Summary
Comfort Systems USA, Inc. (FIX) reported a significant decline in revenue and net income for the six months ended June 30, 2010, compared to the same period in the prior year. Revenue decreased by 16.3% to $486.1 million, primarily driven by reduced activity in the nonresidential construction market, particularly in the education and multi-family sectors. This revenue decline, coupled with specific job underperformance and write-downs, led to a substantial drop in gross profit margin from 19.5% to 16.8%. The company also recorded a $4.4 million goodwill impairment charge related to its Delaware operations. Despite the challenging revenue environment, the company has managed its selling, general, and administrative expenses effectively, which decreased by 13.5% year-over-year, though they increased as a percentage of revenue due to the lower sales base. Comfort Systems USA's financial position remains relatively stable, characterized by zero outstanding borrowings under its credit facility and a strong cash position. The company's liquidity is supported by positive free cash flow generation over the long term, although it experienced negative free cash flow for the first six months of 2010, a shift from the prior year, attributed mainly to lower profitability. The company's outlook suggests continued profitability but at lower levels than 2009 due to expected industry weakness.
Financial Highlights
32 data points| Revenue | $249.59M |
| Cost of Revenue | $207.62M |
| Gross Profit | $41.97M |
| SG&A Expenses | $35.61M |
| Operating Income | $2.38M |
| Interest Expense | $289K |
| Net Income | $1.65M |
| EPS (Basic) | $0.04 |
| EPS (Diluted) | $0.04 |
| Shares Outstanding (Basic) | 37.60M |
| Shares Outstanding (Diluted) | 37.85M |
Key Highlights
- 1Revenue decreased by 16.3% to $486.1 million for the six months ended June 30, 2010.
- 2Gross profit margin declined from 19.5% to 16.8% due to job underperformance and write-downs.
- 3A goodwill impairment charge of $4.4 million was recognized in the second quarter of 2010.
- 4Selling, General, and Administrative (SG&A) expenses decreased by 13.5% but increased as a percentage of revenue.
- 5The company reported negative free cash flow of $11.6 million for the first six months of 2010, compared to positive $15.7 million in the prior year.
- 6Comfort Systems USA has zero outstanding borrowings on its $125 million revolving credit facility (as of July 16, 2010, post-period).
- 7The company acquired ColonialWebb Contractors Company for approximately $81.3 million on July 28, 2010, shortly after the reporting period.