Shimmick Corp (SHIM)·Q1 2025 Earnings Summary

Executive Summary

• Q1 revenue beat: $122.11m vs S&P Global consensus $94.35m; Primary EPS beat: -$0.22 vs -$0.25 consensus. Company Adjusted EBITDA was -$3.0m; S&P “EBITDA” actual was -$6.24m vs -$3.6m consensus, reflecting definitional differences between S&P EBITDA and company Adjusted EBITDA (see Estimates Context). The company reaffirmed FY25 guidance across all metrics.*
• Gross margin improved to 4% from -13% YoY as Legacy/Foundations losses narrowed; GAAP diluted EPS improved to -$0.28 from -$1.30 YoY. New wins (e.g., California Palisades fire clean-up) and ramping water/infrastructure projects drove the improvement.
• Backlog ~ $739–$740m with 87–90% Shimmick Projects; liquidity $71m. Management expects bid activity to accelerate in Q2–Q3 after a brief tariff/funding-related pause; tariff exposure on current backlog minimal with ~96% of commodity/equipment “bought out.”
• Catalyst: Reaffirmed guidance (Shimmick Projects revenue +10–15%, overall GM 9–12%, Adjusted EBITDA $15–$25m), improving backlog mix, and minimal tariff exposure could support estimate revisions and sentiment into Q2–Q3 as delayed awards are released.

What Went Well and What Went Wrong

• What Went Well

  • Significant YoY margin recovery: consolidated GM to $5m (4%) from -$16m (-13%) on Legacy loss improvement and stronger Shimmick Projects (-$1m GM to +$5m YoY). “Our business model continues to prove resilient amid broader macroeconomic factors such as tariffs and supply chain pressures.” — CEO Ural Yal
  • Revenue/EPS beat vs consensus and cost discipline: SG&A down 11% YoY to $14m as the transformation plan takes hold; Primary EPS of -$0.22 versus -$0.25 consensus.*
  • Backlog quality improved: backlog ~ $739m with ~90% Shimmick Projects; management reiterated FY25 guidance and highlighted a ~$2bn bid pipeline and higher bid cadence following a Q1 pause.

• What Went Wrong

  • Still unprofitable: GAAP net loss -$9.77m; Adjusted EBITDA -$3.0m as Legacy/Foundations remained a modest drag (-$1m GM) despite improvement.
  • Working capital and cash usage: cash from operations -$38.18m in Q1 driven by increased contract assets and lower contract liabilities; unrestricted cash fell to $16.3m; liquidity $71m supported by credit availability.
  • Near-term award timing risk: management cited a brief tariff/funding-related pause delaying awards; while expected to rebound in Q2–Q3, timing slippage could affect backlog replenishment cadence.

Financial Results

Q3 2024 → Q4 2024 → Q1 2025

Segment mix and YoY comparison (Q1 2024 → Q1 2025)

KPIs and balance sheet trends (Q3 2024 → Q4 2024 → Q1 2025)

Drivers this quarter:

• Palisades Fire clean-up contributed ~$13m revenue and ~$3m gross margin; new water/infrastructure projects ramping added another ~$10m revenue and ~$3m margin; legacy loss project cost spikes from Q1’24 did not recur.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategy and resilience: “Our business model continues to prove resilient amid broader macroeconomic factors such as tariffs and supply chain pressures… We are seeing heightened demand and opportunities in electrical, water and environmental infrastructure sectors.” — CEO Ural Yal
• Guidance stance: “We are reaffirming our full year guidance… we expect to deliver results in our previously stated guidance ranges.” — CFO Todd Yoder
• Tariff exposure: “We believe we’re around 96% bought out on most of those exposures… we see [tariff] exposure as minimal at this time.” — CFO Todd Yoder
• Capacity and growth: “The overhead structure we have right now, we can easily handle $600–$700–$750 million a year without adding significant additional overhead.” — CEO Ural Yal

Q&A Highlights

• Guidance visibility: Management reiterated confidence in achieving Shimmick Projects GM within guided 9–12% despite Q1 level below that, citing operational improvements and mix of remaining backlog/work to be won.
• Awards/bid pipeline: Several projects were low-bid but paused during Q1; expecting awards and very high bid activity in Q2, with Palisades clean-up continuing (cost-plus).
• Liquidity and capacity: Comfortable liquidity; investments largely complete; existing overhead supports $600–$750m annual revenue without major additions.
• Legacy projects: Efforts to accelerate select legacy completions continue but subject to scope growth/change orders near project end.

Estimates Context

Q1 2025 performance vs S&P Global consensus

• EBITDA note: S&P Global EBITDA consensus was -$3.6m and S&P “EBITDA actual” was -$6.24m*, while company-reported Adjusted EBITDA was -$3.0m (non-GAAP). Differences reflect definitional adjustments (e.g., stock comp, legal/legacy costs, transformation items).
• Values retrieved from S&P Global.*

Key Takeaways for Investors

• Clear top-line and EPS beats with improving gross margin profile support estimate upward revisions for revenue and potentially EPS; EBITDA interpretation should consider definitional differences vs company’s Adjusted EBITDA.
• Guidance reaffirmation amid bid-award pauses signals confidence; expect bid cadence and awards to accelerate in Q2–Q3, a potential near-term catalyst.
• Backlog quality continues to improve (≈90% Shimmick), reducing risk tied to legacy projects; legacy now ~10% of backlog and winding down.
• Minimal tariff exposure on current backlog (~96% bought out) reduces downside risk; watch for client budget pressure and project sizing from tariff-related cost inflation.
• Working capital/cash is a watch item after -$38m operating outflow; monitor contract asset/liability swings and credit facility usage as awards ramp.
• Strategic expansion in electrical/technology-driven infrastructure (aiming for 30% by 2027) adds secular growth optionality tied to data centers, electrification and water/cooling systems.

Appendix: Additional Data Points

• Consolidated balance sheet highlights: Unrestricted cash $16.3m; total liquidity $71m; long-term debt (net) $31.4m as of April 4, 2025.
• Q1 cash flow drivers: Contract assets +$15.9m; contract liabilities -$17.8m; net cash used in operating activities -$38.18m.
• CFO transition: Todd Yoder appointed EVP & CFO effective April 14, 2025; interim CFO Amanda Mobley appointed CAO.