Watts Water Technologies, Inc. (NYSE:WTS) Q3 2022 Earnings Conference Call November 3, 2022 9:00 AM ET Company Participants Diane McClintock - SVP, FP&A and IR Robert Pagano - Chairman & President, CEO Shashank Patel - CFO Conference Call Participants Jeffrey Hammond - KeyBanc Capital Markets Tristan Margot - Cowen & Company Brian Lee - Goldman Sachs Nathan Jones - Stifel, Nicolaus & Company Michael Halloran - Robert W. Baird & Co. Ryan Connors - Northcoast Research Operator Ladies and gentlemen, thank you ...

| --- | --- | |-------|-----------------------------------------------------------| | | | | | | | | Watts Water Technologies 2Q 2022 Earnings Conference Call | | | August 4, 2022 | August 3, 2022 © 2022 Watts Water Technologies, Inc. 1 Forward Looking Statements Certain statements in this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are related to forecasts of sales, margins, earnings, earnings per share, effe ...

Financial Data and Key Metrics Changes - Sales for Q2 2022 were $527 million, up 13% on a reported basis and up 16% organically compared to the previous year [22][23] - Adjusted operating profit increased by 40% to $98 million, and adjusted EPS rose by 43% to $2.11 [23] - Adjusted operating margin improved by 360 basis points to 18.5%, driven by price, volume, and productivity [23][24] Business Line Data and Key Metrics Changes - The Americas experienced organic sales growth of approximately 22%, with strong price realization and underlying market demand [26] - Europe saw organic sales growth of about 5%, but reported sales were negatively impacted by 12% due to unfavorable foreign exchange movements [29] - APMEA (Asia Pacific, Middle East, and Africa) grew organically by 3%, with China experiencing high single-digit growth in commercial valves despite lockdown impacts [31] Market Data and Key Metrics Changes - In the Americas, nonresidential new construction indicators are mixed, with positive ABI and Dodge Momentum Index but recent moderation [12] - Europe faces potential recession concerns due to the war and rising energy costs, with an estimated impact of $12 million annualized from exiting the Russian market [13] - APMEA's growth was hindered by COVID lockdowns in China, but business activity is resuming as restrictions lift [14] Company Strategy and Development Direction - The company is focusing on Smart and Connected product initiatives, aiming for 25% of total sales to come from these products by 2024 [16] - Sustainability efforts are emphasized, with significant improvements in water use intensity, greenhouse gas intensity, and hazardous waste intensity [20][21] - The company is committed to investing an additional $20 million in 2022 to support future growth and Smart and Connected strategies [11] Management's Comments on Operating Environment and Future Outlook - Management noted that the second quarter results exceeded expectations despite challenges from inflation, the Ukraine war, and supply chain disruptions [7][10] - The outlook for the third quarter anticipates organic sales growth and margin improvements, with solid demand in the Americas expected to buffer against European economic slowdowns [15] - Management expressed caution regarding the visibility of the European market due to the ongoing geopolitical situation and energy costs [46][80] Other Important Information - Year-to-date free cash flow was $33 million, down from $65 million in the previous year due to increased working capital and inventory investments [24] - The balance sheet remains strong, with gross leverage at 0.6x and net leverage at negative 0.1x [25] - The company repurchased approximately 434,000 shares for $61 million year-to-date [25] Q&A Session Summary Question: Insights on price-cost dynamics for the second half - Management indicated that the benefits from lower-cost inventory in Q2 would not be repeated in the second half, with a net benefit of $6 million to $8 million in Q2 [45] Question: Differentiation in outlook for EMEA and Asia - Management expects North America to see double-digit growth, while Europe may decline low single digits, with APMEA expected to grow mid-single digits [46] Question: Visibility into channel inventories and destocking - Management noted limited visibility into channel inventories but indicated that destocking is occurring, particularly in Europe [77] Question: Commentary on margin sustainability in the Americas - Management acknowledged that volume leverage in the Americas would be less in the second half, impacting margins, along with higher incremental investments [53] Question: Future capital allocation strategy - Management emphasized a balanced allocation strategy, remaining disciplined in M&A while also considering dividends and capital expenditures [59] Question: Selling prices and commodity costs - Management conducts evaluations every 90 days on cost inflation and adjusts prices accordingly, with ongoing monitoring of commodity costs [83][84]

| --- | --- | |-------|-----------------------------------------------------------| | | | | | | | | Watts Water Technologies 1Q 2022 Earnings Conference Call | | | May 4, 2022 | May 3, 2022 © 2022 Watts Water Technologies, Inc. 1 Forward Looking Statements Certain statements in this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are related to forecasts of sales, margins, earnings, earnings per share, effective ...

Watts Water Technologies, Inc. (NYSE:WTS) Q1 2022 Earnings Conference Call May 4, 2022 9:00 AM ET Company Participants Diane McClintock - Senior Vice President FP&A and Investor Relations Robert Pagano - Chief Executive Officer and President Shashank Patel - Chief Financial Officer Conference Call Participants Jake Jarnigo - Baird Adam Farley - Stifel Joe Giordano - Cowan & Company Jeff Hammond - KeyBanc Capital Markets Operator Ladies and gentlemen, thank you standing by. My name is Brent, and I will be yo ...

Financial Performance - The company achieved record performance for 2021 despite the impact of the COVID-19 pandemic and supply chain disruptions[25]. - Approximately 61% of net sales in 2021 were to wholesale distributors for commercial and residential applications[27]. - Residential & commercial flow control products accounted for approximately 53% of total net sales in 2021[29]. - The top ten customers accounted for $371.5 million, or 20.5% of total net sales in 2021[32]. Capital Expenditures and Investments - Capital expenditures in 2021 were $26.7 million, a decrease from $43.8 million in 2020[35]. - The company launched 21 new smart and connected product offerings in 2021[48]. - The company continues to invest in its smart and connected product pipeline, enhancing energy savings and safety[46]. - The company has invested in manufacturing capabilities to maintain high levels of quality and efficiency[34]. - The company launched the Connected IntelliFlow® Washing Machine flood prevention system and ACV Assure™ Municipal Water Monitoring System solution[47]. Employee Engagement and Diversity - As of December 31, 2021, the company had 4,597 employees globally, with 2,063 in the Americas, 2,239 in Europe, and 295 in APMEA[50]. - In 2021, 82% of employees participated in the global employee engagement survey, providing valuable feedback for workplace improvement[56]. - The company has developed a comprehensive talent management strategy to attract, develop, and retain top talent in a competitive environment[50]. - The company has initiated a comprehensive approach to diversity, equity, and inclusion, including employee resource groups to support diverse employees[55]. Environmental Responsibility - The company funded the construction of six AquaTowers and AquaSan systems, providing clean drinking water for up to 10,800 people in Cambodia, India, Mexico, the Philippines, and Vietnam during 2021[62]. - The company was recognized as one of Newsweek's Most Responsible Companies, ranking 100th overall and 5th within its industry classification in 2021[65]. - The company is committed to reducing its global water consumption and greenhouse gas emissions through smart monitoring systems and energy reduction projects[61]. - The company’s General Counsel and Chief Sustainability Officer oversees sustainability matters, reporting directly to the CEO[59]. Risk Management - The company is experiencing high inflationary pressures in commodity markets, particularly with copper and stainless steel[36]. - The company maintains product liability and other insurance coverage, which may not be adequate to fully protect against substantial damage claims[67]. - The company has been named as a potentially responsible party for a limited number of identified contaminated sites, with environmental liabilities recorded based on probable costs[68]. Financial Instruments and Currency Risks - The company reported consolidated earnings subject to translation risks due to foreign currency exchange rate fluctuations, particularly with the euro, Canadian dollar, and Chinese yuan[252]. - The company utilizes derivative financial instruments primarily to mitigate exposure to adverse fluctuations in foreign exchange rates, interest rates, and raw material costs, adhering to a policy of using these instruments solely for hedging purposes[251]. - Approximately 80% to 85% of forecasted intercompany purchases between a Canadian subsidiary and U.S. operating subsidiaries are hedged using forward exchange contracts for the next twelve months[253]. - Up to 60% of forecasted intercompany sales transactions between a Chinese subsidiary and U.S. operating subsidiaries are hedged using forward exchange contracts for the next twelve months[253]. - The fair value of designated foreign hedge contracts outstanding as of December 31, 2021, was a liability balance of less than $0.1 million[253]. - An interest rate swap agreement was entered into on March 30, 2021, with a notional amount of $100.0 million, paying a fixed rate of 1.02975%[254]. - The interest rate swap matures on March 30, 2026[254]. Commodity Management - The company purchases significant amounts of bronze ingot, brass rod, cast iron, stainless steel, and plastic for manufacturing[255]. - The company manages commodity price risk by monitoring market prices and working with suppliers for cost stability[255]. - The company seeks alternative supply sources when necessary to mitigate commodity price risks[255]. - The company aims to pass on increases in commodity costs to customers to the maximum extent possible[255].

Watts Water Technologies, Inc. (NYSE:WTS) Q4 2021 Earnings Conference Call February 10, 2022 9:00 AM ET Company Participants Tim MacPhee - Treasurer and VP, IR Bob Pagano - CEO & President Shashank Patel - CFO Conference Call Participants Adam Farley - Stifel David Tarantino - KeyBanc Capital Markets Ryan Connors - Boenning and Scattergood Walter Liptak - Seaport Research Partners Miguel Jesus - Goldman Sachs Mike Halloran - Robert W. Baird Nathan Jones - Stifel Operator Good morning, and my name is Sava ...

Financial Performance - Full year 2021 sales reached $1809 million, with organic growth of 17%[28] - Adjusted operating margin for full year 2021 was 143%, an increase of 140 bps[28] - Adjusted EPS for full year 2021 increased by 42% to $552[28] - Q4 2021 sales were $4739 million, an increase of 18% organically[19] - Adjusted operating profit in Americas increased by 13% to approximately $52 million in Q4 2021[26] - Europe's adjusted operating profit increased by 25% to approximately $21 million in Q4 2021[26] - APMEA's adjusted operating profit increased by 9% to approximately $4 million in Q4 2021[26] Smart & Connected Products - In 2021, the company incrementally invested $9 million in the development and support of smart & connected products[13] - Smart & connected products accounted for 16% of consolidated sales in 2021[13] - The company is aiming for 25% revenue from smart & connected products by 2023[13] 2022 Outlook - The company anticipates organic growth of 3% to 8% for full year 2022[33] - The company expects an adjusted operating margin between 143% and 147% for full year 2022[33]

Watts Water Technologies, Inc. (NYSE:WTS) Q3 2021 Earnings Conference Call November 4, 2021 9:00 AM ET Company Participants Tim MacPhee - Treasurer and Vice President-Investor Relations Bob Pagano - Chief Executive Officer & President Shashank Patel - Chief Financial Officer Conference Call Participants Ryan Connors - Boenning and Scattergood Walt Liptak - Seaport Research Jake Jarnigo - Baird David Tarantino - KeyBanc. Operator Ladies and gentlemen, thank you for standing by, and welcome to the Watts Water ...

Financial Performance - Third quarter sales increased by 18% to $455 million, with organic sales up by 17%[9, 21] - Adjusted operating margin increased by 60 basis points to 14.4%[9] - Adjusted EPS increased by 32% to $1.39[9] - Year-to-date free cash flow increased by 26% to $120 million[9] Regional Performance - Americas sales increased by 17% organically to $309 million, with an adjusted operating margin of 18.1%[11] - Europe sales increased by 14% organically to $124 million, with an adjusted operating margin of 15.5%[11] - APMEA sales increased by 33% organically to $22 million, with an adjusted operating margin of 19.1%[11] Outlook - The company is raising its full-year organic sales growth outlook to 14% to 17%[7, 13] - The company expects full year adjusted operating margin to be 13.9% to 14.4%[13] Other - The company purchased Sentinel Hydrosolutions LLC in 4Q, which has annual sales of approximately $6 million[6]