Watsco, Inc. in July reported record results for the second quarter and for the six months ended June 30, 2010. The results include Carrier Enterprise, a joint venture formed on July 1, 2009 with Carrier Corporation, which added 95 locations to the Watsco network.
Watsco owns 60% of Carrier Enterprise and Carrier owns 40%. Watsco is the largest distributor of air conditioning, heating and refrigeration equipment and related parts and supplies in the HVACR industry, currently operating 506 locations serving over 50,000 customers in 36 states, Puerto Rico, Latin America and the Caribbean.
Sales of HVAC equipment reflect a combination of strong growth in unit sales and an improving sales mix of higher-efficiency replacement air conditioning and heating systems.
Revenues increased 114% to a record $865 million, including $400 million of sales added by Carrier Enterprise.
Same-store sales increased 14%, reflecting 25% growth in HVAC equipment (53% of sales), a 3% increase in other HVAC products (34% of sales) and a 5% increase in refrigeration products (13% of sales). Sales of HVAC equipment reflect a combination of strong growth in unit sales and an improving sales mix of higher-efficiency replacement air conditioning and heating systems. Gross profit increased 99% to a record $201 million and gross profit margin was 23.3% versus 24.9%, reflecting lower selling margins for Carrier Enterprise.
On a same-store basis, gross profit increased 12% to $113 million and gross profit margin declined 30 basis-points to 24.7%, reflecting the movement in sales mix toward HVAC equipment, which generates lower gross margin than non-equipment products.