Comfort Systems USA Reports First Quarter Results; Significant Revenue and Income Improvement; Backlog Increases to Record Level.Business Editors HOUSTON--(BUSINESS WIRE)--May 3, 2004 Comfort Systems USA Inc. (NYSE NYSE See: New York Stock Exchange :FIX), a leading provider of commercial, industrial and institutional heating, ventilation ventilation, process of supplying fresh air to an enclosed space and removing from it air contaminated by odors, gases, or smoke. Proper ventilation requires also that there be a movement or circulation of the air within the space and that the temperature and and air conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. ("HVAC (Heating Ventilation Air Conditioning) In the home or small office with a handful of computers, HVAC is more for human comfort than the machines. In large datacenters, a humidity-free room with a steady, cool temperature is essential for the trouble-free ") services, today announced net income of $1,043,000 or $0.03 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the quarter ended March 31, 2004, as compared to a net loss of $4,816,000 or $0.13 per diluted share, and a net loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $4,131,000 or $0.11 per diluted share, in the first quarter of 2003. Excluding restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of debt costs and the effect of divested units not included in discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , the net loss from ongoing operations in the first quarter of 2003 was $2,381,000 or $0.07 per diluted share. Bill Murdy, Comfort Systems USA's chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , said, "We are pleased to report noticeably no·tice·a·ble adj. 1. Evident; observable: noticeable changes in temperature; a noticeable lack of friendliness. 2. Worthy of notice; significant. improved results for our first quarter, typically the period of our lowest seasonal activity levels of the year. We posted year-over-year gains at every major line of the income statement, as challenging industry conditions eased some, and as our productivity and execution efforts began to show results. Consistent with improving activity levels in our markets, and effective business development at our operations, our backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. increased 17% from year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. to a record $473 million." The Company reported revenues from continuing operations of $193,223,000 in the current quarter as compared to $179,664,000 in 2003. Excluding the effect of units divested in 2003 not included in discontinued operations, revenues at ongoing operations were $175,627,000 in the first quarter of 2003. The Company also reported negative cash flow of $5,921,000 following very strong fourth quarter cash flow, as the Company supported renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. revenue growth. This cash flow was funded almost entirely from existing cash balances as the Company maintained its level of debt at an all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal low. Murdy continued, "Even with our strong revenue and backlog performance, our primary emphasis for 2004 remains on productivity, execution and margin performance. As with many other industries, we have seen turbulent pricing and supply developments in the markets for certain commodities, including steel, iron and copper. Given that most of our costs are labor-related, and based on certain steps we have taken to address these market developments, including earlier commodity buying and protective contract provisions, we experienced no appreciable ap·pre·cia·ble adj. Possible to estimate, measure, or perceive: appreciable changes in temperature. See Synonyms at perceptible. impact from these developments in the first quarter and, so far, see only a modest effect in coming quarters. Based on these factors and ongoing improvement in industry conditions, we continue to expect that our 2004 results will be significantly better than 2003's." Murdy concluded, "While it's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have too soon to say our industry is on a sustained upswing Upswing An upward turn in a security's price after a period of falling prices. , we continue to see positive signs in the marketplace, and are pleased to post results more reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of the hard work we've we've Contraction of we have. we've have been doing inside Comfort Systems USA. We look forward to reporting more improvements as the year unfolds." The Company will host a conference call to discuss its financial results and position in more depth on Tuesday Tuesday: see week. , May 4, 2004 at 10:00 a.m. Central time. The call-in call-in adj. Being in a format such that listeners or viewers are invited to have their telephone conversations with the host or guests on a show broadcast to other listeners: a call-in radio show. n. number for this conference call is 773-756-4621. A replay of the entire call will be available until 6:00 p.m. Central time, Tuesday, May 11, 2004 by calling 402-530-7607. Comfort Systems USA is a premier provider of business solutions addressing workplace comfort, with 63 locations in 51 cities around the nation. For more information, visit the Company's website at www.comfortsystemsusa.com. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based on the current plans and expectations of Comfort Systems USA Inc. and involve risks and uncertainties that could cause actual future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual results to differ include, among others, the lack of a combined operating history and the difficulty of integrating formerly separate businesses, retention of key management, national and regional declines in non-residential construction activity, difficulty in obtaining or increased costs associated with debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay or bonding, shortages of labor and specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. building materials Building materials used in the construction industry to create . These categories of materials and products are used by and construction project managers to specify the materials and methods used for . , seasonal fluctuations in the demand for HVAC systems and the use of incorrect Incorrect means to not be correct and may also refer to:
Financial table follows
Comfort Systems USA Inc.
Consolidated Statements of Operations
For the Three Months Ended March 31, 2004 and 2003
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
------------------------------------
2004 % 2003 %
--------- ------ --------- ------
Revenues $193,223 100.0% $179,664 100.0%
Cost of services 163,017 84.4% 152,585 84.9%
--------- ---------
Gross profit 30,206 15.6% 27,079 15.1%
SG&A 27,188 14.1% 30,483 17.0%
Restructuring charges - - 1,162 0.6%
--------- ---------
Income (loss) from operations 3,018 1.6% (4,566) (2.5%)
Interest expense, net 497 0.3% 542 0.3%
Other expense 659 0.3% 249 0.1%
Write-off of debt costs - - 823 0.5%
--------- ---------
Income (loss) before taxes 1,862 1.0% (6,180) (3.4%)
Income taxes 819 (2,049)
--------- ---------
Income (loss) from continuing
operations 1,043 0.5% (4,131) (2.3%)
Discontinued operations:
Operating income, net of
income tax expense of $134 - 227
Estimated loss on disposition,
including income tax expense
of $231 - (912)
--------- ---------
Net income (loss) $1,043 $(4,816)
========= =========
Income (loss) per share:
Basic-
Income (loss) from continuing
operations $0.03 $(0.11)
Discontinued operations -
Income from operations - -
Estimated loss on disposition - (0.02)
--------- ---------
Net income (loss) $0.03 $(0.13)
========= =========
Diluted -
Income (loss) from continuing
operations $0.03 $(0.11)
Discontinued operations -
Income from operations - -
Estimated loss on disposition - (0.02)
--------- ---------
Net income (loss) $0.03 $(0.13)
========= =========
Shares used in computing income
(loss) per share:
Basic 38,136 37,622
Diluted 39,443 38,948
Note 1: The diluted earnings per share data presented above reflects
the dilutive effect, if any, of stock options, warrants and
contingently issuable restricted stock which were outstanding during
the periods presented.
Supplemental Information Relating to Ongoing Operations (Unaudited)
Three Months Ended
March 31,
------------------------------------
2004 % 2003 %
----------------- ------------------
Revenues $193,223 $179,664
Divested units not reflected in
discontinued operations - (4,037)
---------- ----------
Revenues from ongoing operations 193,223 100.0% 175,627 100.0%
---------- ----------
Cost of services 163,017 152,585
Divested units not reflected in
discontinued operations - (4,021)
---------- ----------
Cost of services from ongoing
operations 163,017 84.4% 148,564 84.6%
---------- ----------
Gross profit from ongoing
operations 30,206 15.6% 27,063 15.4%
---------- ----------
Selling, general and
administrative expenses 27,188 30,483
Divested units not reflected in
discontinued operations - (723)
---------- ----------
Selling, general and
administrative expenses from
ongoing operations 27,188 14.1% 29,760 16.9%
---------- ----------
Operating income (loss) from
ongoing operations, excluding
restructuring charges $ 3,018 1.6% $ (2,697) (1.5%)
========== ==========
Income (loss) from continuing
operations (after tax) $ 1,043 $ (4,131)
Divested units not reflected in
discontinued operations (after
tax) - 460
Restructuring charges (after tax) - 755
Write-off of debt costs (after
tax) - 535
---------- ----------
Income (loss) from ongoing
operations (after tax),
excluding restructuring charges
and the write-off of debt costs $ 1,043 0.5% $ (2,381) (1.4%)
========== ==========
Diluted earnings per share -
income (loss) from ongoing
operations (after tax),
excluding restructuring charges
and the write-off of debt costs $ 0.03 $ (0.07)
Note 1: Operating income (loss) from ongoing operations, excluding
restructuring charges is presented because the Company believes it
reflects the results of the core ongoing operations of the Company,
and because we believe it is responsive to frequent questions we
receive about the Company from third parties. However, this measure is
not considered a primary measure of an entity's financial results
under generally accepted accounting principles, and accordingly, this
amount should not be considered an alternative to operating income as
determined under generally accepted accounting principles and as
reported by the Company.
Note 2: The bottom two calculations in the above table show income
(loss) from ongoing operations (after tax) and related earnings per
share information excluding divested units not reflected in
discontinued operations, restructuring charges and the write-off of
debt costs. The tax rate on these items was computed using the pro
forma effective tax rate of the Company exclusive of these charges.
Supplemental Information - Earnings Before Interest, Taxes,
Depreciation and Amortization ("EBITDA") (Unaudited)
Net income (loss) $1,043 $(4,816)
Discontinued operations - 685
Income taxes 819 (2,049)
Write-off of debt costs - 823
Other expense 659 249
Interest expense, net 497 542
Depreciation 1,138 1,322
Divested operations not reflected
in discontinued operations
- 707
Restructuring charges - 1,162
---------- ----------
EBITDA $4,156 2.2% $(1,375) (0.8%)
========== ==========
Note 1: The Company defines earnings before interest, taxes,
depreciation and amortization (EBITDA) as net income (loss), excluding
discontinued operations, income taxes, write-off of debt costs, other
expense, interest expense, net, depreciation, divested units not
reflected in discontinued operations and restructuring charges. EBITDA
may be defined differently by other companies. EBITDA is presented
because it is a financial measure that is frequently requested by
third parties. However, EBITDA is not considered under generally
accepted accounting principles as a primary measure of an entity's
financial results, and accordingly, EBITDA should not be considered an
alternative to operating income, net income or cash flows as
determined under generally accepted accounting principles and as
reported by the Company.
Comfort Systems USA Inc.
Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2004 2003
------------ ------------
(unaudited)
Cash and cash equivalents $5,119 $10,136
Accounts receivable, net 164,529 167,939
Costs and estimated earnings in excess of
billings 18,638 16,162
Other current assets 28,882 28,700
------------ ------------
Total current assets 217,168 222,937
Property and equipment, net 13,360 13,231
Goodwill 104,034 104,034
Other noncurrent assets 10,257 10,908
------------ ------------
Total assets $344,819 $351,110
============ ============
Current maturities of long-term debt $2,090 $1,594
Accounts payable 55,171 58,566
Billings in excess of costs and estimated
earnings 26,866 29,657
Other current liabilities 46,596 49,482
------------ ------------
Total current liabilities 130,723 139,299
Long-term debt 8,292 8,809
Other long-term liabilities 3,053 2,342
------------ ------------
Total liabilities 142,068 150,450
Total equity 202,751 200,660
------------ ------------
Total liabilities and equity $344,819 $351,110
============ ============
Selected Cash Flow Data (in thousands) (unaudited):
---------------------------------------------------
Three Months Ended
March 31,
-------------------------
2004 2003
------------ ------------
Cash flow from operating activities $(4,733) $(2,343)
Cash flow from investing activities $(255) $(1,084)
Cash flow from financing activities $(29) $8,652
Cash flow from operating activities $(4,733) $(2,343)
Taxes paid related to the sale of businesses - 10,371
Purchases of property and equipment (1,317) (1,087)
Proceeds from sales of property and equipment 129 79
------------ ------------
Free cash flow $(5,921) $7,020
============ ============
Note 1: Free cash flow is defined as cash flow from operating
activities excluding items related to sales of businesses, less
customary capital expenditures, plus the proceeds from asset sales.
Free cash flow may be defined differently by other companies. Free
cash flow is presented because it is a financial measure that is
frequently requested by third parties. However, free cash flow is not
considered under generally accepted accounting principles as a primary
measure of an entity's financial results, and accordingly, free cash
flow should not be considered an alternative to operating income, net
income or cash flows as determined under generally accepted accounting
principles and as reported by the Company.
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