Watts Water Technologies, Inc. Reports Record 2024 Financial Results and 2025 Outlook
Watts Water Technologies, Inc., a global leader in manufacturing and providing plumbing, heating, and water quality solutions, has announced its financial results for the fourth quarter and full year of 2024. The company reported record-breaking performance, including all-time high operating income, adjusted earnings per share, and full-year sales. The results highlight Watts’ strong market presence, robust strategic execution, and continued investment in growth opportunities.
CEO Commentary Robert J. Pagano Jr., Chief Executive Officer, expressed his satisfaction with the company’s achievements, stating, “We closed out 2024 with record results for both the quarter and the full year, marking a significant milestone in Watts’ history. Our team’s dedication and commitment to customer service, innovation, and long-term strategic goals have been the key drivers of our success.”
Pagano also highlighted the successful acquisition of I-CON Systems on January 2, 2025. “This acquisition will allow us to expand our digital offerings and enhance our footprint in the correctional facility niche within the institutional market. Integration is progressing well, and we anticipate strong synergies in the coming quarters.”
Looking ahead to 2025, Watts remains vigilant regarding ongoing geopolitical uncertainties and fluctuating global market conditions. However, Pagano emphasized the company’s proactive approach, stating, “We are adjusting our cost structure accordingly and are confident in our team’s ability to navigate the current economic landscape. Our financial strength, coupled with strong cash flow, allows us to invest strategically in growth initiatives and return value to shareholders.”
Financial Performance: Fourth Quarter and Full Year 2024 Watts Water Technologies delivered robust financial results, showcasing resilience and adaptability in the face of global challenges. Below is a summary of key financial highlights:
Fourth Quarter and Full Year Earnings Summary
| Metric | Q4 2024 | Q4 2023 | % Change | Full Year 2024 | Full Year 2023 | % Change |
|---|---|---|---|---|---|---|
| Net Sales ($M) | 540.4 | 547.5 | (1%) | 2,252.2 | 2,056.3 | 10% |
| Organic Sales Growth (%) | -5% | – | – | -1% | – | – |
| Operating Income ($M) | 89.0 | 78.8 | 13% | 390.4 | 350.9 | 11% |
| Operating Margin (%) | 16.5% | 14.4% | +210 bps | 17.3% | 17.1% | +20 bps |
| Adjusted Operating Income ($M) | 90.9 | 86.4 | 5% | 399.6 | 365.2 | 9% |
| Adjusted Operating Margin (%) | 16.8% | 15.8% | +100 bps | 17.7% | 17.8% | -10 bps |
| Diluted EPS ($) | 2.02 | 1.67 | 21% | 8.69 | 7.82 | 11% |
| Adjusted Diluted EPS ($) | 2.05 | 1.97 | 4% | 8.86 | 8.27 | 7% |
Fourth Quarter Financial Highlights
- Sales: Total sales declined by 1% to $540 million due to fewer shipping days, but acquisitions contributed positively.
- Operating Margin: Improved by 210 basis points (bps) due to better pricing, productivity gains, and reduced restructuring and acquisition-related charges.
- Adjusted Operating Margin: Increased by 100 bps, reflecting strong cost management and operational efficiencies.
Regional Performance
- Americas: Sales reached $398 million, up 3% on a reported basis but down 3% organically. The Bradley and Josam acquisitions contributed 6% to reported growth. Price realization and productivity improvements helped offset volume losses from fewer shipping days.
- Europe: Sales declined by 15% to $109 million due to fewer shipping days and weakened OEM demand, impacted by reduced government energy incentives and ongoing heat pump inventory corrections. Segment margin fell by 480 bps due to volume deleverage and inflation.
- Asia Pacific, Middle East, and Africa (APMEA): Sales grew 4% to $34 million, driven by increased demand in China and the Middle East. Australia and New Zealand saw declines due to fewer shipping days. Segment margin improved by 490 bps due to volume growth and productivity enhancements.
Cash Flow and Capital Allocation
- Operating Cash Flow: Generated $361 million in 2024, up from $311 million in 2023.
- Free Cash Flow: Increased to $332 million, driven by improved working capital and contributions from acquisitions.
- Stock Repurchase Program: Repurchased 85,000 shares at a cost of $17 million, with $145 million remaining available under the authorization.
Strategic Initiatives and Market Positioning Watts Water Technologies remains committed to growth and innovation. Key strategic areas include:
- Digital Expansion: The acquisition of I-CON Systems strengthens Watts’ smart water solutions and digital offerings.
- Sustainability and Efficiency: Ongoing investments in energy-efficient and sustainable water management solutions align with global trends.
- Operational Excellence: Enhancing productivity through automation, lean manufacturing, and supply chain optimization.
Full Year 2025 Outlook Watts Water Technologies provided a cautious yet optimistic outlook for 2025:
- Sales Growth: Expected to range from a decline of 3% to an increase of 2%.
- Operating Margin: Forecasted between 16.7% and 17.3%.
- Adjusted Operating Margin: Anticipated between 17.7% and 18.3%.
