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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Dec. 31, 2017	Feb. 15, 2018	Jun. 30, 2017
Document and Entity Information
Entity Registrant Name	COMFORT SYSTEMS USA INC
Entity Central Index Key	0001035983
Document Type	10-K
Document Period End Date	Dec. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 1,350
Entity Common Stock, Shares Outstanding		37,175,074
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
CURRENT ASSETS:
Cash and cash equivalents	$ 36,542	$ 32,074
Accounts receivable, less allowance for doubtful accounts of $3,400 and $4,288, respectively	382,867	318,837
Other receivables	21,235	20,363
Inventories	10,303	9,208
Prepaid expenses and other	8,294	6,106
Costs and estimated earnings in excess of billings	30,116	29,369
Total current assets	489,357	415,957
PROPERTY AND EQUIPMENT, NET	87,591	68,195
GOODWILL	200,584	149,208
IDENTIFIABLE INTANGIBLE ASSETS, NET	76,044	42,435
DEFERRED TAX ASSETS	22,966	27,170
OTHER NONCURRENT ASSETS	4,578	5,938
Total assets	881,120	708,903
CURRENT LIABILITIES:
Current maturities of long-term debt	613	600
Current maturities of long-term capital lease obligations		163
Accounts payable	132,011	103,440
Accrued compensation and benefits	69,217	61,712
Billings in excess of costs and estimated earnings	106,005	83,985
Accrued self-insurance	32,228	33,520
Other current liabilities	33,654	34,261
Total current liabilities	373,728	317,681
LONG-TERM DEBT	59,926	1,955
LONG-TERM CAPITAL LEASE OBLIGATIONS		93
DEFERRED TAX LIABILITIES	2,263	2,289
OTHER LONG-TERM LIABILITIES	27,258	10,252
Total liabilities	463,175	332,270
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par, 5,000,000 shares authorized, none issued and outstanding
Common stock, $.01 par, 102,969,912 shares authorized, 41,123,365 and 41,123,365 shares issued, respectively	411	411
Treasury stock, at cost, 3,936,291 and 3,914,251 shares, respectively	(63,519)	(57,387)
Additional paid-in capital	312,784	309,625
Retained earnings	168,269	123,984
Total stockholders’ equity	417,945	376,633
Total liabilities and stockholders' equity	$ 881,120	$ 708,903

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CONSOLIDATED STATEMENTS OF OPERATIONS
REVENUE	$ 1,787,922	$ 1,634,340	$ 1,580,519
COST OF SERVICES	1,421,641	1,290,331	1,262,390
Gross profit	366,281	344,009	318,129
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	266,586	243,201	228,965
GOODWILL IMPAIRMENT	1,105
GAIN ON SALE OF ASSETS	(670)	(761)	(880)
Operating income	99,260	101,569	90,044
OTHER INCOME (EXPENSE):
Interest income	70	9	72
Interest expense	(3,156)	(2,345)	(1,753)
Changes in the fair value of contingent earn-out obligations	3,715	731	225
Other	1,049	1,097	76
Other income (expense)	1,678	(508)	(1,380)
INCOME BEFORE INCOME TAXES	100,938	101,061	88,664
PROVISION FOR INCOME TAXES	45,666	36,165	31,224
NET INCOME INCLUDING NONCONTROLLING INTERESTS	55,272	64,896	57,440
Less: Net income attributable to noncontrolling interests			8,076
NET INCOME ATTRIBUTABLE TO COMFORT SYSTEMS USA, INC.	$ 55,272	$ 64,896	$ 49,364
INCOME PER SHARE ATTRIBUTABLE TO COMFORT SYSTEMS USA, INC.:
Basic (in shares)	$ 1.48	$ 1.74	$ 1.32
Diluted (in shares)	$ 1.47	$ 1.72	$ 1.30
SHARES USED IN COMPUTING INCOME PER SHARE:
Basic (in shares)	37,239	37,335	37,442
Diluted (in shares)	37,672	37,811	37,868
DIVIDENDS PER SHARE (in dollars per share)	$ 0.295	$ 0.275	$ 0.250

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings	Non-Controlling Interests	Total
BALANCE at Dec. 31, 2014	$ 411	$ (43,598)	$ 320,084	$ 29,384	$ 15,112	$ 321,393
BALANCE (in shares) at Dec. 31, 2014	41,123,365
BALANCE (in shares) at Dec. 31, 2014		3,853,586
Increase (Decrease) in Stockholders' Equity
Net income				49,364	8,076	57,440
Issuance of Stock:
Issuance of shares for options exercised (in shares)		317,333
Issuance of shares for options exercised		$ 3,728	966			4,694
Issuance of restricted stock & performance stock		$ 2,292	(626)			1,666
Issuance of restricted stock & performance stock (in shares)		200,015
Shares received in lieu of tax withholding payment on vested restricted stock		$ (937)				(937)
Shares received in lieu of tax withholding payment on vested restricted stock (in shares)		(44,590)
Tax benefit from vesting of restricted stock			284			284
Stock-based compensation			3,057			3,057
Dividends				(9,358)		(9,358)
Distribution to noncontrolling interests					(4,904)	(4,904)
Share repurchase		$ (8,330)				(8,330)
Minimum number of shares of common stock repurchased		(315,953)
BALANCE at Dec. 31, 2015	$ 411	$ (46,845)	323,765	69,390	18,284	365,005
BALANCE (in shares) at Dec. 31, 2015	41,123,365
BALANCE (in shares) at Dec. 31, 2015		3,696,781
Increase (Decrease) in Stockholders' Equity
Net income				64,896		64,896
Issuance of Stock:
Issuance of shares for options exercised		$ 1,568	10			1,578
Issuance of shares for options exercised (in shares)		111,761
Issuance of restricted stock & performance stock		$ 2,282	(306)			1,976
Issuance of restricted stock & performance stock (in shares)		172,727
Shares received in lieu of tax withholding payment on vested restricted stock		$ (1,304)				(1,304)
Shares received in lieu of tax withholding payment on vested restricted stock (in shares)		(41,788)
Stock-based compensation			3,502			3,502
Dividends				(10,264)		(10,264)
Share repurchase		$ (13,088)				(13,088)
Minimum number of shares of common stock repurchased		(460,170)
Acquisition of noncontrolling interests			(17,346)		$ (18,284)	(35,630)
BALANCE at Dec. 31, 2016	$ 411	$ (57,387)	309,625	123,984		$ 376,633
BALANCE (in shares) at Dec. 31, 2016	41,123,365					41,123,365
BALANCE (in shares) at Dec. 31, 2016		3,914,251				(3,914,251)
Increase (Decrease) in Stockholders' Equity
Cumulative effect of change in accounting principle (unaudited)				(38)		$ (38)
Net income				55,272		55,272
Issuance of Stock:
Issuance of shares for options exercised		$ 2,257	(205)			2,052
Issuance of shares for options exercised (in shares)		145,746
Issuance of restricted stock & performance stock		$ 2,037	(421)			1,616
Issuance of restricted stock & performance stock (in shares)		134,646
Shares received in lieu of tax withholding payment on vested restricted stock		$ (1,419)				(1,419)
Shares received in lieu of tax withholding payment on vested restricted stock (in shares)		(39,335)
Stock-based compensation			3,785			3,785
Dividends				(10,987)		(10,987)
Share repurchase		$ (9,007)				(9,007)
Minimum number of shares of common stock repurchased		(263,097)
BALANCE at Dec. 31, 2017	$ 411	$ (63,519)	$ 312,784	$ 168,269		$ 417,945
BALANCE (in shares) at Dec. 31, 2017	41,123,365					41,123,365
BALANCE (in shares) at Dec. 31, 2017		3,936,291				(3,936,291)

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income including noncontrolling interests	$ 55,272	$ 64,896	$ 57,440
Adjustments to reconcile net income to net cash provided by operating activities—
Amortization of identifiable intangible assets	17,404	8,185	7,481
Depreciation expense	20,052	17,981	15,935
Goodwill impairment	1,105
Bad debt expense (benefit)	182	(27)	1,552
Deferred tax provision (benefit)	4,178	(1,239)	(414)
Amortization of debt financing costs	376	367	317
Gain on sale of assets	(670)	(761)	(880)
Changes in the fair value of contingent earn-out obligations	(3,715)	(731)	(225)
Stock-based compensation	6,377	5,041	5,609
(Increase) decrease in-
Receivables, net	(37,799)	7,038	(3,584)
Inventories	(584)	213	956
Prepaid expenses and other current assets	2,467	(8,850)	364
Costs and estimated earnings in excess of billings	1,869	3,144	(3,630)
Other noncurrent assets	1,005	(143)	(479)
Increase (decrease) in-
Accounts payable and accrued liabilities	22,068	2,736	11,617
Billings in excess of costs and estimated earnings	13,265	(8,351)	7,908
Other long-term liabilities	11,238	1,689	(2,100)
Net cash provided by operating activities	114,090	91,188	97,867
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(35,467)	(23,217)	(20,808)
Proceeds from sales of property and equipment	1,359	1,062	1,338
Cash paid for acquisitions, net of cash acquired	(94,860)	(57,163)	(6,158)
Net cash used in investing activities	(128,968)	(79,318)	(25,628)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving line of credit	177,000	144,000	24,500
Payments on revolving line of credit	(132,000)	(154,000)	(53,000)
Payments on other debt	(835)	(592)
Payments on capital lease obligations	(256)	(251)	(443)
Debt financing costs		(789)
Payments of dividends to stockholders	(10,987)	(10,264)	(9,358)
Share repurchase	(9,007)	(13,088)	(8,330)
Shares received in lieu of tax withholding	(1,419)	(1,304)	(937)
Excess tax benefit of stock-based compensation			1,240
Proceeds from exercise of options	2,052	1,578	3,738
Distributions to noncontrolling interests			(4,904)
Deferred acquisition payments	(2,802)	(1,350)
Payments for contingent consideration arrangements	(2,400)	(200)	(345)
Net cash provided by (used in) financing activities	19,346	(36,260)	(47,839)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	4,468	(24,390)	24,400
CASH AND CASH EQUIVALENTS, beginning of year	32,074	56,464	32,064
CASH AND CASH EQUIVALENTS, end of year	$ 36,542	$ 32,074	$ 56,464

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Consolidation

These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements include our accounts and those of our subsidiaries in which we have a controlling interest. All significant intercompany accounts and transactions have been eliminated. Certain amounts in prior periods may have been reclassified to conform to the current period presentation. The effects of the reclassifications were not material to the consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities, revenue and expenses and disclosures regarding contingent assets and liabilities. Actual results could differ from those estimates. The most significant estimates used in our financial statements affect revenue and cost recognition for construction contracts, the allowance for doubtful accounts, self‑insurance accruals, deferred tax assets, warranty accruals, fair value accounting for acquisitions and the quantification of fair value for reporting units in connection with our goodwill impairment testing. In 2015, two operating locations came to an agreement with customers on multiple jobs and received approved change orders, which resulted in the recognition of additional revenue with minimal additional costs resulting in a project gain of $3.4 million, on a pre-tax basis.

Cash Flow Information

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Cash paid (in thousands) for:


	Year Ended December 31,
	2017		2016		2015
Interest	$	2,832	$	1,864	$	1,408
Income taxes	$	38,144	$	29,349	$	35,538

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 provides a framework that replaces the existing revenue recognition guidance. The guidance can be applied on a full retrospective or modified retrospective basis whereby the entity records a cumulative effect of initially applying this update on the adoption date. We plan to use the modified retrospective basis on the adoption date. ASU 2014-09 is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. We believe the areas that may impact us the most include accounting for variable consideration, capitalization of incremental costs of obtaining a contract and the guidance on the number of performance obligations contained in a contract. We currently expect the adoption of ASU 2014-09 to have an impact of less than $0.5 million on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. The standard requires lessees to recognize assets and liabilities for most leases. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. ASU 2016-02’s transition provisions are applied using a modified retrospective approach at the beginning of the earliest comparative period presented in the financial statements. Full retrospective application is prohibited. We are currently evaluating the potential impact of this authoritative guidance on our consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”. This standard provides guidance on how certain cash receipts and cash payments are presented and classified in the statement of cash flows and is intended to reduce diversity in practice with respect to these items. The standard is applied using a retrospective transition method and is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. We currently do not believe the adoption will have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and other (Topic 350): Simplifying the Accounting for Goodwill Impairment”. This standard removes Step 2 of the goodwill impairment test, which required a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Additionally, entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The standard is applied prospectively and is effective for fiscal years beginning after December 15, 2019, including annual or interim goodwill impairment tests within those fiscal years. Early adoption is permitted for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017. We early adopted ASU 2017-04 in the first quarter of 2017, which did not have a material impact on our consolidated financial statements.

Revenue Recognition

Approximately 81% of our revenue was earned on a project basis and recognized through the percentage of completion method of accounting. Under this method, contract revenue recognizable at any time during the life of a contract is determined by multiplying expected total contract revenue by the percentage of contract costs incurred at any time to total estimated contract costs. More specifically, as part of the negotiation and bidding process in connection with obtaining installation contracts, we estimate our contract costs, which include all direct materials (exclusive of rebates), labor and subcontract costs and indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. These contract costs are included in our results of operations under the caption “Cost of Services.” Then, as we perform under those contracts, we measure costs incurred, compare them to total estimated costs to complete the contract and recognize a corresponding proportion of contract revenue. Labor costs are considered to be incurred as the work is performed. Subcontractor labor is recognized as the work is performed, but is generally subjected to approval as to milestones or other evidence of completion. Non‑labor project costs consist of purchased equipment, prefabricated materials and other materials. Purchased equipment on our projects is substantially produced to job specifications and is a value added element to our work. The costs are considered to be incurred when title is transferred to us, which typically is upon delivery to the work site. Prefabricated materials, such as ductwork and piping, are generally performed at our shops and recognized as contract costs when fabricated for the unique specifications of the job. Other material costs are not significant and are generally recorded when delivered to the work site. This measurement and comparison process requires updates to the estimate of total costs to complete the contract, and these updates may include subjective assessments.

We generally do not incur significant costs prior to receiving a contract, and therefore, these costs are expensed as incurred. In limited circumstances, when significant pre‑contract costs are incurred, they are deferred if the costs can be directly associated with a specific contract and if their recoverability from the contract is probable. Upon receiving the contract, these costs are included in contract costs. Deferred costs associated with unsuccessful contract bids are written off in the period that we are informed that we will not be awarded the contract.

Project contracts typically provide for a schedule of billings or invoices to the customer based on reaching agreed upon milestones or as we incur costs. The schedules for such billings usually do not precisely match the schedule on which costs are incurred. As a result, contract revenue recognized in the statement of operations can and usually does differ from amounts that can be billed or invoiced to the customer at any point during the contract. Amounts by which cumulative contract revenue recognized on a contract as of a given date exceed cumulative billings to the customer under the contract are reflected as a current asset in our balance sheet under the caption “Costs and estimated earnings in excess of billings.” Amounts by which cumulative billings to the customer under a contract as of a given date exceed cumulative contract revenue recognized on the contract are reflected as a current liability in our balance sheet under the caption “Billings in excess of costs and estimated earnings.”

Contracts in progress are as follows (in thousands):


	December 31,
	2017		2016
Costs incurred on contracts in progress	$	1,288,330	$	1,116,182
Estimated earnings, net of losses		253,641		207,252
Less—Billings to date		(1,617,860)		(1,378,050)
	$	(75,889)	$	(54,616)
Costs and estimated earnings in excess of billings	$	30,116	$	29,369
Billings in excess of costs and estimated earnings		(106,005)		(83,985)
	$	(75,889)	$	(54,616)

Accounts receivable include amounts billed to customers under retention or retainage provisions in construction contracts. Such provisions are standard in our industry and usually allow for a small portion of progress billings or the contract price to be withheld by the customer until after we have completed work on the project, typically for a period of six months. Based on our experience with similar contracts in recent years, the majority of our billings for such retention balances at each balance sheet date are finalized and collected within the subsequent year. Retention balances at December 31, 2017 and 2016 were $68.7 million and $60.7 million, respectively, and are included in accounts receivable.

Accounts payable at December 31, 2017 and 2016 included $11.9 million and $10.1 million of retainage under terms of contracts with subcontractors, respectively. The majority of the retention balances at each balance sheet date are finalized and paid within the subsequent year.

The percentage of completion method of accounting is also affected by changes in job performance, job conditions and final contract settlements. These factors may result in revisions to estimated costs and, therefore, revenue. Such revisions are frequently based on further estimates and subjective assessments. The effects of these revisions are recognized in the period in which the revisions are determined. When such revisions lead to a conclusion that a loss will be recognized on a contract, the full amount of the estimated ultimate loss is recognized in the period such a conclusion is reached, regardless of the percentage of completion of the contract.

Revisions to project costs and conditions can give rise to change orders under which the customer agrees to pay additional contract price. Revisions can also result in claims we might make against the customer to recover project variances that have not been satisfactorily addressed through change orders with the customer. Except in certain circumstances, we do not recognize revenue or margin based on change orders or claims until they have been agreed upon with the customer. The amount of revenue associated with unapproved change orders and claims was immaterial for the year ended December 31, 2017.

Variations from estimated project costs could have a significant impact on our operating results, depending on project size, and the recoverability of the variation via additional customer payments.

Revenue associated with maintenance, repair and monitoring services and related contracts are recognized as services are performed. Amounts associated with unbilled service work orders are reflected as a current asset in our balance sheet under the caption “Costs and estimated earnings in excess of billings” and amounts billed in advance of work orders being performed are reflected as a current liability in our balance sheet under the caption “Billings in excess of costs and estimated earnings.”

Accounts Receivable

The carrying value of our receivables, net of the allowance for doubtful accounts, represents the estimated net realizable value. We estimate our allowance for doubtful accounts based upon the creditworthiness of our customers, prior collection history, ongoing relationships with our customers, the aging of past due balances, our lien rights, if any, in the property where we performed the work and the availability, if any, of payment bonds applicable to the contract. The receivables are written off when they are deemed to be uncollectible.

Inventories

Inventories consist of parts and supplies that we purchase and hold for use in the ordinary course of business and are stated at the lower of cost or net realizable value using the average-cost method.

Property and Equipment

Property and equipment are stated at cost, and depreciation is computed using the straight‑line method over the estimated useful lives of the assets. Leasehold improvements are capitalized and amortized over the lesser of the expected life of the lease or the estimated useful life of the asset.

Expenditures for repairs and maintenance are charged to expense when incurred. Expenditures for major renewals and betterments, which extend the useful lives of existing equipment, are capitalized and depreciated over the remaining useful life of the equipment. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in “Gain on sale of assets” in the statement of operations.

Recoverability of Goodwill and Identifiable Intangible Assets

Goodwill is the excess of purchase price over the fair value of the net assets of acquired businesses. We assess goodwill for impairment each year, and more frequently if circumstances suggest an impairment may have occurred.

When the carrying value of a given reporting unit exceeds its fair value, an impairment loss is recorded to the extent that the implied fair value of the goodwill of the reporting unit is less than its carrying value. If other reporting units have had increases in fair value, such increases may not be recorded. Accordingly, such increases may not be netted against impairments at other reporting units. The requirements for assessing whether goodwill has been impaired involve market‑based information. This information, and its use in assessing goodwill, entails some degree of subjective assessment.

We perform our annual impairment testing as of October 1 and any impairment charges resulting from this process are reported in the fourth quarter. We segregate our operations into reporting units based on the degree of operating and financial independence of each unit and our related management of them. We perform our annual goodwill impairment testing at the reporting unit level. Each of our operating units represents an operating segment, and our operating segments are our reporting units.

In the evaluation of goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of one of our reporting units is greater than its carrying value. If, after completing such assessment, we determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then there is no need to perform any further testing. If we conclude otherwise, then we perform the first step of a two‑step impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying value of the reporting unit.

We estimate the fair value of the reporting unit based on a market approach and an income approach, which utilizes discounted future cash flows. Assumptions critical to the fair value estimates under the discounted cash flow model include discount rates, cash flow projections, projected long‑term growth rates and the determination of terminal values. The market approach utilizes market multiples of invested capital from comparable publicly traded companies (“public company approach”). The market multiples from invested capital include revenue, book equity plus debt and earnings before interest, provision for income taxes, depreciation and amortization (“EBITDA”).

We amortize identifiable intangible assets with finite lives over their useful lives. Changes in strategy and/or market condition may result in adjustments to recorded intangible asset balances.

Long‑Lived Assets

Long‑lived assets are comprised principally of goodwill, identifiable intangible assets, property and equipment, and deferred tax assets. We periodically evaluate whether events and circumstances have occurred that indicate that the remaining balances of these assets may not be recoverable. We use estimates of future income from operations and cash flows, as well as other economic and business factors, to assess the recoverability of these assets.

Acquisitions

We recognize assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, based on fair value estimates as of the date of acquisition.

Contingent Consideration—In certain acquisitions, we agree to pay additional amounts to sellers contingent upon achievement by the acquired businesses of certain predetermined profitability targets. We have recognized liabilities for these contingent obligations based on their estimated fair value at the date of acquisition with any differences between the acquisition date fair value and the ultimate settlement of the obligations being recognized in income from operations.

Contingent Assets and Liabilities—Assets and liabilities arising from contingencies are recognized at their acquisition date fair value when their respective fair values can be determined. If the fair values of such contingencies cannot be determined, they are recognized at the acquisition date if the contingencies are probable and an amount can be reasonably estimated. Acquisition date fair value estimates are revised as necessary if, and when, additional information regarding these contingencies becomes available to further define and quantify assets acquired and liabilities assumed.

Self‑Insurance Liabilities

We are substantially self‑insured for workers’ compensation, employer’s liability, auto liability, general liability and employee group health claims, in view of the relatively high per‑incident deductibles we absorb under our insurance arrangements for these risks. Losses are estimated and accrued based upon known facts, historical trends and industry averages. Estimated losses in excess of our deductible, which have not already been paid, are included in our accrual with a corresponding receivable from our insurance carrier. Loss estimates associated with the larger and longer‑developing risks—workers’ compensation, auto liability and general liability—are reviewed by a third‑party actuary quarterly. Our self‑insurance arrangements are further discussed in Note 11 “Commitments and Contingencies.”

Warranty Costs

We typically warrant labor for the first year after installation on new HVAC systems. We generally warrant labor for thirty days after servicing of existing HVAC systems. A reserve for warranty costs is estimated and recorded based upon the historical level of warranty claims and management’s estimate of future costs.

Income Taxes

We are subject to income tax in the United States and Puerto Rico and file a consolidated return for federal income tax purposes. Income taxes are provided for under the liability method, which takes into account differences between financial statement treatment and tax treatment of certain transactions.

Deferred taxes are based on the difference between the financial reporting and tax basis of assets and liabilities. The deferred tax provision represents the change during the reporting period in the deferred tax assets and deferred tax liabilities, net of the effect of acquisitions and dispositions. Deferred tax assets include tax loss and credit carryforwards and are reduced by a valuation allowance if, based on available evidence, it is more-likely-than-not some portion or all of the deferred tax assets will not be realized.

We regularly evaluate valuation allowances established for deferred tax assets for which future realization is uncertain. We perform this evaluation quarterly. In assessing the realizability of deferred tax assets, we must consider whether it is more-likely-than-not some portion, or all, of the deferred tax assets will not be realized. We consider all available evidence, both positive and negative, in determining whether a valuation allowance is required. Such evidence includes the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in prior carryback years and tax planning strategies in making this assessment, and judgment is required in considering the relative weight of negative and positive evidence.

Significant judgment is required in assessing the timing and amounts of deductible and taxable items. We establish reserves when, despite our belief that our tax return positions are supportable, we believe that certain positions may be disallowed. When facts and circumstances change, we adjust these reserves through our provision for income taxes.

To the extent interest and penalties may be assessed by taxing authorities on any underpayment of income tax, such amounts have been accrued and are classified as a component in provision for income taxes in our Consolidated Statements of Operations.

Segment Disclosure

Our activities are within the mechanical services industry, which is the single industry segment we serve. Each operating unit represents an operating segment and these segments have been aggregated, as the operating units meet all of the aggregation criteria.

Concentrations of Credit Risk

We provide services in a broad range of geographic regions. Our credit risk primarily consists of receivables from a variety of customers including general contractors, property owners and developers and commercial and industrial companies. We are subject to potential credit risk related to changes in business and economic factors throughout the United States within the nonresidential construction industry. However, we are entitled to payment for work performed and have certain lien rights in that work. Further, we believe that our contract acceptance, billing and collection policies are adequate to manage potential credit risk. We regularly review our accounts receivable and estimate an allowance for uncollectible amounts. We have a diverse customer base, with no single customer accounting for more than 2% of consolidated 2017 revenue.

Financial Instruments

Our financial instruments consist of cash and cash equivalents, accounts receivable, other receivables, accounts payable, life insurance policies, notes to former owners, capital leases, and a revolving credit facility. We believe that the carrying values of these instruments on the accompanying balance sheets approximate their fair values.

Fair Value Measurements

12 Months Ended

Dec. 31, 2017

Fair Value Measurements

Fair Value Measurements

3. Fair Value Measurements

We classify and disclose assets and liabilities carried at fair value in one of the following three categories:

Level 1—quoted prices in active markets for identical assets and liabilities;

Level 2—observable market based inputs or unobservable inputs that are corroborated by market data; and

Level 3—significant unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following table summarizes the fair values, and levels within the fair value hierarchy in which the fair value measurements fall, for assets and liabilities measured on a recurring basis as of December 31, 2017 and 2016 (in thousands):


	Balance		Fair Value Measurements at Reporting Date
	December 31,
	2017		Level 1		Level 2		Level 3
Cash and cash equivalents	$	36,542	$	36,542	$	—	$	—
Life insurance—cash surrender value	$	3,128	$	—	$	3,128	$	—
Contingent earn-out obligations	$	7,993	$	—	$	—	$	7,993


	December 31,
	2016		Level 1		Level 2		Level 3
Cash and cash equivalents	$	32,074	$	32,074	$	—	$	—
Life insurance—cash surrender value	$	3,697	$	—	$	3,697	$	—
Contingent earn-out obligations	$	2,531	$	—	$	—	$	2,531

Cash and cash equivalents consist primarily of highly rated money market funds at a variety of well‑known institutions with original maturities of three months or less. The original cost of these assets approximates fair value due to their short term maturity. The carrying value of our borrowings associated with the Revolving Credit Facility approximate its fair value due to the variable rate on such debt.

One of our operations has life insurance policies covering 42 employees with a combined face value of $31.3 million. The policies are invested in mutual funds and the fair value measurement of the cash surrender balance associated with these policies is determined using Level 2 inputs within the fair value hierarchy and will vary with investment performance. The cash surrender value of these policies is $3.1 million as of December 31, 2017 and $3.7 million as of December 31, 2016. These assets are included in “Other Noncurrent Assets” in our consolidated balance sheets.

We value contingent earn‑out obligations using a probability weighted discounted cash flow method. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreements (e.g., minimum and maximum payments, length of earn‑out periods, manner of calculating any amounts due, etc.) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows and a discount rate. The contingent earn‑out obligations are measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings.

The table below presents a reconciliation of the fair value of our contingent earn‑out obligations that use significant unobservable inputs (Level 3) (in thousands).


	December 31,
	2017		2016
Balance at beginning of year	$	2,531	$	450
Issuances		11,755		3,240
Settlements		(2,578)		(428)
Adjustments to fair value		(3,715)		(731)
Balance at end of year	$	7,993	$	2,531

We measure certain assets at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. During the year ended December 31, 2017, we recorded a goodwill impairment charge of $1.1 million based on Level 3 measurements. See Note 5 “Goodwill and Identifiable Intangible Assets, Net” for further discussion. No goodwill or other intangible asset impairments were recorded during the years ended December 31, 2016 and 2015. We did not recognize any other impairments on those assets required to be measured at fair value on a nonrecurring basis.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Acquisitions

12 Months Ended

Dec. 31, 2017

Acquisitions

Acquisitions

4. Acquisitions

On April 1, 2017, we acquired all of the issued and outstanding stock of BCH Holdings, Inc. and each of its wholly-owned subsidiaries (collectively “BCH”). BCH is an integrated, single-source provider of mechanical service, maintenance and construction with headquarters in Tampa, Florida and operations throughout the southeastern region of the United States, which reports as a separate operating location.

The following summarizes the acquisition date fair value of consideration transferred and identifiable assets acquired and liabilities assumed, including an amount for goodwill (in thousands):


Cash and cash equivalents	$	9,613
Receivables		28,263
Costs and estimated earnings in excess of billings		1,690
Other current assets		708
Property and equipment		3,927
Goodwill		50,512
Identifiable intangible assets		46,500
Accounts payable and other current liabilities		(11,763)
Billings in excess of costs and estimated earnings		(8,039)
Other non-current liabilities		(104)
Total purchase price	$	121,307

The total purchase price was $121.3 million, including $95.4 million in cash, $14.3 million in notes payable to former owners and an $11.6 million contingent earn-out obligation. Our consolidated balance sheet includes preliminary allocations of the purchase price to the assets acquired and liabilities assumed pending the completion of the final valuation of intangible assets and accrued liabilities.

The contingent earn-out obligation is based upon exceeding specified earnings milestones each year during a four-year period. We determined the initial fair value of the contingent earn-out obligation based on a Monte Carlo simulation model which represents a Level 3 measurement. We measure the contingent earn-out obligation at fair value each reporting period and changes in the estimated fair value of the contingent payments are recognized in earnings.

Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. All of the goodwill recognized as a result of this transaction is tax deductible.

The acquired assets include the following (in thousands):


	Valuation	Estimated	Estimated
	Method	Amortization Life	Value
Customer relationships	Excess Earnings	10 years	$	36,500
Backlog	Excess Earnings	1 year		6,300
Tradenames	Relief-from-royalty	25 years		3,700
Total acquired intangible assets			$	46,500

In estimating the fair value of the acquired intangible assets, we utilized the valuation methodology determined to be the most appropriate for the individual intangible asset. In order to estimate the fair value of the backlog and customer relationships, we utilized an excess earnings methodology, which consisted of the projected cash flows attributable to these assets discounted to present value using a risk-adjusted discount rate that represented the required rate of return. The tradename value was determined based on the relief-from-royalty method, which applies a royalty rate to the revenue stream attributable to this asset and the resulting royalty payment is tax effected and discounted to present value. Some of the more significant estimates and assumptions inherent in determining the fair value of the identifiable intangible assets are associated with forecasting cash flows and profitability, which represent Level 3 inputs. The primary assumptions used were generally based upon the present value of anticipated cash flows discounted at rates ranging from 13%-18%. Estimated years of projected earnings generally follow the range of estimated remaining useful lives for each intangible asset class.

Other Acquisitions

We completed two acquisitions in the first quarter of 2016. We acquired the remaining 40% noncontrolling interest in Environmental Air Systems, LLC (“EAS”) on January 1, 2016 for $46.6 million, including $42.0 million funded on the closing date plus a holdback, an earn-out that will be earned if certain financial targets are met after the acquisition date and a working capital adjustment. Due to our majority ownership and control over EAS on the acquisition date, the difference between the purchase price and the noncontrolling interest liability was recorded in Additional Paid-In Capital in our Balance Sheet.

Additionally in the first quarter of 2016, we acquired 100% of the ShoffnerKalthoff family of companies (collectively, “Shoffner”), which reports as a separate operating location in the Knoxville, Tennessee area. The acquisition date fair value of consideration transferred for this acquisition was $19.8 million, of which $14.8 million was allocated to goodwill and identifiable intangible assets. The purchase price included $15.5 million funded on the closing date plus a note payable to former owners, an earn-out that we will pay if certain financial targets are met after the acquisition date and a working capital adjustment.

We completed various other acquisitions in 2017 and 2016 which were not material, individually or in the aggregate, and were “tucked-in” with existing operations. The total purchase price for the “tucked-in” acquisitions, including earn-outs, was $9.4 million in 2017 and $0.1 million in 2016.

The results of operations of acquisitions are included in our consolidated financial statements from their respective acquisition dates. The acquisitions completed in the current and prior year were not material, individually or in the aggregate. Additional contingent purchase price (“earn-out”) has been or will be paid if certain acquisitions achieve predetermined profitability targets. Such earn-outs are not subject to the continued employment of the sellers.

Goodwill and Identifiable Intangible Assets, Net

12 Months Ended

Dec. 31, 2017

Goodwill and Identifiable Intangible Assets, Net

Goodwill and Identifiable Intangible Assets, Net

5. Goodwill and Identifiable Intangible Assets, Net

Goodwill

The changes in the carrying amount of goodwill are as follows (in thousands):


	December 31,
	2017		2016
Balance at beginning of year	$	149,208	$	143,874
Additions (See Note 4)		52,481		5,334
Impairment adjustment		(1,105)		—
Balance at end of year	$	200,584	$	149,208

We perform our annual impairment testing on October 1, or more frequently, if events and circumstances indicate impairment may have occurred. As discussed in Note 2, “Summary of Significant Accounting Policies,” we have the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying value.

During our annual impairment testing on October 1, we performed a qualitative assessment for each reporting unit, which considered various factors, including changes in the carrying value of the reporting unit, forecasted operating results, long-term growth rates and discount rates. Additionally, we considered qualitative key events and circumstances (i.e. macroeconomic environment, industry and market specific conditions, cost factors and events specific to the reporting unit, etc.). Based on this assessment, we concluded that it was more likely than not that the fair value of each of the reporting units was greater than its carrying value. Accordingly, no further testing was required.

Prior to our annual goodwill impairment test in 2017, we recorded a goodwill impairment charge of $1.1 million during the first quarter of 2017. Based on changes to our market strategy that occurred in March 2017 related to our reporting unit based in California, we reevaluated our projected future earnings for this operating location and determined that we could no longer support the related goodwill balance and therefore the goodwill associated with this location was fully impaired. The fair value was estimated using a discounted cash flow model.

During 2016, we performed a quantitative assessment where the fair value of each reporting unit was estimated using a discounted cash flow model combined with a market valuation approach. We assigned a weighting of 50% to the discounted cash flow analysis and 50% to the public company approach for the year ended December 31, 2016. Based on this assessment, we concluded that the fair value of each of the reporting units was greater than its carrying value. As of October 1, 2016, the fair value exceeded the carrying value by a significant margin for all of our reporting units with a goodwill balance.

During 2015, we performed a qualitative assessment for each reporting unit and no further testing was required.

There are significant inherent uncertainties and management judgment involved in estimating the fair value of each reporting unit. While we believe we have made reasonable estimates and assumptions to estimate the fair value of our reporting units, it is possible that a material change could occur. If actual results are not consistent with our current estimates and assumptions, or the current economic outlook worsens, goodwill impairment charges may be recorded in future periods.

Identifiable Intangible Assets, Net

Identifiable intangible assets consist of the following (dollars in thousands):


	Estimated	2017				2016
	Useful Lives	Gross Book		Accumulated		Gross Book		Accumulated
	in Years	Value		Amortization		Value		Amortization
Customer relationships	1 - 15	$	98,244	$	(47,057)	$	57,230	$	(36,758)
Backlog	1 - 2		6,300		(5,478)		3,600		(3,433)
Noncompete agreements	2 - 7		—		—		2,890		(2,890)
Tradenames	2 - 25		35,340		(11,305)		31,640		(9,844)
Total		$	139,884	$	(63,840)	$	95,360	$	(52,925)

The amounts attributable to customer relationships, noncompete agreements and tradenames are amortized to “Selling, General and Administrative Expenses” on a pattern of economic benefit or a straight‑line method over periods from one to twenty‑five years. The amounts attributable to backlog are being amortized to “Cost of Services” on a proportionate method over the remaining backlog period. Amortization expense for the years ended December 31, 2017, 2016 and 2015 was $17.4 million, $8.2 million and $7.5 million, respectively.

At December 31, 2017, future amortization expense of identifiable intangible assets is as follows (in thousands):


Year ended December 31—
2018	$	13,786
2019		11,320
2020		9,252
2021		7,651
2022		6,041
Thereafter		27,994
Total	$	76,044

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Long Term Debt Obligations

12 Months Ended

Dec. 31, 2017

Debt Obligations

Debt Obligations

8. Long‑Term Debt Obligations

Long‑term debt obligations consist of the following (in thousands):


	December 31,
	2017		2016
Revolving credit facility	$	45,000	$	—
Notes to former owners		15,325		2,250
Other debt		214		305
Capital lease obligations		—		256
Total debt		60,539		2,811
Less—current portion		(613)		(763)
Total long-term portion of debt	$	59,926	$	2,048

At December 31, 2017, future principal payments of debt are as follows (in thousands):


Year ended December 31—
2018	$	613
2019		626
2020		7,150
2021		52,150
	$	60,539

Interest expense included the following primary elements (in thousands):


	Year Ended December 31,
	2017		2016		2015
Interest expense on notes to former owners	$	365	$	70	$	25
Interest expense on borrowings and unused commitment fees		1,862		1,251		692
Letter of credit fees		553		657		719
Amortization of debt financing costs		376		367		317
Total	$	3,156	$	2,345	$	1,753

Revolving Credit Facility

We have a $325.0 million senior credit facility (the “Facility”) provided by a syndicate of banks, with a $100 million accordion option. The Facility, which is available for borrowings and letters of credit, expires in February 2021 and is secured by a first lien on substantially all of our personal property except for assets related to projects subject to surety bonds and assets held by certain unrestricted subsidiaries and a second lien on our assets related to projects subject to surety bonds. As of December 31, 2017, we had $45.0 million of outstanding borrowings, $39.6 million in letters of credit outstanding and $240.4 million of credit available.

Collateral

A common practice in our industry is the posting of payment and performance bonds with customers. These bonds are offered by financial institutions known as sureties, and provide assurance to the customer that in the event we encounter significant financial or operational difficulties, the surety will arrange for the completion of our contractual obligations and for the payment of our vendors on the projects subject to the bonds. In cooperation with our lenders, we granted our sureties a first lien on assets such as receivables, costs and estimated earnings in excess of billings, and equipment specifically identifiable to projects for which bonds are outstanding, as collateral for potential obligations under bonds. As of December 31, 2017, the book value of these assets was approximately $40.9 million.

Covenants and Restrictions

The Facility contains financial covenants defining various measures and the levels of these measures with which we must comply. Covenant compliance is assessed as of each quarter end. Credit Facility Adjusted EBITDA is defined under the Facility for financial covenant purposes as net earnings for the four quarters ending as of any given quarterly covenant compliance measurement date, plus the corresponding amounts for (a) interest expense; (b) provision for income taxes; (c) depreciation and amortization; (d) stock compensation; (e) other non‑cash charges; and (f) pre‑acquisition results of acquired companies. The following is a reconciliation of Credit Facility Adjusted EBITDA to net income for 2017 (in thousands):


Net income including noncontrolling interests	$	55,272
Provision for income taxes		45,666
Interest expense, net		3,086
Depreciation and amortization expense		37,456
Stock-based compensation		6,377
Goodwill impairment		1,105
Pre-acquisition results of acquired companies, as defined under the Facility		4,597
Credit Facility Adjusted EBITDA	$	153,559

The Facility’s principal financial covenants include:

Leverage Ratio—The Facility requires that the ratio of our Consolidated Total Indebtedness to our Credit Facility Adjusted EBITDA not exceed 2.75 to 1.00 as of the end of each fiscal quarter. The leverage ratio as of December 31, 2017 was 0.4.

Fixed Charge Coverage Ratio—The Facility requires that the ratio of Credit Facility Adjusted EBITDA, less non-financed capital expenditures, provision for income taxes, dividends and amounts used to repurchase stock to the sum of interest expense and scheduled principal payments of indebtedness be at least 2.00 to 1.00; provided that the calculation of the fixed charge coverage ratio excludes stock repurchases and the payment of dividends at any time that the Company’s Net Leverage Ratio does not exceed 1.50 to 1.00. The Facility also allows the fixed charge coverage ratio not to be reduced for stock repurchases through September 30, 2015 in an aggregate amount not to exceed $25 million and for stock repurchases made after February 22, 2016 but on or prior to December 31, 2017 in an aggregate amount not to exceed $25 million, if at the time of and after giving effect to such repurchase the Company’s Net Leverage Ratio was less than or equal to 1.50 to 1.00. Capital expenditures, provision for income taxes, dividends and stock repurchase payments are defined under the Facility for purposes of this covenant to be amounts for the four quarters ending as of any given quarterly covenant compliance measurement date. The fixed charge coverage ratio as of December 31, 2017 was 21.8.

Other Restrictions—The Facility permits acquisitions of up to $30.0 million per transaction, provided that the aggregate purchase price of such an acquisition and of acquisitions in the same fiscal year does not exceed $65.0 million. However, these limitations only apply when the Company’s Net Leverage Ratio is equal to or greater than 2.00 to 1.00.

While the Facility’s financial covenants do not specifically govern capacity under the Facility, if our debt level under the Facility at a quarter‑end covenant compliance measurement date were to cause us to violate the Facility’s leverage ratio covenant, our borrowing capacity under the Facility and the favorable terms that we currently have could be negatively impacted by the lenders.

We were in compliance with all of our financial covenants as of December 31, 2017.

Interest Rates and Fees

There are two interest rate options for borrowings under the Facility, the Base Rate Loan Option and the Eurodollar Rate Loan Option. Under the Base Rate Loan Option, the interest rate is determined based on the highest of the Federal Funds Rate plus 0.5%, the prime lending rate offered by Wells Fargo Bank, N.A. or the one‑month Eurodollar Rate plus 1.00%. Under the Eurodollar Rate Loan Option, the interest rate is determined based on the one‑ to six‑month Eurodollar Rate. The Eurodollar Rate corresponds very closely to rates described in various general business media sources as the London Interbank Offered Rate or “LIBOR.” Additional margins are then added to these rates. The additional margins are determined based on the ratio of our Consolidated Total Indebtedness as of a given quarter end to our “Credit Facility Adjusted EBITDA” for the twelve months ending as of that quarter end, as defined in the credit agreement and shown below.

The interest rates under the Facility are floating rates determined by the broad financial markets, meaning they can and do move up and down from time to time. For illustrative purposes, the following are the respective market rates as of December 31, 2017 relating to interest options under the Facility:


Base Rate Loan Option:
Federal Funds Rate plus 0.50%		1.87%
Wells Fargo Bank, N.A. Prime Rate		4.50%
One-month LIBOR plus 1.00%		2.56%
Eurodollar Rate Loan Option:
One-month LIBOR		1.56%
Six-month LIBOR		1.84%

Certain of our vendors require letters of credit to ensure reimbursement for amounts they are disbursing on our behalf, such as to beneficiaries under our self‑funded insurance programs. We have also occasionally used letters of credit to guarantee performance under our contracts and to ensure payment to our subcontractors and vendors under those contracts. Our lenders issue such letters of credit through the Facility. A letter of credit commits the lenders to pay specified amounts to the holder of the letter of credit if the holder demonstrates that we have failed to perform specified actions. If this were to occur, we would be required to reimburse the lenders for amounts they fund to honor the letter of credit holder’s claim. Absent a claim, there is no payment or reserving of funds by us in connection with a letter of credit. However, because a claim on a letter of credit would require immediate reimbursement by us to our lenders, letters of credit are treated as a use of facility capacity just the same as actual borrowings. We have never had a claim made against a letter of credit that resulted in payments by a lender or by us and believe such claim is unlikely in the foreseeable future.

Commitment fees are payable on the portion of the revolving loan capacity not in use for borrowings or letters of credit at any given time. Letter of credit fees and commitment fees are based on the ratio of Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA, as defined in the credit agreement.


	Consolidated Total Indebtedness to
	Credit Facility Adjusted EBITDA
	Less than 0.75		0.75 to 1.50		1.50 to 2.25		2.25 or greater
Additional Per Annum Interest Margin Added Under:
Base Rate Loan Option	0.25	%	0.50	%	0.75	%	1.00	%
Eurodollar Rate Loan Option	1.25	%	1.50	%	1.75	%	2.00	%
Letter of credit fees	1.25	%	1.50	%	1.75	%	2.00	%
Commitment fees on any portion of the Revolving Loan capacity not in use for borrowings or letters of credit at any given time	0.20	%	0.25	%	0.30	%	0.35	%

The weighted average interest rate applicable to the borrowings under the Facility was approximately 2.8% as of December 31, 2017.

Notes to Former Owners

As part of the consideration used to acquire two companies, we have outstanding notes to the former owners. These notes had an outstanding balance of $15.3 million as of December 31, 2017. In conjunction with the BCH acquisition in the second quarter of 2017, we issued a promissory note to the former owners with an outstanding balance of $14.3 million as of December 31, 2017 and bears interest, payable quarterly, at a weighted average interest rate of 3.0%. The principal is due in equal installments in April 2020 and 2021. In conjunction with the Shoffner acquisition in the first quarter of 2016, we issued a subordinated note to former owners with an outstanding balance of $1.0 million as of December 31, 2017 that bears interest, payable quarterly, at a weighted average interest rate of 3.0%. The principal is due in equal installments in February 2018 and 2019.

Other Debt

As part of the Shoffner acquisition, we acquired debt with an outstanding balance at the acquisition date of $0.4 million with principal and interest due the last day of every month; ending on the December 30, 2019 maturity date. The interest rate is the one month LIBOR rate plus 2.25%. As of December 31, 2017, $0.2 million of the note was outstanding, of which $0.1 million was considered current.

Income Taxes

12 Months Ended

Dec. 31, 2017

Income Taxes

Income Taxes

9. Income Taxes

Provision for Income Taxes

The provision for income taxes relating to continuing operations consists of the following (in thousands):


	December 31,
	2017		2016		2015
Current tax provision—
Federal	$	35,434	$	32,721	$	27,564
State and Puerto Rico		6,054		4,683		4,065
Total current		41,488		37,404		31,629
Deferred tax provision (benefit)—
Federal		5,391		(2,101)		(1,481)
State and Puerto Rico		(1,213)		862		1,076
Total deferred		4,178		(1,239)		(405)
Provision for income taxes	$	45,666	$	36,165	$	31,224

The provision for income taxes for the years ended December 31, 2017, 2016 and 2015 resulted in effective tax rates on continuing operations of 45.2%, 35.8% and 35.2%, respectively. The reasons for the differences between these effective tax rates and the 35% federal statutory rate are as follows (in thousands):


	December 31,
	2017		2016		2015
Income taxes at the federal statutory rate of 35%	$	35,328	$	35,371	$	31,032
Increases (decreases) resulting from—
Net state income taxes		2,838		4,262		3,432
Valuation allowances		91		(1,254)		463
Net unrecognized tax benefits		153		20		(72)
Noncontrolling interests		—		—		(2,827)
Nondeductible expenses		1,134		825		751
Stock-based compensation deductions		(1,320)		(885)		—
Domestic production activities deduction		(2,112)		(2,026)		(1,701)
Corporate tax rate reduction to 21%		9,478		—		—
Other		76		(148)		146
Provision for income taxes	$	45,666	$	36,165	$	31,224

While we believe we were able to make reasonable estimates of the impact of the recently enacted Tax Cuts and Jobs Act in these financial statements, the amounts recorded are provisional and the final impact may differ from these estimates due to, among other things, changes in our interpretations and assumptions and additional guidance that may be issued by regulatory authorities.

Deferred Tax Assets (Liabilities)

Significant components of the deferred tax assets and deferred tax liabilities as reflected on the balance sheets are as follows (in thousands):


	Year Ended
	December 31,
	2017		2016
Deferred tax assets—
Accounts receivable and allowance for doubtful accounts	$	715	$	1,627
Stock-based compensation		2,297		3,036
Accrued liabilities and expenses		19,555		23,000
Net operating loss carryforwards		6,007		5,053
Goodwill		—		875
Intangible assets		2,272		—
Other		544		759
Subtotal		31,390		34,350
Valuation allowances		(3,500)		(3,184)
Total deferred tax assets		27,890		31,166
Deferred tax liabilities—
Property and equipment		(4,668)		(4,398)
Long-term contracts		(625)		(637)
Goodwill		(1,572)		—
Intangible assets		—		(737)
Other		(322)		(513)
Total deferred tax liabilities		(7,187)		(6,285)
Net deferred tax assets	$	20,703	$	24,881

The deferred tax assets and liabilities as of December 31, 2017 were remeasured to account for the corporate tax rate reduction to 21%, resulting in an increase to the provision for income taxes of $9.5 million. The deferred tax assets and liabilities reflected above are included in the consolidated balance sheets as follows (in thousands):


	December 31,
	2017		2016
Deferred tax assets	$	22,966	$	27,170
Deferred tax liabilities	$	2,263	$	2,289

As of December 31, 2017, we had $6.0 million of future tax benefits related to $71.8 million of available state and Puerto Rican net operating loss carryforwards (“NOLs”), which begin to expire between 2018 and 2037. Valuation allowances of $3.5 million have been recorded against certain state NOLs and deferred tax assets and all of our Puerto Rican NOLs. We recorded an increase in valuation allowances of $0.3 million for the year ended December 31, 2017. The $2.5 million deferred tax asset for state NOLs, net of related valuation allowances, reflects our conclusion that it is more-likely-than-not these assets will be realized based upon expected future earnings in certain subsidiaries.

We update this assessment of the realizability of deferred tax assets relating to state NOLs annually. A return to profitability in our entities with valuation allowances on their NOLs and other deferred tax assets would result in a reversal of a portion of the valuation allowance relating to realized deferred tax assets. A sustained period of profitability could cause a change in our judgment of the remaining deferred tax assets. If that were to occur, then it is likely that we would reverse some or all of the remaining valuation allowances.

Liabilities for Uncertain Tax Positions

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties, is as follows (in thousands):


	Year Ended
	December 31,
	2017		2016		2015
Balance at beginning of year	$	240	$	240	$	343
Additions based on tax positions related to current year		8,689		—		—
Additions based on tax positions related to prior years		—		—		—
Reductions for tax positions related to prior years		—		—		(103)
Reductions for settlements with tax authorities		—		—		—
Balance at end of year	$	8,929	$	240	$	240

As of December 31, 2017 and 2016, we had $8.9 million and $0.2 million, respectively, of unrecognized tax benefits, most of which, if recognized in future periods, would not impact our effective tax rate. We also had accrued $0.7 million and $0.4 million for potential interest and penalties related to the unrecognized tax benefits as of December 31, 2017 and 2016, respectively. These liabilities are included in “Other Long‑Term Liabilities” in the consolidated balance sheets. We recognize potential interest and penalties related to unrecognized tax benefits in our provision for income taxes.

We expect to recognize a decrease in unrecognized tax benefits of up to $8.7 million within the next twelve months due to the filing of a federal income tax automatic accounting method change application. Approximately $3.0 million of the decrease is expected to impact our effective tax rate.

We are subject to taxation in the United States and various state jurisdictions. In the fourth quarter of 2017, we received a ‘no change letter’ from the Internal Revenue Service upon completion of its examination of the 2015 tax year. We remain open to examination by various state tax authorities for the 2009 tax year forward.

Stock-Based Compensation

12 Months Ended

Dec. 31, 2017

Stock-Based Compensation

Stock-Based Compensation

13. Stock‑Based Compensation

Grants of stock options, restricted stock and restricted stock units, and performance share units have been, under the 2012 Plan, and will be, under the 2017 Omnibus Incentive Plan (the “2017 Plan”), determined and administered by the compensation committee of the Board of Directors. Total stock‑based compensation expense was $6.4 million, $5.0 million and $5.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. Stock-based compensation expense is recognized using the straight‑line method over the vesting period and generally vests over a three‑year vesting period. Certain awards provide for accelerated vesting when the sum of an employee's age and years of service is at least 75. We recognize forfeitures as they occur. Total income tax benefit recognized for stock‑based compensation arrangements was $2.4 million, $1.9 million and $2.1 million for each of the years ended December 31, 2017, 2016 and 2015. Subsequent to our adoption of ASU 2016-09 in the second quarter of 2016, we elected to apply the presentation requirements for cash flows related to excess tax benefits prospectively. As such, we present, in the consolidated statements of cash flows, the benefits of tax deductions in excess of recognized compensation costs (“excess tax benefits”) as operating cash flows for the years ended 2017 and 2016 and as financing cash flows for the year ended 2015.

We generally issue treasury shares for stock options and restricted stock, unless treasury shares are not available. Upon the vesting of restricted shares, we have allowed the holder to elect to surrender an amount of shares to meet their statutory tax withholding requirements. These shares are accounted for as treasury stock based upon the value of the stock on the date of vesting.

Stock Options

The following table summarizes activity under our stock option plans (shares in thousands):


	Year Ended
	December 31,
	2017
		Weighted-
		Average
Stock Options	Shares	Exercise Price
Outstanding at beginning of year	714	$	17.01
Granted	85	$	36.25
Exercised	(146)	$	14.08
Forfeited	(23)	$	23.55
Expired	—	$	—
Outstanding at end of year	630	$	20.03
Options exercisable at end of year	444

The total intrinsic value of options exercised during the years ended December 31, 2017, 2016 and 2015 was $3.6 million, $1.9 million and $3.9 million, respectively. Stock options exercisable as of December 31, 2017 have a weighted‑average remaining contractual term of 5.3 years and an aggregate intrinsic value of $12.5 million. As of December 31, 2017, we have 0.6 million options that are vested or expected to vest; these options have a weighted average exercise price of $20.03 per share, have a weighted‑average remaining contractual term of 6.2 years and an aggregate intrinsic value of $14.9 million.

The following table summarizes information about stock options outstanding at December 31, 2017 (shares in thousands):


	Options Outstanding				Options Exercisable
		Weighted-
		Average
	Number	Remaining	Weighted-		Number	Weighted-
	Outstanding at	Contractual	Average		Exercisable at	Average
Range of Exercise Prices	12/31/2017	Life	Exercise Price		12/31/2017	Exercise Price
$11.00 - $15.00	265	4.16	$	12.77	265	$	12.77
$15.01 - $20.00	189	6.73	$	17.93	149	$	17.47
$20.01 - $36.25	176	8.69	$	33.19	30	$	30.36
$11.00 - $36.25	630	6.20	$	20.03	444	$	15.55

The fair value of each option award is estimated, based on several assumptions, on the date of grant using the Black‑Scholes option valuation model. The fair values and the assumptions used for the 2017, 2016 and 2015 grants are shown in the table below:


	Year Ended December 31,
	2017		2016		2015
Weighted-average fair value per share of options granted	$	11.43	$	9.94	$	6.33
Fair value assumptions:
Expected dividend yield		0.89%		0.97%		1.51%
Expected stock price volatility		34.5%		37.9%		38.4%
Risk-free interest rate		2.11%		1.41%		1.50%
Expected term		5.3 years		5.3 years		5.6 years

Stock options are accounted for as equity instruments. As of December 31, 2017, the unrecognized compensation cost related to stock options was $0.4 million, which is expected to be recognized over a weighted‑average period of 1.4 years. The total fair value of options vested during the year ended December 31, 2017 was $0.8 million.

The following table summarizes information about nonvested stock option awards as of December 31, 2017 and changes for the year ended December 31, 2017 (shares in thousands):


		Weighted-Average
		Grant Date
Stock Options	Shares	Fair Value
Nonvested at December 31, 2016	241	$	7.83
Granted	85	$	11.43
Vested	(117)	$	7.23
Forfeited	(23)	$	7.88
Nonvested at December 31, 2017	186	$	9.85

Restricted Stock and Restricted Stock Units

The following table summarizes activity under our restricted stock plans (shares in thousands):


	Year Ended
	December 31,
	2017
		Weighted
		Average Grant
Restricted Stock and Restricted Stock Units	Shares	Date Fair Value
Unvested at beginning of year	126	$	23.41
Granted	71	$	35.69
Vested	(90)	$	25.44
Forfeited	(15)	$	26.34
Unvested at end of year	92	$	30.48

Approximately $0.8 million of compensation expense related to restricted stock and restricted stock units will be recognized over a weighted‑average period of 1.6 years. The total fair value of shares vested during the year ended December 31, 2017 was $2.3 million. The weighted‑average fair value per share of restricted stock shares and units awarded during 2017, 2016 and 2015 was $35.69, $30.25 and $20.64, respectively. The aggregate intrinsic value of restricted stock vested during the years ended December 31, 2017, 2016 and 2015 was $3.2 million, $3.6 million and $3.4 million, respectively.

Performance Stock Units

Under the 2012 Plan, we granted dollar‑denominated performance vesting restricted stock units (“PSUs”), which cliff vest at the end of a three‑year performance period. The PSUs are subject to two performance measures; 50% of the PSUs are based on the annual performance of our stock price relative to a group of our peers (total shareholder return) and 50% of the PSUs are measured based on meeting or exceeding a pre‑determined annual earnings per share target as set by our board of directors (EPS). Depending on the Company’s performance in relation to the established performance measures, the awards may vest at zero to a maximum of 2.0 times the dollar‑denominated award granted at target. Upon achievement of the necessary performance metrics, the award will be determined in dollars and may be settled in cash or stock based on the market price of the Company’s common stock at the end of the performance period, at our discretion.

Compensation expense for dollar‑denominated performance units will ultimately be equal to the final dollar value awarded to the grantee upon vesting, settled either in cash or stock. However, throughout the performance period we must record an accrued expense based on an estimate of that future payout. For units determined by EPS performance, the awards are evaluated quarterly against established targets in order to estimate the liability throughout the vesting period. For units determined by total shareholder return performance, a Monte Carlo simulation model was used to estimate accruals throughout the vesting period. The model simulates our total shareholder return and compares it against our peer group over the three‑year performance period to produce a predicted distribution of relative share performance. This is applied to the reward criteria to give an expected value of the total shareholder return element. The calculated fair market value as of December 31, 2017 was $4.9 million. Of this amount, $2.2 million relates to the PSUs granted in 2015 whose performance period ended December 31, 2017. These awards will be settled within the upcoming year either in cash or stock. The expense related to performance stock units for the years ended December 31, 2017, 2016 and 2015 was $2.6 million, $1.6 million and $2.6 million, respectively. At the December 31, 2017 calculated fair market value, approximately $0.7 million of compensation expense related to performance stock units will be recognized over a weighted‑average period of 1.2 years.

Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2017

Selected Quarterly Financial Data (Unaudited)

Quarterly Financial Information [Text Block]

14. Selected Quarterly Financial Data (Unaudited)

Quarterly financial information for the years ended December 31, 2017 and 2016 is summarized as follows (in thousands, except per share data):


	2017
	Q1		Q2		Q3		Q4
Revenue	$	380,588	$	465,411	$	480,851	$	461,072
Gross profit		75,954		95,738		100,858		93,731
Net income including noncontrolling interests (1)		7,477		17,972		22,284		7,539
Net income attributable to Comfort Systems USA, Inc. (1)		7,477		17,972		22,284		7,539
INCOME PER SHARE ATTRIBUTABLE TO COMFORT SYSTEMS USA, INC.:
Basic	$	0.20	$	0.48	$	0.60	$	0.20
Diluted	$	0.20	$	0.48	$	0.59	$	0.20


	2016
	Q1		Q2		Q3		Q4
Revenue	$	385,942	$	427,538	$	428,760	$	392,100
Gross profit		73,502		89,426		92,816		88,265
Net income including noncontrolling interests		9,841		17,717		20,471		16,867
Net income attributable to Comfort Systems USA, Inc.		9,841		17,717		20,471		16,867
INCOME PER SHARE ATTRIBUTABLE TO COMFORT SYSTEMS USA, INC.:
Basic	$	0.26	$	0.47	$	0.55	$	0.45
Diluted	$	0.26	$	0.47	$	0.54	$	0.45

(1)

In the fourth quarter of 2017, we recorded a $9.5 million increase to the provision for income taxes to remeasure our net deferred tax assets for the enacted corporate tax rate reduction.

The sums of the individual quarterly earnings per share amounts do not necessarily agree with year‑to‑date earnings per share as each quarter’s computation is based on the weighted average number of shares outstanding during the quarter, the weighted average stock price during the quarter and the dilutive effects of options and contingently issuable restricted stock in each quarter.

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Summary of Significant Accounting Policies

Principles of Consolidation

Use of Estimates

Cash Flow Information

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Cash paid (in thousands) for:


	Year Ended December 31,
	2017		2016		2015
Interest	$	2,832	$	1,864	$	1,408
Income taxes	$	38,144	$	29,349	$	35,538

Recent Accounting Pronouncements

Revenue Recognition

Contracts in progress are as follows (in thousands):


	December 31,
	2017		2016
Costs incurred on contracts in progress	$	1,288,330	$	1,116,182
Estimated earnings, net of losses		253,641		207,252
Less—Billings to date		(1,617,860)		(1,378,050)
	$	(75,889)	$	(54,616)
Costs and estimated earnings in excess of billings	$	30,116	$	29,369
Billings in excess of costs and estimated earnings		(106,005)		(83,985)
	$	(75,889)	$	(54,616)

Variations from estimated project costs could have a significant impact on our operating results, depending on project size, and the recoverability of the variation via additional customer payments.

Accounts Receivable

Inventories

Property and Equipment

Recoverability of Goodwill and Identifiable Intangible Assets

We amortize identifiable intangible assets with finite lives over their useful lives. Changes in strategy and/or market condition may result in adjustments to recorded intangible asset balances.

Long-Lived Assets

Long‑Lived Assets

Acquisitions

We recognize assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities, based on fair value estimates as of the date of acquisition.

Self-Insurance Liabilities

Self‑Insurance Liabilities

Warranty Costs

Income Taxes

Segment Disclosure

Concentrations of Credit Risk

Financial Instruments

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2017

Fair Value Measurements

Summary of fair values and levels within the fair value hierarchy in which the fair value measurements fall for assets and liabilities measured on a recurring basis


	Balance		Fair Value Measurements at Reporting Date
	December 31,
	2017		Level 1		Level 2		Level 3
Cash and cash equivalents	$	36,542	$	36,542	$	—	$	—
Life insurance—cash surrender value	$	3,128	$	—	$	3,128	$	—
Contingent earn-out obligations	$	7,993	$	—	$	—	$	7,993


	December 31,
	2016		Level 1		Level 2		Level 3
Cash and cash equivalents	$	32,074	$	32,074	$	—	$	—
Life insurance—cash surrender value	$	3,697	$	—	$	3,697	$	—
Contingent earn-out obligations	$	2,531	$	—	$	—	$	2,531

Schedule of reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3)

The table below presents a reconciliation of the fair value of our contingent earn‑out obligations that use significant unobservable inputs (Level 3) (in thousands).


	December 31,
	2017		2016
Balance at beginning of year	$	2,531	$	450
Issuances		11,755		3,240
Settlements		(2,578)		(428)
Adjustments to fair value		(3,715)		(731)
Balance at end of year	$	7,993	$	2,531

Goodwill and Identifiable Intangible Assets, Net (Tables)

12 Months Ended

Dec. 31, 2017

Goodwill and Identifiable Intangible Assets, Net

Schedule of changes in the carrying amount of goodwill

The changes in the carrying amount of goodwill are as follows (in thousands):


	December 31,
	2017		2016
Balance at beginning of year	$	149,208	$	143,874
Additions (See Note 4)		52,481		5,334
Impairment adjustment		(1,105)		—
Balance at end of year	$	200,584	$	149,208

Schedule of components of identifiable intangible assets

Identifiable intangible assets consist of the following (dollars in thousands):


	Estimated	2017				2016
	Useful Lives	Gross Book		Accumulated		Gross Book		Accumulated
	in Years	Value		Amortization		Value		Amortization
Customer relationships	1 - 15	$	98,244	$	(47,057)	$	57,230	$	(36,758)
Backlog	1 - 2		6,300		(5,478)		3,600		(3,433)
Noncompete agreements	2 - 7		—		—		2,890		(2,890)
Tradenames	2 - 25		35,340		(11,305)		31,640		(9,844)
Total		$	139,884	$	(63,840)	$	95,360	$	(52,925)

Schedule of future amortization expense of identifiable intangible assets

At December 31, 2017, future amortization expense of identifiable intangible assets is as follows (in thousands):


Year ended December 31—
2018	$	13,786
2019		11,320
2020		9,252
2021		7,651
2022		6,041
Thereafter		27,994
Total	$	76,044

Long Term Debt Obligations (Tables)

12 Months Ended

Dec. 31, 2017

Debt Obligations

Schedule of components of debt obligations

Long‑term debt obligations consist of the following (in thousands):


	December 31,
	2017		2016
Revolving credit facility	$	45,000	$	—
Notes to former owners		15,325		2,250
Other debt		214		305
Capital lease obligations		—		256
Total debt		60,539		2,811
Less—current portion		(613)		(763)
Total long-term portion of debt	$	59,926	$	2,048

Schedule of future principal payments of long-term debt

At December 31, 2017, future principal payments of debt are as follows (in thousands):


Year ended December 31—
2018	$	613
2019		626
2020		7,150
2021		52,150
	$	60,539

Schedule of interest expense

Interest expense included the following primary elements (in thousands):


	Year Ended December 31,
	2017		2016		2015
Interest expense on notes to former owners	$	365	$	70	$	25
Interest expense on borrowings and unused commitment fees		1,862		1,251		692
Letter of credit fees		553		657		719
Amortization of debt financing costs		376		367		317
Total	$	3,156	$	2,345	$	1,753

Schedule of reconciliation of Credit Facility Adjusted EBITDA to net income

The following is a reconciliation of Credit Facility Adjusted EBITDA to net income for 2017 (in thousands):


Net income including noncontrolling interests	$	55,272
Provision for income taxes		45,666
Interest expense, net		3,086
Depreciation and amortization expense		37,456
Stock-based compensation		6,377
Goodwill impairment		1,105
Pre-acquisition results of acquired companies, as defined under the Facility		4,597
Credit Facility Adjusted EBITDA	$	153,559

Schedule of market rates relating to interest options under the Facility

the following are the respective market rates as of December 31, 2017 relating to interest options under the Facility:


Base Rate Loan Option:
Federal Funds Rate plus 0.50%		1.87%
Wells Fargo Bank, N.A. Prime Rate		4.50%
One-month LIBOR plus 1.00%		2.56%
Eurodollar Rate Loan Option:
One-month LIBOR		1.56%
Six-month LIBOR		1.84%

Summary of additional margins


	Consolidated Total Indebtedness to
	Credit Facility Adjusted EBITDA
	Less than 0.75		0.75 to 1.50		1.50 to 2.25		2.25 or greater
Additional Per Annum Interest Margin Added Under:
Base Rate Loan Option	0.25	%	0.50	%	0.75	%	1.00	%
Eurodollar Rate Loan Option	1.25	%	1.50	%	1.75	%	2.00	%
Letter of credit fees	1.25	%	1.50	%	1.75	%	2.00	%
Commitment fees on any portion of the Revolving Loan capacity not in use for borrowings or letters of credit at any given time	0.20	%	0.25	%	0.30	%	0.35	%

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Taxes

Schedule of provision for income taxes relating to continuing operations

The provision for income taxes relating to continuing operations consists of the following (in thousands):


	December 31,
	2017		2016		2015
Current tax provision—
Federal	$	35,434	$	32,721	$	27,564
State and Puerto Rico		6,054		4,683		4,065
Total current		41,488		37,404		31,629
Deferred tax provision (benefit)—
Federal		5,391		(2,101)		(1,481)
State and Puerto Rico		(1,213)		862		1,076
Total deferred		4,178		(1,239)		(405)
Provision for income taxes	$	45,666	$	36,165	$	31,224

Schedule of difference in income taxes provided for and the amounts determined by applying the federal statutory tax rate to income before income taxes results


	December 31,
	2017		2016		2015
Income taxes at the federal statutory rate of 35%	$	35,328	$	35,371	$	31,032
Increases (decreases) resulting from—
Net state income taxes		2,838		4,262		3,432
Valuation allowances		91		(1,254)		463
Net unrecognized tax benefits		153		20		(72)
Noncontrolling interests		—		—		(2,827)
Nondeductible expenses		1,134		825		751
Stock-based compensation deductions		(1,320)		(885)		—
Domestic production activities deduction		(2,112)		(2,026)		(1,701)
Corporate tax rate reduction to 21%		9,478		—		—
Other		76		(148)		146
Provision for income taxes	$	45,666	$	36,165	$	31,224

Schedule of significant components of the net deferred tax assets and net deferred tax liabilities as reflected on the balance sheet

Significant components of the deferred tax assets and deferred tax liabilities as reflected on the balance sheets are as follows (in thousands):


	Year Ended
	December 31,
	2017		2016
Deferred tax assets—
Accounts receivable and allowance for doubtful accounts	$	715	$	1,627
Stock-based compensation		2,297		3,036
Accrued liabilities and expenses		19,555		23,000
Net operating loss carryforwards		6,007		5,053
Goodwill		—		875
Intangible assets		2,272		—
Other		544		759
Subtotal		31,390		34,350
Valuation allowances		(3,500)		(3,184)
Total deferred tax assets		27,890		31,166
Deferred tax liabilities—
Property and equipment		(4,668)		(4,398)
Long-term contracts		(625)		(637)
Goodwill		(1,572)		—
Intangible assets		—		(737)
Other		(322)		(513)
Total deferred tax liabilities		(7,187)		(6,285)
Net deferred tax assets	$	20,703	$	24,881

Schedule of deferred income tax assets and liabilities included in the consolidated balance sheets


	December 31,
	2017		2016
Deferred tax assets	$	22,966	$	27,170
Deferred tax liabilities	$	2,263	$	2,289

Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties, is as follows (in thousands):


	Year Ended
	December 31,
	2017		2016		2015
Balance at beginning of year	$	240	$	240	$	343
Additions based on tax positions related to current year		8,689		—		—
Additions based on tax positions related to prior years		—		—		—
Reductions for tax positions related to prior years		—		—		(103)
Reductions for settlements with tax authorities		—		—		—
Balance at end of year	$	8,929	$	240	$	240

Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2017

Stock-Based Compensation

Summary of activity under the entity's stock option plans

The following table summarizes activity under our stock option plans (shares in thousands):


	Year Ended
	December 31,
	2017
		Weighted-
		Average
Stock Options	Shares	Exercise Price
Outstanding at beginning of year	714	$	17.01
Granted	85	$	36.25
Exercised	(146)	$	14.08
Forfeited	(23)	$	23.55
Expired	—	$	—
Outstanding at end of year	630	$	20.03
Options exercisable at end of year	444

Summary information about stock options outstanding

The following table summarizes information about stock options outstanding at December 31, 2017 (shares in thousands):


	Options Outstanding				Options Exercisable
		Weighted-
		Average
	Number	Remaining	Weighted-		Number	Weighted-
	Outstanding at	Contractual	Average		Exercisable at	Average
Range of Exercise Prices	12/31/2017	Life	Exercise Price		12/31/2017	Exercise Price
$11.00 - $15.00	265	4.16	$	12.77	265	$	12.77
$15.01 - $20.00	189	6.73	$	17.93	149	$	17.47
$20.01 - $36.25	176	8.69	$	33.19	30	$	30.36
$11.00 - $36.25	630	6.20	$	20.03	444	$	15.55

Schedule of fair values and the assumptions used for the grants


	Year Ended December 31,
	2017		2016		2015
Weighted-average fair value per share of options granted	$	11.43	$	9.94	$	6.33
Fair value assumptions:
Expected dividend yield		0.89%		0.97%		1.51%
Expected stock price volatility		34.5%		37.9%		38.4%
Risk-free interest rate		2.11%		1.41%		1.50%
Expected term		5.3 years		5.3 years		5.6 years

Summary of information about nonvested stock option awards and changes

The following table summarizes information about nonvested stock option awards as of December 31, 2017 and changes for the year ended December 31, 2017 (shares in thousands):


		Weighted-Average
		Grant Date
Stock Options	Shares	Fair Value
Nonvested at December 31, 2016	241	$	7.83
Granted	85	$	11.43
Vested	(117)	$	7.23
Forfeited	(23)	$	7.88
Nonvested at December 31, 2017	186	$	9.85

Summary of activity under the entity's restricted stock plans

The following table summarizes activity under our restricted stock plans (shares in thousands):


	Year Ended
	December 31,
	2017
		Weighted
		Average Grant
Restricted Stock and Restricted Stock Units	Shares	Date Fair Value
Unvested at beginning of year	126	$	23.41
Granted	71	$	35.69
Vested	(90)	$	25.44
Forfeited	(15)	$	26.34
Unvested at end of year	92	$	30.48

Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2017

Selected Quarterly Financial Data (Unaudited)

Schedule of quarterly financial information

Quarterly financial information for the years ended December 31, 2017 and 2016 is summarized as follows (in thousands, except per share data):


	2017
	Q1		Q2		Q3		Q4
Revenue	$	380,588	$	465,411	$	480,851	$	461,072
Gross profit		75,954		95,738		100,858		93,731
Net income including noncontrolling interests (1)		7,477		17,972		22,284		7,539
Net income attributable to Comfort Systems USA, Inc. (1)		7,477		17,972		22,284		7,539
INCOME PER SHARE ATTRIBUTABLE TO COMFORT SYSTEMS USA, INC.:
Basic	$	0.20	$	0.48	$	0.60	$	0.20
Diluted	$	0.20	$	0.48	$	0.59	$	0.20


	2016
	Q1		Q2		Q3		Q4
Revenue	$	385,942	$	427,538	$	428,760	$	392,100
Gross profit		73,502		89,426		92,816		88,265
Net income including noncontrolling interests		9,841		17,717		20,471		16,867
Net income attributable to Comfort Systems USA, Inc.		9,841		17,717		20,471		16,867
INCOME PER SHARE ATTRIBUTABLE TO COMFORT SYSTEMS USA, INC.:
Basic	$	0.26	$	0.47	$	0.55	$	0.45
Diluted	$	0.26	$	0.47	$	0.54	$	0.45

In the fourth quarter of 2017, we recorded a $9.5 million increase to the provision for income taxes to remeasure our net deferred tax assets for the enacted corporate tax rate reduction.

Summary of Significant Accounting Policies (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($) location
Use of Estimates
Number or operating locations \| location			2
Gain Loss From Project			$ 3,400
Cash paid for:
Interest	$ 2,832	$ 1,864	1,408
Income taxes paid	$ 38,144	29,349	35,538
Revenue Recognition
Percentage of revenue earned on a project basis	81.00%
Contracts in progress
Costs incurred on contracts in progress	$ 1,288,330	1,116,182
Estimated earnings, net of losses	253,641	207,252
Less-Billings to date	(1,617,860)	(1,378,050)
Contracts in progress	(75,889)	(54,616)
Costs and estimated earnings in excess of billings	30,116	29,369
Billings in excess of costs and estimated earnings	$ 106,005	83,985
Period during which progress billings or contract price can be withheld until completion of work	6 months
Retention receivable	$ 68,700	60,700
Retention payable	$ 11,900	10,100
Warranty Costs
Labor warranty period after servicing of existing HVAC system	30 days
Income Taxes
Federal statutory income taxes rate (as a percent)	35.00%
Recent Accounting Pronouncements
Material impact on consolidated financial statements due to adoption of ASU 2014-09	$ 168,269	123,984
Deferred tax liabilities	2,263	2,289
Effect of share-based compensation of excess tax benefit in provision for income taxes	2,400	1,900	2,100
Impact on retained earnings for minimum statutory withholding tax requirement due to amendments	1,419	$ 1,304	937
Excess tax benefit of stock-based compensation			$ 1,240
Accounting Standards Update 2014-09 \| Difference between Revenue Guidance in Effect before and after Topic 606
Recent Accounting Pronouncements
Material impact on consolidated financial statements due to	$ 500

Fair Value Measurements (Details) $ in Thousands	3 Months Ended	12 Months Ended
Fair Value Measurements (Details) $ in Thousands	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($) item	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Fair Value Measurements
Number of employees covered under life insurance policies \| item		42
Combined face value of life insurance policies		$ 31,300
Cash surrender value		3,100	$ 3,700
Reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3)
Goodwill, Impairment Loss	$ 1,100	1,105
Contingent earn-out obligations
Reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3)
Balance at beginning of year	$ 2,531	2,531	450
Issuances		11,755	3,240
Settlements		(2,578)	(428)
Adjustments to fair value		3,715	731
Balance at end of period		7,993	2,531	$ 450
Recurring basis \| Total
Fair Value Measurements
Cash and cash equivalents		36,542	32,074
Life insurance - cash surrender value		3,128	3,697
Contingent earn-out obligations		7,993	2,531
Recurring basis \| Quoted Market Prices In Active Markets for Identical Assets (Level 1)
Fair Value Measurements
Cash and cash equivalents		36,542	32,074
Recurring basis \| Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Fair Value Measurements
Life insurance - cash surrender value		3,128	3,697
Recurring basis \| Significant Unobservable Inputs (Level 3)
Fair Value Measurements
Contingent earn-out obligations		7,993	2,531
Non recurring basis \| Significant Unobservable Inputs (Level 3)
Reconciliation of the fair value of contingent earn-out obligations that use significant unobservable inputs (Level 3)
Goodwill, Impairment Loss		$ 1,105	$ 0	$ 0

Acquisitions (Details) - USD ($) $ in Thousands		12 Months Ended
Acquisitions (Details) - USD ($) $ in Thousands	Apr. 01, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Acquisitions
Contingent earn out obligation term		4 years
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets
Goodwill		$ 200,584	$ 149,208	$ 143,874
BCH
Acquisitions
Contingent earn-out obligation	$ 11,600
Promissory note payable	14,300
Purchase price paid in cash	95,400
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets
Cash and cash equivalents	9,613
Receivables	28,263
Costs and estimated earnings in excess of billings	1,690
Other current assets	708
Property and equipment	3,927
Goodwill	50,512
Identifiable intangible assets	46,500
Accounts payable and other current liabilities	(11,763)
Billings in excess of costs and estimated earnings	(8,039)
Other non-current liabilities	(104)
Total purchase price	$ 121,307
BCH \| Minimum
Acquisitions
Cash flow discount rate	13.00%
BCH \| Maximum
Acquisitions
Cash flow discount rate	18.00%
BCH \| Customer relationships
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets
Identifiable intangible assets	$ 36,500
Estimated amortization life	10 years
BCH \| Backlog
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets
Identifiable intangible assets	$ 6,300
Estimated amortization life	1 year
BCH \| Trade names
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets
Identifiable intangible assets	$ 3,700
Estimated amortization life	25 years

Goodwill and Identifiable Intangible Assets, Net - IdentifiableIntangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Identifiable Intangible Assets, Net
Gross Book Value	$ 139,884	$ 95,360
Accumulated Amortization	(63,840)	(52,925)
Amortization of identifiable intangible assets	17,404	8,185	$ 7,481
Future amortization expense of identifiable intangible assets
2018	13,786
2019	11,320
2020	9,252
2021	7,651
2022	6,041
Thereafter	27,994
Total	76,044
Customer relationships
Identifiable Intangible Assets, Net
Gross Book Value	98,244	57,230
Accumulated Amortization	$ (47,057)	(36,758)
Customer relationships \| Minimum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	1 year
Customer relationships \| Maximum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	15 years
Backlog
Identifiable Intangible Assets, Net
Gross Book Value	$ 6,300	3,600
Accumulated Amortization	$ (5,478)	(3,433)
Backlog \| Minimum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	1 year
Backlog \| Maximum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	2 years
Noncompete agreements
Identifiable Intangible Assets, Net
Gross Book Value		2,890
Accumulated Amortization		(2,890)
Noncompete agreements \| Minimum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	2 years
Noncompete agreements \| Maximum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	7 years
Trade names
Identifiable Intangible Assets, Net
Gross Book Value	$ 35,340	31,640
Accumulated Amortization	$ (11,305)	$ (9,844)
Trade names \| Minimum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	2 years
Trade names \| Maximum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	25 years
Customer Relationships Non compete Agreements and Tradenames \| Minimum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	1 year
Customer Relationships Non compete Agreements and Tradenames \| Maximum
Identifiable Intangible Assets, Net
Estimated Useful Lives in Years	25 years

Detail of Certain Balance Sheet Accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Activity in allowance for doubtful accounts
Balance at beginning of year	$ 4,288	$ 5,158	$ 4,379
Bad debt expense (benefit)	182	(27)	1,552
Deductions for uncollectible receivables written off, net of recoveries	(1,829)	(876)	(798)
Allowance for doubtful accounts of acquired companies at date of acquisition	759	33	25
Balance at end of year	3,400	4,288	$ 5,158
Other current liabilities
Accrued warranty costs	6,149	6,702
Accrued job losses	598	1,269
Accrued sales and use tax	2,308	1,973
Deferred revenue	3,895	5,257
Liabilities due to former owners	2,981	4,196
Other current liabilities	17,723	14,864
Total other current liabilities	$ 33,654	$ 34,261

Long Term Debt Obligations-Other (Details) $ in Thousands	3 Months Ended								12 Months Ended
Long Term Debt Obligations-Other (Details) $ in Thousands	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2017 USD ($) item	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Long-Term Debt Obligations
Line of credit borrowing capacity accordion option	$ 100,000								$ 100,000
Reconciliation of Earnings before Interest Tax Depreciation and Amortization to Net Income
Net income including noncontrolling interests	7,539	$ 22,284	$ 17,972	$ 7,477	$ 16,867	$ 20,471	$ 17,717	$ 9,841	55,272	$ 64,896	$ 57,440
Provision for income taxes									(45,666)	(36,165)	(31,224)
Stock-based compensation									6,377	5,041	$ 5,609
Goodwill impairment				$ (1,100)					(1,105)
Shoffner
Other disclosures
Outstanding balance	200								200
Debt acquired related to coil line duct processing system	400								400
Current debt	100								$ 100
London Interbank Offered Rate (LIBOR) \| Shoffner
Market rates relating to interest options
Interest rate margin (as a percent)									2.25%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)									2.25%
Revolving credit facility
Long-Term Debt Obligations
Borrowing capacity	325,000								$ 325,000
Outstanding borrowings	45,000								45,000
Letters of credit amount outstanding	39,600								39,600
Credit available	240,400								240,400
Book value of assets pledged as collateral	$ 40,900								$ 40,900
Number of quarters of net earnings used for the calculation of the credit facility adjusted EBITDA \| item									4
Reconciliation of Earnings before Interest Tax Depreciation and Amortization to Net Income
Net income including noncontrolling interests									$ 55,272
Provision for income taxes									(45,666)
Interest expense, net									(3,086)
Depreciation and amortization expense									37,456
Stock-based compensation									6,377
Goodwill impairment									(1,105)
Pre-acquisition results of acquired companies, as defined under the Facility									(4,597)
Credit Facility Adjusted EBITDA									$ 153,559
Principal financial covenants
Leverage ratio	0.40								0.40
Fixed charge coverage ratio	21.8								21.8
Number of quarters of capital expenditures, tax provision, dividends and stock repurchase payments used for calculation of fixed charge coverage ratio \| item									4
Number of interest rate options \| item									2
Period of Credit Facility Adjusted EBITDA for determining additional margins									12 months
Additional per annum interest margin added under:
Weighted average interest rate (as a percent)	2.80%								2.80%
Other disclosures
Outstanding balance	$ 45,000								$ 45,000
Revolving credit facility \| Through maturity
Principal financial covenants
Leverage ratio	2.75								2.75
Revolving credit facility \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: Less than 0.75
Additional per annum interest margin added under:
Letter of credit fees (as a percent)									1.25%
Commitment fees payable on unused portion of the facility (as a percent)									0.20%
Revolving credit facility \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 0.75 to 1.50
Additional per annum interest margin added under:
Letter of credit fees (as a percent)									1.50%
Commitment fees payable on unused portion of the facility (as a percent)									0.25%
Revolving credit facility \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.50 to 2.25
Additional per annum interest margin added under:
Letter of credit fees (as a percent)									1.75%
Commitment fees payable on unused portion of the facility (as a percent)									0.30%
Revolving credit facility \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 2.25 or greater
Additional per annum interest margin added under:
Letter of credit fees (as a percent)									2.00%
Commitment fees payable on unused portion of the facility (as a percent)									0.35%
Revolving credit facility \| Minimum
Principal financial covenants
Fixed charge coverage ratio	2.00								2.00
Revolving credit facility \| Minimum \| Covenant Requirement
Principal financial covenants
Net leverage ratio used as basis for other restrictions	2.00								2.00
Revolving credit facility \| Maximum
Principal financial covenants
Net leverage ratio after giving effect to stock repurchases for calculation of the fixed charge coverage ratio	1.50								1.50
Permitted amount of acquisitions per transaction	$ 30,000								$ 30,000
Aggregate purchase price of current acquisition and acquisitions in the preceding 12 month period for determining permitted amount of acquisition per transaction	$ 65,000								$ 65,000
Revolving credit facility \| Maximum \| Covenant Requirement
Principal financial covenants
Net leverage ratio used to determine exclusion of stock repurchases and the payment of dividends for calculation of the fixed charge coverage ratio	1.50								1.50
Revolving credit facility \| Maximum \| Stock Repurchases Through September 30, 2015
Principal financial covenants
Amount of stock repurchases to maintain maximum net leverage ratio									$ 25,000
Revolving credit facility \| Maximum \| Stock Repurchases After February 22, 2016 And On Or Before December 31, 2017
Principal financial covenants
Amount of stock repurchases to maintain maximum net leverage ratio									$ 25,000
Revolving credit facility \| Base rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: Less than 0.75
Market rates relating to interest options
Interest rate margin (as a percent)									0.25%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)									0.25%
Revolving credit facility \| Base rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 0.75 to 1.50
Market rates relating to interest options
Interest rate margin (as a percent)									0.50%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)									0.50%
Revolving credit facility \| Base rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.50 to 2.25
Market rates relating to interest options
Interest rate margin (as a percent)									0.75%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)									0.75%
Revolving credit facility \| Base rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 2.25 or greater
Market rates relating to interest options
Interest rate margin (as a percent)									1.00%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)									1.00%
Revolving credit facility \| Eurodollar rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: Less than 0.75
Market rates relating to interest options
Interest rate margin (as a percent)									1.25%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)									1.25%
Revolving credit facility \| Eurodollar rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 0.75 to 1.50
Market rates relating to interest options
Interest rate margin (as a percent)									1.50%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)									1.50%
Revolving credit facility \| Eurodollar rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 1.50 to 2.25
Market rates relating to interest options
Interest rate margin (as a percent)									1.75%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)									1.75%
Revolving credit facility \| Eurodollar rate \| Consolidated Total Indebtedness to Credit Facility Adjusted EBITDA: 2.25 or greater
Market rates relating to interest options
Interest rate margin (as a percent)									2.00%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)									2.00%
Notes to former owners
Other disclosures
Outstanding balance	$ 15,325				2,250				$ 15,325	2,250
Subordinate note \| Shoffner
Other disclosures
Outstanding balance	$ 1,000								$ 1,000
Weighted average interest rate (as a percent)	3.00%								3.00%
Promissory note \| BCH
Other disclosures
Outstanding balance	$ 14,300								$ 14,300
Weighted average interest rate (as a percent)	3.00%								3.00%
Other debt
Other disclosures
Outstanding balance	$ 214				$ 305				$ 214	$ 305
Federal Funds Rate \| Revolving credit facility \| Base rate
Market rates relating to interest options
Interest rate margin (as a percent)									0.50%
Market rate (as a percent)	1.87%								1.87%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)									0.50%
Wells Fargo Bank, N.A. Prime Rate \| Revolving credit facility \| Base rate
Market rates relating to interest options
Market rate (as a percent)	4.50%								4.50%
One-month LIBOR \| Revolving credit facility \| Base rate
Market rates relating to interest options
Interest rate margin (as a percent)									1.00%
Market rate (as a percent)	2.56%								2.56%
Additional per annum interest margin added under:
Additional per annum interest margin (as a percent)									1.00%
One-month LIBOR \| Revolving credit facility \| Eurodollar rate
Market rates relating to interest options
Variable rate basis									One-month LIBOR
Market rate (as a percent)	1.56%								1.56%
Six-month LIBOR \| Revolving credit facility \| Eurodollar rate
Market rates relating to interest options
Variable rate basis									Six-month LIBOR
Market rate (as a percent)	1.84%								1.84%

Income Taxes - Reconciliation (Details) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
	Jan. 01, 2018	Dec. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Effective tax rates on continuing operations			45.20%	35.80%	35.20%
Federal statutory income taxes rate (as a percent)			35.00%
Increase to provision for income taxes		$ 9,500	$ 9,500
Income taxes at the federal statutory rate of 35%			35,328	$ 35,371	$ 31,032
Increases (decreases) resulting from—
Net state income taxes			2,838	4,262	3,432
Valuation allowances			91	(1,254)	463
Net unrecognized tax benefits			153	20	(72)
Noncontrolling interests					(2,827)
Nondeductible expenses			1,134	825	751
Stock-based compensation deduction			(1,320)	(885)
Domestic production activities deduction			(2,112)	(2,026)	(1,701)
Corporate tax rate reduction to 21%			9,478
Other			76	(148)	146
Provision for income taxes			$ 45,666	$ 36,165	$ 31,224
Forecast
Federal statutory income taxes rate (as a percent)	21.00%

Income Taxes - Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Deferred tax assets—
Accounts receivable and allowance for doubtful accounts	$ 715	$ 1,627
Stock-based compensation	2,297	3,036
Accrued liabilities and expenses	19,555	23,000
Net operating loss carryforwards	6,007	5,053
Goodwill		875
Intangible assets	2,272
Other	544	759
Subtotal	31,390	34,350
Less-Valuation allowance	(3,500)	(3,184)
Total deferred tax assets	27,890	31,166
Deferred tax liabilities—
Property and equipment	(4,668)	(4,398)
Long-term contracts	(625)	(637)
Goodwill	(1,572)
Intangible assets		(737)
Other	(322)	(513)
Total deferred tax liabilities	(7,187)	(6,285)
Net deferred tax assets	20,703	24,881
Deferred income tax assets-
Deferred income tax assets	22,966	27,170
Deferred income tax liabilities-
Deferred tax liabilities	$ 2,263	$ 2,289

Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Stock-Based Compensation
Stock-based compensation expense	$ 6.4	$ 5.0	$ 5.6
Income tax benefit	$ 2.4	$ 1.9	2.1
Minimum
Stock-Based Compensation
Sum of age and years of service for accelerated vesting on retirement of certain stock options and restricted stock awards	75 years
Stock Options
Stock-Based Compensation
Vesting period	3 years
Shares
Outstanding at beginning of year (in shares)	714
Granted (in shares)	85
Exercised (in shares)	(146)
Forfeited (in shares)	(23)
Outstanding at end of year (in shares)	630	714
Options exercisable at end of year (in shares)	444
Weighted-Average Exercise Price
Outstanding at beginning of year (in dollars per share)	$ 17.01
Granted (in dollars per share)	36.25
Exercised (in dollars per share)	14.08
Forfeited (in dollars per share)	23.55
Outstanding at end of year (in dollars per share)	$ 20.03	$ 17.01
Other information
Intrinsic value of options exercised	$ 3.6	$ 1.9	$ 3.9
Weighted-average remaining contractual term of options exercisable	5 years 3 months 18 days
Aggregate intrinsic value of options exercisable	$ 12.5
Number of options that are vested and expected to vest (in shares)	600
Weighted average exercise price of options that are vested and expected to vest (in dollars per share)	$ 20.03
Weighted-average remaining contractual term of options that are vested and expected to vest	6 years 2 months 12 days
Aggregate intrinsic value of options that are vested and expected to vest	$ 14.9

Stock-Based Compensation - Fair Value Assumptions (Details) $ / shares in Units, shares in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($) item $ / shares shares	Dec. 31, 2016 USD ($) $ / shares shares	Dec. 31, 2015 USD ($) $ / shares
Additional information
Allocated Share-based Compensation Expense \| $	$ 6.4	$ 5.0	$ 5.6
Stock Options
Stock-Based Compensation
Weighted-average fair value per share of options granted (in dollars per share)	$ 11.43	$ 9.94	$ 6.33
Fair value assumptions:
Expected dividend yield (as a percent)	0.89%	0.97%	1.51%
Expected stock price volatility (as a percent)	34.50%	37.90%	38.40%
Risk-free interest rate (as a percent)	2.11%	1.41%	1.50%
Expected term	5 years 3 months 18 days	5 years 3 months 18 days	5 years 7 months 6 days
Other information
Compensation expense yet to be recognized \| $	$ 0.4
Weighted-average period over which compensation cost will be recognized	1 year 4 months 24 days
Total fair value of options vested \| $	$ 0.8
Nonvested Options, Shares
Nonvested at beginning of year (in shares) \| shares	241
Granted (in shares) \| shares	85
Vested (in shares) \| shares	(117)
Forfeited (in shares) \| shares	(23)
Nonvested at end of year (in shares) \| shares	186	241
Nonvested Options, Weighted-Average Grant Date Fair Value
Nonvested at beginning of year (in dollars per share)	$ 7.83
Granted (in dollars per share)	11.43	$ 9.94	$ 6.33
Vested (in dollars per share)	7.23
Forfeited (in dollars per share)	7.88
Nonvested at end of year (in dollars per share)	$ 9.85	$ 7.83
Additional information
Vesting period	3 years
Restricted Stock and Restricted Stock Units
Other information
Compensation expense yet to be recognized \| $	$ 0.8
Weighted-average period over which compensation cost will be recognized	1 year 7 months 6 days
Shares
Unvested at beginning of year (in shares) \| shares	126
Granted (in shares) \| shares	71
Vested (in shares) \| shares	(90)
Forfeited (in shares) \| shares	(15)
Unvested at end of year (in shares) \| shares	92	126
Weighted Average Grant Date Fair Value
Unvested at beginning of year (in dollars per share)	$ 23.41
Granted (in dollars per share)	35.69	$ 30.25	20.64
Vested (in dollars per share)	25.44
Forfeited (in dollars per share)	26.34
Unvested at end of year (in dollars per share)	$ 30.48	23.41
Additional information
Fair value of shares vested \| $	$ 2.3
Weighted-average fair value (in dollars per share)	$ 35.69	$ 30.25	$ 20.64
Aggregate intrinsic value of restricted stock vested \| $	$ 3.2	$ 3.6	$ 3.4
Performance Stock Units
Other information
Compensation expense yet to be recognized \| $	$ 0.7
Weighted-average period over which compensation cost will be recognized	1 year 2 months 12 days
Additional information
Vesting period	3 years
Types of performance units \| item	2
Percentage of units measured on stock price relative to peer group	50.00%
Percentage of units measured on stock price based on pre determined EPS	50.00%
Period for which shareholder return is compared with peer group for units determined by EPS performance	3 years
Calculated fair market value \| $	$ 4.9
Value of PSUs granted \| $	2.2
Allocated Share-based Compensation Expense \| $	$ 2.6	$ 1.6	$ 2.6
Performance Stock Units \| Minimum
Additional information
Performance measures for dollar denominated award granted	0
Performance Stock Units \| Maximum
Additional information
Performance measures for dollar denominated award granted	2.0

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 3,400	$ 4,288
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	102,969,912	102,969,912
Common stock, shares issued	41,123,365	41,123,365
Treasury stock, shares	3,936,291	3,914,251

Employee Benefit Plans	12 Months Ended
Employee Benefit Plans	Dec. 31, 2017
Employee Benefit Plans
Employee Benefit Plans	10. Employee Benefit Plans We and certain of our subsidiaries sponsor various retirement plans for most full‑time and some part‑time employees. These plans primarily consist of defined contribution plans. The defined contribution plans generally provide for contributions up to 2.5% of covered employees’ salaries or wages. These contributions totaled $7.8 million in 2017, $7.8 million in 2016 and $7.1 million in 2015. Of these amounts, approximately $0.5 million and $0.2 million were payable to the plans at December 31, 2017 and 2016, respectively. Certain of our subsidiaries also participate or have participated in various multi‑employer pension plans for the benefit of employees who are union members. As of December 31, 2017 and 2016, we had 6 and 5, respectively, who were union members. There were no contributions made to multi‑employer pension plans in 2017, 2016 or 2015. The data available from administrators of other multi‑employer pension plans is not sufficient to determine the accumulated benefit obligations, nor the net assets attributable to the multi‑employer plans in which our employees participate or previously participated. Certain individuals at one of our operating units are entitled to receive fixed annual payments that reach a maximum amount, as specified in the related agreements, for a 15 year period following retirement or, in some cases, the attainment of 65 years of age. We recognize the unfunded status of the plan as a non‑current liability in our Consolidated Balance Sheet. Benefits vest 50% after ten years of service, 75% after fifteen years of service and are fully vested after 20 years of service. We had an unfunded benefit liability of $4.0 million recorded as of December 31, 2017 and 2016.

Summary of Significant Accounting Policies - Risk (Details) - Revenue - Customer concentration	12 Months Ended
	Dec. 31, 2017 item
Concentrations of Credit Risk
Number of single customers accounting for more than threshold concentration risk percentage	0
Minimum
Concentrations of Credit Risk
Single customer, percentage of revenue	2.00%

Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Property and equipment
Property and equipment, gross	$ 195,901	$ 165,331
Less-Accumulated depreciation	(108,310)	(97,136)
Property and equipment, net	87,591	68,195
Depreciation expense	20,100	18,000	$ 15,900
Land
Property and equipment
Property and equipment, gross	2,745	2,745
Transportation equipment
Property and equipment
Property and equipment, gross	$ 87,120	74,137
Transportation equipment \| Minimum
Property and equipment
Estimated useful life	1 year
Transportation equipment \| Maximum
Property and equipment
Estimated useful life	7 years
Machinery and equipment
Property and equipment
Property and equipment, gross	$ 30,064	27,843
Machinery and equipment \| Minimum
Property and equipment
Estimated useful life	1 year
Machinery and equipment \| Maximum
Property and equipment
Estimated useful life	20 years
Computer and telephone equipment
Property and equipment
Property and equipment, gross	$ 20,463	20,791
Computer and telephone equipment \| Minimum
Property and equipment
Estimated useful life	1 year
Computer and telephone equipment \| Maximum
Property and equipment
Estimated useful life	10 years
Buildings and leasehold improvements
Property and equipment
Property and equipment, gross	$ 38,422	35,166
Buildings and leasehold improvements \| Minimum
Property and equipment
Estimated useful life	1 year
Buildings and leasehold improvements \| Maximum
Property and equipment
Estimated useful life	40 years
Furniture and fixtures
Property and equipment
Property and equipment, gross	$ 4,473	4,224
Furniture and fixtures \| Minimum
Property and equipment
Estimated useful life	1 year
Furniture and fixtures \| Maximum
Property and equipment
Estimated useful life	17 years
Construction in progress
Property and equipment
Property and equipment, gross	$ 12,614	$ 425

Employee Benefit Plans (Details) $ in Thousands	12 Months Ended
Employee Benefit Plans (Details) $ in Thousands	Dec. 31, 2017 USD ($) item	Dec. 31, 2016 USD ($) item	Dec. 31, 2015 USD ($)
Employee Benefit Plans
Percentage of contribution of covered employee's salaries or wages	2.50%
Contribution	$ 7,800	$ 7,800	$ 7,100
Amount payable to plan	$ 500	$ 200
Number of employees who are union members \| item	6	5
Multiemployer Plans, Plan Contributions	$ 0	$ 0	$ 0
Period in which certain individuals are entitled to fixed annual payments	15 years
Maximum age under which certain individuals are entitled to fixed annual payments	65 years
Portion of benefits vesting after ten years of completed service (as a percent)	50.00%
Period of completed service over which 50% of benefits are vested	10 years
Portion of benefits vesting after fifteen years of completed service (as a percent)	75.00%
Period of completed service over which 75% of benefits are vested	15 years
Period of service over which benefits are fully vested	20 years
Unfunded benefit liability	$ 4,000	$ 4,000

Business and Organization (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Business and Organization
Revenue	$ 461,072	$ 480,851	$ 465,411	$ 380,588	$ 392,100	$ 428,760	$ 427,538	$ 385,942	$ 1,787,922	$ 1,634,340	$ 1,580,519
Percentage of revenue attributable to services									100.00%
Installation of systems in newly constructed facilities
Business and Organization
Percentage of revenue attributable to services									38.00%
Maintenance, repair and replacement services
Business and Organization
Percentage of revenue attributable to services									62.00%
HVAC
Business and Organization
Revenue									$ 1,615,468
Percentage of revenue attributable to services									90.00%
Building Automation Control Systems
Business and Organization
Revenue									$ 94,041
Percentage of revenue attributable to services									5.00%
Other
Business and Organization
Revenue									$ 78,413
Percentage of revenue attributable to services									5.00%

Acquisitions Other Acquisitions (Details) $ in Millions		3 Months Ended	12 Months Ended
Acquisitions Other Acquisitions (Details) $ in Millions	Jan. 01, 2016 USD ($)	Mar. 31, 2016 USD ($) item	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Acquisitions
Number of acquisitions \| item		2
Environmental Air Systems
Acquisitions
Interest acquired (as a percent)	40.00%
Total purchase price	$ 46.6
Purchase price paid in cash	$ 42.0
Shoffner
Acquisitions
Interest acquired (as a percent)		100.00%
Total purchase price		$ 19.8
Purchase price paid in cash		15.5
Amount allocated to goodwill and identifiable intangible assets for acquisitions		$ 14.8
Other Acquisitions
Acquisitions
Total purchase price			$ 9.4	$ 0.1

Long Term Debt Obligations (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Long-Term Debt Obligations
Total debt	$ 60,539	$ 2,811
Less - current portion	(613)	(763)
Total long-term portion of debt	59,926	2,048
Revolving credit facility
Long-Term Debt Obligations
Outstanding balance	45,000
Notes to former owners
Long-Term Debt Obligations
Outstanding balance	15,325	2,250
Other debt
Long-Term Debt Obligations
Outstanding balance	$ 214	305
Capital lease obligations
Long-Term Debt Obligations
Capital lease obligation		$ 256

Income Taxes - Provision (Details) - USD ($) $ in Thousands	12 Months Ended
Income Taxes - Provision (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Current tax provision
Federal	$ 35,434	$ 32,721	$ 27,564
State and Puerto Rico	6,054	4,683	4,065
Total current	41,488	37,404	31,629
Deferred tax provision (benefit)
Federal	5,391	(2,101)	(1,481)
State and Puerto Rico	(1,213)	862	1,076
Total deferred	4,178	(1,239)	(405)
Provision for income taxes	$ 45,666	$ 36,165	$ 31,224

Commitments and Contingencies - Bonds (Details) $ in Millions	3 Months Ended		12 Months Ended
	Dec. 31, 2017 USD ($) claim	Dec. 31, 2016 USD ($)	Dec. 31, 2017
British Petroleum
Commitments and Contingencies
Number of claims \| claim	2
Gain on the claim settlement \| $	$ 1.0	$ 0.6
Surety \| Minimum
Surety
Percentage of business which has required bonds			20.00%
Surety \| Maximum
Surety
Percentage of business which has required bonds			30.00%

Commitments and Contingencies - Self Insurance (Details)	Dec. 31, 2017 USD ($) item
Workers Compensation
Self-Insurance
Per incident deductible amount	$ 1,000,000
Amount of loss fully insured above per incident deductible amount.	1,000,000
Employer's Liability
Self-Insurance
Per incident deductible amount	1,000,000
Employer's Liability \| Maximum
Self-Insurance
Amount of excess loss insurance covered	100,000,000
General Liability
Self-Insurance
Per incident deductible amount	1,000,000
Amount of loss fully insured above per incident deductible amount.	1,000,000
General Liability \| Maximum
Self-Insurance
Amount of excess loss insurance covered	100,000,000
Auto Liability
Self-Insurance
Per incident deductible amount	500,000
Amount of loss fully insured above per incident deductible amount.	1,500,000
Auto Liability \| Maximum
Self-Insurance
Amount of excess loss insurance covered	$ 100,000,000
Employee Medical
Self-Insurance
Number of medical plans \| item	3
Employee Medical- Plan One
Self-Insurance
Per person, per policy deductible amount	$ 350,000
Employee Medical- Plan Two
Self-Insurance
Per person, per policy deductible amount	$ 350,000

Stockholders' Equity - Incentive and Other (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	12 Months Ended	132 Months Ended
	Dec. 31, 2017	Dec. 31, 2017	May 31, 2017	May 31, 2012	Mar. 29, 2007
Share Repurchase Program
Number of shares of outstanding common stock authorized to be acquired under a stock repurchase program	8.1	8.1			1.0
Share repurchase (in shares)		7.6
Average price (in dollars per share)	$ 34.23	$ 13.75
Repurchased carrying basis	$ 9.0	$ 9.0
Maximum
Share Repurchase Program
Share repurchase (in shares)	0.3
2012 Equity Incentive Plan
Stockholder's Equity
Number of shares authorized and reserved for issuance				5.1
Number of shares available for issuance	2.9	2.9
2017 Omnibus Incentive Plan
Stockholder's Equity
Number of shares authorized and reserved for issuance			2.9
Number of shares available for issuance	2.9	2.9

Stock-Based Compensation - Stock Option Plan Activity (Details) shares in Thousands	12 Months Ended
	Dec. 31, 2017 $ / shares shares
$11.00 - $15.00
Stock-Based Compensation
Exercise price, low end of range (in dollars per share)	$ 11.00
Exercise price, high end of range (in dollars per share)	15.00
$15.01 - $20.00
Stock-Based Compensation
Exercise price, low end of range (in dollars per share)	15.01
Exercise price, high end of range (in dollars per share)	20.00
$20.01 - $36.25
Stock-Based Compensation
Exercise price, low end of range (in dollars per share)	20.01
Exercise price, high end of range (in dollars per share)	36.25
$11.00 - $36.25
Stock-Based Compensation
Exercise price, low end of range (in dollars per share)	11.00
Exercise price, high end of range (in dollars per share)	$ 36.25
Stock Options \| $11.00 - $15.00
Options Outstanding
Number of Shares \| shares	265
Weighted Average Remaining Contractual Life	4 years 1 month 28 days
Weighted Average Exercise Price (in dollars per share)	$ 12.77
Options Exercisable
Number of Shares \| shares	265
Weighted Average Exercise Price (in dollars per share)	$ 12.77
Stock Options \| $15.01 - $20.00
Options Outstanding
Number of Shares \| shares	189
Weighted Average Remaining Contractual Life	6 years 8 months 23 days
Weighted Average Exercise Price (in dollars per share)	$ 17.93
Options Exercisable
Number of Shares \| shares	149
Weighted Average Exercise Price (in dollars per share)	$ 17.47
Stock Options \| $20.01 - $36.25
Options Outstanding
Number of Shares \| shares	176
Weighted Average Remaining Contractual Life	8 years 8 months 9 days
Weighted Average Exercise Price (in dollars per share)	$ 33.19
Options Exercisable
Number of Shares \| shares	30
Weighted Average Exercise Price (in dollars per share)	$ 30.36
Stock Options \| $11.00 - $36.25
Options Outstanding
Number of Shares \| shares	630
Weighted Average Remaining Contractual Life	6 years 2 months 12 days
Weighted Average Exercise Price (in dollars per share)	$ 20.03
Options Exercisable
Number of Shares \| shares	444
Weighted Average Exercise Price (in dollars per share)	$ 15.55