Exhibit 99.1

Watsco Reports Record Sales, Operating Profit,

Net Income and Cash Flow During First Quarter

 

 

MIAMI, FLORIDA – (GLOBENEWSWIRE), April 23, 2019 – Watsco, Inc. (NYSE: WSO) reported record sales, operating profit, net income and cash flow for the quarter ended March 31, 2019.

Key performance metrics:

 

   

2% increase in operating profit to a record $55 million (10 basis-point expansion in operating margin to 5.9%)

 

   

4% increase in same-store operating profit (30 basis-point expansion in same-store margins to a record 6.1%)

 

   

1% increase in gross profit to a record $234 million (20 basis-points improvement in gross margin)

 

   

1% increase in selling, general & administrative expenses (SG&A)

 

   

Flat SG&A on a same-store basis (10 basis-point decline as a percentage of sales)

 

   

2% increase in net income to a record $35 million

 

   

Earnings per share (EPS) of 88 cents versus 89 cents last year (1)

 

   

Operating cash flow was a record $53 million versus a cash use of $42 million last year

 

(1)

EPS in 2019 includes 3 cents of incremental dilution related to dividends paid on non-vested restricted stock. Dilution occurs when the quarterly cash dividends per share exceeds EPS (usually during the seasonal first and fourth quarters as EPS is typically less than the quarterly dividend rate). For 2019, this impact is not currently expected to affect EPS during the second or third quarters or in determining annual EPS.

Sales trends:

 

   

1% sales growth to a record $931 million (flat on a same-store basis)

 

   

2% growth in HVAC equipment (67% of sales)

 

   

2% decrease in other HVAC products (29% of sales)

 

   

4% decrease in commercial refrigeration products (4% of sales)

Albert H. Nahmad, Watsco’s Chairman and CEO said: “The first quarter is historically the most seasonal quarter of the year, yet we achieved record profitability despite cooler and wetter weather in certain markets, strong year-over-year sales comparisons and one less selling-day in 2019 versus 2018. Our results also reflect investments in 12 new locations and the acceleration of several technology initiatives to drive greater adoption and use throughout our network. We also implemented a number of productivity initiatives as evidenced by our flat same-store SG&A to enhance opportunities for profit growth in 2019. Although it is early, we are optimistic that 2019 will be another record year for our Company.”

Technology Investments

Watsco has launched a variety of technologies and process enhancements to transform how HVAC contractor customers are served. Speed, productivity and scale are critical factors as the digital era progresses and Watsco is investing to ensure an unparalleled customer-experience.

The most notable is the digitization of Watsco’s interactions with its customer-base through e-commerce and mobile apps, supported by the industry’s richest depository of product information of over 685,000 SKUs.

Watsco has also launched internal-facing technologies, including (1) a business intelligence platform to provide insights to 600+ P&L managers and their teams, (2) proprietary order fulfillment software to deliver speed, convenience and order accuracy to customers (currently used at two-thirds of the Company’s locations), and (3) demand planning and inventory optimization software to improve fill-rates and inventory turns and to reduce real estate requirements (currently implemented in 60% of the Company’s supply chain).

Technology spending increased $1.5 million during the quarter (3 cents per diluted share), driven in part by the Company’s recent acquisition of Alert Labs, an early stage start up and pioneer in the IoT space.

Specific technology-related achievements during the first quarter included:

 

   

E-commerce sales run-rate is approaching 30% of revenues (over $1.2 billion during the last 12 months).

 

   

Unique users of Watsco’s iOS/Android-enabled Contractor Assist mobile apps reached 50,000.

 

1


The following information was filed by Watsco Inc (WSO) on Tuesday, April 23, 2019 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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