Comfort Systems USA, Inc. (NYSE:FIX) Q4 2023 Earnings Call Transcript

Bill George: So the factors were remarkably broad-based, remarkably diffuse it’s really just good execution, good work at reasons at fair prices and our guys doing a great job of performing it there is very — is not like — sometimes historically, when you see stuff like this, there’s two or three drivers, right? And certainly, every month and every quarter, there are companies that have an especially good month or quarter, but it’s really remarkable right now, how broad-based this is. So I think that makes you more optimistic that it can continue.

Brian Lane: And also, right, our service business is up to $1 billion. So we continue to grow that with higher margins, too, which is helping our margins as well, Josh.

Josh Chan: Okay. Yes, that’s helpful. Thank you for the color there. And then on the growth — same-store growth that you’re projecting for next year, I guess if it’s mid-teens for the full-year and stronger in the first half, could your growth kind of accelerate in Q1 beyond what you achieved in Q4? Just kind of wanted to get the shape right versus what you’re thinking in terms of how you get to that full-year of mid-teens.

Bill George: So it’s lumpier than you think. So it’s harder to answer that question than you think because the range — you might think we’re within — we can narrow it to a percentage of it, it’s really there’s — to get to 1.5 standard deviations is think you might go from 14 to 23 years or something. So I would say it is certainly the case that if you made me — if you said Comfort was going to grow 15%, if you made me quarterize that, I’d put 1% or 2% more in the first two quarters than I put in the last two quarters. But I will also say all of the factors that drove us to do better are still at evident. Our guys are really killing it. So honestly, one of the reasons we say it’s weighted more heavily towards the first-half as we just have more visibility on the first-half, right? So when you promise something, you know?

Josh Chan: Okay. Yes, that’s really helpful. Yes, thank you for that. And maybe last one for me. Beyond what’s in the backlog now, could you kind of talk about what opportunities you see in terms of things that you’re bidding on, you’ve been working on trying to get to the backlog or the early part of the bidding process? What are you seeing on that front? Thank you.

Brian Lane: Well, we’re seeing still a tremendous amount of activity. We’re being very selective, as we’ve spoken about and it’s heavy and a lot of manufacturing, a lot of industrial, a lot of technology. We’re also seeing education backlog and that is the highest it’s been in years, particularly university work, some K through 12 and also health care, medical, new build hospitals we’re seeing come up. So this is a wide range of opportunities in addition to the food, life sciences, pharma, et cetera, that we’ve talked about. So pretty broad range, Josh.

Josh Chan: That’s great to hear. Congrats on a great quarter and great year.

Brian Lane: Thanks.

Operator: And thank you. [Operator Instructions] And our next question comes from Jean Ramirez from D.A. Davidson. Your line is now open.

Jean Ramirez: Hi, this is Jean Ramirez from Brent Thielman. Congrats on the quarter by the way.

Brian Lane: Alright. Thank you, Jean.

Jean Ramirez: As a percentage of revenue, what was modulars contribution for the year.

Brian Lane: 20%.

Bill George: 18%. I believe.

Jean Ramirez: 18%, is that correct?

Brian Lane: 18%, yes.

Bill George: [Multiple Speakers]

Jean Ramirez: Perfect. Sorry if I missed that. And just continuing on the conversation around backlog. Do — is there any concerns or any major concerns around your markets near-term or perhaps maybe just taking a look at your capacity or labor or any other inputs? Is there anything to share there?

Brian Lane: Yes. In terms of backlog on the markets, I don’t have any concerns, of course, commercial in terms of office buildings. You obviously not seeing a new lot of office buildings. We just have a lot of service, small project work. The exception in Dallas, in the Wall Street Journal earlier this week, Dallas is still pretty busy on office buildings. But in terms of the sectors themselves, I don’t have any real concern at all. In terms of our labor capacity, we’re hiring all in time. We increased our workforce in the fourth quarter as well. We brought a couple of new companies on that brings us more resources to — sorry and then we have a temporary labor organization that we have. So in terms of capacity in the backlog, we feel pretty confident about us doing the work and doing the work that we like and that we can do well.

Bill George: So just one correction, modular for the full-year was 15%, getting a quarterly number mix up. 15% of our total revenue came through our two modular operations.

Jean Ramirez: Perfect. Thank you. I appreciate that. And just one more for me. Could you discuss from the latest acquisition, the Summit Industrial construction. What are the opportunities the company sees to grow this business beyond the revenues ranges discussed?