On July 30, 2024, Watsco Inc (WSO, Financial) released its 8-K filing detailing its financial results for the second quarter and six-month period ended June 30, 2024. Watsco is the largest heating, ventilation, air conditioning, and refrigeration products distributor in North America, primarily operating in the United States with additional operations in Canada and Latin America.
Performance Overview
Watsco Inc (WSO, Financial) reported record sales and strong cash flow for the second quarter, reflecting healthier residential end-markets and increased sales of commercial products. However, the company's earnings per share (EPS) of $4.49 fell short of the analyst estimate of $4.67, while revenue of $2,139.33 million fell short of the estimated $2,186.28 million.
Financial Achievements
Watsco's financial achievements in the second quarter include:
- Record sales of $2,139.33 million, a 6.8% increase from $2,003.08 million in the same period last year.
- Net income attributable to Watsco shareholders of $181.41 million, up from $172.76 million in the prior year.
- Strong cash flow from operations amounting to $161.44 million for the first half of 2024.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $2,139.33 million | $2,003.08 million |
| Gross Profit | $579.76 million | $562.62 million |
| Operating Income | $268.80 million | $265.71 million |
| Net Income Attributable to Watsco | $181.41 million | $172.76 million |
| Diluted EPS | $4.49 | $4.42 |
Balance Sheet and Cash Flow
Watsco's balance sheet remains robust with $425 million in cash and short-term investments and no borrowings under its $600 million credit facility. The company also raised $282 million from the sale of common stock under its ATM program in March 2024.
Commentary and Future Outlook
"We are pleased with our second quarter results, which reflect record sales, strong cash flow and a strengthened balance sheet, which is particularly gratifying during our peak selling season," said Albert H. Nahmad, Watsco’s Chairman and CEO.
"We continue to make good progress towards our goal of scaling Watsco’s customer-focused technologies to more and more contractors. Our e-commerce sales grew at nearly double the rate of overall sales," added A.J. Nahmad, Watsco’s President.
Analysis
Watsco's performance in the second quarter underscores its ability to generate strong sales and maintain a healthy balance sheet. The company's focus on technology and customer engagement has driven growth, particularly in e-commerce sales. However, the slight miss on EPS highlights the challenges in managing costs and achieving operational efficiencies. Overall, Watsco's strategic investments and strong financial position bode well for its long-term growth prospects.
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Explore the complete 8-K earnings release (here) from Watsco Inc for further details.
