Comfort Systems Usa, Inc. · NYSE:FIX
Comfort Systems Usa — Investor Presentation (May 2010)
38 slides from Comfort Systems Usa's investor presentation, May 6, 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 openly..and often. Impact our communit
Slide 5: Comfort Systems USA
6 Comfort Systems USA National Commercial, Industrial, Institutional HVAC/Piping/Plumbing/Energy Efficiency Strong balance sheet Substantial positive cash flow 49% new construction; 51% service, repair, retrofit 2009 Full Year Revenues $1.1 billion
Slide 6: 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) EXVP-CFO Industry: 13 years CSUSA 13 yea
Slide 7: Comfort Today
8 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
9 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 (Recurring Revenue)
10 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
11 17% 34% 49% Revenues by Activity New Construction/ Installation Replacement Service and Maintenance 2010 YTD
Slide 11: Diverse Project Mix
12 PROJECT SIZE # OF PROJECTS (As of March 31, 2010) Diverse Project Mix Average Project Size $365,000 Average Project Length 6-9 months Value of Projects >$1M $1,086.8M Value of Projects <$1M $463.5M 3,982 209 41 13 7 TOTAL PROJECTS = 4,252
Slide 12: Diverse End-Use Base
13 Healthcare Education Government Manufacturing Office Building Multi-Family Retail/Restaurants Other Residential Top 20 Customers Diverse End-Use Base Served by 16 different Comfort operating units Largest customer = less than 3% of revenues Lodging & Entertainment 2010 YTD Religious & Not-for-Pro
Slide 13: Diverse End-Use Base
14 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
15 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
16 Lost Time Injury Rate is 54% less than industry average Achieved 97% training completed OSHA Incident Rate is 44% less than industry average OSHA Recordable Rate Source: Bureau of Labor Statistics, Standard Industry Classification (SIC) Code 20 1710 – Specialty Trades Contractors – HVAC and Plumb
Slide 16: History – Financial
17 854 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 17: Financial Overview
18 Financial Overview
Slide 18: Financial Profile
19 Financial Profile ($ in millions, except per share amounts) 2010 2009 236.5 $280.3 $5.7 $15.2 $ % Revenue 2.4% 5.4% Operating Income 2.1 $12.0 $ % Revenue 0.9% 4.3% Net Income - Continuing Operations 1.2 $7.1 $ % Revenue 0.5% 2.5% Diluted EPS - Continuing Operations 0.03 $0.18 $ Free Cash Flow (1
Slide 19: Revenues
20 Revenues Revenues (in millions) Note: Excludes all divested and discontinued operations $883 $1,048 $1,102 $1,322 $1,129 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 2005 2006 2007 2008 2009
Slide 20: Operating Margins
21 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. No goodwill impairment charge was recorded for 2006, 2007, 2008 or 2009. 0% 1% 2% 3% 4% 5% 6% 7% 2005 2006 2
Slide 21: Backlog
22 Backlog (in millions) Note: Excludes all divested and discontinued operations
Slide 22: Strong Cash Flows
23 Strong Cash Flows (in millions) 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 $ Year Ended December 31,
Slide 23: Financial Strengths
24 Financial Strengths Market share up – revenue and profit performance better than industry Commitment to cost containment $110 million cash at 3/31/10; substantial credit capacity if needed Positive free cash flow for eleven calendar years
Slide 24: Profile For Growth
25 Profile For Growth T I M E E A R N I N G S 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 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
28 The only things that evolve by themselves in an organization are disorder, friction and malperformance. -Peter Drucker
Slide 28: 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: 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 31: 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 32: Target Markets
34 Boise, ID Charleston, SC Columbia/Florence, SC Dallas/Fort Worth, TX El Paso, TX Ft. Lauderdale, FL Los Angeles, CA Norfolk, VA Target Markets (Listed Alphabetically) Omaha, NE Portland, OR Richmond, VA San Antonio, TX Savannah, GA Spartanburg/Greenville, SC Tampa, FL
Slide 33: 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 34: What We Do
What We Do sverema UA.
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Slide 36: Appendix
Appendix COMFORT SYSTEMS USA
Slide 37: Appendix – GAAP Reconciliation To Adjusted EBITDA
39 Appendix – GAAP Reconciliation To Adjusted EBITDA (in thousands) March 31, 2010 % 2009 % Net Income 1,927 $6,942 $ Discontinued Operations (762) 180 Income Taxes 730 4,730 Other (Income) Expense (12) 7 Interest Expense, net 221 110 Gain on Sale of Assets (5) (2) Depreciation and Amortization 3,63
Slide 38: Contact
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 (May 2010) on 6ix