Mike McCann: There’s definitely more than enough. I would tell you that we had 75% on the top five, and there’s still 25% that’s probably on the next five, 10, 15. So there’s plenty of diversity in there. But I would tell you that, to your point, just the top five has been so demanding. They want us to do so many more things that we just continue to – our strategy, I think, resonates with building owners. They understand that there’s a race right now for talent. And they need to work with us to ensure that they’re getting the same person that shows up every day, whether that’s from a management or a field perspective. And I think what’s nice too from a diversity perspective, as we add an IA, they have a whole different group of customers.
They’re really textile manufacturing type customers. So it’s another top five or 10. So we – each location of the top five or 10, there’s going to be some synergy with branch to branch or location to location. And then as we add every acquisition on, we’re adding continued customers. So the customer list continues to build. We’re always trying to force ourselves to be as disciplined as possible to make sure that we’re providing the best service to those customers.
Gerry Sweeney: Got it. So to summarize my words, your top five, I’m just making an upward number. I mean you’re looking at – you’re probably, I don’t know, 25%, 30%, 40% penetration and there’s that extra runway just to grow internally or grow with those – further with those top five.
Mike McCann: Yes, that generally makes sense, yes.
Gerry Sweeney: Got it. Switching gears to GCR. Obviously, very good margins. In the last couple of years, you’ve been less or more being very selective. How much of that is that selectivity? Are you seeing better price, lower project size, maybe just underwriting your projects to a higher degree. I’m just curious if you could bucket that out. And a follow-up to that. Is there opportunity for actually some incremental growth going forward? Because it sounded as though there’s a ton of projects out there sorry a lot there. I apologize.
Mike McCann: Sure. Yes. So the margin – there’s a number of different things, which are just driving the margin. The first one is really our ability to be selective is really driven by the fact that we’re driving sales and marketing resources towards owner-direct. So they’ll come to us and ask us, can you really do this one? I think the second thing is we’re very careful from a risk perspective right now in the CCR projects, really looking at size and duration as well as the amount of labor that we’re actually installing on those projects. So there’s definitely a very rigorous and it continues to be more rigorous. Those are really two. And then the third thing is our teams are performing really well. We’ve got a great group of teams.
And what’s nice about the staff is they’ve been able to really flex between owner-direct and GCR work. And that flexibility has been absolutely paramount to this shift happening and the continuing shift, so those are probably the three big pieces of it. From a growth perspective, we still look at it that even though it’s 12% to 15% and maybe in certain quarters, we performed better than 15%, the owner-direct still provides almost double the margin, and that’s what we’re going to continue to push towards. And just because we’re 25% to 28% doesn’t believe – there’s still future opportunity beyond that. So we’re going to continue to push towards owner direct. I think our next target is really getting to that 70%. And just time and time again is the – it looks like the right return on people and investment to make sure they’re going to the higher-margin segment.
Gerry Sweeney: Got you. That makes sense. And one more, and then I’ll jump back in line. It’s just a sort of follow-up. You talked about ODR, GCR guys being able to flex back and forth. Is that work for 100% sort of fungible between those two businesses? Or is there a certain percentage that will always sort of be in GCR and GCR will always be a component of revenue?
Mike McCann: I look at it where we have our definitions of our segments from a revenue perspective. But from the people side of it, again, it goes down to – it comes down to our people – I think sometimes it’s perceived that in the industry that there are certain people that do this work and certain people that do this work. But we found that our staff has been completely adaptable and flexible, and that’s allowed somebody who’s worked in a large project the ability to be working at a facility every day as an account manager. So it’s been a big shift. It’s a big evolution. But we have great people that are really looking to provide value to customers and that the ability to flex has been paramount.
Gerry Sweeney: Got it, super helpful. I appreciate it. Thank you.
Mike McCann: Thank you, Gerry.
Operator: Thank you. That concludes our question-and-answer session. I’ll turn the floor back to management for any final comments.
A – Mike McCann: Thank you, everyone, for your continued interest in Limbach. If you have any additional questions, please reach out to Jeremy Hellman of the Equity Group. Thank you, everyone. Have a great day.
Operator: Thank you. This concludes today’s conference call. You may disconnect your lines at this time. Thank you for your participation.
