About Watts Water Technologies

Watts Water Technologies, Inc. operates as a provider of water technologies and solutions that are designed to promote safety, energy efficiency, and water conservation for commercial and residential buildings. The company’s strategy is to be the preferred supplier of differentiated solutions, systems and products that manage and conserve the flow of fluids and energy into, through and out of buildings in the commercial and residential markets of the Americas, Europe, and the Asia-Pacific, Middle East and Africa (APMEA), its three geographic segments. Within this framework, the company focuses upon three themes: safety and regulation, energy efficiency and water conservation. The company’s strategy is to expand organically by introducing new, complementary products and solutions in existing markets, by enhancing its preferred brands, by promoting plumbing code development to drive the need for safety and quality products and by continually improving merchandising in its wholesale and retail distribution channels. The company focuses on selling solutions to its customers that integrate a variety of its product offerings. The company targets selected new products and geographic markets based on growth potential, including its ability to leverage its existing distribution channels. Additionally, the company leverages its distribution channels through the introduction of new products and solutions, as well as the integration of products of its acquired companies. The Internet of Things (IoT) has allowed companies to transform components and products into smart and connected solutions. The company is committed to enhancing its smart and connected capabilities by expanding its internal competencies and making strategic acquisitions. The company continues to invest in these capabilities by expanding its architecture development, enhancing digital tools used by its customers, including Watts’ webite, and investing in new smart and connected product development projects. The company’s strategy focuses on three dimensions: Connect, Control and Conserve. In 2023, the company initiated a project to conduct Life Cycle Assessments (LCAs) for all of its products produced in its largest production plant and foundry located in Franklin New Hampshire, representing many of its largest and most impactful product lines. The company’s smart and connected strategy is anchored by a commitment to connect its customers to smart systems, control those systems for optimal performance, and conserve critical water and other resources by increasing operability, efficiency, and safety. In 2023, the company enabled its core product lines with an option for smart and connected capabilities to provide flood and freeze detection in backflow preventors and flood detection in relief valves, helping avoid water waste and mitigate damage. The company intends to generate incremental growth by targeting select acquisitions both in its core markets and in new complementary markets. The company’s acquisition strategy focuses on businesses that manufacture preferred brand name products that address its themes of safety and regulation, energy efficiency and water conservation. The company targets businesses that will provide it with one or more of the following: an entry into new markets, improved channel access, unique and/or proprietary technologies, advanced production capabilities or complementary solution offerings. In the last 12 months, it completed three strategic and complementary acquisitions that expanded its addressable market and are intended to enable value creation through greater scale and growth opportunities. Products and Solutions The company has a broad range of products and solutions in terms of design distinction, size and configuration. The company classifies its many products and solutions into four global categories. These categories are: Residential and 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 the company’s flow control and protection products and solutions are smart and connected enabled, warning of leaks, floods and freeze with alerts to Building Management System (BMS) and/or personal devices giving its 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 the company’s HVAC products and solutions feature advanced controls enabling customers to easily connect to the BMS for better monitoring, control and operation. HVAC & gas products and solutions accounted for approximately 29% of the company’s total net sales in 2023. HVAC is an acronym for heating, ventilation and air conditioning. Drainage and water re-use—includes drainage products and engineered rain water harvesting solutions for commercial, industrial, marine and residential applications, including connected roof drain systems. Drainage & water re-use products and solutions accounted for approximately 10% of the company’s total net sales in 2023. Water quality—includes point-of-use and point-of-entry water filtration, monitoring, conditioning and scale prevention systems for commercial, marine and residential applications. Water quality products and solutions accounted for approximately 5% of the company’s total net sales in 2023. Customers and Markets The company sells its products and solutions to plumbing, heating and mechanical wholesale distributors and dealers, original equipment manufacturers (OEMs), specialty product distributors, and major do-it-yourself (DIY) and retail chains. Wholesalers: Approximately 62% of the company’s net sales in 2023, were to wholesale distributors for commercial and residential applications. OEMs: Approximately 15% of the company’s net sales in 2023, were to OEMs. In the Americas, the company’s typical OEM customers are water heater manufacturers and equipment and water systems manufacturers needing flow control devices and other products. The company’s sales to OEMs in Europe are primarily to boiler manufacturers and radiant system manufacturers. The company’s sales to OEMs in APMEA are primarily to water heater, air conditioning, and appliance manufacturers. Specialty: Approximately 19% of the company’s net sales in 2023, were through its specialty channel. The specialty channel primarily includes sales related to high-efficiency boilers and water heaters, water filtration and conditioning products and solutions, specialty floor and tile products, food service products and leak detection products. DIY Chains: Approximately 4% of the company’s net sales in 2023, were to DIY chains. The DIY channel primarily includes sales related to valves and a portion of the company’s water quality products. Marketing and Sales For product sales in the Americas, the company relies primarily on commissioned manufacturers’ representatives to market its product lines, some of which maintain a consigned inventory of its products. These representatives sell primarily to plumbing and heating wholesalers and contractors or supply DIY stores. The company’s specialty channel products in the Americas are sold through independent representatives, dealers and distributors. The company also sells products directly to wholesalers, OEMs and private label accounts primarily in Europe and APMEA, and, to a lesser extent, in the Americas. Research and Development The company’s research and development costs amounted to $67.1 million for the year ended December 31, 2023. History Watts Water Technologies, Inc. was founded in 1874. The company was incorporated in Delaware in 1985.