Watts Q1 2020 Earnings Report
Key Takeaways
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.
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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.
Positive Outlook
- 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.
Challenges Ahead
- 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
Revenue & Expenses
Visualization of income flow from segment revenue to net income