WTS 10-K & 10-Q changes, risk factors and insider trading

We have experienced and expect to continue to experience fluctuations in revenues and operating results due to economic and business cycles. The businesses of most of our customers, particularly plumbing and heating wholesalers and OEM manufacturers, are cyclical. Therefore, the level of our business activity has been cyclical, fluctuating with economic cycles. An economic downturn may also affect the financial stability of our customers, which could affect their ability to pay amounts owed to their vendors, including us. We also believe our level of business activity is influenced by commercial and residential starts and renovation and remodeling, which are, in turn, heavily influenced by interest rates, consumer debt levels, changes in disposable income, employment growth and consumer confidence. Credit market conditions may prevent commercial and residential builders or developers from obtaining the necessary capital to continue existing projects or to start new projects. Increases in prevailing interest rates or disruptions in financial markets and banking systems could make credit and capital markets difficult for us or our customers to access and could significantly raise the cost of new debt for us or our customers. This may result in thea 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. 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. Economic conditions and financial markets in the United States and globally have experienced significant volatility in recent periods. If these market conditions persist, we may see diminished liquidity and credit availability, inability to access capital markets, and the bankruptcy, failure, collapse, or sale of various entities that could directly or indirectly impact our business, including certain of our customers and suppliers. If economic conditions worsen in the future, our revenues and profits could decrease or trigger goodwill, indefinite-lived intangible assets, or long-lived asset impairments and could have a material adverse effect on our financial condition and results of operations.

Changes in the costs of raw materials and purchased components, including imposition of tariffs or changes in tariff rates, as well as supply chain and logistics disruptions, could reduce our profit margins and adversely affect our ability to meet our customer delivery commitments.

Our products are made using various purchased components and raw materials, including primarily bronze, brass, cast iron, stainless steel, steel and plastic. Substantially all of the rawthese materials we require to manufacture our products are purchasedsourced from outsideexternal sources.suppliers. The costs and availability of raw materials and components may be subject to change due to, among other things, interruptions in production by suppliers, changes in worldwide prices, demand levels, exchange rates andrates, imposition of tariffs or changes in tariff rates. ForTariffs example, the new U.S. presidential administration announced plans to significantly increase tariffsimposed on foreign imports into the United States, particularly from Canada, China and Mexico.Mexico, have increased the cost of our products and could adversely impact the gross margin we earn on our products. We typically do not enter into long-termlong 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. Commodity prices, particularly copper and stainless-steel prices, have experienced tremendous volatility over the past several years, mainly due to global macroeconomic trends, including global price inflation, supply chain disruption and international conflicts. Should commodity costs or purchased component costs increase substantially, we may not be able to recover such costs,costs through selling price increases to our customers or other product cost reductions, which would have a negative effect on our financial results. If commodity costs or purchased component costs decline, we may experience pressure from customers to reduce our selling prices. Additionally,We wealso continuesource to purchasecertain components and finished goods frominternationally, internationalincluding sources.some In limited cases, these components or finished goodsthat are single-sourced. We also sell products internationally. 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,crises, extreme weather events, suppliers’ allocations to other purchasers, threats of wars and global geo-politicalgeopolitical instability, and new laws, tariffs or regulations that might cause short-termshort /or 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. 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. The conflicts in Europe and the Middle East have negatively impacted, and may continue to negatively impact, the availability and prices for raw materials,materials and components.

The successful implementation of our business strategy requires us to continually evolve our existing products and introduce new products to meet customers’ needs in the industries we serve, as evidenced by our investments in our smart and connected strategy. Many of our products are characterized by stringent performance and specification requirements that mandate a high degree of manufacturing, engineering, and technological expertise. If we fail to meet these requirements, or if our product offerings, including our smart and connected products, are not accepted by the market, our business could be at risk. We believe that our customers rigorously evaluate their suppliers on the basis of a number of factors, including product quality, price competitiveness, technical and manufacturing expertise, development and product design capability, new product innovation, reliability and timeliness of delivery, operational flexibility, impact on the environment, customer service and overall management. Our success will depend on our ability to continue to meet customers’ changing specifications with respect to these criteria. Further, we must continue to effectively adapt our products and services to a changing technological and regulatory environment to drive growth and defend against disruption caused by competitors, regulators or other external forces impacting our business and operations. If we are unable to be agile and responsive to disruption in the development of new products, services and technologies, including technologies such as artificial intelligenceintelligence, machine learning and machineother learning,advanced digital technologies that are increasingly central to product development, manufacturing efficiency, and customer engagement, our business, financial condition, results of operations and cash flows could be adversely affected. We are increasingly incorporating artificial intelligence and machine-learning technologies into our operations, products, and services. These technologies present risks, including inaccurate or unreliable outputs, data quality limitations, regulatory uncertainty, intellectual property concerns, cybersecurity vulnerabilities, data privacy concerns, performance issues and reputational harm. The effectiveness of these technologies depends on, amongst other things, appropriate oversight and governance, skilled personnel, and reliable data. In addition, our competitors may more effectively leverage these technologies to improve efficiency, reduce costs, or develop differentiated offerings. If we are unable to responsibly develop, deploy, and manage artificial intelligence technologies, our business and financial results could be adversely affected. We cannot ensure that we will be able to address technological advances or introduce new products that may be necessary to remain competitive within our business. We cannot ensure that we can adequately protect any of our technological developments to produce a sustainable competitive advantage. Furthermore, we may be subject to business continuity risk in the event of an unexpected loss of a material facility or operation. We cannot ensure that we adequately protect against such loss.

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”), and third-party 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,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. 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.

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. 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 malicioussophisticated software,cyberattacks, misconfigurations,system bugs,vulnerabilities, attemptsthird-party 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,failures and other vulnerabilities in commercial software that is integrated into our (or our suppliers’ or service providers’) IT Systems, products or services. Cybersecurity may also be breached through diverse attack vectors, such as social engineering/phishing,phishing or other impersonation attacks, including those enhanced by artificial intelligence, malware (including ransomware), human error, malfeasance by insiders, system errors or vulnerabilities, including vulnerabilities of our customers, distributors, vendors, suppliers, and their products. WeAdditionally, haveany beenintegration impactedof byartificial certainintelligence in our or any third party’s operations, products or services is expected to pose new or unknown cybersecurity attacks, either directly or indirectly via our supply chain or third-party vendors,risks 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. We also have a portion of our workforce working remotely, which heightens these risks.challenges.

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. 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-ThingsInternet 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. 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.

If we need to address multiple vulnerabilities simultaneously, we may also need to make prioritization decisions in determiningprioritize which vulnerabilities or security defects to fix first, and the timing of these fixes, which could result in compromised security. These vulnerabilities and security defects could expose us or our customers to a risk of loss, disclosure, or misuse of data; adversely affect our operating results; result in litigation (including class actions), liability, or regulatory action (including under laws related to privacy, data protection, data security, network security, and consumer protection); deter customers or sellers from using our products, services and solutions; result in significant incident response, system restoration or remediation costs; and otherwise harm our business and reputation. 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. Further, customers and third-party providers increasingly demand rigorous contractual provisions regarding privacy, cybersecurity, data protection, confidentiality, and intellectual property, which may also increase our overall compliance burden and related costs. Finally, we cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all.

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 software implementation requires significant investment of human and financial resources and we may experience significant delays, increased costs and other difficulties. Any significant disruption or deficiency in the design and implementation of our software IT Systems, including our new ERP,ERP system, could adversely affect our ability to process orders, ship product,products, send invoices and track payments, fulfill contractual obligations or otherwise operate our business. While we invest significant resources in planning and project management, significant issues may arise, which could have a material adverse effect on our competitive position, results of operations, cash flows or financial condition. 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. 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 impairedimpaired, andwhich could impact our assessment of the effectiveness of our internal controls over financial reporting.

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. 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. 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. 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. We have invested, and continue to invest, human and technologytechnological resources in our efforts to comply with such requirements that may be time-intensive and costly.

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, from time to time, we may divest assets or businesses based on an evaluation of our business portfolio. We cannot be certain that we will be able to identify, acquire or profitably manage additional companies or successfully integrate such additional companies without substantial costs, delays or other problems. The identification, evaluation, and negotiation of potential acquisitions and other strategic transactions such as divestitures may divert the attention of management and entail various expenses, whether or not such transactions are ultimately completed. We have faced increasing competition for acquisition candidates, which has resulted in significant increases in the purchase prices of many acquisition candidates. This competition, and the resulting purchase price increases, may limit the number of acquisition opportunities available to us, possibly leading to a decrease in the rate of growth of our revenues and profitability. Also, companies acquired recently and in the future may not achieve anticipated revenues, cost synergies, profitability or cash flows that justify our investment, or divestitures may not realize the expected benefits or synergies of such transactions. In addition, acquisitions may involve a number of risks, including, but not limited to:

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. We also cannot be certain that our suppliers will always eliminate latent defects in products we purchase from them. Accordingly, there is a risk that product defects will occur,occur which could require a product recall. Product recalls can be expensive to implement and, if a product recall occurs during the product’s warranty period, we may be required to replace the defective product. In addition, a product recall may damage our relationship with our customers and we may lose market share with our customers. Our insurance policies may not cover the costs of a product recall.

We own important intellectual property, including patents, trademarks, copyrights and trade secrets. We cannot guarantee, however, that we will be able to secure all desired protection, nor that the steps we have taken to protect our intellectual property will be adequate, to prevent infringement of our rights or misappropriation or theft of our technology, trade secrets or know-how. For example, effective patent, trademark, copyright and trade secret protection may be unavailable or limited in some of the countries in which we operate. In addition, while we generally enter into confidentiality agreements with our employees and third parties to protect our trade secrets, know-how, business strategy and other proprietary information, such confidentiality agreements could be breached or otherwise may not provide meaningful protection for our trade secrets and know-how related to the design, manufacture or operation of our products. If it became necessary for us to resort to litigation to protect our intellectual property rights, any proceedings could be burdensome and costly, and we may not prevail. Further, adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets and manufacturing expertise. Finally, for those products in our portfolio that rely on patent protection, once a patent has expired, the product is generally open to competition. Products under patent protection usually generate higher revenues and profitability than those not protected by patents. If we fail to successfully enforce our intellectual property rights, our competitive position could suffer, which could harm our business, financial condition, results of operations and cash flows. Continued use of AI in the development of our products and services could also adversely impact our intellectual property protections. For example, AI-generated content may infringe third-party intellectual property or proprietary information fed into AI tools may lose trade secret protection.

We are subject to and impacted by environmental, health and safety laws and regulations, which could result in costs, liabilities and impacts to our business operations.

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. PRP designation typically requires the funding of site investigations and subsequent remedial activities. Such liability can be imposed without regard to fault and, under certain circumstances, may be joint and several, which may result in one PRP being held responsible for the entire obligation. Liability may also include damagesdamage to natural resources. On occasion, we are involved in the investigation and/or remedial activities at sites that we currently own or operate or formerly owned or operated, or sites to which we sent waste for disposal, and we have been and could continue to be named as a PRP at such other sites.

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. 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. Certain events may disrupt the operations of our customers, creating customer shutdowns that prevent or defer sales of our product, while other events may drive increased demand for our products, which may create volatility in our financial results. Additionally, these events may disrupt our own operations and the operations of our suppliers, including the operation of manufacturing plants, the transportation of raw materials from our suppliers, and the transportation of products to our customers, any of which may increase our costs, reduce our productivity and adversely affect our business, financial condition, results of operations and prospects. Concern over climate changechange, in addition to political debates over the need for additional regulation, has and may continue to result in new or increasedamended 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. New legislation and amendments to regulatory requirements may also impact our customers and suppliers, which could affect demand for our products or our ability to source key materials. In addition, our customers and suppliers may impose their own requirements with respect to climate change and greenhouse gas emissions that may require us to incur additional costs to comply with such requirements. Any failure to comply with those requirementsrequirements, or adapt to rollbacks in regulatory requirements, may also affect demand for our products or our ability to source key materials. We may incur significant costs to adapt our portfolio to comply with these changing regulations and maintain competitiveness in different markets, including, but not limited to, redesigning existing products, developing new climate compliant offerings, and managing the mix of products sold in affected markets. We may at times also establish our own goals with respect to reducing our impact on the environment. 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. Moreover, if we are effective at addressing such matters, we may also attract negative attention from stakeholders and regulators with diverging views on sustainability.

Increased scrutiny of, and evolvingEvolving and conflicting expectations regarding,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 scrutinyexpectations related to ESG practices and disclosures from certain investors, government entities, customers, employees, and other stakeholders or third parties. With this increased focus, publicPublic 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. 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. 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. 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. On November 18, 2025, the U.S. Court of Appeals for the Ninth Circuit granted a motion for an injunction on California’s SB 261, enjoining the California Air Resources Board’s from enforcing SB 261 and scheduled a hearing for January 9, 2026. This decision does not impact SB 253, which is still in effect. The court has yet to decide post-hearing whether to issue a preliminary injunction against SB 261 and/or SB 253, and the case will return to the Central District of California for further proceedings, with summary judgment briefing planned for the summer. Other US states have proposed laws similar to California’s to which we may be subject if they take effect. We expect tomay 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,Regulation. alongThe withCSRD’s implementinginitial regulations,reporting torequirements behave consolidatedbeen into an “omnibus simplification package” expecteddelayed for introductiontwo asyears earlyand asthe FebruaryCSDDD’s 2025transposition .deadline for one year, following the European Parliament’s approval of the Omnibus I package on December 16, 2025. 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 countriesjurisdictions including the United Kingdom, Canada, Australia, China, Hong Kong, and Singapore. Such standards may change over time, which could result in changes to our current goals, reported progress in achieving such goals, or ability to achieve such goals in the future.

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. For example, we may commit to certain initiatives and we may not ultimately be able to achieve such initiatives due to cost, technological constraints or other factors that are within or outside of our control. Even if we achieve our initiatives, our actions may subsequently be determined to be insufficient by various stakeholders or other third parties. Moreover, our initiatives may also attract negative attention from stakeholders and regulators with diverging views on ESG and sustainability. If our ESG practices and reporting do not meet investor, regulator, customer, employee, or other stakeholder or third party expectations, which continue to evolve, our brand, reputation and/or business relationships may be negatively impacted, and we may be subject to investor or regulator engagement regarding such matters. Certain market participants, including major institutional investors, use third-party benchmarks, ratings, or scores to measure our ESG practices in making investment and voting decisions. Unfavorable ratings or scores of us or our industry may lead to negative investor sentiment and thereduced diversion of investment to other companies or industries,investment, which could have a negative impact on our stock price and our access to and cost of capital. 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. Our failure to comply with any applicable rules or regulations could lead to penalties and adversely impact our reputation, customer attraction and retention, access to capital, and employee retention. 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 abilityinability to fully execute such plans as a result of local regulations, geo-political risk or other factors within or beyond the control of management.

As of December 31, 2024,2025, our balance sheet included goodwill, indefinite-lived intangible assets, amortizable intangible assets and property, plant and equipment of $715.0$859.0 million, $70.4$79.4 million, $164.6$215.2 million and $254.8$297.1 million, respectively. In lieu of amortization, we are required to perform an annual impairment review of both goodwill and indefinite-lived intangible assets. In 2024,2025, 20232024 and 2022,2023, 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 2022, we recognized a pre-tax non-cash impairment charge of $1.3 million related to a technology intangible asset. This impairment was due to market value expectations indicating the carrying amounts of these assets were in excess of the fair value. In2025, 2024 and 20232023, none of our long-lived assets were impaired.

As of December 31, 2024,2025, there were 27,366,68527,426,533 shares of our Class A common stock outstanding and 5,953,2905,916,290 shares of our Class B common stock outstanding. Shares of our Class B common stock may be converted into Class A common stock at any time on a one-for-one basis. Under the terms of a registration rights agreement with respect to outstanding shares of our Class B common stock, the holders of our Class B common stock have rights with respect to the registration of the underlying Class A common stock. Under these registration rights, the holders of Class B common stock may require, on up to two occasionsoccasions, that we register their shares for public resale. If we are eligible to use Form S-3 or a similar short-form registration statement, the holders of Class B common stock may require that we register their shares for public resale up to two times per year. If we elect to register any shares of Class A common stock for any public offering, the holders of Class B common stock are entitled to include shares of Class A common stock into which such shares of Class B common stock may be converted in such registration. However, we may reduce the number of shares proposed to be registered in view of market conditions. We will pay all expenses in connection with any registration, other than underwriting discounts and commissions. If all of the available registered shares are sold into the public market, the trading price of our Class A common stock could decline.

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. 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. On January 5, 2026, the OECD released a “side-by-side” package (the “SbS Package”) that generally establishes an exemption for U.S. multinationals from the 15% global minimum tax. However, the implementation of the SbS Package depends on domestic legislation and regulation in OECD member countries and is subject to subsequent review. Details around the proposals are still uncertain as the OECD and local jurisdictions continue to issue the technical guidance. 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. The IRA also includes a 1% excise tax on new corporate stock repurchases that became effective in 2023. WeIn doaddition, notthe expectOne Big Beautiful Bill Act (“OBBBA”), enacted on July 4, 2025, significantly changed the U.S. tax landscape by implementing revisions to meetkey business tax provisions, including through the CAMTexpansion thresholdof rules related to deductibility of executive compensation, the reinstatement of bonus depreciation deductions for acquisitions of qualified property, the restoration of EBITDA-based business interest expense limitation and the implementation of changes relating to the computation of certain taxes in therespect nearof termnon-U.S. noractivities. expectIn the IRA to have a material impact on our financial statements. However,addition, it is possible that the U.S. Congress could advance other tax legislation proposals in the future that could have a material impact on our financial statements.

We are a leading supplier of solutions, systemsproducts and productssolutions 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”). For over 150 years, we have designed and produced valve systems that safeguard and regulate water systems, energy efficient heating and hydronic systems, drainage systems and water filtration technology that helps purify and conserve water. We earn revenue and income almost exclusively from the sale of our products. Our principal product and solution categories include:

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. Our acquisition strategy focuses on businesses that promote our key macro themes around safety and regulation, energy efficiency and water conservation. 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. We have completed 1417 acquisitions since 2015,2016, and eight acquisitions in the last twothree years, weall haveof completedwhich fourwere strategic and complementary acquisitions that expanded our addressable market and that we believe will enable value creation through greater scale and growth opportunities.

Net sales for 20242025 increased 9.5%,8.3%, or $195.9$186.3 million, on a reported basis and decreased 0.9%,5.3%, or $18.0$119.1 million, on an organic basis, compared to 2023.2024. The reported sales increase included acquired sales of 10.4%,2.3%, or $214.7$52.4 million, with $206.6$50.4 million reported within the Americas segment and $8.1$2.0 million reported within APMEA, and the unfavorablefavorable impact of foreign exchange of $0.8$14.8 million.million, primarily due to the depreciation of the U.S. dollar against the euro. The organic sales decreaseincrease was primarily driven by lower volumes in our Europe segment, partially offset by incremental price across all of our operating segments.segments, higher volumes in our Americas and APMEA segments, partially offset by lower volumes in our Europe segment. Operating income of $390.4$448.1 million increased by $39.5$57.7 million, or 11.3%,14.8%, in 20242025 compared to 2023.2024. This increase was primarily driven by contributionfavorable price, volume growth, productivity, contributions from our acquisitions, favorable price, product mix, productivity,acquisitions and cost savings from prior restructuring actions, partially offset by inflation, tariffs, lower volume in our Europe segmentsegment, higher restructuring costs and incremental investments.

In discussing our results of operations, segment earnings is ourthe GAAP performance measure used by our chief operating decision-maker (“CODM”) to assess and evaluate segment results. Segment earnings exclude the impacts of special items which are defined as non-recurring, and unusual expenses or benefitsbenefits, such as restructuring costs, acquisition-related costs, gain or loss on sale of assets,assets and pension settlements and contingent consideration adjustments.settlements. The CODM uses segment earnings for insight into underlying trends comparing past financial performance with current performance by reporting segment on a consistent basis.

On February 3,9, 2025,2026, we declared a quarterly dividend of forty-threefifty-two cents ($0.43$0.52) per share on each outstanding share of Class A common stock and Class B common stock payable on March 14,13, 2025,2026, to stockholders of record on February 28,27, 2025.2026.

Americas net sales increased $236.8$182.5 million, or 16.6%,11.0%, in 20242025 compared to 2023.2024. The change in net sales was positively impacted by $206.6$50.4 million, or 14.5%,3.0%, of acquired sales related to the Bradley and Josamfour acquisitions completed induring the fourth quarter of 2023 and first quarter of 2024, respectively.2025. The change in net sales was negatively impacted by $1.4$1.6 million, or 0.1%,million of foreign currency translation. Organic net sales increased $31.6$133.7 million, or 2.2%,8.0%, primarily due to increased volume and favorable price realization.realization and increased volume. The organic net sales growth was primarily in the wholesale channel from increased sales across our core valve and drain products and in the specialty channel from increased sales of our heating and hot water products.

Europe net sales decreased $58.8$2.6 million, or 11.5%,0.6%, in 20242025 compared to 2023.2024. The change in net sales was positively impacted by $1.5$18.4 million, or 0.3%,4.0%, of foreign currency translation. Organic net sales decreased $60.3$21.0 million, or 11.8%,4.6%, primarily due to lowervolume volumes,declines from market weakness in the OEM and wholesale channels, partially offset by favorable price realization. The decrease was primarily due to volume declines in the OEM channel which was impacted by reduced government energy incentives and the related heat pump destocking,destocking asprimarily wellin asthe first half of 2025, while the wholesale channel was primarily impacted by reduced volume declines in wholesaleof plumbing product sales into France and Benelux,Benelux partially offset by increased sales of ourand drains products.product sales.

APMEA net sales increased $17.9$6.4 million, or 15.4%,4.8%, in 20242025 compared to 2023.2024. The change in net sales was positively impacted by $2.0 million, or 1.5%, of acquired sales related to the Saudi Cast acquisition completed in the fourth quarter of 2025. The change in net sales was negatively impacted by $0.9$2.0 million, or 0.8%,1.5%, 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.translation. Organic net sales increased $10.7$6.4 million, or 9.2%,4.8%, primarily due to increased volume across all major countries in the segment.

The net decreaseincrease in net 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 ChineseAustralian yuandollar and Canadian dollar, partially offset by the favorable impact of the depreciation of the U.S. dollar against the euro in 2024.2025.

Selling, General and Administrative Expenses. Selling, general and administrative,administrative or (“SG&A,A”) expenses increased $59.9$69.8 million, or 9.9%,10.5%, in 20242025 compared to 2023.2024. The increase in SG&A expenses was attributable to the following:

Restructuring. In 2025, we recorded a net restructuring charge of $23.7 million, which included a $22.0 million charge related to the 2025 French restructuring program that was approved in the first quarter of 2025. 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 a more detailed description of our current and future restructuring plans, see “Recent Developments” above and Note 3 of Notes to Consolidated Financial Statements in this Annual Report Form 10-K.

Interest Income. Interest income increased $1.7$0.9 million, or 23.6%,10.1%, in 2024 as2025 compared to 20232024 primarily due to higher interest rates earned on our cash and cash equivalents.equivalents balances.

Interest Expense. Interest expense increaseddecreased $6.5$3.9 million, or 79.3%,26.5%, in 20242025 as compared to 20232024 primarily due to a higherlower principal balance of debt outstanding due to the acquisition of Bradley in the fourth quarter of 2023 and an increase in interest rates.outstanding. Refer to Note 1213 Financing Arrangement of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for further details.

Other Expense (Income) expense,, Net. Other expense (income) expense,, net, was an expense balance of $1.3 million in 2025, primarily due to unfavorable foreign currency translation, compared to an income balance of $1.4 million in 2024 primarily due to an immaterial investment gain. In 2023, other (income) expense, net was an expense balance primarily due to unfavorable foreign currency translation. Refer to Note 1718 Financial Instruments of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for further details.

Net Income. Net income for 20242025 was $291.2$340.8 million, or $8.69$10.17 per share of common sharestock on a diluted basis, compared to $262.1$291.2 million, or $7.82$8.69 per share of common sharestock on a diluted basis, for 2023.2024. Results for 20242025 included after-tax charges of $10.7$17.8 million, or $0.32$0.53 per share of common share,stock, for restructuring and $4.5 million, or $0.13 per share of common stock, for acquisition-related costs and $5.4 million, or $0.16 per common share, for restructuring,costs, partially offset by an after-tax benefitsbenefit of $5.8$8.3 million, or $0.17$0.25 per share of common share,stock, for aan gainincome ontax theadjustment settlementrelated of the Bradley pension plan, $3.5 million, or $0.11 per common share, forto a gainlapsed onstatute saletax ofyear assetsliability, andas $1.0noted million,above orin $0.03‘Income per common share, for other investment gains.Taxes’.

Results for 20232024 includeincluded after-tax charges of $8.3$10.7 million, or $0.25$0.32 per share of common share,stock, for acquisition-related costs,costs $5.3and $5.4 million, or $0.16 per share of common share, primarilystock, for an income tax adjustment related to repatriation of foreign funds and $4.1 million, or $0.12 per common share, for restructuring;restructuring, partially offset by an after-tax benefitbenefits of $2.5$5.8 million, or $0.08$0.17 per share of common share,stock, for ana adjustmentgain toon contingentthe consideration.settlement of the Bradley pension plan, $3.5 million, or $0.11 per share of common stock, for a gain on sale of assets and $1.0 million, or $0.03 per share of common stock, for other investment gains.

We generated $361.1$402.0 million of net cash from operating activities in 20242025 as compared to $310.8$361.1 million in 2023.2024. The increase in cash generated was primarily duerelated to higher net income,income improvedand lower tax payments as a result of the OBBBA, partially offset by higher working capital investment related to timing of accounts receivable collections and cashhigher flowsinventory generatedprimarily fromrelated acquisitions.to strategic inventory investment and incremental tariffs.

We used $124.7$302.8 million of net cash for investing activities in 20242025 compared to $343.1$124.7 million used in 2023.2024. We spent $217.1$160.8 million lessmore cash for acquisitions and $0.3$16.3 million lessmore cash for net capital expenditures in 20242025 compared to 2023.2024.

The Revolving Credit Facility also includes sublimitssub-limits of $100 million for letters of credit and $15 million for swing line loans. As of December 31, 2024,2025, we had drawn down $200.0 million on this line of credit and had $12.9$12.2 million in letters of credit outstanding, which resulted in $587.1$587.8 million of unused and available credit under the Revolving Credit Facility as of such date. Borrowings outstanding under the Revolving Credit Facility bear interest at a fluctuating rate per annum equal to an applicable percentage defined as (i) in the case of Term Benchmark loans, the Term Benchmark rate plus an applicable percentage, ranging from 1.075% to 1.325%, or (ii) in the case of alternate base rate loans and swing line loans, interest (which at all times will not be less than 1.00%) at the greatest of (a) the Prime Rate in effect on such day, (b) the FRBNY Rate in effect on such day plus 0.50% and (c) the Term Benchmark rate plus 1.00% for a one monthone-month interest period, in each case, determined by reference to our consolidated leverage ratio. 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, 20242025 was 5.64%.4.98%. The weighted average interest rate on debt outstanding inclusive of the interest rate swapswaps discussed in Note 1718 of the Notes to Consolidated Financial Statements and interest rates under the Revolving Credit Facility as of December 31, 20242025 was 4.07%. 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. 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, 2024,2025, we held $386.9$405.5 million in cash and cash equivalents. Of this amount, $161.0$209.4 million of cash and cash equivalents were held by foreign subsidiaries. Our U.S. operations typically generate sufficient cash flows to meet our domestic obligations. We expect existing cash and cash equivalents and cash flows from operations and financing activities to be sufficient to meet our cash needs for at least the next 12 months and thereafter for the foreseeable future. However, if we did have to borrow to fund some or all of our expected cash outlays, we can do so at reasonable interest rates by utilizing the undrawn borrowings under our Revolving Credit Facility. Subsequent to recording the Toll Tax as part of the Tax Cuts and Jobs Act of 2017, our intent, other than with respect to the one-time repatriation of foreign earnings in 2023, has been to permanently reinvest undistributed earnings of foreign subsidiaries, and we do not have any current plans to repatriate additional post-Toll Tax foreign earnings to fund operations in the United States. 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. In 2024, we repatriated approximately $75.4 million of previously taxed foreign earnings, using the majority of that cash to reduce our outstanding debt and to fund acquisitions.

As of December 31, 2024,2025, we were in compliance with all financial covenants related to the Credit Agreement.

Working capital (defined as current assets less current liabilities) as of December 31, 20242025 was $665.6$773.7 million compared to $655.2$665.6 million as of December 31, 2023.2024. The ratio of current assets to current liabilities was 2.5 to 1.0 as of December 31, 2025 and 2.6 to 1 as of December 31, 2024 and December 31, 2023.2024. The increase in working capital is primarily related to thehigher increaseworking incapital cashinvestment related to timing of accounts receivable collections and cashhigher equivalentsinventory asprimarily arelated resultto strategic inventory investment and incremental tariffs, partially offset by timing of increasedaccounts cashpayable fromand operatingvarious activities.accrual expense payments.

We anticipate spending approximately $20 million in the next 12 months related to the 2025 French restructuring program that was approved on February 3, 2025. 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. For a more detailed description of this restructuring plan, see Note 20 of Notes to Consolidated Financial Statements in this Annual Report Form 10-K We intend to continue to repurchase shares of Class A common stock consistent with prior years. The repurchases are executed from time to time on the open market or in privately negotiated transactions. The timing and number of shares repurchased will be determined based on our evaluation of market conditions and other factors, see Note 1314 of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K.

(gf) Relates to capital expenditure obligations included in the anticipated capital expenditure investment totals of $45$50 million to $50$60 million discussed above.

(hg) Primarily includes $45.2$56.7 million of commodity commitments and $6.2$12.6 million relates to cost obligations for our SAP ERP system implementation program.

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 earningsearnings, which are non-GAAP measures that exclude the impacts of acquisitions, divestitures and foreign exchange from year-over-year comparisons. A reconciliationReconciliations 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 toto, U.S. GAAP measures. 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,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. Management believes reporting these financial measures provides useful information to investors, potential investors and others,others by facilitating easier comparisons of our performance with prior and future periods.

Free cash flow improved in 20242025 when compared to 20232024 primarily driven by higher net incomeincome, includingpartially contributionsoffset fromby ourhigher acquisitions.working capital investments related to the timing of accounts receivable collections and higher inventory primarily related to increased tariff costs.

Our net debt to capitalization ratio, a non-GAAPnon GAAP financial measure used by management, at December 31, 20242025 was (12.511.4%)% for 2024 compared to (3.512.5%)% inat 2023.December 31, 2024. The change was driven by a decrease in net debt balancebalance, primarily due to decreased long-term debt and increased cash and cash equivalents and an increase in stockholders’ equity at December 31, 20242025 compared to December 31, 20232024 due to higher net income. Management believes the net debt to capitalization ratio is an appropriate supplemental measure because it helps investors understand our ability to meet our financing needs and serves as a basis to evaluate our financial structure. Our computation may not be comparable to other companies that may define their net debt to capitalization ratios differently.

Our revenue for product sales is primarily recognized on a point in time model, at the point control transfers to the customer, which is generally when products are shipped from the Company’s manufacturing or distribution facilities or when delivered to the customer’s named location. For certain product sales, the Company recognizes revenue on an over-time basis. Performance obligations are satisfied over time if the customer receives the benefits as the Company performs work, if the customer controls the asset as it is being produced (continuous transfer of control), or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment for performance to date. For performance obligations satisfied over time, revenue is recognized on a percentage-of-completion basis generally using costs incurred to date relative to total estimated costs at completion to measure progress. Incurred costs represent work performed, which correspond with and best depict transfer of control to the customer. Contract costs can include labor, materials, subcontractors’ costs, or other direct costs and indirect costs. Sales tax, value-added tax, or other taxes collected concurrent with revenue producing activities are excluded from revenue. Freight costs billed to customers for shipping and handling activities are included in revenue with the related cost included in selling, general and administrative expenses. See Note 4 of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for further disclosures and detail regarding revenue recognition.

We have made numerous acquisitions over the years and have recognized a significant amount of goodwill. Goodwill is tested for impairment annually or more frequently if an event or circumstance indicates that an impairment loss may have been incurred. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, and determination of the fair value of each reporting unit when a quantitative analysis is performed. The determination of reporting units requires judgment, and if we changed the definition of our reporting units, it is possible that we would have reached different conclusions when performing our impairment tests. Changes in our management structure or business acquisitions may result in changes to our reporting units. We estimate the fair value of our reporting units using ana weighting of fair value derived from income approach based on the present value of estimated future cash flows,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. We have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. 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.

We then compile this information and make our assessment of whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. IfIf, after assessing the totality of events and circumstances, we determine it is not more likely than not,not the fair value of a reporting unit is greater than its carrying amount, then noperforming furtherthe quantitative analysisimpairment test is required.unnecessary.

This Quarterly Report on Form 10-Q contains statements that are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements contain projections of our future results of operations or our financial position or state other forward-looking information. The forward-looking statements included in this Quarterly Report on Form 10-Q, including without limitation statements regarding our business performance and strategy, including, without limitation, expected financial results,results and liquidity, benefits from recent acquisitions and future acquisitions, expected investments in capital expenditures, expected costs and benefits from restructuring programs, expected impacts from legislation, impacts of the invalidation of tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"), and our ability to manage challenging macro-economic and softer market conditions, including impacts from tariffs and the conflict in the Middle East, market and economic outlook, and the expected timing and benefits of our enterprise resource planning system implementation, are only predictions and involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify these forward-looking statements by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” and “would” or similar words. You should not rely on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. These risks, uncertainties and other factors may cause our actual results, performance or achievements to differ materially from the anticipated future results, performance or achievements expressed or implied by the forward-looking statements. Some of the factors that might cause these differences are described under Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission. You should carefully review all of these factors, and you should be aware that there may be other factors that could cause these differences. These forward-looking statements were based on information, plans and estimates at the date of this report, and, except as required by law, we undertake no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

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. Our acquisition strategy focuses on businesses that promote our key macro themes around safety and regulation, energy efficiency and water conservation. 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. We have completed 17 acquisitions since 2016, and eight acquisitions in the last three years, all of which were strategic and complementary acquisitions that expanded our addressable market and thatare we believe will enableenabling value creation through greater scale and growth opportunities.

Tariffs imposed on foreign imports into the United States have increased the cost of our products and could adversely impact the gross profit we earn on our products. We are proactively managing changes in tariffs and supply disruptions by leveraging our global sourcing strategy, driving incremental productivity within our operations and implementing pricing actions as appropriate. We expect that our significant degree of vertical integration, with manufacturing close to our customers, will be an advantage for us in the current environment. We have a proven track record of successfully navigating through periods of disruption and we are committed to continuing our strong execution. However, there can be no assurance that we will be able to fully mitigate the impact of new or increased tariffs and actions taken by the United States or other countries could have a material adverse effect on our business, financial condition or results of operations. On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under IEEPA were not authorized by the statute. WeFollowing arethis the importer of record for certain raw materials, components and products that were previously subject to such tariffs under IEEPA. Significant uncertainty remains regarding how and when any amounts may be recovered. We are evaluating the ruling and potential actions available to us. Because the process, timing, and amount of any recovery are uncertain,ruling, we have notsubmitted, recordedand anyexpect potentialto benefitcontinue fromto submit, tariff recovery claims through the U.S. Customs and Border Protection (CBP) seeking a refund atof thiscertain time.eligible IEEPA tariffs. We will continue to monitor recent developments on tariff policy and evaluate potentialany impactschanges onto the applicability of tariffs to our futurebusiness financialas resultsthey and business.occur. Further, following the Supreme Court’s ruling invalidating IEEPA tariffs, the U.S. government imposed new and revised tariffs under various other regimes. The full impact of such new tariffs, and the imposition of new tariffs that other countries may implement in response to U.S. trade policies, remain uncertain.

We continue to closely monitor impacts to our business, customers, suppliers, employees, and operations in the Middle East due to the conflict in and around Iran and increased regional instability and tensions. Our operations and our suppliers’ operations in the region have not been materially impacted, although we could experience future impacts as the conflict continues. We also continue to monitor uncertainties related to energy costs and availability. Given the volatile nature of the situation, the potential impacts to our business are subject to change. We also continue to experience inflation in our material, labor and overhead costs. Despite these 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 remain focused on our customers’ needs and executing our long-term strategy.

The trade policy environment and recent geopolitical events have created uncertainty which may result in reduced economic activity. However, grossGross domestic product (“GDP”) is expected to remain positive and is generally a leading indicator for our repair and replacement business. New construction indicators are mixed. Multi-family and single-family housing, office, retail and recreation verticals are expected to be down, but light industrial, including data centers, is growing and institutional verticals remain steady. We also continue to experience inflation in our material, labor and overhead costs. The European economy remainsis weakshowing andsigns of improvement, however, the global geopolitical uncertainties continue,continue. allDespite ofthe whichchallenges mayand adverselyuncertainties affectdiscussed above, we continue to invest in our futuregrowth financialand results.productivity initiatives, and we remain focused on our customers’ needs and executing our long-term strategy.

FirstSecond quarter 2026 sales increased 21.4%,18.6%, or $119.3$119.5 million, on a reported basis, and 11.9%,12.2%, or $66.6$78.7 million, on an organic basis, compared to the firstsecond quarter of 2025. The reported sales increase included acquired sales of 6.6%,5.3%, or $36.6$34.3 million, with $30.7$28.4 million reported within the Americas segment and $5.9 million reported within APMEA. The reported sales increase also included the favorable impact of foreign exchange of $16.1$6.5 million, or 1.1%, primarily due to the depreciation of the U.S. dollar against the euro.euro, Australian dollar and Chinese yuan. The 11.9%12.2% organic growth was driven by organic growth in the Americas of 15.5%,11.6%, Europe of 0.5%9.2% and APMEA of 3.4%.30.7%. The organic growth was primarily driven by favorable price realization and incremental volume, primarily in the Americas driven by data center growth. Operating income of $133.0$154.0 million increased by $45.3$18.7 million, or 51.7%,13.8%, in the firstsecond quarter of 2026 as compared to the firstsecond quarter of 2025. This increase was primarily driven by favorable price realization, productivity and volume leverage partially offset by inflation, investmentsinflation and tariffs.

On MayAugust 4,3, 2026, the Company declared a quarterly dividend of sixty-three cents ($0.63) per share on each outstanding share of Class A common stock and Class B common stock payable on JuneSeptember 15, 2026 to stockholders of record on JuneSeptember 1, 2026.

FirstSecond Quarter Ended MarchJune 29,28, 2026 Compared to FirstSecond Quarter Ended MarchJune 30,29, 2025

Net Sales. Our business is reported in three geographic segments: Americas, Europe and APMEA. Our net sales in each of these segments for each of the firstsecond quarters of 2026 and 2025 were as follows:

Americas net sales increased $97.0$86.5 million, or 23.2%,17.4%, for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The change in net sales was positively impacted by $30.7$28.4 million, or 7.4%,5.7%, of acquired sales related to acquisitions completed during 2025, and was positively impacted by $1.3$0.1 million, or 0.3%,0.1%, of foreign currency translation. Organic net sales increased $65.0$58.0 million, or 15.5%,11.6%, primarily due to favorable price realization and incremental volume driven by data center growth.growth partially offset by product rationalization within our OEM and DIY channels.

Europe net sales increased $13.0$13.6 million, or 12.0%,12.3%, for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The increase in net sales was positively impacted by favorable foreign currency translation of $12.5$3.4 million, or 11.5%.3.1%. Organic net sales increased $0.5$10.2 million, or 0.5%,9.2%, primarily due to favorable price realization and incremental volume partially offset by aproduct slightrationalization declinewithin inour volume.OEM channel.

APMEA net sales increased $9.3$19.4 million, or 29.5%,56.7%, for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The change in net sales was positively impacted by $5.9 million, or 18.7%,17.3%, of acquired sales related to an acquisition completed in the fourth quarter of 2025, and was positively impacted by $2.3$3.0 million, or 7.4%,8.7%, of foreign currency translation. Organic net sales increased $1.1$10.5 million, or 3.4%,30.7%, primarily due to growth in China, Australia and New Zealand partially offset by a decline in the Middle East. The increase in China was driven by data center growth.

The net increase in net sales due to foreign exchange was mostly due to the favorable impact of the depreciation of the U.S. dollar against the euro, Australian dollar and CanadianChinese dollaryuan in the firstsecond quarter of 2026. We cannot predict whether foreign currencies 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 net sales.

Gross Profit. Gross profit and gross profit as a percent of net sales (gross margin) for the firstsecond quarters of 2026 and 2025 were as follows:

Gross profit increased primarily due to higher price realization, productivity, volume leverage and acquisitions which more than offset inflation and tariffs. Gross margin declined primarily due to acquisitionthe dilution.dilutive impact of acquisitions and the prior year benefit of tariff-related price increases ahead of related cost recognition.

Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses increased $25.4$27.3 million, or 15.2%,14.6%, in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The increase in SG&A expenses was attributable to the following:

The increase in organic SG&A expenses was primarily due to general inflation of $4.1 million, an increase in strategic investments of $3.4 million, increased variable costs of $2.1 million due to higher net sales, a net increase in short-term and long-term compensation accruals of $1.2$5.4 million, an increase in strategic investments of $5.0 million, general inflation of $4.2 million and $1.2$2.2 million in higher travel and marketing spend, partially offset by $2.4$3.5 million from productivity initiatives and restructuring savings compared to the firstsecond quarter of 2025. The increase in foreign exchange was mainly due to the depreciation of the U.S. dollar against the euro.euro, Australian dollar and Chinese yuan. The acquired SG&A costs related to acquisitions completed in 2025. Total SG&A expenses, as a percentage of net sales, were 28.5%28.1% in the firstsecond quarter of 2026 compared to 30.0%29.1% in the firstsecond quarter of 2025.

Restructuring. In the firstsecond quarter of 2026, we recorded a net restructuring charge of $0.2$5.6 million,million was recorded, which primarily related to theseverance 2025costs Frenchfor restructuringimmaterial programcost thatsaving was approvedactions in the firstAmericas quarterand ofEurope 2025. In the first quarter of 2025, we recorded a net restructuring charge of $17.3 million, which included a $17.4 million charge related to the 2025 French restructuring program.segments. For a more detailed description of our restructuring plans, see Note 6 of the Notes to the Consolidated Financial Statements.

Operating Income. Operating income, which is made up of segment earnings, Corporate operating loss and special items, for the firstsecond quarters of 2026 and 2025 was as follows:

Operating income increased $45.3$18.7 million, or 51.7%,13.8%, for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. Operating income was favorablyunfavorably impacted by aan decreaseincrease in segment special items of $15.5$2.2 million, primarily relatingrelated to a decrease in restructuring charges, partially offset by an increase in acquisition-relatedrestructuring costscharges in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025. The increase in organic operating income of $29.3$21.7 million, or 24.7%,14.0%, was primarily due to higher price realization, incremental volumevolume, inprimarily the Americas mostly driven byfrom data center growthgrowth, and productivity savings, partially offset by inflation, tariffsinflation and investments.tariffs.

Interest Income. Interest income in the firstsecond quarter of 2026 decreased $0.6 million compared to the firstsecond quarter of 2025, primarily due to lower interest rates.rates and lower cash and cash equivalent balances.

Interest Expense. Interest expense in the firstsecond quarter of 2026 decreased $0.1$0.5 million compared to the firstsecond quarter of 20252025, primarily due to a decreaselower inprincipal lettersbalance of creditdebt outstanding.outstanding during the second quarter of 2026. Refer to Note 11 of the Notes to Consolidated Financial Statements for further details.

Income Taxes. Our effective income tax rate increaseddecreased to 24.2%23.0% in the firstsecond quarter of 2026, from 14.8%25.2% in the firstsecond quarter of 2025 primarily due to athe reversalrelease of aunrecognized tax liabilitybenefits inand associated interest, largely resulting from the first quarterexpiration of 2025 relating to a prior tax year for which we determined the statute of limitations hadin lapsed.a foreign jurisdiction.

Net Income. Net income was $99.6$118.3 million, or $2.97$3.53 per share of common stock on a diluted basis, for the firstsecond quarter of 2026, compared to $74.0$100.9 million, or $2.21$3.01 per share of common stock on a diluted basis, for the firstsecond quarter of 2025. Results for the firstsecond quarter of 2026 included after-tax charges of $2.1$4.2 million, or $0.06$0.12 per share of common stock, for acquisition-related costsrestructuring and $0.1$0.3 million, or $0.01 per share of common stock, for restructuring.acquisition-related costs. Results for the firstsecond quarter of 2025 included after-tax charges of $13.0$2.5 million, or $0.39$0.07 per share of common stock, for restructuring and $0.8$0.3 million, or $0.02$0.01 per share of common stock, for acquisition-related costs; offset by an after-tax benefit of $8.3 million, or $0.25 per share of common stock, for an income tax adjustment related to a lapsed statute tax liability.costs.

We generated $17.9$120.8 million of net cash provided by operating activities in the first quartersix months of 2026 compared to $55.2$124.9 million of net cash provided by operating activities in the first quartersix months of 2025. The decrease in net cash provided by operating activities was primarily related to elevated working capital levels which more than offset higher net income. Working capital increases were due to higher accounts receivable attributable to higher net sales, higher inventory due to incremental tariffs and strategic inventory investments to support expected end-market demand, and higher annual customer rebates due to higher net sales and timing of payments.demand.

We used $13.2$24.3 million of net cash for investing activities in the first quartersix months of 2026 compared to $79.9$105.5 million used in the first quartersix months of 2025. In the first quartersix months of 2026, we used $1.9$1.7 million in cash for business acquisitions related to immaterial purchase price adjustments for acquisitions completed in the fourth quarter of 2025, compared to $70.3$85.7 million in cash for business acquisitions in our Americas segment in the first quartersix months 2025. Cash used for net capital expenditures in the first quartersix months of 2026 compared to the first quartersix months of 2025 increased $1.7$2.8 million. For the remainder of 2026, we expect to invest approximately $40 million to $50$45 million in capital expenditures as part of our ongoing commitment to improve our operating capabilities.

We used $34.8$151.2 million of net cash for financing activities during the first quartersix months of 2026 primarily due to payments of long-term debt of $90.0 million, dividend payments of $17.5$38.8 million, tax withholding payments on vested stock awards of $12.8$13.1 million and payments of $3.8$7.9 million to repurchase approximately 13,00026,000 shares of Class A common stock. In the first quartersix months of 2025, we used $29.9$52.3 million of net cash for financing activities primarily due to dividend payments of $14.4$32.0 million, tax withholding payments on vested stock awards of $10.9$11.1 million and payments of $3.9$7.9 million to repurchase approximately 19,00037,000 shares of Class A common stock.

The Revolving Credit Facility also includes sub-limits of $100 million for letters of credit and $15 million for swing line loans. As of MarchJune 29,28, 2026, we had drawn down $200.0$110.0 million on this line of credit and had $12.2 million in letters of credit outstanding, which resulted in $587.8$677.8 million of unused and available credit under the Revolving Credit Facility as of such date. Borrowings outstanding bear interest at a fluctuating rate per annum equal to an applicable percentage defined as (i) in the case of Term Benchmark loans, the Term Benchmark rate plus an applicable percentage, ranging from 1.075% to 1.325%, or (ii) in the case of alternate base rate loans and swing line loans, interest (which at all times will not be less than 1.00%) at the greatest of (a) the Prime Rate in effect on such day, (b) the FRBNY Rate in effect on such day plus 0.50% and (c) the Term Benchmark rate plus 1.00% for a one-month interest period, in each case, determined by reference to our consolidated leverage ratio. 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 MarchJune 29,28, 2026 was 4.85%. 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 March 29, 2026 was 4.07%.4.81%. 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. 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 MarchJune 29,28, 2026, we held $374.7$347.9 million in cash and cash equivalents. Of this amount, $202.8$220.2 million of cash and cash equivalents were held by foreign subsidiaries. Our U.S. operations typically generate sufficient cash flows to meet our domestic obligations. We expect existing cash and cash equivalents and cash flows from operations and financing activities to be sufficient to meet our cash needs for at least the next 12 months and thereafter for the foreseeable future. However, if we did have to borrow to fund some or all of our expected cash outlays, we can do so at reasonable interest rates by utilizing the undrawn borrowings under our Revolving Credit Facility. Subsequent to recording the Toll Tax as part of the Tax Cuts and Jobs Act of 2017, our intent, other than with respect to the one-time repatriation of foreign earnings in 2023, has been to permanently reinvest undistributed earnings of foreign subsidiaries, and we do not have any current plans to repatriate additional post-Toll Tax foreign earnings to fund operations in the United States. 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.

Free cash flow decreased in the first quartersix months of 2026 when compared to the first quartersix months of 2025, primarily due to increased capital investments and elevated working capital levels which more than offset higher net income. Working capital increases were due to higher accounts receivable attributable to higher net sales, higher inventory due to incremental tariffs and strategic inventory investments to support expected end-market demand, and higher annual customer rebates due to higher net sales and timing of payments.demand.

Our net debt to capitalization ratio, a non-GAAP financial measure used by management, at MarchJune 29,28, 2026 was (9.2%12.3%) compared to (11.4%) at December 31, 2025. The increasedecrease was driven by ana increasedecrease in net debt balance, primarily due to decreased cashlong-term and cash equivalentsdebt and an increase in stockholders’ equity at MarchJune 29,28, 2026 compared to December 31, 2025 due to higher net income. Management believes the net debt to capitalization ratio is an appropriate supplemental measure because it helps investors understand our ability to meet our financing needs and serves as a basis to evaluate our financial structure. Our computation may not be comparable to other companies that may define their net debt to capitalization ratios differently.