FIX - Earnings call transcript Q2 2020 | Comfort Systems USA, Inc.

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Operator

Good day everyone and welcome to the Q2 2020 Comfort Systems USA Earnings Conference hosted by Julie Shaeff, Chief Accounting Officer. My name is Steve and I’m your event manager.

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

Julie Shaeff

Steve. Thanks, morning. Good Systems Comfort Quarter Call. Earnings Welcome USA’s to Second

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

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

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

Brian Lane

everyone our thanks, employees their I thank this courage their right, work this pandemic. by start during commitment want global morning all than on and today. USA Good Julie. us to you for ever, thanking sincerely and especially call Comfort the call Systems All of joining More and for and resilience

these day. And you challenging But are times. know, of are gratitude for feel I occasion. As and them to all the our employees admiration rising every

and will highest earned Systems the in seeking the conforming is to keep earnings safe local is COVID-XX. USA well. quarter segmented compared to are great of on In our that the to true to cash despite path And OSHA quarter we locally protective work other compared to quarter in per protective employ taking numerous Comfort equipments last and In local same of during as safe earnings a work the operate the were and to strength our Revenues share nose are per are this equipment. suited focus guidelines work face community And implemented and personal communities screening, measures achieved employees distancing leadership best the prior these measures on and time, share kept workforce the safe. X% service, million our temperature many areas, year. best basis. same-store and in a $XXX flow continue the of keeping is we That dozens We start healthy of to our we this share of have in $X.XX $X.XX zones, we states that and people revenue location grew actions. symptom of history and feel Comfort million The We such challenges, in We $XXX our midst and quarter. our per staggered is markets and the markets, quarterly and a in Systems. We ensure this of CDC extraordinary company. circumstances, in disinfecting year. $X.XX wearing each headwinds EPS and required our

COVID-XX six the of same unprecedented cash business March. the And of million in in ahead are began of second quarter. free truly million our $XXX months, we $XXX flow Our over had half impacting than this as was flow more through period cash XXXX. we

building customers to pronounced Our and limit decisions first service access. most building business largely and experienced impact, of by because the closures negative

challenges, although have activities, curtailments Meanwhile, continued closures end time As activity overall, from of the of project quarter, expectations. our workers of experienced unabated, result field normal jobs highest extraordinarily a positive individual management, as to our second especially workers exceeding these have and for COVID-XX been and the – productivity local extraordinarily returned effective, of functioning. our majority various of our have leadership, Despite service tests time the to have operations construction at our sites. and temporary

seasonal to approximately XX, very pandemic. same-store was decrease as strong variation from XX, removed backlog will that of a $X.XX likely $XX We of plus XXXX the a majority of The result million effects since maintained projects sequential XXXX. decrease despite adverse a projects we the is billion. from be backlog completed. as Our of of million we removed X% or June primarily backlog This of composed backlog March relating $XXX

paused, However, TAS part and off-site construction of of we when specified North have our we at now and in acquired existing in is with be growing the industry. is or date. Systems modular to expected considered construction connection EAS April now capabilities a USA capabilities paused great Comfort chose assemblies complete to on Energy, is unmatched to Carolina, complex any been a modular With in MEP TAS X, we no off has resumption there that start. if to project remove which

minutes, modular our our and to and of to construction allows our augments already which our existing particularly strong the has medical cross-sell capabilities This us is base Our customer strong in combination locations increased our industries. few offering to outlook to industrial in technology, all segment, this turn pharmaceutical at to detail total first, so XX% of year. a performance. Bill our me revenues discuss details in I far this the of but let financial over Bill? business review call will more

Bill George

was. Thanks, performance it Brian. what And a

the The million, to especially percentage quarter profit Gross to remarkable in XX% in and of May. a XXXX. achieved $XX COVID-related offerings. for or million the year-over-year acquisition primarily $XX X% more same-store by of was the quarter expanding the effects every work of Starr, six of the compared of TAS for compared second last profit quarter the second was results second recent same margins aspect. is fact The $XXX and due million Revenue April XX% because for this of mechanical electrical in the compared to XXXX, quarter second the an XXXX. than construction our quarter $XXX of and modular second service for in strong second Our in quarter segment. revenue both this in as quarter revenues an is due that the construction increase declined to XX.X% million offset the our quarter X% first $XX year. to of were we of XXXX, revenue the increase closures of the quarter margins quarter Gross our or of increase to revenue were was on experienced XX.X% The lower that contribute an up in XXXX. increase months Same-store overall which our million notable we

impact for gross the COVID-XX our segment, margins. project $XX matches component, fact And and XX% lowers on their new percentage SG&A continue large SG&A share expense With and million electrical segment their in by in current certain SG&A compared larger XX.X% also project XXXX. in declined same-store SG&A to added electrical largely second addition have that travel, impact the including projects revenue and a expenses reduction of of basis, two lower resulting leverage, On light as a a of than we the experience in adjustments to more service, lower second Our of SG&A our quarter percentage. challenges, specific the service year, mix was continues the as such purchase $X.X roughly productivity our XXXX, was less actions that to which quarter in we quarter we’ve from the taken million. operations requires which as the SG&A, electrical despite of well due prior to the from levels benefit COVID-XX. certain to in interim. segment, as of of

$X.X that control I You to quarter to This resulted quarter. may cost not noted that a was this SG&A the million we additional from usual second take March We fact quarter. from have a in related the expense decline of decline and caused of of described million debt not any which by first debt also also experienced sequential SG&A, measures an the did is accruals us combination COVID. the the in bad included for just pattern also $X

$XX when which the XX.X%, in middle year-to-date in items. right Net is which ago quarter XX.X% of discrete period, the to rate from for Our our rate compares the our year range expected tax effective second and income was benefited a million or million is share to challenges. impressive as particularly This was was XXXX. or COVID-XX-related XX% in $X.XX per record $XX $X.XX increase share it per despite share as compared achieved per XXXX of earnings in

Our a period. trailing $X.XX, new XX-month per is record earnings XX-month share a for

compared was For year. increase our to the of than second million, the reported that of quarter last as in XX% million we $XX EBITDA quarter, EBITDA second more $XX an

extraordinary. a EBITDA USA Our substantial $XXX trailing Systems a really Comfort XX-month the margin. record quarter for million, by Cash flow for is was

XXXX. of compared free flow $XX million $XXX Our the quarter to in cash million second was

allowed Our stimulus of the certain which million a repaid benefit Approximately cash the has result second of flow of in includes $X $XX that payments us to is benefit been and July. this payroll million federal quarter. defer direct in already income tax bill,

these benefit estimate $XX a overall fourth benefit by that The million quarters in will by cash flow federal the XXXX. third million fourth to net is of will from $X be $X million. best million of $XX expect tax $XX government tax flow cash discrete that will Our cash provisions benefit quarter these $XX and our to quarter million to XXXX million we repaid and flow to the provisions

dipped a benefit April disinvestment temporary working some May. in as from We workforce and also had in this our quarter capital

we quarter. level was a has cash However, single June. a believe two much considering that flow items, benefit of Even these been reabsorbed of free this end the of that by in fantastic

two In fact, in accomplishments. remarkable the quarter sheet extraordinary flow resulted balance this cash

leverage earlier had we trailing than turn EBITDA our able anticipated. one First, were much of we XX-month to reduce less than to

second we acquisition during our quarter second largest XXXX, funded Second, ever. of the

fund reduce to the and free debt However, we managed we were our flow entirely during quarter, still to able acquisition from level. that cash

represents Our flow we ever free flow that XX-month trailing achieved. the that million and have XX-month highest is free cash cash $XXX

XXXX, an got, all back have an six I X of first at since purchased XXX,XXX we of During we at average program, repurchase $XX.XX. we shares our million have of the price of Brian. And price began shares bought nearly $XX.XX. average our months That’s

Brian Lane

thanks, spend a will I’m Bill. markets. discussing XXXX. I and on right, comment few our also to minutes outlook going full All our year for backlog

strong of billion. quarter the was second and at backlog of is end Our the XXXX level $X.XX

as to completed. a projects backlog effects removed of $XX the quarter removed will pandemic. result we adverse be of XXXX, the of relating projects During second the The likely incomplete of majority approximately we from million

to backlog chose one expected been expected paused decrease strong is $XX remove same-store that This our our by date. year-over-year resumption at backlog up COVID, certain segment. on for any to Same-store composed variations, primarily removal and seasonal that but there and than has or to a ago by compared approximately year by the is we same-store Sequentially, by However, of Walker. sectors has actually decreased is our more with decline $XXX the Without have industrial. accounted be paused to million, million remained decreased backlog in million. is if Most strength in related is particular planned project specified $XX the no basis. of Walker, electrical projects decrease

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

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

projects to XX% providing in construction buildings. the pure including and limit to all building revenue pronounced is in a largely This of business of construction our service from is of service quarter related and led with calls, maintenance of access. X% closures experienced late of XX% or by existing decline service our associated construction building Beginning March, customers total XX% revenues first buildings revenue. in in impact result year-to-date service new the work, COVID-XX, second decisions For revenue monitoring. service, negative hourly XXXX, XX% XXXX, providing projects most Service as of to a for XX% from XX% of and with our projects revenue with and

service quarter we because higher same this in service that roughly performed. profit the year-over-year. in were revenues dollars was was flat project the in Our as Overall measured work margins had

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

of instances We have award future have and we starts. also These uncertainty delays experience than we in the pockets of we work believe usual. informed delayed new And that create periods. more potential some been had air of could in factors

inefficiency or challenges, the and performed precautions other implemented incredibly projects added we a as safer team have safety those members that our well for have Even COVID-XX-related and with we our mechanical addition, guidelines communities. environment work In costs quarter. construction create to our during

impact year Finally, our may we unfold, is XXXX our not possible the pandemic quantify to not our and or decisions half currently the to outlook. because decisions in will know second nor government the potential pandemic the It do of impact how of customers. the related how

challenges the this give growth and our industrial and successfully. a in pandemic the the that opportunity of service and that our currently XXXX. can pandemic these economic outlook not that of that we pharmaceutical we us prepared associated are XXXX worsen cope achieve We our with that confront believe well the results at comparable feel investments Assuming we results least medical to to challenges good record technology, with our segments in does materially to believe in we are full-year markets,

We pandemic, we quarters. circumstances the over related to for pleased of our wide given with But prepare range ongoing prospects. to the continue a are uncertainties economic coming

our great it for back have that and confident I’ll marketplaces. again a you over and the make the we turn to your you. once Thank employees Thank We we for workforce work in to hard continue our Steve feel now opportunities most dedication. questions. of will to

Operator

Thank you. line from Joe & Mondillo go Company. of Sidoti Please your first question [Operator And come of Instructions] ahead. the

Joe Mondillo

guys. morning. Hi, Good

Brian Lane

Good morning, Joe.

Joe Mondillo

with us work of your so the progressed almost bookings quarter month open. help understand the you Could let Or I’ll of into and – how we’re second done through July? new monthly July,

Bill George

medium-sized bookings quarter May, By usual getting in Last although rising book May an There big We had and late had in in we the the quarter, although started. is catch-up. wouldn’t at heavy a – rarely work. the bookings June, bookings, to though. got few there was when we bookings And but had April June, any of that until big was work, second they right those expect we just were more right, very so continue are, work Well, season. we than spring is July, a haven’t exception. – really the year, lot this actually remarkable year we

Brian Lane

that the we general second And in busy contractors a Joe, behind lot were were quarter. as is

we as when back of they So, the quarters, and into see that fourth activity. started third opening of opportunities up go the you the half most

Joe Mondillo

was in compare period about, and seasonal talking these, aspect compare the you because there decline it April and you maybe stabilized it, and started would the is year-over-year, July? that decline when So a we’re to worst four-month that when lessen seeing May June year-over-year you say then you year-over-year

Bill George

in a one Yes, short such with it’s lumpy – month little is I hard and That even true. actually our so such about would is is Like bookings new are a month caveat. that a to a a – little talk but timeframe. it’s is trends months, – actually much pretty a say

Joe Mondillo

projects starting opportunity it in provide Any information you be are that helpful, I big that. of are you this in you saw a I to what second expecting – bit could type potentially work in how the Where – acceleration about you of can that I quarter? terms the thinking was Are hearing? of because quarter. about the of COVID-benefit of third an know timing I of people little And Okay. wanted you lot COVID-related a see. benefit an is, the ask would know

Brian Lane

imagine. it’s wide a well, you pretty range, as Joe, can Yes,

therapeutics. already front, four coming. the few that my had opportunity about right, let’s for as for be think and continue, and working think vaccine I we construction probably will pray on we’re going some a On to customers, closer as that they But that. said is a pharmaceutical and get optimistic of hope to in script times other I a we’re hopefully, pretty We’ve number that

On the air a you get about of service conversation lot front, quality.

that host of So, we of in there. buildings are whole opportunities are sorts of a lot options a about to of the how a the out in from lot all building improve seeing air

with for best working the our solution is about them. we’re closely what So, customers

kind this keep they to picking So, pandemic. solution to medical if up of the some get particularly to on front, closer is I think pace, this going construction

Bill George

mobilize Yes, most simultaneously had we companies had to in We about aspects the this an made opportunity. not a good opportunity meet quarter. this. we material quarter three to secular to timeframe. excited on that, the the money I results had where COVID-related but We underlying sort of am of

that of think at. there a investment sectors I will more best lot be that we some are in the

in some get to sophisticated to to prominent at we reinforce But that some we I the idea sales the service past, coming of much trends these offerings over quickly coming think – controls levels do they’re in been they years. get in to the meetings I that service things wanted couldn’t reassuring considerations able more to to talk the especially about people safety. are the And more I had and some address side, this also the people has that people have when they’ve that of companies, our the think as the workplace consideration going a include years. with excited to have, most with in people and in

Brian Lane

overall building. home provide service anybody we in crucial that’s that working are at Joe, But, a or to the

Joe Mondillo

stories this have more a an that opportunity? you that of of fall. Is of Schools businesses when talk or Great. you the of an an service opportunities the of maybe timing? XXXX to a this anecdotal just related this to What a you of of air do going Do Is to in to immediate sense more follow-up quality. up hopefully opening, – And in sort is sense immediate aspect a of you a potential a are open the opportunity the have of on thing? sort kind have? more your try

Bill George

said, in first went one they of to and guys gave our he was I were selling and best talking a lot when presentation, they Anecdotally, of analysis. their

it and deploy. I what – basis this go-forward really, is companies to and has can but your lots these we since I on really only and I come the is the in go and the write match outlook. that, control a that evening analysis around best and deck that and that changes you sell few right of how a measure much factors? how of people us. predictor does good each believe, and I would companies of a more will like a big exchange air with back today." to said and really morning then there that’s thing the best, of meet would a – COX really study, lot the in now. said there There You and they us materially are interesting they the there other’s that front positive is is for people you COX said think one factors having hire air. something this think a say, sure, needed that really of change they can because The it don’t good do things we was We in puts think the have nice important they we’re to is to type do he for said, company, much Systems he measure slide are we But positive But for breathing of help things and Now that I believe put considerations our the center, very realized a they’d us a PL at that are Is put Comfort today, earnings slide they their the we’ll and was that products. the stuff can great, to do – do front "oh, interesting

Brian Lane

these And Joe, number already. projects done we’ve of a

was service this. to and call-out as in our said work same script, our the it’s was the I saw service, of some my You project down, but work related

So we’re a There’s bidding a lot opportunities of lot. there. out

We’re also doing so.

Joe Mondillo

question for just And last Okay. me.

of the see outside XQ Your that sort figure what in also aspects hard you did challenges then it to normal, SG&A, TAS. of it’s the given out of of was positive and all sort

be would your quarterly wondering SG&A run this your rate what I’m point. So, at sort of normalized

Bill George

We stoppages month the but there in about stopped. were two important from very cuts forcing take were I think had to the right, savings took just was there made people complete – had of that hard really the right that voluntary we cuts. a math that’s or concern – know severe for travel were We COVID, now, government how would pay face be. some

so months couldn’t say, I don’t think to than but in lower XX it’s I I And been. But – will have throw I our hard SG&A would be next it would out... the XX very say or months

Brian Lane

I right, he’s think, No, Joe.

we need we you very move on as – quickly cost to. We’re know, when

Bill George

my best odd In own I me. model, have for the question

Joe Mondillo

sort you to pre-COVID than TAS, and pre-COVID. to be SG&A So, accounting would still relative expect for lower of

Bill George

I think so.

people... bound I it’s think – that to be mean I

Brian Lane

Yes.

Bill George

and you’re and investing focus you you to are bit. little on. you going is a focus have – things what to for people There through just a that’s There in have lot have to

Joe Mondillo

Okay, Appreciate taking it. right. my thanks all questions. Well, for

Brian Lane

All care. Take right, Joe.

Bill George

Thank you.

Operator

from go is from Brent question ahead. Davidson. line next D.A. Your the of Thielman Please

Brent Thielman

good thanks. morning. Hey,

Bill George

Hey, Brent.

Brian Lane

Brent. morning, Good

Brent Thielman

the on was that Bill, there million of markets stood there? or or delayed what was that to out anything attributable you to work, end Brian Hey, $XX

Bill George

one think, don’t exceptions. cancellation of More than was exactly was any – It’s the and over If There half. stuff hotels, you what think bunch stopped… I a could it’s slightly there’s stuff. I commercial half just

Brian Lane

A lot of Yes. it we’ve already started.

Bill George

started. that ones already backlog for They out haven’t that a we’ve ones restart. of took The were are yet set date positive we

Brent Thielman

think sense half then to about start of off, back. this work the on And the the trying that guys as Can of backlog margins focus bounce great. a kind just the legacy sense get doing us of margin, down see when is second wind can rolling to as electrical and there? improving I’m Okay, of you can when we you of we some there? give in some those

Bill George

upside second for meet, back. they net half electrical mean, that segment but to margin. start I think net just on I there in keep my mind, do Yes. a flow, cash best in they’ll estimate the roll expected meeting we to is profit, are is what

Brian Lane

a is good Walker really company. Brent. Yes,

Brent Thielman

Yes, yes.

net for wondering payments to this in Bill, customers? I’m excess, driving kind what’s been you, around that. contributor more collecting months. from the in billings first be of great. nice just you flow Are that’s early Just a color six cash any might Okay, that.

Bill George

So, been that this over any much it general, I to – I the the third improvement, we that are will account of a it’s parts out the the pull quarter, see obviously, about quarter we cash of for year think the flow for have us, an been second in great be less that really which the – trends you, you’re in would we went we’re in a this any thought, obviously, you doing we future it, lot went in right, and both look a than thought that there catch-up never a But just the expect think We this if is year. biggest other have year – it. year I gave much third from this for quarter. think cash than great this a developed don’t been the a particular more really quarter, better – think to say that I what we okay, course of wasn’t much – need a with to a guess, hard of took get continue. There’s right, – and maybe us figure specifics to out a dig what that and putting flow, those a which individual I we is. of when way issues, – would I we a into

Brian Lane

Our are and so. guys very new companies on as better average at – are we’ve are that good still the than good just really added we or are

Brent Thielman

it Thanks, I’ll Got it, on. okay. guys. pass

Operator

Thompson ahead. the from Davis. Gainey is question line of go next from Your Please Kevin

Kevin Gainey

Good you guys. morning. Good quarter,

Brian Lane

Hey, Kevin. are you doing? how

Kevin Gainey

since Good. XX, when in I revenue like first how do of you XX, forecast that you bought year first. was organic quarter, XXX what is do I the it, know original XXX do the the on XX to wanted see – it to TAS or of the kind X%... it in rest touch the see you guys

Bill George

Yes.

had revenues just like are is programs quarter. of can They a a couple in had turns and they of companies order-based which a much a XX%, more – and tease – able quickly. our lumpy. because So, were big massive really had you a backlog, quarter, amount the Not purchased their cover you really big out to by above, they any of just amortization, their did. right revenue deliveries They active it backlog like

on money extraordinarily were their really like everything, of of the of look when ate make more still quarter, burned. at was fully every backlog how enough amortization which they I So, and the one main front-loaded those much it, they think to than They out. cover first to half in managed is the neutral, accomplishment, you intangible

big now revenue that’s next estimate. goes, heavily the good for they have far as year prospects not nearly right As the year year. But third revenue a of will rest They as my in the or best really quarter. fourth

Kevin Gainey

That works.

or? on of good there is seasonal kind quarter Do you was is holding got a see going increase I the QX. execution into thing There typically, in Next margins. and that

Bill George

Like service?

Brian Lane

in just talking gross general, about, you’re the Kevin? margin

Kevin Gainey

Yes.

Brian Lane

we tell match That extremely high third can got if in the at quarter. at death thrilled results that mean, you, I be we’d in XX.X%, the – executing to level I an the to field. we’re

Bill George

at is high service all-time as And profitability percentage. a

Brian Lane

Yes.

Bill George

Some stuff service enough. so of in that was margins like that we interestingly debt to the do work average – maintenance missing, and

make overall, will it, have think third very that But – of we it service we’ll I time percentage but would good we’ll in quarter. the quarter. in think come net matching back, Some that the a third margins would have hard on dollars

Brian Lane

We’ll be close to...

Bill George

XX.X% is our best guess.

Brian Lane

But that is a really number, though. strong

Bill George

We control. things just really whole the just – my strong record you’ve underlying obviously, quarter. more are been say. of underlying that have sort has I’ve they’re Yes. same this not good at we as very, uncertainty, there I in in time should of your right? very indications a never put never – but for indications, within – uncertainty combination Comfort, seen But

Kevin Gainey

better Yes. potentially this And than XXXX, XXXX XXXX? you up to when about shape thinking year, I to – halfway on but you’re you’re better be the about another through know, year, shaping think When up only being thoughts than shaping XXXX follow-up. any being – up

Brian Lane

just It’s give Kevin, to meaningful. to early too tell, you anything

Bill George

money be comparable, up we’ll XXXX. of the think right. a make We monster against We’ll lot in not

we and want assumptions – vaccines – about me So COVID, and... mean right? I to you give

Brian Lane

Yes.

Bill George

it’s world, Elections and real – and government right? decisions the

Kevin Gainey

for interest, as TAS translate well? down paid you kind it to, of quickly far it does guess final guys relatively I that pretty one the How as have a to stuff. on as seems

Bill George

cash What or in year do what? mean? the you The flow later

Kevin Gainey

instance, For expense.

model. looking the Just at

Bill George

down, and because rates, way interest because is we LIBOR-based debt lower expense borrowing. right. Interest have lesser LIBOR have we a lot is less – down

So, I was expected, in second same than – I level of would the much see expense cost. why the continue would interest don’t our and at lower think it LIBOR quarter

Kevin Gainey

that right. you. Thank All works.

Bill George

All Kevin. right,

Brian Lane

Okay. thanks.

Operator

the is question go Sean next Please ahead. line of of Market. Capital Eastman Your Key from

Sean Eastman

gentlemen. Compliments Comfort quarter, this done. well team to the job Hi,

Brian Lane

Thanks, Sean.

Sean Eastman

My pleasure.

is half helpful the earnings just just I typically if mean, implies time, range are backdrop. the I’m it’d strong you this don’t guys earnings of you understand So, second I provide have that going about possible just half. how to if I comparable down have in and guess, full-year we’re frame first based in guidance bit. first little the to dipping half, just buggy And But what be been... in outcomes XX% in how you XXXX XXXX done it that since a the you could guys year-over-year given the the has on uncertainty

Bill George

year. comparable, be said that comparables fourth low the What money and – We very Go the would it we similar so very you last ahead. I’ll – last hard it’s of about then range and whatever start for quarter that we’ve there year. Brian. least to by We year. make at end feel our know, tell. of it’s And think pointing is, don’t good out strong ability the I would third add? to cash rest had flow to

Brian Lane

I think still we that and the in field with now checked right now. still very I week, right it’s busy blowing sure. going for everybody and last we’re mean

see. we’ll So,

Sean Eastman

some we next mean, it’d I you know question factors then just it, year. ponder Got year dig factors? on like this dynamic? grow next to modular I big getting on it in maybe, for you some what timing thoughts on Is sense, are guys the but as the What the swing are to a swing the stuff see traction be there? discussion XXXX opportunities? Is whether cross-sell And it guys The able on you are as maybe, in your helpful top-line that? okay. is industrial just some this bigger plan maybe, tough,

Bill George

the projects So, we of year. the this those large no expected are talking expect number to has But who about That revenue, have year for But book you’re customers, would shown would later later sign be slowing if be, have that that in number we one one. a in the book as down. thing will backlog. we’re

our is ago. Our look years chart if vastly slides, up you three compared backlog at our in that backlog two backlog – to or

are farther an than control on even booked even are, we out – average We’re usually on you if for acquisitions. a the

compared is XX really to in strong anything very I’ve seen backlog Our years.

It’s the for well a now? make that’s not got would a lot historical got opportunity I That next And by So, big of And lot very comparable. happen Then continue we do to to about right do money. you us think that a not could What tough the things much yes is if or just your to of to a so I question know. have standards a great put of very you’ve happen we – unbelievable don’t range and be optimistic do no. to I saying – bad I us there just around do by face well comparable standards. uncertain. is pretty I’m uncertainty we what Then gives that. and year. don’t very

Sean Eastman

Got that’s helpful. of... And it. terms Well, in

Bill George

you so know. you much, they Because why right? guys pay That’s

Brian Lane

know. you Because

Bill George

know. You

Brian Lane

Yes.

Sean Eastman

the know we about at some about as we year. I pretending so like to – for bookings that just maybe, but driver to stuff think think the market in the guess, is we as we start those here bigger there we Just of a particular end move through great later tracking what be need year, as

Bill George

the it’s all industrials the and It’s industrials. all

Brian Lane

Yes.

Bill George

all, food, It’s it’s it’s it’s pharma, it’s... data,

Brian Lane

healthcare. Some

Bill George

boomers some five advantage there. me but that don’t is The think I of younger, less do that for Yes. an is do have I swing healthcare low and I expectations have been from for for need we’ll timing I But maybe we we think from healthcare don’t at is one factor – now, baby think see. I it. The or awful next is whatever year. we very an tire is this later years hard a question. out a so long the getting to year. for come imagine is it’s healthcare that interesting point are think fiber think we’d and healthcare plant swing healthcare it’s on to the is or But optic interesting conclusion story. that later COVID then factor with that it’s

think a hydraulic I can’t process resisted. it’s be that

Sean Eastman

Got it.

for one last And me, interesting. that’s Now, guys.

a electrical Walker more I understand of operating drag. sort – the than and exactly is a facing mechanical that I environment that’s want versus a just of to business. environment why bit operating of a been understand challenged bit Just mechanical

Bill George

It’s not so, is somewhat it versus – electrical mechanical.

electrical side, urgent. On the is service less

cleaned that work guys found of – more something all do now from get need. service It’s We frankly, – service for this good is is is for things But Walker’s days and and companies days. that, really, not comparable big that, do really get service to is XX complex extraordinary. down should – people hit other home with it’s them, just have unbelievable in out you – just our and and doing But war it’s is shows right that war. these real doing quarter overall. accomplishing. an like think company. mechanical what something work what on proportionate for in Walker divisions the shifts companies is out are amazing it’s work have gigantic to It are And there’s just a how and we is staggered job, division that our it greater I not can masks that and really, their this really a to not anybody, – for take pretty It had difference guys it electrical and sections they’re doing do who really it they eight kind are they people go can our so really, of So, pandemic, than and is building like a slow with right? COVID’s the XXX hard much

time Our collaboration and underlying complex better reshoring we and the secular construction, the U.S. is getting the in and better all trends think. really, favors

Brian Lane

chances, I Sean. like our

Sean Eastman

Great, well Well time. on for congrats, guys. a done again Thanks quarter. the this job

Brian Lane

of Take All buddy. care right, yourself.

Operator

Please the Regions go Biedenharn next Claudia of line ahead. from question from Your Bank. comes

Claudia Biedenharn

good... guys, Hi,

Brian Lane

Hi.

Claudia Biedenharn

for trends all second thanks curious that little just repair And of expecting what the the a provide as year. what could and what for on balance Okay, replacement – seeing we’re the in information. then and bit as if you you’re looking maybe, color you’re of you’re quarter far of

Brian Lane

go repair of picked in and school when of first, replacement out business, the the I mean, let March they I’ll you up, a school. kids really particularly as coming systems. of We’ve work right that lot know, done out

So, good we’re summer. having a really

we’ll a project the But think We’re be the still right quality. air of opportunities us a year. through given strong Air I more regardless retrofit lot of opportunities. the the service has on business lot end of seeing quality

Claudia Biedenharn

were flow seeing on half? – cash you generally are expecting be kind bit in what from far flow little to year, Okay, in half? the thinking a to your you half continue the like perspective that’s first see the more are cash expecting pressure you’re Or you then as that might a are of and the you second in back as the momentum great. of And there

Bill George

So, free flow. you I positive we our stock and But having of after-tax cash will over like our sell should anybody earnings time, who else chances cash flow actually, ever don’t; substantial we our doesn’t.

quarter, will means quarters, we than a we our other flow don’t there more substantially have where money. we that be when So quarter print cash where that after-tax earnings

– is will little a bit it be of give back. there probably So,

the I temporarily government also benefit. factor, not it’s the a is But Comfort Systems, in We’re giving driver. us a federal on bit that. a scale where a over a it’s of little period went of

when – So, cash end there all is blow-out really we because that’s rest quarters have of flow. another it don’t but cash prospects think to we flow the to I – for comes the think But year. good what quarter I the still quarter,

Claudia Biedenharn

scaling to at Right. these and back the quarters that expenses, Agreed, on curious mean just see you’re if back strong costs I come and so of back. so kind their of and companies some many of are having expecting

Bill George

scenario we’re I Honestly, are flow back, because about that us, I’m free think rising for going means it, to revenues mild I say, think as best cash the a see working and quarters. I’d up is getting go that out. little two there’s to back happens, the like our guys capital. in that by each of getting hundreds – next If investment headcount people

prefer going to money I’m cash the little not So a be it. good, start and free But for to be rooting work – money doing rest a to ironically, get do to I’d of we’re giant and I’d fine. little flow needing the for spend sure a year. rather out

to fine. never are going flow has in flow. cash never years, XX be negative Cash – We had we’ve

just... it’s So,

Claudia Biedenharn

just strong more generators. very you are was I at cash course, Yes. And Of flow looking certainly that guys cadence. I recognize

pass So I’ll it color. – the and on. thanks for

Brian Lane

Thanks.

Bill George

Thanks.

Operator

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

Joe Mondillo

Thanks for taking guys. Hi, a question. follow-up

viewpoint past your little been than is just tax the on on was I rate forward? rate. First, years. going tax wondering higher What a It’s the

Bill George

across Really, same you use go you that quality right? the I bring later over be is fresh expect in the year. and XX.X%. year. People quality were XX.X% laws would mindset air enough, efficiency year, what’s of the haven’t really so it. XXXD. – outside, air just not that had couple energy announced very credits range and – we that So, to first and benefit we XX% the to this – Last we the this was called got air quarter, retrofits, are federal some us big interestingly years transferred in picked and you We did from it purposes, is far to quarter. are this XX%. up some improve don’t efficiency last We where some, under way the quarter there air energy the over in of were year, XX.X% way you get you and We get energy and that in this much second

know on, to tax or goal stuck achieve the a the see some I pretty rest don’t of XX%, – I’d – going that this long-term. we’re pretty we’re at we rate going of the for of of some have other but but unless something, planning I if say So, some XX.X%-ish, it’s we year think lot that’s

Joe Mondillo

beginning be the I then And that market. not the about the education of was your Okay. back least on positive may very – on a market, do given good school percentage that of schools just how you about how actually in or schools, that Is thinking overall maybe, market at the negative? in thinking in what as that be you’re fact that the will curious – the how they you are you on a systems a education work the year, Is school. plan?

Brian Lane

on we’re since K-XX far, the Universities, for us, they it’s systems We’ve are kids level the not positive with there So getting Joe. out school do been been both work at busy. some still early, very doing and extra have a the building. people in

So, our backlog on highest. the are education fronts second

for So, foreseeable the it’s future. good

Joe Mondillo

– take backlog with kids of of really, sort So, they that pull think about space But – had the these lot out affected opportunity state the is that in budgets. school – to at the you and obviously, the and able in get – by was new forward the were done. work I have some how bookings I to stuff that of of does of a are tuitions to universities and when look you K-XX know lot imagine municipal work or a

and you So, think when that? going about forward. outlook at look you the how bookings do

Brian Lane

far so schools education still the to whether kids of in strong, going that Joe. take care not. are them are in they any for bookings or very Our systems have the They are

Joe Mondillo

All right. Okay.

follow-up taking I that’s the Good questions. it. Appreciate Thanks think for for luck. it me.

Brian Lane

care. Joe. Take All right,

Bill George

Thanks.

Operator

closing further There are the questions. Lane no over back remarks. now I turn to for will call Brian

Brian Lane

to resilient amazing our again, thank closing, right, All I committed want employees. and in

were very team quarter are amazing. We this The fortunate. our accomplished results truly

please looking are We the well. summer. of the meantime, in forward, in person But everyone enjoy be to safe and Thanks near future. in everyone rest the seeing sometime again and hopefully, your

Bill George

care. Take Yes.

Operator

today. conference call your Thank concludes for you. That

You may very a now day. have good disconnect. Thank joining and you for

Comfort Systems USA (FIX) 28 Jul 202020 Q2 Earnings call transcript