Raising 2024 Revenue and Adjusted EBITDA
Guidance after Delivering Q2 Net Income of $6.0 million and Record
Quarterly Adjusted EBITDA of $13.8 million
Limbach Holdings, Inc. (Nasdaq: LMB) (“Limbach” or the
“Company”) today announced its financial results for the quarter
ended June 30, 2024.
2024 Second Quarter Financial Overview Compared to 2023
Second Quarter
- Owner Direct Relationships (“ODR”) revenue increased 40.8%, or
$24.0 million, to $82.8 million accounting for 67.7% of total
revenue.
- Total revenue was $122.2 million, a decrease of 2.1% from
$124.9 million.
- Total gross profit was $33.5 million, an increase of 17.5% from
$28.5 million.
- ODR gross profit accounted for $25.4 million, or 75.7%, of
total gross profit.
- Record quarterly total gross margin of 27.4%.
- Net income of $6.0 million, or $0.50 per diluted share,
compared to net income of $5.3 million, or $0.46 per diluted
share.
- Adjusted EBITDA of $13.8 million, up 16.0% from $11.9
million.
- Net cash provided by operating activities of $16.5 million
compared to $16.9 million.
Management Comments
“Our team made strong progress in executing our strategic plan
to grow our higher margin ODR business in the second quarter”, said
Michael McCann, Limbach’s President and Chief Executive Officer.
“In the first quarter we set a goal to achieve an ODR contribution
of 65% to 70% in 2024, up from 50% last year. This quarter, our ODR
business accounted for 67.7% of total revenue, so we are well on
our way to achieving this objective. These strong results, which
includes acquisitions, demonstrate that our strategy is working,
and our customer value proposition is compelling.
“I am proud of our team as they propel the company in becoming
an indispensable partner providing mission critical solutions to
help customers maintain uninterrupted operations in their
facilities. Our strategy is to establish long-lasting relationships
by having our professionals onsite at key accounts to address
immediate needs while also planning for longer-term capital
projects.
“Our transition to the ODR business is evolving at a faster pace
than we anticipated. As a result, we are increasing our 2024
adjusted EBITDA guidance range to $55 million to $58 million from
the current range of $51 million to $55 million. Once ODR reaches
the approximately 80% level of our total segment revenue mix, which
would include the impact of acquisitions, we expect to see total
revenue growth and continued margin expansion.
“We enter the second half of 2024 with strong business momentum
and a healthy balance sheet as we continue to evaluate a strong
pipeline of potential acquisitions. Our focus on existing buildings
with mission critical infrastructure rather than new construction
allows us to address a large and underserved market with
significant growth opportunities to deliver consistently strong
results across economic cycles.”
The following are results for the three months ended June 30,
2024 compared to the three months ended June 30, 2023:
- Total revenue was $122.2 million, a decrease of 2.1% from
$124.9 million. ODR segment revenue of $82.8 million increased by
$24.0 million, or 40.8%, while GCR revenue decreased by $26.6
million, or 40.3%. 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
ACME and Industrial Air transactions. These entities were not
acquired entities for the three months ended June 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 $33.5 million, compared to $28.5
million. ODR gross profit increased $8.1 million, or 47.1%, due to
the combination of an increase in revenue and higher segment
margins of 30.6% versus 29.3% driven by contract mix. GCR gross
profit decreased $3.1 million, or 27.7%, primarily due to lower
revenue despite higher margins of 20.6% compared to 17.1% in the
prior period. The total gross profit percentage increased from
22.8% to 27.4%, mainly driven by the mix of higher margin ODR
segment work, better quality and margin work within the GCR
segment, and the ACME and Industrial Air transactions.
- Selling, general and administrative (“SG&A”) expenses
increased by approximately $2.8 million, to $23.2 million, compared
to $20.4 million. The majority of the increase in SG&A expense
was primarily due to approximately $1.5 million of collective
SG&A related expenses incurred within the ACME and Industrial
Air entities and a $1.7 million increase in payroll related
expenses. SG&A expense also increased due to an increase in
stock-based compensation expenses and travel and entertainment
expenses, partly offset by a $0.6 million decrease in professional
services fees. As a percent of revenue, SG&A expenses were
19.0%, up from 16.3% in the prior period.
- Interest expense was $0.4 million during the current quarter
compared to $0.5 million, which was the result of a lower overall
outstanding debt balance period-over-period.
- Interest income was $0.5 million during the current quarter
compared to $0.2 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 $6.0 million as compared to $5.3 million, an
increase of 12.1%. Diluted income per share was $0.50 as compared
to $0.46 in the prior period. Adjusted EBITDA was $13.8 million as
compared to $11.9 million in the prior period, an increase of
16.0%.
- Net cash provided by operating activities of $16.5 million
compared to $16.9 million in the prior period.
Balance Sheet
At June 30, 2024, cash and cash equivalents were $59.5 million.
Current assets were $213.3 million and current liabilities were
$130.6 million at June 30, 2024, representing a current ratio of
1.63x compared to 1.50x at December 31, 2023. Working capital was
$82.7 million at June 30, 2024, an increase of $10.9 million from
December 31, 2023. At June 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
$515 million - $535 million
$510 million - $530 million
Adjusted EBITDA
$55 million - $58 million
$51 million - $55 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, August 7, 2024
Time:
9:00 a.m. Eastern Time
Participant Dial-In Numbers:
Domestic callers:
(866) 682-6100
International callers:
(862) 298-0702
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=sn4WF3MB.
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 1,200 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
June 30,
Six Months Ended
June 30,
(in thousands, except share and per
share data)
2024
2023
2024
2023
Revenue
$
122,235
$
124,882
$
241,211
$
245,891
Cost of revenue
88,727
96,369
176,615
191,151
Gross profit
33,508
28,513
64,596
54,740
Operating expenses:
Selling, general and administrative
23,176
20,416
46,052
41,466
Change in fair value of contingent
consideration
1,111
162
1,734
303
Amortization of intangibles
1,031
383
2,088
766
Total operating expenses
25,318
20,961
49,874
42,535
Operating income
8,190
7,552
14,722
12,205
Other income (expenses):
Interest expense
(432
)
(511
)
(907
)
(1,178
)
Interest income
546
247
1,108
247
Gain (loss) on disposition of property and
equipment
66
175
557
(40
)
Loss on early debt extinguishment
—
(311
)
—
(311
)
(Loss) gain on change in fair value of
interest rate swap
(12
)
193
137
37
Total other income (expenses)
168
(207
)
895
(1,245
)
Income before income taxes
8,358
7,345
15,617
10,960
Income tax provision
2,395
2,025
2,068
2,647
Net income
$
5,963
$
5,320
$
13,549
$
8,313
Earnings Per Share
(“EPS”)
Earnings per common share:
Basic
$
0.53
$
0.50
$
1.21
$
0.79
Diluted
$
0.50
$
0.46
$
1.13
$
0.73
Weighted average number of shares
outstanding:
Basic
11,268,465
10,644,423
11,214,157
10,560,381
Diluted
11,966,917
11,507,311
11,974,133
11,336,474
LIMBACH HOLDINGS, INC.
Condensed Consolidated Balance
Sheets (Unaudited)
(in thousands, except share and per
share data)
June 30, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
59,534
$
59,833
Restricted cash
65
65
Accounts receivable (net of allowance for
credit losses of $357 and $292 as of June 30, 2024 and December 31,
2023, respectively)
97,168
97,755
Contract assets
47,975
51,690
Income tax receivable
601
—
Other current assets
7,946
7,657
Total current assets
213,289
217,000
Property and equipment, net
24,731
20,830
Intangible assets, net
22,970
24,999
Goodwill
16,433
16,374
Operating lease right-of-use assets
20,780
19,727
Deferred tax asset
5,286
5,179
Other assets
454
330
Total assets
$
303,943
$
304,439
LIABILITIES
Current liabilities:
Current portion of long-term debt
$
2,531
$
2,680
Current operating lease liabilities
3,824
3,627
Accounts payable, including retainage
53,311
65,268
Contract liabilities
46,461
42,160
Accrued income taxes
181
446
Accrued expenses and other current
liabilities
24,270
30,967
Total current liabilities
130,578
145,148
Long-term debt
19,659
19,631
Long-term operating lease liabilities
17,080
16,037
Other long-term liabilities
3,664
2,708
Total liabilities
170,981
183,524
STOCKHOLDERS’ EQUITY
Common stock, $0.0001 par value;
100,000,000 shares authorized, issued 11,449,652 and 11,183,076,
respectively, and 11,270,000 and 11,003,424 outstanding,
respectively
1
1
Additional paid-in capital
91,026
92,528
Treasury stock, at cost (179,652 shares at
both period ends)
(2,000
)
(2,000
)
Retained earnings
43,935
30,386
Total stockholders’ equity
132,962
120,915
Total liabilities and stockholders’
equity
$
303,943
$
304,439
LIMBACH HOLDINGS, INC.
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
(in thousands)
2024
2023
Cash flows from operating
activities:
Net income
$
13,549
$
8,313
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization
5,520
3,859
Provision for credit losses
90
116
Stock-based compensation expense
2,720
2,234
Noncash operating lease expense
2,089
1,882
Amortization of debt issuance costs
21
58
Deferred income tax provision
(107
)
(170
)
(Gain) loss on sale of property and
equipment
(557
)
40
Loss on change in fair value of contingent
consideration
1,734
303
Loss on early debt extinguishment
—
311
Gain on change in fair value of interest
rate swap
(137
)
(37
)
Changes in operating assets and
liabilities:
Accounts receivable
496
37,096
Contract assets
3,715
2,029
Other current assets
(376
)
(1,861
)
Accounts payable, including retainage
(12,195
)
(21,747
)
Prepaid income taxes
(601
)
(719
)
Accrued taxes payable
(266
)
(383
)
Contract liabilities
4,301
(325
)
Operating lease liabilities
(1,961
)
(1,836
)
Accrued expenses and other current
liabilities
(3,639
)
(1,806
)
Payment of contingent consideration
liability in excess of acquisition-date fair value
(1,687
)
(1,224
)
Other long-term liabilities
(149
)
159
Net cash provided by operating
activities
12,560
26,292
Cash flows from investing
activities:
Proceeds from sale of property and
equipment
598
275
Advances from joint ventures
7
—
Purchase of property and equipment
(5,836
)
(1,499
)
Net cash used in investing activities
(5,231
)
(1,224
)
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
(1,313
)
(1,776
)
Payments on finance leases
(1,407
)
(1,302
)
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
279
239
Net cash used in financing activities
(7,628
)
(15,188
)
(Decrease) increase in cash, cash
equivalents and restricted cash
(299
)
9,880
Cash, cash equivalents and restricted
cash, beginning of period
59,898
36,114
Cash, cash equivalents and restricted
cash, end of period
$
59,599
$
45,994
Supplemental disclosures of cash flow
information
Noncash investing and financing
transactions:
Right of use assets obtained in exchange
for new operating lease liabilities
$
3,200
$
742
Right of use assets obtained in exchange
for new finance lease liabilities
1,341
3,392
Right of use assets disposed or adjusted
modifying finance lease liabilities
2
(30
)
Interest paid
918
1,181
Cash paid for income taxes
$
3,041
$
3,919
LIMBACH HOLDINGS, INC.
Condensed Consolidated Segment
Operating Results (Unaudited)
Three Months Ended
June 30,
Increase/(Decrease)
(in thousands, except for
percentages)
2024
2023
$
%
Statement of Operations Data:
Revenue:
ODR
$
82,754
67.7
%
$
58,780
47.1
%
$
23,974
40.8
%
GCR
39,481
32.3
%
66,102
52.9
%
(26,621
)
(40.3
)%
Total revenue
122,235
100.0
%
124,882
100.0
%
(2,647
)
(2.1
)%
Gross profit:
ODR(1)
25,362
30.6
%
17,241
29.3
%
8,121
47.1
%
GCR(2)
8,146
20.6
%
11,272
17.1
%
(3,126
)
(27.7
)%
Total gross profit
33,508
27.4
%
28,513
22.8
%
4,995
17.5
%
Selling, general and administrative(3)
23,176
19.0
%
20,416
16.3
%
2,760
13.5
%
Change in fair value of contingent
consideration
1,111
0.9
%
162
0.1
%
949
585.8
%
Amortization of intangibles
1,031
0.8
%
383
0.3
%
648
169.2
%
Total operating income
$
8,190
6.7
%
$
7,552
6.0
%
$
638
8.4
%
(1)
As a percentage of ODR revenue.
(2)
As a percentage of GCR revenue.
(3)
Included within selling, general and
administrative expenses was $1.5 million and $1.1 million of
stock-based compensation expense for the three months ended June
30, 2024 and 2023, respectively.
LIMBACH HOLDINGS, INC.
Condensed Consolidated Segment
Operating Results (Unaudited)
Six Months Ended
June 30,
Increase/(Decrease)
(in thousands, except for
percentages)
2024
2023
$
%
Statement of Operations Data:
Revenue:
ODR
$
157,010
65.1
%
$
117,498
47.8
%
$
39,512
33.6
%
GCR
84,201
34.9
%
128,393
52.2
%
(44,192
)
(34.4
)%
Total revenue
241,211
100.0
%
245,891
100.0
%
(4,680
)
(1.9
)%
Gross profit:
ODR(1)
47,523
30.3
%
33,150
28.2
%
14,373
43.4
%
GCR(2)
17,073
20.3
%
21,590
16.8
%
(4,517
)
(20.9
)%
Total gross profit
64,596
26.8
%
54,740
22.3
%
9,856
18.0
%
Selling, general and administrative(3)
46,052
19.1
%
41,466
16.9
%
4,586
11.1
%
Change in fair value of contingent
consideration
1,734
0.7
%
303
0.1
%
1,431
472.3
%
Amortization of intangibles
2,088
0.9
%
766
0.3
%
1,322
172.6
%
Total operating income
$
14,722
6.1
%
$
12,205
5.0
%
$
2,517
20.6
%
(1)
As a percentage of ODR revenue.
(2)
As a percentage of GCR revenue.
(3)
Included within selling, general and
administrative expenses was $2.7 million and $2.2 million of
stock-based compensation expense for the six months ended June 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
June 30,
Six Months Ended
June 30,
(in thousands)
2024
2023
2024
2023
Net income
$
5,963
$
5,320
$
13,549
$
8,313
Adjustments:
Depreciation and amortization
2,808
1,937
5,520
3,859
Interest expense
432
511
907
1,178
Interest income
(546
)
(247
)
(1,108
)
(247
)
Non-cash stock-based compensation
expense
1,471
1,101
2,720
2,234
Loss on early debt extinguishment
—
311
—
311
Change in fair value of interest rate
swap
12
(193
)
(137
)
(37
)
CEO transition costs
—
147
—
958
Income tax provision
2,395
2,025
2,068
2,647
Acquisition and other transaction
costs
21
299
51
299
Change in fair value of contingent
consideration
1,111
162
1,734
303
Restructuring costs(1)
142
532
262
772
Adjusted EBITDA
$
13,809
$
11,905
$
25,566
$
20,590
Revenue
$
122,235
$
124,882
$
241,211
$
245,891
Adjusted EBITDA Margin
11.3
%
9.5
%
10.6
%
8.4
%
(1)
For the three and six months ended June
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/20240806166988/en/
Investor Relations Financial
Profiles, Inc. Julie Kegley LMB@finprofiles.com
Limbach (NASDAQ:LMB)
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