Watts Water Technologies Inc (WTS) 2025 Q1 法說會逐字稿

Hello, and thank you for standing by. At this time, I would like to welcome you to the Watts Water Technologies first quarter 2025 earnings call. (Operator Instructions)

您好，感謝您的支持。現在，我歡迎您參加 Watts Water Technologies 2025 年第一季財報電話會議。（操作員指示）

I would now like to turn the conference over to Diane McClintock, Senior Vice President of Investor Relations. Please go ahead.

現在，我想將會議交給投資者關係高級副總裁黛安·麥克林托克 (Diane McClintock)。請繼續。

Thank you, and good morning, everyone. Welcome to our first quarter conference call. Joining me today are Bob Pagano, President and CEO; and Shashank Patel, our CFO. During today's call, Bob will provide an overview of the first quarter, an operational update and an update on our outlook for 2025. Shashank will discuss the details of our first quarter performance and provide our outlook for the second quarter and for the full year. Following our remarks, we will address questions related to the information covered during the call. Today's webcast is accompanied by a presentation, which can be found in the Investor Relations section of our website. We will reference this presentation throughout our prepared remarks.

謝謝大家，早安。歡迎參加我們的第一季電話會議。今天與我一起出席的還有總裁兼執行長 Bob Pagano 和財務長 Shashank Patel。在今天的電話會議中，鮑勃將概述第一季的情況、營運更新以及我們對 2025 年的展望。Shashank 將討論我們第一季業績的細節，並提供我們對第二季和全年的展望。在我們發言之後，我們將解答與通話中涉及的資訊相關的問題。今天的網路廣播附有演示文稿，可在我們網站的投資者關係部分找到。我們將在準備好的演講中引用此演講。

Any reference to non-GAAP financial information is reconciled in the appendix to the presentation. I'd like to remind everyone that during this call, we may be making certain comments that constitute forward-looking statements. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially. For information concerning these risks, see Watts' publicly available filings with the SEC. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. With that, I'll turn the call over to Bob.

任何對非 GAAP 財務資訊的引用均在簡報的附錄中進行核對。我想提醒大家，在這次電話會議中，我們可能會發表一些構成前瞻性陳述的評論。這些聲明受到許多風險和不確定性的影響，可能導致實際結果大不相同。有關這些風險的信息，請參閱 Watts 向美國證券交易委員會 (SEC) 提交的公開文件。無論是由於新資訊、未來事件或其他原因，本公司均不承擔更新或修改任何前瞻性陳述的義務。說完這些，我會把電話轉給鮑伯。

Thank you, Diane, and good morning, everyone. Please turn to slide 3, and I'll provide an overview of the first quarter. We began 2025 with better-than-expected first quarter results, including record adjusted operating income, adjusted operating margin and adjusted earnings per share. I'd like to thank the entire Watts team for their significant contributions during the quarter. Organic sales declined 2% in the quarter due to fewer shipping days, which we noted on our last earnings call and continuing weakness in Europe. We benefited from incremental sales from our I-CON acquisition.

謝謝你，黛安，大家早安。請翻到投影片 3，我將概述第一季的情況。2025 年伊始，我們第一季的業績優於預期，包括創紀錄的調整後營業收入、調整後營業利益率和調整後每股盈餘。我要感謝整個 Watts 團隊在本季做出的重大貢獻。由於運輸天數減少（我們在上次收益電話會議上提到了這一點）以及歐洲市場持續疲軟，本季有機銷售額下降了 2%。我們從收購 I-CON 帶來的增量銷售中獲益。

However, the benefit was more than offset by unfavorable foreign exchange. Adjusted operating margin of 19% exceeded expectations due to better-than-expected volume, productivity and cost controls. As a result of our solid start to 2025 and expected cash flows for the remainder of the year, we announced a 21% dividend increase beginning in June. Our balance sheet remains strong and provides ample capacity to support flexibility in our capital allocation strategy. From an operations perspective, we are proactively working to mitigate the impact of tariffs. We expect that our vertical integration strategy with the manufacturing close to our customers here in the US will benefit us.

然而，不利的外匯因素抵消了這一好處。由於產量、生產力和成本控制優於預期，調整後的營業利益率為 19%，超出預期。由於我們在 2025 年取得了良好的開端，並且預計今年剩餘時間會有現金流，我們宣布從 6 月開始將股息提高 21%。我們的資產負債表依然強勁，並有足夠的能力支持我們資本配置策略的靈活性。從營運角度來看，我們正在積極努力減輕關稅的影響。我們期望，在美國靠近客戶進行製造的垂直整合策略將使我們受益。

We have a proven track record of successfully navigating inflation and supply chain challenges and are confident in our ability to execute through the current environment. I'll talk more about tariffs in a minute. We continue to drive productivity savings through automation, lean initiatives, both inside and outside the factory walls, leveraging our One Watts performance system and selective restructuring actions, including the previously announced exit from a manufacturing facility in France. The exit is progressing as expected and will be complete by year-end.

我們在成功應對通貨膨脹和供應鏈挑戰方面有著良好的記錄，並且對我們在當前環境下執行的能力充滿信心。我稍後將詳細談論關稅問題。我們繼續透過工廠內外的自動化、精實舉措來推動生產力節約，利用我們的 One Watts 績效系統和選擇性重組行動，包括先前宣布的退出法國製造工廠。退出工作正在按預期進行，並將於年底完成。

We're pleased with the progress of the integration efforts with our recent I-CON acquisition, and our teams are working together to capitalize on synergies. We expect I-CON to be accretive to adjusted EBITDA margins and adjusted EPS in 2025. Now an update on our outlook for the remainder of the year. Despite the uncertainty around the trade environment and resulting demand impacts, we are maintaining our full year organic sales and adjusted operating margin outlook. We anticipate that price increases, our global sourcing actions and accelerated onshoring of production should offset incremental tariff costs and any potential demand reduction in the second half of 2025. There are a few positives to note.

我們對最近收購 I-CON 的整合工作的進展感到滿意，我們的團隊正在共同努力，發揮協同效應。我們預計 I-CON 將在 2025 年增加調整後的 EBITDA 利潤率和調整後的 EPS。現在更新我們對今年剩餘時間的展望。儘管貿易環境存在不確定性以及由此產生的需求影響，我們仍維持全年有機銷售額和調整後營業利潤率的預期。我們預計，價格上漲、我們的全球採購行動以及生產的加速回流應能抵消 2025 年下半年增量關稅成本和任何潛在的需求減少。有幾個正面的方面值得注意。

Our solid first quarter and outlook for the second quarter are supportive of our full year outlook. Mega project activity, including data centers remains strong. We also expect to see a benefit from foreign exchange movements relative to the outlook we provided in February. Recently, global GDP forecasts have been revised downward, including a first quarter contraction in the US Given the uncertain impact of tariffs on inflation, we expect interest rates to remain higher for longer. This may unfavorably impact residential and nonresidential new construction in the second half of the year. We expect continued weakness in Europe due to a slowdown in new construction amid continued economic weakness.

我們第一季的穩健表現以及第二季的展望支撐了我們全年的展望。包括資料中心在內的大型專案活動依然強勁。相對於我們二月給予的展望，我們也預期外匯波動將帶來好處。最近，全球GDP預測均下調，其中美國第一季GDP將萎縮。鑑於關稅對通膨影響的不確定性，我們預期利率將在較長時間內維持在高點。這可能會對下半年的住宅和非住宅新建工程產生不利影響。我們預計，由於經濟持續疲軟，新建築建設放緩，歐洲經濟將持續疲軟。

We saw ongoing heat pump destocking in the first quarter and anticipate this to continue in the second quarter, but current market feedback suggests potential recovery in the second half of the year. Please turn to slide 4, and I'll provide an overview of the cost impact of the current tariffs and the actions we're taking. The table on the left illustrates the estimated impact of currently enacted tariffs on our 2025 cost base. We source globally and expect there will be some impact on most countries we import from with the biggest impact on raw material and components sourced from China. We have been proactively working on a number of actions to offset the cost impact, including implementing price increases, relocating our supply chain by leveraging our dual source supply base and increasing capacity across our US manufacturing footprint

我們看到第一季熱泵庫存持續減少，預計第二季這種趨勢將持續，但目前的市場反饋顯示下半年可能會出現復甦。請翻到投影片 4，我將概述目前關稅的成本影響以及我們正在採取的行動。左邊的表格顯示了目前實施的關稅對我們 2025 年成本基礎的預期影響。我們在全球範圍內採購，預計大多數進口國家都會受到影響，其中來自中國的原材料和零件受到的影響最大。我們一直在積極採取一系列措施來抵消成本影響，包括提高價格、利用我們的雙源供應基地重新安置我們的供應鏈以及提高我們在美國製造工廠的產能

We have invested in our North American footprint and supply chain diversification over many years and believe we're well positioned to mitigate the impact of tariffs on our cost base and stakeholders. One last item I'd like to mention is that our search for a new CFO is ongoing, and we're making good progress. We'll inform you as soon as we have identified a candidate. In the meantime, Shashank will stay on as CFO to ensure a smooth transition. With that, let me turn the call over to Shashank, who will address our first quarter results and our second quarter and full year outlook. Shashank?

多年來，我們一直投資於北美業務和供應鏈多元化，並相信我們有能力減輕關稅對我們的成本基礎和利害關係人的影響。最後我想提的是，我們正在尋找新的財務官，並且取得了良好的進展。一旦我們確定了候選人，我們將立即通知您。同時，Shashank 將繼續擔任財務官，以確保平穩過渡。接下來，我將把電話轉給 Shashank，他將介紹我們的第一季業績以及第二季和全年展望。沙尚克？

Thank you, Bob, and good morning, everyone. Please now turn to slide 5, which highlights our first quarter results. Sales of $558 million were down 2% on a reported and organic basis. As previously discussed, we had fewer shipping days in the first quarter, which unfavorably impacted our sales by approximately 3% across all regions. Americas organic sales were down 1% and reported sales were flat. This was better than expected, particularly with the reduced shipping days. Sales from our I-CON acquisition added $5 million. Europe organic sales were down 9% and reported sales were down 12% with declines across all geographies due to fewer shipping days, heat pump destocking and weakness in new construction markets driving destocking in the wholesale channel.

謝謝你，鮑勃，大家早安。現在請翻到投影片 5，其中重點介紹了我們的第一季業績。銷售額為 5.58 億美元，按報告和有機基礎計算下降了 2%。如前所述，第一季我們的運輸天數較少，這對我們所有地區的銷售額產生了約 3% 的不利影響。美洲有機銷售額下降 1%，報告銷售額持平。這比預期的要好，特別是在運輸天數減少的情況下。我們收購 I-CON 帶來的銷售額增加了 500 萬美元。歐洲有機銷售額下降 9%，報告銷售額下降 12%，所有地區均下滑，原因是運輸天數減少、熱泵去庫存以及新建築市場疲軟導致批發渠道去庫存。

APMEA sales increased 9% on a reported basis and 13% on an organic basis. Growth in China, the Middle East and Australia were partly offset by a decline in New Zealand, primarily driven by fewer shipping days. Compared to the prior year, adjusted EBITDA of $119 million increased 1% and adjusted EBITDA margin of 21.4% increased 80 basis points. Adjusted operating income of $106 million increased 2% and adjusted operating margins of 19% were also up by 80 basis points and is a Q1 record for Watts. Adjusted EBITDA and operating income benefited from price, productivity, favorable mix and cost controls, which more than offset inflation, volume deleverage and investments.

APMEA 銷售額報告成長 9%，有機成長 13%。中國、中東和澳洲的成長被紐西蘭的下降部分抵消，主要原因是運輸天數減少。與前一年相比，調整後的 EBITDA 為 1.19 億美元，成長 1%，調整後的 EBITDA 利潤率為 21.4%，增加了 80 個基點。調整後的營業收入為 1.06 億美元，成長 2%，調整後的營業利潤率為 19%，也上漲了 80 個基點，創下了 Watts 第一季的最高紀錄。調整後的 EBITDA 和營業收入受益於價格、生產力、有利的產品組合和成本控制，這些因素足以抵消通貨膨脹、數量去槓桿和投資的影響。

Americas segment margin increased 130 basis points to 23.4%. Europe segment margin decreased by 180 basis points to 13.9% and APMEA segment margins decreased 70 basis points to 17.5%. Adjusted earnings per share of $2.37 increased 2% versus last year with operational contribution and reduced interest expense more than offsetting incremental tax expense and foreign exchange headwinds. The adjusted effective tax rate in the quarter was 24.5%, up 70 basis points compared to the first quarter of 2024, primarily due to a lower tax benefit from the vesting of stock compensation awards that occur in the first quarter of each year. For GAAP purposes, we incurred $1 million of pretax acquisition costs and $17 million of pretax restructuring charges, primarily related to the exit of our site in France.

美洲分部利潤率增加 130 個基點，達到 23.4%。歐洲分部利潤率下降 180 個基點至 13.9%，APMEA 分部利潤率下降 70 個基點至 17.5%。調整後每股收益為 2.37 美元，較去年同期增長 2%，其中營運貢獻和利息支出的減少足以抵消增量稅費和外匯不利因素的影響。本季調整後有效稅率為 24.5%，較 2024 年第一季上升 70 個基點，主要原因是每年第一季股票薪資獎勵歸屬帶來的稅收優惠較低。按照 GAAP 準則，我們產生了 100 萬美元的稅前收購成本和 1700 萬美元的稅前重組費用，主要與退出我們在法國的工廠有關。

These charges were partially offset by a nonrecurring tax benefit related to the reversal of a prior year tax liability. Our free cash flow for the quarter was $46 million compared to $37 million in the first quarter of last year. The cash flow increase was primarily due to the timing of income tax payments compared to last year. We expect sequential improvement in our free cash flow and are on track to achieve our full year goal of free cash flow conversion greater than or equal to 100% of net income as previously communicated. During the quarter, we repurchased approximately 19,000 shares of our Class A common stock for $4 million.

這些費用被與沖銷前一年稅負相關的非經常性稅收優惠部分抵消。本季我們的自由現金流為 4,600 萬美元，去年第一季為 3,700 萬美元。現金流增加主要是因為與去年相比所得稅繳納時間的增加。我們預計自由現金流將持續改善，並有望實現我們先前宣布的全年自由現金流轉換率大於或等於淨收入 100% 的目標。本季度，我們以 400 萬美元回購了約 19,000 股 A 類普通股。

Additionally, as Bob mentioned, we announced a 21% increase in our dividends that will begin in June. The balance sheet remains strong and provides us with ample flexibility. Our net debt to capitalization ratio at quarter end was negative 9% compared to positive 3% in the prior year, and our net leverage is negative 0.3. Our solid cash flow and healthy balance sheet continue to give us capital allocation optionality. Now on slide 6, let's review our assumptions about our second quarter and full year outlook.

此外，正如鮑伯所提到的，我們宣布從 6 月開始將股息提高 21%。資產負債表依然強勁，為我們提供了充足的彈性。本季末，我們的淨負債與資本比率為負9%，去年同期為正3%，淨槓桿比率為負0.3。穩健的現金流量和健康的資產負債表繼續為我們提供靈活的資本配置選擇。現在在第 6 張投影片上，讓我們回顧一下我們對第二季和全年展望的假設。

We are reaffirming our 2025 outlook, which reflects the market factors previously discussed by Bob and assumes that the current tariff structure remains in place for the remainder of the year. As previously mentioned, we anticipate that price increases, our global sourcing actions and accelerated onshoring of production should offset incremental tariff costs and any potential demand reduction in the second half of 2025. For full year 2025, we are maintaining our consolidated organic sales growth outlook at a range of minus 3% to plus 2%. Our reported sales growth is increasing to a range of minus 2% to plus 3% due to favorable foreign exchange movements, which are listed by region in the appendix.

我們重申我們對 2025 年的展望，這反映了鮑勃之前討論過的市場因素，並假設當前的關稅結構在今年剩餘時間內保持不變。如前所述，我們預期價格上漲、我們的全球採購行動以及生產的加速回流應能抵消 2025 年下半年增量關稅成本和任何潛在的需求減少。對於 2025 年全年，我們維持綜合有機銷售額成長預期，範圍為負 3% 至正 2%。由於有利的外匯變動，我們報告的銷售額成長率在-2%至+3%之間，附錄中按地區列出了這些成長率。

Regionally, we expect the Americas to be slightly better, but offset by Europe, which we expect to be down 1 point compared to our original outlook. We are also maintaining our full year adjusted EBITDA and adjusted operating margin outlook consistent with our guidance in February. Our free cash flow expectation remains in line with our previous outlook as we expect to deliver free cash flow conversion of greater than or equal to 100% of net income in 2025.

從地區來看，我們預期美洲的表現會略好一些，但歐洲的表現會受到抵消，我們預期歐洲的表現將比我們最初的預測下降 1 個百分點。我們也維持全年調整後 EBITDA 和調整後營業利潤率預期與 2 月份的指引一致。我們的自由現金流預期與先前的展望一致，因為我們預期 2025 年的自由現金流轉換率將大於或等於淨收入的 100%。

Next, a few items to consider for the second quarter. On an organic basis, we expect organic sales growth to be flat to up 3%. Regionally, we expect low to mid-single-digit growth in the Americas and low single-digit growth in APMEA, partly offset by a high single to low double-digit decline in Europe. We expect approximately $7 million of incremental sales in the Americas from acquisitions. We estimate that foreign exchange in the quarter will be neutral in total. Our assumptions by region are listed in the appendix. We expect we will begin to see the impact from our 80/20 actions in the second quarter with an estimated $2 million of product exits, primarily within the Americas. Second quarter EBITDA margin is expected to be in the range of 21.6% to 22.2% or up 50 to 110 basis points.

接下來，我們來考慮一下第二季需要考慮的幾個事項。從有機角度來看，我們預計有機銷售額成長將持平至 3%。從地區來看，我們預計美洲地區將出現低至中位數個位數成長，亞太、中東和非洲地區將出現低個位數成長，但歐洲地區將出現高個位數至低兩位數的下降，從而部分抵消這一增長。我們預計，收購將為美洲地區帶來約 700 萬美元的增量銷售額。我們預計本季外匯匯率整體將保持中性。我們按地區列出的假設列於附錄。我們預計，我們將在第二季開始看到 80/20 行動的影響，預計產品退出金額將達到 200 萬美元，主要在美洲地區。預計第二季 EBITDA 利潤率將在 21.6% 至 22.2% 之間，或上漲 50 至 110 個基點。

Operating margins should be in the range of 19.1% to 19.7% or up 30 to 90 basis points. We expect that price and volume leverage in the Americas and APMEA will more than offset continued volume deleverage in Europe. Other key inputs for the second quarter and the full year can be found in the appendix. With that, I'll turn the call back over to Bob before moving to Q&A. Bob?

營業利益率應在 19.1% 至 19.7% 之間，或上漲 30 至 90 個基點。我們預計，美洲和亞太、中東和非洲地區的價格和數量槓桿將超過歐洲持續的數量去槓桿。第二季和全年的其他關鍵資訊可以在附錄中找到。說完這些，我將把電話轉回給鮑勃，然後再進入問答環節。鮑伯？

Thanks, Shashank. On slide 7, I'd like to summarize our discussion before we address your questions. Our first quarter performance was better than we anticipated with record first quarter sales, adjusted operating income, adjusted operating margin and adjusted earnings per share due to a strong performance in the Americas and APMEA. We are actively working to manage the current trade environment and expect that our US footprint, global supply chain and price increases will enable us to navigate it successfully.

謝謝，Shashank。在第 7 張投影片上，我想在回答您的問題之前總結我們的討論。由於美洲和亞太、中東和非洲地區的強勁表現，我們第一季的業績好於預期，銷售額、調整後營業收入、調整後營業利潤率和調整後每股收益均創歷史新高。我們正在積極努力管理當前的貿易環境，並期望我們的美國業務、全球供應鏈和價格上漲將有助於我們成功應對。

We are maintaining our full year organic sales and adjusted operating margin outlook despite the macro uncertainty and expectation of softer market conditions as the year progresses. Nonetheless, we've proven our business is resilient over the long term. Our portfolio is agnostic to end markets, and our teams are pivoting to growing subverticals. Additionally, our business model includes a large repair and replacement component that provides a durable base and drives steady revenue and cash flow. Our balance sheet remains strong and provides ample flexibility to support our capital allocation priorities, including M&A and continued investment in new product development and our digital strategy.

儘管宏觀情勢存在不確定性，且預計今年市場狀況將進一步走弱，但我們仍維持全年有機銷售額和調整後營業利潤率的預期。儘管如此，我們已經證明我們的業務具有長期的韌性。我們的投資組合不受終端市場影響，我們的團隊正在轉向不斷成長的垂直產業。此外，我們的商業模式包括大型維修和更換組件，可提供持久的基礎並推動穩定的收入和現金流。我們的資產負債表依然強勁，並提供了充足的靈活性來支持我們的資本配置重點，包括併購以及對新產品開發和數位策略的持續投資。

In addition, we are increasing our dividend by 21% starting in June. We believe our highly experienced team is well positioned to proactively navigate current market conditions as we have done in the past. We're confident in our ability to control costs through our One Watts Performance System while capturing our fair share of demand and positioning us to capitalize on long-term secular trends. With that, operator, please open the line for questions.

此外，從六月開始我們將把股利提高21%。我們相信，我們經驗豐富的團隊能夠像過去一樣積極主動地應對當前的市場狀況。我們有信心透過我們的「一瓦性能係統」來控製成本，同時滿足我們應有的需求份額，並使我們能夠利用長期趨勢。接線員，請打開熱線來回答問題。

(Operator Instructions)

（操作員指示）

Nathan Jones, Stifel.

內森瓊斯（Nathan Jones），Stifel。

I wanted to start off right on that last thing that you said, Bob, there about winning your fair share. And I wanted to talk about winning more than your fair share. I recall in 2022 when supply chains were messed up and your competitors couldn't get product in from China that you guys won some additional share. It was at very good margins because you didn't have to give the typical project discounts. It would seem that the same conditions have been created again here, not necessarily because competitors can't get products, but because it's so much more expensive. So maybe just talk a little bit about where you see opportunities to gain share, to gain margin because of that advantaged manufacturing footprint that you guys have.

鮑勃，我想從你最後說的那件事開始，關於贏得你應得的份額。我想談談如何贏得比你應得的份額更多的利益。我記得 2022 年，當供應鏈陷入混亂，競爭對手無法從中國獲得產品時，你們贏得了一些額外的份額。利潤率非常好，因為你不必給予典型的項目折扣。看起來，同樣的情況又出現在這裡，不一定是因為競爭對手無法取得產品，而是因為價格太高了。因此，也許您可以稍微談談，由於您擁有優勢的製造足跡，您認為在哪些方面有機會獲得市場份額、獲得利潤。

Thanks, Nathan. Well, sure. Listen, as you know, our primary strategy has been to make products in the regions for the region. However, there are products that we source from low-cost countries such as China to be competitive in the marketplace. So we don't directly talk about competitors or anything like that. But look at having our products close to the customer and in this tariff environment, that's very helpful because our cost structure with the tariffs are different or in a better position. And I think we used the example in the past of some of our gas connectors that we make in the US Our primary competition is in China.

謝謝，內森。嗯，當然。聽著，如你所知，我們的主要策略是為該地區生產該產品。然而，為了在市場上具有競爭力，我們從中國等低成本國家採購產品。所以我們不會直接談論競爭對手或類似的事情。但是看看我們的產品是否靠近客戶，在這種關稅環境下，這非常有幫助，因為我們的成本結構與關稅不同或處於更好的位置。我認為我們過去曾以我們在美國生產的一些燃氣連接器為例，我們的主要競爭對手在中國。

And certainly, we are able to take share, as you said, during that time frame. But look, we're going to -- as I said in the last comment, we're going to get our fair share of the market. And with all these tariffs moving around, it's just a dynamic environment we're in now. So stay tuned. Like I said, we'll get our fair share. And let's see how it progresses throughout the year.

當然，正如您所說，我們能夠在這段時間內佔據一定份額。但是，你看，我們將——正如我在上一條評論中所說的那樣，我們將獲得公平的市場份額。隨著所有這些關稅的變動，我們現在所處的環境是動態的。敬請關注。正如我所說的，我們會得到公平的份額。讓我們看看它全年的進展如何。

Fair enough. I guess maybe if you can just talk a little bit about the pacing of the price increases that you've put through. And then if these are all price increases rather than surcharges, obviously, there's talk about the tariffs being reduced on China. If those do get reduced, what happens to your pricing structure? Do you need to give some of that back? Or would you hold on to it? And then I'll pass it on.

很公平。我想您能否稍微談談您所實施的價格上漲步伐？如果這些都是價格上漲而不是附加費，那麼顯然就會有關於降低中國商品關稅的討論。如果這些確實減少了，您的定價結構會發生什麼變化？你需要歸還一些嗎？或者你會堅持下去嗎？然後我會把它傳遞下去。

With regards to price increase, Nathan, we had our annual price increase in January that we talked about during the last earnings call. Since then, the tariff-related price increases, there's been one at the end of March, and then there's one that takes effect May 12. Those -- that's the latest status. And obviously, we'll talk about the realization on those price increases when we have the second quarter earnings call.

關於價格上漲，內森，我們在一月份進行了年度價格上漲，我們在上次收益電話會議上談到了這一點。從那時起，與關稅相關的價格上漲，一次是在 3 月底，另一次是在 5 月 12 日生效。這些——這是最新狀態。顯然，我們將在第二季財報電話會議上討論這些價格上漲的實現情況。

Yeah. Regarding pricing in the future, look, these are big tariff amounts and adjustments. So we're going to be competitive in the marketplace and with a focus on taking care of our customers. So again, stay tuned. We're watching this very carefully, and we'll be competitive.

是的。至於未來的定價，你看，這些都是很大的關稅金額和調整。因此，我們將在市場上保持競爭力，並專注於照顧我們的客戶。所以，請繼續關注。我們正在密切關注此事，並將保持競爭力。

Mike Halloran, RW Baird.

麥克哈洛倫、RW 貝爾德。

So can we just -- I just want to make sure I understand what you're saying with the front half versus back half margin and revenue cadencing. Is it fair to say that the incremental pricing you're getting is being offset by some assumption on incremental weakness from a volume perspective? The nuance, I guess, I'm getting at is I know there was originally some softness embedded in the guide coming in the back half of the year. Has that increased? And if so, is it prospective? Or is it reactive? Meaning it doesn't sound like you've seen any softening really in the business. It's been relatively stable and obviously, this quarter and what you think is going to happen next quarter, very good performance. So is this something you've seen? Or you're just saying, hey, look, the environment is what it is, and we just want to take a cautious approach because the macro signals are suggesting something worse in the back half?

那麼我們可以嗎——我只是想確保我理解你所說的前半部分與後半部分的利潤率和收入節奏。從數量角度來看，是否可以公平地說，您所獲得的增量定價被對增量弱點的一些假設所抵消？我想說的細微差別是，我知道下半年的指南中原本就包含一些柔和的元素。有增加嗎？如果是的話，有前景嗎？還是它是反應性的？意思是，聽起來你並沒有看到業務有任何疲軟跡象。它一直相對穩定，顯然，本季以及您認為下個季度將會出現非常好的表現。那麼這是你見過的東西嗎？或者你只是說，嘿，看，環境就是這樣，我們只是想採取謹慎的態度，因為宏觀信號表明下半年情況會更糟？

Yeah. I think it's the latter, Mike. It's just the uncertainty that's around there with all the tariffs. We've had a solid first quarter as well as April has been very good. So we're watching that. Some of that is just people beating price increases, et cetera, in the marketplace. So we're just watching demand, wanted to make sure it's not being pulled forward too much, and then we'll watch what happens. If these big price increases like the China 145% stay in place, I believe that will certainly impact demand in the second half.

是的。我認為是後者，麥克。所有關稅都存在不確定性。我們第一季的業績表現穩健，四月的業績也非常好。所以我們正在關注這一點。其中一些只是人們在市場上打擊價格上漲等等。所以我們只是在觀察需求，想確保它不會提前太多，然後我們會觀察會發生什麼。如果像中國145%這樣的大幅漲價持續下去，我相信這肯定會影響下半年的需求。

Again, it's a fluid motion. And when you look at all the leading indicators and the market indicators, they've not really changed, right? So it didn't make sense for us to increase the second half of the year at this point in time. So we'll watch. It's only the first quarter. We'll watch and see how things flow through.

再一次，這是一個流暢的動作。當你查看所有領先指標和市場指標時，它們實際上並沒有改變，對嗎？因此，對我們來說，在目前這個時間點增加下半年的產量是沒有意義的。所以我們會觀察。這還只是第一季。我們將觀察事情的進展。

Yeah. Agreed. No incentive to do that. And then just another question on the margins front half versus back half. Back half is down versus front half, probably a little more than normal. I'm sure some of that's the conservatism you just referenced. Is some of that just associated with the math behind putting in incremental pricing that is kind of more one-for-one on EBITDA dollars based on what you know today? Or are there anything else I should be thinking about going into the back half on the margin line?

是的。同意。沒有動力去做那件事。然後還有另一個關於邊緣前半部與後半部的問題。後半部相對於前半部有所下降，可能比正常情況多一點。我確信其中有些就是您剛才提到的保守主義。根據您目前所了解的情況，這是否僅與增量定價背後的數學有關，而增量定價在某種程度上是 EBITDA 美元的一對一定價格？或者我還應該考慮其他什麼事情來進入邊線的後半部？

Yeah. No, Mike, primarily, it's driven -- typically, we have -- first half margins are higher than second half margins so sequential margins from a historical perspective. And then secondly, there's going to be a piece of volume deleverage that impacts the second half. And again, that's to be ascertained. We'll just have to see how that goes as the quarter plays out.

是的。不，麥克，主要是因為——通常情況下，我們上半年的利潤率高於下半年的利潤率，所以從歷史角度來看，連續的利潤率。其次，數量去槓桿將對下半年產生影響。再次強調，這還有待確定。我們只需觀察本季的進展即可。

But implicitly, Shashank, are you saying that the pricing is not margin dilutive in the second half?

但是，Shashank，你是否暗示說下半年的定價不會稀釋利潤率？

The pricing is -- we're holding our margins with the price tariff cost impact in the second half.

定價是－我們將在下半年透過價格關稅成本影響來維持利潤率。

Yeah. And it's not only price, Mike. It's price. It's our global supply chain and our footprint adjustments. So all those together are maintaining our margin outlook.

是的。這不僅僅是價格問題，麥克。這是價格。這是我們的全球供應鏈和我們的足跡調整。因此，所有這些因素共同維持了我們的利潤前景。

Jeff Hammond, KeyBanc.

傑夫·哈蒙德，KeyBanc。

Bob, you mentioned kind of controlling prebuying, but what have you seen from a prebuy ahead of these May 12 increases? And are you doing anything to kind of limit the impact of that?

鮑勃，您提到了控制預購，但是在 5 月 12 日漲價之前，您看到了什麼預購情況？您是否採取了任何措施來限制其影響？

Yeah. We saw some prebuy impact in the first quarter at the last -- at the end of the last week of the month, actually. We saw some of that flow through about $5 million in the first quarter. In the second quarter, April has been solid because people are doing that. We are controlling order input. We don't want everybody to buy a year's full of input. So we're basing it on prior history and making sure we're looking at that. But April was solid. We're just watching that flow through. It's difficult to understand what real demand is -- on prior history and making sure we're looking at that. But April was solid. We're just watching that flow through. It's difficult to understand what real demand is versus how much is that price increase. But I go back to the fundamentals. The market has not changed significantly. There's just more uncertainty and people are just trying to get in front of this right now. But as you know, we have about three months of inventory on hand. So we can -- we have that. And certainly, our price increases that Shashank talked about have been incrementally going through at this point in time.

是的。實際上，我們在第一季的最後一週末看到了一些預購影響。我們看到其中一部分在第一季流入了約 500 萬美元。在第二季度，四月表現穩健，因為人們正在這樣做。我們正在控制訂單輸入。我們不希望每個人都購買一年的投入。因此，我們以過去的歷史為基礎，並確保我們正在關注這一點。但四月表現穩健。我們只是看著它流過。很難理解真正的需求是什麼——根據以往的歷史並確保我們正在關注這一點。但四月表現穩健。我們只是看著它流過。很難了解實際需求與價格上漲幅度之間的關係。但我還是回到基本面。市場沒有發生重大變化。不確定性越來越大，人們現在正試圖解決這個問題。但正如您所知，我們手頭上有大約三個月的庫存。所以我們可以——我們有這個。當然，Shashank 談到的價格上漲目前已在逐步進行中。

Okay. And then what's informing the weaker Europe guide? It seems like we're hearing at least better news on the heat pump side. Just more color there.

好的。那麼，實力較弱的歐洲指南又有何作用呢？看來我們至少聽到了有關熱泵方面的更好的消息。那裡顏色更豐富。

Yeah. I think it's really the heat pump side, just like you, we think it's going to come back in the second half of the year. It's just new construction. We saw more destocking than we thought was going to happen inside of this. And there's just some uncertainty, in particular, in new construction. So we just believe that it's prudent at this point based on order trends and what we're seeing to be cautious with...

是的。我認為這確實是熱泵方面的問題，就像您一樣，我們認為它將在今年下半年回歸。這只是新建築。我們看到的去庫存現像比我們想像的還要多。並且也存在一些不確定性，特別是在新建築方面。因此，根據訂單趨勢以及我們所看到的謹慎情況，我們認為現在採取謹慎措施是明智的...

Okay. If I could just sneak one more in. Just maybe update us on how things are going with Bradley, Josam, I-CON in terms of integration, cost revenue synergies, underlying demand trends?

好的。如果我能再偷偷溜進去一個就好了。您能否向我們介紹一下 Bradley、Josam 和 I-CON 在整合、成本收入綜效和潛在需求趨勢方面的進展？

Yeah. All three of the businesses are doing really well. And I would say all our synergy tracking is ahead of schedule, which is exciting. The integration with the teams is going well, and we're seeing the benefit clearly. And Josam, if you remember, also has a benefit because it has US manufacturing capabilities. And again, in this marketplace, that's a good thing.

是的。這三家公司都經營得很好。我想說的是，我們所有的協同追蹤都提前完成了，這令人興奮。與團隊的整合進展順利，我們清楚地看到了其好處。如果你還記得的話，Josam 還有一個優勢，那就是它擁有美國製造能力。再說一次，在這個市場上，這是一件好事。

Ryan Connors, Northcoast Research.

瑞安康納斯（Ryan Connors），Northcoast Research。

So I had -- to take a different angle on the price cost issue. I know some of the peers in the brass bronze world have talked about specific elements in raw materials being in restricted supply, for example, bismuth as a key ingredient for some of the brass products that I assume you use as well and that's gotten really, really tight and is precipitating some of these price increases. Is that an issue as well? Or is really the main thing you're facing in terms of passing on price is it really exclusively tariffs?

所以我必須從不同的角度來看價格成本問題。我知道黃銅青銅領域的一些同行已經談到原材料中特定元素的供應受到限制，例如，鉍是一些黃銅產品的關鍵成分，我認為你們也使用這種材料，而這種材料現在變得非常非常緊張，並導致了部分價格上漲。這也是個問題嗎？或者，在轉嫁價格方面，你們真正面臨的主要問題真的只是關稅嗎？

I think it's a little bit of the raw materials, but it's mainly the tariffs and some of the more smaller of our products that we have that we get from China to be competitive in the current marketplace. So our team has done a nice job of securing our fair share of the allocations going forward of the components of our raw material, but it's something we continue to watch daily to make sure we know where we're at. But we have a good three months of inventory as well as supply chain availability for an additional three months related to our copper and some of our ingots that we use in our foundries.

我認為有一點是原材料的問題，但主要是關稅以及我們從中國進口的一些較小的產品，使我們在當前市場上具有競爭力。因此，我們的團隊在確保我們在未來原料成分分配中獲得公平份額方面做得很好，但我們每天都會繼續關注，以確保我們知道我們所處的位置。但我們有三個月的庫存，與我們的銅和我們在鑄造廠使用的一些錠相關的供應鏈可用性可維持額外三個月。

Yeah. I think, Ryan, more of the raw material restrictions have been on the rare earth metals. And we don't -- in our processes, we don't use hardly any of that.

是的。瑞安，我認為，更多的原料限制是針對稀土金屬。而我們不會——在我們的流程中，我們幾乎不使用任何這些。

Okay. And then secondly, just conceptually on the price, issue. So we have some competitors out there who are -- who source from China directly with these astronomical price increases. We've seen 60% or more. How do you look at that opportunistically? Are there cases where you'd say, look, we don't really have to raise price any more than 5% or 10%, but maybe we'll go for 20% or 30% just because we've got this air cover of competitors that are out there, we can undercut them amazingly with a 30% price increase. I mean, is there that -- does the market allow for that kind of opportunism on price? Or is it going to be more passing on what your actual tariff costs are?

好的。其次，從概念上講，是關於價格的問題。因此，我們有一些競爭對手，他們直接從中國採購，價格上漲幅度驚人。我們已經看到了60％或更多。您如何看待這項機會主義行為？有沒有這樣的情況，你會說，你看，我們實際上不必將價格提高 5% 或 10% 以上，但也許我們會提高 20% 或 30%，因為我們有競爭對手的空中掩護，我們可以通過 30% 的提價以驚人的價格擊敗他們。我的意思是，市場是否允許這種價格機會主義？或者它會更多地傳遞您的實際關稅成本？

Ryan, we always look at valuing and pricing to value we're providing to our customers. So we look at what competitors price. We try to be competitive in the regions and the markets. And again, with some of these tariffs that are going in place, we don't believe they're sustainable and that they will change in the long run. So I think it's -- you got to be careful to whipsawing. A lot of these price increases are at list price levels, and it varies. There's big ranges of products where some of the products are low single-digit increases and some are in high double-digit increases. But again, it depends on the component of the product, and we look at the customer region by region and making sure we're taking care of customers. So we'll be looking at that and certainly looking at getting our fair share of price in the marketplace.

瑞安，我們始終關注我們為客戶提供的價值的估價和定價。因此，我們看看競爭對手的價格。我們努力在地區和市場上保持競爭力。再次強調，對於正在實施的一些關稅，我們認為它們是不可持續的，而且從長遠來看它們不會改變。所以我認為你必須小心避免雙重打擊。很多價格上漲都是按照標價水準進行的，而且價格各不相同。產品種類繁多，有些產品呈現低個位數成長，有些產品則呈現高兩位數成長。但同樣，這取決於產品的組成部分，我們會逐一地區關注客戶，確保我們能夠照顧到客戶。因此，我們會關注這一點，並一定會尋求在市場上獲得公平的價格份額。

Andrew Krill, Deutsche Bank.

德意志銀行的安德魯·克里爾。

I want to just go back to, I guess, your more US-centric manufacturing, especially relative to some peers. Just could you comment on like your utilization of your facilities there and trying to get a sense of how much more capacity you have to quickly ramp up those as you shift away from other areas like China? And are you planning any further CapEx to build these out this year? Or is it a bit too early to expand further?

我想回到以美國為中心的製造業，特別是相對於一些同行而言。您能否評論一下您在那裡的設施的利用情況，並了解當您從中國等其他地區轉移時，您需要多少產能才能快速提升這些設施？今年您是否計劃進一步支出資本來建造這些設施？或進一步擴張是否為時過早？

Yeah. The good thing is we're not fully utilized on our manufacturing footprint in North America. So we do have second shifts, but we can improve our second shifts and very few of our facilities are running a third shift. So we don't have to put significant capital expenditures, and we believe we have adequate footprint. We're just going to expand shifts and capabilities as needed.

是的。好消息是，我們尚未充分利用我們在北美的製造足跡。因此，我們確實有第二班次，但我們可以改進我們的第二班次，而且我們很少有工廠運行第三班次。因此，我們不必投入大量的資本支出，而且我們相信我們有足夠的足跡。我們只是根據需要擴大班次和能力。

Great. That is helpful. And next for -- on Europe with the margins, they're pretty impressive in 1Q around 14%. But for the 2Q guide, you have them stepping back pretty immaterially, approaching 10% or so. Can you just expand a little on what went well in the first quarter and maybe why there's a pretty big step down for 2Q, I think implied for the rest of the year, it doesn't improve that much from there.

偉大的。這很有幫助。接下來是歐洲的利潤率，第一季的利潤率相當可觀，約 14%。但對於第二季的指引，它們的回落幅度相當小，接近 10% 左右。您能否稍微解釋一下第一季哪些方面表現良好，以及為什麼第二季的業績下滑幅度這麼大，我認為這意味著今年剩餘時間的業績不會有太大改善。

Yeah. Look, in Q1, you're right, the margin expansion Q-over-Q, Q1 to Q1 was very good. Part of that was the volume-driven piece of it, right? We talked about -- we shipped about $10 million more than we had anticipated. And some of that was pre-price increase pull-in, about half of it. The other half was actually data center business, which was up significantly as well. As you look at sequential, Q1 to Q2, we're still expanding margins by about 40 to 50 basis points Q1 to Q2. And then Q2 to Q2 prior year, it's still up about 60 basis points at the midpoint. So there's still margin expansion going on, but Q1 did benefit from some incremental volume as well as cost containment in Q1 as we saw the tariffs coming in.

是的。您看，在第一季度，您說得對，第一季與第一季之間的利潤率擴張非常好。其中一部分是由數量驅動的，對嗎？我們談到——我們的發貨量比預期多了約 1000 萬美元。其中一部分是漲價前的拉動，大約佔一半。另一半實際上是資料中心業務，也大幅成長。從第一季到第二季來看，我們的利潤率仍然從第一季到第二季擴大了約 40 到 50 個基點。然後，與去年第二季相比，中間值仍然上漲了約 60 個基點。因此利潤率仍在擴大，但隨著關稅的實施，第一季確實受益於一些增量銷售以及成本控制。

Okay. Great. And sorry, was that for the full company or Europe specifically?

好的。偉大的。抱歉，這是針對整個公司還是專門針對歐洲？

No, that was in total. For Europe specifically, I mean, we -- typically, Q1, Q2 are the strongest quarters. But year-over-year, with the heat pump destocking, the compares have become more difficult because it depends on the heat pump destocking started and started in the second quarter of last year. And this year, we certainly expect that to continue in the second quarter of this year.

不，總數就是這樣。具體來說，對於歐洲來說，我的意思是，通常第一季和第二季是最強勁的季度。但與去年同期相比，隨著熱泵去庫存，比較變得更加困難，因為這取決於去年第二季開始的熱泵去庫存。我們預計今年第二季這一趨勢將持續下去。

Joe Giordano, TD Cowen.

喬·喬達諾（Joe Giordano），TD Cowen。

So on the Americas guide for revenue, you started off the year a bit better than I think you were thinking. 2Q guide is coming in plus 2%, plus 5%. I'm just trying to think of how to square that with like the full year guide seems very conservative in light of what you expect first half performance to be on easier comps in the back half.

因此，就美洲收入指南而言，今年的開局比我想像的要好一些。第二季指引為成長 2%、成長 5%。我只是想知道如何將其與全年指南相協調，因為考慮到您預期上半年的表現與下半年的更容易比較相比，全年指南似乎非常保守。

So part of that is the demand destruction we talked about, right? So with the incremental tariff prices, we do expect demand might be impacted in the second half. Obviously, we're a short book in ship business. We have visibility into the second quarter. but we're cautious about the second half. So we've kind of baked that into the second half guide for now, and we'll see how things progress over the second quarter.

所以其中一部分就是我們談到的需求破壞，對嗎？因此，隨著關稅價格上漲，我們預計下半年的需求可能會受到影響。顯然，我們在船舶業務方面仍處於短缺狀態。我們對第二季的情況有所了解，但對下半年的情況持謹慎態度。因此，我們目前已將其納入下半年指南中，我們將觀察第二季的進展。

Yeah. And Joe, look at a lot of people are trying to -- a lot of people are trying to beat the price increases. And again, we're watching that. And we just want to make sure they're not pulling, let's call it, the second half demand into Q2. So we're just watching that very carefully. Again, too many moving parts in the economy in the world right now. I think it makes sense to -- in the second half of this year until the world settles down a little bit and we understand true demand in the second half.

是的。喬，你看，很多人都在試圖──很多人都在試圖阻止價格上漲。我們正在再次關注此事。我們只是想確保他們不會將下半年的需求拉入第二季。所以我們只是非常仔細地觀察這一點。再說了，目前世界經濟變動的因素太多了。我認為這是有意義的——在今年下半年，直到世界稍微穩定下來，我們才能了解下半年的真正需求。

That's fair. And also on the margins for Americas, we have a lot of historical -- like the levels that you're at now, obviously, coming from much lower levels in the past and your guide for 2Q is kind of in that almost 25% range. Where do you think this can go from additional portfolio as you integrate the deals, like what's the potential for this business on the margin?

這很公平。此外，就美洲的利潤率而言，我們有很多歷史數據 - 例如您現在的水平，顯然來自過去的較低水平，而您對第二季度的指導則在近 25％ 的範圍內。當您整合這些交易時，您認為這會對附加投資組合帶來什麼影響，例如這項業務的邊際潛力有多大？

(technical difficulty) substantially you're asking margins growing 30 to 50 basis points of margin year-over-year, and that's our target and our goals we still invest in the business. So that will continue to be our goal. We're driving that through our organization and we do. And it's not just -- value of our new products, our new products providing incremental value to our customers. So we're pricing it...

(技術難度) 你要求利潤率年增 30 到 50 個基點，這是我們的目標，我們仍然會投資於這項業務。所以這將繼續是我們的目標。我們正在透過我們的組織推動這一目標，而我們確實這樣做了。這不僅是我們新產品的價值，我們的新產品也為我們的客戶提供了增量價值。因此我們為其定價...

There are no further questions at this time. I'll turn the call back over to Bob Pagano, Watts Water Technologies CEO.

目前沒有其他問題。我將把電話轉回給 Watts Water Technologies 執行長 Bob Pagano。

Thank you for taking the time to join us today. We appreciate your continued interest in Watts and look forward to speaking with you again during our second quarter earnings call in early August. Have a good day and stay safe.

感謝您今天抽出時間來參加我們的活動。我們感謝您對 Watts 的持續關注，並期待在 8 月初的第二季度收益電話會議上再次與您交談。祝您有個愉快的一天並注意安全。

This concludes the meeting. You may now disconnect.

會議到此結束。您現在可以斷開連線。