Limbach Holdings Inc

Limbach Holdings, Inc. (the “Company,” “we” or “us”), a Delaware corporation headquartered in Warrendale, Pennsylvania, is a building systems solution firm that partners with building owners and facilities managers who have mission critical mechanical (heating, ventilation, air conditioning), electrical, and plumbing infrastructure. The Company strives to be an indispensable partner to its customers by providing services that are essential to the operation of their businesses. The Company works with building owners primarily in six vertical markets: healthcare, industrial and manufacturing, data centers, life science, higher education and cultural and entertainment. The Company has more than 1,400 team members in 19 offices across the eastern United States. The Company’s team members uniquely combine engineering expertise with field installation skills to provide custom solutions that leverage its full life-cycle capabilities, which allows it to address both the operational and capital projects needs of its customers.

2023 Highlights

In 2023, the Company:

•Generated $57.4 million of net cash provided by operating activities.

•Expanded consolidated gross profit margin by 420 bps to 23.1%.

•Revenue generated from the Company’s ODR (as defined below) segment increased 21.1% (versus 2022), achieving its 2023 target of a 50/50 segment revenue mix.

•Increased diluted earnings per share by 175% (versus 2022) to $1.76

•Successfully completed the acquisitions of ACME and Industrial Air (as described in more detail below).

•In June 2023, the Company was added to the Russell 3000 Index as part of the annual reconstitution of the Russell indexes.

Segments

The Company operates in two segments, (i) General Contractor Relationships (“GCR”), in which the Company generally manages new construction or renovation projects that involve primarily mechanical, plumbing, or electrical services awarded to the Company by general contractors or construction managers, and (ii) Owner Direct Relationships (“ODR”), in which the Company performs owner direct construction projects and/or provides maintenance or services primarily on mechanical, plumbing or electrical systems, building controls and specialty contracting projects direct to, or assigned by, building owners or property managers.

GCR Segment. The Company provides its GCR segment services through the following project delivery methodologies:

•Plan & Spec Bidding. Plan & Spec bidding is a competitive bid process among multiple contractors bidding on nearly complete or completed design documents based on a lump sum price for delivery of the project. The Company believes price is the predominant selection criteria in this process.

•Design/Build or Design/Assist. Design/Build or Design/Assist is a process in which a specialty contractor is selected among competing contractors using best value methodology. In best value, the Company believes the selection is made based primarily upon qualifications and project approach, and secondarily on select cost factors. Cost factors are usually limited to a fixed fee and expense estimate and an estimate of the cost of work. With Design/Assist, the specialty contractor is typically contracted early in the design process to provide design and preconstruction input as needed to assist the customer in maintaining the established budget and completing design and drawings. This delivery option includes lump sum or guaranteed maximum price on a fixed fee basis.

ODR Segment. The Company’s key business initiative for its ODR segment is to position itself as a value-added and indispensable partner to building owners in mission-critical markets, providing full life-cycle capabilities from concept design and engineering through system commissioning and recurring 24/7 service and maintenance. The Company remains focused on the scalability of its organic business through partnering directly with building owners. The Company believes that its ODR services offerings provide a distribution channel through which it can continue to deliver an expanded offering of value-added services direct to building owners that further reinforces its value proposition and differentiated capabilities. In addition, by establishing successful, long-term partnerships with building owners, the Company has positioned itself to provide reoccurring maintenance services, which it believes improves revenue predictability and could increase economic resilience. The Company provides its ODR business services through both a variety of project delivery methodologies and other service offerings:

•Critical System Repairs. The Company provides retrofit and repair projects that are typically less than $0.5 million in contract value, have short durations and limited scopes of work. When design is required for a project, the Company’s professional engineers on staff often support the contract. Additionally, this service may be provided on a time-and-material basis for an immediate repair.

•MEP Infrastructure Projects. This work is contracted directly for a building owner for which the Company can perform the same project delivery methodologies akin to its GCR offerings. On projects that are predominantly mechanical, plumbing, and/or electrical in scope, the Company may act as the “prime” general contractor. These projects are typically MEP infrastructure projects for existing buildings. These projects are typically greater than $0.5 million in contract value, and have longer durations and broader scopes of work.

•Maintenance Contracts. Through “evergreen” contracts, the Company provides maintenance services for HVAC, electrical and/or plumbing systems and equipment.

•Building Automation Upgrades. The Company provides design, installation and maintenance for specialized controls systems.

•Data Driven Insights. The Company provides the means to manage facility and asset data to empower data driven decisions. The Company’s facility analytic solutions include: (i) energy management and sustainability through real-time tracking and monitoring, (ii) asset management, (iii) predictive maintenance and (iv) virtual facility management services. This tool is used for customer facilities to help reduce operating costs, extend the life cycle of equipment, and uncover energy savings to reduce the customer’s carbon footprint.

•Program Management Services. Program Management Services provide the Company’s healthcare customers with advisory support and strategic guidance to help match their long-term facility needs. These services include the defining of capital program needs for new and existing facilities. In addition, these services offer assessments of existing facilities for project upgrades to improve the operations of the buildings tied to MEP systems.

The Company’s ODR business services profile offers the potential of reoccurring business opportunities. Due to the Company’s on-going relationships with certain building owners established through certain of its service offerings, the Company believes it is well positioned with those owners when they initiate capital construction projects. As a result, the ongoing relationship with the customer along with the maintenance, time-and-materials, building automation upgrades, critical system repair work, and data driven insights often lead, drive and support the revenue associated with owner direct projects.

Additionally, the Company provides captive engineering capabilities, estimating and virtual design services. The Company also provides professional engineering, energy analysis, estimation, and detail design and three-dimensional building installation coordination services, direct to building owners.

The Company maintains professional engineers on staff who are supported by estimators and designers. The Company’s engineers are experienced in healthcare, institutional, commercial, hospitality, and industrial projects. During 2023, the Company took steps to advance its customer experience by moving its staff of professional engineers, estimators and designers from one regional location to each of its branch locations. By decentralizing these services, the Company believes that it maintains the ability to provide the same engineering capabilities but expands its opportunities to enhance and build relationships with building owners.

For additional financial information about the Company’s operating segments, see Note 12 – Operating Segments in the accompanying notes to the Company’s consolidated financial statements.

Strategy

The Company focuses on creating value for building owners by developing long-term relationships and becoming an indispensable partner to building owners with mission-critical systems. The key objectives of the Company’s strategy are to improve profitability and generate quality growth in its operations by increasing the percentage of revenue from ODR, to expand margins through evolved service offerings and to scale the business through acquisitions. To accomplish its objectives, the Company currently is executing the following initiatives:

ODR Growth. The Company’s principal focus over the past few years, and a focus that the Company plans to continue in coming years, is the accelerated growth of its ODR segment. The Company is focused on expanding the number and breadth of owner relationships that it serves on a direct basis and leveraging these expanded owner-direct relationships to deliver a broad suite of services. The Company maintains a disciplined approach of full life-cycle of engineered solutions and craft expertise to be a one-stop-shop for building owners, maximizing their investment in their mission-critical assets.

The Company has and plans to continue to make investments to expand its ODR revenue by increasing the value it can offer to building owners and continues to evaluate areas in which it could expand the breadth of its service offerings to better serve its customers. Employee development underpins the Company’s efforts to execute its 2024 strategy. The Company is actively concentrating managerial and sales resources on training and hiring experienced employees to sell and profitably perform ODR-related services. In many locations, the Company has added or upgraded its capabilities and the Company believes its investments and efforts have provided customer value and stimulated growth within the segment.

The Company continues to expand its owner-direct offerings to include other digital solutions to manage and monitor the performance of building systems, including data analytics, energy consumption and sustainability. These services allow the Company to develop new revenue streams, leveraging its professional services capabilities to support multi-location regional and national customers in core end-markets, and to drive energy retrofit and performance optimization projects for building owners.

The Company’s ODR revenue increased by 21.1% to $262.0 million for the year ended December 31, 2023 as compared to $216.4 million for the year ended December 31, 2022. The increase in year-over-year ODR segment revenue was primarily due to the Company's continued focus on the accelerated growth of its ODR business. In addition, the Company’s ODR segment revenue increased by approximately $3.4 million and $4.7 million due to the ACME and Industrial Air transactions, respectively. ODR gross profit increased to 29.0% for the year ended December 31, 2023 from 25.5% for the year ended December 31, 2022 due to the combination of an increase in revenue and higher margins driven by contract mix.

Improved GCR Segment Margins. In the Company’s GCR segment, its efforts continue to focus on improving project execution and profitability by pursuing opportunities that are smaller in size and shorter in duration than historically, and that leverage its captive design and engineering services.

The Company’s GCR revenue decreased by 9.3% to $254.4 million for the year ended December 31, 2023 as compared to $280.4 million for the year ended December 31, 2022. The decrease in GCR revenue was primarily due to the Company’s continued focus on improving project execution and profitability by pursuing opportunities that are smaller in size, shorter in duration, and that leverage its captive design and engineering services. In addition, the Company continues to drive a disciplined shift to its higher margin ODR business. Gross profit improved to 17.0% for the year ended December 31, 2023 from 13.8% for the year ended December 31, 2022.

Maintain a Diverse Customer, Geographic and Project Base. The Company has a distribution of revenue across end-use sectors that it believes reduces its exposure to negative developments in any given sector. Currently, the Company also has significant geographical diversification across regions that are generally located in the eastern portions of the United States, again reducing its exposure to negative developments in any given region. The Company’s core market sectors consist of the following customer base with mission-critical systems:

•Healthcare, including research, acute care and inpatient hospitals for regional and national hospital groups, and pharmaceutical and biotech laboratories and manufacturing facilities;

•Industrial and manufacturing, including automotive, energy and general manufacturing plants;

•Data Centers, including facilities composed of networked computers, storage systems and computing infrastructure that organizations use to assemble, process, store and disseminate large amounts of data;

•Life sciences, including organizations and companies whose work is centered around research and development focused on living things;

•Higher Education, including both public and private colleges, universities and research centers; and

•Cultural and entertainment, including sports arenas, entertainment facilities (including casinos) and amusement rides and parks.

The Company also partners with building owners in other market sectors (infrastructure, government, hospitality and commercial). It is imperative that the partnerships formed between the Company and its building owners share in similar core values.

Investment in its Employees. Employee development underpins the Company’s efforts to execute its strategy. The Company seeks to attract and retain quality employees by providing them an enhanced career path that offers a stable income, attractive benefits packages and excellent advancement opportunities. The Company invests in its employees through safety and wellness programs, internal communication, career development training programs, recognition programs and succession planning initiatives.

Fully Integrated Operations. A core growth strategy of the Company includes offering design, construction and maintenance services for the full complement of mechanical, plumbing and electrical services in all its business units. The Company believes this combined offering is appealing to building owners who own and operate facilities with complex building systems. The Company also offers services to building owners known as MEP Prime, a service where the Company acts as the general contractor on assignments that predominantly include a heavy concentration of mechanical, electrical, plumbing and building controls systems, along with other trades such as concrete and drywall, to offer a complete service package.

Growth through Acquisitions. The Company believes that it can further increase its cash flow and operating income by acquiring strategically synergistic companies that will increase the Company’s geographic footprint, supplement the Company’s current business model, address capability gaps and enhance the breadth of its service offerings to better serve its clients. The Company has dedicated and continues to dedicate its resources to seek opportunities to acquire and integrate businesses that have attractive market positions, supports the Company ODR growth strategy, expands and/or supplements the Company’s current breadth of service offerings and is culturally compatible. See Note 3 – Acquisitions in the accompanying notes to the Company’s consolidated financial statements for further information on the Company’s most recent acquisition activity.

Acquisitions

The ACME Transaction. On July 3, 2023 (the “ACME Effective Date”), the Company, Limbach Facility Services LLC (“LFS”), a Delaware limited liability company and a wholly-owned subsidiary of the Company, and ACME Industrial Piping, LLC (“ACME”), and the owner of ACME (the “ACME Seller”) entered into a Purchase Agreement (the “ACME Purchase Agreement”) pursuant to which LFS purchased all of the outstanding equity interests in ACME from the ACME Seller (the “ACME Transaction”). The ACME Transaction closed on the ACME Effective Date. As a result of the ACME Transaction, ACME became a wholly-owned indirect subsidiary of the Company. ACME specializes in performing industrial maintenance, capital project work, and emergency services for specialty chemical and manufacturing clients, and is a leading mechanical solutions provider for hydroelectric producers. The acquisition expands the Company’s market share within its existing operating footprint, provides further exposure to an attractive customer base and supports the Company's continued ODR growth strategy.

The Industrial Air Transaction. On November 1, 2023 (the “Industrial Air Effective Date”), the Company, LFS and Industrial Air, LLC (“Industrial Air”), and the owner of Industrial Air (the “IA Seller”) entered into a Purchase Agreement (the “Industrial Air Purchase Agreement”) pursuant to which LFS purchased all of the outstanding equity interests in Industrial Air from the IA Seller (the “Industrial Air Transaction”). The Industrial Air Transaction closed on the Industrial Air Effective Date. As a result of the Industrial Air Transaction, Industrial Air became a wholly-owned indirect subsidiary of the Company. 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.

See Note 3 – Acquisitions in the accompanying notes to the Company’s consolidated financial statements for further information on the ACME Transaction and the Industrial Air Transaction.

Divestitures

Southern California Region. In February 2022, the Company announced its strategic decision to wind down its Southern California GCR and ODR operations. The decision was made to better align the Company’s customer geographic focus and to reduce losses related to unprofitable locations. During 2023, the Company executed the closeout phases on its remaining Southern California business unit projects and has fully exited the Southern California region aside from certain operational warranty obligations. However, the Company is party to the terms of a sublease agreement for its leased premises in Southern California through April 2027 and remains obligated under the original lease for such office space in the event the sublessee fails to satisfy its obligations under the sublease agreement. See Note 14 – Leases in the accompanying notes to the Company’s consolidated financial statements for further information on the Southern California Sublease.

Customers

The Company’s customer base primarily consists of building owners and their third-party representatives, general contractors and construction managers. As stated previously, one of the Company’s strategic goals relate to the continued focus on the growth of its direct relationships with building owners. The Company believes that its ODR service offerings provide a distribution channel through which it can continue to deliver an expanded offering of value-added services direct to building owners that further reinforces its value proposition and differentiated capabilities. The Company’s team members uniquely combine engineering expertise with field installation skills to provide custom solutions that leverage its full life-cycle capabilities, which allows it to address both the operational and capital projects needs of its customers. This also positions the Company to deliver additional products and services in the future. The Company maintains hundreds of building owner relationships through its contracts for program management, maintenance and critical system repairs. For the years ended December 31, 2023 and 2022, no ODR customer accounted for more than 10% of the Company’s consolidated revenue.

The Company believes it has strong relationships with many national commercial general contractors and construction managers. As one of its core risk management processes, the Company is selective in choosing to work with general contractors and construction managers that have similar core values, that have a solid payment history, that have experienced and available project management labor, and who value the Company’s services and reputation. Most of the Company’s branches also maintain strong relationships with local and regional general contractors and construction managers that fit its selection criteria. For the year ended December 31, 2023, no GCR segment customer accounted for more than 10% of the Company’s consolidated revenue. For the year ended December 31, 2022, one GCR segment customer accounted for approximately 11% of consolidated total revenue.

GCR and ODR Backlog

The Company refers to its estimated revenue on uncompleted contracts, including the amount of revenue on contracts for which work has not begun, less the revenue it had recognized under such contracts, as “backlog.” Backlog includes unexercised contract options. The Company’s backlog includes projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions. Additionally, the difference between the Company’s backlog and remaining performance obligations is due to the portion of unexercised contract options that are excluded, under certain contract types, from its remaining performance obligations as these contracts can be canceled for convenience at any time by the Company or the customer without considerable cost incurred by the customer. Additional information related to the Company’s remaining performance obligations is provided in Note 4 — Revenue from Contracts with Customers in the accompanying notes to its consolidated financial statements. See also Item 1A. “Risk Factors —Our contract backlog is subject to unexpected adjustments and cancellations and could be an uncertain indicator of our future earnings.”

The Company’s GCR backlog was $186.9 million and $302.9 million as of December 31, 2023 and 2022, respectively. Projects are brought into backlog once the Company has been provided with a written confirmation of award and the contract value has been established. At any point, the Company has a substantial volume of projects that are specifically identified and advanced in negotiations and/or documentation, however those projects are not booked as backlog until the Company has received written confirmation from the owner or the general contractor / construction manager of their intention to award the contract and they have directed the Company to begin engineering, designing, incurring construction labor costs or procuring needed equipment and material. The Company’s GCR projects tend to be built over a 12- to 24-month schedule depending upon scope and complexity. Most major projects have a preconstruction planning phase which may require months of planning before actual construction commences. The Company is occasionally employed to deliver a “fast-track” project, where construction commences as the preconstruction planning work continues. As work on the Company’s projects progress, it increases or decreases backlog to take into account its estimate of the effects of changes in estimated quantities, changes in conditions, change orders and other variations from initially anticipated contract revenue, and the percentage of completion of the Company’s work on the projects. Based on historical trends, the Company currently estimates that 83% of its GCR backlog as of December 31, 2023 will be recognized as revenue during 2024. Additionally, the reduction in GCR backlog has been intentional as the Company continues to focus on higher margin projects than historically, as well as its focus on smaller, higher margin owner direct projects.

The Company’s ODR backlog was $147.0 million and $108.2 million as of December 31, 2023 and 2022, respectively. These amounts reflect unrecognized revenue expected to be recognized over the remaining terms of the Company’s service contracts and projects. Based on historical trends, the Company estimates that 95% of its ODR backlog as of December 31, 2023 will be recognized as revenue during 2024. The Company believes its ODR backlog increased due to its continued focus on the accelerated growth of its ODR business. In addition, as of December 31, 2023, ODR backlog included approximately $1.2 million and $26.6 million of backlog associated with the operations of ACME and Industrial Air, respectively.

Competition

The mechanical, plumbing, electrical, and maintenance industry is highly competitive and the geographic markets in which the Company competes has numerous companies that provide similar services. Factors influencing the Company’s competitiveness include price, reputation for quality, ability to reduce customer costs, experience and expertise, financial strength, surety bonding capacity, knowledge of local markets and conditions, availability and experience of craft labor, and customer relationships. Competitors tend to be regional firms that vary in size and depth of resources. There are, however, significant national competitors that have greater national presence and breadth of expertise than the Company.

Materials and Equipment

The Company purchases materials, including sheet metal, steel and copper piping, electrical conduit, wire and other various materials from numerous sources. The Company also purchases equipment from various manufacturers. The price and availability of materials and equipment may vary from year to year due to market conditions and industry production capacities. Economic disruptions resulting from the coronavirus disease 2019 (“COVID-19”) pandemic, including supply chain, production, and other logistical issues, as well as escalating commodity prices, have and may continue to negatively impact the Company’s business. For example, the Company has experienced lead times significantly in excess of normal levels while also experiencing the effects of inflation through increases in fuel, material, and other commodity prices to varying degrees throughout 2021 and 2022. These disruptions escalated in 2022 and have manifested themselves most notably through project delays and reduced labor productivity and efficiency, particularly within its GCR segment. The elevated levels of cost inflation persisted throughout 2023, although at lower levels than experienced in 2022. These headwinds have been partially mitigated in 2023 by pricing actions taken in response to the inflationary cost environment, supply chain productivity improvements and cost savings initiatives. The effects of inflation also have resulted in central banks raising short-term interest rates and, as a result, the Company has experienced an increase in its interest expense in 2023. In response to these challenges, the Company continues to strive to more effectively manage its business through enhanced labor planning and project scheduling, increased pricing to the extent contractually permitted, and by leveraging the Company's relationships with its suppliers and customers. While the impacts of COVID-19 on the Company's business have moderated, there still remains uncertainty around the pandemic, its effect on labor or other macroeconomic factors, its severity and duration, the continued availability and effectiveness of vaccines and actions taken by third parties or by government authorities in response, including restrictions, laws or regulations, or other responses. Also, the ongoing conflict between Russia and Ukraine, and the sanctions imposed in response to this conflict, and the conflict in the Middle East have increased global economic and political uncertainty, and may add to these issues as described in “Item 1A. Risk Factors —Continuing worldwide political and economic uncertainties may adversely affect our revenue and profitability.” in this Annual Report on Form 10-K.

Human Capital

To ensure that the Company is well positioned to provide innovative system solutions and reliable services in a safe, efficient and responsible manner, the Company seeks to employ and retain a team of highly dedicated and accomplished people who genuinely care about the success of the Company. Creating an engaging workplace environment that provides for competitive pay and benefits, attractive career development opportunities, and a collaborative, respectful culture further enables the Company to achieve continued success.

Employees. As of December 31, 2023, the Company had approximately 1,400 employees, including approximately 400 full-time salaried employees, comprising project managers, estimators, superintendents and engineers who manage crews in its construction business and office staff. The Company also had approximately 1,000 craft employees, some of whom are represented by various labor unions. The Company believes it has a good relationship with its employees and has developed several strong partnerships with local unions to have access to an experienced, talented craft workforce.

Core Values and Core Purpose. From the technician in the field to the leadership of its business, the Company focuses on caring for people. The Company’s core purpose “is to create great opportunities for people.” The Company has implemented internal development programs, which allow it to attract and retain talent and emphasize the importance of promoting from within. The Company believes its core values reflect who it is. The Company cares about its people and believes its approach provides a competitive advantage. The Company believes it has strong employee retention rates because of its ability to hire, develop and retain top industry talent. Since 2021, the Company has reduced its salaried attrition rate by 32% through the effective implementation of human capital strategies.

The Company’s culture is driven by its Core Values:

•We CARE: We care about safety and having our employees return home injury-free every day. We care about the environment, which is why we explore the life-cycle and total cost of ownership on every project. We care about our communities, which is why we support social and community-based programs and encourage our employees to make a difference by giving back.

•We Act with INTEGRITY: Our business is driven by doing the right thing for our employees and customers. We pride ourselves on delivering on our commitments.

•We Are INNOVATIVE: To remain competitive and provide value, we continuously advance our systems and capabilities. Our engineering design and innovation center in Orlando provides best-in-class energy and engineering solutions while tracking future trends and bringing new ideas to market.

•We Are ACCOUNTABLE: We are a company with drive and discipline. We set goals and hold each other responsible for the outcomes. We utilize the Entrepreneurial Operating System as our way of managing and leading the organization for top performance.

The Company believes its employees are essential to its continued success and the Company seeks to provide every employee with the foundation and environment needed to achieve the employee’s goals. This objective begins with the Company's commitment to diversity and inclusion. We CARE, one of the Company’s Core Values, is the foundation of its efforts to create a diverse, fair and inclusive organization. Building a culture where all of its employees feel a sense of belonging is important to the Company.

In addition, the Company screens leadership hires and measures employee performance against these Core Values, and regularly measures employee engagement against these values through the Company’s annual employee engagement survey. The Company’s “We Care” survey, which has been issued for more than fifteen years, provides leadership with insights, including constructive ideas on how to improve the overall business for those who work for it.

Training and Employee Development. Investment in continuous learning is essential to providing industry-leading expertise and service to the Company’s customers, continuous improvement across its organization, and meaningful career development opportunities for its people. From in-person to online courses, formalized and other specialized training, the Company’s employees benefit from opportunities to strengthen their leadership and management competencies, improve communication and interpersonal skills, and advance their technical proficiency. The Company’s people have access to resources that include a robust learning management system that provides company-wide access for employees to a number of online learning modules and support tools. As a result of its efforts, the Company was recognized as one of the top training organizations in the world earning a Training APEX Award from Training magazine in 2023 and 2024. Additionally, the Company was recognized as a 2024 winner of the Association of Talent Development’s BEST award, which honors organizations that demonstrate enterprise-wide success as a result of employee talent development. The Company’s employees see the impact of these programs, and in 2023, its training programs averaged a participant Net Promoter Score of over 90%. The Company intends to continue to invest in additional training to support those employees directly working in customer-facing roles across the Company as it aims to grow the ODR business.

Diversity and Inclusion. The Company is committed to creating and supporting a diverse, fair and inclusive environment for its employees, We Care culture and industry as a whole. The Company believes that a diverse workforce is important to the long-term success of its business. The Company actively seeks to increase the diversity of its workforce and to practice its commitment to diversity and inclusion in hiring, development and training, which extends to its senior leadership and Board of Directors. The Company understands that diversity is truly a competitive advantage that helps drive growth and innovation.

Embrace Forum. The Company formed the Embrace Forum to continue to evolve its commitment to a culture of diversity and inclusion. This forum is composed of employees and leaders across the company who have made it their mission to maximize the potential of the Company’s employees by creating great opportunities through a diverse, fair and inclusive environment. The Embrace Forum focuses on several core areas: culture, recruitment, development, promotion and employee resource groups (“ERGs”).

The Company offers its employees the opportunity to join ERGs. These groups foster professional development, social connectivity, and celebrate diversity throughout the Company. Each year, new ERGs are evaluated for consideration. Currently, there are four active ERGs at the Company:

•Women in Construction and Service (“WICS”). The Company is committed to diversifying its workforce, promoting and supporting women within its organization to take on leadership roles, and helping encourage other women to join its industry as a whole. To support this initiative, the Company created the WICS ERG with a vision to create a culturally agile community that respects and empowers women in its company and industry.

•Unidos. Unidos is an ERG that was created to promote, empower and amplify the Hispanic culture within the Company. The mission of this ERG is to create a supportive environment for Hispanic employees and provide a more diverse and inclusive environment where everyone feels safe, respected and valued.

•Hearts & Hands. Hearts & Hands is an ERG with a core purpose of providing opportunities and encouraging employees to make a difference by giving back to communities in which the Company has an operating footprint.

•Veterans. The Veterans ERG aims to offer resources, foster camaraderie, and promote understanding among Company employees who have served in the military and those who are committed to supporting them.

In addition, to help recruit the next generation of diverse industry leaders, the Company is actively involved with the ACE Mentor Program of America, Inc. (“ACE”). ACE helps mentor high school students and inspires them to pursue careers in design and construction. It is the construction industry’s fastest-growing high school mentoring program, reaching over 8,000 students annually.

Benefits & Wellness. The Company focuses on the most crucial component for its success: its people. The Company appreciates the fact that it owes its century-old existence to employees who work hard to help the Company prosper.

As such, the Company has committed itself to the health, safety and well-being of its workers and their families. One of the ways the Company shows its commitment is through offering competitive employee compensation and benefits packages, specifically designed to meet the unique needs of each individual in its organization, which include:

•Health and Welfare Plans. All full-time employees who do not participate in union plans are offered a range of choices among medical, dental and vision plans, life, accident, dependent and disability insurance, and pre-tax health spending accounts that include employer contributions.

•Retirement Savings. The Company helps provide its employees with financial security by offering a 401(k) Savings Plan, which includes company matching contributions, and an Employee Stock Purchase Plan.

•Employee Assistance Programs. Through the Company’s Employee Assistance Program, it offers its employees, and their dependents or household members, access to services and counseling on a variety of personal, professional, legal, and financial matters, at no cost.

•Wellness Program. Consists of various activities and financial incentives intended to inspire the Company’s team towards healthy living through personal accountability.

Safety Culture. Safety is integral to the Company’s unique culture and Core Values. The Company cares about its employees and their families, and it holds each other accountable for working safely. The Company’s safety culture is based on its “Hearts and Minds Commitment to Safety” program, established in 2013 by senior staff and field professionals via its Hearts and Minds Forum. The Company’s Hearts and Minds program asks its employees to take direct responsibility for eliminating and preventing all incidents and injuries at home and in the workplace, which is done by:

•Hiring the Right People. The Company is focused on hiring qualified employees who share in its Core Values.

•Knowing the Details. Performed through thorough planning and having acute awareness of present surroundings, which aids in executing work safely.

•Engaging at All Levels. Setting a great example of completing all tasks safely, at work and at home, by everyone from company leadership to craft professional.

•Mentoring and Coaching. Acting as a mentor and coach to show team members how to practice good safety behavior.

This program helped earn the Company’s Ohio business unit the highest honor for which Occupational Safety and Health Administration (“OSHA”) can name a company; OSHA-Voluntary Protection Programs Star Site. This was the first time a union mechanical contractor has earned such an honor in the United States. The Company strives to achieve this honor at its other business units.

Seasonality

Severe weather can impact the Company’s operations. In the northern climates where it operates, and to a lesser extent the southern climates as well, severe winters can slow the Company’s productivity on construction projects, which shifts revenue and gross profit recognition to a later period. The Company’s maintenance operations may also be impacted by mild or severe weather. Mild weather tends to reduce demand for the Company’s maintenance services, whereas severe weather may increase the demand for its maintenance and time-and-materials services.

Government and Environmental Regulations

The Company is subject to various federal, state and local laws and regulations relating to the environment, including those relating to discharges to air, water and land, the handling and disposal of solid and hazardous waste, the handling of underground storage tanks and the cleanup of properties affected by hazardous substances. The Company also is subject to compliance with numerous other laws and regulations of federal, state, local agencies, and authorities, including those relating to workplace safety, wage and hour, and other labor issues (including the requirements of the Occupational Safety and Health Act and comparable state laws), immigration controls, vehicle and equipment operations and other aspects of its business. In addition, a relatively limited number of the Company’s construction contracts are entered into with public authorities, and these contracts frequently impose additional requirements, including requirements regarding labor relations and subcontracting with designated classes of disadvantaged businesses. A large portion of the Company’s business uses labor that is provided under collective bargaining agreements. As such, the Company is subject to federal laws and regulations related to unionized labor and collective bargaining (including the National Labor Relations Act).

The Company continually monitors its compliance with these laws, regulations and other requirements. While compliance with existing laws, regulations and other requirements has not materially adversely affected the Company’s operations in the past, and it is not aware of any proposed requirements that the Company anticipates will have a material impact on its operations, there can be no assurance that these requirements will not change or that compliance will not otherwise adversely affect the Company’s operations in the future. In addition, while the Company typically passes any costs of compliance on to its customers under the applicable project agreement, either directly or as part of its estimate depending on the type of contract, there can be no assurance that the Company will not incur compliance expenses in the future that materially adversely affect its results of operations. Furthermore, certain environmental laws impose substantial penalties for non-compliance and other laws, such as the federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), and comparable state laws, impose strict, retroactive, joint and several liability upon persons that contribute to the release of a “hazardous substance” into the environment. These persons include the owner or operator of the site where the release occurred and companies that disposed or arranged for the disposal of the hazardous substances found at the site.

Climate Change and Sustainability

The Company recognizes its environmental and societal responsibilities and is committed to sustainability and to improving its environmental footprint as well as operating its business in a manner that seeks to protect the health and safety of the Company’s employees and customers, as well as the public. The Company’s focus on environmental stewardship and improving productivity drives not only its efforts to become more energy efficient but also improvements in the Company’s customers’ impact on climate change. Replacing an aging building’s existing systems with modern, energy-efficient systems significantly reduces a building’s energy consumption and carbon footprint while improving cost, air quality and overall system effectiveness.

The Company is subject to the requirements of numerous federal, state and local laws, regulations and rules that promote the protection of the environment. While capital expenditures or operating costs for environmental compliance cannot be predicted with certainty, the Company does not currently anticipate that they will have a material effect on its capital expenditures or competitive position in the short term.

Available Information

The Company’s internet address is https://www.limbachinc.com. The Company makes available, free of charge, on its Internet website copies of the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the United States Securities and Exchange Commission (the “SEC”).

The content of the Company’s website is not incorporated by reference into this annual report on Form 10-K or in any other report or document it files with the SEC, and any references to the Company’s website is intended to be inactive textual references only.