01—Abstract
Summary
Summary of the 10-K filed February 26, 2015. Cited figures are marked; the original filing is the authoritative source.
Comfort Systems USA, Inc. (FIX) reported its 2014 fiscal year results in this 10-K filing.
The company operates in the mechanical services industry, primarily providing HVAC installation, maintenance, repair, and replacement services. Revenue for 2014 was $1,410.8 milliona, a slight increase from the prior year, driven by a modest same-store revenue increase and contributions from recent acquisitions. The company experienced stable gross profit margins, but saw an increase in SG&A expenses due to investments in service growth and IT.
Financially, Comfort Systems USA, Inc. demonstrated strong cash flow generation, with operating activities providing $42.6 millionb and free cash flow of $24.7 million in 2014. The company has been actively managing its debt, increasing its revolving credit facility capacity and maintaining a healthy leverage ratio. Strategic priorities include strengthening core competencies, achieving operating efficiencies, investing in employees, and seeking growth through expansion and acquisitions, with a continued focus on the commercial, industrial, and institutional markets.
02—Key points
Key Highlights
- Revenue for fiscal year 2014 was $1.41 billion, representing a 3.9% increase from 2013, primarily driven by acquisitions and same-store activity.
- Gross profit remained stable at 17.7% of revenue in 2014, reflecting consistent operational performance.
- Selling, General, and Administrative (SG&A) expenses increased by 6.9% to $207.7 million, attributed to investments in service growth and information technology.
- The company generated $42.6 million in cash flow from operating activities and $24.7 million in free cash flow for 2014.
- Backlog increased significantly by 25.5% year-over-year to $757.8 million as of December 31, 2014, indicating future revenue potential.
- Comfort Systems USA, Inc. expanded its credit facility to $250 million and maintained a strong financial position with a leverage ratio of 0.62.
- The company continues to focus on its core strategy of excellence in core competencies, operating efficiencies, and employee development within the commercial, industrial, and institutional HVAC markets.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Comfort Systems USA kept $0.02.
- Revenue$1.41B100.0%
- Cost of revenue−$1.16B82.3%
- Gross profit$249.8M17.7%
- Operating costs−$207.5M14.7%
- Operating income$42.2M3.0%
- Interest, other & tax−$19.2M1.4%
- Net income$23.1M1.6%
Where FY2014 revenue went
$1.41B- Cost of revenue: $1.16B, 82% of revenue
- SG&A: $207.7M, 15% of revenue
- Net income: $23.1M, 1.6% of revenue
- Interest, other & tax: $19.2M, 1.4% of revenue
Kept 1.6% as net incomeNet income $23.1M · 1.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 26, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $1.41B$1.36B | +3.9% |
| Cost of Revenue | $1.16B$1.12B | +3.9% |
| Gross Profit | $249.77M$239.88M | +4.1% |
| SG&A Expenses | $207.65M$194.21M | +6.9% |
| Operating Income | $42.22M$46.26M | −8.7% |
| Interest Expense | $1.86M$1.35M | +37.5% |
| Net Income | $23.06M$27.27M | −15.4% |
| EPS (Basic) | $0.61$0.73 | −16.4% |
| EPS (Diluted) | $0.61$0.73 | −16.4% |
| Shares Outstanding (Basic) | 37.55M37.24M | +0.8% |
| Shares Outstanding (Diluted) | 37.80M37.54M | +0.7% |
05—Questions
Frequently Asked Questions
What is Comfort Systems USA, Inc.'s primary business and revenue model?
Comfort Systems USA, Inc. primarily provides comprehensive HVAC installation, maintenance, repair, and replacement services within the mechanical services industry. Approximately 44% of its revenue in 2014 was from installation services in newly constructed facilities, while 56% was from maintenance, repair, and replacement services in existing facilities. The company serves commercial, industrial, and institutional markets.
How did Comfort Systems USA, Inc. perform financially in 2014?
In 2014, Comfort Systems USA, Inc. reported revenue of $1.41 billion, a 3.9% increase from 2013. Gross profit was $249.8 million, stable at 17.7% of revenue. Operating income was $42.2 million. The company generated strong cash flow, with $42.6 million from operations and $24.7 million in free cash flow, while increasing its revolving credit facility capacity to $250 million.
What are the key risks identified by Comfort Systems USA, Inc. in its 2014 10-K filing?
Key risks include dependence on construction activity which is subject to economic downturns, the risk of cost overruns on contracts, potential adjustments or cancellations in its project backlog, intense competition leading to reduced market share and profits, and the risks associated with integrating acquired businesses. Other identified risks involve IT system failures, reliance on third-party subcontractors and suppliers, potential goodwill impairment, litigation, surety bond availability, and the use of the percentage-of-completion accounting method.
What is the company's strategy for growth and operational improvement?
The company's strategy focuses on achieving excellence in core competencies (customer relations, design-build expertise, estimating, job tracking, safety, service capability), improving operating efficiencies through best practices and purchasing economies, attracting and retaining employees through investment in training and career paths, focusing on commercial, industrial, and institutional markets, leveraging resources across its operating locations, and maintaining a diverse customer and geographic base. They also aim to seek growth through expansion and acquisitions.
06—Continue