Acr Group Inc (711307) SEC Filing 10-K Annual report for the fiscal year ending Monday, February 28, 2005

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

ACR GROUP, INC. REPORTS FIRST PROFITABLE FOURTH QUARTER

AND RECORD EARNINGS FOR YEAR FEBRUARY 28, 2005

>>> Income increases 76% over previous year <<<

Houston, TX—May 26, 2005. ACR Group, Inc. (OTC-BB: ACRG), a leading wholesale distributor of air-conditioning, heating, and refrigeration equipment and supplies, today reported record net income and sales for the fiscal year and fourth fiscal quarter ended February 28, 2005. For the first time in the Company’s history, it reported a profitable fourth fiscal quarter, a quarter in which the Company has historically incurred losses because weather conditions at that time of the year result in relatively low business activity.

Net income for the fiscal year ended February 28, 2005 rose 76% to $4,211,000, or $0.38 per diluted share, compared to $2,395,000, or $0.22 per diluted share, for the fiscal year ended February 29, 2004. The increase in income for fiscal 2004 to fiscal 2005 was attributable to improved operating results at all of the Company’s business units, driven by strong sales growth and gross margin enhancement.

Sales for fiscal 2005 were $199.6 million, compared with sales of $174.4 million in fiscal 2004, an increase of 14%. Same-store sales increased 12% in fiscal 2005, led by the business unit based in Florida, where a strong construction economy boosted sales. For calendar 2004, the Company recorded a 14% increase in same-store sales, compared to a 9% increase in industry-wide product shipments based on data compiled by a leading industry trade association. Gross margin percentage on sales increased to 23.4% in fiscal 2005 from 22.1% in fiscal 2004, as increased availability of working capital enabled the Company to take advantage of opportunities to improve purchasing and payment terms with suppliers, and the Company maintained its customer pricing disciplines to pass through increases in the cost of products manufactured from certain commodity raw materials.

In the fourth fiscal quarter ended February 28, 2005, the Company earned net income of $399,000, or $.04 per diluted share, compared to $8,000, or $0.00 per diluted share, in the prior year fourth quarter. Sales for the fourth quarter of fiscal 2005 increased 11% to $42.6 million, from $38.3 million in the fourth quarter of fiscal 2004.

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