LMB - Earnings call 3 2023 | Limbach Holdings, Inc.

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Operator

Greetings, and welcome to the Limbach Holdings call to discuss third quarter 2023 results and update on current operations. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Jeremy Hellman of the Equity Group. Thank you.

begin. may You

Jeremy Hellman

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

to like on the and www.limbachinc.com. encourages today's available section Management also would refer Investors in company note an its select presentation the website updated company the review call to investors presentation that entirety. of will to is investor at during The slides

reviewing its this results, the call, will be market During update an current financial on company providing conditions.

reports statements, from call. Today's contain made factors risk actual may forward-looking earnings Listeners from XX-K differ the discussion cause on differ may earnings report the that quarterly any the projections forward-looking are actual statements Form statements and similar XX-Q annual results results review during to to Form company's or for may made the reminded call. forecasts, on during and

that call, the I'll Holdings. note call ahead, please Chief With go during that, to the turn session only at of Officer Executive from and analysts. Mike. Please questions McCann, Mike will Also, taking over we of our question-and-answer the President the the Limbach end be

Michael McCann

everyone, and joining Good morning. for Welcome, us. thanks

Chief Brooks, Jayme Executive Joining morning me this is Vice Financial President our and Officer.

third the to quarter. Turning

net continue We income, in continued led adjusted to flow. margin and result solid and the to EBITDA all fronts expansion, growth execute was on turn which in cash

pace. at revenue rapid happening We split transitions Recall we're continue XXXX. originally to our see a by a that targeting XX-XX ODR

that appear track hit this you target year. we today, we with on speak As to

earnings intended driving our in so, growth And business this change flow. in in margins, gross cash is the and mix doing

a on of investor now focused in new ODR. least in deck, XX% indicated shifting Slide XX our target As at we're to

segment ODR sales Both of for well, ODR and to is the project a X,XXX compared been segment shift in performing as extraordinarily due shift are we our be which marketing segment. margin our to and advantage during basis has easier performance our points The GCR segment made ODR QX with towards selection, execution, ability to product rapid GCR resources our improvement selective. of and the was our continue segments to

Within results less a quarter, our was net open. million significant claim. cash write-up claim The of resulted legacy largest successful segment resolution the resolution our claim legacy for That $X.X of million. company to this X leaves GCR in and $XX the

strategy Beyond the and segment segment is for third margin shift acquisitions. objectives, our pillar enhancement in the of scale

deal we're ACME completed in the close to in North Air $XX.X July another Subsequent in acquisition Greensboro, to Industrial cash. quarter we of end, able to and We this based acquisition Industrial Carolina million announce for already of year. the that are pleased announced

Air the very Limbach to to We're excited add family. Industrial

to Recall to We tuck-in organic well deals as continues believe we acquisitions. are able our us opportunities to deal hand build business that on presence. us with acquisition self-fund geographic as our as focused out will program that to cash fund our allow that our allow on both larger

in providing Industrial Air attractive Limbach the a Carolinas with new market. falls growing presence into category, latter the

hit Air Industrial customers, mark believe an we location, future value our customer and criteria. geographic for a deck, investor acquisition the creation. including Strategic our national-scale of ODR incredible of all XX Slide base, on number in shown opportunity As of strong

and advantage supply manufactured customers with contending for to also line That in-house. that air propose Air including Industrial units able products, choke deliver points. us in are has solutions being their value-added own decided handling gives of chain a without

really they for ODR great are Industrial centric model Limbach. fit a Air built believe also and a very

excited very are to have aboard. them We

revenues. minimal With the impact on on to deal Air have Industrial relatively closing expect we November XXXX X, a

inclusion million of EBITDA. the revenue should $X while of of XXXX million benefit EBITDA roughly $XX And and from

and capital structure deal a to are if pleased cost built with targets provides great all a favorable which met. parties earn-out economics the are into lowers We and of have outcome our when

return then it and off few Jayme financial with some market we pass now provide highlights, to to I'll comments a your Jayme? before on take I'll questions. conditions

Jayme Brooks

Mike. Thanks,

XX-Q, extensive I'll focus and was details filed Form Our highlights. financials, press so our provide both yesterday, of key which on release some

Starting income statement. with the

During X.X%. XX.X% the from up while third year quarter, the revenue, segment for top in flat, QX. growth in the GCR XX.X% consolidated year of resulting consolidated ODR essentially quarter total ODR ago, was was up during accounted line revenue from of XX.X% last revenue a

that overall see both during strong As third quarter. solid to the higher-margin gross Consolidated segments which and performance ODR of claims of resulted from Mike quarter benefit onetime the our segment. margin the gross in benefits settlement million. execution in included onetime from couple These in increasing contribution $X.X of X GCR noted, outstanding we margin a our benefit margin a flows benefited the segment, continue through the of

project $X.X had benefits benefit a gross completion a customer. And quarter another million margin the $X.X XX.X%. result to GCR due scope from reduction then a margin These the early to gross we also in of during million of the onetime of contributed the as higher-than-usual

GCR of and still gross ODR margin our the to our solid stayed strong XX% QX. items, gross was exceeded margin to XX.X%, XX% X was these similar at and Excluding target which range

and from SG&A benefit, gross quarter, million from gross the performance million and for onetime margin. $XX Consolidated in the second was in was revenue or period. XX.X% out quarter had expense was if $XX.X margin up strong modestly back million we and for up $XX.X ago quarter XX.X% the and we year even the to very of high record the were

a in deal-related a $XXX,XXX increase fees, and including a The $X.X acquisition in increase payroll-related primarily expense. in professional stock-based compensation related increase fees SG&A expense in to expenses, $XXX,XXX increase was million

the XXXX. quarter. as a we have a we XXXX run total fee associated SG&A SG&A was $XXX,XXX expense expect the of purchase that transaction year calls, of ACME with as the approximately for annual full expense prior the revenue have noted percentage through end similar On rate to

at total of end range growth total revenue our full year. our of revenue expected expense outpaced growth this the year, line to higher SG&A projected targeted to bottom seen XX.X% of have we the currently As XX.X% for land is

cash Now flow. turning to

quarter and balance $XX.X cash million, strong a the the end, million December of net quarter cash had At our position million was cash We of have $XX of cash outstanding sheet. a exited of We balance to in end continue a revolver. and at compared the net and we equivalents $XX.X million million position our on end at $XX.X June $X.X XXXX. to

impact Total operating component. flow a cash million nonworking operating this Changes flow capital million in with during $XX.X had quarter. positive million The third operating cash the $XX.X of accounts year quarter capital cash flow was was million $XX.X compared a on remaining $X.X ago. working the

we totaled our calculated our this That then from nonworking in by As adjusted capital operations cash CapEx, which free noted free flow leaves previously, flow and XX% quarter. $XX.X the EBITDA. subtracting $XXX,XXX cash at of million can around component be or taking

cash did of couple noteworthy include quarter third a The items.

with million by of approximately working accounts increase a changes receivable Starting of cash $XX.X net capital in the from receipt was in of primarily million settlement the offset earlier. $XX.X This a an receipt claim. mentioned of

We ACME investing for the also activities $X.X cash used million acquisition. in of

position. now which end, to fund still used as Subsequent cash liquidity I'll it $XX.X acquisition Air, of hand to a our solid to Industrial back the leaves of we Mike us Mike. with million noted, quarter

Michael McCann

you, Jayme. Thank

That approach our our X the on a in allowed identified. success we plan. each growth We've We're of we demonstrated we this us EBITDA second guidance As year-end, well have to have levers for time adjusted momentum. has executing good raise year.

a that and we to million $XX we to began the year million, of a then subsequently range Recall, million $XX with range quarter. raised to $XX $XX million of last

guidance EBITDA to for increasing now XXXX $XX $XX are adjusted range our to of a again We million. million

upward continued contribution performance along second revision from the is of our a X small quarter this with to during year. function guidance of The half the EBITDA our our year-to-date, adjusted acquisitions strong a

target During margins the to were of segments. we gross quarter, the able again range both record once third above

project of excellent customers. performance field execution, delivering on overarching Underpinning and that emphasis value-added our for selection, rigorous solutions our

million quarter, Our benefits of gross earlier. in onetime were discussed from Jayme booked GCR margin adjusted EBITDA also that benefited $X.X X as the

overall which total in supportive our are for end of consists for revenue of the revenue reiterating believe services. year We markets $XXX to remain our the in of We conditions also XXXX, range million. million $XXX our guidance

on headlines continues to While markets. demand of conditions, macroeconomic our the much the Limbach due mission-critical end to of see strong nature focus day-to-day

our As resilient. we continue customers our continue are partner owners, show indispensable key is to essential that evolution our services building of to being spend an the and

our in alternative and have customers their Leading successful balance managing in sheet. operations verticals been

make significant a not As we demand. of interest now, seen rates have

ODR in past. the a expansion, construction new with less than our reminder, our with correlated is As business

Over all the past demand. vertical strong of markets experienced our quarter,

customers be and In were our long-term capacity, quarter, we saw health our of and no of manufacturing spend on vertical opportunity. industrial appears market, example repair to last for an operational preparing from shortage projects. there capital budget future As the focused both care

time flexible focus customers model our a prevailing solutions reminder, customers, is be to as to conditions. a with positioned to needs a a Also expect regardless of we those lot their to we of wins. refining facilities. and to there mission-critical be well of providing on high-value Essentially economic variety market By the adaptive spent serve

equipment We with lead elevated. moment. equipment shelf is chain time, delivery in all same difficult remaining to some items. do At for times the supply obtain moderation times on Focusing still for see a complex the

Industrial the Air. are So many reasons very acquisition again, we X of the about of enthusiastic

forward believe to year-end, the into we Heading good closing year look strong. momentum and we have

As continued help opportunities. look maximizing to full propel forward our we contributions head our results XXXX, provides year to having ACME effort to and Air Industrial into we and ODR our

we a large views and what that our on to current we Based is continue don't to market believe want underestimate opportunity expectations, pursue. we

platform, believe and the strategy drive right to operating people right to strong we results. to that continue continue right have We the the

remind modeling to that, XX considerations. session. everyone With I additional in Q&A please also Slide includes the investor open want presentation operator, that our

Operator

Rob Street Markets. first Lake comes of Brown the [Operator line Instructions] with Our question from Capital

Robert Brown

Congratulations progress. on all the

been quarter, do margins a next talked some seen to margin Or you ins how some are of detail they of into have maybe and in them, outs and the can about do structural continue you ahead the and year. you've the long-term but that? of improvements you targets targets, about your think -- long-term margin that lot running the there You year

Michael McCann

right make definitely each we optimistic trend forward the that be Rob, those, going improvement. time, do that the future we line same before of X a perspective. at we're anything to going to range there's But have we continue sure from regarding

to each quick. of X about really Just talk them

prepared strategically are with that's extraordinarily increasing allowed up in amount work. could ODR us do GCR, I We remarks, mentioned perspective. There's now. our of be filling but has margin But this a since we lot be to backlog. GCR tremendous opportunistic from the very be reducing a our a of to right ability to and this selective very

tell can that that customers a both our lot I relationship From opportunity. is a our to a of the appreciative We've that of work and and the main accounts. add. the -- with focus perspective you a value to dedication very make from combination the is still of of get are sure owner-direct perspective, lots recently. of They're we're we go-to-market work group conversations doing select had we

we've that with we them. And really they're we've -- make customers really margin certain to through. it's sure from opportunity collaboratively we're value going But with And a understanding over to expansion. that process time, that's really collaborative making working our believe be been gone an additional sure working

of is services. to that matter a us -- our and So sure it's value really our continue expand selective summarize, of future prove opportunity, but GCR to is and just we extraordinarily making really a there's owner-direct a product being just

Robert Brown

kind active? then do And how terms remain I some the Or Great. Are know demand of you see sort on continuing? and is market you -- environment. it of but environment in seeing guess, sort activity, remain I of focused on the verticals any high-growth of areas Okay. quoting demand of -- you've weakness?

Michael McCann

service with I have or sure our markets strategy sure done. and things the they positioning customers afford making to think where couple not X is mission-critical end that really of that years -- been of we've is right we the the have really last ourselves over can't key make to

of really them, care health us for positive Just upon a to care. year. touch really, has been few Health this

those an into amounts and of accounts, XXXX that into been needs happen. ride At capital the work going tremendous few look there's we're budgets It's same the years, to with but starting future last going interesting to to repair time, we've 'XX. ourselves to XXXX them and ahead from dedicated

that is deferred of Some due maintenance. to

manufacturing it's, due industrial strong The are that. about to optimistic looking really So it's been this really has whether again, maintenance. line a change Those deferred year. or

remains ourselves to So in and resilient, worker markets I we're really to mission-critical fact we're that dedicating that looking about demand that. think we're summary, forward optimistic the very

Robert Brown

Great.

pretty you on then And have? situation. Good. maybe of looks doing? adds a Or this to they Okay. your acquisition, just other you -- in Can you're manufacturing areas a what that How ability that Air use how of use component the business? can interesting like Industrial sense

Michael McCann

Yes.

So summary, we from learned a and really just we've through for to ACME process. in kind have Industrial that Jake whole Marshall acquisitions of continue both criteria these learn the the

So really checked Industrial Air -- we're that those really excited boxes. all

provide it a their complete to owners around pieces looking their manufactured able the with sorts Airhandlers, when they're and of able to they to they products, started of to product they really the end know design build use really interesting they dust essentially provide X was that do, end. get installed and a where work and them was all that And filters, a design them solution we that products currently have and to we're line. to

IA, an also in customer because to have do product there's both customers our strategic a think We national feed locations perspective some from and and points. a I perspective think from opportunity they other

as opportunity. just strong a again, component The we of there's deal view future future So add. criteria. in meeting that value But -- definitely itself was the that

Operator

comes question line the from of Sweeney with MKM. Gerry next Our ROTH

Gerard Sweeney

innings is really in just Jayme, probably how what just to about you this little want on to the opportunities early to My the playing bit if side. see a Mike Rob by still field expansion. and talking still we the the follow discuss maybe sense you little drive forward. and in up early ODR pretty you're is And could this sense with continue a are I bit, maybe was

Michael McCann

completely. I agree No, Yes. with you

in The XX% on side. location We're extraordinarily to key you XX I their GCR is we're in focusing But owner-direct early think that's much selective very our each we're their what said accounts or with innings. because of strategy selective being the be is thing the focusing that months still top last time. the X the on on side, on we're XX% selective.

led building these that's And from owners. insights getting to us different really some

way. that So us along us X time, the consistent more. prove we've same value At want the thing they our to is -- do been it's fairly they want to

the to and budget So of trust, into really point next think we at I of as long a kind we're where co-authoring long-term competency and peek solutions. into and into business and and we developing we're and a build phase 'XX, and now go their starting get 'XX needs get term, their we their

So time, which really providers, a hear looking on their their how they're X understanding as time working plan, thing going is and can -- electrical needs the budget same us and The X-, -- we additional long-term strategy time And program are. give they HVAC, develop too. same them. visibility the as visibility. not they're the don't budget, don't I XX-year We're building next their to again our X-, other se, people. tightly with dedicating business with much have is well, At we availability that they we of like and beyond per to mechanical and for as the is stage themselves

Gerard Sweeney

Got interesting. it. is That

to So a you're really get in relationship. and sticky there trying make

accounts it a Is after enough going there You as XX-year top said versus each mean, -- I about location, sort that even X -- your X-, than talked Over you relationship top top that customers. is of currently way out more got would building look X a customers? X-, looking of you that maybe line for at assume you balance through at Or XX. time, I well?

Michael McCann

the next XX% XX, that's X, there's probably top would tell There's XX. that still and X, the I we more definitely on had on XX% you than enough.

there's your shows I right X So field ensure And more understand I we of a add type to us resonates really there. or diversity as I different the manufacturing getting They talent. work day, they're many owners. nice same our would the just to that, IA, that want for -- that's in But been perspective, They from They're tell to you there's point, demanding. plenty things a building top has And continue us think, management a race an to just so that perspective. strategy, with so now whole a a we need whether with too from to have up person of textile diversity they what's that customers. group think customers. every they that do

it's another XX. So top X or

there's -- branch adding continued location top with we some acquisition synergy going So to to customers. the on, branch X location each or add XX, as location. to And or we're of we then every be

to We're possible we're trying as list So that the those ourselves force to sure as build. to providing the always customer best customers. to service disciplined make be to continues

Gerard Sweeney

Got it.

So and top runway I'm at you probably, or just upward XX%, -- top grow extra your words, mean grow those X. -- I you're to there's don't just to summarize those making know, further X, looking I my XX%, with with you're number. an internally penetration that XX%

Michael McCann

makes Yes, sense, that generally yes.

Gerard Sweeney

GCR. a years, Switching selective. In Obviously, more Are project underwriting size, just of it. of very degree. been lower is gears much to selectivity? being your very good maybe higher How last that or that margins. you to better price, projects seeing couple Got the less you've

if for it that. to incremental And Is a opportunity that I'm follow-up apologize. out could Because there actually I bucket sorry of as there. projects there growth just there's sounded curious out. though lot some going a a you forward? ton

Michael McCann

Sure. Yes.

margin. of So are the the things, different just a margin number -- which driving there's

be really we're driving X marketing owner-direct. the and sales selective by is that to resources fact towards first our ability driven The is really

to come do ask and really us, can us one? you they'll So this

a from installing we're as really well on amount perspective careful CCR at size thing in the projects, risk labor those projects. the as is looking the duration actually very of that think I second and now we're right

rigorous very more really X. are it a to continues and definitely there's rigorous. be So Those

of then staff And has absolutely shift flexibility about flex is been they've And performing third happening the the got really a GCR between We've what's well. this the work. thing to that group is to able And are great nice really continuing teams paramount our owner-direct teams. and been and shift.

So the of X those big probably pieces it. are

XX% XX%, continue at double going perspective, certain still XX% what it's to to that even there's a opportunity almost that's because push provides believe XX% better and though that. just towards. still and look performed in still we're From than doesn't margin, to maybe XX% -- quarters, we the future the to owner-direct we growth we're beyond it And

So continue to we're push direct. owner going towards to

I think our next like target time on and just again the -- right people higher-margin it segment. is to really make And sure XX%. to return that and investment to getting going the looks they're is time the

Gerard Sweeney

sense. Got That line. of back And jump in makes just It's sort follow-up. I'll and you. then X a more,

sort You GCR able forth. revenue? a talked those ODR, to Is businesses? fungible be of about will component always will GCR of in and guys be back flex work there between that XXX% a certain percentage and sort of X for Or that is GCR being always

Michael McCann

the and account has people we somebody our at day who's flexible, ability at our of certain be been it's there down that and -- a our working to down certain that facility the found I in adaptable work project segments in people perspective. But it this a our to think definitions that industry from this that's are do an -- from side a large people allowed staff revenue again, to do that I it of it, look worked work. goes we manager. have where people that sometimes as it every the and comes completely But perceived

that But to been it's evolution. looking to have great shift. and So we provide has paramount. ability a really that big a the big customers flex people been to value are It's

Operator

the session. our I'll for comments. back any final concludes question-and-answer floor to That management turn

Michael McCann

in you, Thank interest everyone, continued Limbach. for your

Equity If you questions, out a everyone. reach Hellman please additional great have any you, of the Thank to Jeremy Have day. Group.

Operator

call. conference This you. today's Thank concludes

Thank participation. your your for You this at lines may you time. disconnect

Limbach (LMB) 9 Nov 232023 Q3 Earnings call transcript