This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Comfort Systems USA Reports Third Quarter 2012 Results

Mr. Lane concluded, “Overall demand remains mixed as backlog increased modestly. The headwinds of the last few years are continuing, as signs of strength in private and commercial markets are offset by challenges in government and institutional markets. Despite overall industry challenges, we expect continued profitability and positive cash flow for 2012, and we are continuing to invest in strengthening and growing market share in our core service and construction businesses.”

As previously announced, the Company will host a webcast and conference call to discuss its financial results and position in more depth on Friday, November 2, 2012 at 10:00 a.m. Central Time. The call-in number for this conference call is 1-888-679-8035 and enter 62493188 as the passcode. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PM4JGWQP4. 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, Friday, November 9, 2012 by calling 1-888-286-8010 with the conference passcode of 93561511, 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 at www.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.

– Financial tables follow –

                                                                 
Comfort Systems USA, Inc.
Consolidated Statements of Operations
For the Three Months and Nine Months Ended September 30, 2012 and 2011
(in thousands, except per share amounts)
(unaudited)
 
Three Months Ended Nine Months Ended
September 30, September 30,
2012 % 2011 %   2012 % 2011 %
Revenue $ 335,540 100.0 % $ 328,113 100.0 % $ 1,019,700 100.0 % $ 922,320 100.0 %
Cost of services   279,889 83.4 %   279,005 85.0 %   866,793 85.0 %   791,493 85.8 %
Gross profit 55,651 16.6 % 49,108 15.0 % 152,907 15.0 % 130,827 14.2 %
 
SG&A 46,004 13.7 % 41,493 12.6 % 139,457 13.7 % 126,043 13.7 %
Goodwill impairment

-

-

55,134 16.8 %

-

-

55,134 6.0 %
Gain on sale of assets   (99 )

-

  (58 )

-

  (554 ) (0.1 )%   (162 )

-

Operating income (loss) 9,746 2.9 % (47,461 ) (14.5 )% 14,004 1.4 % (50,188 ) (5.4 )%
 
Interest expense, net (393 ) (0.1 )% (462 ) (0.1 )% (1,210 ) (0.1 )% (1,366 ) (0.1 )%
Changes in the fair value of contingent  
earn-out obligations (38 ) - 5,077 1.5 % (105 ) - 5,566 0.6 %
Other income (expense)   13

-

  (16 )

-

  83

-

  (68 )

-

 
Income (loss) before income taxes 9,328 2.8 % (42,862 ) (13.1 )% 12,772 1.3 % (46,056 ) (5.0 )%
Income tax expense (benefit)   4,003   (6,293 )   6,068   (7,479 )
 
Net income (loss) including
noncontrolling interests 5,325 1.6 % (36,569 )

(11.1

)%

6,704 0.7 % (38,577 ) (4.2 )%
 
Less: Net loss attributable to
noncontrolling interests   (348 )   -   (2,408 )   -
 
Net income (loss) attributable to
Comfort Systems USA, Inc. $ 5,673 $ (36,569 ) $ 9,112 $ (38,577

)

 

Income (loss) per share attributable to

Comfort Systems USA, Inc.:
Basic $ 0.15 $ (0.98 ) $ 0.25 $ (1.03 )
Diluted $ 0.15 $ (0.98 ) $ 0.24 $ (1.03 )
 
Shares used in computing income (loss)
per share:
Basic 37,155 37,325 37,126 37,496
Diluted 37,332 37,325 37,265 37,496
 
   
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 – (Unaudited):

 
          Three Months Ended         Nine Months Ended
September 30, September 30,
2012         %         2011         % 2012         %         2011         %
Net income (loss) attributable to Comfort
Systems USA, Inc. $ 5,673 $ (36,569 ) $ 9,112 $ (38,577 )
Goodwill impairment (after tax)

-

44,886

-

44,886
Changes in fair value of contingent
earn-out obligations (after tax) - (5,025 ) - (5,399 )
Tax valuation allowances (after tax)  

-

  2,056  

-

  2,056
Net income attributable to Comfort Systems
USA, Inc. excluding goodwill impairment,
changes in fair value of contingent earn-out
obligations and tax
valuation allowances $ 5,673 1.7 % $ 5,348 1.6 % $ 9,112 0.9 % $ 2,966 0.3 %
 
Diluted income (loss) per share attributable to
Comfort Systems USA, Inc. $ 0.15 $ (0.98 ) $ 0.24 $ (1.03 )
Goodwill impairment

-

1.20

-

1.20
Changes in fair value of contingent earn-out
obligations - (0.13 ) - (0.14 )
Tax valuation allowances  

-

  0.05  

-

  0.05
 
Diluted income per share attributable to
Comfort Systems USA, Inc. excluding
goodwill impairment, changes in fair value
of contingent earn-out obligations and tax
valuation adjustments $ 0.15 $ 0.14 $ 0.24 $ 0.08
 
   
Note 1: Operating results attributable to Comfort Systems USA, Inc., excluding goodwill impairment, changes in fair value of contingent earn-out
obligations and tax valuation adjustments are presented because the Company believes it reflects the results of the core ongoing operations
of the Company, and because we believe it is responsive to frequent questions we receive from third parties. However, this measure is not
considered a primary measure of an entity’s financial results under generally accepted accounting principles, and accordingly, this amount
should not be considered an alternative to operating results as determined under generally accepted accounting principles and as reported
by the Company.
 
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,
2012         %         2011         % 2012         %         2011         %
Net income (loss) including noncontrolling  
interests $ 5,325 $ (36,569 ) $ 6,704 $ (38,577 )
Income taxes 4,003 (6,293 ) 6,068 (7,479 )
Other expense (income), net (13 ) 16 (83 ) 68
Changes in the fair value of contingent earn-out
obligations 38 (5,077 ) 105 (5,566 )
Interest expense, net 393 462 1,210 1,366
Gain on sale of assets (99 ) (58 ) (554 ) (162 )
Goodwill impairment

-

55,134

-

55,134
Depreciation and amortization   5,332   4,696   15,481   14,228  
Adjusted EBITDA $ 14,979 4.5 % $ 12,311 3.8 % $ 28,931 2.8 % $ 19,012   2.1 %
 
   
Note 1: The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income (loss)
including noncontrolling interests, excluding income taxes, other (income) expense, changes in the fair value of contingent earn-out
obligations, 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,
2012 2011
(unaudited)
 
Cash and cash equivalents $ 35,665 $ 51,237
Accounts receivable, net 268,839 267,060
Costs and estimated earnings in excess of billings 30,521 27,163
Other current assets   44,455   41,822
Total current assets 379,480 387,282
Property and equipment, net 42,041 42,013
Goodwill 114,588 107,093
Identifiable intangible assets, net 46,795 48,349
Other noncurrent assets   8,822   6,329
Total assets $ 591,726 $ 591,066
 
Current maturities of long-term debt $ 300 $ 300
Current maturities of notes to former owners

-

332
Accounts payable 92,994 114,255
Billings in excess of costs and estimated earnings 70,798 71,730
Other current liabilities   99,237   91,354
Total current liabilities 263,329 277,971
Long-term debt, net of current maturities 16,100 2,400
Notes to former owners, net of current maturities 7,949 12,349
Other long-term liabilities   20,029   15,240
Total liabilities 307,407 307,960
Comfort Systems USA, Inc. stockholders’ equity 268,212 264,591
Noncontrolling interests   16,107   18,515
Total stockholders’ equity   284,319   283,106
Total liabilities and stockholders’ equity $ 591,726 $ 591,066
 
 

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

 
          Three Months Ended         Nine Months Ended
September 30, September 30,
2012         2011 2012         2011
Cash provided by (used in):
Operating activities $ 16,455 $ 1,478 $ 3,432 $ (21,965 )
Investing activities $ (2,997 ) $ (2,567 ) $ (20,973 ) $ (6,333 )
Financing activities $ (6,604 ) $ (5,320 ) $ 1,969 $ (14,356 )
 
Free cash flow:
Cash from operating activities $ 16,455 $ 1,478 $ 3,432 $ (21,965 )
Purchases of property and equipment (2,817 ) (2,548 ) (9,405 ) (6,452 )
Proceeds from sales of property and equipment   205   230   967   611
 
Free cash flow $ 13,843 $ (840 ) $ (5,006 ) $ (27,806 )
 
   
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.
 




2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,131.97 +100.83 0.59%
S&P 500 1,998.98 +14.85 0.75%
NASDAQ 4,552.7590 +33.8570 0.75%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs