Building systems company Limbach (NASDAQ: LMB) missed Wall Street’s revenue expectations in Q2 CY2025, but sales rose 16.4% year on year to $142.2 million. On the other hand, the company’s full-year revenue guidance of $665 million at the midpoint came in 6% above analysts’ estimates. Its non-GAAP profit of $0.93 per share was 20.4% above analysts’ consensus estimates.
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Limbach (LMB) Q2 CY2025 Highlights:
- Revenue: $142.2 million vs analyst estimates of $144.2 million (16.4% year-on-year growth, 1.4% miss)
- Adjusted EPS: $0.93 vs analyst estimates of $0.77 (20.4% beat)
- Adjusted EBITDA: $17.95 million vs analyst estimates of $16.7 million (12.6% margin, 7.5% beat)
- The company lifted its revenue guidance for the full year to $665 million at the midpoint from $620 million, a 7.3% increase
- EBITDA guidance for the full year is $83 million at the midpoint, above analyst estimates of $80.37 million
- Operating Margin: 7.5%, in line with the same quarter last year
- Free Cash Flow Margin: 0.8%, down from 10.8% in the same quarter last year
- Market Capitalization: $1.57 billion
“We delivered strong second quarter performance, with improvement in key metrics year over year — clear evidence that our strategic shift to higher margin ODR business is driving meaningful results,” said Michael McCann, President and Chief Executive Officer of Limbach.
Company Overview
Established in 1901, Limbach (NASDAQ: LMB) provides integrated building systems solutions, including mechanical, electrical, and plumbing services.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Limbach struggled to consistently increase demand as its $552.9 million of sales for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result, but there are still things to like about Limbach.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Limbach’s annualized revenue growth of 3.9% over the last two years is above its five-year trend, but we were still disappointed by the results. 
This quarter, Limbach’s revenue grew by 16.4% year on year to $142.2 million but fell short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 22.6% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and implies its newer products and services will spur better top-line performance.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Limbach was profitable over the last five years but held back by its large cost base. Its average operating margin of 5% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
On the plus side, Limbach’s operating margin rose by 6.1 percentage points over the last five years.
In Q2, Limbach generated an operating margin profit margin of 7.5%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Limbach’s EPS grew at an astounding 54.4% compounded annual growth rate over the last five years, higher than its flat revenue. This tells us management responded to softer demand by adapting its cost structure.
Diving into Limbach’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Limbach’s operating margin was flat this quarter but expanded by 6.1 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Limbach, its two-year annual EPS growth of 45.1% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.
In Q2, Limbach reported adjusted EPS at $0.93, up from $0.72 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Limbach’s full-year EPS of $3.95 to grow 8%.
Key Takeaways from Limbach’s Q2 Results
We were impressed by Limbach’s optimistic full-year EBITDA guidance, which blew past analysts’ expectations. We were also glad its full-year revenue guidance trumped Wall Street’s estimates. On the other hand, its revenue slightly missed. Zooming out, we think this quarter was mixed. The market seemed to be hoping for more, and the stock traded down 6.4% to $125 immediately following the results.
So should you invest in Limbach right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
