Slides
Page 1
Second Quarter 2026 Results July 30, 2026
Page 2
2 Charles T. LauberExecutive Vice President Charles T. Lauber Executive Vice President Helen E. GurholtVice President - Investor Relations, Financial Planning Analysis Helen E. Gurholt Vice President - Investor Relations, Financial Planning & Analysis Stephen M. Shafer Chairman and Chief Executive Officer Stephen M. Shafer Chairman and Chief Executive Officer Carrie L. AndersonExecutive Vice Presidentand Chief Financial Officer Carrie L. Anderson Executive Vice President and Chief Financial Officer Second Quarter 2026 Results
Page 3
3 This presentation contains statements that we believe are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of words such as “may,” “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, among other things, the following: Important factors that could cause actual results to differ materially from these expectations include, among other things, the following: further softening in U.S. residential and commercial water heater demand; further weakening in North American residential or commercial construction or instability in the Company’s replacement markets; failure to realize the expected benefits of acquisitions or expected synergies; difficulties in predicting results of operations of an acquired business; 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 differences, including the conflicts in Ukraine and the Middle East; negative impacts to the Company, particularly the demand for its products, resulting from global inflationary pressures or a potential recession in one or more of the markets in which the Company participates; the Company’s ability to continue to obtain commodities, components, parts and accessories on a timely basis through its supply chain and at expected costs, including the recent volatility in fuel and other material prices; 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; uncertain outcomes and costs and other potential impacts of the Company’s assessment relating to the Company’s China business; the failure to realize the expected benefits of restructuring actions; further weakening in the high-efficiency gas boiler segment in the U.S.; substantial defaults in payment by, material reduction in purchases by or the loss, bankruptcy or insolvency of a major customer; foreign currency fluctuations; failure to realize the expected benefits, timing and extent of regulatory changes; competitive pressures on the Company’s businesses, including new technologies and new competitors; the impact of potential information technology or data security breaches; negative impact of changes in government regulations or regulatory requirements; the inability to respond to secular trends toward decarbonization and energy efficiency; and adverse developments in general economic, political and business conditions in key regions of the world. Forward-looking statements included in this presentation are made only as of the date of this presentation, and the Company is under no obligation to update these statements to reflect subsequent events or circumstances. All subsequent written and oral forward-looking statements attributed to the Company, or persons acting on its behalf, are qualified entirely by these cautionary statements. 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.” Forward Looking Statements Second Quarter 2026 Results
Page 4
4 Second Quarter Performance and Highlights Highlights • Net sales decreased slightly • Adjusted EPS decreased 4% to $1.03 North America • Sales increased 5%, with organic growth of 3% • Leonard Valve acquisition contributed $16 million in sales Rest of World • Sales decreased 19% primarily due to continued weakness in the China consumer appliance market • Cost savings actions partially mitigate China sales decline $1.0B $1.0B Q2 2025 Q2 2026 -1% YOY Segment Sales ($M)Adjusted EPS Adj. Segment Earnings ($M)Sales ($B) $1.07 $1.03 Q2 2025 Q2 2026 $821M $195M North America Rest of World $200M $10M North America Rest of World -4% YOY Second Quarter 2026 Results
Page 5
5 $779 $26 $16 $821 Q2 2025 Sales Organic Growth Acquisition Q2 2026 Sales Second Quarter North America Segment 1Includes volume, price and mix • Excluding acquisitions, organic growth was 3%, driven by boiler growth • Boilers sales increased 21% driven by higher volumes and pricing benefits • Water heater pricing actions partially offset by lower residential volumes • Leonard Valve contributed $16 million to sales • Adj. segment earnings were up modestly • Pricing benefits offset by cost inflation • Steel costs increased 20% • Segment margin was 24.4%, a decrease of 100 bps Adj. Segment Operating Earnings ($M)Segment Sales ($M) 5% YOY $198 $17 $4 $200 Q2 2025 Earnings Organic Growth Acquisition Input and Other Costs Q2 2026 Adj Earnings 25.4% 24.4% 1 1 Second Quarter 2026 Results $(19)
Page 6
6 Second Quarter Rest of World Segment 1Includes volume, price and mix • Sales decreased 19% primarily due to lower China volumes • Currency translation benefit of $6 million • Operating earnings decreased due to lower volumes in China • Continued cost control actions mitigate sales decline Segment Operating Earnings ($M)Segment Sales ($M) $240 $6 $195 Q2 2025 Sales Organic Growth FX Q2 2026 Sales -19% YOY $25 $9 $10 Q2 2025 Earnings Organic Growth SG&A Other Q2 2026 Earnings 10.5% 5.2% 1 1 Second Quarter 2026 Results $(24)$(51)
Page 7
7 $181M Cash balance2 25.7% Debt to capital ratio $456M Net debt position ~2.6M Shares repurchased YTD1 totaling ~$162M Cash Flow and Liquidity1 1As of June 30, 2026 2Includes cash, cash equivalents and marketable securities $178 $254 Q2 2025 Q2 2026 $140 $233 Q2 2025 Q2 2026 Free Cash Flow ($M) Cash Flow From Operations ($M) Second Quarter 2026 Results
Page 8
8 Capital Allocation Priorities • Driving organic growth: developing products through product innovation, 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 and Water Management • Five-year CAGR of 7% • Over 30 consecutive years of dividend increases • $162 million YTD June 2026 (~2.6M shares); Full year target increased 50% to $300 million Acquisitions Organic Growth Dividends Share Repurchases Second Quarter 2026 Results
Page 9
9 2026 Outlook and Assumptions1 1As of June 30, 2026 2Excludes the estimated full year impact of North America water treatment pre-tax restructuring and impairment expenses of approximately $20 million, of which $22.6 million was recognized in the second quarter. Anticipated proceeds from the sale of certain assets are expected to occur on late 2026. Revenue Increase ~2% to 3% U.S. Residential Water Heater Industry ~-LSD U.S. Commercial Water Heater Industry ~Flat China Sales Decrease (Local Currency) ~-LDD North American Boiler Sales Growth ~6% to 8% North America Water Treatment Sales Growth ~5% to 6% Leonard Valve Acquisition ~$70M Adjusted North America Segment Margin2 ~24% Rest of World Segment Margin ~6% to 7% Free Cash Flow ~$525M to $575M Capital Expenditures ~$60M to $70M Depreciation & Amortization ~$100M Interest Expense ~$35M Corporate/Other Expense ~$80M to $85M Effective Tax Rate ~24% Share Repurchase ~$300M Share Count – Diluted ~137M Diluted EPS (GAAP) Restructuring Expense Adjusted EPS2 (non-GAAP) 2026 Outlook $3.60 - $3.75 $0.10 $3.70 - $3.85 2025 Actual $3.85 - $3.85 Second Quarter 2026 Results
Page 10
10 Strategic assessment of China business nearing completion Confidence in underlying strength of North America business Strong free cash flow supports 50% increase in 2026 share repurchase target 21% boiler sales growth in the quarter led to YTD boiler sales growth of 12% Total Company sales were $1B, with North America organic growth of 3%; adjusted EPS was $1.03 Second Quarter 2026 Messages 3 4 5 2 1 Second Quarter 2026 Results
Page 11
Appendix Second Quarter 2026 Results
Page 12
12 Adjusted Earnings and Adjusted EPS ($ in Millions, except per share data) Second Quarter 2026 Results
Page 13
13 Sales Growth (Decline) Second Quarter 2026 Results
Page 14
14 Adjusted Segment Earnings ($ in Millions) Second Quarter 2026 Results
Page 15
15 Free Cash Flow ($ in Millions) Second Quarter 2026 Results