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LH

Limbach Holdings, Inc. (LMB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered record profitability: revenue $143.7M, diluted EPS $0.82, adjusted net income $13.8M, and adjusted EBITDA $20.8M, with consolidated gross margin expanding to 30.3% (+700 bps YoY), driven by continued mix shift to ODR and margin improvements in both segments .
  • ODR revenue rose 21.4% YoY to $95.5M (66.5% of total), while GCR revenue declined 24.8% YoY to $48.2M; GCR margin benefited from ~$2.9M write-ups in Q4, a positive non-recurring tailwind to segment profitability .
  • FY24 set records: net income $30.9M ($2.57 diluted EPS), adjusted net income $43.2M ($3.60 adj. EPS), and adjusted EBITDA $63.7M; ODR was 66.6% of FY revenue and 74.7% of gross profit dollars .
  • Initial FY25 guidance: revenue $610–$630M and adjusted EBITDA $78–$82M; management expects ODR to be 70–80% of revenue, 10–15% organic top-line growth, seasonally softer Q1 then stronger H2 .
  • Stock reaction catalysts: accelerating ODR mix, sustained margin expansion, disciplined M&A with targeted EBITDA contribution (~$6M in 2025 from 2024 deals), and clearer FY25 growth/FCF targets (≥70% FCF conversion) .

What Went Well and What Went Wrong

What Went Well

  • Record Q4 adjusted EBITDA ($20.8M, +65.5% YoY) and consolidated gross margin (30.3%), reflecting higher-margin ODR mix, selective GCR pursuit, and acquisition contributions .
  • ODR growth and mix: Q4 ODR revenue +21.4% YoY to $95.5M (66.5% of total); ODR gross margin expanded to 32.1% vs. 30.1% LY, underscoring strategy execution .
  • Management tone on strategy: “We produced record gross profit, record net income and record adjusted EBITDA…by shifting our revenue mix to working directly for building owners, evolving our service offerings and scaling through acquisitions.” — CEO Michael McCann .

What Went Wrong

  • SG&A deleverage: Q4 SG&A rose to 19.1% of revenue (from 17.5% LY), driven by payroll/incentives, though legal costs declined; FY SG&A 18.7% vs 16.9% LY .
  • GCR revenue contraction: Q4 GCR revenue fell 24.8% YoY to $48.2M; while strategic, it weighs on top-line growth and increases reliance on ODR execution .
  • Non-recurring dynamics: Q4 GCR margins benefited from ~$2.9M write-ups; management flagged Q1 2024 had ~$2M write-up, and Q1 2025 set to be similar to Q1 2024, highlighting some onetime elements and seasonality near-term .

Financial Results

Core P&L and Profitability

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$142.7 $122.2 $133.9 $143.7
Diluted EPS ($USD)$0.44 $0.50 $0.62 $0.82
Gross Margin (%)23.3% 27.4% 27.0% 30.3%
Adjusted EBITDA ($USD Millions)$12.6 $13.8 $17.3 $20.8

Segment Breakdown (Revenue and Margins)

MetricQ4 2023Q3 2024Q4 2024
ODR Revenue ($USD Millions)$78.6 $93.0 $95.5
ODR Gross Margin (%)30.1% 31.9% 32.1%
GCR Revenue ($USD Millions)$64.1 $40.9 $48.2
GCR Gross Margin (%)15.0% 15.8% 26.9%

KPIs and Balance Sheet

KPIQ4 2023Q3 2024Q4 2024
Operating Cash Flow ($USD Millions)$13.9 $4.9 $19.3
Cash & Equivalents ($USD Millions)$59.8 $51.2 $44.9
Total Debt ($USD Millions)$22.3 (LT+current) Revolver $10.0 outstanding Total debt $27.2; Revolver $10.0 @ 5.72%
ODR Backlog ($USD Millions)$147.0 $209.8 $225.3
GCR Backlog ($USD Millions)$186.9 $161.5 $140.0

Versus Estimates (Wall Street Consensus)

  • Consensus estimates via S&P Global were unavailable at time of analysis due to SPGI request limits; therefore, estimate comparisons are not included. Values intended for estimates would normally be retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY2025N/A$610–$630 Initiated
Adjusted EBITDA ($USD Millions)FY2025N/A$78–$82 Initiated
ODR Mix (% of Revenue)FY2025N/A70%–80% Initiated (strategic target)
Organic Revenue Growth (%)FY2025N/A10%–15% Initiated
SG&A as % of RevenueFY2025N/A~18%–19% Initiated
Free Cash Flow Conversion (%)FY2025N/A≥70% Initiated
CapEx (excl. rental equipment)FY2025N/A~$4M; +$3.5M rental equipment in H1 Initiated
FY2024 RevenueFY2024$520–$540 (Q3 update) Actual $518.8 N/A (reported)
FY2024 Adjusted EBITDAFY2024$60–$63 (Q3 update) Actual $63.7 Achieved high end

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
ODR mix shift and margin expansionODR 67.7% of Q2 revenue; record gross margin 27.4% ; Q3 ODR 69.4% and consolidated margin 27.0% Q4 ODR 66.5%; consolidated margin 30.3%; ODR margin 32.1% Strengthening margins; ODR mix sustained
Seasonality outlookEmphasis on ODR-driven model; rental fleet investment Q1’25 similar to Q1’24; stronger H2 expected Seasonal softness in Q1; stronger H2
M&A strategy and contributionKent Island acquired; pipeline robust; EBITDA multiples targeted; rental offering growth Two 2024 acquisitions; ~$6M adj. EBITDA to 2025; target $8–$10M annual adj. EBITDA via M&A Disciplined, accretive pipeline
Data centers exposureSelect existing infrastructure work; not building new centers; local strength Existing-building DC work in Columbus/N. Virginia; no new builds Stable, targeted exposure
Backlog mixODR backlog up; GCR backlog down (intentional) ODR backlog $225.3M; GCR backlog $140.0M ODR backlog rising; GCR declining
Healthcare/industrial verticalsHealthcare prioritized across locations; rental solutions; industrial upgrades Healthcare largest vertical; industrial manufacturing second; aging infrastructure driving demand Durable demand across verticals

Management Commentary

  • “In 2024, we produced record gross profit, record net income and record adjusted EBITDA…by expanding and strengthening customer relationships in six verticals…[and] executing the three pillars of our strategy.” — Michael McCann, CEO .
  • “Looking forward to 2025, we expect organic top line revenue growth to be in the 10% to 15% range…total revenue in the range of $610 million to $630 million…adjusted EBITDA…$78 million to $82 million.” — Michael McCann .
  • “Adjusted EBITDA for the fourth quarter was $20.8 million, up 65.5%…Adjusted EBITDA margin for the fourth quarter was 14.5% compared to 8.8%.” — Jayme Brooks, CFO .
  • “We expect CapEx for 2025 to have a run rate of approximately $4 million…[and] an additional investment of $3.5 million in rental equipment in the first half of 2025.” — Jayme Brooks .

Q&A Highlights

  • Organic growth and ODR: Management framed FY25 10–15% organic growth at the total-company level, continuing ODR-led expansion; they avoided quantifying discrete ODR growth but emphasized mix and EBITDA targets .
  • Gross margin sustainability and OEM-level aspiration: Management reiterated long-term goal to reach OEM-like gross margins via mix shift and evolved offerings; Q4 GCR margin benefited from ~$2.9M write-ups .
  • Seasonality and near-term setup: Q1’25 expected similar to Q1’24 (which included a ~$2M write-up), then stronger H2 on ODR mix and acquisitions .
  • Account manager investments and SG&A: Continued investment in on-site account managers to deepen ODR relationships; SG&A targeted ~18–19% in FY25 .
  • Data centers exposure: Focus restricted to existing infrastructure in select markets (Columbus, Northern Virginia); no new construction .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 and FY2025 were unavailable at time of request due to SPGI request limits; thus, comparisons to Wall Street consensus cannot be provided for this recap. If required, we can refresh and incorporate estimates once SPGI access is restored.

Key Takeaways for Investors

  • Margin story intact and strengthening: 30.3% consolidated gross margin in Q4 (vs 23.3% LY) and record adjusted EBITDA reflect ODR mix and improving execution; watch ODR margin durability and SG&A leverage progression in FY25 .
  • ODR flywheel and backlog: ODR backlog rose to $225.3M with GCR backlog declining as planned; embedded growth from aging infrastructure in healthcare/industrial should support FY25 topline and margin expansion .
  • Near-term cadence: Expect seasonal softness in Q1’25, then stronger second half; monitor any normalization from Q4 GCR write-ups as a temporary margin tailwind .
  • M&A as growth accelerator: 2024 acquisitions expected to add ~$6M to FY25 adjusted EBITDA; ongoing pipeline targeting $8–$10M adj. EBITDA per year supports multi-year scaling and offering breadth .
  • Cash and balance sheet: $44.9M cash with $27.2M total debt (including $10M revolver at 5.72%) provides flexibility to fund ODR growth and opportunistic M&A; disciplined capital allocation toward rental fleet and targeted CapEx .
  • FY25 targets: Revenue $610–$630M, adjusted EBITDA $78–$82M, SG&A ~18–19%, FCF conversion ≥70%; ODR expected at 70–80% of revenue, underpinning sustained margin profile .
  • Watch items: SG&A leverage, any tapering of write-ups, pace of account manager deployment, data center exposure scale in existing-infrastructure markets, and timely integration synergies from Kent Island and Consolidated Mechanical .