Shimmick Reports Q2 2026 Results: Full Earnings Call Trans...

Shimmick (NASDAQ:SHIM) held its second-quarter earnings conference call on Monday. Below is the complete transcript from the call.

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The full earnings call is available at https://shimmick-corporation-2q26-earnings.open-exchange.net/registration

Summary

Shimmick Corporation reported consolidated revenue of $107 million for Q2 2026, with a gross margin expansion to 12% and adjusted EBITDA growth to $4 million.

The company achieved a record backlog of $991 million, with significant new project awards totaling $138 million in Q2 2026 and an additional $221 million secured post-quarter.

Strategic focus remains on winding down non-core projects and expanding in core sectors like mission-critical infrastructure, with the establishment of a dedicated business unit.

Shimmick's book-to-burn ratio was 1.4, marking the fourth consecutive quarter of positive performance, indicating strong demand and project win rates.

The company reaffirmed its full-year 2026 revenue guidance of $525 million to $575 million and adjusted EBITDA guidance of $15 million to $30 million, highlighting expected growth in higher-margin projects.

Operational improvements included enhanced project controls and cost management, contributing to consistent margins and improved safety performance.

Geographical expansion focuses on core markets like California, Texas, and Washington, with a strong emphasis on water infrastructure and mission-critical projects.

Full Transcript

OPERATOR (Operator)

Good day and welcome to Shimmick Corp second quarter 2026 earnings conference call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded at this time. I'd like to turn the call over to Anthony Rasmus. Please go ahead.

Anthony Rasmus, Investor Relations

Good afternoon and thank you for joining us on today's conference call to discuss Shimmick Corp's second quarter 2026 results. Slides for today's presentation are available on the Investor Relations section of our website, www.shimmick.com. During this conference call, management will make forward-looking statements based on current expectations and assumptions which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect.

We identify the principal risks and uncertainties that may affect our performance in our reports and filings with the Securities and Exchange Commission, which can also be found on the Investor Relations website. We do not undertake a duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the Company's second quarter press release for definitional information and reconciliation of historical non-GAAP measures to the comparable GAAP financial measures.

With that, it is my pleasure to turn the call over to Yaral Yaal.

Yaral Yaal, CEO

Good afternoon and thank you all for joining us. On today's call, I'm joined by Todd Yoder, Shimmick Corp's CFO. I'd like to start with recognizing our team's unwavering efforts and commitment towards delivering the work we undertake safely and to the satisfaction of our clients as we build our nation's infrastructure. With that, I'm going to start by discussing our financial results for the second quarter of 2026. During the second quarter we continued to execute on our strategy by making further progress winding down non-core projects while driving operational improvements across the business that enhance efficiency, improve execution and support consistent margins. We delivered consolidated revenue of 107 million, expanded gross margin to 12% and grew adjusted EBITDA to 4 million. What's encouraging is that activity levels continue to improve and several projects that had longer ramp-up timelines are now beginning to move forward with others approaching the start of execution. I will touch on that more in a bit. We added 138 million in new work booked in the second quarter which brings our total backlog to 991 million, its highest level in two years, and subsequent to quarter end we secured 221 million in additional new awards which will contribute to our backlog in 2026.

Our second quarter book-to-burn ratio was 1.4, reflecting our fourth consecutive quarter with a positive book-to-burn. Looking ahead, we expect activity levels to increase across both existing and newly awarded projects. As an example, a large project we secured in February only commenced in July, illustrating the longer lead times we have been experiencing and providing confidence that project activity is beginning to translate into execution. Also, to demonstrate the strength of our demand, we've only converted less than 10% of the backlog booked over the past 12 months into revenue to date, providing meaningful visibility and supporting our expectations for continued revenue growth in the upcoming quarters. We continue to secure new work in our core and mission-critical end markets and our teams are well positioned to execute on that backlog and drive consistent revenue growth. Overall, our results reflect continued execution against the priorities we laid out: exiting lower-margin non-core work, increasing bidding activity, growing backlog, driving operational improvements, and positioning the business for sustainable growth.

With that as context, let me turn to some of our recent project wins and the markets where we see the greatest opportunities ahead. Turning to our end markets, we remain encouraged by the opportunities we're seeing across our core and mission-critical sectors. Demand remains strong across mission-critical infrastructure. To further strengthen our positioning in these markets, we have established a dedicated Mission Critical business unit focused on pursuing and executing these opportunities, allowing us to better serve customers and capitalize on the growing demand we're seeing.

The data center market continues to be a significant area of focus. We have several large outstanding opportunities and continue to see strong bidding activity. One of those projects, the data center build in West Virginia, is now transitioning into the pre-construction phase this month and construction work is anticipated to start in the next 60 days. We are gaining traction with customers and are encouraged by the progress we've made across the mission-critical segment, which also includes advanced manufacturing, defense, renewables, critical minerals and other subsegments that contain work scopes that fit our skill set very well.

More broadly, bidding activity remains robust with monthly bid volume consistently ranging between approximately 500 million and a billion. Importantly, our win rates continue to perform in line with historical levels, providing confidence in both the quality of the opportunities we're pursuing and the discipline of our bidding process. Geographically, we continue to see strong opportunities across our core markets of California, Texas and Washington, while also following key customers to adjacent regions as they expand their investment programs.

Especially through our new Mission Critical business unit, our focus remains on projects that align with our core capabilities that provide lower risk profiles and opportunities for higher margin where we believe we can deliver the greatest value, generate attractive and consistent long-term returns. Taken together, we believe the strength of our pipeline, consistent bidding activity and growing presence in the mission-critical markets position us well for future growth.

Our backlog grew once again to 991 million at the end of second quarter of 2026. This represents our highest backlog level since the first quarter of 2024, reflecting both improved win rates and continued discipline around the work we pursue. Subsequent to quarter close, we announced more than 265 million of new awards across our water, industrial and energy and infrastructure segments. These wins further strengthen our backlog and highlight continued demand for the specialized infrastructure solutions we provide across some of the most attractive end markets in the country.

Consistent with our focus on building higher-quality backlog through lower-risk collaborative delivery projects, our Myers Shimmick joint venture along with Axia Electric advanced into the construction phase of LA Metro's North Hollywood to Pasadena Bus Rapid Transit project. The award, which contributed approximately 80 million to backlog, strengthens our strategic industry partnerships and demonstrates our ability to execute complex multidisciplinary infrastructure projects.

Expanding our leadership in water infrastructure and climate resiliency, we were selected for the 124 million Coyote Creek flood protection project in Northern California where we'll deliver critical flood mitigation improvements that enhance community resilience. We also secured a 42 million contract on the Walnut Creek Wastewater Treatment Plant expansion in Texas, further expanding our presence in one of the nation's fastest growing water infrastructure markets.

Finally, in energy and electrification, Axia Electric was awarded a 20 million project at UC Berkeley's electrified heating and cooling plant, supporting the University's transition to a modernized all-electric energy system. Collectively, these awards reflect the strength of our customer relationships, our technical capabilities and our disciplined approach to pursuing complex infrastructure opportunities. Just as importantly, they continue to build our backlog in key growth markets including water, transportation, power and electrification, providing increased visibility and supporting our long-term growth strategy.

And beyond our project wins and backlog growth, we are continuing to make meaningful progress on the operational side of the business. First, safety remains our top priority and we're encouraged by the improvements we've achieved this year. Our safety performance is tracking ahead of 2025 levels, reflecting the focus and discipline our teams bring to every project. Strong safety performance is not only important for our people, but it's also a key indicator of operational excellence across the organization.

We're also seeing benefits of our enhanced project controls and cost management initiatives. Over the last several quarters, we worked to strengthen execution, improve oversight and maintain disciplined cost control across our portfolio. Those efforts are contributing to the consistency we've seen in our margins despite a dynamic operating environment. Looking ahead, we believe there is additional opportunity for margin expansion as more recently awarded projects move from backlog into active construction.

A portion of our backlog today remains in the pre-construction or early phases where revenue and margin contribution are more limited. Importantly, we have converted less than 10% of the backlog booked over the past 12 months into revenue to date, providing significant runway as these projects advance into execution. As these projects ramp and begin burning work at the pace we expect, we anticipate improved absorption of overhead and greater contribution from high-quality work entering the portfolio, supporting both margin expansion and future revenue growth.

Taken together, the combination of improved safety performance, stronger project controls, disciplined execution and the ramp-up of recently awarded projects gives us confidence in our ability to continue improving operational performance and drive further margin enhancement over time. With that, I'd like to turn over to Todd who will review our financials in more detail.

Todd Yoder, CFO

Thank you, Yaral, and thank you for joining us on today's call. The Shimmick Corp team has delivered another strong quarter performance and we're seeing our strategic changes continue to drive results—not only the year-over-year improvements, but more importantly, they're establishing the foundation for continued growth and profitability moving forward. Before we hit the financials, I want to echo Yaral in thanking all of the talented men and women across Shimmick Corp for your continued commitment to executing our strategy, your focus on safety, the quality of the work we deliver to our clients, and your dedication to executing with excellence.

Your contributions continue to have a significant impact on the achievements we've made and put us in a strong position to continue growing the business and winning the right way. Now let's jump into the financial results. I have revenue and gross margin overview in slide 8, but I'll talk to the overall performance for the quarter and reference information that's not included in the slides, but it is available in our 10-Q filing which is posted on our website.

All comparisons I make will be on a quarter-over-quarter basis as compared to the same period in 2025, unless otherwise noted. Shimmick project revenue for Q2 2026 was $96 million versus $113 million in Q2 2025. The net difference of $17 million was driven by projects reaching or nearing completion during 2025 and some winding down this year. This is partially offset by the significant new project awards that are ramping up and will continue to ramp up throughout 2026.

Non-core project revenue for Q2 2026 was $11 million, down from $16 million in Q2 2025. The $5 million decrease was driven by the termination of the Chick Lock replacement project during Q1 of 2026 as well as the continued progress we've made in moving all non-core projects to completion. I've discussed the negative gross impact from non-core on our total gross margin on prior calls and I couldn't be more excited to end the quarter with non-core backlog now less than 3% of our total backlog.

What this means is we'll continue to see favorable mix impact on our total gross margin moving forward on a year-over-year basis. Shimmick consolidated total revenue for Q2 2026 was $107 million as compared to $128 million in Q2 2025. Shimmick project gross margin was $11 million for Q2 2026, down $4 million compared to $15 million in Q2 2025. The $4 million decrease in gross margin was driven by an $11 million decrease in margin from projects winding down.

This was partially offset by a $7 million increase in margin from newer projects that are continuing to ramp up. Non-core project gross margin was $2 million for Q2 2026 as compared to negative $7 million for Q2 2025. The $9 million increase in gross margin for non-core was driven by cost overruns on non-core loss projects during Q2 2025 that did not recur this year. Shimmick consolidated total gross margin for Q2 2026 was $12 million. That's up $4 million, or 53%, as compared to $8 million of gross margin in Q2 2025.

Total gross margin as a percent of revenue improved to 12% from 6% in Q2 2025. SG&A expense for Q2 was $16 million, up $1 million from $15 million during Q2 2025. This was driven by higher one-time legal costs and costs related to equity issuance during the quarter. We remain committed to optimizing our overhead costs while we continue to grow the top line with higher-margin project wins. Net loss for Q2 2026 was $5 million, favorable $4 million, or 44% favorable, as compared to a net loss of $9 million in Q2 2025.

Adjusted EBITDA for Q2 2026 was $4 million as compared to negative $234,000 in Q2 2025. Turning to liquidity, we ended Q2 with $33 million of liquidity. This consisted of unrestricted cash and cash equivalents of $17 million and another $16 million of availability under our credit agreements. New awards booked during Q2 were $138 million, giving us a book-to-burn of 1.4 times, which is our fourth consecutive quarter with a positive book-to-burn ratio.

We ended the quarter with total backlog of $991 million and another $221 million of awards pending fully executed contracts, which on a combined basis is over $1.2 billion. Moving to the guidance slide, as I described on our last call, we have significantly grown backlog over the past few quarters. These new higher-margin projects will continue to gain momentum in the coming quarters, driving higher quarter-over-quarter sequential improvement in our overall results with a favorable mix impact on a year-over-year basis.

In summary, we are very pleased with the strong momentum of our new higher-margin Shimmick project awards. As we now have greater visibility into non-core work that we removed from our backlog last quarter, we are updating our full-year 2026 revenue guidance to approximately $525 million to $575 million, representing approximately 12% growth on a year-over-year basis at the midpoint. Importantly, this non-core work was not expected to contribute gross margin and therefore has no impact on our profitability expectations for the full year.

Thus, we are reaffirming our full-year 2026 adjusted EBITDA guidance of $15 million to $30 million, which at the midpoint represents approximately 350% growth over the prior year. With that, I thank you all for joining us today and for your interest in Shimmick, and I'll turn it back to Yaral.

Yaral Yaal, CEO

Thanks, Todd. Overall, we are encouraged by the progress we made in the first half of the year and increasingly confident in our outlook for the back half of 2026. Going into 2027, we've strengthened backlog quality, improved project controls, enhanced cost discipline, and continue to execute safely across the business. As our newly booked projects begin burning work at the pace we expect, we believe they will drive stronger revenue and gross margin performance over the upcoming quarters.

Combined with the operational improvements over the last several quarters, we believe the business is well positioned to deliver improved results and we look forward to updating you on our progress. Operator, you may now open the line for questions.

OPERATOR (Operator)

We will now move to our question and answer session. At this time, if you would like to ask a question, please click on the raised hand button which can be found on the black bar at the bottom of your screen. You may remove yourself from the queue at any time by lowering your hand. When it is your turn, you will receive a message on your screen asking to be promoted to panelist. Please accept, wait a moment, and once you have been promoted, you will hear your name called.

You may unmute your video and audio and ask your question. We will now pause a moment to assemble the queue. Your first question comes from Jerry Sweeney with Roth Capital. Please unmute your audio and ask your question.