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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 13, 2024
WATSCO, INC.
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of incorporation)
1-5581 59-0778222
(Commission (IRS Employer
File Number) Identification No.)
2665 South Bayshore Drive
,
Suite 901
Miami
,
Florida
33133
(Address of principal executive offices, including zip code)
(305)
714-4100
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule
14a-12
under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d- 2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Name of each exchange
Symbols 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
Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 ((s)230.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 ((s)240.12b-2 of this
chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act.
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Item 2.02. Results of Operations and Financial Condition
On February 13, 2024, Watsco, Inc., a Florida corporation (the "Company"),
issued a press release reporting its financial results for the quarter and
year ended December 31, 2023. A copy of the Company's press release is
furnished as Exhibit 99.1 to this Current Report on Form
8-K
and is hereby incorporated by reference in this Item 2.02.
Item 7.01. Regulation FD Disclosure
The information set forth in Item 2.02 of this Current Report on Form
8-K
is incorporated by reference in this Item 7.01.
On February 13, 2024, the Company issued a press release announcing a 10%
increase in its annual dividend rate to $10.80 per share on each outstanding
share of its Common and Class B common stock. A copy of the Company's press
release is attached hereto as Exhibit 99.2 and is hereby incorporated by
reference in this Item 7.01.
The information contained in this Current Report on Form
8-K,
including Exhibit 99.1 and Exhibit 99.2 attached hereto, shall be deemed
"furnished" and not deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that section, nor shall it be deemed incorporated by reference
in any Company filing under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit Description
Number
99.1 Press release dated February 13, 2024 issued by Watsco, Inc.
99.2 Press release dated February 13, 2024 issued by Watsco, Inc.
104 Cover Page Interactive Date File (embedded within the Inline XBRL document)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
WATSCO, INC.
Dated: February 13, 2024 By: /s/ Ana M. Menendez
Ana M. Menendez,
Chief Financial Officer
Exhibit 99.1
Watsco Reports Strong 2023 Performance Gaining Share in a Soft Market
Boosts Annual Dividend 10% to $10.80 Per Share
Entrepreneurial Culture, Transformational Technologies, Strong Financial
Position
Continue to Provide Results and Significant Opportunities
MIAMI, FLORIDA - (GLOBENEWSWIRE), February 13, 2024 - Watsco, Inc. (NYSE: WSO)
reported its results for the fourth quarter and full year endedDecember 31,
2023. The Company also provided commentary on business trends, growth
opportunities, technology innovation and its financial strength.
Watsco began its distribution strategy in 1989 and today operates the largest
distribution network for HVAC/R products in North America. The Company's692
locations serve over 125,000 contractors across the United States, Canada,
Mexico, Puerto Rico and Latin America. Since 1989, Watsco's entrepreneurial,
growth-focused culture has driven compounded annual growth rates (CAGRs)
ofsales and operating income of 15% and 18%, respectively, reflecting strong
performance across many macroeconomic and industry cycles.
Watsco alsoannounced today that its Board of Directors approved a 10% annual
dividend increase to $10.80 per share effective with the next regular
quarterly payment to be declared in April 2024. This year marks the Company's
50
th
consecutive year of paying dividends. This reflects the Company's
on-going
confidence as well as the strength of its balance sheet, which reflected
netcash as of December 31, 2023. Watsco remains well-positioned to invest in
most
any-sized
opportunity to build further scale in the estimated $60 billion highly-fragmente
d North American HVAC/Rdistribution market.
2023 Performance and HVAC/R Market Trends
Results in 2023 were achieved against the backdrop of record-setting
performance in 2022 and 2021. 2022 sales and EPS grew 16% and 43% (32% on an
adjustedbasis), respectively, which followed 2021 sales and EPS growth of 24%
and 54%, respectively. Outperformance during 2022 and 2021 was driven by
unusually high levels of replacement demand, above-average inflationary
pricing actions by theCompany's suppliers that benefited sales and gross
margins and generally stronger
end-markets.
In contrast,2023 performance reflects softer market conditions with more
conventional levels of pricing actions and normalized levels of HVAC system
replacement. Based on published industry data, annual OEM shipments of unitary
HVAC systems declined byapproximately 15% in 2023 (over 30% decline during the
fourth quarter). By contrast, Watsco's unit volume for unitary HVAC systems
decreased 8% during 2023 (a 4% decline during the fourth quarter), reflecting
a more balanced performance in themidst of a challenging industry backdrop.
2023 results also reflect a significant product transition to higher-efficiency
systems in response toregulatory requirements that went into effect on January
1, 2023. An estimated 60% of 2023 HVAC equipment sales represented new
products in 2023. The transition was completed across several fronts,
including the conversion of inventory for25+ brands of HVAC equipment,
realization of new pricing to sustain margin and competitiveness, large-scale
movement and logistics with OEM partners and wide-scale contractor training
and support.
In response to changing conditions, actions were taken in 2023 to improve
operating efficiency, resulting in a 1% reduction in same-store SG&A.
Furtheractions will be implemented in 2024 to gain additional efficiencies as
market conditions recover. Watsco also actively reduced inventories during the
latter half of 2023 to further improve operating efficiency, conform inventory
levels to currentconditions and generate cash flow. Fourth quarter operating
cash flow in 2023 increased 40% to a record $299 million, including a $208
million reduction in inventories.
1
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Albert H. Nahmad, Watsco's Chairman and CEO, commented: "In many respects, we
consider 2023 anexceptional year given the extraordinary performance during
the two preceding years and considering the softer comparative market
conditions that have followed. We achieved market share gains during a down
market, scaled the adoption ofWatsco's industry-leading technology platforms,
drove productivity gains, expanded our network, fortified the quality of our
balance sheet and once again provided our shareholders a meaningful dividend
increase."
Fourth Quarter Results
. 1% sales growth to a record $1.60 billion
. Gross profit of $414 million (gross margin of 25.8%)
. SG&A expenses increased 4% (SG&A was flat on a same-store basis)
. Operating income of $108 million versus $137 million last year (operating margin of 6.7%)
. EPS of $2.06 in 2023 versus $3.55 in 2022 ($2.35 on an adjusted,
non-GAAP
basis in 2022)
. 40% increase in operating cash flow to a record $299 million
Sales trends (excludes acquisitions)
. 2% decrease in sales
. Flat sales for HVAC equipment (69% of sales)
. 6% decline in other HVAC products (27% of sales)
. 3% decline in commercial refrigeration products (4% of sales)
It is important to note that the fourth and first quarters of each calendar
year are highly seasonal due to the nature and timing of the replacement of
HVACsystems. Results are typically strongest in the second and third quarters
and the Company's fourth quarter financial results are disproportionately
affected by seasonality.
Full-Year Results
. Record sales of $7.28 billion versus $7.27 billion last year
. Gross profit of $1.99 billion compared to $2.03 billion last year (gross margin of 27.4%)
. SG&A expenses of $1.22 billion, flat versus last year (1% decline on a same-store basis)
. Operating income decreased 4% to $795 million (operating margin of 10.9%)
. EPS of $13.67 in 2023 versus $15.41 in 2022 ($14.20 on an adjusted,
non-GAAP
basis in 2022)
. Operating cash flow of $562 million compared to $572 million last year
Sales trends (excludes acquisitions)
. 1% decrease in sales
. Flat sales for HVAC equipment (69% of sales)
. 5% decrease in other HVAC products (27% of sales)
. 5% growth in commercial refrigeration products (4% of sales)
Technology Leadership and Continued Innovation
Watsco continued to invest and scale its industry-leading technology
platforms, which collectively transform the customer experience, enhance
operationalefficiencies and help contractors grow faster as they deliver a
more contemporary experience to homeowners and businesses. Customer-facing
technology highlights include:
. E-commerce
sales grew 5% in 2023 to $2.4 billion, or approximately34% of total sales.
. Active
e-commerce
users experienced nearly 50% less attrition than
non-e-commerce
users.
. Watsco's product information management (PIM) platform expanded to more than 1.5 million SKUs
. Watsco's authenticated user community for HVAC Pro+ Mobile Apps expanded to approximately 55,000 users.
. The gross merchandise value
of products sold onOnCallAir
(R)
, Watsco's proprietary digital sales platform for contractors, increased 28% to $1.2
billion during 2023 with quote volume expanding 14% to approximately 256,000households.
Investments in technologies have also been made to drive productivity, enhance
operations and improve profitability:
. Pricing optimization software to provide analytics and insights on the more than 200,000 SKUs
sold with the goalto modernize historical processes, enhance competitiveness and improve margins.
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. Proprietary warehouse management and order fulfillment systems to enable faster
and more reliable customerservice and to accelerate the fulfillment of orders.
. Demand planning and inventory optimization tools to improve fulfillment rates and inventory turns.
. Logistics and operations software and expertise to facilitate more efficient movement of products.
A.J. Nahmad, Watsco's President, added: "Watsco continues to transform every
aspect of its business through technology. Forover a decade, our contractor-base
d platforms have helped Watsco build market share, accelerate customer
acquisition and drive margin expansion. We are also excited about the
business-process related investments we have made to drive greaterproductivity
across the organization. We are now imagining how AI will influence the daily
lives of our customers and employees. We think in terms of decades, and we
remain committed to investing more over time as we believe these technologiespro
vide a distinct, long-term competitive advantage."
Industry Catalysts
Various industry catalysts are influencing Watsco's marketplace. The Company
believes its scale, entrepreneurial culture, OEM relationships, leadingtechnolog
ies and financial strength provide important competitive advantages to
optimize the opportunities provided by these catalysts.
RegulatoryChanges
. In response to climate change, the Federal government and various states
have enacted laws and regulations, including tax credits, to incentivize the
replacement of aging HVAC systems with more energy-efficient and environmentally
friendly systems. New efficiency standards became effective January 1, 2023
that raised the minimum required efficiency for HVAC systems nationwide. In
addition, regulations went into effect on January 1, 2024 mandating a 30%
phase down inthe manufacture of refrigerants used in older HVAC systems and a
transition to new HVAC systems that contain
lower-GWP
refrigerants. Watsco has historically benefited from these regulatory changes
ascontractors and end users transition to the new systems.
Electrification and Transition to Heat Pumps
. The movement toward electrificationof heating systems, utilizing heat pumps
in lieu of gas furnaces and other forms of fossil-fuel heating, is also an
important trend. The operating characteristics of heat pumps have improved
such that they are now effective substitutes for many ofthe millions of fossil
fuel-burning heating systems used throughout North America. Sales of heat
pumps in 2023 once again outpaced the growth rates for conventional
fossil-fuel heating systems (primarily gas furnaces). Watsco sold over 700,000
heatpump units across 25+ different brands during 2023.
Growth of Ductless HVAC Systems
.
The growing acceptance of ductless HVACproducts by both contractors and
end-market
users benefits Watsco, as we are among the leading distributors of ductless
HVAC products used in both residential and commercial applications. Sales of
ductlessproducts across Watsco grew 12% in 2023.
Acquisitions
Watsco has acquired 69 successful companies since 1989 and is actively seeking
additional opportunities to invest and grow through acquisitions.Watsco
recently completed three acquisitions as follows:
Capitol District Supply
. Founded in 1945, Capitol District operates three locationsin upstate New
York and is led by third generation members of its founding family. Capitol
District generated revenues of approximately $13 million in calendar year
2023. The transaction was completed in March 2023.
Gateway Supply Company
.
Founded in 1964, Gateway operates 15 locations throughout South Carolina and
one location inCharlotte, North Carolina. Gateway is led by second generation
members of its founding family. Gateway generated revenues of approximately
$180 million in calendar year 2023. The transaction was completed in September
2023.
Commercial Specialists
.
Founded in 1964, Commercial Specialists operates two locations in Southern
Ohio and is led bysecond and third generation members of its founding family.
Commercial Specialists generated revenues of approximately $13 million in
calendar year 2023. The transaction was completed in February 2024.
3
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Consistent with Watsco's
buy-and-build
acquisition strategy, these companies will operate under their existing names
and under the direction of existing leadership to provide continuity
tocustomers, employees and OEM partners. Watsco will provide the resources,
capital and technology needed to assist in achieving their growth plans.
Cash Flow & Dividends
Watsco'sfull-year operating cash flow for 2023 was $562 million compared to
$572 million last year (a record $299 million in operating cash flow for the
fourth quarter). The Company's philosophy is to share increasing amountsof
cash flow through higher dividends while maintaining a conservative financial
position with continued capacity to build its distribution network. The
Company's Board of Directors authorized a 10% increase in Watsco's
annualdividend rate effective in April 2024 to $10.80 per share. Future
dividend increases will be considered in light of investment opportunities,
general economic conditions and the Company's overall financial position.
Tax Benefit Included in 2022's Reported Results
2022's full-year and fourth quarter results reflect the vesting of restricted
stock, which provided the Company a $49 million tax benefit in2022 pursuant to
Accounting Standards Update (ASU)
2016-09,
Improvements to Employee Share-Based Payment Accounting,
as well as $3.6 million in incremental SG&A expenses,primarily related to
employment-related taxes. The net benefit to 2022's fourth quarter EPS and
full-year EPS was $1.20 and $1.21, respectively. Due to the infrequent nature
of this event, certain key performance metrics for 2022are presented on an
"adjusted" basis to exclude the impact. Please see "Use of
Non-GAAP
Financial Information" below.
Earnings Conference Call Information
Date andtime: February 13, 2024 at 10:00 a.m. (ET)
Webcast:
http://investors.watsco.com
(a replay will be available on the Company's website)
Dial-in
number: United States (844)
883-3908
/ International (412)
317-9254
Use of
Non-GAAP
Financial Information
In this release, the Company discloses certain performance measures on a
"same-store basis," which are
non-GAAP
and exclude the effects of locations closed, acquired, or locations opened, in
each case during the immediately preceding 12 months, unless such locations
are within close geographical proximity toexisting locations. The Company also
discloses operating income, operating margins and diluted EPS on an adjusted,
non-GAAP
basis to exclude the impact caused by the vesting of restricted stock
onOctober 15, 2022 as described above. The Company believes that this
information provides greater comparability regarding its ongoing operating
performance. These measures should not be considered an alternative to
measurements required by U.S.GAAP. Adjusted GAAP measures are useful to assist
our investors in evaluating our ongoing operating performance for the current
reporting period and, where provided, over different reporting periods.
Adjusted GAAP measures should not be consideredin isolation or as a substitute
for income statement data prepared in accordance with GAAP and our
presentation of Adjusted GAAP measures may not be comparable to similarly-titled
measures used by other companies.
Operating income, a GAAP measure, reconciled to operating income on an
adjusted basis, a
non-GAAP
measure:
Quarter Ended Year Ended
December 31, December 31,
2023 2022 2023 2022
Operating $ 107,748 $ 137,179 $ 794,810 $ 831,578
income
Primarily employment taxes related -- 3,636 -- 3,636
to the vesting of restricted stock
Operating income on $ 107,748 $ 140,815 $ 794,810 $ 835,214
an adjusted basis
Operating 6.7 % 8.7 % 10.9 % 11.4 %
margin
Operating margin on 6.7 % 8.9 % 10.9 % 11.5 %
an adjusted basis
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Diluted EPS for Common and Class B common stock, a GAAP measure, reconciled to
diluted EPS for Commonand Class B common stock on an adjusted basis, a
non-GAAP
measure:
Quarter Ended Year Ended
December 31, December 31,
2023 2022 2023 2022
Diluted earnings per share for $ 2.06 $ 3.55 $ 13.67 $ 15.41
Common and Class B common stock
Primarily employment taxes related -- 0.08 -- 0.08
to the vesting of restricted stock
Tax related benefit from the -- (1.28 ) -- (1.29 )
vesting of restricted stock
Diluted earnings per share for Common and $ 2.06 $ 2.35 $ 13.67 $ 14.20
Class B common stock on an adjusted basis
About Watsco
Watsco operates the largest distribution network for heating, air conditioning
and refrigeration (HVAC/R) products with locations in the United States,
Canada,Mexico, and Puerto Rico, and on an export basis to Latin America and
the Caribbean. Watsco estimates that over 350,000 contractors and technicians
visit or call one of its 692 locations each year to get information, obtain
technical support and buyproducts.
Our business is focused on the replacement market, which has increased in size
and importance as a result of the aging of installed systems,the introduction
of higher energy efficient models and the necessity of HVAC products in homes
and businesses. According to data published in March 2023 by the Energy
Information Administration, there are approximately 102 million HVAC
systemsinstalled in the United States that have been in service for more than
10 years, most of which operate well below current minimum efficiency
standards.
Accordingly, Watsco has the opportunity to be a significant and important
contributor toward climate change as its business plays an important role in
thedrive to lower CO2e emissions. According to the Department of Energy, HVAC
systems account for roughly half of U.S. household energy consumption. As
such, replacing existing systems at higher efficiency levels is one of the
most meaningful stepshomeowners can take to reduce electricity consumption and
carbon footprint over time.
Based on estimates validated by independent sources, Watsco avertedan
estimated 19.2 million metric tons of CO2e emissions from January 1, 2020 to
December 31, 2023 through the sale of replacement HVAC systems at
higher-efficiency standards, an equivalent of removing 4.3 million gas
poweredvehicles annually off the road. More information, including sources and
assumptions used to support the Company's estimates, can be found at
www.watsco.com
.
This document includes certain "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Theseforward-looking
statements may address, among other things, our expected financial and
operational results and the related assumptions underlying our expected
results. These forward-looking statements are distinguished by use of words
such as"will," "would," "anticipate," "expect," "believe," "designed," "plan,"
or "intend," the negative of these terms, and similar references to future
periods. Thesestatements are based on management's current expectations and
are subject to uncertainty and changes in circumstances. Actual results may
differ materially from these expectations due to changes in economic,
business, competitive market, newhousing starts and completions, capital
spending in commercial construction, consumer spending and debt levels,
regulatory and other factors, including, without limitation, the effects of
supplier concentration, competitive conditions withinWatsco's industry, the
seasonal nature of sales of Watsco's products, the ability of the Company to
expand its business, insurance coverage risks and final GAAP adjustments.
Detailed information about these factors and additional importantfactors can
be found in the documents that Watsco files with the Securities and Exchange
Commission, such as Form
10-K,
Form
10-Q
and Form
8-K.
Forward-looking statements speak only as of the date the statements were made.
Watsco assumes no obligation to update forward-looking information to reflect
actual results, changes in assumptions orchanges in other factors affecting
forward-looking information, except as required by applicable law.
5
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WATSCO, INC.
Condensed Consolidated Results of Operations
(In thousands, except per share data)
(Unaudited)
Quarter Ended Year Ended
December 31, December 31,
2023 2022 2023 2022
Revenues $ 1,603,197 $ 1,581,223 $ 7,283,767 $ 7,274,344
Cost of 1,188,781 1,147,673 5,291,627 5,244,055
sales
Gross 414,416 433,550 1,992,140 2,030,289
profit
Gross profit 25.8 % 27.4 % 27.4 % 27.9 %
margin
SG&A 312,461 301,753 1,223,507 1,221,382
expenses
Other 5,793 5,382 26,177 22,671
income
Operating 107,748 137,179 794,810 831,578
income
Operating 6.7 % 8.7 % 10.9 % 11.4 %
margin
Interest (income) (1,000 ) 14 4,920 2,165
expense, net
Income before 108,748 137,165 789,890 829,413
income taxes
Income tax expense 11,007 (19,965 ) 155,751 125,717
(benefit)
Net 97,741 157,130 634,139 703,696
income
Less: net income 15,194 19,459 97,802 102,529
attributable to
non-controlling
interest
Net income $ 82,547 $ 137,671 $ 536,337 $ 601,167
attributable to Watsco
Diluted earnings
per share:
Net income attributable $ 82,547 $ 137,671 $ 536,337 $ 601,167
to Watsco shareholders
Less: distributed and undistributed earnings 6,707 9,390 36,932 51,294
allocated to restricted common stock
Earnings allocated to $ 75,840 $ 128,281 $ 499,405 $ 549,873
Watsco shareholders
Weighted-average Common and Class B common shares and 36,809,454 36,141,047 36,531,683 35,683,634
equivalent shares used to calculatediluted earnings per share
Diluted earnings per share for $ 2.06 $ 3.55 $ 13.67 $ 15.41
Common and Class B common stock
6
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WATSCO, INC.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
December 31, December 31,
2023 2022
Cash and cash equivalents $ 210,112 $ 147,505
Accounts receivable, net 797,832 747,110
Inventories, net 1,347,289 1,370,173
Other 36,698 33,951
Total current assets 2,391,931 2,298,739
Property and equipment, net 136,230 125,424
Operating lease 368,748 317,314
right-of-use
assets
Goodwill, intangibles, net and other 832,273 746,737
Total assets $ 3,729,182 $ 3,488,214
Accounts payable and accrued expenses $ 611,747 $ 759,525
Current portion of lease liabilities 100,265 90,597
Borrowings under prior revolving credit agreement -- 56,400
Total current liabilities 712,012 906,522
Borrowings under current revolving credit agreement 15,400 --
Operating lease liabilities, net of current portion 276,913 232,144
Deferred income taxes and other liabilities 108,667 101,270
Total liabilities 1,112,992 1,239,936
Watsco's shareholders' equity 2,229,839 1,889,237
Non-controlling 386,351 359,041
interest
Shareholders' equity 2,616,190 2,248,278
Total liabilities and shareholders' equity $ 3,729,182 $ 3,488,214
7
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WATSCO, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
Year Ended December 31,
2023 2022
Cash flows from operating activities:
Net income $ 634,139 $ 703,696
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 35,090 31,683
Share-based compensation 30,000 28,821
Deferred income tax (benefit) provision (7,179 ) 13,466
Provision for doubtful accounts 7,158 8,539
Other income from investment in unconsolidated entity (26,177 ) (22,671 )
Other, net 8,719 5,122
Changes in working capital, net of effects of acquisitions
Accounts receivable, net (36,035 ) (60,154 )
Inventories, net 64,620 (259,860 )
Accounts payable and other liabilities (162,042 ) 121,993
Other, net 13,661 1,329
Net cash provided by operating activities 561,954 571,964
Cash flows from investing activities:
Capital expenditures, net (34,172 ) (33,789 )
Business acquisitions, net of cash acquired (3,822 ) (47 )
Investment in unconsolidated entity (2,849 ) --
Other investment (500 ) --
Net cash used in investing activities (41,343 ) (33,836 )
Cash flows from financing activities:
Dividends on Common and Class B Common stock (382,646 ) (332,447 )
Distributions to noncontrolling interest (73,589 ) (69,184 )
Net repayments under revolving credit agreement (41,000 ) (32,600 )
Repurchases of common stock to satisfy employee withholding tax obligations (2,828 ) (87,107 )
Proceeds from NCI for investment in unconsolidated entity 570 --
Net proceeds from the sale of common stock 15,179 --
Other 24,238 17,380
Net cash used in financing activities (460,076 ) (503,958 )
Effect of foreign exchange rate changes on cash and cash equivalents 2,072 (4,933 )
Net increase in cash and cash equivalents 62,607 29,237
Cash and cash equivalents at beginning of year 147,505 118,268
Cash and cash equivalents at end of year $ 210,112 $ 147,505
8
Exhibit 99.2
Watsco Boosts Annual Dividend 10% to $10.80 Per Share
MIAMI, FLORIDA --(GLOBENEWSWIRE), February 13, 2024 -- Watsco, Inc. (NYSE:WSO)
announced that its Board of Directors approved a 10% increase in its annual
dividend to $10.80 per share on each outstanding share of its Common andClass
B common stock. The increase will be reflected in the Company's next quarterly
dividend payment in April 2024.
Albert H. Nahmad,Watsco's Chairman & CEO stated: "We are pleased to increase
dividends to shareholders, reflecting the strength of our 2023 performance and
our confidence in the prospects of our business, which is fundamentally
supported by ourstrong balance sheet."
Watsco has paid dividends to shareholders for 50 consecutive years. The
Company's philosophy is to share increasingamounts of cash flow through higher
dividends while maintaining a conservative balance sheet with continued
capacity to build its distribution network. Future changes in dividends are
considered in light of investment opportunities, cash flow,general economic
conditions and Watsco's overall financial condition.
About Watsco
Watsco operates the largest distribution network for heating, air conditioning
and refrigeration (HVAC/R) products with locations in the United States,
Canada,Mexico, and Puerto Rico, and on an export basis to Latin America and
the Caribbean. Watsco estimates that over 350,000 contractors and technicians
visit or call one of its 692 locations each year to get information, obtain
technical support and buyproducts.
Our business is focused on the replacement market, which has increased in size
and importance as a result of the aging of installed systems,the introduction
of higher energy efficient models and the necessity of HVAC products in homes
and businesses. According to data published in March 2023 by the Energy
Information Administration, there are approximately 102 million HVAC
systemsinstalled in the United States that have been in service for more than
10 years, most of which operate well below current minimum efficiency
standards.
Accordingly, Watsco has the opportunity to be a significant and important
contributor toward climate change as its business plays an important role in
thedrive to lower CO2e emissions. According to the Department of Energy, HVAC
systems account for roughly half of U.S. household energy consumption. As
such, replacing existing systems at higher efficiency levels is one of the
most meaningful stepshomeowners can take to reduce electricity consumption and
carbon footprint over time.
Based on estimates validated by independent sources, Watsco avertedan
estimated 19.2 million metric tons of CO2e emissions from January 1, 2020 to
December 31, 2023 through the sale of replacement HVAC systems at
higher-efficiency standards, an equivalent of removing 4.3 million gas
poweredvehicles annually off the road. More information, including sources and
assumptions used to support the Company's estimates, can be found at
www.watsco.com
.
This document includes certain "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Theseforward-looking
statements may address, among other things, our expected financial and
operational results and the related assumptions underlying our expected
results. These forward-looking statements are distinguished by use of words
such as"will," "would," "anticipate," "expect," "believe," "designed," "plan,"
or "intend," the negative of these terms, and similar references to future
periods. Thesestatements are based on management's current expectations and
are subject to uncertainty and changes in circumstances. Actual results may
differ materially from these expectations due to changes in economic,
business, competitive market, newhousing starts and completions, capital
spending in commercial construction, consumer spending and debt levels,
regulatory and other factors, including, without limitation, the effects of
supplier concentration, competitive conditions withinWatsco's industry, the
seasonal nature of sales of Watsco's products, the ability of the Company to
expand its business, insurance coverage risks and final GAAP adjustments.
Detailed information about these factors and additional importantfactors can
be found in the documents that Watsco files with the Securities and Exchange
Commission, such as Form
10-K,
Form
10-Q
and Form
8-K.
Forward-looking statements speak only as of the date the statements were made.
Watsco assumes no obligation to update forward-looking information to reflect
actual results, changes in assumptions orchanges in other factors affecting
forward-looking information, except as required by applicable law.
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