Watts Water Technologies Reports First Quarter 2005 Results.NORTH ANDOVER North Andover (ăn`dōvər), town (1990 pop. 22,792), Essex co., NE Mass., on the Merrimack River, in a dairy and farm area; settled c.1644, set off from Andover and inc. 1855. , Mass. -- Watts Watts, residential section of south central Los Angeles. Named after C. H. Watts, a Pasadena realtor, the section became part of Los Angeles in 1926. Artist Simon Rodia's celebrated Watts Towers are there. Water Technologies, Inc. (NYSE NYSE See: New York Stock Exchange Symbol "WTS See Windows Terminal Server. ") today announced results for the first quarter ended April 3, 2005. Sales for the first quarter ended April 3, 2005 were $219,027,000, an increase of $33,019,000, or 18%, from the first quarter ended March 28, 2004. Net income for the first quarter ended April 3, 2005, was $12,358,000, or $0.37 per share, which includes a net loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $39,000. Income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the increased $1,402,000, or 13%, for the first quarter ended April 3, 2005, to $12,397,000, or $0.37 per share, compared to income from continuing operations for the first quarter ended March 28, 2004 of $10,995,000, or $0.34 per share. Restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs, net of tax, incurred in the first quarters of 2005 and 2004 were $496,000, or $0.02 per share, and $724,000, or $0.02 per share, respectively. Patrick S. O'Keefe O'Keeffe, and Keeffe, are the anglicised versions of the Irish Ó Caoimh, from caomh, meaning "kind" or "gentle". The original Caomh from whom the family descend lived in the early eleventh century, and was a descendant of Art, King of Munster from 742 to 762. , Chief Executive Officer, commented, "Our overall increase in sales was achieved by internal growth, contributions from acquired companies and the change in foreign exchange rates. Our internal growth contributed $20,104,000 of the increase in sales in the first quarter ended April 3, 2005 over the first quarter ended March 28, 2004. Our acquisitions contributed $9,303,000 of sales for the first quarter ended April 3, 2005 over the first quarter ended March 28, 2004. This acquired growth was attributable to the January January: see month. 2005 acquisitions of HF Scientific, Inc. and Sea Tech, Inc., the May 2004 acquisition of Orion Orion, in Greek mythology Orion (ōrī`ən), in Greek mythology, Boeotian hunter. When Oenopion delayed giving his daughter Merope to him, Orion, when drunk, violated her. Enterprises, Inc. and the April 2004 acquisition of TEAM Precision Pipework, Ltd. The change in foreign exchange rates for the first quarter ended April 3, 2005 increased our sales by $3,612,000 over the first quarter ended March 28, 2004 due primarily to the strengthening of the euro versus the U.S. dollar. "Our North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. segment increased sales for the first quarter ended April 3, 2005 by 22% to $147,477,000 compared to $120,982,000 for the first quarter ended March 28, 2004. This increase in North American sales was achieved through internal sales growth of $19,245,000, the inclusion of sales from the acquisitions of HF Scientific, Inc., Sea Tech, Inc. and Orion Enterprises, Inc. totaling $6,500,000, and $750,000 due to favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign exchange rates associated with the strengthening of the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents versus the U.S. dollar." "Internal sales growth in the North American wholesale market for the first quarter ended April 3, 2005 increased 14% over the first quarter ended March 28, 2004. This increase was led by increased sales of backflow backflow /back·flow/ (-flo) reflux or regurgitation (1). pyelovenous backflow drainage from the renal pelvis into the venous system occurring under certain conditions of back pressure. prevention units, as well as strength in our plumbing plumbing, piping systems inside buildings for water supply and sewage. The Romans had a highly developed plumbing system; water was brought to Rome by aqueducts and distributed to homes in lead pipes—hence the name plumbing from the Latin word plumbum and under-floor radiant heating radiant heating: see heating. radiant heating Heating system in which heat is transmitted by radiation from a heated surface. Radiant heating systems usually employ either electric-resistance wiring or hot-water heating pipes, which may embedded in product lines. Our internal sales growth in the North American home improvement retail market increased 22% for the first quarter ended April 3, 2005 over the first quarter ended March 28, 2004. This increase was led by new product introductions including pre-soldered copper fittings, hot water re-circulation pumps and hot water heater connector kits." "We derived 30% of our total sales for the first quarter ended April 3, 2005 from Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). compared to 32% in the first quarter ended
March 28, 2004. Sales in Europe for the first quarter ended April 3,
2005 increased $6,401,000, or 11% to $66,434,000, compared to the first
quarter ended March 28, 2004. This increase is due to the favorable
foreign exchange rates associated with the strengthening of the euro
versus the U.S. dollar, which accounted for $2,862,000, the inclusion of
the sales from the TEAM Precision Pipework, Ltd. acquisition of
$2,803,000 and internal sales growth of $736,000. The appreciation of
the euro also had a positive impact on European Europeanemanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. income of $0.01 per share in the first quarter ended April 3, 2005, compared with a $0.02 per share effect for the first quarter ended March 28, 2004." "Sales in China increased 2% to $5,116,000 for the quarter ended April 3, 2005 from $4,993,000 for the quarter ended March 28, 2004. The improvement in earnings from Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. operations over last year was primarily due to the increased production levels and lower scrap expenses." "We continue with the consolidation of our manufacturing plants in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Europe while continuing to expand our manufacturing capacity in China and other areas of the world in an effort to lower our cost of manufacturing. For the first quarter ended April 3, 2005 we recorded a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge of approximately $774,000, which was comprised of $412,000 recorded in cost of sales primarily for accelerated depreciation Accelerated Depreciation Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years of the life of an asset. Notes: The straight-line depreciation method spreads the cost evenly over the life of an asset. for both the expected closure of a U.S. manufacturing plant and a reduction in the estimated useful lives of certain manufacturing equipment and $362,000 recorded in selling, general and administrative expenses for severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs related to European restructuring. This compares to $1,177,000 recorded in cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold in the first quarter ended March 28, 2004 for accelerated depreciation for both the expected closure of a U.S. manufacturing plant and a reduction in the estimated useful lives of certain manufacturing equipment. "We also incurred incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charges in the first quarter of 2005 including $709,000 for an acquisition earn-out Earn-out Refers to an additional payment in a merger or acquisition that is not part of the original acquisition cost, which is based on the acquired company's future earnings relative to a level determined by the merger agreement. being treated as compensation expense and costs related to compliance with Sarbanes-Oxley requirements of approximately $1,200,000." On January 5, 2005, the Company acquired 100% of the outstanding stock of HF Scientific, Inc., located in Fort Myers, Florida Fort Myers is the county seatGR6 and commercial center of Lee County, Florida. The population was 48,208 at the 2000 census. According to the 2006 U.S. Census Bureau's Estimates, the city had a population of 60,531. for approximately $7,000,000 in cash plus $800,000 in assumed debt. HF Scientific manufactures and distributes a line of instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. equipment, test kits and chemical reagents used for monitoring water quality in a variety of applications. On January 4, 2005, the Company acquired substantially all of the assets of Sea Tech, Inc. located in Wilmington, North Carolina For other places with the same name, see Wilmington (disambiguation). Wilmington is a city in New Hanover County, North Carolina, United States. The population was estimated at 100,000 as of 2006;[1] for approximately $10,000,000 in cash. Sea Tech provides cost effective solutions for fluidic flu·id·ic adj. 1. Of, relating to, or characteristic of a fluid. 2. Relating to or controlled by fluidics. connection needs. Sea Tech offers a wide range of standard and custom quick connect fittings, valves and manifolds This is a list of particular manifolds, by Wikipedia page. See also list of geometric topology topics. For categorical listings see and its subcategories. Generic families of manifolds
On May 21, 2004, a wholly-owned subsidiary of the Company acquired 100% of the outstanding stock of McCoy Mc·Coy n. Informal The authentic thing or quality; something that is not an imitation or substitute: This gem is the real McCoy. Enterprises, Inc., which was subsequently renamed Orion Enterprises, Inc. (Orion), located in Kansas City, Kansas Kansas City, Kansas (KCK) is the third largest city in the U.S. state of Kansas and the county seat of Wyandotte County (WyCo); it is part of the "Unified Government"[2] which also includes the cities of Bonner Springs and Edwardsville. , for approximately $27,900,000 in cash. Orion distributes its products under the brand names of Orion, Flo Safe and Laboratory Enterprises. Orion's product lines include a complete line of acid resistant waste disposal products, double containment containment Strategic U.S. foreign policy of the late 1940s and early 1950s intended to check the expansionist designs of the Soviet Union through economic, military, diplomatic, and political means. It was conceived by George Kennan soon after World War II. piping systems, as well as a line of high purity Purity: see Pearl, The. Purity See also Modesty. almond symbol of the Virgin Mary’s innocence. [O.T.: Numbers 17: 1–11; Art: Hall, 14] crystal its transparency symbolizes pureness. pipes, fittings and faucets. On April 16, 2004, a wholly-owned subsidiary of the Company acquired 90% of the stock of TEAM Precision Pipework, Ltd. (TEAM), located in Ammanford Coordinates: Ammanford (Welsh: Rhydaman) is the fourth largest town in the county of Carmarthenshire, Wales with a population 5,299 according to the 2001 census. , West Wales West Wales is the western area of Wales bordered by South Wales to the east. The area is loosely-defined, but is generally considered to include Pembrokeshire, Carmarthenshire, southern areas of Ceredigion, and sometimes the city of Swansea, . , United Kingdom for approximately $17,200,000 in cash subject to final adjustments, if any, as stipulated in the purchase and sale agreement. TEAM custom designs and manufactures manipulated pipe and hose tubing assemblies, which are utilized in the heating ventilation ventilation, process of supplying fresh air to an enclosed space and removing from it air contaminated by odors, gases, or smoke. Proper ventilation requires also that there be a movement or circulation of the air within the space and that the temperature and and air conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. markets. TEAM is a supplier to major original equipment manufacturers of air conditioning systems and several of the major European automotive air conditioning manufacturers. On March 29, 2004, a wholly-owned subsidiary of the Company acquired the 40% equity interest in Taizhou Shida Plumbing Manufacturing Co., Ltd. (Shida), that had been held by the Company's former joint venture partner for approximately $3,000,000 in cash and the payment of $3,500,000 in connection with a know-how transfer and non-compete agreement. As of April 3, 2005 the Company had paid $5,750,000 in cash. The Company now owns 100% of Shida. The Company had made prior investments in 2003 and 2002 totaling $8,000,000 in cash for its initial 60% interest. Shida is a manufacturer of a variety of plumbing products sold both into the Chinese domestic market and export markets. This Press Release includes statements that are not historical facts and are considered forward-looking within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. reflect Watts Water Technologies' current views about future results of operations and other forward-looking information. In some cases you can identify these statements by forward-looking words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "should," "will" and "would" or similar words. You should not rely on forward-looking statements because Watts' actual results may differ materially from those indicated by these forward-looking statements as a result of a number of important factors. These factors include, but are not limited to, the following: shortages in and pricing of raw materials and supplies including price increases by suppliers of raw materials and the Company's ability to pass these costs on to customers, loss of market share through competition, introduction of competing products by other companies, pressure on prices from competitors, suppliers, and/or customers, diversion A turning aside or altering of the natural course or route of a thing. The term is chiefly applied to the unauthorized change or alteration of a water course to the prejudice of a lower riparian, or to the unauthorized use of funds. of management's attention and costs associated with efforts to comply with Section 404 of the Sarbanes-Oxley Act See SOX. of 2002, failure to meet the requirements under Section 404 of the Sarbanes-Oxley Act of 2002, identification and disclosure of material weaknesses in our internal controls over financial reporting, failure to expand our markets through acquisitions, failure or delay in developing new products, lack of acceptance of new products, failure to manufacture products that meet required performance and safety standards Safety standards are standards designed to ensure the safety of products, activities or processes, etc. They may be advisory or compulsory and are normally laid down by an advisory or regulatory body that may be either voluntary or statutory. , foreign exchange rate fluctuations, cyclicality of industries, such as plumbing and heating wholesalers and home improvement retailers, in which the Company markets certain of its products, economic factors, such as the levels of housing starts and remodeling remodeling /re·mod·el·ing/ (re-mod´el-ing) reorganization or renovation of an old structure. bone remodeling , impacting the markets where the Company's products are sold, manufactured, or marketed, environmental compliance costs, product liability risks, the results and timing of the Company's manufacturing restructuring plan, changes in the status of current litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , including the James Jones James Jones is the name of:
A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004 filed with the Securities Exchange Commission and other reports Watts files from time to time with the Securities and Exchange Commission. Watts does not intend to, and undertakes no duty to, update the information contained in this Press Release. Watts Water Technologies, Inc. will hold a live web cast of its conference call to discuss first quarter results for 2005 on Wednesday, May 4, 2005, at 2:00 p.m. Eastern Time. The press release and the live web cast can be accessed by visiting the Investors section of the Company's website at www.wattswater.com. Following the web cast, an archived version of the call will be available at the same address until May 4, 2006. Watts Water Technologies, Inc. is a world leader in the manufacture of innovative products to control the efficiency, safety, and quality of water within residential, commercial, and institutional applications. Its expertise in a wide variety of water technologies enables it to be a comprehensive supplier to the water industry.
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
First Quarter Ended
-------------------
April 3, March 28,
2005 2004
--------- ---------
STATEMENTS OF INCOME
---------------------------------------------------
Net sales $219,027 $186,008
Income from continuing operations $12,397 $10,995
Income (loss) from discontinued operations (39) 6
--------- ---------
Net income $12,358 $11,001
========= =========
DILUTED EARNINGS PER SHARE
---------------------------------------------------
Weighted Average Number of Common Shares &
Equivalents 33,032 32,549
Earnings per Share:
Continuing operations $0.37 $0.34
Discontinued operations - -
--------- ---------
Net income $0.37 $0.34
========= =========
Cash dividends per share $0.08 $0.07
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share information)
(Unaudited)
April December
3, 31,
ASSETS 2005 2004
--------- ---------
CURRENT ASSETS:
Cash and cash equivalents $61,532 $65,913
Investment securities - 26,600
Trade accounts receivable, less allowance for
doubtful accounts of
$7,319 at April 3, 2005 and $7,551 at December
31, 2004 156,675 150,073
Inventories, net:
Raw materials 55,778 53,942
Work in process 28,637 28,020
Finished goods 128,319 121,082
--------- ---------
Total Inventories 212,734 203,044
Prepaid expenses and other assets 15,317 14,359
Deferred income taxes 27,809 27,463
Assets of discontinued operations 8,644 10,227
--------- ---------
Total Current Assets 482,711 497,679
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 322,709 321,655
Accumulated depreciation (174,698) (170,966)
--------- ---------
Property, plant and equipment, net 148,011 150,689
--------- ---------
OTHER ASSETS:
Goodwill 234,039 226,178
Other 54,120 49,702
--------- ---------
TOTAL ASSETS $918,881 $924,248
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $72,071 $73,606
Accrued expenses and other liabilities 63,051 64,604
Accrued compensation and benefits 25,638 29,679
Current portion of long-term debt 5,542 4,981
Liabilities of discontinued operations 23,456 24,303
--------- ---------
Total Current Liabilities 189,758 197,173
--------- ---------
LONG-TERM DEBT, NET OF CURRENT PORTION 178,983 180,562
DEFERRED INCOME TAXES 20,476 19,578
OTHER NONCURRENT LIABILITIES 25,558 26,632
MINORITY INTEREST 7,544 7,515
STOCKHOLDERS' EQUITY:
Preferred Stock, $.10 par value; 5,000,000 shares
authorized; no shares issued or outstanding - -
Class A Common Stock, $.10 par value; 80,000,000
shares authorized; 1 vote per share; issued and
outstanding: 25,091,676 shares at April 3, 2005
and 25,049,338 shares at December 31, 2004 2,509 2,505
Class B Common Stock, $.10 par value; 25,000,000
shares authorized; 10 votes per share; issued
and outstanding: 7,343,880 shares at April 3,
2005 and at December 31, 2004 734 734
Additional paid-in capital 142,082 140,172
Retained earnings 333,884 324,145
Deferred compensation (2,380) (1,386)
Accumulated other comprehensive income 19,733 26,618
--------- ---------
Total Stockholders' Equity 496,562 492,788
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY......' $918,881 $924,248
========= =========
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share information)
(Unaudited)
First Quarter Ended
-------------------
April 3, March 28,
2005 2004
--------- ---------
Net sales $219,027 $186,008
Cost of goods sold 141,649 121,096
--------- ---------
GROSS PROFIT 77,378 64,912
Selling, general & administrative expenses 55,706 45,134
Restructuring 362 -
--------- ---------
OPERATING INCOME 21,310 19,778
--------- ---------
Other (income) expense:
Interest income (309) (302)
Interest expense 2,521 2,544
Minority interest 65 175
Other (87) (164)
--------- ---------
2,190 2,253
--------- ---------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES 19,120 17,525
Provision for income taxes 6,723 6,530
--------- ---------
INCOME FROM CONTINUING OPERATIONS 12,397 10,995
Income (loss) from discontinued operations, net of
taxes (39) 6
--------- ---------
NET INCOME $12,358 $11,001
========= =========
BASIC EPS
Income per share:
Continuing operations $0.38 $0.34
Discontinued operations - -
--------- ---------
NET INCOME $0.38 $0.34
========= =========
Weighted average number of shares 32,408 32,136
========= =========
DILUTED EPS
Income per share:
Continuing operations $0.37 $0.34
Discontinued operations - -
--------- ---------
NET INCOME $0.37 $0.34
========= =========
Weighted average number of shares 33,032 32,549
========= =========
Dividends per share $0.08 $0.07
========= =========
WATTS WATER TECHNOLOGIES, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
Net Sales
First Quarter Ended
-----------------------------
April 3, March 28,
2005 2004
-------------- --------------
North America $147,477 $120,982
Europe 66,434 60,033
China 5,116 4,993
-------------- --------------
Total $219,027 $186,008
============== ==============
Operating Income
First Quarter Ended
-----------------------------
April 3, March 28,
2005 2004
-------------- --------------
North America $18,446 $16,434
Europe 7,493 7,445
China 545 (458)
Corporate (5,174) (3,643)
-------------- --------------
Total $21,310 $19,778
============== ==============
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