Comfort Systems USA Reports Fourth Quarter And Full Year Results

Note 2: Net income (loss) from continuing operations attributable to Comfort Systems USA, Inc. is income (loss) from continuing operations less net income (loss) attributable to noncontrolling interests.

Note 3: 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 EndedDecember 31,														Twelve Months EndedDecember 31,
		2012				%			2011				%			2012				%			2011				%
Net income (loss) including noncontrolling interests		$	5,145						$	2,085						$	11,849						$	(36,492	)
Discontinued operations			(592	)						2,532							(355	)						4,018
Income taxes			4,014							701							10,045							(5,463	)
Other expense (income), net			(63	)						(1,003	)						(145	)						(934	)
Changes in the fair value of contingent earn-out obligations			(767	)						38							(662	)						(5,528	)
Interest expense, net			361							392							1,571							1,758
Gain on sale of assets			(53	)						(74	)						(491	)						(236	)
Goodwill impairment			―							2,220							―							57,354
Depreciation and amortization			5,140							5,283							20,569							18,982
Adjusted EBITDA		$	13,185			4.2	%		$	12,174			3.9	%		$	42,381			3.2	%		$	33,459			2.8	%

Note 1: The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income (loss) including noncontrolling interests, excluding discontinued operations, income taxes, other (income) expense, net, 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)
		December 31,2012			December 31,2011
Cash and cash equivalents		$	40,757		$	51,237
Accounts receivable, net			256,959			260,145
Costs and estimated earnings in excess of billings			26,204			26,602
Assets related to discontinued operations			1,582			11,407
Other current assets			47,051			41,159
Total current assets			372,553			390,550
Property and equipment, net			41,416			41,693
Goodwill			114,588			107,093
Identifiable intangible assets, net			44,515			48,349
Other noncurrent assets			7,682			6,295
Total assets		$	580,754		$	593,980
Current maturities of long-term debt		$	300		$	300
Current maturities of notes to former owners			―			332
Accounts payable			100,641			111,683
Billings in excess of costs and estimated earnings			73,814			70,635
Liabilities related to discontinued operations			767			4,257
Other current liabilities			93,065			93,577
Total current liabilities			268,587			280,784
Long-term debt, net of current maturities			2,100			2,400
Notes to former owners, net of current maturities			5,000			12,349
Other long-term liabilities			17,761			15,341
Total liabilities			293,448			310,874
Comfort Systems USA, Inc. stockholders’ equity			270,405			264,591
Noncontrolling interests			16,901			18,515
Total stockholders’ equity			287,306			283,106
Total liabilities and stockholders’ equity		$	580,754		$	593,980

Selected Cash Flow Data (in thousands):
		Three Months EndedDecember 31,								Twelve Months EndedDecember 31,
		(unaudited)
		2012				2011				2012				2011
Cash provided by (used in):
Operating activities		$	27,078			$	51,645			$	30,510			$	29,680
Investing activities		$	(2,195	)		$	(29,417	)		$	(23,168	)		$	(35,750	)
Financing activities		$	(19,791	)		$	(14,683	)		$	(17,822	)		$	(29,039	)
Free cash flow:
Cash from operating activities		$	27,078			$	51,645			$	30,510			$	29,680
Purchases of property and equipment			(2,377	)			(2,214	)			(11,782	)			(8,666	)
Proceeds from sales of property and equipment			139				106				1,106				717
Free cash flow		$	24,840			$	49,537			$	19,834			$	21,731

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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