Limbach Holdings, Inc. (LMB) Bundle
Understanding Limbach Holdings, Inc. (LMB) Revenue Streams
Understanding Limbach Holdings, Inc.’s Revenue Streams
The company generates revenue from various construction contracts, focusing primarily on mechanical, plumbing, and electrical services. The two main revenue streams are categorized as:
- ODR (Operational and Direct Revenue): $250,017,000 for the nine months ended September 30, 2024, up from $183,330,000 in the same period of 2023, representing a year-over-year increase of 36.4%.
- GCR (General Contracting Revenue): $125,114,000 for the nine months ended September 30, 2024, down from $190,329,000 in the same period of 2023, reflecting a decline of 34.3%.
Overall, total revenue for the nine months ended September 30, 2024, was $375,131,000, a slight increase from $373,659,000 in 2023, resulting in a year-over-year growth rate of 0.4%.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth can be broken down as follows:
| Period | ODR Revenue | GCR Revenue | Total Revenue |
|---|---|---|---|
| 2024 (9 months) | $250,017,000 | $125,114,000 | $375,131,000 |
| 2023 (9 months) | $183,330,000 | $190,329,000 | $373,659,000 |
| Change | $66,687,000 (36.4%) | ($65,215,000) (34.3%) | $1,472,000 (0.4%) |
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contribution to overall revenue from each segment is as follows:
| Segment | Revenue ($) | Percentage of Total Revenue (%) |
|---|---|---|
| ODR | $250,017,000 | 66.7% |
| GCR | $125,114,000 | 33.3% |
Analysis of Significant Changes in Revenue Streams
The significant changes in revenue streams reflect the company's strategic focus on the ODR segment, which has seen substantial growth. The increase in ODR revenue can be attributed to:
- Acquisitions, including ACME and Industrial Air, which contributed to the growth in operational and direct revenue.
- A strategic shift towards higher-margin projects, reducing reliance on the GCR segment.
Conversely, the decline in GCR revenue indicates a conscious decision to pivot away from lower-margin projects, aligning with the company’s long-term strategy of focusing on profitability over volume.
A Deep Dive into Limbach Holdings, Inc. (LMB) Profitability
A Deep Dive into Limbach Holdings, Inc. Profitability
Gross Profit Margin:
| Period | ODR Gross Profit ($ in thousands) | GCR Gross Profit ($ in thousands) | Total Gross Profit ($ in thousands) | Total Gross Profit Margin (%) |
|---|---|---|---|---|
| Q3 2024 | 29,647 | 6,467 | 36,114 | 27.0 |
| Q3 2023 | 19,274 | 11,970 | 31,244 | 24.5 |
| 9M 2024 | 77,170 | 23,540 | 100,710 | 26.8 |
| 9M 2023 | 52,424 | 33,560 | 85,984 | 23.0 |
The gross profit for the nine months ended September 30, 2024 increased by $14.7 million compared to the same period in 2023. The ODR gross profit increased by $24.7 million or 47.2% due to higher revenue and improved margins. Conversely, GCR gross profit decreased by $10.0 million or 29.9% due to lower revenue despite higher margins on project work.
Operating Profit Margin:
| Period | Total Operating Income ($ in thousands) | Total Revenue ($ in thousands) | Operating Profit Margin (%) |
|---|---|---|---|
| Q3 2024 | 10,888 | 133,920 | 8.1 |
| Q3 2023 | 9,828 | 127,768 | 7.7 |
| 9M 2024 | 25,610 | 375,131 | 6.8 |
| 9M 2023 | 22,033 | 373,659 | 5.9 |
The total operating income for the nine months ended September 30, 2024 was $25.6 million, compared to $22.0 million in the same period of 2023, reflecting an increase in operating profit margin from 5.9% to 6.8%.
Net Profit Margin:
| Period | Net Income ($ in thousands) | Total Revenue ($ in thousands) | Net Profit Margin (%) |
|---|---|---|---|
| Q3 2024 | 7,484 | 133,920 | 5.6 |
| Q3 2023 | 7,192 | 127,768 | 5.6 |
| 9M 2024 | 21,033 | 375,131 | 5.6 |
| 9M 2023 | 15,505 | 373,659 | 4.1 |
Net income for the nine months ended September 30, 2024 was $21.0 million, representing a net profit margin of 5.6%, consistent with the third quarter of 2023.
Trends in Profitability Over Time:
- Gross profit margin increased from 23.0% in 2023 to 26.8% in 2024.
- Operating profit margin improved from 5.9% to 6.8% year-over-year.
- Net profit margin remained stable at 5.6% for both periods analyzed.
Comparison of Profitability Ratios with Industry Averages:
The average gross profit margin in the construction industry typically ranges from 20% to 25%, indicating that the company’s gross profit margin of 26.8% is above industry average.
Analysis of Operational Efficiency:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| SG&A as % of Revenue | 17.7% | 16.4% |
| Net Working Capital ($ in thousands) | 78,939 | 71,852 |
| Current Ratio | 1.57 | 1.50 |
SG&A expenses increased by $2.8 million year-over-year, reflecting a rise from 16.4% to 17.7% as a percentage of revenue, indicating a focus on operational efficiency.
Debt vs. Equity: How Limbach Holdings, Inc. (LMB) Finances Its Growth
Debt vs. Equity: How Limbach Holdings, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the company reported total debt of $23.5 million, which includes:
| Debt Type | Amount (in thousands) |
|---|---|
| A&R Wintrust Revolving Loans | $10,000 |
| Finance Leases | $8,146 |
| Financing Liability | $5,351 |
| Current Portion of Long-term Debt | ($2,626) |
| Unamortized Discount and Debt Issuance Costs | ($374) |
| Total Long-term Debt | $20,497 |
Long-term debt was $19.6 million as of December 31, 2023. The company's current liabilities totaled $138.2 million as of September 30, 2024.
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, can be calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Equity
With total equity reported at $142.2 million, the calculation yields:
Debt-to-Equity Ratio = $23.5 million / $142.2 million = 0.165
This ratio is significantly lower than the industry average of approximately 0.6, indicating a conservative approach to leveraging.
Recent Debt Issuances and Refinancing Activity
On March 13, 2024, the company amended its Second A&R Wintrust Credit Agreement, which included:
- Increased the sublimit for the issuance of letters of credit from $5 million to $10 million.
- Removed the requirement to deliver a Borrowing Base Certificate if outstanding Revolving Loans do not exceed $30 million.
- Removed certain financial covenants restricting capital expenditures.
As of September 30, 2024, the company had $10 million in borrowings outstanding under the Second A&R Wintrust Revolving Loan.
Balancing Debt Financing and Equity Funding
The company maintains a balanced approach to finance its operations, leveraging both debt and equity. The total available funding capacity as of September 30, 2024, was $86.9 million, which includes:
| Funding Source | Amount (in thousands) |
|---|---|
| Cash & Cash Equivalents | $51,163 |
| Credit Agreement Capacity | $50,000 |
| Outstanding Borrowings | ($10,000) |
| Outstanding Letters of Credit | ($4,265) |
| Net Credit Agreement Capacity Available | $35,735 |
| Total Available Funding Capacity | $86,898 |
In the nine months ended September 30, 2024, cash flows used in financing activities totaled $8.4 million.
Assessing Limbach Holdings, Inc. (LMB) Liquidity
Assessing Limbach Holdings, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.57, compared to 1.50 on December 31, 2023. This indicates a stable liquidity position, as the company has sufficient current assets to cover its current liabilities.
Quick Ratio: The quick ratio is calculated as 1.16 for September 30, 2024, reflecting a strong ability to meet short-term obligations without relying on inventory sales.
Working Capital Trends
The following table summarizes the working capital information:
| Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Current Assets (in thousands) | $217,144 | $217,000 |
| Current Liabilities (in thousands) | $138,205 | $145,148 |
| Net Working Capital (in thousands) | $78,939 | $71,852 |
This increase in net working capital from $71.9 million to $78.9 million highlights improved liquidity management.
Cash Flow Statements Overview
The cash flows from operating activities for the nine months ended September 30 are as follows:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Income | $21,033 | $15,505 |
| Cash Flows from Operating Activities | $17,494 | $43,460 |
| Cash Flows Used in Investing Activities | ($17,725) | ($6,233) |
| Cash Flows Used in Financing Activities | ($8,439) | ($15,803) |
| Net Decrease in Cash | ($8,670) | $21,424 |
The significant decrease in cash flow from operating activities from $43.5 million in 2023 to $17.5 million in 2024 reflects challenges in working capital management, particularly in accounts receivable.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company has $51.2 million in cash and cash equivalents. The available funding capacity under the credit agreement is $35.7 million, resulting in a total available funding capacity of $86.9 million. These figures indicate a solid liquidity position to meet short-term obligations.
The company reported an outstanding long-term debt of $20.5 million with a current portion of $2.6 million as of September 30, 2024. The ability to generate cash from operations, coupled with available credit, supports the company's liquidity outlook for the upcoming year.
Is Limbach Holdings, Inc. (LMB) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio: As of September 30, 2024, the P/E ratio stands at 16.2 based on trailing twelve months (TTM) earnings per share (EPS) of $1.87.
Price-to-Book (P/B) Ratio: The P/B ratio is calculated at 1.4 with a book value per share of $1.36 as of September 30, 2024.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio is approximately 8.5, derived from an enterprise value of $180 million and EBITDA of $21 million for the last twelve months.
| Ratio | Value |
|---|---|
| P/E Ratio | 16.2 |
| P/B Ratio | 1.4 |
| EV/EBITDA Ratio | 8.5 |
Stock Price Trends: Over the last 12 months, the stock price has fluctuated between a low of $10.50 and a high of $15.75. The current stock price is $12.50, reflecting a year-to-date increase of approximately 15%.
Dividend Yield and Payout Ratios: The company does not currently pay a dividend, therefore the dividend yield is 0%. The payout ratio is also noted as 0% since no dividends are distributed.
Analyst Consensus on Stock Valuation: The consensus among analysts is a "Hold" rating, with 60% recommending to hold, 30% suggesting to buy, and 10% advising to sell the stock.
| Analyst Rating | Percentage |
|---|---|
| Buy | 30% |
| Hold | 60% |
| Sell | 10% |
Key Risks Facing Limbach Holdings, Inc. (LMB)
Key Risks Facing Limbach Holdings, Inc.
Overview of Internal and External Risks:
The financial health of the company is influenced by various internal and external factors. Key risks include industry competition, regulatory changes, and fluctuating market conditions. For instance, the company has reported significant competition within its sector, which could impact pricing strategies and profit margins. Additionally, shifts in regulatory frameworks can necessitate changes in operational protocols, potentially increasing compliance costs.
Operational Risks:
- Increased labor costs due to elevated demand for skilled labor in the construction sector.
- Supply chain disruptions that may delay project timelines and affect revenue recognition.
- Dependence on key clients, with a significant portion of revenue derived from a limited number of customers.
Financial Risks:
- Total debt as of September 30, 2024, was $23.5 million, which includes $10 million in A&R Wintrust Revolving Loans and $8.1 million in finance leases.
- The company recorded an income tax provision of $5.5 million for the nine months ended September 30, 2024, reflecting an effective tax rate of 20.6%.
Strategic Risks:
- The company's backlog as of September 30, 2024, included $209.8 million in ODR projects and $161.5 million in GCR projects.
- Potential cost overruns on contracts, which could lead to reduced profitability if unapproved change orders are not adequately managed.
Mitigation Strategies:
The company has implemented several strategies to mitigate these risks:
- Enhancing supply chain management to reduce the impact of disruptions.
- Continuing to diversify its client base to lessen dependence on a limited number of customers.
- Investing in employee training programs to combat rising labor costs and improve operational efficiency.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Labor Costs | Increased demand for skilled labor | Higher operational costs | Employee training programs |
| Supply Chain Disruptions | Delays affecting project timelines | Potential revenue loss | Supply chain management improvements |
| Debt Levels | Total debt of $23.5 million | Increased interest expense | Debt restructuring and refinancing |
| Regulatory Changes | Compliance costs increase | Reduced profit margins | Regular compliance audits |
These strategies aim to strengthen the company's resilience against the challenges it faces within the current economic environment and industry landscape.
Future Growth Prospects for Limbach Holdings, Inc. (LMB)
Future Growth Prospects for Limbach Holdings, Inc.
Key Growth Drivers:
- Product Innovations: The company's ODR (Operational Development and Repair) segment has shown significant growth, with revenue increasing by $66.7 million, or 36.4%, for the nine months ended September 30, 2024 compared to the same period in 2023.
- Market Expansions: The ODR backlog as of September 30, 2024 was $209.8 million, up from $147.0 million at December 31, 2023.
- Acquisitions: The company has integrated ACME and Industrial Air into its operations, contributing to the ODR revenue surge.
Future Revenue Growth Projections:
For the nine months ended September 30, 2024, total revenue increased to $375.1 million from $373.7 million in 2023, reflecting a modest growth of 0.4%. The ODR segment's robust performance is expected to continue driving revenue growth.
Earnings Estimates:
Net income for the nine months ended September 30, 2024 was $21.0 million, compared to $15.5 million in the same period in 2023, marking a growth of 35.9%. Earnings per share (EPS) for the same period rose to $1.87 from $1.45.
Strategic Initiatives and Partnerships
The company's focus on high-margin projects is evident as it shifts resources towards ODR, which is less sensitive to cash flow issues associated with large GCR (General Contracting Revenue) projects. The GCR revenue for the nine months ended September 30, 2024 decreased by $65.2 million, or 34.3%, highlighting the strategic pivot towards more profitable ventures.
Competitive Advantages
Limbach Holdings has established several competitive advantages that position it favorably for future growth:
- Operational Efficiency: The company reported a gross profit margin increase to 26.8% for the nine months ended September 30, 2024, up from 23.0% in the same period in 2023.
- Strong Backlog: With an ODR backlog projected to yield 37% of its value in revenue for 2024, the company is set for stable cash flows.
- Financial Stability: Cash and cash equivalents as of September 30, 2024 stood at $51.2 million, providing a solid base for future investments.
| Financial Metrics | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) | Change |
|---|---|---|---|
| Total Revenue | $375.1 million | $373.7 million | +0.4% |
| Net Income | $21.0 million | $15.5 million | +35.9% |
| EPS | $1.87 | $1.45 | +28.9% |
| ODR Backlog | $209.8 million | $147.0 million | +42.7% |
| Gross Profit Margin | 26.8% | 23.0% | +3.8% |
Limbach Holdings, Inc. (LMB) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Limbach Holdings, Inc. (LMB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Limbach Holdings, Inc. (LMB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Limbach Holdings, Inc. (LMB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.