UPDATE: EMCOR Completes Acquisition Of Comfort Systems' Subsidiaries
Norwalk, Conn.-based EMCOR Group has completed its acquisition of 19 subsidiary companies of Houston-based Comfort Systems USA. The companies, which are predominantly from the Midwest and the New York metro area, posted combined revenues of $650 million. The total purchase price is $186.25 million.
Comfort Systems plans to use about $160 million to reduce debt and substantially strengthen its balance sheet.
The deal includes Comfort Systems' largest current operating unit, Shambaugh & Sons, located in Fort Wayne, Ind., with revenues of $247 million.
"In a perfect world we would have been reluctant to do this," Comfort's Chief Financial Officer J. Gordon Beitenmiller told the Engineering News-Record.
EMCOR Chief Executive Officer Frank MacInnis told ENR that his company is buying the 19 firms for a lower price than Comfort Systems paid during its buying spree in the late 1990s. At that time, EMCOR "thought the prices were too high," MacInnis said.
The firms are active in the installation and maintenance of mechanical systems, including design and installation of fire protection systems. They provide EMCOR with customers in the food processing, pharmaceutical and manufacturing/distribution sectors.
Improved EarningsComfort Systems reported improved earnings for 2001, with net income of $13.1 million, a rebound from the 2000 loss of $16.9 million. Revenues were $1.55 billion in 2001, compared to $1.59 billion in 2000.
Fourth-quarter earnings were $3.1 million compared with a net loss of $16.3 million a year earlier. The results include a reserve of $3.5 million, before taxes, of its receivables from Kmart Corp., which recently filed for bankruptcy protection.
Subsequent to the EMCOR transaction and considering estimated taxes, escrows and transaction costs associated with the deal, Comfort expects its total debt to be $45 million to $55 million.
EMCOR's net income increased 24.8 percent to $50 million, compared to $40.1 million in 2000. Revenues were down slightly, with $3.42 billion in 2001 and $3.46 billion in 2000.
Fourth-quarter earnings increased 20.1 percent to $17.4 million, compared to 2000 fourth-quarter earnings of $14.5 million.