Watts Water Technologies Inc. (WTS) filed Quarterly Report for the period ended 2009-09-27.
Watts Water Technologies Inc. designs manufactures and sells an extensive line of products to the water quality and water regulation and control markets. Watts Water Technologies Inc. has a market cap of $1.1 billion; its shares were traded at around $29.5 with a P/E ratio of 19.8 and P/S ratio of 0.7. The dividend yield of Watts Water Technologies Inc. stocks is 1.5%. Watts Water Technologies Inc. had an annual average earning growth of 18.2% over the past 10 years. GuruFocus rated Watts Water Technologies Inc. the business predictability rank of 2.5-star.
Highlight of Business Operations:
Our sales in the first nine months continued to be affected by downward pressure from a weak U.S. commercial construction marketplace. In addition, U.S. residential construction activity is at historically low levels. We continued to see marked reductions in European sales as the European economy has migrated into a recession. Presently, we believe sales in 2009 will continue to trend down when compared to 2008 as a result of the recessionary pressures. Plant under-absorption and negative foreign currency movements affected operating results in the first nine months of 2009. Plant under-absorption costs were partially offset by our cost saving initiatives. Foreign currency movements, mainly related to the strengthening of the U.S. dollar against the euro and Canadian dollar, negatively impacted the third quarter and first nine months of 2009 diluted earnings per share by $0.01 and $0.07, respectively, compared to the comparable periods of 2008. Additionally, the credit market crisis continues to create concerns for our performance in 2009. In response to these concerns, we took numerous steps to ensure we remain on a firm fiscal platform. In the latter half of 2008, we announced a reduction of the United States workforce, implemented a nine-month salary freeze in North America and initiated a review of discretionary spending in order to reduce operating expenses. In 2009, we have expanded our cost savings programs on a worldwide basis. We have initiated salary reductions, worker furloughs and other cost reductions in an effort to leverage our costs against anticipated lower sales volumes. Additionally, in February 2009, we expanded our restructuring program to consolidate our manufacturing footprint in North America and China. Savings from this program will not be realized until 2010. Lastly, we are continuing our implementation of lean manufacturing and Six Sigma disciplines to partially offset negative pressures on operating income.
Restructuring and Other Charges. In the third quarter of 2009, we recorded a net charge of $6.3 million including $5.8 million for asset write-downs and $1.6 million for severance and other costs incurred as part of our previously announced footprint reduction and restructuring programs, as compared to $0.8 million for the third quarter of 2008. Included in the 2009 restructuring and other charges
WTS is in the portfolios of John Keeley of Keeley Fund Management.
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