Earnings

Raises Outlook as Organic Growth Holds at 12%

The Tip Desk · August 6, 2026 · 2 min read

Watts lifted its 2026 organic-sales growth forecast to 8% to 11%.

Watts Water Technologies (WTS), a maker of water-management products and systems, posted record second-quarter net sales of $763.2 million as organic growth held at 12% for a second consecutive quarter.

Sales rose 19% from a year earlier, easing from 21% growth in the first quarter as acquisition and currency contributions diminished. Organic growth remained above the 8% recorded in the fourth quarter, extending an acceleration that began in the second half of 2024.

Revenue increased $85.9 million sequentially from $677.3 million. Diluted earnings rose 17% to $3.53 a share, while adjusted earnings increased 18% to $3.66 a share, with both growth rates slowing from the first quarter.

Margins improved from the start of the year but remained below year-earlier levels. GAAP operating margin rose sequentially to 20.2% from 19.6%, while adjusted margin reached 21.0% from 20.1%; compared with a year earlier, the measures contracted 80 and 60 basis points, respectively.

Americas sales climbed 17% to $585 million, including 12% organic growth, though segment margin fell 150 basis points. Acquisition dilution, inflation, tariffs and comparison with a prior-year tariff-related price-cost benefit outweighed pricing, volume leverage and productivity.

APMEA led the regions with reported growth of 57% and organic growth of 31%, driven by data-center volume in China, while its margin expanded 100 basis points. Europe sales rose 12%, including 9% organically, and margin widened 160 basis points as pricing, volume leverage and productivity more than offset inflation.

Watts raised its full-year outlook after leaving it unchanged the prior quarter. The company now expects reported sales growth of 14% to 17%, organic growth of 8% to 11%, GAAP operating margin of 19.4% to 20.0% and adjusted margin of 19.8% to 20.4%.

First-half free cash flow fell to $98 million from $105 million as higher working capital and capital spending outweighed increased net income. The company expects sequential improvement in the second half as it converts working capital to cash.

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