This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Watsco Delivers 17% EPS Growth And Record Cash Flow In Third Quarter

Results include 35 new locations from a joint venture formed in 2012 with Carrier Corporation in Canada. Watsco owns 60% of the joint venture and Carrier owns 40%. Results also reflect a 10% greater ownership interest in Carrier Enterprise LLC, a U.S. joint venture formed with Carrier in 2009. On July 2, 2012, the Company exercised an option to purchase the additional ownership interest in Carrier Enterprise for cash consideration of $52 million.

Nine-Month Results

Earnings per share for 2012 increased 12% to $2.61 per diluted share on net income of $89 million, compared to $2.34 per diluted share on net income of $77 million in 2011. Operating income increased 15% to a record $191 million with operating margin expanding 10 basis-points to 7.2%. Same-store operating income increased 4% to $172 million with operating margin of 7.2%.

Revenues increased 14% to a record $2.7 billion, including $283 million of sales from new locations. Same-store sales increased 3%, reflecting a 5% increase in HVAC equipment (63% of sales), a 4% decrease in other HVAC products (33% of sales) and an 18% increase in commercial refrigeration products (4% of sales).

Gross profit increased 11% to a record $632 million and gross profit margin declined 60 basis-points to 23.7%. Same-store gross profit was flat and same-store gross profit margin declined 70 basis-points to 23.6%. SG&A expenses increased 10% to $440 million and as a percentage of sales were a record low of 16.5%. SG&A excluding new locations decreased 3% to $390 million and as a percentage of sales were a record low of 16.4%.

Cash Flow and Dividends

For the quarter, Watsco generated $124 million of operating cash flow, an all-time record for any quarter in our history. For the nine months ended September 30, 2012, Watsco’s operating cash flow was $64 million versus a cash use of $59 million in 2011, a positive swing of $123 million.

2 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%
TSLA $162.60 0.00%
YHOO $27.97 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs