Revenue from Owner Direct Relationships
Segment (“ODR”) up 50.3% year-over-year
ODR Segment Accounted for Approximately
54.4% of Consolidated Gross Profit
Conference Call Scheduled for 9:00 am ET on
May 11, 2022
Limbach Holdings, Inc. (Nasdaq: LMB) today announced its
financial results for the quarter ended March 31, 2022. The company
reported consolidated revenue of $114.8 million, which was an
improvement of 1.3% compared to the first quarter of 2021. Gross
margins improved to 16.0% from 15.2% for the first quarter of 2021
and drove a $1.1 million increase in gross profit year-over-year.
ODR segment revenue accounted for 37.4% of consolidated revenue in
the first quarter of 2022 while contributing approximately 54.4% of
consolidated gross profit. We believe that the continued shift in
revenue mix to the ODR segment provides for greater revenue
stability and higher gross margins.
Charlie Bacon, Limbach’s President and Chief Executive Officer,
said, “Our first quarter 2022 results demonstrate strong execution
in transitioning the business model toward a greater focus on
serving the needs of facility owners. Year-over-year, we generated
significant growth in revenue and gross profit dollars in the ODR
segment, while also driving stronger gross margins in the GCR
segment due to improved project selection and execution. While the
first quarter has historically been the company’s weakest quarter
seasonally, profitability nonetheless improved year-over-year. As
we’ve previously communicated, we continue to believe that business
activity will be back half-loaded similar to what we saw in 2021.
The demand picture in our target verticals, such as healthcare,
data centers, R&D and industrial, continues to be strong, with
project sales well ahead of where they were at this time last year.
ODR backlog grew from $98.0 million to $106.9 million at the end of
the quarter, up 9.1% from December 31, 2021 and 102.3% from March
31, 2021. We currently expect the majority of this backlog will be
recognized as revenue this year.”
Mr. Bacon continued, “The ODR segment continues to account for
an increasing proportion of total revenue, and an even greater
proportion of gross profit. In the first quarter, the ODR segment
contributed more than 50% of total gross profit for the first time.
In addition to the long-term benefits we have articulated regarding
this strategic shift in our business, the emphasis on ODR is
serving us well in the current, constrained supply chain
environment. For example, we’re continuing to see building owners
focus more of their capital investment on maintaining existing
equipment and mechanical systems, given the currently longer lead
times for new equipment. Our growing maintenance base has us
well-positioned to capitalize on this dynamic given the associated
pull-through work. Time & Materials work, although a small
percentage of our ODR segment revenue, is among our most profitable
lines of business.”
Mr. Bacon concluded, “From an operational perspective, we
believe the steps we have taken to de-risk the business have been
successful. We are also encouraged by sales activity that is pacing
well-ahead of where it was at this time last year. This success
gives us confidence to introduce 2022 financial guidance for which
we expect consolidated revenue to be in a range from $510 million
to $540 million with Adjusted EBITDA of between $25 million and $29
million.”
The following are results for the three months ended March 31,
2022 compared to the three months ended March 31, 2021:
- Consolidated revenue was $114.8 million, an increase of 1.3%
from $113.3 million. GCR segment revenue of $71.9 million was down
15.2%, while ODR segment revenue of $42.9 million increased by
$14.4 million, or 50.3%.
- Gross margin increased to 16.0%, up from 15.2%. On a dollar
basis, total gross profit was $18.3 million, compared to $17.2
million. GCR gross profit decreased $1.0 million, or 11.0%, largely
due to lower revenue despite slightly higher margins and total net
gross profit write-downs of $1.4 million compared to $0.5 million
in the prior year quarter. ODR gross profit increased $2.1 million,
or 27.4%, due to an increase in revenue, despite lower margins
because of revenue mix within the segment.
- Selling, general and administrative expenses increased by
approximately $1.6 million, to $18.7 million, compared to $17.1
million. This increase included costs incurred by the newly
acquired Jake Marshall entities, an increase in travel and
entertainment related expenses, and an increase in costs associated
with professional fees, partially offset by a decrease in payroll
related expenses. As a percent of revenue, selling, general and
administrative expenses were 16.3%, up from 15.1% in the first
quarter of 2021.
- Interest expense, net was $0.5 million compared to $1.3
million. This significant decrease was due to our refinancing of
the 2019 debt facilities in February 2021, replacing them with debt
facilities that carry a lower cost of financing, as well as a lower
overall level of indebtedness.
- Net loss for the first quarter of 2022 was $1.5 million as
compared to $2.3 million in the first quarter of 2021. Net loss per
share for both basic and diluted decreased to $0.15 as compared to
net loss per share for both basic and diluted of $0.25 in the prior
year. The decrease in net loss was primarily driven by a prior year
$2.0 million pre-tax loss on early debt extinguishment in
conjunction with the refinancing of the 2019 debt facilities.
- Adjusted EBITDA was $3.4 million for the first quarter of 2022
as compared to $2.1 million for the same period of 2021, an
increase of 65.5%. The increase in Adjusted EBITDA was primarily
attributable to the $1.1 million increase in gross profit.
- Net cash used in operating activities was $3.0 million as
compared to $17.4 million. The increase in operating cash flows was
primarily attributable to a decrease in our underbilled position
and timing of payments.
Balance Sheet and
Backlog
At March 31, 2022, we had cash and cash equivalents of $18.2
million. We had current assets of $210.0 million and current
liabilities of $141.6 million at March 31, 2022, representing a
current ratio of 1.48x compared to 1.49x at December 31, 2021.
Working capital was $68.4 million at March 31, 2022, an increase of
$5.2 million from December 31, 2021. At March 31, 2022, we had $9.4
million in borrowings against our revolving credit facility and
$3.3 million for standby letters of credit, and carried a term loan
balance of $33.0 million.
Total backlog at March 31, 2022 was $447.6 million as compared
to $435.2 million as of December 31, 2021. At March 31, 2022, GCR
and ODR segment backlog accounted for $340.7 million and $106.9
million of that consolidated total, respectively.
2022 Guidance
Limbach announces the following guidance for FY 2022:
Revenue
$510 million - $540 million
Adjusted EBITDA
$25 million - $29 million
With respect to projected 2022 Adjusted EBITDA, a quantitative
reconciliation is not available without unreasonable effort due to
the high variability, complexity and low visibility with respect to
taxes and other items, which are excluded from Adjusted EBITDA. We
expect the variability of this item to have a potentially
unpredictable, and potentially significant, impact on future GAAP
financial results.
Conference Call Details
Date:
Wednesday, May 11, 2022
Time:
9:00 a.m. Eastern Time
Participant Dial-In Numbers:
Domestic callers:
877-407-6176
International callers:
201-689-8451
Access by Webcast
The call will also be simultaneously webcast over the Internet
via the “Investor Relations” section of Limbach’s website at
www.limbachinc.com or by clicking on the conference call link:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=yh0Mwq1h.
An audio replay of the call will be archived on Limbach’s website
for 365 days.
About Limbach
Limbach is an integrated building systems solutions firm whose
expertise is in the design, modular prefabrication, installation,
management and maintenance of heating, ventilation,
air-conditioning (“HVAC”), mechanical, electrical, plumbing and
controls systems. Our market sectors primarily include the
following: healthcare, life sciences, data centers, industrial and
light manufacturing, entertainment, education and government. With
22 offices throughout the United States and Limbach's full
life-cycle capabilities, from concept design and engineering
through system commissioning and recurring 24/7 service and
maintenance, Limbach is positioned as a value-added and essential
partner for building owners, construction managers, general
contractors and energy service companies.
Forward-Looking
Statements
We make forward-looking statements in this press release within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements relate to expectations or
forecasts for future events, including, without limitation, our
earnings, Adjusted EBITDA, revenues, expenses, backlog, capital
expenditures or other future financial or business performance or
strategies, results of operations or financial condition, and in
particular statements regarding the impact of the COVID-19 pandemic
on the construction industry in the first quarter and future
periods, timing of the recognition of backlog as revenue, the
potential for recovery of cost overruns, and the ability of Limbach
to successfully remedy the issues that have led to write-downs in
various business units. These statements may be preceded by,
followed by or include the words “may,” “might,” “will,” “will
likely result,” “should,” “estimate,” “plan,” “project,”
“forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,”
“continue,” “target” or similar expressions. These forward-looking
statements are based on information available to us as of the date
they were made and involve a number of risks and uncertainties
which may cause them to turn out to be wrong. Some of these risks
and uncertainties may in the future be amplified by the COVID-19
outbreak and there may be additional risks that we consider
immaterial or which are unknown. Accordingly, forward-looking
statements should not be relied upon as representing our views as
of any subsequent date, and we do not undertake any obligation to
update forward-looking statements to reflect events or
circumstances after the date they were made, whether as a result of
new information, future events or otherwise, except as may be
required under applicable securities laws. As a result of a number
of known and unknown risks and uncertainties, our actual results or
performance may be materially different from those expressed or
implied by these forward-looking statements. Please refer to our
most recent annual report on Form 10-K, as well as our subsequent
filings on Form 10-Q and Form 8-K, which are available on the SEC’s
website (www.sec.gov), for a full discussion of the risks and other
factors that may impact any forward-looking statements in this
press release.
LIMBACH HOLDINGS, INC. Condensed
Consolidated Statements of Operations (Unaudited)
Three Months Ended
March 31,
(in thousands, except share and per
share data)
2022
2021
Revenue
$
114,822
$
113,344
Cost of revenue
96,482
96,115
Gross profit
18,340
17,229
Operating expenses:
Selling, general and administrative
18,734
17,145
Amortization of intangibles
399
104
Total operating expenses
19,133
17,249
Operating loss
(793
)
(20
)
Other (expenses) income:
Interest expense, net
(486
)
(1,264
)
Loss on disposition of property and
equipment
(36
)
(86
)
Loss on early termination of operating
lease
(817
)
—
Loss on early debt extinguishment
—
(1,961
)
Gain on change in fair value of warrant
liability
—
14
Total other expenses
(1,339
)
(3,297
)
Loss before income taxes
(2,132
)
(3,317
)
Income tax benefit
(616
)
(1,035
)
Net loss
$
(1,516
)
$
(2,282
)
Earnings Per Share
(“EPS”)
Loss per common share:
Basic
$
(0.15
)
$
(0.25
)
Diluted
$
(0.15
)
$
(0.25
)
Weighted average number of shares
outstanding:
Basic
10,420,690
9,218,087
Diluted
10,420,690
9,218,087
LIMBACH HOLDINGS, INC. Condensed
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per
share data)
March 31, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
18,066
$
14,476
Restricted cash
113
113
Accounts receivable (net of allowance for
doubtful accounts of $270 and $263 as of March 31, 2022 and
December 31, 2021, respectively)
108,969
89,327
Contract assets
75,543
83,863
Income tax receivable
161
114
Other current assets
7,143
5,013
Total current assets
209,995
192,906
Property and equipment, net
20,759
21,621
Intangible assets, net
16,508
16,907
Goodwill
11,370
11,370
Operating lease right-of-use assets
17,719
20,119
Deferred tax asset
4,407
4,330
Other assets
245
259
Total assets
$
281,003
$
267,512
LIABILITIES
Current liabilities:
Current portion of long-term debt
$
13,222
$
9,879
Current operating lease liabilities
3,762
4,366
Accounts payable, including retainage
63,734
63,840
Contract liabilities
34,444
26,712
Accrued income taxes
—
501
Accrued expenses and other current
liabilities
26,428
24,444
Total current liabilities
141,590
129,742
Long-term debt
34,220
29,816
Long-term operating lease liabilities
14,787
16,576
Other long-term liabilities
3,535
3,540
Total liabilities
194,132
179,674
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Common stock, $0.0001 par value;
100,000,000 shares authorized, 10,423,068 issued and outstanding as
of March 31, 2022 and 10,304,242 at December 31, 2021
1
1
Additional paid-in capital
85,553
85,004
Retained Earnings
1,317
2,833
Total stockholders’ equity
86,871
87,838
Total liabilities and stockholders’
equity
$
281,003
$
267,512
LIMBACH HOLDINGS, INC. Condensed
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
(in thousands)
2022
2021
Cash flows from operating
activities:
Net loss
$
(1,516
)
$
(2,282
)
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation and amortization
2,062
1,495
Provision for doubtful accounts
56
28
Stock-based compensation expense
599
677
Noncash operating lease expense
1,157
1,043
Amortization of debt issuance costs
32
190
Deferred income tax provision
(77
)
(336
)
Loss on sale of property and equipment
36
86
Loss on early termination of operating
lease
817
—
Loss on early debt extinguishment
—
1,961
Gain on change in fair value of warrant
liability
—
(14
)
Changes in operating assets and
liabilities:
Accounts receivable
(19,698
)
2,584
Contract assets
8,320
(1,986
)
Other current assets
(2,130
)
(2,025
)
Accounts payable, including retainage
(105
)
(8,813
)
Prepaid income taxes
(47
)
—
Accrued taxes payable
(501
)
(654
)
Contract liabilities
7,732
(8,853
)
Operating lease liabilities
(1,117
)
(994
)
Accrued expenses and other current
liabilities
1,419
513
Other long-term liabilities
(4
)
5
Net cash used in operating activities
(2,965
)
(17,375
)
Cash flows from investing
activities:
Proceeds from sale of property and
equipment
39
226
Purchase of property and equipment
(169
)
(221
)
Net cash used in (provided by) investing
activities
(130
)
5
Cash flows from financing
activities:
Proceeds from Wintrust Term Loan
—
30,000
Payments on Wintrust and A&R Wintrust
Term Loans
(1,857
)
(500
)
Proceeds from A&R Wintrust Revolving
Loan
9,400
—
Payments on 2019 Refinancing Term Loan
—
(39,000
)
Prepayment penalty and other costs
associated with early debt extinguishment
—
(1,376
)
Proceeds from the sale of common stock
—
22,773
Proceeds from the exercise of warrants
—
1,989
Payments on finance leases
(660
)
(667
)
Payments of debt issuance costs
—
(593
)
Taxes paid related to net-share settlement
of equity awards
(363
)
(384
)
Proceeds from contributions to Employee
Stock Purchase Plan
165
167
Net cash provided by financing
activities
6,685
12,409
(Decrease) increase in cash, cash
equivalents and restricted cash
3,590
(4,961
)
Cash, cash equivalents and restricted
cash, beginning of period
14,589
42,260
Cash, cash equivalents and restricted
cash, end of period
$
18,179
$
37,299
Supplemental disclosures of cash flow
information
Noncash investing and financing
transactions:
Right of use assets obtained in exchange
for new operating lease liabilities
$
—
$
156
Right of use assets obtained in exchange
for new finance lease liabilities
864
87
Right of use assets disposed or adjusted
modifying operating lease liabilities
(1,276
)
36
Right of use assets disposed or adjusted
modifying finance lease liabilities
(19
)
—
Interest paid
459
1,319
Cash paid (received) for income taxes
$
9
$
(45
)
LIMBACH HOLDINGS, INC. Condensed
Consolidated Segment Operating Results (Unaudited)
Three Months Ended
March 31,
Increase/(Decrease)
(in thousands, except for
percentages)
2022
2021
$
%
Statement of Operations Data:
Revenue:
GCR
$
71,932
62.6
%
$
84,804
74.8
%
$
(12,872
)
(15.2
)%
ODR
42,890
37.4
%
28,540
25.2
%
14,350
50.3
%
Total revenue
114,822
100.0
%
113,344
100.0
%
1,478
1.3
%
Gross profit:
GCR(1)
8,358
11.6
%
9,395
11.1
%
(1,037
)
(11.0
)%
ODR(2)
9,982
23.3
%
7,834
27.4
%
2,148
27.4
%
Total gross profit
18,340
16.0
%
17,229
15.2
%
1,111
6.4
%
Selling, general and administrative:
GCR(1)
8,565
11.9
%
9,114
10.7
%
(549
)
(6.0
)%
ODR(2)
9,570
22.3
%
7,354
25.8
%
2,216
30.1
%
Corporate
599
0.5
%
677
0.6
%
(78
)
(11.5
)%
Total selling, general and
administrative
18,734
16.3
%
17,145
15.1
%
1,589
9.3
%
Amortization of intangibles
(Corporate)
399
0.3
%
104
0.1
%
295
283.7
%
Total operating loss
$
(793
)
(0.7
) %
$
(20
)
—
%
$
(773
)
3865.0
%
(1) As a percentage of GCR revenue.
(2) As a percentage of ODR revenue.
Non-GAAP Financial
Measures
In assessing the performance of our business, management
utilizes a variety of financial and performance measures. The key
measure is Adjusted EBITDA, a non-GAAP financial measure. We define
Adjusted EBITDA as net income plus depreciation and amortization
expense, interest expense, and taxes, as further adjusted to
eliminate the impact of, when applicable, other non-cash items or
expenses that are unusual or non-recurring that we believe do not
reflect our core operating results. We believe that Adjusted EBITDA
is meaningful to our investors to enhance their understanding of
our financial performance for the current period and our ability to
generate cash flows from operations that are available for taxes,
capital expenditures and debt service. We understand that Adjusted
EBITDA is frequently used by securities analysts, investors and
other interested parties as a measure of financial performance and
to compare our performance with the performance of other companies
that report Adjusted EBITDA. Our calculation of Adjusted EBITDA,
however, may not be comparable to similarly titled measures
reported by other companies. When assessing our operating
performance, investors and others should not consider this data in
isolation or as a substitute for net income calculated in
accordance with GAAP. Further, the results presented by Adjusted
EBITDA cannot be achieved without incurring the costs that the
measure excludes. A reconciliation of net income to Adjusted
EBITDA, the most comparable GAAP measure, is provided below.
We refer to our estimated revenue on uncompleted contracts,
including the amount of revenue on contracts for which work has not
begun, less the revenue we have recognized under such contracts, as
“backlog.” Backlog includes unexercised contract options.
Reconciliation of
Net Loss to Adjusted EBITDA
Three Months Ended
March 31,
(in thousands)
2022
2021
Net loss
$
(1,516
)
$
(2,282
)
Adjustments:
Depreciation and amortization
2,062
1,495
Interest expense, net
486
1,264
Non-cash stock-based compensation
expense
599
677
Loss on early debt extinguishment
—
1,961
Change in fair value of warrants
—
(14
)
Loss on early termination of operating
lease
817
—
Income tax provision
(616
)
(1,035
)
Acquisition and other transaction
costs
153
—
Restructuring costs(1)
1,435
—
Adjusted EBITDA
$
3,420
$
2,066
(1) Includes restructuring charges within
our Southern California and Eastern Pennsylvania branches as well
as other cost savings initiatives throughout the company.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220510006381/en/
Investor Relations The
Equity Group, Inc. Jeremy Hellman, CFA Vice President (212)
836-9626 / jhellman@equityny.com or Limbach Holdings, Inc. S.
Mathew Katz Executive Vice President (212) 201-7006 /
matt.katz@limbachinc.com
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