July 30, 2013: Watsco Achieves Record Sales and Profits in Second Quarter
Operating Income Up 22 Percent, Revenues Up 11 Percent, Gross Profit Up 12 Percent
For the second quarter, earnings per share (EPS) increased 29 percent to a record $1.48 per diluted share and net income increased 31 percent to $51 million.
Operating income increased 22 percent to a record $105 million with operating margin expanding 90 basis-points to a record 9.4 percent. On a same-store basis, operating income increased 21 percent with a 100 basis-point improvement in operating margin to 9.5 percent.
Revenues grew 11 percent to a record $1.12 billion. On a same-store basis, sales increased 8 percent, reflecting an 11 percent increase in air conditioning and heating (HVAC) equipment (65 percent of sales), a 4 percent increase in other HVAC products (31 percent of sales) and a 6 percent increase in commercial refrigeration products (4 percent of sales).
Gross profit increased 12 percent to a record $267 million with a 20 basis-point improvement in gross profit margin to 23.8 percent. On a same-store basis, gross profit increased 9 percent and gross profit margin improved by 20 basis-points to 23.8 percent. Selling, general, and administrative (SG&A) expenses increased 6 percent to $162 million and, as a percentage of sales, were a record low of 14.4 percent. Excluding new locations, SG&A increased 2 percent and was 14.3 percent as a percentage of sales.
Albert Nahmad, Watsco’s president and CEO, said, “Our second quarter performance produced the highest sales and the greatest profits of any quarter in Watsco’s history. We delivered strong earnings growth and margin expansion from a combination of solid sales growth, better selling margins, and operating efficiencies. We remain focused on our fundamentals — gaining share for our supplier partners, improving operating efficiency, and having the products and people in place to best serve our customers.”
Publication date: 7/29/2013