Watts Water(US:WTS)2025-11-05 21:25Financial Performance - Net sales for Q3 2025 were $611.7 million, representing a 13% increase compared to Q3 2024, with organic sales growth of 9%[5] - Operating income increased to $111.4 million, up 20% year-over-year, with an operating margin of 18.2%, an increase of 110 basis points[4] - Diluted earnings per share (EPS) rose to $2.45, a 19% increase from the previous year, while adjusted diluted EPS increased by 23% to $2.50[4] - Net income for the nine months ended September 28, 2025, was $257.1 million, compared to $223.6 million for the same period in 2024, reflecting an increase of 15.0%[22] - Operating income for the nine months ended September 28, 2025, was $334.4 million, up from $301.4 million in the same period of 2024, indicating an increase of 10.9%[27] - Adjusted operating income for the nine months ended September 28, 2025, was $358.5 million, compared to $308.7 million in the same period of 2024, an increase of 16.2%[27] - Segment earnings for Q3 2025 were $130.6 million, compared to $105.6 million in Q3 2024, reflecting a significant increase in profitability[28] Sales and Revenue Growth - The company is raising its full year 2025 sales outlook to an increase of 7% to 8% and organic sales growth to 4% to 5%[12] - Sales in the Americas reached $464 million, a 16% increase on a reported basis and 13% organically, driven by favorable pricing and demand[7] - European sales were $112 million, up 4% on a reported basis but down 2% organically, impacted by lower volumes despite favorable foreign exchange movements[8] - Total segment net sales for Q3 2025 reached $642.3 million, a 12.5% increase from $568.7 million in Q3 2024[28] - Net sales from external customers for the nine months ended September 28, 2025, were $1,813.4 million, up 5.9% from $1,711.8 million in the same period of 2024[29] Cash Flow and Financial Position - Operating cash flow for the first nine months of 2025 was $247 million, resulting in free cash flow of $216 million, an increase from $204 million in the same period last year[10] - Cash and cash equivalents at the end of the period were $457.7 million, compared to $303.9 million at the end of September 29, 2024, marking a significant increase of 50.5%[22] - Free cash flow for the nine months ended September 28, 2025, was $216.0 million, compared to $204.2 million in the same period of 2024[30] - The company reported a net cash provided by operating activities of $247.3 million for the nine months ended September 28, 2025, compared to $221.6 million for the same period in 2024, an increase of 11.6%[22] - The company reported a net debt of $(260.2) million as of September 28, 2025, compared to $(189.9) million at the end of 2024, indicating a stronger cash position[33] Asset and Equity Growth - Total assets increased to $2,725.4 million as of September 28, 2025, up from $2,397.0 million at December 31, 2024, representing a growth of 13.7%[20] - Total current assets rose to $1,313.9 million as of September 28, 2025, compared to $1,083.5 million at December 31, 2024, reflecting a growth of 21.3%[20] - Total stockholders' equity increased to $1,956.8 million as of September 28, 2025, up from $1,707.9 million at December 31, 2024, representing a growth of 14.6%[20] Operational Efficiency - Full year operating margin is expected to be between 18.1% and 18.2%, reflecting an increase of 80 to 90 basis points[12] - The operating margin for the third quarter of 2025 improved to 18.2%, up from 17.1% in the third quarter of 2024[27] - The adjusted operating margin for 2025 is forecasted to be between 19.1% to 19.2%, reflecting ongoing operational efficiencies[35] Corporate Actions - The acquisition of Haws Corporation was completed on November 4, 2025, enhancing the company's product offerings in emergency safety and hydration solutions[4] - The company repurchased approximately 15,000 shares of Class A common stock for $3.9 million during Q3 2025, with $133 million remaining under the stock repurchase program[11] Foreign Exchange Impact - The company experienced a foreign exchange impact of (1.1)% on total net sales for Q3 2025, highlighting the challenges posed by currency fluctuations[29]