- Reported sales of $544 million increased 8%; organic sales
down 4%
- Reported operating margin of 17.1%, down 20 bps; adjusted
operating margin of 17.1%, down 90 bps
- Reported EPS of $2.06, up 5%; adjusted EPS of $2.03,
compared to $2.04 in prior year
- Raising midpoint of full-year 2024 operating margin
outlook
- Announced upcoming retirement of Shashank Patel, Chief
Financial Officer
Note changes in performance are relative to third quarter
2023
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 third quarter of
2024.
Chief Executive Officer and President Robert J. Pagano Jr.
commented, “We are pleased with our third quarter results that
exceeded our expectations. I want to express my gratitude to the
entire Watts team for their dedication to providing exceptional
customer service. Given our strong performance through the third
quarter and our fourth quarter expectations, we are increasing the
midpoint of our full-year 2024 operating margin outlook.”
Mr. Pagano added, “We have continued to successfully navigate
near-term challenges related to softening economic conditions by
delivering superior customer service and by driving productivity.
Our focus remains on investing for the future and positioning
ourselves to capitalize on opportunities associated with favorable,
long-term secular trends including water conservation, safety and
regulation, and energy efficiency. Our cash flow and balance sheet
are strong, giving us ample flexibility in capital allocation
decisions. We are confident in our resilient business strategy to
drive sustainable, long-term growth and shareholder value
creation.”
A summary of third quarter financial results is as follows:
Third Quarter Ended
September 29,
September 24,
(In millions, except per share
information)
2024
2023
% Change
Sales
$
543.6
$
504.3
8
%
Organic sales growth % (1)
(4)
%
Operating income - as reported
93.2
87.1
7
%
Operating margin %
17.1
%
17.3
%
(20)
bps
Adjusted operating income (1)
92.8
90.6
2
%
Adjusted operating margin % (1)
17.1
%
18.0
%
(90)
bps
Earnings per share - as reported
$
2.06
$
1.96
5
%
Special items (1)
(0.03)
0.08
Adjusted earnings per share (1)
$
2.03
$
2.04
—
%
(1)
Organic sales growth, adjusted operating income, adjusted
operating margin, special items and adjusted 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.
Third Quarter Financial Highlights
Third quarter 2024 performance relative to third quarter
2023
Sales of $544 million increased 8% on a reported basis and were
down 4% organically. Sales from acquisitions within the Americas
totaled $59 million and contributed 12% to reported growth. Organic
sales growth within APMEA was more than offset by declines in the
Americas and Europe. Foreign exchange movements had an immaterial
impact on sales growth.
Operating margin decreased 20 basis points on a reported basis
and 90 basis points on an adjusted basis. Adjusted operating margin
decreased primarily due to the dilutive impact of acquisitions,
volume deleverage, inflation and incremental investments, which
more than offset favorable price and productivity. Reported
operating margin was favorably impacted by a non-recurring gain on
the settlement of Bradley’s frozen pension plan that offset an
increase in restructuring charges and acquisition-related
charges.
Regional Performance
Americas
Sales of $400 million increased 14% on a reported basis and
declined 3% on an organic basis. The acquisitions of Bradley and
Josam contributed $59 million in sales, or 17% to reported growth.
Organic sales decreased as price realization was more than offset
by volume declines, primarily due to project timing and wholesale
channel safety stock resets within the quarter as our lead times
normalized.
Operating margin decreased 170 basis points on a reported basis
and 260 basis points on an adjusted basis as benefits from price
realization and productivity were more than offset by inflation,
incremental investments, volume deleverage and the dilutive impact
of the Bradley acquisition. Reported operating margin benefitted
from the non-recurring gain on the settlement of Bradley’s frozen
pension plan, which more than offset incremental restructuring and
acquisition-related charges.
Europe
Sales of $107 million decreased 11% on a reported basis and 12%
on an organic basis. Favorable foreign exchange movements increased
reported sales by 1%. Organic sales declined as price realization
and growth in our drains products were more than offset by lower
volumes in fluid solutions products, particularly in the OEM
channel, which was impacted by reduced government energy incentives
and heat pump destocking.
Operating margin decreased 220 basis points on a reported basis
and increased 20 basis points on an adjusted basis. Adjusted
operating margin increased as price realization, product mix and
productivity offset inflation, volume deleverage and investments.
Reported operating margin was unfavorably impacted by incremental
restructuring charges.
APMEA
Sales of $36 million increased 10% on a reported basis and 8% on
an organic basis. Favorable foreign exchange movements increased
reported sales by 2%. Sales increased due to growth in China, New
Zealand and the Middle East, partly offset by a slight decline in
Australia.
Operating margin increased 230 basis points on a reported basis
and 130 basis points on an adjusted basis as benefits from volume
leverage and productivity more than offset inflation, incremental
investments and the dilutive impact of the Enware acquisition.
Reported operating margin was favorably impacted by the reduction
in acquisition charges.
Cash Flow and Capital Allocation
For the first nine months of 2024, operating cash flow was $222
million and net capital expenditures were $17 million, resulting in
free cash flow of $204 million. In the comparable period last year,
operating cash flow was $201 million and net capital expenditures
were $19 million, resulting in free cash flow of $182 million.
Operating and free cash flow increased primarily due to cash flow
from acquisitions. We expect normal seasonality to result in solid
operating and free cash flow in the fourth quarter.
The Company repurchased approximately 26,000 shares of Class A
common stock at an aggregate cost of $4.9 million during the third
quarter of 2024. For the first nine months of 2024, the Company
repurchased approximately 66,000 shares at an aggregate cost of
$13.0 million. The stock repurchase program authorized in 2019 has
been exhausted. Approximately $149 million remains available under
the stock repurchase program authorized in 2023. There is no
expiration date for this program.
Full Year 2024 Outlook
The Company is raising the midpoint of its full year operating
margin outlook by 20 basis points and narrowing its full year sales
guidance compared to our previous outlook. We expect reported sales
to increase 9% to 10% and organic sales to decline between 1% and
2%. Full year operating margin is expected to be between 17.2% and
17.4% and adjusted operating margin to be between 17.5% and 17.7%,
or down 10 basis points to 30 basis points. Further 2024 planning
assumptions are included in the third-quarter earnings materials
posted in the Investor Relations section of our website at
www.watts.com.
CFO Transition
In a separate press release, the Company today announced that
Chief Financial Officer Shashank Patel has communicated his
intention to retire on March 15, 2025 for personal reasons, after
having served in this role since July 2018. Patel will continue as
CFO until a successor is named to ensure a smooth transition. The
Company has initiated a comprehensive search to identify a
successor, which will include both internal and external
candidates.
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.
Watts Water Technologies, Inc. will hold a live webcast of its
conference call to discuss third quarter 2024 results on Thursday,
October 31, 2024, 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
October 30, 2025.
Watts Water Technologies, Inc., through its subsidiaries, is a
world leader in the manufacture 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.
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 2024 financial
results, including organic sales growth and adjusted operating
margin, our strategy, investments, the benefits from recent
acquisitions, improvements in operating and free cash flow in the
fourth quarter of 2024, our ability to manage challenging
macro-economic and softer market conditions and return of capital
to shareholders. 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 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 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 16 of the Notes to the Consolidated
Financial Statements in our Annual Report on Form 10-K for the year
ended December 31, 2023, filed with the Securities and Exchange
Commission (“SEC”), as well as risk factors disclosed in our
subsequent filings with the SEC. We undertake no duty to update the
information contained in this press release, except as required by
law.
WATTS WATER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Amounts in millions, except
per share information)
(Unaudited)
Third Quarter Ended
Nine Months Ended
September 29,
September 24,
September 29,
September 24,
2024
2023
2024
2023
Net sales
$
543.6
$
504.3
$
1,711.8
$
1,508.8
Cost of goods sold
286.5
269.9
902.4
803.5
GROSS PROFIT
257.1
234.4
809.4
705.3
Selling, general and administrative
expenses
159.0
146.9
501.6
431.4
Restructuring
4.9
0.4
6.4
1.7
OPERATING INCOME
93.2
87.1
301.4
272.2
Other (income) expense:
Interest income
(2.1
)
(2.3
)
(6.1
)
(4.0
)
Interest expense
3.6
1.2
11.9
4.4
Other (income) expense, net
(0.6
)
0.1
(1.4
)
(0.4
)
Total other expense (income)
0.9
(1.0
)
4.4
—
INCOME BEFORE INCOME TAXES
92.3
88.1
297.0
272.2
Provision for income taxes
23.2
22.3
73.4
65.8
NET INCOME
$
69.1
$
65.8
$
223.6
$
206.4
BASIC EPS
NET INCOME PER SHARE
$
2.07
$
1.97
$
6.68
$
6.17
Weighted average number of shares
33.5
33.4
33.5
33.4
DILUTED EPS
NET INCOME PER SHARE
$
2.06
$
1.96
$
6.67
$
6.15
Weighted average number of shares
33.5
33.5
33.5
33.5
Dividends declared per share
$
0.43
$
0.36
$
1.22
$
1.02
WATTS WATER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(Amounts in millions, except
share information)
(Unaudited)
September 29,
December 31,
2024
2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
303.9
$
350.1
Trade accounts receivable, less reserve
allowances of $14.1 million at September 29, 2024 and $11.9 million
at December 31, 2023
291.6
259.8
Inventories, net:
Raw materials
152.7
150.6
Work in process
19.5
20.2
Finished goods
248.2
228.5
Total Inventories
420.4
399.3
Prepaid expenses and other current
assets
49.7
51.8
Total Current Assets
1,065.6
1,061.0
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost
700.3
677.2
Accumulated depreciation
(445.2
)
(429.0
)
Property, plant and equipment, net
255.1
248.2
OTHER ASSETS:
Goodwill
725.5
693.0
Intangible assets, net
241.5
216.1
Deferred income taxes
34.9
23.6
Other, net
76.5
67.5
TOTAL ASSETS
$
2,399.1
$
2,309.4
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
$
141.1
$
131.8
Accrued expenses and other liabilities
200.6
190.3
Accrued compensation and benefits
75.8
83.7
Total Current Liabilities
417.5
405.8
LONG-TERM DEBT
211.8
298.3
DEFERRED INCOME TAXES
11.6
13.5
OTHER NONCURRENT LIABILITIES
69.1
78.5
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: 27,385,541 shares at September 29, 2024 and 27,352,701
shares at December 31, 2023
2.7
2.7
Class B common stock, $0.10 par value;
25,000,000 shares authorized; 10 votes per share; issued and
outstanding: 5,953,290 shares at September 29 2024 and 5,958,290
shares at December 31, 2023
0.6
0.6
Additional paid-in capital
692.1
674.3
Retained earnings
1,135.8
979.1
Accumulated other comprehensive loss
(142.1
)
(143.4
)
Total Stockholders’ Equity
1,689.1
1,513.3
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
2,399.1
$
2,309.4
WATTS WATER TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Amounts in millions)
(Unaudited)
Nine Months Ended
September 29,
September 24,
2024
2023
OPERATING ACTIVITIES
Net income
$
223.6
$
206.4
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
25.9
21.8
Amortization of intangibles
14.9
9.0
(Gain) on sale of assets, loss on
disposal, impairment of long-lived asset and other
(5.2
)
0.2
Stock-based compensation
15.5
14.5
Deferred income tax
(12.5
)
(16.9
)
Changes in operating assets and
liabilities, net of effects from business acquisitions:
Accounts receivable
(26.8
)
(19.1
)
Inventories
(4.4
)
(3.7
)
Prepaid expenses and other assets
(11.7
)
(5.6
)
Accounts payable, accrued expenses and
other liabilities
2.3
(5.7
)
Net cash provided by operating
activities
221.6
200.9
INVESTING ACTIVITIES
Additions to property, plant and
equipment
(23.3
)
(19.0
)
Proceeds from the sale of property, plant
and equipment
5.9
—
Business acquisitions, net of cash
acquired and other
(96.3
)
(12.1
)
Other investing activity
1.0
—
Net cash used in investing activities
(112.7
)
(31.1
)
FINANCING ACTIVITIES
Proceeds from long-term borrowings
—
30.0
Payments of long-term debt
(85.0
)
(80.0
)
Payments for tax withholdings on vested
stock awards
(12.8
)
(15.8
)
Payments for debt issuance costs
(2.3
)
—
Payments for finance leases and other
(2.0
)
(2.0
)
Proceeds from share transactions under
employee stock plans
—
0.1
Payments to repurchase common stock
(13.0
)
(11.7
)
Dividends
(41.1
)
(34.4
)
Net cash used in financing activities
(156.2
)
(113.8
)
Effect of exchange rate changes on cash
and cash equivalents
1.1
(4.1
)
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
(46.2
)
51.9
Cash and cash equivalents at beginning of
year
350.1
310.8
CASH AND CASH EQUIVALENTS AT END OF
PERIOD
$
303.9
$
362.7
WATTS WATER TECHNOLOGIES, INC.
AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in millions)
(Unaudited)
Net Sales
Third Quarter Ended
Nine Months Ended
September 29, 2024
September 24, 2023
September 29, 2024
September 24, 2023
Americas
$
400.0
$
351.0
$
1,266.9
$
1,041.1
Europe
107.3
120.2
344.7
384.1
APMEA
36.3
33.1
100.2
83.6
Total
$
543.6
$
504.3
$
1,711.8
$
1,508.8
Operating Income
Third Quarter Ended
Nine Months Ended
September 29, 2024
September 24, 2023
September 29, 2024
September 24, 2023
Americas
$
90.6
$
85.7
$
284.3
$
249.8
Europe
8.7
12.5
40.6
53.2
APMEA
6.7
5.4
18.2
11.9
Corporate
(12.8
)
(16.5
)
(41.7
)
(42.7
)
Total
$
93.2
$
87.1
$
301.4
$
272.2
Intersegment Sales
Third Quarter Ended
Nine Months Ended
September 29, 2024
September 24, 2023
September 29, 2024
September 24, 2023
Americas
$
1.9
$
1.4
$
6.7
$
5.5
Europe
5.9
6.0
18.0
19.9
APMEA
17.3
16.8
63.7
67.4
Total
$
25.1
$
24.2
$
88.4
$
92.8
Key Performance Indicators and Non-GAAP
Measures
In this press release, we refer to non-GAAP financial measures
(including adjusted operating income, adjusted operating margins,
adjusted net income, adjusted earnings per share, organic sales,
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
that these financial measures enhance the overall understanding of
our historical financial performance and give insight into our
future prospects. Adjusted operating income, adjusted operating
margins, adjusted net income and adjusted 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, gain on sale of asset, pension
settlement, other investment gain and the related income tax
impacts on these items. Management then utilizes these adjusted
financial measures to assess the run rate of the Company’s
operations against those of comparable periods. Organic sales
growth is a non-GAAP measure of sales growth excluding the impacts
of foreign exchange, acquisitions and divestitures from
period-over-period comparisons. Management believes reporting
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 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 relative
balance sheet leverage 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 "AS
REPORTED" TO "AS ADJUSTED" NON-GAAP
EXCLUDING THE EFFECT OF
ADJUSTMENTS FOR SPECIAL ITEMS
(Amounts in millions, except
per share information)
(Unaudited)
CONSOLIDATED RESULTS
Third Quarter Ended
Nine Months Ended
September 29,
September 24,
September 29,
September 24,
2024
2023
2024
2023
Net sales
$
543.6
$
504.3
$
1,711.8
$
1,508.8
Operating income - as reported
$
93.2
$
87.1
$
301.4
$
272.2
Operating margin %
17.1
%
17.3
%
17.6
%
18.0
%
Adjustments for special items:
Restructuring
$
4.9
$
0.4
$
6.4
$
1.7
Acquisition-related costs
2.5
3.1
13.1
5.0
Gain on sale of assets
—
—
(4.4
)
—
Pension settlement
(7.8
)
—
(7.8
)
—
Total adjustments for special
items
$
(0.4
)
$
3.5
$
7.3
$
6.7
Operating income - as adjusted
$
92.8
$
90.6
$
308.7
$
278.9
Adjusted operating margin %
17.1
%
18.0
%
18.0
%
18.5
%
Net income - as reported
$
69.1
$
65.8
$
223.6
$
206.4
Adjustments for special items - tax
effected:
Restructuring
$
3.8
$
0.3
$
4.9
$
1.2
Acquisition-related costs
1.9
2.3
9.9
3.6
Gain on sale of assets
—
—
(3.3
)
—
Pension settlement
(5.8
)
—
(5.8
)
—
Other investment gain
(0.9
)
—
(0.9
)
—
Total adjustments for special items -
tax effected
$
(1.0
)
$
2.6
$
4.8
$
4.8
Net income - as adjusted
$
68.1
$
68.4
$
228.4
$
211.2
Diluted earnings per share - as
reported
$
2.06
$
1.96
$
6.67
$
6.15
Restructuring
0.11
0.01
0.14
0.04
Acquisition-related costs
0.06
0.07
0.30
0.11
Gain on sale of assets
—
—
(0.10
)
—
Pension settlement
(0.17
)
—
(0.17
)
—
Other investment gain
(0.03
)
—
(0.03
)
—
Diluted earnings per share - as
adjusted
$
2.03
$
2.04
$
6.81
$
6.30
TABLE 2
SEGMENT INFORMATION -
RECONCILIATION OF GAAP "AS REPORTED" TO "AS ADJUSTED"
NON-GAAP
EXCLUDING THE EFFECT OF
ADJUSTMENTS FOR SPECIAL ITEMS
(Amounts in millions)
(Unaudited)
Third Quarter Ended
Third Quarter Ended
September 29, 2024
September 24, 2023
Americas
Europe
APMEA
Corporate
Total
Americas
Europe
APMEA
Corporate
Total
Net sales
$
400.0
107.3
36.3
—
543.6
$
351.0
120.2
33.1
—
504.3
Operating income (loss) - as
reported
$
90.6
8.7
6.7
(12.8
)
93.2
$
85.7
12.5
5.4
(16.5
)
87.1
Operating margin %
22.7
%
8.2
%
18.5
%
17.1
%
24.4
%
10.4
%
16.2
%
17.3
%
Adjustments for special items
$
(3.0
)
2.6
—
—
(0.4
)
$
0.4
—
0.3
2.8
3.5
Operating income (loss) - as
adjusted
$
87.6
11.3
6.7
(12.8
)
92.8
$
86.1
12.5
5.7
(13.7
)
90.6
Adjusted operating margin %
21.9
%
10.6
%
18.5
%
17.1
%
24.5
%
10.4
%
17.2
%
18.0
%
Nine Months Ended
Nine Months Ended
September 29, 2024
September 24, 2023
Americas
Europe
APMEA
Corporate
Total
Americas
Europe
APMEA
Corporate
Total
Net sales
$
1,266.9
344.7
100.2
—
1,711.8
$
1,041.1
384.1
83.6
—
1,508.8
Operating income (loss) - as
reported
$
284.3
40.6
18.2
(41.7
)
301.4
$
249.8
53.2
11.9
(42.7
)
272.2
Operating margin %
22.4
%
11.8
%
18.1
%
17.6
%
24.0
%
13.8
%
14.2
%
18.0
%
Adjustments for special items
$
4.7
1.6
0.4
0.6
7.3
$
0.5
0.1
3.3
2.8
6.7
Operating income (loss) - as
adjusted
$
289.0
42.2
18.6
(41.1
)
308.7
$
250.3
53.3
15.2
(39.9
)
278.9
Adjusted operating margin %
22.8
%
12.2
%
18.5
%
18.0
%
24.0
%
13.9
%
18.1
%
18.5
%
TABLE 3
SEGMENT INFORMATION -
RECONCILIATION OF REPORTED NET SALES TO NON-GAAP ORGANIC
SALES
(Amounts in millions)
(Unaudited)
Third Quarter Ended
Americas
Europe
APMEA
Total
Reported net sales September 29, 2024
$
400.0
$
107.3
$
36.3
$
543.6
Reported net sales September 24, 2023
351.0
120.2
33.1
504.3
Dollar change
$
49.0
$
(12.9
)
$
3.2
$
39.3
Net sales % increase (decrease)
14.0
%
(10.7
)
%
9.7
%
7.8
%
Foreign exchange impact
0.1
%
(0.8
)
%
(1.4
)
%
(0.2
)
%
Acquisition impact
(16.8
)
%
—
%
—
%
(11.7
)
%
Organic sales (decrease)
increase
(2.7
)
%
(11.5
)
%
8.3
%
(4.1
)
%
Nine Months Ended
Americas
Europe
APMEA
Total
Reported net sales September 29, 2024
$
1,266.9
$
344.7
$
100.2
$
1,711.8
Reported net sales September 24, 2023
1,041.1
384.1
83.6
1,508.8
Dollar change
$
225.8
$
(39.4
)
$
16.6
$
203.0
Net sales % increase (decrease)
21.7
%
(10.3
)
%
19.9
%
13.5
%
Foreign exchange impact
—
%
(0.3
)
%
1.3
%
—
%
Acquisition impact
(17.6
)
%
—
%
(9.7
)
%
(12.7
)
%
Organic sales increase
(decrease)
4.1
%
(10.6
)
%
11.5
%
0.8
%
TABLE 4
RECONCILIATION OF NET CASH
PROVIDED BY OPERATIONS TO FREE CASH FLOW
(Amounts in millions)
(Unaudited)
Nine Months Ended
September 29,
September 24,
2024
2023
Net cash provided by operations - as
reported
$
221.6
$
200.9
Less: additions to property, plant, and
equipment
(23.3
)
(19.0
)
Plus: proceeds from the sale of property,
plant, and equipment
5.9
—
Free cash flow
$
204.2
$
181.9
Net income - as reported
$
223.6
$
206.4
Cash conversion rate of free cash flow to
net income
91.3
%
88.1
%
TABLE 5
RECONCILIATION OF LONG-TERM
DEBT (INCLUDING CURRENT PORTION) TO NET DEBT AND NET DEBT TO
CAPITALIZATION RATIO
(Amounts in millions)
(Unaudited)
September 29,
December 31,
2024
2023
Current portion of long-term debt
$
—
$
—
Plus: Long-term debt, net of current
portion
211.8
298.3
Less: Cash and cash equivalents
(303.9
)
(350.1
)
Net debt
$
(92.1
)
$
(51.8
)
Net debt
$
(92.1
)
$
(51.8
)
Plus: Total Stockholders’ equity
1,689.1
1,513.3
Capitalization
$
1,597.0
$
1,461.5
Net debt to capitalization ratio
(5.8
)
%
(3.5
)
%
TABLE 6
2024 FULL YEAR OUTLOOK –
RECONCILIATION OF REPORTED NET SALES GROWTH TO ORGANIC SALES GROWTH
AND OPERATING MARGIN TO ADJUSTED OPERATING MARGIN
(Unaudited)
Total Watts
Full Year
2024 Outlook
Approximately
Net Sales
Reported net sales growth
9% to 10%
Forecasted impact of acquisition / FX
(11)%
Organic sales growth
(2)% to (1)%
Operating Margin
Operating margin
17.2% to 17.4%
Forecasted restructuring / other costs
0.3%
Adjusted operating margin
17.5% to 17.7%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030254009/en/
Diane McClintock SVP FP&A & Investor Relations
email:investorrelations@wattswater.com
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