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Limbach Holdings Reports Fourth Quarter and Fiscal Year 2021 Results

Continued Growth in Owner Direct Relationships (ODR) Segment Revenue; Up 10.3% year-over-year

ODR Segment Accounted for Approximately 47.1% of Consolidated Gross Profit for FY 2021

FY 2021 Gross Margins Improved to 17.5%; Diluted EPS of $0.66

Conference Call Scheduled for 9:00 am ET on March 17, 2022

Limbach Holdings, Inc. (Nasdaq: LMB) (“Limbach” or the “Company”) today announced its financial results for the year ended December 31, 2021. Net income was $6.7 million for fiscal year 2021 as compared to $5.8 million for fiscal year 2020. Consolidated revenue was $490.4 million, a 13.7% decrease compared to fiscal year 2020. ODR(1) segment revenue was up 10.3% year-over-year and accounted for 28.6% of consolidated revenue in 2021 compared to 22.4% in fiscal year 2020. Consolidated gross margin of 17.5% increased 320 basis points year-over-year as a result of a shift in mix to the ODR segment and increased GCR(1) margins despite lower total revenue. In 2021, the ODR segment accounted for approximately 47.1% of consolidated gross profit.

Charlie Bacon, Limbach’s President and Chief Executive Officer, said, “Limbach posted improvement for the year, with our numbers excelling in the back-half of 2021 driven by continued growth of our ODR business, combined with significantly-improved GCR margins. ODR revenue drives higher margins, and our stated goal has been to continuously drive a greater mix of our total revenue towards this segment. Our GCR business remains an integral part of our operations and as our recent results demonstrate, our emphasis on risk management and project selection is yielding solid gross profits. For the year, GCR gross profit improved by approximately $0.3 million despite an approximate 21% decline in segment revenues. Our improved results occurred despite the labor disruptions and supply chain impacts due to COVID-19.”

Mr. Bacon continued, “The integration process at Jake Marshall, which we acquired in December 2021, is proceeding as expected. We continue to diligently pursue additional opportunities like Jake Marshall in our other target geographies.”

Mr. Bacon concluded, “Entering 2022, proposal activity is above levels at this time a year ago, allowing us to secure a range of project wins in both of our segments while also being selective on pricing. Our recent results reinforce the validity of our bottom-line focused approach, with our 2022 sales and project scheduling governed by our risk management methodology.”

(1) As of January 1, 2021, Limbach renamed its existing two reportable segments to reflect our two distinct approaches to our customer base and to better align with our owner direct strategy. The previously named Construction Segment is now known as General Contractor Relationships (“GCR”) and the previously named Service Segment is now known as Owner Direct Relationships (“ODR”).

The following are results for the three months ended December 31, 2021, compared to the three months ended December 31, 2020:

  • Fourth quarter 2021 revenue of $126.8 million was down 2.7% compared to $130.4 million. GCR segment revenue of $87.7 million was down 7.7%, while ODR segment revenue of $39.1 million was up 10.6%.
  • Gross margin increased to 20.1%, up from 14.3%. This increase was mainly driven by total net gross profit write-ups of $2.6 million compared to total net gross profit write-downs of $2.9 million in the prior year quarter. GCR gross profit increased $7.3 million, or 103.3%, due to higher margins despite lower revenue. ODR gross profit was relatively flat. On a dollar basis, total gross profit was $25.5 million, compared to $18.7 million.
  • SG&A expense increased approximately $2.8 million, to $18.8 million, compared to $16.0 million. This increase was characterized by temporary, lower operating expenses resulting from pandemic-driven operational reductions in 2020. As a percent of revenue, SG&A expense was 14.8%, up from 12.3%.
  • Interest expense, net was $0.4 million compared to $2.2 million. This significant decrease was due to our refinancing of the 2019 debt facilities in February 2021, replacing them with debt facilities that carry a lower cost of financing.
  • Net income was $4.3 million as compared to $0.4 million. Diluted income per share was $0.41 as compared to $0.05. The increase in net income was primarily attributable to increased gross profit on lower revenue, as well as the aforementioned decrease in net interest expense.
  • Adjusted EBITDA was $9.5 million as compared to $4.5 million, an increase of 112.5%. The increase in Adjusted EBITDA was primarily attributable to the $6.9 million increase in gross profit, partially offset by a $2.8 million increase in selling, general and administrative expense.

The following are results for the year ended December 31, 2021, compared to the year ended December 31, 2020:

  • Consolidated revenue was $490.4 million, a decrease of 13.7% from $568.2 million. GCR segment revenue of $350.0 million was down 20.6%, while ODR segment revenue of $140.3 million was up 10.3%. The decrease in GCR revenue was primarily due to our continued focus on improving project execution and profitability by pursuing opportunities that are smaller in size, shorter in duration, and where we can leverage our captive design and engineering services.
  • Gross margin increased to 17.5%, up from 14.3%. This increase was mainly driven by the mix of higher margin ODR segment work, coupled with improved GCR segment margins. GCR gross profit was relatively flat. ODR gross profit increased $4.2 million, or 11.7%, due to an increase in revenue at higher margins. On a dollar basis, total gross profit was $85.9 million, compared to $81.4 million. In addition, the increase in gross margin was also attributable to total net gross profit write-ups of $0.4 million compared to total net gross profit write-downs of $7.9 million.
  • SG&A expense increased approximately $7.8 million, to $71.4 million, compared to $63.6 million. This increase was characterized by temporary, lower operating expenses resulting from pandemic-driven operational reductions in 2020 and increased professional fees, which included costs for our acquisition and compliance requirements. As a percent of revenue, SG&A expense was 14.6%, up from 11.2%.
  • Interest expense, net was $2.6 million compared to $8.6 million. This significant decrease was due to our refinancing of the 2019 debt facilities in February 2021, replacing them with debt facilities that carry a lower cost of financing.
  • Net income for the year was $6.7 million as compared to $5.8 million. Diluted income per share was $0.66 as compared to $0.72. The increase in net income was primarily attributable to increased gross profit on lower revenue as well as the aforementioned decrease in net interest expense.
  • Adjusted EBITDA was $23.3 million as compared to $25.1 million, a decrease of 7.3%. The decrease in Adjusted EBITDA was primarily attributable to a $7.8 million increase in selling, general and administrative, partially offset by a $4.5 million increase in increased gross profit.
  • Net cash used in operating activities was $24.2 million as compared to net cash provided by operating activities of $39.8 million. The decrease in operating cash flows was primarily attributable to a decrease in our overbilled position due to the reduction in GCR revenue in 2021, the timing of change order conversions, and the recognition of contract revenue, partially offset by an increase in non-cash operating activities and net income.

Balance Sheet and Backlog

At December 31, 2021, we had cash and cash equivalents of $14.5 million. We had current assets of $192.9 million and current liabilities of $129.7 million at December 31, 2021, representing a current ratio of 1.49x compared to 1.33x at December 31, 2020. Working capital was $63.2 million at December 31, 2021, an increase of $14.0 million from December 31, 2020. At December 31, 2021, we had no borrowings against our revolving credit facility, other than for standby letters of credit totaling $3.4 million, and carried a term loan balance of $34.9 million.

Aggregate backlog at December 31, 2021 was $435.2 million as compared to $444.4 million as of December 31, 2020. At December 31, 2021, GCR segment backlog accounted for $337.2 million of the consolidated total, a decrease of 14.3% compared to GCR segment backlog at December 31, 2020 of $393.5 million. The reduction in GCR backlog has been intentional as we look to focus on higher margin projects than we have historically, as well as our focus on smaller, higher margin owner direct projects. As of December 31, 2021, GCR backlog included approximately $33.8 million of backlog associated with the operations of the entities acquired in the Jake Marshall Transaction.

ODR segment backlog accounted for $98.0 million of the consolidated total, an increase of 92.5% compared to ODR segment backlog of $50.9 million at December 31, 2020. Our ODR backlog increased due to our continued focus on ODR growth, as well as lower sales in this segment during the fourth quarter of Fiscal 2020 because of macroeconomic uncertainty related to COVID-19. In addition, as of December 31, 2021, ODR backlog included approximately $22.6 million of backlog associated with the operations of the entities acquired in the Jake Marshall Transaction.

Backlog includes unexercised contract options that are not included in the Company’s remaining performance obligations. At December 31, 2021, remaining performance obligations of the Company's GCR and ODR segment contracts were $337.2 million and $81.2 million, respectively. The Company estimates that 65% and 52% of our GCR and ODR segment remaining performance obligations as of December 31, 2021, respectively, will be recognized as revenue during 2022, with the substantial majority of remaining performance obligations to be recognized within 24 months, although the timing of the Company’s performance is not always under its control.

Conference Call Details

Date:

Thursday, March 17, 2022

Time:

9:00 a.m. Eastern Time

Participant Dial-In Numbers:

 

Domestic callers:

(866) 604-1698

International callers:

(201) 389-0844

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://themediaframe.com/mediaframe/webcast.html?webcastid=PiFFyhm2 An audio replay of the call will be archived on Limbach’s website for 365 days.

About Limbach

Limbach is an integrated building systems solutions firm whose expertise is in the design, modular prefabrication, installation, management and maintenance of heating, ventilation, air-conditioning (“HVAC”), mechanical, electrical, plumbing and controls systems. Our market sectors primarily include the following: healthcare, life sciences, data centers, industrial and light manufacturing, entertainment, education and government. With 23 offices throughout the United States and 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 essential 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 the first quarter and 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.

Consolidated Statements of Operations

 

(in thousands, except share and per share data)

For the Quarter Ended

December 31,

 

For the Years Ended

December 31,

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

Revenue

$

126,811

 

 

$

130,396

 

 

$

490,351

 

 

$

568,209

 

Cost of revenue

 

101,283

 

 

 

111,740

 

 

 

404,441

 

 

 

486,823

 

Gross profit

 

25,528

 

 

 

18,656

 

 

 

85,910

 

 

 

81,386

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

18,757

 

 

 

16,005

 

 

 

71,436

 

 

 

63,601

 

Amortization of intangibles

 

189

 

 

 

104

 

 

 

484

 

 

 

630

 

Total operating expenses

 

18,946

 

 

 

16,109

 

 

 

71,920

 

 

 

64,231

 

Operating income

 

6,582

 

 

 

2,547

 

 

 

13,990

 

 

 

17,155

 

Other (expense) income:

 

 

 

 

 

 

 

Interest expense, net

 

(428

)

 

 

(2,178

)

 

 

(2,568

)

 

 

(8,627

)

Loss on debt extinguishment

 

 

 

 

 

 

 

(1,961

)

 

 

 

Gain on sale of property and equipment

 

43

 

 

 

77

 

 

 

2

 

 

 

95

 

Gain (loss) on change in fair value of warrant liability

 

 

 

 

(322

)

 

 

14

 

 

 

(1,634

)

Total other expenses

 

(385

)

 

 

(2,423

)

 

 

(4,513

)

 

 

(10,166

)

Income before income taxes

 

6,197

 

 

 

124

 

 

 

9,477

 

 

 

6,989

 

Income tax provision

 

1,919

 

 

 

(263

)

 

 

2,763

 

 

 

1,182

 

Net income

$

4,278

 

 

$

387

 

 

$

6,714

 

 

$

5,807

 

 

 

 

 

 

 

 

 

Earnings Per Share (“EPS”)

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.42

 

 

$

0.05

 

 

$

0.67

 

 

$

0.74

 

Diluted

$

0.41

 

 

$

0.05

 

 

$

0.66

 

 

$

0.72

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

Basic

 

10,301,389

 

 

 

7,926,151

 

 

 

10,013,117

 

 

 

7,865,089

 

Diluted

 

10,520,818

 

 

 

8,201,953

 

 

 

10,231,637

 

 

 

8,065,464

 

 

LIMBACH HOLDINGS, INC.

Consolidated Balance Sheets

 
 

 

As of December 31,

(in thousands, except share data)

 

2021

 

 

2020

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

14,476

 

$

42,147

 

Restricted cash

 

113

 

 

113

 

Accounts receivable (net of allowance for doubtful accounts of $263 and $266 as of December 31, 2021 and 2020, respectively)

 

89,327

 

 

85,767

 

Contract assets

 

83,863

 

 

67,098

 

Advances to and equity in joint ventures, net

 

12

 

 

10

 

Income tax receivable

 

114

 

 

 

Other current assets

 

5,001

 

 

4,282

 

Total current assets

 

192,906

 

 

199,417

 

 

 

 

 

Property and equipment, net

 

21,621

 

 

19,700

 

Intangible assets, net

 

16,907

 

 

11,681

 

Goodwill

 

11,370

 

 

6,129

 

Operating lease right-of-use assets

 

20,119

 

 

18,751

 

Deferred tax asset

 

4,330

 

 

6,087

 

Other assets

 

259

 

 

392

 

Total assets

$

267,512

 

$

262,157

 

 

 

 

 

LIABILITIES

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

9,879

 

$

6,536

 

Current operating lease liabilities

 

4,366

 

 

3,929

 

Accounts payable, including retainage

 

63,840

 

 

66,763

 

Contract liabilities

 

26,712

 

 

46,648

 

Accrued income taxes

 

501

 

 

1,671

 

Accrued expenses and other current liabilities

 

24,444

 

 

24,747

 

Total current liabilities

 

129,742

 

 

150,294

 

Long-term debt

 

29,816

 

 

36,513

 

Long-term operating lease liabilities

 

16,576

 

 

15,459

 

Other long-term liabilities

 

3,540

 

 

6,159

 

Total liabilities

 

179,674

 

 

208,425

 

Commitments and contingencies

 

 

 

Redeemable convertible preferred stock, net, par value $0.0001, $1,000,000 shares authorized, no shares issued and outstanding as of December 31, 2021 and December 31, 2020 ($0 redemption value as of December 31, 2021 and December 31, 2020)

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

Common stock, $0.0001 par value; 100,000,000 shares authorized, 10,304,242 issued and outstanding at December 31, 2021 and 7,926,137 at December 31, 2020

 

1

 

 

1

 

Additional paid-in capital

 

85,004

 

 

57,612

 

Accumulated deficit

 

2,833

 

 

(3,881

)

Total stockholders’ equity

 

87,838

 

 

53,732

 

Total liabilities and stockholders’ equity

$

267,512

 

$

262,157

 

 

LIMBACH HOLDINGS, INC.

Consolidated Statements of Cash Flows

 

 

Year Ended December 31,

(in thousands)

 

2021

 

 

 

2020

 

Cash flows from operating activities:

 

 

 

Net income

$

6,714

 

 

$

5,807

 

Adjustments to reconcile net income to cash (used in) provided by operating activities:

 

 

 

Depreciation and amortization

 

5,948

 

 

 

6,171

 

Noncash operating lease expense

 

4,268

 

 

 

4,033

 

Provision for doubtful accounts

 

198

 

 

 

100

 

Stock-based compensation expense

 

2,601

 

 

 

1,068

 

Loss on early debt extinguishment

 

1,961

 

 

 

 

Amortization of debt discount and issuance costs

 

280

 

 

 

2,157

 

Deferred income tax provision (benefit)

 

1,757

 

 

 

(1,301

)

(Gain) loss on change in fair value of warrant liability

 

(14

)

 

 

1,634

 

Gain on sale of property and equipment

 

(2

)

 

 

(95

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

3,408

 

 

 

19,200

 

Contract assets

 

(15,054

)

 

 

10,090

 

Other current assets

 

(555

)

 

 

(115

)

Accounts payable, including retainage

 

(5,578

)

 

 

(19,504

)

Contract liabilities

 

(20,399

)

 

 

4,278

 

Income tax receivable

 

(114

)

 

 

494

 

Accrued income taxes

 

(1,170

)

 

 

1,659

 

Accrued expenses and other current liabilities

 

(706

)

 

 

4,713

 

Operating lease liabilities

 

(4,083

)

 

 

(4,337

)

Other long-term liabilities

 

(3,693

)

 

 

3,763

 

Net cash (used in) provided by operating activities

 

(24,233

)

 

 

39,815

 

Cash flows from investing activities:

 

 

 

Proceeds from sale of property and equipment

 

467

 

 

 

162

 

Jake Marshall Transaction, net of cash acquired

 

(18,977

)

 

 

 

Advances to joint ventures

 

(2

)

 

 

(2

)

Purchase of property and equipment

 

(791

)

 

 

(1,483

)

Net cash used in investing activities

 

(19,303

)

 

 

(1,323

)

 

LIMBACH HOLDINGS, INC.

Consolidated Statements of Cash Flows - continued

 

Cash flows from financing activities:

 

 

 

Proceeds from Wintrust and A&R Wintrust Term Loans

 

40,000

 

 

 

 

Payments on Wintrust and A&R Wintrust Term Loans

 

(5,119

)

 

 

 

Payments on 2019 Refinancing Term Loan

 

(39,000

)

 

 

(2,000

)

Proceeds from 2019 Revolving Credit Facility

 

 

 

 

7,250

 

Payments on 2019 Revolving Credit Facility

 

 

 

 

(7,250

)

Prepayment penalty and other costs associated with debt extinguishment

 

(1,376

)

 

 

 

Proceeds from sale of common stock

 

22,773

 

 

 

 

Proceeds from exercise of warrants

 

1,989

 

 

 

 

Payments on finance leases

 

(2,623

)

 

 

(2,664

)

Proceeds from contributions to employee stock purchase plan

 

323

 

 

 

191

 

Taxes paid related to net-share settlement of equity awards

 

(459

)

 

 

(216

)

Payments of debt issuance costs

 

(643

)

 

 

 

Net cash provided by (used in) financing activities

 

15,865

 

 

 

(4,689

)

(Decrease) increase in cash, cash equivalents and restricted cash

 

(27,671

)

 

 

33,803

 

Cash, cash equivalents and restricted cash, beginning of year

 

42,260

 

 

 

8,457

 

Cash, cash equivalents and restricted cash, end of year

$

14,589

 

 

$

42,260

 

 

 

 

 

Supplemental disclosures of cash flow information

 

 

 

Noncash investing and financing transactions:

 

 

 

Earnout Payments associated with the Jake Marshall Transaction

$

3,089

 

 

$

 

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

 

5,417

 

 

 

1,096

 

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

 

1,296

 

 

 

2,624

 

Right of use assets disposed or adjusted modifying operating leases liabilities

 

219

 

 

 

621

 

Right of use assets disposed or adjusted modifying finance leases liabilities

 

 

 

 

(86

)

Interest paid

 

2,549

 

 

 

6,467

 

Cash paid for income taxes

$

2,290

 

 

$

734

 

 

LIMBACH HOLDINGS, INC.

Consolidated Statements of Operations (Unaudited)

 

 

Three Months Ended

December 31,

 

Increase/(Decrease)

(in thousands, except for percentages)

2021

 

2020

 

$

 

%

Statement of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

GCR

$

87,711

 

69.2

%

 

$

95,058

 

72.9

%

 

$

(7,347

)

 

(7.7

) %

ODR

 

39,100

 

30.8

%

 

 

35,338

 

27.1

%

 

 

3,762

 

 

10.6

%

Total revenue

 

126,811

 

100.0

%

 

 

130,396

 

100.0

%

 

 

(3,585

)

 

(2.7

) %

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

GCR(1)

 

14,375

 

16.4

%

 

 

7,072

 

7.4

%

 

 

7,303

 

 

103.3

%

ODR(2)

 

11,153

 

28.5

%

 

 

11,584

 

32.8

%

 

 

(431

)

 

(3.7

) %

Total gross profit

 

25,528

 

20.1

%

 

 

18,656

 

14.3

%

 

 

6,872

 

 

36.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative:

 

 

 

 

 

 

 

 

 

 

 

GCR(1)

 

9,788

 

11.2

%

 

 

9,008

 

9.5

%

 

 

780

 

 

8.7

%

ODR(2)

 

8,384

 

21.4

%

 

 

6,668

 

18.9

%

 

 

1,716

 

 

25.7

%

Corporate

 

585

 

0.5

%

 

 

329

 

0.3

%

 

 

256

 

 

77.8

%

Total selling, general and administrative

 

18,757

 

14.8

%

 

 

16,005

 

12.3

%

 

 

2,752

 

 

17.2

%

Amortization of intangibles (Corporate)

 

189

 

0.1

%

 

 

104

 

0.1

%

 

 

85

 

 

81.7

%

Total operating income

$

6,582

 

5.2

%

 

$

2,547

 

2.0

%

 

$

4,035

 

 

158.4

%

(1) As a percentage of GCR revenue.

(2) As a percentage of ODR revenue.

 
 

LIMBACH HOLDINGS, INC.

Consolidated Statements of Operations

 

 

Year Ended December 31,

 

Increase/(Decrease)

(in thousands, except for percentages)

2021

 

2020

 

$

 

%

Statement of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

GCR

$

350,015

 

71.4

%

 

$

440,979

 

77.6

%

 

$

(90,964

)

 

(20.6

) %

ODR

 

140,336

 

28.6

%

 

 

127,230

 

22.4

%

 

 

13,106

 

 

10.3

%

Total revenue

 

490,351

 

100.0

%

 

 

568,209

 

100.0

%

 

 

(77,858

)

 

(13.7

) %

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

GCR(1)

 

45,409

 

13.0

%

 

 

45,115

 

10.2

%

 

 

294

 

 

0.7

%

ODR(2)

 

40,501

 

28.9

%

 

 

36,271

 

28.5

%

 

 

4,230

 

 

11.7

%

Total gross profit

 

85,910

 

17.5

%

 

 

81,386

 

14.3

%

 

 

4,524

 

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative:

 

 

 

 

 

 

 

 

 

 

 

GCR(1)

 

37,558

 

10.7

%

 

 

37,708

 

8.6

%

 

 

(150

)

 

(0.4

) %

ODR(2)

 

31,277

 

22.3

%

 

 

24,825

 

19.5

%

 

 

6,452

 

 

26.0

%

Corporate

 

2,601

 

0.5

%

 

 

1,068

 

0.2

%

 

 

1,533

 

 

143.5

%

Total selling, general and administrative

 

71,436

 

14.6

%

 

 

63,601

 

11.2

%

 

 

7,835

 

 

12.3

%

Amortization of intangibles (Corporate)

 

484

 

0.1

%

 

 

630

 

0.1

%

 

 

(146

)

 

(23.2

) %

Total operating income

$

13,990

 

2.9

%

 

$

17,155

 

3.0

%

 

$

(3,165

)

 

(18.4

) %

 

 

 

 

 

 

 

 

 

 

 

 

(1) As a percentage of GCR revenue.

(2) As a percentage of ODR revenue.

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

December 31,

 

For the Years Ended

December 31,

(in thousands)

 

2021

 

 

2020

 

 

 

2021

 

 

 

2020

Net income

$

4,278

 

$

387

 

 

$

6,714

 

 

$

5,807

 

 

 

 

 

 

 

 

Adjustments:

 

 

 

 

 

 

 

Depreciation and amortization

 

1,595

 

 

1,536

 

 

 

5,948

 

 

 

6,171

Interest expense, net

 

428

 

 

2,178

 

 

 

2,568

 

 

 

8,627

Non-cash stock-based compensation expense

 

585

 

 

329

 

 

 

2,601

 

 

 

1,068

Loss on early debt extinguishment

 

 

 

 

 

 

1,961

 

 

 

Change in fair value of warrant liability

 

 

 

322

 

 

 

(14

)

 

 

1,634

Severance expense

 

 

 

 

 

 

 

 

 

622

Income tax provision (benefit)

 

1,919

 

 

(263

)

 

 

2,763

 

 

 

1,182

Acquisition and other transaction costs

 

735

 

 

 

 

 

735

 

 

 

Adjusted EBITDA

$

9,540

 

$

4,489

 

 

$

23,276

 

 

$

25,111

 

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