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 of $9,540,000 or $0.25 per diluted share, for the quarter ended September 30, 2009, as compared to net income of $13,765,000 or $0.34 per diluted share, in the third quarter of 2008. The Company reported revenues from continuing operations of $291,591,000 in the current quarter, as compared to $346,705,000 in 2008. The Company also reported free cash flow of $23,143,000 in the current quarter, as compared to $17,709,000 in 2008. Backlog as of September 30, 2009 was $554,280,000 compared to $639,769,000 as of June 30, 2009. Backlog as of September 30, 2008 was $803,728,000.
Bill Murdy, Comfort Systems USA’s Chairman and CEO, said, “Our operations maintained solid profitability and success in a challenging environment. Our workforce continues to deliver quality and results that set a high standard for our industry. As expected, we continue to experience revenue and backlog declines, although we are encouraged by our solid absolute backlog levels and by our ability to book smaller projects and service work. Free cash flow improved both sequentially and year-over-year, with $23.1 million of cash flow in the quarter and an increase in cash balances to $140 million as of September 30, 2009. The strength of our workforce combined with our financial resources leave us confident that we will earn more than our share of available business in the coming months.”
The Company reported net income for the nine months ended September 30, 2009 of $26,580,000 or $0.69 per diluted share, as compared to net income of $37,199,000 or $0.92 per diluted share in 2008. Net income from continuing operations for the nine months ended September 30, 2009 was $27,060,000 or $0.70 per diluted share as compared to $37,084,000 or $0.92 per diluted share for the first nine months of 2008. The Company also reported revenues of $872,214,000 from continuing operations for the first nine months of 2009, as compared to $993,862,000 in 2008. Free cash flow for the nine months ended September 30, 2009 was $38,834,000 as compared to free cash flow of $36,834,000 in 2008.
Bill Murdy concluded, “We remain optimistic that we will be solidly profitable and can improve our competitive position in the markets we serve. We will continue to invest in new and existing operations and we believe that over the coming months we can add new businesses in attractive geographies.”
As previously announced, the Company will host a conference call to discuss its financial results and position in more depth on Wednesday, November 4, 2009 at 10:00 a.m. Central Time. The call-in number for this conference call is 1-888-680-0878 and enter 64503046 as the passcode. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=P8JUFUDJG. Pre-registrants will be issued a pin number to use when dialing into 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 6:00 p.m. Central Time, Wednesday, November 11, 2009 by calling 1-888-286-8010 with the conference passcode of 12896285, 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 75 locations in 71 cities around the nation. For more information, visit the Company’s website atwww.comfortsystemsusa.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current plans and expectations of future events of Comfort Systems USA, Inc. and involve risks and uncertainties that could cause actual future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual results to differ include, among others, the use of incorrect estimates for bidding a fixed-price contract, undertaking contractual commitments that exceed our 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, difficulty in obtaining or increased costs associated with bonding and insurance, shortages of labor and specialty building materials, retention of key management, our backlog failing to translate into actual revenue or profits, errors in our percentage-of-completion method of accounting, the result of competition in our markets, 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 and other risks detailed in our reports filed with the Securities and Exchange Commission. A further list and description of these risks, uncertainties and other factors are discussed under “Item 1A. Company Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. These forward-looking statements speak only as of the date of this filing. Comfort Systems USA, Inc. expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, developments, conditions or circumstances on which any such statement is based.
Comfort Systems USA, Inc. | ||||||||||||||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||||||||||||||
| For the Three Months and Nine Months Ended September 30, 2009 and 2008 | ||||||||||||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||
| 2009 | % | 2008 | % | 2009 | % | 2008 | % | |||||||||||||||||||||
| Revenues | $ | 291,591 | 100.0 | % | $ | 346,705 | 100.0 | % | $ | 872,214 | 100.00 | % | $ | 993,862 | 100.0 | % | ||||||||||||
| Cost of services | 234,186 | 80.3 | % | 280,011 | 80.8 | % | 701,335 | 80.4 | % | 806,784 | 81.2 | % | ||||||||||||||||
| Gross profit | 57,405 | 19.7 | % | 66,694 | 19.2 | % | 170,879 | 19.6 | % | 187,078 | 18.8 | % | ||||||||||||||||
| SG&A | 41,713 | 14.3 | % | 45,078 | 13.0 | % | 126,175 | 14.5 | % | 128,397 | 12.9 | % | ||||||||||||||||
| Gain on sale of assets | (101 | ) | - | (183 | ) | (0.1 | )% | (98 | ) | - | (311 | ) | - | |||||||||||||||
| Operating income | 15,793 | 5.4 | % | 21,799 | 6.3 | % | 44,802 | 5.1 | % | 58,992 | 5.9 | % | ||||||||||||||||
| Interest income (expense), net | (184 | ) | (0.1 | )% | 188 | 0.1 | % | (454 | ) | (0.1 | )% | 1,004 | 0.1 | % | ||||||||||||||
| Other income | 3 | - | - | - | 5 | - | 158 | - | ||||||||||||||||||||
| Income before income taxes | 15,612 | 5.4 | % | 21,987 | 6.3 | % | 44,353 | 5.1 | % | 60,154 | 6.1 | % | ||||||||||||||||
| Income tax expense | 6,072 | 8,250 | 17,293 | 23,070 | ||||||||||||||||||||||||
| Income from continuing operations | 9,540 | 3.3 | % | 13,737 | 4.0 | % | 27,060 | 3.1 | % | 37,084 | 3.7 | % | ||||||||||||||||
Discontinued operations: | ||||||||||||||||||||||||||||
Operating income (loss), net of income tax (expense) benefit of $―, $(46), $133, and $(145) | - | 28 | (387 | ) | 115 | |||||||||||||||||||||||
Estimated loss on disposition, net of tax of $—, $—, $—, and $— | - | - | (93 | ) | - | |||||||||||||||||||||||
| Net income | $ | 9,540 | $ | 13,765 | $ | 26,580 | $ | 37,199 | ||||||||||||||||||||
| Income per share: | ||||||||||||||||||||||||||||
| Basic- | ||||||||||||||||||||||||||||
| Income from continuing operations | $ | 0.25 | $ | 0.35 | $ | 0.71 | $ | 0.94 | ||||||||||||||||||||
| Discontinued operations - | ||||||||||||||||||||||||||||
| Income (loss) from operations | - | - | (0.01 | ) | - | |||||||||||||||||||||||
| Estimated loss on disposition | - | - | - | - | ||||||||||||||||||||||||
| Net income | $ | 0.25 | $ | 0.35 | $ | 0.70 | $ | 0.94 | ||||||||||||||||||||
| Diluted - | ||||||||||||||||||||||||||||
| Income from continuing operations | $ | 0.25 | $ | 0.34 | $ | 0.70 | $ | 0.92 | ||||||||||||||||||||
| Discontinued operations - | ||||||||||||||||||||||||||||
| Income (loss) from operations | - | - | (0.01 | ) | - | |||||||||||||||||||||||
| Estimated loss on disposition | - | - | - | - | ||||||||||||||||||||||||
| Net income | $ | 0.25 | $ | 0.34 | $ | 0.69 | $ | 0.92 | ||||||||||||||||||||
| Shares used in computing income per share: | ||||||||||||||||||||||||||||
| Basic | 37,995 | 39,403 | 38,135 | 39,625 | ||||||||||||||||||||||||
| Diluted | 38,382 | 40,048 | 38,533 | 40,296 | ||||||||||||||||||||||||
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 Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) (Unaudited): | ||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||
| 2009 | % | 2008 | % | 2009 | % | 2008 | % | |||||||||||||||||||||
| Net income | $ | 9,540 | $ | 13,765 | $ | 26,580 | $ | 37,199 | ||||||||||||||||||||
| Discontinued operations | - | (28 | ) | 480 | (115 | ) | ||||||||||||||||||||||
| Income taxes | 6,072 | 8,250 | 17,293 | 23,070 | ||||||||||||||||||||||||
| Other income | (3 | ) | - | (5 | ) | (158 | ) | |||||||||||||||||||||
| Interest (income) expense, net | 184 | (188 | ) | 454 | (1,004 | ) | ||||||||||||||||||||||
| Gain on sale of assets | (101 | ) | (183 | ) | (98 | ) | (311 | ) | ||||||||||||||||||||
| Depreciation and amortization | 3,250 | 3,659 | 9,802 | 9,494 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 18,942 | 6.5 | % | $ | 25,275 | 7.3 | % | $ | 54,506 | 6.2 | % | $ | 68,175 | 6.9 | % | ||||||||||||
Note 1: The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income, excluding discontinued operations, income taxes, other income, interest (income) 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) | ||||||
| September 30, | December 31, | |||||
| 2009 | 2008 | |||||
| (unaudited) | ||||||
| Cash and cash equivalents | $ | 139,863 | $ | 117,015 | ||
| Accounts receivable, net | 228,250 | 266,602 | ||||
| Costs and estimated earnings in excess of billings | 17,373 | 19,123 | ||||
| Other current assets | 44,792 | 40,905 | ||||
| Assets related to discontinued operations | 438 | 1,544 | ||||
| Total current assets | 430,716 | 445,189 | ||||
| Property and equipment, net | 34,083 | 35,650 | ||||
| Goodwill | 95,590 | 90,940 | ||||
| Identifiable intangible assets, net | 13,841 | 16,281 | ||||
| Other noncurrent assets | 7,096 | 10,432 | ||||
| Total assets | $ | 581,326 | $ | 598,492 | ||
| Current maturities of long-term debt | $ | - | $ | - | ||
| Current maturities of notes to former owners | 2,018 | 1,336 | ||||
| Accounts payable | 75,291 | 98,190 | ||||
| Billings in excess of costs and estimated earnings | 89,647 | 97,505 | ||||
| Other current liabilities | 98,993 | 100,957 | ||||
| Liabilities related to discontinued operations | - | 397 | ||||
| Total current liabilities | 265,949 | 298,385 | ||||
| Long-term debt, net of current maturities | - | - | ||||
| Notes to former owners, net of current maturities | 6,607 | 9,363 | ||||
| Other long-term liabilities | 5,677 | 4,273 | ||||
| Total liabilities | 278,233 | 312,021 | ||||
| Total stockholders’ equity | 303,093 | 286,471 | ||||
| Total liabilities and stockholders’ equity | $ | 581,326 | $ | 598,492 | ||
Selected Cash Flow Data (in thousands) (unaudited): | ||||||||||||||||
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Cash provided by (used in): | ||||||||||||||||
| Operating activities | $ | 24,803 | $ | 20,943 | $ | 44,754 | $ | 46,956 | ||||||||
| Investing activities | $ | (1,438 | ) | $ | (15,514 | ) | $ | (7,241 | ) | $ | (61,121 | ) | ||||
| Financing activities | $ | (3,917 | ) | $ | (4,637 | ) | $ | (14,665 | ) | $ | (23,166 | ) | ||||
| Free cash flow: | ||||||||||||||||
| Cash from operating activities | $ | 24,803 | $ | 20,943 | $ | 44,754 | $ | 46,956 | ||||||||
| Purchases of property and equipment | (1,986 | ) | (3,773 | ) | (6,420 | ) | (10,778 | ) | ||||||||
| Proceeds from sales of property and equipment | 326 | 539 | 500 | 656 | ||||||||||||
| Free cash flow | $ | 23,143 | $ | 17,709 | $ | 38,834 | $ | 36,834 | ||||||||
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. | ||||||||||||||||
Contacts:
William George, 713-830-9600
Chief
Financial Officer
