Watsco (WSO) Q3 2026 earnings summary

Executive summary

• Q3 revenue rose 7% to a record $2.220B, with same-store sales up 4%; diluted EPS fell 5% to $3.77 from $3.98 as operating income and margins declined.

• Improving residential demand, acquisitions and digital engagement support long-term growth objectives; early Q4 trends showed further momentum.

Financial highlights

• Q3 gross profit rose 3% to $586.3M; operating income was $225.2M versus $234.8M, and net income was $182.8M versus $189.2M.

• Net income attributable to shareholders fell 4% to $155.4M; Q3 SG&A increased 8% including acquired and new locations, while same-store SG&A rose 5%.

• Nine-month revenue rose 3% to $5.858B; gross profit decreased 1% to $1.59B, operating income was $573.8M versus $618.8M, and diluted EPS was $9.72 versus $10.48.

• Q3 same-store sales rose 4% to $2.142B; acquired locations contributed $77.8M to revenue growth.

Outlook and guidance

• A2L transition impacts are expected to be largely over by year-end; the long-term gross-margin goal is 30% versus 27%+ YTD, with a potentially choppy path.

• October revenue trends were healthy and better than September, with total revenue up double digits including acquisitions; residential unit volumes returned to growth and improved through the selling season.

• Long-range sales, margin and cash-flow objectives remain intact; the stated goal is annual operating cash flow above net income.

• OEM pricing actions are expected to be more conventional over the next 12 months; higher steel and freight costs may prompt price increases this fall and into 2027.