Limbach (LMB) 9 May 232023 Q1 Earnings call transcript

Good day, ladies and gentlemen. Welcome to the Limbach First Quarter 2023 Conference Call and Webcast. [Operator Instructions]

I would now like to turn the call over to your host, Jeremy Hellman of the Equity Group. Jeremy, you may begin.

and everyone. much, very you good morning, Thank Yesterday, and the filed announced its period XXXX results first quarter its March XXXX. Limbach XX, Holdings ended Form XX-Q for investor to The review also company the investors entirety. during website refer its Investors note today's presentation will the is www.limbachinc.com.Management presentation select that section company in of available like to an to would at call the on encourages updated slides and

update on this actual results an earnings During any the and may similar discussion the be company results or made statements from and market those reviewing current contain call, will differ forecasts, statements, Today's projections call. during conditions. providing forward-looking may

company's to earnings call. are statements call, that risk analysts. the we Form will report the factors on from quarterly differ made be at cause during note questions XX-Q the please Listeners question-and-answer the end XX-K actual our the from session for to the taking may reminded forward-looking results annual during that reports review Also, and on only Form of

that, over McCann, of Executive Officer go to Holdings. call I'll Please turn Chief Limbach ahead, Mike Mike. With the

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

Officer. this Brooks, me Jayme our Chief Joining is Financial morning

pacing XXXX year continued year to solid with is year-over-year, well margin gross line driving modestly quarter while that. start off revenue first expand, ahead bottom Top and adjusted to the before EBITDA of the expansion. line a last also was the up

living services best-in-class always provide our to continue while teams local values. Our

of to and which assets.QX by about. solid our the continue expanding with same owners This of we months we rests and bottom focus value ago, the on the line mission-critical the to conditions On was a their of sort our key building having talk to building spoke we whole three market relationship two pillars; consistent manage and to margin you plan, recognize much success business, on partner success when drove who in remain continue the characterized execution managing

mix. segment is of First these

doing to proportion higher-margin improve of our coming revenue continue margin so, from expect segment, run. the in towards to to We push gross a in greater we ODR our successful long if and continue

recent have grow our while the revenue remained even can Our relatively with bottom GCR proven periods that declining modestly flat, during revenue total segment. in results the our line we

In a X, our we updated shows presentation, slide visually. have number investor which new this

aim higher However, outpaces growth our our the segment. we going in GCR as certainly our to line ODR forward segment grow contraction top

prior of For example, also our represent the QX guidance midpoint our was revenue year the year-over-year would from up and growth.

how of gross margin, mix The second as both of output noted work an which each and and three pillars execute is is our in also we segment. price

quarter, to the first both our to perform gross well, margin of segments continue expansion. During leading

to on the improving focus segment, Within GCR we and work. project high-margin securing continue execution

a to their revenue to on. certain concentration, able general greater are very to a we GCR owners instances, continuing selective result evolve result contractor Limbach. be desire a of As building our extracting use our our are strategic we take In of to as shift, the in customers of mix ODR work

our changing in relationships reactive future earn to margin not also order trying must maximize ODR only from to we we on value but long-term segment, proactive. the realize focused provide opportunity. to Within are We're opportunity

to drive investor improvement. X we Slide in demonstrates presentation how our expect further margin

through XX. and Our on Slide third scaling XX shown pillar as is acquisition,

believe continue opportunity our We is this diligently work we pipeline to robust. front, and

activity months ago, growth both to line similar market remain a from well strategy Relative revenue with a as you improved a at as couple top acquisition level is selective. we earnings. of we important remains and spoke Our when as always,

operational, also existing such be and/or as a geographic to and add fit. cultural tuck-in that paramount our with meeting expansion targeted strategic absolutely our requirements It's we financial to We're any strategic business operations. family

collaboratively acquisition working Our the to strategy maximum is value. unlock proposed with focused market while on share gaining

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

Thanks, Mike.

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

the statement. on Focusing income

first accounted compares for in revenue. for quarter, XXXX XX.X% of segment fourth That the ODR of During consolidated and the XXXX. year the XX.X% total XX.X% full the quarter with

margin So more revenue our first of XX% during we with to result each was XX.X% the as quarter Consolidated within progress are from a performance XX-XX margin contributing total higher-margin and strong of towards long-term milestone ODR both segment. segment continuing consolidated to reaching our or increasing segment, goal make good ODR split revenue. a gross the contribution the

GCR was ODR For gross while the quarter, XX.X%. margin was XX.X%

again, comments XX% regarding good and Mike's in gross to talking ago, Also year our on XX% very about in view, performance GCR to to to segments. GCR expand margin range, were in that So we A the we XX% increased margins. both XX%.

selection This projects. of to is result only a of focus but not the execution, on also continuing

depending we backlog. margins the timing projects quarter-to-quarter new, as mix As have older, and see newer projects on to lower-margin those a in expect fluctuate projects we of result, a of higher-margin

was increase stock-based an expense year $X.X included date stock approximately increase The $XX.X related due million, SG&A transition the million CEO of the to $XXX,XXX quarter from $XXX,XXX increase in compensation period. year-over-year. first $XX.X up ago to grant the in expense, and costs in price the million primarily in

be a the percentage we of of to the to continue noted be should SG&A expense stronger we expect consistent that SG&A run which half the of that expect higher call, to prior year, similar with and that a half, second year. our half cause would revenue XXXX total On a have as currently we in a Also in be year revenue case. the first full in the revenue first to as year the rate of XXXX, the last percentage our than to

flow. to Turning cash

million impact the during Solid execution quarter $X.X a the on $X.X working management cash had operating to flow of of in flow. and million. contributed first accounts cash working capital operating Changes capital positive

quarter. it see decrease $XX.X This $XX.X during to which XX. XXXX call. from December Offsetting of increase $XX and of last the included in a And cash AR million on in provided of we compensation. talked collecting settlement the receivable claims first Accounts quarter's cash million from the used coming great result as payable earnings included accrued was million, incentive million $X.X that payment was of accrued the of expenses accounts the about

component. The operating million cash capital of nonworking was remaining $X.X flow a

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

the target term the cash we million of of our continues primary annual paid and we the million. conversion $XX.X So term use debt of $X.X and end, $XX.X a down cash to for level. than The quarter debt in our came had quarter a at generate reduction be better cash million We quarter during balance of XX% debt. of

of of term end term an debt at additional April million. $XX paid balance of million at the Additionally, we our left an XX $X.X April, down outstanding debt. That

revolver to Our debt credit The million. we free an business $XX to to also is new strong and existing with and the balance end, yield sheet is our amendment amendment Wintrust. negotiated million expected to cash term quarter Subsequent continue extinguished our our our $XX agreement expanded flow. to

acquisition with to needing equity pursue flow, have program our to without free financing. cash coupled we we believe ample So turn our capital to

sponsor and a $XX.XX warrants. had remaining have we few inquiries regarding the warrants the merger $XX Lastly,

May of exercised, warrants As on basis for shares. XXX,XXX issuance a X, cashless approximately XX,XXX been have of a all share approximately net

in of As warrants a XXXX. of reminder, expire both of July the remaining tranches

Mike. back call to now the I'll hand

Jayme. you, Thank

revenue our for noted million adjusted EBITDA As $XX are range million. our in XXXX, press of year reiterating of the the of in to for financial in range to $XXX million million consists release, guidance total a $XXX we which $XX and

range. currently second half to us highlighted, upper exceed the end half the We which continue of would also expect are to to as Jayme guide results first the

much much engaging needs noted when always at spoke we That the I the as focus as are onset, conditions on when but systems - of our regardless know ago. is environment. same The two are macroeconomic change, will mission-critical have we and said, conditions industry the months customers. were they As

In these infrastructure demand capitalize. repairs and of there When will their upgrades. and an infrastructure the to eases, for avoid flex us repairs. to be be will defer and but allow they upgrades, owners capital can't we chain customers, will type existing many to building Limbach equipment can opportunity between expenditures, of execute supply positioned buildings believe immediate large This owners well

cases, they need In building operating with engineering their on improve and the are disciplined be are many to we and services repair readily to execute costs order strategy, expertise. available short, craft which provide approach a equipment continually their equipment. plans. In meantime, on-demand reduce to the are but and their In still we in efficiency monitor combines focused owners them energy and their buildings, looking executing of our able intensely solutions older to

customers work win to market market to are our is field, we partner. that from solutions we something Taking cement will an approach By indispensable as timely in a building delivering front-end we assets, value be to on verticals. the quality in our mission-critical focus confident ourselves will the end

we As we In this of excited do industry, of the we in thinking the some are return forefront drives new are a ways, this to this, we assets at a our be providing. of expect commensurate and way with to value earn metamorphic.

session. Q&A please operator, the open that, With

Lake from Street Capital. Rob Instructions] of [Operator Your first comes question Brown

Congratulations Good all progress. on morning. the

morning. Good

Thank you, Rob.

what's little a of color And like? focus the has and that sort on how but trending? the of strong demand been get on maybe good, results visibility but has overall wanted kind environment Just owner with environment, demand to and environment direct, been demand the obviously,

that systems. to of short-term Yes, sometimes on, look we mentioned towards of And at one work shift that think Rob. have customers in, each versus that these the focused you and vertical The the expenditures. sure markets our vertical mission-critical want really we're markets I is we're is long-term things And repair capital will if of make this kind still I demand environment one strong. really

is right And just have a high term little or of the of but a but Health short differently, markets quicker question of as of we a all vertical care, now, one more each they enough examples turn. term. them a this, operating And demand The demand is couple bit have still group long that of demand. diverse

a dependent, investing a mission-critical positioned The ourselves. mission-critical expenditures. or customers long because they're standpoint, long-term lot we're bit term direction. term, in little we that short of towards is a - From we're but manufacturing whether it maybe because data those customer positioned because capital they're hedged market, are center, well It's

be And then working it's lastly, lab, typically and going for It's but work. university, changed Ed life bit demand of for a - still if has a style you is look we less also to science, Ed, work little to the and on And Higher at lab if spec higher we're of it's market a maybe of a shell kind from there. kind fit-out corn tailored. that gone

mission-critical we can the our can't or a working until that equipment thing have o'clock. and down. down call biggest use they Tuesday, this teams is they really goes If example then X always they're are on internally. have Saturday equipment customers So that If not on go for to Monday And focused wait mission-critical.

we use as But a still strong. demand guide. So really simple is that

the Okay. that of on what's of What some effort, you the But term then some of near Great. Thanks more looking does And there. bit that's there? pipeline for where how at? about a talked the sort the you of status quite color for And parameters there. look? are M&A

have Marshall, And probably into really dialed Jake rest ago. six we different types fit, we Sure. are two two of want kind thing mold think XX really to the they the And number and or fit And I the I sure nine acquisitions completed most that The of of - months kind of pipeline refocused make number months is the cultural ago, a the acquisitions. is we one. think, of important we've We about into is strong. branches.

locations. footprint the that The type lot been then we second tuck-in focused is first right a from standpoint. which is also lot that a opportunity type we've on that new now - have a geography And of of we

So an share. market existing can we we a acquisition adjacent to add have that tuck-in business is there that

make So very two to to. patient a make We're to we're really those going that really want sure also fit. looking different types. we asking be culture at a them We've they're lot, been we sure and and

you turn Thank it everything. over. I'll for

you. Thank

Hutton. Your is next EF open. of Chip, Moore question your from comes line Chip

and start morning, a congrats the well. Good good to on as year

morning. Good

Chip. morning, Good

the to start ODR to good the wanted on about Congrats I as the well. path. year ask

I think about longer term. talked you XX%

there organic You've investment maybe obviously that and than XX gotten can how quicker the path? I closer covered thought. most side, to guess you quicker, that people do on what acquisitions, more you but helps

want think right. the organic side, this. a I past, plus But I've this Yes. And an reinforce It's from I and you're just of acquisitions mentioned combination in organic. to

We the in have years. gained customers five a ton four last of or

well point, this that the relationships count customer sure to and X,XXX.And kind of looking right over have picked criteria. we we Our this at we're really a make

there many provide so you that top and customers if we still locations. that's a provide, you to XX mission-critical, XX we're amount we're customers, provide per Again, customers of add focus is we're value really and focusing location, locations of basically, top your that them. looking equipment really top customers for availability service all for up that is on a is can't spend the attributes level high our the then have we focusing want long-term pick your make sure And fits XX resources on our that and and the tremendous

thing, I've interesting. I last five weeks, been too, - or of visiting customers And the the and it's was that in bunch four other a

We little and this have example relationships And change a for a I of for months, lot talked from to customer gross in calls script, could lot of proactive. be revenue be bit and we're just of getting as doing trying the a and our nine could reactive an or but about out we of that, profit reactive there. we - a six to

more we and that going to our embed to ourselves, them long-term But challenging And information, able meet think of the I really we're with look side than to from really are. our to okay, the with the and sit direct we're that be owner not this where able received that side of really that's spend be a even say, but from data you take from also going there's the co-author where them. to grow at margins. been the it, That's plan only you've with customer, said, teams customer, revenue a more

it's listening plan. and not spend of summarize, just So really focusing that list, making just our co-authoring it's customer it's that long-term reactive to kind sure to them a a

a number factors. on it's super it. different So of focused We're really

All focused and also but we're there, really to marketing have sales around too. way a direct. of are And we long getting our owner go, efforts

the the it, the Awesome, thanks backlog take if outperformance Mike. of stronger QX GCR more Just side for one in appreciate project obviously, mind activity And Thanks. could in more half? maybe on on that to margin color, sort the and in I in near-term ask mix near second with anything term. in outlook

one different selective really Yes. No of problem the - so from bunch we're a and GCR allows a as - GCR that have us XX-XX perspective. be to approach from it helped But beyond, margin of - to really going factors perspective, us. there's we've a

us to allows selective, being really our raise So margin.

are It different going the getting recommending now piece where second a that use The position it of forward. we Limbach. a they is us owner in position is puts

fits margin. really So the strategy a the there. opportunity think into still importantly perspective, really, - But we from there's margin the

really that way the obviously, changes add, and risk that our as well, from strategy our fact on focus emphasizes And - place, needs us, management teams in we've when are have building we're be fact owners. approach the they to would trying that a and we that have selective. times execute value all to the I continue there to And We're margin combined are processes that our have proposition well. to trying changes us. have it perspective can the where with too, put And and too. they to really

Fantastic.

again. Thanks Okay.

open. question next your ROTH Capital. comes from of is Sweeney Gerry, Your Gerry line

morning, my thanks taking call. and Mike, Good Jayme for

Gerry. morning, Good

questions presentation, about back, really help a mentioned around data-driven and offerings I ODR, - right? ODR those proactive. that segment, and circle proactively just more opportunities in active a highlighted become assume to Mike, wanted even think of a as the to you you couple Just subscription would getting

assets - basis - we more exactly well? questions a Or about curious go-forward utilization? support look more to your ground. I'm equipment need the should have what How then including we really the be do how need So just sales? that become at you growth? secondarily, are just And as is you do on you do Do enough to proactive? on

us maintain front you're have of in in mean, relationship is The have right. and grow get - it the allows of I order to the second customers. relationship, value. we Yes. part we relationship to provide But always to the to

from service to of trying and caveat plan. a work just asset for that we we'll equipment more would a side So an That's we're of - translate history. I data perform customer, of information and make information into perspective, history, compile also tickets, we'll sure kind a long-term that one to

from equipment that that challenged is you Also are making is I've you are that the It's providing And I give if how provide from what that And tell to another customer on simplest that's is automation information as repair really kind even avenue the utility That's on data, really of, for of where gone system and feedback that teams. we've you perspective. point focused simplified analytics our continue platform years, they us into - internally performed? the that piece Will perspective, that of possible. they two - plays can you it's thing a we question Are sure equipment to customer trust - us? the and just okay, building discussion we're would to a a data. equipment? out that the spend as

to gather in the in is allowing we're way now. a perspective, that but to that So ourselves data really we right that position go spot have long us to

think more development as business we from talk going the return are account and are from to that switching we chain asked to further managers other more, well That's sure more they customer those focused our internally, an even perspective, that to perspective, and managers. asset up new teams questions. people we different getting that make continue investment. a is of account just a really our and piece too, want I sure to And big to question And on the on can from forward, we're make answer positioned

some in also figure a I internally, look promoting well, X. but hire we development those key some is got primary we from mean to it's most in always And or its business lot too. to there's a we've managers. our if simplistic So assets account within externally have perspective, out sprinkling we managers account of new - I are think focus as talented

So as just from and a business with these shift customers. extracting as to new cementing can really as much we ourselves

here contact So I sort sounds assessment? early you've sounds of mean, lots mean, the runway. is we're like still ODR, growth of the your you within some base potential still at existing the innings it of even had on with I of we're the of great customer even growth that of base fair your sort end a - of in so, that day, or but customer - had type It sort

agree. I completely Yes,

even data, back. - going from can and and still needs. give and that and perspective, staff and we're to I prior have trying I provide now, And meet is think kind But your forward. are a we then where them, question, gather on get making those putting have that analyze they're of the foundation that good data we a us customers, our a solutions right in point information sure good to position trusting a we're that to think to to data We it we - focusing that understanding our

forward. foundation to we the - a as able we're our that's going put mix And continue to And still in yes, think our position innings. kind shift going a continue really modify ultimately in from offerings perspective. early it's us But just to of we're to I

this even do of game of you moving This se. you is engaging the against were a per when side with Or this ODR shift Who you another are competing entity? business even account sort compete or - on the you're doing side your Limbach that against customers some management for into.

the in once say happen. again, in need is the it's a that lacking. I - because, that's a and But have while, kind maintained, customer time, It's our Every whether systems would upgrades provider that's - be need there's they they the have we'll would I majority to and is that check us. provider. a right customer and of box have say And for to a primarily customer serviced of

have. they typically, So

and Now giving that the provider them that I focus? services the really where quality Well, traditionally think in. is that's come we

slide we'll we're And touches couple thing a different them, you, that and going kind this still in we or but deck to and campus different a is into be would share. a these got they'll three embedded too, - of the sometimes one pie this in a tell market upon we've kind chart pick an of have an for that customer it's there's I each provider. relationships and - opportunity other a investor So in on the use people, may existing have two even are customer still on another different of up

So be traded some our a contractor. of of mechanical OEM Siemens be Johnson. other an publicly From it some trained just It the lot times, local the contractors. of perspective, will could

an directly buy equipment there's and do they compete those services Sometimes provide controls engineering it could be them, firm. for - also and but we

it when manager again, way engineering we is this as well, talking look but the we well, can And can install occasionally, at perspective. we're then And provide solutions too. work our a as we to property customers from

are to more still that a making another provider X, teams on customer, market we're So be - focused really as with and our share there's it's be with situational if in very and well, the there'll too. even have customer a sure or sometimes

compared provider. may a is proposition we one our there. And solid make that that to we're providers sure matter It's competing, to the So most of us want time, ourselves. if a positioning of the is be of there value

quarter I'll and really And Got appreciate helpful. line Super a it. it. back nice jump in congrats, Thanks. and

Thanks Gerry.

you. Thank

call team I time, turn there over management any the no would closing the for like now to to this questions. remarks. are further At

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

to If the please out additional group. reach questions, you equity have any

Looking forward the in and speaking to you. again Thank all best. August

you, concludes attending. This presentation. everyone, for today's Thank