Shimmick Corp. (NASDAQ: SHIM), a leading water infrastructure
company, today announced financial results for the first quarter
ended March 29, 2024.
First Quarter 2024 and Recent
Highlights
- Reported revenue of $120 million, which includes $90 million of
Shimmick Projects revenue
- Reported a net loss of $33 million with an Adjusted EBITDA loss
of $24 million
- Continue to work down legacy backlog with revenue of $23
million, a decline from $56 million last year with a negative gross
margin of $11 million, reflecting increases in the estimated cost
to complete and ongoing legal costs
- Announced the sale of the assets related to non-core foundation
drilling projects and an equipment yard that will raise
approximately $39 million and reduce future capital
expenditures
- Backlog is over $1.0 billion as of March 29, 2024, with 83%
being Shimmick Projects
- Won several jobs in quarter including new ozonation water
project and drainage system for over 10,000 acres.
Shimmick will announce it expects to delay the filing of its
Quarterly Report on Form 10-Q as a result of, among other things,
on-going negotiations with MidCap regarding compliance with certain
covenants under the Revolving Credit Facility. See “MidCap Credit
Facility and Delay in 10-Q Filing” below.
“Our first quarter results were adversely impacted by the timing
of projects starts and delays and additional costs associated with
the legacy loss projects,” said Steve Richards, Chief Executive
Officer of Shimmick. “While we still have work to do, we are making
progress in simplifying and evolving the business as evident by
recent actions taken to sell non-core assets and continue to wind
down our existing Legacy Projects, which weighed on gross margins
this quarter. These activities will position us well for a more
focused water business with better growth and profitability in the
future."
A summary of our results is included in the
table below:
|
|
Three Months Ended |
|
| (In millions, except
per share data) |
March 29, 2024 |
|
|
March 31, 2023 |
|
|
Change |
|
| Revenue |
$ |
120 |
|
|
$ |
164 |
|
|
$ |
(44 |
) |
| Gross margin |
|
(16 |
) |
|
|
6 |
|
|
|
(22 |
) |
| Net loss attributable to Shimmick
Corporation |
|
(33 |
) |
|
|
(9 |
) |
|
|
(24 |
) |
| Adjusted net loss |
|
(29 |
) |
|
|
(5 |
) |
|
|
(24 |
) |
| Adjusted EBITDA |
|
(24 |
) |
|
|
(1 |
) |
|
|
(23 |
) |
| Diluted loss per common share
attributable to Shimmick Corporation |
|
(1.30 |
) |
|
|
(0.43 |
) |
|
|
(0.87 |
) |
| Adjusted diluted loss per common
share attributable to Shimmick Corporation |
$ |
(1.15 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.91 |
) |
The following table presents revenue and gross
margin data for the first quarter ended March 29, 2024 compared to
the first quarter ended March 31, 2023:
|
(In millions, except percentage data) |
|
Shimmick Projects(1) |
|
|
Foundations Projects(2) |
|
|
Legacy Projects(3) |
|
|
Consolidated Total |
|
| First Quarter
2024 |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
$ |
90 |
|
|
$ |
7 |
|
|
$ |
23 |
|
|
$ |
120 |
|
| Gross margin |
|
|
(1 |
) |
|
|
(4 |
) |
|
|
(11 |
) |
|
|
(16 |
) |
| Gross margin (%) |
|
|
(1 |
)% |
|
|
(57 |
)% |
|
|
(48 |
)% |
|
|
(13 |
)% |
| First Quarter
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue |
|
$ |
88 |
|
|
$ |
20 |
|
|
$ |
56 |
|
|
$ |
164 |
|
| Gross margin |
|
|
5 |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
6 |
|
| Gross margin (%) |
|
|
6 |
% |
|
|
10 |
% |
|
|
(2 |
)% |
|
|
4 |
% |
(1) Shimmick Projects are those projects started
after the AECOM Sale Transactions that have focused on water
infrastructure and other critical infrastructure. (2)
The Company has entered into an agreement to sell the assets of a
non-core foundation projects in the second quarter of 2024 and will
be winding down any remaining work during the year. As the revenue
will decline during the year, the Company will be reporting revenue
and gross margin related to the projects separately for 2024
("Foundations Projects").(3) Legacy Projects are those projects
assumed as part of the AECOM Sale Transactions, that were started
under AECOM ownership.
Shimmick Projects
Projects started after the AECOM Sale Transactions ("Shimmick
Projects") have focused on water infrastructure and other critical
infrastructure. Revenue recognized on Shimmick Projects was
$90 million and $88 million for the three months ended March 29,
2024 and March 31, 2023, respectively. The $2 million increase in
revenue was primarily the result of new jobs and jobs ramping
up.
Gross margin recognized on Shimmick Projects was $(1) million
and $5 million for the three months ended March 29, 2024 and March
31, 2023, respectively. The decline in the gross margin was
primarily the result of jobs winding down and costs tied to pending
change orders.
Foundations Projects
The Company has entered into an agreement to sell the assets of
our non-core foundation projects in the second quarter of 2024 and
will be winding down any remaining work during the year. As the
revenue will decline during the year, the Company will be reporting
revenue related to these projects separately for 2024 ("Foundations
Projects"). Revenue recognized on Foundations Projects was $7
million and $20 million for the three months ended March 29, 2024
and March 31, 2023, respectively. The $13 million decline in
revenue was the result of timing of multiple jobs winding down.
Gross margin recognized on Foundations Projects was $(4) million
and $2 million for the three months ended March 29, 2024 and March
31, 2023, respectively. The decline in the gross margin was the
result of cost overruns on subcontract jobs and timing of jobs
winding down.
Legacy Projects
As part of the AECOM Sale Transactions, we assumed the Legacy
Projects and backlog that were started under AECOM. Legacy Projects
revenue was $23 million, a decline of $33 million as the Company
works to complete these projects. Gross margin was $(11) million, a
decrease of $11 million as compared to the three months ended March
31, 2023, primarily as a result of projects winding down and
additional cost overruns on a subset of these projects ("Legacy
Loss Projects") that have experienced significant cost overruns due
to the COVID pandemic, design issues and other
factors.
In the Legacy Loss Projects, we have recognized the estimated
costs to complete and the loss expected from these projects. If the
estimates of costs to complete fixed-price contracts indicate a
further loss, the entire amount of the additional loss expected
over the life of the project is recognized as a period cost in the
cost of revenue. As these Legacy Loss Projects continue to wind
down to completion, no further gross margin will be recognized and
in some cases, there may be additional costs associated with these
projects. Revenue recognized on these Legacy Loss Projects was $15
million and $27 million for the three months ended March 29, 2024
and March 31, 2023, respectively. Gross margin recognized on these
Legacy Loss Projects was $(11) million and $(1) million for the
three months ended March 29, 2024 and March 31, 2023, respectively,
as a result of an additional increases in the cost to complete as
well as additional legal fees to pursue contract modifications and
recoveries.
Selling, general and administrative expenses
Selling, general and administrative expenses remained flat
period over period.
Equity in earnings (loss) of unconsolidated joint ventures
Equity in earnings (loss) of unconsolidated joint ventures
increased $1 million primarily due to improved equity in earnings
pickup on projects winding down and nearing completion.
(Loss) gain on sale of assets
(Loss) gain on sale of assets decreased by $2 million primarily
due to a one-time gain on sale of an office building for $2 million
during the three months ended March 31, 2023 that did not reoccur
during the three months ended March 29, 2024.
Other expense, net
Other expense, net increased by $1 million primarily due to
interest expense on the Revolving Credit Facility during the three
months ended March 29, 2024 which was not entered into until March
27, 2023.
Income tax expense
Income tax expense was flat period over period. Due to an
expected tax loss for fiscal year ending 2024, no taxable income or
tax expense is anticipated for 2024, and no taxable income was
recorded for the prior year three months ended, March 31, 2023.
Net loss
Net loss increased by $24 million to a net loss of $33 million
for the three months ended March 29, 2024, primarily due to the
decrease in gross margin of $22 million as described above and a $2
million decrease in gain on sale of assets as described above.
Diluted loss per common share was $1.30 for the
three months ended March 29, 2024, compared to diluted loss per
common share of $0.43 for the same period in 2023.
Adjusted net loss was $29 million for the three months ended
March 29, 2024, compared to a net loss of $5 million for the same
period in 2023.
Adjusted diluted loss per common share was
$(1.15) for the three months ended March 29, 2024, compared to
$(0.24) for the same period in 2023.
Adjusted EBITDA was $(24) million for the three
months ended March 29, 2024, compared to $(1) million for the same
period in 2023.
Backlog as of the first quarter ended was $1.0
billion as of March 29, 2024.
Fiscal Year 2024 Guidance
For the full fiscal year ending December 27,
2024, we reaffirm:
- After excluding Foundations Projects revenue of $64 million for
the fiscal year ending December 29, 2023, Shimmick Projects revenue
to grow 7 to 13 percent with gross margin between 7 to 13 percent,
trending toward the lower end of the range for gross margin
- Legacy Projects revenue to decrease by 45 to 55 percent with
negative gross margin of 5 to 10 percent, trending toward the lower
end of the range (negative 10 percent) for gross margin due to
additional costs recorded in the quarter for a Legacy Loss Project
related to pending change orders and other cost
overruns
The guidance assumes we are able to obtain a
waiver from MidCap on the Revolving Credit Facility.
“The guidance continues to reflect our execution
on our strategy, our robust pipeline, the improving quality of our
backlog, and our continued operational execution as well as our
efforts to work off our remaining Foundations Projects and Legacy
Projects. We believe that our results will be back-half weighted in
2024 with further strong momentum for growth in 2025,” said Devin
Nordhagen, Chief Financial Officer of Shimmick.
Sales of non-core Assets
The Company has entered into an agreement to sell the assets
related to its foundation drilling business for total consideration
of $17.5 million, consisting of $15 million in cash and a $2.5
million promissory note. The Company will continue working on
certain existing foundation projects, which are largely expected to
be completed by the end of the year.
In addition, the Company has entered into a non-binding letter
of intent for the sale-leaseback of its equipment yard in Tracy,
California. The transaction contemplates the sale of the equipment
yard for approximately $22 million, along with a five-year lease
for Shimmick to continue using the property.
The Company expects both transactions to close in the second
quarter of fiscal 2024.
MidCap Credit Facility and Delay in 10-Q
Filing
As a result of the Company’s results for the quarter ended March
29, 2024, the Company is no longer in compliance with the leverage
covenant set forth in its Revolving Credit Facility with MidCap
(the “Default”). As a result of the Default, the lender has the
right to declare all amounts outstanding immediately due and
payable and terminate all commitments to extend further credit
under the Revolving Credit Facility. As of March 29, 2024, there
was approximately $32 million outstanding under the Revolving
Credit Facility. To date, MidCap has not exercised its right to
accelerate repayment of the outstanding borrowings, and the Company
is in the process of negotiating a waiver and amendment with
MidCap, as well as pursuing alternative financing arrangements with
other potential lenders. In addition, as noted above, the Company
intends to repay its borrowings under the Revolving Credit Facility
with the proceeds of the proposed asset sales
discussed.
As a result of these ongoing negotiations and pursuant of other
alternatives to address the Default, the Company does not expect to
file its Quarterly Report on Form 10-Q within the prescribed
deadline. Accordingly, the Company intends to file an extension on
Form 12b-25 with the Securities and Exchange Commission. While the
Company’s first quarter results, which are based on currently
available information, are subject to revision as management
completes its internal review, the Company does not expect the
waiver to result in changes to the first quarter 2024 results. The
Company’s independent registered public accounting firm has also
not finalized its review of the first quarter 2024
results.
If the Company is unable to obtain a waiver or new financing
arrangement or the lender exercises its right to accelerate
repayment, it may impact the Company’s ability to continue as a
going concern. In addition, if MidCap exercises its right to
accelerate repayment and the Company is unable to repay those
amounts, the Company could be forced to curtail its operations,
reorganize its capital structure (including through bankruptcy
proceedings) or liquidate some or all of its assets in a manner
that could adversely impact our business.
Conference Call and Webcast Information
Shimmick will host an investor conference call
Monday, May 13th, at 5 pm EST. Interested parties are invited to
listen to the conference call which can be accessed live over the
phone by dialing (877)-869-3847, or for international callers,
(201)-689-8261. A replay will be available two hours after the call
and can be accessed by dialing (877)-660-6853, or for international
callers, (201)-612-7415. The passcode for the live call and the
replay is 13746225. The replay will be available until 11:59 p.m.
(ET) on May 30, 2024. Interested investors and other parties may
also listen to a simultaneous webcast of the conference call by
visiting the Investors section of the Company’s website at
www.shimmick.com. The online replay will be available for a limited
time beginning immediately following the call.
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: expected future
financial performance (including the assumptions related thereto),
including our revenue, net loss and EBITDA; our growth prospects;
our expectations regarding profitability; our expectations
regarding the proposed sale of the assets related to non-core
foundation drilling projects and other non-core assets; our
expectations regarding negotiations with MidCap, ability to obtain
a waiver, expectations regarding acceleration of borrowings and the
corresponding impact on the timing of our Quarterly Report on 10-Q;
our continued successful adjustment to becoming a public company
following our initial public offering; our expectations regarding
successful partnerships with our new investors; and our capital
plans and expectations related thereto. 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.
We wish to caution readers that, although we
believe any forward-looking statements are based on reasonable
assumptions, certain important factors may have affected and could
in the future affect our actual financial results and could cause
our actual financial results for subsequent periods to differ
materially from those expressed in any forward-looking statement
made by or on our behalf, including, but not limited to, the
following: our ability to accurately estimate risks, requirements
or costs when we bid on or negotiate a contract; the impact of our
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 our operations or a decline in the market
value of owned equipment; subcontractors failing to satisfy their
obligations to us or other parties or any inability to maintain
subcontractor relationships; marketplace competition; our limited
operating history as an independent company following our
separation from AECOM; our inability to obtain bonding; disputes
with our prior owner, AECOM, and requirements to make future
payments to AECOM; AECOM defaulting on its contractual obligations
to us or under agreements in which we are beneficiary; our 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 our contact backlog;
accounting for our revenue and costs involves significant
estimates, as does our 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 we may incur; the adequacy of
sources of liquidity; cybersecurity attacks against, disruptions,
failures or security breaches of, our information technology
systems; seasonality of our business; pandemics and health
emergencies; commodity products price fluctuations and rising
inflation and/or 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;
our ability to timely file reports with the Securities and Exchange
Commission; and other risks detailed in our filings with the
Securities and Exchange Commission, including the “Risk Factors”
section in our Annual Report on Form 10-K for the fiscal year ended
December 29, 2023 and those described from time to time in our
future reports with the SEC.
Non-GAAP Definitions This press
release includes unaudited non-GAAP financial measures, adjusted
EBITDA and adjusted net loss and adjusted diluted loss per common
share. For definitions of these non-GAAP financial measures and
reconciliations to the most comparable GAAP measures, see
"Explanatory Notes" and tables that following in this press
release. The presentation of non-GAAP financial measures is not
intended to be a substitute for, and should not be considered in
isolation from, the financial measures reported in accordance with
GAAP.
Please refer to the Reconciliation between Net
loss Attributable to Shimmick Corporation and Adjusted net loss and
Adjusted diluted loss per common share included within Table A and
the Reconciliation between Net Loss Attributable to Shimmick
Corporation and Adjusted EBITDA included within Table B below.
We do not provide forward-looking guidance for
certain financial measures on a U.S. GAAP basis because we are
unable to predict certain items contained in the U.S. GAAP measures
without unreasonable efforts. These items may include legal fees
and other costs for a legacy loss project, acquisition-related
costs, litigation charges or settlements, and certain other unusual
adjustments.
Investor Relations Contact1-949-704-2350
IR@shimmick.com
|
Shimmick CorporationConsolidated
Balance Sheets (In thousands, except share
data)(unaudited) |
|
|
|
|
March 29, |
|
|
December 29, |
|
|
|
|
2024 |
|
|
2023 |
|
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
27,327 |
|
|
$ |
62,939 |
|
|
Restricted cash |
|
|
912 |
|
|
|
971 |
|
|
Accounts receivable, net |
|
|
49,700 |
|
|
|
54,178 |
|
|
Contract assets, current |
|
|
136,031 |
|
|
|
125,943 |
|
|
Prepaids and other current assets |
|
|
11,695 |
|
|
|
13,427 |
|
| |
|
|
|
|
|
|
| TOTAL CURRENT
ASSETS |
|
|
225,665 |
|
|
|
257,458 |
|
| |
|
|
|
|
|
|
| Property, plant and equipment,
net |
|
|
47,094 |
|
|
|
46,373 |
|
| Intangible assets, net |
|
|
8,600 |
|
|
|
9,244 |
|
| Contract assets,
non-current |
|
|
46,703 |
|
|
|
48,316 |
|
| Lease right-of-use assets |
|
|
23,351 |
|
|
|
23,855 |
|
| Investment in unconsolidated
joint ventures |
|
|
23,731 |
|
|
|
21,283 |
|
| Deferred tax assets |
|
|
- |
|
|
|
17,252 |
|
| Other assets |
|
|
2,849 |
|
|
|
2,871 |
|
| |
|
|
|
|
|
|
| TOTAL
ASSETS |
|
$ |
377,993 |
|
|
$ |
426,652 |
|
| |
|
|
|
|
|
|
| LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
77,683 |
|
|
$ |
81,589 |
|
|
Contract liabilities, current |
|
|
110,204 |
|
|
|
115,785 |
|
|
Accrued salaries, wages and benefits |
|
|
30,287 |
|
|
|
26,911 |
|
|
Accrued expenses |
|
|
33,405 |
|
|
|
33,897 |
|
|
Other current liabilities |
|
|
18,173 |
|
|
|
13,071 |
|
| |
|
|
|
|
|
|
| TOTAL CURRENT
LIABILITIES |
|
|
269,752 |
|
|
|
271,253 |
|
| |
|
|
|
|
|
|
| Long-term debt, net |
|
|
31,489 |
|
|
|
29,627 |
|
| Lease liabilities,
non-current |
|
|
14,855 |
|
|
|
15,045 |
|
| Contract liabilities,
non-current |
|
|
2,704 |
|
|
|
3,215 |
|
| Contingent consideration |
|
|
15,725 |
|
|
|
15,488 |
|
| Deferred tax liabilities |
|
|
- |
|
|
|
17,252 |
|
| Other liabilities |
|
|
5,350 |
|
|
|
4,282 |
|
| |
|
|
|
|
|
|
| TOTAL
LIABILITIES |
|
|
339,875 |
|
|
|
356,162 |
|
| |
|
|
|
|
|
|
| Commitments and
Contingencies |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| STOCKHOLDERS'
EQUITY |
|
|
|
|
|
|
| Common stock, $0.01 par value,
100,000,000 shares authorized as of March 29, 2024 and December 29,
2023; 25,738,857 and 25,493,877 shares issued and outstanding as of
March 29, 2024 and December 29, 2023, respectively |
|
|
257 |
|
|
|
255 |
|
| Additional
paid-in-capital |
|
|
25,578 |
|
|
|
24,445 |
|
| Retained earnings |
|
|
13,204 |
|
|
|
46,537 |
|
| Non-controlling interests |
|
|
(921 |
) |
|
|
(747 |
) |
| |
|
|
|
|
|
|
| TOTAL STOCKHOLDERS'
EQUITY |
|
|
38,118 |
|
|
|
70,490 |
|
| |
|
|
|
|
|
|
| TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
$ |
377,993 |
|
|
$ |
426,652 |
|
|
Shimmick CorporationConsolidated
Statements of Operations(In thousands, except per
share data)(unaudited) |
|
|
|
|
Three Months Ended |
|
|
|
|
March 29, |
|
|
March 31, |
|
|
|
|
2024 |
|
|
2023 |
|
| Revenue |
|
$ |
120,043 |
|
|
$ |
164,108 |
|
| Cost of revenue |
|
|
135,903 |
|
|
|
157,886 |
|
| Gross
margin |
|
|
(15,860 |
) |
|
|
6,222 |
|
| Selling, general and
administrative expenses |
|
|
15,524 |
|
|
|
15,558 |
|
| Amortization of
intangibles |
|
|
644 |
|
|
|
658 |
|
|
Total operating expenses |
|
|
16,168 |
|
|
|
16,216 |
|
| Equity in earnings (loss) of
unconsolidated joint ventures |
|
|
263 |
|
|
|
(541 |
) |
| (Loss) gain on sale of
assets |
|
|
(26 |
) |
|
|
1,540 |
|
| Loss from
operations |
|
|
(31,791 |
) |
|
|
(8,995 |
) |
| Other expense, net |
|
|
1,543 |
|
|
|
338 |
|
| Net loss before income
tax |
|
|
(33,334 |
) |
|
|
(9,333 |
) |
| Income tax expense |
|
|
— |
|
|
|
— |
|
| Net loss |
|
|
(33,334 |
) |
|
|
(9,333 |
) |
| Net (loss) income
attributable to non-controlling interests |
|
|
(1 |
) |
|
|
4 |
|
| Net loss attributable to
Shimmick Corporation |
|
$ |
(33,333 |
) |
|
$ |
(9,337 |
) |
| Net loss attributable to
Shimmick Corporation per common share |
|
|
|
|
|
|
|
Basic |
|
$ |
(1.30 |
) |
|
$ |
(0.43 |
) |
|
Diluted |
|
$ |
(1.30 |
) |
|
$ |
(0.43 |
) |
|
Shimmick CorporationConsolidated
Statements of Cash Flows(In
thousands)(unaudited) |
|
|
|
|
Three Months Ended |
|
|
|
|
March 29, |
|
|
March 31, |
|
|
|
|
2024 |
|
|
2023 |
|
| |
|
|
|
|
|
|
| Cash Flows From
Operating Activities |
|
|
|
|
|
|
|
Net loss |
|
$ |
(33,334 |
) |
|
$ |
(9,333 |
) |
| Adjustments to
reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
Stock-based compensation |
|
|
998 |
|
|
|
528 |
|
|
Depreciation and amortization |
|
|
4,410 |
|
|
|
4,165 |
|
|
Equity in (earnings) loss of unconsolidated joint ventures |
|
|
(263 |
) |
|
|
541 |
|
|
Return on investment in unconsolidated joint ventures |
|
|
284 |
|
|
|
5,762 |
|
|
Loss (gain) on sale of assets |
|
|
26 |
|
|
|
(1,877 |
) |
|
Other |
|
|
279 |
|
|
|
270 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
4,478 |
|
|
|
(8,511 |
) |
|
Contract assets |
|
|
(8,475 |
) |
|
|
(6,902 |
) |
|
Accounts payable |
|
|
(8,901 |
) |
|
|
9,919 |
|
|
Contract liabilities |
|
|
(5,579 |
) |
|
|
(9,703 |
) |
|
Accrued expenses |
|
|
(492 |
) |
|
|
(21,070 |
) |
|
Accrued salaries, wages and benefits |
|
|
3,376 |
|
|
|
5,264 |
|
|
Other assets and liabilities |
|
|
8,205 |
|
|
|
4,797 |
|
|
Net cash used in operating activities |
|
|
(34,988 |
) |
|
|
(26,150 |
) |
| Cash Flows From
Investing Activities |
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(4,620 |
) |
|
|
(2,470 |
) |
|
Proceeds from sale of assets |
|
|
199 |
|
|
|
377 |
|
|
Unconsolidated joint venture equity contributions |
|
|
(2,980 |
) |
|
|
(1,550 |
) |
|
Return of investment in unconsolidated joint ventures |
|
|
- |
|
|
|
1,535 |
|
|
Net cash used in investing activities |
|
|
(7,401 |
) |
|
|
(2,108 |
) |
| Cash Flows From
Financing Activities |
|
|
|
|
|
|
|
Net borrowings on revolving credit facility |
|
|
1,835 |
|
|
|
22,808 |
|
|
Other |
|
|
4,883 |
|
|
|
(77 |
) |
|
Net cash provided by financing activities |
|
|
6,718 |
|
|
|
22,731 |
|
| Net decrease in cash, cash
equivalents and restricted cash |
|
|
(35,671 |
) |
|
|
(5,527 |
) |
|
Cash, cash equivalents and restricted cash, beginning of
period |
|
|
63,910 |
|
|
|
82,085 |
|
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
28,239 |
|
|
$ |
76,558 |
|
| Reconciliation of
cash, cash equivalents and restricted cash to the |
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheets |
|
|
|
|
|
|
| Cash and cash equivalents |
|
|
27,327 |
|
|
|
72,145 |
|
| Restricted cash |
|
|
912 |
|
|
|
4,415 |
|
| Total cash, cash equivalents
and restricted cash |
|
$ |
28,239 |
|
|
$ |
76,560 |
|
EXPLANATORY NOTESNon-GAAP Financial
Measures
Adjusted Net loss and Adjusted Diluted Earnings Per Common
Share
Adjusted net loss represents net loss attributable to Shimmick
Corporation adjusted to eliminate changes in fair value of
contingent consideration, transaction-related costs, stock-based
compensation, and legal fees and other costs for a Legacy Loss
Project.
We have included Adjusted net loss in this press release because
it is a key measure used by our management and board of directors
to understand and evaluate our core operating performance and
trends, to prepare and approve our annual budget and to develop
short and long-term operational plans. In particular, we believe
that the exclusion of the income and expenses eliminated in
calculating adjusted net loss can provide a useful measure for
period-to-period comparisons of our core business. Accordingly, we
believe that Adjusted net loss provides useful information to
investors and others in understanding and evaluating our results of
operations.
Our use of Adjusted net loss as an analytical tool has
limitations, and you should not consider it in isolation or as a
substitute for analysis of our financial results as reported under
GAAP. Some of these limitations are:
- Adjusted net loss does not reflect changes in, or cash
requirements for, our working capital needs,
- Adjusted net loss does not reflect the potentially dilutive
impact of stock-based compensation, and
- other companies, including companies in our industry, might
calculate Adjusted net loss or similarly titled measures
differently, which reduces their usefulness as comparative
measures.
Because of these and other limitations, you should consider
Adjusted net loss alongside Net loss attributable to Shimmick
Corporation, which is the most directly comparable GAAP
measure.
Table A
Reconciliation between Net loss
attributable to Shimmick Corporation and Adjusted
net loss(unaudited)
| |
Three Months Ended |
|
|
|
March 29, |
|
|
March 31, |
|
| (In
thousands) |
2024 |
|
|
2023 |
|
|
Net loss attributable to Shimmick Corporation |
$ |
(33,333 |
) |
|
$ |
(9,337 |
) |
| Changes in fair value of
contingent consideration |
$ |
237 |
|
|
$ |
220 |
|
| Transaction-related costs |
$ |
- |
|
|
$ |
809 |
|
| Stock-based compensation |
$ |
998 |
|
|
$ |
528 |
|
| Legal fees and other costs for a
Legacy Loss Project (1) |
$ |
2,731 |
|
|
$ |
2,510 |
|
| Adjusted net loss |
$ |
(29,367 |
) |
|
$ |
(5,270 |
) |
| Adjusted net loss attributable to
Shimmick Corporation per common share |
|
|
|
|
|
|
Basic |
$ |
(1.15 |
) |
|
$ |
(0.24 |
) |
|
Diluted |
$ |
(1.15 |
) |
|
$ |
(0.24 |
) |
(1) Consists of legal fees and other costs incurred in
connection with claims relating to a Legacy Loss Project.
Adjusted EBITDA
Adjusted EBITDA represents our net loss attributable to Shimmick
Corporation before interest expense, income tax expense and
depreciation and amortization, adjusted to eliminate changes in
fair value of contingent consideration, transaction-related costs,
stock-based compensation, and legal fees and other costs for a
Legacy Loss Project.
We have included Adjusted EBITDA in this press release because
it is a key measure used by our management and board of directors
to understand and evaluate our core operating performance and
trends, to prepare and approve our annual budget and to develop
short and long-term operational plans. In particular, we believe
that the exclusion of the income and expenses eliminated in
calculating Adjusted EBITDA can provide a useful measure for
period-to-period comparisons of our core business. Accordingly, we
believe that Adjusted EBITDA provides useful information to
investors and others in understanding and evaluating our results of
operations.
Our use of Adjusted EBITDA as an analytical tool has
limitations, and you should not consider it in isolation or as a
substitute for analysis of our financial results as reported under
GAAP. Some of these limitations are:
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized might have to be
replaced in the future, and Adjusted EBITDA does not reflect cash
capital expenditure requirements for such replacements or for new
capital expenditure requirements,
- Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs,
- Adjusted EBITDA does not reflect the potentially dilutive
impact of stock-based compensation,
- Adjusted EBITDA does not reflect interest or tax payments that
would reduce the cash available to us, and
- other companies, including companies in our industry, might
calculate Adjusted EBITDA or similarly titled measures differently,
which reduces their usefulness as comparative measures.
Because of these and other limitations, you should consider
Adjusted EBITDA alongside Net loss attributable to Shimmick
Corporation, which is the most directly comparable GAAP
measure.
Table B
Reconciliation between Net loss
attributable to Shimmick Corporation and Adjusted
EBITDA(unaudited)
|
|
Three Months Ended |
|
|
|
March 29, |
|
|
March 31, |
|
| (In
thousands) |
2024 |
|
|
2023 |
|
| Net loss attributable to Shimmick
Corporation |
$ |
(33,333 |
) |
|
$ |
(9,337 |
) |
| Depreciation and
amortization |
|
4,410 |
|
|
|
4,165 |
|
| Interest expense |
|
897 |
|
|
|
32 |
|
| Income tax expense |
|
- |
|
|
|
- |
|
| Changes in fair value of
contingent consideration |
|
237 |
|
|
|
220 |
|
| Transaction-related costs |
|
- |
|
|
|
809 |
|
| Stock-based compensation |
|
998 |
|
|
|
528 |
|
| Legal fees and other costs for a
Legacy Loss Project (1) |
|
2,731 |
|
|
|
2,510 |
|
| Adjusted EBITDA |
$ |
(24,060 |
) |
|
$ |
(1,073 |
) |
(1) Consists of legal fees and other costs incurred in
connection with claims relating to a Legacy Loss Project.
Shimmick (NASDAQ:SHIM)
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Shimmick (NASDAQ:SHIM)
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