Watts Water Technologies (NYSE: WTS) raises 2026 outlook after record Q2 growth

Rhea-AI Filing Summary

Watts Water Technologies reported record second-quarter 2026 results, with net sales of $763.2 million, up 19% year over year and 12% organic growth. Operating income was $154.0 million, up 14%. Diluted EPS rose to $3.53, up 17%, and adjusted diluted EPS to $3.66, up 18%. Growth was driven by favorable pricing, higher volumes including strong data center demand, acquisitions and modestly favorable foreign exchange.

Americas sales reached $585 million (17% reported, 12% organic), Europe $125 million (12% reported, 9% organic) and APMEA $54 million (57% reported, 31% organic), with Europe and APMEA expanding segment margins. Consolidated operating margin was 20.2%, down 80 bps, and adjusted operating margin 21.0%, down 60 bps, mainly from acquisition dilution, inflation, tariffs and higher restructuring. For the first six months, operating cash flow was $120.8 million and free cash flow $98.2 million, reflecting working capital investment. The company ended June 28, 2026 with cash of $347.9 million, long-term debt of $108.0 million and net debt of $(239.9) million (net debt to capitalization (12.3)%). Management increased its 2026 outlook to sales growth of 14%–17% reported and 8%–11% organic, with operating margin expected between 19.4% and 20.0% and adjusted operating margin between 19.8% and 20.4%.

Positive

• Quarter delivered record Q2 2026 net sales of $763.2 million with 12% organic growth and double-digit increases across all regions.
• Q2 diluted EPS increased 17% to $3.53 and adjusted diluted EPS rose 18% to $3.66, alongside a higher full-year 2026 sales and margin outlook.
• Balance sheet is strong with net debt of $(239.9) million and a net debt to capitalization ratio of (12.3)%, supported by substantial cash and reduced long-term debt.

Negative

• None.

Filing Explained

The disclosed buyback is partly completed: $4.1 million spent, with approximately $121 million still available but uncommitted.

This Form 8-K reports the quarter ended June 28, 2026 under Item 2.02 and adds a current repurchase status: Watts completed a $4.1 million purchase while retaining approximately $121 million of authorized capacity, so only the former represents reported spending.

The company says it repurchased approximately 13,000 Class A common shares during the second quarter at a cost of $4.1 million.

It also says approximately $121 million remains available under the repurchase program authorized in 2023, which has no expiration date.

That remaining amount is authorization, not a disclosed commitment to spend cash or repurchase additional shares.

The relevant follow-up is a later company disclosure showing whether the remaining authorization is used; this filing sets no expiration date.

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

Q2 2026 Net sales: $763.2 million Q2 2026 Organic sales growth: 12% Q2 2026 Diluted EPS: $3.53 +5 more

8 metrics

Q2 2026 Net sales $763.2 million Second quarter 2026 net sales, up 19% versus second quarter 2025

Q2 2026 Organic sales growth 12% Second quarter 2026 organic sales growth relative to second quarter 2025

Q2 2026 Diluted EPS $3.53 Second quarter 2026 diluted earnings per share, up 17% year over year

Q2 2026 Adjusted diluted EPS $3.66 Second quarter 2026 adjusted diluted earnings per share, up 18% year over year

Six-month 2026 Free cash flow $98.2 million Free cash flow for the six months ended June 28, 2026

Net debt $(239.9) million Net debt as of June 28, 2026 after subtracting cash and cash equivalents

Net debt to capitalization ratio (12.3)% Net debt to capitalization ratio at June 28, 2026

2026 Organic sales growth outlook 8% to 11% Full year 2026 organic sales growth outlook range

Key Terms

organic sales growth, free cash flow, segment margin, net debt to capitalization ratio, +1 more

5 terms

organic sales growth financial

"Sales of $763 million increased 19% 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.

free cash flow financial

"operating cash flow was $121 million and net capital expenditure was $23 million, resulting in free cash flow"

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 decreased 150 basis points primarily due to acquisition dilution, inflation and tariffs"

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 | | (12.3) % | | (11.4) %"

One Watts Performance System other

"through continued investments in innovation, digital capabilities and the One Watts Performance System"

Earnings Snapshot

Net sales: $763.2 million · Guidance included

second quarter and six months ended June 28, 2026

Net sales $763.2 million up 19% versus second quarter 2025

Organic sales growth 12% second quarter 2026 organic growth versus second quarter 2025

Operating income $154.0 million up 14% versus second quarter 2025

Operating margin 20.2% down 80 basis points versus second quarter 2025

Net income $118.3 million versus $100.9 million in second quarter 2025

Diluted EPS $3.53 up 17% versus second quarter 2025

Adjusted diluted EPS $3.66 up 18% versus second quarter 2025

Six-month net sales $1,440.4 million versus $1,201.7 million for the six months ended June 29, 2025

Guidance

For full year 2026, the company expects net sales growth of 14%–17% on a reported basis and 8%–11% on an organic basis, with operating margin of 19.4%–20.0% and adjusted operating margin of 19.8%–20.4%, assuming current tariffs and Middle East conflict impacts.

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FAQ

How did Watts Water Technologies (WTS) perform in the second quarter of 2026?

Watts Water Technologies (WTS) reported record Q2 2026 net sales of $763.2 million, up 19% year over year, with 12% organic sales growth. Diluted EPS was $3.53, up 17%, and adjusted diluted EPS was $3.66, up 18% versus Q2 2025.

What drove organic sales growth for Watts Water Technologies (WTS) in Q2 2026?

Watts Water Technologies (WTS) achieved 12% organic sales growth in Q2 2026, primarily from favorable price realization and higher volumes, including strong demand from data center projects. Acquisitions and foreign exchange provided additional reported growth on top of this organic performance.

How did each region perform for Watts Water Technologies (WTS) in Q2 2026?

In Q2 2026, WTS Americas sales were $585 million (17% reported, 12% organic), Europe sales were $125 million (12% reported, 9% organic) and APMEA sales were $54 million (57% reported, 31% organic). Europe and APMEA both delivered segment margin expansion year over year.

What was Watts Water Technologies' (WTS) cash flow and balance sheet position in 2026 year-to-date?

For the first six months of 2026, WTS generated $120.8 million in operating cash flow and $98.2 million in free cash flow. As of June 28, 2026, it held $347.9 million of cash, $108.0 million of long-term debt and reported net debt of $(239.9) million.

What is the full-year 2026 outlook for Watts Water Technologies (WTS)?

For 2026, WTS expects net sales growth of 14%–17% on a reported basis and 8%–11% organic. Operating margin is projected between 19.4% and 20.0%, with adjusted operating margin between 19.8% and 20.4%, assuming current tariff and Middle East impacts.

How is Watts Water Technologies (WTS) returning capital to shareholders?

In Q2 2026, WTS repurchased approximately 13,000 shares of Class A common stock for $4.1 million. It also increased dividends, declaring $0.63 per share in the quarter compared with $0.52 per share in the prior-year quarter.

0000795403falseWATTS WATER TECHNOLOGIES INC00007954032026-08-052026-08-05

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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): August 5, 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 August 5, 2026, Watts Water Technologies, Inc. (the “Registrant”) announced its financial results for the fiscal quarter ended June 28, 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 August 5, 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: August 5, 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:	Ray Nash
​	​	VP FP&A and Investor Relations
​	​	email: investorrelations@wattswater.com

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WATTS WATER TECHNOLOGIES REPORTS RECORD SECOND QUARTER 2026 RESULTS

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◾ Net sales of $763 million, up 19% on a reported basis and 12% organically

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◾ Operating margin of 20.2%, down 80 bps; adjusted operating margin of 21.0%, down 60 bps

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◾ Diluted EPS of $3.53, up 17%; adjusted diluted EPS of $3.66, up 18%

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◾ Increasing full year 2026 sales and margin outlook

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Note changes in performance are relative to second quarter 2025

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North Andover, Mass., August 5, 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 second quarter of 2026.

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Chief Executive Officer Robert J. Pagano Jr. said, “We delivered another strong quarter, achieving record sales, operating income and EPS, with double-digit organic growth. These results reflect the strength of our diversified portfolio, disciplined execution, and our ability to capture long-term growth opportunities. Building on our first half performance, we are increasing our full year 2026 sales and margin outlook. While the trade and geopolitical environments remain dynamic, our teams continue to execute well and remain focused on serving our customers. Through continued investments in innovation, digital capabilities and the One Watts Performance System, we are enhancing our competitive position and expanding opportunities for profitable growth across our portfolio. This includes attractive markets such as data centers, where our differentiated capabilities continue to drive strong customer demand and where we see significant opportunity ahead. Supported by our healthy balance sheet, consistent cash generation and disciplined capital allocation, we believe we are well positioned to continue delivering value for our customers and shareholders. I would like to thank the Watts team for their commitment and dedication, which continue to drive our success.”

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A summary of second quarter financial results is as follows:

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​	​	​	​	​	​	​	​	​	​
​	​ ​ ​	Second Quarter Ended
​	​	June 28,		​	June 29,		​	​	​
(In millions, except per share information)	​ ​ ​	2026		​ ​ ​	2025		​ ​ ​	% Change	​
Net sales	​	$	763.2	​	$	643.7		19	%
Organic sales growth % (1)	​	​	​	​	​	​	​	12	%
​	​	​	​	​	​	​	​	​	​
Operating income	​	$	154.0	​	$	135.3		14	%
Operating margin %	​	​	20.2	%		21.0	%	(80)	bps
​	​	​	​	​	​	​	​	​	​
Adjusted operating income (1)	​	$	160.0	​	$	139.1		15	%
Adjusted operating margin % (1)	​	​	21.0	%		21.6	%	(60)	bps
​	​	​	​	​	​	​	​	​	​
Diluted earnings per share	​	$	3.53	​	$	3.01		17	%
Special items (1)	​	​	0.13	​	​	0.08		​	​
Adjusted diluted earnings per share (1)	​	$	3.66	​	$	3.09		18	%

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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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Second Quarter Financial Highlights

Second quarter 2026 performance compared to second quarter 2025

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Sales of $763 million increased 19% on a reported basis and 12% on an organic basis, primarily due to favorable price realization and higher volume driven by data center growth. Acquisition sales within the Americas and APMEA contributed $34 million, or 5%, to reported sales growth. Favorable foreign exchange contributed $7 million, or 1%, to reported sales growth.

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Operating margin decreased 80 basis points on a reported basis, and 60 basis points on an adjusted basis. Operating and adjusted operating margin decreased primarily due to acquisition dilution, inflation and tariffs, and the difficult comparison against the one-time tariff-related price/cost benefit in the prior year, partly offset by favorable price realization, sales volume leverage, and productivity. Operating margin was also unfavorably impacted by an increase in restructuring charges.

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Regional Performance

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Americas

Sales of $585 million increased 17% on a reported basis and 12% on an organic basis, primarily due to favorable price realization and higher volume driven by data center growth. Acquisition sales contributed $28 million, or 6%, to reported sales growth.  

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Segment margin decreased 150 basis points primarily due to acquisition dilution, inflation and tariffs, and the difficult comparison against the one-time tariff-related price/cost benefit in the prior year, partly offset by favorable price realization, sales volume leverage, and productivity.

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Europe

Sales of $125 million increased 12% on a reported basis and 9% on an organic basis, primarily due to higher volumes and favorable price realization. Favorable foreign exchange contributed 3% to reported sales growth.

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Segment margin increased 160 basis points primarily due to favorable price realization, sales volume leverage, and productivity, which more than offset higher inflation.

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APMEA

Sales of $54 million increased 57% on a reported basis and 31% on an organic basis. Organic growth was primarily due to higher volume driven by data center growth in China partly offset by a decline in the Middle East. Acquisition sales contributed $6 million, or 17%, and favorable foreign exchange contributed 9% to reported sales growth.

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Segment margin increased 100 basis points primarily due to favorable price realization and acquisition accretion, which more than offset inflation and cost headwinds from the Middle East conflict.

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Cash Flow and Capital Allocation

For the first six months of 2026, operating cash flow was $121 million and net capital expenditure was $23 million, resulting in free cash flow of $98 million. In the comparable period last year, operating cash flow was $125 million and net capital expenditure was $20 million, resulting in free cash flow of $105 million. Free cash flow declined due to higher working capital levels and increased capital expenditures, 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. Sequential increases in free cash flow are expected in the second half of 2026 as we monetize working capital with the seasonality of the business.

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The Company repurchased approximately 13,000 shares of Class A common stock at a cost of $4.1 million during the second quarter of 2026. Approximately $121 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 increasing its full year sales and organic sales growth outlook as well as its operating margin and adjusted operating margin outlook. Sales growth is expected to range from up 14% to up 17% on a reported basis and up 8% to up 11% on an organic basis. Full year operating margin is expected to be between 19.4% and 20.0%, or up 100 basis points to up 160 basis points, and adjusted operating margin is expected to be between 19.8% and 20.4%, or up 20 basis points to up 80 basis points. The full year outlook assumes no change in the level of impact resulting from the Middle East conflict and incorporates the estimated impact of tariffs in place or

announced as of August 4, 2026. The full year outlook does not include the impact of tariff refunds, and any tariff refunds received in future periods will be treated as non-recurring special items and therefore will not be included in our adjusted results.

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Further 2026 planning assumptions are included in the second 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 second quarter 2026 results on Thursday, August 6, 2026 at 9:00 a.m. EDT. 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 August 5, 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, improvements in free cash flow in the second half of 2026, our strategy, investments, our ability to target and capitalize on growing markets, including our data center initiative, the impact of tariffs and any tariff refunds received as a result of the invalidation of tariffs imposed under the International Emergency Economic Powers Act, the benefits from and integration of acquisitions, our ability to manage uncertainty and current market conditions, including the fluid trade environment, future dividends, long-term growth and shareholder value creation. 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 continued growth of our customers’ markets; 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 timeframes 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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Second Quarter Ended

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Six Months Ended

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June 28,

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June 29,

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June 28,

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June 29,

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2026

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2025

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2026

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2025

Net sales

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$

763.2

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$

643.7

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$

1,440.4

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$

1,201.7

Cost of goods sold

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389.1

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317.8

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740.1

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603.3

GROSS PROFIT

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374.1

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325.9

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700.3

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598.4

Selling, general and administrative expenses

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214.5

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187.2

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407.5

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354.7

Restructuring

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5.6

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3.4

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5.8

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20.7

OPERATING INCOME

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154.0

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135.3

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287.0

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223.0

Other (income) expense:

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Interest income

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(1.7)

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(2.3)

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(3.4)

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(4.6)

Interest expense

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2.2

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2.7

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4.8

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5.4

Other (income) expense, net

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(0.2)

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0.2

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0.5

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0.6

Total other expense

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0.3

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0.6

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1.9

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1.4

INCOME BEFORE INCOME TAXES

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153.7

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134.7

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285.1

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221.6

Provision for income taxes

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35.4

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33.8

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67.2

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46.7

NET INCOME

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$

118.3

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$

100.9

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$

217.9

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$

174.9

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BASIC EPS

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NET INCOME PER SHARE

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$

3.53

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$

3.01

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$

6.50

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$

5.22

Weighted average number of shares

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33.5

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33.5

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33.5

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33.5

DILUTED EPS

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NET INCOME PER SHARE

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$

3.53

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$

3.01

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$

6.50

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$

5.22

Weighted average number of shares

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33.5

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33.5

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33.5

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33.5

Dividends declared per share

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$

0.63

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$

0.52

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$

1.15

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$

0.95

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WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in millions, except share information)

(Unaudited)

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​	​	​	​	​	​	​
​	​	June 28,		​	December 31,
​	​	2026		​ ​ ​ ​ ​ ​ ​	2025
ASSETS	​	​	​	​	​	​
CURRENT ASSETS:	​	​	​	​	​	​
Cash and cash equivalents	​	$	347.9	​	$	405.5
Trade accounts receivable, less reserve allowances of $16.9 million at June 28, 2026 and $12.5 million at December 31, 2025	​	​	404.4	​	​	294.0
Inventories, net:	​	​	​	​	​	​
Raw materials	​	​	206.4	​	​	190.8
Work in process	​	​	23.1	​	​	28.5
Finished goods	​	​	317.0	​	​	305.0
Total Inventories	​	​	546.5	​	​	524.3
Prepaid expenses and other current assets	​	​	66.8	​	​	62.3
Total Current Assets	​	​	1,365.6	​	​	1,286.1
PROPERTY, PLANT AND EQUIPMENT:	​	​	​	​	​	​
Property, plant and equipment, at cost	​	​	779.5	​	​	777.1
Accumulated depreciation	​	​	(484.0)	​	​	(480.0)
Property, plant and equipment, net	​	​	295.5	​	​	297.1
OTHER ASSETS:	​	​	​	​	​	​
Goodwill	​	​	858.4	​	​	859.0
Intangible assets, net	​	​	280.6	​	​	294.6
Deferred income taxes	​	​	18.3	​	​	17.9
Other, net	​	​	133.1	​	​	126.5
TOTAL ASSETS	​	$	2,951.5	​	$	2,881.2
​	​	​	​	​	​	​
​	​	​	​	​	​	​
LIABILITIES AND STOCKHOLDERS’ EQUITY	​	​	​	​	​	​
CURRENT LIABILITIES:	​	​	​	​	​	​
Accounts payable	​	$	182.1	​	$	182.2
Accrued expenses and other liabilities	​	​	248.5	​	​	234.7
Accrued compensation and benefits	​	​	82.7	​	​	95.5
Total Current Liabilities	​	​	513.3	​	​	512.4
LONG-TERM DEBT	​	​	108.0	​	​	197.7
DEFERRED INCOME TAXES	​	​	37.0	​	​	36.5
OTHER NONCURRENT LIABILITIES	​	​	103.8	​	​	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, 27,466,829 shares at June 28, 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 June 28, 2026 and December 31, 2025	​	​	0.6	​	​	0.6
Additional paid-in capital	​	​	736.9	​	​	720.6
Retained earnings	​	​	1,589.4	​	​	1,431.3
Accumulated other comprehensive loss	​	​	(140.2)	​	​	(127.5)
Total Stockholders’ Equity	​	​	2,189.4	​	​	2,027.7
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	​	$	2,951.5	​	$	2,881.2

​

​

WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in millions)

(Unaudited)

​

​	​	​	​	​	​	​
​	​	Six Months Ended
​	​	June 28,		​	June 29,
​	​ ​ ​	2026		​ ​ ​	2025
OPERATING ACTIVITIES	​	​	​	​	​	​
Net income	​	$	217.9	​	$	174.9
Adjustments to reconcile net income to net cash provided by operating activities:	​	​	​	​	​	​
Depreciation	​	​	19.2	​	​	17.9
Amortization of intangibles	​	​	11.9	​	​	9.9
Amortization of cloud computing arrangements	​	​	1.2	​	​	0.4
Loss on disposal of long-lived assets	​	​	0.2	​	​	0.2
Stock-based compensation	​	​	13.5	​	​	9.5
Deferred income tax	​	​	0.5	​	​	(6.2)
Changes in operating assets and liabilities, net of effects from business acquisitions:	​	​	​	​	​	​
Accounts receivable	​	​	(114.4)	​	​	(69.3)
Inventories	​	​	(25.0)	​	​	(37.0)
Prepaid expenses and other assets	​	​	(18.4)	​	​	(16.3)
Accounts payable, accrued expenses and other liabilities	​	​	14.2	​	​	40.9
Net cash provided by operating activities	​	​	120.8	​	​	124.9
INVESTING ACTIVITIES	​	​	​	​	​	​
Additions to property, plant and equipment	​	​	(22.6)	​	​	(19.8)
Business acquisitions, net of cash acquired	​	​	(1.7)	​	​	(85.7)
Net cash used in investing activities	​	​	(24.3)	​	​	(105.5)
FINANCING ACTIVITIES	​	​	​	​	​	​
Payments of long-term debt	​	​	(90.0)	​	​	—
Payments for withholding taxes on vested awards	​	​	(13.1)	​	​	(11.1)
Payments for finance leases and other	​	​	(1.4)	​	​	(1.3)
Payments to repurchase common stock	​	​	(7.9)	​	​	(7.9)
Dividends	​	​	(38.8)	​	​	(32.0)
Net cash used in financing activities	​	​	(151.2)	​	​	(52.3)
Effect of exchange rate changes on cash and cash equivalents	​	​	(2.9)	​	​	15.3
DECREASE IN CASH AND CASH EQUIVALENTS	​	​	(57.6)	​	​	(17.6)
Cash and cash equivalents at beginning of year	​	​	405.5	​	​	386.9
CASH AND CASH EQUIVALENTS AT END OF PERIOD	​	$	347.9	​	$	369.3

​

​

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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Second Quarter Ended

​

Six Months Ended

​

​ ​ ​

June 28,

​ ​ ​

June 29,

​ ​ ​

June 28,

​ ​ ​

June 29,

​

​

2026

​

2025

​

2026

​

2025

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net sales

​

$

763.2

​

$

643.7

​

$

1,440.4

​

$

1,201.7

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating income

​

$

154.0

​

$

135.3

​

$

287.0

​

$

223.0

​

Operating margin %

​

20.2

%

21.0

%

19.9

%

18.6

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Adjustments for special items:

​

​

​

​

​

​

​

​

​

Restructuring

​

$

5.6

​

$

3.4

​

$

5.8

​

$

20.7

​

Acquisition-related costs

​

​

0.4

​

​

0.4

​

​

3.1

​

​

1.5

​

Total adjustments for special items

​

$

6.0

​

$

3.8

​

$

8.9

​

$

22.2

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Adjusted operating income

​

$

160.0

​

$

139.1

​

$

295.9

​

$

245.2

​

Adjusted operating margin %

​

21.0

%

21.6

%

20.5

%

20.4

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

$

118.3

​

$

100.9

​

$

217.9

​

$

174.9

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Adjustments for special items - tax effected:

​

​

​

​

​

​

​

​

​

Restructuring

​

$

4.2

​

$

2.5

​

$

4.3

​

$

15.5

​

Acquisition-related costs

​

​

0.3

​

​

0.3

​

​

2.4

​

​

1.0

​

Tax adjustment items

​

​

—

​

​

—

​

​

—

​

​

(8.3)

​

Total adjustments for special items - tax effected

​

$

4.5

​

$

2.8

​

$

6.7

​

$

8.2

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Adjusted net income

​

$

122.8

​

$

103.7

​

$

224.6

​

$

183.1

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Diluted earnings per share

​

$

3.53

​

$

3.01

​

$

6.50

​

$

5.22

​

Restructuring

​

0.12

​

0.07

​

0.13

​

0.46

​

Acquisition-related costs

​

0.01

​

0.01

​

0.07

​

0.03

​

Tax adjustment items

​

—

​

—

​

—

​

(0.25)

​

Adjusted diluted earnings per share

​

$

3.66

​

$

3.09

​

$

6.70

​

$

5.46

​

​

​

​

​

​

TABLE 2

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

(Amounts in millions)

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Second Quarter Ended

​

​

June 28, 2026

​

June 29, 2025

​

​ ​ ​

Americas

​ ​ ​

Europe

​ ​ ​

APMEA

​

​ ​ ​

Total

​ ​ ​

Americas

​ ​ ​

Europe

​ ​ ​

APMEA

​

​ ​ ​

Total

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total segment net sales

​

$

587.0

131.0

86.1

​

$

804.1

​

$

500.5

121.6

65.5

​

$

687.6

​

Elimination of intersegment sales

​

​

(2.0)

(6.4)

(32.5)

​

(40.9)

​

​

(2.0)

(10.6)

(31.3)

​

(43.9)

​

Net sales from external customers

​

$

585.0

124.6

53.6

​

$

763.2

​

$

498.5

111.0

34.2

​

$

643.7

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Segment earnings

​

$

150.1

16.6

10.6

​

$

177.3

​

$

135.8

13.0

6.5

​

$

155.3

​

Segment margin %

​

25.7

%

13.3

%

19.9

%

​

23.2

%

27.2

%

11.7

%

18.9

%

​

24.1

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Corporate operating loss

​

​

​

​

​

​

​

​

$

(17.3)

​

​

​

​

​

​

​

​

$

(16.2)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Adjustments for segment special items:

​

$

(2.3)

​

(3.7)

​

—

​

$

(6.0)

​

$

(0.4)

​

(3.4)

​

—

​

$

(3.8)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating income

​

​

​

​

​

​

​

​

$

154.0

​

​

​

​

​

​

​

​

$

135.3

​

Operating margin %

​

​

​

​

​

​

​

​

20.2

%

​

​

​

​

​

​

​

21.0

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Six Months Ended

​

​

June 28, 2026

​

June 29, 2025

​

​ ​ ​

Americas

​ ​ ​

Europe

​ ​ ​

APMEA

​

​ ​ ​

Total

​ ​ ​

Americas

​ ​ ​

Europe

​ ​ ​

APMEA

​

​ ​ ​

Total

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total segment net sales

​

$

1,104.9

258.6

153.8

​

$

1,517.3

​

$

920.8

238.1

121.9

​

$

1,280.8

​

Elimination of intersegment sales

​

​

(4.8)

(12.6)

(59.5)

​

​

(76.9)

​

​

(4.2)

(18.7)

(56.2)

​

​

(79.1)

​

Net sales from external customers

​

$

1,100.1

246.0

94.3

​

$

1,440.4

​

$

916.6

219.4

65.7

​

$

1,201.7

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Segment earnings

​

$

274.7

​

33.2

​

18.2

​

$

326.1

​

$

233.6

​

28.1

​

12.0

​

$

273.7

​

Segment margin %

​

​

25.0

%

13.5

%

19.3

%

​

22.6

%

​

25.5

%

12.8

%

18.2

%

​

22.8

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Corporate operating loss

​

​

​

​

​

​

​

​

$

(30.2)

​

​

​

​

​

​

​

​

$

(28.5)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Adjustments for segment special items:

​

$

(4.0)

​

(3.8)

​

(1.1)

​

$

(8.9)

​

$

(1.5)

​

(20.6)

​

(0.1)

​

$

(22.2)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating income

​

​

​

​

​

​

​

​

$

287.0

​

​

​

​

​

​

​

​

$

223.0

​

Operating margin %

​

​

​

​

​

​

​

​

​

19.9

%

​

​

​

​

​

​

​

​

18.6

%

​

​

​

​

​

TABLE 3

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

(Amounts in millions)

(Unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended
​	​ ​ ​	Americas		​ ​ ​	Europe		​ ​ ​	APMEA		​ ​ ​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​
Net sales June 28, 2026	​	$	585.0	​	$	124.6	​	$	53.6	​	$	763.2	​
Net sales June 29, 2025	​	$	498.5	​	$	111.0	​	$	34.2	​	$	643.7	​
Dollar change	​	$	86.5	​	$	13.6	​	$	19.4	​	$	119.5	​
Net sales % increase	​		17.4	%		12.3	%		56.7	%		18.6	%
Foreign exchange impact	​		(0.1)	%		(3.1)	%		(8.7)	%		(1.1)	%
Acquisition impact	​		(5.7)	%		—	%	​	(17.3)	%		(5.3)	%
Organic sales % increase	​		11.6	%		9.2	%		30.7	%		12.2	%

​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six Months Ended
​	​ ​ ​	Americas		​ ​ ​	Europe		​ ​ ​	APMEA		​ ​ ​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​
Net sales June 28, 2026	​	$	1,100.1	​	$	246.0	​	$	94.3	​	$	1,440.4	​
Net sales June 29, 2025	​		916.6	​		219.4	​		65.7	​		1,201.7	​
Dollar change	​	$	183.5	​	$	26.6	​	$	28.6	​	$	238.7	​
Net sales % increase	​		20.0	%		12.1	%		43.5	%		19.9	%
Foreign exchange impact	​		(0.1)	%		(7.2)	%		(8.0)	%		(1.8)	%
Acquisition impact	​		(6.5)	%		—	%		(17.9)	%		(6.0)	%
Organic sales % increase	​		13.4	%		4.9	%		17.6	%		12.1	%

​

​

​

TABLE 4

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

(Amounts in millions)

(Unaudited)

​

​	​	​	​	​	​	​	​
​	​	Six Months Ended
​	​	June 28,		​	June 29,
​	​ ​ ​	2026		​ ​ ​	2025
​	​	​	​	​	​	​
Net cash provided by operating activities	​	$	120.8	​	$	124.9	​
Less: additions to property, plant, and equipment	​		(22.6)	​		(19.8)	​
Free cash flow	​	$	98.2	​	$	105.1	​
​	​	​	​	​	​	​	​
Net income	​	$	217.9	​	$	174.9	​
​	​	​	​	​	​	​	​
Cash conversion rate of free cash flow to net income	​		45.1	%		60.1	%

​

​

TABLE 5

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

(Amounts in millions)

(Unaudited)

​

​	​	​	​	​	​	​	​
​	​ ​ ​	June 28,		​ ​ ​	December 31,
​	​	2026		​	2025
​	​	​	​	​	​	​
Current portion of long-term debt	​	$	—	​	$	—	​
Plus: long-term debt, net of current portion	​		108.0	​		197.7	​
Less: cash and cash equivalents	​		(347.9)	​		(405.5)	​
Net debt	​	$	(239.9)	​	$	(207.8)	​
​	​	​	​	​	​	​	​
Net debt	​	$	(239.9)	​	$	(207.8)	​
Total stockholders’ equity	​		2,189.4	​		2,027.7	​
Capitalization	​	$	1,949.5	​	$	1,819.9	​
​	​	​	​	​	​	​	​
Net debt to capitalization ratio	​		(12.3)	%		(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	​	14% to 17%
Forecasted impact of acquisition / FX	​	(6)%
Organic sales growth	​	8% to 11%
​	​	​
Operating Margin	​	​
Operating margin	​	19.4% to 20.0%
Forecasted restructuring / other costs	​	0.4%
Adjusted operating margin	​	19.8% to 20.4%

​

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