Comfort Systems USA(FIX) - 2024 Q2 - Quarterly Results

Financial Highlights Comfort Systems USA reported a record-breaking second quarter for 2024, with revenue increasing to $1.81 billion and net income more than doubling to $134.0 million, or $3.74 per diluted share Q2 2024 vs Q2 2023 Performance | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $1.81 billion | $1.30 billion | +39.2% | | Net Income | $134.0 million | $69.5 million | +92.8% | | Diluted EPS | $3.74 | $1.93 | +93.8% | | Operating Cash Flow | $189.9 million | $125.4 million | +51.4% | Six Months Ended June 30, 2024 vs 2023 Performance | Metric | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $3.35 billion | $2.47 billion | +35.6% | | Net Income | $230.3 million | $126.7 million | +81.8% | | Diluted EPS | $6.43 | $3.53 | +82.2% | | Operating Cash Flow | $336.4 million | $252.3 million | +33.3% | - The quarterly dividend per share was increased from $0.200 in Q2 2023 to $0.300 in Q2 2024[25] Business Outlook and Backlog The company maintains a strong business outlook, supported by an extremely high backlog of $5.77 billion as of June 30, 2024 Backlog Trend (in billions) | Date | Total Backlog | Same-Store Backlog | | :--- | :--- | :--- | | June 30, 2024 | $5.77 | $5.22 | | March 31, 2024 | $5.91 | N/A | | June 30, 2023 | $4.19 | $4.19 | - CEO Brian Lane noted that same-store backlog is 25% above last year, demand continues at unprecedented levels, and job pipelines are robust, leading to optimism for continued strong results[2] Consolidated Financial Statements Consolidated Statements of Operations The company's statements of operations show significant year-over-year growth for the three and six months ended June 30, 2024, with revenue increasing by 39.2% for the quarter and profitability improving Income Statement Highlights (in thousands) | Metric | Q2 2024 (in thousands) | Q2 2023 (in thousands) | H1 2024 (in thousands) | H1 2023 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,810,290 | $1,296,430 | $3,347,306 | $2,471,070 | | Gross Profit | $363,596 | $227,920 | $660,959 | $433,325 | | Operating Income | $184,670 | $92,082 | $320,130 | $162,967 | | Net Income | $134,009 | $69,476 | $230,328 | $126,692 | - Gross profit margin improved to 20.1% in Q2 2024 from 17.6% in Q2 2023, and operating income margin increased to 10.2% from 7.1% in the same period[18] Condensed Consolidated Balance Sheets As of June 30, 2024, total assets grew to $4.21 billion from $3.31 billion at year-end 2023, primarily driven by significant growth in goodwill and identifiable intangible assets Balance Sheet Summary (in thousands) | Account | June 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $2,323,371 | $1,911,100 | | Goodwill | $874,947 | $666,834 | | Total Assets | $4,213,984 | $3,305,579 | | Total Current Liabilities | $2,334,948 | $1,721,205 | | Total Liabilities | $2,731,690 | $2,027,750 | | Total Stockholders' Equity | $1,482,294 | $1,277,829 | Selected Cash Flow Data The company generated strong cash flow from operations, reporting $189.9 million for the second quarter and $336.4 million for the first six months of 2024, both representing significant increases from the prior year Cash Flow Summary (in thousands) | Activity | Q2 2024 (in thousands) | Q2 2023 (in thousands) | H1 2024 (in thousands) | H1 2023 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Operating | $189,858 | $125,410 | $336,415 | $252,319 | | Investing | $(60,786) | $(24,683) | $(282,434) | $(93,628) | | Financing | $(30,445) | $(89,280) | $(59,712) | $(155,898) | Non-GAAP Financial Measures Adjusted EBITDA Reconciliation Adjusted EBITDA, a non-GAAP measure, nearly doubled to $222.7 million in Q2 2024 from $111.6 million in Q2 2023, and increased to $392.5 million for the six-month period Adjusted EBITDA (in thousands) | Period | 2024 (in thousands) | 2023 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $222,739 | $111,576 | +99.6% | | Six Months Ended June 30 | $392,546 | $201,888 | +94.4% | - Adjusted EBITDA is calculated by taking net income and adding back items such as provision for income taxes, interest expense, depreciation, amortization, and changes in the fair value of contingent earn-out obligations[6][28] Free Cash Flow Reconciliation Free cash flow, defined as cash from operations less capital expenditures plus proceeds from asset sales, increased significantly to $167.3 million in Q2 2024 and $289.9 million for the first six months Free Cash Flow (in thousands) | Period | 2024 (in thousands) | 2023 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $167,289 | $102,264 | +63.6% | | Six Months Ended June 30 | $289,908 | $213,275 | +35.9% | - The company defines free cash flow as cash flow from operating activities less customary capital expenditures, plus the proceeds from asset sales[10] Forward-Looking Statements This section provides a standard safe harbor statement, cautioning that the press release contains forward-looking statements based on current management expectations, subject to numerous risk factors - The report contains forward-looking statements regarding future business expectations, which are subject to significant risks and uncertainties that could cause actual results to differ materially[24] - The company undertakes no obligation to publicly update or revise any forward-looking statements after they are made[11]