Comfort Systems Usa, Inc. · NYSE:FIX
Comfort Systems Usa — Investor Presentation (May 2010)
40 slides from Comfort Systems Usa's investor presentation, May 6, 2010
Slide 1: Comfort Systems USA Investor Presentation, May 6, 2010
COMFORT UCA. Quality People. Building Solutions. SYSTEMS As of May 6, 2010
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. 3
Slide 4: Mission
Mission To provide the best value HVAC and mechanical systems installation and service, i principally i i ll in i the th mid-market id k t commercial, industrial, and institutional sectors, while caring for our customers, employees and the environment and realizing superior returns for our stockhold
Slide 5: Values
Values l Act with honesty and integrity. l Show respect for all stakeholders. stakeholders l Exceed customer expectations. l Seek “win-win” “win win” solutions solutions. l Demonstrate spirit, drive, and teamwork. l P Pursue innovation. i ti l Achieve premier safety performance. l C Commit i to ener
Slide 6: Comfort Systems USA
Comfort Systems USA National Commercial, Industrial, Institutional HVAC/Piping/Plumbing/Energy Efficiency Strong balance sheet Substantial positive cash flow 49% new construction; 51% service, repair, retrofit 2009 Full Year Revenues $1.1 billion 6
Slide 7: Comfort Systems USA's Team
Comfort Systems USA’s TEAM William F. Murdy (68) Chairman/CEO Industry: 20 years CSUSA 10 years Club Quarters (CEO), Land Care (CEO), GID (CEO), Morgan Stanley Venture Capital (Pres) PRI (COO), US Army (10 years) BS-West Point, MBA-Harvard William George (45) Brian Lane (53) EXVP-CFO EXVP- President
Slide 8: 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 8
Slide 9: 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 10: Industry Trend Toward Service & Replacement (Recurring Revenue)
Industry Trend Toward Service & Replacement (Recurring Revenue) 5+ million 100% commercial NEW CONSTRUCTION buildings g (DOE) ( ) 70% 70% Recurring service 20 year replacement 50% cycle “Inventory” of Share of Industry future business Revenues 30% 30% OEMs note SERVICE & REPLACEMENT signif
Slide 11: Revenues by Activity
Revenues by Activity 2010 YTD Service and 17% Maintenance 34% 49% New Construction/ Installation Replacement 11
Slide 12: Diverse Project Mix
Diverse Project Mix # OF PROJECTS (As of March 31, 2010) 3,982 209 41 13 7 Average Project Size $365,000 Average Project Length 6-9 months TOTAL PROJECTS = 4,252 Value of Projects >$1M $1,086.8M Value of Projects <$1M $463.5M PROJECT SIZE 12
Slide 13: Diverse End-Use Base
Diverse End-Use Base 2010 YTD Healthcare Education Government Manufacturing Office Building Multi-Family Retail/Restaurants Other Top 20 Customers Lodging & Entertainment Served by 16 different Comfort operating units Residential Largest customer = less than 3% of revenues Religious & Not-for-Pr
Slide 14: 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 14 Washington, Iowa Little Rock, Arkansas
Slide 15: Competitive Advantages
Competitive Advantages High quality operations Ability to leverage and proliferate technical expertise Ability b ty to collaborate co abo ate on o large a ge jobs and share labor Energy efficiency services National multi-location service capability Purchasing economics Balance sheet st
Slide 16: Safety
Safety Industry Average Comfort Systems USA (October 2008 – latest available data) (March 2010 data) Lost Time Injury Rate is 20% Difference 54% less than industry e Rate average HA Recordable Achieved 97% training completed OSH OSHA Incident Rate is 44% less than industry 44% Difference avera
Slide 17: History – Financial Revenues, Capital Structure
History – Financial Revenues Capital Management Structure 2,000 346 1,591 1,500 1,591 1,546 1,546 $ Revenue 275 Debt –TTM EBIITDA 1,370 $ Debt 1,370 1,322 1110 1,102 1,129 1,000 1,048 1057 205 854 883 900 854 819 820 785 767 500 298 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Slide 18: Financial Overview
Financial Overview SsyvsTremsu JA.
Slide 19: Financial Profile
Financial Profile ($ in millions, except per share amounts) 1Q 2010 2009 Revenues …..….…………………………….…$ 236.5 $ 280.3 Adjusted EBITDA (*)………………………… $ 5.7 $ 15.2 % Revenue ...…...………………………… 2.4% 5.4% Operating Income ..….........….………………$ 2.1 $ 12.0 % Revenue ...…..…...…..........….……… 0.9% 4.3% Net In
Slide 20: Revenues
Revenues $1,500 $1,400 $1,300 $1,200 $1,322 $1,100 $1,129 $1 000 $1,000 $1 102 $1,102 n millions) $1,048 Revenues $900 $800 $883 $700 (in R $600 $500 $400 $300 $200 $100 $0 2005 2006 2007 2008 2009 20 Note: Excludes all divested and discontinued operations
Slide 21: Operating Margins
Operating Margins (a) 7% 6% Margin 5% al Operating M 4% 3% Annua 2% 1% 0% 2005 2006 2007 2008 2009 (a) This table includes non-GAAP non GAAP financial information as the information provided excludes goodwill impairment charges of $33.9 million for 2005. No goodwill impairment charge was recorded fo
Slide 22: Backlog (in millions)
Backlog (in millions) 22 Note: Excludes all divested and discontinued operations
Slide 23: Strong Cash Flows (in millions)
Strong Cash Flows (in millions) Year Ended December 31 31, 2009 2008 2007 Cash From Operating Activities $ 54.3 $ 82.9 $ 83.6 Purchases Of Property and E i Equipmentt (9 5) (9.5) (14 6) (14.6) (11 1) (11.1) Proceeds From Sales Of Property and Equipment 0.8 0.6 0.3 Free Cash Flow $ 45.6 $ 68.9 $ 72.8
Slide 24: 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 $110 million cash at 3/31/10; substantial credit capacity if needed Positive free cash flow for eleven calendar years 24
Slide 25: Profile For Growth
Profile For Growth Service EARNINGS CURRENT OPERATIONS (CONSTRUCTION AND SERVICE) TIME Commercial HVAC 25
Slide 26: Operations
Operations Increase Productivity Education – Leadership – Project Managers – Superintendents p – Service Sales – Service Operations – Craft – Safety Best Practices – Project Management – Estimating Cooperation with suppliers Prefabrication New materials and methods 26
Slide 27: 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. 27
Slide 28: Peter Drucker quote
The only things that evolve by themselves in an organization are disorder, friction and malperformance. malperformance -Peter Drucker 28
Slide 29: Service
Service Increase Service* Grow Maintenance Base Education –Employees and Customers Higher Hi h margin i opportunity t it Recurring revenue National accounts $2.50+ of repair and replacement for every $1.00 of maintenance Target Retrofit Projects –Energy Energy Efficiency –Indoor Air Qu
Slide 30: National Account Customers
National Account Customers 30 *Trademarks and logos are the property of their respective owners.
Slide 31: 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. of Energy/EPA) / LEED (USGBC) 2- 4 year pay outs depending on electric rates, usage age usage, age, incentives 31 Use Our Energy to Save
Slide 32: Growth
Growth Internal – More M off what h t we do d best b t – Service – Energy efficiency Step Out Growth – New locations for existing companies – Techs “on their own” Targeted acquisitions – Best HVAC oriented mechanical in new area 32
Slide 33: The Ideal Candidate
The Ideal Candidate l $20 million + in revenue l Construction and service l In a growing market in new area l Company that has performed well in the past and has continuing demonstrable upside l Organizational O i ti l structure t t capable bl off sustaining/improving the company l Ownership/managem
Slide 34: Target Markets
Target Markets (Listed Alphabetically) l Boise ID Boise, l Omaha NE Omaha, l Charleston, SC l Portland, OR l Columbia/Florence, SC l Richmond, VA l Dallas/Fort Worth, TX l San Antonio, TX l El Paso, TX l Savannah, GA l Ft. Lauderdale, FL l Spartanburg/Greenville, SC l Los Angeles, CA l Tampa, FL l N
Slide 35: Outlook
Outlook Long-Term $40+ billion fragmented industry HVAC is 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
Slide 36: What We Do
USA. COMFORT SYSTEMS 36
Slide 37: syvstemsU OA.
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Slide 38: Appendix
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Slide 39: Appendix – GAAP Reconciliation To Adjusted EBITDA
Appendix – GAAP Reconciliation To Adjusted EBITDA (in thousands) Three Months Ended March 31, 2010 % 2009 % Net Income $ 1,927 $ 6,942 Discontinued Operations (762) 180 Income Taxes 730 4,730 Other ((Income)) Expense p ((12)) 7 Interest Expense, net 221 110 Gain on Sale of Assets (5) (2) Depreciatio
Slide 40: 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
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