Limbach(US:LMB)2023-08-10 13:35Business Model & Strategy - Limbach aims to be a one-stop-shop for building owners, maximizing their investment in mission-critical assets through full life-cycle capabilities[2, 9] - The company's strategy involves a shift towards Owner-Direct Relationships (ODR), targeting a gross margin range of 25-28%, compared to General Contractor Relationships (GCR) with a target of 12-15%[34, 35] - Limbach is evolving its business model to focus on recurring revenue from building maintenance services, driving higher margins in the ODR segment[9] - The company is positioned to benefit from customer spending flexibility between Capital and Operating Budgets, providing macroeconomic resilience[9] Financial Performance & Targets - As of June 30, 2023, Limbach had $45.9 million in cash and cash equivalents and $23.6 million in net cash, with TTM adjusted EBITDA of $42.4 million[9] - From FY 2018 to FY 2022, Limbach's gross margin expanded by nearly 58% to 18.9%, driving adjusted EBITDA margin up more than 5x from 1.6% to 8.3%[39] - Limbach's FY 2023 revenue guidance is between $490 million and $520 million, with adjusted EBITDA between $38 million and $41 million[66] Growth & Acquisitions - Limbach is pursuing a three-pillar approach to scale the business: margin expansion through evolved offerings, producing better ODR margin opportunities, and growing revenue and market share[26, 31] - The company is targeting acquisitions with total revenue between $25 million and $40 million, with a mix of ODR and GCR revenue[44] - A recent acquisition, ACME, is expected to contribute $10 million in revenue and over $1 million in EBITDA annually[62] Market Trends & Opportunities - Strong sector tailwinds are driven by building owners focusing on ROIC, including maintenance and retrofit of existing facilities[9] - Limbach serves mission-critical end markets, including healthcare, data centers, industrial, higher education, cultural & entertainment, and life sciences[11, 64] - The company is positioned to capitalize on industry trends such as reshoring, the CHIPS & Science Act, and the Build America Buy America Act (BABAA)[6]