Comfort Systems Usa, Inc. · NYSE:FIX
Comfort Systems Usa — Investor Presentation (November 2009)
39 slides from Comfort Systems Usa's investor presentation, Nov 10, 2009
Slide 1: Comfort Systems USA – As of November 10, 2009
COMFORT UCA. Quality People. Building Solutions. SYSTEMS As of November 10, 2009
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
Slide 3: Vision
Vision To be the nation’s premier HVAC and mechanical systems installation and services provider. 3
Slide 4: Mission
Mission To p provide the best value HVAC and mechanical systems installation and service principally in the mid service, mid-market market commercial, industrial, and institutional sectors while caring for our customers, sectors, customers employees and the environment and realizing superior returns
Slide 5: Values
Values z Act with honesty and integrity. z Show respect for all stakeholders. z Exceed customer expectations. z Seek “win-win” solutions. z Demonstrate spirit, drive, and teamwork. z Pursue innovation. z Achieve premier safety performance. z Commit to energy efficiency. z Communicate openly…..and of
Slide 6: Comfort Systems USA
Comfort Systems USA National Commercial, Industrial, Institutional HVAC/Piping/Plumbing/Energy Efficiency Strong balance sheet Substantial positive cash flow 52% new construction; 48% service, repair, retrofit (YTD Q3 09) 2008 Full Year Revenues $1.3 billion 2009 Full Year Run Rate $
Slide 7: Comfort Today
Comfort Today Region 3 Region 1 Region 2 ANNUAL REVENUES Over $20M $10M - $20M Comfort Systems USA Energy Services Comfort Systems USA National Accounts 7
Slide 8: What We Do
What We Do Commercial, Industrial, Institutional HVAC – A $40B+ Industry DRIVERS Building comfort a “necessity” Mechanical equipment – requires service, repair, replacement Commercial HVAC Applied Systems Increasing technical content and building automation Energy efficiency and Indoor Air Q
Slide 9: Industry Trend Toward Service & Replacement (Recurring Revenue)
Industry Trend Toward Service & Replacement (Recurring Revenue) 5+ million 100% commercial NEW CONSTRUCTION b ildi buildings (DOE) 70% 70% Recurring service 20 year replacement cycle 50% “Inventory” of Share of future business Industry Revenues OEMs note 30% 30% significant deferred SERVIC
Slide 10: Revenues by Activity
Revenues by Activity September 2009 YTD 14% Service and Maintenance 34% 52% New Construction/ Installation Replacement 10
Slide 11: Diverse Project Mix
Diverse Project Mix # OF PROJECTS (As of September 30, 2009) 4,149 241 53 19 6 Average Project Size 4,000 $425,000 Average Project Length 6-9 months 2,000 TOTAL PROJECTS = 4,468 Value of Projects >$1M $1,286.0M Value of Projects <$1M $612.5M 0 0-1M 1-5M 5-10M 10-15M 15+M PROJECT SIZE 11
Slide 12: Diverse End-Use Base
Diverse End-Use Base September 2009 YTD Healthcare Education 3% 1% 2% 12% 4% Government 8% 24% 9% Manufacturing 11% Office Building 14% 12 % Multi-Family Retail/Restaurants Other Top Ten Customers Lodging & Entertainment Served by 10 different Comfort operating units Residential Largest customer
Slide 13: Diverse End-Use Base
Diverse End-Use Base Omni Orlando Resort at ChampionsGate Arboretum Elementary School Orlando, Florida Waunakee, Wisconsin Iowa Renewal Energy University Hospital 13 Washington, Iowa Little Rock, Arkansas
Slide 14: Competitive Advantages
Competitive Advantages High quality operations Ability Abilit tto lleverage and d proliferate lif t technical expertise Ability to collaborate on large jobs and share labor Energy efficiency services National multi-location service capability Purchasing economics Balance sheet strength
Slide 15: Safety
Safety Industry Average Comfort Systems USA (October 2008 – latest available data) (September 2009 data) OSHA Incident Rate decreased from 15.0 20% Difference 3.21 to 2.94 e Rate Lost Time Injury Rate is 63% less than HA Recordable 10 0 10.0 industry average WC claims cost per payroll dollar d
Slide 16: History – Financial Revenues and Capital Management Structure
History – Financial Revenues Capital Management Structure 2,000 400 4.0 3.9 3.6 350 346 346 1,591 1,500 1,591 1,546 1,546 300 3.0 Debt –TTM EB $ Revenue 1,370 2.7 275 $ Debt 1,370 1,329 275 250 1110 1,110 1,000 1,057 1057 200 205 2.0 205 BITDA 854 854 893 900 819 820 150 785 767 500 100 1.0 0.7 0.6
Slide 17: Financial Overview
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Slide 18: Financial Profile
Financial Profile ($ in millions, except per share amounts) 3Q YTD 3Q 2009 2008 2009 2008 Revenues …..….…………………………….……… $ 291.6 $ 346.7 $ 872.2 $ 993.9 Adjusted EBITDA (*)…………………………………$ 18.9 $ 25.3 $ 54.5 $ 68.2 % Revenue ...…...………………………………… 6.5% 7.3% 6.2% 6.9% Operating Income ..….........….………………
Slide 19: Revenues
Revenues $1,500 $1,400 $$1,328.5 ,3 8 5 $1,300 $1,200 $1,109.5 $1,056.5 $1,100 $1 000 $1,000 $892.5 n millions) Revenues $900 $767.4 $800 $700 (in R $600 $500 $400 $300 $200 $100 $0 2004 2005 2006 2007 2008 Revenues for the nine months ended September 30, 2009 were $872.2 million. 19 Note: Excludes
Slide 20: Operating Margins
Operating Margins (a) 7% 6% Margin 5% al Operating M 4% 3% Annua 2% 1% 0% 2004 2005 2006 2007 2008 (a) This table includes non-GAAP financial information as the information provided id d excludes l d goodwill d ill impairment i i t charges h off $0.6 $0 6 million illi and d $33.9 million for 2004 an
Slide 21: Backlog (in millions)
Backlog (in millions) $1,000 $800 $600 $400 $200 $0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09 09 09 21 Note: Excludes all divested and discontinued operations
Slide 22: Strong Cash Flows (in millions)
Strong Cash Flows (in millions) Nine Months Ended Sept. 30, 2009 2008 2007 Cash From Operating Activities $ 44.7 $ 82.9 $ 83.6 Purchases Of Property and E i Equipmentt $ (6 4) (6.4) $ (14 6) (14.6) $ (11 1) (11.1) Proceeds From Sales Of Property and Equipment $ 0.5 $ 0.6 $ 0.3 Free Cash Flow $ 38.8
Slide 23: Financial Strengths
Financial Strengths Market share up – revenue and profit performance f better b tt than th industry i d t Commitment C it t tto costt containment t i t $139.9 $139 9 million cash at 9/30/09; substantial credit capacity if needed Positive free cash flow for ten calendar years 23
Slide 24: Profile For Growth
Profile For Growth Service EARNINGS CURRENT OPERATIONS (CONSTRUCTION AND SERVICE) TIME Commercial HVAC 24
Slide 25: 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 25
Slide 26: Job Loop
Job Loop Project Estimating Project Post-Project Project Qualification Review Pricing Project Management We review projects and apply what we have learned to improve our performance. 26
Slide 27: Peter Drucker quote
The only things that evolve by themselves in an organization are disorder, friction and malperformance. malperformance -Peter Drucker 27
Slide 28: Service
Service Increase Service* Grow Maintenance Base Education –Employees and Customers Higher margin opportunity Recurring revenue National accounts $ $2.50+ of repair p and replacement p for every $1.00 of maintenance Target Retrofit Projects –Energy Efficiency –Indoor Air Quality (IAQ) 28
Slide 29: National Account Customers
National Account Customers 29 *Trademarks and logos are the property of their respective owners.
Slide 30: Green Is Part Of Our Business
Energy Efficiency-Retrofitting HVAC Green Is Part Of Our Business Energy costs drive need for efficiency HVAC 30% - 65 % electric usage Energy Star (Dept (Dept. of Energy/EPA) / LEED (USGBC) 2- 4 year pay outs depending on electric rates, usage, sage age age, incenti incentives es 30 Use Our
Slide 31: Growth
Growth Internal – More M off what h t we do d bbestt – Service – Energy E efficiency ffi i Step Out Growth – New locations for existing companies – Techs “on their own” Targeted acquisitions – Best HVAC oriented mechanical in new area 31
Slide 32: The Ideal Candidate
The Ideal Candidate z $20 million + in revenue z Construction and service z In a growing market in new area z Company that has performed well in the past and has continuing demonstrable upside z Organizational structure capable of sustaining/improving the company z Ownership/management that wants to
Slide 33: Target Markets
Target Markets (Listed Alphabetically) z Boise ID Boise, z Omaha NE Omaha, z Charleston, SC z Portland, OR z Columbia/Florence, SC z Raleigh, NC z Dallas/Fort Worth, TX z Richmond, VA z El Paso, TX z San Antonio, TX z Ft Lauderdale, Ft. L d d l FL z S Savannah, h GA z Los Angeles, CA z Spartanburg/G
Slide 34: Outlook
Outlook Long-Term $40+ billion billi ffragmented t d industry i d t HVAC is a basic necessity Commercial construction continuing Growing installed base for recurring maintenance,, service,, repair p and retrofit Scale opportunities – service, purchasing, prefab, bonding, best practices D
Slide 35: What We Do
What We Do 35
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Slide 37: Appendix
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Slide 38: Appendix – GAAP Reconciliation To Adjusted EBITDA
Appendix – GAAP Reconciliation To Adjusted EBITDA (in thousands) Three Months Ended Nine Months Ended September 30 30, September 30 30, 2009 % 2008 % 2009 % 2008 % Net Income $ 9,540 $ 13,765 $ 26,580 $ 37,199 Discontinued Operations - (28) 480 (115) Income Taxes 6,072 8,250 17,293 23,070 Other Inco
Slide 39: Contact: Bill George
C O N T A C T: Bill George Executive Vice President and CFO 1-800-723-8431 bgeorge@comfortsystemsusa.com www.comfortsystemsusa.com
Comfort Systems USA — Investor Presentation (November 2009) on 6ix