MIAMI--(BUSINESS WIRE)--July 23, 2003--Watsco, Inc. (NYSE:WSO) announced today record operating performance for the second quarter and for the first six months of 2003.

For the quarter, diluted earnings per share improved 13% to a record 52 cents on record net income of $13.4 million. Operating profit advanced 7% to $22.9 million for the quarter, with operating margins expanding 20 basis-points to a record 6.7%. Gross profit increased 4% to $84.3 million with gross selling margins rising 30 basis-points to 24.8%. Interest expense declined 18% or $.3 million from a 16% reduction in average daily borrowings. Shares used in the computation of diluted earnings per share declined 6% primarily reflecting the impact of the Company's share repurchase program.

Sales during the second quarter increased 3% to $340.5 million, including a 3% same-store sales increase in residential and light-commercial products and a decline in sales to the manufactured housing market. Sales results also include a contribution of $10.2 million from 52 locations that were acquired during the second quarter.

For the six months, diluted earnings per share rose 18% to a record 67 cents on record net income of $17.2 million. Operating profit grew 8% to $30.4 million during the first-half of 2003, with operating margins expanding 30 basis-points to 5.1%. Gross profit increased 3% to $148.1 million with gross selling margins improving 30 basis-points to 24.8%. Interest expense decreased 19% or $.7 million from a 17% reduction in average daily borrowings. Shares used in the computation of diluted earnings per share declined 5% during the period.

Sales for the first six months of 2003 increased 2% to $597.9 million, including a 3% same-store sales increase in residential and light-commercial products and a decline in sales to the manufactured housing market. Sales results also include the contribution from the 52 acquired locations.

Cash flow from operations was $13.2 million for the quarter and $12.2 million year to date and is expected to grow substantially by the end of 2003 as the second half of the year is typically a strong seasonal period for cash flow. Long-term debt at June 30, 2003 declined 18% to $80.0 million compared to $97.7 million a year ago. The Company's debt-to-total capitalization ratio improved to 19% at June 30, 2003 versus 23% a year ago.

Albert Nahmad, Watsco's President and Chief Executive Officer stated, "Watsco is operating at record levels of performance in earnings per share and net income with expanded operating margins and continued cash flow during the first-half of 2003. These trends are expected to continue and result in another solid year."

Watsco is the nation's largest independent distributor of air conditioning, heating and refrigeration equipment and related products in the distribution segment of the HVAC/R industry, currently operating 324 locations serving customers in 31 states. Additional information about Watsco may be found on the Internet at http://www.watsco.com.

This document includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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 and regulatory factors. More detailed information about those factors is contained in Watsco's filings with the Securities and Exchange Commission.

                             WATSCO, INC.
             Condensed Consolidated Results of Operations
                 (In thousands, except per share data)
                              (Unaudited)

                           Quarter Ended           Six Months Ended
                              June 30,                  June 30,
                           -------------            ----------------
                          2003      2002              2003     2002
                          ----      ----              ----     ----

Revenue                 $340,516 $331,170 $597,914 $587,985
Cost of sales            256,172  249,900            449,784  443,740
                         -------  -------            -------  -------
Gross profit              84,344   81,270            148,130  144,245
SG&A expenses             61,468   59,832            117,700  116,176
                         -------  -------            -------  -------
Operating profit          22,876   21,438             30,430   28,069
Interest expense, net      1,565    1,914              3,077    3,781
                         -------  -------            -------  -------
Income before income
 taxes                    21,311   19,524             27,353   24,288
Income taxes               7,885    7,058             10,121    8,780
                         -------  -------            -------  -------
Net income              $ 13,426 $ 12,466 $ 17,232 $ 15,508
                         =======  =======            =======  =======

Basic earnings per
 share                  $   0.54 $   0.48 $   0.69 $   0.60
Diluted earnings per
 share                  $   0.52 $   0.46 $   0.67 $   0.57


Weighted average shares
   used to calculate:
Basic earnings per
 share                    25,016   26,018             25,069   25,928
Diluted earnings per
 share                    25,786   27,328             25,787   27,181


Segment Information:

                                   Quarter Ended     Six Months Ended
                                      June 30,           June 30,
                                 ------------------ ------------------
Revenue:                             2003     2002      2003     2002
                                 -------- --------- -------- ---------
Distribution                     $334,099 $322,837 $584,831 $571,629
Staffing                            6,417    8,333    13,083   16,356
                                 -------- --------- -------- ---------
Total                            $340,516 $331,170 $597,914 $587,985
                                 ======== ========= ======== =========

Operating profit (loss):
Distribution                      $26,336 $24,307 $37,572 $33,577
Staffing                             (350)    (333)     (759)    (621)
Corporate                          (3,110)  (2,536)   (6,383)  (4,887)
                                 --------- -------- --------- --------
Total                             $22,876 $21,438 $30,430 $28,069
                                 ========= ======== ========= ========


                             Watsco, Inc.
                 Condensed Consolidated Balance Sheets
                            (In thousands)

                                                    June     December
                                                     30,        31,
                                                    2003       2002
                                                 (unaudited)
                                                 ----------  ---------
Cash and cash equivalents                          $ 12,304 $ 25,880
Accounts receivable, net                            168,425   129,396
Inventories                                         215,487   176,407
Other current assets                                  9,332    13,878
                                                 ----------  ---------
  Total current assets                              405,548   345,561
Property and equipment, net                          24,182    25,850
Other non-current assets                            136,005   132,308
                                                 ----------  ---------
  Total assets                                     $565,735 $503,719
                                                 ==========  =========

Accounts payable and accrued liabilities           $135,891 $ 86,180
Current portion of long-term obligations                239       272
                                                 ----------  ---------
                                                    136,130    86,452
Borrowings under revolving
  credit agreement                                   50,000    50,000
Long-term notes                                      30,000    30,000
Other long-term obligations                           6,382     8,066
                                                 ----------  ---------
  Total liabilities                                 222,512   174,518

Shareholders' equity                                343,223   329,201
                                                 ----------  ---------
     Total liabilities and shareholders' equity    $565,735 $503,719
                                                 ==========  =========

    CONTACT: Watsco, Inc., Coconut Grove, FL
             Barry S. Logan, 305/714-4102
             Fax: 305/858-4492
             e-mail: blogan@watsco.com http://www.watsco.com

    SOURCE: Watsco, Inc.