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Comfort Systems USA Reports Third Quarter 2013 Results

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Mr. Lane concluded, “We are experiencing gradual improvement in more and more of our markets. We believe that we are well positioned to take advantage if construction demand improves in the coming quarters. Despite lower reported backlog, we currently expect revenues and earnings will be similar or modestly higher in 2014.”

As previously announced, the Company will host a webcast and conference call to discuss its financial results and position in more depth on Thursday, October 31, 2013 at 10:00 a.m. Central Time. The call-in number for this conference call is 1-888-713-4214 and enter 48547461 as the passcode. Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PJVTKH9GQ. 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, Thursday, November 7, 2013 by calling 1-888-286-8010 with the conference passcode of 59882552, 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, 2013 and 2012

(in thousands, except per share amounts)

(unaudited)

 
Three Months Ended Nine Months Ended
September 30, September 30,
2013 % 2012 % 2013 % 2012 %
Revenue $ 349,989 100.0 % $ 335,241 100.0 % $ 1,026,932 100.0 % $ 1,015,315 100.0 %
Cost of services   282,968   80.9 %   279,720   83.4 %   848,477   82.6 %   862,767   85.0 %
Gross profit 67,021 19.1 % 55,521 16.6 % 178,455 17.4 % 152,548 15.0 %
 
SG&A 49,404 14.1 % 45,853 13.7 % 141,623 13.8 % 138,781 13.7 %
Gain on sale of assets   (117 )

-

  (99 )

-

  (367 )

-

  (438 )

-

Operating income 17,734 5.1 % 9,767 2.9 % 37,199 3.6 % 14,205 1.4 %
 
Interest expense, net (342 ) (0.1 )% (393 ) (0.1 )% (1,013 ) (0.1 )% (1,210 ) (0.1 )%
Changes in the fair value of contingent earn-out obligations

750

0.2 %

(38

)

-

696 0.1 %

(105

)

-

Other income   83  

-

 

  13  

-

  184  

-

  82  

-

Income before income taxes 18,225 5.2 % 9,349 2.8 % 37,066 3.6 % 12,972 1.3 %
 
Income tax expense   6,588     3,926     14,366     6,031  
Income from continuing operations 11,637 3.3 % 5,423 1.6 % 22,700 2.2 % 6,941 0.7 %
 
Loss from discontinued operations, net of income tax expense (benefit) of $(18), $77, $(57) and $37   (25 )   (98 )   (79 )   (237 )
Net income including noncontrolling interests 11,612 3.3 % 5,325 1.6 % 22,621 2.2 % 6,704 0.7 %
 
Less: Net income (loss) attributable to noncontrolling interests   233     (348 )   948     (2,408 )
Net income attributable to Comfort Systems USA, Inc. $ 11,379   3.3 % $ 5,673   1.7 % $ 21,673   2.1 % $ 9,112   0.9 %
 
Income (loss) per share attributable to Comfort Systems USA, Inc.:

Basic-

Income from continuing operations $ 0.31 $ 0.15 $ 0.58 $ 0.25
Loss from discontinued operations  

-

   

-

   

-

   

-

 
Net income $ 0.31   $ 0.15   $ 0.58   $ 0.25  
 

Diluted-

Income from continuing operations $ 0.30 $ 0.15 $ 0.58 $ 0.25
Loss from discontinued operations  

-

   

-

   

-

    (0.01 )
Net income $ 0.30   $ 0.15   $ 0.58   $ 0.24  
 
Shares used in computing income (loss) per share:
Basic 37,293 37,155 37,184 37,126
Diluted 37,631 37,332 37,444 37,265
 

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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