FIX 10-Q

Comfort Systems USA Inc (FIX)

10-Q 2025-04-24 For: 2025-03-31

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Added on April 03, 2026

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	FIX	New York Stock Exchange

Large accelerated filer ⌧	Accelerated filer ◻	Non-accelerated filer ◻	Smaller reporting company ☐	Emerging growth company ☐


		Page
Part I—Financial Information		2
Item 1—Financial Statements		2
Consolidated Balance Sheets		2
Consolidated Statements of Operations		3
Consolidated Statements of Stockholders’ Equity		4
Consolidated Statements of Cash Flows		5
Condensed Notes to Consolidated Financial Statements		6
Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3—Quantitative and Qualitative Disclosures about Market Risk		31
Item 4—Controls and Procedures		31
Part II—Other Information		33
Item 1—Legal Proceedings		33
Item 1A—Risk Factors		33
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds		33
Item 5—Other Information		34
Item 6—Exhibits		35
Signatures		36


	March 31,		December 31,
	2025		2024
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	204,758	$	549,939
Billed accounts receivable, less allowance for credit losses of $15,632 and $15,286, respectively		1,736,976		1,861,212
Unbilled accounts receivable, less allowance for credit losses of $1,539 and $1,475, respectively		110,496		95,786
Other receivables, less allowance for credit losses of $503 and $553, respectively		203,687		86,186
Inventories		63,045		59,224
Prepaid expenses and other		50,859		46,213
Costs and estimated earnings in excess of billings, less allowance for credit losses of $697 and $271, respectively		227,678		91,681
Total current assets		2,597,499		2,790,241
PROPERTY AND EQUIPMENT, NET		295,098		277,180
LEASE RIGHT-OF-USE ASSET		226,620		229,106
GOODWILL		905,843		875,270
IDENTIFIABLE INTANGIBLE ASSETS, NET		441,502		434,417
DEFERRED TAX ASSETS		83,409		85,441
OTHER NONCURRENT ASSETS		19,247		19,433
Total assets	$	4,569,218	$	4,711,088
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	4,066	$	6,042
Accounts payable		560,663		654,943
Accrued compensation and benefits		191,950		228,622
Billings in excess of costs and estimated earnings and deferred revenue		1,267,373		1,149,257
Accrued self-insurance		35,413		42,315
Other current liabilities		351,779		501,591
Total current liabilities		2,411,244		2,582,770
LONG-TERM DEBT		63,776		62,293
LEASE LIABILITIES		210,364		212,107
DEFERRED TAX LIABILITIES		2,225		2,225
OTHER LONG-TERM LIABILITIES		104,596		147,017
Total liabilities		2,792,205		3,006,412
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $.01 par, 5,000,000 shares authorized, none issued and outstanding		—		—
Common stock, $.01 par, 102,969,912 shares authorized, 41,123,365 and 41,123,365 shares issued, respectively		411		411
Treasury stock, at cost, 5,815,389 and 5,562,453 shares, respectively		(367,508)		(273,799)
Additional paid-in capital		361,653		350,734
Retained earnings		1,782,457		1,627,330
Total stockholders’ equity		1,777,013		1,704,676
Total liabilities and stockholders’ equity	$	4,569,218	$	4,711,088


	Three Months Ended
	March 31,
	2025		2024
REVENUE	$	1,831,286	$	1,537,016
COST OF SERVICES		1,427,870		1,239,653
Gross profit		403,416		297,363
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		194,874		162,723
GAIN ON SALE OF ASSETS		(556)		(820)
Operating income		209,098		135,460
OTHER INCOME (EXPENSE):
Interest income		4,267		1,603
Interest expense		(1,619)		(1,633)
Changes in the fair value of contingent earn-out obligations		(3,758)		(12,491)
Other		24		117
Other income (expense)		(1,086)		(12,404)
INCOME BEFORE INCOME TAXES		208,012		123,056
PROVISION FOR INCOME TAXES		38,723		26,737
NET INCOME	$	169,289	$	96,319

INCOME PER SHARE:
Basic	$	4.77	$	2.70
Diluted	$	4.75	$	2.69

SHARES USED IN COMPUTING INCOME PER SHARE:
Basic		35,524		35,739
Diluted		35,605		35,828


(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Delaware (State or other jurisdiction of Incorporation or Organization)	76-0526487 (I.R.S. Employer Identification No.)
675 Bering Drive Suite 400 Houston, Texas 77057 (Address of Principal Executive Offices) (Zip Code)


	Three Months Ended
	March 31, 2024
							Additional				Total
	Common Stock			Treasury Stock			Paid-In		Retained		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Earnings		Equity
BALANCE AT DECEMBER 31, 2023	41,123,365	$	411	(5,438,625)	$	(209,807)	$	339,562	$	1,147,663	$	1,277,829
Net income	—		—	—		—		—		96,319		96,319
Issuance of Stock:
Issuance of shares for options exercised	—		—	1,369		53		(26)		—		27
Issuance of restricted stock & performance stock	—		—	17,018		657		4,696		—		5,353
Shares received in lieu of tax withholding on vested stock	—		—	(6,763)		(2,126)		—		—		(2,126)
Stock-based compensation	—		—	—		—		4,350		—		4,350
Dividends ($0.25 per share)	—		—	—		—		—		(8,921)		(8,921)
Share repurchase	—		—	(1,500)		(295)		—		—		(295)
BALANCE AT MARCH 31, 2024	41,123,365	$	411	(5,428,501)	$	(211,518)	$	348,582	$	1,235,061	$	1,372,536


	Three Months Ended
	March 31, 2025
							Additional				Total
	Common Stock			Treasury Stock			Paid-In		Retained		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Earnings		Equity
BALANCE AT DECEMBER 31, 2024	41,123,365	$	411	(5,562,453)	$	(273,799)	$	350,734	$	1,627,330	$	1,704,676
Net income	—		—	—		—		—		169,289		169,289
Issuance of Stock:
Issuance of shares for options exercised	—		—	—		—		—		—		—
Issuance of restricted stock & performance stock	—		—	18,448		1,156		5,445		—		6,601
Shares received in lieu of tax withholding on vested stock	—		—	(7,330)		(2,622)		—		—		(2,622)
Stock-based compensation	—		—	—		—		5,474		—		5,474
Dividends ($0.40 per share)	—		—	—		—		—		(14,162)		(14,162)
Share repurchase	—		—	(264,054)		(92,243)		—		—		(92,243)
BALANCE AT MARCH 31, 2025	41,123,365	$	411	(5,815,389)	$	(367,508)	$	361,653	$	1,782,457	$	1,777,013


	Three Months Ended March 31,
Revenue by Service Provided	2025				2024
Mechanical Segment	$	1,402,215	76.6	%	$	1,185,009	77.1	%
Electrical Segment		429,071	23.4	%		352,007	22.9	%
Total	$	1,831,286	100.0	%	$	1,537,016	100.0	%

	Three Months Ended March 31,
Revenue by Type of Customer	2025				2024
Technology	$	677,553	37.0	%	$	464,814	30.2	%
Manufacturing		452,786	24.7	%		461,400	30.0	%
Healthcare		182,542	10.0	%		133,729	8.7	%
Education		161,242	8.8	%		133,983	8.7	%
Office Buildings		122,526	6.7	%		101,892	6.6	%
Government		96,281	5.3	%		87,801	5.7	%
Retail, Restaurants and Entertainment		77,009	4.2	%		80,585	5.2	%
Multi-Family and Residential		28,353	1.5	%		40,851	2.7	%
Other		32,994	1.8	%		31,961	2.2	%
Total	$	1,831,286	100.0	%	$	1,537,016	100.0	%

	Three Months Ended March 31,
Revenue by Activity Type	2025				2024
New Construction	$	1,065,084	58.2	%	$	898,976	58.5	%
Existing Building Construction		492,603	26.9	%		390,369	25.4	%
Service Projects		119,214	6.5	%		104,114	6.8	%
Service Calls, Maintenance and Monitoring		154,385	8.4	%		143,557	9.3	%
Total	$	1,831,286	100.0	%	$	1,537,016	100.0	%


	March 31, 2025		December 31, 2024
Contract assets:
Costs and estimated earnings in excess of billings, less allowance for credit losses	$	227,678	$	91,681
Contract liabilities:
Billings in excess of costs and estimated earnings and deferred revenue	$	1,267,373	$	1,149,257


	Fair Value Measurements at March 31, 2025
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	204,758	$	—	$	—	$	204,758
U.S. Treasury bills	$	—	$	7,274	$	—	$	7,274
Contingent earn-out obligations	$	—	$	—	$	63,768	$	63,768

	Fair Value Measurements at December 31, 2024
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	549,939	$	—	$	—	$	549,939
Contingent earn-out obligations	$	—	$	—	$	140,156	$	140,156


	Three Months Ended		Year Ended
	March 31, 2025		December 31, 2024
Balance at beginning of period	$	140,156	$	44,222
Issuances		218		51,784
Settlements		(80,364)		(43,996)
Adjustments to fair value		3,758		88,146
Balance at end of period	$	63,768	$	140,156


Consideration transferred:
Cash paid at closing	$	267,500
Working capital adjustment		14,602
Notes issued to former owners		35,000
Estimated fair value of contingent earn-out payments		42,732
	$	359,834
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	171,027
Billed and unbilled accounts receivable		59,846
Prepaid expenses and other		1,476
Cost and estimated earnings in excess of billings		578
Property and equipment		2,528
Lease right-of-use asset		2,364
Goodwill		155,345
Identifiable intangible assets		170,100
Other noncurrent assets		136
Accounts payable		(15,130)
Billings in excess of costs and estimated earnings and deferred revenue		(179,895)
Current operating lease liabilities		(1,495)
Accrued expenses and other current liabilities		(6,293)
Long-term operating lease liabilities		(753)
	$	359,834


	Valuation Method	Estimated Useful Life		Estimated Fair Value
Backlog	Excess earnings	1.7 years	$	35,800
Trade Name	Relief-from-royalty	22.9 years		11,300
Customer Relationships	Excess earnings	10 years		123,000
Total			$	170,100


	Three Months Ended
	March 31,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	169,289	$	96,319
Adjustments to reconcile net income to net cash provided by operating activities—
Amortization of identifiable intangible assets		20,115		23,913
Depreciation expense		14,010		11,254
Change in right-of-use assets		7,658		7,981
Bad debt expense		1,380		356
Deferred tax provision (benefit)		2,032		(14,205)
Amortization of debt financing costs		169		171
Gain on sale of assets		(556)		(820)
Changes in the fair value of contingent earn-out obligations		3,758		12,491
Stock-based compensation		8,037		7,414
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures—
(Increase) decrease in—
Receivables, net		48,265		(125,582)
Inventories		(3,821)		(5,293)
Prepaid expenses and other current assets		(2,044)		(4,499)
Costs and estimated earnings in excess of billings and unbilled accounts receivable		(150,100)		(4,822)
Other noncurrent assets		24		(280)
Increase (decrease) in—
Accounts payable and other current liabilities		(312,499)		118,757
Billings in excess of costs and estimated earnings and deferred revenue		103,063		23,307
Other long-term liabilities		3,270		95
Net cash provided by (used in) operating activities		(87,950)		146,557
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(22,208)		(24,952)
Proceeds from sales of property and equipment		1,095		1,014
Cash paid for acquisitions, net of cash acquired		(68,412)		(196,670)
Payments for investments		(7,258)		(1,040)
Net cash used in investing activities		(96,783)		(221,648)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility		—		162,000
Payments on revolving credit facility		—		(162,000)
Proceeds from other debt		—		640
Payments on other debt		(5,993)		(22)
Payments of dividends to stockholders		(14,162)		(8,921)


	Mechanical Segment		Electrical Segment		Total
Balance at December 31, 2023	$	393,276	$	273,558	$	666,834
Acquisitions and purchase price adjustments (See Note 5)		208,236		200		208,436
Balance at December 31, 2024		601,512		273,758		875,270
Acquisitions and purchase price adjustments (See Note 5)		30,573		—		30,573
Balance at March 31, 2025	$	632,085	$	273,758	$	905,843


Year ending December 31—
2025 (remainder of the year)	$	51,221
2026		58,766
2027		56,282
2028		54,735
2029		48,468
Thereafter		172,030
Total	$	441,502


	Net Leverage Ratio
	Less than 1.00		1.00 to less than 1.75		1.75 to less than 2.50		2.50 to less than 3.00		3.00 or greater
Additional Per Annum Interest Margin Added Under:
Base Rate Loan Option	0.00	%	0.25	%	0.50	%	0.75	%	1.00	%
SOFR Loan Option	1.00	%	1.25	%	1.50	%	1.75	%	2.00	%


Consideration transferred:
Cash paid at closing	$	100,000
Working capital adjustment		1,587
Notes issued to former owners		10,000
Estimated fair value of contingent earn-out payments		9,052
	$	120,639
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	14,802
Billed and unbilled accounts receivable		38,411
Inventory		230
Prepaid expenses and other		487
Costs and estimated earnings in excess of billings		728
Property and equipment		2,674
Lease right-of-use asset		4,552
Goodwill		40,693
Identifiable intangible assets		63,300
Other noncurrent assets		10
Accounts payable		(20,649)
Billings in excess of costs and estimated earnings and deferred revenue		(19,188)
Current operating lease liabilities		(133)
Accrued expenses and other current liabilities		(907)
Long-term debt		(59)
Long-term operating lease liabilities		(4,312)
	$	120,639


		Estimated	Estimated
	Valuation Method	Useful Life	Fair Value
Backlog	Excess earnings	1.7 years	$	12,900
Trade Name	Relief-from-royalty	22 years		10,600
Customer Relationships	Excess earnings	9 years		39,800
Total			$	63,300


	Balance at		Range of Stated
	March 31, 2025		Interest Rates
2026	$	30,625	2.5 - 5.5	%
2027		31,500	4.3 - 5.5	%
2028		5,000	5.5	%
Total	$	67,125



	March 31, 2025		December 31, 2024
Operating lease right-of-use assets	$	226,620	$	229,106
Operating lease liabilities:
Other current liabilities	$	27,968	$	28,158
Long-term operating lease liabilities		210,364		212,107
Total operating lease liabilities	$	238,332	$	240,265


Year ending December 31—
2025 (excluding the three months ended March 31, 2025)	$	31,275
2026		38,310
2027		33,611
2028		29,555
2029		25,821
Thereafter		177,767
Total lease payments		336,339
Less—present value discount		(98,007)
Present value of operating lease liabilities	$	238,332


	Mechanical Segment		Electrical Segment		Corporate		Consolidated
Total assets at March 31, 2025	$	3,326,612	$	1,031,571	$	211,035	$	4,569,218
Total assets at December 31, 2024	$	3,162,677	$	985,006	$	563,405	$	4,711,088

	Three Months Ended March 31, 2025
	Mechanical Segment		Electrical Segment		Corporate		Consolidated
Revenue	$	1,402,215	$	429,071	$	—	$	1,831,286
Cost of services		1,097,696		330,174		—		1,427,870
Gross profit		304,519		98,897		—		403,416
Selling, general and administrative expenses		132,270		44,046		18,558		194,874
Gain on sale of assets		(352)		(204)		—		(556)
Operating income	$	172,601	$	55,055	$	(18,558)	$	209,098

Amortization of identifiable intangible assets	$	14,590	$	5,525	$	—	$	20,115
Depreciation expense	$	11,404	$	2,303	$	303	$	14,010
Capital expenditures	$	18,419	$	3,539	$	250	$	22,208


	Three Months Ended March 31, 2024
	Mechanical Segment		Electrical Segment		Corporate		Consolidated
Revenue	$	1,185,009	$	352,007	$	—	$	1,537,016
Cost of services		967,297		272,356		—		1,239,653
Gross profit		217,712		79,651		—		297,363
Selling, general and administrative expenses		110,982		33,880		17,861		162,723
Gain on sale of assets		(574)		(246)		—		(820)
Operating income	$	107,304	$	46,017	$	(17,861)	$	135,460

Amortization of identifiable intangible assets	$	18,094	$	5,819	$	—	$	23,913
Depreciation expense	$	9,228	$	1,720	$	306	$	11,254
Capital expenditures	$	19,942	$	4,379	$	631	$	24,952


		Aggregate
		Contract
	No. of	Price Value
Contract Price of Project	Projects	(millions)
Under $2 million	7,567	$	1,690.4
$2 million - $10 million	831		3,588.6
$10 million - $20 million	136		1,922.7
$20 million - $40 million	130		3,679.6
Greater than $40 million	86		5,547.5
Total	8,750	$	16,428.8


				Total Number of Shares	Maximum Number of
				Purchased as Part of	Shares that May Yet Be
	Total Number of	Average Price		Publicly Announced Plans	Purchased Under the Plans
Period	Shares Purchased	Paid Per Share		or Programs (1)	or Programs
January 1 - January 31	3,000	$	426.13	10,436,482	919,069
February 1 - February 28	63,450	$	378.18	10,499,932	855,619
March 1 - March 31	197,604	$	338.91	10,697,536	658,015
	264,054	$	349.34	10,697,536	658,015


		Incorporated by Reference to the Exhibit Indicated Below and to the Filing with the Commission Indicated Below
Exhibit Number	Description of Exhibits	Exhibit Number	Filing or File Number
3.1	Second Amended and Restated Certificate of Incorporation of the Registrant	3.1	333-24021
3.2	Certificate of Amendment dated May 21, 1998	3.2	1998 Form 10-K
3.3	Certificate of Amendment dated July 9, 2003	3.3	2003 Form 10-K
3.4	Certificate of Amendment dated May 20, 2016	3.1	May 20, 2016 Form 8-K
3.5	Amended and Restated Bylaws of Comfort Systems USA, Inc.	3.1	March 25, 2016 Form 8-K
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	Inline XBRL Instance Document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document)


	Comfort Systems USA, Inc.

April 24, 2025	By:	/s/ Brian E. Lane
		Brian E. Lane
		President, Chief Executive Officer and Director

April 24, 2025	By:	/s/ William George
		William George
		Executive Vice President and Chief Financial Officer

April 24, 2025	By:	/s/ Julie S. Shaeff
		Julie S. Shaeff
		Senior Vice President and Chief Accounting Officer