Core Viewpoint - The Schall Law Firm is investigating Watsco, Inc. for potential violations of securities laws related to misleading statements and undisclosed information affecting investors [1][2]. Financial Performance - Watsco reported a 2% year-over-year revenue decline for Q1 2025, missing consensus estimates [2]. - The company attributed its results to a large-scale product transition due to regulatory changes effective January 1, 2025, impacting approximately 55% of its sales and converting nearly $1 billion of inventory throughout the year [2]. - Following the announcement, Watsco's shares fell by 11% on the same day [2].

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud or unlawful business practices involving Watsco, Inc. and its officers or directors, following disappointing financial results and a significant stock price drop [1][3]. Financial Performance - Watsco reported first-quarter 2025 revenue of $1.53 billion, which is a 2% decline year-over-year and below consensus estimates [3]. - The company indicated that the results are influenced by a large-scale product transition due to regulatory changes effective January 1, 2025, impacting approximately 55% of its sales and expected to convert nearly $1 billion of inventory throughout the year [3]. - Following the announcement, Watsco's stock price decreased by $56.76 per share, or 11.28%, closing at $446.40 per share on April 23, 2025 [3].

Core Viewpoint - Watsco, Inc. has completed the acquisition of Southern Ice Equipment Distributors and two other companies, enhancing its distribution network and annualized sales in high-growth Sunbelt markets [1][3]. Company Overview - Watsco, Inc. operates the largest distribution network for HVAC/R products across the U.S., Canada, Mexico, and Puerto Rico, with over 702 locations [5]. - The company focuses on the replacement market, which is growing due to aging systems and the need for energy-efficient models [6]. Acquisitions - The acquisition of Southern Ice, along with two other transactions, adds 10 new locations and approximately $47 million in annualized sales [3][9]. - Southern Ice, founded in 1984, is a leading distributor in food-service and commercial refrigeration, operating in key Sunbelt markets [2]. Environmental Impact - Watsco has contributed to reducing CO2e emissions by an estimated 23.7 million metric tons from January 2020 to March 2025 through the sale of higher-efficiency HVAC systems [8]. - The company plays a significant role in lowering household energy consumption, as HVAC systems account for about half of U.S. household energy use [7]. Strategic Goals - Watsco aims to identify and partner with strong businesses in the HVAC/R industry, support their growth, and leverage technology for innovation [10].

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud or unlawful business practices involving Watsco, Inc. and its officers or directors following disappointing financial results and a significant stock price drop [1][3]. Financial Performance - Watsco reported first-quarter 2025 revenue of $1.53 billion, which is a 2% decline year-over-year and below consensus estimates [3]. - The company indicated that the results are influenced by a large-scale product transition due to regulatory changes effective January 1, 2025, impacting approximately 55% of its sales and expected to convert nearly $1 billion of inventory throughout the year [3]. - Following the announcement, Watsco's stock price decreased by $56.76 per share, or 11.28%, closing at $446.40 on April 23, 2025 [3]. Legal Investigation - Pomerantz LLP is actively seeking claims from investors regarding potential securities fraud related to Watsco's recent financial disclosures [1]. - The firm has a long history in corporate and securities class litigation, having recovered significant damages for victims of securities fraud and corporate misconduct [4].

NEW YORK, April 25, 2025 (GLOBE NEWSWIRE) -- Pomerantz LLP is investigating claims on behalf of investors of Watsco, Inc. (“Watsco” or the “Company”) (NYSE: WSO). Such investors are advised to contact Danielle Peyton at newaction@pomlaw.com or 646-581-9980, ext. 7980. The investigation concerns whether Watsco and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.  [Click here for information about joining the class action] On April 23, 2025, Watsc ...

Core Insights - Watsco, Inc. reported first-quarter 2025 results with earnings and revenues missing estimates and declining year over year [1][3] - The stock declined 11.3% following the results, influenced by challenges in end markets and seasonal factors [1][2] Financial Performance - Earnings per share (EPS) for the quarter was $1.93, missing the Zacks Consensus Estimate of $2.29 by 15.7% and down from $2.17 in the previous year [3] - Revenues totaled $1.53 billion, missing the consensus mark of $1.66 billion by 7.6% and declining 2.2% year over year [3] - Gross margin expanded by 60 basis points to 28.1%, while operating margin contracted by 80 basis points to 7.3% [7] Sales Breakdown - Sales of HVAC equipment, which comprises 67% of net sales, fell 1% year over year, while sales of other HVAC products (29% of sales) declined 3% [4] - In the U.S. residential replacement segment, sales rose 10% year over year, driven by new customer acquisitions and effective price realization [5] - International sales, accounting for 9% of total revenues, declined 9% year over year due to softer volumes in new housing markets [6] Operational Highlights - Cash and cash equivalents as of March 31, 2025, totaled $431.8 million, down from $526.3 million at the end of 2024 [8] - Net cash used in operating activities was $177.6 million, compared to net cash provided of $103.7 million in the same period last year [8]

Financial Data and Key Metrics Changes - Watsco reported a strong first quarter with a 10% increase in sales for the core HVAC replacement business driven by higher volumes and a richer mix of high-efficiency systems [6][9] - Gross margins improved following the launch of new systems, with the company aiming for a long-term gross profit margin goal of 30% [34][9] - The company has a solid balance sheet with $430 million in cash, no debt, and over $3 billion in equity [9] Business Line Data and Key Metrics Changes - The core HVAC replacement business saw a 10% increase, while the commercial products segment experienced a decline of around 10% due to the transition from 410A to 454B refrigerants [6][71] - The residential replacement market was the primary driver of growth, with 410A still dominating the sales mix in the first quarter [18][6] - The transition to A2L products is expected to gain momentum in the second quarter as the company phases out 410A [18][9] Market Data and Key Metrics Changes - Domestic sales accounted for 91% of first-quarter sales, with international sales representing 9% and showing greater uncertainty [11][9] - The company is closely monitoring the potential impact of proposed tariffs on its business, particularly in Canada and Latin America [11][9] - The HVAC distribution market is valued at $74 billion, with Watsco being a market leader in a highly fragmented industry [13] Company Strategy and Development Direction - Watsco is focused on transitioning to more efficient and sustainable products, with the new A2L systems expected to impact around 55% of total sales [4][5] - The company emphasizes long-term performance and has a unique ownership culture that incentivizes employees [14] - Watsco aims to leverage its scale, technology, and relationships to adapt quickly to changing market conditions [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, expecting benefits from new A2L products to materialize in the stronger second and third quarters [9][6] - The company noted that the first quarter is typically the smallest and most seasonal, with recent sales and margin trends showing improvement [8][9] - Management is confident in maintaining market share in the new construction segment despite some softness [30][6] Other Important Information - Watsco raised its annual dividend by 11% to $12 per share, marking the 51st consecutive year of dividend payments [10] - The company is actively collaborating with OEM partners on pricing actions in response to tariffs [11] Q&A Session Summary Question: Can you provide insight into the residential side and the impact of refrigerants? - Management indicated that most of the first-quarter growth was from 410A, with a transition to A2L products expected in the second quarter [18] Question: How do you see gross margins evolving with recent price increases? - Management noted that gross margin improvements were primarily due to a favorable product mix rather than price increases in the first quarter [22] Question: What is the outlook for international sales? - Management acknowledged that international sales were weak but not significant enough to impact overall performance [26] Question: Are there any delays in the transition to A2L products? - Management reported no significant delays and indicated that the transition is proceeding smoothly [80] Question: How is the company managing price increases from OEMs? - Management stated that they are collaborating closely with OEMs and have the technology to implement price increases quickly [41] Question: What is the company's strategy regarding inventory and pricing? - Management emphasized a focus on long-term relationships with customers and maintaining a diverse product offering to adapt to market conditions [111] Question: How much of the product is sourced from China? - Management estimated that less than 5% of ducted products are sourced from China, with a higher percentage for duct-free products [142]

Financial Data and Key Metrics Changes - Watsco reported a strong first quarter with a 10% increase in sales for the core HVAC replacement business driven by higher volumes and a richer mix of high-efficiency systems [6][9] - Gross margins improved following the launch of new systems, with the company aiming for a long-term gross profit margin goal of 30% [34][9] - The company has $430 million in cash, no debt, and over $3 billion in equity, indicating a strong balance sheet [9] Business Line Data and Key Metrics Changes - The core HVAC replacement business saw a 10% increase, while the commercial products segment experienced a decline of around 10% due to the transition from 410A to 454B refrigerants [6][71] - The residential new construction market was noted to be softer year-over-year, but the company believes it has not lost market share in this segment [30][26] Market Data and Key Metrics Changes - Domestic sales accounted for 91% of first-quarter sales, with mid-single-digit growth observed in the domestic market [58] - International sales, which represent 9% of total sales, were noted to be weaker, with greater uncertainty in Canada and Latin America [11] Company Strategy and Development Direction - Watsco is transitioning to the new A2L refrigerant systems, which are expected to impact around 55% of total sales and are seen as beneficial for business in the long term [4][5] - The company emphasizes its scale, technology, and relationships with OEM partners to adapt quickly to changing market conditions [12][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming selling season, expecting benefits from the new A2L products to materialize in the stronger second and third quarters [9][4] - The company is closely monitoring the potential impact of proposed tariffs and is collaborating with OEM partners on pricing actions [11][9] Other Important Information - Watsco raised its annual dividend by 11% to $12 per share, marking the 51st consecutive year of dividend payments [10] - The company is actively training customers and updating technology platforms to support the transition to new refrigerant systems [5] Q&A Session Summary Question: Insights on residential sales growth - Management indicated that most of the first-quarter growth was from 410A, with a transition to A2L products expected in the second quarter [18][19] Question: Impact of price increases on gross margin - Management noted that the first quarter saw clean pricing without significant price increases, with gross margin improvements primarily due to a favorable segment mix [22][21] Question: International sales performance - Management acknowledged that international sales were weak but not significant enough to impact overall performance, attributing some of the softness to fewer selling days in the quarter [27][28] Question: Transition to A2L refrigerants - Management confirmed that there were no significant delays in the transition to A2L products and that the market is adapting well [80][81] Question: Price increase mechanisms - Management clarified that most pricing actions are price increases rather than surcharges, indicating a stable pricing environment [138][135] Question: Supply chain issues with refrigerants - Management acknowledged shortages of 454B refrigerant due to container issues but emphasized that there is no shortage of the refrigerant itself [96][97] Question: Consumer behavior regarding repairs versus replacements - Management indicated that both repair and replacement markets are expected to grow, with a positive outlook on energy-efficient product sales [105][110]

Watsco (WSO) reported $1.53 billion in revenue for the quarter ended March 2025, representing a year-over-year decline of 2.2%. EPS of $1.93 for the same period compares to $2.17 a year ago.The reported revenue represents a surprise of -7.62% over the Zacks Consensus Estimate of $1.66 billion. With the consensus EPS estimate being $2.29, the EPS surprise was -15.72%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expecta ...

Core Insights - Watsco reported quarterly earnings of $1.93 per share, missing the Zacks Consensus Estimate of $2.29 per share, and down from $2.17 per share a year ago, representing an earnings surprise of -15.72% [1] - The company posted revenues of $1.53 billion for the quarter, missing the Zacks Consensus Estimate by 7.62%, and down from $1.57 billion year-over-year [2] - Watsco has surpassed consensus EPS estimates only once in the last four quarters and has topped revenue estimates just once in the same period [2] Earnings Outlook - The sustainability of Watsco's stock price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $4.93 on revenues of $2.27 billion, and for the current fiscal year, it is $14.60 on revenues of $8.01 billion [7] Industry Context - The Building Products - Air Conditioner and Heating industry is currently ranked in the bottom 34% of over 250 Zacks industries, indicating potential challenges for Watsco's stock performance [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Watsco's stock performance [5][6]