Limbach Holdings, Inc.LMB
Limbach Holdings, Inc. Goodwill & Intangibles Disclosure
Goodwill and Intangible Assets
Goodwill
Goodwill was $33.0 million and $16.4 million as of December 31, 2024 and 2023, respectively. The Company tests its goodwill and indefinite-lived intangible assets allocated to its reporting units for impairment annually on October 1, or more frequently if events or circumstances indicate that it is more likely than not that the fair value of its reporting units and indefinite-lived intangible assets are less than their carrying amount. The Company has the option to assess goodwill for possible impairment by performing a qualitative analysis to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. A quantitative assessment is performed if the qualitative assessments results in a more-likely-than-not determination or if a qualitative assessment is not performed.
On October 1, 2024, the Company performed a qualitative assessment. In conducting that qualitative assessment, the Company analyzed a variety of events or factors that may influence the fair value of the reporting unit or indefinite-life intangible, including, but not limited to: if applicable; changes in the carrying amount of the reporting unit or indefinite-life intangible; actual and projected revenue and operating margin; relevant market data for both the Company and its peer companies; industry outlooks; macroeconomic conditions; liquidity; changes in key personnel; and the Company's competitive position. Significant judgment was used to evaluate the totality of these events and factors to make the determination of whether it is more likely than not that the fair value of the reporting units or indefinite-life intangible is less than its carrying value. No impairment losses were identified as a result of its qualitative assessment during the year ended December 31, 2024.
The following table summarizes the carrying amount and changes in goodwill associated with the Company's segments for the years ended December 31, 2024 and 2023.
| (in thousands) | GCR | ODR | Total | ||||||||||||||
| Goodwill as of January 1, 2023 | $ | — | $ | 11,370 | $ | 11,370 | |||||||||||
Goodwill associated with the ACME Transaction(1) | — | 2,226 | 2,226 | ||||||||||||||
| Goodwill associated with the Industrial Air Transaction | — | 2,778 | 2,778 | ||||||||||||||
| Goodwill as of December 31, 2023 | — | 16,374 | 16,374 | ||||||||||||||
Measurement period adjustments - Industrial Air Transaction(2) | — | 59 | 59 | ||||||||||||||
Goodwill associated with the Kent Island Transaction(3) | 4,244 | 1,240 | 5,484 | ||||||||||||||
| Goodwill associated with the Consolidated Mechanical Transaction | — | 11,117 | 11,117 | ||||||||||||||
| Goodwill as of December 31, 2024 | $ | 4,244 | $ | 28,790 | $ | 33,034 | |||||||||||
(1) Includes certain adjustments, net, to preliminary estimates of fair value within the measurement period of up to one-year from the date of the ACME Transaction. Measurement period adjustments, net, relate primarily to an increase in certain definite-lived intangible assets, partially offset by an increase in total consideration associated with the earnout provision.
(2) Includes certain adjustments to preliminary estimates of fair value within the measurement period of up to one-year from the date of the Industrial Air Transaction. Measurement period adjustments related to certain working capital adjustments.
(3) In connection with the Kent Island Transaction, the Company recorded preliminary goodwill of $4.8 million. During the fourth quarter of 2024, the Company recognized certain adjustments to preliminary estimates of fair value within the measurement period of up to one-year from the date of the Kent Island Transaction. The measurement period adjustments amounted to $0.7 million and related to certain working capital adjustments made in connection with the finalization of the transactions closing date cash consideration.
Intangible Assets
The Company reviews intangible assets with definite lives subject to amortization whenever events or changes in circumstances (triggering events) indicate that the carrying amount of an asset may not be recoverable. Intangible assets with definite lives subject to amortization are amortized on a straight-line or accelerated basis with estimated useful lives ranging from 1 to 15 years. Events or circumstances that might require impairment testing include the identification of other impaired assets within a reporting unit, loss of key personnel, the disposition of a significant portion of a reporting unit, a significant decline in stock price, or a significant adverse change in the Company’s business climate or regulations affecting the Company.
The Company did not recognize an impairment charge on its indefinite-lived intangible assets for the years ended December 31, 2024, 2023 and 2022.
Definite-lived and indefinite-lived intangible assets consist of the following:
| (in thousands) | Gross carrying amount | Accumulated amortization | Net intangible assets, excluding goodwill | ||||||||||||||
| December 31, 2024 | |||||||||||||||||
| Amortized intangible assets: | |||||||||||||||||
| Customer relationships | $ | 32,820 | $ | (7,124) | $ | 25,696 | |||||||||||
| Backlog | 5,560 | (3,310) | 2,250 | ||||||||||||||
| Trade name, trademarks and intellectual property | 4,550 | (1,228) | 3,322 | ||||||||||||||
| Total amortized intangible assets | 42,930 | (11,662) | 31,268 | ||||||||||||||
| Unamortized intangible assets: | |||||||||||||||||
Trade name – Limbach(1) | 9,960 | — | 9,960 | ||||||||||||||
| Total unamortized intangible assets | 9,960 | — | 9,960 | ||||||||||||||
| Total amortized and unamortized assets, excluding goodwill | $ | 52,890 | $ | (11,662) | $ | 41,228 | |||||||||||
(1) The Company has determined that its trade name has an indefinite useful life. The Limbach trade name has been in existence since the Company’s founding in 1901 and therefore is an established brand within the industry.
| (in thousands) | Gross carrying amount | Accumulated amortization | Net intangible assets, excluding goodwill | ||||||||||||||
| December 31, 2023 | |||||||||||||||||
| Amortized intangible assets: | |||||||||||||||||
| Customer relationships | $ | 15,320 | $ | (5,249) | $ | 10,071 | |||||||||||
| Backlog | 2,560 | (1,264) | 1,296 | ||||||||||||||
| Trade name, trademarks and intellectual property | 4,250 | (578) | 3,672 | ||||||||||||||
| Total amortized intangible assets | 22,130 | (7,091) | 15,039 | ||||||||||||||
| Unamortized intangible assets: | |||||||||||||||||
| Trade name – Limbach | 9,960 | — | 9,960 | ||||||||||||||
| Total unamortized intangible assets | 9,960 | — | 9,960 | ||||||||||||||
| Total amortized and unamortized assets, excluding goodwill | $ | 32,090 | $ | (7,091) | $ | 24,999 | |||||||||||
Total amortization expense for the Company’s definite-lived intangible assets was $4.7 million, $1.9 million and $1.6 million for the years ended December 31, 2024, 2023 and 2022, respectively. For the years ended December 31, 2024 and 2023, amortization expense included approximately $0.1 million and less than $0.1 million of amortization expense related to a
below-market lease recognized as a result of the Industrial Air Transaction, which was recorded as an increase to the Company’s operating lease right-of-use assets on its consolidated balance sheet.
The estimated remaining useful lives of definite-lived intangible assets are as follows:
| Intangible Asset | Amortization Method | Weighted Average Remaining Useful Life (Years) | ||||||||||||
| Customer relationships | Straight line / Pattern of economic benefit | 7.1 | ||||||||||||
| Trade name, trademarks and intellectual property | Straight line | 5.4 | ||||||||||||
| Backlog | Straight line | 0.9 | ||||||||||||
Estimated amortization expense is as follows for the years ending December 31:
| (in thousands) | Estimated Amortization Expense | |||||||
| 2025 | $ | 6,919 | ||||||
| 2026 | 4,339 | |||||||
| 2027 | 4,339 | |||||||
| 2028 | 4,162 | |||||||
| 2029 | 3,821 | |||||||
| 2030 and thereafter | 7,688 | |||||||
| Total | $ | 31,268 | ||||||
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About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.