Comfort Systems Usa, Inc. · NYSE:FIX
Comfort Systems Usa — Investor Presentation (November 2010)
41 slides from Comfort Systems Usa's investor presentation, Nov 11, 2010
Slide 1: Comfort Systems USA
COMFORT UCA. Quality People. Building Solutions. SYSTEMS As of November 11, 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 d services i provider. id 3
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 g for our customers,, employees and the environment and realizing li i superior i returns t for f our stockholders. 4
Slide 5: Values
Values Act with honesty and integrity. Show respect for all stakeholders. Exceed customer expectations. p Seek “win-win” solutions. D Demonstrate t t spirit, i it drive, di and d teamwork. t k Pursue innovation. Achieve premier safety performance. Commit to energy efficiency. Commu
Slide 6: Comfort Systems USA
Comfort Systems USA National Commercial, Industrial, Institutional HVAC/Piping/Plumbing/Energy Efficiency Strong g balance sheet 47% new construction; 53% service, repair, retrofit t fit 2009 Full Year Revenues $1.1 billion 2010 Run Rate $1.1 billion 6
Slide 7: Comfort Systems USA's Team
Comfort Systems USA’s TEAM William F. Murdy (68) Chairman/CEO y 20 y Industry: 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 President &
Slide 8: Comfort Today
Comfort Today Region 3 Region 1 Region 2 ANNUAL REVENUES Over $50M $20M - $50M $10M - $20M Comfort Systems USA Energy Services Comfort Systems USA National Accounts 8
Slide 9: ColonialWebb Contractors with Comfort Systems USA
ColonialWebb Contractors with y Comfort Systems USA ANNUAL REVENUES Over $50M Acquired July $20M - $50M 2010 $10M - $20M Colonial Webb $180M - $190M Locations Annual Revenue Main offices in Richmond, VA and Norfolk, VA 9
Slide 10: What We Do
What We Do Commercial, Industrial, Institutional HVAC – A $40B+ Industry DRIVERS Building comfort y a “necessity” Mechanical equipment – requires service, repair replacement repair, Commercial HVAC Applied Systems Increasing technical content and building automation Energy efficiency and Ind
Slide 11: Industry Trend Toward Service & Replacement (Recurring Revenue)
Industry Trend Toward Service & p Replacement ((Recurring g Revenue)) 5.3 million 100% commercial NEW CONSTRUCTION buildings 70% 70% Recurring Service 20 year replacement cycle/retrofits / f forf 50% energy efficiency “Inventory” “I t ” off Share of Industry future business Revenues 30% 30%
Slide 12: Revenues by Activity
Revenues by Activity 2010 YTD Service and 17% Maintenance 36% 47% New Construction/ Installation Replacement 12
Slide 13: Diverse Project Mix
Diverse Project Mix # OF PROJECTS (As of September 30, 2010) 5,015 180 37 20 6 Average Project Size 5,250 $375,000 4,200 Average Project Length 6-9 6 9 months 3,150 TOTAL PROJECTS = 5,258 Value of Projects >$1M 2,100 $1,062.3M 1,050 Value of Projects <$1M $902.7M 0 0-1M 1-5M 5-10M 10-15M 15+M PROJEC
Slide 14: Diverse End-Use Base
Diverse End-Use Base September 30, 2010 YTD Healthcare 1% Education 2% 1% 12% 4% 2% 16% Government 8% 4% 21% Manufacturing 11% Office Building 15% 15% Multi-Family Retail/Restaurants Other Top 20 Customers Lodging & Entertainment Served by 17 different Comfort operating units Residential Largest
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 15 Washington, Iowa Little Rock, Arkansas
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 multi location service capability Purchasing economics Balance sheet strength
Slide 17: Safety
Safety Lost Time Injury Rate Industry Average Comfort Systems USA (October 2009 – latest available data) (September 2010 data) <53% 53% of industry average 15.0 20% Difference OSHA Incident Rate A Recordable Rate 10.0 <40% of industry average 5.0 Training OSHA 40% Difference 97% completed 0.0 1998 1
Slide 18: History – Financial
History – Financial Revenues Capital Management Structure 2,000 346 1,591 1,500 1,591 1,546 1,546 $ Revenue 275 Debt –T 1,370 $ Debt 1,370 1,322 1110 TTM EBITDA 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 19: Financial Overview
Financial Overview systems JA.
Slide 20: Financial Profile
Financial Profile (($ in millions, except p per p share amounts)) 3Q 3Q YTD 2010 2009 2010 2009 Revenues $ 307.6 $ 291.6 $ 793.7 $ 872.2 Adjusted EBITDA (*) $ 13.2 $ 18.9 $ 28.8 $ 54.5 % Revenue 4.3% 6.5% 3.6% 6.2% Operating Income $ 8.5 $ 15.8 $ 17.4 $ 44.8 excluding goodwill impairment (**) %R Rev
Slide 21: Revenues
Revenues $1,500 $1,400 $1,300 $1,322 $1 200 $1,200 $1,100 $1,129 $1,102 $1,000 $1,048 ons) $900 es $883 Revenue (in millio $ $800 $794 $700 $600 $500 $400 $300 $200 $100 $ 00 $0 2005 2006 2007 2008 2009 2010 YTD 21 Note: Excludes all divested and discontinued operations
Slide 22: Operating Margins
Operating Margins (a) 7% 6% 5% 4% g Margin 3% Annual Operating 2% 1% 0% 2005 2006 2007 2008 2009 2010 YTD (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 $33.9 $33 9 million illi for f 2005 and $4.4 mi
Slide 23: 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 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 23 Note: Excludes all divested and dis
Slide 24: Financial Strengths
Financial Strengths Market share up – revenue and profit performance better than industry Commitment to cost containment $45 million cash at 9/30/10; 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 j Managers g – Superintendents – Service Sales – Service Operations – Craft – Safety Best Practices – Project Management – Estimating Cooperation with suppliers Prefabrication P f b i ti New materials and methods 26
Slide 27: Job Loop
Job Loop Project P j t Estimating Project Post-Project Project Q lifi ti Qualification R i Review Pi i Pricing Project Management We review p projects j and apply pp y what we have learned to improve our performance. 27
Slide 28: Peter Drucker quote
The only things that evolve by th themselves l in i an organization i ti are disorder, friction and malperformance. -Peter P t D Drucker k 28
Slide 29: Service
Service Increase Service* Grow G Maintenance M i t Base B Education –Employees and Customers Higher margin opportunity Recurring revenue National accounts $2.50+ of repair and replacement for every $1 $1.00 00 of maintenance Target Retrofit Projects –Energy gy Efficiency y –Indoor Air
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% - 50 % electric usage Energy Star (Dept. of Energy/EPA) / LEED (USGBC) 2- 4 year pay outs depending on electric rates, usage, age, incentives 31 Use Our Energy to Save Yours! ™
Slide 32: 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 T t d acquisitions i iti – Best HVAC oriented mechanical in new area 32
Slide 33: The Ideal Candidate
The Ideal Candidate $20 million + 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 t i i /i i the th company Ownership/management
Slide 34: Target Markets
Target Markets (Listed Alphabetically) Boise, ID Los Angeles, CA Charleston, SC Omaha, NE Columbia/Florence, SC Portland, OR Dallas/Fort Worth, TX San Antonio, TX El Paso, TX Savannah, GA Ft. Lauderdale, FL Spartanburg/Greenville, SC Greensboro, NC Tampa, FL Jackson, Mi
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 Sca Scale e opportunities oppo tu t es – se service, ce, pu purchasing, c as g, prefab, bonding, be
Slide 36: What We Do
COMFORT LIGA.
Slide 37: Comfort Systems USA
systems UOA.
Slide 38: Appendices
svstemsUOA Appendices
Slide 39: Appendix I – GAAP Reconciliation To Adjusted EBITDA
Appendix I – GAAP Reconciliation To j Adjusted EBITDA ((in thousands)) Three Months Ended Nine Months Ended September 30 30, September 30 30, 2010 2009 2010 2009 Net Income $ 5,371 $ 9,540 $ 8,944 $ 26,580 Discontinued Operations 39 - (723) 480 I Income Taxes T 2 919 2,919 6 072 6,072 4 164 4,164 17
Slide 40: Appendix II – Supplemental Non-GAAP Information
Appendix II – Supplemental Non-GAAP Information ($ in thousands except per share h amounts) t ) Three Months Ended Nine Months Ended September 30 30, September 30 30, 2010 2009 2010 2009 Operating Income $ 8,453 $ 15,793 $ 12,933 $ 44,802 Goodwill Impairment - - 4,446 - Operating Income 8 453 8,453
Slide 41: 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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