Shimmick Corp Q3 FY2025 earnings call

Go-Forward Strategy

• 3 major components: grow top line with strategic new business, complete noncore projects, implement operational improvements.

Financial Results

• Q3 2025 revenue: $142M, gross margin: $11M, adjusted EBITDA: $4M.
• Over 75% of Q3 revenue from Shimmick projects ($107M), up 6% Y/Y; gross margin on Shimmick projects up 67% Y/Y.
• Non-core projects revenue: $35M, down $30M Y/Y.

Backlog Growth

• Grew backlog by over $100M or 15% sequentially in Q3 to $754M as of Oct 3, 2025.
• Project awards in Q3 include $116M City of Modesto River Trunk pump station, $51M Bellota Weir modifications, etc.

Momentum

• Benefiting from strategic shift: pursuing aligned projects, deepening client partnerships, reinforcing operational discipline.

For the third quarter of 2025, total revenue was $142 million. Over 75% of the revenue, $107 million, came from Shimmick projects, representing a 6% year-over-year increase. Shimmick projects had a gross margin of $10 million, up 61% from the prior year's third quarter. Non-core projects had revenue of $35 million, a $30 million decrease from the same quarter last year, with a gross margin of $1 million compared to $6 million in the prior year's third quarter.

Full-Year 2025 Guidance

• Shimmick project revenue: $405M-$415M, overall gross margin: 9%-12%.
• Non-core project revenue: $80M-$90M, gross margin: -15% to -5%.
• Consolidated adjusted EBITDA: $5M-$15M. Anticipate full year revenue in higher end of range, adjusted EBITDA in lower end of range.

Q: Can you talk about how much of the pipeline or backlog that represents today? And just how are you expecting growth there in the coming quarters? Maybe what end markets are driving that?

A: Right now represents mid-teens percentage. Markets include electrification-related work, industrial electrical work, data center and mission-critical type projects on electrical side. Expect increase in backlog percentage turning into top line over time.

Q: Do you have some projects in data centers? Maybe what markets are you seeing activity in? And any sizing and margin profile of those as we go with those?

A: Actively bidding in Texas, Tennessee, Georgia areas. Following trusted clients. Hope to be successful on some and get into backlog.

Q: Can you talk about some of the dynamics in cash flow in the quarter and maybe how you see that trending in the coming quarters and just longer term as we get through these legacy projects?

A: Ebbs and flows. Negative impact from non-core legacy projects continues but will decrease. As backlog increases and translates to top line, will generate cash to offset impact, expecting better position into 2026.

Q: You're aiming for the lower end of the $5 million to $15 million adjusted EBITDA, which implies a pretty strong fourth quarter. What gives you confidence to hit the lower end?

A: New work starting to kick in, higher-margin work offsetting loss-generating noncore projects better as we go through each quarter.

Q: You've talked a little bit about water and electricity being strong markets. Just curious as to how negotiated work is coming along?

A: Negotiated work is becoming a bigger portion. Couple of projects in negotiation. Electrical market has more negotiated contracts. Goal is to get to 50% negotiated work for risk balance.

Q: The noncore work had positive gross margins. Was that just a function of where the quarter fell out? Or do you have a little bit more visibility on that work?

A: Related to closing out issues and negotiating additional revenue for scope growth. Still have work to do in 2026 to get those projects done, but trying to keep margins even.