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Watts Water (WTS) Q4 Earnings & Revenues Top, Increase Y/Y
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Watts Water Technologies, Inc (WTS - Free Report) reported fourth-quarter 2022 adjusted earnings of $1.60 per share, which increased 13% on a year-over-year basis and beat the Zacks Consensus Estimate by 3.9%.
The company’s quarterly net sales rose 6% year over year to $502 million. The top line surpassed the Zacks Consensus Estimate by 2.7%. Organic sales increased 11% year over year.
Amid pandemic-induced supply-chain woes, double-digit organic growth in the Americas boosted Watts Water’s fourth-quarter 2022 results. However, unfavorable forex translations affected sales by $22 million.
Watts Water Technologies, Inc. Price, Consensus and EPS Surprise
Americas: Net sales increased 10% year over year to $350 million. Organic sales also rose 11% on higher pricing across all major product lines. Adjusted operating income was up 240 basis points (bps) year over year to 18.7%, driven by increased price and productivity initiatives, which were partly offset by inflation and higher investments.
Europe: Net sales were down 4% year over year to $128 million, including an unfavorable foreign exchange impact of 13%. Organic sales were up 9%, with growth witnessed across all platforms, primarily driven by price actions. Adjusted operating income was down 290 bps year over year to 12.8%, owing to inflationary impact and unfavorable forex volatility.
Asia-Pacific, the Middle East and Africa: Net sales increased 5% to $23 million. Organic sales moved up 17% from China, the Middle East and Australia. The unfavorable foreign exchange impact was 12%. Adjusted operating margin was down 260 bps to 14.4%, affected by lower affiliate volume and inflationary pressure.
Other Details
Gross profit increased 9.7% year over year to $218.6 million. Selling, general and administrative expenses increased 8.4% year over year to $147 million. Operating income was $67.2 million, up 7.4%.
GAAP operating margin was up 20 bps to 13.4%. The adjusted operating margin was 14.3%, up 90 bps.
Cash Flow & Liquidity
For the year ended Dec 31, 2022, Watts Water generated $224 million of cash from operating activities compared with $180.8 million generated in the previous year.
Free cash flow was $201.1 million, up from $159.2 million reported in the previous year. The increase was due to higher net income and lower investment in inventory.
The company repurchased 31,000 shares for $4.3 million in the fourth quarter. For the year, the company repurchased 494,000 shares worth $69 million.
As of Dec 31, 2022, the company had $310.8 million in cash and cash equivalents with $147.6 million of long-term debt compared with the respective figures of $219.5 million and $182.4 million as of Sep 25, 2022.
Guidance
For first-quarter 2023, the company expects organic sales to remain flat to increase 4%. The adjusted operating margin is estimated to rise between 15.7% and 16.2%, with adjusted margin growth in the range of 0-50 bps. The company expects free cash flow performance to be weak due to seasonality.
For full-year 2023, Watts Water expects organic sales to be down 5% to increase 2%. The adjusted operating margin is now estimated to be between 15.4% and 16%, with adjusted margin to be down between 40 bps and 100 bps.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.38 per share, up 1 cent in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have gained 5.5% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.37 per share, rising 2.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 30.7% in the past year.
The Zacks Consensus Estimate for Super Micro Computer’s fiscal 2023 earnings is pegged at $10.68 per share, up 11.5% in the past 60 days.
Super Micro Computer’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 7.8%. Shares of SMCI have gained 120.5% in the past year
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Watts Water (WTS) Q4 Earnings & Revenues Top, Increase Y/Y
Watts Water Technologies, Inc (WTS - Free Report) reported fourth-quarter 2022 adjusted earnings of $1.60 per share, which increased 13% on a year-over-year basis and beat the Zacks Consensus Estimate by 3.9%.
The company’s quarterly net sales rose 6% year over year to $502 million. The top line surpassed the Zacks Consensus Estimate by 2.7%. Organic sales increased 11% year over year.
Amid pandemic-induced supply-chain woes, double-digit organic growth in the Americas boosted Watts Water’s fourth-quarter 2022 results. However, unfavorable forex translations affected sales by $22 million.
Watts Water Technologies, Inc. Price, Consensus and EPS Surprise
Watts Water Technologies, Inc. price-consensus-eps-surprise-chart | Watts Water Technologies, Inc. Quote
Segment Results
Americas: Net sales increased 10% year over year to $350 million. Organic sales also rose 11% on higher pricing across all major product lines. Adjusted operating income was up 240 basis points (bps) year over year to 18.7%, driven by increased price and productivity initiatives, which were partly offset by inflation and higher investments.
Europe: Net sales were down 4% year over year to $128 million, including an unfavorable foreign exchange impact of 13%. Organic sales were up 9%, with growth witnessed across all platforms, primarily driven by price actions. Adjusted operating income was down 290 bps year over year to 12.8%, owing to inflationary impact and unfavorable forex volatility.
Asia-Pacific, the Middle East and Africa: Net sales increased 5% to $23 million. Organic sales moved up 17% from China, the Middle East and Australia. The unfavorable foreign exchange impact was 12%. Adjusted operating margin was down 260 bps to 14.4%, affected by lower affiliate volume and inflationary pressure.
Other Details
Gross profit increased 9.7% year over year to $218.6 million. Selling, general and administrative expenses increased 8.4% year over year to $147 million. Operating income was $67.2 million, up 7.4%.
GAAP operating margin was up 20 bps to 13.4%. The adjusted operating margin was 14.3%, up 90 bps.
Cash Flow & Liquidity
For the year ended Dec 31, 2022, Watts Water generated $224 million of cash from operating activities compared with $180.8 million generated in the previous year.
Free cash flow was $201.1 million, up from $159.2 million reported in the previous year. The increase was due to higher net income and lower investment in inventory.
The company repurchased 31,000 shares for $4.3 million in the fourth quarter. For the year, the company repurchased 494,000 shares worth $69 million.
As of Dec 31, 2022, the company had $310.8 million in cash and cash equivalents with $147.6 million of long-term debt compared with the respective figures of $219.5 million and $182.4 million as of Sep 25, 2022.
Guidance
For first-quarter 2023, the company expects organic sales to remain flat to increase 4%. The adjusted operating margin is estimated to rise between 15.7% and 16.2%, with adjusted margin growth in the range of 0-50 bps. The company expects free cash flow performance to be weak due to seasonality.
For full-year 2023, Watts Water expects organic sales to be down 5% to increase 2%. The adjusted operating margin is now estimated to be between 15.4% and 16%, with adjusted margin to be down between 40 bps and 100 bps.
Zacks Rank & Stocks to Consider
Watts Water currently has a Zacks Rank #3 (Hold).
Investors interested in the broader technology space may also consider stocks like Arista Networks (ANET - Free Report) , Jabil (JBL - Free Report) and Super Micro Computer (SMCI - Free Report) . While Jabil sports a Zacks Rank #1 (Strong Buy), Arista Networks and Super Micro Computer carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.38 per share, up 1 cent in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have gained 5.5% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.37 per share, rising 2.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 30.7% in the past year.
The Zacks Consensus Estimate for Super Micro Computer’s fiscal 2023 earnings is pegged at $10.68 per share, up 11.5% in the past 60 days.
Super Micro Computer’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 7.8%. Shares of SMCI have gained 120.5% in the past year