LMB Limbach Holdings Inc

Owner Direct Relationships (“ODR”) Segment Revenue up 22.8% Year-over-Year for Q4 and 21.1% for the Year

ODR Segment Accounted for 55.1% of Revenue and 71.1% of Consolidated Gross Profit for the Quarter

Consolidated Gross Margin Increased to 23.3% for the Quarter and 23.1% for the Year

Year-end Cash and Cash Equivalents of $59.8 million

Limbach Holdings, Inc. (Nasdaq: LMB) (“Limbach” or the “Company”) today announced its financial results for the year ended December 31, 2023.

2023 Fourth Quarter Financial Overview Compared to 2022 Fourth Quarter

• Consolidated revenue of $142.7 million, a decrease of 0.6% from $143.5 million as the Company continued to take a disciplined approach to select smaller, higher margin projects.
• Gross profit of $33.3 million, an increase of 14.0% from $29.2 million.
• Net income of $5.2 million, or $0.44 per diluted share, compared to net income of $3.8 million, or $0.35 per diluted share.
• Adjusted EBITDA of $12.6 million, up 8.8% from $11.6 million.
• Net cash provided by operating activities of $13.9 million compared to $12.4 million.

2023 Overview Compared to 2022

• Consolidated revenue of $516.4 million, an increase of 3.9% from $496.8 million.
• Gross profit of $119.3 million, an increase of 27.3% from $93.7 million.
• Net income of $20.8 million, or $1.76 per diluted share, compared to $6.8 million, or $0.64 per diluted share.
• Adjusted EBITDA of $46.8 million, up 47.3% from $31.8 million.
• Net cash provided by operating activities of $57.4 million compared to $35.4 million.

Management Comments

“In 2023, we made tremendous progress executing our strategy to become a pure-play provider of buildings systems solutions. We continued to grow our ODR business as an indispensable partner helping our customers provide mission critical services to maintain uninterrupted operations in their facilities. This strategic shift in customer mix is driving higher margin opportunities and creating a stronger, more resilient Limbach,” said Michael McCann, Limbach’s President and Chief Executive Officer.

“I am pleased to report that our team’s focus on accelerating the shift to the ODR business drove expanded margins and delivered Adjusted EBITDA above our guidance for the full year. We grew full-year diluted EPS 175% and Cash Flow from Operating Activities by 62.2%. Furthermore, our full-year ODR revenue increased 21.1% over the previous year. ODR revenue for the quarter was 55.1% of consolidated revenue, exceeding our annual goal of 50%. Our 2024 annual goal for ODR revenue is between 60% and 70% of consolidated revenue.

“While our primary focus is on ODR, we are also implementing changes in our General Contractor Relationship (“GCR”) business. We are taking a more selective approach to the projects we pursue by focusing on smaller contracts with shorter durations. In the fourth quarter, our consolidated revenue was by design slightly lower because of this action but going forward, this should provide greater flexibility and drive higher overall returns.

“We are evolving our service offerings to better support our customers as a one-stop shop for building system solutions. For example, in 2024 we have already invested approximately $4 million in rental equipment for indoor climate control. This provides our customers with an immediate solution to support their mission-critical operations during emergencies or planned downtimes. As we deploy this new rental solution into the market, we anticipate seeing a return on this investment in the second half of 2024.

“We are still in the early stages of our transformation to an even higher quality, more predictable business, and we are confident our strategy is working. Our team will continue our disciplined approach to projects, and we are excited about expanding our customer relationships and service offerings. We also plan to leverage our strong balance sheet to make strategic investments. We believe this strategy will continue delivering value to our customers and higher returns for our shareholders in 2024 and beyond.”

The following are results for the three months ended December 31, 2023, compared to the three months ended December 31, 2022:

• Consolidated revenue was $142.7 million, a decrease of 0.6% from $143.5 million. ODR segment revenue of $78.6 million increased by $14.6 million, or 22.8%, while GCR segment revenue of $64.1 million was down $15.4 million, or 19.4%. The increase in ODR segment revenue primarily was due to the Company's continued focus on the accelerated growth of its ODR business. The decrease in GCR segment revenue primarily was due to the Company’s continued focus on improving project execution and profitability by pursuing GCR opportunities that were smaller in size and shorter in duration.
• Gross margin increased to 23.3%, up from 20.4%. On a dollar basis, total gross profit was $33.3 million, compared to $29.2 million. ODR gross profit increased $6.4 million, or 36.8%, due to the combination of an increase in revenue and higher margins of 30.1% versus 27.0% driven by contract mix. GCR gross profit decreased $2.3 million, or 19.1%, as a result of lower revenue. GCR gross margin was flat at 15.0%. This mix shift is a key element of the Company’s strategy to increase profitability by taking a disciplined approach to select smaller, higher margin projects that mitigate the risk and volatility associated with larger, lower margin projects.
• SG&A expense increased approximately $3.2 million, to $25.0 million, compared to $21.8 million. The increase in SG&A primarily was due to a $2.0 million increase associated with payroll and incentive related expenses, a $0.8 million increase in stock compensation expense, a $1.2 million increase associated with costs incurred by the entities acquired in the ACME and Industrial Air transactions and $0.6 million related to an increase in professional fees, partially offset by a $1.6 million decrease related to certain legal accruals. As a percent of revenue, SG&A expense was 17.5%, up from 15.2%.
• Interest expense was $0.4 million compared to $0.6 million, which was the result of a lower overall outstanding debt balance period-over-period.
• Interest income was $0.6 million during the current quarter. This increase was due to the Company's investment strategy in overnight repurchase agreements, U.S. Treasury Bills, and money market funds during 2023.
• Net income was $5.2 million as compared to $3.8 million. Diluted earnings per share was $0.44 as compared to $0.35. Adjusted EBITDA was $12.6 million as compared to $11.6 million, an increase of 8.8%.
• Net cash provided by operating activities increased to $13.9 million as compared to $12.4 million.

The following are results for the year ended December 31, 2023, compared to the year ended December 31, 2022:

• Consolidated revenue was $516.4 million, an increase of 3.9% from $496.8 million. ODR segment revenue of $262.0 million increased by $45.6 million, or 21.1%, while GCR segment revenue of $254.4 million decreased by $26.0 million, or 9.3%. The increase in ODR segment revenue primarily was due to the Company's continued focus on accelerating growth of its ODR business. In addition, ODR segment revenue increased by approximately $8.1 million due to the ACME and Industrial Air transactions. The decrease in GCR segment revenue primarily was due to the Company’s continued focus on improving project execution and profitability by pursuing GCR opportunities that are smaller in size (based on contract value) and shorter in duration.
• Gross margin increased to 23.1%, up from 18.9%. On a dollar basis, total gross profit was $119.3 million, compared to $93.7 million. ODR gross profit increased $21.0 million, or 38.0%, due to the combination of an increase in revenue and higher margins driven by contract mix. GCR gross profit increased $4.6 million, or 11.9%, primarily due to higher margins despite lower revenue.
• SG&A expense increased approximately $9.5 million, to $87.4 million, compared to $77.9 million. The increase in SG&A primarily was due to a $6.8 million increase associated with payroll and incentive related expenses, a $2.2 million increase in stock compensation expense, a $1.5 million increase in costs incurred by the entities acquired in the ACME and Industrial Air transactions, $1.0 million related to CEO transition costs and $0.8 million related to acquisition-related costs, partially offset by a $1.2 million decrease in rent related expenses and a $1.5 million decrease related to certain legal accruals. As a percent of revenue, SG&A expense was 16.9%, up from 15.7%.
• Interest expense was $2.0 million compared to $2.1 million, reflecting a lower overall outstanding debt balance period-over-period, partly offset by a full-year of interest expense recognized on our financing lease liability arrangement.
• Interest income was $1.2 million, which was driven by the Company's investments in overnight repurchase agreements, U.S. Treasury Bills, and money market funds.
• Net income for the year was $20.8 million as compared to $6.8 million. Diluted earnings per share was $1.76 as compared to $0.64. Adjusted EBITDA was $46.8 million as compared to $31.8 million, an increase of 47.3%.
• Net cash provided by operating activities was $57.4 million as compared to $35.4 million.

Balance Sheet

At December 31, 2023, cash and cash equivalents was $59.8 million. Current assets were $217.0 million and current liabilities were $145.1 million at December 31, 2023, representing a current ratio of 1.50x compared to 1.42x at December 31, 2022. Working capital was $71.9 million at December 31, 2023, an increase of $4.9 million from December 31, 2022. At December 31, 2023, we had $10.0 million borrowings outstanding on our revolving credit facility and $4.1 million for standby letters of credit. For the year ended December 31, 2023, the Company made cash payments of $11.5 million on the principal portion of the A&R Wintrust Term Loan prior to its extinguishment.

2024 Guidance

The Company is providing initial 2024 full year guidance, as summarized in the table below.

Revenue

 

$510 million - $530 million

Adjusted EBITDA

 

$49 million - $53 million

We do not provide a reconciliation of forward-looking Adjusted EBITDA or the most directly comparable forward-looking GAAP measure of net income attributable to the Company because we cannot predict with a reasonable degree of certainty and without unreasonable efforts certain components or excluded items that are inherently uncertain and depend on various factors. For these reasons, we are unable to assess the potential significance of the unavailable information.

Conference Call Details

Date:

 

Thursday, March 14, 2024

Time:

 

9:00 a.m. Eastern Time

Participant Dial-In Numbers:

 

 

Domestic callers:

 

877-407-6176

International callers:

 

201-689-8451

Access by Webcast

The call will also be simultaneously webcast over the Internet via the “Investor Relations” section of Limbach’s website at www.limbachinc.com or by clicking on the conference call link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=iawWhaB5. An audio replay of the call will be archived on Limbach’s website for 365 days.

About Limbach

Limbach is a building systems solution firm that partners with building owners and facilities managers who have mission critical mechanical (heating, ventilation and air conditioning), electrical and plumbing infrastructure. We strive to be an indispensable partner to our customers by providing services that are essential to the operation of their businesses. We work with building owners primarily in six vertical markets: healthcare, industrial and manufacturing, data centers, life science, higher education and cultural and entertainment. We have more than 1,400 team members in 19 offices across the eastern United States. Our team members uniquely combine engineering expertise with field installation skills to provide custom solutions that leverage our full life-cycle capabilities, which allows us to address both the operational and capital projects needs of our customers.

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, timing of the recognition of backlog as revenue, the potential for recovery of cost overruns, the ability of Limbach to successfully remedy the issues that have led to write-downs in various business units and the Company’s business being negatively affected by health crises or outbreaks of disease, such as epidemics or pandemics (and related impacts, such as supply chain disruptions). These statements may be preceded by, followed by or include the words “believe,” “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. There may be additional risks that we consider immaterial or which are unknown. 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. Consolidated Statements of Operations

 

(in thousands, except share and per share data)

(Unaudited) For the Quarter Ended December 31,

 

For the Years Ended December 31,

2023

 

2022

 

2023

 

2022

Revenue

$

142,691

 

 

$

143,483

 

 

$

516,350

 

 

$

496,782

 

Cost of revenue

 

109,385

 

 

 

114,256

 

 

 

397,060

 

 

 

403,041

 

Gross profit

 

33,306

 

 

 

29,227

 

 

 

119,290

 

 

 

93,741

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

24,964

 

 

 

21,766

 

 

 

87,397

 

 

 

77,879

 

Change in fair value of contingent consideration

 

265

 

 

 

1,134

 

 

 

729

 

 

 

2,285

 

Amortization of intangibles

 

826

 

 

 

383

 

 

 

1,880

 

 

 

1,567

 

Total operating expenses

 

26,055

 

 

 

23,283

 

 

 

90,006

 

 

 

81,731

 

Operating income

 

7,251

 

 

 

5,944

 

 

 

29,284

 

 

 

12,010

 

Other (expense) income:

 

 

 

 

 

 

 

Interest expense

 

(431

)

 

 

(633

)

 

 

(2,046

)

 

 

(2,144

)

Interest income

 

593

 

 

 

—

 

 

 

1,217

 

 

 

—

 

Loss on early termination of operating lease

 

—

 

 

 

—

 

 

 

—

 

 

 

(849

)

Loss on debt extinguishment

 

—

 

 

 

—

 

 

 

(311

)

 

 

—

 

(Loss) gain on change in fair value of interest swap

 

(277

)

 

 

12

 

 

 

(124

)

 

 

310

 

Gain on disposition of property and equipment

 

52

 

 

 

19

 

 

 

80

 

 

 

281

 

Total other expenses

 

(63

)

 

 

(602

)

 

 

(1,184

)

 

 

(2,402

)

Income before income taxes

 

7,188

 

 

 

5,342

 

 

 

28,100

 

 

 

9,608

 

Income tax provision

 

1,939

 

 

 

1,534

 

 

 

7,346

 

 

 

2,809

 

Net income

$

5,249

 

 

$

3,808

 

 

$

20,754

 

 

$

6,799

 

 

 

 

 

 

 

 

 

Earnings Per Share (“EPS”)

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.48

 

 

$

0.37

 

 

$

1.93

 

 

$

0.65

 

Diluted

$

0.44

 

 

$

0.35

 

 

$

1.76

 

 

$

0.64

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic

 

11,003,424

 

 

 

10,411,611

 

 

 

10,773,467

 

 

 

10,425,119

 

Diluted

 

11,865,450

 

 

 

10,888,777

 

 

 

11,812,098

 

 

 

10,676,534

 

LIMBACH HOLDINGS, INC. Consolidated Balance Sheets

 

 

As of December 31,

(in thousands, except share data)

2023

 

2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

59,833

 

 

$

36,001

 

Restricted cash

 

65

 

 

 

113

 

Accounts receivable (net of allowance for credit losses of $292 and net of allowance for doubtful accounts of $234 as of December 31, 2023 and 2022, respectively)

 

97,755

 

 

 

124,442

 

Contract assets

 

51,690

 

 

 

61,453

 

Advances to and equity in joint ventures, net

 

12

 

 

 

12

 

Income tax receivable

 

—

 

 

 

95

 

Other current assets

 

7,645

 

 

 

3,874

 

Total current assets

 

217,000

 

 

 

225,990

 

 

 

 

 

Property and equipment, net

 

20,830

 

 

 

18,224

 

Intangible assets, net

 

24,999

 

 

 

15,340

 

Goodwill

 

16,374

 

 

 

11,370

 

Operating lease right-of-use assets

 

19,727

 

 

 

18,288

 

Deferred tax asset

 

5,179

 

 

 

4,829

 

Other assets

 

330

 

 

 

515

 

Total assets

$

304,439

 

 

$

294,556

 

 

 

 

 

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

2,680

 

 

$

9,564

 

Current operating lease liabilities

 

3,627

 

 

 

3,562

 

Accounts payable, including retainage

 

65,268

 

 

 

75,122

 

Contract liabilities

 

42,160

 

 

 

44,007

 

Accrued income taxes

 

446

 

 

 

1,888

 

Accrued expenses and other current liabilities

 

30,967

 

 

 

24,942

 

Total current liabilities

 

145,148

 

 

 

159,085

 

Long-term debt

 

19,631

 

 

 

21,528

 

Long-term operating lease liabilities

 

16,037

 

 

 

15,643

 

Other long-term liabilities

 

2,708

 

 

 

2,858

 

Total liabilities

 

183,524

 

 

 

199,114

 

Commitments and contingencies

 

 

 

Redeemable convertible preferred stock, net, par value $0.0001, $1,000,000 shares authorized, no shares issued and outstanding ($0 redemption value)

 

—

 

 

 

—

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

Common stock, $0.0001 par value; 100,000,000 shares authorized, issued 11,183,076 and 10,471,410, respectively; 11,003,424 and 10,291,758 outstanding, respectively

 

1

 

 

 

1

 

Additional paid-in capital

 

92,528

 

 

 

87,809

 

Treasury stock, at cost (179,652 shares at both period ends)

 

(2,000

)

 

 

(2,000

)

Retained earnings

 

30,386

 

 

 

9,632

 

Total stockholders’ equity

 

120,915

 

 

 

95,442

 

Total liabilities and stockholders’ equity

$

304,439

 

 

$

294,556

 

LIMBACH HOLDINGS, INC. Consolidated Statements of Cash Flows

 

 

Year Ended December 31,

(in thousands)

2023

 

2022

Cash flows from operating activities:

 

 

 

Net income

$

20,754

 

 

$

6,799

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

Depreciation and amortization

 

8,244

 

 

 

8,158

 

Noncash operating lease expense

 

3,824

 

 

 

4,260

 

Provision for credit losses / doubtful accounts

 

431

 

 

 

292

 

Stock-based compensation expense

 

4,910

 

 

 

2,742

 

Loss on early debt extinguishment

 

311

 

 

 

—

 

Loss on early termination of operating lease

 

—

 

 

 

849

 

Amortization of debt issuance costs

 

79

 

 

 

138

 

Deferred income tax provision

 

(350

)

 

 

(499

)

Gain on sale of property and equipment

 

(80

)

 

 

(281

)

Loss (gain) on change in fair value of interest rate swap

 

124

 

 

 

(310

)

Loss on change in fair value of contingent consideration

 

729

 

 

 

2,285

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

32,607

 

 

 

(35,407

)

Contract assets

 

10,397

 

 

 

22,410

 

Other current assets

 

(1,486

)

 

 

1,128

 

Accounts payable, including retainage

 

(10,909

)

 

 

11,282

 

Contract liabilities

 

(9,121

)

 

 

17,296

 

Income tax receivable

 

95

 

 

 

19

 

Accrued income taxes

 

(1,442

)

 

 

1,387

 

Accrued expenses and other current liabilities

 

2,867

 

 

 

(2,934

)

Operating lease liabilities

 

(3,795

)

 

 

(4,133

)

Payment of contingent consideration liability in excess of acquisition-date fair value

 

(1,224

)

 

 

—

 

Other long-term liabilities

 

401

 

 

 

(108

)

Net cash provided by operating activities

 

57,366

 

 

 

35,373

 

Cash flows from investing activities:

 

 

 

ACME Transaction, net of cash acquired

 

(4,883

)

 

 

—

 

Industrial Air Transaction, net of cash acquired

 

(10,378

)

 

 

—

 

Proceeds from sale of property and equipment

 

435

 

 

 

498

 

Purchase of property and equipment

 

(2,266

)

 

 

(993

)

Net cash used in investing activities

 

(17,092

)

 

 

(495

)

Cash flows from financing activities:

 

 

 

Payments on Wintrust and A&R Wintrust Term Loans

 

(21,452

)

 

 

(13,429

)

Proceeds from Wintrust Revolving Loan

 

10,000

 

 

 

15,194

 

Payment on Wintrust Revolving Loan

 

—

 

 

 

(15,194

)

Proceeds from financing transaction

 

—

 

 

 

5,400

 

Payments on financing liability

 

—

 

 

 

(49

)

Payment of contingent consideration liability up to acquisition-date fair value

 

(1,776

)

 

 

—

 

Repurchase of common stock under Share Repurchase Program

 

—

 

 

 

(2,000

)

Payments on finance leases

 

(2,733

)

 

 

(2,734

)

Proceeds from contributions to employee stock purchase plan

 

368

 

 

 

309

 

Taxes paid related to net-share settlement of equity awards

 

(847

)

 

 

(417

)

Payments of debt issuance costs

 

(50

)

 

 

(433

)

Net cash used in financing activities

 

(16,490

)

 

 

(13,353

)

Increase (decrease) in cash, cash equivalents and restricted cash

 

23,784

 

 

 

21,525

 

Cash, cash equivalents and restricted cash, beginning of year

 

36,114

 

 

 

14,589

 

Cash, cash equivalents and restricted cash, end of year

$

59,898

 

 

$

36,114

 

 

 

 

 

Supplemental disclosures of cash flow information

 

 

 

Noncash investing and financing transactions:

 

 

 

Earnout liability associated with the ACME Transaction

$

1,514

 

 

$

—

 

Earnout liability associated with the Industrial Air Transaction

 

3,165

 

 

 

—

 

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

 

3,135

 

 

 

—

 

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

 

5,219

 

 

 

2,634

 

Right of use assets disposed or adjusted modifying operating leases liabilities

 

1,112

 

 

 

2,455

 

Right of use assets disposed or adjusted modifying finance leases liabilities

 

(93

)

 

 

(77

)

Interest paid

 

1,908

 

 

 

2,005

 

Cash paid for income taxes

$

9,156

 

 

$

1,979

 

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

 

 

Three Months Ended December 31,

 

Increase/(Decrease)

(in thousands, except for percentages)

2023

 

2022

 

$

 

%

Statement of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

GCR

$

64,063

 

44.9

%

 

$

79,458

 

55.4

%

 

$

(15,395

)

 

(19.4

) %

ODR

 

78,628

 

55.1

%

 

 

64,025

 

44.6

%

 

 

14,603

 

 

22.8

%

Total revenue

 

142,691

 

100.0

%

 

 

143,483

 

100.0

%

 

 

(792

)

 

(0.6

) %

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

GCR(1)

 

9,640

 

15.0

%

 

 

11,922

 

15.0

%

 

 

(2,282

)

 

(19.1

) %

ODR(2)

 

23,666

 

30.1

%

 

 

17,305

 

27.0

%

 

 

6,361

 

 

36.8

%

Total gross profit

 

33,306

 

23.3

%

 

 

29,227

 

20.4

%

 

 

4,079

 

 

14.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Total selling, general and administrative(3)

 

24,964

 

17.5

%

 

 

21,766

 

15.2

%

 

 

3,198

 

 

14.7

%

Change in fair value of contingent consideration

 

265

 

0.2

%

 

 

1,134

 

0.8

%

 

 

(869

)

 

(76.6

) %

Amortization of intangibles

 

826

 

0.6

%

 

 

383

 

0.3

%

 

 

443

 

 

115.7

%

Total operating income

$

7,251

 

5.1

%

 

$

5,944

 

4.1

%

 

$

1,307

 

 

22.0

%

(1) 

 

As a percentage of GCR revenue.

(2)

 

As a percentage of ODR revenue.

(3)

Included within selling, general and administrative expenses was $1.5 million and $0.8 million of stock-based compensation expense for the quarter ended December 31, 2023 and 2022, respectively.

LIMBACH HOLDINGS, INC. Consolidated Statements of Operations

 

 

Year Ended December 31,

 

Increase/(Decrease)

(in thousands, except for percentages)

2023

 

2022

 

$

 

%

Statement of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

GCR

$

254,392

 

49.3

%

 

$

280,379

 

56.4

%

 

$

(25,987

)

 

(9.3

) %

ODR

 

261,958

 

50.7

%

 

 

216,403

 

43.6

%

 

 

45,555

 

 

21.1

%

Total revenue

 

516,350

 

100.0

%

 

 

496,782

 

100.0

%

 

 

19,568

 

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

GCR(1)

 

43,200

 

17.0

%

 

 

38,622

 

13.8

%

 

 

4,578

 

 

11.9

%

ODR(2)

 

76,090

 

29.0

%

 

 

55,119

 

25.5

%

 

 

20,971

 

 

38.0

%

Total gross profit

 

119,290

 

23.1

%

 

 

93,741

 

18.9

%

 

 

25,549

 

 

27.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Total selling, general and administrative(3)

 

87,397

 

16.9

%

 

 

77,879

 

15.7

%

 

 

9,518

 

 

12.2

%

Change in fair value of contingent consideration

 

729

 

0.1

%

 

 

2,285

 

0.5

%

 

 

(1,556

)

 

(68.1

) %

Amortization of intangibles

 

1,880

 

0.4

%

 

 

1,567

 

0.3

%

 

 

313

 

 

20.0

%

Total operating income

$

29,284

 

5.7

%

 

$

12,010

 

2.4

%

 

$

17,274

 

 

143.8

%

(1) 

 

As a percentage of GCR revenue.

(2) 

 

As a percentage of ODR revenue.

(3) 

 

Included within selling, general and administrative expenses was $4.9 million and $2.7 million of stock based compensation expense for the years ended December 31, 2023 and 2022, respectively.

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 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 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 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 to Adjusted EBITDA (unaudited)

 

Three Months Ended December 31,

 

For the Years Ended December 31,

(in thousands)

2023

 

2022

 

2023

 

2022

Net income

$

5,249

 

 

$

3,808

 

 

$

20,754

 

 

$

6,799

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

Depreciation and amortization

 

2,493

 

 

 

1,985

 

 

 

8,244

 

 

 

8,158

 

Interest expense

 

431

 

 

 

633

 

 

 

2,046

 

 

 

2,144

 

Interest income

 

(593

)

 

 

—

 

 

 

(1,217

)

 

 

—

 

Non-cash stock-based compensation expense

 

1,536

 

 

 

762

 

 

 

4,910

 

 

 

2,742

 

Loss on early debt extinguishment

 

—

 

 

 

—

 

 

 

311

 

 

 

—

 

Change in fair value of interest rate swap

 

277

 

 

 

(12

)

 

 

124

 

 

 

(310

)

Loss on early termination of operating lease

 

—

 

 

 

—

 

 

 

—

 

 

 

849

 

CEO transition costs

 

—

 

 

 

—

 

 

 

958

 

 

 

—

 

Restructuring costs(1)

 

681

 

 

 

1,692

 

 

 

1,770

 

 

 

6,016

 

Change in fair value of contingent consideration

 

265

 

 

 

1,134

 

 

 

729

 

 

 

2,285

 

Income tax provision

 

1,939

 

 

 

1,534

 

 

 

7,346

 

 

 

2,809

 

Acquisition and other transaction costs

 

302

 

 

 

30

 

 

 

826

 

 

 

273

 

Adjusted EBITDA

$

12,580

 

 

$

11,566

 

 

$

46,801

 

 

$

31,765

 

(1) 

 

Includes restructuring charges within our Southern California and Eastern Pennsylvania branches as well as other cost savings initiatives throughout the company.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240313545242/en/

Investor Relations Financial Profiles, Inc. Julie Kegley LMB@finprofiles.com