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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| ITEM 7.01 | Regulation FD Disclosure |
On August 4, 2022, 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 applicable securities laws and regulations. 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, 2021.
A copy of the presentation is furnished herewith as Exhibit 99.1.
| ITEM 9.01 | Financial Statements and Exhibits |
(d) Exhibits.
| Exhibit Number |
Description | |
| 99.1 | Investor presentation dated August 4, 2022 | |
| 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 Senior Vice President and General Counsel |
Date: August 4, 2022
Exhibit 99.1
Quality People. Building Solutions. NYSE: FIX August 4, 2022
SAFE HARBOR Certain statements and information in this presentation may constitute forward - looking statements within the meaning of applicab le securities laws securities laws and regulations. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “c ould,” or other similar expressions are intended to identify forward - looking statements, which are generally not historic in nature. These forward - looki ng statements are based on are based on the current expectations and beliefs of Comfort Systems USA, Inc. and its subsidiaries (collectively, the “Compa ny” ) concerning future future developments and their effect on the Company. While the Company’s management believes that these forward - looking statemen ts are reasonable as reasonable as and when made, there can be no assurance that future developments affecting the Company will be those that it a nti cipates, and the the Company’s actual results of operations, financial condition and liquidity, and the development of the industry in which t he Company operates, may differ operates, may differ materially from those made in or suggested by the forward - looking statements contained in this presentation . In addition, even if our even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate , a re consistent with the forward - the forward - looking statements contained in this presentation, those results or developments may not be indicative of our result s or developments in developments in subsequent periods. All comments concerning the Company’s expectations for future revenue and operating resu lts are based on the on the Company’s forecasts for its existing operations and do not include the potential impact of any future acquisitions. Th e C ompany’s forward - looking forward - looking statements involve significant risks and uncertainties (some of which are beyond the Company’s control) and assu mptions that could cause 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, bu t are not limited to: the use of incorrect estimates for bidding a fixed - price contract; undertaking contractual commitments that exceed the Company’s lab or resources; failing to perform contractual obligations efficiently enough to maintain profitability; national or regional weakness in construction a cti vity and economic conditions; rising inflation and fluctuations in interest rates; shortages of labor and specialty building materials or material increase s t o the cost thereof; the Company’s business being negatively affected by health crises or outbreaks of disease, such as epidemics or pandemics (and related impa cts , such as vaccine mandates or supply chain disruptions); financial difficulties affecting projects, vendors, customers, or subcontractors; the Company’s ba cklog failing to translate into actual revenue or profits; failure of third party subcontractors and suppliers to complete work as anticipated; difficulty i n o btaining or increased costs associated with bonding and insurance; impairment to goodwill; errors in the Company’s percentage - of - completion method of accoun ting; the result of competition in the Company’s markets; the Company’s decentralized management structure; material failure to comply with varyi ng state and local laws, regulations or requirements; debarment from bidding on or performing government contracts; retention of key management; seaso nal fluctuations in the demand for mechanical and electrical systems; the imposition of past and future liability from environmental, safety, and hea lth regulations including the inherent risk associated with self - insurance; adverse litigation results; an increase in our effective tax rate; a material info rmation technology failure or a material cyber security breach; risks associated with acquisitions, such as challenges to our ability to integrate those comp ani es into our internal control environment; our ability to manage growth and geographically - dispersed operations; our ability to obtain financing on acceptable terms; extreme weather conditions (such as storms, droughts, extreme heat or cold, wildfires and floods), including as a result of climate change, a nd any resulting regulations or restrictions related thereto; and other risks detailed in our reports filed with the Securities and Exchange Commission (the “S EC”). For additional information regarding known material factors that could cause the Company’s results to differ from its project ed 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 obligat ion 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 ot herwise. 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.
COMFORT SYSTEMS USA 2 • Leading national mechanical, electrical and plumbing (“MEP”) installation and service provider • $3.5+ billion yearly revenue • 14,000 employees • History of profitable growth • Balanced construction and service portfolio
NATIONAL FOOTPRINT 3 174 locations | 128 cities | 14,000 employees
9% 13% 40% 29% 9% New Construction Existing Building Construction Modular Construction Service Projects Service Calls, Maintenance & Monitoring REVENUE BREAKDOWN – YTD 2022 4 ACTIVITY YTD 2022 Revenue = $1.90B Healthcare 14% Education 11% Government 7% Industrial 46% Office Buildings 8% Other 6% Retail / Restaurant / Entertainment 8% MARKET SECTOR
CONSTRUCTION BACKLOG 5 $763 $948 $1,166 $1,602 $1,511 $2,312 $2,808 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 2016 2017 2018 2019 2020 2021 Q2 2022 ($ in millions)
SERVICE MAINTENANCE BASE 6 $111 $116 $123 $127 $130 $147 $157 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 2016 2017 2018 2019 2020 2021 Q2 2022 ($ in millions)
RECENT FINANCIAL PERFORMANCE 7 THREE MONTHS ENDED SIX MONTHS ENDED ($ in millions, except per share information) 6/30/22 6/30/21 6/30/22 6/30/21 Revenue $1,017.9 $713.9 $1,903.2 $1,383.7 Net Income $42.2 $33.0 $129.0 $59.5 Diluted EPS $1.17 $0.90 $3.57 $1.63 Adjusted EPS (1) $1.17 $0.90 $2.08 $1.63 Adjusted EBITDA (2) $76.9 $54.6 $137.5 $105.8 Operating Cash Flow $44.6 $25.4 $108.3 $110.1 (1) Adjusted EPS is a non - GAAP financial measure. Adjusted EPS excludes tax gains. See Appendix II for a GAAP reconciliation to Ad justed EPS. (2) Adjusted EBITDA is a non - GAAP financial measure. See Appendix I for a GAAP reconciliation to Adjusted EBITDA.
FOCUS ON CASH FLOW • Positive free cash flow for 23 consecutive years • Increased dividend for 10 consecutive years • Debt/TTM EBITDA = 1.41 • $69.1M cash at June 30, 2022 • $405.6M total debt at June 30, 2022 • Debt capacity – $360M borrowings at 6/30/22 – $850M senior credit facility – 2027 maturity 8
9 CONSISTENT CAPITAL ALLOCATION ($ in thousands) $73,595 76% $13,116 14% $9,711 10% AVERAGE 2006 - 2021 Acquisitions Share Repurchases Dividends
10 CAPITAL RETURNED ($ in thousands) FISCAL PERIODS SHARE REPURCHASES DIVIDENDS CAPITAL RETURNED 2015 $8,330 $9,358 $17,688 2016 $13,088 $10,264 $23,352 2017 $9,007 $10,987 $19,994 2018 $28,533 $12,268 $40,801 2019 $19,550 $14,543 $34,093 2020 $30,120 $15,499 $45,619 2021 $27,054 $17,384 $44,438 2022 YTD $32,854 $9,699 $42,553
MARKET OUTLOOK 11 Strong Markets • Technology – Data Centers and Chip Manufacturing • Life Sciences - Pharmaceuticals • Food Processing • Manufacturing • Healthcare Trends • Industrial • Re - Shoring • Indoor Air Quality • Service • Modular
MODULAR OFF - SITE CONSTRUCTION 12
13 Be safe Be honest Be respectful Be innovative Be collaborative OUR VALUES
OUR STRENGTH 14 • Consistent free cash flow • Strong Balance Sheet • Acquisition record • Leading innovation • Profitable growth
Time Innovation INNOVATION WITH AN EMPHASIS ON PRODUCTIVITY 2004 – 2014 • Early adoption of BIM • Industry - leading prefabrication • Best practice sharing across subsidiaries 2014 – Present • Investments in advanced BIM technologies • EAS & TAS modular construction • Mobile technology deployment in service Future • Pilots of emerging technologies • Partnerships with industry leading tech firms • Data analytics to drive business insights 15
THANK YOU 16 174 Locations 42 operating companies across America at 174 locations in 128 cities 14,000 of the most qualified HVAC and electrical contracting personnel in America 14,000 Employees $3.5+ Billion $3.5+ billion in yearly revenue CONTACT: Julie Shaeff Chief Accounting Officer 1 - 800 - 723 - 8431 ir@comfortsystemsusa.com www.comfortsystemsusa.com
APPENDIX I – GAAP RECONCILIATION TO ADJUSTED EBITDA 17 Three Months Ended June 30, Six Months Ended June 30, ($ in thousands) 2022 2021 2022 2021 Net Income $42,246 $32,965 $129,008 $59,456 Provision (Benefit) for Income Taxes 11,269 9,817 (37,784) 18,554 Other (Income) Expense, net 1 (161) (55) (92) Changes in the Fair Value of Contingent Earn - out Obligations 115 (4,581) (3,973) (5,767) Interest Expense, net 3,020 1,357 5,146 2,851 Gain on Sale of Assets (383) (491) (706) (841) Tax - related SG&A costs — — 4,455 — Depreciation and Amortization 20,616 15,698 41,453 31,674 Adjusted EBITDA $76,884 $54,604 $137,544 $105,835 Note: The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net in come, 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 , other one - time expenses or gains 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 acco rdi ngly, 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 t he Company.
APPENDIX II – GAAP RECONCILIATION TO ADJUSTED EPS 18 Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Diluted Income per Share $1.17 $0.90 $3.57 $1.63 Tax Gains — — (1.59) — Tax - Related SG&A Costs, Net of Tax — — 0.10 — Diluted Income per Share Excluding Tax Gains $1.17 $0.90 $2.08 $1.63 Note: Diluted income per share excluding tax gains is presented because the Company believes it reflects the results of the cor e ongoing operations of the Company, and we believe it is responsive to frequent questions we receive from third parties. This measure, however, is not considered a primary measure of an entity’s fin ancial results under generally accepted accounting principles, and accordingly, should not be considered an alternative to operating results as determined under generally accepted accounting p rin ciples and as reported by the Company.