{"id":840511,"date":"2025-04-23T07:44:16","date_gmt":"2025-04-23T11:44:16","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/watscos-first-quarter-reflects-large-scale-product-transition-strong-sales-growth-and-expanded-margins-in-core-replacement-market\/"},"modified":"2025-04-23T07:44:16","modified_gmt":"2025-04-23T11:44:16","slug":"watscos-first-quarter-reflects-large-scale-product-transition-strong-sales-growth-and-expanded-margins-in-core-replacement-market","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/watscos-first-quarter-reflects-large-scale-product-transition-strong-sales-growth-and-expanded-margins-in-core-replacement-market\/","title":{"rendered":"Watsco\u2019s First Quarter Reflects Large-Scale Product Transition,\u00a0Strong Sales Growth and Expanded Margins in Core Replacement Market"},"content":{"rendered":"

\nDebt-Free Balance Sheet, Industry-Leading Technology and Scale Create Competitive Advantage;\u00a0Business Trends Improve Ahead of Summer Selling Season
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MIAMI, April 23, 2025 (GLOBE NEWSWIRE) — Watsco, Inc. (NYSE: WSO) announced its operating results for the first quarter ended March 31, 2025 and provided commentary on growth opportunities, business trends, its financial position and long-term growth drivers.<\/p>\n

Watsco\u00a0is the leading distributor in the HVAC\/R marketplace, serving over 375,000 contractors, technicians and installers from 693 locations across the\u00a0U.S.,\u00a0Canada and\u00a0Latin America. Since entering distribution in 1989, the Company has scaled to be the industry leader through a combination of organic growth and the acquisition of 71 businesses. From 1989 through 2024, Watsco has achieved a 19% compounded annual growth rate (CAGR) for total-shareholder-return, representing strong performance across most macroeconomic and industry cycles.<\/p>\n

Watsco maintains a strong balance sheet and is well-positioned to invest in growth. As previously announced, Watsco raised its annual dividend by 11% to $12.00 per share effective in April 2025. At March 31, 2025, Watsco had $432 million of cash, no outstanding debt and $3 billion of shareholders\u2019 equity. 2025 marks the Company\u2019s 51st<\/sup> consecutive year of paying dividends.<\/p>\n

Watsco\u00a0continues to invest in its industry-leading technologies to enrich the customer experience, drive growth, gain market share and improve operating efficiency. Watsco\u2019s digital user-community consists of approximately 67,000 contractors and technicians that engage through state-of-the-art platforms capable of influencing nearly every aspect of their day. Since launching its digital platform,\u00a0Watsco\u00a0has generated higher sales growth rates among digital users, achieved meaningful customer acquisition and reduced attrition.\u00a0Watsco\u00a0has also begun to establish pathways for AI-related initiatives and leveraging the substantial data streams curated by the Company.<\/p>\n

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\n Comments Regarding First Quarter Performance<\/u>
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Our results reflect the early stages of a large-scale product transition from regulatory changes that went into effect January 1, 2025, which affects approximately 55% of Watsco\u2019s sales and will ultimately convert nearly $1 billion of inventory over the course of the year. The new products represent HVAC systems used in the U.S. for residential and light-commercial applications that contain refrigerants (termed A2L refrigerants) that offer considerably lower global warming properties (GWP), a measurement of environmental impact.<\/p>\n

First quarter sales mix represents a composite of old and new HVAC systems, which experienced varying levels of sales demand across end-markets. Watsco\u2019s core U.S. market for residential replacement sales increased 10% (12% on a same-day basis), reflecting new customer acquisition, unit growth, price-capture and an improved mix of higher-efficiency products, along with improved gross margins. This contrasts with a 9% decline in sales to international markets (9% of first quarter 2025 sales), lower volumes related to new housing markets and a disparity in certain end-markets on the timing and cadence of the A2L product transition. While still early in the selling season, recent sales and margin trends have improved and the Company expects more resilient demand during the seasonally stronger periods that follows the first quarter.<\/p>\n

Albert H. Nahmad, Chairman and CEO, stated: \u201cThe transition to the new A2L products is well underway. Regulatory changes have historically been good for our business, and we see the same opportunity as this transition influences more than half of the products we sell and offers most every customer we serve the opportunity to benefit their business. We are encouraged by the strength in sales, margins and improved efficiency mix in our core replacement market, as well as another good quarter of acquiring new customers. We have built a strong inventory position ahead of the selling season to support our customers and will help them compete and gain share as the transition unfolds.\u201d<\/p>\n

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\n First Quarter Performance<\/u>
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