Watsco, Inc. (NYSE:WSO) Q3 2023 Earnings Conference Call October 19, 2023 10:00 AM ET
Company Participants
Al Nahmad - Chief Executive Officer
A.J. Nahmad - President
Paul Johnston - Executive Vice President
Barry Logan - Executive Vice President
Rick Gomez - Vice President
Conference Call Participants
Tommy Moll - Stephens
Brett Linzey - Mizuho
Dave Manthey - Baird
Nigel Coe - Wolfe Research
Ryan Merkel - William Blair
Jeff Hammond - KeyBanc
Damian Karas - UBS
Steve Volkmann - Jefferies
Steve Tusa - JPMorgan
Jeffrey Sprague - Vertical Research
Joe Ahlersmeyer - Deutsche Bank
Operator
Good day and welcome to the Watsco Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Al Nahmad, CEO. Please go ahead.
Al Nahmad
Good morning, everyone. Welcome to our third quarter earnings call. And this is Al Nahmad, Chairman and CEO. With me is A.J. Nahmad, President and Paul Johnston, Barry Logan and Rick Gomez.
Before we start our normal cautionary statement, this conference call has forward-looking statements as defined by SEC laws and regulations that are made pursuant to the Safe Harbor provisions of these various laws. Ultimate results may differ materially from the forward-looking statements.
Now, on to the quarter. Watsco delivered a record quarter, which is all the more rewarding given a record performance achieved in the third quarter last year. Third quarter last year was a barnburner. And so I am so happy we are able to beat that. Sales grew 4%, driven by 6% increase in HVAC equipment. Residential unit volumes steadily improved throughout the quarter and price realization continues to be strong. Commercial end markets also remain very healthy. As a reminder, we have navigated through immense product transition in 2023 following the step-up minimum efficiency standards mandated across the United States by the U.S. federal government.
Approximately 60% of the HVAC systems we are now selling represent new products. Let me repeat that. 60% of the systems we are selling are new products. Thousands of customers have been trained. Our digital product library has been updated, adding over 400,000 new SKUs since the start of the year. As mentioned in our second quarter call, one of our primary OEM partners was disproportionately impacted by the product transition affecting product availability during the summer selling season. That impact diminished during the third quarter and I am happy to share that our locations are now fully stocked. Sales growth has returned to the effective stores and our partner is aggressively investing and collaborating with us to drive growth. But the reality is that all our OEM partners were affected to some measure and all have improved their supply chain to help us meet the needs of our customers.