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Watsco’s Granite Group Acquisition: A $500 Million Growth Game-Changer?

Watsco Inc.’s third quarter results demonstrate ongoing recovery in demand and operational simplification following several years of industry disruptions including the pandemic, supply chain challenges, and regulatory changes. Revenues grew 7% year-over-year to $2.22 billion, with a 4% increase on a same-store basis, supported by a 7% rise in the residential HVAC equipment segment. Gross profit reached a record $586 million, representing a 26.4% gross margin, which management notes remains below its long-term goal of 30%, citing seasonality, customer mix, and the product transition cycle as factors influencing margin variability. Recent acquisitions notably contributed to revenue growth, with Jackson Supply, acquired in June, growing 16% during the quarter and adding $230 million in annual sales, and The Granite Group, acquired in October, which brings $500 million in annual sales and expands Watsco’s offering into HVAC and plumbing products across 112 locations.