Watsco recently announced the completion ofits transaction with Carrier Corp., forming its joint venture:Carrier Enterprise LLC. This venture will expand the distributor of heating, air-conditioning and refrigeration equipment and parts into Latin America and the Caribbean. Watsco’s consolidated revenues on a pro-forma basis were $3 billion in 2008.
Watsco currently operates from 505 locations in 34 states and Puerto Rico, serves over 50,000 contractor customers and has a team of more than 4,500 employees. As part of Watsco, Carrier Enterprise locations will have the opportunity to sell additional parts, supplies and other complementary accessories through its existing operating structure, leveraging existing customer relationships and costs in the HVAC distribution industry.
Carrier Enterprise will operate on a decentralized basis and continue to be led by its existing management team, a cornerstone of Watsco’s operating strategy. Carrier Enterprise’s team will be empowered to make marketing and operational decisions tailored to the particular needs of their local customers.
Albert Nahmad, Watsco's Chairman and CEO said, “This is a blockbuster event for our Company as we are almost doubling our size and scale in the marketplace. We have also substantially increased our footprint and product offerings in the U.S. Sunbelt where air conditioning is a necessity. We strongly believe that we have a distinct, competitive advantage to serve this market as demand for replacement systems normalizes in the coming years. Further, any level of recovery in the new housing market will also benefit sales and profitability.”
Entering International MarketsCarrier Enterprise will also mark Watsco’s first entry into international markets with the addition of Carrier InterAmerica Corp., and Carrier Puerto Rico, each a subsidiary of Carrier Enterprise. Together they offer a full array of air conditioning and heating equipment in parts of Latin America, the Caribbean and Puerto Rico, and offer potential to leverage their existing customer base with complementary accessories as part of Watsco. Carrier Enterprise will also significantly expand Watsco’s presence in the light commercial market for air conditioning and heating products, with an opportunity to add other ancillary light commercial accessories to the sales mix.
Watsco owns 60% of Carrier Enterprise with options to purchase an additional 20% interest from Carrier in future years. Watsco issued 3,080,469 shares of common stock to Carrier and contributed 15 locations that presently sell Carrier-manufactured products as consideration for its 60% interest. Carrier Enterprise has executed a $75 million revolving credit agreement to fund its working capital needs and growth initiatives.
Source: Watsco Inc.