Watsco (WSO) Misses Q3 EPS by 15c, Revenues Miss; Offers FY18 EPS Outlook Below Consensus

Watsco (NYSE: WSO) reported Q3 EPS of $2.11, $0.15 worse than the analyst estimate of $2.26. Revenue for the quarter came in at $1.3 billion versus the consensus estimate of $1.32 billion.

• Key performance metrics:
  • 16% earnings per share (EPS) growth to a record $2.11
  • 22% increase in net income to a record $79 million
  • 5% sales growth to a record $1.296 billion
  • 8% increase in gross profit to a record $319 million
  • 50 basis-point increase in gross margin
  • 7% increase in operating income to a record $122 million
  • 10 basis-point expansion in operating margins to 9.4%
• Sales trends:
  • 7% growth in HVAC equipment (68% of sales)
  • 4% growth in other HVAC products (28% of sales)
  • Flat sales for commercial refrigeration products (4% of sales)

Albert H. Nahmad, Chairman and CEO stated: “Watsco produced another record quarter with higher gross margin and expanded operating margins. Strong execution was achieved in many markets and we expect to close out another record year in 2018. We are pleased to reward shareholders by raising our annual dividend, reflecting our continued confidence in our business.”

GUIDANCE:

Watsco sees FY2018 EPS of $6.40-$6.50, versus the consensus of $6.70.

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

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