Exhibit 99
[COMFORT SYSTEMS USA LOGO]
777 Post Oak Blvd, Suite 500
Houston, Texas 77056
713-830-9600
Fax 713-830-9696
- --------------------------------------------------------------------------------
CONTACT: Gordon Beittenmiller
Chief Financial Officer
(713) 830-9600
FOR IMMEDIATE RELEASE
---------------------
COMFORT SYSTEMS USA REPORTS FIRST QUARTER RESULTS
-- INCREASED BACKLOG --
-- IMPROVED OUTLOOK FOR THE REST OF 2003 --
HOUSTON, TX - MAY 5, 2003 - COMFORT SYSTEMS USA, INC. (NYSE: FIX), a
leading provider of commercial/industrial heating, ventilation and air
conditioning ("HVAC") services, today announced a net loss of $4,816,000 or
$0.13 per diluted share, for the quarter ended March 31, 2003, as compared to a
net loss of $217,254,000 or $5.79 per diluted share, in the first quarter of
2002. These amounts include results of discontinued operations. The 2002 results
include two significant charges for unusual items - one relating to the adoption
of a new accounting standard for reporting of goodwill and other intangible
assets, and another relating to the Company's sale of certain operations,
principally 19 units sold to Emcor Group, Inc. in March 2002. Excluding these
items, net loss from continuing operations for the quarter was $4,003,000 or
$0.11 per diluted share in the first quarter of 2003 as compared to a loss of
$4,001,000 or $0.11 per diluted share in the first quarter of 2002. The Company
reported revenues from continuing operations of $182,414,000 in the current
quarter as compared to $189,626,000 in 2002.
Bill Murdy, Comfort Systems USA's Chairman and CEO, said, "As we've
previously noted, our industry experienced further slowdown through the first
quarter amid renewed uncertainty over the economy and international events. We
also had cost overruns on certain projects in two of our operations. With these
developments occurring in what is already our traditionally slowest seasonal
quarter during the year, we reported a net loss from continuing operations in
the first quarter."
Murdy continued, "While our first quarter results were disappointing,
we are already seeing indications that activity levels in our industry will
improve over the course of this year. Our backlog at the end of the first
quarter was up 6% compared to both the beginning of the quarter as well as the
comparable period in the prior year. In addition, we have launched significant
new cost reduction efforts. Based on these developments along with continued
strong emphasis on operational execution, we expect to be profitable in the
second quarter, to produce positive free cash flow for the year as a whole, and
to post improved
-4-
operating results for 2003 as compared to 2002. With a strong balance sheet and
a proven ability to generate profits and positive cash flow in very challenging
industry conditions, we believe we are well positioned to produce increased net
income, especially as economic conditions improve."
The Company will host a conference call to discuss its financial
results and position in more depth on Tuesday, May 6, 2003 at 9:00 a.m. Central
Time. The call-in number for this conference call is 1-773-756-4705. A replay of
the entire call will be available until 9:00 a.m. Central Time, Tuesday, May 13,
2003 by calling 1-402-220-4182.
Comfort Systems USA is a premier provider of business solutions
addressing workplace comfort, with 84 locations in 57 cities around the nation.
For more information, visit the Company's website at www.comfortsystemsusa.com.
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are based on the current plans and expectations of Comfort Systems
USA, Inc. and involve risks and uncertainties that could cause actual future
activities and results of operations to be materially different from those set
forth in the forward-looking statements. Important factors that could cause
actual results to differ include, among others, the lack of a combined operating
history and the difficulty of integrating formerly separate businesses,
retention of key management, national and regional declines in non-residential
construction activity, difficulty in obtaining or increased costs associated
with debt financing or bonding, shortages of labor and specialty building
materials, seasonal fluctuations in the demand for HVAC systems and the use of
incorrect estimates for bidding a fixed price contract and other risks detailed
in the Company's reports filed with the Securities and Exchange Commission.
- Financial table follows -
-5-
COMFORT SYSTEMS USA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2003 and 2002
(in thousands, except per share amounts)
(Unaudited)
<Table>
<Caption>
Three Months Ended
March 31,
----------------------------------------
2003 % 2002 %
--------- ----- --------- -----
Revenues $ 182,414 100.0% $ 189,626 100.0%
Cost of services 154,662 84.8% 159,376 84.0%
--------- ---------
Gross profit 27,752 15.2% 30,250 16.0%
SG&A 30,949 17.0% 32,393 17.1%
Restructuring charges 1,162 0.6% 1,878 1.0%
--------- ---------
Loss from operations (4,359) (2.4%) (4,021) (2.1%)
Interest expense, net 1,364 0.7% 1,869 1.0%
Other expense (income) 249 0.1% (312) (0.2%)
--------- ---------
Loss before taxes (5,972) (3.3%) (5,578) (2.9%)
Income tax benefit (1,969) (1,577)
--------- ---------
Loss from continuing operations (4,003) (2.2%) (4,001) (2.1%)
Discontinued operations:
Operating income, net of applicable income tax
benefit (expense) of $(54) and $1,723 99 255
Estimated loss on disposition, including
income tax expense of $231 and $25,978 (912) (10,987)
--------- ---------
Loss before cumulative effect of change in
accounting Principle (4,816) (14,733)
Cumulative effect of change in accounting
principle, net of income tax benefit
of $26,317 - (202,521)
--------- ---------
Net loss $ (4,816) $(217,254)
========= =========
Income (loss) per share:
Basic-
Loss from continuing operations $ (0.11) $ (0.11)
Discontinued operations -
Income from operations - 0.01
Estimated loss on disposition (0.02) (0.29)
Cumulative effect of change in accounting
principle - (5.40)
--------- ---------
Net loss $ (0.13) $ (5.79)
========= =========
Diluted -
Loss from continuing operations $ (0.11) $ (0.11)
Discontinued operations -
Income from operations - 0.01
Estimated loss on disposition (0.02) (0.29)
Cumulative effect of change in accounting
principle - (5.40)
--------- ---------
Net loss $ (0.13) $ (5.79)
========= =========
Shares used in computing income (loss) per share:
Basic 37,622 37,531
Diluted 37,622 37,531
Loss from operations $ (4,359) $ (4,021)
Restructuring charges 1,162 1,878
--------- ---------
Loss from operations, excluding restructuring
charges $ (3,197) (1.8%) $ (2,143) (1.1%)
Loss from operations $ (4,359) $ (4,021)
Depreciation 1,336 1,611
Restructuring charges 1,162 1,878
--------- ---------
EBITDA $ (1,861) (1.0%) $ (532) (0.3%)
Loss from continuing operations (after tax) $ (4,003) $ (4,001)
Restructuring charges (after tax) 755 1,221
--------- ---------
Loss from continuing operations (after tax),
excluding restructuring charges $ (3,248) (1.8%) $ (2,780) (1.5%)
Diluted earnings per share-loss from
continuing operations (after tax),
excluding restructuring charges $ (0.09) $ (0.07)
</Table>
-6-
Note 1: The diluted earnings per share data presented above reflects the
dilutive effect, if any, of stock options, convertible notes, warrants and
contingently issuable restricted stock which were outstanding during the periods
presented.
Note 2: Loss from operations excluding restructuring charges is presented
because it reflects operating results excluding items the Company believes to be
unusual. However, loss from operations excluding restructuring charges is not
considered as a primary measure of an entity's financial results, and
accordingly, this amount should not be considered an alternative to operating
income as determined under generally accepted accounting principles as reported
by the Company.
Note 3: EBITDA is defined as income (loss) from operations, excluding
depreciation and restructuring charges. EBITDA may be defined differently by
other companies. EBITDA is presented because it is a financial measure that is
frequently requested by capital market participants in evaluating the Company.
However, EBITDA is not considered under generally accepted accounting principles
as a primary measure of an entity's financial results, and accordingly, EBITDA
should not be considered an alternative to operating income, net income, or cash
flows as determined under generally accepted accounting principles and as
reported by the Company.
Note 4: The bottom two calculations in the above table show loss from continuing
operations (after tax) and related earnings per share information excluding
restructuring charges. The tax rate on these items was computed using the pro
forma effective tax rate of the Company exclusive of these charges.
-7-
COMFORT SYSTEMS USA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<Table>
<Caption>
March 31, December 31,
2003 2002
----------- ------------
Cash and cash equivalents $ 11,329 $ 6,083
Accounts receivable, net 155,229 167,177
Costs and estimated earnings in excess of
Billings 16,868 17,881
Assets related to discontinued operations 1,397 2,643
Other current assets 29,431 30,759
--------- ---------
Total current assets 214,254 224,543
Property and equipment, net 15,361 16,072
Goodwill 112,545 112,545
Other noncurrent assets 12,575 13,375
--------- ---------
Total assets $ 354,735 $ 366,535
========= =========
Current maturities of long-term debt $ 1,980 $ 1,780
Accounts payable 53,759 56,496
Billings in excess of costs and estimated
Earnings 25,822 26,672
Liabilities related to discontinued
Operations 301 1,017
Other current liabilities 50,563 61,688
--------- ---------
Total current liabilities 132,425 147,653
Long-term debt, net of discount 19,274 10,604
Other long-term liabilities 2,931 3,192
--------- ---------
Total liabilities 154,630 161,449
Total equity 200,105 205,086
--------- ---------
Total liabilities and equity $ 354,735 $ 366,535
========= =========
</Table>
Selected Cash Flow Data (in thousands):
<Table>
<Caption>
Three Months Ended
March 31,
-------------------------
2003 2002
---------- ----------
Cash flow from operating activities $ (2,343) $ (9,262)
Cash flow from investing activities $ (1,084) $ 142,499
Cash flow from financing activities $ 8,652 $ (134,007)
Cash flow from operating activities $ (2,343) $ (9,262)
Taxes paid related to the sale of businesses 10,371 -
Purchases of property and equipment (1,087) (2,134)
Proceeds from sales of property and equipment 79 171
---------- ----------
Free cash flow $ 7,020 $ (11,225)
</Table>
Note 1: Free cash flow is defined as cash flow from operating activities less
items related to nonrecurring transactions such as sales of businesses and
customary capital expenditures plus the proceeds from asset sales. Free cash
flow may be defined differently by other companies. Free cash flow is presented
because it is a financial measure that is frequently requested by capital market
participants in evaluating the Company. However, free cash flow is not
considered under generally accepted accounting principles as a primary measure
of an entity's financial results, and accordingly free cash flow should not be
considered an alternative to operating income, net income, or cash flows as
determined under generally accepted accounting principles and as reported by the
Company.
Note 2: Cash flow information for 2002 includes the results of discontinued
operations, including the 19 operations sold to Emcor in the first quarter of
2002.
-8-