ACR Group Acquires Beaumont A/C Supply Inc. and Continues to Consolidate the $30 Plus Billion HVACR Distribution Industry.

HOUSTON--(BUSINESS WIRE)--Jan. 27, 1999--ACR Group Inc. (Nasdaq:ACRG), announced today that it has acquired Beaumont A/C Supply Inc., a Beaumont, Texas-based wholesale distributor of air conditioning equipment and supplies. Beaumont A/C Supply becomes part of ACR Supply Inc., an operating company of ACR Group (ACRG). ACRG is a rapidly growing wholesale distributor of air-conditioning, heating and refrigeration equipment and supplies with 36 locations in 9 states, generating over $100 million in annual sales.

Even though Beaumont A/C Supply is a fairly small operation operating only in East Texas, the acquisition is very significant to ACRG. According to Alex Trevino Jr., CEO of ACRG, "The acquisition of Beaumont A/C Supply is a great strategic fit for us. It has successfully built long-term relationships in the institutional and industrial market segments, where ACRG has yet to make inroads. Since these markets have higher barriers of entry, they are also much more profitable. This acquisition will therefore increase the profitability of ACR Supply and ACRG."

More importantly, this acquisition is about acquiring talent. Beaumont A/C Supply is an entrepreneur-driven operation, owned and operated by Mike Kothawala, an industry veteran with over 27 years of experience in East Texas. Kothawala will stay on with ACR Supply in a sales and marketing capacity.

"We also want to transfer Kothawala's expertise in working with these previously untapped, high profit market segments to other ACR Supply branches, as well as to our other eight operating companies. This can give every branch a significant boost in its overall profitability," predicts Trevino.

The distribution segment of the HVACR industry has been experiencing consolidation for a number of years, but is still quite diffuse. Only three of the leading HVACR wholesale distributors are publicly traded: Watsco (NYSE:WSO) -- the market leader with less than 5% market share; Pameco (NYSE:PCN); and ACR Group Inc. (Nasdaq:ACRG). These three companies are uniquely positioned to utilize their low-cost capital to acquire smaller competitors, further reducing their costs through economies of scale. This consolidation can also allow them to rapidly increase their earnings per share.

Besides smaller private distributors, the big three face competition from several publicly traded, diversified distributors like W.W. Grainer (NYSE:GWW), Noland Co. (Nasdaq:NOLD) and Hughes Supply (NYSE:HUG). These companies' broad product lines include an assortment of HVACR equipment and supplies.

ACR Group Inc. began acquiring and operating businesses in the wholesale distribution of heating, ventilating, air conditioning and refrigeration equipment and supplies in 1990. Since then, the company has acquired or started nine additional distribution companies, giving it 36 branch operations in California, Nevada, New Mexico, Colorado, Texas, Louisiana, Tennessee, Georgia and Florida. ACRG plans to continue its expansion through both acquisitions and internal growth in the Sunbelt and any other geographic areas with high rates of economic growth.

Certain statements in this release are forward-looking. Although ACR Group Inc. (the Company) believes its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. For factors that may cause actual results to differ materially from expectations and underlying assumptions, see reports by the Company filed with the Securities and Exchange Commission. Merger Communications (Merger) is a media relations firm employed by the Company. The statements and opinions presented here represent the views of the Company, not Merger, as the release is based on the information provided by the Company. Merger and the Company believe that all information in this release has been obtained from sources considered reliable, but can not guarantee that the statements presented herein are accurate or complete. Merger's compensation for its media relations services consists of a result-based service fee and options. Merger can have a long position in the securities of the companies in which it distributes information for media use, and Merger may be buying or selling securities in the course of its regular business.