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
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