Comfort Systems USA Reports Third Quarter Results
-- Strong Profits and Cash Flows --
HOUSTON--(BUSINESS WIRE)--Oct. 30, 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 $13,765,000 or $0.34 per diluted share, for the quarter ended September 30, 2008, as compared to net income of $11,478,000 or $0.28 per diluted share, in the third quarter of 2007. The Company reported revenues of $348,635,000 ($308,955,000 on a same store basis) in the current quarter, as compared to $286,090,000 in 2007. The Company also reported free cash flow of $17,709,000 in the current quarter, as compared to $14,109,000 in 2007. Total backlog as of September 30, 2008 was $804,699,000, which includes backlog from our acquisition during the quarter. On a same store basis, backlog at September 30, 2008 was $754,041,000 compared to $780,156,000 as of June 30, 2008.
Bill Murdy, Comfort Systems USA's Chairman and CEO, said, "Our results reflect a remarkable performance by our team members across the country. Compared to last year, our earnings increased by approximately 20%, which reflects yet another quarter of outstanding performance. Backlog remained at fundamentally high levels at the end of the quarter, and we continued to experience improved cash flow."
The Company reported net income for the nine months ended September 30, 2008 of $37,199,000 or $0.92 per diluted share, as compared to net income of $23,785,000 or $0.57 per diluted share in 2007. The Company also reported revenues of $999,437,000 for the first nine months of 2008, as compared to $816,250,000 in 2007. Free cash flow for the nine months ended September 30, 2008 was $36,834,000 as compared to free cash flow of $17,911,000 in 2007.
Bill Murdy concluded, "Our ongoing commitment to execution, cash discipline and cost control make us optimistic that we will continue to demonstrate strong performance in earnings and cash flow even as more challenging times confront us. We are in a very good sector and we believe that our strong focus on increasing our service and energy efficiency offering will enable us to be successful as we move forward. We also believe that not only will the commitments and investments we have made in efficiency and team member development benefit our fundamental business, together with our strong reputation and balance sheet they will enable us to capitalize on opportunities that may arise in a challenging overall environment."
As previously announced, the Company will host a conference call to discuss its financial results and position in more depth on Friday, October 31, 2008 at 10:00 a.m. Central Time. The call-in number for this conference call is 1-888-713-4213 and enter 23637472 as the passcode. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process? key=PG3TCE3HE. (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, November 7, 2008 by calling 1-888-286-8010 with the conference passcode of 22263245, 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 74 locations in 59 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 Nine Months Ended September 30, 2008 and 2007
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
September 30,
----------------------------------
2008 % 2007 %
--------- ------- --------- ------
Revenues $348,635 100.0% $286,090 100.0%
Cost of services 281,508 80.7% 231,792 81.0%
--------- ---------
Gross profit 67,127 19.3% 54,298 19.0%
SG&A 45,434 13.0% 36,173 12.6%
(Gain) loss on sale of assets (183) (0.1)% 32 --
--------- ---------
Operating income 21,876 6.3% 18,093 6.3%
Interest income, net 184 0.1% 735 0.3%
Other income (loss) -- -- (17) --
--------- ---------
Income before income taxes 22,060 6.3% 18,811 6.6%
Income tax expense 8,295 7,333
--------- ---------
Net income $ 13,765 3.9% $ 11,478 4.0%
========= =========
Income per share:
Basic $ 0.35 $ 0.28
Diluted $ 0.34 $ 0.28
Shares used in computing income per
share:
Basic 39,403 40,731
Diluted 40,048 41,479
Nine Months Ended
September 30,
---------------------------------
2008 % 2007 %
--------- ------ --------- ------
Revenues $999,437 100.0% $816,250 100.0%
Cost of services 811,064 81.2% 673,715 82.5%
--------- ---------
Gross profit 188,373 18.8% 142,535 17.5%
SG&A 129,437 13.0% 105,757 13.0%
(Gain) loss on sale of assets (316) -- (14) --
--------- ---------
Operating income 59,252 5.9% 36,792 4.5%
Interest income, net 1,004 0.1% 1,815 0.2%
Other income (loss) 158 -- 40 --
--------- ---------
Income before income taxes 60,414 6.0% 38,647 4.7%
Income tax expense 23,215 14,862
--------- ---------
Net income $ 37,199 3.7% $ 23,785 2.9%
========= =========
Income per share:
Basic $ 0.94 $ 0.59
Diluted $ 0.92 $ 0.57
Shares used in computing income per
share:
Basic 39,625 40,629
Diluted 40,296 41,397
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,
--------------------------- ---------------------------
2008 % 2007 % 2008 % 2007 %
-------- ---- -------- ---- -------- ---- -------- ----
Net income $13,765 $11,478 $37,199 $23,785
Income taxes 8,295 7,333 23,215 14,862
Other (income) --
loss 17 (158) (40)
Interest
income, net (184) (735) (1,004) (1,815)
(Gain) loss on
sale of
assets (183) 32 (316) (14)
Depreciation
and
amortization 3,689 1,698 9,570 4,921
-------- -------- -------- --------
Adjusted
EBITDA $25,382 7.3% $19,823 6.9% $68,506 6.9% $41,699 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) loss, interest income, net,
(gain) loss 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,
2008 2007
------------- ------------
(unaudited)
Cash and cash equivalents $ 102,300 $ 139,631
Accounts receivable, net 296,014 261,402
Costs and estimated earnings in excess of
billings 25,600 18,463
Other current assets 34,867 31,127
------------- ------------
Total current assets 458,781 450,623
Property and equipment, net 34,819 21,442
Goodwill 88,872 68,621
Identifiable intangible assets, net 18,482 2,187
Other noncurrent assets 13,976 4,194
------------- ------------
Total assets $ 614,930 $ 547,067
============= ============
Current maturities of long-term debt $ -- $ --
Current maturities of notes to former
owners 1,708 375
Accounts payable 96,592 90,866
Billings in excess of costs and estimated
earnings 116,951 104,236
Other current liabilities 97,809 86,216
------------- ------------
Total current liabilities 313,060 281,693
Long-term debt, net of current maturities -- --
Notes to former owners, net of current
maturities 13,125 1,125
Other long-term liabilities 2,843 1,671
------------- ------------
Total liabilities 329,028 284,489
Total stockholders' equity 285,902 262,578
------------- ------------
Total liabilities and stockholders'
equity $ 614,930 $ 547,067
============= ============
Selected Cash Flow Data (in
thousands) (unaudited):
-------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2008 2007 2008 2007
--------- -------- --------- ---------
Cash provided by (used in):
Operating activities $ 20,943 $17,145 $ 46,956 $ 25,541
Investing activities $(15,514) $(3,036) $(61,121) $(12,052)
Financing activities $ (4,637) $(4,314) $(23,166) $ (6,048)
Free cash flow:
Cash from operating
activities $ 20,943 $17,145 $ 46,956 $ 25,541
Purchases of property and
equipment (3,773) (3,109) (10,778) (7,826)
Proceeds from sales of
property and equipment 539 73 656 196
--------- -------- --------- ---------
Free cash flow $ 17,709 $14,109 $ 36,834 $ 17,911
========= ======== ========= =========
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
William George, 713-830-9600
Chief Financial Officer
SOURCE:
Comfort Systems USA, Inc.