0001035983false00010359832024-07-252024-07-25

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 25, 2024

Comfort Systems USA, Inc.

(Exact name of registrant as specified in its charter)

Delaware

    

1-13011

    

76-0526487

(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)

675 Bering Drive, Suite 400

    

Houston, Texas

77057

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code (713) 830-9600

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 

 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

ITEM 2.02        Results of Operations and Financial Condition

Attached and incorporated herein by reference as Exhibit 99.1 is a copy of a press release of Comfort Systems USA, Inc. (the “Company”) dated July 25, 2024 reporting the Company’s financial results for the second quarter of 2024.

The information contained in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for any purpose, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.

ITEM 8.01           Other Events

Attached and incorporated herein by reference as Exhibit 99.2 is a copy of a press release of the Company dated July 25, 2024 reporting the Company’s declaration of a quarterly dividend on the Company’s common stock to stockholders of record as of the close of business on the record date, August 12, 2024.

ITEM 9.01        Financial Statements and Exhibits

(d) The following Exhibits are included herein:

Exhibit 99.1 Press Release of Comfort Systems USA, Inc. dated July 25, 2024 reporting the Company’s financial results for the second quarter of 2024.

Exhibit 99.2 Press Release of Comfort Systems USA, Inc. dated July 25, 2024 reporting the Company’s declaration of a quarterly dividend on the Company’s common stock to stockholders of record as of the close of business on the record date, August 12, 2024.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

COMFORT SYSTEMS USA, INC.

By:

/s/ Laura F. Howell

Laura F. Howell, Senior Vice President and General Counsel

Date:      July 25, 2024

4

Exhibit 99.1

Graphic

CONTACT:

Julie Shaeff, Chief Accounting Officer

675 Bering Drive, Suite 400

ir@comfortsystemsusa.com; 713-830-9687

Houston, Texas 77057

713-830-9600

FOR IMMEDIATE RELEASE

COMFORT SYSTEMS USA REPORTS SECOND QUARTER 2024 RESULTS

Houston, TX — July 25, 2024 — Comfort Systems USA, Inc. (NYSE: FIX) (the “Company”) today reported results for the quarter ended June 30, 2024.

For the quarter ended June 30, 2024, net income was $134.0 million, or $3.74 per diluted share, as compared to $69.5 million, or $1.93 per diluted share, for the quarter ended June 30, 2023. Revenue for the second quarter of 2024 was $1.81 billion compared to $1.30 billion in 2023. The Company reported operating cash flow of $189.9 million in the current quarter compared to $125.4 million in 2023.

Brian Lane, Comfort Systems USA’s President and Chief Executive Officer, said, “Our teams achieved superb execution for our customers this quarter, and early results from recently acquired companies also exceeded our high expectations. Second quarter per share earnings were more than 90% higher than the same quarter last year, and cash flow was remarkable for a second quarter.”

Backlog as of June 30, 2024 was $5.77 billion as compared to $5.91 billion as of March 31, 2024 and $4.19 billion as of June 30, 2023. On a same-store basis, backlog increased from $4.19 billion as of June 30, 2023 to $5.22 billion as of June 30, 2024.

Mr. Lane continued, “Backlog also remains at extremely high levels despite a roughly 30% surge in same-store revenue. Same-store backlog is 25% above last year, demand continues at unprecedented levels and our job pipelines are robust. Considering these factors, we remain optimistic that our strong results will continue in the second half of 2024 and into 2025.”

The Company reported net income of $230.3 million, or $6.43 per diluted share, for the six months ended June 30, 2024, as compared to $126.7 million, or $3.53 per diluted share in 2023. The Company also reported revenue of $3.35 billion for the six months ended June 30, 2024, as compared to $2.47 billion in 2023. Operating cash flow for the six months ended June 30, 2024 was $336.4 million, as compared to $252.3 million in 2023.

The Company will host a webcast and conference call to discuss its financial results and position on Friday, July 26, 2024 at 10:00 a.m. Central Time. To register for the call, please visit https://register.vevent.com/register/BI43c4f05b68e84cada3084ca6794d8f6c. Upon registering, participants will receive dial-in information and a unique PIN to join the call. The call and the slide presentation to accompany the remarks can be accessed on the Company’s website at www.comfortsystemsusa.com under the “Investor” tab. A replay of the entire call will be available on the Company’s website on the next business day following the call.


Comfort Systems USA® is a leading provider of commercial, industrial and institutional heating, ventilation, air conditioning and electrical contracting services, with 177 locations in 136 cities across the nation. For more information, visit the Company’s website at www.comfortsystemsusa.com.

Certain statements and information in this press release may constitute forward-looking statements regarding our future business expectations, which are subject to applicable securities laws and regulations. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” or other similar expressions are intended to identify forward-looking statements, which are generally not historic in nature. These forward-looking statements are based on the current expectations and beliefs of Comfort Systems USA, Inc. and its subsidiaries (collectively, the “Company”) concerning future developments and their effect on the Company. While the Company’s management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting the Company will be those that it anticipates, and the Company’s actual results of operations, financial condition and liquidity, and the development of the industry in which the Company operates, may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of our results or developments in subsequent periods. All comments concerning the Company’s expectations for future revenue and operating results are based on the Company’s forecasts for its existing operations and do not include the potential impact of any future acquisitions. The Company’s forward-looking statements involve significant risks and uncertainties (some of which are beyond the Company’s control) and assumptions that could cause actual future results to differ materially from the Company’s historical experience and its present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the use of incorrect estimates for bidding a fixed-price contract; undertaking contractual commitments that exceed the Company’s labor resources; failing to perform contractual obligations efficiently enough to maintain profitability; national or regional weakness in construction activity and economic conditions; rising inflation and fluctuations in interest rates; shortages of labor and specialty building materials or material increases to the cost thereof; the Company’s business being negatively affected by health crises or outbreaks of disease, such as epidemics or pandemics (and related impacts, such as supply chain disruptions); financial difficulties affecting projects, vendors, customers, or subcontractors; the Company’s backlog failing to translate into actual revenue or profits; failure of third party subcontractors and suppliers to complete work as anticipated; difficulty in obtaining, or increased costs associated with, bonding and insurance; impairment to goodwill; errors in the Company’s cost-to-cost input method of accounting; the result of competition in the Company’s markets; the Company’s decentralized management structure; material failure to comply with varying state and local laws, regulations or requirements; debarment from bidding on or performing government contracts; retention of key management; seasonal fluctuations in the demand for mechanical and electrical systems; the imposition of past and future liability from environmental, safety, and health regulations including the inherent risk associated with self-insurance; adverse litigation results; an increase in our effective tax rate; a material information technology failure or a material cyber security breach; risks associated with acquisitions, such as challenges to our ability to integrate those companies into our internal control environment; our ability to manage growth and geographically-dispersed operations; our ability to obtain financing on acceptable terms; extreme weather conditions (such as storms, droughts, extreme heat or cold, wildfires and floods), including as a result of climate change, and any resulting regulations or restrictions related thereto; and other risks detailed in our reports filed with the Securities and Exchange Commission (the “SEC”).

For additional information regarding known material factors that could cause the Company’s results to differ from its projected results, please see its filings with the SEC, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.


Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether because of new information, future events, or otherwise.

— Financial tables follow —


Comfort Systems USA, Inc.

Consolidated Statements of Operations

(In Thousands, Except per Share Amounts)

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

(Unaudited)

 

(Unaudited)

 

    

2024

    

%  

        

2023

    

%  

 

    

2024

    

%  

        

2023

    

%  

 

Revenue

$

1,810,290

100.0

%

$

1,296,430

100.0

%

$

3,347,306

100.0

%

$

2,471,070

100.0

%

Cost of services

 

1,446,694

79.9

%

 

1,068,510

82.4

%

 

2,686,347

80.3

%

 

2,037,745

82.5

%

Gross profit

 

363,596

20.1

%

 

227,920

17.6

%

 

660,959

19.7

%

 

433,325

17.5

%

SG&A

 

179,537

9.9

%

 

136,430

10.5

%

 

342,260

10.2

%

 

271,462

11.0

%

Gain on sale of assets

 

(611)

 

 

(592)

 

 

(1,431)

 

 

(1,104)

 

Operating income

 

184,670

10.2

%

 

92,082

7.1

%

 

320,130

9.6

%

 

162,967

6.6

%

Interest expense, net

 

(445)

 

(3,826)

(0.3)

%

 

(475)

 

(6,505)

(0.3)

%

Changes in the fair value of contingent earn-out obligations

(14,689)

(0.8)

%

(3,098)

(0.2)

%

(27,180)

(0.8)

%

(5,480)

(0.2)

%

Other income, net

 

119

 

44

 

 

236

 

45

 

Income before income taxes

 

169,655

9.4

%

 

85,202

6.6

%

 

292,711

8.7

%

 

151,027

6.1

%

Provision for income taxes

 

35,646

 

15,726

 

62,383

 

24,335

Net income

$

134,009

7.4

%

$

69,476

5.4

%

$

230,328

6.9

%

$

126,692

5.1

%

Income per share

Basic

$

3.75

$

1.94

$

6.44

$

3.54

Diluted

$

3.74

$

1.93

$

6.43

$

3.53

Shares used in computing income per share:

Basic

 

35,746

 

35,822

 

35,742

 

35,817

Diluted

 

35,828

 

35,906

 

35,828

 

35,907

Dividends per share

$

0.300

$

0.200

$

0.550

$

0.375


Supplemental Non-GAAP Information — (Unaudited) (In Thousands, Except per Share Amounts)

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

    

2024

    

2023

 

2024

    

2023

 

Net income

$

134,009

$

69,476

$

230,328

$

126,692

Tax gains related to prior years

(3,368)

Tax-related SG&A costs, net of tax

333

Net income excluding tax gains

$

134,009

$

69,476

$

230,328

$

123,657

Diluted income per share

$

3.74

$

1.93

$

6.43

$

3.53

Tax gains related to prior years

(0.09)

Tax-related SG&A costs, net of tax

 

0.01

Diluted income per share excluding tax gains

$

3.74

$

1.93

$

6.43

$

3.45

Note: Net income excluding tax gains and diluted income per share excluding tax gains are presented because the Company believes they reflect the results of the core ongoing operations of the Company, and we believe they are responsive to frequent questions we receive from third parties. These amounts, however, are not considered primary measures of an entity’s financial results under generally accepted accounting principles, and accordingly, they should not be considered an alternative to operating results as determined under generally accepted accounting principles and as reported by the Company.


Supplemental Non-GAAP Information — Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) — (Unaudited) (In Thousands)

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

    

2024

    

%  

    

2023

    

%  

 

    

2024

    

%  

    

2023

    

%  

 

 

 

Net income

$

134,009

$

69,476

$

230,328

$

126,692

Provision for income taxes

 

35,646

 

15,726

 

62,383

 

24,335

Other income, net

 

(119)

 

(44)

 

(236)

 

(45)

Changes in the fair value of contingent earn-out obligations

14,689

3,098

27,180

5,480

Interest expense, net

 

445

 

3,826

 

475

 

6,505

Gain on sale of assets

 

(611)

 

(592)

 

(1,431)

 

(1,104)

Tax-related SG&A costs

421

Amortization

26,890

 

11,013

50,803

21,344

Depreciation

 

11,790

9,073

 

23,044

 

18,260

Adjusted EBITDA

$

222,739

 

12.3

%  

$

111,576

 

8.6

%

$

392,546

 

11.7

%  

$

201,888

 

8.2

%

Note: The Company defines adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) as net income, provision for income taxes, other income, net, changes in the fair value of contingent earn-out obligations, interest expense, net, gain on sale of assets, goodwill impairment, other one-time expenses or gains and depreciation and amortization. Other companies may define Adjusted EBITDA differently. Adjusted EBITDA is presented because it is a financial measure that is frequently requested by third parties. However, Adjusted EBITDA is not considered under generally accepted accounting principles as a primary measure of an entity’s financial results, and accordingly, Adjusted EBITDA should not be considered an alternative to operating income, net income, or cash flows as determined under generally accepted accounting principles and as reported by the Company.


Comfort Systems USA, Inc.

Condensed Consolidated Balance Sheets

(In Thousands)

    

June 30,

    

December 31,

 

2024

2023

 

(Unaudited)

 

Cash and cash equivalents

$

199,419

$

205,150

Billed accounts receivable, net

 

1,708,507

 

1,318,926

Unbilled accounts receivable, net

 

81,184

 

72,774

Costs and estimated earnings in excess of billings, net

 

69,391

 

28,084

Other current assets, net

 

264,870

 

286,166

Total current assets

 

2,323,371

 

1,911,100

Property and equipment, net

 

240,319

 

208,568

Goodwill

 

874,947

 

666,834

Identifiable intangible assets, net

 

480,880

 

280,397

Other noncurrent assets

 

294,467

 

238,680

Total assets

$

4,213,984

$

3,305,579

Current maturities of long-term debt

$

17,686

$

4,867

Accounts payable

590,529

419,962

Billings in excess of costs and estimated earnings and deferred revenue

 

1,149,896

 

909,538

Other current liabilities

 

576,837

 

386,838

Total current liabilities

 

2,334,948

 

1,721,205

Long-term debt

 

73,377

 

39,345

Other long-term liabilities

 

323,365

 

267,200

Total liabilities

 

2,731,690

 

2,027,750

Total stockholders’ equity

 

1,482,294

 

1,277,829

Total liabilities and stockholders’ equity

$

4,213,984

$

3,305,579


Selected Cash Flow Data (Unaudited) (In Thousands)

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

    

2024

    

2023

    

2024

    

2023

 

Cash provided by (used in):

Operating activities

$

189,858

$

125,410

$

336,415

$

252,319

Investing activities

$

(60,786)

$

(24,683)

$

(282,434)

$

(93,628)

Financing activities

$

(30,445)

$

(89,280)

$

(59,712)

$

(155,898)

Free cash flow:

Cash from operating activities

$

189,858

$

125,410

$

336,415

$

252,319

Purchases of property and equipment

(23,384)

 

(24,610)

 

(48,336)

 

(41,130)

Proceeds from sales of property and equipment

 

815

 

1,464

 

1,829

 

2,086

Free cash flow

$

167,289

$

102,264

$

289,908

$

213,275

Note: Free cash flow is defined as cash flow from operating activities less customary capital expenditures, plus the proceeds from asset sales. Other companies may define free cash flow differently. Free cash flow is presented because it is a financial measure that is frequently requested by third parties. However, free cash flow is not considered under generally accepted accounting principles as a primary measure of an entity’s financial results, and accordingly, free cash flow should not be considered an alternative to operating income, net income, or cash flows as determined under generally accepted accounting principles and as reported by the Company.


Exhibit 99.2

Graphic

CONTACT:

Julie Shaeff, Chief Accounting Officer

675 Bering Drive, Suite 400

ir@comfortsystemsusa.com; 713-830-9687

Houston, Texas 77057

713-830-9600

FOR IMMEDIATE RELEASE

COMFORT SYSTEMS USA DECLARES QUARTERLY DIVIDEND

Houston, TX — July 25, 2024 — Comfort Systems USA, Inc. (NYSE: FIX), a leading provider of commercial, industrial and institutional heating, ventilation, air conditioning and electrical contracting services, today announced that its board of directors declared a quarterly dividend of $0.30 per share on Comfort Systems USA, Inc. common stock. The dividend is payable on August 23, 2024 to stockholders of record at the close of business on August 12, 2024.

Comfort Systems USA® is a premier provider of business solutions addressing workplace comfort, with 177 locations in 136 cities across the nation. For more information, visit the Company’s website at www.comfortsystemsusa.com.


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