Revenue Growth - Revenues for Q3 2019 increased by $98.9 million, or 8%, with HVAC equipment sales (68% of total sales) rising by 8%[93] - Revenues for the nine months ended September 30, 2019 increased by $142.7 million, or 4%, with $85.6 million from new locations opened and acquired[101] - On a same-store basis, revenues increased by $44.4 million, or 3%, reflecting a 4% increase in sales of HVAC equipment[93] Profitability - Gross profit for Q3 2019 increased by $15.7 million, or 5%, but gross profit margin declined to 24.0% from 24.6% in Q3 2018[95] - Gross profit for the same period increased by $25.8 million, or 3%, while gross profit margin declined by 30 basis points to 24.2%[103] - Net income attributable to Watsco for Q3 2019 increased by $4.3 million, or 5%, driven by higher revenues and gross profit[100] - Net income attributable to Watsco increased by $5.3 million, or 3%, driven by higher revenues and gross profit, alongside a reduction in income taxes[108] Expenses - Selling, general and administrative expenses for Q3 2019 rose by $12.5 million, or 6%, but as a percentage of revenues decreased to 15.3% from 15.5% in Q3 2018[96] - Selling, general and administrative expenses rose by $24.0 million, or 4%, with expenses as a percentage of revenues remaining stable at 15.9%[104] Cash Flow and Working Capital - Cash flows provided by operating activities increased significantly to $197.5 million from $70.1 million, a change of $127.4 million[115] - Working capital increased to $1,148.5 million as of September 30, 2019, up from $1,084.2 million at December 31, 2018, due to higher accounts receivable and inventories[114] Acquisitions and Expansion - The company opened 14 new locations and acquired 26 locations in the 12 months ended September 30, 2019, bringing the total to 603 locations[92] - The company acquired the HVAC distribution business of Peirce-Phelps, Inc. in August 2019 and Dunphey & Associates Supply Co., Inc. in April 2019[90] - The company purchased an additional 20% ownership interest in Homans for $32.4 million, increasing total ownership to 100%[121] - On August 1, 2019, Carrier Enterprise I acquired assets of PPI for $85 million, with a net purchase price consisting of $10 million in cash and shares valued at $58.6 million[125] Financial Ratios and Tax - Interest expense, net for Q3 2019 increased by $0.4 million, or 37%, due to higher average outstanding borrowings[98] - The effective income tax rate decreased to 22.2% in Q3 2019 from 23.3% in Q3 2018, primarily due to the refinement of estimated global intangible low-taxed income[99] Dividends and Credit Facilities - Cash dividends paid per share increased to $4.80 for the nine months ended September 30, 2019, compared to $4.15 in the same period of 2018[128] - The company maintains a $500 million revolving credit agreement, with $169.3 million outstanding as of September 30, 2019[120] Joint Ventures - The company has a controlling interest in multiple joint ventures with Carrier Corporation, enhancing its market presence in the HVAC/R industry[83]
Watsco(WSO_B) - 2019 Q3 - Quarterly Report