Q4 2022 Comfort Systems USA Inc Earnings Call
The conference will begin shortly to raise and lower Johan during Q&A, you can dial star one one.
[music].
Yeah.
Good day, and thank you for standing by and welcome to the Q4 2020 to comfort systems USA earnings Conference call. At this time, all participants are in a listen only mode.
Speakers presentation there'll be a question and answer session to ask a question. During the session you will need to press star one one on your telephone you then here an automated message advice in your hand is raised to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now.
Like to hand, the conference over to your Speaker today, Julie <unk> Chief Accounting Officer. Please go ahead.
Thanks, Jeff.
Welcome to comfort systems, USA fourth quarter, and full year 2022 earnings call.
Today as well as our press releases contain forward looking statements within the meaning of the applicable securities laws and regulation.
Today based upon the current plan and expectations of comfort systems USA.
And expectations include risks and uncertainties that might cause actual future activities and results of our operations to be materially different from those set forth.
With that I'll comment you.
You can read a detailed listing and commentary concerning our specific risk factors in our most recent form K Form 10-K, as well as in our press release covering these earnings.
Slide presentation has been provided as a companion to our remarks.
The presentation is posted on the Investor Relations section of the company's website.
For instance, on USA Dot com joining.
Joining me on the call today are Brian Lane, President and Chief Executive Officer, Brett <unk>, Chief Operating Officer, and Bill George Chief Financial Officer, Brian will open our remarks.
Alright, Thanks, Julie good morning, everyone and thank you for joining us on the call today.
We are pleased to report a great finish to 2022 with increased revenue record earnings fantastic cash flow and a surge of backlog.
Our teams delivered amazing execution.
We're grateful for their hard work.
For the first for the fourth quarter.
And the $1 54 per share on revenue of $1 1 billion.
Full year revenue surpassed 4 billion and included same store revenue growth of 22%.
Backlog received an especially strong lift this quarter and our modular and off site construction operations as.
As large customer purchases were committed in advance to support our ability to invest and modular construction capacity.
Our backlog is now over $4 billion at same store increase of 75% from a year ago.
Cash flow was also extraordinary in the fourth quarter.
And for the full year, our cash flow exceeded our excellent earnings by a substantial amount.
We are excited to announce that on February one we acquired <unk>, a premier industrial electrical based in South Carolina.
<unk> will further strengthen our electrical segment and thanks to its capabilities and relationships in a perfectly located market for us we.
We believe that this combination will allow us to achieve important synergies over the coming years.
We also declared a larger than normal increase in our dividend of two and a half cents per share.
Which increases our quarterly payout to $17.05 per share.
This increase reflects our continuing strong cash flow and our desire to reward our shareholders.
I will discuss our business and outlook in a few minutes, but first I will turn this call over to Bill to review our financial performance Phil. Thanks, Bryan So revenue for the fourth quarter of 2022 was $1 1 billion, an increase of $261 million or 30% compared to last.
Year.
Same store revenue increased by $200 million or 23% with the remaining $61 million increase resulting from our acquisitions.
Revenue for the full year 2022 increased by more than 35% compared to 2021 to $4 1 billion.
Our full year mechanical services segment revenue increased $636 million or 25% and our electrical services segment increased by 81% to $431 million.
Same store revenue increased by 22% or $669 million in 2020 to a broad based increase driven by strong ongoing market conditions.
Inflation of equipment and materials also contributed to revenue growth.
With respect to revenue prospects for 2023.
Our growth is hard to predict because of unknown inflation developments and potential variability and the timing and revenue record contribution of new bookings. However, we currently estimate 2023 same store revenue growth to be in the low to mid teens for the full year with larger percentage increases likely to occur.
Earlier in the year considering prior comparables.
Gross profit was $211 million for the fourth quarter of 2022.
$57 million improvement compared to a year ago.
Our gross profit percentage was 18, 9% this quarter compared to 18.0% for the fourth.
Quarter of 2021.
Quarterly gross profit percentage in our mechanical segment increased to 19, 1% while margins in the electrical segment rose significantly to 18, 2%. This year from 14, 8% in 2021.
For the full year 2022, gross profit increased by $178 million and our gross profit margin was 17, 9% in 2022 as compared to 18, 3% in 2021.
Our full year gross profit margin held up remarkably well considering the spike in revenue the relative increase in construction and the changes in our cost mix as higher prices met the materials increased as a proportion of our costs and revenues.
It is currently challenging to predict how our margins will unfold in 2023.
Important factors that will influence our margins include ongoing cost inflation and the fact that with the surge in bookings, we will be early and many projects and new construction should also expand as a proportion of our revenue.
These factors are especially prevalent in our modular work, where we will also have ramp up of considerations as we implement new capacity.
Despite these structural trends.
That might put some pressure on margins. We expect good continued profitability and we are optimistic that gross margins in 2023 will be at or near the strong levels that we achieved in 2022.
SG&A expense for the quarter was $132 million or 11, 8% of revenue compared to $105 million or 12, 3% of revenue for the fourth quarter in 2021.
On a same store basis, SG&A was up approximately $17 million.
For the full year SG&A expense as a percentage of revenue was 11, 8% in 2022 down from 12, 2% for 2021.
On a same store basis for the full year SG&A increased $56 million largely due to increased head count to support our higher activity levels.
Our operating income increased by 62% in the fourth quarter of 2022 to $80 1 million when compared to this quarter last year.
Interest expense in 2022 was higher than a year ago due to the increased interest rates on our revolving credit facility. Our average interest rate on our credit facility was five 7% as of December 31, 2022, and we expect that with higher rates. Our interest expense will increase in 2023 compared to <unk>.
<unk> thousand 22, especially early this coming year when comparable periods a year ago had much lower rates.
Our tax rate for the quarter was 21%, while our full year tax rate was a negative 4% due to R&D tax benefits related to prior years.
We continue to view, our normalized tax rates could be approximately 22% to 23%.
After considering all of the factors above net income for the fourth quarter of 2022 increased by over 40% to $55 million or $1 54 per share.
This compares to net income for the fourth quarter of 2021 of $38 million or $1 four.
Our full year earnings per share for 2022 was $6 82.
Excluding the R&D tax benefits related to prior years, our 2022 earnings per share was $5 29.
And that $5 in 2009.
Earnings compares to $3 93 per share in the prior year after those adjustments.
For our fourth quarter, EBIT increased by 47% to $100 million.
Our full year 2022, EBITDA has increased by 32% compared to the prior year and it was $338 million.
Full year 2022, cash flow was $256 million compared to $161 million at 2021.
Our cash flow benefited from advanced payments that we negotiated as part of our modular backlog commitments that were mainly received in December . This work has not started so receipt of this cash is reflected in our $73 million increase in our deferred revenue liabilities at the end of 2022.
Our free cash flow also benefited from the $33 million refund from the IRS for the R&D tax credit that we got in the first quarter, but partially offsetting these benefits were roughly $50 million of net tax payments that we made in the fourth quarter that arose from congress's failure to so far to extend the <unk>.
Mediate expenses expensing of research and experimental expenditures.
We expect a meaningful increase in capital expenditures in 2022, and 2023 as compared to 2022.
This increase will be driven by investments to build out large additional production facilities that we at least in Texas and North Carolina to support our increased modular backlog.
We began the year.
With just over 1 million feet of modular production space and when our new facilities come online by mid year that capacity will have increased to over 2 million square feet.
We also expect that during 2023, we will have higher than normal lead investments as we recover from deferrals and vehicle availability during the pandemic.
Overall, we expect Capex spend for 2023 of roughly $55 million to $70 million.
Brian mentioned, our acquisition of <unk> earlier. This month <unk> is headquartered in South Carolina and performs electrical design and construction in the southeastern region of the United States.
We expect this acquisition to contribute annualized revenue of approximately $130 million to $140 million with EBITDA of $8 million to $9 million.
Because of the amortization expense related to intangibles and other acquisition costs. This acquisition is expected to make a neutral to slightly accretive contribution to earnings per share in 2023 and 2024.
Yes.
Our debt at the end of the year was $256 million and we were able to achieve our goal of reducing our leverage below one times EBITDA by year end.
Our current debt to EBITDA leverage stands at <unk> 76.
We are continuing to opportunistically repurchase our shares in 2022, we repurchased 442000 shares at an average price of $86 45.
Since we began our repurchase program in 2007, we have bought back $10 1 million shares at an average price of $24 52.
And with that that's all I have a financial Brian .
Okay. Thanks Bill.
I am going to spend a few minutes discussing our backlog in markets.
I will also comment on our outlook for 2023, and non inflation and supply chain considerations.
Our backlog at the end of 'twenty, two 2022 was a record $4 $1 billion year over year.
Our same store backlog increased by $1 7 billion or 75%.
Broadly based increase with strong bookings in both our electrical and mechanical construction businesses.
During the final three months of 2022, we augmented the increases in our traditional business with substantial new bookings and our off site construction business and sequentially.
Same store backlog increased $813 million, despite heavy backlog burn in the fourth quarter.
These early bookings will burn over a longer period and include orders that will that will be produced in 2024.
The new bookings in a modular and off site construction operations reflected a decision by a key customer.
Served plants capacity farther in advance.
And does that facilitate our ability to invest to increase our capacity.
As mentioned, we are definitely not capacity further accelerating that rapid growth in modular construction, we achieved over the last few years.
We believe that we have unmatched capability capability in complex mechanical electrical modular.
Including scores of professionals with unique design and engineering capability.
And we are investing heavily to maintain and increase that advantage.
Industrial customers were 48% of total revenue in 2022.
This sector, which includes technology life Sciences and food processing.
We will remain strong for us as industrial is heavily represented in new backlog.
Institutional markets, which include education healthcare and government are also strong and represented 31% of our revenue.
The commercial sector is remaining active.
But with our changing mix. It is now a smaller part of our business at about 21% of revenue.
A significant portion of our service revenue is performed for commercial customers.
So the proportion of our overall construction revenue that is commercial is low by historical standards.
Construction was 78% of our full year 2022 revenue with 49% from construction projects.
The new buildings and 29% from construction projects in existing buildings.
Service was strong this year with 2022 service revenue of over $900 million.
Service was 22% of our total revenues.
With service projects, providing 9% of revenue and pure service, including hourly work provide.
Providing 13% of revenue.
2022 service revenue is up by 33%.
And without continuing strong margins service is a great source of profit and cash flow for us.
Sure.
In all our activities, including both service and construction, we are encouraging and supporting our customers as they seek to improve the efficiency and sustainability of their buildings and operations and.
And we are raising our standards in the areas of sustainability diversity and governance.
Ongoing demand is holding up.
And our record backlog combined with strength in the industrial and institution institutional sectors.
Lead us to expect continued growth and strong ongoing profitability in 2023.
As we look ahead.
Priority remains to preserve and grow the best workforce in our industry.
So we can continue our legacy of safely constructing installing maintaining repairing and replacing our nation's buildings all.
While helping our communities achieve sustainable growth.
We are investing to meet the needs of our customers and we are grateful for the trust.
We will continue to invest in our workforce technology and execution capability build leads.
Our skilled workforce is the heart and soul of comfort systems USA.
And we will continue to develop and reward our unmatched team members as they strive each day to work safely.
Prove their communities and serve many markets.
I want to end by thanking our over 14000 employees for their hard work and dedication.
I will now turn it back over to Justin for questions. Thank you.
And thank you.
As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster and one moment for our first question.
And our first question comes from Julio Romero from Sidoti. Your line is now open.
Thanks, Hey, good afternoon, Brian Bill Julie.
I guess to start.
On the modular side.
You guys mentioned, new construction is expected to grow as a proportion of revenue and I believe you include modular and that.
Just if you could talk about what percentage of sales modular makes up today.
What does that look like in five years time.
Well, so so modular is 10% of our revenue.
Which is really it's been 10% for a couple of years.
If you remember we did a lot of acquisitions in 'twenty, one and 'twenty two than we did 5% in 2021.
None of those acquisitions had modular so modular modular to stay at 10% it had to grow very very quickly even up until now with the new backlog.
We expect modular will continue to grow and we will probably start to increase as a percentage of our revenue we projected it will gradually as the new capacity comes online and keep in mind that.
That will take building out 1 million square feet of getting it operational will take a few quarters, but as that new capacity comes online we would expect to see modular get to something like 15% of revenue even as the rest of the company continues to grow.
Yeah, that's that's very exciting.
I guess on the backlog how much of the backlog boost that you saw in the quarter do you attribute to the modular portion.
Well so in the fourth quarter virtually all of the huge sequential Joe was modular there was it was specific bookings that we received in December from a customer.
Who really made the decision to commit to us.
And.
Give us commitments in advance in order to support our ability to make some investments that we needed to make if we were going to meet the.
The capacity needs that they had.
Having said that we had very very heavy backlog burn in the fourth quarter and with the huge increase in backlog in the first nine months of this year and our other base space, It's pretty impressive to me that the rest of our business cap.
Yes, well, yes, we're very fortunate in the fourth quarter continues opportunities is still very robust.
We will look into a pretty consistent bookings this year.
Great Great I guess, just last one for me would be just.
Scott.
$4 billion in backlog just how far out are you guys booked and are you coming close to.
Maybe slowing.
Are you coming close to now taking orders for 24 at this point I guess.
No I think so 2023 were in pretty good shape, there will always be some small work to command good customers et cetera.
We're off to a really good start for 2024, but we definitely have.
<unk> taken in 2024 that was set in the book today.
Okay nice job guys. Thanks very much.
Thank you.
And one moment our next question.
And our next question comes from Brent Thielman from D. A Davidson your line is now open.
Hey, thanks.
Hey, Brian when you look at sort of 23% same store growth this quarter margin expanding it seems like your group is doing a terrific job in terms of productivity and the CEO of that sort of a two part question.
What are the things you and your team.
So well I guess to manage this extraordinary.
Both with what looks like.
Stumbles and maybe kind of how that informed view and give you the confidence around taken an even larger backlog here.
Yeah, Hey, Brian Thanks for the question.
Really appreciate it.
To get these results obviously, we are getting exceptional outstanding performance from the field.
If you look at over about the last 10 years that the gross profit level, we've been performing at a really consistent level.
Which makes you very proud.
It's a combination of a lot of things.
The companies that we brought in the ones. We've had have a lot of good people great leadership.
We provide a lot of training.
Utilization of Prefabrication Bim modeling.
Throughout the organization.
We're really getting a lot of collaboration among companies, which I think is just outstanding.
Used to be one or two instances 10 years ago now it seems like everybody is working on that would be one it's fantastic.
The modular as we've talked about we don't speak for itself.
But we want to make sure everybody performed that safely as you know productively and make sure we're delivering a quality product for our customers, which are folks who are doing so.
We just fortunate to have the workflows and the leadership, we have directed them.
Yes, that's great.
I know you can't talk specifics about the key customer, but more interested just on the inside.
Their commitment to this capacity.
Simply just sort of a sign that the capacity absorption out there your competitors committed.
Committed further out.
And then I guess.
Brian any signs from some of your other customers looking to secure U two services further and further out or is this kind of a unique situation.
I'm going to start with the first part of that I think this is really a testament.
That particular customers deep understanding of what's happening right now in the United States right with re shoring with the new commitments to chip manufacturer to the need for battery by virtually everybody who is involved with vehicles.
With.
Frankly, the data center build out continuing them with AI, becoming denser and requiring more sophisticated.
Okay nickel in electrical and even there are plenty of other drivers like food processing pet food is very very smart par pharmaceuticals, right that re shoring is still just in its infancy. So there is so much demand right now I think this customer looked around and realized now.
Everybody, who want to building our thinks they're going to build a building in the next few years is going to end up having the building, they're expecting and so theyre, just making sure that they get what they need to make their business successful.
I think that will begin to dawn on more and more people.
We will see.
I think you had somebody asked me too so yeah right does that answer your total question, yes, yes. Thanks Bill.
I guess that.
It'd be an annoying question around that the growth outlook here I mean, you've got seven.
75% backlog growth coming into the new year totally recognize some of that spaced out.
I guess, what would you need to see to sustain this low to mid teens same store growth outlook.
Two concern and we need to kind of work through the year see how your book and burn businesses.
And then I guess, just kind of wondering what the outlook there.
I think that's a really good question, it's one I think we spend.
A lot of time on throughout the organization and you're exactly right. What are the actual number is as is nice, but it's really only when it happens the labor availability and what the spacing of it is various times of the year, who has what resources so right now.
We're very comfortable with the labor plans, we have and the resources that we have.
But that's a daily daily situation you wanted to Brent, but we're in good shape right now with the work load.
Allocation of the work and the skill sets we have.
Okay I appreciate that I'll get back in queue. Thank you alright, thanks, Brett.
And thank you and one moment our next question.
And our next question comes from Adam <unk> from Thompson Davis. Your line is now open.
Hey, good morning, guys great quarter.
Yes.
I guess, what I'm trying to figure out the long term modular opportunity what would prevent you from if you needed to from going from 2 million square feet to 4 million square feet down the road.
So there is no law against it.
Yes.
The question is could we manage that kind of growth I think the answer is.
One of the great things about being comfort systems right we have.
90% of our businesses this fantastic CS and incredibly valuable really.
Really.
Desperately needed.
Production capability that gives us great cash flow.
And honestly insights and engineering and things that we need in order to take advantage of it.
We think is a very important long term.
Trend in this industry, we think the upside or modular construction, which today is a tiny part of 1% of how things are built in the U S.
Is bound to grow and we think that the most interesting part of modular is the complex part of modular. So there were big investments by like Softbank trying to solve modular and everybody kept going after.
Glorified mobile homes things that were built of wood and structural stuff, we think that the most obvious place to get the benefits of technology and the benefits of improvement and savings in displacing or augmenting extremely skilled labor needs.
As in the complex part of modular these modular electrical mechanical plants are perfect for it so.
We thought this for years, we started slow back in 2011, we've had regular growth regular investment the acquisition. We did it was because we simply admired what they were able to do we felt like they were the ones that that.
We have the capability to help us and we thought we could help them.
We just really believe it's an important.
Feature.
Our go forward.
The ability to add value for our shareholders, but also to really stay on top of that the technology of our business.
Okay.
Switching gears I mean, youre going to have a lot of revenue this year.
Just curious kind of what youre seeing in the bidding environment and if you think you can continue to grow backlog.
I'll ask Brian bidding opportunities opportunities in general are very strong.
No real let up at all.
So I think youll see us at least hold a lot of maybe grow a little bit as we go through the year.
This is a lot of work out there with the various government funded programs et cetera, we just need to build a lot of.
A lot of industrial capability, which is really in our wheelhouse I think what's really excites me is that a lot of work that's coming out.
We're working on for our good customers and doing work we're good at.
And that's really a big help in a busy market.
But in addition to construction our service business has tripled over the last 10 years I mean, we're close to a billion in revenue and service, which has really given us tremendous margins in cash one profit as we talked about earlier. So we're talking a lot about construction here, but this service business is a really nice foundation for us as well.
But in terms of the bidding market when construction very good.
Yes.
Alright, and last one for me just a couple of numbers.
Bill can you can you just make it easy on us for the interest expense like what is it like $5 million.
$4 five and then four in the back half.
I think if you take the second half of this year and annualize that thats about what our interest expense will be.
Yeah.
Okay I have no reason to think it's going to change much. We while there is one wildcard is how fast we pay down debt. So you could leave that and there is upside.
But.
That's what I would do that's what I did.
And then did you give gross margin guidance and I just missed it or.
The expectations of some sort.
So what we said was that we expect that the full year gross profit margins for comfort will be very similar to the full year 2022. So.
At or near I think is what we said it's essentially there are things that are going to really push against margins just like this year the increase in <unk>.
New construction.
Early in a lot of work, even though we have started to get closeouts from the big surge of work. We started a year ago, we've got a new even bigger surge right with this backlog and so it will be early in a lot of work. So we don't feel a lot of profit out of jobs. When were just starting them and you also still have material as a percentage of cost very high we don't put as much.
Margin on materials, we do on labor, but thats, probably by far the most of the <unk>.
Biggest variable because at some point inflation is and will normalize.
And is it possible that a chiller that went up by 50% comes back down by some percentage probably not back to where it was so theres a lot of moving pieces. The good news is we make our money on our labor that's much more predictable and that's why we're so confident that we're going to have a good year and make a lot of money.
Even even in a play in a in a situation where the amplitude of the wave around what could happen with.
With revenue is pretty big our best estimate of revenue is mid teens as we ramp up into this.
Under this new work and new capacity in.
We don't know.
Got it okay. Thanks, guys.
Yeah.
And thank you.
And one moment our next question.
And our next question comes from Alex <unk> from Keybanc capital markets. Your line is now open.
Hey, guys congrats on the quarter.
Hey, Alex.
Hey, so just staying on the margin can we talk about gross margin by segment in 2023, and 2024, I mean, obviously electrical had quite the Ron here.
Im not sure electrical can ever like catch up some mechanical because of the service component mechanical and.
The higher gross margins and mechanical but with higher G&A.
Is there room for electrical run further from now or what would be why or why not.
So electrical has now achieved the same margins as mechanical and.
The project World. So right now we are.
We're to take mechanical keep in mind has more smaller projects they have higher <unk>.
Margin they have more SG&A or our average project size is bigger in electrical but if you look at like for like.
Fully blended across are now coming up on $1 billion of electrical and $3 billion of mechanical we're getting the same margins. We think that that's sustainable on average in any given quarter, there can be a little bit of difference.
And we think yes. So we think it is sustainable in both mechanical and electrical Brian and also on your on the electrical front with service basically went to zero during COVID-19.
In 2022, we did have a pretty good sized pickup in service. So I think that gives us strength that the margins will probably be pretty close to each other.
Got it helpful and can you talk a little bit about the <unk> acquisition, you guys announced last night like what are you guys really liked about this one and then just more broadly on the M&A pipeline. What are you got seeing out there in the market should we expect more M&A in the near term or in 2023.
So I'd like to add to that if you don't mind, we started talking to the gentleman, who sold us that company's name as Atlas is a perfect.
And his team and his team is fantastic.
They are a perfect fit for comfort.
Pretty much 100% industrial there right next to a lot of our really strong geographies.
Had preexisting respect and relationship for organizations that we had all around them.
Their capabilities are really fantastic, it's a very old company almost everything that we like that we feel like correlates with us being very very happy to get teamed up with somebody.
As it is in that transaction and I don't know.
Extremely I'm extremely optimistic about that.
I mean there.
It's really a pleasure to go there they are really terrific people when they think they'll love been at comfort systems as well.
As far as the M&A pipeline.
We are mindful that we have had a massive surge in backlog that we have to pay a lot of attention to an awful lot of our acquisitions. When we do them they are coming into existing operations, where there is requires effort for.
For collaboration and integration and so we are going to continue during 'twenty, two and certainly going into 'twenty three.
We will not hesitate to buy some company that like with Alan we've been talking to for years and they are ready to sell but we're not going to have our foot on the accelerator and we're going to be very very judicious.
Mostly because our opportunity is so big and our.
In our existing operations that we.
We still we're still doing good work absorbing the five significant deals we did in 'twenty, one and for US there's no quota for us it's a matter of.
If we have them, we're finding the right people, we have conviction, where I'll go but right now we're going to be a little slow.
To go try to talk to somebody and.
The fact that it's time that we're all busy.
Thanks, guys Congrats again.
Alright, Thanks, Alex.
And thank you.
And one moment our next question.
And we have a follow up question from Brent Thielman from D. A Davidson your line is now open.
Hey, thanks.
Maybe just one more on the acquisition.
Frank.
Ryan Bill I kind of seem to remember a year ago or a little less than a year ago. Maybe you wanted to take your foot off the accelerator just from the standpoint of kind of monitoring whats going on in the economy.
And as I said to see a deal seems to be encouraging in terms of what you see going going forward.
Is the idea that youll take that Ed.
We had a measured pace just because the business is growing so fast.
You feel like you have more confidence in your end market didn't hear kind of nine to 12 months later.
Well I can certainly tell you that for a company that's sitting in South Carolina rate, which is in a very favorable geography for reassuring.
Has the capabilities to do that.
The exact kind of work that's needed.
For all of the re shoring verticals that we just talked about it's very very easy.
To do that now with IV as quick.
By something and some remote part of the West Thats building a lot of empty and stuff. There is nothing wrong with that business, but I do think we would be much more mindful.
Sort of where people are and what they are what they're good at we love all of those businesses, but we think theres just an especially good time to have this industrial capability.
Yes.
I appreciate that and then.
Yes.
I guess with all the different factors that can influence the margin.
With deflation be a bit of a tailwind here this year or is it.
Been enough to matter.
It it didn't if deflation materializes, which it has not it would be.
Selective deep placement on things, where there are people just when you've got a premium temporarily because of shortages. It is certainly the case, where we could have some months.
We could have a quarter, where that added a little bit to our earnings rate.
But that would not be like a permanent change in our ability to earn money or anything in our customers stood by us very very well really.
The remarkable way they were willing to help us when these costs the unexpectedly.
Unexpectedly came along we're going to be very very slow to take advantage of them on the other end of that we play a very very long game accounts, where we are in <unk> 40, or so businesses 30 of them.
Mid sized cities, where we are doing this work for the same people.
Decade in and decade out.
We don't have we don't have to extract every penny from these people every chance we get right. We have to play a very long game that from that point of view and it stood us in very very good stead.
Okay. Okay. Thanks for taking my questions.
Alright. Thanks.
Thank you.
And I am showing no further questions I would now like to turn the call back over to Brian Lane for closing remarks.
Okay, just in closing I really want to thank everyone for joining the call and your interest in comfort systems and once again, thank God diligent employees.
We are very proud of 2022, and very excited about 2023 and ready to get on with it. So.
We won't see all soon take care. Thank you thanks, everyone.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Yes.
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