Watsco reported second quarter revenue of $2.1 billion, a 2% increase year-over-year, and diluted earnings per share of $4.00, a 12% decrease from the prior year. Both revenue and EPS fell short of analyst expectations.
Key Highlights
- Gross margin contracted to 27.5% from 29.3% a year ago. The company attributed the decline to normalizing pricing actions in 2026 compared to outsized benefits from inflation and tariffs in 2025.
- Operating margin also decreased, falling to 11.3% from 13.2% in the same quarter last year, as operating income declined 12% to $238 million.
- On a same-store basis, HVAC equipment sales, which represent 68% of total sales, increased 3% during the quarter.
- E-commerce sales continued to show strong growth, rising 13% during the first six months of 2026 and reaching $2.7 billion for the trailing twelve months.