WATTS WATER TECHNOLOGIES INC
For the period ended Mar 30, 2025. Filed May 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 30, 2025 · Filed May 8, 2025
WTS$346.14-0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-29; filed 2024-10-31.
0001558370-24-014022
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-30; filed 2025-05-08.
0001558370-25-006887
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 89 previous paragraphs and 66 current paragraphs.
25 unchanged; 31 reworded; 10 added; 25 removed; 8 previous and 0 current paragraphs rearranged.
Tables are not compared: 17 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Enacted tariffs 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 this fluid environment. We have a proven track record of successfully navigating inflation and supply chain challenges, and remain focused on continuing to deliver our products and provide value to our customers. 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 could have a material adverse effect on our business, financial condition or results of operations. We also continue to experience inflation across our labor and overhead costs. Despite these anticipated 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 report
The trade policy environment has created uncertainty which has resulted in lowered 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 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 report
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, and gain on sale of assets. 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 report
Acquisitions
Current report
On January 2, 2025, we completed the acquisition of I-CON Systems Holdings LLC (“I-CON”) in a membership unit purchase transaction funded with cash on hand. The aggregate net purchase price was approximately $70.3 million, net of cash acquired of $2.8 million, and is subject to a final post-closing working capital adjustment. I-CON is headquartered in Oviedo, Florida, and is a leading designer and manufacturer of intelligent plumbing controls, addressing the unique challenges of water management in correctional facilities.
Current report
Americas net sales decreased $0.7 million, or 0.2%, for the first quarter of 2025 compared to the first quarter of 2024. The change in net sales was positively impacted by $5.0 million, or 1.2%, of acquired sales related to the I-CON acquisition completed in the first quarter of 2025. The change in net sales was negatively impacted by $1.2 million, or 0.3%, of foreign currency translation. Organic net sales decreased $4.5 million, or 1.1%, primarily due to fewer shipping days leading to reduced volumes partially offset by higher volumes of our heating and hot water solution products within the specialty channel and favorable price realization.
Current report
Europe net sales decreased $14.9 million, or 12.1%, for the first quarter of 2025 compared to the first quarter of 2024. The change in net sales was negatively impacted by $3.6 million, or 2.9%, of foreign currency translation. Organic net sales decreased $11.3 million, or 9.2%, primarily due to fewer shipping days leading to reduced volumes and destocking in the wholesale and OEM channels which were impacted by heat pump destocking and market weakness, partially offset by favorable price realization.
Current report
Gross profit and gross margin increased primarily from higher price realization, productivity and lower amortization of fair value inventory adjustments from acquisitions, partially offset by inflation and lower volume.
Current report
Operating income decreased $9.0 million, or 9.3%, for the first quarter of 2025 compared to the first quarter of 2024. Operating income was unfavorably impacted by $17.4 million of restructuring charges related to the 2025 French restructuring program, partially offset by lower acquisition related costs, in the first quarter of 2025 compared to the first quarter of 2024. The increase in organic operating income of $1.8 million, or 1.5%, was primarily due to higher price realization, productivity and lower organic SG&A expenses, partially offset by inflation and lower volume.
Current report
Income Taxes. Our effective income tax rate decreased to 14.8% in the first quarter of 2025, from 23.7% in the first quarter of 2024. The decrease is due to a reversal of a tax liability 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.
Removed paragraphs (25)
Previous report
Global gross domestic product (“GDP”) remains positive and is generally a leading indicator for our repair and replacement business. New construction indicators are mixed, but are showing signs of weakening, particularly in multi-family housing, office, retail and recreation verticals. Light industrial, including data centers, is growing and institutional verticals remain steady. The European economy continued to show signs of weakening and geo-political risks have heightened. Elevated interest rates may impact new construction. We also continue to experience inflation across our labor and overhead costs. Despite these anticipated 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.
Previous report
On October 1, 2024, we publicly disclosed our intention for local management to begin consultations with the appropriate works council in regard to a project to close the foundry at our manufacturing facility in Hautvillers-Ouville, France and to relocate the facility’s other production activities primarily to our other facilities in France and other locations in Europe. We expect that the works council consultation process will last approximately three months, after which the local management team will present its proposal to our Board of Directors, who will make a determination whether to approve the restructuring plan. If our Board of Directors approves the restructuring plan, the charges expected to be incurred in connection with such plan are anticipated to be material.
Previous report
On October 27, 2024, Shashank Patel, our Chief Financial Officer, provided notice of his intention to retire from the Company effective as of March 15, 2025. We have initiated a search for our next Chief Financial Officer, which will include both internal and external candidates. Mr. Patel will continue in his role as Chief Financial Officer until a successor is named and will assist with the transition of his responsibilities to his successor.
Previous report
Americas net sales increased $49.0 million, or 14.0%, for the third quarter of 2024 compared to the third quarter of 2023. The change in net sales was positively impacted by $58.8 million, or 16.8%, of acquired sales related to the Bradley and Josam acquisitions completed in the fourth quarter of 2023 and first quarter of 2024, respectively. Organic net sales decreased $9.4 million, or 2.7%, primarily in the wholesale channel from decreased sales across our core valve products partially related to safety stock reductions.
Previous report
Europe net sales decreased $12.9 million, or 10.7%, for the third quarter of 2024 compared to the third quarter of 2023. The change in net sales was positively impacted by $0.9 million, or 0.8%, of foreign currency translation. Organic net sales decreased $13.8 million, or 11.5%, primarily due to lower volumes partially offset by favorable price realization. The decrease was primarily due to volume declines in the OEM channel which was impacted by reduced government energy incentives and the related heat pump destocking, as well as volume declines in wholesale plumbing product sales into France and Benelux, partially offset by an increase in sales of our drains products.
Previous report
Gross profit and gross margin increased primarily from higher price realization and productivity, partially offset by inflation, lower volume, and the dilutive impact of acquisitions on gross margin. Gross profit includes the impact of the Bradley and Josam acquisitions completed in the fourth quarter of 2023 and first quarter of 2024, respectively.
Previous report
Operating income increased $6.1 million, or 7.0%, for the third quarter of 2024 compared to the third quarter of 2023. Operating income was positively impacted by $11.9 million, or 13.7%, from acquisitions as well as $0.1 million, or 0.1% of foreign currency translation. The decrease in organic operating income of $1.4 million, or 1.6%, was primarily due to inflation, incremental investments and lower volume, partially offset by higher price realization and productivity and lower organic SG&A expenses.
Previous report
Interest Expense. Interest expense in the third quarter of 2024 increased $2.4 million compared to the third quarter of 2023, primarily due to a higher principal balance of debt outstanding due to the acquisition of Bradley during the fourth quarter of 2023 and an increase in interest rates. Refer to Note 10 of the Notes to Consolidated Financial Statements for further details.
Previous report
Income Taxes. Our effective income tax rate decreased slightly to 25.1% in the third quarter of 2024, from 25.3% in the third quarter of 2023. The Organization for Economic Co-operation and Development (“OECD”) has a framework for a 15% global minimum tax, commonly referred to as “Pillar Two” and certain aspects became effective January 1, 2024. We have assessed the 2024 forecasted annual impact of Pillar Two and it is not expected to be material to our consolidated financial statements.
Previous report
Nine Months Ended September 29, 2024 Compared to Nine Months Ended September 24, 2023
Previous report
Net Sales. Our net sales in each of the three geographic segments for the first nine months of 2024 and 2023 were as follows:
Previous report
Americas net sales increased $225.8 million, or 21.7%, for the first nine months of 2024 compared to the first nine months of 2023. The change in net sales was positively impacted by $183.7 million, or 17.6%, of acquired sales related to the Bradley and Josam acquisitions completed in the fourth quarter of 2023 and first quarter of 2024, respectively. Organic net sales increased $42.9 million, or 4.1%, primarily due to increased volume, partially from the benefit of additional shipping days in the first nine months of 2024 compared to the first nine months of 2023, and favorable price realization. The additional shipping days increased net sales by low single-digits. The organic net sales growth was primarily in the wholesale channel from increased sales across our core valve products and in the specialty channel from increased sales of our heating and hot water products.
Previous report
Europe net sales decreased $39.4 million, or 10.3%, for the first nine months of 2024 compared to the first nine months of 2023. The change in net sales was positively impacted by $1.3 million, or 0.3%, of foreign currency translation. Organic net sales decreased $40.7 million, or 10.6%, primarily due to lower volumes despite the benefit of additional shipping days and favorable price realization. The additional shipping days increased net sales by low single-digits. The decrease was primarily due to volume declines in the OEM channel which was impacted by reduced government energy incentives in and the related heat pump destocking, as well as volume declines in wholesale plumbing product sales into France and Benelux, partially offset by an increase in sales of our drains products.
Previous report
APMEA net sales increased $16.6 million, or 19.9%, for the first nine months of 2024 compared to the first nine months of 2023. The change in net sales was negatively impacted by $1.1 million, or 1.3%, of foreign currency translation, which was more than offset by $8.1 million, or 9.7%, of acquired sales related to the Enware acquisition completed in the second quarter of 2023. Organic net sales increased $9.6 million, or 11.5%, primarily due to volume growth from the benefit of additional shipping days in the first nine months of 2024 compared to the first nine months of 2023. The additional shipping days increased net sales by low-single-digits. The organic growth was primarily due to growth in all major countries in the segment.
Previous report
Gross profit and gross margin increased primarily from higher price realization and productivity, partially offset by inflation, lower volume despite the additional shipping days, the dilutive impact of acquisitions on gross margin and the amortization of the fair value step-up adjustments for inventory purchased as part of the Bradley and Josam acquisitions. Gross profit includes the impact of the Bradley and Josam acquisitions completed in the fourth quarter of 2023 and first quarter of 2024, respectively.
Previous report
Selling, General and Administrative Expenses. SG&A expenses increased $70.2 million, or 16.3%, in the first nine months of 2024 compared to the first nine months of 2023. The increase in SG&A expenses was attributable to the following:
Previous report
The increase in organic SG&A expenses was primarily due to an increase in investments of $18.0 million, including in our smart and connected initiatives and other strategic initiatives, general inflation of $12.0 million and increased variable costs due to higher sales of $3.4 million. These increases were partially offset by $7.2 million from productivity initiatives, a net decrease in short-term and long-term compensation accruals of $5.9 million, $4.4 million gain on the sale of buildings, decreased acquisition-related expenses of $3.0 million, lower professional fees of $2.4 million and $1.5 million of restructuring savings compared to the first nine months of 2023. The decrease in foreign exchange was mainly due to the appreciation of the U.S. dollar against the Chinese yuan. The acquired SG&A costs related to the Bradley and Josam acquisitions in the Americas segment completed in the fourth quarter of 2023 and first quarter of 2024, respectively, as well as the Enware acquisition in the APMEA segment completed in the second quarter of 2023. The acquired SG&A costs include $4.1 million of acquisition-related costs and a $7.8 million gain on the settlement of Bradley’s frozen pension plan. Total SG&A expenses, as a percentage of sales, were 29.3% in the first nine months of 2024 compared to 28.6% in the first nine months of 2023.
Previous report
Restructuring. 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. In the first nine months of 2023, we recorded a net restructuring charge of $1.7 million, which primarily related to immaterial actions in all regions related to severance and other cost reductions.
Previous report
Operating Income. Operating income (loss) by segment for the first nine months of 2024 and 2023 was as follows:
Previous report
The increase (decrease) in operating income (loss) was attributable to the following:
Previous report
Operating income increased $29.2 million, or 10.7%, for the first nine months of 2024 compared to the first nine months of 2023. Operating income was positively impacted by $18.1 million, or 6.7%, from acquisitions and negatively impacted by $0.1 million, or 0.2%, of foreign currency translation. The increase in organic operating income of $15.9 million, or 5.9%, was primarily due to higher price realization and productivity, partially offset by inflation, incremental investments and lower volume.
Previous report
Interest Income. Interest income in the first nine months of 2024 increased $2.1 million compared to the first nine months of 2023, primarily due to higher interest rates earned on our cash and cash equivalents.
Previous report
Other Income, Net. Other income, net, in the first nine months of 2024 increased $1.0 million compared to the first nine months of 2023, primarily due to an immaterial investment gain partially offset by unfavorable foreign currency translation.
Previous report
Income Taxes. Our effective income tax rate increased to 24.7% in the first nine months of 2024, from 24.2% in the first nine months of 2023, primarily due to 2023 including a reduction of foreign tax liabilities associated with the repatriation of funds and a higher tax benefit from the vesting of stock compensation awards. These impacts were slightly offset by a change in the geographical mix of income in 2024 compared to 2023.
Previous report
Net Income. Net income was $223.6 million, or $6.67 per common share on a diluted basis, for the first nine months of 2024, compared to $206.4 million, or $6.15 per common share on a diluted basis, for the first nine months of 2023. Results for the first nine months of 2024 included after-tax charges of $9.9 million, or $0.30 per common share, for acquisition-related costs and $4.9 million, or $0.14 per common share, for restructuring, partially offset by an after-tax benefit of $5.8 million, or $0.17 per common share, for a gain on the settlement of the Bradley pension plan, $3.3 million, or $0.10 per common share, for gain on sale of assets and $0.9 million, or $0.03 per common share, for other investment gains. Results for the first nine months of 2023 include after-tax charges of $3.6 million, or $0.11 per common share, for acquisition-related costs and $1.2 million, or $0.04 per common share, for restructuring.
Reworded paragraphs (31)
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, expected investments in capital expenditure, improvements in operating and free cash flow throughout and our ability to manage challenging macro-economic and softer market conditions, 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, 2023, 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, expected investments in capital expenditure, improvements in operating and free cash flow 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.
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 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 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:
Previous wording
● Drainage & water re-use—includes drainage products and engineered rain water harvesting solutions for commercial, industrial, marine and residential applications, including connected roof drain systems.
Current wording
● Drainage & water re-use—includes drainage products and engineered rainwater harvesting solutions for commercial, industrial, marine and residential applications, including connected roof drain systems.
Previous wording
We believe that 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 14 acquisitions since 2014, and in the last year and a half, we have completed three 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 14 acquisitions since 2015, and in the last two years, we have completed three 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
We believe that sustainability guides every aspect of our business, including our product development strategy and design, and how we structure our operations. Our innovation strategy is focused on differentiated products and solutions that will provide greater opportunity to distinguish ourselves in the marketplace, while at the same time creating innovative products and smart solutions to protect, control, and conserve critical resources, and help our customers with their sustainability efforts through the use of our products. We continually look for strategic opportunities to invest in new products and markets or divest existing product lines where necessary in order to meet those objectives.
Current wording
Our innovation strategy is focused on differentiated products and solutions that will provide greater opportunity to distinguish ourselves in the marketplace, while at the same time creating innovative products and smart solutions to protect, control, and conserve critical resources, and help our customers with their sustainability efforts through the use of our products. We continually look for strategic opportunities to invest in new products and markets or divest existing product lines where necessary in order to meet those objectives.
Previous wording
Third quarter 2024 sales increased 7.8%, or $39.3 million, on a reported basis, and decreased 4.1%, or $20.4 million, on an organic basis, compared to the third quarter of 2023. The reported sales increase included acquired sales of 11.7%, or $58.8 million, all reported within the Americas segment, as well as net favorable impact of foreign exchange of 0.2%, or $0.9 million, compared to the third quarter of 2023. The 4.1% organic decline was driven by organic decline in the Americas of 2.7% and Europe of 11.5%, partially offset by 8.3% organic growth in APMEA compared to the third quarter of 2023 segment net sales. The organic decline was primarily driven by volume declines in the Americas and Europe, partially offset by favorable price realization and favorable volume in APMEA. Operating income of $93.2 million increased by $6.1 million, or 7.0%, in the third quarter of 2024 as compared to the third quarter of 2023. This increase, primarily driven by acquisitions of 13.7%, or $11.9 million, all reported within the Americas segment, as well as favorable price realization and productivity, more than offset inflation, incremental investments and restructuring charges and lower volume.
Current wording
First quarter 2025 sales decreased 2.3%, or $12.9 million, on a reported basis, and 2.1%, or $12.0 million, on an organic basis, compared to the first quarter of 2024. The reported sales decrease was positively impacted by acquired sales of 0.9%, or $5.0 million, all reported within the Americas segment, as well as net unfavorable impact of foreign exchange of 1.1%, or $5.9 million, compared to the first quarter of 2024. The 2.1% organic decline was driven by organic decline in the Americas of 1.1% and Europe of 9.2%, partially offset by 13.2% organic growth in APMEA. The organic decline was primarily driven by the unfavorable impact of approximately 3% from fewer shipping days compared to the first quarter of 2024, resulting in volume declines in the Americas and Europe, partially offset by favorable price realization and favorable volume in APMEA. The decline from fewer shipping days was estimated based on average sales per day. Operating income of $87.7 million decreased by $9.0 million, or 9.3%, in the first quarter of 2025 as compared to the first quarter of 2024. This decrease was primarily driven by volume declines from fewer shipping days, inflation and $17.4 million of restructuring charges in our Europe segment related to the 2025 French restructuring program, partially offset by favorable price realization and productivity.
Previous wording
In discussing our results of operations, we refer to non-GAAP financial measures, including organic sales, organic selling, general and administrative expenses, and organic operating income, that exclude the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons. Management believes reporting these non-GAAP financial measures provides useful information to investors, potential investors and others, because it allows for additional insight into underlying trends by providing growth on a consistent basis. We reconcile the change in these non-GAAP financial measures to our reported results below.
Current wording
In addition, we refer to non-GAAP organic changes in financial measures, including organic net sales, organic net sales growth, organic selling, general and administrative expenses, and organic segment earnings, that exclude the impacts of acquisitions, divestitures and foreign exchange. Management believes reporting these non-GAAP financial measures provides useful information to investors, potential investors and others, because it allows for additional insight into underlying trends by providing growth on a consistent basis. We reconcile the change in these non-GAAP financial measures to our reported results below.
Previous wording
On October 28, 2024, we declared a quarterly dividend of forty-three cents ($0.43) per share on each outstanding share of Class A common stock and Class B common stock payable on December 13, 2024 to stockholders of record on November 29, 2024.
Current wording
On May 5, 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 June 13, 2025 to stockholders of record on May 30, 2025.
Previous wording
Third Quarter ended September 29, 2024 Compared to Third Quarter Ended September 24, 2023
Current wording
First Quarter ended March 30, 2025 Compared to First Quarter Ended March 31, 2024
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 2024 and 2023 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 2025 and 2024 were as follows:
Previous wording
APMEA net sales increased $3.2 million, or 9.7%, for the third quarter of 2024 compared to the third quarter of 2023. The change in net sales was positively impacted by $0.4 million, or 1.4%, of foreign currency translation. Organic net sales increased $2.8 million, or 8.3%, primarily due to growth in China, New Zealand and the Middle East. China’s sales
Current wording
APMEA net sales increased $2.7 million, or 9.4%, for the first quarter of 2025 compared to the first quarter of 2024. The change in net sales was negatively impacted by $1.1 million, or 3.8%, of foreign currency translation. Organic net sales increased $3.8 million, or 13.2%, primarily due to growth in China, Australia and the Middle East, partially offset by fewer shipping days. China’s sales growth was primarily from increased commercial valves within data centers.
Previous wording
The net increase in sales due to foreign exchange was mostly due to the favorable impact of the depreciation of the U.S. dollar against the euro and Chinese yuan, partially offset by appreciation of the U.S. dollar against the Canadian dollar in the third quarter of 2024. 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 decrease in sales due to foreign exchange was mostly due to the unfavorable impact of the appreciation of the U.S. dollar against the euro, Chinese yuan and Canadian dollar in the first 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.
Previous wording
Gross Profit. Gross profit and gross profit as a percent of net sales (gross margin) for the third quarters of 2024 and 2023 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 2025 and 2024 were as follows:
Previous wording
Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses increased $12.1 million, or 8.2%, in the third quarter of 2024 compared to the third quarter of 2023. 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 decreased $2.1 million, or 1.2%, in the first quarter of 2025 compared to the first quarter of 2024. The decrease in SG&A expenses was attributable to the following:
Previous wording
The decrease in organic SG&A expenses was primarily due to $3.4 million from productivity initiatives, a net decrease in short-term and long-term compensation accruals of $1.5 million, decreased product liability and insurance costs of $1.1 million and decreased Corporate expenses of $4.0 million including lower acquisition-related costs, mostly offset by an increase in investments of $6.0 million, including in our smart and connected initiatives and other strategic initiatives and general inflation of $3.9 million compared to the third quarter of 2023. 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 the Bradley and Josam acquisitions in the Americas segment completed in the fourth quarter of 2023 and first quarter of 2024, respectively. The acquired SG&A costs include $0.9 million of acquisition-related costs and a $7.8 million gain on the settlement of Bradley’s frozen pension plan. Total SG&A expenses, as a percentage of net sales, were 29.2% in the third quarter of 2024 compared to 29.1% in the third quarter of 2023.
Current wording
The decrease in organic SG&A expenses was primarily due to $1.9 million from productivity initiatives, $1.8 million of restructuring savings, a net decrease in short-term and long-term compensation accruals of $1.3 million and a $1.0 million reduction in travel and marketing spend, partially offset by general inflation of $3.5 million compared to the first quarter of 2024. The decrease in foreign exchange was mainly due to the appreciation of the U.S. dollar against the euro. The acquired SG&A costs related to the I-CON acquisition in the Americas segment completed in the first quarter of 2025. The decrease in special items SG&A costs was primarily due to lower acquisition related costs in the first quarter of 2025. Total SG&A expenses, as a percentage of net sales, were 30.0% in the first quarter of 2025 compared to 29.7% in the first quarter of 2024.
Previous wording
Restructuring. In the third quarter of 2024, we recorded a net restructuring charge of $4.9 million, which primarily related to immaterial actions in all regions including severance and other cost reductions. In the third quarter of 2023, we recorded a net restructuring charge of $0.4 million, which primarily related to an immaterial program approved in the Americas involving a planned facility exit and the related severance and other costs incurred.
Current wording
Restructuring. 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 a 2025 French restructuring program that was approved in the first quarter of 2025. In the first quarter of 2024, we recorded a net restructuring charge of $1.2 million, which primarily related to immaterial severance and other exit costs in the Americas and APMEA segments. For more detailed description of our restructuring plans, see Note 6 of the Notes to the Consolidated Financial Statements.
Previous wording
Operating Income. Operating income (loss) by segment for the third quarters of 2024 and 2023 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 2025 and 2024 was as follows:
Previous wording
The increase (decrease) in operating income (loss) was attributable to the following:
Current wording
The increase (decrease) in total segment earnings was attributable to the following:
Previous wording
Interest Income. Interest income in the third quarter of 2024 decreased $0.2 million compared to the third quarter of 2023, primarily due to lower cash and cash equivalents balances.
Current wording
Interest Income. Interest income in the first quarter of 2025 increased $0.2 million compared to the first quarter of 2024, primarily due to higher cash and cash equivalents balances.
Previous wording
Interest Expense. Interest expense in the first nine months of 2024 increased $7.5 million compared to the first nine months of 2023, primarily due to a higher principal balance of debt outstanding due to the acquisition of Bradley during the fourth quarter of 2023 and an increase in interest rates. Refer to Note 10 of the Notes to Consolidated Financial Statements for further details.
Current wording
Interest Expense. Interest expense in the first quarter of 2025 decreased $1.5 million compared to the first 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.
Previous wording
Other (Income) Expense, Net. Other (income) expense, net, was 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, compared to an expense balance of $0.1 million in the third quarter of 2023.
Current wording
Other Expense (Income), Net. Other expense (income), net, was an expense balance of $0.4 million in the first quarter of 2025, primarily due to unfavorable foreign currency translation, compared to an income balance of $0.6 million in the first quarter of 2024, primarily dure to favorable foreign currency translation.
Previous wording
Net Income. Net income was $69.1 million, or $2.06 per common share on a diluted basis, for the third quarter of 2024, compared to $65.8 million, or $1.96 per common share on a diluted basis, for the third quarter of 2023. Results for the third quarter of 2024 included an after-tax benefit of $5.8 million, or $0.17 per common share, for a gain on the settlement of the Bradley pension plan and $0.9 million, or $0.03 per common share, 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 common share, for acquisition-related costs. Results for the third quarter of 2023 included after-tax charges of $2.3 million, or $0.07 per common share, for acquisition-related costs and $0.3 million, or $0.01 per common share, for restructuring.
Current wording
Net Income. Net income was $74.0 million, or $2.21 per share of common stock on a diluted basis, for the first quarter of 2025, compared to $72.6 million, or $2.17 per share of common stock on a diluted basis, for the first quarter of 2024. 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 year liability, as noted above in ‘Income Taxes’. Results for the first quarter of 2024 included after-tax charges of $5.2 million, or $0.15 per share of common stock, for acquisition-related costs, $0.9 million, or $0.03 per share of common stock, for restructuring; partially offset by an after-tax benefit of $0.8 million, or $0.02 per share of common stock, for a gain on sale of asset.
Previous wording
We generated $221.6 million of net cash provided by operating activities in the first nine months of 2024 compared to $200.9 million of net cash provided by operating activities in the first nine months of 2023. The increase in net cash provided by operating activities was primarily related to higher net income including contributions from our acquisitions.
Current wording
We generated $55.2 million of net cash provided by operating activities in the first quarter of 2025 compared to $45.6 million of net cash provided by operating activities in the first quarter of 2024. The increase in net cash provided by operating activities was primarily related to lower income tax payments.
Previous wording
We used $112.7 million of net cash for investing activities in the first nine months of 2024 compared to $31.1 million used in the first nine months of 2023. We used $96.3 million in cash for business acquisitions in our Americas segment in the first nine months of 2024 compared to $12.1 million for the immaterial acquisition in our APMEA segment in the first nine months of 2023, and $1.6 million less cash for net capital expenditures in the first nine months of 2024 compared to the first nine months of 2023. For the remainder of 2024, we expect to invest approximately $12 million in capital expenditures as part of our ongoing commitment to improve our operating capabilities.
Current wording
We used $79.9 million of net cash for investing activities in the first quarter of 2025 compared to $109.8 million used in the first quarter of 2024. We used $70.3 million in cash for a business acquisition in our Americas segment in the first quarter of 2025 compared to $100.8 million in cash for business acquisitions in our Americas segment in the first quarter of 2024, which was partially offset by an increase of $0.6 million cash used for net capital expenditures in the first quarter of 2025 compared to the first quarter of 2024. For the remainder of 2025, we expect to invest approximately $35 million to $40 million in capital expenditures as part of our ongoing commitment to improve our operating capabilities.
Previous wording
We used $156.2 million of net cash for financing activities during the first nine months of 2024 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. In the first nine months of 2023, we used $113.8 million of net cash for financing activities primarily due to long-term debt repayments on our line of credit totaling $80.0 million (offset by proceeds from drawdowns of $30.0 million), tax withholding payments on vested stock awards of $15.8 million, dividend payments of $34.4 million and payments of $11.7 million to repurchase approximately 69,000 shares of Class A common stock.
Current wording
We used $29.9 million of net cash for financing activities during the first quarter of 2025 primarily due to dividend payments of $14.4 million, tax withholding payments on vested stock awards of $10.9 million and payments of $3.9 million to repurchase approximately 19,000 shares of Class A common stock. In the first quarter of 2024, we used $44.6 million of net cash for financing activities, which primarily consisted of long-term debt repayments of $15.0 million, dividend payments of $12.1 million, tax withholding payments on vested stock awards of $12.8 million and payments of $4.0 million to repurchase approximately 20,000 shares of Class A common stock.
Previous wording
On July 12, 2024, we entered into the Third Amended and Restated Credit Agreement by and among the Company, certain subsidiaries of the Company, the lenders and other parties from time to time parties thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”). The Credit Agreement amends and restates the prior Second Amended and Restated Credit Agreement, dated as of March 30, 2021 (as amended by that certain Amendment No. 1 date August 2, 2022 and Amendment No. 2 dated December 12, 2023, the “Prior Credit Agreement”), that establishes our senior unsecured revolving credit facility of $800 million (the “Revolving Credit Facility”). The Credit Agreement also contains an expansion option of $400.0 million. Pursuant to the Credit Agreement, the maturity date of the Revolving Credit Facility is July 12, 2029, subject to extension under certain circumstances and subject to the terms of the Credit Agreement. The Credit Agreement provides for a maximum consolidated leverage ratio of 3.50 to 1.00 (or 4.00 to 1.00 during temporary step-ups following certain acquisitions) and the minimum consolidated interest ratio of 3.50 to 1.00.
Current wording
On July 12, 2024, we entered into the Third Amended and Restated Credit Agreement by and among the Company, certain subsidiaries of the Company, the lenders and other parties from time to time parties thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”). The Credit Agreement amends and restates the prior Second Amended and Restated Credit Agreement, dated as of March 30, 2021 (as amended by that certain Amendment No. 1 date August 2, 2022 and Amendment No. 2 dated December 12, 2023), that establishes our senior unsecured revolving credit facility of $800 million (the “Revolving Credit Facility”). The Credit Agreement also contains an expansion option of $400.0 million. Pursuant to the Credit Agreement, the maturity date of the Revolving Credit Facility is July 12, 2029, subject to extension under certain circumstances and subject to the terms of the Credit Agreement. The Credit Agreement provides for a maximum consolidated leverage ratio of 3.50 to 1.00 (or 4.00 to 1.00 during temporary step-ups following certain permitted acquisitions) and the minimum consolidated interest ratio of 3.50 to 1.00.
Previous wording
The Revolving Credit Facility also includes sublimits of $100 million for letters of credit and $15 million for swing line loans. As of September 29, 2024, we had drawn down $215.0 million on this line of credit and had $12.9 million in letters of credit outstanding, which resulted in $572.1 million of unused and available credit under the Revolving Credit Facility as of such date. Borrowings outstanding under the Revolving Credit Facility 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 29, 2024 was 6.26%. The weighted average interest rate on debt outstanding inclusive of the interest rate swap discussed in Note 11 of the Notes to Consolidated Financial Statements and interest rates under the Revolving Credit Facility as of September 29, 2024 was 4.22%. 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. As of September 29, 2024, we were in compliance with all covenants related to 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 30, 2025, we had drawn down $200.0 million on this line of credit and had $13.2 million in letters of credit outstanding, which resulted in $586.8 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 30, 2025 was 5.50%. 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 30, 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.
Previous wording
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 30, 2025, we held $336.8 million in cash and cash equivalents. Of this amount, $173.1 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
Organic net sales and organic net sales growth, organic SG&A expenses, and organic operating income, are non-GAAP measures that exclude the impacts of acquisitions, divestitures and foreign exchange from period-over-period comparisons. A reconciliation to the most closely related U.S. GAAP measure, net sales, SG&A and operating income, 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 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.
Previous wording
Free cash flow improved in the first nine months of 2024 when compared to the first nine months of 2023 primarily driven by higher net income including contributions from our acquisitions.
Current wording
Free cash flow improved in the first quarter of 2025 when compared to the first quarter of 2024, primarily driven by lower income tax payments.
Previous wording
Our net debt to capitalization ratio, a non-GAAP financial measure used by management, at September 29, 2024 was (5.8%) compared to (3.5%) at December 31, 2023. The change was driven by a decrease in net debt balance primarily due to decreased long-term debt and an increase in stockholders’ equity at September 29, 2024 compared to December 31, 2023 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
Current wording
Our net debt to capitalization ratio, a non-GAAP financial measure used by management, at March 30, 2025 was (8.6%) compared to (12.5%) at December 31, 2024. The increase was driven by a change in net debt balance, primarily due to decreased cash and cash equivalents, and an increase in stockholders’ equity at March 30, 2025 compared to December 31, 2024 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.
Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
growth was primarily from increased commercial valves within data centers.
Previous report — wording carried elsewhere
The change in net sales was attributable to the following:
Previous report — wording carried elsewhere
The change in organic net sales by channel was attributable to the following:
Previous report — wording carried elsewhere
Segment change as a % of segment net sales by channel and Total change as a % of consolidated net sales by channel.
Previous report — wording carried elsewhere
The net decrease in sales due to foreign exchange was mostly due to the unfavorable impact of the appreciation of the U.S. dollar against the Chinese yuan and Canadian dollar, partially offset by the favorable impact of the depreciation of the U.S. dollar against the euro in the first nine months of 2024.
Previous report — wording carried elsewhere
Gross Profit. Gross profit and gross profit as a percent of net sales (gross margin) for the first nine months of 2024 and 2023 were as follows:
Previous report — wording carried elsewhere
As of September 29, 2024, we held $303.9 million in cash and cash equivalents. Of this amount, $164.0 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. 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.
Previous report — wording carried elsewhere
to evaluate our financial structure. Our computation may not be comparable to other companies that may define their net debt to capitalization ratios differently.