WSO - Earnings call transcript Q1 2020

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Operator

Good day, and welcome to the Watsco First Quarter 2020 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Albert Nahmad, CEO. Please go ahead.

Albert Nahmad

everyone. morning, Good first the call. Welcome quarter to earnings is Nahmad, and Chairman CEO. This Al is With me A.J. Johnston, and Vice Vice President; Executive Nahmad, Paul President; President. Barry Executive Logan,

has these that the are Now This pursuant materially to by our from start, harbor made Ultimate SEC forward-looking provisions results safe call differ of the regulations before defined laws. statements forward-looking and cautionary laws statements. the as various we conference statement. may

period that and safely. I morning. you your getting hope our to through our partners healthy strength and These this will customers, press Once innovative again, good and employees, comfort shareholders. Watsco's Today's families and to speaks we release spirit. are our bring OEM confidence and are believe attributes

our attribute. As most we in strength important press highlight our release, Watsco's is financial

maintaining the low we Our access advantage a and ongoing a sheet, of capital as for us strong impact levels pandemic. balance to the debt is significant through philosophy work of

well while positioned support are to employees to and customers, long product new benefit our expanded looking our acquisitions term. in locations actively We offerings, OEM partners to and invest

cash also Our generate consistent flow ability strength. represents an to important

week's which scheduled XX% an signals confidence Next in business. reflects our our increase, dividends,

great in HVAC our authorities industry in are fundamental essential. products necessities as industry We operate our markets also homes a Local businesses. deemed and as in have

tech adoption our team Watsco's branches accomplished are of Our open, is a weeks, providing services to has also technology and in needed contractor customers. rapidly and our products lot expanding. recent platforms

took less XX the In in pandemic. our terms than In to of many activities, immediate actions response leaders in day-to-day hours. cases,

been no-touch asking These transformed showrooms our quickly were centers. walk-in sustain well branch have services us these forward. to received, pickup curbside are going and to For example, customers changes e-commerce retail locations from

it's As opportune for to Watsco time to an knowing with remain companies, family. in join touch the growth them in great we investment,

and platforms. develop we them help can technology great scale, access to Our our resources and can grow provide

driven new declined international XXXX was respective These strong with XXXX, Results who X%. U.S. for sales of and market results in first come markets. and in softer markets also great which Supply of to the for completed by In residential sorry, XX markets strength HVAC due current are quarter, team their from locations, to results. -- growth reflect earnings terms grew DASCO and our comparable conditions Peirce-Phelps, Supply. companies equipment, in now including and leaders N&S and mostly events culture are responding acquisitions in part I'm Sales

financial provided details provide release. during our we our of recite will but analysis are these be remarks, in my in happy prepared results the press Further will to Q&A. not I color more

Barry, A.J., answer I that, to are questions. With your happy and Paul

Operator

Instructions]. [Operator

today The Morgan from Stanley. first comes Pokrzywinski question of Josh

Joshua Pokrzywinski

now. but Anything Has really feedback changes under you So there's vis-a-vis sure you behavior don't couple up? can the still to would of, hey, visibility money, right answer. are still to appreciate an Have that I a just couple yet? versus gotten or that consumer people is ton tempered visibility, that, that But I make that first, a seen change have want any kind have questions you you that extent of of of indication guess, efficiency the that replace? of repair trading in in anecdotal shown give you afoot. spending more down surface, a maybe

Albert Nahmad

Well, our Johnston. data expert, Paul

Paul Johnston

home. the unit much out outdoor require see looking service are Consumers we'll be sales calls in had someone that quarter, see Really, the repair for contractors an balance quarter consumer a checkups right pretty replacement. we're first pushed anecdotally, being Perhaps repair outdoor to a the aren't at hear a pretty of We it. replace system really in just as opposed or didn't just bit more little perhaps. to level. But second the is In regular what their our not good we from don't and now. we between

Joshua Pokrzywinski

out of comment? Which like, more would comment? a Not ran I "Hey, it. a be distancing money" of social Got

Paul Johnston

Correct.

Albert Nahmad

But thing, we very program it also a to have a if at effective that. come should help consumer that finance would such

Paul Johnston

Yes.

Joshua Pokrzywinski

then kind questions of other to I'll COVID Got turn guess, or leave Obviously, of second. some maybe I some Carrier one other actions of from of And observations, of to now? away owner. But of that a is it. for seen the macro folks. from been the now liberated you changes, multi-industry have kind your guys major engagement early kind equipment partners the their have What with near-term

Albert Nahmad

was led. that they well are. separated. they can and very on industry, it news first, good Well, responsive. They're our very They're They be focused

great couldn't forward. all it's think news I going I be happier.

Joshua Pokrzywinski

on more did I we've they're "Hey, an Anything, on rethought specific guess, tangible more that before, Anything, I now initiative." saying, this we guess, action? where but

Albert Nahmad

their It's like Well, company. I worry the their be in don't news. and United much There's occurred. more they saying focus, focused leadership. the dividends very negative -- nothing up keep than have there own own are. going all to industry in Technologies, we about the parent, about can that they us And assure investing what's great to And they

Operator

comes Brett Vertical question today of next Linzey from The Research Partners.

Brett Linzey

Hope you're well.

April see pricing. on the or seeing side in? other think I guess, are be from I vantage your any point, signs at products, of it across markets of do on we've typically shifted pressures first you as which question a your here, some equipment you in deflationary Just

Albert Nahmad

Paul?

Paul Johnston

any seeing No, not we're deflation.

we've starting had of fact, again. In to up commodity our move some actually back pricing

So deflation. no no,

Brett Linzey

ask update I'll far. guess on Maybe trend question. the April I just so the an And Okay.

or into particular regions the weak? drill in sense on the just out maybe mention it any regional But the decelerated. if stand strong then or Any that did You view. And just magnitude? could state-by-state release down you

Albert Nahmad

were home in much. always of about to is people fourth shut get that in But second most their ourselves April, important asked quarter ahead again, of you is the the and first once terms the or -- that's homes. always over. and the quarter we first time the don't because like of Well, beginning were quarter, don't to tell April to same people stay thing That's that is

-- People strangers that much on. or of didn't we softness that -- know. Now their wouldn't beginning any house the sense of at going the that. just want that some contractors They didn't was want to April sensed we due they transition in

However, That it of that we And say, we that was a since we would stabilized believe beginning April, is I April. weeks of in stabilized. first quickie beginning of think, the happened now. the of couple believe, everything

Operator

Stephen Volkmann Jefferies. today The next of question comes from

Stephen Volkmann

we A seem for one. be couple heading of you of recession since sort to into questions

earlier, And shift a should from little Is but units. expect think fact seen the it to see that might something that? was margin you've we parts because of historically? of and you I toward mix away alluded Paul, some improvement maybe you that

Albert Nahmad

little more What Well, unequivocally product equipment towards that last than I time spend -- was want parts bit can they because to say consumers there the they to went this a repair wanted than mix downturn, more a cash money first cash when cash all, capital results our to jumped, flow And flow occurred? for company second all, were equipment. gains. of flow of working our new that the our enormous -- Well, came down.

the has a a it to new of slowdown If now? equipment everything an see strong. air for may get any cash sort parts -- more don't perspective too just thing, we a that and season. evidence think flow, I into of But will to slow conversion it sure, Do it's that conditioning or So a from be just It's repairs sales. is of and early. so. of benefit. there very beginning beginning, It's

Stephen Volkmann

Great. Okay.

decision? Are You to predicted it is Al. planning make inventories that early sort reduce of your follow-on, to my too you guys Or already?

Albert Nahmad

think make they regions, determine better that. because to think our the season into in inventory we're orders they corporate they great influence levels for going up that and we're as do helps lead do I say with planning think now. determinations But we're if be they we're markets our we ramp decentralized that they'll the Well, but to well, rather we software we're with think us to to tools, I the And that. don't about we're more using we're question talking the that conservative, that level people is, reduce, they in. inventory it's those We our certainly organization. that If need regions, try future. how And basically, a question. -- the at wouldn't that. have handling can they'd If

Stephen Volkmann

Fair. Okay.

Barry Logan

of replacement parts first, what I put Al, that terms what add diversity what in want Barry. just And of highlighted release we is the of question. we to understanding the products. And are XX% to layer to you thought under asked the one it's themselves mix. that earlier in in of product of just press do, perspective about

selling of platform, array circumstances. least yet some contractors can within it at kitchen that wider is points diversity competitors, brands table, sell, today at other brands we mix at just -- There variety is what comes versus we the I who what within of those our points. within would is that's say, so always maybe business are is of our And price kitchen array of And equipment. price like happen consumer And that about that see great sell, not product, cases, our fewer of more the there. sell we we or that table kind the to the using entire brands of we what the when any products like offering concentration deal a the kind -- have in and more

we're in diversity talking release, that's we when of use again, the about. So part what term press that

Operator

question next comes & from Company. Ryan The Blair William of Merkel

Ryan Merkel

right. All

So the first off, on just April. to clarify comment wanted

trends the beginning it you right decelerate saw sounded like at April. So of

Albert Nahmad

Decelerate.

Ryan Merkel

decelerate. Yes,

last stabilizing? you think, over-extrapolate what never you said of days be I I Is And couple that here. days? confident want just of you stabilized could of but kind sales, of week? in Last the to we maybe makes know that a Al, couple

Albert Nahmad

say, days. over And last sales few Daily would numbers. I the

Ryan Merkel

Okay, I the okay. company. resi to but X% X% have growth, I what expected, would the see. And equipment then that's it then total was guess we'll

just declines implies areas. other it expand Can some on So of some that? you the big in

Albert Nahmad

But that is throughout network have of northeast common sense has States in that least And been our regions And also Barry they international year you of I'll been it's been stable temporarily. the statements is It exports let the United the the said in our last Canada, to the softer. a rest to compared much the add that period. and America But soft all Mexico earlier, problems could we softer, were the gets having Latin Well, it. business. it's at having. business, --

Barry Logan

Yes, I the business. It international down. was in that. profits markets, was quarter add year markets. the international particularly is would in There revenues those were not Last down, were to dilution -- for much strong

earth So yes, the quarter first -- comparison. in part that's and more that things obviously of the is on suggested, a in terms which as south, where Al But be sun stand the EPS what And in out probably is out you their smallest the part go would as warm, is stability on. again, of business. impact and year, of those and seeing, the is our we're so

Operator

comes question of next from Baird. The David Manthey

David Manthey

question, first social my that I'm and contractor here part COVID, of away stopped just in I'm goes under understand. my I chances. a down knew distancing? what thinking if still for working business your probably to fact my Florida today, take had I'd So mid-XXs trying AC

Albert Nahmad

don't. hope I you

David Manthey

doing how I do I you if are wait" or someone going just is doing? what they're where mean, that mean, sales service." going not Conceptually. miss "I'm gap to saying, in have "I'm air the to conditioners

Albert Nahmad

you'll less. your But Well, the that's these have will when weather. stranger up, warms to you will I or to because this data comes, have want if guessing either the want The the that that heat get problem Consumers choice systems think it's you issue. that don't a will But reflect mild. in don't the as I'm don't working, the be uncomfortable I to I people -- they and be have. don't things. mild, less think temperature weather upgraded fix hot home. is Because a their that. very postpone. valid do

David Manthey

Right.

Okay. That makes sense.

Albert Nahmad

pretty a necessary know. industry, It's as you

we're In essential heard fact, say, good And an you've industry. me as considered reasons.

heating. have You've got and cooling, to the you've the got to have

David Manthey

Right. essential. Yes, consider definitely you I

sort you 'XX, good during not out, look conditioner market back we that and here, 'XX, was the this were rather 'XX, There's think, obviously Can probably of leads frame. that about? to be we about template. should someone you time that to it that's I your little if to you're when reasonable replace either best. say, better goes outlook, initial X% down kind saying back if And to is recession. that going housing a and -- as an repair of the paused X% think expectation? Is 'XX those to it. ticket there's or in to And go an of thinking than as lower size talk Like clearly, housing-driven mid-single? But that the declines in question, bit frame. from trade-down a It's Al, barely Is good I people a to kind effect. what just not replacing a trading and/or what air revenues, time repairing Second

Albert Nahmad

revenue of terms in mean growth? You

David Manthey

Yes.

Albert Nahmad

Oh, we're too and we're early. It's of. I gosh, do a to early, financially we certain -- that don't much strong so that. I'd against But want gives our know want to competition. us edge our in I we an have do don't something rather over more that report guess. an little that competition, technology edge our our too

us. And be order pretty I program used about help distributors in part good some of feeling hope will we're ourselves. to So M&A certainly the that be

not industry saying there. will, opportunity I with we'll saying I'm it So see if it see does, down. that opportunity might I'm slow but always an

Operator

Tusa The from JPMorgan. next question Steve of comes

Steve Tusa

you like not XX% guess year, on in industry. the going I but talking you talking out of to mean, what is on guys? industry really Lennox you do to this revenues, about comment I broad the guys think really color kind decline going about was So your aren't a any

Albert Nahmad

Paul, See, you to I'm that do want shot? a it give smart. not

Paul Johnston

certainly Boy, type and and in to no different direction. for guide if smart, their been there not we products, And frankly, to smart. thing. out OEMs that you're us constantly our are that what them many I'm outlooks able there's not different consensus polling we so locate represent Steve, represent many I've of so that that

So the can the markets. market. outgrow we think with market the outpace we're We and

market going that to, it. what's about come outperform That's whatever think going is, to we we're close I as guess, to So can as on happen. I

Steve Tusa

right. Right,

Okay.

with assume Like kind here? of how you margin side, -- margins are do margin assuming the you I first guys trends how -- that gross in kind flat know, you thinking quarter, if revenue forward we gross would don't the of On dynamic? or I the line are kind like about course, over about guess, going think of a where

Albert Nahmad

understand hard Logan, tell to let me why predict. answer he know should try I want that. But you that's Mr. But to again, nevertheless, to that.

Barry Logan

that or watch and the Well, couple being obviously, expect I or margins, don't equipment close any expect own having in come helpful this at weirdness as we're through that with we Sure. disrupt well and did and working the of still. with or ago, or strangeness would ended The price in to climbing years again, think up concentration we're either of OEMs anything and kind what kind real don't we disruptive from epic that margin, a their of there's as over our arena. pricing OEMs disruption a dramatic fairly or any But through necessarily that. increases

don't but one. any change expect see know some this and Again, prior quarter of think in the of versus you we'll I price. I we'll it and more, the season, to this So progress terms sequential quarter get last disruption

Steve Tusa

quarter. guys mean, -- I kind still misread Or did too gross that of comment? that for up last the that read maybe is on of board? you had much? that margins I guided Is into I kind we guess

Albert Nahmad

quarter, Oh, we gosh, -- view was at did whatever the pandemic weren't we no time. in last

Steve Tusa

That's a fair comment. very, very very,

the on Just in are a one. you what there guys last or VRF the don't several seeing front ton. commercial I But know you weeks front? one commercial touch last unitary

Albert Nahmad

sure. Paul? Well, obviously, for it's

Paul Johnston

been skewed on have very and stopped. products. commercial for jobs all Northeast -- heavily it's projects Yes, and towards It's and those applied the VRF the the us internationally basically

little So backlog a perhaps, there. we'll have

a again, probably you comes when term up. total percent our little weak. total, unitary going in business. of take the small before longer it's a bit once On has been side, But it's commercial be that And to unitary

Steve Tusa

Okay. Yes, yes.

guys always out Just you good have what's hear going on there. a window and

a thought luck I right. the comes So guys to through best here. of Thanks I'd ask. couple whatever executing of months and All in next lot, you

Operator

Markets. Hammond Jeff KeyBanc of question comes from next Capital The

Jeffrey Hammond

a I investments, on think mix? added XQ on, just trying Can margins, the et costs, SG&A just just were some So color? down. know understand, it give I a the and gave to was some shoulder I you quarter. on cetera? it's were I'm better still same-store it other down. ex maybe you which margins Because guess, focusing Was

Albert Nahmad

I But guy, got? sure numbers not the do you're Barry, understood. you I'm what

Barry Logan

Sure. with Jeff, on we Well, operate do higher margin, again, in the gross margins internationally and gross Northeast. the

well. dropping So accounts as there's some that down EBIT the line the there did algebra in of the the performance profitability impact That some for quarter. to

there in get made quarter SG&A, in year. to shoulder I think, like investments as that And SG&A does season in the into On a start out business were stand a, the this. the we

as we well. as investments, technology in Some number that is highlighted,

goes leadership markets. these it start on play of how terms very markets. year, what's is so But sensitively managing very numbers their impact will local our into And going in up the to the quarters. mix And just in and shoulder in more to SG&A materially local of of differently their out the show some

Albert Nahmad

a picture I'm just the to technology distributor But attributes wherever little these I'm things -- talked just be our homeowner. I'm debt. there. so our the distributor come probably we I glad And very We finance in the about go, very stronger we're happy to here ability we debt, about softer, we now. that, to it contractor for use place. sorry, the markets into I little going that and us very, have to We've to the the All about position gets think out -- keep allows talked strength move talked all wherever we that communicate We've diversity little market allows that financial have, trying service. that speedier of very products. goes. with the it have. no If

Aaron Nahmad

QX how appreciate and we that those words, the level. and remember from forward. picture from the my to regional leadership the operating hard own be in I strength, the we've to going in got on our we're the surviving Every everybody what from proud. strength, see And we'll in what's and business words and the this in how going on of are pandemic, of share. the tremendous micro have to face a I going how financial early and down. questions position of results in from to take market and Watsco. A.J. we'll this have thrive April, focused to not And what strength, how play the And used like is company. we're and and we're very relative This but pandemic, we're expectations of a very it outside me we strength, company the of market business This makes is this the is of and heads long-term leadership operate -- part local macro the is at on exciting, earlier, to a of better we competitors our say look have to But

that examples heard just pickup. So And customers will contactless the in And love throughout the on In apps that you've and some a guys next warehouse about example. so, the our basis. we digitized week transform manual contractors XX operate, be will that with the one and I hours facing or is facing teams. it. this happened how our mean and apps

to it's say of more of before we down. but thrive. maybe, of never there's a exciting term. that more think put time This long we're our just if ways thought awkward sort you an perspective, going the exciting about to focus, or lot And in processes, about is from leveraging that explore energy heads to data our technology even going on and So

Jeffrey Hammond

guess, it there is get settling just XX% to because into Great. of taking hit, you mean, period if a invest that economy seeing I a et this period? -- you're we actions... if just high, big unemployment's Are declines stabilization continuing into cetera. through anticipate it, to sounds Do then the get April. season guys like X% But And we Okay. I some into decline

Albert Nahmad

absolutely. No, Absolutely.

invest our us the of to will. as because downturns That's during nature steady markets. We as strength our financial thinking well allows

to continue billion really that market. long-term-orientated, $X continue continue side. are you've growth, good getting got We invest, It's We're And the we'll $XX to get to revenues in some experience, in ability ambitious. to relatively investing, have a We're that we're at. improving things and and invest. the a you've to customer and order we billion got very

not the to So going we're stop investing.

Paul Johnston

adding and the that entire doing made capital largest we it in And increasing, XXXX, our press a cash adding investments middle and company is when we in adding wasn't And a flow dividends release was the time. of Jeff, to just or recession in reminded everyone increasing. our renaissance venture. in the And careers. was buying joint people, that business last were branches, It adding an the

and So again, we a script out. that know it's can play

Jeffrey Hammond

Just just mobile of a the it between share are ordering? just understand a like to e-commerce looks usage one difference lion's final of of but computer-based XX% the comment? e-commerce. e-commerce Or X% contractors of online just is I about ordering like because to still mobile. done kind the want like on Is use your versus broader there on just app, the and want mobile that sales I the through app --

Albert Nahmad

but it Well, I got know there. release. where expressed that in -- the data, the up the press we've data from data Pick that don't you

Jeffrey Hammond

pulling of have out what I'm it. I the release. press no. That's No,

Aaron Nahmad

Yes.

which of users it's a much app. I or if portion had larger mobile look numbers you at the is of users customer our of active we quarterly, year, about mean, number on for weekly my think You're head, example, base. I XXX,XXX looking at have in mobile the mean, I top our off XXXX, double. app. unique Those last I a monthly

understand at by document way, The shows and that's technician quickly what which focused in right? that can mean app, but have, piece technicians e-commerce, you up yes, the So that locations, he part when the see and delivered. and field, you it's very on the I our understand a equipment, well in part it process the reference. or every just the is product, the of about idea of have system your is than all capabilities. need, warranty, get bigger beyond very mean home, the a much they check an that portion your e-commerce But tool -- components, I mobile written goes warranty and technician much inventory do extension ever those it a

Jeffrey Hammond

Okay.

is indicated would So press higher in release? time than have much in you the what That's a usage the mobile just or... point app number

Aaron Nahmad

it's period at. looking that just Well, the you're

So the has is users in number for the press XXXX, average in or before XXXX that I -- release unique run unique the users, number users. XXXX. unique rate number was you and increased weekly gave And weekly the an increased entire year in in is

Operator

comes The of next question from Longbow Chris Dankert Research.

Christopher Dankert

bit -- we up a quite in is position. are comment But Obviously, any is credit, for Watsco stress So Just Comfort Is now? numbers, there? on yes. any the very there customers how there. your right Credit utilization liquidity feeling strong a

Albert Nahmad

dating or question. business. contractors. that feeling as programs their which to A.J.? That's give use Paul can We Barry, our it, the some when continue so have financial them we They're things it help our you use develop use. help It's a can that's our that, money We great competitors get Yes. naturally, can them. shine, way. say, same for to -- -- consumers And to gets our we tougher. customer of We -- rough we add when strength, Can they that's don't where come but can we to their in. we But

Aaron Nahmad

Yes. A.J. This is

with more the mean, being, several calling you? over a first associates to that I every weeks, we with last whatever Watsco And activity. with are, take Is goodwill have lot customers a that of interactions contractors we who we There's help access that we often. And day getting there's of lot we're and Barry. And follow-up day of their about we don't exposure touch to to long Is credit access -- helping it of memory. on me contractors every what don't business is market X,XXX we it terms? that the question a don't There's probably in is. stab, understanding earned. can product? with now a it have interested -- customers that being some it how capable -- contractors them customers and it we business. business are are a do longer lot we we or Let do grow how in are often the Is these

their especially going have So there a in they Barry. helping I or not when potentially will, with when and the Go periods we difficulty markets periods, hand, even but in believe are it we're helpful paradigm their in customers, ahead, might some providing forward. again, only now, it's change

Barry Logan

install that can And what that a is, with Yes. very about them small be just to about system fraction in you help system. homeowner the there'll systems And Credit for U.S. Comfort. year, that mentioned Chris, replacement about that sold million specific only this contractor acquire of be and a X to and very and sit someone offer credit

inevitably, consumer This into financing. can distributor a entire business. technology that's happen. helps really most takes capabilities in home platform all our financing, provide whole growth digital actual Because my to career. necessity that equation, can use third-party all provide through two the the grow don't the the seeing. help the is bringing credit actual credit is the use help its laggard different for can companies. takes and that's our And we're to into for things but this Comfort So equation. consumer and digital contractor the that of of easy We in been Credit into all our to product that a has contractor information, of the a credit a Innovation industry platform as

Credit is last engaging what customer this contractors And and several engagement for weeks platform. financing over That's potential so that the part of that Comfort of is.

Christopher Dankert

to Certainly, way so market Thanks of social that thing it. moment? opportunity Got operate the PPE, to had. much really kind to share any for Is can't at just additional be me. out I terms Or distancing, from that break of costs, SG&A the thing? some it. you in there of I for guess, quantify assume, a color any shorter-term other the cost one of additional there. kind Got the

Albert Nahmad

Those don't anything are. apply where information categories, mentioned, see our else? customers there. not you We're don't No. installing us. any Paul? I additional to as Anybody

Paul Johnston

really No. It No, impacted no. us. hasn't

Christopher Dankert

sure Yes. disease, just the take then, Well, luck, I guys. trying But not impact and Good just think much, safe. everyone material. make care. so obviously, stays that's thanks to in a yes, smaller

Operator

question of Cory comes Fund. from The next Gabelli Fulton

Albert Nahmad

Where are firm in? are you What from? you

Cory Fulton

I'm with Mario Gabelli. Gabelli,

Albert Nahmad

good a Oh, I know that guy. He's man.

Cory Fulton

He to miss ago. a few was in he you when Miami was sad weeks

Albert Nahmad

my But half, son. my he better met

Aaron Nahmad

of like fun minutes was that XX Yes, month. my the most

Cory Fulton

Yes, fun. Yes, that be he straightforward questions. very ask would could some very

I Can acquisitions the acquisitions quick you So the they're overall a made acquisitions, last business. kind level? you new prolong of are where give And -- or of normal margin margins those maybe question bit an typically, might flurry COVID a now little year. them here. guys impact margin when the those you know below guys, a reaching just on make and Watsco how overall the update or just how for of

Albert Nahmad

Well, anything Is business. Well, to figure me? -- had margin gross we generally that to don't a that's change phone order not because speaking, out. don't to just interruption. I our profit have just we ask They them their Hello?

Cory Fulton

you. We hear hear you. Yes, we can can

Albert Nahmad

question. them But very they continue we I want fact, and very answer their X to so companies improve if margins, us. answer to them And And difficult we independent. use -- independent, cannot in we to so entrepreneurial. that that are -- be cannot they'll it's very those want because us for now very need And

Cory Fulton

-- I a Okay. know obviously question, think my model. business that an decentralized to I it's maybe And is which second answer

perspective? the your you're furloughs market anything that or terms But maybe maybe or year? the regional to far, managers cost-cutting seeing or the indication that, of like allow impacting business take anything from something decisions so level. an of of you that You layoffs in terms at potentially Anything what throughout giving seeing make in place a might

Albert Nahmad

You're three about these acquired talking companies we in general? or that

Cory Fulton

No, no, just for business this overall level question.

Albert Nahmad

Barry?

Barry Logan

add we to said is and intimacy we And on you time. that more but we out, is knowledge is more to grow is And model. so as life. a technology? perfectly, of How and component as How How the that -- going market How it leader's we a All with our the business? can Again, going same A.J. daily at said, local do training? more SG&A local that play be can going customers? growth. decentralized that is can engage can

So to invest share business this. a hustle it the the get It's and both And is and are and a dance. dance to short-term in more of business markets. long-term out managing grow local on a with going

brush So local all. being at there's paint one big answer. dissected here markets. and in no all no led There's It's

Aaron Nahmad

It's -- an Yes, your and just anecdote just give just as to to well. A.J. speak I'll this. question first you I'll I'll

I each with and valuable sharing the conversations, each a doing last of year other acquired and -- been what have those on of leaders benefit do businesses be other's are of And I but wall in the So pandemic. witness realizing, are helpful is connecting they just company share ability to other bigger help each to the very or fly pay that These being the have or are the we a what seeing are that business they those just resources Northeast have what they are to, doing how to sort part it weekly how And those other. hearing you. how have for epicenter to and is and like know a if each businesses in again, of communicate Watsco for that guys there's a ideas and which at this which resource. is are successful X very ways those much are that time, -- least long

Cory Fulton

I'll appreciate you hello. guys That's I Mario color. for make it Al Okay. to tell A.J., said sure and And the me.

Operator

The Instructions]. Stephens. Hirschman comes of Blake question [Operator from next

Blake Hirschman

us of as kind any what top at of rough combination really First just cut? occur declines give of dividend being sense line kind what of different for any one to or be potentially the you have risk me. Could to would for factors to

Albert Nahmad

decrease. clue. strength cash Barry, gosh. if It doesn't in ahead. our haven't I financial slows Oh, down, go mean got we're I flow that a such increases. this

So...

Barry Logan

And days. OEMs can you we're I'll give working record placing a both go we capital day. our you it every down, within This -- the a gets few is And day. -- adjusted then mean, Al's business every And collecting orders I responds revenues right. some I'll textbook wish working way is that to. money are answer. I be track answer, mean We're Yes. give where both essentially a But if given you think with day. every capital

$XXX gets a short put So gets in debt. today, working our and bank and period capital is available cash time, paying debt example, off produced of in for million. either is the for use, under in And

So idea of... the

Albert Nahmad

million. $XX

Barry Logan

sustain in an dividend softer of but having and very people is question helps idea having story. right. to also environment answer of again, comforting, keep bit comfortable a the in of both, cash a That's a and involved machine available ATM the The

venture, we in terms answer is the and in three The going 'XX. three investment being epic to thing, second of Carrier falling flow out; 'XX, made back thing; things: track went during are your construction record immense up epic points question. Again, new those market Those cash coming were XXXX, in joint an pretty XX% our and third to about years. in seeing dividend knives bullet

So it We'll think see, good what -- mechanics kind that's I future? what your track but the of does this for in that's on the answer And goes the record. condition. to question

Blake Hirschman

with Did more outlook believe then talks? a the it. but is last based call, the know what ongoing I market? was the cost stuff, Got those ongoing on changed pandemic that there just lot's has I stuff around negotiations. and that's some since OEM price everything margin and the like uncertainty happens happened, Or And impacted

Albert Nahmad

And very as they're a We Our it's their And it's a best also that. And doing OEMs are to just feel I strong certainly this work keep team. very interest relationship. competitive. cooperative. in

guessing, we're X,XXX customer we We I but I'm I and of think X,XXX are generally, -- every the think vendors. have largest vendors,

Barry Logan

say since to I minutes, dynamics this marketplace time gone competitiveness the minutes Blake. Well, last XX in have reaction XX Yes. the last and we've on has would and pricing been started, and call

think of day this insight, the -- more to of evidence across corroborating data, in technology, end every So grind. And markets should we be. have it we there's that. no environment, And it's again, what pricing minute margins and

Paul Johnston

we've is Paul. change of aren't We conditions any in, flow -- in have vendors that reacted this got almost there on we with the We the to a sure daily have. basis that interruptions up that steady end our product working make to a coming on been immediately. a market There is -- product

whole people only a not team relationships have are we OEM working the level. but at of level, those the at at So also the operating vendor units who

Operator

would our the back over for conference closing to turn remarks. As I session. further Nahmad this any to concludes questions, there are no like Albert question-and-answer

Albert Nahmad

during you and Thank I Yes. and Thank want stay safe so. started. say for in Americans our stronger much. interest your out of when this you now. sure you come I'm to all very together and hope I healthy, that than as again that pandemic this hoping company. are be certainly let's again Bye

Operator

now presentation. The Thank concluded. you attending today's conference for has

You may now disconnect.

Watsco (WSO) 23 Apr 202020 Q1 Earnings call transcript