Comfort Systems USA Reports First Quarter 2013 Results

Comfort Systems USA Reports First Quarter 2013 Results

HOUSTON--(BUSINESS WIRE)-- 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 $2,532,000 or $0.07 per diluted share, for the quarter ended March 31, 2013, as compared to a net loss attributable to Comfort Systems USA of $1,029,000 or $0.03 per diluted share, for the quarter ended March 31, 2012.

Brian Lane, Comfort Systems USA's Chief Executive Officer, said, "We are pleased to report to our stockholders a profitable first quarter providing a solid start to 2013. Our operations displayed remarkable and broad-based strength in the midst of continued low activity levels, especially in light of the fact that the first quarter historically reflects seasonal weakness."


The Company reported revenue of $325,890,000 in the current quarter as compared to $326,902,000 in 2012. Following a very strong fourth quarter cash flow, the Company reported negative free cash flow of $13,382,000 in the current quarter, as compared to a negative $21,490,000 in 2012. Backlog as of March 31, 2013 was $631,056,000 as compared to $617,951,000 as of December 31, 2012 and $620,306,000 as of March 31, 2012.

Mr. Lane concluded, "Although we are keenly aware of continuing industry challenges, our business is stable and we are preparing for the future. Backlog increased this quarter and we continue to expect 2013 results that are similar to 2012. We believe that we are positioned to grow as markets improve."

As previously announced, the Company will host a webcast and conference call to discuss its financial results and position in more depth on Thursday, May 2, 2013 at 10:00 a.m. Central Time. The call-in number for this conference call is 1-888-679-8035 and enter 95154467 as the passcode. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PR9MDFGAQ. 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 6:00 p.m. Central Time, Thursday, May 9, 2013 by calling 1-888-286-8010 with the conference passcode of 31292203, 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 87 locations in 72 cities around the nation. For more information, visit the Company's website atwww.comfortsystemsusa.com.

Certain statements and information in this press release may constitute forward-looking statements within the meaning 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 revenues 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; 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; 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.

Comfort Systems USA, Inc.
Consolidated Statements of Operations
For the Three Months Ended March 31, 2013 and 2012
(in thousands, except per share amounts)

Three Months Ended
March 31,

(unaudited)

2013

%

2012

%

Revenue

$

325,890

100.0

%

$

326,902

100.0

%

Cost of services

274,423

84.2

%

283,971

86.9

%

Gross profit

51,467

15.8

%

42,931

13.1

%

SG&A

46,520

14.3

%

46,051

14.1

%

Gain on sale of assets

(139

)

(117

)

Operating income (loss)

5,086

1.6

%

(3,003

)

(0.9

)%

Interest expense, net

(331

)

(0.1

)%

(393

)

(0.1

)%

Changes in the fair value of contingent earn-out obligations

(27

)

(30

)

Other income (expense)

64

51

Income (loss) before income taxes

4,792

1.5

%

(3,375

)

(1.0

)%

Income tax expense (benefit)

2,043

(944

)

Income (loss) from continuing operations

2,749

0.8

%

(2,431

)

(0.7

)%

Loss from discontinued operations, net of income tax benefit of $39 and $162

(54

)

(237

)

Net income (loss) including noncontrolling interests

2,695

0.8

%

(2,668

)

(0.8

)%

Less: Net income (loss) attributable to noncontrolling interests

163

(1,639

)

Net income (loss) attributable to Comfort Systems USA, Inc.

$

2,532

0.8

%

$

(1,029

)

(0.3

)%

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

Basic―

Income (loss) from continuing operations

$

0.07

$

(0.02

)

Income (loss) from discontinued operations

(0.01

)

Net income (loss)

$

0.07

$

(0.03

)

Diluted―

Income (loss) from continuing operations

$

0.07

$

(0.02

)

Income (loss) from discontinued operations

(0.01

)

Net income (loss)

$

0.07

$

(0.03

)

Shares used in computing income (loss) per share:

Basic

37,067

37,056

Diluted

37,333

37,056

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
March 31,

2013

%

2012

%

Net income (loss) including noncontrolling interests

$

2,695

$

(2,668

)

Discontinued operations

54

237

Income taxes

2,043

(944

)

Other expense (income), net

(64

)

(51

)

Changes in the fair value of contingent earn-out obligations

27

30

Interest expense, net

331

393

Gain on sale of assets

(139

)

(117

)

Depreciation and amortization

4,767

5,106

Adjusted EBITDA

$

9,714

3.0

%

$

1,986

0.6

%

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

March 31,
2013

December 31,
2012

(unaudited)

Cash and cash equivalents

$

25,435

$

40,757

Accounts receivable, net

271,499

256,959

Costs and estimated earnings in excess of billings

33,842

26,204

Assets related to discontinued operations

1,257

1,582

Other current assets

45,200

47,051

Total current assets

377,233

372,553

Property and equipment, net

41,496

41,416

Goodwill

114,588

114,588

Identifiable intangible assets, net

42,586

44,515

Other noncurrent assets

7,705

7,682

Total assets

$

583,608

$

580,754

Current maturities of long-term debt

$

300

$

300

Accounts payable

100,565

100,641

Billings in excess of costs and estimated earnings

75,284

73,814

Liabilities related to discontinued operations

439

767

Other current liabilities

93,635

93,065

Total current liabilities

270,223

268,587

Long-term debt, net of current maturities

2,100

2,100

Notes to former owners

5,000

5,000

Other long-term liabilities

17,509

17,761

Total liabilities

294,832

293,448

Comfort Systems USA, Inc. stockholders' equity

271,712

270,405

Noncontrolling interests

17,064

16,901

Total stockholders' equity

288,776

287,306

Total liabilities and stockholders' equity

$

583,608

$

580,754

Selected Cash Flow Data (in thousands):

Three Months Ended
March 31,

(unaudited)

2013

2012

Cash provided by (used in):

Operating activities

$

(10,351

)

$

(19,816

)

Investing activities

$

(2,988

)

$

(1,650

)

Financing activities

$

(1,983

)

$

(1,898

)

Free cash flow:

Cash from operating activities

$

(10,351

)

$

(19,816

)

Purchases of property and equipment

(3,208

)

(2,094

)

Proceeds from sales of property and equipment

177

420

Free cash flow

$

(13,382

)

$

(21,490

)

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.



Comfort Systems USA, Inc.
William George, 713-830-9600
Chief Financial Officer

KEYWORDS: United States North America Texas

INDUSTRY KEYWORDS:

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