SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported) April 21, 2005
WATSCO, INC.
(Exact name of registrant as specified in its charter)
| Florida | 1-5581 | 59-0778222 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
2665 South Bayshore Drive, Suite 901
Coconut Grove, Florida 33133
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (305) 714-4100
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition
On April 21, 2005, the Company issued a press release reporting its financial results for the quarter ended March 31, 2005. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and is hereby incorporated by reference.
The information in this Form 8-K and the Exhibit attached hereto shall be deemed “furnished” and not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any Company filing under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits
(c) Exhibits
| Exhibit Number |
Description | |
| 99.1 | Press release dated April 21, 2005 issued by Watsco, Inc. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WATSCO, INC. | ||||
| Dated: April 21, 2005 | By: | /s/ Ana M. Menendez | ||
| Ana M. Menendez, | ||||
| Chief Financial Officer | ||||
Exhibit Index
| Exhibit Number |
Description | |
| 99.1 | Press release dated April 21, 2005 issued by Watsco, Inc. |
Exhibit 99.1
Watsco Reports Record First Quarter with 32% EPS Growth Rate
EPS Climbs to 33 Cents Achieved by a 24% Sales Gain &
Expanded Operating Margins
COCONUT GROVE, FLORIDA, April 21, 2005 – Watsco, Inc. (NYSE:WSO), the nation’s largest distributor of air conditioning and heating products, today reported record sales, operating income, net income and earnings per share for the first quarter ended March 31, 2005.
Earnings per share increased 32% per diluted share to a record 33 cents on net income of $9.1 million, compared to 25 cents per diluted share on net income of $6.6 million in 2004. Revenues grew $67 million, or 24%, to $346 million. Operating income advanced $4.0 million, or 34%, to a first quarter record of $15.8 million with operating margins improving 40 basis-points to a record 4.6%. Net interest expense decreased 10% to $1.0 million due to a lower effective interest rate. These results include growth in same-store sales and improved operating margins as well as the contribution made by the January 2005 acquisition of East Coast Metal Distributors, a Sunbelt distributor with 27 locations.
On a same-store basis, HVAC revenues grew 7% and gross profit 8% with gross profit margins expanding 20 basis-points. Same-store operating profit grew 17% with operating margins improving 50 basis-points, reflecting the higher gross profit margin and the effective leveraging of operating costs. East Coast Metal Distributors added $46 million of revenues during the quarter and was accretive to first quarter earnings per share.
Albert Nahmad, President & Chief Executive Officer commented, “Watsco continues to operate at record levels of performance and we are off to a good start in the first quarter, which is traditionally our low point in revenues for the year. Our expectations are that Watsco will achieve another year of record operating results. We are also pleased with the performance and spirit of East Coast’s organization, which performed well during its first quarter as part of the Watsco family.”
Watsco will be holding its investor conference call today, April 21, 2005 at 10:00 a.m. Eastern Time. Shareholders interested in participating may call (877) 391-0532. Internet users can listen to a live webcast of the conference call on the Investor Relations section of Watsco’s website at http://www.watsco.com.
Watsco is the nation’s largest distributor of air conditioning, heating and refrigeration equipment and related products in the distribution segment of the HVAC industry, currently operating 345 locations serving over 38,000 customers in 31 states. The Company’s goal is to build a national network of locations that provide the finest service and product availability for HVAC contractors, assisting and supporting them as they serve the country’s homeowners and businesses. Additional information about Watsco may be found on the Internet at http://www.watsco.com.
This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ
materially from these expectations due to changes in economic, business, competitive market, regulatory and other factors, including, without limitation, the effects of supplier concentration, competitive conditions within Watsco’s industry, seasonal nature of sales of Watsco’s products, insurance coverage risks and final GAAP adjustments. Forward-looking statements speak only as of the date the statement was made. Watsco assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. Detailed information about these factors and additional important factors can be found in the documents that Watsco files from time to time with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K.
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WATSCO, INC.
Consolidated Results of Operations
Quarters Ended March 31, 2005 and 2004
(In thousands, except per share data)
(Unaudited)
| 2005 |
2004 | |||||
| Revenues |
$ | 345,952 | $ | 278,715 | ||
| Cost of sales |
258,527 | 207,268 | ||||
| Gross profit |
87,425 | 71,447 | ||||
| SG&A expenses |
71,616 | 59,658 | ||||
| Operating income |
15,809 | 11,789 | ||||
| Interest expense, net |
1,045 | 1,155 | ||||
| Income before income taxes |
14,764 | 10,634 | ||||
| Income taxes |
5,616 | 4,005 | ||||
| Net income |
$ | 9,148 | $ | 6,629 | ||
| Earnings per share for Common and Class B Common Stock: |
||||||
| Basic |
$ | 0.35 | $ | 0.26 | ||
| Diluted |
$ | 0.33 | $ | 0.25 | ||
| Weighted average Common and Class B Common shares and equivalent shares used to calculate: |
||||||
| Basic |
25,935 | 25,313 | ||||
| Diluted |
27,554 | 26,729 | ||||
(Note: Information in the attached press release referring to “same-store basis” excludes the effects of locations acquired or locations opened or closed during the prior twelve months.)
Condensed Consolidated Balance Sheets
(In thousands)
| March 31, 2005 |
December 31, 2004 | |||||
| (Unaudited) | ||||||
| Cash and cash equivalents |
$ | 6,665 | $ | 85,144 | ||
| Accounts receivable, net |
169,540 | 145,213 | ||||
| Inventories |
248,850 | 218,704 | ||||
| Other |
8,987 | 8,638 | ||||
| Total current assets |
434,042 | 457,699 | ||||
| Property and equipment, net |
16,668 | 15,093 | ||||
| Other |
168,528 | 135,497 | ||||
| Total assets |
$ | 619,238 | $ | 608,289 | ||
| Accounts payable and accrued liabilities |
$ | 122,942 | $ | 137,103 | ||
| Current portion of long-term obligations |
10,057 | 10,056 | ||||
| Total current liabilities |
132,999 | 147,159 | ||||
| Borrowings under revolving credit agreement |
35,000 | 30,000 | ||||
| Long-term notes, net of current portion |
20,000 | 20,000 | ||||
| Other long-term obligations |
7,934 | 8,392 | ||||
| Total liabilities |
195,933 | 205,551 | ||||
| Shareholders’ equity |
423,305 | 402,738 | ||||
| Total liabilities and shareholders’ equity |
$ | 619,238 | $ | 608,289 | ||
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