Good day, and thank you for standing by. Welcome to the A. O. Smith third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, Helen Gurholt. Good morning, and welcome to the A. O. Smith Third Quarter Conference Call. I'm Helen Gurholt, Vice President, Investor Relations and Financial Planning and Analysis. Today, I'm joined by Stephen Shafer, Chief Executive Officer, and Charles Lauber, Chief Financial Officer. Within today's presentation, we have provided non-GAAP measures. Free cash flow is defined as cash from operations plus capital expenditures. Reconciliations from GAAP measures to non-GAAP measures are provided in the appendix at the end of this presentation and on our website. A friendly reminder that some of our comments and answers during this conference call will be forward-looking statements that are subject to risks that could cause actual results to be materially different. Those risks include matters that we described in this morning's press release, among others. Also, as a courtesy to others in the question queue, please limit yourself to one question and one follow-up per turn. If you have multiple questions, please rejoin the queue. We will be using slides as we move through today's call. You can access them on our website at investor.aosmith.com. I'll now turn the call over to Steve to begin our prepared remarks. Thank you, Helen, and good morning, everyone. I would like to start by briefly thanking the many dedicated A. O. Smith employees and broader set of partners and customers in our ecosystem for another quarter of helping to make clean, hot, and safe water available to millions of people. We appreciate all you do to make that happen. Please turn to slide four, and I will now review our financial performance in the quarter. Our global A. O. Smith team delivered third-quarter sales oi f $943 million, a year-over-year increase of 4%, and EPS of $0.94, a 15% increase over 2024. North America sales grew 6%, primarily as a result of our pricing actions and strong commercial water heater and boiler volumes. We achieved North America segment margin expansion of 110 basis points and rest of world segment margin expansion of 90 basis points. Continued economic challenges and more limited availability of government stimulus programs led to a 12% decrease in local currency sales in China. Pureit contributed $17 million of sales in the quarter, and our legacy India business continued its strong double-digit growth trajectory by delivering 13% growth in local currency. North America water heater sales increased 6% in the third quarter, driven by pricing actions taken in response to higher tariffs and other input costs, as well as higher commercial water heater volumes. Our market-leading high-efficiency condensing gas and heat pump products continue to have a compelling payback story in commercial applications. Our residential water heater volumes were also positive, but we believe that Q3 industry volumes declined year- over- year. As we expected, we believe we outperformed the residential and commercial markets in the quarter, in part due to our production efficiency initiative that limited the pre-buy impact on our sales in the first half of the year. Our North America boiler sales increased by 10% compared to the third quarter of 2024, led by the benefits of pricing actions and higher volumes of our high-efficiency boilers. North America water treatment sales decreased 5% in the third quarter, as continued growth in our priority channels was more than offset by an expected decrease from the retail channel. Our priority dealer, e-commerce, and direct-to-consumer channels grew 11% in the quarter. In China, third-quarter sales decreased 12% in local currency as the ongoing economic challenges and reduced availability of government subsidy programs, along with an increasingly competitive environment, led to lower volumes. Despite these challenges and the resulting volume pressure, we achieved 90 basis points of margin expansion compared to last year through the restructuring initiatives we undertook in 2024 and other cost-saving measures. Please turn to slide five. I would now like to take a moment and talk about our commitment to sustainability. For us, sustainability is not just a goal, but a core part of who we are and what we do every day. We are committed to not only developing and bringing to market innovative, high-efficiency products, but we are also dedicated to sustainability in our facilities and manufacturing processes. Later this week, we will publish our sustainability progress report, which will include our sustainability scorecard and an update on our water conservation, greenhouse gas emissions, and waste reduction goals. What the report will show is that we are meeting or exceeding the goals that we set out for ourselves. The outcome of these efforts is providing both sustainability and bottom-line results. Example initiatives we have undertaken to support these goals include the test water recirculation system, which recycles water used during our product testing processes, and our glass enamel reuse process, which captures waste glass enamel for reuse in our tank manufacturing process. These are examples of how we seamlessly integrate sustainability into two of our priority areas, operational excellence and innovation. We remain dedicated to finding better ways of doing things, including how to improve our business while protecting our planet. I'll now turn the call over to Charles, who will provide more details on our third-quarter performance. Thank you, Steve, and good morning, everyone. Please turn to slide six. Third-quarter sales in the North America segment of $743 million increased 6% compared to the same period last year, primarily due to benefits of pricing actions, as well as higher commercial water heater and boiler volumes. North America segment earnings were $180 million, an 11% increase over the third quarter of 2024. Segment operating margin was 24.2%, an increase of 110 basis points year- over- year, primarily due to pricing actions and higher volumes, more than offsetting higher material and other input costs. Moving to slide seven, rest of the world segment sales of $208 million decreased slightly compared to last year and included $17 million of sales from the Pureit acquisition. Sales in our legacy India business grew 13% in local currency. China third-party sales decreased 12% on a constant currency basis. Rest of the world segment earnings of $15 million increased year- over- year as continued expense management and the benefits of restructuring actions more than offset lower volumes in China. Segment operating margin was 7.4%, an increase of 90 basis points compared to the prior period. Pureit will continue to be a headwind in the near term as we focus on integration, which is progressing well. Please turn to slide eight. 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, primarily due to lower inventory balances that were partially offset by other working capital outlays, including lower customer deposits in China. Our cash balance totaled $173 million at the end of September, and our net debt position was $13 million. Our leverage ratio was 9.2% as measured by total debt to total capital. Let's now turn to slide nine. Earlier this month, our board approved a 6% increase in our quarterly dividend to $0.36 per share, making 2025 the 32nd consecutive year that A. O. Smith has raised its dividends. We repurchased approximately 5 million shares of common stock in the first nine months of 2025 for a total of $335 million. This is an increase compared to the same period last year as we raised our planned full-year repurchase intentions from $306 million in 2024 to approximately $400 million of shares for 2025. Consistent with our key priorities, we are actively assessing strategic opportunities and have sufficient dry powder for acquisitions that meet our strategic and financial criteria. Our M&A priority continues to be deals that strengthen our core business or help us build new growth platforms. Please turn to slide 10 and our 2025 earnings guidance and outlook. We are narrowing the range and lowering the top end of our 2025 EPS outlook from a range of $3.70 - $3.90 per share to a range of $3.70 - $3.85 per share. We have included the following assumptions in our outlook. We began to see the impact from tariffs in the third quarter and expect that our tariff costs will continue to increase into the fourth quarter as additional impacts make their way through our supply chain. Though the tariff landscape remains uncertain, we maintain our estimate that annualized tariffs will increase total company cost of goods sold by approximately 5%, which includes tariff rates currently in place, as well as the mitigation efforts we have implemented. As a reminder, our mitigation strategies include footprint optimization, strategic sourcing, and other cost controls and pricing actions as necessary. Apart from tariffs, we expect overall material costs for the year to remain approximately flat versus last year, with steel costs rising 15% - 20% in the second half of 2025 compared to the first half. We estimate that 2025 CapEx will be approximately $75 million. We expect to generate free cash flow of approximately $500 million. Interest expense is projected to be approximately $15 million. Corporate and other expenses are expected to be approximately $75 million. Our effective tax rate is estimated to be approximately 24%, and we project our outstanding diluted shares will be 142 million at the end of 2025. I will now turn the call back over to Steve, who will provide more color around our key markets, top-line growth outlook, and segment expectations for 2025, remaining on slide 10. Steve. Thanks, Charles. Key assumptions in our top-line outlook include the following. We project that 2025 U.S. residential industry unit volumes will be flat to slightly down compared to last year, a slight decrease from our previous guidance due to residential new construction expectations that have come down since last quarter. Lower housing completions, particularly in multifamily, as well as concern around consumer confidence, have led to this revised outlook. The wholesale channel impact is expected to be greater due to its heavier exposure to new construction. That said, we are encouraged by the resilient demand we are seeing in the commercial water heater market segment, and as a result, we are increasing our projection for commercial water heater industry volumes from flat to last year to up low single digits. We are pleased with our strong performance relative to the market in the third quarter and the share momentum we have going into the fourth quarter, supported by our winning products in this segment. Economic challenges persist in China. While government stimulus programs help to stabilize parts of the market in the first half of 2025, we believe the stimulus programs pulled forward a significant amount of demand. During the third quarter, national subsidies were discontinued, resulting in increased promotional activity and discounting from our competitors, much of which we chose not to participate in. Because we do not expect an improvement in market conditions in the near term, we are lowering our 2025 China sales outlook to a decline of approximately 10% in local currency. We continue to benefit from the restructuring actions taken in 2024, as well as other cost-saving measures, which we project will offset the margin impact of lower volumes for the year. Our 2025 North America boiler sales projection of an increase of between 4% and 6% compared to 2024 is unchanged. We are very pleased with our growth in the first nine months of the year, although we believe we may have benefited from a minimal amount of pre-buy related to price increases implemented in the second quarter. We continue to monitor our key markets closely. We have not changed our guidance that North America water treatment sales will decline approximately 5% in 2025, as we de-emphasize the less profitable retail channel. We continue to be pleased with the growth we have seen in our priority channels and our onboarding of new dealers during the year. Our plan to drive 250 basis points of operating margin improvement in 2025 for the North America water treatment business is on track. Finally, we expect the addition of Pureit will add approximately $55 million in sales in 2025, slightly higher than our earlier guidance. It will not have a significant bottom-line contribution this year as we work through integration. Based on the continued economic challenges in China and the softening wholesale residential water heater market in the U.S., we have lowered our full-year sales outlook from 2% - 3% growth to a range of flat to up 1% compared to last year. We continue to expect our North America segment margin will be between 24% - 24.5%, and we expect that the rest of the world segment margin will be approximately 8%. Please turn to slide 11. Last quarter, I laid out my areas of focus. Earlier this month, the top 140 leaders of A. O. Smith gathered to talk about the future of our company, to align on key priorities, and inspire each other through the opportunity to connect and share ideas on how to deliver the next great chapter of the A. O. Smith legacy. I came away from this important time together confident in our path forward and with the commitment from our leadership team to execute. I look forward to sharing more regarding this leadership summit and our focus areas in the quarters to come. I am also pleased to welcome Chris Howe as our new Chief Digital Information Officer. Chris is the transformational leader that we need to help us invest wisely in new technologies for the future and unlock even more value potential in the technologies we are invested in today. In his previous roles, Chris led transformational efforts to leverage enterprise software solutions and most recently worked on the forefront of generative AI solutions. He will be instrumental in ensuring we have the technical capabilities needed to support all our priorities, especially operational excellence and innovation. As we shared last quarter and as part of our portfolio management priority, we announced the intention of our formal China strategic assessment. While we remain early in the process, we are making good progress. We commissioned a third-party analysis of the China market, and it confirmed many of our assumptions entering the strategic assessment. One, our brand remains strong, well-known, and respected among Chinese consumers, especially with regard to our innovative products and premium solutions. Two, our strategy to expand into broader categories that can be connected by smart home solutions and our AI link capability was a necessary path forward. Three, we have a number of go-to-market and business model opportunities to better strengthen the business and capture our fair share of market recovery. We believe that we have a good understanding of our challenges and are evaluating potential opportunities to ensure the future success of this business as we drive greater value for shareholders, employees, and other stakeholders. In conclusion, I am pleased with our third-quarter execution, particularly in the North American segment. I'm also encouraged by the progress we are making on our strategic priorities, including portfolio work to help strengthen our business going forward. Regarding execution, we delivered a solid third quarter in North America, led by pricing performance and our strong commercial high-efficiency portfolio, while expanding margins through operational discipline. Looking forward, we remain confident in our ability to navigate the tariff and competitive landscape in our core water heater and boiler businesses, where we serve a large replacement-driven market with a broad industry-leading portfolio and go-to-market model. Regarding our portfolio, we are driving double-digit growth in priority areas, including boilers, select North America water treatment channels, and India. At the same time, through our strategic assessment, we are working to understand and address what is required to improve the performance of our China business. Finally, we continue to generate cash, maintain a strong balance sheet, and are ready with dry powder necessary to build out our portfolio in ways that complement our business today. With that, we conclude our prepared remarks and are now available for your questions. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question and one follow-up. One moment for questions. Our first question comes from Sarah Boroditsky with Jefferies. You may proceed. Hi, good morning, and thanks for all the color in the commentaries. Maybe just building on some of the China color, you obviously lowered expectations around China sales. Could you just talk about your performance versus the overall market there? Is this just a weaker market, or is there any competitive dynamics going on? Good morning. It's a little bit of both. The market continues to have its challenges, and as I mentioned, there's been a little bit of a pull forward demand driven by the government subsidy program. We're on the other side of that. I think within that down market, the competitive intensity continues to increase. We see a lot of promotional activities trying to step in where government subsidies were playing a role to generate demand previously, and that's adding to the competitive pressure. I think as we see our path forward, as I mentioned, we've got confirmation that our brand remains very strong there. We have a really strong innovative portfolio to serve our customers, but we need to work through this period of challenging market conditions. Appreciate that. Obviously, one of the bright spots this quarter was on the North America commercial water heater sales. I think previously you attributed some of the strengths to pre-buy. Maybe just a little bit more detail on what you're seeing in that market and what's driving the strength there. Yeah, it's been a strong market condition for, you know, commercial products, but I'd also say we have a really strong portfolio in that space. I mentioned on the last earnings call the launch of our Flex commercial water heater, and we've got that out in the marketplace that I think is performing very well. It's a combination of a really strong market backdrop, but also in an area where we've got really competitive product offerings. I would add that during the third quarter, we benefited from our production efficiency program to make sure that we were level-loading a bit closer to the market. Some of that strength we saw in commercial and residential water heater was a part of the output of that benefit in the level-loading program. Thank you. Our next question comes from Bryan Blair with Oppenheimer. You may proceed. Thank you. Morning, everyone. Morning. Good morning. Just to level set on the China strategic review, we know there isn't a timetable as of now in terms of the ultimate decision. Given the insights from the assessment so far, has the range of potential outcomes been narrowed in any way? No, Bryan, not yet. We're still early enough in the process that we're not ruling out any outcomes at this point. Like I said, we've done some really good work just trying to profile and understand the market. We've gotten some third-party assessment to do that. We've started the process of reaching out to other participants, which is why we wanted to announce that we were putting the business under the strategic assessment. We're not at a point yet where we've kind of narrowed down or have a view of what the outcome of that is yet. It's still too early. Yeah, understood. Appreciate the color. The priority channel growth in North American water treatment is certainly encouraging in Q3, and that 11% nicely aligns with the 10% - 12% organic growth target you'd put out at Investor Day. With mix now reset for the platform, you know, is that kind of organic growth in play going forward? That's certainly how we think about the business long term. I would say there's still more work to be done, right? We've done some reprioritization of the channels and where we think we can be competitive and win. I think there's still more work and investment in that space to build out that platform, but we feel good about the growth potential of that business. Thank you. Our next question comes from Jeff Hammond with KeyBanc Capital Markets. You may proceed. Hey, good morning. Good morning. Morning. Good morning. Just on the U.S. resi water heater market, I think you didn't change your industry shipment assumptions, but seemed to lean a little more cautious. I just wanted to understand a little bit better, you know, how you see that playing out. Yeah, our outlook for the industry, you know, we were talking about flat industry on our last call, and now we're seeing flat to slightly down. We do see a little bit of pressure on the residential side. Most of that is coming through new home construction completions on the residential side that we're seeing some of that weakness. We've taken it down just a tad. Are you seeing, you know, kind of the market share recapture play out as you thought? Yes, as we were looking at level-loading our production this year, we've seen our performance relative to the market in Q3 come back and gain share back as we expected. Okay. I think you mentioned some additional tariff headwinds. Maybe quantify or talk about where you're seeing that. As you look at steel pricing and kind of forward tariffs into 2026, how does that kind of inform pricing actions you need to take into 2026? We're seeing, we're hearing from other channels that maybe next year is another above-average increase, and just wanted to get your view there. Yeah, this is Charles. The mention on tariff pressure was really framing from third quarter to fourth quarter. It's probably maybe 20 basis points on North America margins where we're seeing a bit heavier tariffs kind of accumulate. Our full-year outlook at 5% has not changed. It's a little bit of timing, putting a little pressure on the North America margins in the fourth quarter. We'll be back in January giving a little bit of an outlook on costs. The tariff world is a bit volatile. I think we'll kind of hold off commentary to see where material costs go in that respect. Thank you. Our next question comes from Mike Halloran with Baird. You may proceed. Hey, good morning, everyone. Morning. Morning. Could you talk a little bit through what you're seeing in the residential side of things in terms of the discretionary spend? I certainly heard the commentary earlier that some of that weakness or incremental weakness you saw on the residential volume side from an outlook perspective is tied to new housing starts being a little bit lower. No surprise. Are you seeing anything different on the discretionary piece? We really haven't seen that change. We do a survey every quarter, and we look at proactive replacement, as you know. If we kind of look at that survey, there are quarters where it edges up, edges down, but overall, it's still above that 30%. Proactive replacement remains pretty resilient. Certainly, something we'll watch as we go forward. It's a backwards, it's a last trailing 12 months survey. We will have to continue to watch that and make sure we understand if there's a trend developing. Right now, still above 30%. Following up on Jeff's other question, I know you're not giving a 2026 process, but if trends were to play out and we were not going to get any incremental actions, the pricing that you've taken in your mind is enough to make you price cost positive, or at least be price cost neutral on the margin line or in terms of EBITDA dollars once kind of all the catch-up happens. Is that the thought process, or is there still going to be some gap relative to what you're seeing from an inflation perspective with the actions you've already taken? Yeah, when we do our price increases, it really was no different other than the amount of the price increase this time with the tariff costs hitting us. We typically look to cover margin plus cost. Just a reminder, the last one was second quarter that it was effective. When we announced those prices, they go out, and certainly, we see pressures over time on the price, and we have a bit of a fade. I think we'll kind of still reserve kind of the answer to that as we get into the next quarter, but we're comfortable with our price cost relationship now. As you'll see, there's some pressure when you look at our guidance and a little bit of pressure on margins in the fourth quarter. Thank you. Our next question comes from Susan Maklari with Goldman Sachs. You may proceed. Hi, good morning, everyone. This is Charles. Thanks for taking my question. First, I'd like to go back on the China market. Understanding the market conditions are tough, but I guess, do you have any thoughts on potential additional restructuring initiatives in the region given the environment and something that would be done ahead of potential strategic announcements? I think it's one of the things we're going to continue to kind of work through and learn more about as we go through our strategic assessment. I kind of alluded to the fact that there's opportunities for us as we think about how we go to market, our business model. We're going to continue to evaluate those things, whether we do those through partnerships or we do them for ourselves. It's something we still have to work through. No matter what, our goal is to make sure that the business is set up well for success. Obviously, a little bit of market recovery will help aid that in a bit. We're going to continue to kind of learn from the changing market environment and make the necessary changes. Whether that comes through things that we'll take on in self-help to do that, or whether that's done through partnerships is one of the things we're assessing right now. Okay, that's helpful color. I think in your prepared remark, you talked about the potential for strategic acquisition within your or adjacent market. I guess on this, can you talk about what is the pipeline for these types of opportunities in the current environment, along with the timing of any strategic decision on that is dependent on the potential announcement of the strategic review on China? I think one of the strengths we have, right, is a strong balance sheet and our cash generation capabilities. We've got an active pipeline. We continue to evaluate that from kind of a strategic lens, financial lens, where we want to go next. As we mentioned, partly it's how do we strengthen the core of our business? How do we think about building new, higher growth businesses? We're going to continue through that process. I don't think it's connected to other decisions we're making across our portfolio at this time. We're ready to move, I think, when the right opportunities come about. Thank you. Our next question comes from David MacGregor with Longbow Research. You may proceed. Good morning, everyone. I was wondering if you could just give us an update on gas tankless and the progress to date on relocation and manufacturing and market development, and just the impact on third quarter margin contribution and maybe the implied fourth quarter, which you've got the 25 guide. Sure. As you know, we've made a big investment to enter with our own products into the gas tankless space. We've been building out the right set of products, the manufacturing capability here in North America, and all of that is progressing well. I think the market itself for tankless is under pressure, heavily connected back to the residential construction market that we talked about. From that standpoint, it remains kind of a challenging market. I think we're really excited that we've got the right products. We've got the manufacturing capability ready. As we've talked about in the past, we've made some changes. In the past, we were talking about launching in China, moving to North America. We've made some changes into that strategy, which has made some delays to our current plan in terms of how we're going to go after the market. I think we're happy with where we're at. We'd like to move faster in the marketplace. I think as the market picks up and recovers, especially around new construction and with the product offering we have and the supply chain we have, we'll be ready to compete successfully. Are you getting good feedback? Oh, sorry. Sure, go ahead. I was just going to answer the question on margin pressure. You know, we're anniversary when we first launched the product last year. The margin pressure is a bit less than the 40 basis points we had historically talked about. For the quarter, it's probably about 20 basis points. It's not overly significant. Okay. I think you were asking about initial feedback. Yeah, I was just going to get you to talk a little bit about what you're getting back from the marketplace. Are people, I know that you were undertaking a phased launch on that product in terms of just incremental models. Is the acceptance level relatively good at this point, or are people waiting for the full assortment? Any commentary on that would be helpful. Yeah, folks love the product. When they get their hands on it and they get comfortable with it, as you know, we've been building out our portfolio. When we have the full portfolio, we'll be even more compelling. There are also elements of how we serve this market, right? A lot more gas tankless tied to the new construction. We're working out on the business model as well. I would say at the end of the day, the product is a market-leading product. That's what we look to do when we got kind of our own product offering into this space. Thank you. Our next question comes from Nathan Jones with Stifel. You may proceed. Good morning. This is Adam Farley on for Nathan. Morning, Adam. I wanted to follow up on the China commentary. I know fourth quarter is typically a seasonally stronger quarter due to the shopping holidays. What is your expectation for the selling season going into the fourth quarter, balancing that with some of the headwinds you guys are seeing there? You're exactly right. Typically, the fourth quarter is one of our strongest quarters in China. Our outlook assumes that there is an uptick in volume in the fourth quarter compared to the third quarter. I will say when you kind of frame our outlook for China overall to be down 10%, you'll note the fourth quarter gets a little more pressure on year-over-year comps compared to the third quarter. Without the discontinuation of the subsidy program, there's a bit of uncertainty in China on how the fourth quarter may play out. Right now, we have kind of normal cadence, but not at normal volumes. It's just kind of relative to the third quarter, we do see a bit of an uptick. All right, that's helpful. Maybe shifting to boilers, which was a bright spot in the quarter. I think you mentioned maybe you think there's a little bit of pre-buy there. I was also wondering if the boiler sales cycle is maybe elongating at all due to general market uncertainty, or maybe that's not an issue at all. No, I mean, we do believe that there was some pre-buy. There are certain boilers that I'll call inventoryable size. They're small enough that you'd be willing to invest and put them in inventory. We've seen a couple of strong quarters in boilers. Typically, our strongest quarter is the third quarter. We do think we'll see a little bit of headwind as we go into the fourth quarter for some of the unwind of the, I'll call it, inventoryable boilers that will come out in the fourth quarter. Overall, the market quoting remains pretty steady, pretty consistent, particularly on the large crest units. We're not seeing any major change or elongation in what I would say quoting to the order cycle. Thank you. Our next question comes from Andrew Kaplowitz with Citi. You may proceed. Good morning, everyone. Good morning. Good morning. Steve, obviously, you've had good operating experience in your past positions. Maybe just stepping back as you've looked at AOS and given how many of your markets are relatively sluggish, how have you sized the potential opportunity for cost out overall at AOS and/or the potential to accelerate new product-related growth as you begin to transition into 2026? Yeah, Andy, as I've mentioned, two of our priority areas are operational excellence and how do we get more out of the A. O. Smith operating system and innovation. I think that gets after both components of your question. We don't have a good sizing yet of what the value is at stake on that. What I'll tell you is I'm encouraged by the fact that we can bring even more kind of discipline into our operating rhythm at A. O. Smith. I think we have great manufacturing capability, and we run a lot of our business with great people with a lot of experience. I think bringing some discipline, and I mentioned Chris Howe joining us as our CDIO, I think discipline and leveraging some of the technology investments we've made is going to be a meaningful opportunity for us. We haven't kind of framed that in numbers yet. We're sort of building the foundation that we can build on. I think that's something we'll continue to talk to you all about going forward. On the innovation front, we also have a new CTO, and one of the things we're really focused on is how do we kind of increase the pace and success of our commercialization capabilities across our businesses. That's another area of focus. Again, we're kind of putting the foundation in place. We've got a great history at this company of breakthrough innovation, creating categories. Tapping into that culture of innovation is something that's another big priority for us. That's helpful. Maybe just a little more color on inventories across your resi channels. Anything you're seeing there? Obviously, resi HVAC is having a much more difficult time than resi water heaters, given their own inventory problems over there. It doesn't seem to be the case with you guys here, but what's the risk given weaker consumer confidence that we could see some destocking? Right now, I would say we think that inventory in the channel on both residential and commercial side is at pretty normal levels, pretty much target levels. As there's hesitancy maybe on new home construction, you may see some of the distributors looking to be very prudent on how they manage inventories in the back half of the year. We feel like channel inventories are pretty much where they should be right now. Thank you. Our next question comes from Tomohiko Sano with JP Morgan. You may proceed. Good morning, everyone. Good morning. Thank you for taking my questions. My first question is on CapEx. Could you talk about the CapEx guidance compared to three months ago, including what kind of items did you revise for the full year, please? Yeah, we've lowered our CapEx outlook just a little bit. We've pushed out some of the investments that we had planned for the fourth quarter of this year into early next year. Some of those, not all of those, were related to just watching the DOE commercial regulatory initiatives out there. We're just being prudent on making those investments until we have more assurity around that. Thank you. My follow-up is capital allocation. You have been aggressive with the buybacks and dividend increases. How do you prioritize capital allocation going forward, especially if the macro headwinds persist, please? Certainly, the dividend is very important to us. We've raised it for 32 years. We look at that from a yield perspective, and we feel pretty comfortable with where we are at on that. Buybacks, we're framing really to not grow cash, which we're buying back a prudent amount, we believe, to not grow cash and still reserve firepower for acquisitions. As Steve mentioned, we have adequate firepower. We're looking for adding those acquisitions, and we're in a good position to do that. I'd say, in terms of market conditions and how they change, we still recognize we need to deploy capital to our core business. We have a very resilient core business from that standpoint. Making sure that we maintain a very strong core business that's cash flow generating is in that dynamic as well. At the same time, we'll look into how do we provide more adjacency to get us into kind of higher growth businesses. Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Scott Graham with Seaport Research Partners. You may proceed. Yeah, hi. Good morning. I'm sorry for jumping on late, balancing several conference calls. I missed your prepared remarks. Was the reduction to the lower end of the guide range for the year on China exclusively? It looks like the North American items are fairly flat versus last quarter. Was that China or was it something else? Yeah, Scott, there were two things we pointed out. There was obviously the softness, and we did revise down our China outlook for the year to down 10%. That was a big part of it. The other thing we've highlighted is weakness on the residential side of the North America business. We just see that a little bit softer now, where previously we talked about it as a flat market. We now see it as flat to slightly down. Those two components are what have us being a little bit more cautious. Thank you for that. I'm sorry for having to ask that. It was something you already said. Does that presuppose that or maybe contemplate that the October industry shipments were better than September because September really dropped off there? Can you kind of talk about what you're seeing in the industry in October? The industry shipments, you know, August really was down quite a bit on the residential side. We think September will be, you know, not similarly down, but was also weak. As we think about kind of our orders, and you know, maybe that's where we can come in in October because we haven't seen any industry data yet for October. In October, as we look at our orders, we haven't seen resiliency, particularly on the wholesale side, which is generally more influenced by new home construction. It's been a bit weak overall. Those all kind of all those factors come into play. Scott, when we're thinking about a flat industry last quarter, now flat to slightly down, we just see a little bit of pressure, particularly on the new home construction. We've talked about, you know, our approach to trying to level-load our production a bit more for the efficiency benefits of that, working closely with our customers to do that. We saw Q3 where, you know, the industry was down a bit, but we also gained share, as was our intention as we walked through the quarter because of the way we level-loaded our production. Thank you. I would now like to turn the call back over to Helen Gurholt for any closing remarks. Thank you for joining us today. Let me conclude by reminding you that we are pleased with our growth in the quarter. We look forward to updating you on our progress in the quarters to come. In addition, please mark your calendars to join our presentations at three conferences this quarter: Baird on November 11th, UBS on December 3rd, and Goldman on December 4th. Thank you and enjoy the rest of your day. Thank you. Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.