• Total Revenue: $518.8 million for the year, a 0.5% increase from $516.4 million in 2023.
• ODR Revenue Growth: 31.9% increase for the year.
• GCR Revenue Decline: 31.9% decrease for the year.
• Gross Margin: Increased to 27.8% from 23.1% in 2023.
• Adjusted EBITDA: $63.7 million for the year, up 36.1% from $46.8 million in 2023.
• Net Income: $30.9 million for the year, a 48.8% increase from $20.8 million in 2023.
• Earnings Per Diluted Share: Increased to $2.57 from $1.76 in 2023.
• Operating Cash Flow: $36.8 million for the year, a 35.9% decrease from $57.4 million in 2023.
• Free Cash Flow: $52.3 million for the year, a 42.6% increase from $36.7 million in 2023.
• Cash and Cash Equivalents: $44.9 million as of December 31.
• Total Debt: $27.2 million, including $10 million on the revolving credit facility.

• Warning! GuruFocus has detected 1 Warning Sign with LMB.

Release Date: March 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Limbach Holdings Inc (NASDAQ:LMB) achieved a significant increase in total gross margin, rising from 23.1% in 2023 to 27.8% in 2024, driven by a strategic shift towards higher-margin Owner Direct (ODR) revenue.
• The company completed two strategic acquisitions in 2024, expected to add approximately $6 million to adjusted EBITDA in 2025, enhancing its growth prospects.
• ODR revenue grew by 31.9% in 2024, accounting for 66.6% of total revenue, up from 50.7% in 2023, reflecting successful execution of the company's strategic shift.
• Limbach Holdings Inc (NASDAQ:LMB) reported a 48.8% increase in net income for 2024, reaching $30.9 million, with earnings per diluted share growing by 46% to $2.57.
• The company has a strong pipeline of acquisition opportunities and aims to acquire $8 million to $10 million in adjusted EBITDA per year, supporting its long-term growth strategy.

Negative Points

• Total revenue growth for 2024 was nearly flat at 0.5%, indicating challenges in achieving significant top-line expansion.
• The General Contractor (GCR) segment experienced a 31.9% decline in revenue, reflecting the company's strategic shift but also highlighting potential risks in reducing this segment.
• SG&A expenses increased by approximately $9.8 million in 2024, driven by higher payroll and incentive-related expenses, impacting overall profitability.
• Operating cash flow for the year decreased by 35.9% to $36.8 million, primarily due to timing differences in accounts receivable.
• The company anticipates continued seasonality in its business, with the first quarter of 2025 expected to be similar to the softer first quarter of 2024, potentially affecting short-term financial performance.

Q & A Highlights

Q: Can you clarify the organic growth target for 2025? Is it specific to the Owner Direct Relationships (ODR) segment or the overall business? A: The 10% to 15% growth target is for the overall top line. We haven't specified a percentage growth for the ODR segment alone, but it could range from 23% to 46% based on our adjusted EBITDA and revenue projections. - Jayme Brooks, CFO

Q: What steps are needed to achieve OEM-level gross margins, and is this a long-term goal? A: Achieving OEM-level gross margins is a long-term goal. It involves shifting more revenue to the ODR segment and building an integrated platform across all locations. Acquisitions and offering new evolved services through our sales chain will also contribute to this goal. - Michael McCann, CEO

Q: How is Limbach progressing towards becoming a trusted adviser for existing customers in the ODR segment? A: We are making progress but have a long way to go. Relationships often start with quick repair work, leading to more significant projects and capital planning. Our focus is on building trust and capturing long-term relationships. - Michael McCann, CEO

Q: How does the availability of skilled technicians impact your strategy in the ODR segment? A: The demand for specialized labor is increasing, and our focus is on having highly technical staff who can handle complex systems. This specialization is crucial for developing relationships with clients who need expert assistance with their infrastructure. - Michael McCann, CEO

Q: What are your plans for expanding the number of account managers, and how will this affect SG&A expenses in 2025? A: We are in investment mode, focusing on hiring account managers to accelerate growth in the ODR segment. This strategy involves ensuring we have enough personnel to maintain strong relationships with clients, which will impact SG&A expenses. - Michael McCann, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.