The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: David Manthey - Robert W. Baird & Co Inc - Analyst
: Okay. Thank you appreciate you being here, Kelly. My question is on switching costs. So prior to this engagement through CE and with the
technology, how traumatic would it have been for you to switch vendors?
I'm assuming you've got badges on your trucks, you've got these long vendor relationships, there might be idiosyncratic factors related to
different units that you might know from using them for many years. That's the first question. Just set technology on the side, how hard
would it have been for you to say, you know what, I'm going to switch to a different vendor?
And then, Chad, a similar question for you coming at it from the other side, I assume CE doesn't retain all of their customers. So of that group
that attrits on an annual basis, is it just that they're not using the technology, dead stop? Or are there other why they would switch from CE
to a different distributor maybe even -- obviously a different vendor completely?
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DECEMBER 11, 2025 / 2:00PM, WSO.N - Watsco Inc Investor Day
Question: David Manthey - Robert W. Baird & Co Inc - Analyst
: So increase from 70-30, 40 is bigger than 30.
Question: David Manthey - Robert W. Baird & Co Inc - Analyst
: So no specificity, we're just going to go greater than 30, right?
Question: David Manthey - Robert W. Baird & Co Inc - Analyst
: We appreciate that. So when we think about this sort of hub-and-spoke situation, especially in the parts and supplies area, how do you --
when you balance that out, you look at the margin profile, I suppose it's good for cash flow and turns, as you mentioned. Can you just talk
a little bit about how that changes the model, if at all? I mean, as you grow that piece, is it margin dilutive overall? Or is there something
about that methodology that helps you close the gap versus equipment, for example?
Question: David Manthey - Robert W. Baird & Co Inc - Analyst
: Yeah.
Question: David Manthey - Robert W. Baird & Co Inc - Analyst
: It'd be margin accretive.
Question: David Manthey - Robert W. Baird & Co Inc - Analyst
: And then relative to the parts and supplies business today, the hub and spoke, is the profitability higher in that method than it is in what's
going on today?
Question: David Manthey - Robert W. Baird & Co Inc - Analyst
: Just on the topic of the equipment depot, it always felt to me like the -- especially on the equipment side, this is all about being necessarily
local. And just so I'm clear, you're not suggesting that there's not as many SKUs. It's just you have less in quantity --
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