Watts Water Technologies announced its financial results for the fourth quarter and full year 2025.

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 fourth quarter and full year 2025.

Chief Executive Officer Robert J. Pagano Jr. said, "I would like to recognize the Watts team for their hard work and dedication, which resulted in record fourth quarter and full year 2025 performance, including record sales, operating income and earnings per share. In addition, we continued to meet our customers' needs for innovative solutions that address their greatest water safety, water conservation and energy efficiency challenges. We also successfully executed on our goals to develop differentiated products and further enhance productivity through the One Watts Performance System."

"We are proud of the work done to complete the acquisitions of Haws Corporation, Superior Boiler and Saudi Cast during the quarter. These strategic and complementary acquisitions expand our product portfolio, channel access and geographic presence. They also increase our exposure to specified, code-driven products in non-residential, institutional and industrial end markets. The integration of all three acquisitions is underway and progressing well."

Mr. Pagano concluded, "We look ahead to the coming year with confidence in our strategic growth initiatives and execution capabilities while continuing to monitor ongoing geopolitical uncertainty and mixed global markets. Our business is resilient and diversified, underpinned by a strong balance sheet and robust cash flow that support disciplined capital deployment. We will continue to invest for the future, return capital to our shareholders, and execute our strategy to drive profitable, long-term growth."

Fourth Quarter Financial Highlights

Fourth quarter 2025 performance relative to fourth quarter 2024

Sales of $625 million increased 16% on a reported basis and 8% on an organic basis. Organic sales increased primarily due to favorable price and an additional shipping day in the quarter. Incremental acquisition sales within the Americas and APMEA were $29 million and contributed 6% to reported growth. Favorable foreign exchange movements increased sales by $10 million, or 2%.

Operating margin increased 170 basis points on a reported basis and 220 basis points on an adjusted basis. Operating and adjusted operating margin increased primarily due to favorable price and productivity which more than offset inflation, investments and tariffs. Operating margin was unfavorably impacted by an increase in acquisition-related charges and restructuring charges.

Regional Performance

Americas

Sales of $467 million increased 17% on a reported basis and 10% on an organic basis, primarily due to favorable price and an additional shipping day. Acquisitions contributed $27 million of incremental sales, or 7%, to reported growth.

Segment margin increased 150 basis points as benefits from price realization and productivity more than offset inflation, tariffs, and acquisition dilution.

Europe

Sales of $120 million increased 10% on a reported basis and 1% on an organic basis. Sales growth was due to favorable foreign exchange movements, which increased reported sales by 9%. Organic sales increased as a result of favorable price and an additional shipping day partially offset by lower volumes due to continued market weakness.

Segment margin increased 490 basis points as price, productivity, and restructuring actions more than offset inflation.

APMEA

Sales of $39 million increased 15% on a reported basis and 9% on an organic basis, with growth across all major countries in the segment. The acquisition of Saudi Cast contributed $2 million of incremental sales, or 6%, to reported growth.

Segment margin decreased 20 basis points as inflation and affiliate volume deleverage more than offset benefits from productivity and acquisition accretion.

Cash Flow and Capital Allocation

For full year 2025, operating cash flow was $402 million and net capital expenditures were $46 million, resulting in free cash flow of $356 million. For full year 2024, operating cash flow was $361 million and net capital expenditures were $29 million, resulting in free cash flow of $332 million. Operating and free cash flow increased due to higher net income and lower tax payments as a result of the One Big Beautiful Bill Act, partially offset by higher inventory driven by strategic investment and incremental tariffs. Free cash flow was also unfavorably impacted by an increase in net capital expenditures, partly due to proceeds from the sale of properties in the prior year.

For the fourth quarter of 2025, the Company repurchased approximately 15,000 shares of Class A common stock at a cost of $4.2 million. For full year 2025, the Company repurchased approximately 67,000 shares at a cost of $16.0 million. Approximately $129 million remains available under the stock repurchase program authorized in 2023. There is no expiration date for this program.

Full Year 2026 Outlook

The Company anticipates full year 2026 sales growth to range from up 8% to up 12% on a reported basis and up 2% to up 6% on an organic basis. Full year operating margin is expected to be between 18.8% and 19.4%, or up 40 basis points to up 100 basis points, and adjusted operating margin is expected to be between 19.1% and 19.7%, or down 50 basis points to up 10 basis points.

 

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