Watts Water Reports Record Sales Amid Margin Declines
On August 5, Watts Water Technologies (NYSE: WTS) reported second-quarter results showing record net sales of $763 million, up 19% year-over-year on a reported basis and 12% organically. Diluted earnings per share rose to $3.53 from the prior year, while adjusted diluted EPS reached $3.66, reflecting strong performance across most metrics. The growth was largely driven by increased demand for data center infrastructure in all regions where Watts operates. The Americas segment saw a 12% organic sales increase and contributed significantly to overall results. Europe also showed improvement with higher margins due to favorable pricing and productivity gains. However, the company's largest segment experienced an operating margin decline of 150 basis points. Despite strong top-line growth, profitability faced headwinds from acquisition dilution, inflationary pressures, tariffs, and a difficult comparison against prior-year benefits related to tariff adjustments. Free cash flow for the first half fell slightly compared to last year due to higher accounts receivable and inventory levels.
Topics: data_centers dividend_increase profitability sales_growth stock_buybacks