0001193125-21-060167 | 10-K | XBRL Viewer

Selling, general and administrative expenses

$ 5,054,928

^[1]

$ 4,770,362

^[1]

$ 4,546,653

Cost of sales

3,832,107

3,613,406

3,426,401

Gross profit

1,222,821

1,156,956

1,120,252

833,051

800,328

757,452

Other income

11,264

10,256

9,282

Operating income

401,034

366,884

372,082

Interest expense, net

1,239

4,032

2,740

Income before income taxes

399,795

362,852

369,342

Income taxes

76,623

67,077

72,813

Net income

323,172

295,775

296,529

Less: net income attributable to non-controlling interest

53,593

49,825

53,597

Net income attributable to Watsco, Inc.

$ 269,579

$ 245,950

$ 242,932

Earnings per share for Common and Class B common stock:

Basic

$ 7.03

^[2]

$ 6.51

^[2]

$ 6.50

Diluted

$ 7.01

^[2]

$ 6.50

^[2]

$ 6.49

[1]

Sales of residential central air conditioners, heating equipment and parts and supplies are seasonal. 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 is fairly evenly distributed throughout the year except for dependence on housing completions and related weather and economic conditions.

[2]

Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year.

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Net income	$ 323,172	$ 295,775	$ 296,529
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment	6,272	12,298	(20,493)
Unrealized gain (loss) on cash flow hedging instruments	880	(1,461)	1,918
Reclassification of gain on cash flow hedging instruments into earnings	(418)	(352)	(157)
Other comprehensive income (loss)	6,734	10,485	(18,732)
Comprehensive income	329,906	306,260	277,797
Less: comprehensive income attributable to non-controlling interest	56,144	53,392	46,913
Comprehensive income attributable to Watsco, Inc.	$ 273,762	$ 252,868	$ 230,884

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income (loss) and other comprehensive income (loss), attributable to noncontrolling interests. Excludes changes in equity resulting from investments by owners and distributions to owners.

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

Amount after tax and reclassification adjustments of other comprehensive income (loss).

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 146,067	$ 74,454
Accounts receivable, net	535,288	533,810
Inventories, net	781,299	920,786
Other current assets	21,791	17,680
Total current assets	1,484,445	1,546,730
Property and equipment, net	98,225	98,523
Operating lease right-of-use assets	209,169	223,369
Goodwill	412,486	411,217
Intangible assets, net	169,929	172,004
Investment in unconsolidated entity	97,847	94,833
Other assets	12,246	9,485
Total assets	2,484,347	2,556,161
Current liabilities:
Current portion of long-term obligations	71,804	69,421
Accounts payable	251,553	239,666
Accrued expenses and other current liabilities	163,788	152,630
Total current liabilities	487,145	461,717
Long-term obligations:
Borrowings under revolving credit agreement	0	155,700
Operating lease liabilities, net of current portion	139,527	154,271
Finance lease liabilities, net of current portion	4,811	2,009
Total long-term obligations	144,338	311,980
Deferred income taxes and other liabilities	73,103	67,697
Commitments and contingencies
Watsco, Inc. shareholders' equity:
Preferred stock, $0.50 par value, 10,000,000 shares authorized; no shares issued
Paid-in capital	950,915	907,877
Accumulated other comprehensive loss, net of tax	(34,867)	(39,050)
Retained earnings	636,373	632,507
Treasury stock, at cost, 4,823,988 shares of Common stock and 48,263 shares of Class B common stock at both December 31, 2020 and 2019, respectively	(87,440)	(87,440)
Total Watsco, Inc. shareholders' equity	1,486,678	1,435,427
Non-controlling interest	293,083	279,340
Total shareholders' equity	1,779,761	1,714,767
Total liabilities and shareholders' equity	2,484,347	2,556,161
Common Stock
Watsco, Inc. shareholders' equity:
Common stock, $0.50 par value	18,851	18,768
Class B Common Stock
Watsco, Inc. shareholders' equity:
Common stock, $0.50 par value	$ 2,846	$ 2,765

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2020	Dec. 31, 2019
Preferred stock, par value	$ 0.50	$ 0.50
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common Stock
Common stock, par value	$ 0.50	$ 0.50
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares outstanding	37,702,489	37,536,363
Treasury stock, shares	4,823,988	4,823,988
Class B Common Stock
Common stock, par value	$ 0.50	$ 0.50
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares outstanding	5,691,456	5,529,944
Treasury stock, shares	48,263	48,263

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Alert Labs Inc.	Peirce-Phelps, Inc.	Dunphey & Associates Supply Co., Inc.	N&S Supply of Fishkill, Inc	Common Stock, Class B Common Stock and Preferred Stock	Common Stock, Class B Common Stock and Preferred Stock Alert Labs Inc.	Common Stock, Class B Common Stock and Preferred Stock Peirce-Phelps, Inc.	Common Stock, Class B Common Stock and Preferred Stock Dunphey & Associates Supply Co., Inc.	Common Stock, Class B Common Stock and Preferred Stock N&S Supply of Fishkill, Inc	Paid-In Capital	Paid-In Capital Alert Labs Inc.	Paid-In Capital Peirce-Phelps, Inc.	Paid-In Capital Dunphey & Associates Supply Co., Inc.	Paid-In Capital N&S Supply of Fishkill, Inc	Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss Revision of Prior Period, Change in Accounting Principle, Adjustment [Member]	Retained Earnings	Retained Earnings Revision of Prior Period, Change in Accounting Principle, Adjustment [Member]	Treasury Stock	Non-controlling Interest
Beginning balance at Dec. 31, 2017	$ 1,550,977					$ 21,050					$ 804,008					$ (34,221)	$ 301	$ 594,556	$ (301)	$ (87,440)	$ 253,024
Beginning balance (in shares) at Dec. 31, 2017						37,228,715
Net income	296,529																	242,932			53,597
Other comprehensive gain (loss)	(18,732)															(12,048)					(6,684)
Issuances of non-vested restricted shares of common stock						$ 71					(71)
Issuances of non-vested restricted shares of common stock (in shares)						142,865
Forfeitures of non-vested restricted shares of common stock						$ (5)					5
Forfeitures of non-vested restricted shares of common stock (in shares)						(10,000)
Common stock contribution to 401(k) plan	2,945					$ 9					2,936
Common stock contribution to 401(k) plan (in shares)						17,318
Stock issuances from exercise of stock options and employee stock purchase plan	7,852					$ 32					7,820
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)						64,423
Retirement of common stock	(5,044)					$ (14)					(5,030)
Retirement of common stock (in shares)						(28,781)
Share-based compensation	15,631										15,631
Cash dividends declared and paid on Common and Class B common stock	(209,218)																	(209,218)
Common stock issued		$ 6,846					$ 24					$ 6,822
Common stock issued (in shares)							47,103
Investment in unconsolidated entity	752																				752
Distributions to non-controlling interest	(46,825)																				(46,825)
Ending balance at Dec. 31, 2018	1,601,713					$ 21,167					832,121					(45,968)		627,969		(87,440)	253,864
Ending balance (in shares) at Dec. 31, 2018						37,461,643
Net income	295,775																	245,950			49,825
Other comprehensive gain (loss)	10,485															6,918					3,567
Issuances of non-vested restricted shares of common stock						$ 87					(87)
Issuances of non-vested restricted shares of common stock (in shares)						173,940
Forfeitures of non-vested restricted shares of common stock						$ (7)					7
Forfeitures of non-vested restricted shares of common stock (in shares)						(12,837)
Common stock contribution to 401(k) plan	4,274					$ 15					4,259
Common stock contribution to 401(k) plan (in shares)						30,715
Stock issuances from exercise of stock options and employee stock purchase plan	13,464					$ 53					13,411
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)						105,288
Retirement of common stock	(1,652)					$ (5)					(1,647)
Retirement of common stock (in shares)						(10,623)
Share-based compensation	16,537										16,537
Cash dividends declared and paid on Common and Class B common stock	(241,412)																	(241,412)
Common stock issued			$ 58,344	$ 6,891	$ 4,032			$ 186	$ 25	$ 12			$ 58,158	$ 6,866	$ 4,020
Common stock issued (in shares)								372,543	50,952	22,435
Investment in unconsolidated entity	988																				988
Decrease in non-controlling interest in Carrier Enterprise II	(32,400)										(25,768)										(6,632)
Distributions to non-controlling interest	(39,272)																				(39,272)
Investment in Peirce-Phelps, Inc.	17,000																				17,000
Ending balance at Dec. 31, 2019	1,714,767					$ 21,533					907,877					(39,050)		632,507		(87,440)	279,340
Ending balance (in shares) at Dec. 31, 2019						38,194,056
Net income	323,172																	269,579			53,593
Other comprehensive gain (loss)	6,734															4,183					2,551
Issuances of non-vested restricted shares of common stock						$ 92					(92)
Issuances of non-vested restricted shares of common stock (in shares)						184,265
Forfeitures of non-vested restricted shares of common stock						$ (2)					2
Forfeitures of non-vested restricted shares of common stock (in shares)						(3,589)
Common stock contribution to 401(k) plan	4,543					$ 13					4,530
Common stock contribution to 401(k) plan (in shares)						25,216
Stock issuances from exercise of stock options and employee stock purchase plan	21,600					$ 72					21,528
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)						144,894
Retirement of common stock	(4,642)					$ (11)					(4,631)
Retirement of common stock (in shares)						(23,148)
Share-based compensation	21,862										21,862
Cash dividends declared and paid on Common and Class B common stock	(265,713)																	(265,713)
Distributions to non-controlling interest	(42,401)																				(42,401)
Adjustment to fair value of Common stock issued for N&S Supply of Fishkill, Inc.					$ (161)										$ (161)
Ending balance at Dec. 31, 2020	$ 1,779,761					$ 21,697					$ 950,915					$ (34,867)		$ 636,373		$ (87,440)	$ 293,083
Ending balance (in shares) at Dec. 31, 2020						38,521,694

Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash dividends declared and paid, common stock	$ 6.925	$ 6.40	$ 5.60

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities:
Net income	$ 323,172	$ 295,775	$ 296,529
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	25,908	24,512	22,095
Share-based compensation	22,129	17,032	15,508
Non-cash contribution to 401(k) plan	4,543	4,274	2,945
Provision for doubtful accounts	2,688	3,948	2,619
Loss (gain) on sale of property and equipment	17	(585)	27
Deferred income tax provision	40	1,278	8,290
Other income from investment in unconsolidated entity	(11,264)	(10,256)	(9,282)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(3,559)	8,457	(28,831)
Inventories, net	139,929	(15,525)	(78,954)
Accounts payable and other liabilities	33,936	12,734	(57,398)
Other, net	(3,160)	(5,873)	(2,991)
Net cash provided by operating activities	534,379	335,771	170,557
Cash flows from investing activities:
Capital expenditures	(16,436)	(17,805)	(17,153)
Business acquisitions, net of cash acquired		(59,672)	(5,626)
Investment in unconsolidated entity		(4,940)	(3,760)
Proceeds from sale of property and equipment	94	1,380	228
Net cash used in investing activities	(16,342)	(81,037)	(26,311)
Cash flows from financing activities:
Dividends on Common and Class B common stock	(265,713)	(241,412)	(209,218)
Distributions to non-controlling interest	(42,401)	(39,272)	(46,825)
Repurchases of common stock to satisfy employee withholding tax obligations	(2,299)	(1,528)	(3,782)
Net (repayments) proceeds of other long-term obligations	(1,441)	(1,240)	269
Payment of fees related to revolving credit agreement	(196)		(790)
Purchase of additional ownership from non-controlling interest		(32,400)
Proceeds from non-controlling interest for investment in unconsolidated entity		988	752
Net proceeds from issuances of common stock	19,257	13,341	6,591
Proceeds from non-controlling interest for investment in Peirce-Phelps, Inc.		17,000
Net cash used in financing activities	(448,493)	(264,023)	(139,603)
Effect of foreign exchange rate changes on cash and cash equivalents	2,069	849	(2,245)
Net increase (decrease) in cash and cash equivalents	71,613	(8,440)	2,398
Cash and cash equivalents at beginning of year	74,454	82,894	80,496
Cash and cash equivalents at end of year	146,067	74,454	82,894
Prior Revolving Credit Agreement [Member]
Cash flows from financing activities:
Net (repayments) proceeds under revolving credit agreement			(21,800)
Revolving Credit Agreement [Member]
Cash flows from financing activities:
Net (repayments) proceeds under revolving credit agreement	$ (155,700)	$ 20,500	$ 135,200

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2020

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization, Consolidation and Presentation

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. At December 31, 2020, we operated from 600 locations in 38 U.S. states, Canada, Mexico, and Puerto Rico with additional market coverage on an export basis to portions of Latin America and the Caribbean

On April 3, 2020, United Technologies Corporation completed the

spin-off

of Carrier Corporation into an independent, publicly traded company, now named Carrier Global Corporation, which we refer to as Carrier. The consolidated financial statements include the accounts of Watsco, all of its wholly owned subsidiaries and the accounts of three joint ventures with Carrier

Carrier InterAmerica Corporation (“CIAC”), the export division of our first joint venture with Carrier, redomesticated from the U.S. Virgin Islands to Delaware effective December 31, 2019, following which CIAC became a separate operating entity in which we have an 80% controlling interest and Carrier has a 20%

non-controlling

interest. All significant intercompany balances and transactions have been eliminated in consolidation

Impact of

COVID-19

Pandemic

A novel strain of coronavirus,

COVID-19,

surfaced in December 2019 and has spread around the world, including to the United States. In March 2020, the World Health Organization declared

COVID-19

a pandemic. The

COVID-19

pandemic has impacted and could further impact our operations and the operations of our suppliers and customers as a result of quarantines, facility closures, illnesses, and travel and logistics restrictions. The extent to which the

COVID-19

pandemic continues to impact 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 the magnitude, duration, spread, severity, and impact of the

COVID-19

pandemic, the effects of the

COVID-19

pandemic on our employees, customers, suppliers, and vendors, and to what extent normal economic and operating conditions can resume. Even after the

COVID-19

pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred as a result of the

COVID-19

pandemic. Therefore, we cannot reasonably estimate the impact at this time.

Foreign Currency Translation and Transactions

The functional currency of our operations in Canada is the Canadian dollar. Foreign currency denominated assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date, and income and expense items are translated at the average exchange rates in effect during the applicable period. The aggregate effect of foreign currency translation is recorded in accumulated other comprehensive loss in our consolidated balance sheets. Our net investment in our Canadian operations is recorded at the historical rate and the resulting foreign currency translation adjustments are included in accumulated other comprehensive loss in our consolidated balance sheets. Gains or losses resulting from transactions denominated in U.S. dollars are recognized in earnings primarily within cost of sales in our consolidated statements of income.

Our operations in Mexico consider their functional currency to be the U.S. dollar because the majority of their transactions are denominated in U.S. dollars. Gains or losses resulting from transactions denominated in Mexican pesos are recognized in earnings primarily within selling, general and administrative expenses in our consolidated statements of income.

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 consolidated 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 consolidated 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 consolidated 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 consolidated 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.

Cash Equivalents

All highly liquid instruments purchased with original maturities of three months or less are considered to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable primarily consist of trade receivables due from customers and are stated at the invoiced amount less an allowance for doubtful accounts. An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of customers to make required payments. When preparing these estimates, we consider a number of factors, including the aging of a customer’s account, past transactions with customers, creditworthiness of specific customers, historical trends and other information, including potential impacts of business and economic conditions. Upon determination that an account is uncollectible, the receivable balance is written off. At December 31, 2020 and 2019, the allowance for doubtful accounts totaled $7,087 and $7,943, respectively.

Inventories

Inventories consist of air conditioning, heating and refrigeration equipment and related parts and supplies and are valued at the lower of cost using the weighted-average cost basis and the

first-in,

first-out

methods, or net realizable value. As part of the valuation process, inventories are adjusted to reflect excess, slow-moving and damaged inventories at their estimated net realizable value. Inventory policies are reviewed periodically, reflecting current risks, trends and changes in industry conditions. A reserve for estimated inventory shrinkage is also maintained to consider inventory shortages determined from cycle counts and physical inventories.

Vendor Rebates and Purchase Discounts

We have arrangements with several vendors that provide rebates payable to us when we achieve any of a number of measures, generally related to the volume level of purchases. We account for such rebates as a reduction of inventory until we sell the product, at which time such rebates are reflected as a reduction of cost of sales in our consolidated statements of income. Throughout the year, we estimate the amount of the rebate based on our estimate of purchases to date relative to the purchase levels that mark our progress toward earning the rebates. We continually revise our estimates of earned vendor rebates based on actual purchase levels. At December 31, 2020 and 2019, we had $13,434 and $12,007, respectively, of rebates recorded as a reduction of inventory. Substantially all vendor rebate receivables are collected within three months immediately following the end of the year. Vendor rebates that are earned based on products sold are credited directly to cost of sales in our consolidated statements of income.

We also have vendors that offer a cash discount when we pay their invoice within a specified period of time. We account for such cash discounts as a reduction of inventory until we sell the product at which time such cash discounts are reflected as a reduction of cost of sales in our consolidated statements of income. At December 31, 2020 and 2019, we had $12,029 and $10,098, respectively, of cash discounts recorded as a reduction of inventory.

Equity Securities

Investments in equity securities are recorded at fair value using the specific identification method and are included in other assets in our consolidated balance sheets. Changes in the fair value of equity securities and dividend income are recognized in our consolidated statements of income.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is computed using the straight-line method. Buildings and improvements are depreciated or amortized over estimated useful lives ranging from

3-40

years. Leasehold improvements are amortized over the shorter of the respective lease terms or estimated useful lives. Machinery, vehicles

and equipment are depreciated over estimated useful lives ranging from

years. Computer hardware and software are depreciated over estimated useful lives ranging from

3-10

years. Furniture and fixtures are depreciated over estimated useful lives ranging from

5-7

years.

Operating and Finance Leases

We have operating leases for real property, vehicles and equipment, and finance leases primarily for vehicles. Operating leases are included in operating lease

right-of-use

(“ROU”) assets, current portion of long-term obligations, and operating lease liabilities, net of current portion in our consolidated balance sheets. Finance leases are not considered significant to our consolidated balance sheets or consolidated statements of income. Finance lease ROU assets at December 31, 2020 and 2019, of $6,232 and $3,150, respectively, are included in property and equipment, net in our consolidated balance sheets. Finance lease liabilities at December 31, 2020 and 2019, of $6,383 and $3,231, respectively, are included in current portion of long-term obligations and finance lease liabilities, net of current portion in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the applicable commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement dates of the respective leases in determining the present value of the applicable lease payments.

Operating lease ROU assets also include any lease

pre-payments

made and exclude lease incentives. Certain of our leases include variable payments, which are excluded from lease ROU assets and lease liabilities and expensed as incurred. Our leases have remaining lease terms of

1-9

years, some of which include options to extend the leases for up to five years. The exercise of lease renewal options is at our sole discretion, and our lease ROU assets and liabilities reflect only the options we are reasonably certain that we will exercise. Certain real property lease agreements have lease and

non-lease

components, which are generally accounted for as a single lease component. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease payments for short-term leases, which are 12 months or less without a purchase option that is likely to be exercised, are recognized as lease cost on a straight-line basis over the lease term.

Practical Expedients

We elected the practical expedients related to short-term leases and separating lease components from

non-lease

components for all underlying asset classes.

Goodwill and Intangible Assets

Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair value of the net identified tangible and intangible assets acquired. We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. We test goodwill for impairment by comparing the fair value of our reporting unit to its carrying value. If the fair value is determined to be less than the carrying value, an impairment charge would be recognized. On January 1, 2021, we performed our annual evaluation of goodwill impairment and determined that the estimated fair value of our reporting unit significantly exceeded its carrying value.

Intangible assets primarily consist of the value of trade names and trademarks, distributor agreements, customer relationships and patented and unpatented technology. Indefinite lived intangibles not subject to amortization are assessed for impairment at least annually, or more frequently if events or changes in circumstances indicate they may be impaired, by comparing the fair value of the intangible asset to its carrying amount to determine if a write-down to fair value is required. Finite lived intangible assets are amortized using the straight-line method over their respective estimated useful lives.

We perform our annual impairment tests each year and have determined there to be no impairment for any of the periods presented. There were no events or circumstances identified from the date of our assessment that would require an update to our annual impairment tests.

Long-Lived Assets

Long-lived assets, other than goodwill and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability is evaluated by determining whether the amortization of the balance over its remaining life can be recovered through undiscounted future operating cash flows. We measure the impairment loss based on projected discounted cash flows using a discount rate reflecting the average cost of funds and compared to the asset’s carrying value. As of December 31, 2020, there were no such events or circumstances.

Fair Value Measurements

We carry various assets and liabilities at fair value in the consolidated balance sheets. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are classified based on the following fair value hierarchy:


Level 1		Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2		Observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; or model-driven valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3		Unobservable inputs for the asset or liability. These inputs reflect our own assumptions about the assumptions a market participant would use in pricing the asset or liability.

Revenue Recognition

Revenue primarily consists of sales of air conditioning, heating and refrigeration equipment, and related parts and supplies. We generate our revenue primarily from the sale of finished products to customers; therefore, the significant majority of our contracts are short-term in nature and have only a single performance obligation to deliver products; therefore, we satisfy our performance obligation under such contracts when we transfer control of the product to the customer. Some contracts contain a combination of product sales and services, the latter of which is distinct and accounted for as a separate performance obligation. We satisfy our performance obligations for services when we render the services within the agreed-upon service period. Total service revenue is not material and accounted for less than 1% of our consolidated revenues for both 2020 and 2019.

Revenue is recognized when control transfers to our customers when products are picked up or via shipment of products or delivery of services. We measure revenue as the amount of consideration we expect to be entitled to receive in exchange for those goods or services, net of any variable considerations (e.g., rights to return product, sales incentives, others) and any taxes collected from customers and subsequently remitted to governmental authorities. Revenue for shipping and handling charges is recognized when products are delivered to the customer.

Product Returns

We estimate product returns based on historical experience and record them on a gross basis on our balance sheets. Substantially all customer returns relate to products that are returned under manufacturers’ warranty obligations. Accrued sales returns at December 31, 2020 and 2019 of $12,739 and $12,181, respectively, were included in accrued expenses and other current liabilities in our consolidated balance sheets.

Sales Incentives

We estimate sales incentives expected to be paid over the term of the program based on the most likely amounts. Sales incentives are accounted for as a reduction in the transaction price and are generally paid on an annual basis.

Practical Expedients

We generally expense sales commissions when incurred because the amortization period is one year or less. These costs are recorded within selling, general and administrative expenses. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2020, 2019

and 2018, were $12,588, $16,587

and $16,520, respectively.

Shipping and Handling

Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through cost of sales as inventories are sold. Shipping and handling costs associated with the delivery of products are included in selling, general and administrative expenses. Shipping and handling costs included in selling, general and administrative expenses for the years ended December 31, 2020, 2019

and 2018, were $55,019, $54,783

and $51,741, respectively.

Share-Based Compensation

The fair value of stock option and

non-vested

restricted stock awards are expensed net of estimated forfeitures on a straight-line basis over the vesting period of the awards. Share-based compensation expense is included in selling, general and administrative expenses in our consolidated statements of income. Tax benefits resulting from tax deductions in excess of share-based compensation expense are recognized in our provision for income taxes in our consolidated statements of income.

Income Taxes

We record U.S. federal, state and foreign income taxes currently payable, as well as deferred taxes due to temporary differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities reflect the temporary differences between the financial statement and income tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized as income or expense in the period that includes the enactment date. We and our eligible subsidiaries file a consolidated U.S. federal income tax return. As income tax returns are generally not filed until well after the closing process for the

December 31 financial statements is complete, the amounts recorded at December 31 reflect estimates of what the final amounts will be when the actual income tax returns are filed for that calendar year. In addition, estimates are often required with respect to, among other things, the appropriate state income tax rates to use in the various states that we and our subsidiaries are required to file, the potential utilization of operating loss carryforwards and valuation allowances required, if any, for tax assets that may not be realizable in the future.

We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the

“more-likely-than-not”

threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

Earnings per Share

We compute earnings per share using the

two-class

method. The

two-class

method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Shares of our

non-vested

restricted stock are considered participating securities because these awards contain a

non-forfeitable

right to dividends irrespective of whether the awards ultimately vest. Under the

two-class

method, earnings per common share for our Common and Class B common stock is computed by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted-average number of shares of Common and Class B common stock outstanding for the period. In applying the

two-class

method, undistributed earnings are allocated to Common stock, Class B common stock and participating securities based on the weighted-average shares outstanding during the period.

Diluted earnings per share reflects the dilutive effect of potential common shares from stock options. The dilutive effect of outstanding stock options is computed using the treasury stock method, which assumes any proceeds that could be obtained upon the exercise of stock options, would be used to purchase common stock at the average market price for the period. The assumed proceeds include the purchase price the optionee pays, the windfall tax benefit that we receive upon assumed exercise and the unrecognized compensation expense at the end of each period.

Derivative Instruments and Hedging Activity

We have used derivative instruments, including forward and option contracts and swaps, to manage our exposure to fluctuations in foreign currency exchange rates and interest rates. The use of these derivative instruments modifies the exposure of these risks with the intent to reduce the risk or cost to us. We use derivative instruments as risk management tools and not for trading purposes. All derivatives, whether designated as hedging relationships or not, are recorded on the balance sheet at fair value. Cash flows from derivative instruments are classified in the consolidated statements of cash flows in the same category as the cash flows from the items subject to the designated hedge or undesignated (economic) hedge relationships. The hedging designation may be classified as one of the following:

No Hedging Designation.

The gain or loss on a derivative instrument not designated as an accounting hedging instrument is recognized in earnings within selling, general and administrative expenses.

Cash Flow Hedge.

A hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability is considered a cash flow hedge. The effective portion of the change in the fair value of a derivative that is designated as a cash flow hedge is recorded in other comprehensive income (loss) and reclassified to earnings as a component of cost of sales in the period for which the hedged transaction affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings.

Fair Value Hedge.

A hedge of a recognized asset or liability or an unrecognized firm commitment is considered a fair value hedge. Fair value hedges, both the effective and ineffective portions of the changes in the fair value of the derivative, along with the gain or loss on the hedged item that is attributable to the hedged risk, are recorded in earnings.

See Note 17 for additional information pertaining to derivative instruments.

Loss Contingencies

Accruals are recorded for various contingencies including self-insurance, legal proceedings, environmental matters, and other claims that arise in the normal course of business. The estimation process contains uncertainty because accruals are based on judgment, the probability of losses and, where applicable, the consideration of opinions of external legal counsel and actuarially determined estimates. Additionally, we record receivables from third party insurers when recovery has been determined to be probable.

Recently Adopted Accounting Standards

Financial Instruments—Credit Losses

In June 2016, the Financial Accounting Standards Board (“FASB”) issued guidance that modifies the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, contract assets, long-term receivables and

off-balance

sheet credit exposures. Under the new standard, an entity will be required to consider a broader range of information to estimate expected credit losses, including historical information, current conditions

and a reasonable forecast period, which may result in earlier recognition of certain losses. This guidance is effective for interim and annual periods beginning after December 15, 2019 using a modified retrospective approach. The adoption of this guidance did not have a material impact on our consolidated financial statements.

Intangibles—Goodwill and Other

In January 2017, the FASB issued guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under this updated standard, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity also should consider income tax effects from any

tax-deductible

goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if any. This guidance is effective prospectively and is effective for interim and annual periods beginning after December 15, 2019. The adoption of this guidance did not have a material impact on our consolidated financial statements.

LEASES

12 Months Ended

Dec. 31, 2020

LEASES

2. LEASES

The components of operating lease expense were as follows:


Years Ended December 31,	2020			2019
Lease cost	$	82,543		$	74,755
Short-term lease cost		6,317			9,427
Variable lease cost		942			707
Sublease income		(228	)		(226	)

Total operating lease cost	$	89,574		$	84,663

Supplemental balance sheet information related to operating leases were as follows:


December 31,	2020			2019
ROU assets	$	209,169		$	223,369
Current portion of operating lease liabilities	$	70,232		$	68,199
Operating lease liabilities		139,527			154,271

Total operating lease liabilities	$	209,759		$	222,470

Weighted Average Remaining Lease Term (in years)		3.5 years			3.9 years
Weighted Average Discount Rate		4.00	%		4.48	%

Supplemental cash flow information related to operating leases were as follows:


Years Ended December 31,	2020		2019
Operating cash flows for the measurement of operating lease liabilities	$	80,921	$	75,357
Operating lease ROU assets obtained in exchange for operating lease obligations	$	59,093	$	290,422

At December 31, 2020, maturities of operating lease liabilities over each of the next five years and thereafter were as follows:


2021	$	77,170
2022		62,291
2023		44,931
2024		25,052
2025		9,709
Thereafter		6,842

Total lease payments		225,995
Less imputed interest		16,236

Total lease liability	$	209,759

At December 31, 2020, we had additional operating leases, primarily for real property, that had not yet commenced. Such leases had estimated future minimum rental commitments of approximately $21,300. These operating leases are expected to commence in 2021 with lease terms of

5-11

years. These undiscounted amounts are not included in the table above.

REVENUES

12 Months Ended

Dec. 31, 2020

REVENUES

3. REVENUES

Disaggregation of Revenues

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


Years Ended December 31,	2020			2019			2018
Primary Geographical Regions:
United States	$	4,535,262		$	4,184,206		$	3,981,056
Canada		301,727			294,040			291,685
Latin America and the Caribbean		217,939			292,116			273,912

	$	5,054,928		$	4,770,362		$	4,546,653

Major Product Lines:
HVAC equipment		69	%		68	%		67	%
Other HVAC products		28	%		28	%		29	%
Commercial refrigeration products		3	%		4	%		4	%

		100	%		100	%		100	%

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

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OTHER COMPREHENSIVE INCOME (LOSS)

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2020

EARNINGS PER SHARE

4. EARNINGS PER SHARE

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


Years Ended December 31,	2020		2019		2018
Basic Earnings per Share:
Net income attributable to Watsco, Inc. shareholders	$	269,579	$	245,950	$	242,932
Less: distributed and undistributed earnings allocated to non-vested restricted common stock		23,140		20,412		19,792

Earnings allocated to Watsco, Inc. shareholders	$	246,439	$	225,538	$	223,140

Weighted-average common shares outstanding - Basic		35,069,516		34,644,700		34,319,890

Basic earnings per share for Common and Class B common stock	$	7.03	$	6.51	$	6.50

Allocation of earnings for Basic:
Common stock	$	228,361	$	208,779	$	206,355
Class B common stock		18,078		16,759		16,785

	$	246,439	$	225,538	$	223,140

Diluted Earnings per Share:
Net income attributable to Watsco, Inc. shareholders	$	269,579	$	245,950	$	242,932
Less: distributed and undistributed earnings allocated to non-vested restricted common stock		23,140		20,411		19,788

Earnings allocated to Watsco, Inc. shareholders	$	246,439	$	225,539	$	223,144

Weighted-average common shares outstanding - Basic		35,069,516		34,644,700		34,319,890
Effect of dilutive stock options		81,055		30,941		54,379

Weighted-average common shares outstanding - Diluted		35,150,571		34,675,641		34,374,269

Diluted earnings per share for Common and Class B common stock	$	7.01	$	6.50	$	6.49

Diluted earnings per share for our Common stock assumes the conversion of all 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 December 31, 2020, 2019

and 2018, our outstanding Class B common stock was convertible into 2,572,536, 2,574,336

and 2,581,627 shares of our Common stock, respectively.

Diluted earnings per share excluded 19,722, 205,380, and 74,270 shares for the years ended December 31, 2020, 2019

and 2018, respectively, related to stock options with an exercise price per share greater than the average market value, resulting in an anti-dilutive effect on diluted earnings per share.

OTHER COMPREHENSIVE INCOME (LOSS)

12 Months Ended

Dec. 31, 2020

5. OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) 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 gains (losses) on cash flow hedging instruments. The tax effects allocated to each component of other comprehensive income (loss) were as follows:


Years Ended December 31,	2020			2019			2018
Foreign currency translation adjustment	$	6,272		$	12,298		$	(20,493	)
Unrealized gain (loss) on cash flow hedging instruments		1,205			(2,001	)		2,627
Income tax (expense) benefit		(325	)		540			(709	)

Unrealized gain (loss) on cash flow hedging instruments, net of tax		880			(1,461	)		1,918

Reclassification of gain on cash flow hedging instruments into earnings		(574	)		(482	)		(215	)
Income tax expense		156			130			58

Reclassification of gain on cash flow hedging instruments into earnings, net of tax		(418	)		(352	)		(157	)

Other comprehensive income (loss)	$	6,734		$	10,485		$	(18,732	)

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


Years Ended December 31,	2020			2019			2018
Foreign currency translation adjustment:
Beginning balance	$	(38,599	)	$	(46,604	)	$	(33,499	)
Current period other comprehensive income (loss)		3,905			8,005			(13,105	)

Ending balance		(34,694	)		(38,599	)		(46,604	)

Cash flow hedging instruments:
Beginning balance		(451	)		636			(421	)
Current period other comprehensive income (loss)		528			(876	)		1,151
Reclassification adjustment		(250	)		(211	)		(94	)

Ending balance		(173	)		(451	)		636

Equity securities:
Beginning balance		—			—			(301	)
Cumulative-effect adjustment to retained earnings		—			—			301

Ending balance		—			—			—

Accumulated other comprehensive loss, net of tax	$	(34,867	)	$	(39,050	)	$	(45,968	)

SUPPLIER CONCENTRATION

12 Months Ended

Dec. 31, 2020

SUPPLIER CONCENTRATION

6. SUPPLIER CONCENTRATION

Purchases from our top ten suppliers comprised 85%, 83

and 84% of all purchases made in 2020, 2019

and 2018, respectively. Our largest supplier, Carrier and its affiliates, accounted for 63%, 62

and 62% of all purchases made in 2020, 2019

and 2018, respectively. See Note 20. A significant interruption by Carrier, or any of our other key suppliers, in the delivery of products could impair our ability to maintain current inventory levels and could materially impact our consolidated results of operations and consolidated

financial position.

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2020

PROPERTY AND EQUIPMENT

7. PROPERTY AND EQUIPMENT

Property and equipment, net, consists of:


December 31,	2020			2019
Land	$	741		$	741
Buildings and improvements		80,877			81,938
Machinery, vehicles , and equipment		92,577			86,639
Computer hardware and software		62,776			56,227
Furniture and fixtures		19,077			18,049

		256,048			243,594
Accumulated depreciation and amortization		(157,823	)		(145,071	)

	$	98,225		$	98,523

Depreciation and amortization expense related to property and equipment included in selling, general and administrative expenses for the years ended December 31, 2020, 2019

and 2018, were $19,963, $18,808

and $16,747, respectively.

DEBT

12 Months Ended

Dec. 31, 2020

DEBT

8. DEBT

We maintain an unsecured, 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. On April 10, 2020, we increased the aggregate borrowing capacity of our revolving credit agreement from $500,000 to $560,000. The credit facility has a seasonal component from October 1 to March 31, during which the borrowing capacity may be reduced to $460,000 at our discretion, and we effected this reduction in 2020. Included in the credit facility are a $100,000 swingline subfacility, a $10,000 letter of credit subfacility, a $75,000 alternative currency borrowing sublimit and an $8,000 Mexican borrowing sublimit. The credit agreement matures on December 5, 2023.

Borrowings under the credit facility bear interest at either LIBOR-based rates plus a spread, which ranges from 87.5 to 150.0 basis-points (LIBOR plus 87.5 basis-points at December 31, 2020), depending on our ratio of total debt to EBITDA, or on rates based on the highest of the Federal Funds Effective Rate plus 0.5%, the Prime Rate or the Eurocurrency Rate plus 1.0%, in each case plus a spread which ranges from 0 to 50.0 basis-points (0 basis-points at December 31, 2020), depending on our ratio of total debt to EBITDA. We pay a variable commitment fee on the unused portion of the commitment under the revolving credit agreement, ranging from 7.5 to 20.0 basis-points (7.5 basis-points at December 31, 2020). During 2020, we paid fees of $196 in connection with the increase in the aggregate borrowing capacity of our revolving credit agreement, which are being amortized ratably through the maturity of the facility in December 2023.

At December 31, 2020 there was no outstanding

balance

under the revolving credit agreement. At December 31, 2019 $155,700 was 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 December 31, 2020.

INCOME TAXES

12 Months Ended

Dec. 31, 2020

INCOME TAXES

9. INCOME TAXES

The components of income tax expense from our wholly owned operations and investments and our controlling interest in

CIAC and

joint ventures with Carrier are as follows:


Years Ended December 31,	2020			2019			2018
Current:
U.S. Federal	$	58,895		$	48,359		$	47,263
State		12,909			9,362			10,031
Foreign		4,779			8,078			7,229

	76,583			65,799			64,523

Deferred:
U.S. Federal		218			2,603			7,082
State		21			446			1,600
Foreign		(199	)		(1,771	)		(392	)

	40			1,278			8,290

Income tax expense	$	76,623		$	67,077		$	72,813

We calculate our income tax expense and our effective tax rate for 100% of income attributable to our wholly owned operations and for our controlling interest of income attributable

CIAC and

our joint ventures with Carrier, which are primarily taxed as partnerships for income tax purposes.

Following is a reconciliation of the effective income tax rate:


Years Ended December 31,	2020			2019			2018
U.S. federal statutory rate		21.0	%		21.0	%		21.0	%
State income taxes, net of federal benefit and other		3.3			2.8			3.6
Excess tax benefits from share-based compensation		(2.3	)		(2.0	)		(2.0	)
Tax effects on foreign income		0.3			0.5			0.5
GILTI		—			(0.1	)		0.3
Tax credits and other		(0.3	)		(1.0	)		—
Repatriation transition tax		—			—			(0.9	)
Deferred tax impact of enacted tax rate changes		—			—			0.3

Effective income tax rate attributable to Watsco, Inc.		22.0			21.2			22.8
Taxes attributable to non-controlling interest		(2.8	)		(2.7	)		(3.1	)

Effective income tax rate		19.2	%		18.5	%		19.7	%

The following is a summary of the significant components of our net deferred tax liabilities:


December 31,	2020			2019
Deferred tax assets:
Share-based compensation	$	27,223		$	24,413
Capitalized inventory costs and inventory reserves		3,189			3,627
Allowance for doubtful accounts		949			1,338
Self-insurance reserves		518			209
Other		5,090			2,212
Net operating loss carryforwards		2,930			2,036

	39,899			33,835
Valuation allowance		(668	)		(655	)

Total deferred tax assets		39,231			33,180

Deferred tax liabilities:
Deductible goodwill		(78,288	)		(73,898	)
Depreciation		(16,441	)		(14,241	)
Other		(7,050	)		(7,188	)

Total deferred tax liabilities		(101,779	)		(95,327	)

Net deferred tax liabilities (1)	$	(62,548	)	$	(62,147	)

(1)	Net deferred tax liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities.

On December 22, 2017, Public Law

115-97

“An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018”

was enacted. This law is commonly referred to as the Tax Cuts and Jobs Act of 2017 (the “TCJA”). The TCJA made broad and complex changes to the U.S. tax code including but not limited to, reducing the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018

and requiring a

one-time

repatriation transition tax on certain undistributed earnings of foreign subsidiaries. The TCJA also put in place new tax laws that applied prospectively, which included, but were not limited to, generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries and a new provision designed to tax U.S. allocated expenses as well as currently taxing certain global intangible

low-taxed

income (“GILTI”) of foreign subsidiaries. GILTI is a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. We have elected to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense.

In 2018, we increased our previously estimated net income tax benefit for the enactment-date effects of the TCJA by $1,819 to $11,774, following the refinement of estimated U.S. federal and state income taxes on previously undistributed earnings of our foreign subsidiaries. There were no additional refinements for any enactment-date effects related to the TCJA in 2019 or 2020.

The TCJA

one-time

repatriation transition tax and GILTI liabilities effectively taxed the undistributed earnings previously deferred from U.S. federal and certain state income taxes. As of December 31, 2020, we have accumulated undistributed earnings generated by our foreign subsidiaries of approximately $85,000. Any additional taxes due with respect to such previously taxed earnings, if repatriated, would generally be limited to certain state income taxes and foreign withholding. Deferred taxes have been recorded for foreign withholding taxes on certain earnings of our foreign consolidated subsidiaries expected to be repatriated. We do not intend to distribute the remaining previously taxed foreign earnings and therefore have not recorded deferred taxes for certain state income taxes and foreign withholding on such earnings. The amount of certain state income taxes and foreign withholding that might be payable on the remaining amounts at December 31, 2020 is not practicable to estimate.

Valuation allowances are provided to reduce the related deferred income tax assets to an amount which will, more likely than not, be realized. At December 31, 2020 and 2019, we had a valuation allowance of $668 and $655, respectively, to reduce our deferred tax assets to an amount that is more likely than not to be recovered. At December 31, 2020, there were state net operating loss carryforwards of $14,427, which expire in varying amounts from 2021 through 2040. At December 31, 2020, there were foreign net operating loss carryforwards of $10,565, which expire in varying amounts from 2036 through 2040.

These amounts are available to offset future taxable income. There were no federal net operating loss carryforwards at December 31, 2020.

We are subject to United States federal income tax, income tax of multiple state jurisdictions and foreign income tax. We are subject to tax audits in the various jurisdictions until the respective statutes of limitations expire. We are no longer subject to United States federal tax examinations for tax years prior to 2016. For the majority of states and foreign jurisdictions, we are no longer subject to tax examinations for tax years prior to 2015.

At December 31, 2020 and 2019, the total amount of gross unrecognized tax benefits (excluding the federal benefit received from state positions) was $6,505 and $5,367, respectively. Of these totals, $5,461 and $4,367, respectively, (net of the federal benefit received from state positions) represent the amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate. Our continuing practice is to recognize penalties within selling, general and administrative expenses and interest related to income tax matters in income tax expense in the consolidated statements of income. At December 31, 2020 and 2019, the cumulative amount of estimated accrued interest and penalties resulting from such unrecognized tax benefits was $982 and $855, respectively, and is included in deferred income taxes and other current liabilities in the accompanying consolidated balance sheets.

The changes in gross unrecognized tax benefits were as follows:


Balance at December 31, 2017	$	4,225
Additions based on tax positions related to the current year		960
Reductions due to lapse of applicable statute of limitations		(283	)

Balance at December 31, 2018		4,902
Additions based on tax positions related to the current year		1,027
Reductions due to lapse of applicable statute of limitations		(562	)

Balance at December 31, 2019		5,367
Additions based on tax positions related to the current year		1,911
Reductions due to lapse of applicable statute of limitations		(773	)

Balance at December 31, 2020	$	6,505

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

SHARE-BASED COMPENSATION AND BENEFIT PLANS

SHARE-BASED COMPENSATION AND BENEFIT PLANS

12 Months Ended

Dec. 31, 2020

10. SHARE-BASED COMPENSATION AND BENEFIT PLANS

Share-Based Compensation Plans

We maintain the 2014 Incentive Compensation Plan (the “2014 Plan”) that provides for the award of a broad variety of share-based compensation alternatives such as

non-vested

restricted stock,

non-qualified

stock options, incentive stock options, performance awards, dividend equivalents, deferred stock and stock appreciation rights at no less than 100% of the market price on the date the award is granted. To date, awards under the 2014 Plan consist of

non-qualified

stock options and

non-vested

restricted stock.

Under the 2014 Plan, the number of shares of Common and Class B common stock available for issuance is (i) 2,000,000, plus (ii) 45,421 shares of Common stock or Class B common stock that remained available for grant in connection with awards under the 2001 Plan as of the date our shareholders approved the 2014 Plan plus (iii) shares underlying currently outstanding awards issued under the 2001 Plan, which shares become reissuable under the 2014 Plan to the extent that such underlying shares are not issued due to their forfeiture, expiration, termination or otherwise. A total of 915,752 shares of Common stock, net of cancellations, and 968,166 shares of Class B common stock, had been awarded under the 2014 Plan as of December 31, 2020. As of December 31, 2020, 161,503 shares of common stock were reserved for future grants under the 2014 Plan. Options under the 2014 Plan vest over two to four years of service and have contractual terms of five years. Awards of

non-vested

restricted stock, which are granted at no cost to the employee, vest upon attainment of a specified age, generally toward the end of an employee’s career at age 62 or older. Vesting may be accelerated in certain circumstances prior to the original vesting date.

The following is a summary of stock option activity under the 2014 Plan as of and for the year ended December 31, 2020:


	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Options outstanding at December 31, 2019		584,675		$	159.34
Granted		161,500			207.60
Exercised		(135,809	)		146.90
Forfeited		(25,250	)		175.76

Options outstanding at December 31, 2020		585,116		$	174.83		3.22	$	30,729

Options exercisable at December 31, 2020		89,697		$	161.15		2.27	$	5,866

The following is a summary of non-vested restricted stock activity as of and for the year ended December 31, 2020:


	Shares			Weighted- Average Grant Date Fair Value
Non-vested restricted stock outstanding at December 31, 2019		3,191,705		$	68.63
Granted		184,265			193.89
Vested		(37,274	)		108.36
Forfeited		(3,589	)		164.94

Non-vested restricted stock outstanding at December 31, 2020		3,335,107		$	75.00

The weighted-average grant date fair value of

non-vested

restricted stock granted during 2020, 2019

and 2018 was $193.89, $151.58

and $167.06, respectively. The fair value of

non-vested

restricted stock that vested during 2020, 2019

and 2018 was $7,354, $4,931

and $9,637, respectively.

During 2020, 11,693 shares of Common and Class B common stock with an aggregate fair market value of $2,299 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of restricted stock. During 2019, 9,824 shares of Common and Class B common stock with an aggregate fair market value of $1,518 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of restricted stock. During 2018, 21,754 shares of Common and Class B common stock with an aggregate fair market value of $3,775 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of restricted stock. These shares were retired upon delivery.

Share-Based Compensation Fair Value Assumptions

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing valuation model based on the weighted-average assumptions noted in the table below. The fair value of each stock option award, which is subject to graded vesting, is expensed, net of estimated forfeitures, on a straight-line basis over the requisite service period for each separately vesting portion of the stock option. We use historical data to estimate stock option forfeitures. The expected term of stock option awards granted represents the period of time that stock option awards granted are expected to be outstanding and was calculated using the simplified method for plain vanilla options, which we believe provides a reasonable estimate of expected life based on our historical data. The risk-free rate for periods within the contractual life of the stock option award is based on the yield curve of a

zero-coupon

United States Treasury bond on the date the stock option award is granted with a maturity equal to the expected term of the stock option award. Expected volatility is based on historical volatility of our stock.

The following table presents the weighted-average assumptions used for stock options

granted


Years Ended December 31,	2020			2019			2018
Expected term in years		4.25			4.25			4.25
Risk-free interest rate		0.26	%		1.64	%		2.69	%
Expected volatility		20.89	%		18.01	%		17.11	%
Expected dividend yield		3.69	%		3.99	%		3.13	%
Grant date fair value	$	20.76		$	14.81		$	20.05

Exercise of Stock Options

The total intrinsic value of stock options exercised during 2020, 2019

and 2018 was $8,753, $4,153

and $3,500, respectively. Cash received from the exercise of stock options during 2020, 2019

and 2018 was $17,608, $11,703

and $5,006, respectively. The tax benefit from stock option exercises during 2020, 2019

and 2018 was $1,586, $626

and $635, respectively. During 2020, 2019

and 2018, 11,455 shares of Common stock with an aggregate fair market value of $2,343, 799 shares of Common stock with an aggregate fair market value of $134 and 7,027 shares of Common stock with an aggregate fair market value of $1,269, respectively, were withheld as payment in lieu of cash for stock option exercises and related tax withholdings. These shares were retired upon delivery.

Share-Based Compensation Expense

The following table provides information on share-based compensation expense:


Years Ended December 31,	2020		2019		2018
Stock options	$	2,447	$	2,440	$	2,014
Non-vested restricted stock		19,682		14,592		13,494

Share-based compensation expense	$	22,129	$	17,032	$	15,508

At December 31, 2020, there was $4,184 of unrecognized pre-tax

compensation expense related to stock options granted under the 2014 Plan, which is expected to be recognized over a weighted-average period of approximately 1.8 years. The total fair value of stock options that vested during 2020, 2019

and 2018 was $2,177, $2,055

and $1,607, respectively.

At December 31, 2020, there was $152,187 of unrecognized

pre-tax

compensation expense related to

non-vested

restricted stock, which is expected to be recognized over a weighted-average period of approximately 11 years. Of this amount, approximately $57,000 is related to awards granted to our Chief Executive Officer (“CEO”), of which approximately $4,000, $31,000

and $22,000 vest in approximately 2, 6

and 8 years upon his attainment of age 82, 86

and 88, respectively, and approximately $23,000 is related to awards granted to our President, of which approximately $22,000 and $1,000 vest in approximately 23 and 25 years upon his attainment of age 62 and 64, respectively. In the event that vesting is accelerated for any circumstance, as defined in the related agreements, the remaining unrecognized share-based compensation expense would be immediately recognized as a charge to earnings with a corresponding tax benefit. At December 31, 2020, we were obligated to issue 42,909 shares of

non-vested

restricted stock to our CEO that vest in 8 years and 35,025 shares of

non-vested

restricted stock to our President that vest in 23 years in connection with

2020’s

performance-based incentive compensation

program.

Employee Stock Purchase Plan

The Watsco, Inc. Fourth Amended and Restated 1996 Qualified Employee Stock Purchase Plan (the “ESPP”) provides for up to 1,500,000 shares of Common stock to be available for purchase by our full-time employees with at least 90 days of service. The ESPP allows participating employees to purchase shares of Common stock at a 5% discount to the fair market value at specified times. During 2020, 2019

and 2018, employees purchased 5,121, 5,676

and 5,151 shares of Common stock at an average price of $171.89, $145.09

and $168.21 per share, respectively. Cash dividends received by the ESPP were reinvested in Common stock and resulted in the issuance of 3,964, 5,087

and 4,338 additional shares during 2020, 2019

and 2018, respectively. We received net proceeds of $1,649, $1,638

and $1,585, respectively, during 2020, 2019

and 2018, for shares of our Common stock purchased under the ESPP. At December 31, 2020, 457,408 shares remained available for purchase under the ESPP.

401(k) Plan

We have a profit sharing retirement plan for our employees that is qualified under Section 401(k) of the Internal Revenue Code. Annual matching contributions are made based on a percentage of eligible employee compensation deferrals. The contribution has historically been made with the issuance of Common stock to the plan on behalf of our employees. For the years ended December 31, 2020, 2019

and 2018, we issued 25,216, 30,715

and 17,318 shares of Common stock, respectively, to the plan, representing the Common stock discretionary matching contribution of $4,543, $4,274 and $2,945, respectively.

PURCHASE OF REMAINING OWNERSHIP INTEREST IN JOINT VENTURE	12 Months Ended
	Dec. 31, 2020
Equity Method Investments and Joint Ventures [Abstract]
PURCHASE OF REMAINING OWNERSHIP INTEREST IN JOINT VENTURE	11. PURCHASE OF REMAINING OWNERSHIP INTEREST IN JOINT VENTURE Effective May 31, 2019, we purchased an additional 20% ownership interest in Homans Associates II LLC (“Homans”) from our second joint venture with Carrier, Carrier Enterprise Northeast, LLC, which we refer to as Carrier Enterprise II, for cash consideration of $32,400, which increased our ownership in Homans to 100%. Homans previously operated as a division of Carrier Enterprise II and subsequent to the purchase operates as a wholly owned subsidiary of the Company with 17 locations in the Northeastern U.S.

INVESTMENT IN UNCONSOLIDATED ENTITY

12 Months Ended

Dec. 31, 2020

INVESTMENT IN UNCONSOLIDATED ENTITY

12. INVESTMENT IN UNCONSOLIDATED ENTITY

On June 21, 2017, our first joint venture with Carrier, Carrier Enterprise, LLC, which we refer to as Carrier Enterprise I, acquired a 34.9% ownership interest in Russell Sigler, Inc. (“RSI”), an HVAC distributor operating from 30 locations in the Western U.S. We have an 80% controlling interest in Carrier Enterprise I, and Carrier has a 20%

non-controlling

interest. Carrier Enterprise I acquired its ownership interest in RSI for cash consideration of $63,600, of which we contributed $50,880 and Carrier contributed $12,720. Effective June 29, 2018, Carrier Enterprise I acquired an additional 1.4% ownership interest in RSI, which increased Carrier Enterprise I’s ownership interest in RSI to 36.3% for cash consideration of $3,760, of which we contributed $3,008 and Carrier contributed $752. Effective April 22, 2019, Carrier Enterprise I acquired an additional 1.8% ownership interest in RSI for cash consideration of $4,940, of which we contributed $3,952 and Carrier contributed $988. This acquisition increased Carrier Enterprise I’s ownership interest in RSI to 38.1%.

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. Additionally, Carrier Enterprise I has the right to appoint two of RSI’s six board members. Given Carrier Enterprise I’s 38.1% equity interest in RSI and its right to appoint two out of RSI’s six board members, this investment in RSI is accounted for under the equity method.

ACQUISITIONS

12 Months Ended

Dec. 31, 2020

ACQUISITIONS

13. ACQUISITIONS

N&S Supply of Fishkill, Inc.

On November 26, 2019, one of our wholly owned subsidiaries acquired certain assets and assumed certain liabilities of N&S Supply of Fishkill, Inc., a distributor of air conditioning, heating and plumbing products operating from seven locations in New York and Connecticut. The purchase price was composed of cash consideration of $12,000, the issuance of 22,435 shares of Common stock having a fair value of $3,871, net of a discount for lack of marketability, and the repayment of certain indebtedness. The purchase price resulted in the recognition of $4,672 in goodwill and intangibles. The fair value of the identified intangible assets was $1,540 and consisted of $770 trade names and distribution rights, and $770 in customer relationships to be amortized over an

18-year

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

Peirce-Phelps, Inc.

On August 1, 2019, Carrier Enterprise I acquired substantially all the HVAC assets and assumed certain of the liabilities of Peirce-Phelps, Inc. (“PPI”), an HVAC distributor operating from 19 locations in Pennsylvania, New Jersey, and Delaware, for $85,000 less certain average revolving indebtedness. Consideration for the net purchase price consisted of $10,000 in cash, 372,543 shares of Common stock having a fair value of $58,344, net of a discount for lack of marketability, and the repayment of certain average revolving indebtedness. Carrier contributed cash of $17,000 to Carrier Enterprise I in connection with the acquisition of PPI.

The purchase price resulted in the recognition of $28,884 in goodwill and intangibles. The fair value of the identified intangible assets was $19,000 and consisted of $13,500 in trade names and distribution rights, and $5,500 in customer relationships to be amortized over an

18-year

period. The tax basis of such goodwill is deductible for income tax purposes over 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 PPI based on the respective fair values as of August 1, 2019:


Cash and cash equivalents	$	4,299
Accounts receivable		30,719
Inventories		45,491
Other current assets		135
Property and equipment		2,544
Operating lease ROU assets		19,072
Goodwill		9,884
Intangibles		19,000
Other assets		299
Accounts payable		(11,079	)
Accrued expenses and other current liabilities		(13,038	)
Operating lease liabilities, net of current portion		(14,100	)

Total	$	93,226

Dunphey & Associates Supply Co., Inc.

On April 2, 2019, one of our wholly owned subsidiaries acquired certain assets and assumed certain liabilities of Dunphey & Associates Supply Co., Inc., a distributor of air conditioning and heating products operating from seven locations in New Jersey, New York and Connecticut, for cash consideration of $16,758 and the issuance of 50,952 shares of Common stock having a fair value of $6,891, net of a discount for lack of marketability. The purchase price resulted in the recognition of $8,974 in goodwill and intangibles. The fair value of the identified intangible assets was $5,300 and consisted of $2,500 trade names and trademarks, and $2,800 in customer relationships to be amortized over a

15-year

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

Other Acquisitions

On August 23, 2018, one of our wholly owned subsidiaries acquired Alert Labs, Inc., a technology company based in Ontario, Canada for cash consideration of $5,889 and the issuance of 23,873 shares of Common stock having a fair value of $3,991, net of a discount for lack of marketability, less $171 related to our previously held equity interest. In addition, 23,230 shares of Common stock having a fair value of $3,026 were issued into escrow as contingent consideration, all of which are subject to certain performance metrics within a three-year measurement period. The purchase price resulted in the recognition of $15,403 in goodwill and intangibles. The fair value of the identified intangible assets was $1,640 and consisted of $1,600 in patented and unpatented technologies and $40 in customer relationships to be amortized over a seven-year period. The tax basis of the acquired goodwill recognized is not deductible for income tax purposes.

On November 30, 2018, one of our wholly owned subsidiaries acquired certain assets and assumed certain liabilities of a wholesale distributor of air conditioning and heating products operating from three locations in North Carolina.

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 the acquisitions was not deemed significant to the consolidated financial statements.

GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2020

GOODWILL AND INTANGIBLE ASSETS

14. GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill are as follows:


Balance at December 31, 2018	$	391,998
Acquired goodwill		16,742
Foreign currency translation adjustment		2,477

Balance at December 31, 2019		411,217
Acquired goodwill		410
Foreign currency translation adjustment		859

Balance at December 31, 2020	$	412,486

Intangible assets are comprised of the following:


December 31,	Estimated Useful Lives		2020			2019
Indefinite lived intangible assets - Trade names, trademarks , and distribution rights			$	140,867		$	138,647
Finite lived intangible assets:
Customer relationships		7-18 years		81,527			79,911
Patented and unpatented technology		7 years		1,714			1,680
Trade name		10 years		1,150			1,150
Accumulated amortization				(55,329	)		(49,384	)

Finite lived intangible assets, net				29,062			33,357

			$	169,929		$	172,004

Amortization expense related to finite lived intangible assets included in selling, general and administrative expenses for the years ended December 31, 2020, 2019

and 2018, were $5,945, $5,704

and $5,348, respectively.

Annual amortization of finite lived intangible assets for the next five years is expected to approximate the following:


2021	$	5,100
2022	$	4,300
2023	$	3,700
2024	$	3,500
2025	$	3,400

SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2020

SHAREHOLDERS' EQUITY

15. SHAREHOLDERS’ EQUITY

Common Stock

Common stock and Class B common stock share equally in earnings and are identical in most other respects except (i) Common stock is entitled to one vote on most matters and each share of Class B common stock is entitled to ten votes; (ii) shareholders of Common stock are entitled to elect 25% of the Board of Directors (rounded up to the nearest whole number) and Class B shareholders are entitled to elect the balance of the Board of Directors; (iii) cash dividends may be paid on Common stock without paying a cash dividend on Class B common stock and no cash dividend may be paid on Class B common stock unless at least an equal cash dividend is paid on Common stock and (iv) Class B common stock is convertible at any time into Common stock on a

one-for-one

basis at the option of the shareholder.

Preferred Stock

We are authorized to issue preferred stock with such designation, rights and preferences as may be determined from time to time by our Board of Directors. Accordingly, the Board of Directors is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of our Common stock and Class B common stock and, in certain instances, could adversely affect the market price of this stock. We had no preferred stock outstanding at December 31, 2020 or 2019.

Stock Repurchase Plan

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. No shares were repurchased during 2020, 2019 or 2018. We last repurchased shares under this plan during 2008. In aggregate, 6,322,650 shares of Common stock and 48,263 shares of Class B common stock have been repurchased at a cost of $114,425 since the inception of the program. At December 31, 2020, there were 1,129,087 shares remaining authorized for repurchase under the program.

FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2020

FINANCIAL INSTRUMENTS

16. FINANCIAL INSTRUMENTS

Recorded Financial Instruments

Recorded financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, the current portion of long-term obligations and borrowings under our revolving credit agreement. At December 31, 2020 and 2019, the fair values of cash and cash equivalents, accounts receivable, accounts payable and the current portion of long-term obligations approximated their carrying values due to the short-term nature of these instruments.

The fair values of variable rate borrowings under our revolving credit agreement also approximate their carrying value based upon interest rates available for similar instruments with consistent terms and remaining maturities.

Off-Balance

Sheet Financial Instruments

At December 31, 2020 and 2019, we were contingently liable under a standby letter of credit for $1,075 and $925, respectively, which was required by a lease for real property. Additionally, at December 31, 2020 and 2019, we were contingently liable under various performance bonds aggregating approximately $11,400 and $10,500, respectively, which are used as collateral to cover any contingencies related to our nonperformance under agreements with certain customers. We do not expect that any material losses or obligations will result from the issuance of the standby letter of credit or performance bonds because we expect to meet our obligations under our lease for real property and to certain customers in the ordinary course of business. Accordingly, the estimated fair value of these instruments is zero.

Concentrations of Credit Risk

Financial instruments which potentially subject us to concentrations of credit risk consist principally of accounts receivable. Concentrations of credit risk are limited due to the large number of customers comprising the customer base and their dispersion across many different geographical regions. We also have access to credit insurance programs which are used as an additional means to mitigate credit risk.

DERIVATIVES

12 Months Ended

Dec. 31, 2020

DERIVATIVES

17. DERIVATIVES

We enter into foreign currency forward and option contracts 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 12 months. Accordingly, at December 31, 2020, all of our open foreign currency forward contracts had maturities of one year or less.

We had on

ly one

foreign currency exchange contract designated as a cash flow hedge at December 31, 2020

, the total notional value of which

was $

1,000

, and such contract subsequently expired during

January 2021

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


Years Ended December 31,	2020			2019
Gain (loss) recorded in accumulated other comprehensive loss	$	1,205		$	(2,001	)
Gain reclassified from accumulated other comprehensive loss into earnings	$	(574	)	$	(482	)

At December 31, 2020, we expected an estimated $402

pre-tax

loss to be reclassified into earnings to reflect the fixed prices obtained from foreign exchange hedging within the next 12 months.

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 December 31, 2020

, the total notional value of which

was $

4,600

, and such contract subsequently expired during

January 2021

We recognized (losses) gains of $(490), $(540)

and $129 from foreign currency forward and option contracts not designated as hedging instruments in our consolidated statements of income for 2020, 2019

and 2018, respectively.

The following table summarizes the fair value of derivative instruments, which consist solely of foreign exchange contracts, included in accrued expenses and other current liabilities in our consolidated balance sheets. See Note 18.


	Asset Derivatives				Liability Derivatives
December 31,	2020		2019		2020		2019
Derivatives designated as hedging instruments	$	—	$	—	$	91	$	944
Derivatives not designated as hedging instruments		—		—		10		63

Total derivative instruments	$	—	$	—	$	101	$	1,007

FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2020

FAIR VALUE MEASUREMENTS

18. FAIR VALUE MEASUREMENTS

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


		Total		Fair Value Measurements at December 31, 2020 Using
	Balance Sheet Location	Total		Level 1		Level 2		Level 3

Assets:
Equity securities	Other assets	$	6,065	$	6,065		—		—
Liabilities:
Derivative financial instruments	Accrued expenses and other current liabilities	$	101		—	$	101		—


		Total		Fair Value Measurements at December 31, 2019 Using
	Balance Sheet Location	Total		Level 1		Level 2		Level 3
Assets:

Equity securities	Other assets	$	402	$	402		—		—
Private equities	Other assets	$	2,500		—		—	$	2,500
Liabilities:
Derivative financial instruments	Accrued expenses and other current liabilities	$	1,007		—	$	1,007		—

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.

Derivative financial instruments

– these derivatives are foreign currency forward and option contracts. See Note 17. 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.

Private equities

– investment in Porch.com, Inc. Fair value was based on cost as of December 23, 2019 as inputs for the asset were unobservable, therefore, we classified this investment within Level 3 of the fair value hierarchy at December 31, 2019. The company went public on December 23, 2020 and accordingly, the fair value was based on the closing stock price from active markets and therefore was transferred to Level 1 of the fair value hierarchy at December 31, 2020.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2020

19. 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 $5,404 and $3,062 at December 31, 2020 and 2019, respectively, were established related to such programs and are included in accrued expenses and other current liabilities in our consolidated balance sheets.

Variable Interest Entity

As of December 31, 2020, in conjunction with our casualty insurance programs, limited equity interests are held in a captive insurance entity. The programs permit us to self-insure a portion of losses, to gain access to a wide array of safety-related services, to pool insurance risks and resources in order to obtain more competitive pricing for administration and reinsurance

and to limit risk of loss in any particular year. The entity meets the definition of Variable Interest Entity (“VIE”); however, we do not meet the requirements to include this entity in the consolidated financial statements. The maximum exposure to loss related to our involvement with this entity is limited to approximately $3,600.

At December 31, 2020, we have a cash deposit of $2,400 with the captive insurance entity as collateral to cover any contingency related to additional risk assessments pertaining to our self-insurance programs. See “Self-Insurance” above for further information on commitments associated with the insurance programs. At December 31, 2020, there were no other entities that met the definition of a VIE.

Purchase Obligations

At December 31, 2020, we were obligated under various

non-cancelable

purchase orders with our key suppliers for goods aggregating approximately $32,000, of which approximately $13,000 is with Carrier and its affiliates.

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2020

RELATED PARTY TRANSACTIONS

20. RELATED PARTY

TRANSACTIONS

Purchases from Carrier and its affiliates comprised 63%, 62%, and 62% of all inventory purchases made during 2020, 2019 and 2018, respectively. At December 31, 2020 and 2019, approximately $81,000 and $86,000, respectively, was payable to Carrier and its affiliates, net of receivables. Our joint ventures with Carrier also sell HVAC products to Carrier and its affiliates. Revenues in our consolidated statements of income for 2020, 2019

and 2018 included approximately $103,000, $91,000

and $84,000, 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 2020,

2019

and 2018, fees for services performed were $156, $187, and $131, respectively, and $8 was payable at December 31, 2020.

A member of our Board of Directors is the Chairman and Chief Executive Officer of Moss & Associates LLC, which served as general contractor for the remodeling of our Miami headquarters that was completed in 2018. We paid Moss & Associates LLC $124 for construction services performed during 2018.

INFORMATION ABOUT GEOGRAPHIC AREAS

12 Months Ended

Dec. 31, 2020

INFORMATION ABOUT GEOGRAPHIC AREAS

21. INFORMATION ABOUT GEOGRAPHIC AREAS

Our operations are primarily within the United States, including Puerto Rico, Canada and Mexico. Products are also sold from the United States on an export-only basis to portions of Latin America and the Caribbean Basin. The following tables set forth revenues and long-lived assets by geographical area:


Years Ended December 31,	2020		2019		2018
Revenues:
United States	$	4,535,262	$	4,184,206	$	3,981,056
Canada		301,727		294,040		291,685
Latin America and the Caribbean		217,939		292,116		273,912

Total revenues	$	5,054,928	$	4,770,362	$	4,546,653

December 31,	2020		2019
Long-Lived Assets:
United States	$	799,665	$	808,685
Canada		180,518		180,663
Latin America and the Caribbean		19,719		20,083
Total long-lived assets	$	999,902	$	1,009,431

Revenues are attributed to countries based on the location of the store from which the sale occurred. Long-lived assets consist primarily of goodwill and intangible assets, operating lease ROU assets, property and equipment, and our investment in an unconsolidated entity.

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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SUPPLEMENTAL CASH FLOW INFORMATION

SUPPLEMENTAL CASH FLOW INFORMATION

12 Months Ended

Dec. 31, 2020

22. SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information was as follows:


Years Ended December 31,	2020			2019		2018
Interest paid	$	1,844		$	4,341	$	3,065
Income taxes net of refunds	$	70,889		$	70,095	$	115,301
Common stock issued for N&S Supply of Fishkill, Inc.	$	(161	)	$	4,032		—
Common stock issued for Peirce-Phelps, Inc.		—		$	58,344		—
Common stock issued for Dunphey & Associates Supply Co., Inc.		—		$	6,891		—
Common stock issued for Alert Labs, Inc.		—			—	$	6,846

SUBSEQUENT EVENT	12 Months Ended
SUBSEQUENT EVENT	Dec. 31, 2020
SUBSEQUENT EVENT	23. SUBSEQUENT EVENT On February 9, 2021, our Board of Directors approved an increase to the quarterly cash dividend per share of Common and Class B common stock to $1.95 per share from $1.775 per share, beginning with the dividend that will be paid in April 2021.

SELECTED QUARTERLY FINANCIAL DATA

12 Months Ended

Dec. 31, 2020

SELECTED QUARTERLY FINANCIAL DATA

(UNAUDITED)


(In thousands, except per share data)	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
Year Ended December 31, 2020
Revenues (1)	$	1,008,156	$	1,355,385	$	1,536,671	$	1,154,716	$	5,054,928
Gross profit	$	247,615	$	319,199	$	373,763	$	282,244	$	1,222,821
Net income attributable to Watsco, Inc.	$	30,502	$	86,578	$	106,489	$	46,010	$	269,579

Earnings per share for Common and Class B common stock (2):
Basic	$	0.72	$	2.26	$	2.77	$	1.14	$	7.03

Diluted	$	0.72	$	2.26	$	2.76	$	1.14	$	7.01

Year Ended December 31, 2019
Revenues (1)	$	931,278	$	1,371,854	$	1,394,915	$	1,072,315	$	4,770,362
Gross profit	$	233,760	$	327,984	$	334,691	$	260,521	$	1,156,956
Net income attributable to Watsco, Inc.	$	35,037	$	90,155	$	83,480	$	37,278	$	245,950

Earnings per share for Common and Class B common stock (2):
Basic	$	0.88	$	2.40	$	2.20	$	0.92	$	6.51

Diluted	$	0.88	$	2.40	$	2.20	$	0.92	$	6.50

(1)

(2)	Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2020

Organization, Consolidation and Presentation

On April 3, 2020, United Technologies Corporation completed the

spin-off

non-controlling

interest. All significant intercompany balances and transactions have been eliminated in consolidation

Impact of COVID-19 Pandemic

Impact of

COVID-19

Pandemic

A novel strain of coronavirus,

COVID-19,

surfaced in December 2019 and has spread around the world, including to the United States. In March 2020, the World Health Organization declared

COVID-19

a pandemic. The

COVID-19

pandemic, the effects of the

COVID-19

pandemic on our employees, customers, suppliers, and vendors, and to what extent normal economic and operating conditions can resume. Even after the

COVID-19

pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred as a result of the

COVID-19

pandemic. Therefore, we cannot reasonably estimate the impact at this time.

Foreign Currency Translation and Transactions

Equity Method Investments

Use of Estimates

Cash Equivalents

All highly liquid instruments purchased with original maturities of three months or less are considered to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Inventories

Inventories consist of air conditioning, heating and refrigeration equipment and related parts and supplies and are valued at the lower of cost using the weighted-average cost basis and the

first-in,

first-out

Vendor Rebates and Purchase Discounts

Equity Securities

Property and Equipment

3-40

years. Leasehold improvements are amortized over the shorter of the respective lease terms or estimated useful lives. Machinery, vehicles

and equipment are depreciated over estimated useful lives ranging from

years. Computer hardware and software are depreciated over estimated useful lives ranging from

3-10

years. Furniture and fixtures are depreciated over estimated useful lives ranging from

5-7

years.

Operating and Finance Leases

We have operating leases for real property, vehicles and equipment, and finance leases primarily for vehicles. Operating leases are included in operating lease

right-of-use

Operating lease ROU assets also include any lease

pre-payments

1-9

non-lease

Practical Expedients

We elected the practical expedients related to short-term leases and separating lease components from

non-lease

components for all underlying asset classes.

Goodwill and Other Intangible Assets

Goodwill and Intangible Assets

Derivative Instruments and Hedging Activity

Fair Value Measurements


Level 1		Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2		Observable inputs other than Level 1 prices such as quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active; or model-driven valuations or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3		Unobservable inputs for the asset or liability. These inputs reflect our own assumptions about the assumptions a market participant would use in pricing the asset or liability.

Revenue Recognition

Product Returns

Sales Incentives

Practical Expedients

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2020, 2019

and 2018, were $12,588, $16,587

and $16,520, respectively.

Shipping and Handling

and 2018, were $55,019, $54,783

and $51,741, respectively.

Share-Based Compensation

The fair value of stock option and

non-vested

Income Taxes

“more-likely-than-not”

threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority.

Earnings per Share

We compute earnings per share using the

two-class

method. The

two-class

non-vested

restricted stock are considered participating securities because these awards contain a

non-forfeitable

right to dividends irrespective of whether the awards ultimately vest. Under the

two-class

method, undistributed earnings are allocated to Common stock, Class B common stock and participating securities based on the weighted-average shares outstanding during the period.

No Hedging Designation.

The gain or loss on a derivative instrument not designated as an accounting hedging instrument is recognized in earnings within selling, general and administrative expenses.

Cash Flow Hedge.

Fair Value Hedge.

See Note 17 for additional information pertaining to derivative instruments.

Loss Contingencies

Recently Adopted Accounting Standards

Financial Instruments—Credit Losses

off-balance

Intangibles—Goodwill and Other

tax-deductible

LEASES (Tables)

12 Months Ended

Dec. 31, 2020

Components Of Lease Expense

The components of operating lease expense were as follows:


Years Ended December 31,	2020			2019
Lease cost	$	82,543		$	74,755
Short-term lease cost		6,317			9,427
Variable lease cost		942			707
Sublease income		(228	)		(226	)

Total operating lease cost	$	89,574		$	84,663

Summary Of Balance Sheet Information Related To Leases

Supplemental balance sheet information related to operating leases were as follows:


December 31,	2020			2019
ROU assets	$	209,169		$	223,369
Current portion of operating lease liabilities	$	70,232		$	68,199
Operating lease liabilities		139,527			154,271

Total operating lease liabilities	$	209,759		$	222,470

Weighted Average Remaining Lease Term (in years)		3.5 years			3.9 years
Weighted Average Discount Rate		4.00	%		4.48	%

Summary Of Supplemental Cash Flow Information Related to Leases

Supplemental cash flow information related to operating leases were as follows:


Years Ended December 31,	2020		2019
Operating cash flows for the measurement of operating lease liabilities	$	80,921	$	75,357
Operating lease ROU assets obtained in exchange for operating lease obligations	$	59,093	$	290,422

Maturities Of Operating Lease Liabilities

At December 31, 2020, maturities of operating lease liabilities over each of the next five years and thereafter were as follows:


2021	$	77,170
2022		62,291
2023		44,931
2024		25,052
2025		9,709
Thereafter		6,842

Total lease payments		225,995
Less imputed interest		16,236

Total lease liability	$	209,759

REVENUES (Tables)

12 Months Ended

Dec. 31, 2020

Summary of Disaggregated Revenue

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


Years Ended December 31,	2020			2019			2018
Primary Geographical Regions:
United States	$	4,535,262		$	4,184,206		$	3,981,056
Canada		301,727			294,040			291,685
Latin America and the Caribbean		217,939			292,116			273,912

	$	5,054,928		$	4,770,362		$	4,546,653

Major Product Lines:
HVAC equipment		69	%		68	%		67	%
Other HVAC products		28	%		28	%		29	%
Commercial refrigeration products		3	%		4	%		4	%

		100	%		100	%		100	%

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of Basic and Diluted Earnings Per Common Share

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


Years Ended December 31,	2020		2019		2018
Basic Earnings per Share:
Net income attributable to Watsco, Inc. shareholders	$	269,579	$	245,950	$	242,932
Less: distributed and undistributed earnings allocated to non-vested restricted common stock		23,140		20,412		19,792

Earnings allocated to Watsco, Inc. shareholders	$	246,439	$	225,538	$	223,140

Weighted-average common shares outstanding - Basic		35,069,516		34,644,700		34,319,890

Basic earnings per share for Common and Class B common stock	$	7.03	$	6.51	$	6.50

Allocation of earnings for Basic:
Common stock	$	228,361	$	208,779	$	206,355
Class B common stock		18,078		16,759		16,785

	$	246,439	$	225,538	$	223,140

Diluted Earnings per Share:
Net income attributable to Watsco, Inc. shareholders	$	269,579	$	245,950	$	242,932
Less: distributed and undistributed earnings allocated to non-vested restricted common stock		23,140		20,411		19,788

Earnings allocated to Watsco, Inc. shareholders	$	246,439	$	225,539	$	223,144

Weighted-average common shares outstanding - Basic		35,069,516		34,644,700		34,319,890
Effect of dilutive stock options		81,055		30,941		54,379

Weighted-average common shares outstanding - Diluted		35,150,571		34,675,641		34,374,269

Diluted earnings per share for Common and Class B common stock	$	7.01	$	6.50	$	6.49

OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss)

The tax effects allocated to each component of other comprehensive income (loss) were as follows:


Years Ended December 31,	2020			2019			2018
Foreign currency translation adjustment	$	6,272		$	12,298		$	(20,493	)
Unrealized gain (loss) on cash flow hedging instruments		1,205			(2,001	)		2,627
Income tax (expense) benefit		(325	)		540			(709	)

Unrealized gain (loss) on cash flow hedging instruments, net of tax		880			(1,461	)		1,918

Reclassification of gain on cash flow hedging instruments into earnings		(574	)		(482	)		(215	)
Income tax expense		156			130			58

Reclassification of gain on cash flow hedging instruments into earnings, net of tax		(418	)		(352	)		(157	)

Other comprehensive income (loss)	$	6,734		$	10,485		$	(18,732	)

Schedule of Accumulated Other Comprehensive Loss

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


Years Ended December 31,	2020			2019			2018
Foreign currency translation adjustment:
Beginning balance	$	(38,599	)	$	(46,604	)	$	(33,499	)
Current period other comprehensive income (loss)		3,905			8,005			(13,105	)

Ending balance		(34,694	)		(38,599	)		(46,604	)

Cash flow hedging instruments:
Beginning balance		(451	)		636			(421	)
Current period other comprehensive income (loss)		528			(876	)		1,151
Reclassification adjustment		(250	)		(211	)		(94	)

Ending balance		(173	)		(451	)		636

Equity securities:
Beginning balance		—			—			(301	)
Cumulative-effect adjustment to retained earnings		—			—			301

Ending balance		—			—			—

Accumulated other comprehensive loss, net of tax	$	(34,867	)	$	(39,050	)	$	(45,968	)

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2020

Property and Equipment, Net

Property and equipment, net, consists of:


December 31,	2020			2019
Land	$	741		$	741
Buildings and improvements		80,877			81,938
Machinery, vehicles , and equipment		92,577			86,639
Computer hardware and software		62,776			56,227
Furniture and fixtures		19,077			18,049

		256,048			243,594
Accumulated depreciation and amortization		(157,823	)		(145,071	)

	$	98,225		$	98,523

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2020

Components of Income Tax Expense

The components of income tax expense from our wholly owned operations and investments and our controlling interest in

CIAC and

joint ventures with Carrier are as follows:


Years Ended December 31,	2020			2019			2018
Current:
U.S. Federal	$	58,895		$	48,359		$	47,263
State		12,909			9,362			10,031
Foreign		4,779			8,078			7,229

	76,583			65,799			64,523

Deferred:
U.S. Federal		218			2,603			7,082
State		21			446			1,600
Foreign		(199	)		(1,771	)		(392	)

	40			1,278			8,290

Income tax expense	$	76,623		$	67,077		$	72,813

Reconciliation of Effective Income Tax Rate

Following is a reconciliation of the effective income tax rate:


Years Ended December 31,	2020			2019			2018
U.S. federal statutory rate		21.0	%		21.0	%		21.0	%
State income taxes, net of federal benefit and other		3.3			2.8			3.6
Excess tax benefits from share-based compensation		(2.3	)		(2.0	)		(2.0	)
Tax effects on foreign income		0.3			0.5			0.5
GILTI		—			(0.1	)		0.3
Tax credits and other		(0.3	)		(1.0	)		—
Repatriation transition tax		—			—			(0.9	)
Deferred tax impact of enacted tax rate changes		—			—			0.3

Effective income tax rate attributable to Watsco, Inc.		22.0			21.2			22.8
Taxes attributable to non-controlling interest		(2.8	)		(2.7	)		(3.1	)

Effective income tax rate		19.2	%		18.5	%		19.7	%

Significant Components of Net Deferred Tax Liabilities

The following is a summary of the significant components of our net deferred tax liabilities:


December 31,	2020			2019
Deferred tax assets:
Share-based compensation	$	27,223		$	24,413
Capitalized inventory costs and inventory reserves		3,189			3,627
Allowance for doubtful accounts		949			1,338
Self-insurance reserves		518			209
Other		5,090			2,212
Net operating loss carryforwards		2,930			2,036

	39,899			33,835
Valuation allowance		(668	)		(655	)

Total deferred tax assets		39,231			33,180

Deferred tax liabilities:
Deductible goodwill		(78,288	)		(73,898	)
Depreciation		(16,441	)		(14,241	)
Other		(7,050	)		(7,188	)

Total deferred tax liabilities		(101,779	)		(95,327	)

Net deferred tax liabilities (1)	$	(62,548	)	$	(62,147	)

(1)	Net deferred tax liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities.

Changes in Gross Unrecognized Tax Benefits

The changes in gross unrecognized tax benefits were as follows:


Balance at December 31, 2017	$	4,225
Additions based on tax positions related to the current year		960
Reductions due to lapse of applicable statute of limitations		(283	)

Balance at December 31, 2018		4,902
Additions based on tax positions related to the current year		1,027
Reductions due to lapse of applicable statute of limitations		(562	)

Balance at December 31, 2019		5,367
Additions based on tax positions related to the current year		1,911
Reductions due to lapse of applicable statute of limitations		(773	)

Balance at December 31, 2020	$	6,505

SHARE-BASED COMPENSATION AND BENEFIT PLANS (Tables)

12 Months Ended

Dec. 31, 2020

Summary of Stock Option Activity

The following is a summary of stock option activity under the 2014 Plan as of and for the year ended December 31, 2020:


	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Options outstanding at December 31, 2019		584,675		$	159.34
Granted		161,500			207.60
Exercised		(135,809	)		146.90
Forfeited		(25,250	)		175.76

Options outstanding at December 31, 2020		585,116		$	174.83		3.22	$	30,729

Options exercisable at December 31, 2020		89,697		$	161.15		2.27	$	5,866

Summary of Non-Vested Restricted Stock Activity

The following is a summary of non-vested restricted stock activity as of and for the year ended December 31, 2020:


	Shares			Weighted- Average Grant Date Fair Value
Non-vested restricted stock outstanding at December 31, 2019		3,191,705		$	68.63
Granted		184,265			193.89
Vested		(37,274	)		108.36
Forfeited		(3,589	)		164.94

Non-vested restricted stock outstanding at December 31, 2020		3,335,107		$	75.00

Valuation Assumptions Used for Stock Option Awards

The following table presents the weighted-average assumptions used for stock options

granted


Years Ended December 31,	2020			2019			2018
Expected term in years		4.25			4.25			4.25
Risk-free interest rate		0.26	%		1.64	%		2.69	%
Expected volatility		20.89	%		18.01	%		17.11	%
Expected dividend yield		3.69	%		3.99	%		3.13	%
Grant date fair value	$	20.76		$	14.81		$	20.05

Share-Based Compensation Expense

The following table provides information on share-based compensation expense:


Years Ended December 31,	2020		2019		2018
Stock options	$	2,447	$	2,440	$	2,014
Non-vested restricted stock		19,682		14,592		13,494

Share-based compensation expense	$	22,129	$	17,032	$	15,508

ACQUISITIONS (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]


Cash and cash equivalents	$	4,299
Accounts receivable		30,719
Inventories		45,491
Other current assets		135
Property and equipment		2,544
Operating lease ROU assets		19,072
Goodwill		9,884
Intangibles		19,000
Other assets		299
Accounts payable		(11,079	)
Accrued expenses and other current liabilities		(13,038	)
Operating lease liabilities, net of current portion		(14,100	)

Total	$	93,226

GOODWILL AND INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2020

Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill are as follows:


Balance at December 31, 2018	$	391,998
Acquired goodwill		16,742
Foreign currency translation adjustment		2,477

Balance at December 31, 2019		411,217
Acquired goodwill		410
Foreign currency translation adjustment		859

Balance at December 31, 2020	$	412,486

Indefinite Lived Intangible Assets

Intangible assets are comprised of the following:


December 31,	Estimated Useful Lives		2020			2019
Indefinite lived intangible assets - Trade names, trademarks , and distribution rights			$	140,867		$	138,647
Finite lived intangible assets:
Customer relationships		7-18 years		81,527			79,911
Patented and unpatented technology		7 years		1,714			1,680
Trade name		10 years		1,150			1,150
Accumulated amortization				(55,329	)		(49,384	)

Finite lived intangible assets, net				29,062			33,357

			$	169,929		$	172,004

Amortization Expense Related to Finite Lived Intangible Assets

Annual amortization of finite lived intangible assets for the next five years is expected to approximate the following:


2021	$	5,100
2022	$	4,300
2023	$	3,700
2024	$	3,500
2025	$	3,400

DERIVATIVES (Tables)

12 Months Ended

Dec. 31, 2020

Impact from Foreign Exchange Derivative Instruments Designated as Cash Flow Hedges

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


Years Ended December 31,	2020			2019
Gain (loss) recorded in accumulated other comprehensive loss	$	1,205		$	(2,001	)
Gain reclassified from accumulated other comprehensive loss into earnings	$	(574	)	$	(482	)

Fair Value of Derivative Instruments and Location in the Balance Sheets


	Asset Derivatives				Liability Derivatives
December 31,	2020		2019		2020		2019
Derivatives designated as hedging instruments	$	—	$	—	$	91	$	944
Derivatives not designated as hedging instruments		—		—		10		63

Total derivative instruments	$	—	$	—	$	101	$	1,007

FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2020

Assets and Liabilities Measured at Fair Value on Recurring Basis

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


		Total		Fair Value Measurements at December 31, 2020 Using
	Balance Sheet Location	Total		Level 1		Level 2		Level 3

Assets:
Equity securities	Other assets	$	6,065	$	6,065		—		—
Liabilities:
Derivative financial instruments	Accrued expenses and other current liabilities	$	101		—	$	101		—


		Total		Fair Value Measurements at December 31, 2019 Using
	Balance Sheet Location	Total		Level 1		Level 2		Level 3
Assets:

Equity securities	Other assets	$	402	$	402		—		—
Private equities	Other assets	$	2,500		—		—	$	2,500
Liabilities:
Derivative financial instruments	Accrued expenses and other current liabilities	$	1,007		—	$	1,007		—

INFORMATION ABOUT GEOGRAPHIC AREAS (Tables)

12 Months Ended

Dec. 31, 2020

Revenues and Long-Lived Assets by Geographical Area

The following tables set forth revenues and long-lived assets by geographical area:


Years Ended December 31,	2020		2019		2018
Revenues:
United States	$	4,535,262	$	4,184,206	$	3,981,056
Canada		301,727		294,040		291,685
Latin America and the Caribbean		217,939		292,116		273,912

Total revenues	$	5,054,928	$	4,770,362	$	4,546,653

December 31,	2020		2019
Long-Lived Assets:
United States	$	799,665	$	808,685
Canada		180,518		180,663
Latin America and the Caribbean		19,719		20,083
Total long-lived assets	$	999,902	$	1,009,431

SUPPLEMENTAL CASH FLOW INFORMATION (Tables)

12 Months Ended

Dec. 31, 2020

Supplemental Cash Flow Information

Supplemental cash flow information was as follows:


Years Ended December 31,	2020			2019		2018
Interest paid	$	1,844		$	4,341	$	3,065
Income taxes net of refunds	$	70,889		$	70,095	$	115,301
Common stock issued for N&S Supply of Fishkill, Inc.	$	(161	)	$	4,032		—
Common stock issued for Peirce-Phelps, Inc.		—		$	58,344		—
Common stock issued for Dunphey & Associates Supply Co., Inc.		—		$	6,891		—
Common stock issued for Alert Labs, Inc.		—			—	$	6,846

SELECTED QUARTERLY FINANCIAL DATA (Tables)

12 Months Ended

Dec. 31, 2020

Selected Quarterly Financial Data

SELECTED QUARTERLY FINANCIAL DATA

(UNAUDITED)


(In thousands, except per share data)	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
Year Ended December 31, 2020
Revenues (1)	$	1,008,156	$	1,355,385	$	1,536,671	$	1,154,716	$	5,054,928
Gross profit	$	247,615	$	319,199	$	373,763	$	282,244	$	1,222,821
Net income attributable to Watsco, Inc.	$	30,502	$	86,578	$	106,489	$	46,010	$	269,579

Earnings per share for Common and Class B common stock (2):
Basic	$	0.72	$	2.26	$	2.77	$	1.14	$	7.03

Diluted	$	0.72	$	2.26	$	2.76	$	1.14	$	7.01

Year Ended December 31, 2019
Revenues (1)	$	931,278	$	1,371,854	$	1,394,915	$	1,072,315	$	4,770,362
Gross profit	$	233,760	$	327,984	$	334,691	$	260,521	$	1,156,956
Net income attributable to Watsco, Inc.	$	35,037	$	90,155	$	83,480	$	37,278	$	245,950

Earnings per share for Common and Class B common stock (2):
Basic	$	0.88	$	2.40	$	2.20	$	0.92	$	6.51

Diluted	$	0.88	$	2.40	$	2.20	$	0.92	$	6.50

(1)

(2)	Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year.

Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) Store State Entity	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Significant Accounting Policies [Line Items]
Number of joint ventures \| Entity	3
Allowance for doubtful accounts	$ 7,087	$ 7,943
Capitalized vendor rebates	13,434	12,007
Goodwill and intangible assets impairment	0	0	$ 0
Accrued sales returns	12,739	12,181
Selling, general and administrative expense	833,051	800,328	757,452
Finance lease ROU assets	6,232	3,150
Finance lease liabilities	6,383	3,231
Reduction of inventory due to cash discount recorded	12,029	10,098
Shipping and Handling [Member]
Significant Accounting Policies [Line Items]
Selling, general and administrative expense	55,019	54,783	51,741
Advertising Expense [Member]
Significant Accounting Policies [Line Items]
Selling, general and administrative expense	$ 12,588	$ 16,587	$ 16,520
Minimum [Member]
Significant Accounting Policies [Line Items]
Operating Lease Remaining Lease Term	1 year
Maximum [Member]
Significant Accounting Policies [Line Items]
Operating Lease Remaining Lease Term	9 years
Maximum [Member] \| Service Revenue Net [Member] \| Product Concentration Risk
Significant Accounting Policies [Line Items]
Percentage of revenue	1.00%	1.00%
Buildings and Improvements \| Minimum [Member]
Significant Accounting Policies [Line Items]
Estimated useful lives in years	3 years
Buildings and Improvements \| Maximum [Member]
Significant Accounting Policies [Line Items]
Estimated useful lives in years	40 years
Machinery, Vehicles and Equipment \| Minimum [Member]
Significant Accounting Policies [Line Items]
Estimated useful lives in years	3 years
Machinery, Vehicles and Equipment \| Maximum [Member]
Significant Accounting Policies [Line Items]
Estimated useful lives in years	10 years
Computer Hardware and Software \| Minimum [Member]
Significant Accounting Policies [Line Items]
Estimated useful lives in years	3 years
Computer Hardware and Software \| Maximum [Member]
Significant Accounting Policies [Line Items]
Estimated useful lives in years	10 years
Furniture and Fixtures \| Minimum [Member]
Significant Accounting Policies [Line Items]
Estimated useful lives in years	5 years
Furniture and Fixtures \| Maximum [Member]
Significant Accounting Policies [Line Items]
Estimated useful lives in years	7 years
Watsco, Inc.
Significant Accounting Policies [Line Items]
Number of locations from which entity operates \| Store	600
Number of states in which entity operates \| State	38

Components of Operating Lease Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Lease cost	$ 82,543	$ 74,755
Short-term lease cost	6,317	9,427
Variable lease cost	942	707
Sublease income	(228)	(226)
Total operating lease cost	$ 89,574	$ 84,663

Summary Of Balance Sheet Information Related To Operating Leases (Detail) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Operating Leases
ROU assets	$ 209,169	$ 223,369
Current portion of operating lease liabilities	70,232	68,199
Operating lease liabilities	139,527	154,271
Total operating lease liabilities	$ 209,759	$ 222,470
Weighted Average Remaining Lease Term (in years)
Operating leases	3 years 6 months	3 years 10 months 24 days
Weighted Average Discount Rate
Operating leases	4.00%	4.48%

Summary Of Supplemental Cash Flow Information Related to Leases (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for the measurement of operating lease liabilities	$ 80,921	$ 75,357
Operating lease ROU assets obtained in exchange for operating lease obligations	$ 59,093	$ 290,422

Maturities Of Operating Lease Liabilities (Detail) - Operating Lease Liabilities [Member] $ in Thousands	Dec. 31, 2020 USD ($)
Maturities of Operating Lease Liabilities
2021	$ 77,170
2022	62,291
2023	44,931
2024	25,052
2025	9,709
Thereafter	6,842
Total lease payments	225,995
Less imputed interest	16,236
Total lease liability	$ 209,759

Leases - Additional Information (Detail) $ in Thousands	Dec. 31, 2020 USD ($)
Operating leases not yet commenced	$ 21,300
Maximum
Lessee, Operating Lease, Lease Not yet Commenced, Term of Contract	11 years
Minimum
Lessee, Operating Lease, Lease Not yet Commenced, Term of Contract	5 years

Summary of Disaggregated Revenue (Detail) - USD ($)
$ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2020

^[1]

Sep. 30, 2020

^[1]

Jun. 30, 2020

^[1]

Mar. 31, 2020

^[1]

Dec. 31, 2019

^[1]

Sep. 30, 2019

^[1]

Jun. 30, 2019

^[1]

Mar. 31, 2019

^[1]

Dec. 31, 2020

Dec. 31, 2019

Dec. 31, 2018

100.00%

$ 1,154,716

$ 1,536,671

$ 1,355,385

$ 1,008,156

$ 1,072,315

$ 1,394,915

$ 1,371,854

$ 931,278

$ 5,054,928

^[1]

$ 4,770,362

^[1]

$ 4,546,653

United States

4,535,262

4,184,206

3,981,056

Canada

Latin America and the Caribbean

301,727

294,040

291,685

$ 217,939

$ 292,116

$ 273,912

HVAC Equipment

69.00%

68.00%

67.00%

Other HVAC Products

Commercial Refrigeration Products

28.00%

29.00%

3.00%

4.00%

[1]

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

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-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 235
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-05(b)(2))
-URI http://asc.fasb.org/extlink&oid=120399901&loc=d3e537907-122884

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(1))
-URI http://asc.fasb.org/extlink&oid=120395209&loc=SL114868664-224227

Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]

Schedule of Basic and Diluted Earnings per Common Share (Detail) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2020

Sep. 30, 2020

Jun. 30, 2020

Mar. 31, 2020

Dec. 31, 2019

Sep. 30, 2019

Jun. 30, 2019

Mar. 31, 2019

Dec. 31, 2020

Dec. 31, 2019

Dec. 31, 2018

Net income attributable to Watsco, Inc. shareholders

$ 46,010

$ 106,489

$ 86,578

$ 30,502

$ 37,278

$ 83,480

$ 90,155

$ 35,037

$ 269,579

$ 245,950

$ 242,932

Less: distributed and undistributed earnings allocated to non-vested restricted common stock

23,140

20,412

19,792

Earnings allocated to Watsco, Inc. shareholders - Basic

$ 246,439

$ 225,538

$ 223,140

Weighted-average common shares outstanding - Basic

35,069,516

34,644,700

34,319,890

Basic earnings per share for Common and Class B common stock

$ 1.14

^[1]

$ 2.77

^[1]

$ 2.26

^[1]

$ 0.72

^[1]

$ 0.92

^[1]

$ 2.20

^[1]

$ 2.40

^[1]

$ 0.88

^[1]

$ 7.03

^[1]

$ 6.51

^[1]

$ 6.50

Net income attributable to Watsco, Inc. shareholders

$ 46,010

$ 106,489

$ 86,578

$ 30,502

$ 37,278

$ 83,480

$ 90,155

$ 35,037

$ 269,579

$ 245,950

$ 242,932

Less: distributed and undistributed earnings allocated to non-vested restricted common stock - Diluted

23,140

20,411

19,788

Earnings allocated to Watsco, Inc. shareholders - Diluted

$ 246,439

$ 225,539

$ 223,144

Weighted-average common shares outstanding - Basic

35,069,516

34,644,700

34,319,890

Effect of dilutive stock options

81,055

30,941

54,379

Weighted-average common shares outstanding - Diluted

35,150,571

34,675,641

34,374,269

Diluted earnings per share for Common and Class B common stock

$ 1.14

^[1]

$ 2.76

^[1]

$ 2.26

^[1]

$ 0.72

^[1]

$ 0.92

^[1]

$ 2.20

^[1]

$ 2.40

^[1]

$ 0.88

^[1]

$ 7.01

^[1]

$ 6.50

^[1]

$ 6.49

Common Stock

Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]

Earnings allocated to Watsco, Inc. shareholders - Basic

$ 228,361

$ 208,779

$ 206,355

Class B Common Stock

Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]

Earnings allocated to Watsco, Inc. shareholders - Basic

$ 18,078

$ 16,759

$ 16,785

[1]	Quarterly and year-to-date earnings per share are calculated on an individual basis; therefore, the sum of earnings per share amounts for the quarters may not equal earnings per share amounts for the year.

Earnings Per Share - Additional Information (Detail) - shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Earnings Per Share [Line Items]
Class B common stock conversion, number of shares	2,572,536	2,574,336	2,581,627
Anti-dilutive stock options excluded from earnings per share	19,722	205,380	74,270

Schedule of Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Components Of Other Comprehensive Income Loss [Line Items]
Foreign currency translation adjustment	$ 6,272	$ 12,298	$ (20,493)
Unrealized gain (loss) on cash flow hedging instruments	1,205	(2,001)	2,627
Income tax (expense) benefit	(325)	540	(709)
Unrealized gain (loss) on cash flow hedging instruments, net of tax	880	(1,461)	1,918
Reclassification of gain on cash flow hedging instruments into earnings	(574)	(482)	(215)
Income tax expense	156	130	58
Reclassification of gain on cash flow hedging instruments into earnings, net of tax	(418)	(352)	(157)
Other comprehensive income (loss)	$ 6,734	$ 10,485	$ (18,732)

Amount after tax and reclassification adjustments of other comprehensive income (loss).

Schedule of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ (39,050)	$ (45,968)
Ending balance	(34,867)	(39,050)	$ (45,968)
Foreign Currency Translation Adjustment
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(38,599)	(46,604)	(33,499)
Current period other comprehensive income (loss)	3,905	8,005	(13,105)
Ending balance	(34,694)	(38,599)	(46,604)
Cash Flow Hedging Instruments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(451)	636	(421)
Current period other comprehensive income (loss)	528	(876)	1,151
Reclassification adjustment	(250)	(211)	(94)
Ending balance	(173)	(451)	636
Equity Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			(301)
Ending balance
Equity Securities \| Revision of Prior Period, Change in Accounting Principle, Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			$ 301

Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.

Components of Net Deferred Tax Liabilities [Line Items]

Supplier Concentration - Additional Information (Detail) - Supplier Concentration Risk - Vendor	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Concentration Risk [Line Items]
Number of key suppliers	10
Cost of Goods, Total
Concentration Risk [Line Items]
Percentage of purchases from key suppliers	85.00%	83.00%	84.00%
Carrier and Its Affiliates \| Cost of Goods, Total
Concentration Risk [Line Items]
Percentage of purchases from key suppliers	63.00%	62.00%	62.00%

Property and Equipment, Net (Detail) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 256,048	$ 243,594
Accumulated depreciation and amortization	(157,823)	(145,071)
Property and equipment, net	98,225	98,523
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	741	741
Buildings and Improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	80,877	81,938
Machinery, Vehicles and Equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	92,577	86,639
Computer Hardware and Software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	62,776	56,227
Furniture and Fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 19,077	$ 18,049

Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	$ 19,963	$ 18,808	$ 16,747

Debt - Additional Information (Detail) - USD ($) $ in Thousands		6 Months Ended	12 Months Ended
	Dec. 05, 2018	Mar. 31, 2020	Dec. 31, 2020	Dec. 31, 2018	Dec. 31, 2019	Apr. 10, 2010
Debt Instrument [Line Items]
Revolving credit agreement, maturity date	Dec. 05, 2023
Payment of fees related to revolving credit agreement			$ 196	$ 790
Borrowings under revolving credit agreement			$ 0		$ 155,700
Line of Credit Facility, Maximum Borrowing Capacity	$ 500,000					$ 560,000
London Interbank Offer Rate
Debt Instrument [Line Items]
Basis spread			87.50%
Federal Funds Effective Rate [Member]
Debt Instrument [Line Items]
Basis spread			0.50%
Eurocurrency Rate
Debt Instrument [Line Items]
Basis spread			1.00%
Commitment Fee
Debt Instrument [Line Items]
Basis spread			7.50%
Federal Funds and Eurocurrency Rate [Member]
Debt Instrument [Line Items]
Basis spread			0.00%
Maximum \| London Interbank Offer Rate
Debt Instrument [Line Items]
Basis spread			150.00%
Maximum \| Federal Funds Effective Rate [Member]
Debt Instrument [Line Items]
Basis spread			50.00%
Maximum \| Eurocurrency Rate
Debt Instrument [Line Items]
Basis spread			50.00%
Maximum \| Commitment Fee
Debt Instrument [Line Items]
Basis spread			20.00%
Minimum \| London Interbank Offer Rate
Debt Instrument [Line Items]
Basis spread			87.50%
Minimum \| Federal Funds Effective Rate [Member]
Debt Instrument [Line Items]
Basis spread			0.00%
Minimum \| Eurocurrency Rate
Debt Instrument [Line Items]
Basis spread			0.00%
Minimum \| Commitment Fee
Debt Instrument [Line Items]
Basis spread			7.50%
Letter of Credit
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 10,000
Swingline Subfacility
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			100,000
Revolving Credit Facility
Debt Instrument [Line Items]
Payment of fees related to revolving credit agreement			196
Seasonal discretionary maximum borrowing capacity under revolving credit agreement		$ 460,000
Alternative Currency Sublimit
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			75,000
Mexican Borrowing Sublimit
Debt Instrument [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 8,000

Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Taxes [Line Items]
U.S. federal statutory rate	21.00%	21.00%	21.00%	35.00%
Percentage of income attributable to wholly-owned operations and investments for which income tax expense and effective tax rate calculated	100.00%	100.00%	100.00%
Valuation allowance	$ 668	$ 655
Gross unrecognized tax benefits	6,505	5,367	$ 4,902	$ 4,225
Unrecognized tax benefits that, if recognized, would affect the effective tax rate	5,461	4,367
Estimated accrued interest and penalties resulting from unrecognized tax benefits	982	$ 855
Foreign subsidiaries earnings	85,000
Measurement period estimated net income tax benefit			1,819
Total net income tax benefit attributable to passage of the TCJA			$ 11,774
State and other
Income Taxes [Line Items]
Net operating loss carry forwards	$ 14,427
State and other \| Maximum
Income Taxes [Line Items]
State and other net operating loss carry forwards expiration date	2040
State and other \| Minimum
Income Taxes [Line Items]
State and other net operating loss carry forwards expiration date	2021
Foreign
Income Taxes [Line Items]
Net operating loss carry forwards	$ 10,565
Foreign \| Maximum
Income Taxes [Line Items]
State and other net operating loss carry forwards expiration date	2040
Foreign \| Minimum
Income Taxes [Line Items]
State and other net operating loss carry forwards expiration date	2036
Federal
Income Taxes [Line Items]
Net operating loss carry forwards	$ 0

Components of Income Tax Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Current:
U.S. Federal	$ 58,895	$ 48,359	$ 47,263
State	12,909	9,362	10,031
Foreign	4,779	8,078	7,229
Current	76,583	65,799	64,523
Deferred:
U.S. Federal	218	2,603	7,082
State	21	446	1,600
Foreign	(199)	(1,771)	(392)
Deferred	40	1,278	8,290
Income tax expense	$ 76,623	$ 67,077	$ 72,813

Reconciliation of Effective Income Tax Rate (Detail)	12 Months Ended
Reconciliation of Effective Income Tax Rate (Detail)	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of Effective Income Tax Rate [Line Items]
U.S. federal statutory rate	21.00%	21.00%	21.00%	35.00%
State income taxes, net of federal benefit and other	3.30%	2.80%	3.60%
Excess tax benefits from share-based compensation	(2.30%)	(2.00%)	(2.00%)
Tax effects on foreign income	0.30%	0.50%	0.50%
GILTI		(0.10%)	0.30%
Tax credits and other	(0.30%)	(1.00%)
Repatriation transition tax			(0.90%)
Deferred tax impact of enacted tax rate changes			0.30%
Effective income tax rate attributable to Watsco, Inc.	22.00%	21.20%	22.80%
Taxes attributable to non-controlling interest	(2.80%)	(2.70%)	(3.10%)
Effective income tax rate	19.20%	18.50%	19.70%

Significant Components of Net Deferred Tax Liabilities (Detail) - USD ($)
$ in Thousands

Dec. 31, 2020

Dec. 31, 2019

Share-based compensation

$ 27,223

$ 24,413

Capitalized inventory costs and inventory reserves

3,189

3,627

Allowance for doubtful accounts

949

1,338

Self-insurance reserves

518

209

Other

5,090

2,212

Net operating loss carryforwards

2,930

2,036

Total deferred tax assets, gross

39,899

33,835

Valuation allowance

(668)

(655)

Total deferred tax assets

39,231

33,180

Deductible goodwill

(78,288)

(73,898)

Depreciation

(16,441)

(14,241)

Other

(7,050)

(7,188)

Total deferred tax liabilities

(101,779)

(95,327)

Net deferred tax liabilities

^[1]

$ (62,548)

$ (62,147)

[1]	Net deferred tax liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities.

Changes in Gross Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income Tax Contingency [Line Items]
Beginning balance	$ 5,367	$ 4,902	$ 4,225
Additions based on tax positions related to the current year	1,911	1,027	960
Reductions due to lapse of applicable statute of limitations	(773)	(562)	(283)
Ending balance	$ 6,505	$ 5,367	$ 4,902

Share-Based Compensation and Benefit Plans - Additional Information (Detail) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) Age $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Income tax expense	$ 76,623	$ 67,077	$ 72,813
Shares withheld as payment for tax withholdings related to share based compensation, market value	2,299	1,528	3,782
Common stock contribution to 401(k) plan	$ 4,543	$ 4,274	$ 2,945
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares of common stock that may be granted \| shares	1,500,000
Shares reserved for future grant \| shares	457,408
Number of days of service required for an employee to purchase shares	90 days
Discount to employees to purchase shares	5.00%
Shares purchased under ESPP \| shares	5,121	5,676	5,151
Average price of the shares purchased by employees \| $ / shares	$ 171.89	$ 145.09	$ 168.21
Additional shares issued resulting from cash dividends reinvested in common stock \| shares	3,964	5,087	4,338
Net proceeds from shares purchased under ESPP	$ 1,649	$ 1,638	$ 1,585
2014 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percent of market price that share-based compensation awards are granted at	100.00%
Aggregate shares of common stock that may be granted \| shares	2,000,000
Shares of common stock remaining under the 2001 Plan available for issuance under the 2014 Plan \| shares	45,421
Shares reserved for future grant \| shares	161,503
Contractual term of stock option awards	5 years
2014 Plan \| Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Years in which options plan vest	2 years
2014 Plan \| Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Years in which options plan vest	4 years
2014 Plan \| Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares awarded under plan \| shares	915,752
2014 Plan \| Class B Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares awarded under plan \| shares	968,166
401(k) Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock contribution to 401(k) Plan, shares \| shares	25,216	30,715	17,318
Common stock contribution to 401(k) plan	$ 4,543	$ 4,274	$ 2,945
Non-Vested Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average grant date fair value of non-vested (restricted) stock \| $ / shares	$ 193.89	$ 151.58	$ 167.06
Fair value of non-vested stock that vested	$ 7,354	$ 4,931	$ 9,637
Unrecognized share-based compensation expense	$ 152,187
Vesting period related to unrecognized share-based compensation expense	11 years
Non-Vested Restricted Stock \| Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense	$ 57,000
Vesting period related to unrecognized share-based compensation expense	8 years
Vesting period related to shares obligated to issue in connection with incentive compensation agreement \| shares	42,909
Non-Vested Restricted Stock \| Chief Executive Officer \| Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense	$ 4,000
Vesting period related to unrecognized share-based compensation expense	2 years
Age of Chief Executive Officer when non-vested (restricted) stock vests \| Age	82
Non-Vested Restricted Stock \| Chief Executive Officer \| Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense	$ 31,000
Vesting period related to unrecognized share-based compensation expense	6 years
Age of Chief Executive Officer when non-vested (restricted) stock vests \| Age	86
Non-Vested Restricted Stock \| Chief Executive Officer \| Share-based Compensation Award, Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense	$ 22,000
Vesting period related to unrecognized share-based compensation expense	8 years
Age of Chief Executive Officer when non-vested (restricted) stock vests \| Age	88
Non-Vested Restricted Stock \| President
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense	$ 23,000
Vesting period related to unrecognized share-based compensation expense	23 years
Vesting period related to shares obligated to issue in connection with incentive compensation agreement \| shares	35,025
Non-Vested Restricted Stock \| President \| Share-based Compensation Award, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense	$ 22,000
Vesting period related to unrecognized share-based compensation expense	23 years
Age of president when non vested restricted shares vests \| Age	62
Non-Vested Restricted Stock \| President \| Share-based Compensation Award, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation expense	$ 1,000
Vesting period related to unrecognized share-based compensation expense	25 years
Age of president when non vested restricted shares vests \| Age	64
Non-Vested Restricted Stock \| Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Age of employee when non-vested (restricted) stock vests \| Age	62
Non-Vested Restricted Stock \| Common and Class B Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares withheld as payment for tax withholdings related to share based compensation, shares \| shares	11,693	9,824	21,754
Shares withheld as payment for tax withholdings related to share based compensation, market value	$ 2,299	$ 1,518	$ 3,775
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Income tax expense	1,586	626	635
Total intrinsic value of stock options exercised	8,753	4,153	3,500
Cash received from Common stock issued	17,608	11,703	5,006
Unrecognized share-based compensation expense	$ 4,184
Vesting period related to unrecognized share-based compensation expense	1 year 9 months 18 days
Fair value of stock options vested	$ 2,177	$ 2,055	$ 1,607
Stock Options \| Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares withheld as payment for tax withholdings related to share based compensation, shares \| shares	11,455	799	7,027
Shares withheld as payment for tax withholdings related to share based compensation, market value	$ 2,343	$ 134	$ 1,269

Summary of Stock Option Activity (Detail) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, Outstanding beginning balance \| shares	584,675
Options, Granted \| shares	161,500
Options, Exercised \| shares	(135,809)
Options, Forfeited \| shares	(25,250)
Options, Outstanding ending balance \| shares	585,116
Options, Exercisable \| shares	89,697
Weighted-Average Exercise Price, Outstanding beginning balance \| $ / shares	$ 159.34
Weighted-Average Exercise Price, Granted \| $ / shares	207.60
Weighted-Average Exercise Price, Exercised \| $ / shares	146.90
Weighted-Average Exercise Price, Forfeited \| $ / shares	175.76
Weighted-Average Exercise Price, Outstanding ending balance \| $ / shares	174.83
Weighted-Average Exercise Price, Exercisable \| $ / shares	$ 161.15
Weighted-Average Remaining Contractual Term (in years), Outstanding	3 years 2 months 19 days
Weighted-Average Remaining Contractual Term (in years), Exercisable	2 years 3 months 7 days
Aggregate Intrinsic Value, Outstanding \| $	$ 30,729
Aggregate Intrinsic Value, Exercisable \| $	$ 5,866

Summary of Non-Vested Restricted Stock Activity (Detail) - Non-Vested Restricted Stock - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Non-vested beginning balance	3,191,705
Shares, Granted	184,265
Shares, Vested	(37,274)
Shares, Forfeited	(3,589)
Shares, Non-vested ending balance	3,335,107	3,191,705
Weighted-Average Grant Date Fair Value, Non-vested beginning balance	$ 68.63
Weighted-Average Grant Date Fair Value, Granted	193.89	$ 151.58	$ 167.06
Weighted-Average Grant Date Fair Value, Vested	108.36
Weighted-Average Grant Date Fair Value, Forfeited	164.94
Weighted-Average Grant Date Fair Value, Non-vested ending balance	$ 75.00	$ 68.63

Weighted-Average Assumptions Used for Stock Options Granted (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term in years	4 years 3 months	4 years 3 months	4 years 3 months
Risk-free interest rate	0.26%	1.64%	2.69%
Expected volatility	20.89%	18.01%	17.11%
Expected dividend yield	3.69%	3.99%	3.13%
Grant date fair value	$ 20.76	$ 14.81	$ 20.05

Share-Based Compensation Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 22,129	$ 17,032	$ 15,508
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	2,447	2,440	2,014
Non-Vested Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 19,682	$ 14,592	$ 13,494

Purchase of Remaining Ownership Interest in Joint Venture - Additional Information (Detail) - Homans Associates II LLC [Member] $ in Thousands	May 31, 2019 USD ($) Location
Business Acquisition [Line Items]
Additional ownership interest acquired in subsidiary	20.00%
Percentage of ownership interest	100.00%
Cash consideration paid to obtain additional ownership \| $	$ 32,400
Number of locations in which the company operates \| Location	17

Investment in Unconsolidated Entity - Additional Information (Detail) $ in Thousands				12 Months Ended
	Apr. 22, 2019 USD ($)	Jun. 29, 2018 USD ($)	Jun. 21, 2017 USD ($) Location board-member	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Schedule of Equity Method Investments [Line Items]
Investment in unconsolidated entity				$ 4,940	$ 3,760
Proceeds from non-controlling interest for investment in unconsolidated entity				$ 988	$ 752
Carrier Enterprise I
Schedule of Equity Method Investments [Line Items]
Ownership percentage by parent			80.00%
Ownership percentage, by non-controlling owners			20.00%
Russell Sigler Inc
Schedule of Equity Method Investments [Line Items]
Total ownership interest	38.10%	36.30%	34.90%
Investment in unconsolidated entity	$ 4,940	$ 3,760	$ 63,600
Contribution to investment in unconsolidated entity by controlling interest	3,952	3,008	50,880
Proceeds from non-controlling interest for investment in unconsolidated entity	$ 988	$ 752	$ 12,720
Ownership percentage needed for right to purchase up to 100%			85.00%
Total number of board members \| board-member			6
Number of board members that can be appointed based on ownership \| board-member			2
Equity method investment, additional ownership interest acquired	1.80%	1.40%
Russell Sigler Inc \| Western United States
Schedule of Equity Method Investments [Line Items]
Number of locations \| Location			30

Acquisitions - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019	Aug. 01, 2019
Business Acquisition [Line Items]
Operating lease ROU assets	$ 209,169	$ 223,369
Peirce Phelps PPI [Member]
Business Acquisition [Line Items]
Cash and cash equivalents			$ 4,299
Accounts receivable			30,719
Inventories			45,491
Other current assets			135
Property and equipment			2,544
Operating lease ROU assets			19,072
Goodwill			9,884
Intangibles			19,000
Other assets			299
Accounts payable			(11,079)
Accrued expenses and other current liabilities			(13,038)
Operating lease liabilities, net of current portion			(14,100)
Total			$ 93,226

Acquisitions - Additional Information (Detail) $ in Thousands					12 Months Ended
	Nov. 26, 2019 USD ($) Location shares	Aug. 01, 2019 USD ($) Location shares	Apr. 02, 2019 USD ($) Location shares	Aug. 23, 2018 USD ($) shares	Dec. 31, 2019 USD ($)
Business Acquisition [Line Items]
Proceeds from non-controlling interest for Business Acquisition					$ 17,000
N&S Supply of Fishkill, Inc
Business Acquisition [Line Items]
Number of locations in which the company operates \| Location	7
Cash consideration	$ 12,000
Stock issued for acquisition \| shares	22,435
Fair value of equity shares issued	$ 3,871
Goodwill and intangibles acquired	4,672
Intangible assets acquired	$ 1,540
Number of years goodwill is deductible for tax purposes	15 years
N&S Supply of Fishkill, Inc \| Customer Relationships [Member]
Business Acquisition [Line Items]
Intangible assets acquired	$ 770
Amortization period	18 years
N&S Supply of Fishkill, Inc \| Trade Names And Distribution Rights [Member]
Business Acquisition [Line Items]
Intangible assets acquired	$ 770
Peirce Phelps PPI [Member]
Business Acquisition [Line Items]
Number of locations in which the company operates \| Location		19
Purchase price less certain average revolving indebtedness		$ 85,000
Cash consideration		$ 10,000
Stock issued for acquisition \| shares		372,543
Fair value of equity shares issued		$ 58,344
Proceeds from non-controlling interest for Business Acquisition		17,000
Goodwill and intangibles acquired		28,884
Intangible assets acquired		$ 19,000
Number of years goodwill is deductible for tax purposes		15 years
Peirce Phelps PPI [Member] \| Customer Relationships [Member]
Business Acquisition [Line Items]
Intangible assets acquired		$ 5,500
Amortization period		18 years
Peirce Phelps PPI [Member] \| Trade Names And Distribution Rights [Member]
Business Acquisition [Line Items]
Intangible assets acquired		$ 13,500
Dunphey Associates Supply Co [Member]
Business Acquisition [Line Items]
Number of locations in which the company operates \| Location			7
Cash consideration			$ 16,758
Stock issued for acquisition \| shares			50,952
Fair value of equity shares issued			$ 6,891
Goodwill and intangibles acquired			8,974
Intangible assets acquired			$ 5,300
Number of years goodwill is deductible for tax purposes			15 years
Dunphey Associates Supply Co [Member] \| Customer Relationships [Member]
Business Acquisition [Line Items]
Intangible assets acquired			$ 2,800
Amortization period			15 years
Dunphey Associates Supply Co [Member] \| Trade Names And Distribution Rights [Member]
Business Acquisition [Line Items]
Intangible assets acquired			$ 2,500
Alert Labs Inc
Business Acquisition [Line Items]
Cash consideration				$ 5,889
Adjustment related to previously held equity interest				171
Intangibles and goodwill acquired				15,403
Fair value of intangible assets				1,640
Alert Labs Inc \| Patented And Unpatented Technology [Member]
Business Acquisition [Line Items]
Fair value of intangible assets				$ 1,600
Alert Labs Inc \| Customer Relationships [Member]
Business Acquisition [Line Items]
Amortization period				7 years
Fair value of intangible assets				$ 40
Stock consideration [Member] \| Alert Labs Inc
Business Acquisition [Line Items]
Fair value of equity shares issued				$ 3,991
Stock issued for acquisition \| shares				23,873
Contingent consideration [Member] \| Alert Labs Inc
Business Acquisition [Line Items]
Stock issued for acquisition \| shares				23,230
Contingent consideration				$ 3,026
Contingent consideration performance measurement period				3 years

Changes in Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Goodwill [Line Items]
Goodwill, Beginning Balance	$ 411,217	$ 391,998
Acquired goodwill	410	16,742
Foreign currency translation adjustment	859	2,477
Goodwill, Ending Balance	$ 412,486	$ 411,217

Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Goodwill And Intangible Assets [Line Items]
Amortization expense related to finite lived intangible assets	$ 5,945	$ 5,704	$ 5,348

Intangible Assets (Detail) - USD ($) $ in Thousands	12 Months Ended
Intangible Assets (Detail) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Intangible Assets [Line Items]
Indefinite lived intangible assets - Trade names, trademarks and distribution rights	$ 140,867	$ 138,647
Finite lived intangible assets:
Accumulated amortization	(55,329)	(49,384)
Finite lived intangible assets, net	29,062	33,357
Intangible assets, net	169,929	172,004
Customer Relationships
Finite lived intangible assets:
Finite lived intangible assets	$ 81,527	79,911
Customer Relationships \| Maximum
Intangible Assets [Line Items]
Finite lived intangible assets, Estimated Useful lives, years	18 years
Customer Relationships \| Minimum
Intangible Assets [Line Items]
Finite lived intangible assets, Estimated Useful lives, years	7 years
Trade Name
Intangible Assets [Line Items]
Finite lived intangible assets, Estimated Useful lives, years	10 years
Finite lived intangible assets:
Finite lived intangible assets	$ 1,150	1,150
Patented And Unpatented Technology [Member]
Intangible Assets [Line Items]
Finite lived intangible assets, Estimated Useful lives, years	7 years
Finite lived intangible assets:
Finite lived intangible assets	$ 1,714	$ 1,680

Amortization Expense Related to Finite Lived Intangible Assets (Detail) $ in Thousands	Dec. 31, 2020 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2021	$ 5,100
2022	4,300
2023	3,700
2024	3,500
2025	$ 3,400

Shareholders' Equity - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Sep. 30, 1999
Stockholders Equity Note [Line Items]
Preferred stock outstanding	0	0
Number of shares authorized to be repurchased				7,500,000
Treasury stock, shares repurchased	0	0	0
Cost of repurchased shares	$ 114,425	$ 114,425	$ 114,425
Remaining number of shares authorized to be repurchased	1,129,087
Class B Common Stock
Stockholders Equity Note [Line Items]
Amount of votes common stock is entitled	ten
Treasury stock, shares repurchased	48,263	48,263	48,263
Common Stock
Stockholders Equity Note [Line Items]
Amount of votes common stock is entitled	one
Percentage of Board entitled to elect	25.00%
Treasury stock, shares repurchased	6,322,650	6,322,650	6,322,650

Financial Instruments - Additional Information (Detail) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Financial Instrument [Line Items]
Estimated fair value of contingent liabilities	$ 0
Standby Letters of Credit
Financial Instrument [Line Items]
Fair value of contingent liability	1,075	$ 925
Performance Bonds
Financial Instrument [Line Items]
Fair value of contingent liability	$ 11,400	$ 10,500

Impact from Foreign Exchange Derivative Instruments Designated as Cash Flow Hedges (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recorded in accumulated other comprehensive loss	$ 1,205	$ (2,001)	$ 2,627
Foreign Currency Forward Contracts \| Cash Flow Hedge
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) recorded in accumulated other comprehensive loss	1,205	(2,001)
Gain reclassified from accumulated other comprehensive loss into earnings	$ (574)	$ (482)

Fair Value of Derivative Instruments and Location in the Balance Sheets (Detail) - Foreign Exchange Forward And Option Contracts [Member] - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Derivatives, Fair Value [Line Items]
Derivative instruments, assets derivatives
Derivative instruments, liabilities derivatives	101	$ 1,007
Derivatives Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Derivative instruments, assets derivatives
Derivative instruments, liabilities derivatives	91	944
Not Designated as Hedging Instrument, Economic Hedge [Member]
Derivatives, Fair Value [Line Items]
Derivative instruments, assets derivatives
Derivative instruments, liabilities derivatives	$ 10	$ 63

Derivatives - Additional Information (Detail) - USD ($)	12 Months Ended
Derivatives - Additional Information (Detail) - USD ($)	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Foreign Currency Forward Contracts \| Cash Flow Hedge
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional value of derivatives	$ 1,000,000
Contract maturity period	one year or less
Contract expiring terms	2021-01
Maximum length of time hedged in cash flow hedge	12 months
Pre-tax gain to be reclassified into earnings within the next 12 months	$ 402,000
Foreign Exchange Forward And Option Contracts [Member] \| Not Designated as Hedging Instrument, Economic Hedge [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional value of derivatives	$ 4,600,000
Contract expiring terms	2021-01
(Loss) gain from foreign currency forward and option contracts not designated as hedging instruments	$ (490,000)	$ (540,000)	$ 129,000

Assets and Liabilities Carried at Fair Value Measured on Recurring Basis (Detail) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Other assets
Assets:
Equity securities	$ 6,065	$ 402
Private equities		2,500
Accrued expenses and other current liabilities
Liabilities:
Derivative financial instruments	101	1,007
Fair Value Measurements, Level 1 \| Other assets
Assets:
Equity securities	6,065	402
Fair Value Measurements, Level 2 \| Accrued expenses and other current liabilities
Liabilities:
Derivative financial instruments	$ 101	1,007
Fair Value Measurements, Level 3 \| Other assets
Assets:
Private equities		$ 2,500

Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Commitments and Contingencies Disclosure [Line Items]
Self-insurance reserves	$ 5,404	$ 3,062
Maximum exposure to loss related to involvement with variable interest entity	3,600
Non-cancelable purchase obligations for goods	32,000
Variable interest entity cash deposit to cover contingency	2,400
Carrier and Its Affiliates [Member]
Commitments and Contingencies Disclosure [Line Items]
Non-cancelable purchase obligations for goods	$ 13,000

Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Supplier Concentration Risk \| Cost of Goods, Total
Related Party Transaction [Line Items]
Percentage of purchases from key suppliers	85.00%	83.00%	84.00%
Moss & Associates LLC \| Customary Payments for Remodeling of Corporate Headquarters
Related Party Transaction [Line Items]
Payment for related party transaction			$ 124
Greenberg Traurig, P.A. \| Customary Fees for Legal Services
Related Party Transaction [Line Items]
Payment for related party transaction	$ 156	$ 187	131
Amount payable to related party	8
Carrier and Its Affiliates \| Supplier Concentration Risk
Related Party Transaction [Line Items]
Amount payable to Carrier and its affiliates, net of receivables	81,000	86,000
Revenues from sales to Carrier and its affiliates	$ 103,000	$ 91,000	$ 84,000
Carrier and Its Affiliates \| Supplier Concentration Risk \| Cost of Goods, Total
Related Party Transaction [Line Items]
Percentage of purchases from key suppliers	63.00%	62.00%	62.00%

Revenues and Long-Lived Assets by Geographical Area (Detail) - USD ($)
$ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2020

Sep. 30, 2020

^[1]

Jun. 30, 2020

^[1]

Mar. 31, 2020

^[1]

Dec. 31, 2019

Sep. 30, 2019

^[1]

Jun. 30, 2019

^[1]

Mar. 31, 2019

^[1]

Dec. 31, 2020

Dec. 31, 2019

Dec. 31, 2018

$ 1,154,716

^[1]

$ 1,536,671

$ 1,355,385

$ 1,008,156

$ 1,072,315

^[1]

$ 1,394,915

$ 1,371,854

$ 931,278

$ 5,054,928

^[1]

$ 4,770,362

^[1]

$ 4,546,653

999,902

1,009,431

999,902

1,009,431

United States

4,535,262

4,184,206

3,981,056

799,665

808,685

799,665

808,685

Canada

301,727

294,040

291,685

Latin America and Caribbean

180,518

180,663

180,518

180,663

217,939

292,116

$ 273,912

$ 19,719

$ 20,083

$ 19,719

$ 20,083

[1]

Quarterly Financial Data [Line Items]

Supplemental Cash Flow Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash Flow Supplemental Disclosures [Line Items]
Interest paid	$ 1,844	$ 4,341	$ 3,065
Income taxes net of refunds	70,889	70,095	115,301
N&S Supply of Fishkill, Inc
Cash Flow Supplemental Disclosures [Line Items]
Business combination shares issued	$ (161)	4,032
Peirce-Phelps, Inc.
Cash Flow Supplemental Disclosures [Line Items]
Business combination shares issued		58,344
Dunphey & Associates Supply Co., Inc.
Cash Flow Supplemental Disclosures [Line Items]
Business combination shares issued		$ 6,891
Alert Labs Inc
Cash Flow Supplemental Disclosures [Line Items]
Business combination shares issued			$ 6,846

Subsequent Event - Additional Information (Detail) - $ / shares			12 Months Ended
	Apr. 01, 2021	Feb. 09, 2021	Dec. 31, 2020
Subsequent Event [Line Items]
Cash dividend, common stock and Class B common stock previous rate			$ 1.775
Subsequent Event
Subsequent Event [Line Items]
Cash dividend, common stock and Class B common stock current rate rate		$ 1.95
Cash dividends payable date	2021-04

Selected Quarterly Financial Data (Detail) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2020

Sep. 30, 2020

Jun. 30, 2020

Mar. 31, 2020

Dec. 31, 2019

Sep. 30, 2019

Jun. 30, 2019

Mar. 31, 2019

Dec. 31, 2020

Dec. 31, 2019

Dec. 31, 2018

Net income attributable to Watsco, Inc.

$ 1,154,716

^[1]

$ 1,536,671

^[1]

$ 1,355,385

^[1]

$ 1,008,156

^[1]

$ 1,072,315

^[1]

$ 1,394,915

^[1]

$ 1,371,854

^[1]

$ 931,278

^[1]

$ 5,054,928

^[1]

$ 4,770,362

^[1]

$ 4,546,653

Gross profit

282,244

373,763

319,199

247,615

260,521

334,691

327,984

233,760

1,222,821

1,156,956

1,120,252

$ 46,010

$ 106,489

$ 86,578

$ 30,502

$ 37,278

$ 83,480

$ 90,155

$ 35,037

$ 269,579

$ 245,950

$ 242,932

Earnings per share for Common and Class B common stock:

Basic

$ 1.14

^[2]

$ 2.77

^[2]

$ 2.26

^[2]

$ 0.72

^[2]

$ 0.92

^[2]

$ 2.20

^[2]

$ 2.40

^[2]

$ 0.88

^[2]

$ 7.03

^[2]

$ 6.51

^[2]

$ 6.50

Diluted

$ 1.14

^[2]

$ 2.76

^[2]

$ 2.26

^[2]

$ 0.72

^[2]

$ 0.92

^[2]

$ 2.20

^[2]

$ 2.40

^[2]

$ 0.88

^[2]

$ 7.01

^[2]

$ 6.50

^[2]

$ 6.49

[1]

[2]

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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Aggregate revenue less cost of goods and services sold or operating expenses directly attributable to the revenue generation activity.

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The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.