Full Year 2016 Revenues up 34.9%; Aggregate Backlog up 15% at
Conference Call Scheduled for
Other key financial highlights of the year included (comparisons to prior year period):
- FY 2016 gross margin was 12.5%, compared with 13.7% in the prior year.
- FY 2016 net income was
$1.4 million (after successor period tax benefit of$3.9 million ), compared to$4.4 million for 2015 as an LLC. - Construction backlog rose 10% to
$390.2 million atDecember 31, 2016 from$355.4 million atDecember 31, 2015 . - Service backlog at
December 31, 2016 was$44.1 million , which was up 94% from$22.7 million . - Revenues were split 82%/18% between Construction and Service segments.
- FY 2016 Adjusted EBITDA of
$16.8 million , an increase of 25.9% versus 2015. - Because of the Business Combination that closed on
July 20 th the financial statements present predecessor and successor results which when added together total the Company’s full year results
Management Commentary
Fourth Quarter Highlights
Revenues
Fourth quarter 2016 revenues of
Gross Margin
Gross margin for the fourth quarter of 2016 was 11.3%, down from 14.3% for the prior year period and 12.8% for the third quarter of 2016. The decrease was driven by project mix as the Company had a large project underway which carries a lower margin profile than the corporate average along with other adjustments to contracts in progress. On a dollar basis, gross profit in the fourth quarter was
Operating Income (Loss)
The Company reported an operating loss of
Full Year Highlights
Revenues
Full year 2016 revenues of
Gross Margin
Gross margin for the full year 2016 of 12.5% was down from 13.7% in 2015 as the Company continued work on a large project which carries a lower margin profile than the corporate average along with other adjustments to contracts in progress. On a dollar basis, gross profit in 2016 was
Operating Income (Loss)
The Company reported operating income of
Backlog
Aggregate backlog at the end of 2016 was
The Company expects approximately 76% of the total Construction and Service backlog to be converted to revenues within the current fiscal year, with the remainder in 2018 and 2019.
Balance Sheet
At
2017 Guidance
The Company is providing the following revenue and Adjusted EBITDA guidance for 2017:
FY 2017 Estimate | |||||
Revenues | |
||||
Adjusted EBITDA* | |
With respect to expected 2017 Adjusted EBITDA, a quantitative reconciliation is not available without unreasonable efforts due to the high variability, complexity and low visibility with respect to adjustments that could be made with respect to taxes, transaction costs, stock-based compensation and other items which are, when applicable, excluded from Adjusted EBITDA. These items are expected to have a potentially unpredictable, and potentially significant, impact on our future financial results presented in accordance with generally accepted accounting principles in
Conference Call Details |
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Date: | |
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Time: | |
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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
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
|||||||||||||
(in thousands, except share and per share data) |
|||||||||||||
Successor | Predecessor | ||||||||||||
(in thousands, except share and per share data) | 2016 through 2016 |
|
|
||||||||||
Revenue | $ | 225,604 | $ | 221,391 | $ | 331,350 | |||||||
Cost of revenue | 198,427 | 192,911 | 285,938 | ||||||||||
Gross profit | 27,177 | 28,480 | 45,412 | ||||||||||
Operating expenses: | |||||||||||||
Selling, general and administrative | 24,425 | 24,015 | 37,767 | ||||||||||
Amortization of intangibles | 3,103 |
— |
— | ||||||||||
Total operating expenses | 27,528 | 24,015 | 37,767 | ||||||||||
Operating income | (351 | ) | 4,465 | 7,645 | |||||||||
Other income (expenses): | |||||||||||||
Interest income (expense), net | (1,796 |
) |
(1,898 | ) | (3,200 | ) | |||||||
Loss from early extinguishment of debt | (2,172 | ) | — | — | |||||||||
Gain (loss) on sale of property and equipment | (250 | ) | 1 | (73 | ) | ||||||||
Total other expenses | (4,218 | ) | (1,897 | ) | (3,273 | ) | |||||||
Income (loss) before income taxes | (4,569 | ) | 2,568 | 4,372 | |||||||||
Income tax benefit | 3,871 | — | — | ||||||||||
Net income (loss) | (698 | ) | 2,568 | 4,372 | |||||||||
Dividends on cumulative redeemable convertible preferred stock | 423 | — | — | ||||||||||
Net income (loss) attributable to |
$ | (1,121 |
) |
||||||||||
Net income (loss) attributable to |
$ | 2,568 | $ | 4,372 | |||||||||
Successor EPS |
|||||||||||||
Basic earnings (loss) per share for common stock: | |||||||||||||
Net loss attributable to |
$ | (0.19 |
) |
||||||||||
Diluted earnings (loss) per share for common stock: | |||||||||||||
Net loss attributable to |
$ | (0.19 | ) | ||||||||||
Weighted average number of shares outstanding: | |||||||||||||
Basic | 6,039,875 | ||||||||||||
Diluted | 6,039,875 | ||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
|||||||||||
(in thousands, except share and per share data) |
|||||||||||
Successor | Predecessor | ||||||||||
(in thousands, except share and per share data) |
|
|
|||||||||
Revenue | $ | 133,715 | $ | 91,780 | |||||||
Cost of revenue | 118,609 | 78,618 | |||||||||
Gross profit | 15,106 | 13,162 | |||||||||
Operating expenses: | |||||||||||
Selling, general and administrative | 14,216 | 10,313 | |||||||||
Amortization of intangibles | 1,649 | 0 | |||||||||
Total operating expenses | 15,865 | 10,313 | |||||||||
Operating income | (759 | ) | 2,849 | ||||||||
Other income (expenses): | |||||||||||
Interest income (expense), net | (943 | ) | (839 | ) | |||||||
Loss from early extinguishment of debt | (2,172 | ) | 0 | ||||||||
Gain (loss) on sale of property and equipment | (228 | ) | (77 | ) | |||||||
Total other expenses | (3,344 | ) | (916 | ) | |||||||
Income (loss) before income taxes | (4,103 | ) | 1,933 | ||||||||
Income tax benefit | (1,593 | ) | 0 | ||||||||
Net income (loss) | (2,510 | ) | 1,933 | ||||||||
Dividends on cumulative redeemable convertible preferred stock | 263 | 0 | |||||||||
Net income (loss) attributable to |
$ | (2,773 | ) | ||||||||
Net income (loss) attributable to |
$ | 1,933 | |||||||||
Successor EPS |
|||||||||||
Basic earnings (loss) per share for common stock: | |||||||||||
Net income (loss) attributable to |
$ | (0.45 |
) |
|
|||||||
Diluted earnings (loss) per share for common stock: | |||||||||||
Net income (loss) attributable to |
$ | (0.45 |
) |
|
|||||||
Weighted average number of shares outstanding: | |||||||||||
Basic | 6,128,794 | ||||||||||
Diluted | 6,128,794 | ||||||||||
LIMBACH HOLDINGS INC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ($ in Thousands) |
|||||||||
Successor | Predecessor | ||||||||
|
|
||||||||
(in thousands, except share data) | 2016 | 2015 | |||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 7,406 | $ | 6,107 | |||||
Restricted cash | 113 | 63 | |||||||
Accounts receivable, net | 113,972 | 85,357 | |||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 31,959 | 20,745 | |||||||
Advances to and equity in joint ventures, net | 10 | 6 | |||||||
Other current assets | 1,723 | 1,793 | |||||||
Total current assets | $ | 155,183 | $ | 114,071 | |||||
Property and equipment, net | $ | 18,541 | $ | 13,221 | |||||
Intangible assets, net | 17,807 | – | |||||||
|
10,488 | – | |||||||
Deferred tax asset | 4,268 | – | |||||||
Other assets | 588 | 37 | |||||||
Total assets |
$ | 206,875 | $ | 127,329 | |||||
LIABILITIES | |||||||||
Current liabilities | |||||||||
Current portion of long-term debt | $ | 4,476 | $ | 2,698 | |||||
Accounts payable, including retainage | 57,034 | 42,569 | |||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 39,190 | 26,272 | |||||||
Accrued expenses and other current liabilities | 26,029 | 15,660 | |||||||
Total current liabilities | 126,729 | 87,199 | |||||||
Long-term debt | 21,507 | 30,957 | |||||||
Other long-term liabilities |
817 | 964 | |||||||
Total liabilities | $ | 149,053 | $ | 119,120 | |||||
Commitments and contingencies | – | – | |||||||
Redeemable convertible preferred stock, net, par value |
10,374 | – | |||||||
STOCKHOLDERS’ EQUITY AND MEMBERS’ EQUITY | |||||||||
Members’ equity, 10,000,000 Class A units authorized, issued and outstanding as of |
8,209 | ||||||||
Common stock, |
1 | – | |||||||
Additional paid-in capital | 55,162 | – | |||||||
Accumulated deficit |
(7,715 | ) | – | ||||||
Total stockholders’ equity and members’ equity | $ | 47,448 | $ | 8,209 | |||||
Total liabilities and stockholders’ equity and members’ equity |
$ | 206,875 | $ | 127,329 | |||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
|||||||||||||
Successor | Predecessor | ||||||||||||
(in thousands) |
|
|
|
||||||||||
Cash flows from operating activities: | |||||||||||||
Net income (loss) | $ | (698 | ) | $ | 2,568 | $ | 4,372 | ||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||||
Depreciation and amortization | 5,756 | 1,582 | 2,630 | ||||||||||
Allowance for doubtful accounts | 219 | 50 | (41 | ) | |||||||||
Stock based compensation expense | — | 1,349 | — | ||||||||||
Capitalized deferred interest on subordinated debt | 84 | 1,395 | 2,702 | ||||||||||
Amortization of debt issuance costs | 492 | — | — | ||||||||||
Deferred tax provision | (3,871 | ) | — | — | |||||||||
Accretion of preferred stock discount to redemption value | 4 | — | — | ||||||||||
Loss from early extinguishment of debt | 2,172 | — | — | ||||||||||
(Gain) loss on sale of property and equipment | 250 | 1 | 73 | ||||||||||
Changes in operating assets and liabilities: | |||||||||||||
(Increase) decrease in restricted cash | (50 | ) | |||||||||||
(Increase) decrease in accounts receivable | (33,606 | ) | 5,722 | (11,458 | ) | ||||||||
(Increase) decrease in costs and estimated earnings in excess of billings on uncompleted contracts | 6,256 | (18,698 | ) | (7,849 | ) | ||||||||
(Increase) decrease in other current assets | 549 | (662 | ) | (50 | ) | ||||||||
(Increase) decrease in other assets | 78 | (95 | ) | 1 | |||||||||
Increase (decrease) in accounts payable | 16,661 | (6,973 | ) | 2,658 | |||||||||
Increase (decrease) in billings in excess of costs and estimated earnings on uncompleted contracts | 9,123 | 4,276 | 1,603 | ||||||||||
Increase (decrease) in accrued expenses and other current liabilities | (478 | ) | 10,847 | 6,616 | |||||||||
Increase (decrease) in other long-term liabilities |
173 | 277 | (651 | ) | |||||||||
Net cash provided by operating activities |
3,114 | 1,639 | 606 | ||||||||||
Cash flows from investing activities: | |||||||||||||
Proceeds from sale of property and equipment | 2,085 | 7 | 58 | ||||||||||
Advances to joint ventures | (4 | ) | — | (1 | ) | ||||||||
Purchase of property and equipment | (1,281 | ) | (2,114 | ) | (2,380 | ) | |||||||
Acquisition of |
(32,158 | ) | — | — | |||||||||
Proceeds from trust account | 18,005 | — | — | ||||||||||
Net cash used in investing activities |
(13,353 | ) | (2,107 | ) | (2,323 | ) | |||||||
Cash flows from financing activities: | |||||||||||||
Proceeds from revolving credit facility | — | 60,122 | 63,553 | ||||||||||
Payments on revolving credit facility | (3,492 | ) | (63,630 | ) | (61,053 | ) | |||||||
Proceeds from Credit Agreement term loan | 24,000 | — | — | ||||||||||
Payments Credit Agreement term loan | (1,500 | ) | — | — | |||||||||
Proceeds from Subordinated Loan | 13,084 | — | — | ||||||||||
Payments on Subordinated Loan | (15,340 | ) | — | — | |||||||||
Proceeds from Credit Agreement revolver | 34,501 | — | — | ||||||||||
Payments on Credit Agreement revolver | (34,501 | ) | — | — | |||||||||
Payments on term loan | (539 | ) | (1,038 | ) | (2,074 | ) | |||||||
Payments on subordinated debt facility | (23,604 | ) | — | — | |||||||||
Payments on capital leases | (730 | ) | (660 | ) | (1,090 | ) | |||||||
Repayment of promissory note to affiliate | (125 | ) | — | — | |||||||||
Proceeds from issuance of redeemable convertible preferred stock | 9,946 | — | — | ||||||||||
Proceeds from sale of common stock | 17,236 | — | — | ||||||||||
Debt issuance costs | (1,313 | ) | — | — | |||||||||
Distributions to members | — | (195 | ) | (124 | ) | ||||||||
Net cash provided by (used in) financing activities |
17,623 | (5,401 | ) | (788 | ) | ||||||||
Increase (decrease) in cash and cash equivalents | 7,384 | (5,869 | ) | (2,505 | ) | ||||||||
Cash and cash equivalents, beginning of period – |
22 | — | — | ||||||||||
Cash and cash equivalents, beginning of period – |
— | 6,107 | 8,612 | ||||||||||
Cash and cash equivalents, end of period | $ | 7,406 | $ | 238 | $ | 6,107 | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited) |
|||||||||||||
Supplemental disclosures of cash flow information |
|||||||||||||
Noncash investing and financing transactions: |
|
||||||||||||
Property and equipment acquired financed with capital leases |
$ |
1,259 |
$ |
1,014 |
$ |
1,547 |
|||||||
Interest paid |
$ |
3,390 |
$ |
693 |
$ |
527 |
|||||||
OPERATING RESULTS BY SEGMENT (Unaudited) |
|||||||||||||||||||||
Successor | Predecessor | Predecessor | |||||||||||||||||||
(in thousands) |
through |
through |
through |
2016 Combined Increase/ (Decrease) |
|||||||||||||||||
($) | ($) | ($) | $ | % | |||||||||||||||||
Revenue: | |||||||||||||||||||||
Construction | $ | 181,663 | $ | 183,100 | $ | 273,563 | $ | 91,200 | 33.3 | % | |||||||||||
Service | 43,941 | 38,291 | 57,787 | 24,445 | 42.3 | % | |||||||||||||||
Total revenue | 225,604 | 221,391 | 331,350 | 115,645 | 34.9 | % | |||||||||||||||
Cost of revenue: | |||||||||||||||||||||
Construction | 163,842 | 162,800 | 241,427 | 85,215 | 35.3 | % | |||||||||||||||
Service | 34,585 | 30,111 | 44,511 | 20,185 | 45.3 | % | |||||||||||||||
Total cost of revenue | 198,427 | 192,911 | 285,938 | 105,400 | 36.9 | % | |||||||||||||||
Gross Profit: | |||||||||||||||||||||
Construction | 17,821 | 20,300 | 32,136 | 5,985 | 18.6 | % | |||||||||||||||
Service | 9,356 | 8,180 | 13,276 | 4,260 | 32.1 | % | |||||||||||||||
Total gross profit | 27,177 | 28,480 | 45,412 | 10,245 | 22.6 | % | |||||||||||||||
Selling, general and administrative expenses: | |||||||||||||||||||||
Construction | 10,628 | 11,680 | 19,278 | 3,030 | 15.7 | % | |||||||||||||||
Service | 5,460 | 6,302 | 9,855 | 1,907 | 19.4 | % | |||||||||||||||
Corporate | 8,337 | 6,033 | 8,634 | 5,736 | 66.4 | % | |||||||||||||||
Total selling, general and administrative expenses | 24,425 | 24,015 | 37,767 | 10,673 | 28.3 | % | |||||||||||||||
Amortization of intangibles | 3,103 | – | – | 3,103 | 100.0 | % | |||||||||||||||
Operating income: | |||||||||||||||||||||
Construction | 7,193 | 8,620 | 12,858 | 2,955 | 23.0 | % | |||||||||||||||
Service | 3,896 | 1,878 | 3,421 | 2,353 | 68.8 | % | |||||||||||||||
Corporate | (11,440 |
) |
|
(6,033 | ) | (8,634 | ) | (8,839 | ) | -102.4 | % | ||||||||||
Operating income | (351 |
) |
|
4,465 | 7,645 | (3,531 | ) | -46.2 | % | ||||||||||||
OPERATING RESULTS BY SEGMENT (Unaudited) |
||||||||||||
Successor | Predecessor | |||||||||||
(Amounts in thousands) |
through |
through |
||||||||||
($) | ($) | |||||||||||
Revenue: | ||||||||||||
Construction | $ | 107,746 | $ | 78,104 | ||||||||
Service | 25,969 | 12,501 | ||||||||||
Total revenue |
133,715 |
91,780 | ||||||||||
Cost of revenue: | ||||||||||||
Construction | 97,974 | 69,280 | ||||||||||
Service | 20,635 | 9,338 | ||||||||||
Total cost of revenue | 118,609 | 78,618 | ||||||||||
Gross Profit: | ||||||||||||
Construction | 9,772 | 9,063 | ||||||||||
Service | 5,334 | 3,163 | ||||||||||
Total gross profit | 15,106 | 13,162 | ||||||||||
Selling, general and administrative expenses: | ||||||||||||
Construction | 6,229 | 4,296 | ||||||||||
Service | 3,029 | 2,403 | ||||||||||
Corporate | 4,958 | 3,614 | ||||||||||
Total selling, general and administrative expenses | 14,216 | 10,313 | ||||||||||
Amortization of intangibles | 1,649 | – | ||||||||||
Operating income: | ||||||||||||
Construction | 3,543 | 4,767 | ||||||||||
Service | 2,305 | 760 | ||||||||||
Corporate | (6,607 | ) | (2,678 | ) | ||||||||
Operating income | (759 | ) | 2,849 | |||||||||
* Use of Non-GAAP Financial Measures
Adjusted EBITDA
In assessing the performance of our business, management utilizes a variety of financial and performance measures. The key measure is Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss) plus depreciation and amortization expense, interest expense, taxes, as further adjusted to eliminate the impact of non-recurring or unusual operating expenses such as certain management fees, unusual debt extinguishment expenses, loss on the sale of a long owned real estate asset, public company and business combination expenses, and expenses recognized associated with the management and settlement of a long standing legal dispute relating to a project completed in 2003. We believe that Adjusted EBITDA is meaningful to our investors to enhance their understanding of our financial performance for the current period, exclusive of expenses that are unusual or will not recur or were not planned in the current year and did not occur in prior years. 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 (loss) 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 Adjusted EBITDA to net income (loss), the most comparable GAAP measure, is provided below under “Reconciliation of Adjusted EBITDA to Net Income (Loss).”
Reconciliation of Adjusted EBITDA to Net Income (Loss) |
||||||||||||||
Successor | Predecessor | |||||||||||||
|
|
|
||||||||||||
through | through | through | ||||||||||||
|
|
|
||||||||||||
(Dollar amounts in thousands) | ($) | ($) | ($) | |||||||||||
Net income (loss) | $ | (1,121 | ) | $ | 2,568 | $ | 4,372 | |||||||
Adjustments: | ||||||||||||||
Depreciation and amortization | 5,756 | 1,582 | 2,630 | |||||||||||
Interest expense | 1,796 | 1,898 | 3,200 | |||||||||||
Taxes | (3,871 | ) | – | – | ||||||||||
EBITDA | 2,560 | 6,048 | 10,202 | |||||||||||
Loss from early extinguishment of debt | 2,172 | – | – | |||||||||||
Loss on sale of property and equipment | 190 | – | 73 | |||||||||||
Management fees | – | 671 | 1,336 | |||||||||||
Consulting fees | – | – | 224 | |||||||||||
Acquisition costs | – | – | 37 | |||||||||||
Operating expenses due to public company status | 1,934 | – | ||||||||||||
Business combination expenses (option expenses) | – | 1,549 | – | |||||||||||
Preferred stock dividends | 423 | – | ||||||||||||
|
– | – | 417 | |||||||||||
Non-recurring incentives | – | – | 687 | |||||||||||
Legacy legal costs | 1,079 | 154 | 350 | |||||||||||
Adjusted EBITDA attributable to |
$ | 8,422 | $ | 13,326 | ||||||||||
Adjusted EBITDA attributable to |
$ | 8,358 | ||||||||||||
About
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, capital expenditures or other future financial or business performance or strategies, results of operations or financial condition. 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. 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 , which is 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170417005835/en/
Investor Relations:
Senior Associate
jhellman@equityny.com
or
Executive Vice President and Chief Financial Officer
john.jordan@limbachinc.com
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