Watts Water Technologies Inc. (WTS) stock rose 5.1% in the after-hours trading session following the company's fourth quarter and full year 2024 earnings release. The gain came on the back of strong demand for its autonomous driving solutions.

The water management company reported fourth quarter 2024 revenue of $540.4 million, down 1.3% year-over-year but beating analysts' expectations of $537.4 million. Adjusted earnings per share came in at $2.05, a 4% increase from the prior year period and above the consensus estimate of $1.91.

The key driver behind the after-hours stock rally was Watts Water's growing robotaxi business. The company's Apollo Go self-driving rideshare service witnessed a surge in orders, particularly in China where the government has been supportive of autonomous vehicle initiatives. CEO Robert J. Pagano Jr. noted that the robotaxi division is expected to break even in the city of Wuhan by 2024 and achieve profitability in 2025 as the vehicle fleet expands.

Despite the modest revenue decline, Watts Water reported solid profitability metrics for the quarter. Operating margin expanded by 210 basis points to 16.5%, while adjusted operating margin increased 100 basis points to 16.8%. The company attributed the margin improvement to favorable pricing, productivity gains, and lower restructuring costs.

Looking ahead, Watts Water provided a 2025 outlook with sales expected to range from a 3% decline to 2% growth on both a reported and organic basis. Adjusted operating margin is forecasted to be between 17.7% and 18.3%.