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Watsco, Inc. (WSO - Free Report) reported impressive third-quarter 2020 results, wherein earnings and revenues beat the respective Zacks Consensus Estimate.
Albert H. Nahmad, the company’s chairman and CEO said, “Our core U.S. residential business has remained solid and continues to see above-average growth trends. We further strengthened our balance sheet, as evidenced by our record cash flow and debt reduction.”
Inside the Numbers
Watsco’s quarterly earnings of $2.76 per share topped the consensus estimate of $2.53 by 9.1%. The reported earnings also increased 25% year over year.
Total revenues of $1.54 billion surpassed the consensus mark of $1,515 billion by 1.4% and increased 10.2% from the year-ago period. Sales were also up 8% on a same-store basis. This includes 15% in U.S. markets.
Sales of HVAC equipment (heating, ventilating and air conditioning; comprising 70% of sales) were up 10% year over year, including 19% sales growth in U.S. residential markets. Sales of other HVAC products (27% of sales) also increased 2% from the prior-year quarter. Sales from commercial refrigeration products (3% of sales) were flat year over year.
Gross margin expanded 30 basis points (bps) for the quarter. SG&A expenses increased 4% year over year. On a same-store basis, SG&A expenses — as a percentage of sales — remained flat year over year, given operating efficiencies achieved throughout its network. Operating margin expanded 120 bps year over year to 10.2%.
Financial Operations
As of Sep 30, 2020, cash and cash equivalents were $92.6 million compared with $74.5 million at 2019-end. Cash from operations came in at $373 million in the first nine months of 2020 compared with $198 million in the comparable year-ago period.
Watsco has paid cash dividends for 46 consecutive years. Dividends paid through Sep 30, 2020 increased 9% to $197 million.
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 same industry — currently carries a Zacks Rank #2 (Buy).
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Watsco's (WSO) Q3 Earnings & Revenues Beat Estimates
Watsco, Inc. (WSO - Free Report) reported impressive third-quarter 2020 results, wherein earnings and revenues beat the respective Zacks Consensus Estimate.
Albert H. Nahmad, the company’s chairman and CEO said, “Our core U.S. residential business has remained solid and continues to see above-average growth trends. We further strengthened our balance sheet, as evidenced by our record cash flow and debt reduction.”
Inside the Numbers
Watsco’s quarterly earnings of $2.76 per share topped the consensus estimate of $2.53 by 9.1%. The reported earnings also increased 25% year over year.
Total revenues of $1.54 billion surpassed the consensus mark of $1,515 billion by 1.4% and increased 10.2% from the year-ago period. Sales were also up 8% on a same-store basis. This includes 15% in U.S. markets.
Sales of HVAC equipment (heating, ventilating and air conditioning; comprising 70% of sales) were up 10% year over year, including 19% sales growth in U.S. residential markets. Sales of other HVAC products (27% of sales) also increased 2% from the prior-year quarter. Sales from commercial refrigeration products (3% of sales) were flat year over year.
Watsco, Inc. Price, Consensus and EPS Surprise
Watsco, Inc. price-consensus-eps-surprise-chart | Watsco, Inc. Quote
Operating Highlights
Gross margin expanded 30 basis points (bps) for the quarter. SG&A expenses increased 4% year over year. On a same-store basis, SG&A expenses — as a percentage of sales — remained flat year over year, given operating efficiencies achieved throughout its network. Operating margin expanded 120 bps year over year to 10.2%.
Financial Operations
As of Sep 30, 2020, cash and cash equivalents were $92.6 million compared with $74.5 million at 2019-end. Cash from operations came in at $373 million in the first nine months of 2020 compared with $198 million in the comparable year-ago period.
Watsco has paid cash dividends for 46 consecutive years. Dividends paid through Sep 30, 2020 increased 9% to $197 million.
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 same industry — currently carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>