Watsco, Inc. (WSO - Free Report) came up with stellar performance for first-quarter 2021. Both earnings and sales topped the respective Zacks Consensus Estimate as well as grew impressively on a year-over-year basis. The solid results were mainly backed by strong sales growth, a richer sales mix of high-efficiency systems, improved selling margins and operating efficiencies. Shares of the company jumped more than 2% on Apr 22, post the earnings release.
Solid first-quarter results also reflect continued investments in products, technology, and people to drive sales as well as innovation throughout the business.
Inside the Numbers
Watsco’s quarterly earnings of $1.39 per share surpassed the consensus estimate of 91 cents. The reported earnings also improved 93% year over year.
Total sales of $1.14 billion topped the consensus mark of $1.08 billion by 5.6% and increased 14% from the year-ago period. The upside stemmed from strong HVAC equipment business. Persistent investment in technologies designed to revolutionize customer experience added to the positives. Notably, e-commerce sales for the quarter grew 18% year over year on 30% increased e-commerce transactions.
Sales of HVAC equipment (heating, ventilating and air conditioning; comprising 67% of sales) were up 14% year over year, including 18% growth in U.S. residential markets. Sales of other HVAC products (29% of sales) increased 11% from the prior-year quarter. Sales from commercial refrigeration products (4% of sales) rose 10% year over year.
Operating Highlights
Gross margin expanded 130 basis points (bps) to 25.9%. SG&A expenses, however, increased 7% year over year. Nonetheless, SG&A expenses — as a percentage of sales — reduced 100 bps year over year. Operating margin expanded 270 bps year over year to 7.2%.
Financial Operations
As of Mar 31, 2021, cash and cash equivalents were $93.9 million compared with $146.1 million at 2020-end. Cash used in operations were $37.7 million for the first three months of 2021 versus $41.9 million cash provided from operations in the comparable year-ago period.
Zacks Rank
Watsco — which shares space with AAON, Inc. (AAON - Free Report) , Comfort Systems USA, Inc. (FIX - Free Report) and Lennox International Inc. (LII - Free Report) in the Zacks Building Products - Air Conditioner and Heating industry — currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Watsco, Inc. (WSO - Free Report) came up with stellar performance for first-quarter 2021. Both earnings and sales topped the respective Zacks Consensus Estimate as well as grew impressively on a year-over-year basis. The solid results were mainly backed by strong sales growth, a richer sales mix of high-efficiency systems, improved selling margins and operating efficiencies. Shares of the company jumped more than 2% on Apr 22, post the earnings release.
Solid first-quarter results also reflect continued investments in products, technology, and people to drive sales as well as innovation throughout the business.
Inside the Numbers
Watsco’s quarterly earnings of $1.39 per share surpassed the consensus estimate of 91 cents. The reported earnings also improved 93% year over year.
Total sales of $1.14 billion topped the consensus mark of $1.08 billion by 5.6% and increased 14% from the year-ago period. The upside stemmed from strong HVAC equipment business. Persistent investment in technologies designed to revolutionize customer experience added to the positives. Notably, e-commerce sales for the quarter grew 18% year over year on 30% increased e-commerce transactions.
Sales of HVAC equipment (heating, ventilating and air conditioning; comprising 67% of sales) were up 14% year over year, including 18% growth in U.S. residential markets. Sales of other HVAC products (29% of sales) increased 11% from the prior-year quarter. Sales from commercial refrigeration products (4% of sales) rose 10% year over year.
Operating Highlights
Gross margin expanded 130 basis points (bps) to 25.9%. SG&A expenses, however, increased 7% year over year. Nonetheless, SG&A expenses — as a percentage of sales — reduced 100 bps year over year. Operating margin expanded 270 bps year over year to 7.2%.
Financial Operations
As of Mar 31, 2021, cash and cash equivalents were $93.9 million compared with $146.1 million at 2020-end. Cash used in operations were $37.7 million for the first three months of 2021 versus $41.9 million cash provided from operations in the comparable year-ago period.
Zacks Rank
Watsco — which shares space with AAON, Inc. (AAON - Free Report) , Comfort Systems USA, Inc. (FIX - Free Report) and Lennox International Inc. (LII - Free Report) in the Zacks Building Products - Air Conditioner and Heating industry — currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021? Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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