01—Abstract
Summary
Summary of the 8-K filed February 20, 2025. Cited figures are marked; the original filing is the authoritative source.
Comfort Systems USA (NYSE: FIX) reported record fourth-quarter and full-year 2024 results on February 20, 2025.
Q4 revenue rose 38% year over year to $1.87 billiona, and diluted EPS reached $4.09 versus $2.55 a year earlier. For the full year, revenue grew to $7.03 billion from $5.21 billion (about 35%), and diluted EPS rose to $14.60 from $9.01, roughly 62%. Gross margin expanded to 21.0% for the year from 19.0%, and operating income climbed to $749.4 million, a 10.7% margin versus 8.0% in 2023.
Adjusted EBITDA for 2024 was $891.8 millionb, or 12.7% of revenue. Growth was driven in part by recently acquired companies, and management said they were exceeding expectations. Backlog ended 2024 at $5.99 billion, up from $5.16 billion a year earlier.
On a same-store basis, backlog grew to $5.60 billionc, which signals organic demand strength beyond acquisitions. Operating cash flow was $849.1 million for the year, and free cash flow was $743.5 million, both substantially higher than in 2023. Management said the company funded acquisitions and share repurchases from internal cash generation.
Cash rose to $549.9 milliond at year-end, and long-term debt remained modest at $62.3 million. The board also declared a quarterly dividend of $0.40 per share, a $0.05 increase from the prior payout, payable March 21, 2025 to holders of record on March 10, 2025. Management expects continued strong results in 2025.
Investors should note that the company's earnings include large fair-value changes in contingent earn-out obligations ($88.1 million expense in 2024), which weigh on reported net income and are excluded from Adjusted EBITDA. Heavy reliance on fixed-price contracts and the pace of backlog conversion remain key risks.
02—Key points
Key Highlights
- Q4 2024 revenue of $1.87 billion, up about 38% from $1.36 billion in Q4 2023; Q4 diluted EPS of $4.09 versus $2.55.
- Full-year 2024 revenue of $7.03 billion (up about 35%) and diluted EPS of $14.60 (up about 62% from $9.01).
- Backlog of $5.99 billion at December 31, 2024, up from $5.16 billion a year earlier; same-store backlog reached $5.60 billion.
- Operating cash flow of $849.1 million for 2024 and free cash flow of $743.5 million, versus $550.7 million in 2023.
- Gross margin improved to 21.0% for the year from 19.0%, and operating margin rose to 10.7% from 8.0%.
- Quarterly dividend increased to $0.40 per share from $0.35 (Q4 2024 rate), payable March 21, 2025 to holders of record March 10, 2025.
- Earnings were pressured by an $88.1 million charge from changes in the fair value of contingent earn-out obligations, which is excluded from Adjusted EBITDA of $891.8 million (12.7% margin).
03—Questions
Frequently Asked Questions
How strong were Comfort Systems' 2024 results compared with 2023?
Results were substantially higher. Full-year revenue rose to $7.03 billion from $5.21 billion, net income increased to $522.4 million from $323.4 million, and diluted EPS rose to $14.60 from $9.01. Note that 2023 included a tax gain, so the excluding-tax-gain comparison is $8.74 per share, which still shows about 67% growth.
Is the company's backlog growing organically?
Yes, in part. Total backlog reached $5.99 billion, but management highlighted same-store backlog of $5.60 billion, up from $5.16 billion at year-end 2023. Because same-store figures exclude recently acquired companies, this indicates growth in the existing business, not only from acquisitions.
What is the new dividend and when is it payable?
The board declared a quarterly dividend of $0.40 per share, a $0.05 increase. It is payable March 21, 2025 to stockholders of record at the close of business on March 10, 2025.
Why is there a large gap between net income and Adjusted EBITDA?
Net income was reduced by income taxes ($144.1 million), depreciation and amortization ($145.5 million combined), and a $88.1 million charge for changes in the fair value of contingent earn-out obligations tied to acquisitions. Adjusted EBITDA excludes these items, which is why it is substantially higher. The earn-out charge is a non-cash, acquisition-related item, but investors should watch it as acquisitions continue.
How is the company funding its growth and share buybacks?
Management said it organically funded new acquisitions and significant share purchases from 2024 cash flow. Operating cash flow of $849.1 million and free cash flow of $743.5 million were well above prior-year levels. Year-end cash was $549.9 million, and long-term debt was only $62.3 million, leaving the balance sheet with low leverage.
04—Continue