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- **Record Q3 Sales**: $612M (+13% reported, +9% organic), driven by 6% price growth and $11M pull-forward demand.
- **Margin Expansion**: Adjusted EBITDA margin 20.9% (up 140bps YoY), operating margin 18.5% (up 140bps YoY).
- **Haws Acquisition**: $60M business to be modestly dilutive in first year, with long-term margin upside via safety product synergies.
- **Data Center Growth**: North America sales surpassing Asia-Pacific, with high double-digit growth.
- **Tariff Management**: $40M annual tariff impact neutralized through pricing and supply chain optimization.

**【CEO Summary Section】**
- Organic sales grew 9% YoY, driven by price increases (+6%), volume (+3%), and $11M pull-forward demand in the Americas. Europe organic sales declined 2% due to market weakness.
- Acquisitions (I-CON, EasyWater, Haws) contributed $22M in incremental sales, with Haws expected to be modestly dilutive to margins in the first year.
- Adjusted operating margin expanded to 18.5% (up 140bps YoY) due to price, volume leverage, and productivity gains.
- Free cash flow year-to-date: $216M, with >100% conversion of net income expected for the full year.
- Tariffs remain a $40M annual headwind, but cost management has mitigated impact so far.

**【CFO Financial Commentary】**
- Q3 sales: $612M (13% reported growth, 9% organic), setting a new quarterly record.
- Adjusted EBITDA: $128M (21% YoY growth), margin 20.9% (up 140bps YoY).
- Adjusted EPS: $2.50 (23% YoY growth), driven by operational improvements and tax benefits.
- Americas segment margin: 23.7% (up 180bps YoY); Europe margin: 12.2% (up 160bps YoY).
- Full year outlook updated: Organic sales growth 4-5% (vs. prior 1-3%), adjusted EBITDA margin expansion 140-150bps.

**【Q&A Key Highlights】**
- **Tariffs & Pricing**: $11M of Q3 sales were pull-forward demand ahead of price increases. Q4 pricing will be slightly higher than Q3 to offset tariffs. Long-term pricing will depend on copper and tariff trends.
- **Haws Acquisition**: $60M business with 20% hydration market share; complementary to Bradley safety products. Synergies expected to drive margin expansion over time.
- **End Markets**: Multifamily housing growth is slow but nearing a bottom; data center sales in North America are growing faster than Asia-Pacific.
- **Europe Recovery**: Margins improved 160bps YoY, with restructuring complete. Management expects gradual recovery but remains cautious on new construction growth.
- **Government Shutdown Risk**: Potential impact on residential repair/replacement business (60% of revenue), though no immediate effects noted.


Watts Water Technologies, Inc. (WTS) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

WTS

WTS fundamentals

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