Page 1

Watsco EPS Jumps 64 % to $ 3.71 Setting Records for Sales , Operating Profit , Operating Margin and Net Income July 22 , 2021 at 7:30 AM EDT Strong Sales Growth , Higher Margins , Operating Efficiencies and Recent Acquisitions Drive Record Performance Customer - Adoption of Technologies Grows as Business Evolution Continues MIAMI , July 22 , 2021 ( GLOBE NEWSWIRE ) -- Watsco , Inc. ( NYSE : WSO ) reported record second quarter and first- half operating results for the periods ended June 30 , 2021 , establishing new records for sales , operating income , operating margin , net income and earnings per share ( EPS ) for both periods . Watsco's entrepreneurial culture , which empowers leaders to think and act locally , continues to drive record performance with nearly all operating metrics reaching record levels . The Company's industry - leading , customer- focused technologies have helped facilitate this record performance as contractors grow and expand their capacity to meet the needs of unprecedented demand for HVAC / R products . Notably , adoption of Watsco's mobile apps , e- commerce platform , and other customer - facing platforms has grown meaningfully , enabling more customers to engage with us digitally . In addition , curbside / dockside technology , which allows for rapid and contactless order fulfillment , has broadened and continues to benefit our customers in terms of faster service . Taken as a whole , Watsco's technology offering is unique to the industry , has solidified existing customer relationships and created new customer acquisition opportunities to generate long - term growth and market share gains . Complementing its record organic growth , Watsco invested in future growth and expanded its network during the second quarter with the acquisition of two market - leading businesses , Temperature Equipment Corporation ( TEC ) and Acme Refrigeration of Baton Rouge ( Acme ) . The acquired businesses had annualized sales of approximately $ 350 million in 2020 and currently serve more than 14,000 customers from 50 locations . Consistent with Watsco's culture , these companies are being led by their legacy management teams and are expected to provide new sources of growth as more capital is deployed to support their growth plans . Despite these investments , the Company's debt - to - total capitalization ratio remained low at 6 % as of June 30 , 2021 , consistent with the Company's core philosophy to maintain a conservative , risk - averse financial position while possessing a strong balance sheet that can invest in most any opportunity at a low cost of capital . Watsco has acquired 65 businesses since 1989 and remains active in pursuing additional opportunities to invest in what remains a fragmented $ 50 billion North American HVAC / R distribution industry . Second Quarter Results Key Performance Metrics 64 % increase in EPS to a record $ 3.71 36 % sales growth to a record $ 1.85 billion ( 29 % growth on a same - store basis ) 68 % increase in operating income to a record $ 217 million ( 59 % increase on a same - store basis ) 220 basis - point operating margin expansion to a record 11.7 % ( same - store operating margin of 11.8 % ) 50 % gross profit increase to a record $ 478 million ( 40 % increase on a same - store basis ) 220 basis - point gross margin increase to 25.8 % • 37 % increase in SG & A expenses ( 28 % increase on a same - store basis ) Sales trends ( excluding acquisitions ) : • 29 % growth in HVAC equipment ( 71 % of sales ) , including 28 % growth in residential products and 32 % growth in commercial products • 25 % increase in other HVAC products ( 26 % of sales ) • 45 % increase in commercial refrigeration products ( 3 % of sales ) Albert H. Nahmad , Watsco's Chairman & CEO stated : " Watsco delivered a blowout quarter with solid earnings growth and margin expansion from a combination of strong sales across all markets , a richer sales mix of high- efficiency systems , better selling margins , operating efficiencies and contributions from recently completed acquisitions . Our results also reflect continued investments in products , technology and people to drive sales and innovation throughout our business . Our teams remain focused on providing an exceptional customer experience as evidenced by the continued growth in customer adoption of our industry - leading technologies . ” The Company believes that the products it sells , most notably new HVAC equipment to replace older residential systems that inherently operate at lower efficiencies , can play a key role in advancing CO2 reduction . Watsco can therefore be an important contributor to address climate change . Based on estimates and models validated by two independent sources , there was an estimated CO2 reduction of 1.8 billion pounds resulting from Watsco's sale of residential HVAC replacement systems over the 12 month period ended June 30 , 2021 .