WSO
Watsco, Inc.341.89
-2.70-0.78%
Dec 16, 4:00:03 PM EST
Earnings Call Transcripts
This Quarter (Q1 '26)
No earnings call transcript available yet
Last Quarter (Q4 '25)
FY Q4 '25
Unit decline parsed, normalization eyed
Q&A unpacked Q4's 17% unit plunge—7% tied to tough new construction comps, 6% from A2L transition jitters in replacements—framing 2026 as normalization year with trained contractors ready. January/February sales dipped mid-single digits on weather, not demand signals. Management touted VCR non-equipment push, pricing tools for gradual 30% gross margin trek; inventory set for 5 turns. Dividend hike signals cash flow confidence at $16-18/share. No unit forecasts yet. Channel stabilized. Investors eye seasonal ramp.
Key Stats
Market Cap
13.90BP/E (TTM)
26.59Basic EPS (TTM)
12.86Dividend Yield
0.03%Recent Filings
10-K
FY2025 results
Watsco's revenues reached $7.2 billion for FY2025 ended December 31, 2025, up from prior years through its buy-and-build strategy across 695 locations. HVAC equipment drove 67% of sales, with joint ventures with Carrier comprising 53%; other HVAC products and commercial refrigeration added 29% and 4%. U.S. markets dominated at 90% of revenues, concentrated in high-demand Sun Belt states like Florida and Texas. No share repurchases occurred in 2025. Supplier concentration risk looms large, with Carrier and Rheem supplying 70%. Steady growth persists.
8-K
Record margins, dividend hike
Watsco reported Q4 revenues down 10% to $1.58B and full-year down 5% to $7.24B amid A2L refrigerant transition, yet hit record 28.0% gross margins and generated record $400M Q4 cash flow. Cash swelled to $780M debt-free. Board hiked annual dividend 10% to $13.20/share, signaling confidence. Strong cash fuels growth bets.
10-Q
Q3 FY2025 results
Watsco's Q3 revenues dipped 4% y/y to $2.1B while gross margin expanded 1.3 points to 27.5%, driving operating income to $235M despite 5% higher SG&A. Diluted EPS held at $3.98, matching basic due to anti-dilution effects from low-impact options. YTD, sales fell 3% to $5.7B but margins lifted 1.4 points to 28.3%, with operating income down just 4% to $619M and EPS at $10.48. Acquisitions like SIE (closed May 2025 for $17.7M cash/stock, $7.8M goodwill) and Lashley (Jan 2025 for $4.2M cash/stock, $3.1M goodwill) added scale; cash sits at $324M with $200M short-term investments and $600M revolver undrawn. Free cash flow not disclosed in the 10-Q. Supplier concentration tempers pricing power.
8-K
Q3 results press release
10-Q
Q2 FY2025 results
Watsco's Q2 revenues dipped 4% y/y to $2.1B while gross margin expanded 220bps to 29.3%, driving operating income up 1% y/y to $272M and diluted EPS to $4.52, up 1% y/y. YTD revenues fell 3% y/y to $3.6B, with operating income flat at $384M and diluted EPS down 3% to $6.50 (reconciles to 37.9M diluted shares). Acquisitions added punch: closed SIE in May 2025 for $14.3M cash plus $3.4M stock, recognizing $7.8M goodwill; Lashley in Jan for mixed cash/stock, $3.1M goodwill. Cash sits at $293M with $600M revolver undrawn; operating cash used $185M on inventory ramp. Competition shadows HVAC/R distribution.
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