Good day, and thank you for standing by. Welcome to the Q4 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 again. Please be advised that today’s conference is being recorded. I would now like to turn the call over to the speaker for today, Julie S. Shaeff, Chief Accounting Officer. Please go ahead. Thanks, Lisa. Good morning.

Welcome to Comfort Systems USA, Inc.’s fourth quarter and full year 2025 earnings call. Our comments today, as well as our press releases, contain forward-looking statements within the meaning of the applicable securities laws and regulations. What we will say today is based upon the current plans and expectations of Comfort Systems USA, Inc. Those plans and expectations include risks and uncertainties that might cause actual future activities and results of our operations to be materially different from those in our comments. You can read a detailed listing and commentary concerning our specific risk factors in our most recent Form 10-Ks, as well as in our press release covering these earnings. A slide presentation is provided as a companion to our remarks and is posted on the Investor Relations section of the company’s website found at comfortsystemsusa.com. Joining me on the call today are Brian E. Lane, Chief Executive Officer, Trent T. McKenna, President and Chief Operating Officer, and William George, Chief Financial Officer.

Brian will open our remarks.

Alright. Thanks, Julie. Good morning, everyone, and thank you for joining us today. Last night, we reported record earnings and backlog and exceptional cash flow thanks to best-in-class execution by our teams across the United States. Same-store revenue growth for the fourth quarter was 35% and our quarterly gross margin exceeded 25% for the first time in company history. We are reporting $9.37 per share this quarter, up 129% from last year and we earned $28.88 per share for the year compared to $14.60 in 2024. Backlog increased to a new all-time high of $12,000,000,000 thanks to fantastic bookings in the quarter. Backlog growth was especially strong with technology customers, but our bookings and pipelines are strong in practically every sector. 2025 operating cash flow is $1,200,000,000 laying a strong foundation for continued investment and net cash flow demonstrates strong trends in our execution, customer relationships, and prospects. Our modular capacity is currently around 3,000,000 square feet and we expect to increase this to approximately 4,000,000 square feet by the end of 2026 weighed more heavily to the first half of the year. Gross profit was $675,000,000 for 2025, a $241,000,000 increase compared to a year ago. Our gross profit percentage grew to 25.5% this quarter, as compared to 23.2% for 2024. This margin improvement was achieved through excellent execution within both of our segments. The quarterly gross profit percentage in our mechanical segment improved to 24.9% compared to 22.4% last year, and margins in our electrical segment continued to climb to 26.9%. Full-year gross profit increased by $719,000,000 and our annual gross profit margin was 24.1%, as compared to 21% in 2024. Our electrical margin was 26.7% for 2025 while mechanical was 23.6%. As we look to 2026, we are optimistic that gross profit margins will continue in the…

Backlog at the end of the fourth quarter was $11,900,000,000, a same-store increase in both sequential and year-over-year backlog. Same-store sequential backlog increased $2,400,000,000, or 26%, driven by bookings within the technology sector in both traditional construction and modular. More than one-half our sequential backlog increase was new modular bookings and with the continuing increase in modular and larger project backlog, the duration of our backlog continues to extend. Since last year, our backlog has doubled with an increase of $6,000,000,000 on a same and on a same-store basis, our backlog is 93% higher than at this time last year. Our revenue mix continues to be led by the industrial sector, which includes technology, and industrial accounted for 67% of our volume in 2025. Technology, dominated by data center work, was 45% of our revenue, an increase from 33% the prior year. Industrial, and especially technology, is the largest driver of pipeline and backlog. Institutional markets, including education, health care, and government, are also strong and represent 21% of our revenue. Commercial service markets are active for us. However, our commercial construction is now a small portion of our overall construction business. Construction accounted for 86% of our revenue, with projects for new buildings representing 63% and existing building construction, 23%. We include modular in new building construction and year to date, modular was 18% of our revenue. Service revenue increased by 12% this year, but with faster growth in construction, service is now 14% of our total revenue. Our overall service business achieved a record $1,200,000,000 in revenue for 2025, and service continues to be a growing and reliable source of profit and cash flow. With unprecedented backlog and strong project pipelines, and given the confidence we feel in our best-in-class workforce, we expect continued strong performance in 2026. And we feel confident in our prospects. I want to take this opportunity to close by thanking our over 22,000 employees for their hard work and dedication. Our success is a direct result of the people that serve our customers every single day. I will now turn it back over to Lisa for questions. Thank you. Thank you. As a reminder, if you would like to ask a question, please press

11 on your telephone. To remove yourself from the queue, press 11 again. We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. We will now open for questions. Our first question today will be coming from the line of Timothy Mulrooney of William Blair. Your line is open.

Yeah. Good morning, Brian, Bill, Trent. Thanks for taking my questions. Wanted to ask a clarification question on the backlog, and then I have one for Trent about labor. But first, on the backlog, I think folks are going to look at your backlog, and they see that growth accelerating there. They are curious what that is really based on. So could you talk a little bit more about how this all really works? Like, is your technology backlog today, is that reflective of the recent spike in CapEx that we have seen at the major hyperscalers recently, those announcements the last couple of weeks, or is your backlog today reflective of hyperscaler spending plans last year or two years ago? In other words, are you early cycle or later cycle on the CapEx announcements that we see?

Thanks, Tim. So if we put something into backlog, it means that we have the binding legal commitment, a price, and a scope. In order for us to meet those three requirements, a building has to have been planned a year or two ago. Right? We are not booking backlog for things that are being committed to today. The backlog we book is for stuff that is already—the holes have been dug, things are being built. So, you know, for a long time, people have thought of construction in a rubric of there are the early cycle players—that is mostly engineers and architects. There are the mid-cycle players—it is the people who start, you know, dig the hole, start the building—and then we are what is called a late-cycle player. So by the time we are booking backlog and especially by the time we are booking revenue, we are really working on things that came up at, you know, one to two and a half years ago. So for these gigantic projects, you know, I think as you were kind of implying, we will see whatever commitments they are making now, we will see that in 2027, 2028 in our revenue.

Okay. That is very clear, Bill. Thank you. That is exactly what I was asking about. So thank you for clarifying that. And then just shifting gears completely. I wanted to ask about the labor shortage situation because I have seen, you know, you have added more than 7,000 employees over the 24 months according to your SEC filings. So it is a lot. So I guess my question is, are you able to still source enough talent to fulfill all this demand? Or are you seeing more bottlenecks these days? And can you talk about the different things that you are doing as an organization to build and retain this critical talent pool? Thank you.

Yeah. Thanks, Tim, for that question. First, I think first and foremost, you know, our operating companies are really great places to work. They attract best-in-class craft professionals and leaders in the industry. And that is, you know, across the board, Comfort Systems companies, you know, all meet that description. And then, you know, one of the things that we have talked about in the past and we continue to invest in and grow is our in-house capacity to provide contract craft professionals on a traveling basis, and that is in Kodiak and Pivot. And, you know, Pivot brought to us also a technology stack that has really helped us grow that piece of what we are building to be able to meet the labor needs of our customers. And this, you know, really gives our business leaders at a local level greater flexibility to pursue work either in remote geographies or work that would otherwise have had too large of a peak staffing requirement for them to have previously, you know, gone after. So when you see those numbers, you know, one, it is an all-of-the-above approach to hire, and then two, it is a novel and new approach for us with regard to contract craft professionals. And we are currently, you know, approaching this demand environment where we have a lot of work to chase.

Understood. Thanks for that detail. And congrats on a nice quarter.

Thank you. One moment for the next question. Our next question will be coming from the line of Adam Robert Thalhimer of Thompson Davis. Your line is open.

Hey. Good morning, guys. Congrats on another wave of record results.

Thanks, Adam.

Hey. Similar question to Tim, but I was hoping you could give us more color on the bookings in Q4. What kind of projects are those? And when will those start construction?

So if you look at the enormous sequential increase of $2,600,000,000 in bookings, a little over half of that was new bookings in modular. So, in past years, we have sometimes had a lot of year-end purchase orders in modular. And as the business has scaled up, that has scaled up too. That work is—a huge proportion of the work that was actually booked this quarter is going to perform in 2027. Some of it will be in 2026 in the new buildings that we have committed to. And some of it actually goes into 2028. For the rest of the business, the well over a billion dollars of new construction project bookings—that is highly generally reflective of the most busy sectors, which is by far data centers, is the most busy of those sectors. Although there is really good activity in manufacturing, in pharma, and in other verticals such as food processing. But the projects are really big now. And so that means that they get into—they sit in backlog for a longer period of time. And I think some of what you saw with those bookings was people trying to get us signed up for their project as soon as possible because I think there is a general understanding with the demand right now for construction services in the United States. Not everybody who wants a building gets one. So it is a busy time and it is, you know, it is a great opportunity for us to really reward the people who are great partners for us.

Perfect. And then, I wanted to ask about the modular expansion, the 3,000,000 to 4,000,000 square feet. Does all of that come online at 2026, or does that kind of come online throughout 2026? You know, what is your ability to add square footage beyond that, and then how does that impact CapEx this year?

So the single biggest procurement of space will close at February. We will be doing something in that space within a month or two. But it will not be fully productive till the end of the year. So I would say it is more—it is a gradual addition over the course of the year. But I think some of that space will be productive, especially final assembly space. We can be productive in that very, very quickly.

And do you have a forecast for 2026 CapEx, Bill?

If I had to—so a lot of it will depend on whether we sign leases or purchase buildings. We are doing one very large building purchase in the first quarter. We are looking at both leasing and purchasing for another very big that we will probably be making in North Carolina. So I really do not. If I were forced to, I would say the 1.7% you just saw is kind of a baseline rate for us right now. And then, you know, if you buy a building and it is $60,000,000 or $70,000,000, that is going to move the meter, you know, a couple tenths of a percent.

You know?

So that is what I have got for you.

Got it. Okay. Hey. Congrats again. Thank you. See you. Thanks.

Thank you. One moment for the next question. Our next question is coming from the line of Julio Romero of Sidoti & Company. Your line is open.

Thanks. Hey. Good morning, guys. My first question is on the same-store sales growth expectation of mid to high teens year over year in 2026, more weighted in the first half. Could you give us a sense of how much of the full-year contribution is weighted to that first half? In other words, are we looking at a particularly strong first and second quarter, where the same-store sales growth is similar to what you saw in Q1 2023 and Q4 2024 in that 30% growth range? Or how would you have us think about that growth in the first half? It is interesting. It is not so much that the growth is heavier in the first half as that the comparables last year are steeper in the second half of this year. So I think we are going to grow consistently through the year. But you saw—although the extra growth you saw third and fourth quarter of last year just makes it a steeper comparable. So, essentially, we looked at—we budget. Right? We just had our year-end budgeting process. We look really hard at what of the new backlog and of the existing backlog we think will come through. We think about our service business. We think about our modular capacity. And we come up with sort of a full-year revenue number. But then when you just say, okay. Well, yeah. And, you know, so that has a percentage, let us say, in the mid to high teens. Then when you look at that, you have to take into account that last year, the pattern was a pretty steep ramp up. And so the first two quarters just—you know, the number you are going to compare to is proportionately a little smaller. Super helpful there. And then you know, I had one other one about, you know, as data centers continue to increase in density, you are obviously seeing increase in scope and in project complexity. Can you maybe dive a little bit into how that improves the project economics for Comfort Systems. In other words, if scope is increasing three to four times versus five years ago, given the scarcity of skilled contractors that can kind of tackle that. Fair to assume your project economics are outpacing the increasing density of data centers?

Yeah. Well, it certainly has been doing that over the last several quarters, right, as evidenced by the results that we just demonstrated. We definitely have an opportunity to, you know, demand that we be rewarded for the risk and for the commitment of scarce resources to people. At Comfort, we do not price primarily based on, you know, gross profit per hour worked. We put a very, very heavy emphasis on work that will be good for our people, places where, you know, they can get to it without stressing their family. They can find a place to live. They can get lunch. The other contractors on the job who are their friends. So there is a—you know, when your workforce is as scarce as ours is, if you thought about it, I do not think it would surprise you to know that being good to your workforce is almost more important than making sure that you optimize something that is in a spreadsheet. Right? Because the spreadsheet is no good if the people are not there.

And, Julio, one more thing. I mean, even when they are getting bigger, which they are, getting a lot bigger. The work is still the same for us. Is this more of it?

And I really do think it helps with your productivity and your planning. At least the ones I have seen. So

I think it does help our economics in terms of how fast we can go as well.

Very helpful. I will pass it on. Thank you.

Thanks. Thanks, Julio.

Thank you. One moment for the next question. Question comes from the line of Brent Edward Thielman of D.A. Davidson & Company. Your line is open.

Hey, y’all. Great quarter again. I guess just a question. I mean, it looks like you saw a measurable increase in modular contribution in the fourth quarter and happened to see pretty meaningful operating leverage here as well. SG&A as a percentage of revenue—Bill, I mean, I think it is the lowest I think you have ever seen for a fourth quarter that I can remember. Did the two go hand in hand? Anything else that you would say is driving that operating leverage that, you know, ultimately reflecting this benefit at the fixed overhead at Modular this quarter.

So I will start with the second one and say something brief about your first question, and then let us see if anybody else has anything they want to say. You know, that SG&A leverage—we increased our SG&A expenditures by $155,000,000—is a lot of money in the real world. That is a lot of human beings and computers and it is just that our revenue is growing so much faster that we are still getting leverage, and, you know, I think we just talked about pretty strong revenue growth next year. If we were to hit that revenue growth, I do not think our SG&A would grow quite as fast. So there is some of that still available to us. Now as far as the prior question goes, and, you know, if I do not answer it, I think it is pretty down-to-earth answer. It is, you know, it is execution. It is getting good pricing. It is just having an opportunity to go out and, you know, let our people do what they are great at. And having them have enough money in the job to account for the risks and to take care of, you know, take care of their people. I know. Maybe I did not answer your first question, but that is what I am thinking.

Okay. Well, to be continued there, Bill, I guess.

Maybe another question just on modular. You guys had a number of initial—I mean, even before talking about this 4,000,000 square footage, a lot of initiatives in terms of growing physical space, upgrading equipment, so I think all were intended to help you kind of debottleneck. Where would you say you are in terms of leveraging the investments you already made there at Modular? And are there still some of these things coming online through this year before the square footage increase that, you know, you maybe you have not fully realized the benefits of today?

I mean, yeah. I mean, we are on a fantastic journey. Right? One of the interesting things—you heard me talk about how we might be buying more buildings. One of the reasons we are looking at buying buildings rather than leasing them—you know, we do not want to be in the real estate business—is because the amount of money we are putting into these buildings in the form of robotics, and, you know, other optimizations using automation, makes it so that you really do not want to drop $30,000,000 into a $60,000,000 building you do not own. I think we are making great progress. I think that it is really—it is extraordinary to see what is being accomplished by those guys. The last thing I want to do is just come back to the beginning of your question. The other thing is, you know, modular grew precipitously. And if you look in the MD&A, you can see, you know, it grew precipitously on both revenue and the profitability side. But it is still only 18% of Comfort. The rest of Comfort is growing pretty much the same. Modular is an extraordinary, wonderful ingredient for our success, but it is one ingredient and everything else is doing great as well.

Yeah. If I could, I would like to just commend that team. You know, what the modular teams at Comfort Systems have been able to accomplish is really quite extraordinary with the expansion and also performance that they are continuing.

Yeah. For sure. One more if I could. Just, I mean, it looks like you saw, like, a $1,600,000,000 increase in backlog for your, I guess, non-modular Texas operations for the year. Could you just talk about markets outside of data center and Texas? Or should we just be talking about data center and Texas to the stick build operations? Just adds a few questions there.

Yeah. No. I mean, if you are talking about Texas, it is a combination of modular and stick build.

We are getting a lot of electrical work. As you know, we have the largest electrical contractor here in Texas for sure. We are going out more west—they are building in bigger, so we—you know, that has grown considerably. But, also, the other electricals we have are just doing—are outstanding as well throughout the country. So, you know, I know modular gets a lot of attention. But the stick build is still a very popular build—how people are building either data or other facilities.

Yeah. And, you know, like, advanced technology, which for us, at least in the last twelve months, is almost—it is overwhelmingly data center. That went from 33% of our revenue to, like, 45% of our revenue year over year. So the reality is it is a lot in Texas—data center is just coming and demanding the construction resources that we have. And, you know, the good partners are making it worth our while to dedicate the overwhelming majority of our resources to that vertical.

Yeah. I am just going to—the Texas situation is really probably unique in the country with the amount of build that they are going—West Texas, there is a lot of, obviously, energy, et cetera that is out there.

But the amount of opportunities we are looking at, you know, is really outstanding.

Yep. Alright. Thanks a lot. Appreciate it.

Thank you. One moment for the next question, please. Our next question is coming from the line of Joshua K. Chan of UBS. Please go ahead.

Hi. Good morning, Brian, Trent, Bill, Julie. Congrats on a really strong quarter. Thank you. Yeah. I guess, Brian, you have talked for a long time about, you know, not overcommitting to jobs. And so do you feel like your subsidiaries still understand that? Do you feel like there is any push from them to take more jobs than you are comfortable with? Just kind of how is that kind of progressing so far?

Yeah. Given—hey, Josh. That is a good question. You know, we have talked about this a long time. I think it is a great question. We remain very disciplined. You know, we go through, on the acquisition side of a job, a detailed process where we lay out our labor projections on our current work, in the future work we are looking at—when is it going to start, who is going to be available, how many are going to be available, the supervision for that work. So we are right now in a very good position to handle all our backlog and assess what is coming that we can do to make sure we keep our profitability up, productivity up, and keep everybody safe. So, no, we have not—people are not pushing over their skis. The work we have, we can handle.

That is great to hear. Yeah. Thanks, Brian. And then, I guess, on your outlook, you did call out stronger growth in the first half. Obviously, there was an ice storm in a lot of the South and Southeast in Q1. So I just want to make sure that the operations kind of, you know, handled that well and that that is not a concern in the near term, I guess.

So we did have some of our biggest operations who had jobs shut down for multiple days in January. That is why we are seasonally lower. Right? That is why every year, we are seasonally lower. There is always something like that. So I do not think there is anything—you know, there are ice storms every year. It is just what you would normally see. You know? And while we are talking about this, you know, if you look at the weather, particularly up in the North with temperatures we had, really want to applaud our guys for working through it. They did a heck of a job, you know, in very challenging conditions for sure.

Yeah. That is right. Okay. Yeah. Congrats on a good quarter and a strong outlook. Thanks.

One moment for the next question. And our next question is coming from the line of Brian Daniel Brophy of Stifel. Your line is open.

Congrats on a nice quarter. Right. Obviously, there was some discussion about a month ago on some potential changes to cooling requirements on next-generation chips. Just any color on how that may impact your business and any notable implications we should be thinking about.

I would say not at all. You know, the new chip stuff—they said, okay, we can use 45-degree water. Still needs pipe. Still needs water. Forty-five-degree water is not naturally occurring for 99% of the year, and 99% of the places. So I do not—you know, if you just talk to our smartest people, until they figure out how to run the servers without electricity, they are going to have heat. And, yeah, we just think people are going to need electricians and pipe fitters, honestly.

Far more impactful for the OEMs than for us.

Noted. That is helpful. And then just wanted to ask about the M&A pipeline and cash deployment. You guys are obviously generating a lot of cash. A very large cash balance at this point. Seems like your cash generation may be outpacing your ability to deploy into M&A. Maybe that is true. Maybe that is not. But just big picture, how are you also thinking about other avenues on the capital deployment side? Thanks.

So the pipeline is good. But the cash flow is relentless. Sweet. You know, we like our pipeline. We will get some done. You might have noticed we spent a couple $100,000,000 buying shares this past year. You know, two consecutive $0.10 increases to our dividend is almost a 50% increase to our dividend. I know our stock price keeps running away from it. At the same time, proportionately, if you look at the cash that we have and at least project to have this year, given the M&A—we, you know, with, you know, the range of M&A we might do—we are not going to have an unprecedented amount of cash as compared to the size of Comfort Systems. There have been times in the past—when the financial crisis started, we had more cash proportionately than we think we are going to have in the next little while. And that is why we have some of the great companies we have today. So we are definitely of a mindset to continue to have very, very high demands for conviction when we do acquisitions. We are certainly paying more for companies than we ever have. Because they are worth more. You know, a company with hundreds of electricians that have worked together as a team for years, for decades, is worth more than it was in the past. But at some point, you know, we do actually think, you know, we are building for a multi-decade period. And just want to have people that come in and that are good peers to the amazing companies we have. You know? One of the reasons Comfort is so successful is we have so many companies that have—they have been building data centers for decades. Right? There is nobody on the planet that has, you know, a better pedigree than us in building data centers. And, you know, we want to keep the quality of our group of companies, you know, very high. And so with acquisitions, we have to choose between, you know, between conviction and sort of making spreadsheets happy—we are going to stick with conviction. It has done well for us in the past.

Understood. That is helpful color. I will pass it on.

Thank you. And the next question is coming from the line of Sangita Jain of KeyBanc. Your line is open. So I have a question on the backlog duration becoming longer, which is kind of a little bit different from what has been the case for you guys. Since we still have the supply chain and tariff uncertainties, are you having to contract for this longer-duration backlog a little bit differently so that you know you are protecting your return when you deliver them, let us say, in 2028?

You know, if you look across our cost—like, if you look at our cost of goods sold and you look across our cost—there really are not—we do not quote equipment or anything that is highly spec, which on this scale of work, it is all highly spec, without getting a quote from someone else. And so that really has not changed. We are actually being released, even on these long jobs, to purchase stuff very, very early. Sometimes being released to—we are being given enough of a commitment to purchase stuff before the work even goes into our backlog. The rest of our cost and where we take all of our risk is labor. You know, there is no such thing as, you know, sort of four-year price locks for labor. So what we rely on there is that we have the best people in the country at knowing that they are going to have to take care of their people and making sure that they put the money in the jobs that they are going to need to take care of their people.

And, Sangita, Bill and I—this is Trent. Bill and I, as recovering attorneys, both appreciate how much our legal team does to make sure that we have the right contract terms to protect us as we go forward with all this work. And they do a really, really great job making sure that we are protected contractually.

They are doing better than they did when Trent and I were general counsel. Without a doubt.

Without a doubt. I will certify that.

Possible we have a little more bargaining power.

Got it. Let me ask one more on the modular capacity increase. Can you kind of walk us through your decision on going from 3,000,000 to 4,000,000? Is that a function of a specific customer coming and asking you for additional capacity? Or is it more you kind of seeing the runway ahead?

You know, it is primarily us taking steps to meet more of the demand from our two largest customers. They would buy more if they could, and we really want to do everything we can. They have been great partners for us. We want to be great partners for them. We have added a few customers, but none of them are at scale. And if you look at the new buildings, and you say, okay. What is going to be built in those buildings? The floor space right now is planned for those two large hyperscaler customers who have been so good to us.

Appreciate that. Thank you.

Thanks.

Thank you. I would now like to turn the call back over to Brian Lane for closing remarks. Please go ahead, Brian.

Alright. Thank you. In closing, I really want to thank our amazing employees again. They are truly outstanding. We had a great 2025. And we are really excited about 2026. Thanks for your interest in Comfort Systems USA, Inc. We look forward to seeing you on the road soon, and hope you all have a great weekend.

This does conclude today’s conference call. You may all disconnect.