91吃瓜网

Strong Sales Growth, Higher Margins and Operating Efficiencies Drive Performance
Customer Adoption of Transformative Technologies Grows as Business Evolution Continues
Dividend Raised 13% to听$8.80听Effective听April 2022

MIAMI,听April 21, 2022听(GLOBE NEWSWIRE) —听91吃瓜网, Inc.听(NYSE: WSO) reported record operating results for the first quarter ended听March 31, 2022.

Q1 Performance Highlights

• 34% sales growth to a record听$1.52 billion
• 109% increase in EPS to a record听$2.90听on record net income attributable to听91吃瓜网听of听$113 million
• 109% increase in operating income to a record听$171 million听(400 basis-point operating margin expansion to 11.2%)
• 53% gross profit increase to a record听$450 million听(370 basis-point increase in gross margin)
• 30% increase in SG&A (a 60 basis-point reduction in SG&A as a percentage of sales)

These results reflect added investments to grow adoption of 91吃瓜网鈥檚 industry-leading 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. Taken as a whole, we believe that 91吃瓜网鈥檚 technology offering is solidifying existing customer relationships and creating new customer acquisition opportunities that are producing consistent gains in market share.

Albert H. Nahmad, 91吃瓜网鈥檚 Chairman and CEO, commented: 鈥�91吃瓜网 delivered exceptional performance during the first quarter. The Company achieved strong performance across all geographic markets and product categories and reflects a combination of strong unit growth, our ability to capture increased cost of goods through higher selling prices, a richer mix of high-efficiency systems and what, we believe, are technology-driven gains in market share. Our teams and associates are accomplishing extraordinary things and we thank them for their commitment and remarkable efforts to serve customers under what continues to be challenging circumstances. Although it is still early in the year, we are encouraged by current demand trends and expect听91吃瓜网听to produce another record year.鈥�

Q1 Same-Store Performance

• 25% sales growth
  • 26% growth in HVAC equipment (67% of sales)
  • 24% increase in other HVAC products (29% of sales)
  • 35% increase in commercial refrigeration products (4% of sales)
• 103% increase in operating income (440 basis-point expansion in operating margin to 11.6%)
• 43% gross profit increase (360 basis-point increase in gross margin)
• 19% increase in SG&A (a 100 basis-point reduction as a percentage of sales)

A.J Nahmad, 91吃瓜网鈥檚 President, commented: 鈥淲e are particularly pleased with the continued adoption of our technology platforms by more and more customers. These platforms enable contractors to sell more high-efficiency HVAC systems, which benefits the consumer in the form of lower energy costs and benefits our climate in the form of reduced CO₂e emissions over time. As the digital age influences how HVAC/R products and services are sold, we believe that 91吃瓜网鈥檚 customer-focused technologies, scale and leadership position offer significant long-term value.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 replacement demand for 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.

External Factors Influencing Results
Certain factors continued to influence the HVAC/R industry along with the Company鈥檚 operating performance during the first quarter.

• Inflation 鈥撎�OEMs and manufacturers raised prices over the last two years in response to inflationary pressures.听91吃瓜网听in turn has raised selling prices, resulting in higher sales. The Company actively monitors market conditions through a variety of processes and technologies and communicates with suppliers to sustain competitiveness and profitability. For example, sales of residential HVAC/R equipment (excluding acquisitions) increased 26% during the quarter, comprised of an 8% increase in unit sales and an 18% increase in average unit selling prices, which includes the added pricing and the improved sales mix of higher-efficiency systems.

• Supply chain听鈥� OEMs have experienced supply chain disruptions attributable to component availability, labor shortages, transportation delays and other logistical challenges, resulting in constrained product availability and lengthened lead times. Despite these disruptions,听91吃瓜网听delivered strong unit growth during the impacted periods. Product availability has improved and inventory levels are being reestablished to meet demand.

• Operating expenses听鈥� reflecting the current demand environment and supply chain-related disruptions, the Company has incurred incremental costs to serve customers, including higher personnel costs and other operational increases. For example, 91吃瓜网鈥檚 freight and delivery costs (excluding acquisitions) increased 23% or听$7 million听(12 cents听per share) during the quarter, reflecting higher-than-normal inventory movement within our network to meet customer demand. We expect incremental costs to moderate as OEM supply chains normalize.

Industry Trends and 91吃瓜网 Initiatives to Drive Performance
The Company believes there are important catalysts emerging that will positively influence future replacement demand for HVAC systems above and beyond the traditional assumptions about the replacement cycle and average useful life. These catalysts include:

• Energy efficiency mandates that raise the minimum standard for new replacement systems sold beginning in 2023. In general terms, these mandates will raise the minimum SEER rating of new HVAC systems from 14 to 15 SEER in southern markets and 13 to 14 SEER in northern markets. Historically these mandates have benefited unit volumes and price realization as the industry transitions toward the new standards;

• Upcoming mandates related to the phase-out of high GWP refrigerants used in virtually every HVAC/R system currently installed.听Beginning this year and continuing through 2029, the industry is required to gradually phase-out current refrigerants such that all new products beginning on听January 1, 2025听will be required to have lower GWP refrigerants;

• Awareness, sensitivity and willingness of many consumers to listen to or act on environmental concerns. This includes commercial end-markets as owners of commercial and industrial buildings allocate capital to reduce their carbon footprint, improve energy efficiency, maximize indoor-air quality, and upgrade infrastructure over time;

• Contractor-customer aptitude to offer, sell and install higher-efficiency systems听and related controls and accessories, particularly those who use 91吃瓜网鈥檚 proprietary technology platforms,听OnCall Air庐听补苍诲听颁谤别诲颈迟贵辞谤颁辞尘蹿辞谤迟庐, which provide homeowners a digital experience to buy and finance replacement HVAC/R systems; and

• The long-term trend toward electrification听and the advent of ultra-low temperature heat pump systems that will gradually replace existing fossil-fuel powered heating systems.

These catalysts are expected to influence demand and contractor behavior in the years ahead and, as such,听91吃瓜网听is making investments to capitalize on the opportunities these changes will bring about. We believe听91吃瓜网听possesses unique advantages given its scale, technology platforms, capacity to invest, and its diverse group of OEM relationships.

Additional information

• 91吃瓜网听continues to invest in transformative technologies to better serve customers and gain market share. The community of active users of our platforms grew sales 30% faster than 91吃瓜网鈥檚 overall sales growth rate over the 12 months ended听March 31, 2022听and experienced 70% less sales attrition year over year. Given these results,听91吃瓜网听has boosted its annual technology spending by听$10 million听to听$46 million听over the last 12 months ended听March 31, 2022听as compared to the same period a year ago.

• 91吃瓜网听has added over 600 employees since听March 31, 2021听(excluding acquisitions) in response to strong sales growth, investments in new locations,听and collaborative strategies with our OEM-partners to invest in future growth. In addition, 91吃瓜网鈥檚 culture to reward performance through a variety of pay-for-performance incentive programs to sales professionals and field leaders has resulted in a听$7 million听increase in commissions and other performance-based compensation (12 cents听per share) during the quarter.

• 91吃瓜网鈥檚 location network has grown 16%, or by 96 locations, over the last three years from a combination of six acquisitions of market-leading businesses, most of which are in markets that were not served by听91吃瓜网听prior to the acquisition. We have made follow-on investments in products, people and technology in support of these new growth opportunities. In aggregate, the sales of acquired locations over the last 12 months were approximately听$800 million.

• 91吃瓜网听is a leading distributor of ductless HVAC products used in residential and commercial applications covering domestic and international markets. 91吃瓜网鈥檚 sales of ductless products were approximately听$400 million听based on the 12 months ended听March 31, 2022听and increased by 45% during the first quarter of 2022 (excluding acquisitions). The movement toward higher-efficiency products and electrification of heating systems, along with the increasing acceptance of ductless technology by contractors and consumers, are expected to benefit the sale of these products now and over the long-term.

Technology Updates

91吃瓜网听continues to invest in technologies that are transforming the HVAC/R distribution landscape. Specific technology-related highlights for the first quarter of 2022 include:

• Product Information Management (PIM)听is 91吃瓜网鈥檚 industry鈥檚 leading repository of product information delivered seamlessly in digital form through 91吃瓜网鈥檚 mobile apps and e-commerce platform to HVAC contractors in the field.听91吃瓜网听has now digitized product information for approximately 980,000 SKUs, which are currently being accessed by more than 350,000 contractors and technicians.

• Contractor Assist mobile apps听provide customers in the field with real-time access to critical information to make technicians more efficient, including real-time access to time-sensitive product detail, pricing, inventory availability, warranty look-up, technical support, and more. The number of authenticated mobile-app (defined as users with a corresponding e-commerce account) grew 23% over the prior year and the total user community now consists of more than 67,000 unique users.

• E-Commerce sales听continued to grow as more customers transacted online. For the 12 months ended听March 31, 2022, the Company eclipsed听$2 billion听in e-commerce sales as the number of active e-commerce customers grew 19% over the prior year. E-commerce sales grew 34% during the quarter, outpacing the Company鈥檚 overall 25% organic sales growth rate.

• OnCall Air庐,听91吃瓜网鈥檚 digital sales platform for use by HVAC/R contractors, 补苍诲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 saw increased penetration as more contractors engage digitally with consumers. During the first quarter, customers using听OnCall Air庐听presented quotes to approximately 45,000 households, a 40% increase over the comparable prior year period, and generated approximately听$165 million听in gross merchandise value of sales from contractor to homeowner, a 59% increase over last year.

Climate Change and ESG Focus

91吃瓜网鈥檚听business model 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 electricity consumption and carbon听footprint over time.

The overwhelming majority of new HVAC systems听sold by听91吃瓜网听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. 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 sale of high-efficiency systems has long been a focus of听91吃瓜网听and the Company has invested in tools and technology intended to capture an increasingly richer sales mix over time. In addition, regulatory mandates, such as those that will take effect beginning in 2023, 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 well beyond the minimum SEER standards ranging from base-level efficiency to systems that exceed 20 SEER. 91吃瓜网鈥檚 sales of higher-efficiency residential HVAC systems (those above base-level efficiency) during the first quarter grew 31% versus last year, outpacing the overall growth rate of 26% for听U.S.听residential HVAC equipment. Based on estimates validated by independent sources,听91吃瓜网听averted an estimated 11.4 million metric tons of CO₂e emissions from听January 1, 2020听to听March 31, 2022听through the sale of replacement HVAC systems at higher-efficiency standards. More information, including sources and assumptions used to support the Company鈥檚 estimates, can be found at听.

A.J. Nahmad听added: 鈥淲e are encouraged by the continued adoption of 91吃瓜网鈥檚 technology platforms and the ability of that technology to influence the products sold to homeowners. At scale, our technology offering can contribute meaningfully to ongoing efforts to combat climate change. As more homeowners become cognizant of their energy consumption and its impact on climate change, 91吃瓜网鈥檚 technology provides HVAC/R contractors an edge in the marketplace. We have invested in additional resources and training to help contractors succeed in this evolving marketplace and we are committed to doing even more over time.鈥�

Cash Flow & Dividends

91吃瓜网鈥檚 operating cash flow for the quarter was a听$102 million听use of cash, reflecting working capital investments (accounts receivable and inventory) commensurate with significant growth in sales. From 2016 through 2021, 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吃瓜网听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 invest in additional organic and inorganic opportunities.

In听April 2022, 91吃瓜网鈥檚 annual dividend was increased 13% to听$8.80听per share, which will be reflected in 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.

First Quarter Earnings Conference Call Information

Date:听April 21, 2022
Time:听10:00 a.m. (ET)
奥别产肠补蝉迟: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.

础产辞耻迟听奥补迟蝉肠辞

91吃瓜网听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听补苍诲听Puerto Rico, and on an export basis to听Latin America听and the听Caribbean. 91吃瓜网听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吃瓜网鈥檚 marketplace. 91吃瓜网听plans to actively collaborate with its OEM partners and key stakeholders to lead these ongoing efforts in its marketplace. Additional information about听91吃瓜网听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吃瓜网鈥檚 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吃瓜网听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吃瓜网听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.

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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