WATTS WATER TECHNOLOGIES INC

Previous wording

This Quarterly Report on Form 10-Q contains statements that are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements contain projections of our future results of operations or our financial position or state other forward-looking information. The forward-looking statements included in this Quarterly Report on Form 10-Q, including without limitation statements regarding our business performance and strategy, including, without limitation, expected financial results, benefits from recent acquisitions and future acquisitions, expected investments in capital expenditures, expected impacts from legislation and our ability to manage challenging macro-economic and softer market conditions, including impacts from tariffs, are only predictions and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify these forward-looking statements by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” and “would” or similar words. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. These risks, uncertainties and other factors may cause our actual results, performance or achievements to differ materially from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements. Some of the factors that might cause these differences are described under Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission. You should carefully review all of these factors, and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and, except as required by law, we undertake no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Current wording

This Quarterly Report on Form 10-Q contains statements that are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements contain projections of our future results of operations or our financial position or state other forward-looking information. The forward-looking statements included in this Quarterly Report on Form 10-Q, including without limitation statements regarding our business performance and strategy, including, without limitation, expected financial results, benefits from recent acquisitions and future acquisitions, expected investments in capital expenditures, expected impacts from legislation, impacts of the invalidation of tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"), and our ability to manage challenging macro-economic and softer market conditions, including impacts from tariffs and the conflict in the Middle East, are only predictions and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify these forward-looking statements by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” and “would” or similar words. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. These risks, uncertainties and other factors may cause our actual results, performance or achievements to differ materially from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements. Some of the factors that might cause these differences are described under Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission. You should carefully review all of these factors, and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and, except as required by law, we undertake no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Previous wording

We are a leading supplier of solutions, systems and products that manage and conserve the flow of fluids and energy into, through and out of buildings in the commercial, industrial and residential markets in the Americas, Europe and Asia-Pacific, Middle East and Africa (“APMEA”). For over 150 years, we have designed and produced valve systems that safeguard and regulate water systems, energy efficient heating and hydronic systems, drainage systems and water filtration technology that helps purify and conserve water. We earn revenue and income almost exclusively from the sale of our products. Our principal product and solution categories include:

Current wording

We are a leading supplier of products and solutions that manage and conserve the flow of fluids and energy into, through and out of buildings in the commercial, industrial and residential markets in the Americas, Europe and Asia-Pacific, Middle East and Africa (“APMEA”). For over 150 years, we have designed and produced valve systems that safeguard and regulate water systems, energy efficient heating and hydronic systems, drainage systems and water filtration technology that helps purify and conserve water. We earn revenue and income primarily from the sale of our products. Our principal product and solution categories include:

Previous wording

We believe the factors relating to our future growth include continued product innovation that meets the needs of our customers and our end markets; our ability to continue to make selective acquisitions, both in our core markets as well as in complementary markets; regulatory requirements relating to the quality and conservation of water and the safe use of water; increased demand for clean water; and continued enforcement of plumbing and building codes. Our acquisition strategy focuses on businesses that promote our key macro themes around safety and regulation, energy efficiency and water conservation. We target businesses that we believe will provide us with one or more of the following: an entry into new markets and/or new geographies, improved channel access, unique and/or proprietary technologies, including smart and connected technologies, advanced production capabilities or complementary solution offerings. We have completed 15 acquisitions since 2015, and in the last two years, we have completed four strategic and complementary acquisitions that expanded our addressable market and that we believe will enable value creation through greater scale and growth opportunities.

Current wording

We believe the factors relating to our future growth include continued product innovation that meets the needs of our customers and our end markets; our ability to continue to make selective acquisitions, both in our core markets as well as in complementary markets; regulatory requirements relating to the quality and conservation of water and the safe use of water; increased demand for clean water; and continued enforcement of plumbing and building codes. Our acquisition strategy focuses on businesses that promote our key macro themes around safety and regulation, energy efficiency and water conservation. We target businesses that we believe will provide us with one or more of the following: an entry into new markets and/or new geographies, improved channel access, unique and/or proprietary technologies, including smart and connected technologies, advanced production capabilities or complementary solution offerings. We have completed 17 acquisitions since 2016, and eight acquisitions in the last three years, all of which were strategic and complementary acquisitions that expanded our addressable market and that we believe will enable value creation through greater scale and growth opportunities.

Previous wording

Tariffs imposed on foreign imports into the United States, particularly from Canada, China and Mexico, have increased the cost of our products and could adversely impact the gross margin we earn on our products. We are proactively responding to the dynamic trade environment by leveraging our global sourcing strategy, driving incremental productivity within our operations and implementing pricing actions as appropriate. We expect that our significant degree of vertical integration, with manufacturing close to our customers, will be an advantage for us in the current environment. We have a proven track record of successfully navigating through periods of disruption and are committed to continuing our strong execution. However, there can be no assurance that we will be able to fully mitigate the impact of new or increased tariffs and actions taken by the United States or other countries to impose or increase tariffs which could have a material adverse effect on our business, financial condition or results of operations. We also continue to experience inflation in our labor and overhead costs. Despite these challenges and uncertainties, we continue to invest in our business, including new products, our smart and connected solutions and our growth and productivity initiatives. We remain focused on our customers’ needs and executing on our long-term strategy.

Current wording

Tariffs imposed on foreign imports into the United States have increased the cost of our products and could adversely impact the gross profit we earn on our products. We are proactively managing changes in tariffs and supply disruptions by leveraging our global sourcing strategy, driving incremental productivity within our operations and implementing pricing actions as appropriate. We expect that our significant degree of vertical integration, with manufacturing close to our customers, will be an advantage for us in the current environment. We have a proven track record of successfully navigating through periods of disruption and we are committed to continuing our strong execution. However, there can be no assurance that we will be able to fully mitigate the impact of new or increased tariffs and actions taken by the United States or other countries could have a material adverse effect on our business, financial condition or results of operations. On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under IEEPA were not authorized by the statute. We are the importer of record for certain raw materials, components and products that were previously subject to such tariffs under IEEPA. Significant uncertainty remains regarding how and when any amounts may be recovered. We are evaluating the ruling and potential actions available to us. Because the process, timing, and amount of any recovery are uncertain, we have not recorded any potential benefit from a refund at this time. We will continue to monitor developments and evaluate potential impacts on our future financial results and business. Further, following the

Previous wording

The trade policy environment and the ongoing U.S. government shutdown has created uncertainty and may result in further reductions to economic forecasts, including a reduction in global gross domestic product (“GDP”) expectations. While GDP is expected to be lower than the prior year, it is expected to remain positive and is generally a leading indicator for our repair and replacement business. New construction indicators are mixed. Multi-family housing, office, retail and recreation verticals are expected to be down, but light industrial, including data centers, is growing and institutional verticals remain steady. The impact of the enacted tariffs and the U.S. government shutdown on interest rate levels and new construction remains uncertain. The European economy remains weak and geo-political uncertainties continue, all of which may adversely affect our future financial results.

Current wording

The trade policy environment and recent geopolitical events have created uncertainty which may result in reduced economic activity. However, gross domestic product (“GDP”) is expected to remain positive and is generally a leading indicator for our repair and replacement business. New construction indicators are mixed. Multi-family and single-family housing, office, retail and recreation verticals are expected to be down, but light industrial, including data centers, is growing and institutional verticals remain steady. The European economy remains weak and geopolitical uncertainties continue, all of which may adversely affect our future financial results.

Previous wording

Third quarter 2025 sales increased 12.5%, or $68.1 million, on a reported basis, and 9.4%, or $50.8 million, on an organic basis, compared to the third quarter of 2024. The reported sales increase compared to the third quarter of 2024 was positively impacted by acquired sales of 2.0%, or $11.1 million, all reported within the Americas segment, as well as net favorable impact of foreign exchange of 1.1%, or $6.2 million, primarily due to strengthening of the euro against the U.S. dollar. The 9.4% organic growth was driven by organic growth in the Americas of 13.3% and in APMEA of 0.3%, partially offset by organic decline in Europe of 2.3%. The organic growth was primarily driven by favorable price realization and increased volume in the Americas, including pull-forward demand resulting from tariff-related price increases. Organic growth in the Americas and APMEA was partially offset by lower volumes in Europe. Operating income of $111.4 million increased by $18.2 million, or 19.5%, in the third quarter of 2025 as compared to the third quarter of 2024. This increase was primarily driven by favorable price realization, volume growth and productivity, partially offset by inflation and tariffs.

Current wording

First quarter 2026 sales increased 21.4%, or $119.3 million, on a reported basis, and 11.9%, or $66.6 million, on an organic basis, compared to the first quarter of 2025. The reported sales increase included acquired sales of 6.6%, or $36.6 million, with $30.7 million reported within the Americas segment and $5.9 million reported within APMEA. The reported sales increase also included the favorable impact of foreign exchange of $16.1 million, primarily due to the depreciation of the U.S. dollar against the euro. The 11.9% organic growth was driven by organic growth in the Americas of 15.5%, Europe of 0.5% and APMEA of 3.4%. The organic growth was primarily driven by favorable price realization and incremental volume, primarily in the Americas driven by data center growth. Operating income of $133.0 million increased by $45.3 million, or 51.7%, in the first quarter of 2026 as compared to the first quarter of 2025. This increase was primarily driven by favorable price realization, productivity and volume leverage partially offset by inflation, investments and tariffs.

Previous wording

In discussing our results of operations, segment earnings is the GAAP performance measure used by our chief operating decision-maker (“CODM”) to assess and evaluate segment results. Segment earnings exclude the impacts of special items which are defined as non-recurring, and unusual expenses or benefits such as restructuring costs, acquisition-related costs, gain on sale of assets and pension settlements. The CODM uses segment earnings for insight into underlying trends comparing past financial performance with current performance by reporting segment on a consistent basis.

Current wording

In discussing our results of operations, segment earnings is the GAAP performance measure used by our chief operating decision-maker (“CODM”) to assess and evaluate segment results. Segment earnings exclude the impacts of special items which are defined as non-recurring, and unusual expenses or benefits, such as restructuring costs and acquisition-related costs. The CODM uses segment earnings for insight into underlying trends comparing past financial performance with current performance by reporting segment on a consistent basis.

Previous wording

On November 3, 2025, the Company declared a quarterly dividend of fifty-two cents ($0.52) per share on each outstanding share of Class A common stock and Class B common stock payable on December 15, 2025 to stockholders of record on December 1, 2025.

Current wording

On May 4, 2026, the Company declared a quarterly dividend of sixty-three cents ($0.63) per share on each outstanding share of Class A common stock and Class B common stock payable on June 15, 2026 to stockholders of record on June 1, 2026.

Previous wording

Third Quarter Ended September 28, 2025 Compared to Third Quarter Ended September 29, 2024

Current wording

First Quarter Ended March 29, 2026 Compared to First Quarter Ended March 30, 2025

Previous wording

Net Sales. Our business is reported in three geographic segments: Americas, Europe and APMEA. Our net sales in each of these segments for each of the third quarters of 2025 and 2024 were as follows:

Current wording

Net Sales. Our business is reported in three geographic segments: Americas, Europe and APMEA. Our net sales in each of these segments for each of the first quarters of 2026 and 2025 were as follows:

Previous wording

Americas net sales increased $64.1 million, or 16.0%, for the third quarter of 2025 compared to the third quarter of 2024. The change in net sales was positively impacted by $11.1 million, or 2.8%, of acquired sales related to acquisitions completed in the first and second quarters of 2025. The change in net sales was negatively impacted by $0.2 million, or 0.1%, of foreign currency translation. Organic net sales increased $53.2 million, or 13.3%, primarily due to favorable price realization and higher volumes, including pull-forward demand into the third quarter of 2025.

Current wording

Americas net sales increased $97.0 million, or 23.2%, for the first quarter of 2026 compared to the first quarter of 2025. The change in net sales was positively impacted by $30.7 million, or 7.4%, of acquired sales related to acquisitions completed during 2025, and was positively impacted by $1.3 million, or 0.3%, of foreign currency translation. Organic net sales increased $65.0 million, or 15.5%, primarily due to favorable price realization and incremental volume driven by data center growth.

Previous wording

The net increase in net sales due to foreign exchange was mostly due to the favorable impact of the depreciation of the U.S. dollar against the euro partially offset by the appreciation of the U.S. dollar against the Australian dollar and Canadian dollar in the third quarter of 2025. We cannot predict whether foreign currencies will appreciate or depreciate against the U.S. dollar in future periods or whether future foreign exchange rate fluctuations will have a positive or negative impact on our net sales.

Current wording

The net increase in net sales due to foreign exchange was mostly due to the favorable impact of the depreciation of the U.S. dollar against the euro, Australian dollar and Canadian dollar in the first quarter of 2026. We cannot predict whether foreign currencies will appreciate or depreciate against the U.S. dollar in future periods or whether future foreign exchange rate fluctuations will have a positive or negative impact on our net sales.

Previous wording

Gross Profit. Gross profit and gross profit as a percent of net sales (gross margin) for the third quarters of 2025 and 2024 were as follows:

Current wording

Gross Profit. Gross profit and gross profit as a percent of net sales (gross margin) for the first quarters of 2026 and 2025 were as follows:

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses increased $26.1 million, or 16.4%, in the third quarter of 2025 compared to the third quarter of 2024. The increase in SG&A expenses was attributable to the following:

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses increased $25.4 million, or 15.2%, in the first quarter of 2026 compared to the first quarter of 2025. The increase in SG&A expenses was attributable to the following:

Previous wording

The increase in organic SG&A expenses was primarily due to a net increase in short-term and long-term compensation accruals of $6.6 million, an increase in strategic investments of $4.8 million, general inflation of $4.2 million and increased variable costs of $3.1 million due to higher net sales, partially offset by a $3.4 million net benefit from the release of a previously reserved contingency matter, $2.9 million from productivity initiatives, and $1.6 million of restructuring savings compared to the third quarter of 2024. The increase in foreign exchange was mainly due to the depreciation of the U.S. dollar against the euro. The acquired SG&A costs related to two acquisitions in the Americas segment completed in the first and second quarters of 2025. The increase in special items SG&A expenses was primarily due to a $7.8 million gain on the settlement of Bradley’s frozen pension plan, partially offset by acquisition-related costs of $0.9 million, recognized in the third quarter of 2024. Total SG&A expenses, as a percentage of net sales, were 30.3% in the third quarter of 2025 compared to 29.2% in the third quarter of 2024.

Current wording

The increase in organic SG&A expenses was primarily due to general inflation of $4.1 million, an increase in strategic investments of $3.4 million, increased variable costs of $2.1 million due to higher net sales, a net increase in short-term and long-term compensation accruals of $1.2 million and $1.2 million in higher travel and marketing spend, partially offset by $2.4 million from productivity initiatives and restructuring savings compared to the first quarter of 2025. The increase in foreign exchange was mainly due to the depreciation of the U.S. dollar against the euro. The acquired SG&A costs related to acquisitions completed in 2025. Total SG&A expenses, as a percentage of net sales, were 28.5% in the first quarter of 2026 compared to 30.0% in the first quarter of 2025.

Previous wording

Restructuring. In the first nine months of 2025, we recorded a net restructuring charge of $22.6 million, which included a $20.6 million charge related to the 2025 French restructuring program that was approved in the first quarter of 2025. In the first nine months of 2024, we recorded a net restructuring charge of $6.4 million, which primarily related to immaterial actions in all regions including severance, exit costs and other cost reductions. For a more detailed description of our restructuring plans, see Note 6 of the Notes to the Consolidated Financial Statements.

Current wording

Restructuring. In the first quarter of 2026, we recorded a net restructuring charge of $0.2 million, which primarily related to the 2025 French restructuring program that was approved in the first quarter of 2025. In the first quarter of 2025, we recorded a net restructuring charge of $17.3 million, which included a $17.4 million charge related to the 2025 French restructuring program. For a more detailed description of our restructuring plans, see Note 6 of the Notes to the Consolidated Financial Statements.

Previous wording

Operating Income. Operating income, which is made up of segment earnings, Corporate operating loss and special items, for the third quarters of 2025 and 2024 was as follows:

Current wording

Operating Income. Operating income, which is made up of segment earnings, Corporate operating loss and special items, for the first quarters of 2026 and 2025 was as follows:

Previous wording

Interest Income. Interest income in the third quarter of 2025 increased $0.4 million compared to the third quarter of 2024, primarily due to higher cash and cash equivalents balances.

Current wording

Interest Income. Interest income in the first quarter of 2026 decreased $0.6 million compared to the first quarter of 2025, primarily due to lower interest rates.

Previous wording

Interest Expense. Interest expense in the third quarter of 2025 decreased $0.9 million compared to the third quarter of 2024, primarily due to a lower principal balance of debt outstanding. Refer to Note 11 of the Notes to Consolidated Financial Statements for further details.

Current wording

Interest Expense. Interest expense in the first quarter of 2026 decreased $0.1 million compared to the first quarter of 2025 due to a decrease inletters of credit outstanding. Refer to Note 11 of the Notes to Consolidated Financial Statements for further details.

Previous wording

Other Expense (Income), Net. Other expense (income), net, was an expense balance of $0.2 million in the third quarter of 2025, primarily due to unfavorable foreign currency translation, compared to an income balance of $0.6 million in the third quarter of 2024, primarily due to an immaterial investment gain partially offset by unfavorable foreign currency translation.

Current wording

Other Expense, Net. Other expense, net, was an expense balance of $0.7 million in the first quarter of 2026 and increased $0.3 million compared to the first quarter of 2025, primarily due to unfavorable foreign currency translation.

Previous wording

Income Taxes. Our effective income tax rate decreased to 22.7% in the first nine months of 2025, from 24.7% in the first nine months of 2024. The decrease is due to a reversal of a tax liability during the first quarter of 2025 relating to a prior tax year for which we determined the statute of limitations had lapsed. The tax liability reversal resulted in a decrease in our foreign tax credit carryforwards and the release of an associated valuation allowance. This decrease was slightly offset by an increase related to the changes from the OBBBA.

Current wording

Income Taxes. Our effective income tax rate increased to 24.2% in the first quarter of 2026, from 14.8% in the first quarter of 2025 primarily due to a reversal of a tax liability in the first quarter of 2025 relating to a prior tax year for which we determined the statute of limitations had lapsed.

Previous wording

Net Income. Net income was $82.2 million, or $2.45 per share of common stock on a diluted basis, for the third quarter of 2025, compared to $69.1 million, or $2.06 per share of common stock on a diluted basis, for the third quarter of 2024. Results for the third quarter of 2025 included after-tax charges of $1.5 million, or $0.05 per share of common stock, for restructuring. Results for the third quarter of 2024 included an after-tax benefit of $5.8 million, or $0.17 per share of common stock, for a gain on the settlement of the Bradley pension plan and $0.9 million, or $0.03 per share of common stock, for other investment gains, partially offset by after-tax charges of $3.8 million, or $0.11 per common share, for restructuring and $1.9 million, or $0.06 per share of common stock, for acquisition-related costs.

Current wording

Net Income. Net income was $99.6 million, or $2.97 per share of common stock on a diluted basis, for the first quarter of 2026, compared to $74.0 million, or $2.21 per share of common stock on a diluted basis, for the first quarter of 2025. Results for the first quarter of 2026 included after-tax charges of$2.1 million, or $0.06 per share of common stock, for acquisition-related costs and $0.1 million, or $0.01 per share of common stock, for restructuring. Results for the first quarter of 2025 included after-tax charges of $13.0 million, or $0.39 per share of common stock, for restructuring and $0.8 million, or $0.02 per share of common stock, for acquisition-related costs; offset by an after-tax benefit of $8.3 million, or $0.25 per share of common stock, for an income tax adjustment related to a lapsed statute tax liability.

Previous wording

We used $117.0 million of net cash for investing activities in the first nine months of 2025 compared to $112.7 million used in the first nine months of 2024. We used $85.7 million in cash for business acquisitions in our Americas segment in the first nine months of 2025 compared to $96.3 million in cash for business acquisitions in our Americas segment in the first nine months of 2024. Cash used for net capital expenditures in the first nine months of 2025 compared to the first nine months of 2024 increased $13.9 million. For the remainder of 2025, we expect to invest approximately $14 million in capital expenditures as part of our ongoing commitment to improve our operating capabilities.

Current wording

We used $13.2 million of net cash for investing activities in the first quarter of 2026 compared to $79.9 million used in the first quarter of 2025. In the first quarter of 2026, we used $1.9 million in cash for business acquisitions related to immaterial purchase price adjustments for acquisitions completed in the fourth quarter of 2025, compared to $70.3 million in cash for business acquisitions in our Americas segment in the first quarter 2025. Cash used for net capital expenditures in the first quarter of 2026 compared to the first quarter of 2025 increased $1.7 million. For the remainder of 2026, we expect to invest approximately $40 million to $50 million in capital expenditures as part of our ongoing commitment to improve our operating capabilities.

Previous wording

We used $74.5 million of net cash for financing activities during the first nine months of 2025 primarily due to dividend payments of $49.4 million, tax withholding payments on vested stock awards of $11.4 million and payments of $11.8 million to repurchase approximately 51,000 shares of Class A common stock. In the first nine months of 2024, we used $156.2 million of net cash for financing activities primarily due to long-term debt repayments of $85.0 million, dividend payments of $41.1 million, tax withholding payments on vested stock awards of $12.8 million and payments of $13.0 million to repurchase approximately 66,000 shares of Class A common stock.

Current wording

We used $34.8 million of net cash for financing activities during the first quarter of 2026 primarily due to dividend payments of $17.5 million, tax withholding payments on vested stock awards of $12.8 million and payments of $3.8 million to repurchase approximately 13,000 shares of Class A common stock. In the first quarter of 2025, we used $29.9

Previous wording

The Revolving Credit Facility also includes sub-limits of $100 million for letters of credit and $15 million for swing line loans. As of September 28, 2025, we had drawn down $200.0 million on this line of credit and had $12.2 million in letters of credit outstanding, which resulted in $587.8 million of unused and available credit under the Revolving Credit Facility as of such date. Borrowings outstanding bear interest at a fluctuating rate per annum equal to an applicable percentage defined as (i) in the case of Term Benchmark loans, the Term Benchmark rate plus an applicable percentage, ranging from 1.075% to 1.325%, or (ii) in the case of alternate base rate loans and swing line loans, interest (which at all times will not be less than 1.00%) at the greatest of (a) the Prime Rate in effect on such day, (b) the FRBNY Rate in effect on such day plus 0.50% and (c) the Term Benchmark rate plus 1.00% for a one-month interest period, in each case, determined by reference to our consolidated leverage ratio. For the borrowings denominated in dollars, there is a fixed 10 basis point adjustment if the reference rate is Term SOFR. The weighted average interest rate on debt outstanding under the Revolving Credit Facility as of September 28, 2025 was 5.38%. The weighted average interest rate on debt outstanding inclusive of the interest rate swaps discussed in Note 12 of the Notes to Consolidated Financial Statements and interest rates under the Revolving Credit Facility as of September 28, 2025 was 4.07%. In addition to paying interest under the Credit Agreement, we are also required to pay certain fees in connection with the Revolving Credit Facility, including, but not limited to, an unused facility fee and letter of credit fees. We may repay loans outstanding under the Credit Agreement from time to time without premium or penalty, other than customary breakage costs, if any, and subject to the terms of the Credit Agreement.

Current wording

The Revolving Credit Facility also includes sub-limits of $100 million for letters of credit and $15 million for swing line loans. As of March 29, 2026, we had drawn down $200.0 million on this line of credit and had $12.2 million in letters of credit outstanding, which resulted in $587.8 million of unused and available credit under the Revolving Credit Facility as of such date. Borrowings outstanding bear interest at a fluctuating rate per annum equal to an applicable percentage defined as (i) in the case of Term Benchmark loans, the Term Benchmark rate plus an applicable percentage, ranging from 1.075% to 1.325%, or (ii) in the case of alternate base rate loans and swing line loans, interest (which at all times will not be less than 1.00%) at the greatest of (a) the Prime Rate in effect on such day, (b) the FRBNY Rate in effect on such day plus 0.50% and (c) the Term Benchmark rate plus 1.00% for a one-month interest period, in each case, determined by reference to our consolidated leverage ratio. For the borrowings denominated in dollars, there is a fixed 10 basis point adjustment if the reference rate is Term SOFR. The weighted average interest rate on debt outstanding under the Revolving Credit Facility as of March 29, 2026 was 4.85%. The weighted average interest rate on debt outstanding inclusive of the interest rate swaps discussed in Note 12 of the Notes to Consolidated Financial Statements and interest rates under the Revolving Credit Facility as of March 29, 2026 was 4.07%. In addition to paying interest under the Credit Agreement, we are also required to pay certain fees in connection with the Revolving Credit Facility, including, but not limited to, an unused facility fee and letter of credit fees. We may repay loans outstanding under the Credit Agreement from time to time without premium or penalty, other than customary breakage costs, if any, and subject to the terms of the Credit Agreement.

Previous wording

As of September 28, 2025, we held $457.7 million in cash and cash equivalents. Of this amount, $222.5 million of cash and cash equivalents were held by foreign subsidiaries. Our U.S. operations typically generate sufficient cash flows to meet our domestic obligations. We expect existing cash and cash equivalents and cash flows from operations and financing activities to be sufficient to meet our cash needs for at least the next 12 months and thereafter for the foreseeable future. However, if we did have to borrow to fund some or all of our expected cash outlays, we can do so at reasonable interest rates by utilizing the undrawn borrowings under our Revolving Credit Facility. Subsequent to recording the Toll Tax as part of the Tax Cuts and Jobs Act of 2017, our intent, other than with respect to the one-time repatriation of foreign earnings in 2023, has been to permanently reinvest undistributed earnings of foreign subsidiaries, and we do not have any current plans to repatriate additional post-Toll Tax foreign earnings to fund operations in the United States. However, if amounts held by foreign subsidiaries were needed to fund operations in the United States, we could be required to accrue and pay taxes to repatriate these funds. Such charges may include potential state income taxes and other tax charges.

Current wording

As of March 29, 2026, we held $374.7 million in cash and cash equivalents. Of this amount, $202.8 million of cash and cash equivalents were held by foreign subsidiaries. Our U.S. operations typically generate sufficient cash flows to meet our domestic obligations. We expect existing cash and cash equivalents and cash flows from operations and financing activities to be sufficient to meet our cash needs for at least the next 12 months and thereafter for the foreseeable future. However, if we did have to borrow to fund some or all of our expected cash outlays, we can do so at reasonable interest rates by utilizing the undrawn borrowings under our Revolving Credit Facility. Subsequent to recording the Toll Tax as part of the Tax Cuts and Jobs Act of 2017, our intent, other than with respect to the one-time repatriation of foreign earnings in 2023, has been to permanently reinvest undistributed earnings of foreign subsidiaries, and we do not have any current plans to repatriate additional post-Toll Tax foreign earnings to fund operations in the United States. However, if amounts held by foreign subsidiaries were needed to fund operations in the United States, we could be required to accrue and pay taxes to repatriate these funds. Such charges may include potential state income taxes and other tax charges.

Previous wording

On July 4, 2025, the OBBBA was enacted into law, introducing major changes to U.S. tax regulations, with staggered effective dates. Key provisions affecting our income taxes include an increase in bonus depreciation deductions, accelerated expensing of research and development costs and updates to international tax rules. We have included the effects of these changes in our third quarter 2025 consolidated financial statements. While the OBBBA is expected to have minimal impact on our effective income tax rate, it is projected to generate significant cash tax savings in 2025 due to accelerated tax deductions.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law, introducing major changes to U.S. tax regulations, with staggered effective dates. Key provisions affecting our income taxes include an increase in bonus depreciation deductions, accelerated expensing of research and development costs and updates to international tax rules. In 2025, OBBBA generated significant cash tax savings due to the one time change of accelerated tax deductions and will not repeat in 2026.

Previous wording

We refer to non-GAAP organic changes in financial measures, including organic net sales, organic net sales growth, organic SG&A expenses and organic segment earnings which are non-GAAP measures that exclude the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons. A reconciliation to the most closely related U.S. GAAP measure, net sales, net sales growth, SG&A and segment earnings, have been included in our discussion within “Results of Operations” above. Non-GAAP measures should be considered in addition to, and not as a replacement for or as a superior measure to U.S. GAAP measures. Management believes reporting these non-GAAP measures provide useful information to investors, potential investors and others, by facilitating easier comparisons of our performance with prior and future periods.

Current wording

We refer to non-GAAP organic changes in financial measures, including organic net sales, organic net sales growth, organic SG&A expenses and organic segment earnings, which exclude the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons. Reconciliations to the most closely related U.S. GAAP measure, net sales, net sales growth, SG&A and segment earnings, have been included in our discussion within “Results of Operations” above. Non-GAAP measures should be considered in addition to, and not as a replacement for or as a superior measure to, U.S. GAAP measures. Management believes reporting these non-GAAP measures provide useful information to investors, potential investors and others, by facilitating easier comparisons of our performance with prior and future periods.

Previous wording

Our net debt to capitalization ratio, a non-GAAP financial measure used by management, at September 28, 2025 was (15.3%) compared to (12.5%) at December 31, 2024. The decrease was driven by a change in net debt balance, primarily due to increased cash and cash equivalents. Management believes the net debt to capitalization ratio is an appropriate supplemental measure because it helps investors understand our ability to meet our financing needs and serves as a basis to evaluate our financial structure. Our computation may not be comparable to other companies that may define their net debt to capitalization ratios differently.

Current wording

Our net debt to capitalization ratio, a non-GAAP financial measure used by management, at March 29, 2026 was (9.2%) compared to (11.4%) at December 31, 2025. The increase was driven by an increase in net debt balance, primarily due to decreased cash and cash equivalents and an increase in stockholders’ equity at March 29, 2026 compared to December 31, 2025 due to higher net income. Management believes the net debt to capitalization ratio is an appropriate supplemental measure because it helps investors understand our ability to meet our financing needs and serves as a basis to evaluate our financial structure. Our computation may not be comparable to other companies that may define their net debt to capitalization ratios differently.