Comfort Systems USA Reports Loss As It Restructures

HOUSTON-Comfort Systems USA Inc., provider of commercial/industrial heating, ventilation and air conditioning services, is reporting a drop in third quarter revenues and a net loss of $3.68 million or 10 cents per share, as the company carries out a planned restructuring.

Management attributes the results to shutting down two sites and the selling off of two satellite operation as well as a merger. The restructuring charges associated with these actions are primarily non-cash and include the write-down of other long-term assets. Remaining restructuring items include severance and lease termination costs.

Bill Murdy, Comfort Systems’ chairman and CEO, says the firm’s streamlining will continue as it preps for e-commerce trading. A review is being made of non-strategic assets that “will likely result in decisions to cease operating or sell additional operations.” He says the restructuring will, for the most part, be finished by year’s end.

Revenues for the quarter ending Sept. 30 are slightly more than $423.9 million in comparison to about $374.8 million for third quarter 1999. The net loss totals about $3.7 million or 10 cents per diluted share. The same quarter last year had 33 cents per diluted share in 1999.

Third quarter results include a pre-tax restructuring charge of $10 million, or 13 cents per diluted share, associated primarily with restructuring efforts at under-performing operations. Comfort Systems’ disappointing results are being attributed to execution shortfalls on sizable projects with nationally recognized companies. They reflect the challenge of increasing revenues when the markets face problems of scarce technical and skilled labor, pricing pressures in certain markets, and scheduling and efficiency challenges associated with the industry’s high level of activity.

Murdy is, nonetheless, optimistic. “We are enthusiastic about the opportunities and the challenges ahead for 2001 as we place greater emphasis on improved profitability and less on revenue expansion,” he says.