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Comfort Systems USA Reports First Quarter Results
For the quarter ended March 31, 2024, net income was $96.3 million, or $2.69 per diluted share, as compared to $57.2 million, or $1.59 per diluted share, for the quarter ended March 31, 2023. Revenue for the first quarter of 2024 was $1,537.0 million compared to $1,174.6 million in 2023. The Company reported operating cash flow of $146.6 million in the current quarter compared to $126.9 million in 2023.
Brian Lane, Comfort Systems USA's President and Chief Executive Officer, said, "Our expert and dedicated employees achieved superb execution for our customers this quarter, and our newly acquired companies are off to a great start. First quarter results were extraordinary, with per share earnings more than a dollar above the same quarter last year, increased backlog, and over $140 million in cash flow. Our mechanical business improved, and our electrical segment profitability increased to unprecedented levels. Construction and service continue to flourish, demand remains supportive, and we are optimistic that we will continue to achieve strong results in 2024."
Backlog as of March 31, 2024 was $5.91 billion as compared to $5.16 billion as of December 31, 2023 and $4.44 billion as of March 31, 2023. On a same-store basis, backlog increased from $4.44 billion as of March 31, 2023 to $5.25 billion as of March 31, 2024.
The Company will host a webcast and conference call to discuss its financial results and position on Friday, April 26, 2024 at 10:00 a.m. Central Time. To register for the call, please visit https://register.vevent.com/register/BI2d3f8046dbb64b0c8a8126b26147d877. 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(R) is a leading provider of commercial, industrial and institutional heating, ventilation, air conditioning and electrical contracting services, with 177 locations in 136 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
March 31,
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
2024 % 2023 %
------------------------------------------------- ---------------------------------- ------------------------------------------------- ----------------------------------
Revenue $ 1,537,016 100.0 % $ 1,174,640 100.0 %
Cost of services 1,239,653 80.7 % 969,235 82.5 %
-------------------- --------- -------------------- -------------------- --------- --------------------
Gross profit 297,363 19.3 % 205,405 17.5 %
SG&A 162,723 10.6 % 135,032 11.5 %
Gain on sale of assets (820 ) (0.1 )% (512 ) --
-------------------- --------- -------------------- -------------------- --------- --------------------
Operating income 135,460 8.8 % 70,885 6.0 %
Interest income (expense), net (30 ) -- (2,679 ) (0.2 )%
Changes in the fair value of contingent earn-out obligations (12,491 ) (0.8 )% (2,382 ) (0.2 )%
Other income, net 117 -- 1 --
-------------------- --------- -------------------- -------------------- --------- --------------------
Income before income taxes 123,056 8.0 % 65,825 5.6 %
Provision for income taxes 26,737 8,609
-------------------- --------- -------------------- -------------------- --------- --------------------
Net income $ 96,319 6.3 % $ 57,216 4.9 %
==================== ========= ==================== ==================== ========= ====================
Income per share
$ 2.70 $ 1.60
Basic
==================== ========= ==================== ==================== ========= ====================
$ 2.69 $ 1.59
Diluted
==================== ========= ==================== ==================== ========= ====================
Shares used in computing income per share:
35,739 35,812
Basic
==================== ========= ==================== ==================== ========= ====================
35,828 35,907
Diluted
==================== ========= ==================== ==================== ========= ====================
Dividends per share $ 0.250 $ 0.175
==================== ========= ==================== ==================== ========= ====================
Supplemental Non-GAAP Information -- (Unaudited) (In Thousands, Except per Share Amounts)
Three Months Ended
March 31,
----------------------------------------------------------------------------------------------------
2024 2023
---------------------------------- ----------------------------------------------
Net income $ 96,319 $ 57,216
Tax gains related to prior years -- (3,368 )
Tax-related SG&A costs, net of tax -- 333
-------------------- -------------- -------------------- ------ --------------------
Net income excluding tax gains $ 96,319 $ 54,181
==================== ============== ==================== ====== ====================
Diluted income per share $ 2.69 $ 1.59
Tax gains related to prior years - (0.09 )
Tax-related SG&A costs, net of tax - 0.01
-------------------- -------------- -------------------- ------ --------------------
Diluted income per share excluding tax gains $ 2.69 $ 1.51
==================== ============== ==================== ====== ====================
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
March 31,
2024 % 2023 %
------------------------------------------------------ ------------------- ---------------------------------------------- -------------------
Net income $ 96,319 $ $ 57,216
Provision for income taxes 26,737 8,609
Other income, net (117 ) (1 )
Changes in the fair value of contingent earn-out obligations 12,491 2,382
Interest expense (income), net 30 2,679
Gain on sale of assets (820 ) (512 )
Tax-related SG&A costs -- 421
Amortization 23,913 10,331
Depreciation 11,254 9,187
-------------------- -------------- -------------------- -------------------- -------------------- ------ --------------------
Adjusted EBITDA $ 169,807 11.0 11.0 % $ $ 90,312 7.7 7.7 %
==================== ============== ==================== ==================== ==================== ====== ====================
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)
March 31, December 31,
2024 2023
------------------------------ ------------------------------
(Unaudited)
Cash and cash equivalents $ 100,792 $ 205,150
Billed accounts receivable, net 1,570,643 1,318,926
Unbilled accounts receivable, net 76,975 72,774
Costs and estimated earnings in excess of billings, net 30,118 28,084
Other current assets, net 269,661 286,166
-------------------- ---------- -------------------- ----------
2,048,189 1,911,100
Total current assets
Property and equipment, net 226,197 208,568
Goodwill 862,934 666,834
Identifiable intangible assets, net 489,884 280,397
Other noncurrent assets 275,625 238,680
-------------------- ---------- -------------------- ----------
$ 3,902,829 $ 3,305,579
Total assets
==================== ========== ==================== ==========
Current maturities of long-term debt $ 12,885 $ 4,867
Accounts payable 557,859 419,962
Billings in excess of costs and estimated earnings and deferred revenue 1,131,928 909,538
Other current liabilities 436,987 386,838
-------------------- ---------- -------------------- ----------
2,139,659 1,721,205
Total current liabilities
Long-term debt 77,004 39,345
Other long-term liabilities 313,630 267,200
-------------------- ---------- -------------------- ----------
2,530,293 2,027,750
Total liabilities
-------------------- ---------- -------------------- ----------
Total stockholders' equity 1,372,536 1,277,829
-------------------- ---------- -------------------- ----------
$ 3,902,829 $ 3,305,579
Total liabilities and stockholders' equity
==================== ========== ==================== ==========
Selected Cash Flow Data (Unaudited) (In Thousands)
Three Months Ended
March 31,
-------------------------------------------------------------------------------------------------------------------
2024 2023
------------------------------------------------ -----------------------------------------------
Cash provided by (used in):
$ 146,557 $ 126,909
Operating activities
$ (221,648 ) $ (68,945 )
Investing activities
$ (29,267 ) $ (66,618 )
Financing activities
Free cash flow:
$ 146,557 $ 126,909
Cash from operating activities
(24,952 ) (16,520 )
Purchases of property and equipment
1,014 622
Proceeds from sales of property and equipment
-------------------- -------- -------------------- -------------------- ------- --------------------
Free cash flow $ 122,619 $ 111,011
==================== ======== ==================== ==================== ======= ====================
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/20240425854151/en/
SOURCE: Comfort Systems USA, Inc.
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Julie Shaeff, Chief Accounting Officer ir@comfortsystemsusa.com; 713-830-9687
COMTEX_451420780/1006/2024-04-25T16:09:01