What changed in this filing

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Item 1A. Risk Factors

2025-02-28 compared with 2024-02-23 · 22 added, 18 removed, 120 unchanged (25% of the section changed)

2 unchanged sentences

The Company’s top ten suppliers accounted for 85% of our purchases during 2024, including 62% from Carrier and 9% from Rheem.

Carrier provides a diverse variety of brands of HVAC systems including, Carrier, Bryant, Payne, Tempstar, Heil, Comfortmaker and Grandaire, along with complimentary replacement parts.

Carrier provides a diverse variety of brands of HVAC systems including Carrier, Bryant, Payne, Tempstar, Heil, Comfortmaker, and Grandaire (a private label product created by the Company), along with complimentary replacement parts.

Rheem provides Rheem-brand HVAC systems along with complimentary replacement parts.

Given the significant concentration of our supply chain, particularly with Carrier and Rheem, any significant interruption by any of the key manufacturers or a termination of a relationship could temporarily disrupt the operations of certain of our subsidiaries.

Given the significant

concentration of our supply chain, particularly with Carrier and Rheem, any significant interruption by any of the key manufacturers or a termination of a relationship could temporarily disrupt the operations of certain of our subsidiaries.

Additionally, our operations are materially dependent upon the continued market acceptance and quality of these manufacturers’ products and their ability to continue to manufacture products that are competitive, that comply with laws relating to environmental and efficiency standards, and that keep up with shifting consumer preferences.

Our inability to obtain products from one or more of these manufacturers or a decline in market acceptance of these manufacturers’ products could have a material adverse effect on our results of operations, cash flows, and liquidity.

Many HVAC equipment and component manufacturers, including Carrier and Rheem, source component parts from China and/or assemble a significant number of products for residential and light-commercial applications from Mexico.

If any restrictions, including overall trade relations, a potential increase in tariffs, are imposed related to such products sourced or assembled from Mexico and China, including as a result of amendments to existing trade agreements, and our product costs consequently increase, we would be required to raise our prices, which may result in cost inflation, the loss of customers, and harm to our business.

We maintain trade name and distribution agreements with Carrier and Rheem that provide us distribution rights on an exclusive basis in specified territories.

Our inability to obtain products from one or more of these manufacturers or a decline in market acceptance of these manufacturers’ products, including new HVAC systems that use refrigerants with a lower GWP, could have a material adverse effect on our results of operations, cash flows, and liquidity.

Many HVAC equipment and component manufacturers, including Carrier and Rheem, source component parts from China and Mexico and/or assemble a significant number of products for residential and light-commercial applications in Mexico.

If any restrictions, including as a result of overall trade relations or a potential increase in tariffs (which the Trump administration has proposed), are imposed related to such products sourced from, or assembled in, Mexico and China, including as a result of amendments to existing trade agreements, and our product costs consequently increase, we would be required to raise our prices, which may result in cost inflation, the loss of customers, and harm to our business.

We maintain trade name and distribution agreements with Carrier and Rheem that provide us with distribution rights on an exclusive basis in specified territories.

Such agreements are not subject to a stated term or expiration date.

We also maintain other distribution agreements with various other suppliers, either on an exclusive or non-exclusive basis, for various terms ranging from one to ten years.

Certain of the distribution agreements contain provisions that restrict or limit the sale of competitive products in the locations that sell such branded products.

Certain distribution agreements contain provisions that restrict or limit the sale of competitive products in the locations that sell such branded products.

Other than where such location-level restrictions apply, we may distribute other manufacturers’ lines of air conditioning or heating equipment in other locations in the same territories.

5 unchanged sentences

the successful operation and/or integration of acquired companies;

the efficiency and effectiveness of the acquired companies internal control environment;

the efficiency and effectiveness of an acquired company’s internal control environment;

diversion of management’s attention from other daily functions;

issuance by us of equity securities that would dilute ownership of our existing shareholders;

issuance by us of equity securities that dilute the ownership of our existing shareholders;

incurrence and/or assumption of significant debt and contingent liabilities;

10 unchanged sentences

In addition to the disruptions that may occur from interruptions in our information technology systems, cybersecurity threats and sophisticated and targeted cyberattacks pose a risk to our information technology systems.

We have established security policies, processes and defenses designed to help identify and protect against intentional and unintentional misappropriation

or corruption of our information technology systems and information and disruption of our operations.

Cyberattacks may be further enhanced in frequency or effectiveness through threat actors’ use of artificial intelligence.

We have established security policies, processes and defenses designed to help identify and protect against intentional and unintentional misappropriation or corruption of our information technology systems and information and disruption of our operations.

Despite these efforts, our information technology systems may be damaged, disrupted or shut down due to attacks by hackers and other persons obtaining unauthorized access, malicious software, ransomware, computer viruses, undetected intrusion, hardware failures or other events, and in these circumstances our disaster recovery plans may be ineffective or inadequate.

5 unchanged sentences

The Audit Committee is briefed on information security matters at least once a year.

We carry cybersecurity insurance to help mitigate the financial exposure and related notification procedures in the event of intentional intrusion.

We carry cybersecurity insurance to help mitigate financial exposure and related notification procedures in the event of intentional intrusion.

There can be no assurance, however, that our efforts will prevent the risk of a security breach of our databases or systems that could adversely affect our business.

18 unchanged sentences

Access to funds under our line of credit is dependent on the ability of the syndicate banks to meet their respective funding commitments.

Disruptions in the credit and capital markets could adversely affect our ability to draw on our revolving credit agreement and may also adversely affect the determination of interest rates.

Disruptions in the credit and

capital markets could adversely affect our ability to draw on our revolving credit agreement and may also adversely affect the determination of interest rates.

Additionally, disruptions in the credit and capital markets could also result in increased borrowing costs and/or reduced borrowing capacity under our revolving credit agreement.

17 unchanged sentences

The identification and measurement of goodwill impairment involves the estimation of the fair value of our reporting unit and contains uncertainty because management must use judgment in determining appropriate assumptions to be used in the measurement of fair value.

The estimates of fair value of our reporting unit, indefinite lived intangibles, and long-lived assets are based on the best information available as of the date of the assessment and incorporates management’s assumptions about expected future cash flows and contemplates other valuation techniques.

The estimates of fair value of our reporting unit, indefinite lived intangibles, and long-lived assets are based on the best information available as of the date of the assessment and incorporate management’s assumptions about expected future cash flows and contemplates other valuation techniques.

Future cash flows can be affected by changes in the industry, a declining economic environment, or market conditions.

11 unchanged sentences

or in other countries in which we or our suppliers or customers operate could adversely affect our operations and financial performance.

Natural disasters, power outages or other unexpected events could damage or close one or more of our locations or disrupt our operations temporarily or long-term, such as by causing business interruptions or by affecting the availability products we sell.

Existing insurance arrangements may not cover all of the costs or lost cash flows that may arise from such events.

4 unchanged sentences

As of December 31, 2024, our directors and executive officers and entities affiliated with them owned:

(i) Common stock representing 1% of the outstanding shares of Common stock and (ii) Class B common stock representing 89% of the outstanding shares of Class B common stock.

(i) Common stock representing less than 1% of the outstanding shares of Common stock and (ii) Class B common stock representing 90% of the outstanding shares of Class B common stock.

These interests represent 55% of the aggregate combined voting power (including 53% beneficially owned by Albert H.

9 unchanged sentences

We may issue shares of our common stock or other securities in one or more registered or unregistered offerings, and we may also issue our securities in connection with investments or acquisitions.

On March 29, 2024, we implemented the Watsco, Inc.

Dividend Reinvestment Plan (“DRIP”) under which existing shareholders may, in accordance with the DRIP, acquire shares of common stock, as applicable, by reinvesting all or a portion of the cash dividends paid on such shareholders’ shares of common stock.

The number of shares of our common stock issued in connection with any of the foregoing may result in dilution to holders of our common stock.

The market price of our common stock may be highly volatile and could be subject to wide fluctuations.

The market price of our common stock has been and may continue to be highly volatile and could be subject to wide fluctuations.

Securities markets worldwide experience significant price and volume fluctuations.

8 unchanged sentences

The amount of any future dividends that we will pay, if any, will depend upon a number of factors.

Future dividends will be declared and paid at the sole discretion of the Board of Directors and will depend upon such factors as cash flow generated by operations, profitability, financial condition, cash requirements, prospects, and other factors deemed relevant by our Board of Directors.

Future dividends will be declared and paid at the sole discretion of the Board of Directors and will depend upon such factors as cash flow generated by operations, profitability, financial condition, cash requirements, potential dilution related to our dividend reinvestment plan, prospects, and other factors deemed relevant by our Board of Directors.

The right of our Board of Directors to declare dividends, however, is subject to the availability of sufficient funds under Florida law to pay dividends.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors