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Comfort Systems USA Reports Third Quarter Results

Mr. Murdy continued, “We continue to operate in a challenging environment, however, backlog has stabilized for several quarters. We are committed to organic growth and, as demonstrated by the acquisition we announced today, to continuing to add quality operators to our strong family of companies. Although the timing of recovery in nonresidential construction is uncertain, we are continuing to build for the future.”

During the third quarter, the Company also amended its Credit Agreement to extend the term for five years to September 2016, and made changes to the underlying terms of the agreement that enhance the credit available for acquisitions and investments.

Mr. Murdy concluded, “In addition to adding the stability of a longer commitment, we believe that the changes our banks agreed to will give us the added flexibility to continue to invest despite challenging conditions. Overall, as we look forward to year end and 2012, we expect continued industry headwind, however, we believe we can maintain our profitability and continue to invest to improve our position in the crucial mechanical building and service industry.”

As previously announced, the Company will host a conference call to discuss its financial results and position in more depth on Friday, November 4, 2011 at 10:00 a.m. Central Time. The call-in number for this conference call is 1-888-713-4199 and enter 82489670 as the passcode. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PBR6YXQD8 . 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, Friday, November 11, 2011 by calling 1-888-286-8010 with the conference passcode of 10582547, 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 86 locations in 72 cities around the nation. For more information, visit the Company’s website at www.comfortsystemsusa.com .

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current plans and expectations of future events of Comfort Systems USA, Inc. and involve risks and uncertainties that could cause actual future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual results to differ include, among others, the use of incorrect estimates for bidding a fixed-price contract, undertaking contractual commitments that exceed our 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, our 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 our percentage-of-completion method of accounting, the result of competition in our markets, our decentralized management structure, 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. A further list and description of these risks, uncertainties and other factors are discussed under "Item 1A. Company Risk Factors" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. These forward-looking statements speak only as of the date of this filing. Comfort Systems USA, Inc. expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in our expectations with regard thereto or any change in events, developments, conditions or circumstances on which any such statement is based.

– Financial tables follow –

     

Comfort Systems USA, Inc.

Consolidated Statements of Operations

For the Three Months and Nine Months Ended September 30, 2011 and 2010

(in thousands, except per share amounts)

(unaudited)

 
Three Months Ended Nine Months Ended
September 30, September 30,
2011       %     2010     % 2011       %     2010     %
Revenue $ 328,113 100.0 % $ 307,648 100.0 % $ 922,320 100.0 % $ 793,711 100.0 %
Cost of services   279,005 85.0 %   257,339 83.6 %   791,493 85.8 %   661,929 83.4 %
Gross profit 49,108 15.0 % 50,309 16.4 % 130,827 14.2 % 131,782 16.6 %
 
SG&A 41,493 12.6 % 41,885 13.6 % 126,043 13.7 % 114,905 14.5 %
Goodwill impairment 55,134 16.8 %

-

-

55,134 6.0 % 4,446 0.6 %
Gain on sale of assets   (58

)

 

-

  (29 )

-

  (162

)

 

-

  (502 ) (0.1 )%
Operating income (loss) (47,461 ) (14.5 )% 8,453 2.7 % (50,188 ) (5.4 )% 12,933 1.6 %
 
Interest expense, net (462

)

 

(0.1 )% (793 ) (0.3 )% (1,366

)

 

(0.1 )% (1,223 ) (0.2 )%
Changes in the fair value of contingent earn-out obligations

5,077

1.5

%

650

0.2

%

5,566

0.6 % 650 0.1 %
Other income (expense)   (16

)

 

-

  19

-

  (68 )

-

  25

-

 
Income (loss) before income taxes (42,862 ) (13.1 )% 8,329 2.7 % (46,056 ) (5.0 )% 12,385 1.6 %
Income tax expense (benefit)   (6,293 )   2,919   (7,479 )   4,164
Income (loss) from continuing operations (36,569 ) (11.1 )% 5,410 1.8 % (38,577 ) (4.2 )% 8,221 1.0 %
 

Gain (loss) on disposition of discontinued operation, including income tax expense of $-, $195, $- and $166

 

-

 

  (39 )  

-

  723
 
Net income (loss) $ (36,569 ) $ 5,371 $ (38,577 ) $ 8,944
 
Income (loss) per share:
Basic-
Income (loss) from continuing operations $ (0.98 ) $ 0.14 $ (1.03 ) $ 0.22
Gain (loss) on disposition of discontinued operation  

-

 

-

 

-

  0.02
Net income (loss) $ (0.98 ) $ 0.14 $ (1.03 ) $ 0.24
 
Diluted -
Income (loss) from continuing operations $ (0.98 ) $ 0.14 $ (1.03 ) $ 0.22
Gain (loss) on disposition of discontinued operation  

-

 

 

-

 

-

  0.02
Net income (loss) $ (0.98 ) $ 0.14 $ (1.03 ) $ 0.24
 
Shares used in computing income (loss) per share:
Basic 37,325 37,560 37,496 37,564
Diluted 37,325 37,794 37,496 37,821

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.

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