filings.toolsComfort Systems USA 10-Q 2024-03-31
Filed 2024-04-25. 3 sections, 139K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
| | |
|---|---|
| (Mark One) | |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2024
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from to |
Commission file number: 1-13011
COMFORT SYSTEMS USA, INC.
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of Incorporation or Organization) | 76-0526487 (I.R.S. Employer Identification No.) |
|---|---|
| 675 Bering DriveSuite 400Houston**,** Texas 77057(Address of Principal Executive Offices) (Zip Code) |
Registrant’s telephone number, including area code: (713) 830-9600
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, $0.01 par value | FIX | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ⌧ | Accelerated filer ◻ | Non-accelerated filer ◻ | Smaller reporting company ☐ | Emerging growth company ☐ |
|---|---|---|---|---|
| | | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐ No ⌧
The number of shares outstanding of the issuer’s common stock as of April 19, 2024 was 35,721,909 (excluding treasury shares of 5,401,456).
COMFORT SYSTEMS USA, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2024
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
COMFORT SYSTEMS USA, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | | March 31, | | December 31, | | ||
| | 2024 | 2023 | |||||
| | | (Unaudited) | | | | | |
| ASSETS | | | | | | | |
| CURRENT ASSETS: | | | | | | | |
| Cash and cash equivalents | | $ | 100,792 | | $ | 205,150 | |
| Billed accounts receivable, less allowance for credit losses of $11,949 and $11,926, respectively | | 1,570,643 | | 1,318,926 | | ||
| Unbilled accounts receivable, less allowance for credit losses of $929 and $850, respectively | | 76,975 | | 72,774 | | ||
| Other receivables, less allowance for credit losses of $519 and $522, respectively | | 136,100 | | 166,319 | | ||
| Inventories | | 71,061 | | 65,538 | | ||
| Prepaid expenses and other | | 62,500 | | 54,309 | | ||
| Costs and estimated earnings in excess of billings, less allowance for credit losses of $108 and $79, respectively | | 30,118 | | 28,084 | | ||
| Total current assets | | 2,048,189 | | 1,911,100 | | ||
| PROPERTY AND EQUIPMENT, NET | | 226,197 | | 208,568 | | ||
| LEASE RIGHT-OF-USE ASSET | | | 227,157 | | | 205,712 | |
| GOODWILL | | 862,934 | | 666,834 | | ||
| IDENTIFIABLE INTANGIBLE ASSETS, NET | | 489,884 | | 280,397 | | ||
| DEFERRED TAX ASSETS | | | 31,928 | | | 17,723 | |
| OTHER NONCURRENT ASSETS | | 16,540 | | 15,245 | | ||
| Total assets | | $ | 3,902,829 | | $ | 3,305,579 | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
| CURRENT LIABILITIES: | | | | | | | |
| Current maturities of long-term debt | | $ | 12,885 | | $ | 4,867 | |
| Accounts payable | | | 557,859 | | | 419,962 | |
| Accrued compensation and benefits | | 153,859 | | 169,136 | | ||
| Billings in excess of costs and estimated earnings and deferred revenue | | 1,131,928 | | 909,538 | | ||
| Accrued self-insurance | | 29,712 | | 27,774 | | ||
| Other current liabilities | | 253,416 | | 189,928 | | ||
| Total current liabilities | | 2,139,659 | | 1,721,205 | | ||
| LONG-TERM DEBT | | 77,004 | | 39,345 | | ||
| LEASE LIABILITIES | | | 209,717 | | 188,136 | | |
| DEFERRED TAX LIABILITIES | | 1,120 | | 1,120 | | ||
| OTHER LONG-TERM LIABILITIES | | 102,793 | | 77,944 | | ||
| Total liabilities | | 2,530,293 | | 2,027,750 | | ||
| COMMITMENTS AND CONTINGENCIES | | | | | | | |
| STOCKHOLDERS’ EQUITY: | | | | | | | |
| Preferred stock, $.01 par, 5,000,000 shares authorized, none issued and outstanding | | — | | — | | ||
| Common stock, $.01 par, 102,969,912 shares authorized, 41,123,365 and 41,123,365 shares issued, respectively | | 411 | | 411 | | ||
| Treasury stock, at cost, 5,428,501 and 5,438,625 shares, respectively | | (211,518) | | (209,807) | | ||
| Additional paid-in capital | | 348,582 | | 339,562 | | ||
| Retained earnings | | 1,235,061 | | 1,147,663 | | ||
| Total stockholders’ equity | | 1,372,536 | | 1,277,829 | | ||
| Total liabilities and stockholders’ equity | | $ | 3,902,829 | | $ | 3,305,579 | |
The accompanying notes are an integral part of these consolidated financial statements.
COMFORT SYSTEMS USA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | | Three Months Ended | | ||||
| | | March 31, | | ||||
| | 2024 | 2023 | |||||
| REVENUE | | $ | 1,537,016 | | $ | 1,174,640 | |
| COST OF SERVICES | | 1,239,653 | | 969,235 | | ||
| Gross profit | | 297,363 | | 205,405 | | ||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | | 162,723 | | 135,032 | | ||
| GAIN ON SALE OF ASSETS | | (820) | | (512) | | ||
| Operating income | | 135,460 | | 70,885 | | ||
| OTHER INCOME (EXPENSE): | | | | | | | |
| Interest income | | 1,603 | | 1,397 | | ||
| Interest expense | | (1,633) | | (4,076) | | ||
| Changes in the fair value of contingent earn-out obligations | | (12,491) | | (2,382) | | ||
| Other | | 117 | | 1 | | ||
| Other income (expense) | | (12,404) | | (5,060) | | ||
| INCOME BEFORE INCOME TAXES | | 123,056 | | 65,825 | | ||
| PROVISION FOR INCOME TAXES | | 26,737 | | 8,609 | | ||
| NET INCOME | | $ | 96,319 | | $ | 57,216 | |
| | | | | | | | |
| INCOME PER SHARE: | | | | | | | |
| Basic | | $ | 2.70 | | $ | 1.60 | |
| Diluted | | $ | 2.69 | | $ | 1.59 | |
| | | | | | | | |
| SHARES USED IN COMPUTING INCOME PER SHARE: | | | | | | | |
| Basic | | 35,739 | | 35,812 | | ||
| Diluted | | 35,828 | | 35,907 | |
The accompanying notes are an integral part of these consolidated financial statements.
COMFORT SYSTEMS USA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUIT****Y
(In Thousands, Except Share Amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended | | |||||||||||||||||
| | | March 31, 2023 | | |||||||||||||||||
| | | | | | | | | | | | | Additional | | | | Total | ||||
| | Common Stock | Treasury Stock | Paid-In | | Retained | Stockholders’ | ||||||||||||||
| | Shares | Amount | Shares | Amount | Capital | Earnings | Equity | |||||||||||||
| BALANCE AT DECEMBER 31, 2022 | 41,123,365 | | $ | 411 | (5,362,224) | | $ | (187,212) | | $ | 332,080 | | $ | 854,644 | $ | 999,923 | | |||
| Net income | — | | | — | | — | | | — | | | — | | | 57,216 | | 57,216 | | ||
| Issuance of Stock: | | | | | | | | | | | | | | | | | | | | |
| Issuance of shares for options exercised | — | | | — | | 1,000 | | | 36 | | | (18) | | | — | | 18 | | ||
| Issuance of restricted stock & performance stock | — | | | — | | 31,960 | | | 1,131 | | | 3,384 | | | — | | 4,515 | | ||
| Shares received in lieu of tax withholding on vested stock | — | | | — | | (12,728) | | | (1,798) | | | — | | | — | | (1,798) | | ||
| Stock-based compensation | — | | | — | | — | | | — | | | 3,438 | | | — | | 3,438 | | ||
| Dividends ($0.175 per share) | — | | | — | | — | | | — | | | — | | | (6,254) | | (6,254) | | ||
| Share repurchase | — | | | — | | (29,400) | | | (3,568) | | | — | | | — | | (3,568) | | ||
| BALANCE AT MARCH 31, 2023 | | 41,123,365 | | $ | 411 | | (5,371,392) | | $ | (191,411) | | $ | 338,884 | | $ | 905,606 | | $ | 1,053,490 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | |||||||||||||||||
| | | March 31, 2024 |
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Item 5. Other Information
Securities Trading Plans of Directors and Officers
During the three months ended March 31, 2024, no directors or officers of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as defined in Item 408(a) and (c) of Regulation S-K.
Item 6. Exhibits
| | | | | Incorporated by Referenceto the Exhibit Indicated Belowand to the Filing with the****Commission Indicated Below | ||
| Exhibit****Number | Description of Exhibits | Exhibit****Number | Filing or****File Number | |||
| 3.1 | | Second Amended and Restated Certificate of Incorporation of the Registrant | | 3.1 | | 333-24021 |
| 3.2 | | Certificate of Amendment dated May 21, 1998 | | 3.2 | | 1998 Form 10-K |
| 3.3 | | Certificate of Amendment dated July 9, 2003 | | 3.3 | | 2003 Form 10-K |
| 3.4 | | Certificate of Amendment dated May 20, 2016 | | 3.1 | | May 20, 2016 Form 8-K |
| 3.5 | | Amended and Restated Bylaws of Comfort Systems USA, Inc. | | 3.1 | | March 25, 2016 Form 8-K |
| 31.1* | | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | | |
| 31.2* | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | | |
| 32.1** | | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | | |
| 32.2** | | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | | |
| 101.INS* | | Inline XBRL Instance Document | | | | |
| 101.SCH* | | Inline XBRL Taxonomy Extension Schema Document | | | | |
| 101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | | |
| 101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | | |
| 101.LAB* | | Inline XBRL Taxonomy Extension Label Linkbase Document | | | | |
| 101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase | | | | |
| 104 | | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document) | | | | |
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*** Filed herewith.**
**** Furnished herewith.**
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | |
|---|---|---|
| | Comfort Systems USA, Inc. | |
| | | |
| April 25, 2024 | By: | /s/ Brian E. Lane |
| | | Brian E. Lane |
| | | President, Chief Executive Officer and Director |
| | | |
| April 25, 2024 | By: | /s/ William George |
| | | William George |
| | | Executive Vice President and Chief Financial Officer |
| | | |
| April 25, 2024 | By: | /s/ Julie S. Shaeff |
| | | Julie S. Shaeff |
| | | Senior Vice President and Chief Accounting Officer |