Investor Presentation

Forward Looking Statements
Certain statements in this presentation constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These statements are related to forecasts of sales, market dynamics and 2018 outlook
update, capital expenditures, costs and savings associated with realignment activities and
management goals and objectives.
Watts cautions investors that any such forward-looking statements made by Watts are not
guarantees of future performance. All forward-looking statements are subject to known and
unknown risks, uncertainties and contingencies, many that are beyond the control of Watts,
which may cause actual results, performance or achievements to differ materially from
anticipated future results, performance or achievements expressed or implied by the forward-
looking statements.
Factors that might affect forward-looking statements include overall economic and business
conditions, competitive factors, changes in laws affecting Watts, future acquisitions of material
assets or businesses by Watts, the demand for Watts’ products and services and other
factors identified in Watts’ most recent Annual Report on Form 10-K and subsequent reports
filed with the SEC.
6/1/18 © 2018 Watts Water Technologies, Inc. 2

Who We Are
Global Leader / Expanding Geographically
Leader in Commercial / Residential Water Products
• $1.5B Global Company
‒ Domestic / international revenue split fairly balanced
‒ Exposure to replacement markets & new construction
‒ Strong presence in commercial / residential markets
‒ Regulations – plumbing codes drive ~ 65% of worldwide sales
• Leveraging Leading Brands and Key Market Drivers
‒ Safety & Regulation
‒ Energy Efficiency
‒ Water Conservation
• Multi-Year Transformation Complete; Pivoting to Growth
• Strong Cash Generator Drives Capital Deployment
Geographic
REVENUE SOURCES
Americas 65%
Europe 30%
APMEA 5%
End Markets
Non-
Residential 60%
Repair / Retrofit 65%

Where We Play: Strategic Themes
Addressing Global Secular Market Themes
SAFETY & REGULATION
Provide the highestlevels of
performance in the
safeguarding ofwater systems
• Code & specification driven
• Extensive certification process
• Emerging need globally
ENERGY EFFICIENCY
Offer the most efficient
conversion of energy sources into
useful heat and hot water
• Large & fragmented market
• Economic & environmental value
proposition
• Application & engineering
competencies critical
WATER CONSERVATION
Deliver drainage and pre-treatment
systems that meet the design
challenges ofa
water scarce world
• Environmental & emotional
drivers
• Code & specification driven
• Emerging global demand
• Best in class service
Specialty products and systems that conserve and safeguard the flow of fluid and energy
KEY MEGA
TRENDS
MARKET
CHARACTERISTICS
WATTS
VALUE
PROPOSITION

Attractive End Markets
Balanced Portfolio Providing Tailwind For Growth
Institutional / Educational
Multi Family / Commercial
Sports Complexes
Residential
Hospitality – Food Service
Light / General Industrial
Hospitality – Hotel
Healthcare
Specialty products and
systems that conserve and
safeguard the flow of fluid
and energy

Commercial Offerings
June 1, 2018 © 2018 Watts Water Technologies, Inc. 6
~60% of Sales; More Complexity / Systems
Driveway / Sidewalk
Drainage / Rain Water Harvesting Fire Protection Systems
Boiler / Mechanical Room
Irrigation
Commercial Kitchens
► Hot Water Heaters / Boilers
► Digital Thermostatic Mixing Stations
► Boiler & Pump Controls
► Gas Connectors
► Point of Use Filtration Systems
► Stainless Steel Drains
► Backflow Preventers
► Pressure Regulating Valves
► Isolation Valves
► Cross Connection Systems
► Automatic Control Valves
► Isolation Valves
► Cast Iron and Stainless Steel Drains & Pipe
► Rain Water Harvesting
► Roofs, Parking Garages, Bathrooms, Kitchens
Guestroom
► Anti-Scald Shower & Lavatory Valves
► Stainless Steel Shower Drains
► Underfloor Heating Systems
Public Restroom Safety
► Thermostatic Mixing Valves
► Floor Drains
► Closet & Lavatory Carriers
Point of Entry – Potable Water
► Electronic Temperature Controls
► Snow Melt Hydronic Systems
► Manifolds
Point of Entry –
Water Safety
► Automatic Control Valves
► Pressure Reducing Valves
► Ball, Gate, & Butterfly Valves
► OneFlow Anti-Scale Systems
► Water Softeners
► SmartStream UV System

Residential Offerings
June 1, 2018 © 2018 Watts Water Technologies, Inc. 7
~40% of Sales; Product Range Unmatched
Kitchen
► Undersink Thermostatic Mixing Valves
► Reverse Osmosis Water Filtration Systems
► Electric Tile Warming
► SmartSense Excess Flow Valve & Thermal Shutoff
Bathroom
► Tempering Valves
► Electric Tile Warming
► Stainless Steel Shower Drains
► Hot Water on Demand Recirculation
Driveway / Sidewalk
► Snow Melt Hydronic Systems
► Electronic Temperature Controls
► Manifolds
► Quick Connect Fittings
► Hydrocontrol Panels
► PEX Tubing
Laundry Room
► Anti-Scale Systems
► Gas Ball Valves & Connectors
► SmartSense Excess Flow Valve &
Thermal Shutoff
► IntelliFlow Automatic Washing
Machine Shutoff Valves
► Whole House Filtration
Systems
► Anti-Scale Systems
► Water Softeners
► SmartStream UV
Disinfection Systems
Boiler / Furnace Room
► T&P Relief Valves
► Tempering Valves
► Expansion Tanks
► Temperature & Pressure Gauges
► Air Separators
► Flow Control Valves
Point of Entry –
Potable Water Point of Entry –
Water Safety
Irrigation
Living Room
► Control Panel / Thermostat
► Radiant Underfloor Heating

Internal Transformation Completed…
…Now Focused on Driving Profitable Growth
• Realigned Cost Structure to
Demand
• Footprint Optimization
• Sourcing Excellence • Exited Non-core Products
‒ Exited $165M of sales
• Footprint Optimization
‒ 30% US reduction
• Sourcing Excellence
‒ $11M annualized savings
• One Watts
• Innovation / Application Solutions
2013 -
2016 European
Transformation
2015 -
2017 Americas / Asia
Transformation
2018 +
BEYOND
Continue to Drive
Productivity;
Reinvest for Growth
Re-investing $25M in Commercial Excellence

Watts Strategic Framework
6/1/18 9
Continue to Grow
Organically
Drive Operational
Efficiencies &
Improvement
across All Key
Processes
Employ
Disciplined &
Balanced Capital
Allocation
Strategy
© 2018 Watts Water Technologies, Inc.

Organic Growth Initiatives
Multifaceted Approach to Drive Solutions
New
Product
Development
Geographic
Expansion
Key Account
Management
• Streamlined multiple development processes to one
• Leveraging Voice of Customer to drive product innovation
• Opened state-of-the-art Watts Works Learning Center
- Customers experience first-hand products and technologies
• Introducing existing products to new territories
• Targeting countries with well-established plumbing codes
- Australia, Korea, Japan, Singapore, Chile, Mexico
• Expanding relationships with large customers
(e.g., lodging and restaurant chains)
• Leveraging integrated business model to
cross-sell solutions
Future Growth
Supported by
Solution Selling

Margin Improvement Expectations
Major “Self Help” Initiatives Realized; Pivot to Growth
2015
Baseline
Transformation 2017
Growth
Initiatives
Operational
Initiatives
2020E
10.1%
(1)
11.9%
(1)
Goal 14% +
• LEAN
• Functional
Excellence
• New Product
Development
• Geographic
Expansion
• Key Account
Management
• Portfolio
Rationalization
• Footprint
Optimization
• Global Sourcing
• Europe
Restructuring
Adjusted
(1)
Operating Margin Opportunity Next 3 Years
(1)
See slide 18 for reconciliation of GAAP to Non GAAP operating margin

Disciplined Capital Deployment
Strong Cash Generation Drives Deployment Upside
Strong Cash Generation Deployment Priorities
• Investing in High ROI CAPEX
‒ Reinvestment ratio 80-100%
• Strategic M&A
‒ Selective acquirer; disciplined valuation
and screening process
• Dividend increases
• Stable share buyback
‒ Offset option dilution at minimum
$82
$135 +
2015 2020E
$M
>100% FCF
Conversion

M&A Strategy
Disciplined Acquisitions Generate Incremental Growth
ü Core or Related Complementary Markets
ü
Addresses Macro Themes
• Safety & Regulation
• Energy Efficiency
• Water Conservation
ü Preferred Brand Name Products
ü
Financial criteria
• ROIC > Cost of Capital
• EPS Accretive Year 1
• Operating Margin Accretive by Year 3
CRITERIA Additional Considerations
• Entry into new markets
• Increase in shelf space
with existing customers
• Supports solution selling
• New or improved
technology
• Expansion of the breadth
of product offerings

Flexible Balance Sheet
Capacity to Execute on Strategic Growth
12/31/17 12/31/16 12/31/15
Cash $280 $338 $296
Other Current Assets 504 481 513
Non-Current Assets 953 944 884
TotalAssets $1,737 $1,763 $1,693
Current Liabilities, excl. Short-term Debt $305 $287 $294
Non-Current Liabilities 106 90 117
Debt 497 650 577
Equity 829 736 705
Total Liabilities & Equity $1,737 $1,763 $1,693
Net Debt / Capitalization Ratio
(1)
21% 30% 28%
$M
(1)
See slide 19 for calculation of net debt / capitalization ratio

June 1, 2018 © 2018 Watts Water Technologies, Inc.
Forecasting Another Good Year
15
2018 Outlook
FY 2018 Outlook by Region
Org Rev Growth Margin Rate
AMERICAS 3-5%
▲
Positive
EUROPE 1-3%
▲
Positive
APMEA
7-10%
▲
Positive
WATTS ~3%
50 to 70 bps
Includes $10M
Investments
Other Key Inputs
Item Expectation
Corporate Costs ~$37M
Interest
Expense
~$17M
Effective Tax
Rate
~28%
CAPEX / D&A ~$38M / ~$50M
Free Cash Flow
Conversion
>100%
Share Count ~34.4M shares

Summary
Commercial, Operational, and Innovation Excellence
Multi-year transformation completed à Enhanced portfolio and more
efficient organization; ongoing tailwind
Strengthened the
Foundation
Aligned to
Favorable Macros
and Markets
Focus On
Innovation and
Profitable Growth
Accretive Capital
Deployment
Achieving 2020
Targets
Leading market positions in residential and commercial water,
addressing global secular macro themes
Leveraging components to broaden application solutions offering,
Investment continues, fueling growth
Strong cash flow and efficient capital structure enables more
deployment upside; disciplined acquirer
• Operating margin 14%+
• Free cash flow > 100% conversion

Reconciliation of GAAP “As Reported” to “Adjusted” Non-GAAP
Excluding Effect of Adjustments for Special Items
© 2018 Watts Water Technologies, Inc.
18
(in millions except per share information)
Year Ended
2017 2015
Net Sales $1,456.7 $1,467.7
Operating income (loss) - as reported $162.3 $(90.1)
Operating margin % 11.1% -6.1%
Adjustments for special items:
Goodwill impairment - 130.5
Other long-lived asset impairment charges 1.0 -
Acquisitions / divesture related costs 0.2 1.6
Restructuring 6.8 21.4
Transformation 2.9 14.3
Pension / other costs — 70.7
Total adjustments for special items $10.9 $238.5
Operating income - as adjusted $173.2 $148.4
Adjusted operating margin % 11.9% 10.1%
(M)
(Unaudited)
June 1, 2018

Reconciliation of Long-term Debt
(including current portion) to Net Debt to Capitalization Ratio
© 2018 Watts Water Technologies, Inc. 19
(M)
(Unaudited)
December 31,
2017
December 31,
2016
December 31,
2015
Current portion of long-term debt $22.5 $139.1 $1.1
Plus: Long-term debt, net of current portion 474.6 511.3 574.2
Less: Cash and cash equivalents (280.2) (338.4) (292.2)
Net debt $216.9 $312.0 $279.1
Net debt $216.9 $312.0 $279.1
Plus: Total stockholders' equity 829.0 736.3 704.9
Capitalization $1,045.9 1,048.3 $984.0
Net debt to capitalization ratio 20.7% 29.8% 28.4%
June 1, 2018

Investor Presentation

Recommended

Recommended

More Related Content

Similar to Investor Presentation

Similar to Investor Presentation (20)

Recently uploaded

Recently uploaded (20)

Investor Presentation