UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported)  August 2, 2011

 

Comfort Systems USA, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

1-13011

 

76-0526487

(State or other jurisdiction

 

(Commission

 

(IRS Employer

of incorporation)

 

File Number)

 

Identification No.)

 

675 Bering, Suite 400

 

 

Houston, Texas

 

77057

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code  (713) 830-9600

 

 

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

ITEM 2.02  Results of Operations and Financial Condition

 

Attached as Exhibit 99.1 is a copy of a press release of Comfort Systems USA, Inc. (the “Company”) dated August 2, 2011 reporting the Company’s financial results for the second quarter of 2011.

 

The above information and attached press release are being furnished pursuant to Item 2.02 of Form 8-K and General Instruction B.2 thereunder. The information included herein and in the attached press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

 

ITEM 8.01 Other Events

 

Attached as Exhibit 99.2 is a copy of a press release of the Company dated August 2, 2011 reporting the Company’s declaration of a quarterly dividend on the Company’s common stock to shareholders of record as of the close of business on the record date, August 26, 2011.

 

ITEM 9.01             Financial Statements and Exhibits

 

The following Exhibits are included herein:

 

Exhibit 99.1 Press Release of Comfort Systems USA, Inc. dated August 2, 2011 reporting the Company’s financial results for the second quarter of 2011.

 

Exhibit 99.2 Press Release of Comfort Systems USA, Inc. dated August 2, 2011 reporting the Company’s declaration of a quarterly dividend on the Company’s common stock to shareholders of record as of the close of business on the record date, August 26, 2011.

 

2



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

COMFORT SYSTEMS USA, INC.

 

 

 

 

 

 

 

By:

/s/ Trent T. McKenna

 

Trent T. McKenna, Vice President and

 

General Counsel

 

 

 

 

Date:      August 3, 2011

 

 

3



 

EXHIBIT INDEX

 

Exhibit
Number

 

Exhibit Title or Description

 

 

 

99.1

 

Press Release of Comfort Systems USA, Inc. dated August 2, 2011 reporting the Company’s financial results for the second quarter of 2011.

 

 

 

99.2

 

Press Release of Comfort Systems USA, Inc. dated August 2, 2011 reporting the Company’s declaration of a quarterly dividend on the Company’s common stock to shareholders of record as of the close of business on the record date, August 26, 2011.

 

4


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 SECOND QUARTER RESULTS

 

Houston, TX — August 2, 2011 — 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 $3,162,000, or $0.08 per diluted share, for the quarter ended June 30, 2011, as compared to net income of $1,646,000, or $0.04 per diluted share, in the second quarter of 2010.  The second quarter of 2010 included a $4,446,000 noncash goodwill impairment charge (or $0.07 after tax per diluted share).  The Company reported revenue of $312,148,000 in the current quarter.  On a same-store basis, the Company reported revenue of $270,263,000, as compared to $249,588,000 in 2010.  The Company also reported negative free cash flow of $5,787,000 in the current quarter, as compared to positive free cash flow of $1,017,000 in the second quarter of 2010.  Backlog as of June 30, 2011 was $621,162,000 compared to $619,482,000 as of March 31, 2011.  Backlog on a same store basis was $529,647,000 as of June 30, 2011 compared to $506,547,000 as of June 30, 2010.

 

Bill Murdy, Comfort Systems USA’s Chairman and CEO, said, “We are happy to report increased revenues and solid profitability in the second quarter.  Although we continue to experience recessionary conditions in nonresidential construction, we are encouraged by the excellent focus and profitable execution that our operations demonstrated across our markets this quarter as well as our steady backlog and potential pipeline of business.”

 

Bill Murdy concluded, “We expect continued headwinds as 2011 progresses, however, we remain committed to achieving profitability for the year while maintaining and investing in our industry-leading capabilities.”

 

The Company reported a net loss for the six months ended June 30, 2011 of $2,008,000 or $0.05 per diluted share, as compared to net income of $3,573,000 or $0.09 per diluted share in the first six months of 2010.  Excluding the 2010 noncash goodwill impairment charge, net income from continuing operations for the six months ended June 30, 2010 was $5,485,000 or $0.14 per diluted share.  The Company also reported revenues of $594,207,000 from continuing operations for the first six months of 2011. On a same store basis, the Company reported revenue of $511,504,000, as compared to $486,063,000 for the same period in 2010.  Free cash flow for the six months ended June 30, 2011 was negative $26,966,000 as compared to negative free cash flow of $11,563,000 in the first six months of 2010.

 

As previously announced, the Company will host a conference call to discuss its financial results and position in more depth on Wednesday, August 3, 2011 at 10:00 a.m. Central Time.  The call-in number for this conference call is 1-888-680-0890 and enter 88250415 as the passcode.  Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PWNVGQ3B4.  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 6:00 p.m. Central Time, Wednesday, August 10, 2011 by calling 1-888-286-8010 with the conference passcode of  18596721, 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 84 locations in 70 cities around the nation.  For more information, visit the Company’s website at www.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, our backlog failing to translate into actual revenue or profits, difficulty in obtaining or increased costs associated with bonding and insurance, impairment to goodwill, errors in our percentage-of-completion method of accounting, the result of competition in our markets, our decentralized management structure, 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 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, 2010.  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.

 

— Financial tables follow —

 



 

Comfort Systems USA, Inc.

Consolidated Statements of Operations

For the Three Months and Six Months Ended June 30, 2011 and 2010

(in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2011

 

%

 

2010

 

%

 

2011

 

%

 

2010

 

%

 

Revenues

 

$

312,148

 

100.0

%

$

249,588

 

100.0

%

$

594,207

 

100.0

%

$

486,063

 

100.0

%

Cost of services

 

264,638

 

84.8

%

207,623

 

83.2

%

512,488

 

86.2

%

404,590

 

83.2

%

Gross profit

 

47,510

 

15.2

%

41,965

 

16.8

%

81,719

 

13.8

%

81,473

 

16.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SG&A

 

41,928

 

13.4

%

35,611

 

14.3

%

84,550

 

14.2

%

73,020

 

15.0

%

Goodwill impairment

 

 

 

4,446

 

1.8

%

 

 

4,446

 

0.9

%

Gain on sale of assets

 

(19

)

 

(468

)

(0.2

)%

(104

)

 

(473

)

(0.1

)%

Operating income (loss)

 

5,601

 

1.8

%

2,376

 

1.0

%

(2,727

)

(0.5

)%

4,480

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(443

)

(0.1

)%

(209

)

(0.1

)%

(904

)

(0.2

)%

(430

)

(0.1

)%

Other income (expense)

 

517

 

0.2

%

(6

)

 

437

 

0.1

%

6

 

 

Income (loss) before income taxes

 

5,675

 

1.8

%

2,161

 

0.9

%

(3,194

)

(0.5

)%

4,056

 

0.8

%

Income tax (benefit) expense

 

2,513

 

 

 

515

 

 

 

(1,186

)

 

 

1,245

 

 

 

Income (loss) from continuing operations

 

3,162

 

1.0

%

1,646

 

0.7

%

(2,008

)

(0.3

)%

2,811

 

0.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on disposition of discontinued operation, including income tax benefit of $—, $—, $— and $29

 

 

 

 

 

 

 

 

 

 

762

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

3,162

 

 

 

$

1,646

 

 

 

$

(2,008

)

 

 

$

3,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.08

 

 

 

$

0.04

 

 

 

$

(0.05

)

 

 

$

0.08

 

 

 

Gain on disposition of discontinued operation

 

 

 

 

 

 

 

 

 

 

0.02

 

 

 

Net income (loss)

 

$

0.08

 

 

 

$

0.04

 

 

 

$

(0.05

)

 

 

$

0.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.08

 

 

 

$

0.04

 

 

 

$

(0.05

)

 

 

$

0.07

 

 

 

Gain on disposition of discontinued operation

 

 

 

 

 

 

 

 

 

 

0.02

 

 

 

Net income (loss)

 

$

0.08

 

 

 

$

0.04

 

 

 

$

(0.05

)

 

 

$

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

37,630

 

 

 

37,598

 

 

 

37,584

 

 

 

37,566

 

 

 

Diluted

 

37,742

 

 

 

37,848

 

 

 

37,584

 

 

 

37,834

 

 

 

 

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 — (Unaudited):

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2011

 

 

2010

 

%

 

2011

 

%

 

2010

 

%

 

Net income (loss) from continuing operations

 

$

3,162

 

 

 

$

1,646

 

 

 

$

(2,008

)

 

 

$

2,811

 

 

 

Goodwill impairment (after tax)

 

 

 

 

2,674

 

 

 

 

 

 

2,674

 

 

 

Net income (loss) from continuing operations excluding goodwill impairment

 

$

3,162

 

1.0

%

$

4,320

 

1.7

%

$

(2,008

)

(0.3)

%

$

5,485

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share from continuing operations excluding goodwill impairment

 

$

0.08

 

 

 

$

0.11

 

 

 

$

(0.05

)

 

 

$

0.14

 

 

 

 

Note 1:  Operating results from continuing operations, excluding goodwill impairment, is presented because the Company believes it reflects the results of the core ongoing operations of the Company, and because we believe it is responsive to frequent questions we receive from third parties.  However, this measure is not considered a primary measure of an entity’s financial results under generally accepted accounting principles, and accordingly, this amount should not be considered an alternative to operating results as determined under generally accepted accounting principles and as reported by the Company.

 

Note 2:  The tax rate on these items was computed using the pro forma effective tax rate of the Company exclusive of these charges.

 

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

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2011

 

%

 

2010

 

%

 

2011

 

%

 

2010

 

%

 

Net income (loss)

 

$

3,162

 

 

 

$

1,646

 

 

 

$

(2,008

)

 

 

$

3,573

 

 

 

Discontinued operation

 

 

 

 

 

 

 

 

 

 

(762

)

 

 

Income taxes

 

2,513

 

 

 

515

 

 

 

(1,186

)

 

 

1,245

 

 

 

Other expense (income), net

 

(517

)

 

 

6

 

 

 

(437

)

 

 

(6

)

 

 

Interest expense, net

 

443

 

 

 

209

 

 

 

904

 

 

 

430

 

 

 

Gain on sale of assets

 

(19

)

 

 

(468

)

 

 

(104

)

 

 

(473

)

 

 

Goodwill impairment

 

 

 

 

4,446

 

 

 

 

 

 

4,446

 

 

 

Depreciation and amortization

 

4,713

 

 

 

3,444

 

 

 

9,532

 

 

 

7,080

 

 

 

Adjusted EBITDA

 

$

 

10,295

 

3.3

%

$

9,798

 

3.9

%

$

6,701

 

1.1

%

$

15,533

 

3.2

%

 

Note 1:  The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income (loss), excluding discontinued operation, income taxes, other (income) expense, 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 (loss), net income (loss), 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,

 

 

 

2011

 

2010

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

50,101

 

$

86,346

 

Accounts receivable, net

 

255,286

 

233,893

 

Costs and estimated earnings in excess of billings

 

26,423

 

26,648

 

Other current assets

 

54,090

 

56,061

 

Total current assets

 

385,900

 

402,948

 

Property and equipment, net

 

41,039

 

43,620

 

Goodwill

 

148,986

 

147,818

 

Identifiable intangible assets, net

 

37,388

 

39,616

 

Other noncurrent assets

 

8,231

 

6,018

 

Total assets

 

$

621,544

 

$

640,020

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

300

 

$

300

 

Current maturities of notes to former owners

 

460

 

967

 

Accounts payable

 

98,202

 

101,134

 

Billings in excess of costs and estimated earnings

 

61,558

 

63,422

 

Other current liabilities

 

97,545

 

102,387

 

Total current liabilities

 

258,065

 

268,210

 

Long-term debt, net of current maturities

 

2,700

 

2,700

 

Notes to former owners, net of current maturities

 

24,919

 

25,969

 

Other long-term liabilities

 

30,477

 

30,357

 

Total liabilities

 

316,161

 

327,236

 

Total stockholders’ equity

 

305,383

 

312,784

 

Total liabilities and stockholders’ equity

 

$

621,544

 

$

640,020

 

 

Selected Cash Flow Data (in thousands) (unaudited):

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

Cash provided by (used in):

 

 

 

 

 

 

 

 

 

Operating activities

 

$

(4,377

)

$

762

 

$

(23,443

)

$

(10,699

)

Investing activities

 

$

(1,892

)

$

1,302

 

$

(3,766

)

$

(1,252

)

Financing activities

 

$

(7,266

)

$

(4,232

)

$

(9,036

)

$

(8,297

)

 

 

 

 

 

 

 

 

 

 

Free cash flow:

 

 

 

 

 

 

 

 

 

Cash from operating activities

 

$

(4,377

)

$

762

 

$

(23,443

)

$

(10,699

)

Purchases of property and equipment

 

(1,544

)

(860

)

(3,904

)

(2,082

)

Proceeds from sales of property and equipment

 

134

 

1,115

 

381

 

1,218

 

 

 

 

 

 

 

 

 

 

 

Free cash flow

 

$

(5,787

)

$

1,017

 

$

(26,966

)

$

(11,563

)

 

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.

 


Exhibit 99.2

 

 

 

 

675 Bering Dr. Suite 400

 

 

Houston, Texas 77057

CONTACT:

William George

713-830-9600

 

Chief Financial Officer

Fax 713-830-9696

 

(713) 830-9600

 

 

FOR IMMEDIATE RELEASE

 

COMFORT SYSTEMS USA DECLARES QUARTERLY DIVIDEND

 

Houston, TX — August 2, 2011 — Comfort Systems USA, Inc. (NYSE: FIX), a leading provider of commercial, industrial and institutional heating, ventilation and air conditioning (“HVAC”) services, today announced that its board of directors declared a quarterly dividend of $0.05 per share on Comfort Systems USA, Inc. common stock.  The dividend is payable on September 16, 2011 to shareholders of record at the close of business on August 26, 2011.

 

Comfort Systems USA® is a premier provider of business solutions addressing workplace comfort, with 84 locations in 70 cities around the nation.  For more information, visit the Company’s website at www.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, our backlog failing to translate into actual revenue or profits, difficulty in obtaining or increased costs associated with bonding and insurance, impairment to goodwill, errors in our percentage-of-completion method of accounting, the result of competition in our markets, our decentralized management structure, 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 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, 2010. 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.