Limbach Holdings, Inc. (LMB) Earnings

Management highlights

• Long-term vision is to be an indispensable building system solutions partner for mission-critical facilities. • Transitioned and scaled business to focus on direct relationships with building owners, with revenue mix stabilization between ODR and GCR. • First quarter revenue in line with expectations, organic revenue down due to lower bookings and seasonal patterns. • Focus on three strategic growth pillars: ODR organic and total revenue growth, margin expansion through evolved customer solutions, scaling through acquisitions. • Strong Q1 bookings with 27% from data center opportunities. • Pioneer Power integration progressing, aiming to increase its margin to align with company average. • Healthcare market: budgets normalizing, spending expected to pick up in second half. • Data centers: longstanding relationships with hyperscalers, recent wins of data center projects, including a significant one exceeding $30 million. • Industrial manufacturing activity showing momentum starting in April.

Guidance

• Reaffirm full-year guidance for 2026: revenue between $730 and $760 million (13%-17% year-over-year growth), adjusted EBIT 90 to 94 million (10%-16% year-over-year growth). • Total organic revenue growth 4-8%, ODR organic revenue growth 9-12%, ODR revenue to be 75-80% of total revenue. • Total gross margin 26-27%, SG&A expenses 15-17% of total annual revenue, free cash flow 75% of adjusted EBITDA. • Second quarter 2026 expected to have sequential improvement in revenue and adjusted EBITDA.

Segment performance

First quarter revenue was $138.9 million. Total revenue growth was 4.3%, but organic revenue was down 13.4%. Revenue mix was 71.9% ODR and 28.1% GCR. ODR revenue grew 10.4% with organic ODR revenue declining 5.4%. Total gross margin was 22.4%. Adjusted EBIT was $8.7 million. Q1 bookings were $209 million with a book-to-bill ratio of 1.5. Approximately 27% of bookings came from data center opportunities. ODR gross profit comprised 73.7% of total gross profit dollars, or $23 million, with ODR gross margin 23%. GCR gross profit decreased 22.5% from $10.6 million to $8.2 million, with GCR gross margin decreasing from 24.7% to 21%.

Analyst Q&A

• Q: Good morning. First question is on your kind of gross margin trends. You addressed some of the ins and outs, but what's sort of the timing of the improvement on Pioneer kind of this year? I know you gave a two- to three-year window, but how much improvement can you see this year from Pioneer integration?

  A: From a Pioneer Power perspective, this year is focused on gross profit improvement. Dedicating resources to best accounts, analyzing and renegotiating accounts, and infusing data center work. Improving towards the back half of the year with coordinated efforts.

• Q: And then on the bookings, strong bookings in the quarter, particularly in data center, how much, you know, it seems like you're early in that effort. How much opportunity do you see in the data center vertical as you get your national account teams in place?

  A: We've been pleased with the last two quarters' bookings. Leveraging existing relationships, have a national vertical market team. Anticipate combination of national contractor footprint and mission critical expertise to be favorable.

• Q: Hey, good morning, guys. Thanks for taking a couple. Maybe just one more follow-up on data center. So it sounds like the lead times in terms of converting the data center orders is, at least on these orders, is a little bit quicker than the average bookings. Is that fair?

  A: It depends on the work. Some jobs like fabrication projects will burn quickly, but there's a reasonable setup period. We're excited about our ability to leverage capacity and speed to market.

• Q: Yeah, thanks. Good morning, everybody. Congrats on the data center. Good morning. Hey, good morning. I realize awards are kind of hard to predict, but the data center activity in terms of awards that you saw this quarter, is that unusually high? Or just given the demand environment that we're seeing, could you see us potentially grow from this level? I guess how sustainable do you think this level of activity on the data center side is?

  A: It's tough for us to tell, but I will say we've talked to – various customers in this space, the opportunity is there, no doubt about it. I mean, we're going to have to figure out what our cadence is. We're off to a good start, but I think we don't have enough quarters in a row to kind of figure out our cadence or our year-end percentage. But there is so much spend that they're looking for people that understand quality, speed to market, kind of all the things that kind of play into our expertise. So we haven't necessarily run into... a position or a customer where there wasn't the need. And so I think it's going to be the demands there for us to take advantage of, for sure.

• Q: And then obviously, it sounds like fabrication work is part of the awards here. Do you guys have enough capacity currently to support what you're being awarded? Or is there any more CapEx that is needed to support some of that work? And I guess at what point would you need to add more fabrication capacity, or are we pretty far away from that at this point?

  A: No, that's a good question. So we have a decent amount of capacity right now. If anything, we have excess capacity. When we purchased Jake Marshall in late 2021, they had a very large fabrication facility. I think it's almost 14 acres. So we have a lot of capacity. I'd love to get to the point where we need more because that means that that shop, we also have other shops at locations as well too. So I think the advantage for us is when some players or competitors are filled up, we have the capacity. So we spend a lot of time touring people through our facility and And they can see physically that there's capacity as well, too. So, you know, I'd love to be discussing a CapEx in some sense because that means, but I think we're quite a bit of ways away from that. And we're trying to use the capacity that we have and fill it up. So there's several of these jobs that we can handle at one point. And then we also have overflow as well, too. So that's the message that we're telling our customers. I think it's going to help the business all around is if we fill up that fabrication capability capacity.

• Q: Hi. Good morning, everyone. Morning. Morning. Thank you. Could you talk about industrial manufacturing situations? You mentioned you're seeing meaningful momentum start in April. So if you could talk about what exactly you are seeing and any more color would be appreciated.

  A: Sure, sure. So a lot of our industrial work in manufacturing has really come from our acquisitions from Pioneer Power in Minneapolis and Consolidated in Kentucky as well as – Jake Marshall in our Chattanooga location as well too. So for us, part of it's just, I think as we've continued to acquire companies that work in that space, there seems to be kind of a natural cadence that April starts that spend. So, you know, we see positive outlook for sure, but I think that seems like that's the spend, that's the timing. I mean, especially even from a PPI perspective, I think some of this is just seasonal as well too. But as we continue to acquire in this space, I think we're going to see kind of the pattern that happens. So we're optimistic and looking forward, I think, to the work that happens this year.

• Q: And follow-up on national versus local sales contributions. Last quarter, you discussed investing in two senior executives, one focused on local sales enablement and one on the national relationship. How much of the $209 million in Q1 booking was driven by national account relationship versus local sales. And are you seeing the national strategies begin to contribute meaningfully?

  A: Yeah, we didn't provide a breakout per se, but I will say there's a good mix between the two. Still more heavily locally weighed, but definitely starting to see some at-bats from a national perspective as well, too. So Jamie and I are very happy with way that we you know from a structure standpoint and an executive management standpoint you know as far as one one executives on sales enablement with local sales been very successful and then we have somebody dedicated from a national account perspective so um that's going really well i think there are i would also tell you too that the two of them work together and those functions work really well together as well too. So if we have a national um account or an opportunity the two of those execs collaborate as well as the local branch as well, too. So I see them working really closely together. And as we expand not only our footprint, but as well as our exposure from a national account perspective, the more overlap, the better. That means we're getting synergies as well, too. So I think for us, you know, especially from a customer buy perspective and the way that we go to market and differentiate ourselves, the ability to have local and national I think is going to be a game changer for as we continue to expand resources.