Building systems company Limbach (NASDAQ: LMB) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 11.9% year on year to $133.1 million. The company’s full-year revenue guidance of $620 million at the midpoint came in 1.4% above analysts’ estimates. Its non-GAAP profit of $1.12 per share was significantly above analysts’ consensus estimates.
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Limbach (LMB) Q1 CY2025 Highlights:
- Revenue: $133.1 million vs analyst estimates of $121.1 million (11.9% year-on-year growth, 10% beat)
- Adjusted EPS: $1.12 vs analyst estimates of $0.43 (significant beat)
- Adjusted EBITDA: $14.87 million vs analyst estimates of $10.34 million (11.2% margin, 43.8% beat)
- The company reconfirmed its revenue guidance for the full year of $620 million at the midpoint
- EBITDA guidance for the full year is $80 million at the midpoint, above analyst estimates of $78.6 million
- Operating Margin: 5.9%, in line with the same quarter last year
- Free Cash Flow was $11,000, up from -$6.49 million in the same quarter last year
- Market Capitalization: $1.2 billion
“In the first quarter, we grew revenue, gross profit, and Adjusted EBITDA, demonstrating the scalability of our business model,” Michael McCann, President and Chief Executive Officer of Limbach, said.
Company Overview
Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Limbach struggled to consistently increase demand as its $532.9 million of sales for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result, but there are still things to like about Limbach.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Limbach’s annualized revenue growth of 2.9% over the last two years is above its five-year trend, but we were still disappointed by the results. 
This quarter, Limbach reported year-on-year revenue growth of 11.9%, and its $133.1 million of revenue exceeded Wall Street’s estimates by 10%.
Looking ahead, sell-side analysts expect revenue to grow 16% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and implies its newer products and services will catalyze better top-line performance.
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Operating Margin
Limbach was profitable over the last five years but held back by its large cost base. Its average operating margin of 4.9% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
On the plus side, Limbach’s operating margin rose by 5.2 percentage points over the last five years.
This quarter, Limbach generated an operating profit margin of 5.9%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Limbach’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
Limbach’s EPS grew at an astounding 53.3% compounded annual growth rate over the last two years, higher than its 2.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Diving into the nuances of Limbach’s earnings can give us a better understanding of its performance. While we mentioned earlier that Limbach’s operating margin was flat this quarter, a two-year view shows its margin has expanded by 2 percentage points. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
In Q1, Limbach reported EPS at $1.12, up from $0.69 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Limbach’s full-year EPS of $3.74 to grow 10.6%.
Key Takeaways from Limbach’s Q1 Results
We were impressed by how significantly Limbach blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. We were also excited its full-year EBITDA guidance outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 5.9% to $109.20 immediately following the results.
Sure, Limbach had a solid quarter, but if we look at the bigger picture, is this stock a buy? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
