About Comfort Systems USA

Comfort Systems USA, Inc. provides mechanical and electrical contracting services. The company operates primarily in the commercial, industrial and institutional MEP markets and perform most of the company’s services in manufacturing, healthcare, education, office, technology, retail and government facilities. Substantially all of the company’s consolidated 2023 revenue was derived from commercial, industrial and institutional customers and multi-family residential projects. Approximately 54.8% of the company’s revenue was attributable to installation services in newly constructed facilities and 45.2% was attributable to renovation, expansion, maintenance, repair and replacement services in existing buildings. Segments The company’s Mechanical segment principally includes heating, ventilation and air conditioning (‘HVAC’), plumbing, piping and controls, as well as off-site construction, monitoring and fire protection. The company’s Electrical segment includes installation and servicing of electrical systems. The company builds, installs, maintains, repairs and replaces mechanical, electrical and plumbing (‘MEP’) systems throughout the company’s 44 operating units with 172 locations in 131 cities throughout the United States. Strategy Specifically, the company is focused on the following elements: achieving excellence in core competencies; focusing on industrial, commercial and institutional markets; leveraging resources and capabilities; maintaining a diverse customer, geographic, and project base; developing and adopting leading technologies; exceling at modular and off-site construction; expanding the company’s service and maintenance revenue by increasing the value the company can offer to service and maintenance customers; and seeking growth through acquisitions. Operations and Services Provided The company provides a wide range of construction, renovation, expansion, maintenance, repair and replacement services for MEP and related systems in commercial, industrial and institutional properties. The company’s local management teams maintain responsibility for day-to-day operating decisions. Local management is augmented by regional leadership that focuses on core business competencies, regional financial performance, cooperation and coordination between locations, implementing best practices and corporate initiatives. In addition to senior management, local personnel generally include design engineers, energy efficiency and sustainability experts, sales personnel, customer service personnel, installation and service technicians, sheet metal and prefabrication technicians, estimators and administrative personnel. The company has centralized certain administrative functions, such as insurance, employee benefits, training, safety programs, marketing and cash management to enable the company’s local operating management to focus on pursuing new business opportunities and improving operating efficiencies. Construction and Installation Services for New Buildings—The company’s installation business related to newly constructed facilities, which comprised approximately 54.8% of the company’s consolidated 2023 revenue, involves the design, engineering, integration, installation and start-up of MEP and related systems. The company provides ‘design and build’ and ‘plan and spec’ installation services for office buildings, retail centers, manufacturing plants, healthcare, education and government facilities and other commercial, industrial and institutional facilities. In a ‘design and build’ installation, the company works with the customer to determine the needed capacity and to optimize energy efficiency of the MEP systems that best suit the proposed facility. In ‘plan and spec’ installation, the company participates in a bid process to provide labor, equipment, materials and installation based on the end user’s plans and engineering specifications. Once an agreement has been reached, the company orders the necessary materials and equipment for delivery to meet the project schedule. In many instances, the company fabricates ductwork, conduit and piping and assemble certain components for the system based on the mechanical drawing specifications. Finally, the company installs the systems at the project site, working closely with the owner or general contractor. The company also performs larger project work, with 1,004 contracts in progress as of December 31, 2023. Renovation, Expansion, Maintenance, Monitoring, Repair and Replacement Services for Existing Buildings—The company’s renovation, expansion, maintenance, monitoring, repair and replacement services in existing buildings comprised approximately 45.2% of the company’s consolidated 2023 revenue. Maintenance and repair services are provided either in response to service calls or under a service agreement. Service calls are coordinated by customer service representatives or dispatchers to process orders, arrange service calls, dispatch technicians and communicate with and invoice customers. Service technicians work from service vehicles equipped with commonly used parts, supplies and tools to complete a variety of jobs. Optimal maintenance is crucial to energy efficient operations. Commercial, industrial and institutional service agreements usually have terms of one or more years, with automatic annual renewals, and frequently include thirty- to sixty-day cancellation notice periods. The company also provides remote monitoring of power usage, temperature, pressure, humidity and air flow for MEP and other building systems. Seasonality Demand for the company’s services is generally higher in the second and third calendar quarters (year ended December 2023) due to increased construction activity and increased use of air conditioning during the warmer months. Sales and Marketing The company has a diverse customer base, with its top customer representing 14% of consolidated 2023 revenue. The company intends to continue its emphasis on developing and maintaining long-term relationships with the company’s customers by providing superior, high-quality service in a professional manner. With respect to multi-location service opportunities, the company maintains a national sales force in its national accounts group. Vehicles The company operates a fleet of various owned or leased service trucks, vans and support vehicles. Governmental Regulation and Environmental Matters The company’s operations are subject to the requirements of OSHA (Occupational Safety and Health Administration) and comparable state laws directed towards protection of employees. The company’s operations are subject to the federal Clean Air Act, as amended, which governs air emissions and imposes specific requirements on the use and handling of ozone-depleting refrigerants generally classified as chlorofluorocarbons (‘CFCs’) or hydrochlorofluorocarbons (‘HCFCs’). Clean Air Act regulations promulgated by the United States Environmental Protection Agency (‘USEPA’) require the certification of service technicians involved in the service or repair of equipment containing these refrigerants and also regulate the containment and recycling of these refrigerants. History Comfort Systems USA, Inc. was founded in 1917. The company was incorporated in 1996.