Latest news with #EasyWater

National Post

Watts Water Technologies Reports Record Second Quarter 2025 Results

Article content Article content Diluted EPS of $3.01, up 23%; adjusted diluted EPS of $3.09, up 26% Article content Acquired the assets of Freije Treatment Systems (EasyWater) on June 13, 2025 Article content Note changes in performance are relative to second quarter 2024 Article content NORTH ANDOVER, Mass. — Watts Water Technologies, Inc. (NYSE: WTS) – through its subsidiaries, one of the world's leading manufacturers and providers of plumbing, heating and water quality products and solutions – today announced results for the second quarter of 2025. Article content Chief Executive Officer Robert J. Pagano Jr. said, 'We delivered another strong quarter that surpassed our expectations as we achieved record sales, operating income, operating margin and EPS. We continue to demonstrate our ability to execute through periods of uncertainty, enabled by the Watts team's unwavering focus and commitment to serving our customers. As a result of our strong first half performance and our third quarter expectations, we are increasing our full year 2025 sales and margin outlook.' Article content Mr. Pagano concluded, 'We continue to invest for the future and position ourselves to capitalize on growth opportunities aligned to favorable secular trends. We are pleased to have acquired the assets of EasyWater, which includes innovative water conditioning and filtration solutions that complement our existing water quality portfolio. The acquisition closed in June and the integration is underway and progressing well. We are confident that our differentiated capabilities and solutions as well as our resilient business strategy will drive sustainable, long-term growth and shareholder value creation.' Article content Second Quarter Ended June 29, June 30, (In millions, except per share information) 2025 2024 % Change Net sales $ 643.7 $ 597.3 8 % Organic sales growth % (1) 6 % Operating income $ 135.3 $ 111.5 21 % Operating margin % 21.0 % 18.7 % 230 bps Adjusted operating income (1) $ 139.1 $ 112.1 24 % Adjusted operating margin % (1) 21.6 % 18.8 % 280 bps Diluted earnings per share $ 3.01 $ 2.44 23 % Special items (1) 0.08 0.02 Adjusted diluted earnings per share (1) $ 3.09 $ 2.46 26 % Article content _________________________ (1) Organic sales growth, adjusted operating income, adjusted operating margin, free cash flow, special items and adjusted diluted earnings per share represent non-GAAP financial measures. For a reconciliation of GAAP to non-GAAP items, please see the tables attached to this press release. Article content Second Quarter Financial Highlights Article content Second quarter 2025 performance relative to second quarter 2024 Article content Sales of $644 million increased 8% on a reported basis and 6% on an organic basis. Organic sales increased due to price, volume and pull-forward demand in the Americas resulting from tariff-related price increases. Growth in the Americas was partly offset by continued market weakness in Europe and project timing in China. Incremental acquisition sales within the Americas were $7 million and contributed 1% to reported growth. Favorable foreign exchange movements increased sales by $5 million, or 1%. Article content Operating margin increased 230 basis points on a reported basis and 280 basis points on an adjusted basis. Operating and adjusted operating margin increased primarily due to favorable price, volume leverage in the Americas, productivity and cost actions which more than offset volume deleverage in Europe and inflation. Operating margin on a reported basis was unfavorably impacted by an increase in restructuring charges. Article content Regional Performance Article content Americas Article content Sales of $499 million increased 11% on a reported basis and 10% on an organic basis, primarily due to price, volume and pull-forward demand. The acquisitions of I-CON and EasyWater contributed $7 million of incremental sales, or 1% to reported growth. Article content Segment margin increased 290 basis points as benefits from price realization, volume leverage, productivity and cost actions more than offset inflation and investments. Article content Europe Article content Sales of $111 million decreased 3% on a reported basis and 8% on an organic basis. Sales declined as a result of lower volumes due to declining heating OEM sales and continued market weakness, which more than offset favorable price realization. Favorable foreign exchange movements increased reported sales by 5%. Article content Segment margin increased 170 basis points as price, productivity and cost actions more than offset volume deleverage and inflation. Article content APMEA Article content Sales of $34 million decreased 3% on a reported basis and 1% on an organic basis. Sales decreased due to project timing in China, partly offset by growth in Australia, New Zealand and the Middle East. Unfavorable foreign exchange movements decreased sales by 2%. Article content Segment margin was flat as benefits from productivity were offset by inflation and sales mix. Article content Cash Flow and Capital Allocation Article content For the first six months of 2025, operating cash flow was $125 million and net capital expenditures were $20 million, resulting in free cash flow of $105 million. In the comparable period last year, operating cash flow was $131 million and net capital expenditures were $11 million, resulting in free cash flow of $120 million. Operating and free cash flow decreased due to higher working capital investment related to timing of accounts receivable collections and higher inventory costs primarily related to tariffs, partially offset by higher net income. Free cash flow was also unfavorably impacted by an increase in net capital expenditures, largely due to proceeds from the sale of properties in the prior year. Sequential improvement in operating and free cash flow is expected throughout the second half of 2025 due to normal seasonality. Article content The Company repurchased approximately 18,000 shares of Class A common stock at a cost of $4.0 million during the second quarter of 2025. For the first six months of 2025, the Company repurchased approximately 37,000 shares at a cost of $7.9 million. Approximately $137 million remains available under the stock repurchase program authorized in 2023. There is no expiration date for this program. Article content Full Year 2025 Outlook Article content The Company is increasing its full year sales and organic sales growth outlook and the midpoint of its operating margin and adjusted operating margin outlook. Reported sales are expected to increase between 2% to 5% and organic sales growth to range from flat to up 3%. Full year operating margin is expected to be between 17.2% and 17.8%, or down 10 to up 50 basis points, and adjusted operating margin is expected to be between 18.2% and 18.8%, or up 50 to 110 basis points. The full year outlook incorporates estimated tariff impact and actions as of August 6, 2025. Further 2025 planning assumptions are included in the second quarter earnings materials posted in the Investor Relations section of our website at Article content For a reconciliation of GAAP to non-GAAP items and a statement regarding the usefulness of these measures to investors and management in evaluating our operating performance, please see the tables attached to this press release. Article content Watts Water Technologies, Inc. will hold a live webcast of its conference call to discuss second quarter 2025 results on Thursday, August 7, 2025 at 9:00 a.m. EDT. This press release and the live webcast can be accessed by visiting the Investor Relations section of the Company's website at Following the webcast, the call recording will be available at the same address until August 8, 2026. Article content Watts Water Technologies, Inc., through its subsidiaries, is a world leader in the manufacturing of innovative products to control the efficiency, safety, and quality of water within residential, commercial, and institutional applications. Watts' expertise in a wide variety of water technologies enables us to be a comprehensive supplier to the water industry. Article content This press release includes 'forward-looking statements' as defined in the Private Securities Litigation Reform Act of 1995, including statements relating to expected full year 2025 financial results, including sales and organic sales growth, operating margin and adjusted operating margin, future dividends, our strategy, investments, the benefits from and integration of recent acquisitions, improvements in operating and free cash flow throughout 2025, our ability to manage uncertainty and current market conditions, long-term growth and shareholder value creation and return of capital to stockholders. These forward-looking statements reflect our current views about future events. You should not rely on forward-looking statements because our actual results may differ materially from those predicted as a result of a number of potential risks and uncertainties. These potential risks and uncertainties include, but are not limited to: the imposition of or changes to tariff rates and related impacts to our business and the broader market; the effectiveness, timing and expected savings associated with our cost-cutting actions, restructuring and initiatives; integration of acquired businesses 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; current economic and financial conditions, which can affect the housing and construction markets where our products are sold, manufactured and marketed; shortages in and pricing of raw materials and supplies; our ability to compete effectively; changes in variable interest rates on our borrowings; inflation; failure to expand our markets through acquisitions; failure to successfully develop and introduce new product offerings or enhancements to existing products; failure to manufacture products that meet required performance and safety standards; foreign exchange rate fluctuations; cyclicality of industries where we market our products, such as plumbing and heating wholesalers and home improvement retailers; environmental compliance costs; product liability risks and costs; changes in the status of current litigation; the war in Ukraine and other global crises; supply chain and logistical disruptions or labor shortages and workforce disruptions that could negatively affect our supply chain, manufacturing, distribution, or other business processes; and other risks and uncertainties discussed under the heading 'Item 1A. Risk Factors' and in Note 16 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission ('SEC'), as well as risk factors disclosed in our subsequent filings with the SEC. We undertake no duty to update the information contained in this press release, except as required by law. Article content WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES (Unaudited) June 29, December 31, 2025 2024 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 369.3 $ 386.9 Trade accounts receivable, less reserve allowances of $13.5 million at June 29, 2025 and $11.9 million at December 31, 2024 337.5 253.2 Inventories, net: Raw materials 157.4 141.9 Work in process 21.0 16.9 Finished goods 270.1 233.3 Total Inventories 448.5 392.1 Prepaid expenses and other current assets 58.7 51.3 Total Current Assets 1,214.0 1,083.5 PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment, at cost 739.6 691.6 Accumulated depreciation (474.3 ) (436.8 ) Property, plant and equipment, net 265.3 254.8 OTHER ASSETS: Goodwill 781.9 715.0 Intangible assets, net 252.0 235.0 Deferred income taxes 42.9 36.4 Other, net 88.8 72.3 TOTAL ASSETS $ 2,644.9 $ 2,397.0 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 176.9 $ 148.0 Accrued expenses and other liabilities 220.0 190.8 Accrued compensation and benefits 71.5 79.1 Total Current Liabilities 468.4 417.9 LONG-TERM DEBT 197.3 197.0 DEFERRED INCOME TAXES 11.5 10.9 OTHER NONCURRENT LIABILITIES 75.3 63.3 STOCKHOLDERS' EQUITY: Preferred Stock, $0.10 par value; 5,000,000 shares authorized; no shares issued or outstanding — — Class A common stock, $0.10 par value; 120,000,000 shares authorized; 1 vote per share; issued and outstanding, 27,418,992 shares at June 29, 2025 and 27,366,685 shares at December 31, 2024 2.7 2.7 Class B common stock, $0.10 par value; 25,000,000 shares authorized; 10 votes per share; issued and outstanding, 5,946,290 shares at June 29, 2025 and 5,953,290 shares at December 31, 2024 0.6 0.6 Additional paid-in capital 708.6 696.2 Retained earnings 1,308.7 1,184.8 Total Stockholders' Equity 1,892.4 1,707.9 Article content Segment Earnings and Non-GAAP Financial Measures Article content In this press release, segment earnings is our GAAP performance measure used by our chief operating decision-maker ('CODM') to assess and evaluate segment results. Segment earnings exclude the impact of non-recurring and unusual items, such as restructuring costs, acquisition-related costs and gain or loss on sale of assets. The CODM uses segment earnings for insight into underlying trends comparing past financial performance with current performance by reporting segment on a consistent basis. Segment margin is defined as segment earnings divided by segment revenue. Article content We refer to non-GAAP financial measures (including adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted earnings per share, organic sales, organic sales growth, free cash flow, cash conversion rate of free cash flow to net income and net debt to capitalization ratio) and provide a reconciliation of those non-GAAP financial measures to the corresponding financial measures contained in our consolidated financial statements prepared in accordance with GAAP. We believe these financial measures enhance the overall understanding of our historical financial performance and give insight into our future prospects. Adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted earnings per share eliminate certain expenses incurred and benefits recognized in the periods presented that relate primarily to our global restructuring programs, acquisition-related costs, gain or loss on sale of assets and the related income tax impacts on these items and tax adjustment items. Management then utilizes these adjusted financial measures to assess the run rate of the Company's operations against those of comparable periods. Organic sales and organic sales growth are non-GAAP measures of sales and sales growth excluding the impacts of foreign exchange, acquisitions and divestitures from period-over-period comparisons. Management believes reporting organic sales and organic sales growth provides useful information to investors, potential investors and others, and allows for a more complete understanding of underlying sales trends by providing sales and sales growth on a consistent basis. Free cash flow, cash conversion rate of free cash flow to net income, and the net debt to capitalization ratio, which are adjusted to exclude certain cash inflows and outlays, and include only certain balance sheet accounts from the comparable GAAP measures, are an indication of our performance in cash flow generation and also provide an indication of the Company's relative balance sheet leverage to other industrial manufacturing companies. These non-GAAP financial measures are among the primary indicators management uses as a basis for evaluating our cash flow generation and our capitalization structure. In addition, free cash flow is used as a criterion to measure and pay certain compensation-based incentives. For these reasons, management believes these non-GAAP financial measures can be useful to investors, potential investors and others. The Company's non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. Article content Six Months Ended Americas Europe APMEA Total Net sales June 29, 2025 $ 916.6 $ 219.4 $ 65.7 $ 1,201.7 Net sales June 30, 2024 866.9 237.4 63.9 1,168.2 Dollar change $ 49.7 $ (18.0) $ 1.8 $ 33.5 Net sales % increase (decrease) 5.7 % (7.6) % 2.8 % 2.9 % Foreign exchange impact 0.2 % (0.8) % 2.5 % 0.1 % Acquisition impact (1.4) % — % — % (1.0) % Organic sales increase (decrease) 4.5 % (8.4) % 5.3 % 2.0 % Article content Article content Article content Article content Article content Contacts Article content