Watsco (NYSE: WSO) shares are soaring 5.14% in Wednesday's trading session following the release of its third-quarter earnings report. Despite a challenging market environment, the company managed to deliver record gross profit, gross margin, and operating cash flow, which seems to have impressed investors.

The HVAC distribution giant reported Q3 revenues of $2.07 billion, a 4% decrease from the same period last year and below the IBES estimate of $2.211 billion. However, the company's gross profit remained flat at $569 million, with gross profit margin expanding significantly by 130 basis points to a record 27.5%. This improvement in profitability metrics appears to be the key driver behind the stock's surge.

Watsco's Chairman and CEO, Albert H. Nahmad, commented on the results: "This has been one of the most challenging business environments in recent memory, and I am gratified that we have largely sustained our profitability, improved margins, improved cash flow, and navigated the A2L transition successfully while continuing to invest in long-term growth." The company's ability to maintain strong financial performance amidst industry headwinds, including a regulatory transition to new HVAC systems incorporating A2L refrigerants, seems to have bolstered investor confidence in Watsco's resilience and long-term prospects.