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Limbach Holdings Reports Third Quarter 2020 Results

Third Quarter 2020 Revenue Increases 10.6% over prior year; Diluted EPS of $0.31; Third Quarter Net Cash Provided by Operating Activities of $12.8 million

Increasing Adjusted EBITDA Guidance for Fiscal 2020

Conference Call Scheduled for 10:00 am ET on November 12, 2020

PITTSBURGH--(BUSINESS WIRE)-- Limbach Holdings, Inc. (Nasdaq: LMB) (“Limbach” or the “Company”) today announced its financial results for the quarter ended September 30, 2020. Revenue for the third quarter increased 10.6% from the prior year period to $163.9 million. Gross margin in the quarter was 14.8%, an increase of 235 basis points as compared to the same period during fiscal year 2019. Greater gross profit combined with moderate growth in selling, general and administrative expenses resulted in net income of $2.5 million and Adjusted EBITDA of $8.8 million which reflects Adjusted EBITDA growth of more than twice the prior year period amount. The Company generated strong cash flow, with net cash provided by operating activities of $12.8 million in the quarter.

The following are key financial highlights of the third quarter. All comparisons are to the third quarter of 2019, unless noted otherwise.

  • Construction segment revenue of $130.5 million increased 10.2% driven by growth in the Michigan, Ohio, and New England operating regions, offset by revenue declines in the Florida, Southern California and Eastern Pennsylvania regions. Service segment revenue of $33.4 million increased 12.3%, driven by growth in the Florida, Mid-Atlantic and Western Pennsylvania regions, offset by a revenue decline in the Michigan region.
  • Gross margin increased to 14.8% from 12.4%, primarily as a result of improved project execution in the Construction segment and improved pricing and business mix in the Service segment. Gross margin in the Service segment was 27.9% representing an increase of 360 basis points.
  • SG&A expense in the third quarter increased approximately $0.4 million to $17.0 million as compared to $16.6 million as the Company continued to invest in Service segment and owner-direct sales and execution resources. That growth in SG&A expense was offset by a decline in Construction segment and Corporate SG&A which reflects the continuing effort to identify cost reductions undertaken earlier in the calendar year. As a percent of revenue, SG&A expense was 10.4% as compared to 11.2%.
  • Interest expense was $2.2 million in the third quarter of 2020 as compared to $1.8 million as the Company paid higher interest rates under the Company’s term loan following the execution in the third quarter of 2019 of an amendment to its credit facility.
  • Net income in the third quarter was $2.5 million compared with a net loss of $(3.0) million. Diluted EPS increased to $0.31 as compared to $(0.39).
  • Net cash provided by operating activities was $12.8 million in the third quarter, as compared to net cash used in operating activities of $(1.9) million.
  • Total backlog at September 30, 2020 was $469.3 million as compared to $470.6 million as of June 30, 2020 and $561.2 million as of December 31, 2019. At September 30, 2020, Construction segment backlog accounted for $407.5 million of the consolidated total. Service segment backlog accounted for $61.8 million of the consolidated total.

Charlie Bacon, Limbach’s President and Chief Executive Officer, said, “Overall, we experienced a more normalized operating environment during the third quarter. Our strong performance on a consolidated basis reflected continuing improvement in execution in the Construction segment. We expect that dynamic to continue over the coming quarters as older, lower-margin projects are completed and are replaced with higher margin opportunities that better reflect our enhanced risk management paradigm. We’re pleased with the quality and quantity of the mid-size and large project opportunities we are negotiating and booking into backlog and remain disciplined about project selection. We also generated sequential growth in the Service segment where the impact from COVID-19 had been most significant earlier this year. The velocity we experienced in the Service segment this quarter better reflects what we consider to be a run-rate level of activity, and we’re obviously pleased with the continued expansion in margins.”

Mr. Bacon continued, “We also saw another quarter of cash flow generation and improvement in working capital and liquidity. Our quarter-end cash balance increased 37.4% sequentially to $39.6 million, and we again finished the quarter undrawn on the revolver other than to support certain standby letters of credit. Strengthening the balance sheet has been a core initiative all year and will remain so as we enter the winter season and prepare to confront a number of economic, political and public-health uncertainties. Despite these continued distractions, our employees persevered to generate solid financial and operating performance during the quarter and remain well focused on working safely. Given our performance on a year-to-date basis, we are increasing our Adjusted EBITDA guidance from a range of $22-24 million to a range of $23-26 million. We’re maintaining revenue guidance of $560-600 million. We’re excited to carry this momentum through the balance of the year and into 2021.”

Third Quarter 2020 Summary

Revenue

Third quarter 2020 revenue increased 10.6% to $163.9 million compared to $148.1 million in the prior year period. Revenue for the third quarter of 2019 is “As Recast” to reflect the adoption of ASC Topic 606, which amends the existing accounting standards for revenue recognition and establishes principles for recognizing revenue upon the transfer of promised goods or services to customers based on the expected consideration to be received in exchange for those goods or services.

Construction segment of $130.5 million increased 10.2% driven by growth in the Michigan, Ohio and New England operating regions mainly as a result of the start of new projects and the continuation of work on existing projects. These increases were partially offset by revenue decreases in the Florida operating region largely due to project shutdowns due to COVID-19, planned reductions in revenue in the Southern California region and a decrease in revenue in the Eastern Pennsylvania region due to the substantial completion of projects in the third quarter of 2020 compared to the same prior year quarter. Service segment revenue of $33.4 million represented an increase of 12.3% over the third quarter of 2019, driven by growth in the Florida, Mid-Atlantic and Western Pennsylvania regions, offset by a revenue decline in the Michigan region.

Gross Profit
Total gross margin for the quarter was 14.8% as compared to 12.4% in last year’s third quarter. Gross profit for the third quarter of 2019 is “As Recast” to reflect the adoption of ASC Topic 606. In the current period, gross profit in the Construction segment increased by 33.2% driven by higher margins and a reduction in project write-downs. Gross profit in the Service segment increased by 29.0% as a result of more favorable project pricing across most lines of business which remains a key focus area.

Gross profit was negatively impacted by the recognition of net project write-downs of $2.4 million, approximately two-thirds of which are related to previously addressed projects in the Southern California region. That net project adjustment was more favorable than the net project adjustment recognized in the prior year period which also included write-downs on several projects in the Southern California operating region.

SG&A Expense
SG&A expense for the third quarter was $17.0 million compared to $16.6 million in the prior year period. The increase of approximately $0.4 million resulted from an increase of $2.1 million in higher performance-based compensation expense due to the Company’s current year-to-date performance, offset by expense reductions in payroll, travel and entertainment, and other Corporate categories. As a percent of total revenue, SG&A expense for the third quarter declined to 10.4% from 11.2% in the prior year period.

Net Income
Net income was $2.5 million compared to a net loss of $(3.0) million in the prior year period. Net loss for the third quarter of 2019 is “As Recast” to reflect the adoption of ASC Topic 606. Net income per basic and diluted share for the third quarter was $0.32 and $0.31, respectively, compared to a net loss per share of $(0.39) for both basic and diluted for the prior year period.

Adjusted EBITDA
Adjusted EBITDA for the third quarter was $8.8 million as compared to $3.8 million in the prior year period, an increase of 130.4%. Adjusted EBITDA for the third quarter of 2019 is “As Recast” to reflect the adoption of ASC Topic 606. The increase in Adjusted EBITDA was primarily attributable to the increased revenue and gross margins in both the Construction and Service segments during the third quarter of 2020, offset by a moderate increase in SG&A expense.

Backlog and Remaining Performance Obligations
Total backlog at September 30, 2020 was $469.3 million as compared to $561.2 million as of December 31, 2019. At September 30, 2020, Construction segment backlog accounted for $407.5 million of the consolidated total, a decrease of 19.2% as compared to Construction segment backlog at December 31, 2019 of $504.2 million. Service segment backlog accounted for $61.8 million of the consolidated total, an increase of 8.4% as compared to Service segment backlog of $57.0 million at December 31, 2019.

Backlog includes unexercised contract options which are not included in the Company’s remaining performance obligations. At September 30, 2020, remaining performance obligations of the Company's Construction and Service segment contracts were $407.5 million and $47.6 million, respectively. At December 31, 2019, remaining performance obligations of the Company's Construction and Service segment contracts were $504.2 million and $41.9 million, respectively.

Balance Sheet
At September 30, 2020, the Company had current assets of $237.7 million and current liabilities of $187.0 million, representing a current ratio of 1.27x. Working capital was $50.7 million at September 30, 2020, an increase of $12.2 million from December 31, 2019. The Company had no borrowings against its $14.0 million revolving credit facility at September 30, 2020, other than for standby letters of credit totaling $3.4 million.

2020 Guidance

The Company announces the following updated guidance for 2020:

 

 

Current

Previous

Revenue

$560 million - $600 million

$560 million - $600 million

Adjusted EBITDA

$23 million - $26 million

$22 million - $24 million

In addition to the risks and uncertainties identified under “Forward-Looking Statements,” the Company’s 2020 guidance is estimated based on the assumption that any impact on the Company in the fourth quarter of the year from a resurgence of COVID-19 is no more extensive or impactful than what Limbach and the construction industry in the United States experienced in the third quarter of fiscal year 2020.

With respect to projected fiscal year 2020 Adjusted EBITDA, a quantitative reconciliation is not available without unreasonable efforts due to the high variability, complexity and low visibility with respect to taxes and other items, which are excluded from Adjusted EBITDA. We expect the variability of this item to have a potentially unpredictable, and potentially significant, impact on our future financial results.

 

Conference Call Details

 

 

Date:

Thursday, November 12, 2020

 

Time:

10:00 a.m. Eastern Time

 

Participant Dial-In Numbers:

 

Domestic callers:

(866) 604-1698

International callers:

(201) 389-0844

Access by Webcast

The call will also be simultaneously webcast over the Internet via the “Investor Relations” section of LMB’s website at www.limbachinc.com or by clicking on the conference call link: https://78449.themediaframe.com/dataconf/productusers/lmb/mediaframe/41132/indexl.html. An audio replay of the call will be archived on the Company’s website for 365 days.

About Limbach

Founded in 1901, Limbach is the 8th largest mechanical systems solutions firm and 44th largest specialty contractor in the United States as determined by Engineering News Record. Limbach provides building infrastructure services, with an expertise in the design, installation and maintenance of HVAC and mechanical, electrical, and plumbing systems for a diversified group of commercial and institutional building owners. Limbach employs more than 1,700 employees in 22 offices throughout the United States. The Company’s full life-cycle capabilities, from concept design and engineering through system commissioning and recurring 24/7 service and maintenance, position Limbach as a value-added and essential partner for building owners, construction managers, general contractors and energy service companies.

Recast Presentation for 2019

As noted, Revenue for the third quarter of 2019 is “As Recast” to reflect the adoption of ASC Topic 606, which amends the existing accounting standards for revenue recognition and establishes principles for recognizing revenue upon the transfer of promised goods or services to customers based on the expected consideration to be received in exchange for those goods or services. For more information, including reconciliation related to the As Recast Revenue numbers, please refer to our periodic filings, which are available on the SEC's website (www.sec.gov).

Forward-Looking Statements

We make forward-looking statements in this press release within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations or forecasts for future events, including, without limitation, our earnings, adjusted EBITDA, revenues, expenses, backlog, capital expenditures or other future financial or business performance or strategies, results of operations or financial condition, and in particular statements regarding the impact of the COVID-19 pandemic on the construction industry in the fourth quarter and future periods, timing of the recognition of backlog as revenue, the potential for recovery of cost overruns, and the ability of the Company to successfully remedy the issues that have led to write-downs in various business units. These statements may be preceded by, followed by or include the words “may,” “might,” “will,” “will likely result,” “should,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “continue,” “target” or similar expressions. These forward-looking statements are based on information available to us as of the date they were made and involve a number of risks and uncertainties which may cause them to turn out to be wrong. Some of these risks and uncertainties may in the future be amplified by the COVID-19 outbreak and there may be additional risks that we consider immaterial or which are unknown. Additionally, our revised “2020 Guidance” is inherently forward looking, and is subject to a number of risks and uncertainties and assumptions which may ultimately cause that guidance to be different than we project. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Please refer to our most recent annual report on Form 10-K, as well as our subsequent filings on Form 10-Q and Form 8-K, which are available on the SEC’s website (www.sec.gov), for a full discussion of the risks and other factors that may impact any forward-looking statements in this press release.

 

LIMBACH HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

2020

 

2019

 

2020

 

2019

(in thousands, except share and per share data)

 

 

 

(As Recast)

 

 

 

(As Recast)

Revenue

 

$

163,856

 

 

 

$

148,119

 

 

 

$

437,813

 

 

 

$

414,469

 

 

Cost of revenue

 

139,685

 

 

 

129,746

 

 

 

375,083

 

 

 

358,778

 

 

Gross profit

 

24,171

 

 

 

18,373

 

 

 

62,730

 

 

 

55,691

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

17,045

 

 

 

16,568

 

 

 

47,596

 

 

 

49,691

 

 

Amortization of intangibles

 

109

 

 

 

149

 

 

 

526

 

 

 

499

 

 

Total operating expenses

 

17,154

 

 

 

16,717

 

 

 

48,122

 

 

 

50,190

 

 

Operating income

 

7,017

 

 

 

1,656

 

 

 

14,608

 

 

 

5,501

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

Interest expense, net

 

(2,154

)

 

 

(1,759

)

 

 

(6,449

)

 

 

(4,190

)

 

Gain on disposition of property and equipment

 

3

 

 

 

17

 

 

 

18

 

 

 

38

 

 

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

(513

)

 

Gain (loss) on change in fair value of warrant liability

 

(1,371

)

 

 

525

 

 

 

(1,312

)

 

 

422

 

 

Impairment of goodwill

 

 

 

 

(4,359

)

 

 

 

 

 

(4,359

)

 

Total other expenses

 

(3,522

)

 

 

(5,576

)

 

 

(7,743

)

 

 

(8,602

)

 

Income (loss) before income taxes

 

3,495

 

 

 

(3,920

)

 

 

6,865

 

 

 

(3,101

)

 

Income tax provision (benefit)

 

970

 

 

 

(942

)

 

 

1,445

 

 

 

(681

)

 

Net income (loss)

 

$

2,525

 

 

 

$

(2,978

)

 

 

$

5,420

 

 

 

$

(2,420

)

 

Earnings Per Share (“EPS”)

 

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

 

 

Basic

 

$

0.32

 

 

 

$

(0.39

)

 

 

$

0.69

 

 

 

$

(0.32

)

 

Diluted

 

$

0.31

 

 

 

$

(0.39

)

 

 

$

0.68

 

 

 

$

(0.32

)

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

7,890,074

 

 

 

7,673,517

 

 

 

7,844,587

 

 

 

7,653,372

 

 

Diluted

 

8,107,149

 

 

 

7,673,517

 

 

 

7,969,857

 

 

 

7,653,372

 

 

LIMBACH HOLDINGS, INC.
Condensed Consolidated Balance Sheets

(Unaudited)

September 30,

 

December 31,

(in thousands, except share and per share data)

2020

2019

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

39,600

 

 

 

$

8,344

 

 

Restricted cash

113

 

 

 

113

 

 

Accounts receivable, net

124,839

 

 

 

105,067

 

 

Contract assets

68,576

 

 

 

77,188

 

 

Income tax receivable

685

 

 

 

494

 

 

Other current assets

3,908

 

 

 

4,174

 

 

Total current assets

237,721

 

 

 

195,380

 

 

 

 

 

 

Property and equipment, net

20,582

 

 

 

21,287

 

 

Intangible assets, net

11,785

 

 

 

12,311

 

 

Goodwill

6,129

 

 

 

6,129

 

 

Operating lease right-of-use assets

19,533

 

 

 

21,056

 

 

Deferred tax asset

4,575

 

 

 

4,786

 

 

Other assets

461

 

 

 

668

 

 

Total assets

$

300,786

 

 

 

$

261,617

 

 

 

 

 

 

LIABILITIES

 

 

 

Current liabilities

 

 

 

Current portion of long-term debt

$

6,612

 

 

 

$

4,425

 

 

Current operating lease liabilities

3,875

 

 

 

3,750

 

 

Accounts payable, including retainage

88,962

 

 

 

86,267

 

 

Contract liabilities

61,085

 

 

 

42,370

 

 

Accrued income taxes

1,959

 

 

 

12

 

 

Accrued expenses and other current liabilities

24,508

 

 

 

20,045

 

 

Total current liabilities

187,001

 

 

 

156,869

 

 

Long-term debt

37,462

 

 

 

38,868

 

 

Long-term operating lease liabilities

16,402

 

 

 

18,247

 

 

Other long-term liabilities

6,794

 

 

 

763

 

 

Total liabilities

247,659

 

 

 

214,747

 

 

Commitments and contingencies

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

Common stock, $0.0001 par value; 100,000,000 shares authorized, 7,894,202 issued and outstanding at September 30, 2020 and 7,688,958 at December 31, 2019

1

 

 

 

1

 

 

Additional paid-in capital

57,394

 

 

 

56,557

 

 

Accumulated deficit

(4,268

)

 

 

(9,688

)

 

Total stockholders’ equity

53,127

 

 

 

46,870

 

 

Total liabilities and stockholders’ equity

$

300,786

 

 

 

$

261,617

 

 

 

LIMBACH HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

 

Nine months ended
September 30,

 

2020

 

2019

(in thousands)

 

 

(As Recast)

Cash flows from operating activities:

 

 

 

Net income (loss)

$

5,420

 

 

 

$

(2,420

)

 

Adjustments to reconcile net income to cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

4,635

 

 

 

4,234

 

 

Impairment of goodwill

 

 

 

4,359

 

 

Provision for doubtful accounts

62

 

 

 

104

 

 

Stock-based compensation expense

739

 

 

 

1,373

 

 

Noncash operating lease expense

3,033

 

 

 

2,789

 

 

Amortization of debt issuance costs

1,620

 

 

 

901

 

 

Deferred income tax (benefit) provision

211

 

 

 

(775

)

 

Gain on sale of property and equipment

(18

)

 

 

(38

)

 

Loss on debt extinguishment

 

 

 

513

 

 

Gain on change in fair value of warrant liability

1,312

 

 

 

(422

)

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(19,834

)

 

 

(5,223

)

 

Contract assets

8,612

 

 

 

(15,768

)

 

Other current assets

270

 

 

 

29,733

 

 

Accounts payable, including retainage

2,695

 

 

 

(1,406

)

 

Prepaid income taxes

(192

)

 

 

77

 

 

Accrued taxes payable

1,947

 

 

 

63

 

 

Contract liabilities

18,715

 

 

 

(6,826

)

 

Operating lease liabilities

(3,229

)

 

 

(2,789

)

 

Accrued expenses and other current liabilities

8,925

 

 

 

(25,961

)

 

Other long-term liabilities

306

 

 

 

(102

)

 

Net cash provided by (used in) operating activities

35,229

 

 

 

(17,584

)

 

Cash flows from investing activities:

 

 

 

Proceeds from sale of property and equipment

65

 

 

 

148

 

 

Advances (to) from joint ventures

(3

)

 

 

3

 

 

Purchase of property and equipment

(1,116

)

 

 

(2,192

)

 

Net cash used in investing activities

(1,054

)

 

 

(2,041

)

 

Cash flows from financing activities:

 

 

 

Increase in bank overdrafts

 

 

 

6,102

 

 

Payments on Credit Agreement term loan

 

 

 

(14,335

)

 

Proceeds from Credit Agreement revolver

 

 

 

17,500

 

 

Payments on Credit Agreement revolver

 

 

 

(17,500

)

 

Proceeds from 2019 Revolving Credit Facility

7,250

 

 

 

19,250

 

 

Payments on 2019 Revolving Credit Facility

(7,250

)

 

 

(19,250

)

 

Payments on 2019 Refinancing Term Loan

(1,000

)

 

 

 

 

Proceeds from 2019 refinancing Term Loan, net of debt discount

 

 

 

38,643

 

 

Warrants issued in conjunction with the 2019 Refinancing Term Loan

 

 

 

969

 

 

Embedded derivative associated with the 2019 Refinancing Term Loan

 

 

 

388

 

 

Payments on Bridge Term Loan

 

 

 

(7,736

)

 

Payments on finance leases

(1,966

)

 

 

(1,803

)

 

Payments of debt issuance costs

 

 

 

(3,339

)

 

Taxes paid related to net-share settlement of equity awards

(102

)

 

 

(123

)

 

Proceeds from contributions to Employee Stock Purchase Plan

149

 

 

 

 

 

Net cash (used in) provided by financing activities

(2,919

)

 

 

18,766

 

 

Increase in cash, cash equivalents and restricted cash

31,256

 

 

 

(859

)

 

Cash, cash equivalents and restricted cash, beginning of period

8,457

 

 

 

1,732

 

 

Cash, cash equivalents and restricted cash, end of period

$

39,713

 

 

 

$

873

 

 

Supplemental disclosures of cash flow information

 

 

 

Noncash investing and financing transactions:

 

 

 

Right of use assets obtained in exchange for new operating lease liabilities

$

924

 

 

 

$

3,022

 

 

Right of use assets obtained in exchange for new finance lease liabilities

2,399

 

 

 

2,685

 

 

Right of use assets disposed or adjusted modifying operating lease liabilities

586

 

 

 

1,651

 

 

Right of use assets disposed or adjusted modifying finance lease liabilities

(64

)

 

 

(55

)

 

Interest paid

$

4,817

 

 

 

$

3,091

 

 

LIMBACH HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)

 

Three months ended
September 30,

Increase/(Decrease)

 

2020

 

2019

 

 

 

(in thousands)

 

 

(As Recast)

$

 

%

Statement of Operations Data:

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

Construction

$

130,498

 

 

 

$

118,424

 

 

$

12,074

 

 

 

10.2

 

%

Service

33,358

 

 

 

29,695

 

 

3,663

 

 

 

12.3

 

%

Total revenue

163,856

 

 

 

148,119

 

 

15,737

 

 

 

10.6

 

%

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

Construction

14,848

 

 

 

11,144

 

 

3,704

 

 

 

33.2

 

%

Service

9,323

 

 

 

7,229

 

 

2,094

 

 

 

29.0

 

%

Total gross profit

24,171

 

 

 

18,373

 

 

5,798

 

 

 

31.6

 

%

 

 

 

 

 

 

 

Selling, general and administrative expenses:(1)

 

 

 

 

 

 

Construction

10,501

 

 

 

10,746

 

 

(245

)

 

 

(2.3

)

%

Service

6,240

 

 

 

5,329

 

 

911

 

 

 

17.1

 

%

Corporate

304

 

 

 

493

 

 

(189

)

 

 

(38.3

)

%

Total selling, general and administrative expenses

17,045

 

 

 

16,568

 

 

477

 

 

 

2.9

 

%

Amortization of intangibles (Corporate)

109

 

 

 

149

 

 

(40

)

 

 

(26.8

)

%

Operating income (loss):

 

 

 

 

 

 

Construction

4,347

 

 

 

398

 

 

3,949

 

 

 

992.2

 

%

Service

3,083

 

 

 

1,900

 

 

1,183

 

 

 

62.3

 

%

Corporate

(413

)

 

 

(642

)

 

229

 

 

 

(35.7

)

%

Total operating income

$

7,017

 

 

 

$

1,656

 

 

$

5,361

 

 

 

323.7

 

%

 

 

 

 

 

 

 

(1) Starting January 1, 2020, we changed the methodology in which we present our corporate selling, general and administrative expenses to our CODM to better reflect the way the business is managed. Under this new methodology, all corporate expenses except for stock-based compensation are allocated to our Construction and Service segments. For comparability purposes, we reclassified our selling, general and administrative expense segment amounts for the three months ended September 30, 2019 to align with this updated allocation methodology.

 

LIMBACH HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)

 

Nine months ended
September 30,

 

Increase/(Decrease)

 

2020

 

2019

 

 

 

 

(in thousands)

 

 

(As Recast)

 

$

 

%

Statement of Operations Data:

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

Construction

$

345,921

 

 

 

$

327,643

 

 

 

18,278

 

 

 

5.6

 

%

Service

91,892

 

 

 

86,826

 

 

 

5,066

 

 

 

5.8

 

%

Total revenue

437,813

 

 

 

414,469

 

 

 

23,344

 

 

 

5.6

 

%

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

Construction

38,043

 

 

 

34,742

 

 

 

3,301

 

 

 

9.5

 

%

Service

24,687

 

 

 

20,949

 

 

 

3,738

 

 

 

17.8

 

%

Total gross profit

62,730

 

 

 

55,691

 

 

 

7,039

 

 

 

12.6

 

%

 

 

 

 

 

 

 

 

Selling, general and administrative expenses:(1)

 

 

 

 

 

 

 

Construction

28,700

 

 

 

32,427

 

 

 

(3,727

)

 

 

(11.5

)

%

Service

18,157

 

 

 

15,890

 

 

 

2,267

 

 

 

14.3

 

%

Corporate

739

 

 

 

1,374

 

 

 

(635

)

 

 

(46.2

)

%

Total selling, general and administrative expenses

47,596

 

 

 

49,691

 

 

 

(2,095

)

 

 

(4.2

)

%

Amortization of intangibles (Corporate)

526

 

 

 

499

 

 

 

27

 

 

 

5.4

 

%

Operating income (loss):

 

 

 

 

 

 

 

Construction

9,343

 

 

 

2,315

 

 

 

7,028

 

 

 

303.6

 

%

Service

6,530

 

 

 

5,059

 

 

 

1,471

 

 

 

29.1

 

%

Corporate

(1,265

)

 

 

(1,873

)

 

 

608

 

 

 

(32.5

)

%

Total operating income

$

14,608

 

 

 

$

5,501

 

 

 

$

9,107

 

 

 

165.6

 

%

 

(1) Starting January 1, 2020, we changed the methodology in which we present our corporate selling, general and administrative expenses to our CODM to better reflect the way the business is managed. Under this new methodology, all corporate expenses except for stock-based compensation are allocated to our Construction and Service segments. For comparability purposes, we reclassified our selling, general and administrative expense segment amounts for the three months ended September 30, 2019 to align with this updated allocation methodology.

Non-GAAP Financial Measures
In assessing the performance of our business, management utilizes a variety of financial and performance measures. The key measure is Adjusted EBITDA, a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) plus depreciation and amortization expense, interest expense, and taxes, as further adjusted to eliminate the impact of, when applicable, other non-cash items or expenses that are unusual or non-recurring that we believe do not reflect our core operating results. We believe that Adjusted EBITDA is meaningful to our investors to enhance their understanding of our financial performance for the current period and our ability to generate cash flows from operations that are available for taxes, capital expenditures and debt service. We understand that Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties as a measure of financial performance and to compare our performance with the performance of other companies that report Adjusted EBITDA. Our calculation of Adjusted EBITDA, however, may not be comparable to similarly titled measures reported by other companies. When assessing our operating performance, investors and others should not consider this data in isolation or as a substitute for net income (loss) calculated in accordance with GAAP. Further, the results presented by Adjusted EBITDA cannot be achieved without incurring the costs that the measure excludes. A reconciliation of net income (loss) to Adjusted EBITDA, the most comparable GAAP measure, is provided below.

We refer to our estimated revenue on uncompleted contracts, including the amount of revenue on contracts for which work has not begun, less the revenue we have recognized under such contracts, as “backlog.” Backlog includes unexercised contract options.

 

Reconciliation of Net Income (loss) to Adjusted EBITDA

 

 

 

 

 

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

(in thousands)

2020

 

2019
(As Recast)

 

2020

 

2019
(As Recast)

Net income (loss)

$

2,525

 

 

$

(2,978)

 

 

$

5,420

 

 

$

(2,420)

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

Depreciation and amortization

1,495

 

 

1,362

 

 

4,635

 

 

4,234

 

Interest expense

2,154

 

 

1,759

 

 

6,449

 

 

4,190

 

Non-cash stock-based compensation expense

304

 

 

491

 

 

739

 

 

1,373

 

Loss on debt extinguishment

 

 

 

 

 

 

513

 

Impairment of goodwill

 

 

4,359

 

 

 

 

4,359

 

Change in fair value of warrants

1,371

 

 

(525)

 

 

1,312

 

 

(422)

 

Severance expense

 

 

 

 

622

 

 

Income tax (benefit) provision

970

 

 

(942)

 

 

1,445

 

 

(681)

 

CFO transition costs

 

 

301

 

 

 

301

Adjusted EBITDA

$

8,819

 

 

$

3,827

 

 

$

20,622

 

 

$

11,447

 

 

Investor Relations:

The Equity Group, Inc.
Jeremy Hellman, CFA
Vice President
(212) 836-9626 / jhellman@equityny.com

or

Limbach Holdings, Inc.
S. Mathew Katz
Executive Vice President
(212) 201-7006 / matt.katz@limbachinc.com

Source: Limbach Holdings, Inc.