Watts Water Technologies Reports Record Second Quarter 2024 Results

Rhea-AI Summary

Watts Water Technologies (NYSE: WTS) reported record second quarter 2024 results with sales of $597 million, a 12% increase. Key highlights include:

- Reported operating margin of 18.7%, down 10 bps
- Adjusted operating margin of 18.8%, down 70 bps
- Reported EPS of $2.44, up 8%; adjusted EPS of $2.46, up 5%
- Organic sales were flat, with growth in Americas and APMEA offsetting weakness in Europe
- Acquisitions contributed $65 million in sales
- Amended and extended credit facility through July 2029

The company maintains its full-year 2024 outlook, expecting reported sales to increase 7% to 12% and organic sales to range from -4% to +1%. Adjusted operating margin is projected between 17.1% and 17.7%.

Positive

• Record sales of $597 million, up 12% year-over-year
• Reported EPS increased 8% to $2.44
• Adjusted EPS rose 5% to $2.46
• Strong performance in Americas with 22% reported sales growth and 5% organic growth
• APMEA segment showed 16% reported sales growth and 18% organic growth
• Free cash flow improved to $120 million for the first six months of 2024
• Credit facility extended through July 2029, enhancing financial flexibility

Negative

• Adjusted operating margin decreased 70 basis points to 18.8%
• Europe segment sales declined 16% on a reported basis and 15% organically
• Europe operating margin decreased 580 basis points on a reported basis
• Organic sales growth was flat overall, indicating challenges in some markets

Financial Analyst

Watts Water Technologies' Q2 2024 results demonstrate robust performance amidst mixed market conditions. The company reported $597 million in sales, a 12% increase year-over-year, with flat organic growth. The Americas and APMEA regions showed strength, offsetting weakness in Europe.

Key financial highlights include:

• Reported EPS of $2.44, up 8%
• Adjusted EPS of $2.46, up 5%
• Operating margin of 18.7%, down 10 basis points
• Adjusted operating margin of 18.8%, down 70 basis points

The dilutive impact of acquisitions and European market challenges pressured margins. However, the company's strong balance sheet and extended credit facility provide financial flexibility for future growth initiatives.

Market Research Analyst

Watts Water's Q2 results reveal divergent regional trends. The Americas saw 22% reported growth (5% organic), driven by pricing and core product demand. APMEA's 16% reported growth (18% organic) reflects broad-based strength.

However, Europe faced significant headwinds, with sales declining 15% organically due to reduced government energy incentives in Germany and Italy, impacting the OEM channel and heat pump market.

The company's repair and replacement-focused business model provides resilience against economic softening. Management's maintained full-year outlook suggests confidence in navigating challenges, with expected reported sales growth of 7% to 12% and organic sales ranging from -4% to 1%.

Financial Strategist

Watts Water's Q2 performance underscores its financial strength and strategic positioning. The company's ability to deliver record results amid market challenges demonstrates operational resilience. Key strategic moves include:

• Successful integration of Bradley and Josam acquisitions, contributing $65 million in sales
• Extension of credit facility through July 2029, enhancing financial flexibility
• Continued share repurchases, with $154 million remaining authorization

The company's focus on strategic investments, capital return and long-term growth is evident. With a strong balance sheet and proactive management approach, Watts Water is well-positioned to capitalize on market opportunities and navigate potential economic headwinds.

• Reported sales of $597 million increased 12%; organic sales were flat

• Reported operating margin of 18.7%, down 10 bps; adjusted operating margin of 18.8%, down 70 bps

• Reported EPS of $2.44, up 8%; adjusted EPS of $2.46, up 5%

• Amended and extended existing credit facility, effective July 12, 2024

• Maintaining full-year 2024 outlook

Note changes in performance are relative to second quarter 2023

NORTH ANDOVER, Mass.--(BUSINESS WIRE)-- Watts Water Technologies, Inc. (NYSE: WTS) – through its subsidiaries, one of the world’s leading manufacturers and providers of plumbing, heating and water quality products and solutions – today announced results for the second quarter of 2024.

Chief Executive Officer Robert J. Pagano Jr. commented, “We delivered another quarter that surpassed our expectations with record sales, operating income and EPS. We are pleased with the growth and execution in our Americas and APMEA regions, which more than offset market weakness in Europe. Our success is a direct result of our team’s unwavering commitment to serving our customers worldwide.”

Mr. Pagano continued, “We are confident that our business model, which is largely driven by repair and replacement activity, and our proven ability to take proactive and decisive actions will continue to enable us to successfully navigate softening economic conditions. Our balance sheet is strong and well-positioned to support incremental strategic investments into the business, return of capital to shareholders and the execution of our long-term strategy. In addition, we extended our credit facility through July 2029, which further enhances our financial strength and flexibility.”

A summary of second quarter financial results is as follows:

		Second Quarter Ended
		June 30,			June 25,
(In millions, except per share information)		2024			2023			% Change
Sales		$	597.3		$	532.8		12	%
Organic sales growth % (1)								flat
Operating income - as reported			111.5			100.4		11	%
Operating margin %			18.7	%		18.8	%	(10)	bps
Adjusted operating income (1)			112.1			103.9		8	%
Adjusted operating margin % (1)			18.8	%		19.5	%	(70)	bps
Earnings per share - as reported		$	2.44		$	2.26		8	%
Special items (1)			0.02			0.08
Adjusted earnings per share (1)		$	2.46		$	2.34		5	%

_____________________
(1)		Organic sales growth, adjusted operating income, adjusted operating margin, special items and adjusted earnings per share represent non-GAAP financial measures. For a reconciliation of GAAP to non-GAAP items please see the tables attached to this press release.

Second Quarter Financial Highlights
Second quarter 2024 performance relative to second quarter 2023

Sales of $597 million increased 12% on a reported basis, which included sales from acquisitions, and were flat organically. Organic sales growth within the Americas and APMEA was offset by volume weakness in Europe. Sales from acquisitions totaled $65 million and were reported within the Americas. Unfavorable foreign exchange movements decreased sales by approximately $2 million.

Operating margin decreased 10 basis points on a reported basis and 70 basis points on an adjusted basis. Adjusted operating margin decreased primarily due to the dilutive impact of acquisitions, volume deleverage in Europe, inflation and incremental investments which more than offset favorable price and productivity. Reported operating margin was favorably impacted by a reduction in restructuring charges and a non-recurring gain on the sale of a building, partially offset by incremental acquisition-related charges.

Regional Performance

Americas
Sales of $448 million increased 22% on a reported basis and 5% on an organic basis due to price realization and growth in core valve products and our heating and hot water products, which was partly attributed to project timing. The acquisitions of Bradley and Josam contributed $65 million in sales, or 17% to reported growth.

Operating margin decreased 70 basis points on a reported basis and 60 basis points on an adjusted basis as benefits from price realization, volume and productivity were more than offset by inflation, incremental investments and the dilutive impact of the Bradley acquisition. Reported operating margin was unfavorably impacted by acquisition-related charges which more than offset a non-recurring gain on the sale of a building.

Europe
Sales of $114 million decreased 16% on a reported basis and 15% on an organic basis. Unfavorable foreign exchange movements decreased reported sales by 1%. Lower volumes in fluid solutions products, particularly in the OEM channel that was impacted by reduced government energy incentives in Germany and Italy and the related heat pump destocking, more than offset price realization.

Operating margin decreased 580 basis points on a reported basis and 620 basis points on an adjusted basis as inflation and the significant impact of volume deleverage more than offset benefits from price realization, product mix and productivity. Reported operating margin was favorably impacted by the reduction in restructuring charges.

APMEA
Sales of $35 million increased 16% on a reported basis and 18% on an organic basis. Unfavorable foreign exchange movements decreased reported sales by 2%. Sales increased due to growth in all major countries in the segment, which was partly due to project timing.

Operating margin increased 1,010 basis points on a reported basis and 70 basis points on an adjusted basis as benefits from volume leverage and productivity more than offset inflation, incremental investments and the dilutive impact of the Enware acquisition. Reported operating margin was favorably impacted by the reduction in restructuring and acquisition charges.

Cash Flow and Capital Allocation

For the first six months of 2024, operating cash flow was $131 million and net capital expenditures were $11 million, resulting in free cash flow of $120 million. In the comparable period last year, operating cash flow was $101 million and net capital expenditures were $12 million, resulting in free cash flow of $89 million. Operating and free cash flow increased due to higher net income and lower working capital investment. Sequential improvement in operating and free cash flow is expected throughout 2024 due to normal seasonality.

Effective July 12, 2024, the Company amended and extended its revolving credit facility through July 12, 2029. The extended facility maintains the prior interest rate spread and financial covenants of the prior credit facility and amends the accordion option to $400 million.

The Company repurchased approximately 20,000 shares of Class A common stock at a cost of $4.1 million during the second quarter of 2024. For the first six months of 2024, the Company repurchased approximately 40,000 shares at a cost of $8.1 million. Approximately $4 million remains available for stock repurchases under the stock repurchase program authorized in 2019 and $150 million under the stock repurchase program authorized in 2023. There is no expiration date for these programs.

Full Year 2024 Outlook

The Company is maintaining its previous full year outlook. We expect reported sales to increase +7% to +12% and organic sales to range from -4% to +1%. Full year adjusted operating margin is expected to be between 17.1% and 17.7%, or down 70 basis points to 10 basis points. Further 2024 planning assumptions are included in the second-quarter earnings materials posted at www.wattswater.com

For a reconciliation of GAAP to non-GAAP items and a statement regarding the usefulness of these measures to investors and management in evaluating our operating performance, please see the tables attached to this press release.

Watts Water Technologies, Inc. will hold a live webcast of its conference call to discuss second quarter 2024 results on Thursday, August 8, 2024, at 9:00 a.m. EDT. This press release and the live webcast can be accessed by visiting the Investor Relations section of the Company's website at www.wattswater.com. Following the webcast, the call recording will be available at the same address until August 7, 2025.

Watts Water Technologies, Inc., through its subsidiaries, is a world leader in the manufacture of innovative products to control the efficiency, safety, and quality of water within residential, commercial, and institutional applications. Watts’ expertise in a wide variety of water technologies enables us to be a comprehensive supplier to the water industry.

This press release includes “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995, including statements relating to expected full year 2024 financial results, including organic sales growth and adjusted operating margin, our strategy, investments, the benefits from recent acquisitions, improvements in operating and free cash flow throughout 2024, our ability to manage challenging macro-economic and softer market conditions and return of capital to shareholders. These forward-looking statements reflect our current views about future events. You should not rely on forward-looking statements because our actual results may differ materially from those predicted as a result of a number of potential risks and uncertainties. These potential risks and uncertainties include, but are not limited to: the effectiveness, timing and expected savings associated with our cost-cutting actions, restructuring and initiatives; integration of acquired businesses in a timely and cost-effective manner, retention of supplier and customer relationships and key employees, and the ability to achieve synergies and cost savings in the amounts and within the time frames currently anticipated; current economic and financial conditions, which can affect the housing and construction markets where our products are sold, manufactured and marketed; shortages in and pricing of raw materials and supplies; our ability to compete effectively; changes in variable interest rates on our borrowings; inflation; failure to expand our markets through acquisitions; failure to successfully develop and introduce new product offerings or enhancements to existing products; failure to manufacture products that meet required performance and safety standards; foreign exchange rate fluctuations; cyclicality of industries where we market our products, such as plumbing and heating wholesalers and home improvement retailers; environmental compliance costs; product liability risks and costs; changes in the status of current litigation; the war in Ukraine and other global crises; supply chain and logistical disruptions or labor shortages and workforce disruptions that could negatively affect our supply chain, manufacturing, distribution, or other business processes; and other risks and uncertainties discussed under the heading “Item 1A. Risk Factors” and in Note 16 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”), as well as risk factors disclosed in our subsequent filings with the SEC. We undertake no duty to update the information contained in this press release, except as required by law.

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in millions, except per share information)
(Unaudited)
		Second Quarter Ended								Six Months Ended
		June 30,				June 25,				June 30,				June 25,
		2024				2023				2024				2023
Net sales		$	597.3			$	532.8			$	1,168.2			$	1,004.5
Cost of goods sold			312.5				280.0				615.9				533.6
GROSS PROFIT			284.8				252.8				552.3				470.9
Selling, general and administrative expenses			173.1				150.8				342.6				284.5
Restructuring			0.2				1.6				1.5				1.3
OPERATING INCOME			111.5				100.4				208.2				185.1
Other (income) expense:
Interest income			(1.9	)			(1.3	)			(4.0	)			(1.7	)
Interest expense			4.1				1.7				8.3				3.2
Other income, net			(0.2	)			(0.6	)			(0.8	)			(0.5	)
Total other expense (income)			2.0				(0.2	)			3.5				1.0
INCOME BEFORE INCOME TAXES			109.5				100.6				204.7				184.1
Provision for income taxes			27.5				24.7				50.2				43.5
NET INCOME		$	82.0			$	75.9			$	154.5			$	140.6
BASIC EPS
NET INCOME PER SHARE		$	2.44			$	2.27			$	4.61			$	4.21
Weighted average number of shares			33.5				33.5				33.5				33.4
DILUTED EPS
NET INCOME PER SHARE		$	2.44			$	2.26			$	4.61			$	4.19
Weighted average number of shares			33.5				33.6				33.5				33.5
Dividends declared per share		$	0.43			$	0.36			$	0.79			$	0.66

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in millions, except share information)
(Unaudited)
		June 30,				December 31,
		2024				2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	279.4			$	350.1
Trade accounts receivable, less reserve allowances of $13.4 million at June 30, 2024 and $11.9 million at December 31, 2023			310.6				259.8
Inventories, net:
Raw materials			155.6				150.6
Work in process			21.1				20.2
Finished goods			249.7				228.5
Total Inventories			426.4				399.3
Prepaid expenses and other current assets			44.6				51.8
Total Current Assets			1,061.0				1,061.0
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost			683.6				677.2
Accumulated depreciation			(429.4	)			(429.0	)
Property, plant and equipment, net			254.2				248.2
OTHER ASSETS:
Goodwill			719.6				693.0
Intangible assets, net			245.7				216.1
Deferred income taxes			28.0				23.6
Other, net			74.8				67.5
TOTAL ASSETS		$	2,383.3			$	2,309.4
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable		$	163.2			$	131.8
Accrued expenses and other liabilities			198.0				190.3
Accrued compensation and benefits			63.4				83.7
Total Current Liabilities			424.6				405.8
LONG-TERM DEBT			258.7				298.3
DEFERRED INCOME TAXES			12.8				13.5
OTHER NONCURRENT LIABILITIES			69.0				78.5
STOCKHOLDERS' EQUITY:
Preferred Stock, $0.10 par value; 5,000,000 shares authorized; no shares issued or outstanding			—				—
Class A common stock, $0.10 par value; 120,000,000 shares authorized; 1 vote per share; issued and outstanding: 27,404,090 shares at June 30, 2024 and 27,352,701 shares at December 31, 2023			2.7				2.7
Class B common stock, $0.10 par value; 25,000,000 shares authorized; 10 votes per share; issued and outstanding: 5,953,290 shares at June 30, 2024 and 5,958,290 shares at December 31, 2023			0.6				0.6
Additional paid-in capital			686.6				674.3
Retained earnings			1,086.0				979.1
Accumulated other comprehensive loss			(157.7	)			(143.4	)
Total Stockholders' Equity			1,618.2				1,513.3
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	2,383.3			$	2,309.4

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in millions)
(Unaudited)
		Six Months Ended
		June 30,				June 25,
		2024				2023
OPERATING ACTIVITIES
Net income		$	154.5			$	140.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			16.9				14.3
Amortization of intangibles			9.8				6.0
(Gain) on sale of assets, loss on disposal and impairment of long-lived asset			(4.1	)			0.2
Stock-based compensation			10.0				9.5
Deferred income tax			(5.2	)			(10.1	)
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts receivable			(50.0	)			(29.2	)
Inventories			(16.8	)			(35.0	)
Prepaid expenses and other assets			(0.8	)			(8.9	)
Accounts payable, accrued expenses and other liabilities			16.6				13.1
Net cash provided by operating activities			130.9				100.5
INVESTING ACTIVITIES
Additions to property, plant and equipment			(16.9	)			(11.6	)
Proceeds from the sale of property, plant and equipment			5.7				—
Business acquisitions, net of cash acquired and other			(96.3	)			(11.7	)
Net cash used in investing activities			(107.5	)			(23.3	)
FINANCING ACTIVITIES
Proceeds from long-term borrowings			—				30.0
Payments of long-term debt			(40.0	)			(80.0	)
Payments for tax withholdings on vested stock awards			(12.8	)			(15.6	)
Payments for finance leases and other			(1.3	)			(1.4	)
Proceeds from share transactions under employee stock plans			—				0.1
Payments to repurchase common stock			(8.1	)			(7.7	)
Dividends			(26.7	)			(22.3	)
Net cash used in financing activities			(88.9	)			(96.9	)
Effect of exchange rate changes on cash and cash equivalents			(5.2	)			0.8
DECREASE IN CASH AND CASH EQUIVALENTS			(70.7	)			(18.9	)
Cash and cash equivalents at beginning of year			350.1				310.8
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	279.4			$	291.9

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in millions)
(Unaudited)
		Net Sales
		Second Quarter Ended						Six Months Ended
		June 30, 2024			June 25, 2023			June 30, 2024			June 25, 2023
Americas		$	448.1		$	366.9		$	866.9		$	690.1
Europe			114.1			135.6			237.4			263.9
APMEA			35.1			30.3			63.9			50.5
Total		$	597.3		$	532.8		$	1,168.2		$	1,004.5

		Operating Income
		Second Quarter Ended						Six Months Ended
		June 30, 2024			June 25, 2023			June 30, 2024			June 25, 2023
Americas		$	108.4		$	91.6		$	193.8		$	164.1
Europe			11.3			21.5			31.8			40.7
APMEA			6.5			2.5			11.5			6.5
Corporate			(14.7)			(15.2)			(28.9)			(26.2)
Total		$	111.5		$	100.4		$	208.2		$	185.1

		Intersegment Sales
		Second Quarter Ended						Six Months Ended
		June 30, 2024			June 25, 2023			June 30, 2024			June 25, 2023
Americas		$	2.2		$	2.0		$	4.8		$	4.0
Europe			6.4			8.3			12.1			13.9
APMEA			25.1			28.5			46.4			50.6
Total		$	33.7		$	38.8		$	63.3		$	68.5

Key Performance Indicators and Non-GAAP Measures

In this press release, we refer to non-GAAP financial measures (including adjusted operating income, adjusted operating margins, adjusted net income, adjusted earnings per share, organic sales, free cash flow, cash conversion rate of free cash flow to net income and net debt to capitalization ratio) and provide a reconciliation of those non-GAAP financial measures to the corresponding financial measures contained in our consolidated financial statements prepared in accordance with GAAP. We believe that these financial measures enhance the overall understanding of our historical financial performance and give insight into our future prospects. Adjusted operating income, adjusted operating margins, adjusted net income and adjusted earnings per share eliminate certain expenses incurred and benefits recognized in the periods presented that relate primarily to our global restructuring programs, acquisition-related costs, gain on sale of asset and the related income tax impacts on these items. Management then utilizes these adjusted financial measures to assess the run rate of the Company’s operations against those of comparable periods. Organic sales growth is a non-GAAP measure of sales growth excluding the impacts of foreign exchange, acquisitions and divestitures from period-over-period comparisons. Management believes reporting organic sales growth provides useful information to investors, potential investors and others, and allows for a more complete understanding of underlying sales trends by providing sales growth on a consistent basis. Free cash flow, cash conversion rate of free cash flow to net income, and the net debt to capitalization ratio, which are adjusted to exclude certain cash inflows and outlays, and include only certain balance sheet accounts from the comparable GAAP measures, are an indication of our performance in cash flow generation and also provide an indication of the Company's relative balance sheet leverage to other industrial manufacturing companies. These non-GAAP financial measures are among the primary indicators management uses as a basis for evaluating our cash flow generation and our capitalization structure. In addition, free cash flow is used as a criterion to measure and pay certain compensation-based incentives. For these reasons, management believes these non-GAAP financial measures can be useful to investors, potential investors and others. The Company’s non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP.

TABLE 1
RECONCILIATION OF GAAP "AS REPORTED" TO "AS ADJUSTED" NON-GAAP
EXCLUDING THE EFFECT OF ADJUSTMENTS FOR SPECIAL ITEMS
(Amounts in millions, except per share information)
(Unaudited)
CONSOLIDATED RESULTS
		Second Quarter Ended								Six Months Ended
		June 30,				June 25,				June 30,				June 25,
		2024				2023				2024				2023
Net sales		$	597.3			$	532.8			$	1,168.2			$	1,004.5
Operating income - as reported		$	111.5			$	100.4			$	208.2			$	185.1
Operating margin %			18.7	%			18.8	%			17.8	%			18.4	%
Adjustments for special items:
Restructuring		$	0.2			$	1.6			$	1.4			$	1.3
Acquisition-related costs			3.7				1.9				10.7				1.9
Gain on sale of assets			(3.3)				—				(4.4)				—
Total adjustments for special items		$	0.6			$	3.5			$	7.7			$	3.2
Operating income - as adjusted		$	112.1			$	103.9			$	215.9			$	188.3
Adjusted operating margin %			18.8	%			19.5	%			18.5	%			18.7	%
Net income - as reported		$	82.0			$	75.9			$	154.5			$	140.6
Adjustments for special items - tax effected:
Restructuring		$	0.1			$	1.2			$	1.1			$	1.0
Acquisition-related costs			2.8				1.3				8.0				1.3
Gain on sale of assets			(2.5)				—				(3.3)				—
Total adjustments for special items - tax effected		$	0.4			$	2.5			$	5.8			$	2.3
Net income - as adjusted		$	82.4			$	78.4			$	160.3			$	142.9
Diluted earnings per share - as reported		$	2.44			$	2.26			$	4.61			$	4.19
Restructuring			—				0.04				0.03				0.03
Acquisition-related costs			0.08				0.04				0.24				0.04
Gain on sale of assets			(0.06)				—				(0.10)				—
Diluted earnings per share - as adjusted		$	2.46			$	2.34			$	4.78			$	4.26

TABLE 2
SEGMENT INFORMATION - RECONCILIATION OF GAAP "AS REPORTED" TO "AS ADJUSTED" NON-GAAP
EXCLUDING THE EFFECT OF ADJUSTMENTS FOR SPECIAL ITEMS
(Amounts in millions)
(Unaudited)
		Second Quarter Ended											Second Quarter Ended
		June 30, 2024											June 25, 2023
		Americas			Europe		APMEA		Corporate		Total		Americas			Europe		APMEA		Corporate		Total
Net sales		$	448.1		114.1		35.1		—		597.3		$	366.9		135.6		30.3		—		532.8
Operating income (loss) - as reported		$	108.4		11.3		6.5		(14.7)		111.5		$	91.6		21.5		2.5		(15.2)		100.4
Operating margin %			24.2	%	10.0	%	18.5	%			18.7	%		24.9	%	15.8	%	8.4	%			18.8	%
Adjustments for special items		$	0.4		0.1		0.1		—		0.6		$	—		0.5		3.0		—		3.5
Operating income (loss) - as adjusted		$	108.8		11.4		6.6		(14.7)		112.1		$	91.6		22.0		5.5		(15.2)		103.9
Adjusted operating margin %			24.3	%	10.0	%	18.9	%			18.8	%		24.9	%	16.2	%	18.2	%			19.5	%

		Six Months Ended											Six Months Ended
		June 30, 2024											June 25, 2023
		Americas			Europe		APMEA		Corporate		Total		Americas			Europe		APMEA		Corporate		Total
Net sales		$	866.9		237.4		63.9		—		1,168.2		$	690.1		263.9		50.5		—		1,004.5
Operating income (loss) - as reported		$	193.8		31.8		11.5		(28.9)		208.2		$	164.1		40.7		6.5		(26.2)		185.1
Operating margin %			22.4	%	13.4	%	17.9	%			17.8	%		23.8	%	15.4	%	12.9	%			18.4	%
Adjustments for special items		$	7.7		(1.0)		0.4		0.6		7.7		$	0.1		0.1		3.0		—		3.2
Operating income (loss) - as adjusted		$	201.5		30.8		11.9		(28.3)		215.9		$	164.2		40.8		9.5		(26.2)		188.3
Adjusted operating margin %			23.2	%	13.0	%	18.6	%			18.5	%		23.8	%	15.5	%	18.8	%			18.7	%

TABLE 3
SEGMENT INFORMATION - RECONCILIATION OF REPORTED NET SALES TO NON-GAAP ORGANIC SALES
(Amounts in millions)
(Unaudited)
		Second Quarter Ended
		Americas			Europe			APMEA			Total
Reported net sales June 30, 2024		$	448.1		$	114.1		$	35.1		$	597.3
Reported net sales June 25, 2023			366.9			135.6			30.3			532.8
Dollar change		$	81.2		$	(21.5)		$	4.8		$	64.5
Net sales % increase (decrease)			22.1	%		(15.9)	%		15.8	%		12.1	%
Increase due to foreign exchange			0.1	%		0.9	%		2.6	%		0.5	%
Increase due to acquisition			(17.6)	%		—	%		—	%		(12.2)	%
Organic sales increase (decrease)			4.6	%		(15.0)	%		18.4	%		0.4	%

		Six Months Ended
		Americas			Europe			APMEA			Total
Reported net sales June 30, 2024		$	866.9		$	237.4		$	63.9		$	1,168.2
Reported net sales June 25, 2023			690.1			263.9			50.5			1,004.5
Dollar change		$	176.8		$	(26.5)		$	13.4		$	163.7
Net sales % increase (decrease)			25.6	%		(10.0)	%		26.5	%		16.3	%
Increase (decrease) due to foreign exchange			0.1	%		(0.2)	%		3.2	%		0.2	%
Increase due to acquisition			(18.1)	%		—	%		(16.0)	%		(13.2)	%
Organic sales increase (decrease)			7.6	%		(10.2)	%		13.7	%		3.3	%

TABLE 4
RECONCILIATION OF NET CASH PROVIDED BY OPERATIONS TO FREE CASH FLOW
(Amounts in millions)
(Unaudited)
		Six Months Ended
		June 30,			June 25,
		2024			2023
Net cash provided by operations - as reported		$	130.9		$	100.5
Less: additions to property, plant, and equipment			(16.9)			(11.6)
Plus: proceeds from the sale of property, plant, and equipment			5.7			—
Free cash flow		$	119.7		$	88.9
Net income - as reported		$	154.5		$	140.6
Cash conversion rate of free cash flow to net income			77.5	%		63.2	%

TABLE 5
RECONCILIATION OF LONG-TERM DEBT (INCLUDING CURRENT PORTION) TO NET DEBT AND NET DEBT TO CAPITALIZATION RATIO
(Amounts in millions)
(Unaudited)
		June 30,			December 31,
		2024			2023
Current portion of long-term debt		$	—		$	—
Plus: Long-term debt, net of current portion			258.7			298.3
Less: Cash and cash equivalents			(279.4)			(350.1)
Net debt		$	(20.7)		$	(51.8)
Net debt		$	(20.7)		$	(51.8)
Plus: Total stockholders' equity			1,618.2			1,513.3
Capitalization		$	1,597.5		$	1,461.5
Net debt to capitalization ratio			(1.3)	%		(3.5)	%

TABLE 6
2024 FULL YEAR OUTLOOK – RECONCILIATION OF REPORTED NET SALES GROWTH TO ORGANIC SALES GROWTH AND OPERATING MARGIN TO ADJUSTED OPERATING MARGIN
(Unaudited)
		Total Watts
		Full Year
		2024 Outlook
		Approximately
Net Sales
Reported net sales growth		7% to 12%
Forecasted impact of acquisition / FX		(11)%
Organic sales growth		(4)% to 1%
Operating Margin
Operating margin		16.6% to 17.2%
Forecasted restructuring / other costs		0.5%
Adjusted operating margin		17.1% to 17.7%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240807897327/en/

Diane McClintock

SVP FP&A & Investor Relations

email: investorrelations@wattswater.com

Source: Watts Water Technologies, Inc

FAQ

What were Watts Water Technologies' (WTS) Q2 2024 earnings results?

Watts Water Technologies reported Q2 2024 sales of $597 million, up 12% year-over-year. Reported EPS increased 8% to $2.44, while adjusted EPS rose 5% to $2.46.

How did Watts Water Technologies' (WTS) different regions perform in Q2 2024?

In Q2 2024, Americas sales grew 22% reported and 5% organically. Europe sales decreased 16% reported and 15% organically. APMEA sales increased 16% reported and 18% organically.

What is Watts Water Technologies' (WTS) outlook for full-year 2024?

Watts Water Technologies maintains its 2024 outlook, expecting reported sales growth of 7% to 12%, organic sales between -4% to +1%, and adjusted operating margin between 17.1% and 17.7%.

How much did acquisitions contribute to Watts Water Technologies' (WTS) Q2 2024 sales?

Acquisitions contributed $65 million in sales for Watts Water Technologies in Q2 2024, primarily reported within the Americas segment.