Comfort Systems Posts 91% Profit Gain as Technology Work Expands
Backlog reached $14.06 billion at quarter-end, up 73% from a year earlier.
Comfort Systems USA (FIX), the mechanical and electrical contracting company, reported a 91% increase in second-quarter net income as revenue growth and wider margins lifted earnings.
The quarter extended the company’s shift toward technology projects while backlog growth accelerated. Technology accounted for 56% of year-to-date revenue, compared with 45% for full-year 2023, and industrial exposure increased to 75% in May from 67% in February.
Revenue rose 50% from a year earlier to $3.266 billion and increased 14% from the first quarter. Diluted earnings climbed 92% to $12.53 a share from $6.53 and rose 19% sequentially, while net income reached $441.6 million.
Gross margin expanded 2.4 percentage points to 25.9%, helping operating margin widen to 17.1% from 13.8%. Adjusted earnings before interest, taxes, depreciation and amortization increased 80% to $600.5 million, with the adjusted EBITDA margin rising to 18.4% from 15.4%.
The company also gained operating leverage as selling, general and administrative expenses declined to 8.8% of revenue from 9.7%, despite increasing in dollar terms. Comfort Systems expanded its footprint to 206 locations in 150 cities, up from 197 locations in 143 cities in the first quarter, while its workforce grew to more than 23,000 employees.
Backlog rose 13% from March, accelerating from a 4% sequential increase in the first quarter. Operating cash flow increased to $1.139 billion from $252.5 million a year earlier, and free cash flow reached $999.3 million even as capital expenditures climbed to $141.4 million.
The board raised the quarterly dividend 12.5% to $0.90 a share. The higher payout followed a first half in which revenue increased 53% and diluted earnings more than doubled to $23.03 a share.