WATSCO highlighted their continued commitment to digital enablement on July 30th in their Q2 results release
The latest WATSCO digital update has been released and I eagerly await these results as they share Digital details that the entire channel can learn from.
In my opinion WATSCO – has a strong strategy and continues to invest in digital and has the results to show for that investment.
WATSCO Digital highlights
Customer-related technology updates include: July 30, 2024 release
- Product Information Management (PIM), WATSCO’s repository of rich product information, is delivered seamlessly through its mobile apps and e-commerce platform. WATSCO’s PIM database contains more than 1.5 million SKUs digitally accessible to more than 350,000 contractors and technicians annually. (These results similar to their May 2024 investor releases)
- HVAC Pro+ Mobile Apps provide customers with real-time access to critical information to enhance speed and productivity. Features include real-time technical support, product details, inventory availability, warranty look-up and processing, certified system matchups, e-commerce and more. The community of authenticated users (those linked to an e-commerce account) over the 12-month period ended June 30, 2024 expanded 12% to approximately 60,000 users.
- OnCallAir®, Watsco’s digital sales platform, and CreditForComfort®, its companion consumer financing platform, increased penetration among HVAC contractors as digital engagement with homeowners expands. The annualized gross merchandise value (GMV) of products sold by customers through OnCallAir® was approximately $1.4 billion for the twelve-month period ended June 30, 2024. During the first-half of 2024, OnCallAir® presented quotes to approximately 160,000 households, an 18% increase, and generated $743 million GMV, a 27% increase, versus the comparable period last year.
A.J. Nahmad, Watsco’s President, commented: “We continue to make good progress towards our goal of scaling Watsco’s customer-focused technologies to more and more contractors. Our e-commerce sales grew at nearly double the rate of overall sales, indicating more progress in scaling our industry-leading tools and platforms. We are also engaging with more contractors and technicians than ever before through our mobile platforms, which should generate more operating efficiencies over time. I am encouraged by our progress and we have produced great results, but I feel the bulk of the benefit from our technology investments remains ahead of us.”
WATSCO First-Half Results
- Revenue increased 4% to a record $3.7 billion (1% increase on a same-store basis)
- Gross profit of $1.0 billion (27.3% gross margin)
- SG&A increase of 6% (3% increase on a same-store basis)
- Operating income of $395 million (operating margin of 10.7%)
- Earnings per share of $6.69 versus $7.25 last year
- Operating cash flow improved by $250 million compared to last year ($161 million of cash flow in 2024 versus an $89 million cash use in 2023)
Sales trends (excluding acquisitions)
- 4% increase in HVAC equipment (70% of sales)
- 3% decline in other HVAC products (26% of sales)
- 2% increase in commercial refrigeration products (4% of sales)
The storyline from Q2 results continues to be simple to see. The more digitally engaged Watsco customers are the more their sales grow, and having over 60,000 HVAC+ Pro Users is a barrier to exit for WATSCO and a barrier to entry for the competition.
I think as a B2B Distribution leader that the digital investment continues to build digital barriers around their end customers for WATSCO.
If you are a manufacturer or distributor what does this mean to you –
If are or are not a WATSCO supplier, you would be wise to partner with distributors that can deliver similar digital solutions (or have a plan to become more digitally enabled). If your channel partners are not as digitally enabled as you need, I hope you are investing in services that help your partners advance digitally?
If you are a competing distributor in the HVACR Channel. How can you continue to evaluate a digital strategy that you can execute? You might need to lean on the manufacturer partners you have that are digitally advanced to help you accelerate your progress.
Your market position requires solutions that fits your business. The time for digital action is long overdue as a strategic initiative for all the leading partners in the channel.
As always, we would love to get your feedback, so please feel free to comment below or reach out to me directly at john.gunderson1217@gmail.com
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