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Comfort Systems USA Reports Third Quarter 2013 Results

Supplemental Non-GAAP Information — Adjusted Earnings Before Interests, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) — (Unaudited)

  Three Months Ended     Nine Months Ended
September 30, September 30,
2013     %     2012     % 2013     %     2012     %
Net income including noncontrolling interests

$

11,612
$ 5,325 $ 22,621

$

6,704
Discontinued operations 25 98

 
79 237
Income taxes 6,588 3,926 14,366 6,031
Other income (83 )

(13

)
(184 ) (82 )
Changes in the fair value of contingent earn-out obligations

(750

)
38

(696

)
105
Interest expense, net 342 393 1,013 1,210
Gain on sale of assets (117 )

(99

)
(367 )

(438

)
Depreciation and amortization   4,603     5,324     13,901    

15,429
 
Adjusted EBITDA $ 22,220   6.3 % $ 14,992   4.5 % $ 50,733   4.9 % $ 29,196   2.9 %
 

Note 1: The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income 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, 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,
2013 2012
(unaudited)
 
Cash and cash equivalents $ 45,305 $ 40,757
Accounts receivable, net 270,612 256,959
Costs and estimated earnings in excess of billings 30,200 26,204
Assets related to discontinued operations 297 1,582
Other current assets   42,812   47,051
Total current assets 389,226 372,553
Property and equipment, net 44,943 41,416
Goodwill 114,588 114,588
Identifiable intangible assets, net 39,107 44,515
Other noncurrent assets   6,590   7,682
Total assets $ 594,454 $ 580,754
 
Current maturities of long-term debt

$

-
$ 300
Current maturities of notes to former owners 2,000

-
Accounts payable 95,667 100,641
Billings in excess of costs and estimated earnings 62,566 73,814
Liabilities related to discontinued operations 88 767
Other current liabilities   106,328   93,065
Total current liabilities 266,649 268,587
Long-term debt, net of current maturities 5,000 2,100
Notes to former owners, net of current maturities

-
5,000
Other long-term liabilities   16,592   17,761
Total liabilities   288,241   293,448
Comfort Systems USA, Inc. stockholders’ equity 288,364 270,405
Noncontrolling interests   17,849   16,901
Total stockholders’ equity   306,213   287,306
Total liabilities and stockholders’ equity $ 594,454 $ 580,754
 

Selected Cash Flow Data (in thousands):
    Three Months Ended     Nine Months Ended
September 30, September 30,
2013     2012 2013     2012
Cash provided by (used in):
Operating activities $ 27,433 $ 16,455 $ 23,782 $ 3,432
Investing activities $ (5,170 ) $ (2,997 ) $ (11,862 ) $ (20,973 )
Financing activities $ (304 ) $ (6,604 ) $ (7,372 ) $ 1,969
 
Free cash flow:
Cash from operating activities $ 27,433 $ 16,455 $ 23,782 $ 3,432
Purchases of property and equipment (5,234 ) (2,817 ) (12,471 ) (9,405 )
Proceeds from sales of property and equipment   64     205     566     967  
 
Free cash flow $ 22,263   $ 13,843   $ 11,877   $ (5,006 )

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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