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, ~~2021~~2022

☐ 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)


Delaware, USA						46-5399422
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

~~1251 Waterfront Place, Suite 201~~797 Commonwealth Drive, ~~Pittsburgh,~~Warrendale, Pennsylvania						~~15222~~15086
(Address of principal executive offices)						(Zip Code)

1-412-359-2100

(Registrant’s telephone number, including area code)

~~Not Applicable~~








1251 Waterfront Place, Suite 201 Pittsburgh, Pennsylvania						15222
(Former Address of principal executive offices)						(Former Zip Code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, par value $0.0001 per share

LMB

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

~~Large accelerated filer~~ ☐ ~~Accelerated filer~~ ☐

~~Non-accelerated filer~~ ☒ ~~Smaller reporting company~~ ☒

~~Emerging growth company~~ ☐

~~Table of Contents~~

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May ~~13, 2021,~~9, 2022, there were ~~10,251,696~~10,423,068 shares of the registrant’s common stock, $0.0001 par value per share, outstanding.

Table of Contents

LIMBACH HOLDINGS, INC.

~~Form 10-Q~~

TABLE OF CONTENTS


Part I.

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021	1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, ~~2021~~2022 and ~~March 31, 2020~~2021	2
	Condensed Consolidated Statement of Stockholders’ Equity for the Three Months Ended March 31, ~~2021~~2022 and ~~March 31, 2020~~2021	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2021~~2022 and ~~March 31, 2020~~2021	4
	Notes to Condensed Consolidated Financial Statements	65
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2624
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4136
Item 4.	Controls and Procedures	4136

Part II.

Item 1.	Legal Proceedings	4237
Item 1A.	Risk Factors	4237
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4237
Item 3.	Defaults Upon Senior Securities	4237
Item 4.	Mine Safety Disclosures	4237
Item 5.	Other Information	4237
Item 6.	Exhibits	4338

Signature		39

Table of Contents

~~Part I~~PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LIMBACH HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(Unaudited)


(in thousands, except share and per share data)	(in thousands, except share and per share data)	March 31, 2021		December 31, 2020		(in thousands, except share and per share data)	March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets
Current assets:						Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	37,186	$	42,147	Cash and cash equivalents	$	18,066	$	14,476
Restricted cash	Restricted cash	113		113		Restricted cash	113		113
Accounts receivable, net		83,155		85,767
Accounts receivable (net of allowance for doubtful accounts of $270 and $263 as of March 31, 2022 and December 31, 2021, respectively)						Accounts receivable (net of allowance for doubtful accounts of $270 and $263 as of March 31, 2022 and December 31, 2021, respectively)	108,969		89,327
Contract assets	Contract assets	69,084		67,098		Contract assets	75,543		83,863
Income tax receivable						Income tax receivable	161		114
Other current assets	Other current assets	6,317		4,292		Other current assets	7,143		5,013
Total current assets	Total current assets	195,855		199,417		Total current assets	209,995		192,906

Property and equipment, net	Property and equipment, net	18,305		19,700		Property and equipment, net	20,759		21,621
Intangible assets, net	Intangible assets, net	11,577		11,681		Intangible assets, net	16,508		16,907
Goodwill	Goodwill	6,129		6,129		Goodwill	11,370		11,370
Operating lease right-of-use assets	Operating lease right-of-use assets	17,900		18,751		Operating lease right-of-use assets	17,719		20,119
Deferred tax asset	Deferred tax asset	6,423		6,087		Deferred tax asset	4,407		4,330
Other assets	Other assets	300		392		Other assets	245		259
Total assets	Total assets	$	256,489	$	262,157	Total assets	$	281,003	$	267,512

LIABILITIES	LIABILITIES					LIABILITIES
Current liabilities
Current liabilities:						Current liabilities:
Current portion of long-term debt	Current portion of long-term debt	$	8,473	$	6,536	Current portion of long-term debt	$	13,222	$	9,879
Current operating lease liabilities	Current operating lease liabilities	4,145		3,929		Current operating lease liabilities	3,762		4,366
Accounts payable, including retainage	Accounts payable, including retainage	57,950		66,763		Accounts payable, including retainage	63,734		63,840
Contract liabilities	Contract liabilities	37,795		46,648		Contract liabilities	34,444		26,712
Accrued income taxes	Accrued income taxes	1,016		1,671		Accrued income taxes	—		501
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	25,132		24,747		Accrued expenses and other current liabilities	26,428		24,444
Total current liabilities	Total current liabilities	134,511		150,294		Total current liabilities	141,590		129,742
Long-term debt	Long-term debt	26,588		36,513		Long-term debt	34,220		29,816
Long-term operating lease liabilities	Long-term operating lease liabilities	14,442		15,459		Long-term operating lease liabilities	14,787		16,576
Other long-term liabilities	Other long-term liabilities	4,150		6,159		Other long-term liabilities	3,535		3,540
Total liabilities	Total liabilities	179,691		208,425		Total liabilities	194,132		179,674
Commitments and contingencies (Note 15)		0		0
Commitments and contingencies (Note 13)						Commitments and contingencies (Note 13)	0		0

STOCKHOLDERS’ EQUITY	STOCKHOLDERS’ EQUITY					STOCKHOLDERS’ EQUITY
Common stock, $0.0001 par value; 100,000,000 shares authorized, 10,248,405 issued and outstanding at March 31, 2021 and 7,926,137 at December 31, 2020		1		1
Common stock, $0.0001 par value; 100,000,000 shares authorized, 10,423,068 issued and outstanding as of March 31, 2022 and 10,304,242 at December 31, 2021						Common stock, $0.0001 par value; 100,000,000 shares authorized, 10,423,068 issued and outstanding as of March 31, 2022 and 10,304,242 at December 31, 2021	1		1
Additional paid-in capital	Additional paid-in capital	82,960		57,612		Additional paid-in capital	85,553		85,004
Accumulated deficit		(6,163)		(3,881)
Retained Earnings						Retained Earnings	1,317		2,833
Total stockholders’ equity	Total stockholders’ equity	76,798		53,732		Total stockholders’ equity	86,871		87,838
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	256,489	$	262,157	Total liabilities and stockholders’ equity	$	281,003	$	267,512

The accompanying notes are an integral part of these condensed consolidated financial statements

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LIMBACH HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)


		Three months ended March 31,					Three Months Ended March 31,
(in thousands, except share and per share data)	(in thousands, except share and per share data)	2021		2020		(in thousands, except share and per share data)		2022		2021
Revenue	Revenue	$	113,344	$	138,772	Revenue		$	114,822	$	113,344
Cost of revenue	Cost of revenue	96,115		120,548		Cost of revenue		96,482		96,115
Gross profit	Gross profit	17,229		18,224		Gross profit		18,340		17,229
Operating expenses:	Operating expenses:					Operating expenses:
Selling, general and administrative	Selling, general and administrative	17,145		16,799		Selling, general and administrative		18,734		17,145
Amortization of intangibles	Amortization of intangibles	104		143		Amortization of intangibles		399		104
Total operating expenses	Total operating expenses	17,249		16,942		Total operating expenses		19,133		17,249
Operating (loss) income		(20)		1,282
Other income (expenses):
Operating loss						Operating loss		(793)		(20)
Other (expenses) income:						Other (expenses) income:
Interest expense, net	Interest expense, net	(1,264)		(2,158)		Interest expense, net		(486)		(1,264)
(Loss) gain on disposition of property and equipment		(86)		29
Loss on disposition of property and equipment						Loss on disposition of property and equipment		(36)		(86)
Loss on early termination of operating lease						Loss on early termination of operating lease		(817)		—
Loss on early debt extinguishment	Loss on early debt extinguishment	(1,961)		0		Loss on early debt extinguishment		—		(1,961)
Gain on change in fair value of warrant liability	Gain on change in fair value of warrant liability	14		161		Gain on change in fair value of warrant liability		—		14
Total other expenses	Total other expenses	(3,297)		(1,968)		Total other expenses		(1,339)		(3,297)
Loss before income taxes	Loss before income taxes	(3,317)		(686)		Loss before income taxes		(2,132)		(3,317)
Income tax benefit	Income tax benefit	(1,035)		(634)		Income tax benefit		(616)		(1,035)
Net loss	Net loss	$	(2,282)	$	(52)	Net loss		$	(1,516)	$	(2,282)

Earnings Per Share (“EPS”)	Earnings Per Share (“EPS”)					Earnings Per Share (“EPS”)
Loss per common share:	Loss per common share:					Loss per common share:
Basic	Basic	$	(0.25)	$	(0.01)	Basic		$	(0.15)	$	(0.25)
Diluted	Diluted	$	(0.25)	$	(0.01)	Diluted		$	(0.15)	$	(0.25)
Weighted average number of shares outstanding:	Weighted average number of shares outstanding:					Weighted average number of shares outstanding:
Basic	Basic	9,218,087		7,797,673		Basic		10,420,690		9,218,087
Diluted	Diluted	9,218,087		7,797,673		Diluted		10,420,690		9,218,087

The accompanying notes are an integral part of these condensed consolidated financial statements

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LIMBACH HOLDINGS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

Common Stock
(in thousands, except share amounts) Number of
shares
outstanding Par value
amount Additional
paid-in
capital Accumulated
deficit Stockholders’
equity
Balance at December 31, 2020 7,926,137 $ 1 $ 57,612 $ (3,881) $ 53,732
Stock-based compensation — — 677 — 677
Shares issued related to vested restricted stock units 89,446 — — — 0
Tax withholding related to vested restricted stock units — — (183) — (183)
Shares issued related to employee stock purchase plan 8,928 — 92 — 92
Shares issued related to the exercise of warrants 172,869 — 1,989 — 1,989
Shares issued related to sale of common stock 2,051,025 — 22,773 — 22,773
Adjustment
Net loss — — — (2,282) (2,282)
Balance at March 31, 2021 10,248,405 $ 1 $ 82,960 $ (6,163) $ 76,798


		Common Stock										Common Stock
(in thousands, except share amounts)	(in thousands, except share amounts)	Number of shares outstanding	Par value amount		Additional paid-in capital		Accumulated deficit		Stockholders’ equity		(in thousands, except share amounts)	Number of shares outstanding	Par value amount		Additional paid-in capital		Accumulated deficit		Stockholders’ equity
Balance at December 31, 2019		7,688,958	$	1	$	56,557	$	(9,688)	$	46,870
Balance at December 31, 2021											Balance at December 31, 2021	10,304,242	$	1	$	85,004	$	2,833	$	87,838
Stock-based compensation	Stock-based compensation	—	—		295		—		295		Stock-based compensation	—	—		599		—		599
Shares issued related to vested restricted stock units	Shares issued related to vested restricted stock units	104,905	—		—		—		0		Shares issued related to vested restricted stock units	105,928	—		—		—		—
Tax withholding related to vested restricted stock units											Tax withholding related to vested restricted stock units	—	—		(148)		—		(148)
Shares issued related to employee stock purchase plan											Shares issued related to employee stock purchase plan	12,898	—		98		—		98

Net loss	Net loss	—	—		—		(52)		(52)		Net loss	—	—		—		(1,516)		(1,516)
Balance at March 31, 2020		7,793,863	$	1	$	56,852	$	(9,740)	$	47,113
Balance at March 31, 2022											Balance at March 31, 2022	10,423,068	$	1	$	85,553	$	1,317	$	86,871


	Common Stock
(in thousands, except share amounts)	Number of shares outstanding	Par value amount		Additional paid-in capital		Accumulated deficit		Stockholders’ equity
Balance at December 31, 2020	7,926,137	$	1	$	57,612	$	(3,881)	$	53,732
Stock-based compensation	—	—		677		—		677
Shares issued related to vested restricted stock units	89,446	—		—		—		—
Tax withholding related to vested restricted stock units	—	—		(183)		—		(183)
Shares issued related to employee stock purchase plan	8,928	—		92		—		92
Shares issued related to the exercise of warrants	172,869	—		1,989		—		1,989
Shares issued related to sale of common stock	2,051,025	—		22,773		—		22,773
Net loss	—	—		—		(2,282)		(2,282)
Balance at March 31, 2021	10,248,405	$	1	$	82,960	$	(6,163)	$	76,798

The accompanying notes are an integral part of these condensed consolidated financial statements

Table of Contents

LIMBACH HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Three months ended March 31,
(in thousands)
2021 2020
Cash flows from operating activities:
Net loss $ (2,282) $ (52)
Adjustments to reconcile net loss to cash (used in) provided by operating activities:
Depreciation and amortization 1,495 1,504
Provision for doubtful accounts 28 8
Stock-based compensation expense 677 295
Noncash operating lease expense 1,043 1,002
Amortization of debt issuance costs 190 540
Deferred income tax provision (336) 1,021
Loss (gain) on sale of property and equipment 86 (29)
Loss on early debt extinguishment 1,961 0
Gain on change in fair value of warrant liability (14) (161)
Changes in operating assets and liabilities:
   Accounts receivable 2,584 (7,333)
   Contract assets (1,986) 7,518
   Other current assets (2,025) (320)
   Accounts payable, including retainage (8,813) (5,771)
   Prepaid income taxes 0 (1,518)
   Accrued taxes payable (654) (11)
   Contract liabilities (8,853) 6,038
   Operating lease liabilities (994) (978)
   Accrued expenses and other current liabilities 513 1,407
   Other long-term liabilities 5 357
Net cash (used in) provided by operating activities (17,375) 3,517
Cash flows from investing activities:
Proceeds from sale of property and equipment 226 36
Advances (to) from joint ventures 0 (3)
Purchase of property and equipment (221) (501)
Net cash provided by (used in) investing activities 5 (468)
Cash flows from financing activities:
Proceeds from Wintrust Term Loan 30,000 0
Payments on Wintrust Term Loan (500) 0
Proceeds from Wintrust Revolving Loan 0 0
Payments on Wintrust Revolving Loan 0 0
Proceeds from 2019 Revolving Credit Facility 0 7,250
Payments on 2019 Revolving Credit Facility 0 (7,250)
Payments on 2019 Refinancing Term Loan (39,000) 0
Prepayment penalty and other costs associated with early debt extinguishment (1,376) 0
Proceeds from the sale of common stock 22,773 0
Proceeds from the exercise of warrants 1,989 0
Payments on finance leases (667) (652)


	Three Months Ended March 31,
(in thousands)	2022		2021
Cash flows from operating activities:
Net loss	$	(1,516)	$	(2,282)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	2,062		1,495
Provision for doubtful accounts	56		28
Stock-based compensation expense	599		677
Noncash operating lease expense	1,157		1,043
Amortization of debt issuance costs	32		190
Deferred income tax provision	(77)		(336)
Loss on sale of property and equipment	36		86
Loss on early termination of operating lease	817		—
Loss on early debt extinguishment	—		1,961
Gain on change in fair value of warrant liability	—		(14)
Changes in operating assets and liabilities:
Accounts receivable	(19,698)		2,584
Contract assets	8,320		(1,986)
Other current assets	(2,130)		(2,025)
Accounts payable, including retainage	(105)		(8,813)
Prepaid income taxes	(47)		—
Accrued taxes payable	(501)		(654)
Contract liabilities	7,732		(8,853)
Operating lease liabilities	(1,117)		(994)
Accrued expenses and other current liabilities	1,419		513
Other long-term liabilities	(4)		5
Net cash used in operating activities	(2,965)		(17,375)
Cash flows from investing activities:
Proceeds from sale of property and equipment	39		226

Purchase of property and equipment	(169)		(221)
Net cash used in (provided by) investing activities	(130)		5
Cash flows from financing activities:
Proceeds from Wintrust Term Loan (as defined in Note 6)	—		30,000
Payments on Wintrust and A&R Wintrust Term Loans	(1,857)		(500)
Proceeds from A&R Wintrust Revolving Loan (as defined in Note 6)	9,400		—

Payments on 2019 Refinancing Term Loan (as defined in Note 6)	—		(39,000)
Prepayment penalty and other costs associated with early debt extinguishment	—		(1,376)
Proceeds from the sale of common stock	—		22,773
Proceeds from the exercise of warrants	—		1,989
Payments on finance leases	(660)		(667)
Payments of debt issuance costs	—		(593)
Taxes paid related to net-share settlement of equity awards	(363)		(384)
Proceeds from contributions to Employee Stock Purchase Plan	165		167
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, beginning of period	14,589		42,260
Cash, cash equivalents and restricted cash, end of period	$	18,179	$	37,299
Supplemental disclosures of cash flow information
Noncash investing and financing transactions:
Right of use assets obtained in exchange for new operating lease liabilities	$	—	$	156
Right of use assets obtained in exchange for new finance lease liabilities	864		87
Right of use assets disposed or adjusted modifying operating lease liabilities	(1,276)		36
Right of use assets disposed or adjusted modifying finance lease liabilities	(19)		—
Interest paid	459		1,319
Cash paid (received) for income taxes	$	9	$	(45)

~~Table of Contents~~

Payments of debt issuance costs (593) 0
Taxes paid related to net-share settlement of equity awards (384) (44)
   Proceeds from contributions to Employee Stock Purchase Plan 167 0
Net cash provided by (used in) financing activities 12,409 (696)
(Decrease) increase in cash, cash equivalents and restricted cash (4,961) 2,353
Cash, cash equivalents and restricted cash, beginning of period 42,260 8,457
Cash, cash equivalents and restricted cash, end of period $ 37,299 $ 10,810
Supplemental disclosures of cash flow information
Noncash investing and financing transactions:
   Right of use assets obtained in exchange for new operating lease liabilities $ 156 $ 0
   Right of use assets obtained in exchange for new finance lease liabilities 87 337
   Right of use assets disposed or adjusted modifying operating lease liabilities 36 344
   Right of use assets disposed or adjusted modifying finance lease liabilities 0 (41)
Interest paid $ 1,319 $ 1,607

The accompanying notes are an integral part of these condensed consolidated financial statements

Table of Contents

LIMBACH HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 – ~~Organization~~Business and ~~Plan of Business Operations~~Organization

Limbach Holdings, Inc. (the “Company,” “we” or “us”), is a Delaware corporation headquartered in ~~Pittsburgh,~~Warrendale, Pennsylvania, ~~that~~ was formed on July 20, 2016 as a result of a business combination with Limbach Holdings LLC (“LHLLC”). The ~~Company’s condensed consolidated financial statements include~~Company is an integrated building systems solutions firm whose expertise is in the ~~accounts~~design, modular prefabrication, installation, management and maintenance of ~~Limbach Holdings, Inc.~~heating, ventilation, air-conditioning (“HVAC”), mechanical, electrical, plumbing and ~~its wholly-owned subsidiaries,~~controls systems. The Company provides comprehensive facility services consisting of mechanical construction, full HVAC service and maintenance, energy audits and retrofits, engineering and design build services, constructability evaluation, equipment and materials selection, offsite/prefabrication construction, and the complete range of sustainable building solutions. The Company's customers operate in diverse industries including, ~~LHLLC, Limbach Facility Services LLC, Limbach~~but not limited to, healthcare, life sciences, data centers, industrial and light manufacturing, entertainment, education and government. The Company ~~LLC, Limbach Company LP, Harper Limbach LLC,~~operates primarily in the Northeast, Mid-Atlantic, Southeast, Midwest, and ~~Harper Limbach Construction LLC.~~Southwestern regions of the United States.

As of January 1, 2021, the Company renamed its existing 2 reportable segments to reflect our 2 distinct approaches to our customer base and to better align with our owner direct strategy. The previously named Construction Segment is now known as General Contractor Relationships (“GCR”); the previously named Service Segment is now known as Owner Direct Relationships (“ODR”). The Company operates in 2 segments, ~~that are based on the relationship with its customer,~~ (i) ~~GCR,~~General Contractor Relationships (“GCR”), in which the Company generally manages new construction or renovation projects that involve primarily ~~heating, ventilation, and air conditioning (“HVAC”),~~HVAC, plumbing, or electrical services awarded to the Company by general contractors or construction managers, and (ii) ~~ODR,~~Owner Direct Relationships (“ODR”), in which the Company provides maintenance or service primarily on HVAC, plumbing or electrical systems, building controls and specialty contracting projects direct to, or assigned by, building owners or property managers. This work is primarily performed under fixed price, modified fixed price, and time and material contracts over periods of typically less than two years.

The Company's customers operate in diverse industries including, but not limited to, healthcare, life sciences, data centers, industrial and light manufacturing, entertainment, education and government. The Company operates primarily in the Northeast, Mid-Atlantic, Southeast, Midwest, and Southwestern regions of the United States.

~~Impact of the COVID-19 Pandemic~~

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The COVID-19 pandemic has caused significant disruption and volatility on a global scale resulting in, among other things, an economic slowdown and the possibility of a continued economic recession. In response to the COVID-19 outbreak, national and local governments around the world instituted certain measures, including travel bans, restrictions on group events and gatherings, shutdowns of certain non-essential businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. The various governmental actions have abated over time, but remain applicable to Limbach's operations in various ways, often varying by state. In some instances, these orders continued to affect certain projects in our GCR and ODR segments into the first quarter of 2021. In limited instances, during fiscal 2020, projects chose to shutdown work irrespective of the existence or applicability of government action. In most markets, construction is considered an essential business and Limbach continued to staff its projects and perform work during fiscal 2020 and into 2021, and most of the projects that were in progress at the time shutdowns commenced have restarted. The Company’s branches are expecting building owners to maintain or retrofit current facilities in lieu of funding larger capital projects as the effects of the pandemic remain ongoing and uncertain.

During fiscal 2020 and the first quarter of 2021, the Company continued to take several actions to combat the adverse impacts that the COVID-19 outbreak had on our business including, but not limited to the following:

~~• Identification of projects that have been shut down and methods for seeking to preserve any contractual entitlement that may exist to recover monetary and time impacts;~~

~~• Establishment of a task force to identify possible types and areas of impact from COVID-19 for both shutdown and continuing operations;~~

~~• Examination of the Company's productivity and potential impact on gross profit as a result of COVID-19;~~

~~• Implementation of the Company's pandemic response plan;~~

~~• Implemented our furlough and work schedule reduction plans, as well as permanent reductions in force; and~~

~~• Temporarily suspended substantially all discretionary, non-essential expenditures, including but not limited to, auto allowances, deferral of rent ranging between 1 and 3 months; and~~

• A temporary 10% salary reduction for a select group of corporate and regional management, along with a 10% fee reduction in director compensation, and cost reduction opportunities identified by our external consultant.

During the month of July 2020, with the substantial restart and return of project and service work, the Company removed the 10% salary reduction for the select group of corporate and regional management, along with the fee reduction for director compensation, returned auto allowances, reinstated positions, removed schedule reduction plans and discontinued our hiring freeze. During the remainder of 2020 and into 2021, the Company reinstituted limited travel and in-person meetings, along with

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encouraging employees to return to the office, field and training settings in a partial, flexible manner that is consistent with our Work From Home Policy and our COVID-19 Policy. The Company has remained steadfastly committed to our COVID-19 Policy as our work environment evolves in response to the changing landscape of the pandemic and in response to the increasing availability of vaccinations.

The ongoing effects of the pandemic, including decreased consumer confidence and economic instability, can make it extremely difficult for our customers, our vendors and us to accurately forecast and plan future business activities, and could cause constrained spending on our services, delays and a lengthening of our business development efforts, the demand for more favorable pricing or other terms, and/or difficulty in collection of our accounts receivable. Our clients may face budget deficits or other financial constraints that prohibit them from funding proposed and existing projects. During the fourth quarter of 2020 and the first quarter of 2021, several of our business units experienced slowdowns in the closing of sales related to the ongoing effects of the pandemic, which impacted our revenue and profitability. These impacts may continue as the pandemic persists. Further, ongoing economic instability in the global markets, including from the pandemic, could limit our ability to access the capital markets at a time when we would like, or need, to raise capital, which could have an impact on our ability to react to changing business conditions or new opportunities. If economic conditions remain uncertain or weaken, or spending continues to be reduced, our financial condition and results of operations may be adversely affected.

The Company continues to take steps to minimize the adverse impacts of the COVID-19 pandemic on its business and to protect the safety of its employees, and the Company continues to emphasize wearing of masks, more frequent washing of hands and tools, social distancing, and work protocols. Limbach's COVID-19 Policy is based on the best practices provided by the Centers for Disease Control and Prevention (“CDC”) and Occupational Safety and Health Administration for essential workers. Our updated Work From Home Policy, along with the Company's business continuity planning and information technology enhancements enabled an orderly transition to remote work and facilitated social distancing for salaried employees. Although the Company has not mandated vaccinations for employees, it is encouraging all employees to be vaccinated, in accordance with CDC recommendations.

Testing and inpatient treatment for COVID-19 is covered under our medical plan and fees have been waived since the onset of the pandemic. Counseling is available through our employee assistance plan to assist employees with financial, mental and emotional stress related to the virus and other issues.

Note 2 – Significant Accounting Policies

Basis of Presentation

~~Condensed Consolidated Financial Statements~~References in these financial statements to the Company refer collectively to the accounts of Limbach Holdings, Inc. and its wholly-owned subsidiaries, including LHLLC, Limbach Facility Services LLC (“LFS”), Limbach Company LLC, Limbach Company LP, Harper Limbach LLC, Harper Limbach Construction LLC, Limbach Facility & Project Solutions LLC, Jake Marshall, LLC (“JMLLC”) and Coating Solutions, LLC (“CSLLC”) for all periods presented, unless otherwise indicated. All intercompany balances and transactions have been eliminated.

The accompanying unaudited ~~Condensed Consolidated Financial Statements~~ condensed consolidated financial statements have been prepared in accordance with ~~instructions to~~generally accepted accounting principles in the ~~Quarterly Report on~~United States (“GAAP”) for interim financial information and with the requirements of Form 10-Q and Rule 8-03 of Regulation S-X for smaller reporting companies. Consequently, certain information and note disclosures normally included in financial statements prepared in accordance with ~~generally accepted accounting principles in the United States of America (“GAAP”)~~GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Readers of this report should refer to the consolidated financial statements and the notes thereto included in ~~our~~the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ~~(the “SEC”~~(“SEC”) on March ~~25, 2021.~~ 16, 2022.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements for assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, the reported amounts of revenue and expenses during the reported period, and the accompanying notes. Management believes that its most significant estimates and assumptions have been based on reasonable and supportable assumptions and the resulting estimates are reasonable for use in the preparation of the condensed consolidated financial statements. The Company’s significant estimates include estimates associated with revenue recognition on construction contracts, costs incurred through each balance sheet date, intangibles, property and equipment, fair value accounting for acquisitions, insurance reserves and contingencies. If the underlying estimates and assumptions upon which the condensed consolidated financial statements are based change in the future, actual amounts may differ from those included in the accompanying condensed consolidated financial statements.

Unaudited Interim Financial Information

The accompanying interim Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Stockholders’ Equity and Condensed Consolidated Statements of Cash Flows for the periods presented are unaudited. Also, within the notes to the ~~Condensed Consolidated Financial Statements, we have~~condensed consolidated financial statements, the Company has included unaudited information for these interim periods. These unaudited interim ~~Condensed Consolidated Financial Statements~~ condensed consolidated financial statements

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have been prepared in accordance with GAAP. In ~~our~~the Company's opinion, the accompanying unaudited ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements contain all normal and recurring adjustments necessary for a fair statement of the Company’s financial position as of March 31, ~~2021,~~2022, its results of operations and its cash flows for the three months ended March 31, ~~2021.~~2022. The results for the three months ended March 31, ~~2021~~2022 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2021.~~2022.

The Condensed Consolidated Balance Sheet as of December 31, ~~2020~~2021 was derived from ~~our~~the Company's audited financial statements included in ~~our~~its Annual Report on Form 10-K filed with the SEC on March ~~25, 2021,~~16, 2022, but is presented as condensed and does not contain all of the footnote disclosures from the annual financial statements.

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~~Note 3 – Accounting Standards~~

Recently Adopted Accounting Standards

In ~~December 2019,~~November 2021, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ~~ASU 2019-12, Income Taxes~~Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic ~~740)~~805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which ~~affects general principles within Topic 740, and is meant to simplify and reduce the cost of accounting for income taxes. It removes certain exceptions~~creates an exception to the general ~~principles in Topic 740~~recognition and ~~simplifies areas including franchise taxes that are partially based on income, transactions~~measurement principle for contract assets and contract liabilities from contracts with ~~a government that result~~customers acquired in a ~~step up~~business combination. Under this exception, an acquirer applies ASC 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities on the acquisition date. ASC 805 generally requires the acquirer in a business combination to recognize and measure the ~~tax basis of goodwill,~~assets it acquires and the ~~incremental approach for intraperiod tax allocation, interim period income tax accounting for year-to-date losses that exceed anticipated losses and enacted changes in tax laws in interim periods.~~liabilities it assumes at fair value on the acquisition date. The changes are effective for annual periods beginning after December 15, ~~2020.~~2022. The ~~adoption of~~Company early adopted ASU 2021-08 in December 2021. The contract assets and contract liabilities associated with the Jake Marshall Transaction have been valued in accordance with this ~~pronouncement did not have a material impact on our condensed consolidated financial statements or presentation thereof.~~

Also in October 2020, the FASB issued ASU 2020-10, Codification Improvements. The amendments in this update remove references to various FASB Concepts Statements, situates all disclosure guidance in the appropriate disclosure section of the Codification, and makes other improvements and technical corrections to the Codification. The amendments in Sections B and C of this amendment are effective for annual periods beginning after December 15, 2020, for public business entities, with early adoption permitted. The adoption of this pronouncement did not have a material impact on our condensed consolidated financial statements or presentation thereof.standard.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, which introduced an expected credit loss methodology for the measurement and recognition of credit losses on most financial instruments, including trade receivables and off-balance sheet credit exposure. Under this guidance, an entity is required to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. This ASU also requires disclosure of information regarding how a company developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes. The guidance is effective for smaller reporting companies on January 1, 2023 with early adoption permitted. The adoption of this standard will be through a cumulative-effect adjustment to retained earnings as of the effective date. Based on ~~our~~its historical experience, the Company does not expect that this pronouncement will have a significant impact in its condensed consolidated financial statements or on the estimate of the allowance for doubtful accounts.

The FASB has issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting in March 2020. This new guidance provides optional expedients for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform, on financial reporting. The risk of termination of the London Interbank Offered Rate (LIBOR), has caused regulators to undertake reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based that are less susceptible to manipulation. ASU 2020-04 is effective between March 12, 2020 and December 31, 2022.

In addition, in January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments in this update refine the scope for certain optional expedients and exceptions for contract modifications and hedge accounting to apply to derivative contracts and certain hedging relationships affected by the discounting transition. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of adopting the reference rate reform guidance (both ASU 2020-04 and ASU 2021-01) on its condensed consolidated financial statements. ~~Management has identified that its credit agreement utilizes~~As discussed in Note 6, the A&R Credit Agreement removed LIBOR as a benchmark ~~rate. Management will continue to evaluate~~rate and now utilizes SOFR (as defined in the ~~impact of adopting reference rate reform~~A&R Credit Agreement) as ~~the LIBOR benchmark rate within the credit agreement is phased out.~~its replacement.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity and amends the scope guidance for contracts in an entity's own equity. The ASU addresses how convertible instruments are accounted for in the calculation of diluted earnings per share by using the if-converted method. The guidance is effective for all entities for fiscal years beginning after March 31, 2024, albeit early adoption is permitted no earlier than fiscal years beginning after December 15, 2020. Management is currently assessing the impact of this pronouncement on its condensed consolidated financial statements.

~~Note 4 – Accounts Receivable and Allowance for Doubtful Accounts~~

~~Accounts receivable and the allowance for doubtful accounts are comprised of the following:~~

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(in thousands) March 31, 2021 December 31, 2020
Accounts receivable - trade $ 83,394 $ 86,033
Allowance for doubtful accounts (239) (266)
Accounts receivable, net $ 83,155 $ 85,767
Note 3 – Acquisitions

Jake Marshall Transaction

On December 2, 2021 (the “Effective Date”), the Company and LFS entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with JMLLC, CSLLC (together with JMLLC, the “Acquired Companies” and each an “Acquired Company”) and the owners of the Acquired Companies (collectively, the “Sellers”), pursuant to which LFS purchased all of the outstanding membership interests in the Acquired Companies from the Sellers (the transactions contemplated by the Purchase Agreement collectively being the “Jake Marshall Transaction”). The Jake Marshall Transaction closed on the Effective Date. As a result of the Jake Marshall Transaction, each of the Acquired Companies became wholly-owned indirect subsidiaries of the Company. The acquisition expands the Company’s market share within its existing product and service lines.

Total consideration paid by the Company for the Jake Marshall Transaction at closing was $21.3 million (the “Closing Purchase Price”), consisting of cash paid to the Sellers, net of adjustments for working capital. Of the consideration paid to the Sellers, $1.0 million is being held in escrow for indemnification purposes. The purchase price is subject to customary post-closing adjustments. In addition, the Sellers may receive up to an aggregate of $6.0 million in cash, consisting of 2 tranches of $3.0 million, as defined in the Purchase Agreement, if the gross profit of the Acquired Companies equals or exceeds $10.0 million in (i) the approximately 13 month period from closing through December 31, 2022 (the “2022 Earnout Period”) or (ii) fiscal year 2023 (the “2023 Earnout Period”), respectively (collectively, the “Earnout Payments”). To the extent, however, that the gross profit of the Acquired Companies is less than $10.0 million, but exceeds $8.0 million, during any of the 2022 Earnout Period or 2023 Earnout Period, the $3.0 million amount will be prorated for such period.

Allocation of Purchase Price. The Jake Marshall Transaction was accounted for as a business combination using the acquisition method. The following table summarizes the final purchase price and estimated fair values of assets acquired and liabilities assumed as of the Effective Date, with any excess of purchase price over estimated fair value of the identified net assets acquired recorded as goodwill. As a result of the acquisition, the Company recognized $5.2 million of goodwill, all of which was allocated to the ODR segment and fully deductible for tax purposes. Such goodwill primarily related to anticipated future earnings. The following table summarizes the allocation of the fair value of the assets and liabilities of the Jake Marshall Transaction as of the Effective Date by the Company.


(in thousands)	Purchase Price Allocation
Consideration:
Cash	$	21,313
Earnout provision	3,089
Total Consideration	24,402

Fair value of assets acquired:
Cash and cash equivalents	2,336
Accounts receivable	7,165
Contract assets	1,711
Other current assets	164
Property and equipment	5,762
Intangible assets	5,710
Amount attributable to assets acquired	22,848

Fair value of liabilities assumed:
Accounts payable, including retainage	2,655
Accrued expenses and other current liabilities	570
Contract liabilities	462
Amount attributable to liabilities assumed	3,687
Goodwill	$	5,241

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Note 54 – ~~Contract Assets~~Revenue from Contracts with Customers

The Company generates revenue principally from fixed-price construction contracts to deliver HVAC, plumbing, and ~~Liabilities~~electrical construction services to its customers. The duration of its contracts generally ranges from six months to two years. Revenue from fixed price contracts is recognized on the cost-to-cost method, measured by the relationship of total cost incurred to total estimated contract costs. Revenue from time and materials contracts is recognized as services are performed. The Company believes that its extensive experience in HVAC, plumbing, and electrical projects, and its internal cost review procedures during the bidding process, enable it to reasonably estimate costs and mitigate the risk of cost overruns on fixed price contracts.

The Company generally invoices customers on a monthly basis, based on a schedule of values that breaks down the contract amount into discrete billing items. Costs and estimated earnings in excess of billings on uncompleted contracts are recorded as a contract asset until billable under the contract terms. Billings in excess of costs and estimated earnings on uncompleted contracts are recorded as a contract liability until the related revenue is recognizable. The Company classifies contract assets and liabilities that may be settled beyond one year from the balance sheet date as current, consistent with the length of time of the Company’s project operating cycle.

Contract assets

Contract assets include amounts due under retainage provisions and costs and estimated earnings in excess of ~~billings and estimated earnings.~~billings. The components of the contract asset balances as of the respective dates were as follows:


(in thousands)	(in thousands)	March 31, 2021		December 31, 2020		Change		(in thousands)	March 31, 2022		December 31, 2021		Change
Contract assets	Contract assets							Contract assets
Costs in excess of billings and estimated earnings	Costs in excess of billings and estimated earnings	$	36,586	$	31,894	$	4,692	Costs in excess of billings and estimated earnings	$	41,949	$	47,447	$	(5,498)
Retainage receivable	Retainage receivable	32,498		35,204		(2,706)		Retainage receivable	33,594		36,416		(2,822)
Total contract assets	Total contract assets	$	69,084	$	67,098	$	1,986	Total contract assets	$	75,543	$	83,863	$	(8,320)

Retainage receivable represents amounts invoiced to customers where payments have been partially withheld, typically 10%, pending the completion of certain milestones, satisfaction of other contractual conditions or the completion of the project. Retainage agreements vary from project to project and balances could be outstanding for several months or years depending on a number of circumstances such as contract-specific terms, project performance and other variables that may arise as the Company makes progress towards completion.

Contract assets represent the excess of contract costs and profits (or contract revenue) over the amount of contract billings to date and are classified as a current asset. Contract assets result when either: 1)(1) the appropriate contract revenue amount has been recognized over time in accordance with ASC Topic 606, but a portion of the revenue recorded cannot be currently billed due to the billing terms defined in the contract, or 2)(2) costs are incurred related to certain claims and unapproved change orders. Claims occur when there is a dispute regarding both a change in the scope of work and the price associated with that change. Unapproved change orders occur when a change in the scope of work results in additional work being performed before the parties have agreed on the corresponding change in the contract price. The Company routinely estimates recovery related to claims and unapproved change orders as a form of variable consideration at the most likely amount it expects to receive and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Claims and unapproved change orders are billable upon the agreement and resolution between the contractual parties and after the execution of contractual amendments. Increases in claims and unapproved change orders typically result from costs being incurred against existing or new positions; decreases normally result from resolutions and subsequent billings.

The current estimated net realizable value on such ~~claims and unapproved change orders~~items as recorded in contract assets and contract liabilities in the condensed consolidated balance sheets was ~~$40.8~~$39.9 million and ~~$33.6~~$38.1 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. The Company currently anticipates that the majority of such amounts will be approved or executed within one year. The resolution of ~~these~~those claims and unapproved change orders that may require litigation or other forms of dispute resolution ~~proceedings.~~proceedings may delay the timing of billing beyond one year.

Contract liabilities

Contract liabilities include billings in excess of contract costs ~~and estimated earnings~~ and provisions for losses. The components of the contract liability balances as of the respective dates were as follows:

(in thousands) March 31, 2021 December 31, 2020 Change
Contract liabilities
   Billings in excess of costs and estimated earnings $ 37,314 $ 46,020 $ (8,706)
   Provisions for losses 481 628 (147)
      Total contract liabilities $ 37,795 $ 46,648 $ (8,853)

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(in thousands)	March 31, 2022		December 31, 2021		Change
Contract liabilities
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

Billings in excess of costs ~~and estimated earnings~~ represent the excess of contract billings to date over the amount of contract costs and profits (or contract revenue) recognized to date. The balance may fluctuate depending on the timing of contract billings and the recognition of contract revenue.

Provisions for losses are recognized in the condensed consolidated statements of operations at the uncompleted performance obligation level for the amount of total estimated losses in the period that evidence indicates that the estimated total cost of a performance obligation exceeds its estimated total revenue.

The net ~~overbilling~~underbilling position for contracts in process ~~consist~~consisted of the following:


(in thousands)	(in thousands)	March 31, 2021		December 31, 2020		(in thousands)	March 31, 2022		December 31, 2021
Revenue earned on uncompleted contracts	Revenue earned on uncompleted contracts	$	707,647	$	752,564	Revenue earned on uncompleted contracts	$	679,170	$	758,450
Less: Billings to date	Less: Billings to date	(708,375)		(766,690)		Less: Billings to date	(671,274)		(737,296)
Net overbilling		$	(728)	$	(14,126)
Net underbilling						Net underbilling	$	7,896	$	21,154

(in thousands)	(in thousands)	March 31, 2021		December 31, 2020		(in thousands)	March 31, 2022		December 31, 2021
Costs in excess of billings and estimated earnings	Costs in excess of billings and estimated earnings	$	36,586	$	31,894	Costs in excess of billings and estimated earnings	$	41,949	$	47,447
Billings in excess of costs and estimated earnings	Billings in excess of costs and estimated earnings	(37,314)		(46,020)		Billings in excess of costs and estimated earnings	(34,053)		(26,293)
Net overbilling		$	(728)	$	(14,126)
Net underbilling						Net underbilling	$	7,896	$	21,154

WeRevisions in Contract Estimates

The following table summarizes the Company’s recorded revisions in ~~our~~its contract estimates for certain GCR ~~projects. For~~and ODR projects ~~having revisions with a~~for the three months ended March 31, 2022 and 2021 (includes material gross profit ~~impact~~changes of $0.25 million or ~~more, this resulted in: (1)~~more).


	For the Three Months Ended March 31,
	2022			2021
(in thousands except number of projects )			Number of Projects			Number of Projects
Gross profit write-ups:
GCR	$	533	2	$	743	2
ODR	—		—	—		—
Total gross profit write-ups	$	533	2	$	743	2

Gross profit write-downs:
GCR	$	(604)	2	$	(768)	2
ODR	—		—	—		—
Total gross profit write-downs	$	(604)	2	$	(768)	2

Total gross profit write-downs, net	$	(71)		$	(25)

During the three months ended March 31, 2022, the Company recorded total net gross profit ~~write downs on 2 GCR segment projects~~write-downs, regardless of ~~$0.7~~materiality, of $1.4 million compared to total net gross profit write-downs of $0.5 million for the three months ended March 31, ~~2021, 1~~2021.

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Remaining Performance Obligations

Remaining performance obligations represent the transaction price of firm orders for which ~~was within~~work has not been performed and exclude unexercised contract options. The Company’s remaining performance obligations include projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions.

As of March 31, 2022, the ~~Southern California region for a total~~aggregate amount of ~~$0.2~~the transaction prices allocated to the remaining performance obligations of the Company's GCR and ODR segment contracts were $340.7 million and ~~the other was within the Eastern Pennsylvania region for a total~~$90.4 million, respectively. The Company currently estimates that 60% and 73% of ~~$0.5 million,~~its GCR and ~~(2) gross profit write ups~~ODR remaining performance obligations as of ~~$0.7 million on 2 GCR segment projects for the three months ended~~ March 31, ~~2021. There were no material gross profit write ups~~2022, respectively, will be recognized as revenue during the remainder of 2022, with the substantial majority of remaining performance obligations to be recognized within 24 months, although the timing of the Company's performance is not always under its control.

~~For~~ the three months ended March 31, 2020, we recorded revisions in our contract estimates for certain GCR segment projects. Individual GCR segment projects with revisions having a material gross profit impact of $0.25 million or more resulted in: (1) gross profit write downs on 6 projects totaling $3.2 million forcustomer without considerable cost incurred by the three months ended March 31, 2020, 4 of which were within the Southern California region for a total of $2.5 million, and (2) gross profit write ups totaling $1.0 million on 2 projects for the three months ended March 31, 2020.customer.

Note 65 – Goodwill and Intangibles

Goodwill

Goodwill was ~~$6.1~~$11.4 million atas of March 31, 2022 and December 31, 2021 and ~~December 31, 2020. The goodwill~~ is entirely associated with the Company's ODR segment. The Company tests its goodwill and indefinite-lived intangible assets allocated to its reporting units for impairment annually on October 1, or more frequently if events or circumstances indicate that it is more likely than not that the fair value of its reporting units and indefinite-lived intangible asset are less than their carrying amount. The Company has the option to assess goodwill for possible impairment by performing a qualitative analysis to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. A quantitative assessment is performed if the qualitative assessments results in a more-likely-than-not determination or if a qualitative assessment is not performed.

The Company did not recognize any impairment charges on its goodwill or intangible assets for the three months ended March 31, 2022 or March 31, 2021.

Intangible Assets

Intangible assets are comprised of the following:

(in thousands) Gross
carrying
amount Accumulated
amortization Net intangible
assets, excluding
goodwill
March 31, 2021(1)
Amortized intangible assets:
Customer Relationships – ODR $ 4,710 $ (3,212) $ 1,498
Favorable Leasehold Interests(2)
190 (71) 119
Total amortized intangible assets 4,900 (3,283) 1,617
Unamortized intangible assets:
Trade Name 9,960 — 9,960
Total unamortized intangible assets 9,960 — 9,960
Total amortized and unamortized assets, excluding goodwill $ 14,860 $ (3,283) $ 11,577

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(in thousands)	(in thousands)	Gross carrying amount		Accumulated amortization		Net intangible assets, excluding goodwill		(in thousands)	Gross carrying amount		Accumulated amortization		Net intangible assets, excluding goodwill
December 31, 2020(1)
March 31, 2022								March 31, 2022
Amortized intangible assets:	Amortized intangible assets:							Amortized intangible assets:
Customer Relationships – ODR		$	4,710	$	(3,112)	$	1,598
Favorable Leasehold Interests		530		(407)		123
Customer relationships – GCR – Jake Marshall								Customer relationships – GCR – Jake Marshall	$	570	$	(27)	$	543
Customer relationships – ODR – Jake Marshall								Customer relationships – ODR – Jake Marshall	3,050		(134)		2,916
Customer relationships – ODR – Limbach								Customer relationships – ODR – Limbach	4,710		(3,555)		1,155
Favorable leasehold interests – Limbach								Favorable leasehold interests – Limbach	190		(86)		104
Backlog – GCR – Jake Marshall								Backlog – GCR – Jake Marshall	260		(55)		205
Backlog – ODR – Jake Marshall								Backlog – ODR – Jake Marshall	680		(143)		537
Trade name – Jake Marshall								Trade name – Jake Marshall	1,150		(62)		1,088
Total amortized intangible assets	Total amortized intangible assets	5,240		(3,519)		1,721		Total amortized intangible assets	10,610		(4,062)		6,548
Unamortized intangible assets:	Unamortized intangible assets:							Unamortized intangible assets:
Trade Name		9,960		—		9,960
Trade name – Limbach(1)								Trade name – Limbach(1)	9,960		—		9,960
Total unamortized intangible assets	Total unamortized intangible assets	9,960		—		9,960		Total unamortized intangible assets	9,960		—		9,960
Total amortized and unamortized assets, excluding goodwill	Total amortized and unamortized assets, excluding goodwill	$	15,200	$	(3,519)	$	11,681	Total amortized and unamortized assets, excluding goodwill	$	20,570	$	(4,062)	$	16,508

(1)The Backlog-Construction intangible asset previously shown at December 31, 2020 has been fully amortized. Accordingly, its gross carrying amount of $4.8 million and corresponding accumulated amortization of $4.8 million have been removed from the table.

~~(2)~~ The gross carrying amount and accumulated amortization associated with our Favorable leasehold interests intangible asset was reduced by $0.3 million due to the lease termination of our Western Pennsylvania office associated with the intangible asset.

The definite-lived intangible assets are amortized over the period the Company expects to receive the related economic benefit, which for customer relationships is based upon estimated future net cash inflows. The Company has ~~previously~~ determined that its trade name has an indefinite useful life. The Limbach trade name has been in existence since the Company’s founding in 1901 and therefore is an established brand within the industry.

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(in thousands)	Gross carrying amount		Accumulated amortization		Net intangible assets, excluding goodwill
December 31, 2021
Amortized intangible assets:
Customer relationships – GCR – Jake Marshall	$	570	$	(6)	$	564
Customer relationships – ODR – Jake Marshall	3,050		(35)		3,015
Customer relationships – ODR – Limbach	4,710		(3,475)		1,235
Favorable leasehold interests – Limbach	190		(82)		108
Backlog – GCR – Jake Marshall	260		(14)		246
Backlog – ODR – Jake Marshall	680		(36)		644
Trade name – Jake Marshall	1,150		(15)		1,135
Total amortized intangible assets	10,610		(3,663)		6,947
Unamortized intangible assets:
Trade name – Limbach	9,960		—		9,960
Total unamortized intangible assets	9,960		—		9,960
Total amortized and unamortized assets, excluding goodwill	$	20,570	$	(3,663)	$	16,907

Total amortization expense for ~~these amortizable~~the Company's definite-lived intangible assets was $0.4 million and $0.1 million ~~for both the three month periods ended March 31, 2021 and 2020.~~

~~The Company did 0t recognize any impairment charges on its goodwill or intangible assets~~ for the three months ended March 31, 2022 and 2021, ~~or March 31, 2020.~~respectively.

Note 76 – Debt

Long-term debt consists of the following obligations as of:


(in thousands)	(in thousands)	March 31, 2021		December 31, 2020		(in thousands)	March 31, 2022		December 31, 2021
2019 Refinancing Term Loan - term loan payable in quarterly installments of principal, (commencing in September 2020) plus interest through April 2022		$	0	$	39,000
2019 Refinancing Revolving Credit Facility		0		0
Wintrust Term Loan - term loan payable in quarterly installments of principal, (commencing in March 2021) plus interest through February 2026		29,500		0
Wintrust Revolver Loan		0		0
Finance leases – collateralized by vehicles, payable in monthly installments of principal, plus interest ranging from 4.70% to 6.45% through 2025		5,879		6,459
A&R Wintrust Term Loan - term loan payable in quarterly installments of principal, (commencing in December 2021) plus interest through February 2026						A&R Wintrust Term Loan - term loan payable in quarterly installments of principal, (commencing in December 2021) plus interest through February 2026	33,024		34,881
A&R Wintrust Revolving Loan						A&R Wintrust Revolving Loan	9,400		—
Finance leases – collateralized by vehicles, payable in monthly installments of principal, plus interest ranging from 4.40% to 6.45% through 2025						Finance leases – collateralized by vehicles, payable in monthly installments of principal, plus interest ranging from 4.40% to 6.45% through 2025	5,317		5,132
Total debt	Total debt	35,379		45,459		Total debt	47,741		40,013
Less - Current portion of long-term debt	Less - Current portion of long-term debt	(8,473)		(6,536)		Less - Current portion of long-term debt	(13,222)		(9,879)
Less - Unamortized discount and debt issuance costs	Less - Unamortized discount and debt issuance costs	(318)		(2,410)		Less - Unamortized discount and debt issuance costs	(299)		(318)
Long-term debt	Long-term debt	$	26,588	$	36,513	Long-term debt	$	34,220	$	29,816

~~The~~On February 24, 2021 (the “2021 Refinancing Date”), the Company refinanced its 2019 Refinancing Term Loan (as defined below) and 2019 Revolving Credit Facility (as defined below) with proceeds from the issuance of the Wintrust Term Loan (as defined below) (the “2021 Refinancing”). As a result of the 2021 Refinancing, the Company prepaid all principal, interest, fees and other obligations outstanding under the 2019 Refinancing Agreements (as defined below) and terminated its 2019 Refinancing Term Loan, 2019 Refinancing Revolving Credit Facility and the CB Warrants (as defined below). In addition, on ~~February 24,~~the 2021 ~~described below and therefore had 0 amounts outstanding under these agreements at March 31, 2021. Accordingly,~~Refinancing Date, the Company recognized a loss on the early ~~debt~~ extinguishment ~~related to the refinancing~~of debt of $2.0 ~~million. This loss~~million, which consisted of

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the write-off of $2.6 million ~~debt issuance~~of unamortized discount and ~~debt discount~~financing costs, the reversal of the $2.0 million CB warrants (defined below) liability ~~due to the warrants being cancelled on the refinancing date~~ and the prepayment penalty and other extinguishment costs of $1.4 million.

2019 Refinancing Agreement

- 2019 Term Loans

On April 12, 2019 (the ~~“Refinancing~~“2019 Refinancing Closing Date”), ~~Limbach Facility Services LLC (“LFS”)~~LFS entered into a financing agreement (the “2019 Refinancing Agreement”) with the lenders thereto and Cortland Capital Market Services LLC, as collateral agent and administrative agent and CB Agent Services LLC (“CB”), as origination ~~agent (“CB”).~~agent. The 2019 Refinancing Agreement consisted of (i) a $40.0 million term loan (the “2019 Refinancing Term Loan”) and (ii) a new $25.0 million multi-draw delayed draw term loan (the “2019 Delayed Draw Term Loan” and, collectively with the 2019 Refinancing Term Loan, the “2019 Term Loans”). ~~Proceeds from~~On November 14, 2019, the ~~2019 Refinancing Term Loan were used~~Company entered into an amendment to repay the then existing Credit Agreement, to pay related fees and expenses thereof and to fund working capital of the 2019 Refinancing Borrowers (defined below). Management intended for proceeds of the 2019 Delayed Draw Term Loan to be used to fund permitted acquisitions under the 2019 Refinancing Agreement which, among other things, amended the interest rate and ~~related fees and expenses~~certain covenants in ~~connection therewith.~~

~~LFS and each of its subsidiaries were borrowers (the “2019 Refinancing Borrowers”) under~~ the 2019 Refinancing Agreement. ~~In addition,~~

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Prior to its refinancing in February 2021, the 2019 Refinancing Agreement ~~was guaranteed by the Company and LHLLC (each, a “Guarantor”, and together with the 2019 Refinancing Borrowers, the “Loan Parties”).~~

The 2019 Refinancing Agreement was secured by a first-priority lien on the real property of the Loan Parties and a second-priority lien on substantially all other assets of the Loan Parties, behind the 2019 ABL Credit Agreement (as defined below). The respective lien priorities of the 2019 Refinancing Agreement and the 2019 ABL Credit Agreement were governed by an intercreditor agreement.

~~2019 Refinancing Agreement - Interest Rates and Fees~~

The interest rate on borrowings under the 2019 Refinancing Agreement was, at the 2019 Refinancing Borrowers’ option, either LIBOR (with a 2.00% floor) plus 11.00% or a base rate (with a 3.00% minimum) plus 10.00%. At February 24, 2021 and March 31, 2020, the interest rate in effect on the 2019 Refinancing Term Loan was 13.00%.

~~2019 Refinancing Agreement - Other Terms and Conditions~~

~~The 2019 Refinancing Agreement was set to mature~~would have matured on April 12, ~~2022, subject to certain adjustment.~~2022. Required amortization was $1.0 million per quarter and commenced with the fiscal quarter ending September 30, 2020. There was an unused line fee of 2.0% per annum on the undrawn portion of the 2019 Delayed Draw Term Loan, and there iswas a make-whole premium on prepayments made prior to the 19-month anniversary of the 2019 Refinancing Closing Date. This make-whole provision guaranteed that the Company would pay no less than 18 months’ applicable interest to the lenders under the 2019 Refinancing Agreement.

The 2019 Refinancing Agreement contained representations and warranties, and covenants which were customary for debt facilities of this type. Unless the Required Lenders (as defined in the 2019 Refinancing Agreement) otherwise consented in writing, the covenants limited the ability of the Company and its restricted subsidiaries to, among other things, (i) incur additional indebtedness or issue preferred stock, (ii) pay dividends or make distributions to the Company’s stockholders, (iii) purchase or redeem the Company’s equity interests, (iv) make investments, (v) create liens on their assets, (vi) enter into transactions with the Company’s affiliates, (vii) sell assets and (viii) merge or consolidate with, or dispose of substantially all of the Company’s assets to, other companies.

In addition, the 2019 Refinancing Agreement included customary events of default and other provisions that could require all amounts due thereunder to become immediately due and payable, either automatically or at the option of the lenders, if the Company failed to comply with the terms of the 2019 Refinancing Agreement or if other customary events occur.

Furthermore, the 2019 Refinancing Agreement also contained 2 financial maintenance covenants for the 2019 Refinancing Term Loan, including a requirement to have sufficient collateral coverage of the aggregate outstanding principal amount of the 2019 Refinancing Term Loans and as of the last day of each month for the total leverage ratio of the Company and its Subsidiaries (the “Total Leverage Ratio ”) not to exceed an amount beginning at 4.25 to 1.00 through June 30, 2019, and stepping down to 2.00 to 1.00 effective July 1, 2021. From July 1, 2019 through September 30, 2019, the Total Leverage Ratio may not exceed 4.00 to 1.00. In addition, the parties to the 2019 Refinancing Agreement entered into an amendment which, among other changes, revised the maximum permitted Total Leverage Ratio, starting at 3.30 to 1.00 on October 1, 2019 with a peak ratio of 4.25 during March 2020 along with varying monthly rates culminating in the lowest Total Leverage Ratio of 2.00 to 1.00 on April 1, 2021 through the term of such agreement. The 2019 Refinancing Agreement contained a post-closing

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covenant requiring the remediation of the Company’s material weakness, as described in Item 9A of its 2018 Annual Report on Form 10-K, no later than December 31, 2020 and provision for updates as to the progress of such remediation, provided that, if such remediation has not been completed on or prior to December 31, 2019, (x) the Company shall be required to pay the post-closing fee pursuant to the terms of the Origination Agent Fee Letter (as defined in the 2019 Refinancing Agreement) and (y) the applicable margin shall be increased by 1.00% per annum for the period from January 1, 2020 until the date at which the material weakness is no longer disclosed or required to be disclosed in the Company’s SEC filings or audited financial statements of the Company or related auditor’s reports.

In connection with the 2019 Refinancing Amendment Number One and Waiver, dated November 14, 2019, the parties amended certain provisions of the 2019 Refinancing Agreement, including, among other changes to: (i) require, commencing October 1, 2019, a 3.00% increase in the interest rate on borrowings under the 2019 Refinancing ~~Agreement; (ii) require~~Agreement was, at the ~~approval~~option of CBLFS and ~~generally,~~its subsidiaries, either LIBOR (with a 2.00% floor) plus 11.00% or a base rate (with a 3.00% minimum) plus 10.00%. At the ~~lenders representing at least 50.1% of~~2021 Refinancing Date, the aggregate undrawn term loan commitment or unpaid principal amount of the term loans, prior to effecting any permitted acquisition; (iii) revise the maximum permitted Total Leverage Ratio, starting at 3.30 to 1.00interest rate in effect on October 1, 2019 with a peak ratio of 4.25 during March 2020 along with varying monthly rates culminating in the lowest Total Leverage Ratio of 2.00 to 1.00 on April 1, 2021 and thereafter through the term of the 2019 Refinancing Agreement; and (iv) require the liquidity of the loan parties, which is generally calculated by adding (a) unrestricted cash on hand of the Loan Parties maintained in deposit accounts subject to control agreements granting control to the collateral agent for the 2019 ABL Credit Agreement, to (b) the difference between (1) the lesser of (x) $15 million, as adjusted from time to time, and (y) 75% of certain customer accounts resulting from the sale of goods or services in the ordinary course of business minus certain reserves established by the Administrative Agent and (2) the sum of (x) the outstanding principal balance of all revolving loans under the 2019 ABL Credit Agreement plus (y) the aggregate undrawn available amount of all letters of credit then outstanding plus the amount of any obligations that arise from any draw against any letter of credit that have not been reimbursed by the borrowers or funded with a revolving loan under the 2019 ABL Credit Agreement (the “Loan Parties Liquidity”), as of the last day of any fiscal month ending on or after November 30, 2019, of at least $10,000,000. As a condition to executing the 2019 Refinancing Amendment Number One and Waiver, the loan parties will be required to pay a non-refundable waiver fee of $400,000 and a non-refundable amendment fee of $1,000,000 (the “PIK First Amendment Fee”, which shall be paid in kind by adding the PIK First Amendment Fee to the outstanding principal amount of the term loan under the 2019 Refinancing Agreement as additional principal obligations thereunder on and as of the effective date 2019 Refinancing Amendment Number One and Waiver).

~~During December 2020, the Company was not in compliance with the collateral coverage debt covenant as defined by the~~ Term Loan ~~financing agreement. The Company~~ was required to maintain at all times a Collateral Coverage Amount (as defined in the Term Loan Financing Agreement) equal to or greater than the aggregate outstanding principal amount of the Term Loans. The Company calculated its Collateral Coverage amount at $37.9 million as of December 31, 2020, the aggregate outstanding principal amount of Term Loans was $39.0 million as of that same date for an excess of debt over collateral of $1.1 million. On February 1, 2021, the Company, LFS and LHLLC entered into a Waiver - Collateral Coverage Amount (December 2020) ("December 2020 Waiver") with the lenders party thereto and Cortland Capital Market Services LLC as collateral agent and administrative agent. The December 2020 Waiver includes a waiver of the Company's compliance with the Collateral Coverage Amount for the month ending December 31, 2020. The lender waived the event of default arising from this noncompliance as of December 31, 2020, while reserving its rights with respect to covenant compliance in future months.

13.00%.

2019 Refinancing Agreement - CB Warrants

In connection with the 2019 Refinancing Agreement, on the 2019 Refinancing Closing Date, the Company issued to CB and the other lenders under the 2019 Refinancing Agreement warrants (the “CB Warrants”) to purchase up to a maximum of 263,314 shares of the Company's common stock at an exercise price of $7.63 per share subject to certain adjustments, including for stock dividends, stock splits or reclassifications. The actual number of shares of common stock into which the CB Warrants were exercisable at any given time were equal to: (i) the product of (x) the number of shares equal to 2% of the Company’s issued and outstanding shares of common stock on the 2019 Refinancing Closing Date on a fully diluted basis and (y) the percentage of the total 2019 Delayed Draw Term Loan made as of the exercise date, minus (ii) the number of shares previously issued under the CB Warrants. As of the 2019 Refinancing Closing Date through ~~February 24,~~the 2021 0Refinancing Date, no amounts had been drawn on the 2019 Delayed Draw Term Loan, so 0no portion of the CB Warrants ~~was~~were exercisable. The CB Warrants were to be exercised for cash or on a “cashless basis,” subject to certain adjustments, at any time after the 2019 Refinancing Closing Date until the expiration of such warrant at 5:00 p.m., New York time, on the earlier of (i) the five (5) year anniversary of the 2019 Refinancing Closing Date, or (ii) the liquidation of the Company.

~~Accounting for the 2019 Term Loans and CB Warrants~~

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The CB Warrants represented a freestanding financial instrument that was classified as a liability because the CB Warrants met the definition of a derivative instrument that does not meet the equity scope exception (i.e., the CB Warrants were not indexed to the entity’s own equity). In addition, the material weakness penalty described above was evaluated as an embedded derivative liability and bifurcated from the 2019 Term Loans as it represented a non-credit related embedded feature that provides for net settlement. Both the CB Warrants liability and the embedded derivative liability were required to be initially and subsequently measured at fair value. The initial fair values of the CB Warrants liability and the embedded derivative liability approximated $0.9 million and $0.4 million, respectively, on the Refinancing Closing Date. The Company estimated these fair values by using the Black-Scholes-Merton option pricing model and a probability-weighted discounted cash flow approach.

The CB Warrants liability was included in other long-term liabilities. The Company remeasured the fair value of the CB Warrants liability as of December 31, 2020 and February 24, 2021 prior to the refinancing date and recorded any adjustments as other income (expense). At February 24, 2021 and December 31, 2020, the CB Warrants liability was $2.0 million. For the ~~three months ended March 31,~~period from January 1, 2021 ~~and March 31, 2020,~~through the ~~Company recorded other income of $14 thousand and $0.2 million, respectively, to reflect~~2021 Refinancing Date, the ~~change in fair value of the CB Warrants liability.~~

The proceeds for the 2019 Term Loan were first allocated to the CB Warrants liability and embedded derivative liability based on their respective fair values with a corresponding amount of $1.3 million recorded as a debt discount to the 2019 Term Loans. In addition, the Company incurred approximately $3.9 million of debt issuance costs, including $1.4 million related to the first amendment, for the 2019 Term Loans that have also been recorded as a debt discount. The combined debt discount from the CB Warrants liability, embedded derivative liability and the debt issuance costs were being amortized into interest expense over the term of the 2019 Term Loans using the effective interest method and were expensed on the refinancing date as a loss on early debt extinguishment. The Company recorded interest expense for the amortization of the CB Warrants liability and embedded derivative debt discounts of $0.1 million ~~for both the three months ended March 31, 2021 and 2020,~~ and recorded an additional $0.1 ~~million and $0.4~~ million of interest expense for the amortization of the debt issuance ~~costs for the three months ended March 31, 2021 and March 31, 2020, respectively.~~

costs.

2019 ABL Credit Agreement

On the 2019 Refinancing Closing Date, LFS also entered into a financing agreement with the lenders thereto and Citizens Bank, N.A., as collateral agent, administrative agent and origination agent (the “2019 ABL Credit Agreement” and, together with the 2019 Refinancing Agreement, the “Refinancing Agreements”). The 2019 ABL Credit Agreement consisted of a $15.0 million revolving credit facility (the “2019 Revolving Credit Facility”). Proceeds of the 2019 Revolving Credit Facility were to be used for general corporate purposes. On the 2019 Refinancing Closing Date, the Company ~~had nothing drawn on~~entered into an amendment to the 2019 ABL Credit Agreement (as amended, 2019 ABL Credit Amendment Number One and ~~$14.0 million of available borrowing capacity thereunder (net of a $1.0 million reserve imposed by the lender).~~

~~The 2019 Refinancing Borrowers and Guarantors~~Waiver), which amended certain provisions under the 2019 ABL Credit ~~Agreement were the same as under the 2019 Refinancing~~ Agreement. The 2019 ABL Credit Agreement was secured by a second-priority lien on the real property of the Loan Parties (behind the 2019 Refinancing Agreement) and a first-priority lien on substantially all other assets of the Loan Parties.

~~2019 ABL Credit Agreement - Interest Rates and Fees~~

The interest rate on borrowings under the 2019 ABL Credit Agreement was, at the ~~2019 Refinancing Borrowers’~~ option of LFS and its subsidiaries, either LIBOR (with a 2.0% floor) plus an applicable margin ranging from 3.00% to 3.50% or a base rate (with a 3.0% minimum) plus an applicable margin ranging from 2.00% to 2.50%. At ~~February 24,~~the 2021 ~~and March 31, 2020,~~Refinancing Date, the interest rate in effect on the 2019 ABL Credit Agreement was 5.25%.

~~2019 ABL Credit Agreement - Other Terms and Conditions~~

~~The 2019 ABL Credit Agreement was set to mature on April 12, 2022. There was also an unused line fee ranging from 0.250% to 0.375% per annum on undrawn amounts.~~

The 2019 ABL Credit Agreement contained representations and warranties, and covenants which are customary for debt facilities of this type. Unless the Required Lenders otherwise consented in writing, the covenants limited the abilityAs of the Company and its restricted subsidiaries to, among other things, generally, to (i) incur additional indebtedness or issue preferred stock, (ii) pay dividends or make distributions to the Company’s stockholders, (iii) purchase or redeem the Company’s equity interests, (iv) make investments, (v) create liens on their assets, (vi) enter into transactions with the Company’s affiliates, (vii)

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sell assets other than in the ordinary course of business or another permitted disposition of assets and (viii) merge or consolidate with, or dispose of substantially all of the Company’s assets to, other companies.

The 2019 ABL Credit Agreement included customary events of default and other provisions that could require all amounts due thereunder to become immediately due and payable, either automatically or at the option of the lenders, if the Company failed to comply with the terms of the 2019 ABL Credit Agreement or if other customary events occur.

The 2019 ABL Credit Agreement also contained a financial maintenance covenant for the 2019 Revolving Credit Facility, which is a requirement for the Total Leverage Ratio of the Company and its Subsidiaries not to exceed an amount beginning at 4.00 to 1.00 through September 30, 2019, and stepping down to 1.75 to 1.00 effective July 1, 2021. In addition, the parties to the 2019 ABL Credit Agreement entered into an amendment which, among other changes revises the maximum permitted Total Leverage Ratio, starting at 3.30 to 1.00 on October 1, 2019 with a peak ratio of 4.25 during March 2020 along with varying monthly rates culminating in the lowest Total Leverage Ratio of 2.00 to 1.00 on April 1, 2021 ~~through the term of such agreement.~~

In connection with the 2019 ABL Credit Amendment Number One and Waiver, the parties amended certain provisions of the 2019 ABL Credit Agreement, including, among other changes to (i) require the approval of the origination agent and, generally, the lenders representing at least 50.1% of the aggregate undrawn revolving loan commitment or unpaid principal amount of the term loans, prior to effecting any permitted acquisition; (ii) revise the maximum permitted Total Leverage Ratio, starting at 3.30 to 1.00 on October 1, 2019 with a peak ratio of 4.25 during March 2020 along with varying monthly rates culminating in the lowest Total Leverage Ratio of 2.00 to 1.00 on April 1, 2021 through the term of the 2019 ABL Credit Agreement; and (iii) require the Loan Parties Liquidity as of the last day of any fiscal month ending on or after November 30, 2019, of at least $10,000,000, as described above in the Amendment Number One to 2019 Refinancing ~~Agreement and Waiver. As a condition to executing the 2019 ABL Credit Amendment Number One and Waiver, the loan parties were required to pay a non-refundable waiver fee of $7,500.~~

As noted above in the section titled: 2019 Refinancing Agreement - Other Terms and Conditions, the Company was subject to cross-default under our 2019 Revolving Credit Facility as a result of our failure to satisfy the Collateral Coverage Amount as defined in the Term Loan Financing Agreement, which required the company to obtain a waiver. Accordingly, on February 1, 2021, the Company, LFS and LHLLC entered into a Waiver - Collateral Coverage Amount (December 2020) (“December 2020 Waiver”) with the lenders party thereto and Citizens Bank, N.A., as collateral agent and administrative agent. The December 2020 Waiver includes a waiver of the Company's compliance with the Collateral Coverage Amount for the month ending December 31, 2020. The lender has waived the event of default arising from this noncompliance as of December 31, 2020, while reserving its rights with respect to covenant compliance in future months.

~~At March 31, 2021 and December 31, 2020,~~Date, the Company had irrevocable letters of credit in the amount of $3.4 million with its lender to secure obligations under its self-insurance program.

~~Accounting for~~ Prior to its refinancing in February 2021, the 2019 ABL ~~Credit Agreement~~

~~The Company incurred approximately $0.9 million of debt issuance costs for the 2019 ABL Credit~~ Agreement that had been recorded as a non-current deferred asset. The deferred asset was amortized into interest expense over the term of the 2019 Term ABL Credit Agreement using the effective interest method and then expensed on the refinancing date as a loss on early debt extinguishment. The Company recorded interest expense of $23 thousand and $0.1 million for the amortization the debt issuance costs for the three months ended March 31, 2021 and 2020, respectively. As of February 24, 2021, the Company had 0thing drawn on the 2019 ABL Credit Agreement.

would have matured in April 2022.

Wintrust Term and Revolving Loans

On ~~February 24,~~the 2021 Refinancing Date, LFS, LHLLC and the direct and indirect subsidiaries of LFS from time to time included as parties to the agreement (the ~~“Guarantors”~~“Wintrust Guarantors”) entered into a ~~Credit Agreement~~credit agreement (the ~~“Credit~~“Wintrust Credit Agreement”) by and among the LFS, LHLLC, Wintrust Guarantors, the lenders party thereto from time to time, Wheaton Bank & Trust Company, N.A., a subsidiary of Wintrust Financial Corporation (collectively, “Wintrust”), as administrative agent and L/C issuer, Bank of the West as documentation agent, M&T Bank as syndication agent, and Wintrust as lead arranger and sole book runner.

In accordance with the terms of the Wintrust Credit Agreement, Lenders ~~provide~~provided to LFS (i) a $30.0 million senior secured term loan (the ~~“Term~~“Wintrust Term Loan”); and (ii) a $25.0 million senior secured revolving credit facility with a $5.0 million sublimit for the issuance of letters of credit (the ~~“Revolving~~“Wintrust Revolving Loan” and, together with the Wintrust Term Loan, the ~~“Loans”~~“Wintrust Loans”). Proceeds of the Wintrust Loans were used to refinance certain existing indebtedness, finance working

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~~refinance certain existing indebtedness, finance working~~ capital and other general corporate purposes and fund certain fees and expenses associated with the closing of the Wintrust Loans.

The Wintrust Revolving Loan ~~bears~~bore interest, at ~~the~~ LFS’s option, at either LIBOR (with a 0.25% floor) plus 3.5% or a base rate (with a 3.0% floor) plus 0.50%, subject to a 50 basis point step-down based on the ratio between the senior debt of the Company and its subsidiaries to the EBITDA (earnings before interest, income taxes, depreciation and amortization) of the LFS and its subsidiaries for the most recently ended four fiscal ~~quarters (the “Senior Leverage Ratio”).~~quarters. The Wintrust Term Loan ~~bears~~bore interest, at LFS’s option, at either LIBOR (with a 0.25% floor) plus 4.0% or a base rate (with a 3.0% floor) plus 1.00%, subject to a 50 (for LIBOR) or 75 (for base rate) basis point step-down based on the Senior Leverage Ratio.

LFS iswas required to make principal payments on the Wintrust Term Loan in $0.5 million installments on the last business day of each month commencing on March 31, 2021 with a final payment of all principal and interest not sooner paid on the Wintrust Term Loan due and payable on February 24, 2026.

In conjunction with the Jake Marshall Transaction, the Company entered into an amendment to the Wintrust Credit Agreement (the “A&R Wintrust Credit Agreement”). In accordance with the terms of the A&R Credit Agreement, Lenders provided to LFS (i) a $35.5 million senior secured term loan (the “A&R Wintrust Term Loan”); and (ii) a $25 million senior secured revolving credit facility with a $5 million sublimit for the issuance of letters of credit (the “A&R Wintrust Revolving Loan” and, together with the Term Loan, the “A&R Wintrust Loans”). The overall Wintrust Term Loan commitment under the A&R Wintrust Credit Agreement was recast at $35.5 million in connection with the A&R Credit Agreement. A portion of the A&R Wintrust Term Loan commitment was used to fund the closing purchase price of the Jake Marshall Transaction. The A&R Credit Agreement was also amended to: (i) permit the Company to undertake the Jake Marshall Transaction (ii) make certain adjustments to the covenants under the A&R Credit Agreement (which were largely done to make certain adjustments for the Jake Marshall Transaction) (iii) allow for the Earnout Payments under the Jake Marshall Transaction and (iv) make other corresponding changes to the A&R Credit Agreement.

The A&R Wintrust Revolving Loan ~~will mature~~bears interest, at LFS’s option, at either Term SOFR (as defined in the A&R Credit Agreement) (with a 0.15% floor) plus 3.60%, 3.76% or 3.92% for a tenor of one month, three months or six months, respectively, or a base rate (as set forth in the A&R Credit Agreement) (with a 3.0% floor) plus 0.50%, subject to a 50 basis point step-down based on the ratio between the senior debt of the Company and ~~become~~its subsidiaries to the EBITDA of LFS and its subsidiaries for the most recently ended four fiscal quarters (the “Senior Leverage Ratio”). The A&R Wintrust Term Loan bears interest, at LFS’s option, at either Term SOFR (with a 0.15% floor) plus 4.10%, 4.26% or 4.42% for a tenor of one month, three months or six months, respectively, or a base rate (with a 3.0% floor) plus 1.00%, subject to a 50 (for Term SOFR) or 75 (for base rate) basis point step-down based on the Senior Leverage Ratio. At March 31, 2022, the interest rate in effect on the Wintrust Term Loan was 4.50%

LFS is required to make principal payments on the A&R Wintrust Term Loan in installments of approximately $0.6 million on the last business day of each month commencing on December 31, 2021. Subject to defaults and remedies under the A&R Credit Agreement, the final payment of all principal and interest not sooner paid on the A&R Wintrust Term Loan is due and payable on February 24, 2026. Subject to defaults and remedies under the A&R Credit Agreement, the A&R Wintrust Revolving Loan matures and becomes due and payable by LFS on February 24, 2026.

The A&R Wintrust Loans are secured by (i) a valid, perfected and enforceable lien of the ~~Administrative Agent~~administrative agent on the ownership interests held by each of LFS and Wintrust Guarantors in their respective subsidiaries; and (ii) a valid, perfected and enforceable lien of the ~~Administrative Agent~~administrative agent on each of LFS and Wintrust Guarantors’ personal property, fixtures and real estate, subject to certain exceptions and limitations. Additionally, the re-payment of the A&R Wintrust Loans shall be jointly and severally guaranteed by each Wintrust Guarantor.

The A&R Credit Agreement contains representations and warranties, covenants and events of default that are customary for facilities of this type, as more particularly described in the A&R Credit Agreement. The A&R Wintrust Loans also contain 3 financial maintenance covenants, including (i) a requirement to have as of the last day of each quarter for the senior leverage ratio of the Company and its ~~Subsidiaries (the “Total Leverage Ratio”)~~subsidiaries not to exceed an amount beginning at ~~2.25 to 1.00 through December 31, 2021, and stepping down to~~ 2.00 to 1.00 ~~at all times thereafter,~~ (ii) a fixed charge coverage ratio of not less than 1.20 to 1.00 as of the last day of each fiscal quarter commencing with the fiscal quarter ending ~~March~~December 31, 2021, and (iii) 0no unfinanced capital expenditures, except for unfinanced capital expenditures in the ordinary course of business not exceeding in the aggregate $4.0 million during any fiscal year; and no default or event of default (as defined by the agreement) has occurred and is continuing, 50% of any portion of this annual limit, if not expended in the fiscal year for which it is permitted, may be carried over for expenditure in the next following fiscal year as stipulated by the agreement. LFS and its affiliates maintain various commercial and service relationships with certain members of the syndicate and their affiliates in the ordinary course of business.

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As of March 31, ~~2021,~~2022, the Company had $9.4 million of borrowings outstanding under the A&R Wintrust Revolving Loan. The Company did not have any borrowings outstanding under the A&R Wintrust Revolving Loan as of December 31, 2021. During the three months ended March 31, 2022, the maximum outstanding borrowings under the A&R Wintrust Revolving Loan at any time was $9.4 million and the average daily balance was approximately $0.1 million. For the three months ended March 31, 2022, the Company incurred interest on the A&R Wintrust Revolving Loan at a weighted average annual interest rate of 4.00%. For the three months ended March 31, 2022, commitment fees of approximately $14 thousand were paid to maintain credit availability under the A&R Wintrust Revolving Loan.

At March 31, 2022, the Company had irrevocable letters of credit in ~~compliance~~the amount of $3.3 million with ~~all debt covenants as required by~~ the lenders under the A&R Wintrust ~~Loans.~~

Credit Agreement to secure obligations under its self-insurance program.

The following is a summary of the ~~additional~~applicable margin and commitment fees payable on the available ~~term loan~~A&R Wintrust Term Loan and ~~revolving~~A&R Wintrust Revolving Loan credit commitment:

Level Senior Leverage Ratio Additional Margin for
Prime Rate loans Additional Margin for
Prime Revolving loans Additional Margin for Eurodollar Term loans Additional Margin for Eurodollar Revolving loans Commitment Fee
I Greater than 1.00 to 1.00 1.00 % 0.50 % 4.00 % 3.50 % 0.25 %
II Less than or equal to 1.00 to 1.00 0.25 % 0 % 3.50 % 3.00 % 0.25 %
`


Level	Senior Leverage Ratio	Additional Margin for Prime Rate loans		Additional Margin for Prime Revolving loans		Additional Margin for Eurodollar Term loans
I	Greater than 1.00 to 1.00	1.00	%	0.50	%	0.25	%
II	Less than or equal to 1.00 to 1.00	0.25	%	—	%	0.25	%

As of March 31, 2022, the Company was in compliance with all financial maintenance covenants as required by the A&R Wintrust Loans.

Note 87 – Equity

The Company’s second amended and restated certificate of incorporation currently authorizes the issuance of 100,000,000 shares of common stock, par value $0.0001, and 1,000,000 shares of preferred stock, par value $0.0001. ~~The~~

Warrants

In conjunction with the Company's initial public offering, the Company issued Public Warrants, Private Warrants and $15 Exercise Price Sponsor ~~warrants were~~Warrants. The Company issued certain Merger Warrants and Additional Merger Warrants in conjunction with the ~~initial public offering and~~Company's business combination with LHLLC in July 2016 (the “Business Combination”). On July 20, 2021, the ~~Merger~~Public Warrants, Private Warrants, and Additional Merger ~~warrants were issued in conjunction with~~Warrants expired by their terms.

The following table summarizes the ~~business combination.~~

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March 31, 2021 December 31, 2020
Public Warrants(1)(5)
2,140,219 2,300,000
Private Warrants(1)(5)
99,000 99,000
$15 Exercise Price Sponsor Warrants(2)(5)
600,000 600,000
Merger Warrants(3)(6)
629,643 631,119
Additional Merger Warrants(4)(6)
935,068 946,680
Total 4,403,930 4,576,799

~~(1)~~ ~~exercisable for one-half of one share~~underlying shares of common stock ~~at an exercise price of $5.75 per half share ($11.50 per whole share)~~with respect to outstanding warrants:


	March 31, 2022	December 31, 2021


$15 Exercise Price Sponsor Warrants(1)(2)	600,000	600,000
Merger Warrants(3)(4)	629,643	629,643

Total	1,229,643	1,229,643

~~(2)~~(1) ~~exercisable~~Exercisable for 1 share of common stock at an exercise price of $15.00 per share (“$15 Exercise Price Sponsor Warrants”).

~~(3)~~(2) ~~exercisable for 1 share of common share at an exercise price of $12.50 per share~~

~~(4)~~ ~~exercisable for 1 share of common stock at an exercise price of $11.50 per share~~

~~(5)~~ ~~issued~~Issued under a warrant agreement dated July 15, 2014, between Continental Stock Transfer and Trust Company, as warrant agent, and the ~~Company~~Company.

~~(6)~~(3) ~~issued~~Exercisable for 1 share of common stock at an exercise price of $12.50 per share (“Merger Warrants”).

(4) Issued to the sellers of ~~LHLLC~~LHLLC.

Incentive Plan

Upon the consummation of the Company's Business Combination, the Company adopted an omnibus incentive plan (the “Omnibus Incentive Plan”) for which all future equity awards will be granted thereunder.

On ~~May 24, 2020~~March 9, 2021, the Board of Directors approved ~~further~~certain amendments to the Company's ~~amended and restated~~ Omnibus Incentive Plan (the “2021 Amended and Restated Omnibus Incentive Plan”) to increase the number of shares of the Company's common stock that may be issued pursuant to awards by ~~500,000,~~600,000, for a total of ~~1,650,000~~2,250,000 shares, and ~~extend~~extended the term of the plan so that it will expire on the tenth anniversary of the date the stockholders approve the 2021 Amended and Restated Omnibus Incentive Plan. The amendments were approved by the Company's stockholders at the Annual Meeting held on ~~July 14, 2020.~~June 16, 2021.

See Note ~~17 - Management Incentive Plans~~14 for ~~RSUs~~a discussion of the Company's management incentive plans for restricted stock units (“RSUs”) granted, vested, forfeited and remaining unvested.

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Employee Stock Purchase Plan

Upon approval of the Company's stockholders on May 30, 2019, the Company adopted the Limbach Holdings, Inc. 2019 Employee Stock Purchase Plan ~~(“the ESPP”~~(the “ESPP”). On January 1, 2020, the ESPP went into effect. The ESPP enables eligible employees, as defined by the ESPP, the right to purchase the Company's common stock through payroll deductions during consecutive subscription periods at a purchase price of ~~not less than~~ 85% of the fair market value of a common share at the end of each offering period. Annual purchases by participants are limited to the number of whole shares that can be purchased by an amount equal to 10 percent of the participant's compensation or $5,000, whichever is less. Each offering period of the ESPP lasts six months, commencing on January 1 and July 1 of each year. The amounts collected from participants during a subscription period are used on the exercise date to purchase full shares of common stock. Participants may withdraw from an offering before the exercise date and obtain a refund of amounts withheld through payroll deductions. Compensation cost, representing the 15% discount applied to the fair market value of common stock, is recognized on a straight-line basis over the six-month vesting period during which employees perform related services. Under the ESPP, 500,000 shares are authorized to be issued. In ~~July 2020 and~~ January ~~2021,~~2022, the Company issued ~~30,825 and 8,928~~12,898 shares of its common stock ~~respectively,~~ to participants in the ESPP who contributed to the plan ~~through~~during the ~~June 30, 2020 and~~offering period ending December 31, ~~2020 offering periods, respectively. Stock compensation expense related~~2021. In January 2021, the Company issued a total of 8,928 shares of its common stock to participants in the ESPP who contributed to the ~~ESPP was $17 thousand for~~plan during the ~~three months ended March~~offering period ending December 31, ~~2021.~~2020. As of March 31, ~~2020, 0~~2022, 431,209 shares ~~had been issued~~remain available for future issuance under the ESPP.

2021 Public Offering

On February 10, 2021 the Company entered into an underwriting agreement (“Underwriting Agreement”) with Lake Street Capital Markets, LLC (“Underwriter”) relating to an underwritten public offering (the ~~“Offering”~~“2021 Public Offering”). On February 12, 2021, the Company sold to the Underwriter 1,783,500 shares of its Common Stock. The Underwriting Agreement provided for purchase and sale of the Shares by the company to the Underwriter at a price of $11.28 per share. The price to the public in the 2021 Public Offering was $12.00 per share. In addition, under the terms of the Underwriting Agreement, the Company granted the Underwriter a 30-day option to purchase up to an additional 267,525 shares of Common Stock to cover over-allotments, if any, on the same terms and conditions. The net proceeds to the Company from the 2021 Public Offering after deducting the underwriting discounts and commissions were approximately $19.8 million. On February 18, 2021, the Company received approximately $3.0 million of net proceeds for the sale of 267,525 shares in connection with the exercise of the over-allotment option.

Note 98 – Fair Value Measurements

The Company measures the fair value of financial assets and liabilities in accordance with ASC Topic 820 – Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and requires an entity to maximize the use of observable inputs and minimize

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the use of unobservable inputs. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

•Level 1 — inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date;

•Level 2 — inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities; and

•Level 3 — unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company believes that the carrying amounts of its financial instruments, including cash and cash equivalents, trade accounts receivable and accounts payable, consist primarily of instruments without extended maturities, which approximate fair value primarily due to their short-term maturities and low risk of counterparty default. WeThe Company also ~~believe~~believes that the carrying ~~value~~values of the ~~2019 Refinancing Agreement term loan and 2021~~A&R Wintrust Term Loan ~~approximates its~~and the A&R Wintrust Revolving Loan approximate their respective fair values due to the variable ~~rate~~rates on such debt. As of ~~February 24, 2021 and December~~March 31, ~~2020,~~2022, the Company determined that the fair value of ~~its 2019 Revolving Agreement term loan was $39.0 million. As of March 31, 2021,~~ the ~~Company determined that the fair value of its 2021~~A&R Wintrust Term Loan was ~~$29.5~~$33.0 million and the A&R Wintrust Revolving Loan was $9.4 million. ~~There were 0 outstanding borrowings on the Company's 2019 ABL Credit Agreement revolver at February 24, 2021 and December 31, 2020.~~ Such fair ~~values were~~value was determined using discounted estimated future cash flows using level 3 inputs.

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As a part of the total consideration for the Jake Marshall Transaction, the Company recognized $3.1 million in contingent consideration, of which the entire balance was included in other long-term liabilities in the Company’s condensed consolidated balance sheet as of March 31, 2022. The Company determined the initial fair value of the Earnout Payments based on the Monte Carlo Simulation method, which represented a Level 3 measurement. As of the Effective Date, the Earnout Payments associated with the Jake Marshall Transaction were valued utilizing a discount rate of 6.83%. The discount rate was calculated using the build-up method with a risk-free rate commensurate with the term of the Earnout Payments based on the U.S. Treasury Constant Maturity Yield. Subsequent to the Effective Date, the Earnout Payments are re-measured at fair value each reporting period. No changes in the estimated fair value of the contingent payments were recognized during the three months ended March 31, 2022.

Prior to its termination as a result of the 2021 Refinancing, the Company's CB Warrants were determined using the Black-Scholes-Merton option pricing model. The valuation inputs included the quoted price of the Company’s common stock in an active market, volatility and expected life of the warrants, which were considered Level 3 inputs. The CB Warrants liability was included in other long-term liabilities on the Company's Condensed Consolidated Balance Sheets. The Company remeasured the fair value of the CB Warrants liability as of February 24, 2021 and recorded any adjustments to other income (expense). At February 24, 2021, the CB Warrants liability was $2.0 million. Due to the extinguishment of the CB Warrants on the 2021 Refinancing Date, there was no liability associated with the CB Warrants recorded as of March 31, 2021. For the period from January 1, 2021 through the 2021 Refinancing Date, the Company recorded other income of $14 thousand to reflect the change in the CB Warrants liability.

Note 109 – Earnings per Share

Earnings per Share

The Company calculates earnings per share in accordance with ASC Topic 260 - Earnings Per Share (“EPS”). Basic earnings per common share applicable to common stockholders is computed by dividing earnings applicable to common stockholders by the weighted-average number of common shares outstanding and assumed to be outstanding. Diluted EPS assumes the dilutive effect of outstanding common stock warrants, shares issued in conjunction with the Company’s ESPP and RSUs, all using the treasury stock method.

Three months ended March 31,
(in thousands, except per share amounts) 2021 2020
EPS numerator:
Net loss $ (2,282) $ (52)
EPS denominator:
Weighted average shares outstanding – basic 9,218 7,798
Impact of dilutive securities 0 0
Weighted average shares outstanding – diluted 9,218 7,798
EPS:
Basic $ (0.25) $ (0.01)
Diluted $ (0.25) $ (0.01)
The following table sets forth the computation of the basic and diluted earnings per share attributable to the Company's common shareholders for the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31,
(in thousands, except per share amounts)	2022		2021
EPS numerator:
Net loss	$	(1,516)	$	(2,282)

EPS denominator:
Weighted average shares outstanding – basic	10,421		9,218
Impact of dilutive securities(1)	—		—
Weighted average shares outstanding – diluted	10,421		9,218

EPS:
Basic	$	(0.15)	$	(0.25)
Diluted	$	(0.15)	$	(0.25)

(1)

~~Table~~For the three months ended March 31, 2022 and 2021, the Company excluded 153,741 and 603,847, respectively, of ~~Contents~~weighted average anti-dilutive securities related to certain of the Company's outstanding common stock warrants, shares issued in conjunction with the Company's ESPP and nonvested RSUs.

The following table summarizes the securities that were antidilutive or out-of-the-money, and therefore, were not included in the computations of diluted ~~loss~~income per common share:

Three months ended March 31,
2021 2020
In-the-money warrants 365,556 0
Out-of-the-money warrants (see Note 8) 600,000 4,576,799
Service-based RSUs (See Note 17) 143,647 70,120
Performance and market-based RSUs(1)
90,729 0
Employee Stock Purchase Plan 3,627 0
Total 1,203,559 4,646,919

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	Three Months Ended March 31,
	2022	2021
In-the-money warrants	—	365,556
Out-of-the-money warrants (see Note 7)	1,229,643	600,000
Service-based RSUs (See Note 14)	70,999	143,647
Performance and market-based RSUs(1)	87,053	90,729
Employee Stock Purchase Plan	3,547	3,627
Total	1,391,242	1,203,559

(1) For the ~~quarter~~three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, certain PRSU and MRSU awards (each defined in Note 14) were not included in the computation of diluted ~~loss~~income per common share because the performance and market conditions were not satisfied during the periods and would not be satisfied if the reporting date was at the end of the contingency period.

Note 1110 – Income Taxes

The Company is taxed as a C corporation.

For interim periods, the provision for income taxes (including federal, state, local and foreign taxes) is calculated based on the estimated annual effective tax rate, adjusted for certain discrete items for the full fiscal year. Cumulative adjustments to the Company's estimate are recorded in the interim period in which a change in the estimated annual effective rate is determined. Each quarter ~~we update our~~the Company updates its estimate of the annual effective tax rate, and if ~~our~~its estimated tax rate changes, ~~we make~~the Company makes a cumulative adjustment.

The Company had an effective tax benefit rate of 28.9% and 31.2% for the three months ended March 31, 2022 and 2021, ~~and~~respectively. The decrease in the effective tax benefit rate was the result of certain discrete tax items. During the three months ended March 31, ~~2020 was 31.2%~~2022 and ~~92.4%, respectively. NaN~~2021, the Company recorded discrete tax items of approximately $0.1 million and $0.2 million, respectively, related to excess tax benefits associated with stock based compensation.

No valuation allowance was required as of March 31, ~~2021~~2022 or December 31, ~~2020.~~

The Company had previously recorded a liability for unrecognized tax benefits (“UTB”) related to tax positions taken on its various income tax returns in open tax periods. If recognized, a portion of unrecognized tax benefits would favorably impact the effective tax rate that is reported in future periods. The Company filed to change an improper tax method of accounting in the fourth quarter of 2020 related to the UTB that affords the Company IRS audit protection in past periods. Therefore, the total unrecognized tax benefits were reduced in the fourth quarter of 2020.

~~The following is a reconciliation of the beginning and ending unrecognized tax benefits:~~

March 31, 2021 December 31, 2020
Balance at beginning of period $ 0 $ 1,130
Gross increases in prior period tax positions 0 0
Gross increases in current period tax positions 0 0
Decreases related to prior year tax positions 0 (1,130)
Balance at end of period $ 0 $ 0
2021.

Note 1211 – Operating Segments

~~The~~As discussed in Note 1, the Company ~~determined its operating segments on the same basis that it assesses performance and makes operating decisions. The Company manages and measures the performance of its business~~operates in 2 ~~distinct operating segments. As of January 1, 2021,~~segments, (i) GCR, in which the Company ~~renamed its existing 2 reportable segments~~generally manages new construction or renovation projects that involve primarily HVAC, plumbing, or electrical services awarded to ~~reflect its 2 distinct approaches~~the Company by general contractors or construction managers, and (ii) ODR, in which the Company provides maintenance or service primarily on HVAC, plumbing or electrical systems, building controls and specialty contracting projects direct to, our customer base and to better align with our owner direct strategy. The previously named Construction Segment is now known as General Contractor Relationships (“GCR”); the previously named Service Segment is now known as Owner Direct Relationships (“ODR”).or assigned by, building owners or property managers. These segments are reflective of how the Company’s Chief Operating Decision Maker (“CODM”) reviews operating results for the purposes of allocating resources and assessing performance. The Company's CODM is comprised of its Chief Executive Officer, Chief Financial Officer and Chief Operating Officer.

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~~The accounting policies of the segments are the same as those described in the summary of significant accounting policies.~~ The CODM evaluates performance based on income from operations of the respective ~~segments~~branches after the allocation of Corporate office operating expenses. In accordance with ASC Topic 280 – Segment Reporting, the Company has elected to aggregate all of the construction ~~activity~~branches into 1 GCR reportable segment and all of the service branches into 1 ODR reportable segment. All transactions between segments are eliminated in consolidation. ~~Our~~The Company's corporate department provides general and administrative support services to ~~our~~its 2 operating segments. The CODM allocates costs between segments for selling, general and administrative expenses and depreciation expense.

All of the Company’s identifiable assets are located in the United States, which is where the Company is domiciled. Interest expense is not allocated to segments because of the corporate management of debt service including interest.

Condensed consolidated segment information for the ~~periods presented is~~three months ended March 31, 2022 and 2021 were as follows:

Three months ended March 31,
(in thousands) 2021 2020
Statement of Operations Data:
Revenue:
GCR $ 84,804 $ 109,486
ODR 28,540 29,286
Total revenue 113,344 138,772
Gross profit:
GCR 9,395 10,982
ODR 7,834 7,242
Total gross profit 17,229 18,224
Selling, general and administrative:
GCR 9,114 10,174
ODR 7,354 6,330
Corporate 677 295
Total selling, general and administrative 17,145 16,799
Amortization of intangibles 104 143
Operating (loss) income $ (20) $ 1,282
Operating (loss) income for reportable segments $ (20) $ 1,282
Less unallocated amounts:
Interest expense, net (1,264) (2,158)
Loss on early debt extinguishment (1,961) 0
(Loss) gain on sale of property and equipment (86) 29
Gain on change in fair value of warrant liability 14 161
Total unallocated amounts (3,297) (1,968)
Loss before income taxes $ (3,317) $ (686)
Other Data:
Depreciation and amortization:
GCR $ 1,036 $ 1,030
ODR 355 331
Corporate 104 143
Total other data $ 1,495 $ 1,504

2017

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~~Summarized~~


	Three months ended March 31,
(in thousands)	2022		2021
Statement of Operations Data:
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

Selling, general and administrative:
GCR	8,565		9,114
ODR	9,570		7,354
Corporate	599		677
Total selling, general and administrative	18,734		17,145
Amortization of intangibles	399		104
Operating loss	$	(793)	$	(20)



Less unallocated amounts:
Interest expense, net	(486)		(1,264)
Loss on disposition of property and equipment	(36)		(86)
Loss on early termination of operating lease	(817)		—
Loss on early debt extinguishment	—		(1,961)
Gain on change in fair value of warrant liability	—		14
Total unallocated amounts	(1,339)		(3,297)
Loss before income taxes	$	(2,132)	$	(3,317)

Other Data:
Depreciation and amortization:
GCR	$	1,108	$	1,036
ODR	555		355
Corporate	399		104
Total other data	$	2,062	$	1,495

The Company does not identify capital expenditures and total assets by segment ~~information~~in its internal financial reports due in part to the shared use of a centralized fleet of vehicles and specialized equipment. Interest expense is ~~as follows:~~

Three months ended March 31, 2021 Three months ended March 31, 2020
(in thousands) GCR ODR Total GCR ODR Total

Revenue $ 84,804 $ 28,540 $ 113,344 $ 109,486 $ 29,286 $ 138,772
Gross Profit 9,395 7,834 17,229 10,982 7,242 18,224
Selling, general and administrative 9,114 7,354 16,468 10,174 6,330 16,504
EBIT 281 480 761 808 912 1,720

~~Reconciliation~~also not allocated to segments because of ~~segment gross profit to consolidated loss before income taxes~~

Three months ended March 31,
(in thousands) 2021 2020
Total gross profit from reportable segments $ 17,229 $ 18,224
Selling, general and administrative (17,145) (16,799)
Amortization of intangibles (104) (143)
Total other expenses (3,297) (1,968)
Loss before income taxes $ (3,317) $ (686)
the Company’s corporate management of debt service, including interest.

Note 1312 - Leases

The Company leases real estate, trucks and other equipment. The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement. Classification and initial measurement of the right-of-use asset and lease liability are determined at the lease commencement date. The Company elected the short-term lease measurement and recognition exemption; therefore, leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheets. Instead, the short-term leases are recognized in expense on a straight-line basis over the lease term.

The Company's arrangements include certain non-lease components such as common area and other maintenance for leased real estate, as well as mileage, fuel and maintenance costs related to leased vehicles. For all leased asset classes, the Company has elected to not separate non-lease components from lease components and will account for each separate lease component and

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non-lease component associated with the lease as a single lease component. The Company does not guarantee any residual value in its lease agreements, and there are no material restrictions or covenants imposed by lease arrangements. Real estate leases typically include ~~one~~1 or more options to extend the lease. The Company regularly evaluates the renewal options, and when they are reasonably certain of exercise, the Company includes the renewal period in its lease term. For ~~our~~the Company's leased vehicles, the Company uses the interest rate implicit in its leases with the lessor to discount lease payments at the lease commencement date. When the implicit rate is not readily available, as is the case with ~~our~~the Company's real estate leases, the Company uses quoted borrowing rates on ~~our~~its secured debt.

Related Party Lease Agreement. In conjunction with the closing of the Jake Marshall Transaction, the Company entered into an operating lease for certain land and facilities owned by a former member of JMLLC who became a full-time employee of the Company. The lease term is 10 years and includes an option to extend the lease for 2 successive periods of 2 years each through November 2035. Base rent for the term of the lease is $37,500 per month for the first five years with payment commencing on January 1, 2022. The fixed rent payment is escalated to $45,000 per month for years 6 through 10 of the lease term. Fixed rent payments for the extension term shall be increased from $45,000 by the percentage increase, if any, in the consumer price index from the lease commencement date. In addition, under the agreement, the Company is required to pay its share of estimated property taxes and operating expenses, both of which are variable lease expenses.

Southern California Sublease. In June, 2021, the Company entered into a sublease agreement with a third party for the entire ground floor of its leased space in Southern California, consisting of 71,787 square feet. Under the terms of the sublease agreement, the sublessee is obligated to pay the Company base rent of approximately $0.6 million per year, which is subject to a 3.0% annual rent increase, plus certain operating expenses and other costs. The initial lease term commenced in September 2021 and continues through April 30, 2027. As of March 31, 2022, the Company remains obligated under the original lease for such office space and, in the event the subtenant of such office space fails to satisfy its obligations under the sublease, the Company would be required to satisfy its obligations directly to the landlord under such original lease.

In addition, during the first quarter of 2022, the Company entered into an amendment to the aforementioned sublease agreement, which, among other things, expanded the sublease premises to include the entire second floor of its leased space in Southern California, consisting of 16,720 square feet. Under the terms of the amended sublease agreement, the sublessee is obligated to pay the Company base rent of approximately $0.8 million per year, which is subject to a 3.0% annual rent increase, plus certain operating expenses and other costs. The amended sublease term commenced in March 2022 and continues through April 30, 2027. For the three months ended March 31, 2022, the Company recorded approximately $0.2 million of income in selling, general and administrative expenses related to this sublease agreement.

Pittsburgh Lease Termination. In March, 2022, the Company entered into a lease termination agreement (the “Lease Termination Agreement”) to terminate, effective March 31, 2022, the lease associated with the Company’s office space located in Pittsburgh, Pennsylvania, which previously served as its corporate headquarters. Absent the Lease Termination Agreement, the lease would have expired in accordance with its terms in July 2025. Pursuant to the Lease Termination Agreement, in exchange for allowing the Company to terminate the lease early, the Company agreed to pay a termination fee in the aggregate of approximately $0.7 million in 16 equal monthly installments commencing on April 1, 2022.

In connection with the lease termination, the Company recognized a gain of $0.1 million associated with the derecognition of the operating lease right-of-use asset and corresponding operating lease liabilities associated with the operating lease and recorded a $0.1 million loss on the disposal of leasehold improvements.

The following table summarizes the lease amounts included in ~~our~~the Company's condensed consolidated balance sheets:

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(in thousands) Classification on the Condensed Consolidated Balance Sheets March 31, 2021 December 31, 2020
Assets
Operating
Operating lease right-of-use assets (a)
$ 17,900 $ 18,751
Finance
Property and equipment, net (b)
5,654 6,242
Total lease assets $ 23,554 $ 24,993
Liabilities
Current
   Operating Current operating lease liabilities $ 4,145 $ 3,929
   Finance Current portion of long-term debt 2,473 2,536
Noncurrent
   Operating Long-term operating lease liabilities 14,442 15,459
   Finance Long-term debt 3,406 3,923
Total lease liabilities $ 24,466 $ 25,847

~~(a)~~


(in thousands)	Classification on the Condensed Consolidated Balance Sheets	March 31, 2022		December 31, 2021
Assets
Operating	Operating lease right-of-use assets(1)	$	17,719	$	20,119
Finance	Property and equipment, net(2)	5,111		4,916
Total lease assets		$	22,830	$	25,035

Liabilities
Current
Operating	Current operating lease liabilities	$	3,762	$	4,366
Finance	Current portion of long-term debt	2,458		2,451
Noncurrent
Operating	Long-term operating lease liabilities	14,787		16,576
Finance	Long-term debt	2,859		2,681
Total lease liabilities		$	23,866	$	26,074

(1) Operating lease assets are recorded net of accumulated amortization of ~~$12.9~~$15.6 million at March 31, ~~2021~~2022 and ~~$11.9~~$15.9 million at December 31, ~~2020.~~2021.

~~(b)~~(2) Finance lease assets are recorded net of accumulated amortization of ~~$5.4~~$6.4 million at March 31, ~~2021~~2022 and ~~$5.3~~$5.9 million at December 31, ~~2020.~~

2021.

The following table summarizes the lease costs included in ~~our~~the Company's condensed consolidated statements of operations for the three ~~and~~ months ended March 31, ~~2021~~2022 and ~~2020:~~2021:


			For the Three months ended March 31,						Three Months Ended March 31,
(in thousands)	(in thousands)	Classification on the Condensed Consolidated Statement of Operations	2021		2020		(in thousands)	Classification on the Condensed Consolidated Statement of Operations	2022		2021
Operating lease cost	Operating lease cost	Cost of revenue(a)	$	690	$	880	Operating lease cost	Cost of revenue(1)	$	694	$	690
Operating lease cost	Operating lease cost	Selling, general and administrative(a)	584		383		Operating lease cost	Selling, general and administrative(1)	704		584
Finance lease cost	Finance lease cost						Finance lease cost
Amortization	Amortization	Cost of revenue(b)	674		666		Amortization	Cost of revenue(2)	651		674
Interest	Interest	Interest expense, net(b)	86		92		Interest	Interest expense, net(2)	66		86
Total lease cost	Total lease cost		$	2,034	$	2,021	Total lease cost		$	2,115	$	2,034

(1)

~~(a)~~ Operating lease costs recorded in cost of ~~sales includes~~revenue included $0.1 ~~million and $0.2~~ million of variable lease costs for both the three months ended March 31, ~~2021~~2022 and ~~2020, respectively.~~2021. In addition, $0.1 million of variable ~~leases~~lease costs are included in ~~Selling,~~selling, general and administrative for both the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021. These variable costs consist of ~~our~~the Company's proportionate share of operating expenses, real estate taxes and utilities.

~~(b)~~(2) Finance lease costs recorded in cost of revenue include variable lease costs of $0.8 million for the three months ended March 31, 2022 and $0.6 million for the three months ended March 31, 2021 ~~and 2020 includes $0.6 million and $0.7 million of variable leases costs.~~. These variable lease costs consist of fuel, maintenance, and sales tax charges. ~~NaN variable lease costs for finance leases were recorded in selling, general and administrative.~~

Future minimum commitments for finance and operating leases that have non-cancelable lease terms in excess of one year as of March 31, ~~2021~~2022 were as follows:

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									Operating Leases
Year ending (in thousands):	Year ending (in thousands):	Finance Leases		Operating Leases		Year ending (in thousands):	Finance Leases		Non-Related Party		Related Party(1)		Sublease Receipts(2)		Total Operating
Remainder of 2021		$	2,093	$	3,710
2022		2,339		4,616
Remainder of 2022						Remainder of 2022	$	1,934	$	3,252	$	338	$	(623)	$	2,967
2023	2023	1,343		3,516		2023	1,758		3,108		450		(885)		2,673
2024	2024	532		2,917		2024	1,026		2,502		450		(912)		2,040
2025	2025	11		2,409		2025	500		2,148		450		(939)		1,659
2026						2026	99		2,010		450		(967)		1,493
Thereafter	Thereafter	0		4,042		Thereafter	—		2,033		4,815		(327)		6,521
Total minimum lease payments	Total minimum lease payments	$	6,318	$	21,210	Total minimum lease payments	$	5,317	$	15,053	$	6,953	$	(4,653)	$	17,353
Amounts representing interest	Amounts representing interest	(439)				Amounts representing interest	358
Present value of net minimum lease payments	Present value of net minimum lease payments	$	5,879			Present value of net minimum lease payments	$	5,675

(1) Associated with the aforementioned related party lease entered into with a former member of JMLLC.

(2) Associated with the aforementioned third party sublease.

The following is a summary of the lease terms and discount rates:

March 31, 2021 December 31, 2020
Weighted average lease term (in years):
   Operating 5.31 5.48
   Finance 2.61 2.78
Weighted average discount rate:
   Operating 4.83 % 4.83 %
   Finance 5.49 % 5.50 %


	March 31, 2022		December 31, 2021
Weighted average lease term (in years):
Operating	7.30		7.10
Finance	2.60		2.51

Weighted average discount rate:
Operating	4.67	%	4.68	%
Finance	5.14	%	5.27	%

The following is a summary of other information and supplemental cash flow information related to finance and operating ~~leases for the three months ended:~~leases:


							Three months ended March 31,
(in thousands)	(in thousands)	March 31, 2021		March 31, 2020		(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	1,225	$	1,239	Operating cash flows from operating leases	$	1,358	$	1,225
Operating cash flows from finance leases	Operating cash flows from finance leases	86		92		Operating cash flows from finance leases	66		86
Financing cash flows from finance leases	Financing cash flows from finance leases	667		652		Financing cash flows from finance leases	660		667
Right-of-use assets exchanged for lease liabilities:	Right-of-use assets exchanged for lease liabilities:					Right-of-use assets exchanged for lease liabilities:
Operating leases	Operating leases	$	156	$	0	Operating leases	—		156
Finance leases	Finance leases	87		337		Finance leases	864		87
Right-of-use assets disposed or adjusted modifying operating leases liabilities	Right-of-use assets disposed or adjusted modifying operating leases liabilities	$	36	$	344	Right-of-use assets disposed or adjusted modifying operating leases liabilities	(1,276)		36
Right-of-use assets disposed or adjusted modifying finance leases liabilities	Right-of-use assets disposed or adjusted modifying finance leases liabilities	$	0	$	(41)	Right-of-use assets disposed or adjusted modifying finance leases liabilities	$	(19)	—

~~Note 14 – Self-Insurance~~

The Company purchases workers’ compensation and general liability insurance under policies with per-incident deductibles of $250 thousand and a $4.4 million maximum aggregate deductible loss limit per year.

~~The components of the self-insurance liability as of March 31, 2021 and December 31, 2020 are as follows:~~

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(in thousands) As of
March 31, 2021 As of
December 31, 2020
Current liability — workers’ compensation and general liability $ 170 $ 197
Current liability — medical and dental 524 764
Non-current liability 890 890
Total liability shown in Accrued expenses and other current liabilities $ 1,584 $ 1,851
Restricted cash $ 113 $ 113

The restricted cash balance represents an imprest cash balance set aside for the funding of workers' compensation and general liability insurance claims. This amount is replenished either when depleted or at the beginning of each month.

Note 1513 – Commitments and Contingencies

Legal. The Company is continually engaged in administrative proceedings, arbitrations, and litigation with owners, general contractors, suppliers, and other unrelated parties, all arising in the ordinary courses of business. The ultimate resolution of these contingencies could, individually or in the aggregate, be material to the condensed consolidated financial statements. In the opinion of the Company’s management, the current belief is that the results of these actions will not have a material adverse effect on the financial position, results of operations, or cash flows of the Company.

On November 13, 2019, claimant, Lanzo Trenchless Technologies, Inc. - North, filed a Demand for Arbitration in the state of Michigan against the Company's wholly-owned subsidiary, Limbach Company LLC. The demand seeks damages in excess of $0.4 million based upon the allegation that Limbach breached a construction contract by improperly terminating Lanzo’s subcontract, and for withholding payment from Lanzo based upon deficient performance. Limbach has asserted a counterclaim seeking damages caused by Lanzo’s deficient performance. A binding arbitration proceeding is scheduled for July of 2021.

On January 23, 2020, plaintiff, Bernards Bros. Inc. (“Bernards”), filed a complaint against ~~Limbach Holdings, Inc.~~the Company in Superior Court of the State of California for the County of Los ~~Angeles against Limbach Holdings, Inc.~~Angeles. The complaint alleges that ~~our~~the Company's Southern California operations refused to honor a proposal made to Bernards to act as a subcontractor on a construction project, and that, as a result of the

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wrongful failure to honor the proposal, Bernards suffered damages in excess of $3.0 million, including alleged increased costs for hiring a different subcontractor to perform the work. The Company is vigorously defending the ~~suit, which~~suit. A non-binding mediation took place on August 19, 2021 that did not result in a settlement. Per the agreement of the Company and Bernards, in January 2022, the Court appointed a private referee to manage the case and adjudicate the dispute. A trial date before the private referee is ~~currently set~~pending scheduling. The Company believes that a loss is neither probable nor reasonably estimable for ~~trial to take place in February 2022.~~this matter, and, as such, has not recorded a loss contingency.

On April 17, 2020, plaintiff, LA Excavating, Inc., filed a complaint against ~~our~~the Company's wholly-owned subsidiary, Limbach Company LP, and several other parties, in Superior Court of the State of California, for the County of Los Angeles. The complaint seeks damages of approximately $1.0 million for alleged failure to pay contract balances and extra work ordered by Limbach Company LP, as well as seeks to enforce payment obligations under a payment ~~and stop notice release bonds.~~bond. The Company disputes the allegations and intends to vigorously defend the suit, which is currently set for mediation on May 11, 2022 and trial ~~in November of 2021.~~beginning on February 7, 2023. The Company believes that a loss is neither probable nor reasonably estimable for this matter, and, as such, has not recorded a loss contingency.

~~In July of 2020, plaintiff, Kimball~~On January 26, 2022, claimant, Suffolk Construction ~~Co.,~~Company, Inc., (“Suffolk”) filed a ~~complaint~~Demand for Arbitration in Massachusetts against ~~our~~Boston Medical Center Corporation (“BMC”) and numerous of Suffolk’s trade subcontractors, including, the Company’s wholly-owned subsidiary, Limbach Company LLC, ~~in circuit Court~~seeking to recover monies BMC withheld from Suffolk and its subcontractors based on an audit of project billings. Suffolk has demanded the Company defend and indemnify Suffolk against BMC’s audit findings that the Company overbilled the project just over $0.3 million and for ~~Montgomery County, Maryland. The complaint seeks damages~~the Company’s share of ~~approximately $1.7 million for alleged failure to pay contract balances~~BMC’s audit costs, which share has not been, and ~~extra work, as well as to enforce payment obligations under a payment bond issued by Limbach's surety provider.~~cannot currently be, quantified. The Company disputes the ~~allegations~~findings of BMC’s audit and intends to vigorously defend the ~~suit, which~~allegation that it overbilled the project. A final arbitration hearing has not been scheduled. The Company believes that a loss is ~~currently set~~neither probable nor reasonably estimable for ~~trial to take place sometime in the second quarter of 2021.~~this matter, and, as such, has not recorded a loss contingency.

Surety. The terms of ~~our~~its construction contracts frequently require that wethe Company obtain from surety companies, and provide to ~~our~~its customers, payment and performance bonds (“Surety Bonds”) as a condition to the award of such contracts. The Surety Bonds secure ~~our~~its payment and performance obligations under such contracts, and ~~we have~~the Company has agreed to indemnify the surety companies for amounts, if any, paid by them in respect of Surety Bonds issued on ~~our~~its behalf. In addition, at the request of labor unions representing certain of ~~our~~the Company's employees, Surety Bonds are sometimes provided to secure obligations for wages and benefits payable to or for such employees. Public sector contracts require Surety Bonds more frequently than private sector contracts, and accordingly, ~~our~~the Company's bonding requirements typically increase as the amount of public sector work increases. As of March 31, ~~2021,~~2022, the Company had approximately ~~$160.7~~$134.9 million in surety bonds outstanding. The Surety Bonds are issued by surety companies in return for premiums, which vary depending on the size and type of bond.

Collective Bargaining Agreements. Many of the Company’s craft labor employees are covered by collective bargaining agreements. The agreements require the Company to pay specified wages, provide certain benefits and contribute certain amounts to multi-employer pension plans. If the Company withdraws from any of the multi-employer pension plans or if the plans were to otherwise become underfunded, the Company could incur additional liabilities related to these plans. Although

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the Company has been informed that some of the multi-employer pension plans to which it contributes have been classified as “critical” status, the Company is not currently aware of any significant liabilities related to this issue.

~~Note 16 – Remaining Performance Obligations~~

~~Remaining performance obligations represent~~Self-insurance. The Company is substantially self-insured for workers’ compensation and general liability claims, in the transaction price of firm orders for which work has not been performed and exclude unexercised contract options. The Company’s remaining performance obligations includes projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions.

~~As of March 31, 2021, the aggregate amount~~view of the ~~transaction prices allocated~~relatively high per-incident deductibles the Company absorbs under its insurance arrangements for these risks. The Company purchases workers’ compensation and general liability insurance under policies with per-incident deductibles of $250,000 per occurrence and a $4.4 million maximum aggregate deductible loss limit per year. Losses incurred over primary policy limits are covered by umbrella and excess policies up to specified limits with multiple excess insurers. The Company accrues for the ~~remaining performance obligations~~unfunded portion of costs for both reported claims and claims incurred but not reported. The liability for unfunded reported claims and future claims is reflected on the consolidated balance sheets as current and non-current liabilities. The liability is determined by determining a reserve for each reported claim on a case-by-case basis based on the nature of the ~~Company's GCR~~claim and ~~ODR segment contracts were $393.6 million and $37.4 million, respectively. As~~historical loss experience for similar claims plus an allowance for the cost of ~~December 31, 2020, the aggregate amount~~incurred but not reported claims. The current portion of the ~~transaction prices allocated to~~liability is included in accrued expenses and other current liabilities on the ~~remaining performance obligations~~consolidated balance sheet. The non-current portion of the ~~Company's GCR~~liability is included in other long-term liabilities on the consolidated balance sheet.

The Company is self-insured related to medical and ~~ODR segment contracts were $393.5 million~~dental claims under policies with annual per-claimant and ~~$35.7 million, respectively.~~annual aggregate stop-loss limits. The Company accrues for the unfunded portion of costs for both reported claims and claims incurred but not reported. The liability for unfunded reported claims and future claims is reflected on the consolidated balance sheets as a current liability in accrued expenses and other current liabilities.

~~We estimate that 56% and 94%~~The components of ~~our GCR and ODR segment remaining performance obligations~~the self-insurance liability as of March 31, 2022 and December 31, 2021 ~~respectively, will be recognized~~are as ~~revenue during 2021, with~~follows:

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(in thousands)	March 31, 2022		December 31, 2021
Current liability — workers’ compensation and general liability	$	173	$	184
Current liability — medical and dental	373		456
Non-current liability	447		451
Total liability	$	993	$	1,091
Restricted cash	$	113	$	113

The restricted cash balance represents an imprest cash balance set aside for the ~~substantial majority~~funding of ~~remaining performance obligations to be recognized within 24 months, although~~workers' compensation and general liability insurance claims. This amount is replenished either when depleted or at the ~~timing~~beginning of ~~the Company's performance is not always under its control.~~

Additionally, the difference between remaining performance obligations and backlog is due to the exclusion of a portion of the Company’s ODR agreements under certain contract types from the Company’s remaining performance obligations as these contracts can be canceled for convenience at any time by the Company or the customer without considerable cost incurred by the customer. Additional information related to backlog is provided in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.each month.

Note 1714 – Management Incentive Plans

The Company initially adopted the Omnibus Incentive Plan on July 20, 2016 for the purpose of: (a) encouraging the profitability and growth of the Company through short-term and long-term incentives that are consistent with the Company’s objectives; (b) giving participants an incentive for excellence in individual performance; (c) promoting teamwork among participants; and (d) giving the Company a significant advantage in attracting and retaining key employees, directors and consultants. To accomplish such purposes, the Omnibus Incentive Plan, and such subsequent amendments to the Omnibus Incentive Plan, provides that the Company may grant options, stock appreciation rights, restricted shares, ~~restricted stock units,~~RSUs, performance-based awards (including performance-based restricted shares and restricted stock units), other share based awards, other cash-based awards or any combination of the foregoing.

Following the ~~further amendment and restatement of the Omnibus Incentive Plan upon~~ approval of the ~~Company's stockholders on July 14, 2020,~~2021 Amended and Restated Omnibus Incentive Plan, the Company has reserved ~~a total of 1,650,000~~2,250,000 shares of its common stock for ~~issuance under the Omnibus Incentive Plan.~~issuance. The number of shares issued or reserved pursuant to the Omnibus Incentive Plan will be adjusted by the plan administrator, as they deem appropriate and equitable, as a result of stock splits, stock dividends, and similar changes in the Company’s common stock. In connection with the grant of an award, the plan administrator may provide for the treatment of such award in the event of a change in control. All awards are made in the form of shares only.

Service-Based Awards

~~During~~The Company grants service-based stock awards in the ~~first three months~~form of ~~2021, the Company~~RSUs. Service-based RSUs granted ~~118,232 service-based RSUs~~ to ~~its~~ executives, ~~certain~~ employees, and non-employee directors ~~under~~vest ratably, on an annual basis, over three years and in the ~~Omnibus Incentive Plan.~~case of certain awards to non-employee directors, one year. The grant date fair value of the service-based awards was equal to the closing market price of the Company’s common stock on the date of grant.

The following table summarizes ~~our~~the Company's service-based RSU activity for the three months ended March 31, ~~2021:~~2022:

Awards Weighted-Average
Grant Date
Fair Value
Unvested at December 31, 2020 285,799 $ 6.32
Granted 118,232 11.25
Vested (106,383) 6.66
Forfeited 0 0
Unvested at March 31, 2021 297,648 $ 8.57

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	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 Awards

~~During the first three months of 2021, the~~The Company ~~granted 180,034~~grants performance-based ~~RSUs~~restricted stock units (“PRSUs”) under which shares of the Company’s common stock may be earned based on the Company’s performance compared to ~~its executives~~defined metrics. The number of shares earned under a performance award may vary from zero to 150% of the target shares awarded, based upon the Company’s performance compared to the metrics. The metrics used for the grant are determined by the Company’s Compensation Committee of the Board of Directors and are based on internal measures such as the achievement of certain ~~employees under the Omnibus Incentive Plan.~~ predetermined adjusted EBITDA, EPS growth and EBITDA margin performance goals over a three year period.

The Company ~~will recognize~~recognizes stock-based compensation expense for these awards over the vesting period based on the projected probability of achievement of ~~certain~~the performance conditions as of the end of each reporting period during the performance period and may periodically adjust the recognition of such expense, as necessary, in response to any changes in the Company’s

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forecasts with respect to the performance conditions. For both the three months ended March 31, 2022 and 2021, the Company recognized $0.2 million of stock-based compensation expense related to outstanding PRSUs. ~~For the three months ended March 31, 2020, the Company did 0t recognize any stock-based compensation expense related to any outstanding PRSUs.~~

The following table summarizes ~~our~~the Company's PRSU activity for the three months ended March 31, ~~2021:~~2022:


		Awards	Weighted-Average Grant Date Fair Value			Awards	Weighted-Average Grant Date Fair Value
Unvested at December 31, 2020		99,500	$	4.23
Unvested at December 31, 2021					Unvested at December 31, 2021	280,700	$	9.46
Granted	Granted	180,034	12.31		Granted	249,885	7.17
Vested	Vested	0	0		Vested	—	—
Forfeited	Forfeited	0	0		Forfeited	(6,500)	9.04
Unvested at March 31, 2021		279,534	$	9.43
Unvested at March 31, 2022					Unvested at March 31, 2022	524,085	$	8.38

Market-Based Awards

On September 4, 2020, the Compensation Committee (the “Committee”) of the Board of Directors of the Company approved amendments to certain restricted stock units initially awarded on August 30, 2017 by the Company to certain employees. Pursuant to the amendment adopted on September 4, 2020, the measurement period was extended to July 16, 2022. In addition to the market performance-based vesting condition, the vesting of such restricted stock unit is subject to continued employment from August 1, 2017 through the later of July 31, 2019 or the date on which the Committee certifies the achievement of the performance goal. The Company has accounted for this amendment as a Type I modification and will recognize approximately $0.2 million of incremental stock-based compensation expense over 1.26 years based on an updated Monte Carlo simulation model.

The following table summarizes ~~our~~the Company's market-based RSU (“MRSUs”) activity for the three months ended March 31, ~~2021:~~2022:


		Awards	Weighted-Average Grant Date Fair Value			Awards	Weighted-Average Grant Date Fair Value
Unvested at December 31, 2020		102,500	$	8.26
Unvested at December 31, 2021					Unvested at December 31, 2021	102,500	$	8.26
Granted	Granted	0	0		Granted	—	—
Vested	Vested	0	0		Vested	—	—
Forfeited	Forfeited	0	0		Forfeited	—	—
Unvested at March 31, 2021		102,500	$	8.26
Unvested at March 31, 2022					Unvested at March 31, 2022	102,500	$	8.26

The vesting of the MRSUs is contingent upon the Company’s closing price of a share of the Company's common stock on the Nasdaq Capital market, or such other applicable principal securities exchange or quotation system, achieving at least $18.00 over a period of eighty (80) consecutive trading days during the three-year period commencing on August 1, 2018 and concluding on July 31, 2021. On September 4, 2020, the Compensation Committee of the Board of Directors of the Company approved an amendment to extend the measurement period to July 16, 2022.

Total recognized stock-based compensation expense amounted to ~~$0.7~~$0.6 million and ~~$0.3~~$0.7 million for the three months ended March 31, ~~2021~~2022 and ~~March 31, 2020,~~2021, respectively. The aggregate fair value as of the vest date of RSUs that vested during the three months ended March 31, 2022 and 2021 ~~and 2020~~ was ~~$1.3~~$1.1 million and ~~$0.4~~$1.3 million, respectively. Total unrecognized stock-based compensation expense related to unvested RSUs which are probable of vesting was ~~$4.2~~$5.0 million at March 31, ~~2021.~~2022. These costs are expected to be recognized over a weighted average period of ~~2.16~~1.97 years.

Note 15 – Subsequent Events

On May 5, 2022, the Company, LFS and LHLLC entered into a first amendment and waiver to the A&R Wintrust Credit Agreement (the “First Amendment to the A&R Wintrust Credit Agreement”) with the lenders party thereto and Wintrust, as administrative agent. The First Amendment to the A&R Wintrust Credit Agreement modifies certain definitions within the A&R Wintrust Credit Agreement, and make other corresponding changes, including: (i) the definition of EBITDA to allow for the recognition of certain restructuring charges and lease breakage costs not previously specified, (ii) the definition of Excess Cash Flow to exclude the aggregate amount of the Earnout Payments paid in cash, (iii) the definition of Total Funded Debt to exclude certain capitalized lease obligations for real estate based on the approval of each lender and (iv) the definition of Disposition to include a clause for the sale and leaseback of certain real property based on the approval of each lender.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from our management’s expectations. Factors that could cause such differences are discussed in “Forward-Looking Statements” and “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 and in subsequent Quarterly Reports on Form 10-Q. See “Item 1A. Risk Factors” in this Form 10-Q for certain periodic updates to the Company's risk factors. We assume no obligation to update any of these forward-looking statements.

Unless the context otherwise requires, a reference to a “Note” herein refers to the accompanying Notes to Condensed Consolidated Financial Statements (Unaudited) contained in Part I, "Item 1. Financial Statements."

Overview

~~We are~~The Company is an integrated building systems solutions firm whose expertise is in the design, modular prefabrication, installation, management and maintenance of ~~heating, ventilation, and air conditioning (“HVAC”),~~HVAC, mechanical, electrical, plumbing and control ~~systems. Our~~systems for commercial, institutional and light industrial markets. The Company operates primarily in the Northeast, Mid-Atlantic, Southeast, Midwest, and Southwestern regions of the United States.

The Company’s market sectors primarily include the following: ~~healthcare, life sciences,~~

•Healthcare, including research, acute care and inpatient hospitals for regional and national hospital groups, and pharmaceutical and biotech laboratories and manufacturing facilities;

•Education, including both public and private colleges, universities, research centers and K-12 facilities;

•Sports and entertainment, including sports arenas, entertainment facilities (including casinos) and amusement rides;

•Infrastructure, including passenger terminals and maintenance facilities for rail and airports;

•Government, including various facilities for federal, state and local agencies;

•Hospitality, including hotels and resorts;

•Commercial, including office building, warehouse and distribution centers and other commercial structures;

•Mission critical facilities, including data ~~centers, industrial~~centers; and ~~light~~

•Industrial manufacturing ~~entertainment, education~~facilities, including indoor grow farms and ~~government. Our customers are primarily located throughout Florida, California, Massachusetts, New Jersey, Pennsylvania, Delaware, Maryland, Washington, D.C., Virginia, West Virginia, Ohio~~automotive, energy and Michigan. As of January 1, 2021, the Company renamed its existing two reportable segments to reflect our distinct approaches to our customer base and to better align with our owner direct strategy. The previously named Construction Segment is now known as General Contractor Relationships (“GCR”); the previously named Service Segment is now known as Owner Direct Relationships (“ODR”). general manufacturing plants.

The Company operates in two segments, ~~that are based on the relationship with its customer,~~ (i) GCR, in which the Company generally manages new construction or renovation projects that involve primarily HVAC, plumbing, or electrical services ~~and are~~ awarded to the Company by general contractors or construction managers, and (ii) ODR, in which the Company provides maintenance or service primarily on HVAC, plumbing or electrical systems, building controls and specialty contracting projects direct to, or assigned by, building owners or property managers. This work is primarily performed under fixed price, modified fixed price, and time and material contracts over periods of typically less than two years.

Key Components of Condensed Consolidated Statements of Operations

Revenue

~~We generate~~The Company generates revenue principally from fixed-price construction contracts to deliver HVAC, plumbing, and electrical construction services to ~~our~~its customers. The duration of ~~our~~the Company's contracts generally ranges from six months to two years. Revenue from fixed price contracts is recognized on the cost-to-cost method, measured by the relationship of total cost incurred to total estimated contract costs. Revenue from time and materials service contracts is recognized as services are performed. ~~We believe~~The Company believes that ~~our~~its extensive experience in HVAC, plumbing, and electrical projects, and ~~our~~its internal cost review procedures during the bidding process, enable usit to reasonably estimate costs and mitigate the risk of cost overruns on fixed price contracts.

WeThe Company generally ~~invoice~~invoices customers on a monthly basis based on a schedule of values that breaks down the contract amount into discrete billing items. Costs and estimated earnings in excess of billings ~~on uncompleted contracts~~ are recorded as a contract asset until

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billable under the contract terms. Billings in excess of costs and estimated earnings ~~on uncompleted contracts~~ are recorded as a contract liability until the related revenue is recognizable.

Cost of Revenue

Cost of revenue primarily consists of the labor, equipment, material, subcontract, and other job costs in connection with fulfilling the terms of our contracts. Labor costs consist of wages plus taxes, fringe benefits, and insurance. Equipment costs consist of the ownership and operating costs of company-owned assets, in addition to outside-rented equipment. If applicable, job costs include estimated contract losses to be incurred in future periods. Due to the varied nature of ~~our~~the Company's services, and the risks associated therewith, contract costs as a percentage of contract revenue have historically fluctuated and ~~we expect~~it expects this fluctuation to continue in future periods.

Selling, General and Administrative

Selling, general and administrative (“SG&A”) expenses consist primarily of personnel costs for ~~our~~its administrative, estimating, human resources, safety, information technology, legal, finance and accounting employees and executives. Also included are non-personnel costs, such as travel-related expenses, legal and other professional fees and other corporate expenses to support the growth of ~~our~~the Company's business and to meet the compliance requirements associated with operating as a public company. Those costs include accounting, human resources, information technology, legal personnel, additional consulting, legal and audit fees, insurance costs, board of directors’ compensation and the costs of achieving and maintaining compliance with Section 404 of the Sarbanes-Oxley ~~Act.~~

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2002.

Amortization of Intangibles

Amortization expense represents periodic non-cash charges that consist of amortization of various intangible assets primarily including favorable leasehold interests and certain customer relationships in the ODR segment. As a result of the Jake Marshall Transaction, the Company recognized, in the aggregate, an additional $5.7 million of intangible assets associated with customer relationships with third-party customers, the acquired trade name and acquired backlog. The Jake Marshall-related intangible assets were recorded under the acquisition method of accounting at their estimated fair values at the acquisition date.

Other ~~Income/Expense~~(Expenses) Income

Other ~~income/expense, net~~(expenses) income consists primarily of interest expense incurred in connection with ~~our~~the Company's debt, net of interest income, a loss associated with the early termination of an operating lease, a loss on early debt extinguishment, ~~gain and loss on~~losses associated with the ~~sale~~disposition of property and equipment and changes in fair value of warrant liability. Deferred financing costs are amortized to interest expense using the effective interest method.

Provision for Income Taxes

~~We are~~The Company is taxed as a C corporation and ~~our~~its financial results include the effects of federal income taxes which ~~are~~will be paid at the parent level.

For interim periods, the provision for income taxes (including federal, state and local taxes) is calculated based on the estimated annual effective tax rate. The Company accounts for income taxes in accordance with ASC Topic 740 -– Income Taxes, which requires the use of the asset and liability method. Under this method, deferred tax assets and liabilities and income or expense are recognized for the expected future tax consequences of temporary differences between the financial statement carrying values and their respective tax bases, using enacted tax rates expected to be applicable in the years in which the temporary differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes.

Operating Segments

~~As of January 1, 2021, the~~The Company ~~renamed its existing two reportable segments to reflect our two distinct approaches to our customer base~~manages and to better align with our owner direct strategy. The previously named Construction Segment is now known as General Contractor Relationships (“GCR”); the previously named Service Segment is now known as Owner Direct Relationships (“ODR”). We manage and measuremeasures the performance of ~~our~~its business in ~~these~~ two operating ~~segments.~~segments: GCR and ODR. These segments are reflective of how the Company’s ~~Chief Operating Decision Makers (“CODM”)~~CODM reviews ~~its~~ operating results for the purposes of allocating resources and assessing performance. ~~Our~~The Company's CODM is comprised of ~~our~~its Chief Executive Officer, Chief Financial Officer and Chief Operating Officer.

~~The accounting policies of the segments are the same as those described in the summary of significant accounting policies.~~ The CODM evaluates performance based on income from operations of the respective branches after the allocation of corporate office operating expenses. In accordance with ASC Topic 280 – Segment Reporting, the Company has elected to aggregate all of the GCR work performed at branches into one GCR reportable segment and all of the ODR work performed at branches into one ODR reportable segment. All transactions between segments are eliminated in consolidation. ~~Our~~The Company's corporate department provides general and administrative support services to ~~our~~its two operating segments. ~~We allocate~~The Company allocates costs

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between segments for selling, general and administrative and depreciation expense. Interest expense is not allocated to segments because of the corporate management of debt service. See Note ~~12 – Operating Segments in~~11 for further discussion on the ~~notes to condensed consolidated financial statements.~~

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Company's operating segments.

Comparison of Results of Operations for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021

The following table presents operating results for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 in dollars and expressed as a percentage of total revenue (except as indicated below), as compared below:


		Three months ended March 31,											Three Months Ended March 31,
		2021					2020						2022					2021
(in thousands except for percentages)	(in thousands except for percentages)	($)		(%)			($)		(%)			(in thousands except for percentages)
Statement of Operations Data:	Statement of Operations Data:											Statement of Operations Data:
Revenue:	Revenue:											Revenue:
GCR	GCR	$	84,804	74.8	%		$	109,486	78.9	%		GCR	$	71,932	62.6	%		$	84,804	74.8	%
ODR	ODR	28,540		25.2	%		29,286		21.1	%		ODR	42,890		37.4	%		28,540		25.2	%
Total revenue	Total revenue	113,344		100.0	%		138,772		100.0	%		Total revenue	114,822		100.0	%		113,344		100.0	%

Gross profit:	Gross profit:											Gross profit:
GCR	GCR	9,395		11.1	%	(1)	10,982		10.0	%	(1)	GCR	8,358		11.6	%	(1)	9,395		11.1	%	(1)
ODR	ODR	7,834		27.4	%	(2)	7,242		24.7	%	(2)	ODR	9,982		23.3	%	(2)	7,834		27.4	%	(2)
Total gross profit	Total gross profit	17,229		15.2	%		18,224		13.1	%		Total gross profit	18,340		16.0	%		17,229		15.2	%

Selling, general and administrative:	Selling, general and administrative:											Selling, general and administrative:
GCR	GCR	9,114		10.7	%	(1)	10,174		9.3	%	(1)	GCR	8,565		11.9	%	(1)	9,114		10.7	%	(1)
ODR	ODR	7,354		25.8	%	(2)	6,330		21.6	%	(2)	ODR	9,570		22.3	%	(2)	7,354		25.8	%	(2)
Corporate	Corporate	677		0.6	%		295		0.2	%		Corporate	599		0.5	%		677		0.6	%
Total selling, general and administrative	Total selling, general and administrative	17,145		15.1	%		16,799		12.1	%		Total selling, general and administrative	18,734		16.3	%		17,145		15.1	%

Amortization of intangibles (Corporate)	Amortization of intangibles (Corporate)	104		0.1	%		143		0.1	%		Amortization of intangibles (Corporate)	399		0.3	%		104		0.1	%

Operating (loss) income:	Operating (loss) income:											Operating (loss) income:
GCR	GCR	281		0.3	%	(1)	808		0.7	%	(1)	GCR	(207)		(0.3)	%	(1)	281		0.3	%	(1)
ODR	ODR	480		1.7	%	(2)	912		3.1	%	(2)	ODR	412		1.0	%	(2)	480		1.7	%	(2)
Corporate	Corporate	(781)		—	%		(438)		—	%		Corporate	(998)		(0.9)	%		(781)		(0.7)	%
Total operating (loss) income		(20)		—	%		1,282		0.9	%
Total operating loss												Total operating loss	(793)		(0.7)	%		(20)		—	%

Other expenses (Corporate)	Other expenses (Corporate)	(3,297)		(2.9)	%		(1,968)		(1.4)	%		Other expenses (Corporate)	(1,339)		(1.2)	%		(3,297)		(2.9)	%
Total consolidated loss before income taxes	Total consolidated loss before income taxes	(3,317)		(2.9)	%		(686)		(0.5)	%		Total consolidated loss before income taxes	(2,132)		(1.9)	%		(3,317)		(2.9)	%
Income tax benefit	Income tax benefit	(1,035)		(0.9)	%		(634)		(0.5)	%		Income tax benefit	(616)		(0.5)	%		(1,035)		(0.9)	%
Net loss	Net loss	$	(2,282)	(2.0)	%		$	(52)	—	%		Net loss	$	(1,516)	(1.3)	%		$	(2,282)	(2.0)	%

(1)As a percentage of GCR revenue.

(2)As a percentage of ODR revenue.

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Revenue


		Three months ended March 31,						Three Months Ended March 31,
		2021	2020	Increase/(Decrease)				2022		2021		Increase/(Decrease)
(in thousands except for percentages)	(in thousands except for percentages)	$	$	$	%		(in thousands except for percentages)
Revenue:	Revenue:						Revenue:
GCR	GCR	84,804	109,486	(24,682)	(22.5)	%	GCR	$	71,932	$	84,804	$	(12,872)	(15.2)	%
ODR	ODR	28,540	29,286	(746)	(2.5)	%	ODR	42,890		28,540		14,350		50.3	%
Total revenue	Total revenue	113,344	138,772	(25,428)	(18.3)	%	Total revenue	$	114,822	$	113,344	$	1,478	1.3	%

Revenue for the three months ended March 31, ~~2021 decreased~~2022 increased by ~~$25.4~~$1.5 million compared to ~~the revenue for~~ the three months ended March 31, ~~2020.~~2021. GCR revenue decreased by ~~$24.7~~$12.9 million, or ~~22.5%~~15.2%, while ODR revenue decreased by $0.7 million, or 2.5%. GCR segment revenue of $84.8 million decreased 22.5% driven by a planned decrease in the Southern California and Mid Atlantic operating regions and decreases in the Florida and Eastern Pennsylvania operating regions. These decreases were partially offset by a revenue increase in the Michigan operating region largely due to the start of new projects and the continuation of work on existing projects. Southern California, Eastern Pennsylvania, New England and Ohio regions' ODR revenue increased quarter over quarter nearly offset by declines in ODR revenue in Florida and Mid Atlantic. Maintenance contract revenue, a component of ODR revenue increased by ~~$0.4~~$14.4 million, ~~compared~~or 50.3%. The decrease in period over period GCR segment revenue was primarily due to revenue declines in the Michigan, Mid-Atlantic and Southern California operating regions. The Company continued to focus on improving project execution and profitability by pursuing GCR opportunities that were smaller in size, shorter in duration, and where the Company can leverage its captive design and engineering services. In addition, in February 2022, the Company announced its strategic decision to wind down its Southern California operations. The Company expects to fully exit the Southern California Region in 2022. The increase in period over period ODR segment revenue was primarily due to the Company's continued focus on the accelerated growth of its ODR business. For the three months ended March 31, ~~2020.~~2022, GCR and ODR segment revenue increased by $4.5 million and $7.2 million, respectively, as a result of revenue generated by the Acquired Entities in the Jake Marshall Transaction. See Note 3 for further information on the Jake Marshall Transaction.

In addition, during the first quarter of 2022, the Company was impacted by supply chain issues delaying equipment delivery, which resulted in revenue being pushed to future periods.

Gross Profit


		Three months ended March 31,								Three Months Ended March 31,
		2021		2020		Increase/(Decrease)				2022			2021			Increase/(Decrease)
(in thousands except for percentages)	(in thousands except for percentages)	$		$		$	%		(in thousands except for percentages)
Gross Profit:
Gross profit:									Gross profit:
GCR	GCR	9,395		10,982		(1,587)	(14.5)	%	GCR	$	8,358		$	9,395		$	(1,037)	(11.0)	%
ODR	ODR	7,834		7,242		592	8.2	%	ODR	9,982			7,834			2,148		27.4	%
Total gross profit	Total gross profit	17,229		18,224		(995)	(5.5)	%	Total gross profit	$	18,340		$	17,229		$	1,111	6.4	%

Total gross profit as a percentage of consolidated total revenue	Total gross profit as a percentage of consolidated total revenue	15.2	%	13.1	%				Total gross profit as a percentage of consolidated total revenue	16.0		%	15.2		%

~~Our~~The Company's gross profit for the three months ended March 31, ~~2021 decreased~~2022 increased by ~~$1.0~~$1.1 million compared to ~~our~~the three months ended March 31, 2021. GCR gross profit decreased $1.0 million, or 11.0%, primarily due to lower revenue despite slightly higher margins. ODR gross profit increased $2.1 million, or 27.4%, due to an increase in revenue despite lower margins. The total gross profit percentage increased from 15.2% for the three months ended March 31, ~~2020. GCR gross profit decreased $1.6 million or 14.5% largely due~~2021 to lower revenue at slightly higher margins. ODR gross profit increased $0.6 million, or 8.2% due to more favorable project pricing. The total gross profit percentage increased from 13.1% for the three months ended March 31, 2020 to 15.2%16.0% for the same period ended in ~~2021,~~2022, mainly driven by the mix of higher margin ODR segment ~~work coupled with slightly higher margins and lower write downs for GCR segment projects.~~work.

WeThe following table summarizes the Company’s recorded revisions in ~~our~~its contract estimates for certain GCR ~~segment projects. For~~and ODR projects ~~having revisions with a~~for the three months ended March 31, 2022 and 2021 (includes material gross profit ~~impact~~changes of $0.25 million or ~~more, this resulted in: (1)~~more).

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	For the Three Months Ended March 31,
	2022			2021
(in thousands except number of projects )			Number of Projects			Number of Projects
Gross profit write-ups:
GCR	$	533	2	$	743	2
ODR	—		—	—		—
Total gross profit write-ups	$	533	2	$	743	2

Gross profit write-downs:
GCR	$	(604)	2	$	(768)	2
ODR	—		—	—		—
Total gross profit write-downs	$	(604)	2	$	(768)	2

Total gross profit write-downs, net	$	(71)		$	(25)

During the three months ended March 31, 2022, the Company recorded total net gross profit ~~write downs on two GCR projects~~write-downs, regardless of ~~$0.7~~materiality, of $1.4 million compared to total net gross profit write-downs of $0.5 million for the three months ended March 31, ~~2021, one~~2021.

Selling, General and Administrative


	Three Months Ended March 31,
	2022			2021			Increase/(Decrease)
(in thousands except for percentages)
Selling, general and administrative:
GCR	$	8,565		$	9,114		$	(549)	(6.0)	%
ODR	9,570			7,354			2,216		30.1	%
Corporate	599			677			(78)		(11.5)	%
Total selling, general and administrative	$	18,734		$	17,145		$	1,589	9.3	%

Total selling, general and administrative as a percentage of consolidated total revenue	16.3		%	15.1		%

The Company's SG&A expense for the three months ended March 31, 2022 increased by approximately $1.6 million compared to the three months ended March 31, 2021. The increase in SG&A was primarily due to a $1.4 million increase associated with costs incurred by the Acquired Entities in the Jake Marshall Transaction, a $0.6 million increase in travel and entertainment expense and a $0.3 million increase in professional fees, partially offset by a $0.5 million decrease in payroll related expenses primarily related to the wind down of ~~which was within the~~its Southern California ~~region~~branch. Additionally, SG&A as a percentage of revenue were 16.3% for ~~a total~~the three months ended March 31, 2022 and 15.1% for the three months ended March 31, 2021.

Amortization of ~~$0.2~~Intangibles


	Three Months Ended March 31,
	2022		2021		Increase/(Decrease)
(in thousands except for percentages)
Amortization of intangibles (Corporate)	$	399	$	104	$	295	283.7	%

Total amortization expense for the three months ended March 31, 2022 was $0.4 million ~~and the other was within the Eastern Pennsylvania region for a total of $0.5~~as compared to $0.1 million ~~and (2) gross profit write ups of $0.7 million on two GCR segment projects~~ for the three months ended March 31, 2021. ~~There were no material gross profit write ups or write downs~~As a result of ~~$0.25~~the Jake Marshall Transaction, the Company acquired certain intangible assets in which the Company recognized approximately $0.3 million ~~or more on ODR segment projects.~~

~~For~~of amortization expense for the three months ended March 31, ~~2020, we recorded revisions in our contract estimates~~2022. See Note 5 for ~~certain GCR segment projects. Individual GCR segment projects with revisions having a material gross profit impact~~further information on the Company's intangible assets.

Other Expenses

Table of ~~$0.25 million or more resulted in: (1) gross profit write downs on six projects totaling $3.2~~Contents


	Three Months Ended March 31,
	2022		2021		Increase/(Decrease)
(in thousands except for percentages)
Other (expenses) income:
Interest expense, net	$	(486)	$	(1,264)	$	778	(61.6)	%
Gain on disposition of property and equipment	(36)		(86)		50		(58.1)	%
Loss on early termination of operating lease	(817)		—		(817)		100.0	%
Loss on early debt extinguishment	—		(1,961)		1,961		100.0	%
Gain on change in fair value of warrant liability	—		14		(14)		(100.0)	%
Total other expenses	$	(1,339)	$	(3,297)	$	1,958	(59.4)	%

Other (expenses) income consisted of interest expense of $0.5 million for the three months ended March 31, 2020, four of which were within the Southern California region for a total of $2.5 million, and (2) gross profit write ups totaling $1.0 million on two projects for the three months ended March 31, 2020.

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~~Selling, General and Administrative~~

Three months ended March 31,
2021 2020 Increase/(Decrease)
(in thousands except for percentages) $ $ $ %
Selling, general and administrative:
GCR 9,114 10,174 (1,060) (10.4) %
ODR 7,354 6,330 1,024 16.2 %
Corporate 677 295 382 129.5 %
Total selling, general and administrative 17,145 16,799 346 2.1 %
Selling, general and administrative as a percentage of consolidated total revenue 15.1 % 12.1 %

Our total selling, general and administrative (“SG&A”) increased by approximately $0.3 million to $17.1 million for the three months ended March 31, 2021 compared to $16.8 million for the three months ended March 31, 2020. Total SG&A increased due to $0.5 million increase in professional fees, a $0.4 million increase in rent and a $0.4 million increase in stock based compensation expense. These increases were offset by $0.5 million of lower payroll expense2022 as compared to the first quarter of 2020, further offset by $0.4 million related to company-wide reductions in travel and entertainment expenses in 2021. Additionally, total SG&A as a percentage of revenues were 15.1% for the three months ended March 31, 2021 and 12.1% for the three months ended March 31, 2020.

~~Amortization of Intangibles~~

Three months ended March 31,
2021 2020 Increase/(Decrease)
(in thousands except for percentages) $ $ $ %
Amortization of intangibles (Corporate) 104 143 (39) (27.3) %

~~Total amortization expense for the amortizable intangible assets was $0.1 million for each of the three months ended March 31, 2021 and March 31, 2020, remaining relatively flat year over year.~~

~~Other Expenses~~

Three months ended March 31,
2021 2020 Increase/(Decrease)
(in thousands except for percentages) $ $ $ %
Other income (expenses):
Interest expense, net (1,264) (2,158) 894 (41.4) %
   Gain (loss) on disposition of property and equipment (86) 29 (115) (396.6) %
   Loss on early debt extinguishment (1,961) — (1,961) 100.0 %
   Gain on fair value of warrant liability 14 161 (147) (91.3) %
Total other expenses (3,297) (1,968) (1,329) 67.5 %

~~Other expenses, consist of interest expense of~~ $1.3 million for the three months ended March 31, ~~2021 as compared to $2.2 million of interest expense for the three months ended March 31, 2020.~~2021. The reduction in interest expense ~~year~~period over ~~year is~~period was due to the refinancing of the higher interest rate debt with a lower interest rate debt instrument as a result of the 2021 Refinancing and the A&R Wintrust Agreement. The decrease in ~~late February 2021. The Company recognized~~other expenses period over period was also attributable to a prior year loss ~~on early debt extinguishment~~ of $2.0 million ~~in connection~~on the early extinguishment of debt associated with ~~its refinancing~~the Company's 2021 Refinancing. During the three months ended March 31, 2022, the Company recognized an $0.8 million loss as a result of the ~~2019 Refinancing Term Loan and 2019 Revolving Credit Facility with the Wintrust Term and Revolving Loans.~~early termination of its Pittsburgh operating lease. See Note 12 for further information.

Income Taxes

The Company recorded a ~~$1.0~~$0.6 million and ~~$0.6~~$1.0 million income tax benefit for the three months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively.

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The effective tax ~~benefit~~ rate was 28.9% and 31.2% for the three months ended March 31, 2022 and 2021, ~~was 31.2% and 92.4% for the three months ended March 31, 2020.~~respectively.

GCR and ODR Backlog Information

~~We refer~~The Company refers to ~~our~~its estimated revenue on uncompleted contracts, including the amount of revenue on contracts for which work has not begun, less the revenue ~~we have~~it had recognized under such contracts, as “backlog.” Backlog includes unexercised contract options. ~~Our~~The Company's backlog includes projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions. Additionally, the difference between ~~our~~the Company's backlog and remaining performance obligations is due to the portion of unexercised contract options that are excluded, under certain contract types, from ~~our~~the Company's remaining performance obligations as these contracts can be canceled for convenience at any time by usthe Company or the customer without considerable cost incurred by the customer. Additional information related to ~~our~~the Company's remaining performance obligations is provided in Note ~~16 — Remaining Performance Obligations in the accompanying notes to our consolidated financial statements.~~4.

Given the multi-year duration of many of ~~our~~the Company's contracts, revenue from backlog is expected to be earned over a period that will extend beyond one year. ~~Our~~The Company's GCR backlog as of March 31, ~~2021~~2022 was ~~$393.6~~$340.7 million compared to ~~$393.5~~$337.2 million at December 31, ~~2020.~~2021. In addition, ODR backlog as of March 31, ~~2021~~2022 was ~~$52.9~~$106.9 million compared to ~~$50.9~~$98.0 million at December 31, ~~2020.~~2021. Of the total backlog at March 31, ~~2021, we expect~~2022, the Company expects to recognize approximately ~~$270.5~~$294.7 million by the end of ~~2021.~~2022.

COVID-19 Update

In March 2020, the World Health Organization declared the outbreak of the coronavirus disease 2019 (“COVID-19”) a global pandemic. The COVID-19 pandemic has caused significant disruption and volatility on a global scale resulting in, among other things, an economic slowdown, impacts to global supply chains, and the possibility of a continued economic recession. In limited instances, during fiscal 2020, the Company faced disruptions due to the COVID-19 pandemic as certain projects chose to shutdown work irrespective of the existence or applicability of government action. In most markets, construction is considered an essential business and the Company continued to staff its projects and perform work during fiscal 2020 and into 2021, and most of the projects that were in progress at the time shutdowns commenced were restarted.

As new variants of the virus emerge, the Company remains cautious as many factors remain unpredictable. The Company actively monitors and responds to the changing conditions created by the pandemic, with focus on prioritizing the health and safety of the Company’s employees, dedicating resources to support the Company’s communities, and innovating to address the Company’s customers’ needs. During 2021, the Company faced impacts of both the Delta and Omicron variants, with disruptions to the Company’s workforce, which impacted revenue.

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Supply chain disruptions, material shortages and escalating commodity prices as a result of COVID-19 have continued into 2022. During the first quarter of 2022, the Company was impacted by supply chain issues delaying equipment delivery, which resulted in revenue being pushed to future periods. The impact of the COVID-19 pandemic on the Company’s vendors and the pricing and availability of materials or supplies utilized in the Company’s operations continues to evolve and may have an adverse impact on the Company’s operations in future periods. The Company continues to monitor the short- and long-term impacts of the pandemic, including the current supply chain disruptions.

As vaccines have become more readily available, the Company has experienced a growing number of its clients requiring that the Company's workforce present on the client's property be vaccinated against the virus. Additionally, requirements to mandate COVID-19 vaccination of the Company's workforce or requirements of its unvaccinated employees to be tested could result in labor disruptions, employee attrition and difficulty securing future labor needs. Additionally, see “Item 1A. Risk Factors” in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for discussion of risks associated with the COVID-19 pandemic.

The Company continues to monitor developments involving our workforce, customers, suppliers and vendors and take steps to mitigate against additional impacts, but given the unprecedented and evolving nature of these circumstances, it cannot predict the full extent of the impact that COVID-19 will have on the Company's operating results, financial condition and liquidity.

Seasonality, Cyclicality and Quarterly Trends

Severe weather can impact ~~our~~the Company’s operations. In the northern climates where ~~we operate,~~it operates, and to a lesser extent the southern climates as well, severe winters can slow ~~our~~the Company’s productivity on construction projects, which shifts revenue and gross profit recognition to a later period. ~~Our~~The Company’s maintenance operations may also be impacted by mild or severe weather. Mild weather tends to reduce demand for ~~our~~its maintenance services, whereas severe weather may increase the demand for ~~our~~its maintenance and spot services. ~~Our~~The Company’s operations also experience mild cyclicality, as building owners typically work through maintenance and capital projects at an increased level during the third and fourth calendar quarters of each year.

Effect of Inflation and Tariffs

The prices of products such as steel, pipe, copper and equipment from manufacturers are subject to fluctuation and increases. It is difficult to accurately measure the impact of inflation, tariffs and price escalation due to the imprecise nature of the estimates required. However, these effects are, at times, material to our results of operations and financial condition. During fiscal year 2021 and through the first quarter of 2022, we have experienced higher cost of materials on specific projects and delays in our supply chain for equipment and service vehicles from the manufacturers, and we expect these higher costs and delays in our supply chain to persist through the remainder of 2022. When appropriate, we include cost escalation factors into our bids and ~~proposals.~~proposals, as well as limit the acceptance time of our bid. In addition, we are often able to mitigate the impact of future price increases by entering into fixed price purchase orders for materials and equipment and subcontracts on our projects. Notwithstanding these efforts, if we experience significant disruptions to our supply chain, we may need to delay certain projects that would otherwise be accretive to our business and this may also impact the conversion rate of our current backlog into revenue.

Liquidity and Capital Resources

Cash Flows

~~Our~~The Company's liquidity needs relate primarily to the provision of working capital (defined as current assets less current liabilities) to support operations, funding of capital expenditures, and investment in strategic opportunities. Historically, liquidity has been provided by operating activities and borrowings from commercial banks and institutional lenders.

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The following table presents summary cash flow information for the periods indicated:


		Three months ended March 31,					Three months ended March 31,
		2021		2020			2022		2021
(in thousands)	(in thousands)					(in thousands)
Net cash (used in) provided by:	Net cash (used in) provided by:					Net cash (used in) provided by:
Operating activities	Operating activities	$	(17,375)	$	3,517	Operating activities	$	(2,965)	$	(17,375)
Investing activities	Investing activities	5		(468)		Investing activities	(130)		5
Financing activities	Financing activities	12,409		(696)		Financing activities	6,685		12,409
Net (decrease) increase in cash and cash equivalents		$	(4,961)	$	2,353
Net increase (decrease) in cash, cash equivalents and restricted cash						Net increase (decrease) in cash, cash equivalents and restricted cash	$	3,590	$	(4,961)

Noncash investing and financing transactions:	Noncash investing and financing transactions:					Noncash investing and financing transactions:
Right of use assets obtained in exchange for new operating lease liabilities	Right of use assets obtained in exchange for new operating lease liabilities	156		—		Right of use assets obtained in exchange for new operating lease liabilities	$	—	$	156
Right of use assets obtained in exchange for new finance lease liabilities	Right of use assets obtained in exchange for new finance lease liabilities	87		337		Right of use assets obtained in exchange for new finance lease liabilities	864		87
Right of use assets disposed or adjusted modifying operating lease liabilities	Right of use assets disposed or adjusted modifying operating lease liabilities	36		344		Right of use assets disposed or adjusted modifying operating lease liabilities	(1,276)		36
Right of use assets disposed or adjusted modifying finance lease liabilities	Right of use assets disposed or adjusted modifying finance lease liabilities	—		(41)		Right of use assets disposed or adjusted modifying finance lease liabilities	(19)		—
Interest paid	Interest paid	$	1,319	$	1,607	Interest paid	459		1,319
Cash paid (received) for income taxes						Cash paid (received) for income taxes	$	9	$	(45)

~~Our~~The Company's cash flows are primarily impacted ~~from~~ period to period by fluctuations in working capital. Factors such as ~~our~~the Company's contract mix, commercial terms, days sales outstanding (“DSO”) and delays in the start of projects may impact ~~our~~the Company's working capital. In line with industry practice, ~~we accumulate~~the Company accumulates costs during a given month then ~~bill~~bills those costs in the current month for many of ~~our~~its contracts. While labor costs associated with these contracts are paid weekly and salary costs associated with the contracts are paid bi-weekly, certain subcontractor costs are generally not paid until ~~we receive~~the Company receives payment from ~~our~~its customers (contractual “pay-if-paid” terms). ~~We have~~The Company has not historically experienced a large volume of write-offs related to ~~our~~its receivables and contract assets. WeThe Company regularly ~~assess our~~assesses its receivables for collectability and ~~provide~~provides allowances for doubtful accounts where appropriate. ~~We believe~~The Company believes that ~~our~~its reserves for doubtful accounts are appropriate as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, but adverse changes in the economic environment may impact certain of ~~our~~its customers’ ability to access capital and compensate usthe Company for ~~our~~its services, as well as impact project activity for the foreseeable future.

The Company's existing current backlog is projected to provide substantial coverage of forecasted GCR revenue for one year from the date of the financial statement issuance. ~~Our~~The Company's current cash balance, together with cash ~~we expect~~it expects to generate from future operations along with borrowings available under ~~our Wintrust Loans,~~its credit facility, are expected to be sufficient to finance ~~our~~its short- and long-term capital requirements (or meet working capital requirements) for the next twelve months. In addition to the future operating cash flows of the Company, along with its existing borrowing availability and access to financial markets, the Company currently believes it will be able to meet any working capital and future operating requirements, and capital investment forecast opportunities for the next twelve months.

The following table represents our summarized working capital information:


(in thousands, except ratios)	(in thousands, except ratios)	As of March 31, 2021		As of December 31, 2020		(in thousands, except ratios)	March 31, 2022		December 31, 2021
Current assets	Current assets	195,855		199,417		Current assets	$	209,995	$	192,906
Current liabilities	Current liabilities	(134,511)		(150,294)		Current liabilities	(141,590)		(129,742)

Net working capital	Net working capital	$	61,344	$	49,123	Net working capital	$	68,405	$	63,164
Current ratio*		1.46		1.33
Current ratio (1)						Current ratio (1)	1.48		1.49

*(1) Current ratio is calculated by dividing current assets by current liabilities.

As discussed above and in Note ~~7 to the accompanying condensed consolidated financial statements,~~6, as of March 31, ~~2021,~~2022, the Company was in compliance with all ~~debt~~financial maintenance covenants as required by ~~the Wintrust Loans.~~its credit facility.

Cash Flows (Used in) Provided by Operating Activities

The following is a summary of the significant sources (uses) of cash from operating activities:

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	Three Months Ended March 31,
(in thousands)	2022		2021		Cash Inflow (outflow)
Cash flows from operating activities:
Net loss	$	(1,516)	$	(2,282)	$	766
Non-cash operating activities(1)	4,682		5,130		(448)
Changes in operating assets and liabilities:
Accounts receivable	(19,698)		2,584		(22,282)
Contract assets	8,320		(1,986)		10,306
Other current assets	(2,130)		(2,025)		(105)
Accounts payable, including retainage	(105)		(8,813)		8,708
Prepaid income taxes	(47)		—		(47)
Accrued taxes payable	(501)		(654)		153
Contract liabilities	7,732		(8,853)		16,585
Operating lease liabilities	(1,117)		(994)		(123)
Accrued expenses and other current liabilities	1,419		513		906
Other long-term liabilities	(4)		5		(9)
Cash used in working capital	(6,131)		(20,223)		14,092
Net cash used in operating activities	$	(2,965)	$	(17,375)	$	14,410

(1)Represents non-cash activity associated with depreciation and amortization, provision for doubtful accounts, stock-based compensation expense, operating lease expense, amortization of debt issuance costs, deferred income tax provision, gain on sale of property and equipment, loss on early debt extinguishment, loss on early termination of operating lease and changes in the fair value of warrant liabilities.

During the three months ended March 31, 2022, the Company used $3.0 million in cash in its operating activities, which consisted of cash used in working capital of $6.1 million and a net loss for the period of $1.5 million, partially offset by non-cash adjustments of $4.7 million (primarily depreciation and amortization, stock-based compensation expense and operating lease expense). During the three months ended March 31, 2021, the Company used $17.4 million from its operating activities, which consisted of cash used in working capital of $20.2 million and a net loss of $2.3 million, partially offset by non-cash adjustments of $5.1 million (primarily depreciation and amortization, stock-based compensation expense, operating lease expense and a loss on early debt extinguishment).

The increase in operating cash flows during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily attributable to a $26.9 million cash inflow period-over-period related to the aggregate change in our contract assets and liabilities and a $8.7 million period-over-period cash inflow related to the change in accounts payable, including retainage. These cash inflows were partially offset by a $22.2 million period-over-period cash outflow related to the change in accounts receivable. The increase in our overbilled position was due to the timing of contract billings and the recognition of contract revenue. In addition, the cash inflow associated with accounts payable, including retainage was due to the timing of payments, and the cash outflow associated with our accounts receivable was due to the timing of receipts.

Cash Flows (Used in) Provided by Investing Activities

Cash flows used in ~~operating~~investing activities were ~~$17.4~~$0.1 million for the three months ended March 31, ~~2021~~2022 compared to cash flows provided by ~~operating~~investing activities ~~of $3.5 million~~$5.0 thousand for the three months ended March 31, ~~2020.~~2021 For the three months ended March 31, 2022, $0.2 million was used to purchase property and equipment, offset by $39.0 thousand in proceeds from the sale of property and equipment. For the three months ended March 31, 2021, cash used in operating activities was significantly impacted by an $8.9 million decrease in contract liabilities, an $8.8 million decrease in accounts payable, including retainage, $2.0 million related to an increase in our contract assets reflecting the shift from an overbilled position to a neutral position, and a $2.0 million increase in other current assets. These cash outflows were offset by an increase of $2.6 million in accounts receivable and $2.0 million for the loss on early debt extinguishment in connection with our debt refinancing in late February 2021.

Cash flows provided by operating activities were $3.5 million for the three months ended March 31, 2020. For the three months ended March 31, 2020, the key components included cash inflows related to our contract assets, $6.0 million for our contract liabilities shifting from an underbilled to an overbilled position consistent with our renewed focus on project cash flows and $1.4 million related to accrued expenses and other current liabilities. These cash inflows were offset by outflows of $7.3 million related to our accounts receivable and $5.8 million related to our accounts payable, including retainage.

~~Non-cash charges for depreciation and amortization were $1.5 million for the three months ended March 31, 2021 and 2020.~~

~~Cash Flows Provided by (Used in) Investing Activities~~

~~Cash flows provided by investing activities were nearly breakeven for the three months ended March 31, 2021, with~~ $0.2 million was used to purchase property and equipment, offset by $0.2 million in proceeds from the sale of property and equipment. ~~Cash flows used in investing activities were $0.5 million for the three months ended March 31, 2020.~~

The majority of our cash used for investing activities in both periods was for capital additions pertaining to tools and equipment, computer software and hardware purchases, office furniture and office related leasehold improvements.

Cash Flows Provided by (Used in) Financing Activities

Cash flows provided by financing activities were $6.7 million and $12.4 million for the three months ended March 31, ~~2021. Net cash used in financing activities was $0.7 million for~~2022 and 2021, respectively. For the three months ended March 31, ~~2020.~~ 2022, we received proceeds from the following: $9.4 million in

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proceeds from borrowings under the A&R Wintrust Revolving Loan and $0.2 million associated with proceeds from contributions to the ESPP. These proceeds were partly offset by $1.9 million of scheduled principal payments on the Wintrust Term Loan, $0.7 million for payments on finance leases and $0.4 million in taxes related to net share settlement of equity awards.

For the three months ended March 31, 2021, we received proceeds from the following: $22.8 million, net of fees and expenses, in conjunction with our common stock offering in February 2021, $2.0 million from the exercise of warrants and $30.0 million in connection with the refinancing of the 2019 Refinancing Term Loan with the Wintrust Loans. These proceeds were offset by the $39.0 million payment in full of the 2019 Refinancing Term Loan and associated $1.4 million prepayment penalty and other extinguishment costs, a $0.5 million scheduled principal payment on the Wintrust Term Loan, $0.7 million for payments on finance leases, $0.4 million in taxes related to net share settlement of equity awards and $0.6 million for payments related to debt issuance costs related to the Wintrust Term Loan and Revolver.

~~For the three months ended March 31, 2020, we both borrowed and repaid a total of $7.3 million on the 2019 Revolving Credit Facility and made finance lease payments of $0.7 million.~~

~~Debt and Other Obligations~~

The Company refinanced its 2019 Refinancing and ABL Credit Agreements on February 24, 2021, described below and therefore had no amounts outstanding under these agreements at March 31, 2021. Accordingly, the Company recognized a loss on the early debt extinguishment of $2.0 million. This loss consisted of $2.6 million debt issuance and debt discount costs, reversed $2.0 million of CB warrant liability due to the warrants being cancelled on the refinancing date and paid a prepayment penalty of $1.4 million.

~~2019 Refinancing Agreement~~

On April 12, 2019 (the “Refinancing Closing Date”), Limbach Facility Services LLC (“LFS”) entered into a financing agreement (the “2019 Refinancing Agreement”) with the lenders thereto and Cortland Capital Market Services LLC, as collateral agent and administrative agent and CB Agent Services LLC, as origination agent (“CB”). The 2019 Refinancing Agreement consists of (i) a $40.0 million term loan (the “2019 Refinancing Term Loan”) and (ii) a new $25.0 million multi-draw delayed draw term loan (the “2019 Delayed Draw Term Loan” and, collectively with the 2019 Refinancing Term Loan, the “2019 Term Loans”). Proceeds from the 2019 Refinancing Term Loan were used to repay the then existing Credit Agreement, to pay related fees and expenses thereof and to fund working capital of LFS (defined below). Management intends for proceeds of the 2019 Delayed Draw Term Loan to be used to fund permitted acquisitions under the 2019 Refinancing Agreement and related fees and expenses in connection therewith.

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LFS and each of its subsidiaries were borrowers (the “2019 Refinancing Borrowers”) under the 2019 Refinancing Agreement. In addition, the 2019 Refinancing Agreement was guaranteed by the Company and LHLLC (each, a “Guarantor”, and together with the 2019 Refinancing Borrowers, the “Loan Parties”).

~~2019 Refinancing Agreement - Interest Rates and Fees~~

The interest rate on borrowings under the 2019 Refinancing Agreement is, at the 2019 Refinancing Borrowers’ option, either LIBOR (with a 2.00% floor) plus 11.00% or a base rate (with a 3.00% minimum) plus 10.00%. At March 31, 2020, the interest rates in effect on the 2019 Refinancing Term Loan was 13.00%. At February 24, 2021 and March 31, 2020, the interest rate in effect on the 2019 Refinancing Term Loan was 13.00%.

~~2019 Refinancing Agreement - Other Terms and Conditions~~

The 2019 Refinancing Agreement matures on April 12, 2022, subject to certain adjustment. Required amortization is $1.0 million per quarter commencing with the fiscal quarter ending September 30, 2020. There was an unused line fee of 2.0% per annum on the undrawn portion of the 2019 Delayed Draw Term Loan, and there was a make-whole premium on prepayments made prior to the 19-month anniversary of the Refinancing Closing Date. This make-whole provision guaranteed that the Company will pay no less than 18 months’ applicable interest to the lenders under the 2019 Refinancing Agreement.

The 2019 Refinancing Agreement contained representations and warranties, and covenants which were customary for debt facilities of this type. Unless the Required Lenders (as defined in the 2019 Refinancing Agreement) otherwise consent in writing, the covenants limited the ability of the Company and its restricted subsidiaries to, among other things, (i) incur additional indebtedness or issue preferred stock, (ii) pay dividends or make distributions to the Company’s stockholders, (iii) purchase or redeem the Company’s equity interests, (iv) make investments, (v) create liens on their assets, (vi) enter into transactions with the Company’s affiliates, (vii) sell assets and (viii) merge or consolidate with, or dispose of substantially all of the Company’s assets to, other companies.

Furthermore, the 2019 Refinancing Agreement also contained two financial maintenance covenants for the 2019 Refinancing Term Loan, including a requirement to have sufficient collateral coverage of the aggregate outstanding principal amount of the 2019 Refinancing Term Loans and as of the last day of each month for the total leverage ratio of the Company and its Subsidiaries (the “Total Leverage Ratio ”) not to exceed an amount beginning at 4.25 to 1.00 through June 30, 2019, and stepping down to 2.00 to 1.00 effective July 1, 2021. From July 1, 2019 through September 30, 2019, the Total Leverage Ratio was not to exceed 4.00 to 1.00. In addition, the parties to the 2019 Refinancing Agreement entered into an amendment which, among other changes, revised the maximum permitted Total Leverage Ratio, starting at 3.30 to 1.00 on October 1, 2019 with a peak ratio of 4.25 during March 2020 along with varying monthly rates culminating in the lowest Total Leverage Ratio of 2.00 to 1.00 on April 1, 2021 through the term of such agreement. The 2019 Refinancing Agreement contained a post-closing covenant requiring the remediation of the Company’s material weakness, as described in Item 9A of its 2018 Annual Report on Form 10-K, no later than December 31, 2020 and to provide updates as to the progress of such remediation, provided that, if such remediation has not been completed on or prior to December 31, 2019, (x) the Company shall be required to pay the post-closing fee pursuant to the terms of the Origination Agent Fee Letter (as defined in the 2019 Refinancing Agreement) and (y) the applicable margin shall be increased by 1.00% per annum for the period from January 1, 2020 until the date at which the material weakness is no longer disclosed or required to be disclosed in the Company’s SEC filings or audited financial statements of the Company or related auditor’s reports. As of December 31, 2019, the Company fully remediated its material weakness and the Company removed from its SEC filings disclosure of such material weakness.

In connection with the 2019 Refinancing Amendment Number One and Waiver, the parties amended certain provisions of the 2019 Refinancing Agreement, including, among other changes to: (i) require, commencing October 1, 2019, a 3.00% increase in the interest rate on borrowings under the 2019 Refinancing Agreement; (ii) require the approval of CB and, generally, the lenders representing at least 50.1% of the aggregate undrawn term loan commitment or unpaid principal amount of the term loans, prior to effecting any permitted acquisition; (iii) revise the maximum permitted Total Leverage Ratio, starting at 3.30 to

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1.00 on October 1, 2019 with a peak ratio of 4.25 during March 2020 along with varying monthly rates culminating in the lowest Total Leverage Ratio of 2.00 to 1.00 on April 1, 2021 and thereafter through the term of the 2019 Refinancing Agreement; and (iv) require the liquidity of the loan parties, which is generally calculated by adding (a) unrestricted cash on hand of the Loan Parties maintained in deposit accounts subject to control agreements granting control to the collateral agent for the 2019 ABL Credit Agreement, to (b) the difference between (1) the lesser of (x) $15 million, as adjusted from time to time, and (y) 75% of certain customer accounts resulting from the sale of goods or services in the ordinary course of business minus certain reserves established by the Administrative Agent and (2) the sum of (x) the outstanding principal balance of all revolving loans under the 2019 ABL Credit Agreement plus (y) the aggregate undrawn available amount of all letters of credit then outstanding plus the amount of any obligations that arise from any draw against any letter of credit that have not been reimbursed by the borrowers or funded with a revolving loan under the 2019 ABL Credit Agreement (the “Loan Parties Liquidity”), as of the last day of any fiscal month ending on or after November 30, 2019, of at least $10,000,000. As a condition to executing the 2019 Refinancing Amendment Number One and Waiver, the loan parties will be required to pay a non-refundable waiver fee of $400,000 and a non-refundable amendment fee of $1,000,000 (the “PIK First Amendment Fee”, which shall be paid in kind by adding the PIK First Amendment Fee to the outstanding principal amount of the term loan under the 2019 Refinancing Agreement as additional principal obligations thereunder on and as of the effective date 2019 Refinancing Amendment Number One and Waiver).

During December 2020, the Company was not in compliance with the collateral coverage debt covenant as defined by the Term Loan financing agreement. The Company was required to maintain at all times a Collateral Coverage Amount (as defined in the Term Loan Financing Agreement) equal to or greater than the aggregate outstanding principal amount of the Term Loans. The Company calculated its Collateral Coverage amount at $37.9 million as of December 31, 2020, the aggregate outstanding principal amount of Term Loans was $39.0 million as of that same date for an excess of debt over collateral of $1.1 million. On February 1, 2021, the Company, LFS and LHLLC entered into a Waiver - Collateral Coverage Amount (December 2020) ("December 2020 Waiver") with the lenders party thereto and Cortland Capital Market Services LLC as collateral agent and administrative agent. The December 2020 Waiver includes a waiver of the Company's compliance with the Collateral Coverage Amount for the month ending December 31, 2020. The lender waived the event of default arising from this noncompliance as of December 31, 2020, while reserving its rights with respect to covenant compliance in future months.

~~2019 Refinancing Agreement - CB Warrants~~

In connection with the 2019 Refinancing Agreement, on the Refinancing Closing Date, the Company issued to CB and the other lenders under the 2019 Refinancing Agreement warrants (the “CB Warrants”) to purchase up to a maximum of 263,314 shares of the Company's common stock at an exercise price of $7.63 per share subject to certain adjustments, including for stock dividends, stock splits or reclassifications. The actual number of shares of common stock into which the CB Warrants will be exercisable at any given time will be equal to: (i) the product of (x) the number of shares equal to 2% of the Company’s issued and outstanding shares of common stock on the Refinancing Closing Date on a fully diluted basis and (y) the percentage of the total 2019 Delayed Draw Term Loan made as of the exercise date, minus (ii) the number of shares previously issued under the CB Warrants. As of the Refinancing Closing Date and February 24, 2021, no amounts had been drawn on the 2019 Delayed Draw Term Loan, so no portion of the CB Warrants was exercisable. The CB Warrants may be exercised for cash or on a “cashless basis,” subject to certain adjustments, at any time after the Refinancing Closing Date until the expiration of such warrant at 5:00 p.m., New York time, on the earlier of (i) the five (5) year anniversary of the Refinancing Closing Date, or (ii) the liquidation of the Company.

~~Accounting for the 2019 Term Loans and CB Warrants~~

The CB Warrants represented a freestanding financial instrument that was classified as a liability because the CB Warrants met the definition of a derivative instrument that does not meet the equity scope exception (i.e., the CB Warrants are not indexed to the entity’s own equity). In addition, the material weakness penalty described above was evaluated as an embedded derivative liability and bifurcated from the 2019 Term Loans as it represented a non-credit related embedded feature that provides for net settlement. Both the CB Warrants liability and the embedded derivative liability were required to be initially and subsequently measured at fair value. The initial fair values of the CB Warrants liability and the embedded derivative liability approximated $0.9 million and $0.4 million, respectively, on the Refinancing Closing Date. The Company estimated these fair values by using the Black-Scholes-Merton option pricing model and a probability-weighted discounted cash flow approach, respectively.

The CB Warrants liability was included in other long-term liabilities. The Company remeasured the fair value of the CB Warrants liability as of December 31, 2020 and February 24, 2021 prior to the refinancing date and recorded any adjustments as other income (expense). At February 24, 2021 and December 31, 2020, the CB Warrants liability was $2.0 million. For the three months ended March 31, 2021 and March 31, 2020, the Company recorded other income of $14 thousand and $0.2 million, respectively, to reflect the change in fair value of the CB Warrants liability.

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The proceeds for the 2019 Term Loan were first allocated to the CB Warrants liability and embedded derivative liability based on their respective fair values with a corresponding amount of $1.3 million recorded as a debt discount to the 2019 Term Loans. In addition, the Company incurred approximately $3.9 million of debt issuance costs, including $1.4 million related to the first amendment, for the 2019 Term Loans that have also been recorded as a debt discount. The combined debt discount from the CB Warrants liability, embedded derivative liability and the debt issuance costs were being amortized into interest expense over the term of the 2019 Term Loans using the effective interest method and were expensed on the refinancing date as a loss on early debt extinguishment. The Company recorded interest expense for the amortization of the CB Warrants liability and embedded derivative debt discounts of $0.1 million for both the three months ended March 31, 2021 and 2020, and recorded an additional $0.1 million and $0.4 million of interest expense for the amortization of the debt issuance costs for the three months ended March 31, 2021 and March 31, 2020, respectively.

~~2019 ABL Credit Agreement~~

On the Refinancing Closing Date, LFS also entered into a financing agreement with the lenders thereto and Citizens Bank, N.A., as collateral agent, administrative agent and origination agent (the “2019 ABL Credit Agreement” and, together with the 2019 Refinancing Agreement, the “Refinancing Agreements”). The 2019 ABL Credit Agreement consisted of a $15.0 million revolving credit facility (the “2019 Revolving Credit Facility”). Proceeds of the 2019 Revolving Credit Facility were to be used for general corporate purposes. On the Refinancing Closing Date, the Company had nothing drawn on the ABL Credit Agreement and $14.0 million of available borrowing capacity thereunder (net of a $1.0 million reserve imposed by the lender).

The 2019 Refinancing Borrowers and Guarantors under the 2019 ABL Credit Agreement were the same as under the 2019 Refinancing Agreement. The 2019 ABL Credit Agreement was secured by a second-priority lien on the real property of the Loan Parties (behind the 2019 Refinancing Agreement) and a first-priority lien on substantially all other assets of the Loan Parties.

~~2019 ABL Credit Agreement - Interest Rates and Fees~~

The interest rate on borrowings under the 2019 ABL Credit Agreement was, at the 2019 Refinancing Borrowers’ option, either LIBOR (with a 2.0% floor) plus an applicable margin ranging from 3.00% to 3.50% or a base rate (with a 3.0% minimum) plus an applicable margin ranging from 2.00% to 2.50%. At February 24, 2021 and March 31, 2020, the interest rate in effect on the 2019 ABL Credit Agreement was 5.25%.

~~2019 ABL Credit Agreement - Other Terms and Conditions~~

~~The 2019 ABL Credit Agreement was set to mature on April 12, 2022. There was also an unused line fee ranging from 0.250% to 0.375% per annum on undrawn amounts.~~

The 2019 ABL Credit Agreement contained representations and warranties, and covenants which are customary for debt facilities of this type. Unless the Required Lenders otherwise consented in writing, the covenants limited the ability of the Company and its restricted subsidiaries to, among other things, generally, to (i) incur additional indebtedness or issue preferred stock, (ii) pay dividends or make distributions to the Company’s stockholders, (iii) purchase or redeem the Company’s equity interests, (iv) make investments, (v) create liens on their assets, (vi) enter into transactions with the Company’s affiliates, (vii) sell assets other than in the ordinary course of business or another permitted disposition of assets and (viii) merge or consolidate with, or dispose of substantially all of the Company’s assets to, other companies.

The 2019 ABL Credit Agreement also contained a financial maintenance covenant for the 2019 Revolving Credit Facility, which is a requirement for the Total Leverage Ratio of the Company and its Subsidiaries not to exceed an amount beginning at 4.00 to 1.00 through September 30, 2019, and stepping down to 1.75 to 1.00 effective July 1, 2021. In addition, the parties to the 2019 ABL Credit Agreement entered into an amendment which, among other changes revised the maximum permitted Total Leverage Ratio, starting at 3.30 to 1.00 on October 1, 2019 with a peak ratio of 4.25 during March 2020 along with varying monthly rates culminating in the lowest Total Leverage Ratio of 2.00 to 1.00 on April 1, 2021 through the term of such agreement.

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In connection with the 2019 ABL Credit Amendment Number One and Waiver, the parties amended certain provisions of the 2019 ABL Credit Agreement, including, among other changes to (i) require the approval of the origination agent and, generally, the lenders representing at least 50.1% of the aggregate undrawn revolving loan commitment or unpaid principal amount of the term loans, prior to effecting any permitted acquisition; (ii) revise the maximum permitted Total Leverage Ratio, starting at 3.30 to 1.00 on October 1, 2019 with a peak ratio of 4.25 during March 2020 along with varying monthly rates culminating in the lowest Total Leverage Ratio of 2.00 to 1.00 on April 1, 2021 through the term of the 2019 ABL Credit Agreement; and (iii) require the Loan Parties Liquidity as of the last day of any fiscal month ending on or after November 30, 2019, of at least $10,000,000, as described above in the Amendment Number One to 2019 Refinancing Agreement and Waiver. As a condition to executing the 2019 ABL Credit Amendment Number One and Waiver, the loan parties were required to pay a non-refundable waiver fee of $7,500.

As noted above in the section titled “2019 Refinancing Agreement - Other Terms and Conditions,” the Company was subject to cross-default under our 2019 Revolving Credit Facility as a result of our failure to satisfy the Collateral Coverage Amount as defined in the Term Loan Financing Agreement, which required the company to obtain a waiver. Accordingly, on February 1, 2021, the Company, LFS and LHLLC entered into a Waiver - Collateral Coverage Amount (December 2020) (“December 2020 Waiver”) with the lenders party thereto and Citizens Bank, N.A., as collateral agent and administrative agent. The December 2020 Waiver includes a waiver of the Company's compliance with the Collateral Coverage Amount for the month ending December 31, 2020. The lender has waived the event of default arising from this noncompliance as of December 31, 2020, while reserving its rights with respect to covenant compliance in future months.

~~At March 31, 2021 and December 31, 2020, the Company had irrevocable letters of credit in the amount of $3.4 million with its lender to secure obligations under its self-insurance program.~~

~~Accounting for the 2019 ABL Credit Agreement~~

The Company incurred approximately $0.9 million of debt issuance costs for the 2019 ABL Credit Agreement that have been recorded as a non-current deferred asset. The deferred asset is being amortized into interest expense over the term of the 2019 Term ABL Credit Agreement using the effective interest method and then expensed on the refinancing date as a loss on early debt extinguishment. The Company recorded interest expense of $23 thousand and $0.1 million for the amortization the debt issuance costs for the three months ended March 31, 2021 and 2020, respectively. As of February 24, 2021, the Company had nothing drawn on the 2019 ABL Credit Agreement.

~~Wintrust Term and Revolving Loans~~

On February 24, 2021, LFS, LHLLC and the direct and indirect subsidiaries of LFS from time to time included as parties to the agreement (the “Guarantors”) entered into a Credit Agreement (the “Credit Agreement”) by and among LFS, LHLLC, Guarantors, the lenders party thereto from time to time, Wheaton Bank & Trust Company, N.A., a subsidiary of Wintrust Financial Corporation (collectively, “Wintrust”), as administrative agent and L/C issuer, Bank of the West as documentation agent, M&T Bank as syndication agent, and Wintrust as lead arranger and sole book runner.

In accordance with the terms of the Credit Agreement, Lenders provide to LFS (i) a $30.0 million senior secured term loan (the “Term Loan”); and (ii) a $25.0 million senior secured revolving credit facility with a $5.0 million sublimit for the issuance of letters of credit (the “Revolving Loan” and, together with the Term Loan, the “Loans”). Proceeds of the Loans were used to refinance certain existing indebtedness, finance working capital and other general corporate purposes and fund certain fees and expenses associated with the closing of the Loans.

The Revolving Loan bears interest, at LFS’s option, at either LIBOR (with a 0.25% floor) plus 3.5% or a base rate (with a 3.0% floor) plus 0.50%, subject to a 50 basis point step-down based on the ratio between the senior debt of the Company and its subsidiaries to the EBITDA (earnings before interest, income taxes, depreciation and amortization) of LFS and its subsidiaries for the most recently ended four fiscal quarters (the “Senior Leverage Ratio”). The Term Loan bears interest, at LFS’s option, at either LIBOR (with a 0.25% floor) plus 4.0% or a base rate (with a 3.0% floor) plus 1.00%, subject to a 50 (for LIBOR) or 75 (for base rate) basis point step-down based on the Senior Leverage Ratio.

LFS is required to make principal payments on the Term Loan in $0.5 million installments on the last business day of each month commencing on March 31, 2021 with a final payment of all principal and interest not sooner paid on the Term Loan due and payable on February 24, 2026. The Revolving Loan will mature and become due and payable by LFS on February 24, 2026.

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The Loans are secured by (i) a valid, perfected and enforceable lien of the Administrative Agent on the ownership interests held by each of LFS and Guarantors in their respective subsidiaries; and (ii) a valid, perfected and enforceable lien of the Administrative Agent on each of LFS and Guarantors’ personal property, fixtures and real estate, subject to certain exceptions and limitations. Additionally, the re-payment of the Loans shall be jointly and severally guaranteed by each Guarantor.

The Credit Agreement contains representations and warranties, covenants and events of default that are customary for facilities of this type, as more particularly described in the Credit Agreement. The Loans also contain three financial maintenance covenants, including (i) a requirement to have as of the last day of each quarter for the senior leverage ratio of the Company and its Subsidiaries (the “Total Leverage Ratio”) not to exceed an amount beginning at 2.25 to 1.00 through December 31, 2021, and stepping down to 2.00 to 1.00 at all times thereafter, (ii) a fixed charge coverage ratio of not less than 1.20 to 1.00 as of the last day of each fiscal quarter commencing with the fiscal quarter ending March 31, 2021, and (iii) no unfinanced capital expenditures, except for unfinanced capital expenditures in the ordinary course of business not exceeding in the aggregate $4.0 million during any fiscal year; and no default or event of default (as defined by the agreement) has occurred and is continuing, 50% of any portion of this annual limit, if not expended in the fiscal year for which it is permitted, may be carried over for expenditure in the next following fiscal year as stipulated by the agreement. LFS and its affiliates maintain various commercial and service relationships with certain members of the syndicate and their affiliates in the ordinary course of business. As of March 31, 2021, the Company was in compliance with all debt covenants as required by the Wintrust Term and Revolving Loans.

~~The following is a summary of the additional margin and commitment fees payable on the available term loan and revolving credit commitment:~~

The following table reflects our available funding capacity as of March 31, ~~2021:~~2022:

(in thousands)

Cash & cash equivalents

~~37,186~~18,066

Credit agreement:

A&R Wintrust Revolving ~~credit facility~~Loan

25,000

Outstanding ~~revolving credit facility~~borrowings on the A&R Wintrust Revolving Loan

— (9,400)

Outstanding letters of credit

~~(3,405)~~(3,300)

Net credit agreement capacity available

~~21,595~~12,300

Total available funding capacity

~~58,781~~30,366

Cash Flow Summary

Management ~~continues~~continued to devote additional resources to its billing and collection efforts during the three months ended March 31, ~~2021.~~2022. Management continues to expect that growth in its ODR business, which is less sensitive to the cash flow issues presented by large GCR projects, will positively impact our cash flow trends.

Provided that the Company’s lenders continue to provide working capital funding, ~~we believe~~the Company believes based on ~~the Company's~~its current reforecast that our current cash and cash equivalents of ~~$37.2~~$18.1 million as of March 31, ~~2021,~~2022, cash payments to be received from existing and new customers, and availability of borrowing under the ~~revolving line of credit under our~~A&R Wintrust ~~Loans~~Revolving Loan (pursuant to which we had ~~$21.6~~$12.3 million of availability as of March 31, ~~2021)~~2022) will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months. ~~See Note 1 - Organization and Plan of Business Operations.~~

~~Surety Bonding~~Debt and Related Obligations

Long-term debt consists of the following obligations as of:


(in thousands)	March 31, 2022		December 31, 2021
A&R Wintrust Term Loan - term loan payable in quarterly installments of principal, (commencing in December 2021) plus interest through February 2026	33,024		34,881
A&R Wintrust Revolving Loan	9,400		—
Finance leases – collateralized by vehicles, payable in monthly installments of principal, plus interest ranging from 4.40% to 6.45% through 2025	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

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On the 2021 Refinancing Date, the Company refinanced its 2019 Refinancing Term Loan and 2019 Revolving Credit Facility with proceeds from the issuance of the Wintrust Term Loan. As a result of the 2021 Refinancing, the Company prepaid all principal, interest, fees and other obligations outstanding under the 2019 Refinancing Agreements and terminated its 2019 Refinancing Term Loan and 2019 Refinancing Revolving Credit Facility. In addition, on the 2021 Refinancing Date, the Company recognized a loss on the early extinguishment of debt of $2.0 million, which consisted of the write-off of $2.6 million of unamortized discount and financing costs, the reversal of the $2.0 million CB warrants liability and the prepayment penalty and other extinguishment costs of $1.4 million.

In conjunction with the Jake Marshall Transaction, the Company entered into the A&R Wintrust Credit Agreement. In accordance with the terms of the A&R Wintrust Credit Agreement, Lenders provided to LFS (i) a $35.5 million senior secured term loan; and (ii) a $25 million senior secured revolving credit facility with a $5 million sublimit for the issuance of letters of credit. The overall A&R Wintrust Term Loan commitment under the A&R Wintrust Credit Agreement was recast at $35.5 million in connection with the A&R Wintrust Credit Agreement. A portion of the A&R Wintrust Term Loan commitment was used to fund the closing purchase price of the Jake Marshall Transaction. The A&R Credit Agreement was also amended to: permit the Company to undertake the Jake Marshall Transaction, make certain adjustments to the covenants under the A&R Wintrust Credit Agreement (which were largely done to make certain adjustments for the Jake Marshall Transaction), allow for the Earnout Payments under the Jake Marshall Transaction and make other corresponding changes to the A&R Wintrust Credit Agreement.

See Note6 for further discussion.

Surety Bonding

In connection with our business, we are occasionally required to provide various types of surety bonds that provide an additional measure of security to our customers for our performance under certain government and private sector contracts. Our ability to obtain surety bonds depends upon our capitalization, working capital, past performance, management expertise and external factors, including the capacity of the overall surety market. Surety companies consider such factors in light of the amount of our backlog that we have currently bonded and their current underwriting standards, which may change from time-to-time. The bonds we provide typically reflect the contract value. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had approximately ~~$160.7~~$134.9 million and ~~$79.4~~$159.2 million in surety bonds outstanding, respectively. In January 2022, our bonding capacity was increased from $700.0 million to $800.0 million. We believe that our ~~$700.0~~$800.0 million bonding capacity provides us with a significant competitive advantage relative to many of our competitors which have limited bonding capacity. See Note 13 for further discussion.

Insurance and Self-Insurance

We purchase workers’ compensation and general liability insurance under policies with per-incident deductibles of $250,000 per occurrence. Losses incurred over primary policy limits are covered by umbrella and excess policies up to specified limits with multiple excess insurers. We accrue for the unfunded portion of costs for both reported claims and claims incurred but not reported. The liability for unfunded reported claims and future claims is reflected on the Condensed Consolidated Balance Sheets as current and non-current liabilities. The liability is computed by determining a reserve for each reported claim on a case-by-case basis based on the nature of the claim and historical loss experience for similar claims plus an allowance for the cost of incurred but not reported claims. The current portion of the liability is included in accrued expenses and other current liabilities on the Condensed Consolidated Balance Sheets. The non-current portion of the liability is included in other long-term liabilities on the Condensed Consolidated Balance Sheets.

We are self-insured related to medical and dental claims under policies with annual per-claimant and annual aggregate stop-loss limits. We accrue for the unfunded portion of costs for both reported claims and claims incurred but not reported. The liability for unfunded reported claims and future claims is reflected on the Condensed Consolidated Balance Sheets as a current liability in accrued expenses and other current liabilities.

~~The components of the self-insurance liability are reflected below as of March 31, 2021 and December 31, 2020:~~

(in thousands) March 31, 2021 December 31, 2020
Current liability – workers’ compensation and general liability $ 170 $ 197
Current liability – medical and dental 524 764
Non-current liability 890 890
Total liability $ 1,584 $ 1,851
Restricted cash $ 113 $ 113

~~The restricted cash balance represents cash set aside~~ See Note 13 for ~~the funding of workers’ compensation and general liability insurance claims. This amount is replenished when depleted, or at the beginning of each month.~~further discussion.

Multiemployer Pension Plans

We participate in approximately 40 multiemployer pension plans (“MEPPs”) that provide retirement benefits to certain union employees in accordance with various collective bargaining agreements (“CBAs”). As one of many participating employers in these MEPPs, we are responsible with the other participating employers for any plan underfunding. Our contributions to a particular MEPP are established by the applicable CBAs; however, required contributions may increase based on the funded status of an MEPP and legal requirements of the Pension Protection Act of 2006 (the “PPA”), which requires substantially underfunded MEPPs to implement a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) to improve their funded status. Factors that could impact funded status of an MEPP include, without limitation, investment performance, changes in the participant demographics, decline in the number of contributing employers, changes in actuarial assumptions and the utilization

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of extended amortization provisions. Assets contributed to the MEPPs by us may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to an MEPP, the unfunded obligations of the MEPP may be borne by the remaining participating employers.

An FIP or RP requires a particular MEPP to adopt measures to correct its underfunding status. These measures may include, but are not limited to an increase in a company’s contribution rate as a signatory to the applicable CBA, or changes to the benefits paid to retirees. In addition, the PPA requires that a 5.0% surcharge be levied on employer contributions for the first year commencing shortly after the date the employer receives notice that the MEPP is in critical status and a 10.0% surcharge on each succeeding year until a CBA is in place with terms and conditions consistent with the RP.

~~Table of Contents~~

We could also be obligated to make payments to MEPPs if we either cease to have an obligation to contribute to the MEPP or significantly reduce our contributions to the MEPP because we reduce the number of employees who are covered by the relevant MEPP for various reasons, including, but not limited to, layoffs or closure of a subsidiary assuming the MEPP has unfunded vested benefits. The amount of such payments (known as a complete or partial withdrawal liability) would equal our proportionate share of the MEPPs’ unfunded vested benefits. We believe that certain of the MEPPs in which we participate may have unfunded vested benefits. Due to uncertainty regarding future factors that could trigger withdrawal liability, we are unable to determine (a) the amount and timing of any future withdrawal liability, if any, and (b) whether our participation in these MEPPs could have a material adverse impact on our financial condition, results of operations or liquidity.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); therefore, pursuant to Item 301(c) of Regulation S-K, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act. Based on that evaluation as of March 31, ~~2021,~~2022, our Chief Executive Officer and Chief Financial Officer concluded that our Company’s disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance of achieving the desired control objectives. Our management recognizes that any control system, no matter how well designed and operated, is based upon certain judgments and assumptions and cannot provide absolute assurance that its objectives will be met. Similarly, an evaluation of controls cannot provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

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Part II

Item 1. Legal Proceedings

See Note ~~15 Commitments and Contingencies~~13 for ~~further~~ information regarding legal proceedings.

Item 1A. Risk Factors

There have been no material changes ~~to our~~from the risk factors previously disclosed in ~~Part I, Item 1A of our 2020~~the Company's Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits


Exhibit						Description
3.1						Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-36541) filed with the U.S. Securities and Exchange Commission on July 26, 2016).
3.2						Certificate of Designation of Class A Preferred Stock (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-36541) filed with the U.S. Securities and Exchange Commission on July 26, 2016).
3.3						Certificate of Correction to Certificate of Designation of Class A Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-36541) filed with the U.S. Securities and Exchange Commission on August 24, 2016).
3.4						Amended and Restated Bylaws (incorporated by reference to Exhibit ~~3.3 to the Company’s Registration Statement on Form S-1 (file No. 333-195695), filed with the U.S. Securities and Exchange Commission on June 30, 2014).~~
~~10.1~~						Credit Agreement among Limbach Facility Services LLC, Limbach Holdings LLC, the guarantors party thereto from time to time, the lenders party thereto from time to time, Wheaton Bank & Trust Company, N.A., a subsidiary of Wintrust Financial Corporation (collectively, “Wintrust”), as administrative agent and L/C issuer, Bank of the West as documentation agent, M&T Bank as syndication agent, and Wintrust as lead arranger and sole book runner (incorporated by reference to Exhibit 10.13.1 to the Company’s Current Report on Form 8-K (File No. 001-36541) filed with the U.S. Securities and Exchange Commission on ~~February 25,~~September 1, 2021).
10.1						First Amendment and Waiver to the Amended and Restated Credit Agreement, dated as of May 5, 2022, by and among Limbach Facility Services LLC, Limbach Holdings LLC, the other Loan Parties party thereto, the Lenders party thereto and Wheaton Bank & Trust Company, N.A., as Administrative Agent and L/C Issuer, filed herewith as Exhibit 10.1.
31.1						Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF						XBRL Taxonomy Extension Definition Document.

*Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			LIMBACH HOLDINGS, INC.

			/s/ Charles A. Bacon, III
			Charles A. Bacon, III
			Chief Executive Officer
			(Principal Executive Officer)

			/s/ Jayme L. Brooks
			Jayme L. Brooks
			Chief Financial Officer
			(Principal Financial and Accounting Officer)
Date: May ~~14, 2021~~10, 2022

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	March 31, 2021	December 31, 2020
Public Warrants(1)(5)	2,140,219	2,300,000
Private Warrants(1)(5)	99,000	99,000
$15 Exercise Price Sponsor Warrants(2)(5)	600,000	600,000
Merger Warrants(3)(6)	629,643	631,119
Additional Merger Warrants(4)(6)	935,068	946,680
Total	4,403,930	4,576,799


	March 31, 2021		December 31, 2020
Balance at beginning of period	$	0	$	1,130
Gross increases in prior period tax positions	0		0
Gross increases in current period tax positions	0		0
Decreases related to prior year tax positions	0		(1,130)
Balance at end of period	$	0	$	0


	Three months ended March 31, 2021						Three months ended March 31, 2020
(in thousands)	GCR		ODR		Total		GCR		ODR		Total

Revenue	$	84,804	$	28,540	$	113,344	$	109,486	$	29,286	$	138,772
Gross Profit	9,395		7,834		17,229		10,982		7,242		18,224
Selling, general and administrative	9,114		7,354		16,468		10,174		6,330		16,504
EBIT	281		480		761		808		912		1,720