Executive Summary

Q1 2025 delivered record seasonal-first-quarter profitability: revenue $1.83B (+19% YoY), gross margin 22.0% (+270 bps YoY), operating margin 11.4% (+260 bps YoY), and diluted EPS $4.75 (includes ~$0.25/share tax interest benefit) . Backlog reached $6.89B (+$0.90B seq; +$0.98B YoY), with same-store backlog +14% seq and +16% YoY .
Substantial beats vs S&P Global consensus: revenue $1.83B vs $1.77B*, EPS $4.75 vs $3.71*, and EBITDA $242.7M vs $200.7M*; also beat in Q4 2024, underscoring estimate momentum .
Strength was broad-based with technology-related work (data centers/chip fabs) at 37% of total revenue (vs 30% prior year) and industrial at 62%; modular revenue 19% of mix; service 15% with strong profitability .
Capital returns accelerated: quarterly dividend raised to $0.45 (from $0.40 in Q1) and repurchase authorization “topped off” to allow up to an additional 1,000,000 shares (402,413 newly authorized) .

What Went Well and What Went Wrong

What Went Well
- Record Q1 EPS and robust margin expansion: gross margin 22.0% (+270 bps YoY) and operating margin 11.4% (+260 bps YoY) on 19% revenue growth . CEO: “earnings per share that exceed every past quarter… remarkable… first quarter is historically our seasonally weakest period” .
- Backlog inflected sharply higher: $6.89B (+$0.90B seq; ~“nearly $7 billion”), with same-store backlog +$848M seq (+14%) and +16% YoY; bookings especially strong in technology .
- Mix tailwinds and execution: technology-related projects 37% of revenue (up from 30% YoY) with strong margins; both segments saw double-digit revenue growth and margin gains (Electrical gross margin 23.0% vs 22.6% LY; Mechanical 21.7% vs 18.4%) .
What Went Wrong
- Operating cash flow negative (-$88.0M) due to unwinding advanced customer payments, a deferred hurricane-related tax payment (~$80M), and earn-out funding (portion reduces operating cash flow) .
- Sequential margin normalization vs Q4: gross margin 22.0% (vs 23.2% in Q4) and operating margin 11.4% (vs 12.1% in Q4), though both up strongly YoY .
- Tariff/macro uncertainty: management cannot yet quantify tariff cost pass-through; not “detectable” so far, but monitoring; acknowledged tougher comps in 2H’25 and maintained conservative outlook framework .

Financial Results

Income statement and cash/backlog (oldest → newest):

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($B)	$1.81	$1.87	$1.83
Gross Profit ($M)	$381.7	$433.7	$403.4
Gross Margin %	21.1%	23.2%	22.0%
SG&A ($M)	$180.2	$207.6	$194.9
Operating Income ($M)	$202.9	$226.4	$209.1
Operating Margin %	11.2%	12.1%	11.4%
Net Income ($M)	$146.2	$145.9	$169.3
Diluted EPS ($)	$4.09	$4.09	$4.75
Adjusted EBITDA ($M)	$238.3	$261.0	$242.7
Operating Cash Flow ($M)	$302.2	$210.5	$(88.0)
Free Cash Flow ($M)	$281.9	$171.7	$(109.1)
Backlog ($B, period-end)	$5.68	$5.99	$6.89

Q1 2025 vs estimates (S&P Global consensus):

Metric	Q1 2024 Actual	Q4 2024 Actual	Q1 2025 Estimate*	Q1 2025 Actual	Surprise
Revenue ($B)	$1.54	$1.87	$1.767*	$1.831	+$0.065B (~+3.7%)
Diluted EPS ($)	$2.69	$4.09	$3.71*	$4.75	+$1.04 (~+28%)
EBITDA ($M)	$169.8	$261.0	$200.7*	$242.7	+$42.0 (~+21%)

Note: Surprise calculations by Fintool based on reported actuals vs S&P Global consensus. Values marked with * retrieved from S&P Global.

Segment snapshot (Q1 2025):

Segment	Revenue Growth YoY	Gross Margin % (Q1 2025 vs Q1 2024)
Electrical	+22%	23.0% vs 22.6%
Mechanical	+18%	21.7% vs 18.4%

KPI mix (Q1 2025):

KPI	Q1 2025
Industrial mix of revenue	62%
Technology (data centers/chip fab) as % of total revenue	37% (vs 30% prior year)
Institutional mix	24%
Commercial mix	14%
Construction as % of revenue	85% (New build 58%, Existing build 27%)
Service as % of revenue	15%; profitability strong
Modular revenue as % of revenue	19%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Same-store revenue growth	FY 2025	High single-digit growth (prior commentary)	High single-digit growth reaffirmed	Maintained
Gross profit margins	FY 2025	“Strong ranges” achieved in recent quarters (implied)	Expect to continue in strong ranges achieved in last several quarters	Maintained
Effective tax rate	Q2–Q4 2025; FY 2025	Not previously specified	~23% for remaining quarters; FY a bit lower due to Q1 discrete benefit	New specificity
Dividend	Next quarterly	$0.40 paid in Q1 (per FS)	$0.45 declared for May 27, 2025	Raised
Share repurchase authorization	Ongoing	Prior program nearly utilized	Authorization “topped off” to allow up to an additional 1,000,000 shares; 402,413 newly authorized	Increased

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Advanced technology demand (data centers/chip fabs)	Record earnings/cash flow; strong pipelines	Persistent demand for advanced technology; robust backlog	Tech is 37% of total revenue; bookings especially strong	Strengthening mix toward tech
Backlog and pipelines	Backlog $5.68B; strong bookings despite burn	Backlog $5.99B; strong bookings; optimism for 2025	Backlog record $6.89B; same-store +14% seq, +16% YoY	Accelerating
Margins	GP% 21.1%	GP% 23.2%	GP% 22.0%; segment margins improved YoY	Elevated vs LY; near-peak ranges
Tariffs/supply chain	Not emphasized	Not emphasized	Tariffs uncertain; no detectible pass-through impact yet; strong contracting discipline	Watch risk; managed well
Modular	Growing; cash flow strong	Continues to scale	19% of revenue; >2.5M sq ft capacity	Expanding
Sector mix (industrial, healthcare)	Industrial strength	Broad-based strength	Industrial 62%; healthcare dollars rising; commercial mainly service	Broadening

Management Commentary

CEO Brian Lane: “We are reporting earnings per share that exceed every past quarter… a promising start to 2025… backlog grew significantly… we continue to expect strong earnings and cash in 2025, and… optimistic for continuing success into 2026.”
CFO Bill George: “Revenue… increased 19%… same-store revenue +15%… operating income margin increased from 8.8% to 11.4%… we expect gross profit margins will continue in the strong ranges… effective tax rate ~23% for the last 3 quarters of 2025.”
COO Trent McKenna: “Same-store sequential backlog was up $848 million or 14%… Technology… was 37% of our total revenue… Service profitability was strong… Modular revenue… 19% of total revenue.”

Q&A Highlights

Guidance stance and comps: Management reaffirmed high single-digit same-store revenue growth for FY25, citing much tougher 2H comps despite strong demand and high margins .
Tariffs/supply chain: No detectible pricing impact yet; teams proactively lock in equipment/materials and leverage scale/contracts; learned from COVID-era execution .
Backlog seasonality: Historically builds in Q4/Q1 and nets down in Q2/Q3 as revenue burns; pipeline remains very strong .
Mix and end-markets: Manufacturing timing is lumpy but opportunity set is intact; healthcare demand picking up with aging demographics .
SG&A leverage: At ~10.6% of revenue; further leverage likely modest from here as the company invests to support growth .
Working capital normalization: Majority of advanced customer payments unwound in Q1; possibly ~$100M more to a major customer, offset by ~$107–118M tax refund in Q2; expect to “go back to just cash flowing our net income” .

Estimates Context

Q1 2025 beats: Revenue $1.83B vs $1.77B*; EPS $4.75 vs $3.71*; EBITDA $242.7M vs $200.7M* .
Prior quarter (Q4 2024) also beat: Revenue $1.87B vs $1.77B*; EPS $4.09 vs $3.67*; EBITDA $261.0M vs $207.2M* .
Implication: Estimate revisions likely skew higher for FY25 as sustained margin strength, record backlog and tech mix persist; management’s conservative posture (tough comps; tariff uncertainty) may cap magnitude of revisions near term .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Strong beat-and-raise setup without a formal raise: material top-line and EPS beats, record Q1 profitability, and record backlog argue for upward estimate revisions; management maintains conservative growth framing due to 2H comps and macro/tariff watch .
Mix shift tailwinds: technology-related projects are now 37% of revenue, with both Electrical and Mechanical margins expanding YoY—supporting durability of double-digit operating margins .
Cash flow normalization largely behind the company: Q1 outflows driven by known transitory items (advanced payments unwind, deferred tax, earn-outs); expect cash generation to track earnings going forward .
Capital return cadence increasing: dividend stepped up to $0.45 and repurchase authorization expanded (up to 1,000,000 additional shares), reflecting balance sheet strength and confidence .
Watch items: tariff pass-through, 2H revenue comps, and any signs of data center/advanced tech demand moderation—none evident yet per customer/supplier checks .
Medium-term thesis: record backlog and pipeline visibility into 2026, expanding modular capabilities, and disciplined project selection support sustained high returns and EPS compounding despite macro noise .

COMFORT SYSTEMS USA INC (FIX)·Q1 2025 Earnings Summary