Comfort Systems USA Announces Acquisition
- Acquisition of Summit is expected to expand and diversify Comfort Systems USA's modular construction offering, meeting significant demand and growth in the industry.
- Summit is a trusted supplier to some of the world’s largest advanced technology, power, and industrial companies, and is currently deployed on several major chip fabrication projects.
- Summit is expected to contribute annualized revenues of approximately $360 million to $400 million and earnings before interest, taxes, depreciation, and amortization of $30 million to $45 million.
- None.
Insights
The acquisition of Summit Industrial Construction by Comfort Systems USA represents a strategic expansion in the modular construction segment, which is currently experiencing significant demand and growth. From a market research perspective, the integration of Summit's specialized services in engineering, design-assist and turnkey construction, particularly for advanced technology and heavy industrial sectors, positions Comfort Systems USA to capitalize on the burgeoning market for modular systems.
Summit's annualized revenue projections of $360 million to $400 million, coupled with EBITDA estimates of $30 million to $45 million, indicate a substantial boost to Comfort Systems USA's financials. However, the projected neutral to slightly accretive EPS contribution for 2024 and 2025 suggests that the immediate financial impact on Comfort Systems USA may be moderate, likely due to the associated amortization expenses.
The strategic focus on off-site solutions is a response to industry trends favoring modular construction due to its efficiency and cost-effectiveness. Summit's involvement in major chip fabrication projects aligns with global semiconductor industry growth, positioning Comfort Systems USA favorably within this high-demand sector.
From a financial standpoint, the acquisition of Summit by Comfort Systems USA is an investment that could potentially enhance the company's long-term earnings profile. The expected contribution to annualized revenues and EBITDA is significant, reflecting Summit's robust operational performance and market presence. The neutral to slightly accretive EPS impact in the initial years is not uncommon in acquisitions, as upfront costs and integration expenses can offset earnings contributions initially.
Investors should note the potential for synergies that may arise from the combined capabilities of Comfort Systems USA and Summit. These synergies could lead to cost savings, increased efficiency and enhanced competitive positioning, which may result in improved financial performance beyond the initial forecast period. The acquisition could also diversify Comfort Systems USA's revenue streams and reduce its exposure to market volatility within individual sectors.
The acquisition is particularly noteworthy within the industrial sector, as Summit is recognized for its expertise in modular technology, a critical component in the construction of advanced technology facilities such as semiconductor plants. The demand for such facilities has been on the rise due to the global semiconductor shortage and the push for domestic chip manufacturing.
Summit's established reputation as a supplier to some of the world's largest advanced technology and industrial companies suggests that Comfort Systems USA is not only acquiring a company with a solid order book but also one with strategic customer relationships that could lead to future contracts and collaborations.
The focus on off-site modular construction solutions is in line with industry shifts toward more sustainable and efficient building practices. This acquisition could provide Comfort Systems USA with a competitive edge in bidding for new projects and enhancing its market share in a sector that is increasingly looking for innovative construction methods.
- Agrees to Acquire Summit Industrial in
Summit is a specialty industrial mechanical contractor offering engineering, design-assist and turnkey, direct hire construction services of modular systems serving the advanced technology, power, and industrial sectors. Summit’s capabilities encompass a wide range of modular and site-based construction, including process piping, equipment setting, large pipe rack trestles, and related steel erection and specialty concrete work. Summit is a trusted supplier to some of the world’s largest advanced technology, power and industrial companies and is currently deployed on several major chip fabrication projects. Initially, Summit is expected to contribute annualized revenues of approximately
Brian Lane, Comfort Systems USA’s Chief Executive Officer, commented, “We are extremely happy to announce that Summit and its extraordinary team of professionals have agreed to join Comfort Systems USA. Summit is a
Jeff Johnson, Chief Executive Officer of Summit, commented, “We chose Comfort Systems USA based on our belief that we can leverage their complementary capabilities and assets to better serve our customers. Summit and Comfort Systems USA have a strong cultural alignment and a shared commitment to team members at all levels. Together we can continue our strategic focus and provide even more value to customers with additional capabilities and resources. We believe that Summit and Comfort Systems USA have a bright future together.”
Brian Lane concluded, “Summit brings extraordinary capabilities and a stellar reputation as a modular technology leader in growing end markets, with multiple ongoing and large semiconductor projects. We are confident in the quality of Summit’s leadership team, and we believe that Summit will continue to innovate and grow as a part of our network of world-class contracting companies. We are truly thrilled that Summit has chosen to become an exciting new part of Comfort Systems USA.”
Comfort Systems USA® is a leading provider of commercial, industrial, and institutional heating, ventilation, air conditioning and electrical contracting services, with 169 locations in 129 cities across the nation. For more information, visit the Company’s website at www.comfortsystemsusa.com.
This press release contains forward-looking statements noting future business expectations relating to earnings before interest, taxes, depreciation, and amortization (“EBITDA”), a measure which is not prepared in conformity with generally accepted accounting principles (“GAAP”). EBITDA is calculated in a manner generally consistent with the historical presentation of adjusted EBITDA in the earnings releases of the Company, including the Company’s most recent earnings release issued on October 26, 2023. Because of the forward-looking nature of this estimate, it is impractical to present a quantitative reconciliation of such measure to a comparable GAAP measure, and accordingly no such reconciliation is being presented.
Certain statements and information in this press release constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995 regarding our future business expectations, which are subject to applicable securities laws and regulations. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” or other similar expressions are intended to identify forward-looking statements, which are generally not historic in nature. These forward-looking statements are based on the current expectations and beliefs of Comfort Systems USA, Inc., and its subsidiaries (collectively, the “Company”) concerning future developments and their effect on the Company. While the Company’s management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting the Company will be those that it anticipates, and the Company’s actual results of operations, financial condition and liquidity, and the development of the industry in which the Company operates, may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of our results or developments in subsequent periods. All comments concerning the Company’s expectations for future revenue and operating results are based on the Company’s forecasts for its existing operations and its acquisition of Summit and do not include the potential impact of any future acquisitions. The Company’s forward-looking statements involve significant risks and uncertainties (some of which are beyond the Company’s control) and assumptions that could cause actual future results to differ materially from the Company’s historical experience and its present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the use of incorrect estimates for bidding a fixed-price contract; undertaking contractual commitments that exceed the Company’s labor resources; failing to perform contractual obligations efficiently enough to maintain profitability; national or regional weakness in construction activity and economic conditions; rising inflation and fluctuations in interest rates; shortages of labor and specialty building materials or material increases to the cost thereof; the Company’s business being negatively affected by health crises or outbreaks of disease, such as epidemics or pandemics (and related impacts, such as supply chain disruptions); financial difficulties affecting projects, vendors, customers, or subcontractors; the Company’s backlog failing to translate into actual revenue or profits; failure of third party subcontractors and suppliers to complete work as anticipated; difficulty in obtaining, or increased costs associated with, bonding and insurance; impairment to goodwill; errors in the Company’s cost-to-cost input method of accounting; the result of competition in the Company’s markets; the Company’s decentralized management structure; material failure to comply with varying state and local laws, regulations or requirements; debarment from bidding on or performing government contracts; retention of key management; seasonal fluctuations in the demand for mechanical and electrical systems; the imposition of past and future liability from environmental, safety, and health regulations including the inherent risk associated with self-insurance; adverse litigation results; an increase in our effective tax rate; a material information technology failure or a material cyber security breach; risks associated with acquisitions, such as challenges to our ability to integrate those companies into our internal control environment; our ability to manage growth and geographically-dispersed operations; our ability to obtain financing on acceptable terms; extreme weather conditions (such as storms, droughts, extreme heat or cold, wildfires and floods), including as a result of climate change, and any resulting regulations or restrictions related thereto; and other risks detailed in our reports filed with the Securities and Exchange Commission (the “SEC”).
For additional information regarding known material factors that could cause the Company’s results to differ from its projected results, please see its filings with the SEC, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether because of new information, future events, or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240102764218/en/
Julie Shaeff, Chief Accounting Officer
ir@comfortsystemsusa.com; 713-830-9687
Source: Comfort Systems USA, Inc.
FAQ
What company has agreed to acquire Summit Industrial Construction, LLC?
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What are Summit's expected annualized revenues and earnings before interest, taxes, depreciation, and amortization?
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