Watsco targets 30% gross margin as it adds Granite ($500M sales) and expects A2L transition largely over by year-end (NYSE:WSO)
Watsco (WSO) reported Q3 2026 with improving demand and normalizing trends. CEO Albert Nahmad cited 7% growth in residential HVAC equipment, expects A2L transition to be largely over by year-end, and targets 30% gross margin after adding Granite, which generates $500M in sales.
How this was made
The 30-second read
Why it matters
The new gross‑margin target and $500M sales addition from Granite provide fresh upside catalysts for the stock.
Market read
Guidance lift could drive short‑term price appreciation and influence sector peers.
What to watch
Potential supply chain constraints for A2L components could delay transition.
Background
Watsco is a leading distributor of residential HVAC equipment in the United States.
Ticker impact
Watsco announced a target of 30% gross margin, added Granite with $500M sales and expects the A2L transition to be largely complete by year‑end.
likely upward pressure as investors price in higher margin outlook and new sales.
The guidance is a primary disclosure with material scale ($500M) and improves profitability expectations.
Market effects
HVAC distribution sector may see broader margin expectations.
U.S. residential HVAC market outlook improves.
Limited to North American HVAC distributors.
Counterpoint
Margin targets may be optimistic if demand softens later in the year.
Key entities
- CompanyWatsco
U.S. HVAC distributor (NYSE:WSO).
- Acquired BusinessGranite
Adds $500M of sales to Watsco.
