Q4 2024 Limbach Holdings Inc Earnings Call
Operator: Good morning and welcome to the fourth quarter of the fiscal year 2024 Limbach Holdings, Inc. earnings conference call and webcast. All participants will be in a listen-only mode.
Good morning, and welcome to the fourth quarter and fiscal year 2020 for Limbach Holdings, Inc Earnings conference call and webcast.
All participants will be in a listen only mode.
Operator: Should you need assistance, please signal the conference specialist by pressing star key followed by zero.
Should you need assistance. Please signal conference specialist by pressing star key followed by zero.
Julie Kegley: I will now turn the conference over to your host, Julie Kegley of Financial Profiles. You may begin.
I will now turn the conference over to your host Julie casually financial profiles you may begin.
Julie Kegley: Good morning and thank you for joining us today to discuss Limbach Hldg's financial results for the fourth quarter in fiscal year 2020. Yesterday, Limbach issued its earnings release and filed its Form 10-K for the period ended December 31, 2024. Both documents, as well as an updated investor presentation, are available on the Investor Relations section of the company's website at limbachinc.com. Management may refer to select slides during today's call and encourages investors to review the presentation in its entirety.
Julie: Good morning, and thank you for joining us today to discuss Limbach holdings financial results for the fourth quarter and fiscal year 'twenty 'twenty four.
Julie: Yesterday Limbach issued its earnings release and filed its Form 10-K for the period ended December 31 2024.
Julie: Both documents as well as an updated investor presentation are available on the Investor Relations section of the company's website at Limbach in dotcom.
Julie: Management may refer to select slides during today's call and encourages investors to review the presentation in its entirety.
Julie Kegley: On today's call are Michael McCann, President and Chief Executive Officer, and Jayme Brooks, Executive Vice President and Chief Financial Officer. We will begin with prepared remarks and then open the call to your questions. Before we begin, I would like to remind you that today's comments will include forward-looking statements under federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases.
Speaker Change: On today's call are Michael Mccann, President and Chief Executive Officer, and Jayme, Brooks Executive Vice President and Chief Financial Officer, We will begin with prepared remarks, and then open the call to your questions.
Speaker Change: Before we begin I would like to remind you that today's comments will include forward looking statements under federal Securities laws forward looking statements are identified by words, such as will be intend believe expect anticipate or other comparable words and phrases statements that are not historical facts such as statements about expected.
Julie Kegley: The following statements that are not historical facts, such as statements about expected financial performance, are also false. Actual results may differ materially from those contemplated by such forward Discussion of the factors that could cause material difference in the company's results compared to these forward-looking statements is contained in Limbach's SEC filings, including reports on Form 10-K and Please note that on today's call, we will be referring to non-GAP members.
Speaker Change: Financial performance are also forward looking statements actual results may differ materially from those contemplated by such forward looking statements.
Speaker Change: A discussion of the factors that could cause a material difference in the companys results compared to these forward looking statements is contained in limbach SEC filings, including reports on Form 10-K and 10-Q.
Speaker Change: Please note that on today's call, we will be referring to non-GAAP measures you can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our fourth quarter and fiscal year 2024 earnings release and in our Investor presentation, both of which can be found on limp box Investor Relations website and has been furnished on.
Julie Kegley: You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our fourth quarter and fiscal year 2024 earnings release and in our investor presentation, both of which can be found on Limbach's Investor Relations website and have been furnished on the Form 8K filed with the FAA.
Speaker Change: The form 8-K filed with the SEC with that I'll now turn the call over to President and CEO, Mike Monahan.
Michael McCann: With that, I will now turn the call over to President and CEO, Mike McCann. Good morning. Welcome to our stockholders, analysts, and interested investors. We appreciate you joining us today. Throughout 2024, our focus was creating value for our customers, driving margin expansion, and delivering record profitability for our stockholders by continuing to execute the three pillars of our strategy.
Mike Monahan: Good morning, welcome to our stockholders analysts and interested investors.
Speaker Change: We appreciate you joining us today.
Speaker Change: Throughout 2024, our focus was creating value for our customers driving margin expansion and delivering record profitability for our stockholders by continuing to execute the three pillars of our strategy.
Michael McCann: Our first pillar is shifting our revenue mix from new construction projects in the general contractor or GCR segment to working directly for building owners in existing facilities in the owner direct or ODR segment. In 2024, approximately 67 percent of total revenue came from our owner direct segment, contributing 75 percent of total gross profit dollars.
Speaker Change: Our first pillar is shifting our revenue mix from new construction projects and the general contractor.
Speaker Change: Or G C. Our segment the working directly for building owners and existing facilities.
Speaker Change: And the owner direct our OTR segment in 2020 for approximately 67% of total revenue came from our owner direct segment contributing 75% of total gross profit dollars.
Michael McCann: The second pillar is the evolution of our offerings, which expands our capabilities and increases our margins. In 2024, total gross margin increased meaningfully to 27.8% from 23.1% in 2023.
Speaker Change: The second pillar is the evolution of our offerings, which expands our capabilities and increases our margins.
Speaker Change: 2024, total gross margin increased meaningfully to 27, 8% from 23, 1% in 2023.
Michael McCann: Our third pillar is to scale our business through acquisition. In 2024, we completed two strategic acquisitions, which should add approximately $6 million to our adjusted EBITDA in 2025. We maintained a disciplined approach by focusing on six mission-critical market verticals that drive consistent demand across economic cycles. Among these, healthcare has emerged as our largest and most significant vertical, where we play a critical role in ensuring the operational continuity of medical facilities, enabling them to deliver life-saving care. According to the American Hospital Association, the U.S. healthcare market needs hundreds of billions of dollars in capital investment to address its infrastructure deficiencies.
Speaker Change: Our third pillar is to scale our business through acquisitions.
Speaker Change: 2024, we completed two strategic acquisitions, which should add approximately $6 million to our adjusted EBITDA in 2025.
Speaker Change: We made it maintained a disciplined approach by focusing on six mission critical market verticals.
Speaker Change: Drive consistent demand across economic cycles among.
Speaker Change: Among these health care has emerged as our largest and most significant vertical.
Speaker Change: Where we play a critical role in ensuring the operational continuity at medical facilities.
Speaker Change: Enabling them to deliver life saving care.
Speaker Change: According to the American Hospital Association the U S health care market, it's hundreds of billions of dollars in capital investment to address its infrastructure deficiencies.
Michael McCann: workforce challenges, and technological gaps while ensuring readiness for future public health emergencies. Each of our 20 locations prioritizes health care services and we are actively expanding our national footprint in this sector. This growth positions us to become a trusted enterprise partner, delivering comprehensive solutions across the markets we serve. We have seen reoccurring revenue developed for these customers as those relationships evolve. One great example is a hospital group in the Philadelphia market, which has over 1,000 licensed beds. We've been working at this facility for several years. But last year we decided to double down on the account and add a dedicated on-site account manager.
Speaker Change: Workforce challenges and technological gaps, while ensuring readiness for future public health emergencies.
Speaker Change: Okay.
Speaker Change: Each of our 20 locations prioritizes health care services, we are actively expanding our national footprint in this sector.
This growth positions us to become a trusted enterprise partner delivering comprehensive solutions across the markets we serve.
Speaker Change: We have seen reoccurring revenue developed for these customers as those relationships evolve.
Speaker Change: One Great example is a hospital group in the Philadelphia market, which has over 1000 licensed beds.
Speaker Change: We've been working at this facility for several years.
Speaker Change: The last year, we decided to double down on the account and at a dedicated onsite account manager.
Michael McCann: After six months of extreme focus, we built a strong relationship with the facility manager, proactively inspecting areas of the hospital that experienced deferred maintenance. Things finally started to break free after several system failures and we started to see a much larger transaction volume. Right now, we're in the process of repairing and replacing their entire steam system, while the facility is being supported by temporary heating equipment. Our long-term go-to-market approach with customers puts Limbach in a position to capture this revenue and continue cultivating this long-term relationship.
Speaker Change: After six months of extreme focus we built a strong relationship with the facility manager proactively inspecting areas of the hospital that experienced deferred maintenance.
Speaker Change: Finally, starting to break free after several system failures, when we started to see a much larger transaction volume.
Speaker Change: Right now we're in the process process of repairing and replacing their entire steam system. While the facility is being supported by temporary heating equipment.
Speaker Change: Our long term go to market approach with customers, but slim back in a position to capture this revenue continued cultivating this long term relationship.
Michael McCann: Our second largest vertical has become an industrial manufacturer. As a result of our strategic acquisitions over the past few years, we partnered with facility owners to support their complex systems in order to ensure the lines and manufacturing processes continue running smoothly in the existing facilities. Our company is well poised to address significant upgrades to systems and facilities from compliance regulatory standards to the possibility of increased reshoring and nearshoring to address supply chain resilience. One of our larger customers in this space is multiple manufacturing facilities in several states. They base their infrastructure program directly around our engineered solutions and equipment lines, which controls temperature and humidity while filtering and cleansing the air in the environment.
Speaker Change: Our second largest vertical has become industrial manufacturing.
Speaker Change: As a result of our strategic acquisitions over the past few years, we partner with facility owners to support their complex systems in.
Speaker Change: In order to ensure the lines of manufacturing processes continue running smoothly in the existing facilities.
Speaker Change: Our company is well poised to address significant upgrades to systems and facilities from compliance regulatory standards to the possibility of increased re shoring and near shoring to address to address supply chain resilience.
Speaker Change: One of our larger customers in this space has multiple manufacturing facilities in several states.
Speaker Change: They based their infrastructure program directly around our engineered solutions and equipment lines.
Speaker Change: Controls temperature humidity well.
Speaker Change: Well filtering and closing the air in the environment.
Michael McCann: They trust our ability to provide installed solutions around our equipment, evidenced by our growing install base in most of their locations. We collaborate with this customer to resolve their business challenges as a partnership.
Speaker Change: They trust our ability to provide installed solutions around.
Speaker Change: Our equipment.
Speaker Change: Evidenced by growing our growing installed base in most of their locations. We collaborate with this customer to resolve their business challenges as a partnership.
Michael McCann: In our other four verticals, we continue to see growth opportunity as existing buildings age. and need either critical repair work or an upgraded building system solution to keep the building's environment at an optimal temperature and humidity level. One of our largest customers traditionally has a billion and a half infrastructure budget. and is still unable to be as proactive as they need to be in order to avoid equipment failure. To support these systems, we've placed an incredible staff of people specializing in mission critical work within these key facilities, making us an integral team member to the existing building owner.
Speaker Change: And our other four verticals, we continue to see growth opportunity is existing buildings age.
Speaker Change: In need either critical repair work or an upgraded building system solution.
Speaker Change: To keep building the buildings environments, an optimal temperature and humidity levels.
Speaker Change: One of our largest customers traditionally has a billion and a half infrastructure budget.
Speaker Change: And it's still unable to be as proactive as they need to be in order to avoid equipment failures.
Speaker Change: To support these systems, we place an incredible staff of people specializing in Michigan critical work within these key facilities, making us an integral team member to the existing building owner.
Michael McCann: In many cases, particularly due to labor concerns from the owner, we've augmented their staff.
Speaker Change: In many cases, particularly due to labor concerns from the owner we've augmented their staff.
Michael McCann: As a building system solutions firm, we typically go to market differently than a contractor. We are expanding WalletShare with our existing customers, with their existing facilities, and solving complex problems with engineered solutions. We focus on large-scale customers with multiple facilities by assigning an on-site account manager to learn the building and earn the trust of the customer through day-to-day problem solving. We assign additional resources to augment our customers' building staff through either a master service agreement or a maintenance contract. Once we have built that relationship, we offer capital planning services allowing us to develop a long-term vision for the building and related capital projects.
Speaker Change: As a building system solutions firm, we typically go to market.
Speaker Change: It's been a contractor.
Speaker Change: We're expanding wallet share with our existing customers when their existing facilities and solving complex problems with the engineered solutions.
Speaker Change: We focus on large scale customers with multiple facilities by signing an onsite account manager can learn the building and earn the trust of the customer through day to day problem solving we.
Speaker Change: We signed additional resources to augment our customers building staff.
Speaker Change: Through either Master service agreement or maintenance contract.
Speaker Change: Once we had built a relationship we offer our capital planning services, allowing us to develop a long term vision for the building and related capital projects.
Michael McCann: Our objective is to build an entire account team that becomes an indispensable partner to the customer, focusing on future long-term repeatable revenue opportunities.
Our objective is to build an entire account team that becomes an indispensable partner to the customer.
Speaker Change: Focusing on future long term repeatable revenue opportunities.
Michael McCann: This is an important differentiator for Limbach. We're often compared to engineering construction companies. However, while our competitions focus on new construction, we have spent the last five years transitioning our business to working directly with building owners in existing facilities. We are now delivering on demand repairs and system solutions for their existing facilities. We're building a unique, long-term model with durable demand, allowing for shorter sales cycles. In our past GCR model, backlog was critical to our future as the projects could last up to three years in duration under a fixed price agreement, whereas now we're able to share price increases on materials with our customers.
Speaker Change: This is an important differentiator for limbach.
Speaker Change: We're often compared to engineering construction companies, however, while our competition's focus under construction. We have spent the last five years transitioning our business to working directly with building owners of existing facilities.
Speaker Change: We are now delivering on demand repairs and system solutions for their existing facilities. We're building a unique long term model with durable demand, allowing for shorter sales cycles.
Speaker Change: And our past you sure.
Speaker Change: <unk> backlog was critical to our future as the projects can last up to three years in duration under a fixed price agreement, whereas now we're able to share price increases on materials that our customers were.
Michael McCann: With our ODR focus, we have gone a different direction. Building a Durable Model by Collaborating with Building Owners. Providing quick-hit, repair-type work on a T&M basis. along with building system solutions that provide value to our customers and drive higher margins. We continue to evolve and optimize our business mix towards ODR segment to create a high-margin, sustainable business with a repeatable revenue across all cycles.
Speaker Change: With our OTR focus we've gone a different direction.
Speaker Change: Building, a durable model by collaborating with building owners, providing quick hit repair type work on a TTM basis.
Speaker Change: Along with building system solutions that provide value to our customers and drive higher margin.
Speaker Change: We continue to evolve and optimize our business mix towards OTR segment, it's pretty high margin sustainable business with a repeatable revenue across all cycles.
Michael McCann: Our M&A strategy is a key part of our growth. As I noted earlier, as a result of past acquisitions, industrial manufacturing has become our second largest vertical. To that end, most recently, we acquired Consolidated Mechanical December, a leading provider of industrial facility system solutions serving Kentucky, Michigan, and Illinois, expanding our owner-direct relationships and footprint. Other than our typical system integration, which is nearly complete, the cultural fit has allowed us to integrate quickly, and we've added focused sales resources that can help expand WalletShare with already existing building owners. We believe the breadth of our national resources combined with local relationships will enable us to expand both quality and quantity of their gross profit contribution.
Speaker Change: Our M&A strategy is a key part of our growth.
Speaker Change: As I noted earlier as a result of past acquisitions industrial manufacturing has become our second largest vertical.
Speaker Change: To that end most recently, we acquired consolidated mechanical December a leading provider of industrial facilities system solutions, serving Kentucky, Michigan, and Illinois, expanding our owner direct relationships and footprint.
Speaker Change: Other than our typical system integration, which is nearly complete.
Speaker Change: The cultural fit has allowed us to integrate quickly we've added focused sales resources that can help expand wallet share with already existing building owners.
Speaker Change: We believe the breath of our national resources combined with local relationships well.
Speaker Change: It will enable us to expand both quality and quantity of their gross profit contribution.
Michael McCann: Over the past three years, we've acquired five companies, and with each acquisition, our process has become more efficient and repeatable. Our goal is to fully integrate each acquired company into our shared systems and strategies within two to three years of closing. Expanding it to new geographic areas through these acquisitions helps Limbach grow its footprint and better serve our national customers, many of whom operate in more than 10 states. This approach is expected to drive revenue growth, reduce sales costs, and ultimately leverage our SG&A.
Speaker Change: Over the past three years, we've acquired five companies and with each acquisition of process to become more efficient and repeatable.
Speaker Change: Our goal is to fully integrate each acquired company into our shared systems that strategy within two to three years of closing.
Speaker Change: Expanding into new geographic areas.
Speaker Change: Through these acquisitions helps limbach grow its footprint and better serve our national customers many of whom operate in more than 10 States. This approach is expected to drive revenue growth.
Speaker Change: Reduced sales costs and ultimately leverage our SG&A.
Michael McCann: We have a strong pipeline of acquisitions opportunities that meet our criteria of fitting culturally, filling a niche, prioritizing building on relationships, and are accretive on a free cash flow basis. Our target is to acquire $8-10 million in adjusted EBITDA per year and apply our scalable value creation process to drive growth and long-term impact. As we continue to execute our strategy, our mixed ships should normalize to approximately 80% owner direct revenue and 20% general contractor revenue. In 2025, we expect our ODR revenue to land between 70% to 80% of total revenue for the full year. Once our mix reaches 80-20, we believe we'll begin to generate considerable consolidated revenue.
Speaker Change: We have a strong pipeline of acquisition opportunities that meet our criteria fit in culturally.
Speaker Change: Filling a niche prioritizing building on our relationships and are accretive on a free cash flow basis.
Speaker Change: Our target is to acquire $8 million to $10 million adjusted EBITDA per year and apply our scalable value creation process to drive growth and long term impact.
Speaker Change: As we continue to execute our strategy our mix shifts should normalize to approximately 80% owner direct revenue and 20% general contractor revenue.
Speaker Change: 2025, we expect our audio revenue to land between 70% to 80% of total revenue for the full year.
Speaker Change: Once her mixed reaches 80 20, we believe will begin it will begin to generate considerable consolidated revenue growth.
Michael McCann: Over time, we anticipate our evolved offerings will expand our gross margins to comparable levels of OEMs that provide similar solutions to those offered by the company, which tend to be in the 35 to 40% range. Looking forward to 2025, we expect organic top-line revenue growth to be in the 10-15% range for the full year. When we layer on two acquisitions from 2024, we anticipate total revenue in the range of $610 million to $630 million.
Speaker Change: Over time, we anticipate our evolved offerings will expand our gross margins to comparable levels of Oems that provide similar solutions to those offered by the company, which tend to be in the 35% to 40% range.
Speaker Change: Looking forward to 2025, we expect organic top line revenue growth to be in the 10% to 15% range for the full year.
Speaker Change: When we layer on two acquisitions from 2024, we anticipate total revenue in the range of $610 million six $630 million.
Michael McCann: for the past few years as we continued our shift towards ODR revenue, which has seen more seasonality in the business. The first quarter tends to be our softest quarter, with the second half of the year being stronger than the first half of the year. Going into 2025, we expect the same seasonality, with Q1 2025 being similar to Q1 2024, with an even stronger second half of the year. With our expected revenue growth for 2025 and the continued focus on improving our total gross margin, we expect adjusted EBITDA for 2025 to be in the range of $78 million to $82 million.
Speaker Change: Over the past few years as we continued our shift towards odier revenue.
Speaker Change: But you've seen more seasonality in the business.
Speaker Change: The first quarter tends to be our softest quarter with the second half of the year being stronger than the first half of the year.
Speaker Change: Going into 2025, we expect the same seasonality with Q1 2025 being similar.
Speaker Change: Two Q1 2024 with an even stronger second half of the year with our expected revenue growth for 2025, and the continued focus on improving our total gross margin.
Speaker Change: We expect adjusted EBITDA for 2025, it could be in the range of $78 million.
Speaker Change: $82 million.
Michael McCann: While 2024 was a very strong year for execution of results, We're still in the early innings of shifting to our three-pillar strategy. There are plenty of growth opportunities ahead with geographic footprint expansion. Gross margin opportunity, both for mixed shift and evolving our offerings, and tremendous opportunity for mission-critical owners with aging infrastructure.
Speaker Change: Well 2024, with a very strong year for execution of results were.
Speaker Change: We're still in the early innings of shifting to our three pillar strategy.
Speaker Change: There are plenty of growth opportunities ahead.
Speaker Change: Geographic footprint expansion.
Speaker Change: Gross margin opportunity, both for mix shift and evolving our offerings and tremendous opportunity for mission critical owners with aging infrastructure.
Jayme Brooks: Like now to turn the call over to Jayme for our financial results. Thank you, Mike. Our Form 10-K and earnings press release filed yesterday provides comprehensive details of our finance results, so I will focus on the highlights for the full year and fourth quarter. All comparisons are full year 2024 versus 2023 and fourth quarter 2024 versus fourth quarter of 2023 unless otherwise noted. For the year, we generated total revenue of $518.8 million compared to $516.4 million in 2023. Total revenue growth was nearly flat at 0.5% while ODR revenue grew 31.9% and GCR revenue declined 31.9%.
Jamie: Like now to turn the call over to Jamie for our financial results.
Jamie: Thank you, Mike our Form 10-K and earnings press release filed yesterday provides comprehensive details of our financial results.
Jamie: Focus on the highlights for the full year and fourth quarter.
Jamie: All comparisons our full year 2024 versus 2023, and fourth quarter 2024 versus fourth quarter of 2023, unless otherwise noted.
Jamie: For the year, we generated total revenue of $518 8 million compared to $516 4 million in 2023.
Jamie: Total revenue growth was nearly flat at 0.5% Y O D. Our revenue grew 31, 9% and GCI revenue declined 31, 9%.
Jayme Brooks: As we have said before, the GCR revenue decline is by design as we execute our mixed-shift strategy towards ODR. ODR revenue accounted for 66.6% of total revenue for the year, up from 50.7% in 2023. During the quarter, we generated total revenue of $143.7 million versus $142.7 million in 2023. Total revenue growth was nearly flat at 0.7%, while ODR revenue grew 21.4% and GCR revenue declined 24.8%. In the fourth quarter, ODR revenue was 66.5% of total revenue, up from 55.1% in 2023. Our ODR backlog at quarter end was $225.3 million compared to $147 million at December 31, 2023.
Speaker Change: As you said before the GCI revenue decline is by design as we execute our strategy.
Jamie: Sure.
Jamie: OTR revenue accounted for 66, 6% of total revenue for the year.
Jamie: Up from 57% in 2023.
Jamie: During the quarter, we generated total revenue of $143 7 million versus $142 7 million in 2023.
Jamie: Total revenue growth was nearly flat earthquake, 7% Oh, Dr. Revenue grew 21, 4% and you see our revenue declined 24, 8%.
Jamie: In the fourth quarter <unk> revenue was 66, 5% of total revenue up from 55, 1% in 2023.
Jamie: Our OTR backlog at quarter end was $225 3 million compared to 147 million at December 31, 2023.
Jayme Brooks: GCR backlog was $140 million compared to $186.9 million at December 31, 2023. The increase in ODR backlog and the decrease in GCR backlog are due to our continued focus on accelerating the growth of our high-margin ODR business. Keep in mind that the backlog in the ODR segment does not reflect our complete book of business. Many ODR projects are short-term in nature and can be sold and executed within the quarter. Total gross profit for the year increased 20.9% from $119.3 million to $144.3 million, reflecting our focus on growing our ODR segment. Total gross margin on a consolidated basis for the full year was 27.8%, up from 23.1% in 2023, driven by the combination of higher margin ODR revenue, higher quality GCR work, and the contribution from our acquisition.
Jamie: D C. Our backlog was $140 million compared to $186 9 million at December 31, 2023.
Jamie: The increase in our backlog and the decrease in D. C. Our backlog are due to our continued focus on accelerating the growth of our high margin OTR business.
Jamie: Keep in mind that the backlog in the OTR segment does not reflect a complete book of business.
Jamie: Many OTR projects are short term in nature and can be sold and executed within the quarter.
Jamie: Total gross profit for the year increased 29% from $119 3 million to $144 3 million, reflecting our focus on growing our OTR segment.
Jamie: Total gross margin on a consolidated basis for the full year was 27, 8% up from 23, 1% in 2023, driven by the combination of higher margin LDR revenue higher quality D. C artwork and the contribution from our acquisitions.
Jayme Brooks: ODR gross profit contributed $107.8 million, or 74.7% of the total gross profit dollars. ODR gross profit increased $31.7 million, or 41.6%, driven by higher revenue and expansion of our ODR gross margins to 31.2% from 29% in 2023. GCR gross profit declined $6.7 million, or 15.5%, due to our selectivity of higher quality projects, which increased our GCR gross margins to 21.1% from 17% in 2023. Total gross profit for the quarter increased 30.8% from $33.3 million to $43.6 million, again reflecting our ongoing emphasis on ODR. Total gross margin on a consolidated basis for the fourth quarter was 30.3%, up from 23.3% in 2023, mainly due to the mix of higher margin ODR revenue, higher quality GCR work, and the impact from our acquisition.
Jamie: OTR gross profit contributed $107 $8 million or 74, 7% of the total gross profit dollars.
Jamie: Our gross profit increased $31 7 million or 41, 6% driven by higher revenue and expansion of our LDR gross margins to 31.2% from 29% in 2023.
Jamie: G C. Our gross profit declined $6 7 million or 15, 5% due to our selectivity of higher quality projects, which increased our D. C. Our gross margins to 21, 1% from 17% in 2023.
Jamie: Total gross profit for the quarter increased 38% from $33 3 million to $43 6 million again, reflecting our ongoing emphasis on OTR.
Jamie: Total gross margin on a consolidated basis for the fourth quarter was 33% up from 23, 3% in 2023, mainly due to the mix of higher margin LDR revenue higher quality GCI work and the impact from our acquisitions.
Jayme Brooks: ODR gross profit contributed $30.6 million, or 70.2% of the total gross profit dollar. ODR gross profit increased $6.9 million, or 29.3%, driven by higher revenue and expanded gross margins of 32.1% versus 30.1% in 2023. GCR gross profit increased $3.3 million, or 34.5%, driven by our focus on better quality projects and expanding growth margins to 26.9% versus 15% in 2023. For the year, SG&A expense was $97.2 million, an increase of approximately $9.8 million from $87.4 million in 2023. As a percentage of revenue, SG&A expense was 18.7%, up from 16.9% in 2023. The increase was driven primarily by higher payroll and incentive-related expenses and costs incurred due to ACME and industrial air transactions, which were not acquired entities for the full year of 2023.
Jamie: OTR gross profit contributed $36 million or 72% of the total gross profit dollars.
Jamie: Our gross profit increased $6 9 million or 29, 3% driven by higher revenue and expanded gross margins at 32, 1% versus 31% in 2023.
Speaker Change: G C. Our gross profit increased $3 3 million or 34, 45% driven by our focus on better quality projects and expanding gross margin to 26, 9% versus 15% in 2023.
Speaker Change: For the year SG&A expense was $97 2 million, an increase of approximately $9 8 million from $87 4 million in 2023.
Speaker Change: As a percentage of revenue SG&A expense was 18, 7% up from 16, 9% in 2023.
Speaker Change: The increase was driven primarily by higher payroll and incentive related expenses and cost incurred due the acme and industrial air transactions, which were not acquired entities for the full year of 2023.
Jayme Brooks: For 2025, we are targeting SG&A expense as a percentage of revenue to be around 18 to 19% as we continue to invest in our ODR business to drive growth. During the quarter, SG&A expense increased approximately $2.4 million to $27.4 million from $25 million in 2023. As a percentage of revenue, SG&A expense was 19.1%, up from 17.5% in 2023. The increase was driven by a $2.8 million increase in payroll and incentive-related expenses, offset by a decrease in legal costs. Interest expense for Q4 was $0.5 million and $1.9 million for the year. Interest income for the quarter was $0.5 million and $2.2 million for the year, driven by the company's investment strategy in placing our excess cash in overnight repurchase agreements, U.S.
Speaker Change: For 2025, we are targeting SG&A expense as a percentage of revenue to be around 18% to 19% as we continue to invest in our OTR business to drive growth.
Speaker Change: During the quarter SG&A expense increased approximately $2 4 million to $27 4 million from $25 million in 2023.
Speaker Change: As a percentage of revenue SG&A expense was 19, 1% up from 17, 5% in 2023.
Speaker Change: The increase was driven by $2 8 million increase in payroll and incentive related expenses offset by a three crews and legal costs.
Speaker Change: Interest expense for Q4 was <unk> 5 million and $1 9 million for the year.
Speaker Change: Interest income for the quarter was <unk> 5 million and $2 2 million for the year driven by the company's investment strategy in placing our excess cash and overnight repurchase agreements U S Treasury bills and money market funds.
Jayme Brooks: Treasury bills, and money market funds. For the year, Adjusted EBITDA was $63.7 million, up 36.1% from $46.8 million in 2023, and we exceeded the top end of our 2024 Adjusted EBITDA guidance of $60 million to $63 million. Adjusted EBITDA margin for the year was 12.3% compared to 9.1% in 2023. Adjusted EBITDA for the fourth quarter was $20.8 million, up 65.5% from $12.6 million in 2023. adjusted EBITDA margin for the fourth quarter was 14.5% compared to 8.8% in 2023. For the year, net income grew 48.8% from $20.8 million to $30.9 million. and earnings per diluted share grew 46 percent from $1.76 to $2.57.
Speaker Change: For the year adjusted EBITDA was $63 7 million up 36, 1% from $46 8 million in 2023.
Speaker Change: And we exceeded the top end of our 2024, adjusted EBITDA guidance of 60 million to $63 million.
Speaker Change: Adjusted EBITDA margin for the year was 12, 3% compared to nine 1% in 2023.
Speaker Change: Adjusted EBITDA for the fourth quarter was $20 8 million up 65, 5% from $12 6 million in 2023.
Speaker Change: Adjusted EBITDA margin for the fourth quarter was 14, 5% compared to eight 8% in 2023.
Speaker Change: For the year net income grew 48, 8% from $20 8 million to $30 9 million.
Speaker Change: And earnings per diluted share grew 46% from.
Speaker Change: From $1.76 to $2.57.
Jayme Brooks: Adjusted net income grew 48.2% from $29.2 million to $43.2 million, and adjusted earnings per diluted share grew 45.2% from $2.48 to $3.60. Net income for the fourth quarter grew 87.5% from $5.2 million to $9.8 million, and earnings per diluted share grew 86.4% from $0.44 to $0.82. Adjusted net income grew 70.9% from $8.1 million to $13.8 million and adjusted earnings per diluted share grew 69.1% from $0.68 to $1.15. Turning to cash flow, our operating cash flow during the fourth quarter was $19.3 million compared to $13.9 million in 2023, representing a 38.7% increase. operating cash flow for the year was $36.8 million compared to $57.4 million in 2023, representing a 35.9 percent decrease due to the timing of differences in certain accounts receivable.
Speaker Change: Adjusted net income grew 48, 2% from $29 2 million to $43 2 million and adjusted earnings per diluted share grew 45, 2% from $2.48 to $3 60.
Speaker Change: Net income for the fourth quarter grew 87, 5% from $5 2 million to $9 8 million and earnings per diluted share grew 86, 4% from 44 cents to 82 cents.
Speaker Change: Adjusted net income grew 79% from $8 1 million to $13 8 million and adjusted earnings per diluted share grew 69, 1% from 68 to $1 15.
Speaker Change: Turning to cash flow, our operating cash flow during the fourth quarter was $19 3 million compared to $13 9 million in 2023.
Speaker Change: Representing a 38, 7% increase.
Speaker Change: Operating cash flow for the year was $36 8 million compared with $57 4 million in 2023.
Speaker Change: Representing a 35, 9% decrease due to the timing differences in certain accounts receivable.
Jayme Brooks: Free cash flow, defined as cash flow from operating activities, less changes in working capital and capital expenditures, excluding our investment in rental equipment, for the year was $52.3 million, compared to $36.7 million in 2023, an increase of 42.6%. The free cash flow conversion of adjusted EBITDA for the year was 82.1% versus 78.4% in 2023. For 2025, we are continuing to target a free cash flow conversion rate of at least 70%, which again we define as cash flow from operations, minus changes in working capital, minus capital expenditures excluding our investment in rental equipment, divided by adjusted We expect CapEx for 2025 to have a run rate of approximately $4 million, primarily because of our acceleration of our ODR strategy.
Speaker Change: Free cash flow defined as cash flow from operating activities.
Speaker Change: Changes in working capital and capital expenditures, excluding our investment in rental equipment for the year was $52 3 million compared to $36 7 million in 2023 and.
Speaker Change: An increase of 42, 6%.
Speaker Change: Free cash flow conversion of adjusted EBITDA for the year was 82, 1% versus 78, 4% in 2023.
Speaker Change: For 2025, we are continuing to target a free cash flow conversion rate of at least 70%, which again, we define as cash flow from operations.
Speaker Change: Minus changes in working capital minus capital expenditures, excluding our investment in rental equipment divided by adjusted EBITDA.
Speaker Change: We expect Capex for 2025 to have a run rate of approximately $4 million, primarily because of our acceleration of our LDR strategy.
Jayme Brooks: This amount excludes an additional investment of $3.5 million in rental equipment in the first half of 2025. Turning to our balance sheet, as of December 31st, we had $44.9 million in cash and cash equivalents and total debt of $27.2 million, which includes $10 million borrowed on our revolving credit facility at a hedge rate of 5.72%. Our balance sheet remains strong, and we are well-positioned to support our strategy of generating ODR growth and margin expansion, which we believe will create significant long-term value for our stockholders. In addition, our balance sheet supports our acquisition strategy by providing the capital to make our opportunistic decisions for growth.
Speaker Change: This amount excludes an additional investment of $3 5 million in rental equipment in the first half of 2025.
Speaker Change: Turning to our balance sheet as of December 31st we had $44 9 million in cash and cash equivalents and total debt of $27 2 million, which includes 10 million borrowed on our revolving credit facility at a hedge rate.
Speaker Change: $5 seven 2%.
Speaker Change: Our balance sheet remains strong and we are well positioned to support our strategy of generating OTR growth and margin expansion, which we believe will create significant long term value for our stockholders. In addition.
Speaker Change: Our balance sheet supports our acquisition strategy by providing the capital to make opportunistic decisions for growth.
Operator: That concludes our prepared remarks. I'll now ask the operator to begin Q&A. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you.
Speaker Change: That concludes our prepared remarks, I'll now ask the operator to begin Q&A.
Speaker Change: Thank you we will.
Speaker Change: Now be conducting a question and answer session.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star two if he would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing darkies one moment. Please while we poll for questions.
Speaker Change: Thank you. Our first question comes from the line of Rob Brown with Lake Street Capital. Please proceed with your question.
Rob Brown: Our first question comes from the line of Rob Brown with Lake Street Capital. Please proceed with your question. Hi Mike and Jayme. Morning. Good morning. to touch on the organic growth you talked about. Is that the ODR business in particular, or is that the ODR business in general? That's the overall. Sorry, not hearing you very well. That's the overall top line. Okay, great. And then what's sort of the implied OER organic growth? Hlttps://www.plastics-car.com You broke up again. I'm sorry, Rob. Mr. Brown, are you still connected? Yeah, sorry, can you hear me? I think I lost you.
Speaker Change: How about you Jamie.
Speaker Change: Good morning, good morning.
Speaker Change: I just wanted to touch on the organic growth you talked about in 2025, maybe 10% to 15% is that is that the OTR business in particular was that the overall business.
Speaker Change: I guess what would be organic.
Speaker Change: That's the overall.
Speaker Change: Oh, sorry, hearing you very well and that's the overall top line.
Speaker Change: Yeah.
Speaker Change: Okay, Great and then what's sort of the implied organic growth.
Okay.
Speaker Change: Yeah.
Speaker Change: You broke up again I'm sorry, Rob.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Mr Brown and connected.
Speaker Change: Yes, sorry can you hear me I think I lost you.
Speaker Change: Yes, now we hear you.
Rob Brown: Okay, sorry about that. I apologize.
Speaker Change: Okay, sorry about that I apologize I'm just wanted to know the implied organic growth in <unk>.
Michael McCann: I just wanted to know the implied organic growth in the ODR. We're looking at it from the kind of the perspective of both the top line just from a once we do our acquisitions as well as layering that in. So we've gotten a very specifically commented on a percentage growth. I would assume you could see maybe 23 to 46% if you take the top end and the low end of the range that we provided from an adjusted EBITDA and revenue perspective. Okay, good. Thank you.
Speaker Change: We're looking at it from a kind of a perspective of both the top line just from me once we do our acquisitions as well as layering that in.
Speaker Change: They specifically comment on a percentage growth I would assume you could maybe 23% to 46%. If you take the top end and the low end of the range that we provided from an adjusted EBITDA and revenue perspective.
Speaker Change: Okay. Good. Thank you and then on the on the gross margin comment about kind of getting to OEM level gross margins just wanted to get a sense of what you need to sort of duty get there is it.
Michael McCann: And then on the gross margin comment about kind of getting to OEM-level gross margins, just wanted to get a sense of what you need to sort of do to get there. Is that a kind of long-term goal, or what additional kind of services would you need? Yeah, Rob. It's definitely a long-term goal. You know, our margin journey, really, there's two pieces to it. Maybe there's more than two pieces. But, you know, the first piece has been shifting to the revenue as much as the owner direct segment. That's going to get us a natural lift. The second part of it is building our channel and our connected integrated platform among all of our locations.
Speaker Change: Is that a long term goal or what additional kind of services, we just need to get to that point.
Speaker Change: Yeah, Robert it's definitely a long term goal our margin journey really.
Speaker Change: There is two pieces to it maybe there's more than two pieces, but the first piece has been shifting to the revenue as much the owner direct segment, that's going to get us a natural lift.
Speaker Change: The second part of it is building our channel and our connected.
Speaker Change: Integrated platform.
Speaker Change: Among all of our location acquisitions of course will help that.
Michael McCann: Acquisitions, of course, will help that. And then being able to offer new evolved offerings through our sales chain, our integrated sales chain. So, it's going to be a combination of both. It's going to be a combination of really getting to that optimal mix plus from an evolved offerings perspective. And it's very much a long-term perspective on where gross profit could go. Thank you, I'll turn it over.
Speaker Change: And then being able to offer.
Speaker Change: New evolved offerings through our sales team our integrated sales change so.
Speaker Change: It's going to be a combination of both it's gonna be a combination of really getting to that optimal mix plus permanent involved offerings perspective. It is very much long term.
Speaker Change: Perspective on where gross profit could go to.
Speaker Change: Great. Thank you I'll turn it over.
Speaker Change: Thank you.
Speaker Change: Okay.
Jerry Sweeney: Our next question comes from the line of Jerry Sweeney with Roth Capital. Please proceed with your question. Good morning, Jayme and Mike. Good morning. Thanks, Sherry.
Speaker Change: Our next question comes from the line of Gerry Sweeney with Roth Capital. Please proceed with your question.
Gerry Sweeney: Good morning, Jamie and Mike Thanks for taking my call.
Mike Monahan: Thanks Jerry.
Michael McCann: Question on ODR. asked us the right way. When you're looking at existing customers, where are you in terms of... that truly will say trusted advisor advisor level. contracts and development. I'm just trying to see where you are. existing customers and growing. Yeah, I mean, we've got a long way to go. And maybe the best way to do this is to kind of go back to the example that I covered in the prepared remarks. That's kind of a perfect example. Robert Brown, Jayme Brooks, Michael McCann, Julie Kegley, Limbach Hldg of some total system failure. And that really starts the spend process going.
Mike Monahan: A question on Ot or hopefully I can.
Mike Monahan: As this is the right way.
Mike Monahan: When youre looking at existing customers, where are you in terms of.
Mike Monahan: Hitting that truly will say trusted advisor adviser level I suppose.
Mike Monahan: Getting into the maintenance contracts and developing that relationship I'm, just trying to see where you are in terms of existing customers and growing into that sort of long term.
Mike Monahan: Our goal or target with them.
Mike Monahan: Yeah, I mean, we've come a long way to go and maybe the best way to do this is to kind of go back to the example that I covered in the prepared remarks.
Mike Monahan: That's kind of a perfect like that.
Mike Monahan: Where we're at.
Mike Monahan: We've got that hospital group in the Philadelphia market have you been.
Mike Monahan: We had the account.
Mike Monahan: And I think our whole objective the last couple of years as like less place resources, there and that's really capture this relationship. It typically their relationships are built on some sort of quick repair work. It happens off some total system failure and that really starts to spend classes going I think once the spin process.
Michael McCann: I think once the spend process happens, then the outlook is how can we avoid these situations in the future? How can we proactively build your capital plan? So I would say most of our customers are kind of a perfect example of that. We've started to really see the reoccurring revenues start to come in, the OpEx type work. And I think the outlook, I think as we go into deeper in the years, how can we get to the point where we're starting to plan those budgets? Got it.
Mike Monahan: And then the outlook is how can we.
Mike Monahan: Avoid these situations in the future how can we proactively build your capital plans. So I would say most of our customers are kind of a perfect example that we've started to really see the reoccurring revenue start to come in the Opex type work and I think the outlook I think as we go into deeper in a year is how can we get to the point, we're starting to plan those budgets.
Speaker Change: Got it how does the environment sort of play into that in terms of like availability of.
Michael McCann: How does the environment sort of play into that in terms of like availability of skilled technicians, HVAC, et cetera. I mean, it feels as though there's less and less. Are people available in that space? play into this maybe longer theme of you being a trusted advisor. Absolutely. You know, our labor story is a lot different than a lot of other companies in the E&C space. Our field labor has shifted from production-type labor to super specialized labor. And obviously, even from a productivity perspective, the dollars per hour of our labor has gone up significantly from a profitability perspective, and obviously from a cost that we've been able to pass that along.
Speaker Change: Skilled technicians, HVAC et cetera, I mean, it feels as though theres less and less.
Speaker Change: Maybe people available in that space and systems are becoming more and more complicated I mean does this sort of play into this maybe longer theme of you being a trusted advisors for some of these.
Speaker Change: The multi location clients.
Speaker Change: Absolutely our our labor story is a lot different than a lot of other company.
Speaker Change: Companies of the E&C space or field labor has shifted from production type labor to Super specialized labor.
Speaker Change: And.
Speaker Change: Obviously, even from a productivity perspective, the dollars per hour of our labor has gone up significantly from a profitability perspective, and obviously from a cost that we've been able to pass that along.
Michael McCann: But that's been our focus, is having super technical people that take care of these customers, understand complex systems. And a lot of times In many cases, the owners can't work on these systems. They need us to come in and help them and advise them. Always through these critical repairs and complex issues is when we really start to develop that relationship. So I think our specialized labor is important now and will continue to be important in the future. Just our approach of how we've gone to existing building mission-critical spaces. um And that's going to play really well, I think it'd work.
Speaker Change: But that's been our focus is having super technical people.
Speaker Change: They take care of these customers understand complex systems.
Speaker Change: And a lot of times.
Speaker Change: In many cases the owners can't work on these systems, they need us to come in and help them and advise them of it always through these critical repairs and complex issues is when we really start to develop that relationship. So.
Speaker Change: Our specialized labor is important now and will continue to be important in the future just our approach of how we've gone to existing building mission critical spaces.
Speaker Change:
Speaker Change: And that's going to play really well I think into our future.
Michael McCann: got it.
Speaker Change: Got it and one more obviously I mean, OTR, it's been great and I don't want to.
Michael McCann: And one more, obviously, I mean, ODR has been great, and I don't want to I don't want this to come out in any other way. Is there a way to even speed this up to get deeper penetration, invest more in account managers, etc.? probably even a bill. spread more services across more. How does that play out? Yeah, so a couple things. One thing is we've learned that this strategy takes time, and I think it's It's not necessarily easy entry for people that are not focused on existing infrastructure. It takes three, four years. So it's a very, I think, building block-type strategy, and you've got to earn that trust.
Speaker Change: I don't want this to come out in any other way but.
Speaker Change: Is there a way to even speed this up to get deeper penetration invest more in our account managers et cetera.
Speaker Change: And I think there's probably even ability to spread more services across more branches. Just how does that play out in the next couple of years in terms of growth.
Speaker Change: Yeah. So couple of things one thing is we've learned that this strategy takes time and I think it's.
Speaker Change: Not necessarily easy entry for people that are not focused on existing infrastructure takes three or four years. So it's a very I think building block type strategy.
Speaker Change: You've got to earn that trust just because you've done a large construction project doesn't mean that they're going to have you start working on the existing infrastructure. It's taken us three to five years to get to that point, so, but I think going forward you know our growth profile kind of looks like this locally we wanted to get to the point where start to penetrate those capital planning budget.
Michael McCann: Just because you've done a large construction project doesn't mean that they're going to have you start working on the existing infrastructure. It's taken us three to five years to get to that point. But I think going forward, you know, our growth profile kind of looks like this. Locally, we want to get to the point where we start to penetrate those capital planning budgets, co-authoring, authoring, so we get a lot more visibility in the future, and we're able to have a nice mix between OPEX and CAPEX budgets. The other piece of it is our whole goal from an acquisition strategy and from an organic location strategy is to get on the same integrated platform.
Speaker Change: It's co authoring offering so we get a lot more visibility in the future and we're able to a nice mix between opex and Capex budget the.
Speaker Change: The other piece of it is our whole goal from an acquisition strategy and from an organic location strategy you get on the same integrated platform.
Michael McCann: both from a systems and a strategy perspective. So over time, as we develop footprint, we're going to be able to be a national provider of some of these large spend type customers, national customers. That's another area that's going to start to accelerate that allows us to sell capital projects on a much larger scale and to kind of leverage this local and type national type relationship. I think that's when things really start to take off.
Speaker Change: Both from a systems and a strategy perspective, so over time as we develop footprint.
We're going to be able to be a national providers. Some of these large spend type customers national customers. That's another area, that's going to start to accelerate.
Speaker Change: That allows us to sell capital projects and a much larger scale.
Speaker Change: And and to kind of leverage this local and type national type relationship I think that's when things really start to take off.
Speaker Change: Got it Super helpful. Okay.
Jerry Sweeney: Okay, that's it for me, I appreciate it, I'll jump. Thank you, Jerry.
Speaker Change: That's it for me.
Speaker Change: I appreciate it I'll jump back in queue.
Speaker Change: Thank you Jerry.
Speaker Change: Okay.
Operator: As a reminder, if you would like to ask a question, press star 1 on your telephone keypad.
Speaker Change: As a reminder, if you would like to ask a question press star one on your telephone keypad.
Brian Brophy: Our next question comes from the line of Brian Brophy with Stiefel. Please proceed with your question. Thanks. Good morning, everybody. Good morning.
Speaker Change: Our next question comes from the line of Brian Brophy with Stifel. Please proceed with your question.
Brian Brophy: Thanks, Good morning, everybody.
Speaker Change: Good morning, good morning.
Brian Brophy: Wanted to ask kind of a clarifying question here on the first quarter. I think you guys said flat revenue 1Q25 relative to 1Q24. Did I hear that correctly and was that an ODR comment or is that a total revenue comment? Any clarity there would be helpful. We said basically it'd be similar to Q1, Q1 of 25 would be similar to Q1 of 24. If you keep in mind, in Q1 of 24, we did have $2 million of a write up in that quarter. So just kind of top line, bottom line, we expect it to be similar.
Speaker Change: Wanted to ask kind of a clarifying question here on the first quarter. I think you guys said flat revenue <unk> 25 relative to <unk> 24 did I hear that correctly and was that an O D or comment or was that a total revenue comment any clarity there would be helpful.
Speaker Change: We said basically said it would be similar to Q1 Q1 of 'twenty five would be similar to Q1 of 'twenty four and.
Speaker Change: If you keep in mind. Thank you went up 24, we did have $2 billion of a write up in that quarter. So just kind of topline bottomline and we expect to be expect it to be similar.
Michael McCann: Okay and that's total revenue? Yes.
Speaker Change: Okay, and that's total revenue.
Speaker Change: Yes.
Michael McCann: Okay, that's helpful, thanks.
Speaker Change: Okay.
Michael McCann: And then I guess, can you help us with... I guess what gives you guys confidence in... in re-accelerating growth here later in the year. It's a similar pattern that we've seen. There's a good degree of seasonality that happens within the business. I think that piece of it, I think the other part of it, too, is obviously getting our mix to the point where now we're starting to see that owner direct revenue start to translate to top line, where past year we've been kind of holding back that total revenue. I think the other piece of factor is obviously factoring the two acquisitions as well, too.
Speaker Change: That's helpful. Thanks, and then I guess can you help us with.
Speaker Change: I guess, what gives you guys confidence in.
Speaker Change: And re accelerating growth here later in the year.
Speaker Change: Yeah, it's a similar pattern that we've seen there's a good degree of seasonality that happens within the business I think that piece of it I think the other part of it too is obviously getting our mix to the point, where now we're starting to see that owner direct revenue start to translate to top line, where our past we've been kind of holding back that total that tone.
Speaker Change: It'll revenue I think the other piece factories, obviously factoring the two acquisitions as well too.
Michael McCann: So, it's a combination of maybe the three of those things working together where we feel the confidence from that perspective. Okay, that's helpful.
Speaker Change: So it's a combination of maybe the three of those things working together.
Speaker Change: Really where we feel the confidence from that perspective.
Speaker Change: Okay. That's helpful. And then a question on <unk> gross margins in the quarter. They were notably better than we were expecting is there anything that was more one time in there and then you guys mentioned some net material write ups gross profit write ups in the release did that have anything to do with driving the P. C.
Jayme Brooks: And then a question on GCR gross margins in the quarter. They were notably better than we were expecting. Is there anything that was more one-time in there? I think you guys mentioned some net material write-ups, gross profit write-ups in the release. Does that have anything to do with driving the GCR margin in the quarter? Yeah, our GCR, a lot of it depends on what works as being executed and being finalized within that quarter. Obviously, we've been super selective, and I think that has helped us tremendously as well, too, as well as trying to, obviously, we de-risk these projects as much as we can.
Speaker Change: Our margin in the quarter.
Speaker Change: Yes R. G. C are a lot of it depends on what work is being executed and being finalized within that quarter, obviously, you've been super selective.
Speaker Change: And I think that has helped us tremendously as well too as well as trying to obviously, we derisk. These projects as much as we can yeah and then on the GCI side, we did have about two.
Jayme Brooks: Yeah, and then on the GCR side, we did have about 2.9 million of a write up within the quarter itself in Q4 that did benefit those markets.
Speaker Change: $2 9 million or a write up within the quarter itself in Q4.
Speaker Change: Okay.
Speaker Change: It does benefit those margin.
Jayme Brooks: Okay, that's helpful.
Speaker Change: Okay. That's helpful.
Brian Brophy: um And then.
Speaker Change:
Speaker Change: And then.
Jayme Brooks: Wanted to ask about your kind of account manager hiring plans this year. Are you guys planning on continuing to add folks at this point? And how should we be thinking about that impacting your SG&A for 2025? Yeah, we're still in investment mode from an account perspective. You know, it's every year we're always looking to figure out how can we continue to accelerate that growth from an owner direct perspective as well, too. And part of that is obviously making sure that we have enough people on these accounts. So, you know, our strategy has been very different than others.
Speaker Change: Wanted to ask about your.
Speaker Change: Kind of account manager hiring plans. This year are you guys planning on continuing to add folks at this point and how should we be thinking about that impacting your SG&A for 2025.
Speaker Change: Yeah, we're still in investment mode.
Speaker Change: From it from an account perspective.
Speaker Change: Every year, we're always looking to figure out how can we continue to accelerate that growth or an owner direct perspective, as well too and part of that is obviously, making sure that we have enough people on these accounts so.
Speaker Change: You know our strategy has been very different than others are focused on existing building aging infrastructure, making sure that we're on the account every single day is really important the specialization of our labor I think as well too.
Jayme Brooks: Our focus on existing building, aging infrastructure, making sure that we're on the account every single day is really important. The specialization of our labor, I think, as well, too. And then really building that long-term plan as well, too. So we want to make sure that we're at the accounts as much as we can to capture relationships and make it as sticky as possible as well, too.
Speaker Change: And then really building that long term plan as well too so.
Speaker Change: Hum.
Speaker Change: Where we want to make sure that we're at the accounts as much as we can to capture relationships would make it as sticky as possible as well too.
Brian Brophy: Okay.
Speaker Change: Okay.
Brian Brophy: And then maybe pivoting a little bit, thinking bigger picture here. Can you talk about the opportunity to grow your MSA count? You're in about 20 MSAs today. Where can this go over time? And is that primarily going to be a function of M&A or is there an opportunity to greenfield here as well? Yeah, we have a lot of footprint. Just if you looked at our map, you know, there's at least 20 or 25 plus type MSAs that we could be in that are great markets for us as well, too. I think about where we're at in the middle of the country from an industrial manufacturing, we've really just started to take a look at being able to capture that.
Speaker Change: And then maybe pivoting a little bit thinking bigger picture here can you talk about the opportunity to grow your MSA cow you earned about 20 Msas today, where can this go over time and is that primarily going to be a function of M&A or is there an opportunity that greenfield here as well.
Speaker Change: Yeah, we have a lot of footprint just just if you look at our map.
Speaker Change: At least 20 or 25, plus type msas that we could be in that are great markets for us as well too.
Speaker Change: Oh well.
Speaker Change: Where are we at in the middle of the country from an industrial manufacturing. We've really just started to take a look at being able to capture that.
Michael McCann: So, I think a good chunk of it will come from MSAs. Every once in a while, if there's a customer that wants us to be in an area, we have the talent in place, they want to be in the area, we have in the past done organic startups, but I would say the majority is going to come from an acquisition perspective.
Speaker Change: I think a good chunk of it will come from M&A.
Speaker Change: Every once in a while we if there's a customer that wants us to be in an area. We have the talent in place they wanted to be in the area. We have in the past done.
Speaker Change: Organic startups, but I would say the majority is going to come from an acquisition perspective.
Michael McCann: Okay, that's helpful. And then I think last one for me, can you just remind us how much data center exposure do you guys have? Where is that exposure? How much of that is new construction related? And how are you thinking about the long term opportunity in that market? Yeah, so from a, again, we're very different from a data center perspective. About three years ago, We essentially, in one of our locations, we were building data centers, and we basically turned the faucet off and stopped building those data centers, which our location at the time was wondering what we're doing.
Speaker Change: Okay. That's helpful.
Speaker Change: And then I think last one for me can you just remind us how much data center exposure do you guys have where is that exposure how much of that is new construction related and.
Speaker Change: How are you thinking about the long term opportunity in that market.
Speaker Change: Yeah. So again, we're very different from a data center perspective about three years ago.
Speaker Change: We essentially in one of our locations we were building data centers and we basically turn the faucet off and stop building those data centers, which are location at the time was wondering what we're doing.
Michael McCann: So from a new construction perspective, we two or three years ago, we stopped from that perspective. So our data center. The work that we have is existing building data center work, existing infrastructure. There's only a couple of markets that we're even able to take advantage of that, Columbus and a little bit in the Northern Virginia market. So it hasn't been a big part of our past, and I think in the future it's just a matter of watching that infrastructure age and then being a partner for those types of facilities.
Speaker Change: So from a new construction perspective, we.
Speaker Change: Two or three years ago, we stopped from that perspective so.
Speaker Change: Our data center.
Speaker Change: Work that we have is existing building data center works existing infrastructure. There's only a couple of markets that were even able to take advantage of that Columbus, and a little bit in the northern Virginia market. So.
Speaker Change: It hasn't been a big part of our our past and I think in the future. It's just a matter of that eight watching that infrastructure age and then being a partner.
Speaker Change: Facilities.
Brian Brophy: very helpful.
Speaker Change: Very helpful I'll pass it on thank you.
Brian Brophy: I'll pass it on. Thank you.
Speaker Change: Thank you.
Operator: We have no further questions at this time.
Speaker Change: We have no further questions at this time, Mr. Mccann I'd like to turn the floor back over to you for closing comments.
Michael McCann: Mr. McCann, I'd like to turn the floor back over to you for closing comments. Thank you for listening today and for your continued interest in Limbach. We look forward to seeing many of you at the UPS Services Conference this week and at the Roth Conference next week. I hope everybody has a great day. Thank you.
Speaker Change: Thank you for listening today and for your continued interest in Limbach, we look forward to seeing many of you at the UBS Services Conference. This week and at the Roth Conference next week.
Speaker Change: But he has a great day. Thank you.
Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: No.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Thank you.
Speaker Change:
Speaker Change: Uh huh.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Mhm.
Speaker Change: [music].
Yes.
Speaker Change: Okay.
Speaker Change: Okay.