8-K: Limbach Holdings Reports Record Fourth Quarter and Full Year 2024 Results, Driven by ODR Growth and Strategic Acquisitions

Limbach Holdings announces record full-year net income and adjusted EBITDA for 2024, fueled by growth in Owner Direct Relationships (ODR) revenue and strategic acquisitions.

Summary

• Limbach Holdings, Inc. reported its financial results for the fourth quarter and full year ended December 31, 2024.
• The company achieved record full-year net income of $30.9 million, or $2.57 per diluted share, compared to $20.8 million, or $1.76 per diluted share in the previous year.
• Adjusted net income also reached a record $43.2 million, or $3.60 per adjusted diluted earnings per share, compared to $29.2 million, or $2.48 per adjusted diluted earnings per share in 2023.
• Full-year adjusted EBITDA was a record $63.7 million, a 36.1% increase from $46.8 million in the prior year.
• Owner Direct Relationships (ODR) revenue increased by 31.9% to $345.5 million, representing 66.6% of total revenue.
• Total gross profit for the year was a record $144.3 million, up 20.9% from $119.3 million.
• The company completed two strategic acquisitions during the year.
• For the fourth quarter, Limbach reported record net income of $9.8 million, or $0.82 per diluted share, compared to $5.2 million, or $0.44 per diluted share in the same quarter of the previous year.
• Fourth-quarter adjusted EBITDA was a record $20.8 million, a 65.5% increase from $12.6 million.
• The company estimates revenue of $610 million to $630 million and adjusted EBITDA of $78 million to $82 million for 2025.

Sentiment

Score: 9

Explanation: The document presents a highly positive outlook with record financial results, strategic acquisitions, and strong future guidance. The company's focus on high-margin ODR relationships and disciplined capital allocation further contribute to the positive sentiment.

Positives

• Record full-year net income of $30.9 million, or $2.57 per diluted share.
• Record adjusted net income of $43.2 million, or $3.60 per adjusted diluted earnings per share.
• Record full-year adjusted EBITDA of $63.7 million, up 36.1% from $46.8 million.
• ODR revenue increased 31.9%, or $83.5 million, to $345.5 million accounting for 66.6% of total revenue.
• Record full-year total gross profit of $144.3 million, an increase of 20.9% from $119.3 million.
• Completed two strategic acquisitions.
• The total gross profit percentage increased from 23.1% to 27.8%, mainly driven by the mix of higher margin ODR segment work, the Company becoming more selective when pursuing GCR work, and net material gross profit write-ups.
• Net cash provided by operating activities increased to $19.3 million as compared to $13.9 million.

Negatives

• Total revenue only increased by 0.5% year-over-year.
• General Contractor Relationships (GCR) segment revenue decreased by 31.9%, or $81.1 million, to $173.3 million.
• SG&A expense increased approximately $9.8 million, to $97.2 million, compared to $87.4 million.
• Net cash provided by operating activities was $36.8 million as compared to $57.4 million in the prior year primarily due to changes in working capital.

Risks

• The company's forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.
• The company's business could be negatively affected by health crises or outbreaks of diseases, such as epidemics or pandemics (and related impacts, such as supply chain disruptions).

Future Outlook

The company estimates revenue of $610 million to $630 million and adjusted EBITDA of $78 million to $82 million for 2025.

Management Comments

• Michael McCann, President and Chief Executive Officer of Limbach Holdings, said that in 2024, the company produced record gross profit, record net income and record adjusted EBITDA by expanding and strengthening customer relationships in six verticals.
• Management believes they still have significant opportunity to grow market share while growing their bottom line.
• The company's current goal is to produce $8 million to $10 million in adjusted EBITDA per year through acquisitions.

Industry Context

Limbach's focus on mission-critical MEP infrastructure in existing buildings aligns with the growing demand for building system solutions and the need to revitalize aging infrastructure. The company's strategy of shifting towards ODR relationships and expanding its service offerings positions it well to capitalize on these trends.

Comparison to Industry Standards

• It is difficult to directly compare Limbach to industry standards without knowing the specific peer group they benchmark against.
• However, companies like EMCOR Group and Comfort Systems USA also operate in the building systems and mechanical services sector.
• Limbach's adjusted EBITDA margin of 12.3% for 2024 is a key metric to compare against these peers to assess its profitability and efficiency.
• The company's focus on ODR relationships is a differentiating factor compared to companies that primarily focus on general contractor relationships.

Stakeholder Impact

• Shareholders will benefit from the increased profitability and growth potential of the company.
• Employees may see increased opportunities for career advancement and development.
• Customers will benefit from the company's expanded service offerings and expertise.
• Suppliers may see increased demand for their products and services.

Next Steps

• The company will hold a conference call on March 11, 2025, to discuss the results.
• Limbach will continue to execute its three-pillar strategy to scale the business.
• The company will focus on expanding its geographic footprint and market share through strategic acquisitions.

Key Dates