FIX · Q1 2026 Earnings
BullishComfort Systems USA
Reported April 23, 2026
30-second summary
30-second take: Revenue grew 51% YoY to $2.87B with GAAP EPS of $10.51, operating margin of 17.0%, and FCF of $242M, while backlog stepped from $11.94B to $12.45B and same-store backlog accelerated to +77.4% YoY off a stiffer comp. The number that matters most is buried in Q&A: management upgraded full-year same-store revenue growth guidance from "mid-teen to high-teen" (Q4) to "mid to high 20%" — a roughly 1,000bps upward revision delivered without a formal press-release revision. A disclosed $43M non-recurring change-order/closeout benefit means underlying gross margin was closer to 25.2% than the reported 26.3%; backing that out, this is still a clean acceleration print with a meaningfully higher growth bar set for the rest of the year.
Headline numbers
EPS
Q1 FY2026
$10.51
Revenue
Q1 FY2026
$2.87B
+51.0% YoY
Gross margin
Q1 FY2026
26.3%
Free cash flow
Q1 FY2026
$0.24B
Operating margin
Q1 FY2026
17.0%
Key financials
Q1 FY2026| Metric | Q1 FY2026 | YoY | Q4 FY2025 | QoQ |
|---|---|---|---|---|
| Revenue | $2.87B | +51.0% | $2.65B | +8.3% |
| EPS | $10.51 | — | $9.37 | +12.2% |
| Gross margin | 26.3% | — | 25.5% | +80bps |
| Operating margin | 17.0% | — | 16.1% | +90bps |
| Free cash flow | $0.24B | — | $0.40B | -40.0% |
Guidance
Strong Q1 FY2026 beat on revenue (+51% YoY) with reaffirmed FY26 guidance; no forward quarter targets disclosed, only optimistic qualitative commentary.
Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.
Actuals vs prior guidance
| Metric | Period | Prior guide | Actual | Δ | Result |
|---|---|---|---|---|---|
| Revenue | Q1 FY2026 | seasonably lower in Q1 | $2.865 billion | strong beat vs. seasonal expectation; +51% YoY | Beat |
| Gross Profit Margin | Q1 FY2026 | seasonably lower than strong ranges | 26.3% | in-line with seasonal expectation | Met |
Reaffirmed unchanged this quarter: Same-Store Revenue Growth (mid-teen to high-teen percentages), Gross Profit Margin Outlook (continue in strong ranges; seasonably lower in Q1), Tax Rate (around 23%)
Other KPIs
Q1 FY2026| Segment | Q1 FY2026 |
|---|---|
| Backlog | $12.45 billion |
| Same-Store Backlog Growth | +77.4% |
| Operating Cash Flow | $388.8 million |
| Adjusted EBITDA | $524.4 million |
| Adjusted EBITDA Margin | 18.3% |
| Locations | 197 in 143 cities |
Management tone
Narrative arc: Q2 "backlog surge" → Q3 "unprecedented demand" → Q4 "putting numbers on 2026" → Q1 "raising the number on 2026."
The growth bar moved up roughly 1,000bps in one quarter — and management treated it as routine. Three months ago FIX broke from a decade of no-guide posture to anchor 2026 same-store growth at "mid-teen to high-teen" with explicit "weighed more heavily to the first half" language because comps would steepen. This quarter, on the back of a +51% Q1, Sanjita Jain was told the new bar is "mid to high 20%." Management's framing — "we are optimistic about our prospects for the next several quarters...considering recent bookings, underlying persistent demand, and our strong pipelines" — treats the raise as the natural consequence of work already in the book, not a forecast upgrade. That posture is meaningfully more confident than Q4's "tough revenue comparables in 2026" hedge.
The binding constraint flipped from demand-selection to labor capacity, in plain terms. Q2 framed labor as one of several constraints; Q3 set a "high single-digit sustainable rate"; Q4 reframed labor as a managed asset via the Kodiak/Pivot contract platforms. This quarter UBS's Josh Chan was told outright: "Current supply constraint is labor, not demand — management has optionality to take significantly more work but cannot execute it. This represents a structural shift from historical demand-constrained markets." That is the cleanest statement yet that FIX is choosing growth rate via project selection, not maximizing it. The mid-to-high 20% target therefore reflects what management thinks it can execute, not what it could book.
Earnings-quality disclosure became preemptive. The $43M change-order/closeout benefit (~110bps of gross margin) was volunteered by management rather than extracted by analysts. The Q4 brief flagged that backing out one-times would reveal a ~25.2% underlying margin — and that is exactly the figure management gave to Brophy. The willingness to put a normalized number on the print is unusual for a company whose historical posture has been to let backlog speak for itself, and it suggests management wants the run-rate margin understood correctly as the FY revenue bar moves up.
Geographic and regulatory framing shifted from defensive to dismissive. Q4 implicitly acknowledged hyperscaler concentration risk via the "few new customers added" Jain exchange. This quarter, asked about state-level data-center bans or power-limiting legislation, management said no such proposals affect FIX's geographies and that "several states are actively encouraging data center buildout" with "demand still exceeding supply." Combined with the data-center geographic spread disclosed to Adam Thalheimer (Texas epicenter, plus Mid-Atlantic, Carolinas, Virginia, Mississippi, Upper West), management is dismissing the regulatory tail risk that has surfaced in peer commentary.
Recurring themes management leaned on this quarter:
Risks management surfaced:
Q&A highlights
Adam Thalheimer · Thompson Davis
What is the CapEx forecast for the rest of the year and is it geared towards already-booked projects or future orders? Additionally, where is data center demand strongest geographically and how does it match Comfort's capabilities?
CapEx includes major building purchases (largest ever in Houston) plus tens of millions in automation equipment (cranes, robots, turntables, paint booths). Company is evaluating additional capacity investments later in year based on customer demand. Data center demand is strongest in Texas but geographically distributed across Mid-Atlantic, Carolinas, Virginia, Mississippi, and Upper West. Comfort has traveling workforce to handle any geography.
Sam Koss · On4Tim
How did management arrive at mid-to-high 20% organic growth guidance given strong Q1 momentum and backlog growth, which implies moderation? Also, are there any state-level data center bans or power-limiting legislation that could impact backlog?
Guidance based on field projections of committed work with high confidence in achievability. To hit mid-to-high 20% annual growth still requires above 20% average for next three quarters. Company prioritizes profit over revenue growth and ensures proper compensation for productive capacity and risk. No current state-level legislative threats to data center projects in Comfort's geographies; historically strong ability to navigate community pushback; demand still exceeds supply.
Josh Chan · UBS
Can you discuss the future project pipeline and book-to-bill trends? Q1 book-to-bill was 1.2x (normal), but prior four quarters showed much stronger metrics. Is there a cadence change or shift in market conditions?
Pipelines remain very full and strong coast-to-coast with no work availability issues. Company is maintaining disciplined work selection to avoid over-commitment and ensure quality delivery. Current supply constraint is labor, not demand—management has optionality to take significantly more work but cannot execute it. This represents a structural shift from historical demand-constrained markets.
Sanjita Jain · KeyBank Capital Markets
Can you provide details on the electrical acquisition (geography, end markets, other information)? Additionally, what were the biggest change points driving the guidance—labor, equipment, or other factors?
Acquisition is in Western market with strong mechanical presence already; company is in Comfort's 'sweet spot.' Details limited until official announcement. Primary constraint is labor (headcount increased 3,000-4,000 YoY in Q1). Materials and equipment as percentage of revenue up several hundred basis points. Most significant headcount addition happened spring of 2025; employment levels now relatively stable at 23,000+.
Brian Brophy · Stifel
What drove the $43 million change order closeout benefit in Q1? Is this a one-time item or reflective of favorable T&Cs environment with recurring opportunity? Also, where is Comfort finding electricians to support 80%+ organic electrical growth?
The $43 million primarily from late-stage project change orders and favorable closeouts from newly operating companies achieving disproportionate gains. Management disclosed to avoid shareholder confusion—not business-as-usual recurring benefit, though similar items can occur irregularly. Backing out $43 million yields ~25.2% gross margin, closer to normalized Q1 level. Electricians sourced from entire country; company attracts talent through strong compensation, training, work quality, and brand appeal. Full-court press recruiting continues.
Answers to last quarter's watch list
What to watch into next quarter
Implied Q2 growth bar. Hitting mid-to-high 20% FY same-store growth with Q1 at +51% requires the remaining three quarters to average above +20%. Apply this to the Q2 FY2025 baseline of $2.17B: Q2 FY2026 revenue would need to print north of ~$2.60B to keep the new guide credible. Watch whether the Q2 print clears that level or falls into the low-$2.5B range — the latter would imply the FY raise was front-end-loaded by Q1 strength rather than supported by forward backlog.
Same-store backlog YoY rate vs. absolute level. The +77.4% same-store reading is decelerating from Q4's +93.3% on a much stiffer comp. Watch whether absolute backlog clears $13B in Q2 (continued sequential growth) or holds flat near $12.5B (peak-backlog signal).
Western electrical acquisition margin contribution. Closing early May at 8-10% EBITDA margin — well below the 18.3% consolidated Q1 margin. Watch whether reported Q2 EBITDA margin compresses ~50-100bps as the $250M annualized revenue folds in, or whether segment-level discipline holds the consolidated print near 18%.
Underlying gross margin trajectory. Q1 underlying ~25.2% ex. one-times. Watch whether Q2 prints above the 23.5% Q2 2025 reading — confirming pricing power — or compresses into the low 24s as data-center mix pulls materials cost share higher (the "several hundred basis points" mix shift Jain surfaced).
Labor as the binding constraint — quantified. Management stated outright that labor caps growth. Watch whether Q2 headcount holds above 23,000 (no further large step needed) or whether a fresh step suggests management is unlocking capacity to chase upside — either path is material to forward growth and margin.
Modular revenue mix. Was 18% in FY 2025. A Q2 print above 20% would confirm the modular-as-growth-vehicle thesis; flat near 18% would imply core mechanical/electrical is keeping pace with modular's ramp.
Sources
- Comfort Systems USA Q1 2026 press release, filed via SEC EDGAR — https://www.sec.gov/Archives/edgar/data/1035983/000110465926047679/fix-20260423xex99d1.htm
- Comfort Systems USA Q1 2026 earnings call Q&A — exchanges with Thompson Davis (Thalheimer), On4Tim (Koss), UBS (Chan), KeyBank Capital Markets (Jain), Stifel (Brophy)
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