Zurn Elkay Water Solutions Corporation

Good morning and welcome to the Zern-LK Water Solutions Corporation Third Quarter 2025 Earnings Results Conference Call with Todd Adams, Chairman and Chief Executive Officer, David Pauley, Chief Financial Officer, and Brian Winlandt, Director of FP&A for Zern-LK Water Solutions. A replay of the conference call will be available as a webcast on the company's investor relations website. At this time, for opening remarks and introduction, I'll turn the call over to Brian Winland.

Good morning, everyone, and thanks for joining the call today. Before we begin, I'd like to remind everyone that this call contains certain forward-looking statements which are subject to the Safe Harbor language outlined in our press release issued yesterday afternoon and in our filings with the SEC. In addition, some comparisons will refer to non-GAAP measures. Our earnings release and SEC filings contain additional information about these non-GAAP measures, why we use them, and why we believe they're helpful to investors, and contain reconciliations with corresponding GAAP information. Assistant with prior quarters, we will speak to certain non-GAAP metrics as we feel they provide a better understanding of our operating results. These measures are not a substitute for GAAP. We encourage you to review the GAAP information in our earnings release and in our SEC filings. With that, I'll turn the Todd Adams, Chairman and CEO of Zurn LK Water Solutions.

Thanks, Brian, and good morning, everyone. I'll get right to it on page three. In aggregate, we had a decent third quarter. The sales grew 11% organically year over year, and EBITDA grew 16% to $122 million as margins expanded 120 basis points to 26.8%. We leveraged our free cash flow of $94 million in the quarter to repurchase about 600,000 shares. bringing our year-to-date repurchases to $135 million, or about 3.8% of total shares outstanding, and all this while leverage declined to 0.6 times. As you may have seen in the release, we also raised our dividend 22%, and our board has refreshed our share buyback program to $500 million. Dave will highlight it more in his comments, but we also completed our U.S. pension plan termination in the quarter, which is really just a nice thing to have behind us. This morning, as we've done in prior years, We'll take everyone through all the market data we have on the U.S. non-residential construction market and dissect it in ways we believe makes the most sense to understand how the macro data flows through to our end markets and ultimately into our business, setting the stage for what we think the market grows over the coming years. To cut to the chase, we think our markets in 2026 look a lot like they did in 2025. Last year this time, the data showed an acceleration into 2026, that with some of the uncertainty around tariffs and really the lack of interest rate reductions throughout 25 relative to what was projected a year ago, pushes that acceleration to 2027. The market outlook being relatively stable the past few years, we've been much more focused on what we can control, which is leveraging our internal growth initiatives, which are amplified by the competitive advantages we've cultivated around our product portfolio breadth, high levels of specification, and our unique go-to-market positioning. As we discussed last quarter, we feel like we continue to demonstrate that our teams have got a really good handle on the tariff, supply chain, and pricing dynamics. And Dave will update you on all the numbers in a bit, but overall, relatively consistent with what we communicated in the second quarter. All year, our approach to outlook has been to take things a quarter at a time because there's been several scenarios as to how all this change could have played out. But with only one quarter to go and basically only two months left in 2025, we are again raising our full-year estimates for growth profitability and cash flow. Now I'll turn it over to Dave and he'll take you through some more color on the quarter.