WATTS WATER TECHNOLOGIES REPORTS RECORD THIRD QUARTER 2026 RESULTS
WATTS WATER TECHNOLOGIES INC (WTS) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 FOR IMMEDIATE RELEASE Contact: Ray Nash VP FP&A and Investor Relations email: investorrelations@wattswater.com WATTS WATER TECHNOLOGIES REPORTS RECORD THIRD QUARTER 2026 RESULTS ◾ Net sales of $728 million, up 19% on a reported basis and 12% organic
How this was made
The 30-second read
Why it matters
The raised guidance is likely to attract buying pressure, especially from investors focused on industrial growth and data‑center infrastructure.
Market read
First‑report earnings with raised guidance for a mid‑cap industrial firm; actionable for short‑term positioning.
What to watch
Tariff refunds contributed to margin expansion; if those refunds cease, future margins could soften.
WATTS WATER TECHNOLOGIES REPORTS RECORD THIRD QUARTER 2026 RESULTS
Third-quarter net sales increased 19% on a reported basis and 12% organically, while adjusted operating margin increased 240 basis points and adjusted diluted EPS increased 36%. The company increased its full-year sales and margin outlook, although reported operating income and diluted EPS included $39.3 million of tariff refunds.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Third quarter net salesGAAP | $728M | – | 19.0% |
| Third quarter organic sales growthnon-GAAP | 12.2% | – | 12.2% |
| Third quarter gross profitGAAP | $401M | – | – |
| Third quarter selling, general and administrative expensesGAAP | $209.9M | – | – |
| Third quarter restructuringGAAP | $300K | – | – |
| Third quarter operating incomeGAAP | $190.8M | – | 71% |
| Third quarter operating marginGAAP | 26.2% | – | 800 bps |
| Third quarter adjusted operating incomenon-GAAP | $151.8M | – | 34% |
| Third quarter adjusted operating marginnon-GAAP | 20.9% | – | 240 bps |
| Third quarter income before income taxesGAAP | $191.9M | – | – |
| Third quarter provision for income taxesGAAP | $46.5M | – | – |
| Third quarter net incomeGAAP | $145.4M | – | – |
| Third quarter adjusted net incomenon-GAAP | $114M | – | – |
| Third quarter basic net income per shareGAAP | $4.34 | – | – |
| Third quarter diluted net income per shareGAAP | $4.34 | – | 77% |
| Third quarter adjusted diluted earnings per sharenon-GAAP | $3.40 | – | 36% |
| Third quarter dividends declared per shareGAAP | $0.63 | – | – |
| Third quarter tariff refundsGAAP | −$39.3M | – | – |
| Nine months net salesGAAP | $2.17B | – | 19.6% |
| Nine months organic sales growthnon-GAAP | 12.1% | – | 12.1% |
| Nine months gross profitGAAP | $1.10B | – | – |
| Nine months operating incomeGAAP | $477.8M | – | – |
| Nine months operating marginGAAP | 22.0% | – | – |
| Nine months adjusted operating incomenon-GAAP | $447.7M | – | – |
| Nine months adjusted operating marginnon-GAAP | 20.6% | – | – |
| Nine months net incomeGAAP | $363.3M | – | – |
| Nine months adjusted net incomenon-GAAP | $338.7M | – | – |
| Nine months diluted net income per shareGAAP | $10.84 | – | – |
| Nine months adjusted diluted earnings per sharenon-GAAP | $10.10 | – | – |
| Nine months operating cash flowGAAP | $278.9M | – | – |
| Nine months net capital expendituresother | $48.8M | – | – |
| Nine months free cash flownon-GAAP | $230.2M | – | – |
| Nine months cash conversion rate of free cash flow to net incomenon-GAAP | 63.4% | – | – |
| Cash and cash equivalentsGAAP | $444.8M | – | – |
| Long-term debtGAAP | $98.2M | – | – |
| Net debtnon-GAAP | −$346.6M | – | – |
| Net debt to capitalization rationon-GAAP | (17.6)% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| AmericasHigher volume driven by data center growth and favorable price realization. Acquisition sales contributed $35 million, or 8%, to reported sales growth. | $552.6M | – | 19.1% |
| EuropeHigher volumes and favorable price realization. Unfavorable foreign exchange reduced reported sales growth by 2%. | $119.8M | – | 7.4% |
| APMEAHigher volume driven by data center growth and favorable price realization. Acquisition sales contributed $6 million, or 17%, and favorable foreign exchange contributed 8% to reported sales growth. | $55.6M | – | 54.4% |
Full Year 2026 Outlook outlook
- RevenueNet sales growth 17% to 18%
- NoteOrganic sales growth 11% to 12%
- NoteOperating margin 21.6% to 21.7%
- NoteAdjusted operating margin 20.3% to 20.4%
- NoteForecasted impact of acquisition / FX (6)%
- NoteForecasted restructuring / other costs (1.3)%
- NoteThe full year outlook ranges are approximate, assume no change in the level of impact resulting from the Middle East conflict, incorporate the estimated impact of tariffs in place or announced, and adjusted results exclude the impact of tariff refunds and related interest income.
Capital returns
- The Company repurchased approximately 11,000 shares of Class A common stock at a cost of $3.9 million during the third quarter of 2026.
- Approximately $117 million remains available under the stock repurchase program authorized in 2023.
- There is no expiration date for this program.
- Third-quarter dividends declared per share were $0.63, compared with $0.52.
- Nine-month dividends were $60.0 million, compared with $49.4 million.
- Nine-month payments to repurchase common stock were $11.8 million, compared with $11.8 million.
What drove it
- Higher volume primarily driven by data center growth and favorable price realization supported third-quarter sales.
- Acquisition sales within the Americas and APMEA contributed $41 million, or 7%, to reported sales growth.
- Favorable foreign exchange contributed $1 million to reported sales growth.
- Adjusted operating margin increased 240 basis points, driven by favorable price realization, sales volume leverage and productivity, partly offset by inflation and acquisition dilution.
- Reported operating margin expansion primarily reflected $39 million of tariff refunds, underlying operational improvements and lower restructuring costs.
- The company expects anticipated normal seasonality for the fourth quarter to result in strong operating and free cash flow.
Concerns
- Higher interest rates and ongoing market uncertainty continue to weigh on new construction markets.
- Inflation, unfavorable product mix and acquisition dilution partly offset margin expansion in the Americas.
- Higher inflation and unfavorable product mix partly offset margin expansion in Europe.
- Working capital increased due to higher accounts receivable attributable to higher net sales and higher inventory due to inflation and strategic inventory investments to support data center demand.
- 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.
What to watch
- Data center demand, which drove higher volume in the Americas and APMEA.
- The durability of favorable price realization, sales volume leverage and productivity as inflation and mix pressures continue.
- Fourth-quarter operating and free cash flow, including working-capital normalization from anticipated seasonality.
- The contribution and dilution effects of acquisitions, which are embedded in the full-year sales growth outlook.
- The effect of tariffs, tariff refunds and related interest income, which are excluded from adjusted results.
Balance sheet and cash flow
- Cash and cash equivalents were $444.8 million at September 27, 2026, compared with $405.5 million at December 31, 2025.
- Long-term debt was $98.2 million at September 27, 2026, compared with $197.7 million at December 31, 2025.
- Net debt was $(346.6) million at September 27, 2026, compared with $(207.8) million at December 31, 2025.
- Nine-month net cash provided by operating activities was $278.9 million, compared with $247.3 million.
- Nine-month additions to property, plant, equipment and other long-lived assets were $(48.8) million, compared with $(31.3) million.
- Nine-month free cash flow was $230.2 million, compared with $216.0 million.
- Trade accounts receivable were $399.3 million at September 27, 2026, compared with $294.0 million at December 31, 2025.
- Total inventories were $576.6 million at September 27, 2026, compared with $524.3 million at December 31, 2025.
Analysis
Watts delivered record third-quarter net sales of $728.0 million, up 19.0%, with organic sales growth of 12.2%. Management attributed the growth to higher volume primarily driven by data center demand and favorable price realization. Acquisitions added $41 million to reported sales growth across the Americas and APMEA, while favorable foreign exchange added $1 million.
Regional results were broad-based, led by APMEA, where external-customer sales were $55.6 million and increased 54.4%, with 29.7% organic sales growth. Americas external-customer sales were $552.6 million, up 19.1%, and Europe sales were $119.8 million, up 7.4%. Segment margin expanded in all three regions, with reported increases of 180 basis points in the Americas, 230 basis points in Europe and 170 basis points in APMEA.
Profitability strengthened materially, but the distinction between reported and adjusted results is important. GAAP operating income was $190.8 million and operating margin was 26.2%, including $39.3 million of tariff refunds classified as a special item. Excluding special items, adjusted operating income was $151.8 million and adjusted operating margin was 20.9%, up 240 basis points, driven by price realization, volume leverage and productivity, partly offset by inflation and acquisition dilution. Adjusted diluted earnings per share rose 36% to $3.40, while GAAP diluted earnings per share rose 77% to $4.34.
For the first nine months, operating cash flow was $278.9 million and free cash flow was $230.2 million. Higher net income, including the tariff-refund impact, supported free cash flow, while higher working-capital levels and capital expenditures were offsets. The balance sheet showed $444.8 million of cash and cash equivalents and $98.2 million of long-term debt, producing net debt of $(346.6) million. The company also repurchased approximately 11,000 shares for $3.9 million during the third quarter and had approximately $117 million remaining under its 2023 authorization.
Management increased its full-year outlook to reported net sales growth of 17% to 18%, organic sales growth of 11% to 12%, operating margin of 21.6% to 21.7%, and adjusted operating margin of 20.3% to 20.4%. The outlook incorporates the estimated impact of tariffs in place or announced and excludes tariff refunds and related interest income from adjusted results. Management cited continued data-center momentum and price performance as support, while identifying higher interest rates and market uncertainty as pressures on new construction markets.
Management, verbatim
Strong execution across our businesses drove double-digit organic growth and significant adjusted operating margin expansion in the third quarter.
Robert J. Pagano Jr., Chief Executive Officer
Demand remained particularly strong in data center applications, reinforcing our confidence in the long-term potential of this market.
Robert J. Pagano Jr., Chief Executive Officer
We are again raising our full year sales and margin guidance, given our strong year-to-date performance and expectations for the remainder of the year.
Robert J. Pagano Jr., Chief Executive Officer
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so comparisons of reported results with prior guidance are unavailable.
- Third-quarter operating cash flow was not reported.
- Third-quarter free cash flow was not reported.
- Third-quarter capital expenditures were not reported.
- Gross margin was not reported.
- Full-year 2026 guidance for gross margin, operating expenses and tax rate was not reported.
- A reported tax rate was not provided.
- Prior-quarter comparisons for reported metrics were not provided.
- A quarterly balance-sheet debt maturity schedule beyond the current portion of long-term debt was not provided.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
The filing is an SEC Form 8‑K item 2.02, the first public disclosure of Watts Water Technologies' Q3 2026 performance and updated guidance.
Ticker impact
Watts Water Technologies reported record Q3 2026 results with 19% sales growth and raised full-year sales and margin guidance.
likely upward pressure as investors price in higher sales and margin expectations
The company disclosed higher-than-expected earnings and explicitly raised its full-year sales and margin outlook, which typically drives buying interest.
Market effects
Positive for plumbing and water‑quality equipment sector as demand from data centers and price realization improve.
U.S. industrial and infrastructure investors may see a lift.
Limited to companies with exposure to data‑center water‑cooling solutions.
Counterpoint
Higher margins may be partially offset by inflationary pressures and higher interest rates weighing on new‑construction markets.
Key entities
- companyWatts Water Technologies Inc.
Manufacturer of plumbing, heating and water‑quality products.
- executiveRobert J. Pagano Jr.
Chief Executive Officer of Watts Water Technologies.
