Limbach Holdings, Inc. Q3 FY2024 earnings call

Three-pillar strategy

• Shift to ODR: Year-to-date, 67% of revenue and 77% of gross profit is from ODR, on track to reach 65%-70% of revenue for fiscal year 2024.
• Evolved offerings and margin expansion: Focused on offerings complementing building owners' operational budgets in 2024, including on-demand services, etc., with a 3-year plan to evolve into a building systems solutions firm. Invested $4 million in rental equipment for indoor climate control and plans to invest another $4 million in next 12 months.
• Scaling through acquisitions: Completed 4 acquisitions, with Kent Island as an example. Paid ~5 times 2025 projected EBITDA for Kent Island. Aim to buy companies at accretive valuations and increase profitability over 3 years. Build common operating and strategic platform across locations, with focus on local niches and go-to-market strategy to expand customer relationships, including bundling solutions for customers like healthcare in Boston.

Total revenue for the quarter was $133.9 million, a 4.8% growth from $127.8 million in Q3 2023. ODR revenue grew 41.3% to $93 million, accounting for 69.4% of total revenue, while GCR revenue declined 33.9% to $40.9 million, making up 30.6% of total revenue. Total gross profit increased 15.6% to $36.1 million. ODR gross profit was $29.6 million, comprising 82.1% of total gross profit, with a 53.8% increase. GCR gross profit decreased $5.5 million or 46%. SG&A expense increased to $23.7 million from $21 million, accounting for 17.7% of revenue. Net income was $7.5 million, up 4.1% from Q3 2023. Adjusted EBITDA for Q3 was $17.3 million, up 27.2% from Q3 2023.

• Total revenue expected to be in the range of $520 million to $540 million for 2024, up from previous guidance of $515 million to $535 million.
• Adjusted EBITDA expected to be in the range of $60 million to $63 million for 2024, up from previous guidance of $55 million to $58 million.
• Full year gross margin expected to be 26% to 27%.
• Will establish a track record with new model before giving specific future growth guidance, expecting top line revenue growth starting in 2025.

Q: About vertical markets and M&A pipeline A: Mike McCann mentioned vertical markets like data centers, healthcare, and industrial manufacturing have strong demand. Pipeline for M&A is robust but they are careful and measured, learning from each deal. Kent Island is the fourth deal since Nov 2021, and they aim to integrate acquisitions from systems and strategic platform perspectives Q: About growth source, M&A,大客户渗透, etc.

A: Gerry Sweeney asked about growth from existing vs new customers. Mike McCann said a lot of growth is from existing customers, using healthcare and data center as examples. Also talked about M&A pipeline and future offerings for margin improvement, and about gross margin and evolved offerings like rentals, on-site account managers, etc.