Watsco Inc (NYSE: WSO) is an HVAC/R distribution company that distributes air conditioning, heating, and refrigeration equipment, parts, and supplies to contractors and dealers across the United States, Canada, Latin America, and the Caribbean. Revenue is transactional, generated by selling equipment, parts, and supplies through a network of distribution locations. HVAC equipment alone accounted for 67% of revenues in FY2025, with parts and supplies making up the remainder. Watsco operates through joint ventures with Carrier Global Corporation, holding 80% controlling interests in Carrier Enterprise I and Carrier Enterprise II, and has acquired 72 HVAC/R distribution businesses since beginning its distribution strategy in 1989. The company competes in a fragmented market of more than 2,100 U.S. distribution companies with an aggregate estimated annual market size of $74.0 billion (IBIS World, November 2024). Headquartered in Miami, Florida, Watsco was founded and began its HVAC/R strategy in 1989 under a "buy and build" acquisition philosophy.
- Revenue model
- Transactional product sales. Watsco earns revenue by purchasing HVAC/R equipment, parts, and supplies from manufacturers and reselling them to contractors and dealers. HVAC equipment represented 67% of revenues in FY2025 and 69% in FY2024 (10-K, filed 2026-02-27). Parts, supplies, and other non-equipment products comprise the remaining share.
- Products and services
- Equipment: residential ducted and ductless air conditioners (1 to 5 tons), gas, electric, and oil furnaces (50,000 to 150,000 BTUs), commercial air conditioning and heating systems (1.5 to 25 tons). Parts: replacement compressors, evaporator coils, motors. Supplies: thermostats, insulation, refrigerants, ductwork, copper tubing, tools, adhesives. Commercial refrigeration: condensing units, compressors, evaporators, valves, refrigerants, walk-in coolers, ice machines. Also distributes plumbing and bathroom remodeling supplies at a limited number of locations. Private-label products are offered at selected locations.
- Customers and end markets
- Primary customers are HVAC/R contractors and dealers who install and repair residential and commercial air conditioning, heating, and refrigeration systems. End markets include residential, commercial, and industrial HVAC/R applications in the U.S., Canada, Latin America, and the Caribbean. Demand is seasonal and influenced by weather patterns.
- Value-chain role
- Wholesale distributor sitting between HVAC/R equipment manufacturers and contractors or dealers. Watsco sources from approximately 20 equipment vendors, including Carrier, Daikin, and others, and provides same-day or short-notice inventory availability to contractors. Watsco does not manufacture products.
- Geographic exposure
- United States (primary, including Sun Belt states, Northeast, Mid-Atlantic, and Western U.S. through joint ventures and acquisitions), Canada, Latin America, and the Caribbean. Carrier Enterprise II also operates in Mexico. Export operations run through Miami, Florida.
- Competitors
- Carrier Global Corporation (distribution channel overlap), Russell Sigler Inc. (RSI, Western U.S. HVAC distribution, 36 locations, ~$1.2B sales FY2025)
