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8-K - 8-K - COMFORT SYSTEMS USA INCa15-10217_18k.htm
EX-99.2 - EX-99.2 - COMFORT SYSTEMS USA INCa15-10217_1ex99d2.htm

Exhibit 99.1

 

 

CONTACT:

William George

675 Bering Drive, Suite 400

 

Chief Financial Officer

Houston, Texas 77057

 

713-830-9600

713-830-9600

 

 

713-830-9696

 

FOR IMMEDIATE RELEASE

 

COMFORT SYSTEMS USA REPORTS FIRST QUARTER 2015 RESULTS

 

- Improved Earnings; Record First Quarter Free Cash Flow -

 

Houston, TX — April 29, 2015 — Comfort Systems USA, Inc. (NYSE: FIX), a leading provider of commercial, industrial and institutional heating, ventilation and air conditioning (“HVAC”) services, today announced net income attributable to Comfort Systems USA of $5,066,000 or $0.13 per diluted share, for the quarter ended March 31, 2015, as compared to $375,000 or $0.01 per diluted share, for the quarter ended March 31, 2014.

 

Brian Lane, Comfort Systems USA’s President and Chief Executive Officer, said, “We are pleased to announce strong results for the first quarter of 2015, including much improved earnings and a 15% increase in revenue compared to the first quarter of 2014.  These improvements were achieved by our dedicated team members across the United States, and reflect solid execution combined with improving conditions in many of our markets.”

 

The Company reported revenue of $369,547,000 in the current quarter.  On a same-store basis, the Company reported revenue of $354,173,000 as compared to $321,381,000 in 2014.  The Company reported free cash flow of $16,998,000 in the current quarter, as compared to negative $12,449,000 in 2014.  Backlog as of March 31, 2015 was $718,031,000 as compared to $757,804,000 as of December 31, 2014.  On a same-store basis, backlog was $669,856,000 as of March 31, 2015 as compared to $612,335,000 as of March 31, 2014.

 

Mr. Lane concluded, “Our backlog is experiencing good underlying trends.  Although our backlog will fluctuate from quarter to quarter due to seasonality and the timing of projects, we currently anticipate gradual strengthening in our business activity levels.  We also benefitted from exceptionally strong cash flow, and are reporting our first positive first quarter free cash flow since 2003.  Overall, and especially in light of our results this quarter and our sense that our markets are gradually strengthening, we look forward to a profitable and successful 2015.”

 

As previously announced, the Company will host a webcast and conference call to discuss its financial results and position in more depth on Thursday, April 30, 2015 at 10:30 a.m. Central Time.  The call-in number for this conference call is 1-888-713-4205 and enter 60517038 as the passcode.  Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=P73E3WEAW.  The Company anticipates that an accompanying slide presentation will also be available under the Investor tab.  Pre-registrants will be issued a pin number to use when dialing in to the live call, which will provide quick access to the conference by bypassing the operator upon connection.  The call can also be accessed on the Company’s website at www.comfortsystemsusa.com under the Investor tab.  A replay of the entire call will be available until 11:59 p.m. Central Time, Thursday, May 7, 2015 by calling 1-888-286-8010 with the conference passcode of 57414871, and will also be available on our website on the next business day following the call.

 



 

Comfort Systems USAÒ is a premier provider of business solutions addressing workplace comfort, with 90 locations in 85 cities around the nation.  For more information, visit the Company’s website at www.comfortsystemsusa.com.

 

Certain statements and information in this press release may constitute forward-looking statements regarding our future business expectations, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” or other similar expressions are intended to identify forward-looking statements, which are generally not historic in nature. These forward-looking statements are based on the current expectations and beliefs of Comfort Systems USA, Inc. and its subsidiaries (collectively, the “Company”) concerning future developments and their effect on the Company. While the Company’s management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting the Company will be those that it anticipates. All comments concerning the Company’s expectations for future revenues and operating results are based on the Company’s forecasts for its existing operations and do not include the potential impact of any future acquisitions. The Company’s forward-looking statements involve significant risks and uncertainties (some of which are beyond the Company’s control) and assumptions that could cause actual future results to differ materially from the Company’s historical experience and its present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the use of incorrect estimates for bidding a fixed-price contract; undertaking contractual commitments that exceed the Company’s labor resources; failing to perform contractual obligations efficiently enough to maintain profitability; national or regional weakness in construction activity and economic conditions; financial difficulties affecting projects, vendors, customers, or subcontractors; the Company’s backlog failing to translate into actual revenue or profits; failure of third party subcontractors and suppliers to complete work as anticipated;  difficulty in obtaining or increased costs associated with bonding and insurance; impairment to goodwill; errors in the Company’s percentage-of-completion method of accounting; the result of competition in the Company’s markets; the Company’s decentralized management structure; material failure to comply with varying state and local laws, regulations or requirements; debarment from bidding on or performing government contracts; shortages of labor and specialty building materials; retention of key management; seasonal fluctuations in the demand for HVAC systems; the imposition of past and future liability from environmental, safety, and health regulations including the inherent risk associated with self-insurance; adverse litigation results; an increase in our effective tax rate; an information technology failure or cyber security breach; and other risks detailed in our reports filed with the Securities and Exchange Commission.

 

For additional information regarding known material factors that could cause the Company’s results to differ from its projected results, please see its filings with the SEC, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.

 

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.

 

— Financial tables follow —

 



 

Comfort Systems USA, Inc.

Consolidated Statements of Operations

For the Three Months Ended March 31, 2015 and 2014

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

(unaudited)

 

 

 

2015

 

%

 

2014

 

%

 

Revenue

 

$

369,547

 

100.0

%

$

321,381

 

100.0

%

Cost of services

 

304,859

 

82.5

%

269,232

 

83.8

%

Gross profit

 

64,688

 

17.5

%

52,149

 

16.2

%

 

 

 

 

 

 

 

 

 

 

SG&A

 

53,696

 

14.5

%

50,385

 

15.7

%

Gain on sale of assets

 

(176

)

 

(133

)

 

Operating income

 

11,168

 

3.0

%

1,897

 

0.6

%

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(504

)

(0.1

)%

(325

)

(0.1

)%

Changes in the fair value of contingent earn out obligations

 

 

 

130

 

 

Other income (expense)

 

18

 

 

68

 

 

Income before income taxes

 

10,682

 

2.9

%

1,770

 

0.6

%

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

3,793

 

 

 

692

 

 

 

Income from continuing operations

 

6,889

 

1.9

%

1,078

 

0.3

%

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of income tax benefit of $— and $10

 

 

 

 

(15

)

 

 

Net income including noncontrolling interests

 

6,889

 

1.9

%

1,063

 

0.3

%

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

1,823

 

 

 

688

 

 

 

Net income attributable to Comfort Systems USA, Inc.

 

$

5,066

 

1.4

%

$

375

 

0.1

%

 

 

 

 

 

 

 

 

 

 

Income per share attributable to Comfort Systems USA, Inc.:

 

 

 

 

 

 

 

 

 

Basic—

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.14

 

 

 

$

0.01

 

 

 

Loss from discontinued operations

 

 

 

 

 

 

 

Net income

 

$

0.14

 

 

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted—

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.13

 

 

 

$

0.01

 

 

 

Loss from discontinued operations

 

 

 

 

 

 

 

Net income

 

$

0.13

 

 

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing income per share:

 

 

 

 

 

 

 

 

 

Basic

 

37,281

 

 

 

37,582

 

 

 

Diluted

 

37,605

 

 

 

37,890

 

 

 

 

Note 1:  The diluted earnings per share data presented above reflects the dilutive effect, if any, of stock options and contingently issuable restricted stock which were outstanding during the periods presented.

 



 

Supplemental Non-GAAP Information — Adjusted Earnings Before Interests, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) — (Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2015

 

%

 

2014

 

%

 

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

$

6,889

 

 

 

$

1,063

 

 

 

Discontinued operations

 

 

 

 

15

 

 

 

Income taxes

 

3,793

 

 

 

692

 

 

 

Other expense (income), net

 

(18

)

 

 

(68

)

 

 

Changes in the fair value of contingent earn-out obligations

 

 

 

 

(130

)

 

 

Interest expense, net

 

504

 

 

 

325

 

 

 

Gain on sale of assets

 

(176

)

 

 

(133

)

 

 

Depreciation and amortization

 

5,623

 

 

 

4,654

 

 

 

Adjusted EBITDA

 

$

16,615

 

4.5

%

$

6,418

 

2.0

%

 

Note 1:  The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income including noncontrolling interests, excluding discontinued operations, income taxes, other expense (income), net, changes in the fair value of contingent earn-out obligations, interest expense, net, gain on sale of assets, and depreciation and amortization.  Other companies may define Adjusted EBITDA differently. Adjusted EBITDA is presented because it is a financial measure that is frequently requested by third parties.  However, Adjusted EBITDA is not considered under generally accepted accounting principles as a primary measure of an entity’s financial results, and accordingly, Adjusted EBITDA should not be considered an alternative to operating income, net income, or cash flows as determined under generally accepted accounting principles and as reported by the Company.

 

Comfort Systems USA, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

March 31,

 

December 31,

 

 

 

2015

 

2014

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

38,892

 

$

32,064

 

Accounts receivable, net

 

306,864

 

303,575

 

Costs and estimated earnings in excess of billings

 

31,300

 

27,620

 

Assets related to discontinued operations

 

176

 

176

 

Other current assets

 

45,574

 

49,757

 

Total current assets

 

422,806

 

413,192

 

Property and equipment, net

 

55,640

 

55,759

 

Goodwill

 

143,569

 

140,341

 

Identifiable intangible assets, net

 

46,012

 

45,666

 

Other noncurrent assets

 

10,777

 

10,792

 

Total assets

 

$

678,804

 

$

665,750

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

 

$

 

Current maturities of long-term capital lease obligations

 

299

 

317

 

Accounts payable

 

109,478

 

106,211

 

Billings in excess of costs and estimated earnings

 

82,306

 

77,446

 

Liabilities related to discontinued operations

 

263

 

263

 

Other current liabilities

 

100,475

 

98,400

 

Total current liabilities

 

292,821

 

282,637

 

Long-term debt

 

37,000

 

39,500

 

Long-term capital lease obligations

 

463

 

529

 

Other long-term liabilities

 

21,333

 

21,691

 

Total liabilities

 

351,617

 

344,357

 

Comfort Systems USA, Inc. stockholders’ equity

 

310,293

 

306,281

 

Noncontrolling interests

 

16,894

 

15,112

 

Total stockholders’ equity

 

327,187

 

321,393

 

Total liabilities and stockholders’ equity

 

$

678,804

 

$

665,750

 

 



 

Selected Cash Flow Data (in thousands):

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

(unaudited)

 

 

 

2015

 

2014

 

Cash provided by (used in):

 

 

 

 

 

Operating activities

 

$

20,415

 

$

(8,784

)

Investing activities

 

$

(8,767

)

$

(7,665

)

Financing activities

 

$

(4,820

)

$

5,045

 

 

 

 

 

 

 

Free cash flow:

 

 

 

 

 

Cash from operating activities

 

$

20,415

 

$

(8,784

)

Purchases of property and equipment

 

(3,623

)

(3,882

)

Proceeds from sales of property and equipment

 

206

 

217

 

 

 

 

 

 

 

Free cash flow

 

$

16,998

 

$

(12,449

)

 

Note 1:  Free cash flow is defined as cash flow from operating activities less customary capital expenditures, plus the proceeds from asset sales.  Other companies may define free cash flow differently.  Free cash flow is presented because it is a financial measure that is frequently requested by third parties.  However, free cash flow is not considered under generally accepted accounting principles as a primary measure of an entity’s financial results, and accordingly, free cash flow should not be considered an alternative to operating income, net income, or cash flows as determined under generally accepted accounting principles and as reported by the Company.