Limbach Holdings, Inc.

Greetings and welcome to the Limbach Holdings second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If you would like to ask a question, please press star 1 on your telephone keypad. You may press star 2 if you would like to remove your question from the queue. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeremy Hellman of the Equity Group. Thank you, sir. You may begin.

Thank you very much, and good morning, everyone. Yesterday, Limbach Holdings announced its second quarter 2022 results and filed its form 10-Q for the quarter end of June 30, 2022. During this call, the company will be reviewing those results and providing an update on current market conditions. Today's discussion may contain poor-looking statements and actual results may differ from any forecast, projections, or similar statements made during the earnings call. Listeners are reminded to review the company's annual report on Form 10-K and quarterly reports on Form 10-Q for risk factors that may cause actual results to differ from poor-looking statements made during the earnings call. With that, I'll turn the call over to Charlie Bacon, the President and Chief Executive Officer of Limbach Holdings. Please go ahead, Charlie.

Good morning to everyone and thanks for joining us. With me today is our chief financial officer, Jamie Brooks, our chief operating officer, Michael McCann, and our executive vice president of acquisitions and capital markets, Matt Katz. I want to start by thanking our many employees for all of their outstanding work and commitment to the transformational change and evolution we undertook several years ago. We set a goal of achieving a 50-50 revenue split between our two operating segments by 2025, and I'm pleased to report that we expect to reach that goal ahead of schedule. Let me circle back to that shortly. First, though, we had a solid quarter of progress on our ODR transformation and maximizing our GCR outcomes, and I want to share some highlights with you. Year to date, the ODR segment contributed 40.1% of Roblox total revenue as compared to 26.5% for the same period last year. We currently expect to exit 2022 with the ODR segment revenue percentage moving even higher. It's become clear that the majority of our building owners view their building systems as critical to their business outcomes, which is fueling our growth. We've resolved The second claim in 2022, this one resulting in a $1.3 million gross profit write-up for the quarter. The resolution of this claim will generate approximately $6 million of cash prior to year end. This brings the total for both claims resolved this year to over $8 million of additional cash this year. Cash flows of operations for the quarter was $15.6 million with the business generating free cash flow of $5.1 million excluding changes in working capital. Term debt declined by $7.3 million in the quarter and we are scheduled to reduce our term debt to $22 million by the end of the year. We remain on track to deliver financial performance that meets the full year guidance that we provided on our last call. Much like last year's pattern, we're expecting an acceleration of both our top and bottom line results over the second half of the year. And as a result, continue to expect full year revenue to be in the range of $510 million to $540 million with adjusted EBITDA of $25 million to $29 million. The growth that I mentioned in the ODR business is the result of several factors. As you'll hear throughout our prepared remarks today, we've seen demand in the ODR segment from larger project work on down to T&M work. Many of our customers have reacted to the ongoing inflation and supply chain issues by prioritizing the repair and maintenance of existing equipment, which is right in our wheelhouse. Fundamentally, air conditioning, heat, power, and water are mission critical to our customers' business models, whether they operate in healthcare, data centers, pharmaceutical laboratories, or manufacturing. The services we provide to them are essential. Within the GCR segment, we continue to improve execution, generating solid gross profit contributions. We are leveraging our talent, which remains in high demand, and being very selective on the construction projects we bring into backlog. We expect the impact of our continuing effort to maximize profits within the GCR segment to result in annual low single digit percentage contraction in the GCR segment revenue. We are turning down opportunities that don't deliver the level of risk adjusted profitability that appropriately rewards the talent we have. Although our focus is to deploy resources on the higher profit ODR segment, GCR opportunities remain valuable to us for a significant reason. They provide access to developing relationships with new facility owners, which in turn leads to higher margin annuity income streams. While the ODR track is tracking toward an exceptional high growth rate this year, on a go-forward basis, we expect a more normalized organic growth rate in the low teens. As we exit this year with our segment split approaching 50-50, we currently expect a combination of the revenue from both segments to net out to positive annual growth in our consolidated revenue and continued improving our free cash flow results. Before we dig into the quarterly numbers, let me provide a quick comment on our expansion into the industrial market, which is one of the strategic reasons we acquired Jake Marshall last December. As we anticipated, the industrial market seems to be accelerating, given a variety of factors, including onshoring and better domestic access to raw materials, including comparatively cheaper and abundant natural gas and electricity. We think that's particularly relevant in the Tennessee Valley where Jake Marshall operates. The frequent announcements of plant relocations and new plant expansions is encouraging. Within the last several weeks, one of Jake Marshall's most prominent customers announced the multi-year $200 million plant expansion to produce specialty silicone products at the facility in Chattanooga. These products produce their support the automotive, solar, electronics, and medical technology industries. The southeast is an attractive geography for industrial activity, but there's also a lot of announced and anticipated investment in the Midwest, which could match up well with our footprint there. Matt will be commenting further on our acquisition activity, but we are finding the industrial marketplace is very promising for Livock's future growth. With that, I'll hand it off to Jamie to provide details on the quarter.