Watsco, Inc. ( WSO Quick Quote WSO - Free Report) reported mixed first-quarter 2023 results, wherein earnings topped the Zacks Consensus Estimate but sales missed the same. Notably, Watsco delivered record sales and navigated the regulatory transition to higher Seasonal Energy Efficiency Rating or SEER products across its markets. Shares of Watsco gained 8.3% during the trading session on Apr 20. Inside the Numbers
Watsco reported quarterly earnings of $2.83 per share, which topped the consensus estimate of $2.35 by 20.4% but decreased 2.4% year over year on lower operating profit.
Total sales of $1.55 billion, on the other hand, missed the consensus mark of $1.56 billion by 0.6% but increased 2% from the year-ago period. The upside reflects sustainable market share gains, solid heat pumps sales, solid commercial business, product diversity and technology leadership. Also, continued investment in technologies, designed to revolutionize customer experience, added to the positives. Sales of HVAC equipment (heating, ventilating and air conditioning, comprising 68% of sales) were up 2% year over year. Sales of other HVAC products (28% of sales) decreased 2% from the prior-year quarter. Sales from commercial refrigeration products (4% of sales) rose 12% year over year. Operating Highlights
Gross margin contracted 70 basis points (bps) in the first quarter to 28.9%. SG&A expenses improved 10 bps year over year in the quarter.
The operating margin declined 60 bps in the first quarter to 10.6%. Financial Operations
As of Mar 31, 2023, cash and cash equivalents were $141 million compared with $147.5 million at 2022-end. The company used $47.4 million of cash in operating activities in the quarter compared with $101.6 million a year ago.
WSO currently carries a Zacks Rank #2 (Buy). You can see
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