91看片网

MIAMI,听Oct. 20, 2022听(GLOBE NEWSWIRE) —听91看片网, Inc.听(NYSE: WSO) announced record operating results for the third quarter and nine-month periods ended听September 30, 2022听and provided commentary on trends, growth opportunities, technology innovation and financial strength.

91看片网听also announced that its Board of Directors approved an 11% increase in its annual dividend to听$9.80听per share on each outstanding share of its Common and Class B common stock to be reflected in the Company鈥檚 quarterly dividend payment in听January 2023. 91看片网听has paid dividends to shareholders for 48 consecutive years.

Through its entrepreneurial and technology-driven culture,听91看片网听has established itself as the largest company in the highly fragmented $50+billion North American HVAC/R distribution market. Since entering distribution in 1989, sales and operating income have grown at compounded annual growth rates (CAGRs) of 15% and 19%, respectively, reflecting strong and consistent performance across various macroeconomic and industry cycles. During this period, 91看片网鈥檚 dividends have grown at a 21% CAGR, reflecting the Company鈥檚 healthy balance sheet and cash flow.

Today鈥檚 results establish new records for sales, gross profit, operating income, net income and earnings per share (EPS) for the third quarter and nine-month periods ended听September 30, 2022. The results reflect substantial 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.

Third Quarter Results

• 14% sales growth to a record听$2.04 billion
• 14% increase in gross profit to a record听$551 million听(gross margin of 27.1%)
• 14% increase in SG&A expenses (flat as a percentage of sales)
• 14% increase in operating income to a record听$236 million听(operating margin of 11.6%)
• 11% increase in EPS to a record听$4.03听on a 13% increase in net income to a record听$186 million
• 20% increase in cash flow from operations to听$286 million

Sales trends:

• 13% increase in HVAC equipment (69% of sales), including 14% growth in the听U.S.听(13% growth for residential products and 20% growth for commercial products)
• 15% increase in other HVAC products (27% of sales)
• 18% increase in commercial refrigeration products (4% of sales)

Albert Nahmad, 91看片网鈥檚 Chairman and CEO said: 鈥�91看片网 is proud to deliver another record quarter and dividend increase, which reflects our confidence in the long-term prospects of our business. Third quarter sales reflect normalized residential HVAC equipment volumes, effective price realization, sustained progression towards higher-efficiency systems, which grew 26% during the quarter, a greater mix of heat pumps and strong growth in commercial HVAC systems. While Hurricane Ian impacted sales in听Florida, our largest market, we are confident in our ability to participate in the recovery of Florida鈥檚 west coast in 2023 given our strong presence in the affected areas.鈥�

Mr. Nahmad听further added: 鈥淥ur results also reflect higher SG&A investments in our network, including the addition of over 400 field personnel along with increased technology spending, all with the express intent to drive higher market share. At the same time, supply chain disruptions and inflationary pressures have affected other facets of SG&A, leading to increases in variable operating expenses such as freight and delivery costs, temporary labor and other costs. Despite these unprecedented challenges, we believe that 2022 will be a record year for the Company and that meaningful SG&A and working capital efficiencies can be achieved in the coming year.鈥�

Year-to-Date Period Results

• 19% sales growth to a record听$5.69 billion听(17% increase on same-store basis)
• 27% increase in gross profit to a record听$1.60 billion听(170 basis-point increase in gross margin)
• 20% increase in SG&A expenses or 16.2% as a percentage of sales (16% increase on a same-store basis)
• 37% increase in operating income to a record听$694 million
• 160 basis-point expansion in operating margin to a record 12.2%
• 36% increase in EPS to a record听$11.86
• 12% increase in cash flow from operations to听$359 million

Sales trends (excluding acquisitions):

• 16% increase in HVAC equipment (69% of sales), including 17% growth in听U.S.听for both residential and commercial products
• 18% increase in other HVAC products (27% of sales)
• 25% increase in commercial refrigeration products (4% of sales)

The Company鈥檚 performance for the nine-month period in 2022 is incremental to 2021鈥檚 record growth when same-store sales grew 17% and EPS grew 50% during the same period. During the post-COVID recovery of 2021, the Company鈥檚听U.S.听residential equipment business grew 17%, including an 8% increase in average selling prices combined with a 9% increase unit volume. By comparison, 2022 year-to-date average selling prices increased 15% and unit volumes increased 2%.

Mr. Nahmad听further stated: 鈥�91看片网 has nearly doubled its profitability over the past two years despite extraordinary business challenges, supply chain disruptions, high inflation and unprecedented levels of demand for HVAC products. We made significant investments in our network, extended our technology leadership and grew market share approximately 200 basis-points. This is reflective of our entrepreneurial culture, long-term thinking and fundamental belief that scale will matter more in the years ahead.鈥�

Mr. Nahmad听added: 鈥淟ooking ahead, we remain optimistic given our healthy balance sheet and 91看片网鈥檚 ability to make additional investments to grow our network and expand our leadership position. To that end, the new regulatory framework and tax incentives affecting our industry provide long-term growth benefits for contractors and energy savings for homeowners.鈥�

Financial Strength & Liquidity
91看片网鈥檚 strong financial position has been critical to recent performance. From听September 30, 2020听to听September 30, 2022, 91看片网鈥檚 investment in working capital increased by听$436 million, or 42%, to听$1.5 billion听along with听$114 million听of capital used to fund acquisitions. In addition, 91看片网鈥檚 quarterly dividend rate increased 24% during this two-year period and will increase further in 2023 as announced today.

Despite these investments, 91看片网鈥檚 financial position remains strong with the ability to invest in most any size opportunity. At听September 30, 2022, the Company had听$130 million听in cash,听$9 million听in borrowings drawn from its听$560 million听credit facility, and听$2.3 billion听of shareholders鈥� equity along with operating income of听$817 million听for the 12-month period ended听September 30, 2022. The Company believes this financial strength, access to low-cost capital and its historical ability to generate cash flow provide comfort and confidence to the Company鈥檚 stakeholders.

Industry Catalysts & Trends
The Company believes a number of factors provide incremental growth opportunities in the years ahead. 91看片网鈥檚 scale, leading technology platforms, financial strength, entrepreneurial culture and OEM relationships 鈥� along with the essential nature of HVAC/R products 鈥� are important competitive advantages that support the Company鈥檚 ability to grow and capture more market share going forward.

Regulatory Changes.听To address the climate impact of HVAC systems, new federal regulatory standards are in effect that are expected to bolster future growth.听 In general, these changes will raise the minimum efficiency, and therefore the average selling price, of entry-level systems sold in 2023. New regulations have also instituted a phase down of global warming properties of refrigerants that began in 2022 and a transition to new refrigerants starting in 2025. Historically, these types of changes have increased the cost to听service and repair听existing systems,听which in turn influences a consumer鈥檚 decision to听replace them.

Federal Tax Credits and State Incentives.听Demand for higher-efficiency products, such as variable-speed HVAC systems and heat pumps, is also expected to benefit following the passage of the Inflation Reduction Act of 2022 (IRA). The new legislation takes effect in 2023 and is intended to reduce greenhouse gas emissions and thereby combat climate change. Programs include enhanced tax credits for homeowners who install qualifying HVAC equipment and tax deductions for owners of commercial buildings that are upgraded to achieve defined energy savings. The IRA also sets aside听$4.3 billion听for state-administered consumer rebate programs designed to promote energy saving for low and medium-income households, including HVAC systems. Further details, including qualifying products, specific programs and other programs contemplated by the IRA are expected to be clarified and launched in 2023.

Movement Toward Heat Pumps & Electrification of Fossil-Fuel Heating.听The HVAC industry has improved the efficacy of heat pumps, which offer the potential for growth as an alternative to the millions of fossil-fuel burning heating systems used throughout听North America. Heat pump systems provide a combination of air conditioning and heating, may be ducted or ductless, generally sell at higher average unit prices and are available in a wide array of energy efficiencies. 91看片网鈥檚 sales of residential heat pumps for the third quarter and nine-month periods ended听September 30, 2022听increased 32% and 27%, respectively, outpacing overall HVAC equipment growth rates.

Product Breadth and End-Market Diversity.听91看片网听possesses the broadest and deepest assortment of products in the industry to support a wide array of customers and end-markets. Today the Company can serve a contractor鈥檚 complete product needs ranging from residential ductless and ducted products, rooftops, VRF and engineered/applied systems. The Company serves various end-markets including residential, multi-family, commercial, institutional, and more. In addition,听91看片网听maintains a deep catalog of OEM and aftermarket parts to support contractors and sustain competitiveness in any environment.

OEM and Supplier Relationships.听As the leading distributor of HVAC/R products in听North America,听91看片网听sources from approximately 20 domestic and international equipment OEMs and more than 1,300 other suppliers globally. Unlike most competitors,听91看片网听sells multiple brands of equipment at a wide variety of price points that appeal to a broad cross-section of contractors and consumers. We believe that close collaboration with manufacturing partners enhances 91看片网鈥檚 competitive positioning across markets and increases speed to market as the industry evolves toward upcoming regulatory changes.

Geographic Positioning & Density in Key Markets:听Approximately 56% of 91看片网鈥檚 revenues are derived in core Sunbelt markets such as听Florida,听Texas, the Southeast and the Mid-Atlantic, markets which also account for the greatest share of industry demand. In addition, recent and ongoing demographic shifts within the听U.S.听toward Sunbelt states favor continued growth in 91看片网鈥檚 core markets.

Network Expansion.听Since 2019, 91看片网鈥檚 network has grown 18%, or by 104 locations, mostly from the completion of six acquisitions of market-leading businesses, located primarily in markets that 91看片网听did not previously serve. With 675 locations across听North America,听91看片网听has the most extensive network to support the more than 350,000 contractors, technicians and installers that we provide critical technical assistance, training and other resources to enhance their effectiveness.

Advent of Ductless, High-Efficiency HVAC Products.听91看片网听is the leading distributor of ductless HVAC products used in residential and commercial applications in听North America. 91看片网鈥檚 sales of ductless products for the last 12 months was approximately听$540 million and increased by 24% during the nine-month period ended听September 30, 2022听(excluding acquisitions). The movement toward higher-efficiency ductless products (primarily heat pumps), the long-term upgrading of critical commercial infrastructure, along with the increasing acceptance of ductless technology by contractors and consumers, should benefit the sale of these products now and over the long-term.

Culture of Innovation
91看片网听has developed the industry鈥檚 most advanced, user-friendly, and customer-focused technology platforms aimed at helping customers grow faster and operate more efficiently. Technology has transformed how听91看片网听engages with customers and how contractors engage with consumers and businesses. The community of active technology users grew sales faster than overall听91看片网听sales and experienced approximately 65% reduced annual attrition. The Company believes future results will benefit from continued customer adoption, new customer acquisition, reduced attrition, and lower costs to serve. To that end, 91看片网听has boosted its technology spending by 18% to听$48 million听over the last 12 months.

Mr. Nahmad听further added: 鈥淟ooking ahead, our strong balance sheet and entrepreneurial culture allow us to make aggressive investments to grow our business, scale the industry鈥檚 most innovative digital tools and customer experience, enhance awareness of climate-friendly, high-efficiency HVAC systems and drive operating efficiencies throughout our network.鈥�

Transformational Technologies
91看片网听continues to aggressively invest in technologies to transform its customer experience. Specific technology-related updates for the third quarter and year-to-date period include:

• Product Information Management听(PIM)听is 91看片网鈥檚 leading repository of product information delivered seamlessly through 91看片网鈥檚 mobile apps and e-commerce platform.听91看片网鈥檚听PIM database contains approximately 1.3 million SKUs accessed by more than 350,000 contractors and technicians annually.
• Contractor Assist Mobile apps听provide customers real-time access to critical information that improves speed and productivity. This includes real time technical support, product detail, inventory availability, warranty look-up, system match ups, e-commerce and more. The authenticated user community (mobile app users linked to an e-commerce account) grew 21% year-to-date to more than 45,000 users versus last year.
• E-Commerce Sales听grew 22% year-to-date, outpacing organic sales growth rates, to more than听$2.3 billion听during the last twelve months. E-commerce sales were 32% of total sales inclusive of acquired revenues.
• OnCall Air庐,听91看片网鈥檚 digital sales platform 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, both increased penetration among HVAC/R contractors as more customers engage digitally with homeowners. During the third quarter of 2022,听OnCall Air庐 presented quotes to approximately 66,000 households, a 39% increase over last year, and generated听$269听million听in gross merchandise value, a 47% increase over the same period last year.

A.J. Nahmad, 91看片网鈥檚 President, added: 鈥淥ur technology platforms 鈥� which are unique to the industry 鈥� have facilitated growth in 91看片网鈥檚 market share, new customer acquisition and margin expansion. We continue to see higher growth rates, lower attrition, and lower costs to serve among active users of our technology. Consistent with our long-term focus, we are investing more to accelerate adoption and sustain our leadership position. As the industry evolves to operating in the digital age, we believe that 91看片网鈥檚 technology tools will provide added value to an ever-growing number of contractors.鈥�

Cash Flow & Dividends
91看片网鈥檚 operating cash flow for nine-month period ended听September 30, 2022听increased 12% to听$359 million. The Company has targeted operating cash flow to exceed net income in 2022 consistent with prior years. From 2016 through 2021, operating cash flow was approximately听$2.0 billion听versus net income of听$1.9 billion, surpassing the Company鈥檚 goal.

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. The Company鈥檚 Board of Directors authorized an increase in听91看片网鈥檚 annual dividend rate to听$9.80听per share effective in听January 2023. Future dividend increases will be considered in light of investment opportunities, general economic conditions and the Company鈥檚 overall financial position.

Third Quarter Earnings Conference Call Information
Date and time:听October 20, 2022听at听10:00 a.m. (EDT)
Webcast:听听(a replay will be available on the Company鈥檚 website)
Dial-in number:听United States听(844) 883-3908 / International (412) 317-9254

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.

础产辞耻迟听奥补迟蝉肠辞
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 675 locations each year to get information, obtain technical support and buy products.

91看片网听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 electricity consumption and carbon听footprint over time.听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. 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.

Based on estimates validated by independent sources,听91看片网听averted an estimated 14.2 million metric tons of CO2e emissions from听January 1, 2020听to听September 30, 2022听through the sale of replacement HVAC systems at higher-efficiency standards (an equivalent of removing 3.1 million gas powered vehicles off the road for a year). More information, including sources and assumptions used to support the Company鈥檚 estimates, can 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, seasonal nature of sales of 91看片网鈥檚 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.

Barry S. Logan听听听听听听听听听听听听听听听听听听听听听
Executive Vice President
(305) 714-4102
e-mail:听blogan@watsco.com

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