SEC Info - Watsco Inc. - ‘10-Q’ for 6/30/22

Watsco Inc. – ‘10-Q’ for 6/30/22

Watsco Inc. – ‘10-Q’ for 6/30/22

On: Thursday, 8/4/22, at 4:08pm ET · For: 6/30/22 · Accession #: 1193125-22-212504 · File #: 1-05581

Previous ‘10-Q’: ‘10-Q’ on 5/5/22 for 3/31/22 · Next: ‘10-Q’ on 11/3/22 for 9/30/22 · Latest: ‘10-Q’ on 11/3/23 for 9/30/23

Quarterly Report — Form 10-Q

Filing Table of Contents

‘10-Q’ — Quarterly Report

Document Table of Contents

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

On: Thursday, 8/4/22, at 4:08pm ET · For: 6/30/22 · Accession #: 1193125-22-212504 · File #: 1-05581

Previous ‘10-Q’: ‘10-Q’ on 5/5/22 for 3/31/22 · Next: ‘10-Q’ on 11/3/22 for 9/30/22 · Latest: ‘10-Q’ on 11/3/23 for 9/30/23

Quarterly Report — Form 10-QFiling Table of Contents

‘10-Q’ — Quarterly ReportDocument Table of Contents

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

Quarterly Report — Form 10-Q

Filing Table of Contents

‘10-Q’ — Quarterly Report

Document Table of Contents

Page	(sequential)		(alphabetic)	↑Top
		Alternative Formats (Word, et al.) Condensed Consolidated Unaudited Balance Sheets -- June 30, 2022 and December 31, 2021 Condensed Consolidated Unaudited Financial Statements Condensed Consolidated Unaudited Statements of Cash Flows -- Six Months Ended June 30, 2022 and 2021 Condensed Consolidated Unaudited Statements of Comprehensive Income -- Quarters and Six Months Ended June 30, 2022 and 2021 Condensed Consolidated Unaudited Statements of Income -- Quarters and Six Months Ended June 30, 2022 and 2021 Condensed Consolidated Unaudited Statements of Shareholders' Equity -- Quarters and Six Months Ended June 30, 2022 and 2021 Controls and Procedures Exhibits June 30, 2022 and December 31, 2021 Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Notes to Condensed Consolidated Unaudited Financial Statements Part I. Financial Information Part Ii. Other Information Quantitative and Qualitative Disclosures about Market Risk Quarters and Six Months Ended June 30, 2022 and 2021 Risk Factors Signature Six Months Ended June 30, 2022 and 2021 Table of Contents Unregistered Sales of Equity Securities and Use of Proceeds
1	1st Page – Filing Submission
"	Table of Contents
"	Part I. Financial Information
"	Condensed Consolidated Unaudited Financial Statements
"	Condensed Consolidated Unaudited Statements of Income -- Quarters and Six Months Ended June 30, 2022 and 2021
"	Condensed Consolidated Unaudited Statements of Comprehensive Income -- Quarters and Six Months Ended June 30, 2022 and 2021
"	Condensed Consolidated Unaudited Balance Sheets -- June 30, 2022 and December 31, 2021
"	Condensed Consolidated Unaudited Statements of Shareholders' Equity -- Quarters and Six Months Ended June 30, 2022 and 2021
"	Condensed Consolidated Unaudited Statements of Cash Flows -- Six Months Ended June 30, 2022 and 2021
"	Notes to Condensed Consolidated Unaudited Financial Statements
"	Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Quantitative and Qualitative Disclosures about Market Risk
"	Controls and Procedures
"	Part Ii. Other Information
"	Legal Proceedings
"	Risk Factors
"	Unregistered Sales of Equity Securities and Use of Proceeds
"	Exhibits
"	Signature

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wso:Location wso:Entity

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

i 10-Q

i ☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Perio

Ended i June 30, i 2022 /

i ☐	Transition Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition Period From

Commission file number

i 1-5581

I.R.S. Employer Identification Number

i 59-0778222

i WATSCO, INC.

(a i Florida

Corporation)

i 2665 South Bayshore Drive, i Suite 901

i Miami, i Florida i 33133

Telephone:

( i 305) i 714-4100

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
i Common stock, $0.50 par value	i WSO	i New York Stock Exchange
i Class B common stock, $0.50 par value	i WSOB	i New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. i Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). i Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act). Yes ☐ No i ☒

The registrant’s common stock outstanding as of August 1, 2022 comprised (i) i 33,206,880 shares of Common stock, $0.50 par value per share, excluding 4,823,988 treasury shares and (ii) i 5,785,409 shares of Class B common stock, $0.50 par value per share, excluding 48,263 treasury

shares.

Table of Contents

WATSCO, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM

10-Q

TABLE OF CONTENTS


		Page No.

PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Unaudited Financial Statements

	Condensed Consolidated Unaudited Statements of Income – Quarters and Six Months Ended June 30, 2022 and 2021		3

	Condensed Consolidated Unaudited Statements of Comprehensive Income – Quarters and Six Months Ended June 30, 2022 and 2021		4

	Condensed Consolidated Unaudited Balance Sheets – June 30, 2022 and December 31, 2021		5

	Condensed Consolidated Unaudited Statements of Shareholders’ Equity – Quarters and Six Months Ended June 30, 2022 and 2021		6

	Condensed Consolidated Unaudited Statements of Cash Flows – Six Months Ended June 30, 2022 and 2021		8

	Notes to Condensed Consolidated Unaudited Financial Statements		9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		23

Item 4.	Controls and Procedures		23

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		23

Item 1A.	Risk Factors		23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		23

Item 6.	Exhibits		24

SIGNATURE			25

EXHIBITS

2 of 25

Table of Contents

WATSCO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED UNAUDITED STATEMENTS O

SHAREHOLDERS’ EQUITY

(In thousands, except share and per share

data)

Common Stock,
Class B
Common Stock
and Preferred
Stock Shares

Common Stock,
Class B
Common Stock
and Preferred
Stock Amount

Paid-In

Capital

Accumulated
Other
Comprehensive
Loss

Retained
Earnings

Treasury
Stock

Non-

controlling

Interest

Total

Balance at December 31, 2021

i 38,799,632

i 21,836

i 1,003,932

( i 34,176

)

i 760,796

( i 87,440

)

i 332,467

i 1,997,415

Net income

i 113,298

i 21,592

i 134,890

Other comprehensive income

i 2,935

i 1,446

i 4,381

Issuances of

non-vested

restricted shares of common stock

i 105,882

i 53

( i 53

)

—

Common stock contribution to 401(k) plan

i 21,532

i 11

i 6,726

i 6,737

Stock issuances from exercise of stock options and employee stock purchase plan

i 24,850

i 12

i 4,408

i 4,420

Share-based compensation

i 8,667

Cash dividends declared and paid on Common and Class B common stock, $ i 1.95 per share

( i 75,795

)

( i 75,795

)

Balance at March 31, 2022

i 38,951,896

i 21,912

i 1,023,680

( i 31,241

)

i 798,299

( i 87,440

)

i 355,505

i 2,080,715

Net income

i 192,557

i 32,949

i 225,506

Other comprehensive (loss)

( i 6,265

)

( i 3,116

)

( i 9,381

)

Issuances of

non-vested

restricted shares of common stock

i 21,177

i 11

( i 11

)

—

Forfeitures of

non-vested

restricted shares of common stock

( i 10,000

)

( i 5

)

i 5

—

Common stock contribution to 401(k) plan

i 28

i —

i 9

Stock issuances from exercise of stock options and employee stock purchase plan

i 21,939

i 11

i 3,796

i 3,807

Retirement of common stock

( i 8,181

)

( i 4

)

( i 2,175

)

( i 2,179

)

Share-based compensation

i 6,987

Cash dividends declared and paid on Common and Class B common stock, $ i 2.20 per share

( i 85,689

)

( i 85,689

)

Balance at June 30, 2022

i 38,976,859

i 21,925

i 1,032,291

( i 37,506

)

i 905,167

( i 87,440

)

i 385,338

i 2,219,775

Continued on next page.

6 of 25

Table of Contents

(

In thousands, except share and per share

data)

Common Stock,
Class B

Common Stock
and Preferred
Stock Shares

Common Stock,
Class B
Common Stock
and Preferred
Stock Amount

Paid-In

Capital

Accumulated

Other

Comprehensive

Loss

Retained

Earnings

Treasury

Stock

Non-

controlling

Interest

Total

Balance at December 31, 2020

i 38,521,694

i 21,697

i 950,915

( i 34,867

)

i 636,373

( i 87,440

)

i 293,083

i 1,779,761

Net income

i 55,092

i 11,035

i 66,127

Other comprehensive income

i 2,474

i 1,302

i 3,776

Issuances of

non-vested

restricted shares of common stock

i 121,934

i 61

( i 61

)

—

Forfeitures of

non-vested

restricted shares of common stock

( i 43,000

)

( i 21

)

i 21

—

Common stock contribution to 401(k) plan

i 22,752

i 11

i 5,143

i 5,154

Stock issuances from exercise of stock options and employee stock purchase plan

i 24,735

i 12

i 3,862

i 3,874

Share-based compensation

i 6,656

Cash dividends declared and paid on Common and Class B common stock, $ i 1.775 per share

( i 68,521

)

( i 68,521

)

Balance at March 31, 2021

i 38,648,115

i 21,760

i 966,536

( i 32,393

)

i 622,944

( i 87,440

)

i 305,420

i 1,796,827

Net income

i 144,102

i 28,031

i 172,133

Other comprehensive income

i 2,649

i 1,339

i 3,988

Issuances of

non-vested

restricted shares of common stock

i 44,881

i 22

( i 22

)

—

Forfeitures of

non-vested

restricted shares of common stock

( i 7,589

)

( i 4

)

i 4

—

Stock issuances from exercise of stock options and employee stock purchase plan

i 34,311

i 18

i 5,658

i 5,676

Retirement of common stock

( i 2,965

)

( i 1

)

( i 862

)

( i 863

)

Share-based compensation

i 5,569

Common stock issued for Acme Refrigeration of Baton Rouge LLC

i 8,492

i 4

i 2,547

i 2,551

Investment in TEC Distribution LLC

i 21,040

Cash dividends declared and paid on Common and Class B common stock, $ i 1.95 per share

( i 75,388

)

( i 75,388

)

Balance at June 30, 2021

i 38,725,245

i 21,799

i 979,430

( i 29,744

)

i 691,658

( i 87,440

)

i 355,830

i 1,931,533

See accompanying notes to condensed consolidated unaudited financial statements.

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WATSCO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

June 30, 2022

(In thousands, except share and per share data)

1.	BASIS OF PRESENTATION

Basis of Consolidation

Watsco, Inc. (collectively with its subsidiaries, “Watsco,” “we,” “us,” or “our”) was incorporated in Florida in 1956 and is the largest distributor of air conditioning, heating and refrigeration equipment and related parts and supplies (“HVAC/R”) in the HVAC/R distribution industry in North America. The accompanying June 30, 2022 interim condensed consolidated unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, but we believe the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation have been included in the condensed consolidated unaudited financial statements included herein. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2021 Annual Report on Form

10-K.

The condensed consolidated unaudited financial statements include the accounts of Watsco, all of its wholly owned subsidiaries, the accounts of i four joint ventures with Carrier Global Corporation, which we refer to as Carrier, the accounts of Carrier InterAmerica Corporation, of which we have an 80% controlling interest, and Carrier has a 20%

non-controlling

interest, and our 38.1% investment in Russell Sigler, Inc., which is accounted for under the equity method of accounting. All significant intercompany balances and transactions have been eliminated in consolidation.

The results of operations for the quarter and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022. Sales of residential central air conditioners, heating equipment, and parts and supplies are seasonal. Furthermore, profitability can be impacted favorably or unfavorably based on weather patterns, particularly during the Summer and Winter selling seasons. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the first and fourth quarters. Demand related to the new construction sectors throughout most of the markets we serve tends to be fairly evenly distributed throughout the year and depends largely on housing completions and related weather and economic conditions.

/ i

Equity Method Investments

Investments in which we have the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting and are included in investment in unconsolidated entity in our condensed consolidated unaudited balance sheets. Under this method of accounting, our proportionate share of the net income or loss of the investee is included in other income in our condensed consolidated unaudited statements of income. The excess, if any, of the carrying amount of our investment over our ownership percentage in the underlying net assets of the investee is attributed to certain fair value adjustments with the remaining portion recognized as goodwill.

Use of Estimates

The preparation of condensed consolidated unaudited financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated unaudited financial statements and the reported amounts of revenues and expenses for the reporting period. Significant estimates include valuation reserves for accounts receivable, net realizable value adjustments to inventories, income taxes, reserves related to loss contingencies and the valuation of goodwill, indefinite-lived intangible assets and long-lived assets. While we believe that these estimates are reasonable, actual results could differ from such estimates.

Impact of

COVID-19

Pandemic

Since

COVID-19

was declared a pandemic in March 2020, it has impacted our operations and the operations of our customers and suppliers. Although we learned to navigate

COVID-19

while maintaining our operations in all material respects, the pandemic continued to impact our business and operating results throughout 2020 and into 2021. However, as economic activity has been recovering and the effects of the pandemic have continued to lessen, the impact of the pandemic on our business has been more reflective of greater economic and marketplace dynamics, which include supply chain disruptions and labor shortages, rather than pandemic-related issues such as quarantines, location closures, mandated restrictions, employee illnesses, and travel restrictions. The extent to which the

COVID-19

pandemic impacts our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, potential subsequent waves of

COVID-19

infection or potential new variants, the effectiveness and adoption of

COVID-19

vaccines and therapeutics, the ultimate duration and scope of the pandemic, its impact on our employees, customers and suppliers, the broader implications of the macro-economic recovery on our business, and the extent to which normal economic and operating conditions are impacted. Therefore, we cannot reasonably estimate the future impact of the

COVID-19

pandemic at this time.

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2. REVENUES

Disaggregation of Revenues

The following table presents our revenues disaggregated by primary geographical regions and major product lines within our single reporting segment:


	Quarter Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Primary Geographical Regions:
United States	$	i 1,934,435		$	i 1,665,253		$	i 3,305,775		$	i 2,676,519
Canada		i 113,159			i 113,880			i 202,582			i 188,372
Latin America and the Caribbean		i 86,161			i 70,507			i 148,968			i 120,867

	$	i 2,133,755		$	i 1,849,640		$	i 3,657,325		$	i 2,985,758

Major Product Lines:
HVAC equipment		i 70	%		i 71	%		i 69	%		i 69	%
Other HVAC products		i 26	%		i 26	%		i 28	%		i 28	%
Commercial refrigeration products		i 4	%		i 3	%		i 3	%		i 3	%

		i 100	%		i 100	%		i 100	%		i 100	%

/ /

3.	EARNINGS PER SHARE

The following table presents the calculation of basic and diluted earnings per share for our Common and Class B common stock:

Quarter Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

Basic Earnings per Share:

Net income attributable to Watsco, Inc. shareholders

i 192,557

i 144,102

i 305,855

i 199,194

Less: distributed and undistributed earnings allocated to

non-vested

restricted common stock

i 17,600

i 12,779

i 27,902

i 17,618

Earnings allocated to Watsco, Inc. shareholders

i 174,957

i 131,323

i 277,953

i 181,576

Weighted-average common shares outstanding - Basic

i 35,403,171

i 35,228,061

i 35,376,223

i 35,203,925

Basic earnings per share for Common and Class B common stock

i 4.94

i 3.73

i 7.86

i 5.16

Allocation of earnings for Basic:

Common stock

i 162,229

i 121,745

i 257,716

i 168,324

Class B common stock

i 12,728

i 9,578

i 20,237

i 13,252

i 174,957

i 131,323

i 277,953

i 181,576

Diluted Earnings per Share:

Net income attributable to Watsco, Inc. shareholders

i 192,557

i 144,102

i 305,855

i 199,194

Less: distributed and undistributed earnings allocated to

non-vested

restricted common stock

i 17,570

i 12,748

i 27,856

i 17,596

Earnings allocated to Watsco, Inc. shareholders

i 174,987

i 131,354

i 277,999

i 181,598

Weighted-average common shares outstanding - Basic

i 35,403,171

i 35,228,061

i 35,376,223

i 35,203,925

Effect of dilutive stock options

i 117,992

i 199,657

i 136,595

i 175,121

Weighted-average common shares outstanding - Diluted

i 35,521,163

i 35,427,718

i 35,512,818

i 35,379,046

Diluted earnings per share for Common and Class B
common stock

i 4.93

i 3.71

i 7.83

i 5.13

Anti-dilutive stock options not included above

i 185,872

i 10,907

i 167,441

i 7,144

/ /

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Diluted earnings per share for our Common stock assumes the conversion of all of our Class B common stock into Common stock as of the beginning of the fiscal year; therefore, no allocation of earnings to Class B common stock is required. At June 30, 2022 and 2021, our outstanding Class B common stock was convertible into i 2,575,604 and i 2,569,236 shares of our Common stock, respectively.

4.	OTHER COMPREHENSIVE (LOSS) INCOME

Other comprehensive (loss) income consists of the foreign currency translation adjustment associated with our Canadian operations’ use of the Canadian dollar as their functional currency and changes in the unrealized (losses) gains on cash flow hedging instruments. i The tax effects allocated to each component of other comprehensive (loss) income were as follows:

Quarter Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

Foreign currency translation adjustment

( i 9,381

)

i 4,016

( i 5,000

)

i 7,473

Unrealized (loss) gain on cash flow hedging instruments

i —

( i 6

)

i —

i 97

Income tax expense

i —

( i 27

)

Unrealized (loss) gain on cash flow hedging instruments, net of tax

i —

( i 6

)

i —

i 70

Reclassification of (gain) loss on cash flow hedging instruments into earnings

i —

( i 28

)

i —

i 305

Income tax expense (benefit)

i —

i 6

i —

( i 84

)

Reclassification of (gain) loss on cash flow hedging instruments into earnings, net of tax

i —

( i 22

)

i —

i 221

Other comprehensive (loss) income

( i 9,381

)

i 3,988

( i 5,000

)

i 7,764

The changes in each component of accumulated other comprehensive loss, net of tax, were as follows:


Six Months Ended June 30,	2022			2021
Foreign currency translation adjustment:
Beginning balance	$	( i 34,176	)	$	( i 34,694	)
Current period other comprehensive (loss) income		( i 3,330	)		i 4,948

Ending balance		( i 37,506	)		( i 29,746	)

Cash flow hedging instruments:
Beginning balance		i —			( i 173	)
Current period other comprehensive income		i —			i 43
Reclassification adjustment		i —			i 132

Ending balance		i —			i 2

Accumulated other comprehensive loss, net of tax	$	( i 37,506	)	$	( i 29,744	)

/ /

5.	ACQUISITIONS

Makdad Industrial Supply Co., Inc.

On August 20, 2021, one of our wholly owned subsidiaries acquired Makdad Industrial Supply Co., Inc., a distributor of air conditioning and heating products operating from i six locations in Pennsylvania. Consideration for the purchase consisted of $ i 3,164 in cash and the issuance of i 3,627 shares of Common stock having a fair value of $ i 997, net of cash acquired of $ i 204. The purchase price resulted in the recognition of $ i 1,041 in goodwill and intangibles. The fair value of the identified intangible assets was $ i 596 and consisted of $ i 423 in trade names and distribution rights, and $ i 173 in customer relationships to be amortized over an

i 18-year

period. The tax basis of such goodwill is deductible for income tax purposes over i 15 years.

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Acme Refrigeration of Baton Rouge LLC

On May 7, 2021, we acquired certain assets and assumed certain liabilities of Acme Refrigeration of Baton Rouge LLC, a distributor of air conditioning, heating, and refrigeration products, operating from i 18 locations in Louisiana and Mississippi, for $ i 22,855 less certain average revolving indebtedness. We formed a new, wholly owned subsidiary, Acme Refrigeration LLC, which operates this business. Consideration for the purchase consisted of $ i 18,051 in cash, i 8,492 shares of Common stock having a fair value of $ i 2,551, and $ i 3,141 for repayment of indebtedness, net of cash acquired of $ i 1,340. The purchase price resulted in the recognition of $ i 3,710 in goodwill and intangibles. The fair value of the identified intangible assets was $ i 2,124 and consisted of $ i 1,508 in trade names and distribution rights, and $ i 616 in customer relationships to be amortized over an

i 18-year

period. The tax basis of such goodwill is deductible for income tax purposes over i 15 years.

Temperature Equipment Corporation

On April 9, 2021, we acquired certain assets and assumed certain liabilities comprising the HVAC distribution business of Temperature Equipment Corporation, an HVAC distributor operating from i 32 locations in Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri and Wisconsin. We formed a new, stand-alone joint venture with Carrier, TEC Distribution LLC (“TEC”), that operates this business. We have an i 80% controlling interest in TEC, and Carrier has a i 20%

non-controlling

interest. Consideration for the purchase was paid in cash, consisting of $ i 105,200 paid to Temperature Equipment Corporation (Carrier contributed $ i 21,040 and we contributed $ i 84,160) and $ i 1,497 for repayment of indebtedness.

The purchase price resulted in the recognition of $ i 38,624 in goodwill and intangibles. The fair value of the identified intangible assets was $ i 19,900 and consisted of $ i 15,700 in trade names and distribution rights, and $ i 4,200 in customer relationships to be amortized over an

i 18-year

period. The tax basis of such goodwill is deductible for income tax purposes over i 15 years.

The table below presents the allocation of the total consideration to tangible and intangible assets acquired and liabilities assumed from the acquisition of our 80% controlling interest in TEC based on their respective fair values as of April 9, 2021:


Accounts receivable	$	i 33,315
Inventories		i 71,325
Other current assets		i 962
Property and equipment		i 2,590
Operating lease ROU assets		i 53,829
Goodwill		i 18,724
Intangibles		i 19,900
Accounts payable		( i 25,393	)
Accrued expenses and other current liabilities		( i 20,509	)
Operating lease liabilities, net of current portion		( i 48,046	)

Total	$	i 106,697

The results of operations of these acquisitions have been included in the consolidated financial statements from their respective dates of acquisition. The pro forma effect of these acquisitions was not deemed significant to the consolidated financial statements.

6.	DERIVATIVES

We enter into foreign currency forward an

option contracts intended to offset the earnings impact that foreign exchange rate fluctuations would otherwise have on certain monetary liabilities that are denominated in nonfunctional currencies.

Cash Flow Hedging Instruments

We enter into foreign currency forward contracts that are designated as cash flow hedges. The settlement of these derivatives results in reclassifications from accumulated other comprehensive loss to earnings for the period in which the settlement of these instruments occurs. The maximum period for which we hedge our cash flow using these instruments is i 12 months. At June 30, 2022, no foreign currency forward contracts were designated as cash flow hedges.

The impact from foreign exchange derivative instruments designated as cash flow hedges was as follows:


	Quarter Ended June 30,					Six Months Ended June 30,
	2022		2021			2022		2021
(Loss) gain recorded in accumulated other comprehensive loss		i —	$	( i 6	)		i —	$	i 97
(Gain) loss reclassified from accumulated other comprehensive loss into earnings		i —	$	( i 28	)		i —	$	i 305

At June 30, 2022, i no

pre-tax

gain (loss) was expected to be reclassified into earnings related to foreign exchange hedging within the next 12 months.

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Derivatives Not Designated as Hedging Instruments

We have also entered into foreign currency forward and option contracts that are either not designated as hedges or did not qualify for hedge accounting. These derivative instruments were effective economic hedges for all of the periods presented. The fair value gains and losses on these contracts are recognized in earnings as a component of selling, general and administrative expenses. We had only one foreign currency exchange contract not designated as a hedging instrument at June 30, 2022, the total notional value of which was $ i 7,800, and such contract subsequently expired in i July 2022.

We recognized losses of $ i 52 and $ i 211 from foreign currency forward and option contracts not designated as hedging instruments in our condensed consolidated unaudited statements of income for the quarters ended June 30, 2022 and 2021, respectively. We recognized losses of $ i 375 and $ i 184 from foreign currency forward and option contracts not designated as hedging instruments in our condensed consolidated unaudited statements of income for the six months ended June 30, 2022 and 2021, respectively.

The following table summarizes the fair value of derivative instruments, which consist solely of foreign exchange contracts, included in other current assets and accrued expenses and other current liabilities in our condensed consolidated unaudited balance sheets. See Note 7.

Asset Derivatives

Liability Derivatives

Derivatives designated as hedging instruments

i —

Derivatives not designated as hedging instruments

i 12

i —

i 5

Total derivative instruments

i 12

i —

i 5

7.	FAIR VALUE MEASUREMENTS

The following tables present our assets and liabilities carried at fair value that are measured on a recurring basis:

Fair Value Measurements

at June 30, 2022 Using

Balance Sheet Location

Total

Level 1

Level 2

Level 3

Assets:

Derivative financial instruments

Other current assets

i 12

—

i 12

—

Equity securities

Other assets

i 650

—

Private equities

Other assets

i 1,000

—

i 1,000

Total

Fair Value Measurements

at December 31, 2021 Using

Balance Sheet Location

Level 1

Level 2

Level 3

Assets:

Equity securities

Other assets

i 1,790

—

Private equities

Other assets

i 1,000

—

i 1,000

Liabilities:

Derivative financial instruments

Accrued expenses and other current liabilities

i 5

—

i 5

—

The following is a description of the valuation techniques used for these assets and liabilities, as well as the level of input used to measure fair value:

Equity securities

– these investments are exchange-traded equity securities. Fair values for these investments are based on closing stock prices from active markets and are therefore classified within Level 1 of the fair value hierarchy.

Private equities

– other investment in which fair value inputs are unobservable.

Derivative financial instruments

– these derivatives are foreign currency forward and option contracts. See Note 6. Fair value is based on observable market inputs, such as forward rates in active markets; therefore, we classify these derivatives within Level 2 of the valuation hierarchy.

During the six months ended June 30, 2021, we recognized a realized gain

of $

i 3,815

recorded in our condensed consolidated unaudited statement of income attributable to the sale of certain equity securities.

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8.	SHAREHOLDERS’ EQUITY

At-the-Market

Offering Program

On August 6, 2021, we entered into a sales agreement with Robert W. Baird & Co. Inc. (“Baird”), which enables the Company to issue and sell shares of Common stock in one or more negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), for a maximum aggregate offering amount of up to $ i 300,000 (the “ATM Program”). The offer and sale of our Common stock pursuant to the ATM Program has been registered under the Securities Act pursuant to our automatically effective shelf registration statement on Form

S-3

(File

No. 333-260758).

On February 25, 2022, we entered into an amended and restated sales agreement, together with Baird and Goldman Sachs & Co. LLC (“GS”), for the purpose of adding GS as an additional sales agent and making necessary conforming changes. The amended and restated sales agreement otherwise retains all material terms of the original sales agreement.

As of June 30, 2022, i no shares of Common stock had been sold under the ATM Program.

Common Stock Dividends

We paid cash dividends of $ i 2.20, $ i 1.95, $ i 4.15, and $ i 3.725 per share of both Common stock and Class B common stock during the quarters and six months ended June 30, 2022 and 2021, respectively.

Non-Vested

Restricted Stock

During the quarter and six months ended June 30, 2022, i i 8,181 / shares of Class B common stock with an aggregate fair market value of $ i i 2,179 / were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of

non-vested

restricted stock. These shares were retired upon delivery. There were no shares of

non-vested

restricted stock that vested during the quarter and six months ended June 30, 2021.

Exercise of Stock Options

Cash received from Common stock issued as a result of stock options exercised during the quarters and six months ended June 30, 2022 and 2021, was $ i 3,267, $ i 4,377, $ i 7,222, and $ i 7,846, respectively.

During the quarter and six months ended June 30, 2021, i 2,965 shares of Common stock with an aggregate fair market value of $ i 863 were withheld as payment in lieu of cash for stock option exercises. These shares were retired upon delivery.

Employee Stock Purchase Plan

During the quarters ended June 30, 2022 and 2021, we received net proceeds of $ i 541 and $ i 436, respectively, for shares of our Common stock purchased under our employee stock purchase plan. During the six months ended June 30, 2022 and 2021, we received net proceeds of $ i 1,006 and $ i 841, respectively, for shares of our Common stock purchased under our employee stock purchase plan.

9.	COMMITMENTS AND CONTINGENCIES

Litigation, Claims and Assessments

We are involved in litigation incidental to the operation of our business. We vigorously defend all matters in which we or our subsidiaries are named defendants and, for insurable losses, maintain significant levels of insurance to protect against adverse judgments, claims or assessments that may affect us. Although the adequacy of existing insurance coverage and the outcome of any legal proceedings cannot be predicted with certainty, based on the current information available, we do not believe the ultimate liability associated with any known claims or litigation will have a material adverse effect on our financial condition or results of operations.

Self-Insurance

Self-insurance reserves are maintained relative to company-wide casualty insurance and health benefit programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the self-insurance liabilities and related reserves, management considers a number of factors, which include historical claims experience, demographic factors, severity factors, and valuations provided by independent third-party actuaries. Management reviews its assumptions with its independent third-party actuaries to evaluate whether the self-insurance reserves are adequate. If actual claims or adverse development of loss reserves occur and exceed these estimates, additional reserves may be required. Reserves in the amounts of $ i 10,456 and $ i 7,253 at June 30, 2022 and December 31, 2021, respectively, were established related to such programs and are included in accrued expenses and other current liabilities in our condensed consolidated unaudited balance sheets.

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10.	RELATED PARTY TRANSACTIONS

Purchases from Carrier and its affiliates comprised i 60% and i 72% of all inventory purchases made during the quarters ended June 30, 2022 and 2021, respectively. Purchases from Carrier and its affiliates comprised i 58% and i 67% of all inventory purchases made during the six months ended June 30, 2022 and 2021, respectively. At June 30, 2022 and December 31, 2021, approximately $ i 178,000 and $ i 90,000, respectively, was payable to Carrier and its affiliates, net of receivables. We also sell HVAC products to Carrier and its affiliates. Revenues in our condensed consolidated unaudited statements of income for the quarters and six months ended June 30, 2022 and 2021 included approximately $ i 29,000, $ i 33,000, $ i 50,000, and $ i 56,000, respectively, of sales to Carrier and its affiliates. We believe these transactions are conducted on terms equivalent to an

arm’s-length

basis in the ordinary course of business.

A member of our Board of Directors is the Senior Chairman of Greenberg Traurig, P.A., which serves as our principal outside counsel for compliance and acquisition-related legal services. During the quarters and six months ended June 30, 2022 and 2021, fees to this firm for services performed were $ i 97, $ i 32, $ i 129 and $ i 98, respectively. At June 30, 2022 and December 31, 2021, $ i 6 and $ i 34, respectively, was payable to this firm.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form

10-Q

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 United States 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;

•

the continued impact of the

COVID-19

pandemic;

•

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 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 below under Impact of

COVID-19

Pandemic and Item 1A “Risk Factors” of our Annual Report on Form

10-K

for the year ended December 31, 2021, 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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The following information should be read in conjunction with the condensed consolidated unaudited financial statements, including the notes thereto, included under Part I, Item 1 of this Quarterly Report on Form

10-Q.

In addition, reference should be made to our audited consolidated financial statements and notes thereto, and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form

10-K

for the year ended December 31, 2021.

Company Overview

Watsco, Inc. was incorporated in Florida in 1956, and, together with its subsidiaries (collectively, “Watsco,” or “we,” “us,” or “our”) is the largest distributor of air conditioning, heating, and refrigeration equipment, and related parts and supplies (“HVAC/R”) in the HVAC/R distribution industry in North America. At June 30, 2022, we operated from 673 locations in 42 U.S. States, Canada, Mexico, and Puerto Rico with additional market coverage on an export basis to portions of Latin America and the Caribbean.

Revenues primarily consist of sales of air conditioning, heating, and refrigeration equipment, and related parts and supplies. Selling, general and administrative expenses primarily consist of selling expenses, the largest components of which are salaries, commissions, and marketing expenses that are variable and correlate to changes in sales. Other significant selling, general and administrative expenses relate to the operation of warehouse facilities, including a fleet of trucks and forklifts, and facility rent, a majority of which we operate under

non-cancelable

operating leases.

Sales of residential central air conditioners, heating equipment, and parts and supplies are seasonal. Furthermore, profitability can be impacted favorably or unfavorably based on weather patterns, particularly during the Summer and Winter selling seasons. Demand related to the residential central air conditioning replacement market is typically highest in the second and third quarters, and demand for heating equipment is usually highest in the first and fourth quarters. Demand related to the new construction sectors throughout most of the markets we serve tends to be fairly evenly distributed throughout the year and depends largely on housing completions and related weather and economic conditions.

Impact of the

COVID-19

Pandemic

The

COVID-19

pandemic has had widespread, rapidly-evolving and unpredictable impacts on financial markets and business practices. As conditions have continued to improve, governments and organizations have responded by adjusting their restrictions and guidelines accordingly. Although we have learned to navigate

COVID-19

while maintaining our operations in all material respects, our focus remains on promoting employee health and safety, serving our customers and ensuring business continuity.

As economic activity has been recovering and the effects of the pandemic have continued to lessen, the impact of the pandemic on our business has been more reflective of greater economic and marketplace dynamics rather than pandemic-related issues, such as location closures, mandated restrictions and employee illness. Certain of our manufacturers and suppliers continue to experience some level of supply chain disruptions caused by component availability, labor shortages, transportation delays, and other logistical challenges, resulting in longer lead times and constrained availability of HVAC/R products. These supply chain disruptions impacted our ability to fulfill contractor demand at various points during the first half of 2022. Despite these disruptions, we experienced growth in sales of residential units during the first half of 2022. We intend to continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders.

Climate Change and Reductions in CO

e Emissions

We believe that our business plays an important and significant role in the drive to lower CO

e emissions. According to the United States Department of Energy, heating and air conditioning accounts for roughly half of household energy consumption in the United States. As such, replacing older, less efficient HVAC systems with higher efficiency systems is one of the most meaningful steps homeowners can take to reduce their electricity costs and carbon footprint.

The overwhelming majority of new HVAC systems that we sell replace systems that likely operate below current minimum efficiency standards in the United States and may use more harmful refrigerants that have been, or are being,

phased-out. As

consumers replace HVAC systems with new, higher-efficiency systems, homeowners will consume less energy, save costs and reduce their carbon footprint.

The sale of high-efficiency systems has long been a focus of ours, and we have invested in tools and technology intended to capture an increasingly richer sales mix over time. In addition, regulatory mandates will periodically increase the required minimum Seasonal Energy Efficiency Ratio rating, referred to as SEER, thus providing a catalyst for greater sales of higher-efficiency systems. Recently enacted regulations will increase the current minimum SEER beginning in 2023 (in general terms, to 14 SEER from 13 SEER in the Northern U.S. and to 15 SEER from 14 SEER for the Southern U.S.).

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Table of Contents

We offer a broad variety of systems that operate above the minimum SEER standards, ranging from base-level efficiency to systems that exceed 20 SEER. Our sales of higher-efficiency residential HVAC systems (those above base-level efficiency) grew 22% organically during the first half of 2022, outpacing the overall growth rate of 20% for residential HVAC equipment in the United States. Based on estimates validated by independent sources, we averted an estimated 12.9 million metric tons of CO

e emissions during the period January 1, 2020 to June 30, 2022 through the sale of replacement residential HVAC systems at higher-efficiency standards.

Joint Ventures with Carrier Global Corporation

In 2009, we formed a joint venture with Carrier, which we refer to as Carrier Enterprise I, in which Carrier contributed company-owned locations in the Sun Belt states and Puerto Rico, and its export division in Miami, Florida, and we contributed certain locations that distributed Carrier products. We have an 80% controlling interest in Carrier Enterprise I, and Carrier has a 20%

non-controlling

interest. The export division, Carrier InterAmerica Corporation, redomesticated from the U.S. Virgin Islands to Delaware effective December 31, 2019, following which Carrier InterAmerica Corporation became a separate operating entity in which we have an 80% controlling interest and Carrier has a 20%

non-controlling

interest. On August 1, 2019, Carrier Enterprise I acquired substantially all of the HVAC assets and assumed certain of the liabilities of Peirce-Phelps, Inc., an HVAC distributor operating in Pennsylvania, New Jersey, and Delaware.

In 2011, we formed a second joint venture with Carrier, which we refer to as Carrier Enterprise II, in which Carrier contributed company-owned locations in the Northeast U.S., and we contributed certain locations operating as Homans Associates LLC (“Homans”), a Watsco subsidiary, in the Northeast U.S. Subsequently, Carrier Enterprise II purchased Carrier’s distribution operations in Mexico. We have an 80% controlling interest in Carrier Enterprise II, and Carrier has a 20%

non-controlling

interest. Effective May 31, 2019, we repurchased the 20% ownership interest in Homans from Carrier Enterprise II, following which we own 100% of Homans. Homans previously operated as a division of Carrier Enterprise II and subsequent to the purchase operates as a wholly owned subsidiary of the Company.

In 2012, we formed a third joint venture with Carrier, which we refer to as Carrier Enterprise III. Carrier contributed 35 of its company-owned locations in Canada to Carrier Enterprise III. We have a 60% controlling interest in Carrier Enterprise III, and Carrier has a 40%

non-controlling

interest.

On April 9, 2021, we acquired certain assets and assumed certain liabilities comprising the HVAC distribution business of Temperature Equipment Corporation, an HVAC distributor operating from 32 locations in Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri and Wisconsin. We formed a new, stand-alone joint venture with Carrier, TEC Distribution LLC (“TEC”), that operates this business. We have an 80% controlling interest in TEC, and Carrier has a 20%

non-controlling

interest.

Critical Accounting Estimates

Management’s discussion and analysis of financial condition and results of operations is based upon the condensed consolidated unaudited financial statements included in this Quarterly Report on Form

10-Q,

which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these condensed consolidated unaudited financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated unaudited financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results may differ from these estimates under different assumptions or conditions. At least quarterly, management reevaluates its judgments and estimates, which are based on historical experience, current trends, and various other assumptions that are believed to be reasonable under the circumstances.

Our critical accounting estimates are included in our 2021 Annual Report on Form

10-K,

as filed with the SEC on February 25, 2022. We believe that there have been no significant changes during the quarter ended June 30, 2022 to the critical accounting estimates disclosed in our Annual Report on Form

10-K

for the year ended December 31, 2021.

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Results of Operations

The following table summarizes information derived from our condensed consolidated unaudited statements of income, expressed as a percentage of revenues, for the quarters and six months ended June 30, 2022 and 2021:


	Quarter Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Revenues		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		72.1			74.2			71.4			74.1

Gross profit		27.9			25.8			28.6			25.9
Selling, general and administrative expenses		14.8			14.4			16.4			16.2
Other income		0.3			0.3			0.3			0.3

Operating income		13.5			11.7			12.5			10.0
Interest expense, net		0.1			0.0			0.0			0.0

Income before income taxes		13.4			11.7			12.5			10.0
Income taxes		2.8			2.4			2.6			2.0

Net income		10.6			9.3			9.9			8.0
Less: net income attributable to non-controlling interest		1.5			1.5			1.5			1.3

Net income attributable to Watsco, Inc.		9.0	%		7.8	%		8.4	%		6.7	%

Note: Due to rounding, percentages may not add up to 100.

The following narratives reflect our acquisitions of Makdad Industrial Supply Co., Inc. (“MIS”) in August 2021, Acme Refrigeration of Baton Rouge LLC (“ACME”) in May 2021, and Temperature Equipment Corporation in April 2021. We did not acquire any businesses during the quarter or six months ended June 30, 2022.

In the following narratives, computations and other information referring to “same-store basis” exclude the effects of locations closed, acquired, or locations opened, in each case during the immediately preceding 12 months, unless such locations are within close geographical proximity to existing locations. At June 30, 2022 and 2021, nine and one locations, respectively, that we opened during the immediately preceding 12 months were near existing locations and were therefore included in “same-store basis” information.

The table below summarizes the changes in our locations for the 12 months ended June 30, 2022:


	Number of Locations
June 30, 2021		655
Opened		16
Acquired		6
Closed		(6	)

December 31, 2021		671
Opened		7
Closed		(5	)

June 30, 2022		673

Second Quarter of 2022 Compared to Second Quarter of 2021

Revenues

Revenues for the second quarter of 2022 increased $284.1 million, or 15%, as compared to the second quarter of 2021, including $11.2 million attributable to the new locations acquired and $14.3 million from other locations opened during the preceding 12 months, offset by $5.2 million from locations closed. Sales of HVAC equipment (70% of sales) increased 19%, sales of other HVAC products (26% of sales) increased 23% and sales of commercial refrigeration products (4% of sales) increased 26%. On a same-store basis, revenues increased $263.8 million, or 14%, as compared to the same period in 2021, reflecting a 13% increase in sales of HVAC equipment (70% of sales), which included a 14% increase in sales of residential HVAC equipment (15% increase in U.S. markets) and a 5% increase in sales of commercial HVAC equipment, a 15% increase in sales of other HVAC products (26% of sales) and a 26% increase in sales of commercial refrigeration products (4% of sales). For HVAC equipment, the increase in revenues was primarily due to the realization of price increases and a higher mix of high-efficiency air conditioning and heating systems, which sell at higher unit prices, resulting in a 16% increase in the average selling price and a 1% decrease in volume, as well as higher sales of commercial HVAC equipment.

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Gross Profit

Gross profit for the second quarter of 2022 increased $117.6 million, or 25%, as compared to the second quarter of 2021, primarily as a result of increased revenues. Gross profit margin for the quarter ended June 30, 2022 improved 210 basis-points to 27.9% versus 25.8% for the same period in 2021, primarily due to the benefits of our use of technologies designed to optimize pricing and margins, passing on price increases from our suppliers to our customers, and an improved sales mix of higher-efficiency HVAC systems.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the second quarter of 2022 increased $48.1 million, or 18%, as compared to the second quarter of 2021, primarily due to increased revenues. Selling, general and administrative expenses as a percent of revenues for the second quarter of 2022 increased to 14.8% versus 14.4% for the same period in 2021. On a same-store basis, selling, general and administrative expenses increased 17% as compared to the same period in 2021, primarily due to increased higher variable selling costs driven by the increase in revenues, investments in headcount, and new locations opened in 2022.

Other Income

Other income of $6.3 million and $5.5 million for the second quarters of 2022 and 2021, respectively, represented our share of the net income of Russell Sigler, Inc. (“RSI”), in which we have a 38.1% equity interest.

Interest Expense, Net

Interest expense, net for the second quarter of 2022 increased $0.7 million, or 148%, primarily as a result of an increase in average outstanding borrowings and a higher effective interest rate, in each case under our revolving credit facility, as compared to the same period in 2021.

Income Taxes

Income taxes increased to $60.5 million for the second quarter of 2022, as compared to $44.2 million for the second quarter of 2021, and represent a composite of the income taxes attributable to our wholly owned operations and income taxes attributable to the Carrier joint ventures, which are primarily taxed as partnerships for income tax purposes; therefore, Carrier is responsible for its proportionate share of income taxes attributable to its share of earnings from these joint ventures. The effective income tax rates attributable to us were 23.8% and 23.4% for the quarters ended June 30, 2022 and 2021, respectively. The increase was primarily due to higher state income taxes, proportionately higher income, and lower share-based compensation deductions in the second quarter of 2022 as compared to the same period in 2021.

Net Income Attributable to Watsco, Inc.

Net income attributable to Watsco, Inc. for the quarter ended June 30, 2022 increased $48.5 million, or 34%, compared to the same period in 2021. The increase was primarily driven by higher revenues and expanded profit margins, partially offset by higher selling, general and administrative expenses, income taxes, and an increase in the net income attributable to the

non-controlling

interest.

First Half of 2022 Compared to First Half of 2021

Revenues

Revenues for the first half of 2022 increased $671.6 million, or 22%, as compared to the first half of 2021, including $102.1 million attributable to the new locations acquired and $23.9 million from other locations opened during the preceding 12 months, offset by $7.3 million from locations closed. Sales of HVAC equipment (69% of sales) increased 24%, sales of other HVAC products (28% of sales) increased 27%, and sales of commercial refrigeration products (3% of sales) increased 30%. On a same-store basis, revenues increased $552.9 million, or 19%, as compared to the same period in 2021, reflecting an 18% increase in sales of HVAC equipment (69% of sales), which included a 19% increase in sales of residential HVAC equipment (20% increase in U.S. markets) and a 15% increase in sales of commercial HVAC equipment, a 19% increase in sales of other HVAC products (27% of sales) and a 30% increase in commercial refrigeration products (4% of sales). For HVAC equipment, the increase in revenues was primarily due to the realization of price increases and a higher mix of high-efficiency air conditioning and heating systems, which sell at higher unit prices, resulting in a 17% increase in the average selling price and a 3% increase in volume, as well as higher sales of commercial HVAC equipment.

Gross Profit

Gross profit for the first half of 2022 increased $273.1 million, or 35%, as compared to the first half of 2021, primarily as a result of increased revenues. Gross profit margin for the six months ended June 30, 2022 improved 270 basis-points to 28.6% versus 25.9% for the same period in 2021, primarily due to the benefits of our use of technologies designed to optimize pricing and margins, passing on price increases from our suppliers to our customers, and an improved sales mix of higher-efficiency HVAC systems.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses for the first half of 2022 increased $113.8 million, or 23%, as compared to the first half of 2021, primarily due to increased revenues from existing and newly acquired locations. Selling, general and administrative expenses as a percentage of revenues for the six months ended June 30, 2022 increased to 16.4% versus 16.2% for the same period in 2021. On a same-store basis, selling, general and administrative expenses increased 18% as compared to the same period in 2021, primarily due to increased higher variable selling costs driven by the increase in revenues, investments in headcount, and new locations opened in 2022.

Other Income

Other income of $10.4 million and $10.2 million for the first half of 2022 and 2021, respectively, represented our share of the net income of RSI, in which we have a 38.1% equity interest.

Interest Expense, Net

Interest expense, net for the first half of 2022 increased $1.1 million, or 211%, primarily as a result of an increase in average outstanding borrowings under our revolving credit facility as compared to the same period in 2021.

Income Taxes

Income taxes increased to $96.1 million for the first half of 2022, as compared to $59.9 million for the first half of 2021 and represent a composite of the income taxes attributable to our wholly owned operations and income taxes attributable to the Carrier joint ventures, which are primarily taxed as partnerships for income tax purposes; therefore, Carrier is responsible for its proportionate share of income taxes attributable to its share of earnings from these joint ventures. The effective income tax rates attributable to us were 23.8% and 23.0% for the first half of 2022 and 2021, respectively. The increase was primarily due to higher state income taxes, proportionately higher income, and lower share-based compensation deductions in 2022 as compared to 2021.

Net Income Attributable to Watsco, Inc.

Net income attributable to Watsco, Inc. for the first half of 2022 increased $106.7 million, or 54%, compared to the same period in 2021. The increase was primarily driven by higher revenues and expanded profit margins, partially offset by higher selling, general and administrative expenses, income taxes, and an increase in the net income attributable to the

non-controlling

interest.

Liquidity and Capital Resources

We assess our liquidity in terms of our ability to generate cash to execute our business strategy and fund operating and investing activities, taking into consideration the seasonal demand for HVAC/R products, which peaks in the months of May through August. Significant factors that could affect our liquidity include the following:

•

cash needed to fund our business (primarily working capital requirements);

•

borrowing capacity under our revolving credit facility;

•

the ability to attract long-term capital with satisfactory terms;

•

acquisitions, including joint ventures and investments in unconsolidated entities;

•

dividend payments;

•

capital expenditures; and

•

the timing and extent of common stock repurchases.

Sources and Uses of Cash

We rely on cash flows from operations and borrowing capacity under our revolving credit agreement to fund seasonal working capital needs and for other general corporate purposes in the short-term and the long-term, including dividend payments (if and as declared by our Board of Directors), capital expenditures, business acquisitions, and development of our long-term operating and technology strategies. Additionally, we may also generate cash through the issuance and sale of our Common stock.

As of June 30, 2022, we had $129.0 million of cash and cash equivalents, of which $99.3 million was held by foreign subsidiaries. The repatriation of cash balances from our foreign subsidiaries could have adverse tax impacts or be subject to capital controls; however, these balances are generally available to fund the ordinary business operations of our foreign subsidiaries without legal restrictions.

We believe that our operating cash flows, cash on hand, funds available for borrowing under our revolving credit agreement, and funds available from sales of our Common stock under our

at-the-market

offering program, each of which is described below, will be sufficient to meet our liquidity needs for the foreseeable future. However, there can be no assurance that our current sources of available funds will be sufficient to meet our cash requirements.

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Our access to funds under our revolving credit agreement depends 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, particularly rates based on LIBOR, which is one of the base rates under our revolving credit agreement. On March 5, 2021, the United Kingdom Financial Conduct Authority, which regulates LIBOR, confirmed that LIBOR will either cease to be provided by any administrator or will no longer be representative after June 30, 2023 for USD LIBOR reference rates. Our revolving credit agreement provides that it may be amended to replace LIBOR with an alternate benchmark rate. The impact of such an amendment cannot be entirely predicted but could result in an increase in the cost of our debt. 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.

Working Capital

Working capital increased to $1,562.6 million at June 30, 2022 from $1,234.7 million at December 31, 2021, primarily due to higher levels of inventory in support of stronger business conditions, as well as deeper inventory stocking due to supply chain disruptions and increased cost of inventory due to inflation, and higher accounts receivable consistent with overall increased sales. These increases were partially offset by the timing of accounts payable and accrued liabilities.

Cash Flows

The following table summarizes our cash flow activity for the six months ended June 30, 2022 and 2021 (in millions):


	2022			2021			Change
Cash flows provided by operating activities	$	73.1		$	81.9		$	(8.8	)
Cash flows used in investing activities	$	(18.9	)	$	(131.5	)	$	112.6
Cash flows used in financing activities	$	(42.3	)	$	(1.0	)	$	(41.3	)

The individual items contributing to cash flow changes for the periods presented are detailed in the condensed consolidated unaudited statements of cash flows contained in this Quarterly Report on Form

10-Q.

Operating Activities

The decrease in net cash provided by operating activities was primarily due to increases in the level of inventory, partially offset by an increase in net income due to strong business conditions and timing of vendor payments in 2022 as compared to 2021.

Investing Activities

Net cash used in investing activities was lower in 2022 primarily due to cash consideration paid for businesses acquired in 2021.

Financing Activities

The increase in net cash used in financing activities was primarily attributable to $21.0 million in proceeds from the

non-controlling

interest for its contribution to the acquisition of TEC in 2021 and an increase in dividends paid in 2022.

Revolving Credit Agreement

We maintain an unsecured, $560.0 million syndicated multicurrency revolving credit agreement, which we use to fund seasonal working capital needs and for other general corporate purposes, including acquisitions, dividends (if and as declared by our Board of Directors), capital expenditures, stock repurchases and issuances of letters of credit. The credit facility has a seasonal component from October 1 to March 31, during which the borrowing capacity may be reduced to $460.0 million at our discretion (which effectively reduces fees payable in respect of the unused portion of the commitment), and we effected this reduction in 2021. Included in the credit facility are a $100.0 million swingline subfacility, a $10.0 million letter of credit subfacility, a $75.0 million alternative currency borrowing sublimit and an $8.0 million Mexican borrowing sublimit. The credit agreement matures on December 5, 2023.

At June 30, 2022 and December 31, 2021, $203.6 million and $89.0 million, respectively, were outstanding under the revolving credit agreement. The revolving credit agreement contains customary affirmative and negative covenants, including financial covenants with respect to consolidated leverage and interest coverage ratios, and other customary restrictions. We believe we were in compliance with all covenants at June 30, 2022.

At-the-Market

Offering Program

On August 6, 2021, we entered into a sales agreement with Robert W. Baird & Co. Inc. (“Baird”), which enables the Company to issue and sell shares of Common stock in one or more negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), for a maximum aggregate offering amount of up to $300.0 million (the “ATM Program”). The offer and sale of our Common stock pursuant to the ATM Program has been registered under the Securities Act pursuant to our automatically effective shelf registration statement on Form

S-3

(File

No. 333-260758).

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As of June 30, 2022, no shares of Common stock had been sold under the ATM Program.

Contractual Obligations

On October 15, 2022, 975,622 shares of Class B restricted stock held by our Chief Executive Officer (“CEO”) will vest. The CEO may elect to satisfy the tax withholding obligations in connection with the vesting of the restricted stock either by the Company’s withholding of shares otherwise deliverable to the CEO, or in cash, or any combination of the two. If the CEO elects to satisfy his tax withholding obligation through the Company’s withholding of shares, then we will satisfy the withholding tax obligations in cash. Based on the closing price of Watsco’s Class B common stock and withholding tax rates in effect at June 30, 2022, the estimated withholding tax obligation would have been approximately $94.0 million had the shares vested on June 30, 2022. We intend to satisfy any such withholding obligations using cash on hand or borrowing availability under our revolving credit agreement described above.

Investment in Unconsolidated Entity

Carrier Enterprise I has a 38.1% ownership interest in RSI, an HVAC distributor operating from 35 locations in the Western U.S. Our proportionate share of the net income of RSI is included in other income in our condensed consolidated unaudited statements of income.

Carrier Enterprise I is a party to a shareholders’ agreement (the “Shareholders’ Agreement”) with RSI and its shareholders. Pursuant to the Shareholders’ Agreement, RSI’s shareholders have the right to sell, and Carrier Enterprise I has the obligation to purchase, their respective shares of RSI for a purchase price determined based on either book value or a multiple of EBIT, the latter of which Carrier Enterprise I used to calculate the price paid for its investment in RSI. RSI’s shareholders may transfer their respective shares of RSI common stock only to members of the Sigler family or to Carrier Enterprise I, and, at any time from and after the date on which Carrier Enterprise I owns 85% or more of RSI’s outstanding common stock, it has the right, but not the obligation, to purchase from RSI’s shareholders the remaining outstanding shares of RSI common stock. At June 30, 2022, the estimated purchase amount we would be contingently liable for was approximately $306.0 million. We believe that our operating cash flows, cash on hand, and funds available for borrowing under our revolving credit agreement would be sufficient to purchase any additional ownership interests in RSI.

Acquisitions

On August 20, 2021, one of our wholly owned subsidiaries acquired MIS, a distributor of air conditioning and heating products operating from six locations in Pennsylvania. Consideration for the purchase consisted of $3.2 million in cash and the issuance of 3,627 shares of Common stock having a fair value of $1.0 million, net of cash acquired of $0.2 million.

On May 7, 2021, we acquired certain assets and assumed certain liabilities of ACME, a distributor of air conditioning, heating, and refrigeration products, operating from 18 locations in Louisiana and Mississippi, for $22.9 million less certain average revolving indebtedness. Consideration for the purchase consisted of $18.1 million in cash, 8,492 shares of Common stock having a fair value of $2.6 million, and $3.1 million repayment of indebtedness, net of cash acquired of $1.3 million.

On April 9, 2021, we acquired certain assets and assumed certain liabilities comprising the HVAC distribution business of Temperature Equipment Corporation, an HVAC distributor operating from 32 locations in Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri and Wisconsin. We formed a new, stand-alone joint venture with Carrier, TEC, which operates this business. We have an 80% controlling interest in TEC, and Carrier has a 20%

non-controlling

interest. Consideration for the purchase was paid in cash, consisting of $105.2 million paid to Temperature Equipment Corporation (Carrier contributed $21.0 million and we contributed $84.2 million) and $1.5 million for repayment of indebtedness.

We continually evaluate potential acquisitions and/or joint ventures and investments in unconsolidated entities. We routinely hold discussions with several acquisition candidates. Should suitable acquisition opportunities arise that would require additional financing, we believe our financial position and earnings history provide a sufficient basis for us to either obtain additional debt financing at competitive rates and on reasonable terms or raise capital through the issuance of equity securities.

Common Stock Dividends

We paid cash dividends of $4.15 and $3.725 per share of Common stock and Class B common stock during the six months ended June 30, 2022 and 2021, respectively. On July 1, 2022, our Board of Directors declared a regular quarterly cash dividend of $2.20 per share of both Common and Class B common stock that was paid on July 29, 2022 to shareholders of record as of July 15, 2022. Future dividends and/or changes in dividend rates are at the sole discretion of the Board of Directors and depend upon factors including, but not limited to, cash flow generated by operations, profitability, financial condition, cash requirements, and future prospects.

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Company Share Repurchase Program

In September 1999, our Board of Directors authorized the repurchase, at management’s discretion, of up to 7,500,000 shares of common stock in the open market or via private transactions. Shares repurchased under the program are accounted for using the cost method and result in a reduction of shareholders’ equity. We last repurchased shares under this plan in 2008. In aggregate, 6,370,913 shares of Common and Class B common stock have been repurchased at a cost of $114.4 million since the inception of the program. At June 30, 2022, there were 1,129,087 shares remaining authorized for repurchase under the program.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to the information regarding market risk provided in Item 7A, Quantitative and Qualitative Disclosures about Market Risk, of our Annual Report on Form

10-K

for the year ended December 31, 2021.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule

13a-15(e)

under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are, among other things, designed to ensure that information required to be disclosed by us under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer (“CEO”), Executive Vice President (“EVP”) and Chief Financial Officer (“CFO”), to allow for timely decisions regarding required disclosure and appropriate SEC filings.

Our management, with the participation of our CEO, EVP and CFO, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, and, based on that evaluation, our CEO, EVP and CFO concluded that our disclosure controls and procedures were effective, at a reasonable assurance level, at and as of such date.

Changes in Internal Control over Financial Reporting

We are continuously seeking to improve the efficiency and effectiveness of our operations and of our internal controls. This results in refinements to processes throughout the Company. However, there were no changes in internal controls over financial reporting (as such term is defined in Rules

13a-15(f)

and

15d-15(f)

under the Exchange Act) during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information with respect to this item may be found in Note 9 to our condensed consolidated unaudited financial statements contained in this Quarterly Report on Form

10-Q

under the caption “Litigation, Claims and Assessments,” which information is incorporated by reference in this Item 1 of Part II of this Quarterly Report on Form

10-Q.

ITEM 1A. RISK FACTORS

Information about risk factors for the quarter ended June 30, 2022 does not differ materially from that set forth in Part I, Item 1A of our Annual Report on Form

10-K

for the year ended December 31, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

On April 12, 2022, we issued 28 shares of our Common stock to our Profit Sharing Retirement Plan & Trust (the “Plan”) representing an additional employer match under the Plan for the plan year ended December 31, 2021, without registration. This issuance was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 3(a)(2) thereof. The Plan is a profit sharing retirement plan that is qualified under Section 401 of the Internal Revenue Code of 1986, as amended. The assets of the Plan are held in a single trust fund for the benefit of our employees, and the Plan does not hold assets for the benefit of the employees of any other employer. All of the contributions to the Plan from our employees have been invested in assets other than our Common stock. We have contributed all of the Common stock held by the Plan as a discretionary matching contribution, which, at the time of contribution, was lower in value than the employee contributions that the contribution matched.

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	June 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	i 129,049		$	i 118,268
Accounts receivable, net		i 983,033			i 698,456
Inventories, net		i 1,480,519			i 1,115,469
Other current assets		i 31,330			i 29,207

Total current assets		i 2,623,931			i 1,961,400
Property and equipment, net		i 119,525			i 111,019
Operating lease right-of-use assets		i 298,223			i 268,528
Goodwill		i 432,777			i 434,019
Intangible assets, net		i 183,133			i 186,896
Investment in unconsolidated entity		i 122,831			i 114,808
Other assets		i 8,172			i 9,191

	$	i 3,788,592		$	i 3,085,861

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term obligations	$	i 88,600		$	i 84,501
Accounts payable		i 625,962			i 364,185
Accrued expenses and other current liabilities		i 346,781			i 278,036

Total current liabilities		i 1,061,343			i 726,722

Long-term obligations:
Borrowings under revolving credit agreement		i 203,600			i 89,000
Operating lease liabilities, net of current portion		i 213,344			i 187,024
Finance lease liabilities, net of current portion		i 10,204			i 9,189

Total long-term obligations		i 427,148			i 285,213

Deferred income taxes and other liabilities		i 80,326			i 76,511

Commitments and contingencies		i			i
Watsco, Inc. shareholders’ equity:
Common stock, $ i i 0.50 / par value		i 19,007			i 18,941
Class B common stock, $ i i 0.50 / par value		i 2,918			i 2,895
Preferred stock, $ i i 0.50 / par value		i —			i —
Paid-in capital		i 1,032,291			i 1,003,932
Accumulated other comprehensive loss, net of tax		( i 37,506	)		( i 34,176	)
Retained earnings		i 905,167			i 760,796
Treasury stock, at cost		( i 87,440	)		( i 87,440	)

Total Watsco, Inc. shareholders’ equity		i 1,834,437			i 1,664,948
Non-controlling interest		i 385,338			i 332,467

Total shareholders’ equity		i 2,219,775			i 1,997,415

	$	i 3,788,592		$	i 3,085,861


	Six Months Ended June 30,
	2022			2021
Cash flows from operating activities:
Net income	$	i 360,396		$	i 238,260
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		i 15,376			i 13,877
Share-based compensation		i 14,961			i 12,351
Provision for doubtful accounts		i 4,139			i 465
Deferred income tax provision		i 4,098			i 2,115
Other income from investment in unconsolidated entity		( i 10,362	)		( i 10,210	)
Other, net		i 6,853			i 5,685
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable, net		( i 289,478	)		( i 283,077	)
Inventories, net		( i 366,359	)		( i 173,539	)
Accounts payable and other liabilities		i 332,217			i 282,852
Other, net		i 1,231			( i 6,897	)

Net cash provided by operating activities		i 73,072			i 81,882

Cash flows from investing activities:
Capital expenditures		( i 18,952	)		( i 11,008	)
Business acquisitions, net of cash acquired		( i 47	)		( i 126,549	)
Proceeds from sale of equity securities		i —			i 5,993
Proceeds from sale of property and equipment		i 111			i 100

Net cash used in investing activities		( i 18,888	)		( i 131,464	)

Cash flows from financing activities:
Dividends on Common and Class B common stock		( i 161,484	)		( i 143,909	)
Repurchases of common stock to satisfy employee withholding tax obligations		( i 2,179	)		i —
Net repayments of finance lease liabilities		( i 1,437	)		( i 966	)
Proceeds from non-controlling interest for investment in TEC Distribution LLC		i —			i 21,040
Net proceeds from issuances of common stock		i 8,228			i 8,687
Net proceeds under revolving credit agreement		i 114,600			i 114,167

Net cash used in financing activities		( i 42,272	)		( i 981	)

Effect of foreign exchange rate changes on cash and cash equivalents		( i 1,131	)		i 1,283

Net increase (decrease) in cash and cash equivalents		i 10,781			( i 49,280	)
Cash and cash equivalents at beginning of period		i 118,268			i 146,067

Cash and cash equivalents at end of period	$	i 129,049		$	i 96,787

Supplemental cash flow information:
Common stock issued for Acme Refrigeration of Baton Rouge LLC		—		$	i 2,551


31.1 #		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a- 15(e) and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 #		Certification of Executive Vice President pursuant to Securities Exchange Act Rules 13a-15(e) and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.3 #		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a- 15(e) and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 +		Certification of Chief Executive Officer, Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

101.INS #		Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH #		Inline XBRL Taxonomy Extension Schema Document.

101.CAL #		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF #		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB #		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE #		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL.


	WATSCO, INC.
	(Registrant)

Date: August 4, 2022	By:	/s/ *Ana M. Menendez*
		Ana M. Menendez
		Chief Financial Officer (on behalf of the Registrant and as Principal Financial Officer)

This ‘10-Q’ Filing	Date	Other Filings

	12/5/23
	6/30/23
	12/31/22
	10/15/22
Filed on:	8/4/22
	8/1/22
	7/29/22
	7/15/22
	7/1/22
For Period end:	6/30/22
	4/12/22
	3/31/22	10-Q
	2/25/22	10-K, 424B5
	12/31/21	10-K, 5
	8/20/21
	8/6/21	424B5, 8-K
	6/30/21	10-Q
	5/7/21
	4/9/21
	3/31/21	10-Q
	3/5/21
	12/31/20	10-K, 5
	1/1/20
	12/31/19	10-K, 5
	8/1/19	8-K
	5/31/19
		List all Filings

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Non-accelerated
filer

Smaller reporting company

Emerging growth company