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.
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.