Name: Shimmick Corp Q4 2024 Earnings Call
Start: 2025-03-13T21:01:00.000Z

Executive Summary

Q4 2024 revenue was $104M with consolidated gross margin of -20%, driving a net loss of $38M and adjusted EBITDA of -$27M; Shimmick Projects remained positive gross margin but Legacy and Foundations weighed heavily .
Backlog ended at $822M (87% Shimmick Projects), and total liquidity was $100M supported by a new $15M credit agreement replacing the MidCap revolver; management signaled stronger execution and margin mix in 2025 .
FY2025 guidance: Shimmick Projects revenue up 10–15% with overall gross margin 9–12%, Legacy+Foundations revenue $50–$60M with -5% to -15% margin, and adjusted EBITDA $15–$25M; cadence expected to be 3Q-heavy as projects ramp .
Stock reaction catalysts: resolution of legacy issues (Golden Gate Bridge $97M settlement), improving backlog mix, and pivot to lower-risk alternative delivery/electrical expansion; management emphasized optimism and risk controls .

What Went Well and What Went Wrong

What Went Well

Backlog quality improved: $822M backlog with 87% Shimmick Projects (vs. 85% in Q3), reflecting disciplined bidding on more profitable work .
Liquidity strengthened to $100M, aided by the new $15M credit agreement and prior settlements/sale-leaseback; CFO highlighted comfort funding operations and growth .
Strategic wins aligned to core markets and delivery methods (Santa Cruz Murray Street Bridge & Headworks; North Hollywood BRT collaborative delivery; Palisades Fire debris removal), supporting the transformation to lower-risk portfolio .

Quote: “We have a comprehensive strategy… improve our backlog and project performance… already made substantial progress in the last three months.” — CEO Ural Yal .

What Went Wrong

Consolidated gross margin deteriorated to -20% in Q4 (vs. 7% in Q3 and 0% in Q4 2023) with Foundations (-189% GM) and Legacy (-69% GM) driving a larger net loss; adjusted EBITDA fell to -$27M from $30M in Q3 .
Shimmick Projects GM compressed to 2% in Q4 (from 6% in Q3 and 11% in prior year) due to increased costs, schedule extensions, and wind-down effects despite new project margins .
Equity in JV swung to a $4M loss in Q4 (from $1M gain prior year) on schedule extensions; legal fees on legacy claims and cost overruns persisted into quarter-end .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Millions)	$138	$166	$104
Consolidated Gross Margin ($USD Millions)	$(0)	$12	$(20.8)
Consolidated GM (%)	0%	7%	-20%
Net (Loss) Income ($USD Millions)	$(17.5)	$(1.6)	$(38.5)
Diluted EPS ($USD)	$(0.74)	$(0.05)	$(1.13)
Adjusted EBITDA ($USD Millions)	$(8.8)	$29.7	$(27.3)
Adjusted Diluted EPS ($USD)	$(0.59)	$0.72	$(0.91)

Segment Revenue and Gross Margin

Segment	Q3 2024 Revenue ($M)	Q3 2024 GM ($M)	Q3 2024 GM (%)	Q4 2024 Revenue ($M)	Q4 2024 GM ($M)	Q4 2024 GM (%)
Shimmick Projects	$101	$6	6%	$80	$2	2%
Legacy Projects	$54	$8	15%	$18	$(12)	-69%
Foundations Projects	$11	$(2)	-18%	$5	$(10)	-189%
Consolidated Total	$166	$12	7%	$104	$(21)	-20%

Key KPIs

KPI	Q3 2024	Q4 2024
Backlog ($USD Millions)	$834	$822
Backlog Mix (% Shimmick Projects)	85%	87%
Cash & Cash Equivalents ($USD Thousands)	$25,962	$33,730
Liquidity ($USD Millions)	$59	$100
Revolving Credit Facility Availability ($USD Millions)	$18 (revolver) and $15 (credit facility)	New $15M commitment; liquidity includes facility availability

Notes:

Q3 2024 included ERP impairment ($16M) and Golden Gate settlement accounting, boosting reported GM/EBITDA but still producing net loss; Q4 lacked such offsets and faced heavier legacy/foundations headwinds .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Shimmick Projects Revenue Growth (%)	FY 2025	N/A	+10% to +15%	First issuance
Overall Gross Margin (%)	FY 2025	N/A	9% to 12%	First issuance
Legacy + Foundations Revenue ($USD Millions)	FY 2025	N/A	$50 to $60	First issuance
Legacy + Foundations GM (%)	FY 2025	N/A	-5% to -15%	First issuance
Adjusted EBITDA ($USD Millions)	FY 2025	N/A	$15 to $25	First issuance

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024)	Trend
Alternative delivery pivot (negotiated work vs bid)	Building estimator capacity; targeting CA water projects; discipline on margins	Aim for 50/50 balance by 2027–2028; won North Hollywood BRT collaborative contract; negotiated work takes 9–18 months preconstruction	Expanding
Electrical division expansion	Increasing self-perform and estimator resources; targeting upper-teens job margins	Electrical to grow from ~15% to >30% of revenues by 2027; pursue standalone/subcontract roles across data centers, industrial, transit, healthcare	Expanding
Legacy projects resolution	Q2 lock-and-dam $33M settlement; high legal costs; ERP decision; legacy GM guidance negative	Golden Gate $97M settlement (Q3); Q4 legacy/foundations GM sharply negative; winding down continues; JV losses due to schedule extensions	Improving mix but still headwind
Funding/regulatory (IIJA/IRA, CA Prop 4, PFAS)	PFAS opportunity emerging; CA water market robust; asset-light strategy	More reliance on IRA vs IIJA; no funding pullback observed; CA Prop 4 supportive; EPA SRF steady	Supportive/stable
Supply chain/labor	Confident in craft capacity; regional support; adding estimators	West Coast labor availability adequate; some pressure outside CA/WA due to AI/data center demand	Manageable
SG&A/operational excellence	Rightsizing overhead; ERP impairment $16M to optimize system; sale-leaseback	SG&A trending to benchmarks; focus on risk management, early issue resolution, ERP/bidding IT upgrades	Improving

Management Commentary

Strategy pillars: “This strategy is designed around 3 strategic pillars: sustainable backlog, operational excellence, and people and culture.” — CEO Ural Yal .
Market focus: expanding across water, climate resilience, energy transition, technology/sustainable transportation; addressable market ~$106B/year adjusted for presence .
Electrical growth thesis: “Electrical construction will grow to be a much larger contributor… from 15%… to over 30% in 2027.” .
Margin expectations: “Based on… remaining backlog on the active projects, I'm feeling comfortable with 9% to 12% [gross margin].” — CEO bridging Q4 to FY25 .
Tone: “I'm extremely optimistic about our future… ready to take advantage of healthy market conditions.” .

Q&A Highlights

Gross margin bridge: Management expects Shimmick Projects GM to move from 2% in Q4 to 9–12% in FY2025 based on profitable remaining backlog, scope growth discussions, and new high-margin wins; acknowledges Q4 headwinds from wind-down projects .
Year cadence: Expect 2Q better, 3Q best, Q4 flat — implying back-half weighted margin cadence typical for construction .
Negotiated vs bid mix: Target 50/50 balance by 2027–2028; North Hollywood BRT illustrates collaborative delivery; negotiated awards require 9–18 months preconstruction .
Funding backdrop: No observed funding pullbacks; portfolio more tied to IRA; EPA SRF steady; outlook is pause not rollback if any .
Liquidity and FCF: Liquidity at $100M; controls tightened; new $15M revolving facility secured for three years; intend to finish 2025 in strong cash position .

Estimates Context

Wall Street consensus estimates via S&P Global were unavailable at the time of this analysis, so comparisons to consensus for Q4 2024, FY2024, and FY2025 could not be performed. We attempted retrieval, but SPGI returned a daily limit error.

Key Takeaways for Investors

Q4 printed a significant margin/earnings air pocket driven by Legacy/Foundations; monitor FY2025 execution against targeted 9–12% overall gross margin and the mix shift toward Shimmick Projects to validate the margin recovery narrative .
Backlog composition is improving (87% Shimmick Projects) and should support margin quality; watch conversion of collaborative delivery pipeline and negotiated awards into booked backlog through 2026–2027 (North Hollywood BRT is an early proof point) .
Liquidity is solid ($100M) with a freshly inked $15M facility; reduced legal drag post Golden Gate settlement decreases risk of outsized period costs and JV losses, supporting cash stability into 2025 .
Electrical expansion is a structural growth lever (target >30% of revenues by 2027) tied to AI/data centers and electrification; this self-perform capability can lift blended margins and reduce project risk .
Expect seasonal/operational cadence: margins improving into 2Q and peaking in 3Q as projects ramp; position tactically ahead of bid wins and alt-delivery conversions .
Risks: Legacy wind-down still creates volatility; Foundations drags until fully exited; JV schedule extensions and any funding delays could pressure near-term GM/EBITDA .
Catalysts: New project awards in water/climate resilience/transport, further alt-delivery wins, visible margin inflection in Shimmick Projects, and evidence of cash generation tracking toward management’s confident outlook .

Shimmick Corp (SHIM)·Q4 2024 Earnings Summary