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Watts Water(WTS) - 2025 Q2 - Earnings Call Transcript
2025-08-07 14:00
Financial Data and Key Metrics Changes - The company reported record sales of $644 million for Q2 2025, an increase of 8% on a reported basis and 6% on an organic basis [15][16] - Adjusted EBITDA of $153 million increased by 22%, with an adjusted EBITDA margin of 23.8%, up 280 basis points [17] - Adjusted earnings per share rose by 26% to $3.09, driven by operations, acquisitions, foreign exchange, and reduced interest expense [18] Business Line Data and Key Metrics Changes - Organic sales in the Americas increased by 10%, while reported sales were up 11%, driven by price, volume, and pull forward demand [15][16] - Europe experienced an organic sales decline of 8% and reported sales down 3%, attributed to ongoing OEM and market weakness [16] - APMEA sales decreased by 1% on an organic basis and 3% on a reported basis, with growth in Australia, New Zealand, and the Middle East offset by declines in China [16] Market Data and Key Metrics Changes - The Americas segment margin increased by 290 basis points to 27.2% [17] - Europe segment margins increased by 170 basis points to 11.7% [17] - APMEA segment margin remained flat at 18.9% compared to the prior year [17] Company Strategy and Development Direction - The company is focusing on M&A, having acquired EasyWater, which is expected to contribute approximately $5 million in sales and be neutral to adjusted EPS in 2025 [11] - The rollout of the Nexa Intelligent Water Management solution is gaining traction, with successful installations in various sectors [12] - The company is committed to sustainability, having published its 2024 sustainability report highlighting progress in safety, energy efficiency, and water conservation [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current trade environment and increasing full-year sales and margin outlook due to strong first-half performance [25][26] - There is caution regarding the European market, with ongoing softness in general construction and uncertainty around order rates [49] - The company expects continued strength in data centers, which is offsetting residential market softness [94] Other Important Information - The company estimates a direct tariff impact of approximately $40 million for 2025, down from a previous estimate of $60 million [21][56] - Free cash flow year-to-date through Q2 was $105 million, with expectations for sequential improvement [19] Q&A Session Summary Question: Impact of pull forward in sales - Approximately $20 million of sales pull forward was realized in the quarter [28] Question: Pricing dynamics and tariff impacts - Price realization was approximately 3% in Q2, with expectations for mid-single digits in the second half [57] Question: Competitive positioning and domestic manufacturing - The company believes its domestic manufacturing strategy provides a competitive advantage in the current uncertain market environment [43] Question: Update on European heat pump market - Destocking in the heat pump market is expected to end by Q3, but general construction remains soft in Europe [49] Question: Changes in tariff estimates - The reduction from $60 million to $40 million in direct costs is due to changes in tariffs, including new copper tariffs [56] Question: Integration of acquisitions - All acquisitions are integrating well, with synergies being realized across the board [61] Question: Future of Nexa platform - The company expects the sales cycle for Nexa to shorten as more customers realize its benefits [77]
Watts Water(WTS) - 2025 Q2 - Earnings Call Presentation
2025-08-07 13:00
Q2 2025 Performance - Record sales, operating income, and EPS were achieved in Q2 2025[5] - Organic sales increased by 6% due to favorable pricing, pull-forward demand, and incremental volume[5] - The adjusted operating margin reached a record of 21.6%, representing an expansion of 280 bps[5] - Adjusted EBITDA was $153 million, a 22% increase[13] - Adjusted EPS increased by 26% to $3.09[14] Segment Performance - Americas experienced a 10% increase in organic sales, with acquisitions adding $7 million[18] - Europe saw an 8% decrease in organic sales, but benefited from a $6 million FX benefit[18] - APMEA experienced a 1% decrease in organic sales due to project timing in China[18] Financial Position - Free cash flow was $105 million, a 12% decrease compared to the previous year[15] - The net debt to capitalization ratio was negative 10%[18] - Net leverage was negative 0.4x[18] 2025 Outlook - The full-year reported sales growth outlook was raised to between +2% and +5%[19] - The full-year organic sales growth outlook was raised to between flat and +3%[19] - The full-year adjusted EBITDA margin outlook was raised to between 20.7% and 21.3%[19]
Watts Water (WTS) Q2 Earnings: Taking a Look at Key Metrics Versus Estimates
ZACKS· 2025-08-07 00:31
Core Insights - Watts Water reported revenue of $643.7 million for the quarter ended June 2025, reflecting a year-over-year increase of 7.8% and a surprise of +6.1% over the Zacks Consensus Estimate of $606.7 million [1] - The company's EPS for the quarter was $3.09, up from $2.46 in the same quarter last year, resulting in an EPS surprise of +15.3% compared to the consensus estimate of $2.68 [1] Financial Performance - The revenue from the Americas segment was $498.5 million, exceeding the average estimate of $472 million by two analysts, marking an 11.3% year-over-year increase [4] - The APMEA segment reported revenue of $34.2 million, slightly below the average estimate of $34.5 million, representing a year-over-year decline of 2.6% [4] - Revenue from Europe was $111 million, surpassing the estimated $108 million, but showed a year-over-year decrease of 2.7% [4] Market Performance - Shares of Watts Water have returned +3.6% over the past month, outperforming the Zacks S&P 500 composite's +0.5% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]
Watts Water (WTS) Surpasses Q2 Earnings and Revenue Estimates
ZACKS· 2025-08-06 23:55
Core Insights - Watts Water (WTS) reported quarterly earnings of $3.09 per share, exceeding the Zacks Consensus Estimate of $2.68 per share, and up from $2.46 per share a year ago [1] - The earnings surprise was +15.30%, and the company has surpassed consensus EPS estimates for four consecutive quarters [2] - The company generated revenues of $643.7 million for the quarter, surpassing the Zacks Consensus Estimate by 6.10% and increasing from $597.3 million year-over-year [3] Financial Performance - The earnings surprise of +15.30% indicates strong performance relative to expectations [2] - Revenue growth of approximately 7.0% year-over-year reflects the company's ability to outperform market estimates consistently [3] - The stock has appreciated about 29.7% year-to-date, significantly outperforming the S&P 500's gain of 7.1% [4] Future Outlook - The company's earnings outlook is crucial for assessing future stock performance, with current consensus EPS estimates at $2.22 for the next quarter and $9.47 for the current fiscal year [5][8] - The favorable trend in estimate revisions prior to the earnings release has resulted in a Zacks Rank 2 (Buy) for the stock, suggesting expected outperformance in the near future [7] - The Instruments - Control industry, to which Watts Water belongs, is currently in the top 26% of Zacks industries, indicating a positive industry outlook [9]
Watts Water(WTS) - 2025 Q2 - Quarterly Results
2025-08-06 20:49
Note changes in performance are relative to second quarter 2024 North Andover, Mass., August 6, 2025 -- 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. Chief Executive Officer Robert J. Pagano Jr. said, "We delivered another strong quarter that surpassed our expectations as we achieved record sales, operating inc ...
Watts Water Technologies: A Strong Current, But Hold Off Until The Price Trickles Lower
Seeking Alpha· 2025-08-06 07:14
Company Overview - Watts Water Technologies (NYSE: WTS) is a global leader in designing and manufacturing water solutions for various applications [1] - The company operates through three reportable segments: Americas, Europe, and Asia-Pacific, Middle East, and Africa (APMEA) [1] - Watts Water Technologies has a market capitalization of approximately $8.6 billion and employs nearly 1,000 people [1]
Watts Water (WTS) Surges 3.3%: Is This an Indication of Further Gains?
ZACKS· 2025-07-31 10:16
Core Insights - Watts Water (WTS) shares increased by 3.3% to close at $260.91, driven by higher trading volume and steady product momentum in the Americas and APMEA regions, despite weakness in Europe [1][4] Group 1: Financial Performance - The company is expected to report quarterly earnings of $2.68 per share, reflecting an 8.9% year-over-year increase, with revenues projected at $606.7 million, a 1.6% increase from the previous year [4] - The consensus EPS estimate for the quarter has been revised 1.4% higher in the last 30 days, indicating a positive trend that typically correlates with stock price appreciation [5] Group 2: Strategic Initiatives - Watts Water is focused on enhancing organic growth, margin expansion, and reinvesting in productivity initiatives, with plans for new product development and geographic expansion [2] - The company aims to launch smart and connected products to differentiate itself in the marketplace [2] - The expansion of go-to-market strategies is supported by positive customer feedback on value creation through risk mitigation, water savings, and enhanced comfort [3] Group 3: Market Position - Watts Water holds a Zacks Rank of 2 (Buy), indicating a favorable outlook compared to other stocks in the Zacks Instruments - Control industry [6] - In contrast, competitor Thermon Group (THR) has a Zacks Rank of 3 (Hold) and has seen a slight decline in stock performance [6][7]
Watts Water (WTS) Earnings Expected to Grow: What to Know Ahead of Next Week's Release
ZACKS· 2025-07-30 15:07
Core Viewpoint - The market anticipates Watts Water (WTS) to report a year-over-year earnings increase driven by higher revenues, with a focus on how actual results compare to consensus estimates [1][2]. Earnings Expectations - Watts Water is expected to report quarterly earnings of $2.68 per share, reflecting an 8.9% increase year-over-year, with revenues projected at $606.7 million, up 1.6% from the previous year [3]. - The earnings report is scheduled for August 6, and better-than-expected results could lead to a stock price increase, while disappointing results may cause a decline [2]. Estimate Revisions - The consensus EPS estimate has been revised 1.37% higher in the last 30 days, indicating a positive reassessment by analysts [4]. - The Most Accurate Estimate for Watts Water is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +0.86%, suggesting a bullish outlook on the company's earnings [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [10]. - Stocks with a positive Earnings ESP and a solid Zacks Rank have historically produced a positive surprise nearly 70% of the time [10]. Historical Performance - In the last reported quarter, Watts Water exceeded the expected earnings of $2.12 per share by delivering $2.37, resulting in a surprise of +11.79% [13]. - The company has beaten consensus EPS estimates in all of the last four quarters [14]. Conclusion - Watts Water is positioned as a compelling candidate for an earnings beat, but investors should consider other factors influencing stock performance beyond just earnings results [17].
Why Watts Water (WTS) is Poised to Beat Earnings Estimates Again
ZACKS· 2025-07-29 17:11
Core Viewpoint - Watts Water (WTS) has consistently beaten earnings estimates and is well-positioned for future earnings growth, particularly highlighted by its recent performance and positive earnings expectations [1][6]. Earnings Performance - For the last reported quarter, Watts Water achieved earnings of $2.37 per share, surpassing the Zacks Consensus Estimate of $2.12 per share, resulting in a surprise of 11.79% [2]. - In the previous quarter, the company was expected to earn $1.91 per share but delivered $2.05 per share, yielding a surprise of 7.33% [2]. Earnings Estimates and Predictions - Estimates for Watts Water have been trending higher, supported by its history of earnings surprises, with an average surprise of 9.56% over the last two quarters [1][3]. - The company currently has an Earnings ESP of +0.86%, indicating a bullish outlook from analysts regarding its near-term earnings potential [6]. Zacks Rank and Earnings ESP - The combination of a positive Earnings ESP and a Zacks Rank of 2 (Buy) suggests a strong likelihood of another earnings beat in the upcoming report [6]. - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have historically produced positive surprises nearly 70% of the time [4].
3 Instruments Stocks Set to Benefit From Industrial Automation
ZACKS· 2025-07-25 14:56
Industry Overview - The Zacks Instruments – Control industry is positioned to benefit from a focus on energy-efficient production processes and integrated software systems, with rising demand for advanced technology to replace legacy industrial controls driving growth [1] - The industry comprises manufacturers of precision and specialty motion-control components and systems used across various sectors, providing solutions for flow measurement, control, and communication for air, water, and other gases and liquids [3] Growth Drivers - The industry's growth is primarily driven by the emphasis on digitized technologies in manufacturing, such as the Industrial Internet of Things, and the demand for process automation and safety automation systems [4] - Increased adoption of automation and higher investments in new technologies are expected to drive growth, particularly in North America, supported by rising infrastructural investments in the energy sector and favorable government policies [6] Challenges - Elevated customer inventory levels, high capital expenditures for infrastructure upgrades, and intense market volatility may hinder the process automation and instrumentation market [2] - Material cost inflation and rising transportation costs, along with high raw material prices due to geopolitical tensions, are affecting industry players' margins and profitability [5] Market Performance - The Zacks Instruments – Control industry has lagged behind the S&P 500 and the broader Zacks Computer and Technology sector over the past year, gaining only 2.2% compared to the S&P 500's 18.2% and the sector's 23.3% [9] - The industry has a trailing 12-month Enterprise Value-to-EBITDA (EV/EBITDA) ratio of 13.89X, which is below the S&P 500's 17.98X and the sector's 18.29X [12] Notable Companies - **Watts Water Technologies, Inc. (WTS)**: Focuses on water safety and flow control products, benefiting from cost-reduction actions and a strong balance sheet, with a long-term earnings growth expectation of 7.4% and a stock gain of 24.8% in the past year [15] - **Sensata Technologies Holding plc (ST)**: A global industrial technology company specializing in sensor-based solutions, with a long-term earnings growth expectation of 7.3% and a focus on electrification for hybrid and electric vehicles [18][19] - **Thermon Group Holdings, Inc. (THR)**: Provides engineered industrial process heating solutions, with a recent acquisition enhancing its market exposure and a long-term earnings surprise of 12.7% on average in the trailing four quarters [22]