Watsco (WSO) 16 Feb 232022 Q4 Earnings call transcript

Good morning, and welcome to the Watsco Fourth Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there’ll be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Albert Nahmad, CEO and Chairman. ahead. go Please

CEO; I Logan struck everyone. quarter everyone healthy and Chairman is call. Nahmad, is Good of Rick President the do Gomez. virus. not Watsco; and Nahmad, Al by this Johnston, fourth with Welcome and me And A.J. Barry morning, Paul is hope and and to earnings our

harbor and forward-looking Before provisions materially to as defined statements call has we start, forward-looking laws, pursuant various here these from made is SEC of our regulations laws ultimate cautionary the differ are safe statement. statement. This conference may that by results the

Now, Watsco fantastic quarter close year. out delivered a an exceptional to

We are were prior fourth the year, of especially sales were up last XX%. and the share quarter year, up I per say because pleased, should XX% in earnings

today we against fourth results in the prior reporting of the performance are quarter that the year. were So

the XX% do adjusted to grew of did points increased income earnings $X.X on record prior how record increased to record $X.XX. margins EBIT per to sales a a fourth So Well, a of XX% and X% XX X.X%, expanded year to million. quarter basis $XXX operating XXXX? Adjusted share we this billion.

we Now, what explain going adjustment through the we’re here. as to go

running were XX%. sales per the share So, fourth quarter was XX% and remember, this results prior where up up year, against were earnings

think we we So did well.

a basis to income record $XX.XX. Adjusted Now a to for points the share full XX.X%, $XXX expanded year, increased to earnings a increased per XX% operating XXX to EBIT sales $X.X billion. and grew record XX% XX% million. adjusted margins record

per were added in and the I that restricted adjusted million, from $X.XX the net should a figures Those what share adjusted you. $XX per benefit the numbers adjustment share million $XX say, of Now, figures These quarter vesting just excluded for the I year. the means. which – for shares, earnings clarify gave let the exclude figures me $X.XX earnings once tax again, including

$XXX a like cash all. and ended year million if doing I we at debt, the balance flow little XXXX a important, of with having generated a very very And debt, record sheet no any strong and virtually

Watsco great as businesses, Our technology any opportunity to continue we a billion and market. for people and is a And we on family in financial in we in very acquisitions Well, why sustain build strength is to because to American invest North for home build continue $XX to fragmented us we great ability gives most secure distributor invest the as legacies. look provide their we and that? cultures, scale

which acquires long-term, different in other industry. on always us makes is than focus the Our

develop growing challenged and our aggressive share have our leadership build We team to growth market upon and diversity, leadership our utilizing scale, position. plans, technology product

partners regulatory we and industry To that ahead with develop positive light forward-looking some there’s of growth in and our to particularly are lie initiatives, the working collaboratively various ones. that catalysts good end, OEM

across This encouraged progress do and quarter improving those focus, we network. areas and but more are results are also to both, sustaining and efficiencies on more and reflect continued of achieving our margins efficiencies. There’s by progress on operating intent two operating our our gross key

long-term release support This press growth that morning’s concepts provides details and Watsco’s important trajectory.

creating Some we technologies advantage, engagement, These are are increasing are, advantage. immense gains. we investing attrition grow reducing to an of technology them and that and customer’s market have sustainable share

serve a broad and allows competitive Watsco’s advantage is brands to of environment. contractors in products any addition, In and array us

stability growth market proving leading have Sunbelt a share over in position and also time. markets, We higher

in and our to of Sunbelt those recent seem Sunbelt markets. Regarding a in those we’re in markets works markets, the favor people since that be times, the to lot immigrating leader

for XXXX will us in businesses homeowners that beyond. of the the saving play years. high in standard which HVAC and out well, as regulatory for catalysts growth this a will there industry for introduction energy as and efficiency as pricing XXXX and opportunities equipment, and addition, In important is few very are well opportunity important, next several for saw provide

And harder to also equipment. then new repair in XXXX, and we’ll it to historically market customers new drive systems existing which introduction refrigerant of standards, made

pumps, electrification heat We price towards Sales also during a and margins. the see greater outpacing of pumps and growth movement XX% say, adoption continued come quarter, of grew in should our generally which fourth XXXX, XX% in XX% heat sales grew heat higher overall and XXXX rates. at higher of I pumps

Act Reduction for incentives Inflation upgrades new and the credits efficiency and tax provides electrification. Finally, enhanced

catalysts capture strength the our financial scale, in industry new years that us we believe opportunities. these benefit of will market All to these position certainly and technology the ahead. And

sheet, Finally, in in remains balance coming in invest sheet strength. in we a balance are we always our any financial pristine concern opportunity to that the growth Today’s size of condition years. so about position

extraordinary generate before and more our Watsco have for across as job you’ll to our serve to X,XXX I Lastly, see Q&A, commitment turning like market to service an historic would today. customers. They thank customers of to employees than and performance done their

With that, to on let’s go Q&A.

Tommy come begin Inc. will the question Moll Our [Operator Instructions] now We question-and-answer Stephens from with first session. will

You now go ahead. may

Good morning, Tommy.

Al. morning, Good

are So, mention into operational made I on point more little hoping think, call. a it’s X efficiencies a could to this us what quarters was in insight a row give you And you’ve I even underway will revenue the you if bottom SG&A and revenue, no initiatives this in unlikely line have than slower than grow that the industry pressured volumes year? is faster there and

– and SG&A. color our for without our But certainly profitability, a goal to Barry? bit more our you. little improve significantly we is constantly increasing revenues that’s get let’s Well,

overtime even that and years the all branch XX the was first, any a disruption, variable couple branch components we’re what the tested daily there’s X Yeah, Tommy, to last a and volatile the during SG&A. model, morning, would Tommy. component variable a on And I – the years. in spending say were good on everything when and of most of probably the on say people distribution freight life would just went XX, last manager I obviously that through

in quarter. the and costs, we So those an variable definitely fourth saw improvement reductions

would costs, becoming efficiency create be, would for foreshadowing for this I costs XXXX. of year we’re that say, and forward to also a going some looking is opportunities what and Obviously, again, we the variable which And half inefficiency, is SG&A other XX fixed is there’s inflation cost every it every inflation, the other so have months a been like of or spend. last fixed of there And over our business. probably

that reduced So portfolio. across cost to it’s not simple simply the entire

For would inflation, already improvement. with the costs see seeing moderate some expect costs we’re the more variable and I fixed to

on at the reasonable is manager, there’s person So revenue have much a SG&A more a spend focused net-net, that Watsco, and to set branch I’ll a in leader, growth, versus moderate goal not it. isn’t

to environment play more and learning tools. efficient. track I now we But management we’re to these how it for spent we our not reach business think, as people world And world technology Watsco think also and class within a and those out there. their not class technologies how work provides do going systems, experience are where – be And to think data management our or model have I We’ve I and with systems customers Paul. can efficient know talked what, able business is to efficient where to the you into our add, a where we’re improve same will, Watsco. years also X come more they’re normal, if about with inventory got, use I to we enhances X This them and last efficiencies.

on wanted insight, to a the and on topic Appreciate different Even… follow-up inventories.

always a in years. last of go good by the way topic inflation ahead. It’s the couple with Yeah,

than year more more up lower Well, control likely how your year, make revenue by your much this that’s not have that balance going, improve your And be this on own within end? that was at Al. was is does this sheet where point? chain I is to it Even supply inventory dollars Or if to happen? will

to I’ll over our people. hand it financial

Yeah. two but to probably Again, two there’s way, big the you by XX I’ll answer, or ones. the give pieces the pieces

have is, what keep hedge with we’ve branches. and And last in the times. tested inventory of and Lead either years. are. what levels our we uncertain, just in is times last to the what to That’s or X First times they’re couple need we terms Lead we order determines years. done carry extent what lead disrupted what in what we been and of the

dollars, extent strengthen that in than there become it other inventory consequence involved. the would time. over dependable is we expect absolute would is lead lead and opportunity times there’s to be today less Whether than and factors times lower months confidence lead lower But shorten, and and levels next the to the more the to to So XX it’s of over lowering inventory.

it’s still new of first The it last the old see and product it’s through quarter into second, on experienced trickling but product days branches well. gone paper, they’ve hard today, have biggest from to a careers, the to as in their that in inventory conversion XX piece the going our

over been inventory of respects, next XX also greater levels, not looking reduce the would is forward because couple the than And expect as transition. of So inventory I levels. as to experiencing business kind the meaning And help usual the many through, that itself to of in we’re inventory years. works that months, product last simplicity we’ve

going sell. Correct. A we M little bit to new last sold M of we call from the consider inventory we’re inventory, in our not do inventory, is replacing most MX available have you the we where there, to what which Basically, to year of did markets, that transition all a we inventory. what because what be the saying would with old what Barry’s Sunbelt

turnovers all refresh side, the better have inventory. number we that equipment and to on higher was we of the we’re us, And a complete will have in for the in inventory. of inventory, reduction that as the new in Barry’s a So move think to of it to point, handle result going into efficiencies adding also which SKUs we

Appreciate turn it I’ll back. the insight, and

it better of the all inventory, obviously, on as work leads So cash well. to that flow

so we’re as We’re dealing started manage very inventory. flow forces the better off flow, The are the pay with to you’ve And aware the that in we being all better we that. expect well. cash cash presently of just

you. Thank

go from comes Dave Baird. question with ahead. next Manthey Our Please

Dave. Hi,

margin outlook of talk wondering floor the the is Hey, I looking annual it’s still your mix Good morning, based everyone. Al. gross like and was about current business XX%. you on margin if could approximately gross

Mr. Logon?

this that The most percent selling good the satisfying, of and there’s a the a of changes, selling we job noise. markup is component on margin first, the markup of what margin. sustaining – teams a our and call again, is quarter. lot the sustain it’s a lot we simple conversions, of products. important what market, product margin. And And gross lot of simplest, did because Well, analysis again It’s Dave, most our in great going on increased a lot that’s morning. And

looking margin our that’s And don’t our in what our in think XX% anything forward process a business you’ve XXXX. thought target. – changed in telling there’s as leaders heard So are or analysis either or I us

entrepreneurial either would think you the CEO I of target, greater the it’s interim thought And, anything’s expectations what Dave, your Our tell in have mix target changed process, of don’t than an that. is. but we because

to what are Yeah. approximately R-XXXA hear. what seconds Good for is But you getting and pound for of is question. reference your replacement refrigerant a And refrigerant of somewhat a sales percentage days future now? then of random these right

around $XX it’s by XXXA, get, and pound we $XX, region. do that varies of per What

a jug] [For [ph].

pound. that’s No,

That’s pound.

Okay.

And percentage of that sales. by small a and region, our very it’s varies total

Yeah. Yeah.

Appreciate you much. right. All Thank very it.

bet. You

go will come from Research. Please ahead. Vertical question Sprague next with Our Jeffrey

Good morning, Jeff.

the bit just Hope for good the, disruption the maybe to guys here? geographically the old call there in well. product doing stuff is question. everyone. want granularity Thanks that noise particular transition it, maybe I from think internal But for it can’t come also drill. the there get. needs stranded South little where new, to quarter just we Hey, sell taking the particularly to move? from in back fire about Is Is if that you we should it now a be? call that Is needs I’ll morning, to you inventory any more to you’re first

what aware Well, by year that’s a of we end. very were question. happened very And good

whatever no or answer no care took of branches, is, exposure. was There’s the And very, so small. our there but exposure dipped well. northern to was, And that just we significant very that, we it very

didn’t stranded. That of northern we’re large we because U.S. inventory Because, very indicated, to inventory ever actually, kind we’ve do got is we tier of where a a were in makes company, Watsco move, that North, as we sell. South, little national the available it’s business East, sure the plus to Al unique, the make Canada, able West to but nothing move

of Yeah, are we aware very this.

we So down in states. were inventory Southern the

volume the price selling of but up that. new the old markup, how on plus also increases stuff, out Thank out. help you there, price you got dynamics for just we played were really little the quarter can in kind mix, help multiple bit I a And OEM your volume us selling obviously, you’re units, you just of next frame mean, quarter

That’s to figure why they the big out. us all pay bucks that

But us smaller bucks they was? to the it pay out what figure

MX, say a did actually stock. would as opposed Sunbelt the not the to there probably stock that I editorial on it, of sell branches and the selling the way, of so replacement the probably out inventory the new markets, just that they there, was of out there’s to idea sold give gap as old By almost gaining have on meaning the to the I of some in M product and of think, some

fourth to quarter So was slightly you that color. negative transition the unit in some give just probably to

the the being think playing it as opposed to it where of everywhere ahead OEMs still needs product been. I – on don’t MX are catch to have would getting up be So

So…

some are others. Yeah, of doing better OEMs than the

So it’s pretty good.

in chain supply that respect. Our

is, you see the much is price prices XX%. quarter, obviously line of not are you answer, up which down that give at selling items growth would if the products To to big add growth up so unit – were there. a X%, that again, would XX% I prices we’re units, the higher gave component heat some said the that the up units But in inflation. fixed mean because you can In XX%, rate, pump inflation, we X% U.S.

would the give mix inflation, stuff. you that some And

it. appreciate I Terrific.

the smaller ever in quarter. much the and weight forget give fourth is, that don’t given that and the it than quarter inferences the even what’s quarter drawing first quarter, a others size deserves the of And the

you. Thank it. Got

from next Our Merkel will Blair. was William Ryan come question

You ahead. may now go

Good morning, Ryan.

on impact good start question. question the taking in for mix the and Hey, off to I morning, everyone. wanted with the Thanks price XXXX.

be little what a price debate I mix about the there’s change. think, could sheer given

So appreciated. any help give be us there would

is of turning say somebody part I it than been people the a by by product margins about the that do. our I’m our It’s change knows margins. affecting have at of start way, would mix that significant on, products. buying products other some fact, heat I what’s this margin or pumps Yeah, over But higher very just also because improves going more or more these to buying than are

to mix wants or a of Paul, So But, go it’s also ahead, whoever products. Barry, take that.

complex help, even pumps for we some to has they And very the dollars. indicated price twice profit mentioned meddling pumps quarter, of question, better a of but give us duct That’s heat Obviously, a at get on products but double-digits year-to-date that dynamic we’ve give when and mix the haven’t better into Ryan. other obviously it the yet, heat we the split more continued you also free that us a grow in us market, basis more. sell, a like,

products. escalate into has So ducted as to getting come [ph] starting those becoming to we’re the getting see new with without too are the hybrid into we’re duct and has And And to gross ducted also that to functional, the and and becoming higher a on market that lot as them, that free starting profits. see units more wheeze of a with crossover side. margin far obviously continued and that, higher products margins well better between

the for have end a Paul? user. The wonderful benefit products that, also Explain

to the they products ducted minimums the were under Yeah, the XX, are efficiency. to XX old SEER SEER we the high on versus XX well in XX consider that we terminology, be sell range, very above product SEER

and OEMs. seeing from into all more getting a So product. that entrees on our money And consumer the of we’re more marketplace great is saving

appreciate ahead, I Yeah, Go Barry. it. Got that.

Yeah, MX and March tell, some products a anything OEMs on OEMs is is and from to pressure. will that needed market. in time March. a on price think terms just are in feeling are to – or And into capture of in what some from flowing the the year, the of conversation, obviously, some there depends in reminder just add to sticks higher OEM the new March product, price has market, on but their the a we’re capture seeing what which selling of changed of XXXX How which be don’t increases there X terms – the this obviously, captured OEMs a price much inflation the which but in also part I

it. Got

in moving I was range? mix given all mean, be So the least of mid-single-digit it’s pieces, sort at next thinking price high-single-digits year to to the I

I hate Ryan, lot you’ve and price capture of a not includes the specifically, a does lot and of price X comments last from months the terms range, I include a seen in what say of Watsco mix. inflation, on would

think someone’s price. and so, contractor a still there’s home capturing into on and And the I products going big these their selling dependency

we will I tell, pricing year. time pretty environment so think, And strong expect but obviously, this

hasten to I of hell the of going the that. the heat, savings federal cools cooling The getting need it. Well, cooler HVAC. they’re that and are a is a it. that’s mean, heat for discovered people just government’s and innovation now on The don’t because That’s for use wonderful magnificent of price not heat going a add pump, pump add that the of they to use furnace. these heating the I increases

the we’ll heat it. from less for more more So pump, they’re and on that. and consumer to businesses already and emissions providing are provide everybody incentives homes use there saves The wins

more itself, he given cost innovations how is is So, And anything efficiency in helping on heating I don’t I save that these unit further homeowners think saves electricity. cooling XX% positive, from that well consumer all money. see money like which isn’t focused that as out, of are to always and a little benefits the as of

the concern concern we is stuff think roll by the innovate. in of industry just a on. the make the great now, stuff about environment. refrigerants going homeowner the good of contractor, or more turn And the who emissions And lot enjoy to here provides movement more products the the to they guys providing the to and about a there’s business a on owner. damaging because the that the just I So, It’s innovate, it

All Al. I Thanks, agree. right.

bet. You

Coe will Research. Our Wolfe next from question Nigel with come

ahead. may now go You

Good Thanks. morning, everyone.

Good Nigel. morning,

morning. good – So

points, like it as the the So this you and the ductless digits, almost strikes byproduct being it systems for time, the feels system. the that is written double given this for is growing me price mentioned split just the IRA efficiency,

is these that it’s you it to real So lower And a a going to do think it? margin? about XXXX-XXXX revenue think be sounds better mix, point, breakout the like but way Is that for lower units? price

the going for and it’s a to it. the period it’s growing. I last breakout – growing XX don’t it’s Actually, been for think I think, years, And, – be

to XX or that through approximately homes out have million have that ductwork runs remember You XX them. there’s that there

ducted the a them with marvelous a So had ability the more with to OEMs to way the adapt come come important have to and the up new technology that their system products efficiency to consumer. But and ducted of the things occur MX our with to element. are done comfort provide better up to really engineering to be systems maintain for have cost an we for

have I’m going a going nice conversions where products to I use duct the a their home. free. balance think, I ductless homeowner and So, to call would perhaps it’s where between almost now a that it both the to going be in we’re

a HVAC And out bit stock like sounds some sense. mentioned the the that then how on we’ll quarter, give up on when speed the was been were tracking can transition in MX an mean, that just of down you are to that’s units where to X% I more of so with your the that And January impact. situation a through product? warehouses be makes this systems OEMs flavor you Right. do think Yeah, of you perhaps? in us

gas times obviously, the OEMs and are heat the furnaces. to some the pumps right dysfunction lead times the for higher is in Well, lead or demand the of compared the with some now, most straight-cooler improving, units there channel as longer long created in

you’d we’re going when ironed be they’re that get our quarter. able out. they in that that, second that have to the So OEMs to it’s stabilizing start those but the When will ask hoping do – to hope

are demand not year. We’re high also into seeing that lead stretching out and offer, we commercial times there months, on some the the products

have Yeah, in now accessibility most the that’s difficult commercial. inventory that we

if them, XXXX. of With for throughout demand into high the going so it’s pushing where probably entire kind it’s to along the be with highest that’s sales very the And, frankly, out that that demand the of product, year. at, continues and particular

We’re see and between there to availability disconnect demand. going

manifests improvements in with the But player better – into XQ that new perhaps systems? any the for

I we’re on Yeah, the the definite today, the seeing want indicated inventories improvement. But we with we’re small again, adjusted. we get it’s not pumps, mostly as earlier, with the them products, are where not seeing seeing residential and heat but to improvement systems, straight-cool we’re improvements our

very Great. Thank a helpful. That’s lot.

Our next Capital KeyBanc question will come Markets. from Jeff Hammond with

You may now ahead. go

Jeff. Hello,

like down Hey, to good it I and Miami X rained morning, came everyone. days. for

always said You sunny down it’s there.

tell didn’t anybody to be, you And don’t [indiscernible] going room, we Well, were you call you it’s when a take if to even to be, here? big what it’s going me.

A weeks couple of ago.

the least? enjoy weather you Did at

nicer Well, than it was It Cleveland. But… rained.

Well, rain [ph]. Yeah.

Yeah.

you back in and timing? at best kind end take if out of your How talking when which you of we guess system, the the to through say the normal. Just lead know, I And, mentioned much question, lead do if Barry, this conversion, guess, we I things season? destock, about don’t times kind you of of get inventory can guess, it on get inventory you think two Thanks. back XXXX, point of in times get you happen this some assuming the ultimately What’s within some conversion. obviously, those everyone’s is

you inventory. million Well, is to us it want to our we’ll a of but number achieve what a that not, or goal $XXX remove that’s achieve give whether I I’ll

dollars, two you Jeff, it look on at got sides, it when to to also. at it you at you got got in units to look look

mid-single-digits. is it’s up inventory unit that dramatically not Our up

look with the which inflation that the go at even our that it to reach continues dollars want to want to harder work and going receive you we to along have of if effect, do think all and lot have a to I we’re to when to all way meet. So goal,

helpful. Okay. That’s really

on OEMs a decline guys guidance, sell one, most unit So you mid-single-digits, just to of give XXXX, to you for take are don’t year? that of but and guys just market I of of want through your of you kind on market I sales calling just that XXXX, and of that’s know, volume get outgrow. and kind your can presuming still the kind grow But then understand for view wanted this Thanks. and earnings

easy let Oh, quarter. Yes. year? answer I’ll that’s an one this else somebody the

all In growth Jeff, development terms leaders, our this our year. of our in field, the business earnings team, the people sales year, expected

So target the us they lots set that’s managing that local ones, go businesses other the all for and operate.

just wouldn’t I plans to say – it’s it’s just their see not optimism, So growth.

a in So, comparison have ago. that term, funkiest career smallest have comps that revenue career, and against. comps XX% you to year my my is maybe And type I of and I’m XX-year think, it’s of the a XXX% quarter, be of the quarter the short to year the first up quarter EPS glad

And, XXXX. you quarter into and in our again, look the So, to first the for planning are I teams beyond think, have growth year.

to the parts expect business. and a focused you systems, we we piece that business always people on is – the supply our businesses of in I’m that And And always course, industry, continue remind to and ducted talk always split get of yeah, over residential one-third of grow. when big about Watsco’s

which We growth. a of a of on focus a for also we large different products of we lot have tools presence, lot can a lot and and different markets commercial have that

the it mentioned over chain that it’s next up I’ll the this on you’ve Xth restraining about year for seeing business, certainly the XX% or And the truly something simply or It’s And, so commercial talk been probably or which over XX% I OEMs the the asked, XX%. two. not And supply quarter, over was about is the growth, challenged we’re hasn’t thing. up the more. heard same of side commercial still. growth of rate being that quarter it straight I’ll dynamic of being offer all still And Xth think,

our Barry’s were mid-teens. non-equipment up And sales to add comment,

in who goes, our to is But about they serve the we have area. and density wherever are of needle. are we that move in facilities locations we probably what end, And think that the their need the needs equipment that weather

it quick think any one, looked little like last than international, a was nuances? softer was Just I U.S.,

pretty business, expect steady a It’s I there. and growth

sure, and of For it’s there economies even doing very it. managed, not these some are I’m on well positive well, though

thanks. Okay,

Our Pokrzywinski Josh Stanley. with next come question will from Morgan

You go ahead. may now

Hi, you Josh, doing? how

about well. How Al, doing yourself? Hey,

Good. Good.

say new Well, I Josh, that’s I got your a to of pronunciation heard. last one. haven’t

I get creative question, Well, guys. appreciate every the more time.

on we’re on touched you’re we’ve check heat Paul, thoughts, how to now, anything. So thinking pumps enough want times just your about

paying to. On the more rulemaking IRA side, they are there’s anything to point to on the single that bar attention

obviously had, to on impact the first I what zero we’ve in IRA seen would the say, date. quarter now, Right Yeah.

where the can it XX-C of get think I a you portion tax credit.

been sure are clear available quarter. start we still think quarter our follow-up from to units and and definition delayed units we that’s positive qualify some a don’t the credit. seeing I to which that make it each feelings continue We second in third for we’ll And for the what of one tax of understand OEMs. have

So dealers. available. dealers matching hands, just we in can it – units are we’re our We’ve launched information of the We ready. now got with up a matter with it’s what programs the

side impact other think we’re going great a rebates don’t see the IRA, really all. of the to at On I tax the

of think, I side rebates in XXXX, XXXX. the kicking start will for the there impact On most

pump. country same regions on seeing pushing the However, gas forget non-IRA California, basically to heat starting a we’re municipalities it’s City, In side, we’re you are harder with going of the York that the replace and more in and New fossil Northern harder heat, fuel Canada, the furnace, see a lot can’t it. on Places thing.

transition, we has IRA heating electrify as through of the movement behind now getting an impact plus a to and this needs. lot move municipalities our that So local the are also states

really appreciate Super that. comprehensive. it. Got I

far. so like away to Something touched else maybe on from follow-on would been what’s

in serves, maybe JV Just distributor one by, of do a saw think at ability of you the term? started, get the you look the future that since picked I kind their if entity first memory to had ownership think, the carrier up about non-Watsco how fourth the quarter, balance regions longer or just

so of let with run, brand is carrier are in doesn’t to thing. and other that Well, good, with. appetite that XX there is. people well just deal kind brands remind during new time that other It’s not you have I And distributors, the carrier. been that we our me have our matter have what But a we for make distributors

All right. helpful. That’s

I we’re think customer. – Carrier’s we’re largest very

We’re also him let see to our we United want going for the never grow $XX down. business of we the billion distributors. that But States share to in

So anybody we companies I us. can where a great we find will part be of we family. want joining to more And terms else than offer think that go in of

Al. Right. Thanks,

Our next will come JPMorgan. Tusa from Steve question with

Hello, Steve.

Hi, morning. guys, good

Good morning.

was up in Carrier low-XXs sales the like other there. their JVs some know in to I JVs quarter. have they

up are said commercial one. guys for I nicely. pretty You was you an think you important guys obviously And

XQ. volume So when unit resi number? The equipment what down that for in that actual equipment like is was X%, the was equipment resi What number? number, the number actual

Steve? flat, pretty was it think I

Pretty – in that? and around

see. to Wait

carrying was that just commercial up not but them. obviously I if as commercials big mean, strong. Because

not Now, I’m on not what’s all certainly, of commenting but… going carrier, just

all Watsco. totally, of totally, Yeah,

like comfortably. commercial were units like up down you’re It equipment. X% was on sounds So

resi that downloadable? does what for So like mean

down That’s was residential for it it. quarter said X% the We overall domestic.

Okay.

resi the that’s So number.

Yes.

of are to sure for? then to have this. makes if was answered sure unit sense. said guys industry you grow not a construct you That you mean, Was think am sales thought sales. I I not reference answer I’m that the do for or But that what is in And your number you’re Do going you unit what is if kind I before number? you the for a XXXX? number that units. Okay.

[But call, Steve, the you just weren’t] [ph] on kidding.

you grow price includes, Well, to you’re that going and think mix. obviously, sales

actually I’m sure… we volumes, I a question our – before, think not had So

to and sales units prices expect both. contribute to do We growth increase could

year? the For

yeah, Oh, year. for the

that price to from introducing. the the because already starting now. the We expect new increase another coming new occur products It’s mix, they’re OEM of

then… And it. Got

last impossible to right. The community because and don’t brands, we important my wonder years, to just oh go been they say too. this, wringing what do the everybody important like for we’re saying, and incremental it’s opportunities and here we want want want sit goodness, what going ask to it’s handle markets to more doing. hoping And We almost for is it expand, more to products, Steve, hands, and people it’s what OEM it’s I just other and our to not want territory, listen X go OEMs, to and to when to we listen want more we say,

do not couldn’t possible Let’s last could been make because that’s the that the years, X the over not OEMs opportunity. offer product or

market the doing do to them effort to said, And are underground here now. of our you. manufacturers, new what going to grow to for them initiatives we’re of But some and expand those going not I’m on our list a what right year. manufacturers types is there’s of grow in this just I lot business which order with

Got it. Got it.

from share a share – perspective. your For

That’s correct.

for Paul, for One maybe consumer? think payback answer you What you a was savings but consumer. for do like is question, is last know the lot the I Obviously… this the about the the talking – one the what you,

Good… question. Very good

payback? actual systems. of is What going is grand some spending measured on you’re I actual is couple be of payback more on the a Because, in these years to mean, What new… these some the

it a lot depends your get the Obviously, would Yeah. geography. Connecticut, In slower. Florida, on faster be payback. you a payback In

a is pay regions back tax utility So to rebates, rebates, in of each IRA the one state of factor credits. the the also

energy those gravy other we in energy reduction install high to use, a consumption consumption. the the things what All in the But add meal, efficiency. The thing. key when but is energy is drop

it Yeah, XX%. XX% to be could percentage wise,

system. But We’re all on a consideration. older more take even mean, to with have to factors able I an analysis, into you’d year’s those to up be come

Steve, tough So really the U.S. whole for to payback analysis a do,

that going of to the to a company. X is and Barry cost Plus as going – going of where cooling, they system, for start heating and half go if save are We kinds to electrical cost and Yeah, got they’re going the say they look the at dollars. – efficiency and they’re to their home. I’m half higher overall in with That’s half go already selling lot the to to homeowner. is probably is them, sorry, half energy, And of use and dedicated to save of electrical that way all and and in heating homes it. and cost if heating the we’re to if they’re the cooling use paying with more benefits to half you a energy costs a to Paul premise is percentage starts of less tax The the XX% energy stuff run wise, that half. cooling

that products unitary is with of for be guys ductless than it’s to increase be the question with the one competitive have difference more – like cost assume that they? Yeah, down gotten this still some fear I of smaller. that essentially that get would right the is replacement unitary, their system. cost understanding Is expensive more baseline for hybrid will hybrid to is going line a what how are my in you, they the have the sorry, Daikin in kind for or still And Like that unitary about first product? ductless, the

product. the – cost And right very the with every competitive. product line about know, but either will the ASHRAE or in one, have They’re a one ducted made I manufacturer Daikin you They’re has show, beyond right. from comment

seems in substantial what for growth It years. it X.X marketing last been the have revenue. We

guys, All Yeah. really colors all helpful. Makes as Thanks usual, sense. the right. for

Okay.

Chris come [Operator Loop Dankert Capital. from next Instructions] Our with question will

You may ahead. now go

Good morning, Chris.

are you us not theme on heat or with And I’m the Yeah, really I good mix percent a to be tell the Xx growth here, kind the year. of guess, And the maybe morning, impressive quarter pump heat we Al. could would there? is. pumps market helpful? today? is. It and remind More us what guess comments mistaken, base any if than of really I here stick starting smaller It from

depends low very it’s it in a Texas, low-XXs. It’s go to if you on states. again, Once Yeah, the the market. percentage of total the

I So in grow heat XX%, opportunity already we’re to go Carolinas, pumps have the there. the huge we range. up here, into XX% the a If

continuation what over done of XX years. we’ve the just So last a that’s

super now is get heat, to to do push into XX So, obviously, zero. operate degrees, able call big XX, XX, And are regionally, pumps, heat the it what and which at below varies. we

move up people So keep that actually can North the the Dakota, into market winter. and in warm we my home state of

Got it.

Okay…

say last the to. a to XX lifetime. going you on want for Watsco after was remember we furnace years, I But might another which one

useful warranties. In XX years markets. at And them pump some lifetime probably fact, of is life many heat have in best

So of there market out. for is term that longer heat also a churn itself the pumps, replacement works

why now, repair a kind lot sense. change concern there’s the about your consumer of tightening right of understandable Okay. sheet strength belt seeing And balance of for here. you much and kind customers sense so any makes comfort of hearing a of That homeowner or of on part replacement makes the spending any But in versus rate from credit are here? contractor

question. Paul? Good

available about we amount that’s in home their the the of with in morning residence. period, the appreciation we pandemic talking this to primary throughout didn’t entire Yeah, were equity just consumers

new we into transition replace seen a as into a products. gets repair So discussion, which generally the to we haven’t move versus industry

going our to we’re now. So go nice between a and the to declare equipment seeing is little I it’s for a parts now, think with balance right our market way which right early But business.

repair if say a will say lot each often those done course, the products around of and our well positioned. sure have product of with assortment making to well. of margin. as and – meet I Okay. plays demand come I stores that A.J. a a dynamic And, right out, that products we’re is higher work We’ve this that will when

that. do don’t anybody has advantage. very That’s think a I unique the system to

the so guys. for Got color, it. thanks much Well,

to question-and-answer concludes would for over no closing questions. appears I Albert further conference like back turn remarks. to our It the Nahmad session. This any

Well, for company. interest thanks in your again our

We’re come very sun that, interested. you and shines stay from down Not the the players to please here. And and directly. optimistic we hesitate hope visit only hear don’t and always

again the thanks for Bye-bye. So you see next we’ll quarter. interest, your and

conference now Thank concluded. presentation. attending The you for today’s is

disconnect. You may now