Watsco Reports Full Year and Fourth Quarter Operating Results
MIAMI--(BUSINESS WIRE)--Feb. 8, 2001--Watsco, Inc. (NYSE:WSO) today announced its operating results for the year and quarter ended December 31, 2000.
Revenue for the year increased 5% to a record $1.3 billion, including same-store sales growth of 6% in the Company's core HVAC business, which was offset by lower sales volume to the manufactured housing segment. Excluding restructuring and other non-cash charges (as detailed in a press release issued by the Company on January 22, 2001), diluted earnings per share was 99 cents (69 cents after charges).
Fourth quarter revenue totaled $289 million, including same-store sales growth of 5% in the Company's core HVAC business, which was offset by lower sales to the manufactured housing segment. The Company reported a 1 cent loss per share for the quarter, excluding the charges mentioned above (a loss of 31 cents after charges).
"Once again we delivered market share growth," commented Albert Nahmad, Watsco's Chief Executive Officer. "Same-store sales growth of 6% in our core HVAC business compares very favorably to industry data published by the Air Conditioning & Refrigeration Institute, which indicate that U.S. distributor shipments increased 1% during all of last year. We look forward to 2001 with goals of building further market share, targeting a 4-5% increase in sales, improving operating margins by 50 basis-points and achieving 15% growth in earnings per share."
Watsco reported strong operating cash flow of $49 million for the year, exceeding net income, which was used to pay down $23 million of long-term borrowings and to repurchase of $18 million of the Company's common stock.
Watsco is the nation's largest distributor of air conditioning, heating and refrigeration equipment and related products in the distribution segment of the HVAC/R industry, currently operating 300 locations serving customers in 30 states. 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 and regulatory factors. More detailed information about those factors is contained in Watsco's filings with the Securities and Exchange Commission.
WATSCO, INC.
Results of Operations
(In thousands, except share data)
Year Ended
December 31,
---------------------------------------
As Pro-forma, as As
Reported adjusted Reported
2000 2000(D) 1999
---------- ----------- ----------
Revenue $1,306,642 $ 1,306,642 $1,246,272
Cost of sales 1,003,386 (A) 998,329 954,434
---------- ----------- ----------
Gross profit 303,256 308,313 291,838
SG&A expenses 257,441 (B) 251,498 232,399
---------- ----------- ----------
Operating profit 45,815 56,815 59,439
Interest expense, net (13,211) (13,211) (12,643)
Other expense (2,169) (C) -- --
---------- ----------- ----------
Income before income taxes 30,435 43,604 46,796
Income tax provision (11,321) (16,221) (17,315)
---------- ----------- ----------
Net income $ 19,114 $ 27,383 $ 29,481
Basic earnings per share $ 0.72 $ 1.03 $ 1.03
Diluted earnings per share $ 0.69 $ 0.99 $ 0.99
Weighted average shares
used to calculate earnings
per share:
Basic 26,549 26,549 28,499
Diluted 27,793 27,793 29,741
Three Months Ended
December 31,
-----------------------------------
As Pro-forma, as As
Reported adjusted Reported
2000 2000(D) 1999
---------- --------- ---------
Revenue $ 288,833 $ 288,833 $ 290,410
Cost of sales 226,169 (A) 221,112 221,328
--------- --------- ---------
Gross profit 62,664 67,721 69,082
SG&A expenses 70,593 (B) 64,650 61,033
--------- --------- ---------
Operating profit (loss) (7,929) 3,071 8,049
Interest expense, net (3,393) (3,393) (2,442)
Other expense (2,169) (C) -- --
--------- --------- ---------
Income (loss) before income
taxes (13,491) (322) 5,607
Income tax (provision)
benefit 5,019 120 (1,952)
--------- --------- ---------
Net income (loss) $ (8,472) $ (202) $ 3,655
Basic earnings (loss)
per share $ (0.32) $ (0.01) $ 0.13
Diluted earnings (loss)
per share $ (0.31) $ (0.01) $ 0.13
Weighted average shares
used to calculate earnings
(loss) per share:
Basic 26,073 26,073 27,948
Diluted 27,135 27,135 28,920
(A) Cost of sales includes non-cash charges of $5,057 related to discontinued product lines and to the elimination of other unproductive SKUs.
(B) SG&A expenses include restructuring charges of $4,212 related to location integration and closures, administrative costs related to the discontinuance of certain product lines and other restructuring activities in the Company's manufactured housing segment. Also includes a non-cash charge of $1,731 related to additional accounts receivable valuation reserves in the manufactured housing segment.
(C) Other expense represents the write-down of an impaired investment in one of the Company's primary competitors. (D) Excludes the impact for items in (A), (B), and (C) above.
Balance Sheets
(In thousands)
December 31, December 31,
2000 1999
-------- --------
Cash and cash equivalents $ 4,781 $ 7,484
Accounts receivable, net 162,769 167,335
Inventories 205,906 222,853
Other current assets 18,179
17,397
-------- --------
Total current assets 391,635 415,069
Property, plant & equipment, net 30,258 31,427
Other non-current assets 141,577 142,410
-------- --------
Total assets $563,470 $588,906
======== ========
Accounts payable & accrued liabilities $113,240 $116,892
Other current liabilities 1,887 5,915
-------- --------
115,127 122,807
Borrowings under revolving
credit agreement 138,000 155,000
Other long-term obligations 7,212 9,383
-------- --------
Total liabilities 260,339 287,190
Shareholders' equity 303,131 301,716
-------- --------
Total liabilities and equity $563,470 $588,906
======== ========
Condensed Statement of Cash Flows
(In thousands)
Year Ended
December 31,
--------------------
2000 1999
-------- --------
Provided by operating activities $ 48,993 $ 41,894
Used in investing activities (9,918) (11,871)
Used in financing activities (41,778) (29,788)
-------- --------
Net (decrease) increase in cash (2,703)
235
Cash, beginning of the year 7,484 7,249
-------- --------
Cash, end of the year $ 4,781 $ 7,484
======== ========
CONTACT:
Watsco, Inc., Miami
Barry S. Logan, 305/714-4102
e-mail: blogan@watsco.com
