Financial Performance - Revenues decreased 2% to $1.53 billion compared to $1.56 billion in the prior year[15] - Net income for Q1 2025 decreased to $94,540 from $104,262 in Q1 2024, representing a decline of approximately 9%[30] - Dividends on Common and Class B Common stock increased to $(109,037) in Q1 2025 from $(96,765) in Q1 2024, reflecting a rise of approximately 12.5%[30] Profitability and Margins - Gross profit margin improved by 60 basis points to 28.1% from 27.5% in the previous year[15] Market and Sales Growth - Core U.S. market for residential replacement sales increased by 10% (12% on a same-day basis) due to new customer acquisition and improved product mix[6] - The transition to new A2L products affects approximately 55% of Watsco's sales and will convert nearly $1 billion of inventory over the year[5] - The company has acquired 11 companies since 2019, contributing to $1.6 billion in annualized sales[16] Cash Flow and Investments - Operating cash flow was a use of cash totaling $178 million, reflecting inventory investments in new products[12] - Cash flows from investing activities showed a net inflow of $244,556 in Q1 2025, contrasting with a net outflow of $(210,965) in Q1 2024[30] - Capital expenditures netted $(7,443) in Q1 2025, compared to $(5,787) in Q1 2024, indicating increased investment in capital assets[30] Balance Sheet and Liquidity - The company has a debt-free balance sheet with $432 million in cash and $3 billion in shareholders' equity[3] - Cash and cash equivalents at the end of Q1 2025 were $431,823, up from $278,864 at the end of Q1 2024, marking an increase of about 55%[30] - Accounts receivable increased significantly to $83,864 in Q1 2025 from $(33,502) in Q1 2024, indicating a substantial change in working capital[30] - Inventories netted $(389,990) in Q1 2025, compared to $(307,219) in Q1 2024, showing an increase in inventory levels[30] Technology and User Engagement - Watsco's technology platforms have resulted in approximately 60% less attrition among active users, aiding future growth[14] Foreign Exchange Impact - The effect of foreign exchange rate changes on cash and cash equivalents resulted in a positive adjustment of $319 in Q1 2025, compared to a negative adjustment of $(2,390) in Q1 2024[30] Provision for Doubtful Accounts - The company reported a provision for doubtful accounts of $840 in Q1 2025, slightly down from $862 in Q1 2024[30]
Watsco(WSO_B) - 2025 Q1 - Quarterly Results