Comfort Systems USA(US:FIX)2023-10-25 16:00Revenue and Profitability - Revenue for Q3 2023 increased by $258.1 million, or 23.0%, to $1.38 billion compared to Q3 2022, driven by a 20.0% increase in same-store activity and a 3.0% contribution from the Eldeco acquisition [160]. - Gross profit for Q3 2023 was $277.5 million, representing a gross margin of 20.1%, compared to $202.2 million and 18.1% in Q3 2022 [159]. - Net income for Q3 2023 was $105.1 million, a 7.6% increase from $61.5 million in Q3 2022 [159]. - Revenue for the third quarter of 2023 reached $1.38 billion, a 23% increase from $1.12 billion in the same quarter of 2022 [204]. - Gross profit for the third quarter of 2023 was $277.5 million, compared to $202.2 million in the third quarter of 2022, reflecting a significant increase [204]. Backlog and Projects - The backlog as of September 30, 2023, was $4.29 billion, up from $4.06 billion at December 31, 2022, with the mechanical segment accounting for 72.7% and the electrical segment for 27.3% [165]. - The company had 10,412 projects in process as of September 30, 2023, with an average contract price of approximately $1.0 million [166]. Segment Performance - The electrical segment revenue for Q3 2023 increased by $85.6 million, or 32.8%, to $346.8 million, primarily due to the Eldeco acquisition and increased activity in the technology sector [162]. - The acquisition of DECCO, Inc. is expected to contribute annualized revenues of approximately $55 to $65 million, enhancing the mechanical segment [204]. Operating Leases and Expenses - The weighted average discount rate for operating leases as of September 30, 2023, was 5.8%, compared to 4.3% at December 31, 2022 [171]. - Operating lease expense for Q3 2023 was $25.7 million, up from $13.1 million in Q3 2022 [174]. - Total lease payments amount to $301.49 million, with a present value of operating lease liabilities at $214.8 million as of September 30, 2023 [179]. - Operating lease right-of-use assets increased to $209.1 million as of September 30, 2023, up from $130.7 million at the end of 2022 [193]. - Rent paid to related parties for the three months ended September 30, 2023, was approximately $1.9 million, compared to $1.7 million in the same period of 2022 [192]. Compliance and Financial Health - The company was in compliance with all financial covenants as of September 30, 2023 [189]. - Future principal payments of notes to former owners total $47.1 million as of September 30, 2023 [190]. Share Repurchase and Gains - The company repurchased 0.1 million shares for approximately $8.6 million at an average price of $134.53 per share during the nine months ended September 30, 2023 [202]. - The company recorded a pre-tax gain of $6.8 million in Q1 2023 from legal settlements, impacting gross profit positively by $6.6 million [196]. Maintenance and Repair Services - Approximately 11.2% of revenue comes from maintenance and repair services on installed systems, which typically take a few hours to a few days to complete [168].