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Investor Presentation

2017 NDRs - Investor Presentation - Updated March 2017

3

Forward Looking Statements

2/28/2017 2 © 2017 Watts Water Technologies, Inc.

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 2017

outlook update, capital expenditures, costs and savings associated with realignment

activities, lead free developments 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.


4

Who We Are

Asia Pacific

4%

Canada 5%

EMEA 32%

US 59%

2/28/2017 © 2017 Watts Water Technologies, Inc. 3

Global Leader / Driving Margin Expansion

REVENUE SOURCES

Leader in Commercial / Residential

Water Products

• $1.4B Global Company − Domestic / international revenue split fairly balanced

− Strong presence in commercial / residential markets

− Exposure to replacement markets & new construction

• Leveraging Leading Brands and Key Market Drivers − Safety & Regulation

− Energy Efficiency

− Water Conservation

• Multi-Year Transformation Underway − Delivering enhanced margin expansion

• Strong Cash Generator Drives Capital Deployment

• Codes drive ~ 65% of worldwide sales

Residential

40%

Non-Residential

60%

Repair/Retrofit

65% New

Construction

35%

Geographic

End Markets


5

Commercial Applications


One of the Broadest Product Offerings…

WASTEWATER (DRAINAGE) SYSTEM • Roof Drains

• Floor Drains

• Trench Drains

• Fixture Carriers

• Hydrants

• Acid Waste Systems

• Double Containment Piping Systems

• Rainwater Harvesting Systems

• Interceptors

• Cleanouts

ALTERNATIVE ENERGY • Solar Control Packages

HVAC SYSTEM • Commercial Boilers • Water Heaters • Expansion Tanks • Gauges & Thermometers • Balancing Valves • Safety Relief Valves

• Anti-Scale Systems

• Electronic Temperature Controls

• Tempering Valves

• Backflow Preventers

• Radiant Snow Melting Systems

• Hydro-control Panels

• Steam Traps

• Strainers

• Feed Water Regulators

• Manifolds

FOOD SERVICE APPLICATIONS • Movable Gas Connectors

• Water Filtration Systems


• Gas and Water Shutoff Valves

• Commercial Faucets

• Gas Regulators

• Thermostatic Mixing Valves

• Grease Interceptors

• Stainless Steel Piping and Drains


• T&P Relief Valves


• Monitoring and Turbidity Monitors

• Strainers

• Butterfly Valves

• Water Hammer Arrestors

• UL / FM Fire Service Strainers

• Automatic Control Valves

• Pre-Engineered Valve Stations

• Gate Valves

FIRE PROTECTION SYSTEM • Backflow Preventers

• Transition Risers

• Relief Valves

• Check Valves

IRRIGATION SYSTEM • Backflow Preventers

• Backflow Enclosures

• Automatic Control Valves

• Shutoff Valves

• Butterfly Valves

• Relief Valves

• Water Pressure Reducing Valves

POTABLE WATER SYSTEM • Water Heaters

• Gas Connectors

• Reverse Osmosis Water Filtration System

• Water Softeners


• Water Pressure Reducing Valves


6

Residential Applications


…Unmatched in the Industry

BATHROOM

• Tempering Valves for Tubs, Showers and Sinks

• Electric Tile Warming

• Hot Water On Demand Recirculation Systems

KITCHEN

• Undersink Guardian Thermostatic Mixing Valves

• Reverse Osmosis Water Filtration Systems

• Ice Maker Filtration Systems

• Electric Tile Warming

LAUNDRY ROOM • Automatic Washing Machine Shutoff Valves

• Water Hammer Arrestors


• Gas Ball Valves

• Gas Connectors

BOILER

• Temperature & Pressure Gauges


• Safety Relief Valves

• Fill Valves


• Boiler Drains

• Air Separators

• Flow Control Valves

• Float Vents


• Water Softeners

• UV Disinfection Systems

• Whole House Filtration Systems

WATER QUALITY

RADIANT HEAT PRODUCTS

• Radiant Underfloor Heating Systems

• Snowmelting

• Electronic Temperature Controls

• Quick Connect Fittings

• Hydrocontrol Panels

• PEX Tubing

• Manifolds


• Ball Valves

• Drain Tubes

• Floor Drains

• Gas Connectors

• T&P Relief Valves


• Pressure Reducing Valves

• Expansion Tanks


• Water Detector Shutoffs

ALTERNATIVE ENERGY

• Geothermal Control Packages

WATER HEATER


7

Investment Thesis


Winning With Commercial, Operational and Innovation Excellence

Strengthening the

Foundation

Multi-year transformation underway Enhanced portfolio and

more efficient organization; ongoing tailwind

Aligned to

Favorable Macros

and Markets

Leading market positions in residential and commercial water,

addressing global secular macro themes

Focus On

Innovation and

Profitable Growth

Leveraging components to broaden application solutions

offering Investment continues, fueling growth

Accretive Capital

Deployment

Strong cash flow and efficient capital structure enables more

deployment upside; disciplined acquirer


8

Multi-Year Transition Underway


Multi-Year Restructuring Tailwind Helping to Offset Macro Challenges

Continue to Drive Productivity;

Reinvest for Growth

Americas / Asia Transformation

• One Watts

• Innovation / Application

Solutions

European Restructuring

• Exited Non-core Products

• Footprint Optimization

• Sourcing Excellence

• Realigned Cost Structure

to Demand

• Footprint Optimization

• Sourcing Excellence

2013 – 2014

2015 – 2016

2017 & Beyond


9

Attractive End Markets


Balanced Portfolio Providing Tailwind For Growth

Specialty Products and Systems that Conserve and Safeguard the Flow of Fluid and Energy

Ve

rtic

als

E

nd

Ma

rkets

Residential Multi Family / Commercial

Light / General Industrial

Healthcare Hospitality Institutional / Educational


10

Aligned to Favorable Macro Trends


Addressing Global Secular Macro Themes

• Code & specification driven

• Extensive certification process

• Emerging need globally

SAFETY & REGULATION ENERGY EFFICIENCY WATER CONSERVATION

• Environmental & emotional drivers

• Code & specification driven

• Emerging global demand

• Economic & environmental value

proposition

• Application & engineering

competencies critical


11

“Self Help” Story Drives Earnings Growth


Significant Margin Improvement

Operating Margin Opportunity Next 5 Years


12

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

• Pay a competitive dividend - Consistent double-digit increases

• Stable share buyback - Offset option dilution at minimum

2015E 2019T

>100% FCF

Conversion


13

Summary


Stronger Foundation Delivering Long-term Value Creation

Who We Are

• $1.4B enhanced water portfolio

• Global leading brands in highly

fragmented industry

• Broad solutions across balanced

geographies & end markets

• Strong presence in repair/replace &

new construction

• Strong financial position & cash flow

generation

• Disciplined capital allocation

Our Commitments

• Expand operating margins – mid teens

• Earnings growth through commercial

and operational excellence

• Re-investment in innovation to drive

growth and margin upside

• >100% free cash flow generation

• Accelerate growth through disciplined

acquisitions

• Return excess cash to shareholders


14

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