Enables Entrance into New Markets with 32 Locations and 10,000 Contractor-Customers
MIAMI, FLORIDA – (GLOBENEWSWIRE), March 16, 2021 – Watsco, Inc. (NYSE: WSO) and Carrier Global Corp. (NYSE: CARR) announced today that they have signed an agreement to acquire Temperature Equipment Corporation (TEC).
Watsco recently reported record 2020 results with over $5 billion in sales, record profits and record cash flow. TEC marks Watsco’s first entry into the U.S. Midwest.
Founded in Chicago, Illinois in 1935, TEC is one of the largest HVAC distributors in North America with sales of $291 million in 2020. TEC serves approximately 10,000 customers from 32 locations in Illinois, Indiana, Wisconsin, Kansas, Michigan, Minnesota and Missouri. Its product offering includes various brands of residential, light-commercial and applied HVAC equipment made by Carrier as well as complimentary systems, parts, supplies and accessories sourced from approximately 1,200 vendors. More information about TEC can be found at www.tecmungo.com.
TEC will operate as an independent business as an addition to the highly-successful group of joint ventures between Watsco and Carrier, a collaboration that has provided growth and value for both companies over the last several years. Watsco will own 80% of TEC and Carrier 20%. Closing of the transaction is subject to customary conditions and is expected to occur within the next 30 days.
Albert H. Nahmad, Watsco’s Chairman & Chief Executive Officer said: “TEC is one of the most iconic, entrepreneurial, long-standing family businesses in our industry. 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 growth with capital, ideas, technology and our industry relationships to build on their historical success. We are pleased to become part of the TEC family.”
Skip Mungo, TEC’s President & CEO said: “We are excited to become a member of the Watsco family and provide the catalyst for growth in the Midwest. Partnering with Watsco will enable us to think bigger while retaining our unique culture and approach to the market. We look forward to launching their innovative technology platforms over time to support our customers, complementing the historical capabilities and customer focus that is at the heart of TEC’s culture.”
Watsco’s Buy and Build Growth Strategy
Watsco has acquired 63 businesses since 1989, most of which were successful, multi-generation, family-owned businesses. Watsco’s “buy and build” strategy can be summarized as follows:
– Identify and partner with great businesses focused on the HVAC/R industry
– Support their leadership team and honor the culture and legacy they have created
– Ask for aggressive growth plans and help leadership 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
– Build a stronger Watsco because of our association with these companies
We are actively seeking additional opportunities to invest and grow through acquisitions given our 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. 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 90,000 contractor customers and their estimated 300,000 technicians visit or call one of its 600 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 http://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, seasonality of its product sales, 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.