Core Viewpoint - Limbach (LMB) reported quarterly earnings of $1.12 per share, significantly exceeding the Zacks Consensus Estimate of $0.30 per share, marking an earnings surprise of 273.33% [1][2] Financial Performance - The company achieved revenues of $133.11 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 10.45% and showing an increase from $118.98 million year-over-year [2] - Over the last four quarters, Limbach has consistently surpassed consensus EPS estimates, achieving this four times [2] Stock Performance - Limbach shares have increased approximately 20.7% since the beginning of the year, contrasting with the S&P 500's decline of -3.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.75, with projected revenues of $144.46 million, and for the current fiscal year, the estimate is $3.45 on revenues of $609.16 million [7] Industry Outlook - The Building Products - Maintenance Service industry, to which Limbach belongs, is currently ranked in the top 2% of over 250 Zacks industries, indicating a favorable outlook for the sector [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Limbach's stock performance [5][6]

Revenue and Profitability - Total revenue for the three months ended March 31, 2025, was $133.1 million, an increase of $14.1 million or 11.9% compared to $119.0 million in the same period of 2024 [160]. - ODR revenue increased by $16.1 million, or 21.7%, reaching $90.4 million, while GCR revenue decreased by $2.0 million, or 4.5%, totaling $42.7 million [161]. - Gross profit for the total revenue was $36.7 million, representing a gross margin of 27.6%, compared to $31.1 million and 26.1% in the prior year [160]. - The Company reported a net income of $10.2 million for the three months ended March 31, 2025, compared to $7.6 million in the same period of 2024, reflecting a net margin of 7.7% [160]. - The Company's gross profit for the three months ended March 31, 2025 increased by $5.6 million, or 18.1%, compared to the same period in 2024, with ODR gross profit rising by $4.0 million (18.0%) and GCR gross profit increasing by $1.6 million (18.3%) [162]. Expenses and Costs - Selling, general and administrative expenses for the three months ended March 31, 2025, were $26.5 million, or 19.9% of total revenue, compared to $22.9 million, or 19.2% in the prior year [160]. - Selling, general and administrative (SG&A) expenses increased by approximately $3.6 million, or 15.9%, for the three months ended March 31, 2025, primarily due to a $2.0 million increase in payroll-related expenses [164]. - Amortization of intangibles for the period was $1.9 million, up from $1.1 million in the prior year, reflecting the impact of recent acquisitions [160]. - Amortization of intangibles increased by $1.1 million, or 76.3%, for the three months ended March 31, 2025, primarily due to acquisitions [166]. - The Company continues to monitor the impact of inflation and tariffs on its cost structure, with higher costs of materials affecting specific projects in 2024 [183]. Acquisitions and Market Expansion - The Company acquired two companies in 2023 for a total cash consideration of $15.3 million, including ACME for $5.0 million and Industrial Air for $13.5 million [155]. - The acquisition of Kent Island Mechanical for $15.0 million and Consolidated Mechanical for $23.0 million further expanded the Company's market share and capabilities in the mechanical contracting sector [156][157]. - The Company is actively seeking strategic acquisitions to enhance its geographic footprint and service offerings [179]. Backlog and Future Revenue - The Company's ODR backlog as of March 31, 2025 was $249.0 million, up from $225.3 million as of December 31, 2024, with an estimated 87% expected to be recognized as revenue over the remainder of 2025 [170][171]. - The GCR backlog decreased to $120.2 million as of March 31, 2025, from $140.0 million at December 31, 2024, with an estimated 63% expected to be recognized as revenue over the remainder of 2025 [172]. - The Company’s existing current backlog is projected to provide considerable coverage of forecasted revenue for one year from the date of the financial statement issuance [187]. Cash Flow and Liquidity - The Company generated $2.2 million in cash from operating activities for the three months ended March 31, 2025, compared to a cash outflow of $3.9 million for the same period in 2024 [189]. - The Company has $38.1 million in cash and cash equivalents as of March 31, 2025, which, along with available borrowing capacity of $34.9 million, is expected to meet working capital and capital expenditure requirements for at least the next 12 months [197]. - The Company experienced a cash outflow of $1.9 million in investing activities for the three months ended March 31, 2025, slightly down from $2.0 million in 2024 [192]. - Cash flows used in financing activities increased to $7.2 million for the three months ended March 31, 2025, compared to $5.7 million in the same period of 2024 [194]. - The Company’s cash flows are primarily impacted by fluctuations in working capital, influenced by contract mix and timing of cash payments [186]. Debt and Financial Position - As of March 31, 2025, the total long-term debt of the company is $23.692 million, an increase from $23.554 million as of December 31, 2024 [198]. - The company has approximately $113.0 million in surety bonds outstanding as of March 31, 2025, compared to $109.3 million as of December 31, 2024 [199]. - The company believes its $800.0 million bonding capacity provides a significant competitive advantage over competitors with limited bonding capacity [199]. - The Company’s current ratio improved to 1.55 as of March 31, 2025, up from 1.46 as of December 31, 2024, indicating better liquidity [188]. Tax and Other Income - The Company recorded an income tax benefit of $2.2 million for the three months ended March 31, 2025, compared to $0.3 million for the same period in 2024, with an effective tax rate of (27.8)% [168]. - Total other income decreased to $0.08 million for the three months ended March 31, 2025, down from $0.7 million in 2024, driven by a loss associated with the interest rate swap arrangement [167]. - The change in fair value of contingent consideration related to acquisitions was $427,000 for the three months ended March 31, 2025 [160]. - The change in fair value of contingent consideration was an expense of $0.4 million for the three months ended March 31, 2025, down from $0.6 million in 2024 [165]. - The company recognized interest income of approximately $0.4 million for the three months ended March 31, 2025 [211]. Pension and Insurance - The company participates in approximately 50 multiemployer pension plans (MEPPs) and is responsible for any plan underfunding [202]. - The company accrues for the unfunded portion of costs for both reported claims and claims incurred but not reported related to its self-insurance policies [201]. - The company has not experienced any losses in its cash and cash equivalents, maintaining a conservative investment policy [211].

Financial Performance - Total revenue for Q1 2025 was $133.1 million, an increase of 11.9% from $119.0 million in Q1 2024[5] - Record quarterly net income reached $10.2 million, or $0.85 per diluted share, compared to $7.6 million, or $0.64 per diluted share in the prior year, representing a 34.6% increase[11] - Adjusted EBITDA increased by 26.5% to $14.9 million from $11.8 million in Q1 2024[11] - Total gross profit was $36.7 million, an increase of 18.1% from $31.1 million, with a gross profit margin rising from 26.1% to 27.6%[7] - Operating income increased to $7,911,000 for the three months ended March 31, 2025, up 21.1% from $6,532,000 in the prior year[26] - Net income for the first quarter of 2025 was $10,214,000, compared to $7,586,000 in the first quarter of 2024, reflecting a year-over-year increase of 34.1%[22] - Adjusted net income for Q1 2025 was $13,512,000, a 39.0% increase from $9,725,000 in Q1 2024[32] - Adjusted diluted earnings per share for Q1 2025 was $1.12, up from $0.82 in Q1 2024[32] Revenue Segments - Owner Direct Relationships (ODR) revenue grew by 21.7%, or $16.1 million, to $90.4 million, accounting for 67.9% of total revenue[5] - The ODR segment's growth is expected to continue, supported by strong cash generation and a solid M&A pipeline[4] - The company is focused on expanding its ODR segment to enhance margins and drive more predictable, recurring revenue[3] Expenses and Liabilities - Selling, general and administrative (SG&A) expenses increased by approximately $3.6 million to $26.5 million, representing 19.9% of revenue, up from 19.2%[11] - Selling, general and administrative expenses rose to $26,518,000 in Q1 2025, an increase of 15.9% from $22,876,000 in Q1 2024[26] - Total liabilities decreased to $175,240,000 as of March 31, 2025, compared to $198,638,000 at December 31, 2024, a reduction of 11.7%[20] Cash and Current Assets - Cash and cash equivalents stood at $38.1 million, with a current ratio of 1.55x as of March 31, 2025[8] - Cash and cash equivalents decreased to $38,155,000 at the end of the period from $48,304,000 at the end of the previous year, a decline of 21.0%[24] - Total current assets decreased to $204,500,000 as of March 31, 2025, down from $220,334,000 at December 31, 2024, a decrease of 7.2%[20] Guidance and Provisions - The company affirms its 2025 revenue guidance of $610 million to $630 million and Adjusted EBITDA guidance of $78 million to $82 million[9] - The company reported a provision for credit losses of $77,000 in Q1 2025, up from $39,000 in Q1 2024, reflecting increased caution in credit management[22] Other Financial Metrics - Adjusted EBITDA for Q1 2025 was $14,872,000, representing a 26.0% increase from $11,757,000 in Q1 2024[32] - Adjusted EBITDA margin improved to 11.2% in Q1 2025, compared to 9.9% in Q1 2024[32] - The company incurred restructuring costs of $67,000 in Q1 2025, down from $120,000 in Q1 2024[32] - Stock-based compensation expense rose to $2,012,000 in Q1 2025, compared to $1,249,000 in Q1 2024[32] - Diluted weighted average shares outstanding increased to 12,051,678 in Q1 2025 from 11,894,747 in Q1 2024[32]

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Core Viewpoint - Limbach (LMB) shares have increased by 3.4% over the past month, closing at $82.85, with a mean price target of $109.33 indicating a potential upside of 32% [1] Price Targets - The average price target consists of three estimates ranging from a low of $100 to a high of $125, with a standard deviation of $13.65, suggesting a 20.7% increase from the current price at the lowest estimate and a 50.9% upside at the highest [2] - A low standard deviation indicates a strong agreement among analysts regarding the price targets, which can be a good starting point for further research [7] Analyst Sentiment - There is a growing optimism among analysts about LMB's earnings prospects, as evidenced by a positive trend in earnings estimate revisions, which correlates with potential stock price movements [9] - Over the last 30 days, two earnings estimates for LMB have been revised upward, leading to a 10.1% increase in the Zacks Consensus Estimate [10] Zacks Rank - LMB holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate factors, indicating a strong potential upside [11] Caution on Price Targets - While price targets are a common metric for investors, relying solely on them may not be prudent due to the potential for inflated estimates driven by analysts' business incentives [5][6] - Price targets should be approached with skepticism, as they may not accurately reflect the stock's future price movements [8]

Financial Data and Key Metrics Changes - Total revenue for 2024 was $518.8 million, a slight increase of 0.5% from $516.4 million in 2023, with ODR revenue growing by 31.9% and GCR revenue declining by 31.9% [28] - Total gross profit increased by 20.9% from $119.3 million to $144.3 million, with total gross margin rising to 27.8% from 23.1% in 2023 [31] - Adjusted EBITDA for 2024 was $63.7 million, up 36.1% from $46.8 million in 2023, exceeding the guidance of $60 million to $63 million [37] Business Line Data and Key Metrics Changes - ODR revenue accounted for 66.6% of total revenue in 2024, up from 50.7% in 2023, while GCR revenue represented a significant decline [28] - ODR gross profit increased by 41.6% to $107.8 million, contributing 74.7% of total gross profit dollars, with ODR gross margins expanding to 31.2% from 29% [31] - GCR gross profit declined by 15.5% to $36.4 million, but GCR gross margins improved to 21.1% from 17% due to selectivity in project quality [32] Market Data and Key Metrics Changes - The company is focusing on six mission-critical market verticals, with healthcare emerging as the largest, driving consistent demand [4] - The healthcare market in the US requires significant capital investment, which positions the company to expand its national footprint in this sector [5] Company Strategy and Development Direction - The company is executing a three-pillar strategy: shifting revenue mix towards ODR, evolving service offerings, and scaling through acquisitions [2][3] - The goal is to achieve an 80/20 revenue mix of ODR to GCR, with expectations for ODR revenue to reach 70% to 80% of total revenue in 2025 [22] - The company aims to integrate acquired companies efficiently and leverage local relationships to expand gross profit contributions [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving organic top-line revenue growth of 10% to 15% in 2025, driven by the shift towards ODR and the impact of acquisitions [23][25] - The company anticipates total revenue in the range of $610 million to $630 million for 2025, with a stronger second half of the year expected [24] Other Important Information - SG&A expenses increased to $97.2 million in 2024, representing 18.7% of revenue, driven by higher payroll and incentive-related expenses [34] - The company maintains a strong balance sheet with $44.9 million in cash and total debt of $27.2 million, supporting its growth strategy [41][42] Q&A Session Summary Question: Organic growth expectations for 2025 - Management clarified that the expected organic growth of 10% to 15% refers to overall top-line growth, not just ODR [44][45] Question: Implied organic growth in ODR - Management indicated that ODR organic growth could range from 23% to 46% based on adjusted EBITDA and revenue perspectives [50][51] Question: Achieving OEM level gross margins - Management stated that reaching OEM level gross margins is a long-term goal, requiring a shift towards ODR and the development of an integrated sales platform [52][54] Question: Relationship development with existing customers - Management acknowledged the importance of building trust with existing customers and highlighted the need for specialized labor to address complex systems [66][68] Question: Account manager hiring plans - Management confirmed ongoing investments in account managers to enhance relationships and capture growth opportunities [90][91] Question: Growth opportunities in MSAs - Management noted potential for growth in additional MSAs, primarily through acquisitions, while also considering organic startups when necessary [93][95] Question: Data center exposure - Management clarified that the company has shifted focus away from new construction in data centers, concentrating instead on existing infrastructure [98][100]

Limbach Holdings, Inc. (NASDAQ:LMB) Q4 2024 Earnings Conference Call March 11, 2025 9:00 AM ET Company Participants Julie Kegley - Financial Profiles Mike McCann - President & Chief Executive Officer Jayme Brooks - Executive Vice President & Chief Financial Officer Conference Call Participants Rob Brown - Lake Street Capital Gerry Sweeney - ROTH Capital Brian Brophy - Stifel Mike McCann Good morning. Welcome to our stockholders, analysts, and interested investors. We appreciate you joining us today. Through ...

Pension Contributions and Obligations - The company contributed approximately $10.3 million to multiemployer pension plans for the year ended December 31, 2024, compared to $11.6 million in 2023 and $12.6 million in 2022, indicating a decreasing trend in contributions [140] - Approximately 45% of the company's current employees are members of collective bargaining units, which may impact future pension obligations [140] - The company faces potential increased expenses and liabilities due to underfunded multiemployer pension plans, which could require additional contributions [141] Operational Costs and Challenges - Rising healthcare costs have steadily increased, potentially adversely affecting the company's financial results [143] - The company may experience increased operational costs and reduced efficiency due to challenging work environments, including difficult terrain and hazardous conditions [144] - The company is susceptible to adverse weather conditions, which may harm business operations and financial results [161] - The company may face increased costs and operational disruptions due to compliance with evolving immigration laws and labor regulations [170] Climate Change and Regulatory Risks - Future climate change could disrupt operations and negatively affect revenue and profitability due to extreme weather events and regulatory changes [146] - The company is subject to evolving climate-related regulations, which could increase compliance costs and operational complexity [149] - The current presidential administration's regulatory approach may alter the landscape for climate-related regulations, impacting the company's operations and costs [156] Environmental, Social, and Governance (ESG) Concerns - Investor and customer scrutiny regarding environmental, social, and governance (ESG) practices is increasing, potentially imposing additional costs and reputational risks [157] - The company may face unfavorable ESG ratings from third-party organizations, which could negatively influence investor sentiment and stock price [159] Financial Position and Investments - As of March 6, 2025, the company had 11,353,379 shares of common stock outstanding, with 1,074,684 shares held by current directors and officers [175] - The company has not declared any dividends on its common stock to date and does not anticipate doing so in the foreseeable future [179] - The company had $10.0 million of direct borrowings outstanding under its Second A&R Wintrust Revolving Loan as of December 31, 2024 [327] - The company has an interest rate swap arrangement with a notional value of $10.0 million, maturing in July 2027, to manage risks associated with variable-rate long-term debt [327] - Cash equivalents as of December 31, 2024, were $43.0 million, consisting of overnight repurchase agreements and money market fund investments [328] - The company recognized interest income of approximately $2.2 million for the year ended December 31, 2024 [328] - The company maintains a conservative investment policy and has not experienced any losses in its cash and cash equivalents [328] Internal Controls and Compliance - The company plans to continue strengthening internal controls and procedures to enhance the effectiveness of its financial reporting [183] - Any failure in disclosure controls or internal controls could harm the company's financial condition and results of operations [184] Legal and Tax Risks - The company may face claims and lawsuits that could reduce profitability and liquidity, impacting financial condition [185] - Changes in tax laws or regulations could increase the company's tax burden and adversely affect financial position and cash flows [189] - Changes in tax laws and regulations could materially impact the company's provision for income taxes and financial condition [172] Cybersecurity and Technology Risks - The company faces risks related to cybersecurity, including potential breaches that could lead to financial losses and reputational damage [163] - The company relies on third-party software and infrastructure for critical operations, and disruptions could adversely affect financial results [165] - The development and deployment of artificial intelligence technologies may require additional investment and could introduce new risks [164] Market Risks - The company is exposed to market risk through changes in interest rates, primarily related to borrowings not covered by its interest rate swap [327]

Financial Performance - Record full-year net income of $30.9 million, or $2.57 per diluted share, compared to $20.8 million, or $1.76 per diluted share, representing an increase of 48.8%[9] - Record adjusted EBITDA of $63.7 million, up 36.1% from $46.8 million[9] - Total gross profit for the year was $144.3 million, an increase of 20.9% from $119.3 million[9] - Total revenue for the year ended December 31, 2024, was $518,781,000, a slight increase of 0.5% from $516,350,000 in 2023[32] - Adjusted EBITDA for the year ended December 31, 2024, was $63,714,000, up from $46,801,000 in 2023, reflecting a significant improvement in operational performance[38] - Adjusted EBITDA margin improved to 12.3% in 2024 from 9.1% in 2023[38] - Net income for the year was $30,875,000, compared to $20,754,000 in 2023, representing a year-over-year increase of 48.8%[39] - Adjusted net income for 2024 was $43,217,000, with adjusted diluted earnings per share increasing to $3.60 from $2.48 in 2023[39] Revenue Breakdown - Owner Direct Relationships (ODR) revenue increased 31.9%, or $83.5 million, to $345.5 million, accounting for 66.6% of total revenue[9] - ODR segment revenue for Q4 2024 was $95.5 million, an increase of 21.4% compared to the previous year[12] - ODR revenue increased by 31.9% to $345,500,000, while GCR revenue decreased by 31.9% to $173,281,000[32] Quarterly Performance - Total revenue for Q4 2024 was $143.7 million, an increase of 0.7% from $142.7 million[12] - Revenue for Q4 2024 was $143,650,000, a slight increase of 0.7% from $142,691,000 in Q4 2023[21] - Gross profit increased to $43,571,000 in Q4 2024, up 30.8% from $33,306,000 in Q4 2023[21] - Operating income for Q4 2024 was $13,014,000, representing a significant increase of 79.5% compared to $7,251,000 in Q4 2023[30] Expenses and Liabilities - SG&A expense increased to $97.2 million, representing 18.7% of revenue, up from 16.9%[12] - The company reported a significant increase in selling, general and administrative expenses, which rose to $97,199,000 in 2024 from $87,397,000 in 2023, a 11.3% increase[21] - Total liabilities rose to $198,638,000 in 2024, compared to $183,524,000 in 2023, indicating a 8.2% increase[23] Strategic Acquisitions - The company completed two strategic acquisitions in 2024, aiming for $8 million to $10 million in adjusted EBITDA per year from these acquisitions[10] - The company engaged in multiple acquisitions, including the Kent Island Transaction and the Consolidated Mechanical Transaction, impacting cash flows from investing activities negatively by $36,588,000[25] Future Projections - For 2025, the company estimates revenue of $610 million to $630 million and adjusted EBITDA of $78 million to $82 million[6] Other Financial Metrics - The total gross profit percentage increased from 23.1% to 27.8%, driven by a higher margin ODR segment work[12] - Total current assets increased to $220,334,000 in 2024 from $217,000,000 in 2023[23] - Cash and cash equivalents decreased to $44,930,000 in 2024 from $59,833,000 in 2023, a decline of 25%[23] - The change in fair value of contingent consideration increased by 417.1% to $3,770,000, indicating potential growth in future earnings[32] - The company plans to focus on strategic decision-making using non-GAAP measures such as Adjusted EBITDA and Adjusted Net Income to enhance financial performance understanding[36]

Core Viewpoint - The sustainability of a trend is crucial for successful short-term investing, and confirming fundamental factors is essential to maintain momentum in stocks [1][2]. Group 1: Trend Analysis - Timing entries into a trend significantly impacts investment success, as trends can reverse before exiting a trade, leading to potential losses [1][2]. - A predefined "Recent Price Strength" screen helps identify stocks with strong fundamentals that can sustain their upward trends, focusing on those trading in the upper portion of their 52-week high-low range [3]. Group 2: Company Spotlight - Limbach (LMB) - Limbach (LMB) has shown a solid price increase of 33.4% over the past 12 weeks, indicating strong investor interest [4]. - The stock has also increased by 18.9% over the last four weeks, suggesting that the upward trend is still intact, and it is currently trading at 96.6% of its 52-week high-low range, indicating a potential breakout [5]. - Limbach holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6]. Group 3: Market Sentiment - The Zacks Rank system, which categorizes stocks based on earnings estimates, shows that Zacks Rank 1 stocks have historically generated an average annual return of +25% since 1988, indicating strong market performance [7]. - Limbach also has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7]. Group 4: Investment Strategy - In addition to Limbach, there are other stocks that meet the criteria of the "Recent Price Strength" screen, suggesting further investment opportunities [8]. - The effectiveness of stock-picking strategies can be backtested using tools like the Zacks Research Wizard, which provides access to successful stock-picking strategies [9].