10-KPeriod: FY2014

COMFORT SYSTEMS USA INC Annual Report, Year Ended Dec 31, 2014

Filed February 26, 2015For Securities:FIX

Summary

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 million, 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 million 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.

Financial Highlights

55 data points
Beta

Revenue

$1.41B

17.7% Gross Margin

Net Income

$23.06M

1.6% Net Margin

EPS (Diluted)

$0.61

Total Assets

$655.94M

Cash & Equivalents

$32.06M

Free Cash Flow

$23.37M

Financial Statements
Beta
Revenue$1.41B
Cost of Revenue$1.16B
Gross Profit$249.77M
SG&A Expenses$207.65M
Operating Income$42.22M
Interest Expense$1.86M
Net Income$23.06M
EPS (Basic)$0.61
EPS (Diluted)$0.61
Shares Outstanding (Basic)37.55M
Shares Outstanding (Diluted)37.80M

Key Highlights

  • 1Revenue for fiscal year 2014 was $1.41 billion, representing a 3.9% increase from 2013, primarily driven by acquisitions and same-store activity.
  • 2Gross profit remained stable at 17.7% of revenue in 2014, reflecting consistent operational performance.
  • 3Selling, General, and Administrative (SG&A) expenses increased by 6.9% to $207.7 million, attributed to investments in service growth and information technology.
  • 4The company generated $42.6 million in cash flow from operating activities and $24.7 million in free cash flow for 2014.
  • 5Backlog increased significantly by 25.5% year-over-year to $757.8 million as of December 31, 2014, indicating future revenue potential.
  • 6Comfort Systems USA, Inc. expanded its credit facility to $250 million and maintained a strong financial position with a leverage ratio of 0.62.
  • 7The 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.

Frequently Asked Questions

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.

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.

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.

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.