Comfort Systems Usa, Inc. · NYSE:FIX
Comfort Systems Usa — Investor Presentation (November 2010)
40 slides from Comfort Systems Usa's investor presentation, Nov 12, 2010
Slide 1: Comfort Systems USA
COMFORT Quality People. Building Solutions. sverems UA.
Slide 2: Safe Harbor Statement
2 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
Slide 3: Vision
3 To be the nation’s premier HVAC and mechanical systems installation and services provider. Vision
Slide 4: 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 openlyand often. Impact our communitie
Slide 5: Comfort Systems USA
6 Comfort Systems USA National Commercial, Industrial, Institutional HVAC/Piping/Plumbing/Energy Efficiency Strong balance sheet 47% new construction; 53% service, repair, retrofit 2009 Full Year Revenues $1.1 billion 2010 Run Rate $1.1 billion
Slide 6: Comfort Systems USA's Team
7 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) EXVP-CFO Industry: 13 years CSUSA 13 y
Slide 7: Comfort Today
8 Comfort Today Over $50M $20M - $50M $10M - $20M Comfort Systems USA Energy Services Comfort Systems USA National Accounts ANNUAL REVENUES Region 3 Region 1 Region 2
Slide 8: ColonialWebb Contractors with Comfort Systems USA
9 ColonialWebb Contractors with Comfort Systems USA $20M - $50M $10M - $20M ANNUAL REVENUES Colonial Webb Locations Acquired July 2010 $180M - $190M Annual Revenue Main offices in Richmond, VA and Norfolk, VA Over $50M
Slide 9: What We Do
10 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 10: Industry Trend Toward Service & Replacement
11 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 & replacement over recent years Source: The Trane
Slide 11: Revenues by Activity
12 17% 36% 47% Revenues by Activity New Construction/ Installation Replacement Service and Maintenance 2010 YTD
Slide 12: Diverse Project Mix
13 PROJECT SIZE # OF PROJECTS (As of September 30, 2010) Diverse Project Mix Average Project Size $375,000 Average Project Length 6-9 months Value of Projects >$1M $1,062.3M Value of Projects <$1M $902.7M 5,015 180 37 20 6 TOTAL PROJECTS = 5,258
Slide 13: Diverse End-Use Base
14 Healthcare Education Government Manufacturing Office Building Multi-Family Retail/Restaurants Other Residential Top 20 Customers Diverse End-Use Base Served by 17 different Comfort operating units Largest customer = approximately 2% of revenues Lodging & Entertainment September 30, 2010 YTD Relig
Slide 14: Diverse End-Use Base
15 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 15: Competitive Advantages
16 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 16: Safety: OSHA Recordable Rate
17 OSHA Recordable Rate Source: Bureau of Labor Statistics, Standard Industry Classification (SIC) Code 20 1710 – Specialty Trades Contractors – HVAC and Plumbing & North American Industry Classification System (NAICS) Code 23822 Safety 40% Difference 20% Difference Industry Average (October 2009 –
Slide 17: History – Financial
18 854 1,370 1,591 1,546 820 1057 900 346 275 205 History – Financial Nonresidential Construction Spending (FW Dodge) 9/11/01 1110 298 854 1,370 1,591 1,546 785 767 883 1,048 1,102 1,322 Revenues Sale of Assets Acquisition Phase and Industry Growth $ Revenue Capital Management Structure $ Debt Debt
Slide 18: Financial Overview
19 Financial Overview
Slide 19: Financial Profile
20 Financial Profile ($ in millions, except per share amounts) 2010 2009 2010 2009 307.6 $ 291.6 $ 793.7 $ 872.2 $ 13.2 $ 18.9 $ 28.8 $ 54.5 $ % Revenue 4.3% 6.5% 3.6% 6.2% Operating Income 8.5 $ 15.8 $ 17.4 $ 44.8 $ excluding goodwill impairment (**) % Revenue 2.7% 5.4% 2.2% 5.1% Net Income - Conti
Slide 20: Revenues
21 Revenues Revenues (in millions) Note: Excludes all divested and discontinued operations
Slide 21: Operating Margins
22 Operating Margins (a) Annual Operating Margin This table includes non-GAAP financial information as the information provided excludes goodwill impairment charges of $33.9 million for 2005 and $4.4 million for 2010. No goodwill impairment charge was recorded for 2006, 2007, 2008 or 2009.
Slide 22: Backlog
23 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 3Q 09 4Q
Slide 23: Financial Strengths
24 Financial Strengths Market share up – revenue and profit performance better than industry Commitment to cost containment $45 million cash at 9/30/10; substantial credit capacity if needed Positive free cash flow for eleven calendar years
Slide 24: Profile For Growth
25 Profile For Growth TIME EARNINGS Service ACQUISITIONS INCREMENTAL SERVICE GROWTH CURRENT OPERATIONS (CONSTRUCTION AND SERVICE) ENERGY EFFICIENCY Commercial HVAC ACQUISITIONS
Slide 25: Operations: Increase Productivity
26 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
27 Job Loop Post-Project Review We review projects and apply what we have learned to improve our performance. Project Estimating Project Pricing Project Qualification Project Management
Slide 27: Peter Drucker quote
28 The only things that evolve by themselves in an organization are disorder, friction and malperformance. -Peter Drucker
Slide 28: Service: Increase Service
29 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, servic
Slide 29: National Account Customers
30 National Account Customers *Trademarks and logos are the property of their respective owners.
Slide 30: Energy Efficiency-Retrofitting HVAC
31 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, incentives Use Our Energy to Save Yours! ™
Slide 31: Growth
32 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
33 $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
34 Boise, ID Charleston, SC Columbia/Florence, SC Dallas/Fort Worth, TX El Paso, TX Ft. Lauderdale, FL Greensboro, NC Jackson, Mississippi Target Markets (Listed Alphabetically) Los Angeles, CA Omaha, NE Portland, OR San Antonio, TX Savannah, GA Spartanburg/Greenville, SC Tampa, FL
Slide 34: Outlook
35 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: What We Do
What We Do sverems UA
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Slide 37: Appendices
Appendices COMFORT SYSTEMS USA
Slide 38: Appendix I – GAAP Reconciliation To Adjusted EBITDA
39 Appendix I – GAAP Reconciliation To Adjusted EBITDA (in thousands) September 30, September 30, 2010 2009 2010 2009 Net Income $ 5,371 $ 9,540 $ 8,944 $ 26,580 Discontinued Operations 39 - (723) 480 Income Taxes 2,919 6,072 4,164 17,293 Other Income (669) (3) (675) (5) Interest Expense, net 793 18
Slide 39: Appendix II – Supplemental Non-GAAP Information
40 Appendix II – Supplemental Non-GAAP Information ($ in thousands except per share amounts) 2010 2009 2010 2009 Operating Income $ 8,453 $ 15,793 $ 12,933 $ 44,802 Goodwill Impairment - - 4,446 - Operating Income 8,453 15,793 17,379 44,802 excluding goodwill impairment Interest and other (124) (181
Slide 40: Contact
CONTACT: Bill George Executive Vice President and CFO 1-800-723-8431 bgeorge@comfortsystemsusa.com www.comfortsystemsusa.com Quality people Building Solution
Comfort Systems USA — Investor Presentation (November 2010) on 6ix