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Watts Water Technologies, Inc (WTS - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of $2.46, which increased 5% on a year-over-year basis and beat the Zacks Consensus Estimate by 5.1%.
The company’s quarterly net sales rose 12% year over year to $597.3 million. The top line surpassed the Zacks Consensus Estimate by 1.8%. Organic sales remained flat year over year.
The company’s performance benefited from higher revenue growth in the Asia-Pacific, the Middle East and Africa (APMEA) and the Americas amid sluggish market trends in the Europe region along with forex woes.
Watts Water Technologies, Inc. Price, Consensus and EPS Surprise
Americas: Net sales rose 22% year over year to $448 million. Organic sales increased 5% driven by price realization and momentum in core valve products and heating and hot water products. Adjusted operating margin decreased 60 basis points (bps) year over year to 24.3% due to inflation, accretive investments and the dilutive impact of the Bradley acquisition, partly offset by increased price realization.
Europe: Net sales plunged 16% year over year to $114 million, which includes an unfavorable foreign exchange impact of 1%. Organic sales were down 15% due to lower volumes of fluid solutions products and reduced government energy incentives in key markets such as Germany and Italy. Adjusted operating margin was down 620 bps year over year to 10%, owing to inflation and volume deleverage, despite some benefits from price adjustments and improved product mix.
APMEA: Net sales increased 16% to $35 million. Organic sales moved up 18% on the back of successful projects across major countries in the segment. The unfavorable foreign exchange impact was 2%. Adjusted operating margin increased 70 bps to 18.9%, driven by volume leverage and productivity gains, which outweighed inflation, the dilutive impact of the Enware acquisition and accretive investments.
Other Details
Gross profit increased 12.6% year over year to $284.8 million. Selling, general and administrative expenses increased 14.8% to $173.1 million. Operating income was $111.5 million, up 11% year over year.
Operating margin decreased 10 bps to 18.7%. The adjusted operating margin was 18.8%, down 70 bps year over year.
Cash Flow & Liquidity
For the six months ended Jun 2024, Watts Water generated $131 million of cash from operating activities compared with $101 million in the prior-year period.
As of Jun 30, 2024, free cash flow was $120 million compared with $89 million in the year-ago period. This increase in free cash flow was driven by higher net income and lower working capital investment. During the second quarter, Watts Water repurchased nearly 20,000 shares of worth $4.1 million. In the first half of 2024, the company repurchased a total of 40,000 shares worth $8.1 million.
As of Jun 30, 2024, the company had $279.4 million in cash and cash equivalents with $258.7 million of long-term debt compared with the respective figures of $237.1 million and $283.5 million as of Mar 31, 2024.
2024 Guidance Reiterated
The company anticipates reported sales to increase in the band of 7% to 12% for the fiscal year. Organic sales growth is expected to range from a decrease of 4% to an increase of 1%.
The full-year adjusted operating margin is projected to be between 17.1% and 17.7%, implying a decline of 70 bps to an improvement of 10 bps year over year.
BlackBerry’s (BB - Free Report) first-quarter fiscal 2025 adjusted loss per share of 3 cents was narrower than the company’s estimate of a loss of 4-6 cents. In the year-ago quarter, it reported non-GAAP earnings of 6 cents per share. The Zacks Consensus Estimate was pegged at a loss of 4 cents per share.
Shares of BB have lost 54.5% in the past year.
Badger Meter, Inc (BMI - Free Report) reported earnings per share (EPS) of $1.12 for second-quarter 2024, beating the Zacks Consensus Estimate by 14.3%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 76 cents.
Shares of BMI have gained 15.4% in the past year.
SAP SE (SAP - Free Report) reported second-quarter 2024 non-IFRS earnings of €1.10 ($1.18) per share, climbing 59% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.01.
In the past year, shares of SAP have gained 49.7%.
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Watts Water's (WTS) Q2 Earnings & Revenues Beat, Rise Y/Y
Watts Water Technologies, Inc (WTS - Free Report) reported second-quarter 2024 adjusted earnings per share (EPS) of $2.46, which increased 5% on a year-over-year basis and beat the Zacks Consensus Estimate by 5.1%.
The company’s quarterly net sales rose 12% year over year to $597.3 million. The top line surpassed the Zacks Consensus Estimate by 1.8%. Organic sales remained flat year over year.
The company’s performance benefited from higher revenue growth in the Asia-Pacific, the Middle East and Africa (APMEA) and the Americas amid sluggish market trends in the Europe region along with forex woes.
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 rose 22% year over year to $448 million. Organic sales increased 5% driven by price realization and momentum in core valve products and heating and hot water products. Adjusted operating margin decreased 60 basis points (bps) year over year to 24.3% due to inflation, accretive investments and the dilutive impact of the Bradley acquisition, partly offset by increased price realization.
Europe: Net sales plunged 16% year over year to $114 million, which includes an unfavorable foreign exchange impact of 1%. Organic sales were down 15% due to lower volumes of fluid solutions products and reduced government energy incentives in key markets such as Germany and Italy. Adjusted operating margin was down 620 bps year over year to 10%, owing to inflation and volume deleverage, despite some benefits from price adjustments and improved product mix.
APMEA: Net sales increased 16% to $35 million. Organic sales moved up 18% on the back of successful projects across major countries in the segment. The unfavorable foreign exchange impact was 2%. Adjusted operating margin increased 70 bps to 18.9%, driven by volume leverage and productivity gains, which outweighed inflation, the dilutive impact of the Enware acquisition and accretive investments.
Other Details
Gross profit increased 12.6% year over year to $284.8 million. Selling, general and administrative expenses increased 14.8% to $173.1 million. Operating income was $111.5 million, up 11% year over year.
Operating margin decreased 10 bps to 18.7%. The adjusted operating margin was 18.8%, down 70 bps year over year.
Cash Flow & Liquidity
For the six months ended Jun 2024, Watts Water generated $131 million of cash from operating activities compared with $101 million in the prior-year period.
As of Jun 30, 2024, free cash flow was $120 million compared with $89 million in the year-ago period. This increase in free cash flow was driven by higher net income and lower working capital investment.
During the second quarter, Watts Water repurchased nearly 20,000 shares of worth $4.1 million. In the first half of 2024, the company repurchased a total of 40,000 shares worth $8.1 million.
As of Jun 30, 2024, the company had $279.4 million in cash and cash equivalents with $258.7 million of long-term debt compared with the respective figures of $237.1 million and $283.5 million as of Mar 31, 2024.
2024 Guidance Reiterated
The company anticipates reported sales to increase in the band of 7% to 12% for the fiscal year. Organic sales growth is expected to range from a decrease of 4% to an increase of 1%.
The full-year adjusted operating margin is projected to be between 17.1% and 17.7%, implying a decline of 70 bps to an improvement of 10 bps year over year.
Zacks Rank
Watts Water currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
BlackBerry’s (BB - Free Report) first-quarter fiscal 2025 adjusted loss per share of 3 cents was narrower than the company’s estimate of a loss of 4-6 cents. In the year-ago quarter, it reported non-GAAP earnings of 6 cents per share. The Zacks Consensus Estimate was pegged at a loss of 4 cents per share.
Shares of BB have lost 54.5% in the past year.
Badger Meter, Inc (BMI - Free Report) reported earnings per share (EPS) of $1.12 for second-quarter 2024, beating the Zacks Consensus Estimate by 14.3%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 76 cents.
Shares of BMI have gained 15.4% in the past year.
SAP SE (SAP - Free Report) reported second-quarter 2024 non-IFRS earnings of €1.10 ($1.18) per share, climbing 59% from the year-ago quarter’s levels. The Zacks Consensus Estimate was pegged at $1.01.
In the past year, shares of SAP have gained 49.7%.