Cover Page
Cover Page - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 25, 2020 | Jun. 28, 2019 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Amendment Flag | false | ||
Entity Registrant Name | WATSCO INC | ||
Entity Central Index Key | 0000105016 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Shell Company | false | ||
Entity File Number | 1-5581 | ||
Entity Small Business | false | ||
Entity Incorporation, State or Country Code | FL | ||
Entity Emerging Growth Company | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity Tax Identification Number | 59-0778222 | ||
Entity Address, Address Line One | 2665 South Bayshore Drive | ||
Entity Address, State or Province | FL | ||
Entity Address, Address Line Two | Suite 901 | ||
Entity Address, City or Town | Miami | ||
Entity Address, Postal Zip Code | 33133 | ||
City Area Code | 305 | ||
Local Phone Number | 714-4100 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 5,328 | ||
Common Stock [Member] | |||
Document Information [Line Items] | |||
Trading Symbol | WSO | ||
Security Exchange Name | NYSE | ||
Title of 12(b) Security | Common stock, $0.50 par value | ||
Entity Common Stock, Shares Outstanding | 32,717,924 | ||
Common Class B [Member] | |||
Document Information [Line Items] | |||
Trading Symbol | WSOB | ||
Security Exchange Name | NYSE | ||
Title of 12(b) Security | Class B common stock, $0.50 par value | ||
Entity Common Stock, Shares Outstanding | 5,564,890 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |||
Revenues | $ 4,770,362 | [1] | $ 4,546,653 | [1],[2] | $ 4,341,955 |
Cost of sales | 3,613,406 | 3,426,401 | 3,276,296 | ||
Gross profit | 1,156,956 | 1,120,252 | 1,065,659 | ||
Selling, general and administrative expenses | 800,328 | 757,452 | 715,671 | ||
Other income | 10,256 | 9,282 | 3,886 | ||
Operating income | 366,884 | 372,082 | 353,874 | ||
Interest expense, net | 4,032 | 2,740 | 6,363 | ||
Income before income taxes | 362,852 | 369,342 | 347,511 | ||
Income taxes | 67,077 | 72,813 | 90,221 | ||
Net income | 295,775 | 296,529 | 257,290 | ||
Less: net income attributable to non-controlling interest | 49,825 | 53,597 | 49,069 | ||
Net income attributable to Watsco, Inc. | $ 245,950 | $ 242,932 | $ 208,221 | ||
Earnings per share for Common and Class B common stock: | |||||
Basic | $ 6.51 | [3] | $ 6.50 | [3] | $ 5.81 |
Diluted | $ 6.50 | [3] | $ 6.49 | [3] | $ 5.81 |
[1] | Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly evenly distributed throughout the year except for dependence on housing completions and related weather and economic conditions. | ||||
[2] | Effective January 1, 2018, we adopted the provisions of accounting guidance related to revenue recognition. Amounts prior to January 1, 2018 have not been adjusted and remain as originally reported for such periods. See Note 3. | ||||
[3] | Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Net income | $ 295,775 | $ 296,529 | $ 257,290 |
Other comprehensive income (loss), net of tax | |||
Foreign currency translation adjustment | 12,298 | (20,493) | 15,993 |
Unrealized (loss) gain on cash flow hedging instruments | (1,461) | 1,918 | (702) |
Reclassification of gain on cash flow hedging instruments into earnings | (352) | (157) | (358) |
Unrealized loss on equity securities | (15) | ||
Other comprehensive income (loss) | 10,485 | (18,732) | 14,918 |
Comprehensive income | 306,260 | 277,797 | 272,208 |
Less: comprehensive income attributable to non-controlling interest | 53,392 | 46,913 | 54,678 |
Comprehensive income attributable to Watsco, Inc. | $ 252,868 | $ 230,884 | $ 217,530 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 74,454 | $ 82,894 |
Accounts receivable, net | 533,810 | 501,908 |
Inventories | 920,786 | 837,129 |
Other current assets | 17,680 | 19,875 |
Total current assets | 1,546,730 | 1,441,806 |
Property and equipment, net | 98,523 | 91,046 |
Operating lease right-of-use assets | 223,369 | |
Goodwill | 411,217 | 391,998 |
Intangible assets, net | 172,004 | 147,851 |
Investment in unconsolidated entity | 94,833 | 80,157 |
Other assets | 9,485 | 8,175 |
Total assets | 2,556,161 | 2,161,033 |
Current liabilities: | ||
Current portion of other long-term obligations | 69,421 | 246 |
Accounts payable | 239,666 | 200,229 |
Accrued expenses and other current liabilities | 152,630 | 157,091 |
Total current liabilities | 461,717 | 357,566 |
Long-term obligations: | ||
Borrowings under revolving credit agreement | 155,700 | 135,200 |
Operating lease liabilities, net of current portion | 154,271 | |
Other long-term obligations, net of current portion | 2,009 | 552 |
Total long-term obligations | 311,980 | 135,752 |
Deferred income taxes and other liabilities | 67,697 | 66,002 |
Commitments and contingencies | ||
Watsco, Inc. shareholders' equity: | ||
Preferred stock, $0.50 par value, 10,000,000 shares authorized; no shares issued | ||
Paid-in capital | 907,877 | 832,121 |
Accumulated other comprehensive loss, net of tax | (39,050) | (45,968) |
Retained earnings | 632,507 | 627,969 |
Treasury stock, at cost, 4,823,988 shares of Common stock and 48,263 shares of Class B common stock at both December 31, 2019 and 2018, respectively | (87,440) | (87,440) |
Total Watsco, Inc. shareholders' equity | 1,435,427 | 1,347,849 |
Non-controlling interest | 279,340 | 253,864 |
Total shareholders' equity | 1,714,767 | 1,601,713 |
Total liabilities and shareholders' equity | 2,556,161 | 2,161,033 |
Common Stock | ||
Watsco, Inc. shareholders' equity: | ||
Common stock, $0.50 par value | 18,768 | 18,476 |
Class B Common Stock | ||
Watsco, Inc. shareholders' equity: | ||
Common stock, $0.50 par value | $ 2,765 | $ 2,691 |
Consolidated Balance Sheets (
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Preferred stock, par value | $ 0.50 | $ 0.50 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common Stock | ||
Common stock, par value | $ 0.50 | $ 0.50 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares outstanding | 37,536,363 | 36,952,762 |
Treasury stock, shares | 4,823,988 | 4,823,988 |
Class B Common Stock | ||
Common stock, par value | $ 0.50 | $ 0.50 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares outstanding | 5,529,944 | 5,381,132 |
Treasury stock, shares | 48,263 | 48,263 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Alert Labs Inc. | Peirce-Phelps, Inc. | Dunphey & Associates Supply Co., Inc. | N&S Supply of Fishkill, Inc | Common Stock, Class B Common Stock and Preferred Stock | Common Stock, Class B Common Stock and Preferred StockAlert Labs Inc. | Common Stock, Class B Common Stock and Preferred StockPeirce-Phelps, Inc. | Common Stock, Class B Common Stock and Preferred StockDunphey & Associates Supply Co., Inc. | Common Stock, Class B Common Stock and Preferred StockN&S Supply of Fishkill, Inc | Paid-In Capital | Paid-In CapitalAlert Labs Inc. | Paid-In CapitalPeirce-Phelps, Inc. | Paid-In CapitalDunphey & Associates Supply Co., Inc. | Paid-In CapitalN&S Supply of Fishkill, Inc | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Non-controlling Interest |
Beginning balance at Dec. 31, 2016 | $ 1,251,748 | $ 20,951 | $ 592,350 | $ (43,530) | $ 550,482 | $ (114,425) | $ 245,920 | ||||||||||||
Beginning balance (in shares) at Dec. 31, 2016 | 35,530,403 | ||||||||||||||||||
Net income | 257,290 | 208,221 | 49,069 | ||||||||||||||||
Other comprehensive gain (loss) | 14,918 | 9,309 | 5,609 | ||||||||||||||||
Issuances of non-vested restricted shares of common stock | $ 88 | (88) | |||||||||||||||||
Issuances of non-vested restricted shares of common stock (in shares) | 176,899 | ||||||||||||||||||
Forfeitures of non-vested restricted shares of common stock | $ (5) | 5 | |||||||||||||||||
Forfeitures of non-vested restricted shares of common stock (in shares) | (10,000) | ||||||||||||||||||
Common stock contribution to 401(k) plan | 2,428 | $ 8 | 2,420 | ||||||||||||||||
Common stock contribution to 401(k) plan (in shares) | 16,389 | ||||||||||||||||||
Stock issuances from exercise of stock options and employee stock purchase plan | 5,287 | $ 24 | 5,263 | ||||||||||||||||
Stock issuances from exercise of stock options and employee stock purchase plan (in shares) | 49,166 | ||||||||||||||||||
Retirement of common stock | (4,717) | $ (16) | (4,701) | ||||||||||||||||
Retirement of common stock (in shares) | (32,804) | ||||||||||||||||||
Share-based compensation | 13,536 | 13,536 | |||||||||||||||||
Net proceeds from the sale of Common stock | 247,433 | 220,448 | 26,985 | ||||||||||||||||
Net proceeds from the sale of Common stock (in shares) | 1,498,662 | ||||||||||||||||||
Cash dividends declared and paid on Common and Class B common stock | (164,147) | (164,147) | |||||||||||||||||
Investment in unconsolidated entity | 12,720 | 12,720 | |||||||||||||||||
Decrease in non-controlling interest in Carrier Enterprise II | (42,688) | (25,225) | (17,463) | ||||||||||||||||
Distributions to non-controlling interest | (42,831) | (42,831) | |||||||||||||||||
Ending balance at Dec. 31, 2017 | 1,550,977 | $ 21,050 | 804,008 | (34,221) | 594,556 | (87,440) | 253,024 | ||||||||||||
Ending balance (in shares) at Dec. 31, 2017 | 37,228,715 | ||||||||||||||||||
Cumulative-effect adjustment at Dec. 31, 2017 | 301 | (301) | |||||||||||||||||
Net income | 296,529 | 242,932 | 53,597 | ||||||||||||||||
Other comprehensive gain (loss) | (18,732) | (12,048) | (6,684) | ||||||||||||||||
Issuances of non-vested restricted shares of common stock | $ 71 | (71) | |||||||||||||||||
Issuances of non-vested restricted shares of common stock (in shares) | 142,865 | ||||||||||||||||||
Forfeitures of non-vested restricted shares of common stock | $ (5) | 5 | |||||||||||||||||
Forfeitures of non-vested restricted shares of common stock (in shares) | (10,000) | ||||||||||||||||||
Common stock contribution to 401(k) plan | 2,945 | $ 9 | 2,936 | ||||||||||||||||
Common stock contribution to 401(k) plan (in shares) | 17,318 | ||||||||||||||||||
Stock issuances from exercise of stock options and employee stock purchase plan | 7,852 | $ 32 | 7,820 | ||||||||||||||||
Stock issuances from exercise of stock options and employee stock purchase plan (in shares) | 64,423 | ||||||||||||||||||
Retirement of common stock | (5,044) | $ (14) | (5,030) | ||||||||||||||||
Retirement of common stock (in shares) | (28,781) | ||||||||||||||||||
Share-based compensation | 15,631 | 15,631 | |||||||||||||||||
Cash dividends declared and paid on Common and Class B common stock | (209,218) | (209,218) | |||||||||||||||||
Common stock issued | $ 6,846 | $ 24 | $ 6,822 | ||||||||||||||||
Common stock issued (in shares) | 47,103 | ||||||||||||||||||
Investment in unconsolidated entity | 752 | 752 | |||||||||||||||||
Distributions to non-controlling interest | (46,825) | (46,825) | |||||||||||||||||
Ending balance at Dec. 31, 2018 | 1,601,713 | $ 21,167 | 832,121 | (45,968) | 627,969 | (87,440) | 253,864 | ||||||||||||
Ending balance (in shares) at Dec. 31, 2018 | 37,461,643 | ||||||||||||||||||
Net income | 295,775 | 245,950 | 49,825 | ||||||||||||||||
Other comprehensive gain (loss) | 10,485 | 6,918 | 3,567 | ||||||||||||||||
Issuances of non-vested restricted shares of common stock | $ 87 | (87) | |||||||||||||||||
Issuances of non-vested restricted shares of common stock (in shares) | 173,940 | ||||||||||||||||||
Forfeitures of non-vested restricted shares of common stock | $ (7) | 7 | |||||||||||||||||
Forfeitures of non-vested restricted shares of common stock (in shares) | (12,837) | ||||||||||||||||||
Common stock contribution to 401(k) plan | 4,274 | $ 15 | 4,259 | ||||||||||||||||
Common stock contribution to 401(k) plan (in shares) | 30,715 | ||||||||||||||||||
Stock issuances from exercise of stock options and employee stock purchase plan | 13,464 | $ 53 | 13,411 | ||||||||||||||||
Stock issuances from exercise of stock options and employee stock purchase plan (in shares) | 105,288 | ||||||||||||||||||
Retirement of common stock | (1,652) | $ (5) | (1,647) | ||||||||||||||||
Retirement of common stock (in shares) | (10,623) | ||||||||||||||||||
Share-based compensation | 16,537 | 16,537 | |||||||||||||||||
Cash dividends declared and paid on Common and Class B common stock | (241,412) | (241,412) | |||||||||||||||||
Common stock issued | $ 58,344 | $ 6,891 | $ 4,032 | $ 186 | $ 25 | $ 12 | $ 58,158 | $ 6,866 | $ 4,020 | ||||||||||
Common stock issued (in shares) | 372,543 | 50,952 | 22,435 | ||||||||||||||||
Investment in unconsolidated entity | 988 | 988 | |||||||||||||||||
Decrease in non-controlling interest in Carrier Enterprise II | (32,400) | (25,768) | (6,632) | ||||||||||||||||
Distributions to non-controlling interest | (39,272) | (39,272) | |||||||||||||||||
Investment in Peirce-Phelps, Inc. | 17,000 | 17,000 | |||||||||||||||||
Ending balance at Dec. 31, 2019 | $ 1,714,767 | $ 21,533 | $ 907,877 | $ (39,050) | $ 632,507 | $ (87,440) | $ 279,340 | ||||||||||||
Ending balance (in shares) at Dec. 31, 2019 | 38,194,056 |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash dividends declared and paid, common stock | $ 6.40 | $ 5.60 | $ 4.60 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net income | $ 295,775 | $ 296,529 | $ 257,290 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 24,512 | 22,095 | 22,033 |
Share-based compensation | 17,032 | 15,508 | 13,293 |
Non-cash contribution to 401(k) plan | 4,274 | 2,945 | 2,428 |
Provision for doubtful accounts | 3,948 | 2,619 | 1,991 |
Deferred income tax provision (benefit) | 1,278 | 8,290 | (10,735) |
(Gain) loss on sale of property and equipment | (585) | 27 | 115 |
Other income from investment in unconsolidated entity | (10,256) | (9,282) | (3,886) |
Changes in operating assets and liabilities, net of effects of acquisitions: | |||
Accounts receivable | 8,457 | (28,831) | (1,676) |
Inventories | (15,525) | (78,954) | (73,403) |
Accounts payable and other liabilities | 12,734 | (57,398) | 99,956 |
Other, net | (5,873) | (2,991) | (886) |
Net cash provided by operating activities | 335,771 | 170,557 | 306,520 |
Cash flows from investing activities: | |||
Business acquisitions, net of cash acquired | (59,672) | (5,626) | |
Capital expenditures | (17,805) | (17,153) | (17,876) |
Investment in unconsolidated entity | (4,940) | (3,760) | (63,600) |
Proceeds from sale of property and equipment | 1,380 | 228 | 168 |
Net cash used in investing activities | (81,037) | (26,311) | (81,308) |
Cash flows from financing activities: | |||
Dividends on Common and Class B common stock | (241,412) | (209,218) | (164,147) |
Distributions to non-controlling interest | (39,272) | (46,825) | (42,831) |
Purchase of additional ownership from non-controlling interest | (32,400) | (42,688) | |
Repurchases of common stock to satisfy employee withholding tax obligations | (1,528) | (3,782) | (4,674) |
Net (repayments) proceeds of other long-term obligations | (1,240) | 269 | (19) |
Payment of fees related to revolving credit agreement | (790) | ||
Net proceeds from the sale of Common stock | 247,744 | ||
Proceeds from non-controlling interest for investment in unconsolidated entity | 988 | 752 | 12,720 |
Net proceeds from issuances of common stock | 13,341 | 6,591 | 5,244 |
Proceeds from non-controlling interest for investment in Peirce-Phelps, Inc. | 17,000 | ||
Net cash used in financing activities | (264,023) | (139,603) | (202,145) |
Effect of foreign exchange rate changes on cash and cash equivalents | 849 | (2,245) | 1,419 |
Net (decrease) increase in cash and cash equivalents | (8,440) | 2,398 | 24,486 |
Cash and cash equivalents at beginning of year | 82,894 | 80,496 | 56,010 |
Cash and cash equivalents at end of year | 74,454 | 82,894 | 80,496 |
Prior Revolving Credit Agreement [Member] | |||
Cash flows from financing activities: | |||
Net repayments under revolving credit agreement | (21,800) | $ (213,494) | |
Revolving Credit Agreement [Member] | |||
Cash flows from financing activities: | |||
Net repayments under revolving credit agreement | $ 20,500 | $ 135,200 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization, Consolidation and Presentation Watsco, Inc. (collectively with its subsidiaries, “Watsco,” “we,” “us,” or “our”) was incorporated in Florida in 1956 and is the largest distributor of air conditioning, heating and refrigeration equipment and related parts and supplies (“HVAC/R”) in the HVAC/R distribution industry in North America. At December 31, 2019, we operated from 606 locations in 38 U.S. states, Canada, Mexico, and Puerto Rico with additional market coverage on an export basis to portions of Latin America and the Caribbean. The consolidated financial statements include the accounts of Watsco, all of its wholly owned subsidiaries and the accounts of three joint ventures with Carrier Corporation (“Carrier”), in each of which Watsco maintains a controlling interest. All significant intercompany balances and transactions have been eliminated in consolidation. Foreign Currency Translation and Transactions The functional currency of our operations in Canada is the Canadian dollar. Foreign currency denominated assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date, and income and expense items are translated at the average exchange rates in effect during the applicable period. The aggregate effect of foreign currency translation is recorded in accumulated other comprehensive loss in our consolidated balance sheets. Our net investment in our Canadian operations is recorded at the historical rate and the resulting foreign currency translation adjustments are included in accumulated other comprehensive loss in our consolidated balance sheets. Gains or losses resulting from transactions denominated in U.S. dollars are recognized in earnings primarily within cost of sales in our consolidated statements of income. Our operations in Mexico consider their functional currency to be the U.S. dollar because the majority of their transactions are denominated in U.S. dollars. Gains or losses resulting from transactions denominated in Mexican pesos are recognized in earnings primarily within selling, general and administrative expenses in our consolidated statements of income. Equity Method Investments Investments in which we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other assets in our consolidated balance sheets. Under this method of accounting, our proportionate share of the net income or loss of the investee is included in other income in our consolidated statements of income. The excess, if any, of the carrying amount of our investment over our ownership percentage in the underlying net assets of the investee is attributed to certain fair value adjustments with the remaining portion recognized as goodwill. Reclassifications Certain reclassifications of prior year amounts have been made to conform to the 2019 presentation. These reclassifications had no effect on net income or earnings per share as previously reported. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Significant estimates include valuation reserves for accounts receivable, inventories and income taxes, reserves related to loss contingencies and the valuation of goodwill, indefinite-lived intangible assets and long-lived assets. While we believe that these estimates are reasonable, actual results could differ from such estimates. Cash Equivalents All highly liquid instruments purchased with original maturities of three months or less are considered to be cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable primarily consist of trade receivables due from customers and are stated at the invoiced amount less an allowance for doubtful accounts. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments. When preparing these estimates, we consider a number of factors, including the aging of a customer’s account, past transactions with customers, creditworthiness of specific customers, historical trends and other information. Upon determination that an account is uncollectible, the receivable balance is written off. At December 31, 2019 and 2018, the allowance for doubtful accounts totaled $ and $ , respectively. Inventories Inventories consist of air conditioning, heating and refrigeration equipment and related parts and supplies and are valued at the lower of cost using the weighted-average cost basis and the first-in, first-out Vendor Rebates We have arrangements with several vendors that provide rebates payable to us when we achieve any of a number of measures, generally related to the volume level of purchases. We account for such rebates as a reduction of inventory until we sell the product, at which time such rebates are reflected as a reduction of cost of sales in our consolidated statements of income. Throughout the year, we estimate the amount of the rebate based on our estimate of purchases to date relative to the purchase levels that mark our progress toward earning the rebates. We continually revise our estimates of earned vendor rebates based on actual purchase levels. At December 31, 2019 and 2018, we had $12,007 and $11,603, respectively, of rebates recorded as a reduction of inventory. Substantially all vendor rebate receivables are collected within three months immediately following the end of the year. Vendor rebates that are earned based on products sold are credited directly to cost of sales in our consolidated statements of income. Equity Securities Investments in equity securities are recorded at fair value using the specific identification method and are included in other assets in our consolidated balance sheets. Unrealized holding gains and losses, net of deferred taxes, were included in accumulated other comprehensive loss within shareholders’ equity for 2017. For 2019 and 2018, changes in the fair value of equity securities were recognized through income rather than comprehensive income. Dividend and interest income are recognized in the statements of income when earned. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is computed using the straight-line method. Buildings and improvements are depreciated or amortized over estimated useful lives ranging from 3-40 5-7 3-10 Operating and Finance Leases We have operating leases for real property, vehicles and equipment, and finance leases primarily for vehicles. Operating leases are included in operating lease right-of-use ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the applicable commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement dates of the respective leases in determining the present value of the applicable lease payments. Operating lease ROU assets also include any lease pre-payments 1-10 are reasonably certain that we will exercise. Certain real property lease agreements have lease and non-lease components, which are generally accounted for as a single lease component. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease payments for short-term leases, which are 12 months or less without a purchase option that is likely to be exercised, are recognized as lease cost on a straight-line basis over the lease term. Goodwill and Intangible Assets Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair value of the net identified tangible and intangible assets acquired. We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. We test goodwill for impairment by first comparing the fair value of our reporting unit to its carrying value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of impairment loss. On January 1, 2020, we performed our annual evaluation of goodwill impairment and determined that the estimated fair value of our reporting unit significantly exceeded its carrying value. Intangible assets primarily consist of the value of trade names and trademarks, distributor agreements, customer relationships and patented and unpatented technology. Indefinite lived intangibles not subject to amortization are assessed for impairment at least annually, or more frequently if events or changes in circumstances indicate they may be impaired, by comparing the fair value of the intangible asset to its carrying amount to determine if a write-down to fair value is required. Finite lived intangible assets are amortized using the straight-line method over their respective estimated useful lives. We perform our annual impairment tests each year and have determined there to be no impairment for any of the periods presented. There were no events or circumstances identified from the date of our assessment that would require an update to our annual impairment tests. Long-Lived Assets Long-lived assets, other than goodwill and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability is evaluated by determining whether the amortization of the balance over its remaining life can be recovered through undiscounted future operating cash flows. We measure the impairment loss based on projected discounted cash flows using a discount rate reflecting the average cost of funds and compared to the asset’s carrying value. As of December 31, 2019, there were no such events or circumstances. Fair Value Measurements We carry various assets and liabilities at fair value in the consolidated balance sheets. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are classified based on the following fair value hierarchy: Level 1 Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; or model-driven valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs for the asset or liability. These inputs reflect our own assumptions about the assumptions a market participant would use in pricing the asset or liability. Revenue Recognition Revenue primarily consists of sales of air conditioning, heating and refrigeration equipment, and related parts and supplies. We generate our revenue primarily from the sale of finished products to customers; therefore, the significant majority of our contracts are short-term in nature and have only a single performance obligation to deliver products; therefore, we satisfy our performance obligation under such contracts when we transfer control of the product to the customer. Some contracts contain a combination of product sales and services, the latter of which is distinct and accounted for as a separate performance obligation. We satisfy our performance obligations for services when we render the services within the agreed-upon service period. Total service revenue is not material and accounted for less than 1% of our consolidated revenues for both and 2018. Revenue is recognized when control transfers to our customers when products are picked up or via shipment of products or delivery of services. We measure revenue as the amount of consideration we expect to be entitled to receive in exchange for those goods or services, net of any variable considerations (e.g., rights to return product, sales incentives, others) and any taxes collected from customers and subsequently remitted to governmental authorities. Revenue for shipping and handling charges is recognized when products are delivered to the customer. Product Returns We estimate product returns based on historical experience and record them on a gross basis on our balance sheets. Substantially all customer returns relate to products that are returned under manufacturers’ warranty obligations. Accrued sales returns at December 31, 2019 and 2018 of $12,181 and $11,275, respectively, were included in accrued expenses and other current liabilities in our consolidated balance sheets. Sales Incentives We estimate sales incentives expected to be paid over the term of the program based on the most likely amounts. Sales incentives are accounted for as a reduction in the transaction price and are generally paid on an annual basis. Practical Expedients We generally expense sales commissions when incurred because the amortization period is one year or less. These costs are recorded within selling, general and administrative expenses. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Advertising Costs Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2019, 2018 and 2017, were $16,587, $16,520 and $24,677, respectively. See Note 3. Shipping and Handling Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through cost of sales as inventories are sold. Shipping and handling costs associated with the delivery of products are Share-Based Compensation The fair value of stock option and non-vested Income Taxes We record U.S. federal, state and foreign income taxes currently payable, as well as deferred taxes due to temporary differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities reflect the temporary differences between the financial statement and income tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date. We and our eligible subsidiaries file a consolidated U.S. federal income tax return. As income tax returns are generally not filed until well after the closing process for the December 31 financial statements is complete, the amounts recorded at December 31 reflect estimates of what the final amounts will be when the actual income tax returns are filed for that calendar year. In addition, estimates are often required with respect to, among other things, the appropriate state income tax rates to use in the various states that we and our subsidiaries are required to file, the potential utilization of operating loss carryforwards and valuation allowances required, if any, for tax assets that may not be realizable in the future. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” Earnings per Share We compute earnings per share using the two-class two-class non-vested non-forfeitable two-class two-class Diluted earnings per share reflects the dilutive effect of potential common shares from stock options. The dilutive effect of outstanding stock options is computed using the treasury stock method, which assumes any proceeds that could be obtained upon the exercise of stock options, would be used to purchase common stock at the average market price for the period. The assumed proceeds include the purchase price the optionee pays, the windfall tax benefit that we receive upon assumed exercise and the unrecognized compensation expense at the end of each period. Derivative Instruments and Hedging Activity We have used derivative instruments, including forward and option contracts and swaps, to manage our exposure to fluctuations in foreign currency exchange rates and interest rates. The use of these derivative instruments modifies the exposure of these risks with the intent to reduce the risk or cost to us. We use derivative instruments as risk management tools and not for trading purposes. All derivatives, whether designated as hedging relationships or not, are recorded on the balance sheet at fair value. Cash flows from derivative instruments are classified in the consolidated statements of cash flows in the same category as the cash flows from the items subject to the designated hedge or undesignated (economic) hedge relationships. The hedging designation may be classified as one of the following: No Hedging Designation. Cash Flow Hedge. ( loss Fair Value Hedge. See Note 17 for additional information pertaining to derivative instruments. Loss Contingencies Accruals are recorded for various contingencies including self-insurance, legal proceedings, environmental matters, and other claims that arise in the normal course of business. The estimation process contains uncertainty because accruals are based on judgment, the probability of losses and, where applicable, the consideration of opinions of external legal counsel and actuarially determined estimates. Additionally, we record receivables from third party insurers when recovery has been determined to be probable. Recently Adopted Accounting Standards Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance on accounting for leases, which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. In July 2018, the FASB issued updated guidance that provides an additional transition method of adoption that allows entities to initially apply the standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The adoption of this standard and its related amendments (collectively, the “New Lease Standard”) on January 1, 2019 did not result in the recognition of a cumulative adjustment to opening retained earnings under the additional transition method, nor did it have a significant impact on our consolidated statements of income or cash flows. See Note 2. Recently Issued Accounting Standards Not Yet Adopted Financial Instruments—Credit Losses In June 2016, the FASB issued guidance that modifies the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, contract assets, long-term receivables and off-balance Intangibles—Goodwill and Other In January 2017, the FASB issued guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under this updated standard, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity also should consider income tax effects from any tax-deductible |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | 2. LEASES Adoption of New Lease Standard We adopted the New Lease Standard on January 1, 2019 using the additional transition method described in Note 1 to these audited consolidated financial statements. Results for reporting periods beginning on and after January 1, 2019 are presented under the New Lease Standard. Prior periods have not been restated. The New Lease Standard had a material impact on our consolidated balance sheet due to the recognition of ROU assets and lease liabilities for operating leases, while accounting for finance leases remained substantially unchanged. Practical Expedients We elected the package of practical expedients that did not require us to reassess (1) whether existing contracts contain embedded leases, (2) the lease classification of existing leases, and (3) whether initial direct costs for existing leases would qualify for capitalization under the New Lease Standard. We also elected the practical expedients related to short-term leases and separating lease components from non-lease The components of operating lease expense were as follows: Year ended December 31, 2019 Lease cost $ 74,755 Short-term lease cost 9,427 Variable lease cost 707 Sublease income (226 ) Total operating lease cost $ 84,663 Supplemental balance sheet information related to operating leases were as follows: December 31, 2019 ROU assets $ 223,369 Current portion of long-term obligations $ 68,199 Operating lease liabilities 154,271 Total operating lease liabilities $ 222,470 Weighted Average Remaining Lease Term (in years) 3.9 y Weighted Average Discount Rate 4.48 % Supplemental cash flow information related to operating leases were as follows: Year Ended December 31, 2019 Operating cash flows for the measurement of operating lease liabilities $ 75,357 Operating lease right-of-use $ 290,422 At December 31, 2019, maturities of operating lease liabilities over each of the next five years and thereafter were as follows: 2020 $ 76,610 2021 63,442 2022 47,367 2023 30,659 2024 15,532 Thereafter 10,264 Total lease payments 243,874 Less imputed interest 21,404 Total lease liability $ 222,470 At December 31, 2019, we had additional operating leases, primarily for real property, that had not yet commenced. Such leases had estimated future minimum rental commitments of approximately $1,300. These operating leases will commence March 20 Prior to the adoption of the New Lease Standard, rental commitments on an undiscounted basis were approximately $219,300 at December 31, 2018 under non-cancelable |
REVENUES
REVENUES | 12 Months Ended |
Dec. 31, 2019 | |
REVENUES | 3. REVENUES We adopted the New Revenue Standard on January 1, 2018 using the modified retrospective approach. The New Revenue Standard did not have an impact on the amount or timing of our revenue recognition; however, certain payments to customers were reclassified from advertising expenses to a reduction from revenues, resulting in an immaterial impact to the individual financial statement line items of our consolidated statements of income. Results for reporting periods beginning on and after January 1, 2018 are presented under the New Revenue Standard, while prior period results have not been adjusted and continue to be reported under the accounting standards in effect for those periods. Disaggregation of Revenues The following table presents our revenues disaggregated by primary geographical regions and major product lines within our single reporting segment: Years Ended December 31, 2019 2018 2017(1) Primary Geographical Regions: United States $ 4,184,206 $ 3,981,056 $ 3,775,729 Canada 294,040 291,685 269,603 Latin America and the Caribbean 292,116 273,912 296,623 $ 4,770,362 $ 4,546,653 $ 4,341,955 Major Product Lines: HVAC equipment 68 % 67 % 67 % Other HVAC products 28 % 29 % 28 % Commercial refrigeration products 4 % 4 % 5 % 100 % 100 % 100 % (1) As noted above, amounts prior to January 1, 2018 have not been adjusted under the modified retrospective method and remain as originally reported for such periods. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2019 | |
EARNINGS PER SHARE | 4. EARNINGS PER SHARE The following table presents the calculation of basic and diluted earnings per share for our Common and Class B common stock: Years Ended December 31, 2019 2018 2017 Basic Earnings per Share: Net income attributable to Watsco, Inc. shareholders $ 245,950 $ 242,932 $ 208,221 Less: distributed and undistributed earnings allocated to non-vested 20,412 19,792 17,430 Earnings allocated to Watsco, Inc. shareholders $ 225,538 $ 223,140 $ 190,791 Weighted-average common shares outstanding - Basic 34,644,700 34,319,890 32,824,947 Basic earnings per share for Common and Class B common stock $ 6.51 $ 6.50 $ 5.81 Allocation of earnings for Basic: Common stock $ 208,779 $ 206,355 $ 175,667 Class B common stock 16,759 16,785 15,124 $ 225,538 $ 223,140 $ 190,791 Diluted Earnings per Share: Net income attributable to Watsco, Inc. shareholders $ 245,950 $ 242,932 $ 208,221 Less: distributed and undistributed earnings allocated to non-vested 20,411 19,788 17,427 Earnings allocated to Watsco, Inc. shareholders $ 225,539 $ 223,144 $ 190,794 Weighted-average common shares outstanding - Basic 34,644,700 34,319,890 32,824,947 Effect of dilutive stock options 30,941 54,379 37,686 Weighted-average common shares outstanding - Diluted 34,675,641 34,374,269 32,862,633 Diluted earnings per share for Common and Class B common stock $ 6.50 $ 6.49 $ 5.81 Diluted earnings per share for our Common stock assumes the conversion of Diluted earnings per share excluded 205,380, 74,270 and 11,664 shares for the years ended December 31, 2019, 2018 and 2017, respectively, related to stock options with an exercise price per share greater than the average market value, resulting in an anti-dilutive effect on diluted earnings per share. |
OTHER COMPREHENSIVE INCOME (LOS
OTHER COMPREHENSIVE INCOME (LOSS) | 12 Months Ended |
Dec. 31, 2019 | |
OTHER COMPREHENSIVE INCOME (LOSS) | 5. OTHER COMPREHENSIVE INCOME (LOSS) Other comprehensive income (loss) consists of the foreign currency translation adjustment associated with our Canadian operations’ use of the Canadian dollar as their functional currency and changes in the unrealized gains (losses) on cash flow hedging instruments and equity securities. The tax effects allocated to each component of other comprehensive income (loss) were as follows: Years Ended December 31, 2019 2018 2017 Foreign currency translation adjustment $ 12,298 $ (20,493 ) $ 15,993 Unrealized (loss) gain on cash flow hedging instruments (2,001 ) 2,627 (961 ) Income tax benefit (expense) 540 (709 ) 259 Unrealized (loss) gain on cash flow hedging instruments, net of tax (1,461 ) 1,918 (702 ) Reclassification of gain on cash flow hedging instruments into earnings (482 ) (215 ) (491 ) Income tax expense 130 58 133 Reclassification of gain on cash flow hedging instruments into earnings, net of tax (352 ) (157 ) (358 ) Unrealized gain on equity securities — — 51 Income tax expense — — (66 ) Unrealized loss on equity securities, net of tax — — (15 ) Other comprehensive income (loss) $ 10,485 $ (18,732 ) $ 14,918 The changes in each component of accumulated other comprehensive loss, net of tax, were as follows: Years Ended December 31, 2019 2018 2017 Foreign currency translation adjustment: Beginning balance $ (46,604 ) $ (33,499 ) $ (43,459 ) Current period other comprehensive income (loss) 8,005 (13,105 ) 9,960 Ending balance (38,599 ) (46,604 ) (33,499 ) Cash flow hedging instruments: Beginning balance 636 (421 ) 215 Current period other comprehensive (loss) income (876 ) 1,151 (421 ) Reclassification adjustment (211 ) (94 ) (215 ) Ending balance (451 ) 636 (421 ) Equity securities: Beginning balance — (301 ) (286 ) Cumulative-effect adjustment to retained earnings — 301 — Current period other comprehensive loss — — (15 ) Ending balance — — (301 ) Accumulated other comprehensive loss, net of tax $ (39,050 ) $ (45,968 ) $ (34,221 ) |
SUPPLIER CONCENTRATION
SUPPLIER CONCENTRATION | 12 Months Ended |
Dec. 31, 2019 | |
SUPPLIER CONCENTRATION | 6. SUPPLIER CONCENTRATION Purchases from our top ten suppliers comprised 83%, 84% and 84% of all purchases made in 2019, 2018 and 2017, respectively. Our largest supplier, Carrier and its affiliates, accounted for 62% of all purchases made in 2019, 2018 and 2017. See Note 20. A significant interruption by Carrier, or any of our other key suppliers, in the delivery of products could impair our ability to maintain current inventory levels and could materially impact our consolidated results of operations and consolidated financial position. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | 7. PROPERTY AND EQUIPMENT Property and equipment, net, consists of: December 31, 2019 2018 Land $ 741 $ 820 Buildings and improvements 81,938 75,308 Machinery, vehicles and equipment 86,639 79,002 Computer hardware and software 56,227 50,853 Furniture and fixtures 18,049 16,782 243,594 222,765 Accumulated depreciation and amortization (145,071 ) (131,719 ) $ 98,523 $ 91,046 Depreciation and amortization expense related to property and equipment included in selling, general and administrative expenses for the years ended December 31, 2019, 2018 and 2017, were $ 18,808 16,747 16,770 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2019 | |
DEBT | 8. DEBT We maintain an unsecured, $ 500,000 may be discretion, and we effected this reduction in 2019. Included in the credit facility are a $100,000 swingline subfacility, a $10,000 letter of credit subfacility, a $ 75,000 Borrowings under the credit facility bear interest at either LIBOR-based rates plus a spread, which ranges from 87.5 150.0 20.0 7.5 During 2018 , we At December 31, 2019 and 2018 $155,700 and 135,200 , respec t , were |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | 9. INCOME TAXES On December 22, 2017, Public Law 115-97 “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018” one-time low-taxed U.S. GAAP requires the impact of tax legislation to be recorded in the period of enactment. We recognized the tax effects of the TCJA for the year ended December 31, 2017 and recorded a provisional net income tax benefit of $9,955. This amount included an income tax benefit from the revaluation of U.S. deferred income taxes, partially offset by an estimate for income tax expense to record U.S. federal, state and foreign withholding tax on previously undistributed earnings of our foreign subsidiaries. We applied the guidance in Staff Accounting Bulletin 118 when accounting for the enactment-date effects of the TCJA. At d for the enactment -date effects of the TCJA by There were no additional refinements for any enactment-date effects related to the TCJA in 2019. The components of income tax expense from our wholly owned operations and investments and our controlling interest in joint ventures with Carrier are as follows: Years Ended December 31, 2019 2018 2017 Current: U.S. Federal $ 48,359 $ 47,263 $ 82,333 State 9,362 10,031 12,162 Foreign 8,078 7,229 6,461 65,799 64,523 100,956 Deferred: U.S. Federal 2,603 7,082 (13,254 ) State 446 1,600 (1,519 ) Foreign (1,771 ) (392 ) 4,038 1,278 8,290 (10,735 ) Income tax expense $ 67,077 $ 72,813 $ 90,221 We calculate our income tax expense and our effective tax rate for 100% of income attributable to our wholly owned operations and for our controlling interest of income attributable to our joint ventures with Carrier, which are primarily taxed as partnerships for income tax purposes. Following is a reconciliation of the effective income tax rate: Years Ended December 31, 2019 2018 2017 U.S. federal statutory rate 21.0 % 21.0 % 35.0 % State income taxes, net of federal benefit and other 2.8 3.6 2.4 Excess tax benefits from share-based compensation (2.0 ) (2.0 ) (2.7 ) Tax effects on foreign income 0.5 0.5 (1.0 ) GILTI (0.1 ) 0.3 — Tax credits and other (1.0 ) — (0.6 ) Repatriation transition tax — (0.9 ) 3.0 Deferred tax impact of enacted tax rate changes — 0.3 (6.3 ) Effective income tax rate attributable to Watsco, Inc. 21.2 22.8 29.8 Taxes attributable to non-controlling (2.7 ) (3.1 ) (3.8 ) Effective income tax rate 18.5 % 19.7 % 26.0 % The following is a summary of the significant components of our net deferred tax liabilities: December 31, 2019 2018 Deferred tax assets: Share-based compensation $ 24,413 $ 21,517 Capitalized inventory costs and inventory reserves 3,627 2,151 Allowance for doubtful accounts 1,338 1,057 Self-insurance reserves 209 206 Other 2,212 2,486 Net operating loss carryforwards 2,036 484 33,835 27,901 Valuation allowance (655 ) — Total deferred tax assets 33,180 27,901 Deferred tax liabilities: Deductible goodwill (73,898 ) (69,600 ) Depreciation (14,241 ) (10,695 ) Other (7,188 ) (8,516 ) Total deferred tax liabilities (95,327 ) (88,811 ) Net deferred tax liabilities (1) $ (62,147 ) $ (60,910 ) (1) Net deferred tax liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities. Prior to enactment of the TCJA, U.S. income taxes had not been provided on undistributed earnings of our foreign subsidiaries as we had intended to reinvest such earnings permanently outside the U.S. or to repatriate such earnings only when it was tax effective to do so. The TCJA one-time Any additional taxes due with respect to such previously taxed earnings, if repatriated, would generally be limited to certain state income taxes and foreign withholding. Deferred taxes have been recorded for foreign withholding taxes on certain earnings of our foreign consolidated subsidiaries expected to be repatriated. We do not intend to distribute the remaining previously taxed foreign earnings and therefore have not recorded deferred taxes for certain state income taxes and foreign withholding on such earnings. The amount of certain state income taxes and foreign withholding that might be payable on the remaining amounts at December 31, 2019 is not practicable to estimate. Valuation allowances are provided to reduce the related deferred income tax assets to an amount which will, more likely than not, be realized. As of December 31, 2019 and 2018, we had a valuation allowance of $655 and $0, respectively, to reduce our deferred tax assets to an amount that is more likely than not to be recovered. At December 31, 2019, there were state net operating loss carryforwards of $10,411, which expire in varying amounts from 2020 through 2039. At December 31, 2019, there were foreign net operating loss carryforwards of $7,103, which expire in varying amounts from 2035 through 2039. These amounts are available to offset future taxable income. There were no federal net operating loss carryforwards at December 31, 2019. We are subject to United States federal income tax, income tax of multiple state jurisdictions and foreign income tax. We are subject to tax audits in the various jurisdictions until the respective statutes of limitations expire. We are no longer subject to United States federal tax examinations for tax years prior to 2015. For the majority of states and foreign jurisdictions, we are no longer subject to tax examinations for tax years prior to 2014. As of December 31, 2019 and 2018, the total amount of gross unrecognized tax benefits (excluding the federal benefit received from state positions) was $5,367 and $4,902, respectively. Of these totals, $4,367 and $3,997, respectively, (net of the federal benefit received from state positions) represent the amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate. Our continuing practice is to recognize penalties within selling, general and administrative expenses and interest related to income tax matters in income tax expense in the consolidated statements of income. As of December 31, 2019 and 2018, the cumulative amount of estimated accrued interest and penalties resulting from such unrecognized tax benefits was $855 and $755, respectively, and is included in deferred income taxes and other current liabilities in the accompanying consolidated balance sheets. The changes in gross unrecognized tax benefits were as follows: Balance at December 31, 2016 $ 3,695 Additions based on tax positions related to the current year 801 Reductions due to lapse of applicable statute of limitations (271 ) Balance at December 31, 2017 4,225 Additions based on tax positions related to the current year 960 Reductions due to lapse of applicable statute of limitations (283 ) Balance at December 31, 2018 4,902 Additions based on tax positions related to the current year 1,027 Reductions due to lapse of applicable statute of limitations (562 ) Balance at December 31, 2019 $ 5,367 |
SHARE-BASED COMPENSATION AND BE
SHARE-BASED COMPENSATION AND BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2019 | |
SHARE-BASED COMPENSATION AND BENEFIT PLANS | 10. SHARE-BASED COMPENSATION AND BENEFIT PLANS Share-Based Compensation Plans We maintain the 2014 Incentive Compensation Plan (the “2014 Plan”) that provides for the award of a broad variety of share-based compensation alternatives such as non-vested non-qualified non-qualified non-vested Under the 2014 Plan, the number of shares of Common and Class B common stock available for issuance is (i) 2,000,000, plus (ii) 45,421 shares of Common stock or Class B common stock that remained available for grant in connection with awards under the 2001 Plan as of the date our shareholders approved the 2014 Plan plus (iii) shares underlying currently outstanding awards issued under the 2001 Plan, which shares become reissuable under the 2014 Plan to the extent that such underlying shares are not issued due to their forfeiture, expiration, termination or otherwise. A total of 779,502 shares of Common stock, net of cancellations, and 787,490 shares of Class B common stock, had been awarded under the 2014 Plan as of December 31, 2019. As of December 31, 2019, 478,429 shares of common stock were reserved for future grants under the 2014 Plan. Options under the 2014 Plan vest over two of five years non-vested The 2001 Plan expired during 2014; therefore, no The following is a summary of stock option activity under the 2014 Plan and the 2001 Plan as of and for the year ended December 31, 2019: Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Options outstanding at December 31, 2018 504,617 $ 151.71 Granted 206,750 162.42 Exercised (94,525 ) 125.11 Forfeited (28,500 ) 160.53 Expired (3,667 ) 162.62 Options outstanding at December 31, 2019 584,675 $ 159.34 3.37 $ 12,591 Options exercisable at December 31, 2019 95,047 $ 150.83 2.42 $ 2,879 The following is a summary of non-vested Shares Weighted- Average Grant Date Fair Value Non-vested 3,062,602 $ 48.72 Granted 173,940 151.58 Vested (32,000 ) 67.54 Forfeited (12,837 ) 148.43 Non-vested 3,191,705 $ 68.63 The weighted-average grant date fair value of non-vested non-vested During 2019, 9,824 shares of Common and Class B common stock with an aggregate fair market value of $1,518 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of restricted stock. During 2018, 21,754 shares of Common stock and Class B common stock with an aggregate fair market value of $3,775 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of restricted stock. During 2017, 32,454 shares of Common stock with an aggregate fair market value of $4,664 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of restricted stock. These shares were retired upon delivery. Share-Based Compensation Fair Value Assumptions The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing valuation model based on the weighted-average assumptions noted in the table below. The fair value of each stock option award, which is subject to graded vesting, is expensed, net of estimated forfeitures, on a straight-line basis over the requisite service period for each separately vesting portion of the stock option. We use historical data to estimate stock option forfeitures. The expected term of stock option awards granted represents the period of time that stock option awards granted are expected to be outstanding and was calculated using the simplified method for plain vanilla options, which we believe provides a reasonable estimate of expected life based on our historical data. The risk-free rate for periods within the contractual life of the stock option award is based on the yield curve of a zero-coupon The following table presents the weighted-average assumptions used for stock options granted: Years Ended December 31, 2019 2018 2017 Expected term in years 4.25 4.25 4.25 Risk-free interest rate 1.64 % 2.69 % 1.77 % Expected volatility 18.01 % 17.11 % 17.41 % Expected dividend yield 3.99 % 3.13 % 2.82 % Grant date fair value $ 14.81 $ 20.05 $ 17.23 Exercise of Stock Options The total intrinsic value of stock options exercised during 2019, 2018 and 2017 was $4,153, $3,500 and $2,296, respectively. Cash received from the exercise of stock options during 2019, 2018 and 2017 was $11,703, $5,006 and $3,855, respectively. The tax benefit from stock option exercises during 2019, 2018 and 2017 was $626, $635 and $645, respectively. During 2019, 2018 and 2017, 799 shares of Common stock with an aggregate fair market value of $134, 7,027 shares of Common stock with an aggregate fair market value of $1,269 and 350 shares of Common stock with an aggregate fair market value of $53, respectively, were withheld as payment in lieu of cash for stock option exercises and related tax withholdings. These shares were retired upon delivery. Share-Based Compensation Expense The following table provides information on share-based compensation expense: Years Ended December 31, 2019 2018 2017 Stock options $ 2,440 $ 2,014 $ 1,451 Non-vested 14,592 13,494 11,842 Share-based compensation expense $ 17,032 $ 15,508 $ 13,293 At December 31, 2019, there was $3,942 of unrecognized pre-tax At December 31, 2019, there was $132,642 of unrecognized pre-tax non-vested non-vested non-vested Employee Stock Purchase Plan The Watsco, Inc. Fourth Amended and Restated 1996 Qualified Employee Stock Purchase Plan (the “ESPP”) provides for up to 1,500,000 shares of Common stock to be available for purchase by our full-time employees with at least 90 days of service. The ESPP allows participating employees to purchase shares of Common stock at a 5% discount to the fair market value at specified times. During 2019, 2018 and 2017, employees purchased 5,676, 5,151 and 5,571 shares of Common stock at an average price of $145.09, $168.21 and $144.58 per share, respectively. Cash dividends received by the ESPP were reinvested in Common stock and resulted in the issuance of 5,087, 4,338 and 3,844 additional shares during 2019, 2018 and 2017, respectively. We received net proceeds of $1,638, $1,585 and $1,389, respectively, during 2019, 2018 and 2017, for shares of our Common stock purchased under the ESPP. At December 31, 2019, 466,493 shares remained available for purchase under the ESPP. 401(k) Plan We have a profit sharing retirement plan for our employees that is qualified under Section 401(k) of the Internal Revenue Code. Annual matching contributions are made based on a percentage of eligible employee compensation deferrals. The contribution has historically been made with the issuance of Common stock to the plan on behalf of our employees. For the years ended December 31, 2019, 2018 and 2017, we issued 30,715, 17,318 and 16,389 shares of Common stock, respectively, to the plan, representing the Common stock discretionary matching contribution of $4,274, $2,945 and $2,428, respectively. |
PURCHASE OF OWNERSHIP INTEREST
PURCHASE OF OWNERSHIP INTEREST IN JOINT VENTURE | 12 Months Ended |
Dec. 31, 2019 | |
PURCHASE OF OWNERSHIP INTEREST IN JOINT VENTURE | 11. PURCHASE OF OWNERSHIP INTEREST IN JOINT VENTURE In 2011, we formed a joint venture with Carrier, Carrier Enterprise Northeast LLC, which we refer to as Carrier Enterprise II. On February 13, 2017, we purchased an additional 10% ownership interest for cash consideration of $42,688, which increased our controlling interest in Carrier Enterprise II to 80%. Effective May 31, 2019, we purchased an additional 20% ownership interest in Homans Associates II LLC (“Homans”) from Carrier Enterprise II |
INVESTMENT IN UNCONSOLIDATED EN
INVESTMENT IN UNCONSOLIDATED ENTITY | 12 Months Ended |
Dec. 31, 2019 | |
INVESTMENT IN UNCONSOLIDATED ENTITY | 12. INVESTMENT IN UNCONSOLIDATED ENTITY On June 21, 2017, our first joint venture with Carrier, Carrier Enterprise, LLC, which we refer to as Carrier Enterprise I, acquired a 34.9% ownership interest in Russell Sigler, Inc. (“RSI”), an HVAC distributor operating from 30 locations in the Western U.S. We have an 80% controlling interest in Carrier Enterprise I, and Carrier has a 20% non-controlling Carrier Enterprise I is a party to a shareholders’ agreement (the “Shareholders’ Agreement”) with RSI and its shareholders. Pursuant to the Shareholders’ Agreement, RSI’s shareholders have the right to sell, and Carrier Enterprise I has the obligation to purchase, their respective shares of RSI for a purchase price determined based on either book value or a multiple of EBIT, the latter of which Carrier Enterprise I used to calculate the price paid for its investment in RSI. RSI’s shareholders may transfer their respective shares of RSI common stock only to members of the Sigler family or to Carrier Enterprise I, and, at any time from and after the date on which Carrier Enterprise I owns 85% or more of RSI’s outstanding common stock, it has the right, but not the obligation, to purchase from RSI’s shareholders the remaining outstanding shares of RSI common stock. Additionally, Carrier Enterprise I has the right to appoint two six two six |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2019 | |
ACQUISITIONS | 13. ACQUISITIONS N&S Supply of Fishkill, Inc. On November 26, 2019, one of our wholly owned subsidiaries acquired certain assets and assumed certain liabilities of N&S Supply of Fishkill, Inc., a distributor of air conditioning, heating and plumbing products operating from seven indebtedness. The purchase price resulted in the recognition of $2,722 in goodwill. The tax basis of the acquired goodwill recognized is deductible for income tax purposes over 15 years. Peirce-Phelps, Inc. On August 1, 2019, Carrier Enterprise I acquired substantially all the HVAC , net of a discount for lack of marketability, The purchase price resulted in the recognition of $28,884 in goodwill and intangibles. The fair value of the identified intangible assets was $19,000 and consisted of $13,500 in trade names and distribution rights , n - The table below presents the allocation of the total consideration to tangible and intangible assets acquired and l Cash and cash equivalents $ 4,299 Accounts receivable 30,719 Inventories 45,491 Other current assets 135 Property and equipment 2,544 Operating lease right-of-use assets 19,072 Goodwill 9,884 Intangibles 19,000 Other assets 299 Accounts payable (11,079 ) Accrued expenses and other current liabilities (13,038 ) Operating lease liabilities, net of current portion (14,100 ) Total $ 93,226 Dunphey & Associates Supply Co., Inc . On April 2, 2019, one of our wholly owned subsidiaries acquired certain assets and assumed certain liabilities of Dunphey & Associates Supply Co., Inc., a distributor of air conditioning and heating products operating from seven locations in New Jersey, New York and Connecticut , , net of a discount for lack of marketability. The purchase price resulted in the recognition of $8,974 in goodwill and intangibles. The fair value of the identified intangible assets was $5,300 and consisted of $2,500 trade names and trademarks , - over 15 years . Other Acquisitions On August 23, 2018, one of our wholly owned subsidiaries acquired Alert Labs, Inc., a technology company based in Ontario, Canada for cash consideration of $5,889 and the issuance of 23,873 shares of Common stock having a fair value of $3,991, net of a discount for lack of marketability, less $171 related to our previously held equity interest. In addition, 23,230 shares of Common stock having a fair value of $3,026 were issued into escrow as contingent consideration, all of which are subject to certain performance metrics within a three-year On November 30, 2018, one of our wholly owned subsidiaries acquired certain assets and assumed certain liabilities of a wholesale distributor of air conditioning and heating products operating from three locations in North Carolina. The results of operations of these acquisitions have been included in the consolidated financial statements from their respective dates of acquisition. The pro forma effect of the acquisitions was |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
GOODWILL AND INTANGIBLE ASSETS | 14. GOODWILL AND INTANGIBLE ASSETS The changes in the carrying amount of goodwill are as follows: Balance at December 31, 2017 $ 382,729 Acquired goodwill 13,301 Foreign currency translation adjustment (4,032 ) Balance at December 31, 2018 391,998 Acquired goodwill 16,742 Foreign currency translation adjustment 2,477 Balance at December 31, 2019 $ 411,217 Intangible assets are comprised of the following: December 31, Estimated Useful Lives 2019 2018 Indefinite lived intangible assets - Trade names, trademarks and distribution rights $ 138,647 $ 119,188 Finite lived intangible assets: Customer relationships 7-18 79,911 69,593 Patented and unpatented technology 7 years 1,680 1,600 Trade name 10 years 1,150 1,150 Accumulated amortization (49,384 ) (43,680 ) Finite lived intangible assets, net 33,357 28,663 $ 172,004 $ 147,851 Amortization expense related to finite lived intangible assets included in selling, general and administrative expenses for the years ended December 31, 2019, 2018 and 2017, were $5,704, $5,348 and $5,263, respectively. Annual amortization of finite lived intangible assets for the next five years is expected to approximate the following: 2020 $ 5,800 2021 $ 4,900 2022 $ 4,100 2023 $ 3,500 2024 $ 3,300 |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2019 | |
SHAREHOLDERS' EQUITY | 15. SHAREHOLDERS’ EQUITY Common Stock Common stock and Class B common stock share equally in earnings and are identical in most other respects except (i) Common stock is entitled to one vote on most matters and each share of Class B common stock is entitled to ten votes; (ii) shareholders of Common stock are entitled to elect 25% of the Board of Directors (rounded up to the nearest whole number) and Class B shareholders are entitled to elect the balance of the Board of Directors; (iii) cash dividends may be paid on Common stock without paying a cash dividend on Class B common stock and no cash dividend may be paid on Class B common stock unless at least an equal cash dividend is paid on Common stock and (iv) Class B common stock is convertible at any time into Common stock on a one-for-one basis at the option of the shareholder. Preferred Stock We are authorized to issue preferred stock with such designation, rights and preferences as may be determined from time to time by our Board of Directors. Accordingly, the Board of Directors is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of our Common stock and Class B common stock and, in certain instances, could adversely affect the market price of this stock. We had no preferred stock outstanding at December 31, 2019 or 2018. At-the-Market On August 23, 2017, we entered into a sales agreement with Robert W. Baird & Co. Inc., which enabled the Company to issue and sell shares of Common stock in one or more negotiated transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), for a maximum aggregate offering amount of up to $250,000 (the “ATM Program”). The offer and sale of our Common stock pursuant to the ATM Program was registered under the Securities Act pursuant to our automatically effective shelf registration statement on Form S-3 333-207831). Stock Repurchase Plan In September 1999, our Board of Directors authorized the repurchase, at management’s discretion, of up to 7,500,000 shares of common stock in the open market or via private transactions. Shares repurchased under the program are accounted for using the cost method and result in a reduction of shareholders’ equity. No shares were repurchased during 2019, 2018 or 2017. We last repurchased shares under this plan during 2008. In aggregate, 6,322,650 shares of Common stock and 48,263 shares of Class B common stock have been repurchased at a cost of $114,425 since the inception of the program. At December 31, 2019, there were 1,129,087 shares remaining authorized for repurchase under the program. |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2019 | |
FINANCIAL INSTRUMENTS | 16. FINANCIAL INSTRUMENTS Recorded Financial Instruments Recorded financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, the current portion of long-term obligations, borrowings under our revolving credit agreement and debt instruments included in other long-term obligations. At December 31, 2019 and 2018, the fair values of cash and cash equivalents, accounts receivable, accounts payable and the current portion of long-term obligations approximated their carrying values due to the short-term nature of these instruments. The fair values of variable rate borrowings under our revolving credit agreement and debt instruments included in long-term obligations also approximate their carrying value based upon interest rates available for similar instruments with consistent terms and remaining maturities. Off-Balance At December 31, 2019 , we were contingently liable under a standby letter of credit for $925, which was required by a lease for real property. At December 31, 2018, we were contingently liable under standby letters of credit aggregating $1,222, which were Concentrations of Credit Risk Financial instruments which potentially subject us to concentrations of credit risk consist principally of accounts receivable. Concentrations of credit risk are limited due to the large number of customers comprising the customer base and their dispersion across many different geographical regions. We also have access to credit insurance programs which are used as an additional means to mitigate credit risk. |
DERIVATIVES
DERIVATIVES | 12 Months Ended |
Dec. 31, 2019 | |
DERIVATIVES | 17. DERIVATIVES We enter into foreign currency forward and option contracts to offset the earnings impact that foreign exchange rate fluctuations would otherwise have on certain monetary liabilities that are denominated in nonfunctional currencies. Cash Flow Hedging Instruments We enter into foreign currency forward contracts that are designated as cash flow hedges. The settlement of these derivatives results in reclassifications from accumulated other comprehensive loss to earnings for the period in which the settlement of these instruments occurs. The maximum period for which we hedge our cash flow using these instruments is 12 months. Accordingly, at December 31, 2019, all our open foreign currency forward contracts had maturities of one year or less. The total notional value of our foreign currency exchange contracts designated as cash flow hedges at December 31, 2019 was $41,200, and such contracts have varying terms expiring through September 2020. The impact from foreign exchange derivative instruments designated as cash flow hedges was as follows: Years Ended December 31, 2019 2018 (Loss) gain recorded in accumulated other comprehensive loss $ (2,001 ) $ 2,627 Gain reclassified from accumulated other comprehensive loss into earnings $ (482 ) $ (215 ) At December 31, 2019, we expected an estimated $1,033 pre-tax loss Derivatives Not Designated as Hedging Instruments We have also entered into foreign currency forward and option contracts that are either not designated as hedges or did not qualify for hedge accounting. These derivative instruments were effective economic hedges for all the periods presented. The fair value gains and losses on these contracts are recognized in earnings as a component of selling, general and administrative expenses. The total notional value of our foreign currency exchange contracts not designated as hedging instruments at December 31, 2019 was $6,000, and such contracts have varying terms expiring through February 2020. We recognized (losses) gains The following table summarizes the fair value of derivative instruments, which consist solely of foreign exchange contracts, included in accrued expenses and other current liabilities and o ther current assets Asset Derivatives Liability December 31, 2019 2018 2019 2018 Derivatives designated as hedging instruments $ — $ 1,262 $ 944 $ 3 Derivatives not designated as hedging instruments — 58 63 11 Total derivative instruments $ — $ 1,320 $ 1,007 $ 14 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2019 | |
FAIR VALUE MEASUREMENTS | 18. FAIR VALUE MEASUREMENTS The following tables present our assets and liabilities carried at fair value that are measured on a recurring basis: Total Fair Value Measurements at December 31, 2019 Using Balance Sheet Location Level 1 Level 2 Level 3 Assets: Equity securities Other assets $ 402 $402 — — Liabilities: Derivative financial instruments Accrued expenses and $ 1,007 — $1,007 — Total Fair Value Measurements at December 31, 2018 Using Balance Sheet Location Level 1 Level 2 Level 3 Assets: Derivative financial instruments Other current assets $ 1,320 — $ 1,320 — Equity securities Other assets $ 279 $ 279 — — Liabilities: Derivative financial instruments Accrued expenses and $ 14 — $ 14 — The following is a description of the valuation techniques used for these assets and liabilities, as well as the level of input used to measure fair value: Equity securities Derivative financial instruments There were no transfers in or out of Level 1 and Level 2 during 2019 or 2018. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | 19. COMMITMENTS AND CONTINGENCIES Litigation, Claims and Assessments We are involved in litigation incidental to the operation of our business. We vigorously defend all matters in which we or our subsidiaries are named defendants and, for insurable losses, maintain significant levels of insurance to protect against adverse judgments, claims or assessments that may affect us. Although the adequacy of existing insurance coverage and the outcome of any legal proceedings cannot be predicted with certainty, based on the current information available, we do not believe the ultimate liability associated with any known claims or litigation will have a material adverse effect on our financial condition or results of operations. Self- Insurance Self-insurance reserves are maintained relative to company-wide casualty insurance and health benefit programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the self-insurance liabilities and related reserves, management considers a number of factors, which include historical claims experience, demographic factors, severity factors, and valuations provided by independent third-party actuaries. Management reviews its assumptions with its independent third-party actuaries to evaluate whether the self-insurance reserves are adequate. If actual claims or adverse development of loss reserves occur and exceed these estimates, additional reserves may be required. Reserves in the amounts of $3,062 and $2,311 at December 31, 2019 and 2018, respectively, were established related to such programs and are included in accrued expenses and other current liabilities in our consolidated balance sheets. Variable Interest Entity As of December 31, 2019, in conjunction with our casualty insurance programs, limited equity interests are held in a captive insurance entity. The programs permit us to self-insure a portion of losses, to gain access to a wide array of safety-related services, to pool insurance risks and resources in order to obtain more competitive pricing for administration and reinsurance and to limit risk of loss in any particular year. The entity meets the definition of Variable Interest Entity (“VIE”); however, we do not meet the requirements to include this entity in the consolidated financial statements. The maximum exposure to loss related to our involvement with this entity is limited to approximately $3,700. See “Self-Insurance” above for further information on commitments associated with the insurance programs and Note 16, under the caption “Off-Balance Purchase Obligations At December 31, 2019, we were obligated under various non-cancelable |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY TRANSACTIONS | 20. RELATED PARTY TRANSACTIONS Purchases from Carrier and its affiliates comprised 62% of all inventory purchases made during each of 2019, 2018 and 2017. At December 31, 2019 and 2018, approximately $86,000 and $71,000, respectively, was payable to Carrier and its affiliates, net of receivables. Our joint ventures with Carrier also sell HVAC products to Carrier and its affiliates. Revenues in our consolidated statements of income for 2019, 2018 and 2017 included approximately $91,000, $84,000 and $64,000, respectively, of sales to Carrier and its affiliates. We believe these transactions are conducted on terms equivalent to an arm’s-length A member of our Board of Directors is the Senior Chairman of Greenberg Traurig, P.A., which serves as our principal outside counsel for compliance and acquisition-related legal services. During 2019 and 2018, we paid this firm $187 and $131, respectively, for services performed, and no amount was payable at December 31, 2019. A member of our Board of Directors is the Chairman and Chief Executive Officer of Moss & Associates LLC, which served as general contractor for the remodeling of our Miami headquarters that was completed in 2018. We paid Moss & Associates LLC $124 and $951 for construction services performed during 2018 and 2017, respectively. |
INFORMATION ABOUT GEOGRAPHIC AR
INFORMATION ABOUT GEOGRAPHIC AREAS | 12 Months Ended |
Dec. 31, 2019 | |
INFORMATION ABOUT GEOGRAPHIC AREAS | 21. INFORMATION ABOUT GEOGRAPHIC AREAS Our operations are primarily within the United States, including Puerto Rico, Canada and Mexico. Products are also sold from the United States on an export-only basis to portions of Latin America and the Caribbean Basin. The following tables set forth revenues and long-lived assets by geographical area: Years Ended December 31, 2019 2018 (2) 2017 Revenues: United States $ 4,184,206 $ 3,981,056 $ 3,775,729 Canada 294,040 291,685 269,603 Latin America and the Caribbean 292,116 273,912 296,623 Total revenues $ 4,770,362 $ 4,546,653 $ 4,341,955 December 31, 2019 (1) 2018 Long-Lived Assets: United States $ 808,685 $ 549,649 Canada 180,663 162,648 Latin America and the Caribbean 20,083 6,930 Total long-lived assets $ 1,009,431 $ 719,227 Revenues are attributed to countries based on the location of the store from which the sale occurred. Long-lived assets consist primarily of goodwill and intangible assets, operating lease right-of-use assets, property and equipment, and our investment in an unconsolidated entity. (1) Effective January 1, 2019, we adopted the provisions of accounting guidance related to leases. Amounts prior to January 1, 2019 have not been adjusted and remain as originally reported for such periods. See Note 2. (2) Effective January 1, 2018, we adopted the provisions of accounting guidance related to revenue recognition. Amounts prior to January 1, 2018 have not been adjusted and remain as originally reported for such periods. See Note 3. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
SUPPLEMENTAL CASH FLOW INFORMATION | 22. SUPPLEMENTAL CASH FLOW INFORMATIO N Supplemental cash flow information was as foll o : Years Ended December 31, 2019 2018 2017 Interest paid $ 4,341 $ 3,065 $ 5,773 Income taxes net of refunds $ 70,095 $ 115,301 $ 48,056 Common stock issued for N&S Supply of Fishkill, Inc. $ 4,032 — — Common stock issued for Peirce-Phelps, Inc. $ 58,344 — — Common stock issued for Dunphey & Associates Supply Co., Inc. $ 6,891 — — Common stock issued for Alert Labs, Inc. — $ 6,846 — |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENT | 23. SUBSEQUENT EVENT On February 11, 2020, our Board of Directors approved an increase to the quarterly cash dividend per share of Common and Class B common stock to $1.775 per share from $1.60 per share, beginning with the dividend that will be paid in April 2020. |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA | 12 Months Ended |
Dec. 31, 2019 | |
SELECTED QUARTERLY FINANCIAL DATA | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (In thousands, except per share data) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Year Ended December 31, 2019 Revenues (1) $ 931,278 $ 1,371,854 $ 1,394,915 $ 1,072,315 $ 4,770,362 Gross profit $ 233,760 $ 327,984 $ 334,691 $ 260,521 $ 1,156,956 Net income attributable to Watsco, Inc. $ 35,037 $ 90,155 $ 83,480 $ 37,278 $ 245,950 Earnings per share for Common and Class B common stock (2): Basic $ 0.88 $ 2.40 $ 2.20 $ 0.92 $ 6.51 Diluted $ 0.88 $ 2.40 $ 2.20 $ 0.92 $ 6.50 Year Ended December 31, 2018 Revenues (1) $ 926,577 $ 1,332,743 $ 1,296,007 $ 991,326 $ 4,546,653 Gross profit $ 230,833 $ 320,766 $ 319,009 $ 249,644 $ 1,120,252 Net income attributable to Watsco, Inc. $ 34,219 $ 89,957 $ 79,163 $ 39,593 $ 242,932 Earnings per share for Common and Class B common stock (2): Basic $ 0.89 $ 2.41 $ 2.12 $ 1.02 $ 6.50 Diluted $ 0.89 $ 2.40 $ 2.11 $ 1.02 $ 6.49 (1) Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly evenly distributed throughout the year except for dependence on housing completions and related weather and economic conditions. (2) Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation | Organization, Consolidation and Presentation Watsco, Inc. (collectively with its subsidiaries, “Watsco,” “we,” “us,” or “our”) was incorporated in Florida in 1956 and is the largest distributor of air conditioning, heating and refrigeration equipment and related parts and supplies (“HVAC/R”) in the HVAC/R distribution industry in North America. At December 31, 2019, we operated from 606 locations in 38 U.S. states, Canada, Mexico, and Puerto Rico with additional market coverage on an export basis to portions of Latin America and the Caribbean. The consolidated financial statements include the accounts of Watsco, all of its wholly owned subsidiaries and the accounts of three joint ventures with Carrier Corporation (“Carrier”), in each of which Watsco maintains a controlling interest. All significant intercompany balances and transactions have been eliminated in consolidation. |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions The functional currency of our operations in Canada is the Canadian dollar. Foreign currency denominated assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date, and income and expense items are translated at the average exchange rates in effect during the applicable period. The aggregate effect of foreign currency translation is recorded in accumulated other comprehensive loss in our consolidated balance sheets. Our net investment in our Canadian operations is recorded at the historical rate and the resulting foreign currency translation adjustments are included in accumulated other comprehensive loss in our consolidated balance sheets. Gains or losses resulting from transactions denominated in U.S. dollars are recognized in earnings primarily within cost of sales in our consolidated statements of income. Our operations in Mexico consider their functional currency to be the U.S. dollar because the majority of their transactions are denominated in U.S. dollars. Gains or losses resulting from transactions denominated in Mexican pesos are recognized in earnings primarily within selling, general and administrative expenses in our consolidated statements of income. |
Equity Method Investments | Equity Method Investments Investments in which we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in other assets in our consolidated balance sheets. Under this method of accounting, our proportionate share of the net income or loss of the investee is included in other income in our consolidated statements of income. The excess, if any, of the carrying amount of our investment over our ownership percentage in the underlying net assets of the investee is attributed to certain fair value adjustments with the remaining portion recognized as goodwill. |
Reclassifications | Reclassifications Certain reclassifications of prior year amounts have been made to conform to the 2019 presentation. These reclassifications had no effect on net income or earnings per share as previously reported. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses for the reporting period. Significant estimates include valuation reserves for accounts receivable, inventories and income taxes, reserves related to loss contingencies and the valuation of goodwill, indefinite-lived intangible assets and long-lived assets. While we believe that these estimates are reasonable, actual results could differ from such estimates. |
Cash Equivalents | Cash Equivalents All highly liquid instruments purchased with original maturities of three months or less are considered to be cash equivalents. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable primarily consist of trade receivables due from customers and are stated at the invoiced amount less an allowance for doubtful accounts. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments. When preparing these estimates, we consider a number of factors, including the aging of a customer’s account, past transactions with customers, creditworthiness of specific customers, historical trends and other information. Upon determination that an account is uncollectible, the receivable balance is written off. At December 31, 2019 and 2018, the allowance for doubtful accounts totaled $ and $ , respectively. |
Inventories | Inventories Inventories consist of air conditioning, heating and refrigeration equipment and related parts and supplies and are valued at the lower of cost using the weighted-average cost basis and the first-in, first-out |
Vendor Rebates | Vendor Rebates We have arrangements with several vendors that provide rebates payable to us when we achieve any of a number of measures, generally related to the volume level of purchases. We account for such rebates as a reduction of inventory until we sell the product, at which time such rebates are reflected as a reduction of cost of sales in our consolidated statements of income. Throughout the year, we estimate the amount of the rebate based on our estimate of purchases to date relative to the purchase levels that mark our progress toward earning the rebates. We continually revise our estimates of earned vendor rebates based on actual purchase levels. At December 31, 2019 and 2018, we had $12,007 and $11,603, respectively, of rebates recorded as a reduction of inventory. Substantially all vendor rebate receivables are collected within three months immediately following the end of the year. Vendor rebates that are earned based on products sold are credited directly to cost of sales in our consolidated statements of income. |
Equity Securities | Equity Securities Investments in equity securities are recorded at fair value using the specific identification method and are included in other assets in our consolidated balance sheets. Unrealized holding gains and losses, net of deferred taxes, were included in accumulated other comprehensive loss within shareholders’ equity for 2017. For 2019 and 2018, changes in the fair value of equity securities were recognized through income rather than comprehensive income. Dividend and interest income are recognized in the statements of income when earned. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is computed using the straight-line method. Buildings and improvements are depreciated or amortized over estimated useful lives ranging from 3-40 5-7 3-10 |
Operating and Finance Leases | Operating and Finance Leases We have operating leases for real property, vehicles and equipment, and finance leases primarily for vehicles. Operating leases are included in operating lease right-of-use ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the applicable commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement dates of the respective leases in determining the present value of the applicable lease payments. Operating lease ROU assets also include any lease pre-payments 1-10 are reasonably certain that we will exercise. Certain real property lease agreements have lease and non-lease components, which are generally accounted for as a single lease component. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease payments for short-term leases, which are 12 months or less without a purchase option that is likely to be exercised, are recognized as lease cost on a straight-line basis over the lease term. |
Goodwill and Other Intangible Assets | Goodwill and Intangible Assets Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair value of the net identified tangible and intangible assets acquired. We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. We test goodwill for impairment by first comparing the fair value of our reporting unit to its carrying value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of impairment loss. On January 1, 2020, we performed our annual evaluation of goodwill impairment and determined that the estimated fair value of our reporting unit significantly exceeded its carrying value. Intangible assets primarily consist of the value of trade names and trademarks, distributor agreements, customer relationships and patented and unpatented technology. Indefinite lived intangibles not subject to amortization are assessed for impairment at least annually, or more frequently if events or changes in circumstances indicate they may be impaired, by comparing the fair value of the intangible asset to its carrying amount to determine if a write-down to fair value is required. Finite lived intangible assets are amortized using the straight-line method over their respective estimated useful lives. We perform our annual impairment tests each year and have determined there to be no impairment for any of the periods presented. There were no events or circumstances identified from the date of our assessment that would require an update to our annual impairment tests. |
Long-Lived Assets | Long-Lived Assets Long-lived assets, other than goodwill and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability is evaluated by determining whether the amortization of the balance over its remaining life can be recovered through undiscounted future operating cash flows. We measure the impairment loss based on projected discounted cash flows using a discount rate reflecting the average cost of funds and compared to the asset’s carrying value. As of December 31, 2019, there were no such events or circumstances. |
Fair Value Measurements | Fair Value Measurements We carry various assets and liabilities at fair value in the consolidated balance sheets. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are classified based on the following fair value hierarchy: Level 1 Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; or model-driven valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs for the asset or liability. These inputs reflect our own assumptions about the assumptions a market participant would use in pricing the asset or liability. |
Revenue Recognition | Revenue Recognition Revenue primarily consists of sales of air conditioning, heating and refrigeration equipment, and related parts and supplies. We generate our revenue primarily from the sale of finished products to customers; therefore, the significant majority of our contracts are short-term in nature and have only a single performance obligation to deliver products; therefore, we satisfy our performance obligation under such contracts when we transfer control of the product to the customer. Some contracts contain a combination of product sales and services, the latter of which is distinct and accounted for as a separate performance obligation. We satisfy our performance obligations for services when we render the services within the agreed-upon service period. Total service revenue is not material and accounted for less than 1% of our consolidated revenues for both and 2018. Revenue is recognized when control transfers to our customers when products are picked up or via shipment of products or delivery of services. We measure revenue as the amount of consideration we expect to be entitled to receive in exchange for those goods or services, net of any variable considerations (e.g., rights to return product, sales incentives, others) and any taxes collected from customers and subsequently remitted to governmental authorities. Revenue for shipping and handling charges is recognized when products are delivered to the customer. Product Returns We estimate product returns based on historical experience and record them on a gross basis on our balance sheets. Substantially all customer returns relate to products that are returned under manufacturers’ warranty obligations. Accrued sales returns at December 31, 2019 and 2018 of $12,181 and $11,275, respectively, were included in accrued expenses and other current liabilities in our consolidated balance sheets. Sales Incentives We estimate sales incentives expected to be paid over the term of the program based on the most likely amounts. Sales incentives are accounted for as a reduction in the transaction price and are generally paid on an annual basis. Practical Expedients We generally expense sales commissions when incurred because the amortization period is one year or less. These costs are recorded within selling, general and administrative expenses. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2019, 2018 and 2017, were $16,587, $16,520 and $24,677, respectively. See Note 3. |
Shipping and Handling | Shipping and Handling Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through cost of sales as inventories are sold. Shipping and handling costs associated with the delivery of products are |
Share-Based Compensation | Share-Based Compensation The fair value of stock option and non-vested |
Income Taxes | Income Taxes We record U.S. federal, state and foreign income taxes currently payable, as well as deferred taxes due to temporary differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities reflect the temporary differences between the financial statement and income tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date. We and our eligible subsidiaries file a consolidated U.S. federal income tax return. As income tax returns are generally not filed until well after the closing process for the December 31 financial statements is complete, the amounts recorded at December 31 reflect estimates of what the final amounts will be when the actual income tax returns are filed for that calendar year. In addition, estimates are often required with respect to, among other things, the appropriate state income tax rates to use in the various states that we and our subsidiaries are required to file, the potential utilization of operating loss carryforwards and valuation allowances required, if any, for tax assets that may not be realizable in the future. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more-likely-than-not” |
Earnings per Share | Earnings per Share We compute earnings per share using the two-class two-class non-vested non-forfeitable two-class two-class Diluted earnings per share reflects the dilutive effect of potential common shares from stock options. The dilutive effect of outstanding stock options is computed using the treasury stock method, which assumes any proceeds that could be obtained upon the exercise of stock options, would be used to purchase common stock at the average market price for the period. The assumed proceeds include the purchase price the optionee pays, the windfall tax benefit that we receive upon assumed exercise and the unrecognized compensation expense at the end of each period. |
Derivative Instruments and Hedging Activity | Derivative Instruments and Hedging Activity We have used derivative instruments, including forward and option contracts and swaps, to manage our exposure to fluctuations in foreign currency exchange rates and interest rates. The use of these derivative instruments modifies the exposure of these risks with the intent to reduce the risk or cost to us. We use derivative instruments as risk management tools and not for trading purposes. All derivatives, whether designated as hedging relationships or not, are recorded on the balance sheet at fair value. Cash flows from derivative instruments are classified in the consolidated statements of cash flows in the same category as the cash flows from the items subject to the designated hedge or undesignated (economic) hedge relationships. The hedging designation may be classified as one of the following: No Hedging Designation. Cash Flow Hedge. ( loss Fair Value Hedge. See Note 17 for additional information pertaining to derivative instruments. |
Loss Contingencies | Loss Contingencies Accruals are recorded for various contingencies including self-insurance, legal proceedings, environmental matters, and other claims that arise in the normal course of business. The estimation process contains uncertainty because accruals are based on judgment, the probability of losses and, where applicable, the consideration of opinions of external legal counsel and actuarially determined estimates. Additionally, we record receivables from third party insurers when recovery has been determined to be probable. |
Recently Adopted Accounting Standards and Recently Issued Accounting Standards Not Yet Adopted | Recently Adopted Accounting Standards Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance on accounting for leases, which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. In July 2018, the FASB issued updated guidance that provides an additional transition method of adoption that allows entities to initially apply the standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The adoption of this standard and its related amendments (collectively, the “New Lease Standard”) on January 1, 2019 did not result in the recognition of a cumulative adjustment to opening retained earnings under the additional transition method, nor did it have a significant impact on our consolidated statements of income or cash flows. See Note 2. Recently Issued Accounting Standards Not Yet Adopted Financial Instruments—Credit Losses In June 2016, the FASB issued guidance that modifies the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, contract assets, long-term receivables and off-balance Intangibles—Goodwill and Other In January 2017, the FASB issued guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under this updated standard, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity also should consider income tax effects from any tax-deductible |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Components Of Lease Expense | The components of operating lease expense were as follows: Year ended December 31, 2019 Lease cost $ 74,755 Short-term lease cost 9,427 Variable lease cost 707 Sublease income (226 ) Total operating lease cost $ 84,663 |
Summary Of Balance Sheet Information Related To Leases | Supplemental balance sheet information related to operating leases were as follows: December 31, 2019 ROU assets $ 223,369 Current portion of long-term obligations $ 68,199 Operating lease liabilities 154,271 Total operating lease liabilities $ 222,470 Weighted Average Remaining Lease Term (in years) 3.9 y Weighted Average Discount Rate 4.48 % |
Summary Of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to operating leases were as follows: Year Ended December 31, 2019 Operating cash flows for the measurement of operating lease liabilities $ 75,357 Operating lease right-of-use $ 290,422 |
Maturities Of Operating Lease Liabilities | At December 31, 2019, maturities of operating lease liabilities over each of the next five years and thereafter were as follows: 2020 $ 76,610 2021 63,442 2022 47,367 2023 30,659 2024 15,532 Thereafter 10,264 Total lease payments 243,874 Less imputed interest 21,404 Total lease liability $ 222,470 |
REVENUES (Tables)
REVENUES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Disaggregated Revenue | The following table presents our revenues disaggregated by primary geographical regions and major product lines within our single reporting segment: Years Ended December 31, 2019 2018 2017(1) Primary Geographical Regions: United States $ 4,184,206 $ 3,981,056 $ 3,775,729 Canada 294,040 291,685 269,603 Latin America and the Caribbean 292,116 273,912 296,623 $ 4,770,362 $ 4,546,653 $ 4,341,955 Major Product Lines: HVAC equipment 68 % 67 % 67 % Other HVAC products 28 % 29 % 28 % Commercial refrigeration products 4 % 4 % 5 % 100 % 100 % 100 % (1) As noted above, amounts prior to January 1, 2018 have not been adjusted under the modified retrospective method and remain as originally reported for such periods. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of Basic and Diluted Earnings Per Common Share | The following table presents the calculation of basic and diluted earnings per share for our Common and Class B common stock: Years Ended December 31, 2019 2018 2017 Basic Earnings per Share: Net income attributable to Watsco, Inc. shareholders $ 245,950 $ 242,932 $ 208,221 Less: distributed and undistributed earnings allocated to non-vested 20,412 19,792 17,430 Earnings allocated to Watsco, Inc. shareholders $ 225,538 $ 223,140 $ 190,791 Weighted-average common shares outstanding - Basic 34,644,700 34,319,890 32,824,947 Basic earnings per share for Common and Class B common stock $ 6.51 $ 6.50 $ 5.81 Allocation of earnings for Basic: Common stock $ 208,779 $ 206,355 $ 175,667 Class B common stock 16,759 16,785 15,124 $ 225,538 $ 223,140 $ 190,791 Diluted Earnings per Share: Net income attributable to Watsco, Inc. shareholders $ 245,950 $ 242,932 $ 208,221 Less: distributed and undistributed earnings allocated to non-vested 20,411 19,788 17,427 Earnings allocated to Watsco, Inc. shareholders $ 225,539 $ 223,144 $ 190,794 Weighted-average common shares outstanding - Basic 34,644,700 34,319,890 32,824,947 Effect of dilutive stock options 30,941 54,379 37,686 Weighted-average common shares outstanding - Diluted 34,675,641 34,374,269 32,862,633 Diluted earnings per share for Common and Class B common stock $ 6.50 $ 6.49 $ 5.81 |
OTHER COMPREHENSIVE INCOME (L_2
OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss) | The tax effects allocated to each component of other comprehensive income (loss) were as follows: Years Ended December 31, 2019 2018 2017 Foreign currency translation adjustment $ 12,298 $ (20,493 ) $ 15,993 Unrealized (loss) gain on cash flow hedging instruments (2,001 ) 2,627 (961 ) Income tax benefit (expense) 540 (709 ) 259 Unrealized (loss) gain on cash flow hedging instruments, net of tax (1,461 ) 1,918 (702 ) Reclassification of gain on cash flow hedging instruments into earnings (482 ) (215 ) (491 ) Income tax expense 130 58 133 Reclassification of gain on cash flow hedging instruments into earnings, net of tax (352 ) (157 ) (358 ) Unrealized gain on equity securities — — 51 Income tax expense — — (66 ) Unrealized loss on equity securities, net of tax — — (15 ) Other comprehensive income (loss) $ 10,485 $ (18,732 ) $ 14,918 |
Schedule of Accumulated Other Comprehensive Loss | The changes in each component of accumulated other comprehensive loss, net of tax, were as follows: Years Ended December 31, 2019 2018 2017 Foreign currency translation adjustment: Beginning balance $ (46,604 ) $ (33,499 ) $ (43,459 ) Current period other comprehensive income (loss) 8,005 (13,105 ) 9,960 Ending balance (38,599 ) (46,604 ) (33,499 ) Cash flow hedging instruments: Beginning balance 636 (421 ) 215 Current period other comprehensive (loss) income (876 ) 1,151 (421 ) Reclassification adjustment (211 ) (94 ) (215 ) Ending balance (451 ) 636 (421 ) Equity securities: Beginning balance — (301 ) (286 ) Cumulative-effect adjustment to retained earnings — 301 — Current period other comprehensive loss — — (15 ) Ending balance — — (301 ) Accumulated other comprehensive loss, net of tax $ (39,050 ) $ (45,968 ) $ (34,221 ) |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment, Net | December 31, 2019 2018 Land $ 741 $ 820 Buildings and improvements 81,938 75,308 Machinery, vehicles and equipment 86,639 79,002 Computer hardware and software 56,227 50,853 Furniture and fixtures 18,049 16,782 243,594 222,765 Accumulated depreciation and amortization (145,071 ) (131,719 ) $ 98,523 $ 91,046 Depreciation and amortization expense related to property and equipment included in selling, general and administrative expenses for the years ended December 31, 2019, 2018 and 2017, were $ 18,808 16,747 16,770 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Components of Income Tax Expense | The components of income tax expense from our wholly owned operations and investments and our controlling interest in joint ventures with Carrier are as follows: Years Ended December 31, 2019 2018 2017 Current: U.S. Federal $ 48,359 $ 47,263 $ 82,333 State 9,362 10,031 12,162 Foreign 8,078 7,229 6,461 65,799 64,523 100,956 Deferred: U.S. Federal 2,603 7,082 (13,254 ) State 446 1,600 (1,519 ) Foreign (1,771 ) (392 ) 4,038 1,278 8,290 (10,735 ) Income tax expense $ 67,077 $ 72,813 $ 90,221 |
Reconciliation of Effective Income Tax Rate | Following is a reconciliation of the effective income tax rate: Years Ended December 31, 2019 2018 2017 U.S. federal statutory rate 21.0 % 21.0 % 35.0 % State income taxes, net of federal benefit and other 2.8 3.6 2.4 Excess tax benefits from share-based compensation (2.0 ) (2.0 ) (2.7 ) Tax effects on foreign income 0.5 0.5 (1.0 ) GILTI (0.1 ) 0.3 — Tax credits and other (1.0 ) — (0.6 ) Repatriation transition tax — (0.9 ) 3.0 Deferred tax impact of enacted tax rate changes — 0.3 (6.3 ) Effective income tax rate attributable to Watsco, Inc. 21.2 22.8 29.8 Taxes attributable to non-controlling (2.7 ) (3.1 ) (3.8 ) Effective income tax rate 18.5 % 19.7 % 26.0 % |
Significant Components of Net Deferred Tax Liabilities | The following is a summary of the significant components of our net deferred tax liabilities: December 31, 2019 2018 Deferred tax assets: Share-based compensation $ 24,413 $ 21,517 Capitalized inventory costs and inventory reserves 3,627 2,151 Allowance for doubtful accounts 1,338 1,057 Self-insurance reserves 209 206 Other 2,212 2,486 Net operating loss carryforwards 2,036 484 33,835 27,901 Valuation allowance (655 ) — Total deferred tax assets 33,180 27,901 Deferred tax liabilities: Deductible goodwill (73,898 ) (69,600 ) Depreciation (14,241 ) (10,695 ) Other (7,188 ) (8,516 ) Total deferred tax liabilities (95,327 ) (88,811 ) Net deferred tax liabilities (1) $ (62,147 ) $ (60,910 ) (1) Net deferred tax liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities. |
Changes in Gross Unrecognized Tax Benefits | The changes in gross unrecognized tax benefits were as follows: Balance at December 31, 2016 $ 3,695 Additions based on tax positions related to the current year 801 Reductions due to lapse of applicable statute of limitations (271 ) Balance at December 31, 2017 4,225 Additions based on tax positions related to the current year 960 Reductions due to lapse of applicable statute of limitations (283 ) Balance at December 31, 2018 4,902 Additions based on tax positions related to the current year 1,027 Reductions due to lapse of applicable statute of limitations (562 ) Balance at December 31, 2019 $ 5,367 |
SHARE-BASED COMPENSATION AND _2
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Stock Option Activity | The following is a summary of stock option activity under the 2014 Plan and the 2001 Plan as of and for the year ended December 31, 2019: Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Options outstanding at December 31, 2018 504,617 $ 151.71 Granted 206,750 162.42 Exercised (94,525 ) 125.11 Forfeited (28,500 ) 160.53 Expired (3,667 ) 162.62 Options outstanding at December 31, 2019 584,675 $ 159.34 3.37 $ 12,591 Options exercisable at December 31, 2019 95,047 $ 150.83 2.42 $ 2,879 |
Summary of Non-Vested Restricted Stock Activity | The following is a summary of non-vested Shares Weighted- Average Grant Date Fair Value Non-vested 3,062,602 $ 48.72 Granted 173,940 151.58 Vested (32,000 ) 67.54 Forfeited (12,837 ) 148.43 Non-vested 3,191,705 $ 68.63 |
Valuation Assumptions Used for Stock Option Awards | The following table presents the weighted-average assumptions used for stock options granted: Years Ended December 31, 2019 2018 2017 Expected term in years 4.25 4.25 4.25 Risk-free interest rate 1.64 % 2.69 % 1.77 % Expected volatility 18.01 % 17.11 % 17.41 % Expected dividend yield 3.99 % 3.13 % 2.82 % Grant date fair value $ 14.81 $ 20.05 $ 17.23 |
Share-Based Compensation Expense | The following table provides information on share-based compensation expense: Years Ended December 31, 2019 2018 2017 Stock options $ 2,440 $ 2,014 $ 1,451 Non-vested 14,592 13,494 11,842 Share-based compensation expense $ 17,032 $ 15,508 $ 13,293 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The table below presents the allocation of the total consideration to tangible and intangible assets acquired and l Cash and cash equivalents $ 4,299 Accounts receivable 30,719 Inventories 45,491 Other current assets 135 Property and equipment 2,544 Operating lease right-of-use assets 19,072 Goodwill 9,884 Intangibles 19,000 Other assets 299 Accounts payable (11,079 ) Accrued expenses and other current liabilities (13,038 ) Operating lease liabilities, net of current portion (14,100 ) Total $ 93,226 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill are as follows: Balance at December 31, 2017 $ 382,729 Acquired goodwill 13,301 Foreign currency translation adjustment (4,032 ) Balance at December 31, 2018 391,998 Acquired goodwill 16,742 Foreign currency translation adjustment 2,477 Balance at December 31, 2019 $ 411,217 |
Indefinite Lived Intangible Assets | Intangible assets are comprised of the following: December 31, Estimated Useful Lives 2019 2018 Indefinite lived intangible assets - Trade names, trademarks and distribution rights $ 138,647 $ 119,188 Finite lived intangible assets: Customer relationships 7-18 79,911 69,593 Patented and unpatented technology 7 years 1,680 1,600 Trade name 10 years 1,150 1,150 Accumulated amortization (49,384 ) (43,680 ) Finite lived intangible assets, net 33,357 28,663 $ 172,004 $ 147,851 |
Amortization Expense Related to Finite Lived Intangible Assets | Annual amortization of finite lived intangible assets for the next five years is expected to approximate the following: 2020 $ 5,800 2021 $ 4,900 2022 $ 4,100 2023 $ 3,500 2024 $ 3,300 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Impact from Foreign Exchange Derivative Instruments Designated as Cash Flow Hedges | The impact from foreign exchange derivative instruments designated as cash flow hedges was as follows: Years Ended December 31, 2019 2018 (Loss) gain recorded in accumulated other comprehensive loss $ (2,001 ) $ 2,627 Gain reclassified from accumulated other comprehensive loss into earnings $ (482 ) $ (215 ) |
Fair Value of Derivative Instruments and Location in the Balance Sheets | The following table summarizes the fair value of derivative instruments, which consist solely of foreign exchange contracts, included in accrued expenses and other current liabilities and o ther current assets Asset Derivatives Liability December 31, 2019 2018 2019 2018 Derivatives designated as hedging instruments $ — $ 1,262 $ 944 $ 3 Derivatives not designated as hedging instruments — 58 63 11 Total derivative instruments $ — $ 1,320 $ 1,007 $ 14 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables present our assets and liabilities carried at fair value that are measured on a recurring basis: Total Fair Value Measurements at December 31, 2019 Using Balance Sheet Location Level 1 Level 2 Level 3 Assets: Equity securities Other assets $ 402 $402 — — Liabilities: Derivative financial instruments Accrued expenses and $ 1,007 — $1,007 — Total Fair Value Measurements at December 31, 2018 Using Balance Sheet Location Level 1 Level 2 Level 3 Assets: Derivative financial instruments Other current assets $ 1,320 — $ 1,320 — Equity securities Other assets $ 279 $ 279 — — Liabilities: Derivative financial instruments Accrued expenses and $ 14 — $ 14 — |
INFORMATION ABOUT GEOGRAPHIC _2
INFORMATION ABOUT GEOGRAPHIC AREAS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenues and Long-Lived Assets by Geographical Area | The following tables set forth revenues and long-lived assets by geographical area: Years Ended December 31, 2019 2018 (2) 2017 Revenues: United States $ 4,184,206 $ 3,981,056 $ 3,775,729 Canada 294,040 291,685 269,603 Latin America and the Caribbean 292,116 273,912 296,623 Total revenues $ 4,770,362 $ 4,546,653 $ 4,341,955 December 31, 2019 (1) 2018 Long-Lived Assets: United States $ 808,685 $ 549,649 Canada 180,663 162,648 Latin America and the Caribbean 20,083 6,930 Total long-lived assets $ 1,009,431 $ 719,227 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Supplemental Cash Flow Information | Supplemental cash flow information was as foll o : Years Ended December 31, 2019 2018 2017 Interest paid $ 4,341 $ 3,065 $ 5,773 Income taxes net of refunds $ 70,095 $ 115,301 $ 48,056 Common stock issued for N&S Supply of Fishkill, Inc. $ 4,032 — — Common stock issued for Peirce-Phelps, Inc. $ 58,344 — — Common stock issued for Dunphey & Associates Supply Co., Inc. $ 6,891 — — Common stock issued for Alert Labs, Inc. — $ 6,846 — |
SELECTED QUARTERLY FINANCIAL _2
SELECTED QUARTERLY FINANCIAL DATA (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Selected Quarterly Financial Data | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (In thousands, except per share data) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Year Ended December 31, 2019 Revenues (1) $ 931,278 $ 1,371,854 $ 1,394,915 $ 1,072,315 $ 4,770,362 Gross profit $ 233,760 $ 327,984 $ 334,691 $ 260,521 $ 1,156,956 Net income attributable to Watsco, Inc. $ 35,037 $ 90,155 $ 83,480 $ 37,278 $ 245,950 Earnings per share for Common and Class B common stock (2): Basic $ 0.88 $ 2.40 $ 2.20 $ 0.92 $ 6.51 Diluted $ 0.88 $ 2.40 $ 2.20 $ 0.92 $ 6.50 Year Ended December 31, 2018 Revenues (1) $ 926,577 $ 1,332,743 $ 1,296,007 $ 991,326 $ 4,546,653 Gross profit $ 230,833 $ 320,766 $ 319,009 $ 249,644 $ 1,120,252 Net income attributable to Watsco, Inc. $ 34,219 $ 89,957 $ 79,163 $ 39,593 $ 242,932 Earnings per share for Common and Class B common stock (2): Basic $ 0.89 $ 2.41 $ 2.12 $ 1.02 $ 6.50 Diluted $ 0.89 $ 2.40 $ 2.11 $ 1.02 $ 6.49 (1) Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly evenly distributed throughout the year except for dependence on housing completions and related weather and economic conditions. (2) Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)EntityStoreState | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Significant Accounting Policies [Line Items] | |||
Number of joint ventures | Entity | 3 | ||
Allowance for doubtful accounts | $ 7,943 | $ 6,503 | |
Capitalized vendor rebates | 12,007 | 11,603 | |
Goodwill and intangible assets impairment | 0 | 0 | $ 0 |
Accrued sales returns | 12,181 | 11,275 | |
Selling, general and administrative expense | 800,328 | 757,452 | 715,671 |
Finance lease ROU assets | 3,150 | ||
Finance lease liabilities | 3,231 | ||
Shipping and Handling [Member] | |||
Significant Accounting Policies [Line Items] | |||
Selling, general and administrative expense | 54,783 | 51,741 | 47,670 |
Advertising Expense [Member] | |||
Significant Accounting Policies [Line Items] | |||
Selling, general and administrative expense | $ 16,587 | $ 16,520 | $ 24,677 |
Minimum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Operating Lease Remaining Lease Term | 1 year | ||
Maximum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Operating Lease Remaining Lease Term | 10 years | ||
Maximum [Member] | Service Revenue Net [Member] | Product Concentration Risk | |||
Significant Accounting Policies [Line Items] | |||
Percentage of revenue | 1.00% | 1.00% | |
Buildings and Improvements | Minimum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful lives in years | 3 years | ||
Buildings and Improvements | Maximum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful lives in years | 40 years | ||
Other Depreciable Assets | Minimum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful lives in years | 3 years | ||
Other Depreciable Assets | Maximum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful lives in years | 10 years | ||
Furniture and Fixtures | Minimum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful lives in years | 5 years | ||
Furniture and Fixtures | Maximum [Member] | |||
Significant Accounting Policies [Line Items] | |||
Estimated useful lives in years | 7 years | ||
Watsco, Inc. | |||
Significant Accounting Policies [Line Items] | |||
Number of locations from which entity operates | Store | 606 | ||
Number of states in which entity operates | State | 38 |
Components of Operating Lease E
Components of Operating Lease Expense (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lease cost | $ 74,755 |
Short-term lease cost | 9,427 |
Variable lease cost | 707 |
Sublease income | (226) |
Total operating lease cost | $ 84,663 |
Summary Of Balance Sheet Inform
Summary Of Balance Sheet Information Related To Operating Leases (Detail) $ in Thousands | Dec. 31, 2019USD ($) |
Operating Leases | |
ROU assets | $ 223,369 |
Current portion of long-term obligations | 68,199 |
Operating lease liabilities | 154,271 |
Total operating lease liabilities | $ 222,470 |
Weighted Average Remaining Lease Term (in years) | |
Operating leases | 3 years 10 months 24 days |
Weighted Average Discount Rate | |
Operating leases | 4.48% |
Summary Of Supplemental Cash Fl
Summary Of Supplemental Cash Flow Information Related to Leases (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows for the measurement of operating lease liabilities | $ 75,357 |
Operating lease right-of-use assets obtained in exchange for operating lease obligations | $ 290,422 |
Maturities Of Operating Lease L
Maturities Of Operating Lease Liabilities (Detail) $ in Thousands | Dec. 31, 2019USD ($) |
Maturities of Operating Lease Liabilities | |
Total lease liability | $ 222,470 |
Operating Lease Liabilities [Member] | |
Maturities of Operating Lease Liabilities | |
2020 | 76,610 |
2021 | 63,442 |
2022 | 47,367 |
2023 | 30,659 |
2024 | 15,532 |
Thereafter | 10,264 |
Total lease payments | 243,874 |
Less imputed interest | 21,404 |
Total lease liability | $ 222,470 |
Leases - Additional Information
Leases - Additional Information (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Operating leases not yet commenced | $ 1,300 | |
Non Cancelable Leases [Member] | ||
Total lease payments | $ 219,300 | |
2019 | 70,400 | |
2020 | 55,100 | |
2021 | 41,300 | |
2022 | 28,500 | |
2023 | 15,700 | |
Thereafter | $ 8,300 |
Summary of Disaggregated Revenu
Summary of Disaggregated Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2019 | [1] | Sep. 30, 2019 | [1] | Jun. 30, 2019 | [1] | Mar. 31, 2019 | [1] | Dec. 31, 2018 | [1] | Sep. 30, 2018 | [1] | Jun. 30, 2018 | [1] | Mar. 31, 2018 | [1] | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |||
Disaggregation of Revenue [Line Items] | |||||||||||||||||||||
Revenues from product lines, percentage | 100.00% | 100.00% | 100.00% | ||||||||||||||||||
Revenues | $ 1,072,315 | $ 1,394,915 | $ 1,371,854 | $ 931,278 | $ 991,326 | $ 1,296,007 | $ 1,332,743 | $ 926,577 | $ 4,770,362 | [1] | $ 4,546,653 | [1],[2] | $ 4,341,955 | ||||||||
United States | |||||||||||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||||||||||
Revenues | 4,184,206 | 3,981,056 | [2] | 3,775,729 | |||||||||||||||||
Canada | |||||||||||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||||||||||
Revenues | 294,040 | 291,685 | [2] | 269,603 | |||||||||||||||||
Latin America and the Caribbean | |||||||||||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||||||||||
Revenues | $ 292,116 | $ 273,912 | [2] | $ 296,623 | |||||||||||||||||
HVAC Equipment | |||||||||||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||||||||||
Revenues from product lines, percentage | 68.00% | 67.00% | 67.00% | ||||||||||||||||||
Other HVAC Products | |||||||||||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||||||||||
Revenues from product lines, percentage | 28.00% | 29.00% | 28.00% | ||||||||||||||||||
Commercial Refrigeration Products | |||||||||||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||||||||||
Revenues from product lines, percentage | 4.00% | 4.00% | 5.00% | ||||||||||||||||||
[1] | Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly evenly distributed throughout the year except for dependence on housing completions and related weather and economic conditions. | ||||||||||||||||||||
[2] | Effective January 1, 2018, we adopted the provisions of accounting guidance related to revenue recognition. Amounts prior to January 1, 2018 have not been adjusted and remain as originally reported for such periods. See Note 3. |
Schedule of Basic and Diluted E
Schedule of Basic and Diluted Earnings per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||||||||||||
Net income attributable to Watsco, Inc. shareholders | $ 37,278 | $ 83,480 | $ 90,155 | $ 35,037 | $ 39,593 | $ 79,163 | $ 89,957 | $ 34,219 | $ 245,950 | $ 242,932 | $ 208,221 | ||||||||||
Less: distributed and undistributed earnings allocated to non-vested restricted common stock - Basic | 20,412 | 19,792 | 17,430 | ||||||||||||||||||
Earnings allocated to Watsco, Inc. shareholders - Basic | $ 225,538 | $ 223,140 | $ 190,791 | ||||||||||||||||||
Weighted-average common shares outstanding - Basic | 34,644,700 | 34,319,890 | 32,824,947 | ||||||||||||||||||
Basic earnings per share for Common and Class B common stock | $ 0.92 | [1] | $ 2.20 | [1] | $ 2.40 | [1] | $ 0.88 | [1] | $ 1.02 | [1] | $ 2.12 | [1] | $ 2.41 | [1] | $ 0.89 | [1] | $ 6.51 | [1] | $ 6.50 | [1] | $ 5.81 |
Net income attributable to Watsco, Inc. shareholders | $ 37,278 | $ 83,480 | $ 90,155 | $ 35,037 | $ 39,593 | $ 79,163 | $ 89,957 | $ 34,219 | $ 245,950 | $ 242,932 | $ 208,221 | ||||||||||
Less: distributed and undistributed earnings allocated to non-vested restricted common stock - Diluted | 20,411 | 19,788 | 17,427 | ||||||||||||||||||
Earnings allocated to Watsco, Inc. shareholders - Diluted | $ 225,539 | $ 223,144 | $ 190,794 | ||||||||||||||||||
Weighted-average common shares outstanding - Basic | 34,644,700 | 34,319,890 | 32,824,947 | ||||||||||||||||||
Effect of dilutive stock options | 30,941 | 54,379 | 37,686 | ||||||||||||||||||
Weighted-average common shares outstanding - Diluted | 34,675,641 | 34,374,269 | 32,862,633 | ||||||||||||||||||
Diluted earnings per share for Common and Class B common stock | $ 0.92 | [1] | $ 2.20 | [1] | $ 2.40 | [1] | $ 0.88 | [1] | $ 1.02 | [1] | $ 2.11 | [1] | $ 2.40 | [1] | $ 0.89 | [1] | $ 6.50 | [1] | $ 6.49 | [1] | $ 5.81 |
Common Stock | |||||||||||||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||||||||||||
Earnings allocated to Watsco, Inc. shareholders - Basic | $ 208,779 | $ 206,355 | $ 175,667 | ||||||||||||||||||
Class B Common Stock | |||||||||||||||||||||
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | |||||||||||||||||||||
Earnings allocated to Watsco, Inc. shareholders - Basic | $ 16,759 | $ 16,785 | $ 15,124 | ||||||||||||||||||
[1] | Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year. |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Line Items] | |||
Class B common stock conversion, number of shares | 2,574,336 | 2,581,627 | 2,601,996 |
Anti-dilutive stock options excluded from earnings per share | 205,380 | 74,270 | 11,664 |
Schedule of Tax Effects Allocat
Schedule of Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Components Of Other Comprehensive Income Loss [Line Items] | |||
Foreign currency translation adjustment | $ 12,298 | $ (20,493) | $ 15,993 |
Unrealized (loss) gain on cash flow hedging instruments | (2,001) | 2,627 | (961) |
Income tax benefit (expense) | 540 | (709) | 259 |
Unrealized (loss) gain on cash flow hedging instruments, net of tax | (1,461) | 1,918 | (702) |
Reclassification of gain on cash flow hedging instruments into earnings | (482) | (215) | (491) |
Income tax expense | 130 | 58 | 133 |
Reclassification of gain on cash flow hedging instruments into earnings, net of tax | (352) | (157) | (358) |
Unrealized gain on equity securities | 51 | ||
Income tax expense | (66) | ||
Unrealized loss on equity securities, net of tax | (15) | ||
Other comprehensive income (loss) | $ 10,485 | $ (18,732) | $ 14,918 |
Schedule of Accumulated Other C
Schedule of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | $ (45,968) | $ (34,221) | |
Ending balance | (39,050) | (45,968) | $ (34,221) |
Foreign Currency Translation Adjustment | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | (46,604) | (33,499) | (43,459) |
Current period other comprehensive income (loss) | 8,005 | (13,105) | 9,960 |
Ending balance | (38,599) | (46,604) | (33,499) |
Cash Flow Hedging Instruments | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | 636 | (421) | 215 |
Current period other comprehensive income (loss) | (876) | 1,151 | (421) |
Reclassification adjustment | (211) | (94) | (215) |
Ending balance | $ (451) | 636 | (421) |
Equity Securities | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | (301) | (286) | |
Cumulative-effect adjustment to retained earnings | $ 301 | ||
Current period other comprehensive income (loss) | (15) | ||
Ending balance | $ (301) |
Supplier Concentration - Additi
Supplier Concentration - Additional Information (Detail) - Supplier Concentration Risk - Vendor | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Concentration Risk [Line Items] | |||
Number of key suppliers | 10 | ||
Cost of Goods, Total | |||
Concentration Risk [Line Items] | |||
Percentage of purchases from key suppliers | 83.00% | 84.00% | 84.00% |
Carrier and Its Affiliates | Cost of Goods, Total | |||
Concentration Risk [Line Items] | |||
Percentage of purchases from key suppliers | 62.00% | 62.00% | 62.00% |
Property and Equipment, Net (De
Property and Equipment, Net (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 243,594 | $ 222,765 |
Accumulated depreciation and amortization | (145,071) | (131,719) |
Property and equipment, net | 98,523 | 91,046 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 741 | 820 |
Buildings and Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 81,938 | 75,308 |
Machinery, Vehicles and Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 86,639 | 79,002 |
Computer Hardware and Software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 56,227 | 50,853 |
Furniture and Fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 18,049 | $ 16,782 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation and amortization expense | $ 18,808 | $ 16,747 | $ 16,770 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) | Dec. 05, 2018 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||||
Revolving credit agreement, maturity date | Dec. 5, 2023 | |||
Payment of fees related to revolving credit agreement | $ 790,000 | |||
Borrowings under revolving credit agreement | $ 155,700,000 | 135,200,000 | ||
London Interbank Offer Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 87.50% | |||
Federal Funds Effective Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 0.50% | |||
Eurocurrency Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 1.00% | |||
Commitment Fee | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 7.50% | |||
Federal Funds and Eurocurrency Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 0.00% | |||
Maximum | London Interbank Offer Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 150.00% | |||
Maximum | Federal Funds Effective Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 50.00% | |||
Maximum | Eurocurrency Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 50.00% | |||
Maximum | Commitment Fee | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 20.00% | |||
Minimum | London Interbank Offer Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 87.50% | |||
Minimum | Federal Funds Effective Rate [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 0.00% | |||
Minimum | Eurocurrency Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 0.00% | |||
Minimum | Commitment Fee | ||||
Debt Instrument [Line Items] | ||||
Basis spread | 7.50% | |||
Letter of Credit | ||||
Debt Instrument [Line Items] | ||||
Maximum capacity under revolving credit agreement | $ 10,000,000 | |||
Swingline Subfacility | ||||
Debt Instrument [Line Items] | ||||
Maximum capacity under revolving credit agreement | 100,000,000 | |||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Payment of fees related to revolving credit agreement | $ 790,000 | |||
Maximum capacity under revolving credit agreement | $ 500,000,000 | |||
Seasonal discretionary maximum borrowing capacity under revolving credit agreement | $ 400,000,000 | |||
Alternative Currency Sublimit | ||||
Debt Instrument [Line Items] | ||||
Maximum capacity under revolving credit agreement | 75,000,000 | |||
Mexican Borrowing Sublimit | ||||
Debt Instrument [Line Items] | ||||
Maximum capacity under revolving credit agreement | $ 8,000,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes [Line Items] | ||||
U.S. federal statutory rate | 21.00% | 21.00% | 35.00% | |
Percentage of income attributable to wholly-owned operations and investments for which income tax expense and effective tax rate calculated | 100.00% | 100.00% | 100.00% | |
Valuation allowance | $ 655 | $ 0 | ||
Gross unrecognized tax benefits | 5,367 | 4,902 | $ 4,225 | $ 3,695 |
Unrecognized tax benefits that, if recognized, would affect the effective tax rate | 4,367 | 3,997 | ||
Estimated accrued interest and penalties resulting from unrecognized tax benefits | 855 | 755 | ||
Foreign subsidiaries earnings | 72,300 | |||
Provisional net income tax benefit | $ 9,955 | |||
Measurement period estimated net income tax benefit | 1,819 | |||
Total net income tax benefit attributable to passage of the TCJA | $ 11,774 | |||
State and other | ||||
Income Taxes [Line Items] | ||||
Net operating loss carry forwards | $ 10,411 | |||
State and other | Maximum | ||||
Income Taxes [Line Items] | ||||
State and other net operating loss carry forwards expiration date | 2039 | |||
State and other | Minimum | ||||
Income Taxes [Line Items] | ||||
State and other net operating loss carry forwards expiration date | 2020 | |||
Foreign | ||||
Income Taxes [Line Items] | ||||
Net operating loss carry forwards | $ 7,103 | |||
Foreign | Maximum | ||||
Income Taxes [Line Items] | ||||
State and other net operating loss carry forwards expiration date | 2039 | |||
Foreign | Minimum | ||||
Income Taxes [Line Items] | ||||
State and other net operating loss carry forwards expiration date | 2035 | |||
Federal | ||||
Income Taxes [Line Items] | ||||
Net operating loss carry forwards | $ 0 |
Components of Income Tax Expens
Components of Income Tax Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | |||
U.S. Federal | $ 48,359 | $ 47,263 | $ 82,333 |
State | 9,362 | 10,031 | 12,162 |
Foreign | 8,078 | 7,229 | 6,461 |
Current | 65,799 | 64,523 | 100,956 |
Deferred: | |||
U.S. Federal | 2,603 | 7,082 | (13,254) |
State | 446 | 1,600 | (1,519) |
Foreign | (1,771) | (392) | 4,038 |
Deferred | 1,278 | 8,290 | (10,735) |
Income tax expense | $ 67,077 | $ 72,813 | $ 90,221 |
Reconciliation of Effective Inc
Reconciliation of Effective Income Tax Rate (Detail) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of Effective Income Tax Rate [Line Items] | |||
U.S. federal statutory rate | 21.00% | 21.00% | 35.00% |
State income taxes, net of federal benefit and other | 2.80% | 3.60% | 2.40% |
Excess tax benefits from share-based compensation | (2.00%) | (2.00%) | (2.70%) |
Tax effects on foreign income | 0.50% | 0.50% | (1.00%) |
GILTI | (0.10%) | 0.30% | |
Tax credits and other | (1.00%) | (0.60%) | |
Repatriation transition tax | (0.90%) | 3.00% | |
Deferred tax impact of enacted tax rate changes | 0.30% | (6.30%) | |
Effective income tax rate attributable to Watsco, Inc. | 21.20% | 22.80% | 29.80% |
Taxes attributable to non-controlling interest | (2.70%) | (3.10%) | (3.80%) |
Effective income tax rate | 18.50% | 19.70% | 26.00% |
Significant Components of Net D
Significant Components of Net Deferred Tax Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | |
Components of Net Deferred Tax Liabilities [Line Items] | |||
Share-based compensation | $ 24,413 | $ 21,517 | |
Capitalized inventory costs and inventory reserves | 3,627 | 2,151 | |
Allowance for doubtful accounts | 1,338 | 1,057 | |
Self-insurance reserves | 209 | 206 | |
Other | 2,212 | 2,486 | |
Net operating loss carryforwards | 2,036 | 484 | |
Total deferred tax assets, gross | 33,835 | 27,901 | |
Valuation allowance | (655) | 0 | |
Total deferred tax assets | 33,180 | 27,901 | |
Deductible goodwill | (73,898) | (69,600) | |
Depreciation | (14,241) | (10,695) | |
Other | (7,188) | (8,516) | |
Total deferred tax liabilities | (95,327) | (88,811) | |
Net deferred tax liabilities | [1] | $ (62,147) | $ (60,910) |
[1] | Net deferred tax liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities. |
Changes in Gross Unrecognized T
Changes in Gross Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Contingency [Line Items] | |||
Beginning balance | $ 4,902 | $ 4,225 | $ 3,695 |
Additions based on tax positions related to the current year | 1,027 | 960 | 801 |
Reductions due to lapse of applicable statute of limitations | (562) | (283) | (271) |
Ending balance | $ 5,367 | $ 4,902 | $ 4,225 |
Share-Based Compensation and _3
Share-Based Compensation and Benefit Plans - Additional Information (Detail) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)Age$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Income tax expense | $ 67,077 | $ 72,813 | $ 90,221 |
Shares withheld as payment for tax withholdings related to share based compensation, market value | 1,528 | 3,782 | 4,674 |
Common stock contribution to 401(k) plan | $ 4,274 | $ 2,945 | $ 2,428 |
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate shares of common stock that may be granted | shares | 1,500,000 | ||
Shares reserved for future grant | shares | 466,493 | ||
Number of days of service required for an employee to purchase shares | 90 days | ||
Discount to employees to purchase shares | 5.00% | ||
Shares purchased under ESPP | shares | 5,676 | 5,151 | 5,571 |
Average price of the shares purchased by employees | $ / shares | $ 145.09 | $ 168.21 | $ 144.58 |
Additional shares issued resulting from cash dividends reinvested in common stock | shares | 5,087 | 4,338 | 3,844 |
Net proceeds from shares purchased under ESPP | $ 1,638 | $ 1,585 | $ 1,389 |
2014 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percent of market price that share-based compensation awards are granted at | 100.00% | ||
Aggregate shares of common stock that may be granted | shares | 2,000,000 | ||
Shares of common stock remaining under the 2001 Plan available for issuance under the 2014 Plan | shares | 45,421 | ||
Shares reserved for future grant | shares | 478,429 | ||
Contractual term of stock option awards | 5 years | ||
2014 Plan | Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Years in which options plan vest | 2 years | ||
2014 Plan | Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Years in which options plan vest | 4 years | ||
2014 Plan | Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares awarded under plan | shares | 779,502 | ||
2014 Plan | Class B Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares awarded under plan | shares | 787,490 | ||
401(k) Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock contribution to 401(k) Plan, shares | shares | 30,715 | 17,318 | 16,389 |
Common stock contribution to 401(k) plan | $ 4,274 | $ 2,945 | $ 2,428 |
2001 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate shares of common stock that may be granted | shares | 0 | ||
Non-Vested Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average grant date fair value of non-vested (restricted) stock | $ / shares | $ 151.58 | $ 167.06 | $ 149.47 |
Fair value of non-vested stock that vested | $ 4,931 | $ 9,637 | $ 11,580 |
Unrecognized share-based compensation expense | $ 132,642 | ||
Vesting period related to unrecognized share-based compensation expense | 11 years | ||
Non-Vested Restricted Stock | Chief Executive Officer | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized share-based compensation expense | $ 57,000 | ||
Vesting period related to unrecognized share-based compensation expense | 9 years | ||
Vesting period related to shares obligated to issue in connection with incentive compensation agreement | shares | 56,823 | ||
Non-Vested Restricted Stock | Chief Executive Officer | Share-based Compensation Award, Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized share-based compensation expense | $ 6,000 | ||
Vesting period related to unrecognized share-based compensation expense | 3 years | ||
Age of Chief Executive Officer when non-vested (restricted) stock vests | Age | 82 | ||
Non-Vested Restricted Stock | Chief Executive Officer | Share-based Compensation Award, Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized share-based compensation expense | $ 37,000 | ||
Vesting period related to unrecognized share-based compensation expense | 7 years | ||
Age of Chief Executive Officer when non-vested (restricted) stock vests | Age | 86 | ||
Non-Vested Restricted Stock | Chief Executive Officer | Share-based Compensation Award, Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized share-based compensation expense | $ 14,000 | ||
Vesting period related to unrecognized share-based compensation expense | 9 years | ||
Age of Chief Executive Officer when non-vested (restricted) stock vests | Age | 88 | ||
Non-Vested Restricted Stock | President | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized share-based compensation expense | $ 16,000 | ||
Vesting period related to unrecognized share-based compensation expense | 24 years | ||
Vesting period related to shares obligated to issue in connection with incentive compensation agreement | shares | 20,886 | ||
Non-Vested Restricted Stock | President | Share-based Compensation Award, Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized share-based compensation expense | $ 15,000 | ||
Vesting period related to unrecognized share-based compensation expense | 24 years | ||
Age of president when non vested restricted shares vests | Age | 62 | ||
Non-Vested Restricted Stock | President | Share-based Compensation Award, Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized share-based compensation expense | $ 1,000 | ||
Vesting period related to unrecognized share-based compensation expense | 26 years | ||
Age of president when non vested restricted shares vests | Age | 64 | ||
Non-Vested Restricted Stock | Employee | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Age of employee when non-vested (restricted) stock vests | Age | 62 | ||
Non-Vested Restricted Stock | Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares withheld as payment for tax withholdings related to share based compensation, shares | shares | 32,454 | ||
Shares withheld as payment for tax withholdings related to share based compensation, market value | $ 4,664 | ||
Non-Vested Restricted Stock | Common and Class B Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares withheld as payment for tax withholdings related to share based compensation, shares | shares | 9,824 | 21,754 | |
Shares withheld as payment for tax withholdings related to share based compensation, market value | $ 1,518 | $ 3,775 | |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Income tax expense | 626 | 635 | 645 |
Total intrinsic value of stock options exercised | 4,153 | 3,500 | 2,296 |
Cash received from Common stock issued | 11,703 | 5,006 | 3,855 |
Unrecognized share-based compensation expense | $ 3,942 | ||
Vesting period related to unrecognized share-based compensation expense | 1 year 8 months 12 days | ||
Fair value of stock options vested | $ 2,055 | $ 1,607 | $ 754 |
Stock Options | Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares withheld as payment for tax withholdings related to share based compensation, shares | shares | 799 | 7,027 | 350 |
Shares withheld as payment for tax withholdings related to share based compensation, market value | $ 134 | $ 1,269 | $ 53 |
Summary of Stock Option Activit
Summary of Stock Option Activity (Detail) $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options, Outstanding beginning balance | shares | 504,617 |
Options, Granted | shares | 206,750 |
Options, Exercised | shares | (94,525) |
Options, Forfeited | shares | (28,500) |
Options, Expired | shares | (3,667) |
Options, Outstanding ending balance | shares | 584,675 |
Options, Exercisable | shares | 95,047 |
Weighted-Average Exercise Price, Outstanding beginning balance | $ / shares | $ 151.71 |
Weighted-Average Exercise Price, Granted | $ / shares | 162.42 |
Weighted-Average Exercise Price, Exercised | $ / shares | 125.11 |
Weighted-Average Exercise Price, Forfeited | $ / shares | 160.53 |
Weighted-Average Exercise Price, Expired | $ / shares | 162.62 |
Weighted-Average Exercise Price, Outstanding ending balance | $ / shares | 159.34 |
Weighted-Average Exercise Price, Exercisable | $ / shares | $ 150.83 |
Weighted-Average Remaining Contractual Term (in years), Outstanding | 3 years 4 months 13 days |
Weighted-Average Remaining Contractual Term (in years), Exercisable | 2 years 5 months 1 day |
Aggregate Intrinsic Value, Outstanding | $ | $ 12,591 |
Aggregate Intrinsic Value, Exercisable | $ | $ 2,879 |
Summary of Non-Vested Restricte
Summary of Non-Vested Restricted Stock Activity (Detail) - Non-Vested Restricted Stock - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares, Non-vested beginning balance | 3,062,602 | ||
Shares, Granted | 173,940 | ||
Shares, Vested | (32,000) | ||
Shares, Forfeited | (12,837) | ||
Shares, Non-vested ending balance | 3,191,705 | 3,062,602 | |
Weighted-Average Grant Date Fair Value, Non-vested beginning balance | $ 48.72 | ||
Weighted-Average Grant Date Fair Value, Granted | 151.58 | $ 167.06 | $ 149.47 |
Weighted-Average Grant Date Fair Value, Vested | 67.54 | ||
Weighted-Average Grant Date Fair Value, Forfeited | 148.43 | ||
Weighted-Average Grant Date Fair Value, Non-vested ending balance | $ 68.63 | $ 48.72 |
Weighted-Average Assumptions Us
Weighted-Average Assumptions Used for Stock Options Granted (Detail) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term in years | 4 years 3 months | 4 years 3 months | 4 years 3 months |
Risk-free interest rate | 1.64% | 2.69% | 1.77% |
Expected volatility | 18.01% | 17.11% | 17.41% |
Expected dividend yield | 3.99% | 3.13% | 2.82% |
Grant date fair value | $ 14.81 | $ 20.05 | $ 17.23 |
Share-Based Compensation Expens
Share-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 17,032 | $ 15,508 | $ 13,293 |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | 2,440 | 2,014 | 1,451 |
Non-Vested Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 14,592 | $ 13,494 | $ 11,842 |
Purchase of Ownership Interes_2
Purchase of Ownership Interest in Joint Venture - Additional Information (Detail) $ in Thousands | Feb. 13, 2017USD ($) | May 31, 2019USD ($)Location |
Homans Associates II LLC [Member] | ||
Business Acquisition [Line Items] | ||
Additional ownership interest acquired in subsidiary | 20.00% | |
Percentage of ownership interest | 100.00% | |
Cash consideration paid to obtain additional ownership | $ 32,400 | |
Number of locations in which the company operates | Location | 16 | |
Carrier Enterprise II | ||
Business Acquisition [Line Items] | ||
Additional ownership interest acquired | 10.00% | |
Cash consideration | $ 42,688 | |
Controlling interest, ownership percentage | 80.00% |
Investment in Unconsolidated _2
Investment in Unconsolidated Entity - Additional Information (Detail) $ in Thousands | Jul. 05, 2018USD ($) | Apr. 22, 2019USD ($) | Jun. 21, 2017USD ($)board-memberLocation | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jun. 29, 2018 |
Schedule of Equity Method Investments [Line Items] | |||||||
Investment in unconsolidated entity | $ 4,940 | $ 3,760 | $ 63,600 | ||||
Proceeds from non-controlling interest for investment in unconsolidated entity | $ 988 | $ 752 | $ 12,720 | ||||
Carrier Enterprise I | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Ownership percentage by parent | 80.00% | ||||||
Ownership percentage, by non-controlling owners | 20.00% | ||||||
Russell Sigler Inc | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Total ownership interest | 38.10% | 34.90% | 36.30% | ||||
Investment in unconsolidated entity | $ 3,760 | $ 4,940 | $ 63,600 | ||||
Contribution to investment in unconsolidated entity by controlling interest | 3,008 | 3,952 | 50,880 | ||||
Proceeds from non-controlling interest for investment in unconsolidated entity | $ 752 | $ 988 | $ 12,720 | ||||
Ownership percentage needed for right to purchase up to 100% | 85.00% | ||||||
Total number of board members | board-member | 6 | ||||||
Number of board members that can be appointed based on ownership | board-member | 2 | ||||||
Equity method investment, additional ownership interest acquired | 1.80% | 1.40% | |||||
Russell Sigler Inc | Western United States | |||||||
Schedule of Equity Method Investments [Line Items] | |||||||
Number of locations | Location | 30 |
Acquisitions - Schedule of Reco
Acquisitions - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Aug. 01, 2019 |
Business Acquisition [Line Items] | ||
Operating lease right-of-use assets | $ 223,369 | |
Operating lease liabilities, net of current portion | $ (154,271) | |
Peirce Phelps PPI [Member] | ||
Business Acquisition [Line Items] | ||
Cash and cash equivalents | $ 4,299 | |
Accounts receivable | 30,719 | |
Inventories | 45,491 | |
Other current assets | 135 | |
Property and equipment | 2,544 | |
Operating lease right-of-use assets | 19,072 | |
Goodwill | 9,884 | |
Intangibles | 19,000 | |
Other assets | 299 | |
Accounts payable | (11,079) | |
Accrued expenses and other current liabilities | (13,038) | |
Operating lease liabilities, net of current portion | (14,100) | |
Total | $ 93,226 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Detail) $ in Thousands | Aug. 01, 2019USD ($)Locationshares | Apr. 02, 2019USD ($)Locationshares | Aug. 23, 2018USD ($)shares | Nov. 26, 2019USD ($)Locationshares | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) |
Business Acquisition [Line Items] | ||||||
Proceeds from non-controlling interest for Business Acquisition | $ 17,000 | |||||
N&S Supply of Fishkill, Inc | ||||||
Business Acquisition [Line Items] | ||||||
Number of locations in which the company operates | Location | 7 | |||||
Cash consideration | $ 12,000 | |||||
Stock issued for acquisition | shares | 22,435 | |||||
Fair value of equity shares issued | $ 4,032 | 4,032 | ||||
Number of years goodwill is deductible for tax purposes | 15 years | |||||
Goodwill Acquired | $ 2,722 | |||||
Peirce Phelps PPI [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of locations in which the company operates | Location | 19 | |||||
Business combination recognized identifiable assets acquired and liabilities assumed net | $ 85,000 | |||||
Cash consideration | $ 10,000 | |||||
Stock issued for acquisition | shares | 372,543 | |||||
Fair value of equity shares issued | $ 58,344 | 58,344 | ||||
Proceeds from non-controlling interest for Business Acquisition | 17,000 | |||||
Goodwill and intangibles acquired | 28,884 | |||||
intangible assets acquired | $ 19,000 | |||||
Amortization period | 18 years | |||||
Number of years goodwill is deductible for tax purposes | 15 years | |||||
Goodwill Acquired | $ 9,884 | |||||
Peirce Phelps PPI [Member] | Customer Relationships [Member] | ||||||
Business Acquisition [Line Items] | ||||||
intangible assets acquired | 5,500 | |||||
Peirce Phelps PPI [Member] | Trade Names And Distribution Rights [Member] | ||||||
Business Acquisition [Line Items] | ||||||
intangible assets acquired | $ 13,500 | |||||
Alert Labs Inc | ||||||
Business Acquisition [Line Items] | ||||||
Cash consideration | $ 5,889 | |||||
Fair value of equity shares issued | $ 6,846 | |||||
Amortization period | 7 years | |||||
Adjustment related to previously held equity interest | $ 171 | |||||
Contingent consideration performance measurement period | 3 years | |||||
Intangibles and goodwill acquired | $ 15,403 | |||||
Fair value of intangible assets | 1,640 | |||||
Alert Labs Inc | Patented And Unpatented Technology [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Fair value of intangible assets | 1,600 | |||||
Alert Labs Inc | Customer Relationships [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Fair value of intangible assets | $ 40 | |||||
Dunphey Associates Supply Co [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of locations in which the company operates | Location | 7 | |||||
Cash consideration | $ 16,758 | |||||
Stock issued for acquisition | shares | 50,952 | |||||
Fair value of equity shares issued | $ 6,891 | $ 6,891 | ||||
Goodwill and intangibles acquired | 8,974 | |||||
intangible assets acquired | $ 5,300 | |||||
Number of years goodwill is deductible for tax purposes | 15 years | |||||
Dunphey Associates Supply Co [Member] | Customer Relationships [Member] | ||||||
Business Acquisition [Line Items] | ||||||
intangible assets acquired | $ 2,800 | |||||
Amortization period | 15 years | |||||
Dunphey Associates Supply Co [Member] | Trade Names And Distribution Rights [Member] | ||||||
Business Acquisition [Line Items] | ||||||
intangible assets acquired | $ 2,500 | |||||
Stock consideration [Member] | Alert Labs Inc | ||||||
Business Acquisition [Line Items] | ||||||
Stock issued for acquisition | shares | 23,873 | |||||
Business acquisition, fair value of common stock | $ 3,991 | |||||
Contingent consideration [Member] | Alert Labs Inc | ||||||
Business Acquisition [Line Items] | ||||||
Stock issued for acquisition | shares | 23,230 | |||||
Contingent consideration | $ 3,026 |
Changes in Carrying Amount of G
Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill [Line Items] | ||
Goodwill, Beginning Balance | $ 391,998 | $ 382,729 |
Acquired goodwill | 16,742 | 13,301 |
Foreign currency translation adjustment | 2,477 | (4,032) |
Goodwill, Ending Balance | $ 411,217 | $ 391,998 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill And Intangible Assets [Line Items] | |||
Amortization expense related to finite lived intangible assets | $ 5,704 | $ 5,348 | $ 5,263 |
Intangible Assets (Detail)
Intangible Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible Assets [Line Items] | ||
Indefinite lived intangible assets—Trade names, trademarks and distribution rights | $ 138,647 | $ 119,188 |
Finite lived intangible assets: | ||
Accumulated amortization | (49,384) | (43,680) |
Finite lived intangible assets, net | 33,357 | 28,663 |
Intangible assets, net | 172,004 | 147,851 |
Customer Relationships | ||
Finite lived intangible assets: | ||
Finite lived intangible assets | $ 79,911 | 69,593 |
Customer Relationships | Maximum | ||
Intangible Assets [Line Items] | ||
Finite lived intangible assets, Estimated Useful lives, years | 18 years | |
Customer Relationships | Minimum | ||
Intangible Assets [Line Items] | ||
Finite lived intangible assets, Estimated Useful lives, years | 7 years | |
Trade Name | ||
Intangible Assets [Line Items] | ||
Finite lived intangible assets, Estimated Useful lives, years | 10 years | |
Finite lived intangible assets: | ||
Finite lived intangible assets | $ 1,150 | 1,150 |
Patented And Unpatented Technology [Member] | ||
Intangible Assets [Line Items] | ||
Finite lived intangible assets, Estimated Useful lives, years | 7 years | |
Finite lived intangible assets: | ||
Finite lived intangible assets | $ 1,680 | $ 1,600 |
Amortization Expense Related to
Amortization Expense Related to Finite Lived Intangible Assets (Detail) $ in Thousands | Dec. 31, 2019USD ($) |
2020 | $ 5,800 |
2021 | 4,900 |
2022 | 4,100 |
2023 | 3,500 |
2024 | $ 3,300 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Aug. 23, 2017 | Sep. 30, 1999 | |
Stockholders Equity Note [Line Items] | |||||
Preferred stock outstanding | 0 | 0 | |||
Maximum aggregate offering price under sales agreement | $ 250,000 | ||||
Number of shares authorized to be repurchased | 7,500,000 | ||||
Treasury stock, shares repurchased | 0 | 0 | 0 | ||
Cost of repurchased shares | $ 114,425 | $ 114,425 | $ 114,425 | ||
Remaining number of shares authorized to be repurchased | 1,129,087 | ||||
Class B Common Stock | |||||
Stockholders Equity Note [Line Items] | |||||
Amount of votes common stock is entitled | ten | ||||
Treasury stock, shares repurchased | 48,263 | 48,263 | 48,263 | ||
Common Stock | |||||
Stockholders Equity Note [Line Items] | |||||
Amount of votes common stock is entitled | one | ||||
Percentage of Board entitled to elect | 25.00% | ||||
Treasury stock, shares repurchased | 6,322,650 |
Financial Instruments - Additio
Financial Instruments - Additional Information (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Financial Instrument [Line Items] | ||
Estimated fair value of contingent liability | $ 0 | |
Standby Letters of Credit | ||
Financial Instrument [Line Items] | ||
Fair value of contingent liability | 925 | $ 1,222 |
Performance Bonds | ||
Financial Instrument [Line Items] | ||
Fair value of contingent liability | $ 10,500 | $ 3,600 |
Impact from Foreign Exchange De
Impact from Foreign Exchange Derivative Instruments Designated as Cash Flow Hedges (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
(Loss) gain recorded in accumulated other comprehensive loss | $ (2,001) | $ 2,627 | $ (961) |
Foreign Currency Forward Contracts | Cash Flow Hedge | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
(Loss) gain recorded in accumulated other comprehensive loss | (2,001) | 2,627 | |
Gain reclassified from accumulated other comprehensive loss into earnings | $ (482) | $ (215) |
Fair Value of Derivative Instru
Fair Value of Derivative Instruments and Location in the Balance Sheets (Detail) - Foreign Exchange Forward And Option Contracts [Member] - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Derivatives, Fair Value [Line Items] | ||
Derivative instruments, assets derivatives | $ 1,320 | |
Derivative instruments, liabilities derivatives | $ 1,007 | 14 |
Derivatives Designated as Hedging Instruments | ||
Derivatives, Fair Value [Line Items] | ||
Derivative instruments, assets derivatives | 1,262 | |
Derivative instruments, liabilities derivatives | 944 | 3 |
Not Designated as Hedging Instrument, Economic Hedge [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Derivative instruments, assets derivatives | 58 | |
Derivative instruments, liabilities derivatives | $ 63 | $ 11 |
Derivatives - Additional Inform
Derivatives - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Foreign Currency Forward Contracts | Cash Flow Hedge | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Notional value of derivatives | $ 41,200,000 | ||
Contract maturity period | one year or less | ||
Contract expiring terms | 2020-09 | ||
Maximum length of time hedged in cash flow hedge | 12 months | ||
Pre-tax (loss) to be reclassified into earnings within the next 12 months | $ (1,033,000) | ||
Foreign Exchange Forward And Option Contracts [Member] | Not Designated as Hedging Instrument, Economic Hedge [Member] | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Notional value of derivatives | $ 6,000,000 | ||
Contract expiring terms | 2020-02 | ||
(Loss) gain from foreign currency forward and option contracts not designated as hedging instruments | $ (540,000) | $ 129,000 | $ (829,000) |
Assets and Liabilities Carried
Assets and Liabilities Carried at Fair Value Measured on Recurring Basis (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Other Current Assets | ||
Assets: | ||
Derivative financial instruments | $ 1,320 | |
Other assets | ||
Assets: | ||
Equity securities | $ 402 | 279 |
Accrued expenses and other current liabilities | ||
Liabilities: | ||
Derivative financial instruments | 1,007 | 14 |
Fair Value Measurements, Level 1 | Other assets | ||
Assets: | ||
Equity securities | 402 | 279 |
Fair Value Measurements, Level 2 | Other Current Assets | ||
Assets: | ||
Derivative financial instruments | 1,320 | |
Fair Value Measurements, Level 2 | Accrued expenses and other current liabilities | ||
Liabilities: | ||
Derivative financial instruments | $ 1,007 | $ 14 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Line Items] | ||
Self-insurance reserves | $ 3,062 | $ 2,311 |
Maximum exposure to loss related to involvement with variable interest entity | 3,700 | |
Non-cancelable purchase obligations for goods | 28,000 | |
Carrier and Its Affiliates [Member] | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Non-cancelable purchase obligations for goods | $ 17,000 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Supplier Concentration Risk | Cost of Goods, Total | |||
Related Party Transaction [Line Items] | |||
Percentage of purchases from key suppliers | 83.00% | 84.00% | 84.00% |
Moss & Associates LLC | Customary Payments for Remodeling of Corporate Headquarters | |||
Related Party Transaction [Line Items] | |||
Payment for related party transaction | $ 124 | $ 951 | |
Amount payable to related party | $ 0 | ||
Greenberg Traurig, P.A. | Customary Fees for Legal Services | |||
Related Party Transaction [Line Items] | |||
Payment for related party transaction | 187 | 131 | |
Amount payable to related party | 0 | ||
Carrier and Its Affiliates | Supplier Concentration Risk | |||
Related Party Transaction [Line Items] | |||
Amount payable to Carrier and its affiliates, net of receivables | 86,000 | 71,000 | |
Revenues from sales to Carrier and its affiliates | $ 91,000 | $ 84,000 | $ 64,000 |
Carrier and Its Affiliates | Supplier Concentration Risk | Cost of Goods, Total | |||
Related Party Transaction [Line Items] | |||
Percentage of purchases from key suppliers | 62.00% | 62.00% | 62.00% |
Revenues and Long-Lived Assets
Revenues and Long-Lived Assets by Geographical Area (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | [1] | Jun. 30, 2019 | [1] | Mar. 31, 2019 | [1] | Dec. 31, 2018 | Sep. 30, 2018 | [1] | Jun. 30, 2018 | [1] | Mar. 31, 2018 | [1] | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |||||
Geographic Area Information [Line Items] | |||||||||||||||||||||
Revenues | $ 1,072,315 | [1] | $ 1,394,915 | $ 1,371,854 | $ 931,278 | $ 991,326 | [1] | $ 1,296,007 | $ 1,332,743 | $ 926,577 | $ 4,770,362 | [1] | $ 4,546,653 | [1],[2] | $ 4,341,955 | ||||||
Long-Lived Assets | 1,009,431 | [3] | 719,227 | 1,009,431 | [3] | 719,227 | |||||||||||||||
United States | |||||||||||||||||||||
Geographic Area Information [Line Items] | |||||||||||||||||||||
Revenues | 4,184,206 | 3,981,056 | [2] | 3,775,729 | |||||||||||||||||
Long-Lived Assets | 808,685 | [3] | 549,649 | 808,685 | [3] | 549,649 | |||||||||||||||
Canada | |||||||||||||||||||||
Geographic Area Information [Line Items] | |||||||||||||||||||||
Revenues | 294,040 | 291,685 | [2] | 269,603 | |||||||||||||||||
Long-Lived Assets | 180,663 | [3] | 162,648 | 180,663 | [3] | 162,648 | |||||||||||||||
Latin America and Caribbean | |||||||||||||||||||||
Geographic Area Information [Line Items] | |||||||||||||||||||||
Revenues | 292,116 | 273,912 | [2] | $ 296,623 | |||||||||||||||||
Long-Lived Assets | $ 20,083 | [3] | $ 6,930 | $ 20,083 | [3] | $ 6,930 | |||||||||||||||
[1] | Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly evenly distributed throughout the year except for dependence on housing completions and related weather and economic conditions. | ||||||||||||||||||||
[2] | Effective January 1, 2018, we adopted the provisions of accounting guidance related to revenue recognition. Amounts prior to January 1, 2018 have not been adjusted and remain as originally reported for such periods. See Note 3. | ||||||||||||||||||||
[3] | Effective January 1, 2019, we adopted the provisions of accounting guidance related to leases. Amounts prior to January 1, 2019 have not been adjusted and remain as originally reported for such periods. See Note 2. |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information (Detail) - USD ($) $ in Thousands | Aug. 01, 2019 | Apr. 02, 2019 | Nov. 26, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Cash Flow Supplemental Disclosures [Line Items] | ||||||
Interest paid | $ 4,341 | $ 3,065 | $ 5,773 | |||
Income taxes net of refunds | 70,095 | 115,301 | $ 48,056 | |||
N&S Supply of Fishkill, Inc | ||||||
Cash Flow Supplemental Disclosures [Line Items] | ||||||
Business combination shares issued | $ 4,032 | 4,032 | ||||
Peirce-Phelps, Inc. | ||||||
Cash Flow Supplemental Disclosures [Line Items] | ||||||
Business combination shares issued | $ 58,344 | 58,344 | ||||
Dunphey & Associates Supply Co., Inc. | ||||||
Cash Flow Supplemental Disclosures [Line Items] | ||||||
Business combination shares issued | $ 6,891 | $ 6,891 | ||||
Alert Labs Inc | ||||||
Cash Flow Supplemental Disclosures [Line Items] | ||||||
Business combination shares issued | $ 6,846 |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Detail) - Common Stock [Member] - Class B Common Stock - $ / shares | Feb. 11, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | ||
Cash dividend, previous rate | $ 1.60 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Cash dividend, current rate | $ 1.775 |
Selected Quarterly Financial _3
Selected Quarterly Financial Data (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |||||||||||
Quarterly Financial Data [Line Items] | |||||||||||||||||||||
Revenues | $ 1,072,315 | [1] | $ 1,394,915 | [1] | $ 1,371,854 | [1] | $ 931,278 | [1] | $ 991,326 | [1] | $ 1,296,007 | [1] | $ 1,332,743 | [1] | $ 926,577 | [1] | $ 4,770,362 | [1] | $ 4,546,653 | [1],[2] | $ 4,341,955 |
Gross profit | 260,521 | 334,691 | 327,984 | 233,760 | 249,644 | 319,009 | 320,766 | 230,833 | 1,156,956 | 1,120,252 | 1,065,659 | ||||||||||
Net income attributable to Watsco, Inc. | $ 37,278 | $ 83,480 | $ 90,155 | $ 35,037 | $ 39,593 | $ 79,163 | $ 89,957 | $ 34,219 | $ 245,950 | $ 242,932 | $ 208,221 | ||||||||||
Earnings per share for Common and Class B common stock: | |||||||||||||||||||||
Basic | $ 0.92 | [3] | $ 2.20 | [3] | $ 2.40 | [3] | $ 0.88 | [3] | $ 1.02 | [3] | $ 2.12 | [3] | $ 2.41 | [3] | $ 0.89 | [3] | $ 6.51 | [3] | $ 6.50 | [3] | $ 5.81 |
Diluted | $ 0.92 | [3] | $ 2.20 | [3] | $ 2.40 | [3] | $ 0.88 | [3] | $ 1.02 | [3] | $ 2.11 | [3] | $ 2.40 | [3] | $ 0.89 | [3] | $ 6.50 | [3] | $ 6.49 | [3] | $ 5.81 |
[1] | Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the fourth quarter. Demand related to the new construction sectors throughout most of the markets is fairly evenly distributed throughout the year except for dependence on housing completions and related weather and economic conditions. | ||||||||||||||||||||
[2] | Effective January 1, 2018, we adopted the provisions of accounting guidance related to revenue recognition. Amounts prior to January 1, 2018 have not been adjusted and remain as originally reported for such periods. See Note 3. | ||||||||||||||||||||
[3] | Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year. |