Limbach Holdings, Inc.

Good morning and welcome to the first quarter 2024 Limbach Holdings Earnings Conference Call and Webcast. All participants will be in a listen-only mode. Should you need assistance, please signal the 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 first quarter of 2024. Yesterday, Limbach Holdings issued its earnings release and filed its Form 10-Q for the period ended March 31st, 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. 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 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 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 LIMBOC's 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 historical non-GAAP measures to the most directly comparable GAAP measures in our first quarter earnings and in our investor presentations slide deck, both of which can be found on LIMBOC's investor relations website and have been furnished in the Form 8K filed with the SEC. With that, I will now turn the call over to Mike McCann.

Good morning, everyone. Welcome to our stockholders and analysts, as well as those who may be new to LIMBOC. Thank you all for joining our call today. Before we get to the highlights of the first quarter, I'd like to remind everyone of the key elements of our business strategy. First, we are shifting our business mix from general contractor relationships, or GCR, to owner direct relationship, or ODR. Two, we are expanding margins through evolved service offerings. And three, we are scaling the business through strategic acquisitions, whether those are tuck-ins, expansion to new geographies, or additional service offerings. We focus on six key verticals, healthcare, industrial manufacturing, data centers, life science, higher education, and cultural entertainment. These industries require uninterrupted building operations that cannot fail. We provide building owners with solutions and services to maintain and upgrade their mission-critical mechanical, electrical, and plumbing infrastructure. We believe our strategy and core vertical focus is the best way to grow earnings and create stockholder value. So why do we see it this way? Our ODR segment is a higher margin, lower risk business model that is less impacted by macroeconomic trends. By shifting our business mix to the ODR segment versus the GCR segment, we are building a more stable, economically resilient business with a better long-term growth profile. Additionally, this business model does not require significant capital expenditure investment and is expected to generate strong free cash flows. By expanding and evolving our service offerings, We believe that we can grow market share with existing customers and position LIMBOC for recurring revenue streams from these owner-direct relationships while flexing with our customer needs between operating and capital project budgets. All this equals a business with attractive organic and acquisition growth opportunities, less volatility, and more consistent execution. Our first quarter results demonstrate that our strategy is working. In Q1, gross profit increased by 18.5% over Q1 2023 to 31.1 million. Additionally, gross margin increased to a record 26.1% compared to 21.7% last year. Adjusted EBITDA increased 35.4% over Q1 last year to 11.8 million. Revenue was down slightly, which is a result of the intentional strategy to scale down the GSAR business in favor of ODR and therefore increase margins. Q1 is a seasonally slower quarter due to weather and customer budgets. We anticipated this and highlighted this in our last call. We begin gaining momentum in March, and we expect to sustain this for the rest of the year with our seasonally stronger quarters. From a vertical market demand perspective, healthcare continues to be our top priority. The operations spending in healthcare tends to be steady, and we are starting to see signs of some of our customers that infrastructure spending is gaining momentum. In fact, we're already working our customers to build spend plans for fiscal year 2025. Another vertical market that continues to be very strong is industrial and manufacturing. We see a lot of work that is being performed in the Midwest and to the Southeast. We are seeing companies continue to invest and expand their production lines. The O2R business grew in Q1 as a result of the two acquisitions we made last year. In addition to substantial organic growth, we continue to accelerate the mix shift to ODR from GCR, with ODR comprising 62.4% of revenue for the quarter, an increase of 55.1% against Q4 2023. Keep in mind that last quarter we set a range for the year between 60 to 70%. We are already well within that range. In addition to increasing margins through ODR growth, we are expanding margins by evolving our service offerings. For example, as I mentioned last quarter, we are investing approximately $4 million in portable HVAC rental equipment to provide urgent and critical system solutions for our customers. This strategic investment is designed to provide an additional service offering and grow our market share with existing customers. We're now just entering cooling season. We expect to see this new offering to take hold over the next few months and begin realizing revenue in the third quarter. There's ample opportunity to grow our business with customers through our existing services as well. Our strategy is account focused and customer centric. This starts with establishing daily onsite presence which is typically focused on responding to operator expense needs, but the account team is also focused on building customers' capital plans. One of our key accounts in a local market recently came to us with the need to quickly transition funding into capital projects. Because we have an established relationship with them and they understand we are capable of providing engineered solutions, they quickly turned to us to develop a capital project funding plan under a sole-source design-build arrangement. thereby gaining competitive advantages relative to the competition in the marketplace and continuing to develop our long-term relationship with that customer. Turning to the progress on acquisitions, we're pleased with the contributions from the two we made last year, Acme Industrial and Industrial Air, and the growth they've contributed to our ODR business. As I mentioned earlier, one of the key strategies is scaling the business through strategic acquisitions. We currently have a robust pipeline, both tuck-ins and geographic expansion acquisition candidates, We continue to evaluate them to find the right strategic fit, which is critical to the success of the acquisition. We continue to be extremely selective about the business that we pursue, and our strong free cash flow and balance sheet will enable us to execute such acquisitions when we find the right target. I'll now turn it over to Jamie to provide detailed financial highlights before I return with additional commentary. Jamie?