Comfort Systems USA, Inc.
Analytical review · Second-quarter 2026 report (as at June 30, 2026)
Bakshi Finance — Family Office | Research Depth: Comprehensive
What this review is based on. Comfort Systems USA's quarterly report on Form 10-Q for the quarter ended June 30, 2026 and the earnings release, both published on July 23, 2026; the quarterly reports for Q1 2026 and Q3 2025; the annual report on Form 10-K for 2025; the 2026 proxy statement (April 2026); Form 8-K filings on management changes and the investor presentation of August 3, 2026; and annual XBRL data from the U.S. Securities and Exchange Commission. Quotations from the July 24, 2026 earnings call are based on a transcript published by a secondary source and are marked as such. Every figure on this page is drawn from one of these documents; where a figure was calculated by us, this is stated explicitly.
Company Profile
Comfort Systems USA, Inc. is a mechanical and electrical contractor for commercial, industrial and institutional buildings in the United States. It is headquartered in Houston, Texas, and its shares trade on the New York Stock Exchange under the symbol FIX. The company operates through 51 operating companies at 206 locations in 150 cities and employs more than 25,000 people (22,700 at the end of 2025).
The company designs, installs, maintains and replaces heating, ventilation and air-conditioning systems, plumbing, piping, controls and electrical systems. It reports two segments: mechanical (70% of quarterly revenue) and electrical (30%). A fast-growing area is modular construction — assembling complete systems in a factory, away from the building site, and shipping them for installation. According to the investor presentation, this was 17% of revenue in the first half of 2026.
About 94% of revenue comes from projects, most of them contracted at a fixed price. The average project takes six to nine months, with an average contract price of about $3.3 million. At June 30, 2026 there were 8,941 projects in progress with a total contract value of $29.9 billion. 125 projects larger than $50 million account for 51% of that value. About 6% of revenue is ongoing service and maintenance.
The largest customer accounted for 12.8% of 2025 revenue and 10.2% of receivables at year end; its identity is not disclosed. The company has no controlling shareholder. The largest holders are Vanguard (12.2%) and BlackRock (8.3%), and all directors and officers together hold 1.24%. The chief executive, Brian Lane, has served since December 2011.
Financial Performance
In the second quarter of 2026 Comfort Systems USA reported revenue of $3.27 billion, up 50.3%. Net income was $441.6 million, $12.53 per share, against $6.53 in the prior-year quarter — an increase of 92%. Of the revenue growth, 6.5 percentage points came from acquired businesses and 43.8 points from existing operations. Operating cash flow for the quarter was $1.14 billion.
| $ millions | 2023 | 2024 | 2025 | Q2 2025 | Q1 2026 | Q2 2026 |
|---|---|---|---|---|---|---|
| Revenue | 5,207 | 7,027 | 9,102 | 2,173 | 2,865 | 3,266 |
| Gross profit | 991 | 1,476 | 2,196 | 510 | 754 | 844 |
| Gross margin | 19.0% | 21.0% | 24.1% | 23.5% | 26.3% | 25.9% |
| Operating income | 418 | 749 | 1,315 | 300 | 486 | 558 |
| Operating margin | 8.0% | 10.7% | 14.4% | 13.8% | 17.0% | 17.1% |
| Net income | 323 | 522 | 1,023 | 231 | 370 | 442 |
| Diluted EPS ($) | 9.01 | 14.60 | 28.88 | 6.53 | 10.51 | 12.53 |
Looking back over the last ten years, EPS rose from $1.72 in 2016 to $28.88 in 2025. The operating margin was about 6% in each year from 2016 to 2022, and has since risen to 8.0%, 10.7%, 14.4% and 17.1% in the latest quarter. In the last year with an operating loss, 2011, U.S. construction was at a trough.
The disclosure to read first: estimate revisions on prior-period projects
The company recognizes revenue according to cost progress on each project (the "cost-to-cost" method). When it becomes clear that an open project will finish at a higher margin than estimated, the difference is recorded as revenue in the quarter in which it becomes clear. Every report discloses how much revenue came from such revisions on projects that were already open at the start of the period. The revisions have been net positive in every period reviewed, and the rate has risen:
| Estimate revisions as % of revenue | 2025 | 2026 |
|---|---|---|
| Q1 | 5.8% | 8.1% |
| Q2 | 4.4% | 7.7% |
| Q3 | 4.0% | — |
| First half | 5.0% | 7.9% |
| Nine months | 4.6% | — |
Under the cost-to-cost method, a revision on the revenue side carries no additional cost, so it flows almost entirely to gross profit. In the second quarter this was about $252 million by our calculation, against operating income of $558 million. Excluding the revisions, by our calculation and on full revenue, the second-quarter operating margin was 9.4% — the same as in the prior-year quarter; for the first half it was 9.1% against 7.7%. The annual figure the company discloses (1.3% in 2023, 2.3% in 2024, 3.9% in 2025) is measured on a different base — projects open at the start of the year — and is therefore not directly comparable with the quarterly figures.
In the first quarter the company explicitly cited $43.1 million of "favorable developments on projects nearing completion, including change orders received". The 2025 annual report states that revenue from unapproved change orders and claims was "immaterial" in 2023–2025. According to the earnings-call transcript (secondary source), the chief financial officer said the company has had "net gain in our jobs every single year".
Balance Sheet & Capital
Comfort Systems USA's balance sheet is almost debt-free: $54 million of debt, mostly notes to former owners of acquired businesses, against $1.85 billion of cash and $52 million of short-term Treasury bills. A $1.10 billion credit facility, maturing in October 2030, is undrawn. According to the company's presentation, debt to trailing EBITDA is 0.03.
| $ millions | Dec 31, 2025 | Jun 30, 2026 |
|---|---|---|
| Cash | 982 | 1,855 |
| Receivables (billed) | 2,578 | 3,279 |
| Contract assets (work performed, not yet billed) | 89 | 145 |
| Property and equipment | 388 | 654 |
| Goodwill and intangible assets | 1,511 | 1,636 |
| Accounts payable | 696 | 772 |
| Contract liabilities (billings in advance and advance payments) | 2,120 | 3,231 |
| Debt | 145 | 54 |
| Shareholders' equity | 2,449 | 3,217 |
Contract liabilities are money customers have paid in advance for work not yet performed. They rose by $1.11 billion in six months, and of the balance at the start of the year, $1.58 billion had already been recognized as revenue by June. Against them stand receivables, which include amounts customers withhold until project completion ($506.5 million at the end of 2025). By our calculation, net operating working capital is negative by about $847 million — customers finance part of the business, and part of the cash on hand reflects that financing.
Cash flow
| $ millions | 2024 | 2025 | H1 2025 | H1 2026 |
|---|---|---|---|---|
| Operating cash flow | 849 | 1,186 | 165 | 1,528 |
| Of which: before working-capital changes (our calculation) | — | 1,254 | 508 | 966 |
| Capital expenditure | (111) | (155) | (53) | (289) |
| Acquisitions, in cash | (235) | (280) | (124) | (163) |
| Share repurchases | (58) | (216) | (111) | (8) |
| Dividends | (43) | (69) | (30) | (53) |
Operating cash flow in the first half of 2026 was $1.53 billion, of which about $966 million came before working-capital changes and about $562 million from working-capital movements — mainly customer advances. For 2025 as a whole the reverse was true: working capital absorbed about $68 million. First-half capital expenditure included $189 million for buildings for the modular business. According to management on the earnings call, 2026 capital expenditure will total about 5% of revenue, against 1.7% in 2025. According to the company's presentation, free cash flow has been positive for 27 consecutive years.
Segments
| Second quarter | Revenue 2025 | Revenue 2026 | Operating margin 2025 | Operating margin 2026 | Backlog Jun 30, 2026 |
|---|---|---|---|---|---|
| Mechanical | 1,639 | 2,297 | 14.5% | 18.6% | 10,059 |
| Electrical | 535 | 969 | 15.0% | 15.9% | 4,003 |
| Corporate | — | — | (0.8%) | (0.7%) | — |
| Consolidated | 2,173 | 3,266 | 13.8% | 17.1% | 14,062 |
The mechanical segment grew 40.2%, almost entirely from existing operations, and its operating margin rose from 14.5% to 18.6%. The electrical segment grew 81.2%, of which $133 million came from acquired businesses — Hunt Electric (May 2026, $206 million), Feyen Zylstra and Meisner (October 2025).
By customer type
Revenue from technology customers — data centers and chip plants — rose 105% in the quarter, from $934 million to $1,917 million. All other sectors combined rose 10.6%; education revenue fell 13.6% and office buildings 16.3%. By type of work, new construction rose to 75.1% of revenue from 57.9%, and work in existing buildings fell 20.4% in dollars. Technology's share of revenue: 21.4% in 2023, 45.0% in 2025, 58.7% in the latest quarter.
Backlog is also concentrated geographically: according to management's discussion in the quarterly report, five operating units — three in Texas, one in North Carolina and one in Indiana — contributed about $5.07 billion of a $5.58 billion year-on-year organic increase in backlog.
Competitive Position
Skilled workforce. The company employs more than 25,000 people — HVAC technicians, pipefitters, electricians and project managers — and self-performs most of its work. In an industry with a persistent shortage of skilled trades, the ability to staff a large project on time is part of the product.
Modular manufacturing. The company describes its off-site construction capability as "unmatched" in mechanical work. According to the company's president on the earnings call (secondary source), manufacturing space stands at about 3.5 million square feet and is being expanded, with expansion made against multi-year customer commitments.
Balance sheet and bonding. About 10%–20% of the work requires performance bonds. According to the company, the size of its balance sheet and its surety relationships are an advantage over most competitors.
What limits the advantage. In the company's own words, its markets are "highly fragmented and competitive", most operations compete locally, most markets have "low barriers to entry", and "price for value" is the most influential factor for most customers. Most contracts are fixed-price, so the company bears cost overruns.
How to Think About This Company
The growth itself is not in dispute. Revenue grew about 30% a year on average between 2022 and 2025, and 50% in the latest quarter, most of it from existing operations. Backlog roughly doubled in a year. Customers pay in advance. These are reported figures, and they describe exceptionally strong demand from data centers and chip plants.
The question is what the margin rests on. The operating margin rose in the second quarter from 13.8% to 17.1%. In the same quarter, estimate revisions on prior-period projects rose from 4.4% to 7.7% of revenue. By our calculation, excluding the revisions, the quarter's operating margin equals the prior-year quarter's, 9.4%; for the half year it rose from 7.7% to 9.1%. In other words, the rise in the reported figure for the second quarter comes entirely from revisions, and the half year shows a more modest underlying improvement.
There are two legitimate readings of the same figure. In one reading, a contractor that bids conservatively and executes well releases its contingency at the end of each project, so revisions are a permanent part of profit — especially as projects grow larger (an average contract price of $3.3 million against $2.4 million three quarters earlier), and especially since, against the value of open contracts, the rate is stable at about 0.95% in both 2026 quarters by our calculation. In the other reading, the rate doubled in a single year, at the peak of a demand cycle, and such releases tend to shrink when the pace slows. The coming reports will distinguish between the two.
An estimate revision is not cash on the day it is recorded. It reduces billings in excess or increases contract assets, and the cash arrives with final billing and the release of amounts the customer withholds. It is therefore worth reading cash flow alongside receivables, which rose 27% in six months, and contract liabilities.
Advances signal demand, and also create dependence. Contract liabilities ($3.23 billion) exceed cash. As long as backlog grows, new advances come in faster than they are worked off. If backlog stabilizes or falls, the same movement will work in reverse on cash flow, even with no change in profitability.
One source of demand. Technology customers are 58.7% of revenue, and all other sectors combined grew 10.6%. "The largest customer is 12.8%" is true, but most of the growth rests on the same cloud-company investment programs. The same exposure feeds backlog, estimate revisions and advances at once.
Conservative management with a long record. The CEO has served since 2011; according to the company, free cash flow has been positive for 27 consecutive years and the dividend has been raised 14 years in a row (to $0.90 per quarter in July 2026). Share repurchases fell from $216 million in 2025 to $8.2 million in the first half of 2026, alongside a sharp rise in capital expenditure. Succession is in place: a president since January 2026 and a chief operating officer since July 2026. Management's annual incentive is measured on EPS and free cash flow.
What management says about the rest of the year. According to the CFO on the earnings call (secondary source), same-store revenue growth for full-year 2026 will finish "in the mid to high 30% range", against 47.3% in the first half, with "really heavy comparables" in the fourth quarter. By our calculation this implies about 25%–31% in the second half.
Risks & Monitoring
Key risks
- Concentration in one sector. 58.7% of revenue comes from technology customers; a cut or delay in the sector's investment programs would affect backlog, estimate revisions and advances at the same time.
- Execution on fixed-price contracts. Most work is fixed-price; a cost overrun on a large project is recorded in full when it is anticipated. The contract mix is not quantified in the reports.
- Labor cost and supply chain. According to the company, cost pressure and equipment delivery delays will persist; lead times for electrical gear and generators sometimes exceed six months.
- Backlog cancellations. According to the company, backlog is subject to adjustments and cancellations, and its predictive value is "limited to indications of general revenue direction over the near term".
- Cyclicality. Non-residential construction is cyclical; the company recorded an operating loss in 2011.
- Self-insurance. The company self-insures a large part of its workers' compensation, auto and liability risks through a wholly owned captive insurer.
Monitoring items — measured directly from upcoming filings
| Item | Latest reading | Where published |
|---|---|---|
| Estimate revisions on prior-period projects — quarter and year to date | 7.7% · 7.9% for the half | Revenue note in Form 10-Q |
| Operating margin excluding revisions (calculation) | 9.4% for the quarter · 9.1% for the half | Income statement + revenue note |
| Revenue from non-technology sectors | +10.6% for the quarter | Revenue note |
| Backlog, total and same-store | $14.06B · $13.70B | Earnings release |
| Contract liabilities vs. receivables | $3.23B · $3.28B | Balance sheet |
| Cash flow before working-capital changes (calculation) | $966M for the half | Cash-flow statement |
| Capital expenditure | $289M for the half | Cash-flow statement |
| Third-quarter report | Oct 22, 2026 | — |
Scenario Framework
The scenarios below are descriptive, not predictive. They contain no prices, no probabilities and no ranking of outcomes. Their only purpose is to organize the conditions that would need to hold for each state to materialize, so that they can be checked against subsequent filings.
Scenarios are descriptive, not predictive.
- If the operating margin excluding estimate revisions rises against the prior-year quarter
- If estimate revisions stay at 2026 levels also against the value of open contracts
- If non-technology sectors return to high double-digit growth
- If backlog keeps growing quarter on quarter
- If investment in modular capacity is backed by multi-year customer commitments
- If the margin excluding revisions stays around 9%–10%
- If estimate revisions move between 2025 and 2026 levels
- If technology remains half of revenue or more
- If contract liabilities and receivables grow at a pace similar to revenue
- If growth moderates in line with management's statements
- If estimate revisions fall back to 2023–2024 levels
- If backlog falls for two consecutive quarters
- If large technology customers cut or defer projects
- If receivables grow faster than revenue while contract liabilities decline
- If a material cost overrun is recorded on a large fixed-price project
- If labor cost rises faster than prices set in signed contracts
Analytical Lens
The six questions below are identical in every company review we publish. They are deliberately open and do not lead to a single conclusion. Their role is to let the reader examine the company on the same six dimensions as any other company.
Key Observations
1. Revenue in the second quarter of 2026 rose 50.3% to $3.27 billion, and EPS rose 92% to $12.53. Backlog rose 73% to $14.06 billion. Revenue from technology customers was 58.7% of quarterly revenue, against 43.0% in the prior-year quarter.
2. According to the revenue note, 7.7% of quarterly revenue came from estimate revisions on projects open at the start of the quarter, against 4.4% in the prior-year quarter; for the half, 7.9% against 5.0%. By our calculation, excluding the revisions, the operating margin was 9.4% in both second quarters.
3. Operating cash flow for the half was $1.53 billion; by our calculation about $966 million of it came before working-capital changes. Contract liabilities rose $1.11 billion to $3.23 billion, and receivables rose 27% to $3.28 billion.
4. The company has $54 million of debt and $1.85 billion of cash. First-half capital expenditure was $289 million, including $189 million for buildings for the modular business. Share repurchases in the half were $8.2 million, against $216 million in 2025. The quarterly dividend was raised to $0.90.
Bakshi Finance operates as a Family Office for qualified clients only. Mr. Yaron Bakshi held a licensed investment adviser qualification in Israel during 2008–2023. As of the publication date of this document, the firm does not hold an investment advice, investment marketing or portfolio management licence.
This document is intended for research and professional study purposes only. Nothing herein constitutes a recommendation to buy, sell, hold or carry out any transaction in securities. Nothing herein substitutes for advice that takes into account the data and needs of each person. Every decision is the sole responsibility of the investor.
Data were drawn from official sources: Comfort Systems USA's quarterly report on Form 10-Q for the quarter ended June 30, 2026 and the earnings release (July 23, 2026), the quarterly reports for Q1 2026 and Q3 2025, the annual report on Form 10-K for 2025, the 2026 proxy statement, Form 8-K filings and the investor presentation of August 3, 2026; earnings-call quotations from a secondary source. Official USD rate: โช3.033 (Sep 25, 2026). Subsequent filings may change the picture. Past performance is not indicative of future results. The site does not participate in the investment decision. The decision is the client's.
Qualified Investor Review โ Family Office
The full analytical review of Comfort Systems USA, Inc. (FIX) for Q2 2026 is available to Bakshi Finance premium clients.
The review comprises 10 sections, the "How to Think About This Company" narrative, a structured scenario framework, and a 6-dimension Analytical Lens.
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