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Watsco's (WSO) Q2 Earnings & Revenues Miss Estimates, Down Y/Y
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Watsco, Inc. (WSO - Free Report) reported dismal second-quarter 2023 results, wherein earnings and revenues missed the Zacks Consensus Estimate. Also, the bottom and the top lines declined year over year. The downtrend was caused by delayed product availability, with the company estimating about $75 to $80 million of sales being impacted by delays. Furthermore, moderate pricing as well as low volumes add to the tepid performance.
Following the results, shares of Watsco declined 0.3% on Aug 1.
Inside the Numbers
Watsco reported quarterly earnings of $4.42 per share, which missed the Zacks Consensus Estimate of $4.87 per share by 9.2% and decreased 10% year over year on increased interest expenses and lower operating profit.
Total sales of $2 billion missed the consensus mark of $2.15 billion by 7% and decreased 6% from the year-ago period. The downtrend was driven by lower sales trend in HVAC (heating, ventilating and air conditioning) equipment and products as well as product availability delays due to product transition in the Watsco’s OEM community for aligning with regulatory transitions in the quarter. Also, temperate weather conditions caused the delayed commencement of the summer selling season, which in turn affected the sales. This was partially offset by the company’s continued investment in technologies, product diversity and technology leadership.
Sales of HVAC equipment (comprising 69% of sales) were down 8% year over year. Sales of other HVAC products (27% of sales) decreased 7% from the prior-year quarter. Sales of commercial refrigeration products (4% of sales) gained 1% year over year.
Operating Highlights
The gross margin improved 20 basis points (bps) in the second quarter to 28.1%. SG&A expenses (15.2% of sales) decreased by 3% year over year in the quarter.
The operating margin declined 20 bps year over year in the second quarter to 13.3%. Our model predicted operating margin for the quarter to be 12.2%.
Financial Operations
As of Jun 30, 2023, cash and cash equivalents were $162.5 million, up from $147.5 million at 2022 end. For the first six months of 2023, the net cash used in operating activities was $89.2 million against the net cash provided by operating activities of $73.1 million in the prior year period.
Masco Corporation (MAS - Free Report) reported robust results for second-quarter 2023 wherein earnings and revenues surpassed the Zacks Consensus Estimate. Furthermore, earnings increased year over year but the revenues declined. Strong pricing actions and operational efficiency helped deliver solid results, which were partially offset by lower volumes.
MAS focused on a balanced capital deployment strategy. The company returned $89 million to shareholders via dividends and share repurchases and announced a strategic bolt-on acquisition of Sauna360 Group Oy, which will expand its spa and wellness product offerings.
Otis Worldwide Corporation’s (OTIS - Free Report) second-quarter 2023 earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected 11th consecutive quarters of organic sales growth and solid operating margin expansion, contributing to mid-single digit adjusted earnings per share growth.
The company remains focused on strong portfolio growth and aims to generate a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.
Armstrong World Industries, Inc. (AWI - Free Report) reported mixed results for second-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimate but net sales missed the same. Both metrics increased on a year-over-year basis.
AWI’s results were backed by robust growth in operating income and adjusted EBITDA, as well as expanded margins, and fueled by positive performances from both the Mineral Fiber and Architectural Specialties segments. The company remains focused on advancing digital and healthy spaces initiatives and pursuing attractive, bolt-on acquisitions.
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Watsco's (WSO) Q2 Earnings & Revenues Miss Estimates, Down Y/Y
Watsco, Inc. (WSO - Free Report) reported dismal second-quarter 2023 results, wherein earnings and revenues missed the Zacks Consensus Estimate. Also, the bottom and the top lines declined year over year. The downtrend was caused by delayed product availability, with the company estimating about $75 to $80 million of sales being impacted by delays. Furthermore, moderate pricing as well as low volumes add to the tepid performance.
Following the results, shares of Watsco declined 0.3% on Aug 1.
Inside the Numbers
Watsco reported quarterly earnings of $4.42 per share, which missed the Zacks Consensus Estimate of $4.87 per share by 9.2% and decreased 10% year over year on increased interest expenses and lower operating profit.
Total sales of $2 billion missed the consensus mark of $2.15 billion by 7% and decreased 6% from the year-ago period. The downtrend was driven by lower sales trend in HVAC (heating, ventilating and air conditioning) equipment and products as well as product availability delays due to product transition in the Watsco’s OEM community for aligning with regulatory transitions in the quarter. Also, temperate weather conditions caused the delayed commencement of the summer selling season, which in turn affected the sales. This was partially offset by the company’s continued investment in technologies, product diversity and technology leadership.
Watsco, Inc. Price, Consensus and EPS Surprise
Watsco, Inc. price-consensus-eps-surprise-chart | Watsco, Inc. Quote
Sales of HVAC equipment (comprising 69% of sales) were down 8% year over year. Sales of other HVAC products (27% of sales) decreased 7% from the prior-year quarter. Sales of commercial refrigeration products (4% of sales) gained 1% year over year.
Operating Highlights
The gross margin improved 20 basis points (bps) in the second quarter to 28.1%. SG&A expenses (15.2% of sales) decreased by 3% year over year in the quarter.
The operating margin declined 20 bps year over year in the second quarter to 13.3%. Our model predicted operating margin for the quarter to be 12.2%.
Financial Operations
As of Jun 30, 2023, cash and cash equivalents were $162.5 million, up from $147.5 million at 2022 end. For the first six months of 2023, the net cash used in operating activities was $89.2 million against the net cash provided by operating activities of $73.1 million in the prior year period.
Zacks Rank
Watsco 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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Masco Corporation (MAS - Free Report) reported robust results for second-quarter 2023 wherein earnings and revenues surpassed the Zacks Consensus Estimate. Furthermore, earnings increased year over year but the revenues declined. Strong pricing actions and operational efficiency helped deliver solid results, which were partially offset by lower volumes.
MAS focused on a balanced capital deployment strategy. The company returned $89 million to shareholders via dividends and share repurchases and announced a strategic bolt-on acquisition of Sauna360 Group Oy, which will expand its spa and wellness product offerings.
Otis Worldwide Corporation’s (OTIS - Free Report) second-quarter 2023 earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected 11th consecutive quarters of organic sales growth and solid operating margin expansion, contributing to mid-single digit adjusted earnings per share growth.
The company remains focused on strong portfolio growth and aims to generate a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.
Armstrong World Industries, Inc. (AWI - Free Report) reported mixed results for second-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimate but net sales missed the same. Both metrics increased on a year-over-year basis.
AWI’s results were backed by robust growth in operating income and adjusted EBITDA, as well as expanded margins, and fueled by positive performances from both the Mineral Fiber and Architectural Specialties segments. The company remains focused on advancing digital and healthy spaces initiatives and pursuing attractive, bolt-on acquisitions.