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Watsco Sets New Records for Sales, Operating Income,
Operating Margins, Net Income and EPS During Second Quarter
Adoption of Customer-Focused Technologies Grows as Business Transformation Continues
MIAMI, FLORIDA (GLOBENEWSWIRE), July 25, 2018 Watsco, Inc. (NYSE: WSO) reported record results for the quarter ended June 30, 2018.
Watscos record results reflect continued investment in technologies designed to revolutionize Watscos customer-experience and help customers grow their businesses. Most notably, the digitization of Watscos marketplace via e-commerce and iOS/Android-enabled apps, supported by the industrys most complete database of product information, continues to see momentum. E-commerce sales run-rate is approaching 30% of revenues.
Second Quarter Results
|||5% sales growth to a record $1.333 billion|
|||6% growth in HVAC equipment (68% of sales)|
|||5% growth in other HVAC products (28% of sales)|
|||1% growth in commercial refrigeration products (4% of sales)|
Key performance metrics:
|||16% earnings per share (EPS) growth to a record $2.40|
|||22% increase in net income to a record $90 million|
|||6% increase in operating income to a record $137 million|
|||20 basis-point expansion in operating margins to a record 10.3%|
|||3% increase in gross profit to a record $321 million (20 basis-points lower gross margin)|
|||3% increase in SG&A and a 20 basis-point decline in SG&A as a percentage of sales|
|||$238 million debt reduction versus a year ago|
Sales trends improved during the quarter and reflect strong unit demand, improved equipment pricing and a richer sales mix of high-efficiency systems. Gross profit comparisons from 2018 to 2017 include a 70-basis point improvement in selling margins for HVAC equipment offset by a non-recurring benefit in 2017 related to sales of refrigerant products and lower vendor incentives in 2018 due to timing of purchases. SG&A reflects on-going investments in technology and additional customer-facing headcount.
Albert H. Nahmad, Watscos Chairman and CEO stated: Watscos second quarter performance produced the highest sales and profits of any quarter in our history. Looking at the bigger picture, we have invested $90 million in technology over the last five years with a primary focus on transforming our customer experience. Early results are exciting, but the adoption at scale will take time. We have also added nearly 300 employees over the last three years to supplement talent, leadership depth and service capacity to our network. Throughout this period of unprecedented investment, Watsco produced record operating results, more than doubled its annual dividend and reduced debt by $293 million.
Mr. Nahmad added: Pioneering investments of this magnitude require time and patience to determine their impact and value, especially given the focus of transforming our customer experience, which has been slow to evolve for decades. We also have the opportunity to transform our business through people, process and technology to gain market share, develop more efficient processes and reduce costs. Much foundational work has occurred to enable this transformation, and we are now challenging our leadership to accelerate adoption and utilization of these innovative platforms designed to create and capture incremental value in the coming years.
The following information was filed by Watsco Inc (WSO) on Wednesday, July 25, 2018 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-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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