Watsco First Quarter EPS Up 22%
Operating profit was $6.6 million for the quarter. Selling and general administrative expenses decreased 9% or $5.8 million and interest expense decreased 35% or $1.0 million due to a 37% reduction in average daily borrowings resulting from strong cash flow. The Company's 2001 operating results include $.9 million of goodwill amortization ($.6 million on an after-tax basis) that is excluded from 2002's results following the Company's implementation of SFAS No. 142, "Goodwill and Other Intangible Assets."
First quarter sales in 2002 were $256.8 million, including a 5% same-store sales decrease in residential and light-commercial HVAC products and a 10% same-store sales decline in manufactured housing products. The Company operated 12 fewer distribution locations and 6 fewer staffing locations versus a year ago.
During the quarter, a seasonal period of increased working capital requirements, the Company used $.6 million of operating cash flow versus an operating cash outflow of $16.5 million a year ago, an improvement of $15.9 million. Borrowings at March 31, 2002 were $100.0 million, a reduction of 36% or $56.5 million over last year. In addition, the Company repurchased approximately 194,000 shares of common stock for $2.6 million. The Company's balance sheet strengthened during the quarter with the Company's debt-to-total capitalization ratio improving to 24% from 34% a year ago.
Albert H. Nahmad, President & Chief Executive Officer commented, "We are pleased by our solid start during the first quarter and the continued generation of record cash flow. The first quarter is always the low point in seasonal demand for our products and we are encouraged as these results indicate the prospect of another strong year for Watsco."
Watsco is the nation's largest independent distributor of air conditioning, heating and refrigeration equipment and related products in the distribution segment of the HVAC/R industry, currently operating 281 locations serving customers in 31 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.
Consolidated Results of Operations
(In thousands, except per share data)
Three Months Ended March 31,
-------------------------------
2002 2001
---------- ----------
Revenue $ 256,815 $ 278,113
Cost of sales 193,840 209,351
---------- ----------
Gross profit 62,975 68,762
SG&A expenses 56,344 61,203
Goodwill amortization - 900
---------- ----------
Operating profit 6,631 6,659
Interest expense, net (1,867) (2,892)
---------- ----------
Income before income taxes 4,764 3,767
Income tax provision (1,722) (1,401)
---------- ----------
Net income $ 3,042 $ 2,366
========== ==========
Basic earnings per share $ 0.12 $ 0.09
Diluted earnings per share $ 0.11 $ 0.09
Weighted average shares:
Basic 25,837 25,965
Diluted 27,549 27,203
Segment Information:
Three Months Ended
March 31,
-----------------------------
Revenue: 2002 2001
---- ----
Distribution $ 248,792 $ 266,164
Staffing 8,023 11,949
---------- -----------
Total $ 256,815 $ 278,113
========== ===========
Operating profit:
Distribution $ 9,270 $ 8,776
Staffing (288) 64
Corporate (2,351) (2,181)
---------- -----------
Total $ 6,631 $ 6,659
========== ===========
WATSCO, INC.
Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2002 2001
---------- -----------
Cash and cash equivalents $ 6,311 $ 9,132
Accounts receivable, net 135,959 143,301
Inventories 193,712 185,943
Other current assets 26,411 18,823
---------- -----------
Total current assets 362,393 357,199
Property & equipment, net 29,511 30,703
Other non-current assets 133,227 132,918
---------- -----------
Total assets $ 525,131 $ 520,820
========== ===========
Accounts payable & accrued
liabilities $ 89,430 $ 88,010
Other current liabilities 384 429
---------- -----------
89,814 88,439
Borrowings under revolving
credit agreement 70,000 70,000
Long-term notes 30,000 30,000
Deferred income taxes & other 10,321 10,859
---------- -----------
Total liabilities 200,135 199,298
Shareholders' equity 324,996 321,522
---------- -----------
Total liabilities and equity $ 525,131 $ 520,820
========== ===========
CONTACT: Watsco, Inc., Coconut Grove, Fla.
Barry S. Logan, 305/714-4102
blogan@watsco.com
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