Summary
Comfort Systems USA, Inc. (FIX) reported a strong third quarter and year-to-date performance ending September 30, 2019, driven by significant revenue growth, largely attributable to strategic acquisitions, most notably the Walker acquisition. Revenue for the quarter increased by 18.9% to $706.9 million, and for the nine-month period, it rose by 18.9% to $1.9 billion. This growth was supported by a healthy increase in backlog, which stood at $1.61 billion, up 28.2% year-over-year, indicating robust future demand. While gross profit saw an increase of 11.6% for the quarter, the gross profit margin slightly compressed to 20.2% from 21.5% in the prior year, partly due to lower margins on the acquired Walker business and amortization of backlog. Selling, General, and Administrative (SG&A) expenses also increased, reflecting investments in personnel and professional fees related to growth and acquisitions. Despite these pressures, the company maintained solid profitability, with operating income showing a modest increase for the quarter. The company's financial position remains strong, evidenced by a healthy free cash flow generation of $78.5 million for the nine-month period and a strong liquidity position.
Financial Highlights
52 data points| Revenue | $706.92M |
| Cost of Revenue | $564.22M |
| Gross Profit | $142.70M |
| SG&A Expenses | $90.01M |
| Operating Income | $53.40M |
| Interest Expense | $2.78M |
| Net Income | $36.23M |
| EPS (Basic) | $0.98 |
| EPS (Diluted) | $0.98 |
| Shares Outstanding (Basic) | 36.80M |
| Shares Outstanding (Diluted) | 37.05M |
Key Highlights
- 1Revenue surged by 18.9% to $706.9 million in Q3 2019 and by 18.9% to $1.9 billion for the first nine months of 2019, largely driven by the Walker acquisition and other acquisitions.
- 2Backlog increased significantly by 28.2% year-over-year to $1.61 billion as of September 30, 2019, signaling strong future revenue potential.
- 3Gross profit increased by 11.6% to $142.7 million for the quarter, though gross profit margin slightly declined to 20.2% from 21.5% in Q3 2018.
- 4SG&A expenses increased by 19.5% to $90.0 million for the quarter, primarily due to investments in personnel and professional fees related to growth and acquisitions.
- 5The company generated strong free cash flow of $78.5 million for the nine-month period ended September 30, 2019, a significant increase from $47.0 million in the prior year.
- 6Total liabilities increased substantially to $909.8 million from $564.5 million primarily due to increased long-term debt and lease liabilities related to acquisitions and new lease accounting standards.
- 7The company maintained a strong liquidity position, with $40.4 million in cash and cash equivalents and $173.4 million of credit available under its revolving credit facility as of September 30, 2019.