UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 2025 or ☐ Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period From to Commission file number 1-5581 WATSCO, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 2665 ...

Financial Performance - Revenues decreased 2% to $1.53 billion compared to $1.56 billion in the prior year[15] - Net income for Q1 2025 decreased to $94,540 from $104,262 in Q1 2024, representing a decline of approximately 9%[30] - Dividends on Common and Class B Common stock increased to $(109,037) in Q1 2025 from $(96,765) in Q1 2024, reflecting a rise of approximately 12.5%[30] Profitability and Margins - Gross profit margin improved by 60 basis points to 28.1% from 27.5% in the previous year[15] Market and Sales Growth - Core U.S. market for residential replacement sales increased by 10% (12% on a same-day basis) due to new customer acquisition and improved product mix[6] - The transition to new A2L products affects approximately 55% of Watsco's sales and will convert nearly $1 billion of inventory over the year[5] - The company has acquired 11 companies since 2019, contributing to $1.6 billion in annualized sales[16] Cash Flow and Investments - Operating cash flow was a use of cash totaling $178 million, reflecting inventory investments in new products[12] - Cash flows from investing activities showed a net inflow of $244,556 in Q1 2025, contrasting with a net outflow of $(210,965) in Q1 2024[30] - Capital expenditures netted $(7,443) in Q1 2025, compared to $(5,787) in Q1 2024, indicating increased investment in capital assets[30] Balance Sheet and Liquidity - The company has a debt-free balance sheet with $432 million in cash and $3 billion in shareholders' equity[3] - Cash and cash equivalents at the end of Q1 2025 were $431,823, up from $278,864 at the end of Q1 2024, marking an increase of about 55%[30] - Accounts receivable increased significantly to $83,864 in Q1 2025 from $(33,502) in Q1 2024, indicating a substantial change in working capital[30] - Inventories netted $(389,990) in Q1 2025, compared to $(307,219) in Q1 2024, showing an increase in inventory levels[30] Technology and User Engagement - Watsco's technology platforms have resulted in approximately 60% less attrition among active users, aiding future growth[14] Foreign Exchange Impact - The effect of foreign exchange rate changes on cash and cash equivalents resulted in a positive adjustment of $319 in Q1 2025, compared to a negative adjustment of $(2,390) in Q1 2024[30] Provision for Doubtful Accounts - The company reported a provision for doubtful accounts of $840 in Q1 2025, slightly down from $862 in Q1 2024[30]

Revenue Growth and Market Expansion - Watsco's revenues in HVAC/R distribution increased from $64.1 million in 1989 to $7.6 billion in 2024, reflecting a significant growth strategy through acquisitions and market expansion[17]. - The HVAC/R distribution industry in the U.S. has an estimated annual market size of $74.0 billion, with residential HVAC/R products valued at approximately $134.0 billion[19]. - The company has acquired 70 HVAC/R distribution businesses since 1989, contributing to substantial sales and earnings growth through strategic acquisitions and market share expansion[32]. - Watsco, Inc. reported a revenue increase of 12% year-over-year, reaching $1.5 billion for the latest quarter[157]. - Watsco, Inc. provided an optimistic outlook, projecting a revenue growth of 8-10% for the next fiscal year[157]. - Market expansion efforts include entering three new states, aiming for a 5% market share increase in those regions[157]. Employee and Workforce Management - The voluntary turnover rate for U.S. employees was approximately 18% in 2024, down from 20% in 2022, suggesting improved employee retention strategies[36]. - Watsco employs approximately 7,295 individuals, with 8% located in Canada and Mexico, and utilizes independent contractors to supplement its workforce[35]. - Watsco's culture promotes employee ownership, with around 4,200 employees holding shares in the company through various stock-based equity plans[41]. - The company has committed to increasing its workforce by 10% to support growth and expansion efforts[157]. Product and Technology Development - The company focuses on expanding its product line and introducing private-label products to capture market share and grow revenues[30]. - The company has invested in approximately 300 technology employees to enhance digital capabilities and improve customer service[26]. - The company is investing $50 million in new product development and technology enhancements[157]. - The company plans to implement a new customer relationship management system to improve user engagement and retention[157]. Market Trends and Customer Base - Approximately 102 million central air conditioning and heating systems in the U.S. have been in service for over 10 years, indicating a growing replacement market due to aging units[21]. - The replacement market for residential air conditioning equipment is estimated to be 85%-90% of industry unit sales in the U.S., expected to increase as older units are replaced[60]. - The company serves over 130,000 active contractors, with no single customer representing more than 2% of consolidated revenues in 2024[57]. - User data showed a 15% growth in active customers, totaling 1.2 million users[157]. Financial Performance and Risks - The company achieved a net income of $150 million, reflecting a 10% increase compared to the same quarter last year[157]. - The company relies on credit markets for financial commitments, and disruptions in these markets could adversely affect liquidity and operational performance[99]. - Future dividends will depend on cash flow, profitability, and financial condition, with the Board of Directors having sole discretion over declarations[111]. - The market price of the common stock has been highly volatile, influenced by operating results and general market conditions[108]. Strategic Partnerships and Supplier Relationships - Joint ventures with Carrier represented 54% of revenues in 2024, with Carrier contributing significant assets and the company holding controlling interests in these ventures[55]. - The top ten suppliers accounted for 85% of purchases, with 62% from Carrier and 9% from Rheem, indicating a high supplier concentration risk[61]. - The company maintains trade name and distribution agreements with Carrier and Rheem, providing exclusive distribution rights in specified territories[85]. Sustainability and Environmental Impact - The company estimates it has averted approximately 22.8 million metric tons of CO2e emissions from January 1, 2020, to December 31, 2024, equivalent to nearly 5.3 million gas-powered vehicles driven for one year[77]. - Demand for higher-efficiency products is expected to increase due to the U.S. Inflation Reduction Act of 2022, which includes $4.3 billion for state-administered consumer rebate programs[78]. - A strategic focus on sustainability initiatives is expected to reduce operational costs by 3% over the next two years[157]. Corporate Governance and Shareholder Matters - The Class B common stock represents 90% of the outstanding shares of Class B common stock, giving directors and executive officers significant voting power[105]. - The cumulative total shareholder return for Watsco, Inc. common stock increased from 100.00 to 305.64 from December 31, 2019, to December 31, 2024[129]. - The company is not restricted from issuing additional shares of common stock, which may result in dilution for existing shareholders[107]. - Since the inception of the repurchase plan in September 1999, 6,370,913 shares have been repurchased at a total cost of $114.4 million[130]. Operational Infrastructure - As of December 31, 2024, the company operated 690 locations, with 90% of revenues generated from the United States, 5% from Canada, and 5% from Latin America and the Caribbean[47][46]. - The company operated 690 warehousing and distribution facilities across 43 U.S. states, Canada, Mexico, and Puerto Rico, totaling approximately 16.5 million square feet of space[118]. - The company has 783 ground transport vehicles, with 611 leased and the remainder owned, indicating a robust logistics capability[120]. Cybersecurity and Risk Management - The company has established security policies to protect against cybersecurity threats, but risks remain that could impact financial condition and operations[91]. - The company maintains effective disclosure controls and procedures as evaluated by the CEO, EVP, and CFO[135][136]. - The company has established security practices and safeguards to manage cybersecurity risks, including engaging third-party vendors for specialized functions[114].

Financial Performance - Fourth quarter sales increased by 9% to a record $1.75 billion, with a gross profit increase of 13% to $468 million[8] - Operating income grew by 26% to $136 million, with an operating margin expansion of 110 basis points to 7.8%[8] - Annual sales reached $7.62 billion, representing a 5% increase, with a same-store growth of 3%[14] - Revenues for Q4 2024 reached $1,753,962, a 9.4% increase from $1,603,197 in Q4 2023[32] - Gross profit margin improved to 26.7% in Q4 2024, compared to 25.8% in Q4 2023[32] - Net income attributable to Watsco shareholders was $96,841 in Q4 2024, up from $82,547 in Q4 2023, representing a 17.5% increase[32] - Operating income for the year was $781,775, slightly down from $794,810 in 2023, reflecting a decrease of 1.8%[32] - Diluted earnings per share for 2024 were $13.30, compared to $13.67 in 2023, showing a decrease of 2.7%[32] Cash Flow and Assets - Operating cash flow for 2024 increased by 38% to a record $773 million, equating to 122% of net income[16] - Total current assets increased to $3,079,981 in 2024 from $2,391,931 in 2023, reflecting a growth of 28.8%[34] - Cash and cash equivalents at the end of 2024 were $526,271, significantly up from $210,112 in 2023, marking a 150.5% increase[36] - Net cash provided by operating activities for 2024 was $773,102, compared to $561,954 in 2023, indicating a 37.5% increase[36] - Total assets grew to $4,479,523 in 2024 from $3,729,182 in 2023, an increase of 20.1%[34] Dividends and Shareholder Returns - The annual dividend was raised by 11% to $12.00 per share, marking the 51st consecutive year of dividend payments[3][17] E-commerce and Digital Growth - E-commerce sales grew by 8% to $2.6 billion for the year, accounting for 35% of annual sales[14] - The digital user community expanded to approximately 64,000 users, a 15% increase from the prior year[14] Strategic Initiatives - Watsco's buy-and-build strategy has resulted in the acquisition of 70 companies since 1989, contributing to approximately $1.6 billion in annualized sales from 111 locations[19] - The transition to A2L products is underway, providing incremental growth opportunities as technology platforms gain adoption[6] - Watsco's technology platforms have shown to produce higher growth rates and approximately 60% less attrition among active users[20] Expenses - SG&A expenses increased to $1,293,439 in 2024 from $1,223,507 in 2023, a rise of 5.7%[32]

Financial Performance - Revenues for Q3 2024 were $2,160.0 million, a 2% increase from $2,126.8 million in Q3 2023, with $37.5 million attributed to new acquisitions[73] - Same-store sales for Q3 2024 were $2,119.8 million, a slight decrease of $4.5 million compared to $2,124.3 million in Q3 2023[73] - Revenues for the nine months ended September 30, 2024, were $5,864.4 million, an increase of $183.8 million or 3% from $5,680.6 million in 2023[79] - Same-store sales for the nine months ended September 30, 2024, increased by $36.3 million or 1% compared to the same period in 2023[79] Profitability Metrics - Gross profit margin for Q3 2024 was 26.2%, a decrease from 26.7% in Q3 2023, while operating income margin fell to 11.6% from 12.1%[69] - Net income attributable to Watsco, Inc. for Q3 2024 was 7.9%, down from 8.0% in Q3 2023[69] - Gross profit for the quarter ended September 30, 2024, was $566.2 million, a slight decrease of $0.7 million or 0% compared to $566.9 million in the same period of 2023[75] - Gross profit for the nine months ended September 30, 2024, was $1,576.6 million, a decrease of $1.1 million or 0% from $1,577.7 million in 2023[81] Cost and Expenses - Cost of sales for Q3 2024 was 73.8%, slightly higher than 73.3% in Q3 2023, indicating increased costs relative to revenues[69] - Selling, general and administrative expenses increased by 2% to $326.4 million for the third quarter of 2024, compared to $319.8 million in 2023[76] - Selling, general and administrative expenses for the nine months ended September 30, 2024, increased by $44.0 million or 5% to $955.0 million compared to $911.0 million in 2023[82] Operational Metrics - The company operates 689 locations as of September 30, 2024, down from 691 locations a year earlier, with 7 new openings and 10 closures during the year[72] - Working capital increased to $2,199.8 million as of September 30, 2024, from $1,679.9 million at December 31, 2023, due to higher inventory and accounts receivable[92] - As of September 30, 2024, there was no outstanding balance under the revolving credit agreement, compared to $15.4 million outstanding as of December 31, 2023[98] Acquisitions and Investments - The company acquired CSI, a distributor of HVAC products, for a total consideration of $6.0 million in cash, 1,904 shares of Common stock valued at $0.8 million, and $0.6 million for repayment of indebtedness[108] - The acquisition of GWS, a plumbing and HVAC distributor, involved a net purchase price of $4.0 million in cash and 280,215 shares of Common stock valued at $101.6 million[109] Shareholder Returns - Cash dividends paid were $7.85 per share for the nine months ended September 30, 2024, compared to $7.35 per share for the same period in 2023[113] - The company has a remaining authorization to repurchase 1,129,087 shares under its share repurchase program, with a total of 6,370,913 shares repurchased at a cost of $114.4 million since inception[116] Market and Regulatory Environment - The U.S. Inflation Reduction Act of 2022 is expected to increase demand for higher-efficiency products, with $4.3 billion allocated for state-administered consumer rebate programs[64] - The company experienced minimal impact from Hurricane Helene in September 2024 and is currently assessing the effects of Hurricane Milton[65] Future Plans and Financial Instruments - The company executed an amended sales agreement for the 2024 ATM Program, allowing for the issuance of up to $400.0 million of Common stock, with the full amount available for sale as of September 30, 2024[101] - The company plans to file a replacement automatically effective shelf registration statement on Form S-3 immediately following the filing of the Quarterly Report on Form 10-Q[101]

Financial Performance - Watsco's Q3 2024 sales reached a record $2.16 billion, a 2% increase year-over-year, with flat same-store sales[7] - For the nine-month period ended September 30, 2024, sales increased 3% to a record $5.9 billion, with a 1% increase on a same-store basis[8] - Revenues for the quarter ended September 30, 2024, were $2,160,036, compared to $2,126,845 for the same period in 2023, representing a growth of 1.6%[16] - Net income attributable to Watsco shareholders for the nine months ended September 30, 2024, was $439,445, down from $453,790 in the same period of 2023, a decline of 3.2%[16] - Operating income for the nine months ended September 30, 2024, was $645,587, compared to $687,062 for the same period in 2023, a decrease of 6.0%[16] - Diluted earnings per share for the quarter ended September 30, 2024, was $4.22, down from $4.35 in the same quarter of 2023[16] Cash Flow and Assets - Operating cash flow improved by 50% to a record $394 million for the nine-month period[7] - Net cash provided by operating activities for the nine months ended September 30, 2024, was $394,205, significantly higher than $263,340 for the same period in 2023, an increase of 49.7%[18] - Total current assets increased to $3,132,992 as of September 30, 2024, from $2,391,931 at the end of 2023, reflecting a growth of 30.9%[17] - Cash and cash equivalents rose to $294,354 as of September 30, 2024, compared to $210,112 at the end of 2023, an increase of 40.1%[17] Profitability and Margins - Gross profit for Q3 2024 was $566 million, resulting in a gross margin of 26.2%[7] - Gross profit margin decreased to 26.2% in Q3 2024 from 26.7% in Q3 2023[16] - The company estimates that ongoing investments to regain market share have diluted gross margins by approximately 30 basis points for the nine-month period[6] Inventory and Liabilities - The company reported a significant increase in inventories, which rose to $1,596,795 as of September 30, 2024, from $1,347,289 at the end of 2023, an increase of 18.5%[17] - Total liabilities increased to $1,355,605 as of September 30, 2024, from $1,112,992 at the end of 2023, a rise of 21.8%[17] Digital Engagement and E-commerce - Approximately 61,000 contractor businesses and technicians engaged with Watsco digitally, a 14% increase year-over-year[10] - E-commerce sales grew by 5% during the nine-month period, accounting for 35% of total sales[10] - The annualized gross merchandise value (GMV) of products sold through Watsco's OnCallAir® platform was approximately $1.4 billion for the 12-month period[10] Dividends and Financial Position - Watsco's annual dividend rate was increased by 10% to $10.80 per share effective April 2024[11] - The company has a debt-free balance sheet with $550 million in cash and short-term investments as of September 30, 2024[7]

Financial Performance - Revenues for the second quarter of 2024 were $2,139.3 million, an increase of 7% compared to $2,003.1 million in the second quarter of 2023[63] - Same-store sales for the second quarter of 2024 reached $2,079.1 million, reflecting a 4% increase from $2,001.1 million in the same period last year[63] - Gross profit for Q2 2024 was $579.8 million, an increase of $17.2 million or 3% compared to Q2 2023, with a gross margin decline of 100 basis points to 27.1% due to pricing and sales mix impacts[64] - Revenues for the first half of 2024 were $3,704.3 million, a 4% increase from $3,553.7 million in the first half of 2023, with same-store sales increasing by 1%[67] - Net income attributable to Watsco for Q2 2024 increased by $8.6 million or 5% compared to Q2 2023, driven by higher revenues and interest income[67] Sales and Operations - HVAC equipment sales accounted for 71% of total sales in 2024, with an 8% increase in residential products and a 8% increase in commercial HVAC equipment sales[63] - The company operated 691 locations as of June 30, 2024, with a net increase of 18 locations over the past 12 months[62] Profitability and Expenses - Gross profit margin for the second quarter of 2024 was 27.1%, down from 28.1% in the second quarter of 2023[61] - Selling, general and administrative expenses for Q2 2024 were $319.0 million, up $14.8 million or 5% from Q2 2023, with expenses as a percentage of revenues decreasing to 14.9% from 15.2%[64] - Selling, general and administrative expenses as a percentage of revenues decreased to 14.9% in the second quarter of 2024 from 15.2% in the prior year[61] Environmental Impact - The company averted an estimated 20.9 million metric tons of CO2e emissions from January 1, 2020, to June 30, 2024, through the sale of higher-efficiency HVAC systems[56] - The U.S. Inflation Reduction Act of 2022 is expected to increase demand for higher-efficiency products, with $4.3 billion allocated for state-administered consumer rebate programs[57] - The company has invested in tools and technology to capture a richer sales mix over time, focusing on high-efficiency HVAC systems[55] Cash Flow and Capital Management - Cash flows provided by operating activities for the first half of 2024 were $161.4 million, a significant increase of $250.6 million compared to $(89.2) million in 2023[81] - Working capital increased to $2,089.2 million as of June 30, 2024, from $1,679.9 million at December 31, 2023, driven by higher inventory and accounts receivable[81] - The company had $224.9 million in cash and cash equivalents as of June 30, 2024, with $200.0 million in short-term cash investments[79] Shareholder Returns and Equity - Cash dividends paid were $5.15 per share for the six months ended June 30, 2024, compared to $4.90 per share for the same period in 2023[92] - The company implemented a Dividend Reinvestment Plan, allowing shareholders to reinvest dividends into Common stock[93] - Since the inception of the share repurchase program, 6,370,913 shares have been repurchased at a cost of $114.4 million, with 1,129,087 shares remaining authorized for repurchase[93] Investments and Acquisitions - The company acquired CSI for $6.0 million in cash and 1,904 shares valued at $0.8 million, with CSI having annual sales of approximately $13.0 million[90] - The acquisition of GWS was completed for a net purchase price of $4.0 million in cash and 280,215 shares valued at $101.6 million, with GWS having annual sales of approximately $180.0 million[90] - The company's investment in Carrier Enterprise I, which holds a 38.4% interest in RSI, has a valuation of approximately $457.0 million as of June 30, 2024[87] Financing Activities - The company executed a sales agreement under the 2021 ATM Program, issuing 712,000 shares for net proceeds of $281.8 million, with a total of $298.5 million sold under this program[85] - An amended sales agreement under the 2024 ATM Program allows for the issuance of up to $400.0 million of Common stock, fully available as of June 30, 2024[86] Tax and Regulatory - The effective income tax rate for the first half of 2024 was 23.5%, down from 24.1% in the same period of 2023, primarily due to higher share-based compensation deductions[75] - There have been no material changes to market risk disclosures since the last annual report[94] Interest and Other Income - Interest income, net for Q2 2024 increased by $8.3 million or 244% due to interest earned on cash and short-term investments[66] - Other income for Q2 2024 was $8.1 million, up from $7.2 million in Q2 2023, reflecting the company's share of net income from Russell Sigler, Inc.[65]

Financial Performance - Revenue increased 7% to a record $2.1 billion, with a 4% increase on a same-store basis[7] - Gross profit rose 3% to $580 million, resulting in a gross margin of 27.1%[4] - Operating income reached $269 million, with an operating margin of 12.6%[7] - For the six months ended June 30, 2024, net income was $318.9 million, compared to $335.8 million for the same period in 2023, reflecting a decrease of approximately 5.2%[37] Cash Flow and Investments - Operating cash flow improved by $250 million compared to last year, totaling $161 million in 2024[9] - Cash provided by operating activities for the six months ended June 30, 2024, was $161.4 million, a significant improvement compared to a cash used of $89.2 million in the same period of 2023[37] - The company had $425 million in cash and short-term investments with no borrowings under its $600 million credit facility[14] Sales and Market Growth - Sales of heat pump HVAC systems exceeded $1.2 billion, outpacing growth rates for conventional HVAC systems[12] - E-commerce sales grew 13% during the quarter, accounting for 36% of total sales[24] - The annualized gross merchandise value (GMV) of products sold through OnCallAir® was approximately $1.4 billion for the twelve-month period ended June 30, 2024[24] Acquisitions and Business Expansion - Watsco completed 69 acquisitions, generating approximately $1 billion in annual sales from the last eight acquired businesses[6] Expenses and Profitability - SG&A expenses increased by 5%, improving 30 basis points as a percentage of sales[22] Assets and Liabilities - Total current assets increased to $3.03 billion as of June 30, 2024, from $2.39 billion at the end of 2023, representing an increase of approximately 26.8%[38] - Accounts receivable, net, rose to $1.00 billion as of June 30, 2024, compared to $797.8 million at the end of 2023, indicating a growth of about 25.4%[38] - Inventories, net, increased to $1.57 billion as of June 30, 2024, from $1.35 billion at the end of 2023, reflecting a rise of approximately 16.7%[38] - Total liabilities increased to $1.35 billion as of June 30, 2024, compared to $1.11 billion at the end of 2023, marking an increase of about 21.4%[38] - Watsco's shareholders' equity grew to $2.61 billion as of June 30, 2024, from $2.23 billion at the end of 2023, representing an increase of approximately 15.5%[38] Market Focus and Sustainability - The company focuses on the replacement market, with approximately 102 million HVAC systems in the U.S. over 10 years old, most operating below current efficiency standards[33] - Watsco aims to contribute to climate change mitigation by promoting higher efficiency HVAC systems, which are critical for reducing energy consumption and carbon footprint[29] Dividends - Watsco has paid dividends for 50 consecutive years and increased its annual dividend rate by 10% to $10.80 per share effective April 2024[28]

Financial Performance - Revenues for Q1 2024 were $1,565.0 million, a 1% increase from $1,550.6 million in Q1 2023, with $51.4 million attributed to new locations acquired[83]. - Same-store sales decreased by 2%, from $1,549.8 million in Q1 2023 to $1,512.5 million in Q1 2024[84]. - Gross profit for Q1 2024 was $430.6 million, a 4% decline from $448.2 million in Q1 2023, resulting in a gross margin of 27.5% compared to 28.9% in the prior year[85]. - Net income attributable to Watsco for Q1 2024 decreased by $23.1 million, or 21%, compared to Q1 2023, primarily due to lower gross profit and higher selling, general, and administrative expenses[90]. - Net income attributable to Watsco, Inc. for Q1 2024 was 5.6%, down from 7.1% in Q1 2023[78]. Expenses and Costs - Selling, general and administrative expenses increased by 8% to $309.5 million in Q1 2024, with expenses as a percentage of revenues rising to 19.8% from 18.5% in Q1 2023[86]. - The effective income tax rate decreased from 23.3% in Q1 2023 to 21.8% in Q1 2024, attributed to higher share-based compensation deductions[89]. Cash Flow and Capital - Cash flows provided by operating activities increased by $151.1 million, from $(47.4) million in Q1 2023 to $103.7 million in Q1 2024[97]. - Working capital increased to $1,972.2 million as of March 31, 2024, up from $1,679.9 million at December 31, 2023, driven by higher inventory and accounts receivable[96]. - The company had $278.9 million in cash and cash equivalents as of March 31, 2024, with $176.1 million held by foreign subsidiaries[94]. - The company issued and sold 712,000 shares of Common stock under the ATM Program for net proceeds of $281.8 million during Q1 2024[104]. - Cash flows used in investing activities increased by $200.5 million, from $(10.4) million in Q1 2023 to $(210.9) million in Q1 2024, primarily due to short-term cash investments[97]. - The company has $600.0 million available under its revolving credit agreement, with no outstanding balance as of March 31, 2024[101]. Acquisitions and Growth - The company acquired 16 locations in the past 12 months, bringing the total number of locations to 691 as of March 31, 2024[82]. - The company acquired CSI, a distributor of HVAC products, for a total consideration of $6.0 million in cash and 1,904 shares of Common stock valued at $0.8 million on February 1, 2024[109]. Market and Product Insights - HVAC equipment sales reflected a 2% decrease in residential products, with a 3% decline in U.S. markets and a 6% increase in international markets[84]. - The U.S. Inflation Reduction Act of 2022 is expected to increase demand for high-efficiency products, with $4.3 billion allocated for state-administered consumer rebate programs[73]. - The company averted an estimated 20.1 million metric tons of CO2e emissions from January 1, 2020, to March 31, 2024, through the sale of higher-efficiency HVAC systems[72]. Dividends - The company paid cash dividends of $2.45 per share during both Q1 2024 and Q1 2023, with a new dividend of $2.70 declared on April 1, 2024[113]. Interest Income - Interest income for Q1 2024 increased by 502% to $3.1 million, primarily due to interest earned on cash and short-term investments[88].

Financial Performance - Revenues for the first quarter increased 1% to a record $1.56 billion, with a 2% decline on a same-store basis [8]. - Gross profit was $431 million, resulting in a gross margin of 27.5%, down from 28.9% in the previous year [29]. - Operating income decreased to $127 million, reflecting an operating margin of 8.1%, compared to 10.6% last year [29]. - Earnings per share were $2.17, down from $2.83 in the same quarter last year [8]. - Net income for Q1 2024 was $104,262 thousand, a decrease of 19.9% compared to $130,371 thousand in Q1 2023 [33]. Cash Flow and Assets - Record operating cash flow of $104 million was generated during the quarter [18]. - Cash and cash equivalents at the end of Q1 2024 were $278,864 thousand, up from $210,112 thousand at the beginning of the period, marking a net increase of 32.5% [33]. - Total current assets increased to $2,998,372 thousand in Q1 2024 from $2,391,931 thousand in Q4 2023, representing a growth of 25.4% [31]. - Net cash provided by operating activities was $103,706 thousand in Q1 2024, a significant recovery from a net cash used of $(47,421) thousand in Q1 2023 [33]. Liabilities and Equity - Total liabilities rose to $1,429,545 thousand in Q1 2024 from $1,112,992 thousand in Q4 2023, an increase of 28.4% [31]. - Shareholders' equity increased to $2,927,573 thousand in Q1 2024 from $2,616,190 thousand in Q4 2023, showing a growth of 11.9% [31]. Inventory and Receivables - Inventories increased to $1,655,635 thousand in Q1 2024 from $1,347,289 thousand in Q4 2023, reflecting a rise of 23% [31]. - The company reported a decrease in accounts receivable, net, of $33,502 thousand in Q1 2024, compared to a decrease of $64,691 thousand in Q1 2023 [33]. Business Growth and Investments - The company added three new companies to its portfolio since the beginning of last year, enhancing market share [5]. - The company made business acquisitions totaling $5,178 thousand in Q1 2024, compared to $2,989 thousand in Q1 2023 [33]. - The company raised $282 million through an equity offering under its at-the-market program [18]. Sales and Market Trends - Sales of heat pump HVAC systems exceeded $1.2 billion in 2023, continuing to outpace growth rates for conventional systems [14]. - E-commerce sales accounted for 33% of total sales, showing strong growth compared to overall sales [14]. Dividends - A 10% increase in the annual dividend to $10.80 per share was approved, effective April 2024 [4].