Attached files

file filename
8-K - 8-K - COMFORT SYSTEMS USA INCa15-11986_48k.htm
EX-99.2 - EX-99.2 - COMFORT SYSTEMS USA INCa15-11986_4ex99d2.htm

Exhibit 99.1

 

 

CONTACT:

William George

675 Bering Drive, Suite 400

 

Chief Financial Officer

Houston, Texas 77057

 

 

713-830-9600

 

 

713-830-9696

 

FOR IMMEDIATE RELEASE

 

COMFORT SYSTEMS USA REPORTS SECOND QUARTER 2015 RESULTS

 

Houston, TX — July 30, 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 $13,404,000 or $0.35 per diluted share, for the quarter ended June 30, 2015, as compared to $4,401,000 or $0.12 per diluted share, for the quarter ended June 30, 2014.  The Company reported revenue of $416,567,000 in the current quarter.  On a same-store basis, the Company reported revenue of $411,887,000 as compared to $362,801,000 in 2014.  The Company reported free cash flow of $24,839,000 in the current quarter, as compared to $18,256,000 in 2014.  Backlog as of June 30, 2015 was $712,273,000 as compared to $718,031,000 as of March 31, 2015 and $673,694,000 as of June 30, 2014.

 

Brian Lane, Comfort Systems USA’s President and Chief Executive Officer, said, “Today we are pleased to report significant improvement in our second quarter revenue and earnings as compared to recent years.  For the second quarter our revenue increased 15%, and our earnings per share were nearly three times as high as the earnings we reported in the second quarter a year ago.  This dramatic year-over-year comparison is the result of broad-based strength combined with extraordinary performance at certain subsidiaries, and it also derives from improving conditions in our industry and our geographic markets.  Ultimately, these results demonstrate the standard-setting quality and hard work of our nationwide workforce.”

 

The Company reported net income attributable to Comfort Systems USA for the six months ended June 30, 2015 of $18,470,000 or $0.49 per diluted share as compared to $4,776,000 or $0.13 per diluted share, for the first six months of 2014.  The Company also reported revenue of $786,114,000.  On a same-store basis, the Company reported revenue of $766,060,000 as compared to $684,182,000 for the same period of 2014.  Free cash flow for the six months ended June 30, 2015 was $41,837,000 as compared to $5,807,000 in the first six months of 2014.

 

Mr. Lane concluded, “Our investments in workforce and growth initiatives during the recent challenging conditions have positioned us to take advantage of improved demand in our industry.  Cash flow in the second quarter and through the first six months has been outstanding, and will provide us with additional opportunities to invest and return capital to our stockholders.  Looking forward, we are pleased with our construction backlog and ongoing small project and service opportunities.  We expect that conditions will remain supportive for the remainder of 2015, and we are cautiously optimistic about the underlying trends for 2016.”

 

As previously announced, the Company will host a webcast and conference call to discuss its financial results and position in more depth on Friday, July 31, 2015 at 10:00 a.m. Central Time.  The call-in number for this conference call is 1-888-679-8018 and enter 22733904 as the passcode.  Participants may pre-register for the call at

 



 

https://www.theconferencingservice.com/prereg/key.process?key=PF7WDCFV8.  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, Friday, August 7, 2015 by calling 1-888-286-8010 with the conference passcode of 88967040, and will also be available on our website on the next business day following the call.

 

Comfort Systems USA® 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 revenue 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 and Six Months Ended June 30, 2015 and 2014

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

(unaudited)

 

(unaudited)

 

 

 

2015

 

%

 

2014

 

%

 

2015

 

%

 

2014

 

%

 

Revenue

 

$

416,567

 

100.0

%

$

362,801

 

100.0

%

$

786,114

 

100.0

%

$

684,182

 

100.0

%

Cost of services

 

334,518

 

80.3

%

300,942

 

82.9

%

639,377

 

81.3

%

570,174

 

83.3

%

Gross profit

 

82,049

 

19.7

%

61,859

 

17.1

%

146,737

 

18.7

%

114,008

 

16.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SG&A

 

57,369

 

13.8

%

50,573

 

13.9

%

111,065

 

14.1

%

100,958

 

14.8

%

Goodwill impairment

 

 

 

727

 

0.2

%

 

 

727

 

0.1

%

Gain on sale of assets

 

(151

)

 

(89

)

 

(327

)

 

(222

)

 

Operating income

 

24,831

 

6.0

%

10,648

 

2.9

%

35,999

 

4.6

%

12,545

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(387

)

(0.1

)%

(460

)

(0.1

)%

(891

)

(0.1

)%

(785

)

(0.1

)%

Changes in the fair value of contingent earn-out obligations

 

125

 

 

(130

)

 

125

 

 

 

 

Other income (expense)

 

9

 

 

24

 

 

27

 

 

92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

24,578

 

5.9

%

10,082

 

2.8

%

35,260

 

4.5

%

11,852

 

1.7

%

Income tax expense

 

8,796

 

 

 

3,746

 

 

 

12,589

 

 

 

4,438

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

15,782

 

3.8

%

6,336

 

1.7

%

22,671

 

2.9

%

7,414

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

15,782

 

3.8

%

6,336

 

1.7

%

22,671

 

2.9

%

7,399

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

2,378

 

 

 

1,935

 

 

 

4,201

 

 

 

2,623

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Comfort Systems USA, Inc.

 

$

13,404

 

3.2

%

$

4,401

 

1.2

%

$

18,470

 

2.3

%

$

4,776

 

0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.36

 

 

 

$

0.12

 

 

 

$

0.49

 

 

 

$

0.13

 

 

 

Loss from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

0.36

 

 

 

$

0.12

 

 

 

$

0.49

 

 

 

$

0.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.35

 

 

 

$

0.12

 

 

 

$

0.49

 

 

 

$

0.13

 

 

 

Loss from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

0.35

 

 

 

$

0.12

 

 

 

$

0.49

 

 

 

$

0.13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

37,457

 

 

 

37,706

 

 

 

37,370

 

 

 

37,644

 

 

 

Diluted

 

37,917

 

 

 

37,880

 

 

 

37,761

 

 

 

37,914

 

 

 

 

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

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2015

 

%

 

2014

 

%

 

2015

 

%

 

2014

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

$

15,782

 

 

 

$

6,336

 

 

 

$

22,671

 

 

 

$

7,399

 

 

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

15

 

 

 

Income taxes

 

8,796

 

 

 

3,746

 

 

 

12,589

 

 

 

4,438

 

 

 

Other expense (income), net

 

(9

)

 

 

(24

)

 

 

(27

)

 

 

(92

)

 

 

Changes in the fair value of contingent earn-out obligations

 

(125

)

 

 

130

 

 

 

(125

)

 

 

 

 

 

Interest expense, net

 

387

 

 

 

460

 

 

 

891

 

 

 

785

 

 

 

Gain on sale of assets

 

(151

)

 

 

(89

)

 

 

(327

)

 

 

(222

)

 

 

Goodwill Impairment

 

 

 

 

727

 

 

 

 

 

 

727

 

 

 

Depreciation and amortization

 

5,841

 

 

 

5,000

 

 

 

11,464

 

 

 

9,654

 

 

 

Adjusted EBITDA

 

$

30,521

 

7.3

%

$

16,286

 

4.5

%

$

47,136

 

6.0

%

$

22,704

 

3.3

%

 

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)

 

 

 

June 30,

 

December 31,

 

 

 

2015

 

2014

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

40,714

 

$

32,064

 

Accounts receivable, net

 

329,338

 

303,575

 

Costs and estimated earnings in excess of billings

 

33,568

 

27,620

 

Other current assets

 

43,202

 

49,933

 

Total current assets

 

446,822

 

413,192

 

Property and equipment, net

 

57,613

 

55,759

 

Goodwill

 

143,569

 

140,341

 

Identifiable intangible assets, net

 

44,123

 

45,666

 

Other noncurrent assets

 

10,922

 

10,792

 

Total assets

 

$

703,049

 

$

665,750

 

 

 

 

 

 

 

Current maturities of long-term capital lease obligations

 

$

287

 

$

317

 

Accounts payable

 

117,780

 

106,211

 

Billings in excess of costs and estimated earnings

 

90,322

 

77,446

 

Other current liabilities

 

116,072

 

98,663

 

Total current liabilities

 

324,461

 

282,637

 

Long-term debt

 

19,000

 

39,500

 

Long-term capital lease obligations

 

396

 

529

 

Other long-term liabilities

 

17,679

 

21,691

 

Total liabilities

 

361,536

 

344,357

 

Comfort Systems USA, Inc. stockholders’ equity

 

324,315

 

306,281

 

Noncontrolling interests

 

17,198

 

15,112

 

Total stockholders’ equity

 

341,513

 

321,393

 

Total liabilities and stockholders’ equity

 

$

703,049

 

$

665,750

 

 



 

Selected Cash Flow Data (in thousands):

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

(unaudited)

 

(unaudited)

 

 

 

2015

 

2014

 

2015

 

2014

 

Cash provided by (used in):

 

 

 

 

 

 

 

 

 

Operating activities

 

$

30,245

 

$

22,385

 

$

50,660

 

$

13,601

 

Investing activities

 

$

(5,917

)

$

(51,488

)

$

(14,684

)

$

(59,153

)

Financing activities

 

$

(22,506

)

$

38,212

 

$

(27,326

)

$

43,257

 

 

 

 

 

 

 

 

 

 

 

Free cash flow:

 

 

 

 

 

 

 

 

 

Cash from operating activities

 

$

30,245

 

$

22,385

 

$

50,660

 

$

13,601

 

Purchases of property and equipment

 

(5,685

)

(4,452

)

(9,308

)

(8,334

)

Proceeds from sales of property and equipment

 

279

 

323

 

485

 

540

 

 

 

 

 

 

 

 

 

 

 

Free cash flow

 

$

24,839

 

$

18,256

 

$

41,837

 

$

5,807

 

 

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.