Watsco Inc 8-K, filed Oct 27, 2026
Watsco Inc (WSO)
About this 8-K
Watsco Inc filed this 8-K on October 27, 2026.
Watsco reported third-quarter revenues of $2.22 billion, up 7%, and EPS of $3.77, down 5%; nine-month operating cash flow rose 79% to $304 million. Jackson Supply Company and The Granite Group are expected to bolster annual revenue by approximately 10%. AI summary
Items reported
- Item 2.02: Financial results
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On October 27, 2026, Watsco, Inc., a Florida corporation (the “Company”), issued a press release reporting its financial results for the quarter and nine months ended September 30, 2026. A copy of the Company’s press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is hereby incorporated by reference in this Item 2.02.
Item 7.01 Regulation FD Disclosure.
The information set forth in Item 2.02 of this Current Report on Form 8-K is incorporated by reference in this Item 7.01.
The information contained in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall be deemed “furnished” and not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any Company filing under the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit |
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99.1 |
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104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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WATSCO, INC. |
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Date: |
October 27, 2026 |
By: |
/s/ Ana M. Menendez |
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Ana M. Menendez, |
EXHIBIT 99.1
Watsco Reports Record Third Quarter Sales, Strong Cash Flow and Improving Demand
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Recent Acquisitions, Entrepreneurial Culture, Strong Balance Sheet
and Technology Advantage Position Company for Growth
MIAMI, FLORIDA – (GLOBENEWSWIRE), October 27, 2026 – Watsco, Inc. (NYSE: WSO) announced its operating results for the quarter and nine months ended September 30, 2026.
Watsco is the largest distributor in the highly fragmented North American HVAC/R market. Since entering distribution in 1989, Watsco has achieved a 17% compounded annual total shareholder return through a combination of organic growth, driven by the Company’s industry-leading technology platforms, and the acquisition of 74 market-leading businesses that have expanded scale, density, OEM relationships and customers.
Watsco recently welcomed Jackson Supply Company and The Granite Group to the Watsco family. These legendary companies are expected to bolster annual revenue by approximately 10% and broaden Watsco’s geographic reach, product mix, as well as end-market and customer mix. The Company’s philosophy is to build upon the success and legacies of successful businesses through investments in growth, continuity of leadership and culture, and through Watsco’s equity culture to align and reward long-term growth. As importantly, Jackson Supply and Granite Group expand Watsco’s community of talented leaders and provide future scale benefits to Watsco’s technology platforms. Highlights of the Company’s recent acquisitions include:
Watsco’s balance sheet remains solid, enabling incremental investments in growth and the Company’s industry-leading technology platforms. Today, more than 73,000 contractors and technicians engage with the Company digitally, empowering them to integrate Watsco’s innovations into their daily operations. The Company is also introducing AI-driven initiatives to leverage Watsco’s extensive data assets and enrich the customer experience. The Company believes its technology ecosystem offers a durable and widening competitive advantage. Importantly, digitally-enabled customers continue to outperform broader industry and customer metrics, strengthening Watsco’s leadership position in the highly fragmented $74 billion HVAC/R distribution landscape.
Third Quarter Operating Performance
Third Quarter Sales Trends (excluding acquisitions)
Third quarter sales performance reflects continued stabilization of residential end-markets following the prior year transition to new A2L products. Residential equipment sales grew 7%, including 5% unit growth and a 2% increase in average selling price. Same-store sales growth rates have steadily improved throughout the selling season with further momentum thus far in the fourth quarter. Third quarter sales also reflect $78 million in sales from the acquired locations of Jackson Supply, a 16% increase over the comparable prior-year period.
1
Third quarter gross margin was impacted by customer mix (larger versus smaller customers), end-market mix (replacement versus residential new construction), the timing and lower magnitude OEM pricing actions in 2026 versus 2025 and the differing growth rate of equipment versus non-equipment products. The Company believes third quarter 2026 gross margin is also more in-line with historical seasonality and year to date gross margin levels are reflective of current market conditions (including more conventional OEM pricing actions). The Company further believes that its ongoing investments in technology, pricing optimization and non-equipment growth are supportive of long-term margin objectives.
Albert H. Nahmad, Chairman and CEO said: “Third quarter results and early fourth quarter sales trends are indicative of continued improvement in end-market demand. We are encouraged to see residential unit volumes return to growth and steadily improve throughout the season. Our technology-enabled customers also continue to outperform the broader contractor community. Looking ahead, Watsco today is a meaningfully larger company, having added 107 locations and $730 million in annualized revenue to our network through the acquisitions of Jackson and Granite. Our long-range objectives for sales, margin and cash flow generation remain fully intact.”
Mr. Nahmad added: “We welcome Jackson Supply and The Granite Group to the Watsco family, both high-performing distributors in their respective markets. Jackson Supply had a terrific quarter as part of Watsco, and we are excited that The Granite Group offers extended opportunities for us to expand into the growing community of HVAC and plumbing contractors. Both are wonderful companies that diversify our product mix, extend our reach and broaden our technology advantage. We look forward to supporting their ambitious growth plans.”
Nine-Month Operating Performance
Year to Date Sales Trends (excluding acquisitions)
Cash Flow, Dividends, Financial Strength and Liquidity
Operating cash flow increased 79% to $304 million for the nine-month period ended September 30, 2026 ($325 million during the third quarter versus $355 million last year). Watsco’s objective is to maintain a healthy balance sheet and ample liquidity to fund virtually any strategic investment. The Company’s strong financial position has been key to delivering sustained long-term returns and enabling growth investments regardless of macroeconomic or industry conditions. Watsco’s stated goal is to generate annual operating cash flow in excess of net income.
In April 2026, the Company increased its annual cash dividend by 10% to $13.20 per share. Watsco has paid dividends to shareholders for 52 consecutive years. The Company’s philosophy is to share cash flow through dividends while maintaining a conservative balance sheet with continued capacity to build its distribution network. Future changes in dividends are considered in light of investment opportunities, cash flow, general economic conditions and Watsco’s overall financial condition.
In October 2026, Watsco announced that it signed a five-year $750 million unsecured senior revolving credit facility. The terms of the new agreement include increased borrowing capacity, covenant flexibility and greater sensitivity to the seasonal nature of our working capital requirements.
Innovation and Strategic Technology Initiatives
The Company’s continued investment in technology reflects a long-term strategic commitment to building capabilities that strengthen customer relationships, extend the Company’s competitive advantage, improve operating efficiency and support sustainable growth. Watsco has invested approximately $280 million in its digital platforms over the last five years (a current annual run rate of approximately $64 million). The breadth of those investments spans across customer-engagement and internal platforms to increase the speed and efficiency of our locations and emerging AI capabilities that help customers grow and deliver technical know-how quicker.
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A.J. Nahmad, Watsco’s President, added: “We believe that the growth in e-commerce, OnCallAir® and overall digital engagement across our network reflects the value these tools deliver to our customers. We have also progressed nicely with the various initiatives introduced at last year’s investor day, including the formal launch of SupplySync and the early scaling of the other initiatives. Our focus remains on advancing these unique capabilities – with AI enabling better and faster speed to market – in ways that help our customers grow.”
Use of Non-GAAP Financial Information and References to “Unit” Data
In this release, the Company discloses non-GAAP measures on a “same-store basis”, which exclude the effects of locations closed, acquired, or locations opened, in each case during the immediately preceding 12 months, unless such locations are within close geographical proximity to existing locations. The Company believes that this information provides greater comparability regarding its ongoing operating performance. These measures should not be considered an alternative to measurements presented in accordance with U.S. GAAP.
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In addition, the Company references “unit” data, a key performance measure, in analyzing its results. For purposes of this analysis, a “unit” is a compressor-bearing air conditioning unit or heat pump (also generally referred to as “outdoor units”), a standard industry convention consistent with data published by the Air-Conditioning Heating and Refrigeration Institute (AHRI). More information is available at www.ahri.org.
Third Quarter Earnings Conference Call Information
Date and time: October 27, 2026 at 10:00 a.m. (EDT)
Webcast: http://investors.watsco.com (a replay will be available on the Company’s website)
Dial-in number: United States (844) 883-3908 / International (412) 317-9254
About Watsco
Watsco is the largest distributor in the highly fragmented North American HVAC/R market. Watsco’s solid financial position and culture of innovation has enabled investments in long-term growth, including the Company’s industry-leading technology platforms. Today, more than 73,000 contractors, installers and technicians engage digitally with the Company, resulting in improved growth and lower attrition. The Company is now advancing AI-driven initiatives to leverage its extensive data assets to enhance the customer experience and improve efficiencies. These investments position Watsco to capture market share as contractors increasingly adopt digital tools and incorporate data-driven solutions in their businesses.
This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may address, among other things, our expected financial and operational results and the related assumptions underlying our expected results. These forward-looking statements are distinguished by use of words such as “will,” “would,” “anticipate,” “expect,” “believe,” “designed,” “plan,” or “intend,” the negative of these terms, and similar references to future periods. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive market, new housing starts and completions, capital spending in commercial construction, consumer spending and debt levels, regulatory and other factors, including, without limitation, the effects of supplier concentration, competitive conditions within Watsco’s industry, the seasonal nature of sales of Watsco’s products, the ability of the Company to expand its business, insurance coverage risks and final GAAP adjustments. Detailed information about these factors and additional important factors can be found in the documents that Watsco files with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements speak only as of the date the statements were made. Watsco assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except as required by applicable law.
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WATSCO, INC.
Condensed Consolidated Results of Operations
(In thousands, except share and per share data)
(Unaudited)
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Quarters Ended September 30, |
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Nine Months Ended September 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Revenues |
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$ |
2,220,358 |
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$ |
2,067,005 |
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$ |
5,858,227 |
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$ |
5,660,533 |
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Cost of sales |
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1,634,071 |
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1,498,090 |
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4,265,456 |
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4,058,507 |
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Gross profit |
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586,287 |
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568,915 |
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1,592,771 |
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1,602,026 |
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Gross profit margin |
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26.4 |
% |
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27.5 |
% |
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27.2 |
% |
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28.3 |
% |
Selling, general and administrative expenses |
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370,746 |
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343,655 |
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1,042,583 |
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1,005,237 |
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Other income |
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9,667 |
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9,502 |
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23,576 |
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22,030 |
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Operating income |
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225,208 |
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234,762 |
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573,764 |
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618,819 |
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Operating margin |
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10.1 |
% |
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11.4 |
% |
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9.8 |
% |
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10.9 |
% |
Interest income, net |
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4,596 |
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3,733 |
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14,552 |
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11,479 |
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Income before income taxes |
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229,804 |
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238,495 |
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588,316 |
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630,298 |
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Income taxes |
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46,961 |
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49,265 |
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121,230 |
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129,760 |
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Net income |
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182,843 |
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189,230 |
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467,086 |
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500,538 |
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Less: net income attributable to non-controlling interest |
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27,474 |
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27,655 |
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69,307 |
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75,289 |
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Net income attributable to Watsco, Inc. |
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$ |
155,369 |
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$ |
161,575 |
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$ |
397,779 |
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$ |
425,249 |
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Diluted earnings per share: |
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Net income attributable to Watsco, Inc. shareholders |
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$ |
155,369 |
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$ |
161,575 |
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$ |
397,779 |
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$ |
425,249 |
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Less: distributed and undistributed earnings allocated to restricted common stock |
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10,197 |
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10,703 |
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26,166 |
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28,109 |
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Earnings allocated to Watsco, Inc. shareholders |
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$ |
145,172 |
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$ |
150,872 |
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$ |
371,613 |
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$ |
397,140 |
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Weighted-average Common and Class B common shares and equivalent |
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38,558,158 |
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37,918,392 |
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38,240,651 |
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37,890,597 |
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Diluted earnings per share for Common and Class B common stock |
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$ |
3.77 |
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$ |
3.98 |
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$ |
9.72 |
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$ |
10.48 |
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5
WATSCO, INC.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
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September 30, |
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December 31, |
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Cash and cash equivalents |
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$ |
498,698 |
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$ |
433,283 |
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Short-term cash investments |
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150,000 |
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300,000 |
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Accounts receivable, net |
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1,008,554 |
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796,181 |
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Inventories, net |
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1,841,814 |
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1,386,317 |
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Other current assets |
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51,895 |
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38,725 |
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Total current assets |
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3,550,961 |
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2,954,506 |
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Property and equipment, net |
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148,709 |
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136,012 |
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Operating lease right-of-use assets |
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533,536 |
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452,547 |
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Goodwill, intangibles, net and other |
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1,000,606 |
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871,740 |
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Total assets |
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$ |
5,233,812 |
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$ |
4,414,805 |
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Accounts payable and accrued expenses |
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$ |
1,002,091 |
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$ |
600,589 |
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Current portion of lease liabilities |
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124,449 |
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117,153 |
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Total current liabilities |
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1,126,540 |
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717,742 |
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Operating lease liabilities, net of current portion |
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429,269 |
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350,616 |
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Deferred income taxes and other liabilities |
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142,522 |
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124,386 |
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Total liabilities |
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1,698,331 |
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1,192,744 |
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Watsco, Inc. shareholders' equity |
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3,029,082 |
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2,781,376 |
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Non-controlling interest |
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506,399 |
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440,685 |
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Total shareholders' equity |
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3,535,481 |
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3,222,061 |
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Total liabilities and shareholders' equity |
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$ |
5,233,812 |
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$ |
4,414,805 |
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WATSCO, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
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Nine Months Ended September 30, |
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2026 |
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2025 |
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Cash flows from operating activities: |
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Net income |
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$ |
467,086 |
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$ |
500,538 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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33,973 |
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32,680 |
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Non-cash contribution to 401(k) plan |
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9,267 |
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8,743 |
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Share-based compensation |
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25,826 |
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26,683 |
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Provision for doubtful accounts |
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5,274 |
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2,550 |
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Other income from investment in unconsolidated entity |
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(23,576 |
) |
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(22,030 |
) |
Other, net |
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5,270 |
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5,639 |
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Changes in operating assets and liabilities, net of effects of acquisitions: |
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Accounts receivable, net |
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(195,892 |
) |
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(60,234 |
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Inventories, net |
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(396,782 |
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(204,479 |
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Accounts payable and other liabilities |
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382,700 |
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(108,318 |
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Other, net |
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(9,487 |
) |
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(11,925 |
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Net cash provided by operating activities |
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303,659 |
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169,847 |
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Cash flows from investing activities: |
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Net proceeds from short-term cash investments |
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150,000 |
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55,669 |
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Business acquisitions, net of cash acquired |
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7,663 |
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(19,303 |
) |
Capital expenditures, net |
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(25,616 |
) |
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(22,887 |
) |
Net cash provided by investing activities |
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132,047 |
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13,479 |
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Cash flows from financing activities: |
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Dividends on common stock |
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(392,013 |
) |
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(352,085 |
) |
Distributions to non-controlling interest |
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- |
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(69,829 |
) |
Proceeds from dividend reinvestment plan |
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11,388 |
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21,661 |
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Other, net |
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11,865 |
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|
12,450 |
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Net cash used in financing activities |
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(368,760 |
) |
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(387,803 |
) |
Effect of foreign exchange rate changes on cash and cash equivalents |
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(1,531 |
) |
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2,554 |
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Net increase (decrease) in cash and cash equivalents |
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65,415 |
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(201,923 |
) |
Cash and cash equivalents at beginning of period |
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433,283 |
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|
526,271 |
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Cash and cash equivalents at end of period |
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$ |
498,698 |
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$ |
324,348 |
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