Watsco, Inc. reported record gross profit margins and expanded operating margins during the A2L product transition. With a strong balance sheet, the company continues to invest in growth opportunities and technology platforms, serving over 70,000 contractors. Revenues decreased by 4% in the second quarter to $2.06 billion, while gross profit increased by 4% to $603 million, with a record gross profit margin of 29.3%.

In response to the ongoing regulatory transition to A2L refrigerants, Watsco has invested in customer training, technology enhancements, and new inventory. Second quarter sales reflected a 3% decline in domestic markets and a 12% decline in non-US markets, along with a 6% decrease in HVAC equipment sales. The company expects market conditions to improve as the transition progresses, with the sales mix of new A2L equipment growing domestically.

Watsco’s second quarter gross profit margin reached a record 29.3%, driven by pricing technologies and OEM pricing actions. Operating income increased by 1% to $272 million, with operating margins expanding to 13.2%. Despite challenges in the industry, the company remains resilient, focusing on boosting sales and improving operational efficiencies to drive growth for the rest of the year.

For the six-month period, Watsco saw a 3% decrease in revenues to $3.59 billion, while gross profit increased by 2% to $1.03 billion. Gross profit margins expanded to 28.7%, with operating income declining by 3% to $384 million. The company’s innovative technology initiatives, including AI tools, aim to enhance the customer experience and drive efficiency for continued success.

Watsco’s buy and build acquisition strategy has seen the company acquire three distributors in key Sunbelt markets in 2025. With a focus on maintaining a healthy balance sheet for strategic investments, Watsco is committed to delivering sustained long-term returns. Operating cash flow for the six-month period was a use of cash totaling $185 million, reflecting investments in new A2L inventory and seasonal inventory buildup.

Read more at GlobeNewswire: Watsco Reports Second Quarter 2025 Results and