Limbach Holdings, Inc. Announces Third Quarter 2023 Results

Revenue from Owner Direct Relationships (“ODR”) Segment up 10.3% Year-over-Year for Q3

ODR Segment Accounted for Approximately 51.5% of Revenue and 61.7% of Consolidated Gross Profit for the Quarter

Consolidated Gross Margin Increased to 24.5% in the Quarter

Increase in FY 2023 Adjusted EBITDA Guidance

Limbach Holdings, Inc. (Nasdaq: LMB) (“Limbach” or the “Company”) today announced its financial results for the quarter ended September 30, 2023.

2023 Third Quarter Financial Overview Compared to 2022 Third Quarter

  • Consolidated revenue was $127.8 million, an increase of 4.4% from $122.4 million.
  • Gross profit was $31.2 million, an increase of 25.7% from $24.9 million.
  • Net income of $7.2 million, or $0.61 per diluted share, compared to net income of $3.6 million, or $0.34 per diluted share.
  • Adjusted EBITDA of $13.6 million, up 33.6% from $10.2 million.
  • Net cash provided by operating activities of $17.2 million compared to $10.4 million.

Management Comments

Michael McCann, Limbach’s President and Chief Executive Officer, said, “Our third quarter results reflected continued success across all three pillars of our growth strategy. ODR revenue continues to expand, supported by strong demand in many of the verticals we serve. At the same time, GCR revenue was unchanged from the prior year period, resulting in overall top line growth for the quarter, both sequentially and compared to Q3 2022. We were also able to continue to boost margins, with consolidated gross margin up over 400 basis points versus the prior year period. Underpinning our margin performance is our continued emphasis on providing value-added services and solutions for our customers’ mission critical building assets.”

Mr. McCann continued, “The third pillar of our growth strategy is M&A and with the acquisition of Industrial Air that we announced last week, we have been able to add two outstanding businesses to the Limbach family this year. Early in the third quarter, we acquired ACME Industrial based in Chattanooga, Tennessee, which is a tuck-in deal that we’re excited about. ACME is right down the road from our Jake Marshall operations and checks all our acquisition criteria boxes. Subsequent to the end of the quarter, the acquisition of Industrial Air, in Greensboro, North Carolina falls into our other target category as it gives us a new presence in an exciting, growing market.”

Mr. McCann concluded, “Overall current market conditions continue to be highly favorable for our business. While we have witnessed some improvements in the supply chains for ‘off the shelf’ equipment, more complex systems remain in a tight state. We have been very purposeful in how we go to market, particularly in the way we can provide value for our customers as they flex their spending from capital budgets to operating expense budgets. Although cyclicality is unlikely to completely disappear, we expect this comprehensive focus and positioning will allow us to mitigate some of the normal top-line volatility experienced by legacy construction companies, enabling Limbach to continue growing its bottom line.”

Third Quarter 2023 Results Detail

The following are results for the three months ended September 30, 2023 compared to the three months ended September 30, 2022:

  • Consolidated revenue was $127.8 million, an increase of 4.4% from $122.4 million. ODR segment revenue of $65.8 million increased by $6.1 million, or 10.3%, while GCR segment revenue was relatively flat. The Company continued its strategic focus on expanding the ODR segment’s contribution to the business.
  • Gross margin increased to 24.5%, up from 20.3%. On a dollar basis, total gross profit was $31.2 million, compared to $24.9 million. ODR gross profit increased $4.1 million, or 26.8%, due to the combination of an increase in revenue and higher segment margins of 29.3% versus 25.5% driven by contract mix. GCR gross profit increased $2.3 million, or 24.1%, due to higher segment margins of 19.3%, compared with 15.4%. GCR segment margins during the current quarter also benefited from the inclusion of a $1.2 million write-up associated with the settlement of a previously outstanding claim as well as an additional $1.2 million gross margin benefit as a result of an early completion of a project due to a reduction in scope from the customer.
  • Selling, general and administrative (“SG&A”) expenses increased by approximately $2.3 million, to $21.0 million, compared to $18.7 million. The increase in SG&A expense was primarily due to a $1.4 million increase associated with payroll related expenses, a $0.6 million increase associated with professional fees, which included costs associated with the ACME Transaction, and a $0.3 million increase in stock compensation expense. As a percent of revenue, SG&A expenses were 16.4%, up from 15.3%.
  • Interest expense was $0.4 million during the current quarter compared to $0.5 million, which was the result of a lower overall outstanding debt balance period-over-period despite higher interest rates on outstanding debt.
  • Interest income was $0.4 million during the current quarter. This increase was due to the Company's investments in overnight repurchase agreements, U.S. Treasury Bills, and money market funds.
  • Net income was $7.2 million as compared to $3.6 million. Diluted income per share was $0.61 as compared to $0.34. Adjusted EBITDA was $13.6 million as compared to $10.2 million, an increase of 33.6%.
  • Net cash provided by operating activities increased to $17.2 million as compared to $10.4 million. During the third quarter, Limbach received $15.6 million of cash, net, from the settlement of a previously outstanding claim. Offsetting that inflow from operations, $4.9 million of cash was used to fund the acquisition of ACME Industrial.

Balance Sheet

At September 30, 2023, we had cash and cash equivalents of $57.5 million. We had current assets of $214.2 million and current liabilities of $136.5 million at September 30, 2023, representing a current ratio of 1.57x compared to 1.42x at December 31, 2022. Working capital was $77.7 million at September 30, 2023, an increase of $10.8 million from December 31, 2022. At September 30, 2023, we had $10.0 million in borrowings against our revolving credit facility and $4.2 million for standby letters of credit. During the nine months ended September 30, 2023, the Company made cash payments of $11.5 million on the principal portion of the A&R Wintrust Term Loan prior to its extinguishment.

Subsequent Events

On November 1, 2023, Limbach completed the acquisition of Industrial Air, LLC (“Industrial Air”), a Greensboro, North Carolina-based specialty mechanical contractor, for a purchase price at closing of $13.5 million in cash. The transaction also provides for an earnout of up to $6.5 million potentially being paid out over the next two years. Industrial Air serves industrial customers throughout the Southeast United States and along the Eastern seaboard, focusing on delivering engineered air handling systems, including air condition and air filtration, along with controls systems and maintenance work. In addition, Industrial Air manufactures a wide range of components for air conditioning and filtration systems.

2023 Guidance

We are updating our guidance for FY 2023 as follows:

 

Current

 

Previous

Revenue

$490 million - $520 million

 

$490 million - $520 million

Adjusted EBITDA

$42 million - $45 million

 

$38 million - $41 million

Conference Call Details

Date:

Thursday, November 9, 2023

Time:

9:00 a.m. Eastern Time

Participant Dial-In Numbers:

Domestic callers:

(877) 407-6176

International callers:

(201) 689-8451

Access by Webcast

The call will also be simultaneously webcast over the Internet via the “Investor Relations” section of Limbach’s website at www.limbachinc.com or by clicking on the conference call link: https://event.choruscall.com/mediaframe/webcast.html?webcastid=cyobAYjZ. An audio replay of the call will be archived on Limbach’s website for 365 days.

About Limbach

Limbach is a building systems solutions firm with expertise in the design, prefabrication, installation, management and maintenance of heating, ventilation, air-conditioning ("HVAC"), mechanical, electrical, plumbing and controls systems. With over 1,500 team members and 19 offices located throughout the United States, we partner with institutions with mission-critical infrastructures, such as data centers and healthcare, industrial & light manufacturing, cultural & entertainment, higher education, and life science facilities. With Limbach's full life-cycle capabilities, from concept design and engineering through system commissioning and recurring 24/7 service and maintenance, Limbach is positioned as a value-added and indispensable partner for building owners, construction managers, general contractors, and energy service companies.

Forward-Looking Statements

We make forward-looking statements in this press release within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations or forecasts for future events, including, without limitation, our earnings, Adjusted EBITDA, revenues, expenses, backlog, capital expenditures or other future financial or business performance or strategies, results of operations or financial condition, and in particular statements regarding the impact of the COVID-19 pandemic on the construction industry in future periods, timing of the recognition of backlog as revenue, the potential for recovery of cost overruns, and the ability of Limbach to successfully remedy the issues that have led to write-downs in various business units. These statements may be preceded by, followed by or include the words “may,” “might,” “will,” “will likely result,” “should,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “continue,” “target” or similar expressions. These forward-looking statements are based on information available to us as of the date they were made and involve a number of risks and uncertainties which may cause them to turn out to be wrong. Some of these risks and uncertainties may in the future be amplified by the COVID-19 outbreak and there may be additional risks that we consider immaterial or which are unknown. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Please refer to our most recent annual report on Form 10-K, as well as our subsequent filings on Form 10-Q and Form 8-K, which are available on the SEC’s website (www.sec.gov), for a full discussion of the risks and other factors that may impact any forward-looking statements in this press release.

LIMBACH HOLDINGS, INC.

Condensed Consolidated Statements of Operations (Unaudited)

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

(in thousands, except share and per share data)

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue

 

$

127,768

 

 

$

122,357

 

 

$

373,659

 

 

$

353,299

 

Cost of revenue

 

 

96,524

 

 

 

97,503

 

 

 

287,675

 

 

 

288,785

 

Gross profit

 

 

31,244

 

 

 

24,854

 

 

 

85,984

 

 

 

64,514

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

20,967

 

 

 

18,688

 

 

 

62,433

 

 

 

56,113

 

Change in fair value of contingent consideration

 

 

161

 

 

 

386

 

 

 

464

 

 

 

1,151

 

Amortization of intangibles

 

 

288

 

 

 

386

 

 

 

1,054

 

 

 

1,184

 

Total operating expenses

 

 

21,416

 

 

 

19,460

 

 

 

63,951

 

 

 

58,448

 

Operating income

 

 

9,828

 

 

 

5,394

 

 

 

22,033

 

 

 

6,066

 

Other income (expenses):

 

 

 

 

 

 

 

 

Interest expense

 

 

(437

)

 

 

(547

)

 

 

(1,615

)

 

 

(1,511

)

Interest income

 

 

377

 

 

 

 

 

 

624

 

 

 

 

Gain on disposition of property and equipment

 

 

68

 

 

 

150

 

 

 

28

 

 

 

262

 

Loss on early termination of operating lease

 

 

 

 

 

 

 

 

 

 

 

(849

)

Loss on early debt extinguishment

 

 

 

 

 

 

 

 

(311

)

 

 

 

Gain on change in fair value of interest rate swap

 

 

116

 

 

 

298

 

 

 

153

 

 

 

298

 

Total other income (expenses)

 

 

124

 

 

 

(99

)

 

 

(1,121

)

 

 

(1,800

)

Income before income taxes

 

 

9,952

 

 

 

5,295

 

 

 

20,912

 

 

 

4,266

 

Income tax provision

 

 

2,760

 

 

 

1,654

 

 

 

5,407

 

 

 

1,275

 

Net income

 

$

7,192

 

 

$

3,641

 

 

$

15,505

 

 

$

2,991

 

 

 

 

 

 

 

 

 

 

Earnings Per Share (“EPS”)

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

Basic

 

$

0.66

 

 

$

0.35

 

 

$

1.45

 

 

$

0.29

 

Diluted

 

$

0.61

 

 

$

0.34

 

 

$

1.33

 

 

$

0.28

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

10,962,622

 

 

 

10,444,987

 

 

 

10,695,973

 

 

 

10,429,671

 

Diluted

 

 

11,789,137

 

 

 

10,690,434

 

 

 

11,671,819

 

 

 

10,595,061

 

LIMBACH HOLDINGS, INC.

Condensed Consolidated Balance Sheets (Unaudited)

 

(in thousands, except share and per share data)

September 30, 2023

 

December 31, 2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

57,473

 

 

$

36,001

 

Restricted cash

 

65

 

 

 

113

 

Accounts receivable (net of allowance for credit losses of $295 and net of allowance for doubtful accounts of $234 as of September 30, 2023 and December 31, 2022, respectively)

 

103,511

 

 

 

124,442

 

Contract assets

 

47,853

 

 

 

61,453

 

Income tax receivable

 

 

 

 

95

 

Other current assets

 

5,346

 

 

 

3,886

 

Total current assets

 

214,248

 

 

 

225,990

 

 

 

 

 

Property and equipment, net

 

19,377

 

 

 

18,224

 

Intangible assets, net

 

16,586

 

 

 

15,340

 

Goodwill

 

13,703

 

 

 

11,370

 

Operating lease right-of-use assets

 

15,845

 

 

 

18,288

 

Deferred tax asset

 

4,830

 

 

 

4,829

 

Other assets

 

613

 

 

 

515

 

Total assets

$

285,202

 

 

$

294,556

 

 

 

 

 

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

2,472

 

 

$

9,564

 

Current operating lease liabilities

 

3,562

 

 

 

3,562

 

Accounts payable, including retainage

 

56,589

 

 

 

75,122

 

Contract liabilities

 

46,692

 

 

 

44,007

 

Accrued income taxes

 

502

 

 

 

1,888

 

Accrued expenses and other current liabilities

 

26,724

 

 

 

24,942

 

Total current liabilities

 

136,541

 

 

 

159,085

 

Long-term debt

 

19,437

 

 

 

21,528

 

Long-term operating lease liabilities

 

13,240

 

 

 

15,643

 

Other long-term liabilities

 

1,854

 

 

 

2,858

 

Total liabilities

 

171,072

 

 

 

199,114

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

Common stock, $0.0001 par value; 100,000,000 shares authorized, issued 11,183,076 and 10,471,410, respectively, and 11,003,424 and 10,291,758 outstanding, respectively

 

1

 

 

 

1

 

Additional paid-in capital

 

90,992

 

 

 

87,809

 

Treasury stock, at cost (179,652 shares at both period ends)

 

(2,000

)

 

 

(2,000

)

Retained earnings

 

25,137

 

 

 

9,632

 

Total stockholders’ equity

 

114,130

 

 

 

95,442

 

Total liabilities and stockholders’ equity

$

285,202

 

 

$

294,556

 

LIMBACH HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

Nine Months Ended

September 30,

(in thousands)

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

Net income

$

15,505

 

 

$

2,991

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

Depreciation and amortization

 

5,751

 

 

 

6,173

 

Provision for credit losses / doubtful accounts

 

186

 

 

 

235

 

Stock-based compensation expense

 

3,374

 

 

 

1,980

 

Noncash operating lease expense

 

2,843

 

 

 

3,336

 

Amortization of debt issuance costs

 

69

 

 

 

100

 

Deferred income tax provision

 

(1

)

 

 

(1,077

)

Gain on sale of property and equipment

 

(28

)

 

 

(262

)

Loss on early termination of operating lease

 

 

 

 

849

 

Loss on change in fair value of contingent consideration

 

464

 

 

 

1,151

 

Loss on early debt extinguishment

 

311

 

 

 

 

Gain on change in fair value of interest rate swap

 

(153

)

 

 

(298

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

21,896

 

 

 

(21,906

)

Contract assets

 

14,014

 

 

 

18,597

 

Other current assets

 

(1,459

)

 

 

698

 

Accounts payable, including retainage

 

(18,703

)

 

 

(53

)

Prepaid income taxes

 

95

 

 

 

(101

)

Accrued taxes payable

 

(1,386

)

 

 

1,763

 

Contract liabilities

 

2,312

 

 

 

15,810

 

Operating lease liabilities

 

(2,803

)

 

 

(3,264

)

Accrued expenses and other current liabilities

 

1,997

 

 

 

(3,612

)

Payment of contingent consideration liability in excess of acquisition-date fair value

 

(1,224

)

 

 

 

Other long-term liabilities

 

400

 

 

 

(130

)

Net cash provided by operating activities

 

43,460

 

 

 

22,980

 

Cash flows from investing activities:

 

 

 

ACME Transaction, net of cash acquired

 

(4,883

)

 

 

 

Proceeds from sale of property and equipment

 

370

 

 

 

442

 

Purchase of property and equipment

 

(1,720

)

 

 

(725

)

Net cash used in investing activities

 

(6,233

)

 

 

(283

)

Cash flows from financing activities:

 

 

 

Payments on Wintrust and A&R Wintrust Term Loans

 

(21,452

)

 

 

(11,571

)

Proceeds from Wintrust Revolving Loan

 

10,000

 

 

 

15,194

 

Payments on Wintrust Revolving Loan

 

 

 

 

(15,194

)

Payment of contingent consideration liability up to acquisition-date fair value

 

(1,776

)

 

 

 

Payments on finance leases

 

(1,991

)

 

 

(2,051

)

Payments of debt issuance costs

 

(50

)

 

 

(427

)

Taxes paid related to net-share settlement of equity awards

 

(847

)

 

 

(363

)

Proceeds from contributions to Employee Stock Purchase Plan

 

313

 

 

 

265

 

Net cash used in financing activities

 

(15,803

)

 

 

(8,754

)

Increase in cash, cash equivalents and restricted cash

 

21,424

 

 

 

13,943

 

Cash, cash equivalents and restricted cash, beginning of period

 

36,114

 

 

 

14,589

 

Cash, cash equivalents and restricted cash, end of period

$

57,538

 

 

$

28,532

 

Supplemental disclosures of cash flow information

 

 

 

Noncash investing and financing transactions:

 

 

 

Earnout liability associated with the ACME Transaction

$

1,121

 

 

$

 

Right of use assets obtained in exchange for new operating lease liabilities

 

1,043

 

 

 

 

Right of use assets obtained in exchange for new finance lease liabilities

 

4,062

 

 

 

2,171

 

Right of use assets disposed or adjusted modifying operating lease liabilities

 

(643

)

 

 

2,396

 

Right of use assets disposed or adjusted modifying finance lease liabilities

 

(77

)

 

 

(77

)

Interest paid

 

1,482

 

 

 

1,425

 

Cash paid for income taxes

$

6,718

 

 

$

768

 

LIMBACH HOLDINGS, INC.

Condensed Consolidated Segment Operating Results (Unaudited)

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Increase/(Decrease)

(in thousands, except for percentages)

 

2023

 

2022

 

$

 

%

Statement of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

GCR

$

61,936

 

48.5

%

 

$

62,653

 

51.2

%

 

$

(717

)

 

(1.1

)%

ODR

 

65,832

 

51.5

%

 

 

59,704

 

48.8

%

 

 

6,128

 

 

10.3

%

Total revenue

 

127,768

 

100.0

%

 

 

122,357

 

100.0

%

 

 

5,411

 

 

4.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

GCR(1)

 

11,970

 

19.3

%

 

 

9,648

 

15.4

%

 

 

2,322

 

 

24.1

%

ODR(2)

 

19,274

 

29.3

%

 

 

15,206

 

25.5

%

 

 

4,068

 

 

26.8

%

Total gross profit

 

31,244

 

24.5

%

 

 

24,854

 

20.3

%

 

 

6,390

 

 

25.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative(3)

 

20,967

 

16.4

%

 

 

18,688

 

15.3

%

 

 

2,279

 

 

12.2

%

Change in fair value of contingent consideration

 

161

 

0.1

%

 

 

386

 

0.3

%

 

 

(225

)

 

(58.3

)%

Amortization of intangibles

 

288

 

0.2

%

 

 

386

 

0.3

%

 

 

(98

)

 

(25.4

)%

Total operating income

$

9,828

 

7.7

%

 

$

5,394

 

4.4

%

 

$

4,434

 

 

82.2

%

(1)

 

As a percentage of GCR revenue.

(2)

 

As a percentage of ODR revenue.

(3)

 

Included within selling, general and administrative expenses was $1.1 million and $0.8 million of stock based compensation expense for the three months ended September 30, 2023 and 2022, respectively.

LIMBACH HOLDINGS, INC.

Condensed Consolidated Segment Operating Results (Unaudited)

 

 

Nine Months Ended

September 30,

 

Increase/(Decrease)

(in thousands, except for percentages)

2023

 

2022

 

$

 

%

Statement of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

GCR

$

190,329

 

50.9

%

 

$

200,921

 

56.9

%

 

$

(10,592

)

 

(5.3

)%

ODR

 

183,330

 

49.1

%

 

 

152,378

 

43.1

%

 

 

30,952

 

 

20.3

%

Total revenue

 

373,659

 

100.0

%

 

 

353,299

 

100.0

%

 

 

20,360

 

 

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

GCR(1)

 

33,560

 

17.6

%

 

 

26,700

 

13.3

%

 

 

6,860

 

 

25.7

%

ODR(2)

 

52,424

 

28.6

%

 

 

37,814

 

24.8

%

 

 

14,610

 

 

38.6

%

Total gross profit

 

85,984

 

23.0

%

 

 

64,514

 

18.3

%

 

 

21,470

 

 

33.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative(3)

 

62,433

 

16.7

%

 

 

56,113

 

15.9

%

 

 

6,320

 

 

11.3

%

Change in fair value of contingent consideration

 

464

 

0.1

%

 

 

1,151

 

0.3

%

 

 

(687

)

 

(59.7

)%

Amortization of intangibles

 

1,054

 

0.3

%

 

 

1,184

 

0.3

%

 

 

(130

)

 

(11.0

)%

Total operating income

$

22,033

 

5.9

%

 

$

6,066

 

1.7

%

 

$

15,967

 

 

263.2

%

(1)

 

As a percentage of GCR revenue.

(2)

 

As a percentage of ODR revenue.

(3)

 

Included within selling, general and administrative expenses was $3.4 million and $2.0 million of stock based compensation expense for the nine months ended September 30, 2023 and 2022, respectively.

Non-GAAP Financial Measures

In assessing the performance of our business, management utilizes a variety of financial and performance measures. The key measure is Adjusted EBITDA, a non-GAAP financial measure. We define Adjusted EBITDA as net income plus depreciation and amortization expense, interest expense, and taxes, as further adjusted to eliminate the impact of, when applicable, other non-cash items or expenses that are unusual or non-recurring that we believe do not reflect our core operating results. We believe that Adjusted EBITDA is meaningful to our investors to enhance their understanding of our financial performance for the current period and our ability to generate cash flows from operations that are available for taxes, capital expenditures and debt service. We understand that Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties as a measure of financial performance and to compare our performance with the performance of other companies that report Adjusted EBITDA. Our calculation of Adjusted EBITDA, however, may not be comparable to similarly titled measures reported by other companies. When assessing our operating performance, investors and others should not consider this data in isolation or as a substitute for net income calculated in accordance with GAAP. Further, the results presented by Adjusted EBITDA cannot be achieved without incurring the costs that the measure excludes. A reconciliation of net income to Adjusted EBITDA, the most comparable GAAP measure, is provided below.

We refer to our estimated revenue on uncompleted contracts, including the amount of revenue on contracts for which work has not begun, less the revenue we have recognized under such contracts, as “backlog.” Backlog includes unexercised contract options.

Reconciliation of Net Income to Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

(in thousands)

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income

$

7,192

 

 

$

3,641

 

 

$

15,505

 

 

$

2,991

 

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

Depreciation and amortization

 

1,892

 

 

 

2,025

 

 

 

5,751

 

 

 

6,173

 

Interest expense

 

437

 

 

 

547

 

 

 

1,615

 

 

 

1,511

 

Interest income

 

(377

)

 

 

 

 

 

(624

)

 

 

 

Non-cash stock-based compensation expense

 

1,140

 

 

 

806

 

 

 

3,374

 

 

 

1,980

 

Loss on early debt extinguishment

 

 

 

 

 

 

 

311

 

 

 

 

Change in fair value of interest rate swap

 

(116

)

 

 

(298

)

 

 

(153

)

 

 

(298

)

CEO transition costs

 

 

 

 

 

 

 

958

 

 

 

 

Loss on early termination of operating lease

 

 

 

 

 

 

 

 

 

 

849

 

Income tax provision

 

2,760

 

 

 

1,654

 

 

 

5,407

 

 

 

1,275

 

Acquisition and other transaction costs

 

225

 

 

 

45

 

 

 

524

 

 

 

243

 

Change in fair value of contingent consideration

 

161

 

 

 

386

 

 

 

464

 

 

 

1,151

 

Restructuring costs(1)

 

317

 

 

 

1,398

 

 

 

1,089

 

 

 

4,324

 

Adjusted EBITDA

$

13,631

 

 

$

10,204

 

 

$

34,221

 

 

$

20,199

(1)

 

For the three and nine months ended September 30, 2023, the majority of the restructuring costs related to our Southern California and Eastern Pennsylvania branches. For the three and nine months ended September 30, 2022, the majority of the restructuring costs related to our Southern California and Eastern Pennsylvania branches and nominal restructuring costs related to cost initiatives throughout the Company.

 

Contacts

Investor Relations

The Equity Group, Inc.

Jeremy Hellman, CFA

Vice President

(212) 836-9626 / jhellman@equityny.com

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