Watts Q2 2020 Earnings Report
Key Takeaways
Watts Water Technologies reported a 19% decrease in sales, both on a reported and organic basis, amounting to $339 million. GAAP EPS was $0.59, a 44% decline, while adjusted EPS was $0.74, a 32% decrease. Net income also fell by 45% to $20.2 million. The company acquired Australian Valve Group Pty Ltd (AVG) in an all-cash transaction on July 3, 2020.
Sales decreased by 19% on both reported and organic basis.
GAAP operating margin decreased by 380 bps; adjusted operating margin decreased by 220 bps.
GAAP EPS was $0.59 and adjusted EPS was $0.74, representing declines of 44% and 32%, respectively.
The company acquired Australian Valve Group Pty Ltd (AVG) in an all-cash transaction.
Watts
Watts
Watts Revenue by Geographic Location
Forward Guidance
The company expects to see sequential volume and margin improvement in the third quarter of 2020.
Positive Outlook
- Expect to see sequential volume improvement in Q3 2020
- Expect to see sequential margin improvement in Q3 2020
- Continue to promote policies to ensure employees are working in a safe environment
- Balance sheet remains very strong
- Focused on long-term strategic priorities of increasing investment in innovation and positioning Watts for future growth
Challenges Ahead
- COVID-19 pandemic continued to negatively impact year-over-year comparisons
- Recorded restructuring and impairment charges that included costs for previously announced actions.
- Sales decreased 19% on both a reported and organic basis
- Reported operating margin decreased 380 basis points
- Adjusted operating margin decreased 220 basis points
Revenue & Expenses
Visualization of income flow from segment revenue to net income