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 Company
Profile:
Comfort Systems USA is a leading
national installation and service provider for heating, ventilation, and air
conditioning systems, and related mechanical services in the commercial,
industrial, and institutional markets.
 William
F. Murdy
Chairman, CEO, Interim President
and Chairman of Fin. Committee
William F. Murdy is Chairman and Chief Executive Officer of Comfort Systems
USA (NYSE:FIX), a $1 billion company providing heating, ventilation, air
conditioning (HVAC) installation and services in the commercial/industrial
sector countrywide. Comfort Systems operates from over 75 locations
employing more than 6,000 people.
Prior to Comfort he was President and Chief
Executive Officer of Club Quarters, a privately owned, rapidly growing chain
of membership hotels catering to corporate travelers to major cities in the
U.S. and Europe. Until July of 1999, he was Chairman, President and CEO of
LandCare USA, Inc. (NYSE: GRW). LandCare grew to be the
country’s largest commercial landscape and tree services company ($500 MM
revenues) before merging with ServiceMaster (NYSE:SVM) in 1999. Prior to
LandCare, Mr. Murdy was President and Chief Executive Officer for 8
years of General Investment and Development, a large, privately held,
diversified real estate investment, development and operating company, and
before that, from 1981 to 1989, Managing General Partner of the Morgan
Stanley Venture Capital Fund and President of its associated management
company. From 1974 to 1981 he served in a number of positions including
chief operating officer of Pacific Resources (NYSE: PRI), a rapidly growing
$1 billion company in the oil and gas sector.
He is a graduate of the Harvard Business School
and the United States Military Academy at West Point. He served in the
United States Army from 1964 to 1974, including two tours of duty in Viet
Nam and three years teaching at West Point. He serves on the Board of
Directors, as well as, the Audit and Compensation Committees of UIL Holdings
(NYSE: UIL); the Board and is the Chairman of the Compensation Committee of
Kaiser Aluminum (NASDAQ: KALU); and the Boards of NetVersant and Compact
Power Inc. He is a member of the National Board and Executive Committee of
Business Executives for National Security, the Vietnam Veterans Memorial
Corporate Council and the Council of Foreign Relations. He is married with
two grown children and resides in New Canaan, Connecticut and Houston,
Texas. |
Industrial Goods
General Contractors
(FIX-NYSE)
Comfort Systems USA, Inc.
777 Post Oak Boulevard, Suite 500
Houston, TX 77056
Phone: 713-830-9600 |
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Interview conducted by:
Walter Banks, Publisher, CEOCFOinterviews.com, Published – March 13, 2009
CEOCFO: Mr. Murdy, please tell us how
things are in the heating, ventilation and air conditioning systems industry
and how you fit in.
Mr. Murdy: “To give you a description of
Comfort Systems USA, we are a large HVAC installation and maintenance
contractor on a pace to do about $1.3 billion this year. We are nationwide
and we are entirely commercial and industrial. We do apartment complexes and
condominiums, but do not do single family, free standing residential.
Comfort Systems USA is not immune from the current economy. However, the
biggest problems in the current construction economy of course are in
residential housing, where we are not situated. The commercial, industrial
sector, declines later in the cycle than the residential side. We are
certainly seeing some indications of decline, but nothing drastic as of this
time. To date there are more rumors of projects being cancelled and
financing not being available than there are in actuality.”
CEOCFO: I
guess that you are fortunate in your sector, because commercial appears to
not have been affected as much as consumer.
Mr. Murdy: “That’s true but it’s not to
say that we won’t be affected on the commercial HVAC side.”
CEOCFO:
What is your vision, and does your growth strategy involve acquisitions?
Mr. Murdy: “First, Comfort Systems USA
is a company built on acquisitions. We are a rollup or consolidation of the
late 1990’s and we grew very rapidly then. We stopped acquiring just after I
arrived in late 2000, consolidated ourselves and tried to make something of
the rollup that had been put together. However, in the last couple of years
we have started growing again by acquisition. We grew by organic growth at
quite a pace through the early part of this decade and more recently started
to add companies. We are trying to add the best contractors and service
providers in a local jurisdiction to Comfort. However, our primary growth
activity is growth on our own established bases. We are nationwide and we
are a lot of places, but we are certainly not everywhere. There are areas
where we are not represented, where we’d like to be. This is a very
fragmented business, so there are lots of opportunities to do that, but we
are not forcing issue.”
CEOCFO: What are those areas that you
are looking at currently?
Mr. Murdy: “We’ve actually listed those
areas in our investor presentation which is on our website. There are also,
certain selected locations around the country, such as Boise, Omaha,
Nashville, Portland, Savanna, and Charleston. These are not necessarily
metropolises, but large enough to have commercial and industrial
opportunities and importantly, where we are not currently located.”
CEOCFO: What sets you apart from the
competition and why are people choosing Comfort Systems USA?
Mr. Murdy: “What differentiates us from
others is quality and responsiveness. We have been very careful to try to
become the best local provider of commercial industrial mechanical services,
maintenance and repair wherever we are. We are a large company and very
solid with a strong balance sheet. It is not likely that we are going to
default on anything we agree to do. In addition, we have very good
relationships with all our vendors of materials and equipment.”
CEOCFO:
Tell us about the company’s finances and if you will need to go to the
street to raise funds or borrow in order to grow your business.
Mr. Murdy: “We do not contemplate that
at all. We have a very strong balance sheet; September 30 when we last
reported publicly we had $100 million in cash on the balance sheet and we
don’t expect that to have diminished. Therefore, we will not need to borrow
any money. We have been very conservative in the use of our cash. We have
not gone out and acquired wildly and don’t intend to. In many respects, we
are almost run like a private company. We are not levered and I don’t think
very much leverage naturally obtains in the construction business. It is too
cyclical and too seasonal to carry a lot of leverage, so we’ve run very
conservatively on the balance sheet side and intend to continue to do so.”
CEOCFO: Where would you say the greatest
part of your spending is?
Mr. Murdy: “We do not have very much
capital expenditure; the vehicles and computers, many of which we buy, but
no major installations. We spend on training and education as we are hiring
and training people all of the time, especially on the maintenance and
service side of things where we really want to focus. We will of course use
some capital to bring in new companies.”
CEOCFO: You now have a nationwide
business; how do you as CEO manage such a wide reaching business?
Mr. Murdy: “It is managed and led
through others. I participate at a lot of levels and through a lot of
people. We have a very strong senior management here in Houston, and then we
have very strong regional senior vice presidents, but the real strength of
leadership and management in our company is the leadership in our 50
operating units. A lot of those units cooperate with one another, and the
regional vice presidents work to cause the companies to collaborate on
things and help one another, but the real strength is our individual
entities and they are well led and well managed.”
CEOCFO: Please address potential
investors who may be looking at Comfort Systems USA and tell us why they
should consider you?
Mr. Murdy: “First, we are large enough
to survive and indeed do relatively well in any economic environment. We are
very solid financially and we are on the leading edge, but the leading edge
not the “bleeding” edge of a lot of things to include building information
modeling. In addition, we have a real focus on two essential elements; the
first is service. We want to grow our service, which we define as anything
done in an existing structure, whether that is retrofit or maintenance or
service or repair. The second is energy efficiency. We are a active
participant in that effort. HVAC systems use a lot of the electric energy in
any kind of structure. To the extent that we can install and or service
equipment so that it produces efficiently, we save that structure energy.
Green is not a fad, it is happening. It sometimes gets over hyped, but we
are on the ground, actually making things happen and we’ve devoted a lot of
intelligent effort to continuing that.”
CEOCFO: Finally, how big is this
industry and what is your position in it?
Mr. Murdy: “We estimate that the
commercial HVAC sector is about a $40 billion. At $1.3 billion, we are 3% of
it, so there’s a lot of room to grow. In addition, it is a fragmented
business and there are very good businesses and good competition out there.
We’re in an essential business that has a good future.”
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