Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 (I.R.S. Employer ...

Watts Water Technologies, Inc. (NYSE:WTS) Q4 2020 Earnings Conference Call February 11, 2021 9:00 AM ET Company Participants Timothy MacPhee - Vice President, Investor Relations & Treasurer Bob Pagano - Chief Executive Officer and President Shashank Patel - Chief Financial Officer Conference Call Participants Nathan Jones - Stifel Jeff Hammond - KeyBanc Capital Bryan Blair - Oppenheimer Brian Lee - Goldman Sachs Joe Giordano - Cowen Walter Liptak - Seaport Operator Ladies and gentlemen, thank you for standi ...

| --- | --- | |-----------------------------------------|--------------------------| | | | | | | | | Watts Water Technologies | | 4Q and FY 2020 Earnings Conference Call | | | | February 11, 2021 | © 2021 Watts Water Technologies, Inc. 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, capi ...

| --- | --- | |-------|----------------------------------| | | | | | Watts Water Technologies | | | 3Q 2020 Earnings Conference Call | | | November 5, 2020 | © 2020 Watts Water Technologies, Inc. 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, capital expenditures, water market growth, a ...

Financial Data and Key Metrics Changes - Sales for Q3 2020 were $384 million, down 3% on a reported basis and down 5% organically, primarily due to the impact of Covid-19 [16] - Adjusted operating profit and adjusted earnings per share both increased by 1% compared to last year despite lower sales [16] - Adjusted operating margin improved to 13.8%, an increase of 50 basis points year-over-year, driven by cost actions and productivity [16][17] - Year-to-date free cash flow increased by 25% to $95 million compared to the same period last year [19] Business Line Data and Key Metrics Changes - In the Americas, organic sales declined by 4%, better than the expected reduction of 6% to 10%, with strong performance in traditional plumbing and water quality products [20] - Europe saw a 6% organic sales decline, better than the anticipated 14% to 18%, driven by resilient fluid solution product sales [20] - APMEA experienced a 22% organic sales decline, with China down only by low single digits, indicating a recovery trend [21] Market Data and Key Metrics Changes - Residential repair and replacement demand remained strong, supported by record existing home sales in September [11] - The construction industry in the Americas is adjusting to new norms, with job sites that were under construction returning to completion [10] - Concerns remain regarding the commercial markets, particularly in hospitality, office, and retail sectors, which are expected to face challenges [12][14] Company Strategy and Development Direction - The company is focusing on its smart and connected strategy to drive growth and operational efficiency [9][14] - There is a commitment to continue investing in productivity-enhancing capital expenditures and smart technology solutions [25][61] - The company is prepared to adapt to market changes and capture opportunities as markets recover [26] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the market outlook for 2021, citing uncertainty due to the ongoing Covid-19 pandemic [14][26] - The company anticipates soft sales in Q4 compared to last year, with operating margins expected to improve relative to last year but below Q3 levels [15][23] - The management highlighted the importance of employee safety and customer service during the pandemic [25] Other Important Information - The company has instituted cost-saving measures resulting in total run-rate savings of approximately $20 million for the quarter and $42 million year-to-date [9][19] - The adjusted effective tax rate for the quarter was 27.3%, a decrease of 120 basis points year-over-year due to new regulations [17] Q&A Session Summary Question: Can you provide more details on the restocking event in the Americas? - Management noted that restocking occurred in July due to construction restarting, with steady sales observed through October, but uncertainty remains regarding future restocking [29][30] Question: Are there favorable trends in the water quality segment? - Positive trends were noted in the residential water quality market, with double-digit growth in the residential segment [32] Question: Can you quantify temporary cost savings versus structural changes? - Approximately $55 million in cost savings were identified for 2020, with $8 million to $9 million being permanent due to restructuring [35][36] Question: What are the October order rates and their implications for Q4? - October order rates were flat, with expectations for a softer market in November and December due to Covid-19 concerns [51] Question: How is the company adapting to changes in distribution channels? - Management indicated that while smaller wholesalers are consolidating, larger wholesalers are enhancing their online capabilities, and the company is integrating its acquisitions into both traditional and online sales channels [44][48]

Financial Data and Key Metrics Changes - Sales for Q2 2020 were $339 million, down 19% on both a reported and organic basis, primarily due to COVID-19 impacts [30] - Adjusted operating profit and adjusted earnings per share decreased by 32% compared to the previous year, with an adjusted operating margin of 11.1%, down 220 basis points [31] - Year-to-date free cash flow was $25 million, compared to $5 million for the same period last year, driven by improvements in accounts receivable [33] Business Line Data and Key Metrics Changes - The US repair and replacement market performed better than other markets, particularly in retail, which saw strong DIY demand [13] - The marine market remained slow, expected to be tempered due to COVID-19 impacts [13] - APMEA's adjusted operating margin increased by 590 basis points to 13.3%, driven by a 16% increase in affiliate volume [39] Market Data and Key Metrics Changes - Orders trended positively during Q2, with a decline in order rates improving as the quarter progressed [11] - The ABI and Dodge Momentum Index stabilized at lower levels than pre-pandemic, with June PMI indices in both the US and Europe improving as restrictions eased [14] - In APMEA, China's markets showed steady progress, while the Middle East continued to struggle [15] Company Strategy and Development Direction - The company continues to focus on employee safety and has expanded safety protocols as employees return to the office [45] - Cost management and productivity remain priorities, with total savings approximated at $21 million during Q2 [15] - The company is investing in long-term growth opportunities, particularly in smart and connected solutions and productivity-enhancing technology [46] Management's Comments on Operating Environment and Future Outlook - Management expects both sales and operating margins to improve in Q3 relative to Q2, in line with order trends observed through July [21] - Concerns remain regarding the spread of COVID-19 and its potential impact on results [21] - The company refrains from providing full-year guidance due to uncertainties surrounding COVID-19 [44] Other Important Information - The company acquired Australian Valve Group in an all-cash transaction, broadening its product offering in the Australian market [17][18] - A shift in the go-to-market strategy in Korea was implemented, moving from a direct sales organization to a distribution model [19][20] - The company recorded a special charge of $6.7 million in Q2, primarily for costs related to restructuring initiatives [15] Q&A Session Summary Question: What factors could influence the Q3 sales guidance? - Management noted that the reopening of construction markets and strong retail performance could positively impact sales, while potential COVID-19 lockdowns could have a negative effect [52][54] Question: Is there increased interest in connected solutions? - Management observed increased inquiries about remote monitoring capabilities, with a higher percentage of sales coming from connected products [56][57] Question: How did the company manage to sustain margins despite revenue declines? - Cost control measures were implemented early, with significant reductions in discretionary spending and variable costs contributing to margin resilience [63] Question: What is the outlook for sales by region in Q3? - Management provided guidance indicating expected declines of 6% to 10% in the Americas, 14% to 18% in Europe, and 10% to 14% in APMEA [69] Question: Can you provide details on the AVG acquisition? - The acquisition was made at a multiple of 7 to 9 times EBITDA, with some of the purchase price contingent on performance milestones [74][75]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 Or Securities registered pursuant to Section 12(b) of the Act: | | Symbol(s) | | | --- | --- | --- | | Title of each class Class A common stock, par value $0.10 per share | Trading WTS | Name of each exchange on which registered New York Stock Exchange | Securities registered purs ...

Part I [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for Q2 and H1 2019 show growth in net sales and income, with improved operating cash flow [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets and stockholders' equity slightly increased as of June 30, 2019, while total liabilities also rose Consolidated Balance Sheet Summary (in millions) | Account | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Total Current Assets** | $728.4 | $721.3 | | **Total Assets** | $1,678.4 | $1,653.7 | | **Total Current Liabilities** | $391.6 | $348.7 | | **Total Liabilities** | $744.2 | $654.0 | | **Total Stockholders' Equity** | $934.2 | $891.3 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Net sales and net income increased year-over-year for both Q2 and H1 2019, with corresponding diluted EPS growth Statement of Operations Highlights (in millions, except per share data) | Metric | Q2 2019 | Q2 2018 | 6 Months 2019 | 6 Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $416.8 | $407.9 | $805.5 | $786.4 | | Gross Profit | $174.6 | $169.4 | $338.8 | $326.1 | | Operating Income | $54.3 | $52.2 | $101.0 | $96.1 | | Net Income | $36.4 | $36.0 | $67.4 | $64.2 | | Diluted EPS | $1.06 | $1.05 | $1.97 | $1.87 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly improved in H1 2019, while overall cash and cash equivalents decreased due to financing activities Cash Flow Summary for Six Months Ended (in millions) | Activity | June 30, 2019 | July 1, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $19.7 | $1.5 | | Net cash used in investing activities | $(14.3) | $(16.8) | | Net cash used in financing activities | $(42.5) | $(118.1) | | **Decrease in Cash and Cash Equivalents** | **$(37.3)** | **$(137.6)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key accounting policies, restructuring charges, derivative usage, and dividend declarations are detailed in the financial statement notes - The company adopted the new lease accounting standard ASC 842 on January 1, 2019, recording operating Right-of-Use (ROU) assets of **$33.6 million** and operating lease liabilities of **$33.9 million** on the consolidated balance sheet[38](index=38&type=chunk) - A European restructuring program initiated in Q3 2018 has incurred total costs of **$6.7 million** to date, with **$2.7 million** charged in the first six months of 2019 for severance and other cost-cutting actions[59](index=59&type=chunk) - The company uses interest rate swaps to manage exposure on its floating-rate debt and forward exchange contracts to hedge forecasted intercompany transactions in Canadian dollars and Chinese yuan[69](index=69&type=chunk)[70](index=70&type=chunk) - On July 29, 2019, the company declared a quarterly dividend of **$0.23 per share**, payable on September 13, 2019[96](index=96&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company achieved organic sales and operating income growth in Q2 and H1 2019, significantly improving cash flow despite increased net debt [Overview](index=27&type=section&id=Overview) The company's growth strategy focuses on product innovation, acquisitions, and its 'Smart and Connected' IoT initiative - The company's growth strategy focuses on product innovation, selective acquisitions, and capitalizing on regulatory requirements for water quality and conservation[100](index=100&type=chunk) - A key strategic initiative is the 'Smart and Connected' strategy, focusing on IoT-enabled products that 'Connect, Control and Conserve' to deliver superior customer value[102](index=102&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q2 and H1 2019 saw net sales and operating income growth, driven by organic performance and improved gross margin Q2 2019 vs Q2 2018 Net Sales Change (in millions) | Region | Organic Change | Foreign Exchange | Total Change | | :--- | :--- | :--- | :--- | | Americas | $15.6 | $(0.6) | $15.0 | | Europe | $3.2 | $(7.1) | $(3.9) | | APMEA | $(1.4) | $(0.8) | $(2.2) | | **Total** | **$17.4** | **$(8.5)** | **$8.9** | - Gross margin for Q2 2019 increased to **41.9%** from **41.5%** in Q2 2018, driven by price and productivity savings that offset higher inflation and tariffs[109](index=109&type=chunk) - Q2 2019 SG&A expenses increased organically by **$4.1 million**, primarily due to **$2.8 million** in investments for strategic growth initiatives[110](index=110&type=chunk) - For the first six months of 2019, the company recorded a **$2.7 million** restructuring charge related to its European plan[121](index=121&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity remains strong with significantly improved operating and free cash flow, though the net debt to capitalization ratio increased - Net cash from operating activities increased to **$19.7 million** in the first six months of 2019, up from **$1.5 million** in the prior-year period, mainly due to inventory reductions and higher net income[127](index=127&type=chunk) Free Cash Flow Reconciliation (in millions) | | 6 Months 2019 | 6 Months 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $19.7 | $1.5 | | Less: additions to property, plant, and equipment | (14.3) | (15.2) | | **Free cash flow (outflow)** | **$5.4** | **$(13.7)** | - As of June 30, 2019, the company had **$444.2 million** of unused credit under its Revolving Credit Facility and was in compliance with all debt covenants[130](index=130&type=chunk)[89](index=89&type=chunk) Net Debt to Capitalization Ratio | Metric | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Net Debt (in millions) | $177.0 | $149.3 | | Capitalization (in millions) | $1,111.2 | $1,040.6 | | **Net debt to capitalization ratio** | **15.9%** | **14.3%** | [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages foreign currency, interest rate, and commodity price risks using derivative instruments, not for speculative purposes - The company's primary market risks are foreign currency translation, interest rate changes on variable-rate debt, and commodity price volatility[142](index=142&type=chunk)[143](index=143&type=chunk)[148](index=148&type=chunk) - To manage interest rate risk on its floating-rate debt, the company entered into two interest rate swaps with a total notional amount of **$225.0 million**, effectively converting variable LIBOR-based payments to a fixed rate of **1.31375%**[147](index=147&type=chunk) - The company hedges a significant portion (**60-80%**) of its forecasted Canadian dollar and Chinese yuan intercompany transactions for the next twelve months using forward exchange contracts[144](index=144&type=chunk)[146](index=146&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of June 30, 2019, due to a material weakness, with a remediation plan underway - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were not effective as of June 30, 2019, due to a previously identified material weakness[149](index=149&type=chunk) - A remediation plan to address the material weakness is in progress and is expected to be completed prior to the end of fiscal 2019[150](index=150&type=chunk) - Changes were made to internal controls over financial reporting during the quarter to accommodate the adoption of the new lease accounting standard, ASC 842[151](index=151&type=chunk) Part II [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) There have been no material developments in the company's legal proceedings during the quarter ended June 30, 2019, other than those already described in Note 13 of the Notes to Consolidated Financial Statements - No material developments occurred in legal proceedings during the quarter, with existing matters detailed in Note 13[154](index=154&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2018 - No material changes to risk factors were reported for the quarter[155](index=155&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 55,988 shares for $4.7 million in Q2 2019 under its stock repurchase programs Q2 2019 Stock Repurchases | Period | Shares Purchased | Average Price | Total Cost (millions) | | :--- | :--- | :--- | :--- | | Q2 2019 | 55,988 | $84.87 | $4.7 | - On February 6, 2019, the Board of Directors authorized an additional stock repurchase program of up to **$150 million**[74](index=74&type=chunk)[160](index=160&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) The report includes several exhibits, such as the Restated Certificate of Incorporation, officer certifications as required by the Sarbanes-Oxley Act, and financial statements formatted in Inline XBRL - Exhibits filed with the report include CEO and CFO certifications (Rule 13a-14(a) and Section 1350) and Inline XBRL data files[161](index=161&type=chunk)

Table of Contents 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, 2019 or ☐ 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) (State or Other Jurisdiction ...

Washington, D.C. 20549 FORM 10‑K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 (I.R.S. Employer ...