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EX-99.2 - EX-99.2 - COMFORT SYSTEMS USA INCex-99d2.htm
8-K - 8-K - COMFORT SYSTEMS USA INCf8-k.htm

Exhibit 99.1

 

Picture 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 2017 RESULTS

 

Houston, TX — April 26, 2017 — Comfort Systems USA, Inc. (NYSE: FIX), a leading provider of mechanical services including heating, ventilation, air conditioning, plumbing, piping and controls, today announced net income of $7.5 million or $0.20 per diluted share, for the quarter ended March 31, 2017, as compared to $9.8 million or $0.26 per diluted share, for the quarter ended March 31, 2016.  

 

Brian Lane, Comfort Systems USA’s President and Chief Executive Officer, said, “We are pleased to report good first quarter results, especially given that first quarters are traditionally our seasonally lowest and most variable quarter.  Our first quarter results were reduced approximately $0.02 by an impairment of goodwill at one of our operating locations, and an additional $0.02 from acquisition costs and compensation costs associated with leadership changes.  Despite these expenses, and despite an increase in overhead from investments in sales and technology, we were able to achieve strong results although somewhat lower than the record first quarter results we achieved in 2016.”

 

The Company reported revenue of $380.6 million in the current quarter, as compared to $385.9 million in 2016.  The Company reported free cash flow of $5.3 million in the current quarter, as compared to $9.6 million in 2016.  Backlog as of March 31, 2017 was $863.0 million as compared to $763.4 million as of December 31, 2016 and $776.9 million as of March 31, 2016.

 

Mr. Lane continued, “We are encouraged by our cash flow as we are always pleased when we achieve positive cash flow in the first quarter.  We are especially encouraged by the sharp increase in backlog during the quarter.  Our backlog is a new record for Comfort Systems USA.”

 

Mr. Lane concluded, “After many years of diminished new construction markets, key markets have begun to show signs of improvement in new project bookings and prospects.  We are encouraged by underlying trends and we believe that we are well positioned for another very good year of earnings and cash flow in 2017.”

 

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 27, 2017 at 10:30 a.m. Central Time.  The call-in number for this conference call is 1-888-713-4218 and enter 38015495 as the passcode.  Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PNMQFCV3R.  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 3:30 p.m. Central Time,  Thursday,  May 4, 2017 by calling 1-888-286-8010 with the conference passcode of 79029748, 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 102 locations in 95 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 mechanical 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

(In Thousands, Except per Share Amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

(Unaudited)

 

 

    

2017

    

%  

    

 

2016

    

%  

 

Revenue

 

$

380,588

 

100.0

%

 

$

385,942

 

100.0

%

Cost of services

 

 

304,634

 

80.0

%

 

 

312,440

 

81.0

%

Gross profit

 

 

75,954

 

20.0

%

 

 

73,502

 

19.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

SG&A

 

 

63,247

 

16.6

%

 

 

58,190

 

15.1

%

Goodwill impairment

 

 

1,105

 

0.3

%

 

 

 —

 

 —

 

Gain on sale of assets

 

 

(154)

 

 

 

 

(145)

 

 

Operating income

 

 

11,756

 

3.1

%

 

 

15,457

 

4.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(379)

 

(0.1)

%

 

 

(700)

 

(0.2)

%

Changes in the fair value of contingent earn-out obligations

 

 

(26)

 

 

 

 

 —

 

 

Other income (expense)

 

 

18

 

 

 

 

486

 

0.1

%

Income before income taxes

 

 

11,369

 

3.0

%

 

 

15,243

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

3,892

 

 

 

 

 

5,402

 

 

 

Net income

 

$

7,477

 

2.0

%

 

$

9,841

 

2.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.20

 

 

 

 

$

0.26

 

 

 

Diluted

 

$

0.20

 

 

 

 

$

0.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

37,225

 

 

 

 

 

37,344

 

 

 

Diluted

 

 

37,724

 

 

 

 

 

37,830

 

 

 

 

 


 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2017

    

%  

    

2016

    

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

7,477

 

 

 

$

9,841

 

 

 

Income taxes

 

 

3,892

 

 

 

 

5,402

 

 

 

Other expense (income), net

 

 

(18)

 

 

 

 

(486)

 

 

 

Changes in the fair value of contingent earn-out obligations

 

 

26

 

 

 

 

 —

 

 

 

Interest expense, net

 

 

379

 

 

 

 

700

 

 

 

Gain on sale of assets

 

 

(154)

 

 

 

 

(145)

 

 

 

Goodwill impairment

 

 

1,105

 

 

 

 

 —

 

 

 

Depreciation and amortization

 

 

6,139

 

 

 

 

6,258

 

 

 

Adjusted EBITDA

 

$

18,846

 

5.0

%  

$

21,570

 

5.6

%

 

Note:  The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income including noncontrolling interests, income taxes, other expense (income), net, changes in the fair value of contingent earn-out obligations, interest expense, net, gain on sale of assets, goodwill impairment 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,

 

 

 

2017

 

2016

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

31,444

 

$

32,074

 

Accounts receivable, net

 

 

297,079

 

 

318,837

 

Costs and estimated earnings in excess of billings

 

 

35,974

 

 

29,369

 

Other current assets

 

 

31,956

 

 

35,677

 

Total current assets

 

 

396,453

 

 

415,957

 

Property and equipment, net

 

 

68,593

 

 

68,195

 

Goodwill

 

 

148,103

 

 

149,208

 

Identifiable intangible assets, net

 

 

40,873

 

 

42,435

 

Other noncurrent assets

 

 

33,590

 

 

33,108

 

Total assets

 

$

687,612

 

$

708,903

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

1,112

 

$

600

 

Current maturities of long-term capital lease obligations

 

 

131

 

 

163

 

Accounts payable

 

 

98,132

 

 

103,440

 

Billings in excess of costs and estimated earnings

 

 

76,834

 

 

83,985

 

Other current liabilities

 

 

116,834

 

 

129,493

 

Total current liabilities

 

 

293,043

 

 

317,681

 

Long-term debt

 

 

693

 

 

1,955

 

Long-term capital lease obligations

 

 

68

 

 

93

 

Other long-term liabilities

 

 

11,852

 

 

12,541

 

Total liabilities

 

 

305,656

 

 

332,270

 

Total stockholders’ equity

 

 

381,956

 

 

376,633

 

Total liabilities and stockholders’ equity

 

$

687,612

 

$

708,903

 

 


 

Selected Cash Flow Data (Unaudited) (In Thousands):

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

    

2017

    

2016

 

Cash provided by (used in):

 

 

 

 

 

 

 

Operating activities

 

$

10,053

 

$

13,117

 

Investing activities

 

$

(5,098)

 

$

(60,616)

 

Financing activities

 

$

(5,585)

 

$

34,575

 

 

 

 

 

 

 

 

 

Free cash flow:

 

 

 

 

 

 

 

Cash from operating activities

 

$

10,053

 

$

13,117

 

Purchases of property and equipment

 

 

(5,077)

 

 

(3,765)

 

Proceeds from sales of property and equipment

 

 

292

 

 

220

 

Free cash flow

 

$

5,268

 

$

9,572

 

 

Note:  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.