8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) April 26, 2023

Comfort Systems USA, Inc.

(Exact name of registrant as specified in its charter)

Delaware	1-13011	76-0526487
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

675 Bering Drive, Suite 400
Houston, Texas	77057
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (713) 830-9600

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	FIX	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

ITEM 2.02        Results of Operations and Financial Condition

Attached and incorporated herein by reference as Exhibit 99.1 is a copy of a press release of Comfort Systems USA, Inc. (the “Company”) dated April 26, 2023 reporting the Company’s financial results for the first quarter of 2023.

The above information and attached press release are being furnished pursuant to Item 2.02 of Form 8-K and General Instruction B.2 thereunder. The information included herein and in the attached press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

ITEM 8.01           Other Events

Attached and incorporated herein by reference as Exhibit 99.2 is a copy of a press release of the Company dated April 26, 2023 reporting the Company’s declaration of a quarterly dividend on the Company’s common stock to stockholders of record as of the close of business on the record date, May 18, 2023.

ITEM 9.01        Financial Statements and Exhibits

(d) The following Exhibits are included herein:

Exhibit 99.1 Press Release of Comfort Systems USA, Inc. dated April 26, 2023 reporting the Company’s financial results for the first quarter of 2023.

Exhibit 99.2 Press Release of Comfort Systems USA, Inc. dated April 26, 2023 reporting the Company’s declaration of a quarterly dividend on the Company’s common stock to stockholders of record as of the close of business on the record date, May 18, 2023.

2

EXHIBIT INDEX

Exhibit Number	Exhibit Title or Description
99.1	Press Release of Comfort Systems USA, Inc. dated April 26, 2023 reporting the Company’s financial results for the first quarter of 2023.
99.2	Press Release of Comfort Systems USA, Inc. dated April 26, 2023 reporting the Company’s declaration of a quarterly dividend on the Company’s common stock to stockholders of record as of the close of business on the record date, May 18, 2023.
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	COMFORT SYSTEMS USA, INC.
By:	/s/ Laura F. Howell
	Laura F. Howell, Senior Vice President and General Counsel

Date:      April 26, 2023

4

EX-99.1

Exhibit 99.1

CONTACT:	Julie Shaeff, Chief Accounting Officer	675 Bering Drive, Suite 400
	ir@comfortsystemsusa.com; 713-830-9687	Houston, Texas 77057
		713-830-9600

FOR IMMEDIATE RELEASE

COMFORT SYSTEMS USA REPORTS FIRST QUARTER 2023 RESULTS

Houston, TX — April 26, 2023 — Comfort Systems USA, Inc. (NYSE: FIX) (the “Company”) today reported results for the quarter ended March 31, 2023.

For the quarter ended March 31, 2023, net income was $57.2 million, or $1.59 per diluted share, as compared to $86.8 million, or $2.40 per diluted share, for the quarter ended March 31, 2022. The first quarter of 2023 included a diluted per share net gain of $0.12, including $0.08 related to prior tax years, due to a tax change and $0.15 from the favorable resolution of certain litigation matters. The first quarter of 2022 included a diluted per share net tax gain of $1.49 related to prior years. Revenue for the first quarter of 2023 was $1,174.6 million compared to $885.2 million in 2022. The Company reported operating cash flow of $126.9 million in the current quarter compared to $63.7 million in 2022.

Backlog as of March 31, 2023 was $4.44 billion as compared to $4.06 billion as of December 31, 2022 and $2.73 billion as of March 31, 2022. On a same-store basis, backlog increased from $2.73 billion as of March 31, 2022 to $4.32 billion as of March 31, 2023.

Brian Lane, Comfort Systems USA’s President and Chief Executive Officer, said, “We started 2023 on a very positive note, with remarkable increases in revenue and earnings per share. Our mechanical operations again performed at high levels and our electrical segment continued its trend of improving profitability. Cash flow was unusually strong, especially for a first quarter, and our backlog increased yet again, reflecting good ongoing demand in traditional and modular construction. Our already strong quarterly earnings were further increased by favorable resolution of certain litigation matters.”

Mr. Lane concluded, “Our teams across the country continue to execute. Thanks to their excellence, and in light of the strong ongoing demand that we are experiencing, we remain optimistic about our prospects for continued growth and strong profitability in 2023.”

The Company will host a webcast and conference call to discuss its financial results and position on Thursday, April 27, 2023 at 10:30 a.m. Central Time. To register for the call, please visit https://register.vevent.com/register/BI9b57002f12ed44b78143f9dedccc3592. Upon registering, participants will receive dial-in information and a unique PIN to join the call. The call and the slide presentation to accompany the remarks can be accessed on the Company’s website at www.comfortsystemsusa.com under the “Investor” tab. A replay of the entire call will be available on the Company’s website on the next business day following the call.

Comfort Systems USA® is a leading provider of commercial, industrial and institutional heating, ventilation, air conditioning and electrical contracting services, with 173 locations in 132 cities across the nation. For more information, visit the Company’s website at www.comfortsystemsusa.com.

Certain statements and information in this press release may constitute forward-looking statements regarding our future business expectations, which are subject to applicable securities laws and regulations. The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” or other similar expressions are intended to identify forward-looking statements, which are generally not historic in nature. These forward-looking statements are based on the current expectations and beliefs of Comfort Systems USA, Inc. and its subsidiaries (collectively, the “Company”) concerning future developments and their effect on the Company. While the Company’s management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting the Company will be those that it anticipates, and the Company’s actual results of operations, financial condition and liquidity, and the development of the industry in which the Company operates, may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of our results or developments in subsequent periods. All comments concerning the Company’s expectations for future revenue and operating results are based on the Company’s forecasts for its existing operations and its acquisition of Eldeco and do not include the potential impact of any future acquisitions. The Company’s forward-looking statements involve significant risks and uncertainties (some of which are beyond the Company’s control) and assumptions that could cause actual future results to differ materially from the Company’s historical experience and its present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: the use of incorrect estimates for bidding a fixed-price contract; undertaking contractual commitments that exceed the Company’s labor resources; failing to perform contractual obligations efficiently enough to maintain profitability; national or regional weakness in construction activity and economic conditions; rising inflation and fluctuations in interest rates; shortages of labor and specialty building materials or material increases to the cost thereof; the Company’s business being negatively affected by health crises or outbreaks of disease, such as epidemics or pandemics (and related impacts, such as supply chain disruptions); financial difficulties affecting projects, vendors, customers, or subcontractors; the Company’s backlog failing to translate into actual revenue or profits; failure of third party subcontractors and suppliers to complete work as anticipated; difficulty in obtaining, or increased costs associated with, bonding and insurance; impairment to goodwill; errors in the Company’s cost-to-cost input method of accounting; the result of competition in the Company’s markets; the Company’s decentralized management structure; material failure to comply with varying state and local laws, regulations or requirements; debarment from bidding on or performing government contracts; retention of key management; seasonal fluctuations in the demand for mechanical and electrical systems; the imposition of past and future liability from environmental, safety, and health regulations including the inherent risk associated with self-insurance; adverse litigation results; an increase in our effective tax rate; a material information technology failure or a material cyber security breach; risks associated with acquisitions, such as challenges to our ability to integrate those companies into our internal control environment; our ability to manage growth and geographically-dispersed operations; our ability to obtain financing on acceptable terms; extreme weather conditions (such as storms, droughts, extreme heat or cold, wildfires and floods), including as a result of climate change, and any resulting regulations or restrictions related thereto; and other risks detailed in our reports filed with the Securities and Exchange Commission (the “SEC”).

For additional information regarding known material factors that could cause the Company’s results to differ from its projected results, please see its filings with the SEC, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether because of new information, future events, or otherwise.

— Financial tables follow —

Comfort Systems USA, Inc.

Consolidated Statements of Operations

(In Thousands, Except per Share Amounts)

	Three Months Ended
	March 31,
	(Unaudited)
	2023		%		2022		%
Revenue	$	1,174,640	100.0	%	$	885,216	100.0	%
Cost of services		969,235	82.5	%		732,072	82.7	%
Gross profit		205,405	17.5	%		153,144	17.3	%
SG&A		135,032	11.5	%		117,776	13.3	%
Gain on sale of assets		(512)	—			(323)	—
Operating income		70,885	6.0	%		35,691	4.0	%
Interest expense, net		(2,679)	(0.2)	%		(2,126)	(0.2)	%
Changes in the fair value of contingent earn-out obligations		(2,382)	(0.2)	%		4,088	0.5	%
Other income (expense)		1	—			56	—
Income before income taxes		65,825	5.6	%		37,709	4.3	%
Provision (benefit) for income taxes		8,609				(49,053)
Net income	$	57,216	4.9	%	$	86,762	9.8	%
Income per share
Basic	$	1.60			$	2.40
Diluted	$	1.59			$	2.40
Shares used in computing income per share:
Basic		35,812				36,076
Diluted		35,907				36,188
Dividends per share	$	0.175			$	0.130

Supplemental Non-GAAP Information — (Unaudited) (In Thousands, Except per Share Amounts)

	Three Months Ended
	March 31,
	2023		2022
Net income	$	57,216	$	86,762
Tax gains related to prior years		(3,368)		(57,255)
Tax-related SG&A costs, net of tax		333		3,519
Net income excluding tax gains	$	54,181	$	33,026
Diluted income per share	$	1.59	$	2.40
Tax gains related to prior years		(0.09)		(1.59)
Tax-related SG&A costs, net of tax		0.01		0.10
Diluted income per share excluding tax gains	$	1.51	$	0.91

Note: Net income excluding tax gains and diluted income per share excluding tax gains are presented because the Company believes they reflect the results of the core ongoing operations of the Company, and we believe they are responsive to frequent questions we receive from third parties. These amounts, however, are not considered primary measures of an entity’s financial results under generally accepted accounting principles, and accordingly, they should not be considered an alternative to operating results as determined under generally accepted accounting principles and as reported by the Company.

Supplemental Non-GAAP Information — Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) — (Unaudited) (In Thousands)

	Three Months Ended
	March 31,
	2023		%		2022		%
Net income	$	57,216			$	86,762
Provision (benefit) for income taxes		8,609				(49,053)
Other expense (income), net		(1)				(56)
Changes in the fair value of contingent earn-out obligations		2,382				(4,088)
Interest expense, net		2,679				2,126
Gain on sale of assets		(512)				(323)
Tax-related SG&A costs		421				4,455
Amortization		10,331				12,791
Depreciation		9,187				8,046
Adjusted EBITDA	$	90,312	7.7	%	$	60,660	6.9	%

Note: The Company defines adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) as net income, provision for income taxes, other expense (income), net, changes in the fair value of contingent earn-out obligations, interest expense, net, gain on sale of assets, goodwill impairment, other one-time expenses or gains and depreciation and amortization. Other companies may define Adjusted EBITDA differently. Adjusted EBITDA is presented because it is a financial measure that is frequently requested by third parties. However, Adjusted EBITDA is not considered under generally accepted accounting principles as a primary measure of an entity’s financial results, and accordingly, Adjusted EBITDA should not be considered an alternative to operating income, net income, or cash flows as determined under generally accepted accounting principles and as reported by the Company.

Comfort Systems USA, Inc.

Condensed Consolidated Balance Sheets

(In Thousands)

	March 31,		December 31,
	2023		2022
	(Unaudited)
Cash and cash equivalents	$	48,560	$	57,214
Billed accounts receivable, net		1,176,378		1,024,082
Unbilled accounts receivable, net		81,151		77,030
Costs and estimated earnings in excess of billings, net		26,820		27,211
Other current assets, net		126,115		122,134
Total current assets		1,459,024		1,307,671
Property and equipment, net		155,021		143,949
Goodwill		637,434		611,789
Identifiable intangible assets, net		296,070		273,901
Other noncurrent assets		291,922		260,168
Total assets	$	2,839,471	$	2,597,478
Current maturities of long-term debt	$	11,468	$	9,000
Accounts payable		351,509		337,385
Billings in excess of costs and estimated earnings and deferred revenue		717,294		548,293
Other current liabilities		326,388		276,124
Total current liabilities		1,406,659		1,170,802
Long-term debt		197,761		247,245
Other long-term liabilities		181,561		179,508
Total liabilities		1,785,981		1,597,555
Total stockholders’ equity		1,053,490		999,923
Total liabilities and stockholders’ equity	$	2,839,471	$	2,597,478

Selected Cash Flow Data (Unaudited) (In Thousands)

	Three Months Ended
	March 31,
	2023		2022
Cash provided by (used in):
Operating activities	$	126,909	$	63,729
Investing activities	$	(68,945)	$	(9,369)
Financing activities	$	(66,618)	$	2,479
Free cash flow:
Cash from operating activities	$	126,909	$	63,729
Purchases of property and equipment		(16,520)		(9,192)
Proceeds from sales of property and equipment		622		1,056
Free cash flow	$	111,011	$	55,593

Note: Free cash flow is defined as cash flow from operating activities less customary capital expenditures, plus the proceeds from asset sales. Other companies may define free cash flow differently. Free cash flow is presented because it is a financial measure that is frequently requested by third parties. However, free cash flow is not considered under generally accepted accounting principles as a primary measure of an entity’s financial results, and accordingly, free cash flow should not be considered an alternative to operating income, net income, or cash flows as determined under generally accepted accounting principles and as reported by the Company.

EX-99.2

Exhibit 99.2

CONTACT:	Julie Shaeff, Chief Accounting Officer	675 Bering Drive, Suite 400
	ir@comfortsystemsusa.com; 713-830-9687	Houston, Texas 77057
		713-830-9600

FOR IMMEDIATE RELEASE

COMFORT SYSTEMS USA INCREASES QUARTERLY DIVIDEND

Houston, TX — April 26, 2023 — Comfort Systems USA, Inc. (NYSE: FIX), a leading provider of commercial, industrial and institutional heating, ventilation, air conditioning and electrical contracting services, today announced that its board of directors declared a quarterly dividend of $0.20 per share, which is a $0.025 increase from the Company’s most recent dividend, on Comfort Systems USA, Inc. common stock. The dividend is payable on May 29, 2023 to stockholders of record at the close of business on May 18, 2023.

Comfort Systems USA® is a premier provider of business solutions addressing workplace comfort, with 173 locations in 132 cities across the nation. For more information, visit the Company’s website at www.comfortsystemsusa.com.

XML

Document and Entity Information	Apr. 26, 2023
Document and Entity Information
Document Type	8-K
Amendment Flag	false
Document Period End Date	Apr. 26, 2023
Entity File Number	1-13011
Entity Registrant Name	Comfort Systems USA, Inc.
Entity Central Index Key	0001035983
Entity Tax Identificatoin Number	76-0526487
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	675 Bering Drive, Suite 400
Entity Address, State or Province	TX
Entity Address, City or Town	Houston
Entity Address, Postal Zip Code	77057
City Area Code	713
Local Phone Number	830-9600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	FIX
Security Exchange Name	NYSE
Entity Emerging Growth Company	false