Shimmick Corporation Common Stock 2026 Q2 Earnings Call

Please go ahead. Good afternoon, and thank you for joining us on today's conference call to discuss Shimmick'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 Ural Yal, Shimmick's CEO.

Good afternoon, and thank you all for joining us on today's call. I'm joined by Todd Yoder, Shimmick'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. 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 this market, 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, a 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 $1 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 and 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 L.A. 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 University of California, 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. 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.