Watts Water Technologies (WTS) Q4 2025 earnings summary

Executive summary

• Achieved record sales, operating income, and EPS for Q4 and full year 2025, driven by strong execution, innovation, and strategic acquisitions, with organic sales up 8% in Q4 and 5% for the year; reported sales rose 16% in Q4 and 8% for the year.

• Completed five strategic acquisitions in 2025, including Haws Corporation, Superior Boiler, and Saudi Cast, expanding product offerings, geographic reach, and market presence.

• Maintained a resilient and diversified business model with robust cash flow and a strong balance sheet, enabling continued capital allocation flexibility.

• Focused on growth in institutional and data center sub-verticals, leveraging a large installed base for repair and replacement activity.

• Data center solutions now represent over 3% of sales, growing at a double-digit pace, with an addressable market exceeding $1B.

Financial highlights

• Q4 2025 sales reached $625 million (+16% reported, +8% organic); Americas organic growth 10%, Europe 1%, APMEA 9%.

• Q4 adjusted EBITDA: $134 million (+28%), margin 21.4% (+210 bps); adjusted operating income: $119 million (+31%), margin 19% (+220 bps).

• Full year 2025 sales: $2.44 billion (+8% reported, +5% organic); adjusted EBITDA: $534 million (+18%), margin 21.9% (+180 bps); adjusted EPS: $10.58 (+19%).

• Free cash flow for FY 2025 was $356 million, up 7% year-over-year, with a 105% conversion rate.

• Returned $83 million to shareholders via dividends and share repurchases.

Outlook and guidance

• 2026 reported sales growth expected at 8%-12%, organic growth 2%-6%; Americas organic growth 3%-7%, Europe -4% to flat, APMEA 4%-8%.

• Adjusted operating margin for FY 2026 guided at 19.1%-19.7%; adjusted EBITDA margin: 21.5%-22.1%.

• Free cash flow conversion expected at or above 90% of net income.

• Q1 2026: reported sales up 12%-16%, organic up 4%-8%; Americas high single-digit growth, Europe low single-digit decline, APMEA low single-digit growth.

• Acquisition-related margin dilution anticipated (~50 bps for FY, ~70 bps for Q1).