Watts Water Technologies, Inc. · NYSE:WTS
Watts Water Technologies — Q4 2020 Earnings Presentation
20 slides from Watts Water Technologies's earnings presentation, Feb 11, 2021
Slide 1: 4Q and FY 2020 Earnings Conference Call
Watts Water Technologies 4Q and FY 2020 Earnings Conference Call February 11, 2021 © 2021 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, capital expenditures, water
Slide 3: 2020 FY Overview & 2021 Expectations
2020 FY Overview & 2021 Expectations Strong Team Performance ‒ Continued focus on customer engagement and delivery ‒ Experienced; able to adapt – proactive response to evolving market conditions ‒ Continued progress in ESG / DEI initiatives Covid-19 Impact ‒ Construction markets / customers ‒ Compre
Slide 4: Smart & Connected Strategy Progress
Smart & Connected Strategy Progress Smart & Connected revenues by 2023 25% Improve use of data to enhance customer experience Dedicated organizational structure Continue to focus on key customer deployed to support IoT issues: • System Safety Strategic alignment with all • Water Hygiene business uni
Slide 5: Smart & Connected Solutions
Smart & Connected Solutions Trident™ Cloud Based IoT Platform FloPro-MD The Detection Group (TDG) Trident™ IoT Platform The Dormont FloPro-MD allows service is a network of wireless sensors installed technicians and installers to verify proper gas flow throughout a building to detect leaks and and p
Slide 6: 4Q 2020 Financial Summary
4Q 2020 Financial Summary Sales ($M) Adj. Operating Margin %* Adj. EPS* +1% Reported Up 110 -2% Organic* Up 15% bps +3% FX Acquired $400 $403 13.6% 12.5% $1.15 $1.00 Q4'19 Q4'20 Q4'19 Q4'20 Q4'19 Q4'20 • +1% reported; -2% organic • Adjusted OP $55M, +10% • Operations +$0.08 ‒ COVID-19 impact ‒ Aggre
Slide 7: 4Q 2020 Regional Results
4Q 2020 Regional Results $M Adjusted Operating Sales / Business Adjusted Operating Profit / Sales Margin %* Highlights Margin Commentary Change (bps) • –1% reported • Adjusted operating profit* $46M, +1% AMERICAS –2% organic • Margin drivers: $264 17.4% +1% FX / acquisition ▲ Cost actions / restruct
Slide 8: Full Year 2020 Financial Summary
Full Year 2020 Financial Summary Sales ($M) Adj. Operating Margin %* Adj. EPS* FCF* ($M) -6% Reported Flat Down 5 % Up 14% -7% Organic* +1% FX Acquired 12.9% 12.9% $4.07 $187 $1,601 $1,509 $3.88 $165 2019 2020 2019 2020 2019 2020 2019 2020 • -6% reported; -7% organic • Adjusted OP $194M, -6% • Opera
Slide 9: 2021 Planning Framework
2021 Planning Framework MONITORING HEADWINDS TAILWINDS ▼ Covid-19 ► Geopolitical concerns ▲ Residential single family ▼ Non-residential & ► U.S. government ▲ NPD; Smart & multifamily air pocket; transition / policies Connected lack of new starts ▲ One Watts ► Cost / price dynamic Performance System;
Slide 10: 2021 Outlook
2021 Outlook FY 2021 Outlook Other Key Inputs Adjusted Margin Item Expectation Org Rev Growth * Growth* Corporate Costs ~$40M AMERICAS (5%) to Flat Down Interest ~$10M Expense EUROPE (5%) to Flat Down Adjusted Effective ~27% Tax Rate* CAPEX / D&A ~$40M / ~$46M APMEA 2% to 6% Down Free Cash Flow ≥100
Slide 11: Summary
Summary Team proactively adapted in 2020; decisive actions drove results 2021 commercial / multifamily markets soft; vaccine roll-out timing key to restoring confidence in new construction starts Continue long-term focus - NPD / Smart & Connected / investments Driving One Watts Performance System 10
Slide 12: Appendix
Appendix © 2021 Watts Water Technologies, Inc.
Slide 13: Consolidated Statements of Operations
Consolidated Statements of Operations (M) (Unaudited) Fourth Quarter 2020 2019 B/(W) % Net sales $403.4 $400.3 $3.1 1% Cost of goods sold 234.2 230.2 (4.0) (2%) Gross profit 169.2 170.1 (0.9) (1%) 41.9% 42.5% -60p Selling, general & administrative expenses 113.2 121.2 8.0 7% 28.0% 30.3% +230p Restru
Slide 14: Reconciliation of Reported Sales to Organic Sales
Reconciliation of Reported Sales to Organic Sales (M) (Unaudited) (in millions except per share information) Fourth Quarter Americas Europe APMEA Total Reported net sales 2020 $264.4 $119.9 $19.1 $403.4 Reported net sales 2019 267.9 113.6 18.8 400.3 Dollar change ($3.5) $6.3 $0.3 $3.1 Net sales % in
Slide 15: Reconciliation of GAAP As Reported to Adjusted Non-GAAP
Reconciliation of GAAP “As Reported” to “Adjusted” Non-GAAP Excluding Effect of Adjustments for Special Items (M) (Unaudited) Fourth Quarter Year (in millions except per share information) 2020 2019 2020 2019 Net Sales $403.4 $400.3 $1,508.6 $1,600.5 Operating income - as reported $54.4 $47.3 $181.1
Slide 16: Adjusted Operating Income by Segment
Adjusted Operating Income by Segment (M) (Unaudited) (in millions) Fourth Quarter 2020 Fourth Quarter 2019 Americas Europe APMEA Corp. Total Americas Europe APMEA Corp. Total Reported operating income (loss) $46.1 16.9 2.8 (11.4) 54.4 $45.1 11.8 3.0 (12.6) 47.3 Operating margin % 17.4% 14.1% 14.5% 1
Slide 17: Reconciliation of Net Cash Provided by Operations to Free Cash Flow
Reconciliation of Net Cash Provided by Operations to Free Cash Flow (M) (Unaudited) Year Ended 2020 2019 Net cash provided by operations – as reported $228.8 $194.0 Less: additions to property, plant, and equipment (43.8) (29.2) Plus: proceeds from the sale of property, plant, and equipment 2.2 0.1
Slide 18: Reconciliation of Long-term Debt to Net Debt to Capitalization Ratio
Reconciliation of Long-term Debt (including current portion) to Net (Cash) Debt to Capitalization Ratio (M) (Unaudited) December 31, 2020 December 31, 2019 Current portion of long-term debt $- $105.0 Plus: Long-term debt, net of current portion 198.2 204.2 Less: Cash and cash equivalents (218.9) (21
Slide 19: Reconciliation of Adjusted Non-GAAP Effective Tax Rate
Reconciliation of “Adjusted” Non-GAAP Effective Tax Rate (M) (Unaudited) (in millions except per share information) Fourth Quarter Year 2020 2019 2020 2019 Income before income taxes – as reported $51.1 $44.2 $167.0 $183.9 Provision for income taxes – as reported 21.9 12.4 52.7 52.4 Effective tax ra
Slide 20: Reconciliation between GAAP and Non-GAAP Measures Included in 2021 Outlook
Reconciliation between GAAP and Non-GAAP Measures Included in 2021 Outlook Watts Americas Europe APMEA Full Year Full Year Full Year Full Year 2021 2021 2021 2021 Approximately Approximately Approximately Approximately Sales GAAP sales growth (decline) (4.3%) to 0.7% (4.6%) to 0.4% (5%) to Flat 12%
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