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Comfort Systems USA Reports Third Quarter 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 Nine Months Ended
September 30, September 30,
2011 % 2010 % 2011 % 2010 %
Net income (loss) $ (36,569 ) $ 5,371 $ (38,577 ) $ 8,944
Discontinued operation

-

39

-

(723 )
Income taxes (6,293 ) 2,919 (7,479 ) 4,164
Other expense (income), net 16 (19 ) 68 (25 )

Changes in the fair value of contingent earn-out valuations

(5,077

)

(650

)

(5,566

)

(650

)

Interest expense, net 462 793 1,366 1,223
Gain on sale of assets (58 ) (29 )

(162

)

 

(502 )
Goodwill impairment 55,134

-

55,134 4,446
Depreciation and amortization   4,696     4,802     14,228     11,882  
Adjusted EBITDA $ 12,311   3.8 % $ 13,226   4.3 % $ 19,012   2.1 % $ 28,759   3.6 %
 

Note 1: The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income (loss), excluding discontinued operation, income taxes, other (income) expense, net, changes in the fair value of contingent earn-out valuations, 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 (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)

 
September 30, December 31,
2011 2010
(unaudited)
 
Cash and cash equivalents $ 43,692 $ 86,346
Accounts receivable, net 259,769 233,893
Costs and estimated earnings in excess of billings 29,121 26,648
Other current assets   55,420   56,061
Total current assets 388,002 402,948
Property and equipment, net 40,475 43,620
Goodwill 93,640 147,818
Identifiable intangible assets, net 36,099 39,616
Other noncurrent assets   7,430   6,018
Total assets $ 565,646 $ 640,020
 
Current maturities of long-term debt $ 300 $ 300
Current maturities of notes to former owners 510 967
Accounts payable 101,421 101,134
Billings in excess of costs and estimated earnings 62,218 63,422
Other current liabilities   91,303   102,387
Total current liabilities 255,752 268,210
Long-term debt, net of current maturities 2,400 2,700
Notes to former owners, net of current maturities 24,969 25,969
Other long-term liabilities   17,877   30,357
Total liabilities 300,998 327,236
Total stockholders’ equity   264,648   312,784
Total liabilities and stockholders’ equity $ 565,646 $ 640,020
 

Selected Cash Flow Data (in thousands) (unaudited):

    Three Months Ended     Nine Months Ended
September 30, September 30,
2011     2010 2011     2010
Cash provided by (used in):
Operating activities $ 1,478 $ (3,772 ) $ (21,965 ) $ (14,471 )
Investing activities $ (2,567 ) $ (39,165 ) $ (6,333 ) $ (40,417 )
Financing activities $ (5,320 ) $ (20,004 ) $ (14,356 ) $ (28,301 )
 
Free cash flow:
Cash from operating activities $ 1,478 $ (3,772 ) $ (21,965 ) $ (14,471 )
Purchases of property and equipment (2,548 ) (2,021 ) (6,452 ) (4,103 )
Proceeds from sales of property and equipment 230 11 611 1,229
Taxes paid related to pre-acquisition equity transactions of an acquired company  

-

   

7,056

   

-

   

7,056

 
 
Free cash flow $ (840 ) $ 1,274   $ (27,806 ) $ (10,289 )
 

Note 1: Free cash flow is defined as cash flow from operating activities excluding items related to the acquisition 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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