July 25, 2012 / 3:34 PM / 5 years ago

Watsco misses Street estimates for Q2; cuts FY outlook

(Reuters) - Heating and refrigeration products distributor Watsco Inc (WSO.N) reported a lower-than-expected rise in quarterly profit as it sold more low-margin products, and cut its full-year forecast on slackening demand.

Watsco shares fell as much as 15 percent and were trading at $68.03, down 10 percent, late morning on Wednesday.

The company now expects per-share earnings of $3.15 to $3.25 for the year, down from the $3.25 to $3.40 it estimated earlier.

“There is a problem with consumer confidence out there. We know there is an enormous amount of pent-up demand. I don’t think we are seeing any sign of that coming in large numbers,” Chief Executive Albert Nahmad said on a conference call

Meanwhile, gross profit margin for the second quarter fell to 23.6 percent from 24.1 percent a year earlier as heating, ventilation and air conditioning (HVAC) equipment and commercial products increased their shares in the overall sales, the company said.

“Gross profit that you see really is a consequence of the equipment business growing substantially higher than the non- equipment business,” Nahmad said.

    The Miami, Florida-based company earned $39.1 million, or $1.15 a share in the second quarter, missing analysts’ expectations of $1.30 per share. It had a profit of $36.0 million, or $1.09 a share, in the year-ago period.

    Revenue rose 15 percent to $1.01 billion, while analysts had expected $1.05 billion, according to Thomson Reuters I/B/E/S.

    Reporting by Suzannah Benjamin in Bangalore; Editing by Sreejiraj Eluvangal

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