NYSE$WTS

Watts Water Technologies Inc. · Q1 2020 earnings

Q1 2020 earnings · · Investor relations

Briefing

Watts Water Technologies reported first quarter results, experiencing a sales decrease and implementing measures to mitigate the impact of COVID-19.

Watts Water Technologies reported a 2% decrease in sales and a 1% organic sales decrease due to the COVID-19 pandemic. Despite these challenges, the company's GAAP EPS increased by 3% and adjusted EPS increased by 1%. They are withdrawing 2020 full year outlook due to COVID-19 uncertainty.

  • Sales decreased by 2% overall and 1% organically, impacted by COVID-19.
  • GAAP operating margin increased by 50 bps, while adjusted operating margin increased by 20 bps.
  • GAAP and adjusted EPS both saw increases, up 3% and 1% respectively.
  • The company is withdrawing its 2020 full year outlook due to the uncertainty caused by COVID-19.

Headline financials

Total Revenue

$383M

Previous: $389M-1.6%
EPS (adj)

$0.95

Previous: $0.94+1.1%
Total Organic Sales Growth

-1.2%

No prior period
Americas Organic Sales Growth

0.4%

No prior period
Europe Organic Sales Growth

-2.3%

No prior period
APMEA Organic Sales Growth

-22.5%

No prior period
Capital Expenditures

-$8.9M

Previous: -$6.9M-29.0%
Free Cash Flow

$23.1M

Previous: $24.1M-4.1%
Net Income

$32M

Previous: $31M+3.2%
Operating Income

$47.8M

Previous: $46.7M+2.4%
Gross Profit

$163M

Previous: $164M-0.9%
Cash & Equivalents

$245M

Previous: $170M+44.2%
Total Assets

$1.77B

Previous: $1.68B+5.0%
Stock-Based Comp

$3.6M

Previous: $4.6M-21.7%

Revenue & EPS history

Watts · Revenue · Quarterly

$383M

Q1 2020-1.6%vs Q1 2019
Beat estimate in 16 of 16 quarters(100%)
ActualEstimate

Revenue by segment

Watts · $383M total across 3 segments · Q1 2020

  • Americas
    $262M+1.4%
  • Europe
    $110M-5.2%
  • APMEA
    $10M-25.9%

Forward guidance

Due to the uncertainty created by COVID-19, Watts Water Technologies is withdrawing its 2020 full year outlook. The company is focusing on cost reduction and cash preservation programs.

Tailwinds

  • Focusing on managing what is within our control
  • Addressing COVID-19 disruptions by initiating various cost reduction and cash preservation programs to mitigate its impact.
  • Continue to implement these programs over the remainder of 2020.
  • Believe the actions we have taken over the last several years to strengthen our portfolio and increase customer intimacy, along with aggressively paying down debt, has put us in a very strong financial position.
  • Maintain ample liquidity to work through these uncertain times, and we expect to continue to invest for the future.

Headwinds

  • COVID-19 pandemic has resulted in lower demand and volume declines.
  • Operationally, the COVID-19 pandemic has resulted in lower demand and volume declines.
  • Planning to temporarily suspend our stock repurchase program
  • Reducing capital expenditures
  • Deferring payment of employer payroll tax expenditures

Historical earnings impact

How earnings announcements have historically affected this stock's price.

Avg. return before/after earnings

Based on 20 quarterly earnings reports · overlaid with Q1 2020

Historical avgQ1 2020

+0.7%

Avg return

Earnings day

+2.1%

Avg return

5 days after

+2.6%

Avg return

30 days after

53%

36 / 68 earnings

Positive

+12.7%

Q2 2015

Best reaction

-7.8%

Q4 2014

Worst reaction

Earnings price reactions
QuarterReport dateReaction (Day 0)+5 days+30 days
Q1 2026+1.1%+2.6%+7.6%
Q4 2025+6.8%+4.7%-5.4%
Q3 2025-6.7%-2.4%-3.4%
Q1 2025+10.2%+15.0%+15.6%
Q4 2024+7.6%+2.5%-1.1%
Q3 2024-3.6%-1.1%+9.1%
Q2 2024-5.7%-9.2%-3.7%
Q1 2024+1.0%+2.3%-10.5%
Q4 2023-7.8%-8.2%-5.5%
Q3 2023+7.3%+7.4%+13.6%
Q2 2023+0.8%+3.0%+1.1%
Q1 2023+3.5%+4.7%+3.5%
Q4 2022+3.2%+3.3%-3.1%
Q3 2022-3.8%-1.0%+9.2%
Q2 2022+7.2%+5.8%-1.6%
Q1 2022+7.3%+3.4%+6.2%
Q4 2021-5.0%-8.7%-8.0%
Q3 2021+2.6%+6.2%-2.1%
Q2 2021+2.7%+4.6%+8.8%
Q1 2021+4.2%+10.5%+13.1%
Q4 2020-2.9%-5.3%-4.3%
Q3 2020-1.2%-2.8%+1.5%
Q2 2020+3.5%+8.9%+16.4%
Q1 2020-4.2%-4.7%+11.7%
Q4 2019+7.2%+6.8%-9.0%
Q3 2019-2.2%-0.3%+1.7%
Q2 2019-1.5%-2.1%-2.1%
Q1 2019+2.1%+0.5%-4.0%
Q4 2018+8.6%+5.9%+3.9%
Q3 2018+4.7%+7.8%+3.5%
Q2 2018+0.9%+0.2%-3.6%
Q1 2018+0.4%+3.3%+4.9%
Q4 2017+3.8%+6.0%+10.5%
Q3 2017+4.5%+2.4%+9.4%
Q2 2017+4.7%+3.1%-2.5%
Q1 2017+7.9%+3.8%+3.9%
Q4 2016-3.5%-4.6%-5.5%
Q3 2016+2.6%+5.7%+14.9%
Q2 2016+3.3%+3.5%+8.8%
Q1 2016-3.6%
Q4 2015+3.5%
Q3 2015-6.7%
Q2 2015+12.7%
Q1 2015-1.9%
Q4 2014-7.8%
Q3 2014+2.1%
Q2 2014-1.0%
Q1 2014-6.0%
Q4 2013+2.8%
Q3 2013+0.3%
Q2 2013+0.5%
Q1 2013-4.7%
Q4 2012-2.8%
Q3 2012+6.4%
Q2 2012+3.5%
Q1 2012-1.7%
Q4 2011-0.6%
Q2 2011-0.6%
Q3 2011+0.2%
Q1 2010-1.9%
Q1 2011-1.9%
Q2 2010-4.1%
Q4 2008-4.1%
Q4 2010-4.1%
Q3 2009-0.9%
Q3 2010-0.9%
Q2 2009-1.2%
Q4 2009-1.2%

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