Limbach Holdings Reports First Quarter 2021 Results

Rhea-AI Summary

Limbach Holdings (Nasdaq: LMB) reported Q1 2021 revenues of $113.3 million, an 18.3% decline from $138.8 million in Q1 2020, driven by a strategic shift towards higher-margin projects. Gross margin improved to 15.2%, up from 13.1% year-over-year, thanks to a focus on higher-margin Owner Direct Relationships (ODR). Although GCR segment revenue fell by 22.5%, ODR segment revenue remained stable. The company projects full-year revenue guidance of $480 million to $520 million and Adjusted EBITDA between $23 million to $27 million.

Positive

• Gross margin increased to 15.2% from 13.1% year-over-year.
• ODR segment gross margin rose to 27.4%, enhancing overall profitability.
• Introduced full-year revenue guidance of $480 million to $520 million.

Negative

• Consolidated revenues decreased by 18.3% from the previous year.
• GCR segment revenue declined by 22.5%, indicating potential risks in project selection.
• Net loss for the quarter was $2.3 million, a significant increase from the prior year's net loss of $0.1 million.

Limbach Holdings, Inc. (Nasdaq: LMB) (“Limbach” or the “Company”) today announced its financial results for the quarter ended March 31, 2021. Consolidated revenues declined 18.3% to $113.3 million as the Company continues to focus on replacing largely complete, lower margin projects with higher margin opportunities for strategic customers. Consistent with the Company’s focus on expanded profitability driven by a more rigorous project selection process, gross margin improved to 15.2% compared to 13.1% in the year ago period and 14.3%, sequentially.

As of January 1, 2021, the Company renamed its existing two reportable segments to reflect our two distinct approaches to our customer base and to better align with our owner direct strategy. The previously named Construction Segment is now known as General Contractor Relationships (“GCR”) and the previously named Service Segment is now known as Owner Direct Relationships (“ODR”).

Charlie Bacon, Limbach’s President and Chief Executive Officer, said, “This year is an inflection point for Limbach as we look to accelerate towards an owner-driven business model. We experienced the initial validation of this strategy during the first quarter as our gross margin expanded 210 basis points to 15.2% compared to last year’s first quarter. Our GCR revenue declined compared with the prior year, consistent with our intentional shift to a more rigorous project selection process that emphasizes risk mitigation and improved profitability. The near-term impact of this strategy is expected to be a reduction in GCR revenue in 2021, but accompanied by a stronger gross margin and greater consistency of execution and reduced risk. Our ODR segment continued to generate strong performance and accounted for a larger share of our consolidated revenue than during last year’s first quarter, a trend we expect to continue as the year progresses.”

Mr. Bacon continued, “We continue to see business activity accelerate from the low point in late 2020 as the construction industry returns to a more normal state of activity. At this time, we are introducing guidance for the full year, and are forecasting revenue to be between $480 million and $520 million, and Adjusted EBITDA of $23 million to $27 million. We also expect the second half of the year to account for a greater majority of our revenue and Adjusted EBITDA than it has in prior years given the current business cycle.”

The following are key financial highlights of the first quarter of 2021. All comparisons are to the first quarter of 2020, unless noted otherwise.

• Consolidated revenue was $113.3 million for the first quarter of 2021, a decrease of 18.3% from prior year revenue of $138.8 million. GCR segment revenue of $84.8 million was down 22.5% year over year, while ODR segment revenue of $28.5 million remained relatively flat year over year.
• Gross margin increased to 15.2% during the year, from 13.1%, mainly driven by the mix of higher margin ODR segment work coupled with slightly higher margins and lower write downs for GCR segment projects. GCR segment gross profit on a dollar basis decreased $1.6 million largely due to lower revenue at slightly higher margins as a result of our intentional shift to a more rigorous project selection process that emphasizes risk mitigation and improved profitability. In addition, net project adjustments had no effect on the current quarter compared with net project write downs of $2.2 million in the prior year. As a result, GCR segment gross margin was 11.1% for the first quarter of 2021 compared to 10.0% for the prior year. ODR segment gross margin was 27.4%, compared to 24.7% in the prior year due to more favorable project pricing. On a dollar basis, total gross profit was $17.2 million, compared with $18.2 million in the prior year.
• SG&A increased approximately $0.3 million to $17.1 million during the quarter as compared to $16.8 million in the prior year, mostly attributable to an increase in professional fees, higher non-cash stock-based compensation costs due to restricted stock awards granted in the first quarter of 2021 at higher company stock prices than in the prior year, offset by lower payroll expense and lower travel and entertainment expense. As a percent of revenue, SG&A was 15.1% for the quarter, up from 12.1% for the prior year.
• Interest expense, net was $1.3 million for the quarter as compared to $2.2 million in the prior year as the Company refinanced its 2019 debt facilities on February 24, 2021, replacing them with debt facilities that carry a lower cost of financing.
• Net loss for the quarter was $2.3 million, driven by a $2.0 million pre-tax loss on early debt extinguishment in conjunction with the refinancing of the 2019 debt facilities, compared with a net loss of $0.1 million for the prior year. Net loss per share for both basic and diluted increased to $0.25 as compared to net loss per share for both basic and diluted of $0.01 in the prior year.
• Adjusted EBITDA for the quarter was $2.1 million as compared to $3.7 million in the prior ye

FAQ

What are Limbach's financial results for Q1 2021?

Limbach reported Q1 2021 revenues of $113.3 million, an 18.3% decline from Q1 2020.

How did Limbach's gross margin change in Q1 2021?

Gross margin improved to 15.2% in Q1 2021, up from 13.1% in Q1 2020.

What revenue guidance did Limbach provide for 2021?

Limbach expects full-year revenue between $480 million and $520 million.

What was Limbach's net loss in Q1 2021?

Limbach reported a net loss of $2.3 million for Q1 2021.

How did GCR segment performance impact Limbach's revenue?

GCR segment revenue fell by 22.5% year-over-year, impacting overall financial results.