Great. Thank you, everybody. Mike McCann, President and CEO of Limbach Holdings. Joining me on this call today will be Jayme Brooks, EVP and CFO. She'll be available for Q&A. Look forward to getting into the discussion today a little bit about Limbach Holdings. We reported at the end of the day Monday, and we'll be talking about our growth strategy and market opportunity. The first thing, you know, a lot of times we are classified as E&C company.
Thank you, everybody. Mike McCann, President and CEO of Limbach Holdings. Joining me on this call today will be Jamie Brooks.
Sorry about that, everyone. As I was saying before, Jayme and I are here from Limbach Holdings. We're going to get into the strategy. Ultimately, my goal is to describe the differentiation. A lot of times we're compared to E&C companies, but we're really following a different path. There are a couple of reasons for that. Some of the main reasons are our objective is to work in the existing building environment, revitalizing mission-critical systems within that environment. Our old model, we were more focused on new construction and some recurring service maintenance space. We really adapted ourselves into this new model, and we really consider ourselves a building system solutions firm working in incredibly mission-critical, complex type environments. Where we're at, we have basically 20 locations across the East and Central Time Zone.
A lot of white space, which I'll talk about a little bit before about from a further expansion opportunity. We work in six key vertical markets. The key attribute of all these markets, and think healthcare, industrial manufacturing, is the super mission-critical environment of them. We want to be in vertical markets where the demand is durable. They're going to have to spend money. Sometimes they're in repair mode, sometimes they're in capital project mode, but they have no choice to spend. If a service call comes in on Friday, they can't wait till Monday. Even within these six vertical markets, and I'll use higher education as an example, we're working in buildings where it's mission-critical. We're not necessarily working in a building that's only occupied from a nine-five basis. Those are the type of critical environments that we do really well.
Three things that we feel like are differentiators for us is account-focused. We have engineering expertise with field talent on the ground. Our objective, and we tell our staff, is we're making a difference in critical environments. That's super technical team out there where this building, you know, ultimately our goal is to be an indispensable partner to owners where they can't operate the building without us. Again, as part of our transformation process into a building system solutions firm, there were a lot of different areas that we could focus on. Right now, we're really more focused on mechanical, electrical, and plumbing. As we gain traction, there's a bigger not only can we pick up market share with our existing strategic customers, but even past mechanical, electrical, and plumbing, there's other opportunities for us as well, too. I'll get into this a little bit later.
From an acquisition perspective, we're really focused on filling our footprint, which we see 20 or 30 MSAs that are still open in the East and Central Time Zone. Really, there's even more than that. We want to establish a solid base, a standard operating system, not only from a systems perspective, but also strategically, establish a sales channel that's consistent. Our ability to invest in items that are on this page will allow us really to expand ourselves. Our goal is to have local relationships with national breadth. As far as to get into a little bit more detail on our vertical markets, we feel like within these six vertical markets, there's diversification. A couple of things we do within those locations is we want everybody to have at least some healthcare customers. They provide a solid base.
Typically within each market, there's one or two other vertical markets that they're focused on, depending on the geographic footprint and the customers within this. We're looking for this consistent demand that runs a different cycle than typical macroeconomic trends. Over time, as we establish footprint, we feel like there's a great opportunity from a national perspective, from a national customer perspective. We're very particular where we put our time and resources. We're not just looking to resource a healthcare facility that has one acute care hospital. We want to find customers that have footprint over multiple geographic locations. Some things just to get into a little bit more from a durable demand perspective. I talked about this before. We want customers where there's OPEX and CAPEX, but they're going to have to spend no matter what.
We really focus on having long-term relationships, 20, 30, 40-year relationships, and we kind of build that relationship with the customer. We always start from an OPEX perspective, gaining a solid footprint. Our objective is to make sure that facility manager depends on us. We have a deep understanding. Then we grow with that relationship as we work through their capital planning process and establish that relationship over time. Our goal is to be so embedded, it's extremely difficult to displace us. We have core knowledge, not from a systems perspective, but as a perspective of how things work at that customer. We're embedded, and they really depend on us. You think about it from a competitive landscape, there's really four different competitors out there.
I guess I mentioned before, the three attributes that we feel like are kind of cross-sectional that some of these companies have, but maybe not the same go-to-market approach that we have where we're super strategic from an account perspective. We have engineering expertise. We provide engineered solutions, and we can also install it ourselves as well, too. If it's an OEM, you know, they may provide complex solutions, but they're looking to lock the customers in from products and services, and we're agnostic from an equipment and controls perspective. If it's a contractor, we view ourselves as much more of a disciplined, core vertical market-focused property managers, much more of a generalist. We specialize in mechanical and electrical consulting engineering firms. They may design it, but do they install it? The three of those together are where we feel like we're differentiated.
We provide much more of a holistic consultative type arrangement with customers. We have two segments that we work in, and we've been migrating the business from primarily GCR, which I would think of as new construction, to owner-direct, which is existing building. Over the last four or five years, we've transitioned almost fully between the two of those, where five or six years ago, we might have had 10% of work direct for owner. This year, we're guiding anywhere between 70%-80%. The margin typically has been much more in the owner-direct. I think the part that we like about the owner-direct is it's less commoditization to it. We're not in a two-step model. In the general contractor model, the owner hires a general contractor to commoditize the spend.
In the owner-direct side of things, there's a lot heavier sales component of it, but we have to do all the upfront work from feasibility studies to return on investment. Part of that way, really, we earn that margin, but think about it as much more of a sales-heavy type model. Three different pillars to our strategy, continuing our mix shift, greater and greater towards an owner-direct shift. Again, that allows us to have common focus from a customer perspective. Over time, we feel like our objective is to get to 35%-40% gross margin, which aligns more with the OEMs. It's going to take some time to get to that point. A lot of the margin pickup we've had just because we've shifted revenue from GCR to owner-direct, but we still feel like there's a lot of opportunity on top of that.
Part of that is going to be in the building system solution slide that I talked about. It's kind of a layering of margin. Sometimes in projects, there's opportunities to, whether it's equipment or controls, to supply our own parts and pieces as we're able to apply to mark up there as well as in the overall project. Lastly, acquisition, huge runway from an acquisition perspective. Our goal is to get the footprint saturated in the East and Central Time Zone, and then there's opportunity to invest from different services and offerings. We've done five deals since late 2021, but our goal is to buy $8-$10 million in adjusted EBITDA per year. I'm sure over time, there'll be opportunity to go beyond that, but lots of white space from an acquisition perspective.
The performance in this slide is kind of self-explanatory, but as we've shifted revenue, we continue to see adjusted gross margin and gross profit improvement. Even though the revenue has been relatively static, as we've been shifting out the revenue from one segment to the other, we've been able to pick up on the bottom line three, four times on the bottom line as we shifted it out. You can see from this slide. Revenue has actually, compared 2024 compared to 2019, has actually gone down, but the quality has increased tremendously. We've taken very much a long-term approach. During this period of time, we could have just left the GCR where it's at and continued to grow the owner-direct.
The top line revenue would have followed, but we've been very disciplined to make sure that we want to get the business kind of on a common platform focused on owners. We feel like this year is another step in that direction to get to 70%-80%. It's been really important to get the mix shift so we can really focus the business on geographic expansion, services and offerings, and really leverage that customer base that we've built. From a customer perspective, look at the middle of the slide. We like customers with scale. I talked about that a little bit before, too. Multiple locations, critical, a lot of square footage. This type of intense account focus has got to be somebody that's the value is going to be driven from that.
Again, if it's just a one location, they may appreciate what we're doing, but they may not have the opportunity that we have. We really focus on that customer value, balancing recurring work with capital projects. These capital projects, a lot of them are in the three or four-month timeline. Twelve months would be a long capital project for a lot of quick transactions that happen. We're taking these relationships anywhere from integrated facility planning, which is like, think consultative services, all the way to energy efficiency type work that we're doing for these customers. Just as an example of a customer relationship here, this is one of the national healthcare providers that we work with. Right now, we work in three different locations, Ohio, Pennsylvania, and Florida.
As you can see from that blue-purple color, there's still a lot of opportunity to leverage that relationship. Where we're at right now with an example of a customer like this, and there's many more of them, is we've done the hard work from a consultative perspective. We have an office in Nashville that really focuses on national healthcare. As we acquire companies that connect relationships, you could see how this relationship is going to grow from just three locations to potentially 10 locations to Limbach. I want to come to you to roll out a national program from an infrastructure upgrade perspective. This is an example, and there's several more where there's a lot of opportunity from a customer perspective. Again, as I talked about, three different buckets that we perform work in: OPEX, CAPEX, and consultative professional services.
Again, to get a little more detail from an acquisition perspective, our focus, again, East and Central Time Zone. The majority, I would say, from an acquisition perspective will be the new geography. That's our focus: gain geographic footprint. Although we will look in for times from a Tuck-in location, Tuck-ins to existing location, we've done a couple of those as well, too. How can we strengthen relationships as well, too? What do we look for from an acquisition? Three core things that we look for: cultural fit. Do they care about their people from safety, well-being, their staff? Are they going to be willing to make some changes? Ultimately, be working together, but we want that type of environment in their continuous learning type environment.
The other piece of it is, do they have a niche that we can really provide value to customers and raise margins? Lastly, what's their customer list? Is it overlap? Is it new customers? How can we leverage those? We really have a, and we've really been perfecting this process. We still have some ways to go. We're working on our playbook. We've done five deals since late 2021, but every time we do a deal, we learn. This is probably an oversimplification, but there's really eight steps from a value creation process, and this could take anywhere from two- three- four years. After that period of time, our goal is to get them to look and feel like the rest of our branches. Sometimes they'll track ahead of our branches.
You can see from the process there, a lot of this comes down to enhancing margin, focusing on ensuring that we do not have a bunch of fixed costs, and investing back in the business. Those are core key things. The deals we have done have been approximately five- six times. How can we take a deal that we bought for five or six times and make it look like we bought two times after we applied our value creation process? That is our goal. It is just an example of two deals that we did. The last one we did was in December. It was a primarily owner-direct business in western Kentucky. Again, this is just another example of footprint that we have. We expect the contribution to be $23 million and approximately $4 million in adjusted EBITDA.
Gave us great relationships in the power industrial type market, provided additional diversification. You think about those three attributes I had: cultural fit, margin shift, and customers. They had a nice overlap from that perspective and checked those boxes. The other one I'll touch upon real quick. In September, we purchased a company in the Mid-Atlantic that was more of a Tuck-in variety that would allow us to get bigger footprint in the DC, Maryland, northern Virginia area. Same type of, from that aspect, a mix of owner-direct and GCR, but it checked all the boxes, and we think that's going to be a great opportunity and further enhance our market position in the DC area. From a balance sheet perspective, as we've shifted the business model, the business has produced cash. That's allowed us to invest back in the business.
We have a lot of opportunity. What we've done so far is the deals that we've done have been fueled from the last four deals from the cash that the business generated. Lastly, last slide, this is our guidance for 2025. Just a couple of key things to focus on. This is the first year, as you can see, that $610 million-$630 million. That's the first year we've seen revenue growth we're forecasting since 2019. That's because the margin shift has gotten to the point where we're more predominantly owner-direct. Some of the owner-direct growth now translates to the top line. That's kind of a key point. We're continuing to get closer to our mix, shifting from we finished 2024 at 2/3 owner-direct. Now we're guiding to anywhere from 70%-80%. Those are just a couple of key attributes.
Again, we've also just updated our free cash flow from 70%- 75%. The business continues to generate cash, and that's a sign of the shift working and our strategy working. Lastly, I do have one more slide. Just to kind of recap, we're here for this slide really gets translated. We're building a long-term model. We're doing a lot of hard work right now. We're investing in sales. We're building this long-term model that's trying to create incredible durable demand and position ourselves ultimately to have national breadth with local relationships and continue to transition the company to a building system solutions firm. Thanks, everyone.
Hey, Mike, this is Noah Kaye. Thanks so much, by the way, for being at the conference and running through this presentation.
Thank you for having us.
Oh, absolutely. You know, I'm checking the webcast.
No questions so far from the audience. Maybe I just had one that I would love to follow up on with you from your earnings call. You talked about being well-positioned from both a balance sheet and operational standpoint to start to think about expansion to more MSAs. Can you help us better understand how would we think about the cadence of that? Is that more acquisition, more organic? What kind of drives the decision-making process?
I would consider we have done some organic startups. That's part of the reason I came to the company 16 years ago. I know that process, but I would say think about it primarily as acquisition. And we talked about this year buying $8 million-$10 million. That could be up to, that could be a bigger deal. Right now, there's almost so much white space.
There are so many companies out there that are great companies. There is so much to sort through. That is why we are always talking about trying to be patient and disciplined. Sometimes it takes us a long time, but when we get it, we want to get it right. I would say the majority of it, our focus is geographic expansion through acquisition. That is probably going to be the main use of our cash and our capital.
In terms of the ideal target profiles, right? I mean, we know all the factors that can make a business attractive in an industry such as yours, which is high-quality market position, relatively few competitors, good people, right? I mean, people scarcity. Is there anything else that is really, I think, something that is key to your special sauce or a key element for you when you are looking at targets?
There's a check on everything you said. I just want to make sure that I definitely would agree. It's interesting. We look for our strategy of being concentrating on core customers. We look to see trending the last five, six years, who's been their top customers, how have they performed, have they under-resourced them, have they not charged for their value, which I think is different than just marking things up without getting value. Can we have them focus on their top five or ten customers and try to call out customers where they may have done well, but they're not going to provide the scale? As well as I do in this industry, there tends to be a lot of transactions over multiple customers. We like a lot of transactions over a smaller group of customers.
That's usually something that is a completely different concept. That focus is what we kind of go in and look for. From a margin perspective, sometimes it's great if they're low. Sometimes it's great or it's high. If they're lower margins and we do some studying, we think, well, we could get a big pickup initially. If they're higher margins, we are checking for opportunity, but sometimes that still means that it's a good business. It's just they've revalued themselves in the customer, and we can push revenue at that point and maintain the margins. Those are kind of the couple of key things that we look for. We have learned through our lessons learned as a company.
When a company's been around a long time and when things don't go well or things go well, we always try to apply that and keep as humble as possible when we're looking at these businesses and think about, hey, this happened over here, and I know what sometimes we know too much, but we try to apply those lessons learned going forward when we look at the deals.
Yeah, that's very helpful c olor. Okay, I'm checking the Q&A. I think you must have just answered everybody's questions to the extent preemptively. We know that you're going to have meetings going on throughout the day. So Mike, Jayme, I want to thank you both for being here and appreciate all the color.
Thank you. Thanks for having us. Much appreciation.