Summary
Comfort Systems USA, Inc. (FIX) reported a solid third quarter and nine-month performance ending September 30, 2016, demonstrating growth driven by strategic acquisitions and improved operational execution. Revenue for the third quarter increased by 4.4% to $428.8 million, and for the first nine months, it rose by 3.8% to $1.24 billion, primarily boosted by the acquisition of Shoffner. Despite a slight dip in same-store revenue due to weakness in specific projects at the EAS operation, overall gross profit saw a healthy increase, up 6.1% for the quarter and 9.2% year-to-date, reflecting improved project execution and volume growth in other regions. The company maintained a strong financial position, characterized by positive free cash flow generation over many years and a significant increase in available credit under an amended revolving credit facility. SG&A expenses saw a moderate increase, largely due to compensation tied to improved operating results and service expansion. Management remains focused on execution, cost control, and strategic growth in its service business, expecting continued improvement in industry conditions and profitability into 2017.
Financial Highlights
52 data points| Revenue | $428.76M |
| Cost of Revenue | $335.94M |
| Gross Profit | $92.82M |
| SG&A Expenses | $61.03M |
| Operating Income | $31.95M |
| Interest Expense | $563K |
| Net Income | $20.47M |
| EPS (Basic) | $0.55 |
| EPS (Diluted) | $0.54 |
| Shares Outstanding (Basic) | 37.36M |
| Shares Outstanding (Diluted) | 37.82M |
Key Highlights
- 1Revenue increased by 4.4% to $428.8 million in Q3 2016 and 3.8% to $1.24 billion in the first nine months of 2016, driven by the Shoffner acquisition.
- 2Gross profit improved significantly, up 6.1% to $92.8 million in Q3 and 9.2% to $255.7 million year-to-date, indicating better project execution and volume.
- 3The company reported strong compliance with its credit facility covenants, with a leverage ratio of 0.2 as of September 30, 2016.
- 4SG&A expenses increased by 5.4% in Q3 and 6.7% year-to-date, attributed to increased compensation and expanded service activities.
- 5Free cash flow for the first nine months of 2016 was $33.3 million, a decrease from $60.3 million in the prior year, largely due to investments in acquisitions.
- 6Backlog stood at $719.3 million as of September 30, 2016, a 7.9% increase year-over-year, indicating a healthy pipeline of future work.
- 7Comfort Systems USA acquired the remaining 40% noncontrolling interest in Environmental Air Systems, LLC in early 2016, consolidating its ownership.