Comfort Systems Usa, Inc. · NYSE:FIX
Comfort Systems Usa — Investor Presentation (November 2011)
36 slides from Comfort Systems Usa's investor presentation, Nov 10, 2011
Slide 1: Quality People. Building Solutions.
Quality People. Building Solutions. As of November 9, 2011
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current plans and expectations of future events of Comfort Systems USA, Inc. and involve risks and uncertainties t
Slide 3: Vision
Vision To be the nation’s premier HVAC and mechanical systems installation and services provider. 2
Slide 4: Mission
Mission 3 To provide the best value HVAC and mechanical systems installation and service, principally in the mid-market commercial, industrial, and institutional sectors, while caring for our customers, employees and the environment and realizing superior returns for our stockholders.
Slide 5: Values
4 Values Act with honesty and integrity. Show respect for all stakeholders. Exceed customer expectations. Seek “win-win” solutions. Demonstrate spirit, drive, and teamwork. Pursue innovation. Achieve premier safety performance. Commit to energy efficiency. Communicate openly.....and often. Impact ou
Slide 6: Comfort Systems USA's Team
Comfort Systems USA’s Team 5 Bill Murdy – Chairman/CEO Experience Industry: 20 years CSUSA: 10 years Military: 10 years Bill George – EVP & CFO Experience Industry: 14 years CSUSA: 14 years Legal: 13 years Brian Lane – President & COO Experience Industry:26 years CSUSA: 7 years Tom Tanner – SVP-Regi
Slide 7: Comfort Systems USA
6 Comfort Systems USA National Commercial, Industrial, Institutional HVAC/Piping/Plumbing/Energy Efficiency Strong balance sheet 42% new construction; 58% service, repair, retrofit 2010 Full Year Revenue $1.1 billion 2011 Run Rate $1.2 billion
Slide 8: Regions and annual revenues map
COMFORT USA. SYSTEMS I Region 1 I Region 2 \ \ 2 isp Yr aye Im Region 3 q a S b> ‘Annual Revenues © Over $50M © S20M - $50M © S10M-$20M Comfort Systems USA Energy Services © Comfort Systems USA National Accounts O Quality People. Building Solutions.
Slide 9: Our Companies
Our Companies COMFORT UGA. S.l. Goldman Company, Inc. SoMroeT UA ae — | SEFSREUSA. Weieieiyoss BCM Controls Corporation eee a | IN HECHINCAL : SOMERS ea f SERIES NC | AC®R aes SOMrSssUSA. g] SUSTEMEUSA oo Seasonair Wkzcn | ma Coto! | We FAP Ea ERS ry MECHANICAL, INC. es ee Ty HEATING AND COOLING INC
Slide 10: What We Do
What We Do Commercial, Industrial, Institutional HVAC – A $40B+ Industry Drivers Building comfort – a “necessity” Mechanical equipment – requires service, repair, replacement Increasing technical content and building automation Energy efficiency and Indoor Air Quality (IAQ) emerging Outsourcing 9 Co
Slide 11: Industry Trend Toward Service & Replacement (Recurring Revenue)
Industry Trend Toward Service & Replacement (Recurring Revenue) 5.3 million commercial buildings Recurring service 20-year replacement cycle / retrofits for energy efficiency “Inventory” of future business OEMs note significant deferred maintenance and replacement over recent years 10 Source: The Tr
Slide 12: Revenue by Activity
11 Revenue by Activity 2010 – Full Year 2011 - Year To Date New Construction/Installation Replacement Service & Maintenance
Slide 13: Diverse Project Mix
12 Diverse Project Mix Average Project Size: $350,000 Value of Projects >$1M: $533 M Average Project Length: 6-9 months Value of Projects <$1M: $1,294 M (As of September 30, 2011) Total Projects = 5,211
Slide 14: Revenue By Sector
Revenue By Sector Distribution: 2% Religious and Not-for-Profit: 1% Residential: 1% Lodging and Entertainment: 2% Other: 5% Retail/Restaurants: 8% Multi-Family: 3% Office Buildings: 11% Manufacturing: 14% Top 20 Customers Served by 17 different Comfort operating units Largest customer represents les
Slide 15: Diverse End-Use Base
Diverse End-Use Base 14 Omni Orlando Resort at ChampionsGate Orlando, Florida University Hospital Little Rock, Arkansas Arboretum Elementary School Waunakee, Wisconsin Iowa Renewal Energy Washington, Iowa
Slide 16: Competitive Advantages
Competitive Advantages High-quality operations Ability to leverage and proliferate technical expertise Ability to collaborate on large jobs and share labor Energy efficiency services National multi-location service capability Purchasing economics Balance sheet strength Bonding and insurance Strong s
Slide 17: OSHA Recordable Rate
16 OSHA Recordable Rate Source: Bureau of Labor Statistics, Standard Industry Classification (SIC) Code 20 1710 – Specialty Trades Contractors – HVAC and Plumbing & North American Industry Classification System (NAICS) Code 23822 Safety 28% Difference 20% Difference Industry Average (October 2010 –
Slide 18: Key Financial Data – Income Statement
17 Key Financial Data – Income Statement ($ Thousands, except per share information) (Unaudited) 2011 2010 2011 2010 Revenue 328,113 $ 307,648 $ 922,320 $ 793,711 $ Cost of Services 279,005 257,339 791,493 661,929 Gross Profit 49,108 50,309 130,827 131,782 Selling, General and Administrative Expense
Slide 19: Key Financial Data – Balance Sheet
18 Key Financial Data – Balance Sheet ($ Thousands) 9/30/2011 12/31/2010 Cash 43,692 $ 86,346 $ Working Capital 132,250 $ 134,738 $ Goodwill 93,640 $ 147,818 $ Identifiable Intangible Assets, Net 36,099 $ 39,616 $ Total Debt 28,179 $ 29,936 $ Equity 264,648 $ 312,784 $
Slide 20: Revenue
19 Revenue Note: Excludes all divested and discontinued operations
Slide 21: Operating Margins
20 Operating Margins(a) (a) This table includes non-GAAP financial information because the information provided excludes goodwill impairment charges of $33.9 million for 2005, $5.7 million for 2010 and $55.1 million for 2011. No goodwill impairment charge was recorded for 2006, 2007, 2008 or 2009.
Slide 22: Backlog
21 Backlog (in millions) Note: Excludes all divested and discontinued operations
Slide 23: Profile for Growth
Profile for Growth 22 Time Earnings ACQUISITIONS Incremental Service Growth Current Operations (Construction and Service) Energy Efficiency Acquisitions Service Commercial HVAC
Slide 24: Operations
Operations Increase Productivity Education Leadership Project Managers Superintendents Service Sales Service Operations Craft Safety Best Practices Project Management Estimating Cooperation with suppliers Prefabrication New materials and methods 23
Slide 25: Job Loop
Job Loop We review projects and apply what we have learned to improve our performance. 24 Post-Project Review Project Estimating Project Pricing Project Qualification Project Management
Slide 26: Peter Drucker quote
25 The only things that evolve by themselves in an organization are disorder, friction and malperformance. Peter Drucker
Slide 27: Service
Service Increase Service* Grow maintenance base Education Employees and Customers Higher margin opportunity Recurring revenue National accounts $2.50+ of repair and replacement for every $1.00 of maintenance Target retrofit projects Energy Efficiency Indoor Air Quality (IAQ) 26 * Maintenance, servic
Slide 28: National Account Customers
27 National Account Customers *Trademarks and logos are the property of their respective owners.
Slide 29: Energy Efficiency – Retrofitting HVAC
Energy Efficiency – Retrofitting HVAC Green is Part of Our Business Energy costs drive need for efficiency. HVAC accounts for 30% - 50% of electricity usage. Energy Star (Department of Energy/EPA) / LEED (USGBC) 2 - 4 year pay outs depending on electric rates, usage, age, incentives. 28 Use Our Ener
Slide 30: Growth
Growth Internal More of what we do best Service Energy efficiency Step-Out Growth New locations for existing companies Techs “on their own” Targeted acquisitions Best HVAC-oriented mechanical in new area 29
Slide 31: The Ideal Acquisition Candidate
The Ideal Acquisition Candidate $20M+ in revenue Construction and service In a growing market in new area Company that has performed well in the past and has continuing demonstrable upside Organizational structure capable of sustaining/improving the company Ownership/management that wants to stay on
Slide 32: Target Markets
Target Markets Atlanta, GA Boise, ID Charleston, SC Columbia/Florence, SC Dallas/Fort Worth, TX El Paso, TX Ft. Lauderdale, FL Greensboro, NC Jackson, MI Los Angeles, CA Omaha, NE Portland, OR San Antonio, TX Savannah, GA Spartanburg/Greenville, SC Tampa, FL 31 (Listed Alphabetically)
Slide 33: Outlook
Outlook Long-Term $40B+ fragmented industry HVAC a basic necessity Commercial construction continuing Growing installed base for recurring maintenance, service, repair and retrofit Scale opportunities – service, purchasing, prefab, bonding, best practices Diverse customer base and geography Energy e
Slide 34: Appendix I – GAAP Reconciliation To Adjusted EBITDA
33 Appendix I – GAAP Reconciliation To Adjusted EBITDA ($ Thousands) (Unaudited) September 30, September 30, 2011 2010 2011 2010 Net Income (Loss) (36,569) $ 5,371 $ (38,577) $ 8,944 $ Discontinued Operation - 39 - (723) Income Taxes (6,293) 2,919 (7,479) 4,164 Other (Income) Expense, net 16 (19) 68
Slide 35: Appendix II – Supplemental Non-GAAP Information
34 Appendix II – Supplemental Non-GAAP Information ($ Thousands, except per share information) (Unaudited) 2011 2010 2011 2010 Net income (loss) from continuing operations (36,569) $ 5,410 $ (38,577) $ 8,221 $ Goodwill impairment (after tax) 44,886 - 44,886 2,674 Changes in fair value of contingent
Slide 36: Contact
35 Contact Bill George Executive Vice President and CFO 1-800-723-8431 bill.george@comfortsystemsusa.com www.comfortsystemsusa.com
Comfort Systems USA — Investor Presentation (November 2011) on 6ix