Watts Water Technologies Inc 10-Q for FY2026 Q1

Watts Water Technologies Inc (WTS)

10-Q 2026-05-07 For: 2026-03-29

Added on May 07, 2026

About this 10-Q

Watts Water Technologies Inc filed this 10-Q on May 7, 2026, covering the quarter ended March 29, 2026 (FY2026 Q1).

Headline figures

Quarter ended March 29, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $677.3M; up 21.4% from $558M a year earlier
Net income: $99.6M; up 34.6% from net income of $74M a year earlier
Diluted EPS: $2.97; up 34.4% from $2.21 a year earlier

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Delaware		04-2916536
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

815 Chestnut Street, North Andover, MA		01845
(Address of Principal Executive Offices)		(Zip Code)


Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐ Emerging growth company ☐


Class		Outstanding at April 26, 2026
Class A Common Stock, $0.10 par value		27,474,600

Class B Common Stock, $0.10 par value		5,916,290


Part I. Financial Information		3

Item 1.	Financial Statements	3

	Consolidated Balance Sheets at March 29, 2026 and December 31, 2025 (unaudited)	3

	Consolidated Statements of Operations for the First Quarters Ended March 29, 2026 and March 30, 2025 (unaudited)	4

	Consolidated Statements of Comprehensive Income for the First Quarters Ended March 29, 2026 and March 30, 2025 (unaudited)	5

	Consolidated Statements of Stockholders’ Equity for the First Quarters Ended March 29, 2026 and March 30, 2025 (unaudited)	6

	Consolidated Statements of Cash Flows for the First Quarters Ended March 29, 2026 and March 30, 2025 (unaudited)	7

	Notes to Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	35

Part II. Other Information		36

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 5.	Other Information	37

Item 6.	Exhibits	38

Signatures		39


		March 29,			December 31,
		2026			2025
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	374.7		$	405.5
Trade accounts receivable, less reserve allowances of $15.1 million at March 29, 2026 and $12.5 million at December 31, 2025			374.4			294.0
Inventories, net:
Raw materials			208.5			190.8
Work in process			28.1			28.5
Finished goods			306.5			305.0
Total Inventories			543.1			524.3
Prepaid expenses and other current assets			55.9			62.3
Total Current Assets			1,348.1			1,286.1
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost			781.1			777.1
Accumulated depreciation			(484.7)			(480.0)
Property, plant and equipment, net			296.4			297.1
OTHER ASSETS:
Goodwill			859.6			859.0
Intangible assets, net			286.8			294.6
Deferred income taxes			19.4			17.9
Other, net			129.5			126.5
TOTAL ASSETS		$	2,939.8		$	2,881.2
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	188.9		$	182.2
Accrued expenses and other liabilities			234.2			234.7
Accrued compensation and benefits			72.9			95.5
Total Current Liabilities			496.0			512.4
LONG-TERM DEBT			197.8			197.7
DEFERRED INCOME TAXES			42.5			36.5
OTHER NONCURRENT LIABILITIES			107.2			106.9
STOCKHOLDERS’ EQUITY:
Preferred Stock, $0.10 par value; 5,000,000 shares authorized; no shares issued or outstanding			—			—
Class A common stock, $0.10 par value; 120,000,000 shares authorized; 1 vote per share; issued and outstanding, 27,478,641 shares at March 29, 2026 and 27,426,533 shares at December 31, 2025			2.7			2.7
Class B common stock, $0.10 par value; 25,000,000 shares authorized; 10 votes per share; issued and outstanding, 5,916,290 shares at March 29, 2026 and December 31, 2025			0.6			0.6
Additional paid-in capital			728.6			720.6
Retained earnings			1,496.8			1,431.3
Accumulated other comprehensive loss			(132.4)			(127.5)
Total Stockholders’ Equity			2,096.3			2,027.7
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	2,939.8		$	2,881.2


		First Quarter Ended
		March 29,			March 30,
		2026			2025
Net sales		$	677.3		$	558.0
Cost of goods sold			351.2			285.5
GROSS PROFIT			326.1			272.5
Selling, general and administrative expenses			192.9			167.5
Restructuring			0.2			17.3
OPERATING INCOME			133.0			87.7
Other (income) expense:
Interest income			(1.7)			(2.3)
Interest expense			2.6			2.7
Other expense, net			0.7			0.4
Total other expense			1.6			0.8
INCOME BEFORE INCOME TAXES			131.4			86.9
Provision for income taxes			31.8			12.9
NET INCOME		$	99.6		$	74.0
Basic EPS
NET INCOME PER SHARE		$	2.97		$	2.21
Weighted average number of shares			33.5			33.5
Diluted EPS
NET INCOME PER SHARE		$	2.97		$	2.21
Weighted average number of shares			33.5			33.5
Dividends declared per share		$	0.52		$	0.43


																		Accumulated
		Class A					Class B					Additional						Other			Total
(For the first quarter ended		Common Stock					Common Stock					Paid-In			Retained			Comprehensive			Stockholders’
March 30, 2025)		Shares		Amount			Shares		Amount			Capital			Earnings			Loss			Equity
Balance at December 31, 2024		27,366,685		$	2.7		5,953,290		$	0.6		$	696.2		$	1,184.8		$	(176.4)		$	1,707.9
Net income		—			—		—			—			—			74.0			—			74.0
Other comprehensive income		—			—		—			—			—			—			13.7			13.7
Comprehensive income																						87.7
Stock-based compensation		—			—		—			—			2.9			—			—			2.9
Stock repurchase		(18,751)			—		—			—			—			(3.9)			—			(3.9)
Net change in restricted and performance stock units		80,451			—		—			—			2.9			(10.9)			—			(8.0)
Common stock dividends		—			—		—			—			—			(14.4)			—			(14.4)
Balance at March 30, 2025		27,428,385		$	2.7		5,953,290		$	0.6		$	702.0		$	1,229.6		$	(162.7)		$	1,772.2


	For the First Quarter Ended March 30, 2025
			(in millions)
Distribution Channel	Americas		Europe		APMEA		Consolidated
Wholesale	$	266.5	$	75.7	$	22.9	$	365.1
OEM		24.7		32.2		1.5		58.4
Specialty		105.6		—		7.1		112.7
DIY		21.3		0.5		—		21.8
Total	$	418.1	$	108.4	$	31.5	$	558.0

	For the First Quarter Ended March 30, 2025
			(in millions)
Principal Product Category	Americas		Europe		APMEA		Consolidated
Residential & Commercial Flow Control	$	270.8	$	41.4	$	28.6	$	340.8
HVAC and Gas Products		86.3		43.4		2.4		132.1
Drainage and Water Re-use Products		33.6		22.3		0.4		56.3
Water Quality Products		27.4		1.3		0.1		28.8
Total	$	418.1	$	108.4	$	31.5	$	558.0


Cash		$	4.5
Trade accounts receivable			7.3
Inventories, net			10.5
Prepaid expenses and other current assets			5.0
Property, Plant and Equipment			5.9
Intangible assets			29.9
Goodwill			57.0
Other assets			9.4
Accounts payable			(6.2)
Accrued expenses and other current liabilities			(17.1)
Other noncurrent liabilities			(11.7)
Purchase price		$	94.5


		March 29, 2026									December 31, 2025
		Gross						Net			Gross						Net
		Carrying			Accumulated			Carrying			Carrying			Accumulated			Carrying
		Amount			Amortization			Amount			Amount			Amortization			Amount

		(in millions)
Patents		$	5.0		$	(5.0)		$	—		$	5.0		$	(5.0)		$	—
Customer relationships			314.0			(122.9)			191.1			315.0			(117.9)			197.1
Technology			55.5			(50.7)			4.8			55.5			(50.1)			5.4
Trade names			25.8			(14.2)			11.6			26.4			(13.9)			12.5
Other			1.1			(0.9)			0.2			1.1			(0.9)			0.2
Total amortizable intangibles			401.4			(193.7)			207.7			403.0			(187.8)			215.2
Indefinite-lived intangible assets			79.1			—			79.1			79.4			—			79.4
		$	480.5		$	(193.7)		$	286.8		$	482.4		$	(187.8)		$	294.6


		First Quarter Ended
		March 29,			March 30,
		2026			2025

		(in millions)
Restructuring costs:
2025 France Actions		$	0.2		$	17.4
Other Actions			—			(0.1)
Total restructuring charges		$	0.2		$	17.3


											Facility
					Legal and			Asset			exit
		Severance			consultancy			write-downs			and other			Total

		(in millions)
Costs incurred — 2025		$	18.0		$	1.4		$	0.9		$	1.7		$	22.0
Costs incurred — first quarter 2026			0.1			0.1			—			—			0.2
Remaining costs to be incurred			0.4			0.3			—			0.3			1.0
Total expected restructuring costs		$	18.5		$	1.8		$	0.9		$	2.0		$	23.2


											Facility
					Legal and			Asset			exit
		Severance			consultancy			write-downs			and other			Total

		(in millions)
Balance at December 31, 2025		$	8.5		$	0.4		$	—		$	0.4		$	9.3
Net pre-tax restructuring charges			0.1			0.1			—			—			0.2
Utilization and foreign currency impact			(1.7)			(0.5)			—			(0.4)			(2.6)
Balance at March 29, 2026		$	6.9		$	—		$	—		$	—		$	6.9


	For the First Quarter Ended March 29, 2026
	Americas		Europe		APMEA		Total

	(in millions)
Net sales
Net sales from external customers	$	515.1	$	121.4	$	40.8	$	677.3
Intersegment sales		2.7		6.2		27.0		35.9
Total segment net sales	$	517.8	$	127.6	$	67.8	$	713.2
Reconciliation of net sales
Elimination of intersegment sales								(35.9)
Total consolidated net sales							$	677.3
Less (a)
Segment cost of goods sold		256.7		79.7		48.0
Segment selling, general and administrative		121.2		28.2		11.6
Segment research and development		15.4		3.0		0.7
Segment earnings		124.5		16.7		7.5		148.7

Reconciliation of segment earnings to income before income taxes
Segment special items (b)								(2.9)
Corporate operating loss (c)								(12.8)
Consolidated operating income								133.0
Interest income								(1.7)
Interest expense								2.6
Other expense, net								0.7
Income before income taxes							$	131.4


	Fair Value Measurements at December 31, 2025 Using:
			Quoted Prices in Active		Significant Other		Significant
			Markets for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)

	(in millions)
Assets
Plan asset for deferred compensation(1)	$	3.0	$	3.0	$	—	$	—
Interest rate swap(3)	$	0.7	$	—	$	0.7	$	—
Total assets	$	3.7	$	3.0	$	0.7	$	—
Liabilities
Plan liability for deferred compensation(2)	$	3.0	$	3.0	$	—	$	—
Interest rate swap(4)	$	0.3	$	—	$	0.3	$	—
Designated foreign currency hedges(4)	$	0.1	$	—	$	0.1	$	—
Total liabilities	$	3.4	$	3.0	$	0.4	$	—



		First Quarter Ended
		March 29,			March 30,
		2026			2025
OPERATING ACTIVITIES
Net income		$	99.6		$	74.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			9.4			8.8
Amortization of intangibles			6.0			4.9
Amortization of cloud computing arrangements			0.6			—
Loss on disposal of long-lived assets			—			0.1
Stock-based compensation			5.2			2.9
Deferred income tax			4.8			(2.4)
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts receivable			(82.0)			(41.3)
Inventories			(19.8)			(18.4)
Prepaid expenses and other assets			(3.0)			(5.9)
Accounts payable, accrued expenses and other liabilities			(2.9)			32.5
Net cash provided by operating activities			17.9			55.2
INVESTING ACTIVITIES
Additions to property, plant and equipment			(11.3)			(9.6)
Business acquisitions, net of cash acquired			(1.9)			(70.3)
Net cash used in investing activities			(13.2)			(79.9)
FINANCING ACTIVITIES
Payments for withholding taxes on vested awards			(12.8)			(10.9)
Payments for finance leases and other			(0.7)			(0.7)
Payments to repurchase common stock			(3.8)			(3.9)
Dividends			(17.5)			(14.4)
Net cash used in financing activities			(34.8)			(29.9)
Effect of exchange rate changes on cash and cash equivalents			(0.7)			4.5
DECREASE IN CASH AND CASH EQUIVALENTS			(30.8)			(50.1)
Cash and cash equivalents at beginning of year			405.5			386.9
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	374.7		$	336.8

SUPPLEMENTAL CASH FLOW DISCLOSURE:
Acquisition of businesses:
Fair value of assets acquired		$	1.6		$	76.6
Cash paid, net of cash acquired			1.9			70.3
Liabilities assumed		$	(0.3)		$	3.5


		2026		2025
Expected life (years)		3.0		3.0
Expected stock price volatility		25.7	%	27.3	%
Expected dividend yield		0.80	%	0.90	%
Risk-free interest rate		3.7	%	4.0	%


	March 29,		December 31,
	2026		2025

	(in millions)
Identifiable assets (at end of period)
Americas	$	2,079.1	$	2,043.6
Europe		629.4		616.5
APMEA		231.3		221.1
Consolidated identifiable assets	$	2,939.8	$	2,881.2
Property, plant and equipment, net (at end of period)
Americas	$	201.8	$	202.1
Europe		77.4		78.7
APMEA		17.2		16.3
Consolidated property, plant and equipment, net	$	296.4	$	297.1


		First Quarter Ended													% Change to
		March 29, 2026					March 30, 2025								Consolidated
		Net Sales			% Sales		Net Sales			% Sales		Change			Net Sales

		(dollars in millions)
Americas		$	515.1		76.1	%	$	418.1		74.9	%	$	97.0		17.4	%
Europe			121.4		17.9			108.4		19.4			13.0		2.3
APMEA			40.8		6.0			31.5		5.7			9.3		1.7
Total		$	677.3		100.0	%	$	558.0		100.0	%	$	119.3		21.4	%


									Change As a %								Change As a %
									of Consolidated Net Sales								of Segment Net Sales

	Americas		Europe		APMEA		Total		Americas		Europe		APMEA		Total		Americas		Europe		APMEA

	(dollars in millions)
Organic	$	65.0	$	0.5	$	1.1	$	66.6	11.6	%	0.1	%	0.2	%	11.9	%	15.5	%	0.5	%	3.4	%
Foreign exchange		1.3		12.5		2.3		16.1	0.3		2.2		0.4		2.9		0.3		11.5		7.4
Acquired		30.7		—		5.9		36.6	5.5		—		1.1		6.6		7.4		—		18.7
Total	$	97.0	$	13.0	$	9.3	$	119.3	17.4	%	2.3	%	1.7	%	21.4	%	23.2	%	12.0	%	29.5	%


																	Change As a %
																	*of Prior Year Sales ()**
		Wholesale			OEMs			DIY			Specialty			Total			Wholesale		OEMs		DIY		Specialty

		(dollars in millions)
Americas		$	50.9		$	(0.4)		$	0.1		$	14.4		$	65.0		19.1	%	(1.6)	%	0.5	%	13.6	%
Europe			0.6			(0.1)			—			—			0.5		0.8		(0.3)		—		—
APMEA			0.1			1.1			—			(0.1)			1.1		0.4		73.3		—		(1.4)
Total		$	51.6		$	0.6		$	0.1		$	14.3		$	66.6		14.1	%	1.0	%	0.5	%	12.7	%


									Change As a % of								Change As a % of
									Total Segment Earnings								Segment Earnings

	Americas		Europe		APMEA		Total		Americas		Europe		APMEA		Total		Americas		Europe		APMEA

	(dollars in millions)
Organic	$	26.3	$	(0.1)	$	3.1	$	29.3	22.2	%	(0.1)	%	2.6	%	24.7	%	26.9	%	(0.7)	%	56.4	%
Foreign exchange		0.2		1.7		(2.3)		(0.4)	0.2		1.4		(1.9)		(0.3)		0.2		11.3		(41.8)
Acquired		0.2		—		1.2		1.4	0.2		—		1.0		1.2		0.2		—		21.8
Total	$	26.7	$	1.6	$	2.0	$	30.3	22.6	%	1.3	%	1.7	%	25.6	%	27.3	%	10.6	%	36.4	%


		Issuer Purchases of Equity Securities (1)
									(d) Maximum Number (or
		(a) Total					(c) Total Number of		Approximate Dollar
		Number of		(b) Average			Shares (or Units)		Value) of Shares (or
		Shares (or		Price Paid			Purchased as Part of		Units) that May Yet Be
		Units)		per Share			Publicly Announced		Purchased Under the
Period		Purchased(1)		(or Unit)			Plans or Programs		Plans or Programs
January 1, 2026 – January 25, 2026		3,383		$	288.41		3,383		$	127,956,867
January 26, 2026 – February 22, 2026		3,953		$	311.27		3,953		$	126,726,524
February 23, 2026 – March 29, 2026		5,316		$	308.83		5,316		$	125,084,229
Total		12,652		$	304.16		12,652


Exhibit No.		Description
3.1		Restated Certificate of Incorporation, as amended. Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 25, 2023 (File No. 001-11499).
3.2		Amended and Restated By-Laws. Incorporated by reference to the Registrant’s Current Report on Form 8-K dated July 31, 2023 (File No. 001- 11499).
10.1*†		Form of 2026 Performance Stock Unit Award Agreement under the Watts Water Technologies, Inc. Third Amended and Restated 2004 Stock Incentive Plan
31.1†		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
31.2†		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1††		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350
32.2††		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS**		Inline XBRL Instance Document
101.SCH**		Inline XBRL Taxonomy Extension Schema Document
101.CAL**		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE**		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


	WATTS WATER TECHNOLOGIES, INC.

Date: May 7, 2026	By:	/s/ Robert J. Pagano, Jr.
		Robert J. Pagano, Jr.
		Chief Executive Officer, President and Chairperson of the Board (principal executive officer)

Date: May 7, 2026	By:	/s/ Diane McClintock
		Diane McClintock Chief Financial Officer (principal financial officer)


Date: May 7, 2026
	/s/ Diane McClintock
	Diane McClintock
	Chief Financial Officer