Comfort Systems USA, Inc. (NYSE: FIX) (the “Company”)
today reported results for the quarter and annual period ended
December 31, 2022.
For the quarter ended December 31, 2022, net income was $55.4
million, or $1.54 per diluted share, as compared to $37.6 million,
or $1.04 per diluted share, for the quarter ended December 31,
2021. Revenue for the fourth quarter of 2022 was $1,117.2 million
compared to $856.1 million in 2021. The Company reported operating
cash flow of $132.0 million in the current quarter compared to
$27.5 million in 2021.
Backlog as of December 31, 2022 was $4.06 billion as compared to
$3.25 billion as of September 30, 2022 and $2.31 billion as of
December 31, 2021. On a same-store basis, backlog increased from
$2.31 billion as of December 31, 2021 to $4.03 billion as of
December 31, 2022.
The Company reported net income of $245.9 million, or $6.82 per
diluted share, for the twelve months ended December 31, 2022, as
compared to $143.3 million, or $3.93 per diluted share, in 2021.
The first quarter of 2022 included a diluted per share net gain of
$1.49 related to the resolution of tax refund claims from years
2016 through 2018 as well as estimated tax benefits from years 2019
through 2021. The third quarter of 2022 included a diluted per
share net gain of $0.04 related to estimated tax benefits from
years 2019 through 2021. Without those tax gains related to prior
years, our diluted per share earnings for the twelve months ended
December 31, 2022 would have been $5.29. The Company also reported
revenue of $4.14 billion for the twelve months ended December 31,
2022, as compared to $3.07 billion in 2021. Operating cash flow for
the twelve months ended December 31, 2022 was $301.5 million, as
compared to $180.2 million in 2021.
The Company also announced today that it has acquired Eldeco,
Inc. (“Eldeco”), headquartered in South Carolina. Eldeco was
founded in 1972 and performs electrical design and construction
services in the Southeastern region of the United States.
Initially, Eldeco is expected to contribute annualized revenue of
approximately $130 million to $140 million, and earnings before
interest, taxes, depreciation, and amortization of $8 million to $9
million. Considering the required amortization expense related to
intangibles and other costs associated with the transaction, the
acquisition is expected to make a neutral to slightly accretive
contribution to earnings per share in 2023 and 2024.
Brian Lane, Comfort Systems USA’s President and Chief Executive
Officer, said, “We finished 2022 with increased revenue, record
earnings, great cash flow, and a notable surge of backlog, again
surpassing the extraordinary results that we achieved in recent
years.”
“We are also happy to report that we recently welcomed the team
from Eldeco, which we believe is South Carolina’s premier
industrial electrical company. Eldeco will further strengthen our
electrical segment, and thanks to its complementary capabilities
both in and adjacent to some of our strongest markets, we feel
confident that this combination will allow us to achieve important
synergies over the coming years.”
“Revenue benefitted from increasing activity levels and was also
lifted by increases in the pricing of the materials and labor that
we provide to our customers. Earnings rose as our mechanical
operations continued to perform at high levels and due to further
strengthening in the performance of our electrical segment. Our
backlog shows robust same-store increases from a year ago. Backlog
received an especially strong lift in our modular off-site
construction operations, as future customer purchases were
committed to in advance to support our ability to invest in modular
construction capacity. Additionally, cash flow was extraordinary in
the fourth quarter, and for the full year our cash flow exceeded
our earnings by a substantial amount, helped by our tax settlement
refund and by advance payments received in connection with modular
backlog commitments.”
Mr. Lane concluded, “In 2022, our world-class teams achieved
record earnings per share and proved themselves indispensable to
their customers and their communities. We continue to experience
high levels of demand, and we believe that the outlook for Comfort
Systems is continued growth and strong ongoing profitability in
2023.”
The Company will host a webcast and conference call to discuss
its financial results and position on Thursday, February 23, 2023
at 11:00 a.m. Central Time. To register for the call, please visit
https://register.vevent.com/register/BI38d5d5d8831949a9b198a9eab09e9f16.
Upon registering, participants will receive dial-in information and
a unique PIN to join the call. The call and the slide presentation
to accompany the remarks can be accessed on the Company’s website
at www.comfortsystemsusa.com under the “Investor” tab. A replay of
the entire call will be available on the Company’s website on the
next business day following the call.
Comfort Systems USA® is a leading provider of commercial,
industrial and institutional heating, ventilation, air conditioning
and electrical contracting services, with 169 locations in 128
cities across the nation. For more information, visit the Company’s
website at www.comfortsystemsusa.com.
Certain statements and information in this press release may
constitute forward-looking statements regarding our future business
expectations, which are subject to applicable securities laws and
regulations. The words “believe,” “expect,” “anticipate,” “plan,”
“intend,” “foresee,” “should,” “would,” “could,” or other similar
expressions are intended to identify forward-looking statements,
which are generally not historic in nature. These forward-looking
statements are based on the current expectations and beliefs of
Comfort Systems USA, Inc. and its subsidiaries (collectively, the
“Company”) concerning future developments and their effect on the
Company. While the Company’s management believes that these
forward-looking statements are reasonable as and when made, there
can be no assurance that future developments affecting the Company
will be those that it anticipates, and the Company’s actual results
of operations, financial condition and liquidity, and the
development of the industry in which the Company operates, may
differ materially from those made in or suggested by the
forward-looking statements contained in this press release. In
addition, even if our results of operations, financial condition
and liquidity, and the development of the industry in which we
operate, are consistent with the forward-looking statements
contained in this press release, those results or developments may
not be indicative of our results or developments in subsequent
periods. All comments concerning the Company’s expectations for
future revenue and operating results are based on the Company’s
forecasts for its existing operations and its acquisition of Eldeco
and do not include the potential impact of any future acquisitions.
The Company’s forward-looking statements involve significant risks
and uncertainties (some of which are beyond the Company’s control)
and assumptions that could cause actual future results to differ
materially from the Company’s historical experience and its present
expectations or projections. Important factors that could cause
actual results to differ materially from those in the
forward-looking statements include, but are not limited to: the use
of incorrect estimates for bidding a fixed-price contract;
undertaking contractual commitments that exceed the Company’s labor
resources; failing to perform contractual obligations efficiently
enough to maintain profitability; national or regional weakness in
construction activity and economic conditions; rising inflation and
fluctuations in interest rates; shortages of labor and specialty
building materials or material increases to the cost thereof; the
Company’s business being negatively affected by health crises or
outbreaks of disease, such as epidemics or pandemics (and related
impacts, such as supply chain disruptions); financial difficulties
affecting projects, vendors, customers, or subcontractors; the
Company’s backlog failing to translate into actual revenue or
profits; failure of third party subcontractors and suppliers to
complete work as anticipated; difficulty in obtaining, or increased
costs associated with, bonding and insurance; impairment to
goodwill; errors in the Company’s cost-to-cost input method of
accounting; the result of competition in the Company’s markets; the
Company’s decentralized management structure; material failure to
comply with varying state and local laws, regulations or
requirements; debarment from bidding on or performing government
contracts; retention of key management; seasonal fluctuations in
the demand for mechanical and electrical systems; the imposition of
past and future liability from environmental, safety, and health
regulations including the inherent risk associated with
self-insurance; adverse litigation results; an increase in our
effective tax rate; a material information technology failure or a
material cyber security breach; risks associated with acquisitions,
such as challenges to our ability to integrate those companies into
our internal control environment; our ability to manage growth and
geographically-dispersed operations; our ability to obtain
financing on acceptable terms; extreme weather conditions (such as
storms, droughts, extreme heat or cold, wildfires and floods),
including as a result of climate change, and any resulting
regulations or restrictions related thereto; and other risks
detailed in our reports filed with the Securities and Exchange
Commission (the “SEC”).
For additional information regarding known material factors that
could cause the Company’s results to differ from its projected
results, please see its filings with the SEC, including its Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K.
Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date hereof.
The Company undertakes no obligation to publicly update or revise
any forward-looking statements after the date they are made,
whether because of new information, future events, or
otherwise.
— Financial tables follow —
Comfort Systems USA, Inc.
Consolidated Statements of
Operations
(In Thousands, Except per Share
Amounts)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(Unaudited)
2022
%
2021
%
2022
%
2021
%
Revenue
$
1,117,188
100.0
%
$
856,084
100.0
%
$
4,140,364
100.0
%
$
3,073,636
100.0
%
Cost of services
905,940
81.1
%
702,013
82.0
%
3,398,756
82.1
%
2,510,429
81.7
%
Gross profit
211,248
18.9
%
154,071
18.0
%
741,608
17.9
%
563,207
18.3
%
SG&A
131,650
11.8
%
105,259
12.3
%
489,344
11.8
%
376,309
12.2
%
Gain on sale of assets
(473
)
—
(519
)
(0.1
)%
(1,585
)
—
(1,540
)
(0.1
)%
Operating income
80,071
7.2
%
49,331
5.8
%
253,849
6.1
%
188,438
6.1
%
Interest expense, net
(4,556
)
(0.4
)%
(1,736
)
(0.2
)%
(13,306
)
(0.3
)%
(6,172
)
(0.2
)%
Changes in the fair value of contingent
earn-out obligations
(5,349
)
(0.5
)%
3,297
0.4
%
(4,819
)
(0.1
)%
7,820
0.3
%
Other income (expense)
33
—
76
—
134
—
188
—
Income before income taxes
70,199
6.3
%
50,968
6.0
%
235,858
5.7
%
190,274
6.2
%
Provision (benefit) for income taxes
14,775
13,373
(10,089
)
46,926
Net income
$
55,424
5.0
%
$
37,595
4.4
%
$
245,947
5.9
%
$
143,348
4.7
%
Income per share
Basic
$
1.55
$
1.04
$
6.84
$
3.95
Diluted
$
1.54
$
1.04
$
6.82
$
3.93
Shares used in computing income per
share:
Basic
35,828
36,155
35,932
36,285
Diluted
35,948
36,301
36,046
36,450
Dividends per share
$
0.150
$
0.130
$
0.560
$
0.480
Supplemental Non-GAAP Information
— (Unaudited) (In Thousands, Except per Share Amounts)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2022
2021
2022
2021
Net income
$
55,424
$
37,595
$
245,947
$
143,348
Tax gains
—
—
(58,933
)
—
Tax-related SG&A costs, net of tax
—
—
3,685
—
Net income excluding tax gains
$
55,424
$
37,595
$
190,699
$
143,348
Diluted income per share
$
1.54
$
1.04
$
6.82
$
3.93
Tax gains
—
—
(1.64
)
—
Tax-related SG&A costs, net of tax
—
—
0.11
—
Diluted income per share excluding tax
gains
$
1.54
$
1.04
$
5.29
$
3.93
Note: Net income excluding tax gains and
diluted income per share excluding tax gains are presented because
the Company believes they reflect the results of the core ongoing
operations of the Company, and we believe they are responsive to
frequent questions we receive from third parties. These amounts,
however, are not considered primary measures of an entity’s
financial results under generally accepted accounting principles,
and accordingly, they should not be considered an alternative to
operating results as determined under generally accepted accounting
principles and as reported by the Company.
Supplemental Non-GAAP Information —
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (“Adjusted EBITDA”) — (Unaudited) (In Thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2022
%
2021
%
2022
%
2021
%
Net income
$
55,424
$
37,595
$
245,947
$
143,348
Provision (benefit) for income taxes
14,775
13,373
(10,089
)
46,926
Other expense (income), net
(33
)
(76
)
(134
)
(188
)
Changes in the fair value of contingent
earn-out obligations
5,349
(3,297
)
4,819
(7,820
)
Interest expense, net
4,556
1,736
13,306
6,172
Gain on sale of assets
(473
)
(519
)
(1,585
)
(1,540
)
Tax-related SG&A costs
—
—
4,665
—
Amortization
11,193
11,571
47,795
40,505
Depreciation
8,909
7,373
33,552
28,439
Adjusted EBITDA
$
99,700
8.9
%
$
67,756
7.9
%
$
338,276
8.2
%
$
255,842
8.3
%
Note: The Company defines adjusted
earnings before interest, taxes, depreciation, and amortization
(“Adjusted EBITDA”) as net income, provision for income taxes,
other expense (income), net, changes in the fair value of
contingent earn-out obligations, interest expense, net, gain on
sale of assets, goodwill impairment, other one-time expenses or
gains and depreciation and amortization. Other companies may define
Adjusted EBITDA differently. Adjusted EBITDA is presented because
it is a financial measure that is frequently requested by third
parties. However, Adjusted EBITDA is not considered under generally
accepted accounting principles as a primary measure of an entity’s
financial results, and accordingly, Adjusted 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)
December 31,
December 31,
2022
2021
Cash and cash equivalents
$
57,214
$
58,776
Billed accounts receivable, net
1,024,082
773,716
Unbilled accounts receivable, net
77,030
61,881
Costs and estimated earnings in excess of
billings, net
27,211
29,900
Other current assets, net
122,134
103,048
Total current assets
1,307,671
1,027,321
Property and equipment, net
143,949
128,554
Goodwill
611,789
592,114
Identifiable intangible assets, net
273,901
304,781
Other noncurrent assets
260,168
156,344
Total assets
$
2,597,478
$
2,209,114
Current maturities of long-term debt
$
9,000
$
2,788
Accounts payable
337,385
254,788
Billings in excess of costs and estimated
earnings
461,781
307,380
Other current liabilities
362,636
271,598
Total current liabilities
1,170,802
836,554
Long-term debt, net
247,245
385,242
Other long-term liabilities
179,508
181,652
Total liabilities
1,597,555
1,403,448
Total stockholders’ equity
999,923
805,666
Total liabilities and stockholders’
equity
$
2,597,478
$
2,209,114
Selected Cash Flow Data (Unaudited) (In
Thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2022
2021
2022
2021
Cash provided by (used in):
Operating activities
$
132,007
$
27,497
$
301,531
$
180,151
Investing activities
$
(14,419
)
$
(127,117
)
$
(97,178
)
$
(246,722
)
Financing activities
$
(131,513
)
$
90,675
$
(205,915
)
$
70,451
Free cash flow:
Cash from operating activities
$
132,007
$
27,497
$
301,531
$
180,151
Purchases of property and equipment
(13,566
)
(6,466
)
(48,359
)
(22,330
)
Proceeds from sales of property and
equipment
707
1,299
2,858
3,101
Free cash flow
$
119,148
$
22,330
$
256,030
$
160,922
Note: Free cash flow is defined as cash
flow from operating activities less customary capital expenditures,
plus the proceeds from asset sales. Other companies may define free
cash flow differently. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230222005748/en/
Julie Shaeff, Chief Accounting Officer ir@comfortsystemsusa.com;
713-830-9687
Grafico Azioni Comfort Systems USA (NYSE:FIX)
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Grafico Azioni Comfort Systems USA (NYSE:FIX)
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