Limbach’s third-quarter results were met with a negative market reaction, as investors focused on margin pressures despite strong revenue growth. Management attributed the robust top-line expansion to a continued pivot toward owner-direct relationships (ODR), which now account for a significant majority of overall revenue. CEO Michael McCann noted that the ODR business, particularly from recent acquisitions like Pioneer Power, contributed to the company’s growth but also impacted consolidated margins due to their lower initial profitability. McCann specifically highlighted, “We see lots of opportunity to expand margins over time, but it’s a process.”
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Limbach (LMB) Q3 CY2025 Highlights:
- Revenue: $184.6 million vs analyst estimates of $184.5 million (37.8% year-on-year growth, in line)
- Adjusted EPS: $1.05 vs analyst estimates of $1.05 (in line)
- Adjusted EBITDA: $21.77 million vs analyst estimates of $22.63 million (11.8% margin, 3.8% miss)
- The company reconfirmed its revenue guidance for the full year of $665 million at the midpoint
- EBITDA guidance for the full year is $83 million at the midpoint, above analyst estimates of $81.82 million
- Operating Margin: 7.6%, down from 8.6% in the same quarter last year
- Market Capitalization: $908.1 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Limbach’s Q3 Earnings Call
- Christopher Moore (CJS Securities) asked about Pioneer Power’s revenue and margin contribution. CEO Michael McCann clarified that Pioneer’s revenue is mostly ODR and that margin improvement will be gradual as they implement Limbach’s processes.
- Brian Brophy (Stifel) questioned the drivers of lower ODR margins. CFO Jayme Brooks explained that the mix of quick-burning versus fixed-price projects and Pioneer’s initial margin profile were key factors.
- Brian Brophy (Stifel) also inquired about the anticipated acceleration in ODR organic growth for Q4. McCann attributed this to year-end customer budgets and new sales hires reaching productivity.
- Robert Brown (Lake Street Capital) sought insight into longer-term organic growth and margin improvement. McCann emphasized a disciplined approach to project selection and the expectation that operational improvements will enhance margins over time.
- Gerard Sweeney (ROTH Capital Partners) asked about visibility into ODR revenue and local versus national customer development. McCann described increasing consistency in customer spending patterns and progress in building national relationships.
Catalysts in Upcoming Quarters
In upcoming quarters, our team will be monitoring (1) progress in integrating Pioneer Power and related margin improvement, (2) continued growth in owner-direct relationships and expansion into new service offerings, and (3) the impact of sales enablement investments on project win rates and customer retention. The trajectory of capital budgets in key end-markets like healthcare and industrial will be an additional focus.
Limbach currently trades at $78.67, down from $90.38 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).
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