SHIM

Strategic Progress

• Continued execution against core strategic priorities: exiting low-margin non-core work, increasing disciplined bidding activity, growing high-quality backlog, driving operational improvements, and positioning the firm for sustainable long-term growth.
• Added $138 million in new project bookings in Q2 2026, achieving a book-to-burn ratio of 1.4, marking the fourth consecutive quarter of positive book-to-burn. Total end-of-quarter backlog reached $991 million, the highest level since Q1 2024. An additional $221 million in new awards was secured after quarter end, bringing combined backlog and pending awards to over $1.2 billion.
• Established a dedicated mission-critical infrastructure business unit to capture growing demand in high-potential subsegments including data centers, advanced manufacturing, defense, renewables, and critical minerals, allowing the firm to better serve customers and leverage existing core capabilities.

Market and Backlog Quality

• Monthly bidding volume remains robust, consistently ranging between $500 million and $1 billion, and win rates are in line with historical levels, reflecting the discipline of the firm's bidding process and the quality of pursued opportunities.
• Geographically, the firm maintains a strong focus on core markets of California, Texas, and Washington, while expanding into adjacent regions to follow key customer investment programs, particularly through the new mission-critical unit. Only projects that align with core capabilities, have lower risk profiles, and offer attractive margins are pursued.
• Recent post-quarter awards demonstrate diversification across high-growth core segments: $80 million LA Metro bus rapid transit project, $124 million Coyote Creek flood protection project in Northern California, $42 million Walnut Creek wastewater treatment plant expansion in Texas, and a $20 million electrified plant project at UC Berkeley.

Operational Improvement

• Safety remains the top priority, and 2026 year-to-date safety performance is tracking ahead of 2025 levels, reflecting strong team discipline and indicating broader operational excellence.
• Enhanced project controls and cost management initiatives implemented over prior quarters have driven consistent margin performance despite a dynamic operating environment. Less than 10% of backlog booked in the past 12 months has been converted to revenue to date, providing significant long-term revenue runway.
• As newly awarded projects (most currently in pre-construction or early ramp-up phases) move into active execution, the firm expects improved overhead absorption and further margin expansion.

• Management updated full-year 2026 revenue guidance to a range of $525 million to $575 million, representing approximately 12% year-over-year growth at the midpoint. The downward revision from prior implied guidance reflects the full removal of non-core work from backlog that was not expected to contribute any gross margin to full-year results anyway.
• Management reaffirmed the existing full-year 2026 adjusted EBITDA guidance range of $15 million to $30 million, which represents approximately 350% year-over-year growth at the midpoint.
• Management expects sequential quarter-over-quarter revenue and margin improvement in the second half of 2026, with favorable year-over-year mix impact from the elimination of low-margin non-core work, as newly awarded large projects complete startup delays and ramp up to full execution. Long-term, the firm targets a return to its historical revenue size of approximately $750 million per year while maintaining and improving current margin levels.

Schimmick operates two core project segments for financial reporting: core Schimmick projects and non-core projects. In Q2 2026:

• Core Schimmick projects: Generated revenue of $96 million, a decrease of $17 million from $113 million in Q2 2025. This decline stemmed from the completion of older projects in 2025, partially offset by the ramp-up of newly awarded projects. Core project gross margin was $11 million, down $4 million from $15 million in Q2 2025, driven by lower revenue from winding down legacy projects partially offset by higher margin from new ramping projects. Core projects contributed 89.7% of total consolidated revenue in the quarter.
• Non-core projects: Generated revenue of $11 million, a $5 million decrease from $16 million in Q2 2025, driven by the termination of the Chick Lock replacement project in Q1 2026 and continued wind-down of all non-core assets. Non-core gross margin improved to $2 million in Q2 2026 from a negative $7 million in Q2 2025, as 2025's non-core cost overruns on loss-making projects did not recur. Non-core projects contributed 10.3% of total consolidated revenue in the quarter. Non-core backlog now represents less than 3% of total company backlog, down from much higher levels in prior periods.
• Consolidated totals: Total revenue was $107 million (vs $128 million in Q2 2025), total gross margin was $12 million (up $4 million, or 53%, from $8 million in Q2 2025), and gross margin as a percentage of revenue improved to 12% from 6% year-over-year.

• Project startup timelines can extend beyond the typical 3-4 month expected range due to factors outside of the firm's control, such as client permitting delays, which can slow near-term revenue growth. The West Virginia data center project and other large recent awards faced longer lead times than initially expected in Q2 2026, contributing to lower-than-expected revenue in the quarter.
• Legacy non-core loss-making projects, including the terminated Tennessee project, still require a small amount of residual work over the next several quarters, though management notes no additional material risks are expected from these remaining activities.
• All forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from current expectations, with key risks detailed in the firm's SEC filings. There are no new material risks disclosed beyond those already filed with regulators.

Q: The analyst notes Q2 2026 revenue came in below expectations despite growing backlog, and asks for detail on second half 2026 expectations and whether the current quarter's margin level is representative of the broader backlog. / A: Management explains that near-term revenue was slowed by client-driven permitting and startup delays that pushed ramp-up for several large new projects to 6-7 months from the typical 3-4 months. Management confirms that the Q2 2026 margin level is representative of the broader current backlog, and expects significant revenue and margin improvement in the second half of 2026 and into 2027 as delayed projects begin execution.

Q: The analyst asks about the firm's long-term target revenue size and how growth will translate to profitability as backlog expands. / A: Management states the firm's target is to return to its historical size of $750 million in annual revenue, with gradual top-line growth from current levels. SG&A will remain roughly flat as revenue grows, allowing operating leverage to translate top-line growth into strong EBITDA and net income improvements while maintaining current margin levels.

Q: The analyst asks for an update on growth opportunities in the data center and mission-critical segment, including expected timeline and margin levels. / A: Management confirms the new dedicated mission-critical division is gaining traction, with the West Virginia data center project entering pre-construction and additional large opportunities in Texas and other states. Management expects the segment to become a sizable portion of the business within 12 months, with project margins expected to fall in the 15% to 20% range, which is higher than the firm's current consolidated average.

Q: The analyst asks about free cash flow dynamics and the outlook for improvement as new projects ramp up. / A: Management notes that Q2 2026 was the last quarter with demobilization costs for the legacy non-core Tennessee project, and legacy non-core work now makes up less than 3% of total backlog. All new projects are structured to be cash positive from startup, so management expects sequential quarterly improvement in liquidity and free cash flow, with a target of achieving strong free cash conversion alongside positive net income.