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What changed in WATTS WATER TECHNOLOGIES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of WATTS WATER TECHNOLOGIES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+317 added−294 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-21)

Top changes in WATTS WATER TECHNOLOGIES INC's 2024 10-K

317 paragraphs added · 294 removed · 246 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

78 edited+21 added−20 removed83 unchanged
Biggest changeThe occurrence of natural disasters, public health crises such as pandemics or epidemics, political crises such as war, terrorism or political instability, or other events that result in widespread business or supply chain disruptions in China could have a material adverse effect on our ability to obtain necessary components and raw materials, and our business and operating results could suffer. ​ Refer to Item. 1A “Risk Factors” for risks related to the impact of supply chain and logistic disruptions and Item. 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional disclosure. ​ Code Compliance ​ Products representing a majority of our sales are subject to regulatory standards and code enforcement, which typically require that these products meet stringent performance criteria.
Biggest changeThe occurrence of natural disasters, public health crises such as pandemics or epidemics, political crises such as war, terrorism or political instability, or other events that result in widespread business or supply chain disruptions in China or the imposition of tariffs that make it more costly or cost prohibitive to source raw materials from China could have a material adverse effect on our ability to obtain necessary components and raw materials, and our business and operating results could suffer.
We partner with external vendors to offer a variety of leadership and professional development opportunities such as coaching for improved performance, time management and new manager skills. ● Performance Management Training. We offer a targeted training series addressing the components of performance management to help all employees to accomplish their individual goals and strategic objectives of the organization.
We partner with external vendors to offer leadership and professional development opportunities such as coaching for improved performance, time management and new manager skills. ● Performance Management Training. We offer a targeted training series addressing the components of performance management to help all employees accomplish their individual goals and strategic objectives of the organization.
For example, the Quarterly Connect Meetings and the quarterly CEO videos that follow the release of our quarterly earnings are accessible to thousands of employees across the Company. ● Employee Engagement Surveys. We annually conduct confidential company-wide employee engagement surveys. Feedback from these surveys provides our management team with valuable information about our workplace culture.
For example, the Quarterly Connect Meetings and the quarterly CEO videos that follow the release of our quarterly earnings are accessible to thousands of employees across the Company. ● Employee Engagement Surveys. We conduct confidential company-wide employee engagement surveys. Feedback from these surveys provides our management team with valuable information about our workplace culture.
To that end, we have developed, and continue to enhance and refine, a robust and comprehensive talent management strategy that spans from talent attraction to performance management, career development and retention of our top talent to succession planning across our organization.
To that end, we have developed, and continue to enhance and refine, a robust and comprehensive talent management strategy which spans from talent attraction to performance management, career development and retention of our top talent, to succession planning across our organization.
Our smart and connected strategy is anchored by a commitment to connect our customers to smart systems, control those systems for optimal performance, and conserve critical water and other resources by increasing operability, efficiency, and safety.
Our strategy is anchored by a commitment to connect our customers to smart systems, control those systems for optimal performance, and conserve critical water and other resources by increasing operability, efficiency, and safety.
Approximately 19%, 21% and 19% of our net sales in 2023, 2022 and 2021, respectively, were through our specialty channel. The specialty channel primarily includes sales related to high-efficiency boilers and water heaters, water filtration and conditioning products and solutions, specialty floor and tile products, food service products and leak detection products. ​ DIY Chains.
Approximately 19%, 19% and 21% of our net sales in 2024, 2023 and 2022, respectively, were through our specialty channel. The specialty channel primarily includes sales related to high-efficiency boilers and water heaters, water filtration and conditioning products and solutions, specialty floor and tile products, food service products and leak detection products. ​ DIY Chains.
The material on our website, including in our Sustainability Report is for informational purposes only and is not included as part of, or incorporated by reference into, this Annual Report on Form 10-K. ​ 11 Table of Contents Product Liability, Environmental and Other Litigation Matters ​ We are subject to a variety of potential liabilities connected with our business operations, including potential liabilities and expenses associated with possible product defects or failures and compliance with environmental laws.
The material on our website, including in our Sustainability Report is for informational purposes only and is not included as part of, or incorporated by reference into, this Annual Report on Form 10-K. ​ Product Liability, Environmental and Other Litigation Matters ​ We are subject to a variety of potential liabilities connected with our business operations, including potential liabilities and expenses associated with possible product defects or failures and compliance with environmental laws.
Risk Factors” and Note 16 of the Notes to the Consolidated Financial Statements, both of which are incorporated herein by reference. ​ Environmental Remediation ​ We have been named as a potentially responsible party with respect to a limited number of identified contaminated sites.
“Risk Factors” and Note 16 of the Notes to the Consolidated Financial Statements, both of which are incorporated herein by reference. ​ Environmental Remediation ​ We have been named as a potentially responsible party with respect to a limited number of identified contaminated sites.
Risk Factors” and Note 16 of the Notes to the Consolidated Financial Statements, both of which are incorporated herein by reference. ​ Asbestos Litigation ​ We are defending lawsuits in different jurisdictions, alleging injury or death as a result of exposure to asbestos.
“Risk Factors” and Note 16 of the Notes to the Consolidated Financial Statements, both of which are incorporated herein by reference. ​ Asbestos Litigation ​ We are defending lawsuits in different jurisdictions, alleging injury or death as a result of exposure to asbestos.
During 2023, we supported those in need through donations of money and products to several non-profit charitable organizations and through the volunteer efforts of our employees. One example was our ongoing partnership with the Planet Water Foundation.
During 2024, we supported those in need through donations of money and products to several non-profit charitable organizations and through the volunteer efforts of our employees. One example was our ongoing partnership with the Planet Water Foundation.
We maintain product liability and other insurance coverage, which we believe to be generally in accordance with industry practices. Nonetheless, such insurance coverage may not be adequate to protect us fully against substantial damage claims. See “Item 1A.
We maintain product liability and other insurance coverage, which we believe to be generally in accordance with industry practices. Nonetheless, such insurance coverage may not be adequate to protect us fully against substantial damage claims. See Item 1A.
Lepage has served as General Counsel and Secretary of the Company since August 2008 and as Chief Sustainability Officer since May 2021. Mr. Lepage also previously served as Chief Human Resources Officer of the Company from April 2020 to October 2021 and from December 2009 to October 2015. Mr.
Lepage has served as General Counsel and Secretary of the Company since August 2008, as Chief Sustainability Officer since May 2021 and as Chief Compliance Officer since October 2024. Mr. Lepage also previously served as Chief Human Resources Officer of the Company from April 2020 to October 2021 and from December 2009 to October 2015. Mr.
Concern around water conservation has led to increased interest in products that are designed to reduce water consumption, such as our ACV Assure monitoring system, Intelliflow water shut off device, ZeroWaste reverse osmosis filters, OneFlow anti-scale system, Hygienic Pro drains and our Trident™ and Leak Defense leak detection and water shutoff systems.
Concern around water conservation has led to increased interest in products that are designed to reduce water consumption, such as our Nexa intelligent water management system, ACV Assure monitoring system, Intelliflow water shut off device, ZeroWaste reverse osmosis filters, OneFlow anti-scale system, Hygienic Pro drains, and our Trident™ and Leak Defense leak detection and water shutoff systems.
We have completed 14 acquisitions since 2013. Our acquisition strategy focuses on businesses that manufacture preferred brand name products that address our themes of safety and regulation, energy efficiency and water conservation.
We have completed 14 acquisitions since 2015. Our acquisition strategy focuses on businesses that manufacture preferred brand name products that address our themes of safety and regulation, energy efficiency and water conservation.
Melhem spent eleven years with ITT Industries in China where he held several management positions, including serving as President of ITT’s Residential and Commercial Water Group in China and President of ITT’s Water Technology Group in Asia. ​ Rebecca J. Boll has served as a director of the Company since February 2024. Ms.
Melhem spent eleven years with ITT Industries in China where he held several management positions, including serving as President of ITT’s Residential and Commercial Water Group in China and President of ITT’s Water Technology Group in Asia. ​ 14 Table of Contents Rebecca J. Boll has served as a director of the Company since February 2024. Ms.
We have consistently advocated for the development and enforcement of plumbing codes and are committed to providing products to meet these standards. ​ Products and Solutions ​ We have a broad range of products and solutions in terms of design distinction, size and configuration. We classify our many products and solutions into four global categories.
We have consistently advocated for the development and enforcement of plumbing codes and are committed to providing products to meet these standards. ​ 4 Table of Contents Products and Solutions ​ We have a broad range of products and solutions in terms of design distinction, size and configuration. We classify our many products and solutions into four global categories.
Thousands of other customers constituted the balance of our net sales in each of those years. ​ 5 Table of Contents Marketing and Sales ​ For product sales in the Americas, we rely primarily on commissioned manufacturers’ representatives to market our product lines, some of which maintain a consigned inventory of our products.
Thousands of other customers constituted the balance of our net sales in each of those years. ​ Marketing and Sales ​ For product sales in the Americas, we rely primarily on commissioned manufacturers’ representatives to market our product lines, some of which maintain a consigned inventory of our products.
We believe our relationships with our key suppliers are good and that an interruption in supply from any one supplier would not materially affect our ability to meet our immediate demands while another supplier is qualified. We regularly review our suppliers to evaluate their capabilities.
We believe our relationships with our key suppliers are strong and an interruption in supply from any one supplier would not materially affect our ability to meet our immediate demands while another supplier is qualified. We regularly review our suppliers to evaluate their capabilities.
Water quality products and solutions accounted for approximately 5%, 7% and 6% of our total net sales in 2023, 2022 and 2021, respectively. ​ Commercial and Operational Excellence ​ We strive to invest in product innovation that meets the wants and needs of our customers.
Water quality products and solutions accounted for approximately 5%, 5% and 7% of our total net sales in 2024, 2023 and 2022, respectively. ​ Commercial and Operational Excellence ​ We strive to invest in product innovation that meets the wants and needs of our customers.
The timing of any price reductions and decreases in commodity costs may not align. As a result, our margins could be affected. ​ 6 Table of Contents With limited exceptions, we have multiple suppliers for our components and raw materials.
The timing of any price reductions and decreases in commodity costs may not align. As a result, our margins could be affected. ​ With limited exceptions, we have multiple suppliers for our components and raw materials.
Further, there are local regulatory standards requiring compliance as well. ​ We consistently advocate for the development and enforcement of plumbing codes and standards. Our product-testing capabilities and quality control processes are core competencies for us. Our manufacturing operations consistently maintain stringent quality control and testing procedures, thus ensuring products remain in continuous compliance with all requirements.
Further, there are local regulatory standards requiring compliance as well. ​ 7 Table of Contents We consistently advocate for the development and enforcement of plumbing codes and standards. Our product-testing capabilities and quality control processes are core competencies. Our manufacturing operations consistently maintain stringent quality control and testing procedures, thus ensuring products remain in continuous compliance with all requirements.
The Water Council is a non-profit organization focused on water research, education and economic development to solve critical water challenges by driving innovation in freshwater technology and advancing water stewardship. ​ 13 Table of Contents Shashank Patel has served as Chief Financial Officer of the Company since July 2018. Mr.
The Water Council is a non-profit organization focused on water research, education and economic development to solve critical water challenges by driving innovation in freshwater technology and advancing water stewardship. ​ 13 Table of Contents Shashank Patel has served as Chief Financial Officer of the Company since July 2018 and our interim Chief Information Officer since January 2025. Mr.
We recognize changes in estimates as new remediation requirements are defined or as new information becomes available. See “Item 1A.
We recognize changes in estimates as new remediation requirements are defined or as new information becomes available. See Item 1A.
Drainage & water re-use products and solutions accounted for approximately 10% of our total net sales in 2023, 2022 and 2021. ​ ● Water quality—includes point-of-use and point-of-entry water filtration, monitoring, conditioning and scale prevention systems for commercial, marine and residential applications.
Drainage & water re-use products and solutions accounted for approximately 11%, 10% and 10% of our total net sales in 2024, 2023 and 2022, respectively. ​ ● Water quality—includes point-of-use and point-of-entry water filtration, monitoring, conditioning and scale prevention systems for commercial, marine and residential applications.
Operationally, we have reduced our global water consumption and greenhouse gas emissions, improved our safety performance, continued to foster a diverse, equitable and inclusive work environment, and maintained robust ethics and compliance programs so that we do business with integrity and in accordance with high ethical standards. ​ We intend to generate incremental growth by targeting select acquisitions both in our core markets and in new complementary markets.
Operationally, we have reduced our global water consumption and greenhouse gas emissions, improved our safety performance, continued to foster an engaging work environment, and maintained robust ethics and compliance programs so that we do business with integrity and in accordance with high ethical standards. ​ We intend to generate incremental growth by targeting select acquisitions both in our core markets and in new complementary markets.
In 2023, we initiated a project to conduct Life Cycle Assessments (LCAs) for all of our products produced in our largest production plant and foundry located in Franklin New Hampshire, representing many of our largest and most impactful product lines.
In 2024, we completed a project to conduct Life Cycle Assessments (LCAs) for all of our products produced in our largest production plant and foundry located in Franklin, New Hampshire, representing many of our largest and most impactful product lines.
We provide global, broad-based coaching opportunities through several external partnerships that are targeted to the individual’s coaching and development needs. ​ Engagement and Performance Management ​ ● Senior Leader Communication and Transparency. We actively seek opportunities for regular engagement and communication by our CEO and other senior executive leaders with our broader employee population.
We provide global coaching opportunities through external partnerships targeted to the individual’s coaching and development needs. ​ Engagement and Performance Management ​ ● Senior Leader Communication and Transparency. We actively seek opportunities for regular engagement and communication by our CEO and other senior executive leaders with our broader employee population.
Boll has served as Senior Vice President and Chief Product Officer at Fluence Energy, Inc. since 2020. Fluence is a leading provider of energy storage products and services and cloud-based software for the renewable energy and energy storage markets, and its service offerings include delivery services and recurring operational services, as well as financing structuring services. Ms.
Boll served as Senior Vice President and Chief Product Officer at Fluence Energy, Inc. from 2020 until January 2025. Fluence is a leading provider of energy storage products and services and cloud-based software for the renewable energy and energy storage markets, and its service offerings include delivery services and recurring operational services, as well as financing structuring services. Ms.
Dubose served as President of the Fisher Healthcare Division of Thermo Fisher Scientific Inc. from March 2019 until his retirement in August 2023. Thermo Fisher Scientific engages in the provision of analytical instruments, equipment, reagents and consumables, software and services for research, analysis, discovery, and diagnostics. Mr.
Dubose previously served as President of the Fisher Healthcare Division of Thermo Fisher Scientific Inc. from March 2019 to August 2023. Thermo Fisher Scientific engages in the provision of analytical instruments, equipment, reagents and consumables, software and services for research, analysis, discovery, and diagnostics. Mr.
We continue to invest in leak detection and have solutions that service both the residential market and commercial properties and multifamily units, together making water safer and cutting off water 7 Table of Contents loss.
We continue to invest in leak detection and have solutions that service both the residential market and commercial properties and multifamily units, together making water safer and cutting off water loss.
Approximately 4%, 4% and 5% of our net sales in 2023, 2022 and 2021, respectively, were to DIY chains. The DIY channel primarily includes sales related to valves and a portion of our water quality products. ​ In 2023, 2022 and 2021, no customer accounted for more than 10% of our total net sales.
Approximately 4% of our net sales in each of 2024, 2023 and 2022 were to DIY chains. The DIY channel primarily includes sales related to valves and a portion of our water quality products. ​ In 2024, 2023 and 2022, no customer accounted for more than 10% of our total net sales.
In the last 12 months, we completed three strategic and complementary acquisitions that expanded our addressable market and are intended to enable value creation through greater scale and growth opportunities. ​ We are committed to reducing our manufacturing and operating costs using Lean methodologies to drive improvement across all key processes.
In the last two years, we completed four strategic and complementary acquisitions that expanded our addressable market and are intended to enable value creation through greater scale and growth opportunities. ​ We are committed to reducing our manufacturing and operating costs using Lean methodologies to drive improvement across all key processes.
In 2023, we continued to invest in our systems, our manufacturing facilities and our commercial and operational excellence initiatives. ​ Capital expenditures and depreciation for each of the last three years were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 2022 2021 ​ ​ (in millions) Capital expenditures ​ $ 29.7 ​ $ 28.1 ​ $ 26.7 Depreciation ​ $ 30.1 ​ $ 27.6 ​ $ 31.4 ​ Purchased Raw Materials and Components ​ Our products are made using various purchased components and raw materials, including primarily bronze, brass, cast iron, stainless steel, steel, and plastic.
In 2024, we continued to invest in our systems, our manufacturing facilities and our commercial and operational excellence initiatives. ​ 6 Table of Contents Capital expenditures and depreciation for each of the last three years were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 2022 ​ ​ (in millions) Capital expenditures ​ $ 35.3 ​ $ 29.7 ​ $ 28.1 Depreciation ​ $ 34.6 ​ $ 30.1 ​ $ 27.6 ​ Purchased Raw Materials and Components ​ Our products are made using various purchased components and raw materials, including primarily bronze, brass, cast iron, stainless steel, steel, and plastic.
Dunbar held a number of senior positions at Emerson Electric Co., including President of each of the following: Emerson Process Management Europe; Machinery Health Management; and Emerson Climate Technologies Refrigeration. ​ Louise K. Goeser has served as a director of the Company since March 2018. Ms.
Prior to his tenure at Pentair, Mr. Dunbar held a number of senior positions at Emerson Electric Co., including President of each of the following: Emerson Process Management Europe; Machinery Health Management; and Emerson Climate Technologies Refrigeration. ​ Louise K. Goeser has served as a director of the Company since March 2018. Ms.
Everything we accomplish depends on creating an environment that is engaging and supportive and enables employees to perform to their potential. ​ 9 Table of Contents Watts’s DEI mission is to cultivate and sustain a workplace that prioritizes and integrates this inclusive culture in everything we do to fuel innovation, empower our people to reach their full potential and foster stronger connections with our partners.
Everything we accomplish depends on creating an environment that is engaging and supportive and enables employees to perform to their potential. ​ Watts’s mission is to cultivate and sustain a workplace that integrates this culture in everything we do to fuel innovation, empower our people to reach their full potential and foster stronger connections with our partners.
Residential & commercial flow control and protection products accounted for approximately 56%, 52% and 53% of our total net sales in 2023, 2022 and 2021, respectively. ​ 4 Table of Contents ● HVAC & gas—includes commercial high-efficiency boilers, water heaters and heating solutions, hydronic and electric heating systems for under-floor radiant applications, custom heat and hot water solutions, hydronic pump groups for boiler manufacturers and alternative energy control packages, and flexible stainless steel connectors for natural and liquid propane gas in commercial food service and residential applications.
Residential & commercial flow control and protection products accounted for approximately 60%, 56% and 52% of our total net sales in 2024, 2023 and 2022, respectively. ​ ● Heating, ventilation and air conditioning (“HVAC”) & gas—includes commercial high-efficiency boilers, water heaters and custom heat and hot water solutions, hydronic and electric heating systems for under-floor radiant applications, hydronic pump groups for boiler manufacturers and alternative energy control packages, and flexible stainless steel connectors for natural and liquid propane gas in commercial food service and residential applications.
Reitmeier has served as a director of the Company since February 2016. Mr. Reitmeier has served as Executive Vice President and Advisor of Lennox International Inc. since January 2024. Mr.
Reitmeier has served as a director of the Company since February 2016. Mr. Reitmeier served as Executive Vice President and Advisor of Lennox International Inc. from January 2024 until his retirement in February 2024. Mr.
Approximately 62%, 60% and 61% of our net sales in 2023, 2022 and 2021, respectively, were to wholesale distributors for commercial and residential applications. ​ OEMs. Approximately 15% of our net sales in 2023, 2022 and 2021 were to OEMs.
Approximately 66%, 62% and 60% of our net sales in 2024, 2023 and 2022, respectively, were to wholesale distributors for commercial and residential applications. ​ OEMs. Approximately 11%, 15% and 15% of our net sales in 2024, 2023 and 2022, respectively, were to OEMs.
As of December 31, 2023, we had approximately 5,100 employees globally, including 2,600 in the Americas, 2,100 in Europe and 400 in APMEA. At Watts, we strive to attract, develop, retain and engage high performing talent and we reward employee performance. By developing and promoting our talented people, we are creating value for our customers and shareholders.
As of December 31, 2024, we had approximately 4,800 employees globally, including 2,500 in the Americas, 1,900 in Europe and 400 in APMEA. At Watts, we strive to attract, develop, retain and engage high performing talent and we reward employee performance. By developing and promoting our talented people, we are creating value for our customers and shareholders.
Many of our flow control and protection products and solutions are now smart and connected enabled, warning of leaks, floods and freeze with alerts to Building Management System (BMS) and/or personal devices giving our customers greater insight into their water management and the ability to shut off the water supply to avoid waste and mitigate damage.
Many of our flow control and protection products are now smart and connected enabled, warning of leaks, floods, freezing temperatures and other hazards with alerts to Building Management Systems (“BMS”) and/or personal devices giving our customers greater insight into their water management and the ability to shut off the water supply to avoid waste and mitigate damage.
Our strategy focuses on three dimensions: Connect, Control and Conserve. We have introduced and plan to continue offering new products that will connect our customers with smart systems, control systems for optimal performance, and conserve critical resources by increasing operability, efficiency and safety.
Our strategy focuses on three dimensions: Connect, Control and Conserve. In 2024, 25% of our revenue was from smart and connected enabled products. We have introduced and plan to continue offering new products that will connect our customers with smart systems, control systems for optimal performance, and conserve critical resources by increasing operability, efficiency and safety.
Although we own certain patents and trademarks that we consider to be of importance, we do not believe that our business and competitiveness as a whole are dependent on any one of our patents or trademarks or on patent or trademark protection generally. ​ Human Capital Management ​ We believe that our employees are our greatest asset, and we aim to provide a safe, inclusive and high-performance culture where our employees can thrive.
Although we own certain patents and trademarks we consider to be of importance, we do not believe that any one of our patents or trademarks or patent or trademark protection generally are material to our business. 8 Table of Contents Human Capital Management ​ We believe our employees are our greatest asset, and we aim to provide a safe, engaging and high-performance culture where our employees can thrive.
Employee safety is one of our highest priorities and we strive for zero hazards and zero injuries by educating and training employees on safety best practices through awareness campaigns and related engagement initiatives. ​ Diversity, Equity & Inclusion (“DEI”) ​ An integral part of our mission to build a high performance, values-driven culture is creating an inclusive culture that welcomes and celebrates employees from all backgrounds.
Employee safety is one of our highest priorities and we strive for zero hazards and zero injuries by educating and training employees on safety best practices through awareness campaigns and related engagement initiatives. ​ Access & Culture ​ An integral part of our mission to build a high performance, value-driven culture is creating a culture that welcomes employees of all identities, backgrounds and cultures.
We were also named one of America’s Climate Leaders by USA Today. ​ More information about our sustainability efforts is included in our latest Sustainability Report, available at https://investors.wattswater.com/sustainability.
We were also named one of America’s Climate Leaders by USA Today for the second consecutive year. ​ 11 Table of Contents More information about our sustainability efforts is included in our latest Sustainability Report, available at https://investors.wattswater.com/sustainability.
Survey results are also reviewed with our Board and used to develop and refine other aspects of our overall human capital management strategies.
Survey results are also reviewed with our Board and used to develop and refine other aspects of our talent strategies.
Investment in product-testing capability and in plant and equipment also ensures ongoing continuous product compliance. Additionally, a majority of our manufacturing facilities are ISO 9000, 9001 or 9002 certified by the International Organization for Standardization. ​ Watts also proactively monitors and participates in regulatory, codes and standards development activities with the various aforementioned entities and others.
Investment in product-testing capability and in plant and equipment also ensures ongoing continuous product compliance. Additionally, a majority of our manufacturing facilities are ISO 9001 certified by an accredited third party certification body. ​ Watts also proactively monitors and participates in regulatory, codes and standards development activities with the various aforementioned entities and others.
Our top ten customers accounted for $440.4 million, or 21.4%, of our total net sales in 2023; $431.7 million, or 21.8%, of our total net sales in 2022; and $371.5 million, or 20.5%, of our total net sales in 2021.
Our top ten customers accounted for $512.0 million, or 22.7%, of our total net sales in 2024; $440.4 million, or 21.4%, of our total net sales in 2023; and $431.7 million, or 21.8%, of our total net sales in 2022.
Boll held management positions at Northrop Grumman, Allied Domecq and Leo Burnett Advertising, and she served as an electronic combat officer, AWACS, in the United States Air Force. ​ 14 Table of Contents Christopher L. Conway has served as a director of the Company since June 2015. Mr.
Boll held management positions at Northrop Grumman, Allied Domecq and Leo Burnett Advertising, and she served as an electronic combat officer, AWACS, in the United States Air Force. ​ Michael J. Dubose has served as a director of the Company since December 2020. Mr.
We continually strive to cultivate and support a highly engaged and productive workforce with employees from all backgrounds. ​ Talent Acquisition ​ ● Recruitment efforts follow a defined Talent Acquisition process to attract and hire top talent. ● We provide a robust college internship program to identify and cultivate an early-in-career pipeline of talent. ● We are actively engaging with a select group of historically Black colleges and universities, minority serving institutions, and professional organizations to help attract and recruit underrepresented professionals. ● We engage with external professional recruiting firms to supplement our internal recruiting efforts as needed. ● We employ varying sourcing strategies and technology platforms to increase the diversity of our candidate pools. ● We have a global employee referral bonus program to attract qualified candidates and reward employees. ● We provide training to Human Resources Business Partners and hiring managers on the Watts Talent Acquisition Process Interviewing. ​ 8 Table of Contents Professional Development ​ ● Leadership & Inclusivity.
We continually strive to cultivate and support a highly engaged and productive workforce with employees from all backgrounds. ​ Talent Acquisition ​ ● Recruitment efforts follow a defined Talent Acquisition process to attract and hire top talent. ● We provide a robust college internship program to identify and cultivate an early-in-career pipeline of talent. ● We are actively engaging with colleges and universities and professional organizations to help attract and recruit the best talent. ● We engage with external professional recruiting firms to supplement our internal recruiting efforts as needed. ● We employ varying sourcing strategies and technology platforms to increase our outreach to candidate pools of all different backgrounds. ● We have a global employee referral bonus program to attract qualified candidates and reward employees. ​ Professional Development ​ ● Team Building.
We formed employee resource groups, which are voluntary, employee-led groups open to all that provide a forum for employees to share common interests and experiences, gain professional development support, engage with our leadership teams, and drive initiatives to improve DEI at Watts. ​ Sustainability ​ Focus on Sustainability ​ We have demonstrated our focus on environmental sustainability by reducing our impact on the environment in multiple areas of our global business and by providing innovative products and solutions that can help customers to reduce their impact on the environment.
We formed employee resource groups, which are voluntary, employee-led groups that provide a space for all interested employees to gain professional development support, engage with our leadership teams, and drive initiatives to improve Watts. ​ ESG and Sustainability ​ Focus on Sustainability ​ We have demonstrated our focus on environmental sustainability by reducing our impact on the environment in multiple areas of our global business and by providing innovative products and solutions that can help customers to reduce their impact on the environment. ​ The Governance and Sustainability Committee of our Board of Directors has primary responsibility for the oversight of our environmental, social and governance (“ESG”) efforts and strategy.
Dubose previously served as Vice President of National Accounts and Cross Border Business Globally for W.W. Grainger, Inc. from 2010 to March 2019. W.W. Grainger is a leading broad line supplier of maintenance, repair and operating (MRO) products, with operations primarily in North America, Japan and Europe.
Dubose previously served as Vice President of National Accounts and Cross Border Business Globally for W.W. Grainger, Inc. from 2010 to March 2019. W.W. Grainger is a leading broad line supplier of maintenance, repair and operating (MRO) products. Prior to this position, he served as a Regional Vice President of Staples, Inc. from 2008 to 2010. Prior to 2008, Mr.
We have adopted a Code of Business Conduct applicable to all officers, employees and Board members worldwide that serves as the foundation for our ethics and compliance program, and drives policy development, training initiatives, and reinforcement of our values throughout the global organization. ​ Recognition ​ In 2023, we were recognized for the fifth year in a row as one of Newsweek’s Most Responsible Companies and we were also selected by Newsweek as one of America’s Greenest Companies.
We have adopted a Code of Business Conduct applicable to all officers, employees and Board members worldwide that serves as the foundation for our ethics and compliance program, and drives policy development, training initiatives, and reinforcement of our values throughout the global organization.
Most of our HVAC products and solutions feature advanced controls enabling customers to easily connect to the BMS for better monitoring, control and operation. HVAC & gas products and solutions accounted for approximately 29% of our total net sales in 2023, and 31% of our total net sales in 2022 and 2021.
Most of our HVAC products and solutions feature advanced controls enabling customers to easily connect to the BMS for better monitoring, control and operation.
Tariffs impact the total cost of our products and the components and raw materials that go into manufacturing them. Increased tariff costs could adversely impact the gross margin we earn on our products.
Tariffs impact the total cost of our products and the components and raw materials that go into manufacturing them.
Pagano, Jr. ​ 61 ​ Chief Executive Officer, President, Chairperson of the Board and Director Shashank Patel ​ 63 ​ Chief Financial Officer Monica Barry ​ 53 ​ Chief Human Resources Officer Andre Dhawan ​ 60 ​ Chief Operating Officer Kenneth R. Lepage ​ 53 ​ General Counsel, Chief Sustainability Officer & Secretary Elie A.
Pagano, Jr. ​ 62 ​ Chief Executive Officer, President, Chairperson of the Board and Director Shashank Patel ​ 64 ​ Chief Financial Officer & Interim Chief Information Officer Monica Barry ​ 54 ​ Chief Human Resources Officer Andre Dhawan ​ 61 ​ Chief Operating Officer Kenneth R.
The complaints in these cases typically name a large number of defendants and do not identify any of our particular products as a source of asbestos exposure.
The complaints in these cases typically name a large number of defendants and do not identify any of our particular products as a source of asbestos exposure. To date, discovery has failed to yield evidence of substantial exposure to any of our products and no judgments have been entered against us.
Craig Kissel(2)(3) ​ 73 ​ Director Joseph T. Noonan ​ 42 ​ Director Merilee Raines(1)(3) ​ 68 ​ Director Joseph W. Reitmeier(1)(3) ​ 59 ​ Director (1) Member of the Audit Committee ​ (2) Member of the Compensation Committee ​ (3) Member of the Governance and Sustainability Committee ​ Robert J.
Goeser(2)(3) ​ 71 ​ Director Kenneth Napolitano(1)(3) ​ 63 ​ Director Joseph T. Noonan ​ 43 ​ Director Merilee Raines(1)(3) ​ 69 ​ Director Joseph W. Reitmeier(1)(3) ​ 60 ​ Director ​ (1) Member of the Audit Committee ​ (2) Member of the Compensation Committee ​ (3) Member of the Governance and Sustainability Committee ​ Robert J.
The unit was initially owned by Tyco Flow Control and Tyco Flow Control and Pentair merged in 2012. Pentair is a global provider of products and services relating to energy, water, thermal management and equipment protection. Prior to his tenure at Pentair, Mr.
Dunbar previously served as President of the valves and controls global business unit of Pentair Ltd. from October 2009 to December 2013. The unit was initially owned by Tyco Flow Control and Tyco Flow Control and Pentair merged in 2012. Pentair is a global provider of products and services relating to energy, water, thermal management and equipment protection.
Our General Counsel and Chief Sustainability Officer also chairs our global Sustainability Steering Committee, which is made up of senior company leaders and is responsible for formulating our sustainability strategy and overseeing the execution of our environmental, social and governance initiatives. ​ 10 Table of Contents Climate Change Impact ​ Climate change and the increasing focus on sustainability have also created opportunities for our business.
Our General Counsel and Chief Sustainability Officer also chairs our global Sustainability Steering Committee, which is made up of senior company leaders and is responsible for formulating our sustainability strategy and overseeing the execution of our environmental, social and governance initiatives. ​ 10 Table of Contents Climate Change Impact ​ The increasing focus on sustainability and climate change has furthered demand for energy efficient products such as our high-efficiency boilers and water heaters, our Aegis heat pumps, under floor heating systems, smart thermostats, and our Microflex insulated pipes.
MSC is a North American distributor of metal working and maintenance, repair, and operations products and services. Ms. Goeser previously served as a member of the boards of directors of Talen Energy from June 2015 to December 2016, PPL Corporation from March 2003 to June 2015, and Witco Corporation from 1997 to 1999. ​ 15 Table of Contents W.
Goeser previously served as a member of the boards of directors of Talen Energy from June 2015 to December 2016, PPL Corporation from March 2003 to June 2015, and Witco Corporation from 1997 to 1999. ​ 15 Table of Contents Kenneth Napolitano has served as a director of the Company since March 2024. Mr.
In 2023, 90% of our Europe employee population and 87% of our Asia Pacific Middle East & Africa (APMEA) employees participated in a pulse survey to gain feedback on a core set of engagement items and performance drivers aligned to our business priorities.
In 2024, 80% of our Americas employee population participated in a pulse survey to gain feedback on a core set of engagement items and performance drivers aligned to our business priorities. 9 Table of Contents ● Employee Engagement - Recognition .
We are also focused on building a sustainable company by adhering to responsible business practices, prioritizing employee safety and providing our employees with opportunities for personal and professional growth, including through programs and initiatives to promote diversity, equity and inclusion.
We are also focused on adhering to responsible business practices, prioritizing employee safety and providing our employees with opportunities for personal and professional growth, including through programs and initiatives that support access, teamwork and reinforce our focus on building a high-performance, values-driven culture that welcomes employees of all identities, backgrounds and cultures.
We have a global training program educating all employees on our philosophies and principles, empowering them to use OWPS tools in their daily work. ● LinkedIn Learning Curriculum. We provide a comprehensive suite of online LinkedIn Learning courses to supplement live, instructor-led training. Learning collections on relevant topics are provided monthly which employees can access on-demand. ● Coaching.
Specific modules have been developed for all employees on goal setting, performance conversations, assessing performance, and career development. ● LinkedIn Learning Curriculum. We provide a comprehensive suite of online LinkedIn Learning courses to supplement live, instructor-led training. Learning collections on relevant topics are provided which employees can access on-demand. ● Coaching.
Melhem ​ 60 ​ President, Asia-Pacific, the Middle East & Africa Non-Employee Directors ​ ​ ​ ​ Rebecca J. Boll(1)(3) ​ 52 ​ Director Christopher L. Conway(2)(3) ​ 68 ​ Director Michael J. Dubose(2)(3) ​ 68 ​ Director David A. Dunbar(1)(3) ​ 62 ​ Lead Independent Director Louise K. Goeser(2)(3) ​ 70 ​ Director W.
Lepage ​ 54 ​ General Counsel, Chief Compliance Officer, Chief Sustainability Officer & Secretary Elie A. Melhem ​ 61 ​ President, Asia-Pacific, the Middle East & Africa Non-Employee Directors ​ ​ ​ ​ Rebecca J. Boll(1)(3) ​ 53 ​ Director Michael J. Dubose(2)(3) ​ 69 ​ Director David A. Dunbar(2)(3) ​ 63 ​ Lead Independent Director Louise K.
Standex is a global, multi-industry manufacturer comprised of five broad business segments: Electronics, Engraving, Scientific, Engineering Technologies and Specialty Solutions. Mr. Dunbar previously served as President of the valves and controls global business unit of Pentair Ltd. from October 2009 to December 2013.
Dunbar has served as President and Chief Executive Officer and a member of the Board of Directors of Standex International Corporation since January 2014, and as Chairman since October 2016. Standex is a global, multi-industry manufacturer comprised of five broad business segments: Electronics, Engraving, Scientific, Engineering Technologies and Specialty Solutions. Mr.
McDermott International is a global provider of technology, engineering and construction solutions for the energy industry. ​ Joseph T. Noonan has served as a director of the Company since May 2013. Mr. Noonan is currently an angel investor and advisor to consumer, software and technology-enabled companies. Mr.
Napolitano held several sales and sales management roles at Goulds Pumps, Inc., which was acquired by ITT in 1997. ​ Joseph T. Noonan has served as a director of the Company since May 2013. Mr. Noonan is currently an angel investor and advisor to consumer, software and technology-enabled companies. Mr.
HVAC is an acronym for heating, ventilation and air conditioning. ​ ● 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.
HVAC & gas products and solutions accounted for approximately 24%, 29% and 31% of our total net sales in 2024, 2023 and 2022, respectively. ​ ● 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.
We are also striving to simplify our administrative operations to drive further efficiencies. We call this aspect of our business operational excellence. ​ Customers and Markets ​ We sell our products and solutions to plumbing, heating and mechanical wholesale distributors and dealers, original equipment manufacturers (“OEMs”), specialty product distributors, and major do-it-yourself (“DIY”) and retail chains. ​ Wholesalers.
The new ERP is designed to enable commercial and operational excellence by empowering our resources through a modern, standardized and connected experience. ​ 5 Table of Contents Customers and Markets ​ We sell our products and solutions to plumbing, heating and mechanical wholesale distributors and dealers, original equipment manufacturers (“OEMs”), specialty product distributors, and major do-it-yourself (“DIY”) and retail chains. ​ Wholesalers.
The policy and outreach goals simply expand the pool of qualified applicants from which we can draw, but does not impact ultimate hiring, retention or advancement decisions based on the most qualified candidate. ​ We also established a regular cadence for pay equity review and added benefits including additional paid parental leave and family planning in the U.S. and mental health resources globally through our Employee Assistance Program. ​ In addition, we monitor employee perception on inclusion and diversity through employee feedback, and we create awareness with our employees about DEI-related topics through the company intranet, in employee meetings, through our public website and through a DEI calendar of events designed to increase solidarity, engagement and support.
To support this mission, we have incorporated this culture into the Watts strategic pillars, cultural behaviors, global performance management and talent review frameworks, as well as the Global Leadership Team’s goals. ​ We also established a regular cadence for pay equity review and added benefits including additional paid parental leave and family planning in the U.S. and mental health resources globally through our Employee Assistance Program. ​ In addition, we monitor employee perception on our culture through employee feedback, and we create awareness with our employees through the company intranet, in employee meetings, and through a calendar of events designed to increase allyship and engagement.
In 2023, we enabled our core product lines with an option for smart and connected capabilities to provide flood and freeze detection in backflow preventors and flood detection in relief valves, helping avoid water waste and mitigate damage.
In 2024, we broadened the offerings of our enabled backflow preventor product line with smart and connected capability options that provide flood and freeze detection, helping avoid water waste and mitigate damage.
We have a number of manufacturing facilities in lower-cost regions. In recent years, we have announced global restructuring plans which reduced our manufacturing and distribution footprint in order to reduce our costs and to realize incremental operating efficiencies. ​ Additionally, a majority of our manufacturing facilities are ISO 9000, 9001 or 9002 certified by the International Organization for Standardization.
In recent years, we have announced global restructuring plans which reduced our manufacturing and distribution footprint in order to reduce our costs and to realize incremental operating efficiencies. ​ Additionally, a majority of our manufacturing facilities are ISO 9001 certified by an accredited third party certification body to the ISO standards. ​ The majority of our sales are for products that have been approved under regulatory standards incorporated into state and municipal plumbing, heating, building and fire protection codes in the Americas, Europe and certain countries within APMEA.
Dunbar has served as a director of the Company since February 2017 and as Lead Independent Director of our Board of Directors since July 2023. Mr. Dunbar has served as President and Chief Executive Officer and a member of the Board of Directors of Standex International Corporation since January 2014, and as Chairman since October 2016.
Dubose held senior management positions with Corporate Express Inc., Alliant Foodservice Inc. and Baxter International Inc. ​ David A. Dunbar has served as a director of the Company since February 2017 and as Lead Independent Director of our Board of Directors since July 2023. Mr.
To date, discovery has failed to yield evidence of substantial exposure to any of our products and no judgments have been entered against us. ​ Other Litigation ​ Other lawsuits and proceedings or claims, arising from the ordinary course of operations, are also pending or threatened against us. ​ Available Information ​ We maintain a website with the address www.wattswater.com .
Based on information currently known to it, management believes that these matters are not likely to have a material adverse effect on the business or financial condition of the Company, or to have a material adverse effect on the Company’s operating results for any particular period. ​ Other Litigation ​ Other lawsuits and proceedings or claims, arising from the ordinary course of operations, are also pending or threatened against us. ​ Available Information ​ We maintain a website with the address www.wattswater.com .
We also strive to have a positive impact on the communities in which we live and work and other communities in need through community involvement, educational partnerships and charitable giving. ​ Sustainability Leadership ​ The Governance and Sustainability Committee of our Board of Directors has primary responsibility for the oversight of our ESG efforts and strategy.
We also strive to have a positive impact on the communities in which we live and work and other communities in need through community involvement, educational partnerships and charitable giving. ​ Recognition ​ In 2024, we were recognized for the sixth year in a row as one of Newsweek’s Most Responsible Companies and we were also selected by Newsweek as one of America’s Greenest Companies for the second year in a row.
Federal Signal Corporation designs, manufactures and supplies a suite of products and integrated solutions for municipal, governmental, industrial and commercial customers. ​ Monica Barry has served as Chief Human Resources Officer of the Company since October 2021. Ms.
Federal Signal Corporation designs, manufactures and supplies a suite of products and integrated solutions for municipal, governmental, industrial and commercial customers. In October 2024 Mr. Patel announced his intention to retire effective as of March 15, 2025. Mr.
During 2023, we worked with Planet Water to fund the construction of four AquaTowers and AquaSan systems during their World Water Day campaign in order to provide clean, safe drinking water for people in Cambodia, Indonesia and Vietnam. ​ Governance, Business Ethics, and Compliance ​ We believe that good corporate governance and an environment of high ethical standards are important for us to achieve business success and to create value for our stockholders.
We also made donations to the American Red Cross to assist with relief efforts in the southeastern United States following Hurricanes Helene and Milton. ​ Governance, Business Ethics, and Compliance ​ We believe that good corporate governance and an environment of high ethical standards are important for us to achieve business success and to create value for our stockholders.
This training includes three modules focused on identifying bias to make better decisions, creating teams where all people feel valued and empowering people to use their voice and contribute ideas. ● Watts Training & Development Offerings Catalog.
In 2024, we continued our global roll-out of a training program that is designed to build leadership skills, including team building behaviors. This training included, where permitted by law, three modules focused on making better decisions, creating teams where people feel valued and empowering people to contribute ideas. ● Watts Training & Development Offerings Catalog.
For the fourth quarter of 2023, 25% of our revenue was from smart and connected enabled products, in line with our goal set back in 2018. ​ ​ 3 Table of Contents We continue to focus on sustainability by taking steps to reduce the negative impact our operations have on the environment while generating economic value by manufacturing and selling solutions, products and technologies that enable our customers to reduce the negative impact they have on the environment.
This new solution provides insight into water systems and unlocks significant value in onsite operations and water risk management, while supporting customers’ sustainability targets. ​ We continue to focus on sustainability by taking steps to reduce the negative impact our operations have on the environment while generating economic value, and we manufacture and sell solutions, products and technologies that enable our customers to reduce their negative impact to the environment.
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The ISO 9000 standards series is a set of internationally recognized standards for quality assurance and management. ​ The majority of our sales are for products that have been approved under regulatory standards incorporated into state and municipal plumbing, heating, building and fire protection codes in the Americas, Europe, and certain countries within APMEA.
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In 2024, we launched Nexa, the intelligent water management solution, which integrates sensing hardware, smart and connected equipment and software to provide 3 Table of Contents a powerful offering for customers in the commercial building space and users of a building’s water system.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny damage to, or failure of, our systems or a third-party hosting facility or other service that we use, could severely impact our ability to conduct our business operations, attract new customers, maintain existing customers, or result in a material weakness in our internal control over financial reporting, any of which could materially adversely affect our future operating results.
Biggest changeCompany Risk Factors ​ Our business, reputation and financial performance may be adversely affected if we or our third-party providers fail to protect confidential information and/or experience by cybersecurity attacks, information technology failures and other business disruptions. ​ We depend heavily on the confidentiality, integrity and availability of our and third-party information technology, networks infrastructure and systems (collectively, “IT Systems”), including third-party data centers and third-party cloud services, to manage our business objectives and operations, support our customers’ requirements and protect proprietary and other sensitive information, including personal information. ​ Any damage to, or failure of, our IT Systems or a third-party hosting facility or other service or IT System that we use, could severely impact our ability to conduct our business operations, attract new customers, maintain existing customers, or result in a material weakness in our internal control over financial reporting, any of which could materially adversely affect our future operating results.
In addition, acquisitions may involve a number of risks, including, but not limited to: ​ ● difficulties in integrating operations, business processes, systems and company culture; ● challenges in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures; ● adverse effects on existing business relationships with suppliers or customers; ● inadequate internal control over financial reporting and our ability to bring such controls into compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner; ● adverse short-term effects on our reported operating results, as a result of incurring acquisition-related debt, pre-acquisition potential tax liabilities, acquisition expenses, and the amortization of acquisition-acquired assets; ● inability to effectively transfer liabilities, contracts, facilities and employees to the purchaser, identify and separate the intellectual property to be divested from the intellectual property that we wish to keep and reduce fixed costs previously associated with the divested assets or business; we may still retain liabilities associated with the divested businesses and other indemnification obligations; ● diversion of management’s attention; ● investigations of, or challenges to, acquisitions by competition authorities; ● loss of key personnel at acquired companies; ● unanticipated management or operational problems or legal liabilities; and ● potential goodwill, indefinite-lived intangible assets, or long-lived asset impairment charges. ​ We are subject to risks related to product defects, which could result in product recalls and could subject us to warranty claims in excess of our warranty provisions or which are greater than anticipated due to the unenforceability of liability limitations. ​ We cannot be certain that our quality controls and procedures, including the testing of raw materials and safety testing of selected finished products, will reveal latent defects in our products or the materials from which they are made, which may not become apparent until after the products have been sold into the market.
In addition, acquisitions may involve a number of risks, including, but not limited to: ​ ● difficulties in integrating operations, business processes, systems and company culture; ● challenges in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures; ● adverse effects on existing business relationships with suppliers or customers; ● inadequate internal control over financial reporting and our ability to bring such controls into compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner; ● adverse short-term effects on our reported operating results, as a result of incurring acquisition-related debt, pre-acquisition potential tax liabilities, acquisition expenses, and the amortization of acquisition-acquired assets; ● inability to effectively transfer liabilities, contracts, facilities and employees to the purchaser, identify and separate the intellectual property to be divested from the intellectual property that we wish to keep and reduce fixed costs previously associated with the divested assets or business; we may still retain liabilities associated with the divested businesses and other indemnification obligations; ● diversion of management’s attention; ● investigations of, or challenges to, acquisitions by competition authorities; ● loss of key personnel at acquired companies; ● unanticipated management or operational problems or legal liabilities; and ● potential goodwill, indefinite-lived intangible asset, or long-lived asset impairment charges. ​ We are subject to risks related to product defects, which could result in product recalls and could subject us to warranty claims in excess of our warranty provisions or which are greater than anticipated due to the unenforceability of liability limitations. ​ We cannot be certain that our quality controls and procedures, including the testing of raw materials and safety testing of selected finished products, will reveal latent defects in our products or the materials from which they are made, which may not become apparent until after the products have been sold into the market.
As we continue to design and develop smart and connected products, services and solutions that leverage our hosted or cloud-based resources, the Internet-of-Things and other wireless/remote technologies, and include networks of distributed and interconnected devices that contain sensors, data transfers and other computing capabilities, our customers' data and systems may be subjected to harmful or illegal content or attacks, including potential cybersecurity threats.
As we continue to design and develop smart and connected products, services and solutions that leverage our hosted or cloud-based resources, the Internet-of-Things and other wireless/remote technologies, and include networks of distributed and interconnected devices that contain sensors, data transfers and other computing capabilities, our customers' data and IT Systems may be subjected to harmful or illegal content or attacks, including potential cybersecurity threats.
These impacts present several potential challenges to water and energy related products, such as potential degradation of water quality and changes in water conservation or energy efficiency requirements, particularly during periods of increased precipitation, flooding, or water shortages. Inclement weather and extreme weather events may have varying impacts on our business.
These impacts present several potential challenges relevant to water and energy-related products, such as potential degradation of water quality and changes in water conservation or energy efficiency requirements, particularly during periods of increased precipitation, flooding, or water shortages. Inclement weather and extreme weather events may have varying impacts on our business.
Any significant disruption or deficiency in the design and implementation of our software systems, including our new ERP, could adversely affect our ability to process orders, ship product, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.
Any significant disruption or deficiency in the design and implementation of our software IT Systems, including our new ERP, could adversely affect our ability to process orders, ship product, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.
As ESG best practices, reporting standards, and disclosure requirements continue to develop, we may incur increasing costs related to ESG monitoring and reporting. In addition, new ESG rules and regulations have been adopted and may continue to be introduced in various states and other jurisdictions.
As ESG best practices, reporting standards, and disclosure requirements continue to develop, we may incur increasing costs related to ESG monitoring and reporting. In addition, new, conflicting ESG rules and regulations have been adopted and may continue to be introduced in various states and other jurisdictions.
“Business—Product Liability, Environmental and Other Litigation Matters” and Note 16 of the Notes to the Consolidated Financial Statements, both of which are incorporated herein by reference. ​ Climate change, and legislation or regulations addressing climate change, may have an adverse impact on our business and results of operations . ​ The impacts of climate change are highly unpredictable and vary depending on geographical location, but could include changing temperatures, droughts, water shortages, wildfires, changes in weather and rainfall patterns, changes in sea levels, and changing storm patterns and intensities.
“Business—Product Liability, Environmental and Other Litigation Matters” and Note 16 of the Notes to the Consolidated Financial Statements, both of which are incorporated herein by reference. ​ Climate change, and legislation or regulations addressing climate change, may have an adverse impact on our business and results of operations . ​ The impacts of climate change vary depending on geographical location, but could include changing temperatures, droughts, water shortages, wildfires, changes in weather and rainfall patterns, changes in sea levels, and changing storm patterns and intensities.
We maintain a cybersecurity risk management program and have adopted measures and incurred cost with the intention of mitigating potential risks associated with information technology disruptions and cybersecurity threats; however, there is no assurance that these measures will be fully implemented, complied with or effective at preventing or detecting cyber-attacks or security breaches, or other vulnerabilities, which may allow them to persist in the environment over long periods of time.
We maintain a cybersecurity risk management program and have adopted measures and incurred costs with the intention of mitigating potential risks associated with information technology disruptions and cybersecurity threats; however, there is no assurance that these measures will be fully implemented, complied with or effective at preventing or detecting cyber-attacks or security breaches, or other vulnerabilities, which may allow them to persist in the environment over long periods of time.
Such ESG matters may also impact our suppliers, customers, and business partners, which may augment or cause additional impacts on our business, financial condition or results of operations. ​ Our ability to achieve savings through our restructuring and business transformation activities may be adversely affected by management’s ability to fully execute such plans as a result of local regulations, geo-political risk or other factors within or beyond the control of management. ​ We have implemented a number of restructuring and business transformation activities, which include steps that we believe are necessary to enhance the value and performance of the Company, including reducing operating costs and increasing efficiencies throughout our manufacturing, sales and distribution footprint.
Such ESG matters may also impact our suppliers, customers, and business partners, which may augment or cause additional impacts on our business, financial condition or results of operations. ​ 25 Table of Contents Our ability to achieve savings through our restructuring and business transformation activities may be adversely affected by management’s ability to fully execute such plans as a result of local regulations, geo-political risk or other factors within or beyond the control of management. ​ We have implemented a number of restructuring and business transformation activities, which include steps that we believe are necessary to enhance the value and performance of the Company, including reducing operating costs and increasing efficiencies throughout our manufacturing, sales and distribution footprint.
Foreign Corrupt Practices Act and the United Kingdom’s Bribery Act of 2010; ● trade protection measures and import or export duties or licensing requirements, which could increase our costs of doing business internationally; ● expropriation, nationalization or other protectionist activities; 18 Table of Contents ● potentially negative consequences from changes in tax laws, which could have an adverse impact on our profits; ● difficulty in staffing and managing widespread operations, which could reduce our productivity; ● costs of compliance with differing labor regulations, especially in connection with restructuring our overseas operations; ● laws of some foreign countries, which may not protect our intellectual property rights to the same extent as the laws of the U.S.; ● unexpected changes in regulatory requirements, which may be costly and require time to implement; ● difficulty of enforcing agreements, collecting receivables and protecting intellectual property and other assets through non-U.S. legal systems; ● foreign exchange rate fluctuations, which could also materially affect our reported results.
Foreign Corrupt Practices Act and the United Kingdom’s Bribery Act of 2010; ● trade protection measures, import or export duties, licensing requirements or changes to existing trade agreements, which could increase our costs of doing business internationally; ● expropriation, nationalization or other protectionist activities; ● potentially negative consequences from changes in tax laws, which could have an adverse impact on our profits; ● difficulty in staffing and managing widespread operations, which could reduce our productivity; ● costs of compliance with differing labor regulations, especially in connection with restructuring our overseas operations; ● laws of some foreign countries, which may not protect our intellectual property rights to the same extent as the laws of the U.S.; ● unexpected changes in regulatory requirements, which may be costly and require time to implement; ● difficulty of enforcing agreements, collecting receivables and protecting intellectual property and other assets through non-U.S. legal systems; ● foreign exchange rate fluctuations, which could also materially affect our reported results.
The availability of components and finished goods from international sources could be adversely impacted by a range of factors such as a public health crisis, extreme weather events, suppliers’ allocations to other purchasers, threats of wars and global geo-political instability, and new laws, tariffs or regulations that might cause short term / long term supply chain disruptions. ​ As a global manufacturer and distributor, we are facing additional risks related to ongoing disruptions and increased costs in our supply chain and logistics.
The availability of components and finished goods from international sources could be adversely impacted by a range of factors, such as a public health crisis, extreme weather events, suppliers’ allocations to other purchasers, threats of wars and global geo-political instability, and new laws, tariffs or regulations that might cause short-term / long-term supply chain disruptions. ​ 17 Table of Contents As a global manufacturer and distributor, we are facing additional risks related to ongoing disruptions and increased costs in our supply chain and logistics.
Our effective tax rate and cash tax payments could increase in future years as a result of these changes. ​ The U.S. enacted the Inflation Reduction Act of 2022 (“IRA”) in August 2022, which, among other provisions, creates a new corporate alternative minimum tax (CAMT) of at least 15% for certain large corporations that have at least an average of $1 billion in adjusted financial statement income over a consecutive three-year period effective in tax years beginning after December 31, 2022.
Our effective tax rate and cash tax payments could increase in future years as a result of these changes. ​ The U.S. enacted the Inflation Reduction Act of 2022 (“IRA”) in August 2022, which, among other provisions, created a new corporate alternative minimum tax (CAMT) of at least 15% for certain large corporations that have at least an average of $1 billion in adjusted financial statement income over a consecutive three-year period, and became effective in tax years beginning after December 31, 2022.
Our insurance policies may not cover the costs of a product recall. ​ 21 Table of Contents Our standard warranties contain limits on damages and exclusions of liability for consequential damages and for misuse, improper installation, alteration, accident or mishandling while in the possession of someone other than us.
Our insurance policies may not cover the costs of a product recall. ​ 22 Table of Contents Our standard warranties contain limits on damages and exclusions of liability for consequential damages and for misuse, improper installation, alteration, accident or mishandling while in the possession of someone other than us.
We cannot predict whether currencies such as the euro, Canadian dollar, Chinese yuan, or other currencies in which we transact 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 reported results; and ● The occurrence or reoccurrence of regional epidemics, a global pandemic or other public health crises, such as COVID-19, which may adversely affect our operations, financial condition, and results of operations.
We cannot predict whether currencies such as the euro, Canadian dollar, Chinese yuan, Australian dollar, or other currencies in which we transact 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 reported results; and ● occurrence or reoccurrence of regional epidemics, a global pandemic or other public health crises, which may adversely affect our operations, financial condition, and results of operations.
In lieu of amortization, we are required to perform an annual impairment review of both goodwill and indefinite-lived intangible assets. In 2023, 2022 and 2021, none of our goodwill reporting units or our indefinite lived tradenames were impaired. We are also required to perform an impairment review of our long-lived assets if indicators of impairment exist.
In lieu of amortization, we are required to perform an annual impairment review of both goodwill and indefinite-lived intangible assets. In 2024, 2023 and 2022, none of our goodwill reporting units or our indefinite lived tradenames were impaired. We are also required to perform an impairment review of our long-lived assets if indicators of impairment exist.
Horne beneficially owned approximately 17.9% of our outstanding shares of Class A common stock (assuming conversion of all shares of Class B common stock beneficially owned by Mr. Horne into Class A common stock) and approximately 99.7% of our outstanding shares of Class B common stock, which represents approximately 68.3% of the total outstanding voting power. As long as Mr.
Horne beneficially owned approximately 17.8% of our outstanding shares of Class A common stock (assuming conversion of all shares of Class B common stock beneficially owned by Mr. Horne into Class A common stock) and approximately 99.7% of our outstanding shares of Class B common stock, which represents approximately 68.3% of the total outstanding voting power. As long as Mr.
Our tax filings are regularly under audit by tax authorities and the ultimate tax outcome may differ from the amounts recorded and may materially affect our financial results in the period or periods for which such determination is made. ​ In October 2021, the Organization for Economic Co-operation and Development (“OECD”) issued model rules for a new global minimum tax framework, commonly referred to as “Pillar Two,” which includes the introduction of a 15% global minimum tax to become effective beginning after January 1, 2024.
Our tax filings are regularly under audit by tax authorities and the ultimate tax outcome may differ from the amounts recorded and may materially affect our financial results in the period or periods for which such determination is made. ​ In October 2021, the Organization for Economic Co-operation and Development (“OECD”) issued model rules for a new global minimum tax framework, commonly referred to as “Pillar Two,” which included the introduction of a 15% global minimum tax effective beginning January 1, 2024.
A failure by us to comply with applicable requirements or maintain the permits required for our operations could result in civil or criminal fines, 22 Table of Contents penalties, enforcement actions, third-party claims for property damage and personal injury, requirements to clean up property or to pay for the costs of cleanup or regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, including the installation of pollution control equipment or remedial actions. ​ Certain environmental laws and regulations impose on present and former owners and operators of facilities and sites, and on potentially responsible parties (“PRPs”) for sites to which parties may have sent waste for disposal, requirements to investigate and remediate contamination.
A failure by us to comply with applicable requirements or maintain the permits required for our operations could result in civil or criminal fines, penalties, enforcement actions, third-party claims for property damage and personal injury, requirements to clean up property or to pay for the costs of cleanup or regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, including the installation of pollution control equipment or remedial actions. ​ Certain environmental laws and regulations impose on current and former owners and operators of facilities and sites, and on potentially responsible parties (“PRPs”) for sites to which parties may have sent waste for disposal, requirements to investigate and remediate contamination.
Our future taxes could be affected by numerous factors, including changes in the mix of our profitability from country to country, the results of examinations and audits of our tax filings, adjustments to our uncertain tax positions, changes in accounting for income taxes and changes in tax laws. ​ In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain.
Our future taxes could be affected by numerous factors, including changes in the mix of our profitability from country to country, the results of examinations and audits of our tax filings, adjustments to our uncertain tax positions, changes in accounting for income taxes and changes in tax laws. ​ 27 Table of Contents In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain.
We perform our annual test for indications of goodwill and indefinite-lived intangible assets impairment in the fourth quarter of our fiscal year or sooner if indicators of impairment exist. ​ The loss or financial instability of major customers could have an adverse effect on our results of operations. ​ In 2023, our top ten customers accounted for approximately 21% of our total net sales with no one customer accounting for more than 10% of our total net sales.
We perform our annual test for indications of goodwill and indefinite-lived intangible assets impairment in the fourth quarter of our fiscal year or sooner if indicators of impairment exist. ​ The loss or financial instability of major customers could have an adverse effect on our results of operations. ​ In 2024, our top ten customers accounted for approximately 23% of our total net sales with no one customer accounting for more than 10% of our total net sales.
The IRA also includes a 1% excise tax on new corporate stock repurchases beginning in 2023. We do not expect to meet the CAMT threshold in the near term nor expect the IRA to have a material impact on our financial statements. However, it is possible that the U.S.
The IRA also includes a 1% excise tax on new corporate stock repurchases that became effective in 2023. We do not expect to meet the CAMT threshold in the near term nor expect the IRA to have a material impact on our financial statements. However, it is possible that the U.S.
Our Class B common stock entitles its holders to ten votes for each share, and our Class A common stock entitles its holders to one vote per share. As of December 31, 2023, Timothy P.
Our Class B common stock entitles its holders to ten votes for each share, and our Class A common stock entitles its holders to one vote per share. As of December 31, 2024, Timothy P.
Additionally, concern over climate change has and may continue to result in new or increased legal and regulatory requirements to reduce or mitigate the effects of climate change, including limitations on greenhouse gas emissions, or to disclose our efforts regarding such matters, which could increase our costs or require additional investments in our facilities and equipment, and require us to make significant new disclosures regarding the climate-related impacts of our business.
Concern over climate change has and may continue to result in new or increased legal and regulatory requirements to respond to or mitigate the effects of climate change, including limitations on greenhouse gas emissions, which could increase our costs or require additional investments in our facilities and equipment, or to disclose efforts and progress regarding such matters, which could require us to make significant new disclosures regarding the climate-related impacts of our business.
Any disruptions, delays or deficiencies related to our primary ERP system could lead to substantial business interruption, including our ability to perform routine business transactions, which could have a material adverse effect on our financial results. ​ Given the unpredictability of the timing, nature and scope of such disruptions, we could potentially be subject to production downtimes, operational delays, other detrimental impacts on our operations or ability to provide products to our customers, the compromising of confidential or otherwise protected information, misappropriation, destruction or corruption of data, security breaches, other manipulation or improper use of our systems, networks or our products, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition. ​ We are in the process of replacing our current primary ERP system with a new ERP system, and this system implementation is expected to occur in phases over the next several years.
Any disruptions, delays or deficiencies related to our primary ERP system could lead to substantial business interruption, including our ability to perform routine business transactions, which could have a material adverse effect on our financial results. ​ Given the unpredictability of the timing, nature and scope of such disruptions, we could potentially be subject to production downtimes, operational delays, other detrimental impacts on our operations or ability to provide products to our customers, the compromising of confidential information, misappropriation, destruction or corruption of data, security incidents, other manipulation or improper use of our IT Systems, networks or our products, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition. ​ 20 Table of Contents We are in the process of replacing our current primary ERP system with a new ERP system, and this system implementation is expected to occur in phases over the next several years.
Our business and future operating results could be harmed by a variety of factors, including: ​ ● unexpected geo-political events in foreign countries in which we operate, which could adversely affect manufacturing and our ability to fulfill customer orders; and threats or outbreaks of war, terrorism, governmental instability, or international tensions and conflicts, including the wars in Ukraine and Gaza, which could cause supply chain disruptions impacting our ability to manufacture products, service our customers or negatively impact our profit margins ; ● our failure to comply with anti-corruption laws and regulations of the U.S. government and various international jurisdictions, such as the U.S.
Our business and future operating results could be harmed by a variety of factors, including: ​ ● unexpected geo-political events in foreign countries in which we operate, which could adversely affect manufacturing and our ability to fulfill customer orders; and threats or outbreaks of war, terrorism, governmental instability, or international tensions and conflicts, which could cause supply chain disruptions impacting our ability to manufacture products, service our customers or negatively impact our profit margins ; 18 Table of Contents ● our failure to comply with anti-corruption laws and regulations of the U.S. government and various international jurisdictions, such as the U.S.
If we fail to retain and recruit the necessary personnel or arrange for successors to key personnel, our business could materially suffer. ​ Investment Risk Factors ​ One of our stockholders can exercise substantial influence over our Company. ​ As of December 31, 2023, Timothy P. Horne beneficially owned 5,938,290 shares of Class B common stock.
If we fail to retain and recruit the necessary personnel or arrange for successors to key personnel, our business could materially suffer. ​ Investment Risk Factors ​ One of our stockholders can exercise substantial influence over our Company. ​ As of December 31, 2024, Timothy P. Horne beneficially owned 5,933,290 shares of Class B common stock.
Any failure to achieve our own goals, or any perception of a failure to act responsibly with respect to the environment or to effectively respond to regulatory requirements concerning climate change, or failure to accurately report on our progress toward achieving our goal or in environmental and sustainability programs can lead to adverse publicity or litigation, resulting in an adverse effect on our business or damage to our reputation. ​ 23 Table of Contents Increased scrutiny of, and evolving expectations regarding, sustainability and environmental, social, and governance (“ESG”) matters could increase our costs, harm our reputation and adversely impact our financial results. ​ Companies are facing increasing and evolving scrutiny related to ESG practices and disclosures from certain investors, government entities, customers, employees, and other stakeholders or third parties.
Any failure to achieve our own goals, or any perception of a failure to act responsibly with respect to the environment or to effectively respond to regulatory requirements concerning climate change, or failure to accurately report on our progress toward achieving our goal or in environmental and sustainability programs can lead to adverse publicity or litigation, resulting in an adverse effect on our business or damage to our reputation. ​ Increased scrutiny of, and evolving and conflicting expectations regarding, sustainability and ESG matters could increase our costs, harm our reputation and adversely impact our financial results. ​ Companies are facing increasing, evolving and conflicting scrutiny related to ESG practices and disclosures from certain investors, government entities, customers, employees, and other stakeholders or third parties.
Our customers generally are not obligated to purchase any minimum volume of products from us and are able to terminate their relationships with us at any time. In addition, increases in the prices of our products could result in a reduction in orders from our customers.
Our customers generally are not obligated to purchase any minimum volume of products from us and are able to terminate their relationships with us at any time. In addition, increases in the prices of our products, including as a result of tariffs, could result in a reduction in orders from our customers.
Should we require additional debt financing above our existing credit limit, we cannot be assured such financing would be available to us or available to us on reasonable economic terms. ​ Our inability to attract and retain key personnel may adversely affect our business. ​ Our success depends on our ability to recruit, retain and develop highly-skilled management and key personnel.
Should we require additional debt financing above our existing credit limit, we cannot be assured such financing would be available to us or available to us on reasonable economic terms. ​ 26 Table of Contents Our inability to attract and retain key personnel may adversely affect our business. ​ Our success depends on our ability to recruit, retain and develop highly-skilled management and key personnel.
Under these registration rights, the holders of Class B common stock may require, on 25 Table of Contents up to two occasions that we register their shares for public resale.
Under these registration rights, the holders of Class B common stock may require, on up to two occasions that we register their shares for public resale.
With this increased focus, public reporting regarding ESG practices is becoming more broadly expected, which could lead to increased scrutiny of our ESG practices or lack thereof.
With this increased focus, public reporting regarding ESG practices is becoming more broadly expected by some stakeholders, which could lead to increased scrutiny of our ESG practices or lack thereof.
A portion of our net sales and certain portions of our costs, assets and liabilities are denominated in currencies other than U.S. dollars. Approximately 36%, 34% and 38% of our net sales in 2023, 2022 and 2021, respectively, were from sales outside of the U.S.
A portion of our net sales and certain portions of our costs, assets and liabilities are denominated in currencies other than U.S. dollars. Approximately 31%, 36% and 34% of our net sales in 2024, 2023 and 2022, respectively, were from sales outside of the U.S.
Any failure to comply with those requirements may also affect demand for our products or our ability to source key materials. We also establish our own goals with respect to reducing our impact on the environment.
Any failure to comply with those requirements may also affect demand for our products or our ability to source key materials. We also establish our own goals with respect to reducing 24 Table of Contents our impact on the environment.
Horne will be able to unilaterally determine the outcome of most stockholder votes, and other stockholders will not be able to affect the outcome of any such votes. ​ Conversion and subsequent sale of a significant number of shares of our Class B common stock could adversely affect the market price of our Class A common stock. ​ As of December 31, 2023, there were outstanding 27,352,701 shares of our Class A common stock and 5,958,290 shares of our Class B common stock.
Horne will be able to unilaterally determine the outcome of most stockholder votes, and other stockholders will not be able to affect the outcome of any such votes. ​ Conversion and subsequent sale of a significant number of shares of our Class B common stock could adversely affect the market price of our Class A common stock. ​ As of December 31, 2024, there were 27,366,685 shares of our Class A common stock outstanding and 5,953,290 shares of our Class B common stock outstanding.
In 2023 and 2021 none of our long-lived assets were impaired. ​ 24 Table of Contents There can be no assurances that future goodwill, indefinite-lived intangible assets or other long-lived asset impairments will not occur.
In 2024 and 2023 none of our long-lived assets were impaired. ​ There can be no assurances that future goodwill, indefinite-lived intangible assets or other long-lived asset impairments will not occur.
In addition, our restructuring and transformation activities may place substantial demands on our management, which could lead to diversion of management’s attention from other business priorities and result in a reduced customer focus. ​ The requirements to evaluate goodwill, indefinite-lived intangible assets and long-lived assets for impairment may result in a write-off of all or a portion of our recorded amounts, which would negatively affect our operating results and financial condition. ​ As of December 31, 2023, our balance sheet included goodwill, indefinite-lived intangible assets, amortizable intangible assets and property, plant and equipment of $693.0 million, $65.5 million, $150.6 million and $248.2 million, respectively.
In addition, our restructuring and transformation activities may place substantial demands on our management, which could lead to diversion of management’s attention from other business priorities and result in a reduced customer focus. ​ The requirements to evaluate goodwill, indefinite-lived intangible assets and long-lived assets for impairment may result in a write-off of all or a portion of our recorded amounts, which would negatively affect our operating results and financial condition. ​ As of December 31, 2024, our balance sheet included goodwill, indefinite-lived intangible assets, amortizable intangible assets and property, plant and equipment of $715.0 million, $70.4 million, $164.6 million and $254.8 million, respectively.
“Business—Product Liability, Environmental and Other Litigation Matters” and Note 16 of the Notes to the Consolidated Financial Statements, both of which are incorporated herein by reference. ​ We face risks from costs for environmental compliance and/or to address potential liabilities under environmental laws and regulations. ​ Our operations and facilities in all jurisdictions in which we operate are subject to federal, state, local and foreign laws and regulations related to pollution and the protection of the environment, health and safety, including, but not limited to those governing air emissions, discharges to water, water usage, the generation, handling, storage, treatment and disposal of hazardous wastes and other materials, and the remediation of contaminated sites.
“Business—Product Liability, Environmental and Other Litigation Matters” and Note 16 of the Notes to the Consolidated Financial Statements, both of which are incorporated herein by reference. 23 Table of Contents We are subject to environmental, health and safety laws and regulations, which could result in costs, liabilities and impacts to our business operations. ​ Our operations and facilities in all jurisdictions in which we operate are subject to federal, state, local and foreign laws and regulations related to pollution and the protection of the environment and health and safety, including, but not limited to those governing air emissions, discharges to water, water usage, the generation, handling, storage, treatment and disposal of hazardous wastes and other materials, and the remediation of contaminated sites.
Although recent global supply chain disruptions have normalized, labor shortages have affected our manufacturing and distribution processes, as well as those of our suppliers.
Although recent global supply chain disruptions have normalized, labor shortages and labor organizing activities have affected our manufacturing and distribution processes, as well as those of our suppliers and contributed to increased costs.
We typically do not enter into long-term supply agreements. Our inability to obtain supplies of raw materials and purchased components for our products at favorable costs could have a material adverse effect on our business, financial condition or results of operations by decreasing our profit margins.
Our inability to obtain supplies of raw materials and purchased components for our products at favorable costs could have a material adverse effect on our business, financial condition or results of operations by decreasing our profit margins.
Such increased scrutiny may result in increased costs, increased risk of litigation or reputational damage relating to our ESG practices or performance, enhanced compliance, or disclosure obligations, or other adverse impacts on our business, financial condition, or results of operations.
Such increased scrutiny may result in increased costs, increased risk of litigation or reputational damage relating to our ESG practices or performance, enhanced compliance, or disclosure obligations, or other adverse impacts on our business, financial condition, or results of operations. We may become subject to conflicting laws and regulations related to sustainability and ESG matters.
Congress could advance other tax legislation proposals in the future that could have a material impact on our financial statements. ​ ​
Congress could advance other tax legislation proposals in the future that could have a material impact on our financial statements. ​ Item 1B. UNRESOLVED STAFF COMMENTS. ​ None. ​
While we have taken steps designed to reduce interruptions by implementing internal controls, a cybersecurity risk management program, network and data center resiliency, and redundancy and recovery processes, these measures may be inadequate. ​ Cyber-security attacks, in particular, are evolving as threat actors become increasingly sophisticated in using techniques and tools (including artificial intelligence) to circumvent security controls.
While we have taken steps designed to reduce interruptions by implementing internal controls, a cybersecurity risk management program, network and data center resiliency, and redundancy and recovery processes, these measures may be inadequate. ​ 19 Table of Contents Cybersecurity attacks, in particular, are evolving and are expected to accelerate on a global basis in frequency and magnitude as threat actors become increasingly sophisticated in using techniques and tools (including artificial intelligence) to circumvent security controls, evade detection and remove forensic evidence.
This may result in the delay or cancellation of orders from our customers or potential customers and may adversely affect our revenues and our ability to manage inventory levels, collect customer receivables and maintain profitability. Economic conditions and financial markets in the United States and globally have experienced significant volatility in recent periods.
This may result in the delay or cancellation of orders from our customers or potential customers and may adversely affect our revenues and our ability to manage inventory levels, collect customer receivables and maintain profitability.
If we need to address multiple vulnerabilities simultaneously, we may also need to make prioritization decisions in determining which vulnerabilities or security defects to fix first, and the timing of these fixes, which could result in compromised security.
Consequently, these products, services and solutions also may be subjected to harmful or illegal content or attacks that develop vulnerabilities or critical security issues that cannot be disclosed without compromising security. ​ If we need to address multiple vulnerabilities simultaneously, we may also need to make prioritization decisions in determining which vulnerabilities or security defects to fix first, and the timing of these fixes, which could result in compromised security.
To date, approximately 140 countries have tentatively signed a framework agreeing in principle to this initiative and several countries are in various stages of implementing Pillar Two proposals in local tax legislation. The OECD continues to refine the technical guidance.
To date, approximately 140 countries have tentatively signed a framework agreeing in principle to this initiative. A number of countries in which we do business have implemented Pillar Two proposals into local tax legislation. Details around the proposals are still uncertain as the OECD and local jurisdictions continue to issue the technical guidance.
The ongoing wars in Ukraine and Gaza have added strain to the European markets and the global economy, as well as exacerbated inflation, particularly energy inflation. ​ 17 Table of Contents We face intense competition and, if we are not able to respond to competition in our markets, our revenues and profits may decrease. ​ Competitive pressures in our markets could adversely affect our competitive position, leading to a possible loss of market share or a decrease in prices, either of which could result in decreased revenues and profits.
The conflicts in Europe and the Middle East have negatively impacted, and may continue to negatively impact, the availability and prices for raw materials, and components. ​ We face intense competition and, if we are not able to respond to competition in our markets, our revenues and profits may decrease. ​ Competitive pressures in our markets could adversely affect our competitive position, leading to a possible loss of market share or a decrease in prices, either of which could result in decreased revenues and profits.
In addition, our current primary ERP system will continue to be used over the course of the phased implementation and we may experience system interruptions or deficiencies as described in the paragraph above. ​ 20 Table of Contents Implementation of our strategic initiatives, including acquisition and dispositions, and integration of acquired businesses may not be successful, which could affect our ability to increase our revenues or our profitability. ​ One of our strategies is to increase our revenues and profitability and expand our business through acquisitions that will provide us with complementary products and solutions and enhance our existing product offerings.
If any of these events were to occur, our business, results of operations, and financial condition could be materially adversely affected. ​ 21 Table of Contents Implementation of our strategic initiatives, including acquisitions and dispositions, and integration of acquired businesses may not be successful, which could affect our ability to increase our revenues or our profitability. ​ One of our strategies is to increase our revenues and profitability and expand our business through acquisitions that will provide us with complementary products and solutions and enhance our existing product offerings.
In addition, we have designed products and services that connect to and are part of the “Internet of Things” which may also be vulnerable to cyber-security breaches.
We also have a portion of our workforce working remotely, which heightens these risks. ​ In addition, we have designed products and services that connect to and are part of the “Internet of Things,” which may also be vulnerable to attacks and cybersecurity incidents.
Such attacks include, but are not limited to, malicious software, misconfigurations, bugs, attempts to gain unauthorized access to data (including through social engineering/phishing or the use of malware/ransomware), and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and corruption of data.
We face numerous cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and information, including from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, and as a result of malicious software, misconfigurations, bugs, attempts to gain unauthorized access to data (including through social engineering/phishing or the use of malware/ransomware), other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and corruption of data, and other vulnerabilities in commercial software that is integrated into our (or our suppliers’ or service providers’) IT Systems, products or services.
While we may at times engage in voluntary initiatives (such as voluntary disclosures or goals), such initiatives may be costly and may not have the desired effect.
Moreover, we may be subject to the International Sustainability Standards Board’s climate and sustainability disclosure requirements, as such may be or have been adopted into law by countries including the United Kingdom, Canada, Australia, China, Hong Kong, and Singapore. ​ While we may at times engage in voluntary initiatives (such as voluntary disclosures or goals), such initiatives may be costly and may not have the desired effect.
Cybersecurity may also be breached due to employee error, malfeasance, system errors or vulnerabilities, including vulnerabilities of our customers, distributors, vendors, suppliers, and their products. We have been impacted by certain cyber-security attacks, either directly or indirectly via our supply chain or third-party vendors, and may continue to experience them going forward, potentially with more frequency.
We have been impacted by certain cybersecurity attacks, either directly or indirectly via our supply chain or third-party vendors, and may continue to experience them going forward, potentially with more frequency. While to date no attacks have had a material impact on our operations or financial results, we cannot guarantee that material attacks will not occur in the future.
Additionally, we may not have adequately anticipated or precluded such cybersecurity threats through our product design or development. Consequently, these products, services and solutions also may be subjected to harmful or illegal content or attacks that develop vulnerabilities or critical security issues that cannot be disclosed without compromising security.
Additionally, we may not have adequately anticipated or precluded such cybersecurity threats through our product design or development.
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Company Risk Factors ​ Our business, reputation and financial performance may be adversely affected by cyber-security attacks, information technology failures and other business disruptions. ​ Our business may be impacted by disruptions, including cyber-security attacks or information technology failures, threats to physical security, as well as damaging weather, fire or other acts of nature.
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Political conditions, including new and changing laws or tariffs, regulations, executive orders and enforcement priorities, may also impact customer budgets and create uncertainty about how such laws and regulations will be interpreted and applied, which may impact customer demand and adversely impact our business.
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We depend heavily on the confidentiality, integrity and availability of our information technology infrastructure and systems, including third-party data centers and third-party cloud services to manage our business objectives and operations, support our customers’ requirements and protect proprietary and other sensitive information, including personal information.
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Economic conditions and financial markets in the United States and globally have experienced significant volatility in recent periods.
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While to date no attacks have had a material impact on our operations or financial results, we cannot guarantee that material attacks will not occur in the future. We also have a 19 Table of Contents portion of our workforce working remotely, which may heighten these risks.
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For example, the new U.S. presidential administration announced plans to significantly increase tariffs on foreign imports into the United States, particularly from Canada, China and Mexico. We typically do not enter into long-term supply agreements.
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In addition, cybersecurity and data privacy and protection laws and regulations are evolving and present increasing compliance challenges, which may increase our costs, affect our competitiveness and expose us to substantial fines or other penalties.
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During fiscal year 2024, our results of operations were impacted by the softening of economic conditions in Europe. The continuation of economic weakness in Europe or in other regions could adversely impact our financial performance in such regions, as well as our consolidated financial performance.
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Cybersecurity may also be breached through diverse attack vectors, such as social engineering/phishing, malware (including ransomware), human error, malfeasance by insiders, system errors or vulnerabilities, including vulnerabilities of our customers, distributors, vendors, suppliers, and their products.
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In addition, our current primary ERP system will continue to be used over the course of the phased implementation and we may experience system interruptions or deficiencies as described in the paragraph above. Furthermore, the implementation of our ERP system will mandate new procedures and many new controls over financial reporting.
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If we are unable to adequately maintain procedures and controls relating to our ERP system, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired and impact our assessment of the effectiveness of our internal controls over financial reporting. ​ Any actual or perceived failure to comply with new or existing laws, regulations and other requirements relating to the privacy, security and processing of personal information could adversely affect our business, results of operations, or financial condition. ​ In connection with running our business, we receive, store, use and otherwise process information that relates to individuals and/or constitutes “personal data,” “personal information,” “personally identifiable information,” or similar terms under applicable data privacy laws, including from and about actual and prospective customers, as well as our employees and business contacts.
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We are therefore subject to a variety of federal, state and foreign laws, regulations and other requirements relating to the privacy, security and handling of personal information.
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For example, the EU/UK General Data Protection Regulation, the California Consumer Privacy Act, and related laws in other jurisdictions require us to adhere to certain disclosure restrictions and deletion obligations with respect to the personal information, and allow for penalties for violations and, in some cases, a private right of action.
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These laws also impose transparency and other obligations with respect to personal information and provide individuals with similar rights with respect to their personal information.
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We have invested, and continue to invest, human and technology resources in our efforts to comply with such requirements that may be time-intensive and costly. ​ The application and interpretation of such requirements are constantly evolving and are subject to change, creating a complex compliance environment.
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In some cases, these requirements may be either unclear in their interpretation and application or they may have inconsistent or conflicting requirements with each other. Further, there has been a substantial increase in legislative activity and regulatory focus on data privacy and security in the United States and elsewhere, including in relation to cybersecurity incidents.
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In addition, some such requirements place restrictions on our ability to process personal information across our business or across country borders. ​ It is possible that new laws, regulations and other requirements, or amendments to or changes in interpretations of existing laws, regulations and other requirements, may require us to incur significant costs, implement new processes, or change our handling of information and business operations, which could ultimately hinder our ability to grow our business by extracting value from our data assets.
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In addition, any failure or perceived failure by us to comply with laws, regulations and other requirements relating to the privacy, security and handling of information could result in legal claims or proceedings (including class actions), regulatory investigations or enforcement actions.
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We could incur significant costs in investigating and defending such claims and, if found liable, pay significant damages or fines or be required to make changes to our business. These proceedings and any subsequent adverse outcomes may subject us to significant negative publicity and an erosion of trust.
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For instance, in January 2025, President Trump signed an executive order directing the U.S. Attorney General and all federal agencies to identify and discourage diversity, equity and inclusion initiatives in the private sector. On the other hand, in March 2024, the SEC finalized climate-related disclosure rules that require reporting on issues including greenhouse gas emissions and certain climate-related risks.
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We are still evaluating our response to these rules given the subsequent litigation challenging these rules (as well as the SEC’s stay on its climate rules) and the new Trump Administration’s climate policy. Additionally, we may be subject to the State of California’s disclosure laws regarding greenhouse gas emissions and climate-related financial risks.
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Other US states have proposed laws similar to California’s to which we may be subject if they take effect.
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We expect to be subject to the European Union’s Corporate Sustainability Reporting Directive (“CSRD”) for the first time for fiscal year 2025, with our first report due to be published in 2026, Corporate Sustainability Due Diligence Directive (“CSDDD”), and related EU Taxonomy Regulation, along with implementing regulations, to be consolidated into an “omnibus simplification package” expected for introduction as early as February 2025 .

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CIO’s and VP of Information Security’s collectively have over 25 years of experience in leading information technology and security functions across strategy, architecture, engineering, and operations. ​ 27 Table of Contents The CIO and VP of Information Security supervise efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include but are not limited to risk assessments, including with the support of external advisors, briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment. ​ Our Cybersecurity Council, comprised of cross-functional senior leaders from operations, finance, internal audit, product management, and information technology teams, also reviews and assesses security risks and issues from a business and technology perspective across all organizations within Watts on a quarterly basis, with the guidance and input of the CIO and VP of Information Security.
Biggest changeOur VP of Information Security has over 25 years of experience in leading cybersecurity functions across strategy, architecture, engineering, and operations. ​ The CIO and VP of Information Security supervise efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include, but are not limited to, risk assessments, including with the support of external advisors, briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment. ​ Our Cybersecurity Council, comprised of cross-functional senior leaders from operations, finance, internal audit, product management, and information technology teams, also reviews and assesses security risks and issues from a business and technology perspective across all organizations within Watts on a quarterly basis, with the guidance and input of the CIO and VP of Information Security.
We use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. ​ Our cybersecurity risk management program is integrated into our overall enterprise risk management program and shares common methodologies, reporting channels, and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas. ​ Our cybersecurity risk management program includes the following: ​ ● risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment; ​ ● a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; ​ ● the use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls; ​ ● risk review of certain third-party service providers, including software vendors, third-party cloud services, and third-party hosting services, with ongoing risk monitoring for critical vendors through an external cybersecurity intelligence service; ​ ● cybersecurity awareness training of our employees, incident response personnel, and senior management; and ​ ● a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents. ​ There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information. ​ Ongoing Risks ​ We have not experienced any material cybersecurity incidents.
We use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. ​ Our cybersecurity risk management program is integrated into our overall enterprise risk management program and shares common methodologies, reporting channels, and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas. ​ Our cybersecurity risk management program includes the following: ​ ● risk assessments designed to help identify material cybersecurity risks to our critical IT Systems, information, products, services, and our broader enterprise IT environment; ​ ● a security team principally responsible for managing our (1) cybersecurity risk assessment processes, (2) security controls, and (3) response to cybersecurity incidents; ​ ● the use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls; ​ ● risk review of certain third-party service providers, including software vendors , third-party cloud services, and third-party hosting services , with ongoing risk monitoring for critical vendors through an external cybersecurity intelligence service; ​ 28 Table of Contents ● cybersecurity awareness training of our employees, incident response personnel, and senior management; and ​ ● a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents. ​ There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information. ​ Ongoing Risks ​ We have not experienced any material cybersecurity incidents.
Item 1C. CYBERSECURITY ​ Cybersecurity Risk Management and Strategy ​ We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. ​ We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”).
Item 1C. CYBERSECURITY ​ Cybersecurity Risk Management and Strategy ​ We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical IT Systems and information. ​ We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”).
Our executive management team is primarily responsible for assessing and managing our material or reasonably likely to be material risks from cybersecurity threats with the advice and input of the CIO and VP of Information Security, including based on the above and from external advisors as necessary. ​ Board Oversight of Cybersecurity ​ Our Board considers cybersecurity risks as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other information technology risks. ​ The Audit Committee oversees management’s implementation of our cybersecurity risk management program and receives updates on the cybersecurity risk management program from the CIO and the VP of Information Security at least twice yearly.
Our executive management team is responsible for assessing our material, or reasonably likely to be material, risks from cybersecurity threats with the advice and input of the CIO and VP of Information Security, including based on the above and from external advisors as necessary. ​ Board Oversight of Cybersecurity ​ Our Board considers cybersecurity risks as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other information technology risks. ​ The Audit Committee oversees management’s implementation of our cybersecurity risk management program and receives updates on the cybersecurity risk management program from the CIO and the VP of Information Security at least twice yearly.
The full Board also receives annual briefings from the CIO and the VP of Information Security on cybersecurity, or from external experts on cybersecurity as part of the Board’s continuing education on topics that impact public companies. ​
The full Board also receives annual briefings from the CIO and the VP of Information Security on cybersecurity, or from external experts on cybersecurity as part of the Board’s continuing education on topics that impact public companies. 29 Table of Contents
For a full discussion of cybersecurity risks, please see our Risk Factors in Item 1A. ​ Management Oversight of Cybersecurity ​ Our Chief Information Officer (“CIO”) and the Vice President (“VP”) of Information Security have primary responsibility for our overall cybersecurity risk management program and supervise both our internal cybersecurity personnel and our retained external cybersecurity consultants.
For a full discussion of cybersecurity risks, please see our Risk Factors in Item 1A. ​ Management Oversight of Cybersecurity ​ Our Chief Information Officer (“CIO”) and the Vice President (“VP”) of Information Security have primary responsibility for our overall cybersecurity risk management program and supervise both our internal cybersecurity personnel and our retained external cybersecurity consultants. ​ Our former CIO left the Company in January 2025.
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Currently Shashank Patel, our Chief Financial Officer, is serving as Interim CIO as we proceed with an executive search to appoint a permanent CIO. Mr. Patel has been overseeing the Company’s Information Technology function since he joined the Company in July 2018. References to the CIO and the CIO’s duties refer to our CIO’s historical role, Mr.
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Patel’s interim CIO role, and our future CIO’s role. ​ Mr. Patel has over 10 years of experience overseeing an Information Technology function.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePauls, NC ​ Manufacturing ​ Owned Menomonee Falls, WI ​ Manufacturing/Distribution ​ Owned Germantown, WI ​ Manufacturing/Distribution ​ Owned Michigan City, IN ​ Manufacturing/Distribution ​ Owned Spindale, NC ​ Distribution Center ​ Owned Fort Worth, TX ​ Manufacturing/Distribution ​ Leased Fort Myers, FL ​ Manufacturing/Distribution ​ Leased Blauvelt, NY ​ Manufacturing/Distribution ​ Leased Sparks, NV ​ Distribution Center ​ Leased Vernon, BC, Canada ​ Manufacturing/Distribution ​ Leased Woodland, CA ​ Manufacturing ​ Leased Groveport, OH ​ Distribution Center ​ Leased ​ 28 Table of Contents Europe: ​ Location Principal Use Owned/Leased Biassono, Italy ​ Manufacturing/Distribution ​ Owned Hautvillers, France ​ Manufacturing ​ Owned Landau, Germany ​ Manufacturing/Distribution ​ Owned Plovdiv, Bulgaria ​ Manufacturing ​ Owned Sorgues, France ​ Distribution Center ​ Owned Vildbjerg, Denmark ​ Manufacturing/Distribution ​ Owned Virey-le-Grand, France ​ Manufacturing/Distribution ​ Owned Rosières, France ​ Manufacturing/Distribution ​ Owned Gardolo, Italy ​ Manufacturing ​ Owned Monastir, Tunisia ​ Manufacturing ​ Leased St.
Biggest changePauls, NC ​ Manufacturing ​ Owned Menomonee Falls, WI ​ Manufacturing/Distribution ​ Owned Germantown, WI ​ Manufacturing/Distribution ​ Owned Michigan City, IN ​ Manufacturing/Distribution ​ Owned Spindale, NC ​ Distribution Center ​ Owned Fort Worth, TX ​ Manufacturing/Distribution ​ Leased Fort Myers, FL ​ Manufacturing/Distribution ​ Leased Oviedo, FL ​ Manufacturing/Distribution ​ Leased Blauvelt, NY ​ Manufacturing/Distribution ​ Leased Sparks, NV ​ Distribution Center ​ Leased Vernon, BC, Canada ​ Manufacturing/Distribution ​ Leased Woodland, CA ​ Manufacturing ​ Leased Groveport, OH ​ Distribution Center ​ Leased ​ Europe: ​ ​ ​ ​ ​ ​ Location ​ Principal Use ​ Owned/Leased Biassono, Italy ​ Manufacturing/Distribution ​ Owned Hautvillers, France ​ Manufacturing ​ Owned Landau, Germany ​ Manufacturing/Distribution ​ Owned Plovdiv, Bulgaria ​ Manufacturing ​ Owned Sorgues, France ​ Distribution Center ​ Owned Vildbjerg, Denmark ​ Manufacturing/Distribution ​ Owned Virey-le-Grand, France ​ Manufacturing/Distribution ​ Owned Rosières, France ​ Manufacturing/Distribution ​ Owned Gardolo, Italy ​ Manufacturing ​ Owned Monastir, Tunisia ​ Manufacturing ​ Leased St.
Item 2. PROPERTIES. ​ We maintain 35 principal manufacturing, warehouse and distribution centers worldwide, including our corporate headquarters located in North Andover, Massachusetts. Additionally, we maintain numerous sales offices and other smaller manufacturing facilities and warehouses.
Item 2. PROPERTIES. ​ We maintain 36 principal manufacturing, warehouse and distribution centers worldwide, including our corporate headquarters located in North Andover, Massachusetts. Additionally, we maintain numerous sales offices and other smaller manufacturing facilities and warehouses.
Neots, United Kingdom ​ Distribution ​ Leased ​ Asia-Pacific, Middle East, and Africa: ​ Location Principal Use Owned/Leased Ningbo, Beilun, China ​ Manufacturing ​ Owned Shanghai, China ​ APMEA Headquarters ​ Leased Ningbo, Beilun District, China ​ Distribution Center ​ Leased Auckland, New Zealand ​ Manufacturing/Distribution ​ Leased Dubai, United Arab Emirates ​ Sales Office/Distribution ​ Leased Caringbah, New South Wales, Australia ​ Manufacturing/Distribution ​ Leased Kewdale, Western Australia, Australia ​ Distribution ​ Leased Campbellfield, Victoria, Australia ​ Distribution ​ Leased ​ We believe that our properties, including machinery, tools and equipment, are in good condition, well maintained and adequate and suitable for their intended uses. ​
Neots, United Kingdom ​ Distribution ​ Leased ​ Asia-Pacific, Middle East, and Africa: ​ ​ ​ ​ ​ ​ Location ​ Principal Use ​ Owned/Leased Ningbo, Beilun, China ​ Manufacturing ​ Owned Shanghai, China ​ APMEA Headquarters ​ Leased Ningbo, Beilun District, China ​ Distribution Center ​ Leased Auckland, New Zealand ​ Manufacturing/Distribution ​ Leased Dubai, United Arab Emirates ​ Sales Office/Distribution ​ Leased Caringbah, New South Wales, Australia ​ Manufacturing/Distribution ​ Leased Kewdale, Western Australia, Australia ​ Distribution ​ Leased Campbellfield, Victoria, Australia ​ Distribution ​ Leased ​ We believe our properties, including machinery, tools and equipment, are in good condition, well maintained and adequate and suitable for their intended uses. 30 Table of Contents ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. LEGAL PROCEEDINGS. ​ We are from time to time involved in various legal and administrative proceedings. See Item 1. “Business—Product Liability, Environmental and Other Litigation Matters,” and Note 16 of the Notes to Consolidated Financial Statements, both of which are incorporated herein by reference. ​ Item 4.
Biggest changeItem 3. LEGAL PROCEEDINGS. ​ We are from time to time involved in various legal and administrative proceedings. See Item 1. “Business—Product Liability, Environmental and Other Litigation Matters,” and Note 16 of the Notes to Consolidated Financial Statements, both of which are incorporated herein by reference. ​ Item 4. MINE SAFETY DISCLOSURES. ​ Not applicable. PART II ​
Removed
MINE SAFETY DISCLOSURES. ​ Not applicable. 29 Table of Contents PART II ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe did not have any such repurchases in the three-month period ended December 31, 2023. ​ The following table includes information with respect to repurchases of our Class A common stock during the three-month period ended December 31, 2023 under our stock repurchase programs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuer Purchases of Equity Securities (1) ​ ​ ​ ​ ​ (d) Maximum Number (or ​ ​ (a) Total ​ ​ ​ ​ (c) Total Number of ​ Approximate Dollar ​ ​ Number of ​ (b) Average ​ Shares (or Units) ​ Value) of Shares (or ​ ​ Shares (or ​ Price Paid ​ Purchased as Part of ​ Units) that May Yet Be ​ ​ Units) ​ per Share ​ Publicly Announced ​ Purchased Under the Period ​ Purchased(1) ​ (or Unit) ​ Plans or Programs ​ Plans or Programs September 25, 2023 – October 22, 2023 7,069 ​ $ 175.08 7,069 ​ $ 165,026,242 October 23, 2023 – November 19, 2023 6,956 ​ $ 180.37 6,956 ​ $ 163,771,607 November 20, 2023 – December 31, 2023 ​ 9,028 ​ $ 199.75 ​ 9,028 ​ $ 161,968,227 Total 23,053 ​ $ 186.31 23,053 ​ ​ ​ (1) On February 6, 2019, we announced that our Board of Directors had approved a repurchase program of up to $150 million of our Class A common stock, to be purchased from time to time on the open market or in privately negotiated transactions, which does not have an expiration date.
Biggest changeWe did not have any such repurchases in the three-month period ended December 31, 2024. ​ The following table includes information with respect to repurchases of our Class A common stock during the three-month period ended December 31, 2024 under our stock repurchase programs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuer Purchases of Equity Securities (1) ​ ​ ​ ​ ​ (d) Maximum Number (or ​ ​ (a) Total ​ ​ ​ ​ (c) Total Number of ​ Approximate Dollar ​ ​ Number of ​ (b) Average ​ Shares (or Units) ​ Value) of Shares (or ​ ​ Shares (or ​ Price Paid ​ Purchased as Part of ​ Units) that May Yet Be ​ ​ Units) ​ per Share ​ Publicly Announced ​ Purchased Under the Period ​ Purchased(1) ​ (or Unit) ​ Plans or Programs ​ Plans or Programs September 30, 2024 – October 27, 2024 6,070 ​ $ 205.36 6,070 ​ $ 147,747,960 October 28, 2024 – November 24, 2024 6,113 ​ $ 204.55 6,113 ​ $ 146,497,693 November 25, 2024 – December 31, 2024 ​ 7,355 ​ $ 212.85 ​ 7,355 ​ $ 144,932,380 Total 19,538 ​ $ 207.90 19,538 ​ ​ ​ (1) On February 6, 2019, we announced that our Board of Directors had authorized a repurchase program of up to $150 million of our Class A common stock, to be purchased from time to time on the open market or in privately negotiated transactions.
We chose the Russell 2000 Index because it represents companies with a market capitalization similar to that of Watts Water. The graph assumes that the value of the investment in our Class A common stock and each index was $100 at December 31, 2018 and that all dividends were reinvested.
We chose the Russell 2000 Index because it represents companies with a market capitalization similar to that of Watts Water. The graph assumes that the value of the investment in our Class A common stock and each index was $100 at December 31, 2019 and that all dividends were reinvested.
On July 31, 2023, the Board of Directors authorized an additional stock repurchase program of up to $150 million of our Class A common stock to be purchased from time to time on the open market or in privately negotiated transactions, which also has no expiration date.
On July 31, 2023, the Board of Directors authorized an additional stock repurchase program of up to $150 million of our Class A common stock to be purchased from time to time on the open market or in privately negotiated transactions, which also 31 Table of Contents has no expiration date.
The timing and number of shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors. ​ 30 Table of Contents Performance Graph ​ Set forth below is a line graph comparing the cumulative total shareholder return on our Class A common stock for the last five years with the cumulative return of companies on the Standard & Poor’s 500 Stock Index and the Russell 2000 Index.
The timing and number of shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors. ​ Performance Graph ​ Set forth below is a line graph comparing the cumulative total shareholder return on our Class A common stock for the last five years with the cumulative return of companies on the Standard & Poor’s 500 Stock Index and the Russell 2000 Index.
Each share of our Class B common stock (10 votes per share) is convertible into one share of Class A common stock (1 vote per share). ​ The number of record holders of our Class A common stock as of January 28, 2024 was 58.
Each share of our Class B common stock (10 votes per share) is convertible into one share of Class A common stock (1 vote per share). ​ The number of record holders of our Class A common stock as of January 26, 2025 was 57.
The number of record holders of our Class B common stock as of January 28, 2024 was 10. ​ Aggregate common stock dividend payments in 2023 were $46.5 million, which consisted of $38.3 million and $8.2 million for Class A shares and Class B shares, respectively.
Aggregate common stock dividend payments in 2023 were $46.5 million, which consisted of $38.3 million and $8.2 million for Class A shares and Class B shares, respectively.
Cumulative Total Return ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Watts Water Technologies, Inc. 100.00 ​ 156.19 ​ 192.37 ​ 309.02 ​ 234.63 ​ 336.88 S & P 500 100.00 ​ 131.49 ​ 155.68 ​ 200.37 ​ 164.08 ​ 207.21 Russell 2000 100.00 ​ 125.52 ​ 150.58 ​ 172.90 ​ 137.56 ​ 160.85 ​ The above Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing. ​ Item 6. [Reserved] ​ 31 Table of Contents
Cumulative Total Return ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Watts Water Technologies, Inc. 100.00 ​ 123.16 ​ 197.84 ​ 150.22 ​ 215.68 ​ 212.18 S & P 500 100.00 ​ 118.40 ​ 152.39 ​ 124.79 ​ 157.59 ​ 197.02 Russell 2000 100.00 ​ 119.96 ​ 137.74 ​ 109.59 ​ 128.14 ​ 142.93 ​ The above Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that we specifically incorporate it by reference into such filing. ​ 32 Table of Contents Item 6. [Reserved] ​
Aggregate common stock dividend payments in 2022 were $39.5 million, which consisted of $32.5 million and $7.0 million for Class A shares and Class B shares, respectively.
The number of record holders of our Class B common stock as of January 26, 2025 was 9. ​ Aggregate common stock dividend payments in 2024 were $55.5 million, which consisted of $45.7 million and $9.8 million for Class A shares and Class B shares, respectively.
Removed
The additional $150 million has been reflected in the maximum dollar value of shares that may yet be purchased in column (d) above.
Added
This repurchase program was completed in 2024 after the Company expended the remainder of the $150 million authorized under the repurchase program.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. ​ [RESERVED] 31 Item 7. ​ MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 32 Item 7A. ​ QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 46 Item 8. ​ FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 46
Biggest changeItem 6. ​ [RESERVED] 33 Item 7. ​ MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 33 Item 7A. ​ QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 48 Item 8. ​ FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 48 Item 9. ​ CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 48 Item 9A. ​ CONTROLS AND PROCEDURES 49 Item 9B. ​ OTHER INFORMATION 50

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOperating income (loss) by geographic segment for 2023 and 2022 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change to ​ Year Ended ​ ​ Consolidated ​ December 31, ​ December 31, ​ ​ Operating ​ ​ ​ 2023 2022 Change Income ​ ​ (dollars in millions) ​ ​ ​ Americas ​ $ 325.2 $ 283.9 $ 41.3 13.1 % Europe ​ 70.4 ​ 66.7 ​ 3.7 1.2 ​ APMEA ​ 16.1 ​ 14.0 ​ 2.1 0.7 ​ Corporate ​ (60.8) ​ (49.6) ​ (11.2) (3.6) ​ Total ​ $ 350.9 ​ $ 315.0 ​ $ 35.9 11.4 % ​ 36 Table of Contents The increase (decrease) in operating income (loss) is attributable to the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change As a % of ​ Change As a % of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated Operating Income ​ Segment Operating Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ Europe ​ APMEA ​ Corporate ​ Total ​ Americas ​ Europe ​ APMEA ​ Corporate ​ Total ​ Americas ​ Europe ​ APMEA ​ Corporate ​ ​ (dollars in millions) Organic ​ $ 41.6 ​ $ (4.0) ​ $ 2.3 ​ $ (11.2) ​ $ 28.7 ​ 13.2 % (1.3) % 0.7 % (3.6) % 9.0 % 14.7 % (6.0) % 16.4 % 22.6 % Foreign exchange ​ ​ (1.1) ​ ​ 1.2 ​ ​ (0.1) ​ ​ — ​ ​ — ​ (0.4) ​ 0.4 ​ — ​ — ​ — ​ (0.4) ​ 1.8 ​ (0.7) ​ — Acquired ​ ​ 1.2 ​ ​ — ​ ​ 1.0 ​ ​ — ​ ​ 2.2 ​ 0.4 ​ — ​ 0.3 ​ — ​ 0.7 ​ 0.4 ​ — ​ 7.1 ​ — Restructuring, impairment charges ​ (0.4) ​ 6.5 ​ (1.1) ​ — ​ 5.0 (0.1) 2.1 (0.3) — 1.7 (0.1) 9.8 (7.8) — ​ Total ​ $ 41.3 ​ $ 3.7 ​ $ 2.1 ​ $ (11.2) ​ $ 35.9 13.1 % 1.2 % 0.7 % (3.6) % 11.4 % 14.6 % 5.6 % 15.0 % 22.6 % ​ Operating income increased $35.9 million, or 11.4%, in 2023 compared to 2022.
Biggest changeOperating income, which is made up of segment earnings, Corporate operating loss and special items, for 2024 and 2023 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change to ​ Year Ended ​ ​ Consolidated ​ December 31, ​ December 31, ​ ​ Operating ​ ​ ​ 2024 2023 Change Income ​ ​ (dollars in millions) ​ ​ ​ Americas ​ $ 376.0 $ 328.5 $ 47.5 13.6 % Europe ​ 53.2 ​ 72.4 ​ (19.2) (5.5) ​ APMEA ​ 24.5 ​ 19.3 ​ 5.2 1.5 ​ Total segment earnings ​ $ 453.7 ​ $ 420.2 ​ ​ 33.5 9.6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate operating loss - excluding special items ​ (54.1) ​ (55.0) ​ 0.9 0.2 ​ Corporate special items ​ (1.7) ​ (5.8) ​ 4.1 1.2 ​ Corporate operating loss - as reported ​ $ (55.8) ​ $ (60.8) ​ 5.0 1.4 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment special items ​ (7.5) ​ (8.5) ​ 1.0 0.3 ​ Total operating income ​ $ 390.4 ​ $ 350.9 ​ $ 39.5 11.3 % ​ The increase (decrease) in total segment earnings is attributable to the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change As a % of ​ Change As a % of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Segment Earnings ​ Segment Earnings ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ Europe ​ APMEA ​ Total ​ Americas ​ Europe ​ APMEA ​ Total ​ Americas ​ Europe ​ APMEA ​ ​ ​ (dollars in millions) Organic ​ $ 23.0 ​ $ (19.5) ​ $ 4.3 ​ $ 7.8 ​ 5.5 % (4.6) % 1.0 % 1.9 % 7.0 % (26.9) % 22.3 % Foreign exchange ​ ​ (0.3) ​ ​ 0.3 ​ ​ 0.2 ​ ​ 0.2 ​ (0.1) ​ 0.1 ​ — ​ — ​ (0.1) ​ 0.4 ​ 1.0 ​ Acquired ​ ​ 24.8 ​ ​ — ​ ​ 0.7 ​ ​ 25.5 ​ 5.9 ​ — ​ 0.2 ​ 6.1 ​ 7.5 ​ — ​ 3.6 ​ Total ​ $ 47.5 ​ $ (19.2) ​ $ 5.2 ​ $ 33.5 11.3 % (4.5) % 1.2 % 8.0 % 14.4 % (26.5) % 26.9 % ​ Operating income increased $39.5 million, or 11.3%, in 2024 compared to 2023.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. ​ Overview ​ We are a leading supplier of products and solutions that manage and conserve the flow of fluids and energy into, through and out of buildings in the commercial, industrial and residential markets in the Americas, Europe and Asia-Pacific, Middle East and Africa (“APMEA”).
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. ​ Overview ​ 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”).
Our principal product and solutions categories include: ​ ● Residential & commercial flow control and protection—includes products and solutions typically sold into plumbing and hot water applications such as backflow preventers, water pressure regulators, temperature and pressure relief valves, thermostatic mixing valves, leak detection and protection products, commercial washroom solutions and emergency safety products and equipment.
Our principal product and solution categories include: ​ · Residential & commercial flow control and protection—includes products and solutions typically sold into plumbing and hot water applications such as backflow preventers, water pressure regulators, temperature and pressure relief valves, thermostatic mixing valves, leak detection and protection products, commercial washroom solutions and emergency safety products and equipment.
We believe that these measures enhance the overall understanding of underlying business results and trends. These non-GAAP measures are not intended to be considered by the user in place of the related GAAP measure, but rather as supplemental information to more fully understand our business results.
We believe that these measures enhance the overall understanding of underlying business results and trends. These non-GAAP measures are not intended to be considered by the user in place of the related GAAP financial measure, but rather as supplemental information to more fully understand our business results.
We remain focused on our customers’ needs and executing on our long-term strategy. ​ Due to the above circumstances and as described generally in this Form 10-K, our results of operations for the year ended December 31, 2023 are not necessarily indicative of future results. Management cannot predict the full impact of the uncertainties discussed above.
We remain focused on our customers’ needs and executing on our long-term strategy. ​ Due to the above circumstances and as described generally in this Form 10-K, our results of operations for the year ended December 31, 2024 are not necessarily indicative of future results. Management cannot predict the full impact of the uncertainties discussed above.
We are focused on introducing products that connect our customers with smart systems, control systems for optimal performance, and conserve critical resources by increasing operability, efficiency and safety. ​ Products representing a majority of our sales are subject to regulatory standards and code enforcement, which typically require that these products meet stringent performance criteria.
We are focused on introducing products that connect our customers with smart systems, manage systems for optimal performance, and conserve critical resources by increasing operability, efficiency and safety. ​ Products representing a majority of our sales are subject to regulatory standards and code enforcement, which typically require that these products meet stringent performance criteria.
GAAP. Therefore, it should not be considered an alternative to net cash provided by operating activities as an indication of our performance. The cash conversion rate of free cash flow to net income is also a measure of our performance in cash flow generation.
GAAP. Therefore, it should not be considered an alternative to net cash provided by or used in operating activities as an indication of our performance. The cash conversion rate of free cash flow to net income is also a measure of our performance in cash flow generation.
If, after assessing the totality of events and circumstances, we determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then performing the quantitative impairment test is unnecessary. ​ We first identify those reporting units that we believe could pass a qualitative assessment to determine whether further impairment testing is necessary.
If, after assessing the totality of events and circumstances, we determine it is more likely than not the fair value of a reporting unit is greater than its carrying amount, then performing the quantitative impairment test is unnecessary. ​ 45 Table of Contents We first identify those reporting units that we believe could pass a qualitative assessment to determine whether further impairment testing is necessary.
We distribute our products through four primary distribution channels: wholesale, original equipment manufacturers (OEMs), specialty, and do-it-yourself (DIY). ​ 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.
We distribute our products through four primary distribution channels: wholesale, original equipment manufacturers (“OEMs”), specialty, and do-it-yourself (“DIY”). ​ 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.
We estimate the fair value of our reporting units using an income approach based on the present value of estimated future cash flows, and when appropriate, guideline public company and guideline transaction market approaches. ​ 43 Table of Contents Accounting guidance allows us to assess goodwill for impairment utilizing either qualitative or quantitative analyses.
We estimate the fair value of our reporting units using an income approach based on the present value of estimated future cash flows, and when appropriate, guideline public company and guideline transaction market approaches. ​ Accounting guidance allows us to assess goodwill for impairment utilizing either qualitative or quantitative analyses.
The product liability accrual represents the estimated ultimate losses for all reported and incurred but not reported claims. For the remainder of our product liability accrual, where we do not utilize third-party actuarial valuations, we maintain insurance and calculate potential product liability accruals which includes legal costs associated with the accrued claims on a case-by-case basis.
The product liability accrual represents the estimated ultimate losses for all reported and 46 Table of Contents incurred but not reported claims. For the remainder of our product liability accrual, where we do not utilize third-party actuarial valuations, we maintain insurance and calculate potential product liability accruals which includes legal costs associated with the accrued claims on a case-by-case basis.
Management believes the following critical accounting policies reflect our more significant estimates and assumptions. ​ Revenue recognition ​ We recognize revenue under the core principle to recognize revenue in a manner that depicts the transfer of control to our customers in an amount reflecting the consideration to which we expect to be entitled.
Management believes the following critical accounting policies reflect our more significant estimates and assumptions. ​ 44 Table of Contents Revenue recognition ​ We recognize revenue under the core principle to recognize revenue in a manner that depicts the transfer of control to our customers in an amount reflecting the consideration to which we expect to be entitled.
We are subject to a variety of potential liabilities in connection with product liability cases, and for our most significant volume of liability matters, we maintain a high self-insured retention limit within our product 44 Table of Contents liability and general liability coverage, which we believe to be generally in accordance with industry practices.
We are subject to a variety of potential liabilities in connection with product liability cases, and for our most significant volume of liability matters, we maintain a high self-insured retention limit within our product liability and general liability coverage, which we believe to be generally in accordance with industry practices.
There were no significant changes in our accounting policies or significant changes in our accounting estimates during 2023. ​ We periodically discuss the development, selection and disclosure of the estimates with our Audit Committee.
There were no significant changes in our accounting policies or significant changes in our accounting estimates during 2024. ​ We periodically discuss the development, selection and disclosure of the estimates with our Audit Committee.
GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported. A critical accounting estimate is an assumption about highly uncertain matters and could have a material effect on the consolidated financial statements if another, also 42 Table of Contents reasonable, amount were used, or, a change in the estimate is reasonably likely from period to period.
GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported. A critical accounting estimate is an assumption about highly uncertain matters and could have a material effect on the consolidated financial statements if another, also reasonable, amount were used, or a change in the estimate is reasonably likely from period to period.
Consolidated funded debt, as defined in the Credit Agreement, includes all long and short-term debt, finance lease obligations and any trade letters of credit that are outstanding, less cash and cash equivalents on the balance sheet. ​ As of December 31, 2023, our actual financial ratios calculated in accordance with the Credit Agreement compared to the required levels under the Credit Agreement were as follows: ​ ​ ​ ​ ​ ​ ​ Actual Ratio Required Level ​ ​ ​ Minimum level Interest Charge Coverage Ratio 45.5 to 1.00 3.50 to 1.00 ​ ​ ​ Maximum level Leverage Ratio 0.00 to 1.00 3.50 to 1.00 (or 4.00 to 1.00 during temporary step-ups following certain acquisitions) ​ As of December 31, 2023, we were in compliance with all covenants related to the Credit Agreement. ​ In addition to financial ratios, the Credit Agreement contains affirmative and negative covenants that include limitations on disposition or sale of assets, prohibitions on assuming or incurring any liens on assets with limited exceptions and limitations on making investments other than those permitted by the agreement. ​ Working capital (defined as current assets less current liabilities) as of December 31, 2023 was $655.2 million compared to $571.9 million as of December 31, 2022.
Consolidated funded debt, as defined in the Credit Agreement, includes all long and short-term debt, finance lease obligations and any trade letters of credit that are outstanding, less cash and cash equivalents on the balance sheet. ​ As of December 31, 2024, our actual financial ratios calculated in accordance with the Credit Agreement compared to the required levels under the Credit Agreement were as follows: ​ ​ ​ ​ ​ ​ ​ Actual Ratio Required Level ​ ​ ​ Minimum level Interest Charge Coverage Ratio 32.3 to 1.00 3.50 to 1.00 ​ ​ ​ Maximum level Leverage Ratio 0.00 to 1.00 3.50 to 1.00 (or 4.00 to 1.00 during temporary step-ups following certain acquisitions) ​ As of December 31, 2024, we were in compliance with all covenants related to the Credit Agreement. ​ In addition to financial ratios, the Credit Agreement contains affirmative and negative covenants that include limitations on disposition or sale of assets, prohibitions on assuming or incurring any liens on assets with limited exceptions and limitations on making investments other than those permitted by the agreement. ​ Working capital (defined as current assets less current liabilities) as of December 31, 2024 was $665.6 million compared to $655.2 million as of December 31, 2023.
See Note 12 of Notes to the Consolidated Financial Statements in this Annual Report for further disclosures. ​ (b) Relates to the lease liabilities recognized for right-of-use assets of operating leases with a lease term longer than twelve months.
See Note 12 of Notes to the Consolidated Financial Statements in this Annual Report for further disclosures. ​ 41 Table of Contents (b) Relates to the lease liabilities recognized for right-of-use assets of operating leases with a lease term longer than twelve months.
Our strategy is to deliver superior customer value through smart and connected products and solutions. This strategy focuses on three dimensions: Connect, Control and Conserve.
Our strategy is to deliver superior customer value through smart and connected products and intelligent water solutions. This strategy focuses on three dimensions: Connect, Control and Conserve.
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. ​ 32 Table of Contents Over the past several years we have been building our smart and connected products foundation by expanding our internal capabilities and making strategic acquisitions.
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. ​ Over the past several years we have been building our smart and connected products foundation by expanding our internal capabilities and making strategic acquisitions.
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.
In addition to paying interest under the Credit Agreement, we are also required to pay certain fees in connection with the 39 Table of Contents Revolving Credit Facility, including, but not limited to, an unused facility fee and letter of credit fees.
Management believes reporting these financial measures provides useful information to investors, potential investors and others, by facilitating easier comparisons of our performance with prior and future periods. ​ A reconciliation of U.S.
Management believes reporting these financial measures provides useful information to investors, potential investors and others, by facilitating easier comparisons of our performance with prior and future periods. ​ 42 Table of Contents A reconciliation of U.S.
As a result of our qualitative analyses, we determined that the fair values of the six reporting units noted above were more likely than not greater than the carrying amounts. In 2023, we did not need to proceed beyond the qualitative analysis, and no goodwill impairments were recorded.
As a result of our qualitative analyses, we determined that the fair values of the seven reporting units noted above were more likely than not greater than the carrying amounts. In 2024, we did not need to proceed beyond the qualitative analysis, and no goodwill impairments were recorded.
The financial ratios include a consolidated interest coverage ratio based on 38 Table of Contents consolidated earnings before income taxes, interest expense, depreciation, and amortization (Consolidated EBITDA) to consolidated interest expense, as defined in the Credit Agreement. The Credit Agreement defines Consolidated EBITDA to exclude unusual or non-recurring charges and gains.
The financial ratios include a consolidated interest coverage ratio based on consolidated earnings before income taxes, interest expense, depreciation, and amortization (Consolidated EBITDA) to consolidated interest expense, as defined in the Credit Agreement. The Credit Agreement defines Consolidated EBITDA to exclude unusual or non-recurring charges and gains.
Amounts outstanding were approximately $12.5 million as of December 31, 2023 and $12.1 million as of December 31, 2022. Our letters of credit are primarily associated with insurance coverage and, to a lesser extent, foreign purchases and generally expire within one year of issuance.
Amounts outstanding were approximately $12.9 million as of December 31, 2024 and $12.5 million as of December 31, 2023. Our letters of credit are primarily associated with insurance coverage and, to a lesser extent, foreign purchases and generally expire within one year of issuance.
For a more detailed description of our current restructuring plans, see Note 3 of Notes to Consolidated Financial Statements in this Annual Report Form 10-K. ​ Operating Income (Loss).
For a more detailed description of our current restructuring plans, see Note 3 of Notes to Consolidated Financial Statements in this Annual Report Form 10-K.
Many of our flow control and protection products are now smart and connected enabled, warning of leaks, floods and freeze with alerts to Building Management System (“BMS”) and/or personal devices giving our customers greater insight into their water management and the ability to shut off the water supply to avoid waste and mitigate damage. ​ ● HVAC & gas—includes commercial high-efficiency boilers, water heaters and heating solutions, hydronic and electric heating systems for under-floor radiant applications, custom heat and hot water solutions, hydronic pump groups for boiler manufacturers and alternative energy control packages, and flexible stainless steel connectors for natural and liquid propane gas in commercial food service and residential applications.
Many of our flow control and protection products are now smart and connected enabled, warning of leaks, floods, freezing temperatures and other hazards with alerts to Building Management Systems (“BMS”) and/or personal devices giving our customers greater insight into their water management and the ability to shut off the water supply to avoid waste and mitigate damage. ​ · Heating, ventilation and air conditioning (“HVAC”) & gas—includes commercial high-efficiency boilers, water heaters and heating solutions, hydronic and electric heating systems for under-floor radiant applications, custom heat and hot water solutions, hydronic pump groups for boiler manufacturers and alternative energy control packages, and flexible stainless steel connectors for natural and liquid propane gas in commercial food service and residential applications.
During 2023, 2022, and 2021, no impairment was recognized on our indefinite-lived intangible assets.
During 2024, 2023, and 2022, no impairment was recognized on our indefinite-lived intangible assets.
The Credit Agreement provides for our 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. ​ The Revolving Credit Facility also includes sub-limits of $100 million for letters of credit and $15 million for swing line loans.
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. ​ The Revolving Credit Facility also includes sublimits of $100 million for letters of credit and $15 million for swing line loans.
In 2023, we recorded a net restructuring charge of $5.5 million, which primarily related to immaterial cost reduction actions in all regions primarily related to severance and other exit costs.
In 2024, we recorded a net restructuring charge of $7.2 million, which related to immaterial actions in all regions including severance, exit costs and other cost reductions. In 2023, we recorded a net restructuring charge of $5.5 million, which related to immaterial cost reduction actions in all regions primarily related to severance and other exit costs.
For the borrowings denominated in dollars, there is 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 December 31, 2023 was 6.53%.
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 December 31, 2024 was 5.64%.
These instruments may exist or expire without being drawn down; therefore, they do not necessarily represent future cash flow obligations. ​ 39 Table of Contents Our contractual obligations as of December 31, 2023 are presented in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Next Beyond Contractual Obligations ​ Total ​ 12 Months ​ 12 Months ​ ​ (in millions) Long-term debt obligations, including current maturities(a) ​ $ 300.0 ​ $ — ​ $ 300.0 Operating lease obligations(b) ​ 64.1 ​ 11.8 ​ 52.3 Finance lease obligations(c) ​ 2.6 ​ 1.3 ​ 1.3 Pension contributions(d) ​ 9.2 ​ 0.5 ​ 8.7 Interest(e) ​ 25.6 ​ 13.5 ​ ​ 12.1 2017 Tax Act Toll Tax payable(f) ​ ​ 15.3 ​ ​ 6.8 ​ ​ 8.5 Capital expenditures(g) ​ ​ 6.1 ​ ​ 6.1 ​ ​ — Purchase obligations(h) ​ 171.9 ​ 165.4 ​ 6.5 Total ​ $ 594.8 ​ $ 205.4 ​ $ 389.4 ​ (a) Relates to drawdowns on the line of credit under the Credit Agreement as recognized in the consolidated balance sheet.
These instruments may exist or expire without being drawn down; therefore, they do not necessarily represent future cash flow obligations. ​ Our contractual obligations as of December 31, 2024 are presented in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Next Beyond Contractual Obligations ​ Total ​ 12 Months ​ 12 Months ​ ​ (in millions) Long-term debt obligations, including current maturities(a) ​ $ 200.0 ​ $ — ​ $ 200.0 Operating lease obligations(b) ​ 57.8 ​ 12.9 ​ 44.9 Finance lease obligations(c) ​ 4.6 ​ 2.7 ​ 1.9 Pension contributions(d) ​ 9.0 ​ 0.4 ​ 8.6 Interest(e) ​ 17.1 ​ 9.9 ​ ​ 7.2 2017 Tax Act Toll Tax payable(f) ​ ​ 8.4 ​ ​ 8.4 ​ ​ — Capital expenditures(g) ​ ​ 4.4 ​ ​ 4.4 ​ ​ — Purchase obligations(h) ​ 52.0 ​ 49.8 ​ 2.2 Total ​ $ 353.3 ​ $ 88.5 ​ $ 264.8 ​ (a) Relates to drawdowns on the line of credit under the Credit Agreement as recognized in the consolidated balance sheet.
Josam is based in Michigan City, Indiana, and is a leading provider and manufacturer of drainage and plumbing products, serving commercial, industrial, and multi-family end markets for over 100 years. Josam’s annualized sales are approximately $35 million.
Josam is based in Michigan City, Indiana, and is a leading provider and manufacturer of drainage and plumbing products, serving commercial, industrial, and multi-family end markets for over 100 years.
The change in net sales was negatively impacted by $4.0 million, or 4.5%, of foreign currency translation, which was more than offset by $25.2 million, or 27.9%, of acquired sales related to the Enware acquisition completed in the second quarter of 2023.
The change in net sales was negatively impacted by $0.9 million, or 0.8%, of foreign currency translation, which was more than offset by $8.1 million, or 7.0%, of acquired sales related to the Enware acquisition completed in the second quarter of 2023.
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 December 31, 2023 was 4.89%.
The weighted average interest rate on debt outstanding inclusive of the interest rate swap discussed in Note 17 of the Notes to Consolidated Financial Statements and interest rates under the Revolving Credit Facility as of December 31, 2024 was 4.07%.
Our computation may not be comparable to other companies that may define their net debt to capitalization ratios differently. ​ A reconciliation of long-term debt (including current portion) to net debt and our net debt to capitalization ratio is provided below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2023 ​ 2022 ​ ​ (in millions) Current portion of long‑term debt $ — ​ $ — Plus: long-term debt, net of current portion ​ 298.3 ​ 147.6 Less: cash and cash equivalents ​ (350.1) ​ (310.8) Net debt ​ $ (51.8) ​ $ (163.2) ​ A reconciliation of capitalization is provided below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ 2023 ​ 2022 ​ ​ ​ (in millions) Net debt ​ $ (51.8) ​ $ (163.2) ​ Total stockholders’ equity ​ 1,513.3 ​ 1,300.6 ​ Capitalization ​ $ 1,461.5 ​ $ 1,137.4 ​ Net debt to capitalization ratio ​ (3.5) % (14.3) % ​ Application of Critical Accounting Policies and Key Estimates ​ The preparation of our consolidated financial statements in accordance with U.S.
Our computation may not be comparable to other companies that may define their net debt to capitalization ratios differently. ​ A reconciliation of long-term debt (including current portion) to net debt and our net debt to capitalization ratio is provided below: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2024 ​ 2023 ​ ​ (in millions) Current portion of long‑term debt $ — ​ $ — Plus: long-term debt, net of current portion ​ 197.0 ​ 298.3 Less: cash and cash equivalents ​ (386.9) ​ (350.1) Net debt ​ $ (189.9) ​ $ (51.8) ​ A reconciliation of capitalization is provided below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ ​ ​ (in millions) Net debt ​ $ (189.9) ​ $ (51.8) ​ Total stockholders’ equity ​ 1,707.9 ​ 1,513.3 ​ Capitalization ​ $ 1,518.0 ​ $ 1,461.5 ​ Net debt to capitalization ratio ​ (12.5) % (3.5) % ​ Application of Critical Accounting Policies and Key Estimates ​ The preparation of our consolidated financial statements in accordance with U.S.
The change in net sales was positively impacted by $9.2 million, or 1.8%, of foreign currency translation. Organic net sales increased $3.8 million, or 0.8%, primarily due to higher price realization, partially offset by lower volumes.
The change in net sales was positively impacted by $1.5 million, or 0.3%, of foreign currency translation. Organic net sales decreased $60.3 million, or 11.8%, primarily due to lower volumes, partially offset by favorable price realization.
As of December 31, 2023, we had drawn down $300.0 million on this line of credit and had $12.5 million in letters of credit outstanding, which resulted in $487.5 million of unused and available credit under the Revolving Credit Facility as of such date.
As of December 31, 2024, we had drawn down $200.0 million on this line of credit and had $12.9 million in letters of credit outstanding, which resulted in $587.1 million of unused and available credit under the Revolving Credit Facility as of such date.
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.
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.
The ratio of current assets to current liabilities was 2.6 to 1 as of December 31, 2023 compared to 2.5 to 1 as of December 31, 2022.
The ratio of current assets to current liabilities was 2.6 to 1 as of December 31, 2024 and December 31, 2023.
A reconciliation to the most closely related U.S. 40 Table of Contents GAAP measure, net sales, has been included in our discussion within “Results of Operations” above. Organic net sales should be considered in addition to, and not as a replacement for or as a superior measure to net sales.
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 organic sales growth provides useful information to investors, potential investors and others, by facilitating easier comparisons of our revenue performance with prior and future periods. ​ Adjusted operating income, adjusted operating margins, adjusted net income, and adjusted earnings per share are non-GAAP measures that exclude certain expenses incurred and benefits recognized in the periods presented that relate primarily to our global restructuring programs, acquisition-related costs, contingent consideration adjustment, gain on sale of asset, and the related income tax impacts on these items and other tax adjustments.
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. ​ Adjusted operating income, adjusted operating margins, adjusted net income, and adjusted diluted earnings per share are non-GAAP measures that exclude the impact of special items which are defined as non-recurring, and unusual expenses incurred or benefits recognized in the periods presented that relate primarily to our global restructuring programs, acquisition-related costs, contingent consideration adjustment, gain or loss on sale of assets, pension settlements, other investment gains and the related income tax impacts on these items and other tax adjustments.
The increase in working capital is primarily related to the increase in cash and cash equivalents as a result of increased cash from operating activities. ​ Material Cash Requirements ​ We expect existing cash and cash equivalents and cash flows from operations and financing activities to be sufficient to meet our cash needs during 2024 and thereafter for the foreseeable future. ​ We anticipate investing between $55 million to $65 million in capital expenditures during 2024 to improve our manufacturing capabilities and invest in technology and other commercial and operational excellence initiatives. ​ We intend to continue to repurchase shares of Class A common stock consistent with prior years.
The increase in working capital is primarily related to the increase in cash and cash equivalents as a result of increased cash from operating activities. ​ 40 Table of Contents Material Cash Requirements ​ We expect existing cash and cash equivalents and cash flows from operations and financing activities to be sufficient to meet our cash needs during 2025 and thereafter for the foreseeable future. ​ We anticipate investing between $45 million to $50 million in capital expenditures during 2025 to improve our manufacturing capabilities and invest in technology and other commercial and operational excellence initiatives.
We target businesses that 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 believe that sustainability guides and permeates every aspect of our business, including our product development strategy and design, and how we structure our operations.
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.
GAAP results to these adjusted non-GAAP measures is provided below (dollars in millions, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ December 31, ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 2,056.3 ​ $ 1,979.5 ​ ​ ​ ​ ​ ​ ​ Operating income - as reported ​ ​ 350.9 ​ ​ 315.0 Operating margin % ​ ​ 17.1% ​ ​ 15.9% ​ ​ ​ ​ ​ ​ ​ Adjustments for special items: ​ ​ ​ ​ Restructuring ​ ​ 5.5 ​ ​ 10.6 Acquisition-related costs ​ ​ 11.3 ​ ​ — Contingent consideration adjustment ​ ​ (2.5) ​ ​ — Gain on sale of asset ​ ​ — ​ ​ (1.8) ​ ​ ​ ​ ​ ​ ​ Total adjustments for special items ​ $ 14.3 ​ $ 8.8 ​ ​ ​ ​ ​ ​ ​ Operating income - as adjusted ​ $ 365.2 ​ $ 323.8 Adjusted operating margin % ​ ​ 17.8% ​ ​ 16.4% ​ ​ ​ ​ ​ ​ ​ Net income - as reported ​ $ 262.1 ​ $ 251.5 ​ ​ ​ ​ ​ ​ ​ Adjustments for special items - tax effected: ​ ​ ​ ​ ​ ​ Restructuring ​ ​ 4.1 ​ ​ 7.9 Acquisition-related costs ​ ​ 8.3 ​ ​ — Contingent consideration adjustment ​ ​ (2.5) ​ ​ — Gain on sale of asset ​ ​ — ​ ​ (1.4) Discrete tax items ​ ​ 5.3 ​ ​ (18.2) ​ ​ ​ ​ ​ ​ ​ Total adjustments for special items - tax effected: ​ $ 15.2 ​ $ (11.7) ​ ​ ​ ​ ​ ​ ​ Net income as adjusted ​ $ 277.3 ​ $ 239.8 ​ ​ ​ ​ ​ ​ ​ Diluted earnings per share - as reported ​ $ 7.82 ​ $ 7.48 Restructuring ​ 0.12 ​ 0.23 Acquisition-related costs ​ 0.25 ​ — Contingent consideration adjustment ​ (0.08) ​ — Gain on sale of asset ​ — ​ (0.04) Discrete tax items ​ 0.16 ​ (0.54) Diluted earnings per share - as adjusted ​ $ 8.27 ​ $ 7.13 ​ 41 Table of Contents Free cash flow is a non-GAAP measure that does not represent cash generated from operating activities in accordance with U.S.
GAAP results to these adjusted non-GAAP measures is provided below (dollars in millions, except per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ December 31, ​ ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 2,252.2 ​ $ 2,056.3 ​ ​ ​ ​ ​ ​ ​ Operating income ​ ​ 390.4 ​ ​ 350.9 Operating margin % ​ ​ 17.3% ​ ​ 17.1% ​ ​ ​ ​ ​ ​ ​ Adjustments for special items: ​ ​ ​ ​ Restructuring ​ ​ 7.2 ​ ​ 5.5 Acquisition-related costs ​ ​ 14.2 ​ ​ 11.3 Contingent consideration adjustment ​ ​ — ​ ​ (2.5) Gain on sale of asset ​ ​ (4.4) ​ ​ — Pension settlement ​ ​ (7.8) ​ ​ — ​ ​ ​ ​ ​ ​ ​ Total adjustments for special items ​ $ 9.2 ​ $ 14.3 ​ ​ ​ ​ ​ ​ ​ Adjusted operating income ​ $ 399.6 ​ $ 365.2 Adjusted operating margin % ​ ​ 17.7% ​ ​ 17.8% ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 291.2 ​ $ 262.1 ​ ​ ​ ​ ​ ​ ​ Adjustments for special items - tax effected: ​ ​ ​ ​ ​ ​ Restructuring ​ ​ 5.4 ​ ​ 4.1 Acquisition-related costs ​ ​ 10.7 ​ ​ 8.3 Contingent consideration adjustment ​ ​ — ​ ​ (2.5) Gain on sale of asset ​ ​ (3.5) ​ ​ — Pension settlement ​ ​ (5.8) ​ ​ — Other investment gain ​ ​ (1.0) ​ ​ — Discrete tax items ​ ​ — ​ ​ 5.3 ​ ​ ​ ​ ​ ​ ​ Total adjustments for special items - tax effected: ​ $ 5.8 ​ $ 15.2 ​ ​ ​ ​ ​ ​ ​ Adjusted net income ​ $ 297.0 ​ $ 277.3 ​ ​ ​ ​ ​ ​ ​ Diluted earnings per share ​ $ 8.69 ​ $ 7.82 Restructuring ​ 0.16 ​ 0.12 Acquisition-related costs ​ 0.32 ​ 0.25 Contingent consideration adjustment ​ — ​ (0.08) Gain on sale of asset ​ (0.11) ​ — Pension settlement ​ (0.17) ​ — Other investment gain ​ (0.03) ​ — Discrete tax items ​ — ​ 0.16 Adjusted diluted earnings per share ​ $ 8.86 ​ $ 8.27 ​ Free cash flow is a non-GAAP measure that does not represent cash provided by operating activities in accordance with U.S.
These non-GAAP measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted. ​ Organic net sales growth is a non-GAAP measure of net sales growth that excludes the impacts of acquisitions, divestitures and foreign exchange from period-over-period comparisons.
These non-GAAP financial measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted. ​ 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.
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 .
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 December 31, 2024, we held $386.9 million in cash and cash equivalents.
We believe free cash flow and cash flow conversion rate to be an appropriate supplemental measure of our operating performance because it provides investors with a measure of our ability to generate cash, repay debt, pay dividends, repurchase stock and fund acquisitions. ​ A reconciliation of net cash provided by operating activities to free cash flow and calculation of our cash conversion rate is provided below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ December 31, ​ ​ ​ 2023 ​ 2022 ​ ​ ​ (in millions) Net cash provided by operating activities ​ $ 310.8 ​ $ 224.0 ​ Less: additions to property, plant, and equipment ​ (29.7) ​ (28.1) ​ Plus: proceeds from the sale of property, plant, and equipment ​ — ​ 5.2 ​ Free cash flow ​ $ 281.1 ​ $ 201.1 ​ Net income —as reported ​ $ 262.1 ​ $ 251.5 ​ Cash conversion rate of free cash flow to net income ​ 107.2 % 80.0 % ​ Our free cash flow increased in 2023 when compared to 2022 primarily driven by higher net income and reduced working capital investment, partially offset by increased payments related to income taxes and customer incentives . ​ Our net debt to capitalization ratio, a non-GAAP financial measure used by management, at December 31, 2023 was (3.5)% for 2023 compared to (14.3)% in 2022.
We believe free cash flow and cash flow conversion rate to be an appropriate supplemental measure of our operating performance because it provides investors with a measure of our ability to generate cash, repay debt, pay dividends, repurchase stock and fund acquisitions. 43 Table of Contents A reconciliation of net cash provided by operating activities to free cash flow and a calculation of our cash conversion rate is provided below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ ​ ​ (in millions) Net cash provided by operating activities ​ $ 361.1 ​ $ 310.8 ​ Less: additions to property, plant, and equipment ​ (35.3) ​ (29.7) ​ Plus: proceeds from the sale of property, plant, and equipment ​ 5.9 ​ — ​ Free cash flow ​ $ 331.7 ​ $ 281.1 ​ Net income ​ $ 291.2 ​ $ 262.1 ​ Cash conversion rate of free cash flow to net income ​ 113.9 % 107.2 % ​ Free cash flow improved in 2024 when compared to 2023 primarily driven by higher net income including contributions from our acquisitions. ​ Our net debt to capitalization ratio, a non-GAAP financial measure used by management, at December 31, 2024 was (12.5)% for 2024 compared to (3.5)% in 2023.
One of the eight reporting units, Water Quality, had no goodwill. We performed a qualitative analysis for each of the six reporting units, which include Blücher, US Drains, Fluid Solutions-Europe, Fluid Solutions-Americas, Heating and Hot Water Solutions (“HHWS”) and APMEA. ​ As of our October 22, 2023 testing date, we had $589.6 million of goodwill on our balance sheet.
We performed a qualitative analysis for each of the remaining seven reporting units, which include Blücher, Bradley, US Drains, Fluid Solutions-Europe, Fluid Solutions-Americas, Heating and Hot Water Solutions (“HHWS”) and APMEA. ​ As of October 27, 2024, our testing date, we had $721.0 million of goodwill on our balance sheet.
Net income for 2023 was $262.1 million, or $7.82 per common share on a diluted basis, compared to $251.5 million, or $7.48 per common share on a diluted basis, for 2022.
Net income for 2024 was $291.2 million, or $8.69 per common share on a diluted basis, compared to $262.1 million, or $7.82 per common share on a diluted basis, for 2023.
Our net sales in each of these segments for the years ended December 31, 2023 and December 31, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Year Ended ​ ​ ​ ​ % Change to ​ ​ December 31, 2023 ​ December 31, 2022 ​ ​ ​ ​ Consolidated ​ Net Sales % Sales Net Sales % Sales Change Net Sales ​ ​ (dollars in millions) Americas ​ $ 1,428.1 ​ 69.5 % $ 1,390.0 ​ 70.2 % $ 38.1 ​ 1.9 % Europe ​ 512.1 24.9 ​ 499.1 25.2 ​ 13.0 0.7 ​ APMEA ​ 116.1 5.6 ​ 90.4 4.6 ​ 25.7 1.3 ​ Total ​ $ 2,056.3 100.0 % $ 1,979.5 100.0 % $ 76.8 3.9 % ​ The change in net sales was attributable to the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change As a % ​ Change As a % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of Consolidated Net Sales ​ of Segment Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ Europe ​ APMEA ​ Total ​ Americas ​ Europe ​ APMEA ​ Total ​ Americas ​ Europe ​ APMEA ​ ​ (dollars in millions) Organic ​ $ 8.0 ​ $ 3.8 ​ $ 4.5 $ 16.3 0.4 % 0.2 % 0.2 % 0.8 % 0.5 % 0.8 % 5.0 % Foreign exchange ​ (3.3) ​ 9.2 ​ (4.0) ​ 1.9 (0.2) 0.5 (0.2) 0.1 (0.2) 1.8 (4.5) ​ Acquired ​ 33.4 ​ — ​ 25.2 ​ 58.6 1.7 — 1.3 3.0 2.4 — 27.9 ​ Total ​ $ 38.1 ​ $ 13.0 ​ $ 25.7 ​ $ 76.8 1.9 % 0.7 % 1.3 % 3.9 % 2.7 % 2.6 % 28.4 % ​ Our products are sold to wholesalers, OEMs, DIY chains, and through various specialty channels.
Our net sales in each of these segments for the years ended December 31, 2024 and December 31, 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Year Ended ​ ​ ​ ​ % Change to ​ ​ December 31, 2024 ​ December 31, 2023 ​ ​ ​ ​ Consolidated ​ Net Sales % Sales Net Sales % Sales Change Net Sales ​ ​ (dollars in millions) Americas ​ $ 1,664.9 ​ 73.9 % $ 1,428.1 ​ 69.5 % $ 236.8 ​ 11.5 % Europe ​ 453.3 20.1 ​ 512.1 24.9 ​ (58.8) (2.9) ​ APMEA ​ 134.0 6.0 ​ 116.1 5.6 ​ 17.9 0.9 ​ Total ​ $ 2,252.2 100.0 % $ 2,056.3 100.0 % $ 195.9 9.5 % ​ The change in net sales was attributable to the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change As a % ​ Change As a % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of Consolidated Net Sales ​ of Segment Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ Europe ​ APMEA ​ Total ​ Americas ​ Europe ​ APMEA ​ Total ​ Americas ​ Europe ​ APMEA ​ ​ (dollars in millions) Organic ​ $ 31.6 ​ $ (60.3) ​ $ 10.7 $ (18.0) 1.6 % (3.0) % 0.5 % (0.9) % 2.2 % (11.8) % 9.2 % Foreign exchange ​ (1.4) ​ 1.5 ​ (0.9) ​ (0.8) (0.1) 0.1 — — (0.1) 0.3 (0.8) ​ Acquired ​ 206.6 ​ — ​ 8.1 ​ 214.7 10.0 — 0.4 10.4 14.5 — 7.0 ​ Total ​ $ 236.8 ​ $ (58.8) ​ $ 17.9 ​ $ 195.9 11.5 % (2.9) % 0.9 % 9.5 % 16.6 % (11.5) % 15.4 % ​ Our products are sold primarily to wholesalers, OEMs, DIY chains, and through various specialty channels.
HVAC is an acronym for heating, ventilation and air conditioning. ​ ● 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. ​ ● Water quality—includes point-of-use and point-of-entry water filtration, monitoring, conditioning and scale prevention systems for commercial, marine and residential applications . ​ Our business is reported in three geographic segments: Americas, Europe, and APMEA.
Most of our HVAC products and solutions feature advanced controls enabling customers to easily connect to the BMS for better monitoring, control and operation. ​ ● Drainage & water re-use—includes drainage products and engineered rainwater harvesting solutions for commercial, industrial, marine and residential applications, including connected roof drain systems. ​ ● Water quality— includes point of use and point of entry water filtration, monitoring, conditioning and scale prevention systems for commercial, marine and residential applications. ​ Our business is reported in three geographic segments: Americas, Europe, and APMEA.
Interest expense increased $1.2 million, or 17.1%, in 2023 as compared to 2022 primarily due to higher principal balance of debt outstanding due to the acquisition of Bradley during 2023 and an increase in interest rates.
Interest expense increased $6.5 million, or 79.3%, in 2024 as compared to 2023 primarily due to a higher principal balance of debt outstanding due to the acquisition of Bradley in the fourth quarter of 2023 and an increase in interest rates.
Results for 2023 include after-tax charges of $8.3 million, or $0.25 per common share, for acquisition-related costs, $5.3 million, or $0.16 per common share, primarily for an income tax adjustment related to repatriation of foreign funds and $4.1 million, or $0.12 per common share, for restructuring; partially offset by an after-tax benefit of $2.5 million, or $0.08 per common share, for an adjustment to contingent consideration. ​ Results for 2022 include an after-tax benefit of $18.2 million, or $0.54 per common share, primarily for an income tax benefit related to the modification of the structure of our Mexican supply chain operations and $1.4 million, or $0.04 per common share, for an after-tax gain on sale of asset; partially offset by an after-tax charge of $7.9 million, or $0.23 per common share, for restructuring. ​ Liquidity and Capital Resources ​ 2023 and 2022 Cash Flows ​ We generated $310.8 million of net cash from operating activities in 2023 as compared to $224.0 million in 2022.
Results for 2024 included after-tax charges of $10.7 million, or $0.32 per common share, for acquisition-related costs and $5.4 million, or $0.16 per common share, for restructuring, partially offset by after-tax benefits of $5.8 million, or $0.17 per common share, for a gain on the settlement of the Bradley pension plan, $3.5 million, or $0.11 per common share, for a gain on sale of assets and $1.0 million, or $0.03 per common share, for other investment gains. ​ Results for 2023 include after-tax charges of $8.3 million, or $0.25 per common share, for acquisition-related costs, $5.3 million, or $0.16 per common share, primarily for an income tax adjustment related to repatriation of foreign funds and $4.1 million, or $0.12 per common share, for restructuring; partially offset by an after-tax benefit of $2.5 million, or $0.08 per common share, for an adjustment to contingent consideration. ​ Liquidity and Capital Resources ​ 2024 and 2023 Cash Flows ​ We generated $361.1 million of net cash from operating activities in 2024 as compared to $310.8 million in 2023.
The change in organic net sales by channel was attributable to the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change As a % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of Prior Year Sales ​ Wholesale OEMs DIY Specialty Total Wholesale OEMs DIY ​ Specialty ​ (dollars in millions) ​ Americas ​ $ 47.0 ​ $ (3.2) ​ $ (1.9) ​ $ (33.9) ​ $ 8.0 5.9 % (3.1) % (2.3) % (8.2) % Europe ​ (1.4) ​ 5.2 ​ — ​ ​ — ​ 3.8 (0.4) 2.9 ​ — ​ — ​ APMEA ​ 4.8 ​ (0.3) ​ — ​ ​ — ​ 4.5 5.8 (3.8) — ​ — ​ Total ​ $ 50.4 ​ $ 1.7 ​ $ (1.9) ​ $ (33.9) ​ $ 16.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas net sales increased $38.1 million, or 2.7%, in 2023 compared to 2022.
The change in organic net sales by channel was attributable to the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change As a % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ of Prior Year Sales (*) ​ Wholesale OEMs DIY Specialty Total Wholesale OEMs DIY ​ Specialty ​ (dollars in millions) ​ Americas ​ $ 12.8 ​ $ (1.4) ​ $ 0.4 ​ $ 19.8 ​ $ 31.6 1.5 % (1.4) % 0.5 % 5.3 % Europe ​ (6.9) ​ (53.0) ​ (0.4) ​ ​ — ​ (60.3) (2.2) (27.8) ​ (15.4) ​ — ​ APMEA ​ 12.4 ​ (0.8) ​ — ​ ​ (0.9) ​ 10.7 14.8 (11.0) — ​ (3.6) ​ Total ​ $ 18.3 ​ $ (55.2) ​ $ — ​ $ 18.9 ​ $ (18.0) ​ 1.4 % (18.5) % — % 4.7 % ​ * Segment change as a % of segment net sales by channel and Total change as a % of consolidated net sales by channel. ​ Americas net sales increased $236.8 million, or 16.6%, in 2024 compared to 2023.
Selling, general and administrative, or SG&A, expenses increased $55.8 million, or 10.2%, in 2023 compared to 2022.
Selling, general and administrative, or SG&A, expenses increased $59.9 million, or 9.9%, in 2024 compared to 2023.
In the event we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made. 45 Table of Contents ​ As of December 31, 2021, we released $22.1 million of our valuation allowance on foreign tax credits related to the additional foreign source income resulting from our restructured Mexican manufacturing supply chain operations.
In the event we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made. ​ As of December 31, 2024, we decreased our valuation allowance on foreign tax credits by $4.0 million due to the reduction in related foreign tax credits.
The reported sales increase included acquired sales of 3.0%, or $58.6 million, with $33.4 million reported within the Americas segment and $25.2 million reported with APMEA, and the favorable impact of foreign exchange of 0.1%, or $1.9 million.
The reported sales increase included acquired sales of 10.4%, or $214.7 million, with $206.6 million reported within the Americas segment and $8.1 million reported within APMEA, and the unfavorable impact of foreign exchange of $0.8 million.
For our 2023 impairment assessment, which occurred as of October 22, 2023, we performed a qualitative assessment for certain trademarks and tradenames where the fair value significantly exceeded the carrying value in the previous quantitative assessment performed. Each had sales growth in 2023, sales growth is expected in 2024, and no other indicators of impairment were present.
For our 2024 impairment assessment, which occurred as of October 27, 2024, we performed a qualitative assessment for all trademarks and tradenames where the fair value significantly exceeded the carrying value in the previous quantitative assessment performed.
See Note 15 of Notes to the Consolidated Financial Statements in this Annual Report for further disclosures. ​ (e) Represents the current estimate of future interest payments due on the current drawdown on the line of credit under the Credit Agreement referenced above at (a). ​ (f) Relates to the 2017 Tax Act one time transition tax on accumulated foreign subsidiary earnings not previously subject to U.S. income tax which was payable over a number of years. ​ (g) Relates to capital expenditure obligations included in the anticipated capital expenditure investment totals of $55 million to $65 million discussed above. ​ (h) Primarily includes the $98.7 million of a preliminary net purchase price related to the definitive agreement we entered into on December 11, 2023 to acquire Josam, $49.7 million of commodity commitments and $19.4 million relates to cost obligations for an Information Technology investment program. ​ We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. ​ Non-GAAP Financial Measures ​ In accordance with the SEC's Regulation G and Item 10(e) of Regulation S-K, the following provides definitions of the non-GAAP measures used by management.
See Note 15 of Notes to the Consolidated Financial Statements in this Annual Report for further disclosures. ​ (e) Represents the current estimate of future interest payments due on the current and estimated future drawdown requirements on the line of credit under the Credit Agreement referenced above at (a). ​ (f) Relates to the 2017 Tax Act one time transition tax on accumulated foreign subsidiary earnings not previously subject to U.S. income tax which was payable over a number of years. ​ (g) Relates to capital expenditure obligations included in the anticipated capital expenditure investment totals of $45 million to $50 million discussed above. ​ (h) Primarily includes $45.2 million of commodity commitments and $6.2 million relates to cost obligations for our SAP ERP system implementation program. ​ Non-GAAP Financial Measures ​ In accordance with the SEC’s Regulation G and Item 10(e) of Regulation S-K, the following provides definitions of the non-GAAP financial measures used by management.
Refer to Note 17 Financial Instruments of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for further details. ​ Income Taxes. Our effective income tax rate increased to 24.9% in 2023, from 18.2% in 2022.
In 2023, other (income) expense, net was an expense balance primarily due to unfavorable foreign currency translation . Refer to Note 17 Financial Instruments of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for further details. ​ Income Taxes. Our effective income tax rate decreased to 24.6% in 2024 from 24.9% in 2023.
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 have completed 14 acquisitions since 2015, and in the last two years, we have completed four strategic and complementary acquisitions that expanded our addressable market and that we believe will enable value creation through greater scale and growth opportunities. ​ 33 Table of Contents 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 reconcile the change in these non-GAAP financial measures to our reported results below. ​ Management’s discussion and analysis of our financial condition, results of operations and cash flows as of and for the year ended December 31, 2021 can be found in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2022. ​ 33 Table of Contents Acquisitions ​ On March 31, 2023, we completed the acquisition of the primary business assets of Enware Australia Pty Ltd (“Enware”) in an all-cash transaction.
We reconcile the change in these non-GAAP financial measures to our reported results below. ​ Management’s discussion and analysis of our financial condition, results of operations and cash flows as of and for the year ended December 31, 2022 can be found in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2023. ​ Acquisitions ​ Effective January 1, 2024, we completed the acquisition of Josam Company following its conversion into Josam Industries, LLC (“Josam”) in a share purchase transaction funded with cash on hand.
We have completed 14 acquisitions since 2013, including three in the last twelve months. Our acquisition strategy focuses on businesses that promote our key macro themes around safety and regulation, energy efficiency and water conservation.
Our acquisition strategy focuses on businesses that promote our key macro themes around safety and regulation, energy efficiency and water conservation.
The change was driven by an increase in net debt balance due to increase in debt outstanding of $150.7 million, partially offset by an increase in cash and cash equivalents of $39.3, and higher net income contributing to an increase in stockholders’ equity at December 31, 2023 compared to December 31, 2022.
The change was driven by a decrease in net debt balance primarily due to decreased long-term debt and increased cash and cash equivalents and an increase in stockholders’ equity at December 31, 2024 compared to December 31, 2023 due to higher net income.
The foreign exchange impact was primarily driven by the depreciation of the U.S. dollar against the euro, partially offset by the unfavorable impact of the appreciation of the U.S. dollar against the Canadian dollar and Chinese yuan. Operating income of $350.9 million increased by $35.9 million, or 11.4%, in 2023 compared to 2022.
The decrease in foreign exchange was primarily driven by the appreciation of the U.S. dollar against the Canadian dollar and Chinese yuan, partially offset by the depreciation of the U.S. dollar against the euro.
For further information regarding the impact on the Company, see Item 1A, “Risk Factors.” ​ Financial Overview Net sales for 2023 increased 3.9%, or $76.8 million, on a reported basis and 0.8%, or $16.3 million, on an organic basis, compared to 2022, primarily driven by incremental price across all of our operating segments, partially offset by lower volumes.
For further information regarding the impact on the Company, see Item 1A. “Risk Factors.” ​ Financial Overview Net sales for 2024 increased 9.5%, or $195.9 million, on a reported basis and decreased 0.9%, or $18.0 million, on an organic basis, compared to 2023.
Refer to Note 12 of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for further details. ​ Other Expense (Income), Net. Other expense (income) decreased $0.6 million compared to 2022. The decrease was primarily due to $1.0 million of reduced expense as a result of the increase in deferred compensation plan assets.
Refer to Note 12 of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for further details. ​ Other (Income) expense, Net. Other (income) expense, net, was an income balance of $1.4 million in 2024 primarily due to an immaterial investment gain.
The change in net sales was negatively impacted by $3.3 million, or 0.2%, of foreign currency translation, which was more than offset by $33.4 million, or 2.4%, of acquired sales related to the Bradley acquisition completed in the fourth quarter of 2023.
The change in net sales was positively impacted by $206.6 million, or 14.5%, of acquired sales related to the Bradley and Josam acquisitions completed in the fourth quarter of 2023 and first quarter of 2024, respectively. The change in net sales was negatively impacted by $1.4 million, or 0.1%, of foreign currency translation.
The increase in cash generated was primarily due to higher net income and reduced working capital investments, partially offset by increased payments related to income taxes and customer incentives. ​ We used $343.1 million of net cash for investing activities in 2023 compared to $22.9 million used in 2022.
The increase in cash generated was primarily due to higher net income, improved working capital and cash flows generated from acquisitions. ​ We used $124.7 million of net cash for investing activities in 2024 compared to $343.1 million used in 2023.
As a result of our qualitative and quantitative analyses, we determined that the fair values of the indefinite-lived intangibles assets were more likely than not greater than the carrying amounts. As a result of the quantitative analyses, we determined that fair value exceeded carrying value for each indefinite-lived intangible asset.
As a result of our qualitative analyses, we determined that the fair values of the indefinite-lived intangibles assets were more likely than not greater than the carrying amounts. If we were to perform a quantitative assessment, the methodology we employ is the relief from royalty method, a subset of the income approach.
The European economy continues to show signs of weakening, China’s economy has decelerated, and geo-political risks have heightened. Despite these anticipated challenges, we continue to invest in our business, including new products, our smart and connected solutions and our growth and productivity initiatives.
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 believe that product development, product testing capability and investment in plant and equipment needed to manufacture products in compliance with code requirements, represent a competitive advantage for us. ​ Global economic indicators are mixed and show some signs of softer market conditions in 2024. Elevated interest rates may impact new construction.
We believe that product development, product testing capability and investment in plant and equipment needed to manufacture products in compliance with code requirements, represent a competitive advantage for us. ​ Global gross domestic product (“GDP”) remains positive and is generally a leading indicator for our repair and replacement business. New construction indicators are mixed.
In 2022, w e used $121.7 million of net cash from financing activities primarily due to long-term debt repayments of $80.0 million, dividend payments of $39.5 million, tax withholding payments on vested stock awards of $13.3 million and payments of $69.4 million to repurchase 493,733 shares of Class A common stock.
We spent $217.1 million less cash for acquisitions and $0.3 million less cash for net capital expenditures in 2024 compared to 2023. ​ We used $190.5 million of net cash for financing activities during 2024 primarily due to long-term debt repayments of $100.0 million, dividend payments of $55.5 million, tax withholding payments on vested stock awards of $13.0 million and payments of $17.0 million to repurchase 85,435 shares of Class A common stock.
We spent $313.4 million more cash for the acquisitions in our Americas and APMEA segments and $1.6 million more cash for net capital expenditures in 2023 compared to 2022. 37 Table of Contents ​ We generated $69.0 million of net cash from financing activities in 2023 primarily due to proceeds from drawdowns of $240.0 million offset by long-term debt repayments on our line of credit totaling $90.0 million, and partially offset by tax withholding payments on vested stock awards of $15.8 million, dividend payments of $46.5 million and payments of $16.0 million to repurchase 91,622 shares of Class A common stock.
In 2023, we generated $69.0 million of net cash from financing activities in 2023 primarily due to proceeds from borrowings of $240.0 million offset by long-term debt repayments on our line of credit totaling $90.0 million, tax withholding payments on vested stock awards of $15.8 million, dividend payments of $46.5 million and payments of $16.0 million to repurchase 91,622 shares of Class A common stock. ​ 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”).
These increases were partially offset by inflation, lower volume, incremental investments and acquisition-related costs. ​ Interest Income. Interest income increased $6.6 million in 2023 as compared to 2022 primarily due to higher interest rates earned on our cash and cash equivalents. ​ Interest Expense.
Interest income increased $1.7 million, or 23.6%, in 2024 as compared to 2023 primarily due to higher interest rates earned on our cash and cash equivalents. ​ Interest Expense.
Organic net sales increased $4.5 million, or 5.0%, due to higher prices realization and volumes, primarily from growth in the Middle East and Australia, partially offset by declines in China. ​ 35 Table of Contents 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, partially offset by the unfavorable impact of the appreciation of the U.S. dollar against the Canadian dollar and Chinese yuan in 2023.
Organic net sales increased $10.7 million, or 9.2%, primarily due to increased volume across all major countries in the segment. ​ 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 2024. ​ Gross Profit.
If we determine it is not more likely than not, then no further quantitative analysis is required. ​ In 2023, we had eight reporting units. Bradley was acquired in the fourth quarter of 2023, after the goodwill testing date (October 22, 2023), however it was considered a separate reporting unit for the year end 2023.
If we determine it is not more likely than not, then no further quantitative analysis is required. ​ In 2024, we had eight reporting units. One of the eight reporting units, Water Quality, had no goodwill.
Gross profit and gross profit as a percent of net sales (gross margin) for 2023 and 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, 2023 ​ December 31, 2022 ​ ​ ​ (dollars in millions) Gross profit ​ $ 960.9 ​ $ 874.3 ​ Gross margin ​ 46.7 % 44.2 % ​ Gross profit and gross margin increased primarily from higher prices, favorable product mix and productivity, partially offset by inflation and lower volume. ​ Selling, General and Administrative Expenses.
Gross profit and gross profit as a percent of net sales (gross margin) for 2024 and 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, 2024 ​ December 31, 2023 ​ ​ ​ (dollars in millions) Gross profit ​ $ 1,062.0 ​ $ 960.9 ​ Gross margin ​ 47.2 % 46.7 % ​ Gross profit increased primarily due to contribution from our acquisitions, higher price realization and productivity, partially offset by inflation, lower volume in our Europe segment, and the amortization of the fair value step-up adjustments for inventory purchased as part of the Bradley and Josam acquisitions.
The acquired SG&A costs related to the Bradley acquisition in the Americas segment in the fourth quarter of 2023 and the Enware acquisition in the APMEA segment in the second quarter of 2023. Total SG&A expenses, as a percentage of sales, were 29.4% in 2023 compared to 27.8% in 2022. ​ Restructuring.
The acquired increase in SG&A 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.
This increase was primarily driven by favorable price, product mix, productivity, and cost savings from prior restructuring actions, partially offset by inflation, lower volume and incremental investments. ​ 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 excludes the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons.
This increase was primarily driven by contribution from our acquisitions, favorable price, product mix, productivity, and cost savings from restructuring actions, partially offset by inflation, lower volume in our Europe segment and incremental investments. ​ In discussing our results of operations, segment earnings is our GAAP performance measure used by our chief operating decision-maker (“CODM”) to assess and evaluate segment results.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−1 removed7 unchanged
Biggest changeWe record the effective portion of the designated foreign currency hedge contracts in other comprehensive income until inventory turns and is sold to a third-party. Once the third-party transaction associated with the hedged forecasted transaction occurs, the effective portion of any related gain or loss on the designated foreign currency hedge is reclassified into cost of goods sold within earnings.
Biggest changeOnce the third-party transaction associated with the hedged forecasted transaction occurs, the effective portion of any related gain or loss on the designated foreign currency hedge is reclassified into cost of goods sold within earnings. The fair value of our designated foreign hedge contracts outstanding as of December 31, 2024 was an asset of $0.5 million.
Our operating results can be adversely affected by changes in commodity prices if we are unable to pass on related price increases to our customers.
Our operating results can be adversely affected by changes in commodity prices, including tariffs, if we are unable to pass on related price increases to our customers.
As a matter of policy, all derivative positions are used to reduce risk by hedging underlying economic exposure. The derivatives we use are instruments with liquid markets. See Note 17 of Notes to the Consolidated Financial Statements for further details.
As a matter of policy, all derivative positions are used to reduce risk by hedging underlying economic exposure. The derivatives we use are instruments with liquid markets.
Our non-U.S. subsidiaries transact most business, including certain intercompany transactions, in foreign currencies. Such transactions are principally purchases or sales of materials and are denominated in European currencies, the Chinese yuan or the U.S. or Canadian dollar.
Such transactions are principally purchases or sales of materials and are denominated in European currencies, the Chinese yuan or the U.S. or Canadian dollar.
The fair value of our designated foreign hedge contracts outstanding as of December 31, 2023 was a liability of $0.2 million. Under the Credit Agreement, our earnings and cash flows are exposed to fluctuations in interest payments related to our floating rate debt. In order to manage our exposure, we entered into an interest rate swap on March 30, 2021.
Under the Credit Agreement, our earnings and cash flows are exposed to fluctuations in interest payments related to our floating rate debt. In order to manage our exposure, we entered into an interest rate swap on March 30, 2021.
We have entered into forward exchange contracts which hedge approximately 80% to 85% of the forecasted intercompany purchases between one of our Canadian subsidiaries and our U.S. operating subsidiaries for the next twelve months.
We have entered into forward exchange contracts which hedge approximately 80% to 85% of the forecasted intercompany purchases between one of our Canadian subsidiaries and our U.S. operating subsidiaries for the next twelve months. We record the effective portion of the designated foreign currency hedge contracts in other comprehensive income (loss) until inventory turns and is sold to a third-party.
Our consolidated earnings, which are reported in United States dollars, are subject to translation risks due to changes in foreign currency exchange rates. This risk is concentrated in the exchange rate between the U.S. dollar and the euro; the U.S. dollar and the Canadian dollar; and the U.S. dollar and the Chinese yuan.
See Note 17 of Notes to the Consolidated Financial Statements for further details. ​ Our consolidated earnings, which are reported in United States dollars, are subject to translation risks due to changes in foreign currency exchange rates.
Removed
We also entered into forward exchange contracts which hedge up to 60% of the forecasted intercompany sales transactions between one of our Chinese subsidiaries and one of our U.S. operating subsidiaries for the next twelve months.
Added
This risk is concentrated in the exchange rate between the U.S. dollar and the euro; the U.S. dollar and the Canadian dollar; and the U.S. dollar and the Chinese yuan. ​ Our non-U.S. subsidiaries transact most business, including certain intercompany transactions, in foreign currencies.

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