Core Insights - Watsco, Inc. (WSO) reported strong fourth-quarter 2024 results with earnings and revenues exceeding Zacks Consensus Estimates and showing year-over-year growth [1][5] - The quarterly performance was driven by robust sales in residential and commercial equipment, alongside the recovery of market share from a core OEM affected by supply chain issues in 2023 [2][3] Financial Performance - WSO's earnings per share (EPS) for the quarter was $2.37, surpassing the Zacks Consensus Estimate of $2.13 by 11.3%, and up from $2.06 in the same quarter last year [5] - Revenues reached $1.75 billion, exceeding the consensus mark of $1.65 billion by 6.2% and reflecting a 9% increase year over year [5] - The gross margin expanded by 90 basis points to 26.7%, while the operating margin increased by 110 basis points to 7.8% [9] Sales Breakdown - Sales of HVAC equipment, which constitutes 69% of net sales, increased by 14% year over year, while sales of other HVAC products remained flat [6] - Commercial refrigeration product sales grew by 4% from the previous year [6] - E-commerce sales rose by 8% to $2.6 billion in 2024, accounting for 35% of annual net sales, with a 16% increase in the fourth quarter [7] Annual Highlights - For the full year 2024, WSO reported net sales of $7.62 billion, a 5% increase year over year, although gross margin decreased to 26.8% from 27.4% [10] - Full-year EPS was $13.30, down from $13.67 in 2023 [10] Cash Position - As of December 31, 2024, WSO's cash and cash equivalents totaled $526.3 million, significantly up from $210.1 million at the end of 2023, with no borrowings under its revolving credit facility [11] - Net cash provided by operating activities was $773.1 million compared to $562 million the previous year [11] Market Reaction - Following the earnings announcement, WSO stock increased by 9.7% during trading hours and gained an additional 2.1% in after-hours trading, likely influenced by an 11% increase in the annual dividend payment [4]

Financial Data and Key Metrics Changes - Watsco achieved record sales, expanded margins, improved operating efficiency, and generated record earnings and cash flow, with a 14% growth in equipment sales and a 16% growth in residential products [4][5] - The company announced an 11% dividend increase to $12 per share, indicating a strong financial position [5] Business Line Data and Key Metrics Changes - Equipment sales grew by 14%, while residential products saw a 16% increase [4] - E-commerce sales increased by 16%, now representing 35% of annual sales, totaling approximately $2.6 billion [7] - OnCall Air, the digital sales platform, generated $1.5 million in gross merchandise value, marking a 25% increase [8] Market Data and Key Metrics Changes - The transition to next-generation A2L products is underway, influencing 50% to 60% of sales [6] - The company is making significant investments to transition close to $1 billion in inventories to capitalize on this opportunity [6] Company Strategy and Development Direction - Watsco is focused on long-term growth through technology investments and acquisitions, having completed its 70th acquisition since 1989 [9][10] - The company aims to enhance its competitive advantage through technology platforms and training for customers [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future opportunities, particularly with the transition to A2L products and the growth of technology platforms [5][6] - The company anticipates a significant transition to A2L products by the beginning of the second quarter of 2025 [30][33] Other Important Information - The company reported a strong financial position, allowing for investments in growth opportunities and market share expansion [9] - Management emphasized the importance of technology in enhancing customer engagement and sales processes [42][45] Q&A Session Summary Question: Impact of A2L on pricing and transition timeline - Management indicated that A2L had minimal impact in Q4, with pricing actions expected to be around 8% due to tariffs [15][40] Question: Inventory transition timeline for 410A - The company expects to run down 410A inventory to almost nothing by the beginning of the second quarter of 2025 [30][33] Question: Non-equipment sales performance - Management noted a double-digit increase in parts sales, indicating a positive trend in the aftermarket [75] Question: M&A environment and pipeline - The company sees ongoing opportunities for acquisitions, with many family-owned businesses in the market [61][66] Question: New customer growth drivers - New customer growth has been significant, with a focus on mid-tier contractors benefiting from Watsco's technology [94][96] Question: Refrigerant price volatility - Management reported no significant price spikes for 410A, but noted potential higher costs for new refrigerants [142] Question: Repair versus replace trends - Both repair and replacement sales have increased, indicating resilience in the market [134]

Core Insights - Watsco reported revenue of $1.75 billion for the quarter ended December 2024, reflecting a year-over-year increase of 9.4% and exceeding the Zacks Consensus Estimate by 6.18% [1] - The company's EPS for the quarter was $2.37, up from $2.06 in the same quarter last year, surpassing the consensus estimate of $2.13 by 11.27% [1] Revenue Breakdown - HVAC Equipment revenue reached $1.21 billion, exceeding the average estimate of $1.14 billion from three analysts [4] - Commercial Refrigeration Products generated $70.16 million, compared to the estimated $63.69 million [4] - HVAC Products revenue was $473.57 million, surpassing the average estimate of $441.99 million [4] Stock Performance - Watsco's shares have returned -2.5% over the past month, while the Zacks S&P 500 composite increased by 4.7% [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance against the broader market in the near term [3]

Core Insights - Watsco reported quarterly earnings of $2.37 per share, exceeding the Zacks Consensus Estimate of $2.13 per share, and showing an increase from $2.06 per share a year ago, resulting in an earnings surprise of 11.27% [1] - The company generated revenues of $1.75 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.18% and up from $1.6 billion year-over-year [2] - Watsco's stock has underperformed the market with a 2.1% increase since the beginning of the year, compared to the S&P 500's 4% gain [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.21 on revenues of $1.62 billion, and for the current fiscal year, it is $14.50 on revenues of $7.89 billion [7] - The estimate revisions trend for Watsco is favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Building Products - Air Conditioner and Heating industry is currently ranked in the top 9% of over 250 Zacks industries, suggesting a strong outlook for stocks within this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Fourth quarter sales increased by 9% to a record $1.75 billion, with gross profit rising 13% to $468 million[8] - Operating income grew by 26% to $136 million, with an operating margin expansion of 110 basis points to 7.8%[8] - Annual sales reached $7.62 billion, representing a 5% increase, with a same-store growth of 3%[14] - E-commerce sales grew by 8% to $2.6 billion for the year, accounting for 35% of annual sales[14] - Revenues for Q4 2024 reached $1,753,962, a 9.4% increase from $1,603,197 in Q4 2023[32] - Net income attributable to Watsco was $96,841 in Q4 2024, up from $82,547 in Q4 2023, representing a 17.5% increase[32] - Operating income for the year was $781,775, slightly down from $794,810 in 2023, a decrease of 1.8%[32] - Diluted earnings per share for 2024 were $13.30, compared to $13.67 in 2023, showing a decrease of 2.7%[32] Cash Flow and Assets - Operating cash flow increased by 38% to a record $773 million, representing 122% of net income[16] - Cash and cash equivalents at the end of 2024 were $526,271, significantly higher than $210,112 at the end of 2023, marking a 150.5% increase[34] - Net cash provided by operating activities for 2024 was $773,102, compared to $561,954 in 2023, indicating a 37.5% increase[36] - Total assets increased to $4,479,523 in 2024, up from $3,729,182 in 2023, reflecting a growth of 20.1%[34] Expenses and Liabilities - SG&A expenses rose to $338,489 in Q4 2024, up from $312,461 in Q4 2023, reflecting an increase of 8.3%[32] - Total liabilities increased to $1,415,285 in 2024 from $1,112,992 in 2023, a rise of 27.2%[34] Dividends and Acquisitions - The company raised its annual dividend by 11% to $12.00 per share, marking the 51st consecutive year of dividend payments[3][17] - The company has acquired 70 companies since 1989, contributing to approximately $1.6 billion in annualized sales from 111 locations[19] Market and User Growth - Watsco's digital user community expanded to approximately 64,000 users, a 15% increase from the prior year[14] - Sales of residential equipment increased by 16% during the quarter, driven by new customer acquisition and market share gains[9] - Watsco's gross margin for the full year was 26.8%, down from 27.4% the previous year[14] - Gross profit margin improved to 26.7% in Q4 2024, compared to 25.8% in Q4 2023[32]

Company Overview - Watsco, Inc. is the largest distributor of heating, air conditioning, and refrigeration (HVAC/R) products with operations in the United States, Canada, Mexico, Puerto Rico, and exports to Latin America and the Caribbean [3] Dividend Announcement - The Board of Directors approved an 11% increase in the annual dividend to $12.00 per share for each outstanding share of Common and Class B common stock, effective from the next quarterly dividend payment in April 2025 [1][2] Financial Performance and Strategy - The increase in dividends reflects the strength of Watsco's 2024 performance and the company's confidence in its business prospects, supported by a strong balance sheet [2] - Watsco has a history of paying dividends for 51 consecutive years, with a philosophy of sharing increasing cash flow through higher dividends while maintaining a conservative balance sheet [2] Market Focus - The company focuses on the replacement market, which has grown due to the aging of installed HVAC systems and the introduction of more energy-efficient models [4] - Approximately 102 million HVAC systems in the United States have been in service for over 10 years, many operating below current minimum efficiency standards, indicating a significant market opportunity for Watsco [4]

Core Viewpoint - Watsco, Inc. is expected to report its fourth-quarter 2024 results on February 18, with a consensus estimate indicating a potential earnings beat due to strong HVAC demand and improved margins [1][9]. Financial Performance - In the last reported quarter, Watsco's earnings missed the Zacks Consensus Estimate by 12.8% and decreased by 3% year over year, while sales also missed the consensus mark by 3.9% but increased by 2% year over year [2]. - The Zacks Consensus Estimate for the upcoming quarter's earnings has risen to $2.13 from $2.05 per share, reflecting a 3.4% increase from the previous year's earnings of $2.06 per share. Revenue is expected to reach $1.65 billion, indicating a 3% year-over-year growth [3]. Revenue Drivers - The anticipated growth in Watsco's fourth-quarter revenues is attributed to strong performance in the HVAC equipment segment, particularly in the commercial market [4]. - Ongoing investments in advanced technologies, strategic acquisitions, and robust e-commerce sales are expected to contribute positively to the company's performance [5]. Segment Performance - HVAC Equipment sales, which accounted for 71% of total sales in the third quarter of 2024, are projected to grow by 2.3% year over year to $1.13 billion. HVAC Products are expected to increase by 1.3% to $483.3 million, while Commercial Refrigeration Products sales are anticipated to rise by 1.3% to $64.9 million [6]. Margin Analysis - The gross margin is expected to improve by 80 basis points year over year to 26.6%, driven by a better price/mix. Additionally, SG&A expenses as a percentage of net sales are projected to decrease to 19.2% from 19.5% a year ago [8]. Earnings Prediction - The model predicts an earnings beat for Watsco, supported by a positive Earnings ESP of +0.94% and a Zacks Rank of 2 (Buy) [9].

Company Overview - Watsco, Inc. is the largest distributor of heating, air conditioning, and refrigeration (HVAC/R) products with operations in the United States, Canada, Mexico, Puerto Rico, and exports to Latin America and the Caribbean [4] Market Focus - The company focuses on the replacement market, which has grown due to the aging of installed systems, the introduction of higher energy-efficient models, and the necessity of HVAC products in homes and businesses [5] - Approximately 102 million HVAC systems in the U.S. have been in service for over 10 years, most operating below current minimum efficiency standards [5] Environmental Impact - Watsco plays a significant role in addressing climate change by contributing to the reduction of CO2e emissions through the sale of higher-efficiency HVAC systems [6] - HVAC systems account for roughly half of U.S. household energy consumption, making the replacement of older systems critical for reducing electricity consumption and carbon footprints [6] Emission Reduction Achievements - From January 1, 2020, to December 31, 2024, Watsco is estimated to have averted 22.8 million metric tons of CO2e emissions, equivalent to removing 5.3 million gas-powered vehicles from the road annually [7]

MIAMI, Nov. 15, 2024 (GLOBE NEWSWIRE) -- Watsco, Inc. (NYSE: WSO) announced today that Rick Gomez, Vice President of Corporate Development, is scheduled to present at the Stephens Investment Conference being held at the Grand Hyatt in Nashville, Tennessee on Tuesday, November 19, 2024 at 2:00 p.m. (CT). Internet users can listen to a live webcast of the presentation at the Investor Relations section of Watsco’s website at http://www.watsco.com. About Watsco Watsco is the largest distributor of heating, air ...

Revenue and Sales Performance - Revenues for Q3 2024 increased by $33.2 million (2%) compared to Q3 2023, reaching $2,160.0 million[73] - Same-store sales for Q3 2024 were $2,119.8 million, a slight decrease of $4.5 million (0%) compared to Q3 2023[73] - Revenues for the nine months ended September 30, 2024 increased by $183.8 million (3%) to $5,864.4 million, driven by new locations[79] HVAC Equipment Sales - HVAC equipment sales accounted for 71% of total sales in Q3 2024, up 1% from 70% in Q3 2023[74] - Commercial HVAC equipment sales increased by 6% in Q3 2024, with a 12% increase in international markets[74] - Residential unitary compressor-bearing systems sales decreased by 2% in Q3 2024, with a 1% decrease in average selling price and unit volume[74] - HVAC equipment sales increased by 3% in 2024, with residential products up 2% and commercial HVAC equipment up 6%[80] Profitability and Margins - Net income attributable to Watsco, Inc. for Q3 2024 was 7.9% of revenues, slightly down from 8.0% in Q3 2023[69] - Gross profit for Q3 2024 was $566.2 million, a slight decrease of $0.7 million (0%) compared to Q3 2023[75] - Gross margin declined by 50 basis-points to 26.2% in Q3 2024, primarily due to pricing and sales mix for HVAC equipment[76] - Net income attributable to Watsco, Inc. for the nine months ended September 30, 2024 decreased by $14.3 million (3%) compared to the same period in 2023[86] - Gross profit margin for the nine months ended September 30, 2024 declined by 90 basis-points to 26.9%, impacted by pricing and sales mix[81] Expenses and Costs - Selling, general and administrative expenses increased by 2% to $326.4 million in Q3 2024, driven by higher revenues[76] - Selling, general and administrative expenses for the nine months ended September 30, 2024 increased by $44.0 million (5%) to $955.0 million, primarily due to increased revenues and newly acquired locations[82] Environmental Impact and Government Programs - The company averted an estimated 21.8 million metric tons of CO2e emissions from January 1, 2020, to September 30, 2024, through the sale of higher-efficiency HVAC systems[63] - The U.S. Inflation Reduction Act of 2022 allocated $4.3 billion for state-administered consumer rebate programs, including HVAC systems[64] Operational Disruptions - Hurricane Helene and Hurricane Milton caused disruptions in Q3 2024, but the impact on operations was not significant[65] Financial Activities and Investments - Interest income, net for the nine months ended September 30, 2024 increased by $20.1 million (339%) due to higher interest earned on cash and short-term investments[84] - Cash flows provided by operating activities for the nine months ended September 30, 2024 increased by $130.9 million to $394.2 million, primarily due to the timing of vendor payments[93] - No outstanding balance under the revolving credit agreement at September 30, 2024, compared to $15.4 million outstanding at December 31, 2023[98] - Issued and sold 712,000 shares of Common stock under the 2021 ATM Program for net proceeds of $281.8 million during Q1 2024[100] - Executed the 2024 ATM Program enabling issuance of up to $400.0 million of Common stock, with $400.0 million available for sale at September 30, 2024[101] - Obligated under non-cancelable purchase orders for goods aggregating approximately $460.0 million at September 30, 2024, with $250.0 million attributable to Carrier and its affiliates[103] - Carrier Enterprise I, with an 80% controlling interest, holds a 38.4% ownership in RSI, valued at approximately $477.0 million at September 30, 2024[105] - Acquired CSI for $6.0 million in cash, $0.8 million in Common stock, and $0.6 million for repayment of indebtedness, net of cash acquired of $1.4 million[108] - Acquired GWS for $4.0 million in cash and $101.6 million in Common stock, net of cash acquired of $3.1 million[109] Dividends and Share Repurchases - Paid cash dividends of $7.85 and $7.35 per share on Common and Class B common stock during the nine months ended September 30, 2024 and 2023, respectively[113] - Issued 13,394 and 13,398 shares of common stock under the Dividend Reinvestment Plan during the quarter and nine months ended September 30, 2024, respectively[115] - 6,370,913 shares of Common and Class B common stock repurchased at a cost of $114.4 million since the inception of the share repurchase program, with 1,129,087 shares remaining authorized for repurchase at September 30, 2024[116] Company Operations and Locations - The company operated from 689 locations as of September 30, 2024, a decrease from 691 locations in September 2023[72]