Miami-based Watsco — North America’s largest HVACR distributor — reported its 2024 second quarter results on July 30, showing healthier residential end-markets and an increase in sales of commercial products.

Watsco posted total 2Q sales of $2.1 billion, that were up approximately 7% year-over-year, and increased 4% on a same-store basis.

The company’s 2Q gross margin of 27.1% decreased 1% year-over-year. Operating profit of $269 million on margin of 12.6% rose slightly from the $265 million and 13.3% of a year earlier, while net profit of $214 million likewise increased the $205 million of a year earlier.

By Watsco product line during 2Q (excluding acquisition):

• HVAC equipment (71% of sales) increased 8% year-over-year
• Other HVAC products (25% of sales) fell 1% year-over-year
• Commercial refrigeration products (4% of sales) increased 1% year-over-year

“We are pleased with our second quarter results, which reflect record sales, strong cash flow and a strengthened balance sheet, which is particularly gratifying during our peak selling season,” Watsco Chairman and CEO Albert Nahmad said in the company’s news release. “In addition, we made strides toward producing greater operating efficiencies across our network, as evidenced by our SG&A performance. We now look ahead to the next important regulatory transition and the introduction of new products by our OEM partners later this year.”

Watsco noted that its 2Q results reflect a healthier residential end market, growth in ducted residential units and an increase in average selling price. The company added that sales of commercial products grew during 2Q on top of the increase achieved during the same period last year.

Watsco — No. 1 on MDM’s Top Distributors List of HVACR and No. 7 for Industrial Supplies — has locations in the U.S., Canada, Mexico and Puerto Rico.

Technology Transformation

Alongside its financial results, Watsco’s July 20 news release provided updated details on the company’s ongoing technology transformation that is comprised of an “ecosystem of technologies” that make it easier for HVAC contractors to do business with the distributor.

Updates to Watsco’s technology initiatives include:

• Product Information Management, Watsco’s repository of product information, delivered through its mobile apps and e-commerce platform, is accessible to more than 375,000 contractors and technicians annually.
• HVAC Pro+ Mobile Apps provide customers with real-time access to critical information that improves speed and productivity. The community of users expanded 12%, over the 12-month period that ended June 30, to approximately 60,000 users.
• eCommerce sales continue to outpace overall sales growth rates in the second quarter and accounted for 36% of total sales, inclusive of revenues from recently acquired businesses.
• OnCallAir, Watsco’s digital sales platform, has increased penetration among HVAC contractors as digital engagement with homeowners expands. The annualized gross merchandise values of products sold by customers through OnCallAir was approximately $1.4 billion for the twelve-month period ended June 30. During the first-half of 2024, OnCallAir presented quotes to approximately 160,000 households an 18% increase, and generated $743 million GMV, a 27% increase over the last year.

“We continue to make good progress towards our goal of scaling Watsco’s customer-focused technologies to more and more contractors. Our e-commerce sales grew at nearly double the rate of overall sales, indicating more progress in scaling our industry-leading tools and platforms,” company President A.J. Nahmad said. “We are also engaging with more contractors and technicians than ever before through our mobile platforms, which should generate more operating efficiencies over time. I am encouraged by our progress and we have produced great results, but I feel the bulk of the benefit from our technology investments remains ahead of us.”