Shimmick Corporation (SHIM) Q1 2025 Earnings Call May 14, 2025 05:00 PM ET Company Participants Anthony Rasmus - Investor RelationsUral Yal - CEO & DirectorTodd Yoder - CFO Conference Call Participants Aaron Spychalla - Research Analyst Anthony Rasmus Good afternoon, and thank you for joining us today on today's conference call to discuss Shimick's first quarter twenty twenty five results. Slides for today's presentation are available on the Investor Relations section of our website, www.shimick.com. During ...

Financial Data and Key Metrics Changes - For Q1 2025, the company reported revenues of $122 million, a slight increase from $120 million in the same period last year [15] - The gross margin for the quarter was $5 million, compared to a negative $1 million in the prior year [16] - Adjusted EBITDA was negative $3 million, an improvement from negative $24 million year-over-year [18] - The net loss for Q1 2025 was $10 million, significantly reduced from a net loss of $33 million in the prior year [18] - Total liquidity at the end of Q1 was $71 million, consisting of $16 million in cash and $55 million available under credit agreements [19] Business Line Data and Key Metrics Changes - Revenue from Chimich projects was $93 million, up from $90 million a year ago, driven by new water and infrastructure projects [16] - Legacy and foundations projects generated $29 million in revenue, a decrease of $1 million compared to the previous year [17] - Gross margin from legacy projects improved to negative $1 million from negative $15 million year-over-year, indicating reduced costs associated with these projects [17] Market Data and Key Metrics Changes - The backlog at the end of Q1 was approximately $740 million, with 90% attributed to Chimich projects, reflecting a shift towards newer projects [6][19] - There has been a slowdown in bidding for larger public projects due to uncertainty around funding streams and tariffs, but bidding activity is expected to increase in Q2 and Q3 [6][10] Company Strategy and Development Direction - The company aims to grow its backlog, restore profitability, and expand addressable markets, focusing on sustainable infrastructure [12][22] - Strategic pillars include building a sustainable risk-balanced backlog, driving operational excellence, and investing in people and culture [12][20] - The company is targeting a 30% share of electrical work in its backlog by 2027, up from approximately 15% currently [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2025, citing a strong backlog and an exciting pipeline of opportunities despite macro-level uncertainties [22] - The company is closely monitoring tariff policies and expects to deliver results within previously stated guidance ranges [20] - Management noted that existing projects are largely insulated from tariff impacts due to fixed-price contracts [10] Other Important Information - The company has seen increased bidding activity, nearly tripling its bid volume since the last quarter, and expects this trend to continue [7][9] - Investments in reorganizing sales and estimating departments are starting to yield results, with a robust proposal pipeline of approximately $2 billion [9] Q&A Session Summary Question: Visibility into guidance for Shimik projects - Management indicated performance improvement in Q1 but acknowledged challenges remain, expressing confidence in guidance for both Chimich and legacy projects [30][31] Question: New awards and extensions - Management confirmed ongoing projects and a busy bidding activity expected in Q2, with several contracts in negotiation [39][40] Question: Capacity and liquidity - Management stated that current liquidity is sufficient to support operations, with the capacity to handle $600-$750 million in revenue without significant overhead increases [41][42] Question: Accelerating legacy projects - Management is working on opportunities to accelerate legacy projects but noted that scope growth may delay completion [46][47]

Earnings Presentation First Quarter 2025 May 2025 Delivering Sustainable Infrastructure Solutions Disclaimer This presentation is being delivered on behalf of Shimmick Corporation (the "Company"). The sole purpose of this presentation is to provide information in connection with a review of the Company's operations and/or financial status. This presentation does not purport to be all-inclusive or to contain all of the information that prospective investors may desire in reviewing the Company. Other than sta ...

Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The company reported a net loss of $9.8 million for the quarter ended April 4, 2025, a significant improvement from the $33.3 million net loss in the prior-year period, driven by a substantial increase in gross margin to a positive $4.7 million from a negative $15.9 million, while total assets slightly decreased to $227.7 million, total liabilities increased to $270.3 million, resulting in a larger stockholders' deficit of $42.6 million, and net cash used in operating activities was $38.2 million [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of April 4, 2025, the company had total assets of $227.7 million and total liabilities of $270.3 million, resulting in a total stockholders' deficit of $42.6 million, with cash and cash equivalents decreasing from $33.7 million to $16.3 million and long-term debt significantly increasing from $9.5 million to $31.4 million compared to January 3, 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | April 4, 2025 | January 3, 2025 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $16,302 | $33,730 | | Total current assets | $135,762 | $141,000 | | Total assets | $227,677 | $233,864 | | **Liabilities & Stockholders' Deficit** | | | | Total current liabilities | $210,422 | $230,264 | | Long-term debt, net | $31,398 | $9,478 | | Total liabilities | $270,318 | $268,538 | | Total stockholders' deficit | $(42,641) | $(34,674) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended April 4, 2025, revenue was $122.1 million, a slight increase from $120.0 million in the prior-year period, with gross margin dramatically improving to $4.7 million from a loss of $15.9 million, leading to a net loss of $9.8 million, or ($0.28) per share, a substantial reduction from the $33.3 million net loss, or ($1.30) per share, in the same period last year Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended April 4, 2025 | Three Months Ended March 29, 2024 | | :--- | :--- | :--- | | Revenue | $122,110 | $120,043 | | Gross Margin | $4,696 | $(15,860) | | Loss from Operations | $(8,880) | $(31,791) | | Net Loss Attributable to Shimmick | $(9,770) | $(33,333) | | Basic & Diluted EPS | $(0.28) | $(1.30) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first quarter of 2025, net cash used in operating activities was $38.2 million, primarily due to the net loss and unfavorable changes in working capital, specifically contract assets and liabilities, while net cash used in investing activities was minimal at $0.4 million, and net cash provided by financing activities was $21.9 million, driven by new borrowings, resulting in a net decrease in cash of $16.7 million for the period Cash Flow Summary (in thousands) | Activity | Three Months Ended April 4, 2025 | Three Months Ended March 29, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(38,184) | $(34,988) | | Net cash used in investing activities | $(438) | $(7,401) | | Net cash provided by financing activities | $21,907 | $6,718 | | **Net decrease in cash** | **$(16,715)** | **$(35,671)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail revenue recognition, contract balances, joint ventures, and new debt agreements, with fixed-price contract revenue at $102.7 million, remaining performance obligations of $692 million, significant customer concentration in accounts receivable, and new credit and loan agreements increasing borrowing capacity, while a full valuation allowance against deferred tax assets resulted in a 0% effective tax rate Revenue by Contract Type (in thousands) | Contract Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Fixed-price | $102,685 | $113,065 | | Cost reimbursable | $19,015 | $6,505 | | Equipment and labor | $410 | $473 | | **Total revenue** | **$122,110** | **$120,043** | - The company had **$692 million** of remaining performance obligations as of April 4, 2025, with a weighted average life of **2.0 years**[38](index=38&type=chunk) - As of April 4, 2025, two customers represented a significant concentration of accounts receivable, at **37.8%** and **23.2%** respectively[46](index=46&type=chunk) - Changes in contract estimates led to a net decrease in gross margin of **$4 million** for Q1 2025, primarily due to cost increases from delays and lower productivity[47](index=47&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant improvement in financial results to better performance on Shimmick Projects and reduced losses from Legacy Projects, which are being wound down, with revenue increasing by 2% to $122.1 million and gross margin improving by $20.6 million to a positive $4.7 million, while new financing through the ACF Credit Agreement and Ansley Loan Agreement increased total liquidity to $71 million, backlog stood at $739 million with 80% expected to be recognized within 24 months, and a remediation plan is underway for identified material weaknesses in internal controls [Results of Operations](index=30&type=section&id=Results%20of%20Operations) The company's net loss decreased by $23.6 million year-over-year, from $33.3 million to $9.8 million, primarily driven by a $20.6 million improvement in gross margin, which resulted from a $14 million reduction in losses on Legacy and Foundations Projects and a $6 million increase in gross margin from newer Shimmick Projects, while selling, general, and administrative expenses also decreased by $1.8 million Revenue and Gross Margin by Project Type (in thousands) | Project Type | Metric | Q1 2025 | Q1 2024 | $ Change | | :--- | :--- | :--- | :--- | :--- | | **Shimmick Projects** | Revenue | $93,154 | $90,292 | $2,862 | | | Gross Margin | $5,267 | $(436) | $5,703 | | **Legacy & Foundations** | Revenue | $28,956 | $29,751 | $(795) | | | Gross Margin | $(571) | $(15,424) | $14,853 | | **Consolidated Total** | **Revenue** | **$122,110** | **$120,043** | **$2,067** | | | **Gross Margin** | **$4,696** | **$(15,860)** | **$20,556** | - The **$14 million** improvement in Legacy and Foundations Projects' gross margin was primarily because significant cost increases for time and design-related schedule extensions identified in Q1 2024 did not recur in Q1 2025[123](index=123&type=chunk) - Selling, general and administrative expenses decreased by **$2 million**, mainly due to reduced salary, bonus, and legal expenses in Q1 2025 compared to Q1 2024[125](index=125&type=chunk) [Non-GAAP Financial Measures](index=32&type=section&id=Non-GAAP%20Financial%20Measures) The company uses Adjusted Net Loss and Adjusted EBITDA to evaluate core operating performance, with Adjusted EBITDA for Q1 2025 showing a loss of $3.0 million, a significant improvement from a loss of $24.1 million in Q1 2024, and Adjusted Net Loss also improving to a loss of $7.4 million from a loss of $29.4 million in the prior-year period, with adjustments including stock-based compensation, transformation costs, and legal fees for Legacy Projects Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss attributable to Shimmick Corporation | $(9,770) | $(33,333) | | Interest expense | 1,000 | 897 | | Depreciation and amortization | 3,460 | 4,410 | | Transformation costs | 715 | — | | Stock-based compensation | 1,790 | 998 | | Legal fees and other costs for Legacy Projects | (340) | 2,731 | | Other | 191 | 237 | | **Adjusted EBITDA** | **$(2,954)** | **$(24,060)** | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) As of April 4, 2025, the company had total liquidity of $71 million, consisting of $16 million in cash and available borrowings under its credit facilities, having entered into a new $15 million ACF Credit Agreement and a $15 million Ansley Loan Agreement during the quarter while terminating its previous Revolving Credit Facility, with net cash used in operations at $38.2 million driven by the net loss and working capital changes, and management believes existing cash flows and financing are sufficient to fund operations for at least the next twelve months - Total liquidity as of April 4, 2025 was **$71 million**, comprising **$16 million** in unrestricted cash and availability under the Credit Agreement (**$44 million**), ACF Credit Agreement (**$11 million**), and Ansley Loan Agreement (**$0.1 million**)[143](index=143&type=chunk) - In March 2025, the company entered into a new **$15 million** ACF Credit Agreement and a **$15 million** Ansley Loan Agreement, and terminated its previous Revolving Credit Facility[151](index=151&type=chunk)[152](index=152&type=chunk)[154](index=154&type=chunk) - Net cash used in operating activities was **$38 million** in Q1 2025, compared to **$35 million** in Q1 2024, driven by net loss and changes in contract-related assets and liabilities[156](index=156&type=chunk) [Backlog](index=39&type=section&id=Backlog) As of April 4, 2025, the company's project backlog was $739 million, primarily composed of work for state and local agencies (70%) and consisting mostly of fixed-price contracts (84%), with 80% of this backlog revenue expected to be recognized within the next 24 months - Total project backlog was **$739 million** as of April 4, 2025[165](index=165&type=chunk) Backlog Breakdown as of April 4, 2025 | Breakdown by: | Category | Percentage | | :--- | :--- | :--- | | **Customer Type** | State and local agencies | 70% | | | Federal agencies | 13% | | | Private owners | 17% | | **Contract Type** | Fixed-price | 84% | | | Cost reimbursable | 16% | | **Est. Recognition** | 0 to 24 months | 80% | | | 25 to 36 months | 10% | | | Beyond 36 months | 10% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a "smaller reporting company" under Exchange Act rules - The company is a "smaller reporting company" and is therefore not required to provide these disclosures[173](index=173&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that as of April 4, 2025, the company's disclosure controls and procedures were not effective due to previously identified material weaknesses in internal control over financial reporting related to the overall control environment and specific financial processes, with a remediation plan in place including implementing new controls and engaging a third-party advisory firm, though it has not been fully tested for operating effectiveness - Management concluded that disclosure controls and procedures were not effective as of April 4, 2025, due to existing material weaknesses in internal control over financial reporting[178](index=178&type=chunk) - The material weaknesses relate to the lack of formal and effective controls over certain financial statement account balances and a lack of effective controls over the COSO principles (control environment, risk assessment, etc.)[179](index=179&type=chunk) - A remediation plan is underway, which includes designing and implementing new controls and engaging a third-party advisory firm to evaluate effectiveness. However, the remediation is not yet complete as the new controls require more time to be tested[181](index=181&type=chunk)[182](index=182&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is disclosed in Note 11 of the financial statements, where the company states it is subject to various claims and lawsuits in the ordinary course of business but no such matters are currently material to its financial statements - Details on legal proceedings are cross-referenced to Note 11 - Commitments and Contingencies in the financial statements[185](index=185&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to risk factors from the Form 10-K have been reported[186](index=186&type=chunk) [Other Part II Items](index=45&type=section&id=Other%20Part%20II%20Items) The company reported no unregistered sales of equity securities, no defaults upon senior securities, and no mine safety disclosures for the period, and additionally, no directors or executive officers adopted or terminated any Rule 10b5-1 trading plans, with a list of filed exhibits also provided - The report indicates "None" for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), and Item 4 (Mine Safety Disclosures)[187](index=187&type=chunk) - Item 6 provides a list of exhibits filed with the report, including amendments to credit agreements and officer certifications[188](index=188&type=chunk)

[First Quarter 2025 Results](index=1&type=section&id=First%20Quarter%202025%20Results) Shimmick Corporation reported resilient Q1 2025 results with a robust backlog and strong bidding outlook, achieving significant gross margin improvement and reduced net loss while reaffirming full-year guidance [Highlights](index=1&type=section&id=Highlights) Shimmick Corporation reported resilient Q1 2025 results, highlighting a robust backlog of approximately $740 million and strong bidding outlook, with improved gross margin and reduced net loss - The company's business model is proving resilient against macroeconomic factors, supported by a robust backlog and a strong bidding outlook in key sectors like water and environmental infrastructure[3](index=3&type=chunk) - Backlog stands at approximately **$740 million** as of April 4, 2025, with over **87%** from Shimmick Projects. The company is reaffirming its 2025 guidance based on strong bidding activity, with nearly **$2 billion** in projects anticipated[5](index=5&type=chunk) Q1 2025 Key Financial Metrics | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change (in millions) | | :--- | :--- | :--- | :--- | | Revenue | $122 | $120 | +$2 | | Gross Margin | $5 | $(16) | Improved by $21 | | SG&A Expenses | $14 | $16 | -$2 | | Net Loss | $(10) | $(33) | Loss reduced by $23 | | Adjusted EBITDA | $(3) | $(24) | Loss reduced by $21 | | Liquidity (as of quarter end) | $71 | N/A | N/A | [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) This section analyzes Q1 2025 revenue, gross margin, operating expenses, and net loss, highlighting improvements driven by core projects and winding down legacy operations [Revenue and Gross Margin Analysis](index=2&type=section&id=Revenue%20and%20Gross%20Margin%20Analysis) Q1 2025 revenue increased to $122 million, with consolidated gross margin turning positive at $5 million (4%), driven by core project profitability and reduced losses from winding down legacy operations Revenue and Gross Margin by Project Type (Q1 2025 vs Q1 2024) | Project Type | Metric | Q1 2025 (ended Apr 4, in millions) | Q1 2024 (ended Mar 29, in millions) | | :--- | :--- | :--- | :--- | | **Shimmick Projects** | Revenue | $93 | $90 | | | Gross Margin | $5 (6%) | $(1) (-2%) | | **Legacy & Foundations** | Revenue | $29 | $30 | | | Gross Margin | $(1) (-2%) | $(15) (-52%) | | **Consolidated Total** | Revenue | $122 | $120 | | | Gross Margin | $5 (4%) | $(16) (-13%) | [Shimmick Projects](index=3&type=section&id=Shimmick%20Projects) Shimmick Projects revenue grew by $3 million to $93 million, driven by new fire clean-up and water projects, significantly improving gross margin by $6 million to $5 million - Revenue increased by **$3 million**, mainly from a **$13 million** California Palisades fire clean-up project and **$10 million** from new water/infrastructure projects[9](index=9&type=chunk) - Gross margin increased by **$6 million** to **$5 million**, with **$3 million** from the fire clean-up project and **$3 million** from new water/infrastructure projects[10](index=10&type=chunk) [Legacy and Foundations Projects](index=3&type=section&id=Legacy%20and%20Foundations%20Projects) Legacy and Foundations Projects revenue decreased by $1 million to $29 million, with gross margin loss narrowing by $14 million to $(1) million due to non-recurring Q1 2024 cost increases - The company is actively winding down these projects, leading to a **$1 million** decrease in revenue[11](index=11&type=chunk)[12](index=12&type=chunk) - The gross margin loss narrowed by **$14 million**, as cost increases for time and design-related schedule extensions from Q1 2024 did not reoccur this quarter[13](index=13&type=chunk) - A subset of these, 'Legacy Loss Projects', recognized revenue of **$18 million** and a gross margin loss of **$(2) million**, an improvement from an **$(11) million** loss in the prior year[14](index=14&type=chunk) [Operating Expenses and Other Items](index=3&type=section&id=Operating%20Expenses%20and%20Other%20Items) SG&A expenses decreased by $2 million (11%) due to reduced costs, while other financial items remained flat, and no income tax expense was recorded due to expected tax losses - SG&A expenses decreased by **$2 million** compared to Q1 2024, primarily due to reduced salary, bonus, and legal expenses[16](index=16&type=chunk) - Equity in earnings of unconsolidated joint ventures, gain/loss on asset sales, and interest expense remained approximately flat period over period[16](index=16&type=chunk)[17](index=17&type=chunk) - No income tax expense was recorded in either Q1 2025 or Q1 2024 due to expected tax losses for both fiscal years[18](index=18&type=chunk) [Net Loss and Earnings Per Share](index=4&type=section&id=Net%20Loss%20and%20Earnings%20Per%20Share) Net loss significantly narrowed to $(10) million in Q1 2025, a $24 million improvement, with diluted loss per share improving to $(0.28), reflecting substantial year-over-year progress Net Loss and EPS Comparison (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Net Loss | $(10) | $(33) | | Diluted Loss per Share | $(0.28) | $(1.30) | | Adjusted Net Loss | $(7) | $(29) | | Adjusted Diluted Loss per Share | $(0.22) | $(1.15) | - Adjusted EBITDA improved to **$(3) million** for Q1 2025, compared to **$(24) million** for the same period in 2024[20](index=20&type=chunk) [Fiscal Year 2025 Guidance](index=4&type=section&id=Fiscal%20Year%202025%20Guidance) Shimmick reaffirmed FY2025 guidance, projecting 10-15% revenue growth and 9-12% gross margin for core projects, with Adjusted EBITDA expected between $15 million and $25 million Full Fiscal Year 2025 Guidance | Category | Guidance Metric | Value | | :--- | :--- | :--- | | **Shimmick Projects** | Revenue Growth | 10% to 15% | | | Gross Margin | 9% to 12% | | **Legacy & Foundations Projects** | Revenue (in millions) | $50 to $60 | | | Gross Margin | (5)% to (15)% | | **Consolidated** | Adjusted EBITDA (in millions) | $15 to $25 | - The CFO reaffirmed full-year guidance, citing Q1 momentum and a strategy focused on Sustainable Backlog, Operational Excellence, and People and Culture[23](index=23&type=chunk) [Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated balance sheets, statements of operations, and cash flows for Shimmick Corporation, providing detailed financial positions and performance [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) As of April 4, 2025, total assets were $227.7 million, total liabilities $270.3 million, and stockholders' deficit $(42.6) million, with cash at $16.3 million Selected Balance Sheet Items (in thousands) | Account | April 4, 2025 | January 3, 2025 | | :--- | :--- | :--- | | Cash and cash equivalents | $16,302 | $33,730 | | Total Current Assets | $135,762 | $141,000 | | **Total Assets** | **$227,677** | **$233,864** | | Total Current Liabilities | $210,422 | $230,264 | | **Total Liabilities** | **$270,318** | **$268,538** | | **Total Stockholders' Deficit** | **$(42,641)** | **$(34,674)** | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2025 revenue was $122.1 million, with gross margin improving to $4.7 million, resulting in a net loss of $(9.8) million or $(0.28) per diluted share, a significant reduction from Q1 2024 Statement of Operations Summary (in thousands) | Account | Three Months Ended Apr 4, 2025 | Three Months Ended Mar 29, 2024 | | :--- | :--- | :--- | | Revenue | $122,110 | $120,043 | | Gross margin | $4,696 | $(15,860) | | Loss from operations | $(8,880) | $(31,791) | | **Net loss attributable to Shimmick Corporation** | **$(9,770)** | **$(33,333)** | | **Diluted loss per common share** | **$(0.28)** | **$(1.30)** | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 net cash used in operating activities was $38.2 million, with $21.9 million provided by financing, resulting in a $16.7 million net cash decrease and $19.1 million ending cash balance Cash Flow Summary (in thousands) | Cash Flow Category | Three Months Ended Apr 4, 2025 | Three Months Ended Mar 29, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(38,184) | $(34,988) | | Net cash used in investing activities | $(438) | $(7,401) | | Net cash provided by financing activities | $21,907 | $6,718 | | **Net decrease in cash** | **$(16,715)** | **$(35,671)** | | **Cash, cash equivalents and restricted cash, end of period** | **$19,080** | **$28,239** | [Non-GAAP Financial Measures and Reconciliations](index=11&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section explains and reconciles non-GAAP financial measures, including Adjusted Net Loss and Adjusted EBITDA, to their most comparable GAAP figures, providing insights into core operating performance [Explanation of Non-GAAP Measures](index=11&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Shimmick uses Adjusted Net Loss and Adjusted EBITDA to assess core operating performance, adjusting GAAP net loss for items like stock-based compensation and transformation costs, while acknowledging limitations - The company uses Adjusted Net Loss and Adjusted EBITDA as key measures for management to evaluate core operating performance and trends[41](index=41&type=chunk)[48](index=48&type=chunk) - Adjustments from GAAP Net Loss include stock-based compensation, transformation costs, legal fees for Legacy Projects, and other costs[40](index=40&type=chunk)[47](index=47&type=chunk) - The company does not provide a reconciliation for forward-looking non-GAAP guidance due to the unpredictability of certain items[33](index=33&type=chunk) [Reconciliation of Net Loss to Adjusted Net Loss](index=12&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20Net%20Loss) Q1 2025 GAAP net loss of $(9.8) million reconciled to an Adjusted Net Loss of $(7.4) million, reflecting a significant improvement from Q1 2024, with adjustments for stock-based compensation and transformation costs Reconciliation to Adjusted Net Loss (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net loss attributable to Shimmick Corporation** | **$(9,770)** | **$(33,333)** | | Transformation costs | $715 | $— | | Stock-based compensation | $1,790 | $998 | | Legal fees and other costs for Legacy Projects | $(340) | $2,731 | | Other | $191 | $237 | | **Adjusted net loss** | **$(7,414)** | **$(29,367)** | [Reconciliation of Net Loss to Adjusted EBITDA](index=14&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20EBITDA) Q1 2025 GAAP net loss of $(9.8) million reconciled to Adjusted EBITDA of $(3.0) million, a substantial improvement from $(24.1) million in Q1 2024, after adjusting for interest, taxes, and D&A Reconciliation to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net loss attributable to Shimmick Corporation** | **$(9,770)** | **$(33,333)** | | Interest expense | $1,000 | $897 | | Depreciation and amortization | $3,460 | $4,410 | | Transformation costs | $715 | $— | | Stock-based compensation | $1,790 | $998 | | Legal fees and other costs for Legacy Projects | $(340) | $2,731 | | Other | $191 | $237 | | **Adjusted EBITDA** | **$(2,954)** | **$(24,060)** |

Core Insights - Shimmick Corp. reported a revenue of $122 million for Q1 2025, a slight increase from $120 million in Q1 2024, with a gross margin improvement from $(16) million to $5 million [4][5][20] - The company experienced a net loss of $10 million, significantly reduced from a net loss of $33 million in the same quarter last year, indicating improved operational performance [5][20] - Shimmick's backlog stands at approximately $740 million, with over 87% attributed to Shimmick Projects, reflecting strong demand in critical infrastructure sectors [5][20] Financial Performance - Revenue for Shimmick Projects was $93 million, up from $90 million year-over-year, driven by new projects and clean-up efforts [8][9] - Adjusted net loss improved to $(7) million from $(29) million year-over-year, with adjusted diluted loss per share at $(0.22) compared to $(1.15) [21][20] - Selling, general, and administrative expenses decreased by 11% to $14 million, attributed to the ongoing transformation plan [5][15] Project Segmentation - Shimmick Projects, focusing on water, climate resilience, energy transition, and sustainable transportation, showed a gross margin of $5 million, a significant recovery from $(1) million [9][12] - Legacy and Foundations Projects revenue decreased slightly to $29 million from $30 million, with a gross margin improvement from $(15) million to $(1) million [11][12] - The company is winding down Legacy Projects, which are expected to continue to decline in revenue throughout 2025 [10][11] Future Outlook - The company anticipates a strong bidding activity for the remainder of 2025, with nearly $2 billion in projects expected to come to market [5][22] - Guidance for Shimmick Projects revenue growth is projected between 10% to 15%, with overall gross margin expected between 9% and 12% [23] - Legacy Projects and Foundations Projects revenue is expected to be between $50 million and $60 million, with gross margins ranging from (5)% to (15)% as these projects are completed [23]

Company Announcement - Shimmick Corporation will release its first quarter 2025 financial results after market close on May 14, 2025 [1] - A video webcast conference call to discuss the results will be held at 5:00 p.m. Eastern Time on the same day [2] Company Overview - Shimmick is a leading infrastructure solutions provider specializing in complex projects related to water, climate resilience, energy transition, and sustainable transportation [3] - The company integrates technical excellence with collaborative project delivery methods to provide innovative, technology-driven infrastructure solutions [3] - Shimmick has a track record spanning over a century and is headquartered in California [3]

Core Points - Shimmick Corporation has appointed Todd Yoder as Executive Vice President and Chief Financial Officer, effective April 14, 2025, while Amanda Mobley has been appointed Chief Accounting Officer [1][2][3] Group 1: Leadership Changes - Todd Yoder brings extensive financial leadership experience from the construction industry and has held senior finance roles at publicly traded companies, making him a valuable addition to Shimmick's executive team [2] - Amanda Mobley, who served as interim CFO since June 2024, has been recognized for her contributions during a transformative period for the company and will continue to support the finance department in her new role [3] Group 2: Company Overview - Shimmick Corporation is a leading provider of infrastructure solutions, focusing on complex projects in water, climate resilience, energy transition, and sustainable transportation [4] - The company integrates technical excellence with collaborative project delivery methods to offer innovative, technology-driven infrastructure solutions that promote economic growth and empower communities [4]

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]