Sign in

You're signed outSign in or to get full access.

LH

Limbach Holdings, Inc. (LMB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 delivered broad-based outperformance: revenue grew 11.9% Y/Y to $133.1M, adjusted diluted EPS rose 36.6% to $1.12, and adjusted EBITDA increased 26.5% to $14.9M, driven by continued mix shift to Owner Direct Relationships (ODR) at 67.9% of sales .
  • Results beat S&P Global consensus by wide margins: revenue $133.1M vs $121.1M*, adjusted EPS $1.12 vs $0.28*, EBITDA $14.9M vs $10.3M*, and gross margin 27.6% vs 27.1%*, as ODR momentum offset modest GCR revenue decline (intentional) .
  • Management affirmed FY2025 guidance (Revenue $610–$630M; Adj. EBITDA $78–$82M) and highlighted momentum exiting March, continued healthcare demand, improving GCR mix quality, and a robust M&A pipeline .
  • Key stock catalysts: sustained ODR penetration toward 70–80% mix in 2025, durable margin expansion, clarity on tariff pass‑through, and potential accretive M&A execution .

What Went Well and What Went Wrong

  • What Went Well

    • ODR-led growth and margin expansion: ODR revenue +21.7% Y/Y to $90.4M (67.9% of total), consolidated gross margin +150 bps Y/Y to 27.6% .
    • Record profitability metrics for a seasonally soft quarter: adjusted EBITDA $14.9M (+26.5% Y/Y) and adjusted EPS $1.12 (+36.6% Y/Y) on disciplined GCR selectivity and mix shift .
    • Management conviction and execution: “We project [ODR] to be between 70% and 80% for full year 2025” and “gained significant momentum in March,” underscoring growth visibility and pipeline traction .

  • What Went Wrong

    • SG&A deleverage vs revenue: SG&A +$3.6M Y/Y to $26.5M; 19.9% of revenue (vs 19.2%), reflecting sales investments and acquired entities’ costs .
    • ODR gross margin slightly lower (28.9% vs 29.8%) due to prior-year project write‑ups; headwind partially offset by higher-quality GCR work (24.7% vs 20.0%) .
    • Lower interest income and small operating cash inflow: interest income fell to $0.4M (from $0.6M) and operating cash flow was $2.2M (seasonality/working capital) .

Financial Results

Q1 2025 vs prior year, prior quarter, and S&P Global consensus

MetricQ1 2024Q4 2024Q1 2025Q1 2025 Consensus*
Revenue ($M)$119.0 $143.7 $133.1 $121.1*
Diluted EPS (GAAP)$0.64 $0.82 $0.85 —
Adjusted Diluted EPS$0.82 $1.15 $1.12 $0.28*
Gross Margin %26.1% 30.3% 27.6% 27.1%*
Adjusted EBITDA ($M)$11.8 $20.8 $14.9 $10.3*
Adjusted EBITDA Margin %9.9% 14.5% 11.2% —

Segment breakdown

SegmentQ1 2024 Revenue ($M)Q1 2025 Revenue ($M)Q1 2024 Gross Profit ($M)Q1 2025 Gross Profit ($M)Gross Margin % Q1’24Gross Margin % Q1’25
ODR$74.3 $90.4 $22.2 $26.2 29.8% 28.9%
GCR$44.7 $42.7 $8.9 $10.6 20.0% 24.7%
Mix (ODR as % of total)62.4% 67.9% ————

KPIs and balance sheet (Q1 2025)

KPIValue
Operating Cash Flow ($M)$2.2 vs $(3.9) in Q1’24
ODR Backlog ($M)$249.0 at 3/31/25
GCR Backlog ($M)$120.2 at 3/31/25
Remaining Performance Obligations (RPO) – ODR ($M)$227.8 (88% expected in 2025)
RPO – GCR ($M)$120.2 (63% expected in 2025)
Cash & Cash Equivalents ($M)$38.1 at 3/31/25
Total Debt ($M)$27.5 at 3/31/25

Notes: Consensus values marked with an asterisk (*) are from S&P Global; Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$610M–$630M (3/10/25) $610M–$630M (affirmed 5/5/25) Maintained
Adjusted EBITDAFY 2025$78M–$82M (3/10/25) $78M–$82M (affirmed 5/5/25) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3’24; Q-1: Q4’24)Current Period (Q1’25)Trend
ODR mix and marginsODR reached 69.4% of revenue in Q3’24; consolidated margin uplift with selective GCR ODR 67.9% of revenue; blended GM 27.6%; aim for 70–80% in 2025 Continued mix shift; sustained margin tailwind
Healthcare demandBroad demand strength; building owner focus reiterated in FY24 “Healthcare… key vertical”; deferred maintenance driving spend; slow, stable ramp Improving visibility; multi-quarter opportunity
Tariffs/supply chainMonitoring inflation/supply chain impacts (Q3’24) Tariffs “neutral” so far; customers accelerating decisions amid uncertainty Manageable with fast-cycle ODR and pass-through
GCR strategy/qualityMore selective; better GCR margins in Q4’24 GCR GM 24.7% (vs 20.0% LY) on selectivity Quality > quantity; margin improvement
Data/technology enablementStrategy to evolve offerings and digital solutions highlighted at FY24 Branches assessing top accounts; using data to co-author budgets and drive CapEx Increased use of analytics to deepen wallet share
M&A cadence/pipeline2 acquisitions in 2024; disciplined pipeline “[We’re] developing… opportunities,” target $8–$10M adj. EBITDA per year from M&A Pipeline active; disciplined execution

Management Commentary

  • Strategic focus: “Since we implemented the owner-direct strategy 5 years ago… 67.9% in the first quarter of 2025. We project to be between 70% and 80% for full year 2025.” – CEO Michael McCann .
  • March/2Q momentum: “We’ve experienced typical seasonality in Q1… but we have gained meaningful momentum in March, which has carried into the second quarter.” – CEO .
  • Data-led account strategy: “A big initiative for 2025 is to… help influence and co-author customer budgets… by collecting data from repair history, utility bills and facility assessments.” – CEO .
  • Tariffs: “Tariffs… have been so far neutral… [we stress] act quickly on proposals,” leveraging short-cycle ODR work to pass costs .
  • Financial discipline: “Adjusted EBITDA… up 26.5%... free cash flow conversion 101.1% for the quarter; targeting at least 75% for FY2025.” – CFO Jayme Brooks .

Q&A Highlights

  • Healthcare vertical: Deferred maintenance is converting to planned capital programs; stability and embedded relationships position LMB well .
  • Tariffs and pricing: Tariffs neutral; customers accelerating purchase decisions; ODR’s short-cycle projects aid cost pass-through and reduce volatility .
  • ODR account model: Structured around “top 5” strategic customers per branch; expanding from local to national relationships to scale wallet share .
  • GCR margin outlook: Selectivity supports higher GCR margins; blended full-year gross margin target cited at 28–29% (mix dependent) .
  • Go-to-market investment: ~40 new sales professionals (~one-third of sales force), largely on-site account managers; near-term SG&A investment to drive ODR growth .
  • Expansion strategy: New MSAs primarily via acquisitions (faster scale), with selective organic starts when leadership/talent align .
  • Refrigerant changeover: Acts as a customer decision catalyst for upgrades/replacements in certain cases .
  • M&A cadence: Targeting $8–$10M adjusted EBITDA per year via disciplined, culture-aligned acquisitions .

Estimates Context

  • Revenue: $133.1M actual vs $121.1M consensus* (beat). Adjusted diluted EPS: $1.12 vs $0.28 consensus* (large beat). EBITDA: $14.9M adjusted vs $10.3M consensus* (beat). Gross margin: 27.6% vs 27.1% consensus* (slight beat) .
  • Estimate alignment: Beats reflect faster ODR penetration (+21.7% ODR revenue Y/Y), improved GCR margin quality, and mix-driven gross margin expansion; note that S&P’s “Primary EPS” maps to adjusted EPS, while consensus EBITDA may not fully align to company-reported “Adjusted EBITDA.” Values retrieved from S&P Global.

Key Takeaways for Investors

  • ODR engine compounding: Rising ODR mix (67.9% in Q1) is expanding consolidated margins and lowering risk; management targets 70–80% ODR in 2025, a key multi-quarter catalyst .
  • Quality over quantity in GCR: Intentional GCR downshift but better project selection lifted GCR gross margin to 24.7% (from 20.0%)—supportive of sustained blended margin strength .
  • Investment phase in SG&A: Elevated SG&A (19.9% of sales) tied to salesforce buildout and recent acquisitions; expected to support ODR growth and pipeline conversion .
  • Cash discipline and FCF: Positive operating cash flow in a seasonally soft quarter; management targets ≥75% FCF conversion for FY2025—monitor conversion as ODR scales .
  • Macro/tariffs manageable: Short-cycle ODR and pricing agility mitigate tariff/supply volatility; watch for any changes in customer purchasing timing .
  • Guidance intact with upside optionality: FY2025 guidance affirmed in May; subsequent 2Q update raised full-year outlook (post-Q1) signaling momentum—an execution watchpoint for the rest of 2025 .
  • M&A as accelerant: Robust, disciplined pipeline with cultural fit focus and accretive targets ($8–$10M adj. EBITDA/year) could add scale and geography while reinforcing ODR strategy .

References:

  • Q1 2025 press release and financials
  • Q1 2025 earnings call transcript
  • Q4 2024 press release (prior quarter)
  • Q3 2024 press release (two quarters prior)
  • Q1 2025 10-Q (backlog/RPO, debt)

Notes: Consensus metrics marked with an asterisk (*) are from S&P Global; Values retrieved from S&P Global.