Financial Data and Key Metrics Changes - Net revenue for the second quarter was $1,200 million, down 3% year-over-year, or down 1% excluding the impact of China [27][42] - Operating income was $199 million, with an operating margin of 16.5%, reflecting a decrease of 8% compared to the previous year [42] - Earnings per share were $1, with an effective tax rate of 31% due to withholding tax from cash repatriation from China [42] Business Line Data and Key Metrics Changes Water Segment - Water segment sales were $647 million, down 2%, but up 2% excluding China [43] - Operating income for the Water segment was $165.5 million, an increase of 8%, with an operating margin of 25.6% [44] Outdoors Segment - Sales for the Outdoors segment were $379 million, down 3%, with low single-digit point of sale growth [45] - Operating income for Outdoors was $48.6 million, down 23%, with an operating margin of 12.8% [45] Security Segment - Security segment sales decreased by 7% to $178 million, driven by mid-single-digit point of sale declines [46] - Operating income for Security was $26.3 million, down 27%, with an operating margin of 14.8% [46] Market Data and Key Metrics Changes - The company outperformed the North American market, gaining over 200 basis points in market share excluding China [26] - Point of sale growth in the Water and Outdoors segments returned to positive territory, with the Water segment outperforming the broader market [26][28] Company Strategy and Development Direction - The company is focused on a multi-year transformation to become a highly aligned and efficient growth company, emphasizing brand-driven innovation and digital capabilities [7][20] - Strategic actions include responding to market conditions, investing in brands, and accelerating innovation [6][8] - The company aims to fully offset the anticipated impact of tariffs through supply chain actions and strategic pricing [17][18] Management's Comments on Operating Environment and Future Outlook - Management noted broader uncertainty affecting consumer demand, particularly in the housing market, but remains optimistic about long-term fundamentals [25][54] - The company expects to see benefits from new business commitments and product launches in the second half of 2025 [53][54] - Management is confident in the company's ability to navigate current challenges and capitalize on future growth opportunities [55] Other Important Information - The company has reduced its reliance on China, with expectations for China COGS to be around 10% by year-end [50] - The company anticipates a full-year net sales decline of flat to down 2% for 2025, with EPS guidance between $3.75 and $3.95 [51] Q&A Session Summary Question: Details on the Connected Products business and subscription model - Management expressed satisfaction with the connected results and highlighted the upcoming subscription model as a potential revenue stream, expecting to close the year closer to a $300 million run rate [60][62] Question: Market share in the Water business - Management confirmed strong performance in the Water segment, particularly with the Moen brand, and noted ongoing efforts to enhance retail and e-commerce strategies [66][70] Question: Security segment initiatives and retail wins - Management discussed the journey of the Security segment, emphasizing new branding initiatives and expected solid performance in the second half of the year [76][79] Question: Cost-saving efforts and profitability outlook - Management highlighted ongoing cost management efforts and expected margin improvements in the second half of the year, driven by operational efficiencies and strategic investments [80][84]