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Watts Water (WTS) Beats Q4 Earnings & Revenue Estimates
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Watts Water Technologies, Inc. (WTS - Free Report) reported healthy fourth-quarter 2020 results, wherein the top and the bottom lines beat the respective Zacks Consensus Estimate.
Net Income
On a reported basis, quarterly net income was $29.2 million or 86 cents per share compared with $31.8 million or 93 cents per share in the year-ago quarter. The deterioration was primarily due to higher provision for income tax.
In 2020, net income was $114.3 million or $3.36 per share compared with $131.5 million or $3.85 per share in 2019.
Quarterly adjusted net income was $38.9 million or $1.15 per share compared with $34.2 million or $1.00 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 14 cents.
Watts Water Technologies, Inc. Price, Consensus and EPS Surprise
On a reported basis, quarterly net sales inched up 0.8% year over year to $403.4 million, reflecting better-than-expected sales in the Americas and Europe. The top line surpassed the consensus estimate of $387 million. Organic sales decreased 2% year over year.
In 2020, reported sales declined 5.7% year over year to $1,508.6 million.
Quarterly Segment Results
Americas: Net sales slipped 1.3% year over year to $264.4 million. Organic sales declined 2%, as growth in plumbing products and electronics was more than offset by reductions in heating and hot water, water quality, drains and HVAC products. Adjusted operating income improved 0.9% to $45.9 million.
Europe: Net sales increased 5.5% year over year to $119.9 million, including a positive impact of 8% from foreign exchange movements. Organic sales were down 2%, as increased fluid solution product sales were more than offset by a reduction in drain sales. Adjusted operating income was $16.8 million, up 25.4% year over year, benefiting from increased productivity.
Asia-Pacific, Middle East and Africa: Net sales improved 1.6% to $19.1 million. Organic sales decreased 8%. Increased sales in China were more than offset by soft markets in the Middle East and Australia. Adjusted operating income came in at $3.4 million compared with $3 million in the prior-year quarter. The improvement was driven by cost controls and productivity as well as higher intercompany volume.
Other Details
Cost of goods sold was $234.2 million compared with $230.2 million in the year-ago quarter. Gross profit declined to $169.2 million from $170.1 million. Operating income was $54.4 million, up 15%, driven by higher sales and aggressive cost actions. GAAP operating margin was up 170 basis points (bps) to 13.5%. Adjusted operating margin was 13.6%, up 110 bps.
The company incurred $1.2 million in restructuring and other related costs. It repurchased about 37,000 shares for $4.2 million during the quarter.
Cash Flow & Liquidity
In 2020, Watts Water generated $228.8 million of net cash from operating activities compared with $194 million in 2019. Free cash flow was $187.2 million compared with $164.9 million, supported by better working capital management.
As of Dec 31, 2020, the company had $218.9 million in cash and cash equivalents with $198.2 million of long-term debt (net of current portion). This compares with the respective tallies of $219.7 million and $204.2 million a year ago.
Zacks Rank & Stocks to Consider
Watts Water currently carries a Zacks Rank #3 (Hold).
Harsco delivered a trailing four-quarter positive earnings surprise of 463.1%, on average.
Luna Innovations delivered a trailing four-quarter positive earnings surprise of 47.5%, on average.
Riot Blockchain delivered a trailing four-quarter positive earnings surprise of 3.4%, on average.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
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Watts Water (WTS) Beats Q4 Earnings & Revenue Estimates
Watts Water Technologies, Inc. (WTS - Free Report) reported healthy fourth-quarter 2020 results, wherein the top and the bottom lines beat the respective Zacks Consensus Estimate.
Net Income
On a reported basis, quarterly net income was $29.2 million or 86 cents per share compared with $31.8 million or 93 cents per share in the year-ago quarter. The deterioration was primarily due to higher provision for income tax.
In 2020, net income was $114.3 million or $3.36 per share compared with $131.5 million or $3.85 per share in 2019.
Quarterly adjusted net income was $38.9 million or $1.15 per share compared with $34.2 million or $1.00 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 14 cents.
Watts Water Technologies, Inc. Price, Consensus and EPS Surprise
Watts Water Technologies, Inc. price-consensus-eps-surprise-chart | Watts Water Technologies, Inc. Quote
Revenues
On a reported basis, quarterly net sales inched up 0.8% year over year to $403.4 million, reflecting better-than-expected sales in the Americas and Europe. The top line surpassed the consensus estimate of $387 million. Organic sales decreased 2% year over year.
In 2020, reported sales declined 5.7% year over year to $1,508.6 million.
Quarterly Segment Results
Americas: Net sales slipped 1.3% year over year to $264.4 million. Organic sales declined 2%, as growth in plumbing products and electronics was more than offset by reductions in heating and hot water, water quality, drains and HVAC products. Adjusted operating income improved 0.9% to $45.9 million.
Europe: Net sales increased 5.5% year over year to $119.9 million, including a positive impact of 8% from foreign exchange movements. Organic sales were down 2%, as increased fluid solution product sales were more than offset by a reduction in drain sales. Adjusted operating income was $16.8 million, up 25.4% year over year, benefiting from increased productivity.
Asia-Pacific, Middle East and Africa: Net sales improved 1.6% to $19.1 million. Organic sales decreased 8%. Increased sales in China were more than offset by soft markets in the Middle East and Australia. Adjusted operating income came in at $3.4 million compared with $3 million in the prior-year quarter. The improvement was driven by cost controls and productivity as well as higher intercompany volume.
Other Details
Cost of goods sold was $234.2 million compared with $230.2 million in the year-ago quarter. Gross profit declined to $169.2 million from $170.1 million. Operating income was $54.4 million, up 15%, driven by higher sales and aggressive cost actions. GAAP operating margin was up 170 basis points (bps) to 13.5%. Adjusted operating margin was 13.6%, up 110 bps.
The company incurred $1.2 million in restructuring and other related costs. It repurchased about 37,000 shares for $4.2 million during the quarter.
Cash Flow & Liquidity
In 2020, Watts Water generated $228.8 million of net cash from operating activities compared with $194 million in 2019. Free cash flow was $187.2 million compared with $164.9 million, supported by better working capital management.
As of Dec 31, 2020, the company had $218.9 million in cash and cash equivalents with $198.2 million of long-term debt (net of current portion). This compares with the respective tallies of $219.7 million and $204.2 million a year ago.
Zacks Rank & Stocks to Consider
Watts Water currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader sector are Harsco , Luna Innovations (LUNA - Free Report) and Riot Blockchain (RIOT - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Harsco delivered a trailing four-quarter positive earnings surprise of 463.1%, on average.
Luna Innovations delivered a trailing four-quarter positive earnings surprise of 47.5%, on average.
Riot Blockchain delivered a trailing four-quarter positive earnings surprise of 3.4%, on average.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>