Business Overview - Watsco operates in a highly fragmented industry, holding a leading market position [4, 13] - The company's business model involves contractors purchasing equipment, parts, and supplies to repair or replace HVAC systems [10] - Watsco has a significant geographic presence with 690 locations across the United States, Canada, and Latin America & Caribbean [12] - The company's revenue is primarily generated in the United States (90%), with Canada and Latin America contributing 5% each [19] - Residential HVAC equipment accounts for 54% of Watsco's revenue, followed by commercial HVAC equipment at 15% and other HVAC products at 27% [19] Technology and Digital Transformation - Watsco is focused on transforming the HVAC industry through technology, aiming to enhance customer experience and improve efficiency [23] - The company's annualized e-commerce revenue reached $2.4 billion in 2023, representing a 5% increase [32] - Watsco has digitized over 1.5 million product SKUs, accessible through its mobile app [29, 33] - E-commerce users experience approximately 50% less attrition compared to traditional customers [32] Financial Performance and Shareholder Value - From 1989 to 12/31/23, Watsco's revenues grew from $64 million to $7.3 billion, representing a 15% compound annual growth rate (CAGR) [41] - Over the same period, EBIT increased from $2 million to $795 million, with an 18% CAGR [41] - The company's market capitalization grew from $22 million to $16.9 billion, reflecting a 22% CAGR [41]

Financial Performance - Revenues for Q1 2025 were $1,531.1 million, a decrease of 2% compared to $1,565.0 million in Q1 2024[87] - Gross profit margin improved to 28.1% in Q1 2025 from 27.5% in Q1 2024, while operating income decreased to 7.3% from 8.1%[83] - Net income attributable to Watsco, Inc. was 5.2% in Q1 2025, down from 5.6% in Q1 2024[83] - Same-store sales for the quarter ended March 31, 2025, were $1,522.6 million, a decrease of 2% compared to $1,559.7 million in 2024[88] - Gross profit for the quarter was $429.6 million, with a gross margin of 28.1%, an increase of 60 basis points from 27.5% in 2024[89][90] - Net income attributable to Watsco decreased by $6.9 million, or 8%, to $79.5 million for the quarter ended March 31, 2025[95] - Cash flows used in operating activities were $(177.6) million, a decrease of $281.3 million compared to $103.7 million provided in 2024[102] Expenses and Costs - Selling, general and administrative expenses increased to 21.1% of revenues in Q1 2025 from 19.8% in Q1 2024[83] - Selling, general and administrative expenses rose to $322.6 million, a 4% increase from $309.5 million in 2024, with expenses as a percentage of revenues increasing to 21.1%[91] Acquisitions and Investments - On May 1, 2025, the company acquired Southern Ice Equipment Distributors, Inc. for $14.3 million in cash and $3.4 million in Common stock[117] - The company also acquired Hawkins HVAC Distributors, Inc. on April 1, 2025, for $2.5 million in cash[118] - Carrier Enterprise I acquired W.L. Lashley & Associates, Inc. for a total consideration of $4.0 million, resulting in $3.1 million in goodwill[119] - A wholly owned subsidiary acquired Commercial Specialists, Inc. for $6.0 million in cash, leading to $2.5 million in goodwill recognition[120] - The company is actively evaluating potential acquisitions and joint ventures, indicating a strong financial position for future financing[121] Cash and Shareholder Returns - The company had $431.8 million in cash and cash equivalents as of March 31, 2025, with $131.7 million held by foreign subsidiaries[99] - Working capital increased to $2,110.2 million at March 31, 2025, up from $2,096.1 million at December 31, 2024[101] - The company paid cash dividends of $2.70 and $2.45 per share on common stock for the three months ended March 31, 2025 and 2024, respectively[122] - A regular quarterly cash dividend of $3.00 per share was declared on April 1, 2025, payable on April 30, 2025[122] - The Dividend Reinvestment Plan (DRIP) allows shareholders to acquire up to 300,000 shares by reinvesting cash dividends, with 13,942 shares issued under the DRIP during Q1 2025[123] - The company has repurchased a total of 6,370,913 shares at a cost of $114.4 million since the inception of the share repurchase program[124] - As of March 31, 2025, there are 1,129,087 shares remaining authorized for repurchase under the program[124] Market and Regulatory Environment - The company anticipates increased demand for higher-efficiency products due to the U.S. Inflation Reduction Act of 2022, which promotes energy-efficient HVAC systems[79] - The company has a focus on the HVAC replacement market, which is expected to stabilize sales amid tariff-related uncertainties[72] - The company continues to monitor macroeconomic trends and uncertainties related to tariffs and their potential impact on product costs and sales[72] - The company is transitioning inventory to lower-GWP HVAC systems in response to new regulations on refrigerants, with a phasedown of HFC production starting January 1, 2022[76] - An estimated 23.7 million metric tons of CO2e emissions were averted from January 1, 2020, to March 31, 2025, through the sale of higher-efficiency HVAC systems[78] - There have been no material changes to market risk disclosures since the last annual report[125] Interest Income - Interest income, net for the first quarter of 2025 increased by $2.9 million, or 119%, compared to the same period in 2024[93]

Core Viewpoint - The Schall Law Firm is investigating Watsco, Inc. for potential violations of securities laws related to misleading statements and undisclosed information affecting investors [1][2]. Financial Performance - Watsco reported a 2% year-over-year revenue decline for Q1 2025, missing consensus estimates [2]. - The company attributed its results to a large-scale product transition due to regulatory changes effective January 1, 2025, impacting approximately 55% of its sales and converting nearly $1 billion of inventory throughout the year [2]. - Following the announcement, Watsco's shares fell by 11% on the same day [2].

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud or unlawful business practices involving Watsco, Inc. and its officers or directors, following disappointing financial results and a significant stock price drop [1][3]. Financial Performance - Watsco reported first-quarter 2025 revenue of $1.53 billion, which is a 2% decline year-over-year and below consensus estimates [3]. - The company indicated that the results are influenced by a large-scale product transition due to regulatory changes effective January 1, 2025, impacting approximately 55% of its sales and expected to convert nearly $1 billion of inventory throughout the year [3]. - Following the announcement, Watsco's stock price decreased by $56.76 per share, or 11.28%, closing at $446.40 per share on April 23, 2025 [3].

Core Viewpoint - Watsco, Inc. has completed the acquisition of Southern Ice Equipment Distributors and two other companies, enhancing its distribution network and annualized sales in high-growth Sunbelt markets [1][3]. Company Overview - Watsco, Inc. operates the largest distribution network for HVAC/R products across the U.S., Canada, Mexico, and Puerto Rico, with over 702 locations [5]. - The company focuses on the replacement market, which is growing due to aging systems and the need for energy-efficient models [6]. Acquisitions - The acquisition of Southern Ice, along with two other transactions, adds 10 new locations and approximately $47 million in annualized sales [3][9]. - Southern Ice, founded in 1984, is a leading distributor in food-service and commercial refrigeration, operating in key Sunbelt markets [2]. Environmental Impact - Watsco has contributed to reducing CO2e emissions by an estimated 23.7 million metric tons from January 2020 to March 2025 through the sale of higher-efficiency HVAC systems [8]. - The company plays a significant role in lowering household energy consumption, as HVAC systems account for about half of U.S. household energy use [7]. Strategic Goals - Watsco aims to identify and partner with strong businesses in the HVAC/R industry, support their growth, and leverage technology for innovation [10].

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud or unlawful business practices involving Watsco, Inc. and its officers or directors following disappointing financial results and a significant stock price drop [1][3]. Financial Performance - Watsco reported first-quarter 2025 revenue of $1.53 billion, which is a 2% decline year-over-year and below consensus estimates [3]. - The company indicated that the results are influenced by a large-scale product transition due to regulatory changes effective January 1, 2025, impacting approximately 55% of its sales and expected to convert nearly $1 billion of inventory throughout the year [3]. - Following the announcement, Watsco's stock price decreased by $56.76 per share, or 11.28%, closing at $446.40 on April 23, 2025 [3]. Legal Investigation - Pomerantz LLP is actively seeking claims from investors regarding potential securities fraud related to Watsco's recent financial disclosures [1]. - The firm has a long history in corporate and securities class litigation, having recovered significant damages for victims of securities fraud and corporate misconduct [4].

NEW YORK, April 25, 2025 (GLOBE NEWSWIRE) -- Pomerantz LLP is investigating claims on behalf of investors of Watsco, Inc. (“Watsco” or the “Company”) (NYSE: WSO). Such investors are advised to contact Danielle Peyton at newaction@pomlaw.com or 646-581-9980, ext. 7980. The investigation concerns whether Watsco and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.  [Click here for information about joining the class action] On April 23, 2025, Watsc ...

Watsco, Inc. (WSO) reported first-quarter 2025 results wherein earnings and revenues missed the Zacks Consensus Estimate and declined year over year. Following the results, WSO stock declined 11.3% during trading hours yesterday. Investors' sentiments are likely to have been hurt by a mix of challenges across end markets and seasonal factors. Additionally, uncertainty surrounding the ongoing impacts of tariffs and inflationary pressures weighed on investor outlook. Although Watsco has implemented pricing ac ...

Financial Data and Key Metrics Changes - Watsco reported a strong first quarter with a 10% increase in sales for the core HVAC replacement business driven by higher volumes and a richer mix of high-efficiency systems [6][9] - Gross margins improved following the launch of new systems, with the company aiming for a long-term gross profit margin goal of 30% [34][9] - The company has $430 million in cash, no debt, and over $3 billion in equity, indicating a strong balance sheet [9] Business Line Data and Key Metrics Changes - The core HVAC replacement business saw a 10% increase, while the commercial products segment experienced a decline of around 10% due to the transition from 410A to 454B refrigerants [6][71] - The residential new construction market was noted to be softer year-over-year, but the company believes it has not lost market share in this segment [30][26] Market Data and Key Metrics Changes - Domestic sales accounted for 91% of first-quarter sales, with mid-single-digit growth observed in the domestic market [58] - International sales, which represent 9% of total sales, were noted to be weaker, with greater uncertainty in Canada and Latin America [11] Company Strategy and Development Direction - Watsco is transitioning to the new A2L refrigerant systems, which are expected to impact around 55% of total sales and are seen as beneficial for business in the long term [4][5] - The company emphasizes its scale, technology, and relationships with OEM partners to adapt quickly to changing market conditions [12][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming selling season, expecting benefits from the new A2L products to materialize in the stronger second and third quarters [9][4] - The company is closely monitoring the potential impact of proposed tariffs and is collaborating with OEM partners on pricing actions [11][9] Other Important Information - Watsco raised its annual dividend by 11% to $12 per share, marking the 51st consecutive year of dividend payments [10] - The company is actively training customers and updating technology platforms to support the transition to new refrigerant systems [5] Q&A Session Summary Question: Insights on residential sales growth - Management indicated that most of the first-quarter growth was from 410A, with a transition to A2L products expected in the second quarter [18][19] Question: Impact of price increases on gross margin - Management noted that the first quarter saw clean pricing without significant price increases, with gross margin improvements primarily due to a favorable segment mix [22][21] Question: International sales performance - Management acknowledged that international sales were weak but not significant enough to impact overall performance, attributing some of the softness to fewer selling days in the quarter [27][28] Question: Transition to A2L refrigerants - Management confirmed that there were no significant delays in the transition to A2L products and that the market is adapting well [80][81] Question: Price increase mechanisms - Management clarified that most pricing actions are price increases rather than surcharges, indicating a stable pricing environment [138][135] Question: Supply chain issues with refrigerants - Management acknowledged shortages of 454B refrigerant due to container issues but emphasized that there is no shortage of the refrigerant itself [96][97] Question: Consumer behavior regarding repairs versus replacements - Management indicated that both repair and replacement markets are expected to grow, with a positive outlook on energy-efficient product sales [105][110]

Watsco (WSO) Q1 2025 Earnings Call April 23, 2025 06:32 PM ET Company Participants Albert Nahmad - Chairman & CEOPaul Johnston - Executive Vice PresidentBarry Logan - Executive VP of Planning & Strategy and SecretaryJeffrey Sprague - Founder and Managing PartnerTommy Moll - Managing DirectorAaron Nahmad - PresidentRyan Merkel - Co-Group Head–IndustrialsBrett Linzey - Executive DirectorJeffrey Hammond - Managing DirectorChris Snyder - Executive DirectorRick Gomez - Vice President of Corporate DevelopmentStev ...