WSO WATSCO INC

Overview and Growth

WATSCO INC generated $7.24B of revenue in fiscal 2025, with net income of $496.99M and an operating cash inflow of $569.61M. At $7.24B, the top line establishes the operating scale supporting the company’s profit and cash-flow profile. Revenue was 5.0% below fiscal 2024 revenue of $7.62B, marking a top-line contraction. Diluted earnings per share were $12.25, translating the period’s attributable earnings into the amount reported for each diluted share. The per-share result recorded a 7.9% decrease from fiscal 2024 diluted EPS of $13.30. Revenue equaled 1.64x of total assets, indicating how much reported top-line activity the company produced relative to its period-end asset base.

Profitability

The first profit layer was $2.03B of gross profit, the amount available after reported direct revenue costs to absorb operating expenses. The gross-profit relationship equaled 28.0% of revenue, quantifying the portion retained before operating expenses were recognized. Operations produced $720.35M of income after the reported operating expense base, before the remaining non-operating and tax effects. Relative to revenue, operating income represented 10.0%, showing how efficiently sales converted into operating profit. After all reported below-operating-line items, the company recorded net income of $496.99M for the fiscal year. The final earnings result represented 6.9% of revenue, connecting the absolute net income figure with the company’s top-line scale. The earnings statement records $737.68M of pretax income, the profit base against which the reported tax provision can be assessed. The pretax margin was 10.2%, relating income before taxes directly to revenue. The company recognized $150.09M of income tax for the period, completing the transition from pretax income to net income. Relative to pretax income, the tax provision measured 20.3%, quantifying the portion of pre-tax earnings paid in income tax. Return on period-end equity was 15.4%, relating annual net income to the equity capital on the balance sheet. Net income represented 11.3% of period-end assets, placing the company’s bottom-line result against the total resource base employed.

Liquidity and Capital Structure

Total assets were $4.41B, supported by $1.19B of liabilities and $3.22B of shareholder equity. At period end, current assets of $2.95B compared with current liabilities of $717.74M, defining the company’s short-term resource position. The current ratio was 4.12x, with current assets exceeding current liabilities and providing a short-term liquidity cushion. Reported cash and equivalents were $433.28M, separating immediately recognizable cash resources from the rest of the current-asset base. Measured only with cash and equivalents, coverage of current liabilities was 60.4%, excluding receivables and other current assets. Relative to total assets, liabilities measured 27.0%, complementing the separate equity-based view of the company’s capital structure. Measured against total assets, cash and equivalents represented 9.8%, a balance-sheet composition measure rather than a liquidity forecast. Compared with $4.48B in fiscal 2024, the current asset base moved 1.4% and finished lower.

Cash Flow and Earnings Quality

Cash flow from operations was $569.61M, a reported cash inflow that can be compared directly with net income and capital spending. Operating cash flow equaled 1.15x of net income, showing how strongly accounting earnings converted into cash from operations. Capital spending was $34.55M, absorbing part of the cash generated from operations before free cash flow. Relative to operating cash flow, capital expenditures measured 6.1%, connecting investment intensity with the company’s cash-generation base. Free cash flow came to $535.06M, leaving a positive amount after capital expenditures. Free cash flow represented 7.4% of revenue, linking post-investment cash generation with the company’s operating scale. Free cash flow equaled 12.1% of total assets, relating post-investment cash generation to the company’s resource base.

Based on the annual report for the fiscal year ending Dec 31, 2025. Analysis generated Sep 24, 2026.