01—Abstract
Summary
Summary of the 10-Q filed April 25, 2024. Cited figures are marked; the original filing is the authoritative source.
Comfort Systems USA, Inc. (FIX) reported a strong first quarter for 2024, with significant increases in revenue and net income compared to the prior year.
Revenue grew by 30.8% to $1.54 billiona, driven by robust demand across its mechanical and electrical segments, particularly in technology and manufacturing sectors. This growth was supported by both existing operations and strategic acquisitions, as evidenced by a substantial 33.0% increase in backlog year-over-year. The company's profitability also saw a marked improvement, with gross profit increasing by 44.8% and net income rising to $96.3 million, or $2.69 per diluted share, up from $57.2 million, or $1.59 per diluted share, in the first quarter of 2023.
This improved performance was attributed to higher revenues, better operational execution, and increased gross profit margins. Despite some persistent challenges like increased labor costs and supply chain constraints, the company anticipates continued solid earnings and cash flow for the remainder of 2024, projecting sustained supportive conditions, especially for its industrial and technology clients.
02—Key points
Key Highlights
- Revenue surged by 30.8% year-over-year to $1.54 billion, indicating strong market demand and successful integration of acquisitions.
- Net income more than doubled to $96.3 million, translating to diluted EPS of $2.69, a significant increase from $1.59 in Q1 2023.
- Gross profit increased by 44.8% to $297.4 million, with gross margin improving from 17.5% to 19.3% due to higher revenues and better execution.
- Backlog reached $5.91 billion as of March 31, 2024, up 33.0% year-over-year, reflecting strong future revenue visibility.
- The company completed two significant acquisitions in February 2024 (Summit Industrial Construction and J&S Mechanical Contractors), significantly contributing to revenue and backlog growth.
- Free cash flow increased to $122.6 million, demonstrating strong operational cash generation and efficient working capital management.
- Despite inflationary pressures and supply chain issues, the company maintains a positive outlook, expecting solid earnings and cash flow for 2024, particularly driven by the industrial and technology sectors.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Comfort Systems USA kept $0.06.
- Revenue$1.54B100.0%
- Cost of revenue−$1.24B80.7%
- Gross profit$297.4M19.3%
- Operating costs−$161.9M10.5%
- Operating income$135.5M8.8%
- Interest, other & tax−$39.1M2.5%
- Net income$96.3M6.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 25, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $1.54B$1.17B | +30.8% |
| Cost of Revenue | $1.24B$969.24M | +27.9% |
| Gross Profit | $297.36M$205.41M | +44.8% |
| SG&A Expenses | $162.72M$135.03M | +20.5% |
| Operating Income | $135.46M$70.89M | +91.1% |
| Interest Expense | $1.63M$4.08M | −59.9% |
| Net Income | $96.32M$57.22M | +68.3% |
| EPS (Basic) | $2.70$1.60 | +68.8% |
| EPS (Diluted) | $2.69$1.59 | +69.2% |
| Shares Outstanding (Basic) | 35.74M35.81M | −0.2% |
| Shares Outstanding (Diluted) | 35.83M35.91M | −0.2% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Comfort Systems USA's revenue growth in the first quarter of 2024?
Revenue growth was driven by a combination of strong market demand, particularly in the technology and manufacturing sectors, and the successful integration of recent acquisitions, specifically Summit Industrial Construction and J&S Mechanical Contractors. Same-store revenue also saw significant growth, indicating underlying strength in core operations.
How did the company's profitability change compared to the previous year?
Profitability significantly improved. Net income increased to $96.3 million from $57.2 million in the prior year's quarter. This was supported by a substantial increase in gross profit, which rose by 44.8%, leading to an improved gross margin from 17.5% to 19.3%.
What is the current backlog situation and what does it indicate for the future?
The company's backlog stood at $5.91 billion as of March 31, 2024, representing a robust 33.0% increase year-over-year. This substantial backlog suggests strong future revenue visibility and provides a positive outlook for the company's performance over the next several quarters, particularly within its industrial and technology client segments.
Did the company undertake any significant acquisitions during the quarter?
Yes, the company completed two significant acquisitions in February 2024: Summit Industrial Construction, LLC and J&S Mechanical Contractors, Inc. These acquisitions have contributed to the reported revenue and backlog growth for the period.
06—Continue