Revenue Growth - Revenues for Q2 2019 increased by $39.1 million, or 3%, with $22.8 million from new locations and acquisitions, and a same-store revenue increase of $19.9 million, or 1%[90] - For the first half of 2019, revenues increased by $43.8 million, or 2%, with a same-store revenue increase of $23.1 million, or 1%[98] Gross Profit and Margin - Gross profit for Q2 2019 increased by $7.2 million, or 2%, with a gross profit margin of 23.9%, down 20 basis points from 24.1% in Q2 2018[92] - Gross profit for the first half of 2019 increased by $10.1 million, or 2%, maintaining a gross profit margin of 24.4%[99] Expenses - Selling, general and administrative expenses for Q2 2019 rose by $10.0 million, or 5%, with expenses as a percentage of revenues increasing to 14.3% from 14.0% in Q2 2018[93] - Selling, general and administrative expenses for the first half of 2019 increased by $11.5 million, or 3%, with expenses as a percentage of revenues rising[100] - Selling, general and administrative expenses increased by $4.3 million, or 1%, compared to the same period in 2018, including $2.9 million for ongoing technology initiatives[1] Net Income - Net income attributable to Watsco for Q2 2019 increased by $0.2 million compared to Q2 2018, driven by higher revenues and gross profit, alongside a reduction in income taxes[97] - Net income attributable to Watsco for the first half of 2019 increased by $1.0 million, or 1%, compared to the same period in 2018, driven by higher revenues and gross profit[105] Income Taxes - The effective income tax rate for Q2 2019 was 21.7%, down from 23.8% in Q2 2018, primarily due to lower estimated foreign withholding taxes[96] - Income taxes decreased to $35.8 million for the first half of 2019, compared to $39.3 million for the same period in 2018, with effective income tax rates of 22.0% and 23.8% respectively[104] Cash Flow and Working Capital - Cash flows provided by operating activities for the first half of 2019 were $68.4 million, compared to $(19.3) million in 2018, an increase of $87.7 million[112] - Working capital increased to $1,114.6 million at June 30, 2019, from $1,084.2 million at December 31, 2018, reflecting higher accounts receivable and inventories[111] Acquisitions and Ownership - The company opened 11 new locations and acquired 7 locations in the six months ended June 30, 2019, bringing the total to 585 locations[89] - The company purchased an additional 20% ownership interest in Homans effective May 31, 2019, increasing its ownership to 100%[81] - The company acquired an additional 20% ownership interest in Homans for $32.4 million, increasing its ownership to 100%[118] - The company acquired assets of Peirce-Phelps, Inc. for $85.0 million, with consideration including $10.0 million in cash and shares valued at $58.6 million[122] Interest Expense - Interest expense, net for the first half of 2019 increased by $0.7 million, or 50%, primarily due to higher average outstanding borrowings and a higher effective interest rate[103] Dividends - Cash dividends paid were $3.20 per share during the first half of 2019, compared to $2.70 per share in 2018[124] Credit Facilities - The company maintained a $500.0 million revolving credit agreement, with $219.6 million outstanding as of June 30, 2019[116][117]
Watsco(WSO_B) - 2019 Q2 - Quarterly Report