WATTS WATER TECHNOLOGIES INC

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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 and liquidity, benefits from acquisitions, expected investments in capital expenditures, expected costs and benefits from restructuring programs, expected impacts from legislation, impacts of the invalidation of tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"), our ability to manage challenging macro-economic and softer market conditions, including impacts from tariffs and the conflict in the Middle East, market and economic outlook, and the expected timing and benefits of our enterprise resource planning system implementation, 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.

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 and liquidity, benefits from acquisitions, expected investments in capital expenditures, expected costs and benefits from restructuring programs, expected impacts from legislation, impacts from new or revised tariffs imposed under new authorities, our ability to manage challenging macro-economic and softer market conditions, including impacts from inflation, interest rates, tariffs and the conflict in the Middle East, market and economic outlook, and the expected timing and benefits of our enterprise resource planning system implementation, 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 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 are enabling value creation through greater scale and growth opportunities.

Current wording

We believe the factors impacting 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 are enabling value creation through greater scale and growth opportunities.

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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. Following this ruling, we have submitted, and expect to continue to submit, tariff recovery claims through the U.S. Customs and Border Protection (CBP) seeking a refund of certain eligible IEEPA tariffs. We will continue to monitor recent developments on tariff policy and evaluate any changes to the applicability of tariffs to our business as they occur. Further, following the Supreme Court’s ruling invalidating IEEPA tariffs, the U.S. government imposed new

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. Following this ruling, we have submitted tariff recovery claims through the U.S. Customs and Border Protection (“CBP”) seeking a refund of certain eligible IEEPA tariffs. During the third quarter of fiscal 2026, we received approximately $39.3 million in tariff refunds, plus interest, from U.S. CBP, which represents the majority of previously paid IEEPA tariffs. The refunds related to tariffs previously capitalized into inventory, all of which had been sold as of September 27, 2026. As a result, the full benefit of the refunds was recognized in the income statement as a

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and revised tariffs under various other regimes. The full impact of such new tariffs, and the imposition of new tariffs that other countries may implement in response to U.S. trade policies, remain uncertain.

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reduction to cost of goods sold for the three and nine months ended September 27, 2026, as we elected to recognize the tariff refunds when realized. We will continue to monitor recent developments on tariff policy and evaluate any changes to the applicability of tariffs to our business as they occur. Further, following the Supreme Court’s ruling invalidating IEEPA tariffs, the U.S. government imposed new and revised tariffs under various other regimes. The full impact of such new tariffs, and the imposition of new tariffs that other countries may implement in response to U.S. trade policies, remains uncertain.

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We continue to closely monitor impacts to our business, customers, suppliers, employees, and operations in the Middle East due to the conflict in and around Iran and increased regional instability and tensions. Our operations and our suppliers’ operations in the region have not been materially impacted, although we could experience future impacts as the conflict continues. We also continue to monitor uncertainties related to energy costs and availability. Given the volatile nature of the situation, the potential impacts to our business are subject to change.

Current wording

We continue to closely monitor impacts to our business, customers, suppliers, employees, and operations in the Middle East due to the conflict in and around Iran and increased regional instability and tensions. Our operations and our suppliers’ operations in the region have not been materially impacted, although we could experience future impacts as the conflict continues. We also continue to monitor uncertainties related to energy costs, logistics and material availability. Given the volatile nature of the situation, the potential impacts to our business are subject to change.

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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. We also continue to experience inflation in our material, labor and overhead costs. The European economy is showing signs of improvement, however, the global geopolitical uncertainties continue. Despite the challenges and uncertainties discussed above, we continue to invest in our growth and productivity initiatives, and we remain focused on our customers’ needs and executing our long-term strategy.

Current wording

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 remain weak, but light industrial, including data centers, is showing strong growth and institutional verticals remain steady. We are monitoring the impact of rising interest rates and continue to experience inflation in our material, labor and overhead costs. The European economy is showing signs of improvement, however, global geopolitical uncertainties continue. Despite the challenges and uncertainties discussed above, we continue to invest in our growth and productivity initiatives, and we remain focused on our customers’ needs and executing our long-term strategy.

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Second quarter 2026 sales increased 18.6%, or $119.5 million, on a reported basis, and 12.2%, or $78.7 million, on an organic basis, compared to the second quarter of 2025. The reported sales increase included acquired sales of 5.3%, or $34.3 million, with $28.4 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 $6.5 million, or 1.1%, primarily due to the depreciation of the U.S. dollar against the euro, Australian dollar and Chinese yuan. The 12.2% organic growth was driven by organic growth in the Americas of 11.6%, Europe of 9.2% and APMEA of 30.7%. 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 $154.0 million increased by $18.7 million, or 13.8%, in the second quarter of 2026 as compared to the second quarter of 2025. This increase was primarily driven by favorable price realization, productivity and volume leverage partially offset by inflation and tariffs.

Current wording

Third quarter 2026 sales increased 19.0%, or $116.3 million, on a reported basis, and 12.2%, or $74.5 million, on an organic basis, compared to the third quarter of 2025. The reported sales increase included acquired sales of 6.8%, or $41.3 million, with $35.1 million reported within the Americas segment and $6.2 million reported within APMEA. The reported sales increase also included the favorable impact of foreign exchange of $0.5 million. The 12.2% organic growth was driven by organic growth in the Americas of 11.6%, Europe of 9.0% and APMEA of 29.7%. The organic growth was primarily driven by incremental volume, driven by data center growth, and favorable price realization. Operating income of $190.8 million increased by $79.4 million, or 71.3%, in the third quarter of 2026 as compared to the third quarter of 2025. This increase was primarily driven by tariff refunds, favorable price realization, sales volume leverage and productivity partially offset by inflation.

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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.

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 tariff refunds, 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.

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Second Quarter Ended June 28, 2026 Compared to Second Quarter Ended June 29, 2025

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Third Quarter Ended September 27, 2026 Compared to Third Quarter Ended September 28, 2025

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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 second quarters of 2026 and 2025 were as follows:

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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 2026 and 2025 were as follows:

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Americas net sales increased $86.5 million, or 17.4%, for the second quarter of 2026 compared to the second quarter of 2025. The change in net sales was positively impacted by $28.4 million, or 5.7%, of acquired sales related to acquisitions completed during 2025, and by $0.1 million, or 0.1%, of foreign currency translation. Organic net sales increased $58.0 million, or 11.6%, primarily due to favorable price realization and incremental volume driven by data center growth partially offset by product rationalization within our OEM and DIY channels.

Current wording

Americas net sales increased $88.5 million, or 19.1%, for the third quarter of 2026 compared to the third quarter of 2025. The change in net sales was positively impacted by $35.1 million, or 7.6%, of acquired sales related to acquisitions completed in the fourth quarter of 2025, and was negatively impacted by $0.4 million of foreign currency translation. Organic net sales increased $53.8 million, or 11.6%, primarily due to incremental volume driven by data center growth and favorable price realization partially offset by product rationalization within our OEM and DIY channels.

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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 Chinese yuan in the second 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.

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 Australian dollar and Chinese yuan partially offset by the appreciation of the U.S. dollar against the euro in the third 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.

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

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

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Gross profit increased primarily due to higher price realization, productivity, volume leverage and acquisitions which more than offset inflation and tariffs. Gross margin declined primarily due to the dilutive impact of acquisitions and the prior year benefit of tariff-related price increases ahead of related cost recognition.

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Gross profit and gross margin increased primarily due to tariff refunds, higher price realization, volume leverage and productivity which more than offset inflation. Gross margin was negatively impacted by the dilutive impact of acquisitions and unfavorable product mix.

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Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses increased $27.3 million, or 14.6%, in the second quarter of 2026 compared to the second quarter of 2025. 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 $24.8 million, or 13.4%, in the third quarter of 2026 compared to the third quarter of 2025. The increase in SG&A expenses was attributable to the following:

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The increase in organic SG&A expenses was primarily due to a net increase in short-term and long-term compensation accruals of $5.4 million, an increase in strategic investments of $5.0 million, general inflation of $4.2 million and $2.2 million in higher travel and marketing spend, partially offset by $3.5 million from productivity initiatives and restructuring savings compared to the second quarter of 2025. The increase in foreign exchange was mainly due to the depreciation of the U.S. dollar against the euro, Australian dollar and Chinese yuan. The acquired SG&A costs related to acquisitions completed in 2025. Total SG&A expenses, as a percentage of net sales, were 28.1% in the second quarter of 2026 compared to 29.1% in the second quarter of 2025.

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The increase in organic SG&A expenses was primarily due to an increase in strategic investments of $5.0 million, general inflation of $4.4 million, higher professional fees of $4.1 million, increased variable costs of $2.3 million due to higher net sales and logistic costs, and $1.2 million in higher travel and marketing spend, partially offset by $2.8 million from productivity initiatives and restructuring savings compared to the third quarter of 2025. The acquired SG&A costs related to acquisitions completed in the fourth quarter of 2025. Total SG&A expenses, as a percentage of net sales, were 28.8% in the third quarter of 2026 compared to 30.3% in the third quarter of 2025.

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Restructuring. In the second quarter of 2026, a net restructuring charge of $5.6 million was recorded, which primarily related to severance costs for immaterial cost saving actions in the Americas and Europe segments. For a more detailed description of our restructuring plans, see Note 6 of the Notes to the Consolidated Financial Statements.

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Restructuring. In the third quarter of 2026, a net restructuring charge of $0.3 million was recorded. For a more detailed description of our restructuring plans, see Note 6 of the Notes to the Consolidated Financial Statements.

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

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

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Operating income increased $18.7 million, or 13.8%, for the second quarter of 2026 compared to the second quarter of 2025. Operating income was unfavorably impacted by an increase in segment special items of $2.2 million, primarily related to an increase in restructuring charges in the second quarter of 2026 compared to the second quarter of 2025. The increase in organic operating income of $21.7 million, or 14.0%, was primarily due to higher price realization, incremental volume, primarily from data center growth, and productivity savings, partially offset by inflation and tariffs.

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Operating income increased $79.4 million, or 71.3%, for the third quarter of 2026 compared to the third quarter of 2025. Operating income was favorably impacted by segment special items of $39.0 million, which included $39.3 million of tariff refunds received, partially offset by $0.3 million in restructuring costs in the third quarter of 2026 compared to $1.9 million of restructuring costs the third quarter of 2025. The increase in organic operating income of $33.8 million, or 25.9%, was primarily due to higher price realization, incremental volume and productivity savings, partially offset by inflation.

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Interest Income. Interest income in the second quarter of 2026 decreased $0.6 million compared to the second quarter of 2025, primarily due to lower interest rates and lower cash and cash equivalent balances.

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Interest Income. Interest income in the third quarter of 2026 increased $0.9 million compared to the third quarter of 2025, primarily due to interest income related to the tariff refunds received partially offset by lower cash and cash equivalent balances.

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Interest Expense. Interest expense in the second quarter of 2026 decreased $0.5 million compared to the second quarter of 2025, primarily due to a lower principal balance of debt outstanding during the second quarter of 2026. Refer to Note 11 of the Notes to Consolidated Financial Statements for further details.

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Interest Expense. Interest expense in the third quarter of 2026 decreased $0.7 million compared to the third quarter of 2025, primarily due to a lower principal balance of debt outstanding during the third quarter of 2026. Refer to Note 11 of the Notes to Consolidated Financial Statements for further details.

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Other Expense, Net. Other expense, net, in the first six months of 2026 decreased $0.1 million compared to the first six months of 2025, primarily due to favorable foreign currency translation.

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Other Expense, Net. Other expense, net, in the third quarter of 2026 increased $0.1 million compared to the third quarter of 2025, primarily due to unfavorable foreign currency translation.

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Net Income. Net income was $118.3 million, or $3.53 per share of common stock on a diluted basis, for the second quarter of 2026, compared to $100.9 million, or $3.01 per share of common stock on a diluted basis, for the second quarter of 2025. Results for the second quarter of 2026 included after-tax charges of$4.2 million, or $0.12 per share of common stock, forrestructuring and $0.3 million, or $0.01 per share of common stock, foracquisition-related costs. Results for the second quarter of 2025 included after-tax charges of $2.5 million, or $0.07 per share of common stock, for restructuring and $0.3 million, or $0.01 per share of common stock, for acquisition-related costs.

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Net Income. Net income was $145.4 million, or $4.34 per share of common stock on a diluted basis, for the third quarter of 2026, compared to $82.2 million, or $2.45 per share of common stock on a diluted basis, for the third quarter of 2025. Results for the third quarter of 2026 included an after-tax benefit of $31.6 million, or $0.94 per share of common stock, for tariff refunds partially offset by after-tax charges of$0.2 million, or $0.00 per share of common stock, forrestructuring. Results for thethird quarter of 2025 included after-tax charges of $1.5 million, or $0.05 per share of common stock, for restructuring.

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Six Months Ended June 28, 2026 Compared to Six Months Ended June 29, 2025

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Nine Months Ended September 27, 2026 Compared to Nine Months Ended September 28, 2025

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Net Sales. Our net sales in each of the three geographic segments for the first six months of 2026 and 2025 were as follows:

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Net Sales. Our net sales in each of the three geographic segments for the first nine months of 2026 and 2025 were as follows:

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Americas net sales increased $183.5 million, or 20.0%, for the first six months of 2026 compared to the first six months of 2025. The change in net sales was positively impacted by $59.6 million, or 6.5%, of acquired sales related to acquisitions completed during 2025, and was positively impacted by $1.0 million, or 0.1%, of foreign currency translation. Organic net sales increased $122.9 million, or 13.4%, primarily due to favorable price realization and incremental volume driven by data center growth partially offset by product rationalization within our OEM and DIY channels.

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Americas net sales increased $271.9 million, or 19.7%, for the first nine months of 2026 compared to the first nine months of 2025. The change in net sales was positively impacted by $94.6 million, or 6.9 %, of acquired sales related to acquisitions completed during 2025, and was positively impacted by $0.6 million of foreign currency translation. Organic net sales increased $176.7 million, or 12.8%, primarily due to favorable price realization and incremental volume driven by data center growth, partially offset by product rationalization within our OEM and DIY channels.

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Europe net sales increased $26.6 million, or 12.1%, for the first six months of 2026 compared to the first six months of 2025. The increase in net sales was positively impacted by favorable foreign currency translation of $15.9 million, or 7.2%. Organic net sales increased $10.7 million, or 4.9%, primarily due to favorable price realization and incremental volume partially offset by product rationalization within our OEM channel.

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Europe net sales increased $34.8 million, or 10.5%, for the first nine months of 2026 compared to the first nine months of 2025. The increase in net sales was positively impacted by favorable foreign currency translation of $14.1 million, or 4.2%. Organic net sales increased $20.7 million, or 6.3%, primarily due to favorable price realization and incremental volume partially offset by product rationalization within our OEM channel.

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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, Chinese yuan and Canadian dollar in the first six months 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.

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The 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 Chinese yuan in the first nine months 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.

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

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

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Gross profit increased primarily due to higher price realization, productivity, volume leverage and acquisitions which more than offset inflation and tariffs. Gross margin declined primarily due to the dilutive impact of acquisitions and the prior year benefit of tariff-related price increases ahead of related cost recognition.

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Gross profit and gross margin increased primarily due to higher price realization, volume leverage, tariff refunds and productivity which more than offset inflation. Gross margin was negatively impacted by the dilutive impact of acquisitions and unfavorable product mix.

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Selling, General and Administrative Expenses. SG&A expenses increased $52.8 million, or 14.9%, in the first six months of 2026 compared to the first six months of 2025. The increase in SG&A expenses was attributable to the following:

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Selling, General and Administrative Expenses. SG&A expenses increased $77.7 million, or 14.4%, in the first nine months of 2026 compared to the first nine months of 2025. The increase in SG&A expenses was attributable to the following:

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The increase in organic SG&A expenses was primarily due to an increase in strategic investments of $9.0 million, general inflation of $8.3 million, a net increase in short-term and long-term compensation accruals of $6.8 million, $3.0 million in higher travel and marketing spend and increased variable costs of $1.6 million due to higher net sales, partially offset by $6.7 million from productivity initiatives and restructuring savings compared to the first six months of 2025. The increase in foreign exchange was mainly due to the depreciation of the U.S. dollar against the euro, Australian dollar and Chinese yuan. The acquired SG&A costs related to acquisitions completed in 2025. Total SG&A expenses, as a percentage of net sales, were 28.3% in the first six months of 2026 compared to 29.5% in the first six months of 2025.

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The increase in organic SG&A expenses was primarily due to an increase in strategic investments of $13.9 million, general inflation of $12.6 million, a net increase in short-term and long-term compensation accruals of $7.3 million, $4.2 million in higher travel and marketing spend, higher professional fees of $4.1 million and increased variable costs of $4.0 million due to higher net sales and logistic costs, partially offset by $9.4 million from productivity initiatives and restructuring savings compared to the first nine months 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 nine months of 2026 compared to 29.8% in the first nine months of 2025.

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Restructuring. In the first six months of 2026, a net restructuring charge of $5.8 million was recorded, which primarily related to severance costs for immaterial cost saving actions in the Americas and Europe segments. For a more detailed description of our restructuring plans, see Note 6 of the Notes to the Consolidated Financial Statements.

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Restructuring. In the first nine months of 2026, a net restructuring charge of $6.1 million was recorded, which primarily related to severance costs for immaterial cost saving actions in the Americas and Europe segments. For a more detailed description of our restructuring plans, see Note 6 of the Notes to the Consolidated Financial Statements.

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

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

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Operating income increased $64.0 million, or 28.7%, for the first six months of 2026 compared to the first six months of 2025. Operating income was favorably impacted by a decrease in segment special items of $13.3 million, primarily relating to a decrease in restructuring charges, partially offset by an increase in acquisition-related costs in the first six months of 2026 compared to the first six months of 2025. The increase in organic operating income of $44.8 million, or 16.4%, was primarily due to higher price realization, incremental volume, primarily in the Americas from data center growth, and productivity savings, partially offset by inflation and tariffs.

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Operating income increased $143.4 million, or 42.9%, for the first nine months of 2026 compared to the first nine months of 2025. Operating income was favorably impacted by segment special items of $30.1 million, which included $39.3 million of tariff refunds received, partially offset by $6.1 million in restructuring costs and $3.1 million in acquisition related cost in the first nine months of 2026 compared to $22.6 million in restructuring costs and $1.5 million in acquisition related cost in the first nine months of 2025. The increase in organic operating income of $79.4 million, or 19.7%, was primarily due to higher price realization, incremental volume and productivity savings, partially offset by inflation.

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Interest Income. Interest income in the first six months of 2026 decreased $1.2 million compared to the first six months of 2025, primarily due to lower interest rates and lower cash and cash equivalent balances.

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Interest Income. Interest income in the first nine months of 2026 decreased $0.3 million compared to the first nine months of 2025, primarily due to lower interest rates partially offset by interest income related to the tariff refunds received.

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Interest Expense. Interest expense in the first six months of 2026 decreased $0.6 million compared to the first six months of 2025, primarily due to a lower principal balance of debt outstanding during the first six months of 2026. Refer to Note 11 of the Notes to Consolidated Financial Statements for further details.

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Interest Expense. Interest expense in the first nine months of 2026 decreased $1.3 million compared to the first nine months of 2025, primarily due to a lower principal balance of debt outstanding during the first nine months of 2026. Refer to Note 11 of the Notes to Consolidated Financial Statements for further details.

Previous wording

Income Taxes. Our effective income tax rate increased to 23.6% in the first six months of 2026, from 21.1% in the first six months 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. The tax liability reversal resulted in a decrease in our foreign tax credit carryforwards and the release of an associated valuation allowance.

Current wording

Income Taxes. Our effective income tax rate increased to 23.8% in the first nine months of 2026, from 22.7% in the first nine months 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. The tax liability reversal resulted in a decrease in our foreign tax credit carryforwards and the release of an associated valuation allowance.

Previous wording

Net Income. Net income was $217.9 million, or $6.50 per share of common stock on a diluted basis, for the first six months of 2026, compared to $174.9 million, or $5.22 per share of common stock on a diluted basis, for the first six months of 2025. Results for the first six months of 2026 included after-tax charges of$4.3 million, or $0.13 per share of common stock, for restructuring and $2.4 million, or $0.07 per share of common stock, for acquisition-related costs. Results for the first six months of 2025 included after-tax charges of $15.5 million, or $0.46 per share of common stock, for restructuring and $1.0 million, or $0.03 per share of common stock, for acquisition-related costs, partially 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 year liability, as noted above in “Income Taxes”.

Current wording

Net Income. Net income was $363.3 million, or $10.84 per share of common stock on a diluted basis, for the first nine months of 2026, compared to $257.1 million, or $7.67 per share of common stock on a diluted basis, for the first nine months of 2025. Results for the first nine months of 2026 included an after-tax benefit of $31.6 million, or $0.94 per share of common stock, for tariff refunds partially offset by after-tax charges of$4.6 million, or $0.13 per share of common stock, for restructuring and $2.4 million, or $0.07 per share of common stock, for acquisition-related costs. Results for the first nine months of 2025 included after-tax charges of $17.0 million, or $0.51 per share of common stock, for restructuring and $1.0 million, or $0.03 per share of common stock, for acquisition-related costs, partially 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 year liability, as noted above in “Income Taxes”.

Previous wording

We generated $120.8 million of net cash provided by operating activities in the first six months of 2026 compared to $124.9 million in the first six months of 2025. The decrease in net cash provided by operating activities was primarily related to elevated working capital levels which more than offset higher net income. Working capital increases were due to higher accounts receivable attributable to higher net sales, higher inventory due to incremental tariffs and strategic inventory investments to support expected end-market demand.

Current wording

We generated $278.9 million of net cash provided by operating activities in the first nine months of 2026 compared to $247.3 million in the first nine months of 2025. The increase in net cash provided by operating activities was primarily related to higher net income, including the favorable impact from tariff refunds received, which was partly offset by elevated working capital levels and the benefit in the prior year of lower income tax payments from the OBBBA. Working capital increases were due to higher accounts receivable attributable to higher net sales and higher inventory due to inflation and strategic inventory investments to support data center demand.