$180 Million Distributor Adds 16 Locations in Core Sunbelt Markets
Gateway Builds on Watsco’s Leading Scale in Fragmented $50 Billion HVAC Marketplace
MIAMI, FLORIDA – (GLOBENEWSWIRE), September 6, 2023 – Watsco, Inc. (NYSE: WSO) announced that it has completed the acquisition of Gateway Supply Company, Inc., a distributor of plumbing and HVAC products.
Founded in Columbia, South Carolina in 1964, Gateway Supply has annual sales of approximately $180 million and serves approximately 4,000 customers from 15 locations in South Carolina and one location in North Carolina. The company distributes approximately 40,000 SKUs from more than 600 vendors.
Albert H. Nahmad, Watsco’s Chairman and Chief Executive Officer, commented: “We are pleased to welcome Gateway to the Watsco family. We have deep admiration for the company’s culture and impressive track record of growth. Gateway will continue to be led by its second-generation family members Chris, Sam and David Williams. We look forward to investing in Gateway’s expansion, including leveraging our customer-focused digital technology and supporting Gateway’s customers and employees as part of our family.”
Chris Williams, President of Gateway Supply, also commented: “We are excited to join Watsco and partner with the premier company in our industry. Watsco was the logical choice to sustain Gateway’s legacy and unique culture and to help our company thrive going forward. We are eager to utilize Watsco’s scale, capital, industry relationships and entrepreneurial culture to serve our customers in the years ahead. We also look forward to benefiting from the industry’s most advanced technology platforms that help our customers grow and compete in the digital age.”
Watsco is actively seeking additional opportunities to invest and grow through acquisitions. Since entering distribution in 1989, Watsco has completed 68 acquisitions, including many multi-generation, family-owned businesses. Watsco’s “buy and build” strategy can be summarized as follows:
• Identify and partner with great businesses in the HVAC/R industry
• Support their leadership and employees and honor their culture and legacy
• Ask for aggressive growth plans and help them achieve their ambitions
• Motivate teams and reaffirm an ownership culture with long-term equity
• Deploy the industry’s most comprehensive suite of customer-focused technologies
• Solicit and collaborate on big ideas to foster a spirit of innovation and growth
Watsco operates the largest distribution network for heating, air conditioning and refrigeration (HVAC/R) products with locations in the United States, Canada, Mexico and Puerto Rico, and on an export basis to Latin America and the Caribbean. Watsco estimates that over 350,000 contractors and technicians visit or call one of its 689 locations each year to get information, obtain technical support and buy products.
Our business is focused on the replacement market, which has increased in size and importance as a result of the aging of installed systems, the introduction of higher energy efficient models and the necessity of HVAC products in homes and businesses. According to data published in May 2022 by the Energy Information Administration, there are approximately 102 million HVAC systems installed in the United States that have been in service for more than 10 years, most of which operate well below current minimum efficiency standards.
Accordingly, Watsco has the opportunity to be a significant and important contributor toward climate change as its business plays an important role in the drive to lower CO2e emissions. According to the Department of Energy, HVAC systems account for roughly half of U.S. household energy consumption. As such, replacing existing systems at higher efficiency levels is one of the most meaningful steps homeowners can take to reduce electricity consumption and carbon footprint over time.
Based on estimates validated by independent sources, Watsco averted an estimated 17.4 million metric tons of CO2e emissions from January 1, 2020 to June 30, 2023 through the sale of replacement HVAC systems at higher-efficiency standards, an equivalent of removing 3.9 million gas powered vehicles annually off the road. More information, including sources and assumptions used to support the Company’s estimates, can be found at www.watsco.com.
This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may address, among other things, our expected financial and operational results and the related assumptions underlying our expected results. These forward-looking statements are distinguished by use of words such as “will,” “would,” “anticipate,” “expect,” “believe,” “designed,” “plan,” or “intend,” the negative of these terms, and similar references to future periods. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive market, new housing starts and completions, capital spending in commercial construction, consumer spending and debt levels, regulatory and other factors, including, without limitation, the effects of supplier concentration, competitive conditions within Watsco’s industry, the seasonal nature of sales of Watsco’s products, the ability of the Company to expand its business, insurance coverage risks and final GAAP adjustments. Detailed information about these factors and additional important factors can be found in the documents that Watsco files with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements speak only as of the date the statements were made. Watsco assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except as required by applicable law.