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) October 29, 2015

 

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 Drive, 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 and incorporated herein by reference as Exhibit 99.1 is a copy of a press release of Comfort Systems USA, Inc. (the “Company”) dated October 29, 2015 reporting the Company’s financial results for the third quarter of 2015.

 

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 and incorporated herein by reference as Exhibit 99.2 is a copy of a press release of the Company dated October 29, 2015 reporting the Company’s declaration of a quarterly dividend on the Company’s common stock to stockholders of record as of the close of business on the record date, November 10, 2015.

 

ITEM 9.01           Financial Statements and Exhibits

 

The following Exhibits are included herein:

 

Exhibit 99.1 Press Release of Comfort Systems USA, Inc. dated October 29, 2015 reporting the Company’s financial results for the third quarter of 2015.

 

Exhibit 99.2 Press Release of Comfort Systems USA, Inc. dated October 29, 2015 reporting the Company’s declaration of a quarterly dividend on the Company’s common stock to stockholders of record as of the close of business on the record date, November 10, 2015.

 

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, Senior Vice President and General Counsel General Counsel

 

Date:          October 29, 2015

 

3



 

EXHIBIT INDEX

 

Exhibit
Number

 

Exhibit Title or Description

 

 

 

99.1

 

Press Release of Comfort Systems USA, Inc. dated October 29, 2015 reporting the Company’s financial results for the third quarter of 2015.

 

 

 

99.2

 

Press Release of Comfort Systems USA, Inc. dated October 29, 2015 reporting the Company’s declaration of a quarterly dividend on the Company’s common stock to stockholders of record as of the close of business on the record date, November 10, 2015.

 

4


Exhibit 99.1

 

 

CONTACT:

William George

675 Bering Drive, Suite 400

 

Chief Financial Officer

Houston, Texas 77057

 

 

713-830-9600

 

 

713-830-9696

 

FOR IMMEDIATE RELEASE

 

COMFORT SYSTEMS USA REPORTS THIRD QUARTER 2015 RESULTS

 

Houston, TX — October 29, 2015 — 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 attributable to Comfort Systems USA of $17,673,000 or $0.46 per diluted share, for the quarter ended September 30, 2015, as compared to $7,605,000 or $0.20 per diluted share, for the quarter ended September 30, 2014.  The Company reported revenue of $410,565,000 in the current quarter, as compared to $370,145,000 in 2014.  The Company reported free cash flow of $18,421,000 in the current quarter, as compared to $17,540,000 in 2014.  Backlog as of September 30, 2015 was $666,332,000 as compared to $712,273,000 as of June 30, 2015 and $656,828,000 as of September 30, 2014.

 

Brian Lane, Comfort Systems USA’s President and Chief Executive Officer, said, “We are happy to report increased earnings this quarter, including record quarterly EPS.  This improvement continues a recent trend, and it demonstrates the remarkable productivity, quality and dedication of our operations and workforce.”

 

The Company reported net income attributable to Comfort Systems USA for the nine months ended September 30, 2015 of $36,143,000 or $0.96 per diluted share as compared to $12,381,000 or $0.33 per diluted share, for the first nine months of 2014.  The Company also reported revenue of $1,196,679,000.  On a same-store basis, the Company reported revenue of $1,176,625,000 as compared to $1,054,327,000 for the same period of 2014.  Free cash flow for the nine months ended September 30, 2015 was $60,258,000 as compared to $23,347,000 in the first nine months of 2014.

 

Mr. Lane concluded, “Although larger projects have not yet increased significantly and some markets continue to experience competitive pricing, we believe that the underlying demand for our services has strengthened overall, and we are optimistic about the opportunity that trend provides.  We believe that our investments over the last few years have positioned us for continued success, and we will use our strong and historically reliable cash flows to continue investing in our business, to acquire new businesses, and to reward our stockholders.”

 

As previously announced, the Company will host a webcast and conference call to discuss its financial results and position in more depth on Friday, October 30, 2015 at 10:00 a.m. Central Time.  The call-in number for this conference call is 1-888-679-8034 and enter 86799366 as the passcode.  Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PKPWGMNJ4.  The Company anticipates that an accompanying slide presentation will also be available under the Investor tab.  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 11:59 p.m. Central Time, Friday, November 6, 2015 by calling 1-888-286-8010 with the conference passcode of 41104923, 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 88 locations in 83 cities around the nation.  For more information, visit the Company’s website at www.comfortsystemsusa.com.

 

Certain statements and information in this press release may constitute forward-looking statements regarding our future business expectations, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” or other similar expressions are intended to identify forward-looking statements, which are generally not historic in nature. These forward-looking statements are based on the current expectations and beliefs of Comfort Systems USA, Inc. and its subsidiaries (collectively, the “Company”) concerning future developments and their effect on the Company. While the Company’s management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting the Company will be those that it anticipates. All comments concerning the Company’s expectations for future revenue and operating results are based on the Company’s forecasts for its existing operations and do not include the potential impact of any future acquisitions. The Company’s forward-looking statements involve significant risks and uncertainties (some of which are beyond the Company’s control) and assumptions that could cause actual future results to differ materially from the Company’s historical experience and its present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the use of incorrect estimates for bidding a fixed-price contract; undertaking contractual commitments that exceed the Company’s 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; the Company’s backlog failing to translate into actual revenue or profits; failure of third party subcontractors and suppliers to complete work as anticipated;  difficulty in obtaining or increased costs associated with bonding and insurance; impairment to goodwill; errors in the Company’s percentage-of-completion method of accounting; the result of competition in the Company’s markets; the Company’s decentralized management structure; material failure to comply with varying state and local laws, regulations or requirements; debarment from bidding on or performing government contracts; 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; an increase in our effective tax rate; an information technology failure or cyber security breach; and other risks detailed in our reports filed with the Securities and Exchange Commission.

 

For additional information regarding known material factors that could cause the Company’s results to differ from its projected results, please see its filings with the SEC, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.

 

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.

 

— Financial tables follow —

 



 

Comfort Systems USA, Inc.

Consolidated Statements of Operations

For the Three Months and Nine Months Ended September 30, 2015 and 2014

(in thousands, except per share amounts)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

(unaudited)

 

(unaudited)

 

 

 

2015

 

%

 

2014

 

%

 

2015

 

%

 

2014

 

%

 

Revenue

 

$

410,565

 

100.0

%

$

370,145

 

100.0

%

$

1,196,679

 

100.0

%

$

1,054,327

 

100.0

%

Cost of services

 

323,100

 

78.7

%

303,686

 

82.0

%

962,477

 

80.4

%

873,860

 

82.9

%

Gross profit

 

87,465

 

21.3

%

66,459

 

18.0

%

234,202

 

19.6

%

180,467

 

17.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SG&A

 

57,902

 

14.1

%

52,200

 

14.1

%

168,967

 

14.1

%

153,158

 

14.5

%

Goodwill impairment

 

 

 

 

 

 

 

727

 

0.1

%

Gain on sale of assets

 

(298

)

(0.1

)%

(526

)

(0.1

)%

(625

)

(0.1

)%

(748

)

(0.1

)%

Operating income

 

29,861

 

7.3

%

14,785

 

4.0

%

65,860

 

5.5

%

27,330

 

2.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(399

)

(0.1

)%

(559

)

(0.2

)%

(1,290

)

(0.1

)%

(1,344

)

(0.1

)%

Changes in the fair value of contingent earn-out obligations

 

 

 

(210

)

(0.1

)%

125

 

 

(210

)

 

Other income (expense)

 

37

 

 

12

 

 

64

 

 

104

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

29,499

 

7.2

%

14,028

 

3.8

%

64,759

 

5.4

%

25,880

 

2.5

%

Income tax expense

 

9,613

 

 

 

4,649

 

 

 

22,202

 

 

 

9,087

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

19,886

 

4.8

%

9,379

 

2.5

%

42,557

 

3.6

%

16,793

 

1.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of income tax benefit of $—, $—, $— and $10

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

19,886

 

4.8

%

9,379

 

2.5

%

42,557

 

3.6

%

16,778

 

1.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

2,213

 

 

 

1,774

 

 

 

6,414

 

 

 

4,397

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Comfort Systems USA, Inc.

 

$

17,673

 

4.3

%

$

7,605

 

2.1

%

$

36,143

 

3.0

%

$

12,381

 

1.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per share attributable to Comfort Systems USA, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.47

 

 

 

$

0.20

 

 

 

$

0.97

 

 

 

$

0.33

 

 

 

Loss from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

0.47

 

 

 

$

0.20

 

 

 

$

0.97

 

 

 

$

0.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.46

 

 

 

$

0.20

 

 

 

$

0.96

 

 

 

$

0.33

 

 

 

Loss from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

0.46

 

 

 

$

0.20

 

 

 

$

0.96

 

 

 

$

0.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

37,552

 

 

 

37,637

 

 

 

37,431

 

 

 

37,642

 

 

 

Diluted

 

38,007

 

 

 

37,924

 

 

 

37,844

 

 

 

37,917

 

 

 

 

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 Interests, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) — (Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2015

 

%

 

2014

 

%

 

2015

 

%

 

2014

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

$

19,886

 

 

 

$

9,379

 

 

 

$

42,557

 

 

 

$

16,778

 

 

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

15

 

 

 

Income taxes

 

9,613

 

 

 

4,649

 

 

 

22,202

 

 

 

9,087

 

 

 

Other expense (income), net

 

(37

)

 

 

(12

)

 

 

(64

)

 

 

(104

)

 

 

Changes in the fair value of contingent earn-out obligations

 

 

 

 

210

 

 

 

(125

)

 

 

210

 

 

 

Interest expense, net

 

399

 

 

 

559

 

 

 

1,290

 

 

 

1,344

 

 

 

Gain on sale of assets

 

(298

)

 

 

(526

)

 

 

(625

)

 

 

(748

)

 

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

727

 

 

 

Depreciation and amortization

 

5,922

 

 

 

5,708

 

 

 

17,386

 

 

 

15,362

 

 

 

Adjusted EBITDA

 

$

35,485

 

8.6

%

$

19,967

 

5.4

%

$

82,621

 

6.9

%

$

42,671

 

4.0

%

 

Note 1:  The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income including noncontrolling interests, excluding discontinued operations, income taxes, other expense (income), net, changes in the fair value of contingent earn-out obligations, 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, 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,

 

 

 

2015

 

2014

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

45,072

 

$

32,064

 

Accounts receivable, net

 

311,463

 

303,575

 

Costs and estimated earnings in excess of billings

 

36,359

 

27,620

 

Other current assets

 

45,046

 

49,933

 

Total current assets

 

437,940

 

413,192

 

Property and equipment, net

 

59,519

 

55,759

 

Goodwill

 

143,674

 

140,341

 

Identifiable intangible assets, net

 

42,491

 

45,666

 

Other noncurrent assets

 

10,902

 

10,792

 

Total assets

 

$

694,526

 

$

665,750

 

 

 

 

 

 

 

Current maturities of long-term capital lease obligations

 

$

360

 

$

317

 

Accounts payable

 

106,061

 

106,211

 

Billings in excess of costs and estimated earnings

 

80,401

 

77,446

 

Other current liabilities

 

122,314

 

98,663

 

Total current liabilities

 

309,136

 

282,637

 

Long-term debt

 

11,000

 

39,500

 

Long-term capital lease obligations

 

313

 

529

 

Other long-term liabilities

 

17,840

 

21,691

 

Total liabilities

 

338,289

 

344,357

 

Comfort Systems USA, Inc. stockholders’ equity

 

337,608

 

306,281

 

Noncontrolling interests

 

18,629

 

15,112

 

Total stockholders’ equity

 

356,237

 

321,393

 

Total liabilities and stockholders’ equity

 

$

694,526

 

$

665,750

 

 



 

Selected Cash Flow Data (in thousands):

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

(unaudited)

 

(unaudited)

 

 

 

2015

 

2014

 

2015

 

2014

 

Cash provided by (used in):

 

 

 

 

 

 

 

 

 

Operating activities

 

$

23,923

 

$

23,881

 

$

74,583

 

$

37,482

 

Investing activities

 

$

(5,799

)

$

(9,186

)

$

(20,483

)

$

(68,339

)

Financing activities

 

$

(13,766

)

$

(20,572

)

$

(41,092

)

$

22,685

 

 

 

 

 

 

 

 

 

 

 

Free cash flow:

 

 

 

 

 

 

 

 

 

Cash from operating activities

 

$

23,923

 

$

23,881

 

$

74,583

 

$

37,482

 

Purchases of property and equipment

 

(5,908

)

(7,033

)

(15,216

)

(15,367

)

Proceeds from sales of property and equipment

 

406

 

692

 

891

 

1,232

 

 

 

 

 

 

 

 

 

 

 

Free cash flow

 

$

18,421

 

$

17,540

 

$

60,258

 

$

23,347

 

 

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

713-830-9600

Fax 713-830-9696

 

CONTACT:                                                                               William George

Chief Financial Officer

 

FOR IMMEDIATE RELEASE

 

COMFORT SYSTEMS USA DECLARES QUARTERLY DIVIDEND

 

Houston, TX — October 29, 2015 — 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 $0.065 per share on Comfort Systems USA, Inc. common stock.  The dividend is payable on November 23, 2015 to stockholders of record at the close of business on November 10, 2015.

 

Comfort Systems USA® is a premier provider of business solutions addressing workplace comfort, with 88 locations in 83 cities around the nation.  For more information, visit the Company’s website at www.comfortsystemsusa.com.