FIX - Earnings call transcript Q1 2020 | Comfort Systems USA, Inc.

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Operator

Good day and welcome everyone to the Quarter 1, 2020 Comfort Systems USA Earnings Conference hosted by the Comfort Systems USA. My name is Sheila and I will be your operator for today.

During the presentation, your lines will remain on listen-only. [Operator Instructions] I’d also like to advise all participants, this conference is being recorded for replay purposes.

And now I would like to hand over to Julie Shaeff. ahead. go Please

Julie Shaeff

morning. earnings Good Comfort USA's Systems Thanks, Welcome quarter call. first Sheila. to

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

read comfortsystemsusa.com. these detailed most is the our recent website can Relations A been has earnings. our as a and our specific and Investor section XX-K, of commentary in Form XX-Q slide to presentation presentation You concerning The a as our more remarks. Form well at posted provided in covering risk companion company's the release, factors on as listing press found

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

Brian Lane

morning Good everyone thank joining us you Julie. on the Thanks Okay. for call today. and

thanking start USA for especially Comfort work our Let by employees this and and all their and Systems commitment resilience courage me their incredible during sincerely pandemic. of global

and times and holding levels quarter the significant March. had good all so very we far. fortunate second flow very Comfort terrific our As impacting the these up. Systems backlog business spite cash in we the challenging at In you been have occasion that half but COVID-XX are know, is earnings is and first of rising to in our of began

about to bit in we into minutes a get but more I those comment want immediate few facing. are We challenges details a the will

our important, are our to we and safe. employees working communities keep Most

these to Our in and CDC healthy to community actions. working COVID-XX to been many taking workforce and during to we working addition our are safe guidelines our and other kept locations meet implement guidelines ensure OSHA is and have

start nose times, and distancing personal segmenting markets, we and implemented various equipment and In and scanning have protective areas, temporal work staggered wearing face a protective equipment. screening, zones, disinfecting and designated work

we know, of in work the people in That seeking required will different is safe locally leadership our and location each measures true of dozens strength Systems. markets states the to our path in well. conforming that you keep As of best operate are scores and is a and Comfort to that

closing course of Our overall and in the quarter first business was the are effects weeks affected continuing. of those

immediate decisions as most negative building a customers closures largely building to of access. the experienced pronounced and business impacts service result or Our made by limit

tests markets, Although positive considered essential have COVID-XX. activities reported most in owners closed certain are government and to by when our jobs we sites pronouncements due had services temporarily decisions to construction also due for

delayed construction While we we far so material have have some seen not experienced jobs cancellation.

are actual a U.S. and to teams project we our challenges light circumstances. and has In being the taking. amazing service work addition are to stoppages, across that precautions productive accomplish great result these efficiency of are our in of the managing important still work But experienced as

and respond would Our have at this. exceeding workers a for like especially local leadership, management my how high project extraordinarily our expectation they been time effective field

we prior a increase have on compared to year the million included of growth X% and good $XXX Revenues midst the note. basis. the million very were challenges, same In on store these started $XXX XXXX our a in

direct $X.XX result in $X.XX first impact We despite and quarter COVID-XX. a to the is are due in of share per that

productivity ways by challenges in COVID-XX the also to service addition work. less directly quantifiable as project are weakness I and impacts by in impacted described In above, we including quantifiable

prior year was $XXX million store March basis. higher backlog more is a and our of the strong As XX, than than same XXXX on

which flow quarter. cash quarter cash first our fantastic cash in weak tribute is flow focus reporting to a a are on traditionally team's We

I I sometime our mention to to acquisitions. Bill, also want over Before turn

we February added in North Starr strong company During our Carolina, a Electric Electrical segment. to

having they strengthen and business long Carolina. have construction our modular addition collaboration. list in business a local will a contracting of North in customer business our In to already Starr great successful history

in believe to modular EAS growing modular we USA complex, April With On have acquisition Comfort Systems contracting and off-site growing that our now connection and industry. capabilities of TAS, the when expert in we completed we complete X, we existing the unmatched the across industry. will and construction part considered construction with a of and North now capability at leading Carolina, construction TAS, which make us believe modular off-site mechanical the modular

Our gives us strong invest segment, locations and combination the we in of and at customer optimistic. pharmaceutical remain strong to cross-sell and to revenue business In total This of particularly first our midst augments XX% the our is in a of our increased medical existing to industries. base capabilities these challenges off-site already construction opportunity all industrial our which great we to the continue technology, quarter.

but to few our of turn discuss the will first in review more in outlook I this details business our performance. financial call me minutes let over detail Bill? and a to Bill

Bill George

Thanks Brian. Good morning everyone.

quarter our by to first as to Brian revenue rest million store X%, the same increased revenue acquisition. increased the last also due XX% quarter this year which quarter So compared said by $XXX same to means

quarter gross total quarter million The gross increase profit $XX $XXX dollar compared due was same to to the the profit XXXX acquisition. a of of million in last Walker increased by year. to the first Quarterly

percentage in Our pass margin Electrical inefficiencies with of projects and XX.X% percentage of is the through gross XX.X% cost The segment a significant the which result growth has complex to effect lower and large continuing of compared which first material quarter work the to with is in from and amounts combined our was XXXX addition weighted service in COVID-XX. equipment of of profit XXXX. decline

was of second Our the segment the Electrical at XXXX. of added start quarter

quarter. have the included not earlier segment where that will in So the been year is this last quarter

lower project Electrical With challenges specific and our our service, experienced Our Electrical impact service less including also mix segment, SG&A of lowered component segment impact large projects the adjustments certain and on in our larger productivity project addition to percentage. COVID-XX gross and their that margin.

first income or to XXXX share the was per XXXX. of $X.XX $X.XX Net share per $XX in million compared $XX as for quarter million or

approximately and mentioned, quantifiable $X.XX direct previously additionally COVID-XX we and Brian including work. project less challenges As impact by COVID-XX had ways service in in of we weakness were in impacted productivity

prior EBITDA million year. was of from to the contributed by the For $XX first by was small offset that in effects $XX The EBITDA Walker. for EBITDA decline million quarter the negative results compared COVID-XX

other I the want to I run a our from is to move I've on through financials, and various few when aspects how our that of for measures Now profit of to and affecting talk ramifications comment about will mechanics take that company minutes and affect COVID-XX briefly our before on us. potential

and of to our to measure hard ability Work their in risks the proximate some potential subject to how sites are facing; that's the with global customers create it quarter you Precautions pandemic and most challenges which volatility unfold. are of this judgments I'm going for and about they to how results as timing pay risks, for many brings and the can efficiency for measures create we're an timing and talk more affect our services. and adjustment some of the saw in fairly they could The closure cases obvious. reopening.

possibility even can have likely challenges. some of is not create seen and that we jobs planning air Although and the deferral a canceled pockets work

The cycle are There industry conditions. also less goodwill. need obvious closely risk activity and are experiencing most can suddenly as monitor risks cost, or business to and relating on also intangible that these will challenges for our the judgmental and affect results The are the being accrual purchasing volatility such ramifications the second-order we proximate. we effect of of areas rebates medical to

the As unfold quarters few see we will these next effects.

on we This quarter receivables we as the certain result certain of effect light exposures of our customers. a in increase accrual. receivable And COVID-XX our reconsidered receivables of

result bad last bad is stark quarter first expense when increase $XXX,XXX. a a was the of year $X.X only As from which our debt debt our million was for

second additional stoppages currently as continue jobs can the the efficiency the second will especially revenue changes delays during of believe half our that cope job reassessed the to service impact also productivity of and that direct year. challenges. on in we we affect as see to light adapt with We and quarter We greatest

see we're may pockets optimistic or the and work. Although will arise conditions delays from impacts some improve there we air still be will of return productivity smaller that slow

in feel challenges that prepared and that opportunity in a We of believe that will to we in we're Technology, segment can We successfully. challenges we we these give and with these Industrial our and the in emerge us challenges believe Medical face these Pharmaceutical investments growth stronger. and our good cope XXXX to Service confront

comment million now as the increase receivables interruption to acquisitions global by certain for restaurant few was me business in of from was SG&A million collectability first due with first the entertainment primarily expense from the SG&A quarter. specifically driven that about So increase pandemic, and well areas for debt background quarter debt let receivables with with the bad in as million. SG&A The of is expense an retail, compared respect expense XXXX a bad more $X caused of to new quarter $XX primarily XXXX. increase concerns companies. due to to of on $XX first the by

XXXX. compared to the XX.X% of revenue percentage SG&A of in current the as a in quarter was first quarter XX.X%

benefit SG&A largely leverage which Electrical requires of to to from segment SG&A. due continue lower We the levels

XX.X% XXXX. Our XX.X% in compared rate XXXX tax to was

related flow is quarter weak to is benefited flow Our million strong tax in This traditionally prior from XXXX. rate $X year a remarkably Cash flow positive $XX stock-based was for quarter. cash free compensation. permanent million the compared as cash our negative a to differences

We notable ongoing our So challenges. about our despite achievement the is feel for flow positive cash operators. this good cash prospects a

$XXX credit our million. of $XXX includes million borrowings today is facility under debt As balance of and our

facility. financial our principal cabinets two have under We

today ratio The leverage XXXX X.X. first cannot as XX, we The one capacity of of is million. was ratio additional exceed and March very leverage $XXX a X.X substantial which have total

the ratio on fixed second X.X required charge be which March was at XX is coverage to The covenant XX.X. financial least and which is

trailing have than sheet we be been our of long we requirement XX-month a company well by aware that this. have run order ready to Those time for balance that our in XXX%. time like more for you who around seized So are

into variable advantage a During fix agreement calculation debt. April, sheet enter swap of to to balance the our portion we portion our of able substantial for take a to interest our were strong of

debt, swaps roughly result low bank of rates the next has we rates will we executed bear a months, the an now about XX% of decrease about fixed a at the expected X.X% X% were As we rate for our getting. which immediate up XX of interest to from a interest even variable

first the quarter scale During the specifically first for thus share an at we our quarter, our apparent, as we we have purchased price the and became of in challenges stopped withdrew shares and $XX.XX. XXX,XXX COVID-XX purchases of plan average of automated now. repurchase Late

that conditions Brian. reevaluate financial will I have on develop. That's all We and

Brian Lane

Okay. to reported increase I minutes the for of a compared Thanks Bill. overall our I levels at am on segment locations. second a due or strong increase in at Sequentially, comment flat end spend to in was Electrical XXXX and decline and XX% year-end. Backlog sequential we XXX in performance discussing our with the various outlook was and high few many backlog X.X segment first will XXXX of sectors of quarter Mechanical we beyond. the billion, our also and to small the March that the sort remain our markets. XX, backlog going of and primarily million quarter a reputations same the our at roughly our sequential

particular industrial. remained have in with strengths sectors Most strong

the which include which increased was of first our in Industrial XXXX. quarter. to XX% education revenue. Institutional and our is Our commercial revenue consistent what were government, markets sector we XX% quarter The revenue, of with in of revenue first healthcare saw XX% total

With the of expect Electric industries. construction Starr business to off-site and our particularly TAS continue Technology, acquisition Medical the to we Pharmaceutical in grow and

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

For XX% XX% and service revenue of X% with providing quarter of XXXX Service is of service projects of our the first hourly work revenue. revenue including pure providing

negative pronounced result Beginning in to COVID-XX, building by access. and associated as building largely our a late limit service or experienced with customers decisions most March, business the first of closures impacts

by most Although in our had as to been sites. upon jobs markets, of positive have workers due construction decisions services certain closed at action, have we activities various with COVID-XX temporarily essential or classified government owners tests

experienced not starts. delays we of We delayed of also the new Up have cancellations been have of instances we informed some had backlog. work in material award now until our and have in

Upper our as implemented a added cost has and impacted COVID-XX inefficiency has in essential, in safer especially us as In Midwest guidelines we to COVID-XX addition, precautions have not members New states Geographically, particularly other and Northeast been always Michigan that and York, environment in or safety for more we have work and the communities. classified create where related our team Washington construction states.

Finally, outlook. our

We expect of experience May the COVID-XX most from April, to during impacts June. possibly month the significant and

depend that events how unfold. on national will However,

that expect of remainder also will We COVID-XX us for affect XXXX.

that Assuming quarter perhaps evident will by that about the is in one-half share the earnings believe some achieving in there XXXX. we currently levels same June, second positive of be quarter relief considerably per

levels in improvement from anticipate second also those We XXXX. the of half

a for wide of However, XXXX economic range are beyond. we circumstances in and preparing

flow confident investments that feel to to strength their off pay work positive dedication. Cash for our can We have growth to continue profitable. that once accelerate will again you when to and we our returns a we be and all ongoing industry. hard Thank employees and continue our our great workforce will and

back turn Sheila I'll it for Thank you. questions. over

Operator

so of Capital. KeyBanc Thank Please first proceed. The [Operator Sean line from much. of question Instructions] Eastman comes you

Sean Eastman

comes the environment the just looks Thanks the demand once or to gentlemen. Thanks near-term start normalizes? your my on you'd just how questions. like like to been empty that seems near frame the the service get recovery work? on on materials buildings people taking curious have sense frame, what back business. once Clearly, demand curious like and business it how empty on just most how get for to I'm you'd but back disruption I

Brian Lane

That's good Service. optimistic always a about I'm really question.

I think this personally. is just a blip

at to Also, to mean forward good their activity buildings. of Southeast the today. go opportunity I just care as need warmer you're seeing still as take air think a looking looking I I filters. seeing going we're the be some in dormant. increase, at flows weather They Service through let way there's of them still can't people in think we the building, sit

come I be can and opportunities So there's back going think very-very service quickly. to think I

we're pretty summer So will optimistic that into happen. going the

you Bill All there? good right. have So anything? You're

Sean Eastman

the Has Make Okay. interim this what just and booking or can still comment Great. if work on Really And bidding maybe you new bidding currently? in is paused the or broadly sense. stopped at point? helpful. bidding environment guys construction then for like you

Brian Lane

this in both one the add so couple at as Bill that? quick Maine build country New bit at good, probably more quite bonds, some Sean, so needs parts different like That's, seeing we in in one general I'm still that activity State Abbott opportunities do still lot concerned of bidding and but surprisingly you it's some active I outside good. still, as a but in maybe looked morning a night, of activities to are Syracuse anything pretty the for example in of of York far with last little a look have to facilities opportunities to

Bill George

Yes.

actually the or activity not phone there interviews this think, There's there even be there is, delayed. to last I so going I were calls were to delayed just double job morning couple canceled in check. I were that made canceled month well a

work. delay, So return to quick turn there's shut there you quarter over shutdown. slow be be of going little there I a down, may two that you the bit or obviously things the also next did think some

and for of of I a book our know of size of as quick-turn made Our hundreds are business a lot really know thousands like, is but is average for that in don't you projects up that projects time the project developed work. long

happen possibility of things that of again. talked could I yet to were one we That's not that so hasn't have reasons to pocket aren't that see see That come air who have how wait that they but mentioned to going but happen to come we'll the said fast gets and anybody the far. So going that now. going

Brian Lane

New you take script York, about Michigan. Sean, my And I in mentioned like

coming State think I little around recently add think New other day construction. bit. started turning York's to it has the back I Washington a

long be So how just to all play right this think is going out term. I we'll it

Sean Eastman

guys if last signs few play and there's script. expect to there strength of how one out for me I'm Technology in times the a these holding you out? just already Helpful or the Pharma, well wondering opportunity said, Medical, Okay. you mentioned opportunities just

Bill George

us, big us Sean customers on technology, we've for contacting had slow ask technology that this won't reassurance down. us

the maybe So but and that's having encouraging. possibility that of than America in some a charm to pharma, stuff On while far U.S. do think see little that takes ingredients away. going I prepared more the rather it important pharmacological get will

magically I good So think transforms are, pretty, a things optimistic. but don't this two it quarter feel these I I fundamental pretty some think think it's I has within or characteristics.

Brian Lane

and are sectors in Sean, a I times that well-positioned really-really we reason. know mentioned for numerous the pharmaceutical we

come optimistic that's going opportunities pretty be of am and a I forward. going So there back that to lot for us

it's think exciting I So pretty actually

Sean Eastman

Thanks appreciate Excellent. guys. I really the time.

Brian Lane

Have right. a day. All good

Sean Eastman

Best out of there. luck

Brian Lane

Thank you.

Operator

Thank of Please you. & the Company. go of next Joe Sidoti Mondillo comes ahead. the from line And question

Joe Mondillo

Good guys. Hi morning.

Brian Lane

Morning Joe.

Bill George

How are you?

Joe Mondillo

doing you well. Doing Good. are Hope as well. well

Brian Lane

We are doing Thanks. terrific.

Joe Mondillo

hear. to hear. good Good Very to

your provided? you're probably it's would In give you you potentially of us XX% but of talked think range. XQ understand thinking of You trending XQ I down sort of us a outlook, you Any how about about how help whether you're sort about that April's can sort information guidance other that that? terms there's thinking how that and how

Bill George

Yes.

there So on because to develop that the facts that ground. the we going it's that guidance are thing best have but gave we be

we down because April of tests. as goes, far As COVID we closed jobs speak have as

that for days. jobs have We two closed

know of some still, their we're develop out that jobs. than have that's had bigger else more about Walkers jobs. probably a of thousands for talking closed week. to that's We don't of We going on anybody how jobs but closures job

to we have still do. work So with that

very Really changes in to back release, is noticeable this pronouncements. government pick up. get June we will start relief assuming Service in what think we it's we're our We in to said that press vulnerable

have certain where that the the governor shut down. states way We we're the worded down us shut order because

circumstances things and better gave at So guidance trend they thinking. we say these to little we're but we assuming and develop to facts June what in that a for as subject month right now get start are is levels let's another

Brian Lane

Joe of call it's we're have Wednesday outside the we get an last a opportunity today. So Syracuse. already on interesting site We

they need they're quick. they there's and the some quick with worked So opportunities someone have can a and get

these some COVID-XX So if for opportunities to remedies. well-positioned it we some are relates particularly of

Joe Mondillo

and of sort of impacts COVID-XX impacting are anticipating terms you're that July? in out we about to but improvement likely of even the the sort you even biggest that Okay business reopen year the start June or your comments the to made levels. second of What the XQ most half by from once

Bill George

I first on I'm go to going go will that. first.

there's we not couple at So immediately of to right our this a receivables their okay now. we Should to and got things. so look some rent had customer. yes. their impair extent say One we They're paying receivable

So even closed the the pockets. risk have of us I of immediate have actual you and Then Once stoppages, hit as impact. end by building. productivity kind are quarter this biggest think quarter, They air there's March. your those this get you there's the past you

this the we'll have March, again first at so complete to quarter job. a end we cost the how to it us do as will close we much Productivity estimate of and

of of where estimate that an now put know account job circumstances take and we knew a in the at put the on to only XX. that March vertical into people we we Well, We all elevator we four we before end that make could have when facts about.

up taken. on guy knew have platform two. be could a getting their one temperature our knew rather We now would guys only that scissor than We backed lift standing the

that what new down some our So the of Well, the is that because wrote that we play jobs. they'll they're of for rest of out at margin year.

the We have So newer bigger jobs. have can the time ones impact obviously margin lowered one we their that jobs that on. the are

actually and happen. who some matter that they these have are a concerns just, work people forgiven come a believe evidence these cheap getting their are other turn We We've bit this last may to I especially these incremental but that will be really The back. we number minute that to of of I quick-turn may quick and to certain are think work. loans that is have of work pockets. competitors slow take and some be seen air loans, have might concern have working here there little

we some being also because they're that, slow back concerns our getting in pretty concerns have be of cases some but because well some of We about work. labor have to of not employees back paid may these, coming because

of baking considerations. those into what we're So those are all

got the They make fantastic. going they know like a good work somewhat. are this So they're our and they overall little feel bit things and guys world know to to business but and is how we want we've money to matter are a hard those real real

Brian Lane

Joe, really finance opens while up a lot and leads that they had the I'm and all Julie corporate was the charge enough We've about get to we're field the and ready for of she about this -- these us both deadlines meet we've operating able here. call the about were administration hard I It today. can't a this fortunate and work. thank talked them and accounting comments. are topic that talking but folks talking remotely lot we work the a at

nights tie up. it spent few making here a I we think Julie sure would that

all work So how and them professional they want the for I were. thank disciplined really hard and to

Joe Mondillo

last up I'll and my that My you, Just question do in of back Are sorry to train queue. on lost thought. question. follow hop I’m you,

Just regarding project the new prior a follow up on question work.

When if you sort take at will anticipate work this it all? the work around affected time you a project this at occurrences, would Looking system should to feel would weeks occurrences in happen this you to never the time of new in six this a little with by of effect but or like if pandemic and impact past XXXX. an look just of sort we time wondering shock economy longer back project feel obviously seen XXXX, those new what we work point bit have will being to back the time the would something some in in a it XXXX, expect or seen shocks to into we've little take if it's bidding going project more new at to

Bill George

that question take will I Joe. So

and So you we've will prior seen some you're give take There my Comfort me The with very difference this different talking agree to is that I like never today. big call quarterly those is about. anything or company Systems events from XXth this. a biggest are differences is

Our biggest segment going into the most we we recent the revenue, that financial our crisis didn't have with multi-family have then. today at X% of pharma and tech

made We've in a Service. investment big

are that like feel those in So a this better differences me big make will enroll way.

when of the on year. more I nature this think emergency in effects There's the that that be there's happening just year. cycle and will of is of the business right far will be of the what going May, two air impact things some As next be in these now the that on. will as That that events will the and question pockets the then be deferrals because lowered productivity there hit,

calculate had seeing financial happened. already United We in unbalanced were crisis an We recession vacancies Comfort and Systems States. X/XX difference the me, really that when in recessions I already the other been already the to for difference say the would big unemployment were for at hardest thing one in recession hit have had between it the was high levels increases the situation. that makes I we big that in two the of big between biggest this hit

of shock. at the start recession then were a a we we and So had

I on going call energy, eventualities. different recession that ever this had about could shock welcoming you, What's is when be the tax been, trying kind going were regime was triggers. as as for to abundant what fundamentals We're when time it's more this cheap let's I'm of to good came a reassuring, honest big when say this were prepare think they've good and a hard were we really but make when difference people things with all and when the

Joe Mondillo

you. in queue. I Thank thanks. will back Okay. Well, hop

Brian Lane

All Joe. right. Thanks

Operator

Thank you. of next the Please comes D.A. question line of And Brent the from Thielman proceed. Davidson.

Brent Thielman

Thanks. Good morning.

Brian Lane

you are how Brent, morning Good doing?

Brent Thielman

Thank Bill I by work Brian margin, you. might of have into sounds had like coming been that now am I quarter COVID-XX any the think some the well. guess Walker kind you it I and lower through some estimate amplified impacts. at it know to had that to Are move attached on of you business doing that I further that some was margin we guess as margin target how here I the do I of or know step do the And gross diluted to think electrical there's couple in the profit a take in how this about we quarter? lot how that XXXX? next about, a through that think variables quarters, we

Bill George

even appeared super set you aside a that is all So to us if not of uncertainty that answer. easy that's question the for

Let me tell you first about Walker.

culturally was, of an on important made this the multiple been punched I might were really had in So and in They April first quarter. challenges. have of mouth COVID-XX quarter the in had bought they a ways. it Walker had they That expectation then that historically weather that money never had project not have that don't shutdowns. had, They really bad know an lot was they some something before we them they've had, in they of but

And so even bit this a little quarter remotely not will I for still was a through. coming purchase also that of have a believe be adjustment them. indicative They

nice is not Carolina. a just in of this all electrical quarter segment is what I going company as We like. electrical well to North our to think added at look segment that indicative So our

there. adds also a So that variable

cost direct are service. indirect has it’s – project as what more work. and cost. gross going less margins of like, more far It overall It and to our Electrical electrical look As has sales. is cost overhead has less

down So our they gross will margins. leverage

sector. or that be So lower would we a XX we were XX in depending the XXX on I volumes XXX going to to basis points expect be might

that of another for certainty They doesn't is could you proportion some a which the ways it of but and work. cost margins factor do it give fee in cost plus of plus higher fee work you high also price the have they with fixed opportunity because is gross get work very attractive

us average Where we're think I margins will up, growth that long-term up. Comforts that trending shakes So that down.

will I I it's long think lower, they but good. term the trend this still leverage on think some down underlying

Brian Lane

this them company training, is for is working But still work. bit started little is a, Brian. We've a fundamentally circumstances. They by a Yes, and current Brent very very do do etc. etc. be Been good as long-term usually derailed a us. This on good basis sound this this with is to going on recently we company.

Bill George

days. biggest for job their shut twice. Yes, this quarter multiple down didn't That help

Brian Lane

just It's it's event. not work, just

Brent Thielman

I from But mean – that be improvement we you should in it. should got of Yes, take terms sequential

Brian Lane

absolutely. Yes

Bill George

expect second really Throughout in better in in would second Comfort two quarter. have have quarter the as the expect of whole the the first when weeks second and yes margins electrical to have them a only margins to would is COVID-XX quarter better in going Yes. second there, I quarter, in us the we're electrical quarter, impact to, I we

Brian Lane

we the full got And load now.

Bill George

We going margin. a we're obviously tell as includes gross year you to as that much last half lower earn

year. then start set think second the aside a quarter I to would I been trend think this COVID-XX without we you and fantastic So upwards have

Brent Thielman

year. $XXX about out first came the the I $XXX think million to Okay. TAS, right million you still originally guys its Is And think to that then on said ballpark you'd when here? in

Bill George

they're would We and we bake also couple to period to I and there's time. strong of quarters. about our comfortable is years TAS that that kind next over have, release. for XXXX. come and develop will going that is for to I to markets Systems working contribute I recessions track in good press will going completely of a going think in Comfort any to be company, of talked very on over the what I work still it us they're that provide think TAS into revenue recession the year. be to conviction come. there we're in earnings about am this a recession we hard years the for for a by lead XXXX a there's in If levels

which we I by and give think think we'll be year know. profitable I profitable I still that be they'd don't return still

Brian Lane

Yes.

very still very normal and prospects if time. busy ago them on bit visited are here. we So little good their Brent, are a things progress They a

we feel company. about good really So that

Bill George

of going you those the the are listen are about to said all key to add I Comfort Look what EBITDA. add they're our Systems only covenants structure to two if to going capital because EBITDA. And to of they strength the

Brent Thielman

up and any the you on Is one as said or maybe you receivables. or Bill concerns some balance in even me, Okay maybe guys market stepped related particular to of sector geography? the for you last sheet, I attached the guess that accrual

Bill George

is took receivables retail of many accruals So that we against for businesses. primarily, our

based goes It's uses companies but of business. We fair organizations. do have national a for A nationwide, other companies our chunk in work Indianapolis to and work. retail account is that

top could out Tampa about We day it have and business was that We this that. And and them to operated of Florida light we Street do get we Journal their with when one address situation. as a came based that's what do accrual take to make also bought intelligence it we much them. have articles that's circumstances, of reflects whatever that site try could prudent as felt us light receivables we in the retail entire to like various doing of sure we bottom, and similar concerns everything tried to in list scrub we to BCA companies honestly strong of of Wall that

it of is majority vast the retail. So

Brent Thielman

color. you Appreciate the Thank guys. Okay.

Brian Lane

Thank you.

Operator

next the Please line And from of you. the Adam Davis. Thalhimer comes Thompson Thank go ahead. of question

Adam Thalhimer

or by also more Is Hey ask wanted geography end about good that is the by varied morning guys. I bidding. varied to it more market?

Bill George

would both. geography I say

are too way in they tell hasn't to bid. just I because a change much think been that it's soon in

be about of job. there's If for a jobs big going industrial job interviews sort the that's to talk delayed because a really you

$XX day don't you $XXX,XXX] $XX interview for million job. million, people interview people a job You [per $XX million,

So that particular relates industrial the comment hospitals. work to and maybe big big

Brian Lane

just know But geography so Even Adam is tomorrow. terms if down pretty no in broad. that looking Michigan thing we're shut still there's opportunities at. it's of like you in There's

there because we're it's work So bidding. closed we're state lot still not a of doing

Bill George

Northeast The more is definitely traumatized.

Brian Lane

question day southeast Night about and No from Yes. example. for it. the

Adam Thalhimer

remedies COVID be? could material How Okay. the

Bill George

What does that mean?

Brian Lane

in pharma? production build You of to opportunity terms mean facilities,

Adam Thalhimer

Yes.

Brian Lane

Yes.

Bill George

help could our That of certain companies.

a our For into the of going Comfort to business. not whole, turn as basis it's

would but something having people to I from more additional this than be there for consider experience may think impetus be China chain more or is that closer supply their importantly good.

be we're mentioned the the one research we we, the it manufacturer us that, think would think sort Texas mid-Atlantic pharmacological at I all the if in there's sectors is towards and re-shoring of I good hopefully the have the of awful for the like and geographies senators earlier it the of shouldn't there people and gee coming lot is and and least would it important shouldn't maybe. I an that of right like saying best substances triangle be of is most the news places southeast are and trend so likely at in for most underlying by reinforced this

like for do is that our and lot the then a of I we last geography tech. thing

be it'd say less streaming. be hard, to think a experience or people want this centers stretch I less make a it would would data that

Brian Lane

a in a give But to back pharma industry record for terrific way you them to more the pharmacy in got Adam, long goes we track and work. that that

Bill George

They to like work the stuff want have to hire done fast. they people do especially who

Brian Lane

some And do right it can now we we they working opportunities it we're can we know fast. on do got it because

Adam Thalhimer

mix? what's then their end nature and and TAS's the of backlog Okay market

Bill George

TAS? say you Did

Adam Thalhimer

TAS, yes.

Brian Lane

TAS.

Adam Thalhimer

one bought. The just you

Bill George

very percent for. customers, and they repeatedly [indiscernible] Yes. TAS very maybe work that the focused, do is tech very, names, names focused some plus tech X tech have technology top XX XX they technology big over top

for is construction do -- some and TAS things but the we the can confident we into diversify of other time with very do now can do and One are we enough industries hope we with modular of that

Adam Thalhimer

mix their right like sounds perfect now. for market is It

Brian Lane

don't question. if They have energy was Yes. exposure that Adam your

Adam Thalhimer

exposure. oil No, price I they mean no are

Bill George

Yes.

on knock wood. So

Brian Lane

all Houston are based but they place. They just over the in ship

Adam Thalhimer

you balance balance today? the Okay. cash What's And Bill the us today. debt gave

Bill George

Well, so the cash like cash bank. balance $XX today in the million probably XX is like some actual

million million. did a that you you add cash might transit include cash XX book to in XX would If

So see than bank you'd than my just to, account XX you looked in million-ish if more we're because maybe tried just a liquid just -- million million. $XX about keeping more you'd little but We usual even that my if books I see close a little XX over

Adam Thalhimer

total closed X. you're because TAS the April you -- debt But of on

Bill George

Yes.

Adam Thalhimer

it's at from much that even QX? not XXX debt, of you're So

Bill George

Yes.

for we So already had borrowed TAS. money the

look our If on you sheet balance on

a April we over $XXX because million XX. the March X, had with XX, on already we March we borrowed money had closed

So slightly. that's actually down we're down our is then net debt since

Adam Thalhimer

that, impacts organic And then, margins, last like sales Okay. the one in me through up QX? like in okay. still the your be I Well, sounds as think for really QX, it we guess

Bill George

bad a with that store would surprised. at year just percent that, I up quarter would I on feel same surprised I store so over last as be be answering question. same the number sequential but minus same sequential was but up if be first would the over-under We I was in think store. was few surprised

Brian Lane

are Because, Adam. to be busy honest, now still right we

Bill George

places are we're I I got job a there But where stopped, down. shut mean

Brian Lane

But we everywhere. are not stopped

Bill George

job a down It's in a revenue. not got one it's week I the shut week. revenue. not for mid-Atlantic for It's

Brian Lane

We'll see Adam. they we count do when chickens, the how

Adam Thalhimer

a good is This call. both. much very you Thank

Brian Lane

buddy. day good have You

Bill George

Thanks.

Operator

Mondillo ahead. of the Joe next Sidoti Thank line comes question Co. the please you go and of &

Joe Mondillo

guys. Hi

Just you few a questions follow-up will. if

Brian Lane

I’m sure.

Joe Mondillo

gas? any your exposure oil oil really if the was or business gas you any a have in don't but but exposure to downturn to I see I direct know you that really Do and indirect related have know did and don't I you know indirect XXXX because else? any something

Bill George

we the to on anybody gas [indiscernible]. service building were E&C and exposure oil But think don't than do. if in some has doing I less industry

guy in Some oil probably. trading there

Brian Lane

it's the going most affect the for not part model. to But Joe

Bill George

know -- we very have got I Yes.

Brian Lane

gasoline Maybe we stuff the at station. gas buy

Joe Mondillo

thinking Got competitors? any about at competition? about talk you. business and How our smaller of a you're them what going there your your under maybe being to positive Is you Could risk about not all?

Bill George

got their for if turn quick lot work, to and worried don't cheap just four of There people thinking back which a they is have can keep work. means they some money I'm working seen loaned two maybe we've very pay months possibilities. One take they cheap

So are Remember, acquisitions that them few I lot a going not of to real doesn't lot A their help now. of who, lot months. mid into a for and do be of think are capital do people dump lot think happy talk to that there back a businesses. I owners of lot the next these in of XXs. to XXs are their businesses and right I a

think some just I you'll desperately up. like not see blowing actually people So

some you'll or think I see choosing -- people downsize to just

Brian Lane

a We've Joe. few, already seen

calling a it day. Some guys just

Bill George

quickly. it guys small who where called work finish in that a the business, good be call a it guy had project would company time have a Just day. a [indiscernible] can a nice Virginia they said there's and just especially very it do to

hundred guys. hire just and They'll they that. over equipment say, their us, my Sometimes just have they'll We sell a my come will grand hire see a buy for guys. just of and some hey

Joe Mondillo

largely you're Got the as and Right. prepared remarks year especially wide preparing to of to end had it have mentioned you range a contingencies the economic and in people. XXXX get what for that kind your reduction your know business we scenarios kind can cost knows and of be. of going you to actions What we're is I make? of do who really where you

do you downtime? offset can what the So

Bill George

business. parts to the two actual there's question. is One that So answering

business premises times make as are that in workers People at industry but work. pretty really up less there and show construction somebody they good wage when a also varied Our else's business. realize is business is cost the construction variable our there's a

So effectively to where in bottom forever work just scale to very find bad at work amount general get. the can we want because reach we a the costs have to way them That you this of for your can you of business of recession keep our a you pretty, core point busy. who people really and changes a you

don't year in worst are in rather we're make business core general is going money we XXXX when a a us to our today more and scale of our that a So the see our than our in pretty lot year few quickly. revenues make of destroy you we're ranges of and our the but little deciding we lot to like a money this in a guys keep cost

around doesn't a doesn't who the control then the what and Anybody So very SG&A their you do margin is hang to you question and overhead have for is reality do overhead long. this uncovered thin business. to have

Brian Lane

variety things corporate. Many But we've pay done have even cost-cutting taken at Joe. here us cuts a of of

think is we're for of So doing prudent company. the long-term we viability that everything the

Bill George

in them We know people good in time. and have do treat bad we what to times do well we

could usually do So that. we

Joe Mondillo

Okay.

you're following Just last on near-term hit the up of on question productivity on your being jobs. were at jobs the these these percentage in that you'll in terms productivity jobs maybe some on of be margins this? sort and you of What big say the already bids? of of risk some affected margins jobs able I are that by original your your to would assume meet current

Bill George

Yes.

out as will my So most vast answer the of that we jobs not half this absorb that that can is of the moved down contingency is margins is, jobs, our here go contingency later were you from to on. happen won't see what our more of than answer, going majority to my job their make but

you and have some less money price some will spend that cases have as We to [demobe jobs fixed have is and the well like a you make you money. write might but their actually remobe] a but get money in margins you for reality to little on if down something of bit got

Brian Lane

all important one but number health and and Joe But having that's the safety well-being. that a is said

whatever make it takes do will protect they're where sure working. we people and to our We

Bill George

build tough time bigger to industry customers Comfort, important on. even want try count We for out people to in get more the of of bad fitting. times force having a and our we never could share a to as come future. try We the an the last being that

Joe Mondillo

through Well, lot. luck Okay. good the and year. I a appreciate rest Thanks of the

Brian Lane

All right Joe. Thanks. Take care.

Operator

turn much. And remarks. to so the closing you to Lane like back I'd Brian for call Thank

Brian Lane

committed to a Without Systems. I XXXX want been Comfort we would our have once you. Thank sincerely employees. believe resilient for and thank record COVID-XX again amazing year Okay.

quarter we that headwinds share. this XXXX in have second we of $X.XX are the year we with will we are per believe second facing still we attainable quarter. Unfortunately all year. good Last in very feel is point the the don't However, at in a

However, solidly profitable. we be that we will believe

near continue in term progresses forward safe improve. you but healthy. We're many as to in again are year can that be seeing in optimistic much. and the person you to We of please hopefully Thank looking we meanwhile very the

Operator

now concludes for that you. the call Thank And today. everyone

now may joining. Thanks disconnect. You for

Comfort Systems USA (FIX) 28 Apr 202020 Q1 Earnings call transcript