Strong Sales Growth Propels Watsco, Inc. to Record $1.75B Revenue

Watsco, Inc. has reported impressive results for the fourth quarter of 2024, achieving record sales and profit margins. The company, a leader in the HVAC/R distribution market, recorded a 9% increase in sales, reaching $1.75 billion. This robust performance was driven by a 14% increase in HVAC equipment sales, which accounts for the majority of the company’s revenue. The gross profit rose by 13% to $468 million, with a 90 basis-point expansion in gross margin to 26.7%.

Operating income also saw significant growth, increasing by 26% to $136 million, while income before taxes rose by 31% to $143 million. Net income attributable to Watsco increased by 17% to $97 million, with earnings per share (EPS) rising by 15% to $2.37. The company also achieved a 27% increase in operating cash flow, which reached a record $379 million. These results reflect the continued strength of Watsco’s operations and its ability to capture market opportunities effectively. Sales of residential equipment saw a notable increase of 16%, reflecting double-digit unit growth, new customer acquisition, and market share gains.

Commercial equipment sales also performed well, increasing by 9% during the quarter. The company attributes these gains to the recapture of sales and market share from one of its primary OEMs that faced supply chain issues in 2023.

Watsco Reports Double Beat in Fourth Quarter of 2024

Watsco’s fourth-quarter performance exceeded market expectations, with the company surpassing both revenue and EPS forecasts. Analysts had anticipated an EPS of $2.18 and revenue of $1.66 billion. However, Watsco delivered an EPS of $2.37 and revenue of $1.75 billion, significantly outperforming these projections.

The company’s ability to exceed expectations is a testament to its strategic initiatives, including its focus on technology and customer engagement. Watsco’s digital platforms have played a crucial role in driving sales growth and improving customer retention. The company’s e-commerce sales, which grew 16% during the fourth quarter, highlight the effectiveness of these digital strategies in capturing new market opportunities.

Moreover, Watsco’s commitment to innovation and operational efficiency has contributed to its strong performance. The company has continued to invest in technology platforms that enhance customer experience and improve operational efficiency. These efforts have resulted in higher sales growth rates among digital customers and meaningful new customer acquisition.

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Watsco Announces Increase in Annual Dividend to $12.00 per Share

Watsco remains optimistic about its growth prospects and has provided positive guidance for the future. The company announced an 11% increase in its annual dividend to $12.00 per share, reflecting its confidence in sustained financial performance. With $782 million in cash and short-term investments and a debt-free balance sheet, Watsco is well-positioned to invest in growth opportunities and maintain its leadership position in the HVAC/R distribution market.

Watsco’s strategic focus on the transition to A2L products is expected to provide incremental growth opportunities. The company is leveraging its technology platforms to gain market share and drive adoption in the marketplace. As Watsco continues to innovate and expand its offerings, it is poised to capture further growth and share in the fragmented $74 billion HVAC/R distribution market.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.