Shimmick Corporation

Good day, and welcome to SHMIC Corporation's third quarter 2024 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. I'd now like to turn the call over to Anthony Rosmus, Investor Relations. Please go ahead.

Good morning, and thank you for joining us on today's conference call to discuss SHMIC's third quarter 2024 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 risk and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect. We identified the principal risk and uncertainties that may affect our performance in our reports and filings with the Securities and Exchange Commission, which can also be found on our 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 third quarter press release for Definitional Information and Reconciliations of Historical Non-GAAP Measures to Comparable GAAP Financial Measures. With that, it is my pleasure to turn the call over to Steve Richards, SHMIC's CEO.

Good morning, and thank you all for joining today's call. I'm joined by Amanda Mobley, SHMIC's Interim CFO. Earlier this month, we announced the settlement of our last major outstanding claim of our legacy loss projects. Under the terms of the settlement in our Golden Gate Bridge project, we will receive $97 million before the end of the year as reimbursement for costs incurred on the project. We're pleased to have reached the resolution of this claim, and I will provide more details in a minute. With the large legacy settlements behind us, it felt it was time to hand off Shemek to a new leader. I'm proud of what we've accomplished at Shemek and over my 43-year career. The projects we do make a difference in people's lives, and I've had the opportunity to work with an outstanding team who is focused on operational excellence. As we look forward to the next chapter, I'm pleased to announce Yarao Yao as GEMEC's new CEO. Yarao has extensive knowledge of both the California and the water and critical infrastructure market. He's well qualified to lead GEMEC, and I'm excited for what the company can offer in the future. Yoral will officially step into the role as SHMIC's new CEO on December 2nd, 2024. I thank everyone who has supported me over my career. I'm excited to introduce Yoral and working with him over the next few months to ensure a smooth transition. Turning back to the business results, we delivered third quarter 2024 revenues of $166 million and experienced a net loss of $2 million with an adjusted EBITDA of $30 million. CIMIC project revenue totaled $101 million in the third quarter versus $110 million a year ago. CIMIC project gross revenues were 6% for the quarter, a decline of 15% gross margin in the third quarter of 2023, driven by wind down in completion of projects partially offset by new work. We remain encouraged by the margin performance trend in 2024 as this is the second straight quarter with sequential margin improvement compared to 5% in the second quarter of 2024 and negative 1% in the first quarter. As we did on our last call, we'll provide a breakdown of results between SHMIC projects, projects that began after the EECOM sale transaction, and legacy projects, those that started before the EECOM sale transaction. Amanda will provide more details specifically related to the breakdown of those results. Finally, I want to address briefly the recent election, which we don't expect to have a material impact on our business. infrastructure typically has bipartisan support. And in California, we expect to see additional opportunities from the recently passed California Proposition 4, which authorizes bonding for $10 billion for infrastructure-related projects that address climate change, with the largest allocation of nearly 40% focused on water projects. Turning to the next slide, CHMIC, through its consolidating joint venture with Dany's Construction Company, LLC, the CHMIC-Dany's joint venture, We'll receive $97 million before the end of this year as a result of our settlement agreement on the litigation of our Golden Gate Bridge project. Under the terms of the settlement, there will also be a contract change order for reduced scope of work of $6 million and a contract change order for extension of project completion and costs incurred on the TGB project. After paying subcontractor pass-through claims, we plan to use the remaining proceeds for ongoing operations, including completion of the Golden Gate Bridge project. We are expected to reach substantial completion of its on-site portion of the project in the third quarter of 2025, with the remaining work after that related to a subcontractor's off-site equipment fabrication activities. We are proud of the work that has been done on this project, which installed life-saving suicide prevention nets on the iconic Golden Gate Bridge. It is a difficult working environment with the heights, the weather, and the traffic control. Our team has done an exceptional job on the project. We're pleased to have settled the claim as another step forward in our transformation plan. We look forward to being able to further focus our efforts and financial resources on advancing our core projects. Turning to the next slide, I'd like to highlight our recently completed project at the Smith Canal Gate. We began work on this project in July 2020 to address critical flood protection needs for the San Joaquin area. SHMIC solutions included constructing a fixed cellular sheet pile flood wall along the San Joaquin River, a mitre gate structure with temporary in-water works and shoring, improvements to Dad's Point, and enhanced access to the Stockton Gulf and Country Club. These elements protect the canal from high-water events while allowing essential access for boaters during normal conditions. With the project now completed, these improvements significantly enhance Stockton's flood resilience protecting homes and business from high water events while meeting state and federal standards. Again, this is just another project that exemplifies Chimix's commitment to delivering sustainable infrastructure solutions that benefit both communities and the environment. With that, I'd like to turn the call over to Amanda, who will discuss our financial results.