SHIM - Earnings call transcript Q2 2024 | Shimmick Corporation Common Stock

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Operator

Greetings, and welcome to Shimmick's Second Quarter 2024 Earnings Conference Call.

[Operator Instructions]

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Anthony Rozmus, Investor Relations. Please go ahead.

Unknown Executive

you Shimmick's us Second thank call today's and discuss to Quarter morning, for on joining conference Good XXXX results. presentation website, today's section for are the on Slides Investor of our www.shimmick.com. available Relations

incorrect. will if During this expectations assumptions key any materially Actual of are which from forward-looking uncertainties. are based to and could on our and risks make subject results conference current statements our management call, differ forward-looking assumptions statements

reports and We be principal our our and measures. performance Exchange that and uncertainties presentation found Investor Relations also affect with identified website. not may filings Commission, financial update to We also statements. the risks any duty our can Today's Securities references the includes do non-GAAP in which a forward-looking undertake on to

information the press in refer You measures company's and of the should for release the historical to measures. quarter to financial reconciliations non-GAAP information definitional GAAP second comparable contained

the pleasure that, Steve turn it's Richards, my call With over CEO. to to Shimmick's

Steven Richards

thank distractions and lots joining of Interim CFO. all year, and million Shimmick's which X the of Good for settled claims liquidity Mobley, today's legacy for later X cash time us settlement call. and -- key joined $XX legal Amanda We continuing this the our be also our improve to transformation. costs will paid eliminates morning, is you project with I'm continuing by on some to

projects in which As includes an the Amanda reduction discuss $XX legacy $X revenue further later. of million part settlement, quarter gross will the additional million in margin, a

loss second a X% were versus front look by a delivered this X% in sequential we're margins with $XX XXXX, and the quarter, net the quarter totaled the Shimmick $XX for compared building revenues and Shimmick as to gross encouraged That settlement, increased margin an of quarter experienced year quarter of costs. the said, projects X% pending million. million of we project driven million decline accounting momentum. gross revenue and XXXX from orders for forward of extensions, million quarter on by $XX the for schedule first this to $XX the of $XXX ago. margin first After adjusted a improvement EBITDA second loss million change XXXX off

did related breakdown As results that those before that between results. on last transaction AECOM provide provide projects, call, we'll legacy to we the our of breakdown began projects, of projects AECOM will these the the details transaction. a specifically Shimmick after more Amanda and sale started

overall quarter, legacy mods order note, in of and donors. as to in project the However, our legacy the primarily cost recoveries pursue of to experienced, continue overruns to second gross fees settlement was margin agreement additional projects related to and prior loss well the weaker on from legal contract as

and remain project due backlog Shimmick with we projects, by Although timing cost have legacy projects near-term the to projects. we legacy encouraged experiencing headwinds converting progress to versus our we are issues seen

At versus of the portion continue represent the backlog larger second of our to Shimmick projects legacy quarter, a projects. end

quarter. strong second overall end backlog at $XXX of as of remained the Additionally, million our the

federal pipeline robust a increases we water. of a have future to to which alongside grow funding continue We in work, demand for expect growing and

cogeneration replacement Most call, our Antioch, we of bidding the be secured the million end in As bear of uptick second recently, this project win Diablo second quarter in estimating to the the responsive late $XX.X see Delta system described added the we on quarter, following in to for California. for pipeline we We're personnel last to efforts beginning a fruit. a work.

to exhaustor go-forward project The infrastructure recovery electrical systems engine, The on existing and with the resource will focus cogeneration gas, and operates demolition district's existing cogeneration duration. Delta system promote of new than generated again power from and on reliable the projects. XX% cogeneration company once reinforcing that technical improvements include projects. more funding capabilities, of with plant plant is efficient consumption projects work in digester more the system market plant, gas years associated at Public Diablo is existing Shimmick's More higher-margin, vision of includes that demolition treatment in-sourcing replaced allows reality equipment, work use series. a core our wastewater will our upgrades water-related condition and aid performance. storage coming predictable average and boiler. water-focused of and control Shimmick significant also repeat a and digester skills and customers an asset-light, This for programs long-term reduce make flow grid projects a of X to public targeting in customers. a

also like transformation. to the update Shimmick's on address take I'd some to time

for California aware, on are of and other critical has successfully and increasing our the in consistently by projects structure clients operating activity for California, to state has California. you with delivering market. and and of on Northern complex time our winning increasing forecasted the infrastructure bid part projects our transformation history redefining field water deliver in long and across plan company as focus areas noncore The number on the and of of many increasing cost initiatives the a safely grow focus California. critical model with water in supporting size As California in infrastructure rightsizing Shimmick and decades. projects the estimators the our Today, infrastructure include critical projects a year by market reducing budget to of grown on These to the water for complexity Southern announced overheads of our initiatives our each renewed

market underway, well in to ourselves the position operations to Our the best transformation at market. we our continue California capture to is see work refocusing and we towards Shimmick

to at the been the Richmond treatment for San a Richmond. our of to upgrades high-priority the its was the Francisco improve to on current and and designed I'd both critical rehabilitation to both a Shimmick meet a completed Bay To was environmental treatment million in highlight has like milestone Shimmick wastewater needing of next impact slide. and to this, area. identified take series execute moment as significant Turning future Richmond project In quality plant, address which regulations. city recently $XX facility the XXXX, to brought due

Shimmick basins only system upgraded the strategic footprint. environmental constructed removed and buildings, not plant, and facilities. the error improvements outdated have reduce ration force efficiency These of diffusion its with operational unused enhanced also new state-of-the-art but the

gas Now reduced energy operates significantly to with residents orders cutting environment. city. and the system the while treatment for and communities environment, a project the infrastructure This new emissions needs that the project usage, project This of for Richmond. Richmond wastewater efficiently. has successfully life completed, means benefit more greenhouse both sustainable reduced the costs The cleaner of a solutions testament is improved overall and Shimmick's commitment delivering chemical quality to

to our look and vital With are financial in of that, We outcome Amanda, continuing sector. our who I'd like results. to will proud to this over the work call discuss turn forward the

Amanda Mobley

made comparisons same a Steve. year-over-year be to compared All Thanks, will the XXXX. basis today on period in

$XX For offset had the jobs, net of largely infrastructure a revenue as equity period. job. loss of more and increase million to the and a the for the of primarily down job second million million partially as on to the by water recorded result slide, We from existing prior of next $XX lower discuss legacy mentioned settlement, legacy as in on period, $XX loss we quarter, activity Again, unconsolidated revenue well year the new and earlier joint result for year $XXX a a driven project loss the compared a and million compared project by prior of as ventures. an pointing settlement of net

pointing loss a compared $X quarter Revenue Second million a to compared quarter timing $X XXXX $X the recognized ago. was down. in of decline year a the second projects adjusted million loss EBITDA to year prior $XX Foundation's was of of result $X of was in million a on revenue of The million million period. in jobs

June and agreement a projects of XXXX, and to XXXX, reminder, into an a ended months will XX, wind XX, $X the was for negative the the million during we assets on year. As recognized margin projects and X foundations June negative sell down foundations Gross work million noncore respectively. $X entered

jobs substantially the XXXX XXXX, The June legacy project the increase by negative a million a to margin the on revenue cost during result Legacy ended gross million XXXX the by fiscal year. margin continued were $X months XX, overruns X overruns and gross to during incurred projects to of in which completed impacted cost was $XX of and compared settlement and decreased million, primarily $XX costs. negative legal X

margin down period. completion, additional to the projects gross some further in be with no may will continue in all be cases, As be recognized, which will these recognized projects, there costs and to associated loss the wind legacy

ended and for respectively. X ended recognized XXXX, June legacy was XXXX, a months was a XX, on recognized million negative loss for loss Revenue June projects negative the XX, these the the months negative $XX XX, Gross million million these million $XX and ended June X and XXXX. X $X a XXXX, $X for on margin June projects months legacy XX,

to We costs. these pursue opportunities all offset actively continue to

million resulting balance XXXX totaled under and and respectively, totaled and facility million, in Unrestricted equivalents XX, Turning availability $XX $X credit million. $X to sheet. June facility the $XX liquidity cash and cash of total million the at credit revolving

next the slide. to Turning

year. receive mentioned to a Steve on in claim this large $XX cash legacy later As a earlier, to expect million related we project

the Legacy estimate by second our settlement Project. Loss impacted a However, in from quarter results the on change and agreement were

a of the of $XX condensed XXXX. million, X recorded and June within a estimated million a result contract a ended XX, X $XX revenue, for to forward consolidated of months As to adjustment operations which statements loss and the and previously revenue, recognized the reduction dollar settlement the loss includes net company reserves, million $X

receive and While litigation quarter, expect has liquidity costs. this the helped this recorded in later eliminates cash we our support payment our the position revenue to which year, continuation impacted obviously of

prepaid million for credit of of from equipment the related us and $XX adjustments the the completed value for the X, through facility. yard book We transaction a $X our rent The and to net disclosed revolving agreement [ million previously sale remaining sale Tracy, and to The using lease. the we under in received proceeds proceeds California. August were net million continue of February borrowings equipment million net under property had ] after of On used equipment closing the transaction XXXX, back for confinated of repay costs. yard yard allows a received the XXXX $XX approximately lease $XX.X of the X-year

of year that January revenue after fiscal flat For X, XX, December excluding expect XXXX, margin gross the to ending foundations noncore project's generally now Shimmick XXXX, the revenue remained project X% X%. $XX million with we for between fiscal ending year

revenue to settlement. to XX% loss of of million gross margins due projects negative million project XX% with legacy $XX Legacy to $XX the

legacy to strong and our awards in a execution change recorded cost as guidance the our XXXX costs that our be pending continued will with for on operational XXXX. results our efforts other Additional the related work as believe our legacy improving our loss project execution We projects. robust back strategy, our overruns. backlog further for half well weighted and pipeline, in of The growth to reflects off momentum quality

I'd remarks. like over that, Steve now additional it turn some to With for to

Steven Richards

In these off conclusion, project working in 'XX by are have we the XXXX. finish to are we hope Amanda. we Thanks, encouraged the is loss loss the the projects to to related and end behind made as progress line backlog. of the note close important legacy us that It legacy approaching distractions and continued

of be held legacy the albeit other to to jury the And are in anticipated. we We half those year beginning on projects job. trial our large slower claims itself, second correct than expect loss on the

for business nature these to start-ups in term take It is of advance. to reinforce short remains Shimmick ahead believe unchanged. the challenges to positioned as to We core important favorably our we new that strategy project continues continue sizable to be market advantage expect opportunities to be our

to again infrastructure growth. vertical and M&A Operator, minimizes may want towards water for enhanced their with once a one line team higher Shimmick our coupled margins transform questions. strategic CapEx open risk integration activities, companies. tireless our efforts thank America's best to work Our We margin, of we into potential and portfolio as now for position low shift for the us you

Operator

[Operator Instructions]

Capital Roth Our first Sweeney question is today of coming from Gerry Partners.

Gerard Sweeney

and there, I projects the maybe that you give won, was you a you're quarters? if so funnel on seeing but out translates projects some little not that what X wondering terms of activity, maybe in background over how of us could of X, Steve, next X, on new much X, qualitative X, the the bit thoughts the

Steven Richards

with Northern in having California, them fit in in our to million to to size, those $XX Southern California, seeing million the there that Well, we're the projects really average profile both lot a number we duration. of your California like $XXX the of be out down filter projects through market, activity projects

of I've allowing those that to to amount like target our XX%. And about so good lot up you've about a encouraged what projects, that seen a amount us been work is self of most is perform of

pipeline. good So

-- we're division Northwest more we and We've our the on of actually, to work. in Gerry, that plus see, the both Electrical adding estimators, take Southwest divisions pipeline

So excited pretty it. about

Gerard Sweeney

on And front. legacy some follow-up real -- Could that that then little questions over you again of guidance on the probably go quick? could obviously, on I then gave I And projects, front. you have a you that think just bit

Steven Richards

a see into one But jury happening, Yes. later what the we mentioned on this our see projects we release year. trial Legacy in Amanda will me entering that of jump we in this. with

by get most nearly of claim off. the majority off manufacturing by encouraged that work. will the complete. got more and we'll enter a It and piece working to job, part job of the into So of traditional the spring, from or then we're installation that finish standpoint We've that the backlog difficult in

be The backlog most to majority as the by completion for any numbers would the milestones burn you approaching other difficult are want later Amanda, add project, content? and the 'XX, project. overall far end A the work the do to the for interim as of of in what's the color on Legacy 'XX again, completion

Amanda Mobley

we'll jobs, remarks majority down backlog to through into see decrease of going continue XXXX and will same the the the winding that legacy of kind XXXX the done that and little a backlog. be there Yes, there continue to the

Gerard Sweeney

have there other you an are that you're any that settlement for outstanding could to other And losses? you still the or you some is this obviously, then curious had there on a was project lot going on. project But then trial and recoup -- opportunity claims I

Steven Richards

Sure. system. change coming the orders only see course potential Yes. certainly we the flow. Normal always not improve of cash to have business they through but grows, margin And

Gerard Sweeney

normalized legal some And just ramp how trials, more to And settlements much some maybe would fees this G&A quarter this these as of trial, up, SG&A the a normalized, fees? were once you the but in run obviously, in even curious a you to through sort be of closer as what get legal rate? get of

Steven Richards

quarter? hit the we that's to want legal bit. you the fees sure available do Amanda, that in on rightly incurred I'm not

Amanda Mobley

million information in the We that later, queue the Yes. the see quarter. come legal would out more for will to but for fees about $X

Steven Richards

And you're right, Gerry.

example, from those be approach just press or we rate, legal we for that of ready up for be depositions normal see it standpoint described, As the the Amanda off. trial, trial, whether fees really the run the what fall the ramp would to activity,

costs would for it job overhead. an so And be improvement and

Gerard Sweeney

slow And Is the infer we about -- through the that could some loaded? would margins rest on you've half you just sort we talked circumstances Barring down, things here digging weather Shim made you or anticipate projects, of loaded, and around improving the sequential back year? that you on what half gross when of margins. say maybe improvements unforeseen back would

Steven Richards

right. that's Yes,

just and guidance, higher came was end the guidance, through Our we've got still out lower range what the of we there.

would see that you the improvements next So X tell quarters. we over that

Operator

Craig-Hallum. The from next Aaron Spychalla is of coming question

Aaron Spychalla

be on a what little Can that $XXX a would of to you $XX model. anything behind targeted about of First, kind project size hit a margins, million. else anything talked You more just helpful. But share you million little operating just new entails? that bit

Steven Richards

Yes.

which and is be focused in We're little Suisun our a offices, set Oakland. we'll regional Irvine office already the major in east California our then with area. City, regional of bit headquarters So on there geographically, up

our for local the that got but that teams and the right geographic also know jobs. market, local chain the only we've the So presence not supply key estimating running the are or leadership staff our

really and good feel So that's craft labor that this. about following the

drop mousetrap we're best key way that to in we as standpoint, to [ find for seen the job, the of cost most get a win bidding haven't ] we'll market. we our efficiently, share opportunity us, and to the is of work. that finish I find from think it margin a And that margin the the right

teen see job still margins. in area area being upper the for we that as So target

Aaron Spychalla

of on personnel. just the then addition And estimating more

expected feeling pipeline move today labor you are as forward? market, you With of the about your and have for and labor how business growth, capacity capacity just and you just in kind the just availability overall

Steven Richards

teams, first all, able to Right. do is regions. we're able our with to Well, share we're work of across what

as our be the for pursuits. are our to we've so market coming the having additional that emphasis on the -- them folks out of support California national And got

a that immediately we And add that's over. value can so transfer

of got feel the good the really about networking staff, other recruiting a industry on. the able going so We've to good a right lot only From we've being fit but get recruited I We're what talent, great those standpoint in business. want this -- the feel those we're connectivity culture and far. of is the not people. who about portion. We have can to scrutinizing folks that right bring that we've

Aaron Spychalla

then projects, but you're the And starting on that got just higher year? some of after to earlier sounds just the mean, the you year saw and delays for the in obviously see half, new the start-up this like improve back kind execution project of guidance, it I you costs

Steven Richards

see, Yes. its mobilization job major And year, We're we in That's yes. you're the into seeing, and pace. is keeping last Elsinor. of now for margins what well we started that revenues and past project rate in example, we won run

that jobs move a of would we the year through what needle see example that So of good us. for on the be balance the

Aaron Spychalla

about outlook coming kind just and trends think question last flow. just of cash maybe XXXX? in we head as that Can quarters just how kind you then talk into you on of And the

Steven Richards

Yes. purchase quarter significant, finishing work, the remarks, The been activities not that as asset we only finishing later business Foundations those and this announced or the in sale over have year. assets previously, last her mentioned the of up had work Amanda

billion cash So the liquidity. then into provided leaseback $XX in provides And system. some the addition, that sale the

And then is standpoint. certainly, that liquidity with up the engineers settlement nicely $XX the a of for from the core million

the the it's feel improve of balance for liquidity, well finishing to step a make the projects. good the decisions not only very and about those but So year we

Operator

and in today's today's your like and and session you Corporation. Shimmick Ladies gentlemen, interest would We concludes that conference call. to participation for question-and-answer thank

log enjoy your may of this or rest at off the lines You disconnect webcast your time, day. and the

Shimmick Corporation Common Stock (SHIM) 16 Aug 242024 Q2 Earnings call transcript