Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
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(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
Emerging growth company |
WATSCO, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
2 of 28
Quarter Ended September 30, |
Nine Months Ended September 30, |
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2024 |
2023 |
2024 |
2023 |
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Revenues |
$ |
$ | $ |
$ | ||||||||||||
Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Other income |
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Operating income |
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Interest (income) expense, net |
( |
) |
( |
) |
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Income before income taxes |
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Income taxes |
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Net income |
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Less: net income attributable to non-controlling interest |
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Net income attributable to Watsco, Inc. |
$ |
$ | $ |
$ | ||||||||||||
Earnings per share for Common and Class B common stock: |
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Basic |
$ |
$ | $ |
$ |
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Diluted |
$ |
$ | $ |
$ |
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Quarter Ended September 30, |
Nine Months Ended September 30, |
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2024 |
2023 |
2024 |
2023 |
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Net income |
$ |
$ | $ |
$ | ||||||||||||
Other comprehensive income (loss), net of tax |
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Foreign currency translation adjustment |
( |
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) |
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Other comprehensive income (loss) |
( |
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) |
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Comprehensive income |
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Less: comprehensive income attributable to non-controlling interest |
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Comprehensive income attributable to Watsco, Inc. |
$ |
$ | $ |
$ | ||||||||||||
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September 30, 2024 |
December 31, 2023 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
$ | ||||||
Short-term cash investments |
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Accounts receivable, net |
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Inventories, net |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use |
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Goodwill |
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Intangible assets, net |
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Investment in unconsolidated entity |
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Other assets |
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$ |
$ | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Current portion of lease liabilities |
$ |
$ | ||||||
Accounts payable |
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Accrued expenses and other current liabilities |
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Total current liabilities |
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Long-term obligations: |
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Borrowings under revolving credit agreement |
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Operating lease liabilities, net of current portion |
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Finance lease liabilities, net of current portion |
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Total long-term obligations |
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Deferred income taxes and other liabilities |
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Commitments and contingencies |
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Watsco, Inc. shareholders’ equity: |
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Common stock, $ |
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Class B common stock, $ |
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Preferred stock, $ |
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Paid-in capital |
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Accumulated other comprehensive loss, net of tax |
( |
) |
( |
) | ||||
Retained earnings |
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Treasury stock, at cost |
( |
) |
( |
) | ||||
Total Watsco, Inc. shareholders’ equity |
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Non-controlling interest |
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Total shareholders’ equity |
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$ |
$ | |||||||
(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 |
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Balance at December 31, |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
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Net income |
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Other comprehensive (loss) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||||||
Issuances of restricted |
( |
) |
— |
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Forfeitures of restricted |
( |
) |
( |
) |
— |
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Common stock |
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Stock issuances from |
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Retirement of common |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||||
Net proceeds from the sale |
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Common stock issued for |
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Share-based compensation |
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Cash dividends declared per share |
( |
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( |
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Balance at March 31, 2024 |
( |
) |
( |
) |
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Net income |
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Other comprehensive (loss) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||||||
Issuances of restricted |
( |
) |
— |
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Forfeitures of restricted |
( |
) |
( |
) |
— |
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Stock issuances from |
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Retirement of common |
( |
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( |
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( |
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( |
) | ||||||||||||||||||||||||
Share-based compensation |
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Dividend reinvestment plan |
— |
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Cash dividends declared and per share |
( |
) |
( |
) | ||||||||||||||||||||||||||||
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Balance at June 30, 2024 |
( |
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( |
) |
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Net income |
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Other comprehensive |
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Issuances of restricted |
( |
) |
— |
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Stock issuances from |
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Retirement of common |
( |
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( |
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( |
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( |
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Share-based compensation |
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Dividend reinvestment plan |
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Cash dividends declared and per share |
( |
) |
( |
) | ||||||||||||||||||||||||||||
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Balance at September 30, 2024 |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
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(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 |
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Balance at December 31, |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
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Net income |
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Other comprehensive |
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Issuances of restricted |
( |
) |
— |
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Forfeitures of restricted shares of common stock |
( |
) |
( |
) |
— |
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Common stock to 401(k) |
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Stock issuances from |
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Issuance of Class B |
— |
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Retirement of common |
( |
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( |
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( |
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( |
) | ||||||||||||||||||||||||
Share-based compensation |
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Cash dividends declared per share |
( |
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( |
) | ||||||||||||||||||||||||||||
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Balance at March 31, |
( |
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( |
) |
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Net income |
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Other comprehensive |
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Issuances of restricted |
( |
) |
— |
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Forfeitures of restricted |
( |
) |
— |
— |
— |
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Stock issuances from |
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Retirement of common |
( |
) |
( |
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( |
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( |
) | ||||||||||||||||||||||||
Share-based compensation |
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Net proceeds from the sale |
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Cash dividends declared per share |
( |
) |
( |
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Balance at June 30, |
( |
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( |
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Net income |
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Other comprehensive (loss) |
( |
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( |
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( |
) | ||||||||||||||||||||||||||
Issuances of restricted |
( |
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— |
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Forfeitures of restricted |
( |
) |
( |
) |
— |
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Stock issuances from |
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Retirement of common |
( |
) |
— |
( |
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( |
) | |||||||||||||||||||||||||
Share-based compensation |
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Common stock issued for |
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Cash dividends declared per share |
( |
) |
( |
) | ||||||||||||||||||||||||||||
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Balance at September 30, 202 3 |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
$ |
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Nine Months Ended September 30, |
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2024 |
2023 |
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Cash flows from operating activities: |
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Net income |
$ |
$ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Share-based compensation |
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Non-cash |
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Deferred income tax provision |
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Provision for doubtful accounts |
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Loss (gain) on sale of property and equipment |
( |
) | ||||||
Other income from investment in unconsolidated entity |
( |
) |
( |
) | ||||
Changes in operating assets and liabilities, net of effects of acquisitions: |
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Accounts receivable, net |
( |
) |
( |
) | ||||
Inventories, net |
( |
) |
( |
) | ||||
Accounts payable and other liabilities |
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Other, net |
( |
) | ||||||
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Purchases of short-term cash investments |
( |
) |
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Capital expenditures |
( |
) |
( |
) | ||||
Business acquisitions, net of cash acquired |
( |
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( |
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Proceeds from sale of property and equipment |
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Net cash used in investing activities |
( |
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( |
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Cash flows from financing activities: |
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Dividends on Common and Class B common stock |
( |
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( |
) | ||||
Net (repayments) proceeds under current revolving credit agreement |
( |
) |
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Net repayments of finance lease liabilities |
( |
) |
( |
) | ||||
Repurchases of common stock to satisfy employee withholding tax obligations |
( |
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( |
) | ||||
Net repayments under prior revolving credit agreement |
( |
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Payment of fees related to revolving credit agreement |
( |
) | ||||||
Net proceeds from Dividend Reinvestment Plan |
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Net proceeds from issuances of Common stock under employee-related plans |
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Net proceeds from the sale of Common stock |
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Net cash used in financing activities |
( |
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( |
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Effect of foreign exchange rate changes on cash and cash equivalents |
( |
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( |
) | ||||
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Net increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
$ |
$ | ||||||
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Supplemental cash flow information: |
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Common stock issued for Gateway Supply Company, Inc. |
$ | |||||||
Common stock issued for Commercial Specialists, Inc. |
$ |
1. |
BASIS OF PRESENTATION |
2. |
REVENUES |
Quarter Ended September 30, |
Nine Months Ended September 30, |
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2024 | 2023 | 2024 | 2023 | |||||||||||||
Primary Geographical Regions: |
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United States |
$ |
$ | $ |
$ | ||||||||||||
Canada |
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Latin America and the Caribbean |
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$ |
$ | $ |
$ | |||||||||||||
Major Product Lines: |
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HVAC equipment |
% |
% | % |
% | ||||||||||||
Other HVAC products |
% |
% | % |
% | ||||||||||||
Commercial refrigeration products |
% |
% | % |
% | ||||||||||||
% |
% | % |
% | |||||||||||||
3. |
EARNINGS PER SHARE |
Quarter Ended September 30, |
Nine Months Ended September 30, |
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2024 | 2023 | 2024 | 2023 | |||||||||||||
Basic Earnings per Share: |
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Net income attributable to Watsco, Inc. shareholders |
$ |
$ | $ |
$ | ||||||||||||
Less: distributed and undistributed earnings allocated to restricted common stock |
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Earnings allocated to Watsco, Inc. shareholders |
$ |
$ | $ |