Watsco(US:WSO)2024-05-03 20:01Financial Performance - Revenues for Q1 2024 were $1,565.0 million, a 1% increase from $1,550.6 million in Q1 2023, with $51.4 million attributed to new locations acquired[83] - Same-store sales decreased by 2%, from $1,549.8 million in Q1 2023 to $1,512.5 million in Q1 2024[84] - Gross profit for Q1 2024 was $430.6 million, down 4% from $448.2 million in Q1 2023, resulting in a gross margin decline to 27.5% from 28.9%[85] - Selling, general and administrative expenses increased by 8% to $309.5 million in Q1 2024, with expenses as a percentage of revenues rising to 19.8% from 18.5%[86] - Operating income for Q1 2024 was $126.5 million, a decrease from $164.0 million in Q1 2023, leading to an operating margin of 8.1% compared to 10.6%[78] - Net income attributable to Watsco, Inc. for Q1 2024 was $87.6 million, or 5.6% of revenues, down from $109.0 million, or 7.1% of revenues in Q1 2023[78] - Net income attributable to Watsco for Q1 2024 decreased by $23.1 million, or 21%, compared to Q1 2023, primarily due to lower gross profit and higher selling, general, and administrative expenses[90] Cash Flow and Working Capital - Cash flows provided by operating activities increased by $151.1 million, from $(47.4) million in Q1 2023 to $103.7 million in Q1 2024[97] - Working capital increased to $1,972.2 million as of March 31, 2024, up from $1,679.9 million at December 31, 2023, driven by higher inventory and accounts receivable[96] - The company had $278.9 million in cash and cash equivalents as of March 31, 2024, with $176.1 million held by foreign subsidiaries[94] Investments and Acquisitions - The company acquired 16 locations in the past year, bringing the total number of locations to 691 as of March 31, 2024[82] - The company acquired CSI, a distributor of HVAC products, for a total consideration of $6.0 million in cash and stock, and GWS, a plumbing and HVAC distributor, for a net purchase price of $4.0 million in cash and stock[109][110] - Cash flows used in investing activities increased by $200.5 million, primarily due to the purchase of $200.0 million in short-term cash investments in 2024[99] Tax and Dividends - The effective income tax rate decreased from 23.3% in Q1 2023 to 21.8% in Q1 2024, attributed to higher share-based compensation deductions[89] - The company paid cash dividends of $2.45 per share during both Q1 2024 and Q1 2023, with a new dividend of $2.70 declared for April 2024[113] Interest and Environmental Impact - Interest income for Q1 2024 increased by 502% to $3.1 million, primarily due to higher interest earned on cash and short-term investments[88] - The company averted an estimated 20.1 million metric tons of CO2e emissions from January 1, 2020, to March 31, 2024, through the sale of higher-efficiency HVAC systems[72] - The U.S. Inflation Reduction Act of 2022 is expected to increase demand for high-efficiency products, with $4.3 billion allocated for state-administered consumer rebate programs[73] Stock and Credit Facilities - The company issued and sold 712,000 shares of Common stock under the ATM Program for net proceeds of $281.8 million during Q1 2024[104] - The company maintains a $600.0 million revolving credit agreement, with no outstanding balance as of March 31, 2024[102]