Watsco Inc. Reports Strong Margins Amid A2L Transition

Watsco Inc ( (WSO) ) has released its Q2 earnings. Here is a breakdown of the information Watsco Inc presented to its investors.

Watsco Inc. is the largest distributor of heating, ventilation, and air conditioning (HVAC) products in the North American market, known for its extensive network and innovative technology platforms that enhance customer engagement and operational efficiency. The company recently reported its second-quarter 2025 earnings, highlighting record gross profit margins and expanded operating margins despite a slight decline in revenues. Watsco’s financial performance in the second quarter of 2025 showed a 4% decrease in revenues to $2.06 billion, while gross profit increased by 4% to a record $603 million, resulting in a gross profit margin of 29.3%. The company also experienced a 1% increase in operating income to $272 million, with an operating margin expansion to 13.2%. These results were achieved amidst a transition to next-generation HVAC equipment with A2L refrigerants, which have a lower global warming potential. Watsco’s strategic initiatives include significant investments in technology, such as AI-driven platforms and digital sales tools, which have enhanced customer experience and operational efficiencies. The company’s e-commerce sales reached approximately $2.5 billion, comprising 34% of overall sales, and its digital platforms continue to gain traction among contractors and technicians. Looking ahead, Watsco remains focused on leveraging its strong balance sheet and innovative strategies to capture market share and drive growth. The company’s management is optimistic about the potential of its technology initiatives and the ongoing transition to environmentally friendly HVAC products, positioning Watsco for continued success in the evolving market.