10-QPeriod: Q2 FY2022

COMFORT SYSTEMS USA INC Quarterly Report for Q2 Ended Jun 30, 2022

Filed July 27, 2022For Securities:FIX

Summary

Comfort Systems USA, Inc. (FIX) reported strong revenue growth for the second quarter and the first six months of 2022, driven by both organic growth and strategic acquisitions. Revenue increased by 42.6% in Q2 and 37.5% year-to-date, reflecting robust market conditions and the successful integration of recent acquisitions. The company also demonstrated solid profitability, with gross profit increasing significantly year-over-year. While gross profit margin saw a slight decrease due to product mix and increased material costs, overall operating income and net income showed substantial improvements. The company highlighted strong backlog growth and an optimistic outlook for the remainder of 2022, despite ongoing challenges such as supply chain constraints and increased labor costs.

Financial Highlights

51 data points
Beta

Revenue

$1.02B

17.2% Gross Margin

Net Income

$42.25M

4.2% Net Margin

EPS (Diluted)

$1.17

Total Assets

$2.44B

Cash & Equivalents

$69.13M

Free Cash Flow

$33.54M

Financial Statements
Beta
Revenue$1.02B
Cost of Revenue$842.96M
Gross Profit$174.99M
SG&A Expenses$118.72M
Operating Income$56.65M
Interest Expense$3.03M
Net Income$42.25M
EPS (Basic)$1.17
EPS (Diluted)$1.17
Shares Outstanding (Basic)35.97M
Shares Outstanding (Diluted)36.07M

Key Highlights

  • 1Revenue for the second quarter of 2022 surged by 42.6% to $1.02 billion, compared to $713.9 million in the prior year period.
  • 2Year-to-date revenue reached $1.90 billion, a 37.5% increase over the first six months of 2021.
  • 3Gross profit for Q2 2022 increased by 38.4% to $175.0 million, indicating strong operational performance.
  • 4Net income for Q2 2022 was $42.2 million, up from $33.0 million in Q2 2021, reflecting improved profitability.
  • 5The company's backlog grew significantly to $2.81 billion as of June 30, 2022, up 52.6% year-over-year, signaling strong future revenue potential.
  • 6Comfort Systems USA successfully amended its senior credit facility in May 2022, increasing borrowing capacity to $850 million, providing ample liquidity and financial flexibility.
  • 7The company repurchased approximately 0.4 million shares for $32.9 million during the first six months of 2022, demonstrating a commitment to returning value to shareholders.

Frequently Asked Questions

Revenue growth was driven by a combination of same-store activity which saw a 24.7% increase, and contributions from recent acquisitions including Atlantic, Amteck, Ivey, and MEP Holdings, which accounted for a 17.9% increase. Strong market conditions and the pass-through of inflation impacts on costs also contributed.

Gross profit increased significantly, but the gross profit margin slightly decreased from 17.7% in Q2 2021 to 17.2% in Q2 2022. This was primarily attributed to a shift in product mix towards the electrical segment and new construction, as well as materials and equipment comprising a higher percentage of costs.

Comfort Systems USA anticipates solid earnings and cash flow for 2022, with strong demand and a robust pipeline of opportunities. While acknowledging ongoing challenges such as supply chain constraints and labor costs, the company expects supportive industry conditions to continue.

The company amended its senior credit facility in May 2022, increasing its borrowing capacity to $850 million, which provides substantial liquidity. As of June 30, 2022, they had $434.4 million in available credit. They remain in compliance with all financial covenants and have a history of generating positive free cash flow.