Watts Water Technologies, Inc.
) reported first-quarter 2013 adjusted earnings of 49 cents per
share, up 14% year over year, driven by higher sales in North
America and Asia, cost reductions in North America and EMEA as
well as share repurchases. Earnings, however, fell short of the
Zacks Consensus Estimate of 57 cents by 14%.
On a reported basis, including special items, earnings in the
quarter were 45 cents per share compared with 42 cents in the
Total revenue remained flat year over year at $362 million,
beating the Zacks Consensus Estimate of $358 million. Given the
favorable foreign exchange impact, growth from acquisitions as
well as organic growth in North America and Asia were mitigated
by lower organic growth in the Europe, Middle East and Africa
(EMEA) segment, primarily in the France and German
Cost and Margins
Cost of sales remained flat at $233 million in the quarter.
Gross profit inched up 1% to $129.5 million. Consequently, gross
margin expanded 20 basis points (bps) to 35.8% in the quarter.
Selling, general and administrative expenses decreased 1% to $99
million. Adjusted operating profit increased 7% to $30.5 million
and adjusted operating margin expanded 50 bps to 8.4%.
North America: Net sales went up 3% to $213 million, aided by
acquired sales of $0.7 million and organic sales growth of 2.6%;
partially offset by unfavorable foreign currency translation with
the weakening of the Canadian dollar against the U.S. dollar.
Operating profit increased 21% to $24 million in the quarter.
EMEA: Net sales were $142 million, down 5% on a year-over-year
basis as positive impact of foreign currency translation was
offset by lower organic sales. The segment reported an operating
profit of $10.6 million, down 17% from the year-ago operating
income of $10.6 million.
Asia: Net sales increased 34% to $7 million in the quarter.
Operating profit more than doubled to $2.9 million from $1.4
million in the prior year quarter, triggered by increased
third-party sales and incremental plant absorption.
Cash and cash equivalents were $251 million as of Mar 31, 2013
compared with $271.8 million as of Dec 31, 2012. Cash flow from
operations for the quarter was an outflow of $2.7 million versus
an inflow of $3 million in the prior-year quarter.
Long-term debt, excluding current portion, amounted to $306.8
million as of Mar 31, 2013 compared with $307.5 million as of Dec
31, 2012. Net debt-to-capitalization ratio increased to 12.4% as
of Mar 31, 2013, compared with 10.7% as of Dec 31, 2012.
Watts Water's board of directors has authorized the repurchase
of up to $90 million of its common stock. The company has also
announced a 2 cents per share or an 18% hike in it dividend to 13
cents per share.
Watts Water has made strategic investments in both people and
systems and lead-free conversion program in North America. Even
though it has affected near-term results, it will lead to
improved margins in the long term. The company will benefit from
the residential construction recovery that seems imminent in the
U.S. Its focus on growing its business and leveraging the
substantial market expansion opportunities in Asia will add to
its growth profile. However, weak economic condition in Europe is
still a headwind for the company.
Watts Water, through its subsidiaries, is a world leader in
the manufacture of innovative products to control the efficiency,
safety, and quality of water within applications (residential,
commercial, and institutional). Watts Water retains a Zacks Rank
Badger Meter Inc.
) reported first-quarter earnings per share of 20 cents, down
significantly from 42 cents earned in the year-ago quarter and
was well short of the Zacks Consensus Estimate of 48
Roper Industries Inc.
) reported earnings of $1.27 per share, up 16.5% from the
year-ago quarter and ahead of the Zacks Consensus Estimate of
On the other hand,
) reported first quarter los per share of 22 cents compared with
a prior year earnings per share of 12 cents but narrower than the
Zacks Consensus Estimate of a loss per share of 27 cents.
BADGER METER (BMI): Free Stock Analysis
NANOMETRICS INC (NANO): Free Stock Analysis
ROPER INDS INC (ROP): Free Stock Analysis
WATTS WATER TEC (WTS): Free Stock Analysis
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