Greetings and welcome to Limbach Holdings First Quarter 2018 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jeremy Hellman of Equity Group.

Thank you very much. Good morning, everyone. Yesterday the company issued an announcement for Limbach Holdings 2018 first quarter results and filed its Form 10-Q. The company will also be using a slide presentation to accompany this call. The presentation can be found in the earnings section of the company website at www.limbachinc.com. The company encourages us [ph] to review the forward looking statement on slide -- presentation. With that, I’d like to turn the call over to Charlie Bacon of Limbach Holdings. Please go ahead, Charlie.

Thanks, Jeremy. Good morning to all, welcome to the call. Joining me today is also our Chief Financial Officer, John Jordan. As Jeremy noted, we have a slide presentation to accompany our prepared remarks and we hope you find the additional material helpful. We’ll make a point of referencing which slide we are on as we go along. I’ll start on slide two to remind everybody to review our forward-looking statement. Let’s start on slide three where we’ll summarize or we have summarized several key themes from the quarter which includes strong sales and pipeline development activity, which further supports our near-term outlook, strong revenue growth during the quarter and continuing improvement in margin. We’ll also review our construction and service operating segments, knowing particular strengths and a few challenges and then address the balance sheet and strategic activity. Importantly, in light of the excellent sales activity and a solid first quarter revenue, we are increasing our revenue guidance for the year from $510 million to $530 million to $520 million to $540 million. Moving to slide four, consolidated revenues increased 4.7% year-over-year to $120.5 million. Revenue growth was led by our business units in Eastern Pennsylvania, New England, Ohio and Orlando. In fact, seven of our ten business units generated strong year-on-year growth in revenue. This excludes our Michigan operation, which nonetheless outperformed expectations this quarter, but was challenged by a difficult year-over-year comparison due to the inclusion of revenue from the Red Wings Arena project in the first quarter of 2017. Additionally, I’d like to highlight our Eastern Pennsylvania business unit which is making strong inroads into regional healthcare, commercial development and the industrial market. We believe there is a promising growth story emerging in the greater Philadelphia region and that we are well positioned with our design…

Thanks, Charlie. Before getting into the details, I just want to remind everyone to please see our 10-Q for a full breakdown of our results and also note that the presentation accompanying our remarks contains several [Indiscernible] with additional data we think you’ll find helpful. Turning to slide eight, for the quarter our consolidated revenues were $120.5 million, which is up 4.7% versus the prior year. That consolidated figure also exceeded our internal forecast for the quarter. Construction segment revenues were up 5.8% while service segment revenue was flat year-over-year due to owner direct projects being completed in 2017, which did not repeat in the first quarter of 2018. Construction operations accounted for 80.3% of revenue, while service accounted for 19.7%. Gross margin in our construction segment was 11% compared 11.9% in the first quarter of 2017. The decline largely results from write-downs in our Mid-Atlantic business unit totaling 3.7 million which were offset by write-ups on other projects in Mid-Atlantic, Florida, Michigan and New England. Excluding the write-down of the Mid-Atlantic, gross profit for the quarter would have been 15.9%. We have taken operational steps to ensure the write-downs on these projects have been fully identified and recognized and expect a response for recovery in the future. As Charlie noted, service segment gross margin was negatively impacted by the write-down on an owner direct Esco project in the amount of $9000, which combined with the construction write-down of $3.7 million totaled to $4.6 million we recognized in the quarter. For the quarter, service gross margin was 16.9% compared to 20.3% the first quarter of 2017. During the quarter, selling and general administrative expenses were $15.7 million compared to $14.6 million in the first quarter of 2017. 2018 includes $467,000 of stock-based compensation expense which we do not have in…

Thanks, John. As highlighted on slides 10 and 11, market forecast for this sector as we focus on remained strong. Our growth has been outpacing the industry so we see a very nice convergence of growing market and increasing market share. It’s been our expectations since the Presidential election that tax reform could be a great catalyst for non-residential construction industry and our sense is that the Tax Cuts & Jobs Act is indeed leading to increased corporate capital expenditure budgets. We noted in a recent report that capital expenditures jumped 19.4% in the first quarter, which if you read the Wall Street Journal this morning, actually on the front page there’s an article about CapEx expanding by 24%, so I see it as an improved number. We expect to see additional capital construction programs as well as HVAC equipment upgrades and improvements, including energy reduction programs to expand. At this point, I do want to comment on our M&A efforts. Many of you heard Matt Katz describe our M&A program on April 3rd, year-end earnings call and we continue to make great progress in identifying actionable opportunities and executing on them. There are multiple opportunities which are maturing nicely, including active, diligence efforts by management and third-party advisors on proprietary opportunities that meet our acquisition criteria. Overall the M&A effort is producing many interesting opportunities across the construction spectrum, from pure service businesses to arbitrate expansion opportunities and in one case, our software and data analytics platform tied to energy retrofits. We want to reiterate that we remain disciplined and focused on our strategic plan and acquisition criteria, which includes, cultural compatibility, a continuing commitment for management and being accretive to our valuation and earnings. Finally on slide 12, as I noted earlier in the call, we are raising our revenue guidance for the year by $10 million. We now expect revenues to be in the range of $520 million to $540 million. We are keeping our adjusted EBITDA at $20 million to $24 million. We see developing profit opportunities in the business and I’m confident we can meet the guidance space and the work we have scheduled for the balance of the year. We also have a couple of conferences we’ll be attending right at this month, first in Santa Monica next week and then will be at the Craig-Hallum Conference in Minneapolis the last week of May. We hope to see many of you at those events. With that operator, let’s open it up for questions.

Thank you. [Operator Instructions] Our first question is from Brett Feldman with [Indiscernible]. Please proceed.

Thanks, good morning.

Good morning, Brett.

Charlie, the six projects, when are these jobs going to be completed in – and I guess any sense on timeline of when you could potentially get some recoveries on the lot.

Sure, so one project has is demobilized at this point, several others are wrapping up in Q2 very shortly. And then one project continues into Q3. As far as recovery is concerned, when you look at how these processes go, here’s an opportunity in 2018 to possibly see recovery this year, but you know the trends of what I’ve seen in the past, you wrap up the projects, you submit you’re your information, there’s a lot of back and forth between the general contractor and the owner, when one case will be pursuing a subcontractor. It’s going to take some time, I suggest something could happen in Q4, but I think in reality we might be looking at recovery in the first half of the 2019. Like if Brett, if we can do it early, we certainly will, but I’m just letting you know how these tend to play out and I’m sure you’ve seen that in the past with both the contractor we have faced similar situations.

Sure, I can understand. And Charlie, I guess the fact that all these issues sort of occurred within the same region, are there additional measures or actions, you need to take to kind of ensure that the slug of new work, you expect to come in has been effectively or do you view this occurrences as more coincidental and kind of out of your control and you have the safeguards in place to avoid this going forward.

Yes, well let’s just step back a little bit. Let me explain some things that happened here. I’m talking [ph] Mid-Atlantic region, I’m talking about the parched [ph] level, range is anywhere from 175 to 225 craft workers. This like surge that hit us due to the acceleration and some projects being delayed and pushed work that should have been completed in Q4 into Q1 and then the acceleration that they directed us to do in Q1 on the one project where the steel was laid added upto just a massive increase in man power and we were peaking last time I heard at the highest number of 53 craft workers. So we’ve had a very very tight labor markets to find that many workers on very very short notice obviously you can realize that was a heck of a challenge. What we do in the business, when we look at our work load and project out our projects, both what we have in backlog as well as what’s in the pipeline, we schedule at our man power 12 months in advance, so we could see where we need business, we obviously want to continue to grow, but you want to grow to be on a nice, steady state not ramping up with manpower like that. So I think we do a pretty good view of the future and then we look at our business in terms of sales activity, how do we plug in to continuing to meet our current manpower resources and some growth. In this particular case, it was outside of our control where just these particular projects will kind of team together at once including some of the projects that are going extremely well with their big jobs, happening at the same time. Manpower in this particular region by the way is leveling off, so as these projects wrap up here in Q2, we are seeing that manpower drop off dramatically, getting back to normalized levels. The other thing I just want to reinforce is our COO, Kris Thorne is spending a considerable amount of time in Washington DC right now working with that team, working through the issuance both in terms of just that, getting the labor home wise, but also overseeing the recovery efforts on collecting the money. Brett, does that provide enough color?

Yes, that’s helpful, Charlie. And I guess just from the standpoint, are you maintaining the guidance for the year and the fact that you guys kind of came out with that at the end of March, I presume you know some of this was within the realm of your expectations when you offer that guidance, is that fair?

Yes, when you look at kind of the bridge – how did we continue to look at the year. We are raising the revenue guidance only because the sales have been so strong in Q1. So it was terrific to see that, so you’ll see that additional gross profit margin drop to the bottom line, so about $10 million to 15 million in range kind of in that we are expecting to see that kind of increase. We've had very strong service sales in the first quarter and that includes preventative maintenance contracts which tees us up to grab quite a bit of pull-through during the heavy seasonal months of the summer like we love hot weather, we love storms that just means more pull-through for us on our maintenance side of the business. And the other thing is your operating margins continue to increase. And on sales just in general, we have several branches that exceeded their sales plan at this point in the year and while we're watching that manpower equation very carefully they have room to take on some more business. And I think we're doing a good job and we'll recruit the manpower. So, that's going to be accretive to our bottom-line. And then finally, and you started off by asking me the question about recovery on these jobs. We're not anticipating big recoveries on these projects in 2018. We’re not thinking that way. We expect some resolution, but like I said earlier, we think, the prudent thing to do is to look into 2019 for recovery as we work our way through that process.

Okay. And last one if I could, and I apologize if you touched on this, but on service what are the reasons for the sub 20% gross margin this quarter? And should that come back here in subsequent quarters?

Yes. That was really a direct impact of that one service project with that subcontractor dropped the ball big giant [ph] and we had to jump in and do a bunch of work that we didn't expected to do. So that was just anomaly. It happens to be a large service project, so we don't see that, I mean, actually if I look in the past one, we have an experienced this in the past. This is just anomaly where I think we're going to have to work our way through and go for the recovery of these subcontractors month and just pursue the recovery of those moneys in the future. John, do you have any other commentary on it?

No. That's accurate. What we have is the $900,000 write-down on that one service Brent, the Escrow project that we referenced and that's what really drove that service gross margin down.

I'll turn it over. Thanks guys.

Thanks.

[Operator Instructions] Our next question is from Steve Dyer with Craig-Hallum Capital. Please proceed.

Thanks. Good morning, guys.

Good morning, Steve.

I don't want to beat the recovery question into the ground, but just to make – just to be clear you don't have any recovery assumed in your EBITDA guidance this year, so anything you were able to recover maybe late this year would be upside. Is that right?

On the one project we already have the commitment that the client is going reimburse us for the overtime portion of the cost of acceleration. So we have assumed that -- a portion of that recovery. As far as the impacts in inefficiencies, we will be pursuing that, but no, we've not included any of that in our projection.

So, just I want to make sure, kind of I'm thinking about this on an apples-to-apples where it's effect your EBITDA guidance would be $5 million give or take better. You guided that obviously after the end of the first call, but that was obviously – there's a $5 million so that overhang on that given some of these overruns and effectively it should be $5 million better, is that the right way to think about it?

If we wouldn't have had, it’s the year obviously was progressing quite nicely, and if we can hit the recovery this year, Steve that obviously is going to be a bonus to us, but again we're being conservative on that perspective.

Sure, understood. And then some of the wage inflation that I guess the entire industry seeing and not just your industry, I mean is that – are you finding that, you're able to pass that along in the bidding and how do you sort of think about that as you go forward in the next couple of years?

Well, from the standpoint, you got to look at several components here. First of all, on our union agreement, we know when they're coming up for renewal and we generally had a good feel for what they're asking for and yes we do expect some negotiations to be aggressive, but we have a wholesome on that and we price our contracts accordingly based on what we expect to see in the future. When you look at the salary components of staff, I think we're seeing some pressure there in terms of the marketplace, but what we're leaning towards right now is go more towards a pay-for-performance type solution. So yes there'll be some increases in base salaries perhaps more than 3% we become accustomed to 2% to 3% actually. But we're shifting, our thinking right now that let's create the opportunity for the people little bit different than we have in the past, that if they perform they could get a nice upside and obviously the company will benefit too, so we're dealing with that, that's a big project we're working on right now. And then finally, I think the other thing that, I think we're pretty famous for and I know this might sound soft, but we do care about our people and our safety program which a lot of people in the industry have taken note of along with just in general how we operate our business around caring for people. The people that work here like working you and their friends hear the good word about what all about and they want to work for us. So, I think we have to pay mid range. We have our salaries studies for the better performance, obviously we have to do better on the higher end of the ranges, but we'll be smart about it. But I think the combination of staying out in front, taking it through, quite frankly putting our arms around people letting to know we care about them, goes a long long way and that's going to help us as we go forward. Bottom-line though we're pricing expenses both in terms of our projects, for that matter we have spend in corporate. We're constantly viewing that and pricing accordingly.

Okay. And then last one from me as it relates to M&A. I know its hard to put a time line on it because all kinds of things can happen, but I mean, as you're kind of thought or your hope that that's a 2018 event or is it just too hard to kind of pin it on beyond there's a lot of stuff that you're looking at indigenously?

Something could always go wrong, Steve. But it’s a 2018 event. We have a number of opportunities that are active diligence and third parties have been retained to help us. We're moving down the path. And when we get to the point of we're ready to announce we'll have a definitive agreement and we'll share that with the community at large. So we're working hard at it. And Matt [ph] is doing a terrific job. He's got some great resources working with him and we're quite excited not only about the opportunities that we're laser focused on, but what's happened actually over the past where since call, just a number of opportunities have come in on our doorstep. Companies reaching out to us saying we heard you in the market. Greatly respect Limbach. We'd like talk. And it really good sound to generational transfer and people are just looking at what are they're going to do and we're staying away from that process environments where you get the book to bid and all that other stuff. We've looked at a couple. But our real focus is working with companies that we respect, that we think would be a great marriage in terms of cultural compatibility. And actually if you – I'll just make a few other comments. In the businesses that we're currently looking at we're seeing very very nice split of construction service exactly what we're looking for. And we’re also seeing some opportunity with their customers and their sectors that they are in little bit different than Limbach which would quite frankly assist us in kind of getting into those sectors in the stronger way and leveraging their customer relationships with some of their customers work in multiple geographies. So we're pretty excited about what we're looking at in terms of the laser focus right now. The pipeline seems to be opening up even more giving us more to look at, staying away from the process environments and the only thing I'll go wrap up by saying this. The challenging part is these businesses are not in a process. So we're introducing the concept of would you like to join Limbach. And it takes a while for them to emotionally get past that then you got all the rest of it be it pricing legal, but we're staying very disciplined and what we said we were going to do and I'm pretty excited. The bottom line is we expect to see a 2018 event.

That's great color. Thanks Charlie.

Thanks, Steve.

Our next question is from Gerry Sweeney with ROTH Capital Partners. Please proceed.

Hey. Good morning, Charlie and John.

Good morning, Gerry.

I apologize I may not for the connection, its not in best location, but Charlie, I think you touched upon us a little bit talking about in-house training and your prefab work, just improving, just your flavor and your ability to go into the market. But in general we still got labor shortages and improving demand. Are there enough maybe quality subcontractors and personnel out there to take advantage of some of its growth that you're seeing? And is there way to maybe mitigate maybe some of the risk associated with that and you're increasing sales yet and possibly go a little bit further down in that labor pool which is shrinking, any thoughts or comments on that front?

Yes. Look, there is no question about it. The labor is becoming the challenge for the industry, but I have to reinforce a couple of points that I made earlier. When we look at our labor needs in the business we're forecasting out 12 months to see where we need additional business to come in and if we see that there's a challenge in front of us which work that we sold what should we do in-house or what should we subcontract out to? We have an excellent, excellent list of subcontractors that love working with us. We're good, honest people as opposed to running off to a general contractor who might not treat them well. We treat ourselves extremely well. We treat them the way we like to be treated. So, between the manpower to subcontracting community I think we have a pretty good handle on kind of what's coming up and what we need to do. I think the added benefit of our focus around in-house training. I was down in Orlando facility four times in the past month and every time I was down there our new learning center which is just spectacular has been just in active use. And I always go in there when I address all the people that are there. Now what we've done is we've ramped up the training program to create certifications for certain classifications of employees. So, one they're feeling great that Limbach is investing in them. They are meeting people from around the country, so they all get together and walk about what they are up against, but they're making friendships and it's creating a stronger bond within the company. Those individuals become our best recruiters because they start talking to their peers in the industry saying, you know…

Yes, absolutely. That's very helpful. I appreciate it.

Thanks, Gerry.

Thank you.

Our next question is from Eric Kronberg with Dean [ph] Capital Management. Please proceed.

Hi. Good morning, guys. I was wondering on, it sounds like when you gave 1Q guidance and full-year guidance, you were aware of some of these costs the write-ups – sorry, write-downs. As far as you can see at this point do you see any additional write-downs for 2Q or any other quarter this year?

Well, Eric, I just want to step back a bit. In terms of the normal operations of our business, every month, every project is reviewed by the local business unit and then the local business unit is reviewed by our COO and John. And we have very detailed reporting process where they report what we call our write-ups and write-downs, the upside, downside report. And when we go to contract we either contract under a lump-sum arrangement, a guaranteed maximum price arrangement for cost-plus and with the letter to GMP and cost-plus, they tend to be projects that write-up not write-down, only because we have better negotiation, better control and all seems to work. On the lump-sum contracts you see either write-ups or write-downs and obviously we want to see more write-ups than write-downs. But the nature of what we do on estimate day and we submit and we close the contract you go into a project and sometimes we see massive windfalls of upside and in this particular quarter as John mentioned we had a number of significant upsides that came through a number of business units which equated to $1.5 million. That's kind of a normal scenario of what we see. You also have some write-down. They tend to be smaller in size. What we witness here, which I think I've already gone with some details to what happen on this particular projects. It was a real exception to what we typically see and they were very large hits that we typically don't see we're going pursue recovery and all that, but typically we see the write-ups and some write-downs. It’s the nature of what we do. So, Eric, I can't say that say they won't be any. But from a standpoint of what we traditionally see and what we saw in the fourth quarter of last year, we saw a very nice write-ups coming to the business. We had seen that materializing earlier in 2017. I think some people are concerned how is the year going to ramp up and fourth quarter was pretty strong. And we expect to see that through the course of this year and in this case our projections for the balance of the year. Traditionally our first half is a little light, second half is strong, that's what we've seen in the past that we expect to repeat that again.

Okay. Can you hit the full year EBITDA guidance? Are you relaying upon write-ups in the back half for the year?

What we do, Eric, when we go through the assembly every month of our projection each quarter we do refocus for the year. If we see something developing, you can look at year we saw the upsides developing earlier in 2017 we couldn't take them until Q4 when the projects were completing for our policy and that's when we took the upsides. In 2018 we're seeing similar activity where we see some very nice upside developing. We can't take things because the project not far enough along but we will take it at the final stages of completion. And again we project that out whether that's Q3, Q4, Q1 next year. We project that out when we do our reforecast. As of right now the last forecast we did, we all projecting certain projects to bring an upside. We're feeling really good about them. They're developing quite nicely, including a couple in Mid Atlantic. Is that providing enough color on that Eric or…

So, I guess you're relying somewhat on write-ups but not a huge amount?

That's accurate. We take a very conservative view with write-ups. There's again, there are not done, done, done. When we see their projects nearing 85% to 95% completion our COO and John discuss the opportunity, the big, big write-ups they present to me and whether I feel good about it then we're going into the P&L, but we remain very conservative with write-up sales we're projecting them. And John, do you want to add anything else to that.

Sure. Eric, on your initial question about, are there feature write-downs occurring? We do a very strong subsequent event testing process as we close out whether to Q or K and really try to uncover in every branch if there are any changes to any of the estimates in the working process. And as that subsequent event testing is on going in that 45 day window from the end of a quarter, some times that testing does disclose, okay, we do need to take some additional write-down that we have that in the first quarter. We continue to be diligent and when we see write-downs occur on the project we take them immediately. But to Charlie's point on the write-ups we have to wait till the job is substantially complete. There is certain part of the projects that need to be done. Our labor risk needs to be minimal before we take some write-up. There are certain triggering events in the life of a project that generate write-up recognition, but when the write-down is identified it is captured in the financial and that's what you saw in the first quarter.

Okay. And if I look at your backlog, I mean, you said you would have had a 15.9% gross margin. If I look at backlog should I assume that that's all things being equal to that kind of what the gross margin profile ought to look like, assuming no write-ups or write-downs?

We're expecting in the roughly the 15% range for gross margin going forward for the remainder of the year. There are some write-ups assumed as we asked earlier, some write-ups assumed in the forecast, but to Charlie's point would identify those. We only include them in a forecast if we're very, very confident of those occurring. We don't take speculative write-up. We only take a write-up when we should and we only included in the forecast when we have a high confidence level both from the branch, from my perspective, from Chris's perspective, our COO and also from Charlie's perspective from the major write-ups. But I would say that mid-teen range is a reasonable expectation for gross margin going forward.

Okay. I mean, your backlog was down a little sequentially, but then again it was down a little sequentially in Q1 of last year, but it was I guess up around 10% year-over-year. Given the funnel and given that it sounds like there is some Mid Atlantic capacity coming out. Would you expect backlog to be grown throughout the year?

Yes. We had a heck of our first quarter of sales. The $143 million that's not in backlog, we're very excited about. They are very nice projects. We are in preconstruction doing engineering work and we'll take them into backlog at some point during the course of the year Q2, Q3, Q4, as we finalize the front-end work, but as far as the overall pipeline, Eric, its substantial, we don't see any slow up. We're creating good visibility now on 2020 and to 2021. It's pretty exciting to see what's in front of us right now. So very large healthcare projects. Some very – well, data center market which we can comment on today, the whole mission-critical sector that we're working on a business plan on right now we are just very excited about it. We're going to make sure we don't run too fast but we have clients talking to us about other data centers of its -- its pretty excited to see what's in front. We have to do all of this in a measured pace, right. I think that's been a big point in today's call around manpower and got to stay very focused on it. I want to share one example though how sale with the group that came up recently. It's a large museum project on the West Coast and our business unit presented it to me and after thinking it through with what's going on in the marketplace and looking at the competitive environment, I just decided, you know what looks, there is so many opportunities are out, let's pass, let's not be this one. So we told the customer that we're going to walk away and within 24 hours they reached back to us and said please, think of something you can do…

Yes. And that's fine. One last question, just regarding you made a comment that you cleaned up the prefab [ph] high end of your priority list, its sorting out the existing warrants. Could you elaborate on that at all any anticipated timing?

We have active discussions going on looking at our options, it is high on the list and we're looking at our different avenues of how to clean that up. John, do you want provide any more comment on it?

Sure, Eric, need to keep in mind, we have five different trenches of warrants all with slightly different terms, some public some private, so what we're trying to kind of thread the needle as far as what the best plan forward for all the different tranches. So Matt Katz is actually engage along with Charlie and I and looking at those options, looking at some outside consulting services do help us, think through and way all the option as to what's the best path forward to address to either all the tranches, part of the tranches and that the timing is still to be determine.

We have retained the third-party advisor to help us with thinking through how to work our way through all those different layers and what's the smartest way to do it. So it is actively been discussed, Eric.

And something you intent to address this year?

We would like to see if we could move on it this year, yes.

All right. Very good. Thank you very much.

[Operator Instructions] Our next question is from Jordan [Indiscernible]. Please proceed.

Good morning, guys. Can we circle back to the acquisitions little bit and talk about how you're looking at structuring them. What kind of financing equity would be involved?

Sure. We're looking at the combination of cash, equity and seller debt. The conversations have been very productive with the targets that we've engaged with and that seems to be acceptable to them and obviously the percentage of what its going to be equity, what's going to be cash, what's going to seller note varies, but the conversations have gone extremely well and obviously people are interested in our stock that's obviously great to see and it will be restricted stock. So we're kind of excited how those conversations are going.

And then also on the Detroit Red Wings, you guys were looking at possibly some kind of I guess light-up both additional incentive comps, have you guys book that in your I guess forecast for this year?

John, could you take that first.

Sure. The Red Wings projects, while the work is done. There are still a fair amount contract close out that's involved and we're still several months away from bringing that to conclusion. There is some upsides assumed in the forecast, but there's still lot of moving parts. With a cost-plus contract we're subject to audit and 100 million cost-plus contract, there is certainly a lot of time needed for the outside auditors to work through that. That process will be getting started again in next few weeks from what I understand from the team out there. So we're still probably several months away from any final resolution of the financial aspects of the project but there is some slight upside assumed in that forecast.

Okay. But not the entire – because I remember, I thought it was fairly significant potential for you guess to capture, so again it varies depending on the final conclusion of the deal, but if there is one time there was -- I thought a very sizeable amount of the award that you guys could possibly reap? Is that a fair assessment?

There is still some potential upside, but there is also because of the order process, some exposure as well, so we’ve tempered that potential upside with the potential audit outcome that could be negative to the upside amount.

All right. And then also, I think last year you guys had a couple of -- that you were looking at possibly recovering. Can you give us an update about how those things have progressed?

You know the one project is the Boston Medical Center which was a hit back in 2016 actually. That project multiple phases is still continuing, it’s not complete as yet, Jordan [ph]. It’s a cost plus and a fee arrangement, so all of our cost are being covered for this ongoing work and they added additional [Indiscernible] to this stock which really irritated us because we are not getting mark up on top of it. The conversations have continued, it’s not only us, it’s the other specialty contractors too and the general contractor pursuing the owner to get some recovery here. We expect something to happen this year, but what we’ve done in our forecast is we’ve not brought anything into our forecast for that resolution. We just don’t know what it’s going to end up being, so we decided to take a very conservative yield, but we think it will get resolved this year. John, any other comments on that?

That’s actually on the BMC job, that’s still in process.

Okay. And then going back to – you alluded to the fact that the pricing environment seems to be improving. So as we go forward you guys have had wonderful gross margins with the exception of the write-offs. If we see pricing improvements that the gross margin trend continue to pick up, can we see –you know you talked about maybe 40 basis points in the backlog. Is there a potential to get that gross margin up even you know to 16%, 17% over the next 18 months?

You know I guess for those of you that have been tracking us for a couple of years now. When we looked at the recessionary period, we were down at 12%, 13% and we talked about pre-recession levels getting up to 15% to 16%. That’s what we thought we would go and in fact that’s what we are seeing. So this market seems to be drawn even better to that prior period. I know the market isn’t necessarily saying that, but with the Tax Cut & Jobs Act which has seen the CapEx spending jump up in Q1 the way it has, that 19.4%, the Journal reported 24% year-on-year improvement in CapEx spending by corporations, we think that’s just going to increase our funnel of opportunities. So it continues to push the supply and demand curve in our favor. The big conversation internally right now is, pushing the margins further. Our executives get a bit concerned, are we going too far, will we loose that opportunity that we want to win, so the dialogue really has shifted you know, all right so the projects you need to win to ensure your backlog is solid and they cover your plan for the year, twice that appropriately, but when you are sold out and I mentioned there were several branches that were sold out, let’s really push the margin, and if we don’t win, we don’t win. But if we win, obviously we can make a lot more money. All of that tempered with the labor resource issue. So, yes, I can’t say it’s going to go to 16%, 17% or 18%, but we are certainly pushing hard to maximize what margins we control it on the jobs.

All right, great. Thanks guys.

Thanks, Todd.

Ladies and gentlemen, we have reached the end of our question and answer session. I would like to turn the call back over to management for closing remarks.

I just want to thank everybody for your continued interest in Limbach. We’ve got a number of core initiatives that we are working on aggressively. I think we’ve covered all of them today. We weren’t happy with what happened in our Mid-Atlantic region in Q1, but I think we’ve painted that picture clear enough for everybody to understand, it was a strange event and in terms of recovery it will happen in the future, so we’re going to work that hard and aggressively. So, but from the standpoint of all the other good things that are going on in the company, we are on track with our organic growth that we’ve been telling everybody for our mid-term goal, and in terms of the M&A we’re staying disciplined. And I’m pretty excited about you know where are the [Indiscernible] going, so little frustrated that we haven’t announced yet, but we are working it hard. Thank you for your interest and I wish everybody all the best. Take care.

Thank you. This concludes today’s conference. You may disconnect your lines at this time and thank you for your participation.