form8-k.htm



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):
November 10, 2009

COMFORT SYSTEMS USA, INC.
______________________________________________
(Exact Name of Registrant as Specified in its Charter)

Delaware
___________________
(State or other
jurisdiction of
incorporation)
 
1-13011
_________________
(Commission
File Number)
76-0526487
___________________
 (I.R.S. Employer
Identification No.)

675 Bering Drive, Suite 400
Houston, Texas
________________________________________
77057
 
_______________
(Address of Principal Executive Offices)
(Zip Code)

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

Not Applicable
_______________________________________________________________________
(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:

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

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

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

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



 
 

 

 
Item 7.01
Regulation FD Disclosure

On the 10th day of November, 2009 Comfort Systems USA, Inc., a Delaware corporation (the “Company”), a leading provider of commercial/industrial heating, ventilation and air conditioning services, posted to the “Investor” section of its Internet website (www.comfortsystemsusa.com) an investor presentation slideshow.  The Company intends to use this presentation in making presentations to analysts, potential investors, and other interested parties.

The information included in the investor presentation includes financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  The Company’s management uses these non-GAAP measures in its analysis of the Company’s performance.  The Company believes that the presentation of certain non-GAAP measures provides useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses.  These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

The information in this Form 8-K being furnished under Item 7.01 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.  The investor presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are based on the Company’s expectations and involve risks and uncertainties that could cause the Company’s actual results to differ materially from those set forth in the statements.  These risks are discussed in the Company’s filings with the Securities and Exchange Commission, including an extensive discussion of these risks in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

A copy of the presentation is furnished herewith as Exhibit 99.1.

Item 9.01
Financial Statements and Exhibits

The following Exhibits are included herein:

Exhibit
Number
 
 
Exhibit Title or Description
 
Exhibit 99.1
 
 
Slideshow presentation dated November 10, 2009.
 
     

 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.
     
     
Date: November 10, 2009
By:
/s/   Trent T. McKenna                    
   
Trent T. McKenna
   
Vice President and General Counsel

 
 

 

Comfort Systems USA, Inc.
Current Report on Form 8-K
Dated November 10, 2009

EXHIBIT INDEX

Exhibit
Number
 
 
Exhibit Title or Description
 
Exhibit 99.1
 
 
Slideshow presentation dated November 10, 2009.
     

 
ex99_1.htm
As of November 10, 2009
 
 

 
This presentation 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 fluctuation 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 Risks 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.
 Safe Harbor Statement
 
 

 
3
To be the nation’s premier
HVAC and mechanical
systems installation
and services provider.
 Vision
 
 

 
4
 Mission
To provide the best value HVAC and
mechanical systems installation and
service, principally in the mid-market
commercial, industrial, and institutional
sectors, while caring for our customers,
employees and the
environment and
realizing superior returns for our
stockholders.
 
 

 
5
 Act with honesty and integrity.
 Show respect for all stakeholders.
 Exceed customer expectations.
 Seek “win-win” solutions.
 Demonstrate spirit, drive, and teamwork.
 Pursue innovation.
 Achieve premier safety performance.
 Commit to energy efficiency.
 Communicate openly…..and often.
 Impact our communities positively.
 Values
 
 

 
6
 Comfort Systems USA
§ National
§ Commercial, Industrial, Institutional
§ HVAC/Piping/Plumbing/Energy Efficiency
§ Strong balance sheet
§ Substantial positive cash flow
§ 52% new construction; 48% service, repair,
 retrofit (YTD Q3 09)
§ 2008 Full Year Revenues $1.3 billion
§ 2009 Full Year Run Rate $1.15 billion
 
 

 
7
 Comfort Today
Over $20M
$10M - - $20M
Comfort Systems USA Energy Services
Comfort Systems USA National Accounts
ANNUAL REVENUES
Region 3
 
 

 
8
 What We Do
Commercial HVAC
§ Building comfort
 a “necessity”
§ Mechanical equipment -
 requires service, repair,
 replacement
§ Increasing technical
 content and building
 automation
§ Energy efficiency and
 Indoor Air Quality (IAQ)
 emerging
§ Outsourcing
D R I V E R S
Commercial, Industrial, Institutional HVAC - A $40B+ Industry
Applied Systems
Piping
Energy Efficiency
 
 

 
9
 Industry Trend Toward Service &
 Replacement (Recurring Revenue)
§ 5+ million
 commercial
 buildings (DOE)
§ Recurring service
§ 20 year
 replacement
 cycle
§ “Inventory” of
 future business
§ OEMs note
 significant deferred
 maintenance &
 replacement over
 recent years
Source: The Trane Company
NEW CONSTRUCTION
70%
30%
0%
50%
100%
1980
Share of
Industry
Revenues
Time
70%
30%
SERVICE & REPLACEMENT
 
 

 
10
14%
34%
52%
 Revenues by Activity
New Construction/
Installation
Replacement
Service and
Maintenance
September 2009 YTD
 
 

 
11
PROJECT SIZE
# OF PROJECTS (As of September 30, 2009)
 Diverse Project Mix
Average Project Size
$425,000
Average Project Length
6-9 months
Value of Projects >$1M
$1,286.0M
Value of Projects <$1M
$612.5M
4,149
241
53
19
6
TOTAL PROJECTS = 4,468
 
 

 
12
Healthcare
Education
Government
Manufacturing
Office Building
Multi-Family
Retail/Restaurants
Other
Residential
24%
14%
12%
11%
9%
8%
12
%
1%
2%
Top Ten Customers
 Diverse End-Use Base
§ Served by 10 different Comfort operating units
§ Largest customer = less than 2% of revenues
Lodging & Entertainment
September 2009 YTD
4%
3%
 Religious & Not-for-Profit
 
 

 
13
 Diverse End-Use Base
Omni Orlando Resort at ChampionsGate
Orlando, Florida
University Hospital
Little Rock, Arkansas
Arboretum Elementary School
Waunakee, Wisconsin
Iowa Renewal Energy
Washington, Iowa
 
 

 
14
 Competitive Advantages
§ High quality operations
§ Ability to leverage and proliferate
 technical expertise
§ Ability to collaborate on large jobs
 and share labor
§ Energy efficiency services
§ National multi-location service capability
§ Purchasing economics
§ Balance sheet strength
§ Bonding and insurance
§ Strong safety record
 
 

 
15
§ OSHA Incident Rate decreased from
 3.21 to 2.94
§ Lost Time Injury Rate is 63% less than
 industry average
§ WC claims cost per payroll dollar down
 from 3.5% to <1%
§ Achieved 97.6% training completed
§ 26% reduction in the overall CSUSA
 Composite Safety Index Score from
 January to September 
Source: Bureau of Labor Statistics, Standard Industry Classification (SIC)
Code 20 1710 - Specialty Trades Contractors - HVAC and Plumbing & North American
Industry Classification System (NAICS) Code 23822
 Safety
48% Difference
20% Difference
Industry Average
(October 2008 - latest available data)
Comfort Systems USA
(September 2009 data)
Our safety record is no accident.
 
 

 
16
 History - Financial
Nonresidential
Construction
Spending
(FW Dodge)
9/11/01
298
854
1,370
1,591
1,546
819
785
767
893
1,057
1,110
1,329
Revenues
Acquisition Phase
and Industry Growth
Sale of Assets
 
 

 
 Financial Overview
 
 

 
18
 Financial Profile
 
($ in millions, except per share amounts)
 
 

 
19
 Revenues
Note: Excludes all divested and discontinued operations
 
 

 
20
 Operating Margins (a)
(a) This table includes non-GAAP financial information as the information
 provided excludes goodwill impairment charges of $0.6 million and
 $33.9 million for 2004 and 2005, respectively. No goodwill impairment
 charge was recorded for 2006, 2007 or 2008.
(b)  Operating margins for the nine months ended September 30, 2009 were
 5.1%.
 
 

 
 Backlog (in millions)
Note: Excludes all divested and discontinued operations
 
 

 
22
 Strong Cash Flows (in millions)
 
 

 
23
 Financial Strengths
§ Market share up - revenue and profit
 performance better than industry
§ Commitment to cost containment
§ $139.9 million cash at 9/30/09; substantial
 credit capacity if needed
§ Positive free cash flow for ten calendar
 years
 
 

 
24
 Profile For Growth
T I M E
Service
Commercial HVAC
 
 

 
25
 Operations
Increase Productivity
§ Education
  Leadership
  Project Managers
  Superintendents
  Service Sales
  Service Operations
  Craft
  Safety
§ Best Practices
  Project Management
  Estimating
§ Cooperation with suppliers
§ Prefabrication
§ New materials and methods
 
 

 
26
 Job Loop
Project
Estimating
Post-Project
Review
We review projects and apply what we have
learned to improve our performance.
Project
Pricing
Project
Qualification
Project
Management
 
 

 
27
The only things that evolve by
themselves in an organization are
disorder, friction and
malperformance.
-Peter Drucker
 
 

 
28
 Service
Increase Service*
§ Grow Maintenance Base
§ Education
 Employees and Customers
§ Higher margin opportunity
§ Recurring revenue
§ National accounts
§ $2.50+ of repair and replacement
 for every $1.00 of maintenance
§ Target Retrofit Projects
 Energy Efficiency
 Indoor Air Quality (IAQ)
* Maintenance, service, repair, retrofit
 
 

 
29
 National Account Customers
*Trademarks and logos are the property of their respective owners.
 
 

 
30
 Energy Efficiency-Retrofitting HVAC
Green Is Part Of Our Business
§ Energy costs drive need for efficiency
§ HVAC 30% - 65 % electric usage
§ Energy Star (Dept. of Energy/EPA) / LEED
 (USGBC)
Use Our Energy to Save Yours!
 
 

 
31
 Growth
§ Internal
  More of what we do best
  Service
  Energy efficiency
§ Step Out Growth
  New locations for existing companies
  Techs “on their own”
§ Targeted acquisitions
  Best HVAC oriented mechanical in
 new area
 
 

 
32
 $20 million + in revenue
 Construction and service
 In a growing market in new area
●      Company that has performed well in the
       past and has continuing demonstrable
       upside
 Organizational structure capable of
            sustaining/improving the company
 Ownership/management that wants to
            stay on to operate company
 The Ideal Candidate
 
 

 
33
 Boise, ID
 Charleston, SC
 Columbia/Florence, SC
 Dallas/Fort Worth, TX
 El Paso, TX
 Ft. Lauderdale, FL
 Los Angeles, CA
 Nashville, TN
 Norfolk, VA
 Target Markets
(Listed Alphabetically)
 Omaha, NE
●       Portland, OR
 Raleigh, NC
 Richmond, VA
 San Antonio, TX
 Savannah, GA
●       Spartanburg/Greenville, SC
 Tampa, FL
 Tulsa, OK
 
 

 
34
 Outlook
Long-Term
§ $40+ billion fragmented industry
§ HVAC is a basic necessity
§ Commercial construction continuing
§ Growing installed base for recurring
 maintenance, service, repair and retrofit
§ Scale opportunities - service, purchasing,
 prefab, bonding, best practices
§ Diverse customer base and geography
§ Energy efficiency and Indoor Air Quality
§ Financially and operationally sound - continuing
 to grow organically and by acquisition
 
 

 
35
 What We Do
 
 

 
 
 

 
37
 Appendix
 
 

 
38
 Appendix - GAAP Reconciliation To
 Adjusted EBITDA (in thousands)
 
 

 
C O N T A C T:
Bill George
Executive Vice President and CFO
1-800-723-8431
bgeorge@comfortsystemsusa.com
www.comfortsystemsusa.com