Limbach Holdings Inc (LMB) Q2 2024 Earnings Call Highlights: Strategic Shift Drives Margin ...

GuruFocus News
4 min read

In This Article:

  • Total Revenue: $122.2 million, a decline of 2.1% from $124.9 million in Q2 2023.

  • ODR Revenue: $82.8 million, an increase of 40.8%.

  • GCR Revenue: $39.5 million, a decline of 40.3%.

  • Total Gross Profit: $33.5 million, an increase of 17.5% from $28.5 million in Q2 2023.

  • Total Gross Margin: 27.4%, up from 22.8% in Q2 2023.

  • Adjusted EBITDA: $13.8 million, up 16% from $11.9 million in Q2 2023.

  • Adjusted EBITDA Margin: 11.3%, up 180 basis points from 9.5% in Q2 2023.

  • Net Income: $6 million or $0.50 per diluted share, up from $5.3 million or $0.46 per diluted share in Q2 2023.

  • Free Cash Flow: $10.9 million, an increase of 23.8% from $8.8 million in Q2 2023.

  • Cash and Cash Equivalents: $59.5 million at the end of Q2.

  • ODR Backlog: $177.7 million, up from $147 million at December 31, 2023.

  • GCR Backlog: $151.6 million, down from $186.9 million at December 31, 2023.

Release Date: August 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Limbach Holdings Inc (NASDAQ:LMB) achieved a record second quarter total gross margin of 27.4%, up from 22.8% in the prior year.

  • The company successfully increased its Owner-Direct Relationships (ODR) revenue to 67.7% of total revenue, up from 47.1% last year.

  • ODR revenue grew by 40.8% to $82.8 million, reflecting the company's strategic shift towards higher-margin business.

  • Adjusted EBITDA for the second quarter increased by 16% to $13.8 million, with a margin expansion to 11.3%.

  • Limbach Holdings Inc (NASDAQ:LMB) increased its full-year revenue and adjusted EBITDA guidance, indicating confidence in continued growth and profitability.

Negative Points

  • Total revenue for the quarter declined by 2.1% to $122.2 million, due to the strategic shift away from General Contractor Relationships (GCR).

  • GCR revenue decreased by 40.3% to $39.5 million, reflecting the company's intentional reduction in this lower-margin segment.

  • SG&A expenses increased by approximately $2.8 million to $23.2 million, driven by recent acquisitions and higher payroll costs.

  • The company's acquisition pipeline, while strong, has shown limited progress to date, indicating potential delays in expansion plans.

  • Despite the strategic shift, the company still faces challenges in balancing its GCR and ODR revenue mix to optimize profitability.

Q & A Highlights

Q: What are the current strong verticals for Limbach Holdings, and how do they align with the company's strategy? A: Michael McCann, President and CEO, highlighted that the company's focus on mission-critical verticals like healthcare, industrial manufacturing, data centers, and higher education is paying off. These sectors require uninterrupted operations, which aligns with Limbach's strategy of providing maintenance and upgrades to existing infrastructure. The healthcare sector, in particular, shows significant deferred maintenance needs, which could lead to future capital projects.

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