Watsco (WSO) 10-Q 1 Nov 19 2019 Q3 Quarterly report Financial data

Cover Page

Cover Page - shares	9 Months Ended
	Sep. 30, 2019	Oct. 28, 2019
Document Information [Line Items]
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Amendment Flag	false
Entity Registrant Name	WATSCO INC
Entity Central Index Key	0000105016
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity File Number	1-5581
Entity Small Business	false
Entity Incorporation, State or Country Code	FL
Entity Emerging Growth Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity Tax Identification Number	59-0778222
Entity Address, Address Line One	2665 South Bayshore Drive
Entity Address, Address Line Two	Suite 901
Entity Address, State or Province	FL
Entity Address, City or Town	Miami
Entity Address, Postal Zip Code	33133
City Area Code	305
Local Phone Number	714-4100
Common Stock [Member]
Document Information [Line Items]
Trading Symbol	WSO
Security Exchange Name	NYSE
Title of 12(b) Security	Common stock, $0.50 par value
Entity Common Stock, Shares Outstanding		32,647,671
Common Class B [Member]
Document Information [Line Items]
Trading Symbol	WSOB
Security Exchange Name	NYSE
Title of 12(b) Security	Class B common stock, $0.50 par value
Entity Common Stock, Shares Outstanding		5,453,477

Condensed Consolidated Unaudite

Condensed Consolidated Unaudited Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenues	$ 1,394,915	$ 1,296,007	$ 3,698,047	$ 3,555,327
Cost of sales	1,060,224	976,998	2,801,612	2,684,719
Gross profit	334,691	319,009	896,435	870,608
Selling, general and administrative expenses	212,902	200,408	589,523	565,519
Other income	3,530	3,696	7,939	8,491
Operating income	125,319	122,297	314,851	313,580
Interest expense, net	1,434	1,047	3,422	2,375
Income before income taxes	123,885	121,250	311,429	311,205
Income taxes	24,230	24,364	60,060	63,678
Net income	99,655	96,886	251,369	247,527
Less: net income attributable to non-controlling interest	16,175	17,723	42,697	44,188
Net income attributable to Watsco, Inc.	$ 83,480	$ 79,163	$ 208,672	$ 203,339
Earnings per share for Common and Class B common stock:
Basic	$ 2.20	$ 2.12	$ 5.54	$ 5.44
Diluted	$ 2.20	$ 2.11	$ 5.54	$ 5.43

Condensed Consolidated Unaudi_2

Condensed Consolidated Unaudited Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net income	$ 99,655	$ 96,886	$ 251,369	$ 247,527
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustment	(3,038)	4,269	7,264	(7,422)
Unrealized gain (loss) on cash flow hedging instruments	255	231	(798)	762
Reclassification of gain on cash flow hedging instruments into earnings	(140)	(915)	(542)	(57)
Other comprehensive (loss) income	(2,923)	3,585	5,924	(6,717)
Comprehensive income	96,732	100,471	257,293	240,810
Less: comprehensive income attributable to non-controlling interest	15,146	19,006	44,693	41,708
Comprehensive income attributable to Watsco, Inc.	$ 81,586	$ 81,465	$ 212,600	$ 199,102

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 60,150	$ 82,894
Accounts receivable, net	640,802	501,908
Inventories	970,475	837,129
Other current assets	19,400	19,875
Total current assets	1,690,827	1,441,806
Property and equipment, net	97,926	91,046
Operating lease right-of-use assets	225,366
Goodwill	407,009	391,998
Intangible assets, net	171,310	147,851
Other assets	100,621	88,332
Total assets	2,693,059	2,161,033
Current liabilities:
Current portion of other long-term obligations	67,587	246
Accounts payable	311,317	200,229
Accrued expenses and other current liabilities	163,384	157,091
Total current liabilities	542,288	357,566
Long-term obligations:
Borrowings under revolving credit agreement	169,300	135,200
Operating lease liabilities, net of current portion	157,503
Other long-term obligations, net of current portion	1,863	552
Total long-term obligations	328,666	135,752
Deferred income taxes and other liabilities	69,083	66,002
Commitments and contingencies
Watsco, Inc. shareholders' equity:
Preferred stock, $0.50 par value
Paid-in capital	894,917	832,121
Accumulated other comprehensive loss, net of tax	(42,040)	(45,968)
Retained earnings	656,187	627,969
Treasury stock, at cost	(87,440)	(87,440)
Total Watsco, Inc. shareholders' equity	1,443,109	1,347,849
Non-controlling interest	309,913	253,864
Total shareholders' equity	1,753,022	1,601,713
Total liabilities and shareholders' equity	2,693,059	2,161,033
Common Stock
Watsco, Inc. shareholders' equity:
Common stock, $0.50 par value	18,734	18,476
Class B Common Stock
Watsco, Inc. shareholders' equity:
Common stock, $0.50 par value	$ 2,751	$ 2,691

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Preferred stock, par value	$ 0.50	$ 0.50
Common Stock
Common stock, par value	0.50	0.50
Class B Common Stock
Common stock, par value	$ 0.50	$ 0.50

Condensed Consolidated Unaudi_3

Condensed Consolidated Unaudited Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Peirce-Phelps, Inc.	Dunphey & Associates Supply Co., Inc.	Common StockPeirce-Phelps, Inc.	Common StockDunphey & Associates Supply Co., Inc.	Common Stock, Class B Common Stock and Preferred Stock	Paid-In Capital	Paid-In CapitalPeirce-Phelps, Inc.	Paid-In CapitalDunphey & Associates Supply Co., Inc.	Accumulated Other Comprehensive Loss	Retained Earnings	Treasury Stock	Non-controlling Interest
Beginning balance at Dec. 31, 2017	$ 1,550,977					$ 21,050	$ 804,008			$ (34,221)	$ 594,556	$ (87,440)	$ 253,024
Beginning balance (in shares) at Dec. 31, 2017						37,228,715
Cumulative-effect adjustment at Dec. 31, 2017										301	(301)
Net income	42,377										34,219		8,158
Other comprehensive income (loss)	(5,741)									(3,649)			(2,092)
Issuances of non-vested restricted shares of common stock						$ 46	(46)
Issuances of non-vested restricted shares of common stock (in shares)						91,609
Forfeitures of non-vested restricted shares of common stock						$ (2)	2
Forfeitures of non-vested restricted shares of common stock (in shares)						(3,000)
Common stock contribution to 401(k) plan	2,945					$ 9	2,936
Common stock contribution to 401(k) plan (in shares)						17,318
Stock issuances from exercise of stock options and employee stock purchase plan	4,341					$ 19	4,322
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)						37,130
Retirement of common stock	(914)					$ (3)	(911)
Retirement of common stock (in shares)						(5,041)
Share-based compensation	4,400						4,400
Cash dividends declared and paid on Common and Class B common stock	(46,581)										(46,581)
Distributions to non-controlling interest	(2,178)												(2,178)
Ending balance at Mar. 31, 2018	1,549,626					$ 21,119	814,711			(37,569)	581,893	(87,440)	256,912
Ending balance (in shares) at Mar. 31, 2018						37,366,731
Beginning balance at Dec. 31, 2017	1,550,977					$ 21,050	804,008			(34,221)	594,556	(87,440)	253,024
Beginning balance (in shares) at Dec. 31, 2017						37,228,715
Cumulative-effect adjustment at Dec. 31, 2017										301	(301)
Net income	247,527
Other comprehensive income (loss)	(6,717)
Ending balance at Sep. 30, 2018	1,660,550					$ 21,148	829,050			(38,157)	642,643	(87,440)	293,306
Ending balance (in shares) at Sep. 30, 2018						37,424,364
Beginning balance at Mar. 31, 2018	1,549,626					$ 21,119	814,711			(37,569)	581,893	(87,440)	256,912
Beginning balance (in shares) at Mar. 31, 2018						37,366,731
Net income	108,264										89,957		18,307
Other comprehensive income (loss)	(4,561)									(2,890)			(1,671)
Issuances of non-vested restricted shares of common stock						$ 4	(4)
Issuances of non-vested restricted shares of common stock (in shares)						8,500
Forfeitures of non-vested restricted shares of common stock						$ (2)	2
Forfeitures of non-vested restricted shares of common stock (in shares)						(5,000)
Stock issuances from exercise of stock options and employee stock purchase plan	1,601					$ 6	1,595
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)						11,935
Retirement of common stock	(2,499)					$ (7)	(2,492)
Retirement of common stock (in shares)						(14,534)
Share-based compensation	3,747						3,747
Cash dividends declared and paid on Common and Class B common stock	(54,184)										(54,184)
Ending balance at Jun. 30, 2018	1,601,994					$ 21,120	817,559			(40,459)	617,666	(87,440)	273,548
Ending balance (in shares) at Jun. 30, 2018						37,367,632
Net income	96,886										79,163		17,723
Other comprehensive income (loss)	3,585									2,302			1,283
Issuances of non-vested restricted shares of common stock						$ 5	(5)
Issuances of non-vested restricted shares of common stock (in shares)						10,000
Forfeitures of non-vested restricted shares of common stock						$ (1)	1
Forfeitures of non-vested restricted shares of common stock (in shares)						(2,000)
Stock issuances from exercise of stock options and employee stock purchase plan	1,299					$ 5	1,294
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)						10,835
Retirement of common stock	(1,631)					$ (5)	(1,626)
Retirement of common stock (in shares)						(9,206)
Share-based compensation	3,671						3,671
Cash dividends declared and paid on Common and Class B common stock	(54,186)										(54,186)
Common stock issued	8,180					$ 24	8,156
Common stock issued (in shares)						47,103
Investment in unconsolidated entity	752												752
Ending balance at Sep. 30, 2018	1,660,550					$ 21,148	829,050			(38,157)	642,643	(87,440)	293,306
Ending balance (in shares) at Sep. 30, 2018						37,424,364
Beginning balance at Dec. 31, 2018	1,601,713					$ 21,167	832,121			(45,968)	627,969	(87,440)	253,864
Beginning balance (in shares) at Dec. 31, 2018						37,461,643
Net income	43,804										35,037		8,767
Other comprehensive income (loss)	4,195									2,783			1,412
Issuances of non-vested restricted shares of common stock						$ 39	(39)
Issuances of non-vested restricted shares of common stock (in shares)						77,049
Forfeitures of non-vested restricted shares of common stock						$ (3)	3
Forfeitures of non-vested restricted shares of common stock (in shares)						(5,000)
Common stock contribution to 401(k) plan	4,274					$ 15	4,259
Common stock contribution to 401(k) plan (in shares)						30,715
Stock issuances from exercise of stock options and employee stock purchase plan	1,125					$ 4	1,121
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)						8,925
Retirement of common stock	(428)					$ (1)	(427)
Retirement of common stock (in shares)						(2,985)
Share-based compensation	4,537						4,537
Cash dividends declared and paid on Common and Class B common stock	(59,965)										(59,965)
Ending balance at Mar. 31, 2019	1,599,255					$ 21,221	841,575			(43,185)	603,041	(87,440)	264,043
Ending balance (in shares) at Mar. 31, 2019						37,570,347
Beginning balance at Dec. 31, 2018	1,601,713					$ 21,167	832,121			(45,968)	627,969	(87,440)	253,864
Beginning balance (in shares) at Dec. 31, 2018						37,461,643
Net income	251,369
Other comprehensive income (loss)	5,924
Ending balance at Sep. 30, 2019	1,753,022					$ 21,485	894,917			(42,040)	656,187	(87,440)	309,913
Ending balance (in shares) at Sep. 30, 2019						38,097,236
Beginning balance at Mar. 31, 2019	1,599,255					$ 21,221	841,575			(43,185)	603,041	(87,440)	264,043
Beginning balance (in shares) at Mar. 31, 2019						37,570,347
Net income	107,910										90,155		17,755
Other comprehensive income (loss)	4,652									3,039			1,613
Issuances of non-vested restricted shares of common stock						$ 13	(13)
Issuances of non-vested restricted shares of common stock (in shares)						26,354
Stock issuances from exercise of stock options and employee stock purchase plan	1,951					$ 9	1,942
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)						15,807
Retirement of common stock	(555)					$ (2)	(553)
Retirement of common stock (in shares)						(3,608)
Share-based compensation	4,324						4,324
Cash dividends declared and paid on Common and Class B common stock	(60,213)										(60,213)
Common stock issued			$ 7,450		$ 25				$ 7,425
Common stock issued (in shares)					50,952
Investment in unconsolidated entity	988												988
Decrease in non-controlling interest in Carrier Enterprise II	(32,400)						(25,768)						(6,632)
Ending balance at Jun. 30, 2019	1,633,362					$ 21,266	828,932			(40,146)	632,983	(87,440)	277,767
Ending balance (in shares) at Jun. 30, 2019						37,659,852
Net income	99,655										83,480		16,175
Other comprehensive income (loss)	(2,923)									(1,894)			(1,029)
Issuances of non-vested restricted shares of common stock						$ 19	(19)
Issuances of non-vested restricted shares of common stock (in shares)						37,834
Forfeitures of non-vested restricted shares of common stock						$ (3)	3
Forfeitures of non-vested restricted shares of common stock (in shares)						(5,337)
Stock issuances from exercise of stock options and employee stock purchase plan	4,529					$ 19	4,510
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)						36,374
Retirement of common stock	(669)					$ (2)	(667)
Retirement of common stock (in shares)						(4,030)
Share-based compensation	3,706						3,706
Cash dividends declared and paid on Common and Class B common stock	(60,276)										(60,276)
Common stock issued		$ 58,638		$ 186				$ 58,452
Common stock issued (in shares)				372,543
Investment in Peirce-Phelps, Inc.	17,000												17,000
Ending balance at Sep. 30, 2019	$ 1,753,022					$ 21,485	$ 894,917			$ (42,040)	$ 656,187	$ (87,440)	$ 309,913
Ending balance (in shares) at Sep. 30, 2019						38,097,236

Condensed Consolidated Unaudi_4

Condensed Consolidated Unaudited Statements of Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018
Cash dividends declared and paid, common stock	$ 1.60	$ 1.60	$ 1.60	$ 1.45	$ 1.45	$ 1.25

Condensed Consolidated Unaudi_5

Condensed Consolidated Unaudited Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net income	$ 251,369	$ 247,527
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	17,983	16,500
Share-based compensation	11,992	11,769
Non-cash contribution to 401(k) plan	4,274	2,945
Deferred income tax provision	2,765	3,925
Other income from investment in unconsolidated entity	(7,939)	(8,491)
Other, net	1,260	927
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(102,813)	(126,181)
Inventories	(74,448)	(50,566)
Accounts payable and other liabilities	99,627	(23,286)
Other, net	(6,539)	(5,004)
Net cash provided by operating activities	197,531	70,065
Cash flows from investing activities:
Business acquisitions, net of cash acquired	(47,343)	(5,828)
Capital expenditures	(14,007)	(12,897)
Investment in unconsolidated entity	(4,940)	(3,760)
Proceeds from sale of property and equipment	1,295	143
Net cash used in investing activities	(64,995)	(22,342)
Cash flows from financing activities:
Dividends on Common and Class B common stock	(180,454)	(154,951)
Purchase of additional ownership from non-controlling interest	(32,400)
Repurchases of common stock to satisfy employee withholding tax obligations	(1,528)	(3,782)
Net repayments of other long-term obligations	(920)	(182)
Distributions to non-controlling interest		(2,178)
Proceeds from non-controlling interest for investment in unconsolidated entity	988	752
Net proceeds from issuances of common stock	7,480	5,979
Proceeds from non-controlling interest for investment in Peirce-Phelps, Inc.	17,000
Net proceeds under revolving credit agreement	34,100	94,600
Net cash used in financing activities	(155,734)	(59,762)
Effect of foreign exchange rate changes on cash and cash equivalents	454	(845)
Net decrease in cash and cash equivalents	(22,744)	(12,884)
Cash and cash equivalents at beginning of period	82,894	80,496
Cash and cash equivalents at end of period	60,150	67,612
Peirce-Phelps, Inc.
Supplemental cash flow information:
Common stock issued	58,638
Dunphey & Associates Supply Co., Inc.
Supplemental cash flow information:
Common stock issued	$ 7,450
Alert Labs Inc
Supplemental cash flow information:
Common stock issued		$ 8,180

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2019
BASIS OF PRESENTATION	1. BASIS OF PRESENTATION Basis of Consolidation Watsco, Inc. (collectively with its subsidiaries, “Watsco,” “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. The accompanying September 30, 2019 interim condensed consolidated unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, but we believe the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation have been included in the condensed consolidated unaudited financial statements included herein. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K. The condensed consolidated unaudited financial statements contained in this report include the accounts of Watsco, all of its wholly owned subsidiaries and the accounts of three joint ventures with Carrier Corporation (“Carrier”), in each of which Watsco maintains a controlling interest. All significant intercompany balances and transactions have been eliminated in consolidation. The results of operations for the quarter and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019. Sales of residential central air conditioners, heating equipment, and parts and supplies are seasonal. Furthermore, results of operations can be impacted favorably or unfavorably based on weather patterns, primarily during the Summer and Winter selling seasons. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction market is generally evenly distributed throughout the year, subject to weather and economic conditions, including their effect on the number of housing completions. Use of Estimates The preparation of condensed consolidated unaudited financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated unaudited financial statements and the reported amounts of revenues and expenses for the reporting period. Significant estimates include valuation reserves for accounts receivable, inventories and income taxes, reserves related to loss contingencies and the valuation of goodwill, indefinite - Recently Adopted Accounting Standards Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance on accounting for leases, which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. In July 2018, the FASB issued updated guidance that provides an additional transition method of adoption that allows entities to initially apply the standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The adoption of this standard and its related amendments (collectively, the “New Lease Standard”) on January 1, 2019 did not result in the recognition of a cumulative adjustment to opening retained earnings under the additional transition method, nor did it have a significant impact on our consolidated statements of income or cash flows. See Note 2. Recently Issued Accounting Standards Not Yet Adopted Intangibles—Goodwill and Other In January 2017, the FASB issued guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under this updated standard, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity also should consider income tax effects from any tax-deductible

LEASES

LEASES	9 Months Ended
	Sep. 30, 2019
LEASES	2. LEASES Adoption of New Lease Standard We adopted the New Lease Standard on January 1, 2019 using the additional transition method described in Note 1 to these condensed consolidated unaudited financial statements. Results for reporting periods beginning on and after January 1, 2019 are presented under the New Lease Standard. Prior periods have not been restated. The New Lease Standard had a material impact on our consolidated balance sheet due to the recognition of right-of-use Practical Expedients We elected the package of practical expedients that non-lease Operating and Finance Leases We have operating leases for real property, vehicles and equipment, and finance leases primarily for vehicles. Operating leases are included in operating lease right-of-use other ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement dates of the respective leases in determining the present value of the applicable lease payments. Operating lease ROU assets also include any lease pre-payments 1-10 non-lease The components of operating lease expense were as follows: Quarter ended September 30, 2019 Nine months ended Lease cost $ 18,887 $ 54,647 Short-term lease cost 2,489 7,098 Variable lease cost 216 531 Sublease income (81 ) (162 ) Total operating lease cost $ 21,511 $ 62,114 Supplemental balance sheet information related to operating leases were as follows: September 30, 2019 ROU assets $ 225,366 Current portion of long-term obligations $ 66,403 Operating lease liabilities 157,503 Total operating lease liabilities $ 223,906 Weighted Average Remaining Lease Term (in years) 4.0 Weighted Average Discount Rate 4.54 % Supplemental cash flow information related to operating l e Nine Months Ended September 30, 2019 Operating cash flows for the measurement of operating lease liabilities $ 55,214 Operating lease right-of-use $ 274,366 At September 30, 2019, maturities of operating lease liabilities over each of the next five years and thereafter were as follows: Remainder of 2019 $ 19,553 2020 72,188 2021 59,390 2022 43,563 2023 28,167 Thereafter 23,617 Total lease payments 246,478 Less imputed interest 22,572 Total lease liability $ 223,906 At September 30, 2019, we had additional operating leases, primarily for real property, that had not yet commenced. Such leases had estimated future minimum rental commitments of approximately $1,600. These operating leases subsequently d on Octob er 1, five years Prior to the adoption of the New Lease Standard, rental commitments on an undiscounted basis were approximately $219,300 at December 31, 2018 under non-cancelable

REVENUES

REVENUES	9 Months Ended
	Sep. 30, 2019
REVENUES	3. REVENUES Disaggregation of Revenues The following table presents our revenues disaggregated by primary geographical regions and major product lines within our single reporting segment: Quarter Ended Nine Months Ended 2019 2018 2019 2018 Primary Geographical Regions: United States $ 1,232,564 $ 1,134,852 $ 3,258,283 $ 3,125,814 Canada 85,422 87,251 222,429 218,730 Latin America and the Caribbean 76,929 73,904 217,335 210,783 $ 1,394,915 $ 1,296,007 $ 3,698,047 $ 3,555,327 Major Product Lines: HVAC equipment 68 % 68 % 68 % 68 % Other HVAC products 29 % 28 % 28 % 28 % Commercial refrigeration products 3 % 4 % 4 % 4 % 100 % 100 % 100 % 100 %

EARNINGS PER SHARE

EARNINGS PER SHARE	9 Months Ended
	Sep. 30, 2019
EARNINGS PER SHARE	4. EARNINGS PER SHARE The following table presents the calculation of basic and diluted earnings per share for our Common and Class B common stock: Quarter Ended Nine Months Ended 2019 2018 2019 2018 Basic Earnings per Share: Net income attributable to Watsco, Inc. shareholders $ 83,480 $ 79,163 $ 208,672 $ 203,339 Less: distributed and undistributed earnings allocated to non-vested 6,973 6,451 17,326 16,600 Earnings allocated to Watsco, Inc. shareholders $ 76,507 $ 72,712 $ 191,346 $ 186,739 Weighted-average common shares outstanding - Basic 34,755,627 34,339,859 34,544,425 34,301,672 Basic earnings per share for Common and Class B common stock $ 2.20 $ 2.12 $ 5.54 $ 5.44 Allocation of earnings for Basic: Common stock $ 70,836 $ 67,201 $ 177,075 $ 172,571 Class B common stock 5,671 5,511 14,271 14,168 $ 76,507 $ 72,712 $ 191,346 $ 186,739 Diluted Earnings per Share: Net income attributable to Watsco, Inc. shareholders $ 83,480 $ 79,163 $ 208,672 $ 203,339 Less: distributed and undistributed earnings allocated to non-vested 6,971 6,448 17,325 16,593 Earnings allocated to Watsco, Inc. shareholders $ 76,509 $ 72,715 $ 191,347 $ 186,746 Weighted-average common shares outstanding - Basic 34,755,627 34,339,859 34,544,425 34,301,672 Effect of dilutive stock options 33,328 59,530 25,294 64,850 Weighted-average common shares outstanding - Diluted 34,788,955 34,399,389 34,569,719 34,366,522 Diluted earnings per share for Common and Class B common stock $ 2.20 $ 2.11 $ 5.54 $ 5.43 Anti-dilutive stock options not included above 183,083 79,316 220,013 39,751 Diluted earnings per share for our Common stock assumes the conversion of all of our Class B common stock into Common stock as of the beginning of the fiscal year; therefore, no allocation of earnings to Class B common stock is required. At September 30, 2019 and 2018, our outstanding Class B common stock was convertible into 2,576,336 and 2,602,528 shares of our Common stock, respectively .

OTHER COMPREHENSIVE (LOSS) INCO

OTHER COMPREHENSIVE (LOSS) INCOME	9 Months Ended
	Sep. 30, 2019
OTHER COMPREHENSIVE (LOSS) INCOME	5. OTHER COMPREHENSIVE (LOSS) INCOME Other comprehensive (loss) income consists of the foreign currency translation adjustment associated with our Canadian operations’ use of the Canadian dollar as their functional currency and changes in the unrealized gains (losses) on cash flow hedging instruments . (loss) Quarter Ended Nine Months Ended 2019 2018 2019 2018 Foreign currency translation adjustment $ (3,038 ) $ 4,269 $ 7,264 $ (7,422 ) Unrealized gain (loss) on cash flow hedging instruments 351 316 (1,093 ) 1,043 Income tax (expense) benefit (96 ) (85 ) 295 (281 ) Unrealized gain (loss) on cash flow hedging instruments, net of tax 255 231 (798 ) 762 Reclassification of gain on cash flow hedging instruments into earnings (191 ) (1,253 ) (742 ) (78 ) Income tax expense 51 338 200 21 Reclassification of gain on cash flow hedging instruments into earnings, net of tax (140 ) (915 ) (542 ) (57 ) Other comprehensive (loss) income $ (2,923 ) $ 3,585 $ 5,924 $ (6,717 ) The changes in each component of accumulated other comprehensive loss, net of tax, were as follows: Nine Months Ended September 30, 2019 2018 Foreign currency translation adjustment: Beginning balance $ (46,604 ) $ (33,499 ) Current period other comprehensive income (loss) 4,732 (4,660 ) Ending balance (41,872 ) (38,159 ) Cash flow hedging instruments: Beginning balance 636 (421 ) Current period other comprehensive (loss) income (479 ) 457 Reclassification adjustment (325 ) (34 ) Ending balance (168 ) 2 Equity securities: Beginning balance — (301 ) Cumulative-effect adjustment to retained earnings — 301 Ending balance — — Accumulated other comprehensive loss, net of tax $ (42,040 ) $ (38,157 )

PURCHASE OF OWNERSHIP INTEREST

PURCHASE OF OWNERSHIP INTEREST FROM JOINT VENTURE	9 Months Ended
	Sep. 30, 2019
PURCHASE OF OWNERSHIP INTEREST FROM JOINT VENTURE	6. PURCHASE OF OWNERSHIP INTEREST FROM JOINT VENTURE Effective May 31, 2019, we purchased an additional 20​​​​​​​% ownership interest in Homans Associates II LLC (“Homans”) from Carrier Enterprise Northeast, LLC (“Carrier Enterprise II”) for cash consideration of $32,400, which increased our ownership in Homans to 100%. Homans previously operated as a division of Carrier Enterprise II and subsequent to the purchase operates as a stand-alone subsidiary of the Company with 16 locations in the Northeastern U.S.

INVESTMENT IN UNCONSOLIDATED EN

INVESTMENT IN UNCONSOLIDATED ENTITY	9 Months Ended
	Sep. 30, 2019
INVESTMENT IN UNCONSOLIDATED ENTITY	7. INVESTMENT IN UNCONSOLIDATED ENTITY On June 21, 2017, our first joint vent u non-controlling Enterprise I’s ownership interest in RSI to 36.3% for cash consideration of $3,760 that was paid on July 5, 2018, of which we contributed $ 3,008 752 Carrier Enterprise I is a party to a shareholders’ agreement (the “Shareholders ’ Agreement”) with RSI and its shareholders. Pursuant to the Shareholders ’ Agreement, RSI’s shareholders have the right to sell, and Carrier Enterprise I has the obligation to purchase, their respective shares of RSI for a purchase price determined based on either book value or a multiple of EBIT, the latter of which Carrier Enterprise I used to calculate the price paid for its investment in RSI. RSI’s shareholders may transfer their respective shares of RSI common stock only to members of the Sigler family or to Carrier Enterprise I, and, at any time from and after the date on which Carrier Enterprise I owns % or more of RSI’s outstanding common stock, it has the right, but not the obligation, to purchase from RSI’s shareholders the remaining outstanding shares of RSI common stock. Additionally, Carrier Enterprise I has the right to appoint two of RSI’s six board members. Given Carrier Enterprise I’s % voting equity interest in RSI and its right to appoint two out of RSI’s six board members, this investment in RSI is accounted for under the equity method.

ACQUISITIONS

ACQUISITIONS	9 Months Ended
	Sep. 30, 2019
ACQUISITIONS	8 ACQUISITION S On April 2, 2019, one of our wholly owned subsidiaries acquired certain assets and assumed certain liabilities of Dunphey & Associates Supply Co., Inc., a distributor of air conditioning and heating products operating from seven locations in New Jersey, New York and Connecticut. The purchase price was composed of cash consideration of $16,781 and the issuance of 50,952 shares of Common stock having a fair value of $7,450. On August 1, 2019, Carrier Enterprise I acquired substantially all of the assets and assumed certain of the liabilities of Peirce-Phelps, Inc. (“PPI”), an HVAC distributor operating from 19 locations in Pennsylvania, New Jersey, and Delaware, for $85,000 less certain average revolving indebtedness. Consideration for the net purchase price consisted of $10,000 in cash , and the payment of certain average revolving indebtedness . Carrier contributed cash of $17,000 to Carrier Enterprise I in connection with the acquisition of PPI. The preliminary fair value estimate of working capital acquired of approximately $59,000 consists mainly of inventory and accounts receivable partially offset by accounts payable and accrued expenses and other liabilities. We expect to finalize certain procedures related to the opening balance sheet and adjustments to estimates of fair value of net assets acquired by December 31, 2019. Any acquired goodwill as a result of this acquisition will be deductible for tax purposes. The results of operations of these acquisitions have been included in the consolidated financial statements from their respective dates of acquisition. The pro forma effect of the se

DERIVATIVES

DERIVATIVES	9 Months Ended
	Sep. 30, 2019
DERIVATIVES	9 DERIVATIVES We enter into foreign currency forward and option contracts to offset the earnings impact that foreign exchange rate fluctuations would otherwise have on certain monetary liabilities that are denominated in nonfunctional currencies. Cash Flow Hedging Instruments We enter into foreign currency forward contracts that are designated as cash flow hedges. The settlement of these derivatives results in reclassifications from accumulated other comprehensive loss to earnings for the period in which the settlement of these instruments occurs. The maximum period for which we hedge our cash flow using these instruments is 12 months one year or less The impact from foreign exchange derivative instruments designated as cash flow hedges was as follows: Quarter Ended Nine Months Ended 2019 2018 2019 2018 Gain (loss) recorded in accumulated other comprehensive loss $ 351 $ 316 $ (1,093 ) $ 1,043 Gain reclassified from accumulated other comprehensive loss into earnings $ (191 ) $ (1,253 ) $ (742 ) $ (78 ) At September 30, 2019, we expected an estimated $385 pre-tax loss Derivatives Not Designated as Hedging Instruments We have also entered into foreign currency forward and option contracts that are either not designated as hedges or did not qualify for hedge accounting. These derivative instruments were effective economic hedges for all the periods presented. The fair value gains and losses on these contracts are recognized in earnings as a component of selling, general and administrative expenses. The total notional value of our foreign currency exchange contracts not designated as hedging instruments at September 30, 2019 was $12,300, and such contracts have varying terms expiring through November 2019. We recognized gains ) ( ) The following table summarizes the fair value of derivative instruments, which consist solely of foreign exchange contracts, included in other current assets and accrued expenses and other current liabilities in our condensed consolidated unaudited balance sheets. See Note 10 . Asset Derivatives Liability Derivatives September 30, December 31, September 30, December 31, Derivatives designated as $ 45 $ 1,262 $ 250 $ 3 Derivatives not designated as — 58 44 11 Total derivative instruments $ 45 $ 1,320 $ 294 $ 14

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2019
FAIR VALUE MEASUREMENTS	10 FAIR VALUE MEASUREMENTS The following tables present our assets and liabilities carried at fair value that are measured on a recurring basis: Total Fair Value Measurements Balance Sheet Location Level 1 Level 2 Level 3 Assets: Derivative financial instruments Other current assets $ 45 $ — $ 45 $ — Equity securities Other assets $ 318 $ 318 $ — $ — Liabilities: Derivative financial instruments Accrued expenses and other current liabilities $ 294 $ — $ 294 $ — Total Fair Value Measurements Balance Sheet Location Level 1 Level 2 Level 3 Assets: Derivative financial instruments Other current assets $ 1,320 $ — $ 1,320 $ — Equity securities Other assets $ 279 $ 279 $ — $ — Liabilities: Derivative financial instruments Accrued expenses and other current liabilities $ 14 $ — $ 14 $ — The following is a description of the valuation techniques used for these assets and liabilities, as well as the level of input used to measure fair value: Equity securities Derivative financial instruments 9 There were no transfers in or out of Level 1 and Level 2 during the nine months ended September 30, 201 9

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY	9 Months Ended
	Sep. 30, 2019
SHAREHOLDERS' EQUITY	11. SHAREHOLDERS’ EQUITY Common Stock Dividends We paid cash dividends of $1.60, $1.45, $4.80, and $4.15 per share of both Common stock and Class B common stock during the quarters and nine months ended September 30, 2019 and 2018, respectively. Non-Vested During the quarter and nine months ended September 30, 2019, 3,231 shares of Common and Class B common stock with an aggregate fair market value of $535, and 9,824 shares of Common and Class B common stock with an aggregate fair market value of $1,518, respectively, were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of non-vested non-vested Exercise of Stock Options Cash received from Common stock issued as a result of stock options exercised during the quarters and nine months ended September 30, 2019 and 2018, was $3,986, $856, $6,229, and $4,837, respectively. During the quarter and nine months ended September 30, 2019, 799 shares of Common stock with an aggregate fair market value of $134 were withheld as payment in lieu of cash for stock option exercises. These shares were retired upon delivery. During the quarter and nine months ended September 30, 2018, 376 shares of Common stock with an aggregate fair market value of $69, and shares of Common stock with an aggregate fair market value of $ , respectively, were withheld as payment in lieu of cash for stock option exercises. These shares were retired upon delivery. Employee Stock Purchase Plan During the quarters ended September 30, 2019 and 2018, we received net proceeds of $418 and $382, respectively, for shares of Common stock issued under our employee stock purchase plan. During the nine months ended September 30, 2019 and 2018, we received net proceeds of $1,251 and $1,142, respectively, for shares of Common stock issued under our employee stock purchase plan.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2019
COMMITMENTS AND CONTINGENCIES	1 2 COMMITMENTS AND CONTINGENCIES Litigation, Claims and Assessments We are involved in litigation incidental to the operation of our business. We vigorously defend all matters in which we or our subsidiaries are named defendants and, for insurable losses, maintain significant levels of insurance to protect against adverse judgments, claims or assessments that may affect us. Although the adequacy of existing insurance coverage and the outcome of any legal proceedings cannot be predicted with certainty, based on the current information available, we do not believe the ultimate liability associated with any known claims or litigation will have a material adverse effect on our financial condition or results of operations. Self-Insurance Self-insurance reserves are maintained relative to company-wide casualty insurance and health benefit programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the self-insurance liabilities and related reserves, management considers a number of factors, which include historical claims experience, demographic factors, severity factors ,

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2019
RELATED PARTY TRANSACTIONS	1 3 RELATED PARTY TRANSACTIONS Purchases from Carrier and its affiliates comprised 60% and 64% of all inventory purchases made during the quarters ended September 30, 2019 and 2018, respectively. Purchases from Carrier and its affiliates comprised 61% and 63% of all inventory purchases made during the nine months ended September 30, 2019 and 2018, respectively. At September 30, 2019 and December 31, 2018, approximately $120,000 and $71,000, respectively, was payable to Carrier and its affiliates, net of receivables. Our joint ventures with Carrier also sell HVAC products to Carrier and its affiliates. Revenues in our condensed consolidated unaudited statements of income for the quarters and nine months ended September 30, 2019 and 2018 included approximately $24,000, $28,000, $68,000, and $65,000, respectively, of sales to Carrier and its affiliates. We believe these transactions are conducted on terms equivalent to an arm’s-length A member of our Board of Directors is the Senior Chairman of Greenberg Traurig, P.A., which serves as our principal outside counsel for compliance and acquisition-related legal services. During the quarters and nine months ended September 30, 2019 and 2018, we paid this firm $175, $0, $175, and $18 for services performed, respectively, and no amount A member of our Board of Directors is the Chairman and Chief Executive Officer of Moss & Associates LLC, which served as general contractor for the remodeling of our Miami headquarters that was completed in 2018. We paid Moss & Associates LLC $0

BASIS OF PRESENTATION (Policies

BASIS OF PRESENTATION (Policies)	9 Months Ended
	Sep. 30, 2019
Basis of Consolidation	Basis of Consolidation Watsco, Inc. (collectively with its subsidiaries, “Watsco,” “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. The accompanying September 30, 2019 interim condensed consolidated unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, but we believe the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation have been included in the condensed consolidated unaudited financial statements included herein. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K. The condensed consolidated unaudited financial statements contained in this report include the accounts of Watsco, all of its wholly owned subsidiaries and the accounts of three joint ventures with Carrier Corporation (“Carrier”), in each of which Watsco maintains a controlling interest. All significant intercompany balances and transactions have been eliminated in consolidation. The results of operations for the quarter and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019. Sales of residential central air conditioners, heating equipment, and parts and supplies are seasonal. Furthermore, results of operations can be impacted favorably or unfavorably based on weather patterns, primarily during the Summer and Winter selling seasons. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction market is generally evenly distributed throughout the year, subject to weather and economic conditions, including their effect on the number of housing completions.
Use of Estimates	Use of Estimates The preparation of condensed consolidated unaudited financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated unaudited financial statements and the reported amounts of revenues and expenses for the reporting period. Significant estimates include valuation reserves for accounts receivable, inventories and income taxes, reserves related to loss contingencies and the valuation of goodwill, indefinite -
Recently Adopted Accounting Standards and Recently Issued Accounting Standards Not Yet Adopted	Recently Adopted Accounting Standards Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance on accounting for leases, which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. In July 2018, the FASB issued updated guidance that provides an additional transition method of adoption that allows entities to initially apply the standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The adoption of this standard and its related amendments (collectively, the “New Lease Standard”) on January 1, 2019 did not result in the recognition of a cumulative adjustment to opening retained earnings under the additional transition method, nor did it have a significant impact on our consolidated statements of income or cash flows. See Note 2. Recently Issued Accounting Standards Not Yet Adopted Intangibles—Goodwill and Other In January 2017, the FASB issued guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under this updated standard, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity also should consider income tax effects from any tax-deductible

LEASES (Tables)

LEASES (Tables)	9 Months Ended
	Sep. 30, 2019
Components Of Lease Expense	The components of operating lease expense were as follows: Quarter ended September 30, 2019 Nine months ended Lease cost $ 18,887 $ 54,647 Short-term lease cost 2,489 7,098 Variable lease cost 216 531 Sublease income (81 ) (162 ) Total operating lease cost $ 21,511 $ 62,114
Summary Of Balance Sheet Information Related To Leases	Supplemental balance sheet information related to operating leases were as follows: September 30, 2019 ROU assets $ 225,366 Current portion of long-term obligations $ 66,403 Operating lease liabilities 157,503 Total operating lease liabilities $ 223,906 Weighted Average Remaining Lease Term (in years) 4.0 Weighted Average Discount Rate 4.54 %
Summary Of Supplemental Cash Flow Information Related to Leases	Supplemental cash flow information related to operating l e Nine Months Ended September 30, 2019 Operating cash flows for the measurement of operating lease liabilities $ 55,214 Operating lease right-of-use $ 274,366
Maturities Of Operating Lease Liabilities	At September 30, 2019, maturities of operating lease liabilities over each of the next five years and thereafter were as follows: Remainder of 2019 $ 19,553 2020 72,188 2021 59,390 2022 43,563 2023 28,167 Thereafter 23,617 Total lease payments 246,478 Less imputed interest 22,572 Total lease liability $ 223,906

REVENUES (Tables)

REVENUES (Tables)	9 Months Ended
	Sep. 30, 2019
Summary of Disaggregated Revenue	The following table presents our revenues disaggregated by primary geographical regions and major product lines within our single reporting segment: Quarter Ended Nine Months Ended 2019 2018 2019 2018 Primary Geographical Regions: United States $ 1,232,564 $ 1,134,852 $ 3,258,283 $ 3,125,814 Canada 85,422 87,251 222,429 218,730 Latin America and the Caribbean 76,929 73,904 217,335 210,783 $ 1,394,915 $ 1,296,007 $ 3,698,047 $ 3,555,327 Major Product Lines: HVAC equipment 68 % 68 % 68 % 68 % Other HVAC products 29 % 28 % 28 % 28 % Commercial refrigeration products 3 % 4 % 4 % 4 % 100 % 100 % 100 % 100 %

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2019
Schedule of Basic and Diluted Earnings Per Common Share	The following table presents the calculation of basic and diluted earnings per share for our Common and Class B common stock: Quarter Ended Nine Months Ended 2019 2018 2019 2018 Basic Earnings per Share: Net income attributable to Watsco, Inc. shareholders $ 83,480 $ 79,163 $ 208,672 $ 203,339 Less: distributed and undistributed earnings allocated to non-vested 6,973 6,451 17,326 16,600 Earnings allocated to Watsco, Inc. shareholders $ 76,507 $ 72,712 $ 191,346 $ 186,739 Weighted-average common shares outstanding - Basic 34,755,627 34,339,859 34,544,425 34,301,672 Basic earnings per share for Common and Class B common stock $ 2.20 $ 2.12 $ 5.54 $ 5.44 Allocation of earnings for Basic: Common stock $ 70,836 $ 67,201 $ 177,075 $ 172,571 Class B common stock 5,671 5,511 14,271 14,168 $ 76,507 $ 72,712 $ 191,346 $ 186,739 Diluted Earnings per Share: Net income attributable to Watsco, Inc. shareholders $ 83,480 $ 79,163 $ 208,672 $ 203,339 Less: distributed and undistributed earnings allocated to non-vested 6,971 6,448 17,325 16,593 Earnings allocated to Watsco, Inc. shareholders $ 76,509 $ 72,715 $ 191,347 $ 186,746 Weighted-average common shares outstanding - Basic 34,755,627 34,339,859 34,544,425 34,301,672 Effect of dilutive stock options 33,328 59,530 25,294 64,850 Weighted-average common shares outstanding - Diluted 34,788,955 34,399,389 34,569,719 34,366,522 Diluted earnings per share for Common and Class B common stock $ 2.20 $ 2.11 $ 5.54 $ 5.43 Anti-dilutive stock options not included above 183,083 79,316 220,013 39,751

OTHER COMPREHENSIVE (LOSS) IN_2

OTHER COMPREHENSIVE (LOSS) INCOME (Tables)	9 Months Ended
	Sep. 30, 2019
Schedule of Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss)	The tax effects allocated to each component of other comprehensive (loss) Quarter Ended Nine Months Ended 2019 2018 2019 2018 Foreign currency translation adjustment $ (3,038 ) $ 4,269 $ 7,264 $ (7,422 ) Unrealized gain (loss) on cash flow hedging instruments 351 316 (1,093 ) 1,043 Income tax (expense) benefit (96 ) (85 ) 295 (281 ) Unrealized gain (loss) on cash flow hedging instruments, net of tax 255 231 (798 ) 762 Reclassification of gain on cash flow hedging instruments into earnings (191 ) (1,253 ) (742 ) (78 ) Income tax expense 51 338 200 21 Reclassification of gain on cash flow hedging instruments into earnings, net of tax (140 ) (915 ) (542 ) (57 ) Other comprehensive (loss) income $ (2,923 ) $ 3,585 $ 5,924 $ (6,717 )
Schedule of Accumulated Other Comprehensive Loss	The changes in each component of accumulated other comprehensive loss, net of tax, were as follows: Nine Months Ended September 30, 2019 2018 Foreign currency translation adjustment: Beginning balance $ (46,604 ) $ (33,499 ) Current period other comprehensive income (loss) 4,732 (4,660 ) Ending balance (41,872 ) (38,159 ) Cash flow hedging instruments: Beginning balance 636 (421 ) Current period other comprehensive (loss) income (479 ) 457 Reclassification adjustment (325 ) (34 ) Ending balance (168 ) 2 Equity securities: Beginning balance — (301 ) Cumulative-effect adjustment to retained earnings — 301 Ending balance — — Accumulated other comprehensive loss, net of tax $ (42,040 ) $ (38,157 )

DERIVATIVES (Tables)

DERIVATIVES (Tables)	9 Months Ended
	Sep. 30, 2019
Impact from Foreign Exchange Derivative Instruments Designated as Cash Flow Hedges	The impact from foreign exchange derivative instruments designated as cash flow hedges was as follows: Quarter Ended Nine Months Ended 2019 2018 2019 2018 Gain (loss) recorded in accumulated other comprehensive loss $ 351 $ 316 $ (1,093 ) $ 1,043 Gain reclassified from accumulated other comprehensive loss into earnings $ (191 ) $ (1,253 ) $ (742 ) $ (78 )
Fair Value of Derivative Instruments and Location in the Balance Sheets	The following table summarizes the fair value of derivative instruments, which consist solely of foreign exchange contracts, included in other current assets and accrued expenses and other current liabilities in our condensed consolidated unaudited balance sheets. See Note 10 . Asset Derivatives Liability Derivatives September 30, December 31, September 30, December 31, Derivatives designated as $ 45 $ 1,262 $ 250 $ 3 Derivatives not designated as — 58 44 11 Total derivative instruments $ 45 $ 1,320 $ 294 $ 14

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 2019
Assets and Liabilities Measured at Fair Value on Recurring Basis	The following tables present our assets and liabilities carried at fair value that are measured on a recurring basis: Total Fair Value Measurements Balance Sheet Location Level 1 Level 2 Level 3 Assets: Derivative financial instruments Other current assets $ 45 $ — $ 45 $ — Equity securities Other assets $ 318 $ 318 $ — $ — Liabilities: Derivative financial instruments Accrued expenses and other current liabilities $ 294 $ — $ 294 $ — Total Fair Value Measurements Balance Sheet Location Level 1 Level 2 Level 3 Assets: Derivative financial instruments Other current assets $ 1,320 $ — $ 1,320 $ — Equity securities Other assets $ 279 $ 279 $ — $ — Liabilities: Derivative financial instruments Accrued expenses and other current liabilities $ 14 $ — $ 14 $ —

Components of Operating Lease E

Components of Operating Lease Expense (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Lease cost	$ 18,887	$ 54,647
Short-term lease cost	2,489	7,098
Variable lease cost	216	531
Sublease income	(81)	(162)
Total operating lease cost	$ 21,511	$ 62,114

Summary Of Balance Sheet Inform

Summary Of Balance Sheet Information Related To Operating Leases (Detail) $ in Thousands	Sep. 30, 2019USD ($)
Operating Leases
ROU assets	$ 225,366
Current portion of long-term obligations	66,403
Operating lease liabilities	157,503
Total operating lease liabilities	$ 223,906
Weighted Average Remaining Lease Term (in years)
Operating leases	4 years
Weighted Average Discount Rate
Operating leases	4.54%

Summary Of Supplemental Cash Fl

Summary Of Supplemental Cash Flow Information Related to Leases (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2019USD ($)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 55,214
Operating leases	$ 274,366

Maturities Of Operating Lease L

Maturities Of Operating Lease Liabilities (Detail) $ in Thousands	Sep. 30, 2019USD ($)
Maturities of Operating Lease Liabilities
Remainder of 2019	$ 19,553
2020	72,188
2021	59,390
2022	43,563
2023	28,167
Thereafter	23,617
Total lease payments	246,478
Less imputed interest	22,572
Total lease liability	$ 223,906

Leases - Additional Information

Leases - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Operating leases not yet commenced	$ 1,600
Operating leases not yet commenced term	5 years
Lessee, Operating Lease, Renewal Term	5 years
Finance lease right of use assets	$ 2,960
Finance lease liabilities	3,047
Total lease payments	246,478
2020	72,188
2021	59,390
2022	43,563
2023	28,167
Thereafter	$ 23,617
Non Cancelable Leases [Member]
Total lease payments		$ 219,300
2019		70,400
2020		55,100
2021		41,300
2022		28,500
2023		15,700
Thereafter		$ 8,300
Maximum [Member]
Operating Lease Remaining Lease Term	10 years
Minimum [Member]
Operating Lease Remaining Lease Term	1 year

Summary of Disaggregated Revenu

Summary of Disaggregated Revenue (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Revenues from product lines, percentage	100.00%	100.00%	100.00%	100.00%
Revenues	$ 1,394,915	$ 1,296,007	$ 3,698,047	$ 3,555,327
United States
Disaggregation of Revenue [Line Items]
Revenues	1,232,564	1,134,852	3,258,283	3,125,814
Canada
Disaggregation of Revenue [Line Items]
Revenues	85,422	87,251	222,429	218,730
Latin America and Caribbean
Disaggregation of Revenue [Line Items]
Revenues	$ 76,929	$ 73,904	$ 217,335	$ 210,783
HVAC Equipment
Disaggregation of Revenue [Line Items]
Revenues from product lines, percentage	68.00%	68.00%	68.00%	68.00%
Other HVAC Products
Disaggregation of Revenue [Line Items]
Revenues from product lines, percentage	29.00%	28.00%	28.00%	28.00%
Commercial Refrigeration Products
Disaggregation of Revenue [Line Items]
Revenues from product lines, percentage	3.00%	4.00%	4.00%	4.00%

Schedule of Basic and Diluted E

Schedule of Basic and Diluted Earnings per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income attributable to Watsco, Inc. shareholders	$ 83,480	$ 79,163	$ 208,672	$ 203,339
Less: distributed and undistributed earnings allocated to non-vested restricted common stock - Basic	6,973	6,451	17,326	16,600
Earnings allocated to Watsco, Inc. shareholders - Basic	$ 76,507	$ 72,712	$ 191,346	$ 186,739
Weighted-average common shares outstanding - Basic	34,755,627	34,339,859	34,544,425	34,301,672
Basic earnings per share for Common and Class B common stock	$ 2.20	$ 2.12	$ 5.54	$ 5.44
Net income attributable to Watsco, Inc. shareholders	$ 83,480	$ 79,163	$ 208,672	$ 203,339
Less: distributed and undistributed earnings allocated to non-vested restricted common stock - Diluted	6,971	6,448	17,325	16,593
Earnings allocated to Watsco, Inc. shareholders - Diluted	$ 76,509	$ 72,715	$ 191,347	$ 186,746
Weighted-average common shares outstanding - Basic	34,755,627	34,339,859	34,544,425	34,301,672
Effect of dilutive stock options	33,328	59,530	25,294	64,850
Weighted-average common shares outstanding - Diluted	34,788,955	34,399,389	34,569,719	34,366,522
Diluted earnings per share for Common and Class B common stock	$ 2.20	$ 2.11	$ 5.54	$ 5.43
Anti-dilutive stock options not included above	183,083	79,316	220,013	39,751
Common Stock
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Earnings allocated to Watsco, Inc. shareholders - Basic	$ 70,836	$ 67,201	$ 177,075	$ 172,571
Class B Common Stock
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Earnings allocated to Watsco, Inc. shareholders - Basic	$ 5,671	$ 5,511	$ 14,271	$ 14,168

Earnings Per Share - Additional

Earnings Per Share - Additional Information (Detail) - shares	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share [Line Items]
Class B common stock conversion, number of shares	2,576,336	2,602,528

Schedule of Tax Effects Allocat

Schedule of Tax Effects Allocated to Each Component of Other Comprehensive (Loss) Income (Detail) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Components Of Other Comprehensive Income Loss [Line Items]
Foreign currency translation adjustment	$ (3,038)			$ 4,269			$ 7,264	$ (7,422)
Unrealized gain (loss) on cash flow hedging instruments	351			316			(1,093)	1,043
Income tax (expense) benefit	(96)			(85)			295	(281)
Unrealized gain (loss) on cash flow hedging instruments, net of tax	255			231			(798)	762
Reclassification of gain on cash flow hedging instruments into earnings	(191)			(1,253)			(742)	(78)
Income tax expense	51			338			200	21
Reclassification of gain on cash flow hedging instruments into earnings, net of tax	(140)			(915)			(542)	(57)
Other comprehensive (loss) income	$ (2,923)	$ 4,652	$ 4,195	$ 3,585	$ (4,561)	$ (5,741)	$ 5,924	$ (6,717)

Schedule of Accumulated Other C

Schedule of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ (45,968)
Ending balance	(42,040)	$ (38,157)
Foreign Currency Translation Adjustment
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(46,604)	(33,499)
Current period other comprehensive income (loss)	4,732	(4,660)
Ending balance	(41,872)	(38,159)
Cash Flow Hedging Instruments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	636	(421)
Current period other comprehensive income (loss)	(479)	457
Reclassification adjustment	(325)	(34)
Ending balance	$ (168)	2
Equity Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance		(301)
Cumulative-effect adjustment to retained earnings		$ 301

Purchase of Ownership Interes_2

Purchase of Ownership Interest from Joint Venture - Additional Information (Detail) - Homans Associates II LLC [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2019USD ($)Location
Business Acquisition [Line Items]
Additional ownership interest acquired	20.00%
Percentage of ownership interest	100.00%
Cash consideration paid to obtain additional ownership | $	$ 32,400
Number of locations in which the company operates | Location	16

Investment in Unconsolidated _2

Investment in Unconsolidated Entity - Additional Information (Detail) $ in Thousands	Jul. 05, 2018USD ($)	Apr. 22, 2019USD ($)	Jun. 21, 2017USD ($)Locationboard-member	Sep. 30, 2019USD ($)	Sep. 30, 2018USD ($)	Dec. 31, 2018	Jun. 29, 2018
Schedule of Equity Method Investments [Line Items]
Investment in unconsolidated entity				$ 4,940	$ 3,760
Proceeds from non-controlling interest for investment in unconsolidated entity				$ 988	$ 752
Carrier Enterprise I
Schedule of Equity Method Investments [Line Items]
Ownership percentage by parent			80.00%
Ownership percentage, by non-controlling owners			20.00%
Russell Sigler Inc
Schedule of Equity Method Investments [Line Items]
Ownership interest acquired		38.10%	34.90%			36.30%
Investment in unconsolidated entity	$ 3,760	$ 4,940	$ 63,600
Contribution to investment in unconsolidated entity by controlling interest	3,008	3,952	50,880
Proceeds from non-controlling interest for investment in unconsolidated entity	$ 752	$ 988	$ 12,720
Ownership percentage needed for right to purchase up to 100%			85.00%
Total number of board members | board-member			6
Number of board members that can be appointed based on ownership | board-member			2
Equity method investment, additional ownership interest acquired		1.80%					1.40%
Russell Sigler Inc | Western United States
Schedule of Equity Method Investments [Line Items]
Number of locations | Location			30

Acquisitions - Additional Infor

Acquisitions - Additional Information (Detail) $ in Thousands	Aug. 01, 2019USD ($)Locationshares	Apr. 02, 2019USD ($)Locationshares	Sep. 30, 2019USD ($)
Business Acquisition [Line Items]
Proceeds from non-controlling interest for Business Acquisition			$ 17,000
Peirce Phelps PPI [Member]
Business Acquisition [Line Items]
Number of locations in which the company operates | Location	19
Business combination recognized identifiable assets acquired and liabilities assumed net	$ 85,000
Business combination cash transferred	$ 10,000
Number of shares issuable | shares	372,543
Fair value of equity shares issued or issuable	$ 58,638		58,638
Proceeds from non-controlling interest for Business Acquisition	17,000
Preliminary fair value estimate of working capital acquired	$ 59,000
Dunphey Associates Supply Co [Member]
Business Acquisition [Line Items]
Number of locations in which the company operates | Location		7
Business combination cash transferred		$ 16,781
Fair value of equity shares issued or issuable		$ 7,450	$ 7,450
Stock issued for acquisition | shares		50,952

Impact from Foreign Exchange De

Impact from Foreign Exchange Derivative Instruments Designated as Cash Flow Hedges (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recorded in accumulated other comprehensive loss	$ 351	$ 316	$ (1,093)	$ 1,043
Foreign Currency Forward Contracts | Cash Flow Hedge
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recorded in accumulated other comprehensive loss	351	316	(1,093)	1,043
Gain reclassified from accumulated other comprehensive loss into earnings	$ (191)	$ (1,253)	$ (742)	$ (78)

Fair Value of Derivative Instru

Fair Value of Derivative Instruments and Location in the Balance Sheets (Detail) - Foreign Exchange Forward And Option Contracts [Member] - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Derivatives, Fair Value [Line Items]
Derivative instruments, assets derivatives	$ 45	$ 1,320
Derivative instruments, liabilities derivatives	294	14
Derivatives Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Derivative instruments, assets derivatives	45	1,262
Derivative instruments, liabilities derivatives	250	3
Not Designated as Hedging Instrument, Economic Hedge [Member]
Derivatives, Fair Value [Line Items]
Derivative instruments, assets derivatives		58
Derivative instruments, liabilities derivatives	$ 44	$ 11

Derivatives - Additional Inform

Derivatives - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Foreign Currency Forward Contracts | Cash Flow Hedge
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional value of derivatives	$ 40,400,000		$ 40,400,000
Contract maturity period			one year or less
Contract expiring terms			2020-06
Maximum length of time hedged in cash flow hedge			12 months
Pre-tax (loss) to be reclassified into earnings within the next 12 months	(385,000)		$ (385,000)
Foreign Exchange Forward And Option Contracts [Member] | Not Designated as Hedging Instrument, Economic Hedge [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional value of derivatives	12,300,000		$ 12,300,000
Contract expiring terms			2019-11
(Loss) gain from foreign currency forward and option contracts not designated as hedging instruments	$ 128,000	$ (108,000)	$ 175,000	$ 299,000

Assets and Liabilities Carried

Assets and Liabilities Carried at Fair Value Measured on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Other Current Assets
Assets:
Derivative financial instruments	$ 45	$ 1,320
Other assets
Assets:
Equity securities	318	279
Accrued expenses and other current liabilities
Liabilities:
Derivative financial instruments	294	14
Fair Value Measurements, Level 1 | Other assets
Assets:
Equity securities	318	279
Fair Value Measurements, Level 2 | Other Current Assets
Assets:
Derivative financial instruments	45	1,320
Fair Value Measurements, Level 2 | Accrued expenses and other current liabilities
Liabilities:
Derivative financial instruments	$ 294	$ 14

Shareholders' Equity - Addition

Shareholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Stockholders Equity Note [Line Items]
Shares withheld as payment for tax withholdings related to share based compensation, market value			$ 1,528	$ 3,782
Common and Class B Common Stock | Non-Vested Restricted Stock
Stockholders Equity Note [Line Items]
Shares withheld as payment for tax withholdings related to share based compensation, market value	$ 535	$ 1,562	$ 1,518	$ 3,775
Shares withheld as payment for tax withholdings related to share based compensation, shares	3,231	8,830	9,824	21,754
Common Stock | Stock Option
Stockholders Equity Note [Line Items]
Net proceeds from the sale of Common stock	$ 3,986	$ 856	$ 6,229	$ 4,837
Shares withheld as payment for tax withholdings related to share based compensation, market value	$ 134	$ 69	$ 134	$ 1,269
Shares withheld as payment for tax withholdings related to share based compensation, shares	799	376	799	7,027
Common Stock | Employee Stock Purchase Plan [Member]
Stockholders Equity Note [Line Items]
Net proceeds from shares purchased under ESPP	$ 418	$ 382	$ 1,251	$ 1,142
Common Stock | Class B Common Stock
Stockholders Equity Note [Line Items]
Cash dividends paid per share of Common and Class B common stock	$ 1.60	$ 1.45	$ 4.80	$ 4.15

Commitments and Contingencies -

Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Commitments and Contingencies Disclosure [Line Items]
Self-insurance reserves	$ 4,022	$ 2,311

Related Party Transactions - Ad

Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Moss & Associates LLC | Customary Payments for Remodeling of Corporate Headquarters
Related Party Transaction [Line Items]
Payment for related party transaction		$ 0		$ 124
Greenberg Traurig, P.A. | Customary Fees for Legal Services
Related Party Transaction [Line Items]
Payment for related party transaction	$ 175	0	$ 175	18
Amount payable to related party	0		0
Carrier and Its Affiliates | Supplier Concentration Risk
Related Party Transaction [Line Items]
Amount payable to Carrier and its affiliates, net of receivables	120,000		120,000		$ 71,000
Revenues from sales to Carrier and its affiliates	$ 24,000	$ 28,000	$ 68,000	$ 65,000
Carrier and Its Affiliates | Supplier Concentration Risk | Cost of Goods, Total
Related Party Transaction [Line Items]
Percentage of purchases from key suppliers	60.00%	64.00%	61.00%	63.00%