Comfort Systems Usa, Inc. · NYSE:FIX
Comfort Systems Usa — Investor Presentation (August 2011)
36 slides from Comfort Systems Usa's investor presentation, Aug 18, 2011
Slide 1: Quality People. Building Solutions.
Quality People. Building Solutions. As of August 18, 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. 2
Slide 4: Mission
Mission To provide the best value HVAC and mechanical systems installation and service, principally in the mid-market commercial, industrial, and i tit ti l sectors, institutional t while hil caring i ffor our customers, t employees l and d the environment and realizing superior returns for our stoc
Slide 5: Values
Values • Act with honesty and integrity. • Show respect p for all stakeholders. • Exceed customer expectations. • Seek “win-win” solutions. • Demonstrate spirit, drive, and teamwork. • Pursue innovation. • Achieve premier safety performance. • Commit C it to t energy efficiency. ffi i • Communicate
Slide 6: Comfort Systems USA's Team
Comfort Systems USA’s Team Bill Murdy – Chairman/CEO Experience Industry: 20 years y CSUSA: 10 years Military: 10 years Bill George – EVP & CFO Brian Lane – President & COO Experience Experience I d t 14 years Industry: Industry: 26 years CSUSA: 14 years CSUSA: 7 years Legal: 13 years Tom Tanner – S
Slide 7: Comfort Systems USA
Comfort Systems USA • National • Commercial, Commercial Industrial, Industrial Institutional • HVAC/Piping/Plumbing/Energy Efficiency • Strong balance sheet • 44% new construction; 56% service, repair, retrofit • 2010 Full Year Revenues $1.1 billion • 2011 Run Rate $1.2 $1 2 billion 6
Slide 8: Comfort Today
Annual Revenues Over $50M © $20M - $50M © $10M - $20M © Comfort Systems USA Energy Services Comfort Systems USA National Accounts svarems USA. A< 24 Quality People. Building Solutions.
Slide 9: Our Companies
Our Companies Soares UGA SOUTH CENTRAL Since _ | Se, 1917 — =" ¥ Granite State CONTRACTORS Dillingham & Smith Plumbing & Heating, LLC MECHANICAL —— Birtone @ ire Protection Company comroRT A Comfort Systems USA Company svoremsUSA cOMFORT USA. Accu-Temp I | 1/ MECHANICAL 7 SERVICES, INC NORTH AMERICA
Slide 10: What We Do
What We Do Commercial, Industrial, Institutional HVAC – A $40B+ Industry Drivers • Buildingg comfort – a “necessity” y • Mechanical equipment – requires service, repair, replacement • Increasing technical content and building automation • Energy efficiency and Indoor Air Quality (IAQ) emerging • Out
Slide 11: Industry Trend Toward Service & Replacement
Industry Trend Toward Service & Replacement (Recurring Revenue) • 5.3 million commercial buildings • Recurring service • 20-year replacement cycle / retrofits for energy efficiency • “Inventory” of future business • OEMs note significant deferred maintenance and replacement over recent years 100 90
Slide 12: Revenues by Activity
Revenues by Activity 2010 – Full Year 2011 - Year To Date 18% 18% % 47% 44% 35% 38% N New C Construction/Installation t ti /I t ll ti R l Replacement t S i &M Service Maintenance i t 11
Slide 13: Diverse Project Mix
Diverse Project Mix Average Project Size: $375,000 Value of Projects >$1M: $1,027 M Average Project Length: 6-9 months Value of Projects <$1M: $745 M 4,500 4,500 3,600 Number of pprojects 2,700 Total Projects = 4,732 1,800 900 172 39 16 5 0 To $1 M $1 – $5 M $5 – $10 M $10 – $15 M Over $15 M (As of
Slide 14: Revenues By Sector
Revenues By Sector Distribution: 1% Healthcare: 17% Religious and Not-for-Profit: 1% Residential: 1% LLodging d i andd E t t i Entertainment: t 1% Other: 7% Retail/Restaurants: 8% Education: 20% Multi-Family: Multi Family: 3% Office Buildings: 11% Government: 16% Manufacturing: 14% Revenue for the s
Slide 15: Diverse End-Use Base
Diverse End- End-Use Base Omni Orlando Resort at ChampionsGate Arboretum Elementary School Orlando, Florida Waunakee, Wisconsin Iowa Renewal Energy University Hospital Washington, Iowa Little Rock, Arkansas 14
Slide 16: Competitive Advantages
Competitive Advantages • High-quality operations • Abilityy to leverage g and pproliferate technical expertise • Ability to collaborate on large jobs and share labor • Energy efficiency services • National multi multi-location location service capability • Purchasing economics • Balance sheet streng
Slide 17: Safety
Safety Industry Average (October 2009 – latest available data) Comfort Systems USA (June 2011 data) Lost Time Injury Rate 15 0 15.0 <57% of industry average 20% Difference OSHA Incident Rate 10 0 10.0 <37% 37% off industry i d t average OSHA Reccordable Rate Training 5.0 97% completed 37% Difference
Slide 18: Key Financial Data – Income Statement
Key Financial Data – Income Statement ($ Thousands, except per share information) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2011 2010 2011 2010 Revenues $ 312,148 $ 249,588 $ 594,207 $ 486,063 Cost of Services 264,638 207,623 512,488 404,590 Gross Profit 47,510 , 41,965 , 81,
Slide 19: Key Financial Data – Balance Sheet
Key Financial Data – Balance Sheet ($ Thousands) 6/30/2011 12/31/2010 Cash $ 50,101 $ 86,346 Working Capital $ 127,835 $ 134,738 Goodwill $ 148,986 $ 147,818 Identifiable Intangible Assets Assets, Net $ 37 388 37,388 $ 39 616 39,616 Total Debt $ 28,379 $ 29,936 Equity $ 305,383 $ 312,784 18
Slide 20: Revenues
Revenues $1,400 , $1,322 $1,200 $1,102 $1,129 $1,108 millions) $1,000 $1,048 Revenues (in m $883 $800 $600 $400 $200 $0 2005 2006 2007 2008 2009 2010 Note: Excludes all divested and discontinued operations 19
Slide 21: Operating Margins
Operating Margins(a) 7% 6% Annnual Operating Margin 5% 4% 3% 2% 1% 0% 2005 2006 2007 2008 2009 2010 (a) This table includes non-GAAP financial information because the information provided excludes goodwill impairment charges of $33.9 million for 2005 and $5.7 million for 2010. No goodwill impairment
Slide 22: 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 1Q 2Q 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 11 11 Note: Excludes all
Slide 23: Profile for Growth
Profile for Growth Service Earnnings Current Operations (Construction and Service) Time Commercial HVAC 22
Slide 24: Operations: Increase Productivity
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 23
Slide 25: Job Loop
Job Loop We review projects and apply what we have learned to improve our performance. Project Estimating Project j Post-Project j Project j Qualification Review Pricing Project M Managementt 24
Slide 26: Peter Drucker quote
The only things that evolve by themselves in an organization are disorder, friction and malperformance. Peter Drucker 25
Slide 27: Service: Increase Service
Service Increase Service* • Grow maintenance base • Education – Employees and Customers • Higher g margin g opportunity pp y • Recurring revenue • National accounts • $2.50+ $2 50+ of repair and replacement for every $1.00 of maintenance • Target retrofit projects – Energy Efficiency – Indoor Air Qu
Slide 28: National Account Customers
National Account Customers *Trademarks and logos are the property of their respective owners.27
Slide 29: Energy Efficiency – Retrofitting HVAC
Energy Efficiency – Retrofitting HVAC Green is Part of Our Business • Energy gy costs drive need for efficiency. y • HVAC accounts for 30% - 50% of electricity usage. • Energy Star (Department of Energy/EPA) / LEED (USGBC) • 2 - 4 year pay outs depending on electric rates, usage, age, incentives. Us
Slide 30: Growth
Growth • Internal – More of what we do best – Service – Energy efficiency • Step Step-Out Out Growth – New locations for existing companies – Techs “on their own” • Targeted acquisitions – Best HVAC-oriented mechanical in new area 29
Slide 31: The Ideal Acquisition Candidate
The Ideal Acquisition Candidate • $20M+ in revenue • Construction and service • In a growing market in new area • Company that has performed well iin th the pastt andd hhas continuing ti i demonstrable upside • Organizational structure capable of sustaining/improving the company • Ownership/manageme
Slide 32: Target Markets
Target Markets • 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, G b NC • Tampa, T FL • Jackson, MI • Atlanta (Listed
Slide 33: Outlook
Outlook Long-Term • $40B+ fragmented industry • HVAC a basic necessity • Commercial construction continuing •GGrowing o g installed sta ed base for o recurring ecu g maintenance, service, repair and retrofit • Scale opportunities – service,, ppurchasing, g, pprefab,, bonding, g, bes t practices • Di
Slide 34: Appendix I – GAAP Reconciliation To Adjusted EBITDA
Appendix I – GAAP Reconciliation To Adjusted EBITDA ($ Thousands) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2011 2010 2011 2010 Net Income (Loss) $ 3,162 $ 1,646 $ (2,008) $ 3,573 Discontinued Operation - - - (762) Income Taxes 2,513 515 (1,186) 1,245 Other (Income) Expense,
Slide 35: Appendix II – Supplemental Non-GAAP Information
Appendix II – Supplemental Non Non--GAAP Information ($ Thousands, except per share information) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2011 2010 2011 2010 Net income (loss) from continuing operations $ 3,162 $ 1,646 $ (2,008) $ 2,811 Goodwill impairment (after tax) - 2,67
Slide 36: Contact
Contact Bill George Executive Vice President and CFO 1-800 800--723- 723-8431 bill.george@comfortsystemsusa.com www.comfortsystemsusa.com 35
Comfort Systems USA — Investor Presentation (August 2011) on 6ix