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- **Record Financials**: Q3 2025 sales up 11%, EBITDA $122M (+16%), with 26.8% margin (highest since Elkay merger). Free cash flow $94M, driving $135M share buybacks and 22% dividend hike.
- **Tariff Resilience**: $50M tariff costs offset by price/cost neutrality; 50%+ COGS domestic, China exposure <3% by 2026. ZEB system ensures operational efficiency.
- **Growth Drivers**: Stable 2026 market outlook (low single-digit growth), outperformance in drinking water (+55% Q3), and new products like Elkay Liv EZ targeting residential filtration.
- **Balance Sheet Strength**: 0.6x leverage, $500M buyback program, and $300M+ free cash flow for 2025.

**【CEO Summary Section】**
- **Revenue Growth**: Q3 2025 sales of $455 million reflect 11% organic growth year-over-year, driven by tariff-related price increases and incremental demand. EBITDA rose 16% to $122 million, with margins expanding 120 basis points to 26.8%.
- **Share Buybacks and Dividends**: Repurchased 600,000 shares ($25M in Q3, $135M YTD) and raised the dividend 22%, with a refreshed $500M buyback program. U.S. pension plan termination eliminated $200M liability.
- **Market Outlook**: 2026 nonresidential construction market growth expected to mirror 2025, with stable demand across education, healthcare, and warehouses. Zurn Elkay's Zurn Elkay Business System (ZEB) drives continuous improvement and operational efficiency.

**【CFO Financial Commentary】**
- **Financial Highlights**: Q3 free cash flow of $94M, net debt leverage at 0.6x (lowest as a public company). Year-to-date EBITDA up $39M, with 42% drop-through on volume growth. Tariff costs for 2025 revised to $50M, offset by price/cost neutrality.
- **M&A and Growth**: Evaluating M&A opportunities with a focus on adjacencies and internal innovation. Drinking water initiatives, like Elkay Liv EZ, target residential filtration with minimal market penetration but potential for incremental growth.

**【Q&A Highlights】**
- **Tariff Management**: 50%+ of COGS sourced domestically, reducing China exposure to 2-3% by end-2026. Price increases offset $50M tariff impact in 2025.
- **Product Performance**: Flow systems lead-cycle indicator shows stable demand; Pro Filtration units see strong uptake. Elkay Liv EZ launch focuses on DIY convenience, targeting 1.8B gallons of filtered water annually.
- **Margin Expansion**: 26.8% EBITDA margin is a new baseline, with long-term 30-35% incremental margin potential. Free cash flow >$300M for 2025, supporting dividend and buyback flexibility.

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