We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Watts Water (WTS) Q2 Earnings Beat Estimates, Revenues Up Y/Y
Read MoreHide Full Article
Watts Water Technologies, Inc (WTS - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of $2.34, which increased 11% on a year-over-year basis and beat the Zacks Consensus Estimate by 14.2%.
The company’s quarterly net sales rose 1% year over year to $532.8 million. The top line surpassed the Zacks Consensus Estimate by 0.5%. Organic sales were flat year over year.
The company’s performance benefited from higher revenue growth in Asia-Pacific, the Middle East and Africa (APMEA) and Europe amid rising inflation.
Watts Water Technologies, Inc. Price, Consensus and EPS Surprise
Americas: Net sales decreased 2% year over year to $367 million. Organic sales also decreased 2% due to tougher year-over-year comparisons. Adjusted operating income was up 210 basis points (bps) year over year to 24.9%, driven by increased price and productivity initiatives, partly offset by inflation and higher investments.
Europe: Net sales were up 6% year over year to $136 million, including a favorable foreign exchange impact of 1%. Organic sales were up 5%, owing to solid price realization. Adjusted operating income was down 10 bps year over year to 16.2%, owing to inflationary impact and reduced volume.
APMEA: Net sales increased 33% to $30 million. Organic sales moved up 5% from the Middle East and Australia. The unfavorable foreign exchange impact was 6%. Adjusted operating margin was up 250 bps to 18.2%, due to increased trade and affiliate sales volume, along with increased price and productivity.
Other Details
Gross profit increased 6% year over year to $252.8 million. Selling, general and administrative expenses decreased 6% year over year to $150.8 million. Operating income was $100.4 million, up 5% year over year.
GAAP operating margin was up 60 bps to 18.8%. The adjusted operating margin was 19.5%, up 100 bps year over year.
Cash Flow & Liquidity
For the six months that ended Jun 25, 2023, Watts Water generated $100.5 million of cash from operating activities compared with $44.9 million in the prior-year period.
For the six months that ended Jun 25, 2023, the free cash flow was $88.9 million compared with $32.6 million in the prior-year period. The increase was due to higher net income and reduced working capital investment.
The company repurchased 24,000 shares for $4 million in the second quarter. As of Jun 25, 2023, the company had $291.9 million in cash and cash equivalents with $98 million of long-term debt compared with the respective figures of $311.8 million and $147.8 million as of Mar 26, 2023.
Guidance
For third-quarter 2023, the company expects organic sales to decrease 3% to rise 1%. The adjusted operating margin is estimated to rise between 16% and 16.5%, with the adjusted margin projected to decline in the range of 80 bps-30 bps. The company expects the free cash flow performance to be positive.
For 2023, Watts Water expects organic sales to be down 2% to increase 2% compared with the previous guidance of down 5% to increase 2%. The adjusted operating margin is now estimated to be between 16.7% and 17.3% compared with the previous guidance of 15.7%-16.3%. The adjusted margin is expected to rise between 30 bps and 90 bps.
The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Watts Water (WTS) Q2 Earnings Beat Estimates, Revenues Up Y/Y
Watts Water Technologies, Inc (WTS - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of $2.34, which increased 11% on a year-over-year basis and beat the Zacks Consensus Estimate by 14.2%.
The company’s quarterly net sales rose 1% year over year to $532.8 million. The top line surpassed the Zacks Consensus Estimate by 0.5%. Organic sales were flat year over year.
The company’s performance benefited from higher revenue growth in Asia-Pacific, the Middle East and Africa (APMEA) and Europe amid rising inflation.
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 decreased 2% year over year to $367 million. Organic sales also decreased 2% due to tougher year-over-year comparisons. Adjusted operating income was up 210 basis points (bps) year over year to 24.9%, driven by increased price and productivity initiatives, partly offset by inflation and higher investments.
Europe: Net sales were up 6% year over year to $136 million, including a favorable foreign exchange impact of 1%. Organic sales were up 5%, owing to solid price realization. Adjusted operating income was down 10 bps year over year to 16.2%, owing to inflationary impact and reduced volume.
APMEA: Net sales increased 33% to $30 million. Organic sales moved up 5% from the Middle East and Australia. The unfavorable foreign exchange impact was 6%. Adjusted operating margin was up 250 bps to 18.2%, due to increased trade and affiliate sales volume, along with increased price and productivity.
Other Details
Gross profit increased 6% year over year to $252.8 million. Selling, general and administrative expenses decreased 6% year over year to $150.8 million. Operating income was $100.4 million, up 5% year over year.
GAAP operating margin was up 60 bps to 18.8%. The adjusted operating margin was 19.5%, up 100 bps year over year.
Cash Flow & Liquidity
For the six months that ended Jun 25, 2023, Watts Water generated $100.5 million of cash from operating activities compared with $44.9 million in the prior-year period.
For the six months that ended Jun 25, 2023, the free cash flow was $88.9 million compared with $32.6 million in the prior-year period. The increase was due to higher net income and reduced working capital investment.
The company repurchased 24,000 shares for $4 million in the second quarter.
As of Jun 25, 2023, the company had $291.9 million in cash and cash equivalents with $98 million of long-term debt compared with the respective figures of $311.8 million and $147.8 million as of Mar 26, 2023.
Guidance
For third-quarter 2023, the company expects organic sales to decrease 3% to rise 1%. The adjusted operating margin is estimated to rise between 16% and 16.5%, with the adjusted margin projected to decline in the range of 80 bps-30 bps. The company expects the free cash flow performance to be positive.
For 2023, Watts Water expects organic sales to be down 2% to increase 2% compared with the previous guidance of down 5% to increase 2%. The adjusted operating margin is now estimated to be between 16.7% and 17.3% compared with the previous guidance of 15.7%-16.3%. The adjusted margin is expected to rise between 30 bps and 90 bps.
Zacks Rank & Other Stocks to Consider
Watts Water currently has a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology space are InterDigital (IDCC - Free Report) , Badger Meter (BMI - Free Report) and Woodward (WWD - Free Report) . Each of these companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.