Watts Water Technologies (WTS) Financials

Watts Water Technologies (NYSE: WTS) continues to show steady growth, solid profitability, and a very healthy balance sheet in Q1 2026. Revenue, earnings, and operating cash flow all improved versus the same quarter last year, while leverage remained modest. That said, the company is still spending heavily on acquisitions, working capital swings are pressuring cash generation in some periods, and goodwill/intangible assets now make up a large portion of the asset base.

Here are the key takeaways from the last several years:

• Q1 2026 revenue rose to $677.3 million from $558.0 million in Q1 2025, showing strong top-line growth year over year.
• Q1 2026 net income increased to $99.6 million from $74.0 million a year earlier, indicating healthy bottom-line momentum.
• Operating income improved to $133.0 million in Q1 2026 versus $87.7 million in Q1 2025, suggesting better operating leverage.
• Cash from operations was positive at $17.9 million in Q1 2026, supported by strong earnings and non-cash add-backs.
• The balance sheet remains conservative, with $374.7 million in cash and only $197.8 million of long-term debt at the end of Q1 2026.
• Book equity expanded to $2.10 billion in Q1 2026, up from $1.77 billion in Q1 2025, reflecting continued retained earnings growth.
• Gross profit margin improved versus prior-year periods, helped by revenue growth outpacing cost of revenue growth.
• The company continues to return capital to shareholders through dividends, which were $0.52 per share in Q1 2026, while also buying back stock.
• Acquisition activity remains a meaningful part of the strategy, with $1.9 million spent on acquisitions in Q1 2026 and much larger deals in prior periods.
• Accumulated other comprehensive loss remains negative at -$132.4 million, though this is not uncommon for multinational industrial companies.
• Operating cash flow in Q1 2026 was much weaker than net income because changes in operating assets and liabilities used $102.9 million of cash, creating a short-term cash drag.
• Goodwill and intangible assets totaled about $1.15 billion combined in Q1 2026, which is a large share of the company’s $2.94 billion asset base.
• Current liabilities rose to $496.0 million in Q1 2026 from $449.5 million in Q1 2025, reflecting higher working-capital and operating obligations.
• The company has used acquisitions aggressively over the last year, including a very large $171.4 million acquisition outflow in Q4 2025, which increases integration risk.
• Quarterly cash balances can be volatile because WTS also funds dividends, buybacks, capex, and acquisitions, so reported cash flow can swing sharply from period to period.

Longer-term trend: Over the last four years, Watts Water Technologies has generally produced higher revenue, higher earnings, and improved equity, while keeping debt manageable. Revenue has climbed from roughly $471.7 million in Q1 2023 to $677.3 million in Q1 2026, and net income has moved up from $64.7 million to $99.6 million in the comparable quarters. The main watch item is that growth has been helped by acquisitions, so investors should keep an eye on integration, goodwill, and whether operating cash flow keeps pace with reported profits.

Bottom line: WTS looks financially strong overall. The business is growing, margins are holding up, and leverage is low. The stock’s risk profile is mostly tied to acquisition execution and working-capital volatility rather than balance sheet stress.