Hello, and thank you for standing by. Welcome to A. O. Smith Corporation fourth quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press Star one one again. I would now like to hand the call over to Helen Gurholt. You may begin. Good morning, everyone, and welcome to the A. O. Smith full year and fourth quarter conference call. I'm Helen Gurholt, Vice President, Investor Relations and Financial Planning and Analysis. Joining me today are Steve Shafer, Chief Executive Officer, and Chuck Lauber, Chief Financial Officer. In order to provide improved transparency into the operating results of our business, we provided non-GAAP measures. Free cash flow is defined as cash from operations less capital expenditures. Adjusted earnings, adjusted earnings per share, and adjusted segment earnings exclude the impact of restructuring and impairment expenses. 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 will now turn the call over to Steve to begin our prepared remarks. Please turn to the next slide. Thank you, Helen, and good morning, everyone. I want to take a moment to sincerely thank all of our employees for their outstanding dedication and hard work in 2025, allowing us to navigate a dynamic environment and deliver record EPS. Their commitment to serving our customers, adapting to new challenges, and consistently delivering high-quality solutions is instrumental in our success. Each and every member of the A. O. Smith team plays a vital role in building trust with our customers and upholding the values that define A. O. Smith. I am truly grateful for your ongoing passion and collaboration, and it has me excited for our potential together in 2026 and beyond. Now, moving on to our 2025 financial performance, please turn to slide four. Our 2025 sales increased slightly as pricing benefits and higher commercial water heater and boiler volumes were offset by lower China sales. Our EPS increased 6% to a record $3.85, driven by profitability improvements in both segments. North America segment margin improved 20 basis points over 2024 adjusted segment margin, led by profitability improvements in our water treatment business, as well as mix benefits from higher commercial sales. In our Rest of World segment, benefits from our 2024 restructuring actions and other cost control measures in China resulted in margin expansion of 40 basis points, even with lower China sales. We returned $597 million of capital to shareholders with our dividend and share repurchases. In the fourth quarter, we announced the acquisition of Leonard Valve, which we completed earlier this month. This acquisition expands our water management market reach, digital capabilities, and integrated product portfolio. I welcome the Leonard Valve team to the A. O. Smith family. Now, turning to our North America segment performance. North America water heater sales increased 1% in 2025 as cost and tariff-related pricing benefits and higher commercial volumes offset lower wholesale residential volumes. We project that full year 2025 residential industry unit volumes were roughly flat to 2024, and the commercial water heater industry volumes increased approximately 5%. We are pleased with our performance in the commercial market and retail residential channel. However, we faced some challenges in the wholesale residential channel in the fourth quarter. This part of the market is experiencing pressure from a new construction slowdown and continued initiatives by retailers to expand into serving the professional, which is leading to increased competitive intensity. The benefit for us as an industry leader is that we have a strong presence in both the retail and wholesale channels, and we have a good line of sight into how the market moves, backed by data, analytics, and extensive customer relationships. We are actively working with select customers to address the specific geographies and product offerings that are under the most pressure to deliver better outcomes in the wholesale market in 2026. Our North America boiler sales grew 8% compared to 2024 due to higher commercial and residential boiler volumes, as well as pricing benefits. We are pleased with our 2025 boiler performance and the continued strong demand for our market-leading high-efficiency products. North America water treatment sales decreased 2% in 2025 as our strategic shift away from the on-the-shelf retail channel offset growth in our more profitable priority channels. Sales in our priority dealer, direct-to-consumer, and e-commerce channels grew 10% in 2025. We also expanded operating margin by 400 basis points to almost 13% last year, which we expect to improve by an additional 200 basis points in 2026. In China, full year third-party sales decreased 12% in local currency as a result of continued economic weakness and soft consumer demand, particularly in the second half of the year as government subsidy programs were discontinued. The restructuring actions we took in late 2024 and expense management drove profitability improvement of 130 basis points, despite lower sales as the team executed well in a challenging environment. I'll now turn the call over to Chuck, who will provide more details on our full year and fourth quarter performance. Thank you, Steve, and good morning, everyone. We delivered sales of $3.8 billion in 2025, a slight increase over last year. 2025 earnings were $3.85 per share compared with adjusted earnings of $3.73 per share in 2024. Turning to slide five, full year sales in the North America segment of $3 billion increased slightly compared to 2024. Pricing actions and higher boiler and commercial water heater volumes were offset by lower volumes of residential wholesale water heaters. North America segment earnings of $728 million increased 2% compared with 2024 adjusted segment earnings. Segment margin was 24.4%, an increase of 20 basis points year-over-year. The higher segment earnings and segment margin were primarily driven by improved profitability of our water treatment business and higher commercial volumes. Moving to slide six, Rest of the World segment sales of $880 million decreased 4% year-over-year, primarily driven by lower sales in China that were partially offset by 13% sales growth in our legacy India business and Pureit sales of $54 million. Rest of the World segment earnings of $76 million were flat to 2024 adjusted segment earnings as the impact from lower sales in China was offset by the benefits from our 2024 restructuring actions and other cost-saving measures. Segment operating margin was 8.7%, an increase of 40 basis points over 2024 adjusted segment margin. Please turn to slide seven. Turning to fourth quarter performance, we delivered sales of $913 million in the fourth quarter of 2025, flat to the same period in 2024. Earnings in the fourth quarter were $0.90 per share, a 6% increase over adjusted earnings of $0.85 per share in the fourth quarter of 2024. Please turn to slide eight. Fourth quarter sales in the North America segment increased 3% to $714 million compared to the same period in 2024, primarily as a result of pricing benefits. North America segment earnings of $165 million increased 7% compared to 2024. Segment margin of 23.1% increased 70 basis points compared to last year's adjusted segment margin. The higher 2025 segment earnings and segment margin were primarily due to pricing benefits and actions taken to improve water treatment profitability, which were partially offset by higher input costs. Moving to slide nine, fourth quarter, Rest of the World segment sales of $206 million decreased 13% year-over-year, primarily driven by lower sales in China. Organic India sales grew 18% in local currency in 2025, and Pureit contributed $8 million to sales in the quarter. Rest of the World segment earnings and segment margin of $16 million and 7.8% respectively in 2025 compared to adjusted segment earnings and adjusted segment margin of $19 million and 8.1% in 2024. The lower segment earnings and segment margin compared to the prior period were primarily due to lower sales in China, partially offset by the benefits of our 2024 restructuring actions and other cost-saving measures. Please turn to slide 10. We generated strong free cash flow of $546 million during 2025, a 15% increase over 2024, primarily driven by lower year-over-year capital investments, as well as higher earnings and a benefit of a one-time tax adjustment. 2025 free cash flow conversion was 100%. Our cash balance totaled $193 million at the end of December, and our net cash position was $38 million. Our leverage ratio was 7.7% as measured by total debt to total capital. While our 2026 leverage will increase due to the cash we borrowed under a new credit agreement used to acquire Leonard Valve, we continue to have significant available capacity for future acquisitions. Let's turn to slide 11. In addition to returning capital to shareholders, we continue to drive organic growth through the development of innovative product offerings and continuous improvement in productivity, two of our key strategic priorities. Consistent with our portfolio management priority, we continue to actively assess opportunities that meet our strategic and financial criteria. Earlier this month, our board approved our next quarterly dividend of $0.36 per share. We have increased our dividend for over 30 consecutive years. We repurchased approximately 5.9 million shares of common stock in 2025 for a total of $401 million. We continue our strong track record of delivering returns to shareholders. Over the last two years, we have returned almost $1.1 billion to shareholders through dividends and share repurchases. Please turn to slide 12 in our 2026 earnings guidance and outlook. Our 2026 outlook includes an expected EPS range of $3.85-$4.15 per share. The midpoint of our EPS range represents 4% growth over our 2025 EPS. Our outlook is based on a number of key assumptions, including within material costs. Our guidance assumes that steel prices in the full year 2026 will increase approximately 10% compared to 2025. Other material and freight costs, including the carryover impact of tariffs, will also be ahead in 2026. Our guidance assumes no change to the current tariff levels that are in effect today, but we continue to monitor the situation closely. We will continue to invest in our gas tankless offering. As a market leader, we believe that it's important for us to offer best-in-class product in this category. We project our year-over-year impact to our North America margins would be minimal as we continue to build a foundation in this category and gain scale over time. We estimate that 2026 CapEx will be between $70 million-$80 million. We project to generate a strong free cash flow of between $525 million and $575 million. Interest expense is projected to be between $30 million and $40 million, an increase over previous years due to the $470 million of additional debt incurred to acquire Leonard Valve. Corporate and other expenses are expected to be approximately $80 million-$85 million and include advisory fees associated with the Leonard Valve acquisition. Our effective tax rate is estimated to be between 24%-24.5%. Our board has approved 5 million additional shares of stock for repurchase, and we expect to repurchase approximately $200 million of our stock in 2026. We project our outstanding diluted shares will be 138 million at the end of 2026. I'll now turn the call back over to Steve, who will provide more color on our key markets and top-line growth outlook for 2026, as well as a portfolio update. Staying on slide 12. Steve. Thank you, Chuck. Our top-line outlook includes the following assumptions. While we believe that U.S. new home construction remains in a deficit, we project that the softness in new construction will persist into 2026. We assume that proactive replacement remains steady and will be similar to 2025. Based on those factors, we project that 2026 U.S. residential industry unit volumes will be flat to down compared to 2025. Our current projection assumes U.S. commercial water heater industry volumes will increase mid-single digits in 2026 due to a buy-ahead of lower-efficiency non-condensing commercial gas products that are scheduled to be eliminated as part of the October 2026 commercial regulatory change. We assume that 2026 commercial electric industry volumes will be flat to 2025. In addition, our outlook includes carryover from our May 2025 price increases in North America. We project our North America boiler sales will grow 6%-8% in 2026 due to the carryover of pricing benefits and from the continuation of the transition of energy-efficient boilers, particularly as commercial buildings look to improve their overall carbon footprint. We expect North America water treatment sales will grow 10%-12% due to tariff-related pricing benefits as we continue to grow faster than the market through the expansion of our dealer network. In turning to our outlook for China, we foresee continued headwinds in our markets due to continued low consumer confidence, a discontinued government subsidy program, and ongoing competitive intensity. Because of these factors, we project that our 2026 China sales will decrease mid-single digits compared to last year. We expect the first half of 2026 to be particularly difficult as consumer demand remains subdued, and we will face comps from 2025 during which stimulus programs were in place. We anticipate a return to growth in the second half of the year. We continue to manage our discretionary costs prudently in this environment. These decisive actions are designed to protect our profitability and strategically position the business to be competitive during an eventual recovery once market dynamics begin to improve. Our outlook excludes any potential outcomes of the ongoing China assessment. We project our India business, inclusive of Pureit, will have top-line growth of approximately 10% as we continue to leverage brand synergies and introduce innovative new products to grow faster than the market. Based on these 2026 assumptions, we expect top-line growth of approximately 2%-5%. We expect our North America segment margin to be between 24% and 24.5% and Rest of World segment margin to be between 8% and 9%. Please turn to slide 13. 2025 was an exciting year of transition for A. O. Smith, with several leadership changes, including myself. As I began my tenure as CEO last year, we announced three key strategic value creation levers that will guide A. O. Smith's path forward: portfolio management, innovation, and operational excellence. These levers are fundamental to strengthening our industry leadership position, supporting our customers through a dynamic market environment, and delivering long-term profitable growth. We will be providing periodic updates on each of these areas going forward. Today, we'll discuss portfolio management. Over the past year, we have been actively working to transform our portfolio to be better positioned for long-term profitable growth. We have been focused on looking at strategic options in our China assessment to better position our business there to be more competitive going forward and take advantage of the eventual market recovery. The assessment is ongoing, and I am pleased with the quality of discussions we are having with a number of potential partners. We are also continuing to evaluate opportunities to strengthen our core North American water heater and boiler business. Examples of actions we have taken include our recent investments in gas tankless, heat pump, and commercial condensing gas product development and manufacturing capacity. We continue to evaluate broader options for strengthening our leadership position in this space. We have also announced over the past year a number of actions to help scale and improve the profitability of our North American water treatment business. We have been learning much about the space through the acquisition of high-quality businesses we have used as the foundation of this platform and have taken actions to prioritize the channels and further integrate the business to create more synergy and scale. These actions have allowed us to improve the profitability of this business by 400 basis points last year, and we believe additional opportunities are still in front of us to both continue expanding margins and returning the business to higher growth. Finally, we have done work to evaluate expanding into the broader market of water management. This includes the broader ecosystem of moving, controlling, and mixing water across the residential and commercial markets. These products, systems, and solutions often interact with our water technology products that serve as our core business today. Leonard Valve and its portfolio of mixing valves and control units represents our first action expanding into this attractive market opportunity. Please turn to slide 14 as I share more details about our strategic rationale for this acquisition. Leonard Valve is well aligned with our strategic and financial criteria and is an excellent complement to our core water heater and boiler business. It enters us into the attractive water management market with the well-established premium Leonard and Heat-Timer brands. Leonard's connected products, which represents approximately 30% of their sales and growing, expand our digital platform and provide us capabilities to leverage going forward. By broadening and integrating our product offering, we will be able to create new and innovative solutions for our commercial and institutional customers. Along with its higher growth profile, the business also has predictable demand with approximately 80% of the volume associated with repair and replacement. Leonard Valve is also a strong cultural fit as a values-based company with deep market experience, a strong brand and reputation across the industry, and many long-tenured and dedicated employees that have a passion for serving their customers and the market well. Simply put, they do business a lot like how A. O. Smith does business, and I'm looking forward to what we can do together. We expect Leonard Valve to contribute approximately $70 million in sales in 2026. In summary, we are further strengthening our portfolio to deliver greater value to our customers and other stakeholders. We also remain focused on leveraging operational excellence and innovation in addition to portfolio management to drive long-term sustainable growth for A. O. Smith. As we have discussed, while we had challenges to navigate in 2025, we also had meaningful achievements. Highlights include the demonstrated strength and resiliency of our commercial water heater and boiler business. Our leadership in these markets is well recognized and valued by our customers. The significant profit improvement driven by our prioritized approach in North American water treatment. We are now better positioned for long-term growth and profitability. The disciplined cost management actions in China as we look to reposition that business for a more competitive future. The continued double-digit growth of our India business, now complemented by the addition of Pureit to drive continued growth at an even greater scale. And finally, the continued focus on making the necessary investments to ensure our bright future despite the challenging and uncertain market conditions. I am confident that the strategic actions we are taking today, along with our continued disciplined operational approach, will enable A. O. Smith. to build on our leadership position, become more agile, and be better prepared to seize future opportunities. With that, we conclude our prepared remarks, and we are now available for your questions. Thank you. Ladies and gentlemen, as a reminder to ask the question, please press Star one one on your telephone, then wait for your name to be announced. To withdraw your question, please press Star one one again. We're asked that you limit yourself to one question and one follow-up, and then return to the queue for additional questions. Please stand by while we compile the Q&A roster. Our first question comes from the line of Saree Boroditsky with Jefferies. Your line is open. Good morning. This is James from Jefferies. Thanks for taking questions. Good morning. Good morning. Good morning. Yeah. I wanted to ask on the residential guidance here. Your outlook is calling for flattish to down kind of industry volume here for 2026. And I think that this marks kind of third years of flattish to declining volumes, which we haven't really seen for a while. So can you kind of provide me details on what is making this downturn or weakness kind of more persistent? And can you provide more details on what you're kind of seeing in the market generally? Yeah. Thanks for the question. So just overall, as we look into 2026, there's really three components as we think about it, right? We have the emergency replacement, which is very resilient, very reliable, very predictable, and we expect that to continue. We have proactive replacement, which we've talked about being fairly high the last five or six years. We feel like that's pretty resilient at this point. It's been out there for five years at above 30% of total replacement, and so we're expecting that to continue. Where we're seeing some headwind is kind of the new home completions, multifamily and single-family. We see pressure in that as we go into next year. So yes, we've had a couple of years of flat volumes coming off some better growth years earlier that were a little lumpy due to COVID, but the pressure we're seeing next year is really in the new home construction, which we feel like without some stimulus with a lower interest rate or perhaps some velocity on new home sales is going to be a bit of pressure on our top-line residential volumes. Great. Thanks for the caller. I guess I wanted to ask a question on China. I think your guidance kind of implies double-digit decline in first half and then return to growth here. What specific indicators are kind of giving you confidence that it can kind of, what is it, return to growth in second half? Yeah. Some of it is, we've got to work through a period where there was a lot of government subsidies that were driving some demand generation. So that's the challenge we're going to face in the first half of this year as we're now comping against that. The return to growth will be partly driven by, as we move past that phase and we get back to the remodel and refurbishments that still need to happen in China. And part of it is some of our own actions internally to get behind and focus and drive growth in certain areas. Thank you. Please stand by for our next question. Our next question comes from the line of Mike Halloran with Baird. Your line is open. Hey. Good morning, everyone. Good morning, Mike. Hey. So can we first start on just the comments Steve made about increased competitive intensity in the wholesale channel? Maybe just a little bit more context of two things, I suppose. One, what does it mean in terms of what does it mean in terms of the price, share, etc., in that channel? But then secondarily, when you net the two together with the strength you have on the retail side, how is that balancing out all else equal to give both the narrow view on the wholesale, but then draw it back to how that's impacting the cumulative market? Sure. I'll start by saying, as I mentioned, we have meaningful share in both the retail and wholesale side. So from that standpoint, we participate when there's kind of movement between the two. I would say specifically on wholesale, Mike, right? I mean, the dynamic of low new home construction, which we just talked about, and the fact that retail has made some inroads in terms of share gains overall in the industry is just putting pressure on that part of the channel. And anytime you've got kind of pressure that way where there's limited growth or even there's some declines, it just makes it a more competitive environment. And from what we see right now, it's not really driven by a lot of kind of new entrants into the space. It is primarily kind of the leaders that serve the wholesale channel today. It's not new that there's dynamics playing out across the channel in terms of different partners and how that works. I would say it's a bit accelerated a bit the last six months in particular just because of the pressure that's been in that market. I think as we look at it, and this is, again, another area where because we are such a large player in the space, we know all the industry participants, we know all the different distribution partners, we know where those pressures are the greatest, and that's really our focus going forward. Obviously, we're happy with the gains we've made on the retail side and with our partners over there. We think we can do better on the wholesale side to serve that market, and that's what our focus is going to be here right now. Thanks for that. And then maybe just some help with the cadencing through 2026 cumulatively. You have a lot of moving pieces, front half to back half. So any thoughts on how the earnings and revenue should cadence relative to normal seasonality? Any H1, H2 dynamics that are worth mentioning? Any help would be appreciated. Yeah. So yeah, as you look at 2026, Mike, it's going to look a little different than 2024 and 2025. Both those years, 2024 and 2025, on the residential side in particular, on commercial water heating, we had price increases that pulled volume forward in the front half of the year. So 2024 and 2025 cadence on the residential water heating side was 53% in the front half, 47% in the back half. We look at 2026 and expect a much more normalized year, maybe closer to 50/50 or 51/49. So there will be tough comps in the front half of the year, both compared to 2025 and 2024 on the water heating side. As you also step into next year, or 2026, input costs, we're looking at those very closely. Steel should be up. It's expected to be up about 10%. And as you know, we have pretty good visibility into that in our forward view of what our pricing is. We'll have carryover tariffs into the first half of the year, and other costs are also causing a bit of headwind. And then thinking about China, and we've talked a lot in the past about the cadence in China. As Steve said, a bit around, we'll see pressure in the first half of the year because the subsidy program was in place in 2025. This year, actually beginning mid-year last year, was discontinued, and that's why we saw weakness in the back half of this year. We expect that to continue into next year until there's some traction. We think there was some pull ahead into the marketplace and expect some of that traction to come back, perhaps in the second quarter or mid-year. As you know, the first quarter is always a challenge in China because of the Chinese New Year. We expect that to be a little bit more accentuated this year because of the discontinuance of the subsidy program. And then return to, I would say, in the back half of the year for China, kind of their normal, a little bit better in the third quarter, and your outlook expects it to be improved in the fourth quarter, like it historically has been with some of the holiday shopping. Thank you. Please stand by for our next question. Our next question comes from the line of Jeff Hammond with KeyBank Capital Markets. Your line is open. Hey, everyone. Good morning. This is Mitch Moran for Jeff. Thanks for taking my questions. Hey, Mitch. First, I was just wondering if you could give a bit more color on Leonard Valve, their go-to-market strategy, what end markets they plan, and maybe how much growth, the $70 million in sales you're expecting this year, what growth rate that reflects. Thanks. Yeah. In terms of end markets, they're very strong in kind of the commercial markets, which was appealing to us. In some ways, with the Heat-Timer controls business, it's very much a spec-in-driven business, very similar to our Lochinvar business. In fact, we show up on a lot of the same spec sheets together. So there's a similar go-to-market model that way. And there's just overlap in a lot of the channels, both in the representatives who take our products to market and in distribution as well. So it's close to our categories in that way. And then on the actual way the product is used, it interacts in the ecosystem similar to our product. So it's down in the mechanical rooms where our products are often found. And I think that similar trades and contractors operate with the product. From that standpoint, it's a very close adjacency in terms of product expansion. I think it's what's got us excited strategically that there's both ways we can work together and serve the market better and how we go to market, but also ways in which we can innovate and find ways that our products can interface and create better solutions for our customers. As far as growth rate, the business has been growing double digits. In that 10% range, it's kind of baked into how we think about the growth rate, largely driven by the digital portion of the market that they serve. Great. That's helpful. And I know there's a lot of moving pieces around price costs just with tariffs and lapping price increases and whatnot, but can you maybe just give some thoughts about how you expect price costs to trend through the year? Yeah. I mean, Steve had comments around the competitive nature of what's happening in the marketplace today. We certainly also commented that we have some carryover pricing that we expect to carry over in the next year. And historically, I'll say we do a really good job of protecting our price-cost relationship. So we do expect that to continue over time. But also historically, we generally see some fade. We'll be watching that closely. I'll just kind of say that we're very committed to making sure in the competitive environment that we keep our customers competitive, and we'll be focused on that. Thank you. Please stand by for our next question. Our next question comes from the line of Bryan Blair with Oppenheimer. Your line is open. Thank you. Good morning, everyone. Good morning, Bryan. That'd be great too, I guess, following up on Leonard Valve. It'd be great to hear a bit more about the buildout and prospects of your water management platform. I guess, how should we think about TAM expansion given the new products and applications that are involved there or potential there? And in what ways is LVC foundational to the buildout? And again, given the right opportunities, how aggressive would your team like to be on incremental M&A? I mean, we're excited about the way we're defining kind of the water management market. As I mentioned, it's kind of thinking about how does water move, mix, get controlled through the ecosystem of residential and commercial units. We play an important part in that today with the categories of our water heaters and boilers. And I think there's a lot of other products that help make that happen. And so we're still early in our journey of kind of shaping up where the right places are for us to participate. So your question around TAM, I think we're excited about that it does open us up to bigger market opportunities. We've got what we think is an exciting and healthy pipeline of where we could go to do that. Obviously, when it comes to acquisition, there's a lot of things that have to come together to make that work. But we think our reputation in the industry helps us because we're a good spot for good high-quality companies to kind of come together around and how we serve the market. And I think there'll be as near-term opportunities as we think about how do we go together into the marketplace, provide these products that are well-established categories today. And then longer term, I think it creates more growth for us because it allows us new ways to create value for our customers. Today, we do that in a meaningful way by driving more efficiency and performance in the water heater and boiler products that we serve the market. But if you think about how commercial customers use our products and are thinking about things like energy efficiency more broadly, having a way to serve the market with an ecosystem, I think, is a way to create more value. Okay. That makes a lot of sense. And you noted the strategic assessment of China is ongoing. So we know there isn't a definitive update, but you did mention a number of potential partners. I was curious if you could offer any other color on direction or whether options or considerations have narrowed and whether there's any connection to any of the incremental turnaround actions that are underway now. Yeah. I'd say we're moving with urgency because we know when we talk about an assessment of the business, right, we're still running the business, and we have employees and customers that we want to provide some confidence and certainty to. But I would say while we do that with urgency, we're also being thoughtful to do it in a right way. Our goal, again, is to make sure that we set the business up to be as competitive as possible going forward. I can't get into the specifics of the folks that we're necessarily working with, but we are learning, I think, a lot about other options out there on what we can pursue. I think, as I mentioned, the quality of the conversations have been terrific. Our local team in China has been very active and involved in that to make sure we're thinking about things the right way. We'll continue to move that forward, and we'll continue to update you guys as we learn more. But at this point, we don't have anything in terms of how we've narrowed the scope in terms of what potential options and outcomes could come from it. But I'm pretty happy that the process itself has been very helpful for us. Thank you. Our next question comes from the line of David MacGregor with Longbow Research. Your line is open. Yes. Good morning, everyone. I guess I want to start by talking about. Good morning. Good morning. I wanted to begin by asking you about the water treatment business. You called out the 400 basis points of margin improvement in 2025, which is quite an accomplishment. Maybe you could maybe talk a little further about just sort of the composition of that improvement. I guess as well, just where now in terms of where those margins go? At one point, I think the goal had been to grow those margins at about 100 basis points a year through a variety of different initiatives. How are you thinking now about kind of multi-year annual profitability growth in that business? Yeah. We like the space. And for A. O. Smith, we entered in it almost eight years ago because we understood the mega trends, and we felt like there was a lot we could bring into the space in terms of how we run our businesses. To kind of build the platform, we made a number of acquisitions. And I think what we've done recently is we've now taken kind of a state of what have we learned through the businesses that we bought and through running the businesses. And that helped define for us a little bit of our journey and our path going forward. And as we've been talking about for the last year or so, part of it was prioritizing which part of the market we wanted to really focus on and invest in. That's been obviously a little bit of a growth drag for the business as we've decided to deprioritize some things. The end of 2024, we took some restructuring charges to help reorient that business. Now I think what we're excited about is we know the spaces in the market where we really want to focus and play. That's helping us drive a more profitable part of the business. Also, the growth in the spaces where we want to play, we're very pleased with. Then also along with that, it's the natural path of just sort of learning how to kind of integrate the businesses, take advantage of levers you can pull to create value by doing that. That, I think, is a journey we're still on. Going forward, I think, like I said, I think we're focused on where we want to play. We think we can continue to really add value into the water treatment market. We're excited about where this business can go. We're still very excited about the market opportunity overall. We think we can continue, as I've mentioned in my prepared comments, to drive meaningful growth with this business as well as continue to expand margins as we scale and as we continue to pull levers on integrating the business. Yeah. Can you offer any sort of thought on where those margins might be today versus sort of the North American segment averages? Then I have a follow-up. Yeah. I mean, so the margins today at 400 basis points expansion kind of takes you into the zip code of about 13% operating margins. And you know our North America margins at 24.4% this year. So expanding it to another 200 basis points gives us a 15% margins. And we like the fact that we're kind of back to that mid-teens digits and looking for opportunities for M&A to match with the business to continue to grow the business and maybe have opportunities to enhance that margin profile through an M&A transaction. Right. Well, congratulations on that progress. As a follow-up, I guess I just wanted to stay close to the water treatment business and just ask for any thoughts you've got on what you're seeing in the way of consumer demand patterns and how that may be evolving and how that's influencing your guide on 2026 for water? Yeah. I mean, I think overall, that business is closely connected to consumers. So there's, I'd say, some caution that we see from consumers. In some segments of the market, it's considered a discretionary spend item. So from that standpoint, I think there's maybe cautiousness as we enter 2026. But overall, we still see it as growth because we see the category still growing. We still see penetration opportunities, and we still see our opportunity to build out our own dealer network and grow even beyond the market. Thank you. Our next question comes from the line of Scott Graham with Seaport Research Partners. Your line is open. Yeah. Hi. Good morning. I wanted to maybe get a little bit more color from you guys on maybe beyond what you provided with the initial question on this competition in distribution wholesale. And what I'm wondering is, are you kind of saying that residential water heaters in that channel are now kind of more jump ball, or is it that maybe some of the higher-end stuff because of the pros, that that is what is maybe under a little bit of pressure? So in other words, if wholesale is half of residential approximately, is that entire half an area of concern now, or is it less? No. I don't think the characterization of a jump ball is what's happening. I would characterize it more of a lot of industry dynamics that have always been out there, right? You have channel partners that are dedicated to certain brands, and we partner very closely with them to help reach and serve the contractors and trades groups well. Then there's others that carry multiple brands, and there's some share shift that happens through those dynamics. I would say those are the dynamics. They've always been in that part of the market. There's still the dynamics playing out today. What we find is oftentimes when there are movements around share, there's typically reactions to those movements, and those take time to play out. And I think where we are right now in the wholesale market, like I said, it gets a little bit more intense when the market itself is not growing because the new construction builds aren't there. The wholesale channel primarily is the mechanism that serves that part of the market. There's a little bit of pressure, as I mentioned, coming from the retail players who are really looking to make inroads with the professionals. So that intensity's dialed up a little bit, but the dynamics itself are not new. And I'd say they're ones that we typically know how to navigate. And we do it working closely with our customers. And like I said, as there are actions and movements that happen, there's typically reactions. And over time, those things work their way out. That's our focus of what we're going to navigate here when we talk about the start of 2026. Okay. Thank you for that. I want to maybe just ask a follow-up question on capital. And with the Leonard Valve acquisitions, it's clearly more of a pivot to, Stephen, what you said about water management. And so what I'm wondering here is that with this pivot, and I know you found Leonard Valve, and that's wonderful, but for many years, the focus was on water treatment pretty much as a silo. And I'm just wondering how the pipeline is in water management with Leonard now done. Is that something that you have to build, or have you been building a pipeline there? I think it's a pipeline that's been pretty visible for us for a while. I mean, I think when you're in kind of the plumbing space, you know who the players are. Like I said, there's a lot of overlap on how you go to market. There's a lot of overlap in terms of how you serve contractors. So it's not a starting-from-scratch kind of pipeline. I think that's been visible to us. I think the focus and attention we're putting on it is now kind of dialed up because there's a lot of different options of ways we could go. As you mentioned, we've been very focused on building out the water treatment platform. And this is a pivot that's not us walking away from water treatment. In fact, we think that's a very attractive growth platform that we're going to continue to invest in. But we do feel like there's more opportunity for us as a company. And we love our core water heater and boiler business today. It generates great cash flow. It's very resilient. We're a market leader in that space. And we want to think about how do we leverage that to actually find more growth opportunities where we participate. That's what we're trying to do with our water management effort. I think we know who the players are out there. But as I mentioned, with any acquisition strategy, there's a lot dependent upon what's available and when. And I think we can be competitive there. We're also going to remain disciplined in our approach on how we go after it. Thank you. Our next question comes from the line of Tami Zakaria with JP Morgan. Your line is open. Good morning. This is Ethan on the phone. Thank you for taking my question today. I wanted to ask for a little bit more color on India. It seems like you guys have delivered strong growth with the Pureit integration adding incremental revenue. Can you share a little bit on the roadmap for scaling India over the next three to five years and maybe any details on potentially further M&A within that area? I think right now, our primary focus is on how do we take advantage of the Pureit addition to our portfolio. India is a market that we've invested there significantly to get the business up and running. Obviously, the Pureit was an additional investment to that business. We've got a local team there that really understands the local market. We think we've got a lot of opportunities now kind of organically, if you will, with the combination of Pureit and our A. O. Smith business. It's a market that requires a lot of high-paced innovation, bringing new products out to market. That's a big driver of how we've been able to grow double digits for many years in a row. That's what we're now going to do at a bigger scale, as you mentioned. That's our primary focus. Ultimately, over time, does it mean more acquisitions or not? I think that still has to play out. But our focus right now is primarily running the business we've got. Thank you. And looking more on the margin side for internationals, with India continuing to scale up, can we kind of forecast out strength within operational improvements similar to this year out into maybe 2027 or looking more on a longer-term scale with China potentially improving in the second half of this year? Yeah. This is Chuck. I would say a little bit more longer-term scale. I mean, we're still investing in growth in India. We love the fact we're growing double digits together with Pureit, bringing those businesses together. India is still in the growth profile. China, I think it's a little early to call out much margin improvement. We're very pleased with how China performed this year in the fourth quarter, particularly. The restructuring actions that we took in 2024 are paying off. And the team managing through a tough top line did a very good job of managing the margin. So margin improvement in both businesses, I think, will take a little bit of time. And we'll have to see how that plays out, particularly the economy in China and as we grow scale in India and invest in growth. Thank you. Please stand by for our next question. Our next question comes from the line of Nathan Jones with Stifel. Your line is open. Morning, everyone. Hey. Morning. Morning. Follow-up on steel prices. You guys said you're expecting steel prices to be up 10%. Can you just clarify what that means? Is that like average 2026 over average 2025, or are you expecting steel prices to increase from where they are now? And then does that imply that you need to get more price in order to cover some of these inflationary pressures along with some of the other things that you mentioned are still inflationary pressures? Yeah. Steel pricing has gone up, right? So we've seen kind of a gradual increase in the index, which does drive what we pay on a 90-120-day leg. That 10% up is the year-over-year average. I would say if you kind of box it in, it's 10% 2026 over 2025 as well as 10% up quarter-over-quarter 2025. So we'll see steel. We project steel to still rise a bit as we go through the back half of the year, but on average, up 10% year-over-year. As far as price-cost relationship, we do have carryover tariffs. We've got other costs that are going up. I'll just kind of point to kind of our historical ability to be able to, over time, kind of maintain and protect our price-cost relationship and our margin profile. Okay. And then my follow-up question, the slide on Leonard Valve has 2022 to 2025 revenue CAGR of double digits. I think you said it was about 10%. There was a lot of inflation, and I assume that there's a lot of metal in a lot of their products as well. And a fair amount of that kind of growth was probably driven by price as well. Could you maybe just comment on what you think the long-term growth of that business is, kind of the volume that they can generate rather than what I just assume is some price-driven growth that you've seen there over the last few years? Thanks. Yeah. Actually, the biggest source, and Chuck mentioned it, of the growth in Leonard Valve has been the digital transition of mixing valves. So it's a technology upgrade that's happening that's adding a lot of value in the marketplace. And so more so than just a pure kind of pass-through of cost pricing, that's been the big driver of the growth over the last few years. And it was one of the real appealing characteristics for us to both get more involved on that digital upgrade, but also bring that kind of capability and thinking into the broader ecosystem of solutions that we can serve our customers. So from that standpoint, we think it's a growth that has still more momentum to it. And just to frame, I mean, about 30% of their volume or their revenue is digital and connected products. It's a base that we've looked to grow over time. Thank you. Please stand by for our next question. Our next question comes from the line of Andrew Kaplowitz with Citi. Your line is open. Hey. Good morning, everyone. Good morning. Good morning. I know that the strategic review is ongoing in China, as you said, but restructuring does seem to be helping stabilize the margin, the business. So if, for instance, the market doesn't come back as you expect in the second half, do you have more restructuring that you can do? How do you think about the ability to sort of maintain margin if the market is still difficult? Yeah. I mean, look, over long periods of time, right, the answer in China is not continuing to restructure and cut costs and not be able to grow the business. So we're doing what we think is necessary to protect the business today. And we're making, I think, smart decisions around where we do cut. There's a lot still to play out in terms of how the market will kind of respond, especially as we start to lap these subsidies. So we're watching that carefully. Obviously, the strategic assessment we're doing might change kind of how we approach our business in China. That's the high-quality discussions that we're having with partners. Whether there's more structuring in the future, I think we'll evaluate that as we go. I think ultimately, though, our goal is we need to find a way for the business to be even more competitive than it has been going forward. Eventually, the market will recover. When that is, I think, is still obviously a big uncertainty. We'll do what we need to do to make sure we can maintain the competitiveness of the business there financially. Ultimately, we need to find a strategic path forward that allows the business to grow again. It's helpful. And then your boiler business has continued to be pretty solid. And I think you have a good forecast for 2026. So maybe just one more color on the health of that market. I know your high-efficiency boilers are doing well. But is that mostly what this is, or is it the market strength overall? It's good market. But I would say our Lochinvar brand, and it is the, I think, premier brand in that marketplace. We have great technology, as we've talked about, on the high-efficiency end. It's a great product. So it's a little bit of both. It's been a strong market, but also, I think we're performing well and even taking share in that market with the strength of our product portfolio. Thank you. Ladies and gentlemen, I am showing no further questions in the queue. I would now like to turn the call back over to Helen for closing remarks. Thank you, everyone, for joining us today. Let me conclude by reminding you that despite many challenges, A. O. Smith achieved record EPS of $3.85 in 2025. 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: Citi on February 19th, Northcoast on March 12th, and JP Morgan on March 17th. Thank you and enjoy the rest of your day. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.