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• GCR Quarterly Gross Margin FY2023: ○ Q1: 16.6% ○ Q2: 17.1% ○ Q3: 19.3% ○ Q4: 15.0% Overarching Goal: Maximized Returns NASDAQ: LMB | 7 We help limit downtime, increase energy efficiency, and reduce operating costs by revitalizing existing infrastructure | --- | --- | --- | --- | --- | --- | --- | |-------|-------------------|--------------|----------------------------|-------|-------|-------| | | | | | | | | | | TEAM | | | | | | | 1,300 | MEMBERS | | | | | | | | | Healthcare | Industrial & Manufacturing | ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-36541 LIMBACH HOLDINGS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 797 Comm ...

FOR IMMEDIATE RELEASE Record Quarterly Consolidated Gross Margin of 26.1% Quarterly Net Income of $7.6 million, up 153.5% for the period and Adjusted EBITDA up 35.4% Year-over-Year Increase in 2024 Adjusted EBITDA Guidance Range - $51 million to $55 million WARRENDALE, PA – May 8, 2024 – Limbach Holdings, Inc. (Nasdaq: LMB) ("Limbach" or the "Company") today announced its financial results for the quarter ended March 31, 2024. 2024 First Quarter Financial Overview Compared to 2023 First Quarter Management C ...

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Part I [Business Overview](index=7&type=section&id=Item%201.%20Business) The company is a building systems solutions firm that strategically shifted to higher-margin ODR projects in 2023, driving revenue and profit growth - Limbach Holdings, Inc is a building systems solution firm focused on mission-critical mechanical, electrical, and plumbing infrastructure for building owners and facilities managers across six vertical markets[23](index=23&type=chunk) 2023 Key Highlights | Metric | Value | Change vs 2022 | | :--- | :--- | :--- | | Net cash from operating activities | $57.4 million | - | | Consolidated gross profit margin | 23.1% | +420 bps | | ODR segment revenue increase | 21.1% | - | | Segment revenue mix (ODR) | 50/50 target | Achieved | | Diluted earnings per share | $1.76 | +175% | - The company operates in two segments: General Contractor Relationships (GCR) and Owner Direct Relationships (ODR), with a key initiative to position ODR as a value-added, indispensable partner[24](index=24&type=chunk)[25](index=25&type=chunk) - Strategic objectives include improving profitability, generating quality growth by increasing ODR revenue, expanding margins, and scaling the business through acquisitions[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) Segment Revenue and Gross Profit (2023 vs 2022) | Segment | 2023 Revenue ($M) | 2022 Revenue ($M) | YoY Change (%) | 2023 Gross Profit Margin (%) | 2022 Gross Profit Margin (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | ODR | 262.0 | 216.4 | 21.1% | 29.0% | 25.5% | | GCR | 254.4 | 280.4 | (9.3)% | 17.0% | 13.8% | | Total | 516.4 | 496.8 | 3.9% | 23.1% | 18.9% | - In 2023, the company completed two acquisitions, **ACME Industrial Piping, LLC** and **Industrial Air, LLC**, to support its ODR growth strategy[43](index=43&type=chunk)[44](index=44&type=chunk) - The company fully exited its Southern California GCR and ODR operations in 2023 as a strategic decision to reduce losses and align geographic focus[46](index=46&type=chunk) Backlog as of December 31 (2023 vs 2022) | Segment | 2023 Backlog ($M) | 2022 Backlog ($M) | YoY Change ($M) | Estimated 2024 Revenue Recognition (%) | | :--- | :--- | :--- | :--- | :--- | | GCR | 186.9 | 302.9 | (116.0) | 83% | | ODR | 147.0 | 108.2 | 38.8 | 95% | - The company faces intense competition from regional and national firms, with price often being a primary factor[52](index=52&type=chunk)[53](index=53&type=chunk) - The company employs over 1,400 team members and focuses on attracting and retaining talent through competitive benefits and a strong safety culture[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[68](index=68&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks from industry competition, customer dependency, contract uncertainties, acquisition integration, and macroeconomic factors - The company faces **intense competition**, potential loss of market share, and reduced profits due to numerous competitors[79](index=79&type=chunk)[80](index=80&type=chunk) - **Dependence on a limited number of customers**, especially in the GCR segment, poses a risk to operations if business is lost or payments are delayed[82](index=82&type=chunk) - **Contract backlog is an uncertain indicator of future earnings** and is subject to adjustments, cancellations, and the risk of cost overruns[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - Acquisitions and divestitures carry risks of failing to achieve objectives, disrupting business, and difficulties in integration[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - The company is exposed to risks from labor disputes, inability to attract and retain qualified personnel, and employee misconduct[106](index=106&type=chunk)[107](index=107&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - Fluctuations in material costs, supply chain disruptions, and rising inflation/interest rates could adversely impact profitability[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - Failure to comply with debt covenants could lead to acceleration of debt maturity and severely impact liquidity and operations[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) - The company's obligation to contribute to multiemployer pension plans (MEPPs) could result in significant future liabilities[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - Cybersecurity threats and information technology system failures pose risks of data breaches and operational disruptions[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - Adverse weather, climate change, and evolving ESG expectations could impose additional costs and affect operations[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) [Unresolved Staff Comments](index=35&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments from the SEC [Cybersecurity](index=35&type=section&id=Item%201C.%20Cybersecurity) The company manages cybersecurity risk through a NIST-aligned program overseen by its Board of Directors and CIO - The company's cybersecurity risk management program aligns with the **National Institute of Standards and Technology (NIST) Cybersecurity Framework**[182](index=182&type=chunk) - The Board of Directors actively oversees cybersecurity risks, receiving regular briefings from senior management[187](index=187&type=chunk)[189](index=189&type=chunk) - Key cybersecurity initiatives include advanced technology solutions, employee education, regular assessments, and threat intelligence analysis[185](index=185&type=chunk) - The CIO, Christos Ruci, is primarily responsible for assessing, monitoring, and managing the cybersecurity program[190](index=190&type=chunk)[191](index=191&type=chunk) - As of the report date, the company has not encountered any cybersecurity incidents deemed material to the company as a whole[192](index=192&type=chunk) [Properties](index=37&type=section&id=Item%202.%20Properties) The company operates 19 leased offices across the eastern US, with facilities deemed adequate for current needs - The principal executive offices are located at 797 Commonwealth Drive, Warrendale, Pennsylvania[193](index=193&type=chunk) - The company operates 19 offices across the eastern United States, with all business units supporting both GCR and ODR operating segments[193](index=193&type=chunk) Selected Office Locations and Status | Business Unit / Location | Ownership Status | Approximate Size (sq ft) | | :--- | :--- | :--- | | ACME Industrial Piping, LLC (Chattanooga, TN) | Leased | 51,766 | | Eastern Pennsylvania (Warrington, PA) | Leased | 27,443 | | Industrial Air, LLC (Greensboro, NC) | Leased | 71,672 | | Michigan (Pontiac, MI) | Leased | 74,000 | | Mid-Atlantic (Laurel, MD) | Leased | 50,133 | | New England (Wilmington, MA) | Leased | 30,995 | | Ohio (Columbus, OH) | Leased | 130,144 | | Orlando / Corporate (Lake Mary, FL) | Leased | 60,794 | | Western Pennsylvania / Corporate (Warrendale, PA) | Leased | 19,718 | | Southern California (Seal Beach, CA) | Leased | 88,507 | [Legal Proceedings](index=37&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, which are not expected to have a material adverse effect - The company is continually engaged in administrative proceedings, arbitrations, and litigation with various parties in the ordinary course of business[195](index=195&type=chunk)[514](index=514&type=chunk) - In November 2023, the company settled a lawsuit with Bernards Bros Inc for approximately **$2.2 million**[515](index=515&type=chunk) - Management believes that the results of these legal actions will not have a material adverse effect on the company's financial position, results of operations, or cash flows[514](index=514&type=chunk) [Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company states that mine safety disclosures are not applicable [Information About Our Executive Officers](index=38&type=section&id=Information%20About%20Our%20Executive%20Officers) This section provides biographical information for the company's key executive officers Executive Officers | Name | Age | Title | | :--- | :-- | :--- | | Michael M McCann | 42 | President, Chief Executive Officer and Director | | Jayme L Brooks | 53 | Executive Vice President and Chief Financial Officer | | Jay A Sharp | 58 | President of Limbach | | Nicholas S Angerosa | 47 | President of Harper Limbach | - Michael M McCann was appointed President and CEO in March 2023, succeeding Charles A Bacon, III[198](index=198&type=chunk) - Jayme L Brooks has served as Executive Vice President and CFO since October 2019[199](index=199&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=38&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under 'LMB', with 1,206,476 warrants exercised on a cashless basis in 2023 - The company's common stock is traded on The Nasdaq Capital Market under the symbol **'LMB'**[204](index=204&type=chunk) - As of March 12, 2024, there were **32 holders of record** of the company's common stock[205](index=205&type=chunk) Warrant Exercise Summary (Year Ended December 31, 2023) | Warrant Type | Number Exercised | Shares Issued (Cashless) | Proceeds to Company | | :--- | :--- | :--- | :--- | | $15 Exercise Price Sponsor Warrants | 600,000 | 167,564 | None | | Merger Warrants | 606,476 | 274,742 | None | | Total | 1,206,476 | 442,306 | None | - The remaining 23,167 unexercised Merger Warrants expired by their terms on July 20, 2023[206](index=206&type=chunk) [[Reserved]](index=39&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's strategic shift to ODR drove a 21.1% segment revenue increase, expanded gross margins to 23.1%, and boosted net income [Overview](index=39&type=section&id=Overview) - Limbach Holdings, Inc is a building systems solution firm with over 1,400 team members specializing in mission-critical systems[209](index=209&type=chunk) - The company's core market sectors include healthcare, industrial and manufacturing, data centers, life science, higher education, and cultural and entertainment[210](index=210&type=chunk) - Operations are divided into two segments: General Contractor Relationships (GCR) and Owner Direct Relationships (ODR)[210](index=210&type=chunk)[211](index=211&type=chunk) [Key Components of Consolidated Statements of Operations](index=41&type=section&id=Key%20Components%20of%20Consolidated%20Statements%20of%20Operations) - Revenue is primarily generated from fixed-price construction contracts and time and materials service contracts[212](index=212&type=chunk) - Cost of revenue includes labor, material, and subcontract costs, while SG&A expenses cover administrative and corporate personnel costs[214](index=214&type=chunk)[215](index=215&type=chunk) - Changes in the fair value of contingent consideration relate to the remeasurement of earnout arrangements from acquisitions[216](index=216&type=chunk) - Amortization of intangibles includes non-cash charges for assets like customer relationships, with additions from recent acquisitions[217](index=217&type=chunk)[218](index=218&type=chunk) - Other (expenses) income primarily consists of interest expense, interest income, and gains/losses on swaps and asset dispositions[219](index=219&type=chunk) [Impact of Acquisitions](index=43&type=section&id=Impact%20of%20Acquisitions) - In 2023, the company acquired **ACME Industrial Piping, LLC for $5.0 million** cash and **Industrial Air, LLC for $13.5 million** cash, plus potential earnouts[223](index=223&type=chunk) - Both acquisitions support the ODR growth strategy by adding industrial maintenance and engineered air handling capabilities[223](index=223&type=chunk) - The post-acquisition results of ACME and Industrial Air did not have a material impact on 2023 consolidated results due to transaction timing[224](index=224&type=chunk) [Divestitures](index=43&type=section&id=Divestitures) - In February 2022, the company decided to wind down its Southern California GCR and ODR operations to reduce losses[225](index=225&type=chunk) - By 2023, the company had fully exited the Southern California region, aside from certain warranty and sublease obligations[225](index=225&type=chunk) [Operating Segments](index=43&type=section&id=Operating%20Segments) - The company manages its business in two operating segments: General Contractor Relationships (GCR) and Owner Direct Relationships (ODR)[226](index=226&type=chunk) - Following a CEO transition, the segment presentation was revised to focus on segment revenue and gross profit[228](index=228&type=chunk) - All identifiable assets are located in the United States, and no single customer accounted for more than 10% of consolidated revenue in 2023[511](index=511&type=chunk) [Comparison of Results of Operations for the years ended December 31, 2023 and 2022](index=45&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20years%20ended%20December%2031%2C%202023%20and%202022) Consolidated Statement of Operations Data (2023 vs 2022) | Metric | 2023 ($M) | 2022 ($M) | YoY Change ($M) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total revenue | 516.35 | 496.78 | 19.57 | 3.9% | | Total gross profit | 119.29 | 93.74 | 25.55 | 27.3% | | Gross profit margin | 23.1% | 18.9% | +4.2% | - | | Selling, general and administrative | 87.40 | 77.88 | 9.52 | 12.2% | | Change in fair value of contingent consideration | 0.73 | 2.29 | (1.56) | (68.1)% | | Amortization of intangibles | 1.88 | 1.57 | 0.31 | 19.7% | | Total operating income | 29.28 | 12.01 | 17.27 | 143.8% | | Total other expenses | (1.18) | (2.40) | 1.22 | 50.8% | | Income before income taxes | 28.10 | 9.61 | 18.49 | 192.4% | | Income tax provision | 7.35 | 2.81 | 4.54 | 161.6% | | Net income | 20.75 | 6.80 | 13.95 | 205.1% | Revenue by Segment (2023 vs 2022) | Segment | 2023 Revenue ($M) | 2022 Revenue ($M) | YoY Change ($M) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | GCR | 254.39 | 280.38 | (25.99) | (9.3)% | | ODR | 261.96 | 216.40 | 45.56 | 21.1% | | Total | 516.35 | 496.78 | 19.57 | 3.9% | - The decrease in GCR revenue was due to a focus on smaller, higher-margin projects, while **ODR revenue growth was driven by accelerated initiatives and acquisitions**[231](index=231&type=chunk) Gross Profit by Segment (2023 vs 2022) | Segment | 2023 Gross Profit ($M) | 2022 Gross Profit ($M) | YoY Change ($M) | YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | | GCR | 43.20 | 38.62 | 4.58 | 11.9% | | ODR | 76.09 | 55.12 | 20.97 | 38.0% | | Total | 119.29 | 93.74 | 25.55 | 27.3% | - Total gross profit percentage **increased from 18.9% to 23.1%**, primarily due to a mix shift towards higher-margin ODR work[232](index=232&type=chunk) - **SG&A expenses increased by $9.5 million (12.2%)** in 2023, mainly due to higher payroll, stock-based compensation, and acquisition-related costs[235](index=235&type=chunk) - The loss from change in fair value of contingent consideration decreased from $2.3 million to $0.7 million[236](index=236&type=chunk) - Amortization of intangibles increased by $0.3 million, with $0.7 million attributable to recent acquisitions[237](index=237&type=chunk) - Total other expenses decreased by $1.2 million, driven by a $1.2 million increase in interest income[238](index=238&type=chunk)[239](index=239&type=chunk) Income Tax Provision and Effective Tax Rate (2023 vs 2022) | Metric | 2023 ($M) | 2022 ($M) | 2023 Effective Tax Rate (%) | 2022 Effective Tax Rate (%) | | :--- | :--- | :--- | :--- | :--- | | Income tax provision | 7.35 | 2.81 | 26.1% | 29.2% | [GCR and ODR Backlog Information](index=48&type=section&id=GCR%20and%20ODR%20Backlog%20Information) - Backlog represents estimated revenue on uncompleted contracts for which the company has a written award or agreed-upon work order[241](index=241&type=chunk) Backlog as of December 31 (2023 vs 2022) | Segment | 2023 Backlog ($M) | 2022 Backlog ($M) | YoY Change ($M) | Estimated 2024 Revenue Recognition (%) | | :--- | :--- | :--- | :--- | :--- | | GCR | 186.9 | 302.9 | (116.0) | 83% | | ODR | 147.0 | 108.2 | 38.8 | 95% | - The **reduction in GCR backlog is intentional**, reflecting a focus on higher-margin projects, while ODR backlog increased due to growth and acquisitions[241](index=241&type=chunk)[242](index=242&type=chunk) [Market Update](index=48&type=section&id=Market%20Update) - The company experiences strong demand but is impacted by inflation, elevated labor costs, and supply chain disruptions[243](index=243&type=chunk) - Elevated cost inflation persisted in 2023 and is expected to continue in 2024, albeit at lower levels[243](index=243&type=chunk) - Rising interest rates have increased interest expense, and prolonged equipment delays could materially affect business[243](index=243&type=chunk)[245](index=245&type=chunk) [Outlook for 2024](index=49&type=section&id=Outlook%20for%202024) - For 2024, key objectives are to improve profitability, generate quality growth (especially in ODR), and acquire synergistic businesses[246](index=246&type=chunk) - The company reaffirms its focus on expanding ODR relationships and leveraging full life-cycle engineered solutions[247](index=247&type=chunk) - In the GCR segment, the focus remains on improving project execution and profitability on smaller, shorter-duration opportunities[248](index=248&type=chunk) - The company continues to seek acquisitions that support the ODR growth strategy[249](index=249&type=chunk) [Seasonality, Cyclicality and Quarterly Trends](index=50&type=section&id=Seasonality%2C%20Cyclicality%20and%20Quarterly%20Trends) - Severe weather can slow construction productivity, while maintenance demand increases with severe weather and decreases with mild weather[253](index=253&type=chunk) - The company's operations experience mild cyclicality, with increased activity typically in the third and fourth quarters[253](index=253&type=chunk) [Effect of Inflation and Tariffs](index=50&type=section&id=Effect%20of%20Inflation%20and%20Tariffs) - The prices of materials and equipment are subject to fluctuation due to inflation, tariffs, and supply chain disruptions[254](index=254&type=chunk) - The company experienced higher material costs and supply chain delays in 2023 and 2022, expecting these to persist in 2024[254](index=254&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) - Liquidity needs primarily relate to working capital, capital expenditures, and strategic investments[255](index=255&type=chunk) Summary Cash Flow Information (2023 vs 2022) | Metric | 2023 ($M) | 2022 ($M) | | :--- | :--- | :--- | | Net cash provided by operating activities | 57.37 | 35.37 | | Net cash used in investing activities | (17.09) | (0.50) | | Net cash used in financing activities | (16.49) | (13.35) | | Net increase in cash, cash equivalents and restricted cash | 23.78 | 21.53 | - **Operating cash flows increased by $22.0 million** in 2023, primarily due to a $68.0 million cash inflow from accounts receivable changes[261](index=261&type=chunk) - Cash used in investing activities increased to **$17.1 million** in 2023, mainly due to cash outflows for the ACME and Industrial Air acquisitions[262](index=262&type=chunk) - Cash used in financing activities was **$16.5 million** in 2023, including $21.5 million for term loan repayment, partially offset by $10.0 million in revolving loan proceeds[264](index=264&type=chunk) Available Funding Capacity (as of December 31, 2023) | Item | Amount ($M) | | :--- | :--- | | Cash & cash equivalents | 59.83 | | Second A&R Wintrust Revolving Loan | 50.00 | | Less: Outstanding borrowings | (10.00) | | Less: Outstanding letters of credit | (4.07) | | Net credit agreement capacity available | 35.93 | | Total available funding capacity | 95.77 | - The company's long-term debt decreased from $31.8 million in 2022 to **$22.7 million in 2023**[269](index=269&type=chunk) - Surety bonds outstanding decreased from $129.6 million in 2022 to **$90.9 million in 2023**, with an $800 million bonding capacity[270](index=270&type=chunk) - The company is substantially self-insured for workers' compensation, general liability, medical, and dental claims[271](index=271&type=chunk)[272](index=272&type=chunk) - The company contributes to approximately 40 multiemployer pension plans (MEPPs), with total contributions of **$11.6 million in 2023**[273](index=273&type=chunk)[275](index=275&type=chunk)[542](index=542&type=chunk) [Recent Accounting Pronouncements](index=55&type=section&id=Recent%20Accounting%20Pronouncements) - The company adopted ASU 2016-13 (Credit Losses) on January 1, 2023, with no material impact[276](index=276&type=chunk)[390](index=390&type=chunk) [Critical Accounting Policies](index=55&type=section&id=Critical%20Accounting%20Policies) - The most significant accounting policy is **revenue recognition from construction contracts**, which requires significant estimates of total contract costs[277](index=277&type=chunk)[278](index=278&type=chunk) - Critical judgment areas include collectability of receivables, self-insurance liabilities, and recoverability of goodwill and intangible assets[277](index=277&type=chunk) - Changes in estimates for contract costs and profitability are recognized in the period determined, potentially causing fluctuations in gross profit[280](index=280&type=chunk)[282](index=282&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk) - Allowance for credit losses on receivables is developed using an aging method, considering customer creditworthiness and economic conditions[286](index=286&type=chunk)[287](index=287&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually, with **no impairment losses identified in 2023**[292](index=292&type=chunk)[293](index=293&type=chunk)[435](index=435&type=chunk)[437](index=437&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=58&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, this disclosure is not required [Financial Statements and Supplementary Data](index=59&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements, notes, and the independent auditor's report for 2023 and 2022 - Crowe LLP issued an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting[308](index=308&type=chunk) - Critical audit matters included the evaluation of variable consideration for fixed-price contracts and the accounting for acquisitions[314](index=314&type=chunk)[315](index=315&type=chunk)[320](index=320&type=chunk) Consolidated Balance Sheet Highlights (as of December 31) | Metric | 2023 ($M) | 2022 ($M) | | :--- | :--- | :--- | | Total assets | 304.44 | 294.56 | | Total liabilities | 183.52 | 199.11 | | Total stockholders' equity | 120.92 | 95.44 | | Cash and cash equivalents | 59.83 | 36.00 | | Accounts receivable, net | 97.76 | 124.44 | | Contract assets | 51.69 | 61.45 | | Current liabilities | 145.15 | 159.09 | | Long-term debt | 19.63 | 21.53 | Consolidated Statements of Operations Highlights (Years Ended December 31) | Metric | 2023 ($M) | 2022 ($M) | | :--- | :--- | :--- | | Revenue | 516.35 | 496.78 | | Gross profit | 119.29 | 93.74 | | Operating income | 29.28 | 12.01 | | Net income | 20.75 | 6.80 | | Basic EPS | $1.93 | $0.65 | | Diluted EPS | $1.76 | $0.64 | Consolidated Statements of Cash Flows Highlights (Years Ended December 31) | Metric | 2023 ($M) | 2022 ($M) | | :--- | :--- | :--- | | Net cash provided by operating activities | 57.37 | 35.37 | | Net cash used in investing activities | (17.09) | (0.50) | | Net cash used in financing activities | (16.49) | (13.35) | | Net increase in cash, cash equivalents and restricted cash | 23.78 | 21.53 | [Report of Independent Registered Public Accounting Firm](index=61&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) - Crowe LLP provided an unqualified opinion on the financial statements and internal control over financial reporting for Limbach Holdings, Inc as of December 31, 2023[308](index=308&type=chunk) - The audit of internal control over financial reporting excluded the operations of ACME Industrial Piping, LLC and Industrial Air, LLC, acquired during 2023[311](index=311&type=chunk) [Critical Audit Matters](index=62&type=section&id=Critical%20Audit%20Matters) - The evaluation of variable consideration and estimated costs for fixed-price contracts was a critical audit matter due to high subjectivity[315](index=315&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk) - Accounting for acquisitions, specifically the fair value of contingent consideration, was identified as a critical audit matter[320](index=320&type=chunk)[321](index=321&type=chunk) [Consolidated Balance Sheets](index=64&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet (as of December 31, 2023 and 2022) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $59,833 | $36,001 | | Accounts receivable, net | 97,755 | 124,442 | | Contract assets | 51,690 | 61,453 | | Total current assets | 217,000 | 225,990 | | Property and equipment, net | 20,830 | 18,224 | | Intangible assets, net | 24,999 | 15,340 | | Goodwill | 16,374 | 11,370 | | Total assets | $304,439 | $294,556 | | **LIABILITIES** | | | | Current portion of long-term debt | $2,680 | $9,564 | | Accounts payable, including retainage | 65,268 | 75,122 | | Contract liabilities | 42,160 | 44,007 | | Total current liabilities | 145,148 | 159,085 | | Long-term debt | 19,631 | 21,528 | | Total liabilities | 183,524 | 199,114 | | **STOCKHOLDERS' EQUITY** | | | | Total stockholders' equity | 120,915 | 95,442 | | Total liabilities and stockholders' equity | $304,439 | $294,556 | [Consolidated Statements of Operations](index=66&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations (Years Ended December 31, 2023 and 2022) | (in thousands, except share and per share data) | 2023 | 2022 | | :--- | :--- | :--- | | Revenue | $516,350 | $496,782 | | Cost of revenue | 397,060 | 403,041 | | Gross profit | 119,290 | 93,741 | | Selling, general and administrative | 87,397 | 77,879 | | Change in fair value of contingent consideration | 729 | 2,285 | | Amortization of intangibles | 1,880 | 1,567 | | Operating income | 29,284 | 12,010 | | Total other expenses | (1,184) | (2,402) | | Income before income taxes | 28,100 | 9,608 | | Income tax provision | 7,346 | 2,809 | | Net income | $20,754 | $6,799 | | Basic EPS | $1.93 | $0.65 | | Diluted EPS | $1.76 | $0.64 | [Consolidated Statements of Stockholders' Equity](index=67&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Consolidated Statements of Stockholders' Equity (Years Ended December 31, 2023 and 2022) | (in thousands, except share amounts) | Balance at Jan 1, 2022 | Stock-based comp | Repurchase | Net income | Balance at Dec 31, 2022 | Stock-based comp | Warrants issued | Net income | Balance at Dec 31, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Common stock (shares) | 10,304,242 | - | - | - | 10,471,410 | - | 442,306 | - | 11,183,076 | | Common stock ($) | $1 | - | - | - | $1 | - | - | - | $1 | | Additional paid-in capital | $85,004 | $2,742 | ($148) | - | $87,809 | $4,910 | ($428) | - | $92,528 | | Treasury stock, at cost | - | - | ($2,000) | - | ($2,000) | - | - | - | ($2,000) | | Retained earnings | $2,833 | - | - | $6,799 | $9,632 | - | - | $20,754 | $30,386 | | Total Stockholders' Equity | $87,838 | $2,742 | ($2,000) | $6,799 | $95,442 | $4,910 | ($428) | $20,754 | $120,915 | [Consolidated Statements of Cash Flows](index=68&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (Years Ended December 31, 2023 and 2022) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $57,366 | $35,373 | | Net cash used in investing activities | (17,092) | (495) | | Net cash used in financing activities | (16,490) | (13,353) | | Increase (decrease) in cash, cash equivalents and restricted cash | 23,784 | 21,525 | | Cash, cash equivalents and restricted cash, end of year | $59,898 | $36,114 | - Noncash investing and financing transactions in 2023 included earnout liabilities, new operating lease ROU assets, and new finance lease ROU assets[332](index=332&type=chunk)[333](index=333&type=chunk) [Notes to Consolidated Financial Statements](index=70&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note 1 – Business and Organization](index=70&type=section&id=Note%201%20%E2%80%93%20Business%20and%20Organization) - Limbach Holdings, Inc is a Delaware corporation headquartered in Warrendale, Pennsylvania[335](index=335&type=chunk) - The company operates in two segments: General Contractor Relationships (GCR) and Owner Direct Relationships (ODR)[336](index=336&type=chunk) [Note 2 – Significant Accounting Policies](index=70&type=section&id=Note%202%20%E2%80%93%20Significant%20Accounting%20Policies) - The consolidated financial statements are prepared in accordance with GAAP and involve significant management estimates[337](index=337&type=chunk)[339](index=339&type=chunk) - Cash and cash equivalents include highly liquid investments with original maturities of three months or less[340](index=340&type=chunk) - Restricted cash is held in an imprest account for funding workers' compensation and general liability claims[342](index=342&type=chunk) - The company adopted ASU 2016-13 (Credit Losses) on January 1, 2023, with no material impact[390](index=390&type=chunk) - Revenue from construction-type contracts is recognized over time using the **cost-to-cost method**[355](index=355&type=chunk)[356](index=356&type=chunk)[358](index=358&type=chunk) - Goodwill and indefinite-lived intangible assets are evaluated for impairment annually on October 1st[367](index=367&type=chunk)[368](index=368&type=chunk) - Property and equipment are recorded at cost and depreciated on a straight-line basis[373](index=373&type=chunk)[376](index=376&type=chunk) - Deferred financing costs are amortized to interest expense, and stock-based compensation is measured at fair value[380](index=380&type=chunk)[383](index=383&type=chunk) - Income taxes are accounted for using the asset and liability method[384](index=384&type=chunk)[386](index=386&type=chunk) - The company is currently evaluating the impact of newly issued FASB standards on segment reporting and income tax disclosures[395](index=395&type=chunk)[396](index=396&type=chunk) [Note 3 – Acquisitions](index=79&type=section&id=Note%203%20%E2%80%93%20Acquisitions) - On July 3, 2023, the company acquired **ACME Industrial Piping, LLC for $5.0 million cash** at closing, resulting in $2.2 million of goodwill[400](index=400&type=chunk)[401](index=401&type=chunk)[403](index=403&type=chunk)[405](index=405&type=chunk) - ACME's acquired intangible assets, valued at $2.8 million, include customer relationships and trade name[406](index=406&type=chunk)[409](index=409&type=chunk) - On November 1, 2023, the company acquired **Industrial Air, LLC for $13.5 million cash** at closing, resulting in $2.8 million of goodwill[410](index=410&type=chunk)[411](index=411&type=chunk)[413](index=413&type=chunk)[416](index=416&type=chunk) - Industrial Air's acquired intangible assets, valued at $8.7 million, include customer relationships, trade name, and backlog[417](index=417&type=chunk)[421](index=421&type=chunk) - The fair value of contingent earnout payments for both acquisitions was determined using the Monte Carlo Simulation method[409](index=409&type=chunk)[491](index=491&type=chunk)[492](index=492&type=chunk) [Note 4 – Revenue from Contracts with Customers](index=83&type=section&id=Note%204%20%E2%80%93%20Revenue%20from%20Contracts%20with%20Customers) - Revenue is primarily derived from construction-type and service contracts, recognized using the cost-to-cost method or as services are performed[422](index=422&type=chunk) Contract Assets (as of December 31) | (in thousands) | 2023 | 2022 | Change ($M) | | :--- | :--- | :--- | :--- | | Costs and estimated earnings in excess of billings | $29,247 | $33,573 | (4,326) | | Retainage receivable | 22,443 | 27,880 | (5,437) | | Total contract assets | $51,690 | $61,453 | (9,763) | Contract Liabilities (as of December 31) | (in thousands) | 2023 | 2022 | Change ($M) | | :--- | :--- | :--- | :--- | | Billings in excess of costs and estimated earnings | $41,987 | $43,806 | (1,819) | | Provisions for losses | 173 | 201 | (28) | | Total contract liabilities | $42,160 | $44,007 | (1,847) | - The net overbilling position for contracts in process was **($12.7) million in 2023**, compared to ($10.2) million in 2022[430](index=430&type=chunk) - In 2023, the company recorded net gross profit write-ups of $0.9 million on GCR projects and a $1.0 million write-down on one ODR project[233](index=233&type=chunk)[431](index=431&type=chunk) Remaining Performance Obligations (as of December 31, 2023) | Segment | Amount ($M) | Estimated 2024 Revenue Recognition (%) | | :--- | :--- | :--- | | GCR | 186.9 | 83% | | ODR | 127.3 | 95% | [Note 5 – Goodwill and Intangible Assets](index=85&type=section&id=Note%205%20%E2%80%93%20Goodwill%20and%20Intangible%20Assets) Goodwill by Segment (as of December 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | GCR | $— | $— | | ODR | 16,374 | 11,370 | | Total Goodwill | $16,374 | $11,370 | - Goodwill is entirely associated with the ODR segment, with the increase due to the ACME and Industrial Air acquisitions[435](index=435&type=chunk)[439](index=439&type=chunk) - The company performs an annual qualitative assessment for goodwill impairment, and **no impairment losses were identified in 2023 or 2022**[435](index=435&type=chunk)[437](index=437&type=chunk)[438](index=438&type=chunk) Net Intangible Assets (excluding goodwill) (as of December 31, 2023) | (in thousands) | Gross Carrying Amount | Accumulated Amortization | Net Intangible Assets | | :--- | :--- | :--- | :--- | | Customer relationships | $15,320 | ($5,249) | $10,071 | | Backlog | 2,560 | (1,264) | 1,296 | | Trade name, trademarks and intellectual property | 4,250 | (578) | 3,672 | | Trade name – Limbach (unamortized) | 9,960 | — | 9,960 | | Total | $32,090 | ($7,091) | $24,999 | - Total amortization expense for definite-lived intangible assets was **$1.9 million in 2023** and $1.6 million in 2022[442](index=442&type=chunk) Estimated Amortization Expense for Definite-Lived Intangible Assets | Year Ending | Estimated Amortization Expense ($M) | | :--- | :--- | | 2024 | 3.44 | | 2025 | 2.11 | | 2026 | 2.08 | | 2027 | 2.06 | | 2028 | 1.86 | | 2029 and thereafter | 3.49 | | Total | 15.04 | [Note 6 – Accrued Expenses and Other Current Liabilities](index=87&type=section&id=Note%206%20%E2%80%93%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued Expenses and Other Current Liabilities (as of December 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Accrued payroll and related liabilities | $5,561 | $4,545 | | Accrued bonus and commissions | 12,254 | 9,682 | | Accrued insurance liabilities | 1,007 | 715 | | Accrued job costs | 2,710 | 1,913 | | Assurance-type warranty liabilities | 1,500 | 1,581 | | Estimated loss contingency | 650 | 2,182 | | Earnout Payments accrued, current | 5,719 | 2,859 | | Other accrued liabilities | 1,566 | 1,465 | | Total | $30,967 | $24,942 | - Assurance-type warranties are accrued as an expense within cost of revenue, with a balance of $1.5 million at December 31, 2023[445](index=445&type=chunk)[446](index=446&type=chunk) [Note 7 – Debt](index=88&type=section&id=Note%207%20%E2%80%93%20Debt) Long-Term Debt Obligations (as of December 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | A&R Wintrust Term Loan | $— | $21,453 | | Wintrust Revolving Loans | 10,000 | — | | Finance leases – collateralized by vehicles | 7,347 | 4,954 | | Financing liability | 5,351 | 5,351 | | Total debt | $22,698 | $31,758 | | Less – Current portion of long-term debt | (2,680) | (9,564) | | Less – Unamortized discount and debt issuance costs | (387) | (666) | | Long-term debt | $19,631 | $21,528 | - On May 5, 2023, the company entered into a new credit agreement, increasing the revolving credit facility to **$50.0 million** and repaying the term loan[462](index=462&type=chunk) - As of December 31, 2023, the company had **$10.0 million in borrowings outstanding** under the revolving loan[468](index=468&type=chunk) - The credit agreement includes financial maintenance covenants, and the company was in compliance as of December 31, 2023[467](index=467&type=chunk)[470](index=470&type=chunk) - A 2022 sale-leaseback transaction was accounted for as a financing transaction, resulting in a financing liability of $5.0 million[471](index=471&type=chunk)[475](index=475&type=chunk)[477](index=477&type=chunk) [Note 8 – Equity](index=92&type=section&id=Note%208%20%E2%80%93%20Equity) - In 2023, warrants were exercised on a cashless basis, resulting in the issuance of **442,306 shares** of common stock[479](index=479&type=chunk) - The 2023 Amended and Restated Omnibus Incentive Plan authorizes **3,050,000 shares** of common stock for equity awards[483](index=483&type=chunk) - The **$2.0 million Share Repurchase Program** was fully utilized by September 29, 2023[485](index=485&type=chunk) - The Employee Stock Purchase Plan (ESPP) allows employees to purchase stock at an 85% discount, with 17,661 shares issued in 2023[486](index=486&type=chunk) [Note 9 – Fair Value Measurements](index=93&type=section&id=Note%209%20%E2%80%93%20Fair%20Value%20Measurements) - The company's cash equivalents are classified as Level 1 fair value measurements[487](index=487&type=chunk)[488](index=488&type=chunk) - The fair value of the revolving loan is determined using discounted estimated future cash flows (Level 3 inputs)[489](index=489&type=chunk) Contingent Earnout Payment Obligations (as of December 31, 2023) | (in thousands) | Fair Value (Level 3) | | :--- | :--- | | 2023 Jake Marshall Earnout Period | $3,000 | | First ACME Earnout Period | 429 | | First IA Earnout Period | 2,290 | | Second ACME Earnout Period | 1,188 | | Second IA Earnout Period | 875 | | Total | $7,782 | - The fair value of contingent earnout payments is determined using the Monte Carlo Simulation method (Level 3 measurement)[490](index=490&type=chunk)[491](index=491&type=chunk)[492](index=492&type=chunk)[493](index=493&type=chunk) - The interest rate swap had a fair value of approximately $0.2 million (Level 2 measurement) as of December 31, 2023[496](index=496&type=chunk) [Note 10 – Earning per Share](index=95&type=section&id=Note%2010%20%E2%80%93%20Earning%20per%20Share) Earnings Per Share (Years Ended December 31) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net income | $20,754 | $6,799 | | Weighted average shares outstanding – basic | 10,773 | 10,425 | | Weighted average shares outstanding – diluted | 11,812 | 10,677 | | Basic EPS | $1.93 | $0.65 | | Diluted EPS | $1.76 | $0.64 | - Diluted EPS calculation includes the dilutive effect of in-the-money warrants, nonvested RSUs, and the ESPP[497](index=497&type=chunk)[499](index=499&type=chunk) [Note 11 – Income Taxes](index=96&type=section&id=Note%2011%20%E2%80%93%20Income%20Taxes) Income Tax Provision (Years Ended December 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Total current tax provision | $7,696 | $3,308 | | Total deferred tax provision | (350) | (499) | | Income tax provision | $7,346 | $2,809 | Effective Tax Rate Reconciliation (Years Ended December 31) | Item | 2023 | 2022 | | :--- | :--- | :--- | | Federal statutory income tax rate | 21.0% | 21.0% | | State income taxes, net of federal tax effect | 4.8% | 6.4% | | Stock based compensation – restricted stock | (1.1)% | 1.4% | | Permanent differences | 1.4% | 1.3% | | Tax credits | (0.5)% | (0.9)% | | Other | 0.6% | —% | | Effective tax rate | 26.1% | 29.2% | Net Deferred Tax Asset (as of December 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Total deferred tax assets | $14,019 | $13,081 | | Total deferred tax liabilities | (8,840) | (8,252) | | Net deferred tax asset | $5,179 | $4,829 | - Management concluded that deferred tax assets would be fully realized, and **no valuation allowance was deemed necessary**[504](index=504&type=chunk) [Note 12 – Operating Segments](index=98&type=section&id=Note%2012%20%E2%80%93%20Operating%20Segments) - The company operates in two reportable segments: General Contractor Relationships (GCR) and Owner Direct Relationships (ODR)[507](index=507&type=chunk)[508](index=508&type=chunk) - Segment presentation was revised in 2023 to focus on segment revenue and gross profit[509](index=509&type=chunk) Consolidated Segment Information (Years Ended December 31) | (in thousands) | 2023 Revenue | 2022 Revenue | 2023 Gross Profit | 2022 Gross Profit | | :--- | :--- | :--- | :--- | :--- | | GCR | $254,392 | $280,379 | $43,200 | $38,622 | | ODR | 261,958 | 216,403 | 76,090 | 55,119 | | Total | $516,350 | $496,782 | $119,290 | $93,741 | [Note 13 – Commitments and Contingencies](index=99&type=section&id=Note%2013%20%E2%80%93%20Commitments%20and%20Contingencies) - Management believes the ultimate resolution of various legal proceedings will not materially affect its financial position[514](index=514&type=chunk) - Surety bonds outstanding were approximately **$90.9 million** as of December 31, 2023[516](index=516&type=chunk) - Many craft labor employees are covered by collective bargaining agreements, requiring contributions to multi-employer pension plans (MEPPs)[517](index=517&type=chunk) Self-Insurance Liability (as of December 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Current liability — workers' compensation and general liability | $188 | $158 | | Current liability — medical and dental | 819 | 557 | | Non-current liability | 645 | 343 | | Total liability | $1,652 | $1,058 | | Restricted cash | $65 | $113 | [Note 14 - Leases](index=101&type=section&id=Note%2014%20-%20Leases) - The company leases real estate, trucks, and other equipment, classifying them as operating or finance leases[522](index=522&type=chunk) - Related party operating leases were entered into with former owners of acquired entities[524](index=524&type=chunk)[525](index=525&type=chunk)[526](index=526&type=chunk) - The Southern California sublease generated **$1.2 million in income** in 2023[529](index=529&type=chunk) Lease Assets and Liabilities (as of December 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Total lease assets | $29,288 | $25,690 | | Total lease liabilities | $32,362 | $29,510 | Lease Costs (Years Ended December 31) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Operating lease cost | $4,734 | $5,182 | | Finance lease cost | $3,137 | $2,951 | | Total lease cost | $7,871 | $8,133 | [Note 15 – Retirement Plan](index=104&type=section&id=Note%2015%20%E2%80%93%20Retirement%20Plan) - The company maintains a 401(k) plan, with mandatory contributions of **$2.6 million in 2023** and $2.4 million in 2022[536](index=536&type=chunk) - No discretionary profit sharing contributions were made for 2023 or 2022[536](index=536&type=chunk) [Note 16 – Multiemployer Pension Plans](index=104&type=section&id=Note%2016%20%E2%80%93%20Multiemployer%20Pension%20Plans) - The company participates in approximately 40 multiemployer pension plans (MEPPs) for union employees[537](index=537&type=chunk) - Total contributions to MEPPs were **$11.6 million in 2023**, down from $12.6 million in 2022[542](index=542&type=chunk) - Some MEPPs are in 'critical' or 'endangered' status, potentially leading to increased contribution rates or withdrawal liabilities[540](index=540&type=chunk) Selected Multiemployer Pension Plans (2023 PPA Zone Status) | Pension Fund | 2023 PPA Zone Status | 2022 PPA Zone Status | FIP/RP Status | 2023 Contributions ($M) | 2022 Contributions ($M) | | :--- | :--- | :--- | :--- | :--- | :--- | | Plumbers and Pipefitters Local Union No 43 | Green | Green | N/A | 1.50 | 1.21 | | Pipefitters Local 636 Defined Benefit Pension Fund | Green | Green | N/A | 1.44 | 1.48 | | Sheet Metal Workers Local Union No 80 Pension Fund | Green | Green | N/A | 1.26 | 1.25 | | Plumbers No 9 Benefit Fund Pipefitter | Green | Yellow | Implemented | 1.18 | 1.37 | | Sheet Metal Workers' National Pension Fund | Green | Green | N/A | 0.54 | 0.79 | | Plumbers & Pipefitters Local No 20 Pension Fund | Red | Red | Implemented | 0.63 | 0.54 | [Note 17 – Management Incentive Plans](index=107&type=section&id=Note%2017%20%E2%80%93%20Management%20Incentive%20Plans) - The Omnibus Incentive Plan allows for granting various equity awards to encourage profitability and growth[547](index=547&type=chunk)[548](index=548&type=chunk) - Stock-based compensation expense for service-based RSUs was **$1.5 million in 2023**[549](index=549&type=chunk) - Stock-based compensation expense for performance-based RSUs (PRSUs) was **$3.4 million in 2023**[552](index=552&type=chunk)[553](index=553&type=chunk) - Market-based RSUs (MRSUs) expired on July 16, 2022, as the market condition was not achieved[555](index=555&type=chunk)[556](index=556&type=chunk) - Total recognized stock-based compensation expense was **$4.9 million in 2023** and $2.7 million in 2022[557](index=557&type=chunk) [Note 18 – Subsequent Events](index=109&type=section&id=Note%2018%20%E2%80%93%20Subsequent%20Events) - On March 13, 2024, the company amended its credit agreement, increasing the L/C Sublimit to $10.0 million[558](index=558&type=chunk) [Changes In and Disagreements with Accountants on Accounting and Financial Disclosure](index=109&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with accountants [Controls and Procedures](index=109&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - Management concluded that **disclosure controls and procedures were effective** as of December 31, 2023[560](index=560&type=chunk) - Management also concluded that **internal control over financial reporting was effective** as of December 31, 2023, based on the COSO framework[562](index=562&type=chunk) - The assessment of internal control excluded recently acquired businesses, ACME and Industrial Air[304](index=304&type=chunk) - There were no material changes in internal control over financial reporting during the fourth quarter of 2023[561](index=561&type=chunk) [Other Information](index=110&type=section&id=Item%209B.%20Other%20Information) A class action lawsuit was dismissed as moot, with the company agreeing to pay $0.3 million in attorneys' fees - A putative class action lawsuit regarding the record date for the 2022 Annual Meeting was dismissed as moot[565](index=565&type=chunk)[567](index=567&type=chunk)[568](index=568&type=chunk) - The company agreed to pay **$0.3 million** in attorneys' fees and expenses to resolve the matter[568](index=568&type=chunk) - No Rule 10b5-1 trading plans were adopted or terminated by executive officers and directors during Q4 2023[570](index=570&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=110&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) The company states that this disclosure is not applicable Part III [Directors, Executive Officers and Corporate Governance](index=111&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This item incorporates by reference information from the company's 2024 Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement[573](index=573&type=chunk) - The company's Code of Ethics is available on its investor relations website[574](index=574&type=chunk) [Executive Compensation](index=111&type=section&id=Item%2011.%20Executive%20Compensation) This item incorporates by reference information from the company's 2024 Proxy Statement - Information on executive compensation is incorporated by reference from the company's 2024 Proxy Statement[576](index=576&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=111&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This item incorporates by reference information from the company's 2024 Proxy Statement - Information on security ownership and equity compensation plans is incorporated by reference from the company's 2024 Proxy Statement[577](index=577&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=111&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) This item incorporates by reference information from the company's 2024 Proxy Statement - Information on related person transactions and director independence is incorporated by reference from the company's 2024 Proxy Statement[578](index=578&type=chunk) [Principal Accountant Fees and Services](index=111&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This item incorporates by reference information from the company's Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the company's Proxy Statement[579](index=579&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=112&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules filed as part of the 10-K report - The report includes a comprehensive list of exhibits, such as merger agreements, organizational documents, and credit agreements[581](index=581&type=chunk)[582](index=582&type=chunk)[583](index=583&type=chunk)[586](index=586&type=chunk) - Financial statement schedules are omitted as the information is included in the financial statements or notes thereto[581](index=581&type=chunk)[584](index=584&type=chunk) [Form 10-K Summary](index=115&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company states that this item is not applicable

FOR IMMEDIATE RELEASE Limbach Holdings, Inc. Reports Fourth Quarter and 2023 Results Owner Direct Relationships ("ODR") Segment Revenue up 22.8% Year-over-Year for Q4 and 21.1% for the Year ODR Segment Accounted for 55.1% of Revenue and 71.1% of Consolidated Gross Profit for the Quarter Consolidated Gross Margin Increased to 23.3% for the Quarter and 23.1% for the Year Year-end Cash and Cash Equivalents of $59.8 million WARRENDALE, PA – March 13, 2024 – Limbach Holdings, Inc. (Nasdaq: LMB) ("Limbach" or the ...

Financial Performance & Guidance - The company projects revenue between $490 million and $520 million and adjusted EBITDA between $42 million and $45 million[9] - TTM Adjusted EBITDA as of September 30, 2023, was $45.8 million[47] - The company received $15.6 million from the settlement of an outstanding claim during the quarter[21] Strategic Initiatives & Acquisitions - The company is focused on expanding the ODR (Owner Direct Relationships) segment, targeting annual growth in the "low teens"[17] - Limbach acquired ACME, expecting it to contribute $10 million in revenue and over $1 million in EBITDA on a full-year basis[6] - Limbach acquired Industrial Air for $13.5 million in cash, with potential earn-outs of $6.5 million over 2024/2025, expecting it to contribute $30 million in revenue and $4 million in EBITDA on a full year basis[69, 84] Balance Sheet & Capital Allocation - As of September 30, 2023, the company had $57.5 million in cash and cash equivalents and a net cash position of $35.2 million[47, 14] - The company has a credit revolver capacity of $50 million, with $10 million borrowed as of September 30, 2023[47] Segment Performance - In Q3 2023, ODR revenue was $65.8 million, compared to $59.7 million in Q3 2022, representing a 4.4% increase[13] - Gross profit from ODR in Q3 2023 was $19.3 million, with a margin of 29.3%, compared to $15.2 million in Q3 2022, with a margin of 25.7%, representing a 33.6% increase[13]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) 797 Commonwealth Drive, Warrendale, Pennsylvania 15086 (Address of principal executive offices) (Zip Code) Delaware, USA 46-5399422 (I.R.S. Employer Id ...

Financial Data and Key Metrics Changes - The company reported consolidated top line growth of 7.5%, with ODR revenues up 18.1% year-over-year, while GCR revenue remained flat [23][39] - Consolidated gross margin for the second quarter was 22.8%, with GCR gross margin at 17.1% and ODR gross margin at 29.3% [44] - Free cash flow for the quarter was $8.8 million, approximately 74% of adjusted EBITDA [7] Business Line Data and Key Metrics Changes - The ODR segment accounted for 47.1% of total consolidated revenue, an increase from 42.9% the previous year [23] - The company is focusing on increasing the proportion of revenues from the ODR segment to enhance consolidated gross margin [21][47] Market Data and Key Metrics Changes - The company has a strong balance sheet with cash and cash equivalents of $45.9 million and a net cash position of $23.6 million at quarter end [24] - Demand in mission-critical vertical markets remains strong, with a focus on maintaining durable demand through emergency and on-demand services [29][54] Company Strategy and Development Direction - The strategic plan focuses on three primary value drivers: segment mix, evolved offerings for customers, and a strategic acquisition plan [3][48] - The company is pursuing tuck-in acquisitions to expand market share and larger acquisitions to enter new geographies [48] - The acquisition of ACME Industrial is expected to enhance customer relationships and market position in the hydroelectric sector [22] Management Comments on Operating Environment and Future Outlook - Management reiterated revenue guidance for 2023 in the range of $490 million to $520 million and adjusted EBITDA guidance increased to $38 million to $41 million [10][53] - The company is adapting to new supply chain dynamics and equipment availability challenges, emphasizing the importance of maintaining strong demand [55] Other Important Information - SG&A expenses for the quarter were $20.4 million, down from $21.1 million in the first quarter but up from $18.7 million year-over-year [6] - The company is actively enhancing its social media presence to showcase projects and services [12][36] Q&A Session Summary Question: Demand growth in ODR business - Management noted strong demand across both direct projects and maintenance, with a focus on consultative partnerships with clients [30][40] Question: Future EBITDA margin targets - Management indicated that while strong progress has been made on EBITDA margins, growth will continue to be driven by revenue increases rather than a fixed target [57]