Shimmick Corp. (NASDAQ: SHIM) (“Shimmick” or the “Company”), a
leading water infrastructure company, today announced a settlement
in its Golden Gate Bridge Project (the “GGB Project” or “project”).
The litigation associated with this project was notably the
Company’s last major outstanding legal claim that related to its
legacy projects.
Under the terms of the settlement and through its joint venture
with Danny’s Construction Co. LLC, Shimmick/Danny’s Joint Venture
(“SDJV”), Shimmick will receive $97 million before the end of 2024
as reimbursement for costs incurred on the GGB Project. In
addition, the outstanding scope of work will be reduced by
approximately $6.0 million.
“We are pleased to resolve this claim in a constructive manner,
as this settlement reflects a major step forward in our
transformation plan. This resolution enables us to concentrate
additional attention and financial resources on advancing our core
projects, while strengthening Shimmick's liquidity position,” said
Steve Richards, Chief Executive Officer of Shimmick. “Our work on
this project included the installation of a suicide deterrent net
system, an important outcome to benefit Californians. We take
immense pride in the outstanding work our team has done on this
challenging and vital project and look forward to utilizing these
talented team members on other Shimmick projects in the near
future.”
Shimmick is expected to reach substantial completion of its
onsite portions of the project in the third quarter of 2025 with
remaining work after that related to a subcontractor’s offsite
equipment fabrication activities.
Golden Gate Bridge Project
Settlement
The settlement between SDJV and the Golden Gate Bridge, Highway
and Transportation District (the “District”) was entered into
October 31, 2024.
Under the terms of the settlement, SDJV will receive total
settlement proceeds of $97 million, a contract change order for
reduced scope of work of $6.0 million, and a contract change order
for extension of project completion. The District is required to
pay SDJV before the end of 2024.
After paying subcontractor pass-through claims, Shimmick plans
to use the remaining proceeds for ongoing operations, including
completion of the GGB Project.
Transformation Plan Update and Certain Preliminary
Financial Results
The Company continues to advance its strategic transformation
toward a more capital-efficient business model with optimized
operating costs. Key progress includes:
- Completion of the previously announced
sale-leaseback of the Company’s equipment yard in Tracy,
California, which is likely to result in an approximately $17
million gain in the third quarter of fiscal 2024.
- A strategic decision to enhance the
Company’s current enterprise resource planning (ERP) system rather
than implementing a new platform which, due to prior investments
and remaining contractual obligations, is expected to result in a
one-time, primarily non-cash expense of approximately $16 million
in the third quarter of fiscal 2024. The Company expects this
system upgrade to result in reduced overhead in future
periods.
Additional transformation initiatives are progressing as
planned. The Company plans to provide further updates in future
communications.
For the fiscal third quarter of 2024, continued losses in both
legacy and foundation projects are expected to largely offset the
impact of the GGB Project settlement, after accounting for
subcontractor, legal and other costs as well as previously accrued
revenue. As a result, the Company expects the net income/loss
attributable to the company for the quarter to be between breakeven
and a small loss. Shimmick expects to release its full fiscal 2024
third quarter results November 12, 2024.
About Shimmick
Corporation Shimmick Corporation
("Shimmick", the "Company") (NASDAQ: SHIM) is a leading provider of
water infrastructure solutions nationwide. Shimmick has a long
history of working on complex water projects, ranging from the
world’s largest wastewater recycling and purification system in
California to the iconic Hoover Dam. According to Engineering News
Record, in 2023, Shimmick was nationally ranked as a top ten
builder of water supply (#6), dams and reservoirs (#7), and water
treatment and desalination plants (#7). Shimmick is led by industry
veterans, many with over 20 years of experience, and works closely
with its customers to deliver complete solutions, including
long-term operations and maintenance.
Forward-Looking
Statements This release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
These forward-looking statements are often characterized by the use
of words such as “may,” “should,” “expects,” “plans,”
“anticipates,” “could,” “intends,” “targets,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential” or
“continue” or the negative of these terms or other similar words.
Forward-looking statements are only predictions based on our
current expectations and our projections about future events, and
we undertake no obligation to update any forward-looking statement
to reflect events or circumstances, including, but not limited to,
unanticipated events, after the date on which such statement is
made, unless otherwise required by law. Forward-looking statements
contained in this release include, but are not limited to,
statements about regarding the GGB project settlement, including
the timing of cash proceeds, updates regarding the Company’s
transformation plan and the Company’s preliminary financial results
for the third quarter of fiscal 2024. These statements involve
risks and uncertainties, and actual results may differ materially
from any future results expressed or implied by the forward-looking
statements. Forward-looking statements are only predictions based
on our current expectations and our projections about future
events, and we undertake no obligation to update any
forward-looking statement to reflect events or circumstances,
including, but not limited to, unanticipated events, after the date
on which such statement is made, unless otherwise required by
law.
The Company cautions readers that, although it believes any
forward-looking statements are based on reasonable assumptions,
certain important factors may have affected and could in the future
affect the Company’s actual financial results and could cause its
actual financial results for subsequent periods to differ
materially from those expressed in any forward-looking statement
made by or on the Company’s behalf, including, but not limited to,
the following: the Company’s ability to accurately estimate risks,
requirements or costs when the Company bids on or negotiates a
contract; the impact of the Company’s fixed-price contracts;
qualifying as an eligible bidder for contracts; the availability of
qualified personnel, joint venture partners and subcontractors;
inability to attract and retain qualified managers and skilled
employees and the impact of loss of key management; higher costs to
lease, acquire and maintain equipment necessary for the Company’s
operations or a decline in the market value of owned equipment;
subcontractors failing to satisfy their obligations to the Company
or other parties or any inability to maintain subcontractor
relationships; marketplace competition; the Company’s limited
operating history as an independent company following its
separation from AECOM; the Company’s inability to obtain bonding;
the Company’s relationship and transactions with its prior owner,
AECOM, and requirements to make future payments to AECOM; AECOM
defaulting on its contractual obligations to the Company or under
agreements in which the Company is a beneficiary; the Company’s
limited number of customers; dependence on subcontractors and
suppliers of materials; any inability to secure sufficient
aggregates; an inability to complete a merger or acquisition or to
integrate an acquired company’s business; adjustments in the
Company’s contact backlog; accounting for the Company’s revenue and
costs involves significant estimates, as does the Company’s use of
the input method of revenue recognition based on costs incurred
relative to total expected costs; any failure to comply with
covenants under any current indebtedness, and future indebtedness
the Company may incur; the adequacy of sources of liquidity;
cybersecurity attacks against, disruptions, failures or security
breaches of, the Company’s information technology systems;
seasonality of the Company’s business; pandemics and health
emergencies; commodity products price fluctuations, inflation
and/or elevated interest rates; liabilities under environmental
laws, compliance with immigration laws, and other regulatory
matters, including changes in regulations and laws; climate change;
deterioration of the U.S. economy; geopolitical risks, including
those related to the war between Russia and Ukraine and the
conflict in the Gaza Strip and the conflict in the Red Sea Region;
the Company’s ability to timely file reports with the Securities
and Exchange Commission; and other risks detailed in its filings
with the Securities and Exchange Commission, including the “Risk
Factors” section in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 29, 2023 and those described from
time to time in the Company’s future reports with the SEC.
This press release includes certain preliminary results
for the Company’s fiscal quarter ending September 27, 2024, which
are an estimate, based on information available to management as of
the date of this release, and are subject to further changes upon
completion of the Company’s standard quarter closing procedures.
This update does not present all necessary information for an
understanding of the Company’s financial condition as of the date
of this release, or its results of operations for the third
quarter. As the Company completes its quarter-end financial close
process and finalizes its financial statements for the quarter, it
will be required to make significant judgments in a number of
areas. It is possible that the Company may identify items that
require it to make adjustments to the preliminary financial
information included in this release and those changes could be
material. The Company does not intend to update such financial
information prior to release of its final third quarter financial
statement information, which is expected to be released in November
2024.
Investor Relations Contact1-949-704-2350
IR@shimmick.com
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