Shimmick (SHIM) - 2024 Q3 - Quarterly Results

Shimmick Corporation Third Quarter 2024 Results Third Quarter 2024 and Recent Highlights Shimmick Corporation announced a significant settlement for its Golden Gate Bridge (GGB) Project, which will result in $97 million in cash proceeds by year-end 2024, reporting Q3 revenue of $166 million, a net loss of $2 million, and Adjusted EBITDA of $30 million - A joint venture of the company entered into a settlement on the Golden Gate Bridge project, securing total proceeds of $97 million to be paid before the end of 2024[3] Q3 2024 Key Financial Metrics | Metric | Value (USD) | | :--- | :--- | | Revenue | $166 million | | Shimmick Project Revenue | $101 million | | Shimmick Project Gross Margin | 6% | | Net Loss | $2 million | | Adjusted EBITDA | $30 million | | Backlog | > $834 million | - The company announced the hiring of Ural Yal as the new Chief Executive Officer, replacing the retiring Steve Richards[5][6] - The backlog as of September 27, 2024, stands at over $834 million, with more than 85% composed of Shimmick Projects, indicating a strategic shift[5] Transformation Plan Update The company is advancing its strategic transformation towards a more capital-efficient model, highlighted by the GGB project settlement, new CEO hiring, a $17 million gain from an equipment yard sale-leaseback, and a one-time $16 million ERP system charge - The Golden Gate Bridge project settlement is the last major outstanding legal claim related to its Legacy Projects, with $97 million in cash expected by the end of 2024[5] - Completed a sale-leaseback of the company's equipment yard in Tracy, California, resulting in a $17 million gain in Q3 2024[6] - A strategic decision to enhance the current ERP system instead of implementing a new one led to a one-time charge of $16 million in Q3 2024, expected to reduce future overhead[6] - Management believes infrastructure has bipartisan support and the recently passed $10 billion California Proposition 4 should provide additional market support, mitigating potential impacts from the election[8] Financial Results For Q3 2024, Shimmick reported total revenue of $166 million, a net loss of $2 million, driven by varied performance across its project segments, with Shimmick Projects showing lower revenue and margin, Foundations Projects winding down with losses, and Legacy Projects' results significantly impacted by the GGB settlement Consolidated Financial Performance This section presents Shimmick's consolidated financial performance for Q3 and year-to-date 2024, detailing revenue, gross margin, net income, and Adjusted EBITDA Q3 Financial Performance Summary (in millions, except per share data) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Revenue | $166 | $175 | | Gross Margin | $12 | $17 | | Net (Loss) Income | $(2) | $35 | | Adjusted EBITDA | $30 | $42 | | Diluted (Loss) Income per Share | $(0.05) | $1.58 | | Adjusted Diluted Income per Share | $0.72 | $1.67 | Year-to-Date Financial Performance Summary (in millions, except per share data) | Metric | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | | Revenue | $377 | $495 | | Gross Margin | $(35) | $23 | | Net (Loss) Income | $(86) | $15 | | Adjusted EBITDA | $(34) | $39 | | Diluted (Loss) Income per Share | $(2.96) | $0.68 | | Adjusted Diluted (Loss) per Share | $(1.72) | $1.12 | Segment Performance Analysis This section analyzes Shimmick's Q3 2024 financial performance across its Shimmick, Foundations, and Legacy project segments, detailing revenue and gross margin contributions Q3 2024 Revenue and Gross Margin by Project Type (in millions) | Project Type | Revenue | Gross Margin | Gross Margin % | | :--- | :--- | :--- | :--- | | Shimmick Projects | $101 | $6 | 6% | | Foundations Projects | $11 | $(2) | (18%) | | Legacy Projects | $54 | $8 | 15% | | Consolidated Total | $166 | $12 | 7% | - Shimmick Projects revenue decreased by $9 million YoY to $101 million in Q3 2024, primarily due to lower activity on existing jobs winding down[13] - The company is winding down its non-core Foundations Projects, which generated a gross margin loss of $(2) million in Q3 2024 due to cost overruns[15][16] - Legacy Projects revenue for Q3 2024 included a $31 million positive adjustment from the GGB Project settlement, without which revenue would have declined by $31 million[17] Detailed Financial Analysis (Q3 2024 vs Q3 2023) The company's net loss of $2 million in Q3 2024, a $36 million decrease from the prior year's net income, was primarily driven by a $16 million ERP system impairment charge, a $13 million decrease in gain on sale of assets, and a $5 million drop in gross margin, with interest expense also increasing by $2 million due to a new credit facility - A $16 million ERP pre-implementation asset impairment charge was recorded in Q3 2024 due to a strategic decision to enhance the current system instead of adopting a new one[22] - Gain on sale of assets decreased by $13 million, mainly because a $30 million gain from selling non-core business contracts in Q3 2023 did not recur, partially offset by a $17 million gain from a sale-leaseback in Q3 2024[21] - Interest expense rose by $2 million due to charges on a new Credit Facility established in May 2024[22] - The overall net income decreased by $36 million to a net loss of $2 million, attributed to the ERP impairment ($16M), lower gain on sale ($13M), decreased gross margin ($5M), and higher interest expense ($2M)[25] Fiscal Year 2024 Guidance For the full fiscal year 2024, Shimmick expects revenue from its core Shimmick Projects to be generally flat with a gross margin between 4% and 7%, while Legacy Projects are forecast to have revenue of $90 to $95 million with a significant negative gross margin of (40%) to (50%) due to settlement impacts and cost overruns - Shimmick Projects revenue is expected to be generally flat for FY2024, with a projected gross margin between 4% and 7%[28] - Legacy Projects are projected to have revenue of $90 to $95 million with a negative gross margin of (40%) to (50%) for FY2024[28] Financial Statements This section provides the unaudited consolidated financial statements for the period ended September 27, 2024, including the Consolidated Balance Sheets, Consolidated Statements of Operations, and Consolidated Statements of Cash Flows Consolidated Balance Sheets This section presents Shimmick's unaudited Consolidated Balance Sheets as of September 27, 2024, and December 29, 2023, detailing assets, liabilities, and stockholders' equity Balance Sheet Summary (in thousands) | Account | Sep 27, 2024 | Dec 29, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $25,962 | $62,939 | | Total Current Assets | $221,189 | $257,458 | | Total Assets | $346,737 | $426,652 | | Total Current Liabilities | $278,176 | $271,253 | | Total Liabilities | $345,764 | $356,162 | | Total Stockholders' Equity | $973 | $70,490 | Consolidated Statements of Operations This section presents Shimmick's unaudited Consolidated Statements of Operations for the three months ended September 27, 2024, and September 29, 2023, detailing revenue, gross margin, and net income Statement of Operations Summary - Q3 (in thousands) | Account | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Revenue | $166,035 | $175,448 | | Gross margin | $12,189 | $17,012 | | Income (loss) from operations | $1,204 | $35,636 | | Net (loss) income attributable to Shimmick | $(1,564) | $34,567 | Consolidated Statements of Cash Flows This section presents Shimmick's unaudited Consolidated Statements of Cash Flows for the nine months ended September 27, 2024, and September 29, 2023, detailing cash flows from operating, investing, and financing activities Cash Flow Summary - Nine Months Ended (in thousands) | Account | Sep 27, 2024 | Sep 29, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(66,183) | $(64,776) | | Net cash provided by investing activities | $18,389 | $13,153 | | Net cash provided by financing activities | $10,457 | $32,694 | | Net decrease in cash | $(37,337) | $(18,929) | Non-GAAP Financial Measures This section details the company's use of non-GAAP financial measures, including Adjusted Net Income and Adjusted EBITDA, which management uses to evaluate core operating performance by excluding items such as stock-based compensation, ERP impairment costs, transformation costs, and legal fees for Legacy Projects, with reconciliations from the most comparable GAAP measures provided - The company uses Adjusted Net Income and Adjusted EBITDA as key measures to evaluate core operating performance and trends, excluding certain non-recurring or non-cash items[43][49] Reconciliation of Net Income to Adjusted Net Income This section provides a reconciliation of Shimmick's GAAP net income to Adjusted Net Income for Q3 2024 and Q3 2023, detailing adjustments for non-recurring items Reconciliation to Adjusted Net Income - Q3 (in thousands) | Account | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net (loss) income attributable to Shimmick | $(1,564) | $34,567 | | Transformation costs | $1,924 | - | | ERP pre-implementation asset impairment | $15,708 | - | | Legal fees and other costs for Legacy Projects | $6,436 | $1,708 | | Adjusted net income | $24,255 | $36,662 | Reconciliation of Net Income to Adjusted EBITDA This section provides a reconciliation of Shimmick's GAAP net income to Adjusted EBITDA for Q3 2024 and Q3 2023, detailing adjustments for non-cash and non-operating items Reconciliation to Adjusted EBITDA - Q3 (in thousands) | Account | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net (loss) income attributable to Shimmick | $(1,564) | $34,567 | | Depreciation and amortization | $3,447 | $4,637 | | Interest expense | $1,977 | $413 | | ERP pre-implementation asset impairment | $15,708 | - | | Legal fees and other costs for Legacy Projects | $6,436 | $1,708 | | Adjusted EBITDA | $29,679 | $41,712 |