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Watsco, Inc. 3Q25 Investor Presentation
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Safe Harbor Statement This Presentation contains or incorporates by reference statements that are not historical in nature and that are intended to be, and are hereby identified as, “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Statements which are not historical in nature, including the words “anticipate,” “estimate,” “could,” “should,” “may,” “plan,” “seek,” “expect,” “believe,” “intend,” “target,” “will,” “project,” “focused,” “outlook”, “goal”, “designed” and variations of these words and negatives thereof and similar expressions are intended to identify forward-looking statements, including statements regarding, among others, (i) economic conditions, (ii) business and acquisition strategies, (iii) potential acquisitions and/or joint ventures and investments in unconsolidated entities, (iv) financing plans and (v) industry, demographic and other trends affecting our financial condition or results of operations. These forward-looking statements are based on management’s current expectations, are not guarantees of future performance and are subject to a number of risks, uncertainties and changes in circumstances, certain of which are beyond our control. Actual results could differ materially from these forward-looking statements as a result of several factors, including, but not limited to general economic conditions, both in the U.S. and in the international markets we serve; competitive factors within the HVAC/R industry; effects of supplier concentration; fluctuations in certain commodity costs; consumer spending; consumer debt levels; new housing starts and completions; capital spending in the commercial construction market; access to liquidity needed for operations; seasonal nature of product sales; weather patterns and conditions; insurance coverage risks; federal, state and local regulations impacting our industry and products; prevailing interest rates; foreign currency exchange rate fluctuations; international political risk; cybersecurity risk; and the continued viability of our business strategy. We believe these forward-looking statements are reasonable; however, you should not place undue reliance on any forward-looking statements, which are based on current expectations. For additional information regarding important factors that may affect our operations and could cause actual results to vary materially from those anticipated in the forward-looking statements, please see the discussion included in Item 1A “Risk Factors” of our most recent Annual Report on Form 10-K, as well as the other documents and reports that we file with the SEC. Forward-looking statements speak only as of the date the statements were made. We assume no obligation to update forward-looking information or the discussion of such risks and uncertainties to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except as required by applicable law. We qualify any and all of our forward-looking statements by these cautionary factors.
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Investment Thesis Market leader in a highly fragmented industry Transforming customer experience with enhanced technology Unique ownership culture with long-term focus on value creation Deep ties to the industry’s leading OEMs and suppliers Proven track record of delivering superior shareholder returns Robust capital position and balance sheet to fund any growth opportunity
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What is Watsco’s Business Model? Broken or failing A/C unit at home or business Contractor visits homeowner to diagnose problem and recommend solutions Contractor visits our store or e-commerce site to buy equipment, parts and supplies needed to remedy problem Contractor completes the repair or replacement of homeowner’s system
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Strategic Locations United States 640 Canada 34 Latin America & Caribbean 24 TOTAL 698 *WSO Minority Ownership Data as of FYE 9/30/25 Russell Sigler* 36
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Market Leader in a Fragmented Market Why scale matters: Rich product availability and dense branch network to support customers Purchasing power from 1,400+ OEMs and suppliers Greater share of wallet from customer spend Talent acquisition and retention Technology easily scalable across footprint Significant barriers to entry: Technical expertise needed to install and service HVAC units Difficult for consumers to “do it yourself” OEM approval required to enter distribution Loyal customer base$0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 Watsco 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Estimated Revenues in Billions Watsco vs. Industry Competitors
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United States 90% Canada 5% Latin America 5% Residential 65-70% Commercial 15-20% New Housing 10-15% Attractive End-Markets and Products REVENUES BY GEOGRAPHY REVENUES BY SEGMENT Residential HVAC Equipment 55% Commercial HVAC Equipment 15% Other HVAC Products 26% Refrigeration 4% REVENUES BY PRODUCT *Data as of FYE 12/31/24
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Installed Base Annual Industry Shipments Installed Base of Central A/C Units Large and Growing Installed Base Drives Steady Replacement Business with Residential Focus Installed base has increased every year Over 120 million installed HVAC units in U.S. Roughly 87 million ducted systems 9.6 million units shipped in 2024 Only ~12% of industry shipments tied to Residential New Construction 3.4% CAGR of Installed Base since 1980 3.9% CAGR of Shipments since 1980 Source: Data through Dec 31, 2024. AHRI, Industry Data and Watsco estimates - 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 80,000,000 90,000,000 100,000,000 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Replacement Units OEM Shipments
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Using Technology to Transform the HVAC Industry Make it easier to do business with Watsco through best-in-class 24/7 digital experience Make Watsco more efficient and profitable, while improving speed to market Enable new profit streams that help our customers grow faster 1 2 3
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Benefits of Technology Technicians complete more jobs in a day Customers are more efficient and profitable Customer loyalty increases leading to less attrition over time Scalable to future acquisitions Traditional Digital Countless hours wasted on the phone and waiting in line People and resources spend time away from customers Inefficiencies eat into business profitability and growth Ordering and pickups done in minutes, not hours Sales becomes more pro-active and consultative vs. being order takers Resources better deployed to higher margin-generating activities VS
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The Industry’s Leading Digital Experience $2.6B Annualized e-commerce revenue in 2024, an 8% increase ~60% Less attrition for users of e-commerce versus traditional customers 11% Higher e-commerce line items per order versus traditional orders An intuitive and contemporary digital experience for customers to do business with Watsco. Robust E-Commerce Platform Driving growth with existing customers and new customer acquisition, while reducing attrition Product Information Management Largest source of digitized product information for customers now over 930k SKUs Mobile Apps for HVAC Customers Enable customer engagement, technical assistance and sale anywhere, anytime, on any device Feature-rich mobile benefits include: Digital warranty processing, AHRI system match-ups, consumer literature, selling and financing platforms, and more. 25% Increase in gross value of products sold through On-Call-Air® to $1.5B. 930k+ Product SKUs digitized and accessible in mobile app as of 12/31/24 *Data as of 12/31/24 for FY24 64,000 Authenticated mobile app users with e-commerce account
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Our ESG Framework Reduce GHG emissions from own operations ENVIRONMENTAL SOCIAL GOVERNANCE Accelerate the transition to non-fossil fuel & high efficiency systems Optimize the efficiency of installed HVAC systems Reduce waste across our own operations Propel refrigerant reclaiming in the add-on replacement market Recapture end of life equipment for recycling Train our employees on sustainability best practices Train network of technicians on sustainable products and sustainable best practices across the HVAC industry GHG EMISSIONS REDUCTION CIRCULAR ECONOMY WORKFORCE TRAINING OUR BUSINESS OUR OPERATIONS
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ESG: Our Impact 25.3 Million Metric Tons of CO2e averted from the sale of high efficiency equipment from January 2020 – September 2025 14.2 Billion Gallons of Water Saved from the sale of Alert Labs water monitoring products from August 2019 – September 2025 That’s the equivalent of: • Taking 5.9M vehicles off the road for 1 year • 58.5M barrels of oil consumed • Carbon sequestered by 25.4M acres of U.S. forests in 1 year
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Ownership Culture Linked To Value Creation 160+ Restricted Stock plan participants “Retirement age” cliff vesting Average vesting of approximately 12 years 55% of all shares granted since 1997 remain outstanding 37% vested, only 8% forfeited over 25+ years Operating leaders possess $415+ million in restricted stock Other Equity Plans 300+ employees in Stock Option Plan 900+ owners in Employee Stock Purchase Plan 4,000+ actively employed owners in 401(k) Plan Source: Company Reports as of 12/31/24 Watsco’s unique equity programs attract and retain the industry’s best.
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Watsco’s Track Record 1989* LTM 9/30/25 CAGR Revenues $64M $7.4B 14% EBIT $2M $755M 17% Share Price $2.70 $404.30 15% Dividends $.5M $461M 21% Market Cap** $22M $16B 20% Market Share (est.) <1% 18-20% Locations 16 698 5 YEAR 10 YEAR 20 YEAR 25 YEAR 30 YEAR Annualized Total Shareholder Return 25% 20% 18% 19% 19% Watsco’s culture is focused on long-term value creation for all stakeholders. Over most time periods, Watsco produces superior Annualized Total Shareholder Return. *1st year of distribution ** Market Cap calculated using Class A and B Shares Source: Company SEC filings Source: FactSet as 12/31/24
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Solid Cash Flow Performance Source: Company SEC filings Axis in $000 20 Year Cumulative Results Net Income: $5.3B Operating Cash Flow: $5.3B Dividends: $3.2B Acquisitions: $792M Capital Expenditures, net: $353M 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
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Robust Capital Position 12/31/23 12/31/24 09/30/25 Cash & Investments $210M $782M $324M Total Borrowings $15M $0 $0 Shareholders Equity $2,616M $3,064M $3,302M Debt to Capitalization 0.6% N/A N/A EBITDA (LTM) $830M $812M $798M Net Debt to EBITDA (LTM) (0.23x) N/A N/A Operating Cash Flow (LTM) $562M $693M $549M Dividends per share* $9.80 $10.80 $12.00 Consistent with a long-term focus, Watsco maintains a conservative balance sheet. Watsco is well positioned to fund virtually any growth opportunity. In February 2025, Watsco raised its Annual Dividend Rate to $12.00 per share, effective in April 2025. Source: Company SEC filings * Represents dividend rate in effect at period end
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Delivering Exceptional Shareholder Value Watsco’s TSR ranks #25 out of ~1,600 public companies for Total Shareholder Returns over 30 years. Only 30 companies have returned 19+% over the last 30 years. Source: FactSet as of 12/31/24 19