Summary
Comfort Systems USA Inc. (FIX) reported its second-quarter 2017 financial results, demonstrating revenue growth driven by acquisitions and improved industry conditions. Total revenue for the quarter increased by 8.9% year-over-year to $465.4 million, with the first six months of the year seeing a 4.0% increase to $846.0 million. This growth was largely attributable to the acquisition of BCH, contributing to a significant increase in backlog, which rose 29.5% year-over-year to $937.8 million. While overall revenue and backlog show positive momentum, same-store revenue experienced a slight decline, indicating a need for continued focus on core operational performance. The company's financial health remains robust, supported by strong cash flow generation and a well-managed balance sheet. Despite increased interest expense due to recent acquisitions, the company maintained compliance with its debt covenants, with a leverage ratio of 0.70 as of June 30, 2017. Management is focused on execution, cost control, and investing in growth, particularly within its service business, with expectations for continued strong profitability in 2017.
Financial Highlights
52 data points| Revenue | $465.41M |
| Cost of Revenue | $369.67M |
| Gross Profit | $95.74M |
| SG&A Expenses | $66.60M |
| Operating Income | $29.27M |
| Interest Expense | $1.04M |
| Net Income | $17.97M |
| EPS (Basic) | $0.48 |
| EPS (Diluted) | $0.48 |
| Shares Outstanding (Basic) | 37.30M |
| Shares Outstanding (Diluted) | 37.70M |
Key Highlights
- 1Revenue increased 8.9% to $465.4 million for Q2 2017 and 4.0% to $846.0 million for the first six months of 2017, driven by acquisitions.
- 2Backlog grew significantly by 29.5% year-over-year to $937.8 million as of June 30, 2017, reflecting strong project bookings.
- 3Gross profit margin for Q2 2017 slightly decreased to 20.6% from 20.9% in Q2 2016, primarily due to acquisition-related amortization.
- 4Selling, General & Administrative (SG&A) expenses increased, particularly on a same-store basis excluding amortization, due to investments in service and compensation costs.
- 5The company recorded a $1.1 million goodwill impairment charge in Q1 2017 related to a California reporting unit, reflecting a reevaluation of future earnings.
- 6Interest expense increased due to additional borrowings for acquisitions, but the company remains compliant with its debt covenants.
- 7Free cash flow for the first six months of 2017 was $10.1 million, a decrease from $26.0 million in the prior year, primarily due to increased working capital needs and acquisition-related investing activities.