Highlights

  • Third quarter 2026 revenues increased 7% to $2.22 billion, and gross profit increased 3% to $586 million.
  • Operating income decreased 4% to $225 million, and earnings per share decreased 5% to $3.77.
  • Gross profit margin was 26.4%, against 27.5% a year earlier, and operating margin was 10.1%, against 11.4%.
  • Watsco acquired The Granite Group in October 2026 and signed a five-year $750 million unsecured senior revolving credit facility.

Watsco, Inc. (NYSE: WSO) shares were trading at USD 292.90 on October 27, 2026, down 4.07%, with a relative volume at time of 3.43. The HVAC/R distributor acquired Jackson Supply Company in June 2026, acquired The Granite Group in October 2026, and on October 27, 2026 reported results for the quarter and nine months ended September 30, 2026.

Watsco is incorporated in Florida and lists its principal executive offices in Miami, Florida. The company describes itself as the largest distributor in the North American HVAC/R market. It distributes HVAC equipment, other HVAC products and commercial refrigeration products through a network that it says includes 804 locations, of which 112 offer both HVAC and plumbing products. It operates digital platforms including HVAC Pro+ Mobile Apps and E-Commerce, OnCallAir and SupplySync, and says more than 73,000 contractors and technicians engage with it digitally.

Third Quarter 2026 Results

Revenues were $2,220,358 thousand for the quarter ended September 30, 2026, against $2,067,005 thousand a year earlier, which the company stated as a 4% increase on a same-store basis. Gross profit was $586,287 thousand. Selling, general and administrative expenses were $370,746 thousand, an 8% increase that includes 30 new and acquired locations.

Operating income was $225,208 thousand, against $234,762 thousand. Net income attributable to Watsco was $155,369 thousand, against $161,575 thousand. Diluted earnings per share were $3.77, against $3.98.

The company said gross margin reflected customer mix, end-market mix, the timing and lower magnitude of OEM pricing actions in 2026 versus 2025, and the differing growth rate of equipment versus non-equipment products. Excluding acquisitions, HVAC equipment sales increased 5%, with residential products up 7% and commercial products down 5%. Commercial refrigeration product sales rose 10%.

For the nine months, revenues were $5.86 billion, up 3%, and operating income decreased 7% to $574 million. Diluted earnings per share were $9.72, against $10.48.

Cash Flow, Balance Sheet and Acquisitions

Net cash provided by operating activities was $303,659 thousand for the nine months, against $169,847 thousand a year earlier. Cash and cash equivalents were $498,698 thousand at September 30, 2026, and short-term cash investments were $150,000 thousand. Inventories were $1,841,814 thousand, against $1,386,317 thousand at December 31, 2025. Dividends on common stock paid in the nine months were $392,013 thousand.

Jackson Supply, founded in 1972, had annual sales of approximately $230 million and operates from 25 locations. The Granite Group, founded in 1971, had annual sales of approximately $500 million and operates from 82 locations in the Northeast. The company said the two acquisitions are expected to raise annual revenue by approximately 10%, and that they add 107 locations and $730 million in annualized revenue. Third quarter sales included $78 million from the acquired Jackson locations.

In October 2026, Watsco signed the five-year $750 million unsecured senior revolving credit facility. In April 2026, it raised its annual cash dividend by 10% to $13.20 per share.

Management Commentary and Outlook

The press release does not provide numerical financial guidance. Management said same-store sales growth rates improved through the selling season, with further improvement so far in the fourth quarter. It said residential equipment sales grew 7%, including 5% unit growth and a 2% increase in average selling price.

Management said its long-range objectives for sales, margin and cash flow generation remain intact. The company said it has invested approximately $280 million in digital platforms over five years, at a current annual run rate of approximately $64 million. E-commerce sales increased 12% during the nine months and 10% during the third quarter, reaching $2.75 billion for the 12 months ended September 30, 2026, or 37% of revenues. Gross merchandise value through OnCallAir was $1.6 billion for the nine months, a 14% increase. It held its third quarter conference call at 10:00 a.m. EDT on October 27, 2026.