With the July-September period now in the rearview, industrial distributors and manufacturers are beginning to report their 2022 third-quarter earnings and end-of-year financial outlooks. In this earnings roundup, MDM looks at 3Q reports from HVAC distributor Watsco, swimming pool products distributor Pool Corporation and Wisconsin-based manufacturer Snap-On.
Watsco Reports ‘Record-Breaking’ 3Q
On Oct. 20, the Miami-based company announced its 3Q 2022 earnings, including a 14% sales growth over the same period last year to a “record” $2.04 billion. For 3Q, Watsco also reported a 14% increase in gross profit to a record $551 million. Watsco said its board of directors approved an 11% increase in its annual dividend to $9.80 per share on each outstanding share of its Common and Class B common stock “to be reflected in the company’s quarterly dividend payment in January 2023.”
Among sales trends from its 3Q earnings, Watsco also reported:
- A 13% increase in HVAC equipment (69% of sales), including 14% growth in the U.S. (13% growth for residential products and 20% growth for commercial products).
- A 15% increase in other HVAC products (27% of sales).
- And a 18% increase in commercial refrigeration products (4% of sales).
“Watsco is proud to deliver another record quarter and dividend increase, which reflects our confidence in the long-term prospects of our business,” said Albert Nahmad, Watsco’s chairman and CEO. “Third quarter sales reflect normalized residential HVAC equipment volumes, effective price realization, sustained progression towards higher-efficiency systems, which grew 26% during the quarter, a greater mix of heat pumps and strong growth in commercial HVAC systems. While Hurricane Ian impacted sales in Florida, our largest market, we are confident in our ability to participate in the recovery of Florida’s west coast in 2023 given our strong presence in the affected areas.”
Snap-On’s 3Q Sales Increase 6.2%
In its 3Q earnings report, Kenosha, Wisconsin-based Snap-On reported net sales of more than $1.1 billion, an increase of $64.8 million, or 6.2%, from 2021 levels, reflecting a $103.9 million, or 10.4%, organic sales gain, partially offset by $39.1 million of unfavorable foreign currency translation.
Operating earnings before financial services for 3Q of $223.5 million compared to $201.3 million in 2021, Snap-On said. As a percentage of net sales, operating earnings before financial services of 20.3% in the quarter improved 90 basis points from 19.4% last year.
Snap-on’s Commercial & Industrial Group segment had net sales of $356.8 million in the quarter, compared to $351.4 million last year, reflecting a $26.2 million, or 7.9%, organic sales gain. Snap-On’s Tools Group segment saw net sales of $496.6 million in the quarter, compared to $471.4 million last year, reflecting a $34.1 million, or 7.4%, organic sales gain. Its Repair Systems & Information Group segment drew net sales of $414.0 million in 3Q, compared to $364.4 million last year, reflecting a $60.8 million, or 17.2%, organic sales increase. All segment gains were partially offset by unfavorable foreign currency translations, the company said.
Pool Corp Reports Net Sales of $1.6 billion
Covington, Louisiana-based Pool Corp said it reached “record” 3Q net sales of $1.6 billion, up 14% from the same period in 2021. Pool Corp also reported operating income of $263.9 million, up 11% from the same quarter last year, while Q3 2022 diluted EPS of $4.78 was an increase of 5% from 3Q 2021 — a leap of 7% to $4.76, without tax benefits in both periods.
“Our teams delivered another record-breaking quarter,” said Peter D. Arvan, president and CEO. “Our sales activity, lifted by increased pricing, showed stable demand for our products. Combined with focused execution, we surpassed $5.0 billion in year-to-date net sales. We’ve observed increased demand for higher value products and customizations for new pools and remodeling projects, even though the issuance of new pool permits year-to-date has moderated. Over the long-term, we expect that our vast network and the steady growth in the installed base of pools will sustain the industry-leading position that we have built on over our 27 years as a public company.”
Pool Corp said base business sales grew 10% in 3Q, strengthened by “sales growth in our Sun Belt markets, while sales in our northern markets were limited by less favorable weather conditions compared to last year.” Net sales benefited approximately 9% to 10% from inflationary product cost increases and were aided by healthy demand for our products and warmer weather throughout much of the U.S., the company said.