☒ | Annual Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 |
2019
☐ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common stock, $0.50 par value | WSO | New York Stock Exchange | ||
Class B common stock, $0.50 par value | WSOB | New York Stock Exchange |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form10-K. ☒
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
20192016PART I Page Item 1.3Item 1A.10Item 1B.13Item 2.13Item 3.13Item 4.13III Item 5. 14 Item 6. 15 7.6. 15 Item 7A. 15 Item 8. 15 Item 9. 15 Item 9A. 15Item 9B. 16 Item 15. 16SIGNATURES
ITEM 1. | BUSINESS |
We have built our network of locations
Technology Strategy
We are actively transforming our business by investing in scalable technology platforms to further strengthen our leadership position, accelerate sales and profit growth, increase the speed and convenience of serving customers and extend our reach into new geographies and sales channels. Our initiatives include: (i) the development and implementation of mobile applications for iOS and Android devices focused on helping our customers operate more efficiently and interact with our locations more easily; (ii) enablinge-commerce between our customers and our subsidiaries; (iii) supply chain optimization; (iv) building the largest source of digitized HVAC/R product information; (v) the development and implementation of business analytics systems and related data sets, which provide enhanced management tools; and (vi) maintaining our website, ACDoctor.com, which educates consumers about energy efficient HVAC solutions and financial incentives related to the installation of energy efficient systems and connects them with high quality contractors.
2018.
The markets we serve are as follows:
% of Revenues for the Year Ended December 31, 2016 | Number of Locations as of December 31, 2016 | |||||||
United States | 87 | % | 507 | |||||
Latin America and the Caribbean | 7 | % | 21 | |||||
Canada | 6 | % | 37 | |||||
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Total | 100 | % | 565 | |||||
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The markets we serve are as follows: | % of Revenues for the Year Ended December 31, 2019 | Number of Locations as of December 31, 2019 | ||||||
United States | 88 | % | 544 | |||||
Canada | 6 | % | 36 | |||||
Latin America and the Caribbean | 6 | % | 26 | |||||
Total | 100 | % | 606 | |||||
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Florida | 100 | |||
Texas | 85 | |||
North Carolina | 45 | |||
California | 36 | |||
Georgia | 33 | |||
South Carolina | 31 | |||
Virginia | 24 | |||
Tennessee | 22 | |||
New York | 20 | |||
Louisiana | 18 | |||
New Jersey | 15 | |||
Pennsylvania | 15 | |||
Alabama | 10 | |||
Arizona | 9 | |||
Connecticut | 8 | |||
Massachusetts | 8 | |||
Mississippi | 8 | |||
Missouri | 8 | |||
Kansas | 6 | |||
Maryland | 6 | |||
Oklahoma | 5 | |||
Utah | 5 | |||
Arkansas | 4 | |||
Indiana | 2 | |||
Iowa | 2 | |||
Kentucky | 2 | |||
Maine | 2 | |||
Nebraska | 2 | |||
Nevada | 2 | |||
South Dakota | 2 | |||
West Virginia | 2 | |||
Colorado | 1 | |||
Delaware | 1 | |||
New | 1 | |||
New Mexico | 1 | |||
North Dakota | 1 | |||
Rhode Island | 1 | |||
Vermont | 1 | |||
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United States | 544 | |||
Canada | 36 | |||
Mexico | 13 | |||
Puerto Rico | 13 | |||
Total | 606 | |||
In July 2012, we exercised our option to acquireWe have an additional 10% ownership80% controlling interest in Carrier Enterprise I, which increased our ownership interest to 70%; and on JulyCarrier has a 20%2014, we exercised our last remaining option to acquire an additional 10% ownership interest in2019, Carrier Enterprise I which increased our controlling interest to 80%. Neither we nor Carrier has any remaining options to purchase additional ownership interestsacquired substantially all of the HVAC assets and assumed certain of the liabilities of Peirce-Phelps, Inc., an HVAC distributor operating from 19 locations in Carrier Enterprise I, or anyPennsylvania, New Jersey, and Delaware.
stand-alone-subsidiaries.
Financial Information About Geographic Areas
Our operations are primarily withinenergy efficiency of these motors, and, consequently, the United States, including Puerto Rico, Canada and Mexico. Products are also sold fromfurnaces in which they operate. The mandate dictates that residential furnace fans manufactured in the United States on an export-only basis to portionsor after the effective date of Latin America and the Caribbean Basin. The following tables set forth revenues and long-lived assets by geographic area (in millions):
Years Ended December 31, | 2016 | 2015 | 2014 | |||||||||
Revenues: | ||||||||||||
United States | $ | 3,813 | $ | 3,711 | $ | 3,525 | ||||||
Canada | 267 | 264 | 301 | |||||||||
Mexico | 141 | 138 | 119 | |||||||||
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Total Revenues | $ | 4,221 | $ | 4,113 | $ | 3,945 | ||||||
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December 31, | 2016 | 2015 | 2014 | |||||||||
Long-Lived Assets: | ||||||||||||
United States | $ | 468 | $ | 442 | $ | 435 | ||||||
Canada | 156 | 155 | 187 | |||||||||
Mexico | 5 | 5 | 5 | |||||||||
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Total Long-Lived Assets | $ | 629 | $ | 602 | $ | 627 | ||||||
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Revenues are attributed to countries basedJuly 3, 2019, must have a Fan Energy Rating (“FER”) value reduction of 12% or 46% in watts/cfm, depending on the locationtype of furnace. To meet these new standards, most manufacturers have replaced the store from whichpermanent split capacitor blower motors in residential furnaces with electronic controlled motors. At December 31, 2019, we had substantially completed the sale occurred. Long-lived assets consisttransition of property and equipment, goodwill and intangible assets.
our inventory of residential furnaces to those meeting the updated FER standards.
ITEM 1A. | RISK FACTORS |
In addition, a novel strain of coronavirus,
Long-Lived Assets
Loss Contingencies
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
Facilities
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Stock Exchange
Our 2016 Annual Report contains “Information on Common Stock,” which contains the high and low sales prices and dividend information with respect to our
registered shareholders.
2019.
Comparison
Copyright© 2016YEAR CUMULATIVE TOTAL RETURN*
* | $100 invested on 12/31/14 in stock or index, including reinvestment of dividends. |
Watsco, Inc. Watsco Class B NYSE MKT Composite S&P Midcap 400 12/11 12/12 12/13 12/14 12/15 12/16 100.00 126.57 164.51 187.20 209.74 272.66 100.00 131.52 172.83 195.69 222.23 285.86 100.00 106.15 115.07 118.71 106.60 117.67 100.00 117.88 157.37 172.74 168.98 204.03
12/31/14 | 12/31/15 | 12/31/16 | 12/31/17 | 12/31/18 | 12/31/19 | |||||||||||||||||||
Watsco, Inc. | 100.00 | 112.04 | 145.65 | 172.39 | 145.63 | 196.53 | ||||||||||||||||||
Watsco Class B | 100.00 | 113.56 | 146.08 | 171.07 | 141.30 | 197.69 | ||||||||||||||||||
Russell 2000 Index | 100.00 | 95.59 | 115.95 | 132.94 | 118.30 | 148.49 | ||||||||||||||||||
S&P MidCap 400 Index | 100.00 | 97.82 | 118.11 | 137.30 | 122.08 | 154.07 | ||||||||||||||||||
S&P 500 Index | 100.00 | 101.38 | 113.51 | 138.29 | 132.23 | 173.86 |
Dividends
Cash dividends per share of $3.60, $2.80 and $2.00 for both Common and Class B common stock were paid in 2016, 2015 and 2014, respectively. Future dividends will be declared and paid at the sole discretion of the Board of Directors and will depend upon such factors as cash flow generated by operations, profitability, financial condition, cash requirements, future prospects and other factors deemed relevant by our Board of Directors.
ITEM 6. | SELECTED FINANCIAL DATA |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
ITEM 9B. | OTHER INFORMATION |
ITEM 15. | EXHIBITS, |
(a)(1) | Financial Statements | |
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(2) | Financial Statement Schedules | |
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(3) | Exhibits 10-K or, where indicated, incorporated by reference to other filings. |
3.1 | ||
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3.2 | ||
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4.1 | Specimen form of Class B Common Stock Certificate (filed as Exhibit 4.6 to the Registration Statement on Form S-1 (No.33-56646) and incorporated herein by reference). | |
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4.2 | Specimen form of Common Stock Certificate (filed as Exhibit 4.4 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1994 and incorporated herein by reference). | |
(P) | ||
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4.3 | ||
10.1(a) | ||
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10.1(b) | ||
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10.1(c) | ||
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10.1(d) |
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10.1(e) | ||
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10.1(f) | ||
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10.1(g) | ||
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10.1(h) | ||
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10.1(i) | ||
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10.1(k) | ||
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10.1(l) | ||
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10.1(m) | ||
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10.1(n) | ||
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10.1(o) | ||
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10.1(q) | ||
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10.1(r) | ||
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10.1(u) | ||
10.2 |
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21.1 | ||
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23.1 | ||
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31.1 | ||
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31.3 |
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32.1 | ||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. # | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. # | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. # | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. # | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. # | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. # | |
104 | The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline XBRL. |
# | filed herewith. |
+ | furnished herewith. |
* | Management contract or compensation plan or arrangement. |
ITEM 16.
WATSCO, INC. | ||||||
February 28, 2020 | By: | /s/ Albert H. Nahmad | ||||
Albert H. Nahmad, Chief Executive Officer | ||||||
February 28, 2020 | By: | /s/ | ||||
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Ana M. Menendez, Chief Financial Officer |
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SIGNATURE | TITLE | DATE | ||
/s/ A lbert H . Nahmad | Chairman of the Board and Chief Executive Officer | February | ||
Albert H. Nahmad | (principal executive officer) | |||
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/s/ A na m . Menendez | Chief Financial Officer | February 28, 2020 | ||
Ana M. Menendez |
(principal accounting officer and principal financial officer) | |||
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/s/ C esar L. Alvarez | Director | February 28, 2020 | ||
Cesar L. Alvarez | ||||
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/s/ J. M ichael Custer | Director | February 28, 2020 | ||
J. Michael Custer | ||||
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/s/ D enise Dickins | Director | February 28, 2020 | ||
Denise Dickins | ||||
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/s/ B rian e . Keeley | Director | February 28, 2020 | ||
Brian E. Keeley | ||||
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/s/ B ob L. Moss | Director | February 28, 2020 | ||
Bob L. Moss | ||||
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/s/ A aron J. Nahmad | Director and President | February |
Exhibit Index
Aaron J. Nahmad | ||||
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/s/ S teven Rubin | Director | February 28, 2020 | ||
Steven Rubin | ||||
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/s/ G eorge P. Sape | ||||
Director | February 28, 2020 | |||
George P. Sape | ||||
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