Watsco (WSO) Q2 2026 earnings summary

Executive summary

• Revenue grew 2% year-over-year to $2.1 billion in Q2 2026, with same-store sales up 1% and residential HVAC equipment, the largest segment, up 5%.

• The acquisition of Jackson Supply was completed in June, adding $230 million in annual sales, 25 locations, and expanding Sunbelt market presence.

• Technology investments and digital adoption, including e-commerce and AI-driven initiatives, continue to drive operational efficiencies and growth.

• E-commerce sales surged 13% year-over-year, reaching $2.7 billion for the trailing 12 months.

• Operating income declined 12% to $238 million, and EPS fell 12% to $4.00 in Q2 2026.

Financial highlights

• Gross profit was $579 million, with a gross margin of 27.5% versus 29.3% last year.

• SG&A increased 2% (excluding acquisitions), reflecting ongoing tech investments and the Jackson Supply addition; total SG&A was $349 million (16.6% of sales).

• Net income attributable to shareholders was $163 million in Q2 2026, down from $184 million in Q2 2025.

• Ended the quarter with $464 million in cash and no debt.

• Operating cash flow for the six-month period improved by $168 million due to lower seasonal inventory ramp-up.

Outlook and guidance

• Gross margins have normalized to a 27–28% range, with a long-term goal of 30%.

• July organic growth was 4–5%, with expectations for continued unit growth into Q3.

• Management expects more conventional supply-chain trends, better inventory turns, and enhanced returns on invested capital for the remainder of 2026.

• No formal guidance provided, but management sees market stability and potential for conventional growth over the next several years.