Watsco, Inc.

Good day and welcome to the Watsco fourth quarter 2024 and year-end earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Albert and Ahmed Chairman and CEO. Please go ahead.

Good morning. This is Dr. Ernie's call. This is Dr. Ernie.

He is A.J. Named, President of Roscoe, Paul Justin, Barry Logan, and Rick Gomez. Now, before we start, our cautionary statement is always, this conference call has four booking statements as defined by SEC laws and regulations. that are made pursuant to the safe harbor provisions of these various laws. Ultimate results may differ maturely from the forward-looking statement. Now, on to the call. Roscoe had a terrific, emphasis on terrific, fourth quarter to close out a strong deal. We achieved record sales, expanded margins, improved operating efficiency, and generated record earnings and cash flow. Market conditions continue to improve, which led to a 14 percent growth in equipment sales and 16 percent growth in residential products. Our financial position is stronger than ever, and we are happy to announce today an 11 percent dividend increase to $12 per share. Looking forward, we are optimistic about our opportunities ahead of us. The transition to next-generation A2L products is well underway. The new ATL products provide the opportunity to upgrade the installed base of existing equipment to systems that are both more efficient and environmentally friendly. We estimate the transition will influence 50 to 60 percent of our sales. We are making investments to train our customers, leverage our technology advantage, and transition close to $1 billion in inventories to aggressively take advantage of this opportunity. Second, our technology platforms have gained momentum. Our community of active users of Costco mobile apps has expanded to over 64,000 users. E-commerce sales during the quarter increased 16%. at pacing overall growth rates, and that represents 35% for annual sales, which is a number of $2.6 billion in aggregate. On Call Air, our digital sales platform for contractors presented approximately 313,000 proposals to homeowners, generating $1.5 billion in gross merchandise value, a 25% increase. There is no question that our technology investments have contributed to our performance and provided us an immense competitive advantage. And the importance of these investments will only grow with time. Finally, we believe our strong financial position is also an important differentiator. We have the ability to invest in big opportunities to accelerate growth and gain market share. In January 2025, we completed our 70th acquisition since 1989. There are many great family businesses in our industry that we believe offer compelling reasons for them to join forces with us. As always, and I emphasize this, our focus is on the long term. We have a great deal more to accomplish, and we welcome any of you to visit and spend time with our team in Miami to learn more. With that, let's turn to Q&A.