Watsco(US:WSO)2026-02-17 12:30Financial Performance - Watsco reported full-year revenues of $7.2 billion for 2025, a 52% increase from $4.8 billion in 2019, with a compound annual growth rate (CAGR) of 7%[9] - The company's operating income for 2025 was $720 million, up 96% from $367 million in 2019, reflecting a CAGR of 12%[9] - Watsco's earnings per share (EPS) for 2025 were $12.25, compared to $6.50 in 2019, marking an 88% increase[9] - Revenues for Q4 2025 were $1,578,757, a decrease of 9.9% from $1,753,962 in Q4 2024[25] - Net income attributable to Watsco, Inc. was $71,745 in Q4 2025, down from $96,841 in Q4 2024, representing a decline of 26.0%[25] - The diluted earnings per share for 2025 was $12.25, down from $13.30 in 2024, a decrease of 7.9%[25] Profitability and Margins - Gross margin improved to a record 28.0%, an increase of 370 basis points from 24.3%[9] - Gross profit margin improved to 27.1% in Q4 2025 from 26.7% in Q4 2024[25] Cash Flow and Assets - Operating cash flow for 2025 was $570 million, with a record $400 million in the fourth quarter, reflecting a sharp reduction in inventory[17] - Net cash provided by operating activities was $569,613 in 2025, down from $773,102 in 2024, a decrease of 26.4%[29] - Cash and cash equivalents at the end of 2025 were $433,283, down from $526,271 at the end of 2024, a decrease of 17.7%[29] - Total current assets decreased to $2,954,506 in 2025 from $3,079,981 in 2024, a reduction of 4.1%[28] - Total liabilities decreased to $1,192,744 in 2025 from $1,415,285 in 2024, a decline of 16.0%[28] Investments and Acquisitions - The company maintained a debt-free balance sheet with $780 million in cash and investments, allowing for sustained growth investments[6] - Watsco acquired three distributors in key markets during 2025, contributing to a total of 12 acquisitions since 2019, representing approximately $1.6 billion in annualized sales[19] - Business acquisitions net of cash acquired amounted to $19,198 in 2025, compared to $5,173 in 2024, indicating increased investment in growth[29] E-commerce and User Engagement - Watsco's e-commerce sales reached approximately $2.5 billion in 2025, accounting for 35% of overall sales, with some regions exceeding 60% e-commerce penetration[20] - The authenticated user community of Watsco's HVAC Pro+ Mobile Apps increased by 15% to approximately 73,000 users[20] Future Outlook - Watsco plans to continue optimizing inventory and improving operating efficiency as it anticipates a more conventional industry environment in 2026[10] Dividends - Dividends on common stock increased to $473,765 in 2025 from $423,521 in 2024, an increase of 11.9%[29]