Record Q1 2026 for Watts Water (NYSE: WTS) with 21% sales growth

Rhea-AI Filing Summary

Watts Water Technologies reported record first quarter 2026 results with strong broad-based growth and higher profitability. Net sales reached $677.3 million, up 21% year over year and 12% on an organic basis, driven by favorable pricing and higher volumes, especially in data center-related demand. Operating income rose to $133.0 million, lifting operating margin to 19.6%, while adjusted operating margin improved to 20.1%. Diluted EPS increased to $2.97, and adjusted diluted EPS to $3.04, up 28% from a year earlier. The Americas led with 23% reported and 16% organic sales growth, while Europe and APMEA also grew. Free cash flow declined to $6.6 million as working capital and capital investments rose, though management expects improvement over 2026. The company announced a 21% increase in its quarterly dividend to $0.63 per share and maintained its full-year 2026 outlook for reported sales growth of 8–12% and operating margin of 18.8–19.4%.

Positive

• Record revenue and earnings growth: Q1 2026 net sales rose 21% to $677.3 million with 12% organic growth, while adjusted diluted EPS increased 28% to $3.04, reflecting strong pricing, volume leverage and margin expansion.
• Dividend increase and solid balance sheet: The quarterly dividend was raised 21% to $0.63 per share, and net debt was negative $176.9 million with a net debt to capitalization ratio of -9.2%, supporting continued capital returns.

Negative

• Weaker free cash flow and cash conversion: Free cash flow declined to $6.6 million from $45.6 million a year earlier, and cash conversion of free cash flow to net income fell to 6.6% due to higher working capital and capital spending.
• Mixed regional margin performance: Europe’s segment margin decreased by 20 basis points year over year as inflation and volume deleverage outweighed pricing, productivity and restructuring benefits.

Insights

Equity research analyst

Record Q1 growth, margin expansion and a 21% dividend hike signal strong fundamentals despite softer cash conversion.

Watts Water Technologies delivered Q1 2026 net sales of $677.3M, up 21%, with 12% organic growth. Operating margin expanded to 19.6%, and adjusted operating margin to 20.1%, reflecting price realization, productivity and volume leverage across regions, particularly in data center exposure.

Diluted EPS rose to $2.97, while adjusted diluted EPS increased 28% to $3.04. The 21% increase in the quarterly dividend to $0.63 and remaining $125M under the 2023 repurchase program underscore capacity for capital returns alongside growth investments.

Free cash flow fell to $6.6M from $45.6M as inventories, receivables and customer rebates absorbed cash, and capex rose. Management expects sequential free cash flow improvement over 2026 and maintained full-year guidance for 8–12% reported sales growth and 18.8–19.4% operating margin, indicating confidence in the demand outlook and pricing strategy.

8-K Event Classification

2 items: 2.02, 9.01

2 items

Item 2.02 Results of Operations and Financial Condition Financial

Disclosure of earnings results, typically an earnings press release or preliminary financials.

Item 9.01 Financial Statements and Exhibits Exhibits

Financial statements, pro forma financial information, and exhibit attachments filed with this report.

Key Figures

Net sales: $677.3M Organic sales growth: 12% Operating margin: 19.6% +5 more

8 metrics

Net sales $677.3M First quarter 2026, up 21% year over year

Organic sales growth 12% First quarter 2026 vs. first quarter 2025

Operating margin 19.6% First quarter 2026, up 390 basis points year over year

Adjusted operating margin 20.1% First quarter 2026, up 110 basis points year over year

Diluted EPS $2.97 First quarter 2026, up 34% from $2.21 in 2025

Adjusted diluted EPS $3.04 First quarter 2026, up 28% from $2.37 in 2025

Free cash flow $6.6M First quarter 2026, down from $45.6M in 2025

New quarterly dividend $0.63 per share From June 2026, up 21% from $0.52

Key Terms

organic sales growth, adjusted operating margin, free cash flow, segment margin, +2 more

6 terms

organic sales growth financial

"Sales of $677 million increased 21% on a reported basis and 12% on an organic basis."

Organic sales growth measures how much a company’s revenue rises from its regular business activity — like selling more products, charging higher prices, or selling to more customers — without counting money from buying other businesses or one-time currency effects. Investors watch it because it shows whether demand and the company’s core operations are genuinely getting stronger, similar to judging a garden by how much the plants you planted yourself are growing rather than by adding bought potted plants.

adjusted operating margin financial

"Adjusted operating margin % (1) | 20.1 % | 19.0 %"

Adjusted operating margin shows how much profit a company makes from its core business activities, after removing unusual or one-time costs and income. It helps investors see the company's true profitability by providing a clearer picture, similar to removing unexpected expenses to understand the regular performance. This metric is useful for comparing companies or tracking performance over time, as it highlights consistent earning power.

free cash flow financial

"resulting in free cash flow of $7 million."

Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.

segment margin financial

"Segment margin increased 80 basis points as benefits from price realization, productivity, and volume leverage more than offset inflation"

Segment margin measures how much profit a particular business unit or division keeps from its own sales after the costs directly tied to that unit are taken out, usually expressed as a percentage of that unit’s revenue. Think of each division as a separate shop: segment margin shows which shops are making and keeping more money from their sales. Investors use it to compare divisions’ efficiency, spot stronger or weaker areas, and decide where growth or cuts might improve overall company returns.

net debt to capitalization ratio financial

"Net debt to capitalization ratio | (9.2) % | (11.4) %"

cash conversion rate of free cash flow to net income financial

"Cash conversion rate of free cash flow to net income | 6.6 % | 61.6 %"

Earnings Snapshot

Revenue: $677.3M · Guidance included

First quarter 2026

Revenue $677.3M +21% YoY

Organic sales growth 12% vs. Q1 2025

Operating margin 19.6% +390 bps YoY

Adjusted operating margin 20.1% +110 bps YoY

Diluted EPS $2.97 +34% YoY

Adjusted diluted EPS $3.04 +28% YoY

Guidance

For full year 2026, the company expects reported sales growth of 8–12%, organic sales growth of 2–6%, operating margin of 18.8–19.4%, and adjusted operating margin of 19.1–19.7%.

Understanding 8-K Material Events →

0000795403falseWATTS WATER TECHNOLOGIES INC00007954032026-05-062026-05-06

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 8-K

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CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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Date of Report (Date of earliest event reported): May 6, 2026

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WATTS WATER TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in its Charter)

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Delaware	​	001-11499	​	04-2916536
(State or Other Jurisdiction	​	(Commission File Number)	​	(IRS Employer
of Incorporation)	​	​	​	Identification No.)

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815 Chestnut Street, North Andover, Massachusetts 01845

(Address of Principal Executive Offices) (Zip Code)

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(978) 688-1811

(Registrant’s telephone number, including area code)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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☐  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

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☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Securities registered pursuant to Section 12(b) of the Act:

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Title of each class	Trading  Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.10 per share	WTS	New York Stock Exchange

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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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Emerging growth company ☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02.        Results of Operations and Financial Condition.

On May 6, 2026, Watts Water Technologies, Inc. (the “Registrant”) announced its financial results for the fiscal quarter ended March 29, 2026. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

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The information in Item 2.02 of this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing. 

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Item 9.01.        Financial Statements and Exhibits

(d) Exhibits.

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Exhibit Number		Description
99.1		Press Release dated May 6, 2026.
104	​	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 6, 2026	WATTS WATER TECHNOLOGIES, INC.
	By:	/s/ Kenneth R. Lepage
		Kenneth R. Lepage
		General Counsel, Chief Sustainability Officer, Chief Compliance Officer & Secretary

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Exhibit 99.1

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FOR IMMEDIATE RELEASE	Contact:	Diane McClintock
​	​	Chief Financial Officer
​	​	email:	investorrelations@wattswater.com

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WATTS WATER TECHNOLOGIES REPORTS RECORD FIRST QUARTER 2026 RESULTS

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◾ Net sales of $677 million, up 21% on a reported basis and 12% organically

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◾ Operating margin of 19.6%, up 390 bps; adjusted operating margin of 20.1%, up 110 bps

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◾ Diluted EPS of $2.97, up 34%; adjusted diluted EPS of $3.04, up 28%

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◾ Announced 21% increase in quarterly dividend payments to $0.63 per share

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◾ Maintaining full year 2026 outlook

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Note changes in performance are relative to first quarter 2025

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North Andover, Mass., May 6, 2026 -- 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 first quarter of 2026.

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Chief Executive Officer Robert J. Pagano Jr. said, “We delivered a strong start to 2026, with organic growth across all regions and record first quarter net sales, operating income, operating margin and EPS. This is a direct result of the strong execution by the Watts team, and I would like to thank our employees who have remained diligent and focused on delivering quality and value to our customers.”

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Mr. Pagano continued, “We are actively managing through geopolitical and trade-related uncertainties while advancing our strategic priorities. We continue to invest in higher-growth opportunities, including data centers and digital solutions, and are driving productivity through automation to support efficiency and margin performance through the One Watts Performance System. While we are pleased with our strong performance to start the year, the macro environment remains dynamic. As a result, we are maintaining our full year 2026 outlook. Our proven operating model and execution track record position us well, and supported by a strong balance sheet and solid cash flow generation, we remain focused on disciplined capital allocation and delivering sustainable long-term value.”

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A summary of first quarter financial results is as follows:

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​	​	​	​	​	​	​	​	​	​
​	​ ​ ​	First Quarter Ended
​	​	March 29,		​	March 30,		​	​	​
(In millions, except per share information)	​ ​ ​	2026		​ ​ ​	2025		​ ​ ​	% Change	​
Net sales	​	$	677.3	​	$	558.0		21	%
Organic sales growth % (1)	​	​	​	​	​	​	​	12	%
​	​	​	​	​	​	​	​	​	​
Operating income	​	$	133.0	​	$	87.7		52	%
Operating margin %	​	​	19.6	%		15.7	%	390	bps
​	​	​	​	​	​	​	​	​	​
Adjusted operating income (1)	​	$	135.9	​	$	106.1		28	%
Adjusted operating margin % (1)	​	​	20.1	%		19.0	%	110	bps
​	​	​	​	​	​	​	​	​	​
Diluted earnings per share	​	$	2.97	​	$	2.21		34	%
Special items (1)	​	​	0.07	​	​	0.16		​	​
Adjusted diluted earnings per share (1)	​	$	3.04	​	$	2.37		28	%

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(1) Organic sales growth, adjusted operating income, adjusted operating margin, free cash flow, special items and adjusted diluted 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.

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First Quarter Financial Highlights

First quarter 2026 performance compared to first quarter 2025

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Sales of $677 million increased 21% on a reported basis and 12% on an organic basis. Organic sales increased primarily due to favorable price and incremental volume driven by data center growth. Incremental acquisition sales within the Americas and APMEA were $37 million and contributed 7% to reported growth. Favorable foreign exchange increased reported sales by $16 million, or 3%.

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Operating margin increased 390 basis points on a reported basis and 110 basis points on an adjusted basis. Operating and adjusted operating margin increased primarily due to favorable price, productivity and volume leverage which more than offset inflation, investments, tariffs and acquisition dilution. Operating margin was favorably impacted by a decrease in restructuring charges, partially offset by higher acquisition-related charges.

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Regional Performance

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Americas

Sales of $515 million increased 23% on a reported basis and 16% on an organic basis, primarily due to favorable price and incremental volume driven by data center growth. Acquisitions contributed $31 million of incremental sales, or 7%, to reported growth.  

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Segment margin increased 80 basis points as benefits from price realization, productivity, and volume leverage more than offset inflation, tariffs and acquisition dilution.

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Europe

Sales of $121 million increased 12% on a reported basis and 1% on an organic basis. Reported sales growth benefitted from favorable foreign exchange, which increased reported sales by 11%.  Organic sales increased primarily from favorable price, which offset a slight decline in volume.

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Segment margin decreased 20 basis points as benefits from price realization, productivity, and restructuring actions were more than offset by inflation and volume deleverage.

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APMEA

Sales of $41 million increased 29% on a reported basis and 3% on an organic basis, as growth in China, Australia and New Zealand offset a decline in the Middle East. Acquisition sales contributed $6 million, or 19%, and favorable foreign exchange contributed 7% to reported sales growth.

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Segment margin increased 120 basis points as trade sales volume leverage, productivity and acquisition accretion more than offset inflation and affiliate volume deleverage.

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Cash Flow and Capital Allocation

For the first quarter of 2026, operating cash flow was $18 million and net capital expenditures were $11 million, resulting in free cash flow of $7 million. In the comparable period last year, operating cash flow was $55 million and net capital expenditures were $9 million, resulting in free cash flow of $46 million. Free cash flow declined due to increased capital investments and elevated working capital levels which more than offset higher net income. Working capital increases were due to higher accounts receivable attributable to higher net sales, higher inventory due to incremental tariffs and strategic inventory investments to support expected end-market demand, and higher annual customer rebates due to higher net sales and timing of payments. Sequential increases in free cash flow are expected throughout 2026 as we monetize working capital with the seasonality of the business.

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On May 4, 2026, the Company announced a 21% increase in quarterly dividend payments, increasing the quarterly payments from $0.52 per share to $0.63 per share beginning in June 2026.

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The Company repurchased approximately 13,000 shares of Class A common stock at a cost of $3.8 million during the first quarter of 2026. Approximately $125 million remains available under the stock repurchase program authorized in 2023. There is no expiration date for this program.

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Full Year 2026 Outlook

The Company is maintaining its previous full year outlook. Sales growth is expected 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. The full year outlook assumes the Middle East conflict is short term and incorporates estimated tariff impacts and actions as of May 6, 2026 but does not include potential tariff refunds.

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Further 2026 planning assumptions are included in the first quarter earnings materials posted in the Investor Relations section of our website at www.watts.com.

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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.

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Watts Water Technologies, Inc. will hold a live webcast of its conference call to discuss first quarter 2026 results on Thursday, May 7, 2026 at 9:00 a.m. EST. This press release and the live webcast can be accessed by visiting the Investor Relations section of the Company's website at www.watts.com. Following the webcast, the call recording will be available at the same address until May 6, 2027.

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Watts Water Technologies, Inc., through its subsidiaries, is a world leader in the manufacturing 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.

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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 2026 financial results, including sales and organic sales growth, operating margin and adjusted operating margin, future dividends, improvements in operating and free cash flow throughout 2026, our strategy, investments, the impact of tariffs and any potential tariff refunds due to invalidation of tariffs imposed under the International Emergency Economic Powers Act, the benefits from and integration of recent acquisitions, our ability to manage uncertainty and current market conditions, including the fluid trade environment, our portfolio offerings, long-term growth and shareholder value creation and return of capital to stockholders. 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 imposition of or changes to tariff rates and related impacts to our business and the broader market; 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 impacts and duration of the Middle East conflict, 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 17 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (“SEC”).We undertake no duty to update the information contained in this press release, except as required by law.

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WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in millions, except per share information)

(Unaudited)

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​	​	​	​	​	​	​	​
​	​	First Quarter Ended					​
​	​	March 29,		​	March 30,		​
​	​ ​ ​	2026		​ ​ ​	2025		​ ​ ​
Net sales	​	$	677.3	​	$	558.0	​
Cost of goods sold	​	​	351.2	​	​	285.5	​
GROSS PROFIT	​	​	326.1	​	​	272.5	​
Selling, general and administrative expenses	​	​	192.9	​	​	167.5	​
Restructuring	​	​	0.2	​	​	17.3	​
OPERATING INCOME	​	​	133.0	​	​	87.7	​
Other (income) expense:	​	​	​	​	​	​	​
Interest income	​	​	(1.7)	​	​	(2.3)	​
Interest expense	​	​	2.6	​	​	2.7	​
Other expense, net	​	​	0.7	​	​	0.4	​
Total other expense	​	​	1.6	​	​	0.8	​
INCOME BEFORE INCOME TAXES	​	​	131.4	​	​	86.9	​
Provision for income taxes	​	​	31.8	​	​	12.9	​
NET INCOME	​	$	99.6	​	$	74.0	​
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BASIC EPS	​	​	​	​	​	​	​
NET INCOME PER SHARE	​	$	2.97	​	$	2.21	​
Weighted average number of shares	​	​	33.5	​	​	33.5	​
DILUTED EPS	​	​	​	​	​	​	​
NET INCOME PER SHARE	​	$	2.97	​	$	2.21	​
Weighted average number of shares	​	​	33.5	​	​	33.5	​
Dividends declared per share	​	$	0.52	​	$	0.43	​

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WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in millions, except share information)

(Unaudited)

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​	​	​	​	​	​	​
​	​	March 29,		​	December 31,
​	​	2026		​ ​ ​ ​ ​ ​ ​	2025
ASSETS	​	​	​	​	​	​
CURRENT ASSETS:	​	​	​	​	​	​
Cash and cash equivalents	​	$	374.7	​	$	405.5
Trade accounts receivable, less reserve allowances of $15.1 million at March 29, 2026 and $12.5 million at December 31, 2025	​	​	374.4	​	​	294.0
Inventories, net:	​	​	​	​	​	​
Raw materials	​	​	208.5	​	​	190.8
Work in process	​	​	28.1	​	​	28.5
Finished goods	​	​	306.5	​	​	305.0
Total Inventories	​	​	543.1	​	​	524.3
Prepaid expenses and other current assets	​	​	55.9	​	​	62.3
Total Current Assets	​	​	1,348.1	​	​	1,286.1
PROPERTY, PLANT AND EQUIPMENT:	​	​	​	​	​	​
Property, plant and equipment, at cost	​	​	781.1	​	​	777.1
Accumulated depreciation	​	​	(484.7)	​	​	(480.0)
Property, plant and equipment, net	​	​	296.4	​	​	297.1
OTHER ASSETS:	​	​	​	​	​	​
Goodwill	​	​	859.6	​	​	859.0
Intangible assets, net	​	​	286.8	​	​	294.6
Deferred income taxes	​	​	19.4	​	​	17.9
Other, net	​	​	129.5	​	​	126.5
TOTAL ASSETS	​	$	2,939.8	​	$	2,881.2
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LIABILITIES AND STOCKHOLDERS’ EQUITY	​	​	​	​	​	​
CURRENT LIABILITIES:	​	​	​	​	​	​
Accounts payable	​	$	188.9	​	$	182.2
Accrued expenses and other liabilities	​	​	234.2	​	​	234.7
Accrued compensation and benefits	​	​	72.9	​	​	95.5
Total Current Liabilities	​	​	496.0	​	​	512.4
LONG-TERM DEBT	​	​	197.8	​	​	197.7
DEFERRED INCOME TAXES	​	​	42.5	​	​	36.5
OTHER NONCURRENT LIABILITIES	​	​	107.2	​	​	106.9
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, 27,478,641 shares at March 29, 2026 and 27,426,533 shares at December 31, 2025	​	​	2.7	​	​	2.7
Class B common stock, $0.10 par value; 25,000,000 shares authorized; 10 votes per share; issued and outstanding, 5,916,290 shares at March 29, 2026 and December 31, 2025	​	​	0.6	​	​	0.6
Additional paid-in capital	​	​	728.6	​	​	720.6
Retained earnings	​	​	1,496.8	​	​	1,431.3
Accumulated other comprehensive loss	​	​	(132.4)	​	​	(127.5)
Total Stockholders’ Equity	​	​	2,096.3	​	​	2,027.7
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	​	$	2,939.8	​	$	2,881.2

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WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in millions)

(Unaudited)

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​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 29,		​	March 30,
​	​ ​ ​	2026		​ ​ ​	2025
OPERATING ACTIVITIES	​	​	​	​	​	​
Net income	​	$	99.6	​	$	74.0
Adjustments to reconcile net income to net cash provided by operating activities:	​	​	​	​	​	​
Depreciation	​	​	9.4	​	​	8.8
Amortization of intangibles	​	​	6.0	​	​	4.9
Amortization of cloud computing arrangements	​	​	0.6	​	​	—
Loss on disposal of long-lived assets	​	​	—	​	​	0.1
Stock-based compensation	​	​	5.2	​	​	2.9
Deferred income tax	​	​	4.8	​	​	(2.4)
Changes in operating assets and liabilities, net of effects from business acquisitions:	​	​	​	​	​	​
Accounts receivable	​	​	(82.0)	​	​	(41.3)
Inventories	​	​	(19.8)	​	​	(18.4)
Prepaid expenses and other assets	​	​	(3.0)	​	​	(5.9)
Accounts payable, accrued expenses and other liabilities	​	​	(2.9)	​	​	32.5
Net cash provided by operating activities	​	​	17.9	​	​	55.2
INVESTING ACTIVITIES	​	​	​	​	​	​
Additions to property, plant and equipment	​	​	(11.3)	​	​	(9.6)
Business acquisitions, net of cash acquired	​	​	(1.9)	​	​	(70.3)
Net cash used in investing activities	​	​	(13.2)	​	​	(79.9)
FINANCING ACTIVITIES	​	​	​	​	​	​
Payments for withholding taxes on vested awards	​	​	(12.8)	​	​	(10.9)
Payments for finance leases and other	​	​	(0.7)	​	​	(0.7)
Payments to repurchase common stock	​	​	(3.8)	​	​	(3.9)
Dividends	​	​	(17.5)	​	​	(14.4)
Net cash used in financing activities	​	​	(34.8)	​	​	(29.9)
Effect of exchange rate changes on cash and cash equivalents	​	​	(0.7)	​	​	4.5
DECREASE IN CASH AND CASH EQUIVALENTS	​	​	(30.8)	​	​	(50.1)
Cash and cash equivalents at beginning of year	​	​	405.5	​	​	386.9
CASH AND CASH EQUIVALENTS AT END OF PERIOD	​	$	374.7	​	$	336.8

​

​

Segment Earnings and Non-GAAP Financial Measures

In this press release, segment earnings is our GAAP performance measure used by our chief operating decision-maker (“CODM”) to assess and evaluate segment results. Segment earnings exclude the impact of non-recurring and unusual items, such as restructuring costs and acquisition-related costs. The CODM uses segment earnings for insight into underlying trends comparing past financial performance with current performance by reporting segment on a consistent basis. Segment margin is defined as segment earnings divided by segment revenue.

We refer to non-GAAP financial measures (including adjusted operating income, adjusted operating margin, adjusted net income, adjusted diluted earnings per share, organic sales, organic sales growth, 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 these financial measures enhance the overall understanding of our historical financial performance and give insight into our future prospects. Adjusted operating income, adjusted operating margin, adjusted net income and adjusted diluted 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 and the related income tax impacts on these items and tax adjustment items (with respect to adjusted net income and adjusted diluted earnings per share only). Management then utilizes these adjusted financial measures to assess the run rate of the Company’s operations against those of comparable periods. Organic sales and organic sales growth are non-GAAP measures of net sales and net sales growth excluding the impacts of foreign exchange, acquisitions and divestitures from period-over-period comparisons. Management believes reporting organic sales and 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 and 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 balance sheet leverage relative 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 TO NON-GAAP FINANCIAL MEASURES

EXCLUDING THE EFFECT OF ADJUSTMENTS FOR SPECIAL ITEMS

(Amounts in millions, except per share information)

(Unaudited)

​

CONSOLIDATED RESULTS

​

​	​	​	​	​	​	​	​
​	​	First Quarter Ended					​
​	​ ​ ​	March 29,		​ ​ ​	March 30,		​ ​ ​
​	​	2026		​	2025		​
​	​	​	​	​	​	​	​
Net sales	​	$	677.3	​	$	558.0	​
​	​	​	​	​	​	​	​
Operating income	​	$	133.0	​	$	87.7	​
Operating margin %	​		19.6	%		15.7	%
​	​	​	​	​	​	​	​
Adjustments for special items:	​		​	​		​	​
Restructuring	​	$	0.2	​	$	17.3	​
Acquisition-related costs	​	​	2.7	​	​	1.1	​
Total adjustments for special items	​	$	2.9	​	$	18.4	​
​	​	​	​	​	​	​	​
Adjusted operating income	​	$	135.9	​	$	106.1	​
Adjusted operating margin %	​		20.1	%		19.0	%
​	​	​	​	​	​	​	​
Net income	​	$	99.6	​	$	74.0	​
​	​	​	​	​	​	​	​
Adjustments for special items - tax effected:	​		​	​		​	​
Restructuring	​	$	0.1	​	$	13.0	​
Acquisition-related costs	​	​	2.1	​	​	0.8	​
Tax adjustment items	​	​	—	​	​	(8.3)	​
Total adjustments for special items - tax effected	​	$	2.2	​	$	5.5	​
​	​	​	​	​	​	​	​
Adjusted net income	​	$	101.8	​	$	79.5	​
​	​	​	​	​	​	​	​
Diluted earnings per share	​	$	2.97	​	$	2.21	​
Restructuring	​		0.01	​		0.39	​
Acquisition-related costs	​		0.06	​		0.02	​
Tax adjustment items	​		—	​		(0.25)	​
Adjusted diluted earnings per share	​	$	3.04	​	$	2.37	​

​

​

​

​

​

TABLE 2

SEGMENT INFORMATION - RECONCILIATION OF SEGMENT EARNINGS TO CONSOLIDATED OPERATING INCOME - GAAP

(Amounts in millions)

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

First Quarter Ended

​

​

March 29, 2026

​

March 30, 2025

​

​ ​ ​

Americas

​ ​ ​

Europe

​ ​ ​

APMEA

​

​ ​ ​

Total

​ ​ ​

Americas

​ ​ ​

Europe

​ ​ ​

APMEA

​

​ ​ ​

Total

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total segment net sales

​

$

517.8

127.6

67.8

​

$

713.2

​

$

420.3

116.6

56.4

​

$

593.3

​

Elimination of intersegment sales

​

​

(2.7)

(6.2)

(27.0)

​

(35.9)

​

​

(2.2)

(8.2)

(24.9)

​

(35.3)

​

Net sales from external customers

​

$

515.1

121.4

40.8

​

$

677.3

​

$

418.1

108.4

31.5

​

$

558.0

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Segment earnings

​

$

124.5

16.7

7.5

​

$

148.7

​

$

97.8

15.1

5.5

​

$

118.4

​

Segment margin %

​

24.2

%

13.7

%

18.7

%

​

22.0

%

23.4

%

13.9

%

17.5

%

​

21.2

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Corporate operating loss

​

​

​

​

​

​

​

​

$

(12.8)

​

​

​

​

​

​

​

​

$

(12.3)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Adjustments for segment special items:

​

$

(1.7)

​

(0.2)

​

(1.0)

​

$

(2.9)

​

$

(1.1)

​

(17.2)

​

(0.1)

​

$

(18.4)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating income

​

​

​

​

​

​

​

​

$

133.0

​

​

​

​

​

​

​

​

$

87.7

​

Operating margin %

​

​

​

​

​

​

​

​

19.6

%

​

​

​

​

​

​

​

15.7

%

​

​

TABLE 3

SEGMENT INFORMATION - RECONCILIATION OF NET SALES TO NON-GAAP ORGANIC SALES

(Amounts in millions)

(Unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​ ​ ​	Americas		​ ​ ​	Europe		​ ​ ​	APMEA		​ ​ ​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​
Net sales March 29, 2026	​	$	515.1	​	$	121.4	​	$	40.8	​	$	677.3	​
Net sales March 30, 2025	​	$	418.1	​	$	108.4	​	$	31.5	​	$	558.0	​
Dollar change	​	$	97.0	​	$	13.0	​	$	9.3	​	$	119.3	​
Net sales % increase	​		23.2	%		12.0	%		29.5	%		21.4	%
Foreign exchange impact	​		(0.3)	%		(11.5)	%		(7.4)	%		(2.9)	%
Acquisition impact	​		(7.4)	%		—	%	​	(18.7)	%		(6.6)	%
Organic sales % increase	​		15.5	%		0.5	%		3.4	%		11.9	%

​

​

​

​

​

​

​

​

TABLE 4

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

(Amounts in millions)

(Unaudited)

​

​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 29,		​	March 30,
​	​ ​ ​	2026		​ ​ ​	2025
​	​	​	​	​	​	​
Net cash provided by operating activities	​	$	17.9	​	$	55.2	​
Less: additions to property, plant, and equipment	​		(11.3)	​		(9.6)	​
Free cash flow	​	$	6.6	​	$	45.6	​
​	​	​	​	​	​	​	​
Net income	​	$	99.6	​	$	74.0	​
​	​	​	​	​	​	​	​
Cash conversion rate of free cash flow to net income	​		6.6	%		61.6	%

​

​

TABLE 5

RECONCILIATION OF LONG-TERM DEBT (INCLUDING CURRENT PORTION) TO NET DEBT AND NET DEBT TO CAPITALIZATION RATIO

(Amounts in millions)

(Unaudited)

​

​	​	​	​	​	​	​	​
​	​ ​ ​	March 29,		​ ​ ​	December 31,
​	​	2026		​	2025
​	​	​	​	​	​	​
Current portion of long-term debt	​	$	—	​	$	—	​
Plus: long-term debt, net of current portion	​		197.8	​		197.7	​
Less: cash and cash equivalents	​		(374.7)	​		(405.5)	​
Net debt	​	$	(176.9)	​	$	(207.8)	​
​	​	​	​	​	​	​	​
Net debt	​	$	(176.9)	​	$	(207.8)	​
Total stockholders’ equity	​		2,096.3	​		2,027.7	​
Capitalization	​	$	1,919.4	​	$	1,819.9	​
​	​	​	​	​	​	​	​
Net debt to capitalization ratio	​		(9.2)	%		(11.4)	%

​

TABLE 6

2026 FULL YEAR OUTLOOK – RECONCILIATION OF NET SALES GROWTH TO ORGANIC SALES GROWTH AND OPERATING MARGIN TO ADJUSTED OPERATING MARGIN

(Unaudited)

​	​	​
​	​	Total Watts
​	​	Full Year
​	​	2026 Outlook
​	​ ​ ​	Approximately
Net Sales	​	​
Net sales growth	​	8% to 12%
Forecasted impact of acquisition / FX	​	(6)%
Organic sales growth	​	2% to 6%
​	​	​
Operating Margin	​	​
Operating margin	​	18.8% to 19.4%
Forecasted restructuring / other costs	​	0.3%
Adjusted operating margin	​	19.1% to 19.7%

​

FAQ

How did Watts Water Technologies (WTS) perform in Q1 2026?

Watts Water Technologies delivered record Q1 2026 results with strong growth and higher margins. Net sales reached $677.3 million, up 21% year over year, with 12% organic growth. Operating margin improved to 19.6%, and adjusted diluted EPS rose 28% to $3.04.

What were Watts Water Technologies’ key profitability metrics in Q1 2026?

Profitability improved significantly in Q1 2026. Operating income increased to $133.0 million, giving a 19.6% operating margin, up 390 basis points. Adjusted operating income was $135.9 million, and adjusted operating margin rose to 20.1%, 110 basis points higher than Q1 2025.

How did free cash flow trend for Watts Water Technologies in Q1 2026?

Free cash flow declined sharply compared to the prior year. Operating cash flow was $17.9 million and net capital expenditures were $11.3 million, resulting in $6.6 million of free cash flow, versus $45.6 million in Q1 2025, mainly due to higher working capital and investment levels.

What dividend changes did Watts Water Technologies announce for 2026?

The company announced a 21% increase in its quarterly dividend. Quarterly dividends will rise from $0.52 per share to $0.63 per share beginning in June 2026, reflecting management’s confidence in cash generation and long-term value creation for shareholders.

What is Watts Water Technologies’ full year 2026 outlook?

The company maintained its previous full year 2026 guidance. Reported sales growth is expected between 8% and 12%, with organic growth of 2% to 6%. Operating margin is projected at 18.8% to 19.4%, and adjusted operating margin at 19.1% to 19.7%.

How did each region contribute to Watts Water Technologies’ Q1 2026 results?

All regions grew, led by the Americas. Americas sales were $515 million, up 23% reported and 16% organic. Europe reached $121 million, up 12% reported and 1% organic, while APMEA delivered $41 million, up 29% reported and 3% organic.

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