Watts Water Technologies, Inc. · NYSE:WTS
Watts Water Technologies — Q4 2024 Earnings Presentation
20 slides from Watts Water Technologies's earnings presentation, Feb 11, 2025
Slide 1: Watts Water Technologies Q4 2024 Earnings Conference Call
WATTS WATER TECHNOLOGIES Q4 2024 EARNINGS CONFERENCE CALL February 11, 2025 © 2024 Watts Water Technologies, Inc.
Slide 2: Forward Looking Statements
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 tax rate, capital
Slide 3: 2024 Recap and 2025 Outlook
2024 Recap and 2025 Outlook Q4 and FY 2024 Performance Operations 2025 Outlook Q4 results ahead of expectations Strong productivity, including restructuring, ▲ Price ▼ Multi-family new supported margin expansion construction ▲ GDP slowing, but Record Q4 adjusted operating margin of 16.8%, still posi
Slide 4: Q4 2024 Financial Summary
Q4 2024 Financial Summary Sales ($M) Adj. Operating and Adj. EPS* $548 $540 Adj. EBITDA Margin %* $1.97 $2.05 19.3% -1% Adj. +140 bps 17.9% Reported EBITDA % +4% -5% Organic* 16.8% Adj. OM % 15.8% +100 bps Q4 2023 Q4 2024 Q4 2023 Q4 2024 Q4 2023 Q4 2024 • Fewer shipping days in all regions ~-5% • Ad
Slide 5: FY 2024 Financial Summary
FY 2024 Financial Summary Sales ($M) Adj. Operating and Adj. EPS* FCF ($M)* Adj. EBITDA Margin (%)* $2,252 $332 $8.86 $2,056 Adj. $8.27 $281 EBITDA % 19.9% +20 bps 20.1% +10% Reported -1% +7% +18% Organic* Adj. OM % 17.8% -10 bps 17.7% 2023 2024 2023 2024 2023 2024 2023 2024 • Segment sales • Adj. E
Slide 6: Q1 and Full Year 2025 Outlook
Q1 and Full Year 2025 Outlook* FY Outlook Q1 Outlook Sales Growth Reported & Organic -3% to +2% Reported & Organic -7% to -3% Segment Organic Growth Segment Organic Growth Americas:-3% to +3% Americas:-6% to -2% Europe: -8% to -2% Europe: -12% to -8% APMEA: Flat to +5% APMEA: -2% to +2% 80/20: Ameri
Slide 7: Summary
Summary Solid 4Q results with record full year 2024 sales, operating income, EPS and free cash flow 2025 outlook reflects mixed global markets; focusing on growing sub-verticals (institutional & data centers) Scaling connected products, including Nexa, our Intelligent Water Management Solution Posit
Slide 8: Appendix
Appendix 8 © 2024 Watts Water Technologies, Inc.
Slide 9: Other 2025 Outlook Inputs
Other 2025 Outlook* Inputs Other FY Inputs Other Q1 Inputs Corporate Costs ~$55M to $57M ~$13M Net Interest Expense ~$2M to $3M ~$1M Stock-Based compensation ~$20M ~$5M Adj Effective Tax Rate ~25% ~24% Share Count ~33.5M ~33.5M Capex ~$50M ~$13M Depreciation & Amortization ~$60M ~$15M Europe (EUR) ~
Slide 10: Watts Water Snapshot (NYSE: WTS)
Watts Water Snapshot (NYSE: WTS) 2024 Key Statistics With 5 Year Performance vs. 2019 $8.86 17.7% $1.72 $2.3B 112% 19.7% 106% Adj. EPS Adj. Operating Margin Dividends Net Sales 5-yr Avg Free Cash ROIC (GAAP) 5-yr Avg Reinvestment +17% CAGR +480 bps Expansion +13% CAGR 7% CAGR Flow Conversion +640 bp
Slide 11: Key Themes
Key Themes Recognized Aligned to Focus on Accretive Capital Resilient Leader Long-term Secular Innovation and Deployment and Business Model Trends and Profitable Growth Strong Balance Tested Across Diverse Markets Sheet Economic Cycles Global reach Solutions aligned Continuing Targeting >100% Large
Slide 12: Consolidated Statements of Operations
Consolidated Statements of Operations Fourth Quarter 2024 2023 B/(W) % Net sales $540.4 $547.5 ($7.1) (1%) Cost of goods sold 287.7 291.8 4.1 1% Gross profit 252.7 255.7 (3.0) (1%) 46.8% 46.7% +10 bps Selling, general & administrative expenses 162.9 173.1 (10.2) 6% 30.1% 31.6% +150 bps Restructuring
Slide 13: Reconciliation of Sales to Organic Sales
Reconciliation of Sales to Organic Sales Fourth Quarter Americas Europe APMEA Total Net sales 2024 $398.0 $108.6 $33.8 $540.4 Net sales 2023 $387.0 $128.0 $32.5 $547.5 Dollar change $11.0 ($19.4) $1.3 ($7.1) Net sales % increase (decrease) 3% (15%) 4% (1%) Foreign exchange impact - - (1%) - Acquisit
Slide 14: Reconciliation of GAAP to Non-GAAP Measures
Reconciliation of GAAP to Non-GAAP Measures Fourth Quarter Year 2024 2023 2024 2023 Net Sales $540.4 $547.5 $2,252.2 $2,056.3 Operating income $89.0 $78.8 $390.4 $350.9 Operating margin % 16.5% 14.4% 17.3% 17.1% Adjustments for special items: Restructuring $0.8 $3.8 $7.2 $5.5 Acquisition-related cos
Slide 15: Segment Earnings and Margin Summary
Segment Earnings and Margin Summary Fourth Quarter 2024 Fourth Quarter 2023 Americas Europe APMEA Corp. OI Americas Europe APMEA Corp. OI Segment earnings / Corp expenses / Adj. OI $86.9 11.0 5.9 (12.9) $90.9 $78.2 19.2 4.1 (15.1) $86.4 Segment margin / Adjusted operating margin % 21.8% 10.2% 17.5%
Slide 16: Reconciliation of Net Cash Provided by Operations to Free Cash Flow
Reconciliation of Net Cash Provided by Operations to Free Cash Flow Year 2024 2023 Net cash provided by operations $361.1 $310.8 Less: additions to property, plant, and equipment (35.3) (29.7) Plus: proceeds from the sale of property, plant, and equipment 5.9 - Free cash flow $331.7 $281.1 Net incom
Slide 17: Reconciliation of Long-term Debt to Net Debt to Capitalization Ratio
Reconciliation of Long-term Debt (Including Current Portion) to Net Debt to Capitalization Ratio December 31, 2024 December 31, 2023 Current portion of long-term debt $- $- Plus: Long-term debt, net of current portion 197.0 298.3 Less: Cash and cash equivalents (386.9) (350.1) Net debt ($189.9) ($51
Slide 18: Calculations of EBITDA & Gross and Net Leverage
Calculations of EBITDA & Gross and Net Leverage Year Ended December 31, 2024 Sales $2,252.2 Net income $291.2 Plus: Interest expense, net 5.8 Plus: Income taxes 94.8 Plus: Depreciation 34.6 Plus: Amortization 19.8 EBITDA - Earnings before interest, taxes, depreciation and amortization $446.2 EBITDA
Slide 19: Reconciliation of Adjusted Non-GAAP Effective Tax Rate
Reconciliation of “Adjusted” Non-GAAP Effective Tax Rate Fourth Quarter Year 2024 2023 2024 2023 Income before income taxes $89.0 $77.4 $386.0 $349.5 Provision (benefit) for income taxes $21.5 $21.6 $94.8 $87.4 Effective tax rate 24.2% 27.9% 24.6% 25.0% Income before income taxes $89.0 $77.4 $386.0
Slide 20: Reconciliation of GAAP and Non-GAAP Measures in 2025 Outlook
Reconciliation between GAAP and Non-GAAP Measures Included in 2025 Outlook* First Quarter Full Year 2025 2025 Net Sales Net sales growth -7% to -3% -3% to +2% Forecasted impact of acquisition / FX - - Organic net sales growth -7% to -3% -3% to +2% Operating Margin Operating margin range 13.6% to 14.
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