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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-36541
lmb-20210930_g1.jpg
LIMBACH HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware, USA
 46-5399422
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer Identification
No.)
   
1251 Waterfront Place, Suite 201
Pittsburgh, Pennsylvania
 15222
(Address of principal executive offices) (Zip Code)
1-412-359-2100
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per shareLMBThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer☒   Smaller reporting company   
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No  
As of November 9, 2021, there were 10,304,242 shares of the registrant’s common stock, $0.0001 par value per share, outstanding.


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LIMBACH HOLDINGS, INC.
TABLE OF CONTENTS


Table of Contents

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LIMBACH HOLDINGS, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)September 30, 2021December 31, 2020
ASSETS  
Current assets:  
Cash and cash equivalents$33,302 $42,147 
Restricted cash113 113 
Accounts receivable (net of allowance for doubtful accounts of $285 and $266 as of September 30, 2021 and December 31, 2020, respectively)
98,319 85,767 
Contract assets72,193 67,098 
Income tax receivable217  
Other current assets5,539 4,292 
Total current assets209,683 199,417 
Property and equipment, net16,710 19,700 
Intangible assets, net11,386 11,681 
Goodwill6,129 6,129 
Operating lease right-of-use assets15,802 18,751 
Deferred tax asset5,696 6,087 
Other assets272 392 
Total assets$265,678 $262,157 
LIABILITIES
Current liabilities:
Current portion of long-term debt$8,460 $6,536 
Current operating lease liabilities4,061 3,929 
Accounts payable, including retainage70,895 66,763 
Contract liabilities37,003 46,648 
Accrued income taxes245 1,671 
Accrued expenses and other current liabilities22,420 24,747 
Total current liabilities143,084 150,294 
Long-term debt23,094 36,513 
Long-term operating lease liabilities12,495 15,459 
Other long-term liabilities4,030 6,159 
Total liabilities182,703 208,425 
Commitments and contingencies (Note 12)
STOCKHOLDERS’ EQUITY
Common stock, $0.0001 par value; 100,000,000 shares authorized, 10,274,242 issued and outstanding as of September 30, 2021 and 7,926,137 at December 31, 2020
1 1 
Additional paid-in capital84,419 57,612 
Accumulated deficit(1,445)(3,881)
Total stockholders’ equity82,975 53,732 
Total liabilities and stockholders’ equity$265,678 $262,157 
The accompanying notes are an integral part of these condensed consolidated financial statements
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LIMBACH HOLDINGS, INC.
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except share and per share data)
2021202020212020
Revenue$129,177 $163,856 $363,540 $437,813 
Cost of revenue104,714 139,685 303,158 375,083 
Gross profit24,463 24,171 60,382 62,730 
Operating expenses:
Selling, general and administrative18,302 17,045 52,679 47,596 
Amortization of intangibles
87 109295 526
Total operating expenses18,389 17,154 52,974 48,122 
Operating income6,074 7,017 7,408 14,608 
Other (expenses) income:
Interest expense, net
(424)(2,154)(2,140)(6,449)
(Loss) gain on disposition of property and equipment(49)3 (41)18 
Loss on early debt extinguishment  (1,961) 
(Loss) gain on change in fair value of warrant liability (1,371)14 (1,312)
Total other expenses(473)(3,522)(4,128)(7,743)
Income before income taxes5,601 3,495 3,280 6,865 
Income tax provision1,615 970 844 1,445 
Net income$3,986 $2,525 $2,436 $5,420 
Earnings Per Share (“EPS”)
Income per common share:
    Basic
$0.39 $0.32 $0.25 $0.69 
    Diluted
$0.38 $0.31 $0.24 $0.68 
Weighted average number of shares outstanding:
Basic
10,266,486 7,890,074 9,915,966 7,844,587 
Diluted
10,491,863 8,107,149 10,145,470 7,969,857 
The accompanying notes are an integral part of these condensed consolidated financial statements
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LIMBACH HOLDINGS, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
 Common Stock   
(in thousands, except share amounts)Number of
shares
outstanding
Par value
amount
Additional
paid-in
capital
Accumulated
deficit
Stockholders’
equity
Balance at December 31, 20207,926,137 $1 $57,612 $(3,881)$53,732 
Stock-based compensation
— — 677 — 677 
Shares issued related to vested restricted stock units
89,446 — — —  
Tax withholding related to vested restricted stock units— — (183)— (183)
Shares issued related to employee stock purchase plan8,928 — 92 — 92 
Shares issued related to the exercise of warrants172,869 — 1,989 — 1,989 
Shares issued related to sale of common stock2,051,025 — 22,773 — 22,773 
Net loss— — — (2,282)(2,282)
Balance at March 31, 202110,248,405 $1 $82,960 $(6,163)$76,798 
Stock-based compensation
— — 636 — 636 
Shares issued related to vested restricted stock units
3,291 — — —  
Tax withholding related to vested restricted stock units— — (7)— (7)
Net income— — — 732 732 
Balance at June 30, 202110,251,696 $1 $83,589 $(5,431)$78,159 
Stock-based compensation
— — 703 — 703 
Shares issued related to vested restricted stock units
6,401 — — —  
Shares issued related to employee stock purchase plan16,140 — 127 127 
Shares issued related to the exercise of warrants5 — —  
Net income— — — 3,986 3,986 
Balance at September 30, 202110,274,242 $1 $84,419 $(1,445)$82,975 

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 Common Stock   
(in thousands, except share amounts)Number of
shares
outstanding
Par value
amount
Additional
paid-in
capital
Accumulated
deficit
Stockholders’
equity
Balance at December 31, 20197,688,958 $1 $56,557 $(9,688)$46,870 
Stock-based compensation
— — 295 — 295 
Shares issued related to vested restricted stock units
104,905 — — —  
Net loss— — — (52)(52)
Balance at March 31, 20207,793,863 $1 $56,852 $(9,740)$47,113 
Stock-based compensation
— — 140 — 140 
Shares issued related to vested restricted stock units
59,514 — — —  
Net income— — — 2,947 2,947 
Balance at June 30, 20207,853,377 $1 $56,992 $(6,793)$50,200 
Stock-based compensation— — 304 — 304 
Shares issued related to employee stock purchase plan30,825 — 98 — 98 
Shares issued related to vested restricted stock units10,000 — — —  
Net income— — — 2,525 2,525 
Balance at September 30, 20207,894,202 $1 $57,394 $(4,268)$53,127 

The accompanying notes are an integral part of these condensed consolidated financial statements
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LIMBACH HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)

 Nine months ended September 30,
(in thousands)
20212020
Cash flows from operating activities:  
Net income$2,436 $5,420 
Adjustments to reconcile net income to cash (used in) provided by operating activities:
Depreciation and amortization
4,353 4,635 
Provision for doubtful accounts
126 62 
Stock-based compensation expense
2,016 739 
Noncash operating lease expense
3,152 3,033 
Amortization of debt issuance costs
251 1,620 
Deferred income tax provision 391 211 
Loss (gain) on sale of property and equipment41 (18)
Loss on early debt extinguishment1,961  
(Gain) loss on change in fair value of warrant liability(14)1,312 
Changes in operating assets and liabilities:
   Accounts receivable
(12,678)(19,834)
   Contract assets
(5,095)8,612 
   Other current assets
(1,243)270 
   Accounts payable, including retainage
4,131 2,695 
   Prepaid income taxes
(217)(192)
   Accrued taxes payable
(1,426)1,947 
   Contract liabilities
(9,645)18,715 
   Operating lease liabilities
(3,036)(3,229)
   Accrued expenses and other current liabilities
(2,173)8,925 
   Other long-term liabilities
(112)306 
Net cash (used in) provided by operating activities(16,781)35,229 
Cash flows from investing activities:
Proceeds from sale of property and equipment
421 65 
Advances to joint ventures(2)(3)
Purchase of property and equipment
(687)(1,116)
Net cash used in investing activities(268)(1,054)
Cash flows from financing activities:
Proceeds from Wintrust Term Loan (as defined in Note 5)
30,000  
Payments on Wintrust Term Loan(3,500) 
Proceeds from 2019 Revolving Credit Facility (as defined in Note 5)
 7,250 
Payments on 2019 Revolving Credit Facility
 (7,250)
Payments on 2019 Refinancing Term Loan (as defined in Note 5)
(39,000)(1,000)
Prepayment penalty and other costs associated with early debt extinguishment(1,376) 
Proceeds from the sale of common stock22,773  
Proceeds from the exercise of warrants1,989  
Payments on finance leases
(1,966)(1,966)
Payments of debt issuance costs
(593) 
Taxes paid related to net-share settlement of equity awards
(401)(102)
   Proceeds from contributions to Employee Stock Purchase Plan278 149 
Net cash provided by (used in) financing activities8,204 (2,919)
(Decrease) increase in cash, cash equivalents and restricted cash(8,845)31,256 
Cash, cash equivalents and restricted cash, beginning of period42,260 8,457 
Cash, cash equivalents and restricted cash, end of period$33,415 $39,713 
Supplemental disclosures of cash flow information
Noncash investing and financing transactions:
   Right of use assets obtained in exchange for new operating lease liabilities$156 $924 
   Right of use assets obtained in exchange for new finance lease liabilities846 2,399 
   Right of use assets disposed or adjusted modifying operating lease liabilities47 586 
   Right of use assets disposed or adjusted modifying finance lease liabilities (64)
Interest paid2,138 4,817 
Cash paid (received) for income taxes$2,096 $(629)
    
The accompanying notes are an integral part of these condensed consolidated financial statements
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LIMBACH HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 – Business and Organization
Limbach Holdings, Inc. (the “Company,” “we” or “us”), a Delaware corporation headquartered in Pittsburgh, Pennsylvania, was formed on July 20, 2016 as a result of a business combination with Limbach Holdings LLC (“LHLLC”). The Company is an integrated building systems solutions firm whose expertise is in the design, modular prefabrication, installation, management and maintenance of heating, ventilation, air-conditioning (“HVAC”), mechanical, electrical, plumbing and controls systems. The Company provides comprehensive facility services consisting of mechanical construction, full HVAC service and maintenance, energy audits and retrofits, engineering and design build services, constructability evaluation, equipment and materials selection, offsite/prefabrication construction, and the complete range of sustainable building solutions. The Company's customers operate in diverse industries including, but not limited to, healthcare, life sciences, data centers, industrial and light manufacturing, entertainment, education and government. The Company operates primarily in the Northeast, Mid-Atlantic, Southeast, Midwest, and Southwestern regions of the United States.
The Company operates in two segments, which were renamed as of January 1, 2021 to reflect the Company's two distinct approaches to its customer base and to better align with its owner direct strategy. The previously named Construction segment is now known as General Contractor Relationships (“GCR”); the previously named Service segment is now known as Owner Direct Relationships (“ODR”). The Company's operating segments are based on the relationship with its customers, (i) GCR, in which the Company generally manages new construction or renovation projects that involve primarily HVAC, plumbing, or electrical services awarded to the Company by general contractors or construction managers, and (ii) ODR, in which the Company provides maintenance or service primarily on HVAC, plumbing or electrical systems, building controls and specialty contracting projects direct to, or assigned by, building owners or property managers. This work is primarily performed under fixed price, modified fixed price, and time and material contracts over periods of typically less than two years.
Impact of the COVID-19 Pandemic
In March 2020, the World Health Organization declared the outbreak of the coronavirus disease 2019 (“COVID-19”) a global pandemic. The COVID-19 pandemic has caused significant disruption and volatility on a global scale resulting in, among other things, an economic slowdown, impacts to global supply chains, and the possibility of a continued economic recession. In response to the COVID-19 outbreak, national and local governments around the world instituted certain measures, including travel bans, restrictions on group events and gatherings, shutdowns of certain non-essential businesses, curfews, shelter-in-place orders, recommendations to practice social distancing and vaccine mandates. Certain governmental actions have abated over time, but remain applicable to Limbach's operations in various ways, often varying by state. In some instances, these orders continued to affect certain projects in our GCR and ODR segments during 2021. In limited instances, during fiscal 2020, projects chose to shutdown work irrespective of the existence or applicability of government action. In most markets, construction is considered an essential business and the Company continued to staff its projects and perform work during fiscal 2020 and into 2021, and most of the projects that were in progress at the time shutdowns commenced were restarted.
The Company continues to actively manage its response to the COVID-19 pandemic in collaboration with relevant parties and, given that the situation surrounding COVID-19 remains fluid, a number of Company-wide measures undertaken in response to COVID-19 remain in effect to continue to promote the safety and health of its employees and customers.
The Company continues to monitor the short and long term impacts of the pandemic. While our employees and customers have adapted to a new work environment and there continues to be scientific, societal and economic progress to address the effect of COVID-19, there remains significant uncertainty about the future impacts of the pandemic, including the potential effects on our operations. We remain cautiously optimistic about the markets in which we operate and the customers we serve; however, the continued spread of the virus may impact economic activity and could cause projects to be delayed or canceled, or we may experience access restrictions to our customers’ facilities and project sites.
The ongoing effects of the pandemic, including decreased consumer confidence and economic instability, can make it extremely difficult for our customers, our vendors and us to accurately forecast and plan future business activities, and could cause constrained spending on our services, delays and a lengthening of our business development efforts, the demand for more favorable pricing or other terms, and/or difficulty in collection of our accounts receivable. Our clients may face budget deficits or other financial constraints that prohibit them from funding proposed and existing projects. During the fourth quarter of 2020 and the nine months ended September 30, 2021, several of our business units experienced slowdowns in the closing of sales related to the ongoing effects of the pandemic, which impacted our revenue and profitability. These impacts may continue as the pandemic persists. Further, ongoing economic instability in the global markets, including from the pandemic, could limit our ability to access the capital markets at a time when we would like, or need, to raise capital, which could have an impact on
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our ability to react to changing business conditions or new opportunities. If economic conditions remain uncertain or weaken, or spending continues to be reduced, our financial condition and results of operations may be adversely affected.
Note 2 – Significant Accounting Policies
Basis of Presentation
References in these financial statements to the Company refer collectively to the accounts of Limbach Holdings, Inc. and its wholly-owned subsidiaries, including LHLLC, Limbach Facility Services LLC (“LFS”), Limbach Company LLC, Limbach Company LP, Harper Limbach LLC, and Harper Limbach Construction LLC for all periods presented.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the requirements of Form 10-Q and Rule 8-03 of Regulation S-X for smaller reporting companies. Consequently, certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Readers of this report should refer to the consolidated financial statements and the notes thereto included in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 25, 2021.
Unaudited Interim Financial Information
The accompanying interim Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Stockholders’ Equity and Condensed Consolidated Statements of Cash Flows for the periods presented are unaudited. Also, within the notes to the condensed consolidated financial statements, the Company has included unaudited information for these interim periods. These unaudited interim condensed consolidated financial statements have been prepared in accordance with GAAP. In the Company's opinion, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2021, its results of operations and its cash flows for the three and nine months ended September 30, 2021. The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021.
The Condensed Consolidated Balance Sheet as of December 31, 2020 was derived from the Company's audited financial statements included in its Annual Report on Form 10-K filed with the SEC on March 25, 2021, but is presented as condensed and does not contain all of the footnote disclosures from the annual financial statements.
Recently Adopted Accounting Standards
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), which affects general principles within Topic 740, and is meant to simplify and reduce the cost of accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and simplifies areas including franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, the incremental approach for intraperiod tax allocation, interim period income tax accounting for year-to-date losses that exceed anticipated losses and enacted changes in tax laws in interim periods. The changes are effective for annual periods beginning after December 15, 2020. The adoption of this pronouncement did not have a material impact on the Company's condensed consolidated financial statements or presentation thereof.
Also in October 2020, the FASB issued ASU 2020-10, Codification Improvements. The amendments in this update remove references to various FASB Concepts Statements, situates all disclosure guidance in the appropriate disclosure section of the Codification, and makes other improvements and technical corrections to the Codification. The amendments in Sections B and C of this amendment are effective for annual periods beginning after December 15, 2020, for public business entities, with early adoption permitted. The adoption of this pronouncement did not have a material impact on the Company's condensed consolidated financial statements or presentation thereof.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, which introduced an expected credit loss methodology for the measurement and recognition of credit losses on most financial instruments, including trade receivables and off-balance sheet credit exposure. Under this guidance, an entity is required to consider a broader range of information to estimate expected credit losses, which may result in earlier recognition of losses. This ASU also requires disclosure of information regarding how a company developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes. The guidance is effective for smaller reporting companies on January 1, 2023 with early adoption permitted. The
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adoption of this standard will be through a cumulative-effect adjustment to retained earnings as of the effective date. Based on its historical experience, the Company does not expect that this pronouncement will have a significant impact in its financial statements or on the estimate of the allowance for doubtful accounts.
The FASB has issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting in March 2020. This new guidance provides optional expedients for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform, on financial reporting. The risk of termination of the London Interbank Offered Rate (LIBOR), has caused regulators to undertake reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based that are less susceptible to manipulation. ASU 2020-04 is effective between March 12, 2020 and December 31, 2022.
In addition, in January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments in this update refine the scope for certain optional expedients and exceptions for contract modifications and hedge accounting to apply to derivative contracts and certain hedging relationships affected by the discounting transition. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of adopting the reference rate reform guidance (both ASU 2020-04 and ASU 2021-01) on its condensed consolidated financial statements. Management has identified that its credit agreement utilizes LIBOR as a benchmark rate. Management will continue to evaluate the impact of adopting reference rate reform as the LIBOR benchmark rate within the credit agreement is phased out.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity and amends the scope guidance for contracts in an entity's own equity. The ASU addresses how convertible instruments are accounted for in the calculation of diluted earnings per share by using the if-converted method. The guidance is effective for all entities for fiscal years beginning after March 31, 2024, albeit early adoption is permitted no earlier than fiscal years beginning after December 15, 2020. Management is currently assessing the impact of this pronouncement on its condensed consolidated financial statements.
Note 3 – Revenue from Contracts with Customers
The Company generates revenue principally from fixed-price construction contracts to deliver HVAC, plumbing, and electrical construction services to its customers. The duration of its contracts generally ranges from six months to two years. Revenue from fixed price contracts is recognized on the cost-to-cost method, measured by the relationship of total cost incurred to total estimated contract costs. Revenue from time and materials contracts is recognized as services are performed. The Company believes that its extensive experience in HVAC, plumbing, and electrical projects, and its internal cost review procedures during the bidding process, enable it to reasonably estimate costs and mitigate the risk of cost overruns on fixed price contracts.
The Company generally invoices customers on a monthly basis, based on a schedule of values that breaks down the contract amount into discrete billing items. Costs and estimated earnings in excess of billings on uncompleted contracts are recorded as a contract asset until billable under the contract terms. Billings in excess of costs and estimated earnings on uncompleted contracts are recorded as a contract liability until the related revenue is recognizable. The Company classifies contract assets and liabilities that may be settled beyond one year from the balance sheet date as current, consistent with the length of time of the Company’s project operating cycle.
Contract assets
Contract assets include costs in excess of billings and estimated earnings and amounts due under retainage provisions. The components of the contract asset balances as of the respective dates were as follows:
(in thousands)September 30, 2021December 31, 2020Change
Contract assets
   Costs in excess of billings and estimated earnings$39,772 $31,894 $7,878 
   Retainage receivable32,421 35,204 (2,783)
      Total contract assets$72,193 $67,098 $5,095 
Retainage receivable represents amounts invoiced to customers where payments have been partially withheld, typically 10%, pending the completion of certain milestones, satisfaction of other contractual conditions or the completion of the project. Retainage agreements vary from project to project and balances could be outstanding for several months or years depending on
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a number of circumstances such as contract-specific terms, project performance and other variables that may arise as the Company makes progress towards completion.

Contract assets represent the excess of contract costs and profits (or contract revenue) over the amount of contract billings to date and are classified as a current asset. Contract assets result when either: 1) the appropriate contract revenue amount has been recognized over time in accordance with ASC Topic 606, but a portion of the revenue recorded cannot be currently billed due to the billing terms defined in the contract, or 2) costs are incurred related to certain claims and unapproved change orders. Claims occur when there is a dispute regarding both a change in the scope of work and the price associated with that change. Unapproved change orders occur when a change in the scope of work results in additional work being performed before the parties have agreed on the corresponding change in the contract price. The Company routinely estimates recovery related to claims and unapproved change orders as a form of variable consideration at the most likely amount it expects to receive and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Claims and unapproved change orders are billable upon the agreement and resolution between the contractual parties and after the execution of contractual amendments. Increases in claims and unapproved change orders typically result from costs being incurred against existing or new positions; decreases normally result from resolutions and subsequent billings.
The current estimated net realizable value on such claims and unapproved change orders as recorded in contract assets and contract liabilities in the condensed consolidated balance sheets was $39.2 million and $33.6 million as of September 30, 2021 and December 31, 2020, respectively. The Company anticipates that the majority of such amounts will be approved or executed within one year. The resolution of those claims and unapproved change orders that may require litigation or other forms of dispute resolution proceedings may delay the timing of billing beyond one year.
Contract liabilities
Contract liabilities include billings in excess of costs and estimated earnings and provisions for losses. The components of the contract liability balances as of the respective dates were as follows:
(in thousands)September 30, 2021December 31, 2020Change
Contract liabilities
   Billings in excess of costs and estimated earnings$36,517 $46,020 $(9,503)
   Provisions for losses486 628 (142)
      Total contract liabilities$37,003 $46,648 $(9,645)
Billings in excess of costs and estimated earnings represent the excess of contract billings to date over the amount of contract costs and profits (or contract revenue) recognized to date. The balance may fluctuate depending on the timing of contract billings and the recognition of contract revenue.
Provisions for losses are recognized in the condensed consolidated statements of operations at the uncompleted performance obligation level for the amount of total estimated losses in the period that evidence indicates that the estimated total cost of a performance obligation exceeds its estimated total revenue.
The net overbilling position for contracts in process consist of the following:
(in thousands)September 30, 2021December 31, 2020
Revenue earned on uncompleted contracts$718,366 $752,564 
Less: Billings to date(715,111)(766,690)
   Net underbilling (overbilling)$3,255 $(14,126)
(in thousands)September 30, 2021December 31, 2020
Costs in excess of billings and estimated earnings$39,772 $31,894 
Billings in excess of costs and estimated earnings(36,517)(46,020)
   Net underbilling (overbilling)$3,255 $(14,126)
Revisions in Contract Estimates
For the three and nine months ended September 30, 2021 and 2020, the Company recorded revisions in its contract estimates for certain GCR and ODR projects.
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For the three months ended September 30, 2021, total net gross profit write-ups were $1.2 million compared total net gross profit write-downs of $0.8 million for the three months ended September 30, 2020. For projects having a material gross profit impact of $0.25 million or more for the three months ended September 30, 2021, this resulted in material gross profit write-downs on three GCR segment projects of $1.4 million. Of the material GCR segment write-downs, one project was within the New England region for $0.6 million, and two projects were within the Southern California region for a total of $0.8 million. The Company also recorded material gross profit write-ups on three GCR segment projects of $1.2 million. Of the material GCR segment write-ups, one project was within the New England region for $0.6 million and two were within the Florida region for a total of $0.6 million. For the three months ended September 30, 2020, the Company recorded material revisions in its contract estimates on five GCR projects which resulted in gross profit write-downs of $2.4 million. Three of these projects were within the Southern California region for a total of $1.8 million. The Company also recorded a $0.4 million material project revision resulting in a gross profit write-up on one GCR project within the Southern California region for the three months ended September 30, 2020.
For the nine months ended September 30, 2021 and 2020, total net gross profit write-downs were $1.3 million and $4.2 million, respectively. For projects having a material gross profit impact of $0.25 million or more, the Company recorded gross profit write-downs on nine GCR segment projects of $5.3 million and one ODR project for $0.3 million. Of the material GCR segment write-downs, three projects were within the Southern California region for a total of $1.8 million, two projects were within the Michigan region for a total of $1.3 million, two projects were within the Eastern Pennsylvania region for a total of $1.2 million, one project was within the New England region for $0.7 million, and one project was within the Mid-Atlantic region for $0.3 million. The Company also materially wrote-down one ODR segment project within the Eastern Pennsylvania region for $0.3 million. The Company also recorded material GCR segment gross profit write-ups of $2.9 million on seven GCR segment projects. Of the material GCR segment write-ups, two projects were within the Florida region for a total of $0.9 million, one project was within the Michigan region for $0.7 million, two projects were within the Ohio region for a total of $0.6 million, one project was within the New England region for $0.4 million and one project was within the Mid-Atlantic region for $0.3 million. For the nine months ended September 30, 2020, the Company recorded eleven material gross profit write-downs and three gross profit write-ups on material GCR projects, resulting in aggregate revisions of $7.5 million and $1.6 million, respectively.
Remaining Performance Obligations
Remaining performance obligations represent the transaction price of firm orders for which work has not been performed and exclude unexercised contract options. The Company’s remaining performance obligations includes projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions.
As of September 30, 2021, the aggregate amount of the transaction prices allocated to the remaining performance obligations of the Company's GCR and ODR segment contracts were $345.5 million and $52.8 million, respectively. The Company estimates that 25% and 37% of its GCR and ODR remaining performance obligations as of September 30, 2021, respectively, will be recognized as revenue during the remainder of 2021. The substantial majority of remaining performance obligations to be recognized within 24 months, although the timing of the Company's performance is not always under its control.
Additionally, the difference between remaining performance obligations and backlog is due to the exclusion of a portion of the Company’s ODR agreements under certain contract types from the Company’s remaining performance obligations as these contracts can be canceled for convenience at any time by the Company or the customer without considerable cost incurred by the customer.
Note 4 – Goodwill and Intangibles
Goodwill
Goodwill was $6.1 million as of September 30, 2021 and December 31, 2020 and is entirely associated with the Company's ODR segment. 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 asset are less than their carrying amount.
During the third quarter of 2021, the Company identified impairment indicators in the form of significant declines in the stock price of the Company's common shares and corresponding market capitalization. Management considered these declines as indicators that the fair value of the ODR reporting unit may have been below its carrying amount, and the performance of an interim quantitative goodwill impairment assessment was required. In estimating the fair value of the ODR reporting unit, the Company used a combination of the income approach and the market approach. The Company used the income approach’s discounted cash flow method, which applies significant inputs not observable in the public market (Level 3), including
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estimates and assumptions related to the use of an appropriate discount rate, future cash flows generated from existing work and new awards, projected operating margins and changes in working capital. The Company used the market approach’s comparable company method. The comparable company method evaluates the value of a company using metrics of other businesses of similar size and industry.
As a result of the interim assessment, the Company determined that the fair value of the ODR reporting unit was greater than its respective carrying value. The impairment assessment concluded significant headroom of $33.3 million, or 169%, for the ODR reporting unit. No impairment to goodwill was recorded during the three months ended September 30, 2021. The Company believes the estimates and assumptions used in estimating its reporting units’ fair values are reasonable and appropriate; however, different assumptions and estimates could materially affect the calculated fair value of the ODR reporting unit and the resulting conclusions on impairment of goodwill, which could materially affect the Company’s results of operations and financial position. Additionally, actual results could differ from these estimates and assumptions may not be realized.
Intangible Assets
Intangible assets are comprised of the following:
(in thousands)Gross
carrying
amount
Accumulated
amortization
Net intangible
assets, excluding
goodwill
September 30, 2021(1)
Amortized intangible assets:
Customer relationships – ODR$4,710 $(3,396)$1,314 
Favorable leasehold interests(2)
190 (78)112 
Total amortized intangible assets
4,900 (3,474)1,426 
Unamortized intangible assets:
Trade name9,960 — 9,960 
Total unamortized intangible assets
9,960 — 9,960 
Total amortized and unamortized assets, excluding goodwill$14,860 $(3,474)$11,386 
(in thousands)Gross
carrying
amount
Accumulated
amortization
Net intangible
assets, excluding
goodwill
December 31, 2020(1)
   
Amortized intangible assets:   
Customer relationships – ODR$4,710 $(3,112)$1,598 
Favorable leasehold interests530 (407)123 
Total amortized intangible assets5,240 (3,519)1,721 
Unamortized intangible assets:
   Trade name9,960 — 9,960 
Total unamortized intangible assets9,960 — 9,960 
Total amortized and unamortized assets, excluding goodwill$15,200 $(3,519)$11,681 
(1)     The Backlog-Construction intangible asset previously shown at December 31, 2020 has been fully amortized. Accordingly, its gross carrying amount of $4.8 million and corresponding accumulated amortization of $4.8 million have been removed from the table.
(2)     During the first quarter of 2021, the Company reduced the gross carrying amount and accumulated amortization associated with its favorable leasehold interests intangible asset by $0.3 million due to the lease termination of its Western Pennsylvania office associated with the intangible asset.
Customer relationship-related intangible assets are amortized over the period the Company expects to receive the related economic benefit based upon estimated future net cash flows. Favorable leasehold interest-related intangible assets are amortized on a straight-line basis over the remaining lease terms. Total amortization expense for the Company's definite-lived intangible assets was $0.1 million and $0.3 million for the three and nine months ended September 30, 2021, respectively, and $0.1 million and $0.5 million for the three and nine months ended September 30, 2020, respectively.
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The Company has previously 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.
During the third quarter of 2021, the Company performed a quantitative impairment test on its indefinite-lived intangible assets due to the triggering events described in the goodwill impairment summary above. The fair value of the Company's trade name was estimated using an income approach, specifically known as the relief-from-royalty method. The relief-from-royalty method is based on the hypothetical royalty stream that would be received if we were to license the trade name and was based on expected revenues. As a result of the interim assessment, the Company determined that the fair value of the Company's indefinite-lived intangible asset was greater than its respective carrying value. The impairment assessment concluded headroom of $1.0 million, or 10%, for the Company's trade name. The Company did not recognize an impairment charge on its indefinite-lived intangible asset for the three and nine months ended September 30, 2021 and 2020.
Note 5 – Debt
Long-term debt consists of the following obligations as of:
(in thousands)September 30, 2021December 31, 2020
2019 Refinancing Term Loan - term loan payable in quarterly installments of principal, (commencing in September 2020) plus interest through April 2022$ $39,000 
2019 Revolving Credit Facility  
Wintrust Term Loan - term loan payable in quarterly installments of principal, (commencing in March 2021) plus interest through February 202626,500  
Wintrust Revolving Loan  
Finance leases – collateralized by vehicles, payable in monthly installments of principal, plus interest ranging from 4.70% to 6.45% through 2025
5,338 6,459 
Total debt31,838 45,459 
Less - Current portion of long-term debt(8,460)(6,536)
Less - Unamortized discount and debt issuance costs(284)(2,410)
Long-term debt$23,094 $36,513 
On February 24, 2021 (the “2021 Refinancing Date”), the Company refinanced its 2019 Refinancing Term Loan (defined below) and 2019 Revolving Credit Facility (defined below) with proceeds from the issuance of the Wintrust Term Loan (defined below) (the “2021 Refinancing”). As a result of the 2021 Refinancing, the Company prepaid all principal, interest, fees and other obligations outstanding under the 2019 Refinancing Agreements (defined below) and terminated its 2019 Refinancing Term Loan and 2019 Refinancing Revolving Credit Facility. In addition, on the 2021 Refinancing Date, the Company recognized a loss on the early extinguishment of debt of $2.0 million, which consisted of the write-off of $2.6 million of unamortized discount and financing costs, the reversal of the $2.0 million CB warrants (defined below) liability and the prepayment penalty and other extinguishment costs of $1.4 million.
2019 Refinancing Agreement - 2019 Term Loans
On April 12, 2019 (the “Refinancing Closing Date”), LFS entered into a financing agreement (as amended, the “2019 Refinancing Agreement”) with the lenders thereto and Cortland Capital Market Services LLC, as collateral agent and administrative agent and CB Agent Services LLC, as origination agent (“CB”). The 2019 Refinancing Agreement consisted of (i) a $40.0 million term loan (the “2019 Refinancing Term Loan”) and (ii) a new $25.0 million multi-draw delayed draw term loan (the “2019 Delayed Draw Term Loan” and, collectively with the 2019 Refinancing Term Loan, the “2019 Term Loans”). On November 14, 2019, the Company entered into an amendment to the 2019 Refinancing Agreement which, among other things, amended the interest rate and certain covenants in the 2019 Refinancing Agreement.
Prior to its refinancing in February 2021, the 2019 Refinancing Agreement would have matured in April 2022. Required amortization was $1.0 million per quarter and commenced with the fiscal quarter ending September 30, 2020. There was an unused line fee of 2.0% per annum on the undrawn portion of the 2019 Delayed Draw Term Loan, and there was a make-whole premium on prepayments made prior to the 19-month anniversary of the Refinancing Closing Date. This make-whole provision guaranteed that the Company would pay no less than 18 months’ applicable interest to the lenders under the 2019 Refinancing Agreement.
The interest rate on borrowings under the 2019 Refinancing Agreement was, at the option of LFS and its subsidiaries, either LIBOR (with a 2.00% floor) plus 11.00% or a base rate (with a 3.00% minimum) plus 10.00%. At the 2021 Refinancing Date and September 30, 2020, the interest rate in effect on the 2019 Refinancing Term Loan was 13.00%.
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2019 Refinancing Agreement - CB Warrants
In connection with the 2019 Refinancing Agreement, on the Refinancing Closing Date, the Company issued to CB and the other lenders under the 2019 Refinancing Agreement warrants (the “CB Warrants”) to purchase up to a maximum of 263,314 shares of the Company's common stock at an exercise price of $7.63 per share subject to certain adjustments, including for stock dividends, stock splits or reclassifications. The actual number of shares of common stock into which the CB Warrants were exercisable at any given time were equal to: (i) the product of (x) the number of shares equal to 2% of the Company’s issued and outstanding shares of common stock on the Refinancing Closing Date on a fully diluted basis and (y) the percentage of the total 2019 Delayed Draw Term Loan made as of the exercise date, minus (ii) the number of shares previously issued under the CB Warrants. As of the Refinancing Closing Date through the 2021 Refinancing Date, no amounts had been drawn on the 2019 Delayed Draw Term Loan, so no portion of the CB Warrants were exercisable. The CB Warrants were to be exercised for cash or on a “cashless basis,” subject to certain adjustments, at any time after the 2019 Refinancing Closing Date until the expiration of such warrant at 5:00 p.m., New York time, on the earlier of (i) the five (5) year anniversary of the 2019 Refinancing Closing Date, or (ii) the liquidation of the Company.  
The CB Warrants represented a freestanding financial instrument that was classified as a liability because the CB Warrants met the definition of a derivative instrument that does not meet the equity scope exception (i.e., the CB Warrants were not indexed to the entity’s own equity). In addition, the material weakness penalty described in the 2019 Refinancing Agreement was evaluated as an embedded derivative liability and bifurcated from the 2019 Term Loans as it represented a non-credit related embedded feature that provides for net settlement. Both the CB Warrants liability and the embedded derivative liability were required to be initially and subsequently measured at fair value. The initial fair values of the CB Warrants liability and the embedded derivative liability approximated $0.9 million and $0.4 million, respectively, on the Refinancing Closing Date. The Company estimated these fair values by using the Black-Scholes-Merton option pricing model and a probability-weighted discounted cash flow approach. See Note 7 for further discussion on the fair value measurements associated with the CB Warrants.
2019 ABL Credit Agreement
On the Refinancing Closing Date, LFS also entered into a financing agreement with the lenders thereto and Citizens Bank, N.A., as collateral agent, administrative agent and origination agent (the “2019 ABL Credit Agreement” and, together with the 2019 Refinancing Agreement, the “Refinancing Agreements”). The 2019 ABL Credit Agreement consisted of a $15.0 million revolving credit facility (the “2019 Revolving Credit Facility”). Proceeds of the 2019 Revolving Credit Facility were to be used for general corporate purposes. On November 14, 2019, the Company entered into an amendment to the 2019 ABL Credit Agreement (as amended, 2019 ABL Credit Amendment Number One and Waiver), which amended certain provisions under the 2019 ABL Credit Agreement.
The interest rate on borrowings under the 2019 ABL Credit Agreement was, at the option of LFS and its subsidiaries, either LIBOR (with a 2.0% floor) plus an applicable margin ranging from 3.00% to 3.50% or a base rate (with a 3.0% minimum) plus an applicable margin ranging from 2.00% to 2.50%. At the 2021 Refinancing Date and September 30, 2020, the interest rate in effect on the 2019 ABL Credit Agreement was 5.25%.
As of the 2021 Refinancing Date and December 31, 2020, the Company had irrevocable letters of credit in the amount of $3.4 million with its lender to secure obligations under its self-insurance program. Prior to its refinancing in February 2021, the 2019 ABL Agreement would have matured in April 2022.
Wintrust Term and Revolving Loans
On the 2021 Refinancing Date, LFS, LHLLC and the direct and indirect subsidiaries of LFS from time to time included as parties to the agreement (the “Wintrust Guarantors”) entered into a Credit Agreement (the “2021 Credit Agreement”) by and among the LFS, LHLLC, Wintrust Guarantors, the lenders party thereto from time to time, Wheaton Bank & Trust Company, N.A., a subsidiary of Wintrust Financial Corporation (collectively, “Wintrust”), as administrative agent and L/C issuer, Bank of the West as documentation agent, M&T Bank as syndication agent, and Wintrust as lead arranger and sole book runner.
In accordance with the terms of the Credit Agreement, Lenders provided to LFS (i) a $30.0 million senior secured term loan (the “Wintrust Term Loan”); and (ii) a $25.0 million senior secured revolving credit facility with a $5.0 million sublimit for the issuance of letters of credit (the “Wintrust Revolving Loan” and, together with the Wintrust Term Loan, the “Wintrust Loans”). Proceeds of the Wintrust Loans were used to refinance certain existing indebtedness, finance working capital and other general corporate purposes and fund certain fees and expenses associated with the closing of the Wintrust Loans.
The Wintrust Revolving Loan bears interest, at the LFS’s option, at either LIBOR (with a 0.25% floor) plus 3.5% or a base rate (with a 3.0% floor) plus 0.50%, subject to a 50 basis point step-down based on the ratio between the senior debt of the
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Company and its subsidiaries to the EBITDA (earnings before interest, income taxes, depreciation and amortization) of the LFS and its subsidiaries for the most recently ended four fiscal quarters (the “Senior Leverage Ratio”). The Wintrust Term Loan bears interest, at LFS’s option, at either LIBOR (with a 0.25% floor) plus 4.0% or a base rate (with a 3.0% floor) plus 1.00%, subject to a 50 (for LIBOR) or 75 (for base rate) basis point step-down based on the Senior Leverage Ratio.
LFS is required to make principal payments on the Wintrust Term Loan in $0.5 million installments on the last business day of each month commencing on March 31, 2021 with a final payment of all principal and interest not sooner paid on the Wintrust Term Loan due and payable on February 24, 2026. The Wintrust Revolving Loan will mature and become due and payable by LFS on February 24, 2026.
The Wintrust Loans are secured by (i) a valid, perfected and enforceable lien of the administrative agent on the ownership interests held by each of LFS and Wintrust Guarantors in their respective subsidiaries; and (ii) a valid, perfected and enforceable lien of the administrative agent on each of LFS and Wintrust Guarantors’ personal property, fixtures and real estate, subject to certain exceptions and limitations. Additionally, the re-payment of the Wintrust Loans shall be jointly and severally guaranteed by each Wintrust Guarantor.
The Credit Agreement contains representations and warranties, covenants and events of default that are customary for facilities of this type, as more particularly described in the Credit Agreement. The Wintrust Loans also contain three financial maintenance covenants, including (i) a requirement to have as of the last day of each quarter for the senior leverage ratio of the Company and its subsidiaries not to exceed an amount beginning at 2.25 to 1.00 through December 31, 2021, and stepping down to 2.00 to 1.00 at all times thereafter, (ii) a fixed charge coverage ratio of not less than 1.20 to 1.00 as of the last day of each fiscal quarter commencing with the fiscal quarter ending March 31, 2021, and (iii) no unfinanced capital expenditures, except for unfinanced capital expenditures in the ordinary course of business not exceeding in the aggregate $4.0 million during any fiscal year; and no default or event of default (as defined by the agreement) has occurred and is continuing, 50% of any portion of this annual limit, if not expended in the fiscal year for which it is permitted, may be carried over for expenditure in the next following fiscal year as stipulated by the agreement. LFS and its affiliates maintain various commercial and service relationships with certain members of the syndicate and their affiliates in the ordinary course of business. As of September 30, 2021, the Company was in compliance with all financial maintenance covenants as required by the Wintrust Loans.
The following is a summary of the additional margin and commitment fees payable on the available Wintrust Term Loan and Wintrust Revolving Loan credit commitment:
LevelSenior Leverage RatioAdditional Margin for
Prime Rate loans
Additional Margin for
Prime Revolving loans
Additional Margin for Eurodollar Term loansAdditional Margin for Eurodollar Revolving loansCommitment Fee
I
Greater than 1.00 to 1.00
1.00 %0.50 %4.00 %3.50 %0.25 %
II
Less than or equal to 1.00 to 1.00
0.25 % %3.50 %3.00 %0.25 %
At September 30, 2021, the interest rate in effect on the Wintrust Term Loan was 4.25% and the interest rate in effect on the Wintrust Revolving Loan was 3.75%.

At September 30, 2021, the Company had irrevocable letters of credit in the amount of $3.4 million with its lender to secure obligations under its self-insurance program.
Note 6 – Equity
The Company’s second amended and restated certificate of incorporation currently authorizes the issuance of 100,000,000 shares of common stock, par value $0.0001, and 1,000,000 shares of preferred stock, par value $0.0001.
Warrants
In conjunction with the Company's initial public offering, the Company issued Public Warrants, Private Warrants and $15 Exercise Price Sponsor Warrants (each defined below). The Merger Warrants and Additional Merger Warrants (each defined below) were issued in conjunction with the Company's business combination with LHLLC in July 2016 (the “Business Combination”).
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September 30, 2021December 31, 2020
Public Warrants(1)(6)
 2,300,000 
Private Warrants(2)(6)
 99,000 
$15 Exercise Price Sponsor Warrants(3)(6)
600,000 600,000 
Merger Warrants(4)(7)
629,643 631,119 
Additional Merger Warrants(5)(7)
 946,680 
   Total1,229,643 4,576,799 
(1)    Exercisable for one-half of one share of common stock at an exercise price of $5.75 per half share ($11.50 per whole share) (“Public Warrants”).
(2)    Exercisable for one-half of one share of common stock at an exercise price of $5.75 per half share ($11.50 per whole share) (“Private Warrants”).
(3)    Exercisable for one share of common stock at an exercise price of $15.00 per share (“$15 Exercise Price Sponsor Warrants”).
(4)    Exercisable for one share of common share at an exercise price of $12.50 per share (“Merger Warrants”).
(5)    Exercisable for one share of common stock at an exercise price of $11.50 per share (“Additional Merger Warrants”).
(6)    Issued under a warrant agreement dated July 15, 2014, between Continental Stock Transfer and Trust Company, as warrant agent, and the Company.
(7)    Issued to the sellers of LHLLC.

On July 20, 2021, the Public Warrants, Private Warrants, and Additional Merger Warrants expired by their terms.
Incentive Plan
Upon the consummation of the Business Combination, the Company adopted an omnibus incentive plan (the “Omnibus Incentive Plan”) for which all future equity awards will be granted thereunder.
On May 24, 2020, the Board of Directors approved further amendments to the Company's initial Omnibus Incentive Plan (“2020 Amended and Restated Omnibus Incentive Plan”) to increase the number of shares of the Company's common stock that may be issued pursuant to awards by 500,000, for a total of 1,650,000 shares, and extend the term of the plan so that it will expire on the tenth anniversary of the date the stockholders approve the 2020 Amended and Restated Omnibus Incentive Plan. The amendments were approved by the Company's stockholders at the Annual Meeting held on July 14, 2020.
On March 9, 2021, the Board of Directors approved amendments to the Company's 2020 Amended and Restated Omnibus Incentive Plan (the “2021 Amended and Restated Omnibus Incentive Plan”) to increase the number of shares of the Company's common stock that may be issued pursuant to awards by 600,000, for a total of 2,250,000 shares, and extend the term of the plan so that it will expire on the tenth anniversary of the date the stockholders approve the 2021 Amended and Restated Omnibus Incentive Plan. The amendments were approved by the Company's stockholders at the Annual Meeting held on June 16, 2021.
See Note 13 for a discussion of the Company's management incentive plans for restricted stock units (“RSUs”) granted, vested, forfeited and remaining unvested.
Employee Stock Purchase Plan
Upon approval of the Company's stockholders on May 30, 2019, the Company adopted the Limbach Holdings, Inc. 2019 Employee Stock Purchase Plan (the “ ESPP”). On January 1, 2020, the ESPP went into effect. The ESPP enables eligible employees, as defined by the ESPP, the right to purchase the Company's common stock through payroll deductions during consecutive subscription periods at a purchase price of not less than 85% of the fair market value of a common share at the end of each offering period. Annual purchases by participants are limited to the number of whole shares that can be purchased by an amount equal to ten percent of the participant's compensation or $5,000, whichever is less. Each offering period of the ESPP lasts six months, commencing on January 1 and July 1 of each year. The amounts collected from participants during a subscription period are used on the exercise date to purchase full shares of common stock. Participants may withdraw from an offering before the exercise date and obtain a refund of amounts withheld through payroll deductions. Compensation cost, representing the 15% discount applied to the fair market value of common stock, is recognized on a straight-line basis over the six-month vesting period during which employees perform related services. Under the ESPP, 500,000 shares are authorized to be issued. In January 2021 and July 2021, the Company issued 8,928 and 16,140 shares of its common stock, respectively, to participants in the ESPP who contributed to the plan through the December 31, 2020 and June 30, 2021 offering periods, respectively. For the nine months ended September 30, 2020, the Company issued a total of 39,753 shares of its common stock to participants in the ESPP who contributed to the plan during the offering period ending June 30, 2020. As of September 30, 2021, 444,107 shares remain available for future issuance under the ESPP.
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2021 Public Offering
On February 10, 2021 the Company entered into an underwriting agreement (“Underwriting Agreement”) with Lake Street Capital Markets, LLC (“Underwriter”) relating to an underwritten public offering (the “2021 Public Offering”). On February 12, 2021, the Company sold to the Underwriter 1,783,500 shares of its Common Stock. The Underwriting Agreement provided for purchase and sale of the Shares by the company to the Underwriter at a price of $11.28 per share. The price to the public in the 2021 Public Offering was $12.00 per share. In addition, under the terms of the Underwriting Agreement, the Company granted the Underwriter a 30-day option to purchase up to an additional 267,525 shares of Common Stock to cover over-allotments, if any, on the same terms and conditions. The net proceeds to the Company from the 2021 Public Offering after deducting the underwriting discounts and commissions were approximately $19.8 million. On February 18, 2021, the Company received approximately $3.0 million of net proceeds for the sale of 267,525 shares in connection with the exercise of the over-allotment option.
Note 7 – Fair Value Measurements
The Company measures the fair value of financial assets and liabilities in accordance with ASC Topic 820 – Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 — inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date;
Level 2 — inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities; and
Level 3 — unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
As discussed in Note 5, prior to its termination as a result of the 2021 Refinancing, the Company's CB Warrants were determined using the Black-Scholes-Merton option pricing model. The valuation inputs included the quoted price of the Company’s common stock in an active market, volatility and expected life of the warrants, which were considered Level 3 inputs. The CB Warrants liability was included in other long-term liabilities on the Company's Condensed Consolidated Balance Sheets. The Company remeasured the fair value of the CB Warrants liability as of December 31, 2020 and February 24, 2021 and recorded any adjustments to other income (expense). At both February 24, 2021 and December 31, 2020, the CB Warrants liability was $2.0 million. Due to the extinguishment of the CB Warrants on the 2021 Refinancing Date, there was no liability associated with the CB Warrants recorded as of September 30, 2021. For the period from January 1, 2021 through the 2021 Refinancing Date, the Company recorded other income of $0.1 million to reflect the change in the fair value of the CB Warrants liability. For the three and nine months ended September 30, 2020, the Company recorded other expense of $1.4 million and $1.3 million to reflect the change in the CB Warrants liability.
The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short maturity of the instruments; as such, their fair values are Level 1 fair value measurements. The carrying values of borrowings under the 2019 Refinancing Term Loan (prior to its termination), the Wintrust Term Loan, the 2019 Revolving Credit Facility (prior to its termination) and the Wintrust Revolving Loan approximate fair value due to the variable rates on such debt. As of February 24, 2021 and December 31, 2020, the Company determined that the fair value of the 2019 Revolving Term Loan was $39.0 million. As of September 30, 2021, the Company determined that the fair value of the Wintrust Term Loan was $26.5 million. Such fair values were determined using discounted estimated future cash flows using Level 3 inputs.
Note 8 – Earnings per Share
The following table sets forth the computation of the basic and diluted earnings per share attributable to the Company's common shareholders for the three and nine months ended September 30, 2021 and 2020:
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 Three months ended September 30,Nine Months Ended
September 30,
(in thousands, except per share amounts)2021202020212020
EPS numerator:  
Net income$3,986 $2,525 $2,436 $5,420 
EPS denominator:
Weighted average shares outstanding – basic
10,266 7,890 9,916 7,845 
Impact of dilutive securities
226 217 229 125 
Weighted average shares outstanding – diluted
10,492 8,107 10,145 7,970 
EPS:
Basic
$0.39 $0.32 $0.25 $0.69 
Diluted(1)
$0.38 $0.31 $0.24 $0.68 
(1)    Diluted EPS assumes the dilutive effect of outstanding common stock warrants and RSUs using the treasury stock method.
The following table summarizes the securities that were antidilutive or out-of-the-money, and therefore, were not included in the computations of diluted income per common share:
 Three months ended September 30,Nine Months Ended
September 30,
 2021202020212020
Out-of-the-money warrants (see Note 6)(1)
1,885,202 4,576,799