Watsco (WSO) 8-K Watsco Second Quarter EPS Climbs 27% to New Record

Exhibit 99.1

Watsco Second Quarter EPS Climbs 27% to New Record

$1.03 EPS for Quarter Achieved by 16% Higher Revenues

and Expanded Operating Margins

COCONUT GROVE, FLORIDA, July 20, 2006 – Watsco, Inc. (NYSE:WSO), the largest distributor of air conditioning and heating products, today announced record operating results for the second quarter and six months ended June 30, 2006.

Earnings per share for the second quarter increased 27% to a record $1.03 per diluted share with net income increasing by 28% to a record $28.7 million, compared to 81 cents per diluted share on net income of $22.4 million in 2005. During the quarter, revenues grew 16%, or $69 million, to a record $512 million, with revenue growth of 15% on a same-store basis. Gross profit grew 19%, or $21 million, to $132 million with gross profit margin improving 70 basis-points to 25.9%. Operating income advanced 27%, or $10.0 million, to a record $47.2 million with operating margins expanding 80 basis-points to a record 9.2%.

For the first six months of 2006, earnings per share increased 32% to a record $1.50 per diluted share with net income increasing by 32% to a record $41.8 million, compared to $1.14 per diluted share on net income of $31.6 million in the comparable period of 2005. Revenues grew 15%, or $117 million, to a record $906 million, with revenue growth of 14% on a same-store basis. Gross profit grew 17%, or $34 million, to $233 million with gross profit margin advancing 50 basis-points to 25.7%. Operating income increased 30%, or $16.1 million, to a record $69.0 million with operating margins expanding 90 basis-points to a record 7.6%.

Albert H. Nahmad, Watsco’s President and Chief Executive Officer, stated: “This quarter’s financial performance is the most outstanding in Watsco’s history. Strong demand for our products, higher prices related to the launch of new, higher-efficiency air conditioning systems and improved margins combined to produce terrific top and bottom-line performance. New higher-efficiency products have been well-accepted by the market and even more innovative products will be available in the future to provide a greater number of consumer choices to offset increasing energy costs.”

Mr. Nahmad added: “Investment continues in building Watsco’s network and during the last year we added 23 new locations and expanded product offerings. We are focused on our goal of building the industry’s broadest and most effective network available that serves our contractor customers. The potential is huge as Watsco presently enjoys only 7-8% market share of the estimated $25 billion market for our products.”

There are an estimated 120 million single-family homes in the United States, most of which have central air conditioning and heating systems. Eventually, these systems will wear out and require repair or replacement. Watsco’s focused strategy provides the products, technical solutions and convenience that contractors require to satisfy the needs of homeowners and businesses that depend on the comfort and energy-efficiency provided by HVAC systems.

Watsco will be holding its investor conference call today, July 20, 2006 at 11:00 a.m. Eastern Time. Shareholders interested in participating may call (877) 391-0532. Internet users can listen to a live webcast of the conference call on the Investor Relations section of Watsco’s website athttp://www.watsco.com.

Watsco is the largest distributor of air conditioning, heating and refrigeration equipment and related parts and supplies in the distribution segment of the HVAC industry, currently operating 362 locations serving over

38,000 customers in 32 states. The Company’s goal is to build a national network of locations that provide the finest service and product availability for HVAC contractors, assisting and supporting them as they serve the country’s homeowners and businesses. Additional information about Watsco may be found on the Internet athttp://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, 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, 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. Detailed information about these factors and additional important factors can be found in the documents that Watsco files from time to time with the Securities and Exchange Commission, such as Form 10-K, Form 10-Q and Form 8-K.

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WATSCO, INC.

Consolidated Results of Operations

(In thousands, except per share data)

(Unaudited)

	Quarter Ended June 30,						Percentage Change		Six-Months Ended June 30,						Percentage Change
	2006			2005					2006			2005
Revenues	$	512,029		$	443,030		16	%	$	906,336		$	788,982		15	%
Cost of sales		379,541			331,505					673,768			590,032
Gross profit		132,488			111,525		19	%		232,568			198,950		17	%
Gross profit margin		25.9	%		25.2	%				25.7	%		25.2	%
SG&A expenses		85,324			74,410		15	%		163,562			146,026		12	%
Operating income		47,164			37,115		27	%		69,006			52,924		30	%
Operating margin		9.2	%		8.4	%				7.6	%		6.7	%
Interest expense, net		1,120			978		15	%		1,919			2,023		(5	)%
Income before income taxes		46,044			36,137		27	%		67,087			50,901		32	%
Income taxes		17,296			13,731					25,292			19,347
Net income	$	28,748		$	22,406		28	%	$	41,795		$	31,554		32	%
Earnings per share for Common and Class B common stock:
Basic	$	1.10		$	0.86		28	%	$	1.60		$	1.21		32	%
Diluted	$	1.03		$	0.81		27	%	$	1.50		$	1.14		32	%
Weighted average Common and Class B common shares and equivalent shares used to calculate earnings per share:
Basic		26,186			26,044					26,154			25,989
Diluted		27,891			27,771					27,937			27,663

(Note: Information in the attached press release referring to “same-store basis” excludes the effects of locations acquired or locations opened or closed during the prior twelve months.)

Condensed Consolidated Balance Sheets

(In thousands)

	June 30, 2006		December 31, 2005
	(Unaudited)
Cash and cash equivalents	$	7,204	$	27,650
Accounts receivable, net		228,723		191,747
Inventories		338,198		266,543
Other		10,426		8,051
Total current assets		584,551		493,991
Property and equipment, net		17,804		17,244
Other		168,029		167,496
Total assets	$	770,384	$	678,731
Accounts payable and accrued expenses	$	203,271	$	169,219
Current portion of long-term obligations		10,080		10,079
Total current liabilities		213,351		179,298
Borrowings under revolving credit agreement		60,000		30,000
Long-term notes, net of current portion		—		10,000
Other long-term obligations, net of current portion		10,940		8,783
Total liabilities		284,291		228,081
Shareholders’ equity		486,093		450,650
Total liabilities and shareholders’ equity	$	770,384	$	678,731

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