FIX Comfort Systems USA Inc

Comfort Systems USA, Inc. (NYSE: FIX) (the “Company”) today reported results for the quarter ended September 30, 2024.

For the quarter ended September 30, 2024, net income was $146.2 million, or $4.09 per diluted share, as compared to $105.1 million, or $2.93 per diluted share, for the quarter ended September 30, 2023. Revenue for the third quarter of 2024 was $1.81 billion compared to $1.38 billion in 2023. The Company reported operating cash flow of $302.2 million in the current quarter compared to $214.2 million in 2023.

Brian Lane, Comfort Systems USA’s President and Chief Executive Officer, said, “We are happy to report record earnings and cash flow this quarter, as our employees continue to achieve unmatched execution for our customers. Recently acquired companies exceeded our high expectations, and each of our operating segments excelled in every respect. Quarterly per share earnings were 40% ahead of the same quarter last year, and through nine months our per share earnings were 60% higher than in the same period last year. Cash flow surpassed any previous quarter, and that extraordinary cash flow is both a great base for continued investment and a definite signal of strong underlying trends in our execution, customer relationships, and prospects.”

Backlog as of September 30, 2024 was $5.68 billion as compared to $5.77 billion as of June 30, 2024 and $4.29 billion as of September 30, 2023. On a same-store basis, backlog increased from $4.29 billion as of September 30, 2023 to $5.17 billion as of September 30, 2024.

Mr. Lane continued, “Backlog continues far above the levels of the prior year and bookings were remarkable even as we are burning through work at a record pace, with same-store revenue higher by 18% on a quarterly basis, and by 23% year-to-date, compared to the prior year. Entering the fourth quarter, same-store backlog is 21% higher than it was at this time last year, and we are experiencing unprecedented strength in our pipelines. Considering these advantages and given the confidence we have in our unmatched workforce, we expect continued strong results in the fourth quarter and in 2025.”

The Company reported net income of $376.6 million, or $10.52 per diluted share, for the nine months ended September 30, 2024, as compared to $231.8 million, or $6.46 per diluted share in 2023. The Company also reported revenue of $5.16 billion for the nine months ended September 30, 2024, as compared to $3.85 billion in 2023. Operating cash flow for the nine months ended September 30, 2024 was $638.6 million, as compared to $466.6 million in 2023.

The Company will host a webcast and conference call to discuss its financial results and position on Friday, October 25, 2024 at 10:00 a.m. Central Time. To register for the call, please visit https://register.vevent.com/register/BI51e8bc7e6c5c46f18a83b04a20b07efa. 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 178 locations in 137 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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

2024

 

%

 

 

2023

 

%

 

 

2024

 

%

 

 

2023

 

%

 

Revenue

 

$

1,812,366

 

 

100.0

 

%

 

$

1,378,124

 

 

100.0

 

%

 

$

5,159,672

 

 

100.0

 

%

 

$

3,849,194

 

 

100.0

 

%

Cost of services

 

 

1,430,652

 

 

78.9

 

%

 

 

1,100,625

 

 

79.9

 

%

 

 

4,116,999

 

 

79.8

 

%

 

 

3,138,370

 

 

81.5

 

%

Gross profit

 

 

381,714

 

 

21.1

 

%

 

 

277,499

 

 

20.1

 

%

 

 

1,042,673

 

 

20.2

 

%

 

 

710,824

 

 

18.5

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SG&A

 

 

180,177

 

 

9.9

 

%

 

 

142,935

 

 

10.4

 

%

 

 

522,437

 

 

10.1

 

%

 

 

414,397

 

 

10.8

 

%

Gain on sale of assets

 

 

(1,347

)

 

(0.1

)

%

 

 

(579

)

 

—

 

 

 

 

(2,778

)

 

(0.1

)

%

 

 

(1,683

)

 

—

 

 

Operating income

 

 

202,884

 

 

11.2

 

%

 

 

135,143

 

 

9.8

 

%

 

 

523,014

 

 

10.1

 

%

 

 

298,110

 

 

7.7

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

2,095

 

 

0.1

 

%

 

 

(934

)

 

(0.1

)

%

 

 

1,620

 

 

—

 

 

 

 

(7,439

)

 

(0.2

)

%

Changes in the fair value of contingent earn-out obligations

 

 

(17,254

)

 

(1.0

)

%

 

 

(8,727

)

 

(0.6

)

%

 

 

(44,434

)

 

(0.9

)

%

 

 

(14,207

)

 

(0.4

)

%

Other income (expense), net

 

 

87

 

 

—

 

 

 

 

(44

)

 

—

 

 

 

 

323

 

 

—

 

 

 

 

1

 

 

—

 

 

Income before income taxes

 

 

187,812

 

 

10.4

 

%

 

 

125,438

 

 

9.1

 

%

 

 

480,523

 

 

9.3

 

%

 

 

276,465

 

 

7.2

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

41,577

 

 

 

 

 

 

20,313

 

 

 

 

 

 

103,960

 

 

 

 

 

 

44,648

 

 

 

 

Net income

 

$

146,235

 

 

8.1

 

%

 

$

105,125

 

 

7.6

 

%

 

$

376,563

 

 

7.3

 

%

 

$

231,817

 

 

6.0

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

4.10

 

 

 

 

 

$

2.93

 

 

 

 

 

$

10.54

 

 

 

 

 

$

6.47

 

 

 

 

Diluted

 

$

4.09

 

 

 

 

 

$

2.93

 

 

 

 

 

$

10.52

 

 

 

 

 

$

6.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in computing income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

35,669

 

 

 

 

 

 

35,820

 

 

 

 

 

 

35,718

 

 

 

 

 

 

35,819

 

 

 

 

Diluted

 

 

35,755

 

 

 

 

 

 

35,917

 

 

 

 

 

 

35,804

 

 

 

 

 

 

35,910

 

 

 

 

Dividends per share

 

$

0.300

 

 

 

 

 

$

0.225

 

 

 

 

 

$

0.850

 

 

 

 

 

$

0.600

 

 

 

 

Supplemental Non-GAAP Information — (Unaudited) (In Thousands, Except per Share Amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

146,235

 

$

105,125

 

 

$

376,563

 

$

231,817

 

 

Tax gains related to prior years

 

 

—

 

 

(7,393

)

 

 

—

 

 

(10,761

)

 

Tax-related SG&A costs, net of tax

 

 

—

 

 

730

 

 

 

—

 

 

1,063

 

 

Net income excluding tax gains

 

$

146,235

 

$

98,462

 

 

$

376,563

 

$

222,119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income per share

 

$

4.09

 

$

2.93

 

 

$

10.52

 

$

6.46

 

 

Tax gains related to prior years

 

 

—

 

 

(0.21

)

 

 

—

 

 

(0.30

)

 

Tax-related SG&A costs, net of tax

 

 

—

 

 

0.02

 

 

 

—

 

 

0.03

 

 

Diluted income per share excluding tax gains

 

$

4.09

 

$

2.74

 

 

$

10.52

 

$

6.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2024

 

%

 

2023

 

%

 

 

2024

 

%

 

2023

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

146,235

 

 

 

 

$

105,125

 

 

 

 

 

$

376,563

 

 

 

 

$

231,817

 

 

 

 

Provision for income taxes

 

 

41,577

 

 

 

 

 

20,313

 

 

 

 

 

 

103,960

 

 

 

 

 

44,648

 

 

 

 

Other expense (income), net

 

 

(87

)

 

 

 

 

44

 

 

 

 

 

 

(323

)

 

 

 

 

(1

)

 

 

 

Changes in the fair value of contingent earn-out obligations

 

 

17,254

 

 

 

 

 

8,727

 

 

 

 

 

 

44,434

 

 

 

 

 

14,207

 

 

 

 

Interest expense (income), net

 

 

(2,095

)

 

 

 

 

934

 

 

 

 

 

 

(1,620

)

 

 

 

 

7,439

 

 

 

 

Gain on sale of assets

 

 

(1,347

)

 

 

 

 

(579

)

 

 

 

 

 

(2,778

)

 

 

 

 

(1,683

)

 

 

 

Tax-related SG&A costs

 

 

—

 

 

 

 

 

924

 

 

 

 

 

 

—

 

 

 

 

 

1,345

 

 

 

 

Amortization

 

 

24,421

 

 

 

 

 

10,929

 

 

 

 

 

 

75,224

 

 

 

 

 

32,273

 

 

 

 

Depreciation

 

 

12,333

 

 

 

 

 

9,457

 

 

 

 

 

 

35,377

 

 

 

 

 

27,717

 

 

 

 

Adjusted EBITDA

 

$

238,291

 

 

13.1

%

$

155,874

 

 

11.3

%

 

$

630,837

 

 

12.2

%

$

357,762

 

 

9.3

%

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)

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

2024

 

2023

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

415,583

 

$

205,150

 

Billed accounts receivable, net

 

 

1,730,960

 

 

1,318,926

 

Unbilled accounts receivable, net

 

 

89,332

 

 

72,774

 

Costs and estimated earnings in excess of billings, net

 

 

73,934

 

 

28,084

 

Other current assets, net

 

 

227,090

 

 

286,166

 

Total current assets

 

 

2,536,899

 

 

1,911,100

 

Property and equipment, net

 

 

250,150

 

 

208,568

 

Goodwill

 

 

875,193

 

 

666,834

 

Identifiable intangible assets, net

 

 

456,459

 

 

280,397

 

Other noncurrent assets

 

 

294,064

 

 

238,680

 

Total assets

 

$

4,412,765

 

$

3,305,579

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

6,046

 

$

4,867

 

Accounts payable

 

 

603,546

 

 

419,962

 

Billings in excess of costs and estimated earnings and deferred revenue

 

 

1,197,532

 

 

909,538

 

Other current liabilities

 

 

622,019

 

 

386,838

 

Total current liabilities

 

 

2,429,143

 

 

1,721,205

 

Long-term debt

 

 

62,315

 

 

39,345

 

Other long-term liabilities

 

 

333,585

 

 

267,200

 

Total liabilities

 

 

2,825,043

 

 

2,027,750

 

Total stockholders’ equity

 

 

1,587,722

 

 

1,277,829

 

Total liabilities and stockholders’ equity

 

$

4,412,765

 

$

3,305,579

 

Selected Cash Flow Data (Unaudited) (In Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash provided by (used in):

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

$

302,179

 

 

$

214,241

 

 

$

638,594

 

 

$

466,560

 

 

Investing activities

 

$

(21,586

)

 

$

(25,497

)

 

$

(304,020

)

 

$

(119,125

)

 

Financing activities

 

$

(64,429

)

 

$

(111,128

)

 

$

(124,141

)

 

$

(267,026

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash from operating activities

 

$

302,179

 

 

$

214,241

 

 

$

638,594

 

 

$

466,560

 

 

Purchases of property and equipment

 

 

(22,059

)

 

 

(28,444

)

 

 

(70,395

)

 

 

(69,574

)

 

Proceeds from sales of property and equipment

 

 

1,782

 

 

 

3,007

 

 

 

3,611

 

 

 

5,093

 

 

Free cash flow

 

$

281,902

 

 

$

188,804

 

 

$

571,810

 

 

$

402,079

 

 

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/20241024838786/en/

Julie Shaeff, Chief Accounting Officer ir@comfortsystemsusa.com; 713-830-9687

675 Bering Drive, Suite 400 Houston, Texas 77057 713-830-9600