Fri, May 9, 11:32 AM (9 days ago)
**WATSCO, INC. (WSO) Q1 2025 Financial Summary** **Financial Health & Performance:** - **Revenue:** $1,531,086,000, down 2% from $1,564,991,000 in Q1 2024. - **Gross Profit:** $429,623,000, slightly down from $430,625,000 in Q1 2024. - **Net Income:** $94,540,000, down 9% from $104,262,000 in Q1 2024. - **EPS:** $1.93, down from $2.17 in Q1 2024. - **Operating Income:** $112,188,000, down from $126,537,000 in Q1 2024. - **Cash Flow from Operations:** Negative $177,644,000, compared to positive $103,706,000 in Q1 2024. **Profit Margins:** - **Gross Margin:** 28.1%, up from 27.5% in Q1 2024. - **Operating Margin:** 7.3%, down from 8.1% in Q1 2024. - **Net Margin:** 6.2%, down from 6.7% in Q1 2024. **Cash Flow & Earnings Changes:** - **Cash Flow from Operations:** Negative due to higher inventory levels and timing of vendor payments. - **Investing Activities:** Positive $244,556,000, up from negative $210,965,000 in Q1 2024. - **Financing Activities:** Negative $161,679,000, down from positive $178,401,000 in Q1 2024. **Quarterly Performance Discussion:** - **Revenue Decline:** Due to lower sales in commercial HVAC equipment and some residential products. - **Margin Improvement:** Gross margin improved due to pricing actions and sales mix. - **Operating Income Decline:** Due to higher selling, general, and administrative expenses. - **Net Income Decline:** Primarily driven by higher expenses and lower interest income. **Trends & Uncertainties:** - **Seasonality:** Sales of residential central air conditioners and heating equipment are seasonal. - **Weather Patterns:** Profitability can be impacted by weather conditions. - **Tariffs & Trade Policies:** Uncertainties related to tariffs and trade policies may affect product costs and sales. - **Regulatory Changes:** Transition to lower-GWP HVAC systems and potential impacts on inventory. **Future Operations Impact:** - **Acquisitions:** Continued focus on strategic acquisitions to expand market presence. - **Dividends:** Paid $2.70 per share in Q1 2025, with future dividends dependent on board discretion. - **Share Repurchase:** $1,129,087 shares remaining authorized for repurchase. - **Liquidity:** Strong liquidity position with $431,823,000 in cash and cash equivalents, and access to revolving credit facility.