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EX-99.2 - EX-99.2 - COMFORT SYSTEMS USA INCfix_ex992.htm
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Exhibit 99.1

 

Picture 1

 

CONTACT:

William George

675 Bering Drive, Suite 400

 

Chief Financial Officer

Houston, Texas 77057

 

713-830-9600

713-830-9600

 

 

713-830-9696

 

FOR IMMEDIATE RELEASE

 

COMFORT SYSTEMS USA REPORTS FOURTH QUARTER AND FULL YEAR 2016 RESULTS

 

Houston, TX — February 23, 2017 — Comfort Systems USA, Inc. (NYSE: FIX), a leading provider of mechanical services including heating, ventilation, air conditioning, plumbing, piping and controls, today announced net income attributable to Comfort Systems USA of $16.9 million or $0.45 per diluted share, for the quarter ended December 31, 2016, as compared to $13.2 million or $0.35 per diluted share, for the quarter ended December 31, 2015.  The Company reported revenue of $392.1 million in the current quarter, as compared to $383.8 million in 2015.  The Company reported free cash flow of $35.7 million in the current quarter, as compared to $18.1 million in 2015.  Backlog as of December 31, 2016 was $763.4 million as compared to $719.3 million as of September 30, 2016 and $711.6 million as of December 31, 2015.

 

Brian Lane, Comfort Systems USA’s President and Chief Executive Officer, said, “We are proud to report the best fourth quarter and full year results in our history.  Our skilled workforce and local business leaders across the country delivered fantastic execution, achieving these record results despite new construction activity levels that remain below past peaks in most of our markets.  The underlying business environment continued to strengthen in 2016, especially work opportunities in existing buildings, and our recent productivity and growth initiatives ideally positioned us to deliver strong results.”

 

The Company reported net income attributable to Comfort Systems USA for the year ended December 31, 2016 of $64.9 million or $1.72 per diluted share, as compared to $49.4 million or $1.30 per diluted share, in 2015.  The Company also reported revenue of $1.63 billion as compared to $1.58 billion in 2015.  Free cash flow for the year ended December 31, 2016 was $69.0 million as compared to $78.4 million in 2015.

 

Mr. Lane concluded, “2016 was another record year for Comfort Systems USA.  Our continuing focus is on generating and wisely deploying cash flow.  In 2016 we generated over $69.0 million in free cash flow, our eighteenth consecutive positive cash flow year.  These high cash flow levels allow us to invest in new businesses, including the acquisition we announced today, while keeping our balance sheet very strong.  During 2016 we continued to return cash to our stockholders with a growing dividend and opportunistic investments to retire outstanding shares of our stock.  Since we began our stock repurchase program in 2007, we have purchased over 7.3 million shares for $95.6 million.  Despite the risks facing our modestly improving U.S. economy, we remain positive in our outlook for 2017 for several reasons, including our strong sequential and year over year growth in our backlog and the expected addition of our new business partners in Central Florida.”

 

As previously announced, the Company will host a webcast and conference call to discuss its financial results and position in more depth on Friday,  February 24, 2017 at 10:00 a.m. Central Time.  The call-in number for this conference call is 1-800-219-3192 and enter 50329233 as the passcode.  Participants may pre-register for the call at https://www.theconferencingservice.com/prereg/key.process?key=PPARRUET7.  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 3:00 p.m. Central Time,  Friday,  March 3, 2017 by calling 1-888-286-8010 with the conference passcode of 65831797, 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 91 locations in 84 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 regarding our future business expectations, which are subject to the safe harbor provisions 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 revenue 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; failure of third party subcontractors and suppliers to complete work as anticipated;  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 mechanical 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; an increase in our effective tax rate; an information technology failure or cyber security breach; 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

(In Thousands, Except per Share Amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

(Unaudited)

 

 

 

 

 

    

2016

    

%  

    

2015

    

%  

 

    

2016

    

%  

    

2015

    

%  

 

Revenue

 

$

392,100

 

100.0

%

$

383,840

 

100.0

%

 

$

1,634,340

 

100.0

%

$

1,580,519

 

100.0

%

Cost of services

 

 

303,835

 

77.5

%

 

299,913

 

78.1

%

 

 

1,290,331

 

79.0

%

 

1,262,390

 

79.9

%

Gross profit

 

 

88,265

 

22.5

%

 

83,927

 

21.9

%

 

 

344,009

 

21.0

%

 

318,129

 

20.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SG&A

 

 

62,956

 

16.1

%

 

59,998

 

15.6

%

 

 

243,201

 

14.9

%

 

228,965

 

14.5

%

Gain on sale of assets

 

 

(238)

 

(0.1)

%

 

(255)

 

(0.1)

%

 

 

(761)

 

 

 

(880)

 

(0.1)

%

Operating income

 

 

25,547

 

6.5

%

 

24,184

 

6.3

%

 

 

101,569

 

6.2

%

 

90,044

 

5.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(472)

 

(0.1)

%

 

(391)

 

(0.1)

%

 

 

(2,336)

 

(0.1)

%

 

(1,681)

 

(0.1)

%

Changes in the fair value of contingent earn-out obligations

 

 

263

 

0.1

%

 

100

 

 

 

 

731

 

 

 

225

 

 

Other income (expense)

 

 

642

 

0.2

%

 

12

 

 

 

 

1,097

 

0.1

%

 

76

 

 

Income before income taxes

 

 

25,980

 

6.6

%

 

23,905

 

6.2

%

 

 

101,061

 

6.2

%

 

88,664

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

9,113

 

 

 

 

9,022

 

 

 

 

 

36,165

 

 

 

 

31,224

 

 

 

Net income including noncontrolling interests

 

 

16,867

 

4.3

%

 

14,883

 

3.9

%

 

 

64,896

 

4.0

%

 

57,440

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

 

 —

 

 

 

 

1,662

 

 

 

 

 

 —

 

 

 

 

8,076

 

 

 

Net income attributable to Comfort Systems USA, Inc.

 

$

16,867

 

4.3

%

$

13,221

 

3.4

%

 

$

64,896

 

4.0

%

$

49,364

 

3.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per share attributable to Comfort Systems USA, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.45

 

 

 

$

0.35

 

 

 

 

$

1.74

 

 

 

$

1.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

$

0.45

 

 

 

$

0.35

 

 

 

 

$

1.72

 

 

 

$

1.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

37,199

 

 

 

 

37,473

 

 

 

 

 

37,335

 

 

 

 

37,442

 

 

 

Diluted

 

 

37,684

 

 

 

 

37,938

 

 

 

 

 

37,811

 

 

 

 

37,868

 

 

 

 

 


 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

    

2016

    

%  

    

2015

    

%  

 

    

2016

    

%  

    

2015

    

%  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

$

16,867

 

 

 

$

14,883

 

 

 

 

$

64,896

 

 

 

$

57,440

 

 

 

Income taxes

 

 

9,113

 

 

 

 

9,022

 

 

 

 

 

36,165

 

 

 

 

31,224

 

 

 

Other expense (income), net

 

 

(642)

 

 

 

 

(12)

 

 

 

 

 

(1,097)

 

 

 

 

(76)

 

 

 

Changes in the fair value of contingent earn-out obligations

 

 

(263)

 

 

 

 

(100)

 

 

 

 

 

(731)

 

 

 

 

(225)

 

 

 

Interest expense, net

 

 

472

 

 

 

 

391

 

 

 

 

 

2,336

 

 

 

 

1,681

 

 

 

Gain on sale of assets

 

 

(238)

 

 

 

 

(255)

 

 

 

 

 

(761)

 

 

 

 

(880)

 

 

 

Depreciation and amortization

 

 

6,495

 

 

 

 

6,030

 

 

 

 

 

26,166

 

 

 

 

23,416

 

 

 

Adjusted EBITDA

 

$

31,804

 

8.1

%  

$

29,959

 

7.8

%

 

$

126,974

 

7.8

%  

$

112,580

 

7.1

%

 

Note:  The Company defines adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) as net income including noncontrolling interests, income taxes, other expense (income), 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, net income, 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,

    

December 31,

 

 

 

2016

 

2015

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

32,074

 

$

56,464

 

Accounts receivable, net

 

 

318,837

 

 

302,052

 

Costs and estimated earnings in excess of billings

 

 

29,369

 

 

31,338

 

Other current assets

 

 

35,677

 

 

34,419

 

Total current assets

 

 

415,957

 

 

424,273

 

Property and equipment, net

 

 

68,195

 

 

60,813

 

Goodwill

 

 

149,208

 

 

143,874

 

Identifiable intangible assets, net

 

 

42,435

 

 

41,079

 

Other noncurrent assets

 

 

33,108

 

 

21,555

 

Total assets

 

$

708,903

 

$

691,594

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

600

 

$

500

 

Current maturities of long-term capital lease obligations

 

 

163

 

 

251

 

Accounts payable

 

 

103,440

 

 

106,684

 

Billings in excess of costs and estimated earnings

 

 

83,985

 

 

85,397

 

Other current liabilities

 

 

129,493

 

 

112,559

 

Total current liabilities

 

 

317,681

 

 

305,391

 

Long-term debt

 

 

1,955

 

 

10,500

 

Long-term capital lease obligations

 

 

93

 

 

256

 

Other long-term liabilities

 

 

12,541

 

 

10,442

 

Total liabilities

 

 

332,270

 

 

326,589

 

Comfort Systems USA, Inc. stockholders’ equity

 

 

376,633

 

 

346,721

 

Noncontrolling interests

 

 

 

 

18,284

 

Total stockholders’ equity

 

 

376,633

 

 

365,005

 

Total liabilities and stockholders’ equity

 

$

708,903

 

$

691,594

 

 


 

Selected Cash Flow Data (In Thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

    

2016

    

2015

 

2016

    

2015

 

Cash provided by (used in):

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

$

41,434

 

$

23,284

 

$

91,188

 

$

97,867

 

Investing activities

 

$

(4,398)

 

$

(5,145)

 

$

(79,318)

 

$

(25,628)

 

Financing activities

 

$

(30,299)

 

$

(6,747)

 

$

(36,260)

 

$

(47,839)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash from operating activities

 

$

41,434

 

$

23,284

 

$

91,188

 

$

97,867

 

Purchases of property and equipment

 

 

(5,960)

 

 

(5,592)

 

 

(23,217)

 

 

(20,808)

 

Proceeds from sales of property and equipment

 

 

215

 

 

447

 

 

1,062

 

 

1,338

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow

 

$

35,689

 

$

18,139

 

$

69,033

 

$

78,397

 

 

Note:  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.