Key Highlights

  • Net sales were USD 728.0 million, up 19% from USD 611.7 million on a reported basis and 12% organically, with acquisitions adding USD 41 million, or 7%.
  • GAAP Diluted Earnings per Share rose 77% to USD 4.34 from USD 2.45, while adjusted diluted earnings per share, a non-GAAP measure, rose 36% to USD 3.40.
  • Operating margin was 26.2%, up 800 basis points, and included USD 39 million of Tariff refunds; adjusted Operating Margin was 20.9%, up 240 basis points.
  • Nine-month free Cash Flow was USD 230 million versus USD 216 million a year earlier, and USD 117 million remains under the share repurchase program.

Data Center Demand and Pricing Lift Third-Quarter Sales

Watts Water Technologies (NYSE:WTS) reported record third quarter results on November 4, 2026. Sales of USD 728.0 million rose 19% on a reported basis and 12% organically, which management attributed to higher volume, primarily from Data Center growth, and favorable price realization. Acquisitions contributed USD 41 million and foreign exchange USD 1 million. By region, Americas sales were USD 553 million, up 19%, Europe was USD 120 million, up 7%, and APMEA was USD 56 million, up 54% reported and 30% organic. The chief executive said demand was particularly strong in data center applications, while higher interest rates and market uncertainty continue to weigh on new construction.

Tariff Refunds Widen the Gap Between GAAP and Adjusted Profit

GAAP Operating Income climbed 71% to USD 190.8 million, a margin of 26.2% against 18.2%. The company said that expansion mainly reflects USD 39 million of tariff refunds, plus operational improvements and lower restructuring costs. Because the refunds were classified as a special item, adjusted operating income of USD 151.8 million, up 34%, excludes them, and adjusted margin rose to 20.9% from 18.5% on pricing, Volume Leverage and productivity, partly offset by Inflation and Acquisition dilution. Special items reduced earnings per share by USD 0.94 this quarter, which is why adjusted EPS of USD 3.40 sits below the GAAP figure of USD 4.34.

Raised Guidance, Cash Position and Working Capital

The company raised its full-year 2026 outlook: reported sales growth of 17% to 18%, organic growth of 11% to 12%, operating margin of 21.6% to 21.7% and adjusted operating margin of 20.3% to 20.4%. The ranges assume no change in the Middle East conflict's impact and include the estimated effect of tariffs in place or announced. Cash was USD 444.8 million at September 27, 2026, and net Debt was negative USD 346.6 million, meaning cash exceeded debt. Working Capital rose on higher receivables and inventory, partly built to support data center demand. About 11,000 shares were repurchased for USD 3.9 million in the quarter. A conference call was set for November 5, 2026.

Where Things Stand

Mostly the underlying business, with a one-time boost. Watts Water Technologies (NYSE:WTS) grew sales 12% organically on data center volume and pricing, and adjusted EPS rose 36% to USD 3.40. The USD 4.34 GAAP figure was inflated by USD 39 million of tariff refunds that are not in adjusted results. The company raised its sales and margin guidance, and the next markers are fourth-quarter cash flow, which it expects to be strong, and any change to tariff or construction conditions.