Watts Water Technologies, Inc. (NYSE:WTS) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company.
Watts Water Technologies, Inc. Earnings Cheat Sheet
Results: Adjusted Earnings Per Share increased 13.95% to $0.49 in the quarter versus EPS of $0.43 in the year-earlier quarter.
Revenue: Decreased 0.58% to $362.1 million from the year-earlier quarter.
Actual vs. Wall St. Expectations: Watts Water Technologies, Inc. reported adjusted EPS income of $0.49 per share. By that measure, the company missed the mean analyst estimate of $0.58. It missed the average revenue estimate of $370.48 million.
Quoting Management: David J. Coghlan, Chief Executive Officer, noted, “Our wholesale and OEM markets in North America experienced 3% growth over the prior year and strengthened as the quarter progressed with a strong month of March. In our EMEA segment, our drains business and the Middle East market grew as planned, but we experienced greater than expected declines in France, due to economic market conditions, and in Germany, due to OEM customer delays. EMEA cost containments mitigated further margin erosion. Consolidated margins were also negatively affected by product mix and selected pricing actions in both North America and EMEA. We are closely monitoring the overall market environment and, as a result, the Company is considering further realignment initiatives. Our lead free initiative is continuing on track as we spent an incremental $5.6 million dollars in capital during the first quarter of 2013 for our new foundry, and invested approximately $10 million in transitional lead free inventory.”
Key Stats (on next page)…
Revenue increased 3.72% from $349.1 million in the previous quarter. EPS decreased 19.67% from $0.61 in the previous quarter.
Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.71 to a profit $0.61. For the current year, the average estimate has moved down from a profit of $2.61 to a profit of $2.58 over the last ninety days.
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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)