HVACR equipment and supplies distributor Watsco reported its 2025 fourth quarter and full year financial results on Feb. 17, with 4Q’s results reflecting a continued sales decrease in a period marked by heightened seasonality, while pricing more than made up for lower volumes in gross margin impact.

4Q25

Miami-based Watsco posted 4Q25 sales of $1.58 billion, down 10% year-over-year after a 4% decrease in 3Q25. Sales fell 13% in HVAC equipment (67% of sales); fell 4% in other HVAC products (29% of sales) and increased 5% in commercial refrigeration products (4% of sales).

Gross profit fell 8% to $425 million, while gross margin expanded by 40 basis points to 27.1%. Operating profit sunk 25% to $102 million on margin of 6.4% and net profit of $87 million trailed the $115 million of a year ago.

Watsco noted that 4Q25 performance should be considered in light of the company’s strong 2024 comparable results that included 22% sales growth from domestic residential HVAC equipment (20% unit growth) that was boosted by the sale of older, more economical 410A systems ahead of the market’s A2L transition. Meanwhile, 4Q25 results also reflect an 11% increase in average selling price int he U.S.

Full Year

For all of 2025, Watsco’s sales declined 5% to $7.24 billion. Sales fell 4% in U.S. markets and 10% in international. Sales fell 7% in HVAC equipment, 1% in other HVAC products and wer eflat in commercial refrigeration.

Gross profit of $2.0 billion fell 1% while gross margin expanded 120 bps to a company record 28.0%. Operating profit slid 8% to $720 million on margin of 10.0% (10.3% in 2024) and net profit of $588 million trailed the $636 million of 2024.

Watsco said 2025 revenues reflect lower unit volumes of HVAC equipment, partially offset by higher average selling prices following the A2L product transition, further impacted by slower homebuilding.

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“The recent business environment has been among the most complicated in memory,” Watsco Chairman and CEO Albert Nahmad said in the company’s earnings release. “I am gratified at the results we achieved and the execution by our teams over the time horizon summarized above. We raised margins, nearly doubled our profitability, invested $300 million in technology, nearly doubled our dividend and fortified our balance sheet to allow investment in most any-sized growth opportunity. We expect a more conventional industry environment and better prospects for growth as 2026 unfolds, and we believe there is room to further optimize inventory and improve operating efficiency.”