Please note that this event is being recorded. I would now like to turn the conference over to Mr. Albert Nahmad. Thank you, and over to you. Welcome to our first quarter earnings call. This is Al Nahmad, Chairman and CEO. With me is A.J. Nahmad, the President, Paul Johnston, Barry Logan, and Rick Gomez. Before we start our cautionary statement, this conference call has forward-looking statements as defined by SEC laws and regulations that are made pursuant to the safe harbor provisions of these various laws. Ultimate results may differ materially from the forward-looking statements. First quarter results point to improving stability now that the transition to A2L products has matured. We expect a more simplified business environment this year, but it is still early in our summer season, but so far so good. We're also excited to announce our agreement to acquire Jackson Supply, a legendary market-leading Sunbelt distributor with $230 million in annual sales. We are fortunate to know many great entrepreneurs in our industry. Jim Durrett, Jacksonville owner, and his talented group of leaders, all of whom will remain with the company, certainly meet the definition of great entrepreneurial. Our relationship with Jackson dates back more than 20 years, we are grateful to Jim for entrusting us with his company's next chapter. Jackson will expand their Sunbelt presence by 25 locations and provide diversification of brands and products, giving their strong presence in parts and supplies. As I mentioned, is our culture, Jackson team will continue to operate and grow the company with our full support. In addition, our community of leaders, along with Jackson, will collaborate and learn from each other, as is also our culture. We expect to close the transaction sometime in the second quarter. Within our existing business, we continue to build and expand our technology platforms, which provide us an immense long-term competitive advantage. e-commerce sales increased 16% during the quarter, well outpacing overall growth rates. OnCall Air, our digital platform that helps contractors present and sell solutions to homeowners, increased customer sales by 20%, reflecting a rich sales mix of high-efficiency systems. We expect the gross merchandise value for OnCall Air to exceed $2 billion this year. Let me say that again. We expect sales of OnCall Air to exceed $2 billion this year. We feel like this is a good start and expect more progress as adoption by contractors gain momentum in years ahead. Turning now to our first quarter results. Sales increased 2% in U.S. markets, reflecting a mature mix of A2L products as well as an improved mix of high-efficiency systems, offset by lower unit sales. Unit volume stabilized as the first quarter progressed. Gross margins remained largely intact, reflecting good execution by our leadership team to sustain price and competitiveness. We continue to execute on several ongoing initiatives to enhance gross margins with the long-term goal of achieving 30%. SG&A remained flat as improved operations efficiency offset incremental technology investments and new locations. We expect overall operating efficiency to further improve, and our technology can now show its metal in a simpler operating environment. Our balance sheet continues to be strong, and we remain debt-free. Let me repeat that. We remain debt-free. As I mentioned, we continue to invest in innovation and technology to separate us from our competitors. We are making incremental investments to enhance our competitive position and add to our long-term growth and margin profile. For example, we are developing new innovations aimed at capturing more sales to large institutional customers, which is set to launch during the second quarter. We are accelerating the use of our pricing optimization tools to make further progress towards our long-term target. We have launched a new initiative to compete and grow sales in a highly fragmented parts and supply segment, which comprise almost 50% of the industry market share. We have begun to harness the power of artificial intelligence, offering the potential to further transform our customer experience, improve operating efficiency, and create new data-driven growth strategy. These investments, along with our scale, entrepreneurial culture, and a capacity to invest, are unmatched in our industry. With that, let's turn to Q&A. Thank you. We will now begin the question- and- answer session. To ask a question, you may press star and then one on your touch tone telephone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. At this time, we will pause momentarily to assemble our roster. We have the first question from the line of Ryan Merkel from William Blair. Please go ahead. Morning, Ryan. Ryan, can you hear us? Yeah. Can you hear me? Yes, sir. Now I can, yes. Okay. Hey, everyone. Congrats on the deal and a good start to the year. I wanted to start high level. Al, can you just unpack your comments about improved stability as we head into the summer? You know, what's changing? Are you seeing April, you know, positive in terms of year-over-year growth at this point? Well, let me turn to our expert in that sort of thing, to Barry Logan. Oh, he just. Barry? He's saying he dropped off the call. Please let the operator know. Operator, can you please do that? Okay. Rick, do you wanna jump in there? Sure. I'll take a stab, and then Barry can backfill and enhance it. Ryan, good morning. Yeah. Look, first, if we just look at the first quarter in isolation, and then I'll turn to April. You know, we saw what was the full maturity really of the A2L product transition. Units still weighing a little bit and which means that the market is not yet, you know, fully healed. There's no inflection point here. Things did get incrementally better as the quarter progressed. We exited the quarter nicely with March up high single digits on the same-day basis. You know, so far, three weeks into April, I can tell you that that momentum has sustained itself, and we are seeing, you know, incrementally more stability in April than we did to start the year. April has begun nicely. All of that said, you know, we're still not yet in what is the thick of the selling season, and so we'll be a little bit a little cautious in our tone and our optimism. This is certainly, I think, incrementally more stable, more positive, less complex. We'll take that in a first quarter. Okay. Yeah. I'll say that too, if that's all right. Which is, if you zoom out even further, look at the history of this industry for 30, 40, 50 years, it's been a pretty mature, slow growth, steady as you go industry. COVID hit, it seems like all chaos broke loose over the last five years. We had extreme demand as people were investing their homes. We had extreme supply chain challenges, which constrained the products that we could sell. We had multiple regulatory changes that changed the products that we sold, almost 100% of the equipment we sold twice in that period. We've had tariffs, we've had inflation, we've had different tariffs. It's, we've had constraints or limitations on refrigerant canisters. It's just been kinda one thing after the other for the next five years. It seems like coming into 2026, most of that stuff was behind us. Certainly the stuff being driven by the industry in terms of regulatory changes and so forth. We looked forward to a more normalized 2026 as we started the year. I think we've got at least most of the way there. Obviously, there's still some things changing with tariffs and some dynamics, but we're looking forward to a quote-unquote 'more normalized environment' and getting back to business and hitting the streets and taking care of our customers and growing the business. I think that's materializing. Thanks. Go ahead, Barry. No. All right. I was gonna say, I think it's interesting too that we see e-commerce sales kind of bloom this quarter. That tells us the contractors' daily life is kinda re-reset into a good place to start this year. I always mention contractor credit as a critical measurement of how the market looks. Again, that is in very good shape. Also, now that the product line is the product line, we saw an increase in higher efficiency systems being sold. Again, as Rick said, it's early, but those are good indicators and it's kind of what we have been looking for as some indicators. All right. Very helpful. I'll pass it to others and leave it there. Thanks. Thank you. We have our next question from the line of David Manthey from Baird. Please go ahead. Morning, David. Morning, Al. Thanks for taking my question. My question's primarily on the Jackson Supply acquisition. Correct me if I'm wrong, this looks like a Goodman distributor primarily. As far as I can tell, it looks like a great fit within the CE, Gemaire and Baker footprint that you currently have. Is there anything else you can share with us about mix, margins, growth? What made this an attractive acquisition for Watsco? This is a relationship we've had for a very long time. We have seen them succeed in their markets over years. We know that they have the right leadership, we know they have the right strategy. All we wanna do is support it so that they can continue to expand. If they need more capital, we'll provide that. If they need more technology, we'll provide that. If they need more equity for their leadership, we'll provide that. A wonderful business to become part of Watsco in every respect. Texas is where they are from, mostly, and that's always a very good HVAC market. I mean, it resonates on all the points that are important. Yes. Sounds good. As it relates to this, the stabilization or normalization theme that we're all kind of looking at right now, when we look at your numbers through the year, the volume comps get easier, the price comps get more difficult. I don't wanna slice this too thin because I know you guys aren't gonna do that, just when we're thinking about sort of normalization through 2026, would we expect sort of a natural handoff just based on where those year-to-year comps are if we're gonna have sort of a normal stable year that equipment would be, would go the other way, would grow, whereas price would sort of tail off toward the end of the year? Is that how you're thinking about it? Well, we certainly are hopeful that we're gonna grow. It seems like we will. It's too difficult, too early, I should say, is a better way to say it, that we're gonna have the constant market conditions that we have had experienced for so many years. All I can say is what we've already said, is that like we're seeing improvements. We're pretty assured that we're on the right path. Let's wait and see. Regardless of what the markets do, we're gonna do well. We have a competitive edge over other distributors that we tell you about over and over again. Yeah. Sounds good. Thanks a lot, Al. You bet. Thank you. We have the next question from the line of Tommy Moll from Stephens. Please go ahead. Morning, Tommy. Good morning. Good morning, Al. Thanks for taking my questions. Sure. To start, I wanted to expand a bit on the year-to-date comments that Rick made. If March exited the quarter in a high single-digit growth range and April has continued that momentum, is it fair to infer that your resi equipment volumes are now flat or maybe even a little bit better than flat in those two months? How long has it been since that was the case? All yours, Rick. Yeah, Tommy Moll, we're not gonna slice it that thinly for three weeks in April here. We're not yet in the full selling season. I think the prior question got at it a little bit, which is we, you know, this time last year is when we saw volumes begin to degrade a little bit. Just on paper, mathematically, it stands to reason that, you know, that looks better. You know, price, obviously we have pricing actions that took effect last year. I'll remind everyone that our mix of A2L products in the first quarter of last year was about 25%. Like for like, these, the new equipment is at a double-digit price point above where it was last year. We had some of that in our fourth quarter of last year, and it was about 60% of our mix in the second quarter of last year. You know, the ultimate comparison here is what did it look like versus two years ago, versus three years ago, and we'll be in a smarter position to answer that question after the second quarter. Far so good is how I would describe the start in April. Fair enough. Al, a question for you on inventory. There have been some big moves in recent quarters and years. As you enter the selling season for 2026, how would you characterize that inventory position? Well, we expect, given the market conditions, that we will reduce our investment in inventory, which affects our cash flow, of course, because we'll improve the inventory turn. Many changes were occurring recently that it can only get better. It's not going to get worse. We expect our inventory turns to increase and contribute to cash flow for the rest of the year. Yeah. Plus, we've got our supply chain is a lot more solid than it was in the past. You know, A.J. mentioned that we had COVID, we've had all these changes in models and products. I think finally our manufacturers have an opportunity to make a single line of products continuously throughout the year, I think that's gonna also help the inventory turn. Thank you both. I'll turn it back. Thank you. We have the next question from the line of Jeff Hammond from KeyBanc Capital Markets. Please go ahead. Morning, Jeff. Hey, good morning, everyone. Maybe just to start, you know, the Section 232 update seemed to, you know, bring about questions about, you know, follow on pricing. I'm just wondering if you've seen any pricing from your OEMs in near term outside of like normal course, that would suggest, you know, more pricing, upward move in pricing? Well, I do expect it because of the duties that are being paid now by some of the manufacturers. I can't quantify it yet, but yes, the pressure is on the manufacturer, and I believe they will raise their prices. You know, we've had a number of a number of price increases to date, you know, from several of the manufacturers, which have already become public, so they're well known. We are gonna have a price increase pretty much across the board, I believe. We'll just have to wait until, you know, probably in the second quarter, we'll know for sure exactly what those price increases look like. Okay, great. Just on that, you know, there's been kind of increasing questions about price elasticity and, you know, the unit costs are getting up, and there was this debate last year about, you know, repair or replace. Was that, you know, this A2L transition, or was that the consumer kind of being tight? You know, and I noticed your non-equipment or other products was up. Just wondering what you're seeing and how you're thinking about repair versus replace as we go through into the selling season. I think. Go ahead. Yeah, we're, yeah, we're happy with both, you know. We're, we're seeing a definite uptick in our compressor sales, which aren't gonna offset any, you know, by any material stretch of the imagination, the equipment sales. We're also seeing a rebound in equipment sales. I think it's gonna be kind of a, a dual market out there for a while, where we're gonna have an increase in parts, and at the same time, we're gonna have an increase, I'm hoping, in equipment. I don't think it's either/or anymore. Jeff, just to expand on that for a second. Remember that non-equipment for us means a lot of things. It's a very broad basket of goods. The parts is actually the minority of what's in non-equipment. Yes, it grew, so did virtually everything else in non-equipment, including supplies, including our small and growing plumbing business and including commercial refrigeration, of course, which we report separately. There's broad-based growth there, and it's not necessarily a read on repair versus replace all the time. Okay, thanks, guys. To say it analytically, I mean, parts, replacement parts sales are less than 10% of Watsco. When we say 30% is non-equipment, that means 20% is everything else, just from an analytical point of view. Thank you. Thank you. Again, if you have a question, please press star and then one. We have the next question from the line of Nigel Coe from Wolfe Research. Please go ahead. Morning. Thanks. Good morning. Hi, all. I wanted to go back to your comments on, you know, inventory turns continuing to increase. The 1Q inventory build was a little bit higher than what we expected. Actually, looked quite normal. My initial reaction was that the destocking was behind us. It doesn't sound like that's the case. Just wanted to clarify that comment. I'm wondering if you know, the inventory build is, you know, is getting ahead of price increases, slightly better demand. Just wondering anything more there. There's been a shift in the product innovation. When product innovates, we have to carry the existing in-inventory to support what's been out there, and then we have to take inventory in for the new changes in the product. That does inflate inventory. That doesn't bother us. It's just part of a normal thing. We run a very conservative balance sheet. We have no debt, we can afford to have the swings in inventory perhaps better than our competition can. Okay. Nigel, I'll take a stab at that too. I mean, I would not call our expected inventory turns an enhancement and burn-through of our inventory more structural destocking. That's not what we're talking about. We're just talking, like Paul mentioned, the supply chain and our OEMs and the whole process is more stable, more reliable than it has been. Now we bought inventory for the summer selling season to make sure that we have the right amount of products in the right places to support expected customer demand. We expect to turn inventory better than we have been able to because there's less noise in the system. Yes. Another way to ask it, would be do you expect sell-in and sell-through to equalize now going forward? Just obviously we've seen a big divergence in the past. Maybe just with these price increases, which it doesn't sound like they've been formalized at this point. You had a big uptick in gross margin last year in 2Q versus 1Q on the price increases. I'm wondering if you expect that still, you know, that to happen this year with the price increases coming through. I think that'll probably be a second. Yeah, go ahead. Let me refresh the conversation about that. We have a target of 30% gross profit margin, and a lot of things go into that. We're not gonna get there overnight, but we have a plan to get there. That involves pricing technology, which we're getting really good at. I'm sure that the sophistication pricing system that we have is superior to anything else on the market. That'll help gross profit margins. Our ability to consolidate purchases across the whole company from vendors, manufacturers, will also help improve gross profit margin, if that helps that explanation. Okay. Thanks, Al. Thank you. I want, We have the next, I want to go back to the, yep. Sorry. I want to just want to go back, I'm sorry, to the inventory discussion, just to be again, try to be educational about it, because I think what Rick said is important. This is not a structural further reduction in inventory. That's not what this is. That's not the goal. The goal is to own less inventory on average throughout a given year. That's the equation of inventory turns, right? Cost of sales divided by average inventory. Just have less load in the branches over a period of time, in order to keep our customers exactly happy every single minute of the day. As some of the metrics with the manufacturers improve in terms of lead times and on time, you know, on time delivery, things like that, as that improves, it lets us moderate the amount of inventory we carry. It's, it's much more subtle than the big stick we took to inventory last year. This is the subtlety of improving inventory turns over a period of time and frankly, going back to where they should be and where they had been for many years before all these changes. Right. I'll add one more note to that, which is that with our new Hydros system, which we talked about thoroughly in our investor day, we can also increase product assortment at each branch while still carrying less inventory because we can turn that inventory faster. Do we move on to the next question? Seems like we disconnected. Are we disconnected? No, sir, you're connected. Do we move on to the next question? Yes, go ahead. Sure. Thank you. We have the next question from the line of Stephen Volkmann from Jefferies. Please go ahead. Morning, Stephen. Good morning. I guess he wanted you to think about it before you took my question. Yeah, we reserve the right to change our minds, Stephen, you know. Yeah, feel free. Yeah. Most of mine have been answered, but I have a kind of a bigger picture one. Back in the before times, which I'll define as pre-COVID, there was often a fairly meaningful difference between announced price increases and what was actually realized in the market. I'm just curious how you're viewing that these days, because of course we've seen a number of those announced year- to- date here and some whispers about more coming and yet, you know, the demand environment is still not great. I'm just curious how you think that plays out as the year progresses. If I can make a stab at that. You know, one thing that I think you realize is that we've got a very diverse market out there, both geographically as well as the type of customer. Obviously, the announced price increase does not always apply completely to certain segments of the market, you know, to some of the, people that have longer term contracts with pricing. What we end up with is we end up with an announced price increase, and then we end up with a realized price increase, and it's generally less than what the announced price increase is. Yeah. I would add to that, though, Paul, which is that the software that we've brought online to help our businesses, not only with analytics and pricing and making sure we have the right price for the right customer, it's also about administrating those price increases. I mean, if you think about every time there's a price increase from an OEM, it's touching thousands of SKUs, for thousands of customers and just the number of permutations and the administrative work associated with that, which used to be done essentially, call it by hand, was overwhelming. I mean, that was a lot of work for a few hands on keyboards. Now with the tooling, one of the benefits is that we can appropriately adjust the pricing for all the customers, for all the SKUs that have new pricing. You know, it's not actually instantaneously, but I'll say instantaneously so that we don't have the risk of a lag of price increase, where we otherwise did have that risk and sometimes missed making changes that needed to be made. If that made sense. Yes. Good point. Interesting. It's interesting. I appreciate that. Then maybe almost a segue there, A.J., is that it feels like you guys are almost talking like there's an inflection here in your e-commerce platform. I don't want to put words in your mouth, but assuming that growth in that platform is accelerating, does that have an impact on your gross margin target? Is that a tailwind or is it just more sales? Yeah. Well, all the above. We do realize a higher gross margin with our online sales than our offline sales. E-commerce sales are increasing. We expect that trend to continue. Also our cost to serve is lower with our online sales, and customers are using that tooling because it helps them too. It helps them organize their businesses and how they go to market and how they procure product. It's really, it's a win for all of us, including and especially the customers. We very much expect to invest in our e-commerce technologies and our tooling for our customers, and we expect the adoption rate to continue. Just to give you a sense of what's possible, we have markets. When I say markets, I mean, you know, the state of Florida for which was like an $800 million business for one of our subsidiaries, where they're almost 70% of their sales go through the e-commerce tools. That, that's the possible. Steve, I think if we look even more long term, this is one of the most underappreciated aspects that we write about it every quarter and tell you guys about it, but it really is meaningful inside our four walls is the future attrition benefits that we get when we have active e-commerce users. That is a, that is an incredible moat and an incredible stickiness to future revenues, and those customer relationships that really matters when you look out three, five, seven years. Yeah. While we're on the subject, we also sell more line items for invoice when we sell online versus offline. It's a winning formula to sell more products online, and we're focused on it. Thank you all. Thank you. We have the next question on the line of Chris Snyder from Morgan Stanley. Please go ahead. Thank you. Hey, I wanted to ask about Q1 inventory. It was up about 25% quarter-on-quarter, which matches what we saw in the last, you know, five, six years. The last five, six years, you know, OEM inventory was tight, lead times were long. This year, it feels like the opposite. You know, I was surprised at how much your guys' inventory came up in that construct. I guess, is this because you guys feel that demand is turning, or there's, you know, well-appreciated April price increases coming even before the Section 232, and there was some building to get ahead of that? Thank you. Yeah. Let me answer. First, remember that the composite inventory today is all A2L product. A year ago, it wasn't. It was a mixture of old and new product. If you take the inventory increase for equipment, it's all in the mix of price. It's not units. Actually, we own less units at the end of March than we did a year ago. That element, that sales mix of A2L is still being compared a year ago to a heavy mix of 14A products. That gets simpler and easier to identify as we get into the second quarter. To keep it simple in my statement, we do own less units at the end of March than we did a year ago. Yeah. I guess on that, like, sequentially it's kind of the same. Sequentially, like the 25% up, you know, Q1 versus Q4 presumably is almost all volume or units. I guess just like that kind of more like it felt like you guys were building in Q1 the same way you built the last five years. You know, the lead times are a lot shorter, so I would've just thought that you guys would build a little bit more cautiously. I guess just the question was like, is that a function of demand turning and you're more optimistic there, or there's just very well anticipated price increases? Thank you. I think if you look at our March inventory versus our March inventory the year before, you see that the dollars are down. When you sell an A2L product, excuse me, today, you've got to sell an indoor unit and an outdoor unit. We've had to increase our inventory of indoor units to accommodate the new A2L refrigerant. That could be part of what you're looking at there also. Interesting. I appreciate that. Then just, you know, maybe following up on the inventory point. You know, over the last year, it seems like it was very difficult for the industry, you know, both the distributors and the OEMs, to have a sense of how much product their customer is holding. I guess just now, you know, it feels like there's another round of OEM price increases coming. You know, I imagine here in the early part of Q2, maybe distributors and contractors are all looking to get ahead of that. I guess just like how do you guys think about those channel dynamics? Is there any, you know, thing that the company has done versus a year ago to just have better visibility or confidence in how much inventory the customers are holding? Thank you. I mean, I'll take a stab at that and you guys keep me honest, which is that we, Watsco, did not buy ahead of the expected price increases coming from the Section 232 tariffs. That's point one. Two is that, yes, some of our customers hold some inventory, and no, we don't have visibility into what that numbers are. Maybe Paul or somebody can hold me honest. I don't think it's particularly material. No. There were some I can tell you that there were some customers that bought ahead of the price increases coming now, the Section 232 tariff price increases. That in the end, and when I mean the end, I mean the end of the quarter, the end of the season, will just be noise because it'll smooth out by the end of the quarter, by the end of the season. Now, most of the contractors- It's not substantial enough. It's not substantial enough to really jolt the picture. I don't think most of. Thank you. Most of our contractors are not carrying a lot of inventory. They don't have mega warehouses where they put inventory in. That's why we do- Yes, I agree with A.J. completely. Yeah. Yeah. The reason we have inventory, the reason we have all the convenient locations with, you know, as much product variety as they need is because most customers do not carry inventory because they don't know what they're gonna sell that day until they go to someone's house and figure out what the problem is and what the solution is, and then they come work with our teams to get the right product out of our stores to go install it in that home or that building. Yeah. I would say. Thank you. I appreciate that. I know it's hard to pinpoint, but it did feel like last year there were some unexpected downstream inventories. That's why I wanted to ask. Thank you. Okay. Yeah. Yeah, I mean, if I say it this way. Go on. it's not, it's not a, it's not one size fits all for any brand that's out there. I mean, our business, our business model with our brands and our customers is to carry it for them. In Florida have 100 locations to take the pressure off of them having to stock anything ever. That's our value in Florida. There are other business models, other OEM models, factory-operated models that have under 30 branches in Florida. To get product into the channel, they need their customers to stock product. That's a business model decision. I'm not saying it's right or wrong, I'm saying it's a business model. Just and kind of evaluating your, you know, the answer and listening to your question, there is a different answer if we go across brands and OEMs as well in that equation. That's a good point. Good point, Barry. Thank you. Appreciate that distinction. Thank you, Barry. Thank you. We have the next question from the line of Patrick Baumann from JPMorgan. Please go ahead. Good morning. Morning. Morning. I know it's early in the season, but wondering if you guys have a view on what you think unit sell-through will be this year. It's better than last year. Yeah. I have no idea. Yeah. There wasn't anyone that was jumping to answer that question. Yeah, no. I mean, we're obviously shy to answer that question. Sorry, go ahead. Yeah, I mean, Pat, I've said this for my career in April, I think. The question is, if I ask it back to you is, do I feel better or worse today? I feel better today, for sure. You know, the other equations of that, of the answer, existing home sales, new home sales, consumer spending you know. It's consumer confidence. Yeah, consumer confidence and contractor confidence ultimately is who actually sells the product in someone's home. You know, I would say again, it seems like a better situation, but time will tell. Did you see any regional disparity in performance in March and April? Just asking in context of what seems to have been, like, a really hot start to the year from a weather perspective in certain areas. Yeah, I would say in the northern market, you had severe winter. You had a bunch of closed locations, a bunch of lost business. We really either blame or compliment the weather in our discussion. The northern markets had a bit of disruption in the quarter that resolves itself as time goes on, too. The Sun Belt, by, you know, because of what I just said, the Sun Belt was, you know, outperformed the North, I think, for those reasons. That's just the first quarter. Okay Not something to draw an inference from over the longer term. That makes sense. It's nice to be geographically diverse so that, you know, all that just, again, becomes normalized over time. Yep, of course. My final question is I was wondering if you could opine on Home Depot's acquisition of Mingledorff's and kind of how you see that impacting acquisition opportunities for you. Are you seeing valuation multiples go up in the industry at all after that deal or anything else to point out on how it might impact the competitive landscape? We've competed with the business they bought for a long time. We're not threatened by it at all. In fact, I think. I'm not gonna say what I really think because it wouldn't be nice. No, it's not something that we worry about at all. Yeah. I mean, I'll say we've known the Mingledorff family for a long time and wish them well and that business well. You know, it takes two to tango, especially in our business model and on our formula, which our Chairman started 50 years ago here is, the family needs to want to join our family and be here and run their business and use our tools and our technology and our capital and so forth to do what they do and do more of it and continue to grow. If that's not in their interest, then it's not a good fit. If it is in their interest and there's mutual trust and respect, then it's a wonderful fit. We'll keep doing what we do, and we've done it successfully for a long time, and I don't think we're short of opportunities in the future. Makes sense. Thanks a lot, guys. Best luck. Thank you. Thank you. We have the next question from the line of Jeff Hammond from KeyBanc Capital Markets. Please go ahead. Hey, guys. Hey, Jeff. Hey, just on gross margins, you know, you held the line pretty well, and I know you got some price benefit in 1Q last year, so that was good to see. Just wondering how you think. You had a particularly tough comp in 2Q. Just wondering how you think gross margins trend. Then also, just separately, can you give us what commercial HVAC equipment was in the quarter? I'm not sure if I missed that. Oh, that's a big question. Oh, yeah. I can take a stab at it, Jeff. On the, on the Commercial side, really, we didn't see a whole lot of divergence between what was Residential and what was Commercial. The biggest divergence is what we mentioned in the press release about domestic versus international, but resi and Commercial traveled very close together. On margins, I think. If you go back 10 years in time, you can see, and if you just take second quarter and third quarter as one thing, you could see that there's usually some, you know, in most years there's a modest retreat in margins, only because historically first quarters are the ones that have some price OEM pricing actions, and the cooling season and R&C mix and all of that, you know, typically influences the second and third quarter margin versus an off-season margin. That's what history would tell you. Last year did not follow that trajectory, of course, because of the price increases, we'll see what this year brings. I think in the absence of any new information, we'll see what again the OEMs begin to talk about here in the next few days. I think that's what history tells us, is that there's a different profile to margin during season versus out of season. Offsetting that is, and we haven't really talked about this much today, is we, you know, Supply Sync for, is now launching, for example. We expect that to be helpful as it scales. A.J. mentioned Hydros and DCR, its companion initiative around purchasing and non-equipment. That is gaining momentum and scaling. There's some puts and takes to it. We'll share more when we know more. Historically, there's always a little bit of difference between seasonal and off-season margins. Okay, thanks. Thank you. This concludes the question and answer session. I would like to turn the conference over back to Mr. Albert Nahmad for closing comments. Thanks for listening, and thanks for your interest in our business. We're very excited about the future. As I said, we're uniquely capable of investing in the industry through acquisitions and in post-acquisitions and that sort of thing. We're in for the long term, and we're happy you're with us. Bye-bye. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.