91看片网

Sales, Profits, Operating Margin and EPS at Record Levels
___________

Fourth Quarter:听EPS up 77% to听$2.02听on Record Sales of听$1.5 Billion
2021 Year:听EPS up 54% on Record Sales of听$6.3 Billion听and 10.0% Operating Margin
13% Dividend Raise to听$8.80听Following Record Performance

MIAMI,听Feb. 10, 2022听(GLOBE NEWSWIRE) —听91看片网, Inc.听(NYSE: WSO) reported record operating results for the fourth quarter and full-year periods ended听December 31, 2021. 91看片网听also announced that its Board of Directors approved a 13% boost to its annual dividend to听$8.80听per share to be reflected in the Company鈥檚 next regular quarterly payment in听April 2022.

91看片网鈥檚 distribution strategy began in 1989. Today, the Company operates the industry鈥檚 largest sales network for heating, air conditioning and refrigeration (HVAC/R) products with 671 locations covering portions of the United States,听Canada,听Mexico听and听Puerto Rico and serving on an export basis, Latin America听and the听Caribbean. 91看片网听estimates that more than 350,000 contractors and technicians visit, call or digitally engage one of its locations each year to get information, obtain technical support or buy products.听91看片网听has achieved the following results since its entry into the HVAC/R distribution business (unaudited):

91看片网鈥檚 entrepreneurial and technology-driven culture produced record results in 2021. New records were achieved for sales, gross profit, gross margin, operating income, operating margin, net income and earnings per share (EPS) for the fourth quarter and year. These results reflect incremental investments to expand adoption of 91看片网鈥檚 technology platforms, which collectively transform the customer experience, enhance operational efficiency and help contractors grow faster as they deliver a more contemporary experience to homeowners and businesses. As the digital age influences how HVAC/R products and services are sold, we believe that 91看片网鈥檚 customer-focused technologies, scale and leadership position offer significant long-term value.

Albert H. Nahmad, 91看片网鈥檚 Chairman and CEO commented: 鈥�91看片网 delivered exceptional performance under extraordinary circumstances in 2021. Growth rates in all markets remained solid and reflect strong demand for HVAC/R products. Although it is early in 2022, we are encouraged by the continued strength in trends as we start the year, including the continued movement towards higher-efficiency systems, which benefit the homeowner and the environment. We express our gratitude to our approximately 6,900 employees for their commitment and remarkable efforts to serve customers under challenging circumstances.鈥�

Fourth Quarter Results

Key Performance Metrics

• 77% increase in EPS to a record听$2.02听on record net income attributable to听91看片网听of听$79 million
• 31% sales growth to a record听$1.5 billion听(21% growth on a same-store basis)
• 76% increase in operating income to a record听$123 million听(65% increase on a same-store basis)
• 210 basis-point operating margin expansion to a record 8.1% (same-store operating margin of 8.2%)
• 46% gross profit increase to a record听$412 million听(34% increase on a same-store basis)
• 290 basis-point gross margin increase to a record 27.3%
• 36% increase in SG&A expenses (24% increase on a same-store basis)

Sales trends (excluding acquisitions):

• 22% growth in HVAC equipment (68% of sales)
• 17% increase in other HVAC products (28% of sales)
• 35% increase in commercial refrigeration products (4% of sales)

Mr. Nahmad听added: 鈥淎long with our record performance,听91看片网听has continued to maintain a conservative balance sheet with low debt, enabling us to invest in almost any-sized opportunity to grow our network in what remains a fragmented听$50 billion听North American HVAC/R distribution industry.鈥�

It is important to note that the first and fourth quarter of each calendar year are highly seasonal due to the nature and timing of the replacement of HVAC/R systems, which is strongest in the second and third quarters. Accordingly, the Company鈥檚 first and fourth quarter financial results are disproportionately affected by seasonality.

Full-Year Results

Key Performance Metrics

• 54% increase in EPS to a record听$10.78听on record net income attributable to听91看片网听of听$419 million
• 24% sales growth to a record听$6.3 billion听(18% growth on a same-store basis)
• 57% increase in operating income to a record听$629 million听(49% increase on a same-store basis)
• 210 basis-point operating margin expansion to a record 10.0% (same-store operating margin of 10.1%)
• 36% gross profit increase to a record听$1.7 billion听(28% increase on a same-store basis)
• 240 basis-point gross margin increase to a record 26.6%
• 27% increase in SG&A expenses (19% increase on a same-store basis)

Sales trends (excluding acquisitions):

• 18% growth in HVAC equipment (69% of sales)
• 17% increase in other HVAC products (27% of sales)
• 29% increase in commercial refrigeration products (4% of sales)

Several unique factors influenced the HVAC/R industry along with the Company鈥檚 operating performance in 2021. Collectively, these provided opportunities to better serve customers and develop additional market share in a complex operating environment.

Pricing. HVAC/R manufacturers experienced significant inflationary pressures during 2021 and raised prices throughout the year.听91看片网听in turn raised selling prices, resulting in higher sales and enhanced profitability. The Company actively monitors market conditions through a variety of processes and technologies and communicates with suppliers to sustain competitiveness and profitability. For the full year, sales of residential HVAC/R equipment (excluding acquisitions) increased 18%, including a 9% increase in average unit selling prices.

Product Availability.听HVAC/R manufacturers experienced supply chain disruptions during 2021 from constrained component availability, labor shortages, transportation delays and other logistical challenges, which impacted lead times and availability of products. These constraints hampered our ability to fulfill contractor demand at various points during the year. Despite these disruptions, 91看片网听delivered strong unit growth in 2021. Product availability has improved in recent months and inventory levels are being reestablished to meet strong end-market demand.

People Investments.听In response to strong demand along with new branch openings,听91看片网听added over 500 employees during 2021 (excluding acquisitions). In addition, 91看片网鈥檚 culture to reward performance through a number of pay-for-performance incentive programs to sales professionals and field leaders resulted in a听$45 million听increase in commission and other performance-based compensation (85 cent听EPS impact for the full year).

Operating Expenses.听As a result of supply chain disruptions, 91看片网鈥檚 field leadership and front-line employees did extraordinary things to serve customers, resulting in higher personnel costs and other SG&A expense increases. For example, 91看片网鈥檚 logistics costs increased 22% or听$28 million听(48 cents听per share) during 2021, reflecting higher-than-normal inventory movement across our network to meet customer demand. We expect this incremental cost to moderate as OEM supply chains normalize.

Technology Investments.听91看片网听continues to invest in transformative technologies intended to better serve customers and gain additional market share, especially related to expanded customer adoption of our mobile applications and e-commerce platforms. Technology spending increased 22% over last year to听$43 million听in 2021.

Network Expansion.听91看片网听made substantial incremental investments in its network during 2021. The Company completed three acquisitions, investing听$114 million听of capital in strong, market-leading businesses and opened 24 new stores to drive future growth and support local customers.

Climate Change and Reductions in听CO₂e Emissions

We believe that 91看片网鈥檚听business plays an important and significant role in the drive to lower CO₂e听emissions.听According to the听Department of听Energy, heating and air conditioning accounts for roughly half of听U.S.听household energy consumption. As such, replacing HVAC systems at higher efficiency levels is one of the most meaningful steps homeowners can take to reduce their electricity costs and carbon听footprint over time.

The overwhelming majority of new HVAC systems听sold by听91看片网听replace systems that likely operate well below current minimum efficiency standards in the听U.S听and may use more harmful refrigerants that have been subsequently phased-out.听听As consumers replace HVAC systems with new, higher-efficiency systems,听homeowners will consume less energy, save costs and reduce the carbon footprint over time.

The metric used to measure the energy efficiency of HVAC systems is the seasonal energy efficiency rating, or 鈥淪EER鈥�. The higher the SEER rating of a system, the greater its efficiency. The sale of high-efficiency systems has long been a focus of听91看片网听and the Company has invested in tools and technology intended to capture an increasingly richer sales mix over time. In addition, regulatory mandates will periodically increase the required minimum SEER, thus providing a catalyst for greater sales of higher-efficiency systems. Recently enacted regulations will increase the current minimum SEER beginning in 2023 (in general terms, to 14 SEER from 13 SEER in the听Northern U.S.听and to 15 SEER from 14 SEER for the听Southern U.S.).

The Company offers a broad variety of systems that operate beyond the minimum SEER standards, including systems that operate at over 20 SEER. 91看片网鈥檚 sales of higher-efficiency residential HVAC systems grew 26% organically in 2021, outpacing the overall growth rate of 17% for听U.S.听residential HVAC equipment. Based on estimates validated by independent sources,听91看片网听reduced or avoided an estimated 10.1 million metric tons of CO₂e emissions during 2020 and 2021 through the sale of replacement HVAC systems at higher-efficiency standards 鈥� the equivalent of nearly 2.2 million passenger vehicles driven over the course of one year. More information, including sources and assumptions used to support the Company鈥檚 estimates, can be found at听.

A.J. Nahmad, 91看片网鈥檚 President commented: 鈥�91看片网 has much to contribute to the ongoing efforts to combat climate change. The products we sell have a direct and consequential impact on energy consumption and CO₂e emissions. 91看片网听is already making a difference by creating more awareness of the benefits of high-efficiency systems, developing training for contractors and technicians, and听investing in technologies that help customers sell more high-efficiency replacement systems and related accessories. We are committed to doing even more over time.鈥�

Continued Technology Innovation

91看片网鈥檚 technologies continue to transform how HVAC/R contractors operate in the digital age. Speed, productivity and scale are critical long-term factors, and听91看片网听has invested heavily to ensure an unparalleled customer experience. In addition, we have launched and are scaling technologies that modernize the homeowner purchase experience, which in turn will help our customers grow. These investments and innovative tools are unique to听91看片网听and provide a significant long-term advantage. Specific technology-related metrics for the full-year 2021 include:

• Product Information Management (PIM)听is 91看片网鈥檚 leading database of product information delivered seamlessly through our mobile apps and e-commerce platforms.听91看片网鈥檚听PIM database now includes approximately 960,000 SKUs accessed by more than 350,000 contractors and technicians on an annual basis.
• Contractor Assist mobile apps听provide customers real-time field access to critical information, including technical support, product detail and inventory information, warranty look-up, the ability to purchase product through links to e-commerce and more. The authenticated user community (users that are using the mobile app while linked to an e-commerce account) grew 11% compared to last year to more than 41,000 users.
• E-Commerce sales听reached nearly听$2 billion听in 2021 and grew 31% during the year, outpacing overall growth rates. In听U.S.听markets, the number of e-commerce transactions grew 18% to 1.5 million sales orders, and the number of active e-commerce users grew 18% as more customers engage with us digitally.
• OnCall Air庐,听91看片网鈥檚 digital sales platform used by contractors and听颁谤别诲颈迟贵辞谤颁辞尘蹿辞谤迟庐,听its companion consumer financing platform, increased penetration as more customers digitally engaged with homeowners.听OnCall Air庐 presented quotes to approximately 180,000 households during 2021, a 65% increase over last year and facilitated the sale of听$633听million听in gross merchandise value from contractors to consumers, an 82% increase over 2020. Additionally,听OnCall Air庐听is a catalyst for continued growth in higher-SEER systems as contractors sell disproportionately more high-efficiency systems through the platform than those that do not.
• Proprietary听warehouse technology听investments have enabled faster and more reliable customer service. Express Pick-up lets contractors streamline the traditional fulfillment of orders providing quicker service and more efficient job completion. 91看片网听also provides curbside pick-up and touchless payment capabilities to facilitate contactless order fulfillment. Other tools have been developed to optimize demand planning and inventory levels. Taken as a whole, these investments are designed to enhance the customer experience, streamline branch operations and benefit store productivity.

A.J. Nahmad听added: 鈥淲e continue to make progress toward our long-term goal of scaling 91看片网鈥檚 technologies for more and more HVAC/R contractors. As customers adapt to the digital age, we believe that听91看片网听has the industry鈥檚 most sophisticated tools to help customers grow and operate with speed. We are especially excited about the progress of our newer platforms like听OnCall Air庐, which make it possible for contractors to win more frequently with homeowners. Our time horizon remains long-term, and we believe we are still in the early days for what is possible.鈥�

Cash Flow & Dividends

91看片网鈥檚 operating cash flow was听$350 million听in 2021 versus听$534 million听last year, reflecting working capital investments (accounts receivable and inventory) commensurate with significant growth in sales and the comparatively low level of inventory held at听December 31, 2020. Since 2016, operating cash flow was approximately听$2.0 billion听versus net income of approximately听$1.9 billion, surpassing the Company鈥檚 goal of generating cash flow in excess of net income.

91看片网听has paid cash dividends to shareholders for 48 consecutive years. The Company鈥檚 philosophy is to share increasing amounts of cash flow through higher dividends while maintaining a conservative financial position with continued capacity to build its distribution network.

In听February 2022, 91看片网鈥檚 Board authorized a 13% increase in 91看片网鈥檚 annual dividend to听$8.80听per share effective at its next scheduled quarterly payment date on听April 29, 2022. Future dividend increases will be considered in light of investment opportunities, cash flow, general economic conditions and the Company鈥檚 financial condition.

Fourth Quarter Earnings Conference Call Information

Date:听February 10, 2022
Time:听10:00 a.m. (ET)
Webcast:听
Dial-in number:听United States听(844) 883-3908 / International (412) 317-9254

A replay of the conference call will be available on the Company’s website.

Use of Non-GAAP Financial Information

In this release, the Company discloses non-GAAP measures on a 鈥渟ame-store basis鈥�, which exclude the effects of locations closed, acquired, or locations opened, in each case during the immediately preceding 12 months, unless such locations are within close geographical proximity to existing locations. The Company believes that this information provides greater comparability regarding its ongoing operating performance. These measures should not be considered an alternative to measurements required by听U.S.听GAAP.

About听91看片网

91看片网听is the largest distribution network for heating, air conditioning and refrigeration (HVAC/R) products with locations in听the United States,听Canada,听Mexico听and听Puerto Rico, and on an export basis to听Latin America听and the听Caribbean. 91看片网听estimates that over 350,000 contractors and technicians visit or call one of its 671 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.听Sales of higher-efficiency replacement systems have long been a fundamental opportunity in听91看片网鈥檚 marketplace. 91看片网听plans to actively collaborate with its OEM partners and key stakeholders to lead these ongoing efforts in its marketplace. Additional information about听91看片网听may be found at听.

This document includes certain 鈥渇orward-looking statements鈥� 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 鈥渨ill,鈥� 鈥渨ould,鈥� 鈥渁nticipate,鈥� 鈥渆xpect,鈥� 鈥渂elieve,鈥� 鈥渄esigned,鈥� 鈥減lan,鈥� or 鈥渋ntend,鈥� 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 91看片网鈥檚 industry, the seasonality of 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听91看片网听files with the听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.听91看片网听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.

WATSCO, INC.
Condensed Consolidated Results of Operations
(In thousands, except per share data)
(Unaudited)

______________

^{(1)听听听These amounts include the dilutive impact attributable to the excess of dividends paid on restricted shares over the net income allocated to non-vested restricted common stock. Such excess amount was听$1.9 million听in the fourth quarter of 2020 (5 cents听per share). The Company expects this dilutive impact to be seasonal during the first and fourth quarters of each year due to EPS in such periods generally being less than the quarterly dividend rate.}

WATSCO, INC.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)

WATSCO, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)