Watsco, Inc. (NYSE:WSO) Q3 2023 Earnings Call Transcript

Page 11 of 13

Steve Tusa: Okay. Got it. And then I don’t quite understand the comments. I mean the refrigerant prices we have seen, which is kind of curious or down double digit year-over-year, which is kind of unusual going into a period where everybody has visibility on this wind down. I know everybody is very highly convicted that, that price is going up. But from what we have heard in the channel from the actual refrigerant suppliers themselves, they continue to say it’s actually going down sequentially, and it’s like now in the high-single digits per pound type of area. You said you saw an uptick this week or something like that or the last couple of weeks. What are you guys seeing? Yes, what are you guys seeing that…?

Paul Johnston: We saw a definite uptick and those are the guys that are selling it to us. So hopefully, they saw the same uptick. But yes, we have seen an increase in the price of 410. We had – there was some dislocation where some people were taking inventory out earlier, and we are reducing price to be able to create some sort of sell-through, and when that ended, we started seeing the price come back the other way.

Steve Tusa: Got it. So and then just the last one, Barry, the 2,900 equipment number that you mentioned in your instance, that’s after like, obviously, like a 30%-plus increase over the last few years, that just seems low. Is that – I don’t know, is that for like a pool house or something like that, like maybe clarify what, because I mean you have done pretty done pretty well for yourself over the years. I mean that seems like a pretty low number. What is building on your estate…?

Barry Logan: That’s right. That’s right. It’s a 1.5-ton home office system that sits, so it’s a smaller tonnage system. It’s not a 5-ton system, but the more important…

Steve Tusa: Got it. Is that a ductless system?

Barry Logan: No, it’s a ducted system.

Steve Tusa: Okay. Alright. That’s…

Barry Logan: And it is an arms length of margin for the record when I purchased something from one of our subsidiaries.

Steve Tusa: Yes, something didn’t quite add up there. And then just one last one. Have you actually seen the – I mean these OEMs haven’t even really come out with their new products. I mean they have kind of perhaps giving you a bit of a sneak preview on some of them, but like have you actually seen the pricing yet for the 454 products?

Paul Johnston: No, we have not, did not establish a price yet for us.

Steve Tusa: So, if you guys are kind of saying that like it sounds like there is some uncertainty here. I mean I know the rule of the EPA just went through last week, that is finalized and in the Federal Register in a few weeks. But like how can they be so confident in kind of going out there and predicting what their – what kind of price they are going to actually capture over the next 2 years, like what’s the disconnect there?

Paul Johnston: You have to ask them.

Steve Tusa: Yes. Okay. We will do. Thanks guys.

Operator: The next question comes from Jeffrey Sprague with Vertical Research. Please go ahead.

Jeffrey Sprague: Thank you. Good morning everyone.

Al Nahmad: Good morning Jeff.

Jeffrey Sprague: Hey. A lot of good ground covered here. So, let me just do two quick little cleanup ones. Barry, you gave us 8% price and down 4% on units, so consolidated revenues up 4%. Can you do the same on HVAC equipment? And give us a little bit of detail on within price, kind of what the price mix dynamic is there?

Page 11 of 13