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Watsco (WSO) Q1 Earnings & Sales Top Estimates, Margins Up Y/Y

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Watsco, Inc.’s (WSO - Free Report) shares rose 4.45% on Apr 21, after it reported stellar results for first-quarter 2022. The company’s earnings and sales topped their respective Zacks Consensus Estimate and increased strongly on a year-over-year basis.

The company is benefiting from regular investments in customer-focused technologies and the expansion of its branch network. Also, continued investment in technologies designed to revolutionize customer experience added to the positives.

Inside the Numbers

Watsco reported quarterly earnings of $2.90 per share, which topped the consensus mark of $1.82 by 59.3% and increased 109% year over year on solid quarterly sales.

Total sales of $1.52 billion surpassed the consensus mark of $1.38 million by 10.3% and increased 34% from the year-ago quarter’s levels. Sales rose 25% on a same-store basis. The upside was primarily driven by strong performance across the geographies and product categories backed by solid unit growth, higher selling prices, a richer mix of high-efficiency systems and technology-driven gains in market share.

Watsco, Inc. Price, Consensus and EPS Surprise


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 67% of sales) were up 26% year over year. Sales of other HVAC products (29% of sales) also increased 24% from the prior-year quarter’s levels. Sales from commercial refrigeration products (4% of sales) rose 35% year over year.

Operating Highlights

Gross margin expanded 370 basis points (bps) in the quarter to a record level of 53%. SG&A expenses, as a percentage of sales, improved 60 bps to 30% year over year.

The operating margin expanded 400 bps year over year to a record level of 11.2%.

Financial Operations

As of Mar 31, 2022, cash and cash equivalents were $110.6 million compared with $118.3 million at 2021-end. Cash used in operations came in at $101.6 million for first three months of 2022 compared with $37.7 million a year ago.

Zacks Rank

Currently, Watsco carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some Recent Construction Releases

RPM International Inc. (RPM - Free Report) reported third-quarter fiscal 2022 (ended Feb 28, 2022) results, with earnings and sales topping the Zacks Consensus Estimate.

Robust construction and industrial maintenance activity, a rebound in energy markets and RPM’s focus on investments in the fastest-growing areas of its business led to the upside.

Acuity Brands, Inc. (AYI - Free Report) reported impressive second-quarter fiscal 2022 results, with the top and the bottom line beating the Zacks Consensus Estimate and increasing year over year.

Despite global supply chain challenges and unpredictable market conditions, AYI’s higher sales from both segments, price increases and product and productivity improvement drove the results.

KB Home (KBH - Free Report) reported lackluster results for first-quarter fiscal 2022 (ended Feb 28, 2022). The quarterly earnings and revenues missed their respective Zacks Consensus Estimate.

During the quarter, KBH faced intense supply chain issues and a constrained construction labor force, which extended the build times and delayed completions and planned deliveries.

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