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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) July 28, 2021

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:

 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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

FIX

New York Stock Exchange

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).

Emerging growth company

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 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 July 28, 2021 reporting the Company’s financial results for the second quarter of 2021.

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 July 28, 2021 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, August 13, 2021.

ITEM 9.01        Financial Statements and Exhibits

(d) The following Exhibits are included herein:

Exhibit 99.1 Press Release of Comfort Systems USA, Inc. dated July 28, 2021 reporting the Company’s financial results for the second quarter of 2021.

Exhibit 99.2 Press Release of Comfort Systems USA, Inc. dated July 28, 2021 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, August 13, 2021.

2

EXHIBIT INDEX

Exhibit
Number

    

Exhibit Title or Description

99.1

Press Release of Comfort Systems USA, Inc. dated July 28, 2021 reporting the Company’s financial results for the second quarter of 2021.

99.2

Press Release of Comfort Systems USA, Inc. dated July 28, 2021 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, August 13, 2021.

104

Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).

3

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:      July 28, 2021

4

Exhibit 99.1

Graphic

CONTACT:

Julie Shaeff, Chief Accounting Officer

675 Bering Drive, Suite 400

ir@comfortsystemsusa.com; 713-830-9687

Houston, Texas 77057

713-830-9600

FOR IMMEDIATE RELEASE

COMFORT SYSTEMS USA REPORTS SECOND QUARTER 2021 RESULTS

Houston, TX — July 28, 2021 — Comfort Systems USA, Inc. (NYSE: FIX) today reported results for the quarter ended June 30, 2021.

For the quarter ended June 30, 2021, net income was $33.0 million, or $0.90 per diluted share, as compared to $39.5 million, or $1.08 per diluted share, for the quarter ended June 30, 2020. Revenue for the second quarter of 2021 was $713.9 million compared to $743.5 million in 2020. The Company reported operating cash flow of $25.4 million in the current quarter compared to $141.9 million in 2020.

Backlog as of June 30, 2021 was $1.84 billion as compared to $1.66 billion as of March 31, 2021 and $1.53 billion as of June 30, 2020. On a same-store basis, backlog increased from $1.53 billion as of June 30, 2020 to $1.73 billion as of June 30, 2021.

Brian Lane, Comfort Systems USA’s President and Chief Executive Officer, said, “We are happy to report an excellent second quarter. Our strong results were achieved despite sporadic revenue headwinds arising from pandemic-related delays in some areas and projects. Our sequential backlog increased by $180 million this quarter on a same-store basis, and that favorable trend supports our belief that any remaining effects from the pandemic are abating. Our essential workforce proved its mettle during the recent challenges, and they continue to excel as circumstances improve. We remain particularly grateful for their strength and perseverance.”

The Company reported net income of $59.5 million, or $1.63 per diluted share, for the six months ended June 30, 2021, as compared to $57.2 million, or $1.55 per diluted share, in 2020. The Company also reported revenue of $1.38 billion for the six months ended June 30, 2021, as compared to $1.44 billion in 2020. Operating cash flow for the six months ended June 30, 2021 was $110.1 million, as compared to $163.8 million in 2020.

Mr. Lane concluded, “With increasing backlog and the resulting new deployments, our cash flow reflects investments in working capital that we believe bode well for the future. In addition to our increased bookings, we are encouraged that our pipeline and bidding activity remain strong. In light of strong activity levels and our many investments in productivity and growth over the last few years, we are optimistic about our prospects for the next several quarters.”

The Company will host a webcast and conference call to discuss its financial results and position on Thursday, July 29, 2021 at 10:30 a.m. Central Time. The call-in number for this conference call is 1-877-319-0032, and the passcode is 7447577. The call and the slide presentation to accompany the remarks can be accessed on the Company’s website at www.comfortsystemsusa.com under the Investor tab. A replay of the entire call will be available on the Company’s website on the next business day following the call.

Comfort Systems USA® is a leading provider of commercial, industrial and institutional heating, ventilation, air conditioning and electrical contracting services, with 139 locations in 113 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 applicable securities laws and regulations. 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, and the Company’s actual results of operations, financial condition and liquidity, and the development of the industry in which the Company operates, may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of our results or developments in subsequent periods. 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 or material increases to the cost thereof; retention of key management; seasonal fluctuations in the demand for mechanical and 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; a material information technology failure or a material cyber security breach; risks associated with acquisitions; our ability to manage growth and geographically-dispersed operations; our ability to obtain financing on acceptable terms; 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.

— Financial tables follow —


Comfort Systems USA, Inc.

Consolidated Statements of Operations

(In Thousands, Except per Share Amounts)

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

(Unaudited)

 

(Unaudited)

 

    

2021

    

%  

        

2020

    

%  

 

    

2021

    

%  

        

2020

    

%  

 

Revenue

$

713,895

100.0

%

$

743,468

100.0

%

$

1,383,656

100.0

%

$

1,443,599

100.0

%

Cost of services

 

587,440

82.3

%

 

597,773

80.4

%

 

1,133,732

81.9

%

 

1,180,811

81.8

%

Gross profit

 

126,455

17.7

%

 

145,695

19.6

%

 

249,924

18.1

%

 

262,788

18.2

%

SG&A

 

87,549

12.3

%

 

85,045

11.4

%

 

175,763

12.7

%

 

177,969

12.3

%

Gain on sale of assets

 

(491)

 

(0.1)

%

 

(312)

 

 

(841)

 

(0.1)

%

 

(866)

 

(0.1)

%

Operating income

 

39,397

5.5

%

 

60,962

8.2

%

 

75,002

5.4

%

 

85,685

5.9

%

Interest expense, net

 

(1,357)

(0.2)

%

 

(2,526)

(0.3)

%

 

(2,851)

(0.2)

%

 

(5,079)

(0.4)

%

Changes in the fair value of contingent earn-out obligations

4,581

0.6

%

(3,871)

(0.5)

%

5,767

0.4

%

(1,599)

(0.1)

%

Other income

 

161

 

 

 

92

 

25

 

Income before income taxes

 

42,782

6.0

%

 

54,565

7.3

%

 

78,010

5.6

%

 

79,032

5.5

%

Provision for income taxes

 

9,817

 

15,070

 

18,554

 

21,821

Net income

$

32,965

4.6

%

$

39,495

5.3

%

$

59,456

4.3

%

$

57,211

4.0

%

Income per share

Basic

$

0.91

$

1.08

$

1.64

$

1.56

Diluted

$

0.90

$

1.08

$

1.63

$

1.55

Shares used in computing income per share:

Basic

 

36,403

 

36,581

 

36,345

 

36,628

Diluted

 

36,566

 

36,737

 

36,533

 

36,821

Dividends per share

$

0.115

$

0.105

$

0.230

$

0.210


Supplemental Non-GAAP Information — Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) — (Unaudited) (In Thousands)

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

    

2021

    

%  

    

2020

    

%  

 

    

2021

    

%  

    

2020

    

%  

 

 

 

Net income

$

32,965

$

39,495

$

59,456

$

57,211

Provision for income taxes

 

9,817

 

15,070

 

18,554

 

21,821

Other income, net

 

(161)

 

 

(92)

 

(25)

Changes in the fair value of contingent earn-out obligations

(4,581)

3,871

(5,767)

1,599

Interest expense, net

 

1,357

 

2,526

 

2,851

 

5,079

Gain on sale of assets

 

(491)

 

(312)

 

(841)

 

(866)

Depreciation and amortization

 

15,698

 

18,083

 

31,674

 

30,774

Adjusted EBITDA

$

54,604

 

7.6

%  

$

78,733

 

10.6

%

$

105,835

 

7.6

%  

$

115,593

 

8.0

%

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.


Comfort Systems USA, Inc.

Condensed Consolidated Balance Sheets

(In Thousands)

    

June 30,

    

December 31,

 

2021

2020

 

(Unaudited)

 

Cash and cash equivalents

$

53,659

$

54,896

Billed accounts receivable, net

 

630,446

 

619,544

Unbilled accounts receivable, net

 

53,624

 

45,596

Costs and estimated earnings in excess of billings, net

 

12,969

 

18,622

Other current assets, net

 

68,702

 

73,194

Total current assets

 

819,400

 

811,852

Property and equipment, net

 

113,589

 

117,206

Goodwill

 

472,046

 

464,392

Identifiable intangible assets, net

 

221,584

 

231,807

Other noncurrent assets

 

128,331

 

132,098

Total assets

$

1,754,950

$

1,757,355

Current maturities of long-term debt

$

4,235

$

Accounts payable

207,453

204,145

Billings in excess of costs and estimated earnings

 

255,357

 

226,237

Other current liabilities

 

254,365

 

262,522

Total current liabilities

 

721,410

 

692,904

Long-term debt, net

 

156,272

 

235,733

Other long-term liabilities

 

125,256

 

132,289

Total liabilities

 

1,002,938

 

1,060,926

Total stockholders’ equity

 

752,012

 

696,429

Total liabilities and stockholders’ equity

$

1,754,950

$

1,757,355


Selected Cash Flow Data (Unaudited) (In Thousands)

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

    

2021

    

2020

    

2021

    

2020

 

Cash provided by (used in):

Operating activities

$

25,422

$

141,866

$

110,069

$

163,786

Investing activities

$

(5,944)

$

(99,623)

$

(20,974)

$

(115,159)

Financing activities

$

(17,935)

$

(122,254)

$

(90,332)

$

(46,162)

Free cash flow:

Cash from operating activities

$

25,422

$

141,866

$

110,069

$

163,786

Purchases of property and equipment

(5,950)

 

(7,042)

 

(10,762)

 

(14,539)

Proceeds from sales of property and equipment

 

1,032

 

688

 

1,530

 

1,378

Free cash flow

$

20,504

$

135,512

$

100,837

$

150,625

Note: 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

Graphic

CONTACT:

Julie Shaeff, Chief Accounting Officer

675 Bering Drive, Suite 400

ir@comfortsystemsusa.com; 713-830-9687

Houston, Texas 77057

713-830-9600

FOR IMMEDIATE RELEASE

COMFORT SYSTEMS USA INCREASES QUARTERLY DIVIDEND

Houston, TX — July 28, 2021 — Comfort Systems USA, Inc. (NYSE: FIX), a leading provider of commercial, industrial and institutional heating, ventilation, air conditioning and electrical contracting services, today announced that its board of directors declared a quarterly dividend of $0.12 per share, which is a $0.005 increase from the Company’s most recent dividend, on Comfort Systems USA, Inc. common stock. The dividend is payable on August 24, 2021 to stockholders of record at the close of business on August 13, 2021.

Comfort Systems USA® is a premier provider of business solutions addressing workplace comfort, with 139 locations in 113 cities around the nation. For more information, visit the Company’s website at www.comfortsystemsusa.com.