Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to the Watsco Second Quarter 2023 Earnings Call. [Operator Instructions] This event is being recorded.

I would now like to turn the conference over to Albert Nahmad, Chairman and CEO. Please go ahead.

Albert Nahmad

Good morning, everyone. quarter second our to earnings call. Welcome is this Al Nahmad, CEO. and Chairman And with is And A.J. me Johnston, Paul President; Logan Nahmad, Barry and Rick Gomes.

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

is was about solid were quarter per years, quarter our against the It second last XX% a backdrop. in second strongest was delivered share by Watsco history, up surpassed challenging which XX only record-breaking earnings last performance quarterly a up year. XX% year's and sales when

generate are that is teams an the our mentioned the United which States. quarter's transition in results, considerable a immense minimum release. product this availability, across out Our step-up to standards came product The consequence of as very efficiency press executed of shortages this following year challenges, well playing with including product mandated

Approximately Pricing capture we XX% the products. as consistency quarter done have margin for or margins evidenced the are represents well, new performance of and selling our and revamped gross today year-to-date. the by equipment

product We balancing converting and across our inventory footprint. our are offerings

customers of have trained products. the We thousands on new

digital have new products, adding SKUs all We over our library of updated XXX,XXX the of since include to the year. new the start

been transition, uneven. has The however,

are to disproportionately customers. needs meet affecting million partners our have availability help and and product is reality $XX impacted, XX. was improve measure much OEM million, supply of systems period the partners impact OEM been estimated We and our $XXX sales. affecting as primary a and, X-month $XX million chain efficiency some our the therefore, for June of second our of One The to ended as affected of of higher working to sales all us all

as government, the and delayed tough decline the year as supply mentioned, chain weather by was of arrival evidenced largely is during are we a encouraging. other current to degree degree systems measured we days. this our hot Cooling cooling the a transition, comps the facets which the business summer residential year. information has have for beyond arrived of lot business, days issues, so performing very Summer in U.S. the and conditions product are affected the Apart cooling now demand from As of by the well. business

continued business, digits business systems, of extends continues projects commercial Sales the digits during quarter, grow year. into important our Our to an quarter. double backlog trend XX.X%, ductless of this gas strong, the our heat We in double furnaces around this prices. price also next grew of Gross our our saw increasingly and margins component firm disciplined at of pumps, pricing technology. at our which progress sell selling average reflecting investment mindset held converting and continued towards we on higher quarter

little net We good driving of should optimistic across are and the efficiencies our years the through debt through I also exhibited SG&A sheet our course, about we remains say. strong as balance more discipline move network quarter, with year, our And of -- we the this seasonality. peak at operating

market. provides position $XX financial opportunity us grow in a scale to the to invest always, North we very as As in continue virtually billion-plus any and American flexibility fragmented

under provide We and continue cultures, sustain to look space. in build a in invest for secure for great We technology acquisitions. our to legacies. Watsco great and home is entrepreneurs people

term, critical press support Looking release beyond details long-term our short that trajectory. growth the Watsco's provides

advantage. grow to and with have immense We investing we are that advantage, technology

and broad recent contractors to allows environment. a of us Our channels margin array mobile engagement, that have customer serve increased products brands our preference in e-commerce in years. and created reduced attrition, market gains competitive supported and any is share Watsco's advantage expansion

high growth time. and position share provides market leading a have rates Sunbelt We over stability that in markets

addition, are important industry are catalysts that there regulatory In several and developing.

example, year, mix price a this full the HVAC effect for has standards taken sales higher of benefits. and efficiency providing equipment introduction For

that sales got, New and refrigerant systems. have replacement difficult other makes current historically the of systems refrigerant change buy In they refrigeration so repair the whenever words, to standards has began phaseout refrigeration a The new new generally they it last the made you've our and in replacement to they XXXX. scheduled is mandate, standards repair go system. harder of launch of and a year it to equipment existing conforms very what benefits

electrification We also adoption greater towards with selling of see continued pumps and progress average prices. heap higher

consumer credit HVAC help Inflation years the in and Finally, Reduction enhanced expect upgrade the Act, systems to we incentives tax ahead.

will All years, strength our industry the these financial capture scale, of positions to us technology we the benefit believe and opportunities. in and coming catalysts market these certainly

let's that, questions go and With answers. on to

Operator

[Operator question William comes Instructions] with Merkel Ryan The first from Blair.

Ryan Merkel

group I had question and a sales margins. a then question on on

just on us give the sales, in Any change magnitude of mentioned growth So May, to July you the June you sales sense first a July? weather, can Al. chance from or the rate share

Albert Nahmad

Well, I me seeing with the -- the it's part up growth in the what rates low digits, July, I question. quarter. In single will growth, that second expanding we're And answer third end would but your and was say let of first think question? it

Ryan Merkel

July the you of June? of what terms in in just the and to saw in magnitude relative And May Yes. improvement

Albert Nahmad

year? year, I and last June that answer? period last got period low the up gave Paul, same we're same you May got over you if Over you have single or the digits.

Paul Johnston

way the seeing an a starting repair is which growth them rates going because seeing weather or trend us a not year, versus the on. you're repair -- much replace, Yes. in basis. pretty seeing board, this. we're uptick But gross profit towards mean I was we're really always parts half Both across whichever an big repair replace to good weak so the the upticks uptick in of on some on which definite versus see first for were of

Ryan Merkel

Okay. Got it.

Barry Logan

within we versus can't was be a June granular Ryan, that question June huge Barry. quarter. July, was The in Obviously, way. And it's the month how is

our lot a performance. like looked second quarter June So

better, is July So thing. good obviously a that's and

Ryan Merkel

Yes. getting I at. was was That what

is On topic. the favorite long-term gross everyone's The margins, XX%. goal

XX.X%. just You did

you're target. why think XXX that points XX% basis about should And today? us for unpack just target XX%? change long-term make of to your here above willing to then we you Are So

Albert Nahmad

Well, raise for XX%. your shooting We're I'm expectations. going to

to take I'm give timetable beyond you not a Now eventually and questions? it, his believe shot on Who going but we to at there get can wants then we that. a

Barry Logan

like. the And are current again, years that years or ago, I X or be I'd there happy asked. asked that feel was was improved our X performance versus X variables variables It touched have ago, important by to. we number and in whenever platform technology, X talked sell pricing We X influenced question some about And through a X it or on. we our pricing X have everyone one. to all and platform so way being in to been sell is I think how everything

we've OEM The We and profitability. lot of price year is selling we're with community out their new other a and the talked reality new had support get this opportunity obvious of about products sustained margin all our products. to go and

And so far, good. so

of heat I margin rates construction, have of relative example, we're helps mix Obviously, helps to growth for pumps, new which a too, growth the in replacement of the everything efficiencies well. think overall margin terms And selling in some. market higher as and you

being term don't still we too on. I margin to we so are is or that the do our talking there's pricing I of feel doing we're I is on What very target we discussion In ago. was suggesting get profit where that in with I we the longer which and mature short in spectrum are and a terms answered to far a anything the benefits. all to we of to either grow whole Now we're benefit couple from about haven't the things of where satisfied place years term, full therefore, that your and the the of years pressurize to couple old, add can remarkable though, only of technology think only put is mean question, far technology today. from is gross

Albert Nahmad

was a a that, was Well, answer. that Barry. I long-winded one? good that What like

Operator

Stephens Moll from Tommy comes question next with The Inc.

Tommy Moll

to wanted with start a theme. continuation pricing I So of

potentially we the it give as on you extent would pricing quantitative are then be the anything to We if just commentary could quarter, wonder the in helpful like And qualitative well. contribution give where I was on what in today. this can cycle, late sit that you feels and any second

Albert Nahmad

All right. Who that? best to is handle

Paul Johnston

you to do Barry, at want take that? a run

Barry Logan

the layering costs sure. same prosecute in it's that the Sure, out again, gone. changes Tommy, all market and and have go price to the and given have execute and through variables -- we

was residential very pumps, X%, kind quarter, new very XX% for So in, a a about very, XX% OEM I quarter. or or price comes average obviously think mix being it's has that overall capture. business products but price. benefit layered selling of average are inflation that, all from There to of the little some our equipment. this The residential for obviously higher also it have which of the Most heat from moderate selling X%, and

for quarter the selling price X% in is average So I much number call and year-to-date, the same the overall, pretty it, for quarter, think the year. it's and increase the

Tommy Moll

And we pressure key called expect and I can something in of good give out also should to would disruption share can today? particular, the Any your other helpful. wanted to know. ask status one revenue quarter you us OEM That's there you continue the And about with context this that third in December? you to be to partners. the is

Albert Nahmad

end That's by working quarter, and through is hard the end And great and up. at my quarter caught or the that be of very of all They're certainly it a they're question. the will very this guess fourth good improving. they company, a either they're

Operator

comes Baird. from from question next The Manthey Dave

Dave Manthey

you gross on your it ask margin target. out question I'll there, Since XX% a put

I you time mechanisms you strokes, broad that ask us would see in but you give what that would move you could Just direction? won't lines,

Albert Nahmad

towards demand that, sell a Well, to to opportunity comes and heat nonequipment amount creates our we have providing And the pumps. secondly, things movement nature federal We government to our motivated ability considerable having there where that the mandates seem And plus value by -- the that compete people technology like revenues expand going more nonequipment significantly, is other side. from of of are by a is that's in heat lots forget. And effectively. margin. pumps, things higher that, the of of the

and kind kind I'm eventually to have things. able When XX% So of us it's to scale beyond. be you those internal hoping, you do, this should move that, of that accomplish its the we and to forces external

Paul Johnston

And Dave, Paul Johnston. is this

happening XX%, see more which year, awful another will which to to change on did we We we able now an opening see ability have of ago, change regulation be is definite also XX% years mentioned Al next We've refrigeration X a and by X the his to remarks, that another commodity XX% so that in and gas that's replacement years. also we be of XXXX. got You in going a to XXXX really -- us next sell as over availability the an to for going going effect the to even next lot another we're with XXXX. the in the saw from X products over products and in reduce just happening as squeeze sell XX%. that

reduce in there's to warming when that in change, Then refrigerant going we're the feel getting for got potential of XX%. that's is the We've to are little increase as we're occur. occur. of going We that's of line got of change a complete down is an we've XXX And an a far confident furnace us, that other to additional seeing kind to which gas X things in pretty minimum the there's hitting going going the the potential that as but to where that be a and of flexibility also bit minimum a be could in, global of XXXX, line that to from released, down government product efficiency be XXX. time

So market, Watsco. think there's profit a for gross there's upside anytime an an changing for I in opportunity

Albert Nahmad

Yes, me feel there. XX%. we'll we very don't we have an get literally take That's for confident aspiration, that but a timetable -- we expect

Dave Manthey

all that question, expected No, color. I I shut appreciate Actually, in of but the that's be details. to down great

Albert Nahmad

knew also. them talked Well, to I resource, I we the went

You're good.

Dave Manthey

Absolutely. is second spending. tech Well, so on

today? up rate could if If and the That's us all and and that standing you're you populating I'm your started with you right are databases treat key just million when of priorities else. a these And about buckets $XX everything run help understand spending tools now. wondering what tech Xx dealing you

Albert Nahmad

You mean you want to big know is? spender the who

Dave Manthey

Yes.

Albert Nahmad

Hey, Mr. President.

Aaron Nahmad

smart years, and the Yes, consistently major knee-deep thinking improvement at very, to of and on tech which think innovation said opportunities for advent our now next we today with yes. to an it process there's and XX and opportunity. written, the now, we've that are very be think AI, XX, of impact apply do. to unlimited No, and now technology that is invest And And everything it's spending business. world starting I generative to going well in is we've just opportunity universe mark fast. whole and [indiscernible] we of in a I we been And another had a with as changing chapter obviously are people

So but of answer, continue the maybe it's because for the long-term ambiguous going an we to we're to know business. health invest right

Albert Nahmad

And we might invest more.

we're you never been analyst more on is our continue do asked stop to last us company This to investing long I to going when We've to and our some year. is advantage." will. know advantage, we going an very every increase And we're that. think I This going focused investing? time, year "Well, are I said, term.

Barry Logan

lot just -- sitting probably mean, yes. that XXX a in is people with $XX roughly, then David, to a in corporate customers of really is sitting not religion, But to is of growing level. was number. well so a a momentum, lot in in going think then is number local growing and market. spreading the the X/X not say, headcount new for It's layer it we let's that to of our technology, that. the What's helping out It new your a it's at actually tower local million in add understood -- ivory I that speak, field very and I of people, is customers investing new that field sake, thinking customers I the technology geeking have customers.

level sense game just on this the but development, ground is that's markets. that's get in at ground and the truly that our going not sure, it's just invention So for also

Aaron Nahmad

our saying our them again that serve better are our attrition are lower. is it's growth Their technology cost use their rates rates that us And lower, higher, worth with customers customers. are is

more better get company. the for more the we customers the So the using often, technology is it

for the the efficient the well of are and technology. using a by As as result profitable customers, more way. They

Operator

question comes Morgan Josh next with Stanley. from The Pokrzywinski

Albert Nahmad

are better you us liking recently? Josh,

Josh Pokrzywinski

I'll right, done have guys give Al. You that. all you

Albert Nahmad

you. Thank Thank you.

Josh Pokrzywinski

moving the selling was Maybe margin, one margin to that maybe gave sticking in the gross A could increases, couple of Barry, you an I of good wrinkle kind know quarter give about us the here. or some versus phenomenon. just that that itself. XQ extra last of with items of bridge kind questions quarter some there I inventory of in the to inflation maybe items know a little? color basically timing price unpack you anything as initiatives that

Barry Logan

cost, which versus purest Sure. is the quarter. selling general, Well, did the of in increase margin, in price form the

is of to So that's gross it the the a component profit largest performance. important because high-quality component

that came considering any some -- pricing actions the quarter. So without and that's the in, benefit of from in

just So quarter-over-quarter, quality margin improved. year-over-year of pure

flat. say would the fairly of I we're items, Some below-the-line

freight some freight, the deliver of have, to we're would remarkable, us, where of to or that vendors have the things transition that pretty certain too way because still Josh, like through is enormous to other. one in, like But our inventory. we doesn't something And savings going again, nothing we pay

actions? think what is selling any considering I benefit was prosecuted market is, of in positive pricing replicable price which and a is cost simply again, the without being margin, the

Josh Pokrzywinski

pumps. That's it. over just Got on helpful. maybe And more shifting philosophically then heat

it of sense raises the at pricing I of get with OEMs some or of just these to you sort that trying of higher carry IRA becomes maybe all guys anyway. capture guess, as price point the IRA all to think evolves I'm think do I industry you versus stimulus flow the price large disproportionately there, But that through the letting consumer? a are I that things know meaningful. specifically, out start to think to out what the sort there pumps the guys more strategy the

Paul Johnston

the credits, are credit. of by that IRA model and of clarity available get we equipment a got the some published pieces finally tax IRA, what around will has that finally tax the list SKU IRS

able our course, hundred we people get to of of So week. that dealer that apps a were thousand technology, because occurred on out couple our of this And just to quickly.

that. different haven't a pump of are cool. the felt historically benefit been we electronics So heat and straight between a a components, There's involved. really There spread different

now. don't real we've think right occur the table And any got proposition there's because see margins so I the going going now uptick IRA to to that's you're that going on heat where pump up of

I are any So the have the DOE on X word all the people. now, that got the from manage states how think hasn't rebate sales low-income on from higher from really we related impact their the out recommendation because And right and don't rate. finally programs mid- at to now there been

end And next so first any to of quarter not quarter, second see beginning probably until we're of that going perhaps. of year,

Operator

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

Mitch Moore

a Mitch need Moore just second or in selling on better the you'd for is once a had the you This half? inventory to I out on said quick you I Jeff. take How do you want much guys handle levels season. inventory question. had think address

Albert Nahmad

$XXX Who we I'll cash take capable of wants settle -- of out in million and it of terms things another flow. in that taking will helpful we're and is to down, a terms be of my inventory that say when turns sense can shot?

Paul Johnston

would I fair assessment. a agree. That's

Mitch Moore

Great. Okay. just then And one more.

to what half? SG&A the line, guys continue temper you if decrementals in see to declines On second do we can the volume

Barry Logan

you mean it like, I Al. answer if I can

Albert Nahmad

Sure.

Barry Logan

asking if below in be line, that question. happens top top if the conservative Yes. that's I equation first, what line, mean, on the what conservative, helps your let's be to you're

it's down down inside went costs this that quarter are variable the If SG&A focused teens. a becomes second obviously. in quarter, look number, in SG&A I So good. item, the

XX%. and XX% between Somewhere

top which the the of our we've is in the of teams reflect some have yet kind does not that for on. fully occurring. to And we the example, still of been and up that inflation also were Our is have variable a that focused X% in measure change fixed costs productivity line expecting things quarter, from benefit costs

in of not -- in quarter going rest the out, of that I'm for reduce effort but the we'll amount in looking has, is plays challenge can and see don't rest the of the year an further. obvious to data better and I the So how and at the And of where precisely of predict second terms year it we than first was technology, it SG&A but how immense SG&A it's trend. there terms

help would level the that certainly helps growth, the So rate. And decremental of there's any equation. if earnings it growth

Operator

next Linzey with The Brett question from Mizuho. comes

Brett Linzey

as changeover OE Just refrigerant wanted does some of issue. think you the change the in next for inform to the look maybe that SEER 'XX. way back Watsco come 'XX to regional Clearly, or changeover transition with secure inventory? more the created you year about beginning to maybe impediments the ahead prebuy How

Albert Nahmad

follows good for a He Paul. question That's it.

Paul Johnston

I we prebuy. We're looking XXXA. looking don't we've at -- not now our this Yes, on with a think been at I prebuy OEMs. all right is anybody discussed -- don't out of

And be indicated earlier, XX% already going been at XXXX. there's allocations to XXXX. was in in year, means GWP for allocated I one in we're further As of there's a going reduction what to which a the XX% next be

So basically down we're to XX%. going be to

business or I expensive, So going be think to prebuy a a unit offering unit supply and the for opportunity anybody. short is very, a where in don't doing be very refrigerant prudent on a would

Brett Linzey

or credit the down. Got it. glean complexion specific anything growth of versus clearly shifting from anything if replacement versus wondering you trade can just might was repair then mix. seeing And that to backdrop, you're the organization there's the I suggest across to parts metrics equipment Okay. some consumer

Paul Johnston

uptick, are in we first at is happening buses we July, primary motors seeing finally we're components we that month didn't see the which We repair half when year. compressors. at of seeing and motors -- two of with the there's finally seeing we the Yes. are what's we we're in is it's compressors look an replace what -- the and doing, -- and -- look And

more growth that, that a And would in we so indicate repair that happening. would be see as there

under warranty the make not requiring they're to We whether units an but the also marketplace, also back repair to are sure sort as claims that monitor indicator while one, we that, line or make warranty. any they're of OEMs in with the

point, To a I -- in seeing the the yet. don't a But I only all date, of about I'm trend. I've think a it. it's been happy in are It's information. increase as major and and it's wouldn't not this got X business say July, it's we it's trend, earlier, is yes, an indicated but weeks -- not in I repair there certainly, But major positive, at

Operator

comes question next JPMorgan. The with from Tusa Steve

Steve Tusa

know. I it there? I execution Well, obviously pipes Barry is, nice question -- sweet of who commentary. know that July the call I level thinking. set of first doesn't there. on continued with had congrats at know. the was kind those My beginning I don't to are That's the there margins, reasons gross don't was the to sing Paul, That was sing. so wanted good. Maybe just

So bit in that digits, up like from unit? a product What what's like equipment you be repair-related singles low equipment said components unit the perspective. July? little maybe -- down of a Would was you're kind high volume and more single

Albert Nahmad

Paul? Barry?

Paul Johnston

you take to is. it Barry, you want say if would that. Yes, I Yes,

Barry Logan

higher talk about we're consequential single-digit I growth, price sales And Steve. selling about average Probably not it about when units sense, enough prices. that overall it. to consequential use the of if we our common Yes, the matter to in that growth. we talking see, in Consequential I that's but First, is part decline are up? equation. continuance whole Is think a the and business,

think again, of year ago. I we're and against, -- XX% comps a up

as still we're up -- against times ago. the we've many So now, -- still year with if stuff we're blockbuster we're said still not

that's And growth, so for good. July to have some

Steve Tusa

those significantly. time just -- reconciling you want mean trouble tough Can something. with of to X I'm Yes. had are kind I a up but inventories supply, dynamics? you And guys having reconcile then I help your

Albert Nahmad

Logan. Mr. you, for accounting And

Steve Tusa

know. little basic don't than more accounting, a I I that's think

You tell me.

Barry Logan

after prove an to anymore not I'm XX years. just accountant trying I'm

Steve Tusa

everything, Barry. You're

Barry Logan

you Steve, the it data, ago going be this which I'm look question digits. a if the of equipment, ducted, June everything year versus unit that you single through -- is the might the are of called a said the if outdoor is unit, at universe coils, units, So irony took indoor looked whole and irony down is our units to furnaces, pick

So is inventory your higher. Well, higher. the question why is first, right? is mix The mix richer. The higher, is is cost

is And or, so that inventory part say the is enough clearly of can't obviously, own reality We that we year new. this enough.

Imagine last to any in retail or that any everything business had And its products every are into to new that. be roughly the XX% X list, the that every emptied products updated out carrying are months in accommodate XX% every over XX%, and technology, cost. months of X more last price customer,

the cost inventory, in reality it's ever think. our this crop simple it's and are in to answer, if anything noisiest, kind a I measure the cut I most through time units and So with just difficult, the up. that's industry, down give And analytically you of

Steve Tusa

this just of Got it. And then for you last product one one on kind dynamic. transition

As somebody this supply else's to that and past you they up is kind come And more do to of as they guess for -- of can -- -- on you will make you, you back took them ship my you'll back ship? quarter? as

Barry Logan

or a what mix everything. need trickiest having systems that matching or is e-mails term the the a meets the that's what fit right an local it's that right local of would every say the of The part, is rich of us new in I customer to the And not of And has store that needing balance very systems the products having who is in any Yes. e-commerces balance. systems store. matching -- means OEMs calls is been of the matching manufacture everything, been order. customer every use we need mix

that the gone And because balanced transitions the the is so have in all fully challenge. up. point stores that's at all not this of that balance And

answer, too, have So very that's close my You're you Paul, thoughts. some random maybe to abstract thought right? this,

Paul Johnston

your sure make want to I understand totally question. Yes. I

we we going that we We're are of was, claw to back to sales course, every going question in Yes, support can, we're loss we share Your move any and with we get had going OEM? going that such any that to it's and that way we them a back to to are. collaboration able joint be to that And have be loss OEM that to had. is effort that back.

work And together. happen. when things good partners and yes, happen, they together So stand

Steve Tusa

Yes.

one quick one last you. for Sorry,

You obviously, sell-through mentioned unit down, If unit in also your come would somebody inventories and more a residential think inventories wise probably like, meaningfully have bit are were than balance but is down, to I expected. HVAC say industry are doesn't that a we and a I here or by guys destock inventory seen that's it there's that's your with to like already case that it seems want another million. like over, sound reduce way you to the mean you that saying $XXX go from perspective. out

Paul Johnston

some performed. be destock is left There still to Yes.

have have some air the put not to system be going not outdoor we the coil the -- The mismatch indicated, where Barry and to units the you will the you're not units have As indoor there, but some there. handling.

to where units we we're as backlog sold in still open proper side, hot destock great as completed hand inventory are seeing be comments, of a match and be which in on jobs lot we it backlog And far we moved So still there in be is getting some awaiting they're those, of That to as through. some have and into. of commercial inventory indicated can a on the the have but as the of nice those.

be then ourselves million. that some going take to management destocking there's happening think I and inventory $XXX that have on by in could to we're just reduce So some order the to

Operator

with from Ahlersmeyer Joe question next comes Bank. Deutsche The

Joe Ahlersmeyer

the in and Just comments comment that follow want commercial. to the up prior on remarks prepared about

your year. Are double-digit whether are there -- backlogs? what mentioned in us a sales to You the point? you're coming at greater into than down could this those Is sense those current you give of next adding backlogs sort growth of backlogs

Albert Nahmad

Good question. Paul, you've got the data.

Paul Johnston

continue varies to right got still think units, it for stabilization order broad there. It job, applied, increase. into to a where Talking think think we've commercial you When very I based upon get made about supplies demand commercial I rooftop we've backlogs seen equaling the it's -- a I subject. those commercial is now.

see than further growing I are we So don't that today. where much

kind it's the look when of at mixed in commercial. all you a So bag going components on that's

Joe Ahlersmeyer

you business repair in Okay. the heat driven you're as new couple, overall you could be and I another might the is then just the in and Understood. questions here. you side, percentage a your margin of a have think of percentage construction? because less just price by resi a of interested say upgrade the versus And bit construction dynamics. past, new today. equipment would number And commercial What any pumps how in around big the business said on mind

Paul Johnston

And say got about to once building. that is business, to generally new replacement you're again, a commercial. When be rooftops, would continues our you talking talk on we're order When you're the made mixed into construction talking it are applied those because specific when has I historically game you've the about for side. bag a

Joe Ahlersmeyer

And then heat pumps?

Paul Johnston

total continue heat as And of our grow percent pumps a to business.

website. information get I you on the can that HRI think

the total we're to pumps have than that most You'll the see Sunbelt the be in of in. because now our moved -- heat And heavier Watsco exceeded on they've that sales. market. what, geography furnace people gas roughly, exceeded pumps they XX% would up of XXXX, now heavy heat

heat the Mason-Dixon so more And line pump of will north. south obviously than you're you to find going activity,

programs government the climb. and and into push technology, changes, will programs pump change as heat the pumps northern heat the utility that However, as

Operator

Damian The comes question from Karas UBS. from next

Damian Karas

say pricing more you around happen as you mix seeing would pretty Or price the worked price inventories benefits, that you're competitors being in competitive the just appreciate be be you down. market? if I any seeing there might mix out to signs your and uplift So that that details consistent are gave getting on curious

Albert Nahmad

it's say been would I fairly consistent.

pricing. really all and Obviously, to fairly salesman, seen reality is We seen But have haven't the are you disciplined, if any the decline going breaks. at we the listen it, the of in really a prices down. not you equipment really look marketplace if the

Damian Karas

Understood. then to change. Appreciate effectively multiple going follow-up I competing. you're a refrigerant that. the question have on mean refrigerants And

that OEMs And do a sides that's than you on bit I different of are both believe cycles. that. think I with little work past

that just and I'm Watsco? dynamic out So playing how for curious what means it dual you refrigerant see

Paul Johnston

that we amongst go It's very at then is of rest the XXA, going and we the of our one have to their OEM our companies. and discrete where with Well, companies going companies have divided our XXXB. the sells they're

XXX X our we and will be X that So companies XXA, and rest for XXX. and company the will XXX carrying XXX of XXA flavors, carrying have the new And for equipment. be repair

a see don't big I there. So deal

Operator

to any the to would remarks. Nahmad over like conference I turn back closing Albert for

Albert Nahmad

look we appreciate your in you speaking next again interest forward company. and much, Thanks very for the to our quarter. to We it

and if of to learn you any want free. innovations about more visit However, we're come technology, that feel doing, the

be to happy will information would you. to the We that you helpful to present

and thanks for listening, next So see the you time.

Operator

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

disconnect. now may You

Watsco (WSO) 1 Aug 232023 Q2 Earnings call transcript