Watts Water Technologies 2025 Q2 Earnings Beats Expectations, Net Income Up 23%

Watts Water Technologies (WTS) reported its fiscal 2025 Q2 earnings on Aug 07th, 2025. The company exceeded expectations, delivering record sales, operating income, and EPS. It raised full-year sales and margin outlook based on strong first-half performance and positive third-quarter expectations.

Revenue
Watts Water Technologies reported total revenue of $643.70 million for 2025 Q2, a 7.8% increase from $597.30 million in the same period in 2024. This growth was primarily driven by the Americas segment, which saw an 11% increase in sales to $499 million on a reported basis and 10% on an organic basis. The Americas’ growth was partially offset by market weakness in Europe, where sales fell 3% on a reported basis and 8% on an organic basis. APMEA also experienced a 3% decline in reported sales and a 1% drop on an organic basis. Favorable foreign exchange and recent acquisitions contributed to the overall revenue growth.

Earnings/Net Income
The company’s earnings per share (EPS) rose 23.4% to $3.01 in 2025 Q2, up from $2.44 in 2024 Q2. This increase was supported by a 23.0% year-over-year growth in net income, which reached $100.90 million compared to $82 million. The company has maintained profitability for over 20 years, showcasing strong operational resilience. This substantial EPS growth reflects robust earnings momentum and improved profitability.

Price Action
Watts Water Technologies saw a mixed price performance over recent timeframes. The stock edged down 1.32% during the latest trading day and 0.63% during the most recent full trading week. However, it gained 2.44% month-to-date, indicating some recovery despite short-term volatility.

Post-Earnings Price Action Review
The strategy of buying WTS when it beat earnings and holding for 30 days yielded a 174.30% return, significantly outperforming the benchmark return of 85.46%. This resulted in an 88.84% excess return and a compound annual growth rate (CAGR) of 22.82%. The strategy managed risk effectively with a maximum drawdown of 0.00%, a Sharpe ratio of 0.83, and a volatility of 27.37%, highlighting strong risk-adjusted performance.

CEO Commentary
CEO Robert J. Pagano Jr. highlighted the company's record second quarter in sales, operating income, operating margin, and EPS. He credited the team for their strong execution amid economic uncertainty and announced an increased full-year 2025 sales and margin outlook. Pagano emphasized the strategic acquisition of EasyWater, aligning it with favorable secular trends, and expressed confidence in the company’s long-term growth and value creation through differentiated capabilities and a resilient business strategy.

Guidance
Watts Water Technologies increased its full-year 2025 sales and margin outlook, reflecting confidence in its strong first-half performance and positive third-quarter expectations. The company anticipates reported sales to grow between 2% to 5%, with organic sales growth ranging from flat to up 3%. Operating margin is expected to range between 17.2% and 17.8%, while adjusted operating margin is projected to be between 18.2% and 18.8%.

Additional News
The company acquired the assets of EasyWater in June 2025, integrating innovative water conditioning and filtration solutions into its portfolio. The integration is progressing well, with the acquisition complementing the company’s existing water quality offerings. Watts Water Technologies also repurchased approximately 18,000 shares of Class A common stock for $4.0 million during Q2, with around $137 million remaining under its stock repurchase program. The company expects improved operating and free cash flow in the second half of 2025 due to normal seasonality.