Why This Matters to Distributors: Watsco’s results suggest the disruption caused by the transition to A2L refrigerants is easing, allowing distributors to shift their focus back to customer growth, acquisitions, and technology. The company’s continued investment in artificial intelligence also highlights how distributors are using proprietary data and digital platforms to improve customer service and gain market share.
Watsco Inc., North America’s largest distributor of heating, ventilation, air conditioning and refrigeration products, reported modest second-quarter sales growth as demand stabilized following last year’s industrywide transition to A2L refrigerants. The company also expanded its footprint through acquisition and said it is accelerating investments in artificial intelligence to improve customer service and operating efficiency.
Second-quarter sales increased 2.1% to $2.10 billion, up from $2.06 billion a year earlier. Net income attributable to Watsco declined 11.0% to $163.3 million, compared with $183.6 million in the second quarter of 2025.
For the first six months of 2026, sales rose 1.2% to $3.64 billion, compared with $3.59 billion in the same period last year. Year-to-date net income attributable to Watsco fell 8.1% to $242.4 million, down from $263.7 million in the first half of 2025.
The company said the market has recovered from the industry’s conversion into HVAC equipment using A2L refrigerants, a regulatory change that disrupted inventory, pricing and customer purchasing patterns throughout 2025.
Residential HVAC equipment sales increased 5% during the quarter, driven by a 2% increase in unit volume and a 2% increase in average selling prices. Excluding acquisitions, HVAC equipment sales rose 3%, while commercial refrigeration sales climbed 19%.
“Our performance during the second quarter is indicative of improving end-market stability after a busy period of regulatory transitions,” says CEO Albert Nahmad said. “We are now operating in a more conventional environment in which Watsco’s scale, OEM relationships and technology investments can add even more value.”
The quarter also included the acquisition of Jackson Supply Co., an HVAC distributor with approximately $230 million in annual sales and 25 locations across the Sunbelt. Watsco said the acquisition strengthens its presence in several fast-growing markets and adds approximately 5,000 customers to its network.
Beyond expansion, Watsco emphasized technology as a central growth strategy. The company said more than 70,000 contractors and technicians now use its digital platforms, which combine online ordering, pricing, inventory availability, and technical support. It is also expanding the use of artificial intelligence to help customers find products faster, access technical information and receive product recommendations.
President A.J. Nahmad said AI is becoming an increasingly important part of the company’s technology strategy.
“Our technology platforms have continued to scale and deepen their impact for our customers,” Nahmad said. “Our focus remains advancing these unique capabilities — with AI enabling better and faster speed to market — in ways that help our customers grow.”
Watsco said it has invested more than $250 million in digital technology over the past five years, including customer-facing applications, internal operating systems, and emerging AI capabilities.
The company’s digital business continued to outpace overall sales growth. Ecommerce sales increased 13% during the first six months of 2026 and reached $2.7 billion over the trailing 12 months, representing 37% of total company sales. Watsco also said contractors generated $1 billion in gross merchandise value through its OnCallAir sales platform during the first half of the year, a 14% increase from the same period in 2025.
Watsco said it continues to pursue acquisitions in the highly fragmented North American HVAC distribution market, where it estimates more than 2,100 distributors remain. The company has acquired 13 distributors in recent years that now account for approximately $1.8 billion in annual sales across 145 locations.
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