Revenue and Sales Performance - Revenues for Q3 2022 increased by $253.2 million, or 14%, with HVAC equipment sales (69% of total sales) rising by 13%[91] - Sales of residential HVAC equipment grew by 13%, while commercial HVAC equipment sales increased by 20%[91] - Revenues for the nine months ended September 30, 2022, increased by $924.8 million, or 19%, with HVAC equipment sales accounting for 69% of total sales[98] Profitability and Margins - The gross profit margin for the nine months ended September 30, 2022, was 28.0%, up from 26.3% in the same period of 2021[87] - Gross profit for Q3 2022 increased by $68.2 million, or 14%, with a gross profit margin of 27.1%[92] - Gross profit for the nine months ended September 30, 2022, increased by $341.3 million, or 27%, with a gross profit margin improvement to 28.0%[100] - Net income attributable to Watsco for Q3 2022 increased by $16.8 million, or 12%, driven by higher revenues[97] - Net income attributable to Watsco for the nine months ended September 30, 2022, increased by $123.4 million, or 36%[105] Expenses and Financial Position - Selling, general and administrative expenses for Q3 2022 rose by $39.6 million, or 14%, maintaining a percentage of revenues at 15.8%[93] - Interest expense, net for Q3 2022 increased by $0.3 million, or 119%, due to higher average outstanding borrowings[95] - Cash flows provided by operating activities for the nine months ended September 30, 2022, were $358.9 million, an increase of $39.2 million from 2021[112] - Working capital increased to $1,470.4 million as of September 30, 2022, from $1,234.7 million at December 31, 2021[111] Acquisitions and Investments - On August 20, 2021, the company acquired MIS for a total consideration of $4.2 million, consisting of $3.2 million in cash and $1.0 million in common stock[123] - On May 7, 2021, the company acquired ACME for $22.9 million, which included $18.1 million in cash and $2.6 million in common stock[124] - On April 9, 2021, the company acquired the HVAC distribution business of Temperature Equipment Corporation for $106.7 million, with the company contributing $84.2 million in cash[125] - The company is actively evaluating potential acquisitions and joint ventures, indicating a strong financial position to pursue additional financing if needed[126] Shareholder Returns - Cash dividends paid per share increased from $5.675 in 2021 to $6.35 in 2022, with an annual cash dividend increase from $8.80 to $9.80 effective January 2023[127] - The company has repurchased a total of 6,370,913 shares of common stock at a cost of $114.4 million since the inception of the share repurchase program[128] - As of September 30, 2022, there were 1,129,087 shares remaining authorized for repurchase under the program[128] Environmental Impact - The company averted an estimated 14.2 million metric tons of CO2e emissions from January 1, 2020, to September 30, 2022, through the sale of higher-efficiency HVAC systems[79] Operational Metrics - The company operated from 675 locations as of September 30, 2022, an increase from 673 locations a year earlier[90] - The average selling price for HVAC equipment rose by 14%, despite a 1% decrease in volume[91] - Higher-efficiency residential HVAC systems sales grew 23% organically during the nine months ended September 30, 2022, outpacing the overall growth rate of 17% for residential HVAC equipment in the U.S.[79] Supply Chain and Market Risks - The company estimates that supply chain disruptions resulted in approximately 3% to 4% of lost revenues during the first nine months of 2022[75] - There have been no material changes to the market risk information disclosed in the Annual Report for the year ended December 31, 2021[129] - The company has an 80% controlling interest in multiple joint ventures with Carrier Global Corporation, enhancing its market presence[80][81][82][83]
Watsco(WSO_B) - 2022 Q3 - Quarterly Report