Comfort Systems Posts Record Q3 as Backlog Jumps 90% to $17.81B and EPS Beats by $1.06
Comfort Systems USA reported third-quarter revenue of $3.77 billion and EPS of $13.91, above the $3.4 billion and $12.85 expected, while total backlog climbed 90% from a year earlier to $17.81 billion and operating cash flow rose 83% to $1.01 billion.
Comfort Systems USA (FIX) reported third-quarter 2026 results after Thursday's close, with revenue of $3.77 billion against $3.4 billion expected and EPS of $13.91 against $12.85 expected, according to the summary supplied. Net income rose 68% to $489 million. Total backlog climbed 90% from a year earlier to a record $17.81 billion, and operating cash flow rose 83% to $1.01 billion. The board also raised the quarterly dividend to $1.00 a share, and the company said CFO Bill George will retire after the 2026 Form 10-K. One soft spot: the adjusted EBITDA margin of 17.7% came in below the 18.4% forecast. Shares closed at $1,279.37, down 8.7%, before the report and traded at $1,220.00 after hours, down a further 4.4%, according to Yahoo Finance.
Third-quarter results
| Metric | Q3 2026 | Consensus | Versus consensus | Q3 2025 |
|---|---|---|---|---|
| Revenue | $3.77B | $3.4B | Beat by 10.7% | $2.45B |
| EPS | $13.91 | $12.85 | Beat by $1.06 | $8.25 |
| Net income | $489M | — | — | $291.6M |
| Operating income | $624.6M | $583M | Beat by 7.1% | — |
| Adjusted EBITDA | $667.9M | $629M | Beat by 6.2% | — |
| Adjusted EBITDA margin | 17.7% | 18.4% | Missed by 0.7 pt | — |
Revenue growth was 53.7% from a year earlier, according to the summary supplied, in line with our calculation against the $2.45 billion reported in Q3 2025. By our calculation, adjusted EPS was about 69% above the $8.25 of a year ago, with the year-ago figures taken from the Associated Press' quarterly snapshot. Sequentially, revenue rose about 15% from $3.27 billion in the second quarter and EPS about 11% from $12.53.
Backlog, margins and cash
| Metric | Q3 2026 | Change |
|---|---|---|
| Total backlog | $17.81B | +90% year over year |
| Same-store backlog | $17.39B | +85% year over year |
| Gross margin | 24.8% | Down from 25.9% in Q2 |
| Operating margin | 16.6% | — |
| Operating cash flow | $1.01B | +83% year over year |
| Free cash flow | $805.6M | — |
Backlog is the contracted work still to be performed, and it is growing faster than revenue. By our calculation, total backlog is up about 27% from the $14.06 billion at the end of the second quarter and about 43% from $12.45 billion at the end of the first. Free cash flow equaled about 21% of revenue and about 165% of net income, by our calculation.
Three quarters of acceleration, with thinner gross margins
| 2026 | Revenue | EPS | Backlog | Gross margin |
|---|---|---|---|---|
| Q1 | $2.87B | $10.51 | $12.45B | 26.3% |
| Q2 | $3.27B | $12.53 | $14.06B | 25.9% |
| Q3 | $3.77B | $13.91 | $17.81B | 24.8% |
Revenue, EPS and backlog have all stepped up each quarter this year, while gross margin has slipped from 26.3% to 24.8%, about 150 basis points by our calculation. That pattern fits the lone miss in the report, the EBITDA margin, even as operating income topped estimates. In the second quarter, Comfort Systems reported EPS of $12.53 against $10.45 expected, according to MarketBeat, and CEO Brian Lane said in the company's second-quarter release, "Our people continued their unmatched execution in markets across the country."
Dividend and CFO transition
Comfort Systems' board declared a quarterly dividend of $1.00 a share, up $0.10 from the most recent dividend, an increase of about 11% by our calculation. It is payable on Nov. 23, 2026 to shareholders of record at the close of business on Nov. 12, 2026. Separately, the company said Executive Vice President and CFO Bill George plans to retire after it files its 2026 Form 10-K, ending a 30-year career with the company. Julie Shaeff, currently senior vice president and chief accounting officer, will become executive vice president and CFO. George has served as CFO since May 2005 and was part of the company's 1997 founding team, and the company said the move follows its succession plan. Shaeff has been chief accounting officer since May 2005.
Where estimates stand
| Period | EPS estimate | Revenue estimate |
|---|---|---|
| Q4 2026 | $13.15 | $3.46B |
| Full-year 2026 | $49.06 | $12.99B |
| Full-year 2027 | $60.22 | $15.46B |
These FactSet consensus figures were in place before the report, according to the summary supplied. Over the last four quarters Comfort Systems has beaten by an average of 36.1% on EPS and 13.9% on revenue.
The stock into the report
Shares closed Thursday at $1,279.37, down $121.90, or 8.7%, as of 4:02 p.m. ET, and were at $1,220.00 in after-hours trading at 4:27 p.m. ET, down $56.01, or 4.4%, according to Yahoo Finance. The company holds its earnings call on Friday, Oct. 23 at 11 a.m. ET.
Sources: Third-quarter results, consensus figures, backlog, the dividend, the CFO transition and forward estimates are from the summary supplied; share prices and the call time are from Yahoo Finance. The second-quarter figures are from Comfort Systems USA's second-quarter 2026 release (July 23) and the first-quarter figures from its first-quarter release (SEC Exhibit 99.1); the year-ago quarter is from the Associated Press' Q3 earnings snapshot and the second-quarter consensus from MarketBeat. This is informational, not a recommendation to buy or sell.
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