Limbach Holdings’ Earnings Call Highlights Strategic Growth

Limbach Holdings ((LMB)) has held its Q1 earnings call. Read on for the main highlights of the call.

Limbach Holdings’ recent earnings call conveyed a positive sentiment, highlighting significant growth in Owner Direct Relationships (ODR) revenue and improvements in financial performance. Despite challenges such as a strategic decline in General Contractor Relationships (GCR) revenue and increased Selling, General, and Administrative (SG&A) expenses, the company’s strategic focus on ODR and successful acquisition strategy positions it well for future growth.

ODR Revenue Growth

Limbach Holdings reported a substantial increase in ODR revenue, which rose from 21% of total revenue in 2019 to 67.9% in the first quarter of 2025. The company projects this figure to reach between 70% and 80% for the full year. In Q1 2025 alone, ODR revenue grew by 21.7%, underscoring the success of the company’s strategic shift.

Financial Performance Improvements

The company experienced notable improvements in its financial performance, with total revenue growing by 11.9% year-over-year. Gross profit expanded by 18.1%, and adjusted EBITDA increased by 26.5%. Net income saw a remarkable growth of 34.6%, reaching a record $10.2 million.

Successful M&A Strategy

Limbach Holdings is making solid progress with its mergers and acquisitions strategy, having identified 20-30 new Master Service Agreements (MSAs) for expansion, primarily along the East Coast and Midwest. This strategy is expected to further bolster the company’s growth trajectory.

Strong Cash Flow Management

The company reported strong cash flow management, with free cash flow for Q1 2025 at $15 million, a $3.3 million improvement from Q1 2024. The free cash flow conversion rate stood at an impressive 101.1%.

GCR Revenue Decline

As part of its strategic shift towards ODR, Limbach Holdings experienced a 4.5% decline in GCR revenue in Q1 2025. While this reduction is intentional, it remains a challenge for the company.

Increased SG&A Expenses

SG&A expenses rose to $26.5 million from $22.9 million, increasing as a percentage of revenue from 19.2% to 19.9%. This rise reflects the company’s investment in growth initiatives.

Challenges with Tariffs

While tariffs have had a neutral impact on the company, market uncertainty has led to accelerated purchasing decisions by customers, presenting both challenges and opportunities.

Forward-Looking Guidance

During the earnings call, President and CEO Michael McCann provided forward-looking guidance, emphasizing the company’s strategic focus on its ODR model. Limbach aims for full-year revenue between $610 million and $630 million, with adjusted EBITDA ranging from $78 million to $82 million. The company is also expanding its sales team and focusing on deepening customer relationships to drive organic growth and capitalize on high-margin opportunities.

In summary, Limbach Holdings’ earnings call reflected a positive outlook, with significant growth in ODR revenue and improvements in financial performance. The company’s strategic focus on ODR, successful acquisition strategy, and strong cash flow management position it well for future growth, despite challenges such as increased SG&A expenses and GCR revenue decline. Investors and stakeholders can look forward to the company’s continued expansion and resilience against economic fluctuations.