Miami, FL - Watsco, Inc. reported record results for the first quarter ended March 31, 2014. Watsco also announced that its Board of Directors has approved a 50% increase in the company’s annual dividend to $2.40 per share.
Key performance metrics:
- Revenues increased 7% to a record $763 million
- Gross profit margin increased 10 basis-points
- SG&A decreased 30 basis-points as a percentage of sales
- Operating margins expanded 40 basis-points
- Earnings per diluted share climbed 23% to a record 48 cents
- Record first quarter operating cash flow
- HVAC equipment (62% of sales) increased 8%
- Non-equipment HVAC products (33% of sales) increased 5%
- Commercial refrigeration products (5% of sales) increased 2%
Albert H. Nahmad, Watsco’s President & Chief Executive Officer stated: “Watsco delivered another solid quarter of performance driven by sales growth, higher selling margins and improved operating efficiencies. We experienced healthy demand for residential products in the United States, which grew 13%, from strong unit growth and a better sales mix of high efficiency systems. We are off to a strong start and believe 2014 will be a record year for our company.”
Mr. Nahmad added, "We are also pleased to increase Watsco’s dividend to an annual rate of $2.40 per share beginning in July, well ahead of schedule. As evidenced by our long-term track record, we have great confidence in our business to produce both meaningful earnings growth and cash flow that exceeds net income. It is always our intention to share cash flow through increasing dividends. Having said that, we also want to retain the ability to invest in our network and additional opportunities that may come our way.”
It is important to note that the first quarter of each calendar year is the seasonal low point for sales and profits due to the magnitude of the replacement market for air conditioning, heating and refrigeration systems during the second and third quarters of each calendar year. Accordingly, the Company's first quarter financial results are disproportionately affected by this seasonality and the overall general economic conditions.