Limbach(LMB) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the reporting period Item 1. Financial Statements (Unaudited) This section presents Limbach Holdings, Inc.'s unaudited condensed consolidated financial statements and comprehensive notes for Q1 2022 and FY 2021 Condensed Consolidated Balance Sheets This table presents the company's financial position, detailing assets, liabilities, and stockholders' equity at period-end Condensed Consolidated Balance Sheets (in thousands): | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | ASSETS | | | | Total current assets | $209,995 | $192,906 | | Total assets | $281,003 | $267,512 | | LIABILITIES | | | | Total current liabilities | $141,590 | $129,742 | | Total liabilities | $194,132 | $179,674 | | STOCKHOLDERS' EQUITY | | | | Total stockholders' equity | $86,871 | $87,838 | | Total liabilities and stockholders' equity | $281,003 | $267,512 | Condensed Consolidated Statements of Operations This table outlines the company's financial performance, including revenue, gross profit, operating loss, and net loss for the reporting periods Condensed Consolidated Statements of Operations (in thousands, except per share data): | Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $114,822 | $113,344 | | Gross profit | $18,340 | $17,229 | | Operating loss | $(793) | $(20) | | Loss before income taxes | $(2,132) | $(3,317) | | Net loss | $(1,516) | $(2,282) | | Basic EPS | $(0.15) | $(0.25) | | Diluted EPS | $(0.15) | $(0.25) | Condensed Consolidated Statements of Stockholders' Equity This table details changes in stockholders' equity, including common stock, additional paid-in capital, and retained earnings Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share amounts): | Item | Balance at Dec 31, 2021 | Stock-based compensation | Shares issued related to vested RSUs | Tax withholding related to vested RSUs | Shares issued related to ESPP | Net loss | Balance at Mar 31, 2022 | | :----------------------------------- | :---------------------- | :----------------------- | :--------------------------------- | :------------------------------------- | :--------------------------- | :------- | :---------------------- | | Common Stock (shares outstanding) | 10,304,242 | — | 105,928 | — | 12,898 | — | 10,423,068 | | Common Stock (par value amount) | $1 | — | — | — | — | — | $1 | | Additional paid-in capital | $85,004 | $599 | — | $(148) | $98 | — | $85,553 | | Retained Earnings (Accumulated deficit) | $2,833 | — | — | — | — | $(1,516) | $1,317 | | Stockholders' equity | $87,838 | $599 | — | $(148) | $98 | $(1,516) | $86,871 | Condensed Consolidated Statements of Cash Flows This table summarizes cash flows from operating, investing, and financing activities, showing the net change in cash Condensed Consolidated Statements of Cash Flows (in thousands): | Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(2,965) | $(17,375) | | Net cash used in (provided by) investing activities | $(130) | $5 | | Net cash provided by financing activities | $6,685 | $12,409 | | (Decrease) increase in cash, cash equivalents and restricted cash | $3,590 | $(4,961) | | Cash, cash equivalents and restricted cash, end of period | $18,179 | $37,299 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1 – Business and Organization This note describes Limbach Holdings, Inc.'s core business as an integrated building systems solutions firm and its operating segments - Limbach Holdings, Inc. is an integrated building systems solutions firm specializing in HVAC, mechanical, electrical, plumbing, and controls systems. It operates in two segments: General Contractor Relationships (GCR) for new construction/renovation projects and Owner Direct Relationships (ODR) for maintenance/service projects[20][21] Note 2 – Significant Accounting Policies This note outlines the accounting principles, estimates, and recent accounting pronouncements applied in preparing the financial statements - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim information and Form 10-Q requirements for smaller reporting companies, with certain disclosures condensed or omitted. Key estimates include revenue recognition on construction contracts, costs, intangibles, property and equipment, fair value accounting for acquisitions, insurance reserves, and contingencies[23][24][25] - The Company early adopted ASU 2021-08 in December 2021, which changes the accounting for contract assets and liabilities acquired in business combinations to apply ASC 606[28] - The Company is evaluating the impact of ASU 2020-04 and ASU 2021-01 on reference rate reform (LIBOR to SOFR transition) on its financial statements[30][31] Note 3 – Acquisitions This note details the acquisition of Jake Marshall, LLC, including the purchase price, contingent earnout, and purchase price allocation - On December 2, 2021, Limbach Holdings, Inc. acquired Jake Marshall, LLC and Coating Solutions, LLC (the "Jake Marshall Transaction") for a closing purchase price of $21.3 million, expanding its market share in existing product and service lines[33][34] - The acquisition included a contingent earnout provision of up to $6.0 million, payable in two tranches, based on the acquired companies' gross profit performance in 2022 and 2023[34] Jake Marshall Transaction Purchase Price Allocation (in thousands): | Item | Allocation | | :----------------------------------- | :--------- | | Total Consideration | $24,402 | | Fair value of assets acquired | $22,848 | | Fair value of liabilities assumed | $3,687 | | Goodwill (allocated to ODR segment) | $5,241 | Note 4 – Revenue from Contracts with Customers This note explains the company's revenue recognition policies and presents contract assets and liabilities - Revenue is primarily generated from fixed-price construction contracts (HVAC, plumbing, electrical) recognized on a cost-to-cost method, and time and materials contracts recognized as services are performed[37] Contract Assets (in thousands): | Item | March 31, 2022 | December 31, 2021 | Change | | :----------------------------------- | :------------- | :---------------- | :----- | | Costs in excess of billings and estimated earnings | $41,949 | $47,447 | $(5,498) | | Retainage receivable | $33,594 | $36,416 | $(2,822) | | Total contract assets | $75,543 | $83,863 | $(8,320) | Contract Liabilities (in thousands): | Item | March 31, 2022 | December 31, 2021 | Change | | :----------------------------------- | :------------- | :---------------- | :----- | | Billings in excess of costs and estimated earnings | $34,053 | $26,293 | $7,760 | | Provisions for losses | $391 | $419 | $(28) | | Total contract liabilities | $34,444 | $26,712 | $7,732 | Net Underbilling Position (in thousands): | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Revenue earned on uncompleted contracts | $679,170 | $758,450 | | Less: Billings to date | $(671,274) | $(737,296) | | Net underbilling | $7,896 | $21,154 | Total Net Gross Profit Write-downs (in thousands): | Period | Total Net Gross Profit Write-downs | | :----------------------------------- | :------------------------------- | | Three months ended March 31, 2022 | $(1,400) | | Three months ended March 31, 2021 | $(500) | Note 5 – Goodwill and Intangibles This note provides details on the company's goodwill and other intangible assets, including amortization and impairment assessments - Goodwill remained at $11.4 million as of March 31, 2022, and December 31, 2021, entirely associated with the ODR segment. No impairment charges were recognized for goodwill or intangible assets during the three months ended March 31, 2022 or 2021[50][51] Net Intangible Assets (excluding goodwill, in thousands): | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Total amortized intangible assets | $6,548 | $6,947 | | Total unamortized intangible assets (Limbach trade name) | $9,960 | $9,960 | | Total amortized and unamortized assets | $16,508 | $16,907 | | Total amortization expense (3 months ended March 31) | $400 | $100 | Note 6 – Debt This note details the company's long-term debt, including term loans, revolving credit facilities, and compliance with covenants Long-term Debt (in thousands): | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | A&R Wintrust Term Loan | $33,024 | $34,881 | | A&R Wintrust Revolving Loan | $9,400 | $0 | | Finance leases | $5,317 | $5,132 | | Total debt | $47,741 | $40,013 | | Less: Current portion of long-term debt | $(13,222) | $(9,879) | | Less: Unamortized discount and debt issuance costs | $(299) | $(318) | | Long-term debt | $34,220 | $29,816 | - The Company refinanced its 2019 debt in February 2021, resulting in a $2.0 million loss on early extinguishment of debt. The new Wintrust Credit Agreement provided a $30.0 million term loan and a $25.0 million revolving credit facility[54][64] - In conjunction with the Jake Marshall Transaction, the Wintrust Credit Agreement was amended (A&R Wintrust Credit Agreement) to increase the term loan to $35.5 million and adjust covenants, including the transition from LIBOR to Term SOFR as a benchmark rate[68][69] - As of March 31, 2022, the Company had $9.4 million outstanding on the A&R Wintrust Revolving Loan and was in compliance with all financial maintenance covenants[72][73] Note 7 – Equity This note provides information on the company's authorized capital, outstanding warrants, and the Omnibus Incentive Plan - The Company's authorized capital includes 100,000,000 shares of common stock and 1,000,000 shares of preferred stock[74] - As of March 31, 2022, 1,229,643 warrants were outstanding, including $15 Exercise Price Sponsor Warrants and Merger Warrants. Public, Private, and Additional Merger Warrants expired on July 20, 2021[75][76] - The Omnibus Incentive Plan was amended in 2021 to increase authorized shares for awards to 2,250,000 and extend its term[78] Note 8 – Fair Value Measurements This note discusses the fair value of financial instruments, including debt and contingent consideration, using various valuation techniques - The Company's financial instruments, including cash, receivables, and payables, approximate fair value due to short-term maturities. The A&R Wintrust Term Loan and Revolving Loan also approximate fair value due to variable rates[83] - The fair value of the A&R Wintrust Term Loan was $33.0 million and the A&R Wintrust Revolving Loan was $9.4 million as of March 31, 2022, determined using discounted estimated future cash flows (Level 3 inputs)[83] - Contingent consideration for the Jake Marshall Transaction was recognized at $3.1 million, valued using the Monte Carlo Simulation method (Level 3 measurement) with a 6.83% discount rate. No changes in fair value were recognized during Q1 2022[84] Note 9 – Earnings per Share This note provides the calculation of basic and diluted earnings per share, including the impact of anti-dilutive securities Earnings Per Share (in thousands, except per share amounts): | Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(1,516) | $(2,282) | | Weighted average shares outstanding – basic | 10,421 | 9,218 | | Weighted average shares outstanding – diluted | 10,421 | 9,218 | | Basic EPS | $(0.15) | $(0.25) | | Diluted EPS | $(0.15) | $(0.25) | - For both periods, 153,741 (2022) and 603,847 (2021) weighted average anti-dilutive securities (warrants, ESPP shares, nonvested RSUs) were excluded from diluted EPS computation[87] Note 10 – Income Taxes This note details the company's income tax provision, effective tax rates, and discrete tax items - The Company is taxed as a C corporation. The effective tax benefit rate decreased to 28.9% for Q1 2022 from 31.2% for Q1 2021, primarily due to certain discrete tax items[89][91] - Discrete tax items related to excess tax benefits from stock-based compensation were approximately $0.1 million in Q1 2022 and $0.2 million in Q1 2021[91] Note 11 – Operating Segments This note provides financial information for the General Contractor Relationships (GCR) and Owner Direct Relationships (ODR) segments - The Company operates in two segments: General Contractor Relationships (GCR) and Owner Direct Relationships (ODR). Performance is evaluated based on income from operations after allocating corporate office operating expenses[93][94] Condensed Consolidated Segment Information (in thousands): | Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue: | | | | GCR | $71,932 | $84,804 | | ODR | $42,890 | $28,540 | | Total revenue | $114,822 | $113,344 | | Gross profit: | | | | GCR | $8,358 | $9,395 | | ODR | $9,982 | $7,834 | | Total gross profit | $18,340 | $17,229 | | Operating loss: | | | | GCR | $(207) | $281 | | ODR | $412 | $480 | | Corporate | $(998) | $(781) | | Total operating loss | $(793) | $(20) | Note 12 – Leases This note details the company's lease arrangements, including lease assets, liabilities, and related costs - The Company leases real estate, trucks, and other equipment. Short-term leases (12 months or less) are expensed on a straight-line basis and not recorded on the balance sheet[97] - In Q1 2022, the Company entered into an amendment to its Southern California sublease, expanding the subleased premises and increasing annual base rent to approximately $0.8 million. It also terminated its Pittsburgh office lease, incurring an $0.8 million loss[102][103][104] Lease Amounts on Condensed Consolidated Balance Sheets (in thousands): | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Total lease assets | $22,830 | $25,035 | | Total lease liabilities | $23,866 | $26,074 | Total Lease Cost (in thousands): | Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Operating lease cost | $1,398 | $1,274 | | Finance lease cost (Amortization + Interest) | $717 | $760 | | Total lease cost | $2,115 | $2,034 | Note 13 – Commitments and Contingencies This note outlines the company's legal proceedings, surety bonds, and self-insurance programs - The Company is involved in various legal proceedings in the ordinary course of business, including disputes with Bernards Bros. Inc. ($3.0M+ alleged damages), LA Excavating, Inc. ($1.0M alleged damages), and Suffolk Construction Company, Inc. (overbilling claim of $0.3M+). Management believes a material adverse effect on financial position, results of operations, or cash flows is not probable or estimable for these matters[107][108][109][110][111] - As of March 31, 2022, the Company had approximately $134.9 million in surety bonds outstanding, securing payment and performance obligations under contracts[112] - The Company is substantially self-insured for workers' compensation, general liability, medical, and dental claims, accruing for both reported and incurred but not reported claims. Restricted cash of $113,000 is set aside for workers' compensation and general liability claims[114][115][117] Note 14 – Management Incentive Plans This note describes the Omnibus Incentive Plan and provides activity details for service-based and performance-based restricted stock units - The Omnibus Incentive Plan, amended in 2021, reserves 2,250,000 shares for equity awards to encourage profitability, growth, and individual performance[118][119] Service-Based RSU Activity (3 months ended March 31, 2022): | Item | Awards | Weighted Average Grant Date Fair Value | | :----------------------------------- | :----- | :----------------------------------- | | Unvested at December 31, 2021 | 266,089 | $8.45 | | Granted | 180,739 | $9.00 | | Vested | (120,401) | $7.43 | | Forfeited | (10,958) | $9.29 | | Unvested at March 31, 2022 | 315,469 | $9.13 | Performance-Based RSU (PRSU) Activity (3 months ended March 31, 2022): | Item | Awards | Weighted Grant Date Average Fair Value | | :----------------------------------- | :----- | :----------------------------------- | | Unvested at December 31, 2021 | 280,700 | $9.46 | | Granted | 249,885 | $7.17 | | Forfeited | (6,500) | $9.04 | | Unvested at March 31, 2022 | 524,085 | $8.38 | | Stock-based compensation expense (3 months ended March 31) | $200 | $200 | - Total recognized stock-based compensation expense was $0.6 million for Q1 2022, down from $0.7 million in Q1 2021. Unrecognized expense related to unvested RSUs was $5.0 million at March 31, 2022, expected to be recognized over 1.97 years[126] Note 15 – Subsequent Events This note discloses a post-period amendment to the A&R Wintrust Credit Agreement, modifying certain financial definitions - On May 5, 2022, the Company entered into a First Amendment to the A&R Wintrust Credit Agreement, modifying definitions of EBITDA, Excess Cash Flow, Total Funded Debt, and Disposition to allow for certain restructuring charges, exclude earnout payments, and address capitalized lease obligations and sale-leaseback of real property[127] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of the company's financial performance, condition, and liquidity for Q1 2022, highlighting key drivers and external factors Overview This section provides a high-level introduction to Limbach Holdings, Inc.'s business model and operating segments - Limbach Holdings, Inc. is an integrated building systems solutions firm specializing in HVAC, mechanical, electrical, plumbing, and control systems for commercial, institutional, and light industrial markets across various U.S. regions[130] - The Company operates in two segments: General Contractor Relationships (GCR) for new construction/renovation and Owner Direct Relationships (ODR) for maintenance/service, primarily under fixed-price, modified fixed-price, and time and material contracts[131] Key Components of Condensed Consolidated Statements of Operations This section defines and explains the primary components of the company's condensed consolidated statements of operations - Revenue is primarily from fixed-price construction contracts (HVAC, plumbing, electrical) recognized on a cost-to-cost method, and time and materials contracts recognized as services are performed[132] - Cost of revenue includes labor, equipment, material, subcontract, and other job costs, with historical fluctuations as a percentage of contract revenue[135] - Selling, General and Administrative (SG&A) expenses consist mainly of personnel costs for administrative, estimating, and support functions, as well as non-personnel costs like travel, professional fees, and public company compliance expenses[136] - Amortization of intangibles includes charges for favorable leasehold interests and customer relationships, with an additional $5.7 million in intangible assets recognized from the Jake Marshall Transaction[137] - Other (expenses) income primarily includes interest expense, loss on early termination of operating lease, loss on early debt extinguishment, and losses/gains on disposition of property and warrant liability changes[138] - Income tax provision is calculated based on the estimated annual effective tax rate for interim periods, with adjustments for discrete items[139][140] - Operating segments (GCR and ODR) are managed and evaluated based on income from operations after allocating corporate expenses, with interest expense not allocated due to corporate debt management[141][142][143] Comparison of Results of Operations for the three months ended March 31, 2022 and 2021 This section analyzes the company's financial performance for Q1 2022 compared to Q1 2021, detailing changes in revenue, gross profit, and expenses Operating Results Summary (in thousands, except percentages): | Item | 2022 | % of Total Revenue | 2021 | % of Total Revenue | | :----------------------------------- | :----- | :----------------- | :----- | :----------------- | | Total revenue | $114,822 | 100.0% | $113,344 | 100.0% | | Total gross profit | $18,340 | 16.0% | $17,229 | 15.2% | | Total selling, general and administrative | $18,734 | 16.3% | $17,145 | 15.1% | | Amortization of intangibles | $399 | 0.3% | $104 | 0.1% | | Total operating loss | $(793) | (0.7)% | $(20) | —% | | Total consolidated loss before income taxes | $(2,132) | (1.9)% | $(3,317) | (2.9)% | | Net loss | $(1,516) | (1.3)% | $(2,282) | (2.0)% | Revenue by Segment (in thousands, except percentages): | Segment | 2022 | 2021 | Increase/(Decrease) | % Change | | :----------------------------------- | :----- | :----- | :------------------ | :------- | | GCR | $71,932 | $84,804 | $(12,872) | (15.2)% | | ODR | $42,890 | $28,540 | $14,350 | 50.3% | | Total revenue | $114,822 | $113,344 | $1,478 | 1.3% | * GCR revenue decreased due to declines in Michigan, Mid-Atlantic, and Southern California, and a strategic shift to smaller, shorter projects. The Company expects to fully exit Southern California in 2022 * ODR revenue increased due to accelerated growth focus. Both segments benefited from the Jake Marshall Transaction, contributing $4.5 million (GCR) and $7.2 million (ODR) in revenue * Supply chain issues delayed equipment delivery, pushing revenue to future periods[145][146] Gross Profit by Segment (in thousands, except percentages): | Segment | 2022 | 2021 | Increase/(Decrease) | % Change | | :----------------------------------- | :----- | :----- | :------------------ | :------- | | GCR | $8,358 | $9,395 | $(1,037) | (11.0)% | | ODR | $9,982 | $7,834 | $2,148 | 27.4% | | Total gross profit | $18,340 | $17,229 | $1,111 | 6.4% | | Total gross profit as % of consolidated total revenue | 16.0% | 15.2% | | | * GCR gross profit decreased due to lower revenue, despite slightly higher margins * ODR gross profit increased due to higher revenue, despite lower margins * Overall gross profit percentage increased due to a higher mix of ODR segment work[147] Selling, General and Administrative (SG&A) Expense (in thousands, except percentages): | Segment | 2022 | 2021 | Increase/(Decrease) | % Change | | :----------------------------------- | :----- | :----- | :------------------ | :------- | | GCR | $8,565 | $9,114 | $(549) | (6.0)% | | ODR | $9,570 | $7,354 | $2,216 | 30.1% | | Corporate | $599 | $677 | $(78) | (11.5)% | | Total SG&A | $18,734 | $17,145 | $1,589 | 9.3% | | Total SG&A as % of consolidated total revenue | 16.3% | 15.1% | | | * Increase primarily due to $1.4 million from Jake Marshall Transaction, $0.6 million in travel/entertainment, and $0.3 million in professional fees * Partially offset by $0.5 million decrease in payroll related expenses from Southern California branch wind-down[151] Amortization of Intangibles (in thousands, except percentages): | Item | 2022 | 2021 | Increase/(Decrease) | % Change | | :----------------------------------- | :----- | :----- | :------------------ | :------- | | Amortization of intangibles (Corporate) | $399 | $104 | $295 | 283.7% | * Increase due to approximately $0.3 million in amortization expense from intangible assets acquired in the Jake Marshall Transaction[152] Other Expenses (in thousands, except percentages): | Item | 2022 | 2021 | Increase/(Decrease) | % Change | | :----------------------------------- | :----- | :----- | :------------------ | :------- | | Interest expense, net | $(486) | $(1,264) | $778 | (61.6)% | | Loss on early termination of operating lease | $(817) | — | $(817) | 100.0% | | Loss on early debt extinguishment | — | $(1,961) | $1,961 | 100.0% | | Total other expenses | $(1,339) | $(3,297) | $1,958 | (59.4)% | * Reduction in interest expense due to refinancing higher interest rate debt with lower interest rate debt * Decrease in total other expenses primarily due to prior year's $2.0 million loss on early debt extinguishment * Q1 2022 includes an $0.8 million loss from early termination of the Pittsburgh operating lease[154] - Income tax benefit was $0.6 million in Q1 2022 (28.9% effective rate) compared to $1.0 million in Q1 2021 (31.2% effective rate)[155] GCR and ODR Backlog Information This section provides details on the company's backlog for both General Contractor Relationships (GCR) and Owner Direct Relationships (ODR) segments - Backlog represents estimated revenue on uncompleted contracts, including unexercised contract options. It differs from remaining performance obligations by including these options[156] Backlog (in millions): | Segment | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | GCR backlog | $340.7 | $337.2 | | ODR backlog | $106.9 | $98.0 | | Total backlog expected to be recognized by end of 2022 | $294.7 | | COVID-19 Update This section discusses the ongoing impact of the COVID-19 pandemic on the company's operations, supply chain, and labor - The COVID-19 pandemic continues to cause disruptions, including supply chain issues, material shortages, and escalating commodity prices, which impacted Q1 2022 by delaying equipment delivery and pushing revenue to future periods[158][159][160] - Client requirements for vaccinated workforces and potential mandates for employee vaccination or testing could lead to labor disruptions and attrition[161] Seasonality, Cyclicality and Quarterly Trends This section describes how weather conditions and project cycles influence the company's revenue and gross profit - Severe weather in northern climates can slow construction productivity, shifting revenue and gross profit. Mild weather reduces demand for maintenance, while severe weather increases it. Operations also experience mild cyclicality, with increased maintenance and capital projects in Q3 and Q4[163] Effect of Inflation and Tariffs This section addresses the impact of higher material costs and supply chain delays, along with mitigation strategies - The Company has experienced higher material costs and supply chain delays for equipment and service vehicles, which are expected to persist through 2022. Mitigation strategies include incorporating cost escalation factors into bids and using fixed-price purchase orders[164] Liquidity and Capital Resources This section discusses the company's cash flow, working capital, debt, and ability to meet its financial obligations - Liquidity needs are primarily for working capital, capital expenditures, and strategic investments, historically funded by operating activities and borrowings[165] Summary Cash Flow Information (in thousands): | Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash (used in) provided by operating activities | $(2,965) | $(17,375) | | Net cash (used in) provided by investing activities | $(130) | $5 | | Net cash provided by financing activities | $6,685 | $12,409 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $3,590 | $(4,961) | Summarized Working Capital Information (in thousands, except ratios): | Item | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Current assets | $209,995 | $192,906 | | Current liabilities | $(141,590) | $(129,742) | | Net working capital | $68,405 | $63,164 | | Current ratio | 1.48 | 1.49 | - The Company believes its current cash balance ($18.1 million as of March 31, 2022), future operating cash flows, and available borrowing under the A&R Wintrust Revolving Loan ($12.3 million available) will be sufficient to meet capital requirements for the next 12 months[181] Available Funding Capacity (in thousands): | Item | Amount | | :----------------------------------- | :----- | | Cash & cash equivalents | $18,066 | | Net credit agreement capacity available | $12,300 | | Total available funding capacity | $30,366 | - Surety bonding capacity increased from $700.0 million to $800.0 million in January 2022, providing a competitive advantage. Outstanding surety bonds were $134.9 million as of March 31, 2022[186] - The Company participates in approximately 40 multiemployer pension plans (MEPPs) and could incur additional liabilities if plans become underfunded or if it withdraws. Some MEPPs are in 'critical' status, but no significant liabilities are currently known[189][191][192] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Limbach Holdings, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[193] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of March 31, 2022. No material changes in internal control over financial reporting were identified during the period - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of March 31, 2022[194] - No material changes in internal control over financial reporting occurred during the period covered by this report[195] Part II This section covers legal proceedings, risk factors, equity sales, defaults, and other required disclosures Item 1. Legal Proceedings This section refers to Note 13 for detailed information regarding the Company's legal proceedings, commitments, and contingencies - Information regarding legal proceedings is detailed in Note 13 of the financial statements[199] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2021[200] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company reported no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities and use of proceeds[201] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[202] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[203] Item 5. Other Information The Company reported no other information required under this item - There is no other information to report under this item[204] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, credit agreements, certifications, and XBRL documents Key Exhibits Filed: | Exhibit | Description | | :------ | :---------- | | 3.1 | Second Amended and Restated Certificate of Incorporation | | 3.4 | Amended and Restated Bylaws | | 10.1 | First Amendment and Waiver to the Amended and Restated Credit Agreement, dated as of May 5, 2022 | | 31.1 | Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) | | 31.2 | Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) | | 32.1 | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 | | 32.2 | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 | | 101.INS | XBRL Instance Document | | 101.SCH | XBRL Taxonomy Extension Schema Document | Signature The report is duly signed on behalf of Limbach Holdings, Inc. by Charles A. Bacon, III, Chief Executive Officer, and Jayme L. Brooks, Chief Financial Officer, on May 10, 2022 - The report was signed by Charles A. Bacon, III (CEO) and Jayme L. Brooks (CFO) on May 10, 2022[211]