Watsco(US:WSO)2025-05-09 11:30Financial Performance - Revenues for Q1 2025 were $1,531.1 million, a decrease of 2% compared to $1,565.0 million in Q1 2024[87] - Gross profit margin improved to 28.1% in Q1 2025 from 27.5% in Q1 2024, while operating income decreased to 7.3% from 8.1%[83] - Net income attributable to Watsco, Inc. was 5.2% in Q1 2025, down from 5.6% in Q1 2024[83] - Same-store sales for the quarter ended March 31, 2025, were $1,522.6 million, a decrease of 2% compared to $1,559.7 million in 2024[88] - Gross profit for the quarter was $429.6 million, with a gross margin of 28.1%, an increase of 60 basis points from 27.5% in 2024[89][90] - Net income attributable to Watsco decreased by $6.9 million, or 8%, to $79.5 million for the quarter ended March 31, 2025[95] - Cash flows used in operating activities were $(177.6) million, a decrease of $281.3 million compared to $103.7 million provided in 2024[102] Expenses and Costs - Selling, general and administrative expenses increased to 21.1% of revenues in Q1 2025 from 19.8% in Q1 2024[83] - Selling, general and administrative expenses rose to $322.6 million, a 4% increase from $309.5 million in 2024, with expenses as a percentage of revenues increasing to 21.1%[91] Acquisitions and Investments - On May 1, 2025, the company acquired Southern Ice Equipment Distributors, Inc. for $14.3 million in cash and $3.4 million in Common stock[117] - The company also acquired Hawkins HVAC Distributors, Inc. on April 1, 2025, for $2.5 million in cash[118] - Carrier Enterprise I acquired W.L. Lashley & Associates, Inc. for a total consideration of $4.0 million, resulting in $3.1 million in goodwill[119] - A wholly owned subsidiary acquired Commercial Specialists, Inc. for $6.0 million in cash, leading to $2.5 million in goodwill recognition[120] - The company is actively evaluating potential acquisitions and joint ventures, indicating a strong financial position for future financing[121] Cash and Shareholder Returns - The company had $431.8 million in cash and cash equivalents as of March 31, 2025, with $131.7 million held by foreign subsidiaries[99] - Working capital increased to $2,110.2 million at March 31, 2025, up from $2,096.1 million at December 31, 2024[101] - The company paid cash dividends of $2.70 and $2.45 per share on common stock for the three months ended March 31, 2025 and 2024, respectively[122] - A regular quarterly cash dividend of $3.00 per share was declared on April 1, 2025, payable on April 30, 2025[122] - The Dividend Reinvestment Plan (DRIP) allows shareholders to acquire up to 300,000 shares by reinvesting cash dividends, with 13,942 shares issued under the DRIP during Q1 2025[123] - The company has repurchased a total of 6,370,913 shares at a cost of $114.4 million since the inception of the share repurchase program[124] - As of March 31, 2025, there are 1,129,087 shares remaining authorized for repurchase under the program[124] Market and Regulatory Environment - The company anticipates increased demand for higher-efficiency products due to the U.S. Inflation Reduction Act of 2022, which promotes energy-efficient HVAC systems[79] - The company has a focus on the HVAC replacement market, which is expected to stabilize sales amid tariff-related uncertainties[72] - The company continues to monitor macroeconomic trends and uncertainties related to tariffs and their potential impact on product costs and sales[72] - The company is transitioning inventory to lower-GWP HVAC systems in response to new regulations on refrigerants, with a phasedown of HFC production starting January 1, 2022[76] - An estimated 23.7 million metric tons of CO2e emissions were averted from January 1, 2020, to March 31, 2025, through the sale of higher-efficiency HVAC systems[78] - There have been no material changes to market risk disclosures since the last annual report[125] Interest Income - Interest income, net for the first quarter of 2025 increased by $2.9 million, or 119%, compared to the same period in 2024[93]