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1Third Quarter 2025 Earnings Presentation | Third Quarter 2025 Results October 28, 2025
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2Third Quarter 2025 Earnings Presentation | Charles T. Lauber Executive Vice President and Chief Financial Officer Helen E. Gurholt Vice President - Investor Relations, Financial Planning & Analysis Stephen M. Shafer President and Chief Executive Officer
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3Third Quarter 2025 Earnings Presentation | Forward Looking Statements This presentation contains statements that we believe are “forward-looki ng statements” within the meaning of the Private Securities Litigation Re form Act of 1995. Forward- looking statements generally can be identified by the use of words such as “m ay,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “continue,” “ forecast,” “guidance” or words of similar meaning. Important factors that could cause actual results to differ materially from these expectations include, amo ng other things, the following: negative impact to the Company’s businesses from international tariffs, including any new or increased tariffs that could also trigger retaliatory responses from other countries, as well as, trade disputes and geopolitical differe nces, including the conflicts in Ukraine and the Middle East; further softening in U.S. residenti al and commercial water heater demand; negative impacts to the Company, particula rly the demand for its products, resulting from global inflationary pressures or a potential rece ssion in one or more of the markets in which the Company participates; the Company’s ability to contin ue to obtain commodities, components, parts and accessories on a timely ba sis through its supply chain and at expected costs; further weakening in North American residentia l or commercial construction or instability in the Company’s replacemen t markets; inability of the Company to implement or maintain pricing actions; inconsistent recovery of the Chinese economy or a further decline in the growth rate of consumer spending or housing sales in China; the availability, timing or effects of China stimulus programs; unc ertain outcomes and costs and other potential impacts of the Company’s ass essment relating to the Company’s China business; potential weakening in the high-efficiency gas bo iler segment in the U.S.; substantial defaults in payment by, material r eduction in purchases by or the loss, bankruptcy or insolvency of a major customer; foreign currency fluctuations; the Company’s inability to successfully integrate or achiev e its strategic objectives resulting from acquisitions; failure to realize the expected benefits of acquisitio ns or expected synergies; failure to realize the expected benefits, timin g and extent of regulatory changes; competitive pressures on the Company’s businesses, including new technologies and new competitors; the impact of potential information technolog yo rd a t as e c u r i t yb r e a c h e s ; negative impact of changes in government regulatio ns or regulatory requirements; the inability to r espond to secular trends toward decarbonizatio n and energy efficiency; and adverse developments in general economic, political and business conditio ns in key regions of the world. . Forward-looking statements included in t his presentation are made only as of the date of this presentation, and the Company is under no obligati on to update these statements to reflect subsequent events or circumstanc es. All subsequent written and oral forward-looking statements attributed to the Company, or p ersons acting on its behalf, are qualified entirely by these cautionary s tatements. This presentation contains certain non-GAAP financial measures as that term is defined by the SEC. Non-GAAP financial measures are generally identified by “Adjusted”(Adj.) or “Non-GAAP.”
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Third Quarter 2025 Earnings Presentation | 4 Third Quarter Performance and Highlights Highlights • Net sales increased 4 percent to $943M • EPS increased 15 percent to $0.94 North America • Sales up 6 percent primarily due to pricing actions and higher volumes • Segment margin increased 110 bps to 24.2 percent Rest of World • Sales down 1 percent due to lower sales in China partially offset by Pureit acquisition sales and legacy India sales growth • Segment margin increased 90 bps to 7.4 percent $903M $943M Q3 2024 Q3 2025 $743M $208M North America Rest of World $180M $15M North America Rest of World 4% YOY $0.82 $0.94 Q3 2024 Q3 2025 15% YOY Segment SalesEPS Segment EarningsSales
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Third Quarter 2025 Earnings Presentation | 5 Commitment to Sustainability 1 2019 baseline 2 2023 baseline; water savings = water reduced + water recycled; M = million 3 2024 baseline; 7 largest North America manufacturing plants; landfill diversion = waste reduction, recycling, energy recovery Greenhouse Gas GOAL: 10% intensity reduction by 20251 STATUS: Achieved 30% intensity reduction in 2024, exceeding 2025 goal 30% 10% 0% Water GOAL: Annual savings of 40M gallons by 20302 STATUS: 36M gallons saved Waste GOAL: 525,000 pounds of waste diverted from the landfill by 20273 STATUS: Established 2024 baseline Manufacturing Innovation and Continuous Improvement 5-Year Progress on Environmental Goals 2025202420232019 The Water Council – WAVE Action Verified Established landfill waste diversion goal Established water goalWater stewardship program launched The Water Council – WAVE Verified Established greenhouse gas goal
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6Third Quarter 2025 Earnings Presentation | Third Quarter North America Segment • Sales increased primarily due to pricing actions and commercial water heater volumes • Boilers sales increased 10 percent • North America Water Treatment priority dealer, e-commerce and direct- to-consumer channels grew 11 percent • Higher earnings primarily due to pricing actions and higher commercial water heater and boiler volumes partially offset by higher input costs • Tariff impacts more than offset lower steel costs • Segment margin was 24.2 percent, an increase of 110 bps Segment Operating Earnings ($M)Segment Sales ($M) ($1) $703 $41 $743 Q3 2024 Sales Organic Growth FX Q3 2025 Sales 6% YOY $163 $38 $(12) $(9) $180 Q3 2024 Earnings Organic Growth Input Costs SG&A and FX Q3 2025 Earnings 23.1% 24.2%
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Third Quarter 2025 Earnings Presentation | 7 Third Quarter Rest of World Segment • Sales decrease 1 percent primarily due to lower China volumes, partially offset by higher sales in India • China third-party sales declined 12 percent in local currency due to continued weak consumer demand and competitive dynamics • Legacy India business grew 13 percent and Pureit added $17 million to the quarter • Operating earnings increased as cost control efforts more than offset lower volumes in China • Segment operating margin expanded 90 basis points even on lower sales • Pureit integration on track $13 ($7) $9 $15 Q3 2024 Earnings Organic Growth SG&A and Other Q3 2025 Earnings 6.4% 7.4% Segment Operating Earnings ($M) $17 $210 $(19) $208 Q3 2024 Sales Organic Growth Acquisition Q3 2025 Sales Segment Sales ($M) -1% YOY
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Third Quarter 2025 Earnings Presentation | 8 $173M Cash balance2 9.2% Debt to capital ratio $13M Net debt position ~5M Shares repurchased YTD1 totaling ~$335M Cash Flow and Liquidity1 1As of September 30, 2025 2Includes cash, cash equivalents and marketable securities $360 $434 YTD September 2024 YTD September 2025 $283 $381 YTD September 2024 YTD September 2025 Free Cash Flow ($M) Cash Flow From Operations ($M)
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9Third Quarter 2025 Earnings Presentation | Capital Allocation Priorities • Driving organic growth: developing products aligned to upcoming regulatory changes, investing in productivity and continuing to build the strength of the core • Disciplined focus on transactions that expand/grow the core, enable geographic growth, expand technology capabilities, and establish adjacencies • Continued focus within North America Water Treatment • Portfolio management • Quarterly dividend increased 6 percent • Five-year CAGR of 7 percent • Over 30 consecutive years of dividend increases • $335 million through September 2025; $400 million projected for the full year Acquisitions Organic Growth Dividends Share Repurchases
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10Third Quarter 2025 Earnings Presentation | 2025 Outlook and Assumptions1 1As of October 28, 2025 ~Flat to 1%Revenue Increase ~FlatU.S. Residential Water Heater Industry ~LSDCommercial Water Heater Industry ~-10% China Sales Decrease (Local Currency) ~4% to 6%North American Boiler Sales Growth ~-5%North American Water Treatment Decrease ~24% to 24.5%North America Segment Margin ~8%Rest of World Segment Margin ~$500MFree Cash Flow ~$75MCapital Expenditures ~$80MDepreciation & Amortization ~$15M to $20MInterest Expense ~$75MCorporate/Other Expense ~24%Effective Tax Rate ~$400MShare Repurchase ~142MShare Count – Diluted 20242025 Guidance $3.63$3.70 - $3.85Diluted EPS (GAAP) $0.101-Restructuring and impairment expense $3.73$3.70 - $3.85 Adjusted EPS (non-GAAP) 1Includes pre-tax restructuring and impairment expenses of $6.3 million and $11.3 million, within the North America segment and the Rest of World segment, respectively.
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11Third Quarter 2025 Earnings Presentation | Third Quarter Messages North America segment sales grew 6% and water heaters outperformed the market in the quarter 3 Strong performance from growth priorities in India and boilers and key water treatment channels in North America Assessment of China business in process to ensure business is positioned well for the future Continued focus on Operational Excellence, Innovation and Portfolio Management for future value creation Total Company sales grew 4% to $943M and EPS grew 15% to $0.94 4 5 2 1
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12Third Quarter 2025 Earnings Presentation | 12 Appendix
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13Third Quarter 2025 Earnings Presentation | Powerful Investment Thesis Leading with innovative products that drive technology and meet sustainability needs Capitalizing on global megatrends in a large and growing market supported by regulatory changes Leading North American water heater and boiler producer with stable and consistent replacement demand Leveraging strong balance sheet for organic and inorganic growth while returning capital to shareholders Compelling brand awareness in emerging markets with attractive growth and margin expansion opportunities 1 2 3 4 5
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14Third Quarter 2025 Earnings Presentation | Free Cash Flow ($ in Millions)