Financial Data and Key Metrics Changes - For the third quarter, net sales decreased by 3%, and in local currency, excluding the Kichler divestiture, sales decreased by 2% [8][14] - Operating profit was $312 million, with an operating profit margin of 16.3% [8][15] - Earnings per share for the quarter was $0.97 [8][15] - Gross margin was 34.6%, impacted by higher tariffs and commodity costs [14][15] - The company anticipates adjusted earnings per share for 2025 to be in the range of $3.90-$3.95, down from a previous expectation of $3.90-$4.10 [11][23] Business Line Data and Key Metrics Changes - Plumbing sales increased by 1% in local currency, driven by favorable pricing [8][15] - North American plumbing sales increased by 1%, with Delta Faucet showing strong performance, particularly in e-commerce and trade [8][15] - Decorative Architectural segment sales decreased by 12%, or 6% excluding the Kichler divestiture [9][10] - Total paint sales decreased in low single digits, with DIY paint sales down mid-single digits [10][17] - Operating profit for the plumbing segment was $204 million, with an operating margin of 16.4% [9][16] - Operating profit for the Decorative Architectural segment was $128 million, with an operating margin of 19.1% [9][10] Market Data and Key Metrics Changes - International plumbing sales were in line with the prior year in local currency, with growth in many European markets but challenges in China [9][16] - The U.S. and international repair and remodel markets are expected to decrease low single digits in 2025 [20][21] - The company expects its overall sales in 2025 to decrease low single digits, impacted by the Kichler divestiture [21][22] Company Strategy and Development Direction - The company aims to unlock opportunities through strong execution, strategic investments, and innovative product introductions [7][12] - Focus on maintaining agility in response to macroeconomic uncertainties and rising costs [11][12] - The company is committed to capital deployment, returning $188 million to shareholders through dividends and share repurchases [11][19] Management's Comments on Operating Environment and Future Outlook - Management noted that near-term market conditions remain a headwind, but the company continues to focus on execution to grow market share [8][12] - The structural factors for repair and remodel activity are strong, including the age of housing stock and high home equity levels [12][13] - Management expressed confidence in the company's ability to navigate dynamic environments and deliver long-term value for shareholders [13][14] Other Important Information - The company generated strong free cash flow during the quarter and maintained a solid balance sheet, with gross debt to EBITDA at 2x [11][18] - The total annualized cost impact of tariffs is estimated to be approximately $270 million, with ongoing efforts to mitigate these costs [20][21] Q&A Session Questions and Answers Question: How might a competitor's price increase influence the company's outlook for pricing? - Management indicated that they have a long-standing relationship with The Home Depot, which allows for price-cost neutrality over time, and they do not expect significant pricing increases in the coming year [25][27] Question: What is the long-term impact of tariffs on plumbing margins? - Management noted that they are actively working to mitigate tariff impacts through sourcing changes, cost reductions, and pricing strategies, aiming to offset the dollar cost of tariffs and restore margins over time [28][30] Question: What were the drivers behind the Q3 results? - Management identified three main drivers: tariffs, overall industry softness, and incremental costs related to commodity inputs and inventory reserves [34][35] Question: Can you elaborate on the builders' hardware business performance? - Management explained that the builders' hardware business faced softness in sales due to a planned shipping process change, but they do not expect a significant impact for the full year [37][39] Question: What is the expected impact of inventory reserves on plumbing? - Management stated that adjustments to inventory reserves were larger than typical this quarter due to the overall market environment and slow industry sales, impacting margins [101][102]

Financial Data and Key Metrics Changes - For the third quarter, net sales decreased by 3%, with a 2% decrease in local currency excluding the Kichler divestiture [8][14] - Operating profit was $312 million, with an operating profit margin of 16.3% [8][15] - Earnings per share for the quarter was $0.97 [8][15] - Adjusted earnings per share for 2025 is now anticipated to be in the range of $3.90-$3.95, down from a previous expectation of $3.90-$4.10 [11][23] Business Line Data and Key Metrics Changes - Plumbing sales increased by 1% in local currency, with North American plumbing sales also up by 1% driven by favorable pricing [8][9] - Decorative Architectural segment sales decreased by 12%, or 6% excluding the Kichler divestiture, with operating profit for the segment at $128 million and an operating margin of 19.1% [9][10] - Total paint sales decreased in low single digits, with DIY paint sales down mid-single digits due to soft demand [10][17] Market Data and Key Metrics Changes - International plumbing sales were in line with the prior year in local currency, with growth in many European markets but challenges in China [9][16] - The overall market environment remains volatile, with expectations for the U.S. and international repair and remodel markets to decrease low single digits in 2025 [20][21] Company Strategy and Development Direction - The company aims to unlock opportunities through strong execution, strategic investments, and innovation in product offerings [7][12] - Focus on maintaining agility in response to macroeconomic uncertainties and rising costs while continuing to drive long-term shareholder value [11][13] - The company is committed to capital deployment strategies, returning $188 million to shareholders through dividends and share repurchases in the quarter [11][19] Management's Comments on Operating Environment and Future Outlook - Management noted that while near-term market conditions are challenging, structural factors for repair and remodel activity remain strong [12][13] - The company is focused on mitigating tariff impacts and expects to continue to gain market share in key growth areas [12][21] - Management expressed confidence in the strength of their brands and innovative products to deliver long-term value [14][13] Other Important Information - The company generated strong free cash flow and maintained a solid balance sheet, with gross debt to EBITDA at 2x at quarter end [18] - The total annualized cost impact of tariffs is estimated to be approximately $270 million, with ongoing efforts to mitigate these costs [20][21] Q&A Session Summary Question: Impact of competitor price increases on paint pricing outlook - Management indicated that they do not expect significant pricing increases on paint as they maintain a price-cost neutrality relationship with The Home Depot [25][27] Question: Long-term impact of tariffs on plumbing margins - Management acknowledged the volatility of tariffs and emphasized ongoing mitigation efforts to offset costs and restore margins over time [28][30] Question: Surprises in plumbing margins for Q3 - Management noted that Q3 results were impacted by tariffs, industry softness, and elevated commodity costs, with some unexpected adjustments in inventory reserves [34][35] Question: Dynamics in builders' hardware business - Management explained that the builders' hardware business faced softness in sales due to industry-wide challenges and a planned shipping process change [37] Question: Clarification on inventory reserves - Management confirmed that inventory-related adjustments were larger than typical due to market conditions, impacting plumbing segment margins [101][102]

Financial Data and Key Metrics Changes - For the third quarter, net sales decreased by 3%, and in local currency, excluding the Kichler divestiture, sales decreased by 2% [6][11] - Operating profit was $312 million, with an operating profit margin of 16.3% [6][12] - Earnings per share for the quarter was $0.97 [6][12] - Gross margin was 34.6%, impacted by higher tariffs and commodity costs [11][12] - The company anticipates adjusted earnings per share for 2025 to be in the range of $3.90 to $3.95, down from a previous expectation of $3.90 to $4.10 [9][10] Business Segment Data and Key Metrics Changes - Plumbing sales increased by 1% in local currency, driven by favorable pricing, with North American plumbing sales also up by 1% [6][14] - Decorative Architectural segment sales decreased by 12%, or 6% excluding the Kichler divestiture, with operating profit for the segment at $128 million and an operating margin of 19.1% [7][15] - Total paint sales decreased in low single digits, with DIY paint sales down mid-single digits due to soft demand [8][15] Market Data and Key Metrics Changes - International plumbing sales were in line with the prior year in local currency, with growth in many European markets but challenges in China [7][14] - The U.S. and international repair and remodel markets are expected to decrease low single digits in 2025 [19] Company Strategy and Development Direction - The company aims to unlock opportunities through strong execution, strategic investments, and innovative product introductions [5][10] - Focus on maintaining agility in response to macroeconomic uncertainties and rising costs [9][10] - The company is committed to capital deployment, returning $188 million to shareholders through dividends and share repurchases [9][16] Management's Comments on Operating Environment and Future Outlook - Management noted that near-term market conditions remain a headwind, but the company is focused on growing market share and driving long-term shareholder value [6][10] - Structural factors for repair and remodel activity remain strong, including aging housing stock and high home equity levels [10][19] - Management expressed confidence in the company's ability to navigate dynamic environments and deliver long-term value [10][11] Other Important Information - The company generated strong free cash flow and maintained a solid balance sheet, with gross debt to EBITDA at two times [16] - The total annualized cost impact of tariffs is estimated at approximately $270 million, with ongoing efforts to mitigate these costs [18][19] Q&A Session Summary Question: Impact of competitor price increases on paint pricing outlook - Management indicated that they do not expect significant pricing increases for paint as they maintain a price-cost neutrality relationship with The Home Depot [23][24] Question: Long-term impact of tariffs on plumbing margins - Management discussed ongoing efforts to mitigate tariff impacts through sourcing changes and pricing actions, aiming to offset costs and restore margins over time [25][26] Question: Surprises in plumbing margins for Q3 - Management noted that Q3 results were impacted by tariffs, industry softness, and elevated commodity costs, with adjustments in inventory reserves also affecting margins [29][30] Question: Dynamics in builders' hardware business - Management explained that the builders' hardware business faced softness in sales due to shipping timing changes but does not expect significant impacts for the full year [32][33] Question: Inventory reserves and their impact - Management clarified that adjustments in inventory reserves were larger than typical due to market conditions, impacting plumbing segment margins [84][85]