Company Performance - Comfort Systems (FIX) ended the latest trading session at $356.21, reflecting a +1.31% adjustment from the previous day's close, outperforming the S&P 500's daily loss of 0.17% [1] - The company has gained 1.52% in share price over the past month, while the Construction sector lost 5.56% and the S&P 500 lost 3.94% during the same period [1] Upcoming Earnings - The upcoming EPS for Comfort Systems is projected at $3.66, indicating a 36.06% increase compared to the same quarter of the previous year [2] - Revenue is estimated to be $1.7 billion, reflecting a 10.81% rise from the equivalent quarter last year [2] Fiscal Year Estimates - For the entire fiscal year, earnings are projected at $17.87 per share and revenue at $7.55 billion, representing changes of +22.4% and +7.42% respectively from the prior year [3] - Recent changes in analyst estimates are important as they reflect near-term business trends, with positive revisions indicating a favorable business outlook [3] Valuation Metrics - Comfort Systems is currently trading with a Forward P/E ratio of 19.67, which is lower than the industry average Forward P/E of 27.43, suggesting that the company is trading at a discount [6] - The Building Products - Air Conditioner and Heating industry, to which Comfort Systems belongs, has a Zacks Industry Rank of 167, placing it in the bottom 33% of over 250 industries [6] Zacks Rank System - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has a proven track record of outperformance, with 1 stocks returning an average of +25% annually since 1988 [5] - Currently, Comfort Systems holds a Zacks Rank of 3 (Hold), with the Zacks Consensus EPS estimate remaining stagnant over the past month [5]

Financial Data and Key Metrics Changes - Net sales decreased by 2.9% to $297.7 million from $306.6 million, primarily driven by a 16.1% decline in the AAON Oklahoma segment, partially offset by a 129.9% growth in the AAON Coil Products segment [23][24] - Gross profit decreased by 30.5% to $77.6 million, with gross profit margin dropping to 26.1% from 36.4% in 2023, reflecting lower volumes and fixed cost deleveraging [24] - Diluted earnings per share fell by 46.4% to $0.30 from $0.56, influenced by a large excess tax benefit related to stock-based compensation [26] Business Line Data and Key Metrics Changes - The Basics brand saw a significant year, with net sales up 35.1% and data center equipment sales up approximately 85%, leading to a total backlog increase of 70% [15][18] - The AAON brand faced challenges, with sales down modestly in the low single digits, but bookings were up in the mid-teens, resulting in a backlog increase of approximately 20% [17][18] Market Data and Key Metrics Changes - Bookings in the fourth quarter were up approximately 62%, with year-end backlog reaching $867.1 million, driven by data center equipment bookings, including a large $200 million-plus order [18][19] - The AAON Oklahoma segment experienced a slowdown due to the transition to new refrigerants, impacting production and sales volumes [20][30] Company Strategy and Development Direction - The company aims to be an industry leader in innovation and customization, focusing on engineering capabilities and customized solutions [42][43] - The strategic priorities include driving sustainable organic growth, with expectations for the data center equipment business to grow to over $1 billion within a few years [47][48] - The company is reorganizing to efficiently manage growth and capacity expansion, with significant investments in new manufacturing facilities [50] Management's Comments on Operating Environment and Future Outlook - Management noted that 2024 was a year of challenges but also highlighted strong fundamentals for both AAON and Basics brands, anticipating a return to robust growth [52][54] - The outlook for 2025 includes sales growth in the mid to high teens, with expectations for gross margins similar to 2024 [57][58] Other Important Information - Capital expenditures in the fourth quarter were $99.3 million, up nearly fourfold from the previous year, primarily for the new Memphis facility [28] - The company plans to ramp up production in the Memphis facility, with expectations for significant contributions to financials by the end of 2025 [102] Q&A Session Summary Question: Outlook for Oklahoma sales in Q1 - Management indicated that flat sales are expected due to inventory of R410A affecting momentum, with a transition to R454B impacting the run rate [62][64] Question: Reasons for Basics sales decline - Management clarified that the decline is due to capacity limitations at the Redmond facility, despite strong demand and backlog for Basics branded products [66][68] Question: Growth expectations for 2025 - Management explained that while strong growth is anticipated in the data center segment, caution is warranted due to uncertainties in the Oklahoma segment [71][75] Question: Data center construction outlook - Management reported that the data center market remains strong, with capital expenditures increasing and a positive outlook for investments [82] Question: Pricing strategy for R454B - Management stated that they will monitor bookings before implementing any price increases related to R454B, focusing on strengthening demand first [126][130] Question: Capacity and efficiency at Longview and Basics - Management acknowledged inefficiencies during ramp-up phases but expects sequential improvement in margins throughout 2025 as production stabilizes [104][137]

Financial Data and Key Metrics Changes - Lennox achieved record revenue exceeding $5 billion for the first time, with adjusted segment profit surpassing $1 billion [5][6] - Adjusted earnings per share reached $5.60 for Q4 and $22.58 for the full year, with core revenue growing 22% in Q4 and 13% for the full year [6][7] - Adjusted segment margin expanded by 250 basis points in Q4 and 150 basis points for the full year, reaching 19.4% [6][15] Business Line Data and Key Metrics Changes - Home Comfort Solutions segment reported 25% revenue growth and 67% segment profit growth, with sales volume increasing by 21% [12][13] - Building Climate Solutions segment experienced 17% revenue growth, with organic sales volume increasing by 14% [14][15] Market Data and Key Metrics Changes - The company noted a significant impact from the pre-purchase of R-410A equipment, estimated to have positively affected revenue by $125 million [12][30] - The transition to low GWP refrigerants is expected to contribute to future revenue growth, with a projected 4% increase from new product introductions [18][19] Company Strategy and Development Direction - The company is transitioning from a recovery and investment phase to a growth acceleration phase, focusing on disciplined investments while prioritizing growth [21][24] - Strategic investments in digital customer experience and expanded product offerings are aimed at capitalizing on growing demand for energy-efficient solutions [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth, anticipating revenue targets of $5.4 billion to $6 billion by 2026, despite headwinds from the 2024 pre-buy [25][26] - The company is closely monitoring market uncertainties, including interest rates and consumer confidence, which could impact future performance [56][57] Other Important Information - The company reported a free cash flow conversion rate of 97%, with capital expenditures expected to exceed depreciation by approximately $65 million [17][19] - The integration of the AES acquisition is ahead of schedule, contributing positively to the company's strategic M&A pipeline [9][10] Q&A Session Summary Question: Comments on the pre-buy impact and its implications for Q1 - Management acknowledged a $125 million pre-buy impact, which will create a headwind for Q1 revenue [30][31] Question: Flat volume outlook for the Home Comfort Solutions segment - Management cited market uncertainties, including low existing home sales and high mortgage rates, as reasons for a conservative volume outlook [32][34] Question: Guidance on incremental margins and inflation assumptions - Management indicated that inflation is expected to increase costs by approximately 3%, while maintaining a cautious approach to revenue guidance [39][41] Question: Revenue outlook for the Building Climate Solutions segment - Management expressed confidence in the health of the markets served, with expectations for mid-single-digit volume growth [46][48] Question: Insights on the new commercial facility in Mexico - Management indicated that the new facility is expected to contribute to volume growth, particularly in the second half of the year [82][84] Question: Inflationary pressures and their impact on costs - Management noted higher inflation in SG&A costs, particularly in healthcare and wages, while remaining vigilant about potential tariff impacts [91][92] Question: New construction versus replacement demand within Home Comfort Solutions - Management expects new construction to remain flattish, driven primarily by interest rates [108][109] Question: Margin dynamics by segment - Management indicated that margins are expected to be flat overall, with BCS seeing potential expansion in the second half of the year [110][111]