Watsco to Acquire Temperature Equipment Corporation, $291 Million Chicago-Based HVAC Distributor
March 16 2021 - 8:00AM
Watsco, Inc. (NYSE: WSO) and Carrier Global Corp. (NYSE: CARR)
announced today that they have signed an agreement to acquire
Temperature Equipment Corporation (TEC).
Watsco recently reported record 2020 results
with over $5 billion in sales, record profits and record cash flow.
TEC marks Watsco’s first entry into the U.S. Midwest.
Founded in Chicago, Illinois in 1935, TEC is one
of the largest HVAC distributors in North America with sales of
$291 million in 2020. TEC serves approximately 10,000 customers
from 32 locations in Illinois, Indiana, Wisconsin, Kansas,
Michigan, Minnesota and Missouri. Its product offering includes
various brands of residential, light-commercial and applied HVAC
equipment made by Carrier as well as complimentary systems, parts,
supplies and accessories sourced from approximately 1,200 vendors.
More information about TEC can be found
at www.tecmungo.com.
TEC will operate as an independent business as
an addition to the highly-successful group of joint ventures
between Watsco and Carrier, a collaboration that has provided
growth and value for both companies over the last several years.
Watsco will own 80% of TEC and Carrier 20%. Closing of the
transaction is subject to customary conditions and is expected to
occur within the next 30 days.
Albert H. Nahmad, Watsco’s Chairman & Chief
Executive Officer said: “TEC is one of the most iconic,
entrepreneurial, long-standing family businesses in our industry.
Skip Mungo and his team have built a great company and they will
continue TEC’s focus on growth with their name, identity and unique
culture in what will be new markets for our company. We look
forward to supporting their growth with capital, ideas, technology
and our industry relationships to build on their historical
success. We are pleased to become part of the TEC family.”
Skip Mungo, TEC’s President & CEO said: “We
are excited to become a member of the Watsco family and provide the
catalyst for growth in the Midwest. Partnering with Watsco will
enable us to think bigger while retaining our unique culture and
approach to the market. We look forward to launching their
innovative technology platforms over time to support our customers,
complementing the historical capabilities and customer focus that
is at the heart of TEC’s culture.”
Watsco’s Buy and Build Growth
Strategy
Watsco has acquired 63 businesses since 1989,
most of which were successful, multi-generation, family-owned
businesses. Watsco’s “buy and build” strategy can be summarized as
follows:
- Identify and partner with great
businesses focused on the HVAC/R industry
- Support their leadership team and
honor the culture and legacy they have created
- Ask for aggressive growth plans and
help leadership achieve their ambitions
-
Motivate teams and reaffirm an ownership culture with long-term
equity
-
Deploy the industry’s most comprehensive suite of customer-focused
technologies
-
Solicit and collaborate on big ideas to foster a spirit of
innovation and growth
-
Build a stronger Watsco because of our association with these
companies
We are actively seeking additional opportunities
to invest and grow through acquisitions given our 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.
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 90,000 contractor customers and
their estimated 300,000 technicians visit or call one of its 600
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 http://www.watsco.com.
This document includes certain “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements may address,
among other things, our expected financial and operational results
and the related assumptions underlying our expected results. These
forward-looking statements are distinguished by use of words such
as “will,” “would,” “anticipate,” “expect,” “believe,” “designed,”
“plan,” or “intend,” the negative of these terms, and similar
references to future periods. 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, seasonality of its product
sales, 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. LoganExecutive Vice
President (305) 714-4102e-mail: blogan@watsco.com
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