Watsco, Inc. (NYSE:WSO) today reported record results for the third quarter and nine months ended September 30, 2013.
Third Quarter Results
Revenues increased 6% to a record $1.1 billion, reflecting an 8% increase in air conditioning and heating (HVAC) equipment (65% of sales), a 3% increase in other HVAC products (31% of sales) and a 1% increase in commercial refrigeration products (4% of sales).
Gross profit increased 7% to a record $259 million with gross margin improving 10 basis-points to 23.9%. Selling, general and administrative (SG&A) expenses increased 4% to $163 million and as a percentage of sales improved 30 basis-points to a record low of 15.1%. Operating income increased 11% to a record $95 million with operating margin expanding 40 basis-points to 8.8%.Earnings per share increased 11% to a record $1.32 per diluted share on record net income of $46 million, compared to $1.19 per diluted share on net income of $41 million in 2012. Albert Nahmad, Watsco’s President & CEO stated: “Watsco delivered another solid quarter of earnings growth from higher sales, stronger selling margins and the continued effort of our business units to manage operating costs. We again saw strength in the sales of residential HVAC systems in the United States, which grew double-digits and an improved sales trend for commercial products.” Mr. Nahmad added, “Watsco also generated a record level of cash flow for any quarter in its history, and we recently increased our quarterly dividend by 60% to 40 cents per share. With strong cash flow and a healthy balance sheet, we are motivated and believe we are well-positioned to make the right investments to grow our business.” Nine-Month Results Revenues increased 9% to a record $2.9 billion, including $89 million of sales from new locations. Same-store sales increased 6%, reflecting an 8% increase in HVAC equipment (64% of sales), a 3% increase in other HVAC products (31% of sales) and a 4% increase in commercial refrigeration products (5% of sales).
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