Raising 2024 Adjusted EBITDA Guidance after
Delivering Q3 Net Income of $7.5 million and Record Quarterly
Adjusted EBITDA of $17.3 million
Limbach Holdings, Inc. (Nasdaq: LMB) (“Limbach” or the
“Company”) today announced its financial results for the quarter
ended September 30, 2024.
2024 Third Quarter Financial Overview Compared to 2023 Third
Quarter
- Owner Direct Relationships (“ODR”) revenue increased 41.3%, or
$27.2 million, to $93.0 million accounting for 69.4% of total
revenue.
- Total revenue was $133.9 million, an increase of 4.8% from
$127.8 million.
- Total gross profit was $36.1 million, an increase of 15.6% from
$31.2 million.
- ODR gross profit accounted for $29.6 million, or 82.1%, of
total gross profit.
- Net income of $7.5 million, or $0.62 per diluted share,
compared to net income of $7.2 million, or $0.61 per diluted
share.
- Adjusted EBITDA of $17.3 million, up 27.2% from $13.6
million.
- Net cash provided by operating activities of $4.9 million
compared to $17.2 million.
Management Comments
“In the third quarter, we continued to execute the three pillars
of our strategy with each pillar contributing to our EBITDA growth
and gross margin expansion,” said Michael McCann, President and
Chief Executive Officer of Limbach Holdings. “Our results are a
direct outcome of executing our plan to shift our business to
working directly for building owners on existing facilities,
evolving our service offerings and scaling through
acquisitions.
“We are seeing durable customer demand for our value-added
solutions and achieving organic growth by focusing on deeper
penetration with existing customers. Demand in all verticals has
been strong, and we believe the long-term growth potential of data
centers is set to play an increasingly important role for
demand.
“Our recent acquisition of Kent Island Mechanical increased
market share within the Greater Washington, D.C. metro region. We
immediately began integrating Kent Island on to the Limbach
platform to expand our capabilities, gain efficiencies and add new
customers to our existing ODR business. We’re pleased with the
initial progress and anticipate making additional acquisitions at a
pace of about two to three per year from our strong pipeline of
potential targets.
“We are quickly approaching our ODR and GCR target revenue mix
of 65% to 70% ODR for 2024, and in 2025 we expect to see growth in
our top line, total consolidated revenue.”
The following are results for the three months ended September
30, 2024 compared to the three months ended September 30, 2023:
- Total revenue was $133.9 million, an increase of 4.8% from
$127.8 million. ODR segment revenue of $93.0 million increased by
$27.2 million, or 41.3%, while GCR revenue decreased by $21.0
million, or 33.9%. The increase in period-over-period ODR segment
revenue was primarily due to the Company's continued focus on
accelerating the growth of its ODR business and as a result of the
Industrial Air transaction. Industrial Air was not an acquired
entity for the three months ended September 30, 2023. The decrease
in period-over-period GCR segment revenue was primarily due to the
Company’s continued focus on the execution of its mix-shift
strategy to the ODR segment.
- Total gross profit was $36.1 million, compared to $31.2
million. ODR gross profit increased $10.4 million, or 53.8%, due to
the combination of an increase in revenue and higher segment
margins of 31.9% versus 29.3% driven by contract mix. GCR gross
profit decreased $5.5 million, or 46.0%, primarily due to lower
revenue and lower margins of 15.8% compared to 19.3% in the prior
period. The total gross profit percentage increased from 24.5% to
27.0%, mainly driven by the mix of higher margin ODR segment work,
the Company continuing to being more selective when pursuing GCR
work, and the Industrial Air transaction.
- Selling, general and administrative (“SG&A”) expenses
increased by approximately $2.8 million, to $23.7 million, compared
to $21.0 million. The increase in SG&A expense was primarily
due to $1.0 million of SG&A expenses incurred within the
Industrial Air entity that was not an acquired entity of the
Company during the three months ended September 30, 2023, a $1.1
million increase in payroll related expenses, a $0.5 million
increase in stock-based compensation expenses and a $0.4 million
increase in professional services fees. As a percent of revenue,
SG&A expenses were 17.7%, up from 16.4% in the prior
period.
- Interest expense was relatively flat at $0.5 million during the
current quarter compared to $0.4 million.
- Interest income was $0.6 million during the current quarter
compared to $0.4 million. This increase was due to the Company's
timing and amounts of investments in overnight repurchase
agreements, U.S. Treasury Bills, and money market funds
period-over-period.
- Net income was $7.5 million compared to $7.2 million, an
increase of 4.1%. Diluted earnings per share was $0.62 as compared
to $0.61 in the prior period. Adjusted EBITDA was $17.3 million
compared to $13.6 million in the prior period, an increase of
27.2%.
- Net cash provided by operating activities of $4.9 million
compared to $17.2 million in the prior period primarily due to
changes in working capital.
Balance Sheet
At September 30, 2024, cash and cash equivalents were $51.2
million. Current assets were $217.1 million and current liabilities
were $138.2 million at September 30, 2024, representing a current
ratio of 1.57x compared to 1.50x at December 31, 2023. Working
capital was $78.9 million at September 30, 2024, an increase of
$7.1 million from December 31, 2023. At September 30, 2024, we had
$10.0 million in borrowings against our revolving credit facility
and $4.3 million for standby letters of credit.
2024 Guidance
We are updating our guidance for FY 2024 as follows:
Current
Previous
Revenue
$520 million - $540 million
$515 million - $535 million
Adjusted EBITDA
$60 million - $63 million
$55 million - $58 million
With respect to projected 2024 Adjusted EBITDA guidance and
Adjusted EBITDA Margin, a quantitative reconciliation is not
available without unreasonable efforts due to the high variability,
complexity and low visibility with respect to certain items, which
are excluded from Adjusted EBITDA. We expect the variability of
these items to have a potentially unpredictable, and potentially
significant, impact on future financial results.
Conference Call Details
Date:
Wednesday, November 6, 2024
Time:
9:00 a.m. Eastern Time
Participant Dial-In Numbers:
Domestic callers:
(877) 407-6176
International callers:
+1 (201) 689-8451
Access by Webcast
The call will also be simultaneously webcast over the Internet
via the “Investor Relations” section of Limbach’s website at
www.limbachinc.com or by clicking on the conference call link:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=O8Y8RPcV.
An audio replay of the call will be archived on Limbach’s website
for 365 days.
About Limbach
Limbach is a building systems solution firm that partners with
building owners and facilities managers who have mission critical
mechanical (heating, ventilation and air conditioning), electrical
and plumbing infrastructure. We strive to be an indispensable
partner to our customers by providing services that are essential
to the operation of their businesses. We work with building owners
primarily in six vertical markets: healthcare, industrial and
manufacturing, data centers, life science, higher education, and
cultural and entertainment. We have more than 1,300 team members in
19 offices across the eastern United States. Our team members
uniquely combine engineering expertise with field installation
skills to provide custom solutions that leverage our full
life-cycle capabilities, which allows us to address both the
operational and capital projects needs of our customers.
Additional Information
Investors and others should note that Limbach announces material
financial information to its investors using its investor relations
website, U.S. Securities and Exchange Commission filings, press
releases, public conference calls/videos, and webcasts. Limbach
uses these channels, as well as social media, to communicate with
our stockholders and the public about the Company, the Company’s
services and other Company information. It is possible that the
information that Limbach posts on social media could be deemed to
be material information. Therefore, Limbach encourages investors,
the media, and others interested in the Company to review the
information posted on the social media channels listed on Limbach’s
investor relations website.
Forward-Looking
Statements
We make forward-looking statements in this press release within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements relate to expectations or
forecasts for future events, including, without limitation, our
earnings, Adjusted EBITDA, revenues, expenses, backlog, capital
expenditures or other future financial or business performance or
strategies, results of operations or financial condition, and in
particular statements regarding the impact of the COVID-19 pandemic
on the construction industry in future periods, timing of the
recognition of backlog as revenue, the potential for recovery of
cost overruns, and the ability of Limbach to successfully remedy
the issues that have led to write-downs in various business units.
These statements may be preceded by, followed by or include the
words “may,” “might,” “will,” “will likely result,” “should,”
“estimate,” “plan,” “project,” “forecast,” “intend,” “expect,”
“anticipate,” “believe,” “seek,” “continue,” “target,” “goal,” or
similar expressions. These forward-looking statements are based on
information available to us as of the date they were made and
involve a number of risks and uncertainties, which may cause them
to turn out to be wrong. Some of these risks and uncertainties may
in the future be amplified by the COVID-19 outbreak and there may
be additional risks that we consider immaterial or which are
unknown. Accordingly, forward-looking statements should not be
relied upon as representing our views as of any subsequent date,
and we do not undertake any obligation to update forward-looking
statements to reflect events or circumstances after the date they
were made, whether as a result of new information, future events or
otherwise, except as may be required under applicable securities
laws. As a result of a number of known and unknown risks and
uncertainties, our actual results or performance may be materially
different from those expressed or implied by these forward-looking
statements. Please refer to our most recent annual report on Form
10-K, as well as our subsequent filings on Form 10-Q and Form 8-K,
which are available on the SEC’s website (www.sec.gov), for a full
discussion of the risks and other factors that may impact any
forward-looking statements in this press release.
LIMBACH HOLDINGS, INC.
Condensed Consolidated
Statements of Operations (Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except share and per
share data)
2024
2023
2024
2023
Revenue
$
133,920
$
127,768
$
375,131
$
373,659
Cost of revenue
97,806
96,524
274,421
287,675
Gross profit
36,114
31,244
100,710
85,984
Operating expenses:
Selling, general and administrative
23,748
20,967
69,800
62,433
Change in fair value of contingent
consideration
610
161
2,344
464
Amortization of intangibles
868
288
2,956
1,054
Total operating expenses
25,226
21,416
75,100
63,951
Operating income
10,888
9,828
25,610
22,033
Other (expenses) income:
Interest expense
(468
)
(437
)
(1,375
)
(1,615
)
Interest income
626
377
1,734
624
Gain on disposition of property and
equipment
99
68
656
28
Loss on early debt extinguishment
—
—
—
(311
)
(Loss) gain on change in fair value of
interest rate swap
(267
)
116
(130
)
153
Total other (expenses) income
(10
)
124
885
(1,121
)
Income before income taxes
10,878
9,952
26,495
20,912
Income tax provision
3,394
2,760
5,462
5,407
Net income
$
7,484
$
7,192
$
21,033
$
15,505
Earnings Per Share
(“EPS”)
Earnings per common share:
Basic
$
0.66
$
0.66
$
1.87
$
1.45
Diluted
$
0.62
$
0.61
$
1.75
$
1.33
Weighted average number of shares
outstanding:
Basic
11,272,798
10,962,622
11,233,847
10,695,973
Diluted
12,027,021
11,789,137
11,998,750
11,671,819
LIMBACH HOLDINGS, INC.
Condensed Consolidated Balance
Sheets (Unaudited)
(in thousands, except share and per
share data)
September 30, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
51,163
$
59,833
Restricted cash
65
65
Accounts receivable (net of allowance for
credit losses of $425 and $292 as of September 30, 2024 and
December 31, 2023, respectively)
101,014
97,755
Contract assets
56,937
51,690
Other current assets
7,965
7,657
Total current assets
217,144
217,000
Property and equipment, net
25,088
20,830
Intangible assets, net
32,830
24,999
Goodwill
21,246
16,374
Operating lease right-of-use assets
22,312
19,727
Deferred tax asset
5,618
5,179
Other assets
179
330
Total assets
$
324,417
$
304,439
LIABILITIES
Current liabilities:
Current portion of long-term debt
$
2,626
$
2,680
Current operating lease liabilities
3,964
3,627
Accounts payable, including retainage
51,776
65,268
Contract liabilities
46,997
42,160
Accrued income taxes
1,758
446
Accrued expenses and other current
liabilities
31,084
30,967
Total current liabilities
138,205
145,148
Long-term debt
20,497
19,631
Long-term operating lease liabilities
18,569
16,037
Other long-term liabilities
4,947
2,708
Total liabilities
182,218
183,524
STOCKHOLDERS’ EQUITY
Common stock, $0.0001 par value;
100,000,000 shares authorized, issued 11,452,753 and 11,183,076,
respectively, and 11,273,101 and 11,003,424 outstanding,
respectively
1
1
Additional paid-in capital
92,779
92,528
Treasury stock, at cost (179,652 shares at
both period ends)
(2,000
)
(2,000
)
Retained earnings
51,419
30,386
Total stockholders’ equity
142,199
120,915
Total liabilities and stockholders’
equity
$
324,417
$
304,439
LIMBACH HOLDINGS, INC.
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Nine Months Ended
September 30,
(in thousands)
2024
2023
Cash flows from operating
activities:
Net income
$
21,033
$
15,505
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization
8,261
5,751
Provision for credit losses
159
186
Stock-based compensation expense
4,323
3,374
Noncash operating lease expense
3,092
2,843
Amortization of debt issuance costs
32
69
Deferred income tax provision
(439
)
(1
)
Gain on sale of property and equipment
(656
)
(28
)
Loss on change in fair value of contingent
consideration
2,344
464
Loss on early debt extinguishment
—
311
Gain on change in fair value of interest
rate swap
130
(153
)
Changes in operating assets and
liabilities:
Accounts receivable
4,283
21,896
Contract assets
(1,115
)
14,014
Other current assets
(395
)
(1,459
)
Accounts payable, including retainage
(18,418
)
(18,703
)
Prepaid income taxes
—
95
Accrued taxes payable
1,311
(1,386
)
Contract liabilities
10
2,312
Operating lease liabilities
(2,895
)
(2,803
)
Accrued expenses and other current
liabilities
(1,446
)
1,997
Payment of contingent consideration
liability in excess of acquisition-date fair value
(2,175
)
(1,224
)
Other long-term liabilities
55
400
Net cash provided by operating
activities
17,494
43,460
Cash flows from investing
activities:
Kent Island Transaction, net of cash
acquired
(12,716
)
—
ACME Transaction, net of cash acquired
—
(4,883
)
Proceeds from sale of property and
equipment
1,171
370
Advances from joint ventures
7
—
Purchase of property and equipment
(6,187
)
(1,720
)
Net cash used in investing activities
(17,725
)
(6,233
)
Cash flows from financing
activities:
Payments on A&R Wintrust Term
Loans
—
(21,452
)
Proceeds from Wintrust Revolving Loan
—
10,000
Payment of contingent consideration
liability up to acquisition-date fair value
(1,325
)
(1,776
)
Payments on finance leases
(2,296
)
(1,991
)
Payments of debt issuance costs
—
(50
)
Taxes paid related to net-share settlement
of equity awards
(5,187
)
(847
)
Proceeds from contributions to Employee
Stock Purchase Plan
369
313
Net cash used in financing activities
(8,439
)
(15,803
)
(Decrease) increase in cash, cash
equivalents and restricted cash
(8,670
)
21,424
Cash, cash equivalents and restricted
cash, beginning of period
59,898
36,114
Cash, cash equivalents and restricted
cash, end of period
$
51,228
$
57,538
Supplemental disclosures of cash flow
information
Noncash investing and financing
transactions:
Earnout liability associated with the Kent
Island Transaction
$
4,381
$
—
Earnout liability associated with the ACME
Transaction
—
1,121
Right of use assets obtained in exchange
for new operating lease liabilities
$
4,776
$
1,043
Right of use assets obtained in exchange
for new finance lease liabilities
3,095
4,062
Right of use assets disposed or adjusted
modifying operating lease liabilities
988
(643
)
Right of use assets disposed or adjusted
modifying finance lease liabilities
—
(77
)
Interest paid
1,413
1,482
Cash paid for income taxes
$
4,700
$
6,718
LIMBACH HOLDINGS, INC.
Condensed Consolidated Segment
Operating Results (Unaudited)
Three Months Ended
September 30,
Increase/(Decrease)
(in thousands, except for
percentages)
2024
2023
$
%
Statement of Operations Data:
Revenue:
ODR
$
93,007
69.4
%
$
65,832
51.5
%
$
27,175
41.3
%
GCR
40,913
30.6
%
61,936
48.5
%
(21,023
)
(33.9
)%
Total revenue
133,920
100.0
%
127,768
100.0
%
6,152
4.8
%
Gross profit:
ODR(1)
29,647
31.9
%
19,274
29.3
%
10,373
53.8
%
GCR(2)
6,467
15.8
%
11,970
19.3
%
(5,503
)
(46.0
)%
Total gross profit
36,114
27.0
%
31,244
24.5
%
4,870
15.6
%
Selling, general and administrative(3)
23,748
17.7
%
20,967
16.4
%
2,781
13.3
%
Change in fair value of contingent
consideration
610
0.5
%
161
0.1
%
449
278.9
%
Amortization of intangibles
868
0.6
%
288
0.2
%
580
201.4
%
Total operating income
$
10,888
8.1
%
$
9,828
7.7
%
$
1,060
10.8
%
(1)
As a percentage of ODR revenue.
(2)
As a percentage of GCR revenue.
(3)
Included within selling, general and
administrative expenses was $1.6 million and $1.1 million of
stock-based compensation expense for the three months ended
September 30, 2024 and 2023, respectively.
LIMBACH HOLDINGS, INC.
Condensed Consolidated Segment
Operating Results (Unaudited)
Nine Months Ended
September 30,
Increase/(Decrease)
(in thousands, except for
percentages)
2024
2023
$
%
Statement of Operations Data:
Revenue:
ODR
$
250,017
66.6
%
$
183,330
49.1
%
$
66,687
36.4
%
GCR
125,114
33.4
%
190,329
50.9
%
(65,215
)
(34.3
)%
Total revenue
375,131
100.0
%
373,659
100.0
%
1,472
0.4
%
Gross profit:
ODR(1)
77,170
30.9
%
52,424
28.6
%
24,746
47.2
%
GCR(2)
23,540
18.8
%
33,560
17.6
%
(10,020
)
(29.9
)%
Total gross profit
100,710
26.8
%
85,984
23.0
%
14,726
17.1
%
Selling, general and administrative(3)
69,800
18.6
%
62,433
16.7
%
7,367
11.8
%
Change in fair value of contingent
consideration
2,344
0.6
%
464
0.1
%
1,880
405.2
%
Amortization of intangibles
2,956
0.8
%
1,054
0.3
%
1,902
180.5
%
Total operating income
$
25,610
6.8
%
$
22,033
5.9
%
$
3,577
16.2
%
(1)
As a percentage of ODR revenue.
(2)
As a percentage of GCR revenue.
(3)
Included within selling, general and
administrative expenses was $4.3 million and $3.4 million of
stock-based compensation expense for the nine months ended
September 30, 2024 and 2023, respectively.
Non-GAAP Financial
Measures
In assessing the performance of our business, management
utilizes a variety of financial and performance measures. The key
measures are Adjusted EBITDA and Adjusted EBITDA Margin, which are
non-GAAP financial measures. We define Adjusted EBITDA as net
income plus depreciation and amortization expense, interest
expense, and taxes, as further adjusted to eliminate the impact of,
when applicable, other non-cash items or expenses that are unusual
or non-recurring that we believe do not reflect our core operating
results. We define Adjusted EBITDA Margin as Adjusted EBITDA
divided by total revenue. We believe that Adjusted EBITDA and
Adjusted EBITDA Margin are meaningful to our investors to enhance
their understanding of our financial performance for the current
period and our ability to generate cash flows from operations that
are available for taxes, capital expenditures and debt service. We
understand that these non-GAAP financial measures are frequently
used by securities analysts, investors and other interested parties
as a measure of financial performance and to compare our
performance with the performance of other companies that report
Adjusted EBITDA and Adjusted EBITDA Margin. Our calculation of
Adjusted EBITDA and Adjusted EBITDA Margin, however, may not be
comparable to similarly titled measures reported by other
companies. When assessing our operating performance, investors and
others should not consider this data in isolation or as a
substitute for net income calculated in accordance with GAAP.
Further, the results presented by Adjusted EBITDA and Adjusted
EBITDA Margin cannot be achieved without incurring the costs that
the measure excludes. A reconciliation of net income to Adjusted
EBITDA, the most comparable GAAP measure, is provided below.
We refer to our estimated revenue on uncompleted contracts,
including the amount of revenue on contracts for which work has not
begun, less the revenue we have recognized under such contracts, as
“backlog.” Backlog includes unexercised contract options.
Reconciliation of
Net Income to Adjusted EBITDA and Adjusted EBITDA Margin
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)
2024
2023
2024
2023
Net income
$
7,484
$
7,192
$
21,033
$
15,505
Adjustments:
Depreciation and amortization
2,741
1,892
8,261
5,751
Interest expense
468
437
1,375
1,615
Interest income
(626
)
(377
)
(1,734
)
(624
)
Non-cash stock-based compensation
expense
1,603
1,140
4,323
3,374
Loss on early debt extinguishment
—
—
—
311
Change in fair value of interest rate
swap
267
(116
)
130
(153
)
CEO transition costs
—
—
—
958
Income tax provision
3,394
2,760
5,462
5,407
Acquisition and other transaction
costs
826
225
877
524
Change in fair value of contingent
consideration
610
161
2,344
464
Restructuring costs(1)
565
317
827
1,089
Adjusted EBITDA
$
17,332
$
13,631
$
42,898
$
34,221
Revenue
$
133,920
$
127,768
$
375,131
$
373,659
Adjusted EBITDA Margin
12.9
%
10.7
%
11.4
%
9.2
%
(1)
For the three and nine months ended
September 30, 2024 and 2023, the majority of the restructuring
costs related to our Southern California and Eastern Pennsylvania
branches.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241105655435/en/
Investor Relations Financial
Profiles, Inc. Julie Kegley LMB@finprofiles.com
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