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Comfort Systems USA Reports Second Quarter 2012 Results

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

       
Three Months Ended Six Months Ended
June 30, June 30,
2012     %     2011     % 2012     %     2011     %
Net income (loss) including noncontrolling interests

$

4,047 $ 3,162 $ 1,379

$

(2,008 )
Income taxes 3,171 2,513 2,065 (1,186 )
Other expense (income), net (18

)

67 (70 ) 52
Changes in the fair value of contingent earn-out obligations 37 (584

)

67 (489

)

Interest expense, net 424 443 817 904
Gain on sale of assets (239 ) (19 ) (455 ) (104 )
Depreciation and amortization   5,012   4,713   10,149   9,532
Adjusted EBITDA $ 12,434 3.5 % $ 10,295 3.3 % $ 13,952 2.0 % $ 6,701 1.1 %
 

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, 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)

 
June 30, December 31,
2012 2011
(unaudited)
 
Cash and cash equivalents $ 28,811 $ 51,237
Accounts receivable, net 285,333 267,060
Costs and estimated earnings in excess of billings 31,079 27,163
Other current assets   45,018   41,822
Total current assets 390,241 387,282
Property and equipment, net 42,251 42,013
Goodwill 114,593 107,093
Identifiable intangible assets, net 49,206 48,349
Other noncurrent assets   8,330   6,329
Total assets $ 604,621 $ 591,066
 
Current maturities of long-term debt $ 300 $ 300
Current maturities of notes to former owners 332 332
Accounts payable 109,833 114,255
Billings in excess of costs and estimated earnings 73,686 71,730
Other current liabilities   91,695   91,354
Total current liabilities 275,846 277,971
Long-term debt, net of current maturities 20,400 2,400
Notes to former owners, net of current maturities 8,249 12,349
Other long-term liabilities   19,281   15,240
Total liabilities 323,776 307,960
Comfort Systems USA, Inc. stockholders’ equity 264,390 264,591
Noncontrolling interests   16,455   18,515
Total stockholders’ equity   280,845   283,106
Total liabilities and stockholders’ equity $ 604,621 $ 591,066
 

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

       
Three Months Ended Six Months Ended
June 30, June 30,
2012     2011 2012     2011
Cash provided by (used in):
Operating activities $ 6,793 $ (4,377 ) $ (13,023 ) $ (23,443 )
Investing activities $ (16,326 ) $ (1,892 ) $ (17,976 ) $ (3,766 )
Financing activities $ 10,471 $ (7,266 ) $ 8,573 $ (9,036 )
 
Free cash flow:
Cash from operating activities $ 6,793 $ (4,377 ) $ (13,023 ) $ (23,443 )
Purchases of property and equipment (4,494 ) (1,544 ) (6,588 ) (3,904 )
Proceeds from sales of property and equipment   342   134   762   381
 
Free cash flow $ 2,641 $ (5,787 ) $ (18,849 ) $ (26,966 )
 

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.

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