Business Wire | Mar 25, 2021 04:30PM EDT

Limbach Holdings Reports Fourth Quarter and Fiscal Year 2020 Results

Mar. 25, 2021

PITTSBURGH--(BUSINESS WIRE)--Mar. 25, 2021--Limbach Holdings, Inc. (Nasdaq: LMB) ("Limbach" or the "Company") today announced its financial results for the year ended December 31, 2020. Despite the impact of the global pandemic, Limbach was able to generate year over year revenue growth, substantially increase profitability, and improve cash flow during 2020. Most notably during 2020, gross margin increased 130 basis points to 14.3% contributing to a net income of $5.8 million and an increase of approximately 50% to an Adjusted EBITDA of $25.1 million.

Charlie Bacon, Limbach's President and Chief Executive Officer, said, "Limbach recorded a strong year of profitable operation in 2020 and continued to have substantial year over year growth of our service and owner direct business in the fourth quarter, which is the core foundation of our strategic plan. We enter 2021 with a substantially improved capital structure following our successful refinancing, which occurred subsequent to the close of the fiscal year. As a result of the Company's significantly reduced interest rates on its senior debt facilities and a lower overall level of funded debt, we expect to realize approximately $4.0 million of reduced cash interest expense in fiscal 2021 compared to 2020. When combined with our recent capital raise, we believe we are in a strong position to execute on many key initiatives including the acceleration of our owner-direct strategy, digital transformation, and pursuit of strategic growth. Last year, we made meaningful progress against our three core initiatives of improved risk management, greater exposure to the owner-direct market, and cash flow generation and we believe there is additional opportunity to improve performance."

Mr. Bacon continued, "Although we saw some deceleration in revenue and sales in the fourth quarter due to a pause in decision-making by business owners across the non-residential construction industry, we anticipate that to be a temporary issue. We believe the drivers underlying the industry as a whole, and several of Limbach's core end-markets specifically continue to be supportive."

The following are key financial highlights of fiscal year 2020. All comparisons are to fiscal year 2019, unless noted otherwise.

* Consolidated revenue was $568.2 million for the year, an increase of 2.7% from prior year revenue of $553.3 million. Construction segment revenue of $441.0 million was flat year over year, while Service segment revenue of $127.2 million was up 10.5% from the prior year. * Gross margin increased to 14.3% during the year, from 13.0%, primarily as a result of improved project execution in the Construction segment and improved pricing across most lines of business in the Service segment. * SG&A expense increased approximately $0.4 million to $63.6 million during the year as compared to $63.2 million. As a percent of revenue, SG&A expense was 11.2% for the year as compared to 11.4%. * Interest expense (income), net was $8.6 million for the year as compared to $6.3 million as the Company paid higher interest rates in the year primarily due to the senior debt facilities entered into in 2019 that were refinanced in the first quarter of 2021. * Net income for the year was $5.8 million compared with a net loss of $1.8 million. Net income per share for both basic and diluted increased to $0.72 as compared to net loss per share for both basic and diluted of $0.23. * Net cash provided by (used in) operating activities was $39.8 million for the year, as compared to $(0.9) million. The increase in cash flow resulted from greater overall profitability, as well as improved working capital management. * Total backlog at December 31, 2020 was $444.4 million as compared to $561.2 million as of December 31, 2019. At December 31, 2020, Construction segment backlog accounted for $393.5 million of the consolidated total. Service segment backlog accounted for $50.9 million of the consolidated total.

Fourth Quarter 2020 Summary

Revenue

Fourth quarter 2020 revenue of $130.4 million was down 6.1% compared to $138.9 million for the prior year period. Revenue for the fourth 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. Service segment revenue grew by $7.0 million or 24.8%, offset by the Construction segment revenue decrease of $15.5 million or (14.0)% quarter over quarter.

Gross Margin

Gross margin for the fourth quarter 2020 was 14.3%, compared to 11.7% in the prior year period. Gross margin for the fourth quarter of 2019 is "As Recast" to reflect the adoption of ASC Topic 606. Construction segment gross margin on a dollar basis decreased $1.7 million as a result of a decrease in revenue, although project write downs were less this quarter when compared to the same period in the prior year. As a result, Construction segment gross margin was 7.4% for the fourth quarter 2020 compared to 7.9% for the prior year period. Service segment gross margin was 32.8%, compared to 26.3% in the prior year period, as Service work project mix trended toward larger jobs which carried higher pricing. On a dollar basis, total gross profit in the fourth quarter of 2020 was $18.7 million, compared with $16.2 million for the prior year period.

SG&A Expense

Fourth quarter 2020 SG&A expense was $16.0 million, as compared to $13.5 million the prior year period. The increase in SG&A expense was primarily due to the reversal of $4.3 million of accrued performance-based compensation expense for nine months ended September 30, 2019 in the fourth quarter of 2019 due to the Company not meeting the performance criteria for that year. As a percentage of total revenue, fourth quarter 2020 SG&A expenses accounted for 12.3%, compared to 9.7% in the prior year period.

Net Income

Net income for the fourth quarter 2020 was $0.4 million, compared to $0.7 million in the prior year period. Net income for the fourth quarter of 2019 is "As Recast" to reflect the adoption of ASC Topic 606. Net income per share for the fourth quarter 2020 was $0.05 for both basic and diluted, compared to $0.08 for both basic and diluted in the prior year period.

Full Year 2020 Summary

Revenue

Consolidated revenue was $568.2 million for the year, an increase of 2.7% from prior year revenue of $553.3 million.

Construction segment revenue of $441.0 million increased 0.6%. The slight increase was primarily offset by a planned decline of revenue in the Southern California region. The Service segment revenue increase of $12.1 million to $127.2 million or 10.5% was primarily from the Company's continuing focus on developing longer term customer relationships and sales of larger service owner-direct projects and contracts and growth in the maintenance contract base.

Gross Margin

Gross margin for the year was 14.3% as compared to 13.0% last year. Gross profit for the full year 2020 was $81.4 million compared to $71.9 million for the prior year, an increase of 13.2%.

In the Construction segment, gross margin increased 30 basis points. Construction segment gross profit percentage increased from 9.9% for the year ended December 31, 2019 to 10.2% for the year ended December 31, 2020, due to fewer project write downs in 2020 as a result of improved project execution, including less write downs in the Southern California region, than in the prior year period.

Service segment gross margin was 28.5% compared to 24.7% in fiscal 2019, due to increased Service project volume coupled with pricing.

SG&A Expense

SG&A expense for the full year was $63.6 million compared to $63.2 million in the prior year. The slight increase of approximately $0.4 million resulted from a $6.0 million increase in performance-based compensation expense due to the Company's performance, offset by a reduction of $2.1 million in travel and entertainment expenses, a decrease of $0.7 million in professional fees, and $0.7 million in stock compensation expenses from the issuance of restricted stock units year over year and less material expense reductions in other corporate expense categories. In 2019, the Company did not accrue amounts for incentive compensation due to the Company not meeting the performance criteria for that year. As a percent of total revenue, SG&A expense for the year declined to 11.2% from 11.4% in the prior year.

Net Income

Net income was $5.8 million compared to a net loss of $1.8 million in the prior year. Net income per basic and diluted share for the year was $0.74 and $0.72, respectively, compared to a net loss per share of $0.23 for both basic and diluted for the prior year.

Adjusted EBITDA

Adjusted EBITDA for the year was $25.1 million as compared to $16.8 million in the prior year, an increase of 49.9%. The increase in Adjusted EBITDA was primarily attributable to the increased revenue and gross margins in both the Construction and Service segments during the year, offset by a slight increase in SG&A expense.

Backlog and Remaining Performance Obligations

Aggregate backlog at December 31, 2020 was $444.4 million as compared to $561.2 million as of December 31, 2019. At December 31, 2020, Construction segment backlog accounted for $393.5 million of the consolidated total, a decrease of 22.0% compared to Construction segment backlog at December 31, 2019 of $504.2 million. The reduction in Construction backlog has been intentional as we look to focus on higher margin projects than we have historically, as well as our focus on smaller, higher margin owner direct projects. Service segment backlog accounted for $50.9 million of the consolidated total, a decrease of 10.7% compared to Service segment backlog of $57.0 million at December 31, 2019. We believe our Service backlog decreased due to lower sales in this segment in the fourth quarter of Fiscal 2020 because of macroeconomic uncertainty related to COVID-19.

Backlog includes unexercised contract options that are not included in the Company's remaining performance obligations. At December 31, 2020, remaining performance obligations of the Company's Construction and Service segment contracts were $393.5 million and $35.7 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 December 31, 2020, the Company had current assets of $199.4 million and current liabilities of $150.3 million, representing a current ratio of 1.33x. As of December 31, 2019, the Company's current ratio was 1.25x. Working capital was $49.1 million at December 31, 2020, an increase of $10.6 million from December 31, 2019. The Company had no borrowings against its $14.0 million revolving credit facility at December 31, 2020, other than for standby letters of credit totaling $3.4 million. On February 24, 2021, subsequent to year-end, the Company refinanced its existing credit agreement using its proceeds to repay in full the senior debt facilities entered into in 2019.

Conference Call Details

Date: Friday, March 26, 2021

Time: 9:00 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

Limbach is an integrated building systems solutions firm whose expertise is in the design, modular prefabrication, installation, management and maintenance of heating, ventilation, air-conditioning ("HVAC"), mechanical, electrical, plumbing and controls systems for a diversified group of commercial, institutional and light industrial markets. With 22 offices throughout the United States and Limbach's full life-cycle capabilities, from concept design and engineering through system commissioning and recurring 24/7 service and maintenance, Limbach is positioned as a value-added and essential partner for building owners, construction managers, general contractors and energy service companies.

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. 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

(Unaudited)

For the Three Months Ended

(in thousands, except share and per share data) December December 31, 31, 2020 2019 (As Recast)

Revenue $ 130,396 $ 138,865

Cost of revenue 111,740 122,679

Gross profit 18,656 16,186

Operating expenses:

Selling, general and administrative 16,005 13,477

Amortization of intangibles 104 143

Total operating expenses 16,109 13,620

Operating income 2,547 2,566

Other income (expense):

Interest income (expense), net (2,178 ) (2,095 )

Gain on sale of property and equipment 77 19

Gain (loss) on change in fair value of warrant (322 ) 166 liability

Gain on embedded derivative - 388

Total other expenses (2,423 ) (1,522 )

Income (loss) before income taxes 124 1,044

Income tax provision (benefit) (263 ) 399

Net income (loss) $ 387 $ 645



EPS

Net income (loss) per share:

Basic $ 0.05 $ 0.08

Diluted $ 0.05 $ 0.08

Weighted average number of shares outstanding:

Basic 7,926,151 7,689,038

Diluted 8,201,953 7,761,294

LIMBACH HOLDINGS, INC.

Consolidated Statements of Operations

(in thousands, except share and per share data)

For the Year Ended

December 31, 2020

December 31, 2019

Revenue

$

568,209

$

553,334

Cost of revenue

486,823

481,457

Gross profit

81,386

71,877

Operating expenses:

Selling, general and administrative

63,601

63,168

Amortization of intangibles

630

642

Total operating expenses

64,231

63,810

Operating income

17,155

8,067

Other income (expense):

Interest income (expense), net

(8,627

)

(6,285

)

Loss on debt extinguishment

-

(513

)

Gain on sale of property and equipment

95

57

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

(1,634

)

588

Gain on embedded derivative

-

388

Impairment of goodwill

-

(4,359

)

Total other expenses

(10,166

)

(10,124

)

Income (loss) before income taxes

6,989

(2,057

)

Income tax provision (benefit)

1,182

(282

)

Net income (loss)

$

5,807

$

(1,775

)

EPS

Net income (loss) per share:

Basic

$

0.74

$

(0.23

)

Diluted

$

0.72

$

(0.23

)

Weighted average number of shares outstanding:

Basic

7,865,089

7,662,362

Diluted

8,065,464

7,662,362

The accompanying notes are an integral part of these consolidated financial statements

LIMBACH HOLDINGS, INC.

Consolidated Statements of Operations

For the Year Ended

(in thousands, except share and per share data) December December 31, 31, 2020 2019

Revenue $ 568,209 $ 553,334

Cost of revenue 486,823 481,457

Gross profit 81,386 71,877

Operating expenses:

Selling, general and administrative 63,601 63,168

Amortization of intangibles 630 642

Total operating expenses 64,231 63,810

Operating income 17,155 8,067

Other income (expense):

Interest income (expense), net (8,627 ) (6,285 )

Loss on debt extinguishment - (513 )

Gain on sale of property and equipment 95 57

Gain (loss) on change in fair value of warrant (1,634 ) 588 liability

Gain on embedded derivative - 388

Impairment of goodwill - (4,359 )

Total other expenses (10,166 ) (10,124 )

Income (loss) before income taxes 6,989 (2,057 )

Income tax provision (benefit) 1,182 (282 )

Net income (loss) $ 5,807 $ (1,775 )



EPS

Net income (loss) per share:

Basic $ 0.74 $ (0.23 )

Diluted $ 0.72 $ (0.23 )

Weighted average number of shares outstanding:

Basic 7,865,089 7,662,362

Diluted 8,065,464 7,662,362

The accompanying notes are an integral part of these consolidated financialstatements

LIMBACH HOLDINGS, INC.

Consolidated Balance Sheets

December December(in thousands, except share data) 31, 31, 2020 2019

ASSETS

Current assets

Cash and cash equivalents $ 42,147 $ 8,344

Restricted cash 113 113

Accounts receivable, net 85,767 105,067

Contract assets 67,098 77,188

Advances to and equity in joint ventures, net 10 8

Other current assets 4,282 4,660

Total current assets 199,417 195,380



Property and equipment, net 19,700 21,287

Intangible assets, net 11,681 12,311

Goodwill 6,129 6,129

Operating lease right-of-use assets 18,751 21,056

Deferred tax asset 6,087 4,786

Other assets 392 668

Total assets $ 262,157 $ 261,617

LIABILITIES

Current liabilities

Current portion of long-term debt $ 6,536 $ 4,425

Current operating lease liabilities 3,929 3,750

Accounts payable, including retainage 66,763 86,267

Contract liabilities 46,648 42,370

Accrued income taxes 1,671 12

Accrued expenses and other current liabilities 24,747 20,045

Total current liabilities 150,294 156,869

Long-term debt 36,513 38,868

Long-term operating lease liabilities 15,459 18,247

Other long-term liabilities 6,159 763

Total liabilities 208,425 214,747

Commitments and contingencies

Redeemable convertible preferred stock, net, parvalue $0.0001, $1,000,000 shares authorized, noshares issued and outstanding as of December 31, 2020 - - and December 31, 2019 ($0 redemption value as ofDecember 31, 2020 and December 31, 2019)

STOCKHOLDERS' EQUITY

Common stock, $0.0001 par value; 100,000,000 sharesauthorized, 7,926,137 issued and outstanding at 1 1 December 31, 2020 and 7,688,958 at December 31, 2019

Additional paid-in capital 57,612 56,557

Accumulated deficit (3,881 ) (9,688 )

Total stockholders' equity 53,732 46,870

Total liabilities and stockholders' equity $ 262,157 $ 261,617

The accompanying notes are an integral part of these consolidated financialstatements

LIMBACH HOLDINGS, INC.

Consolidated Statements of Cash Flows

(in thousands)

For the Year Ended December 31, 2020

For the Year Ended December 31, 2019

Cash flows from operating activities:

Net income (loss)

$

5,807

$

(1,775

)

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

Depreciation and amortization

6,171

6,286

Noncash operating lease expense

4,033

3,799

Impairment of goodwill

-

4,359

Provision for doubtful accounts

100

95

Stock-based compensation expense

1,068

1,766

Loss on debt extinguishment

-

513

Amortization of debt discount and issuance costs

2,157

1,392

Deferred tax benefit

(1,301

)

(609

)

Change in fair value of warrant liability

1,634

(588

)

Gain on embedded derivative

-

(388

)

Gain on sale of property and equipment

(95

)

(57

)

Changes in operating assets and liabilities:

Accounts receivable

19,200

659

Contract assets

10,090

(13,378

)

Other current assets

(115

)

30,139

Accounts payable, including retainage

(19,504

)

11,914

Contract liabilities

4,278

(6,446

)

Prepaid income taxes

494

58

Accrued taxes payable

1,659

12

Accrued expenses and other current liabilities

4,713

(34,686

)

Operating lease liabilities

(4,337

)

(3,654

)

Other long-term liabilities

3,763

(337

)

Net cash provided by (used in) operating activities

39,815

(926

)

Cash flows from investing activities:

Proceeds from sale of property and equipment

162

168

Advances to joint ventures

(2

)

4

Purchase of property and equipment

(1,483

)

(2,663

)

Net cash used in investing activities

(1,323

)

(2,491

)

Cash flows from financing activities:

Bank overdrafts

-

(1,333

)

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

32,500

Payments on 2019 Revolving Credit Facility

(7,250

)

(32,500

)

Proceeds from 2019 Refinancing Term Loan, net of debt discount

-

38,644

Payments on 2019 Refinancing Term Loan

(2,000

)

-

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

(2,664

)

(2,547

)

Proceeds from contributions to employee stock purchase plan

191

-

Taxes paid related to net-share settlement of equity awards

(216

)

(131

)

Payments of debt issuance costs

-

(3,777

)

Net cash provided by (used in) financing activities

(4,689

)

10,142

Increase in cash, cash equivalents and restricted cash

33,803

6,725

Cash, cash equivalents and restricted cash, beginning of year

8,457

1,732

Cash, cash equivalents and restricted cash, end of year

$

42,260

$

8,457

Supplemental disclosures of cash flow information

Noncash investing and financing transactions:

Debt issuance costs related to 2019 Refinancing Agreement paid-in-kind

$

-

$

1,000

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

1,096

3,355

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

2,624

3,578

Right of use assets disposed or adjusted modifying operating leases liabilities

621

1,651

Right of use assets disposed or adjusted modifying finance leases liabilities

(86

)

(78

)

Interest paid

$

6,467

$

4,607

The accompanying notes are an integral part of these consolidated financial statements

LIMBACH HOLDINGS, INC.

Consolidated Statements of Cash Flows

For the For the Year Year(in thousands) Ended Ended December December 31, 31, 2020 2019

Cash flows from operating activities:

Net income (loss) $ 5,807 $ (1,775 )

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

Depreciation and amortization 6,171 6,286

Noncash operating lease expense 4,033 3,799

Impairment of goodwill - 4,359

Provision for doubtful accounts 100 95

Stock-based compensation expense 1,068 1,766

Loss on debt extinguishment - 513

Amortization of debt discount and issuance costs 2,157 1,392

Deferred tax benefit (1,301 ) (609 )

Change in fair value of warrant liability 1,634 (588 )

Gain on embedded derivative - (388 )

Gain on sale of property and equipment (95 ) (57 )

Changes in operating assets and liabilities:

Accounts receivable 19,200 659

Contract assets 10,090 (13,378 )

Other current assets (115 ) 30,139

Accounts payable, including retainage (19,504 ) 11,914

Contract liabilities 4,278 (6,446 )

Prepaid income taxes 494 58

Accrued taxes payable 1,659 12

Accrued expenses and other current liabilities 4,713 (34,686 )

Operating lease liabilities (4,337 ) (3,654 )

Other long-term liabilities 3,763 (337 )

Net cash provided by (used in) operating activities 39,815 (926 )

Cash flows from investing activities:

Proceeds from sale of property and equipment 162 168

Advances to joint ventures (2 ) 4

Purchase of property and equipment (1,483 ) (2,663 )

Net cash used in investing activities (1,323 ) (2,491 )

Cash flows from financing activities:

Bank overdrafts - (1,333 )

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 32,500

Payments on 2019 Revolving Credit Facility (7,250 ) (32,500 )

Proceeds from 2019 Refinancing Term Loan, net of debt - 38,644 discount

Payments on 2019 Refinancing Term Loan (2,000 ) -

Warrants issued in conjunction with the 2019 - 969 Refinancing Term Loan

Embedded derivative associated with the 2019 - 388 Refinancing Term Loan

Payments on Bridge Term Loan - (7,736 )

Payments on finance leases (2,664 ) (2,547 )

Proceeds from contributions to employee stock purchase 191 - plan

Taxes paid related to net-share settlement of equity (216 ) (131 )awards

Payments of debt issuance costs - (3,777 )

Net cash provided by (used in) financing activities (4,689 ) 10,142

Increase in cash, cash equivalents and restricted cash 33,803 6,725

Cash, cash equivalents and restricted cash, beginning 8,457 1,732 of year

Cash, cash equivalents and restricted cash, end of year $ 42,260 $ 8,457



Supplemental disclosures of cash flow information

Noncash investing and financing transactions:

Debt issuance costs related to 2019 Refinancing $ - $ 1,000 Agreement paid-in-kind

Right of use assets obtained in exchange for new 1,096 3,355 operating lease liabilities

Right of use assets obtained in exchange for new 2,624 3,578 finance lease liabilities

Right of use assets disposed or adjusted modifying 621 1,651 operating leases liabilities

Right of use assets disposed or adjusted modifying (86 ) (78 )finance leases liabilities

Interest paid $ 6,467 $ 4,607

The accompanying notes are an integral part of these consolidated financialstatements

LIMBACH HOLDINGS, INC.

Consolidated Statements of Operations

(Unaudited)

For the three months ended December 31,

2020

2019(As Recast)

Increase /(Decrease)

(Amounts in thousands except for percentages)

($)

($)

($)

(%)

Revenue:

Construction

$

95,058

$

110,553

$

(15,495

)

(14.0

)%

Service

35,338

28,312

7,026

24.8

%

Total revenue

130,396

138,865

(8,469

)

(6.1

)%

Gross profit:

Construction

7,072

8,751

(1,679

)

(19.2

)%

Service

11,584

7,435

4,149

55.8

%

Total gross profit

18,656

16,186

2,470

15.3

%

Selling, general and administrative:

Construction

9,008

7,930

1,078

13.6

%

Service

6,668

5,155

1,513

29.4

%

Corporate

329

392

(63

)

(16.1

)%

Total selling, general and administrative

16,005

13,477

2,528

18.8

%

Amortization of intangibles

104

143

(39

)

(27.3

)%

Operating income (loss):

Construction

(1,936

)

821

(2,757

)

(335.8

)%

Service

4,916

2,280

2,636

115.6

%

Corporate

(433

)

(535

)

102

(19.1

)%

Total operating income

$

2,547

$

2,566

$

(19

)

(0.7

)%

LIMBACH HOLDINGS, INC.

Consolidated Statements of Operations

(Unaudited)

For the three months ended December 31,

2020 2019 Increase /(Decrease) (As Recast)

(Amounts in thousands ($) ($) ($) (%)except for percentages)

Revenue:

Construction $ 95,058 $ 110,553 $ (15,495 ) (14.0 ) %

Service 35,338 28,312 7,026 24.8 %

Total revenue 130,396 138,865 (8,469 ) (6.1 ) %



Gross profit:

Construction 7,072 8,751 (1,679 ) (19.2 ) %

Service 11,584 7,435 4,149 55.8 %

Total gross profit 18,656 16,186 2,470 15.3 %



Selling, general and administrative:

Construction 9,008 7,930 1,078 13.6 %

Service 6,668 5,155 1,513 29.4 %

Corporate 329 392 (63 ) (16.1 ) %

Total selling, general and 16,005 13,477 2,528 18.8 %administrative

Amortization of intangibles 104 143 (39 ) (27.3 ) %

Operating income (loss):

Construction (1,936 ) 821 (2,757 ) (335.8 ) %

Service 4,916 2,280 2,636 115.6 %

Corporate (433 ) (535 ) 102 (19.1 ) %

Total operating income $ 2,547 $ 2,566 $ (19 ) (0.7 ) %

LIMBACH HOLDINGS, INC.

Consolidated Statements of Operations

For the years ended December 31,

2020

2019

Increase /(Decrease)

(Amounts in thousands except for percentages)

($)

($)

($)

(%)

Revenue:

Construction

$

440,979

$

438,196

$

2,783

0.6

%

Service

127,230

115,138

12,092

10.5

%

Total revenue

568,209

553,334

14,875

2.7

%

Gross profit:

Construction

45,115

43,493

1,622

3.7

%

Service

36,271

28,384

7,887

27.8

%

Total gross profit

81,386

71,877

9,509

13.2

%

Selling, general and administrative:

Construction

37,708

40,357

(2,649

)

(6.6

)%

Service

24,825

21,045

3,780

18.0

%

Corporate

1,068

1,766

(698

)

(39.5

)%

Total selling, general and administrative

63,601

63,168

433

0.7

%

Amortization of intangibles

630

642

(12

)

(1.9

)%

Operating income (loss):

Construction

7,407

3,136

4,271

136.2

%

Service

11,446

7,339

4,107

56.0

%

Corporate

(1,698

)

(2,408

)

710

(29.5

)%

Total operating income

$

17,155

$

8,067

$

9,088

112.7

%

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.

LIMBACH HOLDINGS, INC.

Consolidated Statements of Operations

For the years ended December 31,

2020 2019 Increase / (Decrease)

(Amounts in thousands except ($) ($) ($) (%)for percentages)

Revenue:

Construction $ 440,979 $ 438,196 $ 2,783 0.6 %

Service 127,230 115,138 12,092 10.5 %

Total revenue 568,209 553,334 14,875 2.7 %



Gross profit:

Construction 45,115 43,493 1,622 3.7 %

Service 36,271 28,384 7,887 27.8 %

Total gross profit 81,386 71,877 9,509 13.2 %



Selling, general and administrative:

Construction 37,708 40,357 (2,649 ) (6.6 ) %

Service 24,825 21,045 3,780 18.0 %

Corporate 1,068 1,766 (698 ) (39.5 ) %

Total selling, general and 63,601 63,168 433 0.7 %administrative

Amortization of intangibles 630 642 (12 ) (1.9 ) %

Operating income (loss):

Construction 7,407 3,136 4,271 136.2 %

Service 11,446 7,339 4,107 56.0 %

Corporate (1,698 ) (2,408 ) 710 (29.5 ) %

Total operating income $ 17,155 $ 8,067 $ 9,088 112.7 %

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 For the years ended December 31, December 31,

2019(in thousands) 2020 (As 2020 2019 Recast)

Net income (loss) $ 387 $ 645 $ 5,807 $ (1,775 )



Adjustments:

Depreciation and amortization 1,536 2,052 6,171 6,286

Interest expense 2,178 2,095 8,627 6,285

Non-cash stock-based compensation 329 393 1,068 1,766 expense

Loss on debt extinguishment - - - 513

Impairment of goodwill - - - 4,359

Gain on embedded derivative - (388 ) - (388 )

Change in fair value of warrant 322 (166 ) 1,634 (588 )liability

Severance expense - - 622 -

Income tax provision (benefit) (263 ) 399 1,182 (282 )

CFO transition costs - 275 - 576

Adjusted EBITDA $ 4,489 $ 5,305 $ 25,111 $ 16,752

View source version on businesswire.com: https://www.businesswire.com/news/home/20210325005929/en/

CONTACT: 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