Watsco, Inc. (NYSE:WSO) Q1 2023 Earnings Call Transcript April 20, 2023 10:00 AM ET Company Participants Albert Nahmad - Chief Executive Officer Aaron Nahmad - President Paul Johnston - Executive Vice President Barry Logan - Executive Vice President, Planning & Strategy and Secretary Conference Call Participants Ryan Merkel - William Blair & Company David Manthey - Robert W. Baird & Co. Jeffrey Sprague - Vertical Research Partners Nigel Coe - Wolfe Research, LLC Joshua Pokrzywinski - Morgan Stanley Tommy Mo ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 For the Fiscal Year Ended December 31, 2022 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from to Commission File Number 1-5581 WATSCO, INC. (Exact name of registrant as specified in its charter) FLORIDA 59-0778222 (State or other jurisdiction of ...

Watsco, Inc. (NYSE:WSO) Q4 2022 Earnings Conference Call February 16, 2023 10:00 AM ET Company Participants Albert Nahmad - Chief Executive Officer Barry Logan - Executive Vice President, Planning & Strategy and Secretary Paul Johnston - Executive Vice President Aaron Nahmad - President Conference Call Participants Tommy Moll - Stephens Inc. David Manthey - Robert W. Baird & Co. Jeffrey Sprague - Vertical Research Partners Ryan Merkel - William Blair & Company Nigel Coe - Wolfe Research, LLC Jeffrey Hammond ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q 2665 South Bayshore Drive, Suite 901 Miami, Florida 33133 Telephone: (305) 714-4100 Securities registered pursuant to Section 12(b) of the Act: | | Trading | Name of each exchange | | --- | --- | --- | | Title of each class | Symbol(s) | on which registered | | Common stock, $0.50 par value | WSO | New York Stock Exchange | | Class B common stock, $0.50 par value | WSOB | New York Stock Exchange | ☒ Quarterly ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended June 30, 2022 or ☐ Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period From to Commission file number 1-5581 I.R.S. Employer Identification Number 59-0778222 WATSCO, INC. (a Florida Corporation) 2665 South Bayshore Drive, Suite ...

Financial Data and Key Metrics Changes - Earnings per share increased by 33% to a record $4.93 for the quarter, with sales growing 15% to a record $2.13 billion, marking the first $2 billion quarter [6] - Operating income rose 32% to a record $287 million, with margins expanding 180 basis points to a record 13.5% [6][7] - For the first half of the year, earnings per share increased by 53% to a record $7.83, with a 22% increase in sales [7] Business Line Data and Key Metrics Changes - The company reported strong same-store sales growth of 29% in the previous year, indicating robust performance against tough comparisons [7] - Current trends show meaningful unit growth and additional price capture as inflation persists in the industry [8] Market Data and Key Metrics Changes - The company noted significant growth in the Southeast and Southwest regions, with substantial increases in demand compared to the previous year [46] - Unit sales in early July were reported to be up mid to high single digits [50] Company Strategy and Development Direction - The company is focusing on productivity and operating efficiencies to sustain growth and build market share despite challenges in the supply chain [9] - Regulatory changes, such as the increase in minimum federal SEER standards in 2023, are expected to create growth opportunities [14][15] - The company is investing in technology to enhance customer engagement and reduce attrition, which is expected to yield long-term benefits [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2023, citing regulatory changes and the necessity of HVAC products in key markets as drivers of demand [14][105] - The company acknowledged potential economic slowdowns and higher interest rates but remains focused on capturing market opportunities [8][9] - Management emphasized the importance of consumer financing options to facilitate purchases in a potentially inflationary environment [78] Other Important Information - The company maintains a strong balance sheet with minimal debt, allowing for continued investment in growth [16] - There is an ongoing focus on improving SG&A efficiency as the company adapts to changing market conditions [35][118] Q&A Session Summary Question: Update on gross margins and digital pricing optimization - Management highlighted the importance of technology in managing pricing amidst multiple price increases from manufacturers, indicating that the tools have eased administrative burdens and created opportunities for price optimization [25][26] Question: Sales trends exiting the quarter and into July - Management reported a strong increase in demand in July, particularly in the Southeast and Southwest regions, with unit sales up mid to high single digits [46][50] Question: Impact of SEER changes on pricing mix in 2023 - Management indicated that a significant portion of equipment sales would see mid-teen price increases due to regulatory changes, suggesting a meaningful price mix benefit in 2023 [54][56] Question: Concerns about potential consumer pushback on pricing - Management noted that there has been no significant pushback on pricing to date, attributing strong demand to the necessity of HVAC products [72] Question: Outlook for 2023 and potential slowing demand - Management clarified that while new construction sales may be impacted, overall demand remains strong, and they are optimistic about continued growth in 2023 [99][105] Question: SG&A growth in relation to revenue growth - Management acknowledged that SG&A has grown in line with sales but emphasized the need for improved efficiency and productivity moving forward [116][118]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 2022 or ☐ Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period From to Commission file number 1-5581 I.R.S. Employer Identification Number 59-0778222 WATSCO, INC. (a Florida Corporation) 2665 South Bayshore Drive, Suite ...

Watsco, Inc. (NYSE:WSO) Q1 2022 Earnings Conference Call April 21, 2022 10:00 AM ET Company Participants Albert Nahmad - Chairman and Chief Executive Officer Aaron Nahmad - President Paul Johnston - Executive Vice President Barry Logan - Executive Vice President of Planning & Strategy and Secretary Rick Gomez - Vice President of Corporate Development Conference Call Participants Thomas Moll - Stephens Inc. Jeffrey Sprague - Vertical Research Partners, LLC Jeffrey Hammond - KeyBanc Capital Markets Inc. Nigel ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 For the Fiscal Year Ended December 31, 2021 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from to Commission File Number 1-5581 WATSCO, INC. 2665 South Bayshore Drive, Suite 901 Miami, FL 33133 (Address of principal executive offices, including zi ...

Financial Data and Key Metrics Changes - In Q4 2021, earnings per share increased by 77% to a record $2.02, while sales grew by 31% to a record $1.5 billion. Operating income rose by 76% to a record $123 million, with operating margins expanding by 210 basis points to 8.1% [6] - For the full year 2021, earnings per share increased by 54% to a record $10.78, with sales growing by 24% to a record $6.3 billion. Operating income increased by $227 million or 57% to a record $629 million, and operating margins reached 10%, a 210 basis points increase from the previous year [7][8] Business Line Data and Key Metrics Changes - The company reported a 22% growth in HVAC equipment, with unit growth in the quarter and for the year both at 9% [40] - Non-equipment business also performed well, contributing to overall margin improvement [25] Market Data and Key Metrics Changes - The company noted that its sales of more efficient systems helped avoid 10.1 million metric tons of CO2 emissions over two years, equivalent to taking 2.2 million cars off the road [12] - The company highlighted a strong demand for high-efficiency systems, which are expected to grow due to regulatory changes mandating higher efficiency standards [13][75] Company Strategy and Development Direction - Watsco aims to build scale in the fragmented $50 billion North American market and is actively seeking acquisitions to sustain family business cultures while providing technology [9] - The company is investing in technology to enhance contractor customer experience, with e-commerce sales approaching $2 billion annually [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong balance sheet and the ability to invest in growth opportunities, while also emphasizing the importance of addressing climate change through high-efficiency HVAC systems [10][11] - The management team indicated that they expect a normal year in 2022, with existing home sales and a trend towards heat pump growth supporting this outlook [43] Other Important Information - The company announced a 13% increase in its dividend to an annual rate of $8.80 per share, reflecting strong performance and confidence in future growth [8] - Management discussed the impact of regulatory changes on the HVAC industry, including new refrigerant regulations aimed at reducing CO2 emissions [13][75] Q&A Session Summary Question: Can you unpack the record gross margin? - Management explained that higher sales mix of efficiency products and effective pricing strategies contributed to the gross margin increase [21][25] Question: What initiatives are in place with OEMs for 2022? - Management highlighted ongoing communication and collaboration with OEMs, focusing on inventory analysis and marketing programs [31][32] Question: What is the outlook for pricing in 2022? - Management indicated that they expect continued price increases due to regulatory changes and ongoing inflationary pressures [38][39] Question: How are inventories being managed? - Management noted that inventories grew sequentially due to inflation and a need to align with market demand, emphasizing a long-term perspective [49][50] Question: What is the growth outlook for high-efficiency systems? - Management stated that high-efficiency systems are a focus area, with expectations for increased sales driven by regulatory changes and technology adoption [126][127]