Financial Data and Key Metrics Changes - The company reported record sales of $644 million for Q2 2025, an increase of 8% on a reported basis and 6% on an organic basis [15][9] - Adjusted operating margin reached 21.6%, up 280 basis points year-over-year, driven by favorable price cost dynamics and productivity improvements [17][10] - Adjusted earnings per share increased by 26% to $3.09, supported by operations, acquisitions, and reduced interest expenses [18][10] Business Line Data and Key Metrics Changes - Organic sales in the Americas increased by 10%, while reported sales rose by 11%, driven by price, volume, and pull forward demand [15][9] - Europe experienced an organic sales decline of 8% and reported sales down 3%, attributed to ongoing OEM and market weakness [16][10] - APMEA sales decreased by 1% on an organic basis and 3% on a reported basis, with growth in Australia and New Zealand offset by declines in China [16][10] Market Data and Key Metrics Changes - The Americas segment margin increased by 290 basis points to 27.2%, while Europe segment margins rose by 170 basis points to 11.7% [17][10] - The company expects organic sales growth of flat to up 3% for the full year, with reported sales growth anticipated to be up 2% to 5% [20][10] Company Strategy and Development Direction - The company is focusing on M&A, having acquired EasyWater, which is expected to contribute approximately $5 million in sales [11][10] - The rollout of the Nexa Intelligent Water Management solution is gaining traction, with successful installations in various sectors [12][10] - The company is committed to sustainability, having published its 2024 sustainability report highlighting progress in carbon emissions reduction and operational improvements [14][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the uncertain trade environment and expects to maintain a favorable price cost outcome despite tariff impacts [10][10] - The company is increasing its full-year sales and margin outlook due to strong first-half performance and expectations for the third quarter [13][10] - Management remains cautious about the European market, noting ongoing softness in general construction [49][10] Other Important Information - The company incurred $3.8 million in pre-tax acquisition costs and restructuring charges related to facility exits in Europe [18][10] - Free cash flow year-to-date was $105 million, down from $120 million last year, primarily due to working capital timing and increased CapEx [19][10] Q&A Session Summary Question: Impact of pull forward in sales - Management quantified the sales pull forward effect at approximately $20 million for the quarter [29][10] Question: Pricing dynamics and tariff impacts - Price realization was approximately 3% in the quarter, with expectations for mid-single digits in the second half due to implemented price increases [60][10] Question: Competitive positioning and domestic footprint - Management believes producing products in the countries they sell provides a strategic advantage, especially in the current uncertain market environment [44][10] Question: European market expectations - Management noted that destocking in the heat pump market is expected to end by Q3, but general construction remains soft in Europe [49][10] Question: Integration of acquisitions - All acquisitions are integrating well, with synergies being tracked and improvements noted across the board [66][10] Question: Nexa platform and sales cycle - The sales cycle for the Nexa platform is expected to shorten as more installations prove successful, enhancing customer understanding of the benefits [82][10]

Financial Data and Key Metrics Changes - The company reported record sales of $644 million for Q2 2025, an increase of 8% on a reported basis and 6% on an organic basis [15][16] - Adjusted EBITDA of $153 million increased by 22%, with an adjusted EBITDA margin of 23.8%, up 280 basis points [17] - Adjusted earnings per share rose by 26% to $3.09, driven by operations, acquisitions, foreign exchange, and reduced interest expense [18] Business Line Data and Key Metrics Changes - Organic sales in the Americas increased by 10%, while reported sales were up 11%, driven by price, volume, and pull forward demand [15][16] - Europe experienced an organic sales decline of 8% and reported sales down 3%, attributed to ongoing OEM and market weakness [16] - APMEA sales decreased by 1% on an organic basis and 3% on a reported basis, with growth in Australia, New Zealand, and the Middle East offset by declines in China [16] Market Data and Key Metrics Changes - The Americas segment margin increased by 290 basis points to 27.2% [17] - Europe segment margins increased by 170 basis points to 11.7% [17] - APMEA segment margin remained flat at 18.9% compared to the prior year [17] Company Strategy and Development Direction - The company is focusing on M&A, having acquired EasyWater, which is expected to contribute approximately $5 million in sales and be neutral to adjusted EPS in 2025 [11] - The rollout of the Nexa Intelligent Water Management solution is gaining traction, with successful installations in various sectors [12] - The company is committed to sustainability, having published its 2024 sustainability report highlighting progress in safety, energy efficiency, and water conservation [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current trade environment and increasing full-year sales and margin outlook due to strong first-half performance [25][26] - There is caution regarding the European market, with ongoing softness in general construction and uncertainty around order rates [49] - The company expects continued strength in data centers, which is offsetting residential market softness [94] Other Important Information - The company estimates a direct tariff impact of approximately $40 million for 2025, down from a previous estimate of $60 million [21][56] - Free cash flow year-to-date through Q2 was $105 million, with expectations for sequential improvement [19] Q&A Session Summary Question: Impact of pull forward in sales - Approximately $20 million of sales pull forward was realized in the quarter [28] Question: Pricing dynamics and tariff impacts - Price realization was approximately 3% in Q2, with expectations for mid-single digits in the second half [57] Question: Competitive positioning and domestic manufacturing - The company believes its domestic manufacturing strategy provides a competitive advantage in the current uncertain market environment [43] Question: Update on European heat pump market - Destocking in the heat pump market is expected to end by Q3, but general construction remains soft in Europe [49] Question: Changes in tariff estimates - The reduction from $60 million to $40 million in direct costs is due to changes in tariffs, including new copper tariffs [56] Question: Integration of acquisitions - All acquisitions are integrating well, with synergies being realized across the board [61] Question: Future of Nexa platform - The company expects the sales cycle for Nexa to shorten as more customers realize its benefits [77]