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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 11/03/23 Watsco Inc. 10-Q 9/30/23 54:5.3M Donnelley … Solutions/FA |
Document/Exhibit Description Pages Size 1: 10-Q Quarterly Report HTML 1.36M 2: EX-10.1 Material Contract HTML 156K 3: EX-31.1 Certification -- §302 - SOA'02 HTML 21K 4: EX-31.2 Certification -- §302 - SOA'02 HTML 21K 5: EX-31.3 Certification -- §302 - SOA'02 HTML 21K 6: EX-32.1 Certification -- §906 - SOA'02 HTML 18K 12: R1 Cover Page HTML 75K 13: R2 Condensed Consolidated Unaudited Statements of HTML 96K Income 14: R3 Condensed Consolidated Unaudited Statements of HTML 47K Comprehensive Income 15: R4 Condensed Consolidated Unaudited Balance Sheets HTML 147K 16: R5 Condensed Consolidated Unaudited Balance Sheets HTML 22K (Parenthetical) 17: R6 Condensed Consolidated Unaudited Statements of HTML 149K Shareholders' Equity 18: R7 Condensed Consolidated Unaudited Statements of HTML 17K Shareholders' Equity (Parenthetical) 19: R8 Condensed Consolidated Unaudited Statements of HTML 103K Cash Flows 20: R9 Pay vs Performance Disclosure HTML 29K 21: R10 Insider Trading Arrangements HTML 23K 22: R11 Basis of Presentation HTML 25K 23: R12 Revenues HTML 51K 24: R13 Earnings Per Share HTML 101K 25: R14 Other Comprehensive Income (Loss) HTML 29K 26: R15 Acquisitions HTML 23K 27: R16 Debt HTML 26K 28: R17 Derivatives HTML 20K 29: R18 Fair Value Measurements HTML 46K 30: R19 Shareholders' Equity HTML 33K 31: R20 Commitments and Contingencies HTML 22K 32: R21 Related Party Transactions HTML 22K 33: R22 Basis of Presentation (Policies) HTML 31K 34: R23 Revenues (Tables) HTML 47K 35: R24 Earnings Per Share (Tables) HTML 100K 36: R25 Other Comprehensive Income (Loss) (Tables) HTML 28K 37: R26 Fair Value Measurements (Tables) HTML 42K 38: R27 Basis of Presentation - Additional Information HTML 18K (Detail) 39: R28 Revenues - Summary of Disaggregated Revenue HTML 43K (Detail) 40: R29 Earnings Per Share - Schedule of Basic and Diluted HTML 77K Earnings per Common Share (Detail) 41: R30 Earnings Per Share - Additional Information HTML 18K (Detail) 42: R31 Other Comprehensive Income (Loss) - Schedule of HTML 28K Accumulated Other Comprehensive Loss (Detail) 43: R32 Acquisitions - Additional Information (Detail) HTML 47K 44: R33 Debt - Additional Information (Detail) HTML 94K 45: R34 Derivatives - Additional Information (Detail) HTML 25K 46: R35 Fair Value Measurements - Assets and Liabilities HTML 32K Carried at Fair Value Measured on Recurring Basis (Detail) 47: R36 Shareholders' Equity - Additional Information HTML 56K (Detail) 48: R37 Commitments and Contingencies - Additional HTML 19K Information (Detail) 49: R38 Related Party Transactions - Additional HTML 50K Information (Detail) 52: XML IDEA XML File -- Filing Summary XML 87K 50: XML XBRL Instance -- d585205d10q_htm XML 1.13M 51: EXCEL IDEA Workbook of Financial Report Info XLSX 79K 8: EX-101.CAL XBRL Calculations -- wso-20230930_cal XML 109K 9: EX-101.DEF XBRL Definitions -- wso-20230930_def XML 631K 10: EX-101.LAB XBRL Labels -- wso-20230930_lab XML 762K 11: EX-101.PRE XBRL Presentations -- wso-20230930_pre XML 646K 7: EX-101.SCH XBRL Schema -- wso-20230930 XSD 109K 53: JSON XBRL Instance as JSON Data -- MetaLinks 395± 559K 54: ZIP XBRL Zipped Folder -- 0001193125-23-270352-xbrl Zip 239K
10-Q |
i ☒ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
i ☐ | Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 |
FLORIDA |
i 59-0778222 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
i Common stock, $0.50 par value |
i WSO |
i New York Stock Exchange | ||
i Class B common stock, $0.50 par value |
i WSOB |
i New York Stock Exchange |
i Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☐ | Smaller reporting company | i ☐ | |||
Emerging growth company | i ☐ |
Quarter Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2022 |
2023 |
2022 |
||||||||||||||
Revenues |
$ |
i 2,126,845 |
$ | i 2,035,796 | $ |
i 5,680,570 |
$ | i 5,693,121 | ||||||||
Cost of sales |
i 1,559,900 |
i 1,484,948 | i 4,102,846 |
i 4,096,382 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
i 566,945 |
i 550,848 | i 1,577,724 |
i 1,596,739 | ||||||||||||
Selling, general and administrative expenses |
i 319,834 |
i 321,522 | i 911,046 |
i 919,629 | ||||||||||||
Other income |
i 9,506 |
i 6,927 | i 20,384 |
i 17,289 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income |
i 256,617 |
i 236,253 | i 687,062 |
i 694,399 | ||||||||||||
Interest expense, net |
i 1,890 |
i 483 | i 5,920 |
i 2,151 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income before income taxes |
i 254,727 |
i 235,770 | i 681,142 |
i 692,248 | ||||||||||||
Income taxes |
i 54,103 |
i 49,600 | i 144,744 |
i 145,682 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
i 200,624 |
i 186,170 | i 536,398 |
i 546,566 | ||||||||||||
Less: net income attributable to non-controlling interest |
i 29,671 |
i 28,529 | i 82,608 |
i 83,070 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income attributable to Watsco, Inc. |
$ |
i 170,953 |
$ | i 157,641 | $ |
i 453,790 |
$ | i 463,496 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Earnings per share for Common and Class B common stock: |
||||||||||||||||
Basic |
$ |
i 4.36 |
$ | i 4.04 | $ |
i 11.64 |
$ | i 11.90 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted |
$ |
i 4.35 |
$ | i 4.03 | $ |
i 11.60 |
$ | i 11.86 | ||||||||
|
|
|
|
|
|
|
|
Quarter Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2022 |
2023 |
2022 |
||||||||||||||
Net income |
$ |
i 200,624 |
$ | i 186,170 | $ |
i 536,398 |
$ | i 546,566 | ||||||||
Other comprehensive (loss) income, net of tax Foreign currency translation adjustment |
( i 6,966 |
) |
( i 19,091 | ) | i 409 |
( i 24,091 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive (loss) income |
( i 6,966 |
) |
( i 19,091 | ) | i 409 |
( i 24,091 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income |
i 193,658 |
i 167,079 | i 536,807 |
i 522,475 | ||||||||||||
Less: comprehensive income attributable to non-controlling interest |
i 27,350 |
i 22,040 | i 82,712 |
i 74,911 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income attributable to Watsco, Inc. |
$ |
i 166,308 |
$ | i 145,039 | $ |
i 454,095 |
$ | i 447,564 | ||||||||
|
|
|
|
|
|
|
|
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
i 175,022 |
$ | i 147,505 | ||||
Accounts receivable, net |
i 949,317 |
i 747,110 | ||||||
Inventories, net |
i 1,549,740 |
i 1,370,173 | ||||||
Other current assets |
i 56,493 |
i 33,951 | ||||||
|
|
|
|
|||||
Total current assets |
i 2,730,572 |
i 2,298,739 | ||||||
Property and equipment, net |
i 134,076 |
i 125,424 | ||||||
Operating lease right-of-use |
i 362,901 |
i 317,314 | ||||||
Goodwill |
i 491,522 |
i 430,711 | ||||||
Intangible assets, net |
i 172,473 |
i 175,191 | ||||||
Investment in unconsolidated entity |
i 137,596 |
i 132,802 | ||||||
Other assets |
i 9,927 |
i 8,033 | ||||||
|
|
|
|
|||||
$ |
i 4,039,067 |
$ | i 3,488,214 | |||||
|
|
|
|
|||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of lease liabilities |
$ |
i 98,507 |
$ | i 90,597 | ||||
Borrowings under revolving credit agreement |
i — |
i 56,400 | ||||||
Accounts payable |
i 509,308 |
i 456,128 | ||||||
Accrued expenses and other current liabilities |
i 279,813 |
i 303,397 | ||||||
|
|
|
|
|||||
Total current liabilities |
i 887,628 |
i 906,522 | ||||||
|
|
|
|
|||||
Long-term obligations: |
||||||||
Borrowings under revolving credit agreement |
i 105,600 |
i — | ||||||
Operating lease liabilities, net of current portion |
i 272,154 |
i 232,144 | ||||||
Finance lease liabilities, net of current portion |
i 12,585 |
i 11,388 | ||||||
|
|
|
|
|||||
Total long-term obligations |
i 390,339 |
i 243,532 | ||||||
|
|
|
|
|||||
Deferred income taxes and other liabilities |
i 95,338 |
i 89,882 | ||||||
|
|
|
|
|||||
Commitments and contingencies |
i | i | ||||||
Watsco, Inc. shareholders’ equity: |
||||||||
Common stock, $ i i 0.50 /
par value |
i 19,323 |
i 19,054 | ||||||
Class B common stock, $ i i 0.50 /
par value |
i 2,788 |
i 2,757 | ||||||
Preferred stock, $ i i 0.50 /
par value |
i — |
i — | ||||||
Paid-in capital |
i 1,138,749 |
i 973,060 | ||||||
Accumulated other comprehensive loss, net of tax |
( i 47,405 |
) |
( i 47,710 | ) | ||||
Retained earnings |
i 1,197,184 |
i 1,029,516 | ||||||
Treasury stock, at cost |
( i 86,630 |
) |
( i 87,440 | ) | ||||
|
|
|
|
|||||
Total Watsco, Inc. shareholders’ equity |
i 2,224,009 |
i 1,889,237 | ||||||
Non-controlling interest |
i 441,753 |
i 359,041 | ||||||
|
|
|
|
|||||
Total shareholders’ equity |
i 2,665,762 |
i 2,248,278 | ||||||
|
|
|
|
|||||
$ |
i 4,039,067 |
$ | i 3,488,214 | |||||
|
|
|
|
(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, 2022 |
i 38,749,887 |
$ |
i 21,811 |
$ |
i 973,060 |
$ |
( i 47,710 |
) |
$ |
i 1,029,516 |
$ |
( i 87,440 |
) |
$ |
i 359,041 |
$ |
i 2,248,278 |
|||||||||||||||
Net income |
i 110,073 |
i 20,298 |
i 130,371 |
|||||||||||||||||||||||||||||
Other comprehensive income |
i 170 |
i 90 |
i 260 |
|||||||||||||||||||||||||||||
Issuances of restricted shares of common stock |
i 116,510 |
i 58 |
( i 58 |
) |
i — |
|||||||||||||||||||||||||||
Forfeitures of restricted shares of common stock |
( i 2,000 |
) |
( i 1 |
) |
i 1 |
i — |
||||||||||||||||||||||||||
Common stock contribution to 401(k) plan |
i 35,533 |
i 18 |
i 8,844 |
i 8,862 |
||||||||||||||||||||||||||||
Stock issuances from exercise of stock options and employee stock purchase plan |
i 75,186 |
i 38 |
i 12,947 |
i 12,985 |
||||||||||||||||||||||||||||
Issuance of Class B common stock |
i 632 |
i — |
i 200 |
i 200 |
||||||||||||||||||||||||||||
Retirement of common stock |
( i 21,702 |
) |
( i 11 |
) |
( i 6,441 |
) |
( i 6,452 |
) | ||||||||||||||||||||||||
Share-based compensation |
i 8,763 |
i 8,763 |
||||||||||||||||||||||||||||||
Cash dividends declared and paid on Common and Class B common stock, $ i 2.45 per share |
( i 94,970 |
) |
( i 94,970 |
) | ||||||||||||||||||||||||||||
Balance at March 31, 2023 |
i 38,954,046 |
i 21,913 |
i 997,316 |
( i 47,540 |
) |
i 1,044,619 |
( i 87,440 |
) |
i 379,429 |
i 2,308,297 |
||||||||||||||||||||||
Net income |
i 172,764 |
i 32,639 |
i 205,403 |
|||||||||||||||||||||||||||||
Other comprehensive income |
i 4,780 |
i 2,335 |
i 7,115 |
|||||||||||||||||||||||||||||
Issuances of restricted shares of common stock |
i 38,000 |
i 19 |
( i 19 |
) |
i — |
|||||||||||||||||||||||||||
Forfeitures of restricted shares of common stock |
( i 467 |
) |
i — |
i — |
i — |
|||||||||||||||||||||||||||
Stock issuances from exercise of stock options and employee stock purchase plan |
i 30,794 |
i 15 |
i 5,622 |
i 5,637 |
||||||||||||||||||||||||||||
Retirement of common stock |
( i 1,737 |
) |
( i 1 |
) |
( i 594 |
) |
( i 595 |
) | ||||||||||||||||||||||||
Share-based compensation |
i 6,828 |
i 6,828 |
||||||||||||||||||||||||||||||
Net proceeds from the sale of Common stock |
i 45,000 |
i 13,994 |
i 810 |
i 14,804 |
||||||||||||||||||||||||||||
Cash dividends declared and paid on Common and Class B common stock, $ i 2.45 per share |
( i 95,439 |
) |
( i 95,439 |
) | ||||||||||||||||||||||||||||
Balance at June 30, 2023 |
i 39,065,636 |
i 21,946 |
i 1,023,147 |
( i 42,760 |
) |
i 1,121,944 |
( i 86,630 |
) |
i 414,403 |
i 2,452,050 |
||||||||||||||||||||||
Net income |
i 170,953 |
i 29,671 |
i 200,624 |
|||||||||||||||||||||||||||||
Other comprehensive (loss) |
( i 4,645 |
) |
( i 2,321 |
) |
( i 6,966 |
) | ||||||||||||||||||||||||||
Issuances of restricted shares of common stock |
i 13,607 |
i 7 |
( i 7 |
) |
i — |
|||||||||||||||||||||||||||
Forfeitures of restricted shares of common stock |
( i 1,000 |
) |
( i 1 |
) |
i 1 |
i — |
||||||||||||||||||||||||||
Stock issuances from exercise of stock options and employee stock purchase plan |
i 37,399 |
i 19 |
i 6,610 |
i 6,629 |
||||||||||||||||||||||||||||
Retirement of common stock |
( i 1,328 |
) |
i — |
( i 467 |
) |
( i 467 |
) | |||||||||||||||||||||||||
Share-based compensation |
i 7,262 |
i 7,262 |
||||||||||||||||||||||||||||||
Common stock issued for Gateway Supply Company, Inc. |
i 280,215 |
i 140 |
i 102,203 |
i 102,343 |
||||||||||||||||||||||||||||
Cash dividends declared and paid on Common and Class B common stock, $ i 2.45 per share |
( i 95,713 |
) |
( i 95,713 |
) | ||||||||||||||||||||||||||||
Balance at September 30, 2023 |
i 39,394,529 |
$ |
i 22,111 |
$ |
i 1,138,749 |
$ |
( i 47,405 |
) |
$ |
i 1,197,184 |
$ |
( i 86,630 |
) |
$ |
i 441,753 |
$ |
i 2,665,762 |
|||||||||||||||
(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, 2021 |
i 38,799,632 |
$ |
i 21,836 |
$ |
i 1,003,932 |
$ |
( i 34,176 |
) |
$ |
i 760,796 |
$ |
( i 87,440 |
) |
$ |
i 332,467 |
$ |
i 1,997,415 |
|||||||||||||||
Net income |
i 113,298 |
i 21,592 |
i 134,890 |
|||||||||||||||||||||||||||||
Other comprehensive income |
i 2,935 |
i 1,446 |
i 4,381 |
|||||||||||||||||||||||||||||
Issuances of restricted shares of common stock |
i 105,882 |
i 53 |
( i 53 |
) |
i — |
|||||||||||||||||||||||||||
Common stock contribution to 401(k) plan |
i 21,532 |
i 11 |
i 6,726 |
i 6,737 |
||||||||||||||||||||||||||||
Stock issuances from exercise of stock options and employee stock purchase plan |
i 24,850 |
i 12 |
i 4,408 |
i 4,420 |
||||||||||||||||||||||||||||
Share-based compensation |
i 8,667 |
i 8,667 |
||||||||||||||||||||||||||||||
Cash dividends declared and paid on Common and Class B common stock, $ i 1.95 per share |
( i 75,795 |
) |
( i 75,795 |
) | ||||||||||||||||||||||||||||
Balance at March 31, 2022 |
i 38,951,896 |
i 21,912 |
i 1,023,680 |
( i 31,241 |
) |
i 798,299 |
( i 87,440 |
) |
i 355,505 |
i 2,080,715 |
||||||||||||||||||||||
Net income |
i 192,557 |
i 32,949 |
i 225,506 |
|||||||||||||||||||||||||||||
Other comprehensive (loss) |
( i 6,265 |
) |
( i 3,116 |
) |
( i 9,381 |
) | ||||||||||||||||||||||||||
Issuances of restricted shares of common stock |
i 21,177 |
i 11 |
( i 11 |
) |
i — |
|||||||||||||||||||||||||||
Forfeitures of restricted shares of common stock |
( i 10,000 |
) |
( i 5 |
) |
i 5 |
i — |
||||||||||||||||||||||||||
Common stock contribution to 401(k) plan |
i 28 |
i — |
i 9 |
i 9 |
||||||||||||||||||||||||||||
Stock issuances from exercise of stock options and employee stock purchase plan |
i 21,939 |
i 11 |
i 3,796 |
i 3,807 |
||||||||||||||||||||||||||||
Retirement of common stock |
( i 8,181 |
) |
( i 4 |
) |
( i 2,175 |
) |
( i 2,179 |
) | ||||||||||||||||||||||||
Share-based compensation |
i 6,987 |
i 6,987 |
||||||||||||||||||||||||||||||
Cash dividends declared and paid on Common and Class B common stock, $ i 2.20 per share |
( i 85,689 |
) |
( i 85,689 |
) | ||||||||||||||||||||||||||||
Balance at June 30, 2022 |
i 38,976,859 |
i 21,925 |
i 1,032,291 |
( i 37,506 |
) |
i 905,167 |
( i 87,440 |
) |
i 385,338 |
i 2,219,775 |
||||||||||||||||||||||
Net income |
i 157,641 |
i 28,529 |
i 186,170 |
|||||||||||||||||||||||||||||
Other comprehensive (loss) |
( i 12,602 |
) |
( i 6,489 |
) |
( i 19,091 |
) | ||||||||||||||||||||||||||
Issuances of restricted shares of common stock |
i 13,000 |
i 7 |
( i 7 |
) |
i — |
|||||||||||||||||||||||||||
Stock issuances from exercise of stock options and employee stock purchase plan |
i 51,407 |
i 25 |
i 8,639 |
i 8,664 |
||||||||||||||||||||||||||||
Retirement of common stock |
( i 1,932 |
) |
( i 1 |
) |
( i 548 |
) |
( i 549 |
) | ||||||||||||||||||||||||
Share-based compensation |
i 6,942 |
i 6,942 |
||||||||||||||||||||||||||||||
Cash dividends declared and paid on Common and Class B common stock, $ i 2.20 per share |
( i 85,758 |
) |
( i 85,758 |
) | ||||||||||||||||||||||||||||
Balance at September 30, 2022 |
i 39,039,334 |
$ |
i 21,956 |
$ |
i 1,047,317 |
$ |
( i 50,108 |
) |
$ |
i 977,050 |
$ |
( i 87,440 |
) |
$ |
i 407,378 |
$ |
i 2,316,153 |
|||||||||||||||
Nine Months Ended September 30, |
||||||||
2023 | 2022 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ |
i 536,398 |
$ | i 546,566 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
i 25,406 |
i 23,440 | ||||||
Share-based compensation |
i 20,791 |
i 22,017 | ||||||
Non-cash contribution to 401(k) plan |
i 8,862 |
i 6,746 | ||||||
Deferred income tax provision |
i 5,892 |
i 6,311 | ||||||
Other income from investment in unconsolidated entity |
( i 20,384 |
) |
( i 17,289 | ) | ||||
Other, net |
i 2,841 |
i 5,672 | ||||||
Changes in operating assets and liabilities, net of effects of acquisitions: |
||||||||
Accounts receivable, net |
( i 184,106 |
) |
( i 170,746 | ) | ||||
Inventories, net |
( i 143,746 |
) |
( i 276,653 | ) | ||||
Accounts payable and other liabilities |
i 17,608 |
i 212,829 | ||||||
Other, net |
( i 6,222 |
) |
( i 13 | ) | ||||
|
|
|
|
|||||
Net cash provided by operating activities |
i 263,340 |
i 358,880 | ||||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
( i 25,500 |
) |
( i 26,526 | ) | ||||
Business acquisitions, net of cash acquired |
( i 3,827 |
) |
( i 47 | ) | ||||
Proceeds from sale of property and equipment |
i 1,277 |
i 167 | ||||||
|
|
|
|
|||||
Net cash used in investing activities |
( i 28,050 |
) |
( i 26,406 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Net proceeds under current revolving credit agreement |
i 105,600 |
i — | ||||||
Net proceeds from issuances of Common stock under employee-related plans |
i 20,373 |
i 16,635 | ||||||
Net proceeds from the sale of Common stock |
i 15,179 |
i — | ||||||
Payment of fees related to revolving credit agreement |
( i 837 |
) |
i — | |||||
Repurchases of common stock to satisfy employee withholding tax obligations |
( i 2,639 |
) |
( i 2,471 | ) | ||||
Net repayments of finance lease liabilities |
( i 2,794 |
) |
( i 2,206 | ) | ||||
Net repayments under prior revolving credit agreement |
( i 56,400 |
) |
( i 80,200 | ) | ||||
Dividends on Common and Class B common stock |
( i 286,122 |
) |
( i 247,242 | ) | ||||
|
|
|
|
|||||
Net cash used in financing activities |
( i 207,640 |
) |
( i 315,484 | ) | ||||
|
|
|
|
|||||
Effect of foreign exchange rate changes on cash and cash equivalents |
( i 133 |
) |
( i 5,030 | ) | ||||
|
|
|
|
|||||
Net increase in cash and cash equivalents |
i 27,517 |
i 11,960 | ||||||
Cash and cash equivalents at beginning of period |
i 147,505 |
i 118,268 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period |
$ |
i 175,022 |
$ | i 130,228 | ||||
|
|
|
|
|||||
Supplemental cash flow information: |
||||||||
Common stock issued for Gateway Supply Company, Inc. |
$ |
i 102,343 |
i — |
Quarter Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Primary Geographical Regions: |
||||||||||||||||
United States |
$ |
i 1,924,556 |
$ | i 1,851,071 | $ |
i 5,118,591 |
$ | i 5,156,846 | ||||||||
Canada |
i 100,030 |
i 100,567 | i 288,653 |
i 303,149 | ||||||||||||
Latin America and the Caribbean |
i 102,259 |
i 84,158 | i 273,326 |
i 233,126 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ |
i 2,126,845 |
$ | i 2,035,796 | $ |
i 5,680,570 |
$ | i 5,693,121 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Major Product Lines: |
||||||||||||||||
HVAC equipment |
i 70 |
% |
i 69 | % | i 69 |
% |
i 69 | % | ||||||||
Other HVAC products |
i 26 |
% |
i 27 | % | i 27 |
% |
i 27 | % | ||||||||
Commercial refrigeration products |
i 4 |
% |
i 4 | % | i 4 |
% |
i 4 | % | ||||||||
|
|
|
|
|
|
|
|
|||||||||
i 100 |
% |
i 100 | % | i 100 |
% |
i 100 | % | |||||||||
|
|
|
|
|
|
|
|
Quarter Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2022 |
2023 |
2022 |
||||||||||||||
Basic Earnings per Share: |
||||||||||||||||
Net income attributable to Watsco, Inc. shareholders |
$ |
i 170,953 |
$ | i 157,641 | $ |
i 453,790 |
$ | i 463,496 | ||||||||
Less: distributed and undistributed earnings allocated to restricted common stock |
i 11,921 |
i 14,387 | i 31,248 |
i 42,293 | ||||||||||||
Earnings allocated to Watsco, Inc. shareholders |
$ |
i 159,032 |
$ | i 143,254 | $ |
i 422,542 |
$ | i 421,203 | ||||||||
Weighted-average common shares outstanding—Basic |
i 36,446,825 |
i 35,450,277 | i 36,315,680 |
i 35,401,179 | ||||||||||||
Basic earnings per share for Common and Class B common stock |
$ |
i 4.36 |
$ | i 4.04 | $ |
i 11.64 |
$ | i 11.90 | ||||||||
Allocation of earnings for Basic: |
||||||||||||||||
Common stock |
$ |
i 144,942 |
$ | i 132,846 | $ |
i 384,970 |
$ | i 390,557 | ||||||||
Class B common stock |
i 14,090 |
i 10,408 | i 37,572 |
i 30,646 | ||||||||||||
$ |
i 159,032 |
$ | i 143,254 | $ |
i 422,542 |
$ | i 421,203 | |||||||||
Diluted Earnings per Share: |
||||||||||||||||
Net income attributable to Watsco, Inc. shareholders |
$ |
i 170,953 |
$ | i 157,641 | $ |
i 453,790 |
$ | i 463,496 | ||||||||
Less: distributed and undistributed earnings allocated to restricted common stock |
i 11,903 |
i 14,368 | i 31,211 |
i 42,228 | ||||||||||||
Earnings allocated to Watsco, Inc. shareholders |
$ |
i 159,050 |
$ | i 143,273 | $ |
i 422,579 |
$ | i 421,268 | ||||||||
Weighted-average common shares outstanding—Basic |
i 36,446,825 |
i 35,450,277 | i 36,315,680 |
i 35,401,179 | ||||||||||||
Effect of dilutive stock options |
i 132,583 |
i 112,008 | i 122,395 |
i 128,309 | ||||||||||||
Weighted-average common shares outstanding—Diluted |
i 36,579,408 |
i 35,562,285 | i 36,438,075 |
i 35,529,488 | ||||||||||||
Diluted earnings per share for Common and Class B common stock |
$ |
i 4.35 |
$ | i 4.03 | $ |
i 11.60 |
$ |
i 11.86 |
||||||||
Anti-dilutive stock options not included above |
i 24,988 |
i 208,610 | i 37,533 |
i 181,115 |
Nine Months Ended September 30, |
2022 |
|||||||
Foreign currency translation adjustment: |
||||||||
Beginning balance |
$ |
( i 47,710 |
) |
$ | ( i 34,176 | ) | ||
Current period other comprehensive income (loss) |
i 305 |
( i 15,932 | ) | |||||
Ending balance |
$ |
( i 47,405 |
) |
$ | ( i 50,108 | ) | ||
Total |
Fair Value Measurements at September 30, 2023 Using |
|||||||||||||||||||
Balance Sheet Location |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||||||
Assets: |
|
|
||||||||||||||||||
Derivative financial instruments |
|
Other current assets | |
$ |
i 9 |
— |
$ |
i 9 |
— |
|||||||||||
Equity securities |
|
Other assets | |
$ |
i 773 |
$ |
i 773 |
— |
— |
|||||||||||
Private equities |
|
Other assets | |
$ |
i 1,500 |
— |
— |
$ |
i 1,500 |
|||||||||||
|
|
Total | Fair Value Measurements at December 31, 2022 Using |
|||||||||||||||||
|
Balance Sheet Location |
Level 1 | Level 2 | Level 3 | ||||||||||||||||
Assets: |
|
|
||||||||||||||||||
Equity securities |
|
Other assets | |
$ | i 678 | $ | i 678 | — | — | |||||||||||
Private equities |
|
Other assets | |
$ | i 1,000 | — | — | $ | i 1,000 |
• | general economic conditions, both in the United States and in the international markets we serve; |
• | competitive factors within the HVAC/R industry; |
• | effects of supplier concentration, including conditions that impact the supply chain; |
• | fluctuations in certain commodity costs; |
• | consumer spending; |
• | consumer debt levels; |
• | the resurgence of the COVID-19 pandemic; |
• | new housing starts and completions; |
• | capital spending in the commercial construction market; |
• | access to liquidity needed for operations; |
• | seasonal nature of product sales; |
• | weather patterns and conditions; |
• | insurance coverage risks; |
• | federal, state, and local regulations impacting our industry and products; |
• | prevailing interest rates; |
• | the effect of inflation; |
• | foreign currency exchange rate fluctuations; |
• | international risk; |
• | cybersecurity risk; and |
• | the continued viability of our business strategy. |
Quarter Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenues |
100.0 |
% |
100.0 | % | 100.0 |
% |
100.0 | % | ||||||||
Cost of sales |
73.3 |
72.9 | 72.2 |
72.0 | ||||||||||||
Gross profit |
26.7 |
27.1 | 27.8 |
28.0 | ||||||||||||
Selling, general and administrative expenses |
15.0 |
15.8 | 16.0 |
16.2 | ||||||||||||
Other income |
0.4 |
0.3 | 0.4 |
0.3 | ||||||||||||
Operating income |
12.1 |
11.6 | 12.1 |
12.2 | ||||||||||||
Interest expense, net |
0.1 |
0.0 | 0.1 |
0.0 | ||||||||||||
Income before income taxes |
12.0 |
11.6 | 12.0 |
12.2 | ||||||||||||
Income taxes |
2.5 |
2.4 | 2.5 |
2.6 | ||||||||||||
Net income |
9.4 |
9.1 | 9.4 |
9.6 | ||||||||||||
Less: net income attributable to non-controlling interest |
1.4 |
1.4 | 1.5 |
1.5 | ||||||||||||
Net income attributable to Watsco, Inc. |
8.0 |
% |
7.7 | % | 8.0 |
% |
8.1 | % | ||||||||
Number of Locations |
||||
675 | ||||
Opened |
1 | |||
Closed |
(3 | ) | ||
673 | ||||
Opened |
5 | |||
Acquired |
19 | |||
Closed |
(6 | ) | ||
691 |
||||
Quarters Ended September 30, | ||||||||||||||||
(in millions) |
2023 | 2022 | Change | |||||||||||||
Revenues |
$ |
2,126.8 |
$ | 2,035.8 | $ | 91.0 | 4 | % |
Quarters Ended September 30, | ||||||||||||||||
(in millions) |
2023 |
2022 |
Change |
|||||||||||||
Same-store sales |
$ |
2,107.2 |
$ | 2,033.3 | $ | 73.9 | 4 | % |
% of Sales | % Change | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
HVAC equipment |
70 |
% |
69 | % | 6 |
% |
13 | % | ||||||||
Other HVAC products |
26 |
% |
27 | % | (3 |
%) |
15 | % | ||||||||
Commercial refrigeration products |
4 |
% |
4 | % | 9 |
% |
18 | % |
Quarters Ended September 30, | ||||||||||||||||
(in millions) |
2023 | 2022 | Change | |||||||||||||
Gross profit |
$ |
566.9 |
$ | 550.8 | $ | 16.1 | 3 | % | ||||||||
Gross margin |
26.7 |
% |
27.1 | % |
Quarters Ended September 30, | ||||||||||||||||
(in millions) |
2023 | 2022 | Change | |||||||||||||
Selling, general and administrative expenses |
$ |
319.8 |
$ | 321.5 | $ | (1.7 | ) | (1 | %) | |||||||
Selling, general and administrative expenses as a percentage of revenues |
15.0 |
% |
15.8 | % |
Quarters Ended September 30, | ||||||||||||||||
(in millions) |
2023 | 2022 | Change | |||||||||||||
Income taxes |
$ |
54.1 |
$ | 49.6 | $ | 4.5 | 9 | % | ||||||||
Effective income tax rate |
23.8 |
% |
23.8 | % |
Nine Months Ended September 30, | ||||||||||||||||
(in millions) |
2023 | 2022 | Change | |||||||||||||
Revenues |
$ |
5,680.6 |
$ | 5,693.1 | $ | (12.5 | ) | 0 | % |
Nine Months Ended September 30, | ||||||||||||||||
(in millions) |
2023 | 2022 | Change | |||||||||||||
Same-store sales |
$ |
5,650.0 |
$ | 5,686.6 | $ | (36.6 | ) | (1 | %) |
% of Sales | % Change | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
HVAC equipment |
69 |
% |
69 | % | — |
18 | % | |||||||||
Other HVAC products |
27 |
% |
27 | % | (4 |
%) |
20 | % | ||||||||
Commercial refrigeration products |
4 |
% |
4 | % | 7 |
% |
25 | % |
Nine Months Ended September 30, | ||||||||||||||||
(in millions) |
2023 | 2022 | Change | |||||||||||||
Gross profit |
$ |
1,577.7 |
$ | 1,596.7 | $ | (19.0 | ) | (1 | %) | |||||||
Gross margin |
27.8 |
% |
28.0 | % |
Nine Months Ended September 30, | ||||||||||||||||
(in millions) |
2023 | 2022 | Change | |||||||||||||
Selling, general and administrative expenses |
$ |
911.0 |
$ | 919.6 | $ | (8.6 | ) | (1 | %) | |||||||
Selling, general and administrative expenses as a percentage of revenues |
16.0 |
% |
16.2 | % |
Nine Months Ended September 30, | ||||||||||||||||
(in millions) |
2023 | 2022 | Change | |||||||||||||
Income taxes |
$ |
144.7 |
$ | 145.7 | $ | (1.0 | ) | (1 | %) | |||||||
Effective income tax rate |
24.0 |
% |
23.8 | % |
• | cash needed to fund our business (primarily working capital requirements); |
• | borrowing capacity under our revolving credit facility; |
• | the ability to attract long-term capital with satisfactory terms; |
• | acquisitions, including joint ventures and investments in unconsolidated entities; |
• | dividend payments; |
• | capital expenditures; and |
• | the timing and extent of common stock repurchases. |
2023 | 2022 | Change | ||||||||||
Cash flows provided by operating activities |
$ |
263.3 |
$ | 358.9 | $ | (95.6 | ) | |||||
Cash flows used in investing activities |
$ |
(28.1 |
) |
$ | (26.4 | ) | $ | (1.7 | ) | |||
Cash flows used in financing activities |
$ |
(207.6 |
) |
$ | (315.5 | ) | $ | 107.9 |
Period |
Total Number of Shares Purchased (1) |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Maximum Dollar Value that May Yet Be Purchased Under the Plans or Programs |
||||||||||||
— |
$ |
— |
— |
$ |
— |
|||||||||||
1,033 |
349.99 |
— |
— |
|||||||||||||
— |
— |
— |
— |
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
1,033 |
$ |
349.99 |
— |
$ |
— |
||||||||||
|
|
|
|
|
|
|
|
(1) |
During the quarter ended September 30, 2023, we purchased an aggregate of 1,033 shares of our common stock to satisfy the tax withholding obligations in connection with the vesting of restricted stock. |
# |
+ | furnished herewith. |
WATSCO, INC. | ||||||
(Registrant) | ||||||
Date: November 3, 2023 | By: | /s/ Ana M. Menendez | ||||
Ana M. Menendez | ||||||
Chief Financial Officer (on behalf of the Registrant and as Principal Financial Officer) |
This ‘10-Q’ Filing | Date | Other Filings | ||
---|---|---|---|---|
3/16/28 | ||||
12/31/23 | ||||
Filed on: | 11/3/23 | |||
10/31/23 | ||||
10/30/23 | ||||
10/17/23 | ||||
10/2/23 | ||||
10/1/23 | ||||
For Period end: | 9/30/23 | |||
9/1/23 | 8-K | |||
8/31/23 | ||||
8/1/23 | 4, 8-K | |||
7/31/23 | ||||
7/28/23 | ||||
7/1/23 | ||||
6/30/23 | 10-Q | |||
3/31/23 | 10-Q | |||
3/16/23 | 8-K | |||
3/3/23 | ||||
2/24/23 | 10-K | |||
1/1/23 | ||||
12/31/22 | 10-K, 5, ARS | |||
9/30/22 | 10-Q | |||
6/30/22 | 10-Q | |||
3/31/22 | 10-Q | |||
2/25/22 | 10-K, 424B5 | |||
12/31/21 | 10-K, 5 | |||
8/6/21 | 424B5, 8-K | |||
1/1/20 | ||||
List all Filings |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 2/23/24 Watsco Inc. 10-K 12/31/23 107:10M Donnelley … Solutions/FA |