Watsco is the largest HVAC/R distributor in North America, selling air conditioning, heating, and refrigeration equipment, parts, and supplies to over 130,000 licensed contractors who install and service these systems in homes and businesses. The core business is the replacement market — when an existing A/C unit, furnace, or refrigeration system fails or ages out, a contractor buys the replacement equipment from Watsco. Management estimates residential A/C replacement accounts for roughly 80–90% of U.S. industry unit sales, making it a largely non-discretionary, recurring business. Watsco is heavily concentrated in the Sun Belt, particularly Florida and Texas, where hot weather accelerates replacement cycles. Products break into three categories: HVAC equipment (~67% of revenue), parts and supplies (~29%), and commercial refrigeration (~4%). Watsco operates 695 distribution locations and generates 35% of sales through e-commerce. The business model turns on the spread between what Watsco pays OEM manufacturers and what it charges contractors, with revenue driven by unit volumes, pricing, and mix. About 53% of revenue flows through joint ventures with Carrier Global, though Watsco controls these entities. Watsco's long-running growth strategy combines acquisitions — 72 deals since 1989 in a fragmented market — with organic investment in digital tools, including a contractor-facing sales platform, AI-assisted pricing optimization, and a unified interface for large national accounts. Management targets $10B in revenue and 30%+ gross margins.