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Limbach Holdings, Inc. (LMB)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered strong profitability with net income of $7.8M ($0.64 diluted EPS) and Adjusted EBITDA of $17.9M (12.6% margin), while revenue rose 16.4% YoY to $142.2M .
  • Versus S&P Global consensus, Limbach posted a material EPS beat (Primary EPS $0.93 vs $0.625*) and a slight revenue miss ($142.2M vs $144.2M*); four estimates for each metric* .
  • Guidance raised: FY25 revenue to $650–$680M (from $610–$630M) and Adjusted EBITDA to $80–$86M (from $78–$82M), reflecting Pioneer Power integration and ODR momentum .
  • Strategic mix shift to Owner Direct Relationships (ODR) continued: ODR comprised 76.6% of revenue and 79.3% of gross profit dollars, supporting margin expansion .
  • Near-term catalysts: guidance raise and commentary that Q3–Q4 contributions skew to Q4; conservative initial assumptions for Pioneer margins (near-term dilutive) set up potential upward revisions as integration progresses .

What Went Well and What Went Wrong

What Went Well

  • ODR strength drove quality growth: ODR revenue up 31.7% YoY to $108.9M (76.6% of total), ODR gross profit up 24.6%; “our strategic shift to higher margin ODR business is driving meaningful results” — CEO .
  • Margin expansion: total gross margin increased to 28.0% (from 27.4%) on higher-margin ODR mix and improved GCR project selectivity .
  • FCF conversion strong: Q2 free cash flow of $16.1M with 89.7% conversion of Adjusted EBITDA; FY25 target remains ≥75% .

What Went Wrong

  • Revenue slightly missed Street consensus (actual $142.2M vs $144.2M*), primarily due to timing in billings and working capital impacts; net operating cash flow fell to $2.0M vs $16.5M YoY .
  • ODR segment margin eased to 29.0% (from 30.6%) as prior-year project write-ups did not recur; near-term Pioneer integration expected to dilute consolidated margins initially .
  • SG&A up $3.5M YoY to $26.6M (18.7% of revenue) from investments in sales headcount and acquisition-related costs (Pioneer Power) .

Financial Results

Consolidated Results vs Prior Year and Prior Quarter

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$122.2 $133.1 $142.2
Gross Profit ($USD Millions)$33.5 $36.7 $39.8
Gross Margin (%)27.4% 27.6% 28.0%
Diluted EPS (GAAP) ($)$0.50 $0.85 $0.64
Adjusted EPS ($)$0.73 $1.12 $0.93
Adjusted EBITDA ($USD Millions)$13.8 $14.9 $17.9
Adjusted EBITDA Margin (%)11.3% 11.2% 12.6%

Segment Mix and Margins

MetricQ2 2024Q1 2025Q2 2025
ODR Revenue ($USD Millions)$82.8 $90.4 $108.9
ODR Revenue Mix (%)67.7% 67.9% 76.6%
ODR Gross Margin (%)30.6% 28.9% 29.0%
GCR Revenue ($USD Millions)$39.5 $42.7 $33.3
GCR Revenue Mix (%)32.3% 32.1% 23.4%
GCR Gross Margin (%)20.6% 24.7% 24.7%

KPIs and Cash Metrics

KPIQ2 2024Q1 2025Q2 2025
Net Cash from Operating Activities ($USD Millions)$16.5 $2.2 $2.0
Free Cash Flow ($USD Millions)$10.9 —$16.1
FCF Conversion (Adj. EBITDA %)78.7% —89.7%
Current Ratio (x)—1.55x 1.69x
Cash & Equivalents ($USD Millions)—$38.1 $38.9
Total Debt ($USD Millions)—$27.1 $33.2
Net Debt ($USD Millions)——$(5.7)

Results vs Wall Street Consensus (S&P Global)

MetricConsensusActual
Primary EPS ($)$0.625*$0.93
Revenue ($USD Millions)$144.2*$142.2

Values marked with * are retrieved from S&P Global. There were 4 estimates for EPS and 4 estimates for revenue*.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$610 – $630 $650 – $680 Raised
Adjusted EBITDA ($USD Millions)FY 2025$78 – $82 $80 – $86 Raised
ODR Mix (%)FY 2025—70% – 80% Initiated/Emphasized
Gross Margin (%)FY 2025—28% – 29% (company outlook) Initiated
FCF Conversion (%)FY 2025—≥75% target Maintained/Communicated
Revolving Credit FacilityCurrent$50M $100M Expanded

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 & Q1 2025)Current Period (Q2 2025)Trend
ODR Mix ShiftODR at 66.6% FY24; margin expansion via ODR and selective GCR ODR 76.6% of revenue; ODR 79.3% of GP dollars Improving mix quality
Sales Organization BuildoutScaling account team structure; investing in sales +40 new salespeople; hiring SVP Sales (Amy Dorsett) to drive national account strategy and OpEx-to-CapEx conversion Accelerating go-to-market
M&A IntegrationMultiple acquisitions (2024); disciplined criteria Pioneer Power acquired 7/1 (largest deal); near-term margin dilution, Phase 1 systems integration underway; conservative guidance Active, conservative execution
Demand Environment & Vertical MixDurable demand across six verticals (mission-critical) Healthcare deferred maintenance turning proactive; industrial shutdowns on plan; lab buildings strong in higher ed Stable-to-improving
Cash Flow & Capital AllocationStrong FCF FY24; disciplined capital allocation Q2 FCF $16.1M; 89.7% conversion; FY25 ≥75% target; CapEx ~$4M run-rate excl. rental equipment Robust conversion
Backlog & TimingNot detailed in releasesODR backlog down slightly sequentially due to timing; emphasis on converting reactive OpEx to proactive CapEx Timing-dependent, proactive initiatives
Guidance CadenceInitial FY25 guide issued Mar 2025 Guidance raised; Q3/Q4 skew to Q4; Pioneer outlook conservative initially Upward bias, back-half heavy

Management Commentary

  • “We delivered strong second quarter performance… our strategic shift to higher margin ODR business is driving meaningful results” — Michael McCann, CEO .
  • “ODR revenue accounted for 76.6% of total revenue… Adjusted EBITDA margin was 12.6%” — Jayme Brooks, CFO .
  • “For the full year, we anticipate generating between $650M and $680M of revenue, with adjusted EBITDA projected in the range of $80M to $86M” — Michael McCann .
  • “We expanded our revolving credit facility from $50M to $100M and utilized it as part of the Pioneer acquisition on July 1” — Jayme Brooks .

Q&A Highlights

  • GCR margins normalization: management emphasized higher-quality GCR project selection; long-term guides at consolidated gross profit range, quarterly margins expected to ebb/flow .
  • Pioneer margin impact: near-term dilutive to consolidated margins as Phase 1 integration proceeds; margin improvement expected through Limbach’s value creation process .
  • Demand trends: mission-critical verticals driving durable demand; healthcare shifting from reactive repairs toward proactive capital programs supported by assessments across ~20 properties .
  • Backlog: slight sequential dip in ODR backlog attributed to timing; focus on converting OpEx to CapEx and national account expansion .
  • Sales ramp: added on-site account managers; ramp aligns with expectations though full contribution typically realized the following year; new SVP Sales to accelerate conversion of technical to financial sale .

Estimates Context

  • Q2 2025 S&P Global consensus: Primary EPS $0.625* (4 estimates) vs actual Primary EPS $0.93; Revenue $144.2M* (4 estimates) vs actual $142.2M. Result: EPS beat; slight revenue miss .
  • Guidance raise (revenue and Adjusted EBITDA) and commentary on Q4 weighting could prompt upward revisions to FY revenue and EBITDA; near-term margin dilution from Pioneer may temper gross margin estimates until integration progresses .

Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

  • Limbach is executing a disciplined pivot to ODR, driving structurally higher margins (28.0% gross margin) and strong Adjusted EBITDA growth; maintain focus on mix quality .
  • The EPS beat vs consensus (Primary EPS $0.93 vs $0.625*) amid a slight revenue miss underscores margin strength; near-term volatility in revenue timing suggests watching working capital dynamics .
  • FY25 guidance up materially (revenue +$40–$50M; Adj. EBITDA +$2–$4M), with back-half weighting and conservative Pioneer assumptions creating potential for upside if integration outperforms .
  • Free cash flow conversion remains a differentiator (Q2 at ~90%; FY25 target ≥75%), supporting organic investments (sales buildout, rental fleet) and M&A .
  • Monitor ODR margin trajectory (29.0% this quarter) and GCR margin discipline (24.7%) as key levers for profitability; Pioneer’s near-term dilution should fade as Limbach’s playbook scales .
  • Balance sheet flexibility improved (revolver to $100M; net cash of ~$5.7M), enabling continued tuck-ins and footprint expansion in mission-critical verticals .
  • Trading setup: guidance raise and EPS beat are positive; expect analysts to reconcile Primary vs GAAP EPS and weigh back-half skew; stock likely sensitive to integration updates and evidence of OpEx-to-CapEx conversions at national accounts .