Comfort Systems USA Third Quarter Net Income Up 74%.HOUSTON--(BUSINESS WIRE)--November 4, 1998--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 that pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income for the quarter ended September September: see month. 30, 1998 increased 74% to $11,287,000 as compared to $6,493,000 in 1997. Pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share increased 38% to $0.33 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, as compared to $0.24 per diluted share in 1997, based on an approximate 7 million share increase. Pro forma combined revenues for the quarter increased 138% to $232,381,000 as compared to $97,454,000 in 1997. Fred Ferreira, 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, "Our third quarter performance again reflects the strength of our focus on expertise-driven relationships in the commercial/industrial HVAC market. This focus drives both our internal and acquisition growth, and led to another quarter of record results." Pro forma combined revenues for the nine months ended September 30, 1998 were $559,339,000, an increase of 113% over $262,116,000 in 1997. Year-to- date 1998 pro forma net income increased 69% to $23,660,000 or $0.74 per diluted share, as compared to $14,030,000 or $0.55 per diluted share in 1997, based on an approximate 7 million share increase. The Company s current results together with recently announced acquisitions now put Comfort Systems USA's annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenues at more than $925 million. Mr. Ferreira continued, "Our expertise with the energy-intensive equipment and processes of commercial/industrial HVAC also offers us tremendous opportunity to work with energy providers in meeting customers energy and indoor environmental needs as utility deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. unfolds. Our active development of energy alliances, including recent announcements involving Arizona Public Service Arizona Public Service Company is the largest electric utility in Arizona and the principal subsidiary of publicly-traded S&P 500 member Pinnacle West Capital Corporation (NYSE: PNW), which in turn had been formerly named AZP Group , Mid-American Energy and Sempra Energy Sempra Energy NYSE: SRE is a San Diego, California-based energy services holding company that was founded in 1998. Sempra owns the Southern California Gas Company, San Diego Gas & Electric, Sempra Commodities, and Sempra Generation. , position Comfort to gain early experience with the powerful potential of an energy services alliance strategy for our industry. "This view toward the future along with our strong operating results and capital structure highlights our progress in building the leading commercial/industrial HVAC company in the US," concluded Mr. Ferreira. Comfort Systems USA is a national provider of commercial/industrial heating, ventilation and air conditioning services with 68 companies located in 54 cities around the US. For more information, visit the Company's web-site 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, risks associated with acquisitions, fluctuations in operating results because of acquisitions, and variations in stock prices, changes in government regulations, competition, and risks entailed in the operations and growth of the newly acquired businesses and other risks detailed in the Company's reports filed with the Securities and Exchange Commission. -0-
Comfort Systems USA, Inc.
Pro Forma Combined Statements of Operations
For the Three Months and Nine Months
Ended September 30, 1998 & 1997
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 % 1997 % 1998 % 1997 %
Revenues $ 232,381 100.0% $97,454 100.0% $559,339 100.0% $262,116 100.0%
Cost of
services 175,308 70,249 423,223 191,066
Gross profit 57,073 24.6% 27,205 27.9% 136,116 24.3% 71,050 27.1%
SG & A 33,663 14.5% 15,513 15.9% 85,845 15.3% 44,466 17.0%
Goodwill
amortization 1,854 0.8% 875 0.9% 4,642 0.8% 2,623 1.0%
Income from
operations 21,556 9.3% 10,817 11.1% 45,629 8.2% 23,961 9.1%
Interest
expense, net 1,708 0.7% (25) -- 3,731 0.7% 669 0.3%
Other (income)
expense (137) -- (29) -- (156) -- (128) --
Income before
taxes 19,985 8.6% 10,871 11.2% 42,054 7.5% 23,420 8.9%
Income taxes 8,698 -- 4,378 -- 18,394 -- 9,390 --
Net income $11,287 4.9% $6,493 6.7% $23,660 4.2% $14,030 5.4%
Net income
per share:
Basic $ 0.33 $0.24 $0.75 $0.56
Diluted $ 0.33 $0.24 $0.74 $0.55
Shares used in
computing net
earnings per share:
Basic 33,963 26,834 31,689 25,080
Diluted 34,454 27,485 32,179 25,297
EBITDA $25,306 10.9% $12,626 13.0% $54,868 9.8% $29,295 11.2%
Note 1: This table presents the unaudited pro forma combined
results of the twelve Founding Companies as if they had been acquired
January 1, 1997, the retroactive restatement of the Pooled Companies
to January 1, 1997, and the results of the Purchased Companies from
their respective dates of acquisition. Prior to their acquisition by
Comfort Systems, these companies were managed as independent
companies.
In conjunction with the acquisitions, certain former owners have
agreed to reductions in salaries and benefits in accordance with their
employment agreements. The pro forma data also reflects goodwill
amortization and interest expense on borrowings related to S
Corporation distributions to the Founding Companies as if they had
occurred on January 1, 1997. In addition, an incremental tax provision
has been reflected for all periods presented.
Note 2: See Company's Annual Report or Form 10-K for additional
information regarding the pro forma combined presentation.
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