Limbach Holdings, Inc. Stock

Good morning, and welcome to the Limbach Holdings Second Quarter 2026 Earnings Conference Call and Webcast. [Operator Instructions]. I will now turn the conference over to your host, Lisa Fortuna of Financial Profiles. You may begin.

Good morning, and thank you for joining us today to discuss Limbach Holdings' financial results for the second quarter of 2026. Yesterday, Limbach issued its earnings release and filed its Form 10-Q for the period ended June 30, 2026. Both documents as well as the updated investor presentation are available on the Investor Relations section of the company's website at limbachinc.com.

Management may refer to select slides during today's call and encourages investors to review the presentation in its entirety. On today's call are Michael McCann, President and Chief Executive Officer; and Jayme Brooks, Executive Vice President and Chief Financial Officer. We will begin with prepared remarks and then open the call to questions. Before we begin, I would like to remind you that today's comments will include forward-looking statements under federal securities laws.

Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate or other comparable words and phrases. Statements that are not historical facts such as those about expected financial performance are also forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements. A discussion of the factors that could cause a material difference in the company's results compared to these forward-looking statements is contained in Limbach's SEC filings, including reports on Form 10-K and 10-Q.

Please note on today's call, we will be referring to some non-GAAP measures. You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our second quarter 2026 earnings release and in our presentation, both of which can be found on Limbach's Investor Relations website and have been furnished in the Form 8-K filed with the SEC.

With that, I'll now turn the call over to President and CEO, Mike McCann.

Good morning, and thank you for joining us. Yesterday, we reported our second quarter results as well as the acquisition of CYMCOR. Our results fell short of expectations, driven by project timing and ongoing softness in healthcare and institutional markets from elevated price sensitivity and market conditions pressuring gross margins. However, underlying customer demands remained healthy.

We generated $182 million of bookings during the quarter, our third consecutive quarter of strong bookings, bringing the total bookings over the past 3 quarters to $616 million. While these market conditions have created near-term pressure, they also underscore the importance of building a more diversified, higher-quality business, and we are taking action. Our focus is diversifying our end markets, expanding our geographic reach and leveraging our integrated platform in an effort to improve profitability.

Moving on to strategy. For the past 5 years, we transformed Limbach. Today, that work allows us to shift from transformation to disciplined growth. Our objective now is to build a larger company with strong cash generation and higher returns over time. First, we are accelerating our efforts for expansion in data centers and industrial manufacturing, building a national platform that mirrors the success we've achieved in our national healthcare platform. By diversifying our exposure across multiple attractive end markets, we believe we will reduce our reliance on any single vertical, better balance the business through market cycles and create a more resilient platform for long-term growth.

Second, we continue to pursue a disciplined acquisition strategy that expands our presence in targeted vertical markets, while extending our reach into attractive high-growth regions such as Texas, the Midwest and the Southeast. By broadening both our market and geographic exposure, we believe we're able to support customers across more locations, reducing concentration risk and strengthening our competitive position.

Additionally, our acquisition philosophy is not built around buying fully optimized businesses. We're looking for companies with strong customer relationships and attractive strategic positions where we believe Limbach's integrated operating model can create additional value over time. We've already seen that approach produce positive results with Pioneer Power, where we've seen encouraging improvement in gross margin, approximately 1.5% from the first half of 2026 compared to when we acquired Pioneer Power in July of 2025.

We believe each acquisition strengthens the economics of the entire platform because it expands customer relationships, increases cross-selling opportunities, broadens our geographic reach and enhances the value of our integrated operating model. Third, we are leveraging our integrated operating model to connect capabilities across geographies and service lines, accelerating cross-selling opportunities and improving profitability. We believe our work at Pioneer Power demonstrates how disciplined integration and operational improvements can create meaningful value over time, as we just noted.

This integrated operating model also drives value creation from our acquisitions. For example, our target operational and pricing actions are underway in an effort to improve Pioneer Power's profitability and bring gross profit margin in line with the company average over the next 2 to 3 years. We have a clear road map to improve results. By executing this plan, we expect to build a more resilient business with a broader set of growth drivers and less exposure to any single market and higher margins.

Execution of these strategic initiatives expands our national footprint, strengthens customer relationships and increases the scale advantages of our platform. It should strengthen our purchasing power, national account capabilities, operating leverage and our ability to allocate capital efficiently. We believe these advantages will compound over time, creating a larger, higher-quality business with more durable earnings and a stronger long-term shareholder value.

Importantly, our balance sheet and liquidity provides us with the flexibility to execute this strategy in a disciplined manner. Yesterday's acquisition of CYMCOR is an excellent example of our disciplined approach to capital allocation and drives 3 of our strategic initiatives I've been describing. This acquisition expands Limbach's geographic footprint, enhances the ability to serve national and multisite data center customers and increases engagement with building owners early in the facility life cycle.

Equally important, with our integrated operating model, it creates significant cross-selling and pull-through project booking opportunities by connecting complementary service offerings across both organizations, expanding access to new data center customers and generating additional growth within Limbach's existing markets. Through its national program management services, CYMCOR currently oversees project budgets for customers that have a cumulative value exceeding $8 billion.

We believe this early engagement with customers will create meaningful opportunities for Limbach to provide engineering, construction, commissioning, maintenance and other life cycle services. We have confidence in the acquisition of CYMCOR as its business model closely mirrors Limbach's proven healthcare program management platform, which we expect will provide us the ability to drive value in the data center mission-critical market.

Over the last 12 months, our healthcare program management platform generated approximately $3 million of professional service revenue and pulled through approximately $60 million of project bookings, resulting in 20x pull-through multiple. Looking forward, we currently expect CYMCOR to generate $12 million of program management revenue and $4 million of adjusted EBITDA in 2027.

Moving on to our verticals. Healthcare, while at a macro level, healthcare spending remains pressured by budget constraints and delayed decision-making, we continue to strengthen our position by engaging earlier with national customers on facility planning and long-term capital programs. Those relationships continue to generate larger, more strategic opportunities over time.

Industrial, the demand in our industrial markets remain strong and increasingly complement our data center strategy as both are benefiting from sustained investment in power, manufacturing and mission-critical infrastructure. Lastly, data centers. We continue to view data centers as an attractive long-term growth opportunity. We are steadily investing in the capabilities, customer relationships and professional services platform necessary to establish Limbach as a trusted long-term partner.

Before I turn the call over to Jayme, let me close by putting today's results into a broader context of where we're taking Limbach. Despite our near-term challenges, we remain confident in Limbach's long-term direction and our ability to generate shareholder value. We believe the actions we're taking from investing in our national platform to expanding our capabilities through disciplined acquisitions like CYMCOR are building a stronger, more diversified, higher-quality company with greater long-term earnings power.

Our strategy is straightforward: broaden our geographic reach, deepen customer relationships, expand into attractive end markets and leverage our integrated operating model to create a business that generates higher returns and compound value over time. We've adjusted our expectations to reflect the business environment as we see it today. We believe our responsibility is straightforward: execute against the plan, continue allocating capital with discipline and build a business that is stronger, more valuable. We understand that execution is one of our most important measures of success, and we are focused on providing continued and better execution.

With that, I'll turn the call over to Jayme to review our financial results and updated outlook.

Thank you, Mike. Our Form 10-Q and earnings press release filed yesterday provides comprehensive details of our financial results. So I will focus on the highlights of the second quarter of 2026 with all comparisons versus the second quarter of 2025, unless otherwise noted. We generated total revenue of $173.5 million compared to $142.2 million in Q2 2025. The increase was primarily due to the $30.9 million revenue contribution from Pioneer Power.

ODR revenue grew 17.9% to $128.4 million with ODR acquisition-related revenue increasing 21.3%, partially offset by a 3.4% decrease in ODR organic revenue. ODR revenue accounted for 74% of total revenue during the quarter. GCR revenue increased 35.3% to $45 million, with acquisition-related revenue increasing 23.3% and organic revenue increasing 12%. Total gross profit decreased 6.4% from $39.8 million to $37.3 million. Total gross margin was 21.5%, down from 28% in the prior year quarter.

ODR gross profit decreased 2.6% or $0.8 million and ODR gross margin was 24% compared to 29% in the prior year period. GCR gross profit decreased 20.7% or $1.7 million and GCR gross margin was 14.5% from 24.7%. The decrease in both segment gross margin percentages was primarily driven by the current lower margin profile of Pioneer Power. Pioneer Power continues to perform in line with the company's integration expectations and management expects gross margins to improve as 2026 progresses.

Operational and pricing improvement initiatives are underway to enhance profitability at Pioneer Power with the goal of bringing gross margins in line with the company average over the next 2 to 3 years. Gross profit margin was also negatively impacted by lower net project write-ups compared to the prior-year period and competition for skilled labor and materials associated with construction activity in the data center markets.

SG&A expense for the second quarter was $28.1 million, an increase of approximately $1.5 million from $26.6 million. The increase was primarily driven by incremental SG&A expense associated with Pioneer Power and an aggregate $0.6 million increase in total stock-based compensation and payroll-related expenses. As a percentage of revenue, SG&A expense decreased 16.2% compared to 18.7% in the second quarter of 2025.

Net income for the second quarter decreased 38.8% from $7.8 million to $4.7 million, and earnings per diluted share was $0.39 compared to $0.64. Adjusted net income decreased 32.1% to $7.6 million compared to $11.3 million and adjusted diluted earnings per share decreased from $0.93 to $0.64. Adjusted EBITDA for the quarter decreased 22.3% to $13.9 million compared to $17.9 million. Adjusted EBITDA margin was 8% compared to 12.6% in Q2 last year, primarily driven by the lower gross profit and higher SG&A expense.

Turning to cash flow. Net operating cash inflow during the quarter was $18.7 million, representing our second highest second quarter operating cash flow since becoming a public company. This compares to $2 million in the year ago period and was driven by net income of $4.7 million, $9.6 million of noncash adjustments and $4.4 million increase from working capital. Free cash flow, defined as cash flow from operating activities, excluding changes in working capital, minus capital expenditures, was $13.7 million in the second quarter compared to $16.1 million in Q2 last year, representing a $2.4 million decrease. The free cash flow conversion of adjusted EBITDA for the quarter was 98.2% versus 89.7% last year.

Turning to our balance sheet. As of June 30, we had $17.5 million in cash and cash equivalents and total debt of $41.1 million, which includes $17.5 million borrowed on our revolving credit facility. Total liquidity, defined as cash and availability on our revolving credit facility was $93.1 million at the end of the second quarter. And on July 24, 2026, the company amended its credit agreement to increase the aggregate principal amount of available borrowings under its revolving credit facility from $100 million to $125 million, providing an additional $25 million in potential availability.

As Mike mentioned, yesterday, the company completed its acquisition of CYMCOR for a purchase price of $30 million, subject to typical post-closing adjustments. The acquisition was funded through a combination of available cash and borrowing under our revolving credit facility. Since the acquisition occurred after the end of the second quarter, the balance sheet as of June 30, 2026, does not include the funding impact of CYMCOR.

Moving to our outlook. Our revised outlook is based on our strong bookings, projects currently underway and the visibility we have into the balance of the year, and we believe it appropriately reflects the current operating environment and positions us to execute successfully. Accordingly, we've increased our revenue outlook to reflect the timing of project commencements and execution during the remainder of 2026, while lowering our adjusted EBITDA range to reflect the near-term margin and execution headwinds Mike described earlier.

This revised guidance excludes any contribution from the recently completed CYMCOR acquisition or future acquisitions. For fiscal 2026, we now expect revenue of $760 million to $790 million and adjusted EBITDA of $78 million to $84 million. Our outlook is based on the following operating assumptions: total organic revenue growth of 9% to 14%. ODR revenue as a percentage of total revenue of 70% to 80%; ODR organic revenue growth of 6% to 10% gross margin percentage of 23% to 24% and SG&A expense as a percentage of total revenue of 15% to 16%.

Importantly, our expectations for cash generation remain unchanged. We continue to expect to convert at least 75% of adjusted EBITDA into free cash flow through disciplined working capital management for fiscal 2026 and expect CapEx to have a run rate of approximately $5 million. This concludes our prepared remarks. I'll now ask the operator to begin Q&A.

[Operator Instructions] First question comes from Chris Moore with CJS Securities.

So maybe we'll just start with the ODR organic revenue guide. So you stated, Mike, basically some softness in the healthcare market. Is it project timing? Is it kind of -- can you get into it a little bit deeper in terms of the lower revenue growth that you're thinking about for '26? And does that carry over into '27? Just trying to understand kind of how you're seeing the healthcare industrial side of things at this point?

Yes. So what kind of gives us confidence from a guidance perspective, not just from an ODR organic, but a total organic is our strong bookings that we've had over the last 3 quarters. So we sold $616 million in Q4, Q1 and Q2. So that gives us some confidence. So for us, we continue to generate healthy bookings. I think each vertical market is a little bit different as far as a price sensitivity perspective as well, too.

Institutional health care, these type of markets are challenged. We are still gaining market share and picking up bookings. But again, the price sensitivity of that is definitely impacted as well, too. But as far as just from a guidance perspective, whether that's ODR or total revenue, the bookings is the biggest thing that gives us confidence, and we hope to continue the momentum from those bookings that leads us into kind of getting off to a strong start next year, too.

Got it. Okay. I'll leave that one there. The GCR margin had been pretty strong as you kind of more and more look to avoid the lower-margin third-party work. It was pretty low this quarter. I know there was project timing, the Pioneer work. Is there something more strategic in temporarily doing the data center work, even if it's -- third-party data center work, even if it's lower margin to help you kind of gain further expertise in that vertical that would seem to fit with the CYMCOR acquisition?

Yes. There's a couple of things going on, I think, specifically with the GCR margin. We had a pretty low point at the end of Q2 from a backlog perspective, from a GCR perspective. And we've been rebuilding. Obviously, we're still pointed significantly towards owner-direct concentration, but regardless, our model has some GCR that's a part of that. So it really comes down to at the end of 2025, we finished up a lot of work. And then we've started to rebuild from a sales and backlog perspective, and that obviously affects the timing.

And that's why ultimately, it's -- we're at 14.5% in Q2 more than anything. So I would say that's really predominantly from a timing perspective. Now I would tell you, I think diversity is really important to us. We're heavily weighted towards institutional industrial markets. Our ability to have penetration with the data center market helps us in a number of different ways. We're -- I would say we're under-indexed from a data center perspective. And once -- if we can increase that percentage, I think that will help not only revenue growth, but also help margins as well, too, and help us absorb fixed costs.

Got it. And maybe just my last one, kind of more big picture. Just how are you looking at '26? Is it kind of a '26 versus '27. Is '26 a full reset from an EBITDA perspective, a partial reset, no reset at all? Just trying to kind of understand what's happening here, how that would translate into how everybody has been thinking about '27?

Yes. I definitely think from what we knew, we felt like we had to reset from a guidance perspective. Even though revenue is up, GP is down. And again, that's part of that -- it's timing as well as price sensitivity. So from a 2027 perspective, we're looking to make sure that our model is built upon and is resilient.

And I think there's 3 core things that we're looking at: vertical market diversity, which we touched upon a little bit from a data center perspective, geographic expansion, we want to continue to acquire really good companies and then really emphasize our operating model, how can we operate efficiently together through all of our locations. So we think it's a reset. We think going into next year that we're making adjustments that we need to really make sure that we have a super resilient model as we go into next year.

Tomo Sano with JPMorgan.

Could you give us more color on healthcare institutions, the environment, especially on the gaining market share versus pricing sensitivity you talked about, Mike? So how should we look at that environment and strategic initiatives in the back half in 2027, please?

Yes, absolutely. So it's still a challenged environment for sure. They're still impacted by things that happened from a policy perspective in 2025. We're trying -- I think they're trying to navigate what does the new normal look for them. It's our job to guide them to make -- ultimately make the right decisions. So the other thing that they're also impacted is what happens is if there's data activity in the market, that causes overall construction inflation and makes the cost of what they have to do even more challenging as well, too.

So -- for us, I actually think vertical market diversity for us will not only help Limbach, but also helps from a perspective of some of our other clients as well, too. So we're not looking at a dramatic change. I think over time, they'll be able to adapt and then we want to be there with them to adapt as well too. We spent a lot of time from investing in on-site account managers, which those are spread against all of our vertical markets as well as our customers, but it's certainly -- we found that model most impactful from a health care perspective.

For us, it's a great long-term market. Sometimes it's not the market the data center is, but it's really important for us to balance as well, too. So we still really believe in it. It's just helping our customers navigate kind of short term and continue to stick with them as well, too.

And on data center work beyond mix and growth opportunities, could you provide more color and details on gross margin profiles and key cost overrun risks and the contract structure mix, please?

Yes, absolutely. So as we talked about from a healthcare perspective, institutional customers is very cost driven. Data center where it's time and schedule. So they'll pay up for somebody who's going to move really quickly. And in some sense, that's our opportunity as I look at really in 2027. I think the acquisition of CYMCOR is really important to kind of jump start up from a data center perspective.

If we're able to provide the solutions, which is speed to market, there will be opportunities for us from a margin perspective as well, too. But -- that's why, again, I think CYMCOR is really important to kind of use that as a jumping off point. We've made some progress around the last several quarters. We've talked about various fabrication projects. But a lot of times, those projects, we'd be in a little bit later versus from a professional services perspective, we're way earlier in the process and our ability to influence and use our customer solutions, I think, is going to be super impactful.

And if I may squeeze the last one. Mike, in CYMCOR acquisitions, could you talk about more opportunities for both growth as well as the margin profiles? And then how you manage the execution risk with the Pioneer integrations as well?

Okay. Yes. So CYMCOR, we've had some success with our health care program management platform. We started that organically about 4 or 5 years ago. It took a long time. But we've seen a lot of success, about $3 million of professional services revenue has been pulling through about $60 million of project bookings. So a big time multiple from a pull-through perspective. And we've seen our ability to influence early.

And we could have started that organically from a data center perspective, but we saw a great opportunity from a CYMCOR perspective of not only getting a very solid business that doesn't have the execution risk that a contractor would as well as the opportunity for pull-through in a very hot market. So those combination of those factors, we're not only excited about the earnings that we'll get on professional services revenue, but the potential for pull-through is definitely there as well, too.

I think your other question was Pioneer Power. We are -- they're performing as we expected. In the prepared remarks, I talked about their margin being 150 basis points improvement when we purchased them. So I've always pointed people to the Jake Marshall example that we have in our Investor deck. It takes time, especially the first year or 2. So it's on track. And we're looking for ways to improve and kind of following our model that we've done with the other acquisitions as well, too.

Gerry Sweeney with ROTH Capital.

Just wanted to dig in a little bit more with CYMCOR. I wanted to understand when they're brought into a project, how much visibility they have and their ability to maybe bring Limbach services into that equation? And how long would it take to sort of translate some of that professional services revenue into additional services for Limbach.

Absolutely. So they're in very early. Sometimes they're out there from a real estate perspective of just helping the customer plan super early. Customers -- data center customers go to CYMCOR. A lot of it comes down to their ability to manage the budget for them, cost controls, understanding what the right long-term outcome. And a lot of times, that is from doing multiple projects with the same customer as well, too.

So there are so many aspects of visibility we'll get from this. And the one thing we learned in the health care side, what is really important is the ability to understand where value can be driven through the process and how people purchase as well, too. So we're still -- from a data center, we're not where we need to be from a health care perspective and data center gives us insight of where we're able to add from a value chain process as well, too.

So for us, the way that we approach it is very -- going to be very similar to health care. There's probably going to be some immediate opportunities. I think the fact that this -- the data center is exploding right now from a demand perspective, we'll look at things like fabrication, procurement, opportunity to perform projects. After a building is completed, there's a lot of opportunity for service maintenance and retrofit projects as well, too.

So it's up to us. The opportunity is there. It's just for us to basically to capitalize on, and that's ultimately going to drive the it's going to drive kind of when the pull-through starts as well, too. But we're very excited about it, and we think it's the right thing to do as far as kind of being the linchpin to really kicking off our data center vertical market.

Is CYMCOR geographically concentrated in the Texas area? Or do they have projects all over?

So what's nice is they have presence in Dallas, Fort Worth, other parts of Texas, Atlanta, Charlotte, Virginia, Northern Virginia, Richmond area, which is nice because some of those areas are areas that we don't have presence in right now. So it allows us to get a look into a market, and that may eventually be an opportunity for us from an acquisition perspective for a contractor today.

And then, of course, they're dealing with contractors, not only general contractors, but mechanical electrical contractors. So that's one thing that's really attractive is they enter us into markets that we're not. And of course, the markets they're in are very good markets. So it gives us a look, and we're definitely going to try to find synergies from that perspective as well, too. The biggest thing for us, I mean, we can pull through work by not being in the market. We can do that from fabrication and specialty work, but it's going to give us an avenue to figure out what other geographic expansion we want to do and connect the dots, and that's going to be ultimate pull-through opportunity.

That's fair. I get that. And then ODR, health care and some end markets, obviously, it sounded like there's some pressure on that front on spending as well as some costs. How do you recapture that -- those margins? Is this a pricing game and at some point do the healthcare companies just have to absorb these costs?

Yes. So there's a couple of things. I mean I think they always have to absorb what's happening. And I know some of the stuff that happens is almost 12 months old, but those customers are very methodical at the end of the day. They're not going to make -- they're not going to completely change the way they purchase. It just takes time ultimately. For us, the biggest thing for us is to help them look at things differently.

And really, I would say the last 12 months is very different for them as well, too. How they're going to bundle projects, how they're going to look at what across their portfolio, what assets or hospitals are making money and some are not. So it's really the long-term planning. The other thing it helps, obviously, is if we have fixed cost absorption by going into other vertical markets will also help the cost as well from some of these customers as well, too.

So we're very dependent on the institutional, it causes some challenges as well, too. So I don't think there's a secret button or a magic. It's something that's really going to change healthcare. But I think it's our ability to stick with them, find avenues, drive value. That's what's been successful for us for the long term, and I think that's going to drive opportunities for us. And we want to stick with these customers as well, too. I think that's important, and we know in the long term, it's going to work out.

Rob Brown with Lake Street Capital.

Just wanted to follow-up a little bit on the margin question, some of the things you're doing. But how long does that take to kind of cycle through? And is this something that you can see improvement in '27? Or what's the duration of the margin improvement or...

Yes. Thanks, Rob. So there's a couple of things. Obviously, project timing, and that really comes back to us is the sales position that -- the lack of sales that we had in the middle of last year. So that will -- if we perform the way we've performed in the past and we deliver, we're looking forward to potential margin opportunities as we go into '27 just based on the book of business that we have now.

I think the other opportunity is diversifying ourselves into vertical markets where there's greater spend in high-growth markets. And I think when I say vertical markets, I mean vertical markets from data center or other high-growth drivers, but also from a geographic expansion as well, too. Not every market is treated the same at this point. So those -- the combination of those 2 factors, we're making adjustments in order to make sure that in 2027, we're looking for increased opportunity.

Okay. And then on the CYMCOR pull-through in the data center market, is that something that takes -- projects are moving quickly in that market, I understand. But how long does that take to kind of work through the system? And just a sense of how CYMCOR kind of works from a timing aspect?

So we are working -- we are currently working with program managers that are not Limbach right now in the data center. So we have some experience. And ultimately, I think what's going to happen is we want to make sure that we're understanding and learning their customers. And the nice thing about this is they're bringing new customers to the table as well, too, which kind of is additive to some of the customers that we've had.

So it's going to take a little bit of time. But I think if we're doing our job correctly, that there's going to be an opportunity we're able just to fill a gap for them, our ability to influence early. So we don't have an exact timing per se. But I can tell you, yesterday, we've -- obviously, we announced that we were doing the deal, but it's -- we're going to immediately look for pull-through. We're not going to wait per se. So we're probably going to be talking to people in the next few days and trying to find some opportunities as well, too. So we're opportunistic about it, but obviously, it will take a little bit of time.

Brian Brophy with Stifel.

Can you give us a sense for how fast CYMCOR has been growing?

So they've been pretty steady from an earnings perspective. And the biggest thing for us, and they've been working really in the data centers, I'd tell you, the last 4 or 5 years. The challenge for them is responding to the demand. And a lot of that comes down to recruiting staff. So that's one thing they're excited with us is their ability to immediately add staff. It's not something that -- as we talk to them through a diligence process, I mean, I'd love to add people right now.

So that's been the biggest -- and that's, of course, the challenge when you're a smaller company is you're so busy responding to your customers that the recruiting process takes time. So that's been probably the bigger hold up to even seeing more growth. We like the fact that they were steady. But at the same time, we're going to be immediately looking for staff to add to their team to drive good quality, high gross margin revenue.

Understood. That's helpful. And then circling back to GCR gross margins for a minute. Obviously, it was a little bit of a disappointment. But were there 1 or 2 projects in particular that drove the lower gross margin? Or was it more broad-based than that?

It really wasn't execution. It's project starting more than anything. So I mean, we've had pretty steady execution through the first half of the year. It's more just project starting. As I touched upon before, our GCR backlog was $99 million -- it was only $99 million at the end of Q2, and we built that back up to [ $200 million ] basically double at this point. And it's just project starting ultimately more than anything.

So again, we're anticipating our opportunity within GCR margins. For us, it's really a timing perspective. We performed the way we have performed in the past. We think there's a lot of opportunity. I think for 2026, the challenge is going to be what happens if that opportunity shows up into 2027. And that's one of the reasons we kind of adjusted our expectations and our guidance to make sure they reflect that and timing could be a little bit of a challenge, but definitely not an execution issue.

Understood. And then I guess, bigger picture, with GCR now back to more of a growth mode, how are you thinking about the long-term mix between the 2 segments?

Yes. We updated our guidance to be from 75% to 80% to 70% to 80%. We always look at our model as more owner direct driven. I think we're just -- we're trying to find the right mix balance. And I think that's the biggest thing as we go forward. And I think that affects obviously what verticals we're talking to. So -- we're just looking for that mix stabilization, and that's why we felt like going from 75% to 80% to 70% isn't a huge change, but that's the right kind of mix at this point.

A follow-up from Chris Moore with CJS Securities.

Yes. Just one question on bookings. Sounds like 3 straight quarters of good bookings. I know that calendar Q3 last year was the challenge, and that's what created the soft Q1 '26. You're only a month into Q3 so far. What -- any thoughts in terms of July? And when did things kind of go soft last year in Q3? Was it later in the quarter? Or just trying to get a sense of visibility for Q3 bookings.

Yes. I think Q3 last year was a little bit different than what we've seen in the past. And that was really a culmination of ultimately policies hitting higher ed, healthcare, even from a manufacturing standpoint as well, too. So those factors kind of led into our customers kind of into this compression mode as they really entered Q3. So that was kind of a unique period of time. We've looked at the last 3 quarters of kind of getting to that steady pace, and that's what we're looking for kind of as we close out the year.

We have no further questions. I will turn the call back over to Mike McCann for closing comments.

Our conviction in the long-term direction of Limbach has not changed. We've reset expectations to reflect where the business stands today and are focused on executing from here. We have a clear road map that will build an even more resilient business centered around vertical market diversification, geographic expansion and an integrated operating model. These 3 strategic objectives will build enterprise scale that will accelerate growth, expand margins and drive additional shareholder value. Thank you, everyone, for your interest in Limbach.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.

Hello, everyone, and welcome to Limbach Holdings, Inc.'s 2026 Annual Meeting of Stockholders. Before we get started, I would like to review a few important participation details for today's meeting. [Operator Instructions]

The polls are now open. If you've already voted, there is no need to vote again unless you wish to change your vote. If you would like to vote during the meeting, please click on the Vote tab and follow the instructions provided there.

At this time, I would now like to introduce Joshua S. Horowitz, Chairman of the Board of Directors of Limbach Holdings, Inc.

Good morning, and welcome to the Limbach Holdings Inc. 2026 Annual Meeting of Stockholders. The meeting will now come to order. As previously stated, I am Joshua S. Horowitz, Chairman of the Board of Directors of the company.

On behalf of the Board of Directors and the executive management team of the company, we hope that you and your families are doing well. I would like to thank all those who made it possible to conduct this virtual meeting and look forward to interacting with our stockholders on today's call.

I will act as Chairman of the meeting; and Jeremiah Garvey, a representative of Cozen O'Connor, our outside counsel, will serve as Secretary. Representatives of Crowe LLP, the company's independent registered public accounting firm, are also present.

At the end of the meeting, they will be available to respond to questions from stockholders as appropriate. Upon logging into the meeting via your unique joint link provided in your meeting invitation e-mail, each of you were presented with an order of business for the meeting. Also presented was a list of the rules of conduct for the meeting.

To conduct an orderly meeting, we ask that participants abide by these rules. As stated in the rules of conduct, stockholders will be on mute during the duration of the meeting. [Operator Instructions]

You may submit your questions at any time during the meeting. Questions pertaining to the conduct of the meeting will be addressed during the session, if relevant. All other questions will be collected and considered during the Q&A session, along with other questions submitted in advance of this meeting at the end of today's meeting as time permits. Thank you for your cooperation with these rules.

I ask Mr. Garvey to give the Secretary's report on the qualification of this meeting to proceed.

Mr. Chairman, this meeting is held pursuant to a written notice mailed to all stockholders of record as of the close of business on April 17, 2026. The notice mailed to all stockholders was accompanied by the proxy statement, the form of proxy and the annual report for fiscal year 2025. These documents will be filed with the records of this meeting. In addition, the proxies and the certified list of stockholders are in custody of the Inspector of Elections.

Mr. Garvey has been appointed the Inspector of Elections and has taken the oath of office, which has been filed with the company's records. Mr. Garvey, do we have a quorum?

Yes. Our proxy solicitor, Georgeson, has reported that at least a majority of the company's issued and outstanding capital stock entitled to vote are represented at this meeting, either attending the meeting or by proxy. This constitutes a quorum of stockholders and all legal requirements for holding this meeting have been satisfied.

The meeting is lawfully convened and ready to transact business. You have received a copy of the order of business, which includes the matters to be submitted to a vote of the stockholders. At this time, the polls are now open. Stockholders who have sent in proxies do not need to take any further action at this time. If you have not sent in a proxy, please visit the following website in order to vote your shares during the meeting while the polls are open, www.proxy-direct.com.

You will need your virtual control number and security code in order to vote your shares, each of which was provided on your notice of Internet availability, proxy card or voting instruction form.

We will now proceed to the matters to be voted on. The first item of business is a proposal to elect Joshua S. Horowitz, Linda G. Alvarado and Terence P. Dugan as Class A members of our Board of Directors, each to serve for a 3-year term. Is there any discussion concerning the election of directors?

The second item of business is a proposal to approve the compensation of our named executive officers via a nonbinding advisory vote. Is there any discussion concerning the approval of the compensation of our named executive officers via a nonbinding advisory vote?

The third item of business is a proposal to approve on a nonbinding advisory basis, the frequency of future advisory votes on the compensation of our named executive officers. Is there any discussion concerning the proposal to approve on a nonbinding advisory basis, the frequency of future advisory votes on the compensation of our named executive officers.

The fourth item of business is to ratify the appointment of Crowe LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2026. Is there any discussion concerning the appointment of Crowe LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2026.

[Voting]

Has everyone who desires to vote on the proposals done so?

I hereby declare the polls closed. The Inspector of Elections will now tabulate the votes and report the preliminary results before the close of the meeting.

I have been advised by the inspector of elections that the tallies are now available, and I will ask the Secretary to read them.

Mr. Chairman, on the proposal to elect Joshua S. Horowitz, Linda G. Alvarado and Terence P. Dugan as Class A members of our Board of Directors, each to serve a 3-year term, the inspector of elections advises that each of Joshua S. Horowitz, Linda G. Alvarado and Terence P. Dugan has received a plurality of the votes cast from the holders of shares either attending the meeting or represented by proxy and entitled to vote on the election of directors.

On the proposal to approve the compensation of our named executive officers via nonbinding advisory vote, the inspector of elections advises that the holders of a majority of the votes cast, either attending the meeting by proxy or at the annual meeting have voted to approve such proposal.

On the third proposal, the proposal to approve the nonbinding advisory -- on a nonbinding advisory basis, the frequency of the future advisory votes on compensation of our named executive officers, the inspector of election advises that the holders of a majority of the votes cast, either attending the meeting or by proxy at the annual meeting have approved holding such advisory vote every year.

And on the last proposal, the proposal to ratify the appointment of Crowe LLP as our independent registered public accounting firm for the fiscal year ended December 31, 2026, the inspector of elections advises the holders of a majority of the votes cast either attending the meeting or by proxy at the annual meeting have voted to ratify the appointment.

Mr. Chairman, the final results of the stockholder vote reflecting all proxies received by mail or otherwise through the close of this meeting and any votes cast during the meeting with respect to each of the proposals will be included in the final report of the Inspector of Elections and will be published in a Form 8-K within 4 business days after the final results are known and will be available upon request.

Thank you, Mr. Garvey. There being no further business, the meeting is now adjourned.

Thank you, Mr. Horowitz and Mr. Garvey. I want to thank you for attending today's virtual meeting for the support you've shown for Limbach Holdings, Inc. We will now have a brief question-and-answer period. During this period, the representatives of Crowe LLP are available along with management to respond to appropriate questions from stockholders.

Mr. McCann and Mr. Horowitz, we have not received any additional questions to address during the Q&A session, and this concludes the annual meeting.

This concludes the meeting. You may now disconnect.

Good morning, and welcome to the Limbach Holdings First Quarter 2026 Earnings Conference Call and Webcast. [Operator Instructions]

I will now turn the conference over to your host, Lisa Fortuna of Financial Profile. You may begin.

Good morning, and thank you for joining us today to discuss Limbach Holdings financial results for the first quarter of 2026. Yesterday, Limbach issued its earnings release and filed its Form 10-Q for the period ended March 31, 2026. Both documents as well as an updated investor presentation are available on the Investor Relations section of the company's website at limbachinc.com. Management may refer to select slides during today's call and encourages its investors to review the presentation in its entirety.

On today's call are Michael McCann, President and Chief Executive Officer; and Jayme Brooks, Executive Vice President and Chief Financial Officer. We will begin with prepared remarks and then open the call to questions.

Before we begin, I would like to remind you that today's comments will include forward-looking statements under federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate or other comparable words and phrases. Statements that are not historical facts, such as those about expected financial performance are also forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements. A discussion of the factors that could cause a material difference in the company's results compared to these forward-looking statements is contained in Limbach's SEC filings, including reports on Form 10-K and 10-Q.

Please note on today's call, we will be referring to non-GAAP measures. You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our first quarter 2026 earnings release and in our investor presentation, both of which can be found on Limbach's Investor Relations website and have been furnished in the Form 8-K filed with the SEC.

With that, I'll turn the call over to President and CEO, Mike McCann.

Good morning, and welcome to our stockholders, analysts and interested investors. We appreciate you joining us today. Yesterday, we reported our first quarter 2026 results, which were in line with the expectations we discussed on our last earnings call in March. Before turning to the details of the quarter, I want to briefly recap where we've been and where we're headed.

Our long-term vision and strategy are to become an indispensable building system solutions partner for our customers' mission-critical facilities. We provide cost-effective, innovative and dependable services designed to support uninterrupted operations. We operate as an integrated organization that aligns our people, capabilities and service offerings. Our culture is built on the value of caring. At Limbach, our people care about our customers and are dedicated to delivering and maintaining systems that support some of their most critical assets while staying safe.

Over the last 5 years, we've transitioned and scaled our business to focus on direct relationships with building owners. This has raised our margin profile, improved the quality of our revenue and deepened our relationships with customers who operate mission-critical facilities. Our revenue mix between ODR and GCR has reached stabilization, reflecting progress toward what we view as the optimal balance between the 2 business segments. Going forward, we intend to continue to prioritize ODR growth while selectively pursuing high-quality GCR opportunities where customer, partner, risk profile and end market align with our strategy, particularly in data centers where demand is accelerating rapidly.

As we move forward into 2026, our focus is on scale and growth. We see significant opportunities to deepen and expand our customer relationships, supported by the strong foundation we have built over the previous 5 years.

Now turning to our first quarter results. First quarter revenue was $138.9 million, in line with our expectations. Although total revenue growth was 4.3%, organic revenue was down as expected, decreasing by 13.4%. As previously discussed, the results reflect the impact of lower bookings in the middle of 2025 and normal seasonal patterns among industrial customers.

The revenue mix was 71.9% ODR and 28.1% GCR, with ODR revenue growing 10.4% and organic ODR revenue declining 5.4%. Total gross margin was 22.4%, primarily due to lower fixed cost absorption in our ODR segment from lower revenue during the quarter, the absence of higher net project write-ups that benefited the prior year period, which is largely timing related and the current lower gross margin profile of Pioneer Power.

Adjusted EBITDA was $8.7 million, which was also in line with our expectations. As anticipated, we experienced a cash outflow due to the lower net income and higher working capital needs in Q1. Q1 bookings were exceptionally strong at $209 million, generating a book-to-bill ratio of 1.5. Approximately 27% of bookings came from data center opportunities, reflecting strong demand in this vertical and the value of Limbach's existing customers with brand-name hyperscaler customers.

As a reminder, in 2026, we remain highly focused on our 3 strategic growth pillars: ODR organic and total revenue growth, margin expansion through evolved customer solutions, scaling the business through acquisitions. While first quarter organic revenue was down as expected, the more important development in the quarter was the acceleration of demand. Over the past 2 quarters, we recorded more than $434 million of bookings, including $209 million in Q1 of 2026 and $225 million in Q4 of 2025.

Our Q1 2026 book-to-bill ratio of 1.5x is a strong indicator that revenue momentum is building as we move through 2026. We believe the strength of these bookings reflect the traction we are getting from recent investments in our national sales, vertical market teams, customer solution teams as well as our ability to serve increasingly complex mission-critical facilities.

Earlier this year, we invested in dedicated sales enablement tools to support productivity. This type of sales support is only possible in an organization that works collaboratively and shares best practices. During the first quarter, we rolled out an updated sales process system designed to better highlight what differentiates Limbach in the marketplace.

We also continue to invest across 3 national vertical market teams. The health care team is now fully built and delivered strong bookings over the past 2 quarters, positioning revenue to accelerate in the second half as those bookings convert. In addition, during the first half of the year, we are focused on adding resources to our data center team, combining experienced Limbach employees with new hires to drive scale and deepen existing customer relationships.

Our second pillar is to expand margins by driving more evolved customer solutions. We differentiate ourselves from our competition by delivering creative integrated solutions that solve real business problems. Our strategy is focused on 6 core customer solutions, including integrated facility planning, service and maintenance, replacement equipment and retrofits, rental equipment, MEPC infrastructure upgrades and energy efficiency decarbonization projects. Over time, our goal is to deliver all 6 customer solutions at both the national and local level across our customer base. By bundling these offerings, we can create a more comprehensive solutions for customers while layering on incremental margin.

Our third strategic pillar is targeted acquisitions, designed to extend the Limbach brand, strengthen our market presence and expand our capabilities. By pursuing disciplined acquisitions, we seek to diversify our vertical market exposure, broaden our geographic reach and add new offerings that enhance and scale our customer solutions.

Given robust demand from customers with national operations who are increasingly seeking partners with comparable geographic reach and technical capabilities, we believe there's an opportunity to further refine our acquisition strategy. We're actively evaluating acquisitions and are open to larger acquisitions where the strategic rationale is compelling. Many of our customers operate nationally and increasingly want partners whose geographic footprint and technical capabilities can match the scale of their own businesses.

We are focused on businesses that expand and extend our local service capabilities, deepen our presence in attractive geographies and enhance our ability to deliver mission-critical solutions across a larger national platform.

Our integration of Pioneer Power is progressing well. Pioneer expands our capabilities, broadens our customer base and gives us additional avenues to participate in high-growth mission-critical end markets, including data centers. We're in the process of increasing gross margin at Pioneer Power to align with our company average. Our key strategic priorities to achieve this include reviewing and renegotiating existing contracts for better pricing, optimizing project mix with prioritizing revenue by specific target margins, leveraging cross-selling opportunities and implementing Limbach sales and operating tools. We expect Pioneer's margins to begin improving in 2026 with continued progress over the next 2 to 3 years.

From a macro perspective, conditions were generally favorable in the first quarter. We believe the optimal mix for Limbach is centered on 3 key areas: institutional markets led by health care and higher education, industrial markets and data centers. Our experience in 2025 reinforce that market vertical diversification and geographic expansion will make our business model more resilient.

Starting with health care. Customers remain focused on near-term mission-critical spending while thoughtfully planning longer-term capital investments. As discussed last quarter, D.C. policy changes extended budgeted time lines for several of our customers. We are now seeing those budgets normalize with spending expected to pick up in the second half of the year and align with historical patterns. At the national level, our team is gaining traction with key customers and aligning sales efforts with anticipated funding releases.

Locally, customers remain disciplined in how they allocate capital, prioritizing investments to maintain and upgrade critical systems. Our local engineering expertise and solution-oriented approach remain key differentiators, and it's our responsibility to structure opportunities that clearly meet each customer's ROI requirements.

Jake Marshall was a key contributor to our margin expansion over the last 4 years. They've been focused on building relationships in the health care sector. This momentum continued in the first quarter with the award of a multiphase renovation project at Chattanooga-based facility, further strengthening our presence with this customer. Our Chattanooga team has successfully deployed multiple customer solutions, including maintenance agreements, rental fleet utilization and on-site account management. These solutions enabled us to win this significant infrastructure project.

Turning to data centers. We want to emphasize that Limbach has long-standing 10-plus year relationships with brand-name hyperscaler customers, and we are focused on building on that foundation as demand accelerates. What has changed is the scale and urgency of demand in the market and our ability to bring a broader, more coordinated set of capabilities to those customers.

As mentioned on our fourth quarter call, we were awarded a unique infrastructure data center project. Additionally, in the first quarter, we successfully won a similar but even larger project from one of the hyperscalers in the market. We will be providing a fabricated package encompassing of steel structures, piping systems and the execution is expected to be rapid. We anticipate the final contract value of this project to exceed $30 million and expect to generate the revenue over the next few quarters.

Our experience and disciplined approach has made us highly selective around customer quality, contract structure, project execution risk and partner alignment. We are approaching this opportunity with discipline. We're not pursuing growth for growth's sake. We are pursuing data center work where we believe Limbach has a differentiated right to win and where the risk-adjusted return profile is attractive.

One of the key value creation initiatives of Pioneer Power is expanding its reach into the data center market. In the first quarter, we were awarded one of the initial projects within an existing data center, which is expected to provide immediate contributions beginning in the second quarter. The contract value is approximately $6 million, features a rapid execution schedule, involves a complete retrofit of the space to support new server installation. Layering data center work into Pioneer's existing customer profile remains an important driver of the margin expansion over time.

We continue to see meaningful opportunities within this vertical market and expect momentum to build through the year. To support this growth, we are developing a dedicated data center vertical market team focused on leveraging both our fabrication resources and our available field talent.

Industrial manufacturing activity began to show meaningful momentum starting in April with our strength in this vertical beginning to translate into new opportunities. Our other vertical markets are trending in a positive direction, though we expect most of the growth to come in the latter part of the year.

Moving to our outlook. We are reaffirming the full year guidance we provided for 2026 back in March. We expect revenue between $730 million and $760 million, implying year-over-year growth of 13% to 17%. Adjusted EBITDA of $90 million to $94 million, implying year-over-year growth of 10% to 16%. The following underlying assumptions support this guidance: total organic revenue growth of 4% to 8%, ODR organic revenue growth of 9% to 12%, ODR as a percentage of total revenue to be in the range of 75% to 80%, reflecting the stabilization of the mix shift, total gross margin of 26% to 27%. SG&A expense as a percentage of total annual revenue to be 15% to 17% and free cash flow to be 75% of adjusted EBITDA.

For the second quarter of 2026, we expect sequential improvement in revenue adjusted EBITDA and are comfortable where the consensus expectations currently stand.

With that, I'll turn the call over to Jayme to walk through the financials in more detail. Jayme?

Our Form 10-Q and earnings press release filed yesterday provide comprehensive details of our financial results. So I'll focus on the highlights of the first quarter of 2026 with all comparisons versus the first quarter of 2025, unless otherwise noted.

We generated total revenue of $138.9 million compared to $133.1 million in Q1 of 2025. The increase was primarily due to $23.5 million revenue contribution from Pioneer Power. ODR revenue grew 10.4% to $99.8 million, with ODR acquisition-related revenue increasing 15.8%, partially offset by an expected 5.4% decrease in ODR organic revenue. ODR revenue accounted for 71.9% of total revenue during the quarter.

As expected, GCR revenue declined by 8.6% to $39 million from GCR organic revenue decreasing by 30.2%, partially offset by a 21.6% increase in GCR acquisition-related revenue.

Total gross profit decreased 15.1% from $36.7 million to $31.2 million. Total gross margin on a consolidated basis was 22.4%, down from 27.6% in the prior year quarter. Excluding Pioneer Power, total gross margin would have been 25% due to the lower margin profile of Pioneer Power. As Mike mentioned earlier, our acquisition integration strategy is focused on improving Pioneer Power's gross margin to align with our broader operating model over the next 2 to 3 years.

ODR gross profit comprised 73.7% of total gross profit dollars or $23 million. ODR gross profit decreased 12.1% or $3.2 million and ODR gross margin was 23% compared to 28.9% in the prior year period. The decrease in gross margin was primarily due to lower fixed cost absorption as a result of higher fixed costs and seasonally lower revenue, the absence of higher net profit write-ups in Q1 2026 compared to the first quarter of 2025 and Pioneer Power's current lower gross margin profile.

Project write-ups are typically recorded when projects are at or near the end of their life cycle to reflect strong execution. During the first quarter of 2025, more projects were at or near the end of their life cycle than in the first quarter of 2026.

Additionally, we incurred higher fixed costs impacting the cost of revenue in the first quarter of 2026, primarily due to the increase in the size of our vehicle fleet and increase in our insurance premiums as well as increase in tools, supplies and safety costs. As revenue levels increase in 2026, we expect fixed cost absorption to improve.

GCR gross profit decreased 22.5% from $10.6 million to $8.2 million. GCR gross margin decreased from 24.7% to 21%. The decrease was due to lower gross margin work associated with Pioneer Power and lower total net project write-ups in the first quarter of 2026 compared to the first quarter of 2025, similar to the ODR.

SG&A expense for the first quarter was $28.1 million, an increase of approximately $1.6 million from $26.5 million. The increase was primarily driven by an increase in payroll-related expenses. As a percentage of revenue, SG&A expense increased to 20.2% compared to 19.9% in the first quarter of 2025.

Interest expense increased $0.2 million to $0.7 million, driven by higher borrowings under the company's revolving credit facility to finance working capital as well as higher financing costs associated with a larger vehicle fleet.

Net income for the first quarter decreased 57.1% from $10.2 million to $4.4 million and earnings per diluted share was $0.36 compared to $0.85. Adjusted net income decreased 42.6% to $7.8 million compared to $13.5 million and adjusted diluted earnings per share decreased 42.9% from $1.12 to $0.64.

Adjusted EBITDA for the quarter decreased 41.7% to $8.7 million compared to $14.9 million. Adjusted EBITDA margin was 6.2% compared to 11.2% in Q1 last year, primarily driven by the lower gross profit and slightly higher SG&A expense.

Turning to cash flow. Net operating cash outflow during the first quarter was $7.8 million compared to a $2.2 million cash inflow in the year ago period, driven by lower net income and higher working capital. The primary drivers of the reduction in operating cash during the quarter were incentive compensation payments, contingent consideration payments related to prior acquisitions and prepaid insurance premiums.

Additionally, as part of our capital allocation to offset stock issuances for our long-term incentive plan, we used $5.8 million of cash to pay employee taxes related to the shares withheld to cover their taxes.

Free cash flow, defined as cash flow from operating activities, excluding changes in working capital, minus capital expenditures, was $7.7 million in the first quarter compared to $15 million in Q1 last year, representing a $7.4 million decrease. The free cash flow conversion of adjusted EBITDA for the quarter was 88.7% versus 101.1% last year. As Mike already mentioned, for the full year 2026, we continue to target a free cash flow conversion rate of at least 75% of adjusted EBITDA and expect CapEx to have a run rate of approximately $5 million.

Turning to our balance sheet. As of March 31, we had $15.8 million in cash and cash equivalents and total debt of $57 million, which includes $32.4 million borrowed on our revolving credit facility and $7 million of standby letters of credit. As a reminder, at the end of June last year, we expanded our revolving credit facility from $50 million to $100 million in principal amount borrowings. Total liquidity, defined as cash and availability on our revolving credit facility was $76.4 million at the end of the first quarter.

This concludes our prepared remarks. I'll now ask the operator to begin Q&A.

[Operator Instructions] The first question comes from the line of Rob Brown with Lake Street Capital.

First question is on your kind of gross margin trends. You addressed some of the ins and outs, but how -- what's sort of the timing of the improvement on Pioneer kind of this year? I know you gave a 2- to 3-year window, but how much improvement can you see this year from Pioneer integration?

Rob, so from a Pioneer Power perspective, obviously, we've discussed this before, but the first piece of this really was from an integration perspective from a systems, process, accounting system. So that was really last year. This year, it's focused on, obviously, from a gross profit improvement perspective. So a number of different things we've talked about. But obviously, dedicating resources to the best accounts, analyzing them, going back from renegotiation from accounts as well, too.

I think the other thing we talked about in the prepared remarks, too, was our ability to infuse some data center work on top of their markets from industrial and institutional as well, too. So I think those are going to take some time to come into play. And I think we're going to improve. It will be towards the back half of the year. But we're making a lot of -- I think the team, along with management is making a lot of proactive steps to really think through what that improvement process is. And quite frankly, there's a number of different levers that we can pull, and we're kind of doing those in a very coordinated effort. So we're optimistic for sure with Pioneer Power margin improvement.

Okay. Great. And then on the bookings, strong bookings in the quarter, particularly in data center, how much -- it seems like you're early in that effort. How much opportunity do you see in the data center vertical as you get your national accounts teams in place?

Yes. We've definitely been pleased with the last 2 quarters, $434 million booked in the last 2 quarters. I think one thing we -- from a data center perspective, there's so much need for people that work in a mission-critical environment. We're leveraging some relationships we've had for a number of different years. I think we're off to a strong start in Q1. There's a lot more opportunity as well, too. So I think -- as we continue to work our way through that vertical, dedicate resources, we have a national vertical market team as well, too, that will be working relationships and understanding where we fit in.

Ultimately, though, the skill set that we have in the mission-critical environment translates really well from a data center perspective as well, too. So we haven't really provided any forward-looking outlook as far as from a percentage basis, but I think we're pleased with the 27% in Q1, and we see tons of opportunity for players like us.

The other thing I would tell you, I think from a data center perspective, the things that we continue to learn are they're looking for somebody that has a -- is a national contractor that has a good footprint that matches aligns with their footprint. And again, that quality mission-critical expertise. So we anticipate the combination of those 2 to be favorable for us as we look forward through this year and I think the next couple of years.

Next question comes from the line of Chris Moore with CJS Securities.

Maybe just one more follow-up on the data center. So it sounds like the lead times in terms of converting the data center orders is -- at least on these orders is a little bit quicker than the average bookings. Is that fair?

Yes. We -- one of the examples that we gave in the prepared remarks was a fabrication project, which is a very quick burn, which will burn in the next several quarters. So it depends on the work. I think the one thing that seems pretty consistent with the data center work is, unless on our end is they -- it's speed to market at the end of the day. So it does take time to set the work up, even the jobs that we did, we think it will move pretty quickly, but there is a reasonable setup period of time as well, too. But we're excited.

I think our ability to leverage our capacity to move quickly. We won several of these fabrication type projects. And this one that we recently were awarded that encompasses steel and pipe and a number of different structures that we can put into place that they want to -- I think they're looking at us for capacity and speed to market. So it will depend on the opportunity, but I think that particular opportunity or at least a couple that we mentioned in the prepared remarks will burn very quickly.

Terrific. Are the margins there consistent with your ODR targets?

We've done some work. The margins -- the work that we've done in the past, the margins have been really good. So we definitely wouldn't be getting into this vertical if we felt like the margins weren't as good, if not better. Again, we're going to be very selective as well, too. So I think that's -- we're going to be very measured just like we are overall from a strategic standpoint. But we're excited about the margin opportunity. It's all about delivering on time with a high level of quality, and they will pay the margins that's relative to that effort.

Got it. So in terms of -- on the guide, ODR organic growth, 9% to 12% versus the 17% last year. Last year, you had a big Q4. Is there a similar expectation in '26 that the organic ODR kind of builds in Q2 through Q4?

Yes, it will definitely build throughout the year. I mean, I think a similar cadence that we've had and similar cadence that we had last year as well, too. So -- and I think it's part of the cadence with the owner direct customers as well, too. I think as we layer data center work in, I think that could have a little bit of a different profile that's not so backloaded. But a good chunk of our revenue, obviously, this year is based on the institution and industrial markets.

Industrial doesn't really start hitting until April. And then the institutional, they set their budget at the beginning of the year, and they see how it goes and they tend to really spend towards the back half. So yes, I would say similar cadence to last year and especially due to the institutional and industrial work that we do.

Got it. And so you do expect a positive ODR organic growth in Q2, that's I guess what I was asking.

I think it will build throughout the year for sure.

Next question comes from the line of Brian Brophy with Stifel.

Congrats on the data center activity. Just I realize awards are kind of hard to predict. But the data center activity in terms of awards that you saw this quarter, is that unusually high? Or just given the demand environment that we're seeing, could we see this potentially grow from this level? I guess how sustainable do you think this level of activity on data center side is?

It's tough for us to tell. But I will say we've talked to various customers in this space. The opportunity is there, no doubt about it. I mean we're going to have to figure out what our cadence is. We're off to a good start, but I think we don't have enough quarters in a row to kind of figure out our cadence or our year-end percentage. But there is so much spend that they're looking for people that understand quality, speed to market, kind of all the things that kind of play into our expertise. So we haven't necessarily run into a position or a customer where there wasn't the need. And so I think it's going to be -- the demand is there for us to take advantage of for sure.

Okay. That's helpful. And then obviously, it sounds like fabrication work is part of the awards here. Do you guys have enough capacity currently to support what you're being awarded? Or is there any more CapEx that is needed to support some of that work? And I guess at what point would you need to add more fabrication capacity? Or are we pretty far away from that at this point?

No, it's a good question. So we have a decent amount of capacity right now. If anything, we have excess capacity, one thing that we're able to leverage is we -- when we purchased Jake Marshall in late 2021, they had a very large fabrication facility. I think it's almost 14 acres. So we have a lot of capacity.

I'd love to get to the point where we need more because that means that, that shop. We also have other shops at locations as well, too. So I think the advantage for us is when some players or competitors are filled up, we have the capacity. So we spent a lot of time touring people through our facility. And they can see physically that there's capacity as well, too.

So I'd love to be discussing a CapEx in some sense because that means -- but I think we're quite a bit of ways away from that. And we're trying to use the capacity that we have and fill it up. So there are several of these jobs that we could handle at one point. And then we also have overflow as well, too. So that's the message that we're telling our customers. I think it's going to help the business all around as if we fill up that fabrication capability capacity.

Next question comes from the line of Tomo Sano with JPMorgan.

Could you talk about industrial manufacturing situations? You mentioned you're seeing meaningful momentum start in April. So if you could talk about what exactly you're seeing? And any more color would be appreciated.

Sure, sure. So a lot of our industrial work in manufacturing has really come from our acquisitions from Pioneer Power in Minneapolis and Consolidated in Kentucky as well as Jake Marshall in our Chattanooga location as well, too. So for us, part of it is just -- I think as we continue to acquire companies that work in that space, there seems to be kind of a natural cadence that April starts that spend.

So we see positive outlook for sure. But I think that seems like that's the spend. That's the timing. I mean, especially even from a PPI perspective, I think some of this is just seasonal as well, too. But as we continue to acquire in this space, I think we're going to see kind of the pattern that happens. So we're optimistic and looking forward, I think, to the work that happens this year.

And a follow-up on national versus local sales contribution. Last quarter, you discussed investing in 2 senior executives, one focused on local sales enablement and one on the national relationship. How much of the $209 million in Q1 booking was driven by national account relationship versus local sales? And are you seeing the national strategies begin to contribute meaningfully?

Yes. We didn't provide a breakout per se, but I will say there's a good mix between the 2. Still more heavily locally weighted but definitely starting to see some efforts from a national perspective as well, too. So very -- Jayme and I are very happy with the way that we -- from a structure standpoint and an executive management standpoint as far as one executive is on sales enablement with local sales, been very successful. And then we have somebody dedicated from a national account perspective. So that's going really well.

I think there are -- I would also tell you, too, that the 2 of them work together and those functions work really well together as well, too. So if we have a national account or an opportunity, the 2 of those execs collaborate as well as the local branch as well, too. So I see them working really closely together. As we expand not only our footprint, but as well as our exposure from a national account perspective, the more overlap, the better. So that means we're getting synergies as well, too. So I think for us, especially from a customer buy perspective and the way that we go to market and differentiate ourselves, the ability to have local and national, I think, is going to be a game changer as we continue to expand resources.

Ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to turn the floor over to Mike McCann for closing comments.

In closing, our strategic priorities for 2026 are the following: ODR organic revenue growth and total revenue growth, margin expansion through evolved customer solutions, smart capital allocation and scale through acquisitions. Our first quarter book-to-bill ratio of 1.5x, expanding data center opportunities, growing national account relationships and healthy acquisition pipeline all reinforce our confidence in our strategy.

We believe Limbach remains in the early stages of building a larger, more valuable, more durable building systems solutions platform, and we're focused on executing that opportunity with discipline. Our model combines engineering expertise with direct execution, enabling us to partner with customers through multiyear consultative capital planning efforts that extend beyond traditional backlog. We believe this is a differentiated approach, supports sustained growth and shareholder value creation. Thank you again for your interest in Limbach, and have a great rest of your day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

[Audio Gap] Investor presentation are available on the Investor Relations section of the company's website at limdbockinc.com. Management may refer to select slides during today's call and enures investors to review the presentation in its entirety. On today's call are Michael McCann, President and Chief Executive Officer; and Jamie Brooks, Executive Vice President and Chief Financial Officer. We will begin with prepared remarks and then open the call to questions.

Before we begin, I would like to remind you that today's comments will include forward-looking statements under the federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate or other comparable words and phrases. Statements that are not historical facts, such as those about expected financial performance are also forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements. A discussion of the factors that could cause a material difference in the company's results compared to these forward-looking statements is contained in Limbach's SEC filings, including reports on 10-K and 10-Q.

Please note on today's call, we are referring to non-GAAP measures. You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our fourth quarter 2025 earnings release and in our investor presentation. both of which can be found on Limbach's Investor Relations website and have been furnished in the Form 8-K filed with the SEC.

With that, I'll now turn the call over to President and CEO, Mike McCann.

Good morning, and welcome to our stockholders, analysts and interested investors. We appreciate you joining us today. Yesterday, we reported our fourth quarter and full year 2025 results. But before I get into some of the business highlights, I want to recognize all the Limbach team members who deliver safe, quality-driven customer solutions. Our strategy is built on the foundation of great people, and this team delivered a record-setting year. I also want to comment on our announcement yesterday that we'll be relocating our headquarters to Tampa, Florida. The relocation of our headquarters at Tampa reflects the fact that a significant portion of our senior leadership team and nearly 40% of our corporate workforce already based in Tampa, where our presence has grown substantially since establishing the corporate office in 2020.

The move marks a milestone of the company's 125th anniversary year and we look forward to the future as we continue to grow and strengthen our presence in Tampa.

Now turning to our strong results. 2025 marked a record year of significant total revenue growth of 24.7% and Notably, it's the first year our revenue has grown substantially since 2020 when we began executing our strategic shift to ODR. Our ODR GSR mix for 2025 was 75% ODR and 25% GCR. And right in the middle of our guidance range and a meaningful improvement from 2024 mix of 67% ODR and 33% GCR. Total ODR revenue grew by 40.6% and with organic ad revenue growth of 17%, reinforcing organic growth as a major driver of our success. Total gross margin was 26.2% for 2025 and and 28.2% when excluding all of our acquisitions since 2021, demonstrating that our legacy business gross margin has remained stable when compared to 2024.

We reported record full year adjusted EBITDA of $81.8 million, within our guidance of $80 million to $86 million and a 28.4% increase from 2024. We generated $71.9 million in cash from operations, excluding working capital in 2025 with $21.4 million generated in Q4, reflecting our high rate of cash flow conversion. In December, we authorized a $50 million share repurchase program. And finally, our balance sheet remains strong with only $24.6 million in net debt or a net debt to adjusted EBITDA ratio of 0.3x.

Turning to 2026, we are focused on 3 strategic core growth pillars, which include ODR and organic total revenue growth margin expansion through evolved customer solutions and scaling the business through acquisitions. Our first pillar is to grow ODR and organic total revenue. Revenue mix between OR and GCR hold steady, while we focus on growing total revenue with ODR being the primary growth driver. Our strategy for growth to design combine national scale with local execution, allowing us to better serve mission-critical facilities. We're investing both at a local and national level to accelerate sales, leverage SG&A growth. We have supported growth objectives by strategically positioning 2 seasoned senior executives on accelerating sales.

One executive is focused on local sales, while the others are responsible for driving national relationships. We believe this strategy will be a key element to supporting our investments and driving growth. As we focus on growth, we continue to manage project risk and rewards through careful selection based on project size and short life cycle. In Q3, we discussed in detail our various ODR revenue streams, as we mentioned, 1 revenue is broken down to 2 different categories. The first is fixed-price projects greater than $10,000, which represented approximately 73% of total OD revenue for 2025 with an average ODR product size of approximately $240,000.

The second category is recurring quick burning revenue, which includes maintenance contracts, work orders for small fixed-price jobs less than $10,000 and time material work. In full year 2025, our quick burning revenue represented approximately 27% of total ODR revenue. We have also expanded our GCR gross profit by carefully managing the risk and reward profile. As it relates to product size and scope. The average CCR project for 2025 was only $2.6 million. Our second pillar is margin expansion for REVOLVE customer solutions. We differentiate ourselves from the competition by being a single source provider for building owners.

Cable providing comprehensive life cycle engineered solutions. In 2026, we plan to continue to expand our offerings in 6 differentiated customer solutions, including integrated facility planning, service maintenance, equipment replacements and retrofits, to equipment, mechanical, electrical, plumbing and control or MAPC infrastructure upgrades, energy efficiency and decarbonization analysis and projects. Our stat is being trained to bundle customer solutions and deliver long-term value to our clients. Each individual transaction may have a different margin profile, but the overall quantity of gross profit and the quality Blendermarket is carefully managed.

From 2020 through 2025, our total gross margin for the legacy branch businesses has grown from 14.3% to 28.2%. In total gross profit margin. Total gross profit dollars decreased almost 50%, demonstrating that our teams are able to grow total gross profit while simultaneously enhancing margin. The third pillar, strategic M&A, aimed at extending the reach of Limbach brand, strengthening our market presence and expanding our capabilities. Through targeted acquisitions, we seek to diversify our vertical market exposure and broaden our geographic footprint while adding new offerings to enhance our customer solutions.

In 2026, we remain selective as we would expect to pursue 1 to 3 acquisitions to meet our return thresholds by expanding our geographic footprint and increasing our local service capabilities. Additionally, we are looking for companies that expand our 6 core customer solutions. We are particularly focused on companies that expand our integrated facility planning solution. Due to their deep involvement of the capital planning process, these companies tend have national relationships at health care, data centers and industrial manufacturing.

We believe the synergies between these 2 types of deals will help us reach our long-term vision to be an indispensable building system solution partner, providing national reach with local presence.

Turning to our last acquisition, Pioneer Power, where the integration is well underway. We have largely completed the first phase of our value creation process centered around system integration. Next, we are focused on the second phase of our value creation, which is all about increased gross margin. These strategic priorities in '26 will include negotiating T&M contracts measuring margins by revenue size and type, while setting specific goals, introducing Limbach sales training and sales enablement resources, identifying cross-selling opportunities by leveraging our respective national account relationships and aligning resources to most profitable accounts.

We expect margin improvement at Pioneer to take shape throughout 2026, with exit margins higher than current levels as we start the second phase of our value creation process. We expect the gross margin improvement to continue for the next 2 to 3 years until Pioneer's margins reach alignment with the current business. Our record for improving margins of acquired companies is best demonstrated by our acquisition of Jake Marshall in December of 2021. At the time of purchase, the gross margin was approximately 13.4%. After 4 years of executing our value creation model from gross benchmarking to establishing account-focused teams, Kate Marshalls gross margin increased to 28% for 2025.

Today, Pioneer Power's gross margins is below the level where Jake Marshall was at the time of the acquisition. This is an indication of the meaningful value creation opportunity we have. Turning to the macro environment. we experienced positive demand improvement in the fourth quarter across all our verticals. Our institutional markets, health care, life science and higher education rebounded after softness in the middle of last year. The government shutdown on the DC policy changes caused many of our customers to temporary pause activities. However, the subsequent recovery in these verticals allowed us to achieve 24% ODR organic revenue growth in Q4.

I'll now make some specific comments on several of our key verticals. In our healthcare vertical market, many customers were spending their leftover budgets while also preparing 2026 normalized spending patterns during the fourth quarter. Due to the uncertainty of economic conditions at 2025, several national customers have started to engage us much earlier in their planning process. Our unique combination of professional service and installation expertise creates both speed to market and cause certain advantages. As customers are planning their budgets now and given our early involvement in the design and planning process, we anticipate a softer start in 2026 with the revenue building throughout the year.

As an example, in late December, 1 of our key national health care customers called us to help execute a critical infrastructure project. The engagement is worth approximately $50 million in contract value across 3 different hospitals in Florida. For this project, we are providing both program management and design build services. They chose Limbach because of our demonstrated ability to seamless procure, design and execute a complex product swiftly, whereas the engineering firm will perform the original assessment wasn't able to execute the project fast enough. The project is expected to be designed in the first half of the year, with work on site to begin in the second half of 2026.

The shifting to the data centers, where we have 2 very strong emerging relationships with hyperscale data center owners. These relationships have been developed due to our successful delivery of projects out of the Columbus, Ohio location over the past several years. Given the traction we have achieved and future opportunities with these owners, we've decided to dedicate resources towards building a national vertical market team focused on data center work. We believe we have the availability of resources, a unique skill set to position ourselves thoughtfully in this vertical.

As an example of our traction on the data center vertical took place in Q4, where we were awarded a specialty infrastructure project worth approximately $10 million in contract light. The scope of the project is to provide fabricated piping systems directly to the owner. This is the fourth project of this scope, and the owner is expressed interest in further expanding our relationship. We believe we are well positioned to see growth in this vertical in 2026 and beyond. In 2025, revenue from this vertical is less than 5% of total revenue. Our objective in 2026 is to increase vertical market diversity in the business and expanding our data center market contribution is critical to achieving that objective.

We see the opportunity for this vertical to represent a meaningful portion of revenue over time. In 2025, our industrial manufacturing vertical produced strong and steady results and was less affected by the DC policy concerns. Our recent acquisitions of Pioneer Power and consolidated mechanical help provide us with diversity both from a geographic footprint and vertical market standpoint. Our work here is conducted primarily via time material shutdown of work and small project work. We expect first quarter revenue in this vertical to also be soft due to spending seasonality that traditionally picks up in April.

Our success in 2026 will be driven by our ability to accelerate sales and leverage our previous investments. We expect our revenue and earnings to be weighted to the second half of the year with growing confidence in the sales growth demonstrated by fourth quarter bookings of $225 million compared to $187 million in total revenue during the quarter, giving us visibility into 2026.

Moving to our 2026 guidance. We expect revenue of between $730 million to $760 million, implying year-over-year growth of 13% to 17%. adjusted EBITDA of $90 million to $94 million, implying year-over-year growth of 10% to 16%. Underlying that guidance, we have used the following assumptions: Total organic revenue growth of 4% to 8%, and ODR organic revenue growth of 9% to 12%. We expect ODR as a percent of total revenue in the range of 75% to 80%, reflecting the stabilization of the mix shift, total gross margin of 26% to 27% and SG&A expense as a percent of total revenue to be 15% to 17% and free cash flow to be 75% of adjusted EBITDA for 2026 with significant cash used from operations in Q1 and due to the timing of incentive compensation, insurance and tax payments with strong cash generation building during the remaining quarters of the year.

As investors and analysts model 2026, it's important to note that our first quarter tends to be the slowest quarter of the year due to seasonality and customer spending patterns. We expect first quarter revenue to be similar to last year, with lower adjusted EBITDA due to higher SG&A in 2026. Additionally, we don't expect Q1 of 2026 to have the same gross margin write-ups of $900,000 that we had in Q1 of 2025. And as previously stated, we expect the second half of the year to be stronger than the first half. As our bookings momentum from last year converts into revenue, we expect revenue growth to accelerate in Q3 and Q4.

With that, I'll turn it over to Jamie to walk through the financials in more detail. Jamie?

Our Form 10-K and earnings press release filed yesterday provide comprehensive details of our financial results. So I will focus on the highlights of the fourth quarter and full year. All comparisons are for the fourth quarter and full year 2025 versus fourth quarter and full year 2024, unless otherwise noted. Starting with the fourth quarter, we generated total revenue of $186.9 million compared to $143.7 million in 2024. We Total revenue growth was 30.1%, while ODR revenue grew 51.8% to $145 million.

Of the total ODR revenue growth rate, was from the acquisitions and 23.9% was organic. GCR revenue decreased 13% to $41.9 million of which 26.1% was a decrease in organic revenue as designed as we continued our mix shift towards ODR, offset by 13.1% growth in revenue from acquisitions. ODR revenue accounted for 77.6% of total revenue for the fourth quarter, up from 66.5% in 2024. Total gross profit for the quarter increased 10.4% and from $43.6 million to $48.1 million, reflecting the ongoing growth of our ODR segment. Total gross margin on a consolidated basis was 25.7%, down from 30.3% in 2024 and primarily driven by the impact of Pioneer Power.

As we previously communicated, our acquisition integration strategy is focused on improving the acquired company's gross margin to align with our broader operating model over multiple years. ODR gross profit comprised 76% of total gross profit dollars or $36.4 million. ODR gross profit increased 19.1% or $5.8 million, driven by higher sales volume, partially offset by lower ODR segment margin of 25.1% and compared to 32.1% in the year ago period. The decrease in segment margin was primarily attributable to Pioneer Power's lower gross margin profile. DCR gross profit decreased 10.2% or $1.3 million due to lower revenues.

Gross margin increased from 26.9% to 27.8% driven by our ongoing focus on higher-quality projects. SG&A expense for the fourth quarter was $28 million, an increase of approximately 2.3% from $27.4 million. The increase was primarily attributable to incremental costs associated with Pioneer Power and Consolidated Mechanical. Consolidated Mechanical was part of the company for 1 month in the fourth quarter last year and Pioneer Power was not part of the company during the fourth quarter last year.

As a percentage of revenue, SG&A expense decreased to 15% of total revenue as compared to 19.1% in primarily due to the increased revenue from Pioneer Power. Interest expense increased $0.3 million to $0.8 million compared to $0.5 million in the prior year quarter, driven by higher borrowings under the company's revolving credit facility to partially finance the Pioneer Powers acquisition as well as higher financing costs associated with the larger vehicle fleet.

Net income for the quarter increased 25% from $9.8 million to $12.3 million and earnings per diluted share grew 24.4% from $0.82 to $1.02. Adjusted net income grew 22.6% from $13.8 million to $16.9 million, and adjusted earnings per diluted share grew 21.7% from $1.15 to $1.40. Adjusted EBITDA for the quarter increased 30.8% to $27.2 million compared to $20.8 million. Adjusted EBITDA margin was 14.6% compared to 14.5% in Q4 last year.

Turning to cash flow. Our operating cash inflows during the fourth quarter was $28.1 million compared to $19.3 million in the year ago period, driven by higher net income in 2025 along with slight improvement in working capital. Free cash flow, defined as cash flow from operating activities, excluding changes in working capital, minus capital expenditures, excluding our investment in additional rental equipment, was $21.1 million in the fourth quarter compared to $16.6 million in Q4 last year, representing a $4.5 million increase. Free cash flow conversion of adjusted EBITDA for the quarter was 77.5% versus 79.9% last year.

Now turning to the full year 2025. Total revenue increased 24.7% or $128 million to $646.8 million from $58.8 million, primarily due to the acquisitions of Pioneer Power, Consolidated Mechanical and Ken Island. Of the total percentage increase, acquisition-related revenue represented 21% of or $109.1 million and organic revenue represented 3.6% or $18.9 million. ODR revenue increased 40.6% and or $140.2 million to $485.7 million with acquisition-related revenue representing 23.6% of the increase or $81.4 million while organic revenue represented 17% or $58.8 million.

GCR revenue decreased 7% or $12.2 million to $161.1 million. Organic revenue represented 23% of the decrease or $39.9 million decline as the company continued its strategic mix shift to ODR, offset by acquisition-related revenue growth of 16% and or $27.7 million. Total gross profit increased 17.4% to $169.3 million compared to $144.3 million and total gross margin was 26.2%, a decrease from 27.8% in 2024, primarily due to the impact of Pioneer Power's lower gross margin and total net project write-ups of $5.8 million recognized in 2024 compared to $1 million in 2025.

ODR gross profit increased 20.5% or $22.1 million to $129.9 million from $107.8 million, while gross margin decreased to 26.7% from 31.2% and primarily due to the impact of Pioneer Power's lower margin profile and ODR related project write-ups of $3.9 million recognized in 2024 that did not recur in 2025. GCR gross profit increased 8% or $2.9 million to $39.4 million from $36.5 million, and gross margin increased to 24.5% from 21.1%, driven by the company's intentional focus on higher-quality projects.

SG&A expense increased by approximately $12.3 million to $109.5 million compared to $97.2 million in the prior year period. Of the increase, $9.3 million of the increase was attributable to incremental costs associated with Pioneer Power, Consolidated Mechanical and Kent Island. Consolidated mechanical as part of the company for only 1 month last year. Ken Island was part of the company for 4 months, and Pioneer was not part of the company during the entirety of last year.

The remaining SG&A increase of $3 million is attributable to the existing business. SG&A expense increased primarily due to a $1.2 million increase in noncash stock-based compensation expense and a $1.1 million increase in bad debt expense associated with the write-up of certain customer receivables that were deemed uncollectible. SG&A expense as a percentage of revenue decreased to 16.9% compared to 18.7% in primarily due to increased revenue resulting from the Pioneer Power acquisition.

Interest expense increased $1.3 million from $1.9 million to $3.1 million due to higher borrowings under the company's revolving credit facility to partially finance the Pioneer Power acquisition as well as higher financing costs associated with our larger vehicle fleet. Net income increased 26.5% to $39.1 million from $30.9 million and diluted earnings per share increased 25.7% and to $3.23 compared to $2.57 in the prior year.

Adjusted net income increased 26% to $54.5 million compared to $43.2 million and adjusted diluted earnings per share increased 25.3% from $3.60 to $4.51. Adjusted EBITDA increased 28.4% to $81.8 million compared to $63.7 million, and adjusted EBITDA margin was 12.6% compared to 12.3%.

Our operating cash flow for the full year was $45.7 million compared to $36.8 million in the prior year. Free cash flow, defined as cash flow from operating activities excluding changes in working capital, minus capital expenditures, excluding our investment in additional rental equipment was $70.1 million for 2025, compared to $52.3 million in 2024, representing a $17.8 million increase. The free cash flow conversion of adjusted EBITDA for the year was 85.7% versus 82.1% in 2024.

As Mike mentioned, for full year 2026, we continue to target a free cash flow conversion rate of at least 75% of adjusted EBITDA and expect CapEx to have a run rate of approximately $5 million. At this time, we don't anticipate any additional investments in our rental fleet.

Turning to our balance sheet. As of December 31, we had $11.3 million in cash and cash equivalents and total debt of $35.9 million, which includes $10 million borrowed on our revolving credit facility hedged at a rate of approximately 5.37%. As a reminder, at the end of June last year, we expanded our revolving credit facility from $50 million to $100 million in principal amount borrowings.

On July 1, we used a combination of cash and revolver proceeds of approximately $40 million to fund the Pioneer Power acquisition. During the quarter, we paid down the revolving credit facility, $24.5 million to the hedged amount of $10 million. And as of December 31, our total liquidity, defined as cash and availability on our revolving credit facility was $96.3 million. With this expanded facility and our expected strong cash generation, our balance sheet remains strong, and we believe we are well positioned to support our continued organic growth initiatives strategic M&A and opportunistic share repurchases.

That concludes our prepared remarks. Operator, you may begin the Q&A.

[Operator Instructions] Our first question comes from the line of Chris Moore with CJS Securities.

A couple -- so Mike, I might have missed a little bit of it. Can you talk a little bit more about the investment or specific steps you're taking to take advantage of the data center opportunity?

Yes, absolutely. So one thing that's going to be, I think, really important to our strategy, and we started this last year as well, too. It's really building 3 national vertical market teams, health care. And in some sense, that's been our proof point, industrial manufacturing and data center. And when we think about the way that customers buy -- they buy some stuff locally. But I think from a national perspective and a capital planning perspective, it's a lot of advantageous for us even from a resource perspective. So from a data center market, specifically, we've had some really good success in the Columbus, Ohio market with a few different customers.

And we always like to prove things out before we really make sure that we go all in from an investment perspective but -- as I referenced in the prepared remarks, it's our fourth project that we were recently awarded. And that customer and a couple of customers are starting to tell to us based on your availability of resources, our unique combination of engineered solutions with your ability to install and fabricate. We think we're really in a great position, not just in the Columbus market but in other markets as well, too.

And some of that will be overlap from a geographic footprint perspective. And some of that might be providing services just like we do in healthcare and other geographies as well, too. So we think it's a really good opportunity. We've been patient. And I think we're at a point now we want to dedicate some resources and we hope this vertical becomes a meaningful proportion of our revenue over time.

Got it. And you could see that potentially in a few years, that could be your #2 vertical?

We're going to see how it goes. We think there's tons of potential, though. I mean the spending of these customers -- and we're really all in on these 3 verticals, health care, industrial manufacturing data center, but we think it's also a great opportunity of an avenue from a diversity perspective as both too. So we're pretty bullish on it.

Got it. In terms of the ODR organic guide 9% to 12%, pioneer in terms of the back half of '26, is there any organic from Pioneer embedded in the 9% to 12%.

Yes. So after the first half of the year, then it becomes part of our organic because of the acquisition date was July 1 of last year.

Exactly. I just wasn't sure if you're assuming much growth from Panam just trying to get a sense in terms of how that business is going and if you assume some growth there later in the year as part of that -- as part of your 9% to 12%.

Yes. No, just a couple of things on Pioneer as well, too. Our focus, for sure, obviously, we want to see growth in them, but I think the gross profit improvement is equally, if not more important, than really seeing from a from a revenue perspective. Several different things were kind of moving past the Phase 1, which is really that system integration people process getting the accounting system switched over, and I think we're really focused, especially in the back half of the year from a gross profit perspective. A couple of things that I'll really hit on that we're going to focus on is, number one, our ability to push resources towards their best account look at metrics from a year-over-year perspective, revenue types getting on our accounting system allows us to do this, utilization of sales resources as well as 2.

So we're really looking to deploy the the full breadth of our value creation process. And really, that's really getting into the Phase II implementation. So in the back half of the year, is going to be our focus. It's still going to take some time. I got to go back and renegotiate some contracts. You've got to reintroduce yourself from a customer standpoint. So we've seen some real positive things and we're looking, I think, not just in '26 but '27 and '28 of really seeing that business get to the point where matches the other legacy businesses from a margin perspective. We think it's a really good opportunity.

Perfect. I leave it there. Appreciate it.

Our next question comes from the line of Rob Brown with Lake Street Capital Markets.

Moving up on the organic growth. I know you have kind of guidance for a year but what -- longer term, how do you see the organic growth in the OTR segment once you sort of get Pioneer integrated and the business is running? What's sort of the long-term organic growth, right? I think in the past you said.

In last 1 teens, 20%. Sure. Last year, we were at 17%. We had a strong finish in Q4. And this year, we're guiding to 9% to $12 million I think we're really kind of focusing only on 26 from that perspective but we're also trying to think about what is our real normalized growth rate from an organic revenue perspective as well, too. And I think about our growth trajectory as we look forward. our ability to still get really strong local results, we're going to continue to invest and support our sellers that we've really invested in the last 3 years as well, too.

The other thing, too, is I think from a national vertical market perspective, our access to capital and driving different decision makers and being a national provider, that's going to be an avenue as well too. So we're really focused on that 26% but we're obviously looking forward to see what the what the normalized level is and what I would say also from an opportunity perspective, too.

Okay. Got it. And then you talked about pretty strong bookings in Q4 kind of above the run rate -- how is that compared to normal? And it seems like the environment is getting better, maybe a sense of just how the bookings are coming in and what you see for the next.

Yes. So 1 of the things that we've learned as we continue to transition the business. Backlog is a factor, but sales bookings are really what we look from a business perspective. In Q4, we booked $225 million first $187 million of revenue in Q4, 1.2 ratio. I mean anything in our opinion above 1 obviously shows that there is some forward trajectory in the business as well, too.

So we like when the bookings are more than the revenue, we think we're starting to make -- return the corner from a sales perspective. We've learned a lot from a sales perspective. And I think we're really starting to turn the corner. I think the other thing, too, that we saw a little bit in Q4 was our ability to get involved early. And sometimes that may be from customers that looked at strained budgets from 2025 and really starting to plan effectively.

I would say specifically in the health care vertical market where definitely involve much more from a planning perspective. We're starting to understand where customers spend. I think probably the third different quarter in a row, we reported kind of a national health care provider, giving us multiple projects that were born out of facility assessments as well, too. So we think we're turning the corner. And we're looking forward, obviously, from continuing to look at that sales bookings versus revenue as kind of a key indicator.

Our next question comes from the line of Gerry Sweeney with ROTH Capital Partners.

Just stand on the topic of growth. Obviously, earlier in January, you announced 2 new position EV sales and the National Customer Solutions, Head of National Customer Solutions. How does this sort of play into the strategy and of growth? And it feels as though you're sort of maybe maturing into maybe different position of growth. I just want to see how this all plays together and maybe drive some opportunity down the line.

Yes. I think 1 thing that's really important from a messing perspective, local and national, they're both really important to us, and we thought to ourselves the best way to make sure that we're going to get the results is to take 2 proven executives and make sure that they're signed specifically to that task. So one of them is going to be working on sales enablement. Really, how do we -- we've invested about to 120 sales people over the last 3 years. How do we support the tools, training, how do we help them actually deliver those sales, and we're really excited to have that particular focus. The other individual is focused on national accounts.

In some organizations that may be 2 different roles for us, it's so important that we want to make sure we have 2 different executives working on it. And I think the other thing, too, it's not like these 2 we're working kind of independently from that perspective. They have independent focus, but there's lots of synergies as well too. So I really -- and I think that's why it's important that we've got people that understand the business. So I think when we start to mature, having that ability to sell at the national level, and from a national reach, geographic and as well as being able to deliver from a local geographic footprint perspective, we think that's going to be one thing that's going to make us really differentiated and really continue to elevate where we're at from as far as from a customer experience perspective.

How much of your sales has come from sort of a national account opportunity or -- or is it -- has it been much more on the local front?

I would say majority have been local. We've had lots of opportunities over the years from a national perspective, but we haven't had that focus. At the end of the day, the national customers, I don't care if it's data center industrial manufacturing or from a health care perspective, they want to see a seamless experience. And when they see a seamless experience, they're more willing to allocate more capital. So sometimes even from a local perspective, we can only take it so far with the local team. The top person at 1 of these mission-critical facilities could be the facility manager.

And all of those corporate decisions get made at a headquarters office. And we've had some success with health care that we feel like we can extend that. But I would say a lot of the sales have been local. Our opportunity is that we have a combination of local and national.

Got you. And then just 1 more question on acquisitions. Listen, I think you're looking at maybe getting into different areas like integrated facilities opportunities and there's a lot of companies out there that sort of fit in that space that maybe even purchased for higher multiples. So 1 question maybe with an A and B aspect. I mean do you continue to go after these opportunities? Or will you have to pay up for these opportunities?

And secondarily, does it make sense to maybe shift away from the Pioneer powers where it takes multiple years to sort of integrate it into your system and go after acquisitions that are more like right down the middle, like a fully integrated facility type acquisition. So in other words, buying -- paying up a little bit for an opportunity right in our wheelhouse versus maybe fixing one up?

Yes. So we look at it as important. Our long-term objective is to be an indispensable partner building owners with national REIT and local presence. So when you think about national reach, from an acquisition perspective, our ability to invest in companies from an integrated facility planning perspective, they could be professional service companies. They are the ones that are going to have some of these relationships, they're going to be from a planning perspective. We think that's really important. When I think about the concept of local presence, you're still going to need that geographic footprint as well, too. So I don't think it's a question of 1 or the other. It's a question of combining the 2 of them together and making sure these acquisitions fit with that long-term projective.

Obviously, from a geographic footprint perspective, the multiple may be different than from an integrated facility planning perspective. But our end game remains the same. Buying companies great companies with great people that can ultimately achieve our long-term objective and making sure there's a really good fit. We're not just buying assets in compiling them. We're making sure that they're really smartly integrated from a strategy perspective.

Our next question comes from the line of Brian Brophy with Stifel.

Just following up on the national account discussion here. In the past, you kind of talked about going from 20 MSAs or 40 MSAs and then pursuing national accounts. Now it seems like you're leaning into it a little bit more heavily but we haven't obviously hit that 40% MSA number. So can you talk about what's driving that change and just confidence level in being able to secure some of these despite not having a larger footprint?

Yes. So we've looked at it and we've really tested our paradigms on this as well, too. So we've realized, I think, especially in the health care, and I think we're going to see the same thing in the data center. It's great that we're in a geographic location. It's almost an added benefit, but we can still provide a suite of services. As an example, we can still provide design-build services even if we're not in a geographic footprint as well, too. So I think about when we think about future MSAs, we're looking for overlap of national customers because not only can we provide high-level program management design build services, we get an added benefit from an installation process as well, too.

So I think really, we're still going to need geographic footprint but if we can combine with a national account presence, it's going to accelerate the opportunity within not only the acquisition that we purchased, but also from a national vertical market perspective. So we're going to be really strategic from those MSAs.

Got it. That's helpful. And then do you have a sense -- or can you give us a sense of how much of the growth in the guide is related to capitalizing on some of this national account opportunity or should we expect to see more of these benefits in 2017?

I think to really -- to really take off, it's going to be 27%. I think there's some built in but I think it's really going to be. This year is focusing on from a selling perspective. So some of the stuff -- you've asked questions before about the health care jobs that we sold last year. Well, those are going to obviously get to revenue this year. But we're going to see some of it, I think, in the back half of the year. But I think the real opportunity from accessing capital, being able to burn the work, I think that's going to be as much of a 27%, even more so than a '26 perspective.

Okay. That's helpful. And then just 1 clarifying question on the data center opportunity. Are you still focused on existing buildings here? Or are you starting to get into new construction at this point?

We're focused on existing buildings. There's been situations where we've been able to provide infrastructure. From a carve-out perspective, a lot of the work is direct owner. So I think that's 1 thing that we're super focused on. I think as we get into these relationships, we're going to make sure we're always getting the right risk-adjusted returns, too. I think we want to make the smart business decision as well, too. So we're going to look at the opportunity, and we're going to make sure that it makes sense with our strategy.

Your next question comes from the line of Tom Sano with JPMorgan.

One, Jamie, could you please provide an update on the integration of Pioneer Power and share -- increase some time lines, milestones for gross margin improvement. Additionally, what lessons have you learned from previous integrations such as Jake Marshall regarding driving a margin improvement to acquired businesses, please?

Yes, absolutely. So there's a couple of different pieces of information that we provided. One of them I mentioned in the prepared remarks but it's also in Slide 18 in our deck as well, too. So a couple of things we're at the point from a Pioneer Power perspective, we're really wrapping up Phase 1 integration. And we've learned from past deals, the sooner we can get through Phase 1 than better. And a lot of times, that's directly related around the accounting system upgrade. -- we've -- we just want to get that out of the way. We don't want to accelerate that process. That allows us to see numbers. It's a big change management piece that we try to get through.

So I think at this point, we're really focused from a Phase II implementation perspective. So we -- we tried to provide some additional information that we thought would be helpful for investors just to kind of show the trajectory from a J. Marshall perspective. Take Marshall at approximately the time purchase of 13.4% gross profit at the end of 2025, they were approximately 28.1%. So a tremendous increase in gross profit. One thing we learned from Jake Marshall is our Phase I got pretty extended. We didn't really switch over the accounting system for 12 months, and we learned that we wanted to get that out of the way as quickly as possible. So that's 1 of the lessons learned, we applied.

The second lesson learned that we applied is we want to be in front of the customers as soon as possible. We want to listen to customers. We want to have joint meetings. We've already started that process from a Pioneer Power perspective last year, and we want that to build into additional Part of the reason for that is we want to learn what their pain points are, what kind of value are we bring in. So we can then propose different solutions that can drive margins as well, too. Sometimes there's an opportunity to raise margins but margins with value is much more better from a long-term customer perspective as well, too.

So we want to be -- I think the focus, especially at the beginning of the year. Hopefully, we see impact in the second half of the year is get in front of customers, making sure we're focused on them, listening to what they want and then propose solutions that can drive margins hopefully in the back half of the year and really start to impact in 2017. So when I look at trajectory from a gross margin perspective, we kind of have that Jake Marshall example. Our objective, of course, is how can we accelerate that time line but still implement those lessons learned.

And follow-up on gross margins. To achieve 26%, 27% gross margin guidance, what are the most material risks and uncertainties you are monitoring for 2026? And how you're preparing the business to navigate potential headwinds?

Sure. So we're very focused on making sure that we're smart from a risk perspective. So 1 of the things, too, if you look at our -- both our owner-direct fixed-price projects greater than 10,000, still an average project size of $240,000 and GCR projects are an average project size in 2025 of $2.6 million. So we really try to make sure that the projects have a shorter duration is possible. That allows us to flex and ebb as well, too. So that's always been very important from a strategy perspective. And I would say kind of maybe from a holistic perspective is. A lot of our model really comes down to our ability to sell. That's why from a Q4 perspective, our ability to sell $225 million birth revenue and $187 million is, to us, is an important step I think as we continue to sell work, we really want to evaluate from a risk perspective as well, too.

So it's a careful balance but those are probably the 2 things that we really look at and are always looking for opportunity to improve gross margin.

Thank you. And we have reached the end of the question-and-answer session, and I'll turn the call back over to Mike McCann for closing remarks.

In closing, our strategic priorities for 2026 are the following: ODR organic revenue growth and total revenue growth margin expansion to evolve customer solutions, smart capital allocation scale through acquisitions. Over the past several years, the company has transitioned from a typical E&C contractor with single-digit EBITDA margins to a predominantly ODR based platform with strong free cash flow conversion, operating with very minimal leverage. The structural shift is largely complete, and our focus is now on growth.

Every acquisition since 2021, Jake Marshall, Ace industrial, industrial layer, Kent Island consolidated mechanical Pioneer Power was sourced on a proprietary basis and was strategically aligned with our specialized value approach, cultural fit and niche expertise across our verticals. All of our acquisitions were underwritten at multiples of 5x to 6x adjusted EBITDA. And with the operational improvements we make, the ultimate multiple paid is lower by the growth in EBITDA. Through repeatable playbook, we improved margins and use resulting cash generation, delever and redeploy capital.

The company has expanded its adjusted EBITDA margin from from 4.4% to 12.6% in 2020 and our leverage sits at just 0.3x. And we maintained nearly $100 million of liquidity, all while meaningfully increasing the quality and margin of the business. At Limbach, we're building a long-term business model focused on delivering durable value over time. We bring a unique combination of engineered expertise and direct execution with building ours. Through long-term consultant relationships, we help our customers deliver multiyear capital plans to extend beyond traditional backlog. We believe this differentiated approach positions us well for sustained growth and shareholder value creation.

On March 22 through 24, we're attending the Roth Conference in California, and we hope to see some of you there. Thank you again for your interest in Limbach, and have a great day.

This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation. Have a great day.

Good morning, and welcome to the Limbach Holdings Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to your host, Lisa Fortuna of Financial Profiles. You may proceed.

Good morning, and thank you for joining us today to discuss Limbach Holdings' financial results for the third quarter of 2025. Yesterday, Limbach issued its earnings release and filed its Form 10-Q for the period ended September 30, 2025. Both documents as well as an updated investor presentation are available on the Investor Relations section of the company's website at limbachinc.com. Management may refer to select slides during today's call and encourages investors to review the presentation in its entirety. On today's call are Michael McCann, President and Chief Executive Officer; and Jayme Brooks, Executive Vice President and Chief Financial Officer. We will begin with prepared remarks and then open the call to questions.

Before we begin, I would like to remind you that today's comments will include forward-looking statements under federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts such as those about expected financial performance are also forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements. A discussion of the factors that could cause a material difference in the company's results compared to these forward-looking statements is contained in Limbach's SEC filings, including reports on Form 10-K and 10-Q.

Please note that on today's call, we will be referring to non-GAAP measures. You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our third quarter 2025 earnings release and in our investor presentation, both of which can be found on Limbach's Investor Relations website and have been furnished in the Form 8-K filed with the SEC.

With that, I'll now turn the call over to President and CEO, Mike McCann.

Good morning, and welcome, everyone. Thank you for joining us today. At Limbach, we play a critical role as an enterprise provider of building system solutions, ensuring the reliability and continuity of mission-critical infrastructure across our customers' facilities. We're focused on industries with long-term durable demand where facility assets simply cannot fail. We believe our distinct capabilities position us to deliver sustained growth and attractive risk-adjusted returns.

As a reminder, our growth strategy is underpinned by three core pillars. The first pillar is scaling our owner-direct relationships or ODR business. Here, we're focused on working in partnership with owners of mission-critical facilities in existing building environments. This work consists mostly of routine maintenance, emergency repairs, small capital projects, and larger retrofit and renovation projects. Some of this work is contractual and some is predictable given the age and complexity of mechanical systems.

The second pillar is enhancing profitability and increasing wallet share through the introduction of expanded product and service offerings. We have strong and growing relationships with our owner-direct customers built on daily performance, trust and our vast knowledge of their critical building systems. As a result, there is a win-win opportunity for us to expand our service offerings to these customers by introducing new capabilities to solve a greater breadth of issues for owners.

As our capability expand over time, we can deliver more value to both the owner and Limbach. Unlike traditional E&C firms that rely on reactive bidding in response to a project, we're seeing these facilities every day providing solutions. By working directly with owners, we have a better grasp of risk and value. In order to further leverage these relationships, we're formalizing a scalable structure by building a proactive sales team that positions Limbach as a building system solutions provider.

The third pillar is strategic M&A aimed at extending the reach of the Limbach brand, strengthening our market presence and expanding our capabilities. Through targeted acquisitions, we seek to diversify our vertical market exposure and broaden our geographic footprint while adding new products and offerings that align well with our ODR value proposition. Over the past couple of months, we received a number of questions from investors who want to better understand our various revenue streams, particularly in the ODR segment. So let me walk through the ODR business and break down the sources of our revenue.

There are three quick burning revenue streams, maintenance contracts, work orders, and time and material or T&M work. Maintenance contracts generate predictable recurring revenues that are usually smaller in nature, but which have strong margins. Our maintenance contracts run 1 to 3 years in length prior to renewal and are built around routine service for specific equipment at customer sites. Work orders and T&M work often results from problems identified during scheduled maintenance or for emergency repairs or opportunistic upgrades of system components.

In some parts of the market, this is referred to as break-fix work. Any one individual work order may not be predictable, but in a large complex facility, there's generally an estimable amount of this kind of work in any given year. It's usually quick burning and completed an on-demand basis or as directed basis. It can be priced based on labor rates and material markups that are prenegotiated with customers and anticipating -- anticipation of needing to act fast when the work happens or a small fixed price jobs less than $10,000.

For example, large industrial customers usually schedule seasonable shutdowns when their facility reduces production and output of repairs and maintenance. This provides us the opportunity to execute a high volume of this type of small work in a short period of time. Because T&M work is performed on what's essentially a cost-plus basis, the risk profile is different than, say, a large fixed price project. Taken together, all these work streams account for approximately 1/3 of the ODR revenue for year-to-date 2025. Irrespective of the specific structure of the revenue, when executing this kind of work, Limbach most often becomes an extension of the facility staff regardless of the contractual relationship.

Fixed-price projects greater than $10,000 in our ODR segment can range from quick burning work that is booked and executed in the same month or quarter to projects that typically last less than a year. They're usually performed within existing facilities are typically tied in some way to an existing customer relationship and often a maintenance and service relationship. This means we're operating in an environment where we know the systems, the sites and the customers. This preexisting knowledge reduces uncertainty and enhances our ability to manage outcomes. As a result, the risk profile of these ODR projects is very different than GCR projects.

Additionally, the average ODR project size is approximately $245,000 as compared to the average GCR project size of approximately $2.9 million. Both of those are year-to-date 2025 data points. This ODR project work accounts for approximately 2/3 of our ODR revenue. So at a high level, our intentional pivot towards owner-direct relationship has reshaped our revenue mix to become a more diversified and lower risk with more margin consistency. We believe this mix should provide a greater resilience through economic cycles and reflects our focus on stability, predictability, and long-term value creation.

On a consolidated basis, ODR revenue as a percentage of total revenue has steadily increased since 2019. We began to shift our strategy. ODR represents [ 76.6% ] of total revenue in the third quarter of 2025 and 74.1% on a year-to-date basis, in line with our targeted goal between 70% to 80% for the year. Going forward, the strategy continues to be focused on ODR growth and a reduction in GCR revenue. Keeping in mind, businesses we acquired at the time of acquisition typically do not have an evolved ODR strategy as Limbach. However, whether we're speaking about an acquired business or a legacy business, this strategy is driving margin expansion and earnings growth over time, while we -- while also, we believe reducing our overall risk profile.

Turning to backlog. The strategic shift from GCR to ODR means that a larger percentage of our revenue is now generated from quick burning shorter-term projects that can be booked and completed within the same quarter, and therefore, it's not captured in backlog at quarter end. As a result, backlog alone is no longer as predictable, a leading indicator of future revenue as it was in 2018 or even 2022 with a heavy GCR focus, which is typical for E&C companies.

Occasionally, we will book projects with building owners that span multiple quarters. This work is captured in the backlog. However, it's a smaller portion of the overall revenue mix and it can experience quarter-to-quarter fluctuations. So today, looking only at backlog, we'll miss a large percentage of our current revenue streams. Earlier I described our work order and T&M revenue streams and highlighted the industrial shutdown work we engage in. Most of these revenue streams never get captured and included in the quarterly backlog number, and they represent a far larger number than they did several years ago.

Instead of the large high-risk multiyear projects that were a core element of our legacy business model, we're now focused on building a diversified business with multiple revenue streams and what we think is durable demand. Selective M&A remains a cornerstone of our growth strategy, enabling us to expand both our geographic footprint and deepen market share within existing regions and to expand our product and service offerings. Over the last couple of years, our focus has been broadening on our footprint in ways that enhance diversity and position us to serve national customers.

Our approach has always been conservative, and we've remained disciplined and selective in what we pursue even when the M&A market has gotten overheated. To date, we've acquired six high-quality cash flow generating businesses at fair values and have used risk-mitigating structures where possible. We believe the Limbach brand and our unique business model positions us to engage with great companies that over time, we can reposition to align with our owner-focused vision.

After closing, our goal is to improve margins further by implementing our value creation processes. Our main focus in every deal is to expand the quality of gross profit through benchmarking, building a proactive sales team and leveraging operational standards, using the same tools that transformed our business units over the last 6 years and led to much higher margins at lower risk. We believe we can expect better results at acquired companies than what we underwrote at the time of the closing of these transactions.

At Pioneer Power, our most recent acquisition, we're actively executing the first phase of our value creation strategy. During diligence, we identified improving Pioneer Power's lower EBITDA and gross margins as a great opportunity for the intermediate term. We are now transitioning Pioneer Power to Limbach's accounting system and operating systems. Once complete, we can start to focus on improving the quality of gross profit and providing access to other parts of the Limbach operating platform.

We've got a talented team in the Twin Cities. We want to make sure that we deploy all the tools at our disposal to support them and to allow the business unit to flourish. We evaluate a large volume of acquisition opportunities each year and intentionally walk away from the majority of them. Under my leadership, we will never buy a business just to do a deal. Our track record reflects disciplined underwriting, strategic fit and a focus on asymmetrical returns. There is a meaningful upside to our company if we're right and limited downside if we're wrong. There are times we lose competitors willing to pay higher multiples, and we're perfectly comfortable with that.

Next, I'll provide an overview of the environment in our core vertical markets. Healthcare has long been one of our strongest, most strategic end markets across all operating regions. Given the mission-critical nature of the healthcare facilities, customers can defer repairs briefly, but delays in capital spending rarely extend beyond a single quarter. While some customers experienced temporary delays during the summer months in funding both operating and capital expenditures, we're now seeing spending patterns normalize as the year progresses.

Our sales teams have engaged with core customers and emphasize the importance of long-term planning. Increasingly, we're hearing that cost certainty is more important to our customers than simply achieving the lowest cost. This can be achieved by implementing proactive programs, which help avoid reactionary spending and minimize risk to business operations caused by building system downtime.

On our latest earnings call, we shared that a national healthcare owner engaged us to conduct facility assessments across 20 locations. In Q3, this initiative has already translated into $12 million in capital projects at four sites. We'll serve as a design builder for these MEP infrastructure projects, three of which are outside our current geographic footprint. For those out-of-market projects, we'll lead budgeting, design and procurement and utilize a network of subcontractor partners where necessary.

In industrial manufacturing markets, our customers continue to execute seasonal shutdowns and facility upgrades in order to optimize the production of their plants and facilities. During the quarter, both Pioneer Power and Consolidated Mechanical benefit from this type of activity, which is a core element of their local business models.

In the data center market, Limbach remains focused on supporting hyperscale operators through existing building projects and specialized services, primarily in the Columbus, Ohio market. In Q3, we provided specialty fabrication services to one of our customers, enabling on-site contractors to concentrate on their core workloads while we offered supplemental support. That arrangement provided Limbach with what we think is the optimal balance of risk return and resource allocation. While our current footprint and risk profile limits the scale of data center work, we see meaningful growth potential through our national sales efforts and future geographic expansion through strategic acquisitions.

In the life science and higher education market, some of our higher education clients have adopted a cautious approach to spending during ongoing policy uncertainty in Washington, D.C. While the need for our services remains essential to maintaining mission-critical facilities, many temporary pause capital projects. Encouragingly, these clients have begun communicating anticipated spending needs for the coming year, and we are proactively aligning the resources in preparation for ramp-up. One major client has already requested full-time technician support beginning in January.

In the culture and entertainment vertical, we continue to see consistent spending from our key customers. Our recent involvement in capital planning discussions provided valuable insight into some clients' 2026 budgets. Notably, our largest customer in this segment has shared plans for significantly expanding capital and operating budgets next year. They've invited us to review their respective project list and provide input on the work we'd like to pursue, allowing us to proactive plan and allocate resources for 2026.

Next, I'll provide an update on sales and marketing initiatives. For the past 3 years, we've made deliberate investments in building our sales team, which has resulted in a higher SG&A relative to many of our E&C peers. Our training efforts are focused on equipping the team to anticipate owner challenges and craft solutions that are difficult to commoditize. We believe this investment will soon begin to yield measured results, both by leveraging SG&A more effectively and by enhancing the quality and consistency of gross profit.

As we head into Q4, our priority is to deepen sales training to ensure a strong start to 2026. In many cases, we're not competing against local contractors. Instead, we're working directly for owners in a proactive capacity, helping them anticipate issues and plan their budgets accordingly. A recent example from Florida illustrates this approach well. Over the past 2 years, we've supported a $25 billion annual revenue healthcare customer with emergency repairs and small capital upgrades.

During a routine inspection of the main cooling feed, our on-site account manager identified signs of deterioration. We conducted non-destructive testing and the piping was on the verge of failure. In response, we developed a proposal that clearly outlined the ROI and presented it to the facility manager who was then escalated to the CFO and the Chief Medical Officer. In Q3, the project was funded and we were awarded Phase 1 of the repair. This is a prime example of a capital project where we weren't competing for the work. Instead, we earned it by identifying the issue early and presenting a compelling data back justification for the investment.

One of our key differentiators is our ability to offer professional services, including MEP engineering, facility assessments, program management and commissioning. These services are particularly attractive to national customers who can leverage our domain experience even in markets where we might not have field execution capabilities. These services, along with program management are a key driver of margin expansion.

During the quarter, we had one of our national healthcare customers engage us to analyze a hospital in New Mexico, both from a cost and engineering perspective as they're considering making a substantial investment in the facility. This initial research has the potential to become a design build infrastructure project. We find that customers appreciate our ability to provide an engineered solution that we can also build. While currently, our professional service resources are dedicated to national healthcare owners, in the future, we're looking to expand these capabilities into our data center and industrial manufacturing vertical markets.

As we broaden our services portfolio, which includes the expansion of our professional services and solutions-based selling, we see a path to achieving long-term gross margins in the 35% to 40% range, driven by two key dynamics: First, our ability to deepen customer relationships by shifting from reactive transactional sales to proactive consultative solution sales. This approach enables us to build long-term operating and capital programs that are tailored to solving our customers' needs rather than competing solely on price. Second, our ability to bundle offerings creates margin layering opportunities. For example, an infrastructure project may include a rental component, allowing us to mark up both individual elements and the overall project cost. These strategies position us well to deliver sustainable growth at attractive margins.

Moving to guidance. We are reaffirming our 2025 guidance of total revenue in the range of $650 million to $680 million and adjusted EBITDA of $80 million to $86 million. Of note, we have made some updates to our underlying assumptions used to model 2025 guidance to better reflect current market conditions, project timing, and operational performance trends. These updates influence our outlook and are incorporated into the public issued guidance ranges for total revenue and adjusted EBITDA.

As I mentioned earlier, we are on track for total ODR revenue to be 70% to 80% of total revenue. Total ODR revenue growth is expected to be 40% to 50% with ODR organic revenue growth of 20% to 25% Total organic revenue growth is expected in the range of 7% to 10% from 10% to 15% previously discussed, as we originally anticipated a more positive mix shift towards ODR and GCR.

Pioneer Power's revenue performance this quarter exceeded our initial expectations. While Pioneer Power's current margin profile differs from Limbach's consolidated performance, we're actively integrating Pioneer into Limbach's platform, and we have a path to implement operational and commercial enhancements that we expect to expand margins over time. Because of the higher revenue contribution of Pioneer, total gross margin is expected to be 25.5% to 26.5% from 28% to 29%. Additionally, SG&A as a percentage of total revenue is expected to be between 15% to 17% from 18% to 19%, primarily due to the higher revenue contribution.

Now I'll turn it over to Jayme to walk through the financials.

Our Form 10-Q and earnings press release filed yesterday provide comprehensive details of our financial results, so I will focus on the highlights for the third quarter. All comparisons are third quarter 2025 versus third quarter 2024, unless otherwise noted. We generated total revenue of $184.6 million compared to $133.9 million in 2024. Total revenue growth was 37.8%, while ODR revenue grew 52% to $141.4 million. Of the total ODR revenue growth of 52%, 39.8% was from acquisitions and 12.2% was organic. GCR revenue increased 5.6% to $43.2 million, of which 25.1% was growth from acquisitions, offset by an organic revenue decrease of 19.5%, which is as designed as we continue our mix shift towards ODR. ODR revenue accounted for 76.6% of total revenue for the third quarter, up from 69.4% in Q3 2024.

Total gross profit for the quarter increased 23.7% from $36.1 million to $44.7 million, reflecting the ongoing growth of our ODR segment. Total gross margin on a consolidated basis for the quarter was 24.2%, down from 27% in 2024, driven by the lower gross margin profile of Pioneer Power revenue. Our strategy with acquisitions is focused on improving the acquired company's gross margin to align with our broader operating model over time. ODR gross profit comprised approximately 80% of the total gross profit dollars or $35.7 million. ODR gross profit increased $6 million or 20.3%, driven by higher sales volume, partially offset by lower ODR segment margins of 25.2% compared to 31.9% in the year ago period.

The decrease in segment margin was primarily attributable to Pioneer Power's lower gross margin profile. GCR gross profit increased $2.5 million or 39.3% due to higher margins of 20.8% compared to 15.8%, driven by our ongoing focus on higher quality projects. SG&A expense for the third quarter was $28.3 million, an increase of approximately 19.3% from $23.7 million. This increase includes SG&A associated with Pioneer Power, Kent Island and Consolidated Mechanical, where Kent Island was part of the company for only 1 month in the third quarter last year and Pioneer and Consolidated Mechanical were not part of the company during the entire of the third quarter last year. As a percentage of revenue, SG&A expense decreased 15.3% as compared to 17.7%, primarily due to the increased revenue in the third quarter of 2025 provided by Pioneer Power.

Adjusted EBITDA for the quarter was $21.8 million, up 25.6% from $17.3 million in Q3 '24. Adjusted EBITDA margin was 11.8% compared to 12.9% in Q3 last year. Net income for the quarter increased 17.4% from $7.5 million to $8.8 million, and earnings per diluted share grew 17.7% from $0.62 to $0.73. Adjusted net income grew 16.4% from $10.9 million to $12.7 million and adjusted earnings per diluted share grew 15.4% from $0.91 to $1.05.

Turning to cash flow. Our operating cash inflow during the third quarter was $13.3 million compared to $4.9 million during the third quarter last year, primarily due to the timing of accrued expenses, offset by the timing of billings that impacted changes in working capital. Free cash flow, defined as cash flow from operating activities, excluding changes in working capital, minus capital expenditures, excluding our investment in additional rental equipment, was $17.9 million in the third quarter compared to $13 million in Q3 last year, representing a $4.8 million increase.

The free cash flow conversion of adjusted EBITDA for the quarter was 82% versus 75.3% last year. For full year 2025, we currently continue to target a free cash flow conversion rate of at least 75% and expect CapEx to have a run rate of approximately $3 million. This amount excludes an additional investment of $3.5 million in rental equipment for 2025, of which $2.1 million occurred in the first 9 months of the year.

Turning to our balance sheet. As of September 30, we had $9.8 million in cash and cash equivalents and total debt of $61.9 million, which includes $34.5 million borrowed on our revolving credit facility, of which $10 million is at a hedge rate of an applicable margin plus 3.12%. As a reminder, at the end of June, we expanded our revolving credit facility from $50 million to $100 million. On July 1, we used a combination of cash and an additional drawdown of approximately $40 million to fund the Pioneer Power acquisition. During the quarter, we paid down the revolving credit facility $17.3 million. And as of September 30, our total liquidity, defined as cash and availability on our revolving credit facility is $70.3 million.

Additionally, we intend to deploy free cash flow to continue to reduce our borrowings under the revolving credit facility. With this expanded facility and our expected cash generation from the business, we believe our balance sheet remains strong, and we believe we are well-positioned to support our continued growth initiatives and strategic M&A transactions. That concludes our prepared remarks. I'll now ask the operator to begin Q&A.

[Operator Instructions] Our first question comes from the line of Chris Moore with CJS Securities.

So it looks like $47.3 million of Q3 revenue was acquisition-related, $37 million of that ODR, $10.3 million GCR. Can you give us a sense in terms of how much revenue Pioneer contributed to that $47 million and the split between ODR and GCR within Pioneer?

Yes. The Pioneer Power, they continue to produce, I think, even better than we thought they would produce. So we're thinking by year-end, the contribution for the second half of 2025 is closer to actually $60 million, heavily weighted from an owner direct side as well, too. And I think a lot of that strong contribution is from the Industrial segment as well, too, some shutdown work, strong customers and brand, which is always nice to validate after we've had the acquisition as well, too.

I think the other thing, too, even from a margin perspective that we're really looking forward to from a Pioneer perspective is the opportunity. We see a lot of good solid foundation from a Pioneer Power perspective. But at the same time, I think as we've -- right now, we're in the process of transitioning their finance and operating systems, but we already see signs of our ability to not only benchmark their gross profit, but to look for opportunities as well, too.

Got it. So the $60 million you're talking about for the second half, it looks like the bulk of that is in ODR. Am I looking at that correctly?

Yes. Yes, you are.

Okay. And so just -- I got it that the gross margins are -- should be coming up there. Why are they -- within their ODR segment, why are they lower at this point in time? Do they do different work for clients? Are they focused on a different vertical? Just any thoughts there?

Yes, it's very interesting. We've seen -- one of the main opportunities we look at with all their acquisitions is increase of margin. So this is the common playbook that we see. And a lot of times, it comes down to they run a really good business. They have relationships. And it's a matter of understanding benchmarking as much as anything now that we've got -- even from an industrial base or even from other contracts that we purchased, we always take a look at it from a margin perspective. A lot of times, that's eye-opening as well, too.

I think the other piece of it, too, is how they go to market. They're going to market from a branding reputation perspective. But one of the key elements that we add to is a proactive sales team. And a lot of times, that makes a difference. So at the end of the day, it's a matter of taking great customer relationships and a brand, understanding there's 4 or 5 triggers that allow us to expand margins over time. So even -- and we've looked at it not just from Pioneer Power. Pioneer Power obviously is a bigger contributor. But even from the other acquisitions, it's always the same elements over time. It takes time, but I would say it's still the same playbook, and we see lots of opportunity.

Got it. Very helpful. Maybe just the last one. Just SG&A as a percentage of revenue, 15.3% versus 18.7% in Q2. The target range is coming down. Is it reasonable to think that SG&A as a percentage of revenue would tick up a bit in '26 versus the 15% to 17% that we're talking about in '25?

Yes. The big piece of that SG&A reduction was due to the different profile from Pioneer of lower gross profit, but also lower of SG&A as well, too. There's some investments that we're going to need to make going into 2026. And that's not only from a Pioneer and other acquisitions, but also from an overall business as well, too. Jayme, anything you want to comment on that?

Yes, because part of it to get -- I mean, we have a lower rate this period for the fiscal year. But going into next year, too, as Mike said, looking at specifically around Pioneer that proactive sales force piece of it. So we've not given the guidance yet for the next year.

Our next question comes from the line of Brian Brophy with Stifel.

I appreciate all the additional disclosure here. When I try to, I guess, back out PPI from ODR, it looks like gross margins kind of on the core business were down a little bit from a year ago. Is that correct? And can you give us, I guess, a sense of the magnitude and what the driver was?

From a margin perspective, I'll let Jayme answer from the financial exact number perspective. But our margins do end up fluctuating from a quarter-to-quarter basis. And I think it just depends on the mix of work that may be within the quarter. And one thing that you pointed out even as we mentioned in the script, is that combination of 1/3, 2/3 essentially goes through the business as well, too, where 1/3 is that quick burning work and 2/3 of the owner direct revenue is fixed price projects that are of average size year-to-date of $245,000. So at the end of the day, nothing different from -- it's more of that dynamic of the quarter-to-quarter mix of whether it's that quick burning or it's fixed-price projects.

Yes, I was just going to reiterate that. Yes, definitely in line -- it will fluctuate quarter-to-quarter based on the mix, and it's really the impact of the PPI margin for this quarter.

Okay. And then can you give us a sense on ODR organic growth in the first half of the year? I guess the 20% to 25% guidance for 2025 seems to imply an acceleration in the fourth quarter. I just want to understand if that is accurate and what's driving that acceleration?

Yes. Year-to-date, we're 14.4% organic ODR, and we've talked about a range of 20% to 25% for a full year. So that does imply some acceleration. A couple of things that we're really looking at even from a Q4 perspective, continuing quick burning work from a revenue perspective, budgets that need to be spent by year-end. A lot of people have delayed that OpEx spend and they're in a position right now where they have to spend those dollars, small projects that are churning. And I think that's also a result of that sales team. The last 3 years, we've invested in the sales team. The recent sales team investment that we hired in Q4 and early Q1, it's been about 9 or 12 months. We've been in position with customers, and that allows us to give visibility kind of looking into Q4 from that perspective.

Okay. That's very helpful. And then in your opening comments, you mentioned the $12 million of capital projects that were awarded from this facility assessment award that you talked about last quarter. Do you anticipate that potentially driving further awards? Or do you think that's kind of the extent of the opportunity and additional follow-on awards from these facility assessments?

Yes. This is really exciting. So a couple of things that we've learned through our evolution. A lot of times on local relationships, the relationships will start with a maintenance project or really quick turning work. On the national side of things, we really started with healthcare. We're thinking about data centers and industrial as we kind of expand going forward. A lot of times, that work starts with professional services.

Facility assessment, engineering, it's a repositioning of that ultimate entry point. And those customers are very much from a cost certainty, quality, consistency type perspective. So we've got a lot of these national relationships that we've started to. And they typically do start with that facility assessment ultimately, and then we come up with a pro forma. So that particular opportunity, those 20 assessments turned into $12 million of projects over four different sites, three of which were outside of a geography, that's in.

So I think I look going forward, we're excited about the opportunity for multiple customers from multiple assessments of that being kind of a runway for us to have another avenue of work that comes in. I think another interesting thing as well, too, is it's kind of we're going to be a cross-section of having those local maintenance and service type agreements as quick project agreements as well as kind of -- as well as the national relationships. And the two of those meeting together are also a big opportunity for us as well, too.

Appreciate the color there. Last one for me. Past 3 years, you've talked about hiring about 40 salespeople a year. Curious how you're thinking about investing in the sales staff this year relative to kind of the prior pace.

Yes. So it's interesting. I think we're definitely looking at -- as we go into every year like we've done in the last 3 years from a sales staff perspective. I think we've made a lot of hires over about 120 hires over that period of time. I think we're continuing to make sure that we're supporting our sales staff. I think that's going to be a big piece of next year from a sales enablement perspective as well, too.

What resources can we give them to make them successful? How can we connect dots for them? I think that will be a big focus going into next year as well, too. So it's almost as much sales enablement next year as much as traditional sales staff. We also are looking forward to production as well, too. It takes a long time to get sales staff up and running. But whether it's professional services, whether it's data analysis, whether it's financial analysis that we do for customers, those are the sort of things going into next year that we're really excited to make sure that we're making our sales staff as successful as possible.

Our next question comes from the line of Rob Brown with Lake Street Capital.

Congrats on the progress. Kind of back to the organic growth, how do you think about the longer-term organic growth? It was the guidance tweaked it down a little bit this quarter. But what do you sort of think of as the long-term organic growth and what needs to happen to kind of get there?

Yes. So from an organic growth perspective, and of course, that -- it's what we're doing from a GCR perspective, but also from an owner-direct perspective. So let me touch on GCR real quick. Our goal is to be as selective as possible. So sometimes there will be periods where GCR declines like in this period. And that's a result of being super diligent to quality of work. And we're going to continue to push towards owner direct and be very opportunistic from that perspective.

From an owner-direct side of things, we're building a long-term sales team, and we're building a long-term model to have success over multiple quarters and multiple years as well, too. So we haven't given a target out beyond this year. We hope that the insight of the 20% to 25% owner-direct organic will provide some insight to investors. But we're investing for the future. I will say that as well, too.

Okay. And then on kind of the opportunity for margin improvement overall, and I guess at Pioneer, how -- what's sort of the time line of that? And maybe what's -- can you get gross margins back to sort of where they've been? Is that the goal?

Yes. For Pioneer specifically, a lot of the work that we've done is transitioning to the accounting and operating system, which is important to us. It's not always the most exciting, but it's really important because it allows us to have visibility and to get on a common platform. So that first phase -- we talked about that first phase, including structure and gross profit benchmarking can almost take almost up to a year. But that doesn't mean we're not doing things along the way. And I think the first thing that we look at is the gross profit benchmarking. Is there opportunity? Is there a low-hanging fruit? There has been on the other deals. We can't see why this wouldn't be any different. But I think as we look into next year, definitely from an opportunity from that perspective as well, too.

I think from an overall business, it's a matter of our ability to sell in a proactive nature. We've been -- we've had great success over the last couple of years of working with OpEx type work, understanding what customers' needs are. And I'm going to point to a specific example that we talked about in the prepared remarks was we had a customer in Florida. And we've been -- for the last 2 or 3 years, we've been really working from an OpEx perspective, taking care of all their problems. That's been high-margin work as well, too.

They get to the point, though, where they're thinking, that's a lot of money that we're spending. And they end up in this quick period of pause. And it's our job at that point to say, listen, I know you're spending a lot from an OpEx perspective. You're going to have to spend a lot from an OpEx perspective. But there's a reason that you're having that spend. And that developed ultimately into a capital project where we saw deterioration in the cooling system, and built something to get an important capital project with multiple phases to fix their long-term problem. So that's the type of relationship where we have that OpEx recurring spend.

A lot of times that OpEx spend will turn into capital projects. And those capital projects are not projects that we're competing against multiple people. We're working on creating a pro forma, giving them cost certainty. And there's also an opportunity on -- a particular opportunity like that to earn really high margin as well, too. So it's a combination of continued improvement from Pioneer Power, running our playbook as well as this dynamic between OpEx, taking care of reactive relationships as well as developing proactive programs and projects as well, too. That's where we see kind of our key components going into next year.

Our next question comes from the line of Gerry Sweeney with ROTH Capital Partners.

I want to talk about -- it wouldn't be at the conference call if everybody didn't ask about gross margins -- or I'm sorry, about the organic growth. So obviously, there were some questions about hitting your range on organic growth. And you mentioned fourth quarter being relatively strong. For lack of a better term, are you anticipating a budget flush? And I've gone back and looked at a couple of fourth quarters versus 3Q and not every year, but there's been several years when you see a significant uptick in revenue. So I want to get your thoughts on how that's going to occur.

I don't know if I would characterize it as budget flush, but I would characterize it as -- it's a cross-section of two things that go on from our customer relationships, ensuring that they're properly spending their budgets as they exit the year. So there are opportunities where there's a lot of times [Technical Difficulty]. We're also thinking about what they're going to re-up next year as well, too. So it's a dynamic of completing budgets for '25 and even some of the budgets that have been delayed as well as what do I need to do in 2026. So it depends on the vertical.

I think from a healthcare perspective, we have lots of conversations with customers from that perspective as well, too. It could be from a higher ed. Industrial manufacturing, those customers have been pretty consistent from a spend perspective as well, too. So it's really the dynamic between the two versus '25 versus '26. But the key nature of our work is being in a mission-critical facility. Then maybe they'll pause it for, but inevitably, they're going to have to spend, and it's our job to make sure that they spend it as well too. And so we're trying to manage that dynamic with them.

Got it. How much visibility do you have in ODR? Like as of today, can you see out to the end of the year? Obviously, there could be some emergency work, et cetera. But what does visibility in ODR really look like?

Yes. We gave some additional information and color of this dynamic between 1/3 of the work being quick burning work and then 2/3 being smaller projects as well, too. And we hope that, that provides some additional color as well, too. The 1/3 work you traditionally know when it comes, there are some avenues of things that needs to happen, but there's relative consistency from that perspective as well, too. The 2/3 is fixed price project work, but it is relatively small in nature as well, too.

So if we really look at where the customers are at, we focus on a core group of customers, understanding what their spend profiles as well, too. I think the other thing, too, that's part of the dynamic of the owner direct revenue is our ability that we have sales staff. The sales staff with certain pipelines dynamic with customers as well, too. So it really comes down to the 1/3, 2/3 as well as the dynamic of where the customers are from a budget perspective. As we -- I feel like we move into future years, we're going to continue to increase visibility from that perspective as well, too.

Got it. Switching gears, you talked a little bit about local growth or developing relationships on the local level, which certainly has its benefits, but also looking to develop national relationships. How far along are you on the ladder on the sort of national relationship in terms of sales, building that out? There are different animals, local and national.

It's interesting. We've probably been -- when we first started out, we thought that this would go super quick. And we probably started with 4 or 5 years ago. And you realize like it takes time and you're cracking in different levels from a customer perspective. Big customers, it may not be C-suite or may be a couple of levels down. We've been at it for probably 4 or 5 years now. But this year, I think more than others, we've finally been in a position where they trust us, they've given us that pilot work project.

And by the way, this work consists of running a facility program over multiple facilities. It could be project work, engineering work, staff augmentation we've done. So we've put all that hard work in there. And that's allowed us to say, okay, I'm going to give you a bigger piece of the budget. As an example, that $12 million of projects that came out of those facility assessments, we couldn't have got that 2 years ago. They wouldn't have trusted us at that point. A lot of times they're in a position where they've got to spend the dollars, they've gone through the work, and it's not really a matter of competition at that point.

So we're starting to see a blueprint with healthcare. And we feel like we can apply that same blueprint to some of our other verticals as well, too, whether it's industrial manufacturing or data center and tech, we feel like there's a blueprint. So we're looking at those as well, too. And hopefully, we're looking at it as not taking as long because we're going to apply the same blueprint. But the key is that's acting as a trusted advisor through a professional service type offering and allowing us to make long-term decisions with them and being in a position when they have that spend that needs to happen.

There are no further questions at this time. I'd like to pass the floor back over to Mike McCann for closing remarks.

In closing, our priorities as we close out 2025 are as following: continuing to drive top line growth, further expanding our customer relationships to turn technical sales into financial sales, ongoing successful integration of Pioneer in building our M&A pipeline. At Limbach, we're building a long-term business model designed to deliver durable demand over time. We're making strategic investments where others may not, and we bring a unique combination of an account focused, engineering expertise and the ability to execute those solutions directly with building owners.

These relationships are rooted in a long-term partnership, where through consultative engagement, we're helping our clients develop multiyear capital plans that go beyond traditional backlog. We believe this differentiated business model positions us for sustained growth and risk-adjusted returns. We look forward to meeting and speaking with many of you before the end of the year. On December 2, we're attending the UBS Global Industrials and Transportation Conference in Florida. We hope to see some of you there. Thank you again for your interest in Limbach, and have a great rest of your day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.