Business Overview - Watsco operates in a highly fragmented market and is a market leader in the HVAC/R distribution industry[4, 13] - The company has a wide geographic presence with 690 locations across the United States, Canada, and Latin America & Caribbean[12] - Watsco's business model involves supplying equipment, parts, and supplies to contractors for the repair or replacement of HVAC systems[10] - The company's revenues are primarily generated in the United States (90%), with the majority coming from residential HVAC equipment (54%)[19] Technology and Digital Transformation - Watsco is focused on transforming the customer experience through enhanced technology, including a robust e-commerce platform and mobile apps[4, 23] - The company's annualized e-commerce revenue in 2023 was $24 billion, a 5% increase[32] - Watsco has digitized over 15 million product SKUs and made them accessible in 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 $73 billion, representing a 15% compound annual growth rate (CAGR)[41] - The company's market capitalization increased from $22 million to $169 billion during the same period, a 22% CAGR[41] - Watsco raised its annual dividend rate to $1080 per share, effective in April 2024[45]

Business Overview - Watsco operates in a highly fragmented market and is a market leader in the HVAC/R distribution industry[4, 13] - The company has a broad geographic presence with 691 locations, including 630 in the United States, 36 in Canada, and 25 in Latin America & Caribbean[12] - Watsco'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 revenues, followed by other HVAC products (27%), commercial HVAC equipment (15%), and refrigeration (4%)[19] Technology and Digital Transformation - Watsco is focused on transforming the customer experience through technology, with annualized e-commerce revenue reaching $2.4 billion in 2023, a 5% increase[4, 32] - The company has over 1.5 million product SKUs digitized and accessible in its mobile app[29, 33] - E-commerce users experience approximately 50% less attrition compared to traditional customers, and e-commerce orders have 15% higher line items per order[32] Financial Performance and Shareholder Value - Watsco's revenues have grown from $64 million in 1989 to $7.3 billion in the trailing twelve months (TTM) ending March 31, 2024, representing a 14% compound annual growth rate (CAGR)[41] - The company's Earnings Before Interest and Taxes (EBIT) has increased from $2 million in 1989 to $757 million in the TTM ending March 31, 2024, an 18% CAGR[41] - Watsco's market capitalization has grown from $22 million in 1989 to $17.3 billion in the TTM ending March 31, 2024, a 21% CAGR[41] - The company has a solid cash flow performance, with cumulative net income of $4.7 billion, operating cash flow of $4.5 billion, and dividends of $2.8 billion over the past 20 years[43]

Business Overview - Watsco is a market leader in a highly fragmented industry[4] - The company transforms customer experience with enhanced technology[4] - Watsco has deep ties to the industry's leading OEMs and suppliers[4] - The company operates 689 locations, including 627 in the United States, 36 in Canada, and 26 in Latin America & Caribbean[12] - E-commerce revenue reached $2.4 billion in 2023, a 5% increase[31] Financial Performance & Returns - From 1989 to TTM 9/30/2024, Watsco's revenues grew from $64 million to $7.5 billion, representing a CAGR of 15%[42] - EBIT increased from $2 million to $753 million during the same period, with a CAGR of 18%[42] - The company's share price rose from $2.70 to $491.88, reflecting a CAGR of 16%[42] - Dividends increased from $0.5 million to $411 million, showing a CAGR of 21%[42] - Market capitalization grew from $22 million to $19.9 billion, with a CAGR of 21%[42] ESG Initiatives - Watsco's sale of high-efficiency equipment averted 21.8 million metric tons of CO2e from January 2020 to September 2024[34] - The sale of Alert Labs water monitoring products saved 10.6 billion gallons of water from August 2019 to September 2024[34]

Business Overview - Watsco is a market leader in a highly fragmented HVAC/R industry[4, 13] - The company operates 690 strategic locations across the United States, Canada, Latin America, and the Caribbean[12] - The company's business model involves contractors purchasing equipment, parts, and supplies from Watsco to repair or replace homeowner's systems[10] Market and Products - The United States accounts for 90% of Watsco's revenues, with Canada and Latin America contributing 5% each[19] - Residential HVAC equipment makes up 55% of revenues, commercial HVAC equipment 15%, other HVAC products 26%, and refrigeration 4%[19] - The installed base of HVAC units in the U S has been increasing, with over 120 million units installed[24] Technology and Digital Transformation - Watsco is focused on transforming the customer experience through enhanced technology, including a robust e-commerce platform[4, 31] - Annualized e-commerce revenue in 2024 reached $2.6 billion, an 8% increase[35] - E-commerce users experience approximately 60% less attrition compared to traditional customers[35] Financial Performance and Shareholder Value - From 1989 to 2024, Watsco's revenues grew from $64 million to $7.6 billion, representing a 14% compound annual growth rate (CAGR)[46] - Over the same period, EBIT increased from $2 million to $782 million, an 18% CAGR, and the share price rose from $2.70 to $473.89, a 16% CAGR[46] - The company's market capitalization grew from $22 million to $19.2 billion over the same period, a 21% CAGR[46] - In 2024, Watsco's dividend payments totaled $423 million[46] - As of December 31, 2024, Watsco had $782 million in cash and investments and no total borrowings[50]

Business Overview - Watsco is a market leader in a highly fragmented industry, focusing on transforming customer experience with technology and value creation[4] - The company operates 693 strategic locations across the United States, Canada, and Latin America & Caribbean[12] - Watsco's business model involves contractors purchasing equipment, parts, and supplies to repair or replace homeowner's systems[10] Market and Products - The company estimates its market share to be 18-20%[46] - Watsco's revenue is primarily generated in the United States (90%), with Canada and Latin America contributing 5% each[19] - Residential HVAC equipment accounts for 55% of revenue, followed by other HVAC products (26%), commercial HVAC equipment (15%), and refrigeration (4%)[19] - The installed base of HVAC units in the U S continues to grow, with approximately 96 million units shipped in 2024, and only ~12% of industry shipments tied to Residential New Construction[24] Technology and ESG - Watsco is focused on using technology to transform the HVAC industry, with $2.6B in annualized e-commerce revenue in 2024, an 8% increase[25, 35] - The company has over 930k product SKUs digitized and accessible in its mobile app[32, 36] - Watsco's ESG efforts have resulted in averting 23.7 million metric tons of CO2e from the sale of high-efficiency equipment from January 2020 – March 2025[38] Financial Performance - From 1989 to LTM 3/31/25, Watsco's revenues grew from $64 million to $7.6 billion, representing a 14% CAGR[46] - EBIT increased from $2 million to $767 million during the same period, a 17% CAGR[46] - The company's market capitalization has grown from $22 million to $20 billion, a 21% CAGR[46]

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].