01—Abstract
Summary
Summary of the 10-K filed February 23, 2022. Cited figures are marked; the original filing is the authoritative source.
Comfort Systems USA, Inc. (FIX) reported robust performance for the fiscal year ended December 31, 2021.
The company experienced significant revenue growth, driven by a combination of organic activity and strategic acquisitions. The mechanical services segment continued to be the larger contributor to revenue, while the electrical services segment saw substantial growth, nearly doubling its market share within the company. Management highlighted improvements in operational efficiency and a strong focus on core competencies, safety, and employee development.
The company also demonstrated a commitment to sustainability initiatives. Despite facing industry-wide challenges such as increased labor and material costs and supply chain disruptions, Comfort Systems USA maintained a positive outlook for 2022, anticipating continued solid earnings and cash flow due to a strong project pipeline and favorable market conditions. The company’s financial health remains strong, supported by significant borrowing capacity and a history of positive free cash flow generation.
02—Key points
Key Highlights
- Revenue increased by 7.6% to $3.07 billion in 2021 compared to 2020, driven by acquisitions and same-store activity.
- The company completed multiple acquisitions throughout 2021, expanding its operational footprint and capabilities, notably Amteck Holdco LLC, Ivey Mechanical Company, LLC, and MEP Holding Co., Inc.
- Backlog increased significantly by 53.0% year-over-year to $2.31 billion as of December 31, 2021, indicating strong future revenue prospects.
- Gross profit increased by 3.0% to $563.2 million, though the gross profit margin slightly decreased from 19.1% to 18.3% due to project execution issues and higher costs.
- Selling, General, and Administrative (SG&A) expenses as a percentage of revenue decreased from 12.5% to 12.2%, aided by a reduction in bad debt expense.
- The company generated $180.2 million in cash flow from operating activities and $160.9 million in free cash flow for 2021, demonstrating strong cash generation capabilities.
- Comfort Systems USA maintained compliance with all financial covenants under its credit facility, reporting a Total Leverage Ratio of 1.2 as of December 31, 2021.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Comfort Systems USA kept $0.05.
- Revenue$3.07B100.0%
- Cost of revenue−$2.51B81.7%
- Gross profit$563.2M18.3%
- Operating costs−$374.8M12.2%
- Operating income$188.4M6.1%
- Interest, other & tax−$45.1M1.5%
- Net income$143.3M4.7%
Where FY2021 revenue went
$3.07B- Cost of revenue: $2.51B, 82% of revenue
- SG&A: $376.3M, 12% of revenue
- Net income: $143.3M, 4.7% of revenue
- Interest, other & tax: $45.1M, 1.5% of revenue
Kept 4.7% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 23, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $3.07B$2.86B | +7.6% |
| Cost of Revenue | $2.51B$2.31B | +8.7% |
| Gross Profit | $563.21M$546.98M | +3.0% |
| SG&A Expenses | $376.31M$357.78M | +5.2% |
| Operating Income | $188.44M$190.65M | −1.2% |
| Interest Expense | $6.20M$8.38M | −26.1% |
| Net Income | $143.35M$150.14M | −4.5% |
| EPS (Basic) | $3.95$4.11 | −3.9% |
| EPS (Diluted) | $3.93$4.09 | −3.9% |
| Shares Outstanding (Basic) | 36.28M36.54M | −0.7% |
| Shares Outstanding (Diluted) | 36.45M36.74M | −0.8% |
05—Questions
Frequently Asked Questions
What was Comfort Systems USA's financial performance in 2021?
In 2021, Comfort Systems USA reported a revenue of $3.07 billion, an increase of 7.6% from $2.86 billion in 2020. Gross profit was $563.2 million, up 3.0% from $547.0 million in 2020. Net income was $143.3 million, a slight decrease from $150.1 million in 2020. The company also generated $180.2 million in cash flow from operations and $160.9 million in free cash flow.
What are the company's primary business segments and how did they perform?
Comfort Systems USA operates in two main segments: Mechanical Services and Electrical Services. The Mechanical Services segment generated $2.54 billion in revenue in 2021, a 4.6% increase, and accounted for 82.7% of total revenue. The Electrical Services segment saw significant growth, with revenue increasing by 24.6% to $531.0 million, representing 17.3% of total revenue.
What is the company's outlook for 2022?
Comfort Systems USA anticipates solid earnings and cash flow in 2022. They believe they are returning to good market conditions, having largely recovered from COVID-19 impacts. While they acknowledge challenges like increased labor and material costs and supply chain issues, they are actively managing these through job planning, pricing, and early material procurement. The company expects supportive industry conditions to continue.
How has the company managed growth and acquisitions?
The company has pursued growth through strategic acquisitions, completing several in 2021, including Amteck, Ivey Mechanical, and MEP Holdings. These acquisitions aim to expand operational capabilities and market reach. The company also focuses on integrating acquired businesses and leveraging resources across its operating locations to improve efficiency.
06—Continue