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Comfort Systems USA Inc. (FIX
Q3 2008 Earnings Call
October 31, 2008 11:00 am ET
William George – Chief Financial Officer.
William Murdy – Chief Executive Officer
Thomas Tanner – Chief Operating Officer
Jack Atkins – Stephens Inc.
Richard Wesolowski – Sidoti & Company
David Yuschuk – Sanders, Morris Harris
Clint Fendley – Davenport
Tahira Afzel – KeyBanc Capital Markets
Tristan Richardson – Dave Davinson
Previous Statements by FIX
» Comfort Systems USA Inc. Q3 2009 Earnings Call Transcript
» Comfort Systems, Inc. Q4 2008 Earnings Call Transcript
» Comfort Systems USA, Inc. Q2 2008 Earnings Call Transcript
Welcome to Comfort Systems USA's third quarter earnings call. Our comments this morning as well as our press releases contain forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. What we say is based on the current plans and expectations of Comfort Systems USA.
Those plans and expectations involve risks and uncertainties that could cause actual future activities and results of our operations to be materially different from those set forth in our comments. You can read a more detailed listing and commentary concerning our specific risk factors in our Form 10-K as well as in our press release covering these earnings.
On our call with me this morning are Bill Murdy, Comfort Systems USA CEO and Tom Tanner, our Chief Operating Officer. Bill Murdy will open up with remarks.
We are very pleased this morning to be announcing the best third quarter in Comfort's history with a net income of $0.34 a share versus $0.28 in the corresponding quarter of last year. Revenues for this quarter including our recent acquisitions were up 22% from the quarter last year and on a same store basis, we're up 8%, and this of course includes the deliberate reduction Atlas revenues which we talked about before.
Our cash flow remains exceptionally strong at almost $18 million for the quarter and we ended the quarter with almost $100 million of cash on the balance sheet. Backlog at September 30 was overall over $800 million and although it was down slightly on a sequential basis, same store calculation that again gives effect to the reduction in the Atlas work.
Our bottom line which shows a 21% increase over the third quarter of last year is really a tribute to the efforts of our teams across the country. Our work at improving our processes and our procedures which ultimately enhanced productivity, all of this shows continuing very good results.
For the nine months ending September 30, our net income showed an improvement of 60% over the first nine months of 2007 at $0.92 a share versus $0.57 a share. Improvement to that of course helped us in this regard. Our revenues for the first nine months of 2008 came in just short of $1 million.
I'd like to conclude my brief opening remarks here by saying we believe we can continue our strong performance in what is at least an uncertain path forward here for the economy. We demonstrated a track record of business getting, of expense control and certainly cash discipline and we believe we have in place the fundamental elements for efficient execution.
Further, we are in a good essential business and we are situated well within that business solidly in this large and growing mid range of HVAC mechanical construction and service. Our focus on retrofit opportunities, repair, service as well as our very important emphasis on energy efficiency driven work, we believe will enhance our success moving forward.
Further, our strong balance sheet that will allow us to capitalize on opportunities as they arise and we see no reason not to continue prudent acquisitions, not that we're going to continue our cash dividend and our stock buy back programs.
At this time, I'd like to turn it over Bill to further elaborate on some details and then Tom will make some important operations comments.
Let me just take a minute or two to add a few details that many of you will find useful. The first item that I want to update is our progress and accruals at Atlas. We feel that Atlas is on track with its recovery plan. For the quarter, Atlas operations lost approximately $1.3 million with those losses arising from the ongoing close out of our operations in Florida.
The continuing portion of Atlas was profitable but as expected it is smaller with a back log of approximately $52 million which is $40 million less than one year ago. Also, you may recall that at the end of 2007, Atlas had a total of $6.2 million in accruals relating to claims and contingencies on certain of its legacy jobs. As of the end of the third quarter, that overall accrual stood at $3.2 million and the new team at Atlas has resolved approximately two-thirds of those projects, including all of the projects in the mid Atlantic and California markets.
To date the outcomes on complete projects were within expected parameters with the exception of an additional receivable accrual of approximately $500,000 on a job where the owner has recently entered into bankruptcy. It remains our best judgment that these accruals are sufficient in light of the remaining risks even though we expect to vigorously contest many of these matters.
Positive free cash flow was a remarkable $17.7 million this quarter which is $3.6 million higher than the third quarter last year. For nine months, we have had $36.8 million of free cash flow which is twice our total free cash flow at this time last year. Cash balances remain strong at $102 million and we have another $10 million in near cash assets and these totals are in spite of our continued expenditures on acquisitions, our dividends and our regular stock repurchases.