We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Watsco (WSO) Q1 Earnings & Revenues Lag, Margins Down Y/Y
Read MoreHide Full Article
Watsco, Inc. (WSO - Free Report) reported tepid first-quarter 2024 results, with earnings and revenues lagging the Zacks Consensus Estimate. On a year-over-year basis, the top line grew while the bottom line dwindled.
The quarter’s results reflect a seasonal sales trend, wherein the sales of HVAC equipment and other HVAC products declined year over year. Furthermore, high costs and expenses impacted the bottom line of the company. This was partially offset by increased sales volume for commercial refrigeration products.
Moving into the summer selling season, the company is optimistic about growth in end-market demand. Also, its focus on improving its operating efficiency, investments in technology innovation, generating healthy cash flow and enhancing shareholder value is encouraging through 2024.
Following the announcement, shares of Watsco rose 6.5% during the trading session on Apr 24.
Inside the Numbers
Watsco reported quarterly earnings of $2.17 per share, which lagged the Zacks Consensus Estimate of $2.26 by 4%. In the year-ago quarter, the company reported adjusted earnings per share of $2.83.
Revenues of $1.56 billion missed the consensus mark of $1.61 billion by 2.8% but inched up 0.9% year over year.
Sales of HVAC equipment (heating, ventilating and air conditioning, comprising 68% of sales) were down 1% year over year. Sales of other HVAC products (28% of sales) dropped 6% from the year-ago quarter. On the other hand, sales from commercial refrigeration products (4% of sales) increased 2% year over year.
Operating Highlights
The gross margin contracted 140 basis points (bps) in the first quarter to 27.5%. Our model predicted the gross margin to contract 250 bps year over year. SG&A expenses, as a percentage of sales, increased 130 bps year over year to 19.8% in the quarter, much ahead of our expectation of a decline of 50 bps year over year.
The operating margin declined 250 bps year over year in the first quarter to 8.1%. Our estimate for the metric was 8.8%.
Financial Operations
As of Mar 31, 2024, Watsco’s cash and cash equivalents were $278.9 million, up from $210.1 million in 2023 end. As of the first quarter of 2024, the net cash provided by operating activities was $103.7 million against the net cash used in operating activities of $47.4 million in the comparable period a year ago.
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in first-quarter 2024, wherein its earnings surpassed the Zacks Consensus Estimate but net sales missed the same. The top and bottom lines grew on a year-over-year basis.
Its quarterly results reflected 14 consecutive quarters of organic sales growth and the results were marked by a high-teens growth in adjusted earnings per share. Thanks to the strength in modernization, the company witnessed orders growth of more than 10%, leading to mid-teens backlog growth. Otis has been leveraging its Service-driven business model and intends to focus on enhancing its operational performance and shareholder value through a capital-allocation strategy and pursue additional progress toward ESG goals.
PulteGroup Inc. (PHM - Free Report) reported stellar results in first-quarter 2024, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Also, both metrics increased year over year on favorable demand conditions and a balanced operating model, which allows the company to more effectively meet the individual needs of first-time, move-up and active-adult consumers.
The number of homes closed increased 11% to 7,095 units from the year-ago level. The average selling price of homes delivered was $538,000, down 1.3% year over year. New home orders gained 14% year over year to 8,379 units for the quarter, benefiting from higher gross orders and a lower cancelation rate. The value of new orders also rose 24% from a year ago to $4.7 billion.
D.R. Horton, Inc. (DHI - Free Report) reported second-quarter fiscal 2024 (ended Mar 31, 2024) results, with earnings and revenues surpassing Zacks Consensus Estimate. On a year-over-year basis, both the top and bottom lines increased.
The upside was backed by the supply of new and existing homes as affordable price points remain limited and robust housing demand is supported by favorable demographics amid elevated inflation and mortgage/interest rates. Home closings rose 15% from the year-ago quarter to 22,548 homes. Net sales orders were up 14% year over year to 26,456 homes. The cancellation rate (on gross sales orders) was 15%, down from 18% a year ago.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Watsco (WSO) Q1 Earnings & Revenues Lag, Margins Down Y/Y
Watsco, Inc. (WSO - Free Report) reported tepid first-quarter 2024 results, with earnings and revenues lagging the Zacks Consensus Estimate. On a year-over-year basis, the top line grew while the bottom line dwindled.
The quarter’s results reflect a seasonal sales trend, wherein the sales of HVAC equipment and other HVAC products declined year over year. Furthermore, high costs and expenses impacted the bottom line of the company. This was partially offset by increased sales volume for commercial refrigeration products.
Moving into the summer selling season, the company is optimistic about growth in end-market demand. Also, its focus on improving its operating efficiency, investments in technology innovation, generating healthy cash flow and enhancing shareholder value is encouraging through 2024.
Following the announcement, shares of Watsco rose 6.5% during the trading session on Apr 24.
Inside the Numbers
Watsco reported quarterly earnings of $2.17 per share, which lagged the Zacks Consensus Estimate of $2.26 by 4%. In the year-ago quarter, the company reported adjusted earnings per share of $2.83.
Revenues of $1.56 billion missed the consensus mark of $1.61 billion by 2.8% but inched up 0.9% year over year.
Watsco, Inc. Price, Consensus and EPS Surprise
Watsco, Inc. price-consensus-eps-surprise-chart | Watsco, Inc. Quote
Sales of HVAC equipment (heating, ventilating and air conditioning, comprising 68% of sales) were down 1% year over year. Sales of other HVAC products (28% of sales) dropped 6% from the year-ago quarter. On the other hand, sales from commercial refrigeration products (4% of sales) increased 2% year over year.
Operating Highlights
The gross margin contracted 140 basis points (bps) in the first quarter to 27.5%. Our model predicted the gross margin to contract 250 bps year over year. SG&A expenses, as a percentage of sales, increased 130 bps year over year to 19.8% in the quarter, much ahead of our expectation of a decline of 50 bps year over year.
The operating margin declined 250 bps year over year in the first quarter to 8.1%. Our estimate for the metric was 8.8%.
Financial Operations
As of Mar 31, 2024, Watsco’s cash and cash equivalents were $278.9 million, up from $210.1 million in 2023 end. As of the first quarter of 2024, the net cash provided by operating activities was $103.7 million against the net cash used in operating activities of $47.4 million in the comparable period a year ago.
Zacks Rank & Some Recent Construction Releases
Watsco currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in first-quarter 2024, wherein its earnings surpassed the Zacks Consensus Estimate but net sales missed the same. The top and bottom lines grew on a year-over-year basis.
Its quarterly results reflected 14 consecutive quarters of organic sales growth and the results were marked by a high-teens growth in adjusted earnings per share. Thanks to the strength in modernization, the company witnessed orders growth of more than 10%, leading to mid-teens backlog growth. Otis has been leveraging its Service-driven business model and intends to focus on enhancing its operational performance and shareholder value through a capital-allocation strategy and pursue additional progress toward ESG goals.
PulteGroup Inc. (PHM - Free Report) reported stellar results in first-quarter 2024, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Also, both metrics increased year over year on favorable demand conditions and a balanced operating model, which allows the company to more effectively meet the individual needs of first-time, move-up and active-adult consumers.
The number of homes closed increased 11% to 7,095 units from the year-ago level. The average selling price of homes delivered was $538,000, down 1.3% year over year. New home orders gained 14% year over year to 8,379 units for the quarter, benefiting from higher gross orders and a lower cancelation rate. The value of new orders also rose 24% from a year ago to $4.7 billion.
D.R. Horton, Inc. (DHI - Free Report) reported second-quarter fiscal 2024 (ended Mar 31, 2024) results, with earnings and revenues surpassing Zacks Consensus Estimate. On a year-over-year basis, both the top and bottom lines increased.
The upside was backed by the supply of new and existing homes as affordable price points remain limited and robust housing demand is supported by favorable demographics amid elevated inflation and mortgage/interest rates. Home closings rose 15% from the year-ago quarter to 22,548 homes. Net sales orders were up 14% year over year to 26,456 homes. The cancellation rate (on gross sales orders) was 15%, down from 18% a year ago.