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Comfort Systems USA Inc

Comfort Systems USA Inc (FIX) Q1 2026 Earnings Call Transcript

Bullish Engineering & Construction 48.57B USA
Next Earnings
2026-04-29

Comfort Systems USA, Inc., together with its subsidiaries, provides mechanical and electrical installation, renovation, maintenance, repair, and replacement services for the mechanical and electrical services industry in the United States. It operates through two segments: Mechanical and Electrical. The company offers heating, ventilation, and air conditioning systems, as well as plumbing, electrical, piping and controls, off-site construction, monitoring, and fire protection. It also involved in the design, engineering, integration, installation, and start-up of mechanical, electrical, and plumbing (MEP) and related systems in new buildings; and renovation, expansion, maintenance, monitoring, repair, and replacement of MEP systems in existing buildings. In addition, the company provides remote monitoring of power usage, temperature, pressure, humidity and air flow for MEP and other building systems. It serves building owners and developers, general contractors, architects, consulting engineers, and property managers in the commercial, industrial, and institutional MEP markets. Comfort Systems USA, Inc. was founded in 1917 and is headquartered in Houston, Texas.

Comfort Systems USA delivered record backlog, margin expansion, and free cash flow, underpinning a bullish 2026 with strong same-store growth and modular capacity expansion.

⭐ Key Highlights

Record backlog and revenue catalysts
Backlog reached an all-time high of $11.9B, with same-store backlog growth of 26% sequentially, underpinning strong revenue visibility into 2026 and beyond.
Material margin expansion and profitability
Q4 gross margin crossed 25% for the first time, full-year gross margin at 24.1%, with operating income up 89% year over year and EBITDA margin at 16% for 2025.
Strong cash generation and shareholder returns
Full-year free cash flow of $1.0B, capex of $155M (~1.7% of revenue), and over $200M in share repurchases; cumulative buybacks since inception exceed $546M.
Modular capacity expansion and incremental scale
Modular capacity expanded to 3.0M sq ft with plan to reach ~4.0M sq ft by end-2026; initial productivity expected this year with larger gains later in 2026.
Guidance and outlook reinforced
2026 guidance points to continued strong gross margins in the 24–26% range, seasonally lower margins in Q1, and same-store revenue growth in the mid-to-high teens, supported by sustained backlog and service growth.

✔Positive Signals

  • Backlog at $11.9B, up meaningfully YoY and sequentially
  • Q4 gross margin at 25.5% and full-year gross margin at 24.1%
  • Full-year free cash flow of $1.0B and EBITDA of $1.45B
  • Modular capacity expansion to 4.0M sq ft by end-2026
  • Significant share repurchases ($200M+) and rising dividends

✖Negative Signals

  • Q1 2026 expected seasonally lower margins
  • Backlog projects skewed to longer-duration, potential execution risk
  • Capex sensitivity to whether leases or purchases drive costs
  • Reliance on large hyperscaler data-center demand, concentration risk
  • Labor supply dynamics remain a near-term challenge despite in-house programs

📊Financial Results

  • Q4 2025 EPS $9.37, up 129% YoY; full-year 2025 EPS $28.88, up 98% YoY
  • Gross profit for 2025 $675M, up $241M YoY; full-year gross margin 24.1% vs 21.0% in 2024
  • Operating income for 2025 $1,300M, up from $0.9B; operating margin 14.4% for the year vs prior 12.1%
  • Full-year EBITDA $1,450M; EBITDA margin 16.0%
  • CapEx $155M in 2025 (1.7% of revenue); free cash flow $1.0B

🔮Future Guidance

  • 2026 gross margin expected to remain in the strong 24–26% range; seasonally lower in Q1
  • Same-store revenue growth guidance for 2026: mid-to-high teens, weighted toward the first half
  • Modular capacity target raised to ~4.0M sq ft by end-2026; initial productivity in 2026 with fuller impact later in the year
  • CapEx modest base of ~1.7% of revenue; potential incremental capex if large buildings are leased/purchased
  • 2026 tax rate guidance around 23%

💡Interesting Insights

  • Backlog represents commitments already in place 1–2 years prior; current bookings imply revenue realization primarily in 2027–2028, indicating a late-cycle but durable demand exposure

Detailed Analysis

AI-generated summary of Comfort Systems USA Inc earnings call transcript.

The company reported record 2025 results with backlog at a new high of $11.9B and same-store backlog up 26% sequentially. Gross margins improved to 25.5% in Q4 and 24.1% for the full year, driving operating income to $1.3B and EBITDA to $1.45B, while free cash flow reached a record $1.0B. The narrative emphasized best-in-class execution, robust bookings in technology and data-center sectors, and a sizeable modular expansion from 3.0M to 4.0M square feet by end-2026. The company highlighted disciplined labor management, with a growing in-house contract craft capability, and a strong capital return program including share repurchases and dividend increases. Management maintained a positive 2026 view with mid-to-high-teens revenue growth, continued margin strength, and higher capital deployment through modular capacity and strategic asset investments, while noting seasonality and project-duration dynamics that push some large bookings into 2027–2028.

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