Financial Data and Key Metrics Changes - The company reported first quarter sales of $558 million, down 2% on both a reported and organic basis, primarily due to fewer shipping days and ongoing weakness in Europe [14][4] - Adjusted operating income reached a record $106 million, increasing by 2%, with adjusted operating margins at 19%, up 80 basis points [15][4] - Adjusted earnings per share rose to $2.37, reflecting a 2% increase year-over-year, supported by operational contributions and reduced interest expenses [15][16] Business Line Data and Key Metrics Changes - Americas organic sales decreased by 1%, while reported sales remained flat, benefiting from the Icon acquisition which added $5 million [14] - Europe experienced a significant decline, with organic sales down 9% and reported sales down 12%, attributed to fewer shipping days and destocking in the wholesale channel [14] - APMEA sales increased by 9% on a reported basis and 13% on an organic basis, driven by growth in China, the Middle East, and Australia [14] Market Data and Key Metrics Changes - The company anticipates continued weakness in Europe due to a slowdown in new construction, while the Americas are expected to show slight improvement [19][11] - The outlook for the second quarter suggests organic sales growth could be flat to up 3%, with low to mid-single digit growth in the Americas and low single-digit growth in APMEA [20] Company Strategy and Development Direction - The company is focused on mitigating the impact of tariffs through vertical integration and local manufacturing, which is expected to enhance competitiveness [6][12] - A 21% increase in dividends was announced, reflecting confidence in cash flows and a strong balance sheet [5][18] - The company is actively pursuing synergies from recent acquisitions and expects them to be accretive to adjusted EBITDA margins and adjusted EPS in 2025 [8][63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current trade environment and maintaining full-year organic sales and adjusted operating margin outlook despite macroeconomic uncertainties [9][23] - The company noted that while first quarter performance was strong, there are concerns about potential demand reduction in the second half of the year due to tariff impacts [10][11] Other Important Information - The search for a new CFO is ongoing, with the current CFO remaining in place to ensure a smooth transition [13] - Free cash flow for the quarter was $46 million, an increase from $37 million in the same quarter last year, with expectations for continued improvement [17][18] Q&A Session Summary Question: Opportunities to gain market share and margin - Management highlighted the strategy of manufacturing products closer to customers, which positions the company favorably in the current tariff environment [32][33] Question: Impact of price increases and potential tariff reductions - The company implemented annual price increases in January and additional tariff-related increases in March and May, with future pricing strategies being closely monitored [35][37] Question: Margin expectations for the first and second halves of the year - Management indicated that while the first quarter was strong, there is caution regarding potential demand impacts in the second half due to tariffs [44][45] Question: Integration progress of recent acquisitions - Integration efforts with recent acquisitions are ahead of schedule, with positive synergy tracking and operational benefits being realized [63] Question: Utilization of North American manufacturing facilities - The company noted that North American facilities are not fully utilized, allowing for capacity expansion without significant capital expenditures [80] Question: Weaker guidance for Europe - Management attributed the weaker guidance for Europe to ongoing destocking and uncertainty in new construction markets [61][85]

Q1 2025 Performance - Organic sales declined by 2% due to fewer shipping days and ongoing weakness in Europe[5] - Record adjusted operating margin of 19%, an expansion of 80 bps[5] - Announced a 21% dividend increase[5] - Free cash flow increased by 25%, from $37 million to $46 million[20] Financial Results - Sales decreased by 2%, from $571 million to $558 million[16] - Adjusted EPS increased by 2%, from $2.33 to $2.37[19] - Americas segment sales were $418 million, a 1% organic decrease, but acquisitions added $5 million[22] - Europe segment sales were $108 million, a 9% organic decrease, with a $4 million foreign exchange headwind[22] - APMEA segment sales were $32 million, a 13% organic increase[22] Outlook - The company is maintaining its FY 2025 outlook[6] - The estimated 2025 tariff cost impact is approximately $60 million[12]

Core Insights - Watts Water reported $558 million in revenue for Q1 2025, a year-over-year decline of 2.3%, but exceeded the Zacks Consensus Estimate by 3.20% [1] - The EPS for the quarter was $2.37, up from $2.33 a year ago, representing an EPS surprise of 11.79% compared to the consensus estimate of $2.12 [1] Revenue Performance - Geographic Revenue in the Americas was $418.10 million, slightly above the estimated $404.15 million, but a year-over-year decline of 0.2% [4] - APMEA revenue reached $31.50 million, surpassing the estimated $28.30 million, with a year-over-year increase of 9.4% [4] - European revenue was reported at $108.40 million, exceeding the estimate of $107.75 million, but showed a significant year-over-year decline of 12.1% [4] Stock Performance - Shares of Watts Water have returned +17.4% over the past month, outperforming the Zacks S&P 500 composite's +10.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Company Performance - Watts Water reported quarterly earnings of $2.37 per share, exceeding the Zacks Consensus Estimate of $2.12 per share, and showing an increase from $2.33 per share a year ago, representing an earnings surprise of 11.79% [1] - The company posted revenues of $558 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.20%, although this is a decrease from year-ago revenues of $570.9 million [2] - Over the last four quarters, Watts Water has consistently surpassed consensus EPS estimates and revenue estimates [2] Stock Performance - Since the beginning of the year, Watts Water shares have increased by approximately 4.2%, contrasting with a decline of 4.7% in the S&P 500 [3] - The current Zacks Rank for Watts Water is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $2.48 on revenues of $597.27 million, and for the current fiscal year, it is $9.10 on revenues of $2.26 billion [7] - The outlook for the Instruments - Control industry, to which Watts Water belongs, is currently in the bottom 31% of over 250 Zacks industries, which may impact the stock's performance [8]

Financial Performance - Net sales for Q1 2025 were $558 million, a decrease of 2% compared to Q1 2024[5] - Adjusted operating income increased by 2% to $106.1 million, with an adjusted operating margin of 19.0%, up 80 basis points[4] - Diluted earnings per share (EPS) rose by 2% to $2.21, while adjusted diluted EPS also increased by 2% to $2.37[4] - Net sales for the first quarter of 2025 were $558.0 million, a decrease of 2.3% compared to $570.9 million in the first quarter of 2024[27] - Adjusted operating income for the first quarter of 2025 was $106.1 million, compared to $103.8 million in the same period last year, reflecting an increase of 2.2%[27] - The operating margin for the first quarter of 2025 was 15.7%, down from 16.9% in the first quarter of 2024[27] - Net income for the first quarter of 2025 was $74.0 million, slightly up from $72.6 million in the first quarter of 2024[22] - The diluted earnings per share for the first quarter of 2025 were $2.21, compared to $2.17 in the first quarter of 2024, reflecting a growth of 1.8%[27] Cash Flow and Assets - Operating cash flow for Q1 2025 was $55.2 million, resulting in free cash flow of $45.6 million, up from $36.6 million in the same period last year[10] - Cash and cash equivalents at the end of the first quarter of 2025 were $336.8 million, down from $386.9 million at the beginning of the year, a decrease of 12.8%[22] - Net cash provided by operating activities increased to $55.2 million in Q1 2025 from $45.6 million in Q1 2024[30] - Free cash flow rose to $45.6 million in Q1 2025, compared to $36.6 million in Q1 2024, reflecting a strong cash conversion rate of 61.6%[30] - Total assets increased to $2,500.7 million as of March 30, 2025, up from $2,397.0 million at December 31, 2024, representing a growth of 4.3%[20] Sales Performance by Region - Organic sales growth was down 2%, impacted by fewer shipping days and market weakness in Europe[5] - Sales in the Americas segment were $418 million, flat on a reported basis and down 1% organically[7] - European sales decreased by 12% to $108 million, with a 9% decline on an organic basis due to destocking[8] - APMEA sales increased by 9% to $32 million, with a 13% organic growth driven by markets in China, Australia, and the Middle East[9] - Organic sales decreased by 2.1% in the first quarter of 2025, with a notable decline of 12.1% in Europe[29] Future Outlook - The company is maintaining its full year 2025 organic sales outlook, expecting reported sales to range from -2% to +3%[12] - The company forecasts net sales growth of (2)% to 3% for the full year 2025, with organic sales growth projected at (3)% to 2%[33] - The operating margin is expected to be between 16.7% and 17.3% for 2025, with an adjusted operating margin forecasted at 17.7% to 18.3%[33] - The forecasted impact of acquisition and foreign exchange is expected to reduce net sales growth by (1)%[33] - Restructuring and other costs are anticipated to contribute 1.0% to the operating margin for 2025[33] Shareholder Returns - The company announced a 21% increase in quarterly dividend payments to $0.52 per share, effective June 2025[11] Debt and Equity - The net debt position improved to $(139.6) million as of March 30, 2025, compared to $(189.9) million as of December 31, 2024[32] - Total stockholders' equity increased to $1,772.2 million as of March 30, 2025, from $1,707.9 million as of December 31, 2024[32] - The net debt to capitalization ratio improved to (8.6)% in Q1 2025 from (12.5)% in Q4 2024[32]

Company Overview - Watts Water Technologies, Inc. designs, manufactures, and sells water safety and flow control products aimed at promoting safety, energy efficiency, and water conservation for both commercial and residential buildings [12] - The company operates under three geographic segments: The Americas (73.6% of total revenues in Q4 2024), Europe (20.1%), and APMEA (Asia-Pacific, Middle East, and Africa) (6.3%) [12] Investment Ratings - Watts Water is currently rated as a 3 (Hold) on the Zacks Rank, with a VGM Score of B [13] - The company is considered a potential top pick for growth investors, with a Growth Style Score of B, indicating a forecasted year-over-year earnings growth of 3.3% for the current fiscal year [13] Earnings Estimates - In the last 60 days, four analysts have revised their earnings estimates upwards, with the Zacks Consensus Estimate increasing by $0.17 to $9.15 per share [13] - Watts Water has an average earnings surprise of 6.2%, suggesting a positive trend in earnings performance [13] Investment Potential - With a solid Zacks Rank and strong Growth and VGM Style Scores, Watts Water is recommended to be on investors' short lists for potential investment opportunities [14]

A month has gone by since the last earnings report for Watts Water (WTS) . Shares have lost about 7% in that time frame, outperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Watts Water due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.How Have Estimates Been Moving Since Then?It turns out, es ...

Core Insights - Watts Water Technologies, Inc. reported better-than-expected fourth-quarter financial results, with earnings of $2.05 per share, surpassing the analyst consensus estimate of $1.91 per share [1] - The company achieved quarterly sales of $540.400 million, exceeding the analyst consensus estimate of $537.260 million [1] Financial Performance - The CEO highlighted record results for the quarter and full year, including record operating income, adjusted earnings per share, and full year sales [2] - Despite the positive financial results, shares of Watts Water Technologies fell by 1.8% to $220.61 [2] Analyst Reactions - Following the earnings announcement, analysts adjusted their price targets for Watts Water Technologies [3] - Stifel analyst Nathan Jones maintained a Hold rating and raised the price target from $218 to $219 [4] - Goldman Sachs analyst Brian Lee maintained a Neutral rating and increased the price target from $197 to $217 [4]

Financial Data and Key Metrics Changes - The company achieved record full-year sales of $2.25 billion, up 10% on a reported basis but down 1% organically, primarily due to challenges in Europe [29][30] - Adjusted EPS increased by 7% to $8.86, reflecting operational contributions and reduced interest expenses [32] - Free cash flow reached a record $332 million, an 18% increase compared to 2023, with a conversion rate of 114% [9][34] Business Line Data and Key Metrics Changes - Organic sales in the Americas decreased by 3%, while reported sales increased by 3%, aided by earlier shipments of large projects [24][25] - Europe experienced a significant decline, with organic and reported sales down 15%, attributed to fewer shipping days and destocking in the wholesale channel [26] - The Apnea segment showed resilience with 3% organic growth and 4% reported sales growth, benefiting from foreign exchange movements [26] Market Data and Key Metrics Changes - The Americas market is expected to see sales ranging from down 3% to up 3%, while Europe is projected to decline between 8% and 2% [37] - The Asia Pacific region is anticipated to grow modestly, particularly in Australia and New Zealand, while Europe remains weak [22][37] Company Strategy and Development Direction - The company is focused on strategic M&A, high-return investments, competitive dividends, and stable share buybacks as capital allocation priorities [10] - The acquisition of Icon Systems is expected to enhance digital offerings and provide growth opportunities in niche markets [12] - The company is implementing a restructuring program to exit a manufacturing facility in France, aiming to simplify operations and improve productivity [13][39] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding market conditions, noting that while institutional projects remain strong, multifamily construction is expected to decline significantly [90] - The company anticipates continued challenges in Europe due to heat pump destocking and a weak construction market, particularly in the first half of 2025 [102][104] - Management emphasized the importance of controlling costs and driving productivity through the One Watts performance system to navigate current market conditions [46][47] Other Important Information - The company plans to eliminate approximately $10 million to $15 million in sales from low-performing products as part of its 80/20 model [16] - The adjusted effective tax rate for the fourth quarter was 24.6%, up 230 basis points compared to the previous year, primarily due to the recognition of additional R&D credits [28] Q&A Session Summary Question: Can you touch on the margin profile of what you're exiting with the 80/20 action? - Management indicated that the exited products are generally breakeven margin businesses, with some incremental sales expected to carry into next year [54] Question: What is the impact of fewer shipping days on sales? - Management noted that fewer shipping days negatively impacted sales by approximately 5% across all regions, particularly in the Americas [24] Question: How will the company handle the new tariffs on aluminum and steel? - Management plans to raise prices to offset the impact of tariffs and remains cautious about potential slowdowns in the construction industry [60][61] Question: What is the outlook for European margins? - Management aims to restore European margins to pre-decline levels, focusing on restructuring and adjusting the cost structure [93] Question: Can you provide details on the Icon acquisition and its integration? - The acquisition is expected to be EBITDA neutral and offers opportunities for leveraging technology across the company's portfolio [69][116]

WATTS WATER TECHNOLOGIES Q4 2024 EARNINGS CONFERENCE CALL Certain statements in this presentation constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are related to forecasts of sales, margins, earnings, earnings per share, effective tax rate, capital expenditures, cash flow, water market growth, acquisition strategy and integration, construction outlook, inflation and management goals and objectives. Watts cautions investors tha ...