Core Insights - Watsco, Inc. (WSO) is expected to report second-quarter 2025 results on July 30, with earnings projected at $4.84 per share and revenues at $2.21 billion, indicating year-over-year growth of 7.8% and 3.5% respectively [1][2][7] Earnings Performance - In the last reported quarter, Watsco's earnings missed the Zacks Consensus Estimate by 15.7% and decreased 11.1% year over year, while sales missed by 7.6% and decreased 2.2% year over year [1] - Watsco has topped the consensus mark in one of the last four quarters, with an average negative surprise of 5.7% [1] Estimate Revisions - The Zacks Consensus Estimate for the upcoming quarter's earnings has decreased from $4.91 to $4.84 over the past 30 days [2] Revenue Drivers - Strong HVAC demand and the rollout of A2L-compliant systems are expected to boost Watsco's revenues in the second quarter [3] - The company anticipates a smoother sales cadence and a higher-value product mix, with over 60% of recent equipment sales consisting of 454B-based systems [3] Market Conditions - The core residential replacement market is expected to remain strong due to improved weather trends and high-efficiency product demand [4] - Commercial product sales are projected to stabilize as A2L adoption broadens, while international markets may underperform due to macro uncertainties [4] Sales Projections - HVAC Equipment sales are expected to grow 5% year over year to $1.6 billion, while HVAC Products are projected to grow 1% to $540.3 million [5] - Commercial Refrigeration Products sales are expected to grow 2% to $87.3 million [5] Margin Expectations - Gross margins are expected to improve by 100 basis points to 28.1%, driven by favorable pricing and an improved product mix [6][7] - Management aims for a long-term gross margin goal of 30% [6] Cost Pressures - Some cost pressures related to refrigerant container shortages are noted, but management does not expect a material impact on margins [8] Earnings Prediction Model - The current model does not predict an earnings beat for Watsco, as it lacks a positive Earnings ESP and a favorable Zacks Rank [9] - Watsco currently holds a Zacks Rank of 3 [10]

Company Overview - Watsco, Inc. is the largest distributor of heating, air conditioning, and refrigeration (HVAC/R) products with operations in the United States, Canada, Mexico, Puerto Rico, and exports to Latin America and the Caribbean [4] Market Focus - The company focuses on the replacement market, which has grown due to the aging of installed systems, the introduction of higher energy-efficient models, and the necessity of HVAC products in homes and businesses [5] - Approximately 102 million HVAC systems in the U.S. have been in service for over 10 years, many operating below current minimum efficiency standards [5] Environmental Impact - Watsco plays a significant role in addressing climate change by lowering CO2e emissions through the sale of higher-efficiency HVAC systems [6] - HVAC systems account for roughly half of U.S. household energy consumption, making the replacement of older systems critical for reducing electricity consumption and carbon footprints [6] Emission Reduction Achievements - From January 1, 2020, to June 30, 2025, Watsco is estimated to have averted 24.5 million metric tons of CO2e emissions, equivalent to removing 5.7 million gas-powered vehicles from the road annually [7]

Group 1 - Watsco is the largest HVAC maintenance and repair service provider and distributor in the US, with over 375,000 contractors and technicians [1] - The company is benefiting from the industry transition to A2L refrigerants, which is identified as a key catalyst for growth [1]

Core Points - Watsco, Inc. has declared a quarterly cash dividend of $3.00 per share, marking the 200th consecutive quarter of dividend payments [1][2] - The company has a history of paying dividends for 51 consecutive years, reflecting its commitment to sharing cash flow while maintaining a conservative balance sheet [2] - Watsco focuses on the replacement market for HVAC/R products, which is growing due to aging systems and the need for energy-efficient models [4] Company Overview - Watsco is the largest distributor of heating, air conditioning, and refrigeration products in the U.S., Canada, Mexico, and Puerto Rico, with exports to Latin America and the Caribbean [3] - The company plays a significant role in addressing climate change by promoting the replacement of older HVAC systems with higher efficiency models [5] Market Opportunity - There are approximately 102 million HVAC systems in the U.S. that are over 10 years old, many of which operate below current efficiency standards, presenting a substantial market opportunity for Watsco [4] - From January 1, 2020, to March 31, 2025, Watsco is estimated to have averted 23.7 million metric tons of CO2e emissions through the sale of higher-efficiency HVAC systems, equivalent to removing 5.5 million gas-powered vehicles from the road annually [6]

Business Overview - Watsco operates in a highly fragmented market and is a market leader in the HVAC/R distribution industry[4, 13] - The company has a wide geographic presence with 690 locations across the United States, Canada, and Latin America & Caribbean[12] - Watsco's business model involves supplying equipment, parts, and supplies to contractors for the repair or replacement of HVAC systems[10] - The company's revenues are primarily generated in the United States (90%), with the majority coming from residential HVAC equipment (54%)[19] Technology and Digital Transformation - Watsco is focused on transforming the customer experience through enhanced technology, including a robust e-commerce platform and mobile apps[4, 23] - The company's annualized e-commerce revenue in 2023 was $24 billion, a 5% increase[32] - Watsco has digitized over 15 million product SKUs and made them accessible in its mobile app[29, 33] - E-commerce users experience approximately 50% less attrition compared to traditional customers[32] Financial Performance and Shareholder Value - From 1989 to 12/31/23, Watsco's revenues grew from $64 million to $73 billion, representing a 15% compound annual growth rate (CAGR)[41] - The company's market capitalization increased from $22 million to $169 billion during the same period, a 22% CAGR[41] - Watsco raised its annual dividend rate to $1080 per share, effective in April 2024[45]

Business Overview - Watsco operates in a highly fragmented market and is a market leader in the HVAC/R distribution industry[4, 13] - The company has a broad geographic presence with 691 locations, including 630 in the United States, 36 in Canada, and 25 in Latin America & Caribbean[12] - Watsco's revenue is primarily generated in the United States (90%), with Canada and Latin America contributing 5% each[19] - Residential HVAC equipment accounts for 54% of revenues, followed by other HVAC products (27%), commercial HVAC equipment (15%), and refrigeration (4%)[19] Technology and Digital Transformation - Watsco is focused on transforming the customer experience through technology, with annualized e-commerce revenue reaching $2.4 billion in 2023, a 5% increase[4, 32] - The company has over 1.5 million product SKUs digitized and accessible in its mobile app[29, 33] - E-commerce users experience approximately 50% less attrition compared to traditional customers, and e-commerce orders have 15% higher line items per order[32] Financial Performance and Shareholder Value - Watsco's revenues have grown from $64 million in 1989 to $7.3 billion in the trailing twelve months (TTM) ending March 31, 2024, representing a 14% compound annual growth rate (CAGR)[41] - The company's Earnings Before Interest and Taxes (EBIT) has increased from $2 million in 1989 to $757 million in the TTM ending March 31, 2024, an 18% CAGR[41] - Watsco's market capitalization has grown from $22 million in 1989 to $17.3 billion in the TTM ending March 31, 2024, a 21% CAGR[41] - The company has a solid cash flow performance, with cumulative net income of $4.7 billion, operating cash flow of $4.5 billion, and dividends of $2.8 billion over the past 20 years[43]

Business Overview - Watsco is a market leader in a highly fragmented industry[4] - The company transforms customer experience with enhanced technology[4] - Watsco has deep ties to the industry's leading OEMs and suppliers[4] - The company operates 689 locations, including 627 in the United States, 36 in Canada, and 26 in Latin America & Caribbean[12] - E-commerce revenue reached $2.4 billion in 2023, a 5% increase[31] Financial Performance & Returns - From 1989 to TTM 9/30/2024, Watsco's revenues grew from $64 million to $7.5 billion, representing a CAGR of 15%[42] - EBIT increased from $2 million to $753 million during the same period, with a CAGR of 18%[42] - The company's share price rose from $2.70 to $491.88, reflecting a CAGR of 16%[42] - Dividends increased from $0.5 million to $411 million, showing a CAGR of 21%[42] - Market capitalization grew from $22 million to $19.9 billion, with a CAGR of 21%[42] ESG Initiatives - Watsco's sale of high-efficiency equipment averted 21.8 million metric tons of CO2e from January 2020 to September 2024[34] - The sale of Alert Labs water monitoring products saved 10.6 billion gallons of water from August 2019 to September 2024[34]

Business Overview - Watsco is a market leader in a highly fragmented HVAC/R industry[4, 13] - The company operates 690 strategic locations across the United States, Canada, Latin America, and the Caribbean[12] - The company's business model involves contractors purchasing equipment, parts, and supplies from Watsco to repair or replace homeowner's systems[10] Market and Products - The United States accounts for 90% of Watsco's revenues, with Canada and Latin America contributing 5% each[19] - Residential HVAC equipment makes up 55% of revenues, commercial HVAC equipment 15%, other HVAC products 26%, and refrigeration 4%[19] - The installed base of HVAC units in the U S has been increasing, with over 120 million units installed[24] Technology and Digital Transformation - Watsco is focused on transforming the customer experience through enhanced technology, including a robust e-commerce platform[4, 31] - Annualized e-commerce revenue in 2024 reached $2.6 billion, an 8% increase[35] - E-commerce users experience approximately 60% less attrition compared to traditional customers[35] Financial Performance and Shareholder Value - From 1989 to 2024, Watsco's revenues grew from $64 million to $7.6 billion, representing a 14% compound annual growth rate (CAGR)[46] - Over the same period, EBIT increased from $2 million to $782 million, an 18% CAGR, and the share price rose from $2.70 to $473.89, a 16% CAGR[46] - The company's market capitalization grew from $22 million to $19.2 billion over the same period, a 21% CAGR[46] - In 2024, Watsco's dividend payments totaled $423 million[46] - As of December 31, 2024, Watsco had $782 million in cash and investments and no total borrowings[50]

Business Overview - Watsco is a market leader in a highly fragmented industry, focusing on transforming customer experience with technology and value creation[4] - The company operates 693 strategic locations across the United States, Canada, and Latin America & Caribbean[12] - Watsco's business model involves contractors purchasing equipment, parts, and supplies to repair or replace homeowner's systems[10] Market and Products - The company estimates its market share to be 18-20%[46] - Watsco's revenue is primarily generated in the United States (90%), with Canada and Latin America contributing 5% each[19] - Residential HVAC equipment accounts for 55% of revenue, followed by other HVAC products (26%), commercial HVAC equipment (15%), and refrigeration (4%)[19] - The installed base of HVAC units in the U S continues to grow, with approximately 96 million units shipped in 2024, and only ~12% of industry shipments tied to Residential New Construction[24] Technology and ESG - Watsco is focused on using technology to transform the HVAC industry, with $2.6B in annualized e-commerce revenue in 2024, an 8% increase[25, 35] - The company has over 930k product SKUs digitized and accessible in its mobile app[32, 36] - Watsco's ESG efforts have resulted in averting 23.7 million metric tons of CO2e from the sale of high-efficiency equipment from January 2020 – March 2025[38] Financial Performance - From 1989 to LTM 3/31/25, Watsco's revenues grew from $64 million to $7.6 billion, representing a 14% CAGR[46] - EBIT increased from $2 million to $767 million during the same period, a 17% CAGR[46] - The company's market capitalization has grown from $22 million to $20 billion, a 21% CAGR[46]

Business Overview - Watsco operates in a highly fragmented industry, holding a leading market position [4, 13] - The company's business model involves contractors purchasing equipment, parts, and supplies to repair or replace HVAC systems [10] - Watsco has a significant geographic presence with 690 locations across the United States, Canada, and Latin America & Caribbean [12] - The company's revenue is primarily generated in the United States (90%), with Canada and Latin America contributing 5% each [19] - Residential HVAC equipment accounts for 54% of Watsco's revenue, followed by commercial HVAC equipment at 15% and other HVAC products at 27% [19] Technology and Digital Transformation - Watsco is focused on transforming the HVAC industry through technology, aiming to enhance customer experience and improve efficiency [23] - The company's annualized e-commerce revenue reached $2.4 billion in 2023, representing a 5% increase [32] - Watsco has digitized over 1.5 million product SKUs, accessible through its mobile app [29, 33] - E-commerce users experience approximately 50% less attrition compared to traditional customers [32] Financial Performance and Shareholder Value - From 1989 to 12/31/23, Watsco's revenues grew from $64 million to $7.3 billion, representing a 15% compound annual growth rate (CAGR) [41] - Over the same period, EBIT increased from $2 million to $795 million, with an 18% CAGR [41] - The company's market capitalization grew from $22 million to $16.9 billion, reflecting a 22% CAGR [41]