Comfort Systems Usa, Inc. · NYSE:FIX
Comfort Systems Usa — Investor Presentation (March 2012)
36 slides from Comfort Systems Usa's investor presentation, Mar 7, 2012
Slide 1: Quality People. Building Solutions.
Quality People. Building Solutions. As of March 7, 2012
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements and information in this presentation 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
Slide 3: Vision
Vision To be the nation’s premier HVAC and mechanical systems installation and services provider. 2
Slide 4: Mission
Mission 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. 3
Slide 5: Values
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 of
Slide 6: Management Team
Management Team Brian Lane – President & CEO Experience Industry: 26 years CSUSA: 8 years William George – EVP & CFO Thomas N. Tanner – SVP, Region 1 Experience Experience Industry: 13 years Industry: 35 years CSUSA: 13 years CSUSA: 13 years Legal: 6 years Jeff Coleman – President, Nat. Accounts Dea
Slide 7: Comfort Systems USA
Comfort Systems USA • National • Commercial, Industrial, Institutional • HVAC/Piping/Plumbing/Energy Efficiency • Strong balance sheet • 43% new construction; 57% service, repair, retrofit • 2010 Full Year Revenue $1.1 billion • 2011 Full Year Revenue $1.2 billion 6
Slide 8: Comfort Today
Comfort Today SOMFORTUSA. MH Region 1 Ml Region 2 Gl Region 3 & Annual Revenues Over $50M @$20M - $50M © $10M - $20M Comfort Systems USA Energy Services Comfort Systems USA National Accounts a 7 Quality People. Building Solutions.
Slide 9: Our Companies
Our Companies COMFORT i) MECHANICAL SOMFORZUSA. BCM Controls Corporation MJ SOMFORT USA. Seasonair | Granite State Plumbing & Heating, LLC j coMFonTUSA Accu-Tem NORTH AMERICAN MECHANICAL INC &| NAMI DESIGN MECHANICAL, INC. Mechanical Contractors and Engineers MECHANICAL SERVICES, INC. pF TF HEATING
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 • Outsou
Slide 11: Industry Trend Toward Service & Replacement
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 100 90
Slide 12: Revenue by Activity
Revenue by Activity 2010 2011 18% 17% 43% 47% 35% 40% New Construction/Installation Replacement Service & Maintenance 11
Slide 13: Diverse Project Mix
Diverse Project Mix Average Project Size: $420,000 Value of Projects >$1M: $1,250 M Average Project Length: 6-9 months Value of Projects <$1M: $609 M 4,500 4,171 3,600 Number of projects 2,700 Total Projects = 4,425 1,800 900 230 9 3 12 0 To $1 M $1 – $5 M $5 – $10 M $10 – $15 M Over $15 M (As of De
Slide 14: Revenue By Sector
Revenue By Sector Distribution: 2% Healthcare: 17% Religious and Not-for-Profit: 1% Residential: 1% Lodging and Entertainment: 2% Other: 5% Retail/Restaurants: 7% Education: 19% Multi-Family: 3% Office Buildings: 11% Government: 17% Manufacturing: 15% Revenue for the year ended December 31, 2011 Top
Slide 15: Diverse End-Use Base
Diverse End-Use Base Omni Orlando Resort at ChampionsGate Arboretum Elementary School Orlando, Florida Waunakee, Wisconsin Iowa Renewal Energy University Hospital Washington, Iowa Little Rock, Arkansas 14
Slide 16: Competitive Advantages
Competitive Advantages • High-quality operations • Ability to leverage and proliferate technical expertise • Ability to collaborate on large jobs and share labor • Energy efficiency services • National multi-location service capability • Purchasing economics • Balance sheet strength • Bonding and in
Slide 17: Safety: OSHA Recordable Rate
Safety Industry Average (October 2010 – latest available data) Comfort Systems USA (January 2012 data) Lost Time Injury Rate 15.0 <79% of industry average OSHA Incident Rate 20% Difference OSHA Recordable Rate 10.0 <28% of industry average Training 5.0 97.4% completed 28% Difference 0.0 1998 2000 99
Slide 18: Key Financial Data – Income Statement
Key Financial Data – Income Statement ($ Thousands, except per share information) (Unaudited) Three Months Ended Year Ended December 31, December 31, 2011 2010 2011 2010 Revenue $ 317,700 100.0% $ 314,571 100.0% $1,240,020 100.0% $ 1,108,282 100.0% Cost of Services 267,075 84.1% 257,671 81.9% 1,058,
Slide 19: Key Financial Data – Balance Sheet
Key Financial Data – Balance Sheet ($ Thousands) 12/31/2011 12/31/2010 Cash $ 51,237 $ 86,346 Working Capital $ 109,311 $ 134,738 Goodwill $ 107,093 $ 147,818 Identifiable Intangible Assets, Net $ 48,349 $ 39,616 Total Debt $ 15,381 $ 29,936 Equity $ 283,106 $ 312,784 18
Slide 20: Revenue
Revenue $1,400 $1,322 $1,200 $1,240 $1,102 $1,129 $1,108 Revenue (in millions) $1,000 $1,048 $883 $800 $600 $400 $200 $0 2005 2006 2007 2008 2009 2010 2011 Note: Excludes all divested and discontinued operations 19
Slide 21: Annual Operating Margin
Operating Margins(a) 7% 6% Annual Operating Margin 5% 4% 3% 2% 1% 0% 2005 2006 2007 2008 2009 2010 2011 (a) This table includes non-GAAP financial information because the information provided excludes goodwill and other intangible asset impairment charges of $33.9 million for 2005, $5.7 million for
Slide 22: 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 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 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 09 10 10 10 10 11 11 11 11 Note: Ex
Slide 23: Earnings Profile for Growth
Profile for Growth Service Earnings Current Operations (Construction and Service) Time Commercial HVAC 22
Slide 24: Operations: Increase Productivity
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. Project Estimating Project Post-Project Project Qualification Review Pricing Project Management 24
Slide 26: Peter Drucker quote
The only things that evolve by themselves in an organization are disorder, friction and malperformance. Peter Drucker 25
Slide 27: Service: Increase 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) * Ma
Slide 28: National Account Customers
National Account Customers 27 *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. Use Our
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 want
Slide 32: Target Markets
Target Markets • Atlanta, GA • Los Angeles, CA • Boise, ID • Omaha, NE • Charleston, SC • Portland, OR • Columbia/Florence, SC • San Antonio, TX • Dallas/Fort Worth, TX • Savannah, GA • El Paso, TX • Spartanburg/Greenville, SC • Ft. Lauderdale, FL • Tampa, FL • Greensboro, NC • Jackson, MI (Listed A
Slide 33: Outlook – Long-Term
Outlook Long-Term • $40B+ fragmented industry • HVAC a basic necessity • Commercial construction continuing • Growing installed base for recurring maintenance, service, repair and retrofit • Scale opportunities – service, purchasing, prefab, bonding, best practices • Diverse customer base and geogra
Slide 34: Appendix I – Supplemental Non-GAAP Information
Appendix I – Supplemental Non-GAAP Information ($ Thousands, except per share information) (Unaudited) Three Months Ended Year Ended December 31, December 31, 2011 2010 2011 2010 Net income (loss) from continuing operations attributable to Comfort Systems USA $ 1,747 $ 5,796 $ (36,830) $ 14,017 Good
Slide 35: Appendix II – GAAP Reconciliation To Adjusted EBITDA
Appendix II– GAAP Reconciliation To Adjusted EBITDA ($ Thousands) (Unaudited) Three Months Ended Year Ended December 31, December 31, 2011 2010 2011 2010 Net Income (Loss) Including Noncontrolling Interests $ 2,085 $ 5,796 $ (36,492) $ 14,740 Discontinued Operation - - - (723) Income Taxes (693) 2,1
Slide 36: Contact
Contact Bill George Executive Vice President and CFO 1-800-723-8431 bill.george@comfortsystemsusa.com www.comfortsystemsusa.com 35
Comfort Systems USA — Investor Presentation (March 2012) on 6ix