Financial Risks and Conditions - The company may be required to make additional payments to AECOM under certain contractual arrangements, which could adversely impact its business [109]. - AECOM serves as the credit support provider for surety bonds related to the company's Legacy Projects; any financial distress at AECOM could materially affect the company's operations [110]. - The company is dependent on a limited number of customers, and the loss of business from any significant customer could materially affect its financial condition [118]. - The company may need to raise additional capital for working capital, capital expenditures, and acquisitions, which could impair operational capabilities if not obtained on favorable terms [137]. - The company’s financial results could be impacted by uncertainty in U.S. trade policy, including changes in tariffs and trade agreements [154]. - The company may face challenges in meeting financial covenants due to events beyond its control, which could lead to an event of default under debt agreements [136]. - Changes in tax laws could increase the company's tax burden and adversely affect its financial condition [164]. - The company has incurred increased costs associated with being a public entity, including compliance with Sarbanes-Oxley Act requirements, which diverts management's focus from revenue-generating activities [173]. - The company may face legal proceedings and liability claims that could reduce profits and impact cash flow [165]. Operational Risks - The timing of project awards is unpredictable and can significantly impact the company's revenue and earnings, as a substantial portion of revenue is generated from large-scale project awards [112]. - The company may incur costs related to maintaining equipment and work crews in anticipation of future contracts, which could adversely affect anticipated profits if contracts are delayed [113]. - Delays in revenue, earnings, and cash flows can occur due to various factors, including adverse weather conditions and labor shortages, impacting current and future results [114]. - Strikes or work stoppages, despite existing agreements prohibiting them, could negatively impact operations and customer relationships [119]. - The company relies on third-party subcontractors and suppliers for materials, and any inability to secure these could impair contract completion and profitability [121]. - The company is exposed to operational risks related to occupational health and safety, which could result in significant liabilities and impact profitability [163]. Economic and Market Conditions - Continuing inflation and elevated interest rates could negatively impact the company's financial condition and results of operations if costs cannot be offset through price increases [153]. - Deterioration of the U.S. economy could negatively affect government funding for infrastructure projects, impacting the company's financial condition and operations [171]. - The company is exposed to significant commodity price fluctuations, including cement, steel, and diesel fuel, which could adversely affect financial condition and results of operations [151]. Environmental and Regulatory Risks - The company is subject to stringent environmental laws and regulations, which could significantly increase climate-related costs and disclosure obligations if new emissions regulations are implemented [156]. - The company may incur substantial liabilities for remediating contaminated properties, which could expose it to material losses and increased operational costs [157]. - Non-compliance with environmental laws could result in severe penalties, including administrative, civil, or criminal sanctions, and may disrupt operations [158]. - The company faces risks related to climate change, including increased costs for energy, production, and compliance with new regulations, which could adversely impact operations [167]. Corporate Governance and Internal Controls - The controlling stockholder owns over 60% of the outstanding shares, allowing substantial influence over corporate matters [175]. - The company does not anticipate paying any cash dividends in the foreseeable future, focusing on retaining funds for business development [177]. - The company is classified as a "controlled company" under Nasdaq and SEC rules, which may limit certain corporate governance protections for stockholders [176]. - As of January 3, 2025, the company has identified material weaknesses in its internal control over financial reporting [187]. - The company has hired additional accounting and finance staff to address identified material weaknesses and improve financial reporting processes [188]. - The company may incur additional expenses if it becomes subject to Section 404(b) of the Sarbanes-Oxley Act, which requires an independent audit of internal controls [185]. - The company has not yet complied with certain provisions of the Sarbanes-Oxley Act, which could affect investor confidence in financial statements [184]. - The company may take advantage of exemptions from certain disclosure requirements, potentially making its financial statements less comparable to those of other public companies [194]. - The company is classified as a "smaller reporting company" under the Exchange Act, thus market risk disclosures are not applicable [325]. Technology and Cybersecurity Risks - Cybersecurity risks are heightened due to the rapid evolution of technology, which may lead to significant costs for maintaining security systems [143]. - The company relies on IT systems for operations, and any disruption or failure could materially affect business performance and financial condition [141].

Group 1: Company Overview - Shimmick Corporation (SHIM) has experienced significant selling pressure, resulting in a stock price decline of 22.7% over the past four weeks, but it is now considered to be in oversold territory [1] - Wall Street analysts anticipate that SHIM will report better earnings than previously predicted, indicating potential for recovery [1] Group 2: Technical Analysis - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2] - SHIM's current RSI reading is 29.44, suggesting that the heavy selling may be exhausting itself and a trend reversal could be imminent [5] Group 3: Fundamental Analysis - There has been a strong consensus among sell-side analysts to raise earnings estimates for SHIM, leading to a 32.2% increase in the consensus EPS estimate over the last 30 days [6] - An upward trend in earnings estimate revisions is generally associated with price appreciation in the near term, supporting the case for a potential rebound in SHIM's stock price [6] Group 4: Analyst Ratings - SHIM currently holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further indicating a potential turnaround [7]

Financial Data and Key Metrics Changes - For Q4 2024, the company reported revenues of $104 million, down from $138 million in the prior year period [29] - The adjusted EBITDA for Q4 2024 was negative $27 million, compared to negative $9 million in the prior year [33] - The net loss for Q4 2024 was $38 million, compared to a net loss of $17 million for the prior year [32] Business Line Data and Key Metrics Changes - Revenue from Schimmick projects was $80 million in Q4 2024, down from $85 million a year ago, primarily due to lower activity on existing jobs [29] - Gross margin on Schimmick projects decreased to $2 million from $9 million a year ago, attributed to a $15 million increase in cost of revenue [30] - Legacy project revenue was $18 million for Q4 2024, a decline of $28 million compared to the previous year, with a negative gross margin of $12 million [30] Market Data and Key Metrics Changes - The backlog at the end of Q4 2024 was $822 million, with Schimmick projects representing 87% of the backlog, up from 85% a quarter ago [33] - The addressable market for the company is estimated at approximately $106 billion per year within the non-residential U.S. construction market, which is valued at over $1 trillion [18] Company Strategy and Development Direction - The company’s strategy is built around three pillars: sustainable backlog, operational excellence, and people and culture [6] - The focus will expand on delivering sustainable infrastructure solutions across four key markets: water resources, climate resilience, energy transition, and technology and sustainable transportation [10][17] - The company aims to increase its backlog as a percentage of revenues while reducing risk through geographic diversification and alternative project delivery methods [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting strong liquidity and a backlog largely free of past challenges [35] - The company anticipates a significant opportunity for growth in the infrastructure construction business over the next five years [35] - Management noted that while there are challenges in the market, they expect to maintain a strong position due to their capabilities and client relationships [60] Other Important Information - The company has made significant improvements in SG&A costs, now trending towards industry benchmarks [6] - The company is focused on enhancing its electrical division, aiming for it to contribute over 30% of revenues by 2027, up from 15% [22] Q&A Session Summary Question: Can you bridge the gap between the fourth quarter results and the guidance provided? - Management indicated that the backlog consists of profitable work and ongoing discussions with clients could enhance margins in 2025 [42] Question: Have any changes been instituted to drive improvement with existing work? - Management noted opportunities for risk management improvements and early issue identification to enhance bottom-line performance [44] Question: What is the expected cadence of gross margin throughout the year? - Management confirmed that gross margins are expected to trend upward, with the third quarter typically being the strongest [46] Question: How is the company addressing federal budget issues and local market conditions? - Management reported no current impact from federal budget issues and expressed confidence in the funding for their projects [56][58] Question: What is the outlook for free cash flow based on the guidance? - Management stated that they are in a strong liquidity position and have implemented stringent controls to monitor cash flow effectively [63]

Core Viewpoint - Shimmick Corporation reported a significant quarterly loss of $0.91 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.29, indicating a substantial earnings surprise of -213.79% [1] Financial Performance - The company posted revenues of $103.55 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 13.71% and down from $138.06 million in the same quarter last year [2] - Over the last four quarters, Shimmick Corporation has surpassed consensus EPS estimates only once [2] Stock Performance - Shimmick Corporation shares have declined approximately 34.4% since the beginning of the year, compared to a decline of 4.8% for the S&P 500 [3] Future Outlook - The company's earnings outlook will be crucial for investors, particularly in light of management's commentary during the earnings call [4] - Current consensus EPS estimate for the upcoming quarter is -$0.32 on revenues of $112.8 million, and for the current fiscal year, it is -$0.43 on revenues of $491.7 million [7] Industry Context - The Waste Removal Services industry, to which Shimmick Corporation belongs, is currently ranked in the bottom 48% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Performance - Reported revenue of $104 million for Q4 2024, down from $138 million in Q4 2023, and total revenue of $480 million for FY2024, compared to $633 million in FY2023[5] - Net loss increased to $38 million for Q4 2024, compared to a net loss of $17 million in Q4 2023, with adjusted net loss of $31 million for Q4 2024 versus $14 million in Q4 2023[21][22] - Adjusted EBITDA for Q4 2024 was $(27) million, compared to $(9) million in Q4 2023[23] - Revenue for the three months ended January 3, 2025, was $103,552,000, a decrease of 25.1% compared to $138,062,000 for the same period in 2023[37] - Net loss attributable to Shimmick Corporation for the fiscal year ended January 3, 2025, was $124,748,000, compared to a net loss of $2,286,000 for the previous year[37] - Adjusted net loss for the three months ended January 3, 2025, was $(30,899) thousand, compared to $(13,954) thousand for the same period in 2023, reflecting a significant increase in losses[45] - For the fiscal year ended January 3, 2025, the net loss attributable to Shimmick Corporation was $(124,748) thousand, compared to $(2,546) thousand in 2023, indicating a substantial decline in performance[45] - Adjusted EBITDA for the three months ended January 3, 2025, was $(27,320) thousand, compared to $(8,755) thousand for the same period in 2023, highlighting worsening operational performance[53] Revenue Breakdown - Shimmick Projects revenue was $80 million for Q4 2024, a decrease of $5 million from $85 million in Q4 2023, primarily due to lower activity on existing jobs[8] - Legacy Projects revenue declined to $18 million for Q4 2024, down from $46 million in Q4 2023, driven by ongoing project wind-downs[10] - For FY2025, Shimmick expects Shimmick Projects revenue to increase by 10% to 15%, with overall gross margin between 9% and 12%[26] - Legacy Projects and Foundations Projects revenue is projected to be between $50 million and $60 million, with gross margin between (5)% and (15)%[26] Assets and Liabilities - Total current assets decreased to $141,000,000 as of January 3, 2025, from $257,458,000 as of December 29, 2023, representing a decline of 45.3%[35] - Total liabilities increased to $268,538,000 as of January 3, 2025, compared to $356,162,000 as of December 29, 2023[35] - Cash and cash equivalents decreased to $33,730,000 as of January 3, 2025, from $62,939,000 as of December 29, 2023[35] - The company experienced a significant increase in contract liabilities, with current contract liabilities at $102,524,000 as of January 3, 2025, compared to $115,785,000 as of December 29, 2023[35] Costs and Expenses - The company incurred $15,708,000 in ERP pre-implementation asset impairment and associated costs during the fiscal year ended January 3, 2025[37] - Stock-based compensation for the fiscal year ended January 3, 2025, amounted to $6,130 thousand, up from $2,062 thousand in 2023, indicating increased compensation expenses[45] - Legal fees and other costs for Legacy Projects totaled $14,030 thousand for the fiscal year ended January 3, 2025, compared to $8,740 thousand in 2023, reflecting ongoing legal challenges[45] - The company reported an interest expense of $5,426 thousand for the fiscal year ended January 3, 2025, compared to $2,284 thousand in 2023, indicating rising borrowing costs[53] Strategic Outlook - Recognized liquidity of $100 million as of January 3, 2025, reflecting the positive outcomes of the Transformation Plan implemented in 2024[5] - The company anticipates ongoing challenges related to market competition and operational costs, which may impact future financial performance[28] - The company aims to transform its strategy to meet the growing need for water and critical infrastructure, which is a key focus for future growth[48] - The company incurred transformation costs of $2,535 thousand in the three months ended January 3, 2025, as part of its strategy to address critical infrastructure needs[45] - Adjusted EBITDA and adjusted net loss figures were not provided in the forward-looking guidance due to the inability to predict certain items without unreasonable efforts[32] Backlog and Future Projections - Backlog exceeded $822 million as of January 3, 2025, with over 87% attributed to Shimmick Projects[5] - The company plans to enhance its current ERP system, resulting in a charge of approximately $16 million in the third quarter of fiscal 2024[46]

Core Viewpoint - Shimmick Corporation will announce its fourth quarter and full year 2024 results on March 13, 2025, followed by a conference call [1] Company Information - Shimmick Corporation is a leading infrastructure solutions provider specializing in complex projects related to water, climate resilience, energy transition, and sustainable transportation [1][4] - The company integrates technical excellence with collaborative project delivery methods to provide innovative, technology-driven infrastructure solutions [4] - Shimmick has a history spanning over a century and is headquartered in California, focusing on tackling complex infrastructure challenges [4] Conference Call Details - The conference call will take place at 5:00 p.m. (Eastern Time) on March 13, 2025, and can be accessed via phone or webcast [1][2][3] - A telephonic replay will be available approximately three hours after the call, with access until April 3, 2025 [2] - Interested parties can listen to the call through the Investor Relations section of the company's website [3]

Core Points - Shimmick Construction Company has been awarded a significant role in the North Hollywood to Pasadena Bus Rapid Transit (BRT) Project by LA Metro, serving as the Construction Manager/General Contractor for the preconstruction services phase [1][2] - The contract for preconstruction services is valued at $8.26 million, marking the start of a transformative 19-mile transit corridor that will connect multiple cities in California and includes 22 new stations [2] - The construction phase, if awarded to the Myers-Shimmick Joint Venture, is estimated to be worth $190 million [2] Company Overview - Shimmick is recognized as a leading provider of water and critical infrastructure solutions across the United States, with a strong track record in delivering complex infrastructure projects [6] - The company has been nationally ranked in 2024 as a top ten builder in various categories, including water supply (8), dams and reservoirs (6), and water treatment and desalination plants (7) according to Engineering News Record [6] Project Details - The BRT project aims to enhance mobility and connectivity for millions of LA County residents, particularly benefiting disadvantaged Equity Focus Communities through improved transit access and the use of zero-emission electric buses [3][4] - The preconstruction phase will involve collaboration among the Myers-Shimmick team, Metro, and the design team to refine project designs, ensure cost control, and develop a comprehensive construction schedule [4] - Early utility work is set to commence in 2025, with the project expected to be completed by 2028 [4]

Core Insights - Shimmick Construction Company has been awarded a $45.4 million contract for seismic retrofitting and improvements to the Murray Street Bridge at Santa Cruz Small Craft Harbor, enhancing seismic resilience and accessibility for cyclists and pedestrians [1][2]. Company Overview - Shimmick is recognized as a leading provider of water and critical infrastructure solutions across the United States, with a strong history of delivering complex infrastructure projects, including the largest wastewater recycling system in Orange County and the Hoover Dam [5]. - In 2024, Shimmick was ranked among the top ten builders in various categories by Engineering News Record, including water supply (8), dams and reservoirs (6), and water treatment and desalination plants (7) [5]. Project Details - The project involves comprehensive upgrades, including the installation of new piles, extended pile caps, new columns, and bent caps, as well as wider bike lanes and a dedicated sidewalk on the south side of the bridge [3]. - The design will feature see-through barrier rails to enhance views while ensuring safety [3]. - Shimmick has a proven track record of similar projects, such as the Caltrans Dumbarton Bridge Seismic Retrofit and the Port of San Francisco Illinois Street Intermodal Bridge [4].

Group 1: Earnings Performance - Shimmick Corporation reported quarterly earnings of $0.72 per share, significantly beating the Zacks Consensus Estimate of a loss of $0.38 per share, representing an earnings surprise of 289.47% [1] - The company posted revenues of $166.04 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 31.77%, although this is a decrease from year-ago revenues of $175.45 million [2] - Over the last four quarters, Shimmick Corporation has only surpassed consensus EPS estimates once [2] Group 2: Stock Performance and Outlook - Shimmick Corporation shares have declined approximately 67.3% since the beginning of the year, contrasting with the S&P 500's gain of 25.8% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the sustainability of the recent earnings numbers [3][4] - The current consensus EPS estimate for the upcoming quarter is -$0.35 on revenues of $120 million, and for the current fiscal year, it is -$3.48 on revenues of $456.6 million [7] Group 3: Industry Context - The Waste Removal Services industry, to which Shimmick Corporation belongs, is currently ranked in the bottom 17% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Shimmick Corporation's stock performance [5][6]

Financial Performance - Revenue for the three months ended September 27, 2024, was $166 million, a decrease of $9 million (5%) compared to $175 million for the same period in 2023[116]. - Gross margin for the same period was $12 million, down $4.8 million (28%) from $17 million in the prior year[116]. - Shimmick Projects generated revenue of $101 million, a decrease of $8.4 million (8%) from $110 million in the previous year[119]. - Foundations Projects revenue was $11 million, down from $12 million, reflecting the winding down of jobs[120]. - Legacy Projects revenue remained flat at $54 million, with a $31 million adjustment due to the GGB Project settlement included in this figure[122]. - Net loss for the three months ended September 27, 2024, was $2 million, a decrease of $36 million compared to a net income of $34 million in the prior year[129]. - Revenue for the nine months ended September 27, 2024, was $376.7 million, a decrease of $118.1 million or 24% compared to $494.7 million for the same period in 2023[130]. - Gross margin for the nine months ended September 27, 2024, was $(34.8) million, a decline of $57.6 million or 253% compared to $22.8 million for the same period in 2023[130]. - Net loss for the nine months ended September 27, 2024, was $86.3 million, an increase of $101.5 million or 668% compared to a net income of $15.2 million in the prior year[143]. - Adjusted EBITDA for the three months ended September 27, 2024, was $29,679,000, down from $41,712,000 in the same period of 2023, reflecting a decrease of approximately 29%[152]. Project Backlog and Contracts - As of September 27, 2024, the company had a project backlog of $834 million, with over 50% attributed to water projects[89]. - The backlog as of September 27, 2024, was composed of 70% from state and local agencies, 13% from federal agencies, and 17% from private owners[174]. - The estimated backlog recognized within 0 to 24 months is 81% of the total backlog as of September 27, 2024[176]. Settlements and Legal Matters - A settlement agreement for the Golden Gate Bridge Project will yield total proceeds of $97 million, with $25 million due within 14 business days and the remaining $72 million by December 17, 2024[91]. - The company recognized a gross margin increase of $11 million from the Golden Gate Bridge Project settlement during the three months ended September 27, 2024[93]. - The company received $33 million in cash from a settlement with the United States Army Corps of Engineers, impacting revenue for the six months ended June 28, 2024[94]. - The company expects to receive approximately $97 million in the 2024 fiscal year from the settlement of a claim on the GGB Project[153]. Capital and Financing Activities - The company completed a sale-leaseback of its equipment yard for $20.5 million, resulting in net proceeds of $17 million used to repay borrowings[95]. - The company’s initial public offering in November 2023 raised approximately $19 million in net proceeds from the sale of 3,575,000 shares at $7.00 per share[99]. - The company reported a net cash provided by investing activities for the nine months ended September 27, 2024, of $18 million, primarily from asset sales of $32 million[165]. - For the same period, net cash provided by financing activities was $10 million, mainly from net borrowings of $12 million[167]. - The company incurred $2 million in debt issuance costs related to the Credit Facility agreement during the nine months ended September 27, 2024[167]. - As of September 27, 2024, total debt outstanding under the Credit Facility was $42 million, with no borrowings under the Revolving Credit Facility[161]. - The Revolving Credit Facility has a total commitment of $15 million and matures on December 31, 2024, with no instances of noncompliance reported as of September 27, 2024[160]. Operational Challenges - The company anticipates that adverse weather conditions and natural disasters could negatively impact financial results due to project delays and increased liabilities[101]. - Interest expense rose by $2 million, attributed to charges on a new Credit Facility established in May 2024[128]. - Interest expense increased by $3.4 million, primarily due to interest charges on the Credit Facility and Revolving Credit Facility[141]. Strategic Decisions and Changes - A strategic decision to enhance the current ERP system led to a one-time charge of $16 million recorded in the three months ended September 27, 2024[96]. - ERP pre-implementation asset impairment and associated costs increased by $16 million due to a strategic decision to enhance the current ERP system[127]. - The company focuses on self-performing complex projects to reduce risks of cost and schedule overruns, differentiating itself from competitors[89]. - The company is classified as an "emerging growth company" and a "smaller reporting company," allowing it to take advantage of scaled disclosure obligations[180][183]. Cash Flow and Liquidity - Unrestricted cash and cash equivalents as of September 27, 2024, totaled $26 million, with total liquidity amounting to $59 million including available credit facilities[153]. - Net cash used in operating activities for the nine months ended September 27, 2024, was $(66,183,000), compared to $(64,776,000) for the same period in 2023[163]. - The company experienced a net increase in contract capital of $2 million during the nine months ended September 27, 2024, due to decreases in accounts payable and contract liabilities[164]. Asset Management - Gain on sale of assets decreased by $13 million, primarily due to a prior year gain of $30 million that did not recur[126]. - Gain on sale of assets decreased by $11.2 million, primarily due to the absence of a prior year gain from the sale of non-core business contracts[140]. - Capital expenditures for the nine months ended September 27, 2024, were approximately $10 million, an increase from $6 million in the same period of 2023[153].