爆料王

Entrepreneurial Culture, Transformational Technologies, Strong Financial Position
Continue to Provide Results and Significant Opportunities

MIAMI,聽Feb. 13, 2024聽(GLOBE NEWSWIRE) —聽爆料王.听(NYSE: WSO) reported its results for the fourth quarter and full year ended聽December 31, 2023. The Company also provided commentary on business trends, growth opportunities, technology innovation and its financial strength.

爆料王聽began its distribution strategy in 1989 and today operates the largest distribution network for HVAC/R products in聽North America. The Company鈥檚 692 locations serve over 125,000 contractors across the United States,聽Canada,聽Mexico,聽Puerto Rico聽and聽Latin America. Since 1989, 爆料王鈥檚 entrepreneurial, growth-focused culture has driven compounded annual growth rates (CAGRs) of sales and operating income of 15% and 18%, respectively, reflecting strong performance across many macroeconomic and industry cycles.

爆料王聽also announced today that its Board of Directors approved a 10% annual dividend increase to聽$10.80聽per share effective with the next regular quarterly payment to be declared in聽April 2024. This year marks the Company鈥檚 50^th聽consecutive year of paying dividends. This reflects the Company鈥檚 on-going confidence as well as the strength of its balance sheet, which reflected net cash as of聽December 31, 2023.听爆料王聽remains well-positioned to invest in most any-sized opportunity to build further scale in the estimated聽$60 billion聽highly-fragmented North American HVAC/R distribution 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 adjusted basis), respectively, which followed 2021 sales and EPS growth of 24% and 54%, respectively.听Outperformance聽during 2022 and 2021 was driven by unusually high levels of replacement demand, above-average inflationary pricing actions by the Company鈥檚 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 by approximately 15% in 2023 (over 30% decline during the fourth quarter). By contrast, 爆料王鈥檚 unit volume for unitary HVAC systems decreased 8% during 2023 (a 4% decline during the fourth quarter), reflecting a more balanced performance in the midst of a challenging industry backdrop.

2023 results also reflect a significant product transition to higher-efficiency systems in response to regulatory requirements that went into effect on聽January 1, 2023.听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 for 25+ 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. Further actions will be implemented in 2024 to gain additional efficiencies as market conditions recover.听爆料王聽also actively reduced inventories during the latter half of 2023 to further improve operating efficiency, conform inventory levels to current conditions and generate cash flow. Fourth quarter operating cash flow in 2023 increased 40% to a record聽$299 million, including a聽$208 million聽reduction in inventories.

Albert H. Nahmad, 爆料王鈥檚 Chairman and CEO, commented: 鈥淚n many respects, we consider 2023 an exceptional 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 of 爆料王鈥檚 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.鈥�

Fourth Quarter Results

• 1% sales growth to a record聽$1.60 billion
• Gross profit of聽$414 million聽(gross margin of 25.8%)
• SG&A expenses increased 4% (SG&A was flat on a same-store basis)
• Operating income of聽$108 million聽versus聽$137 million聽last year (operating margin of 6.7%)
• EPS of聽$2.06聽in 2023 versus聽$3.55聽in 2022 ($2.35聽on an adjusted, non-GAAP basis in 2022)
• 40% increase in operating cash flow to a record聽$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 HVAC systems. Results are typically strongest in the second and third quarters and the Company鈥檚 fourth quarter financial results are disproportionately affected by seasonality.

Full-Year Results

• Record sales of聽$7.28 billion聽versus聽$7.27 billion聽last year
• Gross profit of聽$1.99 billion聽compared to聽$2.03 billion聽last year (gross margin of 27.4%)
• SG&A expenses of聽$1.22 billion, flat versus last year (1% decline on a same-store basis)
• Operating income decreased 4% to聽$795 million聽(operating margin of 10.9%)
• EPS of聽$13.67聽in 2023 versus聽$15.41聽in 2022 ($14.20聽on an adjusted, non-GAAP basis in 2022)
• Operating cash flow of聽$562 million聽compared to聽$572 million聽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
爆料王聽continued to invest and scale its industry-leading technology platforms, which collectively transform the customer experience, enhance operational efficiencies 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聽$2.4 billion, or approximately 34% of total sales.
• Active e-commerce users experienced nearly 50% less attrition than non-e-commerce users.
• 爆料王鈥檚 product information management (PIM) platform expanded to more than 1.5 million SKUs
• 爆料王鈥檚 authenticated user community for HVAC Pro+ Mobile Apps expanded to approximately 55,000 users.
• The gross merchandise value of products sold on OnCallAir庐, 爆料王鈥檚 proprietary digital sales platform for contractors, increased 28% to聽$1.2 billion聽during 2023 with quote volume expanding 14% to approximately 256,000 households.

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 goal to modernize historical processes, enhance competitiveness and improve margins.
• Proprietary聽warehouse management and order fulfillment systems to enable faster and more reliable customer service 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, 爆料王鈥檚 President, added: 鈥湵�料王 continues to transform every aspect of its business through technology. For over a decade, our contractor-based platforms have helped聽爆料王聽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 greater productivity 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 technologies provide a distinct, long-term competitive advantage.鈥�

Industry Catalysts
Various industry catalysts are influencing 爆料王鈥檚 marketplace. The Company believes its scale, entrepreneurial culture, OEM relationships, leading technologies and financial strength provide important competitive advantages to optimize the opportunities provided by these catalysts.

Regulatory Changes. 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聽January 1, 2023聽that raised the minimum required efficiency for HVAC systems nationwide. In addition, regulations went into effect on聽January 1, 2024聽mandating a 30% phase down in the manufacture of refrigerants used in older HVAC systems and a transition to new HVAC systems that contain lower-GWP refrigerants.听爆料王聽has historically benefited from these regulatory changes as contractors and end users transition to the new systems.

Electrification and Transition to Heat Pumps. The movement toward electrification of 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 of the millions of fossil fuel-burning heating systems used throughout聽North America. Sales of heat pumps in 2023 once again outpaced the growth rates for conventional fossil-fuel heating systems (primarily gas furnaces).听爆料王聽sold over 700,000 heat pump units across 25+ different brands during 2023.

Growth of Ductless HVAC Systems.聽The growing acceptance of ductless HVAC products by both contractors and end-market users benefits聽爆料王, as we are among the leading distributors of ductless HVAC products used in both residential and commercial applications. Sales of ductless products across聽爆料王聽grew 12% in 2023.

Acquisitions
爆料王聽has acquired 69 successful companies since 1989 and聽is actively seeking additional opportunities to invest and grow through acquisitions.听爆料王聽recently completed three acquisitions as follows:

Capitol District Supply. Founded in 1945, Capitol District operates three locations in聽upstate聽New York聽and is led by third generation members of its founding family. Capitol District generated revenues of聽approximately聽$13聽million聽in calendar year 2023. The transaction was completed in聽March 2023.

Gateway Supply Company.听Founded in 1964,聽Gateway聽operates 15 locations throughout聽South Carolina聽and one location in聽Charlotte, North Carolina.听Gateway聽is led by second generation members of its founding family.听Gateway聽generated revenues of聽approximately聽$180聽million聽in calendar year 2023. The transaction was completed in聽September 2023.

Commercial Specialists.听Founded in 1964,聽Commercial Specialists聽operates two locations in聽Southern Ohio and is led by second and third generation members of its founding family.听Commercial Specialists聽generated revenues of聽approximately聽$13聽million聽in calendar year 2023. The transaction was completed in聽February 2024.

Consistent with 爆料王鈥檚 buy-and-build acquisition strategy, these companies will operate under their existing names and under the direction of existing leadership to provide continuity to customers, employees and OEM partners.听爆料王聽will provide the resources, capital and technology needed to assist in achieving their growth plans.

Cash Flow & Dividends
爆料王鈥檚 full-year operating cash flow for 2023 was聽$562 million聽compared to聽$572 million聽last year (a record聽$299 million聽in operating cash flow for the fourth quarter). 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鈥檚 Board of Directors authorized a 10% increase in聽爆料王鈥檚 annual dividend rate effective in聽April 2024聽to聽$10.80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.

Tax Benefit Included in 2022鈥檚 Reported Results
2022鈥檚 full-year and fourth quarter results reflect the vesting of restricted stock, which provided the Company a聽$49 million聽tax benefit in 2022 pursuant to Accounting Standards Update (ASU) 2016-09,聽Improvements to Employee Share-Based Payment Accounting,聽as well as聽$3.6 million聽in incremental SG&A expenses, primarily related to employment-related taxes. The net benefit to 2022鈥檚 fourth quarter EPS and full-year EPS was聽$1.20聽and聽$1.21, respectively. Due to the infrequent nature of this event, certain key performance metrics for 2022 are presented on an 鈥渁djusted鈥� basis to exclude the impact. Please see 鈥淯se of Non-GAAP Financial Information鈥� below.

Earnings Conference Call Information
Date and time:聽February 13, 2024聽at聽10:00 a.m. (ET)
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 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 on聽October 15, 2022聽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聽U.S.听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 considered in 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:

Diluted EPS for Common and Class B common stock, a GAAP measure, reconciled to diluted EPS for Common and Class B common stock on an adjusted basis, a non-GAAP measure:

础产辞耻迟听奥补迟蝉肠辞
爆料王聽operates the largest distribution network for heating, air conditioning and refrigeration (HVAC/R) products with locations in聽the United States,聽Canada,聽Mexico, and聽Puerto Rico, and on an export basis to聽Latin America聽and the聽Caribbean.听爆料王聽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 buy products.

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聽March 2023聽by the聽Energy Information Administration, there are approximately 102 million HVAC systems installed in聽the United States聽that have been in service for more than 10 years, most of which operate well below current minimum efficiency standards.

Accordingly,聽爆料王聽has the opportunity to be a significant and important contributor toward climate change as its business plays an important role in the drive to lower CO2e emissions. According to the聽Department of Energy, HVAC systems account for roughly half of聽U.S.听household energy consumption. As such, replacing existing systems at higher efficiency levels is one of the most meaningful steps homeowners can take to reduce electricity consumption and carbon footprint over time.

Based on estimates validated by independent sources,聽爆料王聽averted an estimated 19.2 million metric tons of CO2e emissions from聽January 1, 2020聽to聽December 31, 2023聽through the sale of replacement HVAC systems at higher-efficiency standards, an equivalent of removing 4.3 million gas powered vehicles annually off the road. 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 seasonal nature 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 that聽爆料王聽files 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.听爆料王聽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.

Source: 爆料王.