Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shimmick Corp (SHIM, Financial) successfully settled its last major outstanding claim related to the Golden Gate Bridge project, resulting in a $97 million reimbursement.
- The company reported an adjusted EBITDA of $30 million for the third quarter, indicating operational improvements.
- Shimmick Corp (SHIM) has a strong backlog of $834 million, with 85% of it consisting of higher-margin Shimmick Projects.
- The company is focusing on water infrastructure projects, which are expected to benefit from California Proposition 4, authorizing $10 billion for climate change-related infrastructure projects.
- Shimmick Corp (SHIM) is undergoing a leadership transition with Ural Yal set to become the new CEO, bringing extensive knowledge of the California and critical infrastructure markets.
Negative Points
- Shimmick Corp (SHIM) reported a net loss of $2 million for the third quarter, compared to a net income of $35 million in the prior year.
- The company's revenue decreased to $166 million from $175 million in the same period last year.
- Legacy Projects continue to impact financial performance, with a negative gross margin expected to persist due to additional costs and legal fees.
- A one-time non-cash expense of $16 million was recognized due to the decision to enhance the current ERP system.
- The gross margin for Shimmick Projects decreased to 6% from 14% a year ago, reflecting challenges in project execution and completion.
Q & A Highlights
Q: Should we expect Shimmick's gross margin to increase as we move through the rest of this year into next year?
A: Steven Richards, CEO: Yes, as we work through the backlog and add higher margin work, we should see improvements. Amanda Mobley, CFO: We will continue to see Legacy Projects wind down and replace them with higher margin work, which should increase margins.
Q: How is bid activity progressing, and are the projects meeting your criteria for gross margins?
A: Steven Richards, CEO: Bid activity is increasing, and we are hiring more estimators to capitalize on opportunities. We are seeing projects that meet our criteria for higher gross margins.
Q: Can you provide a breakdown of the remaining Legacy Projects, including the Golden Gate Bridge project?
A: Amanda Mobley, CFO: We are about 80% done with the Golden Gate Bridge project, with $40 million of backlog remaining. The remaining $85 million is related to other Legacy Loss Projects.
Q: How will the settlement of the Golden Gate Bridge project affect your cash position and capital allocation in 2025?
A: Steven Richards, CEO: The settlement improves our liquidity and reduces risk. Amanda Mobley, CFO: We will use the cash to pay down debt and support ongoing operations, including closing out Legacy jobs.
Q: How do you see the pipeline of projects transitioning into backlog, and what is the impact of the regulatory environment?
A: Steven Richards, CEO: We don't see work being seasonal and have several projects in the pipeline for Q4 and early 2025. The regulatory environment, including new funding, provides more opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
