Watsco(WSO_B) - 2024 Q1 - Quarterly Report

Financial Performance - Revenues for Q1 2024 were $1,565.0 million, a 1% increase from$ 1,550.6 million in Q1 2023, with $51.4 million attributed to new locations acquired[83]. - Same-store sales decreased by 2%, from$ 1,549.8 million in Q1 2023 to $1,512.5 million in Q1 2024[84]. - Gross profit for Q1 2024 was$ 430.6 million, a 4% decline from $448.2 million in Q1 2023, resulting in a gross margin of 27.5% compared to 28.9% in the prior year[85]. - Net income attributable to Watsco for Q1 2024 decreased by$ 23.1 million, or 21%, compared to Q1 2023, primarily due to lower gross profit and higher selling, general, and administrative expenses[90]. - Net income attributable to Watsco, Inc. for Q1 2024 was 5.6%, down from 7.1% in Q1 2023[78]. Expenses and Costs - Selling, general and administrative expenses increased by 8% to $309.5 million in Q1 2024, with expenses as a percentage of revenues rising to 19.8% from 18.5% in Q1 2023[86]. - The effective income tax rate decreased from 23.3% in Q1 2023 to 21.8% in Q1 2024, attributed to higher share-based compensation deductions[89]. Cash Flow and Capital - Cash flows provided by operating activities increased by$ 151.1 million, from $(47.4) million in Q1 2023 to$ 103.7 million in Q1 2024[97]. - Working capital increased to $1,972.2 million as of March 31, 2024, up from$ 1,679.9 million at December 31, 2023, driven by higher inventory and accounts receivable[96]. - The company had $278.9 million in cash and cash equivalents as of March 31, 2024, with$ 176.1 million held by foreign subsidiaries[94]. - The company issued and sold 712,000 shares of Common stock under the ATM Program for net proceeds of $281.8 million during Q1 2024[104]. - Cash flows used in investing activities increased by$ 200.5 million, from $(10.4) million in Q1 2023 to$ (210.9) million in Q1 2024, primarily due to short-term cash investments[97]. - The company has $600.0 million available under its revolving credit agreement, with no outstanding balance as of March 31, 2024[101]. Acquisitions and Growth - The company acquired 16 locations in the past 12 months, bringing the total number of locations to 691 as of March 31, 2024[82]. - The company acquired CSI, a distributor of HVAC products, for a total consideration of$ 6.0 million in cash and 1,904 shares of Common stock valued at $0.8 million on February 1, 2024[109]. Market and Product Insights - HVAC equipment sales reflected a 2% decrease in residential products, with a 3% decline in U.S. markets and a 6% increase in international markets[84]. - The U.S. Inflation Reduction Act of 2022 is expected to increase demand for high-efficiency products, with$ 4.3 billion allocated for state-administered consumer rebate programs[73]. - The company averted an estimated 20.1 million metric tons of CO2e emissions from January 1, 2020, to March 31, 2024, through the sale of higher-efficiency HVAC systems[72]. Dividends - The company paid cash dividends of $2.45 per share during both Q1 2024 and Q1 2023, with a new dividend of$ 2.70 declared on April 1, 2024[113]. Interest Income - Interest income for Q1 2024 increased by 502% to $3.1 million, primarily due to interest earned on cash and short-term investments[88].