Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Jul. 23, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-13011 | |
Entity Registrant Name | COMFORT SYSTEMS USA, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 76-0526487 | |
Entity Address, Address Line One | 675 Bering Drive | |
Entity Address, Address Line Two | Suite 400 | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77057 | |
City Area Code | 713 | |
Local Phone Number | 830-9600 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | FIX | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 36,305,194 | |
Entity Central Index Key | 0001035983 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 53,659 | $ 54,896 |
Billed accounts receivable, less allowance for credit losses of $8,648 and $9,087, respectively | 630,446 | 619,544 |
Unbilled accounts receivable, less allowance for credit losses of $815 and $784, respectively | 53,624 | 45,596 |
Other receivables, less allowance for credit losses of $549 and $759, respectively | 38,515 | 44,212 |
Inventories | 18,837 | 13,472 |
Prepaid expenses and other | 11,350 | 15,510 |
Costs and estimated earnings in excess of billings, less allowance for credit losses of $34 and $79, respectively | 12,969 | 18,622 |
Total current assets | 819,400 | 811,852 |
PROPERTY AND EQUIPMENT, NET | 113,589 | 117,206 |
LEASE RIGHT-OF-USE ASSET | 95,532 | 94,727 |
GOODWILL | 472,046 | 464,392 |
IDENTIFIABLE INTANGIBLE ASSETS, NET | 221,584 | 231,807 |
DEFERRED TAX ASSETS | 23,952 | 29,401 |
OTHER NONCURRENT ASSETS | 8,847 | 7,970 |
Total assets | 1,754,950 | 1,757,355 |
CURRENT LIABILITIES: | ||
Current maturities of long-term debt | 4,235 | |
Accounts payable | 207,453 | 204,145 |
Accrued compensation and benefits | 115,797 | 121,864 |
Billings in excess of costs and estimated earnings | 255,357 | 226,237 |
Accrued self-insurance | 47,359 | 49,166 |
Other current liabilities | 91,209 | 91,492 |
Total current liabilities | 721,410 | 692,904 |
LONG-TERM DEBT, NET | 156,272 | 235,733 |
LEASE LIABILITIES | 81,060 | 80,576 |
DEFERRED TAX LIABILITIES | 1,339 | 1,339 |
OTHER LONG-TERM LIABILITIES | 42,857 | 50,374 |
Total liabilities | 1,002,938 | 1,060,926 |
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, 4,774,785 and 4,935,186 shares, respectively | (128,503) | (129,243) |
Additional paid-in capital | 326,179 | 322,451 |
Retained earnings | 553,925 | 502,810 |
Total stockholders' equity | 752,012 | 696,429 |
Total liabilities and stockholders' equity | $ 1,754,950 | $ 1,757,355 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
CONSOLIDATED BALANCE SHEETS | ||
Billed accounts receivable, allowance for credit losses (in dollars) | $ 8,648 | $ 9,087 |
Unbilled accounts receivable, allowance for credit losses (in dollars) | 815 | 784 |
Other receivables, allowance for credit losses (in dollars) | 549 | 759 |
Costs and estimated earnings in excess of billings, allowance for credit losses (in dollars) | $ 34 | $ 79 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 102,969,912 | 102,969,912 |
Common stock, shares issued | 41,123,365 | 41,123,365 |
Treasury stock, shares | 4,774,785 | 4,935,186 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
REVENUE | $ 713,895 | $ 743,468 | $ 1,383,656 | $ 1,443,599 |
COST OF SERVICES | 587,440 | 597,773 | 1,133,732 | 1,180,811 |
Gross profit | 126,455 | 145,695 | 249,924 | 262,788 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 87,549 | 85,045 | 175,763 | 177,969 |
GAIN ON SALE OF ASSETS | (491) | (312) | (841) | (866) |
Operating income | 39,397 | 60,962 | 75,002 | 85,685 |
OTHER INCOME (EXPENSE): | ||||
Interest income | 3 | 28 | 6 | 92 |
Interest expense | (1,360) | (2,554) | (2,857) | (5,171) |
Changes in the fair value of contingent earn-out obligations | 4,581 | (3,871) | 5,767 | (1,599) |
Other | 161 | 92 | 25 | |
Other income (expense) | 3,385 | (6,397) | 3,008 | (6,653) |
INCOME BEFORE INCOME TAXES | 42,782 | 54,565 | 78,010 | 79,032 |
PROVISION FOR INCOME TAXES | 9,817 | 15,070 | 18,554 | 21,821 |
NET INCOME | $ 32,965 | $ 39,495 | $ 59,456 | $ 57,211 |
INCOME PER SHARE: | ||||
Basic | $ 0.91 | $ 1.08 | $ 1.64 | $ 1.56 |
Diluted | $ 0.90 | $ 1.08 | $ 1.63 | $ 1.55 |
SHARES USED IN COMPUTING INCOME PER SHARE: | ||||
Basic | 36,403 | 36,581 | 36,345 | 36,628 |
Diluted | 36,566 | 36,737 | 36,533 | 36,821 |
DIVIDENDS PER SHARE | $ 0.115 | $ 0.105 | $ 0.230 | $ 0.210 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Cumulative Effect, Period of Adoption, Adjustment [Member]Retained Earnings | Cumulative Effect, Period of Adoption, Adjustment [Member] | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Total |
BALANCE at Dec. 31, 2019 | $ 411 | $ (103,960) | $ 320,168 | $ 368,685 | $ 585,304 | ||
BALANCE (in shares) at Dec. 31, 2019 | 41,123,365 | ||||||
BALANCE (in shares) at Dec. 31, 2019 | (4,465,448) | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 17,716 | 17,716 | |||||
Issuance of Stock: | |||||||
Issuance of restricted stock & performance stock | $ 1,054 | 801 | 1,855 | ||||
Issuance of restricted stock & performance stock (in shares) | 43,902 | ||||||
Shares received in lieu of tax withholding payment on vested restricted stock | $ (622) | (622) | |||||
Shares received in lieu of tax withholding payment on vested restricted stock (in shares) | (14,722) | ||||||
Stock-based compensation | 2,134 | 2,134 | |||||
Dividends | (3,844) | (3,844) | |||||
Share repurchase | $ (8,985) | (8,985) | |||||
Share repurchase (in shares) | (237,359) | ||||||
BALANCE at Mar. 31, 2020 | $ (515) | $ (515) | $ 411 | $ (112,513) | 323,103 | 382,042 | 593,043 |
BALANCE (in shares) at Mar. 31, 2020 | 41,123,365 | ||||||
BALANCE (in shares) at Mar. 31, 2020 | (4,673,627) | ||||||
BALANCE at Dec. 31, 2019 | $ 411 | $ (103,960) | 320,168 | 368,685 | 585,304 | ||
BALANCE (in shares) at Dec. 31, 2019 | 41,123,365 | ||||||
BALANCE (in shares) at Dec. 31, 2019 | (4,465,448) | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 57,211 | ||||||
BALANCE at Jun. 30, 2020 | $ 411 | $ (112,104) | 322,419 | 417,707 | 628,433 | ||
BALANCE (in shares) at Jun. 30, 2020 | 41,123,365 | ||||||
BALANCE (in shares) at Jun. 30, 2020 | (4,620,071) | ||||||
BALANCE at Mar. 31, 2020 | $ (515) | $ (515) | $ 411 | $ (112,513) | 323,103 | 382,042 | 593,043 |
BALANCE (in shares) at Mar. 31, 2020 | 41,123,365 | ||||||
BALANCE (in shares) at Mar. 31, 2020 | (4,673,627) | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 39,495 | 39,495 | |||||
Issuance of Stock: | |||||||
Issuance of shares for options exercised | $ 836 | (280) | 556 | ||||
Issuance of shares for options exercised (in shares) | 34,562 | ||||||
Issuance of restricted stock & performance stock | $ 2,048 | (2,048) | |||||
Issuance of restricted stock & performance stock (in shares) | 84,987 | ||||||
Shares received in lieu of tax withholding payment on vested restricted stock | $ (454) | (454) | |||||
Shares received in lieu of tax withholding payment on vested restricted stock (in shares) | (13,002) | ||||||
Stock-based compensation | 1,644 | 1,644 | |||||
Dividends | (3,830) | (3,830) | |||||
Share repurchase | $ (2,021) | (2,021) | |||||
Share repurchase (in shares) | (52,991) | ||||||
BALANCE at Jun. 30, 2020 | $ 411 | $ (112,104) | 322,419 | 417,707 | 628,433 | ||
BALANCE (in shares) at Jun. 30, 2020 | 41,123,365 | ||||||
BALANCE (in shares) at Jun. 30, 2020 | (4,620,071) | ||||||
BALANCE at Dec. 31, 2020 | $ 411 | $ (129,243) | 322,451 | 502,810 | $ 696,429 | ||
BALANCE (in shares) at Dec. 31, 2020 | 41,123,365 | 41,123,365 | |||||
BALANCE (in shares) at Dec. 31, 2020 | (4,935,186) | 4,935,186 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 26,491 | $ 26,491 | |||||
Issuance of Stock: | |||||||
Issuance of shares for options exercised | $ 1,616 | (211) | 1,405 | ||||
Issuance of shares for options exercised (in shares) | 61,454 | ||||||
Issuance of restricted stock & performance stock | $ 777 | 1,431 | 2,208 | ||||
Issuance of restricted stock & performance stock (in shares) | 29,544 | ||||||
Shares received in lieu of tax withholding payment on vested restricted stock | $ (854) | (854) | |||||
Shares received in lieu of tax withholding payment on vested restricted stock (in shares) | (11,424) | ||||||
Stock-based compensation | 2,472 | 2,472 | |||||
Dividends | (4,163) | (4,163) | |||||
Share repurchase | $ (885) | (885) | |||||
Share repurchase (in shares) | (13,250) | ||||||
BALANCE at Mar. 31, 2021 | $ 411 | $ (128,589) | 326,143 | 525,138 | 723,103 | ||
BALANCE (in shares) at Mar. 31, 2021 | 41,123,365 | ||||||
BALANCE (in shares) at Mar. 31, 2021 | (4,868,862) | ||||||
BALANCE at Dec. 31, 2020 | $ 411 | $ (129,243) | 322,451 | 502,810 | $ 696,429 | ||
BALANCE (in shares) at Dec. 31, 2020 | 41,123,365 | 41,123,365 | |||||
BALANCE (in shares) at Dec. 31, 2020 | (4,935,186) | 4,935,186 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | $ 59,456 | ||||||
BALANCE at Jun. 30, 2021 | $ 411 | $ (128,503) | 326,179 | 553,925 | $ 752,012 | ||
BALANCE (in shares) at Jun. 30, 2021 | 41,123,365 | 41,123,365 | |||||
BALANCE (in shares) at Jun. 30, 2021 | (4,774,785) | 4,774,785 | |||||
BALANCE at Mar. 31, 2021 | $ 411 | $ (128,589) | 326,143 | 525,138 | $ 723,103 | ||
BALANCE (in shares) at Mar. 31, 2021 | 41,123,365 | ||||||
BALANCE (in shares) at Mar. 31, 2021 | (4,868,862) | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 32,965 | 32,965 | |||||
Issuance of Stock: | |||||||
Issuance of shares for options exercised | $ 1,853 | 191 | 2,044 | ||||
Issuance of shares for options exercised (in shares) | 69,342 | ||||||
Issuance of restricted stock & performance stock | $ 1,904 | (1,904) | |||||
Issuance of restricted stock & performance stock (in shares) | 71,816 | ||||||
Shares received in lieu of tax withholding payment on vested restricted stock | $ (1,509) | (1,509) | |||||
Shares received in lieu of tax withholding payment on vested restricted stock (in shares) | (19,989) | ||||||
Stock-based compensation | 1,749 | 1,749 | |||||
Dividends | (4,178) | (4,178) | |||||
Share repurchase | $ (2,162) | (2,162) | |||||
Share repurchase (in shares) | (27,092) | ||||||
BALANCE at Jun. 30, 2021 | $ 411 | $ (128,503) | $ 326,179 | $ 553,925 | $ 752,012 | ||
BALANCE (in shares) at Jun. 30, 2021 | 41,123,365 | 41,123,365 | |||||
BALANCE (in shares) at Jun. 30, 2021 | (4,774,785) | 4,774,785 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 59,456 | $ 57,211 |
Adjustments to reconcile net income to net cash provided by operating activities- | ||
Amortization of identifiable intangible assets | 17,749 | 17,141 |
Depreciation expense | 13,925 | 13,633 |
Change in right-of-use assets | 8,554 | 8,687 |
Bad debt expense (benefit) | (429) | 4,593 |
Deferred tax provision (benefit) | 5,449 | (2,980) |
Amortization of debt financing costs | 267 | 270 |
Gain on sale of assets | (841) | (866) |
Changes in the fair value of contingent earn-out obligations | (5,767) | 1,599 |
Stock-based compensation | 6,860 | 5,188 |
(Increase) decrease in- | ||
Receivables, net | (6,841) | 30,258 |
Inventories | (5,365) | (220) |
Prepaid expenses and other current assets | 13,037 | 13,382 |
Costs and estimated earnings in excess of billings and unbilled accounts receivable | (2,752) | (6,185) |
Other noncurrent assets | (1,105) | (228) |
Increase (decrease) in- | ||
Accounts payable and accrued liabilities | (10,964) | (1,984) |
Billings in excess of costs and estimated earnings | 27,510 | 22,082 |
Other long-term liabilities | (8,674) | 2,205 |
Net cash provided by operating activities | 110,069 | 163,786 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (10,762) | (14,539) |
Proceeds from sales of property and equipment | 1,530 | 1,378 |
Cash paid for acquisitions, net of cash acquired | (11,742) | (101,998) |
Net cash used in investing activities | (20,974) | (115,159) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from revolving credit facility | 25,000 | 178,000 |
Payments on revolving credit facility | (80,000) | (151,000) |
Payments on term loan | (15,000) | (11,250) |
Payments on other debt | (8,765) | (32,449) |
Payments of dividends to stockholders | (8,341) | (7,674) |
Share repurchase | (3,047) | (11,006) |
Shares received in lieu of tax withholding | (2,363) | (1,076) |
Proceeds from exercise of options | 3,449 | 556 |
Deferred acquisition payments | (400) | (400) |
Payments for contingent consideration arrangements | (865) | (9,863) |
Net cash used in financing activities | (90,332) | (46,162) |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (1,237) | 2,465 |
CASH AND CASH EQUIVALENTS, beginning of period | 54,896 | 50,788 |
CASH AND CASH EQUIVALENTS, end of period | $ 53,659 | $ 53,253 |
Business and Organization
Business and Organization | 6 Months Ended |
Jun. 30, 2021 | |
Business and Organization | |
Business and Organization | 1. Business and Organization Comfort Systems USA, Inc., a Delaware corporation, provides comprehensive mechanical and electrical contracting services, which principally includes heating, ventilation and air conditioning (“HVAC”), plumbing, electrical, piping and controls, as well as off-site construction, monitoring and fire protection. We install, maintain, repair and replace products and systems throughout the United States. The terms “Comfort Systems,” “we,” “us,” or the “Company,” refer to Comfort Systems USA, Inc. or Comfort Systems USA, Inc. and its consolidated subsidiaries, as appropriate in the context. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation These interim statements should be read in conjunction with the historical Consolidated Financial Statements and related notes of Comfort Systems included in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) for the year ended December 31, 2020 (the “Form 10-K”). The accompanying unaudited consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X of the SEC. Accordingly, these financial statements do not include all the footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the Form 10-K. We believe all adjustments necessary for a fair presentation of these interim statements have been included and are of a normal and recurring nature. The results of operations for interim periods are not necessarily indicative of the results for the full fiscal year. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities, revenue and expenses and disclosures regarding contingent assets and liabilities. Actual results could differ from those estimates. The most significant estimates used in our financial statements affect revenue and cost recognition for construction contracts, self-insurance accruals, deferred tax assets, fair value accounting for acquisitions and the quantification of fair value for reporting units in connection with our goodwill impairment testing. Recent Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU No. 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within that year. We adopted ASU No. 2019-12 on January 1, 2021, and the impact was not material to our overall financial statements. Revenue Recognition We recognize revenue over time for all of our services as we perform them because (i) control continuously transfers to that customer as work progresses, and (ii) we have the right to bill the customer as costs are incurred. The customer typically controls the work in process, as evidenced either by contractual termination clauses or by our rights to payment for work performed to date, plus a reasonable profit, for delivery of products or services that do not have an alternative use to the Company. For the reasons listed above, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We generally use the cost to cost measure of progress for our contracts, as it best depicts the transfer of assets to the customer that occurs as we incur costs on our contracts. Under the cost to cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue, including estimated fees or profits, is recorded proportionally as costs are incurred. Costs to fulfill include labor, materials, subcontractors’ costs, other direct costs and an allocation of indirect costs. For a small portion of our business in which our services are delivered in the form of service maintenance agreements for existing systems to be repaired and maintained, as opposed to constructed, our performance obligation is to maintain the customer’s mechanical system for a specific period of time. Similar to construction jobs, we recognize revenue over time; however, for service maintenance agreements in which the full cost to provide services may not be known, we generally use an input method to recognize revenue, which is based on the amount of time we have provided our services out of the total time we have been contracted to perform those services. Our revenue recognition policy is further discussed in Note 3 “Revenue from Contracts with Customers.” Accounts Receivable and Allowance for Credit Losses We are required to estimate and record the expected credit losses over the contractual life of our financial assets measured at amortized cost, including billed and unbilled accounts receivable, other receivables and costs and estimated earnings in excess of billings. Accounts receivable include amounts from work completed in which we have billed or have an unconditional right to bill our customers. Our trade receivables are contractually due in less than a year. We estimate our credit losses using a loss-rate method for each of our identified portfolio segments. Our portfolio segments are construction, service and other. While our construction and service financial assets are often with the same subset of customers and industries, our construction financial assets will generally have a lower loss-rate than service financial assets due to lien rights, which we are more likely to have on construction jobs. These lien rights result in lower credit loss expenses on average compared to receivables that do not have lien rights. Financial assets classified as Other include receivables that are not related to our core revenue producing activities, such as receivables related to our acquisition activity from former owners, our vendor rebate program or receivables for estimated losses in excess of our insurance deductible, which are accrued with a corresponding accrued insurance liability. Loss rates for our portfolios are based on numerous factors, including our history of credit loss expense by portfolio, the financial strength of our customers and counterparties in each portfolio, the aging of our receivables, our expectation of likelihood of payment, macroeconomic trends in the U.S. and the current and forecasted non-residential construction market trends in the U.S. In addition to the loss-rate calculations discussed above, we also record allowance for credit losses for specific receivables that are deemed to have a higher risk profile than the rest of the respective pool of receivables (e.g., when we hold concerns about a specific customer going bankrupt and no longer being able to pay the receivables due to us). Income Taxes We conduct business throughout the United States in virtually all fifty states. Our effective tax rate changes based upon our relative profitability, or lack thereof, in states with varying tax rates and rules. In addition, discrete items, such as tax law changes, judgments and legal structures, can impact our effective tax rate. These items can also include the tax treatment for impairment of goodwill and other intangible assets, changes in fair value of acquisition-related assets and liabilities, tax reserves for uncertain tax positions and accounting for losses associated with underperforming operations. In early October 2020, we filed amended federal returns for 2016, 2017 and 2018 to claim the credit for increasing research activities (the “R&D tax credit”) and energy efficient commercial buildings deduction (the “179D deduction”) and recorded tax benefits of $6.1 million, $8.5 million and $11.9 million, respectively. The $26.5 million of tax benefits have been offset by additions to unrecognized tax benefits of $26.4 million due to the uncertainty of the outcome of our current Internal Revenue Service examination. The R&D tax credit and 179D deduction for 2016, 2017 and 2018, therefore, had no material impact on our effective tax rates. At this time, we cannot reasonably estimate the R&D tax credit for years after 2018 or 179D deduction for years after 2017. Financial Instruments Our financial instruments consist of cash and cash equivalents, accounts receivable, other receivables, accounts payable, interest rate swaps, life insurance policies, notes to former owners, a revolving credit facility and a term loan. We believe that the carrying values of these instruments in the accompanying Balance Sheets approximate their fair values. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customers | |
Revenue from Contracts with Customers | 3. Revenue from Contracts with Customers Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. Sales-based taxes are excluded from revenue. We provide mechanical and electrical contracting services. Our mechanical segment principally includes HVAC, plumbing, piping and controls, as well as off- site construction, monitoring and fire protection. Our electrical segment includes installation and servicing of electrical systems. We install, maintain, repair and replace products and systems throughout the United States. All of our revenue is recognized over time as we deliver goods and services to our customers. Revenue can be earned based on an agreed-upon fixed price or based on actual costs incurred, marked up at an agreed-upon percentage. We account for a contract when: (i) it has approval and commitment from both parties, (ii) the rights of the parties are identified, (iii) payment terms are identified, (iv) the contract has commercial substance, and (v) collectability of consideration is probable. We consider the start of a project to be when the above criteria have been met and we either have written authorization from the customer to proceed or an executed contract. We generally do not incur significant incremental costs related to obtaining or fulfilling a contract prior to the start of a project. On rare occasions, when significant pre-contract costs are incurred, they are capitalized and amortized on a percentage of completion basis over the life of the contract. We do not currently have any capitalized obtainment or fulfillment costs on our Balance Sheet and have not incurred any impairment loss on such costs in the current year. Due to the nature of the work required to be performed on many of our performance obligations, the estimation of total revenue and cost at completion (the process described below in more detail) is complex, subject to many variables and requires significant judgment. The consideration to which we are entitled on our long-term contracts may include both fixed and variable amounts. Variable amounts can either increase or decrease the transaction price. A common example of variable amounts that can either increase or decrease contract value are pending change orders that represent contract modifications for which a change in scope has been authorized or acknowledged by our customer, but the final adjustment to contract price is yet to be negotiated. Other examples of positive variable revenue include amounts awarded upon achievement of certain performance metrics, program milestones or cost of completion date targets and can be based upon customer discretion. Variable amounts can result in a deduction from contract revenue if we fail to meet stated performance requirements, such as complying with the construction schedule. Contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from the existing performance obligation(s). The effect of a contract modification on the transaction price, and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase or decrease) on a cumulative catchup basis. We have a Company-wide policy requiring periodic review of the Estimate at Completion in which management reviews the progress and execution of our performance obligations and estimated remaining obligations. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenue and costs. The risks and opportunities include management's judgment about the ability and cost to achieve the schedule (e.g., the number and type of milestone events), technical requirements (e.g., a newly developed product versus a mature product) and other contract requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation (e.g., to estimate increases in wages and prices for materials and related support cost allocations), execution by our subcontractors, the availability and timing of funding from our customer, and overhead cost rates, among other variables. Based on this analysis, any adjustments to revenue, cost of services, and the related impact to operating income are recognized as necessary in the quarter when they become known. These adjustments may result from positive program performance if we determine we will be successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations or realizing related opportunities and may result in an increase in operating income during the performance of individual performance obligations. Likewise, if we determine we will not be successful in mitigating these risks or realizing related opportunities, these adjustments may result in a decrease in operating income. Changes in estimates of revenue, cost of services and the related impact to operating income are recognized quarterly on a cumulative catchup basis, meaning we recognize in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation's percentage of completion. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. For projects in which estimates of total costs to be incurred on a performance obligation exceed total estimates of revenue to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined. In the first six months of 2021 and 2020, net revenue recognized from our performance obligations satisfied in previous periods was not material. Disaggregation of Revenue Our consolidated 2021 revenue was derived from contracts to provide service activities in the mechanical and electrical services segments we serve. Refer to Note 11 – Segment Information for additional information on our reportable segments. We disaggregate our revenue from contracts with customers by activity, customer type and service provided, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. See details in the following tables (dollars in thousands): Three Months Ended June 30, Six Months Ended June 30, Revenue by Service Provided 2021 2020 2021 2020 Mechanical Services $ 611,796 85.7 % $ 626,706 84.3 % $ 1,177,416 85.1 % $ 1,197,457 82.9 % Electrical Services 102,099 14.3 % 116,762 15.7 % 206,240 14.9 % 246,142 17.1 % Total $ 713,895 100.0 % $ 743,468 100.0 % $ 1,383,656 100.0 % $ 1,443,599 100.0 % Three Months Ended June 30, Six Months Ended June 30, Revenue by Type of Customer 2021 2020 2021 2020 Industrial $ 311,075 43.6 % $ 300,870 40.5 % $ 580,658 42.0 % $ 576,068 39.9 % Education 92,381 12.9 % 130,004 17.5 % 184,838 13.4 % 239,588 16.6 % Office Buildings 73,014 10.2 % 75,594 10.2 % 152,010 11.0 % 151,166 10.5 % Healthcare 96,004 13.4 % 96,050 12.9 % 191,095 13.8 % 195,309 13.5 % Government 42,506 6.0 % 39,832 5.4 % 85,671 6.2 % 78,813 5.5 % Retail, Restaurants and Entertainment 48,933 6.9 % 64,628 8.7 % 93,509 6.7 % 125,831 8.7 % Multi-Family and Residential 28,341 4.0 % 20,555 2.8 % 53,001 3.8 % 39,286 2.7 % Other 21,641 3.0 % 15,935 2.0 % 42,874 3.1 % 37,538 2.6 % Total $ 713,895 100.0 % $ 743,468 100.0 % $ 1,383,656 100.0 % $ 1,443,599 100.0 % Three Months Ended June 30, Six Months Ended June 30, Revenue by Activity Type 2021 2020 2021 2020 New Construction $ 329,890 46.2 % $ 377,433 50.8 % $ 631,951 45.7 % $ 724,833 50.2 % Existing Building Construction 215,317 30.2 % 225,103 30.3 % 431,918 31.2 % 432,269 29.9 % Service Projects 66,263 9.3 % 58,378 7.8 % 126,323 9.1 % 110,026 7.6 % Service Calls, Maintenance and Monitoring 102,425 14.3 % 82,554 11.1 % 193,464 14.0 % 176,471 12.3 % Total $ 713,895 100.0 % $ 743,468 100.0 % $ 1,383,656 100.0 % $ 1,443,599 100.0 % Contract Assets and Liabilities Project contracts typically provide for a schedule of billings or invoices to the customer based on our job-to-date percentage of completion of specific tasks inherent in the fulfillment of our performance obligation(s). The schedules for such billings usually do not precisely match the schedule on which costs are incurred. Contract assets include unbilled amounts typically resulting from sales under long term contracts when the cost to cost method of revenue recognition is used, revenue recognized exceeds the amount billed to the customer and right to payment is conditional or subject to completing a milestone, such as a phase of the project. Contract assets are generally classified as current. Contract liabilities consist of advance payments and billings in excess of revenue recognized. Our contract assets and liabilities are reported in a net position on a contract by contract basis at the end of each reporting period. We classify advance payments and billings in excess of revenue recognized as current. It is very unusual for us to have advanced payments with a term of greater than one year; therefore, our contract assets and liabilities are usually all current. If we have advanced payments with a term greater than one year, the noncurrent portion of advanced payments would be included in other long-term liabilities in our consolidated Balance Sheets. The following table presents the changes in contract assets and contract liabilities (in thousands): Six Months Ended June 30, Year Ended December 31, 2021 2020 Contract Contract Contract Contract Assets Liabilities Assets Liabilities Balance at beginning of period $ 18,622 $ 226,237 $ 2,736 $ 166,918 Change due to acquisitions / disposals 472 1,610 9,509 39,885 Change related to credit allowance 45 — (79) — Other changes in the period (6,170) 27,510 6,456 19,434 Balance at end of period $ 12,969 $ 255,357 $ 18,622 $ 226,237 In the first six months of 2021 and 2020, we recognized revenue of $195.0 million and $152.4 million related to our contract liabilities at January 1, 2021 and January 1, 2020, respectively. We did not have any impairment losses recognized on our receivables or contract assets in the first six months of 2021 and 2020. Remaining Performance Obligations Remaining construction performance obligations represent the remaining transaction price of firm orders for which work has not been performed and exclude unexercised contract options. As of June 30, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was $1.84 billion. The Company expects to recognize revenue on approximately 80-85% of the remaining performance obligations over the next 12 months , with the remaining recognized thereafter. Our service maintenance agreements are generally one-year renewable agreements. We have adopted the practical expedient that allows us to not include service maintenance contracts with a total term of one year or less ; therefore, we do not report unfulfilled performance obligations for service maintenance agreements. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | 4. Fair Value Measurements Interest Rate Risk Management and Derivative Instruments In April 2020, we entered into interest rate swap agreements to reduce our exposure to variable interest rates on our term loan and revolving credit facility. The notional amount covered by these interest rate swaps was $130.0 million as of June 30, 2021 and decreases to $80.0 million by November 30, 2021 until the termination date of September 30, 2022. We use derivative instruments to manage exposure to market risk, including interest rate risk. Unsettled amounts under our interest rate swaps are recorded on the Balance Sheet at fair value in “Other Receivables” or “Other Current Liabilities.” Gains and losses on our interest rate swaps are recorded on the Income Statement in “Interest Expense.” For the three months ended June 30, 2021 and June 30, 2020, we recognized a net loss of $0.1 million and less than $0.1 million, respectively, related to our interest rate swaps. For the six months ended June 30, 2021 and June 30, 2020, we recognized a net loss of $0.2 million and less than $0.1 million, respectively, related to our interest rate swaps. We currently do not have any derivatives that are accounted for as hedges under ASC 815. Fair Value Measurements We classify and disclose assets and liabilities carried at fair value in one of the following three categories: ● Level 1—quoted prices in active markets for identical assets and liabilities; ● Level 2—observable market-based inputs or unobservable inputs that are corroborated by market data; and ● Level 3—significant unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The following table summarizes the fair values, and levels within the fair value hierarchy in which the fair value measurements fall, for assets and liabilities measured on a recurring basis as of June 30, 2021 and December 31, 2020 (in thousands): Fair Value Measurements at June 30, 2021 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 53,659 $ — $ — $ 53,659 Life insurance—cash surrender value $ — $ 6,510 $ — $ 6,510 Contingent earn-out obligations $ — $ — $ 22,602 $ 22,602 Interest rate swap liability $ — $ 48 $ — $ 48 Fair Value Measurements at December 31, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 54,896 $ — $ — $ 54,896 Life insurance—cash surrender value $ — $ 5,420 $ — $ 5,420 Contingent earn-out obligations $ — $ — $ 25,979 $ 25,979 Interest rate swap liability $ — $ 42 $ — $ 42 Cash and cash equivalents consist primarily of highly rated money market funds at a variety of well-known institutions with original maturities of three months or less. The original cost of these assets approximates fair value due to their short-term maturity. The fair value for our interest rate swaps is based upon inputs corroborated by observable market data with similar tenors, which are considered Level 2 inputs. The Company’s outstanding term loan held by third-party financial institutions is carried at cost, adjusted for debt issuance costs. The Company’s term loan is not publicly traded and the carrying amount approximates fair value as the loan accrues interest at a variable rate. The carrying value of our borrowings associated with the revolving credit facility approximate its fair value due to the variable rate on such debt. We have life insurance policies covering 89 employees with a combined face value of $63.2 million. The policies are invested in several investment vehicles, and the fair value measurement of the cash surrender balance associated with these policies is determined using Level 2 inputs within the fair value hierarchy and will vary with investment performance. The cash surrender value of these policies was $6.5 million as of June 30, 2021 and $5.4 million as of December 31, 2020. These assets are included in “Other Noncurrent Assets” in our consolidated Balance Sheets. We value contingent earn-out obligations using a probability weighted discounted cash flow method. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreements (e.g., minimum and maximum payments, length of earn-out periods, manner of calculating any amounts due, etc.) and utilizes assumptions with regard to future cash flows and operating income, probabilities of achieving such future cash flows and operating income and a weighted average cost of capital. Significant changes in any of these assumptions could result in a significantly higher or lower potential liability. The contingent earn-out obligations are measured at fair value each reporting period, and changes in estimates of fair value are recognized in earnings. As of June 30, 2021, cash flows were discounted using a weighted average cost of capital ranging from 10.5% - 17.5%. The table below presents a reconciliation of the fair value of our contingent earn-out obligations that use significant unobservable inputs (Level 3) (in thousands): Six Months Ended Year Ended June 30, 2021 December 31, 2020 Balance at beginning of period $ 25,979 $ 28,497 Issuances 3,255 16,715 Settlements (865) (10,114) Adjustments to fair value (5,767) (9,119) Balance at end of period $ 22,602 $ 25,979 |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2021 | |
Acquisitions | |
Acquisitions | 5. Acquisitions On April 1, 2020, we consummated a merger through which TAS Energy Inc. (“TAS”) became a wholly owned subsidiary of the Company. The total purchase price was $169.5 million of which $126.2 million was allocated to goodwill and identifiable intangible assets. The total purchase price included $105.9 million in cash, $40.5 million in working capital adjustment, $14.0 million in notes payable to former owners and a $9.1 million contingent earn-out obligation. TAS is headquartered in Houston, Texas and is a leading engineering, design and construction provider of modular construction systems serving the technology, power and industrial sectors, and reports as a separate operating location in our mechanical services segment. We completed the acquisition of an electrical contractor in North Carolina in the first quarter of 2020 with a total purchase price of $41.6 million. This acquisition is reported in our electrical services segment. In the fourth quarter of 2020, we acquired all outstanding equity interest of Tennessee Electric Company, Inc. dba TEC Industrial Maintenance and Construction (“T E C”) for a total preliminary purchase price of $88.9 million which included $73.0 million in cash, $7.0 million in notes payable to former owners, a $7.6 million contingent earn-out obligation and a $1.3 million working capital adjustment. As a result of the acquisition, T E C is a wholly owned subsidiary of the Company reported in our electrical services segment. In the first quarter of 2021, we completed an acquisition of a mechanical contractor in Utah with a total preliminary purchase price of segment. In June 2021, we entered into a definitive agreement to acquire the Amteck, LLC family of companies (“Amteck”) headquartered in Lexington, Kentucky. The transaction is expected to close in the third quarter of 2021, and Amteck will be reported in our electrical services segment. The results of operations of acquisitions are included in our consolidated financial statements from their respective acquisition dates. Our consolidated Balance Sheet includes preliminary allocations of the purchase price to the assets acquired and liabilities assumed for the applicable acquisitions pending the completion of the final valuation of intangible assets and accrued liabilities. The acquisitions completed in the current and prior year were not material, individually or in the aggregate. Additional contingent purchase price (“earn-out”) has been or will be paid if certain acquisitions achieve predetermined profitability targets. Such earn-outs, when they are not subject to the continued employment of the sellers, are estimated as of the purchase date and included as part of the consideration paid for the acquisition. If we have an earn-out under which continued employment is a condition to receipt of payment, then the earn-out is recorded as compensation expense over the period earned. |
Goodwill and Identifiable Intan
Goodwill and Identifiable Intangible Assets, Net | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Identifiable Intangible Assets, Net | |
Goodwill and Identifiable Intangible Assets, Net | 6. Goodwill and Identifiable Intangible Assets, Net Goodwill The changes in the carrying amount of goodwill are as follows (in thousands): Mechanical Services Electrical Services Segment Segment Total Balance at December 31, 2019 $ 234,660 $ 97,787 $ 332,447 Acquisitions and purchase price adjustments (See Note 5) 72,788 59,157 131,945 Balance at December 31, 2020 307,448 156,944 464,392 Acquisitions and purchase price adjustments (See Note 5) 7,725 (71) 7,654 Impact of segment reorganization 1,101 (1,101) — Balance at June 30, 2021 $ 316,274 $ 155,772 $ 472,046 During the fourth quarter of 2020, the Company performed a qualitative assessment for all of our reporting units except one for which we performed a quantitative assessment, which considered various factors, including changes in the carrying value of the reporting unit, forecasted operating results, long-term growth rates and discount rates. Additionally, we considered qualitative key events and circumstances (i.e. macroeconomic environment, industry and market specific conditions, cost factors and events specific to the reporting unit, etc.). Based on this assessment, we concluded that it was more likely than not that the fair value of each of the reporting units was greater than its carrying value. Accordingly, no further testing was required. For our Texas electrical operation, we performed a step 1 quantitative assessment, and the calculated fair value exceeded the carrying value by 24%. As a result of uncertainty caused by COVID-19 and the reporting unit’s smaller excess of fair value percentage, this reporting unit is more susceptible to impairment risk from additional adverse changes in its operating environment, including micro- and macroeconomic environment conditions that could negatively impact them. Such adverse changes could include worsening economic conditions in the locations or markets they primarily serve, whether due to COVID-19 or other events and conditions. As of June 30, 2021, the Texas electrical operation had a goodwill balance of $96.8 million. Identifiable Intangible Assets, Net At June 30, 2021, future amortization expense of identifiable intangible assets is as follows (in thousands): Year ended December 31— 2021 (remainder of the year) $ 16,914 2022 28,400 2023 24,217 2024 22,867 2025 20,680 Thereafter 108,506 Total $ 221,584 |
Debt Obligations
Debt Obligations | 6 Months Ended |
Jun. 30, 2021 | |
Debt Obligations | |
Debt Obligations | 7. Debt Obligations Debt obligations consist of the following (in thousands): June 30, December 31, 2021 2020 Revolving credit facility $ 15,000 $ 70,000 Term loan 120,000 135,000 Notes to former owners 25,735 31,000 Total principal amount 160,735 236,000 Less—unamortized debt issuance costs (228) (267) Total debt, net of unamortized debt issuance costs 160,507 235,733 Less—current portion (4,235) — Total long-term portion of debt, net $ 156,272 $ 235,733 Revolving Credit Facility and Term Loan We have a $600.0 million senior credit facility (the “Facility”) provided by a syndicate of banks. The Facility is composed of a revolving credit line in the amount of $450.0 million and a $150.0 million term loan, and the Facility provides for a $150.0 million accordion or increase option for the revolving portion of the Facility. As of June 30, 2021, the Facility capacity was $570.0 million as the term loan was paid down by $30.0 million since the inception of the Facility. The amended Facility also includes a sublimit of up to $160.0 million issuable in the form of letters of credit. The Facility expires in January 2025 and is secured by a first lien on substantially all of our personal property except for assets related to projects subject to surety bonds and assets held by certain unrestricted subsidiaries and our wholly owned captive insurance company, and a second lien on our assets related to projects subject to surety bonds. As of June 30, 2021, we had $15.0 million of outstanding borrowings on the revolving credit facility, $49.5 million in letters of credit outstanding and $385.5 million of credit available. There are two interest rate options for borrowings under the Facility, the Base Rate Loan Option and the Eurodollar Rate Loan Option. These rates are floating rates determined by the broad financial markets, meaning they can and do move up and down from time to time. Additional margins are then added to these two rates. The following is a summary of the additional margins: Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA Less than 1.00 1.00 to 1.75 1.75 to 2.50 2.50 or greater Additional Per Annum Interest Margin Added Under: Base Rate Loan Option 0.25 % 0.50 % 0.75 % 1.00 % Eurodollar Rate Loan Option 1.25 % 1.50 % 1.75 % 2.00 % The weighted average interest rate applicable to the borrowings under the revolving credit facility was approximately 1.4% as of June 30, 2021. The weighted average interest rate applicable to the term loan was approximately 1.4% as of June 30, 2021. Certain of our vendors require letters of credit to ensure reimbursement for amounts they are disbursing on our behalf, such as to beneficiaries under our self-funded insurance programs. We have also occasionally used letters of credit to guarantee performance under our contracts and to ensure payment to our subcontractors and vendors under those contracts. Our lenders issue such letters of credit through the Facility. We have never had a claim made against a letter of credit that resulted in payments by a lender or by us and believe such a claim is unlikely in the foreseeable future. The letter of credit fees range from 1.25% to 2.00% per annum, based on the ratio of Consolidated Total Indebtedness to “Credit Facility Adjusted EBITDA,” which shall mean Consolidated EBITDA as such term is defined in the credit agreement. Commitment fees are payable on the portion of the revolving loan capacity not in use for borrowings or letters of credit at any given time. These fees range from 0.20% to 0.35% per annum, based on the ratio of Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA. The Facility contains financial covenants defining various financial measures and the levels of these measures with which we must comply. Covenant compliance is assessed as of each quarter end. We were in compliance with all of our financial covenants as of June 30, 2021. Notes to Former Owners As part of the consideration used to acquire five companies, we have outstanding notes to the former owners. Together, these notes had an outstanding balance of $25.7 million as of June 30, 2021. In conjunction with the acquisition of the Utah mechanical contractor in the first quarter of 2021, we issued a promissory note to former owners with an outstanding balance of $3.5 million as of June 30, 2021 that bears interest, payable quarterly, at a stated interest rate of 2.5%. The principal is due in April 2023. In conjunction with the acquisition of T E C in the fourth quarter of 2020, we issued a promissory note to former owners with an outstanding balance of $7.0 million as of June 30, 2021 that bears interest, payable quarterly, at a stated interest rate of 2.5 %. The principal is due in December 2023. In conjunction with the acquisition of TAS in the second quarter of 2020, we issued a promissory note to former owners with an outstanding balance of $4.2 million as of June 30, 2021 that bears interest, payable quarterly, at a stated interest rate of 3.5 %. The principal is due in April 2022. In conjunction with the acquisition of the electrical contractor in North Carolina in the first quarter of 2020, we issued a promissory note to former owners with an outstanding balance of $5.0 million as of June 30, 2021 that bears interest, payable quarterly, at a stated interest rate of 3.0%. The principal is due in installments in February 2023 and February 2024. In conjunction with the acquisition of a Texas electrical contractor in the second quarter of 2019, we issued a promissory note to former owners with an outstanding balance of $6.0 million as of June 30, 2021 that bears interest, payable quarterly, at a stated interest rate of 4.0 %. The remaining principal is due in April 2023. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
Leases | |
Leases | 8. Leases We lease certain facilities, vehicles and equipment under noncancelable operating leases. The most significant portion of these noncancelable operating leases are for the facilities occupied by our corporate office and our operating locations. Leases with an initial term of 12 months or less are not recorded in the Balance Sheet. We do not separate lease components from their associated non-lease components under the lease accounting guidance. We have certain leases with variable payments based on an index as well as some short-term leases on equipment and facilities. Variable lease expense and short-term lease expense were not material to our financial statements and aggregated to $3.6 million and $3.4 million in the first six months of 2021 and 2020, respectively. Lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The weighted average discount rate as of June 30, 2021 and December 31, 2020 was 4.1% and 4.2%, respectively. We recognize lease expense, including escalating lease payments and lease incentives, on a straight-line basis over the lease term. Lease expense for the three months ended June 30, 2021 and 2020 was $7.1 million and $6.9 million, respectively. Lease expense for the six months ended June 30, 2021 and 2020 was $14.4 million and $13.4 million, respectively. The lease terms generally range from three A majority of the Company’s real property leases are with individuals or entities with whom we have no other business relationship. However, in certain instances the Company enters into real property leases with current or former employees. Rent paid to related parties for the three months ended June 30, 2021 and 2020 was approximately $1.3 million and $1.6 million, respectively. Rent paid to related parties for both the six months ended June 30, 2021 and 2020 was approximately $2.5 million. If we decide to cancel or terminate a lease before the end of its term, we would typically owe the lessor the remaining lease payments under the term of the lease. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. On rare occasions, we rent or sublease certain real estate assets that we no longer use to third parties. The following table summarizes the lease assets and liabilities included in the consolidated Balance Sheet as follows (in thousands): June 30, 2021 December 31, 2020 Lease right-of-use assets $ 95,532 $ 94,727 Lease liabilities: Other current liabilities $ 16,769 $ 16,586 Long-term lease liabilities 81,060 80,576 Total lease liabilities $ 97,829 $ 97,162 The maturities of lease liabilities are as follows (in thousands): Year ending December 31— 2021 (excluding the six months ended June 30, 2021) $ 10,625 2022 18,930 2023 16,355 2024 14,413 2025 13,521 Thereafter 40,038 Total Lease Payments 113,882 Less—Present Value Discount (16,053) Present Value of Lease Liabilities $ 97,829 Supplemental information related to leases was as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Cash paid for amounts included in the measurement of lease liabilities $ 5,347 $ 5,305 $ 10,700 $ 9,778 Lease right-of-use assets obtained in exchange for lease liabilities $ 2,927 $ 19,922 $ 9,359 $ 22,200 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 9. Commitments and Contingencies Claims and Lawsuits We are subject to certain legal and regulatory claims, including lawsuits arising in the normal course of business. We maintain various insurance coverages to minimize financial risk associated with these claims. We have estimated and provided accruals for probable losses and related legal fees associated with certain litigation in the accompanying consolidated financial statements. While we cannot predict the outcome of these proceedings, in management’s opinion and based on reports of counsel, any liability arising from these matters individually and in the aggregate will not have a material effect on our operating results, cash flows or financial condition, after giving effect to provisions already recorded. We are in a dispute with a customer regarding the outcome of a completed project and also regarding the obligation to perform subcontract work under two executed letters of intent for subsequent projects that we believe are not enforceable. The customer is claiming approximately $15 million in damages related to performance of the original project as well as excess costs to perform the work that was subject to the letters of intent. We are claiming approximately $9 million composed of unpaid amounts under the completed contract as well as costs and inefficiencies that we suffered. We have a lien on the project, and this matter is currently scheduled for arbitration in the second quarter of 2022 with a likely decision in the following months. As of June 30, 2021, we recorded an accrual for this matter based on our analysis of likely outcomes related to this dispute; however, it is possible that the ultimate outcome and associated costs will deviate from our estimates and that, in the event of an unexpectedly adverse outcome, we may experience additional costs and expenses in future periods. Surety Many customers, particularly in connection with new construction, require us to post performance and payment bonds issued by a financial institution known as a surety. If we fail to perform under the terms of a contract or to pay subcontractors and vendors who provided goods or services under a contract, the customer may demand that the surety make payments or provide services under the bond. We must reimburse the surety for any expenses or outlays it incurs. To date, we are not aware of any losses to our sureties in connection with bonds the sureties have posted on our behalf and do not expect such losses to be incurred in the foreseeable future. Current market conditions for surety markets and bonding capacity are adequate, with acceptable terms and conditions. Historically, approximately 15% to 25% of our business has required bonds. While we currently have strong surety relationships to support our bonding needs, future market conditions or changes in the sureties’ assessment of our operating and financial risk could cause the sureties to decline to issue bonds for our work. If that were to occur, the alternatives include doing more business that does not require bonds, posting other forms of collateral for project performance, such as letters of credit or cash, and seeking bonding capacity from other sureties. We would likely also encounter concerns from customers, suppliers and other market participants as to our creditworthiness. While we believe our general operating and financial characteristics would enable us to ultimately respond effectively to an interruption in the availability of bonding capacity, such an interruption would likely cause our revenue and profits to decline in the near term. Self-Insurance We are substantially self-insured for workers’ compensation, employer’s liability, auto liability, general liability and employee group health claims, in view of the relatively high per-incident deductibles we absorb under our insurance arrangements for these risks. Losses are estimated and accrued based upon known facts, historical trends and industry averages. Estimated losses in excess of our deductible, which have not already been paid, are included in our accrual with a corresponding receivable from our insurance carrier. Loss estimates associated with the larger and longer-developing risks, such as workers’ compensation, auto liability and general liability, are reviewed by a third-party actuary quarterly. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2021 | |
Stockholders' Equity | |
Stockholders' Equity. | 10. Stockholders’ Equity Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted EPS is computed considering the dilutive effect of stock options, restricted stock, restricted stock units and performance stock units. The vesting of unvested, contingently issuable performance stock units is based on the achievement of certain earnings per share targets and total shareholder return. These shares are considered contingently issuable shares for purposes of calculating diluted earnings per share. These shares are not included in the diluted earnings per share denominator until the performance criteria are met, if it is assumed that the end of the reporting period was the end of the contingency period. Unvested restricted stock, restricted stock units and performance stock units are included in diluted earnings per share, weighted outstanding until the shares and units vest. Upon vesting, the vested restricted stock, restricted stock units and performance stock units are included in basic earnings per share weighted outstanding from the vesting date. There were less than 0.1 million anti-dilutive stock options excluded from the calculation of diluted EPS for the three and six months ended June 30, 2021 and 2020, respectively. The following table reconciles the number of shares outstanding with the number of shares used in computing basic and diluted earnings per share for each of the periods presented (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Common shares outstanding, end of period 36,349 36,503 36,349 36,503 Effect of using weighted average common shares outstanding 54 78 (4) 125 Shares used in computing earnings per share—basic 36,403 36,581 36,345 36,628 Effect of shares issuable under stock option plans based on the treasury stock method 97 99 114 124 Effect of restricted and contingently issuable shares 66 57 74 69 Shares used in computing earnings per share—diluted 36,566 36,737 36,533 36,821 Share Repurchase Program On March 29, 2007, our Board of Directors (the “Board”) approved a stock repurchase program to acquire up to 1.0 million shares of our outstanding common stock. Subsequently, the Board has from time to time increased the number of shares that may be acquired under the program and approved extensions of the program. On December 8, 2020, the Board approved an extension to the program by increasing the shares authorized for repurchase by 0.7 million shares. Since the inception of the repurchase program, the Board has approved 10.3 million shares to be repurchased. As of June 30, 2021, we have repurchased a cumulative total of 9.4 million shares at an average price of $19.87 per share under the repurchase program. The share repurchases will be made from time to time at our discretion in the open market or privately negotiated transactions as permitted by securities laws and other legal requirements, and subject to market conditions and other factors. The Board may modify, suspend, extend or terminate the program at any time. During the six months ended June 30, 2021, we repurchased less than 0.1 million shares for approximately $3.0 million at an average price of $75.54 per share. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2021 | |
Segment Information | |
Segment Information | 11. Segment Information Our activities are within the mechanical services industry and the electrical services industry, which represent our two reportable segments. We aggregate our operating segments into two reportable segments, as the operating segments meet all of the aggregation criteria. On January 1, 2021, we completed a change in the structure of our internal organization that resulted in a portion of our electrical segment’s business being moved to the mechanical segment. We reallocated goodwill between our reorganized reporting units and have restated comparative prior period information for the reorganized reportable segments in accordance with the guidance on segment reporting. Accordingly, we have restated comparative prior period information for the reorganized reportable segments in the tables below. The following table presents information about our reportable segments (in thousands): Three Months Ended June 30, 2021 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 611,796 $ 102,099 $ — $ 713,895 Gross Profit $ 112,405 $ 14,050 $ — $ 126,455 Three Months Ended June 30, 2020 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 626,706 $ 116,762 $ — $ 743,468 Gross Profit $ 136,708 $ 8,987 $ — $ 145,695 Six Months Ended June 30, 2021 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 1,177,416 $ 206,240 $ — $ 1,383,656 Gross Profit $ 220,533 $ 29,391 $ — $ 249,924 Six Months Ended June 30, 2020 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 1,197,457 $ 246,142 $ — $ 1,443,599 Gross Profit $ 246,692 $ 16,096 $ — $ 262,788 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation These interim statements should be read in conjunction with the historical Consolidated Financial Statements and related notes of Comfort Systems included in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) for the year ended December 31, 2020 (the “Form 10-K”). The accompanying unaudited consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X of the SEC. Accordingly, these financial statements do not include all the footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the Form 10-K. We believe all adjustments necessary for a fair presentation of these interim statements have been included and are of a normal and recurring nature. The results of operations for interim periods are not necessarily indicative of the results for the full fiscal year. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities, revenue and expenses and disclosures regarding contingent assets and liabilities. Actual results could differ from those estimates. The most significant estimates used in our financial statements affect revenue and cost recognition for construction contracts, self-insurance accruals, deferred tax assets, fair value accounting for acquisitions and the quantification of fair value for reporting units in connection with our goodwill impairment testing. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU No. 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within that year. We adopted ASU No. 2019-12 on January 1, 2021, and the impact was not material to our overall financial statements. |
Revenue Recognition | Revenue Recognition We recognize revenue over time for all of our services as we perform them because (i) control continuously transfers to that customer as work progresses, and (ii) we have the right to bill the customer as costs are incurred. The customer typically controls the work in process, as evidenced either by contractual termination clauses or by our rights to payment for work performed to date, plus a reasonable profit, for delivery of products or services that do not have an alternative use to the Company. For the reasons listed above, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We generally use the cost to cost measure of progress for our contracts, as it best depicts the transfer of assets to the customer that occurs as we incur costs on our contracts. Under the cost to cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue, including estimated fees or profits, is recorded proportionally as costs are incurred. Costs to fulfill include labor, materials, subcontractors’ costs, other direct costs and an allocation of indirect costs. For a small portion of our business in which our services are delivered in the form of service maintenance agreements for existing systems to be repaired and maintained, as opposed to constructed, our performance obligation is to maintain the customer’s mechanical system for a specific period of time. Similar to construction jobs, we recognize revenue over time; however, for service maintenance agreements in which the full cost to provide services may not be known, we generally use an input method to recognize revenue, which is based on the amount of time we have provided our services out of the total time we have been contracted to perform those services. Our revenue recognition policy is further discussed in Note 3 “Revenue from Contracts with Customers.” |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses We are required to estimate and record the expected credit losses over the contractual life of our financial assets measured at amortized cost, including billed and unbilled accounts receivable, other receivables and costs and estimated earnings in excess of billings. Accounts receivable include amounts from work completed in which we have billed or have an unconditional right to bill our customers. Our trade receivables are contractually due in less than a year. We estimate our credit losses using a loss-rate method for each of our identified portfolio segments. Our portfolio segments are construction, service and other. While our construction and service financial assets are often with the same subset of customers and industries, our construction financial assets will generally have a lower loss-rate than service financial assets due to lien rights, which we are more likely to have on construction jobs. These lien rights result in lower credit loss expenses on average compared to receivables that do not have lien rights. Financial assets classified as Other include receivables that are not related to our core revenue producing activities, such as receivables related to our acquisition activity from former owners, our vendor rebate program or receivables for estimated losses in excess of our insurance deductible, which are accrued with a corresponding accrued insurance liability. Loss rates for our portfolios are based on numerous factors, including our history of credit loss expense by portfolio, the financial strength of our customers and counterparties in each portfolio, the aging of our receivables, our expectation of likelihood of payment, macroeconomic trends in the U.S. and the current and forecasted non-residential construction market trends in the U.S. In addition to the loss-rate calculations discussed above, we also record allowance for credit losses for specific receivables that are deemed to have a higher risk profile than the rest of the respective pool of receivables (e.g., when we hold concerns about a specific customer going bankrupt and no longer being able to pay the receivables due to us). |
Income Taxes | Income Taxes We conduct business throughout the United States in virtually all fifty states. Our effective tax rate changes based upon our relative profitability, or lack thereof, in states with varying tax rates and rules. In addition, discrete items, such as tax law changes, judgments and legal structures, can impact our effective tax rate. These items can also include the tax treatment for impairment of goodwill and other intangible assets, changes in fair value of acquisition-related assets and liabilities, tax reserves for uncertain tax positions and accounting for losses associated with underperforming operations. In early October 2020, we filed amended federal returns for 2016, 2017 and 2018 to claim the credit for increasing research activities (the “R&D tax credit”) and energy efficient commercial buildings deduction (the “179D deduction”) and recorded tax benefits of $6.1 million, $8.5 million and $11.9 million, respectively. The $26.5 million of tax benefits have been offset by additions to unrecognized tax benefits of $26.4 million due to the uncertainty of the outcome of our current Internal Revenue Service examination. The R&D tax credit and 179D deduction for 2016, 2017 and 2018, therefore, had no material impact on our effective tax rates. At this time, we cannot reasonably estimate the R&D tax credit for years after 2018 or 179D deduction for years after 2017. |
Financial Instruments | Financial Instruments Our financial instruments consist of cash and cash equivalents, accounts receivable, other receivables, accounts payable, interest rate swaps, life insurance policies, notes to former owners, a revolving credit facility and a term loan. We believe that the carrying values of these instruments in the accompanying Balance Sheets approximate their fair values. |
Leases | We lease certain facilities, vehicles and equipment under noncancelable operating leases. The most significant portion of these noncancelable operating leases are for the facilities occupied by our corporate office and our operating locations. Leases with an initial term of 12 months or less are not recorded in the Balance Sheet. We do not separate lease components from their associated non-lease components under the lease accounting guidance. We have certain leases with variable payments based on an index as well as some short-term leases on equipment and facilities. Variable lease expense and short-term lease expense were not material to our financial statements and aggregated to $3.6 million and $3.4 million in the first six months of 2021 and 2020, respectively. Lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The weighted average discount rate as of June 30, 2021 and December 31, 2020 was 4.1% and 4.2%, respectively. We recognize lease expense, including escalating lease payments and lease incentives, on a straight-line basis over the lease term. Lease expense for the three months ended June 30, 2021 and 2020 was $7.1 million and $6.9 million, respectively. Lease expense for the six months ended June 30, 2021 and 2020 was $14.4 million and $13.4 million, respectively. The lease terms generally range from three A majority of the Company’s real property leases are with individuals or entities with whom we have no other business relationship. However, in certain instances the Company enters into real property leases with current or former employees. Rent paid to related parties for the three months ended June 30, 2021 and 2020 was approximately $1.3 million and $1.6 million, respectively. Rent paid to related parties for both the six months ended June 30, 2021 and 2020 was approximately $2.5 million. If we decide to cancel or terminate a lease before the end of its term, we would typically owe the lessor the remaining lease payments under the term of the lease. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. On rare occasions, we rent or sublease certain real estate assets that we no longer use to third parties. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customers | |
Schedule of disaggregation of revenue | See details in the following tables (dollars in thousands): Three Months Ended June 30, Six Months Ended June 30, Revenue by Service Provided 2021 2020 2021 2020 Mechanical Services $ 611,796 85.7 % $ 626,706 84.3 % $ 1,177,416 85.1 % $ 1,197,457 82.9 % Electrical Services 102,099 14.3 % 116,762 15.7 % 206,240 14.9 % 246,142 17.1 % Total $ 713,895 100.0 % $ 743,468 100.0 % $ 1,383,656 100.0 % $ 1,443,599 100.0 % Three Months Ended June 30, Six Months Ended June 30, Revenue by Type of Customer 2021 2020 2021 2020 Industrial $ 311,075 43.6 % $ 300,870 40.5 % $ 580,658 42.0 % $ 576,068 39.9 % Education 92,381 12.9 % 130,004 17.5 % 184,838 13.4 % 239,588 16.6 % Office Buildings 73,014 10.2 % 75,594 10.2 % 152,010 11.0 % 151,166 10.5 % Healthcare 96,004 13.4 % 96,050 12.9 % 191,095 13.8 % 195,309 13.5 % Government 42,506 6.0 % 39,832 5.4 % 85,671 6.2 % 78,813 5.5 % Retail, Restaurants and Entertainment 48,933 6.9 % 64,628 8.7 % 93,509 6.7 % 125,831 8.7 % Multi-Family and Residential 28,341 4.0 % 20,555 2.8 % 53,001 3.8 % 39,286 2.7 % Other 21,641 3.0 % 15,935 2.0 % 42,874 3.1 % 37,538 2.6 % Total $ 713,895 100.0 % $ 743,468 100.0 % $ 1,383,656 100.0 % $ 1,443,599 100.0 % Three Months Ended June 30, Six Months Ended June 30, Revenue by Activity Type 2021 2020 2021 2020 New Construction $ 329,890 46.2 % $ 377,433 50.8 % $ 631,951 45.7 % $ 724,833 50.2 % Existing Building Construction 215,317 30.2 % 225,103 30.3 % 431,918 31.2 % 432,269 29.9 % Service Projects 66,263 9.3 % 58,378 7.8 % 126,323 9.1 % 110,026 7.6 % Service Calls, Maintenance and Monitoring 102,425 14.3 % 82,554 11.1 % 193,464 14.0 % 176,471 12.3 % Total $ 713,895 100.0 % $ 743,468 100.0 % $ 1,383,656 100.0 % $ 1,443,599 100.0 % |
Schedule of contract assets and liabilities | The following table presents the changes in contract assets and contract liabilities (in thousands): Six Months Ended June 30, Year Ended December 31, 2021 2020 Contract Contract Contract Contract Assets Liabilities Assets Liabilities Balance at beginning of period $ 18,622 $ 226,237 $ 2,736 $ 166,918 Change due to acquisitions / disposals 472 1,610 9,509 39,885 Change related to credit allowance 45 — (79) — Other changes in the period (6,170) 27,510 6,456 19,434 Balance at end of period $ 12,969 $ 255,357 $ 18,622 $ 226,237 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Measurements | |
Summary of fair values and levels within the fair value hierarchy in which the fair value measurements fall for assets and liabilities measured on a recurring basis | The following table summarizes the fair values, and levels within the fair value hierarchy in which the fair value measurements fall, for assets and liabilities measured on a recurring basis as of June 30, 2021 and December 31, 2020 (in thousands): Fair Value Measurements at June 30, 2021 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 53,659 $ — $ — $ 53,659 Life insurance—cash surrender value $ — $ 6,510 $ — $ 6,510 Contingent earn-out obligations $ — $ — $ 22,602 $ 22,602 Interest rate swap liability $ — $ 48 $ — $ 48 Fair Value Measurements at December 31, 2020 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 54,896 $ — $ — $ 54,896 Life insurance—cash surrender value $ — $ 5,420 $ — $ 5,420 Contingent earn-out obligations $ — $ — $ 25,979 $ 25,979 Interest rate swap liability $ — $ 42 $ — $ 42 |
Schedule of reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3) | The table below presents a reconciliation of the fair value of our contingent earn-out obligations that use significant unobservable inputs (Level 3) (in thousands): Six Months Ended Year Ended June 30, 2021 December 31, 2020 Balance at beginning of period $ 25,979 $ 28,497 Issuances 3,255 16,715 Settlements (865) (10,114) Adjustments to fair value (5,767) (9,119) Balance at end of period $ 22,602 $ 25,979 |
Goodwill and Identifiable Int_2
Goodwill and Identifiable Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Identifiable Intangible Assets, Net | |
Schedule of changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill are as follows (in thousands): Mechanical Services Electrical Services Segment Segment Total Balance at December 31, 2019 $ 234,660 $ 97,787 $ 332,447 Acquisitions and purchase price adjustments (See Note 5) 72,788 59,157 131,945 Balance at December 31, 2020 307,448 156,944 464,392 Acquisitions and purchase price adjustments (See Note 5) 7,725 (71) 7,654 Impact of segment reorganization 1,101 (1,101) — Balance at June 30, 2021 $ 316,274 $ 155,772 $ 472,046 |
Schedule of future amortization expense of identifiable intangible assets | At June 30, 2021, future amortization expense of identifiable intangible assets is as follows (in thousands): Year ended December 31— 2021 (remainder of the year) $ 16,914 2022 28,400 2023 24,217 2024 22,867 2025 20,680 Thereafter 108,506 Total $ 221,584 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt Obligations | |
Schedule of components of debt obligations | Debt obligations consist of the following (in thousands): June 30, December 31, 2021 2020 Revolving credit facility $ 15,000 $ 70,000 Term loan 120,000 135,000 Notes to former owners 25,735 31,000 Total principal amount 160,735 236,000 Less—unamortized debt issuance costs (228) (267) Total debt, net of unamortized debt issuance costs 160,507 235,733 Less—current portion (4,235) — Total long-term portion of debt, net $ 156,272 $ 235,733 |
Summary of additional margins | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA Less than 1.00 1.00 to 1.75 1.75 to 2.50 2.50 or greater Additional Per Annum Interest Margin Added Under: Base Rate Loan Option 0.25 % 0.50 % 0.75 % 1.00 % Eurodollar Rate Loan Option 1.25 % 1.50 % 1.75 % 2.00 % |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases | |
Schedule of lease assets and liabilities | The following table summarizes the lease assets and liabilities included in the consolidated Balance Sheet as follows (in thousands): June 30, 2021 December 31, 2020 Lease right-of-use assets $ 95,532 $ 94,727 Lease liabilities: Other current liabilities $ 16,769 $ 16,586 Long-term lease liabilities 81,060 80,576 Total lease liabilities $ 97,829 $ 97,162 |
Schedule of maturities of lease liabilities | The maturities of lease liabilities are as follows (in thousands): Year ending December 31— 2021 (excluding the six months ended June 30, 2021) $ 10,625 2022 18,930 2023 16,355 2024 14,413 2025 13,521 Thereafter 40,038 Total Lease Payments 113,882 Less—Present Value Discount (16,053) Present Value of Lease Liabilities $ 97,829 |
Schedule of supplemental information related to leases | Supplemental information related to leases was as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Cash paid for amounts included in the measurement of lease liabilities $ 5,347 $ 5,305 $ 10,700 $ 9,778 Lease right-of-use assets obtained in exchange for lease liabilities $ 2,927 $ 19,922 $ 9,359 $ 22,200 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Stockholders' Equity | |
Reconciliation of number of shares outstanding with the number of shares used in computing basic and diluted earnings per share | The following table reconciles the number of shares outstanding with the number of shares used in computing basic and diluted earnings per share for each of the periods presented (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Common shares outstanding, end of period 36,349 36,503 36,349 36,503 Effect of using weighted average common shares outstanding 54 78 (4) 125 Shares used in computing earnings per share—basic 36,403 36,581 36,345 36,628 Effect of shares issuable under stock option plans based on the treasury stock method 97 99 114 124 Effect of restricted and contingently issuable shares 66 57 74 69 Shares used in computing earnings per share—diluted 36,566 36,737 36,533 36,821 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Segment Information | |
Summary of information about reportable segments | The following table presents information about our reportable segments (in thousands): Three Months Ended June 30, 2021 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 611,796 $ 102,099 $ — $ 713,895 Gross Profit $ 112,405 $ 14,050 $ — $ 126,455 Three Months Ended June 30, 2020 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 626,706 $ 116,762 $ — $ 743,468 Gross Profit $ 136,708 $ 8,987 $ — $ 145,695 Six Months Ended June 30, 2021 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 1,177,416 $ 206,240 $ — $ 1,383,656 Gross Profit $ 220,533 $ 29,391 $ — $ 249,924 Six Months Ended June 30, 2020 Mechanical Services Electrical Services Corporate Consolidated Revenue $ 1,197,457 $ 246,142 $ — $ 1,443,599 Gross Profit $ 246,692 $ 16,096 $ — $ 262,788 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Oct. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Tax Examination [Line Items] | |||||
Provision for income taxes | $ 9,817 | $ 15,070 | $ 18,554 | $ 21,821 | |
Additions based on tax positions related to prior years | $ 26,400 | ||||
Tax Year 2016 | |||||
Income Tax Examination [Line Items] | |||||
Provision for income taxes | 6,100 | ||||
Tax Year 2017 | |||||
Income Tax Examination [Line Items] | |||||
Provision for income taxes | 8,500 | ||||
Tax Year 2018 | |||||
Income Tax Examination [Line Items] | |||||
Provision for income taxes | 11,900 | ||||
Total Tax Years 2016-2018 | |||||
Income Tax Examination [Line Items] | |||||
Provision for income taxes | $ 26,500 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Disaggregation of Revenue | ||||
Revenue | $ 713,895 | $ 743,468 | $ 1,383,656 | $ 1,443,599 |
Percentage of revenue from contract with customer (as a percent) | 100.00% | 100.00% | 100.00% | 100.00% |
Industrial | ||||
Disaggregation of Revenue | ||||
Revenue | $ 311,075 | $ 300,870 | $ 580,658 | $ 576,068 |
Percentage of revenue from contract with customer (as a percent) | 43.60% | 40.50% | 42.00% | 39.90% |
Education | ||||
Disaggregation of Revenue | ||||
Revenue | $ 92,381 | $ 130,004 | $ 184,838 | $ 239,588 |
Percentage of revenue from contract with customer (as a percent) | 12.90% | 17.50% | 13.40% | 16.60% |
Office Buildings | ||||
Disaggregation of Revenue | ||||
Revenue | $ 73,014 | $ 75,594 | $ 152,010 | $ 151,166 |
Percentage of revenue from contract with customer (as a percent) | 10.20% | 10.20% | 11.00% | 10.50% |
Healthcare | ||||
Disaggregation of Revenue | ||||
Revenue | $ 96,004 | $ 96,050 | $ 191,095 | $ 195,309 |
Percentage of revenue from contract with customer (as a percent) | 13.40% | 12.90% | 13.80% | 13.50% |
Government | ||||
Disaggregation of Revenue | ||||
Revenue | $ 42,506 | $ 39,832 | $ 85,671 | $ 78,813 |
Percentage of revenue from contract with customer (as a percent) | 6.00% | 5.40% | 6.20% | 5.50% |
Retail, Restaurants and Entertainment | ||||
Disaggregation of Revenue | ||||
Revenue | $ 48,933 | $ 64,628 | $ 93,509 | $ 125,831 |
Percentage of revenue from contract with customer (as a percent) | 6.90% | 8.70% | 6.70% | 8.70% |
Multi-Family and Residential | ||||
Disaggregation of Revenue | ||||
Revenue | $ 28,341 | $ 20,555 | $ 53,001 | $ 39,286 |
Percentage of revenue from contract with customer (as a percent) | 4.00% | 2.80% | 3.80% | 2.70% |
Other | ||||
Disaggregation of Revenue | ||||
Revenue | $ 21,641 | $ 15,935 | $ 42,874 | $ 37,538 |
Percentage of revenue from contract with customer (as a percent) | 3.00% | 2.00% | 3.10% | 2.60% |
New Construction | ||||
Disaggregation of Revenue | ||||
Revenue | $ 329,890 | $ 377,433 | $ 631,951 | $ 724,833 |
Percentage of revenue from contract with customer (as a percent) | 46.20% | 50.80% | 45.70% | 50.20% |
Existing Building Construction | ||||
Disaggregation of Revenue | ||||
Revenue | $ 215,317 | $ 225,103 | $ 431,918 | $ 432,269 |
Percentage of revenue from contract with customer (as a percent) | 30.20% | 30.30% | 31.20% | 29.90% |
Service Projects | ||||
Disaggregation of Revenue | ||||
Revenue | $ 66,263 | $ 58,378 | $ 126,323 | $ 110,026 |
Percentage of revenue from contract with customer (as a percent) | 9.30% | 7.80% | 9.10% | 7.60% |
Service Calls, Maintenance and Monitoring | ||||
Disaggregation of Revenue | ||||
Revenue | $ 102,425 | $ 82,554 | $ 193,464 | $ 176,471 |
Percentage of revenue from contract with customer (as a percent) | 14.30% | 11.10% | 14.00% | 12.30% |
Mechanical Services | ||||
Disaggregation of Revenue | ||||
Revenue | $ 611,796 | $ 626,706 | $ 1,177,416 | $ 1,197,457 |
Percentage of revenue from contract with customer (as a percent) | 85.70% | 84.30% | 85.10% | 82.90% |
Electrical Services | ||||
Disaggregation of Revenue | ||||
Revenue | $ 102,099 | $ 116,762 | $ 206,240 | $ 246,142 |
Percentage of revenue from contract with customer (as a percent) | 14.30% | 15.70% | 14.90% | 17.10% |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Contract Assets | |||
Balance at beginning of period | $ 18,622 | $ 2,736 | $ 2,736 |
Change due to acquisitions / disposals | 472 | 9,509 | |
Change related to credit allowance | 45 | (79) | |
Other changes in the period | (6,170) | 6,456 | |
Balance at end of period | 12,969 | 18,622 | |
Contract Liabilities | |||
Balance at beginning of period | 226,237 | 166,918 | 166,918 |
Change due to acquisitions / disposals | 1,610 | 39,885 | |
Other changes in the period | 27,510 | 19,434 | |
Balance at end of period | 255,357 | $ 226,237 | |
Revenue related to our contract liabilities | $ 195,000 | ||
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | |||
Contract Liabilities | |||
Revenue related to our contract liabilities | $ 152,400 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Remaining Performance Obligations (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Remaining Performance Obligations | |
The term of the renewable service maintenance agreements (in years) | 1 year |
Practical Expedient | true |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | |
Remaining Performance Obligations | |
Remaining performance obligations | $ 1,840 |
Expected timing of performance obligations | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | Minimum | |
Remaining Performance Obligations | |
Expected percentage of remaining performance obligations | 80.00% |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-04-01 | Maximum | |
Remaining Performance Obligations | |
Expected percentage of remaining performance obligations | 85.00% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2021USD ($)employee | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)employee | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Nov. 30, 2021USD ($) | |
Fair Value Measurements | ||||||
Number of employees covered under life insurance policies | employee | 89 | 89 | ||||
Combined face value of life insurance policies | $ 63,200 | $ 63,200 | ||||
Cash surrender value | 6,500 | $ 6,500 | $ 5,400 | |||
Minimum | ||||||
Fair Value Measurements | ||||||
Weighted average cost of capital | 10.50% | |||||
Maximum | ||||||
Fair Value Measurements | ||||||
Weighted average cost of capital | 17.50% | |||||
Contingent earn-out obligations | ||||||
Reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3) | ||||||
Balance at beginning of year | $ 25,979 | $ 28,497 | 28,497 | |||
Issuances | 3,255 | 16,715 | ||||
Settlements | (865) | (10,114) | ||||
Adjustments to fair value | (5,767) | (9,119) | ||||
Balance at end of period | 22,602 | 22,602 | 25,979 | |||
Recurring basis | Total | ||||||
Fair Value Measurements | ||||||
Cash and cash equivalents | 53,659 | 53,659 | 54,896 | |||
Life insurance-cash surrender value | 6,510 | 6,510 | 5,420 | |||
Contingent earn-out obligations | 22,602 | 22,602 | 25,979 | |||
Recurring basis | Quoted Market Prices In Active Markets for Identical Assets (Level 1) | ||||||
Fair Value Measurements | ||||||
Cash and cash equivalents | 53,659 | 53,659 | 54,896 | |||
Recurring basis | Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2) | ||||||
Fair Value Measurements | ||||||
Life insurance-cash surrender value | 6,510 | 6,510 | 5,420 | |||
Recurring basis | Significant Unobservable Inputs (Level 3) | ||||||
Fair Value Measurements | ||||||
Contingent earn-out obligations | 22,602 | 22,602 | 25,979 | |||
Interest Rate Swap | ||||||
Fair Value Measurements | ||||||
Net loss on derivative | 100 | 200 | ||||
Interest Rate Swap | Minimum | ||||||
Fair Value Measurements | ||||||
Net loss on derivative | $ 100 | $ 100 | ||||
Interest Rate Swap | Not Designated as Hedging Instrument, Economic Hedge [Member] | ||||||
Fair Value Measurements | ||||||
Notional amount | 130,000 | 130,000 | $ 80,000 | |||
Interest Rate Swap | Recurring basis | Total | Not Designated as Hedging Instrument, Economic Hedge [Member] | ||||||
Fair Value Measurements | ||||||
Interest rate swap liability | 48 | 48 | 42 | |||
Interest Rate Swap | Recurring basis | Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2) | Not Designated as Hedging Instrument, Economic Hedge [Member] | ||||||
Fair Value Measurements | ||||||
Interest rate swap liability | $ 48 | $ 48 | $ 42 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Millions | Apr. 01, 2020 | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
TAS Energy | ||||
Acquisitions | ||||
Total purchase price | $ 169.5 | |||
Purchase price allocated to goodwill and identifiable intangible assets | 126.2 | |||
Purchase price paid in cash | 105.9 | |||
Working capital adjustment | 40.5 | |||
Promissory note payable | 14 | |||
Contingent earn-out obligation | $ 9.1 | |||
T E C Industrial Construction and Maintenance | ||||
Acquisitions | ||||
Total purchase price | $ 88.9 | |||
Purchase price paid in cash | 73 | |||
Working capital adjustment | 1.3 | |||
Promissory note payable | 7 | |||
Estimated fair value of contingent earn-out payments | $ 7.6 | |||
Electrical Contractor North Carolina | ||||
Acquisitions | ||||
Total purchase price | $ 41.6 | |||
Mechanical Contractor Utah | ||||
Acquisitions | ||||
Total purchase price | $ 19.6 |
Goodwill and Identifiable Int_3
Goodwill and Identifiable Intangible Assets, Net - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2020 | |
Changes in the carrying amount of goodwill | ||
Balance at beginning of year | $ 464,392 | $ 332,447 |
Acquisitions and purchase price adjustments (See Note 5) | 7,654 | 131,945 |
Balance at end of period | 472,046 | 464,392 |
Mechanical Services Segment | ||
Changes in the carrying amount of goodwill | ||
Balance at beginning of year | 307,448 | 234,660 |
Acquisitions and purchase price adjustments (See Note 5) | 7,725 | 72,788 |
Impact of segment reorganization | 1,101 | |
Balance at end of period | 316,274 | 307,448 |
Electrical Services | ||
Changes in the carrying amount of goodwill | ||
Balance at beginning of year | 156,944 | 97,787 |
Acquisitions and purchase price adjustments (See Note 5) | (71) | 59,157 |
Impact of segment reorganization | (1,101) | |
Balance at end of period | $ 155,772 | $ 156,944 |
Goodwill and Identifiable Int_4
Goodwill and Identifiable Intangible Assets, Net - Identifiable Intangible Assets, Net (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Future amortization expense of identifiable intangible assets | |
2021 (remainder of the year) | $ 16,914 |
2022 | 28,400 |
2023 | 24,217 |
2024 | 22,867 |
2025 | 20,680 |
Thereafter | 108,506 |
Total | $ 221,584 |
Goodwill and Identifiable Int_5
Goodwill and Identifiable Intangible Assets, Net - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 31, 2020 | Jun. 30, 2021 | Dec. 31, 2019 | |
Goodwill | |||
Goodwill | $ 464,392 | $ 472,046 | $ 332,447 |
Walker | |||
Goodwill | |||
Fair values in excess of carrying value (as a percent) | 24.00% | ||
Goodwill | $ 96,800 |
Debt Obligations (Details)
Debt Obligations (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Obligations | ||
Total principal amount | $ 160,735 | $ 236,000 |
Less-unamortized debt issuance costs | (228) | (267) |
Total debt, net of unamortized debt issuance costs | 160,507 | 235,733 |
Less-current portion | 4,235 | |
Total long-term portion of debt, net | 156,272 | 235,733 |
Revolving credit facility | ||
Debt Obligations | ||
Total principal amount | 15,000 | 70,000 |
Term loan | ||
Debt Obligations | ||
Total principal amount | 120,000 | 135,000 |
Notes to former owners | ||
Debt Obligations | ||
Outstanding balance | $ 25,735 | $ 31,000 |
Debt Obligations - Other (Detai
Debt Obligations - Other (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2021USD ($)item | Mar. 31, 2021USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2021USD ($)item | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Debt Obligations | |||||||
Payments on term loan | $ 15,000 | $ 11,250 | |||||
Outstanding balance | $ 160,735 | 160,735 | $ 236,000 | ||||
Reconciliation of Credit Facility Adjusted EBITDA to net income | |||||||
Net income | 32,965 | $ 26,491 | $ 39,495 | $ 17,716 | 59,456 | 57,211 | |
Provision for income taxes | 9,817 | $ 15,070 | 18,554 | 21,821 | |||
Stock-based compensation | 6,860 | $ 5,188 | |||||
Revolving credit facility | |||||||
Debt Obligations | |||||||
Borrowing capacity | 450,000 | 450,000 | |||||
Outstanding borrowings | 15,000 | 15,000 | |||||
Outstanding balance | 15,000 | 15,000 | 70,000 | ||||
Letters of credit amount outstanding | 49,500 | 49,500 | |||||
Credit available | $ 385,500 | $ 385,500 | |||||
Principal financial covenants | |||||||
Number of interest rate options | item | 2 | ||||||
Other disclosures | |||||||
Weighted average interest rate (as a percent) | 1.40% | 1.40% | |||||
Revolving credit facility | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: Less than 1.00 | |||||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||||
Letter of credit fees (as a percent) | 1.25% | ||||||
Commitment fees payable on unused portion of the facility (as a percent) | 0.20% | ||||||
Revolving credit facility | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 2.50 or greater | |||||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||||
Letter of credit fees (as a percent) | 2.00% | ||||||
Commitment fees payable on unused portion of the facility (as a percent) | 0.35% | ||||||
Revolving credit facility | Base Rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: Less than 1.00 | |||||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||||
Additional per annum interest margin (as a percent) | 0.25% | ||||||
Revolving credit facility | Base Rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.00 to 1.75 | |||||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||||
Additional per annum interest margin (as a percent) | 0.50% | ||||||
Revolving credit facility | Base Rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.75 to 2.50 | |||||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||||
Additional per annum interest margin (as a percent) | 0.75% | ||||||
Revolving credit facility | Base Rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 2.50 or greater | |||||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||||
Additional per annum interest margin (as a percent) | 1.00% | ||||||
Revolving credit facility | Eurodollar Rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: Less than 1.00 | |||||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||||
Additional per annum interest margin (as a percent) | 1.25% | ||||||
Revolving credit facility | Eurodollar Rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.00 to 1.75 | |||||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||||
Additional per annum interest margin (as a percent) | 1.50% | ||||||
Revolving credit facility | Eurodollar Rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.75 to 2.50 | |||||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||||
Additional per annum interest margin (as a percent) | 1.75% | ||||||
Revolving credit facility | Eurodollar Rate | Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 2.50 or greater | |||||||
Debt Instrument, Interest Rate, Effective Percentage [Abstract] | |||||||
Additional per annum interest margin (as a percent) | 2.00% | ||||||
Amended senior revolving credit facility | |||||||
Debt Obligations | |||||||
Borrowing capacity | $ 570,000 | $ 570,000 | 600,000 | ||||
Line of credit borrowing capacity accordion option | 150,000 | 150,000 | |||||
Payments on term loan | 30,000 | ||||||
Term loan | |||||||
Debt Obligations | |||||||
Borrowing capacity | 150,000 | 150,000 | |||||
Outstanding balance | $ 120,000 | $ 120,000 | 135,000 | ||||
Other disclosures | |||||||
Weighted average interest rate (as a percent) | 1.40% | 1.40% | |||||
Notes to former owners | |||||||
Other disclosures | |||||||
Cumulative number of companies acquired | item | 5 | 5 | |||||
Outstanding balance | $ 25,735 | $ 25,735 | $ 31,000 | ||||
Promissory note | Walker | |||||||
Other disclosures | |||||||
Outstanding balance | $ 6,000 | $ 6,000 | |||||
Weighted average interest rate (as a percent) | 4.00% | 4.00% | |||||
Promissory note | TAS Energy | |||||||
Other disclosures | |||||||
Outstanding balance | $ 4,200 | $ 4,200 | |||||
Weighted average interest rate (as a percent) | 3.50% | 3.50% | |||||
Promissory note | T E C Industrial Construction and Maintenance | |||||||
Other disclosures | |||||||
Outstanding balance | $ 7,000 | $ 7,000 | |||||
Weighted average interest rate (as a percent) | 2.50% | 2.50% | |||||
Promissory note | Electrical Contractor North Carolina | |||||||
Other disclosures | |||||||
Outstanding balance | $ 5,000 | $ 5,000 | |||||
Weighted average interest rate (as a percent) | 3.00% | 3.00% | |||||
Promissory note | Mechanical Contractor Utah | |||||||
Other disclosures | |||||||
Outstanding balance | $ 3,500 | $ 3,500 | |||||
Weighted average interest rate (as a percent) | 2.50% | 2.50% | |||||
Letter of Credit | |||||||
Debt Obligations | |||||||
Borrowing capacity | $ 160,000 | $ 160,000 |
Leases (Details)
Leases (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)Option | Jun. 30, 2020USD ($) | Dec. 31, 2020 | |
Lessee, Lease, Description [Line Items] | |||||
Variable lease expense and short-term lease expenses | $ 3.6 | $ 3.4 | |||
Weighted average discount rate | 4.10% | 4.10% | 4.20% | ||
Lease expense | $ 7.1 | $ 6.9 | $ 14.4 | 13.4 | |
Weighted average remaining lease term | 7 years 2 months 12 days | 7 years 2 months 12 days | 7 years 6 months | ||
Rent paid to related parties | $ 1.3 | $ 1.6 | $ 2.5 | $ 2.5 | |
Existence of option to extend | true | ||||
Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 3 years | 3 years | |||
Number of options to renew | Option | 1 | ||||
Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 10 years | 10 years |
Leases - Summary of Lease Asset
Leases - Summary of Lease Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Summary of lease asset and liabilities | ||
Lease right-of-use assets | $ 95,532 | $ 94,727 |
Lease liabilities: | ||
Other current liabilities | $ 16,769 | $ 16,586 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | Other Liabilities, Current |
Long-term lease liabilities | $ 81,060 | $ 80,576 |
Total lease liabilities | $ 97,829 | $ 97,162 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Maturities of lease liabilities: | |||||
2021 (excluding the six months ended June 30, 2021) | $ 10,625 | $ 10,625 | |||
2022 | 18,930 | 18,930 | |||
2023 | 16,355 | 16,355 | |||
2024 | 14,413 | 14,413 | |||
2025 | 13,521 | 13,521 | |||
Thereafter | 40,038 | 40,038 | |||
Total Lease Payments | 113,882 | 113,882 | |||
Less-Present Value Discount | (16,053) | (16,053) | |||
Present Value of Lease Liabilities | 97,829 | 97,829 | $ 97,162 | ||
Supplemental information related to leases: | |||||
Cash paid for amounts included in the measurement of lease liabilities | 5,347 | $ 5,305 | 10,700 | $ 9,778 | |
Lease right-of-use assets obtained in exchange for lease liabilities | $ 2,927 | $ 19,922 | $ 9,359 | $ 22,200 |
Commitments and Contingencies -
Commitments and Contingencies - Other and Bonds (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2021USD ($)item | |
Obligation to perform subcontract work | Pending Litigation | |
Commitments and Contingencies | |
Letter of intent under dispute | item | 2 |
Damages stated | $ 9 |
Obligation to perform subcontract work | Customer | Pending Litigation | |
Commitments and Contingencies | |
Damages claimed | $ 15 |
Surety | Minimum | |
Surety | |
Percentage of business which has required bonds | 15.00% |
Surety | Maximum | |
Surety | |
Percentage of business which has required bonds | 25.00% |
Stockholders' Equity - Incentiv
Stockholders' Equity - Incentive and Other (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 6 Months Ended | 171 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Dec. 08, 2020 | Mar. 29, 2007 | |
Share Repurchase Program | |||||
Share repurchase | $ 3,047 | $ 11,006 | |||
Stock Repurchase Program 2007 | |||||
Share Repurchase Program | |||||
Number of shares of outstanding common stock authorized to be acquired under a stock repurchase program | 10.3 | 10.3 | 1 | ||
Additional number of shares authorized for repurchase | 0.7 | ||||
Share repurchase (in shares) | 9.4 | ||||
Average price (in dollars per share) | $ 75.54 | $ 19.87 | |||
Share repurchase | $ 3,000 | ||||
Stock Repurchase Program 2007 | Maximum | |||||
Share Repurchase Program | |||||
Share repurchase (in shares) | 0.1 |
Stockholders' Equity - Anti-Dil
Stockholders' Equity - Anti-Dilutive Stock Options (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Stock Options | Maximum | ||||
Earnings Per Share | ||||
Anti-dilutive securities excluded from computation of earnings per share amount (in shares) | 0.1 | 0.1 | 0.1 | 0.1 |
Stockholders' Equity - Number o
Stockholders' Equity - Number of Shares (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Reconciliation of the number of shares outstanding with the number of shares used in computing basic and diluted earnings per share | ||||
Common shares outstanding, end of period | 36,349 | 36,503 | 36,349 | 36,503 |
Effect of using weighted average common shares outstanding | 54 | 78 | (4) | 125 |
Shares used in computing earnings per share-basic | 36,403 | 36,581 | 36,345 | 36,628 |
Effect of shares issuable under stock option plans based on the treasury stock method | 97 | 99 | 114 | 124 |
Effect of restricted and contingently issuable shares | 66 | 57 | 74 | 69 |
Shares used in computing earnings per share-diluted | 36,566 | 36,737 | 36,533 | 36,821 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)segment | Jun. 30, 2020USD ($) | |
Segment Information | ||||
Number of reportable segments | segment | 2 | |||
Revenue | $ 713,895 | $ 743,468 | $ 1,383,656 | $ 1,443,599 |
Gross Profit | 126,455 | 145,695 | 249,924 | 262,788 |
Operating | Mechanical Services Segment | ||||
Segment Information | ||||
Revenue | 611,796 | 626,706 | 1,177,416 | 1,197,457 |
Gross Profit | 112,405 | 136,708 | 220,533 | 246,692 |
Operating | Electrical Services | ||||
Segment Information | ||||
Revenue | 102,099 | 116,762 | 206,240 | 246,142 |
Gross Profit | $ 14,050 | $ 8,987 | $ 29,391 | $ 16,096 |