SHIM — Shimmick Corporation Common Stock

Summary of SHIM Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Consolidated Revenue: $88 million, down from $122 million in Q1 2025.
• Gross Margin: 12% of revenue, up from 4% in Q1 2025; gross margin for Shimmick projects specifically was 11%, an 89% improvement year-over-year.
• Adjusted EBITDA: $3 million, compared to a loss of $3 million in Q1 2025.
• Net Loss: $4 million, improved from a net loss of $10 million in the prior year.
• Backlog: Total backlog reached $944 million, the highest in over two years, with a book-to-burn ratio of 2.6.
• Liquidity: Ended the quarter with $34 million in liquidity, consisting of $15 million in cash and $19 million available under credit agreements.

2. Strategic Updates and Business Highlights

• Continued focus on core projects, with noncore work now representing less than 5% of total backlog.
• Significant new project wins, including flood protection and wastewater treatment projects in California and Texas.
• Appointment of Sarah Tacker as Executive Vice President and COO to enhance operational execution.
• Strong demand in core markets, particularly in Texas and data centers, with multiple active bids.

3. Forward Guidance and Outlook

• Revenue Growth: Expected to increase by 12% to 22% year-over-year, projecting approximately $550 million to $600 million for the full year 2026.
• Adjusted EBITDA: Anticipated to grow between 200% and 500%, with a target range of $15 million to $30 million.
• Positive momentum expected to continue as new projects ramp up, particularly in the summer months.

4. Bad News, Challenges, or Points of Concern

• Noncore Project Termination: The termination of the Chickamauga Lock Replacement Project significantly impacted noncore revenue, which fell to $200,000 from $29 million in Q1 2025.
• Revenue Decline: Overall revenue decreased due to the winding down of prior projects and a lower burn rate on new projects.
• Market Risks: Potential impacts from rising commodity costs and supply chain issues, though management indicated they are incorporating these factors into pricing for new bids.

5. Notable Q&A Insights

• Management reassured that the termination of the Chickamauga project would not hinder their ability to win new work, maintaining a strong bidding activity.
• Confidence in margin improvement was expressed, with expectations to reach gross margins of 12% to 13% as new projects are executed.
• Discussions highlighted the strategic focus on data centers, with management noting that the company is well-positioned to capitalize on growing opportunities in this sector.
• The legacy work's completion is expected to improve cash flow, as noncore projects are phased out, enhancing overall liquidity and operational performance.

Overall, Shimmick is experiencing a transformative phase with a focus on core capabilities, improving financial metrics, and a robust pipeline, despite facing challenges from legacy projects and market conditions.