Comfort Systems Usa, Inc. · NYSE:FIX
Comfort Systems Usa — Q4 2010 Earnings Presentation
42 slides from Comfort Systems Usa's earnings presentation, Mar 2, 2011
Slide 1: Comfort Systems USA – As of March 2, 2011
COMFORT UCA. Quality People. Building Solutions. SYSTEMS As of March 2, 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. 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 Act with honesty and integrity. Show respect for all stakeholders. stakeholders Exceed customer expectations. Seek “win-win” “win win” solutions solutions. Demonstrate spirit, drive, and teamwork. P Pursue innovation. i ti Achieve premier safety performance. 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 47% new construction; 53% service, repair, retrofit 2010 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 President & COO
Slide 8: Comfort Today
Comfort Todayy 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 Comfort Systems USA ANNUAL REVENUES O 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: Our Companies
Our Companies syvstemsU 0A a S.l. Goldman SOMARTELUIGAN ——_EIEEREE Gyeeremtmconoon OR) Company, Inc Sout CENTRAL Teens en US onpeny SRTUSA. RIDDLEBERGER “ElIANCAL GNTRACIOR BROTHERS, INC MECHANICAL CONTRACTOR wou boprioce te tne erie” a Since RENCE co COMFORTS §@ SM. LAW eS systems JOA. a —_ Southwe
Slide 11: 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 12: Industry Trend Toward Service & Replacement (Recurring Revenue)
Industry Trend Toward Service & Replacement (Recurring Revenue) 5.3 million 100% commercial NEW CONSTRUCTION buildings g 70% 70% Recurring Service 20 year replacement cycle/retrofits for 50% energy gy efficiency y “Inventory” of Share of Industry future business Revenues 30% 30% OEMs note
Slide 13: Revenues by Activity
Revenues by Activity 2009 2010 15% 18% 47% 52% 33% 35% N New C Construction/Installation t ti /I t ll ti R l Replacement t S i &M Service Maintenance i t 13
Slide 14: Diverse Project Mix
Diverse Project Mix # OF PROJECTS (As of December 31, 2010) 4,215 177 39 17 8 Average Project Size 4,200 $415,000 Average Project Length 3,150 6-9 months 2,100 TOTAL PROJECTS = 4,456 Value of Projects >$1M $1,085.8M 1,050 Value of Projects <$1M $753.2M 0 0-1M 1-5M 5-10M 10-15M 15+M PROJECT SIZE 14
Slide 15: Diverse End-Use Base
Diverse End-Use Base September 30, 2010 YTD Healthcare 1% Education 2% 1% 12% 4% 2% 17% Government 8% 4% 20% Manufacturing 11% Office Building 16% 14% Multi-Family Retail/Restaurants Other Top 20 Customers Lodging & Entertainment Served by 15 different Comfort operating units Residential Largest
Slide 16: Diverse End-Use Base
Diverse End-Use Base Omni Orlando Resort at ChampionsGate Arboretum Elementary School Orlando, Florida Waunakee, Wisconsin Iowa Renewal Energy University Hospital 16 Washington, Iowa Little Rock, Arkansas
Slide 17: Competitive Advantages
Competitive Advantages High quality operations Ability to leverage and proliferate technical expertise Ability b ty to collaborate co abo ate on o large a ge jobs and share labor Energy efficiency services National multi-location service capability Purchasing economics Balance sheet st
Slide 18: Safety
Safety Industry Average Comfort Systems USA (October 2009 – latest available data) (January 2011 data) 15.0 Lost Time Injury Rate <46% of industry average 20% Difference cordable Rate 10.0 OSHA Incident Rate <42% of industry average OSHA Rec 50 5.0 Training 42% Difference 97% completed 0.0 1998 1999
Slide 19: Financial Overview
Financial Overview SsyvsTremsu JA.
Slide 20: Key Financial Data – Income Statement
Key Financial Data – Income Statement ($ Thousands, except per share information) (Unaudited) Three Months Ended Year Ended December 31, December 31, 2010 2009 2010 2009 Revenues $ 314,571 $ 256,693 $ 1,108,282 $ 1,128,907 Cost of Services 257,671 202,022 919,600 903,357 Gross Profit 56,900 54,671 1
Slide 21: Key Financial Data – Balance Sheet
Key Financial Data – Balance Sheet ($ Thousands) 12/31/2010 12/31/2009 Cash $ 86,346 $ 127,850 Working Capital $ 134,738 $ 164,125 Goodwill $ 147,818 $ 100,194 Identifiable Intangible Assets Assets, Net $ 39 616 39,616 $ 19 380 19,380 Total Debt $ 29,936 $ 7,608 Equity $ 312,784 $ 305,984 21
Slide 22: Revenues
Revenues $ , $1,500 $1,400 $1,300 $1,322 $1,200 $1,100 $1,129 $ , 9 $1 102 $1,102 $1 108 $1,108 $1,000 $1,048 (in millions) $900 venues $800 $883 $700 Rev $600 $500 $400 $300 $200 $100 $0 2005 2006 2007 2008 2009 2010 22 Note: Excludes all divested and discontinued operations
Slide 23: Operating Margins
Operating Margins (a) 7% 6% 5% 4% gin 3% Operating Marg 2% 1% Annual O 0% 2005 2006 2007 2008 2009 2010 YTD (a) This table includes non-GAAP non GAAP financial information as the information provided excludes goodwill impairment charges of $33.9 million for 2005 and $5.7 million for 2010. No goodwil
Slide 24: 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 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 24 Note: Excludes all divested a
Slide 25: 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 $86 million cash at 12/31/10; substantial credit capacity if needed Positive free cash flow for eleven calendar years 25
Slide 26: Profile For Growth
Profile For Growth Service EARNINGS CURRENT OPERATIONS (CONSTRUCTION AND SERVICE) TIME Commercial HVAC 26
Slide 27: 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 27
Slide 28: 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. 28
Slide 29: Peter Drucker quote
The only things that evolve by themselves in an organization are disorder, friction and malperformance. malperformance -Peter Drucker 29
Slide 30: 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 Energy Efficiency –Indoor Air Quality (IAQ)
Slide 31: National Account Customers
National Account Customers 31 *Trademarks and logos are the property of their respective owners.
Slide 32: 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 usage, age, incentives 32 Use Our Energy to Save
Slide 33: 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 33
Slide 34: The Ideal Acquisition Candidate
The Ideal Acquisition 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 O Organizational i ti l structure t t capable bl off sustaining/improving the company Owner
Slide 35: Target Markets
Target Markets (Listed Alphabetically) Boise, Boise ID Los Angeles 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
Slide 36: 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 37: What We Do
COMFORT USCA. SYSTEMS
Slide 38: syvstemsU OA.
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Slide 39: Appendices
syvstemsU 0A Appendices
Slide 40: Appendix I – GAAP Reconciliation To Adjusted EBITDA
Appendix I – GAAP Reconciliation To Adjusted EBITDA (in thousands) (Unaudited) Three Months Ended Year Ended December 31, December 31, 2010 2009 2010 2009 Net Income $ 5,796 $ 7,602 $ 14,740 $ 34,182 Discontinued Operations - (66) (723) 414 Income Taxes 2,196 4,144 6,360 21,437 Other Income (1,166)
Slide 41: Appendix II – Supplemental Non-GAAP Information
Appendix II – Supplemental Non-GAAP Information ($ in thousands except per share amounts) (Unaudited) Three Months Ended Year Ended December 31, December 31, 2010 2009 2010 2009 Net income from continuing operations $ 5,796 $ 7,536 $ 14,017 $ 34,596 Goodwill impairment (after - tax) 642 - 3,316 - Ne
Slide 42: 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