Limbach spent three years turning itself from a general contractor into an owner direct services business, and the market loved it right up until this summer. Then organic revenue went down mid single digits, EBITDA fell 30%, guidance came down from $90m to $80m, and the stock lost half its value. Yaron Naymark of 1 Main Capital pitched me this name in June 2023, watched it 6.5x, sold most of it, and is back buying it after a 75% drawdown.

His argument is that the EBITDA decline is fixed cost deleverage on a demand air pocket, not a broken business, and that the bigger story is the one Limbach missed. While FIX and EME compounded on data centers, Limbach stayed singularly focused on owner direct work and ended up with effectively zero data center exposure. The CYMCOR acquisition announced alongside Q2 is the first real move to fix that. I push back on the bear case that management knowingly bid a pile of low margin work, on whether owner direct is just general contracting by another name, on whether wage inflation from the data center boom is quietly eating them, and on whether a 2016 de-SPAC ever escapes the gravity of $10 per share. We finish on how Yaron invests around AI without pretending to know who wins: Limbach, IWG, and why he re-initiated KKR.

Yaron's first Limbach pitch, June 2023: https://www.youtube.com/watch?v=m7GzW0ahswg

This episode is sponsored by Trata: https://www.trata.com/lmb. If you like this podcast, you are going to love Trata. It is two buysiders getting on the phone and talking through a stock they are both interested in, the reasons they want to get long, the reasons they are worried about it. They have a Limbach call from six months ago that holds up really well, and I asked one of its questions on this episode.

Chapters:

(00:00) Intro

(00:56) Sponsor: Trata

(01:50) Yaron Naymark, back for round six

(03:09) What Limbach is and why he is double dipping

(03:40) Enron, a SPAC, and the shift from general contracting to owner direct

(06:32) Called a data center winner when management said otherwise

(07:48) The air pocket: tariffs, Medicaid cuts, and paused projects

(09:29) Why the stock is down 50% when EBITDA is down 30%

(12:14) Organic versus headline revenue and the Pioneer Power deal

(12:40) Double dipping on a stock you already made money on

(16:57) The bear case: low margin bookings and general contracting by another name

(22:31) Why FIX and EME ran and Limbach did not

(24:42) Wage inflation, technicians, and whether owner direct contracts trap them

(27:01) Did management get caught off guard between Q1 and Q2?

(30:35) The $50m buyback nobody has touched

(31:18) Why M&A beats buying back stock at six times EBITDA

(33:55) The math behind a $200 three year price target

(35:18) Could Limbach be the seller instead of the buyer?

(38:09) Josh Horowitz, insider ownership, and the de-SPAC stigma

(40:50) CYMCOR and the data center pull through

(42:52) Investing around AI: Limbach, IWG, KKR, and the mega-alts

(50:29) Wrap

Yaron Naymark / 1 Main Capital: https://www.1maincapital.com

Links:

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