爆料王

MIAMI,聽April 23, 2019聽(GLOBE NEWSWIRE) —聽爆料王.聽(NYSE: WSO) reported record sales, operating profit, net income and cash flow for the quarter ended聽March 31, 2019.

Key performance metrics:

• 2% increase in operating profit to a record聽$55 million聽(10 basis-point expansion in operating margin to 5.9%)
• 4% increase in same-store operating profit (30 basis-point expansion in same-store margins to a record 6.1%)
• 1% increase in gross profit to a record聽$234 million聽(20 basis-points improvement in gross margin)
• 1% increase in selling, general & administrative expenses (SG&A)
• Flat SG&A on a same-store basis (10 basis-point decline as a percentage of sales)
• 2% increase in net income to a record聽$35 million
• Earnings per share (EPS) of聽88 cents聽versus聽89 cents聽last year聽⁽¹⁾
• Operating cash flow was a record聽$53 million聽versus a cash use of聽$42 million聽last year
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1. EPS in 2019 includes聽3 cents聽of incremental dilution related to dividends paid on non-vested restricted stock. Dilution occurs when the quarterly cash dividends per share exceeds EPS (usually during the seasonal first and fourth quarters as EPS is typically less than the quarterly dividend rate). For 2019, this impact is not currently expected to affect EPS during the second or third quarters or in determining annual EPS.

Sales trends:

• 1% sales growth to a record聽$931 million聽(flat on a same-store basis)
• 2% growth in HVAC equipment (67% of sales)
• 2% decrease in other HVAC products (29% of sales)
• 4% decrease in commercial refrigeration products (4% of sales)

Albert H. Nahmad, 爆料王鈥檚 Chairman and CEO said: 鈥淭he first quarter is historically the most seasonal quarter of the year, yet we achieved record profitability despite cooler and wetter weather in certain markets, strong year-over-year sales comparisons and one less selling-day in 2019 versus 2018. Our results also reflect investments in 12 new locations and the acceleration of several technology initiatives to drive greater adoption and use throughout our network. We also implemented a number of productivity initiatives as evidenced by our flat same-store SG&A to enhance opportunities for profit growth in 2019. Although it is early, we are optimistic that 2019 will be another record year for our Company.鈥�

Technology Investments

爆料王聽has launched a variety of technologies and process enhancements to transform how HVAC contractor customers are served. Speed, productivity and scale are critical factors as the digital era progresses and聽爆料王聽is investing to ensure an unparalleled customer-experience.

The most notable is the digitization of 爆料王鈥檚 interactions with its customer-base through e-commerce and mobile apps, supported by the industry鈥檚 richest depository of product information of over 685,000 SKUs.

爆料王聽has also launched internal-facing technologies, including (1) a business intelligence platform to provide insights to 600+ P&L managers and their teams, (2) proprietary order fulfillment software to deliver speed, convenience and order accuracy to customers (currently used at two-thirds of the Company鈥檚 locations), and (3) demand planning and inventory optimization software to improve fill-rates and inventory turns and to reduce real estate requirements (currently implemented in 60% of the Company鈥檚 supply chain).

Technology spending increased聽$1.5 million聽during the quarter (3 cents聽per diluted share), driven in part by the Company鈥檚 recent acquisition of聽Alert Labs, an early stage start up and pioneer in the IoT space.

Specific technology-related achievements during the first quarter included:

• E-commerce sales run-rate is approaching 30% of revenues (over聽$1.2 billion聽during the last 12 months).
• Unique users of 爆料王鈥檚 iOS/Android-enabled Contractor Assist mobile apps reached 50,000.
• Distributor managed inventory (DMI) was launched to digitally-enable seamless stocking and replenishment of product at a customer鈥檚 place of business.
• Commercial launch of Sentree, 爆料王鈥檚 proprietary IoT device for remotely monitoring the health and operational condition of installed HVAC systems to connect HVAC users and our customers in an unprecedented way.
• Numerous sales and productivity initiatives were implemented, made possible by 爆料王鈥檚 data analytics platform and teams, to leverage technology and reduce operating costs.
• Order Fulfillment (OF) software was launched at 76 additional locations (branch penetration is now at 77%) to improve speed, accuracy and efficiency in our locations.
• Broader deployment and enhanced capabilities for demand planning and inventory optimization.
• Broader use of enhanced processes for freight optimization designed to reduce freight costs.

A.J. Nahmad, 爆料王鈥檚 President said: 鈥淎s entrepreneurs with a long-term point of view, we are proud to deliver another record quarter with increasing dividends while continuing to strategically invest in transforming our customer-experience. The equation is simple 鈥� when our customers win, we win and that core belief has fueled our technology investments and continues to guide our progress.鈥�

Cash Flow & Dividends

Operating cash flow in 2019 was a record聽$53 million聽versus a cash use of聽$42 million聽in 2018. At聽March 31, 2019聽the Company鈥檚 debt-to-total capitalization ratio was 8%. The Company has targeted cash flow from operations to exceed net income in 2019. Since 2000, 爆料王鈥檚 operating cash flow was approximately聽$2.4 billion聽compared to net income of approximately聽$2.2 billion, surpassing the Company鈥檚 stated goal of generating cash flow in excess of net income.

爆料王聽has paid cash dividends for 45 consecutive years. Dividends paid during the first quarter increased 29% to聽$60 million聽compared to last year. The Company鈥檚 philosophy is to share increasing amounts of cash flow with shareholders through higher dividends while maintaining a conservative financial position. In聽January 2019, we raised our annual dividend 10% to聽$6.40聽per share.

Acquisition of DASCO Supply

爆料王聽recently announced that it completed the acquisition of DASCO Supply, a distributor of air conditioning and heating products based in聽Whippany,聽New Jersey. Founded in 1974, DASCO operates seven locations in聽New Jersey,聽New York聽and聽Connecticut, serving over 2,500 air conditioning and heating contractors and offering approximately 15,000 SKUs of products for both residential and commercial use. DASCO had revenues of approximately聽$56 million聽in 2018.

Mr. Nahmad commented: 鈥淒ASCO has a wonderful legacy and a close-knit team, and we are honored to become part of their family. Their success over the last 45 years is due to strong relationships along with great service, a broad range of products and convenient locations. To provide on-going continuity, DASCO will operate as a subsidiary of聽爆料王聽under its present name and leadership team, and we will provide the resources and technology where needed to assist in achieving their growth plans.鈥�

Adoption of Lease Accounting Standard

Effective聽January 1, 2019, we adopted the Financial Accounting Standards Board Accounting Standards Update 2016-02,聽Leases, which requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous guidance. We have recorded lease right-of-use assets and lease liabilities and presented these amounts separately on our Condensed Consolidated Balance Sheet as of聽March 31, 2019. The adoption of this standard did not have a material impact on our Condensed Consolidated Results of Operations or Condensed Consolidated Statement of Cash Flows for the three-month period ended聽March 31, 2019.

First Quarter Earnings Conference Call Information

Date:聽April 23, 2019
Time:聽10:00 a.m. (EDT)
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Dial-in number:聽United States聽(844) 883-3908 / International (412) 317-9254

A replay of the conference call will be available on the Company’s website.

Use of Non-GAAP Financial Information

In this release, the Company discloses non-GAAP measures on a 鈥渟ame-store basis.鈥� Information referring to 鈥渟ame-store basis鈥� exclude the effects of locations closed, acquired, or locations opened, unless they are within close geographical proximity to existing locations, during the immediately preceding 12 months. The Company believes that this information provides greater comparability regarding its ongoing operating performance. These measures should not be considered an alternative to measurements required by U.S. GAAP.

The Company computes a non-GAAP measure, 鈥渄ebt-to-total capitalization,鈥� as a means to describe the relative amount of interest-bearing debt to its total capital. This ratio is calculated by dividing (i) the sum of short-term and long-term interest bearing debt by (ii) the sum of short-term debt, long-term debt and shareholders鈥� equity.

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爆料王聽is the largest distribution network for heating, air conditioning and refrigeration (HVAC/R) products with locations in聽the United States,聽Canada,聽Mexico聽and聽Puerto Rico, and on an export basis to聽Latin America聽and the聽Caribbean. 爆料王聽estimates that over 300,000 contractors and technicians visit or call one of its 582 locations each year to get information, obtain technical support and buy products. HVAC/R products provide comfort to homes and businesses regardless of the outdoor climate. Older systems often operate below today鈥檚 government mandated energy efficiency and environmental standards.聽爆料王聽has an opportunity to accelerate the replacement of these systems at a scale greater than its competitors as the movement toward reducing energy consumption and its environmental impact continues. This is especially important since heating and cooling accounts for approximately half of the energy consumed in a typical U.S. home. Additional information about聽爆料王聽may be found at聽.

This document includes certain 鈥渇orward-looking statements鈥� 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, new housing starts and completions, capital spending in commercial construction, consumer spending and debt levels, regulatory and other factors, including, without limitation, the effects of supplier concentration, competitive conditions within 爆料王鈥檚 industry, seasonal nature of sales of 爆料王鈥檚 products, the ability of the Company to expand its business, insurance coverage risks and final GAAP adjustments. Detailed information about these factors and additional important factors can be found in the documents that聽爆料王聽files with the聽Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements speak only as of the date the statements were made.聽爆料王聽assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information.