Hello, everyone, and welcome to Ferguson's third quarter results conference call. My name's Lydia, and I'll be coordinating your call today. I'd now like to turn the call over to Brian Lantz, Vice President of Investor Relations and Communications. The floor is yours. Please go ahead. Good morning, everyone, and welcome to Ferguson's third quarter earnings conference call and webcast. Hopefully, you've had a chance to review the earnings announcement we issued this morning. The announcement is available in the Investor section of our corporate website and on our SEC filings webpage. A recording of this call will be made available later today. I want to remind everyone that some of our statements today may be forward-looking and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected, including the various risks and uncertainties discussed in our Form 10-K available on the SEC's website. Also, any forward-looking statements represent the company's expectations only as of today, and we disclaim any obligation to update these statements. In addition, on today's call, we will also discuss certain non-GAAP financial measures. Therefore, all references to operating profit, operating margin, diluted earnings per share, effective tax rate, and earnings before interest, taxes, depreciation, and amortization reflect certain non-GAAP adjustments. Please refer to our earnings presentation and announcement on our website for additional information regarding those non-GAAP measures, including reconciliations to their most directly comparable GAAP financial measures. With me on the call today are Kevin Murphy, our CEO, and Bill Brundage, our CFO. I will now turn the call over to Kevin. Thank you, Brian, and welcome, everyone, to Ferguson's third quarter results conference call. On today's call, I'll cover highlights of our third quarter performance. I'll also provide a more detailed view of our performance by end market, customer group, and our growth initiatives before turning the call over to Bill for the financials. I'll then come back at the end and give some closing comments before Bill and I take your questions. Our associates continue to take care of our customers, outperform the market, and drove strong growth in the third quarter. Sales of $7.6 billion increased 4.3% over prior year, driven by organic growth of 5% and acquisition growth of 1%, despite one fewer sales day and foreign exchange, which had a combined 1.7% negative impact. We delivered a 31% gross margin, which strengthened sequentially by 130 basis points. This was driven by our actions to better capture the value we deliver to customers while maintaining market share gains as well as the impact from moderating deflation. Strong volume growth, gross margin improvement, moderating deflation, and the early benefits of streamlining our business drove profitable growth. Operating profit increased 6.1%, and operating margin expanded 20 basis points to 9.4%. Diluted earnings per share increased 7.8% over the prior year to $2.50. We continued to execute our capital priorities, deploying approximately $690 million during the quarter, including completing three acquisitions and returning $417 million to shareholders through share repurchases and dividends. Our balance sheet remained strong, with net debt to EBITDA of 1.2 times. While we're in a dynamic and uncertain environment, we remain confident in our markets over the medium term. We continue to balance investment in key strategic opportunities, leveraging multi-year tailwinds in both residential and non-residential end markets as we look to support the complex project needs of our specialized professional customers. Turning to our performance by end markets in the U.S., net sales grew 4.5% as we drove volume growth with moderating headwinds from deflation. The residential end market, which comprises approximately half of U.S. revenue, remained subdued. Our teams grew revenue in our residential end market by approximately 2% in the quarter, primarily driven by our HVAC growth initiatives. Non-residential end markets, representing just under half of U.S. revenue, saw stronger growth than residential end markets, with increased activity on large capital projects. We continued to grow share with non-residential revenue growth of approximately 7%. We delivered mid to high single-digit growth across commercial and industrial end markets, with low double-digit growth in civil infrastructure. Our intentional balanced end market exposure and focus on key growth initiatives continue to position us well in both the current environment and well into the future. Moving now to revenue performance across our customer groups in the United States. Our HVAC customer group continues to deliver strong growth with an increase of 10% in the quarter. I'll expand on our HVAC growth investments in a moment. Residential trade plumbing revenues declined 1%, broadly consistent with recent quarters. The business faced continued headwinds in new construction and ongoing price deflation, while repair, maintenance, and improvement is performing better. We've recently merged residential building and remodel and residential digital commerce customer groups into a unified brand called Ferguson Home. Ferguson Home provides a seamless omnichannel experience for our customers. Our focus on the higher-end project is driving growth despite the overall softness in broader remodel activity. Strong Waterworks growth of 12% in the quarter was driven by activity in public works, municipal, and our broader diversification efforts. Both Waterworks and Commercial Mechanical continue to see strong activity on large capital projects. Commercial Mechanical revenue grew 10%, and our open order levels continue to grow. Our industrial, fire and fabrication, and facility supply customer groups delivered a combined net sales decline of 1% as commodity deflation continued, particularly in our fire and fabrication business. Collaboration across multiple customer groups and our unique position in the market continue to be an advantage. Despite near-term headwinds, we continue to be pleased with the results of our four key growth areas. The third quarter performance shows ongoing returns from these multi-year investments. HVAC revenue up 10% in the third quarter reflects our focus and investments to expand our HVAC capabilities both organically and through acquisitions. Our multi-pronged approach, which includes leveraging the synergy between our residential trade plumbing and HVAC customer groups, continues to drive market outperformance. We've completed more than 550 counter-conversions to serve our dual-trade contractors. Our HVAC presence continues to grow geographically through both organic expansion and acquisitions. We're addressing the needs of the market by partnering with a variety of HVAC equipment vendors to offer our customers a range of choices, including our own Durastar brand. Waterworks revenue grew 12% in the quarter. We're committed to diversifying our waterworks business to create a best-in-class capability set that addresses the nation's infrastructure needs. We provide solutions for water, wastewater, and stormwater management, as well as erosion control, urban green infrastructure, treatment plant construction, meters, and metering technology. Our unique approach to large capital projects, bringing together the capabilities of underground Waterworks infrastructure, commercial and industrial pipe valve and fitting, and fire protection, create a compelling solution for large capital projects and has been a driving force behind non-residential growth of 7% in the quarter. We believe our early alignment with owners, engineers, and general contractors on these projects, combined with our deep contractor relationships, our scale, and our ability to offer a suite of value-added solutions, uniquely positions us for success in these projects. The February launch of Ferguson Home represents another compelling example of the value our multi-customer group approach brings to the market. We spent years developing best-in-class experience for our showroom and our digital platform for new construction, light remodel, and decorative markets. Ferguson Home is the unified brand of residential building and remodel and residential digital commerce, fully integrating our showroom and digital channels to offer our customers a seamless project-based experience. Our scale, delivered locally with the cohesiveness of our customer groups, is a true competitive advantage. We continue to invest in key growth areas that capitalize on multi-year tailwinds and drive outperformance. I'll now pass you to Bill, who discussed the financial results in more detail. Thank you, Kevin, and good morning, everyone. Net sales of $7.6 billion were 4.3% ahead of last year. Organic revenue increased 5%, with an additional 1% from acquisitions, partially offset by 1.7% from one fewer sales day and the adverse impact of foreign exchange. During the quarter, we saw deflation moderate with the pricing environment broadly flat. We saw improvement in finished goods pricing, offset by continued weakness in certain commodity categories. While we have seen some instances of pull-forward buying activity from customers in the quarter, this is difficult to quantify, and we do not believe this has had a material impact on the overall performance. Gross margin of 31% increased 50 basis points over last year, driven by specific actions taken to better capture the value we deliver to customers while also maintaining market share gains, as well as the positive impact of moderating deflation. We tightly managed operating costs, with the growth being driven by higher volumes, cost inflation, and continued selective investments in core capabilities for future growth. As a result, operating profit of $715 million was up 6.1% on the prior year, delivering a 9.4% operating margin with 20 basis points of expansion over the prior year. Diluted earnings per share of $2.50 was 7.8% ahead of last year, driven by operating profit growth and the impact of share repurchases. Our balance sheet remained strong at 1.2 times net debt to EBITDA. As we discussed in the second quarter, we took targeted actions to streamline operations, enhance speed and efficiency to better serve our customers and drive further profitable growth. Consequently, we incurred a non-recurring business restructuring charge of $68 million, principally related to severance costs. These actions reduce complexity in the organization and will speed up decision-making. We expect the changes to deliver approximately $100 million of annualized cost savings. Moving to our segment results, net sales in the U.S. grew 4.5%, with an organic increase of 5% and a 1% contribution from acquisitions, partially offset by a 1.5% impact from one fewer sales day. Operating profit of $726 million increased $41 million over the prior year, delivering an operating margin of 10%. In Canada, net sales were 0.3% below last year, with organic growth of 3% and a 2.8% contribution from acquisitions, offset by a 4.4% adverse impact from foreign exchange rates and a 1.7% impact from one fewer sales day. Residential activity has continued to be soft, with non-residential activity remaining more resilient. Operating profit was $8 million in the quarter, $2 million above the prior year. Turning to our year-to-date results, our associates delivered volume growth in a period challenged by commodity-led deflation and subdued end markets. Net sales were 2.7% ahead of last year, with organic growth of 2.2% and an acquisition contribution of 1.1%, partially offset by 0.6% from the adverse impact of one fewer sales day and foreign exchange rates. Deflation was over 1% year-to-date. Gross margin was 30.3%, down 10 basis points. Operating profit of $1.9 billion was down 4.9% compared to the prior year, delivering an 8.4% operating margin. Diluted earnings per share of $6.48 was down 3.6%. Next, our cash flow performance. EBITDA of $2 billion was down approximately $80 million on prior year. Working capital investments of approximately $100 million were above the prior year, driven by investments in inventory, along with an increase in receivables driven by sales growth. Interest and tax were down approximately $110 million on the prior year, driven by timing. As a result, operating cash flow was $1.4 billion. We have continued to invest in organic growth through CapEx, investing $235 million, slightly down in the prior year, resulting in free cash flow of $1.15 billion. Turning to capital allocation, as previously mentioned, we invested $100 million in working capital and $235 million into CapEx to drive further above-market organic growth. Our board declared an $0.83 per share quarterly dividend. This is consistent with the second quarter and represents a 5% increase over the prior year, reflecting our confidence in the business and cash generation. We continue to consolidate our fragmented markets through bolt-on geographic and capability acquisitions. We completed three acquisitions during the third quarter, including Independent Pipe and Supply, a leading commercial mechanical business in the Northeast; Light Innovations, a residential building and remodel showroom in Arkansas; and National Fire, a market-leading fire and fabrication business operating across Eastern and Western Canada. We have now completed five acquisitions year-to-date, and the pipeline remains healthy. Finally, we are committed to returning surplus capital to shareholders when we are below the low end of our target leverage range of one to two times net debt to EBITDA. We have returned $759 million to shareholders via share repurchases year-to-date, compared to $421 million in the equivalent prior year period. This year, we have reduced our share count by approximately 4.1 million and now have approximately $1.1 billion outstanding under the share repurchase program. Next, I will cover our updated guidance for fiscal 2025. We are pleased with our continued market outperformance and solid growth in the quarter. Our markets remain dynamic and uncertain, but given the strong performance in the quarter, we are updating our full-year guidance. We now expect low to mid-single-digit revenue growth, up from our prior expectation of low single-digit growth. We expect an operating margin range of 8.5%-9.0%, up from our prior expectation of 8.3%-8.8%. Interest expense is unchanged at between $180 million and $200 million. Our effective tax rate is expected to be approximately 26%, and we've updated our CapEx estimate to between $300 million and $350 million to reflect the pace of expected capital deployment. We believe we are well-positioned as we head into the last quarter of our fiscal year. Thank you, and I'll now pass you back to Kevin. Thank you, Bill. Let me thank our associates who continue to take care of our customers, outperform the market, and are driving strong results. Our ability to serve and support the complex needs of our specialized professional customers continues to allow us to gain market share in a challenging environment. As announced last quarter, we implemented measures to better balance market share gains and capture the value we deliver to our customers. Additionally, we took actions to streamline our business and enhance speed and accountability by reducing complexity and simplifying management structures. We are pleased that these efforts, coupled with deflation moderating a quarter ahead of our expectations, have resulted in operating profit growth and operating margin expansion. We continue to invest in our key growth areas, including HVAC, waterworks diversification, large capital projects, and the recently launched Ferguson Home. Our third-quarter performance shows continued returns from these multi-year investments. We believe our markets remain attractive over the medium term, and we continue to invest in our customer-facing associates and our capabilities to drive growth. We're efficiently delivering scale locally to enable our associates to provide exceptional service to our expert customers on their projects. Thank you for your time today. Bill and I are now happy to take your questions. Operator, I'll hand the call back over to you. Thank you. For our Q&A, if you'd like to ask a question, please press star one on your telephone keypad now. If you change your mind, press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from John Lovallo with UBS. Please go ahead. Your line's open. Good morning, guys. Thanks for taking my questions. The first one is, organic volume was 5% Year-over-Year in the U.S., and it's accelerated now for the past few quarters. I mean, how much of this strength would you attribute to kind of the internal initiatives versus an improving underlying market, and how sustainable are these levels of organic growth as we move forward? Yeah, John, thank you, and good morning. We're obviously pleased with 5% organic growth. I think if you look back at what we've been trying to accomplish, especially in the non-residential side of the world, it is bringing scale benefits and a multi-customer group approach to large capital projects. That large capital project landscape is really the strength behind the non-residential market because the rest of the traditional non-res market is still in a challenging space. As we've said historically, we think that that market starts to step through 2025, peak in 2026 and 2027. I think we're seeing a little bit of that play through, as well as the team delivering value for not only the contractor, but also across contractors from water, wastewater, stormwater, through commercial mechanical piping, through fire suppression. We're pleased with that on the non-res side. On the residential side, it really has been a focused effort to expand our HVAC capabilities across the nation, make sure that we can offer the best experience for a dual-trade contractor inside of our counters, but also with our associate base who deliver real purity of purpose for the unique needs of the HVAC and trade plumbing contractor, but at the same time, giving them one place to shop. From that perspective, we think we've been able to outperform the market, and we're really pleased with those initiatives. Understood. And then on the gross margin, 31% in the quarter, that was particularly strong. I think up about 50 basis points Year-over-Year on sales that were up about 4%. I mean, was there any mixed impact to call out there, and how should we sort of think about gross margin from the third quarter to the fourth quarter, given the expected increase in sales? Yeah, John, this is Bill. Thanks for the question. Not a significant mixed impact there, although given the strength of the non-res businesses, as we've quoted in the past, that can have a little bit of a headwind on overall gross margin. Given the actions that we took in Q2, if you go back to Q2, when we printed just slightly under a 30% gross margin, we had talked about some actions we had taken across our teams with our price matrix, with our sales force, etc., to ensure that we were appropriately charging for the value that we provide in the market. We had talked about the fact that we had seen early returns of those actions as we exited Q2 and into Q3. We were pretty pleased that those continued to play through into Q3. Those actions, coupled with the fact that deflation did moderate a bit ahead of our expectation in terms of timing, enabled us to put up a very strong gross margin in Q3. We would anticipate gross margins will remain above 30% as we step through Q4. It is still a very uncertain environment, and there are a lot of factors out there that are out of our control in terms of tariff announcements and price increases. We feel pretty confident that our margins will be quite solid in the fourth quarter. Okay. Thanks very much, guys. Thank you, John. Thank you. Our next question comes from Phil g with Jefferies. Please go ahead. Guys, congrats on a really strong quarter. You really put together the volume piece and margin. So congrats once again. Thanks, Bill. I guess on the commercial industrial side, really outsized growth. I guess we shouldn't be surprised since you've called out share gains and strong bidding activity for some time. Really nice to see that inflected in a much bigger way. Just given the longer lead time, just give us some color on how bidding activity is progressing, and then how do you see this progression? I think you said perhaps 2026 peaking. Should we expect the Year-over-Year percentage kind of accelerating here? Some of the drag you kind of called out last quarter on margins, is that going to dissipate as we kind of go into this next phase of growth? Yeah. Phil, when we've called out the margin profile for large capital projects, we've called out it potentially could be a headwind on gross margin, but the cost to serve should be appropriate such that we can drive similar operating margins. When you look at the bidding activity that's out there, we still see good strength, although it may have changed slightly in terms of what that large capital project landscape looks like. As you can imagine, the data center activity remains strong. As we look across that funnel of opportunities, the overall landscape appears to continue to grow. Our open order volumes in the commercial mechanical space, as well as overall large capital projects, continue to grow. Although we keep our eyes open for any pause in activity or any cancellation of projects, we still feel good about what's going on there. That is really the strength in the non-residential market, as the traditional side of the house is still in a challenging spot. Super. Kevin, you kind of alluded to this, and perhaps Bill as well, but anything but predictable on the tariffs front? We got some news yesterday on steel and aluminum. How are your suppliers managing price increases in that backdrop? I guess, more importantly, how are you managing price costs and the impact it could have on gross margins? I know plumbing, lighting, a lot of that's coming from China. When you kind of think about that dynamic, encouraging to hear gross margins still pretty good in the fourth quarter, but kind of give us a little perspective on that front. How are you managing price gaps versus big box? Some of the retailers have actually talked about pushing back on tariff-induced price increases from some of the suppliers. Yeah. Maybe if I take a step back, as you know, we're coming off of six consecutive quarters of deflation. Although this is an extremely dynamic environment, and as you suggested, the landscape really evolves and changes by the day. Our pricing strategy, though, hasn't changed. As you know, we work really to compete not solely on price, but really on the value that we provide to what is a project-based business. As we suggested last quarter, the industry was moving back to an annual price increase environment, and we knew that was going to happen, and we saw that play through. There is no singular response to how a vendor is going to be approaching both the tariff landscape as well as the overall pricing landscape. As you know, we source product from over 36,000 different suppliers. The industry was moving back to annual price increases as reciprocals were announced. Obviously, there was a wide variety of responses. As reciprocals were paused, some manufacturers pulled back on those increases. If we look forward, we still believe that pricing across the industry will be positive, but it is difficult, if not impossible, to predict what that level is going to look like. For us, what we are going to do is make sure that we are always working with our customers on bidding activity to make sure that we can put the right product for their application so that they can complete their project on time and on budget. Making sure they have got availability as well as the right price and application is paramount to us. That is what our teams are working on every single day on hundreds of line items for projects in every market across the country. That is really the pricing strategy that we have always adopted and will continue to adopt. Phil, maybe just to build on that, as Kevin said, we believe pricing is moving in a positive direction or moving up across the industry. To date, roughly two-thirds of our branded suppliers have announced some sort of increase. That is across the industry. I tell you, on average, those increases, and there is a wide variety of responses, as Kevin suggested, but on average, those have been broadly in the mid-single-digit price increase range. It is hard to say, to Kevin's point, where that is going to settle. I would also just remind you that still, through the third quarter, our commodity basket, as a basket, was still in about mid-single-digit deflation. We have certain commodities that are moving up and certain commodities that are still under pressure. Net-net, as we look forward, we think price is going to move into mild inflation as we step through the fourth quarter. It still remains very much a live-action game and very uncertain at this point. Ninety percent of our revenue is driven through branded suppliers. Those branded suppliers are principally domestic suppliers here in the U.S. You guys probably feel pretty good about managing that price cost, at least in a neutral fashion, and gross margin even positive in this backdrop? We do. Generally, as price moves up, as you've seen in the past, there can be a bit of short-term gross margin expansion. Over the long term, we expect to maintain our gross margins and then durably grow those gross margins based on the value we provide, the services we provide, and charging for that value. We feel good about our ability to manage gross margins through this period. Okay. Really great color, guys. Continue to great work. Thank you, Phil. Thank you. Our next question comes from Sam Reid with Wells Fargo. Your line's open. Awesome. Thanks so much. I wanted to dig a little deeper into Waterworks. Look, the growth here continues to accelerate. You called out a lot of individual buckets behind the strength: wastewater, stormwater, meters, erosion control. Just maybe contextualize any relative outperformers within that group of Waterworks subcategories just so we have a sense as to whether this sort of growth can persist into the fourth quarter. Could you drill down a little bit on how bidding activity looks in Waterworks, particularly for the part of this business that's tied to New Resy? Yeah, Sam, certainly. I guess I'll start with, couldn't be more proud to be associated with our Waterworks team. They have done a fantastic job of diversifying this business over the years. When I started in Waterworks with this company, we were very much a new residential construction company. Today, we have a broadly diversified business that is very good from, yes, residential, yes, traditional commercial, but heavy public works, water, wastewater treatment plant, urban green infrastructure and soil stabilization, and meters and metering technology. That diversification has served us well. We saw good growth on the public works side of the business. We saw good work in water and wastewater treatment plant production, where we continue to invest in capabilities to make sure that we're right for the project. That really has pushed the growth. I have also got to say that their impact on the large capital project, being the first in on those large capital projects, has also been a source of growth. You asked about non-residential new construction bidding activity. I actually have been surprised by the supportive level of residential new construction bidding activity that has happened over the course of the last, call it, 60 to 90 days. Now, that said, that bidding activity does not always translate into projects that are going to be released. Even if those projects are going to be released, it is very difficult to say whether all sections or phases of those new residential projects are going to be released. We are cautiously optimistic as to what that can look like on the new res side. No, that helps a lot. Maybe just switching gears, when you look at the updated guidance, which is great to see the increase, it does imply a fairly wide range of potential outcomes for the fourth quarter on the top line. If you do the math, it shows anywhere from something as low as, let's call it, flat to very low single digits to as high as perhaps low double digits on my math. Could you just frame kind of the upper and lower bounds of those fourth quarter guardrails and sort of what would need to happen to get to the high end and perhaps the low end? Yeah, Sam. You're right. We still have a fairly wide range for the full year implied in that fourth quarter guide, given the low to mid-single digits guide for the full year. That's because we're still in an inherently uncertain time with, as we've already alluded to on the call, many uncertain external variables. With that said, we are expecting a solid fourth quarter from a top line perspective. If you take the midpoint of the range, we're looking at somewhere in that mid-single digit growth range as our likely midpoint. Just trying to ensure that those factors that are out of our control, such as tariff changes or industry-announced price increases that either push forward or roll back in the very near term, it's a bit more dynamic than the typical environment we find ourselves in. We wanted to recognize that with a slightly wider revenue range. But we're expecting a fairly solid fourth quarter from a top line perspective. That helps a lot. I'll pass it on. Thanks. Thank you. Our next question comes from Ryan Cook with Wolf Research. Please go ahead. Morning, and thank you for taking my questions. Just starting on HVAC and branch conversions, you reported another quarter of outgrowth versus the HARDI market data with HVAC sales up 10% this quarter. Can you maybe share how much of that would be organic? Secondly, on branch conversions, you've spoken to at least 550 completed so far, expectations for 650 by the end of 2026. Could you maybe just help contextualize that growth for us? Maybe how many branches were serving the HVAC vertical prior to this so you can understand how much runway there is there? Does it make sense for us to maintain this kind of mid-single digit outgrowth versus industry sell-through over the next few quarters? Thank you. Yeah, Ryan. In terms of the growth on HVAC, that 10%, the vast majority of that is organic growth. There's roughly a point or so of acquisition growth in there. The vast majority is organic. When you refer to branch conversions, we should realize that much of the work that we're talking about is counter-conversions so that a contractor who does both HVAC and plumbing can come into a location and find a best-in-class product selection and find expertise from an associate perspective to take care of their jobs and their needs. As you can imagine, the bulk of the growth that we're seeing is not on the new resy side, but actually on the repair-replace side of the business. When you look at our balanced investment, yeah, we're going to do upwards of 650 counter-conversions. The markets that we're going into, in some cases, were new markets from an HVAC perspective, but for the most part, they were markets where we had a separation of HVAC and plumbing, and we needed to bring that together to provide convenience for the customer. The bulk of our growth as we go forward will be in expansion of existing capabilities, adding associates with great HVAC knowledge to serve that customer, and then also expanding into new markets where we may not have had a presence, we may not have had access to an equipment line, where we'll gain access to a leading equipment line, either through negotiations and working with our suppliers or through acquisition. It will be a balanced approach of organic expansion, acquisitions, counter-conversions for the dual trade to continue with that growth curve. That's all very clear. Thank you very much. I guess just quickly on the restructuring program for my follow-up. You announced some one-time costs in the quarter, mainly severance, and this is expected to deliver about $100 million in annualized savings. Can you just give us some detail on maybe the timeline of realizing those benefits? Are there further opportunities for headcount reductions ahead of you? On a similar note, how should we be thinking about OpEx growth in Q4? It sounded like that growth rate should be tapering down Q over Q last quarter. Does that still remain the case? Yes, certainly. The $68 million charge is, as we took that, roughly $41 million of that related to severance, with the remaining portion related to the consolidation and closure of some smaller branches. That resulted in us reducing about 800 positions out of the organization as we look to simplify our structure, eliminate layers, and really drive decision-making and accountability back closer to the customer and into our local markets. That work is largely complete, so I would not anticipate anything else material coming through in the fourth quarter. We are really pleased with the team's execution of that restructure over the last three to four months. In terms of the cost growth in the fourth quarter, certainly we'll be responsive to what the volume market is like or what the volume growth is, but I would expect us to get back to a place where we're generating some SG&A leverage as we start to, as we finish the year and enter into next fiscal year. Yeah, Ryan, as Bill suggested, that work around the restructuring really wanted to bring that balance back to the best local experience where our local teams, because this business is intensely local, can make decisions in a timely fashion for our customer and provide great service, all with the backing of strong scale, over $4.5 billion worth of inventory, 5,900 trucks, 36,000 different suppliers, and giving that strength with best local relationships and allowing them to make decisions fast for the customer and take care of their needs. Thanks, Kevin and Bill. I'll turn it back over. Thank you. Our next question comes from David Mancy with BED. Please go ahead. Thank you. Good morning, guys. My first question is, if you could discuss the change in fiscal year guidance this quarter, disaggregated into the third quarter outperformance, new acquisitions done during the quarter, and then your underlying fourth quarter expectations. I'm focusing on that last item in terms of, are you more optimistic or are you sort of the same, but the changes that happened prior are leading to the guidance change? Yeah, Dave, if you take a step back at the guidance that we had updated at the end of the second quarter, expecting low single-digit growth and an operating margin of roughly 8.3%-8.8%, that really implied a profit range for the full year, somewhere in that roughly $2.5 billion-$2.7 billion range. We were very pleased with our third quarter performance. I would view most of the upgrade as the flow-through of that third quarter performance flowing through to the full year. We had always anticipated that the year would get a bit better and strengthen as we moved through the period of deflation that we had talked about. As we talked about already on this call, that move through deflation back to roughly flat pricing happened about a quarter in advance of our expectations. That, combined with strong gross margins, really good cost control, and then the further streamlining actions that we took gave us confidence to increase that full year guidance. I would chalk most of it up to the third quarter performance as well as the setup that we have looking forward to a fairly solid fourth quarter and a finish to the year. Yep, that's encouraging. Second, on HVAC, is the refrigerant transition materially worked its way through your inventories and your business as of today, June 3rd? If not, when do you think you'll be out of the 410A systems? Mainly, I'm trying to get to the 9% organic HVAC growth that you talked about. How much of that was price mix this quarter and what you'd expect going forward? Yeah, we've largely come through to the A2L conversion. There's still some 410A inventory that's left out in the system and in the market. I think that that'll largely play through as we get into, you call it, the middle of the fourth quarter of our fiscal year. That's largely played through. Okay. The price mix you're seeing today, Kevin? Very little price inflation in that 10% HVAC number. I would think of it as low single digits at this point. Okay. All right. Thanks, guys. Thank you, Dave. Our next question comes from Anika Dholakia with Barclays. Your line's open. Good morning, Evanica Zlakia on for Matt today. Thank you for taking my questions. First off, just going back to flat price for the quarter, just curious what was maybe better than expected on the commodity front, or was it more finished goods that came in ahead? More specifically, plastic, rough plumbing, PVC pipe, is that still deflating more than high diameter? Just any details around that? Thanks. Yeah, sure. If you look at the overall flat pricing, again, finished goods were up low single digits for the quarter, and commodities were down in that mid-single digit range. The commodity side was a bit better than we had anticipated, which is always the hardest piece to anticipate. We certainly saw copper still moving in an upward direction, and then steel prices improved during the quarter. Still in deflation as a basket for us for the third quarter, but did improve some of that after the steel import tariffs announcements earlier in the third quarter. You look at PVC, there's still deflation pressure on PVC, both on the plumbing side of the business as well as the waterwork side of the business. While pricing has been more sequentially stable, it's still in deflation as a basket. Overall, that mid-single digit deflation as a basket for commodities was a bit better than anticipated. Finished goods, we had expected that to move back towards positive price, given the fact that, again, we thought that the industry was moving back towards a more normalized annual price increase across those seasonal price increases. Got it. That's helpful. Thanks. You spoke to some pull forward buying in the quarter. I'm just wondering if you could tell us which categories you saw this in, and if you're seeing similar trends quarter to date. Thanks. Yeah, we were obviously pleased with organic growth of 5%, but if you consider the timing of what was happening from a tariff perspective, there was maybe some bit of pull forward, but nothing material from an impact perspective. I mean, as you recall, the lion's share of the tariff activity started around that April 2 time horizon. I mean, although we may see some pull forward, depending on what happens with the tariff environment going forward, it would largely be immaterial in Q3. Great. Thanks and good luck. Thank you. Our next question comes from Mike Dahl with RBC Capital Markets. Your line's open. Please go ahead. Morning. Thanks for taking my questions. I want to go back to kind of the competitive dynamics. Last quarter, it was very notable how you were talking about some of the trade-off between market share gains and the gross margin and some competitive dynamics potentially worsening. As you, I think, both Kevin and Bill, as you articulated, kind of through the quarter, you made some changes to get back into better balance, but it still seemed like you were expecting some trade-off there. Instead, fast forward, and now it looks like you've both gained share and got gross margin expansion. Can you just help us understand and elaborate a little bit more on the competitive dynamics that you've kind of seen over the last few months? Maybe a little more specific around how you were able to both maintain share and get that gross margin up. Yeah, thank you, Mike. It is still a very competitive market out there as the market conditions overall, both residentially and non-residentially, are in a challenging place. Obviously, as Bill indicated, you've still got deflationary activity sitting in some of the commodity baskets that we trade in. If you look at the actions that we took, it's no silver bullet. There are no silver bullets in this business as it relates to gross margin and balancing share gain. We did work around things like price matrix, contract management, but the bulk of the work was really done with our sales management teams and making sure that from a bidding activity perspective and how we were working with our customers, that we implemented our product strategy. What does that mean? That means that we've got to make sure that we've got the right product for the application that the contractor is using, and that for us, it's the right product in terms of margin contribution and how we're driving efficiencies in the supply chain and able to deliver for our customer. That product strategy work together with our sales management teams got us to the right place. We thought we were getting there as we were moving through the second quarter and exited the second quarter. We are pleased with the way the team worked with our contractor base to balance growth and a 31% gross margin. Kevin, just as a follow-up, and then dovetails into my second question, but I mean, was there anything in terms of a more centralized guardrail system that you've put into place around the bidding, or it's still just more of a kind of message to the field that they've been just executed better against? The second related part of the question, Bill, I do think you mentioned that typically you can see some gross margin expansion in the early stages of kind of implementing price increases. Maybe just clarify whether that was part of the expansion in 3Q that you were able to actually implement some pricing in the field ahead of taking cost. Yeah, Mike, great question. I would not consider it to be centralized control. It would be centrally driven data and guidance in terms of price matrix and contract management and contract overrides and delivering tools to those local teams to make sure that we can drive the right balance between what we do with volume growth and what we do with overall gross margin. Centrally driven tools and technique, and then real sales management at the local level is how we achieve. I think, Mike, the majority of that improvement from Q2 to Q3 was attributable to those actions. Stepping again once again over that 30% gross margin range. Yes, there is some piece of that 31% result in Q3 that benefited from price moving up on old cost of goods sold inventory. Very difficult for us to bifurcate the two. What we are confident in is that the gross margin has moved back above 30% now and that we're positioned well to exit the year. Very helpful. Thank you. Thanks, Mike. Our next question comes from Anthony Pettinari with Citi. Please go ahead. Good morning. Following up on Sam's earlier question, hey, following up on Sam's question, I think you said you were pleasantly surprised with bidding for residential new build over the last 60-90 days. I'm just curious if you think it's based on underlying demand improvement or maybe more share gain by Ferguson. Is there any particular region or project type that you're seeing this kind of strength? Yeah, what we were referring to is Waterworks bidding activity since they're the first in on the project. One of the advantages of having that multi-customer group approach for us as a company is to see that playing through. Really, in the last 60-90 days, we've been pleasantly surprised with the single-family new construction bidding activity. We know we're underbuilt in this country by, call it, 4 million units, and we've got to get back to developing new housing construction in order to get after the price side of the world. We're encouraged by that over the medium term. We're not reading a tremendous amount in the new residential growth because, as I suggested in the earlier answer, we don't know whether or not that bidding activity is going to play out to the entire project being released, whether it's going to be pieced out by sections or phases. At least it's a positive sign in terms of what that activity looks like across our different markets. Got it. Got it. That's very helpful. I just maybe switching gears, Ferguson Home, I guess it's very early days, but can you talk about how that brand launch has been received by your core contractor customers, maybe homeowners as well? Anything surprised you positively or negatively? We've been pleased with the rollout. This has been years in the making. We first purchased a company on the digital commerce side of decorative plumbing years ago, and we've transitioned it over time from Improvement Direct to Build.com to Build with Ferguson and now ultimately Ferguson Home. We've invested in that platform. We've invested in the associate base behind it in terms of the service offering that they offer to the connected consumer and that project-minded professional. When we look at where we are today, bringing together that platform with our over 230 showroom locations, which we consider to be a best-in-class consultative experience in that showroom location, is serving us well. Coming together so that we have pricing and value being driven in concert, we've got a tremendous amount of our showroom consultations that are beginning with the project tool on Ferguson Home today. That transition is being embraced. We'll still work out some of the bumps along the road, but we think it offers us a great omnichannel experience as we go forward and transition this fully. Okay. That's helpful. I'll turn it over. Thank you. Thank you. Thank you. We'll take our last question from Will Jones with Redburn Atlantic. Please go ahead. Thank you. Morning. Just a couple for me, please. First, if you could just touch on how you're managing the own brand business amid the changing tariff dynamics, any change of tactics there. The second was just perhaps an update on distribution centers and the recent openings, how they're performing, and what you've got planned over the next year or two. Thank you. Yeah, sure. On the own brand side of the world, it's probably important to remember that's roughly 10% of our revenue base. 90% of our revenue base is driven with our branded suppliers, principally domestic in nature. When you look at that own brand business, our teams have done a very good job of diversifying what that sourcing profile looks like. We source product from over 31 different countries. The group has done well to make sure that we have mitigation efforts should tariff situations arise. When you look at the exposure for China specifically, what you see is principally in the areas of lighting, fan product, some small appliance, some small HVAC, and a bit of vitreous China. Generally speaking, the team has done a good job of diversifying that sourcing structure, both so that we can make sure we have the right supply for our customers, and then also to make sure that we are price relevant on the project that they're competing on. The second part of your question on our supply chain and our network optimization efforts, we continue to look across the network and optimize that and invest in the network. To date, we have five market distribution centers that are open. We have two more that are in process that will open over roughly the next 12 months, one in Dallas, one outside of Washington, DC. We continue to invest in a mix of those types of buildings. We have several large-format buildings or ship hubs that we've invested in over the last 12 months or so, whether that's Fort Myers, Boston, Raleigh, or Austin. We are going to continue to invest in that network. That will include more automation in those facilities, and we are pleased with the returns on that automation. We are also pleased with the fact that we are bringing what we believe is the industry's largest local inventory into those markets. The returns on that inventory investment, particularly over the counters in those facilities, have been quite good. In terms of looking out in the future, we are going to continue to invest in the network. We have invested a fair amount of capital and capacity over the last five years. As we look forward, we're going to continue to base that future investment on where we have capacity needs in those individual localized markets. Quite pleased with the work that the supply chain team has done, quite honestly, over the last five years or so to upgrade our network. All right. Thank you. Thank you. Thank you. That concludes today's Q&A session. I'll pass you back over to Kevin Murphy, CEO, for closing remarks. Thank you. Thank you all for your time today. We appreciate it more than you know. Maybe most importantly, thank you to our associates who continue to deliver in what is a challenging and certainly dynamic environment. They delivered good growth and good balance with making sure that we deliver value for our customers that is reflected in our gross margin. We are pleased with what the team has been able to do from a productivity and efficiency perspective to drive good operating margin expansion and operating profit growth. We are pleased to be in a position with a balance sheet where we can continue to invest in some real multi-year tailwinds that apply to our Ferguson HVAC efforts, our large capital project efforts, our waterworks diversification, and certainly our Ferguson Home brand. Thank you very much for your time. We look forward to talking to you very soon. This concludes today's call. Thank you for your participation. You may now disconnect your line.