Pump, Valve & Water Systems 2026: Key Themes
On February 26th, 2026, Gabelli Funds hosted the 36th Annual Pump, Valve & Water Systems Symposium. Thirteen industry players participated, either with company overviews or fireside chats. This year’s Symposium came at a time of optimism around industrial recovery and most presenting companies having strong stock returns over the last twelve months. However, the Iran war had just started the weekend prior to the conference, and many stocks have since sold off with oil prices briefly rising above $100 per barrel and extreme geopolitical uncertainty.
Pivoting to Growth: Between nascent signs of an industrial recovery and a focus on growing end markets such as aerospace, power, and data centers, our presenters are increasingly focusing on growth, both absolute and relative to their end markets. The ISM Manufacturing PMI was above 50 in both January and February, and if this trend continues, it bodes well for short cycle businesses. New housing construction does, however, remain a headwind.
Sustained Margins: Our presenters are mostly entering the current industrial recovery with peak or near-peak margins, and they expect to continue to push margins forward as volumes recover. Strategic pricing, productivity, and an increasing role for digital/AI are allowing companies to continue to improve their margin profiles.
More Spending on Water Infrastructure: Infrastructure funding remains a tailwind for the industry for the foreseeable future. Under the Drinking Water and Wastewater Infrastructure Act passed in 2021 as part of the IIJA, over $50 billion was allocated to improving water infrastructure. According to the EPA 2023 assessment, over $625 billion is needed to fund improvements across distribution, treatment, storage and sourcing water in the US alone. Lunch speaker Robert Powelson, President and CEO of the National Association of Water Companies noted that the American Society of Civil Engineers grades US drinking water a C- and wastewater a D+, with an estimated funding gap of $1.7 trillion. In addition to clean water, Powelson noted that both PFAS and microplastics in water are issues that need to be addressed.
Data Centers and AI Driving Water and Energy Needs: According to market research firm Baxtel, roughly 3,000 new data centers are either under construction or planned across the U.S. Data centers consume significant energy, which generates heat requiring cooling to protect equipment and ensure efficiency and uptime driving incremental demand for pumps including those used in air and liquid cooling systems. All sources of energy will be required to meet the increased energy needs of these data centers, particularly natural gas and nuclear. Flowserve expects its nuclear business to grow from 2-3% of total revenue to ~15% by 2035. Meanwhile, Oil States should benefit from higher drilling activity for oil and natural gas.
Secular Growth for Aerospace & Defense Spending: The Aerospace & Defense industry enjoys strong multi-year tailwinds. Commercial aerospace is accelerating with production ramps on the Boeing 737, Airbus A320, and COMAC C919, while defense benefits from geopolitical tensions and robust U.S. budget support. Near-term demand for legacy systems (air defense, radar, missiles, F-16 upgrades) exceeds expectations due to elevated foreign military sales. Mid- to long-term growth is driven by major air/missile defense programs, Army vehicle electrification, and next-generation platforms like F-47 and CCA (including Anduril’s Fury). These align with the ~$1 trillion FY2026 U.S. defense budget and sustained high-single-digit growth through the decade. Consistent volume and program wins point to potential upward revisions in sector growth outlooks. Many presenting companies, including AMETEK, ITT and Crane have significant exposure to this dynamic, causing their business models to be less cyclical than many industrial peers. EnPro is seeing big increases in sales to the space end market and is adding capacity to serve this demand.
Financial Engineering and M&A: In 2025, AMETEK acquired FARO, a 3D scanning company, for approximately $900 million, and ITT closed on its $4.8 billion acquisition of SPX Flow the week after the conference. Both companies expect to reap the growth and synergy benefits from these deals in coming years. Landis & Gyr is in the process of selling its EMEA business for $215 million. Many presenting companies including Watts Water, Graco, and Badger Meter have significant net cash balances, and many others have significant debt capacity to pursue M&A.
AMETEK, Inc. (AME – $214.15 – NYSE)
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Based in Berwyn, Pennsylvania, AMETEK, Inc. is a leading global manufacturer of electronic instruments and electromechanical devices. AMETEK operates in two segments: Electronic Instruments, or EIG, and Electromechanical, or EMG. The company achieves earnings growth through the AMETEK Growth Model: Operational Excellence, Strategic Acquisitions, Global and Market Expansion, and New Product Development with a focus on cash generation and capital deployment.
Reason for Comment
On February 26, 2026, Kevin Coleman, AMETEK’s Vice President, Investor Relations & Treasurer, presented at our 36th Annual Pump, Valve and Water Systems Symposium.
Highlights from the session:
- Executing on AMETEK Growth Model, with More M&A to Come. Through the “AMETEK Growth Model”, the company is a leader in niche industrial markets with unique technology, and uses its free cash flow to engage in growth-enhancing M&A, with the aim of delivering double-digits earnings per share growth through the cycle. AMETEK should benefit from synergies and margin expansion from its latest major acquisition, FARO Technologies, completed in 2025, and believes it has $5 billion of dry powder to do future deals.
- Short Cycle Business Improving. Short cycle businesses are ~20% of AMETEK revenues. An inventory correction impacted organic revenue growth in 2024 and the first half of 2025. That has now cleared, and revenue and order growth has been improving. Coleman called AMETEK’S 2025 outlook “prudent”, so a sustained industrial recovery could provide upside to the current guidance.
- Aerospace & Defense to Continue Growth. Aerospace & defense are approximately 20% of AMETEK’s revenues with strong secular tailwinds. The company has content on both legacy and new generation aircraft with products including avionics displays, sensors, and electronics systems. About 1/3 of AMETEK’s defense revenues are outside the US and the company will benefit from the European defense build up as well.
Summary
AMETEK is an industrial compounder focused on niche, high technology/highly engineered products selling into growing end markets. It should continue to see margin improvement from recent acquisitions, is poised for accelerating organic growth in 2026, and has significant financial flexibility for more M&A.
Table 1 Earnings Model
Badger Meter, Inc. (BMI – $146.59 – NYSE)
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Based in Milwaukee, WI, Badger Meter, Inc., is a leading manufacturer of water measurement and flow control products. BMI’s largest business is its utility product line, which comprises residential and commercial water meters primarily sold to water utilities. The company estimates that approximately 95% of its products are used in water applications.
Reason for Comment
On February 26, 2026, Badger Meter’s Chief Financial Officer, Daniel Welzien, presented at our 36th Annual Pump, Valve and Water Systems Symposium. Highlights from the session are included below:
- PRASA award. Badger Meter was awarded a large-scale deployment with the Puerto Rico Aqueduct and Sewer Authority (PRASA), covering approximately 1.6 million service connections. The project will utilize Badger Meter’s E-Series ultrasonic meters, ORION radios, and BEACON software subscriptions. The estimated five-year deployment is expected to begin contributing to revenue in late 2026. This award reinforces management’s confidence in delivering high single-digit revenue growth over a five-year cycle, supported by long-term replacement demand and technology adoption trends.
- Beyond the meter. Over the past few years, Badger Meter has completed several strategic acquisitions, expanding its portfolio of software and analytical tools to address customers’ challenges such as aging infrastructure, labor shortages, and water scarcity. BMI’s products provide critical data, including real-time water flow, pressure irregularities, and quality metrics, while its software solutions support operational efficiency by enabling preventive maintenance planning and ensuring regulatory compliance. In 2025, digital and SaaS revenue grew 32% to $74 million, including contributions from the SmartCover acquisition, all while maintaining highly attractive software margins.
- Deployment flexibility. Badger Meter generates significant free cash flow, which management has successfully deployed in recent years to fund organic growth initiatives, increase the dividend, and pursue strategic acquisitions. The company currently maintains a net cash position, providing ample flexibility for additional acquisitions. In the interim, management repurchased shares, the first buyback in nearly five years, as it viewed the recent pullback in the share price as an attractive use of capital.
Summary
Badger Meter is a high-quality business with a strong base metering segment coupled with growing recurring, software-based revenue streams. Given its strong balance sheet, we expect management to continue to acquire companies expanding Badger Meter’s digital and water monitoring capabilities.
Table 2 Earnings Model
Crane Company (CR – $171.22 – NYSE)
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Based in Stamford, CT, Crane Company manufactures engineered components and operates through two segments: Aerospace & Electronics and Process Flow Technologies. The Aerospace & Electronics segment supplies power solutions, sensing systems, pumps, brake control systems, landing gear subsystems, microwave technologies, lubrication systems, and other mission-critical components for commercial aerospace, defense, and space markets, including both OEM and aftermarket applications. Its products include aircraft engine pressure sensors, braking systems for commercial and military aircraft, and power conversion solutions for defense and space platforms.
The Process Flow Technologies segment provides highly engineered fluid handling equipment for industrial markets. Its portfolio includes isolation valves (check, ball, butterfly, globe, diaphragm, and plug), valve actuation and control systems, lined pipe and fittings, vacuum jacketed and insulated pipe systems, instrumentation and sampling systems, pumps (including air-operated diaphragm and peristaltic), and related diagnostic and calibration solutions. The company serves customers across North America, Europe, and other international markets.
Reason for Comment
On February 26, 2026, Crane’s COO: Alex Acala and Senior VP, Process Flow Technologies, Shangaza Dasent presented at our 36th Annual Pump, Valve and Water Systems Symposium. Highlights from the session are included below:
- Portfolio Shift to Higher-Growth Markets: Process Flow Technologies (PFT), a ~$1.5B business with ~22% margins, has repositioned toward pharmaceuticals, water/wastewater, cryogenics, and nuclear—now nearly two-thirds of revenue—supporting 3–5% through-cycle growth driven by strong secular trends.
- Profitable Growth Model: Mission-critical, highly engineered products with ~50% aftermarket exposure provide resilience. Margins have nearly doubled since 2017, supported by favorable mix, pricing, productivity, innovation, and ~35% incremental operating leverage on higher sales.
- M&A + Execution Engine: Disciplined acquisitions integrated under the Crane Business System drive cost synergies, commercial excellence, portfolio enhancement, and continued margin expansion.
Summary
Crane Company’s Process Flow Technologies (PFT) division is poised for substantial growth, driven by a strategic shift towards higher-growth markets such as chemicals, pharmaceuticals, water and wastewater, and cryogenics. With a strong focus on innovation, new product development, and operational excellence, PFT has seen an impressive shift in its business mix, with higher-margin, high-growth markets now constituting nearly two-thirds of the business.
Table 3 Earnings Model
Enpro Inc. (NPO – $240.71 – NYSE) 
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Based in Charlotte, NC, EnPro Inc. manufactures proprietary engineered industrial products. Sealing Technologies, comprised of Garlock, Stemco, and Technetics businesses, along with recent adjacent acquisitions, makes innovative sealing solutions and other highly engineered products. Advanced Surface Technologies (AST), comprised of the LeanTeq, Alluxa, NxEdge, and Technetics Semi businesses, utilizes proprietary technologies and processes to serve the most challenging applications for semiconductor equipment, specialized optical filters, and thin-film coatings.
Reason for Comment
On February 26, 2026, CFO Joe Bruderek, Sealing Tech President Mike Faulkner, and VP Investor Relations James Gentile presented at our 36th Annual Pump, Valve and Water Systems Symposium. Highlights from the session:
- EnPro 3.0 is well underway, with a focus on profitable growth and compounding. From 2017-2024, during EnPro 2.0, the company sold over $1.5B of businesses that did not meet its strategic and financial criteria. It redeployed the proceeds into value-creating businesses meeting its long-term growth, margin return thresholds, and strategic fit, tied to a business being a small percentage of a customer’s spend, aftermarket heavy, and mission critical. During this period, EBITDA margins increased by 1,000bps and FCF markedly improved, with sealing tech margins increasing to 30%+ through a focus on strategic pricing, operational excellence, and 80:20.
- Sealing Tech is targeting mid-single digit organic growth in 2026 and beyond. EnPro’s focus on engineered solutions in critical service applications is a key enabler of outgrowth, along with exposure to fast growth end markets like nuclear, food & pharma, commercial aerospace, and space. Space and aerospace exposure has doubled to 8% of sales, with space growth tied to content with most of the space launch providers.
- Capital deployment is focused on M&A, with $280mm used for two acquisitions in late 2025, namely Overlook and AlpHa Measurement Solutions, which extended EnPro’s capabilities in markets adjacent to sealing technologies. EnPro aims to continue to deploy about $250-300mm per year towards strategic M&A.
- In semiconductor, EnPro can manage the full life cycle of in-chamber tools, including cleaning, coating, and refurbishment. Commercial opportunities are driven by its focus on leading edge nodes and vertical integration.
- EnPro’s transformation has been aided by operational initiatives including a focus on employee professional development, lean manufacturing, and a careful alignment of the company with customer value add. This ensures investment, innovation, and development spend is tied to initiatives that are most impactful and growth oriented.
Summary
EnPro has dramatically restructured its portfolio to be a growing industrial compounder. It targets mid-single digit in sealing technologies and high-single digit growth in advanced surface technologies. Sealing technologies’ margins should remain at or above 30% with AST margins returning to 30% through volume recovery, return on growth investments (i.e. Arizona precision cleaning plant), and operational improvement.
Table 4 Earnings Model
Flowserve Corporation (FLS – $74.29 – NYSE)
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Based in Irving, TX, Flowserve Corporation is a leading manufacturer and aftermarket supplier of comprehensive flow systems. The company operates in two segments: Flowserve Pump Division (FPD) and Flow Control Division (FCD). Flowserve’s portfolio of products consists of pumps, valves, seals, and automation that serve various end markets, including oil and gas, chemical, power, wastewater management, and general industries.
Reason for Comment
On February 26, 2026, Flowserve’s CFO, Amy Schwetz, presented at our 36th Annual Pump, Valve and Water Systems Symposium. Highlights from the session include:
- 2026 organic revenue growth muted due to 80/20. Flowserve projects 2026 organic sales growth of 1-3% and total sales growth of 5-7%. Organic revenue growth is expected to be muted, with 80/20 initiatives accounting for ~200 bps of headwind in 1H’26, leading to flattish growth in 1H’26 before resuming in 2H’26.
- Aftermarket strength. The company achieved seven consecutive quarters of aftermarket orders of at least $600 million. This success has been driven by the company’s network of Quick Response Centers around the globe, which provide it with proximity and relationships with its end users, it in a position to be first to mind for those customers’ aftermarket needs.
- The nuclear business represents an exciting growth avenue. Flowserve received $400 million in nuclear orders in 2025 and believes this is the base level of nuclear orders we will see annually. Aftermarket orders for nuclear accounts for $100 million. Nuclear currently accounts for 3-5% of FLS revenue, and the company projects it to grow to 7-10% by 2030 and ~15% by 2035. Flowserve’s nuclear OE gross and operating margins are near the corporate average, while the aftermarket margin is higher.
- Trillium Flow Technologies’ Valve Division (TVD) acquisition. TVD bolsters FLS’s nuclear offering. TVD adds $200 million of annual revenue and ~$40 million of EBITDA. The acquisition adds about $100 million of opportunity per nuclear reactor over the next decade and increases Flowserve’s content per reactor by 15-20%.
- 2030 target. Flowserve introduced financial targets for 2030. FLS projects organic revenue growth in the mid-single digits and an adjusted EBIT margin of 20%. Growth will be driven by continued growth in aftermarket sales, higher nuclear mix, operational excellence, and further progress on 80/20 initiatives.
Summary
Flowserve is well-positioned in an environment of accelerating demand and improving supply over the next 12 months, with a favorable multi-year growth outlook. The company’s strong backlog, rising aftermarket sales, and recent acquisitions support the 2026 revenue outlook, while cost-saving initiatives, such as 80/20, should bolster the consolidated operating profit margin.
Table 5 Earnings Model
Franklin Electric Co., Inc. (FELE – $90.91- NASDAQ)
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Based in Fort Wayne, IN, Franklin Electric Co., Inc. manufactures and distributes water and fuel pumping products, including submersible motors, pumps and electronic controls. These flow control products are used for fresh and wastewater applications, water treatment and dewatering. The energy systems segment provides not only pumps, but also fuel containment, monitoring and control systems for gas stations and utilities.
Reason for Comment
On February 26, 2026, Joe Ruzynski, Chief Executive Officer at Franklin Electric, presented at our 36th Annual Pump, Valve and Water Systems Symposium. Highlights from the session are included below:
- New C-suite. Joe Ruzynski joined as Chief Executive Officer in July 2024, followed a year later by the appointment of Jennifer Wolfenbarger as Chief Financial Officer. The new leadership team is early in executing its strategy centered on tighter integration across the divisions, implementing a productivity program, and taking a more proactive approach to managing the balance sheet.
- Pumping performance. The team has identified mining, data centers, utility infrastructure, water treatment, and critical energy asset monitoring as faster-growing end markets that it is targeting. These opportunities will be supported by increased innovation, which management expects will play a larger role in driving revenue growth. The company anticipates a 40% increase in new product launches, with recent examples including VersaBoost, a water pressure booster, and Oversite, a remote-control solution for fueling systems.
- Mind the margin gap. Franklin generates attractive margins; however, management believes there is ample room for improvement as it accelerates growth and targets annual productivity savings through its recently launched value acceleration office. The Distribution segment, with operating margin of 5.7%, offers significant upside as management targets returning to high single-digits to even 10% margin in the medium term as it integrates prior acquisitions and better leverages its national scale.
- Capital allocation. With expectations of free cash flow conversion to exceed 100%, Franklin’s capital allocation priorities include both organic investments and acquisitions. The company has strengthened its corporate development team in anticipation of increased M&A activity beyond the four acquisitions completed in 2025. Targeted acquisitions are expected to enhance the product portfolio and/or expand geographic reach, particularly in emerging markets.
Summary
Franklin Electric is a leading flow control business serving critical water and energy end markets. The recently appointed management team is focused on faster-growing, higher-margin products and customers, and operational improvement. With minimal debt, the company retains flexibility to pursue complementary acquisitions, repurchase shares opportunistically, grow the dividend, and continue investing in organic growth.
Table 6 Earnings Model
The Gorman-Rupp Company (GRC – $57.70 – NYSE)
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Based in Mansfield, Ohio, The Gorman-Rupp Company designs, manufactures, and sells pumps and pump systems in the United States and internationally. The company’s products include self-priming centrifugal, standard centrifugal, magnetic drive centrifugal, axial and mixed flow, vertical turbine line shaft, submersible, high-pressure booster and oscillating pumps. Its pumps are used in water, wastewater, construction, dewatering, industrial, petroleum, original equipment, agriculture, fire suppression, heating, and other liquid-handling applications.
Reason for Comment
On February 26, 2026, President & Chief Executive Officer, Scott King, and Executive Vice President & Chief Financial Officer, Jim Kerr, presented at our 366h Annual Pump, Valve and Water Systems Symposium. Highlights from the session are included below:
- Pump people. Gorman-Rupp competes in $80 billion global pump industry. It is a highly fragmented market where Gorman-Rupp holds less than 0.5% market share. In general, management anticipates that its diverse end-markets will expand at a faster rate than GDP growth attributable to population growth, modernization and aging infrastructure. Additionally, growth may be further bolstered as some cyclical end-markets recover, such as commercial construction, outside of data centers, and agriculture.
- Data center demand. According to market research firm Baxtel, roughly 3,000 new data centers are either under construction or planned across the U.S., driving incremental demand for pumps including those used in liquid cooling systems within server racks. Gorman-Rupp estimates that at least 10% of its current sales are tied to data center applications, which include fire protection, HVAC and in-rack cooling.
- Capital allocation. Capital allocation priorities include reinvesting in organic growth (capex ~$20 million), growing the dividend (53-year track record), and reducing debt to a more comfortable range closer to 2x (at year-end 2.3x). Thereafter, management expects it will be positioned to consider additional acquisitions for pumps or related equipment, preferably in niche markets either in the U.S. or internationally.
Summary
Gorman-Rupp is a quality pump manufacturer for harsh environments, positioned to benefit from rising U.S. spending on data center expansion and water infrastructure. Earnings growth is expected to be supported by an advantaged domestic supply chain, operating leverage, and continued debt reduction.
Table 7 Earnings Model
Graco Inc. (GGG – $87.62 – NYSE)
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Based in Minneapolis, Minnesota, Graco Inc. supplies technology and expertise for the management of fluids and coatings in both industrial and commercial applications. The company designs, manufactures and markets systems and equipment to move, measure, control, dispense and spray fluid and powder materials, and serves customers around the world in the manufacturing, processing, construction and maintenance industries. In addition to its Minneapolis headquarters, Graco has regional headquarters in Belgium and China, with production and distribution centers located worldwide.
Reason for Comment
On February 26, 2026, David Lowe, CFO and Treasurer, and John Bower, director of IR, Finance, and FP&A, presented at our 36th Annual Pump, Valve and Water Systems Symposium.
Highlights from the session:
- 100th Anniversary Highlights Resiliency. 2026 is Graco’s 100th The company started in the lubrication market before leveraging technology to expand into roughly 20 niche markets. The companies sells into many cyclical markets, but is not a classic cyclical, and ~40% of revenues are recurring in spare parts and accessories. With a large installed base, breadth of products, and high switching costs, the company has a demonstrated ability to take price, and generates strong free cash flow in good times and bad.
- Housing Market Headwind, but Recovery Provides Opportunity. Graco has significant exposure to the housing industry, which has been challenged due to affordability issues for new buyers. However, the US housing market is underbuilt. 30-year mortgage rates peaked about 18 months ago
- Longer Term Growth from Expansion Markets. Expansion Markets, a new reportable segment for Graco in 2025, sells pumps used for semiconductors, high pressure valves for oil and gas, and environmental monitoring and remediation equipment. This segment also licenses high torque electric motors used in a variety of applications. While performance was mixed in 2025, this segment has the potential for uncorrelated growth with Graco’s core paint related business, though the electric motor business will be a slower build.
Summary
Graco is a resilient cash generator that should fare relatively well in all markets, but would be a significant beneficiary from a housing recovery when it occurs.
Table 8 Earnings Model
ITT Corp. (ITT – $187.76 – NYSE)
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Based in Stamford, Connecticut, ITT is a manufacturer of critical, engineered components that serve fast-growing end markets in transportation, flow, energy, aerospace and defense. ITT competes in three business units: Flow Technologies, Motion Technologies, and Connect and Control Technologies.
Reason for Comment
On February 26, 2026, Luca Savi, Chief Executive Officer, and Emmanuel Caprais, Senior Vice President and Chief Financial Officer, presented at our 36th Annual Pump, Valve and Water Systems Symposium.
Highlights from the session:
- Positive on SPX Flow Acquisition. In December 2025, ITT announced the acquisition of SPX Flow, a leading provider of highly engineered equipment and process technologies for end markets including industrial, health and nutrition, for $4.775 billion in cash and equity. To fund the deal, the company issued a public offering 8.05 million shares of common stock in December and the deal closed on March 2, 2026. SPX Flow added $1.3 billion of revenues to ITT’s Industrial Process segment (now renamed “Flow Technologies”), doubled its segment aftermarket sales, and provides $80 million of run-rate cost synergies. While revenue synergies have not been quantified, they are likely to be substantial with significant opportunities for cross-selling products.
- Industrial Process Outlook Strong. The company cited strong execution as the reason behind its success, ranging from Goulds Pumps in the Middle East to its EnVizion valve in GLP-1 delivery systems to the recently acquired Svanehoj cryogenic pumps.
- Connect & Control Growth Driven by Aerospace & Defense. ITT renegotiated its contract with Boeing that secured double-digit price increases over the next five years. It is also seeing growth in its connectors business, benefiting from growth in defense spending in both the US and Europe.
- Motion Outperformance Sustained by Execution and New Products. ITT’s brake pad business has outperformed the market by 4-500 bps the last several years, and the expected launch of the new Geo-Pad in 2028 should provide another leg to growth.
Summary
ITT is now positioned as a higher growth, less cyclical company more levered to Flow Technologies and Connect & Control, and less dependent on auto production. We expect significant benefits from the SPX Flow acquisition, and for the company to quickly de-leverage its balance sheet and be poised for more M&A as debt is paid down.
Table 9 Earnings Model
Landis+Gyr Group (LAND – CHF 50.90 – Zurich)
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Based in Cham, Switzerland, Landis+Gyr is a leading global provider of integrated energy management solutions for the utility sector. The company delivers comprehensive solutions for the foundation of a smarter grid, including Smart Metering, distribution network sensing and automation tools, load control, analytics, and energy storage. Its products meter electricity, water, and heat for energy utilities around the world.
Reason for Comment
On February 26, 2026, EnPro’s CEO Peter Mainz participated in a fireside chat at our 36th Annual Pump, Valve and Water Systems Symposium. Highlights from the session:
- First fifteen months: Peter Mainz is pleased with the continuity at Landis+Gyr after he moved into the CEO role in November 2024 from a tenured Board role. Management and operations are functioning well, and the company is executing on its strategy of becoming a North American grid leader with the announced $215mm sale of the EMEA business. An investor day planned for June will highlight the growth, cash generation and strong EBITDA margins of what will be a largely North American business, and potentially revisit segmentation.
- The EMEA sale closing in the June quarter, will complete Landis’ transformation to a NA centric business. Operational headquarters and the CFO are already outside Atlanta. A US listing should be completed in the second half, while a continued Swiss listing will accommodate long-term Swiss investors for some time to come.
- Electricity demand not seen in fifteen plus years, driven by data centers, is placing pressure on the grid. Grid edge intelligence will help ensure grid reliability while flexibly allowing the time shifting of electricity usage. The effect will be to maximize utilization of existing generation and allow for further data center construction.
- Order cadence should follow an ~1.0x book-to-bill intermittently augmented by large orders from a handful of investor-owned utilities that could turbocharge demand, similar to the National Grid order from a few years back. The timing of such orders is less certain. Landis has 70% IOU exposure, similar to the industry at large.
- Focus is on the core Americas business, with bolt on highly adjacent M&A perhaps on the table next year. The company has already repurchased slightly more than 1% of shares outstanding with anticipated EMEA proceeds.
- A growing interest in power could make Landis+Gyr attractive to a diversified industrial company in the future, with Landis having been part of Toshiba in the past. Landis would entertain any serious entrees.
Summary
Landis continues to execute as a leader in metering and grid edge intelligence, with the imminent EMEA sale focusing the company further on its core Americas market. Power demand driven by data centers is stimulating interest in grid edge intelligence, and Landis is winning with its Revelo meter and a variety of software and service offerings for consumers and utilities, which comprise roughly 30% of sales.
Table 10 Earnings Model
Mueller Water Products, Inc. (MWA – $27.74 – NYSE)
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Mueller Water Products, headquartered in Atlanta, GA, manufactures and markets products used in the transmission, distribution and measurement of water primarily in North America. Mueller products are deployed in water distribution networks, water and wastewater treatment facilities, gas distribution systems and fire protection piping systems. The company operates through two segments: Water Flow Solutions (58% of revenue) product portfolio includes iron gate valves, specialty valves, and service brass products. Water Management Solutions (42%) portfolio includes fire hydrants, repair and installation and natural gas, metering and leak detection products.
Reason for Comment
On February 26, 2026, Chief Financial Officer, Melissa Rasmussen, and Vice President, Investor Relations & Communications, Whit Kincaid presented at our 36th Annual Pump, Valve and Water Systems Symposium. Highlights from the session are included below:
- Utility maintenance offsets weaker new builds. This year, Mueller projects low-single digit revenue growth (+2.8-4.2%) driven by healthy repair and replacement demand, which represents approximately 60-65% of revenue. This is augmented by larger project work and low-single digit pricing that was recently introduced. These contributors will be partially offset by continued weakness across new residential construction.
- Federal funding. Infrastructure funding remains a tailwind for the industry for the foreseeable future. Under the Drinking Water and Wastewater Infrastructure Act passed in 2021 as part of the IIJA, $15 billion was allocated to lead pipe replacement. Although not a producer of pipes, Mueller benefits from ancillary products such as valves, couplings and hydrants.
- Foundry to future growth. Mueller Water Products completed the transition to its new state-of-the-art brass foundry last year, which expanded capacity to support future growth but to also drive operational savings. With this major capital project completed, management is shifting its focus back to executing its core strategy of accelerating new product launches, digitizing the customer experience, and leveraging the commercial investments made over the past several years.
- Capital allocation. With a debt free balance sheet, management expects M&A to play a larger role, targeting complementary products that leverage its manufacturing network or capabilities. Mueller continues to invest in organic growth, including planned investments over the next three years to modernize its iron foundries, while also growing the dividend and considering opportunistic share repurchases.
Summary
Mueller is well positioned to benefit from incremental spending related to infrastructure funding allocated by the IIJA in 2021. The company successfully commissioned its new foundry which continues to benefit operations and gross margins. While the solid balance sheet provides management with the flexibility to consider returning cash to shareholders and/or to consider acquisitions.
Table 11 Earnings Model
Oil States Int’l (OIS – $11.89 – NYSE)
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Based in Houston, TX, Oil States International is a diversified oilfield services company that provides engineered capital equipment and integrated services to the global energy sector. The company has three operating segments: Offshore Manufactured Products, Completion and Production Services, and Downhole Technologies.
Reason for Comment
On February 26, 2026, Oil States’ CEO, Cindy Taylor, presented at our 36th Annual Pump, Valve and Water Systems Symposium. Highlights from the session include:
- Oil States is well-positioned to benefit from rising international and offshore drilling activity. OIS derives 77% of its total revenues from offshore and international markets. Over the past 15 years, U.S. shale has accounted for nearly all global crude supply growth. However, U.S. shale production growth is peaking, while global crude demand continues to rise. E&P operators have underinvested in conventional exploration and development globally and are now returning to international and offshore exploration and development.
- Portfolio restructuring should improve profitability. For the past two years, Oil States has been divesting or closing unprofitable product lines and pivoting to focus more on its technological offerings and products that leverage its geological footprint. That restructuring is nearing completion, and the company is now not only manufacturing-oriented and more profitable but also asset-light, generating higher free cash flow.
- Favorable 5 yr outlook. Continued recovery in offshore and international activity, a healthy backlog, and new product introductions provide the foundation for baseline revenue growth over the next five years. OIS entered the year with a backlog of $435 million. Also, the company introduced new products, including a more advanced managed pressure drilling (MPD) technology and a riser system for mineral and metal recovery off the seabed.
- Strong free cash flow generation and capital allocation priorities. Oil States generated $75 million of FCF in 2025, including a $46 million benefit from working capital. It expects to generate about $40 million of FCF in 2026, with working capital as cash use as it invests in growth. In the near term, FCF will primarily support share repurchases, while dividends may be considered longer term as part of returning cash to shareholders.
Summary
Oil States International is well positioned to benefit from higher international and offshore drilling activity. The company has been high-grading its portfolio over the past two years and is poised to return to growth, driven by a healthy backlog and new product introductions. OIS generates robust FCF and is prioritizing shareholder returns.
Table 12 Earnings Model
Watts Water Technologies Inc. (WTS – $297.80 – NYSE)
Source: Company data and ThomsonOne consensus estimates.
COMPANY OVERVIEW
Based in North Andover, MA, Watts Water Technologies is a leading manufacturer of valves for the plumbing, heating and water quality markets. Residential and commercial flow control products include backflow preventers, water pressure regulators, temperature and pressure relief valves, and thermostatic mixing valves. HVAC and gas products include high-efficiency boilers and water heaters. Drainage and water re-use products, including drainage products, while water quality products include point-of-use and point-of-entry water filtration.
Reason for Comment
On February 26, 2026, Bob Pagano, Chief Executive Officer, President and Chairperson, and Diane McClintock, Chief Financial Officer, presented at our 36th Annual Pump, Valve and Water Systems Symposium. Highlights from the session are included below:
- AI cooling cycle. Data centers consume significant energy, which generates heat requiring cooling to protect equipment and ensure efficiency and uptime. Watts provides components used in both air-cooled and liquid-cooled data centers, including cooling valves, strainers, chilled water tanks, and drainage solutions. In 2025, Watts generated approximately $75 million in revenue from data centers solutions. According to Watts, the addressable market exceeds $1 billion, growing at a strong double-digit rate, suggesting runway for future growth.
- Repair & replacement resilience. Watts leverages a large installed base of essential, non-deferrable products to drive steady repair-and-replacement revenue. Repair accounts for approximately 60% of company sales and typically grows in-line with GDP. Its leading brands and new product innovations support its pricing power, while smart and connected products, such as Nexa, create opportunities for recurring revenue.
- New construction challenge. S. single-family, multi-family and non-residential new construction are expected to stay soft, similar to last year. However, long-term demand persists as new home construction continues to lag household formation. New construction accounts for approximately 40% of Watts’s revenue, a future cyclical recovery could provide a tailwind for growth.
- M&A priority. Acquisitions have been central to Watts’s growth strategy, and the company has successfully acquired and integrated 22 companies over the last 11 years. In November, Watts acquired Superior Boiler, which broadened its product offerings in boilers, and Saudi Cast, which expanded its drainage products and Middle East presence. Together, these acquisitions are expected to add approximately $80 million to annual sales. Watts’s balance sheet remains in a healthy position to continue to pursue accretive, bolt-on acquisitions.
Summary
Watts is a leading manufacturer of flow control products that is expanding its product portfolio and geographical reach in key growth markets. Management targets 30-50 basis points of operating margin expansion annually, attributed to revenue growth and productivity savings.
Table 13 Earnings Model
191 MASON STREET, GREENWICH, CT 06830 Gabelli Funds TEL (914) 921-5100
This whitepaper was prepared by Tony Bancroft, Justin Bergner, CFA, Sarah Donnelly, Kevin Dreyer
and Simon Wong, CFA. The examples cited herein are based on public information and we make no
representations regarding their accuracy or usefulness as precedent. The Research Analysts’ views are
subject to change at any time based on market and other conditions. The information in this report represent the opinions of the individual Research Analyst’s as of the date hereof and is not intended to be a forecast of future events, a guarantee of future results, or investments advice. The views expressed may differ from other Research Analysts or of the Firm as a whole.
As of December 31, 2025, affiliates of GAMCO Investors, Inc. beneficially owned 5.38% of Gorman-Rupp,
2.21% of Mueller Water Products, 2.16% of Watts Water Technologies, 1.92% of Flowserve Corporation,
1.91% of Enpro Industries, and less than 1% of all other companies mentioned.
One of our affiliates serves as an investment adviser to Crane Co. or an affiliated entity and has received
compensation within the past 12 months for these non-investment banking securities-related services.
This whitepaper is not an offer to sell any security nor is it a solicitation of an offer to buy any
security.
Investors should consider the investment objectives, risks, sales charges and expense of the fund
carefully before investing.
Gabelli Funds, LLC is a registered investment adviser with the Securities and Exchange Commission and is a wholly owned subsidiary of GAMCO Investors, Inc. (OTC: GAMI).
For more information, visit our website at: www.gabelli.com or call: 800-GABELLI
800-422-3554 • 914-921-5000 • Fax 914-921-5098 • info@gabelli.com
