Slide 1: Comfort Systems USA
COMFORT Quality People. Building Solutions. svorems UA.
Slide 2: Safe Harbor Statement
2 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 Comfort Systems USA, Inc. and involve risks and uncertainties that could cause actua
Slide 3: Vision
3 To be the nation’s premier HVAC and mechanical systems installation and services provider. Vision
Slide 4: Mission
4 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.
Slide 5: Values
5 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 often. Impact our communi
Slide 6: Comfort Systems USA
6 Comfort Systems USA National Commercial, Industrial, Institutional HVAC/Piping/Plumbing/Energy Efficiency Strong balance sheet Substantial positive cash flow 55% new construction; 45% service, repair, retrofit (Q2 09) 2008 Full Year Revenues $1.3 billion 2009 Full Year Run Rate $1.2 billion
Slide 7: Comfort Today
7 Comfort Today Over $20M $10M - $20M Comfort Systems USA Energy Services Comfort Systems USA National Accounts ANNUAL REVENUES Region 3 Region 1 Region 2
Slide 8: What We Do
8 What We Do Commercial HVAC Building comfort a “necessity” Mechanical equipment – requires service, repair, replacement Increasing technical content and building automation Energy efficiency and Indoor Air Quality (IAQ) emerging Outsourcing D R I V E R S Commercial, Industrial, Institutional HVAC –
Slide 9: Industry Trend Toward Service & Replacement
9 Industry Trend Toward Service & Replacement (Recurring Revenue) 5+ million commercial buildings (DOE) Recurring service 20 year replacement cycle “Inventory” of future business OEMs note significant deferred maintenance & replacement over recent years Source: The Trane Company NEW CONSTRUCTION 70%
Slide 10: Revenues by Activity
10 14% 31% 55% Revenues by Activity New Construction/Installation Replacement Service and Maintenance June 2009 YTD
Slide 11: Diverse Project Mix
11 0 2,000 4,000 0-1M 1-5M 5-10M 10-15M 15+M PROJECT SIZE # OF PROJECTS (As of June 30, 2009) Diverse Project Mix Average Project Size $480,000 Average Project Length 6-9 months Value of Projects >$1M $1,306.0M Value of Projects <$1M $684.1M 3,827 242 53 19 7 TOTAL PROJECTS = 4,148
Slide 12: Diverse End-Use Base
12 Healthcare Education Government Manufacturing Office Building Multi-Family Retail/Restaurants Other Residential 24% 13% 11% 11% 10% 8% 12% 1% 2% Top Ten Customers Diverse End-Use Base Served by 9 different Comfort operating units Largest customer = less than 3% of revenues Lodging & Entertainment
Slide 13: Diverse End-Use Base
13 Diverse End-Use Base Omni Orlando Resort at ChampionsGate Orlando, Florida University Hospital Little Rock, Arkansas Arboretum Elementary School Waunakee, Wisconsin Iowa Renewal Energy Washington, Iowa
Slide 14: Competitive Advantages
14 Competitive Advantages High quality operations Ability to leverage and proliferate technical expertise Ability to collaborate on large jobs and share labor Energy efficiency services National multi-location service capability Purchasing economics Balance sheet strength Bonding and insurance Stron
Slide 15: Safety
15 0.0 5.0 10.0 15.0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 OIR decreased from 3.42 to 3.21 Lost time injury rate is 65% less than industry average WC claims cost per payroll dollar down from 3.5% to <1% Achieved 98.1% training completed 24% reduction in the overall CSUSA Compos
Slide 16: History – Financial
16 854 1,370 1,591 1,546 820 1057 900 346 275 205 80 100 120 140 160 180 200 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 History – Financial Nonresidential Construction Spending (FW Dodge) 9/11/01 1110 0 500 1,000 1,500 2,000 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 200
Slide 17: Financial Overview
17 Financial Overview
Slide 18: Financial Profile
18 Financial Profile ($ in millions, except per share amounts) 2Q YTD 2Q 2009 2008 2009 2008 300.3 $ 353.3 $ 580.6 $ 647.2 $ 20.4 $ 27.7 $ 35.6 $ 42.9 $ % Revenue 6.8% 7.8% 6.1% 6.6% Operating Income 17.0 $ 24.5 $ 29.0 $ 37.2 $ % Revenue 5.7% 6.9% 5.0% 5.7% Net Income - Continuing Operations 10.4 $
Slide 19: Revenues
19 Revenues Revenues for the six months ended June 30, 2009 were $580.6 million. Revenues (in millions) $767.4 $892.5 $1,056.5 $1,109.5 $1,328.5 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 2004 2005 2006 2007 2008 Note: Excludes all divested and disconti
Slide 20: Operating Margins
20 Operating Margins (a) Annual Operating Margin 0% 1% 2% 3% 4% 5% 6% 7% 2004 2005 2006 2007 2008 (a) This table includes non-GAAP financial information as the information provided excludes goodwill impairment charges of $0.6 million and $33.9 million for 2004 and 2005, respectively. No goodwill imp
Slide 21: Backlog
21 Backlog (in millions) Note: Excludes all divested and discontinued operations $0 $200 $400 $600 $800 $1,000 1Q 02 2Q 02 3Q 02 4Q 02 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09
Slide 22: Strong Cash Flows
22 Strong Cash Flows (in millions) Six Months Ended June 30, 2009 2008 2007 Cash From Operating Activities 20.0 $ 82.9 $ 83.6 $ Purchases Of Property and Equipment (4.4) $ (14.6) $ (11.1) $ Proceeds From Sales Of Property and Equipment 0.1 $ 0.6 $ 0.3 $ Free Cash Flow 15.7 $ 68.9 $ 72.8 $
Slide 23: Financial Strengths
23 Financial Strengths Market share up – revenue and profit performance better than industry Commitment to cost containment $120.4 million cash at 6/30/09; substantial credit capacity if needed Positive free cash flow for ten calendar years
Slide 24: Profile For Growth
24 Profile For Growth T I M E E A R N I N G S Service INCREMENTAL SERVICE GROWTH CURRENT OPERATIONS (CONSTRUCTION AND SERVICE) ENERGY EFFICIENCY Commercial HVAC ACQUISITIONS
Slide 25: Operations Increase Productivity
25 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
Slide 26: Job Loop
26 Job Loop Project Estimating Post-Project Review We review projects and apply what we have learned to improve our performance. Project Pricing Project Qualification Project Management
Slide 27: Peter Drucker quote
27 The only things that evolve by themselves in an organization are disorder, friction and malperformance. -Peter Drucker
Slide 28: Service
28 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) * Maintenance, ser
Slide 29: National Account Customers
29 National Account Customers *Trademarks and logos are the property of their respective owners.
Slide 30: Energy Efficiency-Retrofitting HVAC
30 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 (USGBC3) 2- 4 year pay outs depending on electric rates, usage, age, incentives Use Our Energy to Save Yours! ™
Slide 31: Growth
31 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
Slide 32: The Ideal Candidate
32 $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 stay on to operate company T
Slide 33: Target Markets
33 Boise, ID Charleston, SC Columbia/Florence, SC Dallas/Fort Worth, TX El Paso, TX Ft. Lauderdale, FL Los Angeles, CA Nashville, TN Norfolk, VA Target Markets (Listed Alphabetically) Omaha, NE Portland, OR Raleigh, NC Richmond, VA San Antonio, TX Savannah, GA Spartanburg/Greenville, SC Tampa, FL Tu
Slide 34: Outlook Long-Term
34 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 and geogr
Slide 35: Comfort Systems USA
SYSTEMS COMFORT USA
Slide 36: Svorems UA
Svorems UA
Slide 37: Appendix
Appendix COMFORT SYSTEMS USA
Slide 38: Appendix – GAAP Reconciliation To Adjusted EBITDA
38 Appendix – GAAP Reconciliation To Adjusted EBITDA June 30, June 30, 2009 % 2008 % 2009 % 2008 % Net Income 10,098 $ 15,193 $ 17,040 $ 23,434 $ Discontinued Operations 300 (24) 480 (87) Income Taxes 6,491 9,529 11,221 14,820 Other Income (9) (52) (2) (158) Interest (income) expense, net 160 (137)
Slide 39: Contact
39 C O N T A C T: Bill George Executive Vice President and CFO 1-800-723-8431 bgeorge@comfortsystemsusa.com www.comfortsystemsusa.com