Limbach Holdings, Inc. (LMB): Greenhaven Road Loves This ‘Boring’ Company

Limbach Holdings, Inc. (NASDAQ:LMB) is one of the top five positions of Greenhaven Road Capital, a long-biased, concentrated hedge fund. Limbach is a Pittsburgh-based mechanical and electrical contractor, with a market cap of over $103 million. Greenhaven Road recently published its Q3 investor letter (a copy of which can be download here) in which the hedge fund discussed its investment thesis on Limbach,  Etsy Inc., TripAdvisor, and Fiat Chrysler Automobiles. In this article, we will take a look at comments made by Greenhaven Road’s Scott Miller about Limbach.

Here is what Miller said:

This “boring” company had another boring quarter of improved revenue, margins, and backlog. Over time we have a reasonable chance at revenue growth, margin expansion, and multiple expansion since the company trades at a discount to its peers. Interestingly, one of Limbach’s board members joined the management team as EVP of M&A and Capital Markets this quarter. The company’s long-term success will ultimately be driven by organic growth and customer satisfaction. There is, however, the opportunity for acquisitions in neighboring geographies as well as adjacent service offerings such as fire and electrical. This hire brings us one step closer.

Based in Pittsburgh, Pa., Limbach Holdings, Inc. (NASDAQ:LMB) is a mechanical systems solutions firm that focuses on building owners in the private, not-for-profit and public/government sectors. The company operates from 10 business units throughout the United States: Western Pennsylvania (Pittsburgh), Eastern Pennsylvania (Warrington), New Jersey (South Brunswick), New England (Wilmington, Mass.), Ohio (Columbus and Athens), Michigan (Pontiac and Lansing), Southern California (Seal Beach), and Mid-Atlantic (Laurel, Maryland).

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For the quarter ended June 30, Limbach reported revenues of $117.8 million, up 21.9% compared to $96.6 million for the same quarter last year. Its net income was $0.4 million versus $2.0 million for the same quarter in 2016. The company’s operating income dropped to $1.7 million compared to $2.9 million a year ago, primarily due to increased selling, general and administrative expenses. Gross margin for the quarter was 13.2% versus 13.6% in 2016. At June 30, Limbach had current assets of $137.4 million and current liabilities of $110.2 million, representing a current ratio of 1.25x.

Shares of Limbach Holdings, Inc. (NASDAQ:LMB) are down 2.13% this year. During the last 12 months, the stock has tumbled more than 13%. However, LMB has jumped over 14% in the last three months.

Limbach isn’t a popular stock among the hedge funds covered by Insider Monkey. There were only four funds in our database with positions in the company.

Disclosure: none