Limbach (LMB) 10 Aug 232023 Q2 Earnings call transcript

Greetings and Welcome to the Limbach Holdings Second Quarter 2023 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jeremy Hellman of the Equity Group. Thank you Please go ahead.

Thank you, very much, and good morning, everyone. its for XXXX XX, the announced its and XXXX. Holdings XX-Q Form period Limbach second results quarter filed Yesterday, ended June investor website at The that the like also www.limbachinc.com. section presentation updated Investors company company on is the to of available would an note

review refer to select encourages to its in will during today's presentation Management and entirety. call slides investors the

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

projections or Today's contain forecasts, differ statements, from earnings actual the and may statements discussion results similar call. may forward-looking during made any

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

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

morning, Good thanks us. joining for everyone welcome and

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

continued quarter, and During produce to of we execute our the improved second quality strategy earnings.

plan continues each which but on capable three to primary of high results, really value when for of drivers, positive provide they company. our center is combined, a strategic pathway Our growth

drivers segment mix. are first The

coming our segment. ODR We continue to of aggressively shift our revenue from percentage our mix towards a work higher

continues profile, long favorable opportunity margin segment the GCR be in customers. risk relationships ODR margin our continues main While, to strengthen with and its focus progress to to profile solid more the improving our make the profile, improvement term through in

to typically at of projects we local value that consolidated margin. natural to work large customers reinforcing message are proportion targeting In than should looking revenues managing lower while our deliver our sell to attributed By margins a our rather which business, quality ODR gross They be to for lift high constantly provides this always the high margins. leadership. in increasing there's the

respect segment can as a quarter the this shift. opportunity. should to of mix they XX% margin of our segment really case gross achieve XX% they of instead this That's XX%, driver biggest the Anytime in was the pursue

The offerings second customers. driver is for our evolved providing

value focused want customers. on our on to drive partner developing that be trusted are to especially comes proactive physical and benefits the for the facility delivering enable return intensely to to added recommendations their solutions maximize and asset We them We when it investments. long term making needs, their all

do. we to higher that, do work we expect earn we As for margins the

our third strategic acquisition The driver's plan.

both large better and bolt-on their scale across market acquisitions, pursue continue to them executed and serve customers acquisitions Properly partner us want regional the larger expand a to to share bring single allow that relatively new service back business, tuck-in new We acquisitions footprint. into to geographies. offerings

large acquisition announced several Following down the federally right our Industrial, in very which ACME is a leadership us of Valley Authority, owned and in relationships. brings which TVA, utility which significant market, Jake customer or with the we the the from Tennessee acids. includes position hydroelectric about subsidiary. hydroelectric quarter ACME is Tennessee, Marshall We're based excited their is end, new Chattanooga, road end

and acquisitions Marshall market we're end pick to new in leverage And positioning. share. a represents Limbach. with the Combined we've to looking new tuck-in on to for tack additional that This market up able Jake been Chattanooga, geography

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

filed our release Thanks, in Yesterday, extensive provide which Form we financials. earnings press XX-Q, detail our Mike. of

some So focus on I will key highlights.

GCR XX.X% XX.X% the year. ODR up quarter essentially of ago, ODR from XX.X%, of the flat the growth revenues segment accounted top in revenue, line statement X.X%. while income consolidated during last consolidated up during the was resulting Starting total quarter, for revenue a was with year second from

quarter the strong see during overall to in primarily in both gross segments. margin was performance Consolidated increasing our and execution continue quarter. margin the We solid due XX.X%, margin segment from to higher second ODR contribution

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

$XX.X quarter from million from million These year SG&A The million increase was year in expense during SG&A from the expense in of modestly quarter first the and the down period. in up the $XX.X $XX.X ago million was related by $XXX,XXX partially offset of expenses a in stock-based rent $X.X ago compensation increases primarily increase expenses. related and in payroll a related decrease expense. period increases in $XXX,XXX to were

expense run As rate a SG&A as we year expect as a we call total full on quarter, to of XXXX. last percentage XXXX revenue have noted our annual similar

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

flow As noted GCR focus better process, our provide project are we operating previously have a selection profile. cash to and expected ODR tightened

on strong the and receivable quarter provided $XX.X the operating as million cash a a $XX.X impact cash with accounts operating ago. Our capital million collections of the accounts during to compared quarter. execution of year positive result contributed second in in had Changes $XX.X million strong of flow of $X.X a cash working flow million

operating the payable. component. of was a we accounts remaining capital used of million some non-working The $X.X million of increase cash in $X.X flow Offsetting cash

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

came the level. then in for annual quarter target the conversion better XX% Cash

be program. use the we reduction of continues of the our to generate cash and of funding primary the debt Our acquisition

cash acquisition million Subsequent on ACME. cash of capital ample our any without we we With expected pursue hand end, our utilized to just $X acquisition over current and the to needing we flow, equity cash of believe balances free to our program have financing. quarter finance

all XXX,XXX common our warrants the price resulting sponsored stock. of issuance second basis, exercised $XX during exercised of quarter, XXX,XXX Lastly, a shares on were of cashless in the the approximately

XXX,XXX, addition $XX.XX XXX,XXX the issuance merger on as quarter stock. during result warrants warrants, total, in a common of approximately our resulting of during nearly were exercised cashless approximately In In XXX,XXX XX,XXX basis were common roughly price second of the shares the of quarter, shares exercised of stock issued a exercised.

warrants of in on issuance the shares Of approximately XX, expiration of June warrants those outstanding their additional remaining XXX,XXX exercised to merger prior XX, in July. common at resulting the July stock approximately XXX,XXX our of were

the This share had on shares exercised. cover count million we X, XX all be of located outstanding can August of As approximately of Form the XX-Q. inclusive our of warrant

now hand I'll it Mike. back to

you, Jayme. Thank

of from half EBITDA on project mix, our timing first segments Our benefited to margins guided adjusted margin ranges. continue investors coming we And execution. can vary quarter, that in and in ahead remind both quarter based gross to

$XX strategy path $XX EBITDA for increasing have million it everyone release, those a in we be longer-range of push want are to to not be our will a higher rapid our noted, to business the for at previously. million press straight time we that With factors $XX mind, million as But to for range remind million, As guidance XXXX to necessarily adjusted margins. $XX one, continues will in our necessarily noted from up the change. same the I nor

adjusted strong of half. for along contribution our a guidance upward revision of first during the function the recently performance very from second EBITDA with ACME Industrial half to is small business the our The year, a acquired the

do the contributor to will We a start gradually Limbach, to business. into integrated been meaningful way become expect we bottom the more once it's ACME line and

also want out supply I equipment our that point when entered business and availability. normal comes to a appears to to have new it chains

which of in revenue total the million revenue are this for of to guidance reiterating $XXX Given range for year consists dynamic, XXXX, million. $XXX we our the

be our that reiterating guidance $XX $XX in slide $XXX additional to or and then, expectation remind investor million. million, also between for $XXX modeling XX, will adjusted our we're that presentation our EBITDA and million want between includes million Summarizing everyone considerations. XXXX I revenue

be strong. and vertical Recapping the mission continues critical to very business demand conditions, markets our

shifted have to As improve greater to position customers. focus with customers these even pure an we've our market we our seen opportunity

trends deck within verticals. emphasizes these and slide industry We have segment a the highlights in opportunity have that we our the investment per

In customers. order demand to continue management our account to key we daily of staff to internal our positions that advantage to shift at take their station

our to aligned is the ever-evolving the business. and staff adaptable of needs strategy Our to

to One overall people of company the our key dedicated so able both to shift reasons been that to quickly success. we've and that talented are due is amazing

the to larger capital projects and building with projects focused regards helping infrastructure these owners understanding finish their to we're directly line. on working get In needs, across very

design and group an We investment. provide have are engineering on analysis utilizing focused to appropriate on our that return solutions engineering

has include a outs. projects but to capital new to adjusted challenge, equipment norm. the entire large the of Most times continue these industry Lead be switch

time demand conditions supply since equation fixed. as remains will long As the not strong, ease take the is for of supply side some it to

to and represents keep select to operational. assets, fact the especially dedicated need projects building we need demand. to those certain facilities mission-critical have we're those may cases, In customers, able to to capital due with services. provide to of their to Due a another in baseline defer That emergency certain continue on-demand group business. durable owners of funding owners personnel decide a Building

supply this CapEx short-term We which tight chains to with All ultimately, believe develop good to work and both closely results keeping is continue long-term these for strong in owners OpEx Limbach. demand and we plan.

media a analysts, on it's to our investment a social customer end not added do. highlight of we page retail channels. see presentation moving facing I what we've from Before questions we business, to Because are our sometimes to the hard want our regarding toward

has and Q&A an building been take share effort With that in a work follow us showcase and our session. up to presence operator, our encourage the please We open look, social team marketing projects Our at content. to media services. everyone hard

Capital is Instructions] Rob Brown Today's Lake Markets. go [Operator you. Please Thank ahead. of first Street coming question from

demand little business? it's direct on but repair sort of you're are I'm the growth? color of morning. Wanted is demand more you seeing Congrats business, maintenance Good and nice the most seeing areas is kinds and sure quarter. What the and it or on it a both projects growth the ODR

try morning, both right to short-term, There's a needs planning. to Good the tremendous it. are The on sides definitely keep continuing long-term Rob. our is balance of between question. maintenance and and short of systems Thanks customers their lot running seeing we're answer now. A deferred for up opportunity

work they've met different And week consultative this really their to as make because proactively patients. them hospitals there's as these a take their that it's of there's we interesting to groups. long-term of sure And or they a definitely an to to with So healthcare I've and in that working example, care four got to their we're clients with short-term balance telling and partner. sure manner take also avoid a but care we them that make issues needs, need ways have

is of a it's journey It particular own their mix their between But business. So definitely their definitely the both. opportunity at, where client both. and in needs depends

great. over just give toward time? Where going then see you'll Okay, sense a strong you growth, on you've getting where pretty where Or some gotten terms you're like to do And on see made in at with that you've targets? margin EBITDA be growth do to you EBITDA of need feel and your revenue margins. sort of progress you in

very quality now. we're Yeah, on right focused

there's mission been is a our locations core vertical critical, where for are now, working on customers have at we've the to one top super the of each the our X markets, right working they and where it's demand, disciplined environment customers. six to the strategy. focused strong. within and of durable demand same that really XX resilience, time, the us clients And And So super

out tremendous But focused demand So amount there. we're on quality. there's a the of super

other term that short And of term. I sure that we're OpEx the advantage think we make accordingly the to thing can just to long in trying we staff is take too, make sure the

making So for early in -- very on up for it's demand we're focused these quality, a journey. we're very customers. durable We're sure our and setting ourselves

you. Thank

like Mr. for I'd comments. back it over you. time, to this closing to Thank At turn McCann

Limbach. in you, for everybody, Thank interest continued

to additional any you The Jeremy Thank reach have questions, you everybody. Group. Equity please If Hellman out at

concludes this gentlemen, and Ladies today's event.

your You this the at disconnect may or rest log time, and day. off of lines webcast the enjoy your