Fueled by a hot air-conditioner replacement market, Miami-based Watsco reported record earnings results for the third quarter and for the nine months ended September 30.
On the strength of the results released Tuesday, the leading distributor of heating and cooling equipment also announced its board approved boosting its annual dividend to $3.40 per share beginning in January. It will be its 40th consecutive year of dividend payouts for Watsco shareholders.
In the third quarter, sales grew 4 percent to a record $1.18 billion. Its earnings per share rose 5 percent to a record $1.64, on net income of $53.4 million. Operating income was up 5 percent to a record $111 million. Third-quarter results fell short of analysts’ expectations, however, and the stock closed on the New York Stock Exchange at $116.84, down 10.5 percent.
For the nine-month results, sales grew 5 percent to $3.21 billion and earnings per share grew 14 percent to $4.16. Operating income was up 11 percent to $283 million.
“Watsco delivered another solid quarter of performance driven by sales growth, share gains, improved selling margins and expanded operating margins. We also generated more cash flow this quarter than in any other quarter in our history. We experienced healthy sales growth for residential HVAC systems in the United States from strong unit growth and the continued trend toward higher-efficiency systems,” said Albert Nahmad, Watsco’s president and CEO, in a statement.
The company also said it is actively increasing its investment in a number of scalable technologies. Since 2012, Watsco has grown its technology team from about 60 employees to over 170 employees. Some of the innovations that Watsco has created to enhance the buying experience for its 88,000 customers and the service capabilities of personnel at its 567 locations are mobile apps and other e-commerce tools, data analytics to enable more insightful management decision-making; and supply chain optimization tools.
Watsco’s revised outlook for its 2015 diluted earnings per share is $4.85 to $4.90 per share.
This story was updated after the market’s close.