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

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

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

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

What were the key takeaways from Watsco's earnings call?

Did Watsco beat or miss consensus estimates last quarter?

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

What factors drove the changes in Watsco's revenue and profit?

- **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.

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