Watts Water (WTS) investor relations material

Executive summary

• Achieved record Q2 2025 sales of $644M, up 8% reported and 6% organic, led by strong Americas growth, favorable pricing, and recent acquisitions, while Europe and APMEA declined.

• Operating income rose 21–24% to $139M, with adjusted operating margin at 21.6%, up 280 bps.

• Adjusted EPS increased 26% to $3.09; net income for Q2 was $100.9M, up 23%.

• Integration of EasyWater, Bradley, Josam, and I-CON acquisitions is ahead of schedule, expanding water quality and intelligent controls offerings.

• Major restructuring in France initiated, with $23.2M in expected pre-tax charges and $3M annual savings by 2026.

Financial highlights

• Q2 net sales reached $643.7M, up 8% year-over-year; Americas organic sales up 10–11%, Europe down 8%, APMEA down 1%.

• Adjusted EBITDA rose 22% to $153M; adjusted EBITDA margin at 23.8%, up 280 bps.

• Gross profit for Q2 was $325.9M (50.6% margin), up from $284.8M (47.7%).

• Free cash flow for the first half was $105M, down from $120M due to higher capex and working capital.

• Net income for Q2 was $100.9M; cash and cash equivalents at quarter-end were $369.3M.

Outlook and guidance

• Raised full-year 2025 sales and margin outlook; reported sales growth expected at 2–5%, organic flat to 3%.

• Adjusted operating margin forecasted at 18.2–18.8%, up 50–110 bps; Q3 organic sales growth expected at 2–5%.

• Free cash flow expected to be ≥100% of net income for the year.

• Outlook incorporates $40M in direct tariff costs and ongoing cost actions.

• Capex for FY 2025 expected at $58M; $25–$30M planned for H2 2025.