Comfort Systems USA, Inc. (FIX) | The Buildout — AI Infrastructure
The Verdict
Comfort Systems USA is a national mechanical and electrical contractor. It installs HVAC, plumbing, piping, controls, off-site construction, monitoring, fire protection, and electrical systems, and it prefabricates modular data center systems. It fits into the AI infrastructure buildout because data center construction requires these mechanical and electrical scopes, and the company sells directly to hyperscalers and the most important intermediaries.
| Market Cap | — |
| Revenue (TTM) | $11.2B |
| Revenue Growth | +46.1% |
| EBITDA Margin (TTM) | 17.9% |
| Net Cash | $1.5B |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Backlog reached a record $14.1 billion at June 30, 2026, up 73% year over year; same-store backlog entering Q3 was 69% higher.
- Technology rose to 58% of H1 2026 revenue from 40% in the prior-year period, and management calls it the largest driver of pipeline and backlog.
- Electrical revenue grew 81% year over year in Q2 2026 after 88% in Q1; mechanical grew 40% in Q2.
- Modular capacity is set to expand from over 3.5 million square feet today to more than 4 million by end-2026 and about 5 million by late summer 2027, supported by two hyperscaler volume commitments.
- Q2 free cash flow was $999 million; FIX ended Q2 in a net cash position over $1.8 billion and has positive free cash flow in each of the last 27 calendar years.
What We’re Watching
- Second-half 2026 comparables are much tougher; H1 same-store growth was +47%, and management flagged heavy Q4 2025 comparables.
- Estimate revisions are running above normal: Q1 2026 included a $43.1 million non-repeatable favorable item, and Q2 2026 revenue carried a roughly 7.7% favorable estimate impact, double the prior-year level.
- Technology was 58% of H1 2026 revenue and the top customer was 12.8% of 2025 revenue; hyperscaler capex or regulatory shifts would now hit a majority of the business.
- Labor remains the stated bottleneck to revenue conversion, even with headcount above 25,000.
The thesis is strengthening: record backlog, accelerating revenue, and modular capacity expansion tied to committed demand support continued growth. The main qualifier is the quality of margin gains, which currently carry an above-normal favorable estimate-revision tailwind. The open question is whether reported margins hold as estimate changes normalize and second-half comparables get harder.
Earnings Beat
Q2 2026 revenue was $3.27 billion, the first quarter above $3 billion in company history, with same-store revenue growth of 44%. Gross margin was 25.9%, up from 23.5% a year earlier; net income was $441.6 million, and free cash flow was $999 million.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $3.3B | $2.9B | $2.2B | +50.3% |
| Gross margin | 25.9% | 26.3% | 23.5% | +240bps |
| EBITDA | $598M | $524M | $334M | +78.8% |
| EPS | $12.51 | $10.49 | $6.52 | +91.9% |
| Backlog | $14.1B | $12.5B | n/a | +73% y/y |
Because we sell directly to the hyperscalers and to the most important intermediaries, we have really good — a really good view on what they're thinking, what they're planning. And there is a very deep and calm certainty among these people that they're going to continue to build … we see no let down whatsoever.— Bill George, CFO, July 24, 2026
Management tone: Management's tone shifted from confident in Q1 to emphatic in Q2. The CFO quantified the Q1 non-recurring $43.1 million gain, described hyperscaler build intent with 'very deep and calm certainty,' called modular returns 'embarrassing,' and volunteered that Q2 free cash flow was not a clean run-rate.
Management Guidance
For full-year 2026, management guided same-store revenue growth to the mid-to-high 30% range, with gross margins expected to continue in strong ranges, capital expenditures at approximately 5% of revenue, and an effective tax rate around 23%. Modular capacity is expected to reach more than 4 million square feet by end of 2026 and approximately 5 million square feet by late summer 2027.
Trajectory
Sequential revenue accelerated from $2.87 billion in Q1 2026 to $3.27 billion in Q2, a 14% quarter-over-quarter step. Gross margin was 25.9% in Q2 after a reported 26.3% in Q1 that included a $43.1 million non-repeating benefit; excluding that item, core gross margin improved from about 25.2% to 25.9%. The lift is coming from project selectivity, technology and modular mix, and favorable estimate changes, while second-half 2025 comparables make the current pace hard to extend.
The Model
The model projects FY+1 revenue of $12,000 million with EBITDA of $2,088 million, a 17.4% margin, and FY+2 revenue of $14,200 million with EBITDA of $2,556 million, an 18.0% margin. Near-term revenue is anchored by the $14.1 billion backlog and management's mid-to-high 30s same-store guidance; FY+2 is driven by continued modular capacity expansion and technology demand.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $9.1B | $12.0B | $14.2B |
| YoY Growth | — | +31.8% | +18.3% |
| EBITDA | $1.5B | $2.1B | $2.6B |
| EBITDA Margin | 16.1% | 17.4% | 18.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 0.2% below analyst consensus.
For full-year 2026, management guided same-store revenue growth to the mid-to-high 30% range, with gross margins expected to continue in strong ranges, capital expenditures at approximately 5% of revenue, and an effective tax rate around 23%. Modular capacity is expected to reach more than 4 million square feet by end of 2026 and approximately 5 million square feet by late summer 2027.
What Could Go Right — and Wrong
- Multiyear modular customer commitments convert into additional capacity and orders beyond the current path.
- Service revenue on the installed data center base accelerates ahead of management's long-term framing.
- Modular capacity expands beyond the current path on additional hyperscaler commitments.
- Hunt Electric's initial 8–10% EBITDA margin converges toward segment-level margins faster than suggested.
- New capacity additions unlock customer commitments that support revenue above current projections.
- A hyperscaler capex slowdown or cancellation hits the technology segment that is 58% of H1 2026 revenue.
- Favorable estimate revisions normalize; Q1 2026 included a $43.1 million one-time gain and Q2 carried a roughly 7.7% favorable revenue impact.
- Power or regulatory constraints delay data center projects in the pipeline.
- Labor availability prevents the company from staffing and filling new modular capacity.
Looking Ahead
Over the next 12 months, the story hinges on whether same-store revenue can hold against heavier Q3 and Q4 2025 comparables, whether the year-end modular capacity milestone of more than 4 million square feet is hit, and whether Hunt Electric contributes its expected roughly $250 million annualized revenue. The late-summer 2027 modular target of about 5 million square feet and the multiyear customer commitments behind modular capacity provide a longer horizon.
- Q3 2026Same-store revenue results — Tests heavy comparables against mid-to-high 30s growth guide.
- Q4 2026Heavy comparable quarter — Q4 2025 comparable flagged as especially heavy.
- End of 2026Modular capacity milestone — More than 4 million square feet in production targeted.
- H2 2026Hunt Electric contribution ramps — Expected roughly $250 million annualized revenue; integration underway.
- Late summer 2027Modular expansion target — Approximately 5 million square feet targeted.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $7.0B | $9.1B | $11.2B | +29.5% |
| Gross Margin | 20.9% | 23.9% | 25.7% | +302bps |
| EBITDA | $895M | $1.5B | $5.4B | +63.8% |
| EBITDA Margin | 12.7% | 16.1% | 17.9% | +337bps |
| Net Income | $522M | $1.0B | $1.4B | +95.7% |
| Free Cash Flow | $738M | $1.0B | $4.6B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)25.7%
- EBITDA Margin (TTM)17.9%
- Net Margin (TTM)12.8%
- ROIC86.4%
- FCF Conversion107.4%
- SBC / Revenue0.3%
The Company
Comfort Systems USA is a national mechanical and electrical contractor. The FY2025 10-K describes services including HVAC, plumbing, piping, controls, off-site construction, monitoring, fire protection, and electrical systems installation and servicing. It operates 50 operating units across 190 locations in 142 cities and 27 states. Technology rose to 58% of H1 2026 revenue from 40% in the prior-year period, and management says technology is the largest driver of pipeline and backlog.
Approximately 94.5% of revenue is earned on a project basis for new construction or replacement systems. Average project duration is six to nine months and average contract price is about $3.3 million. Modular was 17% of revenue year-to-date through Q2 2026. The company is shifting from leasing to owning production buildings because, per management, the automation investment is too large to put into leased buildings.
Business Segments
Competitive Landscape
FIX sells directly to hyperscalers and what management calls 'the most important intermediaries.' In the source material, competitor evidence is drawn from neighbor read-throughs; no provided neighbor transcript directly mentions FIX. Management describes its discipline as profit over revenue and frames other modular builders as adding capacity because customers want more than FIX will build, not as replacements; it differentiates itself from competitors that accept lower-margin GMP/cost-plus work.
- Q1 revenue $4.63B, up 19.7%; RPO $15.62B, up 32.9% y/y; mechanical data center revenue up 86%.
- Q1 revenue $1.04B, up 105%; claims labor is not a material constraint; 1.3 million square feet of fabrication capacity largely up and running.
- Q1 revenue $1.04B, up 25%; record backlog $3.68B, up 20%; E&M revenue up 29%.
- Trane (Stellar Energy)OEM moving into modular chiller plants, described as a partial offsite substitute for field mechanical labor.
Supply Chain
FIX sits between MEP equipment manufacturers and hyperscaler-led data center construction demand. The FY2025 10-K notes lead-time pressure for commercial HVAC equipment, electrical switchgear, and large power generators; no provided neighbor transcript directly mentions FIX by name.
More on FIX: Earnings recap