Watsco, Inc. Q3 2026 Earnings Recap

Watsco shares fell 1.4% after earnings, a roughly flat reaction. Sales rose 7%, but same-store growth was 4%; management described improving demand without providing a new outlook or guidance.

Key Takeaways

• Third-quarter sales reached a record $2.22 billion, up 7% year over year and 4% on a same-store basis; residential HVAC equipment sales grew 7%.
• EPS was $3.77. Gross profit was a record $586 million, with a 26.4% gross margin; operating income was $225 million and operating margin was 10.1%.
• SG&A increased 5% excluding Jackson Supply, primarily due to variable expenses. Management said gross margins had remained in a narrow range and reiterated a long-term goal of 30%.
• E-commerce sales grew 12% year to date and accounted for 37% of sales over the last 12 months. OnCallAir generated $2 billion in gross merchandise value from homeowner proposals, up 14% over the comparable period.
• Watsco ended the quarter with $649 million in cash and no debt. Year-to-date operating cash flow increased 79% to $304 million; the company completed its Granite Group acquisition in October.