Good morning. The largest commercial HVAC contractor in the country just posted a quarter that says as much about how it gets paid as about how much work it has.
Top story — A 73% bigger backlog, and customers funding it
Comfort Systems USA reported second-quarter revenue of $3.27 billion, up from $2.17 billion a year earlier, a 50% increase. Net income was $441.6 million, or $12.53 per diluted share, against $230.8 million and $6.53 a year ago (Comfort Systems USA, second quarter 2026 results, 23 July 2026).
Backlog was $14.06 billion at 30 June 2026, against $8.12 billion at 30 June 2025 — up roughly 73%. On a same-store basis, stripping out acquisitions, backlog still went from $8.12 billion to $13.70 billion (Comfort Systems USA).
The number worth your attention is further down the balance sheet. Billings in excess of costs and estimated earnings and deferred revenue stood at $3.23 billion at 30 June, up from $2.12 billion at 31 December 2025 (Comfort Systems USA). In plain terms: that is work customers have already paid for and the company has not yet done.
Operating cash flow was $1.14 billion for the quarter, against $252.5 million a year earlier. Chief Executive Brian Lane called it “remarkable and completely unprecedented quarterly cash flow of more than $1 billion” (Comfort Systems USA).
Quick hits
The margin moved too, not just the volume. Gross margin was 25.9% against 23.5% a year ago, and adjusted EBITDA margin was 18.4% against 15.4% (Comfort Systems USA).
They are not a niche outfit. The company reports 206 locations across 150 cities (Comfort Systems USA).
Cash beat earnings. Free cash flow was $999.3 million for the quarter against net income of $441.6 million — the customers are ahead of the work (Comfort Systems USA).
The Tip — Bill ahead of the work, or fund it yourself
There is no rule that says the big contractor gets deposits and you get paid 60 days after completion. There is only a contract, and most small shops sign whatever is put in front of them.
Three changes, in order of how hard they are to win. First, a deposit on any job where you have to buy material up front — the number should cover the material, not a token 10%. Second, progress billing on anything running longer than two weeks, invoiced on a date, not on a milestone someone else has to certify. Third, a stated interest or admin charge on late payment, so that the conversation about a slow payer starts from your paperwork rather than your temper.
If a customer will not accept a deposit that covers material, that is information. It usually means their own cash is tight, and you were about to lend it to them at 0%.
Tool watch — [Not sponsored]
Pull your standard contract or quote template out this week and read the payment clause as though a stranger wrote it. If it does not name a deposit amount, a billing interval and a late-payment charge, you are running on the customer’s terms.
That’s the callout. See you next time.
The Callout — the business brief for the trades. We label every commercial placement: [Sponsor], [Affiliate], or [Not sponsored]. Today’s Tool watch is our own honest read — no one paid for it. 231J Ramparts Road, Te Anau 9600, New Zealand · Unsubscribe anytime.
Sources: Comfort Systems USA, Inc. — “Comfort Systems USA Reports Second Quarter 2026 Results,” 23 July 2026, Exhibit 99.1 to Form 8-K filed with the U.S. Securities and Exchange Commission.