Revenue Growth and Market Expansion - Watsco's revenues in HVAC/R distribution increased from 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 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 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 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].
Watsco(WSO_B) - 2024 Q4 - Annual Report