Comfort Systems USA, Inc. (FIX Quick QuoteFIX - Free Report) entered the third quarter of 2026 with a record backlog and strong demand from technology customers, supporting management’s expectations for continued organic growth in 2027.

During its third-quarter earnings call, executives emphasized expanding project commitments, disciplined labor deployment and modular capacity investments. They also addressed margin fluctuations, customer creditworthiness and the sustainability of bookings amid rapid expansion.

The company reported third-quarter revenues of $3.77 billion, which topped the Zacks Consensus Estimate of $3.35 billion. Earnings per share of $13.91 surpassed the consensus estimate of $12.71.

Comfort Systems USA, Inc. Price, Consensus and EPS Surprise

Comfort Systems USA, Inc. price-consensus-eps-surprise-chart | Comfort Systems USA, Inc. Quote

FIX Projects Strong Organic Growth Through 2027

Chief financial officer William George expects same-store revenue growth in the mid-40% range for full-year 2026, followed by growth in the mid-20% range in 2027.

George expects gross margins in 2027 to remain within the strong ranges achieved over recent quarters. Management also anticipates an approximately 23% tax rate through 2027.

Comfort Systems' Backlog Extends Revenue Visibility

President Trent McKenna highlighted a record backlog of $17.81 billion, representing approximately 90% year-over-year growth and a 27% sequential increase.

During discussions with KeyBanc Capital Markets, CEO Brian Lane explained that larger projects have extended backlog duration to about 18-24 months, up from roughly nine months historically.

McKenna attributed stronger bookings to customers committing earlier and securing larger project scopes because skilled construction capacity remains constrained. Management emphasized that labor availability, rather than demand, currently determines project acceptance.

FIX Expands Modular Capacity Amid Technology Demand

McKenna reported that technology customers accounted for 59% of revenue in the first nine months of 2026, up from 42% a year earlier. Modular operations contributed 17% of revenue.

Management expects modular facilities to exceed 4 million square feet by year-end 2026 and reach approximately 6 million square feet by year-end 2027.

In response to Goldman Sachs, McKenna clarified that the planned capacity expansion supports existing programmatic customers. Although the company is manufacturing products for frontier AI laboratories and colocation providers, additional long-term programmatic agreements have not been established.

Comfort Systems Addresses Margin Pressures

George reported a third-quarter gross margin of 24.8%, unchanged year over year. Mechanical margins improved to 25.1%, while electrical margins declined to 24.3% from 26.2%.

During questioning from Thompson, Davis & Company, McKenna explained that a higher equipment-and-materials mix reduced sequential margin percentages despite higher revenue dollars.

George also identified approximately $12 million in additional acquisition-related purchase adjustments versus the preceding quarter. He emphasized that conservative profit recognition on early-stage projects affects reported margins, while maintaining that underlying operating conditions remain strong.

FIX Maintains Selectivity in Customer Commitments

Oppenheimer questioned management about financing risks associated with data center development. George explained that customer financial strength, payment schedules and the alternative usefulness of completed facilities influence contract decisions.

Management also described strict requirements for new modular partnerships, including multiyear volume commitments and acceptable payment terms before undertaking substantial dedicated investments.

On infrastructure constraints, McKenna said power availability had generally been resolved for projects entering the company's traditional construction pipeline. Management reported no material project delays attributable to proposed data center restrictions.

Comfort Systems Balances Expansion and Capital Discipline

George highlighted strong cash generation alongside substantial investment requirements. Third-quarter operating cash flow reached $1.01 billion, partly due to favorable collections and deferred tax payments.

Management expects full-year capital expenditures to be 4-5% of revenue, with elevated investment continuing into the first half of 2027. The company also increased its quarterly dividend to $1 per share.

Lane reiterated that project execution and workforce availability remain central priorities. Management maintained a confident outlook while emphasizing selective bookings, disciplined acquisitions and operational capacity over unrestricted expansion.

FIX Zacks Rank and Style Scores Signal Growth Strength

FIX currently carries a Zacks Rank #2 (Buy), reflecting a favorable earnings-estimate-revision profile. Its Growth Score of A and Momentum Score of A indicate attractive growth characteristics and favorable price momentum, while its Value Score of D points to relatively weaker valuation appeal. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock's VGM Score of A reflects a favorable combination of value, growth and momentum characteristics. This represents a positive screening combination under the Zacks methodology. However, the Zacks Rank remains subject to change as analysts revise earnings estimates following the latest quarterly results.