01—Abstract
Summary
Summary of the 10-K filed February 29, 2012. Cited figures are marked; the original filing is the authoritative source.
Comfort Systems USA, Inc. (FIX) filed its 2011 Form 10-K on February 29, 2012.
The company reported a net loss of $36.8 milliona for the year ended December 31, 2011, a significant decline from a net income of $14.7 million in 2010. This downturn was primarily driven by a substantial goodwill and intangible asset impairment charge of $58.9 million and decreased gross profit due to a difficult pricing environment. Despite the net loss, the company's revenue increased by 11.9% to $1.24 billion, largely due to acquisitions, although same-store revenue saw a modest increase.
The company's strategy emphasizes strengthening core competencies, achieving operating efficiencies, and growing its service-based revenue stream. While facing challenges in the current economic climate and a competitive industry, Comfort Systems USA, Inc. maintained a strong liquidity position with no outstanding borrowings on its revolving credit facility.
02—Key points
Key Highlights
- Reported a net loss of $36.8 million for the year ended December 31, 2011, compared to a net income of $14.7 million in 2010.
- Recognized significant goodwill and other intangible asset impairment charges totaling $58.9 million in 2011.
- Revenue increased by 11.9% to $1.24 billion in 2011, driven largely by acquisitions, while same-store revenue grew by 1.6%.
- Gross profit decreased by 3.8% to $181.5 million, with gross profit margin declining to 14.6% from 17.0% in the prior year, attributed to a difficult pricing environment.
- The company maintained a strong liquidity position with no outstanding borrowings on its $125 million revolving credit facility as of December 31, 2011.
- Approximately 57% of 2011 revenue was derived from maintenance, repair, and replacement services, indicating a strategic shift towards a more stable revenue base.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2011, Comfort Systems USA lost $0.03.
- Revenue$1.22B100.0%
- Cost of revenue−$1.04B85.1%
- Gross profit$181.5M14.9%
- Operating costs−$224.2M18.4%
- Operating income−$42.6M3.5%
- Interest, other & tax$5.8M0.5%
- Net income−$36.8M3.0%
04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 29, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $1.22B$1.06B | +14.4% |
| Cost of Revenue | $1.04B$873.59M | +18.5% |
| Gross Profit | $181.53M$189.93M | −4.4% |
| SG&A Expenses | $167.05M$159.02M | +5.1% |
| Operating Income | -$42.64M$31.44M | −235.6% |
| Interest Expense | $1.89M$1.70M | +11.0% |
| Net Income | -$36.83M$14.74M | −349.9% |
| EPS (Basic) | $-0.99$0.39 | −353.8% |
| EPS (Diluted) | $-0.99$0.39 | −353.8% |
| Shares Outstanding (Basic) | 37.39M37.55M | −0.4% |
| Shares Outstanding (Diluted) | 37.39M37.79M | −1.1% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Comfort Systems USA, Inc.'s financial performance in 2011?
The company experienced a net loss of $36.8 million in 2011, primarily due to a significant goodwill and intangible asset impairment charge of $58.9 million. This was compounded by a decrease in gross profit margin to 14.6% from 17.0% in 2010, largely attributed to a challenging pricing environment in the market. Despite these challenges, revenue grew by 11.9% to $1.24 billion, boosted by recent acquisitions.
How has the company's revenue mix evolved, and what is the significance of this shift?
In 2011, 57% of Comfort Systems USA, Inc.'s revenue came from maintenance, repair, and replacement services, with the remaining 43% from installation in new facilities. This reflects a strategic focus on growing the service-based segment, which typically offers more predictable and recurring revenue streams compared to installation projects tied to new construction cycles.
What is the company's current financial health and liquidity situation?
As of December 31, 2011, Comfort Systems USA, Inc. had a strong liquidity position, reporting no outstanding borrowings on its $125 million revolving credit facility. The company also maintained a healthy amount of cash and cash equivalents, providing financial flexibility.
What are the company's key risks and challenges highlighted in the filing?
The company faces several risks, including dependence on construction activity, which is cyclical and affected by economic downturns; potential cost overruns on contracts; competition leading to pricing pressure; difficulties in securing surety bonds; and the potential for future goodwill impairment charges. The company also noted that its decentralized operating model presents certain risks.
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