Watts raises 2026 forecast as Q3 profit tops estimates

Watts Water Technologies (WTS) said on Nov. 4 that third-quarter sales rose 19% to $728.0 million, and it raised its full-year 2026 sales and margin forecast.

Adjusted diluted earnings per share were $3.40, topping the $3.18 consensus estimate. Revenue also topped the $699.46 million consensus estimate.

Here's how the company did:

• Net sales: $728.0 million vs. $611.7 million a year earlier
• Adjusted EPS: $3.40 vs. $2.50 a year earlier, against $3.18 expected
• Diluted EPS: $4.34 vs. $2.45 a year earlier
• Net income: $145.4 million vs. $82.2 million a year earlier

Watts Water Technologies, through its subsidiaries, makes products that control the efficiency, safety and quality of water in residential, commercial and institutional buildings.

Diluted earnings included $39 million of tariff refunds, which the company classified as a special item and excluded from adjusted results.

Revenue has risen in each of the last three quarters, from $611.7 million in the third quarter of 2025 to $763.2 million in the second quarter of 2026, according to its SEC filings.

Raised 2026 outlook

Watts now expects full-year sales growth of 17% to 18% on a reported basis and 11% to 12% on an organic basis.

In its previous results release on Aug. 5, it forecast reported growth of 14% to 17% and organic growth of 8% to 11%.

The company now expects operating margin of 21.6% to 21.7% and adjusted operating margin of 20.3% to 20.4%. In August it forecast 19.4% to 20.0% and 19.8% to 20.4%.

The adjusted outlook excludes tariff refunds and related interest income, the company said.

Chief Executive Officer Robert J. Pagano Jr. said, “Strong execution across our businesses drove double-digit organic growth and significant adjusted operating margin expansion in the third quarter.”

Pagano also said demand remained particularly strong in data center applications.

Segment results

Americas sales rose 19% to $553 million, or 12% organically, on higher volume tied to data center growth and favorable price realization. Segment margin rose 180 basis points.

Acquisitions within the Americas and APMEA added $41 million, or 7%, to reported sales growth in the quarter.

Europe sales rose 7% to $120 million, or 9% organically, and segment margin rose 230 basis points.

APMEA sales rose 54% to $56 million, or 30% organically, and segment margin rose 170 basis points.

Operating margin was 26.2%, against 18.2% a year earlier. Adjusted operating margin was 20.9%, up from 18.5%.

Restructuring costs fell to $0.3 million from $1.9 million.

Cash and buybacks

Operating cash flow for the first nine months was $279 million. Free cash flow was $230 million, up from $216 million a year earlier.

Net capital expenditures were $49 million for the first nine months, and working capital rose on higher receivables and inventory.

Watts repurchased about 11,000 shares for $3.9 million in the quarter. About $117 million remains under a program authorized in 2023, which has no expiration date.

Dividends declared were $0.63 per share in the quarter, up from $0.52 a year earlier.

Watts will hold a webcast of its conference call on Nov. 5 at 9 a.m. ET.