Watsco: HVAC equipment sales slid 7% in 2025

Watsco, the U.S.’s largest HVAC distributor, on Tuesday released its fourth-quarter and full-year 2025 earnings results.

What’s happening: The company’s total revenue fell 10 percent year-over-year during the quarter, with residential HVAC equipment sales down 13 percent. 

• Yes, but: “Fourth quarter 2025 performance should be considered in light of the strong 2024 comparable results,” Watsco noted, “which included 22% sales growth in domestic residential HVAC equipment (20% unit growth), boosted by the sale of older, more economical 410A systems ahead of the A2L transition.”

The big picture: For the full year 2025, equipment sales — which represent 67 percent of the company’s total sales — declined by seven percent compared to 2024, and sales of “other HVAC products” fell one percent. 

What they’re saying: “The recent business environment has been among the most complicated in memory,” CEO Albert Nahmad said in a statement, citing pandemic disruptions, the 2023 shift in efficiency standards, last year’s refrigerant changeover, and slow home construction. 

• Meanwhile, President Paul Johnston on Tuesday’s earnings call hesitated to echo predictions that unit volumes could fall by 10 to 15 percent this year: “We will sell the exact number of systems that contractors are going to install in people’s homes or businesses,” he said. 
• “We’re not waiting for inventory to clear. We’re not wondering if inventory is going to clear. You know, our business is selling into the contractor channel in real time based on what’s being installed,” he added. 

Of note: The A2L transition impacted approximately 55 percent of Watsco’s products sold across 650 U.S. locations, and resulted in the conversion of more than $1 billion of inventory to new products. 

What we’re watching: “We expect a more conventional industry environment and better prospects for growth as 2026 unfolds, and we believe there is room to further optimize inventory and improve operating efficiency,” Nahmad said.

• Technology and AI will be an ongoing focus for Watsco, as approximately 73,000 contractors, installers, and technicians engage with the company digitally, while ecommerce accounts for 35 percent of sales — and exceeds 60 percent in certain markets. 
• Johnston added that 2026 has started off “down five percent or so,” but noted that severe weather closed some stores and performance to date is not “an inference into the season.”