• Revenue: $1.8 billion, an increase of 19% compared to last year.
• Same-Store Revenue Growth: 15% increase.
• Earnings Per Share (EPS): $4.75, up more than 75% from last year.
• Backlog: Nearly $7 billion, a new high.
• Gross Profit: $403 million, a $106 million improvement from last year.
• Gross Profit Margin: 22.0%, up from 19.3% last year.
• Operating Income: $209 million, a 54% increase from last year.
• Operating Income Margin: Increased from 8.8% to 11.4%.
• Net Income: $169 million.
• EBITDA: $243 million, a 43% increase from last year.
• Free Cash Flow: Negative $109 million due to discrete impacts.
• Dividend Increase: $0.05 to $0.45 per share.
• Share Repurchases: $92 million, over 264,000 shares bought.
• Technology Sector Revenue: 37% of total revenue, up from 30% last year.
• Service Revenue: Up 10% on an absolute basis.

• Warning! GuruFocus has detected 5 Warning Sign with PSX.

Release Date: April 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Comfort Systems USA Inc (NYSE:FIX) reported record earnings per share of $4.75, a 75% increase from the previous year, despite the first quarter being seasonally weak.
• The company's backlog reached a new high of nearly $7 billion, indicating strong future demand.
• Same-store revenue growth was 15% for the first quarter, with total revenue increasing by 19% to $1.8 billion.
• Gross profit improved significantly, with margins increasing to 22.0% from 19.3% in the previous year.
• Comfort Systems USA Inc (NYSE:FIX) increased its quarterly dividend by $0.05 to $0.45 per share and continued share repurchases, reflecting a commitment to shareholder returns.

Negative Points

• Free cash flow was negative $109 million in the first quarter due to advanced customer payments, deferred tax payments, and acquisition earn-out payments.
• The company faces macroeconomic uncertainties, including potential impacts from tariffs and policy changes that could affect construction costs and demand.
• SG&A expenses increased to $195 million from $163 million, maintaining a consistent percentage of revenue but limiting leverage opportunities.
• The company anticipates high comparables for the remainder of 2025, which may challenge continued revenue growth.
• There is ongoing uncertainty regarding the impact of tariffs and supply chain challenges on future pricing and margins.

Q & A Highlights

Q: Can you explain the reasoning behind maintaining the revenue and margin guidance despite a strong start to the year and backlog growth? A: William George, CFO, explained that while the company has experienced strong demand and high margins, they are facing tough comparables from the previous year, particularly in the third and fourth quarters. The guidance reflects this challenge, but they remain confident in maintaining high margins due to superior execution and pricing.

Q: How are your contracts structured to handle potential cost inflation or supply chain challenges? A: Trent McKenna, COO, stated that their teams are adept at managing pricing and supply chain issues. They have strong contractual risk management and collaborate closely with suppliers and customers. Their scale and ability to share information across companies give them an advantage in managing these challenges.

Q: Can you rank the uncertainties affecting your business, such as tariffs and data center CapEx? A: William George, CFO, noted that while there are uncertainties, there is no sign of reduced demand for their services, particularly in technology and data centers. They have a history of managing cost pressures effectively, as seen during COVID, and remain optimistic about ongoing demand.

Q: What contributed to the backlog growth this quarter, and how do you expect it to trend? A: Trent McKenna, COO, highlighted broad-based bookings across the business, particularly in advanced tech and industrial sectors. They have strong visibility into future projects, and while backlog may fluctuate seasonally, they expect continued strong demand.

Q: How does the current backlog provide visibility into 2026? A: Brian Lane, CEO, mentioned that they have more backlog for 2026 at this point than ever before, providing a strong foundation for future growth. They are optimistic about opportunities extending into 2027 and 2028.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.