Comfort Systems USA, Inc. (NYSE: FIX) (the “Company”)
today reported results for the quarter ended March 31, 2023.
For the quarter ended March 31, 2023, net income was $57.2
million, or $1.59 per diluted share, as compared to $86.8 million,
or $2.40 per diluted share, for the quarter ended March 31, 2022.
The first quarter of 2023 included a diluted per share net gain of
$0.12, including $0.08 related to prior tax years, due to a tax
change and $0.15 from the favorable resolution of certain
litigation matters. The first quarter of 2022 included a diluted
per share net tax gain of $1.49 related to prior years. Revenue for
the first quarter of 2023 was $1,174.6 million compared to $885.2
million in 2022. The Company reported operating cash flow of $126.9
million in the current quarter compared to $63.7 million in
2022.
Backlog as of March 31, 2023 was $4.44 billion as compared to
$4.06 billion as of December 31, 2022 and $2.73 billion as of March
31, 2022. On a same-store basis, backlog increased from $2.73
billion as of March 31, 2022 to $4.32 billion as of March 31,
2023.
Brian Lane, Comfort Systems USA’s President and Chief Executive
Officer, said, “We started 2023 on a very positive note, with
remarkable increases in revenue and earnings per share. Our
mechanical operations again performed at high levels and our
electrical segment continued its trend of improving profitability.
Cash flow was unusually strong, especially for a first quarter, and
our backlog increased yet again, reflecting good ongoing demand in
traditional and modular construction. Our already strong quarterly
earnings were further increased by favorable resolution of certain
litigation matters.”
Mr. Lane concluded, “Our teams across the country continue to
execute. Thanks to their excellence, and in light of the strong
ongoing demand that we are experiencing, we remain optimistic about
our prospects for continued growth and strong profitability in
2023.”
The Company will host a webcast and conference call to discuss
its financial results and position on Thursday, April 27, 2023 at
10:30 a.m. Central Time. To register for the call, please visit
https://register.vevent.com/register/BI9b57002f12ed44b78143f9dedccc3592.
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 173 locations in 132
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 its acquisition of Eldeco
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)
2023
%
2022
%
Revenue
$
1,174,640
100.0
%
$
885,216
100.0
%
Cost of services
969,235
82.5
%
732,072
82.7
%
Gross profit
205,405
17.5
%
153,144
17.3
%
SG&A
135,032
11.5
%
117,776
13.3
%
Gain on sale of assets
(512)
—
(323)
—
Operating income
70,885
6.0
%
35,691
4.0
%
Interest expense, net
(2,679)
(0.2)
%
(2,126)
(0.2)
%
Changes in the fair value of contingent
earn-out obligations
(2,382)
(0.2)
%
4,088
0.5
%
Other income (expense)
1
—
56
—
Income before income taxes
65,825
5.6
%
37,709
4.3
%
Provision (benefit) for income taxes
8,609
(49,053)
Net income
$
57,216
4.9
%
$
86,762
9.8
%
Income per share
Basic
$
1.60
$
2.40
Diluted
$
1.59
$
2.40
Shares used in computing income per
share:
Basic
35,812
36,076
Diluted
35,907
36,188
Dividends per share
$
0.175
$
0.130
Supplemental Non-GAAP Information —
(Unaudited) (In Thousands, Except per Share Amounts)
Three Months Ended
March 31,
2023
2022
Net income
$
57,216
$
86,762
Tax gains related to prior years
(3,368)
(57,255)
Tax-related SG&A costs, net of tax
333
3,519
Net income excluding tax gains
$
54,181
$
33,026
Diluted income per share
$
1.59
$
2.40
Tax gains related to prior years
(0.09)
(1.59)
Tax-related SG&A costs, net of tax
0.01
0.10
Diluted income per share excluding tax
gains
$
1.51
$
0.91
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,
2023
%
2022
%
Net income
$
57,216
$
86,762
Provision (benefit) for income taxes
8,609
(49,053)
Other expense (income), net
(1)
(56)
Changes in the fair value of contingent
earn-out obligations
2,382
(4,088)
Interest expense, net
2,679
2,126
Gain on sale of assets
(512)
(323)
Tax-related SG&A costs
421
4,455
Amortization
10,331
12,791
Depreciation
9,187
8,046
Adjusted EBITDA
$
90,312
7.7
%
$
60,660
6.9
%
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, 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,
2023
2022
(Unaudited)
Cash and cash equivalents
$
48,560
$
57,214
Billed accounts receivable, net
1,176,378
1,024,082
Unbilled accounts receivable, net
81,151
77,030
Costs and estimated earnings in excess of
billings, net
26,820
27,211
Other current assets, net
126,115
122,134
Total current assets
1,459,024
1,307,671
Property and equipment, net
155,021
143,949
Goodwill
637,434
611,789
Identifiable intangible assets, net
296,070
273,901
Other noncurrent assets
291,922
260,168
Total assets
$
2,839,471
$
2,597,478
Current maturities of long-term debt
$
11,468
$
9,000
Accounts payable
351,509
337,385
Billings in excess of costs and estimated
earnings and deferred revenue
717,294
548,293
Other current liabilities
326,388
276,124
Total current liabilities
1,406,659
1,170,802
Long-term debt
197,761
247,245
Other long-term liabilities
181,561
179,508
Total liabilities
1,785,981
1,597,555
Total stockholders’ equity
1,053,490
999,923
Total liabilities and stockholders’
equity
$
2,839,471
$
2,597,478
Selected Cash Flow Data (Unaudited) (In
Thousands)
Three Months Ended
March 31,
2023
2022
Cash provided by (used in):
Operating activities
$
126,909
$
63,729
Investing activities
$
(68,945)
$
(9,369)
Financing activities
$
(66,618)
$
2,479
Free cash flow:
Cash from operating activities
$
126,909
$
63,729
Purchases of property and equipment
(16,520)
(9,192)
Proceeds from sales of property and
equipment
622
1,056
Free cash flow
$
111,011
$
55,593
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/20230426005761/en/
Julie Shaeff, Chief Accounting Officer ir@comfortsystemsusa.com;
713-830-9687
Comfort Systems USA (NYSE:FIX)
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