Revenue and Sales Performance - Revenues for Q1 2019 increased by $4.7 million, or 1%, with $4.1 million from new locations and a $2.7 million decrease from closed locations [92]. - On a same-store basis, revenues increased by $3.3 million, reflecting a 2% increase in HVAC equipment sales, a 2% decrease in other HVAC products, and a 4% decrease in commercial refrigeration products [92]. Profitability - Gross profit for Q1 2019 increased by $2.9 million, or 1%, with a gross profit margin improvement to 25.1% from 24.9% [93]. - Net income attributable to Watsco for Q1 2019 increased by $0.8 million, or 2%, driven by higher revenues and expanded profit margins [98]. Expenses - Selling, general and administrative expenses for Q1 2019 increased by $1.5 million, or 1%, remaining consistent at 19.3% of revenues [94]. - Interest expense, net, increased by $0.2 million, or 37%, due to higher average outstanding borrowings [96]. Cash Flow and Working Capital - Cash flows provided by operating activities increased to $52.9 million in Q1 2019 from a negative $41.6 million in Q1 2018, a change of $94.5 million [106]. - Working capital decreased to $1,020.6 million at March 31, 2019, from $1,084.2 million at December 31, 2018, primarily due to lease liabilities [103]. Tax and Financial Position - The effective income tax rates were 22.7% for Q1 2019, down from 23.8% in Q1 2018, due to higher share-based payment deductions [97]. - The company believes its financial position allows for obtaining additional debt financing or raising capital through equity securities for future acquisitions [116]. Investments and Acquisitions - The company acquired a 1.8% additional ownership interest in RSI for $4.9 million, increasing its total ownership to 38.1% [113]. - On April 2, 2019, a subsidiary acquired assets of Dunphey & Associates for $16.8 million in cash and $7.5 million in stock [115]. - The estimated purchase amount for additional ownership interests in RSI is approximately $142 million [114]. Shareholder Returns - Cash dividends paid were $1.60 per share in Q1 2019, up from $1.25 per share in Q1 2018 [117]. - A total of 6,370,913 shares have been repurchased under the share repurchase program at a cost of $114.4 million since its inception [118]. Company Operations - The company operates 575 locations as of March 31, 2019, an increase from 571 locations at the end of 2018 [91]. - The company maintains a $500 million revolving credit agreement, with $137.5 million outstanding as of March 31, 2019 [110]. Investing and Financing Activities - Net cash used in investing activities rose to $4.1 million in Q1 2019, compared to $3.4 million in Q1 2018, reflecting higher capital expenditures [108]. - Net cash used in financing activities increased to $54.9 million in Q1 2019, down from $23.3 million in Q1 2018, primarily due to lower borrowing requirements and increased dividends paid [109].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K 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 organization) FLORIDA 59-0778222 (I.R.S. Employer Identification No.) ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 For the Fiscal Year Ended December 31, 2018 or ☐ Transition Report Pur ...