Oct 23, 2026 earnings call — Record backlog and strong modular demand
Backlog grew to $17.8 billion, a new high for the company.
Revenue $3.8B (est $3.4B) · EPS $13.91 (est $12.85)
Key quotes
"Bookings were strong, and our backlog at the end of the quarter grew to a new high of $17.8 billion."
"We remain on track to have over 4 million square feet of space in our modular businesses by the end of 26 and with ongoing orders and investments to meet that demand, we expect to have approximately 6 million square feet of capacity by the end of 27."
"Every acquisition we have ever done at Comfort Systems USA was done by a team of people."
Analyst Q&A 9
Margins and when big jobs show profit
Q (Adam Thalhimer · Thompson Davis): Analyst asked why margins fell sequentially and when large jobs should mature to raise margins.
A: Management said margins fell because the quarter had a higher share of equipment and materials, purchase adjustments were about $12 million higher, and many jobs are early so margins appear lower now. They said profit visibility improves as jobs reach roughly 40, 60, 70% complete and they expect to get back to average in the first half of next year. They cautioned not to focus on one quarter and pointed to strong underlying business.
"You begin to see profit changes when you are 40, 60, 70% complete." — William George (CFO)
Source of the extra modular capacity
Q (Adam Bubes · Goldman Sachs): Analyst asked if the extra 1 million square feet to the $6 million target is from new frontier lab/colo customers or existing hyperscalers, and asked for details of engagements.
A: Management said the $6 million buildout is based on current programmatic buildouts with existing customers. They are building products for frontier lab and colocation providers, but have not signed programmatic agreements with them yet and will not call them programmatic until terms are settled. They noted programmatic relationships usually involve multiyear volume commitments and careful credit considerations.
"So the build out that we have announced is all for existing capacity that is, with our current customer base in Modular." — Trent T. McKenna (PRESIDENT)
How long backlog will last
Q (Sangita Jain · KeyBanc): Analyst asked why mechanical backlog jumped and whether backlog duration has changed from under a year.
A: Management said backlog is lumpy across businesses and some units are highly exposed to the super cycle and choosing work. They said because they are winning larger projects, backlog duration has extended and a good framework is roughly 18 to 24 months. They emphasized demand exceeds industry capacity and backlog strength reflects that.
"I think the time frame is probably pushed out to 18 to 24 months." — Brian E. Lane (CEO)
Checking customer payment and risk
Q (Brent Thielman · Oppenheimer and Co.): Analyst asked how the company evaluates data center customers' financing and payment risk when taking new projects.
A: Management said outside of modular the payment obligation typically comes from a large national general contractor, and for modular they get mobilization and delivery payments. They said they assess whether a building will have broad value to others, use lien rights and special payment terms when needed, and will avoid work where payment terms look risky.
"Outside of Modular, the payment obligation is actually typically coming from a large national GC." — William George (CFO)
Why orders spiked and material mix impact
Q (Joshua Chan · UBS): Analyst asked what drove the very large bookings this quarter and whether anything specific made material mix more impactful on margins.
A: Management said timing, personnel, locations, and labor availability let them accept and phase the large amount of work and they are confident in execution with collaborative operating companies. They said material and equipment was about 2% higher than the first 6 months, which increased the cost mix because many jobs are early and materials are delivered earlier in the job life cycle. They called some of this lumpiness.
"material and equipment was about 2% higher than it had averaged in the first 6 months." — William George (CFO)
Moratoriums and adding modular customers
Q (Timothy Mulrooney · William Blair): Analyst asked if state data center moratoriums have delayed projects and why the company has not added more programmatic modular customers.
A: Management said they have not seen projects delayed by moratoriums and think some work may shift to more friendly jurisdictions, but at a micro level they have seen no effect. On programmatic modular customers, they said they have stuck with their two long-term programmatic customers because those relationships are proven and reliable, and they do not want to divert from a sure thing to uncertainty.
"We have tended to stick with our 2 big customers who have kept us you know, kept us happy together for so in 1 case, for 20 years, because we know them." — William George (CFO)
What makes a new modular customer programmatic
Q (Julio Romero · Sidoti and Company): Analyst asked what criteria would make newer modular customers become programmatic and how important financial strength is.
A: Management said the key things are the nature of the customer's multiyear commitment and payment timing. They also value building products that are constructible and versatile so capacity can serve other outlets, and they consider the customer's willingness to follow their experience in design. Financial strength and payment terms are central to deciding programmatic status.
"So I would say that the 2 things that you would look for are the nature of the commitment and the payment timing." — William George (CFO)
Capacity, bookings, and buybacks vs M&A
Q (D. A. Davidson): Analyst asked whether a big booking quarter reduces future bookings and how the company thinks about capital deployment between M&A and buybacks.
A: Management said there is no simple mathematical answer and willingness to take work depends on timing, flexibility, and labor; they will not take work they cannot do and expect to keep booking appropriately. On capital allocation, they said they plan over years, have a strong acquisition pipeline though deal pricing is high, and over time they have used 15 to 20% of free cash flow to buy shares and buy more when prices dip.
"Over a long period of time, we typically use. We have used 15 to 20% of our free cash flow to buy shares." — William George (CFO)
Which US regions are strongest
Q (Brian Brophy · Stifel): Analyst asked which geographic regions showed relative strength this quarter beyond Texas.
A: Management said Texas is really strong, Georgia is strong and getting stronger, and they are seeing activity in Mississippi and Louisiana. They also called out North and South Carolina, Utah, Iowa, and large opportunities in Arizona tied to semiconductor work, though they may prioritize busier regions like Texas.
"Texas, really strong. Georgia, strong and getting stronger. We have seen a lot in, you know, Mississippi, Louisiana." — Brian E. Lane (CEO)