Miami-based Watsco — North America’s largest HVACR products distributor — reported its 2025 second quarter financial results on July 30, showing a slight decline in sales, while net profit increased to a company record alongside margin gains.

Watsco posted total sales of $2.06 billion that were down 4.0% year-over-year.

The company’s 2Q gross margin of 29.3% jumped 220 basis points year-over-year to a Watsco-record $603 million and improved 120 bps sequentially. 2Q25 operating margin likewise expanded 60 bps to 13.2% year-over-year.

MDM Case Study: Watsco (Premium access here) 

“The increase in gross margin was driven by margin increases across several product categories attributable to further scaling of Watsco’s pricing technologies, as well as from the timing and extent of OEM pricing actions implemented during the quarter,” Watsco Chairman and CEO Albert Nahmad said in the company’s financial release. “Operating expenses increased on higher labor, facilities and transportation costs partially associated with the A2L product transition, as well as 10 new locations acquired in 2025.”

Gross profit increased by 4.0% year-over-year to a company record of $603 million and jumped sequentially from 1Q’s $429 million.

Watsco’s 2Q net profit of $217 million narrowly topped the $215 million of a year earlier.

By Watsco product line during 2Q (excluding acquisitions):

• HVAC equipment — 68% of sales — decreased 6.0% year-over-year
• Other HVAC products — 28% of sales — remained flat year-over-year
• Commercial refrigeration products — 4.0% of sales — increased 3.0% year-over-year

MDM’s 2Q25 MarketPulse Report (store link) 

Nahmad added: “Our second quarter results reflect softer market conditions and the complexities associated with the industry-wide transition to new A2L products. Despite the challenging environment, I am proud that we improved gross margins and generated a measure of earnings growth, which highlights our entrepreneurial culture and the resilience of our business model. Our leaders are taking actions to boost sales, sustain margins and improve operating efficiencies to drive growth for the balance of the year.”

Watsco was ranked No. 1 on MDM’s 2025 Top Distributors List for HVACR.