FIX

Comfort Systems USA (FIX) just reported third quarter 2026 results that topped analyst expectations, with sales of US$3.77b and diluted earnings per share of US$13.91, yet the share price dropped on the release. The business also outlined nine month figures that showed higher revenue and profit than the same period a year earlier, alongside a record reported backlog and an announced chief financial officer transition. Recent trading has turned sharply against Comfort Systems USA, with the share price down 21% over the past month and 26% over the last quarter. This comes even though the year to date share price return remains 27% and the 1 year total shareholder return is 55.4%. The 3 and 5 year total shareholder returns are also very large at about 7x and 14x respectively. The latest pullback follows a run of strong earnings beats, a record reported backlog tied to data center work, and now a CFO succession. Together, these factors appear to have shifted investor focus from past gains to questions about how much growth and risk were already priced in at US$1,279.37 per share. Spot 55 AI infrastructure stocks that, like Comfort Systems USA, are tied to data center build outs and could be primed for sharp sentiment swings around earnings. Comfort Systems USA now trades more than 50% below one intrinsic value estimate and at a sizeable discount to the average analyst target. After this pullback, where does a reasonable fair value range actually sit? Comfort Systems USA closed at $1,279.37, while the prevailing narrative fair value sits at $2,197, which implies a sizeable valuation gap that investors now have to weigh against the recent share price slide. Technology related and industrial work, now representing the majority of revenue and heavily linked to AI data centers and semiconductor projects, is expected to keep shifting the mix toward complex jobs that support higher gross margins and operating income. See why 90 investors see Comfort Systems USA as 42% undervalued. Result: Fair Value of $2,197 (UNDERVALUED) Still, if AI driven data center projects slow or investors cut the P/E multiple after recent insider selling, the Comfort Systems USA narrative could shift quickly. Find out about the key risks to this Comfort Systems USA narrative. Comfort Systems USA might look cheap against some fair value estimates, yet the current P/E of 31.3x is higher than the US Construction industry on 27.5x, while still below a fair ratio of 40.1x and a peer average of 34.2x. Is this a cushion or a warning sign for anyone eyeing fresh exposure? See what the numbers say about this price — find out in our valuation breakdown. Sentiment around Comfort Systems USA is clearly split, so treat this pullback as a prompt to check the data, weigh both concerns and bright spots, and then anchor your own view with the full breakdown of 4 key rewards and 1 important warning sign. If Comfort Systems USA has sharpened your focus on where capital goes next, use that momentum and line up a few fresh contenders before the next reporting season tightens the window. - Target resilience first and scan a 30 resilient stocks with low risk scores list to spot companies where business volatility and balance sheet pressure already screen as relatively contained. - Hunt for mispriced quality and sort through a 20 high quality undiscovered gems set of companies with fundamentals that may not yet be widely followed. - Anchor your watchlist with robustness by checking a list of solid balance sheet and fundamentals (26 results) so potential ideas start from financial footing rather than hope. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include FIX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Friday, Oct. 23, 2026 - Chief Accounting Officer - Julie S. Shaeff - Chief Executive Officer - Brian E. Lane - President - Trent T. McKenna - Chief Financial Officer - Bill George Operator: Good day, and thank you for standing by. Welcome to the Comfort Systems USA Third Quarter 26 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Julie S. Shaeff, Chief Accounting Officer. Ma'am, please go ahead. Julie S. Shaeff: Thanks, Michelle. Good morning. Welcome to Comfort Systems USA's third quarter 26 earnings call. Our comments today as well as our press releases contain forward-looking statements within the meaning of the applicable securities laws and regulations. What we will say today is based upon the current plans and expectations of Comfort Systems USA. Those plans and expectations include risks and uncertainties that might cause actual future activities and results of our operations to be materially different from those set forth in our comments. You can read a detailed listing and commentary concerning our specific risk factors in our most recent Form 10-Ks and Form 10 Q as well as in our press release covering these earnings. A slide presentation is provided as a companion to our remarks and is posted on the Investor Relations section of the company's website found at comfortsystemsusa.com. Joining me on the call today are Brian E. Lane, chief executive officer Trent T. McKenna, president and Bill George, chief financial officer. Brian will open our remarks. Brian E. Lane: All right. Thanks, Julie. Good morning, and thank you for joining us for the call today. Our amazing teams across the country continue to deliver excellent results. for our customers. They have delivered results that exceed even our recent record results. We earned $13.91 per share this quarter, which is $5.66 more than we earned in the same quarter last year. Our mechanical business had an extraordinary increase in activity levels and profitability. And our Electrical segment once again achieved spectacular organic revenue growth at very high margins. Construction is driving most of our results but service revenue and profit also grew by double digit percentages. Bookings were strong, and our backlog at the end of the quarter grew to a new high of $17.8 billion. As a result of continuing strong demand, we achieved an 8th consecutive sequential backlog increase. We continue to book work with good margins and good working conditions for our valuable people. And we enter the fourth quarter of 26 with $8.4 billion more in backlog than last year at this time. I am happy to announce the acquisition of 2 companies on August 1st, Lewis Electrical located in Melbourne, Florida and Neopod, a module company for the health care industry based in New Braunfels, Texas. We are thrilled to have these 2 companies join the Comfort Systems USA family of companies and expect that they will contribute over $100 million in annual revenue at good margins. Today, we increased our quarterly dividend by $0.10 to $1 per share and we actively purchased shares during the quarter. With solid bookings and great demand, we expect continuing growth and strong results for the remainder of 2026 and into 2027. In a moment, Trent and Bill will discuss our results and outlook, but I want to first discuss another announcement that we made yesterday. Last night, we announced Bill's decision to retire from the company after 30 years of amazing service. Bill helped found the company in 2 thousand and has led the financial strategy of the company since 2005. As importantly, since 2008, Bill has led the extraordinarily successful acquisition efforts of the company. And since 2011, Bill has also worked with many of our companies in an operational role. I am deeply grateful to Bill for his steady leadership thoughtful advice, and the integrity that he has brought to Comfort Systems USA every day. He has been a great partner to me. I, along with the rest of the leadership team, wish Bill the absolute best in his well deserved retirement. Bill will be transitioning from the CFO role shortly after we report our 2026 results and he will then continue with the company for a period to transition his other roles. We also announced that Julie will be promoted to CFO as Bill's successor and I also want to congratulate her. Julie has been an integral member of our finance and accounting team for many years. And I have the utmost confidence that she is the perfect person to lead the organization through Bill's transition. Before Bill discusses our results, I have asked him to also give his thoughts about the upcoming changes. Bill? William George: Thanks, Brian. it is a poignant day for me, and I do want to take just a few minutes and explain why I am utterly confident that Comfort Systems USA will continue to have the best management team in our industry long after I am gone. So, over 30 years, I have done a lot of things at Comfort. Legal, financial, acquisitions, operations, The main 3 things I do today are financial, operational, and acquisitions. Know, the great news is that in the financial area, our depth is extraordinary. it is. frankly, it is amazing. Right down the line starting with Julie, we are stacked with unbelievable talent. In our financial area. And, honestly, the day after I leave this role, Comfort Systems will still have the best CFO in construction and the best finance department in construction. You guys know Julie I have been hearing from people for the last 24 hours how--and relieved, both internal and external, how happy and relieved they are that Julie will be our next CFO. Operations is the part that I will miss the most, but the good news is that our business is not run in Houston. it is not even close to being run in Houston. it is run in the field. And as long as we maintain our culture and stay out of the way of the great companies we have, will always be fine. So I wanted to spend just a little bit more time commenting on acquisitions. Every acquisition we have ever done at Comfort Systems USA was done by a team of people. And every company we have ever bought we pick companies. We certainly qualify but we do not pick companies. They pick us. We give them unlimited time to do--and unlimited access to do due diligence on us. And the reason that we continually win in the acquisition area frequently buying companies at lower prices than other people are offering them. Is because we have worked so hard to make Comfort Systems the best place on planet Earth for somebody who has made their life's work building a great contractor a home for their legacy. And if we continue doing that, we will continue winning because that is why we win in acquisition. And after I leave, we will continue to have a great team. We have a vice president of acquisitions who was carefully selected as a person with the right judgment and temperament to sit in the middle of the team and facilitate things. he is somebody who will not get in the way of Comfort's message, which is all I have ever tried to do. The people who do our acquisitions include Brian E. Lane. They include our CEO, our president, our chief operating officer, our regional leaders, Our head of innovation is very important in acquisitions, guy named Briston Blair. But most important, the thing that we. Makes us win in acquisitions is our field leadership. Always involved in the acquisitions that we do. When we companies where there is overlap, we face that and solve that before we buy a company. We do not have mysteries, and we will figure things out later. I think we will continue to do that. So I think Comfort Systems acquisitions is on a great roll. I think that will continue. I think we will continue to be a trustworthy disciplined company that does acquisitions with conviction. Above all, will be patient. You know, I would say the key to our acquisition program is that we refuse to be hurried We are fast, actually, and we are. When we are ready to go, we go. But we never have to hurry. So I am very, very confident about the future of acquisitions at Comfort Systems. And I just want to say 1 more thing about Comfort. Which is how great comfort is and why I believe it will stay great, and that is our people and our culture. This company is filled from top to bottom with amazing people. And I do not think there is anybody who understands that as well as I do, and there is a lot of people who really understand it. In Houston, every 1 of our crucial functions is led by a great leader, TAC, internal audit, risk management, treasury, insurance, every 1 of them, people you know, most people on this call will never meet the--the great people we have, people with names like Adam and Amy and Anna and Barbara and Byron and Elvira and George, Eli, Jay, Jordan, Julie, Judy, Michael, Wayne, and more. I could not possibly name them all. The unbelievable group of people with very long tenures at the company, very, very dedicated to our company, and very, very dedicated to its culture. And then we have perhaps even surpassing that, at our subsidiaries, at our companies in all of these states. Texas, North Carolina, New York, Florida, South Carolina, Kentucky. Did I mention Texas? We have unbelievable groups of people who have pulled together to create something that is unmatched in their markets. And that culture has led to the staying power that we have in all our markets led to us making money every year of our existence, just having free cash flow every year of our existence, to us being the best positioned when markets became great, to really take advantage of it, it is that everything I have just described is what created the great results that I am gonna review right now. So that is revenue for the third quarter of 26 was $3.8 billion, an increase of $1.3 billion or 54% compared to last year. Electrical segment revenue grew by 85%, and mechanical revenue grew by 43% Through 9 months, our same store revenue increased 47%, and we expect full year same store revenue will also be in the mid-40% range. We estimate that our same store full year 2027 revenue will grow in the mid-20% range. Gross profit was $934 million for the third quarter 26, $327 million higher than 1 year ago. Our gross profit percentage remained consistent, at a strong 24.8% this quarter. Quarterly gross profit percentage in our Mechanical segment increased to 25.1% this quarter, compared to 24.3% last year. Despite electrical segment revenue growth of over 80%, margins in our electrical segment slipped to 24.3% this quarter, as compared to 26.2% in the third quarter of 25. Last year, we noted that our electrical results were positively impacted in the third quarter by discrete gains, including when a customer emerged from bankruptcy. Those gains improved Electrical segment margins last year by approximately 1.8%, and without that effect, electrical margins were roughly flat. We currently expect that 2027 gross profit margins are likely to continue in the strong ranges that we have achieved in average over recent quarters. SG&A expense for the quarter was $314 million or 8.3% of revenue, compared to $230 million or 9.4% of revenue in the third quarter of 25. And we continue to invest to support our extraordinary growth. Our operating income increased by 65% from last year, from $379 million in the third quarter of 25 to $625 million for the third quarter of 26. Our operating income percentage increased to 16.6% this quarter from 15.5% in the prior year. Our year to date tax rate was 23%, and we expect our tax rate to continue to be around 23% for the rest of 2026. And in 2027. After considering all these factors, net income for the third quarter of 26 was $489 million or $0.03 $13.91 per share. As compared to net income for the third quarter of 25 of $292 million or $8.25 per share. Thanks to great execution by our people. EBITDA increased by 61% to $668 million this quarter from a strong $400 million in the third quarter of 25. Our trailing 12 month EBITDA is now approximately $2.3 billion Free cash flow for the third quarter of 26 was $86 million and year to date, our free cash--our cash flow is roughly $2 billion In addition to strong earnings, we benefited from advantageous payment terms, and favorable collections from large technology customers. Our cash flow this quarter was also higher due to $166 million in income tax payments that we were able to defer until the fourth quarter of this year. In addition to the modular expansions that are underway, we invested over $100 million in CapEx to expand prefabrication facilities for our traditional construction business. We estimate that full year CapEx will be 4% to 5% of revenue and we are likely to continue to incur CapEx at elevated levels during the first half of 27. We actively purchased our shares this quarter, and year to date, we have returned $349 million to our shareholders, and we have retired approximately 212 thousand shares. So once again, expressing my gratitude to the people I mentioned earlier and to the people on this call who have supported us for so long, I am going to turn the time over to Trent. Trent? Trent T. McKenna: Thanks, Bill. And before I start, I just want to thank you for the time I have been able to work with you over the last 22 years. And for taking the taking the chance and hiring me back 22 years ago. I appreciate it. So I am going to discuss our operations and outlook. Our backlog at the end of the third quarter jumped to a record $17.8 billion since last year. At this time, our backlog has increased by $8.4 billion or 90%. On a sequential basis, backlog increased by $3.8 billion or 27%. Third quarter bookings were especially strong in the technology sector both in our traditional construction business as well as the modular part of our business. Industrial customers accounted for 76% of total revenue in the first 9 months of 2026 and they are major drivers of pipeline and backlog. Technology, which is included in industrial, was 59% of our revenue, a strong increase from 42% in the prior year. Our modular operations continue to grow with our established customers and we are building products for new customers, including a frontier lab and colo providers. Although we have not yet entered new arrangements that we would consider programmatic, we continue to explore deeper partnerships with these and other potential strategic partners. Institutional markets, include education, health care, and government, remain strong and represent 16% of our revenue. And the commercial sector provided about 8% of revenue Most of our service revenue is for commercial customers. Overall, our companies continue to execute at high margins. However, this quarter, we experienced a higher proportion of equipment and materials in our cost mix that augmented our sequential revenue growth but dampened sequential margins. Construction accounted for 90% of our revenue, with projects for new buildings representing 75% and existing building construction 15%. We include modular in new building construction and year to date, modular was 17% of our revenue. We remain on track to have over 4 million square feet of space in our modular businesses by the end of 26 and with ongoing orders and investments to meet that demand, we expect to have approximately 6 million square feet of capacity by the end of 27. We also continue to evaluate further investments based on continuing strong demand and customer needs. Service revenue was higher by 13% this quarter but with faster growth in construction, service represents 10% of total revenue. Service profitability was stronger than ever this quarter, and service remains a growing and reliable source of profit and cash flow. I cannot say enough about the amazing team of craft professionals that we have working hard for our customers every single day. Thanks to the teams that are working across the country we are optimistic about our future. I want to close by joining Brian and Bill in thanking our over 25 thousand employees for their hard work and dedication And I will now turn it back over to Michelle for questions. Operator: Thank you. Thank you. As a reminder, to ask a question at this time, please press *11 on your telephone. Our first question is going to come from the line of Adam Thalhimer with Thompson Davis. Your line is open. Please go ahead. Adam Thalhimer: Hey, good morning, guys. Congrats on another great quarter. Julie, congrats on your promotion. And, Bill, congrats to you on your retirement. You will be missed, Bill. Trent T. McKenna: Hey. I want to start with you on the sequential margin decline. Can you give a little bit more color on that? And how should we think about that as we look ahead to margins in the next few quarters? Yeah, I will jump in, and then I am sure Bill will want to add a little bit too. But, you know, sequentially, you know, we just carried a higher, proportion of equipment and materials in our cost mix this quarter. So that is going to add revenue, but equipment does not carry the margin. Our labor does. So the percentage comes down even as the dollars go up. So but, anyway, the way I think about it, I would be careful about focusing on 1 quarter. We have always kind of just--some of this is a little bit depending on what the mix is, and that is what we experienced in the prior quarter. William George: Yeah. And there are other things that contributed to the slight decline. 1 of the things that happens is we do acquisitions, we have purchase adjustments, and certain of those purchase adjustments relate to the changes in the WIP schedule for jobs that were ongoing at the time we closed. Because of that, those purchase adjustments roll through our costs. And those adjustments were, like, $12 million higher in the third than they were in the second quarter. So that was a straight hit to margins. We also have 1 large company in electrical. it is over half of our electrical segment. That company had gross margins in the thirties. In the second quarter, and their gross margins were still unfathomably high. In the third quarter and above average. For our company, but they were not in the thirties. So we just--there are discrete things that happened. What happened, I think, the business has never been better. The other thing is when you see this kind of a jump in revenue, like, percent organic revenue growth in the electrical, a couple of things. 1, we got a big denominator for your fraction, but you also know that we are early in a lot of jobs. And we do not pull out high margins early in jobs. Right? We just wait and we keep contingency. We wait and see how they go. So I cannot-- I do not think there is anything but good news in this quarter, Adam. Adam Thalhimer: And then, Bill, just to pull on that thread a little bit. When you say we are early in jobs, when should we think about the portfolio maturing a little bit? William George: You know, we have reached a point today where it is really hard to answer that question because some of these jobs are multiyear. But I will say, you begin to see profit changes when you are 40, 60, 70% complete. These big jobs. You know, the way that you recognize revenue in our industry is you estimate the remaining cost. it is going to take you to finish a contractual obligation. Early in a job, you do not know what is gonna happen. You do not know how much it is gonna rain. You do not know what the people who are working next to you as other subcontractors are gonna do. So companies that stay in business they keep money in the for the things they do not know. As you get deeper and deeper into those jobs, you begin to you begin to get a better view. And for us, historically, we have had gain on jobs every year of our existence, and they have been bigger than ever lately. So I would say this quarter, definitely early in jobs. I would say next quarter will be on average early in jobs, although there is always closeouts in fourth quarters to some extent just because of the nature of years ending and what customers want you to do. So I guess it is hard to say. I think we will get back to average first half of next year. Adam Thalhimer: Okay. And then, obviously, unbelievable awards in the quarter. In terms of which driving that, would you say that is your traditional data center customers, or there is some new customers starting to creep in? Trent T. McKenna: You know, I mean, they are definitely new customers. creeping in, and demand is just very strong. I mean, our customers. I think part of it is our customers are committing earlier. And for larger scopes because they know that capacity like ours is scarce. right now. And we continue to be really selective what we are looking at So, yeah, it is a. You know, it is kind of all of the above. it is a market right now where the governor is not the man. the governor's really just labor. The ability to be able to get the labor to the work. And, you know, our customers realize that so they are wanting to lock up our capacity. that is why you see what the backlog's doing. Brian E. Lane: And you know what, Adam? it is a real tribute to the folks out there and the quality of work they are doing that we are getting this much repeat business from very sophisticated customers. Really tip your hat to the folks on what they are producing. Adam Thalhimer: Thanks, guys. Trent T. McKenna: Alright. See you. Operator: Thank you. And our next question is going to come from the line of Adam Bubes with Goldman Sachs. Your line is open. Please go ahead. Adam Bubes: Hi, good morning. You talked about building some modular products for new customers, including frontier lab and colo providers. You just the 6 million square feet of capacity you expect by 2027, is the incremental 1 million square feet versus what you targeted by midyear. Is that related to Frontier Labs or new colos? Or is that primarily your 2 hyperscaler customers? And then can you just expand on the engagement, those conversations with the frontier lab and colos, what are they asking you in terms of scope of work, potential output? Trent T. McKenna: Yeah. So the so the answer to this, the build out that we just talked about to $6 million is based on our current programmatic build outs with the customers that we already have. And, you know, on the new customer front, yes, we are building products right, for frontier lab and colocation providers. And that is real work, and we are proud of it. But we have not yet entered agreements with them that we would call programmatic, and we are not gonna call them that until we believe they are programmatic. Right? So the build out that we have announced is all for existing capacity that is, with our current customer base in Modular. William George: I might--and you might you might--if you were. If you are living in the paradigm over the last 30 years, like I sometimes do, you might say, oh, they have not yet sold. Business to these people. The reality is we have not yet reached terms where we are willing to accept business from these people. Right now, you know, 1 of the things that is front and center for us is the ability to pay. Right? So if we do something programmatic--typically, our programmatic people have made 5 year volume commitments to us, and then we have gone out and spent large amounts of CapEx to build space that is going to primarily build their product. And I think not just in not just in Modular, but across our business. We have a long history and a long set of experience that really, really takes into account the financial strength of our counterparties. And not that these people do not have financial strength because they do. But we do not. We think there are various considerations as you compare the customers that we do work for. Trent T. McKenna: 1 other thing too, and I am sure I am not telling you anything you have not already, you know, realized but module is 17% of our revenue. it is growing staying 17% because the rest of our business is also seeing really great demand as well. Adam Bubes: Got it. All super clear. And then, Bill, you referenced the projects in sort of earlier stages of completion if you look at catch up adjustments, the impact on revenues this quarter, I think it stepped down to 4.5% from closer to 8% of revenues in the first half of the year. Am I thinking about this right? Because if you kind of strip those impacts out, it looks like underlying gross margins actually continue to increase sequentially. Is that the right way to think about core execution? And does that give you confidence based baseline margins can continue to expand as new projects mature? William George: Well, I was with you all the way to the last sentence because we do not. We do not we do not represent that margins will go up in the future. We do say. We do know that things that are have been driving them up are still apparent for us. And if anything, they are at least as strong as ever. I will say, every. What you said plus things I can see that nobody could see unless they were sitting in Julie's or I's. Or Michael's seat, such as this point about the mix in our cost that. Trent mentioned of a higher part of our cost by a couple percentage points, our cost of goods sold has more material and equipment passing through it. there is nobody who runs a business for us. Who worries about their return on wire. They worry about their return on electricians and plumbers. And our gross profit per hour worked is continues to get better. So I agree And more. Trent. Adam Bubes: Thanks so much, and congrats, Bill and Julie. Operator: Thanks. Thank you. And 1 moment for our next question. Our next question will come from the line of Sangeetha Jain with KeyBanc. Your line is open. Please go ahead. Sangita Jain: Thank you. Good morning. Congratulations, Bill, and congratulations, Julie. So I just wanna ask on the mechanical backlog. Which saw a more meaningful jump than the electrical backlog. And I was wondering if you could break down the makeup of that, whether it may be modular and traditional business. William George: You know, backlog's really lumpy. I do not think there is any different trend between the 2. I just think in any given quarter, 1 might book more. 1 might book less. Well, 1 might book vastly more and the other might book even more vastly more the way things are going. But at some point, I do not think there is any differential there. I think all of any of our. Of our 40 of. Let's say we have 40 businesses, 20 or highly exposed. To the super cycle. Those people have more work than they can do. They are they are choosing how much they take. You know, it is really astonishing that our backlog went up this much in summer months. Brian E. Lane: Yeah. William George: I think about the burn. Look at our revenue. This is a really, really special. that is a really, really crazy amount of bookings. Brian E. Lane: And I will say what is also crazy about it is that Brian E. Lane let. Approved it. Brian E. Lane Brian E. Lane gets, you know, Brian E. Lane, Trent get on calls for the biggest jobs, and they talk through you know, what are we doing to make sure we are safe. We have a whole program for large projects we monitor them even more closely. By the way, we are not kidding ourselves that anybody in Houston is performing anything, but we did really try to stay on top of it. William George: I do not think we. I. Our backlog's the best it is ever been, Brian. Brian E. Lane: Best I have ever seen to fill, and the activity level out there is as strong as I have ever seen it. William George: Yeah. Sangita Jain: Alright. So then can I ask a follow-up on this? On backlog? Given that you are booking, it seems larger projects, how should we think about the duration of that backlog I know historically, it is been under a year, but can you tell us how that has changed in recent quarters? Brian E. Lane: Yeah. I mean, I think if you look at the backlog, we are winning now. We are obviously winning larger projects, and I think the time frame is probably pushed out to 18 to 24 months. As opposed to 10 years ago, 9 months, was the best look see we had for sure. But the size of these jobs, the duration of them, where they are, has extended the backlog. To roughly 18 to 24 months. I think Sangeeta would be a good framework. Sangita Jain: Got it. Thank you, Brian. William George: Yeah. I want. And. Go ahead. Trent T. McKenna: No. I was just gonna say, Sangeetha, 1 way to look at is just that when I look at the backlog right now, what it did in the quarter, right, is demand is just you know, for what our people do remains well. In excess of what the industry can actually deliver, and we are being able and we are being able to do and we are being asked to do and deliver more of it, than ever before. So that is that is what I really take away from how strong the backlog was in this quarter. Sangita Jain: Got it. Thank you, Trent. Operator: Thank you. And 1 moment for our next question. Our next question will come from the line of Brent Edward Thielman with Oppenheimer and Co. Your line is open. Please go ahead. Brent Thielman: Hey. Thank you, Bill, Julie. Course, congrats to both. Trent career here, Bill. I guess, you want to pick up maybe, Bill, where you were talking a little bit on comfort focused on you know, quality of customers, so to speak. Obviously, data center, balance sheets, financing is a big topic. In the market. Maybe if you could talk us through how you are how you look at that, your operations look at that, how corporate looks at and scrutinizes those customers. And I guess, especially with regard to the pipeline of new potential projects, it sounds very healthy. I am assuming that includes companies with you know, available financing to push this through. If you could just talk to that. William George: that is very textured. So you have the ultimate customer, but outside of modular. And I know we are. You. This came up in the context of modular. But outside of Modular, the payment obligation is actually typically coming from a large national GC. Right? And then in Modular, you have you know, we do get mobilization payments, and then we have payments upon delivery. We are typically. At this point, we are vastly ahead with our programmatic customers. And, you know, based on very open with each other, negotiations. The other thing that you look at is what is the labor that you are doing, whatever you are building, are you building something that other people would want? Right? Because we have lien rights in our business where we get to. You know, they go back to the English common law. Right? A thousand years ago, where we have the right to seize the building if we do not get paid. So 1 of the things that we learned to look at over the years is this a building there would be many, many people who would want? Or is this a building like. We. We are involved in a way for construction, a construction of a plant that made wafer using a certain technology where we knew that large and very expensive building would be pretty useless to anybody but the person building it. And so we in that case, asked for very special terms where we were paid every 2 weeks and we had the right to leave on very short notice. So it is it is very. There are many, things that you take into account when you try to figure this out. So. And, you know, by the way, there are people rolling into modular now who are taking large books of business who we think are agreeing to payment terms where they are banking some people. And so you know, if we lose work on that basis, we do not mind it. Brent Thielman: Okay. Maybe another sort of point of concern out there. Just with the technology or data center project opportunities that are out there that you are looking at that are not reflected in huge backlog today, presumably over the next few years, I guess any sense for how many of those you are looking at already have power connections figured out? Trent T. McKenna: It pretty much. it is the things we are looking at as prospects. The power connection is usually already solved. William George: Right. Trent T. McKenna: If anybody stroked a check for us to do design work, to make our engineers Because of where we sit in the cycle. Right? We are pretty late cycle player in the design of a building. And so, you know, for our for our traditional construction business, you know, there are not a lot of. I am I am not aware of a lot of things in. That we are looking at prospect pipeline wise where the power has not already been solved. Brian E. Lane: And I gotta tell you, it really has not delayed anything we are seeing at. Trent. And a lot of these data centers is generating their own power anyway. So folks are gonna solve their problem 1 way or another. Brent Thielman: Okay. Just a quick technical question. The operating margins in the Mechanical segment have come up a lot. This year, including the third quarter. Is that primarily due to better profit margins in Modular compared to last year, at least on an operating basis? William George: Essentially, are you getting better fixed cost leverage there? And that is that is a big In the mix, that is that is the large. that is the single largest driver in the mix. There is actually higher margins out for the 9 months. For sure, in pretty much all parts of that work, but modular has really closed the gap with the rest of the business to come really up to parity with our average margins and, of course, mathematically, that changes the mix I am just gonna throw props to 1 company that is doing an unbelievable job on piping. Brian E. Lane: Really throughout the country, and their margins have been improved significantly. Is doing a heck of a job. Yeah. Very good. Brent Thielman: Okay. Thanks, all. Appreciate it. Operator: Thank you. And 1 moment for our next question. Our next question will come from the line of Joshua Chan with UBS. Your line is open. Please go ahead. Joshua Chan: Hi. Good morning, and congrats Bill and Julie. Both, truly very well deserved. Congrats. My first question, could you talk about the magnitude of the orders that you took in, in the quarter? I mean, it. it is sort of billions of dollars more than you taking in any other quarter and so maybe. I know that the demand is obviously really strong, but just kind of you know, what drove that decision, the confidence around being able to phase it out and things of that nature? Brian E. Lane: Yeah. Well, you know, the first. Joshua. So the first part of that is that the timing of the work, we can handle. We have the personnel to do it. The locations are working in our in our favor. And in the most, you know, the most important thing is your slash. You know, your labor availability over when it is gonna go. So as Bill said earlier, when we were with our operating companies looking at these opportunities, where they are, We are very confident we can handle all the work we have right now with the forces we have. And we are also very fortunate the company of this size, that the companies collaborate, work together, add that on to have a good traveling workforce. So when you add all that up, we are very confident in executing the level of backlog we have today. Joshua Chan: that is great to hear, and, obviously, great backlog. I guess my follow-up, could I ask about the margin comment about the mix of materials? Because I obviously understand the mathematical reason for that, but it over the years, it is very rare for you to call out that mix as a driver. And so I was wondering if anything large specifically happened this quarter where that mix was more impactful than usual. William George: So material and equipment was about 2% higher than it had averaged in the first 6 months. The only other time we brought that up was during COVID because there was so much inflation in materials and equipment. I think that they just met the dollars of them just became such a bigger part of our cost mix. I think in this case, a big part of it is the earliness of the job. So a lot of stuff Mhmm. Gets delivered. They are. Earlier in a job, there is. You know, you are doing very, very long pipe runs and things like that. Think some of that actually comes back to the earliness of the job. Joshua Chan: Some of it is just it is lumpy, and that is just the way it is. Trent T. McKenna: To print. William George: I mean, what do you. Trent T. McKenna: I mean, Yeah. Everything you said, Bill, is correct. You know? So it is really. You know, where are those large projects are in their life cycle and where we are in, you know, in ordering that equipment. Joshua Chan: Okay. Trent. Yeah. Thanks for the color, and, congrats on the quarter. Operator: Thanks. And 1 moment for our next question. Our next question will come from the line of Timothy Mulrooney with William Blair. Your line is open. Please go ahead. Timothy Mulrooney: Yeah. Thanks for taking my questions. Good morning. The first question I wanted to ask about is on the on the backlog, obviously, very strong result. But we do not see. You know, we do not have insight into the individual conversations that you are having. So I am wondering with all the political rhetoric around data center moratoriums heading into the election, other regulations that governors are proposing around data center construction, Just curious if you have seen any change in any project schedules or push out in the pipeline in any of the states. William George: So I would say. And having talked to 1 of our biggest companies in the last day or 2, the answer is generally no. Like, have not. Literally, I do not know of a project where 1 of these considerations has changed its trajectory. I will say, I think on a big more macro level, I have a sense, and I have talked with people who. You have given me this sense. This may push more of the work nationally into more sort of friendly jurisdictions. So if you were if you were if you were a large hyperscaler and you were laying your bed on which states you wanted to do work in, I think you sort of wear your future. Where you place your bets where you go do your work and make your commitments is going to be influenced by your perception of whether the governor in that state wants people in that state to have jobs. Right? And, so I do think it. I do think. I am not saying it has no effect, but I do not know. Like, I do not think it a micro level we have seen any effect whatsoever. Brian E. Lane: Timothy, I can tell you, for the work we have today, what we are seeing here at Comfort Systems we have not been delayed by any moratorium. Trent T. McKenna: You know, 1 thing more to think about too is that modular is even less exposed because it ships to wherever the customer site is. So it is it is also something keep in mind for that 17% of our business. Timothy Mulrooney: Okay. that is really helpful color. And just on the modular business, by the way, my just my last question here. I am curious why you have not why you have not added any more programmatic customers in your modular business. I know you touched on this earlier, but the demand is clearly there. Could you just walk me through that decision metrics around that a little bit more? Thank you. William George: I will start. I will start. So this happens in the real world. Right? We are talking about 250 thousand 600 thousand 700 thousand-square-foot buildings that are being built out with rows of robots and automated paint booths and turntables and have to be staffed with you know, thousands ultimately of people. And so we think we have grown unbelievably fast. We do not. This is not scalable the way you can just print another copy of software. And honestly, we have tended to stick with our 2 big customers who have kept us you know, kept us happy together for so in 1 case, for 20 years, because we know them. It works. They want more than we can buy. They are. They cannot buy enough from us. To the point where they are looking at other sources of supply. So another way of asking it, the other side of that question is, why would we divert from a sure thing to sort of a mystery? Right? Trent T. McKenna: Yeah. William George: Yep. Timothy Mulrooney: Makes total sense. Thanks for the color, guys. Bye. Take care. You. Operator: And 1 moment for our next question. Our next question is going to come from the line of Julio Romero with Sidoti and Company. Your line is open. Please go ahead. Julio Romero: Thanks. Hey, good morning and again, Bill, congrats on your retirement. And Julie, congrats on the CFO role. Well deserved. Hey, Trent. You mentioned earlier that, your customers understand that labor is the governor. I guess, if that is the case, know, what lever would expand that fastest, would it be training? Would it be yeah, modular automation or digital field tools? And what kind of growth in your headcount does mid twenties growth in 2027 require? Trent T. McKenna: it is going to require growth. I mean, we are over 25 thousand. Today. Right? And we have done. We have grown that kind of the way we have always done it. Right? Where our company's strive to be the best place for craft professionals to work. We pay well. We train relentlessly. And we are always trying to keep people busy on good projects with good conditions. that is what that is what a craft professional is interested in. Obviously, our traveling workforce has helped a lot. In this, and our contract craft operations at Kodiak and Pivot have helped as well. And acquisitions like Hunt and Voice have already let us put people where the work is. Right? So there is a lot of ways we are doing it. And, you know, our companies, we have. You know, we have planned. You know, the 1 key thing about us is that, if we have taken work it means we have labor planned against every planned against every dollar in that backlog. So that is 1 thing about us. When we look at something, you know, to Bill's point earlier where you talked about Trent and Brian looking at work, it is always the question's always, well, do we have the labor to do it? And then it is labor planned before we ever agree to it. So you know, as we look into the future in that mid twenties, we will have to add people, but we will just do it the way we have always done it. And, you know, and that is really. The easiest way to kinda sum that up is we wanna be the best place for a craft professional to build their career. We will continue to try to be that place. that is a lot of. there is a lot of things that go into that, but that is the easiest way to understand it. Brian E. Lane: Oh, I have been doing construction a long time, probably more than I wanna remember. But we really do treat people with respect and feeling here, and I think that really matters when you bring people in. And they stay with us. I think it is really important what the culture of this company is and how we get people to go work where they go work. Trent T. McKenna: Yeah. And I wanna I wanna. If it is okay, Brian, I wanna add to that because, you know, if you look at what our people. The 25 thousand plus just did over the last 3 months, know, they were working in the hottest months of the year. Yeah. Many of them many of them were on the road away from their families. And they still delivered safely on schedule with great quality for our customers that is. You know, I just wanna take my hat off to them and commend them on the on the work that they performed and how grateful I am for what they have done. Julio Romero: Thanks. Really helpful there. And then maybe just asking again about what you mentioned earlier about programmatic relationships. Typically involving multiyear volume commitments and enough visibility to support CapEx. Earlier, know, to another question you stated, why would you divert from those the 2 large programmatic customers? But I guess what would you need to see from 1 of the newer customers before they could kind of graduate to programmatic, and how important is the financial strength of the customer in those considerations? William George: Yeah. So I would say that the 2 things that you would look for are the nature of the commitment and the payment timing. Right? Payment timing And, also, you actually take into account many of these newer customers are really they are new to building modular you know, hot aisle containment or modular chiller plants. And so 1 great thing about them is they are willing to really listen to our experience and build stuff. And if we build stuff that is constructible, and versatile, that gives us a lot of comfort as well that you know, it is valuable to them or to someone else or. And maybe more importantly that the capacity that we set up to build for them you know, has a lot of outlets. So you know, none of it is mysterious. You could sit and think of it. Nobody here is a genius who is thought something new. it is exactly what you would think. Julio Romero: Very helpful. I will pass it on, and congratulations again. Trent T. McKenna: Thanks. William George: Thanks. Operator: Thank you. 1 moment for our next question. Our next question will come from the line of Kurt Yinger with D. A. Davidson. Your line is open. Please go ahead. Analyst: Trent. Thank you, and good morning, everyone. I just wanted to go back to the point on capacity. I guess, for those operating companies that are doing larger data center work, much capacity, so to speak, is just left looking at the projects and backlog and how that carries you through next year and guess what I am ultimately trying to get at is thinking about bookings the next couple quarters and whether the outsized performance this quarter maybe takes away from what we might expect looking forward. I think that first of all, that question does not have, like, a mathematical answer. William George: there is no gauge. Right? And Right. Your willingness to stretch to accept work has to do with work you know, the nature of that work, the flexibility that you are given, the timing, I would say, our guys it. it is certainly the case that if we book more in 1 quarter, we might not. We might book not as much in a future quarter. My sense is our guys have. You know, they are gonna continue to book the work probably continue to book farther out. At this moment, the conditions are extremely supportive with no sign of that changing. I do not know. it is. But I cannot you know, cannot change the fact that you do not collect a dollar twice You do not book the same job twice. Right? Brian E. Lane: And, you know, Kurt, we will remain. We do remain in what we are gonna take. We are we are. The big driver for us we are not gonna take work that we cannot do. At a very high level. So know, that to me is the overriding factor when we look at these things. And. But we have world class people out there looking to work, doing the work. So handle what we can handle, and we will see how it goes. But I we will keep booking work. I do not know. As we go farther and farther out. Analyst: K. That makes sense. And then just second on capital deployment. I mean, given the level of cash generation guess I am just curious looking at historically, as a percentage of that, what you have deployed towards M&A? How does kind of the current landscape look? And in terms of the ability to continue to do that? And how does that maybe impact the thinking or aggressiveness that we might expect from kind of a share repurchase perspective going forward? William George: So we look at these decisions over years, not months or quarters. We have a very, very good acquisition pipeline, but, of course, pricing for acquisitions is has been high. I think it might be. That might be rolling over right now with interest rates and with you know, the continued lack of exits for certain private people, but we will see. Of. We have always bought our shares more aggressively when they dip. Right? Over a long period of time, we typically use. We have used 15 to 20% of our free cash flow to buy shares. But if you look over the time we bought them since 2007, we buy a lot more during deep seek in 2 week. In a 2 week period. We brought. We spent $200 million. Right? And the $200 million by the way, more than a year ago was more to us than it is today. We spent $200 million this last quarter. So I guess all of those things are. We are do exactly what you would do. We have a lot of confidence in our future. We have a lot of confidence in stock buybacks, especially when the price is softer. We have a really good acquisition pipeline, but we will not we will not do a deal just because we have money and that you. By the way, 1 turn of EBITDA in cash we have had that many, many times in the past. This is not. it is a big a dollar amount, but it is not it is not a big dollar amount. On the scale of what comfort is yet. Analyst: Okay. That makes sense. Thank you for the color. Operator: Thank you. And in the interest of time, our last question is going come from the line of Brian Brophy with Stifel. Your line is open. Please go ahead. Brian Brophy: Yes, thanks. Good morning. Appreciate taking the question. Bill, Julie, congrats to you both. Bill, quite an incredible career. And truly very well deserved. I guess just 1 for me, Curious if there is any area geographic exposure that kind of stand out this quarter in terms of relative strength or weakness that is worth calling out? Obviously, it sounds like Texas remains quite strong, but curious if there is other regions that are notable. Thanks. Brian E. Lane: Yeah. I will just. I will go. You hit it right on the head. Texas, really strong. Georgia, strong and getting stronger. We have seen a lot in, you know, Mississippi, Louisiana. We do not do much work in, but Louisiana is strong. And then, of course, you got North and South Carolina in the Southeast areas, but you know, Texas right now is really strong. Utah is very strong. William George: Bill, any other Iowa. Brian E. Lane: Oh, yeah. Iowa. William George: Okay. I was woken up. there is a new Yeah. there is a new 1, sir. Yeah. Yeah. Brian E. Lane: If you are talking about the areas of what we consider above normal strength, those would probably be the territories You know, by the way, we. I am not saying we will play there because we may choose other but Arizona is the semi. The next phases of some of the big semiconductor work is about is about to hit. We have opportunities there. I do not know that we will take very much of that because we are so busy in Texas. But if you are just asking about geographies, there is some monster work in Arizona. Brian Brophy: Very helpful. I appreciate it. I will pass it on. Congrats again. Operator: Thank you. I would now like to hand the conference back over to Brian E. Lane for closing remarks. Brian E. Lane: All right. In closing, I want to thank our teams across the country for their dedication, skill, and excellence they bring to serving our customers every day. Demand remains strong, and our people continue to rise to the challenge of meeting an unprecedented need for their expertise. Conditions remain favorable for continued strong performance, And we have the resources and commitment to build on that momentum. Thank you for your confidence, and I hope you all have a great weekend. Operator: Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day. Before you buy stock in Comfort Systems USA, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Comfort Systems USA wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $361,596!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,303,935!* Now, it's worth noting Stock Advisor's total average return is 910% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 23, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Comfort Systems USA. The Motley Fool has a disclosure policy. Comfort Systems (FIX) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

- Interested in Comfort Systems USA, Inc.? Here are five stocks we like better. - Q3 results surged: Net income rose 68% to $489 million, while revenue increased 54% to $3.8 billion. Growth was driven by strong construction demand from technology and industrial customers, plus expanding electrical and modular operations. - Backlog reached a record $17.8 billion, up 90% year over year and marking the eighth consecutive quarter of sequential growth. Management said the backlog now generally spans 18 to 24 months, though labor availability remains a key capacity constraint. - Management maintained an optimistic outlook, projecting mid-40% same-store revenue growth in 2026 and mid-20% growth in 2027. The company also expects elevated capital spending through the first half of 2027 to expand modular and prefabrication capacity. - 3 Stocks Built for Higher Rates—And 2 That Could Break Comfort Systems USA (NYSE:FIX) reported sharply higher third-quarter results, supported by strong demand in construction activity, particularly from technology and industrial customers, and continued growth in its electrical and modular operations. The company earned net income of $489 million, or $13.91 per share, for the third quarter of 2026, compared with $292 million, or $8.25 per share, a year earlier. Revenue increased 54% to $3.8 billion. Chief Executive Officer Brian Lane said the company's mechanical business saw an "extraordinary increase" in activity and profitability, while the electrical segment delivered substantial organic growth. → The AI Buildout Is Only 15% Complete—Here Is Where the Next Dollar Actually Goes - Beyond Big Tech: 3 Non-Tech Earnings Winners to Watch "Construction is driving most of our results, but service revenue and profit also grew by double-digit percentages," Lane said. Service revenue increased 13% from the prior year and represented 10% of total revenue, while construction accounted for 90%. Comfort Systems ended the quarter with backlog of $17.8 billion, a record level and an increase of $8.4 billion, or 90%, from a year earlier. Backlog rose $3.8 billion sequentially, marking the company's eighth consecutive quarter of sequential backlog growth. → GM Beat and Added a $20 Billion Buyback—Why Did the Stock Fall? - Forget Chips: These 3 Stocks Are Building the AI Data Center Boom President Trent McKenna said bookings were especially strong in the technology sector across both traditional construction and modular operations. Industrial customers accounted for 76% of revenue during the first nine months of 2026, while technology-related work represented 59% of revenue, up from 42% in the prior-year period. Management said the duration of backlog has increased as the company takes on larger projects. Lane estimated that the current backlog generally extends about 18 to 24 months, compared with roughly nine months a decade ago. → Tech Stocks Took a Hit—These 2 Pharma Stocks Are Near New Highs Company executives said labor availability remains a key constraint on industry capacity, but said Comfort Systems evaluates staffing needs before accepting work. Lane said the company remains disciplined in selecting projects and will not take on work it cannot execute at a high level. Gross profit rose to $934 million from $607 million a year earlier, while the gross margin remained at 24.8%. Mechanical segment gross margin improved to 25.1% from 24.3%. Electrical segment gross margin was 24.3%, down from 26.2% a year earlier, though management noted that the prior-year electrical margin benefited from discrete gains, including a customer bankruptcy emergence, that added approximately 1.8 percentage points. Chief Financial Officer Bill George said margins were affected by a higher proportion of equipment and materials in the cost mix, which increased revenue but carried lower margins than labor-intensive work. The company also cited higher acquisition-related purchase accounting adjustments and the early stage of several large projects. "Our gross profit per hour worked continues to get better," George said, adding that the company does not recognize all potential gains early in a project because it retains contingencies until work progresses further. Operating income increased 65% to $625 million, and the operating margin improved to 16.6% from 15.5%. EBITDA rose 61% to $668 million, with trailing 12-month EBITDA reaching about $2.3 billion. The company said it expects 2027 gross margins to remain within the strong ranges achieved in recent quarters. Modular operations represented 17% of year-to-date revenue. Comfort Systems expects to have more than 4 million square feet of modular production space by the end of 2026 and about 6 million square feet of capacity by the end of 2027. McKenna said the planned expansion is based on existing programmatic customer relationships rather than new arrangements with Frontier Lab or colocation providers. The company is building products for those newer customers but has not yet reached agreements it considers programmatic. George said that when evaluating new modular relationships, the company considers the customer's commitment level, payment terms, financial strength, and whether the products and dedicated capacity could be used for other customers. He said Comfort Systems has remained focused on its two large existing programmatic customers, which have made multiyear volume commitments. Third-quarter free cash flow totaled $806 million, bringing year-to-date cash flow to roughly $2 billion. The company said cash flow benefited from favorable payment terms and collections from large technology customers, as well as $166 million of income tax payments deferred into the fourth quarter. Comfort Systems invested more than $100 million in capital expenditures during the quarter to expand prefabrication facilities for its traditional construction business, in addition to ongoing modular investments. It expects full-year capital expenditures to equal 4% to 5% of revenue and anticipates elevated spending through the first half of 2027. The company repurchased shares during the quarter and has returned $349 million to shareholders year to date, retiring approximately 212,000 shares. It also raised its quarterly dividend by $0.10 to $1 per share. Comfort Systems announced that George will retire following the company's 2026 results, ending a 30-year tenure with the company. Julie Shaeff, currently chief accounting officer, will succeed him as CFO shortly after the results are reported. Lane said the company also acquired Boys Electrical of Melbourne, Florida, and NeoPod, a healthcare-focused modular company based in New Braunfels, Texas, on Aug. 1. The acquisitions are expected to contribute more than $100 million in annual revenue at favorable margins. Management said it expects full-year same-store revenue growth in the mid-40% range for 2026 and same-store revenue growth in the mid-20% range for 2027, citing continued demand and a growing project pipeline. Comfort Systems USA, Inc (NYSE:FIX) is a provider of mechanical and electrical contracting services for commercial, industrial, and institutional customers. The company designs, installs, maintains, repairs, and replaces heating, ventilation, air conditioning, and temperature-control systems, as well as plumbing, piping, electrical, and related building systems. Its services support new construction, building renovations, facility upgrades, and ongoing maintenance. Comfort Systems USA also provides specialized services for data centers, manufacturing facilities, healthcare buildings, educational institutions, and other complex commercial and industrial projects. Founded in 1997 and headquartered in Houston, Texas, the company operates through a network of regional contracting businesses serving customers across the United States. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "What Comfort Systems USA (FIX) Said on Its Q3 Earnings Call" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - Record results were driven by an extraordinary increase in activity within the Mechanical and Electrical segments, particularly serving the technology and industrial sectors. - Industrial customers accounted for 76% of total revenue, with technology-specific projects rising to 59% of revenue compared to 42% in the prior year. - The company is experiencing a 'super-cycle' where demand for specialized labor significantly exceeds industry capacity, allowing for high selectivity in project acquisition. - Sequential margin dampening was attributed to a higher proportion of equipment and materials in the cost mix, which generates revenue but carries lower margins than labor. - Modular operations reached 17% of total revenue, with management focusing on programmatic relationships that offer multi-year volume commitments and favorable payment terms. - Management attributes acquisition success to a 'home for legacy' culture, often winning deals at lower prices than competitors by offering founders operational autonomy. - Backlog duration has extended to 18-24 months, a significant increase from the historical 9-month window, reflecting larger project scopes and longer-term customer commitments. - Modular capacity is projected to reach 6 million square feet by the end of 2027, up from the 4 million square feet expected by the end of 2026. - Same-store revenue growth is estimated to be in the mid-40% range for full-year 2026, moderating to the mid-20% range for 2027. - Elevated CapEx spending of 4% to 5% of revenue is expected to continue through the first half of 2027 to support prefabrication and modular facility expansions. - Management anticipates that gross profit margins will remain in the strong ranges achieved over recent quarters as early-stage projects mature and contingencies are released. - CFO Bill George announced his retirement after 30 years, with Chief Accounting Officer Julie Shaeff named as his successor to ensure leadership continuity. - The company completed two acquisitions on August 1st, Lewis Electrical and Neopod, expected to contribute over $100 million in annual revenue. - Free cash flow was bolstered by $166 million in income tax payments deferred until the fourth quarter of 2026. - Management highlighted labor availability as the primary 'governor' or constraint on growth, rather than market demand or project financing. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - The decline was driven by a 2% increase in material/equipment mix and $12 million in purchase adjustments from recent acquisitions. - Management noted that many large projects are currently in early stages where high margins are not yet recognized due to conservative contingency accounting. - Management is prioritizing existing 'sure thing' hyperscaler customers who currently demand more capacity than Comfort Systems can supply. - New customers must demonstrate extreme financial strength and agree to specific payment timing before being granted programmatic status. - Management has seen zero micro-level impact on project trajectories or schedules due to regulatory or political headwinds. - They suggested that restrictive regulations in certain states may simply push hyperscaler investment toward more 'friendly' jurisdictions where Comfort Systems also operates. - Management explicitly stated they do not accept work unless labor is already planned against every dollar in that specific backlog entry. - The company utilizes a traveling workforce and internal craft operations (Kodiak and Pivot) to move personnel to high-demand regions like Texas and Arizona.

Comfort Systems USA, Inc. (FIX delivered impressive third-quarter 2026 results, with earnings and revenues surpassing the Zacks Consensus Estimate and increasing sharply year over year. The quarterly performance reflected robust demand across technology-related projects, strong execution and continued expansion in construction activity. Backlog reached $17.81 billion, reinforcing management's confidence in sustained growth and profitability. FIX shares dipped more than 6% in after-hours trading on Thursday, Oct. 22, 2026, following the release of its third-quarter 2026 results. The decline reflected concerns over the absence of forward guidance and the company's CFO transition. The company announced that longtime chief financial officer Bill George will retire after the filing of its 2026 annual report, ending a 30-year tenure. Julie Shaeff, currently chief accounting officer, will succeed him. Comfort Systems USA, Inc. price-consensus-eps-surprise-chart | Comfort Systems USA, Inc. Quote The company reported earnings per share of $13.91, which topped the Zacks Consensus Estimate of $12.71 by 9.4% and increased 68.6% from $8.25 reported in the year-ago quarter. Revenues of $3.77 billion surpassed the consensus mark of $3.35 billion by 12.5% and rose 53.7% from $2.45 billion generated in the prior-year quarter. The improvement reflected strong demand, increased project activity and contributions from acquired businesses. Comfort Systems generated Mechanical segment (which accounted for 68.6% of total revenues in the quarter) revenues of $2.58 billion in the third quarter, up 42.7% from $1.81 billion in the prior-year quarter. The segment's operating income increased 63.2% to $469.6 million from $287.8 million a year ago. The Electrical segment's revenues (which accounted for 31.4% of total revenues) surged 84.8% year over year to $1.18 billion from $640.5 million. Segment operating income climbed 60.4% to $173.6 million, supported by increased activity across electrical contracting operations. Technology customers accounted for 60.8% of consolidated revenues compared with 45.8% a year ago. Manufacturing represented 16.8%, followed by healthcare at 6.3%, education at 4.6% and government at 3.7%. New construction contributed 76.2% of quarterly revenues, up from 65.2% in the year-ago period. Existing building construction accounted for 14%, while service projects and service calls, maintenance and monitoring represented 5.1% and 4.7%, respectively. Backlog as of Sept. 30, 2026, totaled $17.81 billion, increasing 26.7% from $14.06 billion at June 30, 2026, and jumping 90% from $9.38 billion reported a year ago. On a same-store basis, backlog climbed to $17.39 billion from $9.38 billion in the prior-year period, highlighting substantial organic growth in the company's project pipeline. Management attributed the strong order momentum to sustained demand and the company's execution capabilities. Approximately 65-75% of remaining construction performance obligations are expected to be recognized as revenues over the next 12 months, providing visibility into future business activity. Gross profit increased 53.7% to $934.5 million from $607.9 million a year ago. Gross margin remained stable at 24.8%, reflecting consistent profitability despite the significant expansion in revenues. Selling, general and administrative expenses increased 36.8% to $314.2 million. However, SG&A expenses as a percentage of revenues improved to 8.3% from 9.4%, indicating better expense absorption as business volumes expanded. Operating income surged 64.8% to $624.6 million from $378.9 million in the prior-year quarter. Operating margin expanded 110 basis points to 16.6%. Adjusted EBITDA increased 61.4% to $667.9 million from $413.9 million. Adjusted EBITDA margin improved 80 basis points to 17.7%, reflecting stronger operating profitability. As of Sept. 30, 2026, Comfort Systems had cash and cash equivalents of $2.16 billion, up from $981.9 million at 2025-end. Total debt declined to $49.6 million from $145.2 million, strengthening the company's financial flexibility. During the quarter, net cash provided by operating activities increased 82.6% to $1.01 billion from $553.3 million a year earlier. Free cash flow rose to $805.6 million from $519 million, despite higher capital expenditures. The company also paid dividends of 90 cents per share during the quarter, compared with 50 cents a year ago. Share repurchases totaled $340.9 million, reflecting continued shareholder returns alongside investments in business expansion. Comfort Systems' management maintained a positive outlook, supported by strong customer demand, an expanding project pipeline and consistent operating execution. The company expects to sustain organic growth, high profitability and solid cash generation through the remainder of 2026 and into 2027. Management emphasized that continued demand and workforce capabilities position the business to capitalize on opportunities across its key markets. Recent acquisitions also expanded the company's operating capabilities. During the third quarter, Comfort Systems acquired Boys Electrical Contractors in Florida and a Texas-based modular construction business, strengthening its presence across electrical services and customized building components. Comfort Systems currently has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. KB Home KBH reported third-quarter fiscal 2026 earnings of $1.05 per share, beating the Zacks Consensus Estimate of 88 cents by 19.3%. Earnings declined 34.8% from $1.61 per share in the year-ago quarter. KBH's total revenues of $1.30 billion surpassed the consensus mark of $1.29 billion by 0.4% but dropped 20% year over year. Results reflected lower deliveries and continued pricing pressure, partly offset by progress in the company's Built to Order model. BTO homes represented 74% of deliveries, supporting sequential improvement in housing gross margin. Lennar Corporation LEN reported weaker-than-expected third-quarter fiscal 2026 (ended Aug. 31) results. Adjusted earnings of $1.23 per share missed the Zacks Consensus Estimate of $1.29 by 4.7% and fell 38.5% from $2.00 per share a year ago. Lennar's total revenues of $8.05 billion missed the consensus estimate of $8.33 billion by 3.4% and declined 8.6% year over year. Lower deliveries and home prices weighed on results amid affordability pressure. Inventory turn stood at 2.4 times. United Rentals, Inc. URI reported third-quarter 2026 results, with adjusted earnings per share and total revenues beating the Zacks Consensus Estimate and increasing year over year. URI's adjusted earnings of $15.55 per share topped the Zacks Consensus Estimate of $13.83 by 12.4% and grew 32.9% year over year from $11.70 per share. URI's total revenues rose 15.7% year over year to $4.89 billion and surpassed the consensus estimate of $4.69 billion by 4.3%. United Rentals management raised its revenue outlook to $18-$18.2 billion from $17.5-$17.8 billion. Adjusted EBITDA is now projected at $8.3-$8.4 billion compared with $7.98-$8.13 billion previously. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Comfort Systems USA, Inc. (FIX) : Free Stock Analysis Report KB Home (KBH) : Free Stock Analysis Report Lennar Corporation (LEN) : Free Stock Analysis Report United Rentals, Inc. (URI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

HOUSTON, October 22, 2026--(BUSINESS WIRE)--Comfort Systems USA, Inc. (NYSE: FIX) (the "Company") today reported results for the quarter ended September 30, 2026. For the quarter ended September 30, 2026, net income was $489.0 million, or $13.91 per diluted share, as compared to $291.6 million, or $8.25 per diluted share, for the quarter ended September 30, 2025. Revenue for the third quarter of 2026 was $3.77 billion compared to $2.45 billion in 2025. The Company reported operating cash flow of $1.01 billion in the current quarter compared to $553.3 million in 2025. Brian Lane, Comfort Systems USA's Chief Executive Officer, said, "Strong ongoing demand and consistent excellence by our teams resulted in extraordinary results across every metric this quarter. As compared to the same quarter last year, Comfort Systems USA is reporting a 50% increase in revenue and a 70% jump in per share earnings. We also achieved remarkable cash flow exceeding $1 billion in a single quarter. Our teams continue their superb execution, providing great outcomes for our customers and communities." Backlog as of September 30, 2026 was $17.81 billion as compared to $14.06 billion as of June 30, 2026 and $9.38 billion as of September 30, 2025. On a same-store basis, backlog increased from $9.38 billion as of September 30, 2025 to $17.39 billion as of September 30, 2026. Mr. Lane concluded, "Relentless demand, together with our competence and reputation, produced sequential backlog growth of $3.8 billion, and a year over year backlog increase exceeding $8.0 billion. We continue to experience robust demand, and thanks to the dedication and excellence of our workforce, we believe that through year end and for 2027 we are well-positioned to grow organically, and to maintain high levels of profitability and solid ongoing cash flow." The Company reported net income of $1.30 billion, or $36.94 per diluted share, for the nine months ended September 30, 2026, compared to $691.8 million, or $19.52 per diluted share, in 2025. The Company also reported revenue of $9.90 billion for the nine months ended September 30, 2026, as compared to $6.46 billion in 2025. Operating cash flow for the nine months ended September 30, 2026 was $2.54 billion, as compared to $717.8 million in 2025. The Company will host a webcast and conference call to discuss its financial results and position on Friday, October 23, 2026 at 10:00 a.m. Central Time. To register for the call, please visit https://register-conf.media-server.com/register/BIadd092e43bfe46868f23208875b8c879. 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 https://comfortsystemsusa.com under the "Investors" 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 211 locations in 155 cities across the nation. For more information, visit the Company's website at https://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 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; economic downturns in the markets where the Company operates; shortages of labor and specialty building materials or material increases to the cost thereof; financial difficulties affecting projects, vendors, customers, or subcontractors; unexpected adjustments or cancellations in our backlog resulting in the Company's backlog failing to translate into actual revenue or profits; inflation, supply chain disruptions, and capital market volatility; the loss of significant customers; intense competition in the Company's industry; risks associated with acquisitions, including the ability to successfully integrate those companies; impairment charges for goodwill and intangible assets; reductions or reversals of previously recorded revenue or profits as a result of the Company's cost-to-cost input method of accounting; difficulties in the financial and surety markets; delays and/or defaults in customer payments; difficult work environment; worldwide political and economic uncertainties, including international conflicts and epidemics or pandemics; attraction and retention of key management and employees; the Company's decentralized management structure; our ability to effectively manage our backlog and the size and cost of our operations; failure of third party subcontractors and suppliers to complete work as anticipated; difficulty in obtaining, or increased costs associated with, bonding and insurance; our ability to remain in compliance with covenants under our credit agreement, service our indebtedness, or fund our other liquidity needs; our inability to properly utilize our workforce; increases and uncertainty in insurance costs; regulatory and legal risks, including adverse litigation results, failure to comply with laws and regulations; changes in United States trade policy, and tax-related risks; the imposition of past and future liability from environmental, safety, and health regulations including the inherent risk associated with self-insurance; an increase in our effective tax rate; a material information technology failure or a material cybersecurity breach; risks related to our common stock; failure or circumvention of our disclosure controls and procedures or internal control environment; our ability to manage growth and geographically-dispersed operations; severe 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; force majeure events; deliberate, malicious acts, including terrorism and sabotage; findings of inadequate internal controls; changes in accounting rules and regulations; 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 Reports 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, except as otherwise required by law. — Financial tables follow — Comfort Systems USA, Inc. Consolidated Statements of Operations (In Thousands, Except per Share Amounts) | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | Nine Months Ended | | | September 30, | | | September 30, | | | (Unaudited) | | | (Unaudited) | | | 2026 | | % | | | 2025 | | % | | | 2026 | | % | | | 2025 | | % | Revenue | | $ | 3,766,302 | | | 100.0 | | % | | $ | 2,450,969 | | | 100.0 | | % | | $ | 9,897,290 | | | 100.0 | | % | | $ | 6,455,574 | | | 100.0 | | % Cost of services | | | 2,831,820 | | | 75.2 | | % | | | 1,843,098 | | | 75.2 | | % | | | 7,364,168 | | | 74.4 | | % | | | 4,934,390 | | | 76.4 | | % Gross profit | | | 934,482 | | | 24.8 | | % | | | 607,871 | | | 24.8 | | % | | | 2,533,122 | | | 25.6 | | % | | | 1,521,184 | | | 23.6 | | % | | | | | | | | | | | | | | | | | | | | | | | | SG&A | | | 314,165 | | | 8.3 | | % | | | 229,579 | | | 9.4 | | % | | | 870,208 | | | 8.8 | | % | | | 634,919 | | | 9.8 | | % Gain on sale of assets | | | (4,253 | ) | | (0.1 | ) | % | | | (582 | ) | | — | | | | | (5,340 | ) | | (0.1 | ) | % | | | (1,580 | ) | | — | | Operating income | | | 624,570 | | | 16.6 | | % | | | 378,874 | | | 15.5 | | % | | | 1,668,254 | | | 16.9 | | % | | | 887,845 | | | 13.8 | | % | | | | | | | | | | | | | | | | | | | | | | | | Interest income, net | | | 14,497 | | | 0.4 | | % | | | 3,407 | | | 0.1 | | % | | | 30,445 | | | 0.3 | | % | | | 7,269 | | | 0.1 | | % Changes in the fair value of contingent earn-out obligations | | | (4,295 | ) | | (0.1 | ) | % | | | (12,103 | ) | | (0.5 | ) | % | | | (16,710 | ) | | (0.2 | ) | % | | | (19,934 | ) | | (0.3 | ) | % Other income, net | | | 284 | | | — | | | | | 280 | | | — | | | | | 1,456 | | | — | | | | | (226 | ) | | — | | Income before income taxes | | | 635,056 | | | 16.9 | | % | | | 370,458 | | | 15.1 | | % | | | 1,683,445 | | | 17.0 | | % | | | 874,954 | | | 13.6 | | % | | | | | | | | | | | | | | | | | | | | | | | | Provision for income taxes | | | 146,012 | | | | | | | 78,843 | | | | | | | 382,421 | | | | | | | 183,202 | | | | Net income | | $ | 489,044 | | | 13.0 | | % | | $ | 291,615 | | | 11.9 | | % | | $ | 1,301,024 | | | 13.1 | | % | | $ | 691,752 | | | 10.7 | | % | | | | | | | | | | | | | | | | | | | | | | | | Income per share | | | | | | | | | | | | | | | | | | | | | | | | Basic | | $ | 13.93 | | | | | | $ | 8.26 | | | | | | $ | 36.98 | | | | | | $ | 19.55 | | | | Diluted | | $ | 13.91 | | | | | | $ | 8.25 | | | | | | $ | 36.94 | | | | | | $ | 19.52 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares used in computing income per share: | | | | | | | | | | | | | | | | | | | | | | | | Basic | | | 35,116 | | | | | | | 35,307 | | | | | | | 35,183 | | | | | | | 35,379 | | | | Diluted | | | 35,152 | | | | | | | 35,365 | | | | | | | 35,221 | | | | | | | 35,445 | | | | Dividends per share | | $ | 0.900 | | | | | | $ | 0.500 | | | | | | $ | 2.400 | | | | | | $ | 1.350 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Supplemental Non-GAAP Information — Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") — (Unaudited) (In Thousands) | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | Nine Months Ended | | | September 30, | | | September 30, | | | 2026 | | % | | 2025 | | % | | | 2026 | | % | | 2025 | | % | Net income | | $ | 489,044 | | | | | $ | 291,615 | | | | | | $ | 1,301,024 | | | | | $ | 691,752 | | | | Provision for income taxes | | | 146,012 | | | | | | 78,843 | | | | | | | 382,421 | | | | | | 183,202 | | | | Other expense (income), net | | | (284 | ) | | | | | (280 | ) | | | | | | (1,456 | ) | | | | | 226 | | | | Changes in the fair value of contingent earn-out obligations | | | 4,295 | | | | | | 12,103 | | | | | | | 16,710 | | | | | | 19,934 | | | | Interest income, net | | | (14,497 | ) | | | | | (3,407 | ) | | | | | | (30,445 | ) | | | | | (7,269 | ) | | | Gain on sale of assets | | | (4,253 | ) | | | | | (582 | ) | | | | | | (5,340 | ) | | | | | (1,580 | ) | | | Amortization | | | 25,691 | | | | | | 19,526 | | | | | | | 69,359 | | | | | | 59,432 | | | | Depreciation | | | 21,850 | | | | | | 16,048 | | | | | | | 60,452 | | | | | | 44,914 | | | | Adjusted EBITDA | | $ | 667,858 | | | 17.7 | % | $ | 413,866 | | | 16.9 | % | | $ | 1,792,725 | | | 18.1 | % | $ | 990,611 | | | 15.3 | % 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 income, 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) | | | | | | | | | September 30, | | December 31, | | | 2026 | | 2025 | | | (Unaudited) | | | | Cash and cash equivalents | | $ | 2,158,027 | | $ | 981,898 | Billed accounts receivable, net | | | 3,837,245 | | | 2,577,858 | Unbilled accounts receivable, net | | | 184,114 | | | 123,197 | Costs and estimated earnings in excess of billings, net | | | 159,328 | | | 88,817 | Other current assets, net | | | 437,476 | | | 338,783 | Total current assets | | | 6,776,190 | | | 4,110,553 | Property and equipment, net | | | 862,733 | | | 387,952 | Goodwill | | | 1,149,698 | | | 1,025,515 | Identifiable intangible assets, net | | | 548,435 | | | 485,168 | Other noncurrent assets | | | 468,227 | | | 431,981 | Total assets | | $ | 9,805,283 | | $ | 6,441,169 | | | | | | | | Current maturities of long-term debt | | $ | 5,710 | | $ | 6,163 | Accounts payable | | | 945,969 | | | 696,348 | Billings in excess of costs and estimated earnings and deferred revenue | | | 3,872,012 | | | 2,120,262 | Other current liabilities | | | 1,087,880 | | | 571,077 | Total current liabilities | | | 5,911,571 | | | 3,393,850 | Long-term debt | | | 43,845 | | | 139,063 | Other long-term liabilities | | | 514,624 | | | 459,482 | Total liabilities | | | 6,470,040 | | | 3,992,395 | Total stockholders' equity | | | 3,335,243 | | | 2,448,774 | Total liabilities and stockholders' equity | | $ | 9,805,283 | | $ | 6,441,169 | | | | | | | | Selected Cash Flow Data (Unaudited) (In Thousands) | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | | September 30, | | September 30, | | | 2026 | | 2025 | | 2026 | | 2025 | Cash provided by (used in): | | | | | | | | | | | | | Operating activities | | $ | 1,010,126 | | | $ | 553,271 | | | $ | 2,538,380 | | | $ | 717,816 | | Investing activities | | $ | (321,109 | ) | | $ | (53,008 | ) | | $ | (788,573 | ) | | $ | (235,996 | ) | Financing activities | | $ | (385,784 | ) | | $ | 28,550 | | | $ | (573,678 | ) | | $ | (171,236 | ) | | | | | | | | | | | | | | Free cash flow: | | | | | | | | | | | | | Cash from operating activities | | $ | 1,010,126 | | | $ | 553,271 | | | $ | 2,538,380 | | | $ | 717,816 | | Purchases of property and equipment | | | (210,600 | ) | | | (35,332 | ) | | | (499,437 | ) | | | (88,813 | ) | Proceeds from sales of property and equipment | | | 6,097 | | | | 1,088 | | | | 8,229 | | | | 3,152 | | Free cash flow | | $ | 805,623 | | | $ | 519,027 | | | $ | 2,047,172 | | | $ | 632,155 | | 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20261022067223/en/ Contacts Julie Shaeff, Chief Accounting Officer [email protected]; 713-830-9687

Comfort Systems (FIX) came out with quarterly earnings of $13.91 per share, beating the Zacks Consensus Estimate of $12.71 per share. This compares to earnings of $8.25 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +9.44%. A quarter ago, it was expected that this heating, ventilation and air conditioning company would post earnings of $10.38 per share when it actually produced earnings of $12.53, delivering a surprise of +20.71%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Comfort Systems, which belongs to the Zacks Building Products - Air Conditioner and Heating industry, posted revenues of $3.77 billion for the quarter ended September 2026, surpassing the Zacks Consensus Estimate by 12.45%. This compares to year-ago revenues of $2.45 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Comfort Systems shares have added about 50.1% since the beginning of the year versus the S&P 500's gain of 13.3%. While Comfort Systems has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Comfort Systems was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $12.85 on $3.44 billion in revenues for the coming quarter and $48.40 on $12.93 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Building Products - Air Conditioner and Heating is currently in the bottom 31% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Lennox International (LII), another stock in the same industry, has yet to report results for the quarter ended September 2026. The results are expected to be released on October 28. This manufacturer of furnaces, air conditioners and other products is expected to post quarterly earnings of $7.18 per share in its upcoming report, which represents a year-over-year change of +2.9%. The consensus EPS estimate for the quarter has been revised 3.7% lower over the last 30 days to the current level. Lennox International's revenues are expected to be $1.57 billion, up 10% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Comfort Systems USA, Inc. (FIX) : Free Stock Analysis Report Lennox International, Inc. (LII) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research