Comfort Systems Usa, Inc. · NYSE:FIX
Comfort Systems Usa — Investor Presentation (August 2010)
42 slides from Comfort Systems Usa's investor presentation, Aug 12, 2010
Slide 1: Comfort Systems USA – As of August 12, 2010
COMFORT Quality People. Building Solutions. SYSTEMS USA. As of August 12, 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, 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. 4
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: Comfort Systems USA
Comfort Systems USA National Commercial, Industrial, Institutional HVAC/Piping/Plumbing/Energy Efficiency Strong balance sheet Positive cash flow 47% new construction; 53% service, repair, retrofit 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 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 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: ColonialWebb Contractors with Comfort Systems USA
ColonialWebb Contractors with Comfort Systems USA ANNUAL REVENUES Acquired July Over $20M 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 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 11: Industry Trend Toward Service & Replacement (Recurring Revenue)
Industry Trend Toward Service & Replacement (Recurring Revenue) 5+ million 100% commercial NEW CONSTRUCTION buildings (DOE) 70% 70% Recurring service 20 year replacement 50% cycle “Inventory” of Share of Industry future business Revenues 30% 30% OEMs note SERVICE & REPLACEMENT significant
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 June 30, 2010) 4,176 202 37 14 7 Average Project Size $335,000 Average Project Length 6-9 months TOTAL PROJECTS = 4,436 Value of Projects >$1M $1,050.8M Value of Projects <$1M $433.7M PROJECT SIZE 13
Slide 14: Diverse End-Use Base
Diverse End-Use Base 2010 YTD Top 20 Customers Served by 15 different Comfort operating units Largest customer = less than 3% of revenues 14
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 service capability Purchasing economics Balance sheet strength Bonding and in
Slide 17: Safety – OSHA Recordable Rate
Safety Industry Average Comfort Systems USA (October 2008 – latest available data) (June 2010 data) Lost Time Injury Rate is 20% Difference 58% less than industry average OSHA Recordable Rate Achieved 96% training completed OSHA Incident Rate is 44% less than industry 44% Difference average So
Slide 18: History – Financial $ Revenue
History – Financial Revenues Capital Management Structure 2,000 346 1,591 1,500 1,591 1,546 1,546 $ Revenue 275 Debt –TTM EBITDA 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 A
Slide 19: Financial Overview
Financial Overview 19
Slide 20: Financial Profile
Financial Profile ($ in millions, except per share amounts) 2Q 2Q YTD 2010 2009 2010 2009 Revenues $ 249.6 $ 300.3 $ 486.1 $ 580.6 Adjusted EBITDA (*) $ 9.8 $ 20.4 $ 15.5 $ 35.6 % Revenue 3.9% 6.8% 3.2% 6.1% Operating Income $ 6.8 $ 17.0 $ 8.9 $ 29.0 excluding goodwill impairment (**) % Revenue 2.7%
Slide 21: Revenues
Revenues $1,500 $1,400 $1,300 $1,200 $1,322 $1,100 $1,129 $1,000 $1,102 (in millions) $1,048 Revenues $900 $800 $883 $700 $600 $500 $400 $300 $200 $100 $0 2005 2006 2007 2008 2009 21 Note: Excludes all divested and discontinued operations
Slide 22: Annual Operating Margin
Operating Margins (a) 7% 6% Annual Operating Margin 5% 4% 3% 2% 1% 0% 2005 2006 2007 2008 2009 (a) This table includes non-GAAP financial information as the information provided excludes goodwill impairment charges of $33.9 million for 2005. No goodwill impairment charge was recorded for 2006, 2007,
Slide 23: Backlog (in millions)
Backlog (in millions) 23 Note: Excludes all divested and discontinued operations
Slide 24: Free Cash Flow (in millions)
Free Cash Flow (in millions) Year Ended December 31, 2009 2008 2007 Cash From Operating Activities $ 54.3 $ 82.9 $ 83.6 Purchases Of Property and Equipment (9.5) (14.6) (11.1) Proceeds From Sales Of Property and Equipment 0.8 0.6 0.3 Free Cash Flow $ 45.6 $ 68.9 $ 72.8 24
Slide 25: Financial Strengths
Financial Strengths Market share up – revenue and profit performance better than industry Commitment to cost containment $108 million cash at 6/30/10 (prior to ColonialWebb acquisition); 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 – 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. -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 Efficiency –Indoor Air Quality (IAQ) * Maint
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% - 65 % electric usage Energy Star (Dept. of Energy/EPA) / LEED (USGBC) 2- 4 year pay outs depending on electric rates, usage, age, incentives 32 Use Our Energy to Save Yours! ™
Slide 33: 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 33
Slide 34: 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 the company Ownership/management that wants to
Slide 35: 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 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
What We Do systems UA.
Slide 38: Comfort Systems USA
COMFORT UGA.
Slide 39: Appendices
systems U CA Appendices
Slide 40: Appendix I – GAAP Reconciliation to Adjusted EBITDA
Appendix I – GAAP Reconciliation To Adjusted EBITDA (in thousands) Three Months Ended Six Months Ended June 30, June 30, 2010 2009 2010 2009 Net Income $ 1,646 $ 10,098 $ 3,573 $ 17,040 Discontinued Operations - 300 (762) 480 Income Taxes 515 6,491 1,245 11,221 Other (Income) Expense 6 (9) (6) (2) I
Slide 41: Appendix II – Supplemental Non-GAAP Information
Appendix II – Supplemental Non-GAAP Information ($ in thousands except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2010 2009 2010 2009 Operating Income $ 2,376 $ 17,040 $ 4,480 $ 29,009 Goodwill Impairment 4,446 - 4,446 - Operating Income 6,822 17,040 8,926 29,009 exclud
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
Comfort Systems USA — Investor Presentation (August 2010) on 6ix