Watsco Completes Acquisition of N&S Supply
December 03 2019 - 8:46AM
Watsco, Inc. (NYSE : WSO) announced today that it has completed the
acquisition of N&S Supply, a distributor of air conditioning,
heating and plumbing products based in Fishkill, New York. N&S
Supply had revenues of approximately $44 million over the last
twelve months.
Founded in 1946, N&S Supply operates seven
locations in the Hudson Valley of New York and Connecticut. The
Company serves over 10,000 customers with approximately 40,000
SKUs, including air conditioning and heating equipment, hydronic
heating equipment, complimentary parts and supplies and a variety
of plumbing products. Terms of the acquisition were not disclosed.
Consideration for the purchase included a combination of cash and
Watsco common stock.
Albert H. Nahmad, Watsco’s Chairman and CEO,
stated: “N&S Supply has a wonderful legacy and we are proud to
become part of their family. As is our custom, the company will
operate under its existing name under the direction of its current
leadership team to provide continuity to customers, employees and
vendor partners. Their reputation and success are built on a
tradition of great service and a broad range of products from
convenient locations and we look forward to assisting them to
achieve their growth plans.”
Expansion & Growth in the
Northeastern Market
This acquisition expands Watsco’s sales presence
in the Northeast U.S., which has grown from approximately $70
million in 2010 to a present run-rate of over $700 million. N&S
Supply compliments other Watsco acquisitions completed in 2019,
including the purchase of Dasco Supply, based in Whippany, New
Jersey, Peirce-Phelps based in Philadelphia, Pennsylvania and an
incremental 20% ownership in Homans Associates based in Wilmington,
Massachusetts.
Mr. Nahmad commented: "Watsco builds density in
markets to improve customer service and to provide vendor partners
with growth opportunities. N&S Supply enhances our strong and
growing footprint in the Northeast.”
Watsco’s Buy & Build
Philosophy
The acquisition of N&S Supply is consistent
with Watsco’s ‘buy-and-build’ strategy. Since 1989, Watsco has
acquired over 60 businesses to become the established industry
leader. This strategy has produced a 30-year compounded annual
growth rate for total-shareholder-return of 18.2%, which ranks
Watsco among the best performing public companies over this time
period. Key components of Watsco’s buy-and-build strategy
include:
- identify and partner with great businesses
- retain the leadership team, honor their culture and empower
them
- ask for aggressive growth plans and help them achieve their
ambitions
- motivate the team with long-term equity and establish an
ownership culture
- deploy the industry’s most comprehensive suite of
technologies
- solicit and collaborate on big ideas to foster a spirit of
innovation and growth
Mr. Nahmad added: “We remain highly active and
desire to make additional investments in other great businesses in
our industry. Our balance sheet remains conservative and
well-positioned to take advantage of almost any-size
opportunity.”
Expansion & Leveraging of
Technology
N&S Supply will join Watsco’s culture of
innovation. In recent years, substantial investments have been made
to develop and launch a variety of customer-obsessed technologies
to enhance and transform the customer experience. These
technologies also offer homeowners and business-owners a more
productive and valuable means to purchase products and services
from our customers.
Ongoing initiatives include: (i) mobile
applications to help customers operate more productively and
interact with our locations more efficiently; (ii) e-commerce
between our customers and our business locations; (iii) supply
chain optimization; and (iv) building and maintaining the
largest source of digitized HVAC/R product information. In
addition, Watsco has developed, internally and through external
collaboration, a variety of early-stage technologies meant to help
contractor customers grow faster and become more profitable.
A.J. Nahmad, Watsco’s President said: “The team
at N&S Supply are forward-thinking. The opportunity to
modernize and digitize their business played an important role in
their decision to become part of Watsco. We look forward to
working with their team and customers.”
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 610 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. There are approximately 91 million central air
conditioning and heating systems installed in the United
States that have been in service more than 10 years. 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 http://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.
Barry S. Logan Executive Vice
President (305) 714-4102 e-mail:
blogan@watsco.com
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