Limbach (LMB) Q2 2024 earnings summary

Executive summary

• Strategic shift from new construction (GCR) to higher-margin Owner Direct Relationships (ODR) is driving margin expansion, lower risk, and recurring revenue, with ODR now 67.7% of total revenue and a target of 65–70% for 2024.

• Q2 2024 net income rose to $6.0M, up 12.1% year-over-year, with diluted EPS of $0.50, driven by higher ODR margins and recent acquisitions.

• Record quarterly Adjusted EBITDA of $13.8M, up 16–17.5% year-over-year, and gross profit up 17.5% to $33.5M, with gross margin reaching 27.4%.

• Recent acquisitions (ACME, Industrial Air) expanded ODR exposure, geographic reach, and contributed to growth and higher SG&A.

• Growth strategy combines organic expansion, service evolution, and disciplined M&A, with a robust acquisition pipeline focused on six key verticals.

Financial highlights

• Q2 2024 total revenue was $122.2M–$124.9M, down 2.1% year-over-year, with ODR revenue up 40.8% to $82.8M and GCR revenue down 40.3% to $39.5M.

• Gross profit for Q2 was $33.5M (27.4% margin), and Adjusted EBITDA was $13.8M (11.3% margin).

• Net income for Q2 was $6.0M ($0.50 per diluted share), up 12.1% year-over-year; YTD net income was $13.5M.

• Free cash flow increased 23.8% to $10.9M, with conversion rates above 70% in recent years.

• Cash and cash equivalents at quarter end were $59.5M, with net debt (cash) position of $(36.9)M and $10M outstanding on the credit facility.

Outlook and guidance

• 2024 revenue guidance raised to $515M–$535M, with ODR revenue expected to remain 65–70% of total and ODR growth of 28–43%.

• 2024 Adjusted EBITDA guidance increased to $55M–$58M (margin 10.3%–11.3%).

• Management expects further margin expansion as ODR approaches 80% of segment mix.