Comfort Systems USA Reports Fourth Quarter Full Year Results.Business Editors HOUSTON--(BUSINESS WIRE)--March 31, 2003 Profitable and Positive Cash Flow in Difficult Industry Conditions Strengthened Management Team Comfort Systems USA Inc. (NYSE NYSE See: New York Stock Exchange :FIX), a leading provider of commercial/industrial 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 a net loss of $334,000 or $0.01 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 Dec. 31, 2002, as compared to net income of $3,091,000 or $0.08 per diluted share, in the fourth quarter of 2001. These amounts include results of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Excluding these items, net income 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 for the quarter was $512,000 or $0.01 per diluted share as compared to a loss of $1,135,000 or $0.03 per diluted share in fourth quarter of 2001. The Company reported revenues from continuing operations of $200,844,000 in the current quarter as compared to $215,577,000 in 2001. 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, "As is well known, 2002 was one of the worst years our industry has seen in decades. While our performance did not meet our goals in 2002, we were pleased to post profitable results and positive cash flow in such a challenging environment." The Company reported a net loss for the year ended Dec. 31, 2002 of $209,080,000 or $5.45 per diluted share, as compared to net income of $13,124,000 or $0.35 per diluted share, in 2001. As disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). earlier this year, these results include two significant charges for unusual items - one relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the adoption of a new accounting standard for reporting of goodwill and other intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , and another relating to the Company's sale this year of certain operations, principally 19 units sold to Emcor Group EMCOR Group NYSE: EME is a Fortune 500 company based in Norwalk, Connecticut. This company's businesses include mechanical and electrical construction, energy infrastructure, and facilities services. Inc. in March. Excluding these items, the Company reported net income from continuing operations of $5,479,000 or $0.14 per diluted share for 2002 as compared to a loss of $1,033,000 or $0.03 per diluted share for 2001. The Company reported revenues of $819,282,000 from continuing operations for 2002, as compared to $882,861,000 in 2001. Murdy continued, "Our sale of operations to Emcor early in 2002 enabled us to greatly strengthen our balance sheet - an important and timely step given the course of the economy over the past year. Reduced industry activity levels have continued into 2003. Based on these conditions, as well as on underperforming projects in certain of our operations, we expect to report a loss for the first quarter of 2003 comparable to the loss from continuing operations that we reported in first quarter of 2002. We are responding to these challenges with significant current cost reduction initiatives and even more intense application of operational disciplines we have been introducing over the past year. Additionally, despite tough market conditions, we started 2003 with 7% more in 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. than we did in 2002, and backlog has held steady through the first quarter. In view of these factors, we expect to be profitable in the upcoming second quarter and to produce positive cash flow for the year as a whole, and to post improved operating results for 2003 as compared to 2002. "We continue to build Comfort for the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , particularly through the addition of management depth. As previously announced, Norm Chambers joined us in the fourth quarter and fills the roles of president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . In the first quarter, industry veteran Chuck chuck a hand grip to be attached to intramedullary pins to enable the surgeon to rotate or drive them into bone. Diltz joined us to lead our national service operations, and Hobart Hobart, city, Australia Hobart, city (1990 pop. 127,134), capital and principal port of Tasmania, SE Australia, at the foot of Mt. Wellington (4,166 ft/1,270 m high). Hobart's harbor is one of the finest in the world. Pillsbury Pills·bur·y , Charles Alfred 1842-1899. American manufacturer who founded (1869) C.A. Pillsbury and Company, one of the largest flour-milling enterprises of the 19th century. came on board as Comfort's chief information officer. As we strengthen our team while responding to challenging market conditions, we believe we are positioning Comfort Systems USA for excellent performance when activity levels rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective in our industry." The Company will host a conference call to discuss its financial results and position in more depth on Tuesday Tuesday: see week. , April 1, 2003 at 9:00 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 630/395-0178. A replay of the entire call will be available until 9:00 a.m. Central Time, Tuesday, April 8, 2003 by calling 402/344-6637. Comfort Systems USA is a premier provider of business solutions addressing workplace comfort, with 84 locations in 57 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 and Twelve Months Ended Dec. 31, 2002 and 2001
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended
December 31,
----------------------------------------
2002 % 2001 %
-------------------- -------------------
Revenues $200,844 100.0% $215,577 100.0%
Cost of services 167,102 83.2% 174,211 80.8%
------------- ----------
Gross profit 33,742 16.8% 41,366 19.2%
SG&A 31,784 15.8% 36,981 17.2%
Goodwill amortization and
impairment 218 - 2,059 1.0%
Restructuring charges - - - -
------------- ----------
Income from operations 1,740 0.9% 2,326 1.1%
Interest expense, net 978 0.5% 1,148 0.5%
Other income (163) (0.1%) (74) -
------------- ----------
Income before taxes 925 0.5% 1,252 0.6%
Income taxes 413 2,387
------------- ----------
Income (loss) from continuing
operations 512 0.3% (1,135) (0.5%)
Discontinued operations:
Operating income (loss) net
of applicable income tax
benefit (expense) of $0,
$(2,842) $1,880 and $(9,627) - 4,226
Estimated gain (loss) on
disposition, including
income tax benefit
(expense) of $2,563 and
$(23,324) (846) -
------------- ----------
Income (loss) before
cumulative effect
of change in accounting
principle (334) 3,091
Cumulative effect of change
in accounting principle,
net of income tax
benefit of $26,317 - -
------------- ----------
Net income (loss) $(334) $3,091
============= ==========
Income (loss) per share:
Basic-
Income (loss) from continuing
operations $0.01 $(0.03)
Discontinued operations -
Income (loss) from
operations - 0.11
Estimated loss on
disposition (0.02) -
Cumulative effect of change
in accounting principle - -
------------- ----------
Net income (loss) $(0.01) $0.08
============= ==========
Diluted -
Income (loss) from continuing
operations $0.01 $(0.03)
Discontinued operations -
Income (loss) from
operations - 0.11
Estimated loss on
disposition (0.02) -
Cumulative effect of change
in accounting principle - -
------------- ----------
Net income (loss) $(0.01) $0.08
============= ==========
Shares used in computing
income (loss) per share:
Basic 37,636 37,510
Diluted 38,082 37,510
Income from operations $1,740 $2,326
Goodwill amortization and
impairment 218 2,059
Restructuring charges - -
Kmart reserve - 3,500
------------- ----------
Income from operations,
excluding goodwill
amortization and impairment,
restructuring charges and
Kmart reserve $1,958 1.0% $7,885 3.7%
Income from operations $1,740 $2,326
Depreciation 1,439 2,285
Goodwill amortization and
impairment 218 2,059
Restructuring charges - -
Kmart reserve - 3,500
------------- ----------
EBITDA, excluding goodwill
impairment, restructuring
charges and Kmart reserve $3,397 1.7% $10,170 4.7%
Income (loss) from continuing
operations (after tax) $512 $(1,135)
Goodwill amortization and
impairment 142 1,906
Restructuring charges - -
Kmart reserve - 2,275
------------- ----------
Income from continuing
operations (after tax),
excluding goodwill
amortization and impairment,
restructuring charges and
Kmart reserve $654 0.3% $3,046 1.4%
Diluted earnings per share-
income from continuing
operations (after tax),
excluding goodwill
amortization and
impairment, restructuring
charges and
Kmart reserve $0.02 $0.08
Comfort Systems USA Inc.
Consolidated Statements of Operations
For the Three Months and Twelve Months Ended Dec. 31, 2002 and 2001
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended
December 31,
-------------------------------------
2002 % 2001 %
------------------ ------------------
Revenues $819,282 100.0% $882,861 100.0%
Cost of services 676,268 82.5% 717,284 81.2%
----------- ----------
Gross profit 143,014 17.5% 165,577 18.8%
SG&A 127,051 15.5% 143,675 16.3%
Goodwill amortization and
impairment 218 - 8,238 0.9%
Restructuring charges 1,878 0.2% 238 -
----------- ----------
Income from operations 13,867 1.7% 13,426 1.5%
Interest expense, net 4,880 0.6% 8,000 0.9%
Other income (1,395) (0.2%) (446) (0.1%)
----------- ----------
Income before taxes 10,382 1.3% 5,872 0.7%
Income taxes 4,903 6,905
----------- ----------
Income (loss) from continuing
operations 5,479 0.7% (1,033) (0.1%)
Discontinued operations:
Operating income (loss) net of
applicable income tax benefit
(expense) of $0, $(2,842)
$1,880 and $(9,627) (36) 14,157
Estimated gain (loss) on
disposition, including
income tax benefit
(expense) of $2,563
and $(23,324) (12,002) -
----------- ----------
Income (loss) before cumulative
effect of change in
accounting principle (6,559) 13,124
Cumulative effect of change in
accounting principle, net of
income tax benefit of $26,317 (202,521) -
----------- ----------
Net income (loss) $(209,080) $13,124
=========== ==========
Income (loss) per share:
Basic-
Income (loss) from continuing
operations $0.15 $ (0.03)
Discontinued operations -
Income (loss) from operations - 0.38
Estimated loss on disposition (0.32) -
Cumulative effect of change in
accounting principle (5.39) -
----------- ----------
Net income (loss) $(5.56) $0.35
=========== ==========
Diluted -
Income (loss) from continuing
operations $ 0.14 $ (0.03)
Discontinued operations -
Income (loss) from operations - 0.38
Estimated loss on disposition (0.31) -
Cumulative effect of change in
accounting principle (5.28) -
----------- ----------
Net income (loss) $(5.45) $0.35
=========== ==========
Shares used in computing income
(loss) per share:
Basic 37,605 37,436
Diluted 38,367 37,436
Income from operations $13,867 $13,426
Goodwill amortization and
impairment 218 8,238
Restructuring charges 1,878 238
Kmart reserve (800) 3,500
----------- ----------
Income from operations,
excluding goodwill
amortization and
impairment, restructuring
charges and Kmart reserve $15,163 1.9% $25,402 2.9%
Income from operations $13,867 $13,426
Depreciation 6,428 8,009
Goodwill amortization and
impairment 218 8,238
Restructuring charges 1,878 238
Kmart reserve (800) 3,500
----------- ----------
EBITDA, excluding goodwill
impairment, restructuring charges
and Kmart reserve $21,591 2.6% $33,411 3.8%
Income (loss) from continuing
operations (after tax) $5,479 $(1,033)
Goodwill amortization and
impairment 142 7,622
Restructuring charges 1,221 155
Kmart reserve (520) 2,275
----------- ----------
Income from continuing operations
(after tax), excluding goodwill
amortization and impairment,
restructuring charges and Kmart
reserve $6,322 0.8% $9,019 1.0%
Diluted earnings per share-income
from continuing operations (after
tax), excluding goodwill
amortization and impairment,
restructuring charges and
Kmart reserve $0.17 $0.24
Note 1: The diluted earnings per share data presented above reflects
the dilutive effect, if any, of stock options, convertible notes,
warrants and contingently issuable restricted stock which were
outstanding during the periods presented. The after-tax loss related
to the warrant's mark-to-market adjustment of $117 in 2002 has been
added to income (loss) from continuing operations and net income for
purposes of calculating diluted earnings per share. The shares
associated with contingently issuable restricted stock are included in
diluted earnings per share because it is probable that the performance
requirement for the issuance of these shares will be met.
Note 2: EBITDA is defined as income (loss) from operations, excluding
depreciation and amortization. EBITDA may be defined differently by
other companies. EBITDA is presented because it is a financial measure
that is frequently requested by capital market participants in
evaluating the Company. 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.
Note 3: The bottom two calculations in the above table show income
(loss) from continuing operations (after tax) and related earnings per
share information excluding goodwill amortization and impairment,
restructuring charges and Kmart reserve. The tax rate on these items
was computed using the pro forma effective tax rate of the Company
exclusive of these charges.
Comfort Systems USA Inc.
Condensed Consolidated Balance Sheets
(in Thousands)
December December
31, 31,
2002 2001
--------- ----------
Cash and cash equivalents $6,104 $4,156
Accounts receivable, net 168,392 175,735
Costs and estimated earnings in excess of
billings 17,964 19,413
Assets related to discontinued operations - 326,076
Other current assets 30,933 33,713
--------- ----------
Total current assets 223,393 559,093
Property and equipment, net 16,111 18,956
Goodwill 113,427 297,251
Other noncurrent assets 13,604 1,325
--------- ----------
Total assets $366,535 $876,625
========= ==========
Current maturities of long-term debt $1,780 $2,447
Accounts payable 56,773 57,719
Billings in excess of costs and estimated
earnings 26,672 26,663
Liabilities related to discontinued operations - 140,474
Other current liabilities 62,428 52,727
--------- ----------
Total current liabilities 147,653 280,030
Long-term debt 10,604 179,581
Other long-term liabilities 3,192 3,193
--------- ----------
Total liabilities 161,449 462,804
Total equity 205,086 413,821
--------- ----------
Total liabilities and equity $366,535 $876,625
========= ==========
Note 1: The Company's balance sheet as of Dec. 31, 2001 included
$326,076 in assets and $140,474 of liabilities related to discontinued
operations, all of which have since been sold. Additionally, the
Company reduced its yearend goodwill asset balance related to
continuing operations by $183,606 in connection with adopting SFAS No.
142 in the first quarter of 2002; a subsequent impairment of $218 was
recorded during the fourth quarter of 2002.
Selected Cash Flow Data (in thousands):
Three Months Twelve Months
Ended Ended
December 31, December 31,
------------------ -------------------
2002 2001 2002 2001
------------------ -------------------
Cash flow from operating
activities $283 $25,051 $14,090 $66,829
Cash flow from investing
activities $(1,196) $(785) $150,589 $(4,003)
Cash used in financing
activities $(3,608) $(28,776) $(169,200) $(68,222)
Cash flow from operating
activities $283 $25,051 $14,090 $66,829
Purchases of property and
equipment (1,278) (1,336) (5,322) (5,978)
Proceeds from sales of property
and equipment 221 551 1,551 1,011
------------------ -------------------
Free cash flow $(774) $24,266 $10,319 $61,862
Note 1: Free cash flow is defined as cash flow from operating
activities 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 capital market participants in
evaluating the Company. 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.
Note 2: Cash flow information for 2001 includes the results of
discontinued operations, including the 19 operations sold to Emcor in
the first quarter of 2002.
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