Benzinga | Jan 5, 2022 04:11PM EST

Comfort Systems USA Reports Purchase Of MEP Holdings, No Terms Disclosed

Comfort Systems USA, Inc. (NYSE:FIX) ("Comfort Systems USA") today announced that it has acquired MEP Holding Co., Inc., and its related subsidiaries, including Edwards Electrical & Mechanical, Inc. (collectively, "Edwards"), headquartered in Indianapolis, Indiana. Comfort Systems USA also announced that it has acquired a service and controls business headquartered in Richmond, Kentucky and a temporary staffing company based in Indiana.

Edwards was founded in 1968 and performs electrical, mechanical and controls contracting services, as well as site improvement projects, in the Midwest region of the United States. Initially, Edwards is expected to contribute annualized revenues of approximately $85 to $95 million, and earnings before interest, taxes, depreciation, and amortization of $6 to $8 million.

Brian Lane, Comfort Systems USA's Chief Executive Officer, commented, "Edwards and its affiliated companies bring us a solid full-service presence in Indianapolis, and provide Comfort Systems USA access to remarkable specialized capabilities in clean room solutions that will complement our off-site construction and pre-fabrication solutions."

Paul Morey, President of Edwards, commented, "Having known and admired Comfort Systems USA for nearly 25 years, partnering with them was an easy decision. We greatly value their shared commitment to employee growth and education as well as the complementary focus on teamwork and customer service. This partnership will accelerate our technical innovation and offers a bright future for our business, and most importantly for our employees."

Comfort Systems USA further announced that it has acquired Thermal Service, LLC and TES Controls, LLC (together, "Thermal") headquartered in Richmond, Kentucky. Thermal provides complex HVAC service and automation solutions in the state of Kentucky. Thermal is expected to contribute approximately $20 million in annualized revenues at similar margins to the existing service businesses of Comfort Systems USA.

Finally, Comfort Systems USA announced that it has acquired Kodiak Labor Solutions, LLC ("Kodiak"). Kodiak is a temporary staffing agency that recruits and provides skilled labor, primarily in the Midwest and Eastern United States. Kodiak was acquired to augment labor resources and is not expected to make a material contribution to revenue on a stand-alone basis.

Brian Lane concluded, "Thermal is a true service organization with great relationships and capabilities, including high quality chiller maintenance. The Kodiak organization has strong skilled labor and recruitment talent, enjoys an ongoing relationship with several of our locations, and we believe Kodiak will help us improve our ability to staff projects and add to our strong project teams in many markets. We are very happy that Edwards, Thermal, and Kodiak are joining Comfort Systems USA and we believe that each of these businesses provide unique opportunities for mutual growth and improvement."

Considering the required amortization expense related to intangibles and other costs associated with the transaction, these acquisitions are expected to make a neutral to slightly accretive contribution to earnings per share in 2022 and 2023.