0001193125-21-319758 | 10-Q | XBRL Viewer

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Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2021	Nov. 01, 2021
Document Information [Line Items]
Document Type	10-Q
Document Period End Date	Sep. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Amendment Flag	false
Entity Registrant Name	WATSCO, INC.
Entity Central Index Key	0000105016
Entity File Number	1-5581
Entity Incorporation, State or Country Code	FL
Document Quarterly Report	true
Document Transition Report	false
Entity Tax Identification Number	59-0778222
Entity Address, Address Line One	2665 South Bayshore Drive
Entity Address, City or Town	Miami
Entity Address, Postal Zip Code	33133
Entity Address, Address Line Two	Suite 901
Entity Address, State or Province	FL
City Area Code	305
Local Phone Number	714-4100
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Common Stock [Member]
Document Information [Line Items]
Trading Symbol	WSO
Security Exchange Name	NYSE
Title of 12(b) Security	Common stock, $0.50 par value
Entity Common Stock, Shares Outstanding		33,025,976
Common Class B [Member]
Document Information [Line Items]
Trading Symbol	WSOB
Security Exchange Name	NYSE
Title of 12(b) Security	Class B common stock, $0.50 par value
Entity Common Stock, Shares Outstanding		5,746,980

Condensed Consolidated Unaudited Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Revenues	$ 1,782,569	$ 1,536,671	$ 4,768,327	$ 3,900,212
Cost of sales	1,299,905	1,162,908	3,512,901	2,959,635
Gross profit	482,664	373,763	1,255,426	940,577
Selling, general and administrative expenses	281,922	221,037	766,231	618,476
Other income	6,057	4,055	16,267	9,172
Operating income	206,799	156,781	505,462	331,273
Interest expense, net	221	108	757	1,181
Income before income taxes	206,578	156,673	504,705	330,092
Income taxes	41,734	30,467	101,601	63,397
Net income	164,844	126,206	403,104	266,695
Less: net income attributable to non-controlling interest	23,979	19,717	63,045	43,126
Net income attributable to Watsco, Inc.	$ 140,865	$ 106,489	$ 340,059	$ 223,569
Earnings per share for Common and Class B common stock:
Basic	$ 3.64	$ 2.77	$ 8.80	$ 5.83
Diluted	$ 3.62	$ 2.76	$ 8.75	$ 5.82

Condensed Consolidated Unaudited Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Net income	$ 164,844	$ 126,206	$ 403,104	$ 266,695
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustment	(8,219)	5,514	(746)	(6,592)
Unrealized (loss) gain on cash flow hedging instruments	0	(416)	70	948
Reclassification of (gain) loss on cash flow hedging instruments into earnings	0	(509)	221	(691)
Other comprehensive (loss) income	(8,219)	4,589	(455)	(6,335)
Comprehensive income	156,625	130,795	402,649	260,360
Less: comprehensive income attributable to non-controlling interest	21,114	21,283	62,821	40,986
Comprehensive income attributable to Watsco, Inc.	$ 135,511	$ 109,512	$ 339,828	$ 219,374

- Definition

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.

+ References + Details

- Definition

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.

+ References + Details

- Definition

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

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+ Details

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 137,201	$ 146,067
Accounts receivable, net	771,042	535,288
Inventories, net	1,042,144	781,299
Other current assets	30,474	21,791
Total current assets	1,980,861	1,484,445
Property and equipment, net	105,842	98,225
Operating lease right-of-use assets	262,965	209,169
Goodwill	432,514	412,486
Intangible assets, net	187,662	169,929
Investment in unconsolidated entity	111,776	97,847
Other assets	9,301	12,246
Total assets	3,090,921	2,484,347
Current liabilities:
Current portion of long-term obligations	82,712	71,804
Accounts payable	454,498	251,553
Accrued expenses and other current liabilities	259,483	163,788
Total current liabilities	796,693	487,145
Long-term obligations:
Borrowings under revolving credit agreement	1,724	0
Operating lease liabilities, net of current portion	182,772	139,527
Finance lease liabilities, net of current portion	6,676	4,811
Total long-term obligations	191,172	144,338
Deferred income taxes and other liabilities	81,531	73,103
Commitments and contingencies
Watsco, Inc. shareholders' equity:
Preferred stock, $0.50 par value	0	0
Paid-in capital	988,310	950,915
Accumulated other comprehensive loss, net of tax	(35,098)	(34,867)
Retained earnings	756,992	636,373
Treasury stock, at cost	(87,440)	(87,440)
Total Watsco, Inc. shareholders' equity	1,644,581	1,486,678
Non-controlling interest	376,944	293,083
Total shareholders' equity	2,021,525	1,779,761
Total liabilities and shareholders' equity	3,090,921	2,484,347
Common Stock
Watsco, Inc. shareholders' equity:
Common stock, $0.50 par value	18,913	18,851
Class B Common Stock
Watsco, Inc. shareholders' equity:
Common stock, $0.50 par value	$ 2,904	$ 2,846

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2021	Dec. 31, 2020
Preferred stock, par value	$ 0.50	$ 0.50
Common Stock
Common stock, par value	0.50	0.50
Class B Common Stock
Common stock, par value	$ 0.50	$ 0.50

Condensed Consolidated Unaudited Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	ACME Refrigeration LLC [Member]	TEC Distribution LLC [Member]	Makdad Industrial Supply Co., Inc.[Member]	Common Stock, Class B Common Stock and Preferred Stock	Common Stock, Class B Common Stock and Preferred Stock ACME Refrigeration LLC [Member]	Common Stock, Class B Common Stock and Preferred Stock Makdad Industrial Supply Co., Inc.[Member]	Paid-In Capital	Paid-In Capital ACME Refrigeration LLC [Member]	Paid-In Capital Makdad Industrial Supply Co., Inc.[Member]	Accumulated Other Comprehensive Loss	Retained Earnings	Treasury Stock	Non-controlling Interest	Non-controlling Interest TEC Distribution LLC [Member]
Beginning balance at Dec. 31, 2019	$ 1,714,767				$ 21,533			$ 907,877			$ (39,050)	$ 632,507	$ (87,440)	$ 279,340
Beginning balance (in shares) at Dec. 31, 2019					38,194,056
Net income	36,247											30,502		5,745
Other comprehensive (loss) income	(19,280)										(12,739)			(6,541)
Issuances of non-vested restricted shares of common stock					$ 57			(57)
Issuances of non-vested restricted shares of common stock (in shares)					113,765
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	2,541				$ 9			2,532
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)					18,674
Retirement of common stock	(791)				$ (2)			(789)
Retirement of common stock (in shares)					(4,828)
Share-based compensation	6,097							6,097
Cash dividends declared and paid on Common and Class B common stock	(61,238)											(61,238)
Ending balance at Mar. 31, 2020	1,682,886				$ 21,610			920,190			(51,789)	601,771	(87,440)	278,544
Ending balance (in shares) at Mar. 31, 2020					38,346,883
Beginning balance at Dec. 31, 2019	1,714,767				$ 21,533			907,877			(39,050)	632,507	(87,440)	279,340
Beginning balance (in shares) at Dec. 31, 2019					38,194,056
Net income	266,695
Other comprehensive (loss) income	(6,335)
Ending balance at Sep. 30, 2020	1,809,938				$ 21,660			940,015			(43,245)	658,622	(87,440)	320,326
Ending balance (in shares) at Sep. 30, 2020					38,448,020
Beginning balance at Mar. 31, 2020	1,682,886				$ 21,610			920,190			(51,789)	601,771	(87,440)	278,544
Beginning balance (in shares) at Mar. 31, 2020					38,346,883
Net income	104,242											86,578		17,664
Other comprehensive (loss) income	8,356										5,521			2,835
Issuances of non-vested restricted shares of common stock					$ 8			(8)
Issuances of non-vested restricted shares of common stock (in shares)					15,500
Stock issuances from exercise of stock options and employee stock purchase plan	4,545				$ 16			4,529
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)					32,073
Retirement of common stock	(1,096)				$ (4)			(1,092)
Retirement of common stock (in shares)					(6,377)
Share-based compensation	5,226							5,226
Cash dividends declared and paid on Common and Class B common stock	(68,077)											(68,077)
Ending balance at Jun. 30, 2020	1,736,082				$ 21,630			928,845			(46,268)	620,272	(87,440)	299,043
Ending balance (in shares) at Jun. 30, 2020					38,388,079
Net income	126,206											106,489		19,717
Other comprehensive (loss) income	4,589										3,023			1,566
Issuances of non-vested restricted shares of common stock					$ 10			(10)
Issuances of non-vested restricted shares of common stock (in shares)					20,000
Forfeitures of non-vested restricted shares of common stock					$ (2)			2
Forfeitures of non-vested restricted shares of common stock (in shares)					(3,589)
Stock issuances from exercise of stock options and employee stock purchase plan	8,466				$ 28			8,438
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)					55,473
Retirement of common stock	(2,755)				$ (6)			(2,749)
Retirement of common stock (in shares)					(11,943)
Share-based compensation	5,489							5,489
Cash dividends declared and paid on Common and Class B common stock	(68,139)											(68,139)
Ending balance at Sep. 30, 2020	1,809,938				$ 21,660			940,015			(43,245)	658,622	(87,440)	320,326
Ending balance (in shares) at Sep. 30, 2020					38,448,020
Beginning balance at Dec. 31, 2020	1,779,761				$ 21,697			950,915			(34,867)	636,373	(87,440)	293,083
Beginning balance (in shares) at Dec. 31, 2020					38,521,694
Net income	66,127											55,092		11,035
Other comprehensive (loss) income	3,776										2,474			1,302
Issuances of non-vested restricted shares of common stock					$ 61			(61)
Issuances of non-vested restricted shares of common stock (in shares)					121,934
Forfeitures of non-vested restricted shares of common stock					$ (21)			21
Forfeitures of non-vested restricted shares of common stock (in shares)					(43,000)
Common stock contribution to 401(k) plan	5,154				$ 11			5,143
Common stock contribution to 401(k) plan (in shares)					22,752
Stock issuances from exercise of stock options and employee stock purchase plan	3,874				$ 12			3,862
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)					24,735
Share-based compensation	6,656							6,656
Cash dividends declared and paid on Common and Class B common stock	(68,521)											(68,521)
Ending balance at Mar. 31, 2021	1,796,827				$ 21,760			966,536			(32,393)	622,944	(87,440)	305,420
Ending balance (in shares) at Mar. 31, 2021					38,648,115
Beginning balance at Dec. 31, 2020	1,779,761				$ 21,697			950,915			(34,867)	636,373	(87,440)	293,083
Beginning balance (in shares) at Dec. 31, 2020					38,521,694
Net income	403,104
Other comprehensive (loss) income	(455)
Ending balance at Sep. 30, 2021	2,021,525				$ 21,817			988,310			(35,098)	756,992	(87,440)	376,944
Ending balance (in shares) at Sep. 30, 2021					38,761,863
Beginning balance at Mar. 31, 2021	1,796,827				$ 21,760			966,536			(32,393)	622,944	(87,440)	305,420
Beginning balance (in shares) at Mar. 31, 2021					38,648,115
Net income	172,133											144,102		28,031
Other comprehensive (loss) income	3,988										2,649			1,339
Issuances of non-vested restricted shares of common stock					$ 22			(22)
Issuances of non-vested restricted shares of common stock (in shares)					44,881
Forfeitures of non-vested restricted shares of common stock					$ (4)			4
Forfeitures of non-vested restricted shares of common stock (in shares)					(7,589)
Stock issuances from exercise of stock options and employee stock purchase plan	5,676				$ 18			5,658
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)					34,311
Retirement of common stock	(863)				$ (1)			(862)
Retirement of common stock (in shares)					(2,965)
Investment in TEC Distribution LLC			$ 21,040												$ 21,040
Share-based compensation	5,569							5,569
Cash dividends declared and paid on Common and Class B common stock	(75,388)											(75,388)
Common stock issued		$ 2,551				$ 4			$ 2,547
Common stock issued (in shares)						8,492
Ending balance at Jun. 30, 2021	1,931,533				$ 21,799			979,430			(29,744)	691,658	(87,440)	355,830
Ending balance (in shares) at Jun. 30, 2021					38,725,245
Net income	164,844											140,865		23,979
Other comprehensive (loss) income	(8,219)										(5,354)			(2,865)
Issuances of non-vested restricted shares of common stock					$ 11			(11)
Issuances of non-vested restricted shares of common stock (in shares)					21,828
Stock issuances from exercise of stock options and employee stock purchase plan	2,487				$ 7			2,480
Stock issuances from exercise of stock options and employee stock purchase plan (in shares)					14,413
Retirement of common stock	(894)				$ (2)			(892)
Retirement of common stock (in shares)					(3,250)
Share-based compensation	6,308							6,308
Cash dividends declared and paid on Common and Class B common stock	(75,531)											(75,531)
Common stock issued				$ 997			$ 2			$ 995
Common stock issued (in shares)							3,627
Ending balance at Sep. 30, 2021	$ 2,021,525				$ 21,817			$ 988,310			$ (35,098)	$ 756,992	$ (87,440)	$ 376,944
Ending balance (in shares) at Sep. 30, 2021					38,761,863

Condensed Consolidated Unaudited Statements of Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020
Cash dividends declared and paid, common stock	$ 1.95	$ 1.95	$ 1.775	$ 1.775	$ 1.775	$ 1.60

Condensed Consolidated Unaudited Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash flows from operating activities:
Net income	$ 403,104	$ 266,695
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	20,874	19,350
Share-based compensation	18,659	15,802
Non-cash contribution to 401(k) plan	5,154	4,543
Deferred income tax Provision	3,966	3,177
Other income from investment in unconsolidated entity	(16,267)	(9,172)
Other, net	1,969	1,776
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable, net	(198,011)	(113,017)
Inventories, net	(170,662)	34,448
Accounts payable and other liabilities	263,752	158,094
Other, net	(12,866)	(8,918)
Net cash provided by operating activities	319,672	372,778
Cash flows from investing activities:
Business acquisitions, net of cash acquired	(129,462)	0
Capital expenditures	(16,770)	(11,608)
Proceeds from sale of property and equipment	108	61
Proceeds from sale of equity securities	5,993	0
Net cash used in investing activities	(140,131)	(11,547)
Cash flows from financing activities:
Dividends on Common and Class B common stock	(219,440)	(197,454)
Net repayments of finance lease liabilities	(1,482)	(1,003)
Repurchases of common stock to satisfy employee withholding tax obligations	(894)	(2,299)
Payment of fees related to revolving credit agreement	(22)	(189)
Net proceeds (repayments) under revolving credit agreement	1,724	(155,032)
Net proceeds from issuances of common stock	11,173	13,207
Proceeds from non-controlling interest for investment in TEC Distribution LLC	21,040
Net cash used in financing activities	(187,901)	(342,770)
Effect of foreign exchange rate changes on cash and cash equivalents	(506)	(315)
Net (decrease) increase in cash and cash equivalents	(8,866)	18,146
Cash and cash equivalents at beginning of period	146,067	74,454
Cash and cash equivalents at end of period	137,201	$ 92,600
ACME Refrigeration LLC [Member]
Supplemental cash flow information:
Common stock issued	2,551
Makdad Industrial Supply Co Inc [Member]
Supplemental cash flow information:
Common stock issued	$ 997

BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2021

BASIS OF PRESENTATION

1. BASIS OF PRESENTATION

Basis of Consolidation

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. The accompanying September 30, 2021 interim condensed consolidated unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, but we believe the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation have been included in the condensed consolidated unaudited financial statements included herein. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2020 Annual Report on Form

10-K.

The condensed consolidated unaudited financial statements include the accounts of Watsco, all of its wholly owned subsidiaries, the accounts of four joint ventures with Carrier Global Corporation, which we refer to as Carrier, the accounts of Carrier InterAmerica Corporation, of which we have an 80% controlling interest and Carrier has a 20%

non-controlling

interest, and our 38.1% investment in Russell Sigler, Inc. (“RSI”), which is accounted for under the equity method of accounting. All significant intercompany balances and transactions have been eliminated in consolidation.

The results of operations for the quarter and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021. Sales of residential central air conditioners, heating equipment, and parts and supplies are seasonal. Furthermore, profitability can be impacted favorably or unfavorably based on weather patterns, particularly during the Summer and Winter selling seasons. 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 we serve tends to be fairly evenly distributed throughout the year and depends largely on housing completions and related weather and economic conditions.

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 condensed consolidated unaudited 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 condensed consolidated unaudited 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 condensed consolidated unaudited 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 condensed consolidated unaudited 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.

Impact of

COVID-19

Pandemic

Since

COVID-19

was declared a pandemic in March 2020, it has impacted our operations and the operations of our customers and suppliers. Although we learned to navigate

COVID-19

while maintaining our operations in all material respects, the pandemic continued to impact our business and operating results throughout 2020 and into 2021. However, as economic activity has been recovering, the impact of the pandemic on our business has been more reflective of greater economic and marketplace dynamics, which include supply chain disruptions and labor shortages, rather than pandemic-related issues such as location closures, mandated restrictions and employee illness. Notwithstanding the recent resurgence of economic activity, in light of variant strains of the virus that have emerged, the

COVID-19

pandemic could once again impact our operations and the operations of our customers and suppliers as a result of quarantines, location closures, illnesses, and travel restrictions. The extent to which the

COVID-19

pandemic impacts 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 resumption of high levels of infection and hospitalization, new variants of the virus, the resulting impact on our employees, customers, suppliers, and vendors, and the remedial actions and any stimulus measures adopted by federal, state, and local governments, and to what extent normal economic and operating conditions are impacted. Therefore, we cannot reasonably estimate the future impact at this time.

REVENUES

9 Months Ended

Sep. 30, 2021

REVENUES

2. REVENUES

Disaggregation of Revenues

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


	Quarter Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Primary Geographical Regions:
United States	$	1,615,319		$	1,391,340		$	4,291,838		$	3,517,533
Canada		102,491			91,429			290,863			218,687
Latin America and the Caribbean		64,759			53,902			185,626			163,992

	$	1,782,569		$	1,536,671		$	4,768,327		$	3,900,212

Major Product Lines:
HVAC equipment		69	%		70	%		69	%		70	%
Other HVAC products		27	%		27	%		27	%		27	%
Commercial refrigeration products		4	%		3	%		4	%		3	%

		100	%		100	%		100	%		100	%

- Definition

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.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2021

EARNINGS PER SHARE

3. EARNINGS PER SHARE

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


	Quarter Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Basic Earnings per Share:
Net income attributable to Watsco, Inc. shareholders	$	140,865	$	106,489	$	340,059	$	223,569
Less: distributed and undistributed earnings allocated to non-vested restricted common stock		12,590		9,146		30,182		19,178

Earnings allocated to Watsco, Inc. shareholders	$	128,275	$	97,343	$	309,877	$	204,391


Weighted-average common shares outstanding - Basic		35,260,126		35,099,871		35,222,865		35,046,156
Basic earnings per share for Common and Class B common stock	$	3.64	$	2.77	$	8.80	$	5.83
Allocation of earnings for Basic:
Common stock	$	118,905	$	90,197	$	287,217	$	189,364
Class B common stock		9,370		7,146		22,660		15,027

	$	128,275	$	97,343	$	309,877	$	204,391

Diluted Earnings per Share:
Net income attributable to Watsco, Inc. shareholders	$	140,865	$	106,489	$	340,059	$	223,569
Less: distributed and undistributed earnings allocated to non-vested restricted common stock		12,563		9,135		30,132		19,175

Earnings allocated to Watsco, Inc. shareholders	$	128,302	$	97,354	$	309,927	$	204,394


Weighted-average common shares outstanding - Basic		35,260,126		35,099,871		35,222,865		35,046,156
Effect of dilutive stock options		181,852		137,151		177,389		62,887

Weighted-average common shares outstanding - Diluted		35,441,978		35,237,022		35,400,254		35,109,043

Diluted earnings per share for Common and Class B common stock	$	3.62	$	2.76	$	8.75	$	5.82

Anti-dilutive stock options not included above		63,959		3,750		27,513		27,755

Diluted earnings per share for our Common stock assumes the conversion of all of 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 September 30, 2021 and 2020, our outstanding Class B common stock was convertible into 2,575,698 and 2,576,570 shares of our Common stock, respectively.

OTHER COMPREHENSIVE (LOSS) INCOME

9 Months Ended

Sep. 30, 2021

OTHER COMPREHENSIVE (LOSS) INCOME

4. OTHER COMPREHENSIVE (LOSS) INCOME

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


	Quarter Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Foreign currency translation adjustment	$	(8,219	)	$	5,514		$	(746	)	$	(6,592	)

Unrealized (loss) gain on cash flow hedging instruments		—			(570	)		97			1,297
Income tax benefit (expense)		—			154			(27	)		(349	)

Unrealized (loss) gain on cash flow hedging instruments, net of tax		—			(416	)		70			948


Reclassification of (gain) loss on cash flow hedging instruments into earnings		—			(697	)		305			(946	)
Income tax expense (benefit)		—			188			(84	)		255

Reclassification of (gain) loss on cash flow hedging instruments into earnings, net of tax		—			(509	)		221			(691	)

Other comprehensive (loss) income	$	(8,219	)	$	4,589		$	(455	)	$	(6,335	)

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


Nine Months Ended September 30,	2021			2020
Foreign currency translation adjustment:
Beginning balance	$	(34,694	)	$	(38,599	)
Current period other comprehensive loss		(406	)		(4,349	)

Ending balance		(35,100	)		(42,948	)

Cash flow hedging instruments:
Beginning balance		(173	)		(451	)
Current period other comprehensive income		43			568
Reclassification adjustment		132			(414	)

Ending balance		2			(297	)

Accumulated other comprehensive loss, net of tax	$	(35,098	)	$	(43,245	)

ACQUISITIONS

9 Months Ended

Sep. 30, 2021

ACQUISITIONS

5. ACQUISITIONS

Makdad Industrial Supply Co., Inc.

On August 20, 2021, one of our wholly owned subsidiaries acquired Makdad Industrial Supply Co., Inc., a distributor of air conditioning and heating products operating from six locations in Pennsylvania. Consideration for the purchase price consisted of $3,117 in cash and the issuance of 3,627 shares of Common stock having a fair value of $997, net of cash acquired of $204. The purchase price resulted in the recognition of $981 in goodwill. The tax basis of such goodwill is deductible for income tax purposes over 15 years.

Acme Refrigeration of Baton Rouge LLC

On May 7, 2021, we acquired certain assets and assumed certain liabilities of Acme Refrigeration of Baton Rouge LLC, a distributor of air conditioning, heating, and refrigeration products, operating from 18 locations in Louisiana and Mississippi, for $22,855 less certain average revolving indebtedness. Consideration for the net purchase price consisted of $18,051 in cash, 8,492 shares of Common stock having a fair value of $2,551, and $3,141 for repayment of indebtedness, net of cash acquired of $1,340. The purchase price resulted in the recognition of $3,710 in goodwill and intangibles. The fair value of the identified intangible assets was $2,124 and consisted of $1,508 in trade names and distribution rights, and $616 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.

Temperature Equipment Corporation

On April 9, 2021, we acquired certain assets and assumed certain liabilities comprising the HVAC distribution business of Temperature Equipment Corporation, an HVAC distributor operating from 32 locations in Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri and Wisconsin. We formed a new, stand-alone joint venture with Carrier, TEC Distribution LLC (“TEC”), that operates this business. We have an 80% controlling interest in TEC, and Carrier has a 20%

non-controlling

interest. Consideration for the purchase was paid in cash, consisting of $105,200 paid to Temperature Equipment Corporation (Carrier contributed $21,040 and we contributed $84,160) and $1,497 for repayment of indebtedness

The preliminary purchase price resulted in the recognition of $37,352 in goodwill and intangibles. The fair value of the identified intangible assets was $19,900 and consisted of $15,700 in trade names and distribution rights, and $4,200 in customer relationships to be amortized over an

-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 our 80% controlling interest in TEC based on their respective preliminary fair values as of April 9, 2021:


Accounts receivable	$	33,315
Inventories		71,325
Other current assets		962
Property and equipment		2,590
Operating lease right-of-use assets		53,829
Goodwill		17,452
Intangibles		19,900
Accounts payable		(25,393	)
Accrued expenses and other current liabilities		(19,237	)
Operating lease liabilities, net of current portion		(48,046	)

Total	$	106,697

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 these acquisitions were not deemed significant to the consolidated financial statements.

DERIVATIVES

9 Months Ended

Sep. 30, 2021

DERIVATIVES

6. DERIVATIVES

We enter into foreign currency forward and option contracts intended 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. At September 30, 2021, no foreign currency forward contracts were designated as cash flow hedges.

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


	Quarter Ended September 30,					Nine Months Ended September 30,
	2021		2020			2021		2020
(Loss) gain recorded in accumulated other comprehensive loss	$	—	$	(570	)	$	97	$	1,297
(Gain) loss reclassified from accumulated other comprehensive loss into earnings	$	—	$	(697	)	$	305	$	(946	)

At September 30, 2021, no

pre-tax

gain (loss) is expected to be reclassified into earnings related to 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. The total notional value of our foreign currency exchange contracts not designated as hedging instruments at September 30, 2021 was $4,200, and such contracts subsequently expired during October 2021.

We recognized gains (losses) of $83 and $(454) from foreign currency forward and option contracts not designated as hedging instruments in our condensed consolidated unaudited statements of income for the quarters ended September 30, 2021 and 2020, respectively. We recognized (losses) gains of $(101) and $57 from foreign currency forward and option contracts not designated as hedging instruments in our condensed consolidated unaudited statements of income for the nine months ended September 30, 2021 and 2020, 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 condensed consolidated unaudited balance sheets. See Note 7.


	Asset Derivatives				Liability Derivatives
	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Derivatives designated as hedging instruments	$	—	$	—	$	—	$	91
Derivatives not designated as hedging instruments		—		—		5		10

Total derivative instruments	$	—	$	—	$	5	$	101

FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2021

FAIR VALUE MEASUREMENTS

7. FAIR VALUE MEASUREMENTS

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


				Fair Value Measurements at September 30, 2021 Using
	Balance Sheet Location	Total		Level 1		Level 2		Level 3
Assets:
Equity securities	Other assets	$	1,750	$	1,750	$	—	$	—
Liabilities:
Derivative financial instruments	Accrued expenses and other current liabilities	$	5	$	—	$	5	$	—


				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	$	—

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 eq

ity 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 6. 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.

During the nine months ended September 30, 2021, we recognized a realized gain of $3,815 recorded in our condensed consolidated unaudited statement of income attributable to the sale of certain equity securities.

- Definition

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.

+ References + Details

SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2021

SHAREHOLDERS' EQUITY

8. SHAREHOLDERS’ EQUITY

At-the-Market

Offering Program

On August 6, 2021, we entered into a sales agreement with Robert W. Baird & Co. Inc., which enables the Company to issue and sell shares of Common stock in one or more negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), for a maximum aggregate offering amount of up to

$300,000

(the “ATM Program”). The offer and sale of our Common stock pursuant to the ATM Program has been registered under the Securities Act pursuant to our automatically effective shelf registration statement on Form S-3 (File No. 333-228269).

As of September 30, 2021, no shares of Common stock ha

been sold under the ATM Program.

Common Stock Dividends

We paid cash dividends of $1.95, $1.775, $5.675, and $5.15 per share of both Common stock and Class B common stock during the quarters and nine months ended September 30, 2021 and 2020, respectively.

Non-Vested

Restricted Stock

During both the quarter and nine months ended September 30, 2021, 3,250 shares of Class B common stock with an aggregate fair market value of $894 were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of

non-vested

restricted stock. These shares were retired upon delivery. During the quarter and nine months ended September 30, 2020, 5,361 shares of Common and Class B common stock with an aggregate fair market value of $1,265, and 11,693 shares of Common and Class B common stock with an aggregate fair market value of $2,299, respectively, were withheld as payment in lieu of cash to satisfy tax withholding obligations in connection with the vesting of

non-vested

restricted stock. These shares were retired upon delivery.

Exercise of Stock Options

Cash received from Common stock issued as a result of stock options exercised during the quarters and nine months ended September 30, 2021 and 2020, was $2,094, $6,573, $9,940, and $11,978, respectively.

During the nine months ended September 30, 2021, 2,965 shares of Common stock with an aggregate fair market value of $863 were withheld as payment in lieu of cash for stock option exercises. These shares were retired upon delivery. During the quarter and nine months ended September 30, 2020, 6,582 shares of Common stock with an aggregate fair market value of $1,490, and 11,455 shares of Common stock with an aggregate fair market value of $2,343, respectively, were withheld as payment in lieu of cash for stock option exercises. These shares were retired upon delivery.

Employee Stock Purchase Plan

During the quarters ended September 30, 2021 and 2020, we received net proceeds of $392 and $401, respectively, for shares of our Common stock purchased under our employee stock purchase plan. During the nine months ended September 30, 2021 and 2020, we received net proceeds of $1,233 and $1,229, respectively, for shares of our Common stock purchased under our employee stock purchase plan.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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+ Details

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2021

COMMITMENTS AND CONTINGENCIES

9. 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 $8,039 and $5,404 at September 30, 2021 and December 31, 2020, respectively, were established related to such programs and are included in accrued expenses and other current liabilities in our condensed consolidated unaudited balance sheets.

RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2021

RELATED PARTY TRANSACTIONS

10. RELATED PARTY TRANSACTIONS

Purchases from Carrier and its affiliates comprised 59% and 65% of all inventory purchases made during the quarters ended September 30, 2021 and 2020, respectively. Purchases from Carrier and its affiliates comprised 64% and 62% of all inventory purchases made during the nine months ended September 30, 2021 and 2020, respectively. At September 30, 2021 and December 31, 2020, approximately $142,000 and $81,000, respectively, was payable to Carrier and its affiliates, net of receivables. We also sell HVAC products to Carrier and its affiliates. Revenues in our condensed consolidated unaudited statements of income for the quarters and nine months ended September 30, 2021 and 2020 included approximately $30,000, $27,000, $86,000, and $82,000, 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 the quarters and nine months ended September 30, 2021 and 2020, fees to this firm for services performed were $83, $28, $181, and $28, respectively. At September 30, 2021 and December 31, 2020, $56 and $8, respectively, was payable to this firm.

BASIS OF PRESENTATION (Policies)	9 Months Ended
BASIS OF PRESENTATION (Policies)	Sep. 30, 2021
Basis of Consolidation	Basis of Consolidation 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. The accompanying September 30, 2021 interim condensed consolidated unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, but we believe the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation have been included in the condensed consolidated unaudited financial statements included herein. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2020 Annual Report on Form 10-K. The condensed consolidated unaudited financial statements include the accounts of Watsco, all of its wholly owned subsidiaries, the accounts of four joint ventures with Carrier Global Corporation, which we refer to as Carrier, the accounts of Carrier InterAmerica Corporation, of which we have an 80% controlling interest and Carrier has a 20% non-controlling interest, and our 38.1% investment in Russell Sigler, Inc. (“RSI”), which is accounted for under the equity method of accounting. All significant intercompany balances and transactions have been eliminated in consolidation. The results of operations for the quarter and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021. Sales of residential central air conditioners, heating equipment, and parts and supplies are seasonal. Furthermore, profitability can be impacted favorably or unfavorably based on weather patterns, particularly during the Summer and Winter selling seasons. 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 we serve tends to be fairly evenly distributed throughout the year and depends largely on housing completions and related weather and economic conditions.
Equity Method Investments	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 condensed consolidated unaudited 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 condensed consolidated unaudited 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	Use of Estimates The preparation of condensed consolidated unaudited 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 condensed consolidated unaudited 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.
Impact of COVID-19 Pandemic	Impact of COVID-19 Pandemic Since COVID-19 was declared a pandemic in March 2020, it has impacted our operations and the operations of our customers and suppliers. Although we learned to navigate COVID-19 while maintaining our operations in all material respects, the pandemic continued to impact our business and operating results throughout 2020 and into 2021. However, as economic activity has been recovering, the impact of the pandemic on our business has been more reflective of greater economic and marketplace dynamics, which include supply chain disruptions and labor shortages, rather than pandemic-related issues such as location closures, mandated restrictions and employee illness. Notwithstanding the recent resurgence of economic activity, in light of variant strains of the virus that have emerged, the COVID-19 pandemic could once again impact our operations and the operations of our customers and suppliers as a result of quarantines, location closures, illnesses, and travel restrictions. The extent to which the COVID-19 pandemic impacts 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 resumption of high levels of infection and hospitalization, new variants of the virus, the resulting impact on our employees, customers, suppliers, and vendors, and the remedial actions and any stimulus measures adopted by federal, state, and local governments, and to what extent normal economic and operating conditions are impacted. Therefore, we cannot reasonably estimate the future impact at this time.

REVENUES (Tables)

9 Months Ended

Sep. 30, 2021

Summary of Disaggregated Revenue

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


	Quarter Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Primary Geographical Regions:
United States	$	1,615,319		$	1,391,340		$	4,291,838		$	3,517,533
Canada		102,491			91,429			290,863			218,687
Latin America and the Caribbean		64,759			53,902			185,626			163,992

	$	1,782,569		$	1,536,671		$	4,768,327		$	3,900,212

Major Product Lines:
HVAC equipment		69	%		70	%		69	%		70	%
Other HVAC products		27	%		27	%		27	%		27	%
Commercial refrigeration products		4	%		3	%		4	%		3	%

		100	%		100	%		100	%		100	%

EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2021

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:


	Quarter Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Basic Earnings per Share:
Net income attributable to Watsco, Inc. shareholders	$	140,865	$	106,489	$	340,059	$	223,569
Less: distributed and undistributed earnings allocated to non-vested restricted common stock		12,590		9,146		30,182		19,178

Earnings allocated to Watsco, Inc. shareholders	$	128,275	$	97,343	$	309,877	$	204,391


Weighted-average common shares outstanding - Basic		35,260,126		35,099,871		35,222,865		35,046,156
Basic earnings per share for Common and Class B common stock	$	3.64	$	2.77	$	8.80	$	5.83
Allocation of earnings for Basic:
Common stock	$	118,905	$	90,197	$	287,217	$	189,364
Class B common stock		9,370		7,146		22,660		15,027

	$	128,275	$	97,343	$	309,877	$	204,391

Diluted Earnings per Share:
Net income attributable to Watsco, Inc. shareholders	$	140,865	$	106,489	$	340,059	$	223,569
Less: distributed and undistributed earnings allocated to non-vested restricted common stock		12,563		9,135		30,132		19,175

Earnings allocated to Watsco, Inc. shareholders	$	128,302	$	97,354	$	309,927	$	204,394


Weighted-average common shares outstanding - Basic		35,260,126		35,099,871		35,222,865		35,046,156
Effect of dilutive stock options		181,852		137,151		177,389		62,887

Weighted-average common shares outstanding - Diluted		35,441,978		35,237,022		35,400,254		35,109,043

Diluted earnings per share for Common and Class B common stock	$	3.62	$	2.76	$	8.75	$	5.82

Anti-dilutive stock options not included above		63,959		3,750		27,513		27,755

OTHER COMPREHENSIVE (LOSS) INCOME (Tables)

9 Months Ended

Sep. 30, 2021

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

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


	Quarter Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Foreign currency translation adjustment	$	(8,219	)	$	5,514		$	(746	)	$	(6,592	)

Unrealized (loss) gain on cash flow hedging instruments		—			(570	)		97			1,297
Income tax benefit (expense)		—			154			(27	)		(349	)

Unrealized (loss) gain on cash flow hedging instruments, net of tax		—			(416	)		70			948


Reclassification of (gain) loss on cash flow hedging instruments into earnings		—			(697	)		305			(946	)
Income tax expense (benefit)		—			188			(84	)		255

Reclassification of (gain) loss on cash flow hedging instruments into earnings, net of tax		—			(509	)		221			(691	)

Other comprehensive (loss) income	$	(8,219	)	$	4,589		$	(455	)	$	(6,335	)

Schedule of Accumulated Other Comprehensive Loss

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


Nine Months Ended September 30,	2021			2020
Foreign currency translation adjustment:
Beginning balance	$	(34,694	)	$	(38,599	)
Current period other comprehensive loss		(406	)		(4,349	)

Ending balance		(35,100	)		(42,948	)

Cash flow hedging instruments:
Beginning balance		(173	)		(451	)
Current period other comprehensive income		43			568
Reclassification adjustment		132			(414	)

Ending balance		2			(297	)

Accumulated other comprehensive loss, net of tax	$	(35,098	)	$	(43,245	)

ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2021

Business Combinations [Abstract]

Summary of tangible and intangible assets acquired and liabilities assumed


Accounts receivable	$	33,315
Inventories		71,325
Other current assets		962
Property and equipment		2,590
Operating lease right-of-use assets		53,829
Goodwill		17,452
Intangibles		19,900
Accounts payable		(25,393	)
Accrued expenses and other current liabilities		(19,237	)
Operating lease liabilities, net of current portion		(48,046	)

Total	$	106,697

DERIVATIVES (Tables)

9 Months Ended

Sep. 30, 2021

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:


	Quarter Ended September 30,					Nine Months Ended September 30,
	2021		2020			2021		2020
(Loss) gain recorded in accumulated other comprehensive loss	$	—	$	(570	)	$	97	$	1,297
(Gain) loss reclassified from accumulated other comprehensive loss into earnings	$	—	$	(697	)	$	305	$	(946	)

Fair Value of Derivative Instruments and Location in the Balance Sheets


	Asset Derivatives				Liability Derivatives
	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020
Derivatives designated as hedging instruments	$	—	$	—	$	—	$	91
Derivatives not designated as hedging instruments		—		—		5		10

Total derivative instruments	$	—	$	—	$	5	$	101

FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2021

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:


				Fair Value Measurements at September 30, 2021 Using
	Balance Sheet Location	Total		Level 1		Level 2		Level 3
Assets:
Equity securities	Other assets	$	1,750	$	1,750	$	—	$	—
Liabilities:
Derivative financial instruments	Accrued expenses and other current liabilities	$	5	$	—	$	5	$	—


				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	$	—

Basis of Presentation - Additional Information (Detail)	Sep. 30, 2021 Entity
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of Joint Ventures	4

Revenues - Summary of Disaggregated Revenue (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Disaggregation of Revenue [Line Items]
Revenues from product lines, percentage	100.00%	100.00%	100.00%	100.00%
Revenues	$ 1,782,569	$ 1,536,671	$ 4,768,327	$ 3,900,212
United States
Disaggregation of Revenue [Line Items]
Revenues	1,615,319	1,391,340	4,291,838	3,517,533
Canada
Disaggregation of Revenue [Line Items]
Revenues	102,491	91,429	290,863	218,687
Latin America and the Caribbean
Disaggregation of Revenue [Line Items]
Revenues	$ 64,759	$ 53,902	$ 185,626	$ 163,992
HVAC Equipment
Disaggregation of Revenue [Line Items]
Revenues from product lines, percentage	69.00%	70.00%	69.00%	70.00%
Other HVAC Products
Disaggregation of Revenue [Line Items]
Revenues from product lines, percentage	27.00%	27.00%	27.00%	27.00%
Commercial Refrigeration Products
Disaggregation of Revenue [Line Items]
Revenues from product lines, percentage	4.00%	3.00%	4.00%	3.00%

- Definition

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).

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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+ Details

Earnings Per Share - Schedule of Basic and Diluted Earnings per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income attributable to Watsco, Inc. shareholders	$ 140,865	$ 106,489	$ 340,059	$ 223,569
Basic earnings per share for Common and Class B common stock	$ 3.64	$ 2.77	$ 8.80	$ 5.83
Net income attributable to Watsco, Inc. shareholders	$ 140,865	$ 106,489	$ 340,059	$ 223,569
Diluted earnings per share for Common and Class B common stock	$ 3.62	$ 2.76	$ 8.75	$ 5.82
Class B Common Stock
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Earnings allocated to Watsco, Inc. shareholders – Basic	$ 9,370	$ 7,146	$ 22,660	$ 15,027
Common Stock
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Earnings allocated to Watsco, Inc. shareholders – Basic	118,905	90,197	287,217	189,364
Common Stock \| Class B Common Stock
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income attributable to Watsco, Inc. shareholders	140,865	106,489	340,059	223,569
Less: distributed and undistributed earnings allocated to non-vested restricted common stock	12,590	9,146	30,182	19,178
Earnings allocated to Watsco, Inc. shareholders – Basic	$ 128,275	$ 97,343	$ 309,877	$ 204,391
Weighted-average common shares outstanding - Basic	35,260,126	35,099,871	35,222,865	35,046,156
Basic earnings per share for Common and Class B common stock	$ 3.64	$ 2.77	$ 8.80	$ 5.83
Net income attributable to Watsco, Inc. shareholders	$ 140,865	$ 106,489	$ 340,059	$ 223,569
Less: distributed and undistributed earnings allocated to non-vested restricted common stock – Diluted	12,563	9,135	30,132	19,175
Earnings allocated to Watsco, Inc. shareholders – Diluted	$ 128,302	$ 97,354	$ 309,927	$ 204,394
Weighted-average common shares outstanding - Basic	35,260,126	35,099,871	35,222,865	35,046,156
Effect of dilutive stock options	181,852	137,151	177,389	62,887
Weighted-average common shares outstanding - Diluted	35,441,978	35,237,022	35,400,254	35,109,043
Diluted earnings per share for Common and Class B common stock	$ 3.62	$ 2.76	$ 8.75	$ 5.82
Anti-dilutive stock options not included above	63,959	3,750	27,513	27,755

Earnings Per Share - Additional Information (Detail) - shares	Sep. 30, 2021	Sep. 30, 2020
Earnings Per Share [Line Items]
Class B common stock conversion, number of shares	2,575,698	2,576,570

Other Comprehensive (Loss) Income - Schedule of Tax Effects Allocated to Each Component of Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020
Components Of Other Comprehensive Income Loss [Line Items]
Foreign currency translation adjustment	$ (8,219)			$ 5,514			$ (746)	$ (6,592)
Unrealized (loss) gain on cash flow hedging instruments	0			(570)			97	1,297
Income tax benefit (expense)	0			154			(27)	(349)
Unrealized (loss) gain on cash flow hedging instruments, net of tax	0			(416)			70	948
Reclassification of (gain) loss on cash flow hedging instruments into earnings	0			(697)			305	(946)
Income tax expense (benefit)	0			188			(84)	255
Reclassification of (gain) loss on cash flow hedging instruments into earnings, net of tax	0			(509)			221	(691)
Other comprehensive (loss) income	$ (8,219)	$ 3,988	$ 3,776	$ 4,589	$ 8,356	$ (19,280)	$ (455)	$ (6,335)

- Definition

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

+ References

+ Details

Other Comprehensive (Loss) Income - Schedule of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ (34,867)
Ending balance	(35,098)	$ (43,245)
Foreign Currency Translation Adjustment
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(34,694)	(38,599)
Current period other comprehensive income (loss)	(406)	(4,349)
Ending balance	(35,100)	(42,948)
Cash Flow Hedging Instruments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(173)	(451)
Current period other comprehensive income (loss)	43	568
Reclassification adjustment	132	(414)
Ending balance	$ 2	$ (297)

- Definition

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.

+ References + Details

Acquisitions - Additional Information (Detail) $ in Thousands				9 Months Ended
	Aug. 20, 2021 USD ($) shares	May 07, 2021 USD ($) Location shares	Apr. 09, 2021 USD ($) Location	Sep. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)
Business Acquisition [Line Items]
Goodwill				$ 432,514	$ 412,486
ACME Refrigeration LLC [Member]
Business Acquisition [Line Items]
Number of locations in which the company operates \| Location		18
Cash consideration for Business Acquisition		$ 18,051
Fair value of equity shares issued or issuable		$ 2,551		2,551
Stock issued for acquisition \| shares		8,492
Businees acquisition total identifiable goodwill and intangibles		$ 3,710
Businesss acquistion goodwill expected period of tax deduction		15 years
Business combination consideration transferred liabilities incurred		$ 3,141
Business acquistion total consideration		22,855
Cash acquired from acquisition		1,340
Intangible assets acquired		2,124
ACME Refrigeration LLC [Member] \| Trade Names and Distribution Rights [Member]
Business Acquisition [Line Items]
Indefinite-lived intangible assets acquired		$ 1,508
ACME Refrigeration LLC [Member] \| Customer Relationships [Member]
Business Acquisition [Line Items]
Amortization period		18 years
Finite lived intangible assets acquired		$ 616
TEC Distribution LLC [Member]
Business Acquisition [Line Items]
Number of locations in which the company operates \| Location			32
Cash consideration for Business Acquisition			$ 105,200
Businees acquisition total identifiable goodwill and intangibles			$ 37,352
Businesss acquistion goodwill expected period of tax deduction			15 years
Intangible assets acquired			$ 19,900
TEC Distribution LLC [Member] \| Trade Names and Distribution Rights [Member]
Business Acquisition [Line Items]
Indefinite-lived intangible assets acquired			$ 15,700
TEC Distribution LLC [Member] \| Customer Relationships [Member]
Business Acquisition [Line Items]
Amortization period			18 years
Finite lived intangible assets acquired			$ 4,200
TEC Distribution LLC [Member] \| Carrier Global Corporation [Member]
Business Acquisition [Line Items]
Cash consideration for Business Acquisition			$ 21,040
Ownership percentage, by non-controlling owners			20.00%
TEC Distribution LLC [Member] \| Watsco, Inc. [member]
Business Acquisition [Line Items]
Cash consideration for Business Acquisition			$ 84,160
Ownership percentage by parent			80.00%
Repayment of indebtedness for Business Acquisition			$ 1,497
Makdad Industrial Supply Co Inc [Member]
Business Acquisition [Line Items]
Cash consideration for Business Acquisition	$ 3,117
Fair value of equity shares issued or issuable	$ 997			$ 997
Stock issued for acquisition \| shares	3,627
Businesss acquistion goodwill expected period of tax deduction	15 years
Cash acquired from acquisition	$ 204
Goodwill	$ 981

Acquisitions - Summary of Tangible and Intangible Assets Acquired and Liabilities Assumed (Detail) - TEC Distribution LLC [Member] $ in Thousands	Apr. 09, 2021 USD ($)
Business Acquisition [Line Items]
Accounts receivable	$ 33,315
Inventories	71,325
Other current assets	962
Property and equipment	2,590
Operating lease right-of-use assets	53,829
Goodwill	17,452
Intangibles	19,900
Accounts payable	(25,393)
Accrued expenses and other current liabilities	(19,237)
Operating lease liabilities, net of current portion	(48,046)
Total	$ 106,697

Derivatives - Impact from Foreign Exchange Derivative Instruments Designated as Cash Flow Hedges (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Derivative Instruments, Gain (Loss) [Line Items]
(Loss) gain recorded in accumulated other comprehensive loss	$ 0	$ (570)	$ 97	$ 1,297
Foreign Currency Forward Contracts \| Cash Flow Hedge
Derivative Instruments, Gain (Loss) [Line Items]
(Loss) gain recorded in accumulated other comprehensive loss	0	(570)	97	1,297
(Gain) loss reclassified from accumulated other comprehensive loss into earnings	$ 0	$ (697)	$ 305	$ (946)

Derivatives - Fair Value of Derivative Instruments and Location in the Balance Sheets (Detail) - Foreign Exchange Forward And Option Contracts [Member] - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Derivatives, Fair Value [Line Items]
Derivative instruments, assets derivatives	$ 0	$ 0
Derivative instruments, liabilities derivatives	5	101
Derivatives Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Derivative instruments, assets derivatives	0	0
Derivative instruments, liabilities derivatives	0	91
Derivatives Not Designated as Hedging Instruments [Member]
Derivatives, Fair Value [Line Items]
Derivative instruments, assets derivatives	0	0
Derivative instruments, liabilities derivatives	$ 5	$ 10

Derivatives - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Foreign Currency Forward Contracts \| Cash Flow Hedge
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Maximum length of time hedged in cash flow hedge			12 months
Pre-tax gain to be reclassified into earnings within the next 12 months	$ 0		$ 0
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	4,200		$ 4,200
Contract expiring terms			2021-10
Gain (loss) from foreign currency forward and option contracts not designated as hedging instruments	$ 83	$ (454)	$ (101)	$ 57

Fair Value Measurements - Assets and Liabilities Carried at Fair Value Measured on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Assets:
Equity securities	$ 1,750	$ 6,065
Liabilities:
Derivative financial instruments	5	101
Fair Value Measurements, Level 1 \| Other assets
Assets:
Equity securities	1,750	6,065
Fair Value Measurements, Level 2 \| Accrued expenses and other current liabilities
Liabilities:
Derivative financial instruments	$ 5	$ 101

Fair Value Measurements - Additional Information (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2021 USD ($)
Fair Value Disclosures [Abstract]
Equity Securities, FV-NI, Realized Gain	$ 3,815

Shareholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
	Aug. 06, 2021	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Stockholders Equity Note [Line Items]
Shares withheld as payment for tax withholdings related to share based compensation, market value				$ 894	$ 2,299
Robert W. Baird Co. Inc [Member] \| Sales Agreement [Member] \| ATM Program [Member] \| Maximum [Member]
Stockholders Equity Note [Line Items]
Maximum aggregate offering amount of stock	$ 300,000
Common and Class B Common Stock \| Non-Vested Restricted Stock
Stockholders Equity Note [Line Items]
Shares withheld as payment for tax withholdings related to share based compensation, shares		3,250	5,361	3,250	11,693
Shares withheld as payment for tax withholdings related to share based compensation, market value		$ 894	$ 1,265	$ 894	$ 2,299
Common and Class B Common Stock \| Non-Vested Restricted Stock \| Robert W. Baird Co. Inc [Member]
Stockholders Equity Note [Line Items]
Sale of stock number of shares issued in transaction				0
Common Stock \| Stock Option
Stockholders Equity Note [Line Items]
Net proceeds from the sale of Common stock		$ 2,094	$ 6,573	$ 9,940	$ 11,978
Shares withheld as payment for tax withholdings related to share based compensation, shares		2,965	6,582	2,965	11,455
Shares withheld as payment for tax withholdings related to share based compensation, market value		$ 863	$ 1,490	$ 863	$ 2,343
Common Stock \| Employee Stock Purchase Plan [Member]
Stockholders Equity Note [Line Items]
Net proceeds from shares purchased under ESPP		$ 392	$ 401	$ 1,233	$ 1,229
Common Stock \| Class B Common Stock
Stockholders Equity Note [Line Items]
Cash dividends paid per share of Common and Class B common stock		$ 1.95	$ 1.775	$ 5.675	$ 5.15

Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Commitments and Contingencies Disclosure [Line Items]
Self-insurance reserves	$ 8,039	$ 5,404

Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Greenberg Traurig, P.A.
Related Party Transaction [Line Items]
Amount payable to related party	$ 56		$ 56		$ 8
Related Party Transaction	83	$ 28	181	$ 28
Carrier and Its Affiliates \| Supplier Concentration Risk
Related Party Transaction [Line Items]
Amount payable to Carrier and its affiliates, net of receivables	142,000		142,000		$ 81,000
Revenues from sales to Carrier and its affiliates	$ 30,000	$ 27,000	$ 86,000	$ 82,000
Carrier and Its Affiliates \| Supplier Concentration Risk \| Cost of Goods, Total
Related Party Transaction [Line Items]
Percentage of purchases from key suppliers	59.00%	65.00%	64.00%	62.00%