Watsco, Inc.: Expansion into Large Institutional Customers to Drive Substantial Growth By Tapping Into A Broader Market Segment! 

Watsco’s second quarter results for 2025 present a mixed picture, characterized by several strategic transitions and market conditions impacting financial performance. Let’s outline the key aspects of the company’s results and form an investment thesis with a neutral perspective: Watsco reported a sales decline of 4% despite implementing double-digit pricing increases for its new line of A2L refrigerant-based equipment. This decline was primarily due to lower sales volumes, partly attributed to a delayed start to the summer season and subdued demand in residential new construction and international markets, particularly in Mexico. However, the company achieved record gross profit margins, driven largely by price optimization tactics and OEM pricing actions.