Watts Water Technologies (WTS) Investor presentation summary

Strategic positioning and market overview

• Global leader in water solutions for commercial, residential, and light industrial markets, with a strong repair and replacement footprint and broad product portfolio.

• Operates on five continents with over 5,000 employees and 35 principal locations worldwide.

• Addressable market estimated at ~$20B, spanning institutional, healthcare, industrial, and residential sectors.

• Product offerings include flow control, water quality, drainage, heating, and hot water solutions.

• Commercial sales account for ~65% and residential for ~35% of total sales.

Financial performance and outlook

• Achieved $2.1B in net sales in 2023, with a 6% CAGR over five years and 17.8% adjusted operating margin.

• Five-year average free cash flow conversion at 115% and ROIC at 20.3%.

• Updated 2024 outlook projects reported sales growth of +9% to +10%, adjusted EBITDA margin of 20.0% to 20.2%, and free cash flow at ≥100% of net income.

• No debt due until 2029, with a net debt to capitalization ratio of -5.8% and ~$572M in available credit.

• Dividend increased 19% to $1.72/share, with an 11% five-year CAGR.

Growth strategy and innovation

• Focused on innovation through smart and connected products, with 25% of revenues from these offerings in 2023.

• Continuous improvement driven by the One Watts Performance System, emphasizing customer focus, operational excellence, and productivity.

• Disciplined M&A strategy targets core and complementary markets, with recent acquisitions expanding product and geographic reach.

• Long-term aspirations include organic growth 1% above market, 30–50 bps annual operating margin expansion, and targeted M&A.