Watsco (WSO) Misses Q2 EPS by 7c, Revenues Miss

Watsco (NYSE: WSO) reported Q2 EPS of $2.40, $0.07 worse than the analyst estimate of $2.47. Revenue for the quarter came in at $1.33 billion versus the consensus estimate of $1.34 billion.

Second Quarter Results

Sales trends:

• 5% sales growth to a record $1.333 billion
• 6% growth in HVAC equipment (68% of sales)
• 5% growth in other HVAC products (28% of sales)
• 1% growth in commercial refrigeration products (4% of sales)

Key performance metrics:

• 16% earnings per share (EPS) growth to a record $2.40
• 22% increase in net income to a record $90 million
• 6% increase in operating income to a record $137 million
• 20 basis-point expansion in operating margins to a record 10.3%
• 3% increase in gross profit to a record $321 million (20 basis-points lower gross margin)
• 3% increase in SG&A and a 20 basis-point decline in SG&A as a percentage of sales
• $238 million debt reduction versus a year ago

Albert H. Nahmad, Watsco’s Chairman and CEO, stated: “Watsco’s second quarter performance produced the highest sales and profits of any quarter in our history. Looking at the bigger picture, we have invested $90 million in technology over the last five years with a primary focus on transforming our customer experience. Early results are exciting, but the adoption at scale will take time. We have also added nearly 300 employees over the last three years to supplement talent, leadership depth and service capacity to our network. Throughout this period of unprecedented investment, Watsco produced record operating results, more than doubled its annual dividend and reduced debt by $293 million.”

Mr. Nahmad added: “Pioneering investments of this magnitude require time and patience to determine their impact and value, especially given the focus of transforming our customer experience, which has been slow to evolve for decades. We also have the opportunity to transform our business through people, process and technology to gain market share, develop more efficient processes and reduce costs. Much foundational work has occurred to enable this transformation, and we are now challenging our leadership to accelerate adoption and utilization of these innovative platforms designed to create and capture incremental value in the coming years.”

For earnings history and earnings-related data on Watsco (WSO) click here.

You May Also Be Interested In

• Alphabet stock surges 11% to record high on Q1 earnings beat, first-ever dividend
• Edwards Lifesciences (EW) Tops Q1 EPS by 2c; offers guidance
• Customers Bancorp (CUBI) Tops Q1 EPS by 3c