爆料王

Entrepreneurial Culture, Industry Scale, Technology Adoption and Regulatory Changes Contribute to Strong Margins and Support Long-Term Growth

MIAMI,聽April 20, 2023聽(GLOBE NEWSWIRE) —聽爆料王.聽(NYSE: WSO) announced its operating results for the first quarter ended聽March 31, 2023聽and provided commentary on business trends, growth opportunities, technology innovation and its financial position.

Through its entrepreneurial and technology-driven culture,聽爆料王聽has established itself as the largest participant in the highly fragmented $50+ billion North American HVAC/R distribution market. Since entering distribution in 1989, sales and operating income have grown at compounded annual growth rates (CAGRs) of 15% and 19%, respectively, reflecting strong and consistent performance across various macroeconomic and industry cycles. Over this period, 爆料王鈥檚 dividends have grown at a 21% CAGR while maintaining a healthy balance sheet and strong cash flow.

爆料王聽continues to invest in industry-leading technologies that are transforming how contractors operate. The Company鈥檚 digital ecosystem and suite of mobile apps continues to see growth in contractor adoption and e-commerce usage. In addition, 爆料王鈥檚 investment in pricing and warehouse management technology has resulted in improved margins and operating efficiencies over time. Taken as a whole, 爆料王鈥檚 technology investments are transforming contractor engagement, facilitating new customer acquisition and expanding the Company鈥檚 leadership position in the industry.

This quarter鈥檚 results follow a record-breaking year in 2022 and a particularly strong comparative performance achieved in the first quarter of 2022, when sales grew 34% (25% on a same-store basis) and EPS grew 109%. It is also important to note that the first and fourth quarters are highly seasonal due to the nature and timing of the replacement market for HVAC systems, which drives sequential growth in the second and third calendar quarters. Accordingly, the Company鈥檚 financial results may be disproportionately affected by this seasonality.

First Quarter Results

• 2% increase in sales to a record聽$1.55 billion
• Gross profit of聽$448 million聽(28.9% gross margin) versus聽$450 million聽(29.6% gross margin) last year
• 1% increase in SG&A expenses (10 basis-point improvement in SG&A as a percentage of sales)
• 4% decrease in operating income to聽$165 million聽(operating margin of 10.6% versus 11.2% last year)
• EPS of聽$2.83聽versus聽$2.90聽in 2022
• $54 million聽improvement in operating cash flow

Sales trends

• 2% increase in HVAC equipment (68% of sales)
• 2% decrease in other HVAC products (28% of sales)
• 12% increase in commercial refrigeration products (4% of sales)

Albert H. Nahmad, 爆料王鈥檚 Chairman and CEO stated: 鈥淲e view the first quarter performance as exceptional in many respects. Last year鈥檚 results were driven by robust unit demand, unprecedented levels of OEM pricing actions, and overall strong end-markets, which culminated in the highest single-quarter growth rates in our history. In contrast, OEM pricing actions in 2023 were less, occurred later, and unit volumes are now adjusting toward more conventional run-rates. Despite these factors,聽爆料王聽delivered record sales and successfully navigated the regulatory transition to higher SEER products across its markets. Sales of heat pumps continued to expand and our commercial business remains strong. We also executed well in terms of gross margins, maintained SG&A discipline and gained operating efficiency. We intend to build on this success as our selling season unfolds and we have confidence in our team鈥檚 ability to navigate changing market conditions and are optimistic about the year ahead.鈥�

Financial Strength & Liquidity
爆料王鈥檚 strong financial position has been critical to its performance in recent periods. Over the last three years (since聽April 1, 2020), 爆料王鈥檚 investment in working capital increased by 54%, or聽$575 million, to聽$1.6 billion along with聽$117 million聽of capital invested for acquisitions. In addition, 爆料王鈥檚 annual dividend rate increased 53% to聽$9.80聽per share from聽$6.40聽per share during the same period.

Despite these investments, 爆料王鈥檚 financial position remains strong with the ability to invest in most any size opportunity. At聽March 31, 2023, the Company had聽net borrowings of聽$57 million聽($141聽million聽of cash less聽$198 million聽in borrowings drawn from its聽$600 million聽credit facility), and聽$2.3 billion聽of shareholders鈥� equity along with operating income of聽$825 million聽for the 12-month period ended聽March 31, 2023. The Company believes this financial strength, current access to low-cost capital and its historical ability to generate cash flow provide comfort and confidence to the Company鈥檚 stakeholders.

Industry Catalysts & Trends
The Company believes that various industry catalysts are unfolding that will provide growth opportunities in the years ahead and positively influence the replacement of residential and commercial HVAC systems. 爆料王鈥檚 scale, leading technology platforms, financial strength, entrepreneurial culture, and OEM relationships, along with the essential nature of HVAC/R products, are important competitive advantages that provide stability to the Company鈥檚 performance and position聽爆料王聽favorably in light of these catalysts.

Regulatory Changes. To address and stem the impacts of climate change, the federal government and various states have enacted laws and regulations intended to incentivize the replacement of aging HVAC systems in favor of more energy-efficient or environmentally friendly systems. New聽U.S.聽federal regulatory standards became effective in 2023 that raise the minimum required efficiency for HVAC systems nationwide. New regulations are also in effect that institute a phase down of global warming properties of refrigerants currently used in older HVAC systems and a transition to new refrigerants beginning in 2025. The demand for higher-efficiency products and heat pumps is also expected to benefit from the passage of the Inflation Reduction Act of 2022.

Trend Toward Electrification of Heating Systems. Another important trend is the HVAC industry鈥檚 movement toward electrification of heating systems utilizing heat pumps in lieu of gas furnaces and other forms of fossil-fuel heating. The operating characteristics of heat pumps have improved, offering immense replacement potential for the millions of fossil fuel-burning heating systems used throughout聽North America, particularly in Northern climates. During the first quarter, sales of heat pumps increased 7%, outpacing the overall growth rates for conventional fossil-fuel heating systems (primarily gas furnaces). In all of 2022,聽爆料王聽sold more than 700,000 heat pump units across 24 different brands.

Product and Geographic Diversity. 爆料王鈥檚 product breadth and end-market diversity also provide a competitive advantage. The Company possesses the broadest and deepest assortment of products in the industry to support its customers and end-markets. In addition,聽爆料王聽maintains a deep catalog of OEM and aftermarket parts to support contractors and sustain competitiveness in any environment. In all of 2022,聽爆料王聽sold nearly 2 million compressor-bearing HVAC systems throughout its locations in 42 U.S. States,聽Canada,聽Mexico聽and聽Puerto Rico聽as well as on an export basis to the聽Caribbean聽and portions of聽Latin America.

Growth of Ductless HVAC Systems. The growing acceptance of ductless, high-efficiency HVAC products is a trend that benefits聽爆料王, as we are one of the leading distributors of ductless HVAC products used in both residential and commercial applications in聽North America. 爆料王鈥檚 sales of ductless HVAC systems grew 9% during the first quarter of 2023.

Network Investment & Expansion.聽爆料王’s聽network expansion, geographic positioning and density in key markets are also factors contributing to the Company鈥檚 long-term growth.聽爆料王’s聽network has grown by 73 locations since 2020, mostly from four acquisitions of market-leading businesses, located primarily in markets that聽爆料王聽did not previously serve. The Company鈥檚 network supports more than 350,000 contractors, technicians, and installers with critical technical assistance, training, and other resources to enhance their daily activities.

Technology Transformation
爆料王聽has launched the industry鈥檚 most advanced, user-friendly, and customer-focused technology platforms, which have transformed the way contractor-customers interact with the Company and, increasingly, the way contractors engage with consumers and businesses. 爆料王鈥檚 community of active technology users is growing sales faster than non-user customers and experiences approximately 56% less annual attrition.聽爆料王聽believes that future results will benefit from continued customer adoption, including higher share of wallet, new customer acquisition, reduced attrition, and lower costs to serve.

Specific technology-related updates include:

• Product Information Management (PIM), 爆料王鈥檚 repository of rich product information, is delivered seamlessly through its mobile apps and e-commerce platform. 爆料王鈥檚 PIM database contains more than 1 million SKUs accessible to more than 350,000 contractors and technicians annually.
• HVAC Pro+ Mobile Apps provide customers with real-time access to critical information that improves speed and productivity. This includes real-time technical support, product details, inventory availability, warranty look-up and processing, certified system matchups, e-commerce, and more. The authenticated user community (users linked to an e-commerce account over the 12-month period ended聽March 31, 2023) grew 19% to more than 53,000 users compared to the same period a year ago.
• E-commerce sales continue to outpace overall sales growth rates in the first quarter and accounted for 33% of total sales, inclusive of revenues from recently acquired businesses that are now adopting 爆料王鈥檚 technology platforms.
• OnCallAir庐, 爆料王鈥檚 digital sales platform, and CreditForComfort庐, its companion consumer financing platform, have both increased penetration among HVAC contractors as digital engagement with homeowners expands. The annualized gross merchandise value (GMV) of products sold by customers through OnCallAir庐 now exceeds聽$1 billion. During the first quarter of 2023, OnCallAir庐 presented quotes to approximately 53,000 households, an 18% increase over 2022, and generated聽$220 million聽GMV, a 33% increase over the same period last year.

A.J. Nahmad, 爆料王鈥檚 President, added, 鈥淥ur technology platforms, which are unique to the industry, have transformed nearly every aspect of our business. The contractor-based platforms, like our HVAC Pro+ suite of apps and OnCallAir庐, our consumer-facing sales platform, combined with our internal-facing technologies, have helped聽爆料王聽build market share, accelerate new customer acquisition, and drive margin expansion. Consistent with our long-term focus, we remain committed to investing more over time as we believe these platforms provide a distinct, long-term competitive advantage.鈥�

Cash Flow & Dividends
爆料王鈥檚 first quarter 2023 operating cash flow was a聽$47 million聽use of cash commensurate with the seasonal build of working capital ahead of the second and third quarter selling season. Cash used in operations was聽$102 million聽during the first quarter of 2022. The Company鈥檚 philosophy is to share increasing amounts of cash flow through higher dividends while maintaining a conservative financial position with continued capacity to build its distribution network. The Company increased its annual dividend rate by 11% effective in聽January 2023聽to聽$9.80聽per share. Future dividend increases will be considered in light of investment opportunities, general economic conditions and the Company鈥檚 overall financial position.

First Quarter Earnings Conference Call Information
Date and time:聽April 20, 2023聽at聽10:00 a.m. (EDT)
奥别产肠补蝉迟:听聽(a replay will be available on the Company鈥檚 website)
Dial-in number:聽United States聽(844) 883-3908 / International (412) 317-9254

Use of Non-GAAP Financial Information
In this release, the Company discloses certain performance measures on a 鈥渟ame-store basis鈥�, 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 to existing locations. 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聽U.S.聽GAAP.

础产辞耻迟听奥补迟蝉肠辞
爆料王聽is the largest distribution network for heating, air conditioning and refrigeration (HVAC/R) products with locations in聽the United States,聽Canada,聽Mexico聽and聽Puerto Rico, and on an export basis to聽Latin America聽and the聽Caribbean. 爆料王聽estimates that over 350,000 contractors and technicians visit or call one of its 673 locations each year to get information, obtain technical support and buy products.

爆料王聽plays a crucial role in the fight against climate change, presenting a long-term opportunity to significantly reduce CO2e emissions in our markets. Research by the聽Department of Energy聽has revealed that HVAC systems account for approximately 50% of聽U.S.聽household energy consumption. Thus, replacing outdated HVAC systems with higher efficiency models is a critical step that homeowners can take to reduce consumption.聽爆料王聽is also aggressively expanding its sales of heat pumps, which allow homeowners to reduce their carbon footprint by switching from conventional, fossil fuel-based heating systems to electric ones. By investing in high-efficiency HVAC systems and heat pumps, homeowners can not only reduce their energy consumption and save costs, but also significantly reduce their carbon footprint over time.

Based on estimates validated by independent sources,聽爆料王聽averted an estimated 15.8 million metric tons of CO2e emissions from聽January 1, 2020聽to聽December 31, 2022聽through the sale of replacement HVAC systems at higher-efficiency standards (an equivalent of removing 3.4 million gas powered vehicles off the road for a year). More information, including sources and assumptions used to support the Company鈥檚 estimates, can be found at聽.

This document includes certain 鈥渇orward-looking statements鈥� within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-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 鈥渨ill,鈥� 鈥渨ould,鈥� 鈥渁nticipate,鈥� 鈥渆xpect,鈥� 鈥渂elieve,鈥� 鈥渄esigned,鈥� 鈥減lan,鈥� or 鈥渋ntend,鈥� the negative of these terms, and similar references to future periods. These statements 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, new housing 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 within 爆料王鈥檚 industry, the seasonality of sales of 爆料王鈥檚 products, the ability of the Company to expand its business, insurance coverage risks and final GAAP adjustments. Detailed information about these factors and additional important factors can be found in the documents filed by聽爆料王聽with the聽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.聽爆料王聽assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except as required by applicable law.

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Barry S. Logan
Executive Vice President
(305) 714-4102
别-尘补颈濒:听blogan@watsco.com

Source: 爆料王.