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spk03: Once again, to ask a question, please press star 1 on your telephone keypad. One moment while we compile the Q&A roster. Your first question comes from Rob Brown of Lake Street Capital.
spk01: Good morning. Congratulations on all the progress. Good morning. Thank you, Rob. Just wanted to get a little color on kind of the demand environment and maybe focus on owner direct, but overall demand environment, how has that been trending? And, you know, obviously the strong results, it's been good, but, you know, what's the demand environment and sort of visibility like?
spk04: Yeah, Rob, the demand environment is still really strong. And I think one of the things that we're really focused on, and I mentioned this, is we want to make sure that our customers have mission-critical systems. And if you kind of look at the vertical markets, that we're in, sometimes each one of these vertical markets will shift towards short-term repair work versus long-term capital expenditures. And right now we have a diverse enough group of vertical markets that each one of them is operating a little bit differently, but they all have demand. The question is the demand short-term or long-term. And just as a couple examples of this, healthcare, still high demand but more of a quicker turn. The data center, emission-critical market, they're investing in long-term capital expenditures. It's maybe hedged a little bit towards that direction. From a manufacturing standpoint, a lot of it is customer-dependent, whether they're short-term or long-term, but we're well-positioned because those customers are mission-critical and because we've positioned ourselves. And then lastly, if you look at higher ed and life science, on higher ed, we typically work for, if we're working for a university, it's going to be lab style work and that market's kind of changed a little bit, but the demand is still there. It's gone from maybe less of a core and shell to a fit out spec lab. And it's also kind of tailored. So the biggest thing is our teams are really focused on working for mission critical customers that have equipment that can't go down. And we always use this example internally. If they have a call on Saturday and the equipment goes down at three o'clock, if they can wait till Monday or Tuesday, then they're not mission critical. So we use that as a simple guide, but, you know, demand's still really strong.
spk01: Okay, great. Thank you for all the color there. And then on the M&A effort, you talked quite a bit about some of the parameters there, but how does that pipeline look? You know, what are you sort of looking for more near term there, and what's some of the status of where that's at?
spk04: The pipeline is really strong. You know, we really refocused probably six or nine months ago. And I think the most important thing is we want to make sure that the acquisitions are a cultural fit, number one. And number two is they kind of fit into the mold of the rest of the branches. And, you know, we completed Jake Marshall, I think, about 16 months ago. And we've kind of dialed into two different types of acquisitions. The first type is a new geography, which we have a lot of footprint right now that we – a lot of opportunity from that standpoint. And then the second type that we've also been focused on is tuck-in locations. So is there a tuck-in acquisition adjacent to an existing business that we have that we can add market share? So we're really looking at those two different types. We've also been very patient, too. We're asking a lot, and we want to make sure that we really call through them and make sure they're going to be a fit.
spk01: Hey, thank you for everything. I'll turn it over. Thank you.
spk03: Your next question comes from Chip Moore of EF Hutton. Chip, your line is open.
spk02: Good morning, and congrats on a good start to the year as well. Good morning.
spk01: Good morning.
spk02: Hey, Jamie. I wanted to ask about the ODR path. I think you talked about 70% longer term. You've obviously gotten closer to 50 quicker than most people thought. I guess you covered acquisitions, but maybe more on the organic investment side, you know, what you can do there and how that helps that path.
spk04: Yeah, and you're right. It's a combination of acquisitions plus organic, but from an organic side, And I think I've mentioned this to Pat, but I just want to reinforce this. We have gained a ton of customers the last four or five years. Our customer count, well over 1,200. And at this point, we're really looking to make sure that we pick the right relationships and just we have a kind of a criteria. Again, is the equipment mission critical? Is there availability for long-term spend? And basically, we're really focusing our locations is pick your top 10 customers. Make sure your top 10 customers fits the attributes that we're looking for, and then focus resources on them. And we have so many customers that you can't provide a high-level service and provide that value that we want to provide, and we're really focusing on the top 10 per location. That's still a tremendous amount of customers if you add up all our locations. And the other thing, too, that I've been You know, I was visiting a bunch of customers the last four or five weeks, and it's interesting. We have a lot of – and I talk about this a little bit in the script, but we're trying to change our relationships from reactive to proactive. And just as an example of that, we could be doing reactive calls for a customer for six or nine months, and we could be getting a lot of revenue and gross profit out of there. But we've really been challenging our teams to say, okay – Take a look at the information, the data that you've received from the customer, the spend that you've sent. Meet with that customer. Sit with them and co-author more of a long-term plan with them. That's where we're really going to be able to embed ourselves, and that's where we're really going to be able to grow this owner direct side of it even more than we are. And I think there's not only from a revenue side, but also from a margin. So just to kind of summarize, it's really focusing our customer list, listening to them, and making sure that it's just not a reactive, that it's co-authoring a long-term spend plan. So it's a number of different factors. We're really super focused on it. All of our sales and marketing efforts are really focused around owner direct. And we're getting there, but we also have a long way to go, too.
spk02: Awesome. Thanks for that call. I appreciate it, Mike. And maybe if I could ask one more on more sort of near-term projects. margin mix and backlog between the GCR side with the outperformance in Q1 and obviously the stronger outlook in the second half. Just anything to take in mind on project activity near term. Thanks.
spk04: Yeah, no problem. So from a GCR margin perspective, there's a bunch of different factors that have really helped us. But as we're going to approach 50-50 and beyond, it allows us to be really selective from a GCR perspective. So being selective is allows us to really raise our margin. The second piece of it is we are getting a position now where the owner is recommending that they use LIMBOC. It puts us in a different position going forward. So from a margin perspective, we still think there's opportunity there, but really the strategy fits really importantly into the margin. And I would add, too, that our teams continue to execute really well, and all the risk management processes we put in place combined with the fact that our strategy really emphasizes the fact that we're trying to be selective, we're trying to focus on building owners, and there are times and needs where they have to have us. And when they have to have us, obviously it changes our value proposition and changes the way that we can approach from a margin perspective as well, too.
spk02: Fantastic. Okay, thanks again.
spk03: Your next question comes from Jerry Sweeney of Roth Capital. Jerry, your line is open.
spk00: Good morning, Jamie and Mike. Thanks for taking my call. Good morning, Jerry. I wanted to circle back ODR. Mike, you mentioned proactive, reactive, and really a couple questions around just ODR as a segment, right?
spk04: Sure.
spk00: You know, I think even in the presentation, I highlighted opportunities about, you know, getting data-driven subscription, and that those offerings, I would assume, help you to become more proactive. So the questions are really, you know, what exactly do you need to become more proactive? And then secondarily, I'm just curious about just assets on the ground, you know, including do you need more sales? How's your equipment utilization? Do you have enough to support growth, or should we be – how do we look at that on a go-forward basis as well?
spk04: Yeah, I mean, you're right. The relationship always allows us to get in front of customers, but the second part of it is we have to, in order to maintain the relationship and grow the relationship, we have to provide value. So just from a data, and I would also kind of caveat to an information perspective, we'll perform work for a customer and we'll compile service tickets, equipment history, asset history, That's one side of information that we're trying to make sure that we translate into more of a long-term plan. Also, from a building automation system and analytics platform perspective, that's another avenue that we can provide information and data. And I would tell you that what we're really focused on internally is making sure it's simplified as possible. It's the simplest thing as if I've gone out to that piece of equipment for two years, Are you providing that customer feedback on how that equipment's performed, or you just continue to repair that equipment? That's a question that we've really challenged our teams. And that kind of plays into the discussion of, okay, is the customer to the point where they trust us? Will they give us the data? Even from a utility spend perspective. So we have a long way to go in that perspective. But allowing us to position ourselves to gather that data is really the spot that we're in right now. And just from an asset perspective, internally, we're really focused on switching from new business development to account managers. And I think the other big piece going forward, too, as we continue to talk to different people from a customer perspective, even further up the chain, is more of return on investment. That's a question that we are getting asked more and more. And we want to make sure that our teams and our account managers are well positioned to make sure that they can answer those questions. So I think it's the most simplistic perspective. We've gone from new business development to account managers. And a lot of those assets we have internally, we always look externally to figure out if there's a key hire or two. I mean, our primary focus is promoting from within. We also are sprinkling in some talented account managers as well, too. So just as a shift from new business to to extracting as much as we can and really cementing ourselves with these customers.
spk00: So, I mean, at the end of the day, it sounds like we're still – I mean, you've had great growth on ODR, but we're still sort of even in the early innings of the growth potentially here. So lots of runway, it sounds, even within your sort of existing customer base or your customer base that you have some type of contact with. Is that sort of a fair assessment?
spk04: Yeah, I completely agree. We have – And I think that kind of is a good, right now we have good foundation going forward. But understanding our customers, focusing on them, making sure that we're putting our staff in position to meet those needs. And I think to your prior question, even from a data and information perspective, we're still trying to get to that point where they're trusting us to give that data and that we can gather the data. and then analyze it and provide us solutions back. And that's ultimately where we're able to kind of modify our offerings going forward. But, yeah, we're still really in the early innings. And I think as we continue to shift our mix, it's just going to continue to put us in a position from a foundation perspective.
spk00: Who do you compete against on the ODR side when you're doing some of this business, or even the account management side that you're moving into it? Are you competing against another entity, or is this even a game shift for your customers, sort of engaging with LIMBOC per se?
spk04: I would say it's primarily they have a provider. Every once in a while we'll have a customer that's lacking, but I would say the majority of the time there's a provider because, again, they have systems that need to be serviced and maintained and upgrades need to happen. And that's kind of what our checkbox and whether that customer is the right customer for us. So typically they have. Now, is that provider giving them the quality services and the focus? Well, that's really where I think traditionally that we come in. So, you know, we've got a slide in the investor deck that kind of touches upon this, and it's kind of this pie chart. And, you know, each one of these relationships – that we're going into may have a different provider. And the other thing I would tell you, too, is sometimes we'll be on a campus for a customer and we are embedded in them, but they'll still use another couple, you know, two or three different people, and there's still an opportunity even on an existing customer to pick up market share. So a lot of times it'll be just the local contractor. It could be some of the other mechanically publicly traded contractors. From an OEM perspective, Siemens, Train, Johnson, You know, sometimes we buy equipment and controls for them, but also they do compete and provide those services directly. It could be an engineering firm. And, again, we look at it this way when we're talking to our customers. We can provide engineering solutions as well, but we can install the work as well too. And then occasionally from a property manager perspective. So it's very situational, and our teams are really focused on making sure that even if we're in it with a customer – Sometimes there'll still be another provider or two, and there's more market share to be had with the customer as well, too. So most of the time, there is a provider. It's a matter of us positioning ourselves, and if we're competing, we want to make sure that our value proposition is solid compared to one of the providers that may be there.
spk00: Got it. Super helpful. And I'll jump back in line and congrats. Really nice quarter, and congratulations. Good, so appreciate it. Thanks.
spk03: Thanks, Karen.
spk04: Thank you.
spk03: At this time, there are no further questions. I would now like to turn the call over to the management team for any closing remarks.
spk04: Thank you, everyone, for your continued interest in LIMBOC. If you have any additional questions, please reach out to the Equity Group. Looking forward to speaking again in August, and all the best. Thank you.
spk03: This concludes today's presentation. Thank you everyone for attending.
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