Revenues increased 5% to a record $2.98 billion and declined 1% on same-store basis, reflecting a 3% decline in sales of HVAC equipment (60% of sales), a 1% decline in sales of other HVAC products (33% of sales) and a 3% increase in sales of commercial refrigeration products (7% of sales).
Gross profit increased 8% to a record $728 million and gross profit margin improved 80 basis-points to 24.5%. On a same-store basis, gross profit increased 2% and gross profit margin improved 90 basis-points to 24.5%.
SG&A expenses increased 4% to $529 million and as a percentage of sales declined 10 basis-points to 17.8%. Excluding new locations, SG&A declined 3% or $14 million to $494 million.
Mr. Nahmad added: “Our leadership continues its pursuit of increasing revenues and margins through partnerships with strong manufacturers and contractors to produce the best results the market will yield. Our strong balance sheet, dense geographic coverage and solid relationships give us the ability to take advantage of changing market conditions and expansion opportunities as they become available.”
Cash Flow and Dividends
Operating cash flow for the fourth quarter was a record $120 million versus $56 million in 2010. For the full year, operating cash flow was $61 million and includes the use of $87 million to fund incremental vendor payments from one-time changes in payment terms and the purchase of previously consigned inventory. Excluding these payments, adjusted operating cash flow for the year was $148 million (approximately $4.83 per diluted share).
Since 2000, Watsco’s operating cash flow was approximately $900 million compared to net income of approximately $700 million, far surpassing the Company’s stated goal of generating cash flow greater than net income.
Dividends paid in 2011 increased 11% to $73 million. In January 2012, the Company raised its quarterly dividend rate 9% to 62 cents per share. Watsco has paid dividends for over 38 consecutive years and 2012 will mark the eleventh year of paying increasing dividends.