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Watsco Reports 2010 Results
Record Sales, Cash Flow & Market Share Gains
48% EPS Growth in 4th Quarter Driven by
17% Revenue Increase & Margin Expansion
MIAMI, Florida (BUSINESS WIRE), February 15, 2011 Watsco, Inc. (NYSE:WSO) today reported results for the fourth quarter and for the year ended December 31, 2010.
Fourth Quarter Results
Revenues increased 17% to a record $657 million, reflecting 23% growth in air conditioning and heating (HVAC) equipment (63% of sales), 6% growth in other HVAC products (31% of sales) and 19% growth in commercial refrigeration products (6% of sales). Sales of HVAC equipment benefited from strong replacement demand, market share growth and an improved sales mix of higher-efficiency replacement HVAC systems.
Gross profit increased 15% to a record $154 million and gross profit margin was 23.4% versus 23.7% resulting from the higher sales mix of HVAC equipment. Selling, general and administrative (SG&A) expenses increased 11% to $132 million and as a percentage of sales declined 100 basis-points to 20.1%. Operating income increased 47% to $22 million and operating margin expanded 70 basis-points to 3.3%. Net income improved 48% to $10 million and earnings per share increased 48% to 31 cents per diluted share.
Albert H. Nahmad, Watscos President & Chief Executive Officer, stated: Watsco delivered strong growth in sales, earnings and cash flow for the quarter, gained market share and expanded operating margins. These results are a testament to our culture, which provides local leadership the empowerment and incentives to constantly identify new opportunities to grow market share, enhance profits, provide better solutions for consumers and move ahead of the industry in terms of total performance.
Full Year Results
Revenues increased 42% to a record $2.8 billion and improved 11% on a same-store basis. Gross profit increased 40% to a record $673 million and gross profit margin was 23.7%. On a same-store basis (including closed locations) gross profit increased 11% and gross margin improved 30 basis-points to 24.3%. SG&A expenses were $508 million and as a percentage of sales declined 210 basis-points to 17.9%. On a same-store basis, SG&A expenses increased 2%, a sharp contrast to the 11% sales increase, and declined 150 basis-points to 18.5% as a percent of revenues.
Operating income more than doubled to a record $166 million and operating margin expanded by 180 basis-points to 5.8%. On a same-store basis (including closed locations) operating profit increased 58%, with operating margins also reflecting improvement of 180 basis-points. Net income improved 86% to $81 million and earnings per share increased 78% to $2.49 per diluted share.
Mr. Nahmad added: We remain focused on several opportunities to drive growth. First, the trend toward higher-efficiency and environmentally-sensitive HVAC products remains strong. Second, the residential installed base of HVAC systems is the oldest it has been in the history of the industry and will require replacement as older units become more expensive to repair. Third, sales of commercial products have been increasing in the last several months and are expected to recover further as capital spending continues to increase. Finally, we continue to seek opportunities to build our network through the acquisition of great businesses using our proven buy-and-build strategy.
The following information was filed by Watsco Inc (WSO) on Tuesday, February 15, 2011 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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