Limbach Holdings Inc

Previous wording

The Company is a building systems solution firm that partners with building owners and facilities managers who have mission critical mechanical (heating, ventilation and 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 has more than 1,300 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.

Current wording

The Company is a building systems solution firm that partners with building owners and facilities managers who have mission critical mechanical (heating, ventilation and 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 has more than 1,200 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.

Previous wording

During 2023, the Company acquired two companies for total consideration of $15.3 million, net of cash acquired and inclusive of certain measurement period adjustments. On July 3, 2023, the Company completed an acquisition of Chattanooga, TN-based specialty industrial contractor, ACME, for a purchase price at closing of $5.0 million in cash. The transaction also provides for an earnout of up to $2.5 million potentially being paid out over the next two years. 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. On November 1, 2023, the Company completed an acquisition of Greensboro, NC-based specialty mechanical contractor, Industrial Air, for a purchase price at closing of $13.5 million in cash. The transaction also provides for an earnout of up to $6.5 million potentially being paid out over the next two years. 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.

Current wording

During 2023, the Company acquired two companies for total cash consideration of $15.3 million, net of cash acquired and inclusive of certain measurement period adjustments. On July 3, 2023, the Company completed an acquisition of Chattanooga, TN-based specialty industrial contractor, ACME, for a purchase price at closing of $5.0 million in cash. The transaction also provides for an earnout of up to $2.5 million potentially being paid out over the next two years. 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. On November 1, 2023, the Company completed an acquisition of Greensboro, NC-based specialty mechanical contractor, Industrial Air, for a purchase price at closing of $13.5 million in cash. The transaction also provides for an earnout of up to $6.5 million potentially being paid out over the next two years. 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.

Previous wording

The Company manages and measures the performance of its business in two operating segments: GCR and ODR. These segments are reflective of how the Company’s CODM reviews operating results for the purposes of allocating resources and assessing performance. The Company's CODM comprises its President and Chief Executive Officer and Executive Vice President and Chief Financial Officer.

Current wording

The Company manages and measures the performance of its business in two operating segments: ODR and GCR. These segments are reflective of how the Company’s CODM reviews operating results for the purposes of allocating resources and assessing performance. The Company's CODM comprises its President and Chief Executive Officer and Executive Vice President and Chief Financial Officer.

Previous wording

(3)Included within selling, general and administrative expenses was $1.2 million and $1.1 million of stock based compensation expense for the three months ended March 31, 2024 and 2023, respectively.

Current wording

(3)Included within selling, general and administrative expenses was $1.5 million and $1.1 million of stock-based compensation expense for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

Revenue for the three months ended March 31, 2024 decreased by $2.0 million compared to the three months ended March 31, 2023. ODR revenue increased by $15.5 million, or 26.5%, while GCR revenue decreased by $17.6 million, or 28.2%. The increase in period over period ODR segment revenue was primarily due to the Company's continued focus on the accelerated growth of its ODR business and as a result of the ACME and Industrial Air transactions. These entities were not acquired entities of the Company for the three months ended March 31, 2023.

Current wording

Revenue for the three months ended June 30, 2024 decreased by $2.6 million compared to the three months ended June 30, 2023. ODR revenue increased by $24.0 million, or 40.8%, while GCR revenue decreased by $26.6 million, or 40.3%. The increase in period-over-period ODR segment revenue was primarily due to the Company's continued focus on the accelerated growth of its ODR business and as a result of the ACME and Industrial Air transactions. These entities were not acquired entities of the Company for the three months ended June 30, 2023. The decrease in period-over-period GCR segment revenue was primarily due to the Company’s continued focus on the execution of its mix-shift strategy to ODR.

Previous wording

The Company's gross profit for the three months ended March 31, 2024 increased by $4.9 million compared to the three months ended March 31, 2023. ODR gross profit increased $6.3 million, or 39.3%, due to the combination of an increase in revenue and higher margins driven by contract mix. GCR gross profit decreased $1.4 million, or 13.5%, primarily due to lower revenue despite higher margins on project work period over period. The total gross profit percentage increased from 21.7% for the three months ended March 31, 2023 to 26.1% for the same period ended in 2024, mainly driven by the mix of higher margin ODR segment work, becoming more selective when pursuing GCR work, and as a result of the ACME and Industrial Air transactions. These entities were not acquired entities of the Company for the three months ended March 31, 2023.

Current wording

The Company's gross profit for the three months ended June 30, 2024 increased by $5.0 million compared to the three months ended June 30, 2023. ODR gross profit increased $8.1 million, or 47.1%, due to the combination of an increase in revenue and higher margins driven by contract mix. GCR gross profit decreased $3.1 million, or 27.7%, primarily due to lower revenue despite higher margins on project work period-over-period. The total gross profit percentage increased from 22.8% for the three months ended June 30, 2023 to 27.4% for the same period ended in 2024, mainly driven by the mix of higher margin ODR segment work, the Company becoming more selective when pursuing GCR work, and as a result of the ACME and Industrial Air transactions. These entities were not acquired entities of the Company for the three months ended June 30, 2023.

Previous wording

The Company recorded revisions in its contract estimates for certain ODR and GCR projects. During the three months ended March 31, 2024, the Company recorded material gross profit write-ups on two ODR projects for a total of $2.0 million that had a net gross profit impact of $0.5 million or more. There were no material gross profit write-downs recognized during the three months ended March 31, 2024. During the three months ended March 31, 2023, the Company did not record any material gross profit write-ups or write-downs that had a net gross profit impact of $0.5 million or more.

Current wording

The Company recorded revisions in its contract estimates for certain ODR and GCR projects. During the three months ended June 30, 2024, the Company recorded material gross profit write-ups on two ODR projects and two GCR projects for a total of $1.5 million and $1.5 million, respectively, that had a net gross profit impact of $0.5 million or more. During the three months ended June 30, 2023, the Company did not record any material gross profit write-ups or write-downs that had a net gross profit impact of $0.5 million or more.

Previous wording

The Company's SG&A expense for the three months ended March 31, 2024 increased by approximately $1.8 million compared to the three months ended March 31, 2023. The increase in SG&A expense was primarily due to approximately $1.1 million of SG&A expenses incurred within the ACME and Industrial Air entities during the three months ended March 31, 2024 that were not acquired entities of the Company during the three months ended March 31, 2023. The Company’s SG&A expense for the three months ended March 31, 2024 also increased due to a $0.4 million increase in professional fees, a $0.3 million increase in travel and entertainment expenses and a $0.2 million increase associated with payroll related expenses. As a result of these factors, SG&A expense as a percentage of revenue increased to 19.2% for the three months ended March 31, 2024 as compared to 17.4% for the three months ended March 31, 2023.

Current wording

The Company's SG&A expense for the three months ended June 30, 2024 increased by approximately $2.8 million compared to the three months ended June 30, 2023. The increase in SG&A expense was primarily due to approximately $1.5 million of collective SG&A related expenses incurred within the ACME and Industrial Air entities during the three months ended June 30, 2024 that were not acquired entities of the Company during the three months ended June 30, 2023. The Company’s SG&A expense for the three months ended June 30, 2024 also increased due to a $1.7 million increase in payroll related expenses, a $0.4 million increase in stock-based compensation expenses and a $0.2 million increase in travel and entertainment expenses. Partly offsetting the increase in SG&A expense was a $0.6 million decrease related to professional services fees. As a result of these factors, SG&A expense as a percentage of revenue increased to 19.0% for the three months ended June 30, 2024 as compared to 16.3% for the three months ended June 30, 2023.

Previous wording

The change in fair value of the Earnout Payments contingent consideration was a $0.6 million and a $0.1 million loss for the three months ended March 31, 2024 and 2023, respectively. These increases to the contingent liability were primarily attributable to the timing component and probability of meeting the gross profit margins associated with the contingent consideration arrangements as of March 31, 2024 and 2023.

Current wording

The change in fair value of the Earnout Payments contingent consideration was a $1.1 million and a $0.2 million loss for the three months ended June 30, 2024 and 2023, respectively. These increases to the contingent liability were primarily attributable to the timing component and probability of meeting the gross profit margins associated with the contingent consideration arrangements as of June 30, 2024 and 2023. See Note 8 – Fair Value Measurements in the accompanying notes to the Company’s condensed consolidated financial statements for further information on the Company's earnout arrangements.

Previous wording

Total amortization expense for the three months ended March 31, 2024 and 2023 was $1.1 million and $0.4 million, respectively. As a result of the ACME and Industrial Air transactions, the Company acquired certain intangible assets in which it recognized approximately $0.8 million of amortization expense for the three months ended March 31, 2024. See Note 5 - Goodwill and Intangible Assets for further information on the Company's intangible assets.

Current wording

Total amortization expense for the three months ended June 30, 2024 and 2023 was $1.0 million and $0.4 million, respectively. As a result of the ACME and Industrial Air transactions, the Company acquired certain intangible assets in which it recognized approximately $0.8 million of amortization expense for the three months ended June 30, 2024. See Note 5 - Goodwill and Intangible Assets for further information on the Company's intangible assets.

Previous wording

Total other income for the three months ended March 31, 2024 was $0.7 million as compared to total other expenses of $1.0 million for the three months ended March 31, 2023. The increase in total other income (expenses) was primarily driven by a $0.6 million increase in interest income related to the Company's overnight repurchase agreements, investments in U.S. Treasury Bills and money market funds. Interest expense for the three months ended March 31, 2024 and 2023 decreased by $0.2 million, which was the result of lower overall outstanding debt balance period-over-period. In addition, during the three months ended March 31, 2024, the Company recognized a gain of $0.5 million related to the sale of certain property and equipment compared to a $0.2 million loss recognized in 2023.

Current wording

Total other income for the six months ended June 30, 2024 was $0.9 million as compared to total other expenses of $1.2 million for the six months ended June 30, 2023. The change period-over-period was primarily driven by a $0.9 million increase in interest income related to the Company's overnight repurchase agreements, investments in U.S. Treasury Bills and money market funds and a $0.3 million decrease in interest expense, which was the result of lower overall outstanding debt. In addition, during the six months ended June 30, 2024, the Company recognized a gain of $0.6 million related to the sale of certain property and equipment compared to a less than $0.1 million loss recognized in 2023.

Previous wording

The Company recorded an income tax benefit of $0.3 million for the three months ended March 31, 2024 compared to an income tax provision of $0.6 million for the three months ended March 31, 2023. The effective tax rate was (4.5)% and 17.2% for the three months ended March 31, 2024 and 2023, respectively. The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate period over period was primarily due to state income taxes, tax credits, other permanent adjustments and discrete tax items. In particular, the Company’s effective rate for the quarters ended March 31, 2024 and 2023 are materially impacted by “excess tax benefits on stock-based compensation” recognized discretely during the quarter. This benefit reduced the effective tax rate by 35.1% and 10.2% for the three months ended March 31, 2024 and 2023 respectively, with the impact varying in prior years. The increase in the 2024 effective rate reduction is primarily related to the higher stock price of the Company resulting in increased tax deductions for the Company upon vesting.

Current wording

The Company recorded an income tax provision of $2.1 million for the six months ended June 30, 2024 compared to $2.6 million for the six months ended June 30, 2023. The effective tax rate was 13.2% and 24.2% for the six months ended June 30, 2024 and 2023, respectively. The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate period-over-period was primarily due to state income taxes, tax credits, other permanent adjustments and discrete tax items. In particular, the Company’s effective rate for the six months ended June 30, 2024 and 2023 were materially impacted by “excess tax benefits on stock-based compensation” recognized discretely during the first quarter of each year. This benefit reduced the effective tax rate by 35.1% and 10.2% for the three months ended March 31, 2024 and 2023 respectively, with the impact varying in prior years. The increase in the 2024 effective rate reduction is primarily related to the higher stock price of the Company resulting in increased tax deductions for the Company upon vesting of equity incentive awards.

Previous wording

The Company's ODR backlog as of March 31, 2024 was $158.8 million compared to $147.0 million at December 31, 2023. These amounts reflect unrecognized revenue expected to be recognized over the remaining terms of our service contracts and projects. Based on historical trends, the Company currently estimates that 92% of its ODR backlog as of March 31, 2024 will be recognized as revenue over the remainder of 2024. The Company believes its ODR backlog increased due to its continued focus on the accelerated growth of its ODR business.

Current wording

The Company's ODR backlog as of June 30, 2024 was $177.7 million compared to $147.0 million at December 31, 2023. These amounts reflect unrecognized revenue expected to be recognized over the remaining terms of our service contracts and projects. Based on historical trends, the Company currently estimates that 80% of its ODR backlog as of June 30, 2024 will be recognized as revenue over the remainder of 2024. The Company believes its ODR backlog increased due to its continued focus on the accelerated growth of its ODR business.

Previous wording

In addition, the Company's GCR backlog as of March 31, 2024 was $163.0 million compared to $186.9 million at December 31, 2023. Projects are brought into backlog once the Company has been provided a written confirmation of award and the contract value has been established. At any point in time, 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 GC/CM of their intention to award the Company 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 68% of its GCR backlog as of March 31, 2024 will be recognized as revenue over the remainder of 2024. Additionally, the reduction in GCR backlog has been intentional as the Company looks to focus on higher margin projects than historically, as well as its focus on smaller, higher margin owner direct projects.

Current wording

In addition, the Company's GCR backlog as of June 30, 2024 was $151.6 million compared to $186.9 million at December 31, 2023. Projects are brought into backlog once the Company has been provided a written confirmation of award and the contract value has been established. At any point in time, 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 GC/CM of their intention to award the Company 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 60% of its GCR backlog as of June 30, 2024 will be recognized as revenue over the remainder of 2024. Additionally, the reduction in GCR backlog has been intentional as the Company looks to focus on higher margin projects than historically, as well as its focus on smaller, higher margin owner direct projects.

Previous wording

Although the Company has been experiencing strong demand, certain events continue to impact its business, including global economic conditions, the inflationary cost environment, elevated labor costs and disruption in its supply chain. The Company continued to experience elevated levels of cost inflation during 2023, which has continued into 2024, although at lower levels than experienced in 2023. 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, which have remained at increased levels. Therefore, the Company has continued to experience an elevation in its interest expense relative to its outstanding borrowings. Also, the ongoing conflict between Russia and Ukraine, and the sanctions imposed in response to this conflict, have increased global economic and political uncertainty and the conflict in the Middle East may add to these issues.

Current wording

Although the Company has been experiencing strong demand, certain events continue to impact its business, including global economic conditions, the inflationary cost environment, elevated labor costs and disruption in its supply chain. The Company continued to experience elevated levels of cost inflation during 2023, which has continued into 2024, although at lower levels than experienced in 2023. These headwinds have been partially mitigated in 2023 and 2024 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, which have remained at increased levels. Therefore, the Company has continued to experience an elevation in its interest expense relative to its outstanding borrowings. Also, the ongoing conflict between Russia and Ukraine, and the sanctions imposed in response to this conflict, have increased global economic and political uncertainty and the conflict in the Middle East may add to these issues.

Previous wording

In focusing on improved profitability and generating quality growth in its operation, the Company has dedicated and continues to dedicate, its resources toward the growth of its ODR segment as the scope of services provided within the Company’s ODR segment typically yield higher margins when compared to its GCR segment work. During fiscal year 2023, the Company eclipsed its ODR-related revenue target, generating a 50/50 segment revenue mix. For 2024, the Company reaffirms its focus 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 believes it maintains a disciplined approach, capable of providing a full life-cycle of engineered solutions and craft expertise enabling it to be a one-stop-shop for building owners to maximize their investments in their mission-critical assets. In addition, the Company continues 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 clients. 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. 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.

Current wording

In focusing on improved profitability and generating quality growth in its operation, the Company has dedicated and continues to dedicate, its resources toward the growth of its ODR segment as the scope of services provided within the Company’s ODR segment typically yield higher margins when compared to its GCR segment work. During fiscal year 2023, the Company eclipsed its ODR-related revenue target, generating a 50/50 segment revenue mix. For 2024, the Company reaffirms its focus 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 believes it maintains a disciplined approach, capable of providing a full life-cycle of engineered solutions and craft expertise enabling it to be a one-stop-shop for building owners to maximize their investments in their mission-critical assets. In addition, the Company continues 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 clients. 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 enhanced its capabilities and the Company believes its investments and efforts have provided customer value and stimulated growth. 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.

Previous wording

The Company's existing current backlog is projected to provide substantial coverage of forecasted GCR revenue for one year from the date of the financial statement issuance. The Company's current cash balance, together with cash it expects to generate from future operations along with borrowings available under its credit facility, are expected to be sufficient to finance its short- and long-term capital requirements (or meet working capital requirements) for at least the next twelve months. In addition to the future operating cash flows of the Company, along with its existing borrowing availability and access to financial markets, the Company currently believes it will be able to meet any working capital and future operating requirements, and capital investment forecast opportunities for at least the next twelve months.

Current wording

The Company's existing current backlog is projected to provide substantial coverage of forecasted revenue for one year from the date of the financial statement issuance. The Company's current cash balance, together with cash it expects to generate from future operations along with borrowings available under its credit facility, are expected to be sufficient to finance its short- and long-term capital requirements (or meet working capital requirements) for at least the next twelve months. In addition to the future operating cash flows of the Company, along with its existing borrowing availability and access to financial markets, the Company currently believes it will be able to meet any working capital and future operating requirements, and capital investment forecast opportunities for at least the next twelve months.

Previous wording

Cash Flows (Used in) Provided by Operating Activities

Current wording

Cash Flows Provided by Operating Activities

Previous wording

The following is a summary of the significant (uses) sources of cash from operating activities:

Current wording

The following is a summary of the significant sources (uses) of cash from operating activities:

Previous wording

During the three months ended March 31, 2024, the Company used $3.9 million in cash for its operating activities, which consisted of cash used in working capital of $16.2 million, partly offset by non-cash adjustments of $4.7 million (primarily depreciation and amortization, stock-based compensation expense, operating lease expense and the change in fair value of contingent consideration) and net income for the period of $7.6 million. During the three months ended March 31, 2023, the Company generated $9.4 million from its operating activities, which consisted of cash provided by working capital of $1.8 million, $4.6 million of non-cash adjustments (primarily depreciation and amortization, stock-based compensation expense, operating lease expense and the change in fair value of contingent consideration) and net income for the period of $3.0 million.

Current wording

During the six months ended June 30, 2024, the Company generated $12.6 million in cash for its operating activities, which consisted of net income of $13.5 million and certain non-cash adjustments of $11.4 million (primarily depreciation and amortization, stock-based compensation expense, operating lease expense and the change in fair value of contingent consideration), partly offset by cash used in working capital of $12.4 million. During the six months ended June 30, 2023, the Company generated $26.3 million from its operating activities, which consisted of cash provided by working capital of $9.4 million, $8.6 million of non-cash adjustments (primarily depreciation and amortization, stock-based compensation expense, operating lease expense and the change in fair value of contingent consideration) and net income for the period of $8.3 million.

Previous wording

The decrease in operating cash flows during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily attributable to a $22.7 million period-over-period cash outflow related to the change in accounts receivable, which was due to the timing of cash receipts. This cash outflow was partially offset by a $5.4 million cash inflow period-over-period related to the aggregate change in our contract assets and liabilities and a $0.9 million change in accounts payable, including retainage. The increase in the Company's overbilled position was due to the timing of contract billings and the recognition of contract revenue, as well as the successful resolution of certain outstanding claims. The cash inflow associated with the Company's accounts payable was due to the timing of cash payments.

Current wording

The decrease in operating cash flows during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily attributable to a $36.6 million period-over-period cash outflow related to the change in accounts receivable, which was due to the timing of cash receipts. This cash outflow was partially offset by a $6.3 million cash inflow period-over-period related to the aggregate change in our contract assets and liabilities and a $9.6 million change in accounts payable, including retainage. The increase in the Company's overbilled position was due to the timing of contract billings and the recognition of contract revenue, as well as the successful resolution of certain outstanding claims. The cash inflow associated with the Company's accounts payable was due to the timing of cash payments.

Previous wording

Cash flows used in investing activities were $2.0 million and $0.8 million for the three months ended March 31, 2024 and 2023, respectively. Cash used in investing activities for the three months ended March 31, 2024 included $2.5 million, which was primarily associated with the purchase of certain rental equipment to expand customer service offerings, partially offset by $0.6 million in proceeds from the sale of property and equipment. For the three months ended March 31, 2023, $0.9 million was used to purchase property and equipment, partially offset by $0.1 million in proceeds from the sale of property and equipment.

Current wording

Cash flows used in investing activities were $5.2 million and $1.2 million for the six months ended June 30, 2024 and 2023, respectively. Cash used in investing activities for the six months ended June 30, 2024 included a $5.8 million cash outflow related to the purchase of property and equipment, which was primarily associated with the purchase of certain rental equipment to expand customer service offerings, partially offset by $0.6 million in proceeds from the sale of property and equipment. For the six months ended June 30, 2023, $1.5 million was used to purchase property and equipment, which was partially offset by $0.3 million in proceeds from the sale of property and equipment.

Previous wording

Aside from the rental equipment purchased during the first quarter of 2024, the majority of the Company's cash used for investing activities in both periods was for capital additions pertaining to tools and equipment, computer software and hardware purchases, office furniture and office related leasehold improvements.

Current wording

Aside from the rental equipment purchased during the first half of 2024, the majority of the Company's cash used for investing activities in both periods was for capital additions pertaining to tools and equipment, computer software and hardware purchases, office furniture and office related leasehold improvements.

Previous wording

Cash flows used in financing activities were $5.7 million for the three months ended March 31, 2024 compared to $3.2 million for the three months ended March 31, 2023. During the three months ended March 31, 2024, the Company paid approximately $5.2 million in taxes related to net share settlement of equity awards and $0.7 million for payments on finance leases. These cash financing outflows were partially offset by $0.2 million associated with proceeds from contributions to the ESPP.

Current wording

Cash flows used in financing activities were $7.6 million for the six months ended June 30, 2024 compared to $15.2 million for the six months ended June 30, 2023. During the six months ended June 30, 2024, the Company paid approximately $5.2 million in taxes related to the net share settlement of equity awards, $1.4 million for payments on finance leases and made a $3.0 million payment to the former owners of JMLLC and CSLLC related to the 2023 Earnout Period, of which $1.3 million was recognized as a cash outflow from financing activities. These cash financing outflows were partially offset by $0.3 million associated with proceeds from employee contributions to the ESPP.

Previous wording

For the three months ended March 31, 2023, the Company made A&R Wintrust Term Loan principal payments of $1.9 million, consisting of monthly installment payments of $0.6 million, $0.8 million in taxes related to net share settlement of equity awards and $0.6 million for payments on finance leases, partially offset by $0.2 million associated with proceeds from contributions to the ESPP.

Current wording

For the six months ended June 30, 2023, as a result of the execution of the Second A&R Wintrust Credit Agreement, the Company paid off the remaining principal portion of the A&R Wintrust Term Loan of $19.0 million. Prior to the termination of the A&R Wintrust Term Loan, the Company made principal payments of $2.4 million, consisting of monthly installment payments of $0.6 million. In addition, the Company paid approximately $0.8 million in taxes related to net share settlement of equity awards, $1.3 million for payments on finance leases and made a $3.0 million payment to the former owners of JMLLC and CSLLC related to the 2022 Earnout Period, of which $1.7 million was recognized as a cash outflow from financing activities. These cash financing outflows were partially offset by $10.0 million in proceeds from borrowings under the Second A&R Wintrust Revolving Loan and $0.2 million associated with proceeds from contributions to the ESPP.

Previous wording

Management continued to devote additional resources to its billing and collection efforts during the three months ended March 31, 2024. Management continues to expect that growth in our ODR business, which is less sensitive to the cash flow issues presented by large GCR projects, should positively impact our cash flow trends.

Current wording

Management continued to devote additional resources to its billing and collection efforts during the six months ended June 30, 2024. Management continues to expect that growth in our ODR business, which is less sensitive to the cash flow issues presented by large GCR projects, should positively impact our cash flow trends.

Previous wording

Provided that the Company’s lenders continue to provide working capital funding, the Company believes based on its current forecast that its current cash and cash equivalents of $48.2 million as of March 31, 2024, cash payments to be received from existing and new customers, and availability of borrowing under the Second A&R Wintrust Revolving Loan (pursuant to which we had $34.8 million of availability as of March 31, 2024) will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months.

Current wording

Provided that the Company’s lenders continue to provide working capital funding, the Company believes based on its current forecast that its current cash and cash equivalents of $59.5 million as of June 30, 2024, cash payments to be received from existing and new customers, and availability of borrowing under the Second A&R Wintrust Revolving Loan (pursuant to which we had $35.7 million of availability as of June 30, 2024) will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months.

Previous wording

In connection with its business, the Company is occasionally required to provide various types of surety bonds that provide an additional measure of security to its customers for its performance under certain government and private sector contracts. The Company’s ability to obtain surety bonds depends upon its capitalization, working capital, past performance, management expertise and external factors, including the capacity of the overall surety market. Surety companies consider such factors in light of the amount of the Company’s backlog that it has currently bonded and their current underwriting standards, which may change from time-to-time. The bonds, if any, the Company provides typically reflect the contract value. As of March 31, 2024 and December 31, 2023, the Company had approximately $90.0 million and $90.9 million in surety bonds outstanding, respectively. The Company believes that its $800.0 million bonding capacity provides us with a significant competitive advantage relative to many of our competitors which we believe have limited bonding capacity. See Note 13 for further discussion.

Current wording

In connection with its business, the Company is occasionally required to provide various types of surety bonds that provide an additional measure of security to its customers for its performance under certain government and private sector contracts. The Company’s ability to obtain surety bonds depends upon its capitalization, working capital, past performance, management expertise and external factors, including the capacity of the overall surety market. Surety companies consider such factors in light of the amount of the Company’s backlog that it has currently bonded and their current underwriting standards, which may change from time-to-time. The bonds, if any, the Company provides typically reflect the contract value. As of June 30, 2024 and December 31, 2023, the Company had approximately $79.2 million and $90.9 million in surety bonds outstanding, respectively. The Company believes that its $800.0 million bonding capacity provides us with a significant competitive advantage relative to many of our competitors which we believe have limited bonding capacity. See Note 13 for further discussion.