Summary
Comfort Systems USA Inc. (FIX) reported strong top-line growth for the nine months ended September 30, 2017, with revenue increasing by 6.8% to $1.33 billion, driven by both acquisitions and same-store activity. The third quarter also showed robust growth, with revenue up 12.1% to $480.9 million. This growth was supported by improved market conditions in the nonresidential construction sector, a trend management expects to continue. The company's strategic focus on execution, cost control, and investment in its service business is paying off, as evidenced by the healthy backlog, which increased 25.3% year-over-year. Financially, the company demonstrated solid cash flow generation, with free cash flow increasing to $49.6 million for the first nine months of 2017, up from $33.3 million in the prior year. This strong cash flow, coupled with a substantial credit facility and prudent debt management, provides a stable financial foundation. Despite a slight decrease in gross profit margin percentage due to acquisition-related amortization, overall profitability remains strong, and the company is well-positioned for continued performance given the favorable industry outlook.
Financial Highlights
52 data points| Revenue | $480.85M |
| Cost of Revenue | $379.99M |
| Gross Profit | $100.86M |
| SG&A Expenses | $66.71M |
| Operating Income | $34.34M |
| Interest Expense | $961K |
| Net Income | $22.28M |
| EPS (Basic) | $0.60 |
| EPS (Diluted) | $0.59 |
| Shares Outstanding (Basic) | 37.23M |
| Shares Outstanding (Diluted) | 37.63M |
Key Highlights
- 1Revenue increased by 12.1% to $480.9 million in Q3 2017 and 6.8% to $1.33 billion for the first nine months of 2017, reflecting strong organic growth and successful acquisitions.
- 2Backlog increased significantly by 25.3% year-over-year to $901.2 million as of September 30, 2017, indicating robust future revenue potential.
- 3Free cash flow saw substantial improvement, growing to $49.6 million for the first nine months of 2017 from $33.3 million in the same period of 2016.
- 4The company maintained strong financial flexibility with $219.4 million of credit available under its $325.0 million senior credit facility as of September 30, 2017.
- 5Gross profit margin slightly decreased from 21.6% to 21.0% in Q3 2017 due to acquisition-related amortization, but overall gross profit dollars increased.
- 6Selling, General & Administrative (SG&A) expenses as a percentage of revenue decreased from 14.2% in Q3 2016 to 13.9% in Q3 2017, demonstrating good cost management relative to revenue growth.
- 7The company reported compliance with all financial covenants under its senior credit facility, highlighting its sound financial health.