Watts Water Technologies Posts Strong Q3 Earnings, Sales Up 12.5%

TL;DR

**Watts is flowing strong with double-digit sales and profit growth, making it a solid buy in a thirsty market.**

AI Summary

WATTS WATER TECHNOLOGIES INC reported a strong financial performance for the third quarter and nine months ended September 28, 2025. Net sales for the third quarter increased by $68.1 million, or 12.5%, to $611.7 million from $543.6 million in the prior year. For the nine months, net sales rose by $101.6 million, or 5.9%, to $1,813.4 million compared to $1,711.8 million in 2024. Net income for the third quarter saw a significant jump of $13.1 million, or 18.9%, reaching $82.2 million from $69.1 million. Year-to-date net income increased by $33.5 million, or 15.0%, to $257.1 million from $223.6 million. Operating income also improved, growing by $18.2 million to $111.4 million in Q3 2025 and by $33.0 million to $334.4 million for the nine months. The company's cash and cash equivalents increased by $70.8 million to $457.7 million at September 28, 2025, from $386.9 million at the beginning of the year, driven by $247.3 million in net cash provided by operating activities. Strategic investments included $85.7 million for business acquisitions and $31.3 million in property, plant, and equipment additions during the nine-month period.

Why It Matters

This strong performance from Watts Water Technologies signals robust demand in the commercial, industrial, and residential water management sectors, which is positive for investors looking for stability and growth in infrastructure-related industries. Increased net income and sales suggest effective management and a competitive edge in a market increasingly focused on water conservation and smart building solutions. Employees benefit from a growing company, potentially leading to more opportunities and job security. Customers gain from continued innovation in products like smart flow control and leak detection, enhancing building efficiency and safety. The broader market sees a healthy player in the critical water technology space, potentially influencing sector trends and investment.

Risk Assessment

Risk Level: low — The company demonstrates strong financial health with a significant increase in cash and cash equivalents by $70.8 million to $457.7 million and a healthy net income of $257.1 million for the nine months ended September 28, 2025. Operating activities generated $247.3 million in cash, indicating robust internal funding capabilities and reduced reliance on external financing, which mitigates financial risk.

Analyst Insight

Investors should consider increasing their position in WTS, given the consistent growth in net sales and net income, coupled with strong cash flow from operations. The company's strategic investments in acquisitions and property, plant, and equipment suggest a commitment to future expansion and innovation in a resilient sector.

Financial Highlights

debt To Equity

0.10

revenue

$611.7M

operating Margin

18.2%

total Assets

$2,725.4M

total Debt

$197.5M

net Income

$82.2M

eps

$2.45

gross Margin

48.8%

cash Position

$457.7M

revenue Growth

+12.5%

Revenue Breakdown

Key Numbers

• $611.7M — Q3 2025 Net Sales (Up 12.5% from $543.6M in Q3 2024)
• $82.2M — Q3 2025 Net Income (Up 18.9% from $69.1M in Q3 2024)
• $1,813.4M — Nine-Month 2025 Net Sales (Up 5.9% from $1,711.8M in nine months 2024)
• $257.1M — Nine-Month 2025 Net Income (Up 15.0% from $223.6M in nine months 2024)
• $457.7M — Cash and Cash Equivalents (Increased by $70.8M from December 31, 2024)
• $2.45 — Basic EPS for Q3 2025 (Increased from $2.07 in Q3 2024)
• $7.67 — Basic EPS for Nine Months 2025 (Increased from $6.68 in nine months 2024)
• $247.3M — Net Cash Provided by Operating Activities (For the nine months ended September 28, 2025)
• $85.7M — Business Acquisitions (Net cash used in investing activities for nine months 2025)
• $0.52 — Dividends Declared per Share for Q3 2025 (Increased from $0.43 in Q3 2024)

Key Players & Entities

• WATTS WATER TECHNOLOGIES INC (company) — Registrant
• $611.7 million (dollar_amount) — Net sales for Q3 2025
• $543.6 million (dollar_amount) — Net sales for Q3 2024
• $82.2 million (dollar_amount) — Net income for Q3 2025
• $69.1 million (dollar_amount) — Net income for Q3 2024
• $1,813.4 million (dollar_amount) — Net sales for nine months ended Sept 28, 2025
• $257.1 million (dollar_amount) — Net income for nine months ended Sept 28, 2025
• $457.7 million (dollar_amount) — Cash and cash equivalents at Sept 28, 2025
• $247.3 million (dollar_amount) — Net cash provided by operating activities for nine months ended Sept 28, 2025
• FASB (regulator) — Issued accounting standard updates

FAQ

Risk Factors

• Supply Chain Disruptions [medium — market]: The company relies on a global supply chain for raw materials and components. Disruptions due to geopolitical events, natural disasters, or pandemics could impact production and increase costs, as seen in the fluctuating cost of goods sold.
• Integration of Acquisitions [medium — operational]: The company has made significant investments in business acquisitions ($85.7 million in nine months 2025). Successful integration of these businesses is crucial for realizing expected synergies and avoiding operational disruptions.
• Environmental Regulations [low — regulatory]: Increasingly stringent environmental regulations related to water quality and conservation could necessitate additional investments in product development and manufacturing processes, potentially impacting margins.
• Interest Rate Fluctuations [low — financial]: While the company has relatively low long-term debt ($197.5 million), changes in interest rates could affect interest income and expense, impacting overall profitability.

Industry Context

Watts Water Technologies operates in the highly fragmented global water technology market, encompassing plumbing, heating, water reuse, and water quality solutions. The industry is influenced by trends such as increasing demand for water conservation, aging infrastructure requiring replacement, and growing awareness of water quality. Competition is present from both large diversified players and smaller specialized companies.

Regulatory Implications

The company faces regulatory scrutiny related to water quality standards and environmental impact. Compliance with evolving regulations, particularly concerning lead content and water efficiency, is critical. Failure to adapt could lead to product redesigns, increased compliance costs, and potential market access restrictions.

What Investors Should Do

1. Monitor acquisition integration progress.
2. Analyze gross and operating margins for trends.
3. Evaluate cash flow generation and deployment.

Key Dates

• 2025-09-28: End of Q3 2025 Reporting Period — Marks the end of the period for which financial results are reported, showing significant revenue and net income growth.
• 2025-09-28: Consolidated Balance Sheet Date — Shows an increase in total assets to $2,725.4 million and a strong cash position of $457.7 million.
• 2025-09-28: Consolidated Statement of Operations Date — Details the Q3 and year-to-date performance, highlighting a 12.5% increase in net sales and 18.9% increase in net income for Q3.
• 2025-09-28: Consolidated Statement of Cash Flows Date — Reflects $247.3 million in net cash provided by operating activities for the nine months, supporting investments and cash growth.

Glossary

Net Sales

The total revenue generated from sales of goods or services after deducting returns, allowances, and discounts. (Key indicator of top-line performance and market demand for Watts Water Technologies' products.)

Operating Income

Profitability from a company's core business operations, calculated as revenue minus cost of goods sold and operating expenses. (Measures the efficiency of the company's operations before considering interest and taxes.)

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair value of its net assets. (Represents a significant portion of the company's assets ($781.3 million), indicating past acquisitions.)

Accumulated Other Comprehensive Loss

A component of equity that includes unrealized gains and losses on certain investments and foreign currency translation adjustments. (Shows a reduction in equity by $130.2 million, influenced by factors outside of normal operations.)

Basic EPS

Earnings per share calculated by dividing net income by the weighted-average number of outstanding common shares. (Indicates the profitability attributable to each outstanding share of common stock.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, Watts Water Technologies demonstrates robust growth. Net sales for Q3 2025 increased by 12.5% to $611.7 million, and for the nine months by 5.9% to $1,813.4 million. Net income saw even stronger gains, up 18.9% in Q3 to $82.2 million and 15.0% year-to-date to $257.1 million. Operating income also improved significantly. The balance sheet reflects a healthy increase in cash and cash equivalents to $457.7 million, up $70.8 million from year-end 2024, supported by strong operating cash flows. Goodwill has increased from $715.0 million to $781.3 million, indicating recent or ongoing acquisition activity.

Key Financial Figures

• $0.10 — stered Class A common stock, par value $0.10 per share WTS New York Stock Exchan

Filing Documents

• wts-20250928x10q.htm (10-Q) — 3421KB
• wts-20250928xex10d1.htm (EX-10.1) — 70KB
• wts-20250928xex31d1.htm (EX-31.1) — 13KB
• wts-20250928xex31d2.htm (EX-31.2) — 12KB
• wts-20250928xex32d1.htm (EX-32.1) — 6KB
• wts-20250928xex32d2.htm (EX-32.2) — 6KB
• 0001104659-25-107489.txt ( ) — 13440KB
• wts-20250928.xsd (EX-101.SCH) — 51KB
• wts-20250928_cal.xml (EX-101.CAL) — 56KB
• wts-20250928_def.xml (EX-101.DEF) — 305KB
• wts-20250928_lab.xml (EX-101.LAB) — 506KB
• wts-20250928_pre.xml (EX-101.PRE) — 393KB
• wts-20250928x10q_htm.xml (XML) — 3392KB

Financial Information

Part I. Financial Information 3 Item 1.

Financial Statements

Financial Statements 3 Consolidated Balance Sheets at September 28, 2025 and December 31, 2024 (unaudited) 3 Consolidated Statements of Operations for the Third Quarters and Nine Months Ended September 28, 2025 and September 29, 2024 (unaudited) 4 Consolidated Statements of Comprehensive Income for the Third Quarters and Nine Months Ended September 28, 2025 and September 29, 2024 (unaudited) 5 Consolidated Statements of Stockholders' Equity for the Third Quarters and Nine Months Ended September 28, 2025 and September 29, 2024 (unaudited) 6 Consolidated Statements of Cash Flows for the Nine Months Ended September 28, 2025 and September 29, 2024 (unaudited) 8

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 28 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 41 Item 4.

Controls and Procedures

Controls and Procedures 42

Other Information

Part II. Other Information 43 Item 1.

Legal Proceedings

Legal Proceedings 43 Item 1A.

Risk Factors

Risk Factors 43 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 43 Item 5. Other Information 44 Item 6. Exhibits 45

Signatures

Signatures 46 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

ITEM 1. Financial Statements WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amounts in millions, except share information) (Unaudited) September 28, December 31, 2025 2024 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 457.7 $ 386.9 Trade accounts receivable, less reserve allowances of $ 13.6 million at September 28, 2025 and $ 11.9 million at December 31, 2024 323.9 253.2 Inventories, net: Raw materials 164.9 141.9 Work in process 20.8 16.9 Finished goods 273.0 233.3 Total Inventories 458.7 392.1 Prepaid expenses and other current assets 73.6 51.3 Total Current Assets 1,313.9 1,083.5 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, at cost 749.1 691.6 Accumulated depreciation ( 481.7 ) ( 436.8 ) Property, plant and equipment, net 267.4 254.8 OTHER ASSETS: Goodwill 781.3 715.0 Intangible assets, net 246.8 235.0 Deferred income taxes 19.7 36.4 Other, net 96.3 72.3 TOTAL ASSETS $ 2,725.4 $ 2,397.0 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 156.0 $ 148.0 Accrued expenses and other liabilities 218.8 190.8 Accrued compensation and benefits 89.1 79.1 Total Current Liabilities 463.9 417.9 LONG-TERM DEBT 197.5 197.0 DEFERRED INCOME TAXES 26.7 10.9 OTHER NONCURRENT LIABILITIES 80.5 63.3 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 , 27,411,311 shares at September 28, 2025 and 27,366,685 shares at December 31, 2024 2.7 2.7 Class B common stock, $ 0.10 par value; 25,000,000 shares authorized; 10 votes per share; issued and outstanding , 5,946,290 shares at September 28, 2025 and 5,953,290 shares at December 31, 2024 0.6 0.6 Additional paid-in capital

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included in the Watts Water Technologies, Inc. (the "Company") Consolidated Balance Sheet as of September 28, 2025, the Consolidated Statements of Operations for the Third Quarters and Nine Months Ended September 28, 2025 and September 29, 2024, the Consolidated Statements of Comprehensive Income for the Third Quarters and Nine Months Ended September 28, 2025 and September 29, 2024, the Consolidated Statements of Stockholders' Equity for the Third Quarters and Nine Months Ended September 28, 2025 and September 29, 2024, and the Consolidated Statements of Cash Flows for the Nine Months Ended September 28, 2025 and September 29, 2024. The consolidated balance sheet at December 31, 2024 has been derived from the audited consolidated financial statements at that date. The accounting policies followed by the Company are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. The consolidated financial statements included in this report should be read in conjunction with the consolidated financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2024. Operating results for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2025. The Company ope

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