Watsco Reports Revenue Decline in Q3 and First Nine Months of 2025

Watsco, Inc. reported a decline in financial performance for the third quarter and the first nine months of 2025, as detailed in its latest 10-Q filing. For the quarter ended September 30, 2025, the company generated revenues of $2.067 billion, a decrease of 4% from $2.160 billion in the same period of 2024. Net income attributable to Watsco, Inc. was $161.6 million, down 6% from $171.0 million year-over-year. For the nine months ending September 30, 2025, revenues totaled $5.661 billion, a 3% decline from $5.864 billion in 2024, with net income decreasing to $425.2 million from $439.4 million.

The decrease in revenue was attributed to several factors, including a decline in same-store sales, which fell by 5% in the third quarter and 4% for the nine-month period. The company noted that temperate weather conditions during the summer selling season, lower home building activity, and reduced consumer confidence contributed to lower unit volumes, particularly in residential HVAC equipment. Additionally, Watsco's gross profit margin improved to 27.5% in the third quarter, up from 26.2% in the prior year, primarily due to effective pricing strategies and improved selling margins.

Watsco has also been active in expanding its operations through acquisitions. In 2025, the company acquired Southern Ice Equipment Distributors, Inc. and Hawkins HVAC Distributors, Inc., which are expected to enhance its market presence. The acquisitions added approximately $39 million in annual sales and contributed to the recognition of goodwill. As of September 30, 2025, Watsco operated 698 locations across the U.S., Canada, Mexico, and Puerto Rico, reflecting a strategic focus on geographic expansion.

Operationally, Watsco's employee headcount and customer engagement metrics remained stable, with the company continuing to leverage its technology platforms to adapt to changing market conditions. The company reported a significant increase in selling, general, and administrative expenses, which rose to $343.7 million in the third quarter, up from $326.4 million in 2024, primarily due to investments in technology and employee benefits.

Looking ahead, Watsco remains cautious about the economic environment, including potential impacts from tariffs and inflationary pressures on its supply chain. The company is focused on maintaining its market leadership in the HVAC/R distribution industry while navigating these challenges. Watsco's management expressed optimism about the long-term demand for high-efficiency HVAC systems, particularly in light of regulatory changes aimed at reducing carbon emissions.