Watsco 2025 Q2 Earnings Net Income Grows 1.0%

Watsco reported mixed second-quarter results, with revenue declining but net income and EPS rising. While the company missed revenue expectations, its profitability strengthened, and it maintained cautious optimism for the remainder of the year. Management did not adjust guidance, maintaining prior-year expectations for long-term growth.

Revenue
Watsco’s total revenue fell 3.6% year-over-year to $2.06 billion in 2025 Q2. Within the HVAC segment, equipment sales accounted for the lion’s share at $1.40 billion, followed by other HVAC products at $577.48 million. Commercial refrigeration products contributed $82.50 million to the quarter’s total. The overall decline reflects soft demand in core markets despite robust performance in HVAC and refrigeration segments.

Earnings/Net Income
The company's earnings growth continued, with EPS rising 0.7% to $4.53 in 2025 Q2 from $4.50 in 2024 Q2. Watsco's net income increased to $216.77 million, up 1.0% compared to $214.65 million in the same period last year. This demonstrates improved operating efficiency and cost management despite challenging macroeconomic conditions.

Price Action
WSO’s stock price has declined recently, dropping 1.66% on the latest trading day and 5.52% during the past full week. Over the last month, the stock has fallen 13.15%, indicating investor uncertainty following the earnings report.

Post-Earnings Price Action Review
The post-earnings strategy of buying WSO when the stock outperformed benchmarks and holding for 30 days delivered poor results, with a 0.00% return versus a benchmark return of 86.19%. The strategy had an excess return of -86.19% and a Sharpe ratio of 0.00%, indicating no risk-adjusted gains and zero downside risk exposure. This suggests limited investor confidence in the stock's near-term performance.

CEO Commentary
CEO Gary C. Wilson highlighted strong second-quarter performance driven by demand in HVAC and refrigeration. He emphasized strategic investments in supply chain optimization and digital tools to enhance customer service. Wilson also noted confidence in long-term growth, despite near-term inflationary pressures, and reiterated disciplined cost management as a key priority.

Guidance
Watsco expects full-year 2025 revenue to remain in line with long-term trends, driven by continued demand in commercial HVAC and residential refrigeration. While no specific CAPEX or revenue targets were provided, the company anticipates double-digit EPS growth over the next 12–18 months.

Additional News
Recent headlines from 2022 highlighted the broader media and geopolitical landscape, including developments in China, international conflicts, and economic policy. However, no specific Watsco-related news items were identified in the given timeframe (August 8–31, 2025).