Investors

News

View printer-friendly version
<< Back

Comfort Systems USA Reports Fourth Quarter and Full Year Results

Strong Increases in Profits and Margins

HOUSTON--(BUSINESS WIRE)--Feb. 26, 2009-- 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 $12,491,000 or $0.32 per diluted share, for the quarter ended December 31, 2008, as compared to net income of $8,681,000 or $0.21 per diluted share, in the fourth quarter of 2007.

Bill Murdy, Comfort Systems USA’s Chairman and CEO, said, “Today we are reporting record fourth quarter and full year results. For the fourth quarter our revenues increased 12% and notably our earnings increased by 44% over the fourth quarter a year ago. This extraordinary increase in profitability is a testament to the remarkable quality and hard work of our assembled team, encompassing management, sales, office, and especially, our field workforce.”

The Company reported revenues of $329,028,000 in the current quarter, as compared to $293,284,000 in 2007. The Company also reported free cash flow of $32,101,000 in the current quarter, as compared to $54,908,000 in 2007. Backlog as of December 31, 2008 was $752,372,000, compared to $804,699,000 as of September 30, 2008. Backlog as of December 31, 2007 was $786,673,000.

Mr. Murdy continued, “We have generated positive free cash flow for each of the last ten years, including during very challenging economic and industry conditions from 2001 through 2003. Free cash flow in the fourth quarter totaled $32 million, a notable performance that provides additional cushion and flexibility to our already solid balance sheet as we face cyclical change. Although our backlog declined modestly during the quarter reflecting deterioration in nonresidential construction market fundamentals, it remains at high levels compared to historical trends and totals.”

The Company reported net income for the year ended December 31, 2008 of $49,690,000 or $1.24 per diluted share, as compared to net income of $32,466,000 or $0.79 per diluted share in 2007. The Company also reported revenues of $1,328,465,000 for 2008, as compared to $1,109,534,000 in 2007. Free cash flow for the year ended December 31, 2008 was $68,935,000 as compared to $72,819,000 in 2007.

Bill Murdy concluded, “We and our industry have historically participated in business cycle fluctuations, and our dedicated workforce is well-prepared for changing conditions. We will continue to invest in prudent growth opportunities, and we remain committed to improving our excellent service and energy efficiency offerings. Challenges often bring opportunity, and we are optimistic that our balance sheet and operational strength will allow us to continue to increase the value of our company in the coming quarters. Although we expect weakness in our markets to develop throughout 2009, we will continue our focus on execution, cash discipline and cost control, and we look forward to a profitable and successful 2009.”

As previously announced, the Company will host a conference call to discuss its financial results and position in more depth on Friday, February 27, 2009 at 10:00 a.m. Central Time. The call-in number for this conference call is 1-888-680-0869 and enter 12601486 as the passcode. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PJ3NP9KCY. 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, Friday, March 6, 2009 by calling 1-888-286-8010 with the conference passcode of 90507250, 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 74 locations in 67 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, 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.

Financial tables follow

Comfort Systems USA, Inc.

Consolidated Statements of Operations

For the Three Months and Twelve Months Ended December 31, 2008 and 2007

(in thousands, except per share amounts)

               
Three Months Ended Twelve Months Ended
December 31, December 31,
(unaudited)
2008

%

2007 % 2008 % 2007 %
Revenues $ 329,028 100.0 % $ 293,284 100.0 % $ 1,328,465 100.0 % $ 1,109,534 100.0 %
Cost of services   256,160   77.9 %   238,756   81.4 %   1,067,224   80.3 %   912,471 82.2 %
Gross profit 72,868 22.1 % 54,528 18.6 % 261,241 19.7 % 197,063 17.8 %
 
SG&A 52,732 16.0 % 41,401 14.1 % 182,169 13.7 % 147,158 13.3 %
Loss (gain) on sale of assets   21  

-

  48  

-

  (295 )

-

  34

-

Operating income 20,115 6.1 % 13,079 4.5 % 79,367 6.0 % 49,871 4.5 %
 
Interest income, net 156

-

855 0.3 % 1,160 0.1 % 2,670 0.2 %
Other income (expense)   (94 )

-

  (35 )

-

  64  

-

  5

-

Income before income taxes 20,177 6.1 % 13,899 4.7 % 80,591 6.1 % 52,546 4.7 %
Income tax expense   7,686     5,218     30,901     20,080
Net income $ 12,491   $ 8,681   $ 49,690   $ 32,466
 
 
Income per share:
Basic $ 0.32 $ 0.21 $ 1.26 $ 0.80
Diluted $ 0.32 $ 0.21 $ 1.24 $ 0.79
 
Shares used in computing income per share:
Basic 38,825 40,406 39,424 40,573
Diluted 39,217 41,145 40,025 41,334
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   Twelve Months Ended
December 31, December 31,
2008   %   2007   % 2008

 

 

%

  2007   %
Net income $ 12,491 $ 8,681 $ 49,690 $ 32,466
Income taxes 7,686 5,218 30,901 20,080
Other (income) expense 94 35 (64 ) (5 )
Interest income, net (156 ) (855 ) (1,160 ) (2,670 )
Loss (gain) on sale of assets 21 48 (295 ) 34
Depreciation and amortization   3,123     1,932   12,693     6,853  
Adjusted EBITDA $ 23,259   7.1 % $ 15,059   5.1 % $ 91,765   6.9 % $ 56,758   5.1 %
Note 1: The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income, excluding income taxes, other (income) expense, interest income, net, loss (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)

   
December 31, December 31,
2008 2007
 
 
Cash and cash equivalents $ 117,015 $ 139,631
Accounts receivable, net 267,498 261,402
Costs and estimated earnings in excess of billings 19,223 18,463
Other current assets   41,195   31,127
Total current assets 444,931 450,623
Property and equipment, net 35,908 21,442
Goodwill 90,940 68,621
Identifiable intangible assets, net 16,281 2,187
Other noncurrent assets   10,432   4,194
Total assets $ 598,492 $ 547,067
 
Current maturities of long-term debt

$

$

Current maturities of notes to former owners 1,336 375
Accounts payable 98,400 90,866
Billings in excess of costs and estimated earnings 97,510 104,236
Other current liabilities   101,139   86,216
Total current liabilities 298,385 281,693
Long-term debt, net of current maturities

 

 

Notes to former owners, net of current maturities 9,363 1,125
Other long-term liabilities   4,273   1,671
Total liabilities 312,021 284,489
Total stockholders’ equity   286,471   262,578
Total liabilities and stockholders’ equity $ 598,492 $ 547,067
 

Selected Cash Flow Data (in thousands):

   
 

Three Months Ended
December 31,

Twelve Months Ended
December 31,

(unaudited)  
2008   2007 2008 2007
Cash provided by (used in)
Operating activities $ 35,895 $ 58,101 $ 82,851 $ 83,642
Investing activities $ (3,913 ) $ (6,080 ) $ (65,034 ) $ (18,132 )
Financing activities $ (17,267 ) $ (10,117 ) $ (40,433 ) $ (16,165 )
 
Free cash flow:
Cash from operating activities $ 35,895 $ 58,101 $ 82,851 $ 83,642
Purchases of property and equipment (3,794 ) (3,262 ) (14,572 ) (11,088 )
Proceeds from sales of property and equipment       69     656     265  
 
Free cash flow $ 32,101   $ 54,908   $ 68,935   $ 72,819  
 
Note 1: Free cash flow is defined as cash flow from operating activities excluding items related to sale of businesses, 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.

Source: Comfort Systems USA, Inc.

Comfort Systems USA, Inc., Houston
Chief Financial Officer
William George, 713-830-9600

Our company went public in June 1997, with the intention of becoming a nationwide provider of building systems installation and maintenance.

Learn More