Adds $291 Million in Sales and 32 Locations in New Markets
MIAMI, FLORIDA – (GLOBENEWSWIRE), April 12, 2021 – Watsco, Inc. (NYSE: WSO) announced that it has completed the acquisition of Temperature Equipment Corporation (TEC).
Founded in Chicago in 1935, TEC serves approximately 10,000 HVAC customers from 32 locations in Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri and Wisconsin. TEC generated sales of $291 million in 2020 and provides a broad product offering including residential, light-commercial and applied HVAC systems from Carrier as well as parts, supplies and accessories sourced from approximately 1,200 vendors. More information about TEC can be found at www.tecmungo.com.
Consistent with Watsco’s entrepreneurial approach, TEC will operate as a stand-alone joint venture between Watsco and Carrier Global Corporation. Watsco owns 80% of TEC and Carrier Global owns 20%. The transaction is expected to be immediately accretive to Watsco’s financial results.
Albert H. Nahmad, Watsco’s Chairman and Chief Executive Officer, commented: “We have deep respect and admiration for TEC’s legacy and long record of success. Skip Mungo and his team have built a great company and they will continue TEC’s focus on growth with their name, identity and unique culture in what will be new markets for our company. We look forward to supporting their ambitious growth plans and introducing our innovative technologies to accelerate their digital capabilities as part of the Watsco family.”
The acquisition of TEC is the latest example of Watsco’s strategy to invest in growth opportunities and expand its industry-leading position. Since entering HVAC/R distribution in 1989, Watsco’s revenues have increased from $64 million to a current run-rate of $5.3 billion following a unique “buy and build” philosophy. The core principles of this philosophy include:
– Recognize, respect and sustain the legacy of great businesses;
– Instill a passion for entrepreneurism, innovation and continuous improvement;
– Operate as a local business, no matter how great Watsco’s scale, by empowering local leaders;
– Think and act with a long-term focus through equity-ownership to attract and retain great performers;
– Build an unmatched repository of talent, product expertise and strategic value with OEM-partners;
– Develop and launch the industry’s most customer-obsessed suite of technologies; and
– Remain conservative and risk averse with our finances to enable investment in growth at a low cost of capital.
Watsco is actively seeking additional opportunities to invest in what remains a fragmented $40 billion North American HVAC distribution industry.
Watsco is 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 300,000 contractors and technicians visit or call one of its 632 locations each year to get information, obtain technical support and buy products.
The Company believes there is long-term opportunity to be a significant participant and contributor in efforts to address climate change. HVAC/R products provide comfort to homes and businesses regardless of the outdoor climate. Older systems often operate below current government-mandated energy efficiency and environmental standards, resulting in higher energy use and costs to homeowners. Sales of higher-efficiency replacement systems have long been a fundamental opportunity in Watsco’s marketplace. Watsco plans to actively collaborate with its OEM partners and key stakeholders to lead these ongoing efforts in its marketplace. Additional information about Watsco may 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, 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 other factors affecting forward-looking information, except as required by applicable law.