Watsco (WSO) to Acquire Temperature Equipment Corporation

Watsco, Inc. (NYSE: WSO) and Carrier Global Corp. (NYSE: CARR) announced today that they have signed an agreement to acquire Temperature Equipment Corporation (TEC).

Watsco recently reported record 2020 results with over $5 billion in sales, record profits and record cash flow. TEC marks Watsco’s first entry into the U.S. Midwest.

Founded in Chicago, Illinois in 1935, TEC is one of the largest HVAC distributors in North America with sales of $291 million in 2020. TEC serves approximately 10,000 customers from 32 locations in Illinois, Indiana, Wisconsin, Kansas, Michigan, Minnesota and Missouri. Its product offering includes various brands of residential, light-commercial and applied HVAC equipment made by Carrier as well as complimentary systems, parts, supplies and accessories sourced from approximately 1,200 vendors. More information about TEC can be found at www.tecmungo.com.

TEC will operate as an independent business as an addition to the highly-successful group of joint ventures between Watsco and Carrier, a collaboration that has provided growth and value for both companies over the last several years. Watsco will own 80% of TEC and Carrier 20%. Closing of the transaction is subject to customary conditions and is expected to occur within the next 30 days.

Albert H. Nahmad, Watsco’s Chairman & Chief Executive Officer said: “TEC is one of the most iconic, entrepreneurial, long-standing family businesses in our industry. Skip Mungo and his team have built a great company and they will continue TEC’s focus on growth with their name, identity and unique culture in what will be new markets for our company. We look forward to supporting their growth with capital, ideas, technology and our industry relationships to build on their historical success. We are pleased to become part of the TEC family.”

Skip Mungo, TEC’s President & CEO said: “We are excited to become a member of the Watsco family and provide the catalyst for growth in the Midwest. Partnering with Watsco will enable us to think bigger while retaining our unique culture and approach to the market. We look forward to launching their innovative technology platforms over time to support our customers, complementing the historical capabilities and customer focus that is at the heart of TEC’s culture.”

Watsco’s Buy and Build Growth Strategy

Watsco has acquired 63 businesses since 1989, most of which were successful, multi-generation, family-owned businesses. Watsco’s “buy and build” strategy can be summarized as follows:

• Identify and partner with great businesses focused on the HVAC/R industry
• Support their leadership team and honor the culture and legacy they have created
• Ask for aggressive growth plans and help leadership achieve their ambitions
• Motivate teams and reaffirm an ownership culture with long-term equity
• Deploy the industry’s most comprehensive suite of customer-focused technologies
• Solicit and collaborate on big ideas to foster a spirit of innovation and growth
• Build a stronger Watsco because of our association with these companies

We are actively seeking additional opportunities to invest and grow through acquisitions given our relative low market share of the estimated $40 billion North American distribution marketplace for HVAC/R products.

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