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Watsco & Carrier: Building on Joint Venture's Success

Watsco & Carrier: Building on Joint Venture's Success

April 2, 2013

When HVACR distributor Watsco Inc. (NYSE: WSO) announced it would form a joint venture with Carrier Corp. in 2009 to distribute Carrier, Bryant and Payne products throughout the U.S. Sunbelt, Latin America and the Caribbean, the HVAC distributor had no international presence. The joint venture allowed Watsco to "address the international market really for the very first time," said Barry S. Logan, Watsco senior vice president.

Logan presented an update on the Watsco-Carrier joint venture at the BB&T Capital Markets Commercial and Industrial conference last month.

"Carrier made a decision to get out of the distribution business," Logan said, and Watsco was well-positioned to take on the load at the time. "It wasn't just about locations," Logan said. "It's also about supporting the brands." And the unique structure of Watsco allowed for multiple brand support across multiple locations.

In the two and a half years since that initial JV agreement, Carrier Enterprise – the name the JV operates under – has since expanded into other U.S. regions, Mexico and, most recently, Canada. And it is complex, Logan says. It's not a single joint venture, but rather a series of JV transactions that have expanded the distributor’s geographic and product footprint. The effort has been a financial success for both companies.

In 2009, Logan said Carrier's distribution business had an EBIT of around 3 percent. "Now that's closer to 8 percent EBIT," he said. Combined, the joint ventures with Carrier represented 61 percent of Watsco's 2012 revenues. Watsco reported 2012 sales of $3.4 billion.

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