Revenues Top $1 Billion Mark

Fourth Quarter Results Also Reach Record Levels

MIAMI, FLORIDA, February 16, 1999 - Watsco, Inc. (NYSE: WSO) today reported record operating results for the year and fourth quarter ended December 31, 1998.

Full Year 1998

For the full year, diluted earnings per share from continuing operations increased 32% to $.90 per share compared to $.68 in 1997. Revenue, including acquisitions, rose 59% to $1.008 billion and includes same store sales growth of 12%.

Operating profit grew 57% to $51.8 million and includes new locations which, in aggregate, operated at a loss during their initial year. Same store operating profit increased 16% in comparison to the 12% same store revenue growth rate achieved, highlighting leverage of the cost structure on increasing sales. Operating margin, on a same store basis, expanded to 5.4% in 1998 from 5.2% in 1997 from increased operating efficiency. Income from continuing operations increased 40% to $25.7 million.

"This year's record results again demonstrate the effectiveness of our growth strategy producing strong same store sales and operating profit comparisons as well as another successful year of earnings per share growth," said Albert H. Nahmad, Chairman and Chief Executive Officer.

Fourth Quarter of 1998

For the quarter, diluted earnings per share from continuing operations increased 25% to $.15 compared to $.12 in 1997. Revenue, including acquisitions, increased 34% to $248 million and includes same store sales growth of 8%.

Operating profit grew at a faster rate than revenue for the quarter, increasing 43% to $10.1 million. Income from continuing operations was $4.3 million, up 25% over the same period last year.

Operational Highlights

Watsco opened 18 new locations in various markets during 1998. Twelve locations were opened in current markets to enhance customer service and convenience or to expand geographic boundaries. Six new locations were also established to support the addition of new product lines. Also during 1998, various manufacturers of heating and air conditioning equipment granted Watsco operating units new distribution rights including American Standard Companies, Carrier Corporation, Goodman Manufacturing, International Comfort Products, Nordyne Corporation and York International Corporation.

Markets in which new distribution rights were granted include California, Arizona, Georgia, North Carolina, Oklahoma, Kansas, Missouri and Florida. In aggregate, new locations operated at a loss during 1998 as start-up expenses exceeded their gross margin contribution in the first year of establishment.

Mr. Nahmad stated, "In the last two years, we have been on an aggressive campaign of internal expansion, opening thirty-eight new locations. Despite the initial dilutive impact on earnings, we have maintained our historical earnings per share growth rate and are positioned better than ever to build market share. We believe 1999 will be the year in which we will realize the benefits of these investments. We will continue to evaluate new opportunities, but it is important that we focus on increasing our return on these new locations as they will be an important source of internal growth in the coming years."

Capital Structure

At December 31, 1998, Watsco's shareholders' equity was $274 million and borrowings under the company's revolving credit facility totaled $168 million, a 38% debt-to-total capitalization ratio. The Company's existing credit agreement provides borrowings on an unsecured basis of up to $260 million. Existing covenants allow for an expansion of this credit facility to over $400 million, subject to the approval of the syndicate of banks.

Barry Logan, Chief Financial Officer, commented, "Our strong balance sheet, available debt capital and cash flow will allow us to continue the expansion of our business and make acquisitions."

Acquisition Program

Watsco completed acquisitions of eleven HVAC/R distributors in 1998, adding 25 locations in 14 states and annualized revenue of $165 million. The most significant acquisition, Kaufman Supply Company, headquartered in Atlanta, Georgia, establishes Watsco as a leader in the manufactured housing segment of the HVAC/R industry. In January 1999, Watsco announced the acquisition of two New England-based distributors with 15 locations in seven states and annualized revenues of $61 million. These acquisitions establish Watsco as the largest distributor serving the New England market.

"The cornerstone of our acquisition program is to acquire highly successful companies with great management and then provide them with the resources necessary to help develop and execute their growth plans post-acquisition," Mr. Logan said. "Businesses acquired have achieved very powerful rates of internal growth once part of Watsco and we shall continue to identify and target other successful companies in our acquisition pipeline."

This release contains forward-looking statements which are made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additional information on factors that may affect the business and financial results of the Company can be found in filings of the Company with the Securities & Exchange Commission. All forward-looking statements should be considered in light of these risks and uncertainties.