Limbach Holdings, Inc.

Good morning and welcome to the fourth quarter and fiscal year 2023 Limbock Holdings Earnings Conference Call and Webcast. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. I will now turn the conference over to your host, Julie Kegley of Financial Profiles. You may begin.

Good morning, and thank you for joining us today to discuss Limbach Holdings' financial results for the fourth quarter in fiscal year 2023. Yesterday, Limbach issued its earnings release and filed its Form 10-K for the period ended December 31, 2023. 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. With me on today's call are Michael McCann, President and Chief Executive Officer, and Jamie Brooks, Executive Vice President and Chief Financial Officer. We will begin with prepared remarks and then open up the call for analyst questions. Before we begin, I would like to remind you that today's comments will include forward-looking statements 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 improvement in profit and operating margins, are also forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements. A discussion of the factors that could cause a material difference in the company's results compared to these forward-looking statements is contained in LIMBOX SEC filings, including reports on Form 10-K and 10-Q. Please note that on today's call, we will be referring to some non-GAAP measures. You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our fourth quarter earnings release and investor presentation, which can be found on LIMBOX Investor Relations website and has been furnished on Form 8-K with the SEC. With that, I will now turn the call over to Mike McCann.

Good morning, everyone. I'd like to welcome our stockholders and analysts, as well as those who may be new to Limbock. Thank you all for joining our call today. A few years ago, we saw an opportunity to leverage our construction and engineering service experience, relationships, and knowledge to build a pure-play building system solutions firm. Our objective was twofold. First, to transfer Limbock into a value-added solutions partner to building owners to command higher margins, while delivering greater returns for our stockholders. And second, to position Limbach into a less competitive, volatile market, creating a stronger, more resilient company. Through disciplined execution of this strategy, today we are partnering with building owners to provide critical services and or need to maintain uninterrupted operations in their facilities. We provide building owners with solutions and services to maintain and upgrade their mission critical mechanical, electrical, and plumbing infrastructure. We are focused on six key vertical markets, healthcare, industrial manufacturing, data centers, life science, higher education, and cultural entertainment. These are large and growing markets with sustainable demand drivers where systems failure is not an option. We operate in two business segments. Our owner direct relationship segments, or ODR, where we work directly with building owners to provide building system solutions, which now accounts for over 50% of our total revenue. In our general contractor relationship segment, or GCR, where we work directly with general contractors, we are focused on growing our ODR business for several reasons. First, our direct customer relationships give us access to key decision makers. While the initial engagement may be small, we have a strong value proposition and the opportunity to build long-term relationships. As we become embedded into our customers' businesses, We're often onsite collaborating with their teams to develop customized solutions that reduce costs and drive energy efficiencies. This positions us to handle near-term maintenance needs, at the same time develop risk mitigation and cost saving strategies for the future. By adding more value over time, we can become an indispensable partner to our customers, helping them avoid their biggest nightmare, business disruption due to systems failure. In turn, with these types of ODR relationships, we generate reoccurring revenue at higher margins. As we grow our ODR business, this gives us opportunity to become more selective when evaluating our lower margin GCR projects, and as a result, we expect GCR revenue to decline. We are focused on building relationships with our top five building owners in each of our locations. Our target customers have multiple facilities, which opens the door to developing long-term, mutually beneficial relationships. A recent example of our successful ODR model at work is with one of our Florida healthcare facilities. Our relationship started out as a small engagement and they are now one of our top five customers for one of our Florida locations. We have fully embedded teams working on site closely with this customer on all aspects of OPEX and CAPEX planning and decisions where we can have a tangible impact on their operational goals. We are executing our strategy from an advantage position between property managers who act as pure generalists OEMs who sell proprietary equipment, and traditional contractors. Our objective is to provide unbiased objective analysis and recommendations on the integrity and opportunities to improve their entire system, including HVAC, electrical, plumbing, and engineered systems. This is where we add value. Our customers know our goals to recommend optimal, cost-effective solutions to ensure uninterrupted service. We believe our ODR business has significant organic growth opportunities. as we continue to expand our customer relationships. For example, as I indicated in our earnings press release in 2024, we have invested approximately $4 million in portable HVAC rental equipment to provide urgent and critical system solutions for our customers. This is a strategic investment to expand our service offerings and grow our market share with existing customers. Strategic acquisitions are also an important component for our long-term growth plan. We take a discipline and a selective approach to acquiring companies that meet four key criteria. Expanding our geographic footprint and service capabilities, supporting our ODR growth strategy, and most importantly, their good cultural fit. We're establishing a track record of making acquisitions that follow our specific strategy. And in 2023, we made two acquisitions, Acme Industrial and Industrial Air. Acme was a tuck-in acquisition that provided new owner-direct relationships with on-premise teams at Fortune 500-caliber customers and manufacturing vertical. Industrial Air expanded our geographic footprint in North Carolina, providing additional ODR customer relationships with consumer goods or textile manufacturing facilities. We believe that successful strategic acquisitions, along with organic growth, will drive profitability and create shareholder value. Now that I've outlined our strategy and how we create value, I'd like to talk about 2023 because Limbach had a great year. The company demonstrated significant earnings rose in cash flow while maintaining a strong balance sheet by accelerating our mixed shift ODR from GCR ahead of schedule, which we see as definitive evidence of the success of our mixed shift strategy. ODR accounted for 50.7% of our full year revenue for 2023, exceeding our 50% ODR target We were making great progress towards our 2024-25 ODR revenue target of more than 70%. As we exited the year with the ODR revenue accounting for 55.1% for the fourth quarter. We expanded total gross margins by 420 basis points in 2023 to 23.1% from 18.9% in 2022. ODR gross margins were 29% for the year, which exceeded our target range of 25 to 28%. TCR margins were 17% for the year, also exceeding our target range of 12% to 15%, as we honed in our focus on high-margin, quick-hitting projects. I'll now turn it over to Jamie to provide detailed financial highlights before I return with additional commentary. Jamie?