Company Quick10K Filing
Quick10K
Watsco
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$158.32 34 $5,447
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-08-01 Sale of Shares, Other Events, Exhibits
8-K 2019-07-18 Earnings, Regulation FD, Exhibits
8-K 2019-06-03 Shareholder Vote
8-K 2019-04-23 Earnings, Regulation FD, Exhibits
8-K 2019-04-01 Officers
8-K 2019-02-14 Earnings, Regulation FD, Exhibits
8-K 2018-12-11 Officers
8-K 2018-12-05 Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K 2018-10-25 Earnings, Regulation FD, Exhibits
8-K 2018-07-25 Earnings, Regulation FD, Exhibits
8-K 2018-06-04 Shareholder Vote
8-K 2018-04-24 Earnings, Regulation FD, Exhibits
8-K 2018-03-13 Officers
8-K 2018-02-05 Enter Agreement, Earnings, Regulation FD, Exhibits
KEYS Keysight Technologies 18,081
ZBRA Zebra Technologies 10,719
SSD Simpson Manufacturing 2,797
ACA Arcosa 1,548
ALG Alamo Group 1,328
ATKR Atkore 1,320
ACLS Axcelis 483
GHM Graham 177
MNTX Manitex 107
ASYS Amtech Systems 74
WSO 2019-06-30
Part I. Financial Information
Item 1. Condensed Consolidated Unaudited Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 d752540dex311.htm
EX-31.2 d752540dex312.htm
EX-31.3 d752540dex313.htm
EX-32.1 d752540dex321.htm

Watsco Earnings 2019-06-30

WSO 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Form 10-Q
2019Q2--12-31falseWATSCO INC0000105016 0000105016 2019-01-01 2019-06-30 0000105016 2019-04-01 2019-06-30 0000105016 2018-04-01 2018-06-30 0000105016 2018-01-01 2018-06-30 0000105016 2019-06-30 0000105016 2018-12-31 0000105016 2019-01-01 2019-03-31 0000105016 2018-01-01 2018-03-31 0000105016 2018-06-30 0000105016 2017-12-31 0000105016 2018-03-31 0000105016 2019-03-31 0000105016 wso:CarrierAndItsAffiliatesMember us-gaap:SupplierConcentrationRiskMember us-gaap:CostOfGoodsTotalMember 2019-01-01 2019-06-30 0000105016 us-gaap:ForeignExchangeForwardMember us-gaap:CashFlowHedgingMember 2019-01-01 2019-06-30 0000105016 us-gaap:CommonStockMember 2019-01-01 2019-06-30 0000105016 us-gaap:CommonClassBMember 2019-01-01 2019-06-30 0000105016 wso:CarrierAndItsAffiliatesMember us-gaap:SupplierConcentrationRiskMember 2019-01-01 2019-06-30 0000105016 wso:ForeignExchangeForwardAndOptionContractsMember us-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember 2019-01-01 2019-06-30 0000105016 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Table of Contents 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
Quarterly Report Pursuant to Section 
 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended
June 30, 2019
or
Transition Report Pursuant To Section 
 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period From
    
    
    
    
to
    
    
    
    
Commission file number
1-5581
I.R.S. Employer Identification Number
59-0778222
 
  
WATSCO, INC.
 
 
 
(a Florida Corporation)
2665 South Bayshore Drive, Suite 901
Miami, Florida 33133
Telephone: (305)
 714-4100
 
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Common stock, $0.50 par value
 
WSO
 
New York Stock Exchange
Class B common stock, $0.50 par value
 
WSOB
 
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  
    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  
    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
Large accelerated filer
 
 
Accelerated filer
 
             
Non-accelerated filer
 
 
Smaller reporting company
 
             
 
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  
    No  
The registrant’s common stock outstanding as of August 5, 2019 comprised (i)
32,613,520
shares of Common stock, $0.50 par value per share, excluding 4,823,988 treasury shares and (ii)
5,446,199
shares of Class B common stock, $0.50 par value per share, excluding 48,263 treasury shares.
     
 
 
Table of Contents
 
WATSCO, INC. AND SUBSIDIARIES
 
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
 
Page No.
 
         
Item 1.
   
         
   
3
         
   
4
         
   
5
         
   
6
         
   
8
         
   
9
         
Item 2.
   
17
         
Item 3.
   
23
         
Item 4.
   
23
     
 
         
Item 1.
   
24
         
Item 1A.
   
24
         
Item 2.
   
24
         
Item 6.
   
25
     
 
26
     
EXHIBITS
 
 
2 of 26
 
 
 
Table of Contents
 
PART I. FINANCIAL INFORMATION
ITEM 1.
CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
 
 
 
 
 
 
 
 
 
 
 
WATSCO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF INCOME
(In thousands, except per share data)
                                 
 
Quarter Ended
June 30,
   
Six Months Ended
June 30,
 
 
2019
   
2018
   
2019
   
2018
 
Revenues
 
$
1,371,854
    $
1,332,743
   
$
2,303,132
    $
2,259,320
 
Cost of sales
   
1,043,870
     
1,011,977
     
1,741,388
     
1,707,721
 
                                 
Gross profit
   
327,984
     
320,766
     
561,744
     
551,599
 
Selling, general and administrative expenses
   
196,549
     
186,577
     
376,621
     
365,111
 
Other income
   
2,965
     
3,157
     
4,409
     
4,795
 
                                 
Operating income
   
134,400
     
137,346
     
189,532
     
191,283
 
Interest expense, net
   
1,212
     
763
     
1,988
     
1,328
 
                                 
Income before income taxes
   
133,188
     
136,583
     
187,544
     
189,955
 
Income taxes
   
25,278
     
28,319
     
35,830
     
39,314
 
                                 
Net income
   
107,910
     
108,264
     
151,714
     
150,641
 
Less: net income attributable to
non-controlling
interest
   
17,755
     
18,307
     
26,522
     
26,465
 
                                 
Net income attributable to Watsco, Inc.
 
$
90,155
    $
89,957
   
$
125,192
    $
124,176
 
                                 
Earnings per share for Common and Class B common stock:
   
     
     
     
 
Basic
 
$
2.40
    $
2.41
   
$
3.34
    $
3.33
 
                                 
Diluted
 
$
2.40
    $
2.40
   
$
3.34
    $
3.32
 
                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated unaudited financial statements.
 
3 of 26
 
 
 
Table of Contents
 
WATSCO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
                                 
 
Quarter Ended
June 30,
   
Six Months Ended
June 30,
 
 
2019
   
2018
   
2019
   
2018
 
Net income
 
$
107,910
    $
108,264
   
$
151,714
    $
150,641
 
Other comprehensive income (loss), net of tax
   
     
     
     
 
Foreign currency translation adjustment
   
5,297
     
(5,046
)    
10,302
     
(11,691
)
Unrealized (loss) gain on cash flow hedging instruments
   
(517
)
   
380
     
(1,053
)
   
531
 
Reclassification of (gain) loss on cash flow hedging instruments into earnings
   
(128
)
   
105
     
(402
)
   
858
 
                                 
Other comprehensive income (loss)
   
4,652
     
(4,561
)    
8,847
     
(10,302
)
                                 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income
   
112,562
     
103,703
     
160,561
     
140,339
 
Less: comprehensive income attributable to
non-controlling
interest
   
19,368
     
16,636
     
29,547
     
22,702
 
                                 
Comprehensive income attributable to Watsco, Inc.
 
$
93,194
    $
87,067
   
$
131,014
    $
117,637
 
                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to condensed consolidated unaudited financial statements.
 
4 of 26
 
 
 
Table of Contents
 
WATSCO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
 
June 30,
2019
   
December 31,
2018
 
 
(Unaudited)
   
 
ASSETS
   
     
 
Current assets:
   
     
 
Cash and cash equivalents
 
$
55,915
    $
82,894
 
Accounts receivable, net
   
655,418
     
501,908
 
Inventories
   
967,394
     
837,129
 
Other current assets
   
16,367
     
19,875
 
                 
Total current assets
   
1,695,094
     
1,441,806
 
Property and equipment, net
   
95,586
     
91,046
 
Operating lease
right-of-use
assets
   
190,530
     
—  
 
Goodwill
   
398,575
     
391,998
 
Intangible assets, net
   
155,120
     
147,851
 
Other assets
   
97,529
     
88,332
 
                 
 
$
2,632,434
    $
2,161,033
 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
   
     
 
Current liabilities:
   
     
 
Current portion of long-term obligations
 
$
60,784
    $
246
 
Accounts payable
   
356,062
     
200,229
 
Accrued expenses and other current liabilities
   
163,672
     
157,091
 
                 
Total current liabilities
   
580,518
     
357,566
 
                 
Long-term obligations:
   
     
 
Borrowings under revolving credit agreement
   
219,600
     
135,200
 
Operating lease liabilities, net of current portion
   
129,636
     
—  
 
Other long-term obligations, net of current portion
   
1,712
     
552
 
                 
Total long-term obligations
   
350,948
     
135,752
 
                 
Deferred income taxes and other liabilities
   
67,606
     
66,002
 
                 
Commitments and contingencies
   
     
 
 
 
 
 
 
 
 
Watsco, Inc. shareholders’ equity:
   
     
 
Common stock, $0.50 par value
   
18,531
     
18,476
 
Class B common stock, $0.50 par value
   
2,735
     
2,691
 
Preferred stock, $0.50 par value
   
—  
     
—  
 
Paid-in
capital
   
828,932
     
832,121
 
Accumulated other comprehensive loss, net of tax
   
(40,146
)
   
(45,968
)
Retained earnings
   
632,983
     
627,969
 
Treasury stock, at cost
   
(87,440
)
   
(87,440
)
                 
Total Watsco, Inc. shareholders’ equity
   
1,355,595
     
1,347,849
 
Non-controlling
interest
   
277,767
     
253,864
 
                 
Total shareholders’ equity
   
1,633,362
     
1,601,713
 
                 
 
$
2,632,434
    $
2,161,033
 
                 
See accompanying notes to condensed consolidated unaudited financial statements.
 
5 of 26
 
 
 
Table of Contents
 
WATSCO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except share and per share data)
 
Common Stock,
Class B
Common Stock
and Preferred
Stock Shares
   
Common Stock,
Class B
Common Stock
and Preferred
Stock Amount
   
Paid-In

Capital
   
Accumulated
Other
Comprehensive
Loss
   
Retained
Earnings
   
Treasury
Stock
   
Non-
controlling
Interest
   
Total
 
Balance at December 31, 2018
   
37,461,643
   
$
21,167
   
$
832,121
   
$
(45,968
)
 
$
627,969
   
$
(87,440
)
 
$
253,864
   
$
1,601,713
 
Net income
   
     
     
     
     
35,037
     
     
8,767
     
43,804
 
Other comprehensive income
   
     
     
     
2,783
     
     
     
1,412
     
4,195
 
Issuances of
non-vested
restricted shares of common stock
   
77,049
     
39
     
(39
)
   
     
     
     
     
—  
 
Forfeitures of
non-vested
restricted shares of common stock
   
(5,000
)
   
(3
)
   
3
     
     
     
     
     
—  
 
Common stock contribution to 401(k) plan
   
30,715
     
15
     
4,259
     
     
     
     
     
4,274
 
Stock issuances from exercise of stock options and employee stock purchase plan
   
8,925
     
4
     
1,121
     
     
     
     
     
1,125
 
Retirement of common stock  
 
 
(2,985
)
 
 
(1
)
 
 
(427
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(428
)
Share-based compensation
 
 
 
 
 
 
 
 
 
 
4,537
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,537
 
Cash dividends declared and paid on Common and Class B common stock, $1.60 per share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(59,965
)
 
 
 
 
 
 
 
 
 
(59,965
Balance at March 31, 2019
 
 
37,570,347
 
 
$
 
21,221
 
 
$
 
841,575
 
 
$
 
(43,185
)
 
$
 
603,041
 
 
$
 
(87,440
)
 
$
 
264,043
 
 
$
1,599,255
 
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90,155
 
 
 
 
 
 
17,755
 
 
 
107,910
 
Other comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,039
 
 
 
 
 
 
 
 
 
1,613
 
 
 
4,652
 
Issuances of non-vested restricted shares of common stock
 
 
26,354
 
 
 
13
 
 
 
(13
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—  
 
Stock issuances from exercise of stock options and employee stock purchase plan
 
 
15,807
 
 
 
9
 
 
 
1,942
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,951
 
Retirement of common stock
   
(3,608
)
   
(2
)
   
(553
)    
     
     
     
     
(555
)
Share-based compensation
   
     
     
4,324
     
     
     
     
     
4,324
 
Cash dividends declared and paid on Common and Class B common stock, $1.60 per share
   
     
     
     
     
(60,213
)
   
     
     
(60,213
)
Common stock issued for Dunphey & Associates Supply Co., Inc. 
 
 
50,952
 
 
 
25
 
 
 
7,425
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,450
 
Investment in unconsolidated entity 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
988
 
 
 
988
 
Decrease in non-controlling interest in Carrier Enterprise II 
 
 
 
 
 
 
 
 
(25,768
)
 
 
 
 
 
 
 
 
 
 
 
 
(6,632
)
 
 
(32,400
)
Balance at June 30, 2019
   
37,659,852
   
$
21,266
   
$
828,932
   
$
(40,146
)
 
$
632,983
   
$
(87,440
)
 
$
277,767
   
$
1,633,362
 
                                                                 
Continued on next page.
 
6 of 26
 
 
 
Table of Contents
 
(In thousands, except share and per share data)
 
Common Stock,
Class B
Common Stock
and Preferred
Stock Shares
   
Common Stock,
Class B
Common Stock
and Preferred
Stock Amount
   
Paid-In

Capital
   
Accumulated
Other
Comprehensive
Loss
   
Retained
Earnings
   
Treasury
Stock
   
Non-
controlling
Interest
   
Total
 
Balance at December 
31, 2017
   
37,228,715
   
$
21,050
   
$
804,008
   
$
(34,221
)
 
$
594,556
   
$
(87,440
)
 
$
253,024
   
$
1,550,977
 
Cumulative-effect adjustment
   
     
     
     
301
     
(301
)
   
     
     
—  
 
Net income
   
     
     
     
     
34,219
     
     
8,158
     
42,377
 
Other comprehensive loss
   
     
     
     
(3,649
)
   
     
     
(2,092
)
   
(5,741
)
Issuances of
non-vested
restricted
shares of common stock
   
91,609
     
46
     
(46
)
   
     
     
     
     
—  
 
Forfeitures of
non-vested
restricted
shares of common stock
   
(3,000
)
   
(2
)
   
2
     
     
     
     
     
—  
 
Common stock contribution to
401(k) plan
   
17,318
     
9
     
2,936
     
     
     
     
     
2,945
 
Stock issuances from exercise of stock options and employee stock
purchase plan
   
37,130
     
19
     
4,322
     
     
     
     
     
4,341
 
Retirement of common stock
   
(5,041
)
   
(3
)
   
(911
)
   
     
     
     
     
(914
)
Share-based compensation
   
     
     
4,400
     
     
     
     
     
4,400
 
Cash dividends declared and paid on Common and Class B common
stock, $1.25 per share
   
     
     
     
     
(46,581
   
             
(46,581
)
Distributions to
non-controlling

interest
   
     
     
     
       
     
     
(2,178
)
   
(2,178
)
Balance at March 31, 2018
 
 
37,366,731
 
 
$
21,119
 
 
$
814,711
 
 
$
(37,569
)
 
$
581,893
 
 
$
(87,440
)
 
 
$
256,912
 
 
$
1,549,626
 
Net income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
89,957
 
 
 
 
 
 
 18,307
 
 
 
 108,264
 
Other comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
(2,890
)
 
 
 
 
 
 
 
 
 (1,671
)
 
 
 (4,561
)
Issuances of non-vested restricted
shares of common stock
 
 
8,500
 
 
 
4
 
 
 
(4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—  
 
Forfeitures of non-vested restricted
shares of common stock
 
 
(5,000
)
 
 
(2
)
 
 
2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—  
 
Stock issuances from exercise of stock options and employee stock
purchase plan
 
 
11,935
 
 
 
6
 
 
 
1,595
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,601