Core Insights - Watsco reported quarterly earnings of $2.37 per share, exceeding the Zacks Consensus Estimate of $2.13 per share, and showing an increase from $2.06 per share a year ago, resulting in an earnings surprise of 11.27% [1] - The company generated revenues of $1.75 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.18% and up from $1.6 billion year-over-year [2] - Watsco's stock has underperformed the market with a 2.1% increase since the beginning of the year, compared to the S&P 500's 4% gain [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.21 on revenues of $1.62 billion, and for the current fiscal year, it is $14.50 on revenues of $7.89 billion [7] - The estimate revisions trend for Watsco is favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Building Products - Air Conditioner and Heating industry is currently ranked in the top 9% of over 250 Zacks industries, suggesting a strong outlook for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Fourth quarter sales increased by 9% to a record $1.75 billion, with gross profit rising 13% to $468 million[8] - Operating income grew by 26% to $136 million, with an operating margin expansion of 110 basis points to 7.8%[8] - Annual sales reached $7.62 billion, representing a 5% increase, with a same-store growth of 3%[14] - E-commerce sales grew by 8% to $2.6 billion for the year, accounting for 35% of annual sales[14] - Revenues for Q4 2024 reached $1,753,962, a 9.4% increase from $1,603,197 in Q4 2023[32] - Net income attributable to Watsco was $96,841 in Q4 2024, up from $82,547 in Q4 2023, representing a 17.5% increase[32] - Operating income for the year was $781,775, slightly down from $794,810 in 2023, a decrease of 1.8%[32] - Diluted earnings per share for 2024 were $13.30, compared to $13.67 in 2023, showing a decrease of 2.7%[32] Cash Flow and Assets - Operating cash flow increased by 38% to a record $773 million, representing 122% of net income[16] - Cash and cash equivalents at the end of 2024 were $526,271, significantly higher than $210,112 at the end of 2023, marking a 150.5% increase[34] - Net cash provided by operating activities for 2024 was $773,102, compared to $561,954 in 2023, indicating a 37.5% increase[36] - Total assets increased to $4,479,523 in 2024, up from $3,729,182 in 2023, reflecting a growth of 20.1%[34] Expenses and Liabilities - SG&A expenses rose to $338,489 in Q4 2024, up from $312,461 in Q4 2023, reflecting an increase of 8.3%[32] - Total liabilities increased to $1,415,285 in 2024 from $1,112,992 in 2023, a rise of 27.2%[34] Dividends and Acquisitions - The company raised its annual dividend by 11% to $12.00 per share, marking the 51st consecutive year of dividend payments[3][17] - The company has acquired 70 companies since 1989, contributing to approximately $1.6 billion in annualized sales from 111 locations[19] Market and User Growth - Watsco's digital user community expanded to approximately 64,000 users, a 15% increase from the prior year[14] - Sales of residential equipment increased by 16% during the quarter, driven by new customer acquisition and market share gains[9] - Watsco's gross margin for the full year was 26.8%, down from 27.4% the previous year[14] - Gross profit margin improved to 26.7% in Q4 2024, compared to 25.8% in Q4 2023[32]

Company Overview - Watsco, Inc. is the largest distributor of heating, air conditioning, and refrigeration (HVAC/R) products with operations in the United States, Canada, Mexico, Puerto Rico, and exports to Latin America and the Caribbean [3] Dividend Announcement - The Board of Directors approved an 11% increase in the annual dividend to $12.00 per share for each outstanding share of Common and Class B common stock, effective from the next quarterly dividend payment in April 2025 [1][2] Financial Performance and Strategy - The increase in dividends reflects the strength of Watsco's 2024 performance and the company's confidence in its business prospects, supported by a strong balance sheet [2] - Watsco has a history of paying dividends for 51 consecutive years, with a philosophy of sharing increasing cash flow through higher dividends while maintaining a conservative balance sheet [2] Market Focus - The company focuses on the replacement market, which has grown due to the aging of installed HVAC systems and the introduction of more energy-efficient models [4] - Approximately 102 million HVAC systems in the United States have been in service for over 10 years, many operating below current minimum efficiency standards, indicating a significant market opportunity for Watsco [4]

Core Viewpoint - Watsco, Inc. is expected to report its fourth-quarter 2024 results on February 18, with a consensus estimate indicating a potential earnings beat due to strong HVAC demand and improved margins [1][9]. Financial Performance - In the last reported quarter, Watsco's earnings missed the Zacks Consensus Estimate by 12.8% and decreased by 3% year over year, while sales also missed the consensus mark by 3.9% but increased by 2% year over year [2]. - The Zacks Consensus Estimate for the upcoming quarter's earnings has risen to $2.13 from $2.05 per share, reflecting a 3.4% increase from the previous year's earnings of $2.06 per share. Revenue is expected to reach $1.65 billion, indicating a 3% year-over-year growth [3]. Revenue Drivers - The anticipated growth in Watsco's fourth-quarter revenues is attributed to strong performance in the HVAC equipment segment, particularly in the commercial market [4]. - Ongoing investments in advanced technologies, strategic acquisitions, and robust e-commerce sales are expected to contribute positively to the company's performance [5]. Segment Performance - HVAC Equipment sales, which accounted for 71% of total sales in the third quarter of 2024, are projected to grow by 2.3% year over year to $1.13 billion. HVAC Products are expected to increase by 1.3% to $483.3 million, while Commercial Refrigeration Products sales are anticipated to rise by 1.3% to $64.9 million [6]. Margin Analysis - The gross margin is expected to improve by 80 basis points year over year to 26.6%, driven by a better price/mix. Additionally, SG&A expenses as a percentage of net sales are projected to decrease to 19.2% from 19.5% a year ago [8]. Earnings Prediction - The model predicts an earnings beat for Watsco, supported by a positive Earnings ESP of +0.94% and a Zacks Rank of 2 (Buy) [9].

Company Overview - Watsco, Inc. is the largest distributor of heating, air conditioning, and refrigeration (HVAC/R) products with operations in the United States, Canada, Mexico, Puerto Rico, and exports to Latin America and the Caribbean [4] Market Focus - The company focuses on the replacement market, which has grown due to the aging of installed systems, the introduction of higher energy-efficient models, and the necessity of HVAC products in homes and businesses [5] - Approximately 102 million HVAC systems in the U.S. have been in service for over 10 years, most operating below current minimum efficiency standards [5] Environmental Impact - Watsco plays a significant role in addressing climate change by contributing to the reduction of CO2e emissions through the sale of higher-efficiency HVAC systems [6] - HVAC systems account for roughly half of U.S. household energy consumption, making the replacement of older systems critical for reducing electricity consumption and carbon footprints [6] Emission Reduction Achievements - From January 1, 2020, to December 31, 2024, Watsco is estimated to have averted 22.8 million metric tons of CO2e emissions, equivalent to removing 5.3 million gas-powered vehicles from the road annually [7]

MIAMI, Nov. 15, 2024 (GLOBE NEWSWIRE) -- Watsco, Inc. (NYSE: WSO) announced today that Rick Gomez, Vice President of Corporate Development, is scheduled to present at the Stephens Investment Conference being held at the Grand Hyatt in Nashville, Tennessee on Tuesday, November 19, 2024 at 2:00 p.m. (CT). Internet users can listen to a live webcast of the presentation at the Investor Relations section of Watsco’s website at http://www.watsco.com. About Watsco Watsco is the largest distributor of heating, air ...

Revenue and Sales Performance - Revenues for Q3 2024 increased by $33.2 million (2%) compared to Q3 2023, reaching $2,160.0 million[73] - Same-store sales for Q3 2024 were $2,119.8 million, a slight decrease of $4.5 million (0%) compared to Q3 2023[73] - Revenues for the nine months ended September 30, 2024 increased by $183.8 million (3%) to $5,864.4 million, driven by new locations[79] HVAC Equipment Sales - HVAC equipment sales accounted for 71% of total sales in Q3 2024, up 1% from 70% in Q3 2023[74] - Commercial HVAC equipment sales increased by 6% in Q3 2024, with a 12% increase in international markets[74] - Residential unitary compressor-bearing systems sales decreased by 2% in Q3 2024, with a 1% decrease in average selling price and unit volume[74] - HVAC equipment sales increased by 3% in 2024, with residential products up 2% and commercial HVAC equipment up 6%[80] Profitability and Margins - Net income attributable to Watsco, Inc. for Q3 2024 was 7.9% of revenues, slightly down from 8.0% in Q3 2023[69] - Gross profit for Q3 2024 was $566.2 million, a slight decrease of $0.7 million (0%) compared to Q3 2023[75] - Gross margin declined by 50 basis-points to 26.2% in Q3 2024, primarily due to pricing and sales mix for HVAC equipment[76] - Net income attributable to Watsco, Inc. for the nine months ended September 30, 2024 decreased by $14.3 million (3%) compared to the same period in 2023[86] - Gross profit margin for the nine months ended September 30, 2024 declined by 90 basis-points to 26.9%, impacted by pricing and sales mix[81] Expenses and Costs - Selling, general and administrative expenses increased by 2% to $326.4 million in Q3 2024, driven by higher revenues[76] - Selling, general and administrative expenses for the nine months ended September 30, 2024 increased by $44.0 million (5%) to $955.0 million, primarily due to increased revenues and newly acquired locations[82] Environmental Impact and Government Programs - The company averted an estimated 21.8 million metric tons of CO2e emissions from January 1, 2020, to September 30, 2024, through the sale of higher-efficiency HVAC systems[63] - The U.S. Inflation Reduction Act of 2022 allocated $4.3 billion for state-administered consumer rebate programs, including HVAC systems[64] Operational Disruptions - Hurricane Helene and Hurricane Milton caused disruptions in Q3 2024, but the impact on operations was not significant[65] Financial Activities and Investments - Interest income, net for the nine months ended September 30, 2024 increased by $20.1 million (339%) due to higher interest earned on cash and short-term investments[84] - Cash flows provided by operating activities for the nine months ended September 30, 2024 increased by $130.9 million to $394.2 million, primarily due to the timing of vendor payments[93] - No outstanding balance under the revolving credit agreement at September 30, 2024, compared to $15.4 million outstanding at December 31, 2023[98] - Issued and sold 712,000 shares of Common stock under the 2021 ATM Program for net proceeds of $281.8 million during Q1 2024[100] - Executed the 2024 ATM Program enabling issuance of up to $400.0 million of Common stock, with $400.0 million available for sale at September 30, 2024[101] - Obligated under non-cancelable purchase orders for goods aggregating approximately $460.0 million at September 30, 2024, with $250.0 million attributable to Carrier and its affiliates[103] - Carrier Enterprise I, with an 80% controlling interest, holds a 38.4% ownership in RSI, valued at approximately $477.0 million at September 30, 2024[105] - Acquired CSI for $6.0 million in cash, $0.8 million in Common stock, and $0.6 million for repayment of indebtedness, net of cash acquired of $1.4 million[108] - Acquired GWS for $4.0 million in cash and $101.6 million in Common stock, net of cash acquired of $3.1 million[109] Dividends and Share Repurchases - Paid cash dividends of $7.85 and $7.35 per share on Common and Class B common stock during the nine months ended September 30, 2024 and 2023, respectively[113] - Issued 13,394 and 13,398 shares of common stock under the Dividend Reinvestment Plan during the quarter and nine months ended September 30, 2024, respectively[115] - 6,370,913 shares of Common and Class B common stock repurchased at a cost of $114.4 million since the inception of the share repurchase program, with 1,129,087 shares remaining authorized for repurchase at September 30, 2024[116] Company Operations and Locations - The company operated from 689 locations as of September 30, 2024, a decrease from 691 locations in September 2023[72]

Watsco, Inc. (NYSE: WSO ) reported mixed Q3 2024 results, but the company sees an improving market opportunity on the horizon. The company expects the shift to A2L refrigerants to drive both pricing and demand tailwinds throughI hold a Master's in Accounting, am a small business owner, and am an assistant investing educator for beginning and intermediate individual investors. My investing analysis focus is on identifying and developing deep knowledge of great businesses. I have helped manage businesses, spe ...

Watsco, Inc.’s (WSO) shares plunged 3.8% on Wednesday after it reported unimpressive third-quarter 2024 results. Both the earnings and revenues missed the Zacks Consensus Estimate.On a year-over-year basis, the top line increased, driven by better commercial HVAC systems and stable residential HVAC equipment. However, bottom lines declined due to higher costs.Watsco is steadily advancing toward its goal of expanding customer-focused technologies to a growing number of contractors. Its e-commerce sales have ...

Watsco, Inc. (NYSE:WSO) Q3 2024 Earnings Conference Call October 23, 2024 10:00 AM ET Company Participants Albert Nahmad - Chairman and CEO Paul Johnston - Executive Vice President Barry Logan - Executive Vice President of Planning and Strategy and Secretary A.J. Nahmad - President Rick Gomez - Vice President Conference Call Participants David Manthey - Robert W. Baird & Co. Tommy Moll - Stephens Inc. Jeffrey Hammond - KeyBanc Capital Markets Inc. Ryan Merkel - William Blair Patrick Baumann - JP. Morgan Nig ...