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With Almost Every Building Built Today
Needing Ventilation Or Air Conditioning, Comfort Systems USA Is In The Right
Place At The Right Time As The Largest HVAC Mechanical Services Company
Comfort Systems USA, Inc.
777 Post Oak Boulevard, Suite 500
Houston, TX 77056
William F. Murdy
Chairman, Interim President and CEO
Interview conducted by:
Walter Banks, Publisher
Published – February 22, 2008
CEOCFO: Mr. Murdy, how long have you been with Comfort Systems
and what is your vision for the company?
Mr. Murdy: “I have been with Comfort
Systems since late 2000, so it has been over seven years. Today Comfort
Systems USA is the largest HVAC mechanical services company in the country.
We focus entirely on the commercial, industrial, institutional sector and
operate Nationwide. Our vision is to be the premiere company in the sector
and we want to continue to grow, on our current platforms as well as by
acquisition. Our focus is on profitability as opposed to just growth.”
CEOCFO: What is the structure of the company?
Mr. Murdy: “We are headquartered in
Houston and we have 42 operations from Portland, Maine to San Diego and
Orlando to Tacoma. We are organized in three large regions with a Senior
Vice President that reports to our Chief Operating Officer. The business
model includes heavy corporate support to our operations but not smothering
them. Our companies remain strong local entities and most have retained
their local names. The companies relate one to another with the help of the
Regional Vice President and collaborate a lot on work.”
CEOCFO: What is the size of the industry, the percentage you hold
and how do you grow your business?
Mr. Murdy: "The total commercial
industrial institutional sector is approximately $40 billion per annum in
the US and we are only in the United States. We will do well over $1 billion
this year, so we are about 2.5% of that. There are only five large entities.
Three of those are the installation and service components of the large
OEMs: Trane, Carrier and York; the forth is the Emcor Group, which has the
division that works in the commercial HVAC sector. Emcor’s division, Trane
and Carrier and York’s installation and service entities are about as big as
we are. So the five of us aggregate about $5 billion of $40 billion, which
is, in total, an eighth of the market. The commercial HVAC sector is very
fragmented with 100s, even 1000s of companies making up the rest of the
revenues. That allows potential growth focus by bringing in some of those
now independent businesses into Comfort Systems. We are only interested in
very high quality “go-to” non-union mechanical operations which generally do
both construction and service. We want to be in good markets and we do not
want to bring operations into Comfort Systems that duplicate where we are
geographically. We are looking in new geographies all the time and there is
a lot left out there to look at.”
CEOCFO: Do you grow through acquisitions?
Mr. Murdy: “We intend to grow via
acquisitions, as well as organically. We have only made three relatively
small acquisitions since I have been CEO but our overall revenues have grown
CEOCFO: What do you need to do to grow your base?
Mr. Murdy: “First of all this is a
relationship business. Relationships with general contractors, and end users
who have new construction and installation needs are important to us.
Growing the service part of our business is extremely important. We are
putting a lot of effort into growing service because there is a huge
installed base that needs maintenance and in time repair and ultimately
retrofit. We have that business in front of us and we can expand our
business just by growing service, where we are doing it now but we also will
be bringing in other companies.”
CEOCFO: What sets you apart from your competition?
Mr. Murdy: “There is a lot of business
out there but of course there is competition. We promise to deliver the kind
of high quality, follow-up, and responsiveness that professional contractors
and end user companies that we work with want. We usually are the “go-to”
non-union, HVAC company, wherever we are and we pride ourselves on the
quality of our operations around the country. So quality is the real
differentiator. Further, big companies like to work with big companies and
we are a big company. We have a very strong balance sheet so we can support
our operations. “We are never going to default on a job.”
CEOCFO: What is the financial position of the company; do you see
yourselves having to borrow?
Mr. Murdy: “We have over $100 million
cash on the balance sheet and no debt. We have borrowing capacity, but we
have not borrowed any money from our banks in years. We have uses for cash
in our acquisition programs. We pay a dividend, and we are actually buying
some of our public stock back. We think it is a great investment for our
CEOCFO: Why should investors consider Comfort Systems at this
Mr. Murdy: “It starts with the fact that
we are in a very good basic business. The HVAC business is not going away.
You do not build anything today that does not need to be heated and
air-conditioned. And since this is mechanical equipment it needs to be
serviced. Additionally, we are an energy efficient play. A great portion of
the cost to run a commercial building, warehouse or school, is spent on the
electricity that runs the HVAC system. If you install or reinstall an
efficient system and keep it serviced, you are going to save on that
electric usage. This is very important at these high electric rates and that
is why we are focused on energy efficiency. In fact, we have a separate unit
that works with all our companies on energy efficiency projects and service
CEOCFO: What should readers remember about Comfort Systems USA?
Mr. Murdy: “This is a business that is
very dependent on the quality of its people and we have high quality people
on all of our operations. I like to say that ‘we are lean but not mean’. We
pride ourselves on our people and they continue to produce and meet
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