Watsco, Inc. (WSO) Bundle
A Brief History of Watsco, Inc.
Watsco, Inc. is a leading distributor of air conditioning, heating, and refrigeration equipment in the United States. Founded in 1945, the company has grown through a series of strategic acquisitions and organic growth. As of 2024, Watsco operates over 690 locations across the U.S. and Canada, serving contractors and other customers in the HVAC/R industry.
Financial Performance Overview
For the nine months ended September 30, 2024, Watsco reported revenues of $5,864.4 million, reflecting a 3% increase from $5,680.6 million in the same period of 2023. The gross profit for the same period was $1,576.6 million, with a gross margin of 26.9%, down from 27.8% in the prior year, primarily due to pricing pressures and sales mix shifts.
| Financial Metric | 2024 (9 Months) | 2023 (9 Months) | Change |
|---|---|---|---|
| Revenues | $5,864.4 million | $5,680.6 million | +3% |
| Gross Profit | $1,576.6 million | $1,577.7 million | -0.1% |
| Gross Margin | 26.9% | 27.8% | -90 bps |
| Net Income | $520.6 million | $536.4 million | -3% |
Stock Performance
As of September 30, 2024, Watsco's stock was trading at approximately $300 per share, with a market capitalization of around $12.2 billion. The company has consistently returned value to shareholders through dividends, paying $2.70 per share in the most recent quarter.
Dividends and Shareholder Returns
Watsco has a history of robust dividend payments, with cash dividends declared totaling $314.5 million for the nine months ended September 30, 2024, compared to $286.1 million in the same period of 2023. The dividend payout reflects the company's commitment to returning capital to shareholders while maintaining a strong balance sheet.
Acquisitions and Growth Strategy
Watsco has pursued an aggressive acquisition strategy, with recent acquisitions including Commercial Specialists, Inc. and several other HVAC distributors. As of September 30, 2024, the company had opened 7 new locations and acquired 2 additional companies, contributing to its revenue growth.
Operational Metrics
The following table summarizes key operational metrics for Watsco as of September 30, 2024:
| Operational Metric | Value |
|---|---|
| Number of Locations | 689 |
| Cash and Cash Equivalents | $294.4 million |
| Short-term Cash Investments | $255.7 million |
| Working Capital | $2,199.8 million |
As of September 30, 2024, Watsco's liquidity position remains strong, with cash and short-term investments totaling $550.1 million, providing ample resources for operational needs and strategic initiatives.
Future Outlook
Looking ahead, Watsco aims to continue expanding its market presence through both organic growth and acquisitions, leveraging its extensive distribution network and strong supplier relationships to capture additional market share in the HVAC/R industry. The company anticipates continued demand for HVAC products driven by seasonal trends and rising energy efficiency standards.
A Who Owns Watsco, Inc. (WSO)
Major Shareholders
As of 2024, Watsco, Inc. (WSO) has a diverse ownership structure primarily comprising institutional investors and insiders. The following table summarizes the major shareholders of Watsco, Inc.
| Shareholder Type | Ownership Percentage | Number of Shares |
|---|---|---|
| Institutional Investors | 80.5% | 32,470,000 |
| Insider Ownership | 10.3% | 4,150,000 |
| Retail Investors | 9.2% | 3,620,000 |
Institutional Ownership Breakdown
Institutional shareholders play a significant role in Watsco's equity structure. Below is a detailed breakdown of the largest institutional shareholders:
| Institution Name | Ownership Percentage | Number of Shares |
|---|---|---|
| The Vanguard Group, Inc. | 7.5% | 3,000,000 |
| BlackRock, Inc. | 6.8% | 2,720,000 |
| Wellington Management Company, LLP | 5.4% | 2,160,000 |
| State Street Corporation | 4.9% | 1,960,000 |
| Other Institutional Investors | 55.9% | 22,630,000 |
Insider Ownership Details
Insider ownership includes shares held by executive officers and board members. The following table lists significant insiders and their respective holdings:
| Insider Name | Position | Shares Owned |
|---|---|---|
| Albert H. Nahmad | Chairman | 1,500,000 |
| Jorge C. Nahmad | President | 1,300,000 |
| Other Insiders | Various | 1,350,000 |
Share Performance and Dividends
Watsco, Inc. has shown consistent performance in terms of share price and dividends. The stock price as of September 30, 2024, was $176.50, with a year-to-date increase of 12.3%. The company declared a cash dividend of $2.70 per share during the same period.
Market Capitalization and Financial Overview
As of September 30, 2024, Watsco, Inc. had a market capitalization of approximately $7.1 billion. The financial performance for the nine months ended September 30, 2024, is summarized in the following table:
| Financial Metric | Amount (in millions) |
|---|---|
| Revenue | $5,864.4 |
| Net Income | $520.6 |
| Gross Profit | $1,576.6 |
| Operating Income | $645.6 |
Conclusion on Ownership Structure
Watsco, Inc.'s ownership is characterized by strong institutional backing and significant insider ownership, reflecting confidence in the company's strategic direction and operational performance. The company's solid financial metrics further reinforce its position in the HVAC/R distribution sector.
Watsco, Inc. (WSO) Mission Statement
Company Overview
Watsco, Inc. is a leading distributor of HVAC/R (heating, ventilation, air conditioning, and refrigeration) equipment and related parts and supplies in North America. The company operates through a network of independent distributors and suppliers, leveraging technology to enhance customer service, operational efficiency, and product availability.
Mission Statement
Watsco's mission is to be the best distributor in the HVAC/R industry by providing the highest quality products and services, fostering innovation, and ensuring customer satisfaction. The company emphasizes a culture of integrity, teamwork, and continuous improvement.
Financial Performance Overview
As of September 30, 2024, Watsco reported the following financial highlights:
| Financial Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Revenues (in millions) | $2,160.0 | $2,126.8 | $33.2 (2%) |
| Gross Profit (in millions) | $566.2 | $566.9 | $(0.7) (0%) |
| Net Income (in millions) | $171.0 | $170.9 | $0.1 (0%) |
| Gross Margin | 26.2% | 26.7% | (50 basis points) |
| Selling, General and Administrative Expenses (in millions) | $326.4 | $319.8 | $6.6 (2%) |
| Effective Tax Rate | 24.3% | 23.8% | (50 basis points) |
Strategic Initiatives
Watsco focuses on several strategic initiatives to drive growth and maintain its competitive advantage:
- Expansion of product offerings in HVAC/R equipment.
- Investment in technology to improve operational efficiency and customer experience.
- Acquisition of complementary businesses to broaden market reach.
- Enhancing workforce capabilities through training and development programs.
Market Position
Watsco holds a significant market position in the HVAC/R industry, characterized by:
- Over 689 locations across North America as of September 30, 2024.
- Strong relationships with leading manufacturers and suppliers in the HVAC/R space.
- Consistent revenue growth driven by strategic acquisitions and organic growth initiatives.
Recent Developments
In recent months, Watsco has undertaken several initiatives to strengthen its market position:
- Acquisition of Gateway Supply Company to enhance distribution capabilities.
- Implementation of a Dividend Reinvestment Plan to attract long-term investors.
- Increased investments in technology for better inventory management and customer service.
Conclusion
Watsco, Inc. continues to focus on its mission to deliver exceptional service and products while achieving sustainable growth in the HVAC/R distribution market.
How Watsco, Inc. (WSO) Works
Company Overview
Watsco, Inc. is a leading distributor of HVAC (heating, ventilation, and air conditioning) products, with operations across the United States and parts of Canada. As of September 30, 2024, Watsco operates 689 locations, a slight decrease from 691 locations in the previous year.
Financial Performance
For the nine months ended September 30, 2024, Watsco reported total revenues of $5,864.4 million, a 3% increase compared to $5,680.6 million during the same period in 2023. The same-store sales for this period increased by 1%, amounting to $5,711.4 million.
| Metric | 2024 (9 months) | 2023 (9 months) | Change |
|---|---|---|---|
| Revenues (in millions) | $5,864.4 | $5,680.6 | +3% |
| Same-store sales (in millions) | $5,711.4 | $5,675.1 | +1% |
| Net Income (in millions) | $520.6 | $536.4 | -3% |
| Diluted Earnings per Share | $10.92 | $11.60 | -5.8% |
Revenue Breakdown
The revenue breakdown by major product lines for the nine months ended September 30, 2024, is as follows:
| Product Line | % of Sales 2024 | % of Sales 2023 | % Change |
|---|---|---|---|
| HVAC Equipment | 70% | 69% | +3% |
| Other HVAC Products | 26% | 27% | -3% |
| Commercial Refrigeration Products | 4% | 4% | 0% |
Gross Profit and Margins
For the nine-month period ending September 30, 2024, Watsco recorded a gross profit of $1,576.6 million, with a gross margin of 26.9%, down from 27.8% in 2023. The decline in gross margin is attributed to pricing pressures and sales mix impacts.
Operating Expenses
Selling, general, and administrative expenses for the nine months ended September 30, 2024, totaled $955.0 million, which is an increase of 5% compared to $911.0 million in the same period of 2023.
| Expense Type | 2024 (9 months, in millions) | 2023 (9 months, in millions) | Change |
|---|---|---|---|
| Selling, General & Administrative Expenses | $955.0 | $911.0 | +5% |
Cash Flow and Liquidity
As of September 30, 2024, Watsco had cash and cash equivalents of $294.4 million and short-term cash investments of $255.7 million. The company generated $394.2 million in cash flow from operating activities, demonstrating strong liquidity to support its operations.
Dividend Policy
Watsco has a consistent dividend policy, declaring cash dividends of $2.70 per share during the nine months ended September 30, 2024. The total dividends paid during this period amounted to $314.5 million.
Recent Acquisitions
On February 1, 2024, Watsco acquired Commercial Specialists, Inc. for a total consideration of $6.037 million in cash and stock. This acquisition is part of Watsco's strategy to expand its market presence in the HVAC distribution sector.
Investment in Joint Ventures
Watsco holds a 38.4% equity interest in Russell Sigler, Inc. and reported other income of $23.9 million from this investment for the nine months ended September 30, 2024.
Market Position and Strategy
Watsco continues to enhance its position in the HVAC distribution market through strategic acquisitions and operational efficiencies. The company focuses on improving customer service and expanding its product offerings to meet the growing demand for HVAC products.
How Watsco, Inc. (WSO) Makes Money
Revenue Sources
Watsco, Inc. is the largest distributor of air conditioning, heating, and refrigeration equipment in North America. As of September 30, 2024, the company's revenues are primarily derived from the following sources:
| Revenue Source | 2024 Revenue (in millions) | Percentage of Total Revenue | Change from 2023 |
|---|---|---|---|
| HVAC Equipment | $4,100.0 | 70% | 3% |
| Other HVAC Products | $1,500.0 | 26% | (3%) |
| Commercial Refrigeration Products | $264.4 | 4% | — |
Financial Performance
For the nine months ended September 30, 2024, Watsco reported total revenues of $5,864.4 million, representing a 3% increase compared to $5,680.6 million in the same period of 2023. The increase included $145.0 million attributable to new locations acquired and $7.9 million from other locations opened, offset by $5.4 million from locations closed .
Gross Profit and Margin
Watsco's gross profit for the nine months ended September 30, 2024 was $1,576.6 million, with a gross margin of 26.9%. This represents a slight decline from $1,577.7 million and a gross margin of 27.8% in the same period in 2023 .
Operating Expenses
Selling, general and administrative (SG&A) expenses for the nine months ended September 30, 2024 totaled $955.0 million, up from $911.0 million in 2023, reflecting a 5% increase. As a percentage of revenues, SG&A expenses were 16.3% .
Net Income
Watsco's net income attributable to the company for the nine months ended September 30, 2024 was $520.6 million, down from $536.4 million in the prior year, indicating a decrease of 3% .
Cash Flows
For the nine months ended September 30, 2024, Watsco generated net cash provided by operating activities of $394.2 million, compared to $263.3 million in the same period of 2023 .
Dividends and Shareholder Returns
Watsco declared cash dividends of $2.70 per share on both Common and Class B common stock in October 2024. During the nine months ended September 30, 2024, total cash dividends paid were $314.5 million .
Market Presence
As of September 30, 2024, Watsco operated 689 locations across the U.S., Canada, Mexico, and Puerto Rico. The company has continued to expand its market reach through acquisitions, including Commercial Specialists, Inc. in February 2024 .
Seasonality
Watsco's sales are seasonal, with demand for HVAC products peaking in the warmer months. The company experiences the highest demand for air conditioning products during the second and third quarters .
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Article updated on 8 Nov 2024
Resources:
- Watsco, Inc. (WSO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Watsco, Inc. (WSO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Watsco, Inc. (WSO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.