WSO - Earnings call transcript Q1 2024

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Operator

Good morning, and welcome to the Watsco First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

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

Albert Nahmad

Thank you. everyone. morning, Good first our call. Welcome quarter to earnings this Al Chairman Nahmad, CEO. And is me And A.J. with is President Barry Nahmad, Gomez. Paul ]; [ Johnston; Logan Rick and

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

softer performance. Watsco delivered Now market on despite conditions. results to the good

reminder, a is the As first the traditionally our low quarter in sales industry. season for

Although improved it the April is summer early, trends of we are encouraged by ahead sales the [indiscernible]. in

We have believe and network generated products market and share of our technology, gains. brands our the expansion of breadth

of ATM flow using April year dividends share Our launched equity raise of And an program. by record per This cash of paying boosted balance during XX% a sheet strengthened our our and beginning dividends. XXXX. again, the our year once we quarter $XX.XX annual XXth consecutive Watsco's to combination marks through

the highlights commentary quarter. Now on

near-term ductless Although our a of believe our record time. healthy. Sales with over low, Gross remain important mix conventional an higher in to sales well [indiscernible] locations well offset the Commercial price are margins system, component increasingly consistent business. of of pumps quarter. markets experienced XX%, new and our achievable margins ductless of unit end in our business though are declines grew in and backlog residential target the of as performed and [indiscernible] high we heat demand as sales [indiscernible], contributed growth efficiency equipment products remains projects

adjusted lower Watsco the improve efficiency SG&A quarter, our fourth for expenses Variable across and number expenses. SG&A basis. increased to same-store Turning teams actions SG&A. reduce X% a consecutive and on implemented of has an to were

to execute necessary possess acquisitions and businesses through our most Collectively, These recent aggregate change retain beginning network And last X per the importantly, expanded that sustaining will and culture end, uniqueness million $XXX their way. joining their acquisition possible more markets. and long-term all, an Watsco's importantly, new which improve we of they our drive with the a data have with growth. in and Since and leaders additional terrific to culture, entrepreneurial the sales of the are their we of legacy businesses practice tools we expand year. X to in equipped consistent productivity teams is Watsco family. approximately year, market, in investing to great with And leadership --

continue market. the ], remains join industry to highly technology companies to [ family. Our equity strength balance scale, in reasons we are our and of culture all great and to industry-leading great sheet Watsco's North Watsco $XX our billion American fragmented will scale advantage, the pursue grow other

getting And I term. into that on always, made finally, Q&A, as the long [indiscernible] before emphasize is our focus

Our balance we stand to sheet growth right the ready opportunity. invest in is and strong,

serve advantage that array and play will contractors catalysts to ahead. out an that there's immense also allows and technology are ] advantage. grow We competitive bought to Watsco's investing products to have a of we brands, us industry [ are in And years from any operate benefits we fortunate an fundamental changes in that environment. and that regulation also the most in advantage,

Q&A. With that, to let's go on

Operator

Hammond [Operator is Markets. with KeyBanc from Jeff Instructions] Our question first Capital today

Jeffrey Hammond

raise. equity Well, I'll ask first about this

why imminent M&A the wondering does just Or kind some what's it of signal And coming? Just now? rationale?

Albert Nahmad

That's And being all them had because that that it to an from long-term that's reputation Well, us with the long have a a wanted is. holder. it's we a for has opportunity an term institution engage we for reputation.

Jeffrey Hammond

et channel kind cetera, players, kind with our checks increased up struggle of were we of shifting picking in rates, since cost. consumers to then our more higher repair/replace is and And the

end? that on seeing you're what wondering Just

Albert Nahmad

Paul?

Paul Johnston

side. the really we're market on of in not now. quarter. just any real the dynamics the seeing right pickup side motor really And little change compressor institute there a not weather but lot bit on the repair we in a The saw first wasn't Yes, to

Jeffrey Hammond

then maybe context put better, Okay. now just little you're mentioned you April what finally, around And being more seeing? a

Albert Nahmad

I'll Barry let that. answer

Barry S. Logan

new I unit put it's things market. includes been look thus the in digits it's a far growth single-digit the is in pickup in Again, and nice it at high range call basis, as it's same-store a on how it that I and characterize it, would the I the mid-single the branches.

Operator

is question next Moll Tommy from Stephens. with The

Thomas Moll

focus gross So believe to I it margin or not, wanted going to on SG&A. today. start on I'm not

Albert Nahmad

much hope you those margins. on [indiscernible] haven't we Well,

Thomas Moll

think But been on change the the no. you $X item expense a so. of No, nonrecurring faster top same-store out that versus or out, strip know that has a even the items and grow I we SG&A basis there called year if I did past over on driving point, the leverage line. million priority

what us you in the how going about tell first that unfold quarter and what might think forward? you saw So you can

Albert Nahmad

Mr. Logan?

Barry S. Logan

first, lot holidays. out headcount branch it to that the streamlining and opposed before leaders did. They those and is tended first actions Tommy, of this year quarter, as a and actions terms the taken beginning again, were and of the at the went the in to the conditions take of general

kind is again, on. sense. that So part start of that going year And makes with of to that's mindset momentum the the common

expect several now played reflect of major been of categories. some out So in that remainder rest the in in year freight February the much some Transportation and the year quarter. -- down logistics March, for our quarters. That's and of the consistent of reductions to were I the would

largest the which SG&A. contributors to the the side, is of On headcount

the what results for year. from was you'll see the some think remainder done I of

Thomas Moll

and for I AXL helpful. transition about the then be offer managing how still into XXXA another And of of year next some and AXL. even portion a here. you're there just on on this the for year market you the the portion -- terms inventory the where guess of on is maybe state will in there question the What That's can union thinking

us you Just can here? what the strategy tell about

Albert Nahmad

a Paul. It's for one good you,

Paul Johnston

right going it's whether with EPA or they Will probably Well, first now, units. AXL the still a kind all looking just third going what in of quarter sales not and as an the from all the some interesting XXXA now. at and probably anticipate hear we're be of ointment the time. that's incorporating We'll units, sell-through Right to fly in components? there's to is pickup fourth people probably quarter. Okay. the allowed start to second be XXXX. the see that be So We're waiting

quite now, be is of phase when down, AXL to market phase be going between product it's the far as one some manufacturers as that to going it's a think we products. up X the each a their lines. I Right introducing represent

Thomas Moll

of get or all fair a perspective, year? -- it part into just And you that, middle in of than is middle turns to typical may need the your to as the higher from little midst say back a you this run of of that half half back

Paul Johnston

would uptick Yes, how can over contrary but there's the what transition as Mr. see going we turns product. some in we but lower new going of Nahmad it be some definitely, to be like, would We're AXL much XXXA to that to from mitigate, inventory. the to old

Aaron Nahmad

This is A.J.

One speculate some of players. may little other speaks is We're culture maybe way are which for product if our on thing one XXX and will either color independent piece more long-term not do distributors our to the speculate do I some the the being to do, take over a and Just you add the XXXA product smaller bit ] short-term more others and a or market there, is can not trying conservative. huge [ customers. we positions meet or of to swing the giant expectations because little

Operator

from Jeff Vertical The question with next is Research. Sprague

Jeffrey Sprague

again, come back inventory, to I if could. to want I

that you're historical year Just guess, anything going But may estimate touch a from looks to, there. vantage point, my in and relative QX sales, differ from what else high full still planning. my on of it I maybe

You've [ impacting it got ] It role. sure, but stuff distributors, XXXB a you, new sound is some the is. I'm perhaps like doesn't is

play how the where year might today any on Just inventories stand your of other relative kind color out. to

Albert Nahmad

to give you... going I'm

Paul Johnston

Go ahead.

Albert Nahmad

was to we we're higher, give for said just turn big more with picture the until you I that in that a achieve I going had the goals Paul, and that to inventory agree slightly detail. be we going not stop to view. may

want do you that? to Paul, deal with

Paul Johnston

in Yes. in go with increase March It's we're marketplace. -- We $X.XX April again, seeing a to up a another the price had -- copper price one various that from increase in lot a of manufacturers is it [indiscernible] a pricing had February pound. we in and

as we've upward of seen thrust our cost concerned. a So as lot far is

As we down have far number have, year-over-year. that of we outdoor as in inventory, actually that's that units the units

price the bit our inventory. managing So out we now feel It's like there tough right with little a we're increases.

Aaron Nahmad

add, advantage guess, margin our buying took of. And opportunistic the that I'll was some, I there business on

out far that us a summer which a They've -- moving in feel got and result quality they've for -- inventory and chaotic as of very healthy as products they that as our of a years prepared season So right are and of the believe going goes. business supply well the busy mix inventory. got last COVID, of a X the chain, has for I as been result

So customers is positioned course, well its the and run our take product. the should begins care move and expectation you as of that be season to selling

Barry S. Logan

a particular competitive also ago our lamented of in the major stage and say later, and just more grew in we is inventory vendor very a being I'll that's do, at on. a it year year here, condition, a a for about obviously, Yes. vendors of channel for work so strong the to inventory still sales And and position think and position. then year lost nicely not that season in early the lamented but the I there's this good an one call, lot that

If our look to at year-over-year some a contributes of that current basis, you position.

Jeffrey Sprague

bias as like-for-like more XXXB, do be on to price for on kind see to a on there's kind price, OEMs of different obviously, And going then But be of just regime. for product, you kind than like looking copper gotten on of price OEM a like-for-like units with year, kind terms we've kind price what's up OEM normal the of of a bit little of increases? going something is noted, moving you in more or on during increase one to

Paul Johnston

Well, the new the we're roll products. see in to I OEMs on prices starting from mean AXL the just

think for that's And on probably I to So we're going price year. going be AXL I it would to products. I'm the see say hoping. increase then one the

Aaron Nahmad

products going not I products year. next the us mean the Yes. to be again And sold away, right? XXXA will like-for-like are

Jeffrey Sprague

one branded in selling you these through. if the all, is products the particular, one significant, this of Yes. in for channel -- interest in And me. how [indiscernible] other strategy, they're just These how to your address at just kind and products. Can

Paul Johnston

portion value of -- out like market. there good, there's market, [indiscernible] a fits every Well, that products there's of selection and the best generally better,

Trane got that's think now. a So of products, positioned Payne some ], other number of ICP our that And market products, compete We've right label a where a [ I product has private of products in segment. our that some as got marketplace. it's such

Barry S. Logan

There to are that going a brands of dozen the emphasize space, sold was a sells Watsco in I It's value that are half itself a probably lot a segment. brands market. that. crowded in segment. the

it's to a points OEM an it space, again, space. crowded so crowded And and is market. price diversify for way in it's But a the its a

Operator

The with Manthey next question Dave Baird. from is

David Manthey

Thank you. everyone. Good Hi, morning.

what full positive XX% anything that or is XX% nonrecurring the just second, question that, year? that? First on was the more about the for about then less hitting And you SG&A, makes margin gross on

Albert Nahmad

guy. Okay. numbers Barry, you're the

Barry S. Logan

first, we like, on well. that -- pretty think long gross term would the said probably when and it's the chimed thought in what I look think the we years side, up held I ago On X.X on we profit -- I

what my and up but don't the think capabilities and coming with change, our has sustain that there's subject XX all at question. year, this are term if always answers year. and for our this that are changed I'll for your So XX, opinion conviction near variables that, to Obviously, I in

in in the side, way, first leadership in those making obviously our incurred those reduce stores, some There's responsible Watsco the On nonrecurring we across headcount in our decisions a of quarter. mentioned all of all reductions. costs

that probably that, that a behind recurring So other minds, or probably a $X just that the component major our something million there's in things, component items number. be one of as are clearly, it's not far item million item. no the And out, us and $X that's would as is of taking

David Manthey

of second, the Florida about to And like million. looks is now going funding it [indiscernible] accept Okay. IRA $XXX

when anything consumers And different our from Act? you're are fourth in maybe of seeing that, of states that Inflation read contacts quarter year help Can you give might terms start that or might some benefit saying the a this see to something. in start us in to Reduction the

Paul Johnston

Yes.

of New is fourth correct the country. quarter, probably the think been now, one what funded. part quarter, third Right the that's depends on in I you're York

-- impulse going We'll And impact be. I what so think it's that hoping that what going place. out in there, we're find so of California. sort to can what to see that of we Then the generates second it's to be probably be from

So [indiscernible] the forward. a throughout thing it's U.S. this spreading going be rolls of to the gradual as

to So interesting see states the we a in it's to be what X out and to big first say jump before going going really deal. it's lay be

Unknown Executive

to we similar, thing, be don't know. should it something but say that Yes. and I when, a Paul, was good good going how

Paul Johnston

heat trend and the least first quarter, this, I for now But we'll example. the versus seeing without first it's summer. promises Yes. the and at so But everything at right out else, benefit how will benefit necessarily quarter, incentives one say better. in a of growth And period heat if the pump the see I on, absent we're remarkably look plays in the coming. that's of pump sales this If improved a

is products year new reinvention the last second part the that higher industry of of efficiency products makes. the a the essentially all all And recalibration of was

our SEER, in grew and XX new that in essentially nicely So the growth above. XX rates quarter. year. mix higher this And category again, SEER products

the things those out it can things. So And good again, play a as just to incentive. to are the add needs I'll it full that, accept year. And if for right good nice to without early in and been year could regulatory now, of the be the But rest if it's the it continues. good see a the thing. for improving year good mix that's the part incentives of

Operator

Merkel question William with is Ryan The next Blair. from

Ryan Merkel

quarter, to came And later lift a way some pricing second quarter wanted right first start is thinking of to see Is about think OEM to from margin. a the we'll my I on sequential the I'm this gross year. the curious it? that little if

Unknown Executive

you have a shot I Who you a Barry? take fortune knows? wish. ball if you it, there, Do can mean at

Barry S. Logan

pricing Ryan, market, a Yes. -- it's you're obviously, a but there market. it's still right. in strong actions are And better it's not later, still that came

And because conservatism if it handicap always of wrong, we'll market on of discussion. just So the I'm some will what the hopefully upside doing. be that is

over We'll X what's will market tune be about So this early I'm going on. the not and the change -- our next to months really in I commentary the want conservative the season. of educate us

Unknown Executive

Yes. a things And know, said there's, you earlier, Barry, up like don't make margins. I that half different dozen, a gross dozen

one, but So not alone. important that's an it's

Ryan Merkel

wanted No. then That's about ask pricing. the And ] helpful. I to [ Hwell

mentioned OEMs. to letters get of some from the think starting I you the you're

I normal that's XX% to transit just Just we you other increase hard don't I do what full the sometimes answer, if then know because question what we've it's And list is list full think increase. to are the XX% expect don't new had a you equipment to range seeing, but... get is, a it's get I heard? because price on if

Paul Johnston

to wins in the in the range. the are we've really tough. middle. they're XX% fact, in And in right XX% gotten But That's initial

we we really pretty early vary. I that that we so see late think into price to do, variance going I before next to move see to held And would going much the very year on like adjustment year, true. be, season? didn't it's that we that. this an If say, a as Are

third XX right in have quarter. then quarter, through. to think probably moving the start seeing I the some sell marketplace we'll we're And into fourth units X AXL going units of to the

Unknown Executive

I'll increases still, a expect at to I to previously. relatively company, more the rate a advanced just than we are systems, rate complete price quickly. add our with pricing capture -- But new do Yes. mean, which

sense? that Does make

Ryan Merkel

does. it Yes, yes.

market. and -- your fair just then year be forecasting the XX%, Does XX% of quickly, Just one that will is AXL next seem you? to competitors that of

Paul Johnston

exactly them would what Boy, year. I to a be it it'd is and think would to to crystal allow next XX% be see say that's of somewhere would. going anybody's if I XX%. great it the between be AXL don't impact going got the product ball

Unknown Executive

which all moves long the good. these it All are major difficult summarize of move. positive are -- a all a little on that It's that timing to it's positive, is term,

Operator

is from The Patrick with question next Baumann JPMorgan.

Patrick Baumann

of on in year-over-year the couple HVAC in A ones. versus X% color saw of resume what Any prices being a the in on you quarter? same-store equipment to quarter -- the selling way the the The quick down terms average sales volumes basis? more us give unit

Rick Gomez

this is Patrick, Rick. Yes,

outperforming bit. I positive Latin still little unit Actually, and trends the saw The we backlog do healthy is side, positive. what's residential a of -- mirrors mid-single the was in into it better with that. And of digits, a but than and happening of lot we're think channel. declines support sell not And On that sort what's strength hugely commercial to industry broader to price that continues America was positive and there residential. trend very

So we that's would the color give.

Barry S. Logan

provided on of this. little We top bit of a data

I'd just be So helpful.

product, of that for now pricing routinely used product mix OEM happen is I mix, and product, later the the as price kind So and in deducted the early. purposely word U.S. actions to price quarter mix said, unitary the around X% those as [indiscernible]. opposed at the we've and ultimately up type

of gives read you it it. some So

flat. year decided of pricing products, pricing actions. unit X vendor April which there is bit that our have largest ductless is But case, part to our more Our discussion, in a this

state, this growth. Rick kind call it's is said, And it mid-single-digit of that a of as run in makes it and sense. I at steady point So outperformed, commercial, grew on think

Patrick Baumann

well? And to I trending units on that I'm on applies the as mean, in up resi sorry, -- resi comment April,

Barry S. Logan

when say resi that. I only That's Yes.

Patrick Baumann

Yes.

going decline seeing the subsegment. Is you there it or any price you're or there's quarter? the of Okay. maybe on know [indiscernible] Was [indiscernible] And like can color saw give different product, on in then what products sales color that in you on things bunch in a volumes refrigerants? like I

Barry S. Logan

that's refrigerant, X% give quarter. the the but during I headwind give being of we've copper deflation a going use category. our products word and a reality on to color. an simply selling average sheet the imputation have where a in third bigger context of and it tubing Watsco does probably It's quarter between just Sure. around we can sales as grows when non-equipment total metal it that price commodity And essentially commodities, products X% had

good The in we this is pricing the expect price the news increasing into get through less as perhaps kind in The positive even have and is of margins that that and getting news better rest if, is stabilized. news copper good and is year-over-year we're this impact impact fact, impact no of and cycle year.

end to kind based the discussion. of line so so some hoping and the So seeing expect the here. what with this seems we're we be I'm of look on as of into time spring, that

Patrick Baumann

then And just one me, for side. the helpful. same-store last Super on SG&A

Is a I thinking talked, basis? a think slightly same-store were maybe reasonable still we for you expectation last time down that on the year.

Barry S. Logan

to the generation a that of it's But costs flat violate and in a through today, is going are from a from view, it that probably that good important and market let's concept if we they'll a mindset, cultural it's been leadership and our That's or there increase, We we'll But aspiration the say, there's do again, not or manage customer, sales bad a manage Watsco. a do they not we've extent that's to market, Well, something how dictate. carrying it. what point a goal thing. on [indiscernible] find want think to not going of it's I after. [indiscernible] if investments out for variable

would variable drive with We -- go expenses would growth. along are sales

that glad an the as SG&A I'm some would growth There there's days. goes I better tell. is noise first to quantified will Time early it's that extent and in going we've the on. on. expect quarter So year performance

Operator

next question The is with Damian from UBS. Karas

Damian Karas

in to encouraging pickup in the demand really you're say I'd So hear about April. seeing

us sales quarter, what same-store for the looks comparable Do in what have same-store in you what you I mentioned, remind growth like could April, to May? April, be April like XXXX? like mid-single-digit just of growth. the was have kind the last You sales in -- shaping second And the seasonal like year think,

Albert Nahmad

the from wants of forecasting engage the with I of lot industry. because shot take if a anybody we Watsco side. a That's like and don't to to of nature which know don't

Aaron Nahmad

Breakout break months. we don't think Yes. it... I

Albert Nahmad

not We're that. going do to

Damian Karas

for April, though to Okay. The you comp from have happen that? don't last year

Albert Nahmad

what? The

Unknown Executive

but it it have We [indiscernible]

Albert Nahmad

not We're [indiscernible] just

Damian Karas

just totally Fair understand. maybe Okay. Well, your guys you could ask so you I about put have enough, -- through. pricing

of OEMs your is that? to I if cumulative kind of hear contractors March demand-related a the that byproduct your short-term on increases. that if the up pass just an [indiscernible] that that? experience so, much few that thing kind some and that to employees there's You pretty to I right in someone heard been going Or think, some with a One you resolving maybe now price issue April. just and wanted base? just in of are end maybe of the of years? is customer last of kind is that wages thoughts just is struggling whether on agree all from over And we've the your of like

Albert Nahmad

as don't that have they I in happen mean with will respond the we happen. question a to [indiscernible] future, I and because need to think that things even to have is looking

on So pass to I'll -- going we're question. the pass

Operator

[Operator with Jeff Research. Sprague Instructions] The Vertical follow-up next question from is a

Jeffrey Sprague

know, to increases a a said Just Ryan I this follow-up, at hope don't more you times, sort price year. with see there. couple Al, question any of of But not Damian's maybe you

the So item? that Or that not ability I'm the noted that you're maybe have maybe versus but something a that terms screen you early handle that to that's of kind are your signs dynamics happening? indication is eroded, on out some replace an there this just is wondering seeing watch as just stuff? repair in this if stress some is seeing of You radar

Albert Nahmad

And to No. the have we That happening gone what mean, AXL was does. market only there. now it's the insinuation we're I waiting what's market that does I the for come up. mean pricing has is the in. the pricing market

Barry S. Logan

to to I in backbone we've emphasize chime mean important because to about it's I've on an got talked like it. this I what want already. -- And

said early least statement heat That stage higher-priced signs in said earlier market call that what's on the right? installing contractors we Secondly, of mix about higher-priced the I've outperforming is the if else, that's with higher everything that First, systems, a pumps in as efficiency going are -- remarkably. indicator be an early the again, at an But in of rather on is early of it increasing going too how stage what's going I'd what's And and on also on. October went. the report market.

Third no of never question. of it we [indiscernible] all or asks third on I like up. going ever contractor. -- and our all, what's and bring I -- about It's me to about one have a talk to ever about it with so It's feel remarkable

you our look healthy. it's is debt when the us contractors quality bad or very are year credit for at a us how year overall less a more versus billion and If expense behaving with ago, the and quarter pay they $X

as very the location or a we local the to I best view. in at April Watsco but in that to the we're And multiple lower not across October thing know have end And I of they going go variety services don't subtlety at obviously. if or on It's to or of do doesn't like they a brand really get off. the to market, an markets. an of serve have the day the I market. are the job what's brands going they not few have to of it. competitors have that this discount need. can product -- their a that going So that's same brands binary There's who job have look view It's the contractors do a on go to to

trickier softer a a our if market even position market, or the kind more I like out I conversation. in round So competitive of

Aaron Nahmad

think said, our I'll here technology -- the strong that's I sheet -- best-in-class we positioned I and your can't we got talked We've We've field. And just high-quality a in contractor love good I ready I competitive like position product about expect got well the in -- on Barry, a balance it. to competitors and there, a tenure. and have good invest we've opportunity. We've every love our just deployed whole. expect the got in that inventory any Barry a build on match. answer need. to we're very that got year could and market size that have

Operator

Nigel from question Wolfe The Coe with next Research. is

Nigel Coe

Sorry, late I joining. was

addressed if this But So I ATM that, apologize really I'd timing on the be Al. curious on drawdown, [ ] the already. you've of

You obviously a on cetera, out that options and [indiscernible], why a you unless please. got sight cash the I I've [indiscernible] do But question well, but et kind there? timing of the in of line got much got follow-up as

Albert Nahmad

I'm sorry, March? in why what do

Nigel Coe

The issue? draw. [indiscernible] The ATM

Albert Nahmad

I it. As said earlier, do didn't we

a him of he high-quality Somebody we opportunity and holder long-term to believe -- the it wanted because that we came wanted wanted what took supplied we at [indiscernible]. up, meet We believe who is he's it. And holder, time. the we the we the holder would shares, if did be

Nigel Coe

have full there Okay. the within be in capital, maybe of on are mean I'm take or up to some of and the deploy the there a current any there And taking sort That's the then the [indiscernible] opportunity to you you big of anything, I'd the [indiscernible] [indiscernible] longest control out I rush or capital? in see opportunities prices. out not to but fair. curious, set you're sure

Albert Nahmad

would we you. did, we tell If

Nigel Coe

Okay.

keep So you the just cash margin? and

Albert Nahmad

Sorry?

Nigel Coe

just keep you the cash? Should

Albert Nahmad

in do useful. very we expansion in we program, had investor. be the first? took question. it you you We like we keep understand you have do significant opportunity this the me so long-term would because bring -- like don't we're goal course, told important What the a to capital What of not going a -- [indiscernible]. I we will We it. would to Of

Operator

The next question JPMorgan. from with Steve is Tusa

C. Stephen Tusa

Pat's and I and join was just to question, on call, say follow foremost. to up so wanted hi, I I and wanted first on another

the this on exactly the these I just timing increase carrier mean I mix. the accelerate course the not year thought would X. increase? of thought obviously pricing I -- you you given the mean April dynamics do So March, and I like early of -- pricing over was to expect

play color maybe would some you that expect on out. to So just how

Paul Johnston

The they're to AXL we March to received No. any on then And on Carrier received the have pricing had of on going equipment. was new subsequent increase products. we what the see be that, from we've we're the products to But not yet. what going AXL also XXXA --

C. Stephen Tusa

And what will in those be of taking you it. warehouses? at do to be filling you like Got the expect those kind -- products point

Paul Johnston

any of be amount third will probably units We're the quarter, depend operating AXL do, would probably it fourth product. we significant what before see on quarter

C. Stephen Tusa

Got it.

And mean, this of to I are cut your mean, relative a How extra inventory ahead characterize ahead little prebuy, Okay. there's you -- demand? think of you bit took then you do really on of the of I a inventories or they're question. would lean? kind the normal can your ways you inventories just I it. now on guess bunch now

Paul Johnston

of products and We're a right some bit ahead, we're XXXA some inventory had I don't that you? little now. little in ahead a we additional bit think the on also that purchased. came products, got we We've prebuys

C. Stephen Tusa

change on just aside. Okay. putting and you end on -- repair an just up Are And any one, then seeing from weather anything one perspective kind versus of replace last market there? demand

Paul Johnston

nothing. There hasn't just weather Too is -- aside, yet. put early. any there been you if Not Nope.

Operator

The next Loop question is Chris Capital. with Dankert

Christopher Dankert

there I the And be on quarter. the rate? Just running or about front? here, just $XX technology that anything at technology or the of one Is a on-call guess. [indiscernible] in worth anything in million explicit teasing with side beyond else kind of spending technology that anything quick is on us highlighting you'd still question you kind quarter run for that Explicit

Albert Nahmad

the understand [indiscernible] question.

A.J.? You,

Aaron Nahmad

the to that question? Are talk technology the Is there on side? new things about

Christopher Dankert

run and call or rate anything then here? out I is spending you're the introducing new Just there would

Albert Nahmad

introduce to going not we'll ideas. going introduce I -- We're it. constantly we're mean, it, introducing we're Well, to new

Barry S. Logan

the that's your much as sequentially there's far change quarter As pure SG&A, that's this quarter. last technology from the your spend question, question. in not If

Christopher Dankert

It was.

Aaron Nahmad

us for on keep expect technology side, You can though, innovating sure. the to

Operator

from is question next Volkmann Stephen The with Jefferies.

Stephen Volkmann

end of some you origination, want think you credit ask I'm was for about okay? do don't financing also to for aside, you seriousness I but well. how you I Barry, know wanted that that I it the curious, I brokering sort as I know, to know guys customer quality, about commentary, -- All grateful

I think you if credit curious that of how looks? have through into And visibility quality your platforms. available some that's I'm

Albert Nahmad

we hold. A.J. Yes. Well, don't Go ahead,

Aaron Nahmad

customers, and our -- and not frankly, once matchmaking [indiscernible] I it's largely and don't a -- the performance small customers do make financing origination, we have really visibility, it's our those into are amount picture of and out stable, that, the customers of matchmaking, we But say. of we So that sources not loans. would their pretty between it's

Operator

would like I back to concludes question-and-answer closing turn the This to Nahmad for over session. conference his Al remarks. our

Albert Nahmad

very interest thanks Once your with Bye. conversing look much company. again, time for on. goes in to our you that We forward

Operator

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

You may now disconnect.

Watsco (WSO) 24 Apr 242024 Q1 Earnings call transcript