Watsco Completes Peirce-Phelps Acquisition
02 August 2019 - 9:30PM
Watsco, Inc. (NYSE: WSO) announced that it has completed the
acquisition of the HVAC business of Peirce-Phelps, Inc.
Founded in Philadelphia in 1926, Peirce-Phelps
has current annual sales of approximately $206 million and
serves over 9,000 customers from 19 locations in Pennsylvania, New
Jersey and Delaware. Its product offering includes residential and
commercial HVAC systems made by Carrier as well as parts, supplies
and accessories sourced from approximately 350 vendors. More
information about Peirce-Phelps can be found at www.peirce.com.
Peirce-Phelps will operate as a stand-alone
subsidiary of Carrier Enterprise, LLC, a joint venture between
Watsco and Carrier Corporation. Watsco owns 80% of Carrier
Enterprise and Carrier owns 20%. The transaction is expected to be
immediately accretive to Watsco’s financial results. Consideration
for the purchase was paid in a combination of cash and Watsco, Inc.
common stock.
Albert H. Nahmad, Watsco's Chairman and Chief
Executive Officer, commented: "We are pleased to join forces with
the Peirce-Phelps organization to grow, expand and compete in what
are new markets for Watsco. We have deep respect and admiration for
their 93-years of success and the strong customer relationships
that have been built. We look forward to supporting their growth
plans and to leverage our customer-focused technology investments,
enabling them to evolve their digital capabilities more rapidly and
completely as part of the Watsco family.”
The acquisition of Peirce-Phelps continues
Watsco’s strategy to grow its industry-leading position. Since
entering HVAC/R distribution in 1989, Watsco’s revenues have
increased from $65 million to a current run-rate of over $4.7
billion following a unique “buy and build” philosophy.
The core, cultural principles of this
philosophy, established over the last 30 years, are as follows:
- Recognize, respect and sustain the legacy of great
businesses;
- Instill a passion for entrepreneurism, innovation and
continuous improvement;
- Operate as a local business, no matter how great Watsco’s
scale, by empowering local leaders;
- Think and act with a focus on the long-term through
equity-ownership that attracts, motivates and retains great
performers for the duration of their careers;
- Build an unmatched depository of talent, product expertise and
strategic value with OEM-partners;
- Develop, launch and iterate the industry’s most
customer-obsessed suite of technologies to help our customers grow
and to attract other progressive distributors to join the Watsco
family; and
- Remain conservative and risk averse with our finances to
provide us flexibility to invest in any opportunity at a low cost
of capital.
Watsco is actively seeking additional
opportunities to invest and grow through acquisitions given its
relative low market share of the estimated $40 billion North
American distribution marketplace for HVAC/R products.
About Watsco
Watsco is the largest distribution network
for heating, air conditioning and refrigeration (HVAC/R) products
with locations in the United
States, Canada, Mexico and Puerto Rico, and on
an export basis to Latin America and the Caribbean.
Watsco estimates that over 300,000 contractors and technicians
visit or call one of its 604 locations each year to get
information, obtain technical support and buy products. HVAC/R
products provide comfort to homes and businesses regardless of the
outdoor climate. Older systems often operate below today’s
government mandated energy efficiency and environmental
standards. Watsco has an opportunity to accelerate the
replacement of these systems at a scale greater than its
competitors as the movement toward reducing energy consumption and
its environmental impact continues. This is especially important
since heating and cooling accounts for approximately half of the
energy consumed in a typical U.S. home. Additional information
about Watsco may be found at www.watsco.com.
This document includes certain “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are based on management's
current expectations and are subject to uncertainty and changes in
circumstances. Actual results may differ materially from these
expectations due to changes in economic, business, competitive
market, new housing starts and completions, capital spending in
commercial construction, consumer spending and debt levels,
regulatory and other factors, including, without limitation, the
effects of supplier concentration, competitive conditions within
Watsco’s industry, seasonal nature of sales of Watsco’s products,
the ability of the Company to expand its business, insurance
coverage risks and final GAAP adjustments. Detailed information
about these factors and additional important factors can be found
in the documents that Watsco files with the Securities and Exchange
Commission, such as Form 10-K, Form 10-Q and Form 8-K.
Forward-looking statements speak only as of the date the statements
were made. Watsco assumes no obligation to update forward-looking
information to reflect actual results, changes in assumptions or
changes in other factors affecting forward-looking information,
except as required by applicable law.
Barry S. LoganSenior Vice President(305)
714-4102e-mail: blogan@watsco.com
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