A water heater system and method of operating such a system are disclosed herein. In an example embodiment, the water heater system includes a heat exchanger. a heat source inlet by which heated heating fluid can be provided to the heat exchanger, a heat source outlet by which cooled heating fluid can be communicated from the heat exchanger, a water supply inlet by which supply water can be provided to the heat exchanger, and a water supply outlet by which heated water can be communicated from the heat exchanger. Additionally, the system includes a controller, a water supply outlet temperature sensor, a water supply flowmeter, and an actuator. The controller is configured to generate control signals based at least indirectly upon temperature measurements and flow measurements and to provide the control signals to the actuator to regulate a fluid flow of the heated heating fluid into the heat exchanger.