Watsco at Morgan Stanley’s Laguna Conference: Strategic Growth Amidst Challenges

On Thursday, 11 September 2025, Watsco Inc. (NYSE:WSO) participated in Morgan Stanley’s 13th Annual Laguna Conference. The discussion, led by Barry S. Logan, focused on Watsco’s strategic positioning in the HVAC market amidst current challenges and opportunities. While the company faces a slowdown in unit sales, it maintains a strong focus on strategic partnerships and inventory management to drive future growth.

Key Takeaways

• Watsco’s unit sales are down 12% year-to-date, attributed mainly to decreased new construction and cautious consumer spending.
• The company is managing elevated inventory levels due to the 410A refrigerant phase-out and aims to reduce them by year-end.
• Strategic partnerships, particularly with Carrier, are central to Watsco’s growth plans.
• Watsco’s dividend policy is driven by cash flow, with a strong history of growth over the past 15 years.
• The transition to new refrigerants is largely complete, with minimal competition from the old 410A stock.

Financial Results

• Revenue remained stable, while earnings showed slight improvement in Q2.
• Units sold decreased by 12% year-to-date, reflecting consistent trends throughout the summer.
• New product prices increased by approximately 12%, supporting higher margins.
• Inventory levels rose by 24% in Q2, but a reduction is planned by year-end.

Operational Updates

• The phase-out of 410A refrigerant required significant inventory buildup, but Watsco is now focused on reducing inventory levels.
• The decline in new construction, especially in Florida, has impacted unit sales, with 60% of the decline attributed to this factor.
• Light commercial sales remain consistent, though influenced by business capital expenditures and interest rates.

Future Outlook

• Watsco plans to expand its market share through strategic partnerships with OEMs like Carrier and Daikin.
• The company’s strong balance sheet, with no debt, positions it well for aggressive growth.
• Anticipation of potential economic improvements could boost light commercial sales.

Q&A Highlights

• Watsco aims to reduce both unit and dollar inventory by the end of the year.
• Pricing strategies focus on maintaining margin integrity, with contractors setting final installation prices.
• There is no anticipated price competition from R32 refrigerants, and the EPA may extend installation deadlines.

For a deeper understanding of Watsco’s strategic direction and market insights, readers are encouraged to refer to the full transcript below.

Full transcript - Morgan Stanley’s 13th Annual Laguna Conference:

Barry S. Logan, Executive, Watsco Inc.: Ready when I’m sitting here.

Chris Hart, U.S. Multi-Industry Analyst: Thank you, everybody. Chris Hart, U.S. Multi-Industry Analyst. You know, super excited to have Barry S. Logan up here with me from Watsco Inc. Thank you for coming, Barry.

Barry S. Logan, Executive, Watsco Inc.: Thank you.

Chris Hart, U.S. Multi-Industry Analyst: Maybe starting off high level and kind of open-ended, we’ve had a lot of resident HVAC updates this week, both from the OEMs, some industry data. There’s a lot of cross-currents going on in the market. Can you just kind of talk about what you see out there?

Barry S. Logan, Executive, Watsco Inc.: Sure. First of all, I started my day at 7:00 A.M., but nine hours and 50 minutes later, I’m here. I’ve talked about it all day. I’m either well rehearsed or I’m tired of talking about it.

Chris Hart, U.S. Multi-Industry Analyst: Probably both.

Barry S. Logan, Executive, Watsco Inc.: Just to do a little bit of therapy about it. There can always be, and every year, be a disconnect where a product change has gone on to the extent that it has. Right. Play back a year ago. A year ago, we knew 410A was leaving the building. We knew that OEMs had a deadline in which we could order the products. We knew customers wanted the product. As distributors, we decide to build inventory to take care of our customers. Our customers do not like change very much. They’ll take change when they have to, but not necessarily well ahead of time. I think our fellow brethren of distributors, not just us, built 410A inventory in the fall last year. It’s reflected in the industry numbers. I think industry shipments were up 22% last July, probably near 20% for the next couple of months.

A year later, everything I just said is irrelevant. Right. A year later, we have no special need, no deadline, no special transition going on. That inventory has been sold out for the most part. A year later, it’s part of the calculus that you should consider why the OEMs would be reducing their thoughts on inventory levels. I think now that’s certainly a material part of the discussion. The comparison of a year ago shouldn’t be obviously ignored. Secondly, as new products came out early this year, and again, we’re talking about taking almost 60% of our product volume, emptying out our stores of the old product and bringing in new product. Imagine, we have a store in Miami that had $70 million of Rheem product. Average Home Depot does $45 million.

Chris Hart, U.S. Multi-Industry Analyst: Really? Wow.

Barry S. Logan, Executive, Watsco Inc.: Let’s take 70% of the inventory in that store, sell it off, and bring in new product. Let’s fix the price. Let’s make sure the margin’s right. Let’s make sure customers are happy. Let’s make sure they know what they’re doing. The distributor level of cost commitment fortitude was to transition an enormous amount of product beginning this year. You had lead times extending out. You had lead time uncertainty beyond those extended lead times playing out. As distributors, our lead time is one hour. If you order the product this morning, I want to have it to you in an hour, not next Tuesday, not when I can get it from Carrier, not when Mitsubishi delivers it to me an hour from now.

To always hedge the risk of product availability and uncertainty, like we just experienced this year, we build inventory, we build safety stock, we use our balance sheet. Distributors use their balance sheet, not just us, to be in a good position for the season with product. There is an element of safety stock that’s been carried all year that every distributor now has out of season to move out of their locations. There’s a third one. The third one is the reality that the demand structure this year isn’t what any of us would have thought going into the year. We said in our second quarter call and our 10-Q units were down 12% year to date. I would say that’s a very consistent percentage and concept for what we’re seeing right now.

No change, no real change in trend or behavior as we got through the summer, positive or negative. What we said in July was our revenue dollars were flattish. I would say the same thing sitting here in September. Our earnings were up slightly in the second quarter. I would say we have that opportunity for the third quarter. Everyone should have some sense of feeling that consistency has gone on in our market to the contractor. I say that with objectivity. More of what the OEMs are sensing or seeing or saying is really this huge inventory reality. Part of that reality, the third reality, is demand is less than we thought. If we’re building replenishment where we think units are flat and instead they’re down, you know, 10%, 12% in a market, we’re going to replenish at lower levels as time goes on.

Part of the calculus going out of season is to position inventories to reflect the demand environment we’re seeing. When units are down, we will replenish at lower levels. Those are the three factors, and there’s probably more nuances beyond that. That’s where the disconnect is, I think, between what I’m saying is a fairly stable, kind of contractor market. We’d like it to grow. We’d like it to be stronger. What we saw in terms of trends has been pretty consistent.

Chris Hart, U.S. Multi-Industry Analyst: I appreciate that. I think coming into the year and in the early part of the year, I think you guys had been saying that the intention was to have extra inventory to accommodate the transition. It seemed like that inventory position continued to increase or even deteriorated from like an attorney’s perspective. Is that just essentially a function of the demand got worse as the summer went on?

Barry S. Logan, Executive, Watsco Inc.: I think that’s one part of it. Maybe an equal or greater part of it is the safety stock that was really needed to build into our availability in season. For example, we don’t buy a box from a Rheem factory and sell the box. To make a system work in my home in Miami, I’m buying three different components from Rheem made and treated in factories. I’m converging that into truckload quantities into a store in Miami. What I just said was typically a 20, 30-day lead time reality. It became 60 to 90-day lead times across all OEMs. Building those matching systems, building that matching set of components became far more complex over the last 12 months. It’s simpler today. Getting it right, getting the mix right, getting the matching right is where inventory gets built.

As that unwinds as lead times and the pattern of consistency of what we’re seeing, we lower inventory. Demand plays a role in that. I would say the safety stock discussion and lead time inefficiency discussion had as much to do with why inventory is coming out at this point.

Chris Hart, U.S. Multi-Industry Analyst: If I understood your earlier comment, it sounds like you were kind of saying, I know you guys said on the conference call July was flat. It sounds like it’s been similar as Q3 progressed from a sales perspective. We’re kind of thinking about volumes maybe down in that 10% range or something. Is that a function of consumers, uncertainty on the consumer? Is there a risk that the industry has just reached a price point that is just driving demand destruction? What is it? Weather? No one wants to blame weather, but we know that does have an impact.

Barry S. Logan, Executive, Watsco Inc.: Sure. Two things. You mentioned price, just to mop that up a little bit. Everything we’re selling now in these new products, we needed to do two things under our control: get the price right and get the margins protected from a historical basis. Right now, the price trend on those products is around 12%. That’s a combination of the introductory price plus the price increases since then. That’s been holding very steady, and we’re very comfortable with what’s been achieved and at higher margins. That we can’t control. So far, you know, so good. I think your question is, why did the units decline? What’s the source of it? Call it simple. About 60% of the decline this year in units is either new construction, new housing construction, multifamily housing construction, or multifamily kind of facility management type customers that buy at special prices. We identify them.

We know who they are. We buy at a different cost from our manufacturers to support that group. In Florida, in particular, it’s down almost 20%. Florida is 20% of Watsco. I think single-family housing completions is a good benchmark to keep it simple, which are down about 16% through July year to date. I’ve not talked about home building in 15 years. Since 2010, I’ve not mentioned home building as either a positive or a negative until this year. It is about 15% to 20% of what we sell, and it’s part of the unit decline, probably more material than any other category of product. The rest of the unit decline is obviously then consumer-driven. By the way, we can compete market share down to counties and states and brands and markets. We don’t see a market share impact this year.

In a market like Florida, we’re in 30% to 40% of the market for our carriers. We’re not going to have market share chiseled away in big markets. What we do see, because every business is cyclical, if you sell something and collect money, your business is cyclical, which in my definition means every business is cyclical. How much risk is there? This year, clearly, the consumer is heavier. The contractor sets the price of these products. I don’t. Carrier doesn’t. Trane doesn’t. Rheem doesn’t. Lennox doesn’t. The contractor sets the price of these products in the market.

If the contractor doesn’t have the full swagger to go in and close a $10,000 installation and defaults to something that keeps the business but has a lower rate or perhaps a Band-Aid instead of a replacement or a lower brand versus a different brand or a replacement refrigerant and fixing a leak instead of a new system, I keep it simple. I think people are spending less money on their homes this year. If you glance at Home Depot, same store sales are up 1%. That would tell you units are probably down in all the stuff they sell, just a basic proxy. It is a heavier year. Is it rates? Is it economy? Is it a sense of concern? Always. Our job isn’t to fret about it. Our job is, again, to sustain price, margin, market share.

As we head into next year, if we have lower rates, great. That’ll help some of this underlying heaviness. Existing home sales is a component of that consumer discussion. That’s down 15% to 20% in some markets. It is a heaviness that’s going on. I don’t want to complicate it by any more articulate answer than that. People are spending less money on their homes. Those cycles typically don’t last. I think at this point, the industry shipments this year, just my guess, will be very close to what they were in 2019. We know there are 15% more installed units today than in 2019. If some conventional churn of replacement or systems show up in the next several years, it’s growth against the market this year that’s down in probably at the contractor level, probably down 10% to 15%. I’ll take that as a vision of improvement.

We don’t see it yet, but 35 years of experience tells us that this could be a bit of a trough in what the consumer is doing. It’s really not so much the consumer as what the contractor is recommending and doing.

Chris Hart, U.S. Multi-Industry Analyst: Interesting.

Barry S. Logan, Executive, Watsco Inc.: That’s where we’re putting a lot of energy and technology, and some market share thoughts with our OEMs, some initiatives, some incentives. How do we get the contractor to have kind of the swagger to go replace more units next year and not necessarily count on what the economy is doing?

Chris Hart, U.S. Multi-Industry Analyst: Appreciate that perspective. Maybe, you know, kind of turning from the market more towards Watsco Inc. In the second quarter, you know, you kind of talked about the inventory. I think inventory is up 24%. Sales were down 4%, if I remember correct. I guess, what’s the timeline for you guys getting that back, you know, to kind of a normalized level? Because, you know, with volumes still negative here, it’s obviously, you know, a tougher job.

Barry S. Logan, Executive, Watsco Inc.: Yeah, it really goes back to our order book with our various OEMs. There’s about 600 total vendors in Watsco, by the way. Could be Owens Corning, could be Resideo, could be Mueller, could be, you know, a variety of companies that we buy products from. 3M Duct Tape, Avery Dennison Duct Tape. There’s not a single one of those vendors, as well as those at this conference, that isn’t feeling a lower order book as, again, as we can kind of get through an inventory cycle that should be lower and should be more productive for, you know, kind of our teams. The opportunity is then to use that capacity and buying power as we head into next year in a very effective way.

If it’s making deals, making programs, making some kind of collaboration to grow, you know, the business next year and kind of use our balance sheet as a way to do that. As we build inventory into next year, be a very good partner to those that need to grow and sell products. I’ll leave that abstractly the way I’ve just left it, but kind of use some of our market share capacity and capital as a way for OEMs to take advantage of and grow with us. We haven’t had to be able to have those conversations with that level of theory the last couple of years, given all the product changes. Now it’s a simpler business to look forward to, and we see that as an opportunity.

I think your question of timing, I think, you know, we can certainly own less units at the end of this year versus last year. The question is proportionately, you know, how much less? We’d like it to be kind of conformed to what we see in the market. The price of those products today, as I said, at least in the equipment side, is about 12% higher. Dollars will, you know, will add to the equation. Units of, I would say, you know, 90% of our heavy lifting can be done this year. If it lingers into next year, it’s because we’re not going to just cut inventory for the sake of it. We’re going to still serve customers. We’ll see. I think the intent is to have less dollars and certainly less units than a year ago by the end of this year.

Chris Hart, U.S. Multi-Industry Analyst: No, I appreciate that. If we, the HVAC resi, has a really strong track record of price from the OEM, obviously distribution as well. You guys have a great pricing track record. Is this market so unique in that the price action is so choppy that people are on different footing? The demand is, or the flow of activity is cratering to a degree that that is starting to change a little bit?

Barry S. Logan, Executive, Watsco Inc.: I think that’s always a worry. Part of the common sense is to go back to how things work transactionally. Just to have fun with numbers, an OEM makes something for $2,000. I think this is pretty accurate, by the way. The average system price that OEM sells to us is around $2,000 for that matching pair of systems. I’m not, you know, what their gross margins are. You know what their EBIT margins are. We sell it for probably $3,000 and make 26% margin. You know what our gross margin, EBIT margin is. What we sell for three, what we sell, what we buy for, what we buy for $2,000. I’m sorry. What an OEM makes for $2,000, they sell to us for $3,000. What we buy for $3,000, we sell for $4,000. The average ticket price installed in a home for that system is $9,000.

A lot of layers. Why is that? Who’s making the most margin? Is it an OEM? Is it Watsco or a contractor? That’s why I’m saying the contractor plays a greater role in this entire conversation than any of us.

Chris Hart, U.S. Multi-Industry Analyst: Yeah.

Barry S. Logan, Executive, Watsco Inc.: If the contractor can set the price at $9,000 and have a great business and make ends meet, and we’re going to help, as a distributor, help him do that and do that every single day, that’s where our service lies. It’s a good business. Now, if the price goes up 5% because tariffs, inflation, commodity prices, labor, you know, transportation from China, whatever, if the price goes up 5% to now my price went up to $3,150. My selling price went up to $4,200. Does that really change the $9,000 very much? Does the guy go to $9,200? Is he going to push back on me? That’s where pricing, I think, has the opaqueness of that, you know, changes. Also, common sense. You only buy one of these things twice in your lifetime.

Chris Hart, U.S. Multi-Industry Analyst: Yeah.

Barry S. Logan, Executive, Watsco Inc.: You didn’t know 10 years ago it was $6,700. All you know today is it’s $9,200. I think we worry less about price friction when there’s a little bit of inflation going on.

Chris Hart, U.S. Multi-Industry Analyst: Interesting.

Barry S. Logan, Executive, Watsco Inc.: What I worry more about is, is there a consumer that just can’t afford $9,000 and tells the contractor, can you just fix the leak and get me by for a period of time?

Chris Hart, U.S. Multi-Industry Analyst: Yeah.

Barry S. Logan, Executive, Watsco Inc.: I think that’s more a macroeconomic reality in our industry than can we continue to pass on 5% price if there’s inflation going on?

Chris Hart, U.S. Multi-Industry Analyst: Interesting perspective. The other dynamic that’s been going on in the market is obviously the 410A to 454. You guys pivoted over to 454 earlier than some others. It pressured your sales, at least in the first half of the year. I don’t know if you disagree.

Barry S. Logan, Executive, Watsco Inc.: Yeah, more so in the first quarter than the second quarter, but yes.

Chris Hart, U.S. Multi-Industry Analyst: Do you guys have any sense of how much 410A is left in the market? Is it, you know, gone at this point?

Barry S. Logan, Executive, Watsco Inc.: I think, in our case, we were around $100 million in inventory left. We started the year with about $1 billion in 410A inventory. I think Lennox said, here’s where we are, which was very consistent, I think, with that. What we see in the channel now is very little kind of competition for that 410A business. I don’t think there’s a lot left in the channel. I mean, there’s an artificial writedown risk if you own too much of it heading into next year. We’re allowed to sell the product, but only in components, not as systems. Going long on 410A might have been a benefit in the first quarter or second quarter, but became an artificial writedown risk if you had too much of it.

That’s why we were conservative about it and why I think most distributors have been, are, not holding on to a long amount of 410A inventory at this point.

Chris Hart, U.S. Multi-Industry Analyst: Kind of talking about that timeline, the EPA has talked about possible extensions of that 410A selling window. Do you guys have any perspective on that? If that were to happen, what would it mean for you and the industry at large?

Barry S. Logan, Executive, Watsco Inc.: I think there’s maybe two layers to extending something. One is the ability for a contractor to install systems beyond this year. Right now, the deadline is a contractor to install a system that’s 410A. It has to be this year. It can’t be next year. If that were extended, it would take some of the pressure off of maybe distribution to try to sell out of all of it. I don’t think it would be an incentive or even a thought for a manufacturer to make more of it into next year. I thought David Galison said it well. There’d be a cost to that. You have component makers that have moved on. You have OEMs that have moved on. You have distributor inventory that we’re not looking to own two different product lines either. Every part of the industry has said it’s not, doesn’t make sense to us.

That doesn’t mean it doesn’t happen. I think there are other parts of the industry that use refrigerants, be it frozen containers or frozen buildings or frozen grocery stores, that have that concern that if we chop off availability this year, it’s going to cost us a fortune in the long term. We’re talking about converting a grocery store that’s got to spend $2 million on that.

Chris Hart, U.S. Multi-Industry Analyst: Yeah.

Barry S. Logan, Executive, Watsco Inc.: Those industry associations are, I’m sure, the ones lobbying. I’m not sure anyone in our industry is lobbying for that kind of extension.

Chris Hart, U.S. Multi-Industry Analyst: Appreciate that. Maybe going over to the light commercial side of the market, where the updates, you know, certainly more positive on the resi side, what are you guys seeing over there?

Barry S. Logan, Executive, Watsco Inc.: Yeah, again, consistency with what we’ve reported year to date. Probably units are down a little bit. Pricing is up consistent with 410A. I mean, with the 410A transition because those products are affected there too. Yeah, I would say consistency again. I think light commercial in our view is someone’s CapEx. It’s a $10,000 machine on top of a retail store in a shopping mall. The economy, I think, could have some weight on that, and maybe has, but I don’t think it’s material. I think there’s still an interest rate of a part of the economy that has been restrained in spending some CapEx. You would see that across your universe of, and the light commercial, I think, can benefit from either a stronger economy or lower rates to uncork some of the restrained CapEx that’s gone in the market. It’s not better or worse.

It’s been pretty consistent as we see it.

Chris Hart, U.S. Multi-Industry Analyst: Appreciate that. Do you think interest rates are kind of the tailwind to kickstart that more than anything?

Barry S. Logan, Executive, Watsco Inc.: Yeah, I would never say more than anything. I would say it’s a component of the discussion. I think business confidence and, abstractly, whatever that means, is probably more to do with it. Watsco’s CapEx budget is probably more restrained than what we’ll spend next year if we feel the economy is picking up. We’re not the only company that probably would say those words. It’s conservatism, I think, versus interest rates.

Chris Hart, U.S. Multi-Industry Analyst: I appreciate that. Obviously, the big focus this week is on the resi sell-through and some of the headwinds that’s being faced there. Is it possible that there’s more downstream inventory at the dealer-installer level than everyone thought? Maybe end demand is actually better than we’re seeing, but that’s just kind of eating away at the sell-through data?

Barry S. Logan, Executive, Watsco Inc.: Yeah, we certainly manage bulk sales to customers carefully for two reasons. We’re taking credit risk if we do that, and there’s always a thought of rebalance where they say, I bought too much. Can I bring some back? I would say the days of stocking up dealers for us in our business model have diminished and are de minimis at this point. I can’t speak for others. If we have 107 locations in Florida, and we do, and we have competitors that have 12 branches in Florida that are at this conference, or 20 branches instead of 107, I have the product. I don’t need to put inventory in a small town in Florida to get somebody product timely. They can come get it, and they don’t have to own it.

There are other business models where there are fewer branches in markets, and part of pushing finished goods into the market is to have contractors take it. I would say it’s extremely de minimis in our company because we have the branch network that supports the customer.

Chris Hart, U.S. Multi-Industry Analyst: I appreciate that. We haven’t talked about, you know, R32. I guess you’re kind of talking earlier about, you know, the price on the homeowner. R32, from our understanding, is cheaper than 454. Is that, you know, are you seeing that have an impact and that maybe the installers are looking to those products?

Barry S. Logan, Executive, Watsco Inc.: Sure. The R32 is installed by Daikin at the factory when they make the product. If it’s cheaper for Daikin to make that product, then that’s their profitability to either enjoy or use in the market. We don’t see any real change in, and I think we’re Goodman’s third largest customer.

Chris Hart, U.S. Multi-Industry Analyst: Yeah.

Barry S. Logan, Executive, Watsco Inc.: There’s no price competition that’s been introduced as a Goodman distributor in the market because of that.

Chris Hart, U.S. Multi-Industry Analyst: Yeah.

Barry S. Logan, Executive, Watsco Inc.: We’re not looking to introduce, frankly, deflation into the market and try to grow with a lower price. There’s really not a long-term benefit to that. What we see with Goodman and Daikin, importantly, is they have product in the channel en masse this year. That wasn’t the case this time last year for reasons that have been well publicized. If you have less product in the market to sell, you’ll sell less. If you have more, you’ll sell more. I think they’ve done a good job of, and been a great supplier to get product in our channel to grow it this year. Our Goodman business, Daikin business has absolute growth this year.

I think it’s more of a consequence than distributors having product to sell and be active in the market this year versus last and have little to do, if nothing to do with any kind of price advantage of some kind.

Chris Hart, U.S. Multi-Industry Analyst: Yeah.

Barry S. Logan, Executive, Watsco Inc.: I think Daikin also is an innovative company where they’ve come out with new products. They’ve come out with higher efficiency products. They want to innovate beyond just, you know, and I think it’s helped their business this year. It’s an important partner to us.

Chris Hart, U.S. Multi-Industry Analyst: I appreciate that. One question that we’ve gotten on Watsco is that, obviously with the industry headwinds, the pace of the company’s earnings growth in 2025, and I mean, I guess we’ll see about 2026, but 2025, obviously, under pressure. I guess, anything that we should think about on the dividend, you guys have a really long history of steady and quite material increases. Is that tied to EPS growth? How should we think about that?

Barry S. Logan, Executive, Watsco Inc.: Yeah, I would say it’s, first, you know, just for everybody’s sake, we’ve paid a dividend for 50 years. I would say the last 15 years or so, it’s been about a 10% compounded rate, maybe 11%, whatever the math is. It’s more of a consequence of what we see in cash flow than EPS. Let me play with your head. Let’s say our business is down 10%.

Chris Hart, U.S. Multi-Industry Analyst: Yeah.

Barry S. Logan, Executive, Watsco Inc.: What happens to working capital? It goes down 10%.

Chris Hart, U.S. Multi-Industry Analyst: Yep.

Barry S. Logan, Executive, Watsco Inc.: We have more cash flow in a lower earnings environment.

Chris Hart, U.S. Multi-Industry Analyst: Yeah.

Barry S. Logan, Executive, Watsco Inc.: Conceivably can raise the dividend well beyond an EPS because the cash is there. Today, Watsco Inc. has no debt. One of three Fortune 500 companies that can say those words. Google it. It’s only three. The affordability of dividend isn’t just having the cash. It’s having the cash flow. EPS actually is not a, I’m not saying we ignore it or play pretend and ignore it. I’m saying our cash flow is really what derives the dividend. With almost no CapEx, really material to speak of, free cash flow and operating cash flow is relatively the same. In 51 years, we’ll raise the dividend again.

Chris Hart, U.S. Multi-Industry Analyst: Yeah, no, really, really interesting points. It almost seems like distribution is a great business. I guess, you know, only a minute left here. I guess, you know, kind of just to wrap, it seems like from our perspective that you guys feel like you’re obviously taking a lot of inventory, maybe a little bit to go next year, but really the heavy lifting is done this year. It seems like you think the industry could have a solid setup into next year. You guys might be, I don’t want to say aggressive, but in the market looking to build inventory into that next year.

Barry S. Logan, Executive, Watsco Inc.: Yeah, I think the inventory will follow the strategy, right? Carrier was here yesterday and they talk about growth. They want growth. It’s our biggest partner, like by 5X. Just to talk about that for a second as an example, I mean, Carrier is a great partner. It has been, I would say, an exceptional partner the last five years because in their independence, in their own entrepreneurship, in their own need for growth and desire to grow, they’ve become exponentially easier to do business with to say, what should we do? I guarantee you in this environment, after all this product stuff is done and we’re catching our breath and kind of sitting down and saying, what’s next? There are very aggressive growth plans with all of our partners, but I’ll pick the biggest one. It’s not just open to ideas.

It’s a complete open-mindedness to say, what can we do?

Chris Hart, U.S. Multi-Industry Analyst: Yeah.

Barry S. Logan, Executive, Watsco Inc.: We are really looking forward to that for next year and do that with other, you know, big partners of ours. That one in particular is strategic and we are strategic for each other. It is actually pretty exciting in terms of things that we are conceiving of and working on and collaborating on very closely to achieve. That is conversations we did not get to have at the same level of freedom given all the product changes that have gone on and now we can.

Chris Hart, U.S. Multi-Industry Analyst: I appreciate you sharing all your decades of knowledge with us. Thank you.

Barry S. Logan, Executive, Watsco Inc.: Thank you very much. Appreciate it. Thanks, everybody.

Chris Hart, U.S. Multi-Industry Analyst: Thanks, guys.

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