Watsco, Inc. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Watsco, Inc. has filed its 2023 Form 10-K, detailing its financial performance and business operations for the fiscal year ending December 31, 2023.</b>

AI Summary

WATSCO INC (WSO-B) filed a Annual Report (10-K) with the SEC on February 23, 2024. Watsco, Inc. filed its annual report on Form 10-K for the fiscal year ended December 31, 2023. The filing covers the period from January 1, 2023, to December 31, 2023. Previous fiscal periods reported include 2022 and 2021. The company's principal business is wholesale distribution of HVAC/R products. Watsco, Inc. is incorporated in Florida and headquartered in Coconut Grove, FL.

Why It Matters

For investors and stakeholders tracking WATSCO INC, this filing contains several important signals. This 10-K filing provides a comprehensive overview of Watsco's financial health, operational strategies, and market position for the fiscal year 2023, crucial for investors and stakeholders to assess performance and future outlook. The detailed financial statements and risk factors within the report offer insights into the company's revenue streams, cost management, and potential challenges in the wholesale distribution of HVAC/R products.

Risk Assessment

Risk Level: medium — WATSCO INC shows moderate risk based on this filing. The company's business is subject to supplier concentration risk, with specific mention of 'Carrier and its Affiliates' and 'Ten Suppliers' comprising a significant portion of cost of goods in 2021, indicating potential dependency and vulnerability to supply chain disruptions.

Analyst Insight

Investors should review the detailed financial statements and risk factors in the 10-K to understand Watsco's performance and potential vulnerabilities in the HVAC/R distribution market.

Key Numbers

• 2023-12-31 — Fiscal Year End (CONFORMED PERIOD OF REPORT)
• 2024-02-23 — Filing Date (FILED AS OF DATE)
• 5070 — SIC Code (STANDARD INDUSTRIAL CLASSIFICATION)
• 590778222 — IRS Number (IRS NUMBER)

Key Players & Entities

• WATSCO INC (company) — FILER
• 2023-12-31 (date) — CONFORMED PERIOD OF REPORT
• 2024-02-23 (date) — FILED AS OF DATE
• 0000105016 (company) — CENTRAL INDEX KEY
• FL (location) — STATE OF INCORPORATION
• 305-714-4100 (phone) — BUSINESS PHONE
• Carrier and its Affiliates (company) — Supplier Concentration Risk
• GreenbergTraurig (company) — Legal Services

FAQ

Risk Factors

• Supplier Concentration Risk [medium — market]: The company is exposed to supplier concentration risk, with specific mention of 'Carrier and its Affiliates' and 'Ten Suppliers' comprising a significant portion of cost of goods in 2021.

Key Dates

• 2023-12-31: Fiscal Year End — Marks the end of the reporting period for the 10-K filing.
• 2024-02-23: Filing Date — Date the 10-K was officially submitted to the SEC.

Glossary

10-K

An annual report required by the U.S. Securities and Exchange Commission (SEC), that gives a comprehensive summary of a company's financial performance. (This is the primary document filed by Watsco, Inc. to report its annual financial results and business activities.)

Key Financial Figures

• $0.50 — ange on which registered Common stock, $0.50 par value WSO New York Stock Exchan
• $64.1 million — HVAC/R distribution have increased from $64.1 million in 1989 to $7.3 billion in 2023, result
• $7.3 billion — increased from $64.1 million in 1989 to $7.3 billion in 2023, resulting from our strategic a
• $64.0 billion — gregate estimated annual market size of $64.0 billion. The estimated annual market on an inst
• $126.0 billion — ential HVAC/R products is approximately $126.0 billion according to the November 2023 IBIS Wor

Filing Documents

• d104765d10k.htm (10-K) — 522KB
• d104765dex101z.htm (EX-10.1Z) — 19KB
• d104765dex13.htm (EX-13) — 1404KB
• d104765dex211.htm (EX-21.1) — 11KB
• d104765dex231.htm (EX-23.1) — 2KB
• d104765dex232.htm (EX-23.2) — 2KB
• d104765dex311.htm (EX-31.1) — 10KB
• d104765dex312.htm (EX-31.2) — 10KB
• d104765dex313.htm (EX-31.3) — 10KB
• d104765dex321.htm (EX-32.1) — 6KB
• d104765dex971.htm (EX-97.1) — 54KB
• g104765g0217074104988.jpg (GRAPHIC) — 134KB
• g104765g21w11.jpg (GRAPHIC) — 4KB
• 0001193125-24-044609.txt (&nbsp;) — 10928KB
• wso-20231231.xsd (EX-101.SCH) — 83KB
• wso-20231231_cal.xml (EX-101.CAL) — 82KB
• wso-20231231_def.xml (EX-101.DEF) — 605KB
• wso-20231231_lab.xml (EX-101.LAB) — 691KB
• wso-20231231_pre.xml (EX-101.PRE) — 646KB
• d104765d10k_htm.xml (XML) — 1641KB

Business

Business 3 Item 1A.

Risk Factors

Risk Factors 13 Item 1B. Unresolved Staff Comments 18 Item 1C. Cybersecurity 18 Item 2.

Properties

Properties 18 Item 3.

Legal Proceedings

Legal Proceedings 19 Item 4. Mine Safety Disclosures 19 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 19 Item 6. [Reserved] 21 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 21 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 21 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 21 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 21 Item 9A.

Controls and Procedures

Controls and Procedures 21 Item 9B. Other Information 22 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 22 PART III PART IV Item 15. Exhibits, Financial Statement Schedules 22 Item 16. Form 10-K Summary 25

SIGNATURES

SIGNATURES 26 2 Table of Contents PART I

Forward-Looking Statements

Forward-Looking Statements This Annual Report on Form 10-K contains or incorporates by reference statements that are not historical in nature and that are intended to be, and are hereby identified as, "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Statements which are not historical in nature, including the words "anticipate," "estimate," "could," "should," "may," "plan," "seek," "expect," "believe," "intend," "target," "will," "project," "focused," "outlook," "goal," "designed," and variations of these words and negatives thereof and similar expressions are intended to identify forward-looking statements, including statements regarding, among others, (i) economic conditions, (ii) business and acquisition strategies, (iii) potential acquisitions and/or joint ventures and investments in unconsolidated entities, (iv) financing plans, and (v) industry, demographic and other trends affecting our financial condition or results of operations. These forward-looking statements are based on management's current expectations, are not guarantees of future performance and are subject to a number of risks, uncertainties, and changes in circumstances, certain of which are beyond our control. Actual results could differ materially from these forward-looking statements as a result of several factors, including, but not limited to: general economic conditions, both in the United States and in the international markets we serve; competitive factors within the HVAC/R industry; effects of supplier concentration, including conditions that impact the supply chain; fluctuations in certain commodity costs; consumer spending; consumer debt levels; new housing starts and completions; capital spending in the commercial construction market; access to liquidity needed for operations; seasonal nature of product sales; weather patterns and conditions; insurance coverage risks; federal, state, and local regulations impac

BUSINESS

BUSINESS General Watsco, Inc. and its subsidiaries (collectively, "Watsco," the "Company", or "we," "us," or "our " ) was incorporated in Florida in 1956 and is the largest distributor of air conditioning, heating and refrigeration equipment and related parts and supplies ("HVAC/R") in the HVAC/R distribution industry in North America. At December 31, 2023, we operated from 690 locations in 42 U.S. States, Canada, Mexico and Puerto Rico with additional market coverage on an export basis to portions 3 Table of Contents of Latin America and the Caribbean, through which we serve more than 125,000 active contractors and dealers that service the replacement and new construction markets. Our revenues in HVAC/R distribution have increased from $64.1 million in 1989 to $7.3 billion in 2023, resulting from our strategic acquisition of companies with established market positions and subsequent building of revenues and profit through a combination of additional locations, introduction of new products, and other initiatives. Our principal executive office is located at 2665 South Bayshore Drive, Suite 901, Miami, Florida 33133, and our telephone number is (305) 714-4100. Our website address on the Internet is www.watsco.com and e-mails may be sent to info@watsco.com. Our website address is included in this report only as an inactive textual reference. Information contained on, or available through, our website is not incorporated by reference in, or made a part of, this report. Air Conditioning, Heating and Refrigeration Industry The HVAC/R distribution industry is highly fragmented. According to data published in the December 2023 IBIS World Industry Report for Heating and Air Conditioning Wholesaling in the U.S., the HVAC/R distribution industry has approximately 2,200 distribution companies with an aggregate estimated annual market size of $64.0 billion. The estimated annual market on an installed basis, which adds the contractor's value to the market size, f

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View this 10-K filing on SEC EDGAR