Watsco, Inc. reported record operating results for the first quarter ended March 31, 2022.
Performance Highlights:
34% sales growth to a record $1.52 billion
109% increase in EPS to a record $2.90 on record net income attributable to Watsco of $113 million
109% increase in operating income to a record $171 million (400 basis-point operating margin expansion to 11.2%)
53% gross profit increase to a record $450 million (370 basis-point increase in gross margin)
30% increase in SG&A (a 60 basis-point reduction in SG&A as a percentage of sales)
These results reflect added investments to grow adoption of Watsco’s industry-leading technology platforms, which collectively transform the customer experience, enhance operational efficiency, and help contractors grow faster as they deliver a more contemporary experience to homeowners and businesses. Taken as a whole, we believe that Watsco’s technology offering is solidifying existing customer relationships and creating new customer acquisition opportunities that are producing consistent gains in market share.
Albert H. Nahmad, Watsco’s Chairman and CEO, commented: “Watsco delivered exceptional performance during the first quarter. The Company achieved strong performance across all geographic markets and product categories and reflects a combination of strong unit growth, our ability to capture increased cost of goods through higher selling prices, a richer mix of high-efficiency systems and what, we believe, are technology-driven gains in market share. Our teams and associates are accomplishing extraordinary things and we thank them for their commitment and remarkable efforts to serve customers under what continues to be challenging circumstances. Although it is still early in the year, we are encouraged by current demand trends and expect Watsco to produce another record year.”
Same-Store Performance:
- 25% sales growth
- 26% growth in HVAC equipment (67% of sales)
- 24% increase in other HVAC products (29% of sales)
- 35% increase in commercial refrigeration products (4% of sales)
- 103% increase in operating income (440 basis-point expansion in operating margin to 11.6%)
- 43% gross profit increase (360 basis-point increase in gross margin)
- 19% increase in SG&A (a 100 basis-point reduction as a percentage of sales)
A.J Nahmad, Watsco’s President, commented: “We are particularly pleased with the continued adoption of our technology platforms by more and more customers. These platforms enable contractors to sell more high-efficiency HVAC systems, which benefits the consumer in the form of lower energy costs and benefits our climate in the form of reduced CO2e emissions over time. As the digital age influences how HVAC/R products and services are sold, we believe that Watsco’s customer-focused technologies, scale and leadership position offer significant long-term value.”
It is important to note that the first and fourth quarter of each calendar year are highly seasonal due to the nature and timing of replacement demand for HVAC/R systems, which is strongest in the second and third quarters. Accordingly, the Company’s first and fourth quarter financial results are disproportionately affected by seasonality.
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