Watsco says various industry catalysts are influencing marketplace

The company said, “Various industry catalysts are influencing Watsco’s marketplace. The Company believes its scale, entrepreneurial culture, OEM relationships, leading technologies and financial strength provide important competitive advantages to optimize the opportunities provided by these catalysts. Regulatory Changes. In response to climate change, the Federal government and various states have enacted laws and regulations, including tax credits, to incentivize the replacement of aging HVAC systems with more energy-efficient and environmentally friendly systems. New efficiency standards became effective January 1, 2023 that raised the minimum required efficiency for HVAC systems nationwide. In addition, regulations went into effect on January 1, 2024 mandating a 30% phase down in the manufacture of refrigerants used in older HVAC systems and a transition to new HVAC systems that contain lower-GWP refrigerants. Watsco has historically benefited from these regulatory changes as contractors and end users transition to the new systems. Electrification and Transition to Heat Pumps. The movement toward electrification of heating systems, utilizing heat pumps in lieu of gas furnaces and other forms of fossil-fuel heating, is also an important trend. The operating characteristics of heat pumps have improved such that they are now effective substitutes for many of the millions of fossil fuel-burning heating systems used throughout North America. Sales of heat pumps in 2023 once again outpaced the growth rates for conventional fossil-fuel heating systems. Watsco sold over 700,000 heat pump units across 25+ different brands during 2023. Growth of Ductless HVAC Systems. The growing acceptance of ductless HVAC products by both contractors and end-market users benefits Watsco, as we are among the leading distributors of ductless HVAC products used in both residential and commercial applications. Sales of ductless products across Watsco grew 12% in 2023.”