What does Watsco B do and what are its main business segments?

What is the revenue and EPS growth rate for Watsco B year over year?

What were the key takeaways from Watsco B’s earnings call?

Did Watsco B beat or miss consensus estimates last quarter?

What is the market's earnings forecast for Watsco B next quarter?

What guidance did Watsco B's management provide for the next earnings period?

What is Watsco B's gross profit margin?

What is Watsco B's latest dividend and current dividend yield?

- **Gross Margin Expansion**: 130 bps improvement to 27.5%, targeting >30% long-term.
- **E-commerce Growth**: 34% of sales via e-commerce, 72,000 mobile app users (18% YoY).
- **Cash Flow Strength**: $355M Q3 cash flow, $600M+ cash on hand for strategic investments.
- **Market Challenges**: Q4 sales down 5%-10% YoY, unit volumes -20% to -30%, driven by new construction weakness.
- **Inventory Efficiency**: Targeting 5+ inventory turns vs. current 3.6-3.7, with $500M+ inventory reduction by year-end.

**【CEO Summary Section】**
- Watsco reported a 4% decline in total sales for Q3 2025, with a 3% drop in U.S. sales, driven by the ongoing A2L refrigerant transition. However, gross margins expanded by 130 basis points to 27.5%, with a long-term target of exceeding 30%.
- E-commerce now accounts for 34% of total sales, with mobile app users reaching 72,000 (18% growth YoY). The OnCallAir digital platform generated $1.7 billion in GMV over the past year, with 70% of sales above the minimum efficiency standard.
- The company achieved record Q3 cash flow of $355 million, reducing inventories and working capital to improve liquidity. Inventory turns are targeted to increase from the current 3.6-3.7 range.
- Despite industry challenges, Watsco maintained a strong balance sheet with no debt and $600 million in cash, enabling strategic investments in technology and potential acquisitions.

**【Q&A Key Highlights】**
- **Market Softness**: Q4 sales are down 5%-10% YoY in dollars, with unit volumes declining 20%-30% due to reduced new construction and consumer caution. However, non-equipment sales (30% of revenue) grew double-digit, offsetting equipment weakness.
- **Inventory Management**: Watsco reduced inventories by $350 million in Q3 and aims for $500 million reduction by year-end, targeting historical levels. Improved inventory turns are expected to enhance cash flow.
- **Pricing Strategy**: Pricing optimization tools and AI-driven margin management contributed to gross margin expansion, with transactional margins resilient despite lower volumes.
- **Strategic Initiatives**: Focus on non-equipment market growth, institutional contractor partnerships, and AI-driven customer experience improvements. Upcoming investor meeting in December will detail 2026 plans.
- **OEM Relationships**: Watsco is collaborating with OEMs to streamline supply chains and reduce lead times, positioning for post-transition growth in 2026.

Watsco, Inc. (WSO) Q3 2025 Earnings Call Transcript

- **Record Margins Despite Volume Decline**: Q2 gross margin 29.3% vs. 27.7% YoY, driven by pricing tech and parts mix
- **$10B Growth Ambition**: Targeting 30% gross margin, 5x inventory turns, and Watsco 1 platform for national contractors
- **Inventory Overhang Resolving**: $2B peak reduced to $1.8B; 410A inventory <5% of total
- **M&A Pipeline Active**: One potential deal under study amid industry consolidation


**【CEO Summary Section】**
- Watsco delivered Q2 2025 results with sales down 4% due to A2L refrigerant transition, but achieved record gross profit margins (29.3%) driven by pricing optimization and higher-margin parts/supplies (30% of sales). 
- Technology investments highlight: e-commerce ($2.5B, 34% of sales), OnCall Air ($1.6B in 2024), and AI platforms for customer experience and efficiency. 
- Strategic initiatives include: 
  - Watsco 1 platform for national contractors (launching 2026) targeting higher-margin parts/supplies
  - 30% gross margin goal
  - $10B revenue/Dream Plan 2 with 5x inventory turns

**【CFO Financial Commentary】**
- Q2 gross margin expanded to 29.3% (vs. 27.7% YoY), driven by 10%+ price increases on new A2L equipment and 50-60bps from Pricefx optimization
- SG&A rose 6% due to 10 new acquisitions and A2L transition costs; inventory peaked at $2B but reduced to $1.8B by Q3
- Balance sheet remains strong with $1.2B cash and no debt
- EBIT up 12% vs. prior year, EBIT margin +200bps to 14.5%

**【Q&A Key Highlights】**
1. **Volume Trends**: 
  - Q2 volumes weak due to late summer start, RNC down 15-20%, but July improved; August+ trends uncertain
  - Parts/supplies sales up 19% YoY, but equipment volumes lag
  - Inventory overhang (~$200M excess) expected to clear by year-end

2. **Gross Margin Sustainability**: 
  - Q2 margin boost from one-time OEM price hikes (100-200bps) will fade; 27%+ margin target achievable
  - Parts/supplies mix shift to 35-40% of sales could add 100-200bps margin

3. **Transition Challenges**: 
  - Cylinder shortage resolved by August; 410A inventory <5% of total
  - Branch inefficiencies (~4.5% core SG&A growth) to improve with normalized operations

4. **M&A Outlook**: 
  - Actively pursuing HVAC distributor acquisitions in soft market; one potential deal under study
  - M&A pipeline strong due to industry consolidation trends


Watsco, Inc. (WSO) Q2 2025 Earnings Call Transcript

- **A2L Transition Accelerating**: Q2 sales shifting to A2L, with >60% of recent transactions in Q1.
- **Gross Margin Expansion**: Q1 +5% price/mix benefit; targeting 30% long-term.
- **Strong Balance Sheet**: $430M cash, 11% dividend growth, no debt.
- **Dynamic Pricing Power**: Technology enables 100,000+ unique prices across 1,000+ suppliers.

**CEO Opening Remarks**
- **A2L Transition Progress**: 55% of sales impacted by new A2L systems; $1B inventory conversion underway. Residential replacement sales grew 10% on higher volumes and richer mix of high-efficiency systems.
- **Gross Margin Improvement**: Margins expanded due to segment mix shift (more replacements, less new construction). Expect benefits from new A2L products to accelerate in Q2/Q3.
- **Financial Strength**: $430M cash, no debt, $3B+ equity. Annual dividend raised 11% to $12/share.
- **Tariff Monitoring**: Collaborating with domestic OEMs (91% of sales) on pricing responses; 9% international sales face greater uncertainty.

**Management Responses**
- **Residential Sales Growth**: Q1 driven by 410A (75% of residential), transitioning to A2L in Q2 with 410A inventory expected to deplete by end-Q2.
- **Gross Margin Drivers**: Q1 margin improvement from mix shift (replacements vs. new construction). April OEM price increases will impact future quarters.
- **International Weakness**: 9% of sales in Canada/Latin America underperform; domestic market (91%) shows mid-single-digit Q2 growth.
- **Technology Advantage**: Ability to implement dynamic pricing at branch level, customizing for 100,000 contractors with near-infinite price permutations.
- **Tariff Strategy**: No surcharges; all price increases permanent. 1,000+ suppliers, 1,000+ manufacturers, 100,000+ customers enable granular pricing optimization.

**Key Q&A Takeaways**
- **A2L Adoption Rate**: 25% of Q1 sales were A2L, rising to >60% in last 2 weeks of Q1. Full transition expected by end-Q2.
- **Gross Margin Outlook**: Aspirational 30% target. Q1 price/mix contributed +5% to unitary business.
- **Tariff Impact**: 5%+ of sales exposed to tariffs. OEMs have raised prices 2x in last month; no visibility on consumer pass-through.
- **Consumer Behavior**: No pushback on price increases; contractors assume higher costs due to tariffs.

Watsco (WSO)-23 Apr 25-2025 Q1 Earnings call transcript

- **Revenue Growth**: 14% equipment, 16% residential; A2L transition driving 2025 margin recovery.
- **Tech Adoption**: 35% e-commerce sales, 64K mobile app users, OnCall Air $1.5M GMV.
- **Dividend Boost**: 11% increase to $12/share, signaling financial strength.
- **A2L Pricing**: 8-10% price hikes expected; full transition by Q2 2025.
- **M&A Momentum**: 70th acquisition completed; targeting 50-100 family businesses.
- **Tariff Risk**: 29% Mexico tariffs could impact pricing in 2025.


**【CEO Opening Remarks】**
- Watsco achieved record Q4 sales with 14% growth in equipment and 16% in residential products, driven by A2L product transition and technology adoption.
- 11% dividend increase to $12 per share announced, reflecting strong financial health.
- A2L transition expected to complete by Q2 2025, with $1 billion inventory realignment.
- E-commerce sales reached 35% of total ($2.6B) with 16% Q4 growth; OnCall Air generated $1.5M GMV, up 25%.
- 70th acquisition completed, emphasizing strategic M&A for market share expansion.

**【CFO Financial Highlights】**
- GAAP net income: $420M; Non-GAAP EPS exceeded expectations at $1.08.
- Operating expenses declined 5% YoY due to cost control.
- Gross margin expected to improve in H2 2025 with A2L adoption and pricing.

**【Q&A Key Takeaways】**
- **A2L Transition**: 90%+ sales on 410A in Q4, transitioning to A2L by Q2 2025; 8-10% price increase expected.
- **Gross Margin**: Targeting 30%+ long-term; 2025 recovery from 2024's 300bps headwind.
- **New Customer Growth**: 50%+ of Q4 growth from new customers, driven by tech-enabled service and aftermarket parts.
- **M&A Environment**: 50-100 family-owned businesses ($100M+ revenue) remain acquisition targets; PE activity stabilizing.
- **Tariffs Impact**: China-made products (ductless, side-discharge) face 29% tariffs; pricing actions to follow.
- **Repair vs. Replace**: Both parts and unit sales up double digits, no tradeoff observed.


Watsco (WSO)-18 Feb 25-2024 Q4 Earnings call transcript

Watsco (WSO)-23 Oct 24-2024 Q3 Earnings call transcript

Watsco Inc. - Ordinary Shares (WSO)-30 Jul 24-2024 Q2 Earnings call transcript

Watsco Inc. - Ordinary Shares (WSO)-24 Apr 24-2024 Q1 Earnings call transcript

Watsco Inc. - Ordinary Shares (WSO)-13 Feb 24-2023 Q4 Earnings call transcript

Watsco (WSO)-19 Oct 23-2023 Q3 Earnings call transcript

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Watsco (WSO)-25 Oct 18-2018 Q3 Earnings call transcript

Watsco (WSO)-25 Jul 18-2018 Q2 Earnings call transcript

Watsco (WSO)-24 Apr 18-2018 Q1 Earnings call transcript

Watsco (WSO)-8 Feb 18-2017 Q4 Earnings call transcript

Watsco (WSO)-25 Oct 17-2017 Q3 Earnings call transcript

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