Watsco, Inc.'s (WSO) Q1 2022 Earnings Call Transcript

For the period ending March 31, 2022

April 21, 2022 10:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Watsco First Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Albert Nahmad, CEO and Chairman. Please go ahead.

Albert Nahmad

Good morning, everyone. Welcome to our first quarter earnings call. And as she said, this is Al Nahmad, Chairman and CEO. With me is A.J. Nahmad, who is the President and Paul Johnston, Barry Logan and Rick Gomez. Now, before we start our cautionary statement as usual, this conference call has forward-looking statements as defined by SEC laws and regulations that are made pursuant to the Safe Harbor provisions of these various laws, ultimate results may differ materially from the forward-looking statements.

Well, now that that's over. Let me report that we had another exceptional quarter. New records were set on virtually every measurement of performance. Earnings per share jumped 109% to a record $2.90 per share. Sales grew 34% to a record $1.52 billion and operating income increased 109% to a record $171 million. Gross margins expanded, and that along with improved operating efficiencies, led to record operating profit as well as operating margins, which expanded 400 basis points to a record 11.2%.

Now this is important. The sales growth was strong and consistent across all markets and product groups. Also, noted is the companies that we acquired during the past year also performed at record levels. The reason we like that is that we believe that shows once again, that Watsco is a great home for family-owned businesses. We sustain their culture, invest in people and provide technology to secure and build upon their very great legends.

Also, please note that the quarter’s results are all the more impressive giving the strong comparison from a year-ago. Year-ago was very strong and this year is even stronger. While it's early in the year, we are encouraged by this terrific start and by current demand trends. Let me say that again, we are encouraged by terrific start and by current demands trends. And we think that 2022 should be another record year for Watsco.

Looking beyond sales and profits is important to highlight some of the important catalysts going on both in the short-term and the long-term and we emphasize as we always do with the long-term. The industry is still experiencing inflationary pressures and OEMs have recently announced additional price increases. As you can see from our results, we are capturing price in the marketplace, given the reliance and necessity of HVAC products in homes and businesses.