July 22, 2025: Spruce Point Capital Management, LLC (“Spruce Point” or “we” or “us”), a New York-based investment management firm that focuses on forensic research and short-selling, today issued a detailed report entitled, “An Overheated HVAC Growth Story”, that outlines why we believe and estimate that shares of Limbach Holdings, Inc. (NASDAQ:LMB) ("Limbach" or the "Company") face up to (20% – 50%) potential downside risk, or ($62.00 – $99.00 per share. Download and view the report and its Full Legal Disclaimer by visiting www.sprucepointcap.com for additional information and exclusive updates.
Spruce Point Report Overview:
After conducting a forensic review of Limbach Holdings, Inc. (Nasdaq: LMB or “the Company”), a building systems solutions firm specializing in mechanical, electrical, plumbing, HVAC, and controls infrastructure for commercial, institutional, and industrial facilities, Spruce Point has developed concerns over the Company’s aggressive accounting practices, several connections to high-profile actual and alleged fraud cases (e.g. an Enron spin-off, Qwest Communications, and Granite Construction) among its board, and its CFO who was previously sued over an alleged breach of fiduciary duty. We also observe decelerating organic growth in the Company’s Owner Direct Relationships (“ODR”) segment, the key growth driver for the Company, and highlight why we believe the Company’s measures of Adj. EBITDA and free cash flow are overstated by 13% and 200%, respectively, over the last-twelve months, raising questions about the sustainability of its growth strategy.
Despite the above concerns, Limbach currently enjoys unanimous “Buy” ratings from the sell-side, with an average price target of $141.50/share, with a wide range between $120 and $163 per share, and valuation multiples of ~2.2x and ~18x our estimate for 2026 revenue and Adj. EBITDA, respectively. This is a level of bullishness we view as disconnected from the Company’s underlying fundamentals and constrained geographic growth potential mostly in the Eastern/Central part of the US. For example, Limbach’s valuation is nearly 3.5x the value it paid for recent acquisitions. As the market re-evaluates Limbach’s narrative against its actual financial performance, we believe the stock presents meaningful downside risk from current levels. Limbach currently trades at a premium to many peer facility service providers, some of which have stronger cash flow generation, greater revenue visibility, and better operating leverage. We believe this premium is unwarranted given our analysis which illustrates Limbach’s sharply decelerating organic growth, limited recurring revenue visibility, lack of free cash flow growth, and reliance on aggressive accounting practices. We also believe any future M&A is likely to increase leverage, as evidenced by the increased revolver announced with the Pioneer Power acquisition. We value Limbach at 1.2x – 1.8x and 10x – 15x our estimate for 2026 sales and Adj. EBITDA, respectively, in line with comparable companies. This implies 20% – 50% ($62.00 - $99.00/share) potential downside risk. We expect the Company’s share price to underperform the broader facility services sector and overall equity market.
Please note that the items summarized in this email are expanded upon and supported with data, public filings and records, and images in Spruce Point’s full report. As a reminder, our full report, along with its investment disclaimers, can be downloaded and viewed at www.SprucePointCap.com.
As disclosed, Spruce Point and/or its clients have a short position in Limbach Holdings, Inc. (Nasdaq: LMB) and owns derivative securities that stand to net benefit if its share price falls. Following publication of the report, we intend to continue transacting in the securities covered therein, and we may be long, short, or neutral at any time hereafter regardless of our initial opinion. For additional important information, please review the “Full Legal Disclaimer” contained in the report.
About Spruce Point
Spruce Point Capital Management, LLC is a forensic fundamentally-oriented investment manager that focuses on short-selling, value and special situation investment opportunities.
