爆料王

MIAMI,聽Oct. 25, 2018聽(GLOBE NEWSWIRE) —聽爆料王.聽(NYSE:WSO) reported record results for the quarter and nine-month periods ended聽September 30, 2018. Record sales, operating profit, net income and earnings per share were achieved for both periods.

爆料王聽also announced that its Board of Directors approved a 10% increase in its annual dividend to聽$6.40聽per share on each outstanding share of its Common stock and Class B common stock to be reflected in the Company鈥檚 next regular quarterly dividend payment beginning in聽January 2019.

Third Quarter Results

Key performance metrics:

• 16% earnings per share (EPS) growth to a record聽$2.11
• 22% increase in net income to a record聽$79 million
• 5% sales growth to a record聽$1.296 billion
• 8% increase in gross profit to a record聽$319 million
• 50 basis-point increase in gross margin
• 7% increase in operating income to a record聽$122 million
• 10 basis-point expansion in operating margins to 9.4%

Sales trends:

• 7% growth in HVAC equipment (68% of sales)
• 4% growth in other HVAC products (28% of sales)
• Flat sales for commercial refrigeration products (4% of sales)

Albert H. Nahmad, Chairman and CEO stated: 鈥湵�料王 produced another record quarter with higher gross margin and expanded operating margins. Strong execution was achieved in many markets and we expect to close out another record year in 2018. We are pleased to reward shareholders by raising our annual dividend, reflecting our continued confidence in our business.鈥�

Results reflect unit growth in HVAC equipment, realization of price increases and a richer mix of high-efficiency systems. Comparable growth rates were achieved for residential and commercial products. Results include a聽$3 million聽operating profit decline in聽Florida-based locations on flat sales and a聽$2 million聽operating profit decline in聽Mexico聽on lower sales. Sales increased 8% and operating profit increased 18%, excluding these markets, which drove a聽$6 million聽increase in performance-based compensation during the quarter.

Nine-Month Results

Key performance metrics:

• 18% earnings per share growth to a record聽$5.43
• 23% increase in net income to a record聽$203 million
• 5% sales growth to a record聽$3.555 billion
• 6% increase in gross profit to a record聽$871 million
• 10 basis-point expansion in gross margin
• 7% increase in operating income to a record聽$314 million
• 10 basis-point expansion in operating margins to 8.8%

Sales trends:

• 7% growth in HVAC equipment (68% of sales), including 7% growth in residential products
• 5% growth in other HVAC products (28% of sales)
• Flat sales for commercial refrigeration products (4% of sales)

Sunbelt Markets & Market Share

爆料王鈥檚 network consists of 568 locations in聽37 U.S. states,聽Canada,聽Mexico聽and聽Puerto Rico.聽爆料王聽also exports products to聽Latin America聽and the聽Caribbean. Sales are concentrated in Sunbelt markets (77% of sales), which the Company believes are not weather-sensitive. By comparison, the Company estimates industry sales to be 60% in Sunbelt markets and 40% in more temperate, weather-sensitive markets. Accordingly, the Company鈥檚 sales and operating results may vary in comparison to broad-based industry data.

爆料王鈥檚 concentration in Sunbelt markets has been a cornerstone of its strategy over the last 30 years given the following attributes:

• On-going population migration to the Sunbelt is a catalyst for economic expansion and provides growth opportunities. 聽
• HVAC systems are an absolute necessity by providing a comfortable place to live or conduct business.
• The installed base is highly-dense and systems are replaced more often given the stress and run-times of older systems.
• Warm weather patterns in the Sunbelt have consistently produced more dependable market conditions over longer periods (conversely, weather extremes in temperate markets can create greater volatility).
• U.S. regulatory changes have been focused on and more relevant to Sunbelt markets. 聽聽聽聽

The Company strives to gain profitable market share in its markets and regularly makes assessments of changes in share in collaboration with its primary supplier partners. Based on the most recent data available, the Company believes it has gained share in its markets during 2018. 聽聽聽聽聽聽聽

Technology Investments & Data-Driven Productivity Initiative

爆料王聽has successfully launched several technology programs designed to revolutionize the Company鈥檚 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 largest database of product information. 爆料王鈥檚 run-rate for e-commerce sales is now over 30%, which is supported by the industry鈥檚 richest depository of product information of over 700,000 SKUs. Both of these metrics were close to zero just a few years ago.

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

Leveraging the Company鈥檚 data analytics capabilities,聽爆料王聽has also recently launched a productivity initiative to surgically target opportunities to reduce costs and improve profitability. This is part of a culture to consistently assess ongoing resource requirements and seek continuous improvement.

Substantial incremental SG&A investments have been made over the last three years as聽爆料王聽digitizes its business. This includes a new team of technologists and the addition of over 250 customer-facing employees to enhance capacity and capabilities throughout 爆料王鈥檚 network. Combined, the incremental annual costs of these investments are approaching聽$25 million. The Company鈥檚 believes that as these initiatives mature, meaningful gains in productivity can be achieved.聽聽聽聽聽聽聽聽

A.J. Nahmad, 爆料王鈥檚 President said: 鈥淲e are proud to be the industry leader in progressive technologies to help our customers grow their businesses while improving our operations. We have made great progress and are seeing early returns such as reduced customer attrition rates, improved inventory quality and exciting sales growth for customers that are leveraging our technologies.鈥�

Mr. Nahmad added: 鈥淲e are also so proud to have delivered record results and increasing dividends during such a transformative period. Most importantly, our teams have embraced a culture of innovation and continuous improvement, which we believe positions us well to further scale these technologies and derive value in the years ahead.鈥�

Organizational Investments

爆料王聽has made incremental investments in its organization during 2018, including a 33% increase in the annual matching contribution to its 401k plan, which is made in聽爆料王聽common stock. The Company鈥檚 25-year compounded total shareholder return of 19% has benefitted shareholders at-large but has also proven meaningful to 爆料王鈥檚 401k participants who have spent their careers with the Company.

In addition, an enriched wellness program will be launched in 2019, including greater incentives to employees to learn more about their health, identify risks and promote preventive care. The Company considers an active wellness program as an important component of its culture.

爆料王聽also intends to continue to build on its ownership culture through a variety of unique, equity-based programs.

Alert Labs Acquisition

During the quarter,聽爆料王聽completed the acquisition of聽Alert Labs Inc., a technology company founded in 2015 and based in聽Kitchener, Ontario, Canada.聽Alert Labs聽develops, designs and builds IoT hardware and software aimed at protecting homes and businesses.聽Alert Labs聽will continue to be led by its founders.

Alert Labs聽will support the development and commercialization of Sentree, an IoT device invented by聽爆料王 Ventures聽that easily attaches to an existing HVAC system. Sentree is designed to stream raw performance data to a proprietary cloud-based software platform where calculations and machine learning algorithms are used to remotely measure, monitor, and perform predictive diagnostics on the HVAC system. In addition to providing data about the health of a system to assist in diagnostics and repairs, this connectivity and datastream offer longevity and value to a contractor鈥檚 relationship with its customer. More information can be found at聽.

鈥淎lert Labs has an exceptional team of innovators with an entrepreneurial culture that is consistent and complementary to ours,鈥� said聽A.J. Nahmad. 鈥淭his acquisition represents the next phase of investing in ground-breaking technologies intended to deliver unique solutions and opportunities to our customers.鈥�

Dividends & Cash Flow

爆料王聽has paid cash dividends for over 40 consecutive years. The Company鈥檚 philosophy is to share increasing amounts of cash flow with shareholders through higher dividends while maintaining a conservative financial position.聽爆料王聽announced today a 10% increase in its annual dividend rate to聽$6.40聽per share effective聽January 2019. Since 2000, 爆料王鈥檚 operating cash flow was approximately聽$2.2 billion聽compared to net income of approximately聽$2.0 billion, surpassing the Company鈥檚 stated goal of generating cash flow in excess of net income.

Tax Cuts and Jobs Act of 2017

2018 results reflect lower income tax expense as a result of the passage of the Tax Cuts and Jobs Act of 2017.聽 The Company鈥檚 effective income tax rate (net of taxes attributable to non-controlling interest) was 20% for the nine-month period ended聽September 30, 2018versus 29% for the same period last year.

Outlook for 2018

爆料王聽estimates 2018 annual EPS in the range of聽$6.40 to $6.50聽per share in comparison to adjusted EPS of聽$5.54聽in 2017 (2017 GAAP EPS was聽$5.81聽and includes a聽27 cent聽one-time tax benefit related to the change in U.S. tax law).

Third Quarter Earnings Conference Call Information

Date:聽聽October 25, 2018
Time:聽聽10:00 a.m. (EDT)
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Dial-in number:聽聽United States聽(844) 883-3908 / International (412) 317-9254

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

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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 250,000 contractors and technicians visit or call one of its 568 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. There are approximately 92 million central air conditioning and heating systems installed in聽the United States聽that have been in service more than 10 years. 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. Forward-looking statements speak only as of the date the statement was 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. 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.

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