Exhibit 99.1

Watsco Achieves Record Sales, Earnings, Net Income

and EPS During Second Quarter



14% EPS Growth and 40-Basis Point Operating Margin Expansion

MIAMI, FLORIDA – (BUSINESS WIRE), July 25, 2017 – Watsco, Inc. (NYSE: WSO) reported record results for the second quarter and six months ended June 30, 2017. The results reflect continued investment in a variety of technologies to revolutionize Watsco’s customer-experience, create a data-driven culture, to empower more insightful decision-making and enhance productivity and operational efficiency. The Company has also made additional investments in products and people to grow and develop market share for supplier partners.

Second Quarter Results

Key performance metrics:


    14% increase in earnings per share to a record $2.07


    10% increase in operating income to a record $129 million


    40 basis-point expansion in operating margins to 10.1%


    30 basis-point improvement in gross profit margin


    10 basis-point reduction in SG&A as a percentage of sales

Sales trends:


    5% sales growth to a record $1.28 billion


    7% increase in HVAC equipment (67% of sales), including 8% growth in the U.S.


    2% increase in other HVAC products (28% of sales)


    3% growth in commercial refrigeration products (5% of sales)

Albert H. Nahmad, Watsco’s Chairman and CEO stated: “Our second quarter performance produced the highest sales and profits of any quarter in Watsco’s history. Earnings growth and margin expansion were driven by a combination of solid sales growth, improved selling margins and operating efficiencies.”

Mr. Nahmad added: “We believe technology changes progressing in our industry will accelerate and our industry-specific focus, scale and leadership position will serve us well. In time, we believe peers and competitors will realize that Watsco is an attractive succession plan and join forces with us to adapt and evolve in the changing environment. In this regard, we continue to actively seek acquisitions and investments to grow our network and leverage investments across an expanding enterprise.”

First-Half Results

Key performance metrics:


    10% increase in earnings per share to a record $2.80


    6% increase in operating income to a record $178 million


    20 basis-point expansion in operating margins to 8.3%


    20 basis-point improvement in gross profit margin


    Flat SG&A as a percentage of sales

Sales trends:


    4% sales growth to a record $2.15 billion


    5% increase in HVAC equipment (66% of sales)


    1% increase in other HVAC products (29% of sales)


    4% growth in commercial refrigeration products (5% of sales)

Mr. Nahmad added: “First-half results reflect further investments in technology and additional headcount of approximately 150 customer-facing employees intended to enhance long-term sales growth and market share. We remain optimistic that 2017 will be a record year for our company.”

Acquisition of 35% of Russell Sigler, Inc.

On June 21, 2017, Watsco’s Carrier Enterprise business unit, a joint venture between Watsco and Carrier Corporation, acquired 35% ownership of Russell Sigler, Inc. (RSI). RSI was established in 1950 and is one of the largest HVAC distributors in North America with annual sales of approximately $650 million. It serves over 10,000 customers from 30 locations throughout Arizona, California, Idaho, New Mexico, Nevada and portions of Texas. Products sold include residential and commercial HVAC equipment manufactured by Carrier as well as parts, supplies and accessories sourced from over 700 other vendors. Consideration for the purchase was $63.6 million paid in cash (the Company contributed 80%, or $50.9 million). Carrier Enterprise has the exclusive right to purchase shares if and when any current RSI owner wishes to sell shares in the future.

Acquisition of Joint Venture Interests

In February 2017, Watsco raised its ownership of Carrier Enterprise Northeast LLC, also a joint venture with Carrier Corporation, to 80% for approximately $43 million in cash. The incremental investment builds on a November 2016 transaction, which increased Watsco’s controlling interest from 60% to 70%. Carrier Enterprise Northeast had sales in 2016 of approximately $500 million from 41 locations in the northeastern United States and 12 locations in Mexico. First-half results include a contribution of 8 cents per share from the increased ownership interest.

Technology Strategy

Watsco is actively transforming its business into the digital age by investing in scalable platforms for mobile apps, e-commerce, business intelligence and supply chain optimization. Strategic goals are to further strengthen Watsco’s leadership position, accelerate sales and profit growth, increase the speed and convenience of serving customers and extend the Company’s reach into new geographies and sales channels. Technology-related spending over the last twelve months was approximately $23 million.

Dividends & Cash Flow

In April 2017, Watsco’s Board of Directors approved a 19% increase in its annual dividend to $5.00 per share on each outstanding share of its Common and Class B common stock. The increase will be reflected in the Company’s dividend payment on July 31, 2017.

Watsco has paid dividends for over 40 consecutive years with the philosophy of sharing increasing amounts of cash flow through higher dividends while maintaining a conservative financial position. Future increases in dividends, if any, will be considered in light of investment opportunities, cash flow, general economic conditions and the Company’s overall financial condition.

The Company has targeted cash flow from operations to exceed net income in 2017. From 2000 to 2016, Watsco’s operating cash flow was approximately $1.9 billion compared to net income of approximately $1.8 billion, surpassing the Company’s stated goal of generating cash flow in excess of net income.

Conference Call Information

Date: July 25, 2017

Time: 10:00 a.m. (EDT)

Webcast: http://investors.watsco.com

Dial-in number: United States (844) 883-3908 / International (412) 317-9254



A replay of the conference call will be available on the Company’s website.

About Watsco

Watsco provides comfort to homes and businesses regardless of the outdoor climate. There are approximately 92 million central air conditioning and heating systems installed in the United States that have been in service more than 10 years. Older systems often operate below today’s government mandated energy efficiency and environmental standards. Watsco has an opportunity to accelerate the replacement of these systems at a scale greater than its competitors as the movement toward reducing energy consumption and its environmental impact continues. This is especially important since heating and cooling accounts for approximately half of the energy consumed in a typical U.S. home.

Watsco’s traditional sales channel is the industry’s largest and currently serves 88,000 contractor businesses through 562 locations in the United States, Canada, Mexico and Puerto Rico, and on an export basis to Latin America and the Caribbean. Watsco is a technology company, operating scalable platforms for mobile apps, e-commerce, business intelligence and supply chain. Strategic goals are to accelerate sales and profit growth, increase the speed and convenience of serving customers and to extend its reach into new geographies and sales channels. Watsco is also developing technologies to address the evolving buying habits of consumers in the digital economy. Over the long-term, Watsco believes its focus, scale and innovative culture offer significant advantages to address the consumer market, which is estimated to be $88 billion annually. Additional information about Watsco may be found at http://www.watsco.com.



This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “will,” “would,” “anticipate,” “expect,” “believe,” “plan,” “optimistic,” “goal” or “intend,” the negative of these terms and similar references to future periods. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive market, new housing starts and completions, capital spending in commercial construction, consumer spending and debt levels, regulatory and other factors, including, without limitation, the effects of supplier concentration, competitive conditions within Watsco’s industry, seasonal nature of sales of Watsco’s products, the ability of the Company to expand its business, insurance coverage risks and final GAAP adjustments. Forward-looking statements speak only as of the date the statement was made. Watsco assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except as required by applicable law. Detailed information about these factors and additional important factors can be found in the documents that Watsco files with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K.




Condensed Consolidated Results of Operations

(In thousands, except per share data)



     Quarter Ended June 30,     Six Months Ended June 30,  
     2017     2016     2017     2016  


   $ 1,275,924     $ 1,214,435     $ 2,148,019     $ 2,065,859  

Cost of sales

     965,646       922,574       1,619,185       1,561,551  













Gross profit

     310,278       291,861       528,834       504,308  

Gross profit margin

     24.3     24.0     24.6     24.4













SG&A expenses (1)

     180,930       174,271       350,787       336,050  













Operating income

     129,348       117,590       178,047       168,258  

Operating margin

     10.1     9.7     8.3     8.1













Interest expense, net

     1,647       1,054       2,902       2,040  













Income before income taxes

     127,701       116,536       175,145       166,218  

Income taxes

     36,854       35,112       50,530       50,620  













Net income

     90,847       81,424       124,615       115,598  

Less: net income attributable to noncontrolling interest

     17,091       16,803       24,678       25,440  













Net income attributable to Watsco

   $ 73,756     $ 64,621     $ 99,937     $ 90,158  













Diluted earnings per share:


Net income attributable to Watsco shareholders

   $ 73,756     $ 64,621     $ 99,937     $ 90,158  

Less: distributed and undistributed earnings allocated to non-vested (restricted) common stock

     6,186       5,251       8,374       7,302  













Earnings allocated to Watsco shareholders

   $ 67,570     $ 59,370     $ 91,563     $ 82,856  













Weighted-average Common and Class B common shares and equivalent shares used to calculate diluted earnings per share

     32,708,646       32,606,336       32,694,306       32,576,326  

Diluted earnings per share for Common and Class B common stock

   $ 2.07     $ 1.82     $ 2.80     $ 2.54  














(1) Selling, general and administrative expenses.




Condensed Consolidated Balance Sheets

(Unaudited, in thousands)


     June 30, 2017      December 31, 2016  

Cash and cash equivalents

   $ 51,034      $ 56,010  

Accounts receivable, net

     613,193        475,974  


     770,012        685,011  


     17,502        23,161  







Total current assets

     1,451,741        1,240,156  

Property and equipment, net

     92,255        90,502  

Goodwill, intangibles, net and other

     610,422        543,991  







Total assets

   $ 2,154,418      $ 1,874,649  







Accounts payable and accrued expenses

   $ 422,556      $ 314,688  

Current portion of long-term obligations

     1,880        200  







Total current liabilities

     424,436        314,888  

Borrowings under revolving credit agreement

     379,300        235,294  

Deferred income taxes and other liabilities

     70,322        72,719  







Total liabilities

     874,058        622,901  







Watsco’s shareholders’ equity

     1,018,665        1,005,828  

Non-controlling interest

     261,695        245,920  







Shareholders’ equity

     1,280,360        1,251,748  







Total liabilities and shareholders’ equity

   $ 2,154,418      $ 1,874,649  










Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)


     Six Months Ended June 30,  
     2017     2016  

Cash flow from operating activities:


Net income

   $ 124,615     $ 115,598  

Non-cash items

     21,677       21,099  

Changes in working capital

     (114,053     (94,764







Net cash provided by operating activities

     32,239       41,933  







Cash flow from investing activities:


Investment in unconsolidated entity

     (63,600     —    

Capital expenditures, net

     (10,237     (4,994







Net cash used in investing activities

     (73,837     (4,994







Cash flow from financing activities:


Net proceeds under revolving credit agreement

     144,006       22,025  

Proceeds from non-controlling interest for investment in unconsolidated entity

     12,720       —    

Dividends on Common and Class B Common stock

     (74,835     (60,164

Purchase of additional ownership from non-controlling interest

     (42,688     —    

Distributions to non-controlling interest

     (6,799     (7,114


     3,488       3,575  







Net cash provided by (used in) financing activities

     35,892       (41,678







Effect of foreign exchange rate changes on cash and cash equivalents

     730       54  







Net decrease in cash and cash equivalents

     (4,976     (4,685

Cash and cash equivalents at beginning of period

     56,010       35,229  







Cash and cash equivalents at end of period

   $ 51,034     $ 30,544  









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