Limbach(LMB)2025-03-11 22:37Financial Data and Key Metrics Changes - Total revenue for 2024 was 516.4 million in 2023, with ODR revenue growing by 31.9% and GCR revenue declining by 31.9% [28] - Total gross profit increased by 20.9% from 144.3 million, with total gross margin rising to 27.8% from 23.1% in 2023 [31] - Adjusted EBITDA for 2024 was 46.8 million in 2023, exceeding the guidance of 63 million [37] Business Line Data and Key Metrics Changes - ODR revenue accounted for 66.6% of total revenue in 2024, up from 50.7% in 2023, while GCR revenue represented a significant decline [28] - ODR gross profit increased by 41.6% to 36.4 million, but GCR gross margins improved to 21.1% from 17% due to selectivity in project quality [32] Market Data and Key Metrics Changes - The company is focusing on six mission-critical market verticals, with healthcare emerging as the largest, driving consistent demand [4] - The healthcare market in the US requires significant capital investment, which positions the company to expand its national footprint in this sector [5] Company Strategy and Development Direction - The company is executing a three-pillar strategy: shifting revenue mix towards ODR, evolving service offerings, and scaling through acquisitions [2][3] - The goal is to achieve an 80/20 revenue mix of ODR to GCR, with expectations for ODR revenue to reach 70% to 80% of total revenue in 2025 [22] - The company aims to integrate acquired companies efficiently and leverage local relationships to expand gross profit contributions [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving organic top-line revenue growth of 10% to 15% in 2025, driven by the shift towards ODR and the impact of acquisitions [23][25] - The company anticipates total revenue in the range of 630 million for 2025, with a stronger second half of the year expected [24] Other Important Information - SG&A expenses increased to 44.9 million in cash and total debt of $27.2 million, supporting its growth strategy [41][42] Q&A Session Summary Question: Organic growth expectations for 2025 - Management clarified that the expected organic growth of 10% to 15% refers to overall top-line growth, not just ODR [44][45] Question: Implied organic growth in ODR - Management indicated that ODR organic growth could range from 23% to 46% based on adjusted EBITDA and revenue perspectives [50][51] Question: Achieving OEM level gross margins - Management stated that reaching OEM level gross margins is a long-term goal, requiring a shift towards ODR and the development of an integrated sales platform [52][54] Question: Relationship development with existing customers - Management acknowledged the importance of building trust with existing customers and highlighted the need for specialized labor to address complex systems [66][68] Question: Account manager hiring plans - Management confirmed ongoing investments in account managers to enhance relationships and capture growth opportunities [90][91] Question: Growth opportunities in MSAs - Management noted potential for growth in additional MSAs, primarily through acquisitions, while also considering organic startups when necessary [93][95] Question: Data center exposure - Management clarified that the company has shifted focus away from new construction in data centers, concentrating instead on existing infrastructure [98][100]