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 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 - 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 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 - 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]

Financial Data and Key Metrics Changes - The merger between FirstSun Capital and First Foundation was announced, with a focus on leveraging the combined strengths to enhance growth and profitability [2][4] - The pro forma CET1 capital level after closing is projected at a strong 10.5%, with no new capital required as part of the deal [18][33] - The company expects a significant improvement in the net interest margin (NIM) from a recent run rate of approximately 1.60% to nearly 4% by 2027 [19][20] Business Line Data and Key Metrics Changes - First Foundation's wealth management platform, with over $5.3 billion in assets under management, is expected to significantly enhance the fee income profile of the combined organization [15][67] - The merger is anticipated to create a top-tier organization with improved revenue synergies from treasury management and residential mortgage expertise [10][16] Market Data and Key Metrics Changes - The merger will expand FirstSun's geographic footprint into eight of the top 10 largest metropolitan statistical areas (MSAs) in the Central and Western regions of the U.S. [15] - The company aims to grow deposits significantly, targeting over $3 billion in deposit growth opportunities through enhanced branch operations and product offerings [58][62] Company Strategy and Development Direction - The merger is seen as a strategic move to tackle unloved companies in the industry, with a focus on transforming First Foundation's balance sheet and enhancing profitability [5][12] - The company plans to migrate more of First Foundation's balance sheet to its business model, improving the mix of deposits and asset yields [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Southern California market, highlighting its strong economic fundamentals and the opportunity to capture middle-market clients who feel neglected by larger banks [65][66] - The management team emphasized a proactive approach to reducing risk and enhancing the credit profile of the combined organization [9][18] Other Important Information - The repositioning plan includes a total downsizing of $3.4 billion, focusing on reducing non-relationship rate-sensitive elements on both sides of the balance sheet [16][80] - The company expects to achieve approximately 35% in cost savings, primarily from personnel reductions and professional services [81][82] Q&A Session Summary Question: Can you walk us through the mechanics of the $3.4 billion repositioning plan and its timing? - The repositioning is expected to be completed around the closing date, with some progress anticipated in Q4 and Q1 based on existing plans [25][26] Question: What are the expectations for capital management strategies in the long term? - The company expects to see CET1 leveling off beyond 2027, with future capital management strategies being employed that have not been historically utilized [33] Question: Can you provide visibility on the EPS accretion assumptions and how they compare to street estimates? - Internal projections indicate significant improvements in net interest income (NII) and expense reductions, with a projected improvement from break-even levels to approximately $28 million pre-loan loss provision by 2026 [40][42] Question: What gives you confidence in the regulatory approval process for this transaction? - Extensive conversations with regulators have been held, and the company has taken lessons from past experiences to ensure a clearer and more robust restructuring plan [46] Question: What are the sources of the expected 35% cost savings? - Approximately 70% of the cost savings are expected to come from personnel reductions, with additional savings from professional services and back-office opportunities [81][82]

Financial Data and Key Metrics Changes - Sysco reported sales growth of 3.2% on a reported basis and 3.8% 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 with volume growth of 0.4%, significantly outpacing the overall industry traffic improvement [7][24] - The international segment delivered sales growth of 4.5% on a reported basis and 7.9% 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 - U.S. food service volume reporting included a negative impact from an intentional business exit within the FreshPoint business, which negatively affected total local performance by over 50 basis points [9][24] - Restaurant traffic improved by 60 basis points in Q1, with Sysco's local volume improvement being more than double the overall industry rate [8][24] Company Strategy and Development Direction - Sysco aims to deliver profitable growth across U.S. Food Service, international, and Sigma segments, focusing on local business momentum and strategic sourcing [4][19] - The company is leveraging technology initiatives like AI 360 and customer loyalty programs such as Perks 2.0 to enhance sales productivity and customer retention [14][16] - Sysco's strategy includes expanding its specialty capabilities through acquisitions, such as 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 despite a challenging macro backdrop, citing strong operational momentum and improved retention rates [4][20][22] - The company anticipates continued sequential improvement in local business volume, projecting at least an additional 100 basis points improvement in Q2 versus Q1 [8][32] - Sysco's diversified business model and strong international segment performance are expected to provide resilience and growth opportunities [37] Other Important Information - Sysco's investment-grade balance sheet remains robust, with total liquidity of $3.5 billion and a net debt leverage ratio of 2.9 times [29][30] - The company plans to return approximately $1 billion to shareholders through dividends and share repurchases in FY26 [32][33] Q&A Session Summary Question: Local Salesforce productivity metrics and correlation to case growth - Management highlighted a 130 basis points improvement in local volume, with retention of sales colleagues exceeding targets, contributing to positive momentum [41][42] Question: Guidance for the back half of the year - Management expressed confidence in guidance, citing strong momentum and operational improvements, with expectations for continued growth in national sales [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 margins [72][74] Question: Drivers of industry weakness - Management acknowledged that while the overall restaurant industry showed weakness, Sysco's performance improved due to internal initiatives and workforce stability [79]

Financial Data and Key Metrics Changes - The company generated a record revenue of $4.8 billion in Q3 2025, with a gross profit of $803 million and a gross profit margin of 16.7% [7] - Adjusted earnings per share (EPS) was reported at $7.17, with an adjusted EBITDA of $261 million [7][16] - Adjusted net income for the quarter was $140 million, excluding various non-cash and acquisition-related expenses [16] Business Line Data and Key Metrics Changes - Same-store revenue for new vehicles increased by 8% year-over-year, with unit sales up by 7% [9] - The parts and service business saw a same-store gross profit increase of 7%, with customer pay gross profit up by 8% [6][13] - Used vehicle unit volume decreased by 4% year-over-year, but used retail gross profit per unit (GPU) increased to $1,551 [10][11] Market Data and Key Metrics Changes - The company experienced elevated consumer demand for electric vehicles (EVs), with EV unit sales doubling from Q2 to Q3 [25] - Same-store new day supply was reported at 58 days, indicating a slight improvement in inventory management [10] - The company anticipates headwinds in the used vehicle market due to a softening labor market and vehicle affordability challenges [10] Company Strategy and Development Direction - The company is focused on deleveraging its balance sheet and optimizing its portfolio while being opportunistic with share repurchases [6][20] - The integration of the Herb Chambers Group is expected to enhance operating metrics and contribute positively to gross profits [4][26] - The company aims to continue its transition to the Techyon platform, which is expected to improve operational efficiency and reduce costs in the long term [57][58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about maintaining margins in Q4, particularly in the luxury vehicle segment, despite macroeconomic uncertainties [25] - The company expects to see a recovery in the used vehicle market starting in 2026, with improved inventory levels anticipated in the following years [11][66] - Management acknowledged the challenges posed by the current economic environment but remains confident in the company's ability to generate cash and reduce leverage [20] Other Important Information - The company divested four stores in July, generating annualized revenue of $300 million, as part of its disciplined portfolio management strategy [6] - The adjusted SG&A as a percentage of gross profit was reported at 64.2%, with expectations for potential reductions as the Techyon rollout progresses [17] Q&A Session Summary Question: Insights on new GPUs for Q4 - Management indicated that Q4 is traditionally strong for luxury vehicles, and they expect margins to hold up well despite the lower gross profit from EVs compared to traditional vehicles [25][26] Question: Impact of Chambers acquisition on new GPUs - The acquisition is expected to have a positive effect on new GPUs, as the Herb Chambers Group has historically performed well in generating growth [26] Question: Updates on TCA and EPS projections - Management revised TCA projections due to changes in the SAR estimates, indicating a delay in achieving previous EPS targets [30][32] Question: Capital allocation priorities - Management indicated a focus on share repurchases and debt reduction, with a balanced approach to portfolio management [43] Question: Trends in luxury vehicle performance - Management noted that luxury performance is more brand-specific than region-specific, with expectations for a strong luxury end to the quarter [49] Question: Strategies for increasing used vehicle volume - The company is leveraging digital marketing tools and focusing on service drives to acquire more used vehicles, while balancing volume and profitability [64][66]

Financial Data and Key Metrics Changes - Adjusted EPS for the quarter was $1.64, reflecting a 5.6% core sales growth, primarily driven by Aerospace & Electronics and Process Flow Technologies [5][19] - Adjusted operating profit increased by 19%, supported by strong net pricing and productivity [19] - Core FX neutral backlog rose by 16% year-over-year, indicating continued strength in Aerospace & Electronics [19][22] Business Line Data and Key Metrics Changes - Aerospace & Electronics segment sales reached $270 million, up 13% year-over-year, with total aftermarket sales increasing by 20% [22][23] - Process Flow Technologies delivered sales of $319 million, a 3% increase, with flat core performance and a slight benefit from acquisitions and foreign exchange [23][24] - Adjusted segment margin for Aerospace & Electronics expanded to 25.1%, up 160 basis points from the previous year, while Process Flow Technologies saw a margin of 22.4%, up 60 basis points [23][24] Market Data and Key Metrics Changes - The backlog in Aerospace & Electronics exceeded $1 billion, up 27% year-over-year, indicating strong demand [22] - Core orders in Aerospace & Electronics increased by 5%, aligning with expectations, while Process Flow Technologies experienced a slight decline in core FX neutral orders [22][24] - The company anticipates low double-digit core sales growth for Aerospace & Electronics for the year, up from previous single-digit expectations [11][22] Company Strategy and Development Direction - The company is on track to close the acquisition of Precision Sensors & Instrumentation from Baker Hughes by year-end, with integration planning already underway [6][9] - The strategic outlook for the acquired business has improved, with expectations for it to be accretive to financial profiles in terms of margins and growth [9][45] - The company maintains a robust pipeline for further acquisitions, focusing on both Aerospace & Electronics and Process Flow Technologies [10][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate current market challenges, emphasizing operational discipline and adaptability [5][19] - The company expects to achieve adjusted EPS growth of 20% year-over-year at the midpoint for the full year, raising guidance to $5.75-$5.95 [7][25] - Management remains optimistic about the broader market outlook, anticipating stabilization and potential growth in the chemical sector next year [42][43] Other Important Information - The company has entered into a credit agreement for the acquisition financing, including a $900 million delayed draw term loan and a $900 million revolving credit facility [20][21] - Tariff impacts are expected to total approximately $30 million for the year, with plans to offset these through pricing and productivity measures [22] Q&A Session Summary Question: Can you discuss the organic growth expectations for Process Flow Technologies? - Management indicated that non-chemical markets like wastewater and cryogenics are experiencing double-digit growth, while chemical markets are stable but softer in Europe and China [30][32][33] Question: What are the key drivers of margin upside in Process Flow Technologies? - The margin improvements are attributed to innovation, new product launches, and effective management of tariff impacts through pricing and supply chain strategies [34][36] Question: How is the company positioned regarding the potential U.S. government shutdown? - Management stated that there are currently no impacts from the government shutdown, and they do not foresee any issues in the near term [57] Question: What is the outlook for the Aerospace & Electronics segment next year? - Management expects organic growth to accelerate, potentially reaching the high end of the long-term guidance range of 7%-9% [102] Question: How does the company view automation in its operations? - The company is focusing on specific automation projects to enhance productivity and address skilled labor shortages, rather than fully automating entire facilities [94][96]