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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 29, 2025

☐

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number: 001-11499

WATTS WATER TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		04-2916536
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

815 Chestnut Street, North Andover, MA		01845
(Address of Principal Executive Offices)		(Zip Code)

(978) 688-1811

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Class A common stock, par value $0.10 per share

WTS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding at July 27, 2025
Class A Common Stock, $0.10 par value		27,415,415

Class B Common Stock, $0.10 par value		5,946,290

Table of Contents

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

INDEX


Part I. Financial Information		3

Item 1.	Financial Statements	3

	Consolidated Balance Sheets at June 29, 2025 and December 31, 2024 (unaudited)	3

	Consolidated Statements of Operations for the Second Quarters and Six Months Ended June 29, 2025 and June 30, 2024 (unaudited)	4

	Consolidated Statements of Comprehensive Income for the Second Quarters and Six Months Ended June 29, 2025 and June 30, 2024 (unaudited)	5

	Consolidated Statements of Stockholders’ Equity for the Second Quarters and Six Months Ended June 29, 2025 and June 30, 2024 (unaudited)	6

	Consolidated Statements of Cash Flows for the Six Months Ended June 29, 2025 and June 30, 2024 (unaudited)	8

	Notes to Consolidated Financial Statements (unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4.	Controls and Procedures	41

Part II. Other Information		43

Item 1.	Legal Proceedings	43

Item 1A.	Risk Factors	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 5.	Other Information	45

Item 6.	Exhibits	46

Signatures		47

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in millions, except share information)

(Unaudited)


	June 29,		December 31,
	2025		2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	369.3	$	386.9
Trade accounts receivable, less reserve allowances of $13.5 million at June 29, 2025 and $11.9 million at December 31, 2024		337.5		253.2
Inventories, net:
Raw materials		157.4		141.9
Work in process		21.0		16.9
Finished goods		270.1		233.3
Total Inventories		448.5		392.1
Prepaid expenses and other current assets		58.7		51.3
Total Current Assets		1,214.0		1,083.5
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost		739.6		691.6
Accumulated depreciation		(474.3)		(436.8)
Property, plant and equipment, net		265.3		254.8
OTHER ASSETS:
Goodwill		781.9		715.0
Intangible assets, net		252.0		235.0
Deferred income taxes		42.9		36.4
Other, net		88.8		72.3
TOTAL ASSETS	$	2,644.9	$	2,397.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	176.9	$	148.0
Accrued expenses and other liabilities		220.0		190.8
Accrued compensation and benefits		71.5		79.1
Total Current Liabilities		468.4		417.9
LONG-TERM DEBT		197.3		197.0
DEFERRED INCOME TAXES		11.5		10.9
OTHER NONCURRENT LIABILITIES		75.3		63.3
STOCKHOLDERS’ EQUITY:
Preferred Stock, $0.10 par value; 5,000,000 shares authorized; no shares issued or outstanding		—		—
Class A common stock, $0.10 par value; 120,000,000 shares authorized; 1 vote per share; issued and outstanding, 27,418,992 shares at June 29, 2025 and 27,366,685 shares at December 31, 2024		2.7		2.7
Class B common stock, $0.10 par value; 25,000,000 shares authorized; 10 votes per share; issued and outstanding, 5,946,290 shares at June 29, 2025 and 5,953,290 shares at December 31, 2024		0.6		0.6
Additional paid-in capital		708.6		696.2
Retained earnings		1,308.7		1,184.8
Accumulated other comprehensive loss		(128.2)		(176.4)
Total Stockholders’ Equity		1,892.4		1,707.9
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,644.9	$	2,397.0

See accompanying notes to consolidated financial statements.

Table of Contents

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in millions, except per share information)

(Unaudited)


	Second Quarter Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2025		2024		2025		2024
Net sales	$	643.7	$	597.3	$	1,201.7	$	1,168.2
Cost of goods sold		317.8		312.5		603.3		615.9
GROSS PROFIT		325.9		284.8		598.4		552.3
Selling, general and administrative expenses		187.2		173.1		354.7		342.6
Restructuring		3.4		0.2		20.7		1.5
OPERATING INCOME		135.3		111.5		223.0		208.2
Other (income) expense:
Interest income		(2.3)		(1.9)		(4.6)		(4.0)
Interest expense		2.7		4.1		5.4		8.3
Other expense (income), net		0.2		(0.2)		0.6		(0.8)
Total other expense		0.6		2.0		1.4		3.5
INCOME BEFORE INCOME TAXES		134.7		109.5		221.6		204.7
Provision for income taxes		33.8		27.5		46.7		50.2
NET INCOME	$	100.9	$	82.0	$	174.9	$	154.5
Basic EPS
NET INCOME PER SHARE	$	3.01	$	2.44	$	5.22	$	4.61
Weighted average number of shares		33.5		33.5		33.5		33.5
Diluted EPS
NET INCOME PER SHARE	$	3.01	$	2.44	$	5.22	$	4.61
Weighted average number of shares		33.5		33.5		33.5		33.5
Dividends declared per share	$	0.52	$	0.43	$	0.95	$	0.79

See accompanying notes to consolidated financial statements.

Table of Contents

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in millions)

(Unaudited)


	Second Quarter Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2025		2024		2025		2024
Net income	$	100.9	$	82.0	$	174.9	$	154.5
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		35.2		(2.6)		49.6		(15.5)
Cash flow hedges		(0.7)		(0.2)		(1.4)		1.2
Other comprehensive income (loss)		34.5		(2.8)		48.2		(14.3)
Comprehensive income	$	135.4	$	79.2	$	223.1	$	140.2

See accompanying notes to consolidated financial statements.

Table of Contents

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Dollars in millions)

(Unaudited)

Accumulated

Class A

Class B

Additional

Other

Total

(For the six months ended

Common Stock

Paid-In

Retained

Comprehensive

Stockholders’

June 29, 2025)

Shares

Amount

Shares

Amount

Capital

Earnings

Loss

Equity

Balance at December 31, 2024

27,366,685

2.7

5,953,290

0.6

696.2

1,184.8

(176.4)

1,707.9

Net income

—

174.9

—

174.9

Other comprehensive income

—

48.2

Comprehensive income

223.1

Shares of Class B common stock converted to Class A common stock

7,000

—

(7,000)

—

Stock-based compensation

—

9.5

—

9.5

Stock repurchase

(36,770)

—

(7.9)

—

(7.9)

Net change in restricted and performance stock units

82,077

—

2.9

(11.1)

—

(8.2)

Common stock dividends

—

(32.0)

—

(32.0)

Balance at June 29, 2025

27,418,992

2.7

5,946,290

0.6

708.6

1,308.7

(128.2)

1,892.4

Accumulated

Class A

Class B

Additional

Other

Total

(For the second quarter ended

Common Stock

Paid-In

Retained

Comprehensive

Stockholders’

June 29, 2025)

Shares

Amount

Shares

Amount

Capital

Earnings

Loss

Equity

Balance at March 30, 2025

27,428,385

2.7

5,953,290

0.6

702.0

1,229.6

(162.7)

1,772.2

Net income

—

100.9

—

100.9

Other comprehensive income

—

34.5

Comprehensive income

135.4

Shares of Class B common stock converted to Class A common stock

7,000

—

(7,000)

—

Stock-based compensation

—

6.7

—

6.7

Stock repurchase

(18,019)

—

(4.0)

—

(4.0)

Net change in restricted and performance stock units

1,626

—

(0.1)

(0.3)

—

(0.4)

Common stock dividends

—

(17.5)

—

(17.5)

Balance at June 29, 2025

27,418,992

2.7

5,946,290

0.6

708.6

1,308.7

(128.2)

1,892.4

Table of Contents


											Accumulated
	Class A			Class B			Additional				Other		Total
(For the six months ended	Common Stock			Common Stock			Paid-In		Retained		Comprehensive		Stockholders’
June 30, 2024)	Shares	Amount		Shares	Amount		Capital		Earnings		Loss		Equity
Balance at December 31, 2023	27,352,701	$	2.7	5,958,290	$	0.6	$	674.3	$	979.1	$	(143.4)	$	1,513.3
Net income	—		—	—		—		—		154.5		—		154.5
Other comprehensive loss	—		—	—		—		—		—		(14.3)		(14.3)
Comprehensive income														140.2
Shares of Class B common stock converted to Class A common stock	5,000		—	(5,000)		—		—		—		—		—
Shares of Class A common stock issued upon the exercise of stock options	364		—	—		—		—		—		—		—
Stock-based compensation	—		—	—		—		10.0		—		—		10.0
Stock repurchase	(40,012)		—	—		—		—		(8.1)		—		(8.1)
Net change in restricted and performance stock units	86,037		—	—		—		2.3		(12.8)		—		(10.5)
Common stock dividends	—		—	—		—		—		(26.7)		—		(26.7)
Balance at June 30, 2024	27,404,090	$	2.7	5,953,290	$	0.6	$	686.6	$	1,086.0	$	(157.7)	$	1,618.2

											Accumulated
	Class A			Class B			Additional				Other		Total
(For the second quarter ended	Common Stock			Common Stock			Paid-In		Retained		Comprehensive		Stockholders’
June 30, 2024)	Shares	Amount		Shares	Amount		Capital		Earnings		Loss		Equity
Balance at March 31, 2024	27,418,449	$	2.7	5,958,290	$	0.6	$	680.6	$	1,022.8	$	(154.9)	$	1,551.8
Net income	—		—	—		—		—		82.0		—		82.0
Other comprehensive loss	—		—	—		—		—		—		(2.8)		(2.8)
Comprehensive income														79.2
Shares of Class B common stock converted to Class A common stock	5,000		—	(5,000)		—		—		—		—		—
Shares of Class A common stock issued upon the exercise of stock options	364		—	—		—		—		—		—		—
Stock-based compensation	—		—	—		—		6.0		—		—		6.0
Stock repurchase	(20,262)		—	—		—		—		(4.1)		—		(4.1)
Net change in restricted and performance stock units	539		—	—		—		—		(0.1)		—		(0.1)
Common stock dividends	—		—	—		—		—		(14.6)		—		(14.6)
Balance at June 30, 2024	27,404,090	$	2.7	5,953,290	$	0.6	$	686.6	$	1,086.0	$	(157.7)	$	1,618.2

See accompanying notes to consolidated financial statements.

Table of Contents

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in millions)

(Unaudited)



	Six Months Ended
	June 29,		June 30,
	2025		2024
OPERATING ACTIVITIES
Net income	$	174.9	$	154.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		17.9		16.9
Amortization of intangibles and other		10.3		9.8
Loss on disposal of long-lived assets and (gain) on sale of assets		0.2		(4.1)
Stock-based compensation		9.5		10.0
Deferred income tax		(6.2)		(5.2)
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts receivable		(69.3)		(50.0)
Inventories		(37.0)		(16.8)
Prepaid expenses and other assets		(16.3)		(0.8)
Accounts payable, accrued expenses and other liabilities		40.9		16.6
Net cash provided by operating activities		124.9		130.9
INVESTING ACTIVITIES
Additions to property, plant and equipment		(19.8)		(16.9)
Proceeds from the sale of property, plant and equipment		—		5.7
Business acquisitions, net of cash acquired		(85.7)		(96.3)
Net cash used in investing activities		(105.5)		(107.5)
FINANCING ACTIVITIES
Payments of long-term debt		—		(40.0)
Payments for withholding taxes on vested awards		(11.1)		(12.8)
Payments for finance leases and other		(1.3)		(1.3)
Payments to repurchase common stock		(7.9)		(8.1)
Dividends		(32.0)		(26.7)
Net cash used in financing activities		(52.3)		(88.9)
Effect of exchange rate changes on cash and cash equivalents		15.3		(5.2)
DECREASE IN CASH AND CASH EQUIVALENTS		(17.6)		(70.7)
Cash and cash equivalents at beginning of year		386.9		350.1
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	369.3	$	279.4

SUPPLEMENTAL CASH FLOW DISCLOSURE:
Acquisition of businesses:
Fair value of assets acquired	$	90.2	$	98.0
Cash paid, net of cash acquired		85.7		96.3
Liabilities assumed	$	4.5	$	1.7

Issuance of stock under management stock purchase plan	$	0.7	$	0.3

CASH PAID FOR:
Interest	$	4.9	$	7.0
Income taxes	$	52.6	$	60.6

See accompanying notes to consolidated financial statements.

Table of Contents

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included in the Watts Water Technologies, Inc. (the “Company”) Consolidated Balance Sheet as of June 29, 2025, the Consolidated Statements of Operations for the Second Quarters and Six Months Ended June 29, 2025 and June 30, 2024, the Consolidated Statements of Comprehensive Income for the Second Quarters and Six Months Ended June 29, 2025 and June 30, 2024, the Consolidated Statements of Stockholders’ Equity for the Second Quarters and Six Months Ended June 29, 2025 and June 30, 2024, and the Consolidated Statements of Cash Flows for the Six Months Ended June 29, 2025 and June 30, 2024.

The consolidated balance sheet at December 31, 2024 has been derived from the audited consolidated financial statements at that date. The accounting policies followed by the Company are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The consolidated financial statements included in this report should be read in conjunction with the consolidated financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2024. Operating results for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2025.

The Company operates on a 52-week fiscal year ending on December 31, with each quarter, except the fourth quarter, ending on a Sunday. Any quarterly data contained in this Quarterly Report on Form 10-Q generally reflect the results of operations for a 13-week period.

Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We are not aware of any specific event or circumstance that would require updates to the Company’s estimates or judgments, or require the Company to revise the carrying value of the Company’s assets or liabilities, as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change as new events occur and additional information is obtained. Actual results could differ from those estimates.

2. Accounting Policies

The significant accounting policies used in preparation of these consolidated financial statements for the six months ended June 29, 2025, are consistent with those discussed in Note 2 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Shipping and Handling

Shipping and handling costs included in selling, general and administrative expenses amounted to $23.5 million and $22.0 million for the second quarters of 2025 and 2024, respectively, and were $45.0 million and $43.8 million for the first six months of 2025 and 2024, respectively.

Research and Development

Research and development costs included in selling, general and administrative expenses amounted to $17.4 million and $17.9 million for the second quarters of 2025 and 2024, respectively, and were $34.1 million and $36.4 million for the first six months of 2025 and 2024, respectively.

Table of Contents

Accounting Standard Updates

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on the Company’s financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03 "Income Statement - Reporting Comprehensive Income (Subtopic 220-40): Expense Disaggregation Disclosures" to expand the disclosure requirements of certain expense categories included in the income statement. ASU 2024-03 is effective for our annual periods beginning January 1, 2027, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on the Company’s consolidated financial statement disclosures.

3. Revenue Recognition

The Company is a leading supplier of products and solutions that manage and conserve the flow of fluids and energy into, through and out of buildings in the commercial, industrial and residential markets. For over 150 years, the Company has designed and produced valve systems that safeguard and regulate water systems, energy efficient heating and hydronic systems, drainage systems and water filtration technology that help purify and conserve water.

The Company distributes products through four primary distribution channels: wholesale, original equipment manufacturers (“OEMs”), specialty, and do-it-yourself (“DIY”). The Company operates in three geographic segments: Americas, Europe, and Asia-Pacific, Middle East and Africa (“APMEA”). Each of these segments sells similar products, which consist of the following principal product categories:

●

Residential & commercial flow control and protection—includes products and solutions typically sold into plumbing and hot water applications such as backflow preventers, water pressure regulators, temperature and pressure relief valves, thermostatic mixing valves, leak detection and protection products, commercial washroom solutions and emergency safety products and equipment. Many of our flow control and protection products are now smart and connected enabled, warning of leaks, floods, freezing temperatures and other hazards with alerts to Building Management Systems (“BMS”) and/or personal devices giving our customers greater insight into their water management and the ability to shut off the water supply to avoid waste and mitigate damage.

●

Heating, ventilation and air conditioning (“HVAC”) & gas—includes commercial high efficiency boilers, water heaters and heating solutions, hydronic and electric heating systems for under floor radiant applications, custom heat and hot water solutions, hydronic pump groups for boiler manufacturers and alternative energy control packages, and flexible stainless steel connectors for natural and liquid propane gas in commercial food service and residential applications. Most of our HVAC products and solutions feature advanced controls enabling customers to easily connect to the BMS for better monitoring, control and operation.

●

Drainage & water re-use—includes drainage products and engineered rainwater harvesting solutions for commercial, industrial, marine and residential applications, including connected roof drain systems.

●

Water quality—includes point-of-use, point-of-entry, closed loop, cooling tower, and other water applications used for water filtration, monitoring, conditioning and scale prevention systems for commercial, marine, light industrial and residential applications.

Table of Contents

The following table disaggregates revenue, which is presented as net sales in the consolidated financial statements, for each reportable segment, by distribution channel and principal product category:

For the Second Quarter Ended June 29, 2025

For the Six Months Ended June 29, 2025

(in millions)

Distribution Channel

Americas

Europe

APMEA

Consolidated

Americas

Europe

APMEA

Consolidated

Wholesale

330.0

76.7

23.8

430.5

596.4

152.4

46.8

795.6

OEM

29.2

33.7

2.5

65.4

53.9

65.9

3.9

123.7

Specialty

117.2

—

7.9

125.1

222.9

—

15.0

237.9

DIY

22.1

0.6

—

22.7

43.4

1.1

—

44.5

Total

498.5

111.0

34.2

643.7

916.6

219.4

65.7

1,201.7

For the Second Quarter Ended June 29, 2025

For the Six Months Ended June 29, 2025

(in millions)

Principal Product Category

Americas

Europe

APMEA

Consolidated

Americas

Europe

APMEA

Consolidated

Residential & Commercial Flow Control

322.5

42.6

29.7

394.8

593.2

84.0

58.3

735.5

HVAC and Gas Products

95.7

44.0

3.2

142.9

182.0

87.5

5.6

275.1

Drainage and Water Re-use Products

51.4

23.5

1.0

75.9

85.0

45.8

1.4

132.2

Water Quality Products

28.9

0.9

0.3

30.1

56.4

2.1

0.4

58.9

Total

498.5

111.0

34.2

643.7

916.6

219.4

65.7

1,201.7


	For the Second Quarter Ended June 30, 2024								For the Six Months Ended June 30, 2024
			(in millions)								(in millions)
Distribution Channel	Americas		Europe		APMEA		Consolidated		Americas		Europe		APMEA		Consolidated
Wholesale	$	294.2	$	77.7	$	25.1	$	397.0	$	566.4	$	161.7	$	44.1	$	772.2
OEM		27.0		35.8		1.7		64.5		53.0		74.5		3.4		130.9
Specialty		107.0		—		8.3		115.3		204.5		—		16.4		220.9
DIY		19.9		0.6		—		20.5		43.0		1.2		—		44.2
Total	$	448.1	$	114.1	$	35.1	$	597.3	$	866.9	$	237.4	$	63.9	$	1,168.2

	For the Second Quarter Ended June 30, 2024								For the Six Months Ended June 30, 2024
			(in millions)								(in millions)
Principal Product Category	Americas		Europe		APMEA		Consolidated		Americas		Europe		APMEA		Consolidated
Residential & Commercial Flow Control	$	288.1	$	42.2	$	30.4	$	360.7	$	561.7	$	89.3	$	55.5	$	706.5
HVAC and Gas Products		93.7		45.7		3.8		143.2		178.8		97.9		6.5		283.2
Drainage and Water Re-use Products		40.0		25.1		0.5		65.6		73.0		48.0		1.2		122.2
Water Quality Products		26.3		1.1		0.4		27.8		53.4		2.2		0.7		56.3
Total	$	448.1	$	114.1	$	35.1	$	597.3	$	866.9	$	237.4	$	63.9	$	1,168.2

The Company generally considers customer purchase orders, which in some cases are governed by master sales agreements, to represent the contract with a customer. The Company’s contracts with customers are generally for products only and typically do not include other performance obligations such as professional services, extended warranties, or other material rights. In situations where sales are to a distributor, the Company has concluded that its contracts are with the distributor as the Company holds a contract bearing enforceable rights and obligations only with the distributor. As part of its consideration of the contract, the Company evaluates certain factors, including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligation. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. As the Company’s standard payment terms are less than one year, the Company has elected not to assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on its relative standalone selling price. The product price as specified on the purchase order is

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considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment from the Company’s manufacturing site or distribution center, or delivery to the customer’s named location. In determining whether control has transferred, the Company considers if there is a present right to payment, physical possession and legal title, along with risks and rewards of ownership having transferred to the customer. In certain circumstances, the Company manufactures customized products without alternative use for its customers. For the arrangements that entitle the Company to a right to payment of cost plus a profit for work completed, the Company concluded that control transfers over time. However, for the arrangements that do not provide such payment rights, the Company has concluded that control transfers at the point in time and not over time.

At times, the Company receives orders for products to be delivered over multiple dates that may extend across reporting periods. The Company invoices for each delivery upon shipment and recognizes revenues for each distinct product delivered, assuming transfer of control has occurred. As scheduled delivery dates are within one year, under the optional exemption as provided for under ASC 606 (Revenue from Contracts with Customers), revenues allocated to future shipments of partially completed contracts are not disclosed.

The Company generally provides an assurance warranty that its products will substantially conform to their published specifications. The Company’s liability is limited to either a credit equal to the purchase price or replacement of the defective part. Returns under warranty have historically been immaterial. The Company does not consider activities related to such warranty, if any, to be a separate performance obligation. For certain of its products, the Company will separately sell extended warranty and service policies to its customers. The Company considers the sale of these policies as separate performance obligations. These policies typically are for periods ranging from one to three years. Payments received are deferred and recognized over the policy period. For all periods presented, the revenue recognized and the revenue deferred under these policies are not material to the consolidated financial statements.

The timing of revenue recognition, billings and cash collections from the Company’s contracts with customers can vary based on the payment terms and conditions in the customer contracts. In limited cases, customers will partially prepay for their goods. In addition, there are constraints which cause variability in the ultimate consideration to be recognized. These constraints typically include early payment discounts, volume rebates, rights of return, cooperative advertising, and market development funds. The Company includes these constraints in the estimated transaction price when there is a basis to reasonably estimate the amount of variable consideration. These estimates are based on historical experience, anticipated future performance and the Company’s best judgment at the time. The Company did not recognize any material revenue from obligations satisfied in prior periods. When the timing of the Company’s recognition of revenue is different from the timing of payments made by the customer, the Company recognizes a contract liability (customer payment precedes performance). For all periods presented, the recognized contract liabilities and the associated revenue deferred are not material to the consolidated financial statements.

The Company incurs costs to obtain and fulfill a contract; however, the Company has elected to recognize all incremental costs to obtain a contract as an expense when incurred if the amortization period is one year or less. The Company has elected to treat shipping and handling activities performed after the customer has obtained control of the related goods as a fulfillment cost, and the related cost is accrued for in conjunction with the recording of revenue for the goods.

4. Acquisitions

EasyWater

On June 13, 2025, the Company completed the acquisition of substantially all of the assets of Freije Treatment Systems, Inc. (“EasyWater”) in an all-cash transaction. EasyWater, a leading provider of water quality solutions, is based in Fishers, Indiana, and has designed and manufactured innovative, chemical-free technologies for treating water in residential and commercial applications. The acquisition of EasyWater aligns with the Company’s continued focus on growth, innovation and expanding the Company’s portfolio of high-value water quality solutions. The Company accounted for the transaction as a business combination and it was deemed not to be material to the Company’s consolidated financial statements.

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I-CON

On January 2, 2025, the Company completed the acquisition of I-CON Systems Holdings, LLC (“I-CON”) in a membership unit purchase transaction funded with cash on hand. The final net purchase price was $70.7 million, net of cash acquired of $2.8 million. The final post-closing working capital adjustment was immaterial and adjusted in the second quarter of 2025.

I-CON is headquartered in Oviedo, Florida, and is a designer and manufacturer of intelligent plumbing controls, addressing the unique challenges of water management in correctional facilities. I-CON’s operating results since the date of acquisition are included in the Americas segment. The Company has determined that both the pro-forma and actual results, including I-CON’s net sales, net income, and earnings per share, are not material to the Company’s financial results, and therefore has not included these disclosures.

The Company accounted for the transaction as a purchased business combination. During the first quarter of 2025, the Company performed the preliminary purchase price allocation for the I-CON purchase, with immaterial adjustments in the second quarter of 2025 related to the final working capital and valuation adjustments. The purchase price allocation was completed in the second quarter of 2025. The acquisition resulted in the recognition of $41.6 million in goodwill and $20.9 million in intangible assets. The intangible assets acquired consist of customer relationships valued at $18.2 million with estimated lives of 12 years and the trade name valued at $2.7 million with an indefinite life. The goodwill is attributable to the workforce of I-CON and the portfolio which will allow the Company to extend its product offerings as a result of the acquisition. For tax purposes, the Company accounted for the transaction as an asset acquisition and therefore the intangibles and goodwill are deductible for tax purposes resulting in future tax benefits.

The following table summarizes the fair value of the assets and liabilities acquired (in millions):


Cash	$	2.8
Trade accounts receivable		3.3
Inventories, net		4.4
Prepaid expenses and other assets		2.8
Property, plant and equipment		1.2
Intangible assets		20.9
Goodwill		41.6
Accounts payable, accrued expenses and other liabilities		(3.5)
Purchase price	$	73.5

Josam

Effective January 1, 2024, the Company completed the acquisition of Josam Company following its conversion into Josam Industries, LLC (“Josam”) in a share purchase transaction funded with cash on hand. The final net purchase price was $99.0 million, net of cash acquired of $4.6 million. Josam is based in Michigan City, Indiana, and is a leading provider and manufacturer of drainage and plumbing products, serving commercial, industrial, and multi-family end markets for over 100 years. Josam’s operating results since the date of acquisition are included in the Americas segment. The Company has determined that both the pro-forma and actual results, including Josam’s net sales, net income, and earnings per share, are not material to the Company’s financial results, and therefore has not included these disclosures.

The Company accounted for the transaction as a purchased business combination. During the first quarter of 2024, the Company performed the preliminary purchase price allocation for the Josam purchase, with immaterial adjustments during the remainder of fiscal year 2024 related to the final working capital and valuation adjustments. The purchase price allocation was completed in the fourth quarter of 2024. The acquisition resulted in the recognition of $35.1 million in goodwill and $39.4 million in intangible assets. The intangible assets acquired consist of customer relationships valued at $33.5 million with estimated lives of 15 years and the trade name valued at $5.9 million with an indefinite life. The goodwill is attributable to the workforce of Josam and the portfolio which will allow the Company to extend its product offerings as a result of the acquisition. For tax purposes, the Company accounted for the transaction as an asset acquisition and therefore the intangibles and goodwill are deductible for tax purposes resulting in future tax benefits.

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The following table summarizes the fair value of the assets and liabilities acquired (in millions):


Cash	$	4.6
Trade accounts receivable		4.3
Inventories, net		15.0
Prepaid expenses and other current assets		0.9
Property, plant and equipment		7.6
Intangible assets		39.4
Goodwill		35.1
Accounts payable		(1.5)
Accrued expenses and other current liabilities		(1.8)
Purchase price	$	103.6

5. Goodwill & Intangibles

The Company operates in three geographic segments: Americas, Europe, and APMEA. The changes in the carrying amounts of goodwill by geographic segment are as follows:

Gross Balance

Accumulated Impairment Losses

Foreign Currency Translation

Net Goodwill

Acquired

January 1,

Balance

During

Balance

Impairment

Balance

2025 -

January 1,

the

June 29,

January 1,

Loss During

June 29,

2025

Period

2025

the Period

2025

(in millions)

Americas

617.5

52.2

669.7

(24.5)

—

(24.5)

0.4

645.6

Europe

233.3

—

233.3

(129.7)

—

(129.7)

13.1

116.7

APMEA

31.3

—

31.3

(12.9)

—

(12.9)

1.2

19.6

Total

882.1

52.2

934.3

(167.1)

—

(167.1)

14.7

781.9

During the first six months of 2025, the Company completed the acquisitions of EasyWater and I-CON, resulting in an increase in goodwill of $52.2 million within the Americas segment.

Goodwill and indefinite-lived intangible assets are tested for impairment at least annually or more frequently if events or circumstances indicate that it is “more likely than not” that they might be impaired, such as from a change in business conditions. The Company performs its annual goodwill and indefinite-lived intangible assets impairment assessment in the fourth quarter of each year. At the most recent annual impairment test, which occurred during the fourth quarter of 2024, the Company performed qualitative fair value assessments, including an evaluation of certain key assumptions for all of its reporting units with goodwill at the impairment test date. The Company concluded that the fair value of all reporting units tested exceeded their carrying values at that time.

Intangible assets include the following:


	June 29, 2025						December 31, 2024
	Gross				Net		Gross				Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount

	(in millions)
Patents	$	5.0	$	(5.0)	$	—	$	5.0	$	(5.0)	$	—
Customer relationships		271.7		(109.0)		162.7		251.9		(100.6)		151.3
Technology		55.5		(48.9)		6.6		53.2		(47.8)		5.4
Trade names		20.8		(13.4)		7.4		20.6		(13.0)		7.6
Other		1.1		(0.8)		0.3		1.1		(0.8)		0.3
Total amortizable intangibles		354.1		(177.1)		177.0		331.8		(167.2)		164.6
Indefinite-lived intangible assets		75.0		—		75.0		70.4		—		70.4
	$	429.1	$	(177.1)	$	252.0	$	402.2	$	(167.2)	$	235.0

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With the completion of the acquisitions of EasyWater and I-CON in the first six months of 2025, the Company acquired intangible assets of $24.7 million, consisting of amortizable technology assets valued at $2.3 million with an estimated useful life of 5 years, customer relationships valued at $19.7 million with an estimated useful life of 10 to 12 years, and an indefinite-lived trade name valued at $2.7 million. During the year ended December 31, 2024, the Company acquired $39.4 million in intangible assets as part of the Josam acquisition, consisting of customer relationships valued at $33.5 million, with an estimated useful life of 15 years, and an indefinite-lived trade name of $5.9 million.

Aggregate amortization expense for amortized intangible assets for the second quarters ended June 29, 2025 and June 30, 2024 was $5.0 million and $5.1 million, respectively, and for the first six months of 2025 and 2024 was $9.9 million and $9.8 million, respectively.

6. Restructuring and Other Charges, Net

The Company’s Board of Directors approves all major restructuring programs that may involve the discontinuance of significant product lines or the shutdown of significant facilities. From time to time, the Company takes additional restructuring actions, including involuntary terminations that are not part of a major program. The Company accounts for these costs in the period in which the liability is incurred. These costs are included in restructuring charges in the Company’s consolidated statements of operations.

A summary of the pre-tax cost by restructuring program is as follows:


	Second Quarter Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2025		2024		2025		2024

	(in millions)
Restructuring costs:
2025 France Actions	$	1.7	$	—	$	19.1	$	—
Other Actions		1.7		0.2		1.6		1.5
Total restructuring charges	$	3.4	$	0.2	$	20.7	$	1.5

The Company recorded pre-tax restructuring costs in its business segments as follows:


	Second Quarter Ended				Six Months Ended
	June 29,		June 30,		June 29,		June 30,
	2025		2024		2025		2024

	(in millions)
Americas	$	—	$	—	$	—	$	1.0
Europe		3.4		0.1		20.6		0.1
APMEA		—		0.1		0.1		0.4
Total	$	3.4	$	0.2	$	20.7	$	1.5

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2025 France Actions

On February 3, 2025, the Board of Directors approved a restructuring program with respect to the Company’s operating facilities in Hautvillers, France, within its Europe operating segment. The restructuring program includes the shutdown of the Company’s manufacturing facility in Hautvillers, France and relocation of the facility’s production activities primarily to the Company’s other facilities in France and other locations in Europe. The program was initially expected to include pre-tax charges totaling approximately $22.0 million, including costs for severance, relocation, clean-up and certain asset write-downs, and result in the elimination of approximately 96 positions at the Hautvillers, France facility. As a result of the facility consolidations, the net headcount reduction in France is expected to be approximately 68 positions. As of June 29, 2025, the Company increased its total expected pre-tax charges for the program to approximately $23.2 million, primarily related to higher legal and severance costs than were initially estimated. Total net after-tax charges for this restructuring program are expected to be approximately $17.1 million, of which non-cash charges are immaterial, with costs being incurred through the end of 2026, at which time the restructuring program is expected to be completed. The Company expects to spend approximately $1 million in capital expenditures to consolidate operations. Annual pre-tax savings are estimated to be approximately $3.0 million, which the Company expects to fully realize by the end of 2026.

The following table summarizes by type, the total expected, incurred and remaining pre-tax restructuring costs for the Company’s restructuring program related to the 2025 France Actions:


							Facility
			Legal and		Asset		exit
	Severance		consultancy		write-downs		and other		Total

	(in millions)
Costs incurred — first quarter 2025	$	16.1	$	1.1	$	0.2	$	—	$	17.4
Costs incurred — second quarter 2025		0.8		0.1		0.4		0.4		1.7
Remaining costs to be incurred		1.3		0.5		0.3		2.0		4.1
Total expected restructuring costs	$	18.2	$	1.7	$	0.9	$	2.4	$	23.2

Details of the restructuring reserve activity for the Company’s 2025 France Actions for the six months ended June 29, 2025 are as follows:


							Facility
			Legal and		Asset		exit
	Severance		consultancy		write-downs		and other		Total

	(in millions)
Balance at December 31, 2024	$	—	$	—	$	—	$	—	$	—
Net pre-tax restructuring charges		16.1		1.1		0.2		—		17.4
Utilization and foreign currency impact		1.4		(0.3)		(0.2)		—		0.9
Balance at March 30, 2025	$	17.5	$	0.8	$	—	$	—	$	18.3
Net pre-tax restructuring charges		0.8		0.1		0.4		0.4		1.7
Utilization and foreign currency impact		(4.7)		(0.1)		(0.4)		(0.1)		(5.3)
Balance at June 29, 2025	$	13.6	$	0.8	$	—	$	0.3	$	14.7

Other Actions

The Company periodically initiates other actions which are not part of a major program. Included in “Other Actions” for the second quarter and six months ended June 29, 2025, were immaterial cost saving actions, primarily severance costs, in the Europe and APMEA segments.

Included in “Other Actions” for the second quarter and six months ended June 30, 2024, were immaterial actions primarily taken in the Americas segment related to the approved closure of two facilities and consolidation of the related productions into existing facilities, as well as immaterial cost saving actions in the Europe and APMEA segment. The facility exits were substantially completed in the fourth quarter of 2023, with one facility exit completed in the first half of 2024.

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7. Earnings per Share and Stock Repurchase Program

The following table sets forth the reconciliation of the calculation of earnings per share:


	For the Second Quarter Ended June 29, 2025					For the Second Quarter Ended June 30, 2024
	Income		Shares	Per Share		Income		Shares	Per Share
	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount

	(Amounts in millions, except per share information)
Basic EPS:
Net income	$	100.9	33.5	$	3.01	$	82.0	33.5	$	2.44
Effect of dilutive securities:
Common stock equivalents			—		—			—		—
Diluted EPS:
Net income	$	100.9	33.5	$	3.01	$	82.0	33.5	$	2.44


	For the Six Months Ended June 29, 2025					For the Six Months Ended June 30, 2024
	Income		Shares	Per Share		Income		Shares	Per Share
	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount

	(Amounts in millions, except per share information)
Basic EPS:
Net income	$	174.9	33.5	$	5.22	$	154.5	33.5	$	4.61
Effect of dilutive securities:
Common stock equivalents			—		—			—		—
Diluted EPS:
Net income	$	174.9	33.5	$	5.22	$	154.5	33.5	$	4.61

On July 31, 2023, the Company’s Board of Directors authorized the repurchase of up to $150 million of the Company’s Class A common stock, to be purchased from time to time on the open market or in privately negotiated transactions. The Company has entered into a Rule 10b5-1 plan, which permits shares to be repurchased under the Company’s stock repurchase program when the Company might otherwise be precluded from doing so under insider trading laws. The repurchase program may be suspended or discontinued at any time, subject to the terms of the Rule 10b5-1 plan the Company entered into with respect to the repurchase program. As of June 29, 2025, there was approximately $137.0 million remaining authorized for share repurchases under the repurchase program.

For the second quarters ended June 29, 2025 and June 30, 2024, the Company repurchased 18,019 shares for $4.0 million and 20,262 shares for $4.1 million, respectively. For the six months ended June 29, 2025 and June 30, 2024, the Company repurchased 36,770 shares for $7.9 million and 40,012 shares for $8.1 million, respectively.

8. Stock-Based Compensation

The Company granted 46,361 and 44,459 units of deferred stock awards during the first six months of 2025 and 2024, respectively. The Company grants deferred stock awards to key employees and stock awards to non-employee members of the Company’s Board of Directors under the Third Amended and Restated 2004 Stock Incentive Plan (“2004 Stock Incentive Plan”). Deferred stock awards to employees typically vest annually over a three-year period, and stock awards to non-employee members of the Company’s Board of Directors vest immediately.

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The Company also grants performance stock units to key employees under the 2004 Stock Incentive Plan. Performance stock units cliff vest at the end of a performance period set by the Compensation Committee of the Board of Directors at the time of grant, which is currently three years. Upon vesting, the number of shares of the Company’s Class A common stock awarded to each performance stock unit recipient will be determined based on the Company’s performance relative to certain performance goals set at the time the performance stock units were granted. The recipient of a performance stock unit award may earn from zero shares to twice the number of target shares awarded to such recipient. The performance stock units are amortized to expense over the vesting period and, based on the Company’s performance relative to the performance goals, may be adjusted. Changes to the estimated shares expected to vest will result in adjustments to the related share-based compensation expense that will be recorded in the period of change. If the performance goals are not met, no awards are earned and previously recognized compensation expense is reversed. The Company granted 34,932 and 39,085 performance stock units during the first six months of 2025 and 2024, respectively. The performance goals for the performance stock units are based on the compound annual growth rate of the Company’s revenue over the three-year performance period and the Company’s return on invested capital for the third year of the performance period.

The Company also has a Management Stock Purchase Plan (“MSPP”) that allows for the granting of restricted stock units (“RSUs”) to key employees. Under the MSPP, the Company granted 18,071 and 20,076 RSUs during the first six months of 2025 and 2024, respectively. On an annual basis, key employees may elect to receive a portion of their annual incentive compensation in RSUs instead of cash. Participating key employees may use up to 50% of their annual incentive bonus to purchase RSUs for a purchase price equal to 80% of the fair market value of the Company’s Class A common stock as of the date of grant. RSUs vest either annually over a three-year period from the grant date or upon the third anniversary of the grant date. Receipt of the shares underlying RSUs is deferred for a minimum of three years, or such greater number of years from the date of the grant as is chosen by the key employee.

The fair value of the discount of each purchased RSU is estimated on the date of grant, using the Black-Scholes-Merton Model, based on the following weighted average assumptions:


	2025		2024
Expected life (years)	3.0		3.0
Expected stock price volatility	27.3	%	28.9	%
Expected dividend yield	0.90	%	0.80	%
Risk-free interest rate	4.0	%	4.5	%

The risk-free interest rate is based upon the U.S. Treasury yield curve at the time of grant for the expected life of the RSUs. The expected life (estimated period of time outstanding) of RSUs and volatility were calculated using historical data. The expected dividend yield of stock is the Company’s best estimate of the expected future dividend yield.

The above assumptions were used to determine the weighted average grant-date fair value of the discount on RSUs granted in 2025 and 2024 of $67.63 and $68.94, respectively.

A more detailed description of each of these plans can be found in Note 14 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

9. Segment Information

The Company adopted ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” for its annual reporting beginning January 1, 2024. The Company discloses segment information on the same basis that the Chief Executive Officer, the Company’s chief operating decision-maker (“CODM”), manages the segments, evaluates financial results and makes key operating decisions to allocate investments and resources. The Company operates in three geographic and reportable segments: Americas, Europe, and APMEA. Each of these segments sells similar products and solutions and has separate financial results that are reviewed by the CODM. Each segment earns revenue and income almost exclusively from the sale of the Company’s products. The Company sells its products into various end markets around the world with sales by region based upon location of the entity recording the sale. See Note 3 for further detail on sales by region of the product categories. The accounting policies for each segment are the same as those described in Note 2 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

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In the fourth quarter of 2024, the Company’s segment performance measure was changed to segment earnings as this is the performance measure used by the CODM in assessing segment performance and deciding how to allocate resources. Prior to the fourth quarter of 2024, the Company’s segment performance measure was operating income (loss). Segment earnings excludes the impact of special items defined as non-recurring and unusual items such as restructuring costs, acquisition-related costs, and gain on sale of assets. The CODM uses segment earnings for insight into underlying trends comparing past financial performance with current performance by reporting segment on a consistent basis.

The following is a summary of the Company’s significant accounts and balances by segment, reconciled to its consolidated financial statements:


	For the Second Quarter Ended June 29, 2025
	Americas		Europe		APMEA		Total

	(in millions)
Net sales
Net sales from external customers	$	498.5	$	111.0	$	34.2	$	643.7
Intersegment sales		2.0		10.6		31.3		43.9
Total segment net sales	$	500.5	$	121.6	$	65.5	$	687.6
Reconciliation of net sales
Elimination of intersegment sales								(43.9)
Total consolidated net sales							$	643.7
Less (a)
Segment cost of goods sold		234.7		79.0		48.1
Segment selling, general and administrative		116.1		26.9		10.2
Segment research and development		13.9		2.7		0.7
Segment earnings		135.8		13.0		6.5		155.3

Reconciliation of segment earnings to income before income taxes
Segment special items (b)								(3.8)
Corporate operating loss (c)								(16.2)
Consolidated operating income								135.3
Interest income								(2.3)
Interest expense								2.7
Other expense, net								0.2
Income before income taxes							$	134.7

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WATTS WATER TECHNOLOGIES INC 10-Q