Financial Performance - Revenues for the first quarter increased 1% to a record $1.56 billion, with a 2% decline on a same-store basis [8]. - Gross profit was $431 million, resulting in a gross margin of 27.5%, down from 28.9% in the previous year [29]. - Operating income decreased to $127 million, reflecting an operating margin of 8.1%, compared to 10.6% last year [29]. - Earnings per share were $2.17, down from $2.83 in the same quarter last year [8]. - Net income for Q1 2024 was $104,262 thousand, a decrease of 19.9% compared to $130,371 thousand in Q1 2023 [33]. Cash Flow and Assets - Record operating cash flow of $104 million was generated during the quarter [18]. - Cash and cash equivalents at the end of Q1 2024 were $278,864 thousand, up from $210,112 thousand at the beginning of the period, marking a net increase of 32.5% [33]. - Total current assets increased to $2,998,372 thousand in Q1 2024 from $2,391,931 thousand in Q4 2023, representing a growth of 25.4% [31]. - Net cash provided by operating activities was $103,706 thousand in Q1 2024, a significant recovery from a net cash used of $(47,421) thousand in Q1 2023 [33]. Liabilities and Equity - Total liabilities rose to $1,429,545 thousand in Q1 2024 from $1,112,992 thousand in Q4 2023, an increase of 28.4% [31]. - Shareholders' equity increased to $2,927,573 thousand in Q1 2024 from $2,616,190 thousand in Q4 2023, showing a growth of 11.9% [31]. Inventory and Receivables - Inventories increased to $1,655,635 thousand in Q1 2024 from $1,347,289 thousand in Q4 2023, reflecting a rise of 23% [31]. - The company reported a decrease in accounts receivable, net, of $33,502 thousand in Q1 2024, compared to a decrease of $64,691 thousand in Q1 2023 [33]. Business Growth and Investments - The company added three new companies to its portfolio since the beginning of last year, enhancing market share [5]. - The company made business acquisitions totaling $5,178 thousand in Q1 2024, compared to $2,989 thousand in Q1 2023 [33]. - The company raised $282 million through an equity offering under its at-the-market program [18]. Sales and Market Trends - Sales of heat pump HVAC systems exceeded $1.2 billion in 2023, continuing to outpace growth rates for conventional systems [14]. - E-commerce sales accounted for 33% of total sales, showing strong growth compared to overall sales [14]. Dividends - A 10% increase in the annual dividend to $10.80 per share was approved, effective April 2024 [4].

Financial Performance and Growth - Watsco's HVAC/R distribution revenues increased from $64.1 million in 1989 to $7.3 billion in 2023, reflecting a significant growth strategy through acquisitions and market expansion[16] - The HVAC/R distribution industry in the U.S. has an estimated annual market size of $64.0 billion, with residential HVAC/R products estimated at $126.0 billion[18] - The company has acquired 69 HVAC/R distribution businesses since 1989, enhancing its market presence and operational capabilities[31] - HVAC equipment sales accounted for 69% of revenues in 2023, down from 68% in 2022; other HVAC products made up 27% in 2023, down from 28% in 2022[45] - The company expects to transition its inventory to HVAC equipment with refrigerants that comply with the new EPA standards, benefiting from higher sales prices for environmentally friendly units[70] Market Presence and Operations - As of December 31, 2023, Watsco operated 690 locations across 42 U.S. states, Canada, Mexico, and Puerto Rico, serving over 125,000 active contractors and dealers[16] - The company operated 690 warehousing and distribution facilities across 42 U.S. states, Canada, Mexico, and Puerto Rico, totaling approximately 16.4 million square feet, with 16.2 million square feet leased[113] - The largest market is the United States, particularly in the Sun Belt states, which have seen significant population growth and demand for HVAC products[47] - Joint ventures with Carrier represented 55% of revenues in 2023, with Carrier being the largest supplier, accounting for 65% of purchases[54][59] - The company serves over 125,000 active contractors and dealers, with no single customer representing more than 2% of consolidated revenues[56] Employee and Corporate Culture - Watsco employs approximately 7,425 individuals, with a voluntary turnover rate of about 19% in 2023, consistent with industry standards[35][36] - Watsco's culture promotes employee ownership through stock-based equity plans, with around 130 employees receiving equity awards in 2023[40] - The company has invested in approximately 300 technology employees to enhance digital capabilities and customer service[25] Environmental and Regulatory Factors - An estimated 19.2 million metric tons of CO2e emissions were averted from January 1, 2020, to December 31, 2023, through the sale of higher-efficiency residential HVAC systems, equivalent to nearly 4.3 million gas-powered vehicles driven for one year[74] - The U.S. Inflation Reduction Act of 2022 is expected to increase demand for higher-efficiency products, with $4.3 billion allocated for state-administered consumer rebate programs to promote energy savings[75] - The company completed the transition of its inventory to higher SEER products in 2023, aligning with new efficiency standards[69] Financial Management and Risks - The company relies on credit markets for financial commitments, and disruptions in these markets could adversely affect liquidity and operational performance[94] - The company plans to pursue additional acquisitions of complementary businesses, which may involve incurring additional debt and diluting existing shareholders' ownership[83] - The market price of the company's common stock may be highly volatile, influenced by various unpredictable factors[105] Governance and Compliance - The company’s management, including the CEO, EVP, and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of the end of the reporting period[132] - The report was signed by the Chief Executive Officer and Chief Financial Officer on February 23, 2024, indicating compliance with SEC requirements[151] - The company has established security practices and safeguards to protect against cybersecurity threats, with a dedicated management team overseeing these efforts[109][110] - The report includes various exhibits and documents filed with the SEC, ensuring transparency and compliance[149]

Financial Performance - Revenues for Q3 2023 were $2,126.8 million, an increase of 4% compared to $2,035.8 million in Q3 2022, with $17.9 million attributed to new acquisitions and $1.7 million from new locations opened [81]. - Same-store sales for Q3 2023 were $2,107.2 million, reflecting a 4% increase from $2,033.3 million in Q3 2022 [83]. - Gross profit for Q3 2023 was $566.9 million, a 3% increase from $550.8 million in Q3 2022, with a gross margin of 26.7%, down 40 basis points from 27.1% in the prior year [84]. - Revenues for the nine months ended September 30, 2023, were $5,693.1 million, a slight decrease of $12.5 million or 0% compared to the same period in 2022 [90]. - Same-store sales decreased by 1% to $5,650.0 million for the nine months ended September 30, 2023 [91]. - Gross profit for the nine months ended September 30, 2023, was $1,577.7 million, down $19.0 million or 1% from the previous year, with a gross margin of 27.8% [92]. - Net income attributable to Watsco, Inc. rose by $13.3 million, or 8%, in Q3 2023 compared to the same period in 2022, driven by higher revenues and lower selling expenses [89]. Acquisitions and Growth Strategy - The company acquired Capitol District Supply Co., Inc. in March 2023 and Gateway Supply Company, Inc. in September 2023, contributing to its growth strategy [78]. - The company operated 691 locations as of September 30, 2023, an increase from 675 locations a year earlier, with 19 locations acquired and 5 opened during the year [80]. - The company acquired substantially all the assets of Gateway Supply Company, Inc. for a net purchase price of $106.3 million, consisting of $4.0 million in cash and 280,215 shares of Common stock [118]. - The company acquired Capitol, a distributor of air conditioning and heating products, for a total consideration of $3.1 million in cash and $1.9 million for repayment of indebtedness [119]. - The company continues to evaluate potential acquisitions and joint ventures, believing its financial position allows for obtaining additional debt financing or raising capital through equity securities if needed [120]. Expenses and Financial Management - Selling, general and administrative expenses decreased by 1% to $319.8 million for Q3 2023, with a same-store basis decrease of 2% compared to 2022 [85]. - Selling, general and administrative expenses for the nine months ended September 30, 2023, decreased by 1% to $911.0 million [94]. - Net interest expense increased by $1.4 million, or 291%, in Q3 2023 due to higher effective interest rates and increased borrowings [87]. - Cash flows provided by operating activities decreased by $95.6 million to $263.3 million for the nine months ended September 30, 2023 [105]. Market Conditions and Challenges - The company experienced a 1% revenue impact in Q3 2023 due to supply chain disruptions, with an estimated 3% impact for the first nine months of 2023 [73]. - The company anticipates continued challenges from inflationary pressures and supply chain disruptions affecting product availability and lead times [73]. - The U.S. Inflation Reduction Act of 2022 is expected to increase demand for higher-efficiency HVAC products, with $4.3 billion allocated for state-administered consumer rebate programs [72]. Shareholder Returns and Stock Management - The company paid cash dividends of $7.35 per share on Common and Class B common stock during the nine months ended September 30, 2023, compared to $6.35 per share in the same period of 2022 [121]. - The company has repurchased a total of 6,370,913 shares of Common and Class B common stock at a cost of $114.4 million since the inception of the repurchase program, with 1,129,087 shares remaining authorized for repurchase [122]. - The valuation of the RSI Shareholders' common stock was approximately $426.0 million as of September 30, 2023, based on the criteria set forth in the Shareholders' Agreement [116]. - The company has the discretion to fund up to 80% of any purchase from the RSI Majority Holders using Watsco Common stock, with a limit of $125.0 million on the amount of RSI shares that may be sold during any rolling 12-month period [117]. Other Income and Financial Activities - Other income increased to $9.5 million in Q3 2023 from $6.9 million in Q3 2022, reflecting the company's 38.1% equity interest in Russell Sigler, Inc. [86]. - During the nine months ended September 30, 2023, the company issued and sold 45,000 shares of Common stock under the ATM Program for net proceeds of $15.2 million, with $284.7 million remaining available for sale under the program [113]. - The company entered into a second amended and restated sales agreement with Baird, removing GS as a sales agent under the ATM Program [114]. - There have been no material changes to the information regarding market risk since the last annual report [123].

Financial Performance - Revenues for Q2 2023 were $2,003.1 million, a decrease of 6% compared to $2,133.8 million in Q2 2022[84] - Same-store sales declined by 6%, from $2,131.3 million in Q2 2022 to $1,996.3 million in Q2 2023[85] - Gross profit for Q2 2023 was $562.6 million, down 6% from $595.5 million in Q2 2022, with a gross margin improvement to 28.1%[87] - Revenues for the first half of 2023 were $3,553.7 million, a decrease of $103.6 million, or 3%, compared to the first half of 2022[94] - Same-store sales for the first half of 2023 were $3,542.7 million, down $110.6 million, or 3%, from the same period in 2022[95] - Gross profit for the first half of 2023 was $1,010.8 million, a decrease of $35.1 million, or 3%, with a gross margin of 28.4%[96] - Net income attributable to Watsco, Inc. for Q2 2023 decreased by $19.8 million, or 10%, compared to Q2 2022, primarily due to lower revenues and gross profit[93] Expenses and Costs - Selling, general and administrative expenses decreased by 3% to $304.2 million in Q2 2023, representing 15.2% of revenues[88] - Selling, general and administrative expenses for the first half of 2023 were $591.2 million, down $6.9 million, or 1%, compared to the first half of 2022[97] - Interest expense, net for the first half of 2023 increased by $2.4 million, or 142%, primarily due to a higher effective interest rate[100] Inventory and Working Capital - The company estimates that revenues were negatively impacted by approximately 4% in Q2 2023 due to constrained inventory availability[76] - Working capital increased to $1,926.6 million as of June 30, 2023, from $1,392.2 million at December 31, 2022, driven by higher inventory and accounts receivable[108] Cash Flow and Dividends - Cash flows used in operating activities for the first half of 2023 were $(89.2) million, a decrease of $162.3 million compared to $73.1 million in 2022[109] - Cash dividends paid per share of Common stock were $4.90 for the six months ended June 30, 2023, compared to $4.15 for the same period in 2022[122] - The Board of Directors declared a quarterly cash dividend of $2.45 per share on July 3, 2023, to be paid on July 31, 2023[122] Acquisitions and Investments - On March 3, 2023, a subsidiary acquired Capitol for a total consideration of $3.1 million, which includes $1.3 million in cash and $1.8 million for debt repayment[120] - The company is actively evaluating potential acquisitions and believes its financial position allows for obtaining additional debt financing or raising capital through equity securities if needed[121] - The company routinely holds discussions with several acquisition candidates, indicating a proactive approach to growth through potential mergers and acquisitions[121] - The agreement with RSI Majority Holders allows Carrier Enterprise I to fund up to 80% of any purchase using Watsco Common stock, with a limit of $125.0 million on shares sold in any rolling 12-month period[119] Environmental Impact - The company averted an estimated 17.4 million metric tons of CO2e emissions from January 1, 2020, to June 30, 2023, through the sale of higher-efficiency HVAC systems[73] - The Inflation Reduction Act of 2022 is expected to increase demand for high-efficiency HVAC products, with $4.3 billion allocated for consumer rebate programs[75] - The transition to higher SEER products, effective in 2023, has created challenges in supply chain and product availability, impacting revenue[76] Company Operations - The company operates 673 locations as of June 30, 2023, with no net change in locations from the previous year[83] - There have been no material changes to market risk disclosures since the last annual report[124]

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, 2023 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 ...

☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☐ 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 incorporation or organization) (I.R.S. Employer ...

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 September 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 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Commission file numb ...

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 ...

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) Indicate by check mark whether t ...

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. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or or ...