UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
ITEM 7.01 Regulation FD Disclosure
On October 30, 2020, Comfort Systems USA, Inc., a Delaware corporation (the “Company”), a leading provider of commercial, industrial and institutional heating, ventilation, air conditioning and electrical contracting services, posted to the “Investor” section of its Internet website (www.comfortsystemsusa.com) an investor presentation slideshow. The Company intends to use this slideshow 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 Exchange Act of 1934, as amended (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, as amended, 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, as amended. 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, 2019.
A copy of the presentation is furnished herewith as Exhibit 99.1.
ITEM 9.01 Financial Statements and Exhibits
| (d) | Exhibits. |
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Exhibit
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Description | |
| 99.1 | Investor presentation dated October 30, 2020 | |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document). |
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/ Laura F. Howell | |
| Laura F. Howell, Vice President and General Counsel |
Date: October 30, 2020
Exhibit 99.1
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Quality People. Building Solutions. NYSE: FIX October 30, 2020 |
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SAFE HARBOR Certain statements and information in this presentation 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, as amended. 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; the Company’s business being negatively affected by health crises or outbreaks of disease, such as epidemics or pandemics; 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 mechanical or electrical 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 (the “SEC”). 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. NON-GAAP MEASURES Certain measures in this presentation are not measures calculated in accordance with generally accepted accounting principles (“GAAP”). They should not be considered a replacement for GAAP results. Non-GAAP financial measures appearing in these slides are identified in the footnote. See the Appendices for a reconciliation of these non-GAAP measures to the most comparable GAAP financial measures. |
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COMFORT SYSTEMS USA Leading national mechanical, electrical and plumbing (“MEP”) installation and service provider $2.8B yearly revenue 11,000 employees History of profitable growth Balanced construction and service portfolio |
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NATIONAL FOOTPRINT 137 locations|112 cities|11,000 employees 3 |
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REVENUE BREAKDOWN – YTD 2020 YTD 2020 Revenue = $2.16B Activity Market Sector 7%8% 13% 30% 42% Other 5% Retail / Restaurant / Entertainment 9% Healthcare 13% Office Buildings 11% Education 17% Government 6% Industrial 39% New Construction Existing Building Construction Modular Construction Service Projects |
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Cost of Sales Breakdown 2019 2018 15% 36% 11% 38% 15% 34% 11% 40% Materials Labor Subcontract Other 5 Other includes equipment rentals, vehicles, rent etc. |
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CONSTRUCTION BACKLOG ($ in millions) $1,800 $1,600 $1,400 $1,166 $1,000 $800 $763 $400 $200 $948 $1,602 $1,429 $-2016201720182019Q3 2020 |
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SERVICE MAINTENANCE BASE ($ in millions) $135 $130 $125 $120 $115 $110 $105 $100 $111$116$123$127$130 2016201720182019Q3 2020 |
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RECENT FINANCIAL PERFORMANCE (1) Adjusted EBITDA is a non-GAAP financial measure. See Appendix for a GAAP reconciliation to Adjusted EBITDA. |
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FOCUS ON CASH FLOW Positive free cash flow for 21 consecutive years Increased dividend for 7 consecutive years Debt/TTM EBITDA = 0.90 $70.5M cash at September 30, 2020 $222.3M total debt at September 30, 2020 Debt capacity $196.5M borrowings at 9/30/20 $600M senior credit facility 2025 maturity |
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CONSISTENT CAPITAL ALLOCATION ($ in thousands) Average 2006 - 2019 $8,749 13% $10,906 17% $45,034 70% $70,000 $60,000 $50,000 AcquisitionsShare RepurchasesDividends $56,273 $40,000 $30,000 $20,000 $10,000 $-Free Cash FlowDisc Spending |
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MODULAR OFF-SITE CONSTRUCTION 11 |
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OUR STRENGTH Consistent free cash flow Strong Balance Sheet Acquisition record Leading innovation Profitable growth |
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THANK YOU 13 137 Locations 36 operating companies across America at 137 locations in 112 cities 11,000 of the most qualified HVAC and electrical contracting personnel in America 11,000 Employees $2.8 Billion $2.8 billion in yearly revenue CONTACT: Bill George Executive Vice President & CFO 1 - 800 - 723 - 8431 Bill.George@comfortsystemsusa.com www.comfortsystemsusa.com |
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APPENDIX – GAAP RECONCILIATION TO ADJUSTED EBITDA Note: The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income, provision for 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. |