Watts Water Technologies, Inc. WTS reported fourth-quarter 2024 adjusted earnings per share (EPS) of $2.05 compared with $1.97 in the prior-year quarter. The bottom line topped the Zacks Consensus Estimate by 7.3%.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

The company’s quarterly net sales declined 1.3% year over year to $540.4 million. The top line surpassed the Zacks Consensus Estimate by 0.6%. Organic sales were down 5% year over year.

Watts Water Technologies, Inc. Price, Consensus and EPS Surprise

Watts Water Technologies, Inc. price-consensus-eps-surprise-chart | Watts Water Technologies, Inc. Quote

Acquisitions in the Americas added $23 million in sales, contributing 4% to overall growth. Higher revenue growth in the Asia-Pacific, the Middle East and Africa (APMEA) boosted the company's performance. However, the decline in the Americas and Europe, mainly due to fewer shipping days (which reduced sales by about 5%), outweighed that growth. Currency exchange rates had little effect on sales.

Segment Results

Americas: Net sales rose 3% year over year to $398 million, while organic sales dipped 3%. The Bradley and Josam acquisitions contributed $23 million to total sales, marking 6% growth. Organic sales declined because there were fewer shipping days, reducing sales by about mid-single digits and outweighing the benefits of price increases. Adjusted operating margin increased 160 basis points (bps) year over year to 21.8%, driven by cost savings and price increases, which offset the impact of inflation, lower sales volume and the Bradley acquisition effect.

Europe: Net sales plunged 15% year over year to $109 million on both a reported and organic basis. Foreign exchange had minimal impact on sales. Sales decreased due to lower volumes, mainly resulting from fewer shipping days and a decline in the OEM channel. The OEM decline was due to reduced government energy incentives and continued destocking in the heat pump and wholesale channels. Adjusted operating margin was down 480 bps year over year to 10.2% due to the negative impacts of lower sales volume and inflation mitigating productivity gains.

APMEA: Net sales increased 4% to $34 million and 3% organically. Favorable forex movements further enhanced reported sales by 1%. Key growth drivers included strong demand across China and the Middle East, offset by lower sales in Australia and New Zealand due to fewer shipping days. Adjusted operating margin expanded 490 bps to 17.5%, driven by higher trade and affiliate sales volume, along with productivity gains, which counteracted inflationary pressures and accretive investments.

WTS’ Other Details

Gross profit decreased 1.2% year over year to $252.7 million. Selling, general and administrative expenses declined 5.9% to $162.9 million. Operating income was $89 million, up 12.9% year over year.

Operating margin expanded 210 bps to 16.5%. The adjusted operating margin was 16.8%, up 100 bps year over year.

Cash Flow & Liquidity

For the full year ended Dec. 31, 2024, Watts Water generated $361.1 million of cash from operating activities compared with $310.8 million in the prior-year period.

For the full year ended Dec. 31, 2024, free cash flow was $331.7 million compared with $281.1 million a year ago. The increase in operating and free cash flow was driven by higher net income, better working capital management and cash flow from acquisitions.

The company repurchased around 20,000 shares for $4 million in the fourth quarter. In the full year 2024, the company bought back about 85,000 shares for a total of $17 million. As of now, around $145 million is still available under the stock repurchase program approved in 2023, which has no expiration date.

As of Dec. 31, 2024, the company had $386.9 million in cash and cash equivalents with $197 million of long-term debt compared with the respective figures of $303.9 million and $211.8 million as of Sept. 29, 2024.

WTS’ Guidance

For 2025, the company anticipates the adjusted operating margin to be between 17.7% and 18.3%, implying 0-60 bps improvement year over year. Reported sales and organic sales are expected to range from a decline of 3% to an increase of 2%. The projected full-year operating margin is between 16.7% and 17.3%, implying a fall of up to 60 bps to no change.

For the first quarter of 2025, the company projects the adjusted operating margin to be between 16.9% and 17.5%, implying a decline of 70 bps to 130 bps year over year. Reported sales and organic sales are expected to record a decline of 7-3%.

WTS’ Zacks Rank

Watts Water currently has a Zacks Rank #3 (Hold). Shares of the company have soared 17.1% in the past six months against no change for the Zacks Instruments - Control industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Image Source: Zacks Investment Research

Recent Performance of Other Companies in Broader Tech Space

Plexus Corp PLXS reported first-quarter fiscal 2025 adjusted EPS of $1.73, up 40.7% year over year. The figure outpaced the Zacks Consensus Estimate of $1.59 per share.

In the past year, shares of PLXS have gained 41.7%.

Seagate Technology Holdings plc STX reported second-quarter fiscal 2025 non-GAAP earnings of $2.03 per share, beating the Zacks Consensus Estimate by 7.98%. The company reported non-GAAP earnings of 12 cents per share in the year-ago quarter.

In the past year, STX shares have gained 10%.

Simulations Plus, Inc. SLP reported first-quarter fiscal 2025 adjusted earnings of 17 cents per share, which declined 5.6% year over year. The figure, however, missed the Zacks Consensus Estimate of 18 cents per share.

Shares of SLP have declined 13% in the past year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Seagate Technology Holdings PLC (STX) : Free Stock Analysis Report

Plexus Corp. (PLXS) : Free Stock Analysis Report

Simulations Plus, Inc. (SLP) : Free Stock Analysis Report

Watts Water Technologies, Inc. (WTS) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research