Watsco (WSO) 8-K Watsco Sets Full-Year and Fourth Quarter Records

Exhibit 99.1

Watsco Sets Full-Year and Fourth Quarter Records

for Sales, Earnings, EPS and Cash Flow

Technology Investments and Culture of Innovation Continue

to Transform the HVAC Distribution Channel

MIAMI, FLORIDA – (BUSINESS WIRE), February 14, 2017 – Watsco, Inc. (NYSE: WSO) reported record results for the fourth quarter and year ended December 31, 2016.

Watsco also announced today that it has raised its ownership stake in Carrier Enterprise Northeast LLC, a joint venture with Carrier, to 80% for approximately $43 million in cash. The incremental investment builds on a transaction completed in November 2016, 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.

2016 Full-Year Results

Key performance metrics:

• Earnings per share increased 5% to a record $5.15

• Net income increased 6% to a record $183 million

• Operating income increased 3% to a record $346 million

• Operating income for U.S. locations (87% of sales) increased 6% (operating margins expanded 20 basis-points)

• Operating income for international locations (13% of sales) declined 14% (operating margins declined 120 basis-points)

• Operating cash flow of $8.52 per share, a 25% increase to a record $278 million

Sales trends:

• Sales increased 3% to a record $4.2 billion

• HVAC equipment increased 3% (66% of sales), including 4% growth in the U.S.

• Other HVAC products increased 1% (29% of sales)

• Commercial refrigeration products increased 6% (5% of sales)

Albert H. Nahmad, Watsco’s Chairman and CEO stated: “Watsco produced record results in a year of varying seasonal conditions in certain of our larger U.S. markets and lower international sales and profits due to a stronger U.S. dollar. This performance includes a 17% increase in technology costs for ouron-going investments designed to enhance the customer-experience, to optimize the speed and efficiency of our operations and to compete in ways and at a scale that sets us apart in the marketplace.”

Mr. Nahmad added: “Watsco generated record cash flow of $278 million in 2016, or $8.52 per share, which exceeded net income and represents a 25% increase over last year. Along with our continued focus to drive consistently strong cash flow, we improved inventory turns by approximately 30 basis-points through our recent launch of new supply-chain technologies. We are pleased with the early progress for what will be a long-term project to optimize working capital efficiency while enhancing product availability.”

Fourth Quarter Results

Key performance metrics:

• Earnings per share increased 8% to a record 81 cents

• Net income increased 12% to a record $30 million

• Operating income increased 7% to a record $58 million (operating margins expanded 40 basis-points to record level)

• Operating income in U.S. locations increased 11% (operating margins expanded 50 basis-points)

• Operating income international locations decreased 4% (operating margins declined 30 basis-points)

• Operating cash flow increased 8% to a record $131 million

Sales trends:

• Sales increased 1% to a record $914 million

• HVAC equipment increased 2% (66% of sales), including 3% growth in the U.S.

• Other HVAC products declined 1% (29% of sales)

• Commercial refrigeration products increased 3% (5% of sales)

Mr. Nahmad added: “Watsco delivered record performance during the fourth quarter, reflectingmid-single-digit growth in most markets, offset by unfavorable seasonal conditions in certain regions and a decline in international locations. We are focused on achieving another record year in 2017 while driving the adoption and advancement of our technologies with our customers and within our organization.”

It is important to note that the first and fourth quarters of each calendar year are highly seasonal due to the nature and timing of the replacement market for air conditioning systems, which is strongest in the second and third quarters. Accordingly, the Company’s fourth quarter financial results are disproportionately affected by this seasonality.

Technology Strategy

Watsco has established itself as the leader in the HVAC distribution industry and produced a 21% compounded annual total-shareholder-return over the last 25 years. A variety of scalable technologies have been launched to transform Watsco into a modern, data-based company to continue its outperformance in the digital era. Watsco’s goals with these technology programs are to further strengthen its leadership position, accelerate sales and profit growth, increase the speed, convenience and efficiency in serving customers and to extend Watsco’s reach into new geographies and sales channels.

Since 2012, Watsco’s technology team has grown from approximately 60 employees to 175 employees. Financial performance in 2016 reflects an increase of $3.3 million in technology-related costs (6 cents diluted per share). The present annualrun-rate for technology related costs is approximately $23 million.

Examples of innovations that Watsco has launched to enhance the buying experience for its 88,000 customers and the service capabilities of personnel at its 565 locations include:

• Mobile apps,e-commerce and otheron-line tools using the industry’s most data-rich catalog of product information.

• Business intelligence and data analytics to enable more insightful decision-making by more than 600+ P&L managers across the company.

• Supply chain optimization to improve fill-rates, increase inventory turns and reduce real estate requirements and other operational costs over the long-term.

• Comprehensive order fulfillment software and implementation of wireless warehouses to improve operational efficiency for 7+ million annual customer transactions.

A summary of key performance indicators for the company’s primary technology platforms is as follows:

E-Commerce / App Usage	Progress in 2016
iOS or Android app users	220% increase in weekly active users
Products (SKUs) mastered	71% increase to over 500,000 SKUs
E-commerce transactions	127% increase inon-line transactions
Line items per orderon-line versusin-store	28% more line items per order

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Business Intelligence (BI) Platform
Increase in internal BI users Average number of BI queries per day per user Total user inquiries during the year	12% increase to over 1,500 users 31% increase in queries per user Over 225,000 queries processed
SalesmanBI-user performance versusnon-user	7-times better sales performance
Store managerBI-user performance versusnon-user	5-times better sales performance
Supply Chain / Warehouse Optimization
Total company inventory turns Inventory turns for fully-adopted locations Service levels for fully-adopted locations Number of wireless locations Locations with digitized order fulfillment software Locations with express pickup Reduction of real estate requirements	32 basis-point improvement in turns 80 basis-point improvement in turns 300 basis-point improvement to 97% 359 locations now functioning 150 locations versus 25 locations last year 68 locations (began in late 2016) 500,000 square foot reduction

A.J. Nahmad, Watsco’s President said: “We are pleased to have made progress across all of these fronts. Our customers and organization continue to embrace technology though we are still in the early stages. We believe our efforts and innovative culture will ultimately redefine how the HVAC distribution channel will serve customers and transact business.”

Cash Flow & Dividends

Operating cash flow for the full year was a record $278 million or $8.52 per diluted share and for the fourth quarter was a record $131 million. Since 2000, 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.

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. Dividends paid in 2016 increased 30% to $128 million. Watsco recently raised its annual dividend rate 24% to $4.20 per share. 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.

Other

2016 full-year results include income tax benefits of $2.9 million or 8 cents per diluted share relating to the Company’s early adoption of Accounting Standards Update2016-09,ImprovementstoEmployee-Share-BasedPaymentAccounting, issued by the Financial Accounting Standards Board on March 30, 2016.

Conference Call Information

Date & time: February 14, 2017 at 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.

Use ofNon-GAAP Financial Information

In this release, the Company disclosesnon-GAAP measure of “operating cash flow per share”, which is determined by dividing “net cash provided by operating activities” as shown in the attached Condensed Consolidated Statements of Cash Flows by the “weighted–average Common and Class B common shares and equivalent shares used to calculated earnings per share” as shown in the attached Condensed Consolidated

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Results of Operations. The Company believes that this information provides a meaningful comparison and important correlation of the Company’s financial performance and cash flow generation on a per share basis in order to further assess overall performance. This measure should not be considered an alternative to measurements required by accounting principles generally accepted in the United States (GAAP).

About Watsco

Watsco improves indoor living and working environments with air conditioning and heating solutions that provide comfort regardless of the outdoor climate. There are approximately 89 million central air conditioning and heating systems installed in the United States that have been in service for 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 our 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 through one of its 565 locations in the United States, Canada, Mexico and Puerto Rico, and on an export basis to Latin America and the Caribbean. This network has been built over the last 25 years and serves 88,000 active customers. Watsco is developing and investing in technologies to enable sales viae-commerce,on-line marketplaces and through the retail sales channel. As the industry leader, we believe that significant growth potential remains given that the marketplace for HVAC/R products at the consumer level is estimated to be $88 billion annually. Additional information about Watsco may be found athttp://www.watsco.com.

Cautionary Statement Regarding Forward-Looking Statements

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, 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 Form10-K, Form10-Q andForm 8-K.

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WATSCO, INC.

Condensed Consolidated Results of Operations

(In thousands, except per share data)

(Unaudited)

	Quarter Ended December 31,						Year Ended December 31,
	2016			2015			2016			2015
Revenues	$	913,611		$	903,816		$	4,220,702		$	4,113,239
Cost of sales		685,539			681,775			3,186,118			3,105,882
Gross profit		228,072			222,041			1,034,584			1,007,357
Gross profit margin		25.0	%		24.6	%		24.5	%		24.5	%
SG&A expenses		169,998			167,840			688,952			670,609
Operating income		58,074			54,201			345,632			336,748
Operating margin		6.4	%		6.0	%		8.2	%		8.2	%
Interest expense, net		677			1,021			3,713			5,547
Income before income taxes		57,397			53,180			341,919			331,201
Income taxes		17,530			16,841			105,936			104,677
Net income		39,867			36,339			235,983			226,524	��
Less: net income attributable tonon-controlling interest		10,314			9,849			53,173			53,595
Net income attributable to Watsco	$	29,553		$	26,490		$	182,810		$	172,929
Diluted earnings per share:
Net income attributable to Watsco shareholders	$	29,553		$	26,490		$	182,810		$	172,929
Less: distributed and undistributed earnings allocated tonon-vested restricted common stock		3,050			2,107			14,801			13,626
Earnings allocated to Watsco shareholders	$	26,503		$	24,383		$	168,009		$	159,303
Weighted-average Common and Class B common shares and equivalent shares used to calculate diluted earnings per share		32,662,341			32,513,121			32,616,504			32,480,356
Diluted earnings per share for Common and Class B common stock	$	0.81		$	0.75		$	5.15		$	4.90

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WATSCO, INC.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands)

	December 31,		December 31,
	2016		2015
Cash and cash equivalents	$	56,010	$	35,229
Accounts receivable, net		475,974		451,079
Inventories		685,011		673,967
Other		23,161		20,990
Total current assets		1,240,156		1,181,265
Property and equipment, net		90,502		62,715
Goodwill, intangibles, net and other		543,991		544,462
Total assets	$	1,874,649	$	1,788,442
Accounts payable and accrued expenses	$	314,688	$	270,117
Current portion of long-term obligations		200		184
Total current liabilities		314,888		270,301
Borrowings under revolving credit agreement		235,294		245,300
Deferred income taxes and other liabilities		72,719		69,120
Total liabilities		622,901		584,721
Watsco’s shareholders’ equity		1,005,828		957,310
Non-controlling interest		245,920		246,411
Shareholders’ equity		1,251,748		1,203,721
Total liabilities and shareholders’ equity	$	1,874,649	$	1,788,442

WATSCO, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

	Year Ended December 31,
	2016			2015
Cash flow from operating activities:
Net income	$	235,983		$	226,524
Non-cash items		40,751			38,142
Changes in working capital		1,022			(43,283	)
Net cash provided by operating activities		277,756			221,383
Cash flow from investing activities:
Capital expenditures, net		(42,833	)		(22,938	)
Cash flow from financing activities:
Dividends on Common and Class B Common stock		(127,604	)		(98,532	)
Net repayments under revolving credit agreement		(10,006	)		(56,256	)
Distributions tonon-controlling interest		(38,900	)		(39,754	)
Purchase of additional ownership fromnon-controlling interest		(42,909	)		—
Other		5,503			8,222
Net cash used in financing activities		(213,916	)		(186,320	)
Effect of foreign exchange rate changes on cash and cash equivalents		(226	)		(1,343	)
Net increase in cash and cash equivalents		20,781			10,782
Cash and cash equivalents at beginning of year		35,229			24,447
Cash and cash equivalents at end of year	$	56,010		$	35,229

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