Financial Data and Key Metrics Changes - Net sales for the quarter reached $7.6 billion, an increase of 4.3% year-over-year, driven by organic growth of 5% and acquisition growth of 1%, despite a 1.7% negative impact from one fewer sales day and foreign exchange [6][16][19] - Gross margin improved to 31%, up 50 basis points year-over-year, attributed to actions taken to capture value and moderating deflation [6][18] - Operating profit increased by 6.1% to $715 million, with an operating margin of 9.4%, expanding by 20 basis points [19][22] - Diluted earnings per share rose by 7.8% to $2.5, supported by operating profit growth and share repurchases [7][19] Performance by Business Lines - HVAC customer group saw a strong growth of 10% in the quarter, primarily due to focused investments and expansion efforts [10][13] - Waterworks revenue grew by 12%, driven by public works and municipal activities, reflecting diversification efforts [11][14] - Residential trade plumbing revenues declined by 1%, consistent with recent trends, facing challenges in new construction [10][12] Performance by Markets - In the U.S., net sales grew by 4.5%, with non-residential revenue growth of approximately 7% driven by large capital projects [8][21] - Canadian net sales were down 0.3%, with organic growth of 3% offset by foreign exchange impacts [21] Company Strategy and Industry Competition - The company continues to invest in key growth areas, including HVAC, Waterworks diversification, and large capital projects, while streamlining operations to enhance efficiency [29][30] - The launch of Ferguson Home aims to provide a seamless omnichannel experience, integrating showroom and digital channels [15][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in medium-term market conditions despite a dynamic and uncertain environment, with expectations for low to mid single-digit revenue growth for the full year [7][27] - The company anticipates continued strong performance in the fourth quarter, supported by solid bidding activity and market share gains [62][63] Other Important Information - The company completed three acquisitions during the quarter, enhancing its market position and capabilities [25] - A nonrecurring business restructuring charge of $68 million was incurred, expected to yield approximately $100 million in annualized cost savings [19][72] Q&A Session Summary Question: How much of the organic volume growth is attributed to internal initiatives versus market improvement? - Management indicated that the 5% organic growth is largely due to internal initiatives, particularly in the non-residential sector, and they expect the market to improve in the coming years [33][34] Question: What factors contributed to the strong gross margin of 31%? - Management noted that the strong gross margin was due to actions taken in pricing strategy and moderating deflation, with expectations to maintain margins above 30% in the fourth quarter [36][37] Question: How is bidding activity progressing in the commercial industrial sector? - Management reported strong bidding activity, particularly in data centers, and expressed optimism about the growth in large capital projects [42][43] Question: How is the company managing price increases in the current tariff environment? - Management emphasized their pricing strategy focuses on value rather than just price, and they are working closely with suppliers to manage costs effectively [44][45] Question: Can you provide insights on the Waterworks segment's growth and bidding activity? - Management highlighted strong growth in Waterworks, particularly in public works, and noted supportive bidding activity in residential new construction [55][56] Question: What is the outlook for HVAC growth and branch conversions? - Management stated that the majority of HVAC growth is organic, with ongoing counter conversions to enhance service for dual trade contractors [67][69] Question: How will the restructuring program impact future operations? - Management indicated that the restructuring is largely complete, with expected annualized savings and improved operational efficiency moving forward [72][73]