Good day, and thank you for standing by. Welcome to the Q4 2025 Comfort Systems USA Earnings Conference Call. At this time, all participants are in the synony mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the call over to the speaker for today, Julie Schaap, Chief Accounting Officer. Please go ahead.

Thanks, Lisa. Good morning. Welcome to Comfort Systems USA's fourth quarter and full year 2025 earnings call. Our comments today, as well as our press releases, contain forward-looking statements within the meaning of the applicable securities laws and regulations. What we will say today is based upon the current plans and expectations of Comfort Systems USA. those plans next expectations include risks and uncertainties that might cause actual future activities and results of our operations to be materially different from those in our comments you can read a detailed listing and commentary concerning our specific risk factors in our most recent form 10k as well as in our press release covering these earnings a slide presentation is provided as a companion to our remarks and is posted on the investor relations section of the company's website found at ComfortSystemsUSA.com. Joining me on the call today are Brian Lane, Chief Executive Officer, Trent McKenna, President and Chief Operating Officer, and Bill George, Chief Financial Officer. Brian will open our remarks.

All right, thanks Julie. Good morning everyone and thank you for joining us today. Last night we reported record earnings and backlog and exceptional cash flow thanks to best-in-class execution by our teams across the United States. Same-store revenue growth for the fourth quarter was 35% and our quarterly gross margin exceeded 25% for the first time in company history. We are reporting $9.37 per share this quarter, up 129% from last year, and we earned $28.88 per share for the year compared to $14.60 in 2024. Backlog increased to a new all-time high of $12 billion thanks to fantastic bookings in the quarter. Backlog growth was especially strong with technology customers, but our bookings and pipelines are strong in practically every sector. 2025 operating cash flow is 1.2 billion laying a strong foundation for continued investment and that cash flow demonstrates strong trends in our execution customer relationships and prospects. Our modular capacity is currently around 3 million square feet and we expect to increase this to approximately 4 million square feet by the end of 2026 with planned additions in Texas and North Carolina. We continue to explore every opportunity to invest in our businesses. In addition to expanding a modular footprint, we are investing in technology, equipment, and training for our amazing workforce. Also, as announced previously, we acquired two great electrical companies during the fourth quarter, FC in Michigan and Meisner in Florida. Both are off to a great start and I am happy to have them as part of Comfort Systems USA. We have increased our quarterly dividend by 10 cents to 70 cents per share and with our share repurchases last year we are proving our commitment to rewarding our shareholders. Trent will discuss our operations and outlook in a few minutes and I will make closing comments after our Q&A. But first, I'll turn this call over to Bill to review our financial performance. Bill?

Thanks, Brian. As Brian's demonstrated, these results are unprecedented. Revenue for the fourth quarter of 2025 increased by 42 percent compared to last year to $2.6 billion. Full-year revenue for 2025 exceeded $9 billion, an increase of 30 percent compared to 2024. For the full year, our mechanical segment revenue increased by 21 percent, benefited by modular expansion and substantial organic construction and service growth. Electrical segment revenue increased by 62 percent, and overall same-store revenue increased by 26 percent. Despite tough revenue comparables in 2026, we expect same-store revenue will rise by mid-teen to high-teen percentages this year weighed more heavily to the first half of the year. Gross profit was $675 million for the fourth quarter of 2025, a $241 million increase compared to a year ago. Our gross profit percentage grew to 25.5% this quarter, as compared to 23.2% for the fourth quarter of 2024. This margin improvement was achieved through excellent execution within both of our segments. The quarterly gross profit percentage in our mechanical segment improved to 24.9% compared to 22.4% last year, and margins in our electrical segment continued to climb to 26.9%. Full-year gross profit increased by $719 million, and our annual gross profit margin was 24.1%, as compared to 21.0% in 2024. Our electrical margin was 26.7% for 2025, while mechanical was 23.6%. As we look to 2026, we are optimistic that gross profit margins will continue in the strong ranges that we have achieved over the last several quarters, although we expect that, as usual, our margins will be seasonably lower in the first quarter compared to the full year. SG&A expense in the fourth quarter was $248 million, or 9.4% of revenue, compared to $208 million, or 11.1% of revenue, in the same quarter of 2024. For the full year, SG&A expense as a percentage of revenue was 9.7%, down from 10.4% in 2024. In 2025, our SG&A increased by $153 million as we invested to support our much higher activity levels. Quarterly operating income increased by 89%, from $226 million in the fourth quarter of 2024 to $427 million for the fourth quarter of 2025. Thanks to the jump in gross profit margins and good SG&A leverage, our quarterly operating income percentage increased to 16.1% from 12.1% in the prior year. For the full year, our operating income was $1.3 billion, and we achieved a noteworthy operating income percentage of 14.4%. Our 2025 tax rate was 20.9%. Our effective tax rate was lower last year due to interest we received on a delayed refund for 2022, and we estimate that our tax rate in 2026 will be around 23%. After considering all these factors, net income for the fourth quarter of 2025 was $331 million, or $9.37 per share, and this is a 129% improvement in quarterly earnings per share from last year. Our full-quarter, full-year earnings per share for 2025 were $28.88 as compared to $14.60 per share in the prior year, so our annual EPS grew by 98 percent. EBITDA increased 78 percent to $464 million this quarter from $261 million in the fourth quarter of 2024. Same-store quarterly EBITDA increased by over 70 percent. Full-year 2025 EBITDA was $1.45 billion, and our EBITDA margin was 16%. Full-year free cash flow was a record $1 billion. CapEx in 2025 was $155 million, just over 1.7% of revenues. We continue to invest in our operations, expand our modular capacity, and purchase vehicles to support the growth in our service business. We increased our investment in share repurchases in 2025 and returned more than $200 million to shareholders by purchasing over 440,000 shares at an average price of $489 per share. Since inception, our share purchase program has retired approximately 10.9 million shares at an average price of $50.15, and we have returned more than $546 million to you, our owners.

That's all I've got, Trent. Thanks, Bill. I'm now going to discuss our business and outlook. Backlog at the end of the fourth quarter was $11.9 billion, a same-store increase in both sequential and year-over-year backlog. Same-store sequential backlog increased $2.4 billion, or 26%, driven by bookings within the technology sector in both traditional construction and modular more than one half our sequential backlog increase was new modular bookings and with the continuing increase in modular and larger project backlog the duration of our backlog continues to extend since last year our backlog has doubled with an increase of six billion dollars on the same on and on the same store basis our backlog is 93 percent higher than at this time last year. Our revenue mix continues to be led by the industrial sector, which includes technology, and industrial accounted for 67 percent of our volume in 2025. Technology dominated by data center work was 45 percent of our revenue, an increase from 33 percent the prior year. Industrial and especially technology is the largest driver of pipeline and backlog. Institutional markets including education, healthcare and government are also strong and represent 21% of our revenue. Commercial service markets are active for us, however our commercial construction is now a small portion of our overall construction business. Construction accounted for 86 percent of our revenue with projects for new buildings representing 63 percent and existing building construction 23 percent. We include modular in new building construction and year-to-date modular was 18 percent of our revenue. Service revenue increased by 12 percent this year, but with faster growth in construction, service is now 14% of our total revenue. Our overall service business achieved a record $1.2 billion in revenue for 2025, and service continues to be a growing and reliable source of profit and cash flow. With unprecedented backlog and strong project pipelines, and given the confidence we feel in our best-in-class workforce, we expect continued strong performance in 2026, and we feel confident in our prospects. I want to take this opportunity to close by thanking our over 22,000 employees for their hard work and dedication. Our success is a direct result of the people that serve our customers every single day. I will now turn it back over to Lisa for questions. Thank you.

Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. To remove yourself from the queue, press star 11 again. We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. Our first question today will be coming from the line of Tim Mulroney of William Blair. Your line is open.

Good morning, Brian, Bill, Trent. Thanks for taking my questions. I wanted to ask a clarification question on the backlog, and then I have one for Trent about labor. But first on the backlog, you know, I think folks are going to look at your backlog, and they see that growth accelerating there. And they're curious what that's really based on. So could you talk a little bit more about how this all really works? Is your technology backlog today, is that reflective of the recent spike in CapEx that we've seen at the major hyperscalers recently, those announcements the last couple of weeks? Or is your backlog today reflective of hyperscalar spending plans last year or two years ago? In other words, are you early cycle or later cycle on the CapEx announcements that we see?

Thanks, Tim. So, yeah, so if you, if we put something into backlog, it means that we have a legal, a binding legal commitment, a price, and a scope. In order for us to meet those three requirements, a building has to have been planned a year or two ago, right? We're not, you know, we're not booking backlog for things that are being committed to today. The backlog we hit, we book is for stuff that's already, the holes have been dug, things are being built. So, you know, we've, for a long time, people have thought of construction in a rubric of there's the early cycle players. that's mostly engineers and architects. There's the mid-cycle players. It's the people who dig the hole, start the building. And then we're what's called a late-cycle player. So by the time we are booking backlog, and especially by the time we're booking revenue, we're really working on things that came up one to two and a half years ago. So for these gigantic projects, I think as you were kind of implying, we'll see whatever commitments they're making now, we'll see that

in 27 28 in our revenue okay that's very clear though thank you that's exactly what i was asking about so thank thank you for clarifying that um and then just uh shifting gears completely i i trent i wanted to ask um about the labor shortage situation because i've seen uh you've added more than 7 000 employees over the last 24 months according to your sec filings so it's a lot so I guess my question is, are you able to still source enough talent to fulfill all this demand, or are you seeing more bottlenecks these days? And can you talk about the different things that you're doing as an organization to build and retain this critical talent pool?

Yeah, thanks, Tim, for that question. First, I think first and foremost, you know, our operating companies are really great places to work. They attract best-in-class craft professionals and leaders in the industry. And that's, you know, across the board, comfort systems companies, you know, all meet that description. And then, you know, one of the things that we've talked about in the past and we continue to invest in and grow is our in-house capacity to provide contract craft professionals on a traveling basis. and that's in Kodiak and Pivot. And Pivot brought to us also a technology stack that has really helped us grow that piece of what we're building to be able to meet the labor needs of our customers. And this really gives our business leaders at a local level greater flexibility to pursue work, either in remote geographies or work that would otherwise have had too large of a peak staffing requirement for them to have previously, you know, gone after. So when you see those numbers, you know, one, it's an all-of-the-above approach to hiring, and then two, it's a novel and new approach for us with regard to contract craft professionals. And that's how we're currently, you know, approaching this demand environment where we have a lot of work to chase.

Understood. Thanks for that detail, and congrats on a nice quarter.

Thanks. Thanks, Tim.

Thank you. One moment for the next question. Our next question will be coming from the line of Alan Dalhammer of Thompson Davis. Your line is open.

Hey, good morning, guys. congrats on another wave of record results. Thanks, Adam. A similar question to Tim, but I was hoping you could give us more color on the bookings in Q4. What kind of projects are those, and when will those start construction? So, if you look at the enormous sequential

increase of $2.6 billion in bookings, a little over half of that was new bookings in modular. So, you know, in past years, we've sometimes had a lot of year-end purchase orders and modular. And as the business has scaled up, that's scaled up, too. That work is a huge proportion of the work that was actually booked this quarter is going to perform in 2027. Some of it will be in 2026 in the new buildings that we've committed to. And some of it actually goes into 2028. For the rest of the business, the well over a billion dollars of new construction project bookings, that is highly, generally reflective of the most busy sectors, which is by far data centers is the most busy of those sectors, although there's really good, there's really good activity in manufacturing, in pharma, and in other verticals such as food processing, but the projects are really big now. And so that means that they sit in backlog for a longer period of time. And I think some of what you saw with those bookings was people trying to get us signed up for their project, you know, as soon as possible. Because I think there's a general understanding with the demand right now for construction services in the United States. Not everybody who wants a building gets one. So it's a busy time, and it's a great opportunity for us to really reward the people who are great partners for us.

Perfect. And then I wanted to ask about the modular expansion, the 3 million to 4 million square feet. Does all of that come online at the end of 2026, or does that kind of come online throughout 2026? you know what's your ability to add square footage beyond that and then how does that impact capex

this year so the single biggest procurement of space will close at the end of february we'll be doing something in that space within a month or two but it won't be fully productive till the end of the year um so i'd say it's more it's a gradual it's a gradual addition over the course of the year. But I think some of that space, we will be productive, especially final assembly space. We can be productive in that very, very quickly. And do you have a forecast for 2026 CapEx, Bill? You know, if I had to, so a lot of it will depend on whether we sign leases or purchase buildings. We are doing one very large building purchase in the first quarter. We are looking at both leasing and purchasing for another very big investment that we'll probably be making in North Carolina. So I really don't. If I were forced to, I would say the 1.7% you just saw is kind of a baseline rate for us right now. And then, you know, if you buy a building and it's $60, $70 million, that's going to move the meter, you know, a couple tenths of a percent, you know. So that's the best I've got for you. Got it. Okay. Hey, congrats again.

Thank you.

Thanks. Thank you. One moment for the next question. Our next question is coming from the line of Julio Romeo of Sidoti & Company. Your line is open.

Hey, good morning, guys. My first question is on the same store sales growth expectation of mid to high teens year over year in 2026, more weighted in the first half. Could you give us a sense of how much of the full year contribution is weighted to that first half? In other words, are we looking at a particularly strong first and second quarter where the same story sales growth is similar to what you saw in 1Q23 and 2Q24 in that 30% growth range? Or how would you have us think about that growth in the first half?

You know, it's interesting. It's not so much that the growth is heavier in the first half as that the comparables last year are steeper in the second half of this year. So I think we're going to grow consistently through the year, but the extra growth you saw in the third and fourth quarter of last year just makes it a steeper comparable. So essentially we looked at, we budget, right? We just had our year-end budgeting process. We look really hard at what, of the new backlog and of the existing backlog, we think will come through. We think about our service business. We think about our modular capacity, and we come up with sort of a full-year revenue number. But then when you just say, okay, well, and, you know, so that has a percentage, let's say, in the mid to high teens. But then when you look at that, you have to take into account that last year the pattern was a pretty steep ramp up. And so the first two quarters just, you know, the number you're going to compare to is proportionally a little smaller.

Super helpful there. And then, you know, I had one other one about, you know, as data centers continue to increase in density, you're obviously seeing increase in scope and in project complexity. Can you maybe dive a little bit into how that improves the project economics for comfort systems? In other words, if scope is increasing 3 to 4x versus five years ago, given the scarcity of skilled contractors that can kind of tackle that, fair to assume your project economics are outpacing the increasing density of data centers?

Yeah, well, it certainly has been doing that over the last several quarters, right, as evidenced by the results. that we just demonstrated, we definitely have an opportunity to, you know, demand that we be rewarded for the risk and for the commitment of scarce resources to people. At Comfort, we don't price primarily based on, you know, gross profit per hour work. We put a very, very heavy emphasis on work that will be good for our people, places where, you know, they can get to it without stressing their family. They can find a place to live. They can get lunch. Other contractors on the job who are their friends. So there's a, you know, there's a, when your workforce is as scarce as ours is, if you thought about it, I don't think it would surprise you to know that being good to your workforce is almost more important than making sure that you optimize something that's in a spreadsheet, right? Because the spreadsheet's no good if the people aren't there.

And, Julio, one more thing. I mean, even when they're getting bigger, which they are getting a lot bigger, the work is still the same for us. There's just more of it. And I really do think it helps with your productivity and your planning, at least the ones I've seen. So I think it does help our economics in terms of how fast we can go as well.

Very helpful. I'll pass it on.

Thanks.

Thanks, Julio.

Thank you. one moment for the next question. That question comes from the line of Brent Salmon of the

A. Davidson and Company. Your line is open. Hey, y'all. Great quarter again. You know, just a question. I mean, it looks like you saw a measurable increase in modular contribution in the fourth quarter. And, you know, happened to see a pretty meaningful operating leverage year as well. SG&A is a percentage of revenue. Bill, I mean, I think it's the lowest I think you've ever seen for a fourth quarter that I can remember. Did the two go hand in hand? Anything else that you would say is driving that operating leverage? Is it, you know, ultimately reflecting this benefit of the fixed overhead at modular this quarter? So, I'll start with the second one,

say something briefly about your first question, and then let, see if anybody else has anything they want to say. You know, that SG&A leverage, we increased our SG&A expenditures by $155 million. That is a lot of money in the real world. That is a lot of human beings and computers. And it's just that our revenue is growing so much faster that we're still getting leverage. And, you know, I think we just talked about pretty strong revenue growth next year. If we were to hit that revenue growth, I don't think our SG&A would grow quite as fast. So there's some of that still available to us. As far as the prior question goes, and if I don't answer it, I think it's a pretty down-to-earth answer. It's execution. It's getting good pricing. It's just having an opportunity to go out and let our people do what they're great at and having them have enough money in the in the job to account for the risks and to take care of you know take care of their people I don't know maybe I didn't answer your first question but

that's what I'm thinking okay well to be continued there bill maybe the other question just on modular you guys had number of initial I mean even before were talking about this 4 million square footage and a lot of initiatives in terms of growing physical space, upgrading equipment, I think all were intended to help you kind of de-bottleneck. Where would you say you are in terms of leveraging the investments you've already made there at Modular and are there still some of these things coming online through this year before the square footage increase that, you know, maybe you haven't fully realized the benefits of today?

I mean, yeah. I mean, we're on a fantastic journey, right? One of the interesting things, you heard me talk about how we might be buying more buildings. Well, one of the reasons we're looking at buying buildings rather than leasing them, you know, we don't want to be in the real estate business, is because the amount of money we're putting into these buildings in the form of robotics and, you know, other optimizations using automation makes it so that you really don't want to drop $30 million into a $60 million building you don't own. I think we're making great progress. I think that it's really extraordinary to see what's being accomplished by those guys. The last thing I want to do is just come back to the beginning of your question. The other thing is, you know, modular grew precipitously, and if you look in the MD&A, you can see, you know, it grew precipitously on both revenue and the profitability side, but it's still only 18% of comfort. The rest of comfort is growing pretty much the same. Modular is an extraordinary, wonderful ingredient for our success, but it's one ingredient, and everything else is doing great as well.

Yeah. If I could, I'd like to just commend that team. What the modular teams at Comfort Systems have been able to accomplish is really quite extraordinary with the expansion and also

performance that they're continuing. Yeah, for sure. One more, if I could, just, I mean, it looks like you saw like a $1.6 billion increase in backlog for your, or I guess your non-modular Texas operations for the year. Could you just talk about markets outside of data center in Texas, or should we just be talking about data center in Texas for the stick build operations? Just adds a few questions there.

Yeah, no, I mean, if you're talking about Texas, it's a combination of modular and stick build. We're getting a lot of electrical work. As you know, we have the largest electrical contract here in Texas for sure. We're going out more west. They're building them bigger, so, you know, that has grown considerably. But also the other electricals we have are just doing outstanding as well throughout the country. So, you know, I know Marjola gets a lot of attention, but the stick build is still a very popular build now. People are building either data centers or other facilities.

Yeah, and, you know, like advanced technology, which for us at least in the last 12 months is almost, it's overwhelmingly data center. That went from 33% of our revenue to like 45% of our revenue year over year. So the reality is it is a lot. In Texas, data center is just coming and demanding the construction resources that we have. And, you know, they're good. The good partners are making it worth our while to dedicate the overwhelming majority of our resources to

that vertical yeah I'm just gonna the Texas situation is really probably unique in the country with the the amount of build that they're going West Texas there's a lot of obviously energy etc that's out there but the amount of opportunities we're looking at you know it was really outstanding all right

thanks I appreciate it thank you one moment for the next question please Our next question is coming from the line of Josh Chang of UBS. Please go ahead.

Hi, good morning, Brian, Trent, Bill, Julie. Congrats on a really strong quarter. Thank you. Yeah, I guess, Brian, you have talked for a long time about not overcommitting to jobs. And so do you feel like your subsidiaries still understand that? Do you feel like there's any push from them to take more jobs than you're comfortable with? Just kind of how is that kind of progressing so far?

Hey, Josh, that's a good question. You know, we've talked about this a long time. I think it's a great question. We remain very disciplined. You know, we go through on the acquisition side of a job, you know, a detailed process where we lay out our labor projections on our current work. And the future work we're looking at, when's it going to start, who's going to be available, how many are going to be available, and the supervision for that work. So we are right now in a very good position to handle all our backlog and assess what is coming that we can do to make sure we keep our profitability up, productivity up, and keep everybody safe. So, no, we haven't – people are pushing over their skis. The work we have, we can handle.

That's great to hear. Yeah, thanks, Brian. And then I guess on your outlook, you did call out stronger growth in the first half. Obviously, there was an ice storm in a lot of the south and southeast in Q1. I just wanted to make sure that the operations kind of handled that well and that that's not a concern in the near term, I guess.

So we did have some of our biggest operations who had jobs shut down for multiple days in January. But that's why we're seasonally lower. That's why every year we're seasonally lower. There's always something like that. So I don't think there's anything, you know, there's ice storms every year. It's just what you'd normally see.

And, you know, while we're talking about this, you know, if you look at the weather particularly up in the north with the temperatures we had, I really want to applaud our guys for working through it. They did a heck of a job in very challenging conditions for sure.

Yeah, that's right. Yeah, congrats on a good quarter and a strong outlook.

One moment for the next question. And our next question is coming from the line of Brian Brophy of CFL. Your line is open.

Yeah, thanks. Good morning, everybody. Appreciate you taking the question. Congrats on a nice quarter. Obviously, there was some discussion about a month ago on some potential changes to cooling requirements on next-generation chips. Just any color on how that may impact your business and any notable implications we should be thinking about?

I would say not at all. You know, the new chip stuff, he said, okay, we can use 45-degree water. Still needs pipe. Still needs water. 45-degree water is not naturally occurring for 99% of the year and 99% of the places. So I don't, you know, if you just talk to our smartest people, until they figure out how to run the servers without electricity, they're going to have heat. And, yeah, we just think people are going to need electricians and pipe fitters, honestly.

Far more impactful for the OEMs than for us.

Yeah, noted. That's helpful. And I just wanted to ask about the M&A pipeline and cash deployment. You guys are obviously generating a lot of cash, a very large cash balance at this point. Seems like your cash generation may be outpacing your ability to deploy into M&A. Maybe that's true. Maybe that's not. But just big picture, how are you also thinking about other avenues on the capital deployment side?

So the pipeline's good, but the cash flow is relentless. We, you know, we like our pipeline. We'll get some done. You might have noticed we spent a couple hundred million dollars buying shares this past year. You know, two consecutive 10-cent increases to our dividend is almost a 50% increase to our dividend. I know our stock price keeps running away from it. And at the same time, we proportionately, if you look at the cash that we have and at least project to have this year, given the M&A we, you know, the range of M&A we might do, we are not going to have an unprecedented amount of cash as compared to the size of Comfort Systems. There have been times in the past when the financial crisis started, we had more cash proportionately than we think we're going to have in the next little while. And that's why we have some of the great companies we have today. So we're definitely of a mindset to continue to have very, very high demands for conviction when we do acquisitions. We are certainly paying more for companies than we ever have because they're worth more. You know, a company with hundreds of electricians that have worked together as a team for years, for decades, is worth more than it was in the past. But at some point, you know, we do actually think, you know, we're building for a multi-decade period, and we just want to have people that come in and that are good peers to the amazing companies we have. You know, one of the reasons Comfort is so successful is we have so many companies that have been building data centers for decades, right? There's nobody on the planet that has, you know, a better pedigree than us in building data centers. And, you know, we want to keep the quality of our group of companies, you know, very high. And so with acquisitions, we have to choose between, you know, between conviction and sort of making spreadsheets happy. We're going to stick with conviction. It's done well for us in the past.

Understood. Good. That's a helpful caller. I'll pass it on.

Thank you. And the next question is coming from the line of Sanjita Zhang of KeyBank. Your line is open.

Great. Thank you. So I have a question on the backlog duration becoming longer, which is kind of a little bit different from what has been the case for you guys. Since we still have the supply chain and tariff uncertainties, Are you having to contract for this longer-duration backlog a little bit differently so that you know you're protecting your returns when you deliver them, let's say, in 2028?

You know, if you look across our costs, like if you look at our cost of goods sold and you look across our costs, there really aren't – we don't quote equipment or anything that's highly specced, which on this scale of work, it's all highly specced without getting a quote from someone else. And so that really hasn't changed. We're actually being released, even on these long jobs, to purchase stuff very, very early. Sometimes we're being released. We're being given enough of a commitment to purchase stuff before the work itself even goes into our backlog. the rest of our cost and where we take all of our risk is labor you know there's no such thing as you know sort of four-year price locks for labor so what we rely on there is that we have the best people in the country at knowing that they're going to have to take care of their people and and making sure that they put the money in the jobs that they're going to need to take care of

their people. And Sangeeta, Bill and I, this is Trent, Bill and I as recovering attorneys both appreciate how much our legal team does to make sure that we have the right contract terms to protect us as we go forward with all this work. And they do a really, really great job of making

sure that we're protected contractually. They're doing better than they did when Trent and I were general capitalists. Without a doubt, Bill, without a doubt. I'll certify that. It's possible we have a

little more bargaining power. Got it. Let me ask one more on the modular capacity increase. Can you kind of walk us through your decision on going from three to four million? Is that a function of a specific customer coming in asking you for additional capacity or is it more you kind of seeing the runway ahead you know it's primarily us taking steps to meet

more of the demand from our two largest customers they would buy more if they could and we really want to do everything we can they've been great partners for us we want to be great partners for them we've added a few customers then none of them are at scale and if you look at the new buildings and you say, okay, what's going to be built in those buildings, the floor space right now is planned for those two large hyperscaler customers who have been so good to us.

Appreciate that.

Thanks.

Thank you. I would now like to turn the call back over to Brian Lane for closing remarks. Please go ahead, Brian.

Thank you. In closing, I really want to thank our amazing employees again. They're truly outstanding. we had a great 2025 and we are really excited about 2026. Thanks for your interest in conference systems. We look forward to seeing you on the road soon and hope you all have a great weekend. This does conclude today's conference

call. You may all disconnect.