Financial Data and Key Metrics Changes - In Q3 2025, sales were approximately flat at $1.1 billion, with a 1% increase when excluding China [4][14][25] - Operating income was $206 million, down 5% year-over-year, primarily due to lower volumes and higher costs [25][28] - Earnings per share (EPS) were $1.09, reflecting the impact of lower volumes and product mix [14][25] Business Line Data and Key Metrics Changes - **Water Segment**: Sales were $619 million, down 3% year-over-year, with operating income of $151 million and a margin of 24.4% [14][25][26] - **Outdoors Segment**: Sales were $345 million, roughly flat year-over-year, with operating income of $53 million and a margin of 15.5% [14][25][27] - **Security Segment**: Sales increased by 5% to $186 million, with operating income of $33 million and a margin of 17.8% [20][25][28] Market Data and Key Metrics Changes - The macroeconomic environment remains uneven, with cautious consumer sentiment and mixed signals in housing activity [9][10] - The U.S. housing market shows signs of stabilization, with recent rate cuts by the Federal Reserve leading to increased buyer interest [10][11] - Homeowners are increasingly interested in renovations, with 84% planning to renovate in the next 12 months [11][12] Company Strategy and Development Direction - The company is focused on leveraging its "Fortune Brands Advantage" capabilities to achieve sustained above-market growth [5][7] - The transformation into a tightly aligned operating company is expected to enhance performance and efficiency [6][7] - The company aims to fully offset tariff impacts through supply chain actions and strategic pricing [8][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform the market despite current challenges [5][9] - The outlook for the R&R market remains encouraging, driven by aging housing stock and deferred maintenance projects [11][12] - The company anticipates growth in 2026, supported by strategic execution and a strong brand portfolio [23][32] Other Important Information - The company has made significant progress in its headquarters transition, completing hiring commitments ahead of schedule [6][29] - Free cash flow for the quarter was $177 million, with full-year expectations of $400 million to $420 million [28][29] - The company is on track to reduce its China-based costs to around 10% of COGS by year-end [30][58] Q&A Session Summary Question: Pricing strategy outcomes and future outlook - Management highlighted a disciplined approach to pricing, successfully covering tariff impacts and focusing on market opportunities for volume growth [35][36][37] Question: Segment margin guidance changes - The decline in outdoor and security segment margins was attributed to lower seasonal inventory builds and increased R&D investments [41][42][43] Question: Digital business growth and future metrics - The digital business is on track to reach a $300 million annualized run rate, with a goal of $1 billion by 2030 [45][48][49] Question: Tariff dynamics and impacts - The anticipated tariff impact for 2025 is around $80 million, with a reduced annualized impact for 2026 in the low $200 million range [56][58]