Watsco, Inc. (WSO) Q2 2022 Earnings Call Transcript

For the period ending June 30, 2022

July 26, 2022 10:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Watsco Second 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 Mr. Albert Nahmad, Chairman and CEO. Please go ahead, sir.

Albert Nahmad

Morning, everyone. Welcome from rainy cloudy, Miami, Florida. This is our second quarter earnings call and this is Al Nahmad, Chairman and CEO. And with me is A.J. Nahmad, who is the company's President; Paul Johnston, Barry Logan and Rick Gomez.

Before we start our cautionary statement, 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.

Onto our information. Watsco delivered another exceptional quarter. Records were set for virtually every measure of performance. Earning per share jumped 33% to a record four point -- sorry -- to a record $4.93 per share. That's a record $4.93 per share for the quarter. Sales grew 15% to a record $2.13 billion, which is our first $2 billion quarter. Operating income increased 32% to a record $287 million with margins expanding 180 basis points to a record 13.5%.

We are particularly pleased with these results, given the strong comparisons against the second quarter last year. Now that was a heck of a quarter. Last year, same-store sales are up 29% and earnings per share was up 64%. That's the comparison that we're up against this last quarter, the second quarter of this year. Now for the first half of this year, earnings per share is up 53% and the record $7.83 on a 22% increase in sales.

Looking at current trends so far in July, we see meaningful unit growth and additional price capture as inflation remains a reality in our industry. For the year, we expect 2022 will be another year of record performance. Then, looking to 2023, higher interest rates and perhaps an economics slow down is what we think about.

We were reacting creative ways to take advantage of our scale, product diversity and technology leadership to sustain growth and build upon our growing market share no matter what comes in 2023. We have also asked our teams to focus on productivity and operating efficiencies, which have been more difficult to achieve the last two years, given the unprecedented supply chain, transportation and business disruption that have impacted all businesses, not just ours.