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TheStreet Open House

Comfort Systems USA Reports Fourth Quarter And Full Year Results

Note 2: The tax rate on these items was computed using the pro forma effective tax rate of the Company exclusive of these charges.

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

    Three Months Ended   Twelve Months Ended
    December 31,   December 31,
  2010 %     2009 %   2010 %     2009 %
Net income $ 5,796 $ 7,602 $ 14,740 $ 34,182
Discontinued operations (66 ) (723 ) 414
Income taxes 2,196 4,144 6,360 21,437
Other income (1,166 ) (12 ) (1,841 ) (17 )
Interest expense, net 283 163 1,506 617
Gain on sale of assets (23 ) (8 ) (525 ) (106 )
Goodwill impairment 1,288 5,734
Depreciation and amortization   5,560   3,630   17,442   13,432
Adjusted EBITDA $ 13,934 4.4% $ 15,453 6.0% $ 42,693 3.9% $ 69,959 6.2%

Note 1: The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income, excluding discontinued operations, income taxes, other income, 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)
  December 31,

2010

  December 31,

2009

 
Cash and cash equivalents $ 86,346 $ 127,850
Accounts receivable, net 233,893 203,353
Costs and estimated earnings in excess of billings 26,648 20,432
Other current assets   56,061   61,520
Total current assets 402,948 413,155
Property and equipment, net 43,620 34,671
Goodwill 147,818 100,194
Identifiable intangible assets, net 39,616 19,380
Other noncurrent assets   6,018   7,548
Total assets $ 640,020 $ 574,948
 
Current maturities of long-term debt $ 300 $ 250
Current maturities of notes to former owners 967 917
Accounts payable 101,134 83,848
Billings in excess of costs and estimated earnings 63,422 66,343
Other current liabilities   102,387   97,672
Total current liabilities 268,210 249,030
Long-term debt, net of current maturities 2,700
Notes to former owners, net of current maturities 25,969 6,441
Other long-term liabilities   30,357   13,493
Total liabilities 327,236 268,964
Total stockholders’ equity   312,784   305,984
Total liabilities and stockholders’ equity $ 640,020 $ 574,948

Selected Cash Flow Data (in thousands):

  Three Months Ended

December 31,

  Twelve Months Ended

December 31,

(unaudited)  
2010   2009 2010 2009
Cash provided by (used in):
Operating activities $ 46,620 $ 9,497 $ 32,149 $ 54,251
Investing activities $ (2,584 ) $ (11,581 ) $ (43,001 ) $ (18,822 )
Financing activities $ (2,351 ) $ (9,929 ) $ (30,652 ) $ (24,594 )
 
Free cash flow:
Cash from operating activities $ 46,620 $ 9,497 $ 32,149 $ 54,251
Purchases of property and equipment (2,986 ) (3,037 ) (7,089 ) (9,457 )
Proceeds from sales of property and equipment 152 270 1,381 770
Taxes paid related to pre-acquisition equity transactions of an acquired company       7,056  
 
Free cash flow $ 43,786 $ 6,730 $ 33,497 $ 45,564

Note 1: Free cash flow is defined as cash flow from operating activities excluding items related to the acquisiton of businesses 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.

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