Watts Water(WTS) - 2022 Q4 - Annual Report

Product Development and Innovation - The company launched 20 new smart and connected product offerings in 2022, expanding its portfolio and smart strategy[50] - The Centurion, a new 2000 MBH water heater, features state-of-the-art combustion control technology for optimal efficiency and low emissions[48] - The company has made advancements in its backflow product line, now providing sensors for flood detection, potentially avoiding significant water loss[48] - The company has invested in leak detection solutions for both residential and commercial markets, helping to prevent costly water damage[48] - The company has seen increased demand for high-efficiency products due to growing interest in energy efficiency and water conservation[66] Employee and Corporate Governance - Approximately 4,600 employees were reported globally as of December 31, 2022, with 2,100 in the Americas, 2,200 in Europe, and 300 in APMEA[52] - The company aims for zero hazards and injuries by prioritizing employee safety through education and training initiatives[60] - The company has a Code of Business Conduct applicable to all officers, employees, and Board members worldwide, driving policy development and training initiatives[71] - The company’s executive team includes Robert J. Pagano, Jr. as CEO, Shashank Patel as CFO, and Monica Barry as Chief Human Resources Officer[80] - The company has a commitment to high governance standards and periodically reviews its corporate governance policies[71] Environmental, Social, and Governance (ESG) Initiatives - The Governance and Sustainability Committee reviews the company's ESG performance and strategic plans quarterly[63] - The company was recognized for the fourth consecutive year as one of Newsweek's Most Responsible Companies[72] - The company was promoted to the "low-risk" category by Sustainalytics in their annual ESG Risk Rating Report[72] - The company supported several non-profit organizations in 2022, including funding the construction of AquaTowers providing clean water for up to 10,800 people[70] - The company has implemented smart monitoring systems to reduce global water consumption and greenhouse gas emissions[67] - The company’s sustainability efforts are detailed in its latest Sustainability Report, which is available on its investor website[73] Financial Instruments and Risk Management - The company uses derivative financial instruments primarily to reduce exposure to adverse fluctuations in foreign exchange rates, interest rates, and costs of certain raw materials[253] - The company hedges approximately 80% to 85% of forecasted intercompany purchases between its Canadian and U.S. subsidiaries for the next twelve months[256] - The company has entered into forward exchange contracts that hedge up to 60% of forecasted intercompany sales transactions between its Chinese and U.S. subsidiaries for the next twelve months[256] - The fair value of the company's designated foreign hedge contracts outstanding as of December 31, 2022, was an asset of $0.2 million[256] - The company entered into an interest rate swap agreement on March 30, 2021, with a notional amount of$100.0 million, paying a fixed rate of 1.02975%[257] - The interest rate swap was amended on August 2, 2022, to replace LIBOR with Term SOFR, with the company paying a fixed rate of 0.942% on the same notional amount[257] - The company manages commodity price risks by monitoring market prices and working with suppliers to achieve cost stability[258] Legal and Environmental Liabilities - The company is defending approximately 550 lawsuits related to asbestos exposure, with no substantial evidence found against its products[77] - The company maintains product liability and other insurance coverage, which may not be adequate to fully protect against substantial damage claims[74] - The company has been named as a potentially responsible party for a limited number of identified contaminated sites, with environmental liabilities recorded based on the most probable cost[75] Reporting and Transparency - The company provides free access to its Annual Report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K through its website[79]