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
Date of Report (Date of
earliest event reported)
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction | (Commission | (IRS Employer | ||
| of incorporation) | File Number) | Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number,
including area code (
(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:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
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 7.01 Regulation FD Disclosure
On August 2, 2024, 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, 2023.
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 2, 2024 | |
| 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 2, 2024
Exhibit 99.1
Quality People. Building Solutions. NYSE: FIX August 2, 2024
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 limited to: the use of incorrect estimates for bidding a fixed - price contract; undertaking contractual commitments that exceed t he Company’s labor labor resources; failing to perform contractual obligations efficiently enough to maintain profitability; national or regiona l w eakness in construction activity construction activity and economic conditions; rising inflation and fluctuations in interest rates; shortages of labor and sp eci alty building materials or materials or material increases to the cost thereof; the Company’s business being negatively affected by health crises or out bre aks of disease, such as such as epidemics or pandemics (and related impacts, such as supply chain disruptions); financial difficulties affecting proj ect s, vendors, customers, or customers, or subcontractors; the Company’s backlog failing to translate into actual revenue or profits; failure of third par ty subcontractors and suppliers to suppliers to complete work as anticipated; difficulty in obtaining, or increased costs associated with, bonding and insuranc e; impairment to goodwill; errors goodwill; errors in the Company’s cost - to - cost input method of accounting; the result of competition in the Company’s markets; t he Company’s decentralized management structure; material failure to comply with varying state and local laws, regulations or requirements ; d ebarment from bidding on bidding on or performing government contracts; retention of key management; seasonal fluctuations in the demand for mechanica l a nd electrical systems; systems; the imposition of past and future liability from environmental, safety, and health regulations including the inheren t r isk associated with self - self - insurance; adverse litigation results; an increase in our effective tax rate; a material information technology failure or a material cyber security breach; security breach; risks associated with acquisitions, such as challenges to our ability to integrate those companies into our int ernal control environment; our environment; our ability to manage growth and geographically - dispersed operations; our ability to obtain financing on acceptable terms; extreme weather weather conditions (such as storms, droughts, extreme heat or cold, wildfires and floods), including as a result of climate c han ge, and any resulting resulting regulations or restrictions related thereto; and other risks detailed in our reports filed with the Securities and Ex change Commission (the “SEC”). (the “SEC”). For additional information regarding known material factors that could cause the Company’s results to differ from its project ed results, please see its please see its filings with the SEC, including its Annual Report on Form 10 - K, Quarterly Reports on Form 10 - Q, and Current Repor ts on Form 8 - K. Readers are 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 undertakes no obligation to publicly update or revise any forward - looking statements after the date they are made, whether becau se of new information, 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 should not be considered a replacement for GAAP results. Non - GAAP financial measures appearing in these slides are identified in the footnote. See the 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 • $6.0+ billion yearly revenue • 17,000+ employees • History of profitable growth • Advantageous mechanical, electrical, and modular construction and service portfolio
NATIONAL FOOTPRINT 3 177 locations | 136 cities | 17,000+ employees
MARKET OUTLOOK 4 Strong Markets • Technology – Data Centers and Chip Manufacturing • Life Sciences - Pharmaceuticals • Food Processing • Manufacturing • Healthcare • EV Battery Trends • Industrial • Re - Shoring • Indoor Air Quality • Service • Modular
Mechanical 79% Electrical 21% SEGMENT BREAKDOWN – YTD 2024 5 REVENUE Mechanical 75% Electrical 25% GROSS PROFIT YTD 2024 Gross Profit = $661.0M YTD 2024 Revenue = $3,347.3M
Service Projects 7% Service and Maintenance 9% New Construction 42% Existing Construction 24% Modular 18% REVENUE BREAKDOWN – 2024 6 ACTIVITY 2024 Revenue = $3.35B Healthcare 8% Education 10% Government 5% Manufacturing 30% Technology 31% Office Buildings 6% Other 4% Retail 6% MARKET SECTOR
CONSTRUCTION BACKLOG 7 $763 $948 $1,166 $1,602 $1,511 $2,312 $4,064 $5,157 $5,772 $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 2016 2017 2018 2019 2020 2021 2022 2023 Q2 2024 ($ in millions)
SERVICE MAINTENANCE BASE 8 $111 $116 $123 $127 $130 $147 $161 $165 $171 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 2016 2017 2018 2019 2020 2021 2022 2023 Q2 2024 ($ in millions)
RECENT FINANCIAL PERFORMANCE 9 THREE MONTHS ENDED SIX MONTHS ENDED ($ in millions, except per share information) 6/30/24 6/30/23 6/30/24 6/30/23 Revenue $1,810.3 $1,296.4 $3,347.3 $2,471.1 Net Income $134.0 $69.5 $230.3 $126.7 Diluted EPS $3.74 $1.93 $6.43 $3.53 Adjusted EPS (1) $3.74 $1.93 $6.43 $3.45 Adjusted EBITDA (2) $222.7 $111.6 $392.5 $201.9 Operating Cash Flow $189.9 $125.4 $336.4 $252.3 (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.
ACCELERATED CASH 10 $723.7 $427.0 $- $100 $200 $300 $400 $500 $600 $700 $800 TTM 6/30/2024 Operating Cash Flow TTM 6/30/2024 Net Income ($ Millions) - TTM operating cash flow far exceeds TTM net income - At 6/30/24, we have a very substantial amount of unearned customer cash - Pre - bookings and equipment advances will normalize creating cash flow headwind when project costs are incurred
FINANCIAL STRENGTH • Positive free cash flow for 25 consecutive years • Increased dividend for 12 consecutive years • Debt/TTM EBITDA = 0.13 • $199.4 M cash at June 30, 2024 • $91.1 M total debt at June 30, 2024 • Debt capacity – No borrowings at 6/30/24 – $850M senior credit facility – 2027 maturity 11
12 CAPITAL ALLOCATION ($ in thousands) $82,524 75% $15,839 14% $11,774 11% AVERAGE 2007 - 2023 Acquisitions Share Repurchases Dividends
13 CAPITAL RETURNED ($ 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 $38,216 $20,077 $58,293 2023 $21,184 $30,379 $51,563 2024 YTD $11,139 $19,634 $30,773
MODULAR OFF - SITE CONSTRUCTION 14
Foster a safe, collaborative, and inclusive environment for our employees • Recently launched a Diversity, Equity and Inclusion Council, consisting of a broad group of internal stakeholders to ensure the Company continually takes meaningful steps to remain an inclusive place of business • 100% of operational sites have conducted an employee health and safety risk assessment and utilize the CAUSE Mapping program and the “5x5” initiative • As part of our commitment to employee health and well - being, Comfort Systems USA offers all employees and family members in their household access to 24/7 support for confidential emotional support, work - life solutions, legal guidance, and financial resources Our sustainability goals are embedded in how we operate as a business – they are part of our very foundation and core values of being safe, honest, respectful, collaborative, and innovative – and we have diligently sought to develop transparent disclosures to support our sustainability commitments . As a company, we recognize that while our work lends itself to sustainable best practices, there is more we can do to create a positive impact . We are committed to a continual improvement approach to sustainability . PEOPL E PARTNER S PLANE T Be reliable, honest, and innovative partners to our customers and suppliers • 100% of all operational sites have completed an internal audit/risk assessment concerning business ethics issues • Bronze EcoVadis Sustainability Rating achieved in 2023 • Sustainable Procurement Policy launched in 2021 • Developed a Supplier Diversity Program and launched a Supplier Code of Conduct in 2021 • Developed and implemented a Human Rights Policy in 2022 Operate with the intention to positively impact the environment through our work and the services we provide to our customers • Comfort Systems USA has completed a Greenhouse Gas ("GHG") Inventory covering all relevant Scope 1 and 2 emissions across our operations for the years 2021, 2022, and 2023, facilitating a deeper analysis and comparative data in our 2023 Sustainability Report • Previously, we developed and shared sustainable transportation guidelines with all operating companies to utilize best practices in fleet management, business travel, route optimization, and employee commuting • Performed our first climate risk analysis in 2023 Energy Efficiency GHG Emissions Data Privacy/ Cybersecurity Risk Management Employee Hiring and Retention Training and Development Worker Health and Safety Diversity, Equity, and Inclusion Material Topics Material Topics Material Topics SUSTAINABILITY OVERVIEW 15
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 16
17 Be safe Be honest Be respectful Be innovative Be collaborative OUR VALUES
OUR STRENGTH 18 • Consistent free cash flow • Strong Balance Sheet • Acquisition record • Attractive geographies • Leading innovation • Profitable growth
THANK YOU 19 177 Locations 47 operating companies across America at 177 locations in 136 cities 17,000+ of the most qualified HVAC and electrical contracting personnel in America 17,000+ Employees $6.0+ Billion Approximately $6.0+ billion in yearly revenue CONTACT: Julie Shaeff Chief Accounting Officer 1 - 800 - 723 - 8431 ir@comfortsystemsusa.com www.comfortsystemsusa.com
APPENDIX I – GAAP RECONCILIATION TO ADJUSTED EBITDA 20 Three Months Ended June 30, Six Months Ended June 30, ($ in thousands) 2024 2023 2024 2023 Net Income $134,009 $69,476 $230,328 $126,692 Provision for Income Taxes 35,646 15,726 62,383 24,335 Other Income, net (119) (44) (236) (45) Changes in the Fair Value of Contingent Earn - out Obligations 14,689 3,098 27,180 5,480 Interest Expense, net 445 3,826 475 6,505 Gain on Sale of Assets (611) (592) (1,431) (1,104) Tax - related SG&A costs — — — 421 Amortization 26,890 11,013 50,803 21,344 Depreciation 11,790 9,073 23,044 18,260 Adjusted EBITDA $222,739 $111,576 $392,546 $201,888 Note: The Company defines adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) as ne t i ncome, provision for income taxes, other expense (income), net, changes in the fair value of contingent earn - out obligations, interest expense (income), net, gain on sale of assets, goodwill i mpairment, 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 financia l m easure 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 financia l r esults, 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 an d a s reported by the Company.
APPENDIX II – GAAP RECONCILIATION TO ADJUSTED EPS 21 Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Diluted Income per Share $3.74 $1.93 $6.43 $3.53 Tax Gains Related to Prior Years — — — (0.09) Tax - Related SG&A Costs, Net of Tax — — — 0.01 Diluted Income per Share Excluding Tax Gains $3.74 $1.93 $6.43 $3.45 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.