Watsco (WSO) investor relations material

Strategic vision and growth targets

• Launched the ambitious 10, 30, and 5 plan: $10B in sales, 30% gross margins, and five inventory turns, up from $7.5B in sales and 27% gross margins currently.

• Emphasized collaborative growth across business units, leveraging shared resources, buying power, and technology to unlock new value.

• Focused on expanding non-equipment sales, aiming to increase parts and supplies from 30% to 50% of the business, which is margin-accretive.

• Highlighted a decentralized but collaborative culture, with business units maintaining autonomy while benefiting from shared platforms and initiatives.

• Stressed long-term, sustainable growth, supported by a strong balance sheet and significant employee ownership.

Technology and digital transformation

• Over 15 years, built a robust digital ecosystem: data warehouse, e-commerce, mobile apps, AI-driven analytics, and pricing optimization.

• E-commerce now accounts for $2.5B in sales, with some regions at 80% digital penetration; digital tools drive higher line items per order and margin.

• OnCall Air and Enclair platforms professionalize contractors, increase close rates, ticket size, and high-efficiency product mix, with a 44% close rate and 17% higher ticket size when financing is offered.

• AI and automation streamline onboarding, customer service, technical support, and pricing, reducing manual work and improving customer experience.

• PriceFX pricing platform delivered 200 basis points of margin improvement since 2020, with ongoing optimization and AI-driven agents for future gains.

Operational initiatives and supply chain

• Vendor Consolidation and Rationalization (VCR) initiative consolidates purchasing across business units, aiming for better terms, efficiency, and supply chain optimization.

• Hydros, a shared distribution center, enables branches to access a broader SKU assortment with less inventory, improving replenishment, cash flow, and private label growth.

• SupplySync.com (formerly Watsco One) is a new enterprise procurement marketplace, unifying pricing, billing, and logistics for large, multi-location customers, and designed for extensibility.

• Collaboration, not centralization, is the guiding principle—business units retain independence while leveraging shared infrastructure for scale and efficiency.

• M&A remains a key growth lever, with technology and digital platforms making Watsco an attractive partner for family-owned distributors.