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Dec 31, 2025
Watsco Q4 2025 Earnings Report
Watsco reported lower fourth quarter 2025 revenue and earnings amid challenging market conditions, while expanding gross margin and generating record operating cash flow.
Key Takeaways
Watsco generated Q4 2025 revenue of 1578757000 with gross profit of 428438000 and gross margin of 27.1%. Operating income declined to 101528000 with a 6.4% operating margin, and diluted EPS was 1.68. The company delivered record fourth quarter operating cash flow of 400000000 and maintained a debt-free balance sheet.
Revenue decreased 10% to 1578757000 in Q4 2025.
Gross profit margin expanded 40 basis points to 27.1%.
Operating income declined to 101528000 with a 6.4% margin.
Record Q4 operating cash flow of 400000000.
Forward Guidance
The company expects a more conventional industry environment and better growth prospects as 2026 unfolds, with opportunities to optimize inventory and improve operating efficiency.
Positive Outlook
- Expectation of improved industry conditions in 2026.
- Opportunity to further optimize inventory levels.
- Debt-free balance sheet with 780000000 in cash and investments.
- Strong digital platform adoption with 73000 authenticated users.
- Expanded annual dividend to 13.20 per share.
Challenges Ahead
- Challenging macroeconomic and housing market conditions.
- Seasonality impacts fourth and first quarter results.
- Recent regulatory-driven product transitions created volatility.
- Lower HVAC equipment unit volumes in 2025.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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