Watsco (WSO.B) Financials

Here’s a concise, investor-focused snapshot of Watsco (NYSE: WSO) using the last four years of quarterly statements. The focus is on trends in revenue, margins, cash flow, and the balance sheet to help gauge operating stability and financial flexibility.

• Gross margin has remained in the high-20s across the period, indicating stable profitability. For example, in Q4 2025, gross margin was roughly 27.1% (428,438,000 gross profit on 1,578,757,000 revenue).
• Operating cash flow from continuing activities has been broadly strong in most of the latest quarters, highlighting solid cash generation. Notable figures include Q4 2025 net cash from continuing operating activities of 399,766,000; Q4 2024 of 370,162,000; and Q3 2024 of 358,843,000.
• Earnings per share have shown meaningful strength in several quarters, with quarterly diluted EPS reaching notable levels (e.g., Q2 2025 at 4.52 and Q3 2025 at 3.98). This demonstrates underlying earnings power even as quarterly results fluctuate.
• Dividend per share remains attractive and consistent, with recent quarters reporting around 2.7 to 3.0 USD per share. For instance, Q4 2025 shows a cash dividend per share of 3.0, while Q1 2025 was 2.7.
• Liquidity remains solid, with cash and equivalents generally in the low to mid hundreds of millions (for example, 324.3 million in Q3 2025 and 431.8 million in Q1 2025), and total equity broadly in the 2.8 to 3.3 billion range across periods. This supports financial flexibility and capacity to weather cyclicality.
• Long-term debt is notably light in several periods (zero in some quarters, such as Q3 2025), with debt often carried in capital lease obligations. This shifts the debt mix away from traditional long-term debt, which can reduce interest expense but may raise lease-related leverage considerations.
• Revenue levels show seasonality and quarterly swings, typically in the 1.5 to 2.1 billion range in recent years. This pattern is normal for a distributor of HVAC and related equipment and should be considered when evaluating quarterly momentum.
• Capital expenditures are modest, with quarterly purchases of property, plant & equipment generally in the single-digit tens of millions. This suggests ongoing investment activity without a heavy capex burden, supporting efficiency gains without excessive cash strain.
• Working capital dynamics are noticeable, with elevated accounts receivable and inventories relative to cash at times. This indicates operating growth and channel inventory needs, which can affect near-term cash flow timing but are typical for a distribution business.
• Certain quarters show negative net cash from financing activities and investing activities, reflecting ongoing dividends, debt and lease payments, and capital allocations that reduce cash in those periods. Examples include negative financing cash flow in several quarters (e.g., Q4 2025, Q3 2025, Q4 2024) and meaningful investing cash outlays in some quarters, underscoring cash flow volatility tied to capital management and growth initiatives.