Comfort Systems USA(FIX)2024-04-25 20:05Financial Performance - Revenue for Q1 2024 was $1,537,016, an increase of 30.8% compared to $1,174,640 in Q1 2023[13] - Gross profit for Q1 2024 was $297,363, representing a gross margin of 19.4%, up from $205,405 in Q1 2023[13] - Net income for Q1 2024 was $96,319, a 68.4% increase from $57,216 in Q1 2023[13] - Basic earnings per share for Q1 2024 increased to $2.70, compared to $1.60 in Q1 2023[13] - Consolidated revenue for Q1 2024 was $1,537,016, a 30.9% increase from $1,174,640 in Q1 2023[54] - Gross profit for the consolidated entity was $297,363,000 for the three months ended March 31, 2024, compared to $205,405,000 for the same period in 2023, a growth of about 44.7%[115] - Revenue for Q1 2024 increased by $362.4 million, or 30.8%, to $1.54 billion compared to Q1 2023, driven by a 22.7% increase in same-store activity[146] - The mechanical segment revenue for Q1 2024 increased by $266.4 million, or 29.0%, to $1,185.0 million, with $178.9 million attributed to same-store activity[147] - The electrical segment revenue for Q1 2024 increased by $96.0 million, or 37.5%, to $352.0 million, primarily due to increased activity in the technology and manufacturing sectors[148] Assets and Liabilities - Total current assets rose to $2,048,189 as of March 31, 2024, up from $1,911,100 at the end of 2023[11] - Total assets increased to $3,902,829 as of March 31, 2024, compared to $3,305,579 at the end of 2023[11] - Total liabilities increased to $2,530,293 as of March 31, 2024, from $2,027,750 at the end of 2023[11] - Cash and cash equivalents decreased to $100,792 as of March 31, 2024, down from $205,150 at the end of 2023[11] - The outstanding balance of notes to former owners is $89.1 million, with future principal payments scheduled as follows: $4.8 million in 2024, $21.645 million in 2025, $31.625 million in 2026, $26 million in 2027, and $5 million in 2028[180]. Cash Flow - Net cash provided by operating activities for Q1 2024 was $146,557, compared to $126,909 in Q1 2023[19] - Cash used in investing activities for Q1 2024 was $221,648, significantly higher than $68,945 in Q1 2023, primarily due to cash paid for acquisitions[19] - Free cash flow for Q1 2024 was $122.6 million, compared to $111.0 million in Q1 2023[170] - Cash provided by operating activities was $146.6 million in Q1 2024, up from $126.9 million in Q1 2023, driven by higher pre-tax income and increases in accounts payable[167] - Cash paid for amounts included in the measurement of operating lease liabilities was $9,466,000 for the three months ended March 31, 2024, compared to $7,024,000 for the same period in 2023, representing a year-over-year increase of approximately 34.8%[100] Acquisitions - The acquisition of Summit Industrial Construction, LLC on February 1, 2024, involved a total consideration of $359,827, including cash and contingent earn-out payments[69] - The total preliminary purchase price for DECCO, Inc. acquisition was $59.8 million, including $48.8 million in cash paid at closing[80] - The total purchase price for Eldeco, Inc. acquisition was $74.0 million, including $60.8 million in cash paid at closing[81] - The fair value of identifiable intangible assets acquired from Summit was estimated at $170,100, with customer relationships valued at $123,000[71] - The contingent earn-out obligation from the Summit acquisition is tied to four earnings milestones, with payments ranging from $2.6 million to $20.5 million[73] Backlog and Performance Obligations - Remaining performance obligations totaled $5.91 billion, with an expectation to recognize 65-75% of this amount over the next 12 months[60] - The backlog as of March 31, 2024, was $5.91 billion, a 14.6% increase from $5.16 billion as of December 31, 2023, and a 33.0% increase from $4.44 billion as of March 31, 2023[150] - Approximately 10% to 20% of the company's business has historically required performance and payment bonds, which could be affected by future market conditions[184] Tax and Compliance - The company filed its 2022 federal tax return in October 2023, requesting a refund of $107.1 million for an overpayment, which has not been received as of March 31, 2024[38] - The provision for income taxes for Q1 2024 was $26.7 million with an effective tax rate of 21.7%, compared to $8.6 million and 13.1% in Q1 2023[158] - The company’s effective tax rate is influenced by profitability across various jurisdictions and can be impacted by discrete items such as tax law changes and judgments[36] Operational Insights - The company expects continued pressure on costs and availability of skilled labor throughout 2024[135] - The company has generated positive net free cash flow for the last twenty-five calendar years, indicating strong financial resilience[181] - The company maintains reasonable cash balances and significant borrowing capacity, which are expected to provide sufficient liquidity for operations in the foreseeable future[182] - There have been no changes in internal control over financial reporting that materially affected the company's financial reporting during the three months ended March 31, 2024[191] Shareholder Activities - The company has repurchased a cumulative total of 10.3 million shares at an average price of $26.29 per share under the stock repurchase program as of March 31, 2024[171] - During the three months ended March 31, 2024, the company repurchased less than 0.1 million shares for approximately $0.3 million at an average price of $196.89 per share[200]