Comfort Systems Usa, Inc. · NYSE:FIX
Comfort Systems Usa — Investor Presentation (June 2006)
40 slides from Comfort Systems Usa's investor presentation, Jun 2, 2006
Slide 1: Comfort Systems USA
COMFORT U Ch Quality People. Building Solutions. SYSTEMS one. is
Slide 2: Safe Harbor Statement
Safe Harbor Statement svsrems UDA. This presentation includes certain statements that may be deemed to be “forward-looking statements’ within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as Amended. These statements are
Slide 3: Vision
SOMRSUCA To be the nation’s premier HVAC and mechanical systems installation and services provider.
Slide 4: Mission
Mission SYSTEMS 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.
Slide 5: Values
systems UA Honesty and Integrity Respect for ALL Stakeholders Exceed Customer Expectations Seek “Win-Win” Solutions Entrepreneurial Spirit and Drive Premier Safety Performance Communicate Openly Positively Impact Our Communities Think National - Act Local
Slide 6: Comfort Systems USA at a glance
COMFORT, SYSTEM: + National « Commercial, Industrial, Institutional + HVAC/Piping/Plumbing » Strong balance sheet + Profitable/cash flow positive in tough 01-03 conditions = Good results in 04 = Increased growth, profitability and cash flow in 05/06 = 2005 - $900 million revenues = 62% new construct
Slide 7: Geographic footprint and national accounts
COMFORT USCA systems ( 7) ~ 7 ty a A A over szom @ stom-szom @ Under $10M Matis comfort systems USA A. comfort systems USA National Accounts
Slide 8: Applied Systems
ee Applied Systems SOMRSUCA Quality People. Building Solutions.
Slide 9: Industry section
SOMFORTUSCAN SYSTEMS '
Slide 10: Long Term Industry Growth
g Term Industry Growth systems UA. Commercial, Industrial, Institutional HVAC — A $40B+ Industry + Building comfort 7, a‘necessity” + Mechanical equipment — requires service, repair, 440 120 replacement + Increasing technical 100, content and building automation wo + Energy efficiency and 6 1AQ emer
Slide 11: Nonresidential Construction Spending
onresidential Construction Spending aes systems UA. ($ in billions) — 3-Year 3-Year 2002 2005 CAGR 2008 CAGR Manufacturing $13.2 $18.8 12.5% $29.7 16.5% Office 32.3 28.5 (4.1%) 40.9 12.8% Lodging 8.4 8.9 1.9% 11.7 9.5% Health Care 14.4 13.4 (1.7%) 14.7 3.1% Religious 6.7 5.5 (6.4%) 61 3.5% Education
Slide 12: Industry Trend Toward Service & Replacement
Industry Trend Toward Service & SOMFORT LO SYSTEMS ' Replacement (Recurring Revenue) = 5+ million commercial buildings (DOE) 100% Fy | NEW CONSTRUCTION 1 10% = Recurring service = 20 year replacement cycle 50% = “Inventory” of future business Share of : seo ! + OEMs note Revenues i T significant def
Slide 13: Revenue mix YTD March 2006
YTD March 2006 SOMFORT USCA. SYSTEMS ' I Service and Maintenance 1 New Construction/ Installation _| Replacement
Slide 14: Diverse Project Mix
erse Project Mix sysrensUCA # OF PROJECTS (As of tarch 31, 2006) [442] |: i 2 Average Project Size $320,000 p00 Average Project Length 3-6 months 2000 TOTAL PROJECTS = 4,680 Value of Projects >S1M. $829.4M Value of Projects <$1M $658.3M om ea sea sor 15H PROJECT SIZE
Slide 15: General contractor customers
COMFORT, SYSTEMS ' WHITING-TURNER WEITZ ca BRASFIELD E&P GORRIE creo Exrecranons, Evers Dav! cilbane ROBINS & MORTON ) MECARTHY ~d nscomen CENTEX CONSTRUCTION 18 “Trademarks and lagos are the property of their respective owners.
Slide 16: Customer end-markets YTD March 2006
‘YTD March 2006 = Served by ten different Comfort operating units = Largest customer = less than 5% of revenues COMFORT, SYSTEMS ' Healthcare Schools Government Manufacturing Office Building Multi-Family Retail Distribution Other Hotels Residential
Slide 17: Benefits of national platform
+ High quality operations * Ability to leverage and proliferate technical expertise * Ability to collaborate on large jobs and share labor + National multi-location service capability + Purchasing economics + Financing + Bonding and insurance COMFORT, SYSTEMS '
Slide 18: Company section
See USA.
Slide 19: Company history 1997 to 2006
= 1997 to 1999 — IPO, rapid acquisition growth, strong organic growth = 2000 — Integration challenges, trough in profits, high leverage, start of rationalization of operations = 2001 - Working capital conservation increases cash flow/reduces debt = 2002 to 2003 — Sale of assets; smaller stronger pla
Slide 20: History — Financial
History — Financial sysrensUCA $ Revenue z vauiaa — 900 20 poe ee ee ee ee)
Slide 21: Project risk management and review
COMFORT, SYSTEMS ' « If project > 10% TTM revenues or new technical application ~ Then Senior Vice President review required prior to bid process — This may include blind estimate by another Comfort unit experienced in type/size of project = Bonding qualification « Project management training = Sarb
Slide 22: Record backlog
systems UA [=] * 9 consecutive (| The record backlog mes [oes] quarters 400 | [asa « Includes $16 million 7 of acquired backlog in 1Q05 200 0 eal es 2 fs f ° er 2 al * OF Note: Excludes all divested and discontinued operations 2
Slide 23: OSHA Recordable Rate
OSHA Recordable Rate 2 60 100 aot "== Industry Average s==== Comfort Systems USA 20% Difference 50% Difference ee ee ee ee Source: Bureau of Labor Statistics, Standard Industry Classifation (SIC) Code 201710 - Specialy Trades Contractore - HVAC and Plumbing & Noth American Industry Classification Sy
Slide 24: Financial Profile - Ongoing Operations
Financial Profile - Ongoing Operations systems UA. 06 05 05” og” ReVvenues......ccccceeeeecreescceneeee $237.9 $195.3 $899.5 $778.6 Adjusted EBITDA.........00000. $8.0 $2.2 $37.0 $25.5 % Revenue. eeoeerate 3.3% 1.1% 4A 3.3% Operating Income ... $6.7 $1.3 $32.6 $21.4 % Revenue... 2.8% 0.7% 3.6% 2.7%
Slide 25: Revenues
$1,100 $1,000 Revenues 6 200 se00 $700 00 $600 400 $900 $200 $00 $0 2001 2002 2003 2008 systems UA
Slide 26: Annual Operating Margin
Annual Operating Margin 6 6% 5% 4% 3% 2% 1% 0% (@) 2002 2003 2004 2005 Q106 ‘This table includes non-GAAP financial information as the information provided excludes goodwill impairment charges of $02 million, $27 million, $0.6 million and $33.9 milion for 2002, 2003, 2004 and 2006, respectively. COM
Slide 27: Market share, cost containment and cash
an = Market share up — revenue and profit performance better than industry = Commitment to cost containment = $58 million cash at 3/31/06; substantial credit capacity if needed = Positive free cash flow for last seven calendar years COMFORT, SYSTEMS ' USA
Slide 28: Commercial HVAC
Fy EARNINGS systems UA. Commercial HVAC
Slide 29: Increase Productivity
SOMFORTUSCAN SYSTEMS ' Increase Productivity « Education — Leadership = Project Managers — Superintendents — Service Sales — Service Operations — Craft Best Practices — Project Loop — Estimating Cooperation with suppliers Prefabrication New materials and methods Focus — Leadership — Management
Slide 30: Project Job Loop
20 Project Qualification Project Pricing Project Management systems UA Job Loop = Constant feedback = Continuous improvement process
Slide 31: Peter Drucker quote
systems UA The only things that evolve by themselves in an organization are disorder, friction and malperformance. -Peter Drucker
Slide 32: Increase Service
2 Increase Service” = Grow Maintenance Base » Education - Sales — Sales Management — Service Operations = Target Retrofit Projects — Energy Efficiency - IAQ * Maintenance, service, repair, retrofit COMFORT, SYSTEMS ' USA
Slide 33: Higher margin service opportunity
COMFORT, SYSTEM: Higher margin opportunity Full maintenance contracts/ life of installation Recurring revenue EARNINGS National accounts ads = $2.50+ of repair and replacement for every $1.00 of maintenance 2
Slide 34: National accounts customers
systems UA SSATeT Wireless gtelizabeth Arden TRANS WORLD ENTERTAINMENT Liz claiborne’ OfficeMax 3 Witadawear de and Bipot are thr orient al thele renpeclive ciaere:
Slide 35: Grow
6 Grow = Internal Growth — More of what we do best — Service = Step Out Growth — New locations for existing companies — Techs “on their own” « Targeted acquisitions COMFORT, SYSTEMS ' USA.
Slide 36: Acquisition criteria
systems UA 6 $20 million in revenue Full service mechanical In a growing market where we are not now 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 stay on to o
Slide 37: Target Cities
Target Cities a (Listed East to West) Boston, MA Providence, RI Norfolk, VA Richmond, VA Raleigh/Durham, NC Charleston, SC Columbia, SC Tampa, FL Charlotte, NC Spartanburg/Greenville, SC Pittsburgh, PA Atlanta, GA (Service) COMFORT, SYSTEMS ' Cincinnati, OH Nashville, TN Tulsa, OK Dallas/Fort Worth,
Slide 38: Industry Activity
Industry Activity systems UA. (FW. Dodge) Dodge F t = Nonresidential new construction increasing (US. Census Bureau - Construction Put In Place) + Deferred maintenance and replacement 8
Slide 39: Long-Term outlook
systems UA ey Long-Term * $40+ billion fragmented industry + HVAC is a basic necessity = Commercial construction strong * Growing installed base for recurring maintenance, service, repair and retrofit * Scale opportunities — service, purchasing, bonding, best practices « Diverse customer base and ge
Slide 40: Searchable text section of graphics shown above
Searchable text section of graphics shown above Quality People. Building Solutions. [LOGO] [GRAPHIC] As of June 1, 2006 Safe Harbor Statement This presentation includes certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of
Comfort Systems USA — Investor Presentation (June 2006) on 6ix