Watsco Inc Q2 Earnings Miss Estimates, Revenue Falls 4% to $2.06 Billion

Watsco Inc reported Q2 2025 earnings with revenue of $2.06 billion, a 4% decrease from last year, and EPS of $4.52, below the estimated $4.83. The company's gross profit margin reached a record 29.3%, with operating income increasing 1% to $272 million. Despite challenges, Watsco achieved expanded operating margins and continues to invest in long-term growth, including technology platforms and acquisitions. The company's strategic focus on innovation and technology positions it to capture market share in the HVACR industry.

Watsco Inc (WSO, Financial) reported its second-quarter (Q2) 2025 earnings, revealing a 4% decrease in revenue to $2.06 billion, falling short of the estimated $2.243 billion. The earnings per share (EPS) stood at $4.52, below the estimated $4.83, but slightly up from $4.49 in the prior year. Despite these challenges, the company achieved a record gross profit margin of 29.3%, an increase of 220 basis points.

The gross profit increased 4% to a record $603 million, while operating income rose 1% to $272 million, with operating margins expanding by 60 basis points to 13.2%. These achievements underscore Watsco's ability to navigate industry transitions and maintain profitability through strategic pricing and operational efficiencies [1].

Watsco's strong financial position remains robust, with $293 million in cash and no debt, supporting continued investments in growth. The company's dividend was raised by 11% to $12.00 per share, marking the 51st consecutive year of dividends. The balance sheet as of June 30, 2025, shows $3 billion in shareholders' equity, indicating a solid foundation for future growth.

Albert H. Nahmad, Chairman and CEO, remarked, "Our second quarter results reflect softer market conditions and the complexities associated with the industry-wide transition to new A2L products. Despite the challenging environment, I am proud that we improved gross margins and generated a measure of earnings growth, which highlights our entrepreneurial culture and the resilience of our business model."

Watsco's strategic focus on innovation and technology is evident in its ongoing investments in AI-driven initiatives and digital platforms. These efforts aim to enhance customer experience and operational efficiencies, positioning the company to capture market share as digital tools become more prevalent in the HVACR industry. The company's "buy and build" acquisition strategy continues to expand its network, with recent acquisitions contributing to its scale and community of seasoned leaders.

Despite the challenges, Watsco's long-term growth prospects remain promising. The company's focus on innovation and operational efficiency positions it well for future success, despite current market headwinds.

References:
[1] https://www.gurufocus.com/news/3016035/watsco-inc-wso-q2-earnings-eps-at-452-revenue-hits-206-billion-both-miss-estimates
[2] https://markets.financialcontent.com/wral/article/stockstory-2025-7-30-watsco-nysewso-reports-sales-below-analyst-estimates-in-q2-earnings