Shimmick Corporation (SHIM) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates a mixed financial performance with a decline in non-core project revenue and gross margin, despite some growth in Shimmick projects. Adjusted EBITDA fell significantly, and liquidity remains tight. The Q&A reveals management's reluctance to provide specific forecasts, causing uncertainty. While there is potential growth in data centers and a strategic shift towards negotiated work, these are long-term prospects. The lack of immediate positive catalysts and management's vague responses suggest a negative sentiment, likely leading to a stock price decline in the short term.
Key Financial Performance
Revenue For the third quarter of 2025, revenue was $142 million, a decrease of 15% compared to $166 million in the third quarter of 2024. The decrease was primarily due to a one-time favorable claim settlement on the GGB project in 2024, which contributed $31 million to revenue. Excluding this one-time impact, revenue grew 5% year-over-year on a like-for-like basis.
Shimmick Project Revenue Revenue for Shimmick projects in the third quarter of 2025 was $107 million, up 5% compared to $101 million in the same period last year. The increase was driven by $25 million from new projects ramping up, partially offset by a $19 million impact from projects winding down.
Non-core Project Revenue Revenue for non-core projects in the third quarter of 2025 was $35 million, a decrease of 46% compared to $65 million in the same period last year. The decrease was driven by the favorable GGB claim settlement in 2024.
Gross Margin Gross margin for the third quarter of 2025 was $11 million, down $1 million compared to $12 million in the third quarter of 2024. The decrease was due to the one-time GGB claim settlement in 2024, which contributed $11 million to gross margin. Excluding this impact, gross margin increased by $10 million year-over-year on a like-for-like basis.
Shimmick Project Gross Margin Gross margin for Shimmick projects in the third quarter of 2025 was $10 million, up 61% compared to $6 million in the same period last year. The increase was driven by $8 million from new projects ramping up, partially offset by a $4 million decrease from projects winding down.
Non-core Project Gross Margin Gross margin for non-core projects in the third quarter of 2025 was $1 million, compared to $6 million in the same period last year. The decrease was driven by the favorable GGB claim settlement in 2024.
Adjusted EBITDA Adjusted EBITDA for the third quarter of 2025 was $4 million, compared to $30 million in the same period last year. The decrease was due to the one-time favorable GGB project settlement in 2024 and the ERP impairment add-back in 2024.
Liquidity Total liquidity at the end of the third quarter of 2025 was $48 million, consisting of $18 million in unrestricted cash and cash equivalents and $30 million in availability under credit agreements.
Backlog Backlog at the end of the third quarter of 2025 was $754 million, a sequential increase of over $100 million from the second quarter of 2025. Shimmick projects now represent 86% of the total backlog.
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Operating Highlights
New project awards: Added $116 million City of Modesto River Trunk pump station and $51 million Bellota Weir modifications projects to backlog, both in California, focusing on water quality and flood resilience. Also added $30 million City of Santa Monica Pier Bridge replacement and $30 million Port of Seattle Terminal 18 Shore Power project.
Market expansion in water and electrical sectors: Significant growth in Texas water market due to funding and infrastructure needs. Strong momentum in electrical segment, particularly in manufacturing and data center markets.
Operational improvements: Expanded gross margin on Shimmick projects by 67% year-over-year. Achieved positive adjusted EBITDA for the first time in 2025. Reduced G&A expenses by 5% quarter-over-quarter.
Strategic shift: Focused on projects aligning with strengths in water and electrical sectors. Shifted backlog composition to 86% Shimmick projects, reducing non-core projects. Achieved a book-to-burn ratio of 1.7, highest in two years.
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Risk or Challenges
Non-core projects impact: Non-core projects continue to negatively impact profitability, with gross margins on these projects being significantly lower or even negative. These projects also represent a higher-than-expected percentage of total revenue for 2025, leading to an unfavorable mix impact on overall gross margins.
Revenue decline: Total revenue for the third quarter of 2025 decreased by 15% compared to the same period in 2024, primarily due to the absence of a one-time favorable claim settlement from the prior year. This decline highlights the company's reliance on such settlements for revenue growth.
Operational risks in non-core projects: Non-core projects are winding down, but there is a risk of additional costs being recognized in future periods, which could further impact profitability.
Liquidity constraints: The company ended the quarter with $18 million in unrestricted cash and $30 million in credit availability, which may limit its ability to invest in growth initiatives or buffer against unforeseen financial challenges.
Competitive pressures in bidding: While the company has a robust bidding pipeline, there is a risk of not winning enough high-margin projects to sustain growth and profitability, especially given the competitive nature of the infrastructure market.
Economic and market uncertainties: The company’s future performance is tied to favorable market conditions and ongoing infrastructure investments, which are subject to economic and political uncertainties.
Execution risks: The company’s ability to convert its growing backlog into revenue and profits depends on disciplined execution, which remains a challenge given the complexity of projects and operational improvements still underway.
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Guidance & Outlook
Market Conditions and Backlog Growth: The company is encouraged by the continued strength in market conditions and backlog growth. It achieved $1 billion in bidding volumes in September and October 2025, with a 12-month bidding outlook of over $9 billion. The company expects its backlog to shift more towards water and electrical projects in the coming quarters.
Water and Electrical Projects: The company anticipates significant growth in water and electrical projects, driven by ongoing infrastructure investments, population growth, and the need for clean water. Texas and the West Coast are identified as key growth areas, with increasing opportunities in the Texas water market and strong momentum in the electrical segment, particularly in manufacturing and data center markets.
Olympics-Related Opportunities: The company sees opportunities related to the 2028 L.A. Olympics, with projects already in the pipeline and ongoing preparations creating additional prospects.
Backlog and Revenue Visibility: The company achieved a book-to-burn ratio of 1.7 in Q3 2025 and grew its backlog by over $100 million sequentially, reaching $754 million as of October 3, 2025. This growth provides greater visibility into future revenue and positions the company for continued growth into 2026.
Full-Year 2025 Guidance: The company reaffirmed its full-year 2025 guidance, expecting Shimmick project revenue of $405 million to $415 million with gross margins between 9% and 12%. Non-core project revenue is expected to range from $80 million to $90 million, with gross margins between negative 15% and negative 5%. Consolidated adjusted EBITDA is projected to be between $5 million and $15 million.
Operational Focus and Strategic Execution: The company plans to maintain momentum by executing with discipline, converting backlog efficiently, and driving consistent profitable growth. It aims to achieve a growing, profitable, and dependable Shimmick in 2026 and beyond.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you talk about how much of the pipeline or backlog Axia represents today and expectations for growth in the coming quarters?
A:Axia represents about 15%-16% of the pipeline, with growth expected as it constitutes a higher volume of bids. Growth is driven by electrification-related work, industrial electrical projects, water treatment plants, manufacturing facilities, and data center projects.
Q:Do you have some projects in data centers? What markets are you seeing activity in, and what is the sizing and margin profile of those?
A:The company is actively bidding on data center projects in Texas, Tennessee, and Georgia. There is a significant shortage of work in this area, and they are pursuing multiple opportunities to add to the backlog.
Q:Can you talk about cash flow dynamics in the quarter and expectations for the coming quarters and longer term?
A:Cash flow is impacted by non-core legacy projects, which are expected to be completed by the end of 2026. As the backlog increases and translates into revenue, cash flow is expected to improve. The company ended the second quarter with $48 million in liquidity and is comfortable with its position.
Q:What gives you confidence to hit the lower end of the $5 million to $15 million guidance, especially with seasonality in the fourth quarter?
A:Confidence comes from new higher-margin work starting to offset losses from non-core projects. These newer projects are expected to drive better results despite seasonality.
Q:How is the strategy to do more negotiated work and less bidding work progressing?
A:Negotiated work is becoming a larger portion of bidding volume. Several projects are already in negotiation, and the company expects to see benefits from this strategy by 2027. The goal is to achieve a 50-50 mix of negotiated and fixed-price work for risk balance.
Q:Do you target a certain percentage of your backlog to be negotiated work?
A:The goal is to reach 50% negotiated work in the backlog, which is considered a healthy risk-balanced mix.
Q:Can non-core work maintain flat to slightly positive margins going forward?
A:Positive margins in non-core work are due to scope growth and negotiating additional revenue. The company aims to keep margins stable but acknowledges there is work to be done through 2026 to complete these projects.
Q:Review of Unclear Management Responses
A:Management avoided providing specific forecasts for liquidity, citing the business's lumpiness and various factors like advanced payments and retention collection. They also used vague language when discussing the margin profile of data center projects and did not provide detailed numerical insights.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ERP
GA
GGB claim
GGB project
Noncore project
Olympics
Shimmick project
Texas
Ural
West Coast
award
backlog City
book ratio
claim settlement
decrease GGB
discipline
expense
fruition
impairment
increase backlog
margin Shimmick
market condition
pace
population
progress project
progress result
project Shimmick
project burn
project decrease
project increase
project port
quality
quarter
remainder
scale
settlement margin
strength market
SHIM Transcript
Shimmick Corporation (SHIM) Q1 2026 Earnings Call Transcript
Positive5-14
The earnings call reveals strong financial performance, with significant revenue growth, improved gross margin, and increased net income. These factors indicate operational efficiency and effective cost management. The absence of discussions on strategic initiatives or risks could be a concern, but the financial results alone are strong enough to predict a positive stock price movement. The lack of additional insights from the Q&A does not detract from the positive financial highlights.
Capricor Therapeutics, Inc. (CAPR) Q4 2025 Earnings Call Transcript
Positive3-12
The earnings call summary indicates strong market conditions, backlog growth, and revenue visibility, particularly in water and electrical projects, with promising opportunities related to the 2028 L.A. Olympics. The company reaffirmed its 2025 guidance, which suggests confidence in achieving financial targets. Although there are some concerns about non-core project margins, the overall sentiment is positive, supported by strategic execution and growth potential in key markets.
Shimmick Corporation (SHIM) Q4 2025 Earnings Call Transcript
Positive3-12
The company showed strong financial performance with improved gross margins and a positive EBITDA shift. Strategic project wins and backlog growth, particularly in water and electrical projects, indicate future revenue potential. While some risks exist, such as project ramp-up delays and procurement challenges, these are being addressed. The Q&A highlighted positive analyst sentiment on margins and backlog visibility. Overall, the company's optimistic guidance and strategic focus on high-margin projects suggest a positive stock price movement in the near term.
Shimmick Corporation (SHIM) Q3 2025 Earnings Call Transcript
Unknown11-13
The earnings call indicates a mixed financial performance with a decline in non-core project revenue and gross margin, despite some growth in Shimmick projects. Adjusted EBITDA fell significantly, and liquidity remains tight. The Q&A reveals management's reluctance to provide specific forecasts, causing uncertainty. While there is potential growth in data centers and a strategic shift towards negotiated work, these are long-term prospects. The lack of immediate positive catalysts and management's vague responses suggest a negative sentiment, likely leading to a stock price decline in the short term.
SHIM Slides
Shimmick Q4 2025 slides show turnaround despite earnings miss2026-03-12
Shimmick Q3 2025 slides: core project growth offsets overall revenue decline2025-11-13
Shimmick Q2 2025 slides: revenue jumps 42%, launches new electrical subsidiary2025-08-14
Shimmick Q1 2025 slides: improved margins despite continued net loss2025-05-14
SHIM Report
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