Watsco (WSO)

“Again, making quarters is important, but having great quarter-centuries is mission-critical."

Aaron Nahmad, President

Founded in 1956, Watsco is the largest distributor of air conditioning, heating and refrigeration equipment and related parts and supplies (HVAC) in North America, with almost 650 locations across Canada and, particularly, the United States, where 90% of its total revenue comes from.

Air conditioning systems (AC) are vital in the day-to-day of most households, and more specifically those in the Sunbelt states, where 90% of Watsco's US business concentrates. The first civilizations had already developed cooling systems for their homes (cavemen settled there not only to protect themselves from predators, but also because caves worked as some kind of geothermal cooled homes). Air conditioning systems can improve comfort, but may also save lives. In 1840, physicist and inventor Dr. John Gorrie, from Florida, believed that the outcome of many patients admitted to hospitals could be influenced by the building’s temperature. Although his technology was ultimately not implemented, he patented a system that created ice from a compressor powered by a horse, water and wind. The number of deaths caused by heat in the US fell by 80% in the period between 1960 (when the popularity of residential AC systems began to rise) and 2004, compared to the prior 59 years.

Today, HVAC systems are an essential part of any household, especially in regions with high humidity and extreme temperatures. However, that was not the case until not too long ago. The first HVAC systems were installed in Los Angeles theaters in the early 20th century by the Willis Carrier Company, the leading manufacturer of HVAC systems in the US today and Watsco’s major supplier. Throughout the years, new manufacturers tried to bring this innovation to American homes, but private use was still a luxury very few could afford. The first air conditioner required a room of more than 375 square feet and could cost between $10,000 and $50,000 (about $120,000 to $600,000 today). In 1932, H.H. Schultz and J.Q. Sherman designed a residential air conditioning system that could be installed in window sills, leading many homes to progressively upgrade to a central HVAC system. These new electric air conditioning systems dramatically reduced the average cost at the turn of the century, and in 1938 American households could purchase a Chrysler system for just over $400. The installed base of residential air conditioners in the United States has kept growing ever since and, according to the US Energy Information Administration, more than 90% of households in the country now own an AC system.