LMB - Earnings call transcript Q3 2021

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Operator

Greetings. Welcome to Limbach Holdings Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. the to turn The Hellman now Group. Equity will conference Jeremy over with I you. Thank

begin. may You

Jeremy Hellman

Thank and results very ended its Form you much, for September third Holdings Yesterday, XX-Q quarter announced XX, Limbach XXXX. of fiscal XXXX the and its good filed quarter morning, everyone.

statements With Form may During the I’ll may over call Charlie on projections cause forward-looking contain statements, Charlie. be actual reports from results Holdings. turn Form company during reviewing providing forecasts, results Bacon, and made may that results to and Chief this update ahead, go Today’s on the actual Limbach risk call. company’s call. similar reminded discussion from earnings to of differ call, factors differ or any during review an XX-K to Executive current Annual that, will Listeners and those the Please market made the Officer forward-looking conditions. and the XX-Q quarterly on statements President Report for are earnings the the

Charlie Bacon

morning, joining us. and for Good thanks everyone,

the remarks. which our follow is also hand Brooks; President, session, CFO, a Jayme Matt McCann; Those on Mike Joining me Q&A Executive today Katz and prepared our is our COO, for Vice will know we you reflection quarter of pointing as I’m reported. of point and we a in our have results who to followed proud company extremely major been have the third our business,

XX.X% year-on-year Specifically, ODR our and sequentially. revenue XX.X% was growth segment

year-on-year GCR basis and delivered, margins sequentially. were gross and basis ODR of Our of And points up points XXX points XX.X% margins gross XXX basis up XX basis were points sequentially. XXX year-on-year XX.X%

completed years public the the was excellent primarily margin result and our was the Our in in largest net is that QX. $X income since ago, and which performance we gross refinancing, of went quarter of five million

on pandemic, the ago grappled As the in that towards has we indicators line profitability. results of strategic two we leaders of on years improving further Process last quarter, and many as believe put smart plan strategic of are that thank place to growth. with company the have for all here impacts we with the firmly as for our evidence want the centered well bottom are at the strong our we night for room goal The also executing good staff and plan. receiving our work. that I their reported the hard we slowed are

people We positive have realizing are and our in incredible talent Limbach. we’re that here team the proud at the offices together, outcomes. field. these entire and in work Very all The of growing

think doing a job. terrific I we’re

grow, ODR our gross overall believe profile segment helping the of margin, also business. while Our to continues risk consolidated improve temporary our we

results often basis continued reminder, higher in as actively line segment GCR results. T&M emergency to contracts. as Our the total normally third strong That repairs. through quick-hitting bookings is also to lead typically of delivering base can the on the to ODR small intended remain focus segment, contracts profitability our our year. for well our grow. a excess our accelerated The with shifted and with maintenance quarter, is of work recurring capital September performing project along month bottom And in work Within the revenues strongest Limbach maintenance maintenance a performed margin,

we segment as dust settled, propose that the improve the we When has in helped at our risk performance our ago began will gross drive to margins we projects Turning or years closeouts initiatives the proposed. earn projects, margin our to successful to level GCR XX.X% once at project segment. of The hold expectation above two which continue management on take is quarter.

gross be to in resulting some we intend margin which performance. and Jayme the numbers for off GCR trailing monitor segment best with we and broader margins to highlights. financial that selection quarter-to-quarter, project lens segment offer our and everyone in for margin her Our the improved but XX-month emphasis may the it consistent GCR continue improvement I’ll remind hand quality to profitability, coupled to execution segment or annual There is performance. field that variability expect in continue on With that,

Jayme Brooks

Thanks, Charlie.

few Our XX-Q have release With that discussion continues and earnings focus in our that a of on may our mind, thorough press review. further Form review financials. my will I points a key

cash flow. equivalents First for the million. $X.X cash and quarter operating from activities is was Cash cash was million, $XX.X and

call, for some dynamics as in example. the the that sales of somewhat has flows is products, questions flow compared spent had our of aspects around and last cash industry forecasting has work our with billed the our we discussing we explain unique On time can cash how how company

life addition, a function of our over project due our XX-month the and cycles. viewed accounts annual like results, on flows our and trailing best assets flows, as which in that contract operating included Broadly, are the most or and accounts payable the significant to swings In billings, much under an our accounts. impact cash quarter-to-quarter can quarter-to-quarter receivable, on are basis cash liabilities occur are

we of we position we that we in doing successful when ahead an net look As December position. are At we $XX.X overbilled so, projects, build of last around were And on also to work. overbilled million. work commenced in XX develop year, of for a portions

perspective. performed, that By setting In in was time billings. position typically a that customers be these XXXX, costs Note the those XX, we amounts is X XX-Q. aside our of we cash the reasons, that course timing December Both due normal DSO of which we able of of million. that net based being in $X.X underbilled paid XX basically flows. and of our and from Form aside incurred payments a period this underbilled million position was on we to internally to reversed, can bill advance to at on of found fluctuation net project that of cash in a those which host for shift September net Setting not monitor is cash to operation a September overbilled were XX, for our XXXX, cash, position on this the from a that yet $XX.X So work individual collected year, of model looking

a market and with over Our life type underbillings customers are are for equipment. along dynamics, the external materials we other influenced by such as cycle to things impact range of work supply and from and doing for project the chain

such, no impact As for way to the investors their and unfortunately, how in these there on is accounts cash. good fluctuations is model

extinguishment in for million expense, on Non-recurring the CARES the also statement taxes payroll our there payment items However, such of and fairly and QX debt stock on easily such loss Act, several more non-cash upcoming which interest discussed the items as $X.X amortization, flow straightforward that have are expense, modeled, deferred cash operating taxes QX comp. lease the as depreciation model. should and to be before under we are

where year. in our gross I gross levels, year. quarter, compared show before Next, business efforts of exceeding an XX.X%, to the of quarter range for with result. to compared ODR our was margin at margin impact with same the last the XX.X%, which the our is excellent and our margin at GCR for our segments in XX% the in ranges target mix of with XX.X% have XX% XX.X%, was our consolidated we period noted quarter Both want this drive last a XX.X% third financial to margin as the gross third gross is margin highlight balanced performed In statements. of

favorably quarter’s to This estimated XX.X%. range results also of our versus compared XX.X%

benefited As noted, from successful Charlie of gross margin quarter. closeouts number project GCR a in the

see for as target to are we building market reasonable modeling out purposes growth larger we more the We laid believe ranges spend. XXXX in view have In ODR, will mix we owners that will CapEx have their products continue in XXXX. the in as optimistic

margins soften tend would to a bit on, expect lower our comes work as margins. carry projects to that segment As we relative larger

can We a factors moment. impacts. our chains, in which and more are In our timing external also and starts, to project detail due a as weather bit monitoring the supply closely with GCR, margins such Mike discuss volatile completions will more supply along of be chain in

or While feel, XX.X% ago, and succeeded segment model a we it in projects conservatively prudent still margin we is year two to the XX.X% the in relative range. improved to margins gross booking have to

to touch I on SG&A. Lastly, want

year. compared lower that expense expense period SG&A were somewhat year’s expense million reduced third as mode as at the SG&A quarter such up third and a a of we entertainment Last was and $X.X back-to-the-office quarter running last Our categories ticked full still to travel rate. in not were

Nashville Additionally, in office expansion, to the getting in track see new additional to in business customers. XXXX, order our investments we of and continued to health ODR opening our care such out our ODR make as

Before potential quarter. headwinds handing to the want I to up call into fourth the going Mike, the discuss

XXXX health plan. full noticed an past the per we Over have participant to increase care our claims few compared in months, year

As our claims impact a we direct had increased results. self-insured, are on the have operating

care quarter, health if costs our operating the note this fourth trend have quarter unfavorable impact we monitor could on to results. an and continues year and that full continue into We the

fourth Additionally, results. vaccine the the also but compliance mandates mandates, impact could the note Mike back meet our call vaccine the Mike. will and I year to want to pass did on full quarter costs touch to unfavorably I’ll that our now

Mike McCann

In reacting respect issues. color some market how conditions to chains, on broader I light with are the Jayme. provide want those of to Thanks, to we supply

of doesn’t weren’t material seven significant commodities. pricing potential pricing in significant note, off. risk. period. good there pricing has we on It for existing helped customers leveled on we book when know bid has new that risk at days, taking is business, to us a projects, is Of and and of business the the into that mitigate keeping we’re raw limitation the our First, availability our risk Pressure it sure inflationary return appears only – appear account make

vaccination market do impact really believe has work. impending mandates. opportunity near-term industry, managing We’ve there’s biggest work tightening likely we is of a We perhaps available. some the which XXX% project, that labor felt a Next capacity for federal parties federal full. all emerge carefully, The been Currently, much risk so across shared any is but from in having requires is on labor left some don’t been the vaccine labor. our working not one

is the employees over requirements tested one the every OSHA be any with Limbach, private larger vaccinated weekly. XXX that For risk business or

effect. the On to go into will and we could the plans holding go need as complete, we recognition. QX work procure it. focused effect on which need to We’re on all we whether on drives equipment, we are impact in allow percent Without very doing a it it mandates not us key us risk that equipment, will drive the into equipment a that ability revenue schedule could the some are or and point be a into expectations the and is with for forced incur our keeping courts watch developing costs can to close pattern,

we are data into our standard clearly back that reinforce Along off the reporting over we processes. to that management staying focused with QX. now want realized stronger the it XX is business on the I past Lastly, to Charlie. call with in results all we risk incorporated paying pass months, I’ll the

Charlie Bacon

third call, possible. good I on successfully start COVID-XX As had at the quarter the numbers, I of plan QX’s really with and what’s we despite year-to-date ongoing are noted the impacts. reinforce am a our our but disappointed results executing

Our segment is margins. that nicely growing with doing ODR with and so transformation continuing, healthy

rather In for work. that mix capital to spend capital our market large business dynamics growth than favor terms of has segment, operating continued

allow maintained AIA the and of September I presents properly last services, year. Southeast known non-residential program growth, we the The indicating the looking care, with service opportunities. we the our as services, of XXXX, our and service need share forward a The other billing building Index over project. national to hit building customers Momentum us. high, assist existing more and view two to will management services. our serve the forecast expansion continued ODR to points, same market a of expansion us The owners quarter with with The expansion everyone’s U.S., FMI reinforces FMI in make to are in growth to growing of sector, specifically XX.X. sure their health entry following planning issues through better providers. have also the the fourth indicate business a on the and aware new With at are forecast the regional been better develop of want strong secure our growth awareness XX-year focused cycle launching benefits period. their successful that Given customer very index at healthcare to where largest accurately position a period continues report equipment economy, sectors supply XX% capital This Early ODR us projects. increase Dodge base over a the chain

we new significant these major customers, During the two sold including customers. quarter, to several services national

macro negative the knew of with include improve, strength. some while With selective ample various In seen to Also rightsizing attractive third our project our decline. This us in focus ahead to headwind were market goal the bookings optimizing business, would that on ODR our strategy. and our said, accelerated backdrop a have opportunity profitability revenue in the the indicate GCR track at our recapping made ultimate work continued securing XXXX, to margins resources. being is positive an our of allows we – operations quarter a we September. comments earlier, indicators during continue and good I Looking which proposals margins we available

us. of pleased We’re the and the in front of really volume with quality opportunities

from XXXX, with that, we’ll $XX to our guidance take questions. are $XX $XXX range your EBITDA we With Lastly, adjusted million million of the with to revenues million, in $XXX million. reaffirming for

Operator

[Operator Please Lake Rob Our question Instructions] Brown Capital. you. Street Thank from is first proceed. with

Rob Brown

Charlie. morning, quarter. Good Jayme. job in morning, Good Nice the

Charlie Bacon

Rob. morning, Good

Jayme Brooks

Rob, thank you.

Rob Brown

wanted and cost clarify you’re that low vaccine that pressures guidance commentary about mandates. your being of Just the range? – that would and EBITDA kind what comments be to about that you’re the of in about? incremental talking care is in kind the Is QX health the seeing to and of some in of end – Or on your

Jayme Brooks

That would be incremental.

– we’re And put that to what at, now. today, investors kind that but just that’s – kind – them we’re those know that we looking just what looking that’s aware at around to are We are headwinds want looking in of of our parameters not make we things able is guidance. we’re then and those right any

Rob Brown

Okay.

next now of how the of of you And your how sort And right year? the it. QX? of Got margin then – in is of on rest expansion that for visibility is terms but then kind the expansion year, Okay. [indiscernible] project in margin that’s sort the the implied visibility business,

Mike McCann

to Rob, that the thanks that been we’ve mix is owner been on sure we direct last question. GCR and that make pushing biggest and The really focusing that. thing for months our really get between nine

along We’re mix, our for is with in sales forward, from And QX looking performance mix to excited ODR. going about really that we’re similar looking obtain. that we’re the that

Rob Brown

expectations does year of sort guess in how rates this out? your point? And the Okay. Great. And sort then backlog how year. of book next point? you And that this of at have of about the of you much of order growth have – into much how sort I pretty is next will there the sort positive view comments visibility is play How in – your much the when out at or

Charlie Bacon

Rob, year was just The way. a positive whole ODR up, the it fantastic We’ve sales news. picking a in seen trend

So look of going people. growth don’t we’re you next return look into We at looking at maximizing When ODR up. year. that at right we continue to letting GCR, our see

we’re kind past, the not story. not – in that’s story. growth said of looking as profit really the It’s I’ve as So so much

maximize GCR. to margins going our We’re on

well. of at statements by GCR. look we maximize and And XXXX, curves the really to the bottom ODR, the to to quite certainly executing opportunities grow really appears and a pipeline we fared we execution, very going to have which made look And the allow focus I all great demand frankly, in we supply high just it, meaning be not are recent track the indices us our And those about margin. in growth. But a track in I XXXX, units, quite think very continue ODR. pipeline, where shift line branches the for we’ve reports, when positive for is see to business on this will And is So those business there’s of to record some XXXX. going the strong. very successful of And frankly, have that

I or think So year. it’s good a say, GCR. next I’d pretty going be on But to modest on opportunity and ODR of, mix we visibility have growth

Rob Brown

turn over. Thank I’ll you. Okay. it

Operator

is with Long Our Meadow Please Old proceed. from next question Investors. Jon

Jon Old

update everyone. claims you and the the on on I acquisition Thanks program. results. sort Charlie, Hi, collection and could, us if wonder congrats of

Charlie Bacon

Good Jon, morning, Charlie Sure. here.

made in federal two We definitely with moving claims extended, that interesting. project pleased bid, some the on one we’re it. we’re the project. we’ve the And on really So a projects of forward direction, right progress had was collection and it’s of kind that

I think we’ve total a worked it submitted three smartly. We’ve of claims.

the two a we going of But we early. resolution we’re claims the in maybe problems be years to but late. about And get couldn’t those going see just we’ve as is a All have result, with some in seen been progress fourth. the is did past, of steady. And the resolved, where project

particular negotiations right is private in project, now. project, which Another kind is a of final

to how have that to we’ll firm. see we’re continues play holding out, but So

we’re backing We’re looking for and off, strong not settlements.

drag the and it’s monies our big dealing the contractors. particular of that involves just are are it ones not times probably just with going contractor us. Some after size opportunity. – of step look out. that one is The we’re to and at continuing general XX It’s all interesting that’s to back claim, the And

So a them we’re going in but working to it’s hand glove continue to continue that, to to resolve. progress take while to with

to progress seeing I other come the sure would fronts. faster company. it But several into the and it move look we’re again, on as on I wish at fronts, future So cash

make actually, two. On the or remain acquisition Go to Matt. comment have I’d we ahead, Matt front, like active. a And

Matt Katz

market, overall Charlie’s I Jon, year. is gains, The capital terms anticipated quick the end at the speaking, leveled comment certainly of activity has given of tax think, good changes I think rate broadly morning. there appropriate. in the Yes, off

get over probably and done try into the everybody launched who this going or summer fall. I the to something think early was year

broadly a measure the want the of just owners they the rush, broker-driven end think, ago you emotional Obviously, you fatigue by a level, really as may seeing, considered having is a the for that a year seriously are if of again, don’t transaction, launching year. banker-driven for lot market, have would there even folks is getting probably now, anything expect it’s the or not point. are of somebody to health of have might of heart. a use not we at this folks so of where been in evaluating and activity who if I is I change think, inbound business a a who And done anticipate What these

a Limbach. And at certainly got so And some various I is think good market, receptive seeing to tell discussion. very opportunities of stages sort story interesting to continue very brand that it’s a to market itself to and we in of manifesting a we’re good and

of sort really into cycle We’re on past putting of burner this the them, always focusing evaluating and in others the opportunities perpetual moving on queue, then a back bringing couple. some

like. performance we going to but price things the we underlying got do at obviously, is equipment then and some We’re feelings to in remain that feeling challenge, seller exposure, and commodity the threading the The mandates, cultural willingness we’ve COVID engage and around both to availability right continue needle see between our getting like our disciplined, and elsewhere, Limbach arms vaccine market our compatibility. about

firing before falling some the if set at would – precision we it’s certainly to in where love following right process for me, something in certainly degree and fall we’re done ourselves a cylinders opportunity. like a up structure and we’re get that open-minded point we’ve but love, and So requires a excuse on to all of

Charlie Bacon

comments. I to just add want Matt’s couple of Jon, the to a points

either growth area it a And complement We region that’s the to – or of plan. also Southeast potential, expand States. to we’re need sector has new expansion has into. focused our continue at United We really that existing strong possibly all ODR to looking think we but an sector the we’re hunt, in mainly and

And So said, Matt’s opportunities. job in at great of done as discussion. a various we’re some nurturing he stages

Jon Old

Okay, thanks.

Operator

Brown Chip from Please proceed. is question next Our Stifel. with

Chip Brown

the taking ODR Thanks is My guys. morning, service call. segment Good expansion. for question regarding my

expect that on and comments what office forward going to working impacts Nashville we the some the made or Any constraints? you you on terms light in impacts of capital can shed how So the on cap can SG&A.

Charlie Bacon

Yes.

minor a investment. sorry, it was Chip Brown? I’m it’s So SG&A

Chip Brown

Yes.

Charlie Bacon

thanks before investment, on run. to a Yes. was Chip, And walk we board it question. for talented brought person. we’re we the going Yes, a minor but very

have to added staff. We another professional that

this. It’s – ahead view on get it’s than We’re actually. original better of how like selling our plan working expected, from to into

client I It’s program explain. I to if objective Our of to did lot little our the actual it’s their XX for another different play later service. value to bit management core really management spend CapEx early going program And get before which further services, to past on something us But CapEx knowledge for to career, what’s Limbach. and a develop a joining in did opportunity years to want positions project, happen, just for in develop us than add I a then propositions we my ODR with an spend. the the for

new during are So quarter. we These clients the actually Nashville. three secured in major based players

So quite we’re excited.

they’ll from So a have and to modest be great we SG&A perspective, didn’t the doing big me, that. investment. a work or a anything there, – the perspective It’s office and And of job, they’re CapEx feeding two just company. we up like very open rest a people a excuse

I that So did what in on provides color we Nashville. hope some

Chip Brown

cash next expect year appreciate or to within, so? it. can the I flow be Yes. mean, this within And accretive I we

Charlie Bacon

Yes. Yes. Absolutely.

Chip Brown

Thank you. Appreciate it.

Operator

is [Operator Please Our Hughes question SGF Mike from Instructions] Capital. proceed. with next

Mike Hughes

for questions. Thanks morning. my Good taking

wanted I this give that follow-up range to of on the discussion. Can multiples point? you at at, a M&A First, looking you’re

Mike McCann

in of area end terms on That’s efficiencies. times years minus to any synergy the or for the over administrative our prior couple plus of back-end profit of opportunities in front either target from revenue range EBITDA the Mike, is point and companies. of view trailing a gross last X.X potential or target

Mike Hughes

indicated $XXX year million. of Okay. full Year-to-date, XX% implies million. grow this you by quarter, last business, which done you’ve The $XXX year, would ODR a

of million. quarter, this just that you Can there last potential? put on comment kind get quarter, to $XX to So just up million out to close need $XX goal to reported that that you you from do

Charlie Bacon

in in to said very Sure. sales which to quarter, Like order quarter fourth earlier, revenue. the third see needed the had we strong fuel we I

it is but I grow stretch for think QX. of do we a probably $XXX bit a to expect the million the over quarter,

see So disappointed went, in we’re to resulting I and year-on-year. up of said sales year we of in of we which earlier, the it’s sales nice are impacted up I QX. even to revenue. year sales, don’t that and It’s But lightening rather standpoint different – nicely in QX, kind terms the And QX, terms again, teeing of it, ODR execute which up going the it, And a a from strength was how works, of we GCR. is Yes. start sell The beginning year the very of than and in way wrap the growth as it. immediate. book bit a we the that the

quarter. fixing from strong customers focused there lot And quarter the the be of following just a a right work. equipment, demand. quarter, in that pent-up sales third And great again, and continued are now seeing fourth is seems perspective us on So existing fuels the right, emergency from the pipeline, which to T&M

T&M seeing We’re ever of front. the years our one on best

don’t especially to supply up, that of lighten So issues. chain we the expect because

Mike Hughes

Okay.

just very wondering was you’re robust the issue. have few to rolls and You kind it segment, demand. pushed address quarters pent-up that that much and how my I’m over, maybe a just one that with just for is of results this at on of going ODR concerns of hit business just to right then

Charlie Bacon

of a preventive the One an year. And and a of strength of record service sale business, maintenance indicator is that its we’re the having things contracts.

at you contract, you does And maintenance with what of renewal So rate a Now effect sell mean? very in margin. have preventive look about customer. evergreen contract, you’re revenue, when we annually. that it’s the getting an start multiplier They’re maintenance XX% right that contracts. And now you a selling high once and

year this see up maintenance be work. business. It’s service core emergency it’s future contracts, growth, So it’s actually expanding setting not our preventative to best going the to right? have the just an to ever of year’s So

off. on more that. resources past about it’s to excited momentum the quite sales we’re spend did years over going, money paying get So and two that We

think the up. Mike, So so actually, I’d in much to iceberg. so of still look There’s we When more you and I expand. start opportunity the don’t tip And it, our at us ODR potential footprint letting market see segment. to at looking growth way you it the like the it’s penetration, much there’s for

So us I don’t see letting up.

invest the we in expansion that’s continue to going We of believe really ODR. should where invest. to We’re

Mike Hughes

Okay.

the that December segment increase So September quarter. $XX the just the for segment you fourth from the enough you to quarter the sequentially expect to March being revenue reported to for million that quarter versus into have in up the commit you visibility Do quarter?

Charlie Bacon

second as now, Right quarter, far the of fourth I’m growth that and the And fourth part revenue visibility in that. the in as the sorry, quarter, expect have question? we we on

Mike Hughes

the quarter you Do have from December visibility sequentially up into the March thinking it will quarter? be

Charlie Bacon

Yes.

strong, we the of this be perform And the the through sell the We now, sales was right than of pipeline So second quarter. of third seen a we’ve continued appears quarter it. year, activity sales right? it. think to Through course the year. I ramp-up better

better the was than first quarter quarter. Second

we’ve down. expect that I on feet I again, right, we invested street. think it, the with call And slow So the don’t to

expect existing which put want in what, we of they the I have because great Band-Aids maybe new they’re concerns us with And we saying, their making up. they’re now, you the the right instead, have So supply expansion, of today. but on different aware no our equipment, money. chiller," don’t techs a "Well, instead of spending is any for to The move know ordering chiller, and forward buildings, But part business let only it chain interesting our other again, that, it. to than is matters, customers is we’re which

reaping We’re very the revenue at margins. high

as side? it that working of Mike, opportunity. can any best other we’re chain opportunity the of And on do supply in thoughts you So have terms in terms about we

Mike McCann

Yes.

a thing, the and that awareness. that worked sure supply from smarts chain is relationship from us, one look in trusted is thing that and Maybe properly communication past, bought approach. from to other become has through would The customers we’ve our have make the a we’ve seen are parts from more the segments complicated, both for and we’ve pieces. managing of they’re too, think they more definitely I we seen especially really internally turning to turnkey to perspective, or

Now for them. to manage that for they’re looking of somebody kind

go approach and opportunity seen a see as now we more seen So of we’ve we’ve forward, turnkey as past. the opposed in to especially what we for

Mike Hughes

GCR an that bidding. on the appreciate Okay. the which does discipline for a And idea? But have bottom then turning quarters to now, has backlog of out? when I business. The declined few you side Do your

Mike McCann

Charlie we’re I touched we’re that trying we historically and that – business really got maximizing performed. perform we perspective, making sure where upon too, little best we’ve We’ve can outcomes. places make to in this sure bit the a the GCR that think a we’re that

We’re gross watching profit impacting we’re quality growing of that. that and sure really and not making the the

on opportunity. it’s depends on It very So think I dependent on. that markets we’re working

opportunities. a we’re We’re be our turn from smart that certain we But will making trying growth really are key to level with resources pattern to paired that sure a in that a in certain market, once – is market. hit

Charlie Bacon

what up. they’ve we In back tough with you and indicating branch in And And expect ODR? SG&A to some ODR. okay that the were And margin, because and eye of and we’re what, to to we the making In right dollars they units, something, that supply go execute GCR we’re calls they business on it’s it. at deliver GCR. indices focusing the challenges all have can we not reinforce off where great when for past, extremely there. doing side are the side, opportunity chain And really it the let’s at have really we if look disciplined one certain out we just upper disciplined the units deploy back us might the our them what and we the that we favor, particular plenty they now being Yes. we pricing. a there’s that do if grow, is that’s of on to We over just, pulling let in business have but either in I margins. on killing equation. to proven want lose and business, our that saying had going know You’re we’re existing the looked had,

So besides performing then that’s smart. to to we’re actually smart very with see I just the compared strategic. contract. continue forward growth labor on in people. expansion. require to a thing it’s being going moving to nice every expect it we where capital-intensive high cash performing performing just huge we’re ODR, it’s that back play. It’s just, out we many It – not And is flow is building just The new front. and doesn’t think Where the we’re the better, ODR margin And And well, ODR recap, think well, conditions there, location and not building. a much as about to

Mike Hughes

side and Okay. you And on roughly flow on better had does operating $X cash the over look flow negative the million. discussed next I just million. at cash being the $XX flow XXXX ODR like negative Then $XX XX you at of million. months? year-to-date, if look but Then mention huge it’s a what the Because of you earlier was cash XXXX, business, this the know call,

sum all good conversion up, averages EBITDA isn’t you’ve it which So about that million, you $X reported. on the very

you forward? that to? What do So like look does going what aspire

Jayme Brooks

Yes.

So to that’s to we do really cycle that work through billing when we the how underbills. regards and we go kind in took our the have and where time we the with detail overbills of fluctuations

targeted X.X. running there, of around tax way adjusted the CapEx EBITDA. to had And X.X. best We for so we the of X.X around model debt what’s And that you just had about interest for laid to We is X.X. out from need of and had QX, the kind we example, –

kind will for not through look that And of those investors I internally, – fluctuations EBITDA, So enough some information model adjusted as to to impacts you spent those the we’re as piece, the it’s working you time guidance capital capital against have too bulk of that that of adjustment insight it’s that. we kind in of And basically cash working cash give at adjustments. necessary of difficult. before if a going the figure accounts. giving but There’s on

Charlie Bacon

We get we’re into recovery claims were during Mike, question sheet. we to comment seeking them, or delayed, stand. sheet they just, a Jon projects I consume balance those obviously to period. a of cash as earlier that the working lot the Old where did to that and and just asked we want claim back cash balance Or through on about were on

major another thing past So over that’s had is we if The claims. to be good the months, XX haven’t news thinking about. you at any business look XX, new the

jobs specialty just the We up past were XX put in or this not we’ve cash went business. we seeing that. some ago. us, caught the what out south, had of problems just think the that months, that contractor years into but of on with with problems lay the All because not with we I And contractors. we’re decisions months general other and suffered to and owner back it’s to discipline But XX past the

outlay lot the claims a of seeing past, hope what But that of not taking cash helps. a months I So we being in the from that old because just over is activity. period that recovery we’re got XX smarter future also, that the the on. we’re the we’re past we saw

Mike Hughes

appreciate as the at there, outsiders, suggest now story I you XXXX put rate. can’t if there, convert the that cash to I you’ve out year-to-date but year-to-date. XX% one from the out flow capital. to at has we about modeling missing rate number been XX% XXXX, quarter-to-quarter want outlined. very would we converted that that, Well, XX%, is EBITDA a poor, would flow XX%, right thing and model put cash at we, because a be working maybe a operating a look But I is operating Maybe to the you’d think able metric variability at hey,

question, re-upping a that’s middle in you So September. levels? suggestion. a of in issue Was just just these actually Last Or that shelf the at shares you would filed shelf? existing

Jayme Brooks

putting shelf. warrants was were shelf. what call the That in other sense that just the housekeeping kind of under a I We issued had up good of it Yes.

availability no on it. was there so And

put to – need we So just to there. have something out

Mike Hughes

you. Okay. Thank

Charlie Bacon

Mike. you, Thank

Operator

Our Meadow from question with Please Long a Investors. Jon next follow-up is Old proceed.

Jon Old

to sort I Yes, on just last Thanks. a little flip of question that bit. head its thanks. want

even net peers. I think your back to on I public this in credit and cases, Are modify less depending Given at, is mean, even a more to the could look buy I valuation big your what position than in metric X/X at you position the – allow a cash agreement yourself mean you in – you’re you many stock? to point where

Jayme Brooks

with this bank. in keeping are of position our time, we the agreement still with at a No.

Jon Old

some at change mean I what... point? That

Charlie Bacon

just… it Hi,

Jayme Brooks

Yes. be. could It

yes, not I agreement. We’re year, the a year in mean into even

definitely it’s the forward. we’re point, So relationship. something at consider we this going could with But new

Jon Old

thanks. Yes,

Operator

proceed. Our follow-up Stifel. next from with question is a Chip Brown Please

Chip Brown

that from install can impacts? negative – the those negative based questions, – segment? segment? predominantly the under Hi, nine Was quarter trailing capital? to on or impacts would during the negative wanted segment construction months. prior was the just with that expect underbilling, the GCR that over So side cap Service Any all is Or we just light two working the this the impacts the just on the working obviously predominantly on that in

Jayme Brooks

specific to each segment? want See, you

Chip Brown

terms out Yes. working assets Specific, of I you or break guys the in segments. mean don’t cap

that’s then GCR working is September the the underbilling would the… to on driven? side, that impacts cap the of over – And just negative So for obviously end at

Jayme Brooks

Primarily.

Chip Brown

capital I expect like made the Nashville? in past, had And forward? fast. constraints appreciate are should is comments going service line we Charlie, in the fine there? grown what What that Where mean the too then expansions on I Okay. – the Primarily? with you had that side you

Charlie Bacon

okay. Well, Yes.

that fluctuations when look to working doesn’t to over some to record jobs not to cash past those look projects still in and start And XX large overbilled on get have in right, And business But done execution. jobs to a units that large projects a in we’ve the as GCR at past, that we’ve up. goal. opportunity taking it’s as primary off necessarily position months we’re scale position. very actually the the overbilled compared what work. is very project. capital projects – in continue the have our backed the great We to That’s great big a will work, So we large get and take on position taken you those we of track could smaller cause

a million think smaller the fluctuations. $X a projects, the So to it. or other going million $XX if that’s long-term could it from it’s really they’re going talking by great. big The impact $XX you the way the mid-term, – But you have go million and don’t see we’re our way, they the jobs, about well, if and perspective, way, we position. versus $X When health jobs contract, to million smart

tend stay We’re to They don’t ahead able trouble. to in it. of get

in smarter a You out. and get get platform. of just business It’s kind

And just asked down you doing we’re segment, what – while, actually there ODR once get we payment is in the a the on we On for it. some XX% generally, of deals.

they’ll to basically buyers smarter the not do payment. going that. upfront smaller to customers. Basically, no, XX% sophisticated But that think customers, larger I say, I’m agree the the that’s

opportunity So improved Chip, that very We reinforce other is to want play. for just And pushing just it think the we position. small a were was Nashville cash constantly thing, a investment. I very, smart very

are is customer the so healthcare, is hotbed base. of Nashville the sector largest made healthcare for-profit decisions and Our where

And the positive. projection. a delivered margin. definitely to sales the worked me the think So actually was on we’re an former great earlier, there. early by of we really at It’s what part months next his we’ll excellent it’s see my and ahead he’s done cash of actually, he’s And positive mean excited. sales and brought been someone The back said in individual he’s are he’s number of high I for here. year, already the job that flow, like I company, who very to I be

pretty pumped up about it. So we’re

Chip Brown

it. Appreciate

I in as we approach makes expect – sense. install, with of to you mean, out, the XXXX as for just So that modeling service a and working your hope smooth target of mix can XX-XX I we kind purposes? cap

Jayme Brooks

sense, fluctuations the the right where that’s sitting with Yes, over GCR, our regards like we’re now, that of XX% and see we’re to more lifecycle because we the so makes cash the project. mentioned, Charlie

So yes, get balance the it we more out. ODR, will towards as

Chip Brown

the what there? capital And can outlay ODR perspective? expect of from we Any in light terms

Charlie Bacon

right. ODR an a looking a in right. small that business, basically outlay, tech at when a got you’re talking some van, capital you’re and he’s equipment very service van, It’s and Because about actually

the grow we CapEx. through. management business, So people a not terms perspective, compared from that we with intensive we leases it’s of have And staff adding but in as that come construction sales to and are as

Jayme Brooks

the its CapEx. Yes, CapEx. Like on

Charlie Bacon

kind that plant on the plants that’s metal. those I of of very efficiently. obviously, have And ODR that big the we from Yes. I plants, GCR activity. although side, mean really work doesn’t maintaining standpoint But sheet require the that think business produce we outlays

So much. it’s so just not why we it as intensive, which reason another like

Chip Brown

you. Thank Great.

Operator

We closing it to management have I session. turn over like end question-and-answer comments. of for to back the our reached would

Charlie Bacon

listen, joining us today. thank you Well, for everyone,

can end It’s We’re clear as continue obviously to meeting see do of we We the but patience work we’re and of starting with quarter. some we continue a aggressively to appreciate proud to spot of think through to fruits what We we labor, results, forward. and our of management to thank indication is the challenging very you. as you execute with go strategy year I look everybody’s forward with our on. our we’re And going times, that. again

Operator

This conclude today’s does you. Thank conference.

your time, lines this you thank for at participation. your You and may disconnect

Limbach (LMB) 11 Nov 212021 Q3 Earnings call transcript