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Watsco Reports Record Third Quarter Sales, Strong Cash Flow and Improving Demand

WSO
  • Watsco, Inc. announced operating results for the quarter & nine months ended September 30, 2026, reporting record revenues of $2.22 billion for Q3 & $5.86 billion for the nine-month period.
  • The company acquired Jackson Supply Company in June 2026 ($230 million annual sales) & The Granite Group in October 2026 ($500 million annual sales), expected to boost annual revenue by approximately 10%.
  • Q3 revenues rose 7% overall, with a 4% increase on a same-store basis, while gross profit increased 3% to $586 million despite a margin decline to 26.4%.
  • Operating income for Q3 decreased 4% to $225 million, & diluted earnings per share fell 5% to $3.77.
  • Nine-month operating income declined 7% to $574 million, with operating margin dropping to 9.8%, while operating cash flow surged 79% to $304 million.
  • HVAC equipment sales increased 5% in Q3, driven by a 7% rise in residential products, whereas commercial equipment sales declined 5%.
  • E-commerce sales grew 12% during the nine-month period, reaching $2.75 billion for the 12 months ended September 30, 2026, representing 37% of total revenues.
  • The company introduced AI initiatives including the internal "Ask.Watsco" engine & the customer-facing "AL.watsco" model to enhance productivity & customer service.
  • Watsco increased its annual cash dividend by 10% in April 2026 to $13.20 per share & signed a new five-year, $750 million unsecured senior revolving credit facility in October 2026.
  • More than 73,000 contractors & technicians now engage digitally with the company, enabling technology-driven growth & improved operational efficiency.
  • The balance sheet remains solid with $498.7 million in cash & cash equivalents as of September 30, 2026, supporting continued strategic investments.
  • Non-equipment products accounted for 30% of total purchases, with the company launching initiatives to optimize sourcing & improve inventory service levels.
  • The SupplySync pilot program was launched to target institutional customers with enterprise-wide solutions for sales, pricing, & order management.