Shimmick Corporation

Welcome to Chimix Third Quarter 2025 Financial Results. All participants will be in a listen-only mode until the question and answer session begins. As a reminder, this conference call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to the Investor Relations team.

Good afternoon, and thank you for joining us on today's conference call to discuss SHMIC's third quarter 2025 results. Slides for today's presentation are available on our investor relations section of our website, www.shmic.com. During this 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 identify 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 Yoral Yal, Shemek's CEO.

Good afternoon, and thank you all for joining us on today's call. I'm joined by Todd Yoder, Shemek's CFO. I'm going to kick it off with our results for the third quarter and speak to our expectations for the remainder of 2025 and for an exciting 2026. But before I go there, I would like to reiterate our go-forward strategy, which has been consistent since I joined the company. There are three major components to our strategy. Growth to top line through bidding and winning strategic new business that play into our strengths and market differentiators that will drive consistent margins. completes non-core projects that have impacted our profitability over the last two years, and implement operational improvements that build on our existing talent and result in more predictable, consistent margins and lower GNAs as a percentage of revenue. We are confident that our disciplined execution of the strategy is going to allow us to have a company that performs at or above the industry year after year. And I'm pleased to report that we are making progress. Moving to our financial results, starting with revenue, for the third quarter of 2025, we delivered revenue of $142 million with a gross margin of $11 million and an adjusted EBITDA of $4 million. As I've mentioned over the last few quarters, the majority of our current business consists of our core SHIMIC projects, those we've won since becoming independent from our previous ownership. The remainder consists of non-core projects, which were awarded prior to that transition, but represents the types of projects we no longer pursue. Throughout 2025, we've been making progress towards replacing more of these non-core projects with new SHIMIC projects as we complete them. Now of the third quarter revenue, over 75% came from SHMIC projects, with a revenue of $107 million, representing a 6% increase year over year. We've also expanded our gross margin on SHMIC projects from prior year's third quarter by 67% on the continued operational improvements we've implemented this year. We expect our core business to continue to generate higher margins as we continue to build our backlog. Our non-core projects, the revenue was $35 million, a reduction of $30 million from same quarter last year, reflecting our continued progress with those projects. We achieved positive adjusted EBITDA for the first time this year and the first time since the same period in 2024, so we can clearly see our strategy come to fruition in our financials. We've also maintained a strong liquidity position in the third quarter, finishing the quarter with a total liquidity of $48 million. The momentum we're seeing is a direct outcome of the strategic shift we implemented earlier this year, which focused on pursuing projects that align closely with our strengths, deepening client partnerships to drive superior project outcomes, and reinforcing operational discipline to boost both execution and employee engagement. Looking ahead, we're particularly encouraged by the continued strength in market conditions and our backlog growth, which I'll touch on next. We continue to see a large and expanding addressable market, particularly in critical infrastructure segments where our expertise aligns closely with long-term national priorities. In September, and then in October again, we achieved a billion dollars in bidding volumes, a clear indication that our pipeline remains both active and robust. Our 12-month bidding outlook stands at over $9 billion, demonstrating our disciplined pursuit strategy, but also the favorable nature of the market conditions. Water and electrical projects remain the most compelling opportunities, driven by ongoing investment in infrastructure, in turn driven by technology population patterns and the ever-growing need for clean water. Given our strong presence and expertise in water and existing and growing electrical capabilities, we expect to see more of our backlog shifting towards these two sectors over the next couple of quarters. Within that, we're seeing notable success and increasing opportunities in the Texas water market, where significant funding, population growth, and infrastructure needs are creating a strong demand for our services. Our focused approach and our resources have positioned us to capture a growing share of these opportunities. We view the West Coast and Texas as a key growth engine within our broader water strategy, and the momentum we're seeing there reinforces our confidence in the scale and durability of this market. We're also seeing strong momentum within our electrical segment, particularly across manufacturing and data center markets. Leading activity in these areas has been exceptionally strong, reflecting continued investment in large-scale industrial and technology infrastructure. It's no secret that investments in mission-critical infrastructure are continuing at a fast pace across the country, and we're seeing more and more of our pipeline consisting of opportunities in this market sector. We're actively pursuing a number of high-quality opportunities in this space, and our teams are maintaining discipline to ensure we target the right projects with the right risk profiles. Given the strength of the pipeline and the volume of active bids, the outlook for the fourth quarter and the first quarter of next year is shaping up to be promising. All of this activity reinforces the strength and diversification of our end markets and positions us well as we move into 2026. I'm pleased to share that our transformation is clearly hitting its stride. Over the past few quarters, we've seen meaningful progress in both the pace and the quality of our execution, and that progress is now shaping in our results. We are starting to see the new shimmy come to fruition. We achieved a book-to-burn ratio of 1.7 in the third quarter, a significant improvement from last quarter, and for the first time, we exceeded 1.0 in two years. During past quarters, I spoke about investments we're making in the sales side of the business, focusing on our core strengths while expanding our capacity to bid and win work consistently. This healthy backlog growth is a direct result of our strategy and is designed to fuel our growth into 2026. As a result, in the third quarter, we grew our backlog by over $100 million, or 15% sequentially, and now it sits at $754 million as of October 3, 2025. To highlight a few of the project awards that were added to our backlog in the third quarter are the $116 million City of Modesto River Trunk Pump Station and the $51 million Belota Weir Modifications Projects. Both of these projects are located in California and are designed to improve water quality for the local communities, shore up flood resilience, and maintain environmental stewardship. Additionally, we've been awarded contracts for $60 million that added to our backlog in October. The $30 million City of Santa Monica Pier Bridge replacement that restores a historic structure along the Los Angeles shoreline and reflects our efforts to support the accelerating efforts to prepare the local infrastructure for the upcoming 2028 LA Olympics. We see a lot more Olympics-related opportunities as the preparations ramp up with various projects already in our pipeline throughout the region. The $30 million Port of Seattle Terminal 18 shore power project is an electrical project that improves operational efficiencies at the port facilities while reducing carbon emissions. We have performed similar projects for other ports along the West Coast, and we expect more of these projects as the ports continue their electrification journeys. Lastly, after the third quarter concluded, we've been selected as preferred bidder on projects totaling $169 million with projects that are predominantly in our core sectors of water and electrical construction. We are currently negotiating these contracts or waiting for a word from clients, which we expect to happen in the fourth quarter. The steady increase in backlog provides greater visibility into future revenue and positions us well for continued growth as we move into 2026. All of this gives us confidence that the actions we've taken to strengthen the business are working. We are competing more effectively, delivering for our customers, and building a strong foundation for sustainable long-term performance. As we move forward, our focus remains on maintaining this momentum, executing with discipline, converting backlog efficiently, and continuing to drive consistent, profitable growth. Looking ahead, we feel confident about the trajectory we're on. We're seeing forward momentum in our business, and we will get stronger as we continue to capitalize on favorable market conditions and put the non-core work behind us. We will consistently execute our three-pronged strategy to achieve a growing, profitable, and dependable SHMIC in 2026 and in the future. With that, I'd like to turn to Todd, who will review our financials in more detail.