Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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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 March 31, 2024

☐

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 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 April 28, 2024
Class A Common Stock, $0.10 par value		27,412,374

Class B Common Stock, $0.10 par value		5,958,290

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WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

INDEX


Part I. Financial Information		3

Item 1.	Financial Statements	3

	Consolidated Balance Sheets at March 31, 2024 and December 31, 2023 (unaudited)	3

	Consolidated Statements of Operations for the First Quarters ended March 31, 2024 and March 26, 2023 (unaudited)	4

	Consolidated Statements of Comprehensive Income for the First Quarters ended March 31, 2024 and March 26, 2023 (unaudited)	5

	Consolidated Statements of Stockholders’ Equity for the First Quarters ended March 31, 2024 and March 26, 2023 (unaudited)	6

	Consolidated Statements of Cash Flows for the First Quarters ended March 31, 2024 and March 26, 2023 (unaudited)	7

	Notes to Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	33

Part II. Other Information		33

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	33

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 5.	Other Information		35

Item 6.	Exhibits	36

Signatures		37

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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in millions, except share information)

(Unaudited)


	March 31,		December 31,
	2024		2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	237.1	$	350.1
Trade accounts receivable, less reserve allowances of $13.0 million at March 31, 2024 and $11.9 million at December 31, 2023		305.7		259.8
Inventories, net:
Raw materials		151.9		150.6
Work in process		21.3		20.2
Finished goods		250.4		228.5
Total Inventories		423.6		399.3
Prepaid expenses and other current assets		43.6		51.8
Total Current Assets		1,010.0		1,061.0
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost		683.8		677.2
Accumulated depreciation		(428.8)		(429.0)
Property, plant and equipment, net		255.0		248.2
OTHER ASSETS:
Goodwill		724.3		693.0
Intangible assets, net		250.9		216.1
Deferred income taxes		21.6		23.6
Other, net		70.6		67.5
TOTAL ASSETS	$	2,332.4	$	2,309.4
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	162.6	$	131.8
Accrued expenses and other liabilities		186.6		190.3
Accrued compensation and benefits		58.1		83.7
Total Current Liabilities		407.3		405.8
LONG-TERM DEBT		283.5		298.3
DEFERRED INCOME TAXES		12.6		13.5
OTHER NONCURRENT LIABILITIES		77.2		78.5
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, 27,418,449 shares at March 31, 2024 and 27,352,701 shares at December 31, 2023		2.7		2.7
Class B common stock, $0.10 par value; 25,000,000 shares authorized; 10 votes per share; issued and outstanding, 5,958,290 shares at March 31, 2024 and at December 31, 2023		0.6		0.6
Additional paid-in capital		680.6		674.3
Retained earnings		1,022.8		979.1
Accumulated other comprehensive loss		(154.9)		(143.4)
Total Stockholders’ Equity		1,551.8		1,513.3
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,332.4	$	2,309.4

See accompanying notes to consolidated financial statements.

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WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in millions, except per share information)

(Unaudited)


	First Quarter Ended
	March 31,		March 26,
	2024		2023
Net sales	$	570.9	$	471.7
Cost of goods sold		303.4		253.6
GROSS PROFIT		267.5		218.1
Selling, general and administrative expenses		169.6		133.7
Restructuring		1.2		(0.3)
OPERATING INCOME		96.7		84.7
Other (income) expense:
Interest income		(2.1)		(0.4)
Interest expense		4.2		1.5
Other (income) expense, net		(0.6)		0.1
Total other expense		1.5		1.2
INCOME BEFORE INCOME TAXES		95.2		83.5
Provision for income taxes		22.6		18.8
NET INCOME	$	72.6	$	64.7
Basic EPS
NET INCOME PER SHARE	$	2.17	$	1.94
Weighted average number of shares		33.4		33.4
Diluted EPS
NET INCOME PER SHARE	$	2.17	$	1.93
Weighted average number of shares		33.5		33.5
Dividends declared per share	$	0.36	$	0.30

See accompanying notes to consolidated financial statements.

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WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in millions)

(Unaudited)


	First Quarter Ended
	March 31,		March 26,
	2024		2023
Net income	$	72.6	$	64.7
Other comprehensive (loss) income net of tax:
Foreign currency translation adjustments		(12.9)		4.4
Cash flow hedges		1.4		(1.7)
Other comprehensive (loss) income		(11.5)		2.7
Comprehensive income	$	61.1	$	67.4

See accompanying notes to consolidated financial statements.

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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 first quarter ended

Common Stock

Paid-In

Retained

Comprehensive

Stockholders’

March 31, 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

—

72.6

—

72.6

Other comprehensive loss

—

(11.5)

Comprehensive income

61.1

Stock-based compensation

—

4.0

—

4.0

Stock repurchase

(19,750)

—

(4.0)

—

(4.0)

Net change in restricted and performance stock units

85,498

—

2.3

(12.8)

—

(10.5)

Common stock dividends

—

(12.1)

—

(12.1)

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


											Accumulated
	Class A			Class B			Additional				Other		Total
(For the first quarter ended	Common Stock			Common Stock			Paid-In		Retained		Comprehensive		Stockholders’
March 26, 2023)	Shares	Amount		Shares	Amount		Capital		Earnings		Loss		Equity
Balance at December 31, 2022	27,314,679	$	2.7	5,958,290	$	0.6	$	651.9	$	795.3	$	(149.9)	$	1,300.6
Net income	—		—	—		—		—		64.7		—		64.7
Other comprehensive income	—		—	—		—		—		—		2.7		2.7
Comprehensive income														67.4
Shares of Class A common stock issued upon the exercise of stock options	547		—	—		—		0.1		—		—		0.1
Stock-based compensation	—		—	—		—		4.0		—		—		4.0
Stock repurchase	(22,473)		—	—		—		—		(3.7)		—		(3.7)
Net change in restricted and performance stock units	121,647		—	—		—		2.1		(14.6)		—		(12.5)
Common stock dividends	—		—	—		—		—		(10.1)		—		(10.1)
Balance at March 26, 2023	27,414,400	$	2.7	5,958,290	$	0.6	$	658.1	$	831.6	$	(147.2)	$	1,345.8

See accompanying notes to consolidated financial statements.

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WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in millions)

(Unaudited)


	Three Months Ended
	March 31,		March 26,
	2024		2023
OPERATING ACTIVITIES
Net income	$	72.6	$	64.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		8.6		7.0
Amortization of intangibles		4.7		3.0
(Gain) on sale of asset and loss on disposal of long-lived asset		(1.0)		0.2
Stock-based compensation		4.0		4.0
Deferred income tax		0.9		(0.7)
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts receivable		(44.5)		(34.8)
Inventories		(12.5)		(23.9)
Prepaid expenses and other assets		7.1		(1.9)
Accounts payable, accrued expenses and other liabilities		5.7		15.8
Net cash provided by operating activities		45.6		33.4
INVESTING ACTIVITIES
Additions to property, plant and equipment		(10.1)		(5.1)
Proceeds from the sale of property, plant and equipment		1.1		—
Business acquisitions, net of cash acquired		(100.8)		—
Net cash used in investing activities		(109.8)		(5.1)
FINANCING ACTIVITIES
Proceeds from long-term borrowings		—		30.0
Payments of long-term debt		(15.0)		(30.0)
Payments for withholding taxes on vested awards		(12.8)		(14.6)
Payments for finance leases and other		(0.7)		(0.7)
Proceeds from share transactions under employee stock plans		—		0.1
Payments to repurchase common stock		(4.0)		(3.7)
Dividends		(12.1)		(10.1)
Net cash used in financing activities		(44.6)		(29.0)
Effect of exchange rate changes on cash and cash equivalents		(4.2)		1.7
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(113.0)		1.0
Cash and cash equivalents at beginning of year		350.1		310.8
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	237.1	$	311.8

SUPPLEMENTAL CASH FLOW DISCLOSURE:
Acquisition of businesses:
Fair value of assets acquired	$	102.9	$	—
Cash paid, net of cash acquired		100.8		—
Liabilities assumed	$	2.1	$	—

Issuance of stock under management stock purchase plan	$	0.3	$	0.4

CASH PAID FOR:
Interest	$	3.2	$	1.2
Income taxes	$	13.7	$	7.7

See accompanying notes to consolidated financial statements.

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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 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 March 31, 2024, the Consolidated Statements of Operations for the First Quarters ended March 31, 2024 and March 26, 2023, the Consolidated Statements of Comprehensive Income for the First Quarters ended March 31, 2024 and March 26, 2023, the Consolidated Statements of Stockholders’ Equity for the First Quarters ended March 31, 2024 and March 26, 2023, and the Consolidated Statements of Cash Flows for the First Quarters ended March 31, 2024 and March 26, 2023.

The consolidated balance sheet at December 31, 2023 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, 2023. The 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, 2023. Operating results for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2024.

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 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 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 first quarter ended March 31, 2024, 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, 2023.

Shipping and Handling

Shipping and handling costs included in selling, general and administrative expenses amounted to $21.8 million and $16.6 million for the first quarters of 2024 and 2023, respectively.

Research and Development

Research and development costs included in selling, general and administrative expenses amounted to $18.5 million and $16.1 million for the first quarters of 2024 and 2023, respectively.

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Accounting Standard Updates

In March 2024, the Securities and Exchange Commission (“SEC”) adopted climate-related reporting rules, “The Enhancement and Standardization of Climate-Related Disclosures for Investors” (the “SEC Climate Reporting Rules”), which require the disclosure of material Scope 1 and Scope 2 greenhouse gas emissions and other climate-related topics in annual reports and registration statements. For large accelerated filers, disclosure requirements will begin phasing in for fiscal years beginning on or after January 1, 2025. The Company is currently evaluating the impact these rules will have on the Company’s consolidated financial statements and related disclosures. In April 2024, the SEC voluntarily stayed the implementation of the final rules. In the stay order, the SEC noted it intends to vigorously defend the validity of the final rules. The Company is monitoring the outcome of the voluntary stay.

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 2023, the Financial Standards Accounting Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for our annual periods beginning January 1, 2024, and for interim 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.

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 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 helps 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 and freeze 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.

●

HVAC & gas—includes commercial high-efficiency boilers, water heaters and custom heat and hot water solutions, hydronic and electric heating systems for under-floor radiant applications, 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. HVAC is an acronym for heating, ventilation and air conditioning.

●

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

●

Water quality—includes point-of-use and point-of-entry water filtration, monitoring, conditioning and scale prevention systems for commercial, marine and residential applications.

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

For the first quarter ended March 31, 2024

(in millions)

Distribution Channel

Americas

Europe

APMEA

Consolidated

Wholesale

272.2

84.0

19.0

375.2

OEM

26.0

38.7

1.7

66.4

Specialty

97.5

—

8.1

105.6

DIY

23.1

0.6

—

23.7

Total

418.8

123.3

28.8

570.9

For the first quarter ended March 31, 2024

(in millions)

Principal Product Category

Americas

Europe

APMEA

Consolidated

Residential & Commercial Flow Control

273.6

47.2

25.1

345.9

HVAC and Gas Products

85.1

52.2

2.8

140.1

Drainage and Water Re-use Products

33.0

22.9

0.6

56.5

Water Quality Products

27.1

1.0

0.3

28.4

Total

418.8

123.3

28.8

570.9


	For the first quarter ended March 26, 2023
			(in millions)
Distribution Channel	Americas		Europe		APMEA		Consolidated
Wholesale	$	188.8	$	81.1	$	18.5	$	288.4
OEM		23.1		46.5		1.7		71.3
Specialty		90.5		—		—		90.5
DIY		20.8		0.7		—		21.5
Total	$	323.2	$	128.3	$	20.2	$	471.7

	For the first quarter ended March 26, 2023
			(in millions)
Principal Product Category	Americas		Europe		APMEA		Consolidated
Residential & Commercial Flow Control	$	194.5	$	45.5	$	15.9	$	255.9
HVAC and Gas Products		78.2		62.3		3.4		143.9
Drainage and Water Re-use Products		22.8		19.6		0.7		43.1
Water Quality Products		27.7		0.9		0.2		28.8
Total	$	323.2	$	128.3	$	20.2	$	471.7

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 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

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customized products without alternative use for its customers. However, as these arrangements do not entitle the Company to a right to payment of cost plus a profit for work completed, 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

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 aggregate net purchase price was approximately $98.9 million, net of cash acquired of $4.6 million. The final post-closing working capital adjustment is immaterial and will be adjusted in the second quarter of 2024. 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 expected in the second quarter of 2024 related to the final working capital adjustment, final intangible asset valuations and deferred tax adjustments. The acquisition resulted in the recognition of $34.6 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 that will allow Watts to extend its product offerings as a result of the

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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.

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


Cash	$	4.6
Trade accounts receivable		4.3
Inventories, net		15.4
Prepaid expenses and other current assets		0.5
Property, Plant and Equipment		7.6
Intangible assets		39.4
Goodwill		34.6
Accounts payable		(1.5)
Accrued expenses and other current liabilities		(1.4)
Purchase price	$	103.5

Bradley

On October 23, 2023, the Company completed the acquisition of Bradley Corporation following its conversion into Bradley Company, LLC (“Bradley”) in a share purchase transaction. The aggregate net purchase price was approximately $301.2 million, net of cash acquired of $9.2 million, and was financed by $210 million of borrowings under the Company’s Second Amended and Restated Credit Agreement with the remainder being funded by cash on hand. The purchase price includes an estimated working capital adjustment of $3.1 million and is subject to a final post-closing working capital adjustment, which is expected to be finalized in the second quarter of 2024. In the first quarter of 2024, the Company paid an additional $1.9 million to settle liabilities acquired in the transaction that were considered part of the total purchase price, resulting in an aggregate net purchase price of approximately $303.1 million, net of cash of $9.2 million.

Bradley is based in Menomonee Falls, WI, and is a provider and manufacturer of commercial washroom and emergency safety products serving commercial (primarily institutional) and industrial end markets for over 100 years. Bradley offers a comprehensive product portfolio that includes plumbing fixtures, washroom accessories and emergency safety products to a diverse customer base. Bradley’s complementary portfolio will enable the Company to provide its customers with innovative water solutions, as it adds front-of-the-wall applications to its differentiated back-of-the-wall portfolio. The acquisition of Bradley is intended to align with the Company’s strategy to enhance its product offerings, drive growth and serve its customers.

Bradley’s operating results since the date of acquisition are included in the Americas segment. The Company accounted for the transaction as a purchased business combination. During the fourth quarter of 2023, the Company performed the preliminary purchase price allocation for the Bradley purchase, with immaterial adjustments expected related to the final working capital adjustment, final intangible asset valuations and deferred tax adjustments. During the first quarter of 2024, the Company finalized the purchase price allocation with the exception of the final working capital adjustment which is expected in the second quarter of 2024. The changes to the purchase price allocation in the first quarter of 2024 were not material and resulted in the adjusted recognition of $96.9 million in goodwill and $115.3 million in intangible assets. The intangible assets acquired consist of customer relationships valued at $85.3 million with estimated lives of 15 years and the trade name valued at $30.0 million with an indefinite life. The goodwill is attributable to the workforce of Bradley and the strategic platform adjacency that will allow Watts 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.

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


Cash	$	9.2
Trade accounts receivable		23.5
Inventories, net		38.4
Prepaid expenses and other current assets		3.5
Property, Plant and Equipment		47.6
Intangible assets		115.3
Goodwill		96.9
Accounts payable		(8.2)
Employee benefits, other		(5.0)
Other current liabilities		(8.4)
Other noncurrent liabilities		(0.5)
Purchase price	$	312.3

Supplemental pro-forma information (unaudited)

Had the Company completed the acquisition of Bradley at the beginning of 2023, net sales, net income and earnings per share would have been as follows:


	Three Months Ended March 31,
	2024		2023

	(Amounts in millions, except per share information)
Net Sales	$	570.9	$	521.6
Net Income	$	75.6	$	65.3
Net income per share:
Basic EPS	$	2.26	$	1.95
Diluted EPS	$	2.25	$	1.95

Net income for the first quarter ended March 26, 2023 was adjusted to include $2.0 million of net interest expense related to the financing, $1.1 million of net amortization expense resulting from the estimated allocation of purchase price to amortizable tangible and intangible assets, and $0.4 million of income tax expense to align the effective tax rate. Net income for the first quarters ended March 31, 2024 and March 26, 2023 was also adjusted to exclude $3.0 million and $2.2 million, respectively, of net acquisition-related and purchase accounting charges. The pro-forma financial information excludes adjustments for estimated cost synergies or other effects of the integration of Bradley.

Enware

On March 31, 2023, the Company completed the acquisition of the primary business assets of Enware Australia Pty Ltd (“Enware”) in an all-cash transaction. Enware is based near Sydney, Australia, and has been a leading supplier for specialty plumbing and safety equipment used in the Australian institutional and commercial end markets since 1937. The acquisition of Enware aligns with the Company’s strategy to expand geographically into countries with mature and enforced plumbing codes. Enware is expected to enhance the Company’s product offering and channel access into the Australian marketplace. The acquisition of Enware was deemed not to be material to the Company’s consolidated financial statements.

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5. Goodwill & Intangibles

The Company operates in three geographic segments: Americas, Europe, and APMEA. The changes in the carrying amount 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

2024 -

January 1,

the

March 31,

January 1,

Loss During

March 31,

2024

Period

2024

the Period

2024

(in millions)

Americas

587.1

34.8

621.9

(24.5)

—

(24.5)

(0.2)

597.2

Europe

239.8

—

239.8

(129.7)

—

(129.7)

(2.4)

107.7

APMEA

33.2

—

33.2

(12.9)

—

(12.9)

(0.9)

19.4

Total

860.1

34.8

894.9

(167.1)

—

(167.1)

(3.5)

724.3

During the first quarter of 2024, the Company completed the acquisition of Josam, resulting in $34.6 million of goodwill, and adjustments to the purchase price allocation of Bradley, resulting in $0.2 million of additional goodwill, both within the Americas region. The final working capital adjustments for the two acquisitions are expected to be completed in the second quarter of 2024.

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 in the fourth quarter of 2023, 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:

March 31, 2024

December 31, 2023

Gross

Net

Gross

Net

Carrying

Accumulated

Carrying

Accumulated

Carrying

Amount

Amortization

Amount

Amortization

Amount

(in millions)

Patents

5.0

(5.0)

—

5.0

(5.0)

—

Customer relationships

252.0

(89.0)

163.0

218.0

(85.3)

132.7

Technology

53.2

(45.1)

8.1

53.2

(44.2)

9.0

Trade names

20.7

(12.3)

8.4

20.8

(12.3)

8.5

Other

1.1

(0.7)

0.4

1.1

(0.7)

0.4

Total amortizable intangibles

332.0

(152.1)

179.9

298.1

(147.5)

150.6

Indefinite-lived intangible assets

71.0

—

71.0

65.5

—

65.5

403.0

(152.1)

250.9

363.6

(147.5)

216.1

In the first quarter of 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 first quarters ended March 31, 2024 and March 26, 2023 was $4.7 million and $3.0 million, respectively.

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6. Earnings per Share and Stock Repurchase Program

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

For the First Quarter Ended March 31, 2024

For the First Quarter Ended March 26, 2023

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

72.6

33.4

2.17

64.7

33.4

1.94

Effect of dilutive securities:

Common stock equivalents

0.1

—

0.1

(0.01)

Diluted EPS:

Net income

72.6

33.5

2.17

64.7

33.5

1.93

There were no options to purchase Class A common stock outstanding during the first quarters ended March 31, 2024 or March 26, 2023 that would have been anti-dilutive.

On February 6, 2019, 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. On July 31, 2023, the Board of Directors authorized a new stock repurchase program 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 both stock repurchase programs when the Company might otherwise be precluded from doing so under insider trading laws. The repurchase programs 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 programs. As of March 31, 2024, there was approximately $8.0 million remaining authorized for share repurchases under the 2019 repurchase program. The Company had not made any share repurchases under the 2023 repurchase program as of March 31, 2024.

For the first quarters ended March 31, 2024 and March 26, 2023, the Company repurchased 19,750 shares for $4.0 million and 22,473 shares for $3.7 million, respectively.

7. Stock-Based Compensation

The Company granted 41,862 and 41,096 units of deferred stock awards during the first quarters of 2024 and 2023, respectively. The Company grants shares of 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 over a three-year period, and stock awards to non-employee members of the Company’s Board of Directors vest immediately.

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 38,903 and 35,948 performance stock units during the first quarters of 2024 and 2023, 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 (“ROIC”) for the third year of the performance period.

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Under the Management Stock Purchase Plan (“MSPP”), the Company granted 20,076 and 26,645 restricted stock units (“RSUs”) during the first quarters of 2024 and 2023, respectively. The MSPP allows for the granting of RSUs to key employees. On an annual basis, key employees may elect to receive a portion of their annual incentive compensation in RSUs instead of cash. Participating 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 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:


	2024		2023
Expected life (years)	3.0		3.0
Expected stock price volatility	28.9	%	33.7	%
Expected dividend yield	0.80	%	0.80	%
Risk-free interest rate	4.5	%	4.1	%

The risk-free interest rate is based upon the U.S. Treasury yield curve at the time of grant for the respective 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 2024 and 2023 of $68.94 and $57.50, 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, 2023.

8. Segment Information

The Company operates in three geographic segments: Americas, Europe, and APMEA. Each of these segments sells similar products and has separate financial results that are reviewed by the Company’s chief operating decision-maker. 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 the product lines sold into by region. All intercompany sales transactions have been eliminated. The accounting policies for each segment are the same as those described in Note 2 above and 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, 2023.

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


	First Quarter Ended
	March 31,		March 26,
	2024		2023

	(in millions)
Net sales
Americas	$	418.8	$	323.2
Europe		123.3		128.3
APMEA		28.8		20.2
Consolidated net sales	$	570.9	$	471.7
Operating income (loss)
Americas	$	85.4	$	72.5
Europe		20.5		19.2
APMEA		5.0		4.0
Subtotal reportable segments		110.9		95.7
Corporate(*)		(14.2)		(11.0)
Consolidated operating income		96.7		84.7
Interest income		(2.1)		(0.4)
Interest expense		4.2		1.5
Other (income) expense, net		(0.6)		0.1
Income before income taxes	$	95.2	$	83.5
Capital expenditures
Americas	$	7.4	$	3.2
Europe		2.4		1.8
APMEA		0.3		0.1
Consolidated capital expenditures	$	10.1	$	5.1
Depreciation and amortization
Americas	$	10.4	$	7.1
Europe		2.3		2.4
APMEA		0.6		0.5
Consolidated depreciation and amortization	$	13.3	$	10.0

	March 31,		December 31,
	2024		2023

	(in millions)
Identifiable assets (at end of period)
Americas	$	1,610.4	$	1,605.7
Europe		585.3		569.1
APMEA		136.7		134.6
Consolidated identifiable assets	$	2,332.4	$	2,309.4
Property, plant and equipment, net (at end of period)
Americas	$	182.3	$	174.0
Europe		68.5		69.9
APMEA		4.2		4.3
Consolidated property, plant and equipment, net	$	255.0	$	248.2

* Corporate expenses are primarily for administrative compensation expense, compliance costs, professional fees, including corporate-related legal and audit expenses, shareholder services and benefit administration costs.

The above operating segments are presented on a basis consistent with the presentation included in the Company’s December 31, 2023 consolidated financial statements included in its Annual Report on Form 10-K.

The property, plant and equipment, net, in the U.S. of the Company’s Americas segment was $169.5 million and $161.5 million as of March 31, 2024 and December 31, 2023, respectively.

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The following includes U.S. net sales of the Company’s Americas segment:


	March 31,		March 26,
	2024		2023

	(in millions)
U.S. net sales	$	392.6	$	304.3

The following includes intersegment sales for Americas, Europe and APMEA:


	First Quarter Ended
	March 31,		March 26,
	2024		2023

	(in millions)
Intersegment Sales
Americas	$	2.6	$	2.0
Europe		5.8		5.6
APMEA		21.4		22.1
Intersegment sales	$	29.8	$	29.7

9. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the following:


							Accumulated
	Foreign						Other
	Currency		Pension			Cash Flow	Comprehensive
	Translation		Adjustment			Hedges (1)	Loss

	(in millions)

Balance December 31, 2023	$	(147.3)	$	0.7	$	3.2	$	(143.4)
Change in period		(12.9)		—		1.4		(11.5)
Balance March 31, 2024	$	(160.2)	$	0.7	$	4.6	$	(154.9)

Balance December 31, 2022	$	(157.0)	$	—	$	7.1	$	(149.9)
Change in period		4.4		—		(1.7)		2.7
Balance March 26, 2023	$	(152.6)	$	—	$	5.4	$	(147.2)

(1)	Cash flow hedges include interest rate swaps and designated foreign currency hedges. See Note 11 for further details.

10. Debt

On March 30, 2021, the Company and certain of its subsidiaries entered into the Second Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, as amended by Amendment no. 1 dated August 2, 2022, Amendment no. 2 dated December 12, 2023 and as may be further amended, restated, amended and restated, modified or supplemented from time to time (the “Credit Agreement”). The Credit Agreement establishes a senior unsecured revolving credit facility of $800 million (the "Revolving Credit Facility"). The maturity date of the Revolving Credit Facility is March 30, 2026, subject to extension under certain circumstances and subject to the terms of the Credit Agreement. The Credit Agreement provides for a maximum consolidated leverage ratio of 3.50 to 1.00 (or 4.00 to 1.00 during temporary step-ups following certain acquisitions) and the minimum consolidated interest ratio of 3.50 to 1.00.

The Revolving Credit Facility also includes sub-limits of $100 million for letters of credit and $15 million for swing line loans. As of March 31, 2024, the Company had drawn down $285.0 million on this line of credit and had $12.5 million in letters of credit outstanding, which resulted in $502.5 million of unused and available credit under the Revolving Credit Facility as of such date. Borrowings outstanding bear interest at a fluctuating rate per annum equal to an applicable percentage defined as (i) in the case of Term Benchmark loans, the Term Benchmark rate plus an applicable percentage, ranging from 1.075% to 1.325%, or (ii) in the case of alternate base rate loans and swing line loans, interest (which at all times will not be less than 1.00%) at the greatest of (a) the Prime Rate in effect on such day, (b) the FRBNY Rate in effect on such day plus 0.50% and (c) the Term Benchmark rate plus 1.00% for a one-month interest period, in each case, determined by reference to the Company’s consolidated leverage ratio. For the borrowings

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denominated in dollars, there is a fixed 10 basis point adjustment if the reference rate is Term SOFR. The weighted average interest rate on debt outstanding under the Revolving Credit Facility as of March 31, 2024 was 6.50%. The weighted average interest rate on debt outstanding inclusive of the interest rate swaps discussed in Note 11 of the Notes to Consolidated Financial Statements and interest rates under the Revolving Credit Facility as of March 31, 2024 was 4.79%. In addition to paying interest under the Credit Agreement, the Company is also required to pay certain fees in connection with the Revolving Credit Facility, including, but not limited to, an unused facility fee and letter of credit fees. The Company may repay loans outstanding under the Credit Agreement from time to time without premium or penalty, other than customary breakage costs, if any, and subject to the terms of the Credit Agreement. As of March 31, 2024, the Company was in compliance with all covenants related to the Credit Agreement.

The Credit Agreement imposes various restrictions on the Company and its subsidiaries, including restrictions pertaining to: (i) the incurrence of additional indebtedness, (ii) limitations on liens, (iii) making distributions, dividends and other payments, (iv) mergers, consolidations and acquisitions, (v) dispositions of assets, (vi) certain consolidated leverage ratios and consolidated interest coverage ratios, (vii) transactions with affiliates, (viii) changes to governing documents, and (ix) changes in control.

The Company maintains letters of credit that guarantee its performance or payment to third parties in accordance with specified terms and conditions. The Company’s letters of credit are primarily associated with insurance coverage. The Company’s letters of credit generally expire within one year of issuance. These instruments may exist or expire without being drawn down. Therefore, they do not necessarily represent future cash flow obligations.

11. Financial Instruments and Derivative Instruments

Fair Value

The carrying amounts of cash and cash equivalents, trade receivables and trade payables approximate fair value because of the short maturity of these financial instruments. The fair value of the Company’s variable rate debt under the Revolving Credit Facility approximates its carrying value.

Financial Instruments

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including deferred compensation plan assets and related liabilities, contingent consideration and derivatives. The fair values of these financial assets and liabilities were determined using the following inputs as of March 31, 2024 and December 31, 2023:


	Fair Value Measurement at March 31, 2024 Using:
			Quoted Prices in Active		Significant Other		Significant
			Markets for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)

	(in millions)
Assets
Plan asset for deferred compensation(1)	$	2.5	$	2.5	$	—	$	—
Interest rate swap(2)	$	6.9	$	—	$	6.9	$	—
Designated foreign currency hedges(3)	$	0.1	$	—	$	0.1	$	—
Total assets	$	9.5	$	2.5	$	7.0	$	—
Liabilities
Plan liability for deferred compensation(4)	$	2.5	$	2.5	$	—	$	—
Interest rate swap(5)	$	0.8	$	—	$	0.8	$	—
Total liabilities	$	3.3	$	2.5	$	0.8	$	—

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	Fair Value Measurements at December 31, 2023 Using:
			Quoted Prices in Active		Significant Other		Significant
			Markets for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)

	(in millions)
Assets
Plan asset for deferred compensation(1)	$	2.3	$	2.3	$	—	$	—
Interest rate swap(2)	$	6.5	$	—	$	6.5	$	—
Total assets	$	8.8	$	2.3	$	6.5	$	—
Liabilities
Plan liability for deferred compensation(4)	$	2.3	$	2.3	$	—	$	—
Interest rate swap(5)	$	2.0	$	—	$	2.0	$	—
Designated foreign currency hedges(6)	$	0.2	$	—	$	0.2	$	—
Total liabilities	$	4.5	$	2.3	$	2.2	$	—

(1)	Included on the Company’s consolidated balance sheet in other assets (other, net).

(2)

As of March 31, 2024, $3.8 million classified in prepaid expenses and other current assets on the Company’s consolidated balance sheet and $3.1 million classified in other assets (other, net). As of December 31, 2023, $3.5 million classified in prepaid expenses and other current assets on the Company’s consolidated balance sheet and $3.0 million classified in other assets (other, net).

(3)	Included on the Company’s consolidated balance sheet in prepaid expenses and other current assets.

(4)Included on the Company’s consolidated balance sheet in accrued compensation and benefits.

(5)Included on the Company’s consolidated balance sheet in other noncurrent liabilities.

(6)Included on the Company’s consolidated balance sheet in accrued expenses and other liabilities.

Cash equivalents consist of instruments with remaining maturities of three months or less at the date of purchase and consist primarily of money market funds, for which the carrying amount is a reasonable estimate of fair value.

The Company uses financial instruments from time to time to enhance its ability to manage risk, including foreign currency and commodity pricing exposures, which exist as part of its ongoing business operations. The use of derivatives exposes the Company to counterparty credit risk for nonperformance and to market risk related to changes in currency exchange rates and commodity prices. The Company manages its exposure to counterparty credit risk through diversification of counterparties. The Company’s counterparties in derivative transactions are substantial commercial banks with significant experience using such derivative instruments. The impact of market risk on the fair value and cash flows of the Company’s derivative instruments is monitored and the Company restricts the use of derivative financial instruments to hedging activities. The Company does not enter into contracts for trading purposes nor does the Company enter into any contracts for speculative purposes. The use of derivative instruments is approved by senior management under written guidelines.

Interest Rate Swaps

On March 30, 2021, the Company entered into the Credit Agreement which extended the maturity date of the $800 million senior unsecured revolving credit facility from February 12, 2022 to March 30, 2026. On August 2, 2022, the Company entered into Amendment No. 1 to the Credit Agreement to replace the LIBOR as a reference rate for borrowings with Term SOFR and to provide for a fixed adjustment of 10 basis points added to Term SOFR for all Term SOFR borrowings, subject to a 0.00% floor. Borrowings outstanding under the Revolving Credit Facility bear interest at a fluctuating rate per annum as further detailed in Note 10.

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In order to manage the Company’s exposure to changes in cash flows attributable to fluctuations in interest payments related to the Company’s floating rate debt, the Company entered into an interest rate swap on March 30, 2021. Under the interest rate swap agreement, the Company received the one-month USD-LIBOR subject to a 0.00% floor and paid a fixed rate of 1.02975% on a notional amount of $100.0 million. On August 2, 2022, the Company amended the interest rate swap to replace LIBOR as a reference rate for borrowings with Term SOFR. Under the amended interest rate swap agreement, the Company receives the one-month Term SOFR subject to a -0.1 floor and pays a fixed rate of 0.942% on a notional amount of $100.0 million. The Company elected the optional expedient in connection with amending its interest rate swap to replace the reference rate from LIBOR to Term SOFR to consider the amendment as a continuation of the existing contract without having to perform an assessment that would otherwise be required under U.S. GAAP. The Company entered into an additional interest rate swap on October 23, 2023, as part of the acquisition of Bradley. Under the interest rate swap agreement, the Company receives the one-month Term SOFR subject to a -0.1% floor and pays a fixed rate of 4.844% on a notional amount of $100.0 million. Both swaps mature on March 30, 2026. The Company formally documents the hedge relationships at hedge inception to ensure that its interest rate swaps qualify for hedge accounting. On a quarterly basis, the Company assesses whether the interest rate swap is highly effective in offsetting changes in the cash flow of the hedged item. The Company does not hold or issue interest rate swaps for trading purposes. The swaps are designated as cash flow hedges. For the first quarter ended March 31, 2024, a net gain of $1.2 million was recorded in Accumulated Other Comprehensive Loss to recognize the effective portion of the fair value of the interest rate swap that qualifies as a cash flow hedge.

Designated Foreign Currency Hedges

The Company’s foreign subsidiaries transact most business, including certain intercompany transactions, in foreign currencies. Such transactions are principally purchases or sales of materials. The Company has exposure to a number of foreign currencies, including the Canadian dollar, the euro, and the Chinese yuan. The Company uses a layering methodology, whereby at the end of each quarter, the Company enters into forward exchange contracts hedging Canadian dollar to U.S. dollar, which hedge up to 85% of the forecasted intercompany purchase transactions between one of the Company’s Canadian subsidiaries and the Company’s U.S. operating subsidiaries for the next twelve months. As of March 31, 2024, all designated foreign exchange hedge contracts were cash flow hedges under ASC 815, Derivatives and Hedging. The Company records the effective portion of the designated foreign currency hedge contracts in other comprehensive income until inventory turns and is sold to a third-party. Once the third-party transaction associated with the hedged forecasted transaction occurs, the effective portion of any related gain or loss on the designated foreign currency hedge is reclassified into earnings within cost of goods sold. In the event the notional amount of the derivatives exceeds the forecasted intercompany purchases for a given month, the excess hedge position will be attributed to the following month’s forecasted purchases. However, if the following month’s forecasted purchases cannot absorb the excess hedge position from the current month, the effective portion of the hedge recorded in other comprehensive income will be reclassified to earnings.

The notional amounts outstanding as of March 31, 2024 for the Canadian dollar to U.S. dollar contracts was $15.5 million. The fair value of the Company’s designated foreign hedge contracts outstanding as of March 31, 2024 was an asset of $0.1 million. As of March 31, 2024, the amount expected to be reclassified into cost of goods sold from other comprehensive income in the next twelve months is a gain of less than $0.1 million.

12. Contingencies and Environmental Remediation

In the ordinary course of business, the Company is involved in disputes, litigation, and governmental or regulatory inquiries and investigations, both pending and threatened, including those involving product liability, environmental matters, and commercial disputes.

Other than the items described below, significant commitments and contingencies at March 31, 2024 are consistent with those discussed in Note 16 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

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As of March 31, 2024, the Company estimates that the aggregate amount of reasonably possible loss in excess of the amount accrued for its contingencies is approximately $4.6 million. With respect to the estimate of reasonably possible loss, management has estimated the upper end of the range of reasonably possible loss based on (i) the amount of money damages claimed, where applicable, (ii) the allegations and factual development to date, (iii) available defenses based on the allegations, and/or (iv) other potentially liable parties. This estimate is based upon currently available information and is subject to significant judgment and a variety of assumptions and known and unknown uncertainties. The matters underlying the estimate will change from time to time, and actual results may vary significantly from the current estimate. In the event of an unfavorable outcome in one or more of the matters, the ultimate liability may be in excess of amounts currently accrued, if any, and may be material to the Company’s operating results or cash flows for a particular quarterly or annual period. However, based on information currently known to it, management believes that the ultimate outcome of all matters, as they are resolved over time, is not likely to have a material adverse effect on the financial condition of the Company.

Chemetco, Inc. Superfund Site, Hartford, Illinois

In August 2017, Watts Regulator Co. (a wholly-owned subsidiary of the Company) received a “Notice of Environmental Liability” from the Chemetco Site Group (“Group”) alleging that it is a PRP for the Chemetco, Inc. Superfund Site in Hartford, Illinois (the “Site”) because it arranged for the disposal or treatment of hazardous substances that were contained in materials sent to the Site and that resulted in the release or threat of release of hazardous substances at the Site. The letter offered Watts Regulator Co. the opportunity to join the Group and participate in the Remedial Investigation and Feasibility Study (“RI/FS”) for a portion of the Site. Watts Regulator Co. joined the Group in September 2017 and was added in March 2018 as a signatory to the Administrative Settlement Agreement and Order on Consent with the United States Environmental Protection Agency (“USEPA”) and the Illinois Environmental Protection Agency (“IEPA”) governing completion of the RI/FS. The Remedial Investigation report has been completed for the first portion of the site. For that same portion of the site, the draft Feasibility Study (“FS”) report was submitted to USEPA and IEPA for review and comment in September 2021. USEPA and IEPA both issued comments on the draft FS. The Group provided responses to the Agency comments on December 1, 2023. The deadline for submission of the revised FS report has been deferred with USEPA’s consent until all Agency comments are resolved. Comments and final approval from the EPA are required to complete the FS process.

Based on information currently known to it, management believes that Watts Regulator Co.’s share of the costs of the RI/FS is not likely to have a material adverse effect on the financial condition of the Company, or have a material adverse effect on the Company’s operating results for any particular period. The Company is unable to estimate a range of reasonably possible loss for the above matter in which damages have not been specified because: (i) the FS process for the first portion of the Site has not been completed, and the RI/FS process for the remainder of the Site has not yet been initiated, to determine what remediation plans will be implemented and the costs of such plans; (ii) the total amount of material sent to the Site, and the total number of PRPs who may or may not agree to fund or perform any remediation, have not been determined; (iii) the share contribution for PRPs to any remediation has not been determined; and (iv) the number of years required to implement a remediation plan acceptable to USEPA and IEPA is uncertain.

13. Subsequent Events

On May 7, 2024, the Company declared a quarterly dividend of forty-three cents ($0.43) per share on each outstanding share of Class A common stock and Class B common stock payable on June 14, 2024 to stockholders of record on May 31, 2024.

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

This Quarterly Report on Form 10-Q contains statements that are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements contain projections of our future results of operations or our financial position or state other forward-looking information. The forward-looking statements included in this Quarterly Report on Form 10-Q, including without limitation statements regarding our business performance and strategy, expected financial results, our strategy, benefits from recent acquisitions, improvements in operating and free cashflow throughout and our ability to manage challenging macro-economic and softer market conditions, are only predictions and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify these forward-looking statements by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” and “would” or similar words. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. These risks, uncertainties and other factors may cause our actual results, performance or achievements to differ materially from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements. Some of the factors that might cause these differences are described under Item 1A-“Risk Factors” of our annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission. You should carefully review all of these factors, and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and, except as required by law, we undertake no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Overview

The following discussion and analysis are provided to increase the understanding of, and should be read in conjunction with, the accompanying unaudited consolidated financial statements and related notes. In this Quarterly Report on Form 10-Q, references to “the Company,” “Watts,” “we,” “us” or “our” refer to Watts Water Technologies, Inc. and its consolidated subsidiaries.

We are a leading supplier of solutions, systems and products that manage and conserve the flow of fluids and energy into, through and out of buildings in the commercial, industrial and residential markets in the Americas, Europe and APMEA. For 150 years, we have designed and produced valve systems that safeguard and regulate water systems, energy efficient heating and hydronic systems, drainage systems and water filtration technology that helps purify and conserve water. We earn revenue and income almost exclusively from the sale of our products. Our principal product and solution categories include:

● 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 and freeze 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.

● 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. HVAC is an acronym for heating, ventilation and air conditioning.

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

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● Water quality—includes point-of-use and point-of-entry water filtration, monitoring, conditioning and scale prevention systems for commercial, marine and residential applications.

Our business is reported in three geographic segments: Americas, Europe, and APMEA. We distribute our products through four primary distribution channels: wholesale, original equipment manufacturers (OEMs), specialty, and do-it-yourself (DIY).

We believe that the factors relating to our future growth include continued product innovation that meets the needs of our customers and our end markets; our ability to continue to make selective acquisitions, both in our core markets as well as in complementary markets; regulatory requirements relating to the quality and conservation of water and the safe use of water; increased demand for clean water; and continued enforcement of plumbing and building codes. We have completed 14 acquisitions since 2014. Our acquisition strategy focuses on businesses that promote our key macro themes around safety and regulation, energy efficiency and water conservation. We target businesses that will provide us with one or more of the following: an entry into new markets and/or new geographies, improved channel access, unique and/or proprietary technologies, including smart and connected technologies, advanced production capabilities or complementary solution offerings. Since March 31, 2023, we completed three strategic and complementary acquisitions that expanded our addressable market and that we believe will enable value creation through greater scale and growth opportunities.

We believe that sustainability guides and permeates every aspect of our business, including our product development strategy and design, and how we structure our operations. Our innovation strategy is focused on differentiated products and solutions that will provide greater opportunity to distinguish ourselves in the marketplace, while at the same time creating innovative products and smart solutions to protect, control, and conserve critical resources, and help our customers with their sustainability efforts through the use of our products. We continually look for strategic opportunities to invest in new products and markets or divest existing product lines where necessary in order to meet those objectives.

Over the past several years we have been building our smart and connected products foundation by expanding our internal capabilities and making strategic acquisitions. Our strategy is to deliver superior customer value through smart and connected products and solutions. This strategy focuses on three dimensions: Connect, Control and Conserve. We are focused on introducing products that connect our customers with smart systems, control systems for optimal performance, and conserve critical resources by increasing operability, efficiency and safety.

Products representing a majority of our sales are subject to regulatory standards and code enforcement, which typically require that these products meet stringent performance criteria. We have consistently advocated for the development and enforcement of such plumbing codes. We are focused on maintaining stringent quality control and testing procedures at each of our manufacturing facilities in order to manufacture products in compliance with code requirements and take advantage of the resulting demand for compliant products. We believe that product development, product testing capability and investment in plant and equipment needed to manufacture products in compliance with code requirements, represent a competitive advantage for us.

Global gross domestic product (“GDP”) remains positive, however global economic indicators are mixed and show some signs of weakening market conditions for the remainder of 2024. Elevated interest rates may impact new construction. We also continue to experience inflation across our labor and overhead costs. The European economy continued to show signs of weakening, China’s economy has decelerated, and geo-political risks have heightened. Despite these anticipated challenges and uncertainties, we continue to invest in our business, including new products, our smart and connected solutions and our growth and productivity initiatives. We remain focused on our customers’ needs and executing on our long-term strategy.

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Financial Overview

First quarter 2024 sales increased 21.0%, or $99.2 million, on a reported basis, and 6.4%, or $30.1 million, on an organic basis, compared to the first quarter of 2023. The reported sales increase included acquired sales of $68.3 million, or 14.5%, with $60.2 million reported within the Americas segment and $8.1 million reported within the APMEA segment, while the foreign exchange impact was flat compared to the first quarter of 2023. The 6.4% organic growth was driven by organic growth in the Americas of 11.0% and APMEA of 6.4% and offset by 5.1% organic decline in Europe, and included additional shipping days compared to the first quarter of 2023. The positive impact of additional shipping days in the first quarter of 2024 will be offset in the fourth quarter of 2024. The 6.4% organic growth was primarily driven by approximately 7% of growth from additional shipping days and favorable price realization, offset by volume declines in Europe. The growth from additional shipping days was estimated based on average sales per day. Operating income of $96.7 million increased by $12.0 million, or 14.2%, in the first quarter of 2024 as compared to the first quarter of 2023. This increase was primarily driven by favorable price realization, volume leverage from the additional shipping days and productivity, partially offset by inflation and incremental investments.

In discussing our results of operations, we refer to non-GAAP financial measures, including organic sales, organic selling, general and administrative expenses, and organic operating income, that exclude the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons. Management believes reporting these non-GAAP financial measures provides useful information to investors, potential investors and others, because it allows for additional insight into underlying trends by providing growth on a consistent basis. We reconcile the change in these non-GAAP financial measures to our reported results below.

Acquisitions

On January 1, 2024, we 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 aggregate net purchase price was approximately $98.9 million, net of cash acquired of $4.6 million. The net transaction value was approximately $88.9 million after adjusting for the estimated net present value of expected tax benefits of approximately $10 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.

Recent Developments

On May 7, 2024, we declared a quarterly dividend of forty-three cents ($0.43) per share on each outstanding share of Class A common stock and Class B common stock payable on June 14, 2024 to stockholders of record on May 31, 2024.

Results of Operations

First Quarter ended March 31, 2024 Compared to First Quarter Ended March 26, 2023

Net Sales. Our business is reported in three geographic segments: Americas, Europe and APMEA. Our net sales in each of these segments for each of the first quarters of 2024 and 2023 were as follows:


	First Quarter Ended				First Quarter Ended						% Change to
	March 31, 2024				March 26, 2023						Consolidated
	Net Sales		% Sales		Net Sales		% Sales		Change		Net Sales

	(dollars in millions)
Americas	$	418.8	73.4	%	$	323.2	68.5	%	$	95.6	20.3	%
Europe		123.3	21.6			128.3	27.2			(5.0)	(1.1)
APMEA		28.8	5.0			20.2	4.3			8.6	1.8
Total	$	570.9	100.0	%	$	471.7	100.0	%	$	99.2	21.0	%

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The change in net sales was attributable to the following:


									Change As a %								Change As a %
									of Consolidated Net Sales								of Segment Net Sales

	Americas		Europe		APMEA		Total		Americas		Europe		APMEA		Total		Americas		Europe		APMEA

	(dollars in millions)
Organic	$	35.4	$	(6.6)	$	1.3	$	30.1	7.5	%	(1.4)	%	0.3	%	6.4	%	11.0	%	(5.1)	%	6.4	%
Foreign exchange		—		1.6		(0.8)		0.8	—		0.3		(0.2)		0.1		—		1.2		(3.9)
Acquired		60.2		—		8.1		68.3	12.8		—		1.7		14.5		18.6		—		40.1
Total	$	95.6	$	(5.0)	$	8.6	$	99.2	20.3	%	(1.1)	%	1.8	%	21.0	%	29.6	%	(3.9)	%	42.6	%

Our products are sold primarily to wholesalers, OEMs, DIY chains, and through various specialty channels. The change in organic net sales by channel was attributable to the following:


														Change As a %
														of Prior Year Sales
	Wholesale		OEMs		DIY		Specialty			Total			Wholesale			OEMs			DIY			Specialty

	(dollars in millions)
Americas	$	23.2	$	3.0	$	2.2		$	7.0		$	35.4		12.3	%		13.0	%		10.6	%		7.7	%
Europe		1.9		(8.4)		(0.1)			—			(6.6)		2.3			(18.1)			(14.3)			—
APMEA		1.2		0.1		—			—			1.3		6.5			5.9			—			—
Total	$	26.3	$	(5.3)	$	2.1		$	7.0		$	30.1

Americas net sales increased $95.6 million, or 29.6%, for the first quarter of 2024 compared to the first quarter of 2023. The change in net sales was positively impacted by $60.2 million, or 18.6%, of acquired sales related to the Bradley and Josam acquisitions completed in the fourth quarter of 2023 and first quarter of 2024, respectively. Organic net sales increased $35.4 million, or 11.0%, primarily due to increased volume from the benefit of additional shipping days in the first quarter of 2024 compared to the first quarter of 2023 and favorable price realization. The additional shipping days increased net sales by high-single-digits. The organic net sales growth was primarily in the wholesale channel from increased sales across our core valve products.

Europe net sales decreased $5.0 million, or 3.9%, for the first quarter of 2024 compared to the first quarter of 2023. The change in net sales was positively impacted by $1.6 million, or 1.2%, of foreign currency translation. Organic net sales decreased $6.6 million, or 5.1%, primarily due to lower volumes despite the benefit of additional shipping days and favorable price realization. The additional shipping days increased net sales by mid-single-digits. The decline was primarily in the OEM channel due to the volume declines impacted by reduced government energy incentives in Germany and Italy, as well as volume declines in wholesale plumbing product into France and Benelux.

APMEA net sales increased $8.6 million, or 42.6%, for the first quarter of 2024 compared to the first quarter of 2023. The change in net sales was negatively impacted by $0.8 million, or 3.9%, of foreign currency translation, which was more than offset by $8.1 million, or 40.1%, of acquired sales related to the Enware acquisition completed in the second quarter of 2023. Organic net sales increased $1.3 million, or 6.4%, primarily due to volume growth from the benefit of additional shipping days in the first quarter of 2024 compared to the first quarter of 2023. The additional shipping days increased net sales by mid-single-digits. The organic growth was primarily due to growth in New Zealand, Australia and the Middle East, partially offset by declines in China.

The net increase in sales due to foreign exchange was mostly due to the favorable impact of the depreciation of the U.S. dollar against the euro, partially offset by the unfavorable impact of the appreciation of the U.S. dollar against the Chinese yuan in the first quarter of 2024. We cannot predict whether foreign currencies will appreciate or depreciate against the U.S. dollar in future periods or whether future foreign exchange rate fluctuations will have a positive or negative impact on our net sales.

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Gross Profit. Gross profit and gross profit as a percent of net sales (gross margin) for the first quarters of 2024 and 2023 were as follows:


	First Quarter Ended
	March 31, 2024			March 26, 2023

	(dollars in millions)
Gross profit	$	267.5		$	218.1
Gross margin		46.9	%		46.2	%

Gross profit and gross margin increased primarily from higher price realization, favorable volume leverage from the additional shipping days and productivity, partially offset by inflation and the amortization of the fair value step-up adjustments for inventory purchased as part of the Bradley and Josam acquisitions.

Selling, General and Administrative Expenses. Selling, general and administrative, or SG&A, expenses increased $35.9 million, or 5.9%, in the first quarter of 2024 compared to the first quarter of 2023. The increase in SG&A expenses was attributable to the following:


	(in millions)		% Change
Organic	$	10.4	1.7	%
Foreign exchange		0.2	—
Acquired		25.3	4.2
Total	$	35.9	5.9	%

The increase in organic SG&A expenses was primarily due to an increase in investments of $6.0 million, including in our smart and connected initiatives and other strategic initiatives, general inflation of $3.8 million, increased variable costs due to higher sales of $2.7 million, higher travel and marketing costs of $1.8 million and acquisition-related costs of $0.7 million compared to the first quarter of 2023. These increases were partially offset by a net decrease in short-term and long-term compensation accruals of $2.9 million, $2.1 million from productivity initiatives and $0.7 million of restructuring savings. The increase in foreign exchange was mainly due to the depreciation of the U.S. dollar against the euro, partially offset by the U.S. dollar appreciation against the Chinese yuan. The acquired SG&A costs related to the Bradley and Josam acquisitions in the Americas segment completed in the fourth quarter of 2023 and first quarter of 2024, respectively, as well as the Enware acquisition in the APMEA segment completed in the second quarter of 2023. The acquired SG&A costs include $2.0 million of acquisition-related costs. Total SG&A expenses, as a percentage of sales, were 29.7% in the first quarter of 2024 compared to 28.3% in the first quarter of 2023.

Restructuring. In the first quarter of 2024, we recorded a net restructuring charge of $1.2 million, which primarily related to immaterial severance and other exit costs in the Americas and APMEA segments. In the first quarter of 2023, we recorded a net restructuring benefit of $0.3 million related to immaterial adjustments to reduce previously estimated restructuring charges recognized for the cost saving actions in Europe and related to severance and other costs.

Operating Income. Operating income (loss) by segment for the first quarters of 2024 and 2023 was as follows:


							% Change to
	First Quarter Ended						Consolidated
	March 31,		March 26,				Operating
	2024		2023		Change		Income

	(dollars in millions)
Americas	$	85.4	$	72.5	$	12.9	15.2	%
Europe		20.5		19.2		1.3	1.6
APMEA		5.0		4.0		1.0	1.2
Corporate		(14.2)		(11.0)		(3.2)	(3.8)
Total	$	96.7	$	84.7	$	12.0	14.2	%

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The increase (decrease) in operating income (loss) was attributable to the following:


											Change As a % of										Change As a % of
											Consolidated Operating Income										Segment Operating Income

	Americas		Europe		APMEA		Corporate		Total		Americas		Europe		APMEA		Corporate		Total		Americas		Europe		APMEA		Corporate

	(dollars in millions)
Organic	$	6.0	$	1.4	$	0.7	$	(3.2)	$	4.9	7.1	%	1.7	%	0.8	%	(3.8)	%	5.8	%	8.2	%	7.3	%	17.5	%	29.1	%
Foreign exchange		—		0.3		(0.2)		—		0.1	—		0.4		(0.2)		—		0.2		—		1.6		(5.0)		—
Acquired		7.8		—		0.7		—		8.5	9.2		—		0.8		—		10.0		10.8		—		17.5		—
Restructuring, impairment charges		(0.9)		(0.4)		(0.2)		—		(1.5)	(1.1)		(0.5)		(0.2)		—		(1.8)		(1.2)		(2.1)		(5.0)		—
Total	$	12.9	$	1.3	$	1.0	$	(3.2)	$	12.0	15.2	%	1.6	%	1.2	%	(3.8)	%	14.2	%	17.8	%	6.8	%	25.0	%	29.1	%

Operating income increased $12.0 million, or 14.2%, for the first quarter of 2024 compared to the first quarter of 2023. Operating income was positively impacted by $8.5 million, or 10.0%, from acquisitions and positively impacted by $0.1 million, or 0.2% of foreign currency translation. The increase in organic operating income of $4.9 million, or 5.8%, was due to higher price realization, favorable volume leverage from additional shipping days and productivity. These increases were partially offset by inflation and incremental investments.

Interest Income. Interest income in the first quarter of 2024 increased $1.7 million compared to the first quarter of 2023, primarily due to higher interest rates earned on our cash and cash equivalents.

Interest Expense. Interest expense in the first quarter of 2024 increased $2.7 million compared to the first quarter of 2023, primarily due to a higher principal balance of debt outstanding due to the acquisition of Bradley during the fourth quarter of 2023 and an increase in interest rates. Refer to Note 10 of the Notes to Consolidated Financial Statements for further details.

Other (Income) Expense, Net. Other (income) expense, net, was an income balance of $0.6 million in the first quarter of 2024 primarily due to favorable foreign currency translation, compared to an expense balance of $0.1 in the first quarter of 2023.

Income Taxes. Our effective income tax rate increased to 23.7% in the first quarter of 2024, from 22.5% in the first quarter of 2023, primarily related to a lower tax benefit resulting from the vesting of stock compensation awards in the first quarter of 2024 compared to the first quarter of 2023. The Organization for Economic Co-operation and Development (“OECD”) has a framework for a 15% global minimum tax, commonly referred to as “Pillar Two” and certain aspects are effective January 1, 2024. We have assessed the 2024 forecasted annual impact of Pillar Two and it is not expected to be material to our consolidated financial statements.

Net Income. Net income was $72.6 million, or $2.17 per common share on a diluted basis, for the first quarter of 2024, compared to $64.7 million, or $1.93 per common share on a diluted basis, for the first quarter of 2023. Results for the first quarter of 2024 included after-tax charges of $5.2 million, or $0.15 per common share, for acquisition-related costs, $0.9 million, or $0.03 per common share, for restructuring; partially offset by an after-tax benefit of $0.8 million, or $0.02 per common share, for gain on sale of asset. Results for the first quarter of 2023 include an after-tax benefit of $0.2 million, or $0.01 per common share, for restructuring.

Liquidity and Capital Resources

We generated $45.6 million of net cash provided by operating activities in the first quarter of 2024 compared to $33.4 million of net cash provided by operating activities in the first quarter of 2023. The increase in net cash provided by operating activities was primarily related to higher net income and reduced working capital investments.

We used $109.8 million of net cash for investing activities in the first quarter of 2024 compared to $5.1 million used in the first quarter of 2023. We used $100.8 million in cash for business acquisitions in our Americas segment and $3.9 million more cash for net capital expenditures in the first quarter of 2024 compared to the first quarter of 2023. For the remainder of 2024, we expect to invest approximately $35 million to $45 million in capital expenditure as part of our ongoing commitment to improve our operating capabilities.

We used $44.6 million of net cash for financing activities during the first quarter of 2024 primarily due to long-term debt repayments of $15.0 million, dividend payments of $12.1 million, tax withholding payments on vested stock awards of $12.8 million and payments of $4.0 million to repurchase approximately 20,000 shares of Class A common stock. In the

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first quarter of 2023, we used $29.0 million of net cash for financing activities primarily due to tax withholding payments on vested stock awards of $14.6 million, dividend payments of $10.1 million and payments of $3.7 million to repurchase approximately 22,000 shares of Class A common stock.

On March 30, 2021, we and certain of our subsidiaries entered into the Second Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, as amended by Amendment no. 1 dated August 2, 2022, Amendment no. 2 dated December 12, 2023 and as may be further amended, restated, amended and restated, modified or supplemented from time to time (the “Credit Agreement”). The Credit Agreement establishes a senior unsecured revolving credit facility of $800 million (the “Revolving Credit Facility”). The maturity date of the Revolving Credit Facility is March 30, 2026, subject to extension under certain circumstances and subject to the terms of the Credit Agreement. The Credit Agreement provides for a maximum consolidated leverage ratio of 3.50 to 1.00 (or 4.00 to 1.00 during temporary step-ups following certain acquisitions) and the minimum consolidated interest ratio of 3.50 to 1.00.

The Revolving Credit Facility also includes sublimits of $100 million for letters of credit and $15 million for swing line loans. As of March 31, 2024, we had drawn down $285.0 million on this line of credit and had $12.5 million in letters of credit outstanding, which resulted in $502.5 million of unused and available credit under the Revolving Credit Facility as of such date. Borrowings outstanding under the Revolving Credit Facility bear interest at a fluctuating rate per annum equal to an applicable percentage defined as (i) in the case of Term Benchmark loans, the Term Benchmark rate plus an applicable percentage, ranging from 1.075% to 1.325%, or (ii) in the case of alternate base rate loans and swing line loans, interest (which at all times will not be less than 1.00%) at the greatest of (a) the Prime Rate in effect on such day, (b) the FRBNY Rate in effect on such day plus 0.50% and (c) the Term Benchmark rate plus 1.00% for a one month interest period, in each case, determined by reference to our consolidated leverage ratio. For the borrowings denominated in dollars, there is a fixed 10 basis point adjustment if the reference rate is Term SOFR. The weighted average interest rate on debt outstanding under the Revolving Credit Facility as of March 31, 2024 was 6.50%. The weighted average interest rate on debt outstanding inclusive of the interest rate swap discussed in Note 11 of the Notes to Consolidated Financial Statements and interest rates under the Revolving Credit Facility as of March 31, 2024 was 4.79%. In addition to paying interest under the Credit Agreement, we are also required to pay certain fees in connection with the Revolving Credit Facility, including, but not limited to, an unused facility fee and letter of credit fees. We may repay loans outstanding under the Credit Agreement from time to time without premium or penalty, other than customary breakage costs, if any, and subject to the terms of the Credit Agreement. As of March 31, 2024, we were in compliance with all covenants related to the Credit Agreement.

As of March 31, 2024, we held $237.1 million in cash and cash equivalents. Of this amount, $157.6 million of cash and cash equivalents were held by foreign subsidiaries. Our U.S. operations typically generate sufficient cash flows to meet our domestic obligations. However, if we did have to borrow to fund some or all of our expected cash outlays, we can do so at reasonable interest rates by utilizing the undrawn borrowings under our Revolving Credit Facility. Subsequent to recording the Toll Tax as part of the Tax Cuts and Jobs Act of 2017, our intent, other than with respect to the one-time repatriation of foreign earnings in 2023, has been to permanently reinvest undistributed earnings of foreign subsidiaries, and we do not have any current plans to repatriate additional post-Toll Tax foreign earnings to fund operations in the United States. However, if amounts held by foreign subsidiaries were needed to fund operations in the United States, we could be required to accrue and pay taxes to repatriate these funds. Such charges may include potential state income taxes and other tax charges.

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Non-GAAP Financial Measures

In accordance with the SEC’s Regulation G and Item 10(e) of Regulation S-K, the following provides definitions of the non-GAAP financial measures used by management. We believe that these measures enhance the overall understanding of underlying business results and trends. These non-GAAP measures are not intended to be considered by the user in place of the related GAAP financial measure, but rather as supplemental information to more fully understand our business results. These non-GAAP financial measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted.

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Organic net sales and organic net sales growth, organic SG&A expenses, and organic operating income, are non-GAAP measures that exclude the impacts of acquisitions, divestitures and foreign exchange from period-over-period comparisons. A reconciliation to the most closely related U.S. GAAP measure, net sales, SG&A and operating income, have been included in our discussion within “Results of Operations” above. Non-GAAP measures should be considered in addition to, and not as a replacement for or as a superior measure to U.S. GAAP measures. Management believes reporting these non-GAAP measures provide useful information to investors, potential investors and others, by facilitating easier comparisons of our performance with prior and future periods.

Free cash flow is a non-GAAP measure that does not represent cash provided by operating activities in accordance with U.S. GAAP. Therefore, it should not be considered an alternative to net cash provided by or used in operating activities as an indication of our performance. The cash conversion rate of free cash flow to net income is also a measure of our performance in cash flow generation. We believe free cash flow and cash flow conversion rate to be an appropriate supplemental measure of our operating performance because it provides investors with a measure of our ability to generate cash, repay debt, pay dividends, repurchase stock and fund acquisitions.

A reconciliation of net cash provided by operating activities to free cash flow and a calculation of our cash conversion rate is provided below:


	Three Months Ended
	March 31,			March 26,
	2024			2023

	(in millions)
Net cash provided by operating activities	$	45.6		$	33.4
Less: additions to property, plant, and equipment		(10.1)			(5.1)
Plus: proceeds from the sale of property, plant, and equipment		1.1			—
Free cash flow	$	36.6		$	28.3
Net income —as reported	$	72.6		$	64.7
Cash conversion rate of free cash flow to net income		50.4	%		43.7	%

Free cash flow improved in the first quarter of 2024 when compared to the first quarter of 2023 primarily driven by higher net income and reduced working capital investments.

Our net debt to capitalization ratio, a non-GAAP financial measure used by management, at March 31, 2024 was 2.9% compared to (3.5%) at December 31, 2023. The change was driven by an increase in net debt balance primarily due to decreased cash and cash equivalents and an increase in stockholders’ equity at March 31, 2024 compared to December 31, 2023 due to higher net income. Management believes the net debt to capitalization ratio is an appropriate supplemental measure because it helps investors understand our ability to meet our financing needs and serves as a basis to evaluate our financial structure. Our computation may not be comparable to other companies that may define their net debt to capitalization ratios differently.

A reconciliation of long-term debt (including current portion) to net debt and our net debt to capitalization ratio is provided below:


	March 31,		December 31,
	2024		2023

	(in millions)
Current portion of long‑term debt	$	—	$	—
Plus: long-term debt, net of current portion		283.5		298.3
Less: cash and cash equivalents		(237.1)		(350.1)
Net debt	$	46.4	$	(51.8)

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A reconciliation of capitalization is provided below:


	March 31,			December 31,
	2024			2023

	(in millions)
Net debt	$	46.4		$	(51.8)
Total stockholders’ equity		1,551.8			1,513.3
Capitalization	$	1,598.2		$	1,461.5
Net debt to capitalization ratio		2.9	%		(3.5)	%

Application of Critical Accounting Policies and Key Estimates

We believe that our critical accounting policies are those related to revenue recognition, inventory valuation, goodwill and other intangibles, product liability costs, legal contingencies and income taxes. We believe these accounting policies are particularly important to an understanding of our financial position and results of operations and require application of significant judgment by our management. In applying these policies, management uses its judgment in making certain assumptions and estimates. Our accounting policies are more fully described under the heading “Accounting Policies” in Note 2 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K as filed with the SEC on February 21, 2024.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We use derivative financial instruments primarily to reduce exposure to adverse fluctuations in foreign exchange rates, interest rates and costs of certain raw materials used in the manufacturing process. We do not enter into derivative financial instruments for trading purposes. As a matter of policy, all derivative positions are used to reduce risk by hedging underlying economic exposure. The derivatives we use are instruments with liquid markets. See Note 11 of Notes to the Consolidated Financial Statements for further details.

Our consolidated earnings, which are reported in United States dollars, are subject to translation risks due to changes in foreign currency exchange rates. This risk is concentrated in the exchange rate between the U.S. dollar and the euro; the U.S. dollar and the Canadian dollar; and the U.S. dollar and the Chinese yuan.

Our non-U.S. subsidiaries transact most business, including certain intercompany transactions, in foreign currencies. Such transactions are principally purchases or sales of materials and are denominated in European currencies, the Chinese yuan or the U.S. or Canadian dollar. We use foreign currency forward exchange contracts from time to time to manage the risk related to intercompany loans, intercompany purchases and intercompany sales that occur during the course of a year, and certain open foreign currency denominated commitments to sell products to third parties. We have entered into forward exchange contracts which hedge approximately 80% to 85% of the forecasted intercompany purchases between one of our Canadian subsidiaries and our U.S. operating subsidiaries for the next twelve months. We record the effective portion of the designated foreign currency hedge contracts in other comprehensive income until inventory turns and is sold to a third-party. Once the third-party transaction associated with the hedged forecasted transaction occurs, the effective portion of any related gain or loss on the designated foreign currency hedge is reclassified into cost of goods sold within earnings. The fair value of the Company’s designated foreign hedge contracts outstanding as of March 31, 2024 was an asset of $0.1 million.

Under the Credit Agreement, our earnings and cash flows are exposed to fluctuations in interest payments related to our floating rate debt. In order to manage our exposure, we entered into an interest rate swap on March 30, 2021. Under the interest rate swap agreement, we received the one-month USD-LIBOR subject to a 0.00% floor and paid a fixed rate of 1.02975% on a notional amount of $100.0 million. On August 2, 2022, we amended the interest rate swap to replace LIBOR as a reference rate for borrowings with Term SOFR. Under the amended interest rate swap agreement, we receive the one-month Term SOFR subject to a -0.1 percent floor and pay a fixed rate of 0.942% on a notional amount of $100.0 million. We entered into an additional interest rate swap on October 23, 2023, as part of the acquisition of Bradley. Under the interest rate swap agreement, we receive the one-month Term SOFR subject to a -0.1% floor and pay a fixed rate of 4.844% on a notional amount of $100.0 million. Both swaps mature on March 30, 2026. Information about our long-term debt facility and related interest rates appears in Note 10 of the Consolidated Financial Statements.

We purchase significant amounts of bronze ingot, brass rod, cast iron, stainless steel and plastic, which are utilized in manufacturing our many product lines. Our operating results can be adversely affected by changes in commodity prices

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if we are unable to pass on related price increases to our customers. We manage this risk by monitoring related market prices, working with our suppliers to achieve the maximum level of stability in their costs and related pricing, seeking alternative supply sources when necessary and passing increases in commodity costs to our customers, to the maximum extent possible, when they occur.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, or Exchange Act, as of the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily applies its judgment in evaluating and implementing possible controls and procedures. The effectiveness of our disclosure controls and procedures is also necessarily limited by the staff and other resources available to us and the geographic diversity of our operations. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective, in that they provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There was no change in our internal control over financial reporting that occurred during the first quarter ended March 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We are currently in the process of integrating the Bradley operations, control processes and information systems into our systems and control environment. We believe that we have taken the necessary steps to monitor and maintain appropriate internal controls over financial reporting during this integration. We will continue to review and document our disclosure controls and procedures, including our internal control over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

As disclosed in Part I, Item 1, “Product Liability, Environmental and Other Litigation Matters” and Item 3, “Legal Proceedings” of our Annual Report on Form 10-K for the year ended December 31, 2023, we are party to certain litigation. There have been no material developments with respect to such legal proceedings during the quarter ended March 31, 2024, other than as described in Note 12 of the Notes to Consolidated Financial Statements, which is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes to the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2023.

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

We satisfy the minimum withholding tax obligation due upon the vesting of shares of restricted stock by repurchasing a number of shares with an aggregate fair market value on the date of such vesting that would satisfy the withholding amount due.

The following table includes information with respect to shares of our Class A common stock withheld to satisfy withholding tax obligations during the first quarter ended March 31, 2024.


	Issuer Purchases of Equity Securities
					(d) Maximum Number (or
	(a) Total			(c) Total Number of	Approximate Dollar
	Number of			Shares (or Units)	Value) of Shares (or
	Shares (or	(b) Average		Purchased as Part of	Units) that May Yet Be
	Units)	Price Paid per		Publicly Announced	Purchased Under the
Period	Purchased	Share (or Unit)		Plans or Programs	Plans or Programs
January 1, 2024 – January 28, 2024	—	$	—	—	—
January 29, 2024 – February 25, 2024	34,300	$	209.10	—	—
February 26, 2024 – March 31, 2024	27,753	$	205.70	—	—
Total	62,053	$	207.58	—	—

The following table includes information with respect to repurchases of our Class A common stock during the first quarter ended March 31, 2024 under our stock repurchase programs.


	Issuer Purchases of Equity Securities (1)
					(d) Maximum Number (or
	(a) Total			(c) Total Number of	Approximate Dollar
	Number of	(b) Average		Shares (or Units)	Value) of Shares (or
	Shares (or	Price Paid		Purchased as Part of	Units) that May Yet Be
	Units)	per Share		Publicly Announced	Purchased Under the
Period	Purchased(1)	(or Unit)		Plans or Programs	Plans or Programs
January 1, 2024 – January 28, 2024	5,879	$	199.89	5,879	$	160,793,044
January 29, 2024 – February 25, 2024	6,149	$	202.74	6,149	$	159,546,371
February 26, 2024 – March 31, 2024	7,722	$	204.05	7,722	$	157,970,533
Total	19,750	$	202.39	19,750

(1)

On February 6, 2019, we announced that our Board of Directors had approved a repurchase program of up to $150 million of our Class A common stock, to be purchased from time to time on the open market or in privately negotiated transactions, which does not have an expiration date. On July 31, 2023, the Board of Directors authorized an additional stock repurchase program of up to $150 million of our Class A common stock to be purchased from time to time on the open market or in privately negotiated transactions, which also has no expiration date. The additional $150 million has been reflected in the maximum dollar value of shares that may yet be purchased in column (d) above. The timing and number of shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors.

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Item 5.Other Information

(a) Disclosure in lieu of reporting on a Current Report on Form 8-K.

None.

(b) Material changes to the procedures by which security holders may recommend nominees to the board of directors.

None.

During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits


Exhibit No.		Description
3.1		Restated Certificate of Incorporation, as amended. Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 25, 2023 (File No. 001-11499).
3.2		Amended and Restated By-Laws. Incorporated by reference to the Registrant’s Current Report on Form 8-K dated July 31, 2023 (File No. 001- 11499).
10.1†		Form of Indemnification Agreement between the Registrant and certain directors and officers of the Registrant.
10.2†		Form of 2024 Performance Stock Unit Award Agreement under the Watts Water Technologies, Inc. Third Amended and Restated 2004 Stock Incentive Plan.
10.3†		Third Amendment, dated March 29, 2024, to Unit Purchase Agreement, dated as of August 30, 2023, by and among G6 Adventures Corporation, Bradley Corporation, the shareholders of G6 Adventures Corporation, Watts Regulator Co. and Watts Water Technologies, Inc.
31.1†		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
31.2†		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1††		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350
32.2††		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS**		Inline XBRL Instance Document
101.SCH**		Inline XBRL Taxonomy Extension Schema Document
101.CAL**		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE**		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

† Filed herewith.

†† Furnished herewith.

** Attached as Exhibit 101 to this report are the following formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at March 31, 2024 and December 31, 2023, (ii) Consolidated Statements of Operations for the First Quarters ended March 31, 2024 and March 26, 2023, (iii) Consolidated Statements of Comprehensive Income for the First Quarters ended March 31, 2024 and March 26, 2023, (iv) Consolidated Statements of Stockholders’ Equity for the First Quarters ended March 31, 2024 and March 26, 2023, (v) Consolidated Statements of Cash Flows for the First Quarters ended March 31, 2024 and March 26, 2023, and (vi) Notes to Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	WATTS WATER TECHNOLOGIES, INC.

Date: May 9, 2024	By:	/s/ Robert J. Pagano, Jr.
		Robert J. Pagano, Jr.
		Chief Executive Officer (principal executive officer)

Date: May 9, 2024	By:	/s/ Shashank Patel
		Shashank Patel Chief Financial Officer (principal financial officer)

Date: May 9, 2024

By:

/s/ Virginia A. Halloran

Virginia A. Halloran

Chief Accounting Officer (principal accounting officer)

Exhibit 10.1

INDEMNIFICATION AGREEMENT

This Agreement made and entered into this ___ day of ________ ____, (the “Agreement”), by and between Watts Water Technologies, Inc., a Delaware corporation (the “Company,” which term shall include, where appropriate, any Entity (as hereinafter defined) controlled directly or indirectly by the Company) and ____________ (the “Indemnitee”):

WHEREAS, it is essential to the Company that it be able to retain and attract as directors and officers the most capable persons available;

WHEREAS, increased corporate litigation has subjected directors and officers to litigation risks and expenses, and the limitations on the availability of directors and officers liability insurance have made it increasingly difficult for the Company to attract and retain such persons;

WHEREAS, the Company’s Certificate of Incorporation and By-laws (the “Certificate of Incorporation” and “By-laws,” respectively) require it to indemnify its directors and officers to the fullest extent permitted by law and permit it to make other indemnification arrangements and agreements;

WHEREAS, the Company desires to provide Indemnitee with specific contractual assurance of Indemnitee’s rights to full indemnification against litigation risks and expenses (regardless, among other things, of any amendment to or revocation of the Certificate of Incorporation or By-laws or any change in the ownership of the Company or the composition of its Board of Directors);

WHEREAS, the Company intends that this Agreement provide Indemnitee with greater protection than that which is provided by the Company’s Certificate of Incorporation and By-laws; and

WHEREAS, Indemnitee is relying upon the rights afforded under this Agreement in continuing as a director or officer of the Company.

NOW, THEREFORE, in consideration of the promises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

1.Definitions.

(a)“Corporate Status” describes the status of a person who is serving or has served (i) as a director or officer of the Company, (ii) in any capacity with respect to any employee benefit plan of the Company, or (iii) as a director, partner, trustee, officer, employee, or agent of any other Entity at the request of the Company. For purposes of subsection (iii) of this Section 1(a), if Indemnitee is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary, Indemnitee shall be deemed to be serving at the request of the Company.

(b)“Entity” shall mean any corporation, partnership, limited liability company, joint venture, trust, foundation, association, organization or other legal entity.

(c)“Expenses” shall mean all fees, costs and expenses incurred by Indemnitee in connection with any Proceeding (as defined below), including, without limitation, attorneys’ fees, disbursements and retainers (including, without limitation, any such fees, disbursements and retainers incurred by Indemnitee pursuant to Sections 10 and 11(c) of this Agreement), fees and disbursements of expert witnesses, private investigators and professional advisors (including,

without limitation, accountants and investment bankers), court costs, transcript costs, fees of experts, travel expenses, duplicating, printing and binding costs, telephone and fax transmission charges, postage, delivery services, secretarial services, and other disbursements and expenses.

(d)“Indemnifiable Expenses,” “Indemnifiable Liabilities” and “Indemnifiable Amounts” shall have the meanings ascribed to those terms in Section 3(a) below.

(e)“Liabilities” shall mean judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement.

(f)“Proceeding” shall mean any threatened, pending or completed claim, action, suit, arbitration, alternate dispute resolution process, investigation, administrative hearing, appeal, or any other proceeding, whether civil, criminal, administrative, arbitrative or investigative, whether formal or informal, including a proceeding initiated by Indemnitee pursuant to Section 10 of this Agreement to enforce Indemnitee’s rights hereunder.

(g)“Subsidiary” shall mean any corporation, partnership, limited liability company, joint venture, trust or other Entity of which the Company owns (either directly or through or together with another Subsidiary of the Company) either (i) a general partner, managing member or other similar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such corporation, partnership, limited liability company, joint venture or other Entity, or (B) 50% or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other Entity.

2.Services of Indemnitee. In consideration of the Company’s covenants and commitments hereunder, Indemnitee agrees to serve or continue to serve as a director and/or officer of the Company. However, this Agreement shall not impose any obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any.

3.Agreement to Indemnify. The Company agrees to indemnify Indemnitee as follows:

(a)Proceedings Other Than By or In the Right of the Company. Subject to the exceptions contained in Section 4(a) below, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of Indemnitee’s Corporate Status, Indemnitee shall be indemnified by the Company against all Expenses and Liabilities incurred or paid by Indemnitee in connection with such Proceeding (referred to herein as “Indemnifiable Expenses” and “Indemnifiable Liabilities,” respectively, and collectively as “Indemnifiable Amounts”).

(b)Proceedings By or In the Right of the Company. Subject to the exceptions contained in Section 4(b) below, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company by reason of Indemnitee’s Corporate Status, Indemnitee shall be indemnified by the Company against all Indemnifiable Expenses.

(c)Conclusive Presumption Regarding Standard of Care. In making any determination required to be made under Delaware law with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee submitted a request therefor in accordance with Section 5 of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption.

4.Exceptions to Indemnification. Indemnitee shall be entitled to indemnification under Sections 3(a) and 3(b) above in all circumstances other than with respect to any specific claim, issue or matter involved in the Proceeding out of which Indemnitee’s claim for indemnification has arisen, as follows:

(a)Proceedings Other Than By or In the Right of the Company. If indemnification is requested under Section 3(a) and it has been finally adjudicated by a court of competent jurisdiction that, in connection with such specific claim, issue or matter, Indemnitee failed to act (i) in good faith and (ii) in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal Proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful, Indemnitee shall not be entitled to payment of Indemnifiable Amounts hereunder.

(b)Proceedings By or In the Right of the Company. If indemnification is requested under Section 3(b) and

(i) it has been finally adjudicated by a court of competent jurisdiction that, in connection with such specific claim, issue or matter, Indemnitee failed to act (A) in good faith and (B) in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, Indemnitee shall not be entitled to payment of Indemnifiable Expenses hereunder; or

(ii) it has been finally adjudicated by a court of competent jurisdiction that Indemnitee is liable to the Company with respect to such specific claim, Indemnitee shall not be entitled to payment of Indemnifiable Expenses hereunder with respect to such claim, issue or matter unless the Court of Chancery or another court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such Indemnifiable Expenses which such court shall deem proper; or

(iii) it has been finally adjudicated by a court of competent jurisdiction that Indemnitee is liable to the Company for an accounting of profits made from the purchase or sale by the Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, the rules and regulations promulgated thereunder and amendments thereto or similar provisions of any federal, state or local statutory law, Indemnitee shall not be entitled to payment of Indemnifiable Expenses hereunder.

(c)Insurance Proceeds. To the extent payment is actually made to the Indemnitee under a valid and collectible insurance policy in respect of Indemnifiable Amounts in connection with such specific claim, issue or matter, Indemnitee shall not be entitled to payment of Indemnifiable Amounts hereunder except in respect of any excess beyond the amount of payment under such insurance.

5.Procedure for Payment of Indemnifiable Amounts. Indemnitee shall submit to the Company a written request specifying the Indemnifiable Amounts for which Indemnitee seeks payment under Section 3 of this Agreement and the basis for the claim. The Company shall pay such Indemnifiable Amounts to Indemnitee within sixty (60) calendar days of receipt of the request. At the request of the Company, Indemnitee shall furnish such documentation and information as are reasonably available to Indemnitee and necessary to establish that Indemnitee is entitled to indemnification hereunder.

6.Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified against all Expenses reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Agreement, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, by reason of settlement, judgment, order or otherwise, shall be deemed to be a successful result as to such claim, issue or matter.

7.Effect of Certain Resolutions. Neither the settlement or termination of any Proceeding nor the failure of the Company to award indemnification or to determine that indemnification is payable shall create a presumption that Indemnitee is not entitled to indemnification hereunder. In addition, the termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, had reasonable cause to believe that Indemnitee’s action was unlawful.

8.Agreement to Advance Expenses; Undertaking. The Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding, including a Proceeding by or in the right of the Company, in which Indemnitee is involved by reason of such Indemnitee’s Corporate Status within ten (10) calendar days after the receipt by the Company of a written statement from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. To the extent required by Delaware law, Indemnitee hereby undertakes to repay any and all of the amount of Indemnifiable Expenses paid to Indemnitee if it is finally determined by a court of competent jurisdiction that Indemnitee is not entitled under this Agreement to indemnification with respect to such Expenses. This undertaking is an unlimited general obligation of Indemnitee.

9.Procedure for Advance Payment of Expenses. Indemnitee shall submit to the Company a written request specifying the Indemnifiable Expenses for which Indemnitee seeks an advancement under Section 8 of this Agreement, together with documentation evidencing that Indemnitee has incurred such Indemnifiable Expenses. Payment of Indemnifiable Expenses under Section 8 shall be made no later than ten (10) calendar days after the Company’s receipt of such request.

10.Remedies of Indemnitee.

(a)Right to Petition Court. In the event that Indemnitee makes a request for payment of Indemnifiable Amounts under Sections 3 and 5 above or a request for an advancement of Indemnifiable Expenses under Sections 8 and 9 above and the Company fails to make such payment or advancement in a timely manner pursuant to the terms of this Agreement, Indemnitee may petition the Court of Chancery to enforce the Company’s obligations under this Agreement.

(b)Burden of Proof. In any judicial proceeding brought under Section 10(a) above, the Company shall have the burden of proving that Indemnitee is not entitled to payment of Indemnifiable Amounts hereunder.

(c)Expenses. The Company agrees to reimburse Indemnitee in full for any Expenses incurred by Indemnitee in connection with investigating, preparing for, litigating, defending or settling any action brought by Indemnitee under Section 10(a) above, or in connection with any claim or counterclaim brought by the Company in connection therewith, whether or not Indemnitee is successful in whole or in part in connection with any such action.

(d)Failure to Act Not a Defense. The failure of the Company (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 10(a) above, and shall not create a presumption that such payment or advancement is not permissible.

11.Defense of the Underlying Proceeding.

(a)Notice by Indemnitee. Indemnitee agrees to notify the Company promptly upon being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any Proceeding which may result in the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to receive payments of Indemnifiable Amounts or advancements of Indemnifiable Expenses unless the Company’s ability to defend in such Proceeding is materially and adversely prejudiced thereby.

(b)Defense by Company. Subject to the provisions of the last sentence of this Section 11(b) and of Section 11(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to the payment of Indemnifiable Amounts hereunder; provided, however that the Company shall notify Indemnitee of any such decision to defend within ten (10) calendar days of receipt of notice of any such Proceeding under Section 11(a) above. The Company shall not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee or (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee. This Section 11(b) shall not apply to a Proceeding brought by Indemnitee under Section 10(a) above or pursuant to Section 19 below.

(c)Indemnitee’s Right to Counsel. Notwithstanding the provisions of Section 11(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes that he or she may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with the position of other defendants in such Proceeding, (ii) a conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company fails to assume the defense of such proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any action, suit or proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, at the expense of the Company, to represent Indemnitee in connection with any such matter.

12.Representations and Warranties of the Company. The Company hereby represents and warrants to Indemnitee as follows:

(a)Authority. The Company has all necessary power and authority to enter into, and be bound by the terms of, this Agreement, and the execution, delivery and performance of the undertakings contemplated by this Agreement have been duly authorized by the Company.

(b)Enforceability. This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, shall be a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the enforcement of creditors’ rights generally.

13.Insurance. For a period of six (6) years following the date on which Indemnitee no longer serves as a director, officer or employee of the Company or any Subsidiary, and for such longer period, if any, for which Indemnitee may be subject to a Proceeding by reason of Indemnitee’s Corporate Status, the Company (i) shall maintain a policy or policies of insurance with one or more reputable insurance companies providing the Indemnitee with coverage in an amount not less than, and of a type and scope not materially less favorable to Indemnitee than, the directors’ and officers’ liability insurance coverage presently maintained by the Company, (ii) shall pay on a timely basis all premiums on such insurance and (iii) shall provide such notices and renewals in a complete and timely manner and take such other actions as may be required in order to keep such insurance in full force and effect. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s officers and directors.

14.Contract Rights Not Exclusive. The rights to payment of Indemnifiable Amounts and advancement of Indemnifiable Expenses provided by this Agreement shall be in addition to, but not exclusive of, any other rights which Indemnitee may have at any time under applicable law, the Company’s Certificate of Incorporation or By-laws, or any other agreement, vote of stockholders or directors (or a committee of directors), or otherwise, both as to action in Indemnitee’s official capacity and as to action in any other capacity as a result of Indemnitee’s serving as a director or officer of the Company.

15.Successors. This Agreement shall be (a) binding upon all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law) and (b) binding on and shall inure to the benefit of the heirs, personal representatives, executors and administrators of Indemnitee. In the event that the Company or any of its successors or assigns (i) consolidates with or merges into any other person or entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any person or entity, then, and in each such case, proper provision shall be made so that the successors and assigns of the Company assume the obligations of the Company under this Agreement. This Agreement shall continue for the benefit of Indemnitee and such heirs, personal representatives, executors and administrators after Indemnitee has ceased to have Corporate Status.

16.Subrogation. In the event of any payment of Indemnifiable Amounts under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of contribution or recovery of Indemnitee against other persons, and Indemnitee shall take, at the request of the Company, all reasonable action necessary to secure such rights, including the execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

17.Change in Law. To the extent that a change in Delaware law (whether by statute or judicial decision) shall permit broader indemnification or advancement of expenses than is provided under the terms of the By-laws and this Agreement, Indemnitee shall be entitled to such broader indemnification and advancements, and this Agreement shall be deemed to be amended to such extent.

18.Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, in whole or in part, such provision or clause shall be limited or modified in its application to the minimum extent necessary to make such provision or clause valid, legal and enforceable, and the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the parties.

19.Indemnitee as Plaintiff. Except as provided in Section 10(c) of this Agreement and in the next sentence, Indemnitee shall not be entitled to payment of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect to any Proceeding brought by Indemnitee against the Company, any Entity which it controls, any director or officer thereof, or any third party, unless the Board of Directors of the Company has consented to the initiation of such Proceeding. This Section shall not apply to counterclaims or affirmative defenses asserted by Indemnitee in an action brought against Indemnitee.

20.Modifications and Waiver. Except as provided in Section 17 above with respect to changes in Delaware law which broaden the right of Indemnitee to be indemnified by the Company, no supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement (whether or not similar), nor shall such waiver constitute a continuing waiver.

21.General Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

(i) If to Indemnitee, to:






(ii) If to the Company, to:

Watts Water Technologies, Inc.
815 Chestnut Street
North Andover, MA 01845
Facsimile: (978) 688-2976
Attention:

or to such other address as may have been furnished in the same manner by any party to the others.

22.Governing Law; Consent to Jurisdiction; Service of Process. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its rules of conflict of laws. Each of the Company and the Indemnitee hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the Court of Chancery of the State of Delaware and the courts of the United States of America located in the State of Delaware (the "Delaware Courts") for any litigation arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in such courts), waives any objection to the laying of venue of any such litigation in the Delaware Courts and agrees not to plead or claim in any Delaware Court that such litigation brought therein has been brought in an inconvenient forum. Each of the parties hereto agrees, (a) to the extent such party is not otherwise subject to service of process in the State of Delaware, to appoint and maintain an agent in the State of Delaware as such party's agent for acceptance of legal process, and (b) that service of process may also be made on such party by prepaid certified mail with a proof of mailing receipt validated by the United States Postal Service constituting evidence of valid service. Service made pursuant to (a) or (b) above shall have the same legal force and effect as if served upon such party personally within the State of Delaware. For purposes of implementing the parties' agreement to appoint and maintain an agent for service of process in the State of Delaware, each such party does hereby appoint The Corporation Trust Company, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, as such agent and each such party hereby agrees to complete all actions necessary for such appointment.

23.[Prior Agreement. This Agreement supersedes and replaces in its entirety the Indemnification Agreement between the Indemnitee and the Company dated as of _______, ___.]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

	WATTS WATER TECHNOLOGIES, INC.

	By:
		Name:
		Title:

	INDEMNITEE


	Name:

Schedule of Omitted Information


Name of Indemnitee	Date of Agreement	Date of Prior Agreement (Section 23)	Person Signing on behalf of the Company
Timothy P. Horne	February 10, 2004	August 7, 2002	Patrick S. O’Keefe Chief Executive Officer
Kenneth R. Lepage	February 10, 2004	November 5, 2003	Patrick S. O’Keefe Chief Executive Officer
Merilee Raines	February 7, 2011	Not Applicable	David J. Coghlan Chief Executive Officer
W. Craig Kissel	October 30, 2011	Not Applicable	David J. Coghlan Chief Executive Officer
Joseph T. Noonan	May 15, 2013	Not Applicable	David J. Coghlan Chief Executive Officer
Robert J. Pagano, Jr.	May 27, 2014	Not Applicable	Kenneth R. Lepage General Counsel
Christopher L. Conway	June 2, 2015	Not Applicable	Robert J. Pagano, Jr. Chief Executive Officer
Joseph W. Reitmeier	February 10, 2016	Not Applicable	Robert J. Pagano, Jr. Chief Executive Officer
David A. Dunbar	February 8, 2017	Not Applicable	Robert J. Pagano, Jr. Chief Executive Officer
Louise K. Goeser	March 12, 2018	Not Applicable	Robert J. Pagano, Jr. Chief Executive Officer
Shashank Patel	July 2, 2018	Not Applicable	Robert J. Pagano, Jr. Chief Executive Officer
Michael J. Dubose	December 8, 2020	Not Applicable	Robert J. Pagano, Jr. Chief Executive Officer
Monica Barry	October 4, 2021	Not Applicable	Robert J. Pagano, Jr. Chief Executive Officer
Andre Dhawan	August 15, 2022	Not Applicable	Kenneth R. Lepage General Counsel, Chief Sustainability Officer & Secretary
Rebecca Boll	February 7, 2024	Not Applicable	Robert J. Pagano, Jr. Chief Executive Officer
Kenneth Napolitano	March 12, 2024	Not Applicable	Robert J. Pagano, Jr. Chief Executive Officer

Exhibit 10.2

2024 PERFORMANCE STOCK UNIT AWARD AGREEMENT

FOR COMPANY EMPLOYEES

UNDER THE WATTS WATER TECHNOLOGIES, INC.

THIRD AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN

This award of performance stock units (“Performance Stock Units”) of Watts Water Technologies, Inc. (the “Company”) made to the grantee (the “Grantee”), as set forth in the Performance Stock Unit award notification provided through the Grantee’s stock plan account on the E*TRADE website, is subject to the provisions of the Company’s Third Amended and Restated 2004 Stock Incentive Plan (the “Plan”) and the terms and conditions contained in this 2024 Performance Stock Unit Award Agreement (the “Agreement”) and shall constitute Deferred Stock (as defined in the Plan) which is earned based on performance as provided herein. By accepting the award of Performance Stock Units on the E*TRADE website, the Grantee agrees to the terms and conditions of this Agreement.

Nature and Acceptance of Award. This Performance Stock Unit award entitles the Grantee to receive a share of Class A Common Stock of the Company (“Stock”) for each Performance Stock Unit that is earned and vested as determined pursuant to Sections 3 and 5 below. The target number of Performance Stock Units the Grantee shall be eligible to earn and become vested in with respect to this Agreement is set forth on the E*TRADE website (the “Target Award”). The Grantee shall have no rights to the Performance Stock Units or to receive the Stock upon settlement of the Performance Stock Units under this Agreement unless he or she shall have accepted the Performance Stock Unit award and this Agreement through the E*TRADE website. Unless and until the shares of Stock are actually issued to the Grantee upon settlement of the Performance Stock Units in accordance with this Agreement, the Grantee shall not by reason of being granted the Performance Stock Units be deemed to be a shareholder of the Company or to have any other right to the Stock, except as otherwise provided in this Agreement.

2.	Restrictions and Conditions.

(a)

The Performance Stock Units granted herein may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of by the Grantee.

(b)

Except as otherwise provided herein, if the Grantee’s employment with the Company and its Subsidiaries is voluntarily or involuntarily terminated for any reason (other than death, disability or due to Normal Retirement (as defined below)) prior to the last day of the Performance Period, all Performance Stock Units shall be immediately and automatically forfeited to the Company upon termination of employment, without payment of any consideration to the Grantee. The Grantee shall have no further rights with respect to the Performance Stock Units or to receive shares of Stock with respect thereto.

(c)

Notwithstanding the foregoing, if the Grantee’s employment or service is terminated by reason of death or disability (as determined by the Administrator):

(i)if the date of termination of service is within the last twelve months of the Performance Period, then the determination of number of Performance Stock Units earned and vested will be conducted as if the Participant had not terminated employment; and

(ii)if the date of termination of service is within the first twenty-four months of the Performance Period, then the number of Performance Stock Units earned and vested shall be determined by multiplying the Target Award by a fraction, the numerator of which is the number of days from the start of the Performance Period to and including the date of termination of service, and the denominator of which is the number of days in the Performance Period, with such date of termination of service being a Payment Date under Section 4.

(d)

Notwithstanding the foregoing, if the Grantee’s employment or service is terminated due to Normal Retirement (as defined below) prior to the last day of the Performance Period, then the Performance Stock Units shall continue to vest in accordance with the vesting provisions of this Section 2(d) and be settled on the Payment Date, but only if Grantee (i) remains employed with the Company through the last working day of 2024, (ii) has complied with the provisions of Section 10 at all times during his or her employment, (iii) continues to comply with the provisions of Section 10, and (iv) if deemed necessary by the Company to have an enforceable non-compete similar to that provided in Section 10(b), then to execute and not revoke or violate a separate Non-Competition Agreement the terms of which are substantially similar to those set forth in Section 10 below. For the avoidance of doubt, if (A) the Grantee violates the provisions of Section 10, (B) fails to execute a Non-Competition Agreement as may be requested by the Company, (C) revokes or violates any Non-Competition Agreement so executed, or (D) the obligations set forth in Section 10(b) or the Non-Competition Agreement are deemed unenforceable, then the Performance Stock Units shall not continue to vest pursuant to this Section 2(d) and any unvested Performance Stock Units shall be immediately and automatically forfeited to the Company without any further action required by the Company. The portion of the Performance Stock Units that are eligible to vest in accordance with this Section 2(d) shall be determined by multiplying (A) the Earned Performance Stock Units determined pursuant to Section 3 below for the entire Performance Period, by (B) a fraction, the numerator of which is the number of days the Grantee was continually employed since the beginning of the Performance Period and the denominator of which is the number of days in the Performance Period.

3.	Determination of Number of Performance Stock Units Earned.

(a)

No Performance Stock Units shall be earned or vested unless the Company’s ROIC (as defined below) equals or exceeds __% (the “Minimum Performance Goal”).

(b)

If the Minimum Performance Goal is obtained, then the number of Performance Stock Units that will be earned and vested, if any, for the Performance Period shall be determined as follows:

Earned Performance Stock Units = Payout Percentage x Target Award

The “Payout Percentage” is based on the Company’s achievement with respect to (i) “ROIC” (as defined below) and “Revenue CAGR” (as defined below) (the “Performance Goals”), as determined at the end of the Performance Period in accordance with the following table:

3 Year Revenue CAGR

ROIC

Below Threshold

Threshold

Target

Maximum

Payout Percentage

Below Threshold

60%

75%

100%

Threshold

60%

75%

125%

Target

80%

100%

150%

Maximum

100%

150%

200%

Achievement between (i) below threshold and threshold, (ii) threshold and target and (iii) target and maximum will be interpolated linearly. All Performance Stock Units that are not earned at the end of the Performance Period shall be forfeited.

(c)

Defined Terms.

(i)“Average Invested Capital” shall mean the average of invested capital as of December 31, 2025 and the invested capital as of December 31, 2026 where the invested capital is defined as the sum of the Company’s long-term debt plus the current portion of long-term debt, less cash, cash equivalents and investments, plus stockholder equity.

(ii)“Normal Retirement” shall mean any termination of the Grantee’s employment (other than a Company-initiated termination for Cause) after the date the Grantee attains age 55 and completes 10 or more years of employment or service with the Company or one of its Subsidiaries (as

determined by the Administrator). “Cause” shall mean (i) an act constituting a felony; (ii) fraud or dishonesty that results in or is likely to result in economic damage to the Company; or (iii) willful misconduct in the performance of duties.

(iii)“Performance Period” shall mean January 1, 2024 through and including December 31, 2026.

(iv)“Revenue CAGR” shall mean the 3-year compound annual growth rate in the Company’s revenue during the Performance Period. For the purposes of calculating Revenue CAGR under this Agreement, the revenue shall be adjusted to reflect foreign exchange and proforma revenue in the base year 2023 (adjusted for acquisitions and divestitures).

(v)“ROIC” shall mean the Company’s return on Average Invested Capital calculated as a percentage for the twelve-month period ending on the last day of the Performance Period by dividing net operating profit after tax by Average Invested Capital. For the purposes of calculating ROIC under this Agreement, “net operating profit” shall be adjusted to exclude the impact of all restructuring, foreign exchange, impairments, legal settlements, employee separation costs, product liability charges, retroactive tax law changes, and other significant, unforeseen events outside of the Company’s control to the extent such items were not contemplated and included in the Company’s 2023 Strategic Plan, upon which the ROIC goals were based.

(d)

The Revenue CAGR and ROIC goals shall be adjusted to reflect the impact of any acquisition or disposition of an entity, business or business segment during the Performance Period.

4.	Settlement and Payment of Performance Stock Units.

(a)

Except as otherwise provided for payment upon a Sale Event or under Section 2(c)(ii), any earned Performance Stock Units shall be settled and shares of Stock issued to the Grantee as soon as administratively practicable following the Administrator’s certification of the achievement of the Performance Goals at the end of the Performance Period (such date of settlement being the “Payment Date”); provided, that the Payment Date shall occur no later than March 15 of the year following the end of the Performance Period. Performance Stock Units earned under Section 2(c)(ii) shall be settled and shares of Stock issued to the Grantee or the Grantee’s beneficiary as soon as administratively practicable following the Grantee’s termination of service, but no later than March 15 of the year following the year of Grantee’s termination of service.

(b)

Notwithstanding anything herein to the contrary, the Company may postpone the issuance of the shares of Stock until it is satisfied that the issuance of such Stock will not violate any applicable law. The actual issuance of the shares of Stock shall be subject to such terms and conditions as the Company may establish from time to time in order to comply with applicable law.

(c)

Notwithstanding anything herein to the contrary, the Administrator may adjust the calculation of Revenue CAGR and/or ROIC to exclude certain items that were not

contemplated and included in the Company’s 2023 Strategic Plan if, in its sole judgment, such adjustment is appropriate.

(d)

Notwithstanding anything herein to the contrary, the Administrator may, in its discretion, grant additional Performance Stock Units to a Grantee at the time of settlement to account for demonstrated quality of performance; provided that the number of Performance Stock Units earned by Grantee under this Agreement may not exceed 200% of the Target Award.

(e)

Notwithstanding anything herein to the contrary, the Administrator may, in its discretion, decrease the number of Performance Stock Units earned by the Grantee at the time of settlement in exceptional circumstances or for good reason.

Sale Event. In the event of a Sale Event during the Performance Period, the Performance Stock Units will be deemed to have been earned at the greater of (a) the Target Award, or (b) the number of Performance Stock Units that would be earned based on the actual performance of the Company determined as if the Company’s last quarter end prior to the date of the Sale Event was the last day of the Performance Period. The Performance Stock Units will become payable in shares of Stock or cash, as the Administrator may determine, within sixty (60) days following the Sale Event.

Dividend Equivalent Rights. If the Company pays a cash dividend on its Stock during the Performance Period, then the Grantee has the right to receive a cash payment at the time the earned and vested Performance Stock Units are settled determined by (a) multiplying the value of the dividends paid on a share of Stock during the Performance Period by the number of Performance Stock Units actually earned and vested at the end of the Performance Period (“Dividend Equivalents”). The right to Dividend Equivalents will cease and be forfeited upon the forfeiture and cancellation of the Performance Stock Units under this Agreement.

Incorporation of Plan. Notwithstanding anything herein to the contrary, this Agreement shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the Plan. Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

8.	Limitations on Transferability. This Agreement is personal to the Grantee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution.

Tax Withholding. The Grantee acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Grantee any federal, state, local or other taxes of any kind required by law to be withheld with respect to the grant, settlement or payment of the Performance Stock Units. The Grantee shall satisfy such tax withholding obligations on the Performance Stock Units by transferring to the Company, on each date on which such tax liability shall arise, such number of shares of Stock as have a Fair Market Value equal to the amount of the Company’s minimum

required tax withholding obligation. Such delivery of Stock to the Company shall be deemed to happen automatically, without any action required on the part of the Grantee, and the Company is hereby authorized to take such actions as are necessary to effect such delivery.

10.	Non-Solicitation, Non-Disparagement and Non-Competition for Retiree Vesting.

(a)

In consideration of the Company entering into this Agreement with the Grantee, the Grantee agrees that throughout his or her term of employment with the Company and for a period of twelve (12) months following the Grantee’s date of termination with the Company, the Grantee shall not, directly or indirectly: (i) divert or attempt to divert or assist others in diverting any business of the Company by soliciting, contacting or communicating with any customer or supplier of the Company with whom the Grantee has direct or indirect contact or upon termination of employment has had direct or indirect contact during the twelve (12) month period immediately preceding the Grantee’s date of termination with the Company; (ii) solicit, induce, attempt to induce or assist others in attempting to induce any employee or other service provider of the Company with whom the Grantee has worked or had material contact with, during the twelve (12) month period immediately preceding the termination of the Grantee’s employment, to leave the employment of the Company or a subsidiary of the Company or to accept employment or affiliation with any other company or firm of which the Grantee becomes an employee, owner, partner or consultant; or (iii) make any statements, orally or in writing, cause to be published or in any way disseminate any information concerning the Company or any subsidiaries of the Company concerning the Company’s business, business operations or business practices that in any way, in form or substance, harms, disparages or otherwise casts an unfavorable light upon the Company or any subsidiaries of the Company or upon any of their reputations or standing in the business community or the community as a whole. The provisions of this Section 10 do not prohibit the Grantee from communicating with, cooperating with, or providing information to the Securities and Exchange Commission, the Department of Labor, the EEOC, the NLRB, or any government agency that might be interpreted as disparaging. In consideration of the Company entering into this Agreement with the Grantee, the Grantee further agrees that throughout his or her term of employment with the Company, except on behalf of the Company, the Grantee shall not, directly or indirectly, engage in or participate in, or prepare to engage in or participate in, the Business, or provide services in any capacity to any person or entity engaged in or preparing to engage in the Business in competition with the Company. For purposes of this Section 10 and each subpart, “Company” shall include the Company and any parent company, subsidiary, or affiliated company of the Company and any of their respective successors or assigns.

(b)

In consideration of the continued vesting of the Grantee’s Performance Stock Units pursuant to Section 2(d) above, the Grantee agrees that throughout his or her term of employment with the Company and following the Grantee’s

termination with the Company due to Normal Retirement through the Payment Date, the Grantee will not, directly or indirectly, either through any form of ownership (other than ownership of securities of a publicly-held corporation of which the Grantee owns, or has real or contingent rights to own, two percent (2%) or less of any class of outstanding securities) or as a director, officer, principal, agent, employee, employer, advisor, consultant, investor, member, partner or in any other individual or representative capacity whatsoever, either for Grantee’s own benefit or for the benefit of any other person, (i) engage or participate in, or prepare to engage in or participate in, the Business or (ii) manage, join, operate, lend to, invest in, control, or render any services to any person or entity engaged in or preparing to engage in the Business, in each case (i) and (ii) in competition with the Company anywhere in the Restricted Territory. For purposes of this Agreement, the “Restricted Territory” means each city, county, state, territory and country in which (i) Grantee provided services or had a material presence or influence at any time during the last two (2) years of Grantee’s employment with the Company or (ii) the Company is engaged in or is preparing to engage in the Business as of the date of Grantee’s termination of employment, which Grantee acknowledges includes the Americas, Europe, and Asia-Pacific, Middle East and Africa. For purposes of this Agreement, “Business” means the business of (i) supplying products and systems that manage and conserve the flow of fluids and energy into, through and out of buildings in the residential and commercial markets, (ii) designing, fabricating and distributing residential and commercial flow control products, HVAC and gas products, drainage and water re-use products as well as water quality products, and (iii) any other business the Company is engaged in or preparing to engage in as of the date of Grantee’s termination of employment.

(c)

The Grantee and the Company acknowledge and mutually agree that the continued vesting of the Performance Stock Units pursuant to Section 2(d) above following the Grantee’s termination is sufficient consideration to enforce the non-competition provision set forth in Section 10(b) above. The non-competition provision set forth in Section 10(b) shall take effect on the date Grantee accepts this Agreement through the E*TRADE website.

11.

Compensation Recovery Policy. Notwithstanding anything contained in this Agreement to the contrary, all Performance Stock Units awarded under this Agreement, and any shares of Stock issued upon settlement hereunder shall be subject to forfeiture or repayment pursuant to the terms of the Company’s Compensation Recovery Policy as in effect from time to time, including any amendments necessary for compliance with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

12.	Miscellaneous.

(a)

Notice hereunder shall be given to the Company at its principal place of business, and shall be given to the Grantee at the address on file with the Company, or in

either case at such other address as one party may subsequently furnish to the other party in writing.

(b)

This Agreement does not confer upon the Grantee any rights with respect to continuation of employment by the Company or any Subsidiary. Further, Grantee understands and agrees that Grantee’s employment with the Company is and shall remain at-will. Nothing in this Agreement is intended to modify the at-will nature of Grantee’s employment relationship with the Company.

(c)

Grantee acknowledges that Grantee has the right to consult with independent legal counsel prior to accepting this Agreement and that Grantee either consulted, or on Grantee’s own volition chose not to consult, with such counsel.

Exhibit 10.3

Execution Version

THIRD AMENDMENT TO

UNIT PURCHASE AGREEMENT

This THIRD AMENDMENT TO THE UNIT PURCHASE AGREEMENT (this “Amendment”) is effective as of March 29, 2024, and is made by and between Watts Regulator Co., a Massachusetts corporation (“Buyer”), and G6 Adventures Corporation, a Wisconsin corporation (“Parent”). Capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Purchase Agreement, as amended hereby.

WHEREAS, Buyer and Parent are party to that certain Unit Purchase Agreement, dated as of August 30, 2023 (as amended, restated, supplemented or otherwise modified from time to time, the “Purchase Agreement”), by and among Buyer, Parent, Bradley Company, LLC, a Wisconsin limited liability company (f/k/a Bradley Corporation), and Watts Water Technologies, Inc., a Delaware corporation (solely for the purpose of Section 5.8 therein), as amended by (i) that certain letter agreement by and between Buyer and Parent, dated October 9, 2023, (ii) that certain Amendment to the Unit Purchase Agreement, effective as of December 15, 2023 and (ii) that certain Second Amendment to the Unit Purchase Agreement, effective as of January 31, 2024; and

WHEREAS, Buyer and Parent wish to further amend Section 2.4(d) of the Purchase Agreement for the convenience of the parties.

NOW, THEREFORE, the parties hereto hereby agree as follows:

Amendment to the Purchase Agreement. The first sentence of Section 2.4(d) of the Purchase Agreement is hereby amended and restated in its entirety as follows:

“In the period between Buyer’s delivery of the Preliminary Closing Statement pursuant to Section 2.4(c) and April 15, 2024 (the “Closing Statement Review Period”), Parent shall complete its review of the Preliminary Closing Statement.”

No Other Amendments. Except as specifically amended hereby, the Purchase Agreement shall continue in full force and effect as written.

Incorporation by Reference. The provisions of Sections 10.5, 10.6, 10.7, 10.8, 10.9, 10.10, 10.11, 10.12 and 10.16 are hereby incorporated herein mutatis mutandis.

Counterparts; Telecopy Execution and Delivery. This Amendment may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. A facsimile, telecopy, or other reproduction of this Amendment may be executed by one or more parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com). Such execution and delivery shall be considered valid, binding, and effective for all purposes. At the request of any party hereto, all parties hereto agree to execute and deliver an original of this Amendment as well as any facsimile, telecopy, or other reproduction hereof.

Entire Agreement. This Amendment, together with the Purchase Agreement, constitutes the entire agreement among the parties with respect to the subject matters contained herein and therein and

supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matters contained herein and therein.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and year first above written.

BUYER:

Watts Regulator Co.

By: /s/ Kenneth R. Lepage
Name: Kenneth R. Lepage
Title: General Counsel, Chief Sustainability

Officer & Secretary

PARENT:

G6 Adventures Corporation

By: /s/ Bryan H. Mullett
Name: Bryan H. Mullett
Title: Chairman and CEO

Exhibit 31.1

WATTS WATER TECHNOLOGIES, INC.

CERTIFICATION PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Robert J. Pagano, Jr., certify that:

1.I have reviewed this quarterly report on Form 10-Q of Watts Water Technologies, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 9, 2024
	/s/ Robert J. Pagano, Jr.
	Robert J. Pagano, Jr.
	Chief Executive Officer

Exhibit 31.2

WATTS WATER TECHNOLOGIES, INC.

CERTIFICATION PURSUANT TO

SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Shashank Patel, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Watts Water Technologies, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 9, 2024
	/s/ Shashank Patel
	Shashank Patel
	Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned officer of Watts Water Technologies, Inc. (the “Company”) hereby certifies that, to his knowledge, the Company’s quarterly report on Form 10-Q to which this certification is attached (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is provided solely pursuant to 18 U.S.C. Section 1350 and Item 601(b)(32) of Regulation S-K (“Item 601(b)(32)”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act. In accordance with clause (ii) of Item 601(b)(32), this certification (A) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and (B) shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.


Date: May 9, 2024	/s/ Robert J. Pagano, Jr.
	Robert J. Pagano, Jr.
	Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


Date: May 9, 2024	/s/ Shashank Patel
	Shashank Patel
	Chief Financial Officer

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2024	Apr. 28, 2024
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2024
Entity File Number	001-11499
Entity Registrant Name	WATTS WATER TECHNOLOGIES INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	04-2916536
Entity Address, Address Line One	815 Chestnut Street
Entity Address, City or Town	North Andover
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01845
City Area Code	978
Local Phone Number	688-1811
Title of 12(b) Security	Class A common stock, par value $0.10 per share
Trading Symbol	WTS
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Entity Central Index Key	0000795403
Amendment Flag	false
Class A
Entity Common Stock, Shares Outstanding		27,412,374
Class B
Entity Common Stock, Shares Outstanding		5,958,290

Consolidated Balance Sheets - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
CURRENT ASSETS:
Cash and cash equivalents	$ 237.1	$ 350.1
Trade accounts receivable, less reserve allowances of $13.0 million at March 31, 2024 and $11.9 million at December 31, 2023	305.7	259.8
Inventories, net:
Raw materials	151.9	150.6
Work in process	21.3	20.2
Finished goods	250.4	228.5
Total Inventories	423.6	399.3
Prepaid expenses and other current assets	43.6	51.8
Total Current Assets	1,010.0	1,061.0
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost	683.8	677.2
Accumulated depreciation	(428.8)	(429.0)
Property, plant and equipment, net	255.0	248.2
OTHER ASSETS:
Goodwill	724.3	693.0
Intangible assets, net	250.9	216.1
Deferred income taxes	21.6	23.6
Other, net	70.6	67.5
TOTAL ASSETS	2,332.4	2,309.4
CURRENT LIABILITIES:
Accounts payable	162.6	131.8
Accrued expenses and other liabilities	186.6	190.3
Accrued compensation and benefits	58.1	83.7
Total Current Liabilities	407.3	405.8
LONG-TERM DEBT	283.5	298.3
DEFERRED INCOME TAXES	12.6	13.5
OTHER NONCURRENT LIABILITIES	77.2	78.5
STOCKHOLDERS' EQUITY:
Preferred Stock, $0.10 par value; 5,000,000 shares authorized; no shares issued or outstanding
Additional paid-in capital	680.6	674.3
Retained earnings	1,022.8	979.1
Accumulated other comprehensive loss	(154.9)	(143.4)
Total Stockholders' Equity	1,551.8	1,513.3
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	2,332.4	2,309.4
Class A
STOCKHOLDERS' EQUITY:
Common Stock	2.7	2.7
Class B
STOCKHOLDERS' EQUITY:
Common Stock	$ 0.6	$ 0.6

Consolidated Balance Sheets (Parenthetical) $ in Millions	Mar. 31, 2024 USD ($) $ / shares shares	Dec. 31, 2023 USD ($) $ / shares shares
Trade accounts receivable, reserve allowances \| $	$ 13.0	$ 11.9
Preferred Stock, par value (in dollars per share) \| $ / shares	$ 0.10	$ 0.10
Preferred Stock, shares authorized	5,000,000	5,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Class A
Common Stock, par value (in dollars per share) \| $ / shares	$ 0.10	$ 0.10
Common Stock, shares authorized	120,000,000	120,000,000
Common Stock, votes per share (Number of votes)	1	1
Common Stock, issued shares	27,418,449	27,352,701
Common Stock, outstanding shares	27,418,449	27,352,701
Class B
Common Stock, par value (in dollars per share) \| $ / shares	$ 0.10	$ 0.10
Common Stock, shares authorized	25,000,000	25,000,000
Common Stock, votes per share (Number of votes)	10	10
Common Stock, issued shares	5,958,290	5,958,290
Common Stock, outstanding shares	5,958,290	5,958,290

Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 26, 2023
Consolidated Statements of Operations
Net sales	$ 570.9	$ 471.7
Cost of goods sold	303.4	253.6
GROSS PROFIT	267.5	218.1
Selling, general and administrative expenses	169.6	133.7
Restructuring	1.2	(0.3)
OPERATING INCOME	96.7	84.7
Other (income) expense:
Interest income	(2.1)	(0.4)
Interest expense	4.2	1.5
Other (income) expense, net	(0.6)	0.1
Total other expense	1.5	1.2
INCOME BEFORE INCOME TAXES	95.2	83.5
Provision for income taxes	22.6	18.8
NET INCOME	$ 72.6	$ 64.7
Basic EPS
NET INCOME PER SHARE	$ 2.17	$ 1.94
Weighted average number of shares	33.4	33.4
Diluted EPS
NET INCOME PER SHARE	$ 2.17	$ 1.93
Weighted average number of shares	33.5	33.5
Dividends declared per share	$ 0.36	$ 0.30

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 26, 2023
Consolidated Statements of Comprehensive Income
Net income	$ 72.6	$ 64.7
Other comprehensive (loss) income net of tax:
Foreign currency translation adjustments	(12.9)	4.4
Cash flow hedges	1.4	(1.7)
Other comprehensive (loss) income	(11.5)	2.7
Comprehensive income	$ 61.1	$ 67.4

Consolidated Statements of Stockholders Equity - USD ($) $ in Millions	Class A Common Stock	Class B Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss.	Total
Balance at the beginning of the period at Dec. 31, 2022	$ 2.7	$ 0.6	$ 651.9	$ 795.3	$ (149.9)	$ 1,300.6
Balance (in shares) at Dec. 31, 2022	27,314,679	5,958,290
Increase (Decrease) in Stockholders' Equity
Net income				64.7		64.7
Other comprehensive income (loss)					2.7	2.7
Comprehensive income						67.4
Shares of Class A common stock issued upon the exercise of stock options			0.1			0.1
Shares of Class A common stock issued upon the exercise of stock options (in shares)	547
Stock-based compensation			4.0			4.0
Stock repurchase				(3.7)		(3.7)
Stock repurchase (in shares)	(22,473)
Net change in restricted and performance stock units			2.1	(14.6)		(12.5)
Net change in restricted and performance stock units (in shares)	121,647
Common stock dividends				(10.1)		(10.1)
Balance at the end of the period at Mar. 26, 2023	$ 2.7	$ 0.6	658.1	831.6	(147.2)	1,345.8
Balance (in shares) at Mar. 26, 2023	27,414,400	5,958,290
Balance at the beginning of the period at Dec. 31, 2023	$ 2.7	$ 0.6	674.3	979.1	(143.4)	1,513.3
Balance (in shares) at Dec. 31, 2023	27,352,701	5,958,290
Increase (Decrease) in Stockholders' Equity
Net income				72.6		72.6
Other comprehensive income (loss)					(11.5)	(11.5)
Comprehensive income						61.1
Stock-based compensation			4.0			4.0
Stock repurchase				(4.0)		(4.0)
Stock repurchase (in shares)	(19,750)
Net change in restricted and performance stock units			2.3	(12.8)		(10.5)
Net change in restricted and performance stock units (in shares)	85,498
Common stock dividends				(12.1)		(12.1)
Balance at the end of the period at Mar. 31, 2024	$ 2.7	$ 0.6	$ 680.6	$ 1,022.8	$ (154.9)	$ 1,551.8
Balance (in shares) at Mar. 31, 2024	27,418,449	5,958,290

Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 26, 2023
OPERATING ACTIVITIES
Net income	$ 72.6	$ 64.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	8.6	7.0
Amortization of intangibles	4.7	3.0
Loss on disposal and impairment of long-lived asset	(1.0)	0.2
Stock-based compensation	4.0	4.0
Deferred income tax	0.9	(0.7)
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts receivable	(44.5)	(34.8)
Inventories	(12.5)	(23.9)
Prepaid expenses and other assets	7.1	(1.9)
Accounts payable, accrued expenses and other liabilities	5.7	15.8
Net cash provided by operating activities	45.6	33.4
INVESTING ACTIVITIES
Additions to property, plant and equipment	(10.1)	(5.1)
Proceeds from the sale of property, plant and equipment	1.1
Business acquisitions, net of cash acquired	(100.8)
Net cash used in investing activities	(109.8)	(5.1)
FINANCING ACTIVITIES
Proceeds from long-term borrowings		30.0
Payments of long-term debt	(15.0)	(30.0)
Payments for withholding taxes on vested awards	(12.8)	(14.6)
Payments for finance leases and other	(0.7)	(0.7)
Proceeds from share transactions under employee stock plans		0.1
Payments to repurchase common stock	(4.0)	(3.7)
Dividends	(12.1)	(10.1)
Net cash used in financing activities	(44.6)	(29.0)
Effect of exchange rate changes on cash and cash equivalents	(4.2)	1.7
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(113.0)	1.0
Cash and cash equivalents at beginning of year	350.1	310.8
CASH AND CASH EQUIVALENTS AT END OF PERIOD	237.1	311.8
Acquisition of businesses:
Fair value of assets acquired	102.9
Cash paid, net of cash acquired	100.8
Liabilities assumed	2.1
Issuance of stock under management stock purchase plan	0.3	0.4
CASH PAID FOR:
Interest	3.2	1.2
Income taxes	$ 13.7	$ 7.7

Basis of Presentation

3 Months Ended

Mar. 31, 2024

Basis of Presentation

Basis of Presentation

1. Basis of Presentation

Estimates

Accounting Policies

3 Months Ended

Mar. 31, 2024

Accounting Policies

Accounting Policies

2. Accounting Policies

Shipping and Handling

Shipping and handling costs included in selling, general and administrative expenses amounted to $21.8 million and $16.6 million for the first quarters of 2024 and 2023, respectively.

Research and Development

Research and development costs included in selling, general and administrative expenses amounted to $18.5 million and $16.1 million for the first quarters of 2024 and 2023, respectively.

Accounting Standard Updates

Revenue Recognition

3 Months Ended

Mar. 31, 2024

Revenue Recognition

Revenue Recognition

3. Revenue Recognition

●

Water quality—includes point-of-use and point-of-entry water filtration, monitoring, conditioning and scale prevention systems for commercial, marine and residential applications.

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

For the first quarter ended March 31, 2024

(in millions)

Distribution Channel

Americas

Europe

APMEA

Consolidated

Wholesale

272.2

84.0

19.0

375.2

OEM

26.0

38.7

1.7

66.4

Specialty

97.5

—

8.1

105.6

DIY

23.1

0.6

—

23.7

Total

418.8

123.3

28.8

570.9

For the first quarter ended March 31, 2024

(in millions)

Principal Product Category

Americas

Europe

APMEA

Consolidated

Residential & Commercial Flow Control

273.6

47.2

25.1

345.9

HVAC and Gas Products

85.1

52.2

2.8

140.1

Drainage and Water Re-use Products

33.0

22.9

0.6

56.5

Water Quality Products

27.1

1.0

0.3

28.4

Total

418.8

123.3

28.8

570.9


	For the first quarter ended March 26, 2023
			(in millions)
Distribution Channel	Americas		Europe		APMEA		Consolidated
Wholesale	$	188.8	$	81.1	$	18.5	$	288.4
OEM		23.1		46.5		1.7		71.3
Specialty		90.5		—		—		90.5
DIY		20.8		0.7		—		21.5
Total	$	323.2	$	128.3	$	20.2	$	471.7

	For the first quarter ended March 26, 2023
			(in millions)
Principal Product Category	Americas		Europe		APMEA		Consolidated
Residential & Commercial Flow Control	$	194.5	$	45.5	$	15.9	$	255.9
HVAC and Gas Products		78.2		62.3		3.4		143.9
Drainage and Water Re-use Products		22.8		19.6		0.7		43.1
Water Quality Products		27.7		0.9		0.2		28.8
Total	$	323.2	$	128.3	$	20.2	$	471.7

Acquisitions

3 Months Ended

Mar. 31, 2024

Acquisitions

Acquisitions

4. Acquisitions

Josam

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.

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


Cash	$	4.6
Trade accounts receivable		4.3
Inventories, net		15.4
Prepaid expenses and other current assets		0.5
Property, Plant and Equipment		7.6
Intangible assets		39.4
Goodwill		34.6
Accounts payable		(1.5)
Accrued expenses and other current liabilities		(1.4)
Purchase price	$	103.5

Bradley

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


Cash	$	9.2
Trade accounts receivable		23.5
Inventories, net		38.4
Prepaid expenses and other current assets		3.5
Property, Plant and Equipment		47.6
Intangible assets		115.3
Goodwill		96.9
Accounts payable		(8.2)
Employee benefits, other		(5.0)
Other current liabilities		(8.4)
Other noncurrent liabilities		(0.5)
Purchase price	$	312.3

Supplemental pro-forma information (unaudited)

Had the Company completed the acquisition of Bradley at the beginning of 2023, net sales, net income and earnings per share would have been as follows:


	Three Months Ended March 31,
	2024		2023

	(Amounts in millions, except per share information)
Net Sales	$	570.9	$	521.6
Net Income	$	75.6	$	65.3
Net income per share:
Basic EPS	$	2.26	$	1.95
Diluted EPS	$	2.25	$	1.95

Enware

Goodwill & Intangibles

3 Months Ended

Mar. 31, 2024

Goodwill & Intangibles

Goodwill & Intangibles

5. Goodwill & Intangibles

The Company operates in three geographic segments: Americas, Europe, and APMEA. The changes in the carrying amount 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

2024 -

January 1,

the

March 31,

January 1,

Loss During

March 31,

2024

Period

2024

the Period

2024

(in millions)

Americas

587.1

34.8

621.9

(24.5)

—

(24.5)

(0.2)

597.2

Europe

239.8

—

239.8

(129.7)

—

(129.7)

(2.4)

107.7

APMEA

33.2

—

33.2

(12.9)

—

(12.9)

(0.9)

19.4

Total

860.1

34.8

894.9

(167.1)

—

(167.1)

(3.5)

724.3

Intangible assets include the following:

March 31, 2024

December 31, 2023

Gross

Net

Gross

Net

Carrying

Accumulated

Carrying

Accumulated

Carrying

Amount

Amortization

Amount

Amortization

Amount

(in millions)

Patents

5.0

(5.0)

—

5.0

(5.0)

—

Customer relationships

252.0

(89.0)

163.0

218.0

(85.3)

132.7

Technology

53.2

(45.1)

8.1

53.2

(44.2)

9.0

Trade names

20.7

(12.3)

8.4

20.8

(12.3)

8.5

Other

1.1

(0.7)

0.4

1.1

(0.7)

0.4

Total amortizable intangibles

332.0

(152.1)

179.9

298.1

(147.5)

150.6

Indefinite-lived intangible assets

71.0

—

71.0

65.5

—

65.5

403.0

(152.1)

250.9

363.6

(147.5)

216.1

Earnings per Share and Stock Repurchase Program

3 Months Ended

Mar. 31, 2024

Earnings per Share and Stock Repurchase Program

Earnings per Share and Stock Repurchase Program

6. Earnings per Share and Stock Repurchase Program

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

For the First Quarter Ended March 31, 2024

For the First Quarter Ended March 26, 2023

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

72.6

33.4

2.17

64.7

33.4

1.94

Effect of dilutive securities:

Common stock equivalents

0.1

—

0.1

(0.01)

Diluted EPS:

Net income

72.6

33.5

2.17

64.7

33.5

1.93

There were no options to purchase Class A common stock outstanding during the first quarters ended March 31, 2024 or March 26, 2023 that would have been anti-dilutive.

For the first quarters ended March 31, 2024 and March 26, 2023, the Company repurchased 19,750 shares for $4.0 million and 22,473 shares for $3.7 million, respectively.

Stock-Based Compensation

3 Months Ended

Mar. 31, 2024

Stock-Based Compensation

Stock-Based Compensation

7. Stock-Based Compensation

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:


	2024		2023
Expected life (years)	3.0		3.0
Expected stock price volatility	28.9	%	33.7	%
Expected dividend yield	0.80	%	0.80	%
Risk-free interest rate	4.5	%	4.1	%

The above assumptions were used to determine the weighted average grant-date fair value of the discount on RSUs granted in 2024 and 2023 of $68.94 and $57.50, respectively.

Segment Information

3 Months Ended

Mar. 31, 2024

Segment Information

Segment Information

8. Segment Information

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


	First Quarter Ended
	March 31,		March 26,
	2024		2023

	(in millions)
Net sales
Americas	$	418.8	$	323.2
Europe		123.3		128.3
APMEA		28.8		20.2
Consolidated net sales	$	570.9	$	471.7
Operating income (loss)
Americas	$	85.4	$	72.5
Europe		20.5		19.2
APMEA		5.0		4.0
Subtotal reportable segments		110.9		95.7
Corporate(*)		(14.2)		(11.0)
Consolidated operating income		96.7		84.7
Interest income		(2.1)		(0.4)
Interest expense		4.2		1.5
Other (income) expense, net		(0.6)		0.1
Income before income taxes	$	95.2	$	83.5
Capital expenditures
Americas	$	7.4	$	3.2
Europe		2.4		1.8
APMEA		0.3		0.1
Consolidated capital expenditures	$	10.1	$	5.1
Depreciation and amortization
Americas	$	10.4	$	7.1
Europe		2.3		2.4
APMEA		0.6		0.5
Consolidated depreciation and amortization	$	13.3	$	10.0

	March 31,		December 31,
	2024		2023

	(in millions)
Identifiable assets (at end of period)
Americas	$	1,610.4	$	1,605.7
Europe		585.3		569.1
APMEA		136.7		134.6
Consolidated identifiable assets	$	2,332.4	$	2,309.4
Property, plant and equipment, net (at end of period)
Americas	$	182.3	$	174.0
Europe		68.5		69.9
APMEA		4.2		4.3
Consolidated property, plant and equipment, net	$	255.0	$	248.2

The property, plant and equipment, net, in the U.S. of the Company’s Americas segment was $169.5 million and $161.5 million as of March 31, 2024 and December 31, 2023, respectively.

The following includes U.S. net sales of the Company’s Americas segment:


	March 31,		March 26,
	2024		2023

	(in millions)
U.S. net sales	$	392.6	$	304.3

The following includes intersegment sales for Americas, Europe and APMEA:


	First Quarter Ended
	March 31,		March 26,
	2024		2023

	(in millions)
Intersegment Sales
Americas	$	2.6	$	2.0
Europe		5.8		5.6
APMEA		21.4		22.1
Intersegment sales	$	29.8	$	29.7

Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2024

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

9. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the following:


							Accumulated
	Foreign						Other
	Currency		Pension			Cash Flow	Comprehensive
	Translation		Adjustment			Hedges (1)	Loss

	(in millions)

Balance December 31, 2023	$	(147.3)	$	0.7	$	3.2	$	(143.4)
Change in period		(12.9)		—		1.4		(11.5)
Balance March 31, 2024	$	(160.2)	$	0.7	$	4.6	$	(154.9)

Balance December 31, 2022	$	(157.0)	$	—	$	7.1	$	(149.9)
Change in period		4.4		—		(1.7)		2.7
Balance March 26, 2023	$	(152.6)	$	—	$	5.4	$	(147.2)

(1)	Cash flow hedges include interest rate swaps and designated foreign currency hedges. See Note 11 for further details.

Debt

3 Months Ended

Mar. 31, 2024

Debt

Debt

10. Debt

Financial Instruments and Derivative Instruments

3 Months Ended

Mar. 31, 2024

Financial Instruments and Derivative Instruments

Financial Instruments and Derivative Instruments

11. Financial Instruments and Derivative Instruments

Fair Value

Financial Instruments


	Fair Value Measurement at March 31, 2024 Using:
			Quoted Prices in Active		Significant Other		Significant
			Markets for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)

	(in millions)
Assets
Plan asset for deferred compensation(1)	$	2.5	$	2.5	$	—	$	—
Interest rate swap(2)	$	6.9	$	—	$	6.9	$	—
Designated foreign currency hedges(3)	$	0.1	$	—	$	0.1	$	—
Total assets	$	9.5	$	2.5	$	7.0	$	—
Liabilities
Plan liability for deferred compensation(4)	$	2.5	$	2.5	$	—	$	—
Interest rate swap(5)	$	0.8	$	—	$	0.8	$	—
Total liabilities	$	3.3	$	2.5	$	0.8	$	—


	Fair Value Measurements at December 31, 2023 Using:
			Quoted Prices in Active		Significant Other		Significant
			Markets for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)

	(in millions)
Assets
Plan asset for deferred compensation(1)	$	2.3	$	2.3	$	—	$	—
Interest rate swap(2)	$	6.5	$	—	$	6.5	$	—
Total assets	$	8.8	$	2.3	$	6.5	$	—
Liabilities
Plan liability for deferred compensation(4)	$	2.3	$	2.3	$	—	$	—
Interest rate swap(5)	$	2.0	$	—	$	2.0	$	—
Designated foreign currency hedges(6)	$	0.2	$	—	$	0.2	$	—
Total liabilities	$	4.5	$	2.3	$	2.2	$	—

(1)	Included on the Company’s consolidated balance sheet in other assets (other, net).

(2)

(3)	Included on the Company’s consolidated balance sheet in prepaid expenses and other current assets.

(4)Included on the Company’s consolidated balance sheet in accrued compensation and benefits.

(5)Included on the Company’s consolidated balance sheet in other noncurrent liabilities.

(6)Included on the Company’s consolidated balance sheet in accrued expenses and other liabilities.

Interest Rate Swaps

Designated Foreign Currency Hedges

Contingencies and Environmental Remediation

3 Months Ended

Mar. 31, 2024

Contingencies and Environmental Remediation

Contingencies and Environmental Remediation

12. Contingencies and Environmental Remediation

Chemetco, Inc. Superfund Site, Hartford, Illinois

Subsequent Events

3 Months Ended

Mar. 31, 2024

Subsequent Events

Subsequent Events

13. Subsequent Events

Accounting Policies (Policies)	3 Months Ended
Accounting Policies (Policies)	Mar. 31, 2024
Accounting Policies
Shipping and Handling	Shipping and Handling Shipping and handling costs included in selling, general and administrative expenses amounted to $21.8 million and $16.6 million for the first quarters of 2024 and 2023, respectively.
Research and Development	Research and Development Research and development costs included in selling, general and administrative expenses amounted to $18.5 million and $16.1 million for the first quarters of 2024 and 2023, respectively.
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 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 March 31, 2024, the Consolidated Statements of Operations for the First Quarters ended March 31, 2024 and March 26, 2023, the Consolidated Statements of Comprehensive Income for the First Quarters ended March 31, 2024 and March 26, 2023, the Consolidated Statements of Stockholders’ Equity for the First Quarters ended March 31, 2024 and March 26, 2023, and the Consolidated Statements of Cash Flows for the First Quarters ended March 31, 2024 and March 26, 2023. The consolidated balance sheet at December 31, 2023 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, 2023. The 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, 2023. Operating results for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2024. 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	Estimates The preparation of 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 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.
Accounting Standard Updates	Accounting Standard Updates In March 2024, the Securities and Exchange Commission (“SEC”) adopted climate-related reporting rules, “The Enhancement and Standardization of Climate-Related Disclosures for Investors” (the “SEC Climate Reporting Rules”), which require the disclosure of material Scope 1 and Scope 2 greenhouse gas emissions and other climate-related topics in annual reports and registration statements. For large accelerated filers, disclosure requirements will begin phasing in for fiscal years beginning on or after January 1, 2025. The Company is currently evaluating the impact these rules will have on the Company’s consolidated financial statements and related disclosures. In April 2024, the SEC voluntarily stayed the implementation of the final rules. In the stay order, the SEC noted it intends to vigorously defend the validity of the final rules. The Company is monitoring the outcome of the voluntary stay. 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 2023, the Financial Standards Accounting Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for our annual periods beginning January 1, 2024, and for interim 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.

Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2024

Revenue Recognition

Schedule of disaggregation of revenue

For the first quarter ended March 31, 2024

(in millions)

Distribution Channel

Americas

Europe

APMEA

Consolidated

Wholesale

272.2

84.0

19.0

375.2

OEM

26.0

38.7

1.7

66.4

Specialty

97.5

—

8.1

105.6

DIY

23.1

0.6

—

23.7

Total

418.8

123.3

28.8

570.9

For the first quarter ended March 31, 2024

(in millions)

Principal Product Category

Americas

Europe

APMEA

Consolidated

Residential & Commercial Flow Control

273.6

47.2

25.1

345.9

HVAC and Gas Products

85.1

52.2

2.8

140.1

Drainage and Water Re-use Products

33.0

22.9

0.6

56.5

Water Quality Products

27.1

1.0

0.3

28.4

Total

418.8

123.3

28.8

570.9


	For the first quarter ended March 26, 2023
			(in millions)
Distribution Channel	Americas		Europe		APMEA		Consolidated
Wholesale	$	188.8	$	81.1	$	18.5	$	288.4
OEM		23.1		46.5		1.7		71.3
Specialty		90.5		—		—		90.5
DIY		20.8		0.7		—		21.5
Total	$	323.2	$	128.3	$	20.2	$	471.7

	For the first quarter ended March 26, 2023
			(in millions)
Principal Product Category	Americas		Europe		APMEA		Consolidated
Residential & Commercial Flow Control	$	194.5	$	45.5	$	15.9	$	255.9
HVAC and Gas Products		78.2		62.3		3.4		143.9
Drainage and Water Re-use Products		22.8		19.6		0.7		43.1
Water Quality Products		27.7		0.9		0.2		28.8
Total	$	323.2	$	128.3	$	20.2	$	471.7

Acquisitions (Tables)

3 Months Ended

Mar. 31, 2024

Supplemental pro-forma information


	Three Months Ended March 31,
	2024		2023

	(Amounts in millions, except per share information)
Net Sales	$	570.9	$	521.6
Net Income	$	75.6	$	65.3
Net income per share:
Basic EPS	$	2.26	$	1.95
Diluted EPS	$	2.25	$	1.95

Josam Industries, LLC

Summary of the value of assets and liabilities acquired

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


Cash	$	4.6
Trade accounts receivable		4.3
Inventories, net		15.4
Prepaid expenses and other current assets		0.5
Property, Plant and Equipment		7.6
Intangible assets		39.4
Goodwill		34.6
Accounts payable		(1.5)
Accrued expenses and other current liabilities		(1.4)
Purchase price	$	103.5

Bradley

Summary of the value of assets and liabilities acquired

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


Cash	$	9.2
Trade accounts receivable		23.5
Inventories, net		38.4
Prepaid expenses and other current assets		3.5
Property, Plant and Equipment		47.6
Intangible assets		115.3
Goodwill		96.9
Accounts payable		(8.2)
Employee benefits, other		(5.0)
Other current liabilities		(8.4)
Other noncurrent liabilities		(0.5)
Purchase price	$	312.3

Goodwill & Intangibles (Tables)

3 Months Ended

Mar. 31, 2024

Goodwill & Intangibles

Changes in the carrying amount of goodwill by geographic segment

Gross Balance

Accumulated Impairment Losses

Foreign Currency Translation

Net Goodwill

Acquired

January 1,

Balance

During

Balance

Impairment

Balance

2024 -

January 1,

the

March 31,

January 1,

Loss During

March 31,

2024

Period

2024

the Period

2024

(in millions)

Americas

587.1

34.8

621.9

(24.5)

—

(24.5)

(0.2)

597.2

Europe

239.8

—

239.8

(129.7)

—

(129.7)

(2.4)

107.7

APMEA

33.2

—

33.2

(12.9)

—

(12.9)

(0.9)

19.4

Total

860.1

34.8

894.9

(167.1)

—

(167.1)

(3.5)

724.3

Schedule of Intangible assets

March 31, 2024

December 31, 2023

Gross

Net

Gross

Net

Carrying

Accumulated

Carrying

Accumulated

Carrying

Amount

Amortization

Amount

Amortization

Amount

(in millions)

Patents

5.0

(5.0)

—

5.0

(5.0)

—

Customer relationships

252.0

(89.0)

163.0

218.0

(85.3)

132.7

Technology

53.2

(45.1)

8.1

53.2

(44.2)

9.0

Trade names

20.7

(12.3)

8.4

20.8

(12.3)

8.5

Other

1.1

(0.7)

0.4

1.1

(0.7)

0.4

Total amortizable intangibles

332.0

(152.1)

179.9

298.1

(147.5)

150.6

Indefinite-lived intangible assets

71.0

—

71.0

65.5

—

65.5

403.0

(152.1)

250.9

363.6

(147.5)

216.1

Earnings per Share and Stock Repurchase Program (Tables)

3 Months Ended

Mar. 31, 2024

Earnings per Share and Stock Repurchase Program

Summary of reconciliation of the calculation of earnings per share

For the First Quarter Ended March 31, 2024

For the First Quarter Ended March 26, 2023

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

72.6

33.4

2.17

64.7

33.4

1.94

Effect of dilutive securities:

Common stock equivalents

0.1

—

0.1

(0.01)

Diluted EPS:

Net income

72.6

33.5

2.17

64.7

33.5

1.93

Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2024

Stock-Based Compensation

Schedule of stock-based compensation fair value assumptions


	2024		2023
Expected life (years)	3.0		3.0
Expected stock price volatility	28.9	%	33.7	%
Expected dividend yield	0.80	%	0.80	%
Risk-free interest rate	4.5	%	4.1	%

Segment Information (Tables)

3 Months Ended

Mar. 31, 2024

Segment Information

Summary of the Company's significant accounts and balances by segment, reconciled to the consolidated totals


	First Quarter Ended
	March 31,		March 26,
	2024		2023

	(in millions)
Net sales
Americas	$	418.8	$	323.2
Europe		123.3		128.3
APMEA		28.8		20.2
Consolidated net sales	$	570.9	$	471.7
Operating income (loss)
Americas	$	85.4	$	72.5
Europe		20.5		19.2
APMEA		5.0		4.0
Subtotal reportable segments		110.9		95.7
Corporate(*)		(14.2)		(11.0)
Consolidated operating income		96.7		84.7
Interest income		(2.1)		(0.4)
Interest expense		4.2		1.5
Other (income) expense, net		(0.6)		0.1
Income before income taxes	$	95.2	$	83.5
Capital expenditures
Americas	$	7.4	$	3.2
Europe		2.4		1.8
APMEA		0.3		0.1
Consolidated capital expenditures	$	10.1	$	5.1
Depreciation and amortization
Americas	$	10.4	$	7.1
Europe		2.3		2.4
APMEA		0.6		0.5
Consolidated depreciation and amortization	$	13.3	$	10.0

	March 31,		December 31,
	2024		2023

	(in millions)
Identifiable assets (at end of period)
Americas	$	1,610.4	$	1,605.7
Europe		585.3		569.1
APMEA		136.7		134.6
Consolidated identifiable assets	$	2,332.4	$	2,309.4
Property, plant and equipment, net (at end of period)
Americas	$	182.3	$	174.0
Europe		68.5		69.9
APMEA		4.2		4.3
Consolidated property, plant and equipment, net	$	255.0	$	248.2

Schedule of U.S. net sales of the Company's Americas segment


	March 31,		March 26,
	2024		2023

	(in millions)
U.S. net sales	$	392.6	$	304.3

Schedule of intersegment sales for Americas, EMEA and Asia-Pacific


	First Quarter Ended
	March 31,		March 26,
	2024		2023

	(in millions)
Intersegment Sales
Americas	$	2.6	$	2.0
Europe		5.8		5.6
APMEA		21.4		22.1
Intersegment sales	$	29.8	$	29.7

Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2024

Accumulated Other Comprehensive Loss

Schedule of amounts recognized in accumulated other comprehensive income (loss)


							Accumulated
	Foreign						Other
	Currency		Pension			Cash Flow	Comprehensive
	Translation		Adjustment			Hedges (1)	Loss

	(in millions)

Balance December 31, 2023	$	(147.3)	$	0.7	$	3.2	$	(143.4)
Change in period		(12.9)		—		1.4		(11.5)
Balance March 31, 2024	$	(160.2)	$	0.7	$	4.6	$	(154.9)

Balance December 31, 2022	$	(157.0)	$	—	$	7.1	$	(149.9)
Change in period		4.4		—		(1.7)		2.7
Balance March 26, 2023	$	(152.6)	$	—	$	5.4	$	(147.2)

(1)	Cash flow hedges include interest rate swaps and designated foreign currency hedges. See Note 11 for further details.

Financial Instruments and Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2024

Financial Instruments and Derivative Instruments

Schedule of fair value of financial assets and liabilities


	Fair Value Measurement at March 31, 2024 Using:
			Quoted Prices in Active		Significant Other		Significant
			Markets for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)

	(in millions)
Assets
Plan asset for deferred compensation(1)	$	2.5	$	2.5	$	—	$	—
Interest rate swap(2)	$	6.9	$	—	$	6.9	$	—
Designated foreign currency hedges(3)	$	0.1	$	—	$	0.1	$	—
Total assets	$	9.5	$	2.5	$	7.0	$	—
Liabilities
Plan liability for deferred compensation(4)	$	2.5	$	2.5	$	—	$	—
Interest rate swap(5)	$	0.8	$	—	$	0.8	$	—
Total liabilities	$	3.3	$	2.5	$	0.8	$	—


	Fair Value Measurements at December 31, 2023 Using:
			Quoted Prices in Active		Significant Other		Significant
			Markets for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)

	(in millions)
Assets
Plan asset for deferred compensation(1)	$	2.3	$	2.3	$	—	$	—
Interest rate swap(2)	$	6.5	$	—	$	6.5	$	—
Total assets	$	8.8	$	2.3	$	6.5	$	—
Liabilities
Plan liability for deferred compensation(4)	$	2.3	$	2.3	$	—	$	—
Interest rate swap(5)	$	2.0	$	—	$	2.0	$	—
Designated foreign currency hedges(6)	$	0.2	$	—	$	0.2	$	—
Total liabilities	$	4.5	$	2.3	$	2.2	$	—

(1)	Included on the Company’s consolidated balance sheet in other assets (other, net).

(2)

(3)	Included on the Company’s consolidated balance sheet in prepaid expenses and other current assets.

(4)Included on the Company’s consolidated balance sheet in accrued compensation and benefits.

(5)Included on the Company’s consolidated balance sheet in other noncurrent liabilities.

(6)Included on the Company’s consolidated balance sheet in accrued expenses and other liabilities.

Basis of Presentation (Details)	3 Months Ended
Basis of Presentation (Details)	Mar. 31, 2024
Basis of Presentation
Length of fiscal year	365 days
Length of fiscal quarter	91 days

Accounting Policies - Shipping and Handling, and Research and Development (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 26, 2023
Shipping and Handling
Shipping and handling	$ 21,800,000	$ 16,600,000
Research and Development
Research and development costs included in selling, general, and administrative expense	$ 18,500,000	$ 16,100,000

Revenue Recognition (Details) $ in Millions	3 Months Ended
Revenue Recognition (Details) $ in Millions	Mar. 31, 2024 USD ($) segment item	Mar. 26, 2023 USD ($)
Disaggregation of Revenue
Number of distribution channels \| item	4
Number of geographic segments \| segment	3
Revenue	$ 570.9	$ 471.7
Minimum
Disaggregation of Revenue
Period of Business Operations	150 years
Wholesale
Disaggregation of Revenue
Revenue	$ 375.2	288.4
OEM
Disaggregation of Revenue
Revenue	66.4	71.3
Specialty
Disaggregation of Revenue
Revenue	105.6	90.5
DIY
Disaggregation of Revenue
Revenue	23.7	21.5
Residential & commercial flow control
Disaggregation of Revenue
Revenue	345.9	255.9
HVAC & gas
Disaggregation of Revenue
Revenue	140.1	143.9
Drains & water re-use
Disaggregation of Revenue
Revenue	56.5	43.1
Water quality
Disaggregation of Revenue
Revenue	28.4	28.8
Americas
Disaggregation of Revenue
Revenue	418.8	323.2
Americas \| Wholesale
Disaggregation of Revenue
Revenue	272.2	188.8
Americas \| OEM
Disaggregation of Revenue
Revenue	26.0	23.1
Americas \| Specialty
Disaggregation of Revenue
Revenue	97.5	90.5
Americas \| DIY
Disaggregation of Revenue
Revenue	23.1	20.8
Americas \| Residential & commercial flow control
Disaggregation of Revenue
Revenue	273.6	194.5
Americas \| HVAC & gas
Disaggregation of Revenue
Revenue	85.1	78.2
Americas \| Drains & water re-use
Disaggregation of Revenue
Revenue	33.0	22.8
Americas \| Water quality
Disaggregation of Revenue
Revenue	27.1	27.7
Europe
Disaggregation of Revenue
Revenue	123.3	128.3
Europe \| Wholesale
Disaggregation of Revenue
Revenue	84.0	81.1
Europe \| OEM
Disaggregation of Revenue
Revenue	38.7	46.5
Europe \| DIY
Disaggregation of Revenue
Revenue	0.6	0.7
Europe \| Residential & commercial flow control
Disaggregation of Revenue
Revenue	47.2	45.5
Europe \| HVAC & gas
Disaggregation of Revenue
Revenue	52.2	62.3
Europe \| Drains & water re-use
Disaggregation of Revenue
Revenue	22.9	19.6
Europe \| Water quality
Disaggregation of Revenue
Revenue	1.0	0.9
APMEA
Disaggregation of Revenue
Revenue	28.8	20.2
APMEA \| Wholesale
Disaggregation of Revenue
Revenue	19.0	18.5
APMEA \| OEM
Disaggregation of Revenue
Revenue	1.7	1.7
APMEA \| Specialty
Disaggregation of Revenue
Revenue	8.1
APMEA \| Residential & commercial flow control
Disaggregation of Revenue
Revenue	25.1	15.9
APMEA \| HVAC & gas
Disaggregation of Revenue
Revenue	2.8	3.4
APMEA \| Drains & water re-use
Disaggregation of Revenue
Revenue	0.6	0.7
APMEA \| Water quality
Disaggregation of Revenue
Revenue	$ 0.3	$ 0.2

Revenue Recognition - Performance obligation (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01	Mar. 31, 2024
Minimum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Maximum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	3 years

Acquisitions (Details) - USD ($) $ in Millions			3 Months Ended
Acquisitions (Details) - USD ($) $ in Millions	Jan. 01, 2024	Oct. 23, 2023	Mar. 31, 2024	Dec. 31, 2023
Acquisition
Aggregate net purchase price			$ 100.8
Goodwill			724.3	$ 693.0
Bradley
Acquisition
Aggregate consideration, net		$ 301.2	303.1
Cash paid, net of cash acquired		9.2	9.2
Purchase price paid through borrowings under the Company's Second Amended and Restated Credit Agreement		210.0
Aggregate net purchase price			1.9
Final working capital adjustment		$ 3.1
Period of existence		100 years
Goodwill		$ 96.9	96.9
Intangible assets finite lived		$ 115.3	115.3
Bradley \| Customer relationships
Acquisition
Intangible assets finite lived			$ 85.3
Estimated useful lives			15 years
Bradley \| Trade name
Acquisition
Intangible assets In-definite lived			$ 30.0
Josam Industries, LLC
Acquisition
Aggregate consideration, net	$ 98.9
Cash paid, net of cash acquired	$ 4.6
Period of existence	100 years
Goodwill	$ 34.6		34.6
Intangible assets finite lived	$ 39.4		39.4
Intangible assets In-definite lived			$ 5.9
Estimated useful lives			15 years
Josam Industries, LLC \| Customer relationships
Acquisition
Intangible assets finite lived			$ 33.5
Estimated useful lives			15 years
Josam Industries, LLC \| Trade name
Acquisition
Intangible assets In-definite lived			$ 5.9

Acquisitions - Value of the assets and liabilities acquired (Details) - USD ($) $ in Millions	Mar. 31, 2024	Jan. 01, 2024	Dec. 31, 2023	Oct. 23, 2023
Acquisition
Goodwill	$ 724.3		$ 693.0
Bradley
Acquisition
Cash				$ 9.2
Trade accounts receivable				23.5
Inventory				38.4
Prepaid expenses and other current assets				3.5
Property, Plant and Equipment				47.6
Intangible assets	115.3			115.3
Goodwill	96.9			96.9
Accounts payable				(8.2)
Employee benefits, other				(5.0)
Other current liabilities				(8.4)
Other noncurrent liabilities				(0.5)
Purchase price				$ 312.3
Josam Industries, LLC
Acquisition
Cash		$ 4.6
Trade accounts receivable		4.3
Inventory		15.4
Prepaid expenses and other current assets		0.5
Property, Plant and Equipment		7.6
Intangible assets	39.4	39.4
Goodwill	$ 34.6	34.6
Accounts payable		(1.5)
Accrued expenses and other current liabilities		(1.4)
Purchase price		$ 103.5

Acquisitions - Supplemental pro-forma information (unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 26, 2023
Acquisition
Amortization of intangibles	$ 4.7	$ 3.0
Provision for income taxes	22.6	18.8
Bradley
Acquisition
Net sales	570.9	521.6
Net income from continuing operations	$ 75.6	$ 65.3
Basic EPS-continuing operations	$ 2.26	$ 1.95
Diluted EPS-continuing operations	$ 2.25	$ 1.95
Net interest expense related to the financing		$ 2.0
Amortization of intangibles		1.1
Provision for income taxes		0.4
Net acquisition-related and third-party costs	$ 3.0	$ 2.2

Goodwill and Intangibles - Goodwill (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Jan. 01, 2024	Dec. 31, 2023	Oct. 23, 2023
Gross Balance
Balance at the beginning of the period	$ 860.1
Acquired During the Period	34.8
Balance at the end of the period	894.9
Accumulated Impairment Losses
Balance at the beginning of the period	(167.1)
Balance at the end of the period	(167.1)
Foreign Currency Translation	(3.5)
Net Goodwill	724.3		$ 693.0
Americas
Gross Balance
Balance at the beginning of the period	587.1
Acquired During the Period	34.8
Balance at the end of the period	621.9
Accumulated Impairment Losses
Balance at the beginning of the period	(24.5)
Balance at the end of the period	(24.5)
Foreign Currency Translation	(0.2)
Net Goodwill	597.2
Europe
Gross Balance
Balance at the beginning of the period	239.8
Balance at the end of the period	239.8
Accumulated Impairment Losses
Balance at the beginning of the period	(129.7)
Balance at the end of the period	(129.7)
Foreign Currency Translation	(2.4)
Net Goodwill	107.7
APMEA
Gross Balance
Balance at the beginning of the period	33.2
Balance at the end of the period	33.2
Accumulated Impairment Losses
Balance at the beginning of the period	(12.9)
Balance at the end of the period	(12.9)
Foreign Currency Translation	(0.9)
Net Goodwill	19.4
Bradley
Accumulated Impairment Losses
Net Goodwill	96.9			$ 96.9
Bradley \| Americas
Gross Balance
Acquired During the Period	0.2
Josam Industries, LLC
Accumulated Impairment Losses
Net Goodwill	34.6	$ 34.6
Josam Industries, LLC \| Americas
Gross Balance
Acquired During the Period	$ 34.6

Goodwill and Intangibles - Intangibles (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 26, 2023	Jan. 01, 2024	Dec. 31, 2023	Oct. 23, 2023
Intangible assets subject to amortization
Gross Carrying Amount	$ 332.0			$ 298.1
Accumulated Amortization	(152.1)			(147.5)
Net Carrying Amount	179.9			150.6
Indefinite-lived intangible assets
Indefinite-lived intangible assets	71.0			65.5
Intangible assets
Gross Carrying Amount	403.0			363.6
Net Carrying Amount	250.9			216.1
Aggregate amortization expense for amortized intangible assets	4.7	$ 3.0
Patents
Intangible assets subject to amortization
Gross Carrying Amount	5.0			5.0
Accumulated Amortization	(5.0)			(5.0)
Customer relationships
Intangible assets subject to amortization
Gross Carrying Amount	252.0			218.0
Accumulated Amortization	(89.0)			(85.3)
Net Carrying Amount	163.0			132.7
Technology
Intangible assets subject to amortization
Gross Carrying Amount	53.2			53.2
Accumulated Amortization	(45.1)			(44.2)
Net Carrying Amount	8.1			9.0
Trade names
Intangible assets subject to amortization
Gross Carrying Amount	20.7			20.8
Accumulated Amortization	(12.3)			(12.3)
Net Carrying Amount	8.4			8.5
Other
Intangible assets subject to amortization
Gross Carrying Amount	1.1			1.1
Accumulated Amortization	(0.7)			(0.7)
Net Carrying Amount	0.4			$ 0.4
Bradley
Intangible assets
Intangible assets finite lived	115.3				$ 115.3
Aggregate amortization expense for amortized intangible assets		$ 1.1
Bradley \| Customer relationships
Intangible assets
Intangible assets finite lived	$ 85.3
Estimated useful lives	15 years
Josam Industries, LLC
Intangible assets
Purchase price allocated to intangible assets	$ 39.4
Intangible assets finite lived	$ 39.4		$ 39.4
Estimated useful lives	15 years
Intangible assets In-definite lived	$ 5.9
Josam Industries, LLC \| Customer relationships
Intangible assets
Intangible assets finite lived	$ 33.5
Estimated useful lives	15 years

Earnings per Share and Stock Repurchase Program (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 26, 2023	Jul. 31, 2023	Feb. 06, 2019
Net (loss) income
Net income	$ 72.6	$ 64.7
Shares
Shares (in shares)	33,400,000	33,400,000
Per Share Amount
Net income (in dollars per share)	$ 2.17	$ 1.94
Dilutive securities, principally common stock options
Common stock equivalents (in shares)	100,000	100,000
Common stock equivalents (in dollars per share)		$ (0.01)
Net (loss) income
Net income	$ 72.6	$ 64.7
Weighted average number of shares:
Shares (in shares)	33,500,000	33,500,000
Securities not included in the computation of diluted EPS
Net income (in dollars per share)	$ 2.17	$ 1.93
Dilutive securities, principally common stock options
Options to purchase shares of Class A common stock, anti-dilutive	0	0
Shares repurchased
Number of shares repurchased	19,750	22,473
Cost of shares repurchased	$ 4.0	$ 3.7
Class A
Shares repurchased
Value of shares of the entity's Class A common stock authorized to be repurchased			$ 150.0	$ 150.0
February 6, 2019 \| Class A
Shares repurchased
Remaining authorized repurchase amount	$ 8.0

Stock-Based Compensation (Details)	3 Months Ended		12 Months Ended
Stock-Based Compensation (Details)	Mar. 31, 2024 $ / shares shares	Mar. 26, 2023 $ / shares shares	Dec. 31, 2023
Second Amended and Restated 2004 Stock Incentive Plan
Stock-based compensation
Vesting period	3 years
Second Amended and Restated 2004 Stock Incentive Plan \| Deferred shares
Stock-based compensation
Granted (in shares)	41,862	41,096
Second Amended and Restated 2004 Stock Incentive Plan \| Performance stock units
Stock-based compensation
Vesting period	3 years
Period of time used to calculate the compound annual growth rate	3 years
Granted (in shares)	38,903	35,948
Second Amended and Restated 2004 Stock Incentive Plan \| Performance stock units \| Minimum
Stock-based compensation
Percent of target shares a recipient may earn	0
Second Amended and Restated 2004 Stock Incentive Plan \| Performance stock units \| Maximum
Stock-based compensation
Percent of target shares a recipient may earn	2
Management Stock Purchase Plan \| Maximum
Stock-based compensation
Percentage of annual incentive bonus that may be used to purchase RSU's	50.00%
Management Stock Purchase Plan \| Class A
Stock-based compensation
Purchase price as percentage of fair market value of common stock on grant date	80.00%
Management Stock Purchase Plan \| Restricted stock units (RSUs)
Stock-based compensation
Minimum deferral period	3 years
Granted (in shares)	20,076	26,645
Fair value assumptions
Expected life (years)	3 years		3 years
Expected stock price volatility (as a percent)	28.90%		33.70%
Expected dividend yield (as a percent)	0.80%		0.80%
Risk-free interest rate (as a percent)	4.50%		4.10%
Weighted average grant-date fair value (in dollars per share) \| $ / shares	$ 68.94	$ 57.50
Management Stock Purchase Plan \| Restricted stock units (RSUs) \| Minimum
Stock-based compensation
Vesting period	3 years

Segment Information (Details) $ in Millions	3 Months Ended
Segment Information (Details) $ in Millions	Mar. 31, 2024 USD ($) segment	Mar. 26, 2023 USD ($)	Dec. 31, 2023 USD ($)
Segment information
Number of geographic segments \| segment	3
Net sales	$ 570.9	$ 471.7
Operating income	96.7	84.7
Interest income	(2.1)	(0.4)
Interest expense	4.2	1.5
Other (income) expense, net	(0.6)	0.1
INCOME BEFORE INCOME TAXES	95.2	83.5
Capital expenditures	10.1	5.1
Depreciation and amortization	13.3	10.0
Identifiable assets (at end of period)	2,332.4	2,309.4	$ 2,309.4
Property, plant and equipment, net (at end of period)	255.0	248.2	248.2
U.S.
Segment information
Net sales	392.6	304.3
Reportable segments
Segment information
Operating income	110.9	95.7
Corporate
Segment information
Operating income	(14.2)	(11.0)
Intersegment sales
Segment information
Net sales	29.8	29.7
Americas
Segment information
Net sales	418.8	323.2
Capital expenditures	7.4	3.2
Depreciation and amortization	10.4	7.1
Identifiable assets (at end of period)	1,610.4	1,605.7
Property, plant and equipment, net (at end of period)	182.3	174.0
Americas \| U.S.
Segment information
Property, plant and equipment, net (at end of period)	169.5		$ 161.5
Americas \| Reportable segments
Segment information
Operating income	85.4	72.5
Americas \| Intersegment sales
Segment information
Net sales	2.6	2.0
Europe
Segment information
Net sales	123.3	128.3
Capital expenditures	2.4	1.8
Depreciation and amortization	2.3	2.4
Identifiable assets (at end of period)	585.3	569.1
Property, plant and equipment, net (at end of period)	68.5	69.9
Europe \| Reportable segments
Segment information
Operating income	20.5	19.2
Europe \| Intersegment sales
Segment information
Net sales	5.8	5.6
APMEA
Segment information
Net sales	28.8	20.2
Capital expenditures	0.3	0.1
Depreciation and amortization	0.6	0.5
Identifiable assets (at end of period)	136.7	134.6
Property, plant and equipment, net (at end of period)	4.2	4.3
APMEA \| Reportable segments
Segment information
Operating income	5.0	4.0
APMEA \| Intersegment sales
Segment information
Net sales	$ 21.4	$ 22.1

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 26, 2023
Changes in accumulated other comprehensive income (loss)
Balance at the beginning of the period	$ (143.4)
Balance at the end of the period	(154.9)
Foreign Currency Translation
Changes in accumulated other comprehensive income (loss)
Balance at the beginning of the period	(147.3)	$ (157.0)
Change in period	(12.9)	4.4
Balance at the end of the period	(160.2)	(152.6)
Pension Adjustment
Changes in accumulated other comprehensive income (loss)
Balance at the beginning of the period	0.7
Balance at the end of the period	0.7
Cash Flow Hedges
Changes in accumulated other comprehensive income (loss)
Balance at the beginning of the period	3.2	7.1
Change in period	1.4	(1.7)
Balance at the end of the period	4.6	5.4
Accumulated Other Comprehensive Loss.
Changes in accumulated other comprehensive income (loss)
Balance at the beginning of the period	(143.4)	(149.9)
Change in period	(11.5)	2.7
Balance at the end of the period	$ (154.9)	$ (147.2)

Debt - Credit Agreement (Details) $ in Millions			3 Months Ended
Debt - Credit Agreement (Details) $ in Millions	Aug. 02, 2022	Mar. 30, 2021 USD ($)	Mar. 31, 2024 USD ($)
Letters of credit
Credit Agreement
Term of debt			1 year
SOFR
Credit Agreement
Adjustment to interest rate		0.10
SOFR \| Minimum
Credit Agreement
Interest rate added to base rate (as a percent)		1.075%
SOFR \| Maximum
Credit Agreement
Interest rate added to base rate (as a percent)		1.325%
Credit Agreement
Credit Agreement
Unused and available credit under the credit agreement			$ 502.5
Credit Agreement \| Letters of credit
Credit Agreement
Borrowing capacity		$ 100.0
Stand-by letters of credit outstanding			12.5
Base rate loans and swing line loans
Credit Agreement
Minimum base rate (as a percent)		1.00
Base rate loans and swing line loans \| SOFR
Credit Agreement
Interest rate (as a percent)		1.00%
Base rate loans and swing line loans \| Prime Rate
Credit Agreement
Interest rate (as a percent)		0.50%
Revolving credit facility
Credit Agreement
Borrowing capacity		$ 800.0
Maximum consolidated leverage ratio		3.50
Minimum consolidated leverage ratio		3.50
Amount drawn			$ 285.0
Weighted average interest rate (as a percent)			6.50%
Interest rate (as a percent)			4.79%
Revolving credit facility \| Temporary Step-ups Following Acquisitions
Credit Agreement
Maximum consolidated leverage ratio		4.00
Revolving credit facility \| SOFR
Credit Agreement
Adjustment to interest rate	0.10
Swing Line Loans
Credit Agreement
Borrowing capacity		$ 15.0

Financial Instruments - Fair Value on a Recurring Basis (Details) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Interest Rate Swap \| Prepaid Expenses and Other Current Assets
Assets
Derivative assets	$ 3.8	$ 3.5
Interest Rate Swap \| Other Noncurrent Assets
Assets
Derivative assets	3.1	3.0
Fair value measured on a recurring basis
Assets
Plan asset for deferred compensation	2.5	2.3
Total assets	9.5	8.8
Liabilities
Plan liability for deferred compensation	2.5	2.3
Total liabilities	3.3	4.5
Fair value measured on a recurring basis \| Interest Rate Swap
Assets
Derivative assets	6.9	6.5
Liabilities
Derivative liabilities	0.8	2.0
Fair value measured on a recurring basis \| Forward exchange contracts
Assets
Derivative assets	0.1
Liabilities
Derivative liabilities		0.2
Fair value measured on a recurring basis \| Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets
Plan asset for deferred compensation	2.5	2.3
Total assets	2.5	2.3
Liabilities
Plan liability for deferred compensation	2.5	2.3
Total liabilities	2.5	2.3
Fair value measured on a recurring basis \| Significant Other Observable Inputs (Level 2)
Assets
Total assets	7.0	6.5
Liabilities
Total liabilities	0.8	2.2
Fair value measured on a recurring basis \| Significant Other Observable Inputs (Level 2) \| Interest Rate Swap
Assets
Derivative assets	6.9	6.5
Liabilities
Derivative liabilities	0.8	2.0
Fair value measured on a recurring basis \| Significant Other Observable Inputs (Level 2) \| Forward exchange contracts
Assets
Derivative assets	$ 0.1
Liabilities
Derivative liabilities		$ 0.2

Financial Instruments - Interest Rate Swaps and Non-Designated Cash Flow Hedge (Details)			3 Months Ended
	Aug. 02, 2022 USD ($)	Mar. 30, 2021 USD ($)	Mar. 31, 2024 USD ($)	Oct. 23, 2023 USD ($)
Derivative instruments
Period of projected intercompany purchase transactions			12 months
Maximum
Derivative instruments
Percentage of projected intercompany purchases hedged by forward exchange contracts			85.00%
SOFR
Interest Rate Swaps
Adjustment to interest rate		0.10
Revolving credit facility
Interest Rate Swaps
Borrowing capacity		$ 800,000,000
Revolving credit facility \| SOFR
Interest Rate Swaps
Adjustment to interest rate	0.10
Floor rate	0.00%
Forward exchange contracts \| Cash Flow Hedging
Derivative instruments
Fair value of derivative asset			$ 100,000
Forward exchange contracts \| Designated
Amount of Gain or (Loss) Recognized in Income on Derivatives
Period of time for expected reclassification			12 months
Forward exchange contracts \| Designated \| Cash Flow Hedging
Amount of Gain or (Loss) Recognized in Income on Derivatives
Amount expected to be reclassified			$ 100,000
Canadian Dollar to US Dollar Contracts
Interest Rate Swaps
Derivative notional amount			15,500,000
Interest Rate Swap \| Designated \| Cash Flow Hedging
Interest Rate Swaps
Derivative fixed interest rate	0.942%	1.02975%
Derivative notional amount	$ 100,000,000.0	$ 100,000,000.0
Gain recognized in Accumulated Other Comprehensive Loss, effective portion			$ 1,200,000
Interest Rate Swap \| Designated \| Cash Flow Hedging \| LIBOR
Interest Rate Swaps
Derivative, floor interest rate		0.00%
Interest Rate Swap \| Designated \| Cash Flow Hedging \| SOFR
Interest Rate Swaps
Derivative, floor interest rate	0.10%
Interest Rate Swap \| Designated \| Bradley \| Cash Flow Hedging
Interest Rate Swaps
Derivative fixed interest rate				4.844%
Derivative notional amount				$ 100,000,000.0
Interest Rate Swap \| Designated \| Bradley \| Cash Flow Hedging \| SOFR
Interest Rate Swaps
Derivative, floor interest rate				0.10%

Contingencies and Environmental Remediation (Details) $ in Millions	Mar. 31, 2024 USD ($)
Contingencies and Environmental Remediation
Possible loss	$ 4.6

Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions	Jan. 01, 2024	May 07, 2024
Josam Industries, LLC
Subsequent events
Purchase price	$ 98.9
Business combination, cash paid	$ 4.6
Period of existence	100 years
Subsequent event \| Class A
Subsequent events
Quarterly dividend payable (in dollars per share)		$ 0.43
Subsequent event \| Class B
Subsequent events
Quarterly dividend payable (in dollars per share)		$ 0.43

Pay vs Performance Disclosure - USD ($) $ in Millions	3 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Millions	Mar. 31, 2024	Mar. 26, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ 72.6	$ 64.7

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Mar. 31, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false