Watts Water Technologies, Inc. Acquires I-CON Systems

Rhea-AI Summary

Watts Water Technologies (NYSE: WTS) has announced the acquisition of I-CON Systems, a leading provider of plumbing control solutions primarily serving the corrections market. The acquisition, funded with cash on hand, brings I-CON's annualized sales of approximately $25 million under Watts' umbrella.

The strategic move aligns with Watts' growth strategy, enabling the company to expand its digital offerings and capitalize on growth opportunities in the correctional niche of the institutional market. The integration process is underway, with additional transaction details to be discussed during Watts' fourth quarter earnings call in February 2025.

Positive

• Cash acquisition requiring no debt financing
• Adds $25 million in annualized sales
• Expands digital offerings portfolio
• Strengthens presence in institutional corrections market
• Strategic fit with existing growth strategy

Negative

• None.

Insights

M&A Analyst

This strategic acquisition of I-CON Systems represents a calculated move into the specialized corrections market. With $25 million in annualized sales, while relatively small compared to Watts' overall size, the deal's value lies in its strategic positioning. The transaction's cash-based funding indicates strong liquidity position and minimal impact on Watts' balance sheet. The corrections market offers stable, recession-resistant revenue streams due to consistent government funding. I-CON's digital water management systems align perfectly with the growing trend toward smart building solutions, potentially creating cross-selling opportunities across Watts' institutional customer base.

For a simpler perspective: Think of this like buying a small but specialized tool that opens up an entirely new market - prisons and correctional facilities need specific plumbing solutions that regular commercial buildings don't and now Watts has expertise in this niche.

Digital Technology Analyst

The integration of I-CON's digital water management systems significantly enhances Watts' technological capabilities in the smart building sector. This acquisition isn't just about entering the corrections market - it's about acquiring sophisticated IoT and control systems that could be adapted for broader commercial applications. The digital solutions for water management represent high-margin products with recurring revenue potential through maintenance and upgrades.

In simpler terms: Imagine having a smart home system that controls your water usage, but for prisons. These systems can prevent flooding, control water pressure and even detect unusual usage patterns. This technology could eventually be modified for use in hotels, schools and other large buildings.

Industry Specialist

The corrections market presents unique opportunities with its stringent requirements for plumbing solutions. This acquisition positions Watts to capture a larger share of the $80+ billion annual corrections industry spending in the US. The timing is particularly strategic as many correctional facilities are aging and require modernization of their water systems. I-CON's specialized expertise in this sector provides Watts with immediate credibility and established relationships in a market with high barriers to entry.

To break it down simply: Prisons need special plumbing systems that inmates can't tamper with or use to cause problems. These systems must be extremely durable and reliable. I-CON is already trusted in this market and now Watts can sell these specialized products alongside their regular plumbing solutions.

NORTH ANDOVER, Mass.--(BUSINESS WIRE)-- Watts Water Technologies, Inc., (NYSE: WTS) (“Watts”) – through its subsidiaries, one of the world’s leading manufacturers and providers of plumbing, heating and water quality products and solutions – today announced that it has acquired I-CON Systems Inc. (“I-CON”), a leading provider of plumbing control solutions primarily for the corrections market. I-CON’s annualized sales are approximately $25 million. The acquisition was funded with cash on hand.

Chief Executive Officer Robert J. Pagano Jr. commented, “We are excited to welcome the I-CON team to Watts. This acquisition is consistent with our established strategy and further positions Watts for growth. The addition of I-CON’s innovative water management systems will allow us to expand our digital offerings and provide growth opportunities in the correctional niche of the institutional market. I want to thank the teams at Watts and I-CON for their efforts to get us to closing today and helping to ensure a smooth, effective transition as we integrate I-CON with Watts.”

President and CEO of I-CON Systems Shawn Bush stated, “Watts acquisition of I-CON will provide tremendous resources and opportunities for the continued growth of the I-CON brand. The similarities in culture and commitment to innovation and customer excellence will contribute to our long-term success.”

Additional information regarding the transaction will be discussed during the Watts fourth quarter earnings call in February 2025.

About Watts Water Technologies, Inc.

Watts Water Technologies, Inc., through its family of companies, is a global manufacturer headquartered in the USA that provides one of the broadest plumbing, heating and water quality product lines in the world. Watts Water companies and brands offer innovative plumbing, heating and water quality solutions to control the efficiency, safety, and quality of water within commercial, residential and industrial applications. For more information, visit www.watts.com.

About I-CON

I-CON was founded in 1994 in Oviedo Florida. I-CON designs, manufactures and installs intelligent plumbing solutions tailored for the correctional market. For more information visit www.i-con.com.

Forward-Looking Statements

In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Watts provides the following cautionary statement: This news release contains various forward-looking statements based on current expectations about important economic, political, and technological factors, among others, and are subject to risks and uncertainties, which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. These include statements regarding estimates of future earnings and cash flows and expectations as to the closing of the transaction. Other uncertainties include, but are not limited to, general economic conditions, supply chain conditions and any related impact on costs and availability of materials, the ability to obtain regulatory approval without unexpected delays or conditions, integration of the acquired business in a timely and cost-effective manner, retention of supplier and customer relationships and key employees, and the ability to achieve synergies and cost savings in the amounts and within the time frames currently anticipated. Other risks and uncertainties that may materially affect Watts are described from time to time in its reports filed with the Securities and Exchange Commission, including Forms 10-K, 10-Q, and 8-K. Except to the extent required by law, Watts does not undertake and specifically declines any obligation to review or update any forward looking statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250106885688/en/

Watts Water Technologies, Inc.

Diane McClintock

Senior Vice President FP&A and Investor Relations

Telephone: 978-689-6153

Email: investorrelations@wattswater.com

Source: Watts Water Technologies, Inc

FAQ

How much annual revenue does I-CON Systems bring to Watts Water Technologies (WTS)?

I-CON Systems brings approximately $25 million in annualized sales to Watts Water Technologies.

How is Watts Water Technologies (WTS) funding the I-CON Systems acquisition?

The acquisition is being funded with cash on hand.

When will Watts Water Technologies (WTS) provide more details about the I-CON Systems acquisition?

Additional information regarding the transaction will be discussed during Watts' fourth quarter earnings call in February 2025.

What market segment does the I-CON Systems acquisition strengthen for WTS?

The acquisition strengthens Watts' presence in the corrections niche of the institutional market.

How does the I-CON Systems acquisition align with WTS's strategic goals?

The acquisition aligns with Watts' strategy by expanding their digital offerings and providing growth opportunities in the institutional corrections market.