Watts Water Technologies, a global provider of water treatment solutions, reported record fourth‑quarter and full‑year 2025 results. Revenue reached $625.1 million in Q4, a 16% increase from $549.5 million in Q4 2024, and $2.438 billion for the year, up 8% from $2.257 billion in 2024. Operating income rose to $113.7 million, giving an operating margin of 18.2% versus 16.5% in 2024, while adjusted operating income climbed to $118.7 million, an adjusted margin of 19.0%.
Diluted earnings per share were $2.50, beating the consensus estimate of $2.36 by $0.14 or 6%, and adjusted diluted EPS reached $2.62. For the full year, diluted EPS was $10.17, up 17% from $8.55 in 2024, and adjusted EPS was $10.58, up 19% from $8.73. The earnings beat was driven by disciplined cost management, a favorable mix shift toward higher‑margin data‑center and industrial customers, and the successful integration of the Haws, Superior Boiler, and Saudi Cast acquisitions.
Revenue growth was underpinned by strong demand in the Americas, where sales grew 12% year‑over‑year, and by a 15% increase in data‑center revenue, reflecting the company’s focus on high‑growth, non‑residential markets. The company’s One Watts Performance System helped improve productivity and reduce operating costs, contributing to the margin expansion. While the acquisitions added short‑term integration costs, the overall mix shift and pricing power offset those impacts, allowing the company to maintain an operating margin above 18%.
Free cash flow for 2025 reached $356 million, up 7% from $332 million in 2024, and the cash‑flow conversion rate hit 105%, underscoring the company’s strong balance‑sheet health. The company’s low debt‑to‑equity ratio and robust cash generation provide flexibility to fund future growth, pursue additional acquisitions, and return value to shareholders through dividends and share buybacks.
Looking ahead, Watts Water guided for full‑year 2026 sales of $2.631 billion to $2.728 billion, an increase of 8% to 12% on a reported basis and 2% to 6% on an organic basis. Operating margin guidance of 18.8% to 19.4% and adjusted margin of 19.1% to 19.7% signals management’s confidence in sustaining profitability amid ongoing tariff headwinds and integration costs. The guidance reflects expectations of continued demand in data‑center and industrial segments and the ongoing benefits of the company’s strategic M&A pipeline.
CEO Robert J. Pagano highlighted the company’s “record fourth‑quarter and full‑year 2025 performance” and praised the team’s execution. He noted that the acquisitions of Haws, Superior Boiler, and Saudi Cast “expand our product portfolio and strengthen our channel access,” and that the company’s “One Watts Performance System” continues to drive productivity gains. Pagano also emphasized the company’s focus on water safety, conservation, and energy efficiency as key drivers of future growth.
Investors reacted positively to the results, citing the earnings beat, margin expansion, and strong guidance as evidence of effective execution and a resilient business model.
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