Limbach NASDAQ: LMB said first-quarter 2026 results were in line with expectations, as the building systems solutions provider pointed to accelerating demand and exceptionally strong bookings that management expects to support revenue momentum through the remainder of the year.
First-quarter results match expectations as bookings surge
President and CEO Michael McCann told investors the company’s Q1 performance tracked what it outlined on its prior call in March, with the quarter reflecting “the impact of lower bookings in the middle of 2025 and normal seasonal patterns among industrial customers.”
Total revenue rose 4.3% year over year to $138.9 million, driven primarily by the contribution from the Pioneer Power acquisition, according to Executive Vice President and CFO Jayme Brooks. McCann said organic revenue declined as expected, down 13.4%, while total revenue growth benefited from acquisitions.
The company reported $209 million of bookings in the quarter, producing a 1.5x book-to-bill ratio. McCann highlighted that bookings over the last two quarters totaled more than $434 million (including $225 million in Q4 2025), which he said indicates “revenue momentum is building as we move through 2026.”
McCann said approximately 27% of Q1 bookings came from data center opportunities, reflecting what he described as strong demand in the vertical and the value of Limbach’s existing customer relationships, including “brand name hyperscaler customers.”
Segment mix, margin pressure, and Pioneer Power integration
Revenue mix in the quarter was 71.9% Owner Direct Relationships (ODR) and 28.1% General Contractor Relationships (GCR). ODR revenue grew 10.4% to $99.8 million, while ODR organic revenue decreased 5.4%, Brooks said. GCR revenue fell 8.6% to $39.0 million, reflecting a 30.2% decline in GCR organic revenue partially offset by higher acquisition-related revenue.
Profitability declined year over year, with consolidated gross margin at 22.4%, down from 27.6% in the prior-year quarter. Brooks said that excluding Pioneer Power, consolidated gross margin would have been 25%, citing Pioneer’s “lower margin profile” as a key factor. McCann also attributed the gross margin decline to lower fixed-cost absorption in ODR from seasonally lower revenue and “the absence of higher net project write-ups” that benefited the year-ago period.
ODR gross margin fell to 23.0% from 28.9%. Brooks said the decline was driven by a combination of factors, including higher fixed costs—such as a larger vehicle fleet, higher insurance premiums, and increases in tools, supplies, and safety costs—as well as fewer project write-ups, which are typically recognized when jobs near completion. GCR gross margin declined to 21.0% from 24.7%, also reflecting fewer write-ups and lower-margin work tied to Pioneer Power.
Management reiterated that improving Pioneer Power’s margins is a key integration focus. In response to an analyst question, McCann said that after completing systems and accounting integration work last year, 2026 efforts are focused on gross profit improvement, including “reviewing and renegotiating existing contracts for better pricing,” optimizing project mix, and cross-selling. He added that margin improvement should trend more meaningfully “towards the back half of the year,” while the company has previously framed a two- to three-year timeline to align Pioneer’s margins with Limbach’s average.
Earnings, cash flow, and balance sheet
Adjusted EBITDA was $8.7 million, down from $14.9 million in Q1 2025, and the adjusted EBITDA margin fell to 6.2% from 11.2%. Brooks attributed the decline primarily to lower gross profit and slightly higher SG&A expense.
SG&A increased to $28.1 million from $26.5 million, driven mainly by higher payroll-related costs, Brooks said. As a share of revenue, SG&A rose to 20.2% from 19.9%.
Net income dropped to $4.4 million from $10.2 million, and diluted earnings per share were $0.36 compared with $0.85 a year earlier. Adjusted net income was $7.8 million, and adjusted diluted EPS was $0.64, down from $1.12.
Cash flow turned negative in the quarter. Net operating cash outflow was $7.8 million, compared with a $2.2 million inflow in the prior-year period, which Brooks said reflected lower net income and higher working capital needs. He also cited incentive compensation payments, contingent consideration payments related to prior acquisitions, and prepaid insurance premiums as key drivers.
On the balance sheet, Brooks said Limbach ended Q1 with $15.8 million in cash and $57.0 million of total debt, including $32.4 million borrowed on its revolving credit facility and $7.0 million of standby letters of credit. Total liquidity was $76.4 million, and Brooks noted the company expanded its revolver to $100 million in principal borrowing capacity in June of last year.
Data center momentum and capacity
McCann emphasized Limbach’s “longstanding 10+ year relationships” with hyperscaler customers and said the company is seeing increased “scale and urgency of demand” in data centers. He noted that in addition to a unique data center infrastructure project discussed on the prior call, Limbach won “a similar but even larger project” in Q1, for which the company expects final contract value to exceed $30 million and expects to recognize revenue over the next few quarters. The project includes a fabricated package of steel structures and piping systems, with rapid execution expected.
McCann also said Pioneer Power won an initial project inside an existing data center with a contract value of approximately $6 million, involving a rapid retrofit to support new server installations. He said adding data center work to Pioneer’s customer profile is expected to support margin expansion over time, with contributions beginning in Q2.
On execution and profitability, McCann said Limbach is being selective in pursuing data center work based on customer quality, contract structure, risk, and partner alignment. When asked about margins, he said the company’s prior work in the vertical has produced “really good” margins and added that Limbach would not pursue the space if margins were not “as good, if not better.”
McCann also said the company has “a decent amount of capacity” in fabrication, including a large facility obtained through the Jake Marshall acquisition, adding that Limbach is “quite a bit of ways away” from needing incremental CapEx for fabrication capacity.
Guidance reaffirmed for 2026
Management reaffirmed its full-year 2026 outlook issued in March. McCann said the company continues to expect:
- Revenue: $730 million to $760 million
- Adjusted EBITDA: $90 million to $94 million
McCann also outlined assumptions supporting the forecast, including ODR organic revenue growth of 9% to 12%, ODR representing 75% to 80% of total revenue, consolidated gross margin of 26% to 27%, SG&A at 15% to 17% of annual revenue, and free cash flow of 75% of adjusted EBITDA. For the second quarter, McCann said the company expects sequential improvement in revenue and adjusted EBITDA and said management was “comfortable where the consensus expectations currently stand.”
In closing remarks, McCann said Limbach’s 2026 priorities remain ODR organic and total revenue growth, margin expansion through “evolved customer solutions,” and scaling through acquisitions. He added that the company’s strong book-to-bill ratio, expanding data center opportunities, growing national account relationships, and “healthy acquisition pipeline” support management’s confidence in its strategy.
About Limbach NASDAQ: LMB
Limbach Holdings, Inc NASDAQ: LMB is a U.S.-based mechanical construction firm specializing in the design, installation and maintenance of heating, ventilation and air conditioning (HVAC) systems, piping, plumbing and sheet metal fabrication. The company delivers comprehensive mechanical solutions to commercial, institutional, health care, education, government and industrial clients, drawing on its in-house engineering, prefabrication and construction management capabilities.
The company's service offerings encompass full-scope mechanical construction, including energy system design, direct digital controls and building automation, retrofits, testing and balancing, preventive maintenance programs and emergency response services.
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