Comfort Systems USA Reports Second Quarter Results
Profits and Margins Increase Strongly on Higher Revenues
HOUSTON--(BUSINESS WIRE)--July 31, 2008--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 $15,193,000 or $0.38 per diluted share, for the quarter ended June 30, 2008, as compared to net income of $10,501,000 or $0.25 per diluted share, in the second quarter of 2007.
Bill Murdy, Comfort Systems USA's Chairman and CEO, said, "We are delighted to report that earnings per share increased by over 50% compared to the same quarter a year ago. This improvement continues our record of success and further demonstrates the productivity, quality and dedication of our operations and outstanding workforce."
The Company reported revenues of $355,097,000 ($318,691,000 on a same store basis) in the current quarter, as compared to $280,520,000 in 2007. The Company also reported free cash flow of $22,843,000 in the current quarter, as compared to $19,079,000 in 2007. Backlog as of June 30, 2008 was $780,156,000 compared to $811,255,000 as of March 31, 2008. On a same store basis, backlog as of June 30, 2008 was $701,055,000 as compared to $719,967,000 on June 30, 2007. Backlog at our Atlas subsidiary decreased by approximately $36,600,000 over the same period, which more than accounted for the decrease in total backlog.
Murdy continued, "Revenues were up significantly both on absolute and same store measures. Backlog, although down slightly, remains at or near record levels at the vast majority of our operations. Importantly, same store backlog versus one year earlier has increased excluding the purposeful decrease in backlog at our Atlas subsidiary."
The Company reported net income for the six months ended June 30, 2008 of $23,434,000 or $0.58 per diluted share, as compared to net income of $12,307,000 or $0.30 per diluted share in 2007. The Company also reported revenues of $650,802,000 for the first six months of 2008, as compared to $530,160,000 in 2007. Free cash flow for the six months ended June 30, 2008 was $19,125,000 as compared to free cash flow of $3,802,000 in 2007.
Bill Murdy concluded, "We are mindful of economic and financial challenges that confront the economy. In light of the consistency of our cash flows, the strength demonstrated in our backlog, and our recent success in bringing strong new operations and their excellent teams into the Comfort Systems USA family, we remain optimistic about the second half of 2008. Even if a significant nonresidential construction recession becomes fact, we believe that we can continue to demonstrate impressive profitability and growth to the fundamental value of Comfort Systems USA."
As previously announced, the Company will host a conference call to discuss its financial results and position in more depth on Friday, August 1, 2008 at 10:00 a.m. Central Time. The call-in number for this conference call is 1-888-713-4214 and enter 94297224 as the passcode. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=P8HMPDWV Y. (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.) 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, August 8, 2008 by calling 1-888-286-8010 with the conference passcode of 92285007, and will also be available on our website on the next business day following the call.
Comfort Systems USA(R) is a premier provider of business solutions addressing workplace comfort, with 73 locations in 58 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 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, national or regional weakness in non-residential construction activity, difficulty in obtaining or increased costs associated with bonding, shortages of labor and specialty building materials, the use of incorrect estimates for bidding a fixed price contract, undertaking contractual commitments that exceed our labor resources, retention of key management, the Company's backlog failing to translate into actual revenue or profits, errors in the Company's percentage of completion method of accounting, the result of competition in the Company's 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 the Company's reports filed with the Securities and Exchange Commission. Important factors that could cause actual results to differ are discussed under "Item 1A. Company Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2007. These forward-looking statements speak only as of the date of this release. 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 Comfort Systems USA, Inc.'s expectations with regard thereto or any change in events, 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, 2008 and 2007
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
June 30,
---------------------------------
2008 % 2007 %
--------- ------ --------- ------
Revenues $355,097 100.0% $280,520 100.0%
Cost of services 287,271 80.9% 228,797 81.6%
--------- ---------
Gross profit 67,826 19.1% 51,723 18.4%
SG&A 43,363 12.2% 35,207 12.6%
Gain on sale of assets (103) -- (27) --
--------- ---------
Operating income 24,566 6.9% 16,543 5.9%
Interest income, net 142 -- 529 0.2%
Other income 52 -- 24 --
--------- ---------
Income before income taxes 24,760 7.0% 17,096 6.1%
Income tax expense 9,567 6,595
--------- ---------
Net income $ 15,193 4.3% $ 10,501 3.7%
========= =========
Income per share:
Basic $ 0.38 $ 0.26
Diluted $ 0.38 $ 0.25
Shares used in computing income per
share:
Basic 39,634 40,655
Diluted 40,359 41,407
Six Months Ended
June 30,
---------------------------------
2008 % 2007 %
--------- ------ --------- ------
Revenues $650,802 100.0% $530,160 100.0%
Cost of services 529,556 81.4% 441,923 83.4%
--------- ---------
Gross profit 121,246 18.6% 88,237 16.6%
SG&A 84,003 12.9% 69,584 13.1%
Gain on sale of assets (133) -- (46) --
--------- ---------
Operating income 37,376 5.7% 18,699 3.5%
Interest income, net 820 0.1% 1,080 0.2%
Other income 158 -- 57 --
--------- ---------
Income before income taxes 38,354 5.9% 19,836 3.7%
Income tax expense 14,920 7,529
--------- ---------
Net income $ 23,434 3.6% $ 12,307 2.3%
========= =========
Income per share:
Basic $ 0.59 $ 0.30
Diluted $ 0.58 $ 0.30
Shares used in computing income per
share:
Basic 39,737 40,578
Diluted 40,422 41,355
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 Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2008 % 2007 % 2008 % 2007 %
-------- ---- -------- ---- -------- ---- -------- ----
Net income $15,193 $10,501 $23,434 $12,307
Income taxes 9,567 6,595 14,920 7,529
Other income (52) (24) (158) (57)
Interest
income, net (142) (529) (820) (1,080)
Gain on sale
of assets (103) (27) (133) (46)
Depreciation
and
amortization 3,341 1,679 5,881 3,223
-------- -------- -------- --------
Adjusted
EBITDA $27,804 7.8% $18,195 6.5% $43,124 6.6% $21,876 4.1%
======== ======== ======== ========
Note 1: The Company defines adjusted earnings before interest, taxes,
depreciation and amortization ("Adjusted EBITDA") as net income,
excluding income taxes, other income, interest income, 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,
2008 2007
------------ ------------
(unaudited)
Cash and cash equivalents $ 101,508 $ 139,631
Accounts receivable, net 297,762 261,402
Costs and estimated earnings in excess of
billings 25,686 18,463
Other current assets 33,575 31,127
------------ ------------
Total current assets 458,531 450,623
Property and equipment, net 32,632 21,442
Goodwill 85,956 68,621
Identifiable intangible assets, net 14,753 2,187
Other noncurrent assets 12,458 4,194
------------ ------------
Total assets $ 604,330 $ 547,067
============ ============
Current maturities of long-term debt $ -- $ --
Current maturities of notes to former owners 1,708 375
Accounts payable 104,910 90,866
Billings in excess of costs and estimated
earnings 117,756 104,236
Other current liabilities 90,336 86,216
------------ ------------
Total current liabilities 314,710 281,693
Long-term debt, net of current maturities -- --
Notes to former owners, net of current
maturities 11,125 1,125
Other long-term liabilities 3,558 1,671
------------ ------------
Total liabilities 329,393 284,489
Total stockholders' equity 274,937 262,578
------------ ------------
Total liabilities and stockholders' equity $ 604,330 $ 547,067
============ ============
Selected Cash Flow Data (in
thousands) (unaudited):
--------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2008 2007 2008 2007
--------- -------- --------- --------
Cash provided by (used in):
Operating activities $ 27,059 $21,224 $ 26,013 $ 8,396
Investing activities $ (1,302) $(2,144) $(45,607) $(9,016)
Financing activities $(12,885) $ (186) $(18,529) $(1,734)
Free cash flow:
Cash from operating activities $ 27,059 $21,224 $ 26,013 $ 8,396
Purchases of property and
equipment (4,253) (2,227) (7,005) (4,717)
Proceeds from sales of
property and equipment 37 82 117 123
--------- -------- --------- --------
Free cash flow $ 22,843 $19,079 $ 19,125 $ 3,802
========= ======== ========= ========
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.
CONTACT:
Comfort Systems USA, Inc., Houston
Chief Financial Officer
William George, 713-830-9600
SOURCE:
Comfort Systems USA, Inc.