Watts Water Technologies reported record third quarter 2026 results, with double-digit organic growth and adjusted margin expansion that significantly exceeded analyst expectations. The company's performance was bolstered by robust demand in data center applications and favorable price realization, prompting management to raise full-year guidance for both sales and operating margins.
Key Highlights
- Organic sales increased 12% year-over-year, outperforming the 6.5% consensus estimate due to strong data center cooling volume.
- Adjusted operating margin expanded 240 basis points to 20.9% as favorable price realization and volume leverage offset inflation.
- Reported GAAP results were uniquely impacted by a $39 million tariff refund, which contributed to a total reported operating margin of 26.2%.
- Full-year 2026 organic sales growth guidance was raised to a range of 11% to 12%, up from previous outlooks.