Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 08, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-36541 | |
Entity Registrant Name | LIMBACH HOLDINGS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 46-5399422 | |
Entity Address, Address Line One | 797 Commonwealth Drive | |
Entity Address, City or Town | Warrendale | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 15086 | |
City Area Code | 412 | |
Local Phone Number | 359-2100 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | LMB | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 10,471,410 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001606163 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 28,419 | $ 14,476 |
Restricted cash | 113 | 113 |
Accounts receivable (net of allowance for doubtful accounts of $349 and $263 as of September 30, 2022 and December 31, 2021, respectively) | 110,998 | 89,327 |
Contract assets | 65,266 | 83,863 |
Income tax receivable | 214 | 114 |
Other current assets | 4,318 | 5,013 |
Total current assets | 209,328 | 192,906 |
Property and equipment, net | 19,131 | 21,621 |
Intangible assets, net | 15,723 | 16,907 |
Goodwill | 11,370 | 11,370 |
Operating lease right-of-use assets | 19,272 | 20,119 |
Deferred tax asset | 5,407 | 4,330 |
Other assets | 516 | 259 |
Total assets | 280,747 | 267,512 |
Current liabilities: | ||
Current portion of long-term debt | 9,719 | 9,879 |
Current operating lease liabilities | 3,602 | 4,366 |
Accounts payable, including retainage | 63,787 | 63,840 |
Contract liabilities | 42,522 | 26,712 |
Accrued income taxes | 2,264 | 501 |
Accrued expenses and other current liabilities | 24,140 | 24,444 |
Total current liabilities | 146,034 | 129,742 |
Long-term debt | 23,473 | 29,816 |
Long-term operating lease liabilities | 16,532 | 16,576 |
Other long-term liabilities | 1,838 | 3,540 |
Total liabilities | 187,877 | 179,674 |
Commitments and contingencies (Note 13) | ||
STOCKHOLDERS’ EQUITY | ||
Common stock, $0.0001 par value; 100,000,000 shares authorized, 10,447,660 issued and outstanding as of September 30, 2022 and 10,304,242 at December 31, 2021 | 1 | 1 |
Additional paid-in capital | 87,045 | 85,004 |
Retained Earnings | 5,824 | 2,833 |
Total stockholders’ equity | 92,870 | 87,838 |
Total liabilities and stockholders’ equity | $ 280,747 | $ 267,512 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for credit loss, current | $ 349 | $ 263 |
Common stock, par or stated value per share (in usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares, issued (in shares) | 10,447,660 | 10,304,242 |
Common stock, shares, outstanding (in shares) | 10,447,660 | 10,304,242 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Revenue | $ 122,357 | $ 129,177 | $ 353,299 | $ 363,540 |
Cost of revenue | 97,503 | 104,714 | 288,785 | 303,158 |
Gross profit | 24,854 | 24,463 | 64,514 | 60,382 |
Operating expenses: | ||||
Selling, general and administrative | 18,688 | 18,302 | 56,113 | 52,679 |
Change in fair value of contingent consideration | 386 | 0 | 1,151 | 0 |
Amortization of intangibles | 386 | 87 | 1,184 | 295 |
Total operating expenses | 19,460 | 18,389 | 58,448 | 52,974 |
Operating income | 5,394 | 6,074 | 6,066 | 7,408 |
Other (expenses) income: | ||||
Interest expense, net | (547) | (424) | (1,511) | (2,140) |
Gain (loss) on disposition of property and equipment | 150 | (49) | 262 | (41) |
Loss on early termination of operating lease | 0 | 0 | (849) | 0 |
Loss on early debt extinguishment | 0 | 0 | 0 | (1,961) |
Gain on change in fair value of interest rate swap | 298 | 0 | 298 | 0 |
Gain on change in fair value of warrant liability | 0 | 0 | 0 | 14 |
Total other expenses | (99) | (473) | (1,800) | (4,128) |
Income before income taxes | 5,295 | 5,601 | 4,266 | 3,280 |
Income tax provision | 1,654 | 1,615 | 1,275 | 844 |
Net income | $ 3,641 | $ 3,986 | $ 2,991 | $ 2,436 |
Earnings per common share: | ||||
Basic (in usd per share) | $ 0.35 | $ 0.39 | $ 0.29 | $ 0.25 |
Diluted (in usd per share) | $ 0.34 | $ 0.38 | $ 0.28 | $ 0.24 |
Weighted average number of shares outstanding: | ||||
Basic (in shares) | 10,444,987 | 10,266,486 | 10,429,671 | 9,915,966 |
Diluted (in shares) | 10,690,434 | 10,491,863 | 10,595,061 | 10,145,470 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional paid-in capital | Retained earnings (Accumulated deficit) |
Beginning balance (in shares) at Dec. 31, 2020 | 7,926,137 | |||
Beginning balance at Dec. 31, 2020 | $ 53,732 | $ 1 | $ 57,612 | $ (3,881) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 677 | 677 | ||
Shares issued related to vested restricted stock units (in shares) | 89,446 | |||
Shares issued related to vested restricted stock units | 0 | |||
Tax withholding related to vested restricted stock units | (183) | (183) | ||
Shares issued related to employee stock purchase plan (in shares) | 8,928 | |||
Shares issued related to employee stock purchase plan | 92 | 92 | ||
Shares issued related to exercise of warrants (in shares) | 172,869 | |||
Shares issued related to the exercise of warrants | 1,989 | 1,989 | ||
Shares issued related to sale of common stock (in shares) | 2,051,025 | |||
Shares issued related to sale of common stock | 22,773 | 22,773 | ||
Net (loss) income | (2,282) | (2,282) | ||
Ending balance (in shares) at Mar. 31, 2021 | 10,248,405 | |||
Ending balance at Mar. 31, 2021 | 76,798 | $ 1 | 82,960 | (6,163) |
Beginning balance (in shares) at Dec. 31, 2020 | 7,926,137 | |||
Beginning balance at Dec. 31, 2020 | 53,732 | $ 1 | 57,612 | (3,881) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net (loss) income | 2,436 | |||
Ending balance (in shares) at Sep. 30, 2021 | 10,274,242 | |||
Ending balance at Sep. 30, 2021 | 82,975 | $ 1 | 84,419 | (1,445) |
Beginning balance (in shares) at Mar. 31, 2021 | 10,248,405 | |||
Beginning balance at Mar. 31, 2021 | 76,798 | $ 1 | 82,960 | (6,163) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 636 | 636 | ||
Shares issued related to vested restricted stock units (in shares) | 3,291 | |||
Shares issued related to vested restricted stock units | 0 | |||
Tax withholding related to vested restricted stock units | (7) | (7) | ||
Net (loss) income | 732 | 732 | ||
Ending balance (in shares) at Jun. 30, 2021 | 10,251,696 | |||
Ending balance at Jun. 30, 2021 | 78,159 | $ 1 | 83,589 | (5,431) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 703 | 703 | ||
Shares issued related to vested restricted stock units (in shares) | 6,401 | |||
Shares issued related to vested restricted stock units | 0 | |||
Shares issued related to employee stock purchase plan (in shares) | 16,140 | |||
Shares issued related to employee stock purchase plan | 127 | 127 | ||
Shares issued related to exercise of warrants (in shares) | 5 | |||
Shares issued related to the exercise of warrants | 0 | |||
Net (loss) income | 3,986 | 3,986 | ||
Ending balance (in shares) at Sep. 30, 2021 | 10,274,242 | |||
Ending balance at Sep. 30, 2021 | 82,975 | $ 1 | 84,419 | (1,445) |
Beginning balance (in shares) at Dec. 31, 2021 | 10,304,242 | |||
Beginning balance at Dec. 31, 2021 | 87,838 | $ 1 | 85,004 | 2,833 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 599 | 599 | ||
Shares issued related to vested restricted stock units (in shares) | 105,928 | |||
Shares issued related to vested restricted stock units | 0 | |||
Tax withholding related to vested restricted stock units | (148) | (148) | ||
Shares issued related to employee stock purchase plan (in shares) | 12,898 | |||
Shares issued related to employee stock purchase plan | 98 | 98 | ||
Net (loss) income | (1,516) | (1,516) | ||
Ending balance (in shares) at Mar. 31, 2022 | 10,423,068 | |||
Ending balance at Mar. 31, 2022 | 86,871 | $ 1 | 85,553 | 1,317 |
Beginning balance (in shares) at Dec. 31, 2021 | 10,304,242 | |||
Beginning balance at Dec. 31, 2021 | 87,838 | $ 1 | 85,004 | 2,833 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net (loss) income | 2,991 | |||
Ending balance (in shares) at Sep. 30, 2022 | 10,447,660 | |||
Ending balance at Sep. 30, 2022 | 92,870 | $ 1 | 87,045 | 5,824 |
Beginning balance (in shares) at Mar. 31, 2022 | 10,423,068 | |||
Beginning balance at Mar. 31, 2022 | 86,871 | $ 1 | 85,553 | 1,317 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 575 | 575 | ||
Net (loss) income | 866 | 866 | ||
Ending balance (in shares) at Jun. 30, 2022 | 10,423,068 | |||
Ending balance at Jun. 30, 2022 | 88,312 | $ 1 | 86,128 | 2,183 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | 806 | 806 | ||
Shares issued related to employee stock purchase plan (in shares) | 24,592 | |||
Shares issued related to employee stock purchase plan | 111 | 111 | ||
Net (loss) income | 3,641 | 3,641 | ||
Ending balance (in shares) at Sep. 30, 2022 | 10,447,660 | |||
Ending balance at Sep. 30, 2022 | $ 92,870 | $ 1 | $ 87,045 | $ 5,824 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 2,991 | $ 2,436 |
Adjustments to reconcile net income to cash provided by (used in) operating activities: | ||
Depreciation and amortization | 6,173 | 4,353 |
Provision for doubtful accounts | 235 | 126 |
Stock-based compensation expense | 1,980 | 2,016 |
Noncash operating lease expense | 3,336 | 3,152 |
Amortization of debt issuance costs | 100 | 251 |
Deferred income tax provision | (1,077) | 391 |
(Gain) loss on sale of property and equipment | (262) | 41 |
Loss on early termination of operating lease | 849 | 0 |
Loss on change in fair value of contingent consideration | 1,151 | 0 |
Loss on early debt extinguishment | 0 | 1,961 |
Gain on change in fair value of interest rate swap | (298) | 0 |
Gain on change in fair value of warrant liability | 0 | (14) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (21,906) | (12,678) |
Contract assets | 18,597 | (5,095) |
Other current assets | 698 | (1,243) |
Accounts payable, including retainage | (53) | 4,131 |
Prepaid income taxes | (101) | (217) |
Accrued taxes payable | 1,763 | (1,426) |
Contract liabilities | 15,810 | (9,645) |
Operating lease liabilities | (3,264) | (3,036) |
Accrued expenses and other current liabilities | (3,612) | (2,173) |
Other long-term liabilities | (130) | (112) |
Net cash provided by (used in) operating activities | 22,980 | (16,781) |
Cash flows from investing activities: | ||
Proceeds from sale of property and equipment | 442 | 421 |
Advances to joint ventures | 0 | (2) |
Purchase of property and equipment | (725) | (687) |
Net cash used in investing activities | (283) | (268) |
Cash flows from financing activities: | ||
Proceeds from Wintrust Term Loan (as defined in Note 6) | 0 | 30,000 |
Payments on Wintrust and A&R Wintrust Term Loans | (11,571) | (3,500) |
Proceeds from A&R Wintrust Revolving Loan (as defined in Note 6) | 15,194 | 0 |
Payments on 2019 Refinancing Term Loan (as defined in Note 6) | (15,194) | 0 |
Payments on 2019 Refinancing Term Loan (as defined in Note 6) | 0 | (39,000) |
Proceeds from financing transaction (see Note 6) | 5,400 | 0 |
Payments on financing liability | (7) | 0 |
Prepayment penalty and other costs associated with early debt extinguishment | 0 | (1,376) |
Proceeds from the sale of common stock | 0 | 22,773 |
Proceeds from the exercise of warrants | 0 | 1,989 |
Payments on finance leases | (2,051) | (1,966) |
Payments of debt issuance costs | (427) | (593) |
Taxes paid related to net-share settlement of equity awards | (363) | (401) |
Proceeds from contributions to Employee Stock Purchase Plan | 265 | 278 |
Net cash (used in) provided by financing activities | (8,754) | 8,204 |
Increase (decrease) in cash, cash equivalents and restricted cash | 13,943 | (8,845) |
Cash, cash equivalents and restricted cash, beginning of period | 14,589 | 42,260 |
Cash, cash equivalents and restricted cash, end of period | 28,532 | 33,415 |
Noncash investing and financing transactions: | ||
Right of use assets obtained in exchange for new operating lease liabilities | 0 | 156 |
Right of use assets obtained in exchange for new finance lease liabilities | 2,171 | 846 |
Right of use assets disposed or adjusted modifying operating lease liabilities | 2,396 | 47 |
Right of use assets disposed or adjusted modifying finance lease liabilities | (77) | 0 |
Interest paid | 1,425 | 2,138 |
Cash paid for income taxes | $ 768 | $ 2,096 |
Business and Organization
Business and Organization | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | Business and OrganizationLimbach Holdings, Inc. (the “Company,” “we” or “us”), a Delaware corporation headquartered in Warrendale, Pennsylvania, was formed on July 20, 2016 as a result of a business combination with Limbach Holdings LLC (“LHLLC”). The Company is an integrated building systems solutions firm whose expertise is in the design, modular prefabrication, installation, management and maintenance of heating, ventilation, air-conditioning (“HVAC”), mechanical, electrical, plumbing and 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, 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.The Company operates in two segments, (i) General Contractor Relationships (“GCR”), in which the Company generally manages new construction or renovation projects that involve primarily HVAC, plumbing, or electrical services awarded to the Company by general contractors or construction managers, and (ii) 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. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Basis of Presentation 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 (“LC 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 have been prepared in accordance with generally accepted accounting principles in the 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 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 the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 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, fair value of contingent consideration arrangements 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, the Company has included unaudited information for these interim periods. These unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP. In the Company's opinion, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2022, its results of operations and equity for the three and nine months ended September 30, 2022 and 2021 and its cash flows for the nine months ended September 30, 2022 and 2021. The results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022. The Condensed Consolidated Balance Sheet as of December 31, 2021 was derived from the Company's audited financial statements included in its Annual Report on Form 10-K filed with the SEC on March 16, 2022, but is presented as condensed and does not contain all of the footnote disclosures from the annual financial statements. Recently Adopted Accounting Standards In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which creates an exception to the general recognition and measurement principle for contract assets and contract liabilities from contracts with customers acquired in a 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 assets it acquires and the liabilities it assumes at fair value on the acquisition date. The changes are effective for annual periods beginning after December 15, 2022. The Company early adopted ASU 2021-08 in December 2021. The contract assets and contract liabilities associated with the Jake Marshall Transaction (as defined below) have been valued in accordance with this 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 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. An entity may elect to apply the amendments in this update from the beginning of an interim period beginning as of March 12, 2020, through December 31, 2022. The Company has evaluated the impact of adopting the reference rate reform guidance (both ASU 2020-04 and ASU 2021-01) on its condensed consolidated financial statements and has determined that these pronouncements will not have a significant impact. As discussed in Note 6, the A&R Credit Agreement removed LIBOR as a benchmark rate and now utilizes SOFR (as defined in the A&R Credit Agreement) as 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. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | 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 two 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 final 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 |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers The Company generates revenue principally from fixed-price construction contracts to deliver HVAC, plumbing, and 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. The components of the contract asset balances as of the respective dates were as follows: (in thousands) September 30, 2022 December 31, 2021 Change Contract assets Costs in excess of billings and estimated earnings $ 39,275 $ 47,447 $ (8,172) Retainage receivable 25,991 36,416 (10,425) Total contract assets $ 65,266 $ 83,863 $ (18,597) 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) 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) 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 items as recorded in contract assets and contract liabilities in the condensed consolidated balance sheets was $39.0 million and $38.1 million as of September 30, 2022 and December 31, 2021, respectively. The Company currently anticipates that the majority of such amounts will be approved or executed within one year. The resolution of those claims and unapproved change orders that may require litigation or other forms of dispute resolution proceedings may delay the timing of billing beyond one year. Contract liabilities Contract liabilities include billings in excess of contract costs and provisions for losses. The components of the contract liability balances as of the respective dates were as follows: (in thousands) September 30, 2022 December 31, 2021 Change Contract liabilities Billings in excess of costs and estimated earnings $ 42,207 $ 26,293 $ 15,914 Provisions for losses 315 419 (104) Total contract liabilities $ 42,522 $ 26,712 $ 15,810 Billings in excess of costs 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 consisted of the following: (in thousands) September 30, 2022 December 31, 2021 Revenue earned on uncompleted contracts $ 720,629 $ 758,450 Less: Billings to date (723,561) (737,296) Net (overbilling) underbilling $ (2,932) $ 21,154 (in thousands) September 30, 2022 December 31, 2021 Costs in excess of billings and estimated earnings $ 39,275 $ 47,447 Billings in excess of costs and estimated earnings (42,207) (26,293) Net (overbilling) underbilling $ (2,932) $ 21,154 Revisions in Contract Estimates The Company recorded revisions in its contract estimates for certain GCR and ODR projects. During the three months ended September 30, 2022, the Company did not record any material gross profit write-ups or write-downs that had a net gross profit impact of $0.5 million or more. During the nine months ended September 30, 2022, the Company recorded material gross profit write-ups on two GCR projects for a total of $2.0 million and two material GCR project gross profit write-downs for a total of $1.1 million. During the three months ended September 30, 2021, the Company recorded material gross profit write-downs on two GCR projects for a total of $1.1 million and a gross profit write-up on one GCR project for a total of $0.6 million that had a net gross profit impact of $0.5 million or more. During the nine months ended September 30, 2021, the Company recorded material gross profit write-downs on five GCR projects for a total of $4.0 million and a gross profit write-up of $0.7 million on one GCR project. Remaining Performance Obligations Remaining performance obligations represent the transaction price of firm orders for which 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 September 30, 2022, the aggregate amount of the transaction prices allocated to the remaining performance obligations of the Company's GCR and ODR segment contracts were $332.8 million and $106.5 million, respectively. The Company currently estimates that 26% and 40% of its GCR and ODR remaining performance obligations as of September 30, 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. 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. |
Goodwill and Intangibles
Goodwill and Intangibles | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangibles | Goodwill and Intangibles Goodwill Goodwill was $11.4 million as of September 30, 2022 and December 31, 2021 and 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 both the three and nine months ended September 30, 2022 and September 30, 2021. Intangible Assets Intangible assets are comprised of the following: (in thousands) Gross Accumulated Net intangible September 30, 2022 Amortized intangible assets: Customer relationships – GCR – Jake Marshall $ 570 $ (67) $ 503 Customer relationships – ODR – Jake Marshall 3,050 (335) 2,715 Customer relationships – ODR – Limbach 4,710 (3,701) 1,009 Favorable leasehold interests – Limbach 190 (94) 96 Backlog – GCR – Jake Marshall 260 (137) 123 Backlog – ODR – Jake Marshall 680 (358) 322 Trade name – Jake Marshall 1,150 (155) 995 Total amortized intangible assets 10,610 (4,847) 5,763 Unamortized intangible assets: Trade name – Limbach (1) 9,960 — 9,960 Total unamortized intangible assets 9,960 — 9,960 Total amortized and unamortized assets, excluding goodwill $ 20,570 $ (4,847) $ 15,723 (1) The Company has 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. (in thousands) Gross Accumulated Net intangible 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 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt consists of the following obligations as of: (in thousands) September 30, 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 23,310 34,881 A&R Wintrust Revolving Loan — — Finance leases – collateralized by vehicles, payable in monthly installments of principal, plus interest ranging from 3.96% to 6.45% through 2026 5,174 5,132 Financing liability 5,393 — Total debt 33,877 40,013 Less - Current portion of long-term debt (9,719) (9,879) Less - Unamortized discount and debt issuance costs (685) (318) Long-term debt $ 23,473 $ 29,816 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 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 (defined below) liability and the prepayment penalty and other extinguishment costs of $1.4 million. 2019 Refinancing Agreement - 2019 Term Loans On April 12, 2019 (the “2019 Refinancing Closing Date”), 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. 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”). On November 14, 2019, the Company entered into an amendment to the 2019 Refinancing Agreement which, among other things, amended the interest rate and certain covenants in the 2019 Refinancing Agreement. Prior to its refinancing in February 2021, the 2019 Refinancing Agreement would have matured on April 12, 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 was 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 interest rate on borrowings under the 2019 Refinancing Agreement was, at the option of LFS and 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 2021 Refinancing Date, the interest rate in effect on the 2019 Refinancing Term Loan was 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 the 2021 Refinancing Date, no amounts had been drawn on the 2019 Delayed Draw Term Loan, so no portion of the CB Warrants 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. For the period from January 1, 2021 through the 2021 Refinancing Date, the Company recorded interest expense for the amortization of the CB Warrants liability and embedded derivative debt discounts of $0.1 million and recorded an additional $0.1 million of interest expense for the amortization of the debt issuance 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 entered into an amendment to the 2019 ABL Credit Agreement (as amended, 2019 ABL Credit Amendment Number One and Waiver), which amended certain provisions under the 2019 ABL Credit Agreement. The interest rate on borrowings under the 2019 ABL Credit Agreement was, at the 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 the 2021 Refinancing Date, the interest rate in effect on the 2019 ABL Credit Agreement was 5.25%. As of the 2021 Refinancing 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. Prior to its refinancing in February 2021, the 2019 ABL Agreement would have matured in April 2022. Wintrust Term and Revolving Loans On 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 “Wintrust Guarantors”) entered into a credit agreement (the “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 provided to LFS (i) a $30.0 million senior secured term loan (the “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 “Wintrust Revolving Loan” and, together with the Wintrust Term Loan, the “Wintrust Loans”). Proceeds of the Wintrust 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 Wintrust Loans. The Wintrust Revolving Loan initially bore 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 the LFS and its subsidiaries for the most recently ended four fiscal quarters. The Wintrust Term Loan initially 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 was initially 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 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 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 September 30, 2022 and 2021, the interest rate in effect on the non-hedged portion of the Wintrust Term Loan was 7.25% and 4.25%, respectively. For the three and nine months ended September 30, 2022, the Company incurred interest on the A&R Wintrust Term Loan at a weighted average annual interest rate of 6.35% and 5.08%, respectively. In July 2022, the Company entered into an interest rate swap agreement to manage the risk associated with a portion of its variable-rate long-term debt. The interest rate swap involves the exchange of fixed-rate and variable-rate payments without the exchange of the underlying notional amount on which the interest payments are calculated. The new swap agreement became effective on July 14, 2022 and will terminate on July 31, 2027. The notional amount of the swap agreement is $10.0 million with a fixed interest rate of 3.12%. If the one-month SOFR (as defined in the A&R Credit Agreement) is above the fixed rate, the counterparty pays the Company, and if the one-month SOFR is less the fixed rate, the Company pays the counterparty, the difference between the fixed rate of 3.12% and one-month SOFR. The Company has not designated this instrument as a hedge for accounting purposes. As a result, the change in fair value of the derivative instrument is recognized directly in earnings on the Company's condensed consolidated statements of operations as a gain or loss on interest rate swap. Refer to Note 8 for further information regarding this interest rate swap. The A&R Wintrust Term Loan is payable through a combination of (i) monthly installments of approximately $0.6 million due on the last business day of each month commencing on December 31, 2021, (ii) annual Excess Cash Flow payments as defined in the A&R Wintrust Credit Agreement, which are due 120 days after the last day of the Company's fiscal year and (iii) Net Claim Proceeds from Legacy Claims as defined in the A&R Wintrust Credit Agreement. 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. During the second quarter of 2022, the Company made certain Excess Cash Flow and Net Claim Proceeds payments of $3.3 million and $2.1 million, respectively, which concurrently reduced the outstanding A&R Wintrust Term Loan balance. In addition, during the third quarter of 2022, the Company made a Net Claim Proceeds payment of $0.6 million, which was also applied against the outstanding A&R Wintrust Term Loan balance. The A&R Wintrust 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 Wintrust Guarantors in their respective subsidiaries; and (ii) a valid, perfected and enforceable lien of the 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 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 not to exceed an amount beginning at 2.00 to 1.00, (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 December 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. 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. On September 28, 2022, the Company, LFS and LHLLC entered into a second amendment and waiver to the amended and restated Wintrust credit agreement (the “Second Amendment to the A&R Wintrust Credit Agreement”) with the lenders party thereto and Wintrust, as administrative agent. The Second Amendment to the A&R Wintrust Credit Agreement incorporates certain restricted payment provisions, among other things, to permit LFS to repurchase shares under the Company’s Share Repurchase Program (as defined in Note 7). As of September 30, 2022 and December 31, 2021, the Company had no borrowings outstanding under the A&R Wintrust Revolving Loan. During the three and nine months ended September 30, 2022, the maximum outstanding borrowings under the A&R Wintrust Revolving Loan at any time was $3.5 million and $9.4 million, respectively, and the average daily balance was approximately $0.2 million and $0.1 million, respectively. For the three and nine months ended September 30, 2022, the Company incurred interest on the A&R Wintrust Revolving Loan at a weighted average annual interest rate of 5.25% and 4.78%, respectively. At September 30, 2022, the Company had irrevocable letters of credit in the amount of $3.3 million with the lenders under the A&R Wintrust Credit Agreement to secure obligations under its self-insurance program. The following is a summary of the applicable margin and commitment fees payable on the available A&R Wintrust Term Loan and A&R Wintrust Revolving Loan credit commitment: Level Senior Leverage Ratio Additional Margin for Additional Margin for 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 September 30, 2022, the Company was in compliance with all financial maintenance covenants as required by the A&R Wintrust Loans. Sale-Leaseback Financing Transaction On September 29, 2022, LC LLC and Royal Oak Acquisitions, LLC (the “Purchaser”) consummated the purchase of the real property under a sale and leaseback transaction, with an aggregate value of approximately $7.8 million (a purchase price of approximately $5.4 million and $2.4 million in tenant improvement allowances), pursuant to a purchase agreement under which the Purchaser purchased from LC LLC the Company’s facility and real property in Pontiac, MI (collectively, the “Pontiac Facility”). In connection with the sale and leaseback transaction, LC LLC and Featherstone St Pontiac MI LLC (the “Landlord”) entered into a Lease Agreement (the “Lease Agreement”), dated September 29, 2022 (the “Lease Effective Date”) for the Pontiac Facility. Commencing on the Lease Effective Date, pursuant to the Lease Agreement, LC LLC has leased the Pontiac Facility, subject to the terms and conditions of the Lease Agreement. The Lease Agreement provides for a term of 25 years (the “Primary Term”). The Lease Agreement also provides LC LLC with the option to extend the Primary Term by two separate renewal terms of five years each (each a “Renewal Term”). Under the terms of the Lease Agreement, the Company’s annual minimum rent is $499,730, payable in monthly installments, subject to annual increases of approximately 2.5% each year under the Primary Term and for each year under the Renewal Terms, if exercised. LC LLC has a one-time option to terminate the Lease Agreement effective on the last day of the fifteenth lease year by providing written notice to the Landlord as more fully set forth in the Lease Agreement. The one-time termination option of the Lease Agreement would require LC LLC to pay to the Landlord a termination fee of approximately $1.7 million. Pursuant to the terms and conditions set forth in the Lease Agreement, the Landlord has agreed to provide LC LLC with a tenant improvement allowance in an amount up to $2.4 million. LC LLC is responsible for the initial capital outlay and completion of the agreed upon improvement work. The Landlord will subsequently reimburse LC LLC for such items up to the stated allowance amount. The Company accounted for the sale and leaseback arrangement as a financing transaction in accordance with ASC 842, “ Leases ,” as the Lease Agreement was determined to be a finance lease. The Company concluded the Lease Agreement met the qualifications to be classified as a finance lease due to the significance of the present value of the lease payments, using an implicit rate of 11.11% to reflect the Company’s incremental borrowing rate associated with the $5.4 million purchase price as of the Lease Agreement date, compared to the fair value of the Pontiac Facility. The implicit rate associated with the aggregate purchase value, inclusive of tenant improvement allowances, was 6.53% as of the Lease Agreement date. The presence of a finance lease indicates that control of the Pontiac Facility has not transferred to the Purchaser and, as such, the transaction was deemed a failed sale-leaseback and must be accounted for as a financing arrangement. As a result of this determination, the Company is viewed as having received the sale proceeds from the Purchaser in the form of a hypothetical loan collateralized by its leased facilities. The hypothetical loan is payable as principal and interest in the form of “lease payments” to the Purchaser. Principal repayments are recorded as a reduction to the financing liability. The Company will not derecognize the Pontiac Facility from its books for accounting purposes until the lease ends. No gain or loss was recognized under GAAP related to the sale and leaseback arrangement. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Equity | EquityThe 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. Warrants In conjunction with the Company's initial public offering, the Company issued Public Warrants, Private Warrants and $15 Exercise Price Sponsor Warrants. The Company issued certain Merger Warrants and Additional Merger Warrants in conjunction with the Company's business combination with LHLLC in July 2016 (the “Business Combination”). On July 20, 2021, the Public Warrants, Private Warrants, and Additional Merger Warrants expired by their terms. The following table summarizes the underlying shares of common stock with respect to outstanding warrants: September 30, 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 (1) Exercisable for one share of common stock at an exercise price of $15.00 per share (“$15 Exercise Price Sponsor Warrants”). (2) Issued under a warrant agreement dated July 15, 2014, between Continental Stock Transfer and Trust Company, as warrant agent, and the Company. (3) Exercisable for one share of common stock at an exercise price of $12.50 per share (“Merger Warrants”). (4) Issued to the sellers of LHLLC. Incentive Plan Upon the consummation of the Company's Business Combination, the Company adopted an omnibus incentive plan (the “Omnibus Incentive Plan”) pursuant to which equity awards may be granted thereunder. On March 9, 2021, the Board of Directors approved certain amendments to the Company's 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 600,000, for a total of 2,250,000 shares, and 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 June 16, 2021. On March 25, 2022, the Board of Directors approved certain additional amendments to the Company's Omnibus Incentive Plan (the “2022 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 350,000, for a total of 2,600,000 shares, and extended the term of the plan so that it will expire on the tenth anniversary of the date the stockholders approve the 2022 Amended and Restated Omnibus Incentive Plan. The amendments were approved by the Company's stockholders at the Annual Meeting held on June 22, 2022. See Note 14 for a discussion of the Company's management incentive plans for restricted stock units (“RSUs”) granted, vested, forfeited and remaining unvested. Share Repurchase Program In September 2022, the Company announced that its Board of Directors approved a share repurchase program (the “Share Repurchase Program”) to repurchase shares of its common stock for an aggregate purchase price not to exceed $2.0 million. The share repurchase authority is valid through September 29, 2023. Share repurchases may be executed through various means, including, without limitation, open market transactions, privately negotiated transactions or by other means in accordance with federal securities laws. The Share Repurchase Program does not obligate the Company to acquire any particular amount of common stock, and the program may be suspended or terminated by the Company at any time at its discretion without prior notice. As of September 30, 2022, the Company has not made any share repurchases under its Share Repurchase Program. 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”). 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 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 ten 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 January 2022 and July 2022, the Company issued 12,898 and 24,592 shares of its common stock, respectively, to participants in the ESPP who contributed to the plan during the offering period ending December 31, 2021 and June 30, 2022, respectively. In January 2021 and July 2021, the Company issued a total of 8,928 and 16,140 shares of its common stock, respectively, to participants in the ESPP who contributed to the plan during the offering periods ending December 31, 2020 and June 30, 2021, respectively. As of September 30, 2022, 406,617 shares 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 “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. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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 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. The Company also believes that the carrying value of the A&R Wintrust Term Loan approximates its respective fair value due to the variable rate on such debt. As of September 30, 2022, the Company determined that the fair value of the A&R Wintrust Term Loan was $23.3 million. Such fair value was determined using discounted estimated future cash flows using level 3 inputs. Earnout Payments As a part of the total consideration for the Jake Marshall Transaction, the Company initially 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 on the Effective Date. The fair value of contingent Earnout Payments is based on generating growth rates on the projected gross margins of the Acquired Entities and calculating the associated contingent payments based on achieving the earnout targets, which are reassessed each reporting period. Based on the Company’s ongoing assessment of the fair value of contingent earnout liability, the Company recorded net increases in the estimated fair value of such liabilities of $0.4 million and $1.2 million for the three and nine months ended September 30, 2022, respectively, which were presented in change in fair value of contingent consideration in the Company's condensed consolidated statements of operations. The Company has assessed the maximum estimated exposure to the contingent earnout liabilities to be approximately $4.2 million at September 30, 2022, of which approximately $2.7 million was included in accrued expenses and other current liabilities and approximately $1.5 million was included in other long-term liabilities. The Company determines the fair value of the Earnout Payments by utilizing the Monte Carlo Simulation method, which represents a Level 3 measurement. The Monte Carlo Simulation method models the probability of different financial results of the Acquired Entities during the earn-out period, utilizing a discount rate, which reflects a credit spread over the term-adjusted continuous risk-free rate. As of September 30, 2022 and the Effective Date, the Earnout Payments associated with the Jake Marshall Transaction were valued utilizing a discount rate of 10.1% and 6.83%, respectively. 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. Interest Rate Swap The fair value of the interest rate swap is determined using widely accepted valuation techniques and reflects the contractual terms of the interest rate swap including the period to maturity, and while there are no quoted prices in active markets, it uses observable market-based inputs, including interest rate curves and implied volatilities. The fair value analysis also considers a credit valuation adjustment to reflect nonperformance risk of both the Company and the single counterparty. The fair value of the interest rate contract has been determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The interest rate swap is classified as a Level 2 item within the fair value hierarchy. As of September 30, 2022, the Company determined that the fair value of the interest rate swap was $0.3 million and is recognized in other assets on the Company's condensed consolidated balance sheets. For the three and nine months ended September 30, 2022, the Company recognized a gain of $0.3 million on its condensed consolidated statements of operations associated with the change in fair value of the interest rate swap arrangement. CB Warrants 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). Prior to its extinguishment, 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. 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. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings per Share | 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. 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 and nine months ended September 30, 2022 and 2021: Three Months Ended Nine Months Ended (in thousands, except per share amounts) 2022 2021 2022 2021 EPS numerator: Net income $ 3,641 $ 3,986 $ 2,991 $ 2,436 EPS denominator: Weighted average shares outstanding – basic 10,445 10,266 10,430 9,916 Impact of dilutive securities 245 225 165 230 Weighted average shares outstanding – diluted 10,690 10,492 10,595 10,146 EPS: Basic $ 0.35 $ 0.39 $ 0.29 $ 0.25 Diluted $ 0.34 $ 0.38 $ 0.28 $ 0.24 The following table summarizes the securities that were antidilutive or out-of-the-money, and therefore, were not included in the computations of diluted income per common share: Three Months Ended Nine Months Ended 2022 2021 2022 2021 Out-of-the-money warrants (see Note 7) 1,229,643 1,885,202 1,229,643 3,571,833 Service-based RSUs (See Note 14) 56 290 3,818 155 Performance and market-based RSUs (1) 197 36,305 842 8,707 Employee Stock Purchase Plan 233 — 1,301 — Total 1,230,129 1,921,797 1,235,604 3,580,695 (1) For the three and nine months ended September 30, 2022 and 2021, certain MRSU awards (each defined in Note 14) were not included in the computation of diluted 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. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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 the Company updates its estimate of the annual effective tax rate, and if its estimated tax rate changes, the Company makes a cumulative adjustment. The following table presents our income tax provision and our income tax rate for the three and nine months ended September 30, 2022 and 2021. Three Months Ended Nine Months Ended (in thousands, except percentages) 2022 2021 2022 2021 Income tax provision $ 1,654 $ 1,615 $ 1,275 $ 844 Income tax rate 31.2 % 28.8 % 29.9 % 25.7 % The U.S. federal statutory tax rate was 21% for each of the three and nine months ended September 30, 2022 and 2021. The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate for the three and nine months ended September 30, 2022 was primarily due to state income taxes, tax credits, other permanent adjustments and discrete tax items. No valuation allowance was required as of September 30, 2022 or December 31, 2021. |
Operating Segments
Operating Segments | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Operating Segments | Operating Segments As discussed in Note 1, the Company operates in two segments, (i) GCR, in which the Company generally manages new construction or renovation projects that involve primarily HVAC, plumbing, or electrical services 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. 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 President and Chief Executive Officer, Chief Financial Officer and Chief Operating Officer. 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. The Company's corporate department provides general and administrative support services to its two operating segments. The CODM allocates costs between segments for selling, general and administrative expenses and depreciation expense. Interest expense is not allocated to segments because of the corporate management of debt service. 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 three and nine months ended September 30, 2022 and 2021 were as follows: Three Months Ended Nine Months Ended (in thousands) 2022 2021 2022 2021 Statement of Operations Data: Revenue: GCR $ 62,653 $ 89,950 $ 200,921 $ 262,304 ODR 59,704 39,227 152,378 101,236 Total revenue 122,357 129,177 353,299 363,540 Gross profit: GCR 9,648 12,754 26,700 31,034 ODR 15,206 11,709 37,814 29,348 Total gross profit 24,854 24,463 64,514 60,382 Selling, general and administrative: GCR 8,496 9,586 25,042 27,770 ODR 9,386 8,013 29,091 22,893 Corporate 806 703 1,980 2,016 Total selling, general and administrative 18,688 18,302 56,113 52,679 Change in fair value of contingent consideration 386 — 1,151 — Amortization of intangibles 386 87 1,184 295 Operating income $ 5,394 $ 6,074 $ 6,066 $ 7,408 Less unallocated amounts: Interest expense, net (547) (424) (1,511) (2,140) Gain (loss) on disposition of property and equipment 150 (49) 262 (41) Loss on early termination of operating lease — — (849) — Loss on early debt extinguishment — — — (1,961) Gain on change in fair value of interest rate swap 298 — 298 — Gain on change in fair value of warrant liability — — — 14 Total unallocated amounts (99) (473) (1,800) (4,128) Income before income taxes $ 5,295 $ 5,601 $ 4,266 $ 3,280 Other Data: Depreciation and amortization: GCR $ 1,049 $ 1,035 $ 3,232 $ 3,091 ODR 590 267 1,757 967 Corporate 386 87 1,184 295 Total other data $ 2,025 $ 1,389 $ 6,173 $ 4,353 The Company does not identify capital expenditures and total assets by segment in its internal financial reports due in part to the shared use of a centralized fleet of vehicles and specialized equipment. Interest expense is also not allocated to segments because of the Company’s corporate management of debt service, including interest. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Leases | LeasesThe 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 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 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 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 the Company's real estate leases, the Company uses quoted borrowing rates on 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 two successive periods of two 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 September 30, 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 and nine months ended September 30, 2022, the Company recorded approximately $0.3 million and $0.6 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. The Company recognized the full termination fee expense during the first quarter of 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 and moving expenses. The following table summarizes the lease amounts included in the Company's condensed consolidated balance sheets: (in thousands) Classification on the Condensed Consolidated Balance Sheets September 30, 2022 December 31, 2021 Assets Operating Operating lease right-of-use assets (1) $ 19,272 $ 20,119 Finance Property and equipment, net (2)(3) 7,662 4,916 Total lease assets $ 26,934 $ 25,035 Liabilities Current Operating Current operating lease liabilities $ 3,602 $ 4,366 Finance Current portion of long-term debt 2,291 2,451 Noncurrent Operating Long-term operating lease liabilities 16,532 16,576 Finance Long-term debt (4) 8,276 2,681 Total lease liabilities $ 30,701 $ 26,074 (1) Operating lease assets are recorded net of accumulated amortization of $11.4 million at September 30, 2022 and $15.9 million at December 31, 2021. (2) Finance lease vehicle assets are recorded net of accumulated amortization of $6.3 million at September 30, 2022 and $5.9 million at December 31, 2021. (3) Includes approximately $2.7 million of net property assets associated with the the Company's Pontiac Facility. (4) Includes approximately $5.4 million associated with the Company's sale and leaseback financing transaction. See Note 6 for further detail. The following table summarizes the lease costs included in the Company's condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021: Three Months Ended Nine Months Ended (in thousands) Classification on the Condensed Consolidated Statement of Operations 2022 2021 2022 2021 Operating lease cost Cost of revenue (1) $ 654 $ 716 $ 2,005 $ 2,088 Operating lease cost Selling, general and administrative (1) 622 553 1,957 1,724 Finance lease cost Amortization Cost of revenue (2) 684 644 2,020 1,971 Interest Interest expense, net (2) 68 72 200 236 Total lease cost $ 2,028 $ 1,985 $ 6,182 $ 6,019 (1) Operating lease costs recorded in cost of revenue included $0.2 million of variable lease costs for each of the three months ended September 30, 2022 and 2021, and $0.4 million for each of the nine months ended September 30, 2022 and 2021. In addition, $0.2 million and $0.1 million of variable lease costs are included in selling, general and administrative for each of the three months ended September 30, 2022 and 2021, respectively, and $0.4 million and $0.3 million for the nine months ended September 30, 2022 and 2021, respectively. These variable costs consist of the Company's proportionate share of operating expenses, real estate taxes and utilities. (2) Finance lease costs recorded in cost of revenue include variable lease costs of $1.0 million and $0.7 million for the three months ended September 30, 2022 and 2021, respectively, and $2.8 million and $2.0 million for the nine months ended September 30, 2022 and 2021, respectively. These variable lease costs consist of fuel, maintenance, and sales tax charges. Future minimum commitments for finance and operating leases that have non-cancelable lease terms in excess of one year as of September 30, 2022 were as follows: Finance Leases Operating Leases Year ending (in thousands): Vehicles Pontiac Facility Total Finance Non-Related Party Related Party (1) Sublease Receipts (2) Total Operating Remainder of 2022 $ 675 $ 42 $ 717 $ 1,052 $ 113 $ (218) $ 947 2023 2,035 — 2,035 3,948 450 (885) 3,513 2024 1,322 — 1,322 3,259 450 (912) 2,797 2025 827 — 827 2,745 450 (939) 2,256 2026 315 — 315 2,625 450 (967) 2,108 Thereafter — 5,351 5,351 3,479 4,815 (327) 7,967 Total minimum lease payments $ 5,174 $ 5,393 $ 10,567 $ 17,108 $ 6,728 $ (4,248) $ 19,588 Amounts representing interest 353 11,676 12,029 Present value of net minimum lease payments $ 5,527 $ 17,069 $ 22,596 (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: September 30, 2022 December 31, 2021 Weighted average lease term (in years): Operating 7.09 7.10 Finance (1) 2.71 2.51 Weighted average discount rate: Operating 4.77 % 4.68 % Finance (1) 4.97 % 5.27 % (1) Excludes the weighted average lease term and weighted average discount rate associated with the aforementioned sale-leaseback financing transaction, which has a Primary Term of 25 years and utilized an implicit rate of 11.11%. See Note 6 for further detail. The following is a summary of other information and supplemental cash flow information related to finance and operating leases: Nine months ended September 30, (in thousands) 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3,890 $ 3,696 Operating cash flows from finance leases 200 236 Financing cash flows from finance leases 2,051 1,966 Right-of-use assets exchanged for lease liabilities: Operating leases — 156 Finance leases 2,171 846 Right-of-use assets disposed or adjusted modifying operating leases liabilities 2,396 47 Right-of-use assets disposed or adjusted modifying finance leases liabilities $ (77) — |
Leases | LeasesThe 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 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 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 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 the Company's real estate leases, the Company uses quoted borrowing rates on 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 two successive periods of two 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 September 30, 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 and nine months ended September 30, 2022, the Company recorded approximately $0.3 million and $0.6 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. The Company recognized the full termination fee expense during the first quarter of 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 and moving expenses. The following table summarizes the lease amounts included in the Company's condensed consolidated balance sheets: (in thousands) Classification on the Condensed Consolidated Balance Sheets September 30, 2022 December 31, 2021 Assets Operating Operating lease right-of-use assets (1) $ 19,272 $ 20,119 Finance Property and equipment, net (2)(3) 7,662 4,916 Total lease assets $ 26,934 $ 25,035 Liabilities Current Operating Current operating lease liabilities $ 3,602 $ 4,366 Finance Current portion of long-term debt 2,291 2,451 Noncurrent Operating Long-term operating lease liabilities 16,532 16,576 Finance Long-term debt (4) 8,276 2,681 Total lease liabilities $ 30,701 $ 26,074 (1) Operating lease assets are recorded net of accumulated amortization of $11.4 million at September 30, 2022 and $15.9 million at December 31, 2021. (2) Finance lease vehicle assets are recorded net of accumulated amortization of $6.3 million at September 30, 2022 and $5.9 million at December 31, 2021. (3) Includes approximately $2.7 million of net property assets associated with the the Company's Pontiac Facility. (4) Includes approximately $5.4 million associated with the Company's sale and leaseback financing transaction. See Note 6 for further detail. The following table summarizes the lease costs included in the Company's condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021: Three Months Ended Nine Months Ended (in thousands) Classification on the Condensed Consolidated Statement of Operations 2022 2021 2022 2021 Operating lease cost Cost of revenue (1) $ 654 $ 716 $ 2,005 $ 2,088 Operating lease cost Selling, general and administrative (1) 622 553 1,957 1,724 Finance lease cost Amortization Cost of revenue (2) 684 644 2,020 1,971 Interest Interest expense, net (2) 68 72 200 236 Total lease cost $ 2,028 $ 1,985 $ 6,182 $ 6,019 (1) Operating lease costs recorded in cost of revenue included $0.2 million of variable lease costs for each of the three months ended September 30, 2022 and 2021, and $0.4 million for each of the nine months ended September 30, 2022 and 2021. In addition, $0.2 million and $0.1 million of variable lease costs are included in selling, general and administrative for each of the three months ended September 30, 2022 and 2021, respectively, and $0.4 million and $0.3 million for the nine months ended September 30, 2022 and 2021, respectively. These variable costs consist of the Company's proportionate share of operating expenses, real estate taxes and utilities. (2) Finance lease costs recorded in cost of revenue include variable lease costs of $1.0 million and $0.7 million for the three months ended September 30, 2022 and 2021, respectively, and $2.8 million and $2.0 million for the nine months ended September 30, 2022 and 2021, respectively. These variable lease costs consist of fuel, maintenance, and sales tax charges. Future minimum commitments for finance and operating leases that have non-cancelable lease terms in excess of one year as of September 30, 2022 were as follows: Finance Leases Operating Leases Year ending (in thousands): Vehicles Pontiac Facility Total Finance Non-Related Party Related Party (1) Sublease Receipts (2) Total Operating Remainder of 2022 $ 675 $ 42 $ 717 $ 1,052 $ 113 $ (218) $ 947 2023 2,035 — 2,035 3,948 450 (885) 3,513 2024 1,322 — 1,322 3,259 450 (912) 2,797 2025 827 — 827 2,745 450 (939) 2,256 2026 315 — 315 2,625 450 (967) 2,108 Thereafter — 5,351 5,351 3,479 4,815 (327) 7,967 Total minimum lease payments $ 5,174 $ 5,393 $ 10,567 $ 17,108 $ 6,728 $ (4,248) $ 19,588 Amounts representing interest 353 11,676 12,029 Present value of net minimum lease payments $ 5,527 $ 17,069 $ 22,596 (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: September 30, 2022 December 31, 2021 Weighted average lease term (in years): Operating 7.09 7.10 Finance (1) 2.71 2.51 Weighted average discount rate: Operating 4.77 % 4.68 % Finance (1) 4.97 % 5.27 % (1) Excludes the weighted average lease term and weighted average discount rate associated with the aforementioned sale-leaseback financing transaction, which has a Primary Term of 25 years and utilized an implicit rate of 11.11%. See Note 6 for further detail. The following is a summary of other information and supplemental cash flow information related to finance and operating leases: Nine months ended September 30, (in thousands) 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3,890 $ 3,696 Operating cash flows from finance leases 200 236 Financing cash flows from finance leases 2,051 1,966 Right-of-use assets exchanged for lease liabilities: Operating leases — 156 Finance leases 2,171 846 Right-of-use assets disposed or adjusted modifying operating leases liabilities 2,396 47 Right-of-use assets disposed or adjusted modifying finance leases liabilities $ (77) — |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 January 23, 2020, plaintiff, Bernards Bros. Inc. (“Bernards”), filed a complaint against the Company in Superior Court of the State of California for the County of Los Angeles. The complaint alleges that 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 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. 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 has been set for January 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. On April 17, 2020, plaintiff, LA Excavating, Inc., filed a complaint against 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 sought damages of approximately $1.0 million for alleged failure to pay contract balances and extra work ordered by Limbach Company LP, as well as sought to enforce payment obligations under a payment bond. In April 2022, the parties settled for an immaterial amount and the case was dismissed. On January 26, 2022, claimant, Suffolk Construction Company, Inc. (“Suffolk”) filed a Demand for Arbitration in Massachusetts against Boston Medical Center Corporation (“BMC”) and numerous of Suffolk’s trade subcontractors, including, the Company’s wholly-owned subsidiary, Limbach Company LLC, 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 the Company’s share of BMC’s audit costs, which share has not been, and cannot currently be, quantified. The Company disputes the findings of BMC’s audit and intends to vigorously defend the allegation that it overbilled the project. An arbitration hearing date has been set for February 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. Surety. The terms of its construction contracts frequently require that the Company obtain from surety companies, and provide to its customers, payment and performance bonds (“Surety Bonds”) as a condition to the award of such contracts. The Surety Bonds secure its payment and performance obligations under such contracts, and the Company has agreed to indemnify the surety companies for amounts, if any, paid by them in respect of Surety Bonds issued on its behalf. In addition, at the request of labor unions representing certain of 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, the Company's bonding requirements typically increase as the amount of public sector work increases. As of September 30, 2022, the Company had approximately $115.6 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 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. Self-insurance . The Company is substantially self-insured for workers’ compensation and general liability claims, in the view of the 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 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 establishing 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 consolidated balance sheet. The non-current portion of the liability is included in other long-term liabilities on the consolidated balance sheet. The Company is self-insured related to medical and dental claims under policies with annual per-claimant and 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. The components of the self-insurance liability as of September 30, 2022 and December 31, 2021 are as follows: (in thousands) September 30, December 31, Current liability — workers’ compensation and general liability $ 133 $ 184 Current liability — medical and dental 479 456 Non-current liability 321 451 Total liability $ 933 $ 1,091 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. |
Management Incentive Plans
Management Incentive Plans | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Management Incentive Plans | 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, 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 approval of the 2022 Amended and Restated Omnibus Incentive Plan, the Company will reserve 2,600,000 shares of its common stock for 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 The Company grants service-based stock awards in the form of RSUs. Service-based RSUs granted to executives, employees, and non-employee directors vest ratably, on an annual basis, over three years and in the 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 the Company's service-based RSU activity for the nine months ended September 30, 2022: Awards Weighted-Average Unvested at December 31, 2021 266,089 $ 8.45 Granted 184,941 8.97 Vested (120,401) 7.43 Forfeited (24,604) 9.43 Unvested at September 30, 2022 306,025 $ 9.09 Performance-Based Awards The Company grants performance-based restricted stock units (“PRSUs”) under which shares of the Company’s common stock may be earned based on the Company’s performance compared to 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 predetermined adjusted EBITDA, EPS growth and EBITDA margin performance goals over a three year period. The Company recognizes stock-based compensation expense for these awards over the vesting period based on the projected probability of achievement of 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 forecasts with respect to the performance conditions. For the three months ended September 30, 2022 and 2021, the Company recognized $0.3 million and $0.2 million, respectively, of stock-based compensation expense related to outstanding PRSUs. For the nine months ended September 30, 2022 and 2021, the Company recognized $0.7 million and $0.6 million, respectively, of stock-based compensation expense related to outstanding PRSUs. The following table summarizes the Company's PRSU activity for the nine months ended September 30, 2022: Awards Weighted-Average Unvested at December 31, 2021 280,700 $ 9.46 Granted 258,363 7.18 Vested — — Forfeited (41,123) 8.98 Unvested at September 30, 2022 497,940 $ 8.32 Market-Based Awards The following table summarizes the Company's market-based RSU (“MRSUs”) activity for the nine months ended September 30, 2022: Awards Weighted-Average Unvested at December 31, 2021 102,500 $ 8.26 Granted — — Vested — — Forfeited (102,500) 8.26 Unvested at September 30, 2022 — $ — 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. These awards expired on July 16, 2022 as the MRSU award conditions were not achieved. Total recognized stock-based compensation expense amounted to $0.8 million and $2.0 million for the three and nine months ended September 30, 2022, respectively, and $0.7 million and $2.0 million for the three and nine months ended September 30, 2021. The aggregate fair value as of the vest date of RSUs that vested during the nine months ended September 30, 2022 and 2021 was $1.1 million and $1.4 million, respectively. Total unrecognized stock-based compensation expense related to unvested RSUs which are probable of vesting was $3.3 million at September 30, 2022. These costs are expected to be recognized over a weighted average period of 1.68 years. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation 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 (“LC 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 have been prepared in accordance with generally accepted accounting principles in the 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 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 the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 16, 2022. |
Use of Estimates | 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, fair value of contingent consideration arrangements 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 | 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, the Company has included unaudited information for these interim periods. These unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP. In the Company's opinion, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2022, its results of operations and equity for the three and nine months ended September 30, 2022 and 2021 and its cash flows for the nine months ended September 30, 2022 and 2021. The results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022. The Condensed Consolidated Balance Sheet as of December 31, 2021 was derived from the Company's audited financial statements included in its Annual Report on Form 10-K filed with the SEC on March 16, 2022, but is presented as condensed and does not contain all of the footnote disclosures from the annual financial statements. |
Recently Adopted Accounting Standards and Recent Accounting Pronouncements | Recently Adopted Accounting Standards In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which creates an exception to the general recognition and measurement principle for contract assets and contract liabilities from contracts with customers acquired in a 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 assets it acquires and the liabilities it assumes at fair value on the acquisition date. The changes are effective for annual periods beginning after December 15, 2022. The Company early adopted ASU 2021-08 in December 2021. The contract assets and contract liabilities associated with the Jake Marshall Transaction (as defined below) have been valued in accordance with this 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 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. An entity may elect to apply the amendments in this update from the beginning of an interim period beginning as of March 12, 2020, through December 31, 2022. The Company has evaluated the impact of adopting the reference rate reform guidance (both ASU 2020-04 and ASU 2021-01) on its condensed consolidated financial statements and has determined that these pronouncements will not have a significant impact. As discussed in Note 6, the A&R Credit Agreement removed LIBOR as a benchmark rate and now utilizes SOFR (as defined in the A&R Credit Agreement) as 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. |
Revenue from Contract with Customers | Revenue from Contracts with Customers The Company generates revenue principally from fixed-price construction contracts to deliver HVAC, plumbing, and 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. 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) 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) 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. Billings in excess of costs 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. Remaining Performance Obligations Remaining performance obligations represent the transaction price of firm orders for which 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. |
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 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. |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Allocation of Fair Value of Assets and Liabilities from Jake Marshall Transaction | The following table summarizes the final 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 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Components of Contract Asset and Liability Balances | Contract assets include amounts due under retainage provisions and costs and estimated earnings in excess of billings. The components of the contract asset balances as of the respective dates were as follows: (in thousands) September 30, 2022 December 31, 2021 Change Contract assets Costs in excess of billings and estimated earnings $ 39,275 $ 47,447 $ (8,172) Retainage receivable 25,991 36,416 (10,425) Total contract assets $ 65,266 $ 83,863 $ (18,597) (in thousands) September 30, 2022 December 31, 2021 Change Contract liabilities Billings in excess of costs and estimated earnings $ 42,207 $ 26,293 $ 15,914 Provisions for losses 315 419 (104) Total contract liabilities $ 42,522 $ 26,712 $ 15,810 |
Schedule of Contracts In Progress | The net (overbilling) underbilling position for contracts in process consisted of the following: (in thousands) September 30, 2022 December 31, 2021 Revenue earned on uncompleted contracts $ 720,629 $ 758,450 Less: Billings to date (723,561) (737,296) Net (overbilling) underbilling $ (2,932) $ 21,154 (in thousands) September 30, 2022 December 31, 2021 Costs in excess of billings and estimated earnings $ 39,275 $ 47,447 Billings in excess of costs and estimated earnings (42,207) (26,293) Net (overbilling) underbilling $ (2,932) $ 21,154 |
Goodwill and Intangibles (Table
Goodwill and Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets are comprised of the following: (in thousands) Gross Accumulated Net intangible September 30, 2022 Amortized intangible assets: Customer relationships – GCR – Jake Marshall $ 570 $ (67) $ 503 Customer relationships – ODR – Jake Marshall 3,050 (335) 2,715 Customer relationships – ODR – Limbach 4,710 (3,701) 1,009 Favorable leasehold interests – Limbach 190 (94) 96 Backlog – GCR – Jake Marshall 260 (137) 123 Backlog – ODR – Jake Marshall 680 (358) 322 Trade name – Jake Marshall 1,150 (155) 995 Total amortized intangible assets 10,610 (4,847) 5,763 Unamortized intangible assets: Trade name – Limbach (1) 9,960 — 9,960 Total unamortized intangible assets 9,960 — 9,960 Total amortized and unamortized assets, excluding goodwill $ 20,570 $ (4,847) $ 15,723 (1) The Company has 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. (in thousands) Gross Accumulated Net intangible 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 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Long-term debt consists of the following obligations as of: (in thousands) September 30, 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 23,310 34,881 A&R Wintrust Revolving Loan — — Finance leases – collateralized by vehicles, payable in monthly installments of principal, plus interest ranging from 3.96% to 6.45% through 2026 5,174 5,132 Financing liability 5,393 — Total debt 33,877 40,013 Less - Current portion of long-term debt (9,719) (9,879) Less - Unamortized discount and debt issuance costs (685) (318) Long-term debt $ 23,473 $ 29,816 |
Schedule of Additional Margin and Commitment Fees Payable | The following is a summary of the applicable margin and commitment fees payable on the available A&R Wintrust Term Loan and A&R Wintrust Revolving Loan credit commitment: Level Senior Leverage Ratio Additional Margin for Additional Margin for 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 % |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of Outstanding Warrants | The following table summarizes the underlying shares of common stock with respect to outstanding warrants: September 30, 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 (1) Exercisable for one share of common stock at an exercise price of $15.00 per share (“$15 Exercise Price Sponsor Warrants”). (2) Issued under a warrant agreement dated July 15, 2014, between Continental Stock Transfer and Trust Company, as warrant agent, and the Company. (3) Exercisable for one share of common stock at an exercise price of $12.50 per share (“Merger Warrants”). (4) Issued to the sellers of LHLLC. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | 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 and nine months ended September 30, 2022 and 2021: Three Months Ended Nine Months Ended (in thousands, except per share amounts) 2022 2021 2022 2021 EPS numerator: Net income $ 3,641 $ 3,986 $ 2,991 $ 2,436 EPS denominator: Weighted average shares outstanding – basic 10,445 10,266 10,430 9,916 Impact of dilutive securities 245 225 165 230 Weighted average shares outstanding – diluted 10,690 10,492 10,595 10,146 EPS: Basic $ 0.35 $ 0.39 $ 0.29 $ 0.25 Diluted $ 0.34 $ 0.38 $ 0.28 $ 0.24 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table summarizes the securities that were antidilutive or out-of-the-money, and therefore, were not included in the computations of diluted income per common share: Three Months Ended Nine Months Ended 2022 2021 2022 2021 Out-of-the-money warrants (see Note 7) 1,229,643 1,885,202 1,229,643 3,571,833 Service-based RSUs (See Note 14) 56 290 3,818 155 Performance and market-based RSUs (1) 197 36,305 842 8,707 Employee Stock Purchase Plan 233 — 1,301 — Total 1,230,129 1,921,797 1,235,604 3,580,695 (1) For the three and nine months ended September 30, 2022 and 2021, certain MRSU awards (each defined in Note 14) were not included in the computation of diluted 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. |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision (Benefit) | The following table presents our income tax provision and our income tax rate for the three and nine months ended September 30, 2022 and 2021. Three Months Ended Nine Months Ended (in thousands, except percentages) 2022 2021 2022 2021 Income tax provision $ 1,654 $ 1,615 $ 1,275 $ 844 Income tax rate 31.2 % 28.8 % 29.9 % 25.7 % |
Operating Segments (Tables)
Operating Segments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Condensed Consolidated Segment Information | Condensed consolidated segment information for the three and nine months ended September 30, 2022 and 2021 were as follows: Three Months Ended Nine Months Ended (in thousands) 2022 2021 2022 2021 Statement of Operations Data: Revenue: GCR $ 62,653 $ 89,950 $ 200,921 $ 262,304 ODR 59,704 39,227 152,378 101,236 Total revenue 122,357 129,177 353,299 363,540 Gross profit: GCR 9,648 12,754 26,700 31,034 ODR 15,206 11,709 37,814 29,348 Total gross profit 24,854 24,463 64,514 60,382 Selling, general and administrative: GCR 8,496 9,586 25,042 27,770 ODR 9,386 8,013 29,091 22,893 Corporate 806 703 1,980 2,016 Total selling, general and administrative 18,688 18,302 56,113 52,679 Change in fair value of contingent consideration 386 — 1,151 — Amortization of intangibles 386 87 1,184 295 Operating income $ 5,394 $ 6,074 $ 6,066 $ 7,408 Less unallocated amounts: Interest expense, net (547) (424) (1,511) (2,140) Gain (loss) on disposition of property and equipment 150 (49) 262 (41) Loss on early termination of operating lease — — (849) — Loss on early debt extinguishment — — — (1,961) Gain on change in fair value of interest rate swap 298 — 298 — Gain on change in fair value of warrant liability — — — 14 Total unallocated amounts (99) (473) (1,800) (4,128) Income before income taxes $ 5,295 $ 5,601 $ 4,266 $ 3,280 Other Data: Depreciation and amortization: GCR $ 1,049 $ 1,035 $ 3,232 $ 3,091 ODR 590 267 1,757 967 Corporate 386 87 1,184 295 Total other data $ 2,025 $ 1,389 $ 6,173 $ 4,353 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Supplemental Balance Sheets Information | The following table summarizes the lease amounts included in the Company's condensed consolidated balance sheets: (in thousands) Classification on the Condensed Consolidated Balance Sheets September 30, 2022 December 31, 2021 Assets Operating Operating lease right-of-use assets (1) $ 19,272 $ 20,119 Finance Property and equipment, net (2)(3) 7,662 4,916 Total lease assets $ 26,934 $ 25,035 Liabilities Current Operating Current operating lease liabilities $ 3,602 $ 4,366 Finance Current portion of long-term debt 2,291 2,451 Noncurrent Operating Long-term operating lease liabilities 16,532 16,576 Finance Long-term debt (4) 8,276 2,681 Total lease liabilities $ 30,701 $ 26,074 (1) Operating lease assets are recorded net of accumulated amortization of $11.4 million at September 30, 2022 and $15.9 million at December 31, 2021. (2) Finance lease vehicle assets are recorded net of accumulated amortization of $6.3 million at September 30, 2022 and $5.9 million at December 31, 2021. (3) Includes approximately $2.7 million of net property assets associated with the the Company's Pontiac Facility. (4) Includes approximately $5.4 million associated with the Company's sale and leaseback financing transaction. See Note 6 for further detail. |
Summary of Lease Costs, Lease Terms and Discount Rates | The following table summarizes the lease costs included in the Company's condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021: Three Months Ended Nine Months Ended (in thousands) Classification on the Condensed Consolidated Statement of Operations 2022 2021 2022 2021 Operating lease cost Cost of revenue (1) $ 654 $ 716 $ 2,005 $ 2,088 Operating lease cost Selling, general and administrative (1) 622 553 1,957 1,724 Finance lease cost Amortization Cost of revenue (2) 684 644 2,020 1,971 Interest Interest expense, net (2) 68 72 200 236 Total lease cost $ 2,028 $ 1,985 $ 6,182 $ 6,019 (1) Operating lease costs recorded in cost of revenue included $0.2 million of variable lease costs for each of the three months ended September 30, 2022 and 2021, and $0.4 million for each of the nine months ended September 30, 2022 and 2021. In addition, $0.2 million and $0.1 million of variable lease costs are included in selling, general and administrative for each of the three months ended September 30, 2022 and 2021, respectively, and $0.4 million and $0.3 million for the nine months ended September 30, 2022 and 2021, respectively. These variable costs consist of the Company's proportionate share of operating expenses, real estate taxes and utilities. (2) Finance lease costs recorded in cost of revenue include variable lease costs of $1.0 million and $0.7 million for the three months ended September 30, 2022 and 2021, respectively, and $2.8 million and $2.0 million for the nine months ended September 30, 2022 and 2021, respectively. These variable lease costs consist of fuel, maintenance, and sales tax charges. The following is a summary of the lease terms and discount rates: September 30, 2022 December 31, 2021 Weighted average lease term (in years): Operating 7.09 7.10 Finance (1) 2.71 2.51 Weighted average discount rate: Operating 4.77 % 4.68 % Finance (1) 4.97 % 5.27 % (1) Excludes the weighted average lease term and weighted average discount rate associated with the aforementioned sale-leaseback financing transaction, which has a Primary Term of 25 years and utilized an implicit rate of 11.11%. See Note 6 for further detail. |
Future Minimum Commitment for Finance Leases | Future minimum commitments for finance and operating leases that have non-cancelable lease terms in excess of one year as of September 30, 2022 were as follows: Finance Leases Operating Leases Year ending (in thousands): Vehicles Pontiac Facility Total Finance Non-Related Party Related Party (1) Sublease Receipts (2) Total Operating Remainder of 2022 $ 675 $ 42 $ 717 $ 1,052 $ 113 $ (218) $ 947 2023 2,035 — 2,035 3,948 450 (885) 3,513 2024 1,322 — 1,322 3,259 450 (912) 2,797 2025 827 — 827 2,745 450 (939) 2,256 2026 315 — 315 2,625 450 (967) 2,108 Thereafter — 5,351 5,351 3,479 4,815 (327) 7,967 Total minimum lease payments $ 5,174 $ 5,393 $ 10,567 $ 17,108 $ 6,728 $ (4,248) $ 19,588 Amounts representing interest 353 11,676 12,029 Present value of net minimum lease payments $ 5,527 $ 17,069 $ 22,596 (1) Associated with the aforementioned related party lease entered into with a former member of JMLLC. (2) Associated with the aforementioned third party sublease. |
Future Minimum Commitment for Operating Leases | Future minimum commitments for finance and operating leases that have non-cancelable lease terms in excess of one year as of September 30, 2022 were as follows: Finance Leases Operating Leases Year ending (in thousands): Vehicles Pontiac Facility Total Finance Non-Related Party Related Party (1) Sublease Receipts (2) Total Operating Remainder of 2022 $ 675 $ 42 $ 717 $ 1,052 $ 113 $ (218) $ 947 2023 2,035 — 2,035 3,948 450 (885) 3,513 2024 1,322 — 1,322 3,259 450 (912) 2,797 2025 827 — 827 2,745 450 (939) 2,256 2026 315 — 315 2,625 450 (967) 2,108 Thereafter — 5,351 5,351 3,479 4,815 (327) 7,967 Total minimum lease payments $ 5,174 $ 5,393 $ 10,567 $ 17,108 $ 6,728 $ (4,248) $ 19,588 Amounts representing interest 353 11,676 12,029 Present value of net minimum lease payments $ 5,527 $ 17,069 $ 22,596 (1) Associated with the aforementioned related party lease entered into with a former member of JMLLC. (2) Associated with the aforementioned third party sublease. |
Leases Supplemental Cash Flow Information | The following is a summary of other information and supplemental cash flow information related to finance and operating leases: Nine months ended September 30, (in thousands) 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3,890 $ 3,696 Operating cash flows from finance leases 200 236 Financing cash flows from finance leases 2,051 1,966 Right-of-use assets exchanged for lease liabilities: Operating leases — 156 Finance leases 2,171 846 Right-of-use assets disposed or adjusted modifying operating leases liabilities 2,396 47 Right-of-use assets disposed or adjusted modifying finance leases liabilities $ (77) — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Components of Self-Insurance | The components of the self-insurance liability as of September 30, 2022 and December 31, 2021 are as follows: (in thousands) September 30, December 31, Current liability — workers’ compensation and general liability $ 133 $ 184 Current liability — medical and dental 479 456 Non-current liability 321 451 Total liability $ 933 $ 1,091 Restricted cash $ 113 $ 113 |
Management Incentive Plans (Tab
Management Incentive Plans (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes the Company's service-based RSU activity for the nine months ended September 30, 2022: Awards Weighted-Average Unvested at December 31, 2021 266,089 $ 8.45 Granted 184,941 8.97 Vested (120,401) 7.43 Forfeited (24,604) 9.43 Unvested at September 30, 2022 306,025 $ 9.09 |
PRSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes the Company's PRSU activity for the nine months ended September 30, 2022: Awards Weighted-Average Unvested at December 31, 2021 280,700 $ 9.46 Granted 258,363 7.18 Vested — — Forfeited (41,123) 8.98 Unvested at September 30, 2022 497,940 $ 8.32 |
MRSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes the Company's market-based RSU (“MRSUs”) activity for the nine months ended September 30, 2022: Awards Weighted-Average Unvested at December 31, 2021 102,500 $ 8.26 Granted — — Vested — — Forfeited (102,500) 8.26 Unvested at September 30, 2022 — $ — |
Business and Organization (Deta
Business and Organization (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | 2 |
Service period | 2 years |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - Jake Marshall Transaction $ in Thousands | Dec. 02, 2021 USD ($) payment | Sep. 30, 2022 USD ($) |
Business Acquisition [Line Items] | ||
Closing purchase price | $ 21,313 | |
Amount of consideration paid held in escrow for indemnification purposes | 1,000 | |
Earnout payments | 6,000 | |
Maximum | ||
Business Acquisition [Line Items] | ||
Earnout payments | $ 4,200 | |
Earn Out Payment Two | ||
Business Acquisition [Line Items] | ||
Earnout payments | $ 3,000 | |
Number of earnout tranches | payment | 2 | |
Earnout period | 13 months | |
Earn Out Payment Two | Maximum | ||
Business Acquisition [Line Items] | ||
Gross profits from acquired companies | $ 10,000 | |
Earn Out Payment Two | Minimum | ||
Business Acquisition [Line Items] | ||
Gross profits from acquired companies | 8,000 | |
Earn Out Payment One | ||
Business Acquisition [Line Items] | ||
Earnout payments | $ 3,000 | |
Number of earnout tranches | payment | 2 | |
Earnout period | 13 months | |
Earn Out Payment One | Maximum | ||
Business Acquisition [Line Items] | ||
Gross profits from acquired companies | $ 10,000 | |
Earn Out Payment One | Minimum | ||
Business Acquisition [Line Items] | ||
Gross profits from acquired companies | 8,000 | |
ODR | ||
Business Acquisition [Line Items] | ||
Goodwill associated with acquisition | 5,200 | |
Goodwill fully deductible for tax purposes | $ 5,200 |
Acquisitions - Allocation of Pu
Acquisitions - Allocation of Purchase Price of Assets and Liabilities from Jake Marshall Transaction (Details) - USD ($) $ in Thousands | Dec. 02, 2021 | Sep. 30, 2022 | Dec. 31, 2021 |
Fair value of liabilities assumed: | |||
Goodwill | $ 11,370 | $ 11,370 | |
Jake Marshall Transaction | |||
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 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) project | Sep. 30, 2022 USD ($) project | Sep. 30, 2021 USD ($) project | Dec. 31, 2021 USD ($) | |
Disaggregation of Revenue [Line Items] | |||||
Term of revenue contracts | six months to two years | ||||
Percentage completed of certain milestones | 10% | ||||
Net amount of unresolved change orders and claims | $ 39 | $ 39 | $ 38.1 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue, remaining performance obligations, expected timing of satisfaction, period | 24 months | 24 months | |||
GCR | |||||
Disaggregation of Revenue [Line Items] | |||||
Number of projects with write downs | project | 1 | 2 | 1 | ||
Number of projects wrote down | project | 2 | 2 | 5 | ||
Total net gross profits write ups (downs) | $ 0.6 | $ 2 | $ 0.7 | ||
Total gross profit write downs | 1.1 | 1.1 | $ 4 | ||
Revision amount for gross profit impact on contract estimates (more than) | $ 0.5 | $ 0.5 | |||
GCR | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |||||
Disaggregation of Revenue [Line Items] | |||||
Remaining performance obligations, amount | $ 332.8 | $ 332.8 | |||
Revenue, remaining performance obligations, percentage | 26% | 26% | |||
Revenue, remaining performance obligations, expected timing of satisfaction, period | 3 months | 3 months | |||
GCR | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue, remaining performance obligations, percentage | 40% | 40% | |||
Revenue, remaining performance obligations, expected timing of satisfaction, period | 1 year 9 months | 1 year 9 months | |||
ODR | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |||||
Disaggregation of Revenue [Line Items] | |||||
Remaining performance obligations, amount | $ 106.5 | $ 106.5 | |||
Revenue, remaining performance obligations, percentage | 40% | 40% | |||
Revenue, remaining performance obligations, expected timing of satisfaction, period | 3 months | 3 months | |||
ODR | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue, remaining performance obligations, percentage | 27% | 27% | |||
Revenue, remaining performance obligations, expected timing of satisfaction, period | 1 year 9 months | 1 year 9 months |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Components of Contract Asset and Liability Balances (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Contract assets | |||
Costs in excess of billings and estimated earnings | $ 39,275 | $ 47,447 | |
Retainage receivable | 25,991 | 36,416 | |
Total contract assets | 65,266 | 83,863 | |
Change in costs in excess of billings and estimated earnings | (8,172) | ||
Change in retainage receivable | (10,425) | ||
Change in total contract assets | (18,597) | $ 5,095 | |
Contract liabilities | |||
Billings in excess of costs and estimated earnings | 42,207 | 26,293 | |
Provisions for losses | 315 | 419 | |
Total contract liabilities | 42,522 | $ 26,712 | |
Change in billings in excess of costs and estimated earnings | 15,914 | ||
Change in provisions for losses | (104) | ||
Change in total contract liabilities | $ 15,810 | $ (9,645) |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Contracts In Progress (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Revenue earned on uncompleted contracts | $ 720,629 | $ 758,450 |
Less: Billings to date | (723,561) | (737,296) |
Net (overbilling) underbilling | (2,932) | 21,154 |
Costs in excess of billings and estimated earnings | 39,275 | 47,447 |
Billings in excess of costs and estimated earnings | $ (42,207) | $ (26,293) |
Goodwill and Intangibles - Narr
Goodwill and Intangibles - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Goodwill | $ 11,370,000 | $ 11,370,000 | $ 11,370,000 | ||
Impairment of intangible assets (excluding goodwill) | 0 | $ 0 | 0 | $ 0 | |
Amortization of intangibles | $ 386,000 | $ 87,000 | $ 1,184,000 | $ 295,000 |
Goodwill and Intangibles - Inta
Goodwill and Intangibles - Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Amortized intangible assets: | ||
Gross carrying amount | $ 10,610 | $ 10,610 |
Accumulated amortization | (4,847) | (3,663) |
Net intangible assets, excluding goodwill | 5,763 | 6,947 |
Unamortized intangible assets: | ||
Gross carrying amount | 9,960 | 9,960 |
Net intangible assets, excluding goodwill | 9,960 | 9,960 |
Gross carrying amount | 20,570 | 20,570 |
Accumulated amortization | (4,847) | (3,663) |
Total amortized and unamortized assets, excluding goodwill | 15,723 | 16,907 |
Trade name – Jake Marshall | ||
Unamortized intangible assets: | ||
Gross carrying amount | 9,960 | 9,960 |
Net intangible assets, excluding goodwill | 9,960 | 9,960 |
Customer Relationships | GCR | Jake Marshall Transaction | ||
Amortized intangible assets: | ||
Gross carrying amount | 570 | 570 |
Accumulated amortization | (67) | (6) |
Net intangible assets, excluding goodwill | 503 | 564 |
Unamortized intangible assets: | ||
Accumulated amortization | (67) | (6) |
Customer Relationships | ODR | ||
Amortized intangible assets: | ||
Gross carrying amount | 4,710 | 4,710 |
Accumulated amortization | (3,701) | (3,475) |
Net intangible assets, excluding goodwill | 1,009 | 1,235 |
Unamortized intangible assets: | ||
Accumulated amortization | (3,701) | (3,475) |
Customer Relationships | ODR | Jake Marshall Transaction | ||
Amortized intangible assets: | ||
Gross carrying amount | 3,050 | 3,050 |
Accumulated amortization | (335) | (35) |
Net intangible assets, excluding goodwill | 2,715 | 3,015 |
Unamortized intangible assets: | ||
Accumulated amortization | (335) | (35) |
Favorable Leasehold Interests | ||
Amortized intangible assets: | ||
Gross carrying amount | 190 | 190 |
Accumulated amortization | (94) | (82) |
Net intangible assets, excluding goodwill | 96 | 108 |
Unamortized intangible assets: | ||
Accumulated amortization | (94) | (82) |
Backlog – Construction | GCR | Jake Marshall Transaction | ||
Amortized intangible assets: | ||
Gross carrying amount | 260 | 260 |
Accumulated amortization | (137) | (14) |
Net intangible assets, excluding goodwill | 123 | 246 |
Unamortized intangible assets: | ||
Accumulated amortization | (137) | (14) |
Backlog – Construction | ODR | Jake Marshall Transaction | ||
Amortized intangible assets: | ||
Gross carrying amount | 680 | 680 |
Accumulated amortization | (358) | (36) |
Net intangible assets, excluding goodwill | 322 | 644 |
Unamortized intangible assets: | ||
Accumulated amortization | (358) | (36) |
Trade name – Jake Marshall | Jake Marshall Transaction | ||
Amortized intangible assets: | ||
Gross carrying amount | 1,150 | 1,150 |
Accumulated amortization | (155) | (15) |
Net intangible assets, excluding goodwill | 995 | 1,135 |
Unamortized intangible assets: | ||
Accumulated amortization | $ (155) | $ (15) |
Debt - Long-Term Debt (Details)
Debt - Long-Term Debt (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Feb. 24, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||||||
Financing liability | $ 10,567,000 | $ 10,567,000 | ||||
Total debt | 33,877,000 | 33,877,000 | $ 40,013,000 | |||
Less - Current portion of long-term debt | (9,719,000) | (9,719,000) | (9,879,000) | |||
Less - Unamortized discount and debt issuance costs | (685,000) | (685,000) | (318,000) | |||
Long-term debt | 23,473,000 | 23,473,000 | 29,816,000 | |||
Loss on early debt extinguishment | 0 | $ 0 | 0 | $ 1,961,000 | ||
Prepayment penalty and other costs associated with early debt extinguishment | 0 | $ 1,376,000 | ||||
Building | ||||||
Debt Instrument [Line Items] | ||||||
Financing liability | 5,393,000 | 5,393,000 | 0 | |||
Vehicles | ||||||
Debt Instrument [Line Items] | ||||||
Financing liability | $ 5,174,000 | $ 5,174,000 | 5,132,000 | |||
Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Finance lease, discount rate | 3.96% | 3.96% | ||||
Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Finance lease, discount rate | 6.45% | 6.45% | ||||
2019 Refinancing Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Long term debt | $ 0 | |||||
Loss on early debt extinguishment | 2,000,000 | |||||
Write off of debt issuance and discount costs | 2,600,000 | |||||
Reversal or warrant liability | 2,000,000 | |||||
Prepayment penalty and other costs associated with early debt extinguishment | $ 1,400,000 | |||||
Secured Debt | A&R Wintrust Term Loan - term loan payable in quarterly installments of principal, (commencing in December 2021) plus interest through February 2026 | ||||||
Debt Instrument [Line Items] | ||||||
Long term debt | $ 23,310,000 | $ 23,310,000 | 34,881,000 | |||
Revolving Credit Facility | A&R Wintrust Revolving Loan | ||||||
Debt Instrument [Line Items] | ||||||
Long term debt | $ 0 | $ 0 | $ 0 |
Debt - 2019 Refinancing Agreeme
Debt - 2019 Refinancing Agreement - 2019 Term Loans (Details) - 2019 Refinancing Agreement - USD ($) $ in Millions | 3 Months Ended | ||
Apr. 12, 2019 | Sep. 30, 2020 | Feb. 24, 2021 | |
Debt Instrument [Line Items] | |||
Debt issued | $ 40 | ||
Debt installment payments | $ 1 | ||
Unused line fee percentage | 2% | ||
Make-whole premium prepayment period | 19 months | ||
Make-whole provision applicable to interest period | 18 months | ||
Debt effective interest rate | 13% | ||
LIBOR Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 11% | ||
LIBOR Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 2% | ||
Base Rate | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 10% | ||
Base Rate | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 3% | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $ 25 |
Debt - 2019 Refinancing Agree_2
Debt - 2019 Refinancing Agreement - CB Warrants (Details) - USD ($) | 2 Months Ended | 9 Months Ended | ||
Apr. 12, 2019 | Feb. 24, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Debt Instrument [Line Items] | ||||
Percentage of number of shares | 2% | |||
Amortization of debt issuance costs | $ 100,000 | $ 251,000 | ||
2019 Refinancing Term Loan - CB Warrants | ||||
Debt Instrument [Line Items] | ||||
Class of warrant or right, number of securities called by each warrant or right (in shares) | 263,314 | |||
Exercise price of warrants (in usd per share) | $ 7.63 | |||
Warrants term | 5 years | |||
Interest expense, debt | $ 100,000 | |||
Amortization of debt issuance costs | $ 100,000 | |||
2019 Refinancing Agreement | ||||
Debt Instrument [Line Items] | ||||
Class of warrant or right, number of securities called by each warrant or right (in shares) | 0 | |||
Debt outstanding | $ 0 |
Debt - 2019 ABL Credit Agreemen
Debt - 2019 ABL Credit Agreement (Details) - 2019 Refinancing Revolving Credit Facility - USD ($) $ in Millions | Apr. 12, 2019 | Feb. 24, 2021 |
Debt Instrument [Line Items] | ||
Debt effective interest rate | 5.25% | |
Letters of credit | $ 3.4 | |
LIBOR Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2% | |
LIBOR Rate | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 3% | |
LIBOR Rate | Maximum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 3.50% | |
Base Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 3% | |
Base Rate | Minimum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2% | |
Base Rate | Maximum | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.50% | |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Line of credit facility, maximum borrowing capacity | $ 15 |
Debt - Wintrust Term and Revolv
Debt - Wintrust Term and Revolving Loans (Details) | 3 Months Ended | 9 Months Ended | |||||
Dec. 02, 2021 USD ($) covenant | Feb. 24, 2021 USD ($) | Sep. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | Jul. 31, 2022 USD ($) | Sep. 30, 2021 | |
Interest Rate Swap | |||||||
Debt Instrument [Line Items] | |||||||
Notional amount | $ 10,000,000 | ||||||
Fixed interest rate | 3.12% | ||||||
Wintrust Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Debt effective interest rate | 7.25% | 7.25% | 4.25% | ||||
Debt weighted average annual interest rate | 6.35% | 6.35% | 5.08% | ||||
A&R Wintrust Term And Revolving Loans | |||||||
Debt Instrument [Line Items] | |||||||
Number of financial covenants | covenant | 3 | ||||||
Debt instrument, covenant compliance, leverage ratio | 2 | ||||||
Debt instrument, covenant compliance, coverage ratio | 1.20 | ||||||
Aggregate amount of unfinanced capital expenditures during any fiscal year | $ 0 | ||||||
Limit annual percentage of unfinanced capital expenditures | 50% | ||||||
Maximum outstanding borrowings during the period | $ 3,500,000 | $ 9,400,000 | |||||
Weighted average annual interest rate | 5.25% | 4.78% | |||||
A&R Wintrust Term And Revolving Loans | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Average daily balance of borrowings outstanding | $ 100,000 | $ 100,000 | |||||
A&R Wintrust Term And Revolving Loans | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate amount of unfinanced capital expenditures during any fiscal year | $ 4,000,000 | ||||||
Amount drawn under credit agreement | 0 | 0 | |||||
Average daily balance of borrowings outstanding | 200,000 | 200,000 | |||||
Wintrust Loans | |||||||
Debt Instrument [Line Items] | |||||||
Letters of credit | 3,300,000 | $ 3,300,000 | |||||
Secured Debt | Wintrust Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Debt issued | $ 30,000,000 | ||||||
Debt installment payments | $ 500,000 | ||||||
Secured Debt | A&R Wintrust Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Debt installment payments | 600,000 | ||||||
Excess cash flow payments | $ 3,300,000 | ||||||
Net claim proceeds payments | $ 600,000 | $ 2,100,000 | |||||
Secured Debt | A&R Wintrust Term Loan | Jake Marshall Transaction | |||||||
Debt Instrument [Line Items] | |||||||
Debt issued | 35,500,000 | ||||||
Secured Debt | Revolving Credit Facility | A&R Wintrust Revolving Loan | Jake Marshall Transaction | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | 25,000,000 | ||||||
Secured Debt | Sublimit for Letters of Credit | A&R Wintrust Revolving Loan | Jake Marshall Transaction | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | $ 5,000,000 | ||||||
Line of Credit | A&R Wintrust Term Loan | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 1% | ||||||
Step-down adjustment on basis spread on variable rate | 0.75% | ||||||
Line of Credit | A&R Wintrust Term Loan | Base Rate | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 3% | ||||||
Line of Credit | A&R Wintrust Term Loan | Secured Overnight Financing Rate (SOFR) | |||||||
Debt Instrument [Line Items] | |||||||
Step-down adjustment on basis spread on variable rate | 0.50% | ||||||
Line of Credit | A&R Wintrust Term Loan | Secured Overnight Financing Rate (SOFR) | Variable Rate Component Two | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 4.26% | ||||||
Line of Credit | A&R Wintrust Term Loan | Secured Overnight Financing Rate (SOFR) | Variable Rate Component Three | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 4.42% | ||||||
Line of Credit | A&R Wintrust Term Loan | Secured Overnight Financing Rate (SOFR) | Variable Rate Component One | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 4.10% | ||||||
Line of Credit | A&R Wintrust Term Loan | Secured Overnight Financing Rate (SOFR) | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 0.15% | ||||||
Line of Credit | Revolving Credit Facility | Wintrust Term Loan | LIBOR Rate | |||||||
Debt Instrument [Line Items] | |||||||
Step-down adjustment on basis spread on variable rate | 0.50% | ||||||
Line of Credit | Revolving Credit Facility | Wintrust Term Loan | LIBOR Rate | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 0.25% | ||||||
Line of Credit | Revolving Credit Facility | Wintrust Term Loan | LIBOR Rate | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 4% | ||||||
Line of Credit | Revolving Credit Facility | Wintrust Term Loan | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Step-down adjustment on basis spread on variable rate | 0.75% | ||||||
Line of Credit | Revolving Credit Facility | Wintrust Term Loan | Base Rate | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 3% | ||||||
Line of Credit | Revolving Credit Facility | Wintrust Term Loan | Base Rate | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 1% | ||||||
Line of Credit | Revolving Credit Facility | A&R Wintrust Revolving Loan | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | $ 25,000,000 | ||||||
Line of Credit | Revolving Credit Facility | A&R Wintrust Revolving Loan | LIBOR Rate | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 0.25% | ||||||
Line of Credit | Revolving Credit Facility | A&R Wintrust Revolving Loan | LIBOR Rate | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 3.50% | ||||||
Line of Credit | Revolving Credit Facility | A&R Wintrust Revolving Loan | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Step-down adjustment on basis spread on variable rate | 0.50% | ||||||
Line of Credit | Revolving Credit Facility | A&R Wintrust Revolving Loan | Base Rate | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 3% | ||||||
Line of Credit | Revolving Credit Facility | A&R Wintrust Revolving Loan | Base Rate | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 0.50% | ||||||
Line of Credit | Revolving Credit Facility | A&R Wintrust Revolving Loan | Base Rate | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 0.50% | ||||||
Step-down adjustment on basis spread on variable rate | 0.50% | ||||||
Line of Credit | Revolving Credit Facility | A&R Wintrust Revolving Loan | Base Rate | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 3% | ||||||
Line of Credit | Revolving Credit Facility | A&R Wintrust Revolving Loan | Secured Overnight Financing Rate (SOFR) | Variable Rate Component Two | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 3.76% | ||||||
Line of Credit | Revolving Credit Facility | A&R Wintrust Revolving Loan | Secured Overnight Financing Rate (SOFR) | Variable Rate Component Three | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 3.92% | ||||||
Line of Credit | Revolving Credit Facility | A&R Wintrust Revolving Loan | Secured Overnight Financing Rate (SOFR) | Variable Rate Component One | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 3.60% | ||||||
Line of Credit | Revolving Credit Facility | A&R Wintrust Revolving Loan | Secured Overnight Financing Rate (SOFR) | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 0.15% | ||||||
Line of Credit | Sublimit for Letters of Credit | A&R Wintrust Revolving Loan | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | $ 5,000,000 |
Debt - Additional Margin and Co
Debt - Additional Margin and Commitment Fees Payable (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Level I | |
Debt Instrument [Line Items] | |
Senior Leverage Ratio | 100% |
Level I | Prime Rate | Wintrust Term Loan | |
Debt Instrument [Line Items] | |
Additional Margin for Loans | 1% |
Level I | Prime Rate | A&R Wintrust Revolving Loan | |
Debt Instrument [Line Items] | |
Additional Margin for Loans | 0.50% |
Level I | Eurodollar | Wintrust Term Loan | |
Debt Instrument [Line Items] | |
Additional Margin for Loans | 0.25% |
Level II | |
Debt Instrument [Line Items] | |
Senior Leverage Ratio | 100% |
Level II | Prime Rate | Wintrust Term Loan | |
Debt Instrument [Line Items] | |
Additional Margin for Loans | 0.25% |
Level II | Prime Rate | A&R Wintrust Revolving Loan | |
Debt Instrument [Line Items] | |
Additional Margin for Loans | 0% |
Level II | Eurodollar | Wintrust Term Loan | |
Debt Instrument [Line Items] | |
Additional Margin for Loans | 0.25% |
Debt - Sale-Leaseback Financing
Debt - Sale-Leaseback Financing Transactions (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 29, 2022 USD ($) renewalTerm | Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | |
Debt Disclosure [Abstract] | |||
Purchase of property under sale and leaseback transaction | $ 7,800,000 | $ 2,700,000 | $ 2,700,000 |
Purchase price | 5,400,000 | ||
Tenant improvement allowance | $ 2,400,000 | ||
Lease agreement, term | 25 years | ||
Lease agreement, number of renewal terms | renewalTerm | 2 | ||
Lease agreement, renewal term | 5 years | ||
Sale leaseback transaction, annual minimum rent | $ 499,730 | ||
Annual increase rate | 2.50% | ||
Termination fee | $ 1,700,000 | ||
Discount rate | 11.11% | ||
Tenant Improvement Allowance, implicit rate | 6.53% | ||
Financing liability | 4,900,000 | 4,900,000 | |
Financing interest expense | $ 0 | $ 0 |
Equity - Narrative (Details)
Equity - Narrative (Details) - USD ($) | 1 Months Ended | ||||||||||
Mar. 25, 2022 | Mar. 09, 2021 | Feb. 18, 2021 | Feb. 12, 2021 | Jan. 01, 2020 | Jul. 31, 2022 | Jan. 31, 2022 | Jul. 31, 2021 | Jan. 31, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | |
Class of Stock [Line Items] | |||||||||||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | |||||||||
Common stock, par or stated value per share (in usd per share) | $ 0.0001 | $ 0.0001 | |||||||||
Preferred stock, shares authorized (in shares) | 1,000,000 | ||||||||||
Preferred stock, par or stated value per share (in usd per shares) | $ 0.0001 | ||||||||||
Share Repurchase Program | |||||||||||
Class of Stock [Line Items] | |||||||||||
Repurchase of common stock | $ 2,000,000 | ||||||||||
2021 Public Offering | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares sold (in shares) | 1,783,500 | ||||||||||
Share price (in usd per share) | $ 12 | ||||||||||
Proceeds from sale of shares, net of underwriters discounts and commissions | $ 19,800,000 | ||||||||||
Over-allotment Option | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of shares sold (in shares) | 267,525 | 267,525 | |||||||||
Share price (in usd per share) | $ 11.28 | ||||||||||
Period to purchase additional shares | 30 days | ||||||||||
Proceeds from sale of shares, net of underwriters discounts and commissions | $ 3,000,000 | ||||||||||
2021 Amended And Restated Omnibus Incentive Plan | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of additional shares authorized under share-based compensation plan (in shares) | 600,000 | ||||||||||
Common stock, capital shares reserved for future issuance (in shares) | 2,250,000 | 2,600,000 | |||||||||
2022 Amended And Restated Omnibus Incentive Plan | |||||||||||
Class of Stock [Line Items] | |||||||||||
Number of additional shares authorized under share-based compensation plan (in shares) | 350,000 | ||||||||||
Common stock, capital shares reserved for future issuance (in shares) | 2,600,000 | ||||||||||
ESPP | Employee Stock | |||||||||||
Class of Stock [Line Items] | |||||||||||
Purchase price of common stock, percent of market price (no less than) | 85% | ||||||||||
Maximum employee subscription percentage | 10% | ||||||||||
Maximum contribution amount | $ 5,000 | ||||||||||
Offering period | 6 months | ||||||||||
Discount percentage from market price, beginning of purchase period | 15% | ||||||||||
Award vesting period | 6 months | ||||||||||
Number of shares authorized (in shares) | 500,000 | ||||||||||
Shares issued (in shares) | 24,592 | 12,898 | 16,140 | 8,928 | |||||||
Shares remaining available for future issuance (in shares) | 406,617 | ||||||||||
$15 Exercise Price Sponsor Warrants | |||||||||||
Class of Stock [Line Items] | |||||||||||
Exercise price of warrants (in usd per share) | $ 15 | $ 15 |
Equity - Outstanding Warrants (
Equity - Outstanding Warrants (Details) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Class of Stock [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 1,229,643 | 1,229,643 |
$15 Exercise Price Sponsor Warrants | ||
Class of Stock [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 600,000 | 600,000 |
Class of warrant or right, number of securities called by each warrant or right (in shares) | 1 | 1 |
Exercise price of warrants (in usd per share) | $ 15 | $ 15 |
Merger Warrants | ||
Class of Stock [Line Items] | ||
Class of warrant or right, outstanding (in shares) | 629,643 | 629,643 |
Class of warrant or right, number of securities called by each warrant or right (in shares) | 1 | 1 |
Exercise price of warrants (in usd per share) | $ 12.50 | $ 12.50 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) | 2 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Feb. 24, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Dec. 31, 2021 | Dec. 02, 2021 USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Change in fair value of contingent consideration | $ 386,000 | $ 0 | $ 1,151,000 | $ 0 | |||
Gain on change in fair value of warrant liability | 0 | $ 0 | 0 | $ (14,000) | |||
Interest Rate Swap | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Gain on change in fair value of interest rate swap | 300,000 | 300,000 | |||||
Other Long-term Liabilities | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Fair value of the interest rate swap | 300,000 | 300,000 | |||||
Jake Marshall Transaction | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Change in fair value of contingent consideration | 400,000 | 1,200,000 | |||||
Earnout payments | $ 6,000,000 | ||||||
Jake Marshall Transaction | Maximum | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Earnout payments | 4,200,000 | 4,200,000 | |||||
Jake Marshall Transaction | Accrued Expenses and Other Current Liabilities | Maximum | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Earnout payments | 2,700,000 | 2,700,000 | |||||
Jake Marshall Transaction | Other Long-term Liabilities | Maximum | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Earnout payments | 1,500,000 | 1,500,000 | |||||
Level 3 | Contingent Consideration Liability | Jake Marshall Transaction | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Fair value of earnout payments | $ 3,100,000 | $ 3,100,000 | |||||
Level 3 | Contingent Consideration Liability | Jake Marshall Transaction | Measurement Input, Discount Rate | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Earnout payments, measurement input | 0.101 | 0.101 | 0.0683 | ||||
Wintrust Term Loan | Level 3 | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Fair value of debt | $ 23,300,000 | $ 23,300,000 | |||||
2019 Refinancing Agreement | |||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||
Warrants liability | $ 2,000,000 | $ 0 | $ 0 | ||||
Gain on change in fair value of warrant liability | $ 14,000 |
Earnings per Share - Schedule o
Earnings per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
EPS numerator: | ||||||||
Net income (loss) | $ 3,641 | $ 866 | $ (1,516) | $ 3,986 | $ 732 | $ (2,282) | $ 2,991 | $ 2,436 |
EPS denominator: | ||||||||
Weighted average shares outstanding - basic (in shares) | 10,444,987 | 10,266,486 | 10,429,671 | 9,915,966 | ||||
Impact of dilutive securities (in shares) | 245,000 | 225,000 | 165,000 | 230,000 | ||||
Weighted average shares outstanding - diluted (in shares) | 10,690,434 | 10,491,863 | 10,595,061 | 10,145,470 | ||||
EPS: | ||||||||
Basic (in usd per share) | $ 0.35 | $ 0.39 | $ 0.29 | $ 0.25 | ||||
Diluted (in usd per share) | $ 0.34 | $ 0.38 | $ 0.28 | $ 0.24 |
Earnings per Share - Schedule_2
Earnings per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 1,230,129 | 1,921,797 | 1,235,604 | 3,580,695 |
Out-of-the money warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 1,229,643 | 1,885,202 | 1,229,643 | 3,571,833 |
Service-based RSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 56 | 290 | 3,818 | 155 |
Performance and market-based RSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 197 | 36,305 | 842 | 8,707 |
Employee Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 233 | 0 | 1,301 | 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||||
Income tax provision | $ 1,654,000 | $ 1,615,000 | $ 1,275,000 | $ 844,000 | |
Effective tax rate | 31.20% | 28.80% | 29.90% | 25.70% | |
Valuation allowance | $ 0 | $ 0 | $ 0 |
Operating Segments - Narrative
Operating Segments - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
Segment Reporting Information [Line Items] | |
Number of operating segments | 2 |
GCR | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | 1 |
ODR | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | 1 |
Operating Segments - Condensed
Operating Segments - Condensed Consolidated Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 122,357 | $ 129,177 | $ 353,299 | $ 363,540 |
Total gross profit | 24,854 | 24,463 | 64,514 | 60,382 |
Selling, general and administrative | 18,688 | 18,302 | 56,113 | 52,679 |
Change in fair value of contingent consideration | 386 | 0 | 1,151 | 0 |
Amortization of intangibles | 386 | 87 | 1,184 | 295 |
Operating income | 5,394 | 6,074 | 6,066 | 7,408 |
Interest expense, net | (547) | (424) | (1,511) | (2,140) |
Gain (loss) on disposition of property and equipment | 150 | (49) | 262 | (41) |
Loss on early termination of operating lease | 0 | 0 | (849) | 0 |
Loss on early debt extinguishment | 0 | 0 | 0 | (1,961) |
Gain on change in fair value of interest rate swap | 298 | 0 | 298 | 0 |
Gain on change in fair value of warrant liability | 0 | 0 | 0 | 14 |
Total unallocated amounts | (99) | (473) | (1,800) | (4,128) |
Income before income taxes | 5,295 | 5,601 | 4,266 | 3,280 |
Depreciation and amortization | 2,025 | 1,389 | 6,173 | 4,353 |
Operating Segments | GCR | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 62,653 | 89,950 | 200,921 | 262,304 |
Total gross profit | 9,648 | 12,754 | 26,700 | 31,034 |
Selling, general and administrative | 8,496 | 9,586 | 25,042 | 27,770 |
Depreciation and amortization | 1,049 | 1,035 | 3,232 | 3,091 |
Operating Segments | ODR | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 59,704 | 39,227 | 152,378 | 101,236 |
Total gross profit | 15,206 | 11,709 | 37,814 | 29,348 |
Selling, general and administrative | 9,386 | 8,013 | 29,091 | 22,893 |
Depreciation and amortization | 590 | 267 | 1,757 | 967 |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Selling, general and administrative | 806 | 703 | 1,980 | 2,016 |
Depreciation and amortization | $ 386 | $ 87 | $ 1,184 | $ 295 |
Leases - Narrative (Details)
Leases - Narrative (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Dec. 02, 2021 USD ($) extension | Mar. 31, 2022 USD ($) ft² installment | Jun. 30, 2021 USD ($) ft² | Sep. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) ft² installment | Sep. 30, 2022 USD ($) extension | |
Lessee, Lease, Description [Line Items] | ||||||
Lease termination fee | $ 700,000 | |||||
Lease termination fee payable, number of installments | installment | 16 | 16 | ||||
Gain on derecognition of lease assets and liabilities | $ 100,000 | |||||
Loss on disposal of leasehold improvement | $ 100,000 | |||||
Real Estate Leases | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Number of lease extensions | extension | 1 | |||||
Office Building | Geographic Distribution, Domestic | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Subleased area (in sq ft) | ft² | 16,720 | 71,787 | 16,720 | |||
Sublease annual base rent | $ 600,000 | $ 800,000 | ||||
Sublease annual base rent increase percentage | 3% | 3% | ||||
Sublease income | $ 300,000 | $ 600,000 | ||||
Jake Marshall Transaction | Land and Building | Full Time Employee | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Number of lease extensions | extension | 2 | |||||
Lease term | 10 years | |||||
Term of lease extensions | 2 years | |||||
Jake Marshall Transaction | Land and Building | Full Time Employee | Lease Contractual Term One | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Lease term | 5 years | |||||
Monthly base rent | $ 37,500 | |||||
Jake Marshall Transaction | Land and Building | Full Time Employee | Lease Contractual Term Two | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Lease term | 5 years | |||||
Monthly base rent | $ 45,000 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheets Information (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Sep. 29, 2022 | Dec. 31, 2021 |
Leases [Abstract] | |||
Operating lease right-of-use assets | $ 19,272 | $ 20,119 | |
Property, plant and equipment, net | 7,662 | 4,916 | |
Lease right-of-use assets | 26,934 | 25,035 | |
Current operating lease liabilities | 3,602 | 4,366 | |
Current portion of long-term debt | 2,291 | 2,451 | |
Long-term operating lease liabilities | 16,532 | 16,576 | |
Long-term debt(4) | 8,276 | 2,681 | |
Total lease liabilities | 30,701 | 26,074 | |
Operating lease, accumulated amortization | 11,400 | 15,900 | |
Finance lease, accumulated amortization | 6,300 | $ 5,900 | |
Purchase of property under sale and leaseback transaction | $ 2,700 | $ 7,800 | |
Purchase price | $ 5,400 | ||
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Long-Term Debt and Lease Obligation, Current | Long-Term Debt and Lease Obligation, Current | |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Long-term debt | Long-term debt |
Leases - Summary of Lease Costs
Leases - Summary of Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Lessee, Lease, Description [Line Items] | ||||
Finance lease cost, amortization | $ 684 | $ 644 | $ 2,020 | $ 1,971 |
Finance lease cost, interest expense | 68 | 72 | 200 | 236 |
Total lease cost | 2,028 | 1,985 | 6,182 | 6,019 |
Cost of revenue | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease cost | 654 | 716 | 2,005 | 2,088 |
Cost of revenue | Operating Lease | ||||
Lessee, Lease, Description [Line Items] | ||||
Variable lease costs | 200 | 200 | 400 | 400 |
Cost of revenue | Finance Lease | ||||
Lessee, Lease, Description [Line Items] | ||||
Variable lease costs | 1,000 | 700 | 2,800 | 2,000 |
Selling, general and administrative expenses | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease cost | 622 | 553 | 1,957 | 1,724 |
Selling, general and administrative expenses | Operating Lease | ||||
Lessee, Lease, Description [Line Items] | ||||
Variable lease costs | $ 200 | $ 100 | $ 400 | $ 300 |
Leases - Future Minimum Lease C
Leases - Future Minimum Lease Commitment (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Finance Leases | ||
Remainder of 2022 | $ 717 | |
2023 | 2,035 | |
2024 | 1,322 | |
2025 | 827 | |
2026 | 315 | |
Thereafter | 5,351 | |
Total minimum lease payments | 10,567 | |
Amounts representing interest | 12,029 | |
Present value of net minimum lease payments | 22,596 | |
Operating Leases | ||
Remainder of 2022 | 947 | |
2023 | 3,513 | |
2024 | 2,797 | |
2025 | 2,256 | |
2026 | 2,108 | |
Thereafter | 7,967 | |
Total minimum lease payments | 19,588 | |
Sublease Receipts | ||
Remainder of 2022 | (218) | |
2023 | (885) | |
2024 | (912) | |
2025 | (939) | |
2026 | (967) | |
Thereafter | (327) | |
Total minimum lease payments | (4,248) | |
Non-Related Party | ||
Operating Leases | ||
Remainder of 2022 | 1,052 | |
2023 | 3,948 | |
2024 | 3,259 | |
2025 | 2,745 | |
2026 | 2,625 | |
Thereafter | 3,479 | |
Total minimum lease payments | 17,108 | |
Related Party | ||
Operating Leases | ||
Remainder of 2022 | 113 | |
2023 | 450 | |
2024 | 450 | |
2025 | 450 | |
2026 | 450 | |
Thereafter | 4,815 | |
Total minimum lease payments | 6,728 | |
Vehicles | ||
Finance Leases | ||
Remainder of 2022 | 675 | |
2023 | 2,035 | |
2024 | 1,322 | |
2025 | 827 | |
2026 | 315 | |
Thereafter | 0 | |
Total minimum lease payments | 5,174 | $ 5,132 |
Amounts representing interest | 353 | |
Present value of net minimum lease payments | 5,527 | |
Building | ||
Finance Leases | ||
Remainder of 2022 | 42 | |
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
Thereafter | 5,351 | |
Total minimum lease payments | 5,393 | $ 0 |
Amounts representing interest | 11,676 | |
Present value of net minimum lease payments | $ 17,069 |
Leases - Summary of Lease Terms
Leases - Summary of Lease Terms and Discount Rates (Details) | Sep. 29, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Weighted average lease term (in years): | |||
Operating | 7 years 1 month 2 days | 7 years 1 month 6 days | |
Finance | 2 years 8 months 15 days | 2 years 6 months 3 days | |
Weighted average discount rate: | |||
Operating | 4.77% | 4.68% | |
Finance | 4.97% | 5.27% | |
Lease agreement, term | 25 years | ||
Discount rate | 11.11% |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||
Operating cash flows from operating leases | $ 3,890 | $ 3,696 |
Operating cash flows from finance leases | 200 | 236 |
Financing cash flows from finance leases | 2,051 | 1,966 |
Right of use assets obtained in exchange for new operating lease liabilities | 0 | 156 |
Right of use assets obtained in exchange for new finance lease liabilities | 2,171 | 846 |
Right-of-use assets disposed or adjusted modifying operating leases liabilities | 2,396 | 47 |
Right-of-use assets disposed or adjusted modifying finance leases liabilities | $ (77) | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Jan. 26, 2022 | Apr. 17, 2020 | Jan. 23, 2020 | Sep. 30, 2022 | |
Loss Contingencies [Line Items] | ||||
Payment to acquire workers' compensation and general liability insurance | $ 250 | |||
Malpractice insurance, annual coverage limit | 4,400 | |||
Surety Bond | ||||
Loss Contingencies [Line Items] | ||||
Debt outstanding | $ 115,600 | |||
Bernards Bros vs. Limbach Holdings, Inc. | Pending Litigation | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency, damages sought, value | $ 3,000 | |||
LA Excavating, Inc. vs. Limbach Company LP | Pending Litigation | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency, damages sought, value | $ 1,000 | |||
Suffolk Construction Company, Inc. | Pending Litigation | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency, damages sought, value | $ 300 |
Commitments and Contingencies_2
Commitments and Contingencies - Components of Self-Insurance Liability (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Commitments and Contingencies Disclosure [Abstract] | ||
Current liability — workers’ compensation and general liability | $ 133 | $ 184 |
Current liability — medical and dental | 479 | 456 |
Non-current liability | 321 | 451 |
Total liability | 933 | 1,091 |
Restricted cash | $ 113 | $ 113 |
Management Incentive Plans - Na
Management Incentive Plans - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Mar. 09, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Recognized stock-based compensation | $ 800 | $ 700 | $ 1,980 | $ 2,016 | |
2021 Amended And Restated Omnibus Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common stock, capital shares reserved for future issuance (in shares) | 2,600,000 | 2,600,000 | 2,250,000 | ||
RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, vesting period | 3 years | ||||
RSUs | Director | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, vesting period | 1 year | ||||
PRSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation arrangement by share-based payment award, vesting period | 3 years | ||||
Recognized stock-based compensation | $ 300 | $ 200 | $ 700 | 600 | |
PRSUs | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of shares to be issued under grant | 0% | ||||
PRSUs | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of shares to be issued under grant | 150% | ||||
Market-Based RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Performance target, price per share (in dollars per share) | $ 18 | ||||
Number of consecutive trading days within performance period to meet target share price | 80 days | ||||
Performance period | 3 years | ||||
RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Fair value of awards vested | $ 1,100 | $ 1,400 | |||
Unrecognized share-based costs | $ 3,300 | $ 3,300 | |||
Weighted average period to recognize share-based costs | 1 year 8 months 4 days |
Management Incentive Plans - RS
Management Incentive Plans - RSUs Activity (Details) - RSUs | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Awards | |
Unvested at December 31, 2021 (in shares) | shares | 266,089 |
Granted (in shares) | shares | 184,941 |
Vested (in shares) | shares | (120,401) |
Forfeited (in shares) | shares | (24,604) |
Unvested at March 31, 2022 (in shares) | shares | 306,025 |
Weighted-Average Grant Date Fair Value | |
Unvested at December 31, 2021 (usd per share) | $ / shares | $ 8.45 |
Granted (usd per share) | $ / shares | 8.97 |
Vested (usd per share) | $ / shares | 7.43 |
Forfeited (usd per share) | $ / shares | 9.43 |
Unvested at March 31, 2022 (usd per share) | $ / shares | $ 9.09 |
Management Incentive Plans - PR
Management Incentive Plans - PRSUs Activity (Details) - PRSUs | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Awards | |
Unvested at December 31, 2021 (in shares) | shares | 280,700 |
Granted (in shares) | shares | 258,363 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | (41,123) |
Unvested at March 31, 2022 (in shares) | shares | 497,940 |
Weighted-Average Grant Date Fair Value | |
Unvested at December 31, 2021 (usd per share) | $ / shares | $ 9.46 |
Granted (usd per share) | $ / shares | 7.18 |
Vested (usd per share) | $ / shares | 0 |
Forfeited (usd per share) | $ / shares | 8.98 |
Unvested at March 31, 2022 (usd per share) | $ / shares | $ 8.32 |
Management Incentive Plans - MR
Management Incentive Plans - MRSUs Activity (Details) - Market-Based RSUs | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Awards | |
Unvested at December 31, 2021 (in shares) | shares | 102,500 |
Granted (in shares) | shares | 0 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | (102,500) |
Unvested at March 31, 2022 (in shares) | shares | 0 |
Weighted-Average Grant Date Fair Value | |
Unvested at December 31, 2021 (usd per share) | $ / shares | $ 8.26 |
Granted (usd per share) | $ / shares | 0 |
Vested (usd per share) | $ / shares | 0 |
Forfeited (usd per share) | $ / shares | 8.26 |
Unvested at March 31, 2022 (usd per share) | $ / shares | $ 0 |