Comfort Systems USA, Inc. (NYSE: FIX) (the “Company”)
today reported results for the quarter and annual period ended
December 31, 2023.
For the quarter ended December 31, 2023, net income was $91.6
million, or $2.55 per diluted share, as compared to $55.4 million,
or $1.54 per diluted share, for the quarter ended December 31,
2022. Revenue for the fourth quarter of 2023 was $1,357.6 million
compared to $1,117.2 million in 2022. The Company reported
operating cash flow of $173.0 million in the current quarter
compared to $132.0 million in 2022.
Backlog as of December 31, 2023 was $5.16 billion as compared to
$4.29 billion as of September 30, 2023 and $4.06 billion as of
December 31, 2022. On a same-store basis, backlog increased from
$4.06 billion as of December 31, 2022 to $4.98 billion as of
December 31, 2023.
The Company reported net income of $323.4 million, or $9.01 per
diluted share, for the twelve months ended December 31, 2023, as
compared to $245.9 million, or $6.82 per diluted share, in 2022.
The Company also reported revenue of $5.21 billion for the twelve
months ended December 31, 2023, as compared to $4.14 billion in
2022. Operating cash flow for the twelve months ended December 31,
2023 was $639.6 million, as compared to $301.5 million in 2022.
Brian Lane, Comfort Systems USA’s President and Chief Executive
Officer, said, “2023 was a year of great execution by our people in
markets across the country, as they achieved unprecedented growth,
earnings, and cash flow. During the fourth quarter both our
mechanical and electrical businesses grew and increased margins to
drive our annual results to new heights. Construction finished an
already strong year on an up note, with particularly notable profit
and activity increases in our modular business. Service also
achieved superb execution, continued growth, and improved
profitability, as our service operations continue to benefit from
ongoing investments. Cash flow for the quarter was an extraordinary
$149 million, strongly up from last year, and we finished the year
with over $550 million in free cash flow.”
Mr. Lane concluded, “Our backlog is up 27% from last year, with
a year over year increase of roughly $1.1 billion, and most of that
growth resulted from a same-store backlog surge in the just
completed quarter. Underlying demand remains very supportive, and
we are excited about the two new companies that joined us at the
beginning of this month. As a result, we are optimistic that we
will continue to grow and maintain our strong operational results
in 2024.”
The Company will host a webcast and conference call to discuss
its financial results and position on Friday, February 23, 2024 at
10:00 a.m. Central Time. To register for the call, please visit
https://register.vevent.com/register/BI091e4855174e43ea90af68775601723f.
Upon registering, participants will receive dial-in information and
a unique PIN to join the call. The call and the slide presentation
to accompany the remarks can be accessed on the Company’s website
at www.comfortsystemsusa.com under the “Investor” tab. A replay of
the entire call will be available on the Company’s website on the
next business day following the call.
Comfort Systems USA® is a leading provider of commercial,
industrial and institutional heating, ventilation, air conditioning
and electrical contracting services, with 172 locations in 131
cities across the nation. For more information, visit the Company’s
website at www.comfortsystemsusa.com.
Certain statements and information in this press release may
constitute forward-looking statements 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 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.
— Financial tables follow —
Comfort Systems USA, Inc.
Consolidated Statements of Operations (In Thousands, Except per
Share Amounts)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(Unaudited)
2023
%
2022
%
2023
%
2022
%
Revenue
$
1,357,566
100.0
%
$
1,117,188
100.0
%
$
5,206,760
100.0
%
$
4,140,364
100.0
%
Cost of services
1,077,881
79.4
%
905,940
81.1
%
4,216,251
81.0
%
3,398,756
82.1
%
Gross profit
279,685
20.6
%
211,248
18.9
%
990,509
19.0
%
741,608
17.9
%
SG&A
160,026
11.8
%
131,650
11.8
%
574,423
11.0
%
489,344
11.8
%
Gain on sale of assets
(619
)
—
(473
)
—
(2,302
)
—
(1,585
)
—
Operating income
120,278
8.9
%
80,071
7.2
%
418,388
8.0
%
253,849
6.1
%
Interest income (expense), net
650
—
(4,556
)
(0.4
)
%
(6,789
)
(0.1
)
%
(13,306
)
(0.3
)
%
Changes in the fair value of contingent
earn-out obligations
(9,400
)
(0.7
)
%
(5,349
)
(0.5
)
%
(23,607
)
(0.5
)
%
(4,819
)
(0.1
)
%
Other income, net
201
—
33
—
202
—
134
—
Income before income taxes
111,729
8.2
%
70,199
6.3
%
388,194
7.5
%
235,858
5.7
%
Provision (benefit) for income taxes
20,148
14,775
64,796
(10,089
)
Net income
$
91,581
6.7
%
$
55,424
5.0
%
$
323,398
6.2
%
$
245,947
5.9
%
Income per share
Basic
$
2.56
$
1.55
$
9.03
$
6.84
Diluted
$
2.55
$
1.54
$
9.01
$
6.82
Shares used in computing income per
share:
Basic
35,752
35,828
35,802
35,932
Diluted
35,852
35,948
35,895
36,046
Dividends per share
$
0.250
$
0.150
$
0.850
$
0.560
Supplemental Non-GAAP Information —
(Unaudited) (In Thousands, Except per Share Amounts)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
2023
2022
Net income
$
91,581
$
55,424
$
323,398
$
245,947
Tax gains related to prior years
—
—
(10,761
)
(58,933
)
Tax-related SG&A costs, net of tax
—
—
1,063
3,685
Net income excluding tax gains
$
91,581
$
55,424
$
313,700
$
190,699
Diluted income per share
$
2.55
$
1.54
$
9.01
$
6.82
Tax gains related to prior years
—
—
(0.30
)
(1.64
)
Tax-related SG&A costs, net of tax
—
—
0.03
0.11
Diluted income per share excluding tax
gains
$
2.55
$
1.54
$
8.74
$
5.29
Note: Net income excluding tax gains and
diluted income per share excluding tax gains are presented because
the Company believes they reflect the results of the core ongoing
operations of the Company, and we believe they are responsive to
frequent questions we receive from third parties. These amounts,
however, are not considered primary measures of an entity’s
financial results under generally accepted accounting principles,
and accordingly, they should not be considered an alternative to
operating results as determined under generally accepted accounting
principles and as reported by the Company.
Supplemental Non-GAAP Information —
Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (“Adjusted EBITDA”) — (Unaudited) (In
Thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
%
2022
%
2023
%
2022
%
Net income
$
91,581
$
55,424
$
323,398
$
245,947
Provision (benefit) for income taxes
20,148
14,775
64,796
(10,089
)
Other income, net
(201
)
(33
)
(202
)
(134
)
Changes in the fair value of contingent
earn-out obligations
9,400
5,349
23,607
4,819
Interest expense (income), net
(650
)
4,556
6,789
13,306
Gain on sale of assets
(619
)
(473
)
(2,302
)
(1,585
)
Tax-related SG&A costs
—
—
1,345
4,665
Amortization
11,131
11,193
43,404
47,795
Depreciation
10,445
8,909
38,162
33,552
Adjusted EBITDA
$
141,235
10.4
%
$
99,700
8.9
%
$
498,997
9.6
%
$
338,276
8.2
%
Note: The Company defines adjusted
earnings before interest, taxes, depreciation, and amortization
(“Adjusted EBITDA”) as net income, provision for income taxes,
other expense (income), net, changes in the fair value of
contingent earn-out obligations, interest expense (income), net,
gain on sale of assets, goodwill impairment, other one-time
expenses or gains and depreciation and amortization. Other
companies may define Adjusted EBITDA differently. Adjusted EBITDA
is presented because it is a financial measure that is frequently
requested by third parties. However, Adjusted EBITDA is not
considered under generally accepted accounting principles as a
primary measure of an entity’s financial results, and accordingly,
Adjusted EBITDA should not be considered an alternative to
operating income, net income, or cash flows as determined under
generally accepted accounting principles and as reported by the
Company.
Comfort Systems USA, Inc.
Condensed Consolidated Balance Sheets (In Thousands)
December 31,
December 31,
2023
2022
Cash and cash equivalents
$
205,150
$
57,214
Billed accounts receivable, net
1,318,926
1,024,082
Unbilled accounts receivable, net
72,774
77,030
Costs and estimated earnings in excess of
billings, net
28,084
27,211
Other current assets, net
286,166
122,134
Total current assets
1,911,100
1,307,671
Property and equipment, net
208,568
143,949
Goodwill
666,834
611,789
Identifiable intangible assets, net
280,397
273,901
Other noncurrent assets
238,680
260,168
Total assets
$
3,305,579
$
2,597,478
Current maturities of long-term debt
$
4,867
$
9,000
Accounts payable
419,962
337,385
Billings in excess of costs and estimated
earnings and deferred revenue
909,538
548,293
Other current liabilities
386,838
276,124
Total current liabilities
1,721,205
1,170,802
Long-term debt
39,345
247,245
Other long-term liabilities
267,200
179,508
Total liabilities
2,027,750
1,597,555
Total stockholders’ equity
1,277,829
999,923
Total liabilities and stockholders’
equity
$
3,305,579
$
2,597,478
Selected Cash Flow Data (Unaudited) (In
Thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
2023
2022
Cash provided by (used in):
Operating activities
$
173,008
$
132,007
$
639,568
$
301,531
Investing activities
$
(73,883
)
$
(14,419
)
$
(193,008
)
$
(97,178
)
Financing activities
$
(31,598
)
$
(131,513
)
$
(298,624
)
$
(205,915
)
Free cash flow:
Cash from operating activities
$
173,008
$
132,007
$
639,568
$
301,531
Purchases of property and equipment
(25,264
)
(13,566
)
(94,838
)
(48,359
)
Proceeds from sales of property and
equipment
858
707
5,951
2,858
Free cash flow
$
148,602
$
119,148
$
550,681
$
256,030
Note: Free cash flow is defined as cash
flow from operating activities less customary capital expenditures,
plus the proceeds from asset sales. Other companies may define free
cash flow differently. Free cash flow is presented because it is a
financial measure that is frequently requested by third parties.
However, free cash flow is not considered under generally accepted
accounting principles as a primary measure of an entity’s financial
results, and accordingly, free cash flow should not be considered
an alternative to operating income, net income, or cash flows as
determined under generally accepted accounting principles and as
reported by the Company.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240222387807/en/
Julie Shaeff, Chief Accounting Officer ir@comfortsystemsusa.com;
713-830-9687
Comfort Systems USA (NYSE:FIX)
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