Shimmick Corp Q4 FY2025 earnings call

• Strategy centered on 3 pillars: growing top line with strategic work, winding down legacy noncore projects, and driving operational improvements.
• 2025 Shimmick projects revenue up 12% YOY, representing 75% of total revenue, with 10% gross margin and 400 basis point improvement. Noncore projects revenue down to $96 million from $125 million in 2024.
• Backlog grown meaningfully, well above 1:1 book-to-burn ratio. Pipeline volumes strong, with $793 million backlog at end of 2025, $139 million new awards in Q4 2025, $128 million new awards added in 2026, and $234 million pending contracts.
• First progressive design-build awards expected, valued at ~$55 million in Southern California. CM/GC method projects in pipeline, including ~$200 million effort for LA Olympics infrastructure.
• Progress on operational improvements: strengthened project controls, enhanced procurement capabilities, used AI-based tools, improved talent retention with better employee experience.

For 2025, Shimmick projects revenue was $395 million, a 12% year-over-year increase, representing 75% of total revenue, with a 10% gross margin and a 400 basis point improvement over the previous year. Noncore projects revenue was $96 million in 2025 compared to $125 million in 2024, with 2025 noncore project gross margin flat compared to negative $23 million in Q4 2024, and full-year noncore project gross margin negative $7% compared to negative 7% in 2024. Consolidated revenue for 2025 was $493 million, with 7% gross margin and adjusted EBITDA of $5 million. Q4 2025 Shimmick project revenue was $84 million, up 4% year-over-year; noncore project revenue was $16 million, down $24 million year-over-year. Q4 2025 Shimmick consolidated total revenue was $100 million. Q4 2025 Shimmick project gross margin was $10 million, up from $2 million in Q4 2024; noncore project gross margin was flat compared to negative $23 million in Q4 2024. Q4 2025 consolidated total gross margin was $10 million, up from negative $21 million in Q4 2024. G&A expense for Q4 2025 was $11 million, favorable 32% compared to $16 million in Q4 2024. Net loss for Q4 2025 was $3 million, favorable $37 million compared to $38 million in Q4 2024. Adjusted EBITDA for Q4 2025 was $4 million, up from negative $27 million in Q4 2024. Ended 2025 with total liquidity of $44 million.

• 2026 Shimmick consolidated revenue expected to grow between 12% and 22%, midpoint 17%, ~$550 million to $600 million. Adjusted EBITDA projected to increase between 200% and 500%, midpoint 350%, range $15 million to $30 million.
• Some Shimmick projects in California and Texas experienced slower burn due to weather, but expect quarter-over-quarter sequential improvement as new projects ramp up.
• Noncore work expected to be mostly burned through, with very little left into 2027.

Q: Good afternoon. Anyhow, congratulations, obviously making nice progress, continuously push some of the legacy business behind you. And there's a lot of initiatives on the forefront. So a couple of questions around -- I'm going to use gross margin as sort of the overlying aspect, but some progressive design awards, I think CM/GC opportunities and electrical opportunities. How does this all play through? And how does that impact margins as we go through 2026?

A: Yes. No, I think overall, gross margins are going to be -- we expect them to go up. It's always a function of the mix of projects, obviously. So however, some projects tend to be closer in the high teens, some projects tend to be in the lower in the teens. But we're going to -- we're watching that balance very carefully to make sure that we're continuously making improvement on the gross margin. But what you'll also see at the bottom line as we grow the revenues, we're very focused on controlling the SG&A around the levels that it is today for 2026. And that's also going to be contributing. It's not just top gross margin, but it's the more efficient SG&A running a larger book of business.

Q: I had a question on SG&A, but before I get there. What about just the -- I think you mentioned you were bidding $600 million to $1 billion a month, but how does the backlog look? Obviously, I think Texas has been very strong with some of our other companies. I mean there's always water projects to do in California. But what's your visibility and feeling on just the overall spend in sort of the macro environment across your territories?

A: Yes, it's great. Actually, great question. So really, very focused in California and Texas, like we've been along with the Pacific Northwest. Waterwise, Texas is very active. California is always active, like you mentioned. So we're seeing opportunities, like, there's really no shortage of opportunities going in the next 12 to 24 months in that kind of volume. Which then -- we don't need all of it in our win rates, but that gets us to be more selective, more strategic about. We really want to be California, Texas, Pacific Northwest and focus on those markets and grow from there. So it really allows us to be -- to pick the right jobs with lower competition, maybe higher margins, more strategic for the future. So it's -- as far as kind of overall pipeline perspective, it hasn't let up in the last 6 months at all.

Q: Then circling back, SG&A came in just shy of $11 million. I think你 indicated that maybe that's a good number that you use on a -- at least for 2026. One, I want to see if that's accurate? And then two, how much more revenue can you have prior to maybe starting to invest a little bit more in the SG&A front?

A: Yes. So I think what we had in 2025 is a reasonable number to assume for 2026 approximately.

Q: Maybe first for me on the guidance for 2026. Can you just kind of talk about some of the puts or takes there, especially on like the EBITDA range? And then just maybe how much of noncore revenue and kind of margin gross profit are you looking for, for the year?

A: Yes. Good question. So yes, so we've simplified the guidance a little bit this time. But looking at the noncore work, we are expecting to burn through pretty much all of it. It's right now about 11% of the backlog. It's going to be very little left, if any, into 2027, so -- and then that's also kind of along the lines of we've booked forward losses on those. So你're going to assume those at 0%. You're going to continue to kind of impact overall aggregate margin. But I think as far as the gross margin, the real key is how fast can you get the new work to be kind of hitting there -- hitting its stride, all these projects that we won and now starting how fast can they start generating revenue and margins. That's really the story of 2026 for us. As far as backlog goes, we finished the year almost at where we started. So we've really stabilized very close to where we started and now with the wins that we've announced today as those contracts come to fruition, we have a clear path to getting over $1 billion in backlog. And it's just going to be a matter of how do you get those jobs going quickly throughout the summer. Did that answer your question?

Q: Yes. No, that was great. And then maybe on the electrical infrastructure side of things, you kind of talked about, I think, in the release and the call, some pending awards on the electrical side of things. So it starts -- it sounds like you're starting to see some traction there. Maybe just a little bit more color, and I think你 noted significant kind of potential there. Just what types of projects and project sizes? Are you looking for there?

A: Yes. So electrical business, our electrical business is a low-voltage, medium voltage electrical business that does a variety of sizes of projects. projects that are very small, $5 million, $10 million all the way to $200 million kind of like more of the larger Shimmick projects, and we're able to do range in that -- up and down in that range. Texas is extremely strong. We're bidding a lot of work in Texas, continuing to bid a lot of work in California, continuing to support the larger Shimmick projects with our electrical capabilities. So there's a lot of activity. And what I'm tracking every month is that the amount of Axia work we're bidding is becoming a higher percentage of the overall bids pretty much every month. So I think it's just a matter of time. We're really hitting our stride now on the bidding side. We're going to see some serious increase in our backlog for Axia work, and then that will translate to revenue in a quarter or 2.

Q: And then on the legacy or the noncore projects, good kind of execution this quarter, and it sounds like they're 90% wrapped up. You just kind of talk about it. It seems like you have a good handle on ramping those up. But maybe just a little bit of color there would be helpful.

A: Yes. I mean we're moving along. It's really 2 projects at this point that are active, that's left. And we're going to get through those this year. The end of these larger kind of more complicated projects, there are always some risk at the end of them to close them out and cost overruns, but we're managing it, and we're pretty comfortable that we're going to -- that's going to really start decreasing as part of our revenue, especially in the second half of this year.