16-05-2025
Shimmick Corp (SHIM) Q1 2025 Earnings Call Highlights: Revenue Growth Amid Ongoing Challenges
Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Shimmick Corp (NASDAQ:SHIM) reported a revenue increase to $122 million in Q1 2025, up from $120 million in the same period last year.
Gross margin improved significantly, with a positive $5 million compared to a negative $1 million in the previous year.
The company has a strong liquidity position with $71 million, providing the capital needed for strategic and operational plans.
Shimmick Corp (NASDAQ:SHIM) has a robust proposal pipeline of approximately $2 billion in upcoming bids, indicating potential future growth.
The company is seeing increased bidding activity, particularly in the electrical and technology-driven infrastructure market, which is expected to grow significantly.
Shimmick Corp (NASDAQ:SHIM) reported a net loss of $10 million for Q1 2025, although this is an improvement from a $33 million loss in the prior year.
Legacy projects continue to impact financials negatively, with a gross margin of negative $1 million for these projects.
There is uncertainty in the market due to tariffs and funding streams, which has caused a slowdown in bidding for larger public projects.
The company faces potential long-term challenges from rising prices due to tariffs, which could strain client budgets and lead to project downscaling or cancellations.
Despite improvements, the adjusted EBITDA remains negative at $-3 million, indicating ongoing financial challenges.
Warning! GuruFocus has detected 5 Warning Signs with SHIM.
Q: Can you discuss the visibility into the guidance for the year on Shimmick projects, both on revenue and gross margin, given the performance in the first quarter? Also, could you elaborate on what you're seeing on the tariff side of things? A: Yes, we've seen performance improvement in Q1, and while it's not yet at the guidance level, operational improvements are underway. We feel good about our guidance for both Shimmick and legacy projects. Regarding tariffs, there was a brief pause due to uncertainty around funding streams, but activity is picking up as clients aim to lock in prices before potential increases. We are optimistic about Q2 due to increased bidding activity.
Q: Can you quantify the new awards and extensions that are pending? Have they been seen in the second quarter, or are they still to come? Also, could you touch on the Palisades project and its potential size and contribution? A: The Palisades project is ongoing and contributes to Q2 activity. We have projects where we were the low bidder, but awards were paused. We expect to see them in Q2. Bidding activity is high, and we are negotiating certain contracts and change orders. The high level of bidding activity is encouraging, and we anticipate positive outcomes.
Q: With the added estimating side and building out the electrical piece of the business, what kind of revenue capacity can the business support today? Are there any other investments planned? A: We are comfortable with our liquidity and have largely completed our investments, expanding our sales and estimating team. Our current overhead structure can handle $600-$750 million annually without significant additional overhead. We have excess capacity, especially in water and electrical, and see good opportunities for the rest of the year.
Q: You mentioned potentially accelerating some legacy projects in 2025. Can you provide an update on that potential? A: We are working on accelerating a couple of legacy projects, but there are still some scope growth and additional client requests that might push timelines. We are striving to bring the majority of the work forward as much as possible.
Q: How does the company view its current exposure to tariffs, and what measures are in place to mitigate any potential impacts? A: We analyze our exposure to tariffs by looking at commodity exposure, inflation, and equipment prices. We are approximately 96% bought out on these exposures, meaning we have minimal exposure to tariffs with our existing backlog.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
