Adds $206 Million in Sales and 19 Locations in New Markets. Continuation of Buy-and-Build Strategy to Expand Industry-Leading Network
MIAMI, FLORIDA – (GLOBENEWSWIRE), August 2, 2019 – Watsco, Inc. (NYSE: WSO) announced that it has completed the acquisition of the HVAC business of Peirce-Phelps, Inc.
Founded in Philadelphia in 1926, Peirce-Phelps has current annual sales of approximately $206 million and serves over 9,000 customers from 19 locations in Pennsylvania, New Jersey and Delaware. Its product offering includes residential and commercial HVAC systems made by Carrier as well as parts, supplies and accessories sourced from approximately 350 vendors. More information about Peirce-Phelps can be found at www.peirce.com.
Peirce-Phelps will operate as a stand-alone subsidiary of Carrier Enterprise, LLC, a joint venture between Watsco and Carrier Corporation. Watsco owns 80% of Carrier Enterprise and Carrier owns 20%. The transaction is expected to be immediately accretive to Watsco’s financial results. Consideration for the purchase was paid in a combination of cash and Watsco, Inc. common stock.
Albert H. Nahmad, Watsco’s Chairman and Chief Executive Officer, commented: “We are pleased to join forces with the Peirce-Phelps organization to grow, expand and compete in what are new markets for Watsco. We have deep respect and admiration for their 93-years of success and the strong customer relationships that have been built. We look forward to supporting their growth plans and to leverage our customer-focused technology investments, enabling them to evolve their digital capabilities more rapidly and completely as part of the Watsco family.”
The acquisition of Peirce-Phelps continues Watsco’s strategy to grow its industry-leading position. Since entering HVAC/R distribution in 1989, Watsco’s revenues have increased from $65 million to a current run-rate of over $4.7 billion following a unique “buy and build” philosophy.
The core, cultural principles of this philosophy, established over the last 30 years, are as follows:
– 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 focus on the long-term through equity-ownership that attracts, motivates and retains great performers for the duration of their careers;
– Build an unmatched depository of talent, product expertise and strategic value with OEM-partners;
– Develop, launch and iterate the industry’s most customer-obsessed suite of technologies to help our customers grow and to attract other progressive distributors to join the Watsco family; and
– Remain conservative and risk averse with our finances to provide us flexibility to invest in any opportunity at a low cost of capital.
Watsco is actively seeking additional opportunities to invest and grow through acquisitions given its relative low market share of the estimated $40 billion North American distribution marketplace for HVAC/R products.
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 604 locations each year to get information, obtain technical support and buy products. HVAC/R products provide comfort to homes and businesses regardless of the outdoor climate. Older systems often operate below today’s government mandated energy efficiency and environmental standards. Watsco has an opportunity to accelerate the replacement of these systems at a scale greater than its competitors as the movement toward reducing energy consumption and its environmental impact continues. This is especially important since heating and cooling accounts for approximately half of the energy consumed in a typical U.S. home. 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 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 changes in other factors affecting forward-looking information, except as required by applicable law.