Financial Data and Key Metrics Changes - Full year 2025 sales increased by 5.4% to $2.1 billion, with segment operating income up 10% to $269 million [5][17][18] - Fourth quarter 2025 sales were $506.9 million, a year-over-year increase of 4.4%, with operating income rising 20% to $51.6 million [12][13][15][16] - Adjusted diluted earnings per share for 2025 was $4.14, a 6% increase from $3.92 in 2024, while GAAP diluted EPS was $3.22, down from $3.86 due to a pension settlement charge [12][17] Business Line Data and Key Metrics Changes - Global Water Systems sales increased by 6% for the full year 2025, driven by strong pricing and acquisitions, while operating income was up 5.2% [22][23] - Energy Systems sales rose by 9% to $299 million for the full year, with operating income increasing by 6% to $99 million [24] - Distribution segment sales increased by 2% to $700.7 million, with operating income up 64% to $39.8 million, reflecting margin enhancement initiatives [25] Market Data and Key Metrics Changes - Water Systems in the U.S. and Canada saw a 4% decline in Q4 due to softer HVAC markets, while international sales increased by 15% [19] - Energy Systems sales outside the U.S. and Canada increased by 19%, indicating strong international demand [20] - Distribution segment's operating income margin improved by 300 basis points to 3.3% in Q4, driven by higher volumes and price realization [21] Company Strategy and Development Direction - The company aims to position itself as an innovation and growth leader, with over 35 new products expected to generate $160 million in revenue by year three [8] - Focus on enhancing margins through a value acceleration office, utilizing AI and process engineering to streamline operations and manage costs [10][31] - The company is committed to strategic acquisitions to fill portfolio gaps and enhance market reach, with a healthy M&A pipeline anticipated for 2026 [60][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a turbulent global market, with a healthy order book and backlog as they move into 2026 [5][6] - The outlook for 2026 includes expected sales growth of 3% to 4% across segments, with adjusted EPS guidance of $4.40 to $4.60 [27][28] - Management noted that the company is well-positioned to capitalize on urbanization and increasing demand for high-quality water and energy solutions [29][30] Other Important Information - The company completed approximately $120 million in acquisitions and $160 million in share buybacks in 2025, maintaining a strong balance sheet [6][26] - A quarterly cash dividend of $0.28 was announced, marking the 34th consecutive year of dividend increases [26] Q&A Session Summary Question: Organic outlook across segments for revenue guidance - Management indicated a 3%-5% growth outlook for the water business, with a mix of volume and price increases expected [36] Question: Specifics on water business end markets and geographic demand - Management noted stabilization in HVAC markets and expected growth in the U.S. and Europe, with no pronounced weaknesses anticipated [40][41] Question: Impact of HVAC on water segment performance - Management clarified that HVAC weakness was isolated to Q4 and expected normalization in early 2026 [45] Question: Energy segment margin challenges - Management acknowledged tariff impacts and indicated expectations for margin recovery in 2026 [50] Question: Integration progress of recent acquisitions - Management reported smooth integration of PumpEng and Barnes, with positive growth synergies anticipated for 2026 [58][59] Question: Value acceleration office and its impact - Management highlighted the office's focus on process reengineering and growth, with expected benefits in productivity and efficiency [64][66]

Financial Data and Key Metrics Changes - Consolidated sales for Q3 2025 were $582 million, up over 9% year-over-year, driven by strong organic contribution and pricing actions [6][10][11] - Fully diluted earnings per share were $0.37 for Q3 2025, down from $1.17 in Q3 2024, primarily due to the termination of the U.S. pension plan impacting EPS by approximately $0.93 [10][11] - Adjusted fully diluted earnings per share increased by 11% to $1.30 for Q3 2025 compared to $1.17 in Q3 2024 [10][11] - Gross profit was $208.7 million, up from $189.7 million year-over-year, with gross profit as a percentage of net sales at 35.9%, an increase of 20 basis points [10][11][12] Business Segment Data and Key Metrics Changes - Water systems sales increased by 11% year-over-year, driven by price, volume, and acquisitions, with significant growth in Europe, the U.S., and Canada [7][14] - Energy systems sales rose nearly 15% year-over-year, with strong growth in the U.S., Europe, and India, despite expected moderation in Q3 due to seasonal factors [8][15] - Distribution segment sales increased by 3.4%, marking the strongest pricing performance in over two years, with operating income up 34% year-over-year [9][15][86] Market Data and Key Metrics Changes - The U.S. and Canadian markets for water systems performed well despite softer housing starts, indicating resilience and market share capture [7][14] - Internationally, energy systems sales outside the U.S. and Canada increased by 26%, led by growth in India and Europe [15] - The groundwater market in the U.S. was relatively flat, with expectations for low single-digit growth next year [56] Company Strategy and Development Direction - The company is focused on growth acceleration, resilient margins, strategic investments, and top-tier talent as part of its value creation framework [18] - Innovation is central to the growth strategy, with new product launches aimed at enhancing efficiency and reliability in the pressure-boosting market [19][20] - A new factory in Izmir, Turkey, is set to start production in Q1 2026, aimed at expanding capabilities in Eastern Europe and the Middle East [21][92] Management's Comments on Operating Environment and Future Outlook - Management expects a subdued market in the U.S. and Canada for 2026, with volume growth anticipated despite challenging macro conditions [27][30] - The company is optimistic about growth opportunities outside the U.S., particularly in Latin America and emerging markets [28][53] - Management highlighted the importance of customer intimacy and the ability to adapt to market needs as key drivers for future success [66] Other Important Information - The company announced a quarterly cash dividend of $0.265, payable on November 20, 2025 [17] - The effective tax rate for Q3 was 27%, up from 24% in the prior year, influenced by increased foreign earnings [16] Q&A Session Summary Question: Outlook for end markets in 2026 - Management anticipates a flattish market in the U.S. and Canada but expects volume growth driven by innovation and strong channel partnerships [27][30] Question: Impact of tariffs and geographic mix on energy systems margins - The majority of margin impacts are attributed to tariffs, with geographic mix contributing to a lesser extent [45] Question: Backlog growth in energy systems - Backlog growth is favorable, with positive trends expected in both U.S. and international markets [52][53] Question: Performance of groundwater market - The groundwater market is expected to remain flat, with low single-digit growth anticipated due to high replacement rates [56] Question: Distribution business margin improvements - Margin improvements are driven by better cost management, strategic pricing, and operational efficiencies [84][88] Question: Factory expansion in Turkey - The new factory is expected to start production in Q1 2026, with normalized margins anticipated in the latter half of the year [91][92]