Q2 2026 Watsco Inc Earnings Call Transcript
Key Points
- Watsco Inc (WSO) reported a 5% growth in residential HVAC equipment during the quarter, indicating strong performance in its largest product segment.
- The acquisition of Jackson Supply, with $230 million in annual sales, is expected to enhance Watsco's market presence and growth potential.
- E-commerce sales grew by 13%, with penetration reaching 37% of total sales, showcasing the success of Watsco's digital initiatives.
- Watsco ended the quarter with $464 million in cash and no debt, maintaining a strong balance sheet for future investments.
- The company increased its annual dividend by 10% to $13.20 per share, marking the 52nd consecutive year of dividend payments, reflecting a commitment to shareholder returns.
- Gross margin decreased to 27.5% from 29.3% last year, impacted by more moderate OEM pricing actions compared to the previous year.
- SG&A expenses increased by 2%, partly due to continued technology investments and the addition of Jackson Supply.
- There is a noted slowdown in new construction in key southern states like Florida and Texas, which could impact future sales.
- The commercial segment, particularly VRF, experienced an 8% decline, attributed to transitions and disruptions.
- Inventory levels were higher than anticipated, with a $100 million excess, which could affect future purchasing and cost management.
Good day and welcome to the Watts Co. Inc. Second Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
After today's presentation, there will be an opportunity to ask questions.
To ask a question, you may press then one on a touchtone phone.
To withdraw your question, please press then two. Please note this event is being recorded.
I would now like to turn the conference over to Al Nahmed, Chairman. Please go ahead.
Good morning, everyone. Welcome to our second quarter earnings call. This is Al Named, Chairman and CEO, and with me is AJ Named, President, also Paul Johnson and Barry Logan and Rick Gomez.
Before we start our cautionary statement, this conference call has forward-looking statements as defined by SEC laws and regulations that are made pursuant to the safe harbor provisions of these
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