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Industry Benchmarks · Explainer

What Are the Key Sales KPIs for the Wholesale HVAC & Refrigeration Parts Distribution Industry in 2027?

By Kory White · Updated Nov 2026 · 9 min read
A green metal-sided United Refrigeration wholesale branch with a sign reading refrigeration, air conditioning and heating, beside a quiet street in Madison, Wisconsin
Direct answer

The sales KPIs that matter most in wholesale HVAC and refrigeration distribution are gross margin (split by equipment versus parts and supplies, and by customer), sales growth adjusted for billing days and season, sales mix, inventory relative to sales, fill rate and counter service, sales per branch, and days sales outstanding (DSO). The best public anchors come from HARDI's monthly distributor survey, the Census Bureau's wholesale trade survey and public distributors' filings. Watsco, the largest North American HVAC/R distributor, reported a record 28.0% gross margin for 2025 and 26.4% for the third quarter of 2026, versus 27.5% a year earlier. HARDI put member DSO at less than 37 days in August 2026, and 39.4 days in January 2026 versus the 43 day area for January 2022, 2023 and 2024.

The Census Bureau's August 2026 report puts the inventories/sales ratio for NAICS 4237 merchant wholesalers, a group that includes HVAC and refrigeration wholesalers alongside hardware and plumbing, at 2.02 versus 2.12 a year earlier. No source read for this page publishes an industry benchmark for fill rate, counter versus delivered sales mix or inventory turns specific to HVAC distribution, so none is invented. Every source was read on November 3, 2026. This page is not financial advice.

Gross margin, by product and by customer

Gross margin comes first because the distributor's margin, not its revenue, pays for branches, trucks and counter staff. The public numbers also show how quickly it moves with mix and supplier pricing. Watsco's February 17, 2026 release reported a record 28.0% gross profit margin for 2025, up 120 basis points, and set it against 24.3% in 2019. Its quarterly releases since then show the margin coming back down as supplier price increases normalized.

Watsco lists the drivers of its third-quarter 2026 margin as customer mix (larger versus smaller customers), end-market mix (replacement versus residential new construction), the timing and lower magnitude of OEM pricing actions in 2026 versus 2025, and the different growth rates of equipment and non-equipment products. Each of those is a cut of gross margin a sales leader can track: by customer size, by end market and by product family.

The Ferguson and Watsco margins are not directly comparable. Ferguson is a multi-trade distributor whose U.S. sales span waterworks, plumbing, commercial/mechanical and other groups, so its company-wide 31.0% is not an HVAC figure. Benchmark against a business with your own product and customer mix.

Sales mix: equipment, parts and supplies, and refrigeration

Mix is a sales KPI in its own right in this industry, because equipment and non-equipment products carry different margins and grow at different rates. Watsco reports its sales in three groups every quarter, and the split has been stable.

Watsco estimates that 40% of the products sold in the HVAC/R marketplace are non-equipment products, and it launched initiatives in 2026 to grow those sales and enhance gross margins. Its 10-K describes the commercial refrigeration line as condensing units, compressors, evaporators, valves, refrigerants, walk-in coolers and ice machines. For a parts-focused distributor, the share of sales from non-equipment and refrigeration products, and the margin on each, is a more useful target than total revenue.

A beige rooftop packaged air-conditioning and heating unit on a flat commercial roof, with more rooftop units and trees in the background
Photo: P199 / Public domain via Wikimedia Commons

End-market mix matters as well. Watsco's 10-K says the residential replacement market has grown in size and importance with the aging installed base of central air conditioners and furnaces, while Ferguson reported that its U.S. residential net sales rose approximately 2% in the second quarter of 2026 due to growth in HVAC.

Seasonality and billing-day adjusted sales growth

Monthly and quarterly sales in this industry cannot be read without the season. Watsco's 10-K says demand in the residential central air conditioning replacement market is typically highest in the second and third quarters, demand for heating equipment is usually highest in the first and fourth quarters, and new construction demand is fairly evenly distributed through the year. Its own quarterly revenue shows the swing.

HARDI's monthly TRENDS releases add a second adjustment: billing days. HARDI said March 2026 sales rose 10.4%, but estimated growth was closer to 5.4% with the same number of billing days. June 2026 sales rose 6.0%, which HARDI estimated would have been closer to 1.2% on equal billing days, and the 4.8% decline reported for May 2026 would have been about flat. A rep or branch scorecard that compares raw months will reward and punish people for the calendar.

For the market trend, HARDI reported annual sales growth of 2.3% for the 12 months through June 2026 and 3.4% for the 12 months through July 2026, and described a recent 2% to 4% range. The Census Bureau's Monthly Wholesale Trade report for August 2026 put adjusted sales of NAICS 4237 merchant wholesalers at $23,490 million, up 7.7% from August 2025; that figure is adjusted for seasonal and trading-day differences but not for price changes, and it includes hardware and plumbing wholesalers. Use same-month, billing-day adjusted growth against these series to judge whether you are gaining share.

Inventory relative to sales, and inventory turns

Inventory is the distributor's largest investment and the reason contractors come to the counter, so the ratio of inventory to sales sits on a sales scorecard. The Census Bureau publishes that ratio every month for NAICS 4237, which covers hardware, plumbing and heating (hydronics), warm air heating and air-conditioning, and refrigeration equipment and supplies merchant wholesalers.

Watsco said the 2025 build supported customers through the transition to A2L refrigerant products, which converted over $1 billion of inventory to new products, and that it expects more conventional working capital trends going forward, providing the opportunity for better inventory turns. HARDI's March 2026 release noted that distributors' sales-to-inventory ratio indicated they were planning for a busy cooling season, which is a reminder that inventory ratios also follow the season.

No source read on November 3, 2026 publishes an inventory turns benchmark specific to HVAC and refrigeration distribution, so none is given. The Census ratio covers a broader group than HVAC alone. Track your own turns (cost of goods sold divided by average inventory) by product family and by month, and compare each month with the same month last year.

Fill rate, counter service and the digital channel

Fill rate, the share of ordered lines or units shipped from stock, is a sales KPI here because a contractor with a customer waiting for cooling will buy wherever the part is on the shelf. Watsco's 10-K says contractors generally demand immediate, convenient and reliable service, and lists maintaining well-stocked inventories to ensure customer orders are filled in a timely manner, a strong density of warehouse locations, and technical expertise at the point of sale among its responses. Ferguson's 10-Q says it sells through branches, counter service, expert sales associates, showroom consultants and e-commerce channels.

No source read here publishes an industry benchmark for fill rate, or for the split between counter (will-call) sales and delivered or contractor-account sales in HVAC distribution, so none is given. Track both by branch, and track lost sales from stockouts at the counter.

The digital share of sales is the one channel-mix figure a public distributor does report. Watsco said e-commerce sales reached $2.75 billion for the 12 months ended September 30, 2026, or 37% of revenues, and grew 12% in the first nine months of 2026. It also reported that contractors presented approximately 351,000 quotes through its OnCallAir platform in that 12-month period, generating $2.0 billion of gross merchandise value.

Sales per branch and per customer

Distribution is a branch business, so sales per branch and the number of active contractor accounts per branch are core productivity KPIs. HARDI says it represents more than 570 distributor members and their 5,000+ branch locations. The public figures below give the inputs; divide sales by locations for your own comparison, and remember that branch size and market vary widely.

Customer concentration is low in this industry. Watsco says no single customer represented more than 2% of its consolidated revenues in 2025, 2024 or 2023, which makes the count of active accounts, and revenue per account, a more useful sales measure than a handful of large-account wins.

Days sales outstanding (DSO)

Distributors sell to contractors on account, so a sale is only finished when it is collected. HARDI's monthly survey calculates DSO, which it describes as a measure of how quickly customers pay their bills, and it is the only published DSO benchmark for HVACR distributors found for this page.

The seasonal pattern shows on a balance sheet too. Watsco's accounts receivable were $1,008,554 thousand at September 30, 2026 versus $796,181 thousand at December 31, 2025. HARDI's advice applies to any scorecard: compare DSO with the same month in prior years, not with last month.

A scorecard to start with

Read together, the sources point to a short monthly scorecard for a wholesale HVAC and refrigeration distributor.

Questions people ask

What are the most important sales KPIs for an HVAC and refrigeration parts distributor?

Gross margin by product family and customer, billing-day adjusted sales growth, sales mix between equipment and parts, inventory relative to sales, fill rate, sales per branch and DSO. HARDI's monthly survey and public filings from distributors such as Watsco and Ferguson give the published anchors.

What is a typical gross margin for an HVAC distributor?

Public figures vary with mix. Watsco reported a record 28.0% for 2025 and 26.4% for the third quarter of 2026. Ferguson, a multi-trade distributor, reported 31.0% company-wide for the quarter ended June 30, 2026, which is not an HVAC-only figure.

What is a normal DSO for HVACR distributors?

HARDI's monthly survey put DSO at 39.4 days in January 2026 and less than 37 days from June to August 2026. DSO is seasonal, with June the shortest month, so compare with the same month in prior years.

How seasonal are HVAC distribution sales?

Strongly. Watsco says replacement air conditioning demand is typically highest in the second and third quarters. Its revenue was $1.53 billion in the first quarter of 2026 and a record $2.22 billion in the third quarter.

Is there a published benchmark for fill rate or counter sales mix?

Not in any source read for this page. Watsco reports e-commerce at 37% of revenues for the 12 months ended September 30, 2026, but no public source found gives a fill rate or counter versus delivered sales benchmark for HVAC distribution.

Sources

Figures were read from the linked pages on November 3, 2026. Company figures are company-reported, and HARDI figures come from a voluntary member survey whose coverage varies by region. Where no credible benchmark was found, the page says so instead of estimating. This page is not financial advice.

Top photo: Corey Coyle / CC BY 3.0 via Wikimedia Commons

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