Summary
Comfort Systems USA, Inc. (FIX) reported a significant increase in revenue for the first quarter of 2018, up 22.2% year-over-year to $464.9 million. This growth was driven by both acquisitions and strong same-store performance, indicating a healthy expansion in its core mechanical installation and services business. While gross profit also increased, the gross profit margin slightly declined from 20.0% to 19.2%, attributed to underperformance in specific projects. The company's backlog also showed robust growth, increasing 13.7% sequentially and 25.0% year-over-year, signaling continued demand for its services. Financially, the company maintained a strong position with a low leverage ratio of 0.4 and a healthy fixed charge coverage ratio of 19.9, well within its credit facility covenants. Despite a decrease in cash flow from operations compared to the prior year, primarily due to increased accounts receivable tied to project timing, the company highlighted its consistent generation of positive free cash flow over the past nineteen years. Management expects continued improvement in revenue and net earnings for 2018, driven by strong industry conditions and a focus on cost control and growth investment in its service business.
Financial Highlights
52 data points| Revenue | $464.94M |
| Cost of Revenue | $375.89M |
| Gross Profit | $89.05M |
| SG&A Expenses | $70.02M |
| Operating Income | $19.24M |
| Interest Expense | $713K |
| Net Income | $16.66M |
| EPS (Basic) | $0.45 |
| EPS (Diluted) | $0.44 |
| Shares Outstanding (Basic) | 37.19M |
| Shares Outstanding (Diluted) | 37.63M |
Key Highlights
- 1Revenue surged by 22.2% to $464.9 million in Q1 2018 compared to Q1 2017, driven by both acquisitions and a 15.5% increase in same-store revenue.
- 2Backlog increased significantly, up 13.7% sequentially to $1.08 billion and 25.0% year-over-year, indicating strong future revenue potential.
- 3Gross profit increased by 17.2% to $89.1 million, though the gross profit margin slightly decreased from 20.0% to 19.2% due to project underperformance in certain locations.
- 4Selling, General, and Administrative (SG&A) expenses increased by 10.7%, but as a percentage of revenue, they decreased from 16.6% to 15.1%.
- 5The company reported a strong financial position with a leverage ratio of 0.4 and a fixed charge coverage ratio of 19.9, well within debt covenants.
- 6Free cash flow turned negative in Q1 2018 ($1.37 million) compared to a positive $5.27 million in Q1 2017, primarily due to increased investment in acquisitions and working capital needs.
- 7Management anticipates continued improvement in revenue and net earnings for the full year 2018, citing favorable industry conditions and strategic focus on cost discipline and growth.