I guess, please let me know when the webcast starts so we can put you guys on. Okay, great. Well, thank you all for coming. Thank you for the interest in the company. We're very excited to have you guys. We are very proud of what we're up to. We're very proud of the team that we have. We're very proud of the investments we're making. And we really enjoy showing it off. And having an engaged audience like you guys is special. So thank you. We'll also ask you for questions and comments along the way. These are much more fun when they're interactive. So please, be participants. Please keep it interesting and lively. And we'll try to do the same. I'm required to read this cautionary statement. It says, "During this call, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please review the forward-looking and cautionary statements contained in our third quarter 2025 earnings release for various factors that could cause actual results to differ materially from forward-looking statements made during our meeting today." But again, thanks for coming. I know it's very tough to get you guys to Miami when we deliver 75 degrees and sunny. You come from places like Cleveland and others that are cold and miserable. We like to do these usually in January and February, where you've had two or three months of cold and miserable. So it's even that much more pleasant to come down here. But maybe next time. Although it sounds like next time. We do this every what, seven, eight years now. So next time, maybe I might have to wait seven, eight years. We'll see. But the point of today is to tell you a little bit where we came from. I think most of you, or many of you, are probably pretty familiar with the story. But we'll rehash probably some of what you've heard before. But it's a good story. It's where we came from. It's where we are. It's what we see and what we're investing in. But I think more interesting is that you guys, some of you know me. I think you all know these two gentlemen up here, and Rick and Barry. But we've brought a cadre of other really important and good people from the business and some of our customers as well because we want to showcase some of the talent and some of the leadership that we have throughout the organization that we're very proud of. And just give you some new voices to hear from and ask questions to. So a little bit about how we got here. Our Chairman, who I share a last name with and DNA with, he got here in 1972. He was looking for a young, full of piss and vinegar entrepreneur looking for a business to acquire and grow. He got here to Miami and found this business, a little business called Watsco in a part of Miami called Hialeah, which was a small manufacturing business doing about $4 million in sales, selling and manufacturing and selling small air conditioning parts and pieces and other very random products like ball bearings for shower curtain doors. I have a Watsco airboat horn on my desk in the office. They made hair sprays and whatnot. The man that founded that business, a man named William Wagner, was selling his 38% interest in the business. My dad, who didn't have money, raised money from friends and family and from banks, bought the man's 38% of this publicly traded business and took over controlling interest of Watsco. The trivia question of the day, Watsco, if anybody doesn't know, stands for Wagner Tool and Supply Company because, like I said, the man that founded that business was William Wagner. You can teach your grandkids that trivia question later, isn't it? Like I said, $4 million in sales, $4 million market cap. Off he went. His mission was to grow through acquisition. He started exactly that. He bought some other businesses and got from about $4 million to about $30 million in sales. Then in 1989, he got a prospectus in the mail from Merrill Lynch, which maybe some of you have spent your careers at, that a business up the street from here near Boca Raton was being auctioned off. It was a business called Gemaire Distributors, which was and is the Rheem distributor for the state of Florida. The seller was a business named Nortek. They were ready to exit. They had launched this auction. His first instinct was, well, I'm in manufacturing, not distribution. So he first threw the prospectus in the trash. Then, as he likes to tell the story, he had nothing to do that day, so he pulled the prospectus out of the trash, and he drove up there, checked it out. He ended up actually entering the auction with a bid, and he was the only bidder, and so that was the only auction he and we have ever participated in, and that was also the pivot from manufacturing to distribution in 1989, and since then, there's been 70 other businesses and maybe 68 other families that had chosen to join their family with our family, and that's really what Watsco is today. It's an amalgamation of the 70 or so acquisitions that have been made in HVAC, our distribution, and now a little bit of plumbing, as you'll hear tonight today as well. And manufacturing assets were sold off a long time ago. And today, we go to market really as our 10 primary business units. The 70 over the years have sort of through osmosis become these 10. And those 10 each have a leader. You'll hear from at least two of those, or three, I guess, of those leaders today who run. One is Gemaire. One is Carrier Enterprise. One is N&S Supply, who you'll hear. And it is those leaders' jobs to grow and kill it in their marketplaces. They make all the decisions from hiring and firing and strategy and you name it. And they're accountable and responsible. And their job is to grow the P&L, maintain the balance sheet, excel with cash flow, et cetera. And then our job is to help them. How can we help you guys grow as entrepreneurs in your marketplaces? Can we help you with capital? Can we help you with Watsco equity to recruit and retain great people? Can we help you with vendor relationships that you may not have on your own otherwise? Can we help you by getting you guys together because you are a community of leaders in this industry who have similar missions in some of the same markets? So see what everybody's up to, see where you can share assets or collaborate or avoid common pitfalls or team up on something, or help you with technology. And that technology story, if you know Watsco at all, has become a major part of our story. And frankly, I think we need to stop separating that we do this technology stuff. It's really just who we are now. We are somewhat of a technology company that just happens to sell heating and air conditioning and related products. And I think you'll get that flavor by the end of the day. So the technology story started about 15 years ago, I guess now. And even then, we were an industry leader in terms of size. But the thesis then was, well, we're large. We're doing well. But we've been doing the same thing the same way largely for the last 30 years. And if we could infuse the business with technology, and I put technology in air quotes because that can mean a lot of things. And it does mean a lot of things. And it's really people, process, and technology, not just computers. But if we can infuse the business with modernization and systems and processes and humans and teams and the weaponry that they have every day, then we could do things bigger, better, faster, and more profitably and have a new foundation on top of which to grow and give our entrepreneurs who are running these businesses and their teams more weaponry in their arsenals to go win with in their markets, to help support their customers, et cetera, et cetera. So that was the thesis about 15 years ago. And then we said, great, what does that mean? Where do we even take that idea? And it took us a few minutes. But what we realized is that data is at the foundation of all these modern technology platforms. Anything in the enterprise really is data, data, data. And we had lots and lots of data. But that data was trapped in what at the time was 16 different ERPs across all of our business units, which ERP, hopefully, you're familiar with, the software and the machines to run the operating system of the business on. Our first decision was that we are not going to rip out and replace all those ERPs and put in one homogenized software technology because that's like an Oracle or an SAP or something like that because that's a $100 million plus program that takes five plus years and puts the whole company at risk. And we don't do things that put the whole company at risk because we are such a long-term thinking business, long-term focus. And we don't bet the ranch on things like ERP conversions or anything else, frankly. That's a good cultural tenet that you guys should write down. Watsco does not bet the ranch. We think long term, and that we didn't have to, that we could buy or build best-of-breed technologies, integrate them with each other, integrate them with the ERPs, and create this ecosystem of world-class tools that really can drive what we're looking for. It doesn't have to come from an ERP. It can be despite the ERP, and that's what we did. We bought and built best-of-breed technologies. We've integrated them with each other, and really, what we've done is amassed amazing, amazing amounts of master data. It started with the ERP data, right? The ERP data has things like our transactions, our invoices, our customers, our inventory, our financials, and so forth, so the first program was get all that data out of the ERPs into a data warehouse where we have a common data model. We can put tools against it so that we could put that data in the hands of all those business leaders and all their teams, excuse me, so that it could go throughout their day knowing what's happening in their business. Because you have to imagine before they had this insight, this ability to see what is going on in any part of their business that they can imagine in real time on any device anywhere, they got maybe one P&L once a month, right? That was kind of the extent of their knowledge of what was happening in their business. Now, they can slice and dice and look at trends and patterns and anomalies and outliers and et cetera and really become a data-driven business, not just an intuition-based business. It went from being, "I've been in this industry for 20 years. I know how many of these to put on the shelf." Great. Now, here's alerts and scorecards and dashboards and other information to help you maximize or optimize that decision, et cetera. And we can do that across the whole universe of what we do. And we do do that now. And you'll hear that throughout the day. I mean, our business has very much changed to be a data-driven business. There's probably not a meaningful conversation that happens throughout this company without really data being at the forefront of it. So we've become data snobs, is another way to say that. And we've amassed and piled and created piles of data and data and data. So first is that ERP data, like I mentioned. And then we've gone and mastered other piles of data. And I tell you the story. I'll get why. But first is our products. We sell about 200,000 different SKUs across our network. Everything that any contractor needs in any part of the country or North America to do his or her job, you can find in one of our locations. So now we have digitized everything there is to know about all those products: the height, the length, the width, the shipping weight, the country of origin, the manufacturing number, et cetera, et cetera. But we've also mastered everything there is to know around those products. So take a piece of equipment, ABC123. We know the full bill of materials of that piece of equipment. We know the complementary products for that system. We know the accessories that go with it. We know the substitutes. We know everything there is to know about that system. And it's all known digitally in our PIM, our product information management database. We've done something similar with all of our customers. We know their transaction history with us in the ERP because we have all their invoice history. But we didn't have their profile information, like AJ's Heating and Cooling. AJ's Heating and Cooling, now we have mastered, has been in business for this long. Here are the primary people there. Here's where their locations are. Here are the brands they like to sell. Here's their mix between replacement and new construction. Their mix between residential and commercial. Whatever there is to know about AJ's Heating and Cooling and the other 999,999 customers we do business with now is mastered in a database. We've done the same thing with our suppliers. Who are the primary people there? What are the products? Same thing with our competitors. Who are the primary? Et cetera, et cetera. So now we've mastered all this data. We continue to master that data as things change and needs editing. Then we can build on top of that. Where do we do that? It's in our analytics capabilities. It's in our e-commerce capabilities and our mobile app capabilities and our Watsco Ventures capabilities like OnCall Air. Like you'll see in our Salesforce.com capabilities that our customer service folks and our technical service people use every day. Now AI has all this data to use and to leverage to deliver new tools and technology to take us to that next generation of capabilities. We like to say that we were brilliant. We saw AI coming 15 years ago when we started masking this data. Really, maybe we just got lucky. We have more data, I think, than anybody else in this industry, I would say, easily. And it sets us up beautifully for what AI can and is doing already, where I would say we're at the tip of the spear of that. And again, you'll see a lot of that today. But that's sort of a little bit of setting the stage of where we've been, where we're up to, and where we are. Okay. So then I want to say that we have always been, and if you know us, we've always been and we will always remain super ambitious. This is a publicly traded company. Our valuation is driven on our rate of growth. And it is our mission every day to drive growth. And over the years, we've taken a stab at putting out, well, let me say it this way. 20 years ago, our chairman put a challenge out to our leaders. And the moniker, and some of you may remember this, was 10 by 10 equals 100. At the time, we were probably trading around $40 a share. And what 10 by 10 meant was if we could become a 10% revenue growth company at 10% even margins, that should translate into a $100 stock price. And he delivered it in a session like this with all of our business leaders around the tables like this. And they kind of all rolled their eyes and said, "This guy is crazy. And that's never going to happen." And sure enough, they met it and exceeded it. And off we went. And we kept going. Well, about seven, eight months ago, I guess now, that was called the dream plan. We came up with dream plan two. And we said, "Let's put a new challenge out there to our leaders. Let's put a new moniker out there." And we came up with 10, 30, and 5. And that is the theme of today, 10, 30, and 5. And what that is, is $10 billion in sales. Today, we're about $7.5 billion with 30% gross margins. Historically, we've been 25%. Now we're around 27% gross margins and five inventory turns, which, again, you can do some math and project out what the share price might be if we're able to pull all that off. And so we threw that out to our leaders again. And we said, "Okay, that's the new crazy goal, big audacious goal. Guess what? You guys are responsible for helping us get there or for getting us there because you guys are running these businesses. And what would you like to do? And how would you like to get there? And how can we help?" And so we grabbed everybody, put them in a room like this. And there was an overwhelming sense of what we should do, which was collaborate more across the business units. Let's do things together across the companies, the Watsco companies that we haven't done to a scale that we maybe should have or could have that can create and unlock new value, new dollars that we can capture and grow with. And you're going to hear that throughout the day as well. But 10, 30, and 5, that's the theme. And I think it's on the bottom of every slide today. So you'll get sick of 10, 30, and 5 by the end of it, just like all of our leaders, I'm sure, are at this point too. All right. So is that my 15 minutes? Because I know I can go on for another 25, 15 minutes or 30 minutes. But I think I'll stop right around there. What I want to say, and the next person I believe speaking is Ed Gaffney, who ran one of our regions for Carrier Enterprise in the Northeast New York, New England markets until several years ago. He took what I think is one of the best and biggest roles in the business. I think they call it President of Digital at Carrier Enterprise and has helped lead the adoption and continued run of our e-commerce tools. But what you'll see is that e-commerce at Watsco is not just buying and selling online. It's this digital ecosystem of tools that we've created for our customers to help them do business with us, to help them grow their businesses, and to help our teams help our customers. Ed is going to lead the conversation and try to help explain that in a much more beautiful way than I can. I'm going to hop in. All right. Thanks. All right. Thank you, AJ. Thank you, sir. All right. Excited to be here and share with you the journey, the digital journey that CE went on. I, like AJ, was there when it first started. Halfway through, I'm going to bring up some guests. One is Kelly Harvey. He's president, one of our customers, very loyal customer of Sunshine Air in Florida, and Chad Wetzel, who is president of Florida and the Texas region. That one, you don't have to listen to me the whole time, but you get perspective from our customers and from our sales teams on how these digital tools have impacted them, which I think is going to be. This is. Maybe just some background real quick on what CE is for everyone's sake. AJ mentioned around 10 business units, the largest of which i s Carrier Enterprise. Carrier Enterprise is a joint venture with Carrier. It's now 16 years old in time, and today, CE has its own subset of business units within CE, I think nine of them across North America, and it's actually what had been a group of Carrier independent distributors that had been around 40 years-50 years going back in time. So when we did the joint venture, we had to figure out what to do, how to do it, who's going to do it, what to do, and the technology came around, and we borrowed one of the regional presidents to become the technology head for CE. And in many respects, Ed was a pioneer for all of Watsco's technologies that you're going to hear from him. So just get a sense of the backdrop of that. Anrid the other pile of data, as AJ suggested, we own. It's shared across all the business units in terms of one big technology, one big layer of data. CE is a piece of that. They skin it. They show it. They demonstrate it. They teach it in their own version of their own personality within CE. But it's still one shared, again, pile of data. So just some backdrop for everyone's sake. Yeah. I remember when I was running the Northeast. I'd always say to A.J., "We got to do more in digital, more in digital." He said, "Okay, Ted, you're it." So word to the wise there. So how do we start this journey? Where's the best place to start it? How about right in the beginning? So on 8:28 A.M. on March 3rd, 2015, it's when it started for us at CE. Gentleman by the name of Tom Rydell, he owns a heating and air conditioning company in the Northeast, Polytemp, placed or became the father of our first order, came in on our platform, weighing in at about $1,163. So it was a beautiful time from there. Full disclosure, if I was a little bit better in PowerPoint, I was going to do a reveal between a gas furnace and an air conditioning unit. For us in the HVAC industry, that would have been funny. But it's a gas furnace. And from there, we never stopped. We started in 2015, and we just kept growing from there. And we took what we had at CE and all the learnings, and we started to spread that out and open up sites across all the Watsco business companies. So where are we today? $2.5 billion in sales overall through Watsco, of which Carrier Enterprise is about $1.6 billion. In some of our regions, that's about 80% of their sales are going through this digital channel today. That is a huge transformation, huge change. It impacts every corner of every warehouse. It impacts every branch. It impacts how our salespeople interact with customers, all in a positive way. And we'll talk through some of that. We're processing anywhere between 300-400 orders an hour, about 750,000 orders. It changes based on the seasonality. Those orders were all processed either by a customer service team or by a sales rep. That's all time now that the sales reps have to focus with customers on other things other than taking orders, things that are more valuable, and you're going to hear throughout today when I talk about this is we want a strategic partnership with all of our customers so that when they grow, we grow. It's not just about selling boxes. It's bigger, and that's what you're going to see, and that's what the whole digital ecosystem came out of, by the way. Digital is one part, right? The technology is one part, but we learned quickly customers want to interact with us in the channel that they're in. We needed to service them while they were on the website. We launched chat about three or four years ago. We had about 5,000 chats a year. Today, we're up to over 100,000 chats. That's growing. That is a big piece that's allowed us to see the growth because customers are confident when they hit the button. Everything that happens after the enter button, that product's going to show up. It's going to be on time. It's going to be the right product. That's what the customer service piece brings in. In addition to that, our chat actually, we started an hour early before our branches opened and an hour after. Our virtual store is what we call it, open for them for the early risers, as also those folks that might have just come to your place, your house, sold you a unit, and now they're going back to put the product into the system. They can talk to us virtually through chat after hours and even on the weekends sometimes. I think we were one of the first ever to have our site in three languages: English, Spanish, and for our friends up north, French-Canadian. That's going to continue to grow because we have a large demographic base that we deal with. That includes, as AJ said, the PIM data and the marketing data all transcribed for them. PIM data. AJ kind of touched on it, right? 900,000 SKUs for a distributor, any distributor trying to get into digital, this is the long pole in the tent. This takes a lot of time. I showed that slide that we started in 2015. Well, like I said, thanks to these guys, they actually started a year and a half building that PIM data. That PIM data has all the images. It has descriptions, and it's got all the attributes like A.J. was talking about. That could be up to 40 per product. For a distributor, smaller distributor, tough to get that information. You're trying to get that information from thousands of suppliers. With Watsco, with our scale, we're able to use that to talk with suppliers. A lot of the suppliers, we had to help them get the data. In addition to that, the model is we have one PIM database that we all share across all Watsco. So when one of the other business units is enhancing the data, we all get that. So that's a huge benefit that we have. That data helps us. One, it's a great customer experience. But line items per invoice, the one below that, what that is, is we look at how many items are placed with every order online, and we compare it to what the number of line items placed offline. And we see a significantly higher number online than offline. PIM has a lot to do with that. They come in, they build a system for your house. We then show them before they check out all the accessories, all the supplies they need to install that unit in your house. Those are all high-margin items. We already have a truck rolling there. Our cost to serve is already there. We add all those extra high-margin parts and supplies in. That's a win. That's what PIM can do. And that's how we can drive additional margin online. Yeah. The moniker, "Would you like fries?" with that works, especially when you ask that question digitally every time somebody's placing an order, which happens 350-450 times an hour. Yeah. It's big. It's big. There's no fatigue, no Friday afternoon lull, no after lunch sleepiness. Technology is going to do it every time. So that's where we are today. When you go through something as big of a transformation as we did, it opens our eyes to the possible, right? It opened us and said, "Okay, ordering is important. Ordering is really important, making sure that we've made that easy." And that's what you're going to hear too. A lot of what we do, B2B business in the HVAC, it's complex. There's a lot that happens. So our ability to make that easier for our customers is what we try to focus on. But we noticed that across the customer journey, and I'm defining the journey as pre-sales, the actual ordering and sales and post-sales, there's a whole bunch of touch points. And all those touch points are opportunities for us to take digital, take data, as A.J. said, and apply it there and be able to improve the customer experience. Our digital ecosystem starts with putting the customer in the middle. I stole Sunshine Air, Kelly Harvey's logo, and stuck it in there, for that's the sunshine in the middle there. Then around it, we started to identify all these touch points. We started to say, "Where can we use solutions?" Like AJ said, the future on this is even going to be better when we start to talk about AI. But give you an example. Pickup Express. We have customers pick up product at our branches all the time. When in season, it can get pretty busy. They want to get in, and they want to get out. With Pickup Express, they can go online, and they can go on the app. By the way, that's another thing. Everything we do, we can do on a PC or on our HVAC Pro Contractor Assist app, which allows them, if they're in the field, to do exactly what they're doing, whether they're in an office. Because a lot of our folks are working in your house or working on a rooftop. They can place the order. They can pick a two-hour window when they're going to pick it up. They can pick the branch they want, and then when they're leaving, they can tell us by clicking on the app that they're coming, and when they arrive, they can let us know. What that does is it allows our team to pull the product, stage the product. When they arrive, we pull it out, put it in their truck, and they can even use the app to pay using our CE Pay app. That gets them in and gets them out quickly. That's the kind of things that we're looking at. It's identifying from a customer perspective, and that's money for them because they're rolling trucks, and they need to get to the next job. Another example, Delivery Express. It's an Uber-like delivery service where we're able to take product from our locations and get it to the customer quickly at a job site. Another example, contractors at your house working on your heating and air conditioning. He or she thought she had a thermostat on the truck that worked with this system. Not the right one. It's got a couple of options. He either gets in a truck, drives an hour to the store, an hour back, loses all that time on this job. Maybe the job goes negative. Or he sends, if he's got somebody with him, he sends a runner, and he loses half his workforce for that day. The other option opens the app, orders the part, clicks on it. Uber driver will pick it up at our location and bring it to them, in many cases, under an hour. They continue to work on your system. No loss of profitability for them on that job. And they continue to move on down the road. These are the areas that we have many of these situations where we have the opportunity and are working on to enhance the customer experience using technology. And that's our digital ecosystem. It's tools, services, and products. I'm going to drill down a little bit now and kind of show you what customers see when they go online and how we make things simpler. So one of the things we have on our e-comm site is something called the System Builder. There's different systems that can be built for your house, for a commercial job. And all of them, they can be done online now because we've made it that simple. So for example, one of the ones I'm going to show you here is a System Builder for a duct-free multi-zone. That's probably one of the most complex ones. What has to happen is they come to your house or place of business. They select an outdoor unit that they're going to use. In this case, with the multi-zones, they have six zones, six options they can attach to the inside. It can be a high wall unit. It can be something that goes in the ceiling. It can be even a fan coil. Each one of those, they have to get it right. We've built a system, as you can see on the left side, that shows you they pick the unit. By the way, we're only showing them the products that we have in inventory. We know where they're located. If they're in the state of Florida, we're showing them the products that we have here. If they have to do this job tomorrow, it can go. It's their pricing. Then on the right-hand side, as they select the indoor, once they've selected the outdoor, it gives them a nice green bar that shows them, "You're good. This system will work. This system will work," and we generate what we call an AHRI certificate for them, which is a third-party group that says, "This system will work, and it will work to this capacity and rating." They can use that to get a rebate, which, by the way, we show them online all the rebates, whether they're federal, whether they're local, or whether they're from the manufacturer when they're looking and building this system. I'll give you, it's a 30-second video to kind of show you very quickly how it works. Revolutionizing home comfort for your customer is as easy as 123 with CE's Ductless Multi-Zone Mini-Split System Builder. Pick a condenser or outdoor unit. Add indoor units that fit your client's needs. Choose the accessories for the perfect setup. Review the system and add it to your cart. Proceed to checkout to purchase or save to a list for your job so you can come back to it later. With just a few clicks, it's that simple. Start building the perfect multi-zone system today. Though it looks simple, but what went into the back end of that is tremendous. Did you notice at the end there when they built the system, that PIM data flowed up and showed all the accessories? Again, that same concept about with one click, here's all and all the accessories you need to install it, but we know with confidence it's the right accessories too, and it's their pricing, and it's all, again, we know it's in inventory. So that's one example. If you talk to contractors out there and you ask them, "What's the biggest issue we're facing?" I guarantee you the top three, one of the top three will be trained technicians. Having that in this industry is a big, big gap. So what we've done is we've launched CE Path, which is our online training system that customers can go into. They have technical training there on heating and cooling. It's a platform that they access online. I'm going to show you while I'm talking on the right-hand side is how they can view it on the app. So you get to see both. This training, it's kind of important because they can go in, they can do their training, but they can look at it across all of North America now. In the past, it was all separate. So if somebody in Northeast wants to come down and take a training class in Florida, they have access to it. We have virtual training. We have in-person training. We have training in our facilities where we tear down units. And then we have even a hybrid-type training there. All of that they have access to. But we're not going to just stop with that. We hear from our customers, they also want business training. Remember I talked about being a strategic partner with these customers? Well, what we're hoping is we're going to help them grow their business. Classes like how to do a business plan, how to price for profit, how to market to generate leads. Even things like safety and HR that we have training on internally, we're going to share. That's what a business partner does. That's something that no other distributors out there are looking at and doing. And we have that capability for them to see online. Here's a great one talking about data. Our tech support team collects all the calls we get in Salesforce from our customers. So I know the types of questions I'm getting from a company I can aggregate the data or from an individual. What we're looking to do now is suggest using AI, suggest classes. If somebody's calling me and calling our tech support team with a lot of troubleshooting questions on heat pumps, well, guess what? We're going to be starting to suggest, "Here's a great training class that would fit that need." One, it reduces the call volume we're going to get. But more importantly, now you have a technician out there and we're helping their business, their owners identify opportunities for training. One last one, marketing. Again, partnership. We partner with our customers, and we do marketing with them. We created a single page now. Customers can go in 3247365 and see all the marketing value we give them. Depending on the program they're on with us or not, they all get some type of rewards, which in one case, we use Pro Points. Pro Points: the more you buy, you get points. Then we've created a real easy way for them to collect the money back. They go into their checkout online, and they just enter the points, and it reduces the value of their next order. It's a great way, too. Customers love it. The focus here is growth and loyalty, and that focus on growth definitely has an impact. As you would expect, they get more points for online and for those high-margin parts we talked about, right? Co-op funds. We give funds to the customers to market with them. The OEM, ourselves, we all participate in that. Those funds are there to generate leads. That's going to be on here. We're also doing things like financing will show up here. OnCall Air rebate, which you're going to learn a little bit more about today in some of the discussions that will be here. Our salespeople are now using this page when they sit with customers to have the value discussion versus the price discussion. Our contractors get competitors knocking on their door all the time. This takes it to a different level because we're showing it. And again, it's real-time, and they're able to see it also. Every one of those things, this is personalized to them. So the more benefits you have, the more tiles you will see. So again, making it simple for them to see the value we're bringing to them. So as we look forward, our digital ecosystem, we have so much opportunity, so much opportunity. One, because we already know we've cut a path so far. But we see more and more opportunities going forward, not only in enhancing the ones we've already launched, but we have up on the drawing board a few more that are going to be coming in the near future. AI, you're going to hear more about that today. We're already rolling that out in our customer service teams with huge opportunities there for AI. And you're going to see more there. But for me, I think I call it the secret sauce or the when I look back over the because I've been here from the beginning on the journey, it's what I call the Watsco model. What we have is we have Watsco and Watsco Ventures at the tip of the spear, identifying technology, identifying partners that we may want to partner with, collaborating with all the business units who are bringing the field input, and together coming up with the solutions, the priorities that we want to work on. Then once we launch them, we all get in a room, and we kind of share practices, what's working, best practices, what's not working. There's not many distributors, if any, that I know of that have that type of model or the capability to build it. To me, that has been a big foundational element in our success when I look back and I see it going forward. Okay. Enough about me. I'm hearing me talk. Let me bring up Chad and Kelly. And we can have a little bit of fun, a little Q&A here, and ask them some questions. And the intent here was to try to find out how has our digital tools impacted their business. Kelly's got an interesting background. He was with a contractor, then he was with distribution, and now he's president of Sunshine Air. Sunshine Air is a very loyal Carrier dealer. And they are a President's Club winner, which is a very, very high prestige. Not many people get that award, as well as a fad dealer. And I believe they are doing close to 99% of their sales online. And they use many of our tools. So Kelly, thank you for coming. From the beautiful state of Florida. And Chad is overseas. He's the president of our Florida region and our Texas region. He's got about a couple of thousand customers that he deals with. He can give us a perspective on that side of things. Gentlemen, why don't you want to sit down? All right. Let me go to the next one. Let me get my slides out here, my little cards. All right. Kelly, like I said, you've got a great background here. Can you tell us over your time, when was it where you first started to see these digital tools and say, "Wow, these things can really have an impact on my business"? Looking back, being part of the CE leadership team, I'd say a decade and a half ago, I think about A.J. and Mr. Rupp and team and the idea, the concept of embracing technology to gain operational excellence in our own business. But then how can we extend that over to contractors? So hearing these things come out and now being a contractor is a very unique position because I know that I was a part of that on the front end. But it wasn't just about our own internal operational excellence. It was extending that to customers. So there was a big why in the background of saying, "How are we going to do it? What do we want the impact to be? And then how do we grow it?" And there were a couple of things that came out of that. It was gaining operational excellence and economy of scale in our business model, and then taking that to contractors so that we can help them to do the same thing. All right. Thanks. Chad, you've got a couple of thousand customers that you deal with, right? And that are using digital solutions. What have you seen as the biggest difference? Yeah. I think Kelly's a live example here, one of the best we have in digital adoption, but it's really all about the relationship and what we call the stickiness of the relationship. And it's more of a journey than it is going out and saying, "Okay, here's our app. Go use it." It's a journey that builds that relationship because we're educating, a lot of times, the dealers aren't begging to use it. It's a transformation that we have to show them the value, so we show them the tool, we show them the value, and then walk them through the process, and it's encouraging when they start seeing the efficiencies in their business and they start getting their techs to use it and other people in the organization to use it and then go on to the additional offerings that you showed in that portfolio. It's really encouraging in that journey. And that journey is the stickiness of the relationship. It changes a salesperson's conversation when they're going in to visit the dealer. And they're coming armed with data as well that we collect from the usage of those tools. When I told you we had regions over 80% of sales, I didn't mention that those regions were under Chad. So he was one of the reasons he's up here. All right. For you, Kelly. You know you have options on who you partner with from a distributor perspective, right? I'm sure you have competitors knocking on your door. How has the suite of digital tools, the ecosystem that you see CE and Watsco providing, how has that weighed in on that decision on who you partner with? Thinking back to the experience and understanding the whys behind it, I mean, at the end of the day, we were always about creating shareholder value, being able to produce a return, and as we go to market as a contractor, one of the things I was impressed with when doing diligence to buy Sunshine Air Conditioning, leaving distribution, and coming into the private sector, there's a lot of diligence, obviously, that goes into that. What I noticed there was not a lot of adoption of technology, and where some people would look at that and say, "Well, that's kind of a negative," right? We looked at it as 100% opportunity, and literally scaling a model out to 15X our EBITDA over the course of 10 years was the goal. We did it in four. The biggest piece of that was partnering with CE. Obviously, I had a connection there. But then taking the tools that we had always taken contractors to help them gain that economy of scale and be successful, implementing those in our own business. And what that does is it creates a stickiness, right? It is really hard. If you've created all your processes, all of your direction, all of your goals around the adoption of that technology, then it's really hard to try to piecemeal and buy something from someone else. It just doesn't make sense. So at the end of the day, you look at it and say, "Well, we partnered with CE. Both of us are way stronger. We were both taking advantage of that economy of scale, and we did 15X our business." Really hard to buy from someone else at that point. Glad to hear that. Great. Thank you. Same kind of question, Chad. How about across the customers you see? How does that impact the thousands of customers that we do business with when they have that ability to link into the digital solutions we have? And can you tell us a little bit at a higher level? Yeah. Yeah. We're always focused on growth, obviously, and two segments of distribution. We have our current business, and how do we protect that attrition? And then at the same time, how do we acquire new business? How do we go grow the business? From the digital platform, I think what's really exciting now is in growing the dealers. We're out presenting this to dealers who may have worked with another OEM for decades, a decade or decades, and they're blown away with the portfolio that we have. So it makes it easier. And especially a lot of new generations coming into the business, taking over the business that are more technology proficient and want to see that. And they're blown away with the offerings in that portfolio that Watsco has. It becomes more of a conversation about the value and the tech versus price, right? It does. And that's what makes it exciting. It's not about, "Hey, can I sell you a box today?" It's, "Here's some solutions that are going to make your business more efficient. All right. Great. All right. Cut it, both of you, gentlemen. There's a kind of a perception out there that technology or digital will take away from the relationship, which for those of us in the business we know is critical, right? What are your thoughts on that in terms of how technology and digital might impact one way or the other the relationship between our companies? I know for us, it does the opposite of what people would think. It actually grows that relationship because it's the adage of 80/20 rule, right? What are you focusing on? And 20% is creating 80% of your outcome or your throughput. For us, it's the small task that you can utilize technology on one side to be able to free up that time so that that 20% of focus can actually grow. The other side of it is the proactive piece where A.J. talks about ERP systems and all the digital tools and trying to get everything together. We actually have built process around and amongst other contractors as well in the industry where we utilize their tools, and that becomes a part of our business. And so it doesn't restrict that relationship. It actually grows the relationship because now people can come in and have meaningful conversations. They can bring more tools that can help them be more efficient and gain an economy of scale where, when I look at it, we don't have to add a ton of headcount to get the throughput. We can be way more effective and add to that bottom line and, at the end of the day, be able to serve our customer the way that we feel that CE and team serves us. Nice. Thank you. Chad? Yeah. I think in distribution, it's all about value. I probably said value five times since I've been up here. I probably say it 50 times a day when I'm talking to our sales teams, and you have to bring that value to the table, and that enables us to do that. We were talking. I was talking to Kelly. It was at dinner last night. I kind of like that term. I like to think of us as that kind of a partner with you. Yeah. I mean, when I think about the competitive landscape, we were all talking. And I said, "I remember taking a class, oh my gosh, a couple of decades ago." And it was about distribution and account sales. And it outlined the four different ways that customers view you. And it's like a vendor, which is not where you want to be: a problem solver, a business resource, and then a strategic ally. And I remember being in leadership and then calling on customers and being part of the CE team and thinking, "I never want to be in the vendor box. How can I stay out of that space and create stickiness to where the customers are actually calling us and they're relying on us for best practices to run a successful business?" And that's how we attack the market. Technology was a big piece of that. How can we take and build an ecosystem around the tools that you have that can create value for us as a contractor so that we can go dominate the market? That's exactly what we did. Excellent. All right. Thanks. All right. If you were talking to a contractor that wasn't using any digital tools, and I guess I have to preface this, it's not a competing contractor because the last time I asked that question, it was a competing contractor. The answer was, "I'm not telling them anything because I don't want them to know about these tools." But so a non-competing contractor, what would your advice be? First off, I'd want to buy them. Straight up. Good. The consultative approach. In the consultative approach, I would look at it as, "What are your processes? How do you go to market? And conceptually, what do you think about utilizing one tool at a time?" Like eating an elephant one little bite. I'm a big fan of Billy Beane, and I'm looking at the math and going, "You know that you can do these things with the data. Where's your data?" We could start there, grow upon that concept, implement the tools, and that's going to build not only a relationship between me and their company, right, if I'm trying to help, if I'm trying to consult, but then I'm going to recommend a Watsco company in that because they're the best in the business of technology. Chad, how about yourself? I mean, you don't have many customers not using our digital tools. But if you have customers that are maybe not using the full suite, what do you typically—what's your advice? Yeah. The ones who have not adopted yet, we go in and really just start simple. Start with that e-commerce and get one person starting to use it, the express pickup, when they're not doing digital adoption, but they may complain that it's a full store and they're not getting in and out as quick as possible. Start small. Back to my first answer. Start small, educate, and take them for the journey. Take them through the journey, and that's what creates that stickiness, value, and more adoption. That's how we've been able to hit the levels that we have in my regions. Certainly, the data shows it's certainly working. So all right. I have one more for you. From both your perspectives, you've got both gentlemen, you've got a lot of background. Where do you see this going in the next two to three years? Where do you see this whole digital impact to your businesses as we look forward? For us, I like to think we're one of the best in the top tier of not only adoption, but implementation. I see us continuing to grow in the contracting world, continuing to grow. I mean, when I think about adoption, being realistic, 95% of the contractors in the company do not operate the way we're talking. So there's nothing but a runway of opportunity in the contracting world. I believe you incorporate the AI tools along with the data that we already have. And that's combined. I mean, CE is a strategic ally for us, not a vendor. And the more the tools are, the more that they further and you group in other tools along with it, there's nothing but opportunity because you've only touched 5% of the market. Chad, how about yourself? What do you see? 100% AI. It's what everyone wants to know about. It actually helps us as a tool to sell digital solutions because when you start educating on AI, so many people are thinking technology and how that ties in, and when you create that tie of our suite of offerings in digital and what the future of AI is in the industry, it gets their attention. They want to know more. All right. Well, gentlemen, thank you. I truly, truly appreciate you being here today. That was amazing. I think you hear Barry, you hear me, you hear AJ talk about this. Hearing about it from the people that actually use it, from the entrepreneurs themselves, I think it's a completely different discussion. We're going to try and save about five or 10 minutes at the end of each session. Best efforts. Don't hold me to it. So if there's any questions in the audience for Kelly, for Chad, or for Ed, please raise your hand. Feel free. We got Mr. Manpey up front with a question. While Myra comes up, just to let everybody know, at the end, we're going to try and bring it all together here in terms of the implications of all of this. Save your more financial questions for the end. Go ahead, Rick. Okay. Thank you. Appreciate your being here, Kelly. Thank you. My question is on switching costs. So prior to this engagement through CE and with the technology, how traumatic would it have been for you to switch vendors? I'm assuming you've got badges on your trucks. You've got these long vendor relationships. There might be idiosyncratic factors related to different units that you might know from using them for many years. That's the first question. Just like, "Let's set technology on the side." How hard would it have been for you to say, "You know what? I'm going to switch to a different vendor." And then, Chad, a similar question for you coming at it from the other side. I assume CE doesn't retain all of their customers. So of that group that attrits on an annual basis, is it just that they're not using the technology dead stop? Or are there other reasons why they would switch from CE to a different distributor, maybe even a, well, obviously, a different vendor completely? So thank you. There would be two different sides of the cost in a company our size. And it is relative to size. I'd say there would be the operational field side of the cost when you talk about the trucks. But a lot of things that people don't think about is you swap brands, go to a different distributor, you have to retrain all your installers. You have to retrain all your technicians. You have to change the process internally, which, when you, let's just say you're north of $10 million in revenue, which is small, relatively speaking, right? But that's a lot of contractors out there. For us, half the cost would probably be around $200,000-$300,000. That's just on the field side. When you think about the training, the rewrapping of vehicles, and your identity, marketing goes into that. Internally, from a process side, we would go backwards because there's so much process tied around the technology that's directly tied to CE, our strategic ally of choice, I should say. In that example, we've had to replace those systems. So you're talking, again, another $200,000. So I would say for your medium-sized contractor, you're talking $500,000 just to change so that you can gain that same level of excellence in the field. I would say from an attrition standpoint, there's attrition where the ebbs and flows of business. They didn't go away, but because of a market or competition coming in, they went down. That's attrition. I think what you're asking about is that they leave us. Utilizing the data, if somebody was using the multitude of digital platforms, that attrition rate is so minor. Typically, when they do attrit completely, they wouldn't be using those, and that's when I'm looking in the mirror at what did we do wrong because obviously, we didn't bring the value to that customer. Why didn't we get them on these programs? You're welcome. Any other questions from the audience? Mr. Merkel? Hey, thanks. Two questions for Kelly. You mentioned that Watsco is the best in the business at technology. I'm curious, what do you see from some of the other distributors? How far ahead is Watsco? That's the first question. And then the second question is, typically, a contractor would use a second supplier. Do you use other suppliers? I assume most of your business is to CE. But do you use, or is it the case where the technology is so powerful that the majority of your purchases are with CE? Kelly's never bought from another distributor. Second question first. So yes, there's a small percentage. I mean, we're 99% CE. Again, because our process flows is seamless. Are there examples where you have to buy something from somebody else? Absolutely. It's really hard to be that 100% when we have market demands or whatever they may be. But the real meat of our business and our real growth is so centered on not only the technology and the empowerment, but the relationship. That relationship is growing because now you don't just care about selling us boxes. You care about propelling our business forward. And that really matters in the contracting world. And I apologize. Would you mind repeating your first question again? Just how differentiated is Watsco's technology versus what you see from competitors? What I see is it's very fragmented out there. Watsco is the only one that has everything in-house. It's internal, and that brings a ton of strength to the contracting world, to the market, because you could say Trane, Lennox, York, whoever may be out there, it's not that they don't have technology, but it's not integrated as well. They don't have the same amount of data, and based off of how they go to market, they're really more worried about technology as it impacts them directly operationally, and then when it comes to helping contractors, they're sourcing out, and anytime you do that, you create an opportunity for that contractor to build a relationship with someone else that doesn't know everything that you buy, that doesn't understand your trends, and Chad and I were talking earlier about taking weather out of our business. They had the data to show it. Yes, we're a weather-driven business. Yes and no. Because everything we do is based off historical analysis. We have the data. You mean to tell me it wasn't this cool or warm last January? They empower us with that information. We could place, whether it be stocking orders or project revenue or sales based off of trends. So that's one piece of the data. And then when we go to market, they empower us with the tools to make that seamless, to take that 80% of work that has to be done. But how can we put that into a box to where we can seamlessly transact and grow that 20% of productive time that we're using and gain that economy of scale? They empower us to do that. Great. Kelly, we're indebted to you. Thank you so much. And Chad, wonderful session. Appreciate you. Thank you. We are going to pivot now to talk a little bit about our pricing excellence and our pricing optimization, and you're going to meet two wonderful humans, Brian O'Mahoney and Kristen Daniels. Brian is President of CE North America for us. That includes all the regions of CE here in the U.S. and Canada as well. Kristen is our VP of Pricing Excellence at Watsco, and I'm going to turn it over to them. All right. Good morning, everybody, so we're going to talk about the wonderful world of wholesale pricing. What I want to do is just put a little context about the complexity of what we're talking about here today, it's vastly different than retail, and the reason for that is touch points, so let me give you an example. It all starts with a fair market price, so whatever the price is for a particular widget, let's say it's $100. This is what a contractor would pay if they come into our location, but let's say that instead of buying one a year, a contractor buys one a week. That pricing should be different. We incentivize them to come to us and buy more product from us. Sounds obvious, right, but that's a different touch point, well, what happens if it's now three items per week? Another customer is 10 items per week. Another customer is 100 items per week. These are real true examples right here, but the point is you can't keep giving away price to a point where you're selling below cost, right, so now you go back to the vendor and you kind of negotiate a cost point from the vendor to be competitive. Another touch point. Now you're looking at different locations, so you would think that, for example, in the New York City market, there's a little bit more price than you'd see, let's say, in Omaha. That's another touch point, so the touch points get really complex, so if you kind of take a look, if you look at the number of suppliers multiplied by the number of products, by the number of customers, we're talking about billions of touch points. And that's if you touch it only one time a year. Over the last five years, we're looking at price increases at some vendors six times a year. This is not a Carrier Enterprise problem or a Watsco problem or an HVAC problem. This is a wholesale distribution problem. And we've kind of really done a good job managing through it. So what we want to talk about today is a tool that we've been used to kind of help us navigate through this. And the great news here is at the end, you'll kind of see that even though we made a lot of headway in this overall industry problem, there's still a boatload of opportunity to go. So we've got Kristen. Let's go through the slides. Yeah, you bet. So we're going to get back to the complexity of pricing in a little bit. But first, I wanted to take a few minutes to talk about the journey that we've been on. We started our analysis and investigation into who we wanted to partner with from a technology perspective back in 2019. It took us about six months. We talked to many different pricing technology vendors and landed on PriceFX as our partner. As part of that process, we really just had to understand with having several different business units. We started with our six largest business units as our scope. Each one of them was kind of at a different point on their journey or their sophistication of pricing. But there were some common themes that we knew we had to solve for, which is what I'm going to talk about here. So prior to our investment, one of the biggest challenges we had was the maintenance associated with all of these various price points or touch points, like Brian said. So trying to give our teams easier ways to maintain all of these various prices in our system, I like to joke that one of our business units, the person was actually hand-keying the prices. He had 200,000 price records in his system, and he was hand-keying changes to those. That's crazy. So we had to make it easier for our pricing administrators to be able to administer all of that pricing through mass updates, through rules-based application of what changes we needed to make to those prices. That's a really good point, too. It's also the speed of execution. If you get a cost increase from a vendor that's going to go in place April 1st, let's say you get that 30 days in advance, you got 30 days now to get all those billions of touch points basically executed on time. If that takes you to April 10th, April 15th, May 1st, you just took a margin hit for that one month. Speed in executing these price points, trying to do it manually is just basically impossible. That was a huge part of what we implemented. And that implementation started in 2020 for that ability to maintain these records much quickly, much more quickly. The second piece that we focused on was more the analytical side. So how do we help our business unit leaders understand how effective we are at maintaining our pricing? A.J. talked about how we've had business intelligence tools, or we built that whole data warehouse, and we have all of this data. But the way that you analyze data to understand how your sales are trending or how your margin's trending is very different from how you analyze data to understand what pricing actions you need to take. That's what the PriceFX tool gives us, is ways to mine our data almost more like bottom-up instead of top-down to say, "Show me all the problems I had yesterday." Low-margin transactions, overrides, whatever it is, let's go look at that at a much more granular level so that I can understand what pricing actions I need to take. And then having that all in one tool means once I identify what problems I might have, I can immediately do the maintenance associated with fixing those problems. This ties in also with the e-commerce presentation that Ed was talking about before. If the price is not right, and if they keep walking into a branch and the team knows it's not right, and they just do a discount right there at the counter, let's say the price is 5% too high, and they do what we call an override and do a 5% discount, if they continually do these discounts, why would anyone buy online and pay 5% more? The goal here is we've got to get the price correct and right. Part of this tool kind of gives us the ability to kind of analyze that and see where there's overrides, where there's not overrides, and where we can make adjustments. We'll kind of go through that in a second. Another concept that we used to have challenges with is because it was very difficult for us to update our system, we would sometimes make pricing decisions that were easier to administer as opposed to being more profitable. An example of that is maybe we have a pricing record in our system that applies a given price to 10,000 customers because they're all relatively similar customers. But if we could be more strategic, we might recognize that, you know what, there's some attributes of those customers that actually aren't similar. Brian used the example of just volume. How much business are they doing with us? If we have a really wide band for that, we're not being as strategic or honed in how we're administering pricing. Those kind of decisions were getting made because I would only have to maintain one pricing record instead of 10,000 or whatever it is. And then finally, as far as pricing decisions, a lot of the pricing decisions were done in silos. So whether it was the sales team, the leadership team, the finance team involved in some of the not necessarily pricing decisions, but the mechanics of how we were viewing our results, those kind of conversations weren't happening across our business. And certainly weren't happening across our business units. So now with this consolidated tool, where we have many different business units all using the same tool, we can speak the same language and understand, "Oh, okay, you're doing this thing at Baker. We think that makes sense to do at CE as well." So just breaking down those silos by having a common platform. There's a big thing in the industry called bundles. So if you buy this bundle, this package, let's say it's an outdoor unit, indoor unit, a condensing pad, a disconnect, a stat, and things of that nature. So everything that surrounds that unit, if you buy them all at once, we can give a certain percentage off. But how effective is that? And what's the ROI? How many systems do we have to sell until we kind of recoup that kind of discount? To do that manually, it's really, really a challenging step, especially with the number of bundles that we want to kind of produce on a daily basis. Okay, so I'm pretty excited to show this next slide because I get to be a total pricing nerd for a little bit, and I definitely am. Yeah, we know. Thank you for letting us show you much. All right, so I can't get by without showing a scatterplot. So just to make sure we're all on the same page, the way to look at this, number of units across the X-axis. So the further to the right the dot, the bigger the customer is with us. This is for one product. So the higher you go up on the chart, the higher the price. So you got it. So this particular scatterplot is, again, for one product without applying any kind of segmentation or understanding how maybe this looks crazy to you because it should. It looks wild, chaotic. But when we start to apply what segmentation we have within our business, you can start to see the patterns here. And remember, it's the same products, but different areas, different business units. So it's all together kind of grouped at once. Look how many different price points we sell the same product at, and it's all over the map without coordination or sophistication until. Until. Thank you. Yeah. So until. But within that complexity and within that variability is precisely the opportunity we see with pricing optimization. So when you look at this, it may look scary. It may look disorganized. It's opportunity. And that's what excites us. All right. So what I highlighted now is you can definitely see a clear pattern here with these dots. This happens to be one of our regions at one of our business units. Now we've focused in on these dots. And we're looking at a residential new construction or R&C customers, again, in this particular region. This is what our software enabled us to do. So it enabled us to classify customers using all this rich data that we have and then understand where their price point should be in the market based on all the information that we get from our sales team, from our customers themselves, and have logical, rational pricing that goes lower as they buy more. Here's another example layering on top of these dots. This happens to be AOR customers in another region. It's a higher-priced region in general. So you can see there's still opportunity for sure. This is never going to be a straight line, by the way, or a tiered stair step, which is what on paper or in an academic kind of setting, maybe it could be. There's always going to be some variation because these prices are based on relationships and other factors. Go ahead. The utopian vision here is if you can get all those dots all the way to the top right corner, where you get the highest price possible with the most amount of products being sold, that's just not practical. So there's a balance here between a price point and the number of units that actually get purchased from us. What exactly is that balance point? And that's what this is helping us with. Yep, and I do want to stress, too, this happens to be one simple product example, but we can do this at scale as well across the whole entire customer's basket of part purchases, not just always item by item. So just to kind of follow this through, here's one more example. Again, more distributed now, maybe less of a pattern, but still we can see that pattern. Again, another AOR grouping of customers in another region. This happens to be highlighting dots from one of our business units that's kind of newer to the platform or we haven't gotten in there quite as deep to do as much of the optimization that we know we can. Okay, it's all SKU. Oh, wait, one more SKU outside. Okay, so here's an example of that first grouping of customers that we showed. So this is those R&C customers. What I wanted to highlight on this particular example is how you can clearly see that band of where the prices are aligned, but you also can see the outliers. That's really also the beauty of our PriceFX solution is that when we find these outliers, the system alerts us of those, and then we're able to take action. So in some cases, maybe we're a little priced out of market. The pricing looks a little high. We want to consider having a conversation with the customer, "Hey, this is something we can look at." And then in other cases, maybe the customer's purchase volume doesn't support the pricing that they're at. It could be because maybe they used to have more volume with us and they don't anymore, or maybe they just never reached that level. So this is what I was mentioning before, the exception there where you see priced out of market. So it's higher than what you see the typical trends. Oh, that's good news. We're getting more price. But if we were able to get them a little bit lower where it's following that trend, would we get more product and more sales from them? That's that ROI piece that we're talking about. Exactly. And then the other exception there where we're kind of below that trend. The question there, if they're not giving us the volume, why are they getting a better price than all those players all the way to the right? What's the cause for that? So, even to ask that question, having the visibility without the tool is extremely difficult. So this kind of brings a little bit of a significant management advantage in kind of understanding where our customers are and where they need to go. Yeah, just to say that the first part, a different way, priced out of market is this whole program is not necessarily about increasing prices. It's about getting the right price for the right customer segment or the right specific customer for the right product, the right place, and the right time to maximize margin dollars. That includes capturing sales that we may have otherwise missed because we didn't have the right price for that customer in that case. Exactly. I think I'll just add to it that there's also separate costs, different costs from our OEMs serving this equation, and so the better our data about this profile of data with our customers helps us address cost in ways that we have insight to it. So from all this complexity, the 2.6 billion data points, which used to be daunting and frankly money-losing, now it's exciting and delicious because it becomes all opportunity for us to maximize that output. So let's talk a little bit more about numbers. So in 2025, year to date, we had over 260,000 supplier cost changes. That's actually down. It's not surprising to any of you, I imagine. But as the market stabilized a little bit, a little less inflation, last year this number was nearly double as far as the number of cost changes that we were managing. To Barry's point, that can be different cost changes for one product. It could be where the cost is the same in all of our markets, but it can also be that that particular supplier has different costs in Florida than they do in New York. So we have to manage all of that. 3.8 million associated pricing record changes associated with that. So that can be in response to the cost change that we saw from our suppliers, or it could be independent of that. One of the things I also want to mention is this investment in software honestly came just in time because if we think back the last few years, I don't know how we would have processed all of the cost changes that we received in 2021 and 2022 without this investment in technology. I do want to specify that 3.8 million price records, to me, that's an astounding number. That is a lot of price changes still entered completely by humans. Now, granted, in mass maintenance type form, we have that capability, but that is a lot of change. That actually doesn't even include maybe a customer moving from one price level to another. This is truly how many price points do we have loaded in our system? But for those price points, a customer maybe moves from a level one price to a level two price. If I include that, it multiplies the number times three more. It's up in the nine million range of actual changes that we're making in our pricing system all through PriceFX. The 200 basis points and margin improvement is based on a baseline of 2020. So that is looking at the pricing actions and costing changes that occurred and how much margin basis we can associate with that type of change. As far as the, I mentioned the analytics and the maintenance, but we've really done more than that with PriceFX. So again, talking about the maintenance is the first bullet here, and then certainly being able to handle cost changes. But some of the things that we're doing with the software is helping us provide better guidance on where to set price. So we call this TPO or target price optimization. We've built a model within PriceFX that looks at things like the size of the customer, the region, the type of customer, the type of product, the type of transaction, pulls all that together, and can recommend targeted specific pricing for any one of our customers for any one of our 200,000 products. Just one note. You see 200 basis points of improvement. This wasn't something where we brought the software, we plugged it in, and we go, "Wow, 200 basis points of price." Incredible, right? So there's a whole discipline surrounding this. It's a management team, basically a pricing team that's associating and analyzing it, managing. So we developed a complete discipline on understanding what our pricing are to our customers. So it is a, and we had hiccups when we first started, right? How many people do we need? So we've actually done a really great job over the last few years understanding what the complexity is. But it's an investment, right? As we invest in those resources and building it, what's the ROI and what's the return on it? And 200 basis points is really pretty impressive. A culture change as part of that too, right? Who makes pricing decisions? Who recommends pricing? Who approves it? So on and so forth. Kristen, I'll ask you a leading question. You bet. Are we fully done optimizing this? Oh gosh, no. Oh gosh, no. Yeah, I think we've used the term early innings. I think that's a fair way to describe this. So target pricing launched last year, and we're just figuring out how to get that kind of fully integrated into our ecosystem. A lot of it's change management. To your point, do our salespeople trust that a system is giving them the right guidance on price? We're proving to them over and over again that, yeah, this guidance is pretty good, but it's a very different way of operating than what we have today. One of the things that we're also able to do is track the impact of the pricing actions we take. And that is incredibly powerful, not only in the change management piece, but also in just our management reporting and understanding the value of doing various pricing initiatives or price testing in the market. So we have a capability within PriceFX that anytime we run a promotion or we pass through a supplier cost change to our customers, we can track each initiative by name and see within each of our business units how those are performing. Are sales growing? Are units down? Or whatever? How's our gross profit performing? How's our margin rate? So having that tracking capability, honestly, is pretty central to our strategy. So we're evaluating real-time what all this means and then calling audibles as needed because it's giving us that feedback and continuous loop. You got it. One thing I want to just double-click on for a second for everyone's benefit here. So most of you cover and know really, really powerful, sophisticated companies, whether it be Grainger Fastenal in distribution, whether it be the OEMs, whether it be other companies in other sectors. They're all doing wonderful things along these lines. Our competitor is a 10-branch, $100 million business in Florida. Our competitor might be a 30-branch regional operation that does 200, 300, 400 million dollars in volume. And so relative to what is in the market for HVAC distribution, Watsco is head and shoulders above its peer set with regard to this technology. And so this may not seem all that differentiated to you if you cover those big companies. It is extremely differentiated in HVAC distribution. That's true of the whole technology ecosystem that we're talking about. I would also say 12% of Watsco, 12% of our revenue was acquired in the last six years. So three of our business units doing $1 billion today are just getting access to these tools just in the last couple of years. We don't shove it down their throat. We don't push them into it. We obviously ask them to be open-minded and gravitate toward it. And with the community of other leaders that have done it like Brian, it accelerates what we can accomplish with an acquired company sooner and more effectively. And so that's part of that early innings is, again, 12% of Watsco was acquired in the last six years. And a lot of what you're hearing today is just evolving into some of those business units today. Exactly. Yeah, and you asked kind of the roadmap, are we done yet? That clearly adding more business units onto this platform is part of that. Our big five are on, but we have more work to do as far as getting all of our new friends and our family using this software. And it's great because the platform is something, especially because of this standardized data model that we talked about first. Feeding data into this platform and bringing up a new business unit onto this platform is actually not a huge lift for us. I have to say the technology is the easy part. Yeah. Because you just have Steve do it. Love it. All right, so as far as where we're going, of course, we're going to talk about AI. So there's a capability that PriceFX is all in on right now that they call PriceFX agents. What agents essentially are, we're in early stages still, but what agents essentially do, or they're like little bots that are crawling through our data looking for these anomalies. So that example that I gave earlier of the scatterplot with the red dots circled, an agent found those for us. So it's not someone trying to pore through scatterplots, although we love to do that, but it's actually the system kind of highlighting those things for us. Where this is going, though, and really the holy grail for us, is not just identifying where we have opportunities to change price, but within our guardrails, actually just doing the maintenance. So we'll start training our system. When this problem occurs, these are the things that have to happen to correct that price in the system, or these are the emails that need to get sent, or whatever it is that we need to do to make that more automated. That's where the AI is coming in, and we're actually partnering with PriceFX to kind of move from identification to action. So that's one area. The other area with respect to agents is today, the agent itself, the criteria that the agent uses to know what to search for in our data is set up by humans. So our pricing analysts are the ones that are actually figuring out, "Oh, I want an agent that does this." And they're doing that just based on their experience. What we're moving toward is more of a large language model type interaction with these agents to say, "Hey, I'm looking at a problem on my screen. I think I want an agent to start scanning for this." Having that ChatGPT type conversation to say, "All right, set up a new agent. Let's see the results. Nope, that's not quite right. Change this, change that, change this," until we can get that agent actually built in a much more dynamic way, where today, I will be honest, it's a bit of a, you almost need a subject matter expert to create an agent today. So that's agents. Anything? Yeah. Okay. The other area that we're really investing and looking towards the future is taking this TPO or target price optimization to the next and the next level. We're starting to gain more and more confidence in the data that this model produces as far as giving our salespeople and our pricing teams guidance on where pricing should be for each individual customer, for each product. But we haven't yet put that guidance directly in front of the salesforce at the time that they're putting a quote together for their customer. They can get that information from our pricing teams, but we don't have a full-fledged quoting tool yet. We've been building to that over the last six years. That's our next big project for coming up in 2026, 2027, is to launch this pricing guidance in the hands of our salespeople. So I like to say that there's some durability to the margin that has been built over the last couple of years. This is the underpinnings of that durability. We've got a couple of minutes if there are any questions on this before we break. Tommy? My idea. Sorry. Go ahead, Brian. Can you hear me okay? Okay, thanks. Yes. So you talked about the penetration rate today being relatively low across the whole enterprise. Is there a way to characterize the number of SKUs or the percent of branches that are currently using this tool? And then secondarily, as we think about the frequency of price increases, the magnitude of price increases over the last two, three years, you're constantly kind of chasing price, making these adjustments. But as you see better price stability from the suppliers, the vendors, should we think of the margin gain as maybe a little bit easier in a stable price environment as you're making the adjustments across the different territories? To take the second part first, it's certainly easier for us to understand where the pricing opportunities are when our cost isn't consistently changing and we're not changing out all of our models due to refrigerant changes or A2L or whatever. I mean, that makes it very complicated, right? That's only 60% of what we sell, though. That's a good point. That's a good point. What am I complaining about? Only 60%. So yes, the more stability that we have, the easier, I shouldn't say the easier, the more clarity we'll have as to where we're going to have opportunities to move customers in price. And you'll have to remind me your first question. It was, oh, about adoption, right? Yeah. So as far as adoption, I didn't mean to mislead. We have five or actually six business units, and I'll just run through them. Baker, CE, Gemaire, East Coast, Homans, and CE Canada that are all using PriceFX very effectively. So as far as adoption, they're using it to maintain every single price record. We're using that target price optimization in various forms within those business units. I mean, I feel like adoption's fantastic. Yeah, but the opportunity is still limitless. Oh, for sure. That's where I was going. Yes, thank you. Yeah, sorry. No, no, no, you're fine. I can't help myself. But as far as just using the tool, but yes, to A.J.'s point, really taking it to the next level as far as the opportunities that we're pursuing, the analytics that we continue to add, different ways of looking at our data, and certainly continuing. I mean, I could go back and we could show that scatterplot again. I would not say at all, while you could see the patterns in the data, there's still massive opportunity. There was still quite a bit of scatter in those illustrations, and that's true. That's the reality of what we're still working on to enhance. Go ahead. But I would say that's more cultural than adopting the software or pushing it out. It's the culture of acting on the data. That's right. There's also, when we say about culture, right? Back in the day, who controls pricing? Unfortunately, it was sales, right? So it was the fox watching the henhouse, unfortunately, right? So now it's a debate. And guys, just my opinion here, a successful company is when you have a lot of debate. If everybody gets along and high-fives in on every decision out there, you're not going to have a well-run company. You want challenging conversations between sales and operations, between sales and pricing, between sales and finance, between operations and finance. That's when you get the best decisions are made on this. So when sales goes out and gets a prospect and they come back and they say, "This is what we need to kind of switch the business over to CE," right? We take that information, we throw it into a tool, and we see where that lies. And if it shows that it's an outlier, where it's far below where the typical range is, now you have a secondary conversation, right? But the goal here is when we talk about growth, at least with Carrier Enterprise, it's all about profitable growth. We're not going to grow just to move the top line and suffer on the bottom, right? So it's profitable growth. A part of profitable growth, right, is not just managing expenses and SG&A, but it's also those profit margins. So we're not throwing business away or anything like that, but now we have some data now. We can have meaningful conversations with customers of what we're kind of looking like at price or what's happening in that particular market. I think Tommy had a question up front. Yeah, Myra up here, third row. Thank you. Good morning. Good morning. Thanks for the question. Brian, just to continue with the example you provided. So let's say there's been a new customer brought on to CE. The sales team is going back and forth with the pricing team, and we agree on the scheme, okay? A month later, conditions have changed, whatever market, demand, OEM pricing, whatever it is, something's changed, weather. Watsco is a pretty decentralized organization. So now we're talking about someone at the counter talking to a customer that they've gotten to know that may look at the computer and say, "I just don't like that price anymore. I'm going to do this other price for you." So how do you try to align over time? And some of this is cultural, right? I mean, you've got this new tool, but at the end of the day, you got someone on the front line of the business that's got to say, "Yes, that's the price I see on my screen, and that's what I'm going to require of you today." How do you make that happen? So we have what's great, and that's part of the whole cultural change and the thing with PriceFX and even with our ERP system, right, is visibility. So we have visibility out there, and we can see what's happening over the counter. If sales are going up or going down, right? We can see if there's overrides being made. And the question is, why? Why aren't sales growing, for example, right? Is it price point? We can evaluate that. Or maybe we are selling over the counter, but we're giving that example I gave before, the 5% discount, right? We actually have a process in place that runs that up through our pricing organization to evaluate the pricing. We also have a group called product managers. So these are product experts. So a product could be an outdoor split system or indoor unit or ancillary supply. These product experts basically have a sense of what the ranges are in price. Here's the high point and here's the low point, right? Where the complexity is, is where in that should that customer be placed, right? And you got attributes for that customer. And the biggest one is how much they purchase, right? But to really answer your question, right now, we have visibility and a process to flow that information up to our pricing team to analyze. Also, trust. I mean, because this is a culture change, because this is change management, as this becomes more and more of our norm, as the people that are on the street touching the contractor every day, the customer every day, believe in the tooling, believe in the analytics, believe in that this is the right price, there are less and less overrides. To the point where there's another gentleman back there who runs Gemaire, and he's either ready to or getting ready to limit, if not eliminate, the ability for overrides in the field. That's great. I'm just reminded too that not too many years ago, our visibility was a monthly financial statement for the Ocala branch. That was the scorecard. That's when the Ocala guy knew what was going on. So it's a remarkable change in culture, and obviously, the result is progress. Yeah, so Chris and I will be available during launch if you guys have any other questions that you want to go grab us. We're open and eager to talk to you guys. Or geek out on pricing analytics. That's what we do, exactly. All right, so we are going to take a precisely 11-minute break, and we'll see you guys back here. Is it 11 minutes? No, nine-minute break. We'll see you here what time? Time. All right, thank you, everybody. Thanks, guys. Thanks. Great job. 10:45, we'll take an 11-minute break. We'll start up here, guys. If you come back in, take your seats, please. I'm addressing? I'm bringing Rob up halfway through. Hey, Ed Gaffney. Ed. You want to corral that group back in, please? Paging Ed Gaffney. Yeah. Y eah. So also, we clearly want to demonstrate the power of air conditioning by freezing everyone out of this room. So this cup of coffee is purely to warm my fingertips. But thank you, guys, so far. I hope you're enjoying what you're seeing. We're very proud of it, as you can tell, I hope. And we brought Patrick up here. He's our head of security at 64 something. 67. 67. 67. I've never seen him in a suit and tie, or a suit, but he's looking good. He's got sleeves, tattoos, and he helps sell all the Watsco Ventures products that we're putting together. I'll let you run with it, buddy. Take off, Enclair. Thank you so much, A.J. I have to tag on to A.J.'s joke there a little bit that some of you, if you've been in the office, and I've had the pleasure to meet with you, seeing sales and customer success up there probably shocks you because I was likely introduced as head of collections. So there's some people out there that might owe us some. Jim, looking at you, buddy. No, but I came up here today to talk to you guys about Enclair. So again, my name's Patrick Ruland. I run sales and customer success. I'm actually going to bring up Rob Rusnaczyk from Legacy Service Partners about halfway through this presentation to talk a little bit about how his company is using the tool, the results that they see, and how it's impacting their business. I'm going to start off by telling you guys just a little bit about what Enclair is, right, introduce you to it, give you some of the high-end features, and then I'm actually going to do a live demo. So I'm the one that IT has been sweating about all morning that my live demo might not work properly. So this should be really fun. I'm your guys' entertainment going into lunch. So what is Enclair? Enclair is the ultimate sales engine in the HVAC space, period, right? This is a tool that was designed, built, and developed in-house at Watsco Ventures that helps our contractors build very content-rich, digitally engaging proposals that help them close more sales, right? And the entire purpose behind it was a thesis that if we can help a contractor be better at selling, then that contractor will have a better business. They will sell more boxes. When they sell those additional boxes, hopefully they buy those boxes from us, and they'll drag us along with them. And so that was really the point of this tool. And it all kind of started as a dream about 10 years ago. And there were two issues that were identified in the space with the sales process. First was from the contractor's point of view. It's very difficult, and it takes a lot of processes to actually get a sale across the finish line. You have to do things like measurements in the home to do Manual J calculations. I don't know if that's a term that anyone here is familiar with, but literally knowing what the load calculation is in the home for an HVAC system or their furnace. Understanding how financing works, making sure that they're tapping into an AHRI database so that if there's municipal rebates or state rebates that that homeowner could take advantage of, that they're giving them all of that proper paperwork. So it's a really long, arduous process. So that was issue number one. How can we streamline this process? And then the second issue was actually meeting homeowners where they shop today. There's a term in the HVAC industry called the paper towel method. It's a selling method that somebody in the '80s went out and sold, and they did a heck of a job doing it. And I'd be willing to bet that everyone here has been sold on the paper towel method by a contractor at some point in your life. And that paper towel method is literally a sheet of paper. This is what you're getting. This is your price, right? And so that's what was happening in the industry, but where customers are shopping is places like Amazon, right? You go on Amazon, you can buy a $10 pair of headphones, and it's going to give you a warranty. It's going to offer you financing. You're going to have rich product information, right? It's how consumers are used to shopping today. And so that was the thesis, right? How can we make it much easier for a contractor to quote and meet the customer where they're shopping to overall improve the sales process? So that was October of 2016. So fast forward to today and what the results are that have gone through Enclair. Since inception, again, October 2016, $6.3 billion in gross merchandise value going through the platform since inception, $1.7 billion in the trailing 12 months, and on track to do $1.8 billion in 2025. But Patrick, define gross merchandise value. So this would be the value to the homeowner, right? If I'm a contractor and I'm selling AJ a $15,000 HVAC system, that $15,000 would represent that GMV. 1.1 million units sold and nearly 225,000 sold through Q3 in 2025. So really starting to see a significant impact on the market and 600,000 jobs closed since inception. That means that Enclair has been the sales tool that was used to close over 500,000 homes in the United States on what is one of the top three most expensive things that they'll purchase in their lifetime, and 115,000 jobs closed year to date on the platform. So before I dive into my demo, I want to share some more feedback from our customers, right? Of course, I'm going to come up here and say all of the greatest things in the world about Enclair, but nothing is more powerful than hearing what a customer has to say about it. So I've got about a 30-second video here, and then we'll jump over to my live demo. It's the best thing that I could have gotten to get more jobs and get jobs at a higher price. Everybody always tells me the same thing, that how professional the proposals look. I could do an estimate in less than two minutes on site. They could see more information on there than what we can offer to even explain. I'll be at 2:00 A.M. up in the lake, and I will get a signed proposal from a customer. The monthly membership for what you're getting back. It's a steal. It's very good. I always love to hear what real guys out in the field say about it and hear how it's impacting their business because that's what gets us up in the morning. That's what drives us is seeing those contractors win. And so before I dive into that demo, I just wanted to quickly highlight a couple of the key features of Enclair and why it's such an advantage for our contractors out in the field. First and foremost is the real-time pricing and inventory, right? When a contractor utilizes Enclair, they have the pricing as of that minute when they presented that proposal of what they're paying for their equipment. They can see in their local warehouse or warehouses what's available, right? If they're with a homeowner that is in the middle of the summer and they're in a no-cool situation and they're miserable, they want to make sure that what they can sell is available there. What comes along with that as well is rich product information, which you guys are going to see in just a moment here of things that actually help explain to the homeowner, right? Watch this video and understand about this system. Read this spec sheet and learn more about what your savings are going to look like. All of those things are things that Enclair maintains for the contractor. We have built-in AHRI matchups. There's over 20 million AHRI matchups in our system today, and it's constantly, constantly growing, and that is a very critical thing. Again, I said this a couple of minutes ago, but for our contractors that are in areas of the country where maybe there's a municipal rebate or a state rebate and it requires to have that paperwork to file to get that, they need to know that what they're selling is matched. We integrate with financing. The average cost of an HVAC system in Enclair is over $12,000 today. That's a lot of money, and the average homeowner needs to have access to financing to be able to support that. And so we integrate with multiple lenders through the platform. We had over 50 lenders used on Enclair in the last year alone by our contractors out in the field. Beyond that, we do things like tools for sales enablement, ensuring that our contractors can get their arms around their business and understand what's happening in it. Internally, we refer to it a lot as the blowfish effect, right? I might be that one guy, or I might be that five-employee business, or even that 10-employee business, but this is something that can make me look like I'm that national consolidator. It shows the professionalism. It allows me to see the insights on how my team is selling, on how my margins affect my overall profitability. All of these are things that are available to that contractor inside of Enclair to help them have their processes be very, very clean. And then finally, and probably most importantly, order fulfillment, right? They can see what a system costs. They can verify that it's available in their warehouse. They can show all of the information to that homeowner to help sell it. Then when they're ready to order it, there's a simple button that they can click that adds it directly to their e-commerce cart for purchase, so we're really just streamlining that entire process for them. Just to double-click real quick on something Patrick said is the professionalization of the contractor and their selling process. Historically, if you had a very sophisticated contractor come to your home and show you a proposal, you would think, "Wow, they're part of a big company. They're part of a big sophisticated company." We've got small contractors here that look like big guys in the space. And so it is really evening the playing field of sophistication across our customers. And those that use this are, you'll see in just a second, the outcomes are terrific. Awesome. All right, so here's the scary part. We're going to do the live demo. So if you guys could change over that for me. Okay, perfect. So I want to put a scenario out there for everyone, right? We're in Miami, so we'll use this as our baseline, right? It's August in Miami. Your AC unit just went out. It's 100 degrees Fahrenheit. It's 100% humidity. You're miserable. Your spouse is miserable. Your kids are miserable. Your dog is miserable. I need to get this fixed today, right? And so this is a live proposal on OnCall Air. This is exactly what a comfort consultant, a salesperson in the HVAC space would either be going over with that homeowner while they're sitting across from each other at the kitchen table, or this could be that homeowner, 10:00 P.M. At night, flat on their back, scrolling through their phone or on their laptop, they would have the same level of interactivity that I'm going to show you guys here today. So to call back to what I said, OnCall Air's kind of three main purposes that we're trying to bring to our contractors is one, that we're going to help them increase their average ticket size, usually through increase of high-efficiency sales, increase of attachment rates of add-on items. OnCall Air's going to help them increase their close rate just by being very, very interactive and features that do things like follow-up to keep that customer engaged. And it's going to help save them time, right? And the time savings really comes in with the integration back to distribution. So over the next five or so minutes as I talk through this proposal, I'm going to continually call back to those three things for you guys. So what you see at the top here, this is just my about the business section. GroveTech HVAC is one of my demo accounts. It's what myself and the marketing team use to share what Enclair looks like to our friends out in the field. But what you notice, this doesn't say Enclair. It doesn't say Watsco CE, Baker, Gemaire. It says GroveTech HVAC. It's branded for that contractor, and we do that for every contractor we work with. We give them the ability to offer up to four options side by side. And what I'm showing here is very standard or kind of best practice of what we see out in the field, right? Offering the homeowner an option for a repair and then offering multiple options for replacement. Now, to just quickly click on the repair side of it, and the reason why is to talk about kind of the development cycle or the development schedule of Enclair. That is that we're constantly looking at how to improve this tool. I love that our developers approach it as they're never satisfied. It's always what can be next? What's the next feature? What's the next bug that needs to be addressed? What's the next thing that's going to make this even take us even further ahead of the next sales tool out there? As we work on six-week dev cycles. And so our contractor said, "We love Enclair for service and repair or for, I'm sorry, for add-on and replacement. We would love to use it for service and repair." And so my repair here was built with a feature that was designed and built in Enclair by our in-house developers specifically based on contractor feedback, and that is 99.9% of our roadmap. I digress. Jumping back over to the important things, right? Our replacement sales. Again, looking at this as a homeowner who's shopping, right? I like to look at this like the cover of a brochure. So it's telling me what brand is being sold in this. It's giving me a little bit of information, and I'll do some zooming here about the equipment that I'm going to be purchasing potentially. And then I start to get driven into the value, right? So we're always trying to drive that homeowner towards understanding why they would want to buy a higher efficiency system, a more expensive system. And so this is one of the first places we do this. We call this our ETAG. And so this is using the AHRI match of the system that's being shown, the existing efficiency of the system in the home, the kilowatt per hour usage in that or the kilowatt per hour cost in that homeowner's zip code, the heating and cooling hours in that customer zip code to actually break out for them what is the cost savings, what is the CO2 reduction over the lifetime of this system. This is a key metric for that homeowner because the average homeowner buys about two HVAC systems in their lifetime. Whoever is buying this has either never seen a proposal before, had no idea it was going to cost this much money, or if they did, it's been a decade and the industry has changed completely in the last 10 years, and so they're still going to be a little bit of sticker shock. By helping them understand, "Hey, this is why this system costs more money," it's going to save you almost $12,500 over the course of its lifetime versus maybe a lower efficiency system that will save you half as much or a quarter as much, and so. Sorry, just say this is all demo data. That's all fabricated data, right? Correct. Yes, completely fabricated. We also embed financing, right? I said earlier that having financing available for our contractors for their homeowner customers is critical right now. And so I'm embedding financing to show that homeowner what their monthly cost would look like, knowing that that tends to be where homeowners look today, right? They're not looking at what is the cost of the full system. It's what can I actually add to my monthly budget. So we enable our contractors to put that first and foremost in front of their customers. Digging a little bit deeper into the proposals, we maintain tons of product data, tons of product information. I talked about this being one of the strengths of Enclair is the integration back to distribution. So things like pictures of equipment, videos, digital brochures that we can look at. All of these are things that are maintained by the Enclair team. And so there's two main points behind why we do this. First and foremost, homeowners tend to like to do research, right? So we're looking at a Rheem system here. There's videos that I can look at. There's a brochure that I can click on. If I went and searched for this system though in Google, I'm probably going to get a list of the 10 HVAC contractors that are as close to us here in Coral Gables as possible, maybe some product data, right? It's not where the contractor wants their customer going. So we keep them on the proposal is important. But then two is that education piece, right? Knowing that the homeowner isn't necessarily aware of what does high efficiency mean? How does that translate to my utility bill? How does that translate to my carbon footprint? These are the types of things that help them understand that to drive them towards that higher efficiency sale. Normally, when I'm doing a demo, I would be dropping stats right now. So I'm like biting my tongue because they're coming on slides, and I'll speak to specifically what these results look like in real-world scenarios. Last thing I wanted to share with you guys before or well, there's two more things I wanted to share on the proposal before we bring Rob up and talk a little bit about his usage of it. One is that OnCall Air gives our contractors the ability to really put their best foot forward. And this goes back to that blowfish effect, right? Regardless, this could be a one-man show business, but I'm showing things like, "Hey, here's our installation team's digital business card. Did you know that we have a first-year maintenance plan included? Learn more about my company and read more about my team. These are all things that can help differentiate them. And then finally, and this might be my favorite tool inside of the proposal, is recommending. I like to look at this like Amazon add to cart. Can I ask for a quick show of hands on Amazon shoppers? Okay, that's like the most honest I've ever gotten when I asked that. Usually like half the group raise. I'm like, "You're lying. You're a liar." So Amazon add to cart. I'm a big Amazon shopper. It's becoming like an addiction at this point. But what will happen is I will be on buying something and it will say, "Hey Patrick, you're about to buy this." Customers that bought this usually bought these items with it. Would you like to buy those? Heck yes, I would. I am who that button was made for. We are pulling on those exact same heartstrings here, right? "Hey, you told me that air quality was a big issue in your home. Since you got that new dog, your daughter's allergies have been through the roof," right? They can give that homeowner the ability to review items. And it could be things like air quality devices, extended maintenance contracts, or even, as you see in my example here, full additional systems to the home, and then let the homeowner decide. And that's where a stat would come that I'll save for the next slide. And then finally, we obviously allow our contractors to embed that financing when they need to, right? Handling discounts, handling rebates. There are lots of incentives throughout the country that make it more affordable for a homeowner to buy a new HVAC system. And we make sure that our contractors can share that value on these proposals when they're working with that homeowner. So I'll pause there. If you wouldn't mind switching back over to the slides for me, guys, I'd love to bring up Rob Rusnaczyk giving some space here. I was going to say one thing, Patrick. Just a quick question. Just to level set the mindset. Our content in that $12,000 average system, what is our content? Would you guess? Between 17% and 20%. So part of the storytelling with our contractor here is we're helping them take our costs, what they're paying us for the product, and building not just the proposal, but helping them build their profitability inside the tool. Correct. Absolutely. Critical to think about. Come on up, Rob. So I'd love to introduce Rob Rusniaczek. Rob is the Vice President of Sales and Training at Legacy Service Partners. Legacy Service Partners is a consolidator. That is, how long have you guys been in? Well, we can get into that in just a second when we ask the questions. So everybody meet Rob. And Rob, thanks for jumping in here with us. Thanks. Thanks for having me. So while I organize. So I should sit down, right? Yeah. Or should I stand and you sit? All right. Yeah, you might want to stand. So starting off, just if you wouldn't mind, just share with the group a little bit about Legacy Service Partners. You and I were talking last night about how you guys look at the businesses that you acquire and kind of your strategy when you go in of how you guys look at this. And if you wouldn't mind just briefly sharing with the group to give them a little background on you. Yeah. So I guess the big thing when we're looking at companies is in our name, it's partnership, right? We form a partnership with who we're acquiring. So Kelly Harvey was here earlier with Sunshine, and that's an acquisition that we had made. I mean, he's a partner of ours. And what we look to do is go into his business and add the little pieces, if you would, to bolster that relationship and make it bigger, better, faster, so to speak. So if you're talking about the EBITDA growth that Kelly was talking about, I mean, that's what we're looking to optimize. And that's with all of our partnerships. And we're not a heavy-handed type of acquisition company or anything like that. What we look to do is strategically partner. And in many cases, you're looking at one-degree shifts. So it's more about, I would say it's more about creating an evolution rather than a revolution because we're buying good businesses and we're looking to do those small little things that really are going to have top-line growth and bottom-line growth. That's awesome. And just as a kind of funny anecdote for the group, we didn't realize until practicing that we had invited two customers from the same company. It gives you an idea of how big these consolidators have gotten and how diverse their company can be that it took us weeks to figure it out that, hey, we had invited the same customer twice. It was bizarre because we were traveling in Pensacola and we were talking about it. "Oh, are you going to? I'm going to this event." He goes, "Oh, I am too." Okay. I love it. Great. So when you walk into a new business that you guys have acquired, I know that the sales processes are all over the map, but kind of what does that normally look like? What do the existing sales processes normally look like at your acquisitions? I mean, it varies, right? You're talking about the paper towel close. You'll have some guys that'll use an Excel spreadsheet, some that'll use PowerPoint, some that'll use a different software altogether. And yeah, so it's all-encompassing. And so in many cases, what you're looking to do, and again, without being heavy-handed, you're looking to do those small little one-degree shifts. And what I mean by that is just introducing a concept to them and saying, "Hey, this is a tool that you might like, and this is where you could win with it." And I mean, you take a look at an area of, let's say, Massachusetts where an AHRI rating could yield an $11,000 rebate. Absolutely. Whether it's the federal tax credit, whether it's the municipal rebates, or whether there's the utility rebates, et cetera, so all of those things, what we're trying to do is give our guys the competitive advantage at the kitchen table. Selling at the kitchen table in the past, I mean, you could build all the rapport in the world, but if you're $11,000 more than the other guy because you're too lazy to figure out all of the rebates and the machinations of that, and so how do you make that easy, and so this is a tool that we utilize to weaponize that and make it easy, if you would. That's awesome. I mean, I think you've already answered this, but what made you decide you needed a sales tool, right? And it sounds like it's all those things, right? It's fragmented processes. It's different tools being used. But what else made you kind of force that decision? I mean, I don't know if it's a force. Honestly, what we look to do is we look to win. In some ways, I don't really care what the customer buys as long as they buy from me or one of our companies. And what we know is that we're going to provide that great installation and that great value to the homeowner. I mean, when they're buying a system, what they're buying is potentially a 15-year mistake, okay? Because they're going to be stuck with something that is going to last for 15 years. And I want them to buy from us, and they're going to have a 15-year satisfaction, if you would. Yeah, absolutely. The other thing, ultimately, what we're selling is time. We're selling a lot of time, if you would. Our production crews, nothing really happens without a sale, and I think you guys know that, but as sales comfort consultants, what we're doing is we're feeding families, and what I mean by that is we have seven or eight installation crews at a company. If we don't sell anything, those guys don't eat. Their families don't eat, so it's one of those symbiotic relationships that have to occur, if you would. This tool does some unique things. I mean, the demo was great, but it doesn't show you some of the things that you're able to interrogate. A customer in the middle of the night starts querying and looking at the system. We have a breadcrumb trail where we're able to look in and see all of the touches and what specific options they were noodling on at what time. So 4:00 A.M., because that guy got up or that gal got up and they started looking at things. "Oh, they looked at option two, option one, option three. Oh, option two again, option two again, option two again." And then you go, "All right, well, how about if I give this person a call and say, 'Hey, just wanted to reach out'?" It's like, you know how the phone is listening and you have the Facebook Reels and all of those things? Well, we have some insider-type information. Again, customers are out there. They're more educated than they've ever been, and they're looking to shop, okay? How do I keep them at least in our circle, in our sphere? That's what this tool helps us do. That's incredible. I'll let you go a little bit deeper into this, right? So as you guys can see up on the slides there, the Legacy Service Partners group has 23 acquisitions under their belt. 17 of their companies today are on OnCall Air, and they have a 64% close ratio on the tool, which is, in my opinion, a pretty darn high close ratio. But I mean, this could have been prior to, right? When you guys adopted OnCall Air, any shift in close ratio, any shift in high-efficiency mix of equipment, any more attachments of add-on recommendations? What have you guys seen results pre and post-tool adoption? I mean, without getting into the hairy details. Yeah, of course. Of different things. I mean, let's just take a look at a partner. They had probably categorically the best sales team, but the tools that were supporting them, not so much. And they would spend 45 minutes out in the car working to create a proposal. And they wouldn't spend maybe but 15 minutes in the home with a homeowner. That script has flipped, so to speak, where they're spending more time with the homeowner, five minutes with constructing the proposal. But really, let me just back up. When our guys are selling a product, yeah, they're selling time. They're selling the production team's time. But in essence, what do we actually sell as a delivery mechanism to the homeowner? We're selling air. Can you see air? You really can't. What you're seeing is you have to be an incredible storyteller to be able to talk about the quality of air that that homeowner is going to buy. One of the things that this tool does, it really helps us sell the quality of air that they're going to be receiving, if you would. And so if you're talking about that company again that was spending that 45 minutes out in the car, they don't really have that ability to talk about the quality of air that they're going to receive. And you could liken this to water. If I have three bottles of water, which one's the tap water? Which one's the one that's kind of the swamp water? It's all kind of clear, but when you taste it, oh, it's vastly different. We have to be able to tell that story based on the products and the range of different options that are out there. So essentially, you're almost describing the tool more as like an education tool, as much of an education tool as a sales tool, right? You have to educate that homeowner on what they're purchasing and why it matters. Right. And it's kind of like the keystone of the story where you have to worry about all those things. Oh, and what about the money? So with all the different price increases and all of those things, and oh, what about protecting margin? Well, prices increased, but now with the connectivity into, let's say, the CE platform, you're able to see real-time the price adjust, so to speak, and based on that, still the preservation of margin. It's just a priori. Everything is just interconnected. And we have to, as comfort advisors, worry about all those things. And mind you, we still have the production team saying, "What are you going to do? Exactly. What are you doing for me today? Because I still want to work. Of course. Of course. A couple of other quick questions here for you, Rob. I know that you guys recently launched the new Walmart program with our partners. You guys have shifted some of your product over to our partners over the course of the last year and continuing to shift more. How did OnCall Air affect that decision, or did it affect the decision? Kind of chicken or egg scenario, which came first? Did you engage with OnCall Air, and then the product came, or was it product and then OnCall Air? I don't know. I mean, it's like living at the pace that we live in with consolidation and looking at those things. I think it was a culmination of everything was happening simultaneously, right? And so, okay, you have all of these different fees. You have this that you have to account for, and this that you have to account for. The nice thing, and I can't answer the question, honestly, but the nice thing was that the tool was able to accommodate those types of things. And it's like we called your team, we worked through some things, we went back and forth, and bingo, we now have a resolution, and now we're able to effectively sell with that program at the kitchen table. Perfect, so yeah, like we were talking about last night, right? What came first, the chicken or the egg? I don't know, but it wouldn't work as well as it does without the full gamut. Okay, last question for you, and this one is my favorite. Oh boy. If you asked your top salesperson what they thought about OnCall Air, what would they say? Everything that I talked about and then some. I mean, I have comfort advisors that go, "You have no idea this changed my life. My average ticket has gone up, and as a result of that, their commissions go up." And then they get enamored with the feature. Kelly earlier talked about the seasonality effect of business. Well, we have different seasonality. We're selling a need. And sometimes in a shoulder season, there is no need. And when you're effectively selling something at the kitchen table, if you sell something at, let's say, 7:00 P.M. or 8:00 P.M., will you be able to install that the next morning for the homeowner at, let's say, 8:00 A.M. and have the production team? I have some comfort advisors that go, well, a lot of them that go, "We could pull this off, and we could pull it off tomorrow." And it's not just selling boxes. We don't just necessarily sell a box. When you're buying an HVAC system, you're not buying a box. You're buying that production team. It's not like unplugging a refrigerator and then just going ahead and putting a new refrigerator in. What you're doing is you're buying that refrigerator just strewn across your lawn, and you're paying for the production team that's going to be able to put all of those itsy bitsy pieces together in your particular home, which is different than that particular home. And so the logistics is really what the tool enables us to do with the interface with CE and your other partners, right? I would say our comfort advisors, having the confidence that when they sell a product to the homeowner, that we're going to be able to pull that job off the next day. I think that's a winning answer. I love it. Don't go anywhere. We got two quick slides, and then we'll open up to some questions. So obviously, Rob is seeing amazing results with his team utilizing OnCall Air at their locations. But what I want to share is that while Rob and team are definitely the top of the pack, they're not an edge case, right? So let's talk a little bit about how these numbers look across all businesses utilizing OnCall Air. So when we look at how contractors and how OnCall Air is performing in 2025 versus 2024, we see a 20% increase year over year in gross margin value through OnCall Air sales. The number of quotes presented through the platform is up 18%, and the number of jobs closed is 14%. Now, to add a little bit more color to that, these contractors that are using this tool, for our contractors that buy from us, the ones that are using OnCall Air, their product mix of high-efficiency versus low-efficiency equipment is two times higher than those analog customers, right? They see a 25% attachment rate when they offer recommended items through OnCall Air. These are some of those stats that I said I love to say these, but I have to wait for my slide. They see a 25% attachment rate of those recommended items. They have a 44% close rate overall, with an industry average that's really closer to 30%-35%. So significantly outperforming their peers that are not using this tool, and a 17% increase in ticket size when that is offered with financing. And so in a market that is very challenging for our contractors, right? Let's be honest about it. We're seeing our OnCall Air customers not only just outperform their peers, but continue to grow and show these types of results even in that difficult time. Those are pretty good. Not as good as yours. But those are pretty good. Thanks, Rob. That's my last slide. Oh, okay, great. You can come back and respond to that. Yeah, of course. Let me open up to questions, Patrick. Yeah. Anybody have a question or two for this group? Thanks, Rob. Thank you. Oh, no. This is the gotcha question. It's the one. First question is, what percentage of units that you sell through OnCall Air go through are financed, and how is that different from maybe the regular channel? Yeah. So what I'll speak to is that through OnCall Air, we give our contractors the ability to offer financing, right? Now, I know how often a proposal is signed when the financing is still included, but going all the way down to funding is something that I don't have perfect visibility into. So the number that I would be very confident in sharing is that about 40% of the jobs carry a financing offer to the homeowner. Yeah. And, like. Now, Rob, I would say your true real world is probably a little bit different. Yeah. We lead with financing everywhere possible. Average tickets are 30% greater. It depends on partnership, and there's a lot that goes into the whole financing discussion. But I would say our tickets are 30%, 35% higher when we offer financing. At some partners, we have 70% utilization of financing. At others, we have a little bit less, if you would. But part of that is based on market, if you would. But we lead with financing. We teach to lead with financing from a framework perspective because we just want to be able to offer the options. And what? I would even go further. Please, please. I would even go further that our sales or our comfort advisors, we don't only sell systems, but we also sell the flexible payment option, okay? We have to understand how to offer that flex pay option to the homeowner. Yeah, this is 180 months, and they would never do that, or you would never do that. Really, it's the flexibility of having the option to pay this low amount, and as money comes in in a lumpy fashion, if you would, sometimes pays for this, that, or the other thing. I know this is going tangential, but we have to be really well equipped in offering those flex pay options. We do it. Some partners lead 100% of the time with financing. What I was going to add is that the contractors range the full gamut, right? We have some contractors that are 99% financing, right? And others that maybe don't even offer financing, and they still haven't got their mind around the concept of it. One of the things that OnCall Air has done a really good job at is making offering financing for the contractor that's not comfortable with it very simple and easy. So one of the things that contractors will tell us when we ask them, "Hey, why aren't you offering financing?" Right? The average homeowner can't afford this. Why aren't you doing it? Well, I'm afraid that I'm not going to calculate my merchant fees incorrectly. I'm afraid that when I calculate my merchant fees in, it's going to put me at some type of a risk of litigation because I did it at the wrong time. I'm going to calculate the payment factor wrong, and they're not going to know. And then beyond all of that, when I offer this, I have to account for my costs, and I'm going to price myself out of the job. And so OnCall Air has tools specifically built in to literally address each one of those things categorically to make that guy that is not comfortable offering financing today very, very, very comfortable and confident offering it inside of OnCall Air tomorrow. But then above and beyond that, okay, so the question is, we'll show one financing option. At this stage, what we're showing is three financing options because simultaneously, the program is able to show a lot more, but we just choose to use three because customers are looking for, depending on the variety of customers that you have, they're either looking to pay. And ultimately, the end homeowner, they're your customer. I mean, they're our customer, right? So 0%, some like 0% financing, some like low payment, and some like low interest. And we're able to simultaneously offer the three and then work through with the customer what's best going to fit their budget and their schedule. So it's not just one finance offer compared to no finance offer. We're leading with three simultaneously. And then maybe a follow-up, maybe outside of OnCall Air, but given your expertise. So Watsco has been consolidating distributors and HVAC for a long time. We've seen this really big surge, it seems like, the last two, three years of consolidation of contractors, which maybe we've been doing for some time. But what do you see? What's driving that change, and what's it doing to the competitive landscape and just kind of pricing overall in the industry? That's a big question. I don't know if I have a firm answer for you. We could take it offline, but again, based on market, I think in many cases, the homeowner wins. Yeah, there might be more maybe pricing has gone up, but the overall value and what they're receiving in terms of consistency and performance. I mean, I'll go as far back as, let's say, two years ago. I was working with a contractor, and they had a system that functioned, but they put it in backwards. And what I mean by backwards is the air handler was going left to right, and it should have been going right to left. Did it function? It functioned, but it didn't perform. What we look to do with, and ultimately, this is where the consumer is winning, is through process, they're getting performance. That's what we're developing, at least with our platform. Rob, Jeff has an Excel spreadsheet he'd like you to fill out at the end of this, if you could put in your numbers. Oh, sure. Yeah, yeah, yeah. That's good. Thank you guys so much. Thank you. Just a second. All right. Sitting between us and lunch is a father-daughter team, Wayne and Stephanie Nussbickel, that have really joined their family with our family. As you know, and as I mentioned earlier, part of what we do is ask families like these to join our family and do what they do and do it under our umbrella and spread their wings and grow and let us know how they can help. So we thought we'd show off some of our newest and finest and let them tell you their story. Thank you. All yours. We're going for the fireside chat. I like it. It's not only a great honor to be up here and share our story. It's an even larger honor for me to share our family story with my daughter, Stephanie, which ties into the whole history of what we're all about. Our story began in the 1930s in New York City, in Bronx, New York, during the Depression. My grandfather was struggling like everyone else was, and he had three sons at the time. And he said he just felt he couldn't make it in New York as well as he could go upstairs, I mean, upstate. So he went upstate New York for a better life for his kids. And he was scraping out a living, and he ended up being a junk man. And just like, I don't know if anybody remembers the Sanford and Son show from the '70s, that's what he did. He would take a truck, an old model A pickup truck. He would go down to New York City for the WPA projects. I don't know if anybody, I'm dating myself here, that I've been aware of this, but there were these projects that FDR started during the Depression to rebuild buildings and try to get some investment going in the city, so they tear these buildings down. My grandfather would take doorknobs and windows and railings and anything he could that he thought he could sell upstate, and the woman across the street, and I'm old enough to actually have met her when I was a toddler, she came over to my grandfather and said, "Lew, I need a sink." So he goes, "Okay, I'm going down a week. I'll find it." He went down there and found four sinks. He sold one to a woman across the street and put the three on the front lawn, and that's how N&S Supply started. It was insane. I've heard the story so many times. They said the sinks were out there for like two days, and everything else kept backing up, so they went down and brought sinks and toilets up, and then they sold really quick, and they started bringing accessories and faucets, and then someone said, "Hey, can you give me a radiator? I need this, I need that," so they really realized that the demand for plumbing and heating was greater than the demand for any building materials, so they started bringing in a few new parts just to supplement and complement the products they had, so they changed it. They had a business. They built a shack next to the house in East Fishkill, New York, in Dutchess County. It was called Lew's New and Used. I still have a journal from when they kept the books in 1942. AJ said, "We can't go back to that form." It's fascinating. It's in and out every day, total plus or minus, in and out for the week, in and out for the month, in and out for the quarter, in and out for the year. It's one book. It just makes you really realize how simple life was back then. It's really common that we still have that in our archives. During World War II, it was struggling to get material. They actually did pretty well because everything was rationed, and it was hard to get material. Three of his sons, including my father, Stephanie's grandfather, served in World War II. So when they came back, they collectively decided with my grandfather that they wanted to make the company a success. And they sat together and said, "How can we really grow and become a viable business?" So another brother, they actually had five sons. Another one joined right after the war. And he decided to change the name to N&S, which stands for Nussbickel & Sons. No offense, Stephanie. And it was really a turning point, and then they decided they built a bigger building and stopped bringing in used material. And they grew. In 1962, they've added a branch in Catskill. And it was very rural. The Hudson Valley in New York was still very depressed at that time and hadn't really pulled out of depression at all. In 1963, my grandfather passed away. There were four brothers. His four sons were working in the business, and they assumed control and ownership. My Uncle Paul took over as president of N&S Supply. He was the second president of N&S Supply. We are and always have been run as a family business, which in our view is we have direct connection and make sure everybody has a direct connection with all our employees, personal relationships with our customers. We have a business appreciation trip where we go with our larger contractors. We all get to know them as people, as friends, and family. We always support our employees, and we support our community. We say it's a family business. It's really a family. Our employees say, "This is my family here. I wouldn't leave." And we've had some people with us 40 years. And so I mean, it's really a testament to what they did. But we also have some fun. And AJ insisted I tell a story. We have some traditions, like we do pull a truck, and we do fundraising for holidays and food drives and things. But one of the foolish traditions, and I don't know how it's ever started, but it started many years ago. The top four leaders of the company, now it's Stephanie and I and our general manager and our business development director, we wear silly hats and put on flashing necklaces and foolish things for Christmas. And we go to each and every branch. We can't go to all now because we have too many, but we went to the original seven branches, and we bring everybody around, and we say, "Gather around, elves. Gather around, children. Santa's here." And everybody thinks it's just the funniest thing. And then we sing a little song for them. And one of the things I love about our culture, the people have been doing this and saying, "Look, they're making fools of themselves. Let's watch this again. Never tell the new people." So the new people come up, and they go, "Come on, gather around." I go, "What are you doing?" And then we sing, and we hand them a check for the holidays. And they all laugh and go, "That is just who would do that? That is just a great thing. I think one of the reasons that Watsco acquired us was Stephanie, and the other reason was the fact that we do that for Christmas. Yeah. I like it when you called and said, "Is it okay if we? Yes. I called and said, "Can we do that?" And they said, "It's not an option. You have to do that. You absolutely have to do that." And that's another great point because we closed on November 19th, 2019. So less than three weeks, four weeks later, we did that. People go, "I can't believe you're still doing this. Watsco lets you do that?" I said, "We had to get a special permission slip, but yes, they let us do it." But it was just a fun thing. And that was one of the things that really helped people see that we were going to grow and be who we are. And we're part of Watsco. So over the years, we grew and added locations, up to seven locations. And we felt it was important to be a full-line distributor. We had handled actually, we've been handling ICP. It was Hyle, and we. It was Quaker Heil. Yeah. Heil Quaker. And we started dealing with ICP, which was now Heil Quaker, in 1957. And I remember growing up, there was a big green and gray furnace in our basement. It said Heil Quaker on it. So that's pretty cool. But over the years, we've had some struggles. And one, which was the first one that really affected me was I was in the business at the time, is my father passed away in December of 1983, and my uncle passed away in April of 1984. So 50% of the ownership changed in a little over a year. So a lot of businesses would have just been devastated, but there was careful planning, and everybody said, "Let's just roll up our sleeves and make this work." And I was in the business with my sister, who had unfortunately passed away. There are two other of my cousins who were in the business. So the ownership moved on. Then in 1987, which is only not even two years after that, we had a devastating fire that leveled our entire building, a 50,000 sq ft building, all our offices. And everybody said, "Well, what are we going to do? How are we going to get through this? Not are we over? Are we done?" We said, "We're going to go on." And unfortunately, my grandmother had just passed away two weeks earlier. So I said to my other relatives, "Don't clear anything out of Nana's house. That's going to be our offices." So we got temporary desks, and we worked out of the back of our cars and worked out of our house at our homes before that was really practical. And we got through it, and we rebuilt the business. And like I said, we added locations, and we added a tin shop. In the 1980s, we became a full-line HVAC distributor. Then it was a separate division. But now it's more integrated, but then it was a different part of my experience, the plumbers and the sophisticated HVAC guys, and they hated each other. So we actually put it in a separate facility and ran it as a separate business. But now, luckily, those walls are coming down, and technology is starting to become more prevalent across the board. But then that was a big challenge. So as we grew, we came upon the reality that so many businesses do. That's the system that needs help. I hope anybody in here can understand. Right. HVAC contractor. But as we grew, and we really. Kelly. Yeah. Yeah. As we grew, we really believed in moving forward with the company and believed in keeping our culture intact. And what happened is a lot of small and mid-sized businesses, you get some challenges that are really hard to attack. One is access to capital. We wanted to grow, but you have to fund what you're doing and fund your AP and to invest in new locations. You had to be very careful of how you did that. And a big challenge was technology because technology was really starting to ramp up. And with not having access to it, or if we did have access to be able to budget something, we couldn't have done a fraction of what Watsco and A.J. and his team has done because it was just too big of a challenge. There was no way that we could actually do that. Another challenge that was slowly coming up more and more was the buying power challenge. We're dealing with four skids of a product that we'd sell a bunch of competing with someone who bought a half a trailer load or a project, a product that we moved a lot of. We'd buy a trailer load, and they'd make a deal to have five trailer loads. It was always a back five or another number. We were killing all the competitors in our range. Some of the big guys really started to make a footprint. We said, "This is going to be a challenge for us because we want to be who we are. We like what we're doing, but we want to offer all of our people the best future." And we felt somewhere down the line, this was going to start affecting our ability to attract and retain talent because when you look at what do you offer? Well, this is my package for hospitalization, healthcare. Well, they have this, and they have these days off, and you can buy into a dental plan. And when you have a company of 120 employees or whatever, it's really hard to have that together. So we started really feeling we need to step up the game. We got to find a way to really bring up N&S's game. And we had a tough decision, a lot of soul searching. We said, "I think it's time we become part of someone else." So we really started to look for a suitable partner. We wanted to identify what was most important to us. We don't want to hear what they have. Let's think, what are our values? And it's respect for our employees, respect for our customers, operating with honesty and integrity, keeping up our reputation in the community and in the industry. We had a great reputation, and we still do. It's, "Oh, you guys are great to deal with. You're so good. Your people always do what you say you're going to do." And so we really sat down and said, "Okay, this is what we really need to do." But we need to develop a culture of collaboration and resources and some strength behind us. So then we let it known that we were in play. And we fully expected a good response. We were a solid company. We were profitable. We had a strong footprint in the Hudson Valley up through New York's Capital District, and like I said, with the reputation, and we weren't bottom-feeding. We were profitable. It wasn't a fire sale or an inventory purchase, so we reached out to almost everybody that was interested and entertained it, and that's when the pain, I always call it the pain, started. We're very proud of what we do and what we did and what we built up to this point, and without exception, every single suitor would come up and say, "I can do this for you, and I can take this over, and then you can give me this line, and we'll change your name," and it's like, "Well, what about our culture?" "Well, you'll integrate well into our culture. You have a good culture, and that'll work into our culture," and it was all about what we can do for them. One eye-opening thing, I said, "Well, how would upper management fit into this?" They said, "Well, we'd evaluate everyone and see, you may want to stay on. You'd be incorporated probably in another division, and you could stay on as a branch manager," and I'm like, "Well, we built this business. What are you talking about?" The irony of the whole thing was, and we almost laughed about it. We said, "What are you buying? These people want to buy us and are getting good cash offers. But if you want to dismantle us and take us apart, what are you buying?" I mean, they wouldn't even guarantee our people. They said, "We'll probably keep maybe some of your accounting and merge that. And your purchasing, we'll have to look at that. And we think we can probably cut 20% or 30% of your workforce." So we said, "I don't know. We have to do something, but I certainly don't want to do this. And this would just cut everything we've ever done and built." And then we get a call from Watsco. Enter stage left, A.J. It was the most refreshing change having someone come up and say it was particularly Rick Gomez. Give him a little shout out there. He's like, "The most important thing we want to know is how can Watsco help you grow your business? How can we make you be a better company? How can we give you the tools and the capital you need? You need to tell us what you want, and then we can give it to you." And we're going, "Should we pinch ourselves? Is this really happening?" And then they said, "Here's a list of people that we've brought into the everyone else says, 'We'll acquire you.'" Watsco, I love it. Mr. Nahmad says, "We want you to be part of the Watsco family." And it's kind of a tongue-in-cheek thing, but it's really true. That is the philosophy. So when we sat down and we really looked at what was best for our people, what was best to grow the business, what was best for everyone. And then I finally, as almost a later note, I said, "Well, how would I fit in this?" And they said, "Well, you would leave, would you?" And I said, "I don't want to." And they said, "As long as you make just a commitment, nothing formal, would you want to stay?" I said, "Absolutely." And they said, "Well, we believe in people who build businesses, and we want them to stay and continue to build their business. We don't want to plug someone in and take away what everyone here has done." And I was like, "Wow." And proof of that, they said, "Can you stay at least five years?" And I said, "Absolutely. I'm on year number seven. I'm not going anywhere." But that was really an amazing difference. So they supported us financially. They supported us with technology, with advice. I mean, Stephanie can go into this a little more. But it was so clear that I could stay present. And that wasn't the point. The point was to keep everything the best we could. All our management team was into it. And we said, "This is what we really need to do. We need to become a Watsco company." And like I said, as Mr. Nahmad said, "We're not acquiring you. You're becoming part of the Watsco family." And that's truly what, up to the point of the sale, it has been and is still. Yeah. I mean, six years ago, during this whole acquisition process, I was a bystander. I didn't know where my career was going to take me. I had no clue if Watsco was going to fundamentally change N&S Supply. I mean, and I can seriously say, six years later, that has been an overwhelmingly positive experience, and now, as the fourth president of N&S Supply, I truly do believe that statement. I remember the day of the sale, Barry came to N&S Supply and told us the Watsco story, the same one that AJ told us this morning. We were in our conference room with a group of all of our upper-level management, our best salespeople, and they couldn't believe it that somebody as high up in the organization as Barry would fly all the way to little old Fishkill, New York, to make us feel comfortable and welcome and to ease the transition. One point I forgot to mention was I love what Barry said. He said, "If you got anything you don't like, don't call me, call Wayne. If there's anything you do like, don't tell me, call Wayne. You have any suggestions, tell Wayne." Wayne and his team still run this company. We are investing in N&S. We're not considering us buying you. We're investing in you. Everybody had the most like, "Wow," to hear Barry say that with such sincerity. Right. And the day after the sale, one of our counter people came up to us and said, "What do I do today?" And we asked, "Well, what did you do yesterday?" "You're going to log onto the computer, and you're going to help the customer." We didn't change our ERP. We didn't change our operations. We kept running our business exactly the way we saw fit, which is how we define our relationship with Watsco. Honestly, since the acquisition, the day-to-day feel of our business is very, very similar. We make all the day-to-day business decisions. We run our operations and trucks as we need to. And in turn has helped keep our employees in-house. During the transition, we lost no customers, and we lost zero employees. I mean, six years later, many of our customers and most of the community still think the Nussbickel family still owns N&S Supply. And now, being a part of Watsco, we immediately got better IT infrastructure, legal support, loss prevention, and safety platforms. And we were relieved of the burden of healthcare negotiations and fleet contracts and 401(k) administration. And we could focus on the business that we're passionate about, wholesale distribution. And actually, I remember after the sale, he's like, "Well, I don't want to leave. All the stuff I hate is off my plate, and now I get to do the fun stuff." So I think that we had to no longer struggle with these benefits and these packages. Now, we have this enhanced benefit package and our family culture. And truly, in our market area, we are an employer of choice. We post a job, and we get multiple people applying for it from other top competitors that want to join our company because of these values that we have. One of the biggest wins after the acquisition was all of a sudden having the purchasing power of a company that buys $5 billion worth of products annually. We had better access to all sorts of vendors to buying power to better terms. But Watsco being Watsco, there is no thou shalt buy this and thou shalt not buy this. They give us the liberty to decide what works for our regional needs and what works for our customers. But one of the ways that we could layer in these opportunities is with Watsco's private label line. We saw immediate margin gains when we added those products to the comparable ones that they replaced. And Brian, I think, alluded to this a little earlier. One of the less obvious value adds is our network of sister companies. I mean, Watsco considers itself a family. And yes, there's definitely sibling rivalries. But, however. But I mean, there's no better way to make a plan better to move forward without somebody who's running alongside of you. I mean, honestly, poking holes in your plan because sometimes you're just blind to those things. So we end up making each other better. I mean, I think now that being part of this closely connected network of business units led by what I consider to be the smartest and most talented people in the industry is one of our most invaluable resources. I mean, to be able to talk openly about anything, operational issues, what do you do when this happens, pricing problems, oh, how did it go with that transition to PriceFX, all those sorts of things are so helpful. In fact, there's a standing Zoom meeting every Friday morning where all the business leaders get on a call together. Sometimes there's an agenda, and sometimes we have a general business discussion. And we talk about trends, challenges, best practices. And I really think it's rare to see management empower its leaders this way. I mean, I have A.J.'s cell phone number. What president of a Fortune 500 company gives his cell phone out to anyone who might need it? He truly puts his money where his mouth is. He clears the way to help us achieve our goals: sustainable, profitable growth. Whenever we want to grow or invest, we put together a thoughtful plan. We present it to Watsco, and then they help us achieve it. Back in 2022, we found a smaller multi-generational family-run business that was looking for a partner. And they were in a market area that we needed to grow in. With tremendous help from Rick and Ted, we were able to acquire that distributor, Capital District Supply, in 2022. Now they're part of the N&S Supply family. Capital District Supply was a plumbing supply house. They had three very strong retail bath showrooms, and they happened to sell some HVAC. With their three retail showrooms that sell to high-end clientele and we have designers that sit down with them and go through options, we were able to add that into our fold and bring our company total to seven. They were able to help us strengthen this part of our business, which is unique in the Watsco family. Like I said, they were a plumbing supply house that just sold some HVAC. With Watsco and our resources, we taught them how to sell HVAC to dealers, which from HVAC distribution is a critical part of our business. And that is something that we were very familiar with. And we think that we see that a lot in plumbing supply houses getting into HVAC, that they lack that dealer development. I mean, N&S Supply has sold HVAC and plumbing for a lot of years. And like my dad mentioned earlier, plumbers and HVAC contractors for a long time did not get along. We operated them as separate divisions in our own company. They were literally separate buildings because they didn't want to be near each other. But over these past few years, we've merged these two departments. We've cross-trained all of our employees. And we actually physically house most of our inside sales team in one location so that they can collaborate with each other. And I think everyone kind of knows, especially in this room, that these two parts of the industry have remained siloed for many, many years. But we're seeing more and more distributors and contractors offer both services. I mean, we'll see this a lot with the emergence of the home service contractor. And even that contractor has changed how we do our business. And I think there are benefits. I mean, it's easy to sell a wide array of products. You can cover a whole job from the air conditioner to the boiler to the water heater, even to the kitchen sink. And that's a win. But it's not without its pitfalls. I mean, being everything to everyone is very, very difficult. There's a lot to manage and balance. I mean, the first thing I think is most obvious is technical expertise, but that could just be me. But that's what we're strong in. But for these new guys in town, price and availability might get you the first sale, but it is rarely going to get you the second or the third. And I also believe inventory management is extremely challenging, especially at the branch level. Just by nature, plumbing has significantly higher SKU count than HVAC. In another way, I mean, just growing up in the industry, plumbing supply houses have a totally different go-to-market strategy that doesn't always translate to the traditional HVAC contractor. I hate to say it, but it does sometimes feel like a used car salesman. Thanks for calling me a toilet bowl salesman. I like to say I'm into after-dinner wear instead of toilets. That sounds much better. I mean, it's going to be interesting to see how this all evolves over the next couple of years, and since N&S has had a long tradition of both, we have received nothing but support from Watsco, even if that just meant trusting us and trusting us to run a business that ran completely differently in some ways than other business units. We were the first acquisition or member of the family that actually was heavy in deployment and hydronic heat. Hydronic heat, we're in the Northeast, so there's a lot of water, heat, and boilers and baseboard and radiators. So that was something that's a big part of our business. And we're looking forward to opportunities to share that with other folks in the Northeast that can be part of their market as well. So sharing back and forth and collaboration is just what's been really, really exciting. Yeah. I mean, as we look to 2026 and beyond, we're looking to collaborate more with our business units, our sister companies, grow more locations, deepen our adoption of the Watsco technology platforms. But really, what we're really excited about is continuing to serve our customers in a way that no other distributor can. We have the values of a family-run company with the backing of a Fortune 500 company. And I think that really all I have to say is thank you to Mr. Nahmad and A.J. for allowing us to be a part of your family. We appreciate it. The only thing I would add is that we always ask an owner like this, who do you know? And who are your friends? And because these guys go to trade shows. These guys go to a buying group. They all know each other. It's a tight industry. So Gateway Supply, which we acquired three years ago, one of his friends. And his advocacy meant a great deal to the owners of Gateway when they sold us the business. And if we had Chris Williams on stage as Gateway Supply's founding family, it's the same advocacy that you would hear. So now we're taking that same advocacy of Wayne and Chris. There's probably 30, 40 businesses like theirs that have done HVAC and plumbing well for decades. And so part of our progression and our acquisition strategy is to build on that. So we've done two. But there's many more out there. And again, we think the culture will be as attractive for them as it was for these guys when they tell their story. And I love the way you told the story. So thank you. Just don't ask because they're saying, "Loomio way, I need hugs. Honestly, it brought tears to my eyes. You can reflect it in my salary. I'll do the hugs. That's between you and Wayne. No, but I'll just say this. I mean, I've learned a lot from my dad over the years. But the core foundational strategy has been find great businesses like your guys with great families that lead great companies and great markets. You know your customers. You know your culture and so forth. And basically stay the hell out of the way. And just ask how we can help. And this epitomizes that, exemplifies that to the maximum. And just thank you guys for what you're doing. It's actually been a great honor to be part of Watsco. It really is. Yeah. I think we have time for like one or two questions before lunch. If anybody wants to have a question, there's one right up here in the front of my room, please. Ooh, look at you running. Ooh. Get this out of your way. Hi. Just as far as the negotiation, and I don't expect details, but could you just you talked a lot about when the initial bids came in, the competitors wanted to change everything about N&S, and that was a key decision to go with Watsco. But could you just qualitatively talk about, did you have to take a materially different price than if you would have chosen to go with a financial buyer and give up some of the. I can answer that safely. You don't have to give. No, I can answer that safely, and I've said this many times. It wasn't necessarily the highest offer, but it was absolutely the best offer, without question. And they were really realistic and fair, and they were really good to deal with. Yeah. I mean, just again, one of the things I learned from my dad, our chairman, the last thing we want to do is get into a contentious debate about valuation because this is so personal and we need to be trusting and loving on the way in because we rely on these folks to run their business. We can't do it for them. We're not going to try to do it for them. That's all risk, so that's true in the quote-unquote negotiation. It goes like this. What do you want and is it reasonable? Great. Let's do it. If it's not reasonable, then probably you're not reasonable. Maybe it's not a good fit. All right. That was it. All right. Lunchtime. Thank you all for your time, and enjoy your lunch. Appreciate you. Thanks, guys. That was awesome. Good. All right. Hope everybody got a sandwich. Hope everybody got their hand warmers here. Warm the inside out. Thank you guys so far. I hope it's been interesting and insightful. Like I said, we're very proud to show off who we are and what we're up to and what we've accomplished so far. Part of that idea is to give us some credibility that as we make more investments in new and different things, we got some credibility that you guys believe we can pull it off and that it's going to make an impact on the business. Like I said earlier, the theme of today, and now I guess we're really going to get into the crux of it, is this 10, 30 and five: $10 billion in sales, 30% gross margins and five inventory turns. And again, as I said, we challenged our business leaders how to do that and what to do, and it came up with collaboration. Yes, keep the individuality of the business units and the culture and the people and the teams. And thank you again to Stephanie and Wayne for sharing their story, which really moves me actually. But leverage what we can leverage in terms of shared resources, shared buying power, shared whatever we can do. And that's translated really into this more specifically this three-legged stool, which is not the most elegant of terms maybe, but it's how can we let's buy together, let's supply chain together, and let's sell together. As macro forces change in the country and in the industry and the markets, let's leverage our strengths at scale to take advantage of what we can take advantage of, which is our size and our strength. That's taking the form of three things. I can go one more. Right. Collaboration, optimization, foundation. Right. Sorry, I must also tell you that I'm filling in here for another one of our business leaders who could not make it last minute for some reasons, and I have not seen these slides. But I do know the story. Right. He drew the short straw and had to present with me. Yeah, exactly. Also, I should introduce Jim. Jim Brady is, I think, our VP of Supply Chain or something along those lines, but has helped us get smarter on all things transportation and safety and supply chain. But, so go back to the story. So the three-legged stool is what we're going to talk about. That's buying together, it's supply chaining together, and selling together. So the buying together is what we're calling this VCR, which stands for vendor consolidation and rationalization. So again, this came out of a session like this where we asked our business unit leaders, what's the next move? How do we, what should we do going into the future? And you heard Stephanie and Wayne and others mention what we do not do today, we have never done, is tell the companies, tell the business units what to do in terms of what to buy from what vendor at what price or anything like that. Each of the businesses negotiate their own deals. They're doing their own product selections. They're meeting with vendors and suppliers. They're negotiating deals and so forth. We have a group at Watsco and have for 20 or 30 years that goes to those same vendors. Or maybe if we do business with 2,000 manufacturers, we go to about 100, 125, and we negotiate a strategic deal with them. Somebody like a Resideo or a DiversiTech, some of these vendors that all of our business units buy from. I'm talking about on parts and supplies mostly. On the equipment really that happens more at the business unit level. We say, listen, yes, you're doing business with N&S and you're doing business with Gemaire and Baker and you have your deals with them, but we also want you to look at our entire buy and give us a program that makes sense for that buy. And that means things like rebates and payment terms and rebalancing the inventory and freight allowances and so on and so forth that makes sense for us and our size as a customer. And then we have a book of these deals, if you will, and we go back to the business units and say, as you guys are making your purchase decisions, just know that this is also there for you to take advantage of. That sort of has been the as is. Where we're going to, yeah, the as was. Where we're going to and the ask will be is what these business units have said is that we want to go a step further and make decisions together strategically about who we should buy from, which vendors we should buy from, and combine our strengths and go to those vendors and sign up to be bigger, better partners with them. Give them more of our business, commit more to them, and get deals more appropriately that fit that expected buy. So that sounds easy, but you have to understand that these 10 business units are 10 personalities and have 10 cultures and have 10 different leadership groups and so forth. So the gentleman that I'm standing in for, Rich Iandoli, who's one of our best and leads our business Homans in New England, he likes to say he got voluntold to lead this effort. And he calls himself the Chief Cat Hugger. Right? So he's armed with all the data from all the business units and really from the Watsco team of what's being bought and where, and he piled everybody into a room and said, let's not leave this room until we make decisions about who we're going to buy from and what. Just to give you an example, by product category, and I'm making up these numbers, but we may buy thermostats from 30 or 40 different manufacturers. And again, I'm telling you what these guys did. They said, let's pick five. And I don't know the real numbers. Or maybe six. Let's make our primary vendor partners in this product category. Let's all agree to consolidate our buy, consolidate our spend, consolidate our partnership level with these five, and that'll be more meaningful for the vendor partner, and they'll make it more meaningful for us, and that way we all win together. So that's starting to happen. We're having more and more conversations with vendors that way. We're consolidating our 10 different business units and their approach to our vendor partnerships, and it's going to be meaningful. How am I doing, Jim? You were doing terrific. Anytime you want to jump in and save me, that'd be great. Yeah. I'm sorry. Oh, sorry, Barry. That was you. I think the one thing in our partnership meetings, and I think it was Kelly that mentioned that it's really about being a partner, is we're not looking at them for, hey, we're big, we want more money. We're looking at how do we take our supply chain together and really streamline it so we're more efficient. I think the theme of it is we want to grow. For us to do that, we have to sell more of their products. So how can we enable that and roll that through our business? So it's a really different approach than I've seen in my prior life in other distribution. And I think it's something that I'm seeing our suppliers being very, very excited about as an opportunity for them. Because at the end of the day, just like us, they want to generate more sales. So it really helps us better align along those paths. Yeah. And the other approach, like you said, it's not just price, it's not just rebates, it is also supply chain expectations. Right? We want to raise the game of all of us in the channel to be better. That means let's get the right amount, let's order the right amount of products that we need for the moment. Let's receive what we order. Let's get those in a timely manner and just increase the efficiency and optimize the supply chain so that we can take care of more customers the right way more often and turn our inventory faster. Right? And therefore generate cash. So the world we're talking about is this parts and supplies world, really, which is 30% of our business, which in dollars is what is it, $1.6 billion? $1.6 billion of purchases in 2025, for example, which that number we expect to grow. But that's the world of what we're talking about. So what's next? Yeah. I was going to say about we think about half the industry is the parts and supplies. Half the industry is parts and supplies. And what's ours? 30%. 30% of our business is non-equipment. So that's opportunity for us. Go ahead, Jim. You want me to? Yeah, help me out. Help me out. Oh, don't cry. I'm sorry. I thought you meant just slow down. Yeah, yeah. So I mean, really, again, I wasn't. He drew the short straw through us. Some say I did, but. This will be my last formal presentation for Watsco companies who've been actually great working with everybody. So the other pieces and the topic that we're going to lead into is you saw that's 30%. And our competitors are able to be more at a 50% marker. So if we take, without impacting our equipment sales, and we can provide a platform that gets us to that 50%, that's a big number. And that's a big number on a high margin set of categories. So that's really what we're focused on. So we've been, over the past probably a month and a half, two months, we've been having meetings with, it's now 45 suppliers in total. When you're sitting in them for nine hours a day, they're excruciatingly painful, but they're very productive. And what we've been doing is working with these top suppliers who make up the bulk of that $1.6 billion that we're spending. And we've been truly looking at how can we work more efficiently together and then gain share in that. So this isn't about, again, it's easy to go back and say we're big and we want an extra point here or better pricing. We're now looking to say, how do we take maybe 10% out of the supply chain and let's figure out a gain share for that? And those are pretty much the candid conversations that we're having with them. And some of them are really pointing because I know our solutions are going to deliver that. Yeah. And I think there have been two that said, no thanks. Yeah, there have been a couple that have kind of shied away. And it's totally fine. The thing with our industry, especially on the parts and supplies, unlike equipment where brand is king, parts and supplies, there's usually two, three, four, five, 10 alternatives. So we're able to, if one group doesn't want to play and take advantage of this, we have another group that will. And once you're in this and with the businesses supporting it across our 10 businesses, the collaboration and the commitment, and I'll go over some numbers kind of as we move on, is just astounding as far as how we're driving our business to really consolidate and leverage our capacity and our spend overall. If you want. Please. Yeah. So we're $7.5 billion. We're made up of 10 organizations. Everybody is basically placing their own set of orders. Everybody, even though we're that big, we end up approaching our suppliers as 10 separate independent companies. And yes, we have the meetings at a top line, and yes, we're negotiating spend, but they also know transactionally everything is happening at the business units. That's the, as A.J. said, the as was so what we're trying to do now is work on how do we change that? How do we, as a Watsco family, start acting more as one? A key part of it is we don't want to lose. This isn't about command and control. This isn't about consolidating purchasing organizations, and now it's all under one. I came from an organization that was the way they drove things, and that's a fine approach. I think if you look at Watsco's success, it's been driven by the fact that we have an entrepreneurial spirit. Our businesses are constantly hunting. We compete against each other, and we're constantly driving that kind of hunger, if you will. So now what we want to try to do is find a way of really being able to combine ourselves as a business unit or as an overall entity, but not take away from that entrepreneurial spirit. And that's why we have people like Zach and Brian. Everybody is committed at the business unit level. This was not something that we sat in, I would say, in the group, but I'm from the Northeast, so I do appreciate the weather. But it's something that the businesses came and said, hey, we can't do this as 10 individual businesses. So how do we do this? We need someone to kind of quarterback it. And that's what's wanted. Yeah. And none of this will affect or denigrate the identity of the business unit. I mean, they're still making decisions. They're still approaching their customers their way with their cultures and their people and so forth, all the things that Wayne and Stephanie said so eloquently. This is more on the backside. Right? This is not customer-facing. This is making tough choices together as a group and then leveraging the benefits of that, so the second leg of the stool is the supply chaining together. If the first leg was buying together, the second is supply chaining. These are my very fancy words, and for that, we have started a program we call Hydros. And just again, the as was is each of these 10 businesses of ours has their own supply chain network. That means their own branches, their own trucks moving products into the stores, between the stores, to customers, with their own teams that are running those routes and so forth and running the operations. But for the first time now, and this is only about nine or 10 months old, we have a shared cross-business unit distribution center. And we call it Hydros. And Jim has helped lead that effort. So go ahead, Jim. Sure. The first name, Hydros. Steve Rupp in the back came up with the name when I asked because I had no idea what it meant or why we would call a supply chain solution that. He looked at me. He's about a foot and a half taller than me. And when I asked why, he asked why not. We decided Hydros was. So that is forever its opportunity. And AJ mentioned it's a DC. I'm looking at this. Part of the reason I came to Watsco a number of years ago was because partly this opportunity. And as much as I'm an operations guy, I look at operations and supply chain as really an engine for growing our business. So when the idea came through and we started looking at these challenges of how can we start getting the most out of our supply chain, out of our vendor base, but not disrupt what's made us a success over the years. So that's a kind of fine-tuned balance. And what we decided to do is Hydros is going to be made up of a distribution center, but it's going to be a little bit more than that. It's going to be what I would consider a master distributor of parts and supplies for the Watsco companies. So as we go kind of old way, old way is I'm placing 10 orders with 10 different vendors. New way, I'm placing one order with my master distributor, and I'm getting that entire shipment together as one. I think so. So it's a little change in the way we do it. But our business is nothing's changing. We've agreed on what products are in the warehouse, so no one's telling you you're selling this brand. It's something that we jointly agree on as an overall company and driven by the business units. So that's kind of the foundation part of it. So as far as when we built it, the one advantage we had is we weren't just tagging on to another business unit or just trying to fit it into an existing operation. That always becomes a challenge, and you almost get to where you want to be. What we had the ability to do was really just greenfield this. So we started from a technology perspective. A.J. made it very clear we're not going to create an organization that is high in overhead and just really kind of is a burden to the business. We leveraged technology. I know it was mentioned throughout the thing, but truly, we're able to synchronize our data across all the business platforms, bring it in through our forecasting system, and now have a single view of if you take tie wraps, 36-inch tie wraps, I can tell you how many are bought at the entire company level, how many we can ship to every single branch, bring that together. Then when I turn in an order from the vendor, I'm placing one order for a truckload of tie wraps, and it's a lot of tie wraps. So our entire ecosystem across that, from when our subsidiaries generate an order until when that order is received on their end, the only touchpoints that are physical are when the person picks the item and puts it on the pallet, and then the receiver receives it. Other than that, the transaction itself is, you'll see on the next slide, it's about 98% digital. No touch. Flexible and scalable. Obviously, we have seasonality. So we don't want to go and buy X hundreds of thousands sq ft, and then we find that for seven months of the year, it sits idle. So we've built a model, and this has been our first year of Hydros. We've been able to scale up by a third, and then we came beginning in September, and we scaled down by a third in our distribution center. The numbers and things I'm quoting are specific to our Hydros initiative. So we've built that, and we did the same with labor. So it's there, and we're still adapting it. We're far from perfect, but we're building it on a scalable platform so that we're able to ebb and flow with it. Parts and supply growth, this is the part that I'm personally excited about. If you go and you look at our branches, and Stephanie mentioned taking out private label. One of the challenges for our branches is private label. A lot of them, you got to buy a box of them. A box has 100 whatever in it. That might be 12 months. So if they want to get into the game, they got to invest in a year's supply of this item and that. So now, to get that broad array of product, I always look at it as you have a fixed amount of money you could spend on groceries. So if you go to Costco, you got a lot of stuff. It's just a very narrow selection. With Hydros, what we're doing is we are literally buying things like these tie wraps that hold ductwork together. And we're buying them by the truckload. And for a small branch that's in Paducah, Kentucky, when they need 10, we're shipping them 10. So now that small branch is actually able to get into that segment. So things like private label, where a lot of branches had a hard time entering that market, they're now able to get into that market because we're able to break it down and get it to them. Obviously, private label growth, the fast and consistent replenishment, every branch, every week. Now, I want to see that even be more as we have additional VCs. I want to be able to turn this even quicker because I want us, if you run out of something today, I want you to be able to get it quick. I don't want you to have to carry four weeks' worth of safety stock if you know you got a truck coming next week. Place an order today. It's here on Monday. So by doing that, you obviously have the cash flow gain. So instead of our branches starting to carry 8, 12 weeks, and I mean, if you're a branch manager, two things matter to you. I've been in multiple industries. How many trucks do I have, and how big is my warehouse? And three things, sorry. How much crap do I have all over the place? Whether it moves or not, they don't care about. It's a matter of how much does it look like I have. Now I want them to still look like they have a ton, but I want them to have double the amount of SKUs in that building to sell without having to stock the depth and the cash flow requirement for it. I don't know if you have a - Fantastic. Keep going. The next slide, I'll go. I do get - I just love this crap, and it's definitely fun. The point of this slide, we're still relatively small now. We've been operating a year. This is not something we're not doing $1 billion through it. I don't want to come there. What I can tell you, it has gained scale. We started this year, opened up, integrated all the systems, got everything up and running. We're now servicing 550 branches across the United States. We have one distribution center. Our goal, and we're letting the data and the science tell us, is what's our breaking point to move to that second DC? But the data that I'm going over here is real. We're able to replenish and hit every branch every week. We also, if you need something quickly, we can UPS it, overnight it, get it to you however you want. This single DC is taking orders end to end from automatically generated in our, I call them customers because in my mind, that's how they're treated, and those are our subsidiaries. But we take that order. It flows through our system. No one even looks at it. I mean, here and there, there's an item issue, some data issue, but it flows into a transportation planning system, our PIM data, which you've heard us talk about. It determines, oh, is this one pallet, two pallets, or is this a truckload? And we have a transportation management system that says, what's the best mode to ship this? Is it UPS, truckload, LTL, whatever it may be? Once that is planned, it then drops to the warehouse. We're using a tier one WMS that supports it. That just drops a handheld gun. Guy goes out, wave picks it, zone picks it, puts it on the dock, it ships. We now track that order all the way to receipt. All of our branches have visibility using salesforce.com to see every order from place to end. I mean, it really is a pretty cool, transparent process. The businesses are now coming. I'm working with Stephanie. We're getting her group on board. And we just have a couple. We're almost complete with that. But there's a desire to do it because of the ease of business. Again, if I go old way, I have 10 POs, 15, 20 POs going out to 20 different suppliers. That's AP transactions. That's issues. That's everything that goes with it. Now I'm placing one order. Our first-time fill rate is double what our manufacturers are. Our out-of-stocks are almost nil. We're stocking 98% of the items we sold. So we look back 12 months and say, what items make up 98% of what's been sold? That's what's in our DC right now. So I can't say enough. We're really on a roll. And the whole point of it is this isn't a concept. The train's left the station. We're now at a point of just hitting acceleration. Our vendors, and that's why I kind of earlier alluded to it, our vendors are excited because for the first time, they're going, "Oh my God, thank God I don't have to get 10 different POs." One of our suppliers had a conversation with them, and they were talking about a little bit of the discount. And I said, "Listen," I said, "What if instead of you have a $3,500 freight minimum, what if I guarantee every PO is $1,250,000?" We could do that because we sell $25 million worth of stuff. That's not even. I'm lowballing it. So I was like, "You can't give me the same discount for $3,500 that you give me for $250,000." So those are the discussions. And I'm like, "I know I'm taking money out of your supply chain. Let's have a little give and take on it." And that's really one of the ways that we're funding a lot of this. And they're excited. I mean, they are over the moon to do this with us. It is because it simplifies. I mean, you just think about it from business. They're used to dealing with 10 different people, 10 different sets of orders. They're maintaining 10 different item numbers. Pricing, Kristen talked about the pricing up here. Right now, they send one price sheet to us. It flows into our system. We disseminate it out to our businesses. Old way, they're doing regional pricing. They're doing all sorts of things. It's just a nightmare to really manage. Now we're funneling in, and we're really driving efficiency on their side. And that's where I said we don't go with our handout. Usually, it's about this part in the presentation to them. Then I put my handout because I know I'm saving them a bunch of money. So I think fair is fair. And that's where we save money together, and then we try to grow together. Yeah. That's great. And then so now we talk about kind of the futures and capabilities. I want to see where we are now. I mean, I'd love to see it quadruple. And when I talk months, I don't mean four or five, but talking in multiples of 16 months, 12 months, be able to double quadruple where we're at. The opportunity is massive. If you just do, then I'm sure everyone here definitely could do it more accurately than me. But if you do the math, if we were a 50/50 business, even with our existing current sales on equipment, that's all incremental sales. And that number starts to matter. And again, there's a couple of things as an operations person. I'll now kind of put that hat on. Is longer term, we're thinking about what if we start looking potentially like an equipment depot, a big warehouse. I mean, equipment, it takes up a ton of space. When I came here, I was like, "Holy crap, this is a little bit different than I'm used to." And it just takes up a lot of space. So now you have all the businesses in prime real estate, and everybody's storing a month's worth of inventory. What if I just stored everybody's inventory kind of in a middle of the place, and I hit every branch every night? Now my branches go down to eight, 10, 12,000 sq ft. Currently, it's not just to reduce square footage, but then I want to open up 10 more dots. HVAC tends to be a very local market. I go to what's close to me, and I'd rather have more dots rather than have just a big dot in one place, so as we look out long term, this also starts to play in our real estate portfolio. At the scale we're at with 15 vendors, no, it's not going to impact our overall turns right now, but what we are seeing, and I forgot to mention it from the other side, but Hydros has itself selling to our business units. We've hit six turns within that business unit, and we've seen our weeks on hands at the branches come down. Now, again, the scale of Hydros, where it is today, is small compared to a $7.5 billion business. But I'm kind of thinking if it works here, there's nothing that can't take it four, five, six, 10 levels beyond where it's at. I mean, transactions, warehouse space. If I need more, you get more. It's not like there's some capacity limitation that's unachievable, if you will. And then the improved inventory, I think I hit on. So I mean, I think as you guys could tell from my approach, I am super excited about this. I look at it as just a way of really driving parts and supplies. I think equipment is kind of an anchor. But everything else, there's no reason that if someone's buying an indoor and outdoor unit from us, that the thermostat, the wiring, that every single component can't be sold with that one package. Why are they going to a second distributor? Is it we're not stocking something? Those are the things that we got to fix that problem. And I really believe this becomes that enabler or mechanism for that. That's what I was going to say. And you didn't push me off the stage. That's great job, Tim. That's perfect. And maybe we'll open up to a couple of questions if anybody has any. Myra's just grabbing a microphone. Give me one second. This one there in the fourth row, Myra, please. Maybe just comment. The industry is at 50%. Is it the other HVAC distributors are carrying this much working capital to hold the parts and supplies? Or are those HVAC contractors getting the parts and supplies from general distributors? Yeah. I mean, Barry, you answered that question nicely. Well, first, there are legacy distributors that compete well in this segment for 50 years. Just like if we buy a large equipment distributor that's built a legacy 50 years doing equipment, we see that in the same community of non-equipment distributors. If he's listening today, Charlie, we want to acquire your business and make you part of the family. Company here called Tropic Supply in Miami. Also, return my calls, please. No one's ever heard of it. It's a great company. They've built their legacy serving contractors in this segment. And we're not going to put them out of business. What we want to do is chip away in our business model to better compete, to better serve, and use our overall strength of technology and so on to do that. It takes a bit of a change in the logistics model to accomplish that the way that you heard today. You heard private label. Grainger is a great company. In my early career, they were not necessarily a great company. Today, they are a great company. And private label and logistics and product selection and what goes with small cube and fastball, another great example. So again, in the culture, we have business units inside of Watsco that does all of this very well. We have two business units inside Watsco that is 50/50 and others that are 80/20. And so part of the evolution is part of our challenge to business unit leaders was how will we compete and grow that part of the market knowing there's even more fragmentation, more good competitors in that segment. And what's bubbling up here of, "Let's buy together. Let's have logistics together. We're going to talk about let's sell together," is the evolution of that discussion with our business unit leaders. So today, I think the average contractor might go to Carrier Enterprise and buy $4,000 of machines and still have an account over at Tropic Supply where they might buy their concrete pad to put it on. And the question is, does CE have concrete pads in stock? Is it competitive? Do they know what they're talking about? Is there a way for them to connect that dot with their customer? And what Jim is saying and what we are saying is not all of our stores are in that position to have sold those types of accessories as well as Tropic Supply has over the last 50 years. And this is part of that evolution that we see a big opportunity for. David, do you have a question? Thanks. Thank you. So. Increase from 70/30, 40 is bigger than 30. Yeah and I'm not in finance, and you're right. So no specificity. We're just going to go greater than 30. I mean, I think you know us by now, Dave, right? I mean, we also want to give you guidance on the fourth quarter just before you leave. Yeah. We appreciate that. So when we think about this sort of hub and spoke situation, especially in the parts and supplies area, when you balance that out, you look at the margin profile, I suppose it's good for cash flow and turns, as you mentioned. Can you just talk a little bit about how that changes the model, if at all? I mean, as you grow that piece, is it margin-dilutive overall, or is there something about that methodology that helps you close the gap versus equipment, for example? I'm sorry. As we add parts and supplies, is it margin-dilutive? Is that the question? Yeah. No, it's the opposite. It's margin-accretive. It'd be margin-accretive. Yeah. Parts and supplies, we saw the higher and typically, as categories, we saw those at a higher margin than equipment. But then relative to the parts and supplies business today, the hub and spoke, is the profitability higher in that method than it is in what's going on today? Well, the intention of doing it in this method is to do a lot more of it, right? And that's part of what Jim was trying to explain is that we can help more of our branches, more of our businesses, and more of their branches get into more of these product categories without making such a large investment as they used to have to make. So instead of carrying a year's worth of these, they can carry six days' worth and buy them out of our master distributor, internal master distributor, if you will, and get replenished every day or every week or whatever it is so they can be in that business of selling that stuff. And it's an easier entry point. It's an on-ramp to selling more of this stuff. I think, too, there is a segment of parts and supplies that is a lower margin when you start getting into truly the commodities. There's that segment. But the bulk of that category is when you start talking about thermostats and some of the electrical and the pumps on it, the motors, those tend to be very solid margin products. And then as far as what we're doing, like I was saying, when we negotiate, just as an example with one of our motor suppliers, we're now buying factory direct from their plant because we're able to buy at that scale because our demand is all 10 businesses. And that is going to put us at a different price point and cost point. So there's some improvement for us on the cost side. Obviously, there's cost to redistribute it, and it's finding that balance. But the key is having a little bit left over for our business to drive that margin. And that's a lot of what we're trying to do. That's helpful. Okay. Thank you. But just to say one more time, it's about selling more stuff and also making a higher margin doing it. Got it. Just on the topic of the equipment depot, it always felt to me like, especially on the equipment side, this is all about being necessarily local. And just so I'm clear, you're not suggesting that there's not as many SKUs. It's just you'd have less in quantity. Yeah. What's an equipment depot? I'm not sure. Oh, no. So think about it this way, though. Right now, we have a lot of our branches who are buying a truckload at a time. And they tend to have a very narrow breadth of SKUs. If I'm replenishing you every day, so I have this when it comes to things like equipment, it's overnight, every night is that mindset I have. So if I have a DC that has every SKU out there, every SEER rating, everything you could need, I can have it to you overnight constantly. Now, that regular piece of equipment that, "Oh, crap, burnt out. I got to replace it today," that's going to be at the store. And again, it comes down to now I could stock one or two of these, one or two of these, some breadth there. But then when the guy calls and says, "Hey, I want 10 units for a job I'm doing," or, "I need this one-off unit," we become the guy that says, "Oh, yeah, I'll be here by the time the store opens." Yeah. But let me clarify. We are not at equipment depots. What that is on there for and what all this is and really one theme I want you guys to take out of this is that we're increasing our world of what's possible. If we didn't have the data, if we didn't have the systems, if we didn't have Ecom and the apps and all these things build on each other and integrations and so forth, they create new worlds of opportunities for us, things that we couldn't do before because we physically were not capable of it. Now, something like an equipment depot can be on the list because it is actually something we can dream about actually pulling off. Does that make sense? Yeah. Yeah. I would say that the second half of today, just to be clear, is a little bit of future state. Yeah. A little bit of a dream state, if you will. First half of the day is, "This is what we've done. This is what it means. This is what it's meant. We're going to keep doing it." So this afternoon is a little more abstract. Right. Well, to say it more succinctly, the vendor consolidation and rationalization, we're three months in. Hydros, we're 10 months in or 11 months in or something like that. And what you'll hear about coming, which we call Watsco One, we saw in our press releases, now we call SupplySync.com. We're still on day zero, right? These are things we're giving you insight on what we're investing in because we see, A, because now they're possible, and we see the opportunity that they present in terms of return. Cool. Thank you, guys. Thank you, Jim. Any birthdays from you there. So before we go to the Watsco One SupplySync story, we're going to talk, oh, I got to advance a slide, about customer experience in the AI world. We've alluded to it a few times. We are doing a lot in the world of AI. I am very confident that we are at the leading edge, if not the bleeding edge, certainly in the HVAC and industrial world of taking advantage of the new tooling. We're uniquely positioned to do so because of the data elements that I explained before. These two gentlemen, Zach runs Gemaire, Zach Lynd. I think CE's got a lot of play today, so you got to get Gemaire some love here. We got to start getting in the limelight a little bit. Yeah, yeah. Rich Martin, who is our Salesforce.com guru, and which a lot of the new AI stuff is living inside, so it's being delivered to our constituents through the Salesforce platform, so take it away, guys. Okay. Thank you. Thank you. As AJ was saying, my name is Rich Martin. I lead the Salesforce platform, which means I'm responsible for a lot of the screens and the tools that our associates use every day to complete their job and how that influences the experience they're able to deliver to our customers. And we know that AI has the ability to shape every part of our business. And everyone you hear present today, you're going to hear them talk about AI and how it's influencing things. And you'll hear Zach and myself do that too. But before we get there, I'd like to talk about how Watsco is uniquely positioned to take advantage of that and to implement these technologies. So we do that in three ways. AI takes on the role of a credible, reliable, and instantaneous source of information. It leverages the rich data resources that we've spent years building, curating, and putting together. We're talking about data on our products, data about our customers, data about how we troubleshoot our equipment and what the resolutions are for different modes of failures and different things that go wrong, and the list goes on and on and on to all the things that AJ mentioned earlier. The next role it takes on is a guide. It's intimately familiar with our business processes and our offerings to our customers and how we complete things so it can guide our associates as well as our customers themselves to the right solution right away, and the last thing it does is it saves time. Both of those come together to save time for our customers, and we know when our customers are more efficient, they can complete more jobs during the day, which turns into more sales opportunities with us. And they're happier. When there's less friction to do business with us, it makes it easier to do business. And they're stickier. They tend to continue to buy from us and do business with us and grow with us. And when those same things happen to our customers, we see the exact same two outcomes. We see our - I'm sorry, our associates. Our associates are more efficient. One individual is able to get more work done in one day. And when you take frustration out of someone's job, they're happier at work. They stay around longer. They don't leave as quickly. And when we do bring new employees on, it reduces the time to onboarding. We can get people up to speed more quickly and get them efficient sooner. So now talking about how AI has been able to influence some of our processes and some of our customer experiences, let's start with onboarding. Every time we bring a new customer into our business, there's a long list of things we have to do to get them set up for us to validate if they're creditworthy, for us to learn about them so we can target them and segment them and put them in the right sales channel and give them access to the right tools to do business with us, and then to set us up with all of our OEMs, with our partners, with all the systems they need access to that we have them in that they don't even know about in order to serve them. And we have to do that 18,000 times every year. This is a customer or this is an industry that always has new customers. There's churn, which is normal. And there's new businesses starting every day. Every single day, there are people starting new HVAC companies, establishing new relationships with distributors who need to be set up and need to go through this entire process. So this is a process that used to be measured in weeks for time to complete. And through AI and robotic process automation, we've got that down to minutes. If we receive a completed credit application digitally on our e-commerce site, we're able to get that customer set up and ready to buy from us with access to our systems in under 15 minutes now, which is a tremendous improvement from where we were. Then another way AI has impacted our operations is once the customer is onboard with us, they interact with us in a number of different ways across all sorts of different channels, digitally and in person. And in the old world, all of those were siloed. Someone would walk into the branch. Branch person is there, eager to talk to them, eager to help them, but completely unaware of the conversation that customer had with credit a week ago, the conversation that customer had with technical support that morning, or what technical support recommended they go to the branch to buy. We've done a great job the last few years digitizing that information, consolidating it, putting it all together on one platform where people could see it. But because we have such vast relationships with our customers across so many different channels, it can be a lot. So how we're leveraging AI is to surface the most relevant and contextual information based on what an individual's role is and what the task is they're trying to complete. So in this example, we see someone who's logged in as a sales manager. They're responsible for a set of customers, and this is one of their assigned accounts, and their main goal is driving sales growth and transitioning customers to digital experiences, getting them on e-commerce, and we see right at the top of that summary, online sales have skyrocketed. Overall sales are up. You're doing great with your two goals for your role in the business. Then below that, it's summarizing all of the interactions this customer has recently had with the business, so then our sales rep, when they're preparing to talk to this customer, they know this customer has recently had a positive experience. They've had two cases in the last 30 days. Both of them were resolved, and the customer's sentiment through those cases was positive. They were happy with that resolution. And we're able to prepare our reps with that information and also alert them and allow them to be proactive when things maybe aren't as positive. And then the last thing it does for our example sales rep is it provides insights. So it's noticed that this customer is on our website frequently. They're looking at supplies, products, but they're not actually purchasing supplies from us. And it's letting me know as a rep that could be a great thing to talk about. And again, it's highlighting the most relevant pieces of information to me and my job. It's not giving me a long list I have to dig through where I have to look at charts and identify trends to see, "Oh, there's something going on with supplies." It's letting me know so I can jump right to that. And when you're a sales rep with 20 to 30 to 50 customers, it's a challenge to manage, but it's possible to manage that customer set. When you're an inside salesperson, when you work in a call center, you could be servicing hundreds or thousands of customers. And if you're receiving an inbound call, you have 12 seconds, 12 seconds during pleasantries to identify who this customer is, how we interact with them, what tools you might need to solve, you might need to use to solve their issue, just in those couple seconds while you're saying, "Hello, how are you?" With AI, we're able to do that immediately and have that on the screen before you even say hello. We receive millions of phone calls annually, and a large proportion of those phone calls are fairly routine and, frankly, could be handled by our app or e-commerce site. Do you have the product? What's my price? And is this product still under warranty, but we do get a few hundred thousand calls that require a unique service, and that's through our technical support group. You heard in this morning session, one of the biggest challenges for contractors is to hire and train service and installation technicians, and so because of that challenge, we staff a technical support group to provide a resource for the field if they're on the job site and are having problems with servicing or installing a product. Now, in the past, the handling of these phone calls was a challenge because these are emergency-type calls. If you think about it, this is originating from the job site in an attic on a roof and usually with the owner or homeowner standing by, and so responsiveness is very important on this. We struggled with that because it was either a call center with these technical support experts or chat or email, which is not very responsive. It was difficult for us to really gain the data and insights on what is the purpose of the call. It limited our ability to be proactive on how we're going to solve these issues in the future. We introduced Wingman. What Wingman does for us is it's a structured way to request technical support and give us the insights on what was the fault or the issue that contributed to the call. This is accessible through our mobile app. A technician has a mobile app, and they go in there and request Wingman support. They provide the model number, serial number, basic narrative of what the fault or issue is that they're experiencing on the job site, and then any relevant pictures, diagrams, anything that they're struggling with. And what that does with my team is it then comes in and creates a Salesforce case, populates this case with all of the information, and then we begin tracking that interaction between the technical support team and the technician that's in the field. And so the process is fairly simple. That information comes in. It gives my team the ability to view it and to do some background investigation on what's the model number, serial number, warranty status. And then they've got the narrative of what the installation or service technician is struggling with. And they can pull up any sort of relevant diagrams or product information. And then they reach out and call or video conference the technician in the field based off of their preference. The video conference has been very effective for us because a lot of times the technician is looking at the unit and they're struggling. They turn their camera around, and then my technician in the office can help diagnose and troubleshoot the challenges that they're having. So once that issue is resolved, then they can close the case. And the true power of what I mentioned before is now we're starting to compile all of the data on what created the fault in the first place. What are our most common calls? What are the quantity of calls? And with that data, then we can be more proactive with how to potentially train those contractors upfront on what the most common issues are that are coming in. We can create ready-to-make videos on common faults so that if they call in or text in or have an issue, we can shoot a video on how to quickly solve it themselves. And also, we can communicate more effectively with our OEM suppliers on, "Here's common faults that we're seeing. This needs to be a quality assurance piece of the factory on these given faults." And now that we're in this position and we've got the data, we've compiled it, now we're going to be able to use AI to, in the future, better create programs around solving these common issues. And a fast anecdote talking about the live video support Zach mentioned. I just love this story. Shortly after we launched the feature, I was part of a technical support call where the customer called and said they're getting an error 310. Our technical support person, not familiar with that error code, is looking up and down the manual, can't find it anywhere. Says, "Hang on. We just got this video feature. Turn it on. Let me see what's going on." Instantly, they saw that the display board was hanging upside down, and it was E01. It's the kind of situation where a picture really is worth a thousand words. They'd been on the phone, both of them frustrated for longer than anyone wants to admit right now, and as soon as they saw it, it was instantly clear, and they were able to jump right to what they had to do to troubleshoot it. But now that we've talked about what that process is like overall and how it looks to our customers, I want to zoom in and look at exactly what it looks like for one of our internal technicians who works those Wingman cases and answers those calls now that we're in the age of AI. And in the old world and the way this has been done historically, that job is a very swivel chair-heavy job. Someone takes a call on one screen. They're taking notes on a second screen. In a third window, they're pulling up product manuals, wiring diagrams, all sorts of information for that system. They're trying to look up inventory if there are replacement parts needed, and they're trying to look up service history along with a whole bunch of other things. And now AI is able to do all of that. So we see two tools that we've launched with our associates on the screen here. The top one, our suggestions. The AI is sitting alongside me on this phone call, whispering to me, telling me things that might be helpful to say or might be helpful for me to think about as I'm on this call. So if we look at the transcript in this example, customer calls up. They have a particular model, and they're getting an error code. Before I do anything and without requiring any action from me, the AI pulls out the model number so that I can look up the relevant information for that equipment and translates the error code. It's telling me that error code is a problem with the pressure switch, and the manufacturer recommends troubleshooting that by measuring the voltage across it. All I need to do as a rep is repeat that back to our customer if, based on my experience, I think that's the right thing to say. And then our customer did that, and they're reporting the voltage is five volts AC. And the AI immediately recognizes that's outside of spec. That switch has failed. Not only has it failed, here's the replacement part number. And then it takes that part number and checks our inventory for the branch that that customer likes to purchase from. And very quickly, without me having to copy and paste a part number to three different screens, I'm able to tell the customer, "Your preferred branch has three of these in stock. You can get it tonight. They close at 4:00 P.M." It's increasing the velocity. It's decreasing our time to resolution, and it's making the entire process a lot more pleasant and a lot more smooth for everyone involved, and the other tool we've launched is an AI coach. With the first tool being all about suggestions and concrete ideas and things for me to say and do and help think through, this is about the softer side of doing business. Historically, if I was a rep who took phone calls every two weeks or maybe every month, I would sit down with a supervisor, team leader, whoever, and they'd pick one or two or three phone calls that we would listen to together and review. This is weeks after those calls occurred. I'd get feedback, but in the meantime, I possibly have taken hundreds of calls in between when those were recorded and when we actually review them. Those are hundreds of interactions where I haven't had an opportunity to better myself. Now we're able to tell people live during the call how they're doing, if they sound professional, if they're mentioning the promotions that are hot right now, if they have a habit of interrupting the customer so people can see these things real-time as they might be doing them so that they can make corrections. And it allows us to be extremely transparent with our associates and really helps everyone provide a better experience all around. And then the last thing we do, at the end of every call, reps are tasked with writing up notes about the call. They have to type a short summary. On average, that takes about 30 seconds, which really adds up. Some of our call centers are extremely high velocity, which we'll talk about in a few minutes. 30 seconds times the number of calls a rep takes in a day really does add up to a lot of time. Right now, you'll see on the left side of the screen, the AI has been transcribing the call live as we're going, and as soon as we disconnect, it's able to summarize those notes, save them to the case. I'm done, and I can move on to my next call. I don't need to be burdened with writing notes on sticky notes the entire time I'm talking on the phone, trying to remember what I need to put in my notes, and then spending that time at the end of the call to write it down. AI takes care of all that for me, and AI is accurate and makes it easy. In three languages. Yep, so that's how we do one phone call. But we don't take one phone call a year. We take a lot of calls. We take five million customer phone calls every single year at this company. And over 60% of those, we've found, are what we call routine inquiries. These are not problems that customers need us to solve. These are people asking for a single piece of information. They want to know, "Is something in stock at the branch I buy from? What's my price on this particular part? Is this serial number under warranty?" And those are all things that in the future, our voice-to-voice AI will allow customers to call and immediately get an answer to. Ed mentioned this morning that chat is open an hour before the branch opens and an hour later, which has been a great service to our customer. AI will be able to be available 24 hours a day. No one will have to wait on hold. They'll be able to call up and immediately get the answer they're looking for, and in the case where it's not one of these routine inquiries, in the case where this is something we want to route it to a person, we'll be that much better at routing it to the correct person because they will have told the AI what they're calling about, why they're calling, and then we can route it to the person who has that skill. If they're calling about a multi-zone ductless system, we can route it to the product specialist for that. If they're calling about a technical support issue, we can route them back to the same rep they spoke to earlier in the morning when they were given some troubleshooting steps and said they would call back later. It's such an evolution from press two for sales and press three for technical support. So it really makes us that much more powerful and that much more able to serve our customers both better and faster. So last point. Yeah. Just a few more points on AI. And Steve, join me if you would. Thank you, guys. So one is important to note that while a lot of what you just saw is being delivered by Salesforce.com and Rich is our Salesforce guru, this is not Salesforce technology. This is Watsco technology that was homegrown, developed in-house, and just delivered through the platform that our customer service and technical support reps are using. And there's a lot more technology that's being delivered in other locations outside of Salesforce.com. But we want to highlight that because it's so tangible. But just to give you a quick flavor of other AI that's happening or other areas where AI is being used in the organization, and we started this, I don't know, two years ago maybe, is we really built an internal AI chatbot, much like ChatGPT. We call it ask.watsco so that none of our data leaves Watsco when we have interactions and conversations with AI. So we have a very early partnership with Microsoft and their OpenAI partnership. We get keys so that we can access the foundational models of the AI, frontier models, if you will, but we have no data leakage. Every conversation we have, every piece of data that we share and have conversation with our AI tools, and that's happening by like 2,500 people in our organization every day or week or whatever it is, stays within our four walls. That's a hugely important piece. And that AI chatbot is developed, again, in-house, and it's got new tools and technology coming out every so often. And then we built, and that's the engine of what you saw a lot, and now that's being delivered through Salesforce.com. The other engine that we built in our building is more external-facing or can be more external-facing. It's a digital HVAC expert. So all that PIM information we have, every Salesforce case that's ever existed with the customer service and technical support people, every piece of data that we've talked about can now live in the brain of this AI. We call it Al as an homage to our Chairman and can answer questions about installations or troubleshooting or what have you. So if I'm installing an ABC 123 system and I need to know how much length of a line set can go between the indoor and outdoor system, I don't even know if that's a thing. I'm making it up here. I can ask Al that question and get a real-time answer and get a citation from where in the literature it's getting that answer. And that's being delivered today to our counter-representatives and others internally and coming, not I was going to say tomorrow, but in the very near future to our customer base through our mobile apps and other interfaces. So I just wanted to make that clear that this is really our homegrown stuff that we're leveraging and continuing to build out. Yeah. The most important point there is that if we don't get out of this conference soon, we're going to be behind. Yeah. We're very eager to get back to work. What questions can we ask or answer, rather, about anything AI or anything else you heard? Come on. Wow. Dave, nothing? You guys nailed it then, I guess. Yes. Yeah. Thanks. Appreciate it. Appreciate it. All right. This is the penultimate, I think, right? Yeah. SupplySync.com. So back to 10:30 and 5:00, big ambitious goals. We asked our business leaders, "What do you want to do to get us there?" And they came up with the three-legged stool of buy together, supply chain together, and sell together. SupplySync.com, or you may have heard us refer to it as Watsco One. We're going to go to market as SupplySync.com is the sell together piece of that. These gentlemen, Steve Rupp, our Senior Vice President and Chief Technology Officer, Brian you met earlier, leads Carrier Enterprise, are going to take you to that. Well, this is the last presentation before the roundup. So we're leaving the best for last. Oh, yeah. And everybody wake up, right? Yeah. So I've had, over the last 15 years, I've had the pleasure to lead the digital transformation at Watsco and really leading this crazy, talented technical team, which has been a blast. There's just so much going on. And the latest thing that we're bringing to the organization is SupplySync.com. And some may say, "What is SupplySync.com?" Others have heard this project, Watsco One. So we rebranded it. We went from project name to go-to-market name SupplySync.com. And what it is, it's an enterprise-grade procurement marketplace built and designed for enterprise-class customers. And Brian will go through a little bit more about what that means or what those enterprise customers look like. It's all about unifying through this digital platform the entire Watsco portfolio to better serve these organizations that have a broad need and oftentimes do business with more than one of our Watsco companies. You heard the word marketplace, and why that's important is because the architecture is built in a manner to preserve our decentralized culture and allow each of these first-party businesses that we're bringing on board to continue to bring their culture through in the offerings that they're making but harmonize a little bit better on price and service levels and such with their sister companies. So it's all customer-focused. You're going to hear a lot about how we built this thing, and it was all through voice of customer of this class of customer. It maintains that full value stack that kind of Ed walked through earlier of our commerce environments. They're not just procurement platforms. They're ecosystems for the HVAC trade. There's a lot of tools and capabilities that shine through in these platforms. This will continue to exist. Here are the customer segments where the initial focus is going to be on. One are contractor consolidators. That's an entity that purchases a contractor or multiple contractors, a large contractor purchasing one, two, three over a different geographical area, PE firms buying contractors. The second group is called institutional organizations, a significantly huge opportunity. Think about repair and maintenance departments in these institutions, like in a hospital network, school network, pharmacy network, or just corporations across the country. So these are organizations that are actually looking for some kind of solution that we're going to show how we're going to provide that in a second. Then you got home warranty and property management groups. So you're looking at countless opportunities where equipment's needed for either a repair or replace. So what tool can we use to kind of access those opportunities? You heard me say how we design this thing with our customers. Enterprise customers spoke and we listened, right? We went and visited with tons of these enterprise-grade customers. We said, what are the internal business challenges that you have working with the Watsco companies, but more broadly? What are the areas that keep you up at night and make it challenging for you to grow and scale your businesses? We heard a lot of very consistent threads: inconsistent pricing across their locations. As they have organizations that are regional or national, they get price drift across all the companies. Even though we may have well-intentioned intentions of setting a price with an organization, over time, these prices company to company may not harmonize as well as they should. And so that's one of the big challenges that they had: limited ability to influence product selection and vendor selection within their own company walls and ecosystem, fragmented billing and credit. We talked a little bit about how Watsco benefits from some of that on the VCR side. On this side, these companies are experiencing much the same phenomena of multiple vendors, multiple lines of credit, just a lot of complexity on the AR/AP side, inconsistent logistical commitments, so not having full visibility into how things are transacting, when they're to be delivered, how often they're to be delivered, et cetera, minimal procurement visibility. So as they acquire new companies or as they have different parts of their organization, what does that look like? How can I influence how these operating companies are going to buy from the enterprise perspective? Which is everything that Steve just mentioned. It's not much different than the challenges that we're going through at Watsco. And so the goal here is to basically provide an avenue to take all those different aspects that Steve's talked about and be consistent really from the parent company down. And we're going to kind of get into a little bit more of the nuances of that. But remember, these groups, these channels that we've talked about aren't under one location. They're spread out throughout the country. So how do you get your hands around all of that? And how do you ensure that they're following the processes that's coming? It's an interesting predicament. It's a challenge out there. And I think we have a solution to kind of tackle that. Right. And the last one's a little bit more nuanced, but loosely integrated technology systems. And what we mean by that is all of these complex organizations operate field service management platforms. They have associated financial systems. And all of them want product catalogs, pricing, inventory levels, all introduced into these field service management platforms. When you're doing business with 10, 12, 15, 20 different companies, embedding all of that in your field service management platform is very challenging. With SupplySync.com, that becomes extremely feasible. So what are we building? You heard all that, voice of customer, Rob from Legacy Service Partners. Did we miss anything on that prior slide that were the challenge that you see or that we're facing? No. What could we do better? I mean, Rob was a big part of specifying some of these things. So just go ahead. I think it comes down to friction and velocity. When you have the ability to scan across the country very quickly where something is located, it comes, I mean, there's so many different tentacles. We have one business that stretches from North Carolina all the way up until Boston. And they are dealing with multiple Watscos or Watsco-type locations, if you would, whether it's Gemaire, Baker, CE, Pierce Phelps. So that right there, that one company spans across so many different regions, if you would. And if you're talking about price inconsistency, it's not always the cheapest price. But as an example, you could have a heat kit in one market that's $800. And then realistically, knowing that that thing should be around $200 bucks, you're tearing your hair out like, "Do I get the $800 one because I need to service the customer?" But I know everything is based on my price book, and I know what the margins are so that I'm going to go ahead and supply that customer, if you would, but all of the rigmarole that's required to have that pricing inconsistency, if you would. That's one thing. Yeah, that's a great point. We should have brought that up on the innovations with pricing. But when we talked about market pricing, remember we can maybe get a little bit more price out of the Northeast than we would out of the Midwest, for example. With these channels that we're talking about, that's basically our problem. They want one price to manage their business. They can't worry about the velocity of each individual area with the different prices in that scope of business. So for them to make their life easy, they really need to have one provider, quote, "provider," that be able to provide one price across the entire footprint of where they're doing business. So how do we fill in that one provider mode with 10 Watsco business units? And that's the solution we're talking about. Right. And to a degree, I mean, if I go on Amazon, I go on Amazon and I'm seeing a price. That's right. Okay. When I go on five different Watscos, if you would, and I see some disparity in those types of things, but yet my pricing engine is really predicated on the price that you could understand, it just throws a wrench into the whole thing. But it's not also that. It's the stickiness that you then provide. Because I know based on our service level agreements in multiple areas, you're going to open the store at 4:30 P.M. on a Saturday or what have you. Again, it's being able to, because I don't have it in stock, I don't have it on a truck, but I could find where that's located, and I could say, compared to a different contractor, "I could go ahead and take care of you, Mrs. Jones, today. And this is how I'm going to do that. Consistent logistical commitments, right? Absolutely. Yeah. Yep. Well, thank you. Appreciate that. And feel free to pop in wherever you want, Rob. So what are we delivering? Based on all that voice of customer and all those requirements that we heard, what does version one of SupplySync.com look like? Again, supporting that consistent pricing, regional or national. Very, very critical for these organizations. And we've got to deliver that, and we're planning to. Procurement control. So enterprise-level visibility. Allow these enterprise organizations to monitor and have full visibility into how their organizations are buying and where they're buying and why they're buying. I think today, if you talk to these customers en masse, that's a big challenge for them. And they need to arrive at their economies of scale. They need to be able to have that visibility all the way through their organization as to where and why they're buying. Unified billing. Unified billing is a challenge for them, just like for a company like Watsco. They want to minimize the number of vendors that they do business with for simplicity and back-office scale, and so with SupplySync.com, we're going to be able to harmonize and unify all the invoicing to a single payee. Rob's organization will only need to deal with the payables for SupplySync.com for the entire Watsco family of businesses. Reliable logistics, Rob touched on it a little bit there. Just, we make service-level commitments. We meet those service-level commitments, and it's consistent across all of the Watsco companies that they're doing business with, and then just complete visibility through the entire experience: pricing visibility, logistical visibility, procurement trends and capabilities, et cetera. That integrated experience, we're also going to deliver a branded mobile app for those enterprise customers that are interested. You guys are familiar with the HVAC ProPlus mobile application for each of our business units. We're going to build for each enterprise customer, if they so choose, a branded mobile app specific to their business. And so they can deploy that to their teams with logo for their organization and giving them full visibility into the entire process all the way through from the field to the back office. And then a single point of contact, and I'll let Brian dig in on this one, but we hear this a lot. Single point of contact, sort of that ambassador of the relationship with the organization, but from a selling perspective. Yeah, it's the one throat to choke, so throughout HVAC, there's going to be issues. If it's pricing issues, availability issues, service issues, whatever the issues are, what you can have is customers that are spread out across the entire country figuring out who the point of contact is in each individual market and reach out and make that call. It's just completely inefficient. You need one person where you can talk about opportunities with, that you can talk about next steps with, that you can talk about issues with, so that's what we call an ambassador, and that ambassador would actually own the relationship, get the feedback directly from the customer, and then that person is going to do all the legwork, reaching out to all the different contact points to get the opportunity accomplished or the issues resolved. That's kind of like Groundhog's Day, right? Because we live that and breathe that every single day, and what I mean by that is we have a partner in, let's say, Nebraska, and then that same partner actually does business in two locations in Texas, and I'm on three calls having that same conversation with three different regional locations, and choking? I want to choke all of them, mind you, so it would be really nice to just kill one of them and kind of be done with it so that they know that I don't have to do that again and again, but in reality, think of that times 23, and that's what we have many, many times. When I'm talking about something as simple as creating an HVAC partner's login for all of your regions, nice to have one person rather than going to, well, it's this person here and this person there and so forth and so on. I love it. I'm telling you, I love it. Perfect. Perfect. So what does that unlock? It unlocks access to our 600-plus locations through one login, one harmonized set of pricing, et cetera, across the Watsco footprint. If I could just paint the problem just a little bit more with a specific example. So let's say a customer needs air conditioning, and they're going to call Carrier Enterprise. They're going to get on their website. They're going to sign on. They're going to see the box. They love the price. They love the service. They place the order. But now they need Flex. And I got to tell you that with Carrier Enterprise, that's now a core competency. We're not good with Flex. We're good with a lot of things, but not Flex. We have a sister company that's phenomenal with Flex. But for them to order that from that sister company, they have to log off our platform, go on to the sister company, log on. By the way, it's East Coast Metal Distributors, phenomenal company. Log on to East Coast Metal Distributors' website, order the product. Right there, that's two orders hitting two basically credit lines, two processes, and two invoices coming in. And there's breakage there. So if this is all spread out throughout the country, and we all talked about this being a relationship-type business, what stops from a certain person in a certain office ordering it from a friend of theirs in another facility or another vendor? And that happens constantly. So if we can get one platform where that customer can see all of the complete assortment across all 10 business entities, and at that point, have that product arrive to them when they need it with the one price, et cetera, we think that's a complete home run for us. Sure. So during these voice of customers with their outcomes, and I'll let you guys read some of these outcomes, but it kind of goes all the way from exciting to impactful to valuable. But at the end of the day, when you look at these kinds of comments, and I think Rob just kind of also gave us another one, but to a number, we got very positive feedback from this customer group that this is going to hit the mark. And so we think that it's not going to address every challenge of these enterprise organizations, but we think it's going to address a lot of them. And so we're excited to get down the path of development. So from this point forward, we're going to go into Kristen. You thought that the scatter plots were the nerdy stuff. I got you beat big time. You get the CPO up here, and we're not going to have a conversation without architecture diagrams. But now, what we're showing here is this is 2014, and not all concepts are ready for their time. I drew this architecture diagram on 5/5 of 2014. I called it Hydra back in the day. For all those nerds, a Hydra is a multi-headed fire-breathing dragon. So it's Project Hydra, and it was amazing. The concept was incredible. But the reality was, at that time, we didn't have the technology stack to support a concept like this. That was the first problem. The second problem is no customers were asking for it. Certainly, no business leaders were asking for it because we were very decentralized at the time. Enterprise customers weren't as sophisticated as they are now. So the demand just wasn't there. But we also didn't have the technology stack to support it. And so what we're building, and you've heard a lot about this, and we haven't talked a ton about it, is since we started this mission of digitization of the Watsco companies 15 or so years ago, we've built so many capabilities, but these capabilities have really built upon themselves. And so we started with data and analytics, and then data and analytics fed PIM, and then PIM enabled commerce. And then we wanted to go down the pricing path. And to do that, we needed product data. We needed analytical data from our ERPs, et cetera, et cetera. And so over time, we've built all these capabilities, and they've piled on top of one another. And when you're looking at building something like SupplySync.com, it's really just a mashup of all the technologies that we've already built and launched. So there's a ton of efficiencies we gain. It's got a heavy commerce backbone. It's got a heavy PIM backbone. Without the pricing platform, we'd have no luck, trust me, synchronizing and harmonizing pricing across our companies. And on and on and on. And the Conduit infrastructure that we haven't talked about today. We talked earlier about we allow through acquisition. Through acquisition, they come in and they maintain their existing ERPs. We don't migrate them to an SAP or otherwise. That's extremely intentional. As long as they're safe and patched and secure, that's okay because they're efficient operating systems for these companies. But when you're sitting in my role, building enterprise solutions that bolt on are very difficult unless you can build what we built, which is Conduit, which is an enterprise messaging bus that can speak to all the very typical ERPs in our space. So you take Epicor Eclipse, Prophet 21, Infor CSD, Mincron, all of the standard ERPs in wholesale distribution. We could plug into any of those, communicate with them, and deliver our enterprise solutions. And that's just not a SupplySync thing. That's everything. So Conduit is threaded throughout. But the point here is that we've built upon all these things. And so as we develop SupplySync, it's just the next generation of a digital solution. And it just happens to be the newest digital platform that we've developed and we're delivering. So what does that look like? This is where it gets really exciting. On your left is that e-commerce front end. That world where just like CarrierEnterprise.com or Gemaire.com, you're going to go to supplysync.com, and you're going to have access to all the capabilities that we just said. But how does that work? And it gets into this marketplace design. But the magic happens in that marketplace center area. How do we evaluate, make offers to customers, and then evaluate where the best place to place that order is, and then get it off to the ERP, which then moves on to the WMS within each of the business units for fulfillment? And then you got to do the money side of it, invoice, and like I said, consolidate and provide that single payee. This is a little bit of how the sausage is made or underneath the hood, but it's critically important to enabling what we've got today. So when and how are we going to do this? We're already building it. So we started in about August building out the capabilities. And our plan, and that's all the way from voice of customer through technical design, et cetera. The most challenging place is business process design, as you guys can well imagine. Now, all of a sudden, we're going to provide this marketplace where all of our businesses can create offers and compete with one another on the service side, not compete with one another on the price side. But we're going through all that process right now. Our plan is Q1 of next year to have a pilot customer and then move through from there to first wave of customer onboarding in 2026. So extremely aggressive compressed timeline. One of the reasons that we can move so fast is because this is the first platform. I don't know what that's all about, but technical issues. Is that the AC? It's not the AC. Okay. Wayne took care of that. But one of the reasons that we can move so quickly is this is actually the first platform that we've planned, designed, and begun developing, particularly on the commerce side with AI. So A.J. mentioned ask.watsco, program manager Alex and I and everybody are heavily using these large language models to do a lot of the planning and program management, et cetera, a lot of the design. And then we're using products like Amazon's Q Developer to develop the code far more quickly than our developers could in the past. And we're using that same technology through all of our other programs. This is the ground-up AI-first development program. So it's pretty exciting. At the end of the day, what do we get? It's designed for enterprise customers by the enterprise customers. I think we're going to wind up being proud of that because we're going to design exactly what our customers are asking for. It's not going to be right day one, but we'll just keep iterating on it like we do with all of our other programs. Eventually, it'll be perfectly dialed in and serving those customers. I think what's exciting though, it can be designed specific for a channel. So for example, right now, our e-commerce platform, it's for all customers. But if you're in a hospital network, for example, you may not want to see residential products. If you're in home warranty or property management, you may not want to see commercial. So we can get to a point now where we can actually customize the platform by channel and make it a lot more efficient for our customers. Right. So in conclusion on SupplySync.com, what's in it for our customers? And it is that sort of design spec all the way through support, single platform, single place to do business, single place to interface and execute your organization, but looking for visibility, confidence, efficiency, and control. Those are the things that these enterprise customers are looking for. And we can play a big part of that. On the Watsco side, what do we get? We get deeper partnerships with these enterprise organizations. We get significantly expanded share of wallet. We know the analytics around this. There's a lot of opportunity in the share of wallet space. And then, of course, improve product mix, sell more parts and supplies than we do today substantially, and gain the associated margins. That's the Flex example that I gave. Driving that mix kind of offsets a little bit of concern that I was hearing earlier regarding the margin elasticity and things of that nature. Mix is a good solution for that. You see the opportunity ahead of us. We got a way to go on it, but it's all upside. This is really a way to kind of break through that for us. So another interesting point, we're designing this as an extensible platform. So we're starting with first parties. This platform is more than capable of extending to third-party HVAC as well as other verticals, which I think is pretty interesting longer term. That's it? That's it? That's it. Got to get back to work. We may have stunned everybody. Any questions? All right, let's go on here. I had a quick question on the wallet share. Is there a material difference in terms of what's your average wallet share with, let's say, a smaller contractor versus, let's say, a larger enterprise contractor? I'm not sure if I understand the question. For Watsco and Watsco companies, like the wallet share that they have with a smaller contractor customer versus, let's say, a larger enterprise customer, what's the difference in the average wallet shares today? It all depends on the size. So if you're asking the impact of a larger customer with share of wallet versus a smaller customer? No, I think the question is, on average, does Watsco have a higher share of wallet with smaller contractors or larger contractors? I think that's your question. Yeah, it depends on the business unit. So for Carrier Enterprise, it's the latter. We have a higher share of wallet with the larger customers. Zach, I would say you have a larger share of wallet with the smaller customers for Gemaire, exactly. So it depends on which business unit. That's really the power of Watsco, is that diversity. If the larger customer is doing well, we get a piece of that. If the smaller customers are doing well, we get a piece of that. Either way, it's a really solid dynamic mix and blend across the board. On average, is it like 30%, 50%, 70%? I'm just trying to. Yeah, we got. I'm also curious the answer to this question. So I can't speak on the other business units, but for CE, we have markets that on the low end, blend at 10%. On the high end, blend at high 20s%. It kind of all depends on the geographical area and where they land on it. Yeah. In the case of Carrier Enterprise, our businesses are developing dealers. So we talk about contractors, we don't talk about dealers. Dealers are customers that we develop really important, thorough relationships with where they, in the case of CE, for example, that they'll wear a Carrier on their trucks and in their badges and their shirts. And they buy into a marketing program and special training and special product access and special, special, special, special. And in that case, in those cases of which there's hundreds in the case of CE, we are 80%, 90%, theoretically, 80%, 90%, 100% of wallet share there. And then it goes the complete opposite side of that spectrum too, where we have the long tail of customers that may buy one thing from us each year. And that's, of course, all target-rich opportunity. And our goal is also, at least for Carrier Enterprise, is diversifying that. So back four or five years ago, predominantly, everything that we did was those larger contractors. Actually, we would walk away from a business if they didn't want to become a dealer. So if a customer was not exclusively Carrier or Bryant's, at one point, we didn't have any interest. We changed that now. So we worked with Carrier and came up with a product line that's competitively priced that we can go after those contractors where it's okay if they install multiple different brands or service multiple different brands, but why can't you include us in the mix? I mean, us at Venture, we took on about three and a half, four years ago, and we grew it to a $300 million business. And we're just starting. We're going to need another investor day to get us on. Yeah. Thank you. What else we got? Thank you. Just two questions. One, what scale for that consolidated contractor? What is that customer? How big do you have to get before you're going to move to SupplySync? Just trying to understand that. Does it make sense at what level on that roll-up? And then are there going to be any material differences on the economics of a dollar spent on SupplySync versus traditionally how they've done business, whether from a gross margin standpoint or like, "Hey, we understand that's going to be tighter, but the size of it's going to give us better G&A leverage." Just trying to understand the economic differences there. Thank you. I think I'll take the first one. I don't think it's dollar amounts on size. I think it's the complexity of the organization. So if they've acquired multiple different businesses or have multiple different businesses or outlook or a difficult outreach of how they go to market, I think at that point, the platform makes a lot of sense for them. Which inherently means they're going to be a larger contractor. Right. Potentially, yeah. Or against. Again, you don't know the share of wallet, right? No, but the revenue of the contracting business is going to be $25 million-$50 million, right? I would imagine, and then the second part of that question, the whole point of this, and I think you, Rob, if I can put words in your mouth, which I shouldn't, is that we can gain more of their share of wallet. I mean, they're buying parts and supplies, for example, from competitors of ours. But if we can make it easy and seamless and all these wonderful things that we just talked about, we should earn more of their business, and parts and supplies has a higher margin profile in general than the equipment does. Even as we're moving field now, as prospectively as we're greenfielding out, just they may have like 200. Sorry, Maya, can you give the microphone? Even as we greenfield out where they have one or two, let's say, installers in said location, this type of partnership makes it pretty seamless for us. So they don't necessarily have a JMAR, but they have a CE. But we, let's say, are using JMAR in this location. Now we can start really going wild on the map a little bit more. So it gives us that opportunity to penetrate with greenfield. Another way to say it, it's not just about the business we do with these customers today. It's about making that business simpler so they want to do incrementally much, much more business with us. That make sense? Yeah. That's it? Great. Thank you so much, guys. Thank you. Thanks, guys. Appreciate it. Perfect. All right, bring it all together. We're on the rounding surveys here, right? Long stretch. Yeah. Sorry. So Rick and Jarrett , Barry, why don't you come up to just so we complete the check back of smart people up here. Just want to recap a little bit of what we've done, or at least what we tried to do today is give you an update of some of these programs and capabilities that are in flight. We started investing in, again, technology about 15 years ago. It really means modernizing our businesses. We're talking about avenues or ways that what that means is the data, it's the capabilities and technology, and these things are built on each other. And we have some track record on some of these platforms that have been in the market now in markets in the hands of our customers and internal users for some time. We tried to profile some of the bigger platforms out there and what they're up to and where we are. Then, well, first time we asked Wayne and Stephanie to share their beautiful story, which literally brought me to tears. Then we tried to give you some. I don't know if tease is the right word, but show you what our next level investments are that are building on top of these capabilities that we've built over the last 15 years and why we're doing what we're doing. The why is to get to the 10, 30, and 5. The how is driven by the business leaders standing up and shouting, saying, "Let's do more together collaboratively." What that's resulting in is buying together, supply chaining together, and selling together. VCR, Hydros, and SupplySync. Those three are in; they're nascent, they're babies, they're new, but we want to get in front of you with them because we're excited about them and excited about the people leading these things, and we want you guys to be equally excited. Bringing it all together, this is your guy's show. I'm here in support. Thank you. Yeah. Thank you. Well, a couple of things. First, I hope you get the sense that we're passionate about all of this. I think back to the investor day we had seven and a half years ago. And yes, the next one will be at least seven and a half years from now. But the one we had seven and a half years ago, we were showcasing some of the mobile apps to start. We were showcasing e-commerce to start. OnCall Air was not yet on the map. And here we are seven and a half years later with some great results. So we have in many ways led the transformation of our industry into the digital age. And yet, what I hope you take away also is that there's even more excitement about what lies ahead and the work that from our perspective remains to be done. Everything here that we've talked about today is in the service of 10, 30, and 5, and what I wanted to convey to everybody is hopefully you can still hear. That's a quite frightening noise. Yeah. There we go. What I wanted to convey to everybody is everything touches everything here. It's very hard to neatly categorize the impact of all of these investments because they have impacts into multiple areas. But as you can see here, at its core, these are all growth initiatives. And these growth initiatives have margin and they have productivity and they have cash flow implications. But you don't get those unless you actually grow. So whether it's VCR, whether it's Hydros, yes, they have tangential productivity and margin and cash flow benefits. At its core, they're all about growth. And it starts with the customer, how we help them win. We're now several years into the technology journey. We've learned a few things. So I'm going to let Jarrett come up and walk you through a couple of things that we've learned. Yeah, and I realize I didn't introduce you, Jarrett, but Jared is another key executive, senior executive in our business. I have no idea what your title is, but. Neither do I. Yeah, but core to the team. We started the day today with Ed talking about our core technology. When we think about our core technology, we're talking e-commerce to make it easier for customers to transact with us. We're talking HVAC Pro, which is aimed at the service tech. We're talking OnCallAir, selling in the kitchen. Where we are today is around 30% adopted. That means about 30% of our customers are using our technology in one form or another. What's most interesting to us is those customers that engage in our technology the most, that have the highest utilization, produce the greatest outcomes. As we kind of think forward, we have two levels. We think about adoption in two different ways. One is we have 70% of the customers left to go. Two is we have about 10% of the customers highly engaged with our technology. We need to get those customers more engaged, so those are two of our building blocks as we kind of look forward to 1035. Yeah, and so two takeaways from that. I think one is all of this and it's 30%. Now that 30% means a lot. There's value to that 30%. What's most exciting is that there's still 70% runway to go. So let us try and quantify a little bit as to what we think some of that value looks. When we look at the platforms that are those three platforms that are maturing and where we have several years under our belt, as I said, they have clear value. They drive wonderful outcomes. Starting with digital adoption, two key takeaways. First is that tech users grow faster, sustainably. I mean, we see that over a multi-year trend in the data. They grow faster and they attrit less. So I'm in a room of investment managers, so I have to describe it this way. If we can reduce your attrition and your outflows of AUM by 60%, how much more profitable would all of your respective firms be? The answer is a lot more profitable. And we think we have something similar. We are achieving something similar to that as well with the attrition benefits that we have. So the combination of those two, as I said, has value to the business. And the cumulative result of our investments in digital adoption today has an estimated $750 million sales benefit to our business today. So think of the flywheel of faster growing customers being stickier with us over longer periods of time. And that's the value creation that exists today. And of course, compounding over time. Moving to OnCall Air, you heard Patrick give you some amazing statistics about how that cohort of customers is well outperforming any other cohort of customers you can imagine. The industry's close rates are sales closed and jobs presented are not up 18%-20%, but this cohort is. We think we have something special there. And as they win more, again, with those higher close rates and with the more quotes presented in the home, we also get a mixed benefit to that and a margin benefit to that by virtue of it being 2x the amount of richer mix efficiency. These investments are accumulating. As I said, we're 30% the way there. This is what we can discern 30% the way there. And in our view, they do compound over time as customer adoption grows. Thinking about e-commerce a little bit simpler, right? We know it's open 24 hours a day, 7 days a week, 365 days a year. We know without fail, every time a customer places an order, it asks for recommendations of additional things to buy. We know that translates into additional line items. Those line items have a value. So our estimate is around $200 million of sales and $70 million of annual margin contribution as we sit today. As we think about pricing optimization, you heard Brian and Kristen give some of the complexity that we have to manage within our business. As a company, we've never been better prepared to deal with that complexity. As we really have a dual mandate, which is grow sales and grow margin, we can do both. Right now, we've grown 200 basis points in a short amount of time. You heard Kristen say right out there that we're pretty early in this and we see a lot of runway in the future. For sure. And very importantly, I want to emphasize that the gains in pricing optimization and as this matures in the business, today we are a larger market share business than we were when we started that journey. And so one has not borrowed from the other. There has been both growth in market share, top line, customer acquisition. And at the same time, we've gotten better through the pricing optimization tools in eking out that extra margin. So now pivoting for a second to just a quick summary and almost the business case of, if it isn't already obvious, the business case of why we're doing what we're doing. And I'll summarize just quickly what the enthusiasm is for buying better together and supply chaining better together. Is chaining a word? Yeah, now it is. Now it is. We added it to the word library. I love it. Again, I must emphasize at its core, it's about growth. We can sell motors for 1.5% higher margins. That's not going to get us to 1030 and 5. What's going to get us to 1030 and 5 is increasing our non-equipment sales and our attachment rate. So that's what this is about. Can we simplify and focus our purchasing? Can we drive inventory turns and quality? Can we broaden that SKU assortment at the branch level, at the local level through faster replenishment that allows that local salesperson, that local branch manager to increase attachment rates? Can we add more private label to our mix? It's only about 5% of our business today. We think it could easily be higher than that. I won't tell you what we think, but we think it can easily be higher than that. So the outcomes I think are pretty straightforward. Better customer service locally in the markets, incremental non-equipment via that attachment rate, higher gross margins, higher inventory turns, and of course, better cash flow. So I know you just heard about SupplySync, but just my own quick summary on it. A different way to talk about that customer segment, that institutional customer segment we're going after is multi-brand, multi-geography, multi-trade type customers. So we're talking hundreds of customers, just to frame this in terms of scope, not tens of thousands of customers. You heard, I think pretty clearly today that there is a customer expectation about how the customer wants to be served in this marketplace. I think what's really important about SupplySync is that it meets that customer there. But at the same time, the technology enables us to keep our decentralized core, which you heard Stephanie and Wayne talk about earlier, remain true. So we're able to really serve, just make this incremental and just find a better way to serve this very specific type of customer. Again, I think the outcomes that we're going for are pretty obvious. Higher sales. In particular, we think we can grow non-equipment. Non-equipment comes with higher margins. We do think it will reduce our cost to serve. Loyalty and retention, that pays off over multiples of years. All right. So this is where we're going to ask you to dream with us a little bit. And I also think about this as the why we win slide. This is, I think, a summary of our competitive toolkit, the arsenal that we have to go win in the market. We think we can double digital adoption. 30% can be 50%-60%. We think e-commerce can grow to something north of 50%, particularly as we scale it to some of the new acquisitions that have been made over the last year, over the last few years. We're obviously going to launch and grow SupplySync. There's a revenue base and a customer base to that today, just based on how we service those customers. And through all the voice of the customer work we've done, we know that that's up and to the right to some extent. We're going to double down on OnCall Air. Again, the outcomes are too good not to say that we can two or three X the number of customers that we have on OnCall Air and supercharge some of those outcomes. And lastly, all of this, not lastly, all of this, I think is becoming more and more appealing to the entrepreneur that would be an ideal fit for us. And so as Mr. Logan here is fond of saying, our goal is not to roll up a fragmented industry. Our goal is to align ourselves with high-quality, well-led entrepreneurs that say, "I want to be part of that. I want to compete like that. I want their toolkit so I can go win more effectively in the market." And so we want for all of this to be accretive to acquisitions as more of this technology becomes prevalent in the field. More to go on pricing optimization. Early to middle innings, you can impute what that could mean going forward. We've already talked about non-equipment and the shared purchasing and shared distribution. And the AI investments, it's impossible to say what that can mean at this point. I think anyone who knows or has an idea, meet me at the bar afterwards because I know. It's impossible to know. We just know, going back to what I said earlier, we just know that in the world of HVAC distribution, we are miles ahead, miles ahead. And everything builds on each other. And so our existing data assets are more valuable. And I think AI just amplifies that going forward. And do you want to talk about the. Keep going. I'll fill in. Go ahead. Perfect. Now, the horizons to all of this are far out ahead of us. There's no horizon next year. There's no horizon the year after. We just know it's gettable. We just know it's all ahead of us. What I think underpins it and what I think gives us all the, not just the enthusiasm, but the willingness to go after it, is every one of these business unit leaders that you met and dozens of others who are not here and those of us on this stage. We're all in this for the long term. We are all unified by this unique ownership culture that rewards really a career of accomplishments, not a year's worth of accomplishments. We have 4,000 employee owners of this company. That means that we're all rowing in the same direction. We're uniquely aligned with all of you. We've got incredible wealth built in the company through employee ownership. And that employee ownership is largely long-dated vesting ownership where, as I said, you have to really be here for the duration of a career to achieve those outcomes. And that is the glue that I think holds all of this together. It's the glue that provides for the longevity, the continuity of our entrepreneurial spirit. And honestly, I think this is the why we win in the market over the next five to 10 years and forever thereafter. Beautifully said. Yeah, I think the four of us on stage have about 400,000 shares of Watsco. And as the old guy who vested last year, for the record, I vested in about 110,000 shares. I sold 10,000 of them. I still own 100,000 shares at $509, by the way. It's an approximation. So that's my wealth creation over my first grant was 28 years ago. These three have 20 years to go or so. They're all in their 40s, as you can tell. But. So wish us luck, please. But there are 156 of us that aren't on the stage that are sharing that same common theme and feeling. And in the 30 years we've done restricted stock like that, people have only forfeited 8% of the shares ever granted. So when we show our long-term 5-, 10-, 15-, 20-, 30-year CAGRs, we've all been together a long time. And the intent is to keep this group together a very long time. And I haven't witnessed another public company that has that type of technique in place. So just know it's still a central theme. And know that those guys that vested are still at risk. And it's part of the culture and an important part of the culture. Last thing I want to say is about equipment growth. Because heaven knows the most impossible job any of you might have had the last six years is to look at equipment. You talk to OEMs, you talk to us, you talk to contractors, you do surveys, and all you do is get more questions than answers, right? And in my 33-year career, this is really the last five, six years has been either the most wonderful or the most difficult kind of. And so if we look long-term, forget short-term volatility, and just look at the industry as a whole, it's a great industry. And the equipment side of our business, our partners who are probably listening, together, we've been through just incredible volatility between COVID, after COVID, huge product change in 2023, huge product change in 2025, and now it's kind of done. I can assure you in the last four months, six months, all of our strategic partners in terms of OEMs and us have gotten together and said, "Let's look forward. Let's look past all this regulatory change we've been through. How are we going to grow? How are we going to develop share? Here are the product needs. Here are the customer needs. Here are the market needs. Here's our technology needs." It's been nice to have those meetings at a very senior level with all of our partners in the last few months. As I was made fun of after a conference call, I used the word serenity. Dave used the word serenity now if you're a Seinfeld fan. I think there is that sense of simplicity that is ahead of us. And God knows we're looking forward to it because we get to have actual strategic, tactical discussions with our partners, not just talk about all the volatility or all the difficulty going on with what's been going on. So we look forward to that. Yeah. I'll say one more thing to double down on that is long-term, long-term, long-term, opportunity, opportunity, opportunity, investments, investments, investments. We've got a pristine balance sheet. No debt, $7,800 million worth of cash. We are hungry and eager to invest internally and inorganically. So we're very excited about the future. And we appreciate you guys coming and listening and sticking out with us. And those of you guys listening on the webcast, thank you for the interest in the company. We'd love to answer any questions that you guys have. Yes, sir, Tommy. Myra's coming. Yeah, thank you all for everything today. Question on the buying together, supply chaining together, and selling together. The common theme there is obviously the together piece, which is a more centralized approach than we've often seen at Watsco. But AJ, I think it was you earlier who said, "This is still to some extent a bottoms-up initiative where the business leaders are surfacing these ideas." So my question is, what changed in the market to drive that? Because typically you wouldn't assume things flow this way, but it sounds like they have. Yeah, maybe that's the best question for Brian or Zack, who are two of the leaders that raised their hand and said, "We want to do this." But I'm not sure it's a market-driven thing. I'm going to speak for you guys as you're getting the microphones. But it's more of an opportunity set thing. First of all, let me start back. None of this will be at the expense of the independence and the identity of each of the business units. Trust me, they are GDIs, goddamn independence, right? They really honor, and they should, who they are and their cultures and their brands and their relationships with their customers and their vendor community and so forth. None of it is at the expense of that. It's all incremental to that. And I think that's largely, and again, maybe you guys can chime in. Come on up here. Why you stood up and said, "This should be our next frontier. Yeah, and while they come up and do that, I just want to underscore one thing, which is use the word centralization. And I think all of us trembled when we heard that word. Collaboration need not lead to centralization. We are at the first iteration of this, which is collaboration. These guys are collaborating. No one's merging purchasing departments. No one's merging credit departments. No one's merging. We're not doing that. That is centralization. This is collaboration. Yeah, I think the fun of the business is this entrepreneurial spirit where leaders have the ability to go out and drive new business, close new business, develop new ways to bring in new business. The ugly part of the business is all the work behind the scenes. It's that inventory piece of it, the pricing things that we talked about. In a sense, it's almost a distraction. So a lot of the tools, and we had this conversation, I think, last night over dinner. A lot of the tools that we're talking about here is to ease that back end, give us the ability to spend more time out there growing the business, more time in strategic planning versus tactical execution or firefighting. So everything that's here, I don't think it's leading, Tom, to centralization. I think it's taking that hard work on the back end and taking it off our shoulders so we could be more free to grow. Actually, Stephanie, you said it while you were up here. It's that back end stuff. We're expanding the list of back end stuff to give more tooling to go in with. Yeah, I think with SupplySync specifically, you heard it. We're not providing a good customer experience to that section of customer base. And if we want to compete and be the best provider, we've got to provide a solution that is best for that customer experience. As far as Hydros, we can leverage our scale a lot better. If you think of Hydros not only as a common logistics platform, but as a buying group for us all, we can then leverage our collective buying power like we never did in the past. And I think that makes Watsco much more powerful. So this is definitely business leaders saying, "We want to be able to leverage Watsco's scale more effectively than we ever did in the past." And now we've got the tools to do it. Maybe I'll get in trouble by saying this. Probably. All these tools that are coming down, everything that you've seen here today, we're not forced to use it. So I'm not forced to use e-commerce or use any kind of PriceFX or use SupplySync. The question that will be asked is, "Why don't you want to use it?" And if there is a valid reason for it, something that we're not thinking about, that would get addressed. But what you guys seen here today, why would we want to implement this? I mean, this is cool stuff. Listen, I've been in the industry over 20 years. And this industry is not sexy. It really is not. And when you look at this technology that's coming in, I mean, it's a breath of fresh air. And the thought of working for an organization that doesn't have this kind of technology, I'd change industries. So this is what's really exciting about this. So back, Tom, I'm a little upset. There's not more tools rolling out. We want more of this kind of stuff so we can get out there and be liberated and just keep growing the business. Sorry to disappoint you, Brian. We'll work on it. Other questions? Thank you. Just wanted to kind of look at that idea of the technology piece of the pie and the tools that you're getting rolled out now. Historically, we've looked at the business and said, "Listen, there's a gross margin target. There's an incremental margin opportunity." With the new tools that you have, how's that incremental kind of platform going forward? What's the next kind of stage for that? What should we be thinking about as far as that kind of opportunity? I'll take a stab and say we just launched or we've just announced three big things here today. We mentioned it in the second quarter earnings release, and we're expanding and double-clicking on it today. We're never stopped. We're never done. I mean, somebody said, actually, I think it was AJ who said when we were talking about pricing technology, there's no ninth inning to pricing. It's just perpetual. It just goes forward. It just keeps going, and the same thing will be true about SupplySync. And the same thing will be true about VCR and Hydros. So your question specifically about margin, I think we know there's an upward bias to it. We know that all these things are incremental to it. We know that all these things help us grow. You can grow margin, and you can also not grow, or you can grow and grow margin. So we choose the latter. We choose that step. So all of this is really to help us grow, help us gain that incremental margin. I showed you in the chart earlier that there's not one of these initiatives that doesn't help us advance our margin targets going forward. Not one. They're all creative and helpful to margin in some way. So what I think the mentality here is we're going to put our heads down. We're going to execute over the next 12 months on all three of these big initiatives that we just mentioned here, and we'll tell you over time what it means. Yeah, once we surpass 1035, we'll come up with it. It'll be 1545 in seven and a half. This is continuous improvement. We're going to keep going. Question here? Zach or Myra, or you or Brian? I got it. Oh, he's going over there. I liked how you elaborated on the pain points of enterprise customers. Could you also maybe talk about what are the pain points for customers who buy more parts and supplies? And what has prevented them from buying more from Watsco companies? And I understood that VCR is kind of trying to attack that. But if you could just tie it up with what the key pain points are, that'll be helpful. Yeah, so again, I'll let the business leaders speak. And Stephanie, feel free to come on up as well because you know this stuff better than me. But I will tell you, again, part of the beauty or someone said the power of Watsco is that we get 10 stabs at winning in the marketplace with these 10 different business units. And they all have a history, and they all grew up a certain way. Carrier Enterprise grew up selling Carrier boxes. And now they're trying to sell more parts and supplies. Baker, who's not represented in this room, probably shame on us. They grew up with refrigeration and parts and supplies. And then they've taken on boxes equipment and are trying to expand that. East Coast Metal Distributors, mentioned before, very much a supply house. It's the flex duct. It's the duct work and the grills and registers and so forth. That's their tradition and history. And now they're trying to take on everything else. So everybody knows the whole field and knows where they're coming from and is trying to expand into the rest of it. I don't know if you guys want to elaborate on any of that, but. Yeah, so back to the constraints. So two of the obvious ones. One is product availability. Keep in mind, when we talk about parts and supplies, supplies are more for assisting in the installation of equipment. And replacement parts is really the inner workings of the equipment itself. We have equipment that's installed out there at the long end between 10-15 years. So to have a part in stock locally for a contractor for a piece of equipment that went through like three, four different generations, very hard to plan for. But if the network was bigger and what they can see and have access to, either for pickup or for delivery next day, kind of bridges that gap. So availability is one piece of it. And it's back to what we talked about, the pricing side of it, which I think basically all the tools that we kind of rolled out before, we talked about enhancing our margins. But another piece of it is all these tools we're rolling out is really enhancing the contractor and how they actually perform in the market, having them see visibility, how they're looking at their own pricing, how they're being able to sell at the kitchen table. So I think it's a full package. It's just not one-sided between a distributor or a contractor, but it's more of a kind of a we scenario where we're all benefiting from all these changes. Yeah, I think part of the barrier of more market share and supplies, especially, are good competitors. It's not us and them. It's us and maybe 10 other people in Miami. We've competed very well against the factory-operated brands of equipment in Miami. We probably have, I'll call it more broadly, in Florida, probably 30%-40% share of the equipment market competing against factory-owned locations. We've done extremely well. We've not done as well competing against the smaller distributor that has done parts and supplies well for 30 or 40 years. So use the word pain point. I'm not sure part of the conversion needs to come from earning the business from good competitors. It's not that we've been in our own way. We have good competitors selling those products. Other questions? Oh, one more there. I think you had something, right? I guess my question was on the parts and supplies as well. It's intuitive to me that the location would be a big part of that. And so have you considered kind of density and the potential for maybe opening a smaller format parts-only store? Yes. So we've actually done a really good job doing the opposite, meaning converting our stores to be parts pickup only to full-blown supply sales and equipment sales. So basically becoming a full-blown supply house. I think what we're thinking here is logistically, how does this work? So I'm an affirmed believer, and each of the business units are a little bit different. But for Carrier Enterprise, we work on this hub-and-spoke model where we have a centralized hub that contains the majority of our inventory. And we feed each of the branches, kind of like the spokes, in some cases, mostly daily runs. Worst cases, maybe one every two days or three days. But the goal is, if we can get that logistics, kind of what Jim Brady was talking about earlier, if we can get that dialed down, then the square footage of the spokes can actually turn down and have the inventory enriched in the DC. And then, as the orders come in, we just keep fulfilling. I think if we get that model kind of really locked down the way we're thinking about it, I think we're going to see a significant success on that supply and parts side of the business. Yeah, I mean, Hydros unlocks it because now our branches can order a pallet that has 10 different vendors or 100 different vendors' products on it and quantity they need for that week, as opposed to having to carry all sorts of many weeks of supplies worth of one vendor's or several vendors taken to smaller locations, and therefore, we can have more density and number of locations. And I would just add we have examples of that. And most of our newer branches that are opened every year are in that format. What we're talking about here is a vehicle to scale it. Right. I wonder if you could speak to how you view inorganic opportunities in light of all these investments. Because on the one hand, I think most of us can see how you could accelerate share gains organically. But then I could also see the plug and play upside via M&A. So maybe just speak to compared to years past, say 10 plus years ago, what you view the upside to M&A from a returns perspective? Barry? Yeah, well, first, the way the industry was constructed, has been constructed and operated for 100 years is most equipment OEMs have assigned territories to distributors who over 40, 50, 60 years have built relatively exclusive franchises of immense size. Immense meaning between $100 million-$300 million. So we have the Rheem franchise in Florida. We've done that. We don't have the Rheem franchise in Georgia. We have the Carrier franchise. I don't like the word franchise, but you understand you're the Carrier territory in Florida, not Georgia. Somebody else does. And that family in Georgia has had Carrier since Willis Carrier gave them the territory. So inorganic growth is the most obvious way to gain instant market share with long legacy businesses, with brand exclusivity, with affinities that people have built for decades. That's why we do it. And then the next thing you heard today was, "Let's build on that. Let's add value to that. Let's go beyond the family legacy of investment and technology and do more." So that's still a valid discussion and why we can't greenfield to Seattle because there are three players there that have had that affinity built for 50 years or more. And so what we can do is bring more products, more density, more customers, more everything to existing markets that still rely on acquisitions to go outside of our footprint into other markets. Or it's why that's still important. So the good news is that 95% of those targets are family-based businesses. And you heard one today emotionally tell you why it was important to do business with us. The bad news is 95% of them are family businesses that may not have to do anything. It usually takes a two or three-year family resolution to decide they might want to sell the business. Then the question is, do we have the good relationship in place when they decide that? It's why there aren't 45 Watscos. There's one. I've done it this way for a long period of time. We'll just keep doing it. It's the same structure that we started with. The OEM kind of territorial maps are still in place the way they have been. I would just add very quickly that seven, eight years ago, when we made a conscious decision to go talk to more independent distributors about what we were doing here on the technology side, I don't know, Barry and I probably spent weeks on the road those years talking to all these distributors, and boy, did we get some funny stares when we were talking about e-commerce and digital adoption and PIM. And what if you could help your customer selling the home because we're toying with that? Boy, we got some really strange stares, and so we were like early missionaries in the HVAC world, it feels like. I don't mind saying I was with an acquisition target a few months ago, and wonderful discussion, three hours long, great business. We would love to own it in a heartbeat, and we're about halfway through the meeting. And he says, "Oh, by the way, don't let me forget. I keep hearing about this thing called OnCall Air. Can you tell me about it?" I said, "Aha, we're doing something right. We're doing something right." And so time is on our side here. It is the pace at which it happens that none of us can really predict. But as this gains more traction, as 30% becomes 40%, 50%, 60%, it does, I think, benefit at least the conversations we could have. Yeah. You made a comment on just the technology initiatives and how Watsco is kind of way ahead of where the rest of the market is. I think there's always an interesting slide you put in that investor deck where the list of top 10 competitors. And over time, at least what I've seen is that gap between the number one, number two, number three has kind of closed. And so we'd just love to understand, do those larger competitors also have access to the same technology? And is that why they have been able to close the gap? Or what's enabled them to close the gap? And how do you kind of see this or all the different initiatives that you are focusing on will kind of help you maintain that gap? Or is that even a goal that you should have? Yeah, I mean, I don't mind saying publicly who they are. I mean, it's transparency. So Lennox would be a player with $2 billion-$3 billion of similar sales within our product group. They certainly have a great balance sheet, great cash to spend. They can build what we've built for their brand. And they should. And they have to some extent. It's going to be for their brand. They're not building a ubiquitous concept. I think that's where our competitiveness should matter long term. Ferguson, another business, they want to grow the HVAC business. I think it's about 11% of a $30 billion company. They've been investing in it. They should. This is a good industry. I don't think they have the full horsepower across a full spectrum of all brands, all markets, all everything. They should try to. And maybe they can. What we like isn't maybe those players help us run faster. The good news is numbers five through 1,400 have almost zero or near zero in terms of what you're hearing from us. And so there's room for competition. Maybe it makes us better. But the other 85% of the market that isn't in the top two or three is the opportunity. That's how I see it. And they may build it within their brand, but not that's the difference between if there was a Procter & Gamble dot com and an Amazon dot com. If I have fun with the concept. Question about your pricing initiatives. So I imagine you start with your highest priced products, highest margin products, work your way down. How far can you drive that down? And how long would you expect that would take? And is that primarily just on the equipment only? Or do some parts and supplies also lend themselves to that? Let the expert answer that one. I'd say it absolutely applies to parts and supplies as well. And we're not necessarily starting. Let me not trip over it. Yeah, don't. Everybody's tripped over it. Safety first here, Chris. So yeah, and we're not necessarily starting with the highest priced products and such. In some cases, with pricing, it's easier to start with the long tail because we can test things, see how they're working. So we are targeting it all. There's no exceptions. Anything you guys would add? The opportunity is infinite. It's crazy. I mean, we talked about one look at the data in that histogram and talking about some segmentation. And I'll give you another. This is a Gemaire example that is when a new customer signs on to be a customer with Gemaire, for example, correct me right, I get this wrong, guys, is they get a price sheet. Here's the price that we're setting for you based on the size of business we expect you to do with us. Well, we may have missed that expectation. Or the customer may not have hit those expectations. But nobody went back historically. Nobody at Gemaire went back historically and corrected the pricing. So they're getting overly favorable pricing for not the level of business they're doing with us. Well, just again, one example, you can do a scan with the tooling. Just look at this cohort, up to $25,000 of business, again, long tail business with Gemaire that got price sheets. How are they performing? Are they meeting expectations? No, okay. Again, make up the numbers. A third of them need a correction. Well, let's get them corrected. Let's get our price back in line with the amount of business that they're doing. That's play number two out of 2 trillion. Not only the AI, but the humans. I mean, really, it's just humans that have these are pricing experts who have more and more creative ideas. They can get an idea. Baker may have an idea that then Gemaire adopts and does with their customer segmentation and then CE and so on and so forth. So it is. I call them plays, pricing plays. They're just on and on and on. It is a perfect playground for AI because it has trends. It is exceptions. It is anomalies. The AI agents are built to discover and act on those types of things. One quick add to that, which is I think it's a perfect example of how we can collaborate with big picture technology stuff. Yet, we weren't prescriptive with the plays that needed to be run. Every business unit leader developed their own plays. They shared the best of those. We turned off the ones that didn't work. If Rich Iandoli were here, he probably had a very different playbook than what Gemaire had. That's perfectly okay. It's a great example of we've developed something. It can be helpful at scale. We need not be prescriptive about how it applies to every customer in every market. We trust in the right humans and the right entrepreneurs to develop the playbook that's right for their business. And then let's get them all together across business units and share best practices and common pitfalls. And Chris quarterbacks that conversation every day of every week. And look, this is what's happening over here. Let's take it over there. And that's part of the system. Yeah, I want to add to that because it's that human piece of it. Our pricing teams have grown quite a bit since I started. And I'm really proud of that because we've hired some really good people. Part of my team is focused on all this development we talked about with PriceFX and building out these models and all this technology. Another part of my team meets with the business unit pricing analysts and talks about exactly what you guys said. What pricing plays are we running at Baker? Oh, that's working at Baker. Let's take it to Gemaire. We spent a lot of time doing that. I can't remember the statistics. Maybe you have it. I don't remember now. I know it was bad, and we've gotten a lot better. For a customer to go onto our e-commerce site, we screen customers. First, we make sure they're a real customer, so we go, we check licenses. We ensure they're an established organization, etc. The statistic that was scary is that when a customer would sign on, and it's a process, so they're eventually on, and they don't buy from us. Why would a customer spend all this time going through this process, sign onto e-commerce site and not purchase? The answer has to do with the pricing stuff. Pricing wrong. Right. So that number was really bad. And we're getting better at it. But to what Christa was saying before, it's this follow-up now, actually calling up customers and trying to get a sense what was so scary on it. And it could be some item that we lost complete visibility to because we didn't have a tool. And it kind of hurt us. So now that's all getting cleaned up and getting better. So there's not really a priority list of where do we start and where do we finish. It all depends on where the opportunity is on that grid that you saw market by market. Yeah. I mean, not to beat a dead horse, but I remember, Steve, you remember, we went and visited this is years ago, maybe 10 years ago. Early days of e-commerce, we were showing a customer this new gemaire.com that had just launched. And he was all excited. He said, "Great. I'll order all my equipment here." And we're like, "Yeah, and your parts and supplies." He said, "No, I don't buy that stuff from you." We're like, "Why not?" He said, "Because your pricing is obnoxious." We're like, "What are you talking about?" And so he showed us on gemaire.com. It exposed our warts. And what the wart was is that we, Gemaire, had not set up a pricing profile for that customer on parts and supplies. So remember, we sell 200,000 SKUs across the enterprise. But maybe Gemaire Miami branch sells, I don't know, 14,000. A TM, a salesperson, is incentivized primarily to sell equipment because that's where the dollars are. So they may stop at getting the pricing profile set for equipment. They may not, historically, they may not do the rest of it. Well, just getting that customer set up on an appropriate competitive pricing profile enables that customer to buy from us those parts and supplies. Before he wouldn't consider it, now we're in the game. And we can do that systematically across 100,000 customers that we do business with, with the new tooling and people. Yes, sir. Thank you. One of the trends in the industry that you're seeing more and more of with consolidation on the contractor distribution side is just the dual trade element of wanting to do more than just electrical HVAC or plumbing. In fact, I think both the customers you had this morning had some dual trade element. I think it was HVAC electrical. And then this was plumbing and HVAC. How do you think about the opportunity of getting more in other trades? And at what pace would you want to approach that? What urgency? Let's start us off again, I guess. Yeah. Well, first, like we said, we've done two plumbing HVAC DNA-like companies in the last, really, five, six years. We know the other 35, 40 of scale that share that DNA. And it's the target list in that particular segment of the market, if you will. And it is regional. There are vagaries to which market does that sound simple and which ones are it? Is there still a segregation, if you will? But it's in that target list. And again, they're either friends of Wayne, friends of Chris, and good contacts that we're developing and making. So we will grow that part of the business to the extent we can accomplish that. There is another regulatory change coming in a few years with water heating that puts a compressor on top of a water heater and heats the water. And heat pumps is something we sell every day. And there's a curiosity, I would say, now more so than obviousness, but a curiosity of how can an air conditioning contractor become the servicer and installer and a business opportunity really for the HVAC contractor, given that there's refrigerant and compressors involved. And in the water heating market, I think about half the market is retailers. And are retailers going to be able to serve that market in the same way? That's a question for them. I can't answer it. But in the wholesale channel, the water heating market is mostly accomplished by plumbing wholesalers and almost no HVAC water heating. Well, we know that's converging. We have vendors come to us. We have deeper relationships with the primary water heating guys, the largest of which is Rheem, which is one of our largest suppliers, obviously. And so that will be a segment that we're beyond wondering about. We're thinking in real terms about where that evolves in the next few years, and our largest partner in the form of Carrier also has a large investment in a great heat pump water heating business in Europe that I'm sure it is evaluating for this market, so it's something that I think is get rich slow. I don't think anything's going to be volatile or disruptive. I think it's a migration or an evolution that will take a long time, and those are some of the things that we're looking at is partnering with more companies that do both well, evaluating this water heating opportunity longer term, and working with OEMs that we know well that have the same curiosities and strategies going on. There's a ductless water heating mindset that will also happen because elsewhere in the world, ductless HVAC guys do ductless water heating. Or the same machines do water heating at the same moment. So again, ultimately, it's not dependent on any of us. Ultimately, it's dependent on what the contractor is comfortable doing in someone's home. It's not what we think. It's what they think. And I would say there's more of it going on, but it's not this avalanche that's going on. It'll happen very slow over a long period of time. Hi. Just add a quick one on the contractor consolidation trend. So that segment of the market, I guess, like the Legacy Service Partners that was up here, what percentage would you say that makes up today in terms of sales or however you want to quantify? It's like 8%, something like that. Somewhere around there. Somewhere in the neighborhood of 8%. 8%? Yeah. Okay. As they consolidate and they're trying to negotiate with scale the way that you're doing with your suppliers, who are they talking to? Is it you? Is it the OEM? And what type of price concessions can they get as they bring more contractors into their group, I guess? All the above. Yeah, so they're negotiating with the OEM directly, with the distributor directly, and they're going to push the needle as far as they can, and you kind of heard that now there's pushback, so there's only so far you can kind of discount products and still provide the service that you need, so I think it's going to be a dynamic interval going over the next two years right now of how that's all going to be pieced together, but what you saw today is we're not scared about that. We're not nervous about that. We're embracing it, and we're putting a platform together to actually make them even more successful by partnering with us, so it's a different tack than what you see with other OEMs are doing. That's kind of what we're really excited about. In other words, we don't have to compete necessarily on price to win. We're offering the scale of 700 locations across North America and the convenience and etc., etc., all the things that Steve and Brian went over, which adds value to their business beyond just the lowest price they can buy in the marketplace. Makes sense. When they do go to you, do you then go back to the OEM? You have the opportunity then to get a lower cost from them as well, right? Yeah, if we need to. It depends what the ask is. In some cases, we're priced competitively. There's no need to ask. In some cases, there might be an unrealistic ask that has implications on share growth. That would be in our best interest to have a conversation with the OEM provider and see what we want to do on that behalf. But our goal is not to take any type of business out there, remember, profitable growth. So our goal is not to take something that we're not going to make money at just to grow the top line. That we don't do. Anyone else? All right. Great. First, I have to thank Myra and Nicole and Maria and Alex and Conrad. Thank you, guys, for your help sending this stuff. Excellent job. Thank you. Thank you to all who came in person and participated. Thank you all in the webcast. And thank you, guys, for all participating. We're excited to get back to work. We'll see you in about seven and a half years.