Limbach Holdings, Inc. Q1 FY2025 earnings call

• ODR segment growth: Since implementing the owner direct strategy 5 years ago, ODR revenue has grown from less than 21% of total revenue in 2019 to 66.6% in 2024 and 67.9% in Q1 2025, projected to be 70-80% for full year 2025.
• Sales investment: Added approximately 40 new sales professionals in the past year, focusing on existing customers with large established facilities.
• Customer offerings: Added $2 million to climate control rental equipment fleet, transitioning to proactive customer relationships to influence and co-author budgets.
• Tariffs: Tariffs have had a neutral impact on the business, with customers accelerating purchases due to tariff uncertainty.
• M&A: Patient and disciplined in M&A, focusing on owner direct mission critical customers, exploring additional opportunities, and well-positioned from a capital perspective.
• Geographic expansion: Identified 20-30 MSAs for expansion, well-positioned to capitalize on these markets.

In the first quarter of 2025, total revenue was $133.1 million, up 11.9% compared to Q1 2024 ($119 million). ODR revenue grew 21.7%, while GCR revenue declined 4.5%. ODR revenue accounted for 67.9% of total revenue in Q1 2025, up from 62.4% in Q1 2024. Total gross profit increased 18.1% to $36.7 million. ODR gross profit was $26.2 million, comprising 71.2% of total gross profit, and increased $4 million or 18%. GCR gross profit increased $1.6 million or 18.3% due to a more selective approach to projects.

• Full year 2025 revenue guidance: $610 million to $630 million.
• Adjusted EBITDA guidance: $78 million to $82 million.
• Free cash flow: Targets at least 75% conversion in 2025, with CapEx run rate ~$4 million, excluding additional $3.5 million rental equipment investment in 2025.

• Uncertainty around tariffs and macroeconomic factors could impact pricing and project timelines.
• Dependence on key customers and seasonality in Q1 could affect overall performance.

Q: On the healthcare market you talked about some kind of rebound there and recovery and activity. Could you just give us a sense of where that market's been and how you see it trending?

A: Yeah. So the healthcare vertical market's definitely been our key vertical market that we've really focused on I would say not just this year, but the past few years. What we like about it is the relative stability from that perspective. There's been lots of deferred maintenance that's really happened over the last four years or five years I think coming out of 2020 and 2021. So a lot of times the hospital gets to the point where that deferred maintenance needs to be dealt with and they no longer in the quick repair mode and they need to make plans on their long-term capital planning from that perspective. So I think going to this year we've definitely start to see some of our key customers realize like I really need to start planning in the future because I'm building up a short term expense. So we expect it to be. A slow ramp up but we like the stability and we've really embedded ourselves in our strategy really works well in that vertical market.

Q: You talked a little bit about some pull forward on projects as customers looked at maybe tariff risk but how do you see that or how much of it do you think was pulled forward and I guess what's the risk on kind of equipment prices with their?

A: Yeah. So I think the one thing we definitely appreciate this year is going it's a lot tougher to sell on our model like every there's not like a location has one or two projects that make up all of their revenue for the year. So a lot tougher from that perspective but I think the thing that really helps us is we do have things that pop-up that are tariffs or even I think of other items that are macroeconomic related our ability to be nimble and quick. And pass costs along with something that I think is beneficial even though tariffs essentially been neutral to us. What I think we've seen from customers is the need to make the decision. They can't wait two or three months later because first off our price won't be valid at that point but secondly. You know things could change in the dynamics could change the pricing could change so I think that's one thing that we've really tried to stress to our customers is I'm giving you some I'm giving you a proposal you need to act quickly on it. You need to make sure that, you're ready to get funded or not, and I think that's the real conversation we've had a lot of our customers and I think it's a good conversation because it allows us to be as proactive as possible and to make sure that there's no surprises between either but definitely the quick hitting nature of our work I think. Allows us to have those conversations with our customers and not be caught up in super long term projects where it's tough to deal with drastic material increases.