Financial Data and Key Metrics Changes - The company reported a third-quarter operating EBITDA growth of over 15% and free cash flow growth of nearly 33% [8] - Total company operating EBITDA margin reached 30.6%, the best quarterly result in history, while the legacy business achieved a margin of 32% [19][24] - Free cash flow for the first nine months of 2025 grew 13.5% to $2.11 billion, with operating EBITDA to free cash flow conversion approaching 42% in Q3 [21][24] Business Line Data and Key Metrics Changes - The collection and disposal business contributed more than half of the year-over-year increase in operating EBITDA, with MSW and special waste volumes growing by 5% and 5.5% respectively [8][10] - Operating EBITDA margins in the collection and disposal business expanded by 100 basis points to a record 38.4%, with operating EBITDA growing more than 7% [14] - The healthcare solutions segment's operating EBITDA margin improved to 17.5% as integration efforts progressed [20] Market Data and Key Metrics Changes - The company experienced strong organic revenue growth driven by disciplined pricing and improving volume trends, with core price at 6% [15] - Landfill volumes rose by 5.2%, with broad strength across MSW, special waste, and construction and demolition [16] - Recycling segment's operating EBITDA grew by 18% despite a nearly 35% decline in recycled commodity prices [10] Company Strategy and Development Direction - The company is focused on maximizing customer lifetime value through pricing strategies and leveraging technology to optimize costs [9] - Strategic investments in technology and automation are expected to yield benefits in 2026, with free cash flow projected to approach $3.8 billion [11][12] - The company remains disciplined in capital allocation, expecting to translate performance into returns for shareholders [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term value of the healthcare solutions acquisition, despite a more measured revenue growth pace than initially projected [22][23] - The company anticipates achieving targeted operating EBITDA contributions from the healthcare solutions acquisition, with synergy capture exceeding expectations [23] - Management remains optimistic about achieving strong earnings, margin, and cash flow growth in 2025 and building on this success into 2026 [24] Other Important Information - The company has returned $1 billion to shareholders in dividends and allocated over $400 million to solid waste acquisitions through the first three quarters of 2025 [22] - The CFO announced retirement after 23 years with the company, expressing confidence in the incoming CFO and the company's future [24][25] Q&A Session Summary Question: How much have you benefited from the one-time cleanup work at the landfill? - The total revenues from wildfire volumes were around $115 million for the year, with Q3 solid waste results indicating $145 million in EBITDA growth without meaningful impacts from wildfires [30] Question: Can you provide details on the charges this quarter? - The landfill impairment was due to a long-term pursuit of expansion at a hazardous waste landfill that was deemed no longer worth pursuing [31][32] Question: What are the expectations for sustainability EBITDA? - The company expects to hit the sustainability EBITDA target for 2025, with a step-up anticipated in Q4 [37] Question: How is the healthcare solutions business performing? - The healthcare solutions business is experiencing some churn but has renewed nearly $200 million worth of business with strong average price increases [90] Question: What is the outlook for M&A activity? - The company is looking at a normal $100 million to $200 million in M&A for 2026, with potential for additional transactions in Q4 [84][86]

Financial Performance - The company reported third-quarter sales of $943 million, a year-over-year increase of 4%, and EPS of $0.94, a 15% increase over 2024 [5][11] - North America sales grew 6%, primarily due to pricing actions and strong commercial water heater and boiler volumes [5][11] - Operating cash flow grew 21% to $434 million, and free cash flow grew 35% to $381 million during the first nine months of 2025 compared to the same period last year [12] Business Line Performance - North America water heater sales increased 6%, driven by pricing actions and higher commercial water heater volumes [7][11] - North America boiler sales increased by 10% compared to the third quarter of 2024, led by pricing actions and higher volumes [8][11] - North America water treatment sales decreased 5% in the third quarter, with growth in priority channels offset by a decrease in the retail channel [8][11] Market Performance - Local currency sales in China decreased by 12% due to economic challenges and reduced government subsidy programs [6][11] - The legacy India business continued strong growth, delivering 13% growth in local currency [6][11] - The company expects a decline of approximately 10% in local currency sales in China for 2025 [18][20] Company Strategy and Industry Competition - The company is committed to sustainability, integrating it into operational excellence and innovation [9][10] - The board approved a 6% increase in the quarterly dividend, marking the 32nd consecutive year of dividend increases [13] - The company is actively assessing strategic opportunities and has sufficient resources for acquisitions that meet its criteria [14] Management Commentary on Operating Environment and Future Outlook - Management noted ongoing economic challenges in China and a cautious outlook for the U.S. residential water heater market, projecting flat to slightly down industry volumes [17][18] - The company remains confident in navigating tariff and competitive landscapes in core water heater and boiler businesses [25] - Management emphasized the importance of operational excellence and innovation as key focus areas for future growth [22][83] Other Important Information - The company plans to generate free cash flow of approximately $500 million in 2025 [16] - The company has lowered its full-year sales outlook from 2% to 3% growth to a range of flat to up 1% compared to last year [20][21] Q&A Session Summary Question: Could you talk about your performance versus the overall market in China? - Management indicated that the market continues to face challenges, with increased competitive intensity and promotional activities due to the discontinuation of government subsidies [27][28] Question: What is driving the strength in North America commercial water heater sales? - Management attributed the strength to a strong market backdrop and competitive product offerings, including the launch of the Flex commercial water heater [29][30] Question: Can you provide an update on the China strategic review? - Management stated that it is still early in the process and no outcomes have been narrowed down yet [36] Question: How do you see the U.S. residential water heater market playing out? - Management noted a slight decrease in expectations due to pressures from new home construction completions [44][45] Question: What is the outlook for tariffs and material costs? - Management mentioned that tariff costs are expected to increase total company cost of goods sold by approximately 5% [15][48] Question: What is the current state of inventories across residential channels? - Management indicated that inventory levels are at normal levels, but there may be prudence in managing inventories due to hesitancy in new home construction [84][85] Question: Can you discuss the CapEx guidance for the year? - Management has lowered the CapEx outlook slightly, pushing some investments into early next year [89] Question: How do you prioritize capital allocation going forward? - Management emphasized the importance of maintaining a strong core business while also looking for acquisition opportunities [90][91]

Financial Data and Key Metrics Changes - The company reported a 13% year-over-year growth in adjusted earnings per share and a 14% increase year-to-date, exceeding target ranges [4][5] - Return on equity expanded significantly and is now at the high end of the target range [4] - Year-to-date free capital flow conversion ratio is over 90%, tracking above target [4] - Non-GAAP operating earnings reached $474 million, or $2.10 per share, a 19% increase year-over-year [11] - Total managed AUM increased to $784 billion, a 4% sequential increase [13] Business Line Data and Key Metrics Changes - Workplace Savings and Retirement Solutions (WSRS) transfer deposits grew 13% year-over-year, with total Retirement Investment Solutions (RIS) sales of $7 billion, an 8% increase [6][7] - Small and mid-sized business segment saw WSRS SMB recurring deposits grow 8% and transfer deposits increase by 27% [7] - Global asset management gross sales reached $32 billion, up 19% year-over-year, with private markets generating net inflows of $1.7 billion [8][9] - Specialty Benefits pre-tax operating earnings were $147 million, a record quarter, reflecting a 28% increase year-over-year [16] Market Data and Key Metrics Changes - The company experienced positive net cash flow of $400 million in the quarter, driven by investment management flows [13] - International pension reported record AUM of $151 billion, a 9% year-over-year increase [15] Company Strategy and Development Direction - The company is focused on three significant profit pools: the retirement ecosystem, small and mid-sized businesses, and global asset management [5] - Continued investment in modernizing recordkeeping capabilities and enhancing individual customer service [22] - The company aims to capitalize on opportunities in financial inclusion and fintech solutions [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering full-year enterprise financial targets based on strong performance and business momentum [5][17] - The economic environment has created challenges, but there are significant opportunities for growth in financial inclusion and retirement solutions [10] Other Important Information - The company returned $400 million to shareholders in the quarter, including $225 million in share repurchases [12] - The common stock dividend was raised by 8%, marking the ninth consecutive quarter of increases [5][12] Q&A Session Summary Question: Margin expansion expectations - Management expects continued margin expansion driven by strong underwriting results and disciplined expense management [19][20] Question: Free capital flow conversion trends - The company maintains a strong capital position with a capital-efficient mix of business, allowing for organic investments while returning capital to shareholders [26][27] Question: Investment management flows and investor sentiment - Positive net cash flow of $800 million was reported, with strong demand in private markets and emerging market fixed income [33][34] Question: Performance fees outlook - Performance fees are expected to remain modest, but there has been an uptick in transaction and borrower fee activity [36][37] Question: Bering Strategic Partnership fee rate - The partnership aims to enhance private market expertise and is expected to create value for the company [41][43] Question: 401k business and market consolidation - The company anticipates benefiting from industry consolidation and is focused on driving organic growth [45][49] Question: Private credit market dynamics - The company maintains a strong credit quality in its portfolio, with a focus on underwriting standards [86][90]

Financial Data and Key Metrics Changes - Hubbell reported a 4% increase in sales to approximately $1.5 billion and a 4% increase in operating profit to $358 million [12][13] - Adjusted diluted EPS rose by 12%, and free cash flow increased by 34% to $254 million [14][15] - The company raised its full-year 2025 outlook, anticipating stronger margin performance to offset lower organic growth [7][21] Business Line Data and Key Metrics Changes - The utility segment saw sales increase by 1% to $944 million, with operating profit remaining stable at $242 million [15][16] - Grid infrastructure within the utility segment achieved high single-digit growth, while grid automation sales declined by 18% [5][16] - The electrical segment experienced double-digit sales growth of 10% and a 17% increase in operating profit, with 8% organic growth across end markets [18][19] Market Data and Key Metrics Changes - Strong performance was noted in the T&D markets, driven by utility investments in grid interconnections and aging infrastructure [4][16] - The company observed a return to growth in telecom and enclosures after previous overstock issues [16] - The order book for the utility segment showed significant acceleration in September and October, indicating strong future growth potential [16][23] Company Strategy and Development Direction - Hubbell's acquisition of DMC Power is expected to enhance its utility connector offerings and contribute approximately $0.20 to adjusted EPS in 2026 [8][9] - The company aims to simplify its HES segment to drive productivity and operating efficiencies, positioning itself well for long-term margin expansion [6][19] - Hubbell is focused on capital allocation strategies that target high-growth, high-margin businesses in attractive markets [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong performance in 2026, driven by megatrends in grid modernization and electrification [7][29] - The anticipated normalization of supply chain dynamics is expected to support continued growth [25][26] - Management acknowledged the challenges faced in the utility segment but remains optimistic about future recovery and growth [32][70] Other Important Information - Bill Sperry, the CFO, announced his retirement at the end of the year, with Joe Capozzoli set to succeed him [9][10] - The company has successfully managed cost inflation through pricing and productivity actions, which have positively impacted price-cost productivity [6][7] Q&A Session Summary Question: Insights on 2026 utility growth expectations - Management indicated that while there is potential for strong growth, a conservative approach will be taken in planning resources for 2026 [32][34] Question: Details on September-October order strength - Management noted broad-based order strength in T&D markets, with expectations for continued growth [38][40] Question: Sustainability of the lower tax rate into 2026 - The lower tax rate is project-driven and is expected to normalize next year [42] Question: Clarification on utility segment recovery - The recovery shape is as expected, with timing shifted but still showing positive signs [47][50] Question: Pricing dynamics and market pushback - Pricing has been strong, with constructive discussions with channel partners, indicating good stickiness [71][72] Question: Insights on behind-the-meter infrastructure investments - The company sees strong opportunities in data center investments, particularly on the electrical side [78][80] Question: Visibility on grid automation and meter performance - Management acknowledged that while performance has been below expectations, they are focused on improving the business [84]

Financial Data and Key Metrics Changes - Consolidated sales increased at the high end of the guided range, with adjusted EBITDA margin expanding by 60 basis points to 21.4% and adjusted diluted EPS growing by 6.5% [4][6] - SG&A growth moderated to the low single-digit percentage level, in line with expectations, driven by control of general and administrative expenses [5][6] - The company returned $864 million to shareholders through share repurchases and dividends [6] Business Line Data and Key Metrics Changes - **Paint Stores Group**: Sales increased by a mid-single-digit percentage, with price mix up at the high end of low single digits and volume up low single digits [8] - **Consumer Brands Group**: Sales exceeded expectations, with price mix up low single digits and volume down mid-single digits, reflecting continued softness in North America DIY [10] - **Performance Coatings Group**: Sales were in line with expectations, with volume, acquisitions, and FX all increasing by low single digits, but offset by unfavorable price mix [11][12] Market Data and Key Metrics Changes - The company outperformed the market in all segments served, with residential repaint sales growing by mid-single digits despite negative existing home sales [8] - Commercial sales were up mid-single digits, while new residential sales increased by low single digits despite a slight decline in single-family completions [9] Company Strategy and Development Direction - The company continues to focus on growth investments, controlling costs, and leveraging a unique competitive environment to drive profitability [4][7] - The acquisition of Suvinil is expected to enhance the Consumer Brands Group's portfolio in Latin America, with significant growth opportunities anticipated [11][48] - The company plans to continue investing in growth initiatives, including opening 80-100 North America paint stores for the year [15] Management's Comments on Operating Environment and Future Outlook - Management indicated that the demand environment remains soft and choppy, with minimal positive catalysts expected in the near term [16][20] - Raw material costs are expected to increase by low single digits, with healthcare costs anticipated to rise by low double digits [17] - The company is focused on maintaining discipline in pricing and cost control while pursuing growth opportunities [18][94] Other Important Information - The company temporarily paused matching contributions to its 401(k) plan to preserve jobs and protect the company during a period of prolonged demand uncertainty [13][14] - The company is moving into a new headquarters and R&D center in Cleveland, with expectations for CapEx to return to around 2% of sales next year [19][20] Q&A Session Summary Question: Can you provide more details on the 7% price increase for Paint Stores Group? - Management explained that the price increase is driven by higher year-over-year costs and the need to balance volume growth with pricing effectiveness [23][25] Question: What mortgage rates are needed to catalyze demand in the Paint Stores Group? - Management indicated that around 6% mortgage rates could drive stronger existing home turnover, which is crucial for demand [32][33] Question: How does the company define the efficiency of its investment spending? - Management emphasized a disciplined approach to evaluating returns on investments in stores and sales representatives, with a focus on profitability [38][39] Question: What actions are planned for the Suvinil acquisition? - Management expressed excitement about the acquisition, highlighting opportunities for synergies and growth in the Consumer Brands Group [46][48] Question: What is the outlook for the second half of next year? - Management noted that current trends do not indicate a strong recovery, emphasizing a pragmatic approach to forecasting [50] Question: Can you discuss the negative operating leverage in Performance Coatings despite positive sales? - Management attributed this to unfavorable mix by region and business, but expects moderation in the fourth quarter [78][80]

Financial Data and Key Metrics Changes - Sales for the third quarter were $1.8 billion, representing a 7% increase driven by stronger shipments and a solid mix of off-road vehicles [4][21] - Adjusted EBITDA margin was under pressure compared to last year due to increased tariffs and normalized incentive compensation [7][22] - Adjusted EPS came in at $0.41, influenced by a strong mix and operational efficiencies, partially offset by tariffs [8][22] - Operating cash flow for the quarter was $159 million, with year-to-date cash flow exceeding $560 million [22][25] Business Line Data and Key Metrics Changes - Off-road vehicle (ORV) sales rose 8%, supported by a richer mix of vehicles and strong commercial volume [22] - Marine sales increased by 20%, driven by positive shipments of new boats, including the new entry-level Bennington pontoon [24] - On-road sales were down 3%, impacted by ongoing softness in the motorcycle market [24] Market Data and Key Metrics Changes - North American retail rose 9%, leading to approximately 3 points of market share gain in ORV [5][22] - Dealer inventory decreased by 21% year over year, with aged units down approximately 60% relative to six months ago [6][23] - International sales grew by 2%, led by strength in Europe [21] Company Strategy and Development Direction - The company announced the sale of a majority stake in Indian Motorcycle to focus on core business areas with the greatest potential for profitable growth [4][16] - The strategy includes enhancing customer experience through rider-driven innovation and maintaining a strong dealer network [13][17] - The company is committed to reducing reliance on China for parts, aiming for an 80% reduction in China spend by 2027 [20][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current economic environment and achieving strong earnings and returns for shareholders [4][8] - The company is closely monitoring consumer health indicators and expects sales to grow sequentially in Q4, despite anticipated headwinds from mix and operating expenses [8][28] - Management highlighted the importance of innovation and dealer engagement in maintaining market share and driving future growth [79][81] Other Important Information - The company expects the Indian Motorcycle transaction to be accretive to adjusted EBITDA by approximately $50 million and adjusted EPS by approximately $1 post-separation [18] - The gross tariff impacts for the year rose by $10 million since July, with an expected total impact of approximately $90 million [19][28] Q&A Session Summary Question: What drove ORV retail strength and share gains in the quarter? - Management attributed the strength to right-sized inventory, a broad product lineup, and improved quality leading to lower warranty costs [36][38] Question: Any early thoughts on fiscal 2026? - The Indian Motorcycle deal is expected to significantly impact revenue and EBITDA, with tariffs anticipated to increase costs in 2026 [40][42] Question: What is the consumer profile for the Ranger 500? - The Ranger 500 appeals to new customers, including those transitioning from other brands or looking for entry-level options [46][48] Question: Concerns about demand pull-forward from the FAC program? - Management indicated that the FAC program did not drive significant incremental spend and that retail trends remain strong [54][56] Question: What are the expectations for tariffs in 2026? - Tariffs are expected to exceed $200 million in 2026, with ongoing efforts to mitigate their impact [57][59]

Financial Data and Key Metrics Changes - The company reported record-setting third quarter net sales and earnings results, achieving a year-over-year top-line growth of 10% [4][5] - Consolidated adjusted EBITDA increased by 6%, while adjusted net earnings per share rose by 13% [5][20] - Free cash flow grew significantly, with a double-digit increase both in the quarter and year-to-date [5][20] Business Line Data and Key Metrics Changes - In the Mineral Fiber segment, net sales increased by 6% year-over-year, driven by strong average unit value (AUV) growth and positive sales volume contributions [8][17] - The Architectural Specialties segment saw a net sales increase of 18%, supported by acquisitions and solid organic growth [12][19] Market Data and Key Metrics Changes - The company noted stabilizing market conditions, with no anticipated softening in discretionary renovation activity, contrary to earlier expectations [28][90] - The office market showed signs of improvement, with declining vacancy rates for Class A offices and increased demand for renovations in Class B spaces [30][31] Company Strategy and Development Direction - The company remains focused on operational efficiency, commercial execution, and growth initiatives to navigate a dynamic macroeconomic environment [7][8] - Investments in digital growth initiatives like PROJECTWORKS and Kanopi are expected to drive volume and contribute to margin expansion [15][16] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong results for the remainder of 2025, with expectations for continued double-digit growth in net sales and adjusted EBITDA [27][35] - The company anticipates a full-year adjusted EBITDA margin of approximately 43% for the Mineral Fiber segment, the highest since 2019 [10][25] Other Important Information - The company announced a 10% increase in its quarterly dividend, marking the seventh consecutive annual increase since the inception of its dividend program [24] - The acquisition of Geometrik, a Canadian wood ceiling manufacturer, was completed for $7.5 million, enhancing the company's product offerings and geographic diversification [14][23] Q&A Session Summary Question: Can you talk about the benefit that you're seeing from the new products? - Management noted that innovation at the high end of the portfolio is driving double-digit growth in both the Mineral Fiber and Architectural Specialties segments [39][40] Question: What is the outlook for Architectural Specialties margins? - Management expects to maintain organic margins around 20% while continuing to focus on growth opportunities [43][44] Question: Can you elaborate on the timing-related cost headwinds? - Management highlighted that higher SG&A costs were driven by increased incentive compensation and atypical medical claims, which are not expected to persist [50][51] Question: What is the outlook for the education and healthcare segments? - Management indicated that both segments remain stabilized, with positive trends in healthcare and robust opportunities in data centers [54][55] Question: How do you view the potential for Mineral Fiber margins to exceed pre-pandemic levels? - Management emphasized that continued focus on pricing, productivity, and innovation will support margin expansion beyond pre-pandemic levels [92][93]

Financial Performance - The company reported third-quarter sales of $943 million, a year-over-year increase of 4%, and EPS of $0.94, a 15% increase over 2024 [5][11] - North America sales grew 6%, primarily due to pricing actions and strong commercial water heater and boiler volumes [5][11] - Operating cash flow grew 21% to $434 million, and free cash flow grew 35% to $381 million during the first nine months of 2025 compared to the same period last year [12] Business Line Performance - North America water heater sales increased 6%, driven by pricing actions and higher commercial water heater volumes [7][11] - North America boiler sales increased by 10% compared to the third quarter of 2024, led by pricing actions and higher volumes of high-efficiency boilers [8][11] - North America water treatment sales decreased 5% in the third quarter, with growth in priority channels offset by a decrease in the retail channel [8][11] Market Performance - Local currency sales in China decreased by 12% due to economic challenges and reduced government subsidy programs [6][11] - The legacy India business continued strong growth, delivering 13% growth in local currency [6][11] - The company expects a decline of approximately 10% in local currency sales in China for 2025 [18][20] Company Strategy and Industry Competition - The company is committed to sustainability, integrating it into operational excellence and innovation [9][10] - The board approved a 6% increase in the quarterly dividend, marking the 32nd consecutive year of dividend increases [13] - The company is actively assessing strategic opportunities and has sufficient resources for acquisitions that meet its strategic and financial criteria [14] Management Commentary on Operating Environment and Future Outlook - Management noted ongoing economic challenges in China and a cautious outlook for the U.S. residential market due to lower new home construction completions [17][18] - The company is encouraged by resilient demand in the commercial water heater market and has increased projections for commercial water heater industry volumes [17] - Management expressed confidence in navigating tariff and competitive landscapes in core water heater and boiler businesses [25] Other Important Information - The company plans to generate free cash flow of approximately $500 million in 2025 [16] - The company has lowered its full-year sales outlook from 2%-3% growth to a range of flat to up 1% compared to last year [20] Q&A Session Summary Question: Could you talk about your performance versus the overall market in China? - Management indicated that the market continues to face challenges, with increased competitive intensity and promotional activities due to the discontinuation of government subsidies [27][28] Question: What is driving the strength in North America commercial water heater sales? - Management attributed the strength to a strong market backdrop and competitive product offerings, including the launch of the Flex commercial water heater [29][30] Question: Can you provide an update on the China strategic review? - Management stated that it is still early in the process and no outcomes have been narrowed down yet [36] Question: How do you see the U.S. residential water heater market playing out? - Management noted a slight decrease in expectations due to pressure from new home construction completions [45] Question: What is the outlook for the fourth quarter in China? - Management expects an uptick in volume compared to the third quarter, but overall conditions remain uncertain due to the subsidy program discontinuation [75]

Financial Data and Key Metrics Changes - Sysco reported a sales growth of 3.2% on a reported basis and 3.8% when excluding the divestiture of Mexico, with gross profit growing by 3.9% and Adjusted EPS increasing by 5.5% [6][19][21] - The company achieved gross margin expansion of 13 basis points year over year, reflecting structural improvements [21][28] - Operating cash flow increased by 62% year over year to approximately $86 million, while free cash flow was negative $50 million due to typical seasonality [29][30] Business Line Data and Key Metrics Changes - Sysco's U.S. Broadline local business experienced a positive inflection, delivering volume growth of 0.4%, with USFS performance being 130 basis points stronger than Q4 results [7][24] - The international segment delivered outsized sales growth of 4.5% on a reported basis and 7.9% when excluding the divestiture of Mexico, with local case volume growth of approximately 5% [9][10] - Sigma segment reported 4% sales growth and 39% operating income growth, although more moderate results are expected for the remainder of the year [26][29] Market Data and Key Metrics Changes - Sysco's local business outperformed the overall industry traffic improvement, achieving a rate of local volume improvement more than 2x the industry average [6][8] - Restaurant traffic in Q1 improved by 60 basis points, with Sysco's performance being significantly stronger, particularly in September [8][24] - The company anticipates continued improvement in local business performance, expecting at least an additional 100 basis points improvement in Q2 versus Q1 [9][32] Company Strategy and Development Direction - Sysco aims to deliver profitable growth across its U.S. Food Service, international, and Sigma segments, even in a challenging macroeconomic environment [4][20] - The company is focused on enhancing its local business through initiatives like AI 360 and Perks 2.0, which are expected to drive customer retention and sales productivity [12][15][16] - Sysco's strategy includes expanding its specialty capabilities through acquisitions, such as the recent acquisition of Fairfax Meadow, to unlock incremental growth [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering full-year financial guidance, citing strong operational momentum and improved retention rates among sales colleagues [20][22] - The leadership team emphasized the importance of internal initiatives in driving performance improvements, independent of external market conditions [55][59] - Sysco's diversified business model and strong international segment performance are seen as key advantages in navigating economic challenges [37] Other Important Information - Sysco's total liquidity remains robust at $3.5 billion, with a net debt leverage ratio of 2.9x [29][30] - The company expects to return approximately $1 billion to shareholders through dividends and share repurchases in FY2026 [32][33] Q&A Session Summary Question: Local Salesforce productivity and metrics - Management highlighted a 130 basis points improvement in local volume and emphasized the stability of the workforce as a key driver of positive momentum [41][42] Question: Guidance for the second half of the year - Management expressed confidence in their guidance, citing strong momentum and internal initiatives driving growth [47][48] Question: Case volumes and customer type performance - Management noted that every month in Q1 showed improvement, with strong retention in national sales and growth in non-commercial segments [55][56] Question: Food cost and inflation trends - Management clarified that while inflation was higher in Q1, it is expected to normalize around 2% for the full year, with ongoing improvements in gross profit [71][74] Question: Broader restaurant industry trends - Management acknowledged industry weakness but emphasized Sysco's ability to outperform due to internal initiatives and a stable workforce [79]

Financial Data and Key Metrics Changes - Sales for Q3 2025 were $1.8 billion, representing a 7% increase driven by stronger shipments and a solid mix of off-road vehicles [4][21] - Adjusted EBITDA margin was under pressure compared to last year due to increased tariffs and normalized incentive compensation [7][22] - Adjusted EPS came in at $0.41, influenced by a strong mix and operational efficiencies, partially offset by tariffs [8][22] - Operating cash flow for the quarter was $159 million, with year-to-date cash flow exceeding $560 million [22][25] Business Line Data and Key Metrics Changes - Off-road vehicle (ORV) sales rose 8%, supported by a richer mix of vehicles and strong commercial volume [22] - Marine sales increased by 20%, driven by positive shipments of new boats, including the entry-level Bennington pontoon [24] - On-road sales decreased by 3%, impacted by ongoing softness in the motorcycle market [24] Market Data and Key Metrics Changes - North American retail rose 9%, leading to approximately 3 points of market share gain in ORV [5][23] - Dealer inventory decreased by 21% year-over-year, with aged units down approximately 60% relative to six months ago [6][23] - International sales grew by 2%, led by strength in Europe [21] Company Strategy and Development Direction - The company announced the sale of a majority stake in Indian Motorcycle to focus on core business areas with the greatest potential for profitable growth [4][16] - The strategy includes enhancing customer experience through rider-driven innovation and maintaining a strong dealer network [17][32] - The company is committed to reducing reliance on China for parts, aiming for an 80% reduction in China spend by 2027 [20][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current economic environment and expects to deliver strong earnings and higher returns for shareholders [4][8] - The company is closely monitoring consumer health indicators and anticipates sequential sales growth in Q4, despite challenges in certain segments [8][28] - Management highlighted the importance of operational efficiencies and innovation in driving future growth [7][32] Other Important Information - The company expects the Indian Motorcycle transaction to be accretive to adjusted EBITDA by approximately $50 million and adjusted EPS by approximately $1 post-separation [16][18] - The gross tariff impacts for the year rose by $10 million since July, with an expected total impact of approximately $90 million [19][20] - The company remains committed to maintaining investment-grade credit metrics and balancing investments for growth with debt paydown [27] Q&A Session Summary Question: What drove ORV retail strength and share gains in the quarter? - Management attributed the strength to right-sized inventory, a broad product offering, and improved quality leading to lower warranty costs [35][36] Question: Any early thoughts on fiscal 2026? - The Indian Motorcycle deal is expected to significantly impact revenue and EBITDA, while tariffs are projected to increase in 2026 [39][42] Question: What is the consumer profile for the RANGER 500? - The RANGER 500 appeals to new customers, including those who previously used golf carts or other brands, providing an entry point into the Polaris product line [46][47] Question: Concerns about demand pull-forward from the FAC program? - Management indicated that the FAC program did not drive significant incremental spend and noted continued strength in retail for October [54][55] Question: What are the expectations for tariffs in 2026? - Tariffs are expected to exceed $200 million in 2026, with ongoing efforts to mitigate costs through reduced sourcing from China [57][58]