Watsco (NYSE:WSO) posted full-year 2025 revenues of $7.24 billion, down 5% from the prior year, reflecting headwinds in equipment volumes offset partially by an 11% increase in average domestic selling prices and contributions from parts and supplies.
Gross profit decreased 1% to $2 billion, but the gross margin expanded 120 basis points to a record 28%, driven by pricing optimization technologies, OEM pricing actions, and favorable product mix shifts during the A2L refrigerant transition.
Operating income totaled $720 million, while diluted earnings per share came in at $12.25 compared with $13.30 in 2024.
The company highlighted exceptional cash generation, with operating cash flow of $570 million for the full year—including a record $400 million in the fourth quarter—supported by aggressive inventory management.
Inventory declined 30% from its 2025 peak to $1.4 billion by year-end, meeting reduction targets and enhancing working capital efficiency.
Watsco ended 2025 with $780 million in cash and investments and no debt, providing significant financial flexibility for investments in technology, acquisitions, and shareholder returns.