Comfort Systems USA (FIX) 27 Jul 182018 Q2 Earnings call transcript

Company Profile

Participants

Julie Shaeff	Chief Accounting Officer
Brian Lane	President and Chief Executive Officer
Bill George	Chief Financial Officer
Tahira Afzal	KeyBank
Joseph Mondello	Sidoti & Company
Bill Newby	D.A. Davidson
Adam Thalhimer	Thompson Davis
Sophie Karp	Guggenheim Securities
Jared Goodman	Colorado PERA

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2018 Comfort Systems USA Earnings Conference Call. My name is Darick, and I’ll be operator for today. At this time, all participants are in a listen-only mode. We shall facilitate a question-and-answer session towards the end of the conference. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. would turn I to conference time, Ms. this like the to over At Accounting Shaeff, Officer. Julie Chief proceed. Please

Julie Shaeff

Darick. Thanks, Welcome call. morning. Good quarter USA’s earnings second to Comfort Systems

comments is Securities Litigation press of XXXX. as operations within Our will meaning that and the Act as Those say current Comfort we forward-looking and and expectations today our our the uncertainties Private contain on statements Systems our the of results What morning and this based activities releases future well USA. in plans be from might of different actual expectations risks cause forth materially those plans to of include set comments.

and a factors accompany well on section as Form our more read covering the and listing in specific our can press Relations Company’s in commentaries earnings. will comfortsystemsusa.com. recent website risk most are presentation release A slide concerning slides posted Investor XX-K found the at XX-Q You our these our as detailed Form The remarks. of filed

Joining Brian the and Financial Chief Chief and Bill remarks. George, Brian Executive Officer. are me Lane, call open Officer; our on will President today

Brian Lane

Okay. second Julie. call. quarter to Thank welcome our earnings Good morning, everyone, you, and

with all more continued detail. Systems of This was performance. in the growth, by employees very for performance, and USA strong and quarter, their profits strong our start me start with Let the cover hard results financial thanking fantastic and cash highlights work Comfort I’ll the Bill flow. good will a

profits higher performance. substantially some we XX% than our execution the quarters, over increases are also had of second per second year We’re increased quarter quarter we with Considering solid dividend. reporting flows per quarter. have quarterly ever generation, compared Free this the again past our backlog $XX remarkable excellent XXXX, the to $X.XX cash earnings million acquisitions. on performance ongoing cash share for of and a $X.XX and are a improved Building our substantial strongest several ago. share Revenues

We many second experienced increase of activity in in another markets. the construction quarter. significant our backlog have strong We in

June $XXX million sequentially, prospects was about XX, billion, year. I’m As is an optimistic our $X.XX our of backlog and increase Overall, broad-based. for the increase this of

Midwest, into strong acquired in During the some upstate contractor based England. The mechanical companies well-established New half our companies welcome Dilling our Indiana expand all to USA. excited XXXX, operations, Texas and New to a Tennessee. Systems including team of to new York, we solid Group, the acquired Group And Comfort and we July and on in existing Dilling the Austin, first industrial in presence X, looks we’re additionally, in members

get agreement me also I I Bill? review During the and details outlook that, performance. the before This additional a our will credit few in amended over in our Bill turn flexibility. minutes. facility. of second quarter, But discuss we call this our provides extended detail and backlog financial increased more let to investment into to

Bill George

Thanks, Brian.

provide refer please details to as X, results. and through of our Slide some I So explanations X

reporting, $X.XX year. tax operations would million $X.XX have was per settlement. compared $X.XX expense share XX.X% and legal is $X of XXXX Most XX% of to XX.X%, by period of or costs XXXX a increase quarter quarter $XXX increase it an growth. this income as was year was related we earned $XX tax and to XXXX, Pretax XXXX. million in this quarter XX.X% XXXX. the Without of the was in quarter percentage year. million quarter $X.XX a the in project SG&A increase XXXX. XX% $XX.X XX.X% reflected connection of $XX.X of income Gulf of Coast that compared XXXX. in in for from to gain quarter $XX $XX or share for rate $X.XX income of million The of claims or our XXXX. million, in the rate of due to oil second spill construction for to last increase profit second $X.X in that, the from the disruptions year. quarter second increase second settlement related second second of an with an flow Income of same working to this compensation second strong basis to the to quarter million profit last second fact XX million the points for expense revenue cash quarter given the the was of to an $XX revenue quarter increased XX.X% had quarter the from revenue during share, million strong revenue tax had We or growth. an capital revenue last second in Second million of and deploy last the second $XXX compares quarter. free we’re with the compared tax to level Of with $XX our $XX.X quarter XXXX Net XX% the that especially for million, decreased XXXX, Gross expense compared increase we’re for compared the the earnings high we same or per the per for to this million year. a very quarter The as was Gross from resulted that in million defend to $XX.X a was increase effective that quarter. of earnings second million quarter, the of of percentage effective SG&A of XX.X% the for to activity

$XX.X flow million a was to ago. For our cash and $X.X year free million, that the quarter, compares

$XX which was free first XXXX. the six to $XX.X Our months cash million months for flow million compares of six

operations of flow component the mentioned, Acquisitions We’re existing shareholders. year. And important our during with that continuing discretionary six an our companies were combined to months add we’ve strategy. for as cash value to are deploy of first our Brian acquired this

our industrial contribute annualized as fantastic revenues Midwest are of these to that after levels a XX Mechanical, companies the required of to transaction, other companies. to right $XXX associated are per related and with to first make a expected months the to cost up These company expected share acquisitions profitability amortization and mentioned, quarter. the with generally to Brian expense XX accretive of was on that approximately third the are and intangibles the million earnings teamed and acquisition. during In comparable light first-day the in contribution other months to also We Dilling neutral slightly

in back at X.X stock average shares During price an XXXX, of purchased million we’ve an at price $XX.XX. we repurchase And $XX.XX. XXXX, average we bought shares program XXX,XXX our since of of began have our

to we’ve our As increased the consecutive dividend our quarterly two Brian dividend April, until $X.XXX, have amended it That’s not in the with increased expire noted, In quarters. from will the we on financials, and the we XXXX. results remainder to is increase our our time million million, and we’re all of facility Overall, just that $XXX April happy I credit amended Brian. to first year. $XXX this optimistic facility about and

Brian Lane

Slides and rest our and spend going markets. you, discussing These covered X I this All the on in a year. to backlog prospects comment our I’m minutes Bill. then in sectors X. will activity for few of to various right. are Thank

to Our second of increase the $X.XX first compared was backlog quarter billion, $XXX of the an or XXXX increased quarter significantly this of XX% of quarter. million Backlog the end at XXXX.

companies. comparison our backlog increase ago, backlog over by increased of stronger. million, distributed most a Compared is XX% our to The year-over-year which year even Our is has a is $XXX increase.

XX% balance of have turn and industrial We Slide sectors. The X markets, good our healthcare in revenue commercial revenue Institutional made our XXXX. XX%. for to for government, which represented current remanding XX% sector our was education, various include up the of mix. end-user and Please revenue

is XX% existing projects new our XX% XX% total revenue construction buildings. XXXX, from in with from For and construction of buildings for construction projects

fundamentals construction in nonresidential is trends Our benefiting good construction markets. from business and

We good North particular results strength our Wisconsin, including booking for Geographically, most of Virginia. markets in experienced in and are many Carolina with we strong next year. projects,

X% to service Service revenue project providing make all revenue. revenue, and of service We XX% in continue with of investments work pure XX% including providing is business. the our service of our

in well profits. of and business is second volume service Our the XXXX doing and quarter exceeded both

Finally, our outlook.

backlog pricing that and our XXXX. growth have upper believe strong. single-digit we environment half prospects We improved, currently revenue for is revenue growth expect Our during of and the second

future. on to opportunities, you, turn With you. our questions. opportunities X,XXX invest, we positioned good our continue to and our their again, are hard Thank return all-time these to execute with to invest once back our we will optimistic now and to dedication. We and high an and to Thank backlog to for Darick intend I over about shareholders. work employees it capital are at for

Operator

the line from Instructions] question KeyBank. Our Tahira first come will [Operator of Afzal,

Tahira Afzal

yourself and very Hi, strong a there quarter team. folks congratulations to your on and

Brian Lane

Tahira. you, Thank

Tahira Afzal

I you said trends first visibility is pretty this potentially the growth given mid-single-digit amount you’re possible? that in are is, is within year Brian, question we organic mean, of good. the guess looking backlog in duration So terms I a out and given seeing of backlog seeing being

Brian Lane

confident I the in probably next said, the Yes. Tahira, year. as I think, we’re of issue upper pretty single-digit rest middle

backlog our a half probably have – XXXX. into We of

be in mid-single-digit good year. range probably would for that So next

XXXX I So Tahira. pretty think and both in XXXX, confident we’re

Tahira Afzal

Got it.

Okay, Brian.

and keep was really the And you to year. like so, to from for your seems you’re like in $X.XX It far I – doing small next the on and if if assume the margins well. that operating add even said past. too as gross not that you’re acquisitions can flat Seems doing I then, even leverages assume

Bill George

This math I’ve never done.

Brian Lane

Tahira. Yes,

Tahira Afzal

excel. doing math I’m in just the

Bill George

Yes.

Tahira Afzal

I’m So out… just sitting

Brian Lane

very Tahira, field from having we’re terrific. of just execution is really right that, level getting said fortunate the all now we’re the

Tahira Afzal

Right.

Brian Lane

the We’re in out very and people have we they’re work the doing. confident there

Tahira Afzal

just barring go you’ve guess strip I seems macro thing. at able point? obviously labor, cycle this is at wrong. there this is enough execution? that execution that, – what so is Is point? It at another Okay. But mean, it the execution been Obviously, just I looking could to

Brian Lane

execution that that. And continue it’s Right. gives us uniform And right. good say, we environment States. to pricing a would United for the really have across good now, Right mix, execution I really to opportunity

have right, We there risk, I past, are – that jobs is risk – there the making us. is we’re think are execution portfolio bigger projects. And of today, in But the been broad-based. so are it’s any there a for than money we a

resources. your you’re to would be chance holds. right? what And future you If of macro the problems then with always the can had a never because you That’s there’s – probably – know overcommitted event, that

Bill George

for of And, to for Tahira, but numerous off times, training recession the about this and continue what’s paying level now. us we did is talked during the we’ve do

in So this mean. was the four, know five you making, what if years I

Tahira Afzal

of got I and Congrats queue. I’ll questions. it. the a couple in But Got hop

Brian Lane

thank you. right, All

Operator

from Sidoti line Joseph be the will question of next Mondello, Your Company. &

Joseph Mondello

Hi, guys. morning good

Brian Lane

Good Joe. morning,

Bill George

Joe. morning, Good

Joseph Mondello

versus of service. in the the construction on looks there’s the based But we that new here new like the quarter gave you total construction It smallest in in new backlog, percent on a the that probably lot know as So there. the breakout construction of versus retrofit years. second was

So did just your construction backlogs? role the thoughts are in on, go of stronger-than-expected we new of wondering year back gross that play margins? be And through the for as these what of the your may a half thoughts sort some

Brian Lane

Industrial typically has times we’re say, often, even what in big existing between some doing that. construction to and additions they they to industrial around projects existing stuff would don’t starting. of – add facilities. that But mix do I new have break We and facilities. to the lot facilities like because are new projects A new it’s existing. pretty similar really been more customers,

to I mix a of It’s of in us. with that everywhere. that work sense execution very good is this that’s true, type it hard be So kind because for has profitable – that really think is

Bill George

want just also, to Joe, And out. point

is It’s can XX%. of queue, long but over You backlog. been has it a in see the since our of heck time healthcare healthcare a over been XX%

more activity, to new So a add-on bills, buildings. bit of we’ve seen couple a existing little

it’s so the seen first number And while. that a time in I’ve

Joseph Mondello

Okay.

it thing was So construction in is you quarter of with be this just March new that, I sales I’m or guess, XX the XX% and year-over-year wondering one point. that at consider the not said if then should we

like to backlog, cautious quarter. gross talked margins with of So that and the percent analysis, if have that XX%, assumes about be margin. lower lot that’s quarter boosted the maybe lowest a my on candidly look and new last we have is the I second of second carries thinking a been seen in in that should that And quarter construction the How there’s of gross going guys the gross year? should on it about always over – as what construction total. I’ve new have would have new you you construction margin at a the maybe that guys sort

Bill George

pointing you’re interesting That’s an thing out.

representative. us, good quarters XX% lumpy will I and But more think First hard a I this say are make point. you for

construction the will faster will than We – have parts. while over expand other new expanding next the little

gross opportunity lot very think of very our I But the construction early demand. will is also margins for I in new just will good good say, life. work of that that project be a because in

can in – the the could good That the margin lower underlying we’ll shouldn’t trend things a quarter lot But good shouldn’t be quarter-to-quarter, a is underlying not prices. create lot We��re really certainly in the places happens obscure here trend is sort good. our for there. work work very that booking some even that obscure that there’s quarter. of movement and and good good, if one particular – whatever there, So out a is a of young, of close of

Brian Lane

the we and it’s out pace And is good. worked liked

Joseph Mondello

Okay.

that was is is thing of from year projects noticing was of the fairly I ago. sort $X $X the number a for flattish. sub up over that value XX% Another million project And with your million

I’m in in the that about have are larger that and execution can thoughts So potential execution of risks? projects come projects, with you’re what maybe on And – based execution, that your of talk you margin those that sort wondering you gross undergone? the larger just terms

Brian Lane

average as $XXX,XXX in million spot. to million Yes, it’s price jobs range, is in really is question. a us so Joe, sweet X good still X a Our the

it little the just recession, don’t risk, smaller, very got we’re big But to I the well to you that but going work do always a work range. how execution during I have up is. think geared think know, I in

very me concern really much. doesn’t that So

Joseph Mondello

the reason, I margin Just larger operation. reasons a because how related for the last gross Was then was was wanted as well – it that? you comparable for talk to the year it within quarter? talk was your Carolina one-time if the the Was was in of don’t quarter the because out I that made of about year? or quarter related a why called up XX-Q and improvement about know it and that second like gross question a factor? of North it or biggest Okay, to one to in you Could type margins may thing be the last that seem ask of that that was

Brian Lane

last XXXX really over have They pick – was just of worth I they the going you’re have tell So, North they’ve year that five It’s of or years. what their exact so had in the them four you of but a said none that millions came I I year. a also work, of there, out somebody, reason on so last customers get have projects done several of of up. rules – hundreds who for you work will happened largest give which of Carolina dollars the the having you way always everything, on will will to mention sort for going say that did the MD&A to

much so So some and they the there. last an into are but they would look okay work year, of I too don’t they – also obviously year read were They accounting are to a we at changes, have for – want that are biggest good picked I don’t where required rules had want you put say to has so math if just them the was that change. to because somebody – and by up but biggest

Joseph Mondello

I see. Okay,

to I will other couple have All somebody Okay. step. right, else take the questions, let Thanks. a I but

Brian Lane

Joe. Thanks,

Bill George

Joe. Thanks,

Operator

D.A. will Davidson. the Bill question next Newby, be of from line Your

Bill Newby

congrats and on morning Good guys the quarter. again

Brian Lane

Bill. you, Thank

Bill George

Bill. you, Thank

Bill Newby

that into guys are how little out I was had? to ever you guess into mean a backlog I guys far more. bit that and dig I visibility you now best booked XXXX is hoping the has just this

Brian Lane

I here. been since here best work I backlog, the we of the but XXXX I’ve do service – have XXXX, half terms since is that the have me backlogs I’ve visibility, has than plus of into been this about longer seen we in Bill clearly into put not been here that

Bill looks the like So next for sure. baseline what year for

Bill George

Yeah, I’ve next where year. in – the much we’ve never the this already work been a schedule have we July on never for

Bill Newby

guess ticked – – there are – I there any called guess in Okay. end are healthcare, I Brain I are months this? up markets that And mean you six last driving out that are the that

Brian Lane

had I don’t been strong. Industrial, good work – we’ve ticked continues steady a up state. strong. education has be University to level really

some more office backlog recently. folks we who’re is dealing, had than higher all. which our a on is are at We in have our adding not little industrial in buildings, And bit numbers

thing. I geographically one and don’t wise. based It’s any sector So both think pretty broad it’s

Bill Newby

modeling All right, Bill. a quick and for just then

With about the second the the half should how July, closing interest – this year? think for [indiscernible] of of this I bigger we of acquisition assume rest for the in there?

Bill George

really good question. Yeah, that’s a

So is X% million also we to then $XX there our don’t that And have a that have pay do a have little or million bit you we the expense always same down been. net amortizing we’re deals. also that We interest progresses. the pay is did because as debt borrowings we includes assuming anything close don’t they - yeah, we’ll – do today when of more we as and – $XX we there year our add fees about

And end big the year interest let’s say the year, year, interest, did. that did last quite guess big that had we a last for to So in the I we similar by April, paid the same will deal at the I you little a because think of see year we have thing. borrowings Last bit. we but down

XX% plus quarters to – and year last good last meaning would the say, third I’d so – be of quarters the last year year. to be two fourth start, mean don’t place second I a So

Bill Newby

right. Right,

Bill George

a LIBOR up and creeping chance obviously, certainly been creeps then up little. a interest, there’s And has little a

Bill Newby

Yes that’s you it then up. more I helpful. And since brought guess one

and a I the guys exploring of deals market. mean But maybe You usually from – pause deals in these finish big you this the second guys year? take are half

Brian Lane

these have days work them. ready a winter. ever – in like Normally, – that not sense these ready. we do they’re – a deals It’s them they And they’re really multiple we pause do we the we that we before on in take when long years typically

real at it’s so of year. to not something this a And for be time common us announcing

But prospect year. good year. a got I of another I out – out we of rule think – coin wouldn’t another just But year. I it’s rule later flip. deal this in But this the I wouldn’t deal don’t a

Bill Newby

Alright. appreciate get back I’ll it. queue. in I

Brian Lane

you. Thank

Operator

Next come question will Davis. from Thalhimer, Adam Thompson

Adam Thalhimer

Good morning guys.

Brian Lane

Good morning Adam.

Bill George

Hey Adam.

Adam Thalhimer

dealing here? So guess what a will from probably But backlog. backlog the your to add the of how for thoughts year on trends little bit rest I

Bill George

that answer I’ll view second you third quarter. don’t of the expect of backlog, up I first, go seasonality. in don’t expect point backlog the really from to or

– burned burn of would that we to more say lot were flat, a be in much in I third every bit that So the second If quarter. won’t we quarter bullish. going as we’re not backlog if

having in backlog good, very – too. are we’re know burning I So said prospects that our but

so I upward And think – bidding, happen. noticeable winter because when likely, be you see they most next always the changes next the that’s you’d time – would time

always the that exception case, just not an What really and is quarter sure think This Brian? been that do you means I’m exceptions

Brian Lane

the our And good. and said, about lot level bit that a the we’ll have people probably in the winter, backlog Like feel work the we’re just you because they Adam, we Bill very contractors a our general we of that just in activity fair win shares If are looking prospects good look executing even out at at place. late so. little

they’ll season. in be summer see over that good time I will but winter, think another booking You the

Bill George

Yes.

Adam Thalhimer

revenues XXXX? of it, half you And – say for half then is – what would is how booked your

Brian Lane

backlog. Half of our

Bill George

Half construction need, of the we right.

concern service really revenue service, rights increased with and So me. XX% that doesn’t

Brian Lane

now. It for July. That that XXXX us that really have we work happens much into in

Bill George

in July. That’s

Brian Lane

backlog. definition the meets That of

Bill George

earlier, happening right. Yes. Part are of people committing what’s is

a not somebody year possible building, aware next to well you’re of who who to building have gets not want it, wants you’re it’s everybody one. If very

signed want and You people get up committed. to

advance. in further little us. is helping part a That’s book things So

Adam Thalhimer

On incremental interest, you are raising price?

Bill George

contractually, our contractual need If pricing pre-buy ultimately, get going jobs do. more But We up, do protection we’re good we’re for that margin of want And everybody, labor going up, for demand for we’re looking we it. going considerations for we better up, frequently for considerations considerations pricing, also busy. labor sure protection. people to can’t to to and the going materials. making for for are particular be be the in the paid for to we pre-buy. protect materials our us right? We paid on or we get we’re resources, of a of work to if want we work commit authorization If And

Brian Lane

the the what think As is you you rubber execute site where of part get but you pricing the to it deliver well But that’s it. at know we road. winning that me Adam, really How we job on on and it do how do. meets can

Adam Thalhimer

in Okay. how forward? did gross one bias I’m Joe here, bias some but work correctly, did out XX.X% more on less playing negative there of from see just or from should QX, most it And the be that kind you here, but you positive be there more then hard margin. may you that’s going hearing of that here If

Bill George

remarkably likely. very gross margins the year are the full think for I XX%

or that came Some were a But are service pulled little. bit, service from of certainly in little. SG&A possible dollars, starts profit good, that down down a were absolute right? levels work got service averaged overheads services up of at though less percentage you as have we leverage, even down newer get a they the up profits this construction a you You little get get

multiyear our and really, yet not guys And in how into there. frankly, So size, have it. that know to good summer work our do the jobs. average a because quite should maintain job it’s hot out we And pricing we’re

mix. So we good a should have

Brian Lane

even proud Adam, should the doing XX% that feel margin range, work gross Yes, of themselves. folks

Adam Thalhimer

Understood.

Okay, thanks guys.

Brian Lane

Thanks.

Operator

Karp, Guggenheim The next question Securities. Sophie will of line be the from

Sophie Karp

the morning, Hi, on good quarter. guys. Congrats

Brian Lane

Good and thanks. morning

Sophie Karp

power your and its quite think something up labor growing. I guys, a more the than your that economy bit manifest now that How pricing some chat book takes little I recently getting here. could you maybe you stronger want so a that itself, on or give will situation bit if cost and with came puts or the to us would will into pressure have result for and you

Bill George

speak. deserve cost right. also Yes, labor more, hope is opportunity arms answer what both, of fair are going maintain the to The is preserve really can have be the I’d to say killed with have labor say, it that last up, as something we by – are to we The fair and keep seen really little a labor, had. then while. some during happy are pay be we recession around and would ourself definition to pay wage the and I and guys we we had Brian our able we and

acquisitions it, our our demand That’s later, we were acquiring We there are keeping at doing you knew are would investing then really seeing fantastic. and people. sooner and of All workforces are and seeing why in done that that the for pointed because there. simple you And that good. were we think be we we’ve are people those the why really its or productivity prospects these that’s results then

Brian Lane

benefit it weight them lot gets gullibility, more, I us provide the got fantastic. are much a Sophie, hour. what attract also of a really really a helps And for pay is folks. I’m And your can on per package benefit the one with cetera, But people. a on that’s that think we But first-class to first-class is et how benefit medical, XXX(k) also thing labor people we person that benefits, package. the package, dental, we and the able putting happy

Sophie Karp

that manifest power, pricing how about itself? And Great. would

Brian Lane

resources The are good now. think I going and what demand money take. to manifesting But saying make do do. to we need that I the And that into we’re to work seeing is we it and don’t itself going work is get think risk think compensated for be sure the constrained. book not the have are we to we’re the to that you buyers right we that we it results and we

Bill George

for number markets. one two And the their player number our companies, the operating part, most in and

the good So pricing about particular of they’ve markets be and what got really to in area. the feel a going geographic

Sophie Karp

All you it able basically there’s and there right, push strong declines basically to works higher availability sufficient just when are in the isn’t for that price competition you? how of so is demand for that

Brian Lane

We we push as can. hard as

Sophie Karp

my other And release electric question your may then have evolving? I and the sort you the – that was company. mentioned mentioned on in still know mechanical you how you table past, Is interest contractor in press that as that your you the are right, that’s something you well. think I some All offerings see – do of in and the

Bill George

to a who’s when do So we time our fantastic of and a a buy for definitely spent today. I long it’s and our period on we conviction. our definitely we take think some a of a years there’s we in We – get of But long, that really and They we greater contractor, time. almost over better future. long that stockholders time really know know getting to people it’s lot great – electrical all space we there. of stock now lot wins out electrical are anybody think have And I their we think

can are us. there to them if for come So to its be companies going get And and some and that in be of situation have them right good are think part the to fantastic, its going be for where we a love good to we convert. we

get you some But find them in until those to three next it transactions again – – I will happen suspect to and for see conviction work we fully think years. they months six the of I going you make can we are and not us.

Brian Lane

has that pretty contract Midwest electrical the their we component significant to also business. just a as Dilling And joined

right business. of So side electrical now we’re with very comfortable the the

Sophie Karp

comments. jump for queue. the right. you. the back All Great. you Thank I’ll Thank into

Brian Lane

you. Thank

Operator

from be of the line PERA. will question Jared next Goodman, Colorado Your

Jared Goodman

morning, Good guys.

Brian Lane

Jerry. morning, good Hey

Jared Goodman

years? It up considering how tick think couple been is how was curious it see the that great of weak to see healthcare has you I just over durable was trend in mix. to last

Brian Lane

– Yes, I this think is Brian.

it’s think a life I of time both it, onto some legs while, care. think and build one a of the new first little end to I in bit, in sort then adding from hospitals got particular

So good think activity are facilities. you’ll the more demographics driving bit. there for pretty see I It’s next not little all

I’ve little to So I’m XX years. confident more than in bit eight been about a

Jared Goodman

was are what I on curious Thanks. California? Excellent. the seeing you

Bill George

for stable is California us.

we really had to that a in find disciplined service we in guys are good do have the make and And the business California. California. sure contribution. our very well And that We be mean. work I trying

Brian Lane

state of focus a I nice We do we’ve work. there small sort industrial work. think fair of the got a on steady think service, type and bit got I we project right

I well right think things team focused on today. So that is the

Jared Goodman

Excellent. Thank you.

Brian Lane

you. Thank

Operator

the We follow-up a Tahira from line of Afzal have question coming of KeyBanc.

Tahira Afzal

buybacks. up the the at of an and visibility know thing. Bill, least had obviously guess as buybacks you for threshold I given you up the of which building you’ve allocation But between I dividend. that Brian I sort have is buybacks one balance reach really point of go have? the you looking get lots about Does cash a the was you How good the you. know confidence Thank I at question versus inched forward. let’s say, we internal acquisitions, do and think

Bill George

and supportive fantastic a of have Directors. Board We

we he of creative we doing? could I says, of So have capital we if good One a a and of ask about. we’re conviction we If wrong find us in is, to going to our he think Board have our that with question that first in XXXX with Directors get use Bill, think what has guys idea the was acquisitions. Brian, to decided likes be that which what’s deals start

or do buybacks. used with it our over we doing willingness time to and what’s mean I acquisitions. However, between of dividends But to we’ve you’re think that. acquisitions, left more cash divided two-thirds flow continue to do no only acquisition And and see

I think the a notice done which we row, two dividend you’ll raised haven’t quarters that the past. we typically in in

there we’ve been year doing the I size think after year. dividend raise same is, what of been growing. we’ve seeing this But you’re

we So dividend was becoming smaller. the the amount were actually raising

think capital of of as to right stock that to to that to that. have at will size use sure then we us a So little that consideration the to use least just now I And I there’s amount a really making dedicate think you has continue bit proportion wanted dividend buybacks.

we’ve we’ll with share that that to that been of that think XXXX. dedicating ever the cash do since I

Tahira Afzal

Got it.

me. last And guess I for Okay. question

side forays to equation. make industrial bigger the You of on started the some

done? I curiosity you a similar is Our has setting EMCOR mean yourself? it what guys to strategy – a different for Or pathway are

Brian Lane

industrial We’ll I and it’s of it’s comfortable good we a Company the an most is work. us. like good and them big opportunity if of company piping good stuff they think looking look with we’re a are fan them like comfortable good customers, work is Tahira. company distinct that thinking I’m a we’ll and Coast good with just good they But Gulf for it’s at, are joining opposed people. us, with strategy go or something company for excellent the as that that maybe to on do

Bill George

including rare accomplished a things. of the with that’s or happening as everybody who When been companies, things records know. us as to we range in bought the for the track and company ever more phone do we they deal a made up give them With abilities advantages the acquirer number done of us companies we us, every very us of track companies person company do these is, with record One attractive We lot or they a old has of number. building at deal, industrial it’s that been a bringing to selling give phone – our President. look their sister companies of companies

their do and due you’re think available And they’re diligence reason great is I us. companies. that of because it’s can they just part seeing So on the

Tahira Afzal

Thank it. you, folks. Got

Bill George

Thanks, Tahira.

Operator

& You’re line Sidoti Mondello, will from Company. the next be Joseph of question

Joseph Mondello

guys. Hi

follow-up Just of a couple questions.

could contributed wondering breakout you acquisitions was the contributed the for to I relative quarter? as the as well revenue backlog if So the

Bill George

Yes.

So notice to the deal larger on not deal July of Indiana in million was somewhat $XX million and Tennessee material accounting closed the Xst. for purposes, $XX still

no that. effect. revenue is not So from it not had We’ve no sheet the in Its is got in balance the Its numbers. backlog numbers.

hand in April we and closing other full and one then deals of like we The closed a February had like May. that did,

We have they’re that million first $X two second or them let’s $XX million month million $X quarter in not the six for tuck-ins million that, just here we we they months. the first $X weren’t was because only a quarter and $XX those first big or So million in annualize the they them and proportionally the because say from in there. and in got or nothing maybe plus, place got

So I would first the say, quarter use for second quarter. million $X and million the $X for

Joseph Mondello

backlog I the… for probably negligible then And Okay. the is suppose

Bill George

of a These tuck-ins have lot were service. they intend and to

Brian Lane

moved would number Yes. that Joe. much, I have

Bill George

Yes.

Joseph Mondello

ask account revenue how rules has that to you wanted I new revenue for accounting affected then the is And at all? recognition for Okay.

Bill George

changes a backlog very always the And as far can we’ve that result the we a of way. standard, standard we is Not so no tell, question. just identical good the standard backlog new just adoption were that That’s those for it been always coincidentally, performance for a obligations. we was doing use as there, we standards. of used had remaining that for didn’t – have because the to material as There new change happened so – there

Joseph Mondello

in always the a on Okay. seeing usual year? organic compensation? just Do And bump you’re that anticipate the based than SG&A lastly, fourth the But in very bigger strong a see just bump. growth then quarter to seasonal given this SG&A you sees

Bill George

bump. that for praying are We

Brian Lane

that. praying We’re

Bill George

percentage That bump XX.X% we to to is that make – were as that think, for right. as pay of revenues, in and as in second XX.X% quarter. they would percentage want get that I want the us, I a say money first quarter, much We can. we of a the we

they because in who as Indiana, and basis, to SG&A work you I to – I’d a But for see addition got do some company who on the think stay we the going we’ll guess, are we’ll they dollar and guys just bills out obviously, sent got think bought stay people I XX% in this below. office.

people accruals you add there’s going like when get hope as period some have see But acquisition. other we’ll I just – and And So we who from this. to And in it project to do that managers to is being – typically profitable you’re are growing millions a gross of people hired. be leverage like number will be. where there we are then There strong to we if as are of – this. straight think compensation continue some SG&A

goes up get half think the to up. we’ll continue I go revenues But rate, it. the be may SG&A

Brian Lane

I Joe, long think But enough. those are

overhead We hock. like a will watch that

Joseph Mondello

Right.

awesome. guys. Okay, Thanks,

Brian Lane

Thank you.

Operator

At back the this time, I’m showing no to further Mr. closing questions Lane conference Brian in to like any over for queue. I remarks. turn would

Brian Lane

us Thank our today. Darick, call thank for joining Okay. you, everyone you, and on

the you the optimistic great We hope remainder and XXXX. you obviously weekend, we quarter, this seeing much. on Have and thank results very of and have you a look with to very I’m the We’re enjoyable all for and pleased safe summer forward a road.

Bill George

Thanks.

Operator

for and I We conclude conference. participation. gentlemen, Ladies your you thank today’s

great You may now a Have disconnect. weekend.

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