Watsco (WSO) Misses Q4 EPS by 4c, Revenues Miss

Watsco (NYSE: WSO) reported Q4 EPS of $1.02, $0.04 worse than the analyst estimate of $1.06. Revenue for the quarter came in at $991.33 million versus the consensus estimate of $1.01 billion.

Sales trends:

• 3% increase in total sales to a record $991 million (5% increase in domestic markets)
• 3% growth in HVAC equipment (66% of sales)
• 4% growth in other HVAC products (30% of sales)
• Flat sales for commercial refrigeration products (4% of sales)

Key performance metrics:

• 13% EPS growth to a record $1.02 (3)
• 18% increase in net income to a record $40 million (3)
• 4% increase in gross profit to a record $250 million (20 basis-point expansion in gross margin)
• 5% decline in operating income to $59 million (operating margin of 5.9%)

Albert H. Nahmad, Chairman and CEO stated: “2018 represented another record year for our Company. Strong performance was achieved in many markets and others presented a challenge where market conditions slowed after several years of expansion. Growth initiatives have been instituted in partnership with our supplier partners with a focus of gaining market share.”

Mr. Nahmad added: “We also finished the year with a strong balance sheet consistent with our core philosophy to remain conservative and risk averse, while maintaining the capacity and flexibility to invest in opportunities at a low cost of capital. We continue to seek opportunities to grow our network through acquisitions, and we are encouraged by current conditions. We also look to use our financial strength to expand our product portfolio and build on key supplier relationships to provide new opportunities for growth.”

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

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