Inquired about Shimmick's capacity for a larger revenue base and how it plans to achieve that.

Management stated that the company's overhead structure and processes are built to handle a larger volume, referencing a past revenue level of $750 million. They anticipate gradual top-line revenue improvement while maintaining or improving margins, which will translate into strong EBITDA numbers. “We were a $750 million company before, and I think that's what we're trying to get back to. And with this backlog, we're going to see gradual improvement on top line revenues, and we're confident we're going to be able to hold these margins and improve them.”

Asked for more details on the data center and electrical work space, specifically the West Virginia project and timelines for success.

Management is very pleased with the Mission Critical division, launched due to significant opportunities. The West Virginia data center project is the first, with others in Texas. They expect this segment to become a sizable portion of the business within 12 months, noting that 80% of mission-critical work is electrical and carries higher gross margins (15-20%). “So we think that this is going to start becoming a sizable chunk of the business, at least in the next 12 months. And but meanwhile, Axia is doing really well on other fronts as well. We're winning water waste water work. We're winning electrification work. And so we're also diversifying the business on the electrical side. But I would say the mission-critical work we're winning is probably about 80% on the electrical side. So it's heavy on the electrical side, which is which is great for the electrical business we've launched, and those are higher margins, strong jobs, and we're pretty excited about them.”

Asked about the company's geographical expansion strategy, particularly in Texas, and diversification.

Shimmick is focused on core markets: California, Texas, and Washington. Texas is highlighted as a strong market for water and data center opportunities, with expectations for its percentage of backlog to grow. Beyond these states, they take a cautious approach, following clients for mission-critical projects. “We're very focused on as far as kind of core markets. We're very focused on California, Texas and Washington. And those are are where we're really focused on bidding Texas market is really great right now. It's lots and lots of water opportunities.”

SHIM

Shimmick (SHIM) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jul 2025 (Q2 FY26)· Industrials· Aug 10, 2026

Source: earnings call transcript

Executive summary

Shimmick Q2 FY26 — Record Backlog and Margin Expansion

Shimmick Corporation delivered a strong second quarter, marked by significant backlog growth and improved gross margins, driven by the successful wind-down of noncore projects and a strategic focus on higher-margin work. Despite some revenue deceleration due to extended project ramp-up times, the company is confident in its operational improvements and the increasing momentum of new, higher-quality projects, particularly in the mission-critical sector, positioning it for sustained growth and profitability in the coming quarters.

Highlights

Total backlog reached $991 million, its highest level in 2 years.
Consolidated gross margin expanded to 12% from 6% in Q2 2025.
Adjusted EBITDA grew to $4 million from negative $234,000 in Q2 2021.
Book-to-burn ratio was 1.4x, marking the fourth consecutive quarter with a positive ratio.
Noncore backlog reduced to less than 3% of total backlog, improving mix.

Concerns

Consolidated revenue decreased to $107 million from $128 million in Q2 2025.
Project ramp-up times were longer than expected (6-7 months vs. 3-4 months), slowing revenue momentum.
Net loss was $5 million, despite being a 44% improvement from $9 million in Q2 2025.
G&A expense increased by $1 million to $16 million due to higher one-time legal costs and equity issuance.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 revenue	$525 million to $575 million high materiality	FY26	High
Full-year 2026 Adjusted EBITDA	$15 million to $30 million high materiality	FY26	High

Orderbook & backlog

New work booked in Q2 $138 million Q2 2026

Additional new awards subsequent to quarter end $221 million Subsequent to Q2 2026 end

Will contribute to backlog in 2026

Combined backlog (total + pending awards) over $1.2 billion Subsequent to Q2 2026 end

Includes $991 million total backlog and $221 million pending awards

Deals & partnerships

Myer Schimek joint venture, AXCElectric LA Metro North Hollywood to Pasadena Bus Rapid Transit project $80 million

Strengthens strategic industry partnerships and demonstrates ability to execute complex multidisciplinary infrastructure projects.

Client (unnamed) Coyote Creek flood protection project in Northern California $124 million

Expanding leadership in water infrastructure and climate resiliency, delivering critical flood mitigation improvements.

Client (unnamed) Walnut Creek wastewater treatment plant expansion in Texas $42 million

Further expanding presence in one of the nation's fastest-growing water infrastructure markets.

Axia Electric UC Berkeley's electrified heating and cooling plant project $20 million

Supporting the university's transition to a modernized all-electric energy system.

Risks & headwinds

Longer project ramp-up times Past couple of quarters

6-7 months for some projects, compared to typical 3-4 months

Mitigation:Projects are funded and starting now, providing confidence that activity is translating into execution.

Increased G&A expenses Q2 2026

Up $1 million to $16 million in Q2 2026

Mitigation:Driven by higher one-time legal costs and equity issuance; company remains committed to optimizing overhead costs while growing top line.

Legacy projects with negative cash flows Past quarters, concluding Q2 2026 for Tennessee project

Q2 2026 was the last quarter for demobilization from the Tennessee project

Mitigation:Noncore backlog now less than 3% of total; new projects are designed to be cash positive, expecting cash flow and liquidity to improve.

Ongoing Tennessee project resolution Ongoing

Not specified, but will take 'a little while'

Mitigation:Expect an amicable solution with the client; the project is running its course with decreasing volumes quarter after quarter, with no perceived risk or issue.

What to watch in Q3 FY26

Revenue acceleration from new projects

Rest of the year and into '27

Current Revenue was $107 million, slowed by longer ramp-up times

Target Significant improvement in revenue

Why it matters

Indicates successful conversion of growing backlog into top-line growth, validating the strategy of pursuing higher-quality projects.

But we're very pleased with the margins, like you said. And I think the rest of the backlog represents these kinds of margins and more -- so we're -- we expect -- as those projects continue to ramp up and the new projects continue to ramp up. We expect a pretty significant improvement the rest of the year and into '27.

Find out whether SHIM delivers this. Inve re-checks your case every morning.

Q&A highlights

Asked about the discrepancy between strong margins and lower-than-expected revenue, and if current margins are representative of the future backlog.

Management explained that longer-than-expected project ramp-up times (6-7 months vs. 3-4 months) slowed revenue momentum. They expect significant revenue improvement in the second half of the year and into 2027, with current margins being representative and potentially improving as new projects ramp up.

“But we're very pleased with the margins, like you said. And I think the rest of the backlog represents these kinds of margins and more -- so we're -- we expect -- as those projects continue to ramp up and the new projects continue to ramp up. We expect a pretty significant improvement the rest of the year and into '27.”

asked by Gerard Sweeney · answered by Ural Yal

2 min read 6 chapters

Detailed narrative

Strategic Execution and Operational Improvements

Shimmick continued to execute its strategy by making further progress winding down noncore projects while driving operational improvements across the business. These efforts enhanced efficiency, improved execution, and supported consistent margins. The company's focus on safety is tracking ahead of 2025 levels, and enhanced project controls and cost management initiatives are contributing to margin consistency despite a dynamic operating environment.

Backlog Growth and Quality

The company's total backlog reached $991 million at the end of Q2 FY26, its highest level in 2 years. This was further bolstered by $221 million in additional new awards subsequent to quarter end, bringing the combined total to over $1.2 billion.

This growth reflects improved win rates and a disciplined approach to pursuing higher-quality, lower-risk projects in key growth markets like water, transportation, power, and electrification.

Mission-Critical Market Focus

Shimmick established a dedicated Mission Critical business unit to capitalize on strong demand in data centers, advanced manufacturing, defense, renewables, and critical minerals. The data center market is a significant focus, with a large project in West Virginia transitioning to preconstruction and construction anticipated to start within 60 days.

Management expects this segment to become a sizable portion of the business within 12 months, with target gross margins of 15-20%.

Project Ramp-Up and Revenue Visibility

While some projects experienced longer-than-expected ramp-up times (6-7 months compared to the typical 3-4 months), management noted that these projects are now beginning to move forward into execution. Less than 10% of the backlog booked over the past 12 months has converted into revenue to date, providing meaningful visibility and supporting expectations for continued revenue growth in upcoming quarters as these projects ramp up.

Margin Expansion Drivers

The company anticipates further margin expansion as more recently awarded, higher-margin projects move from backlog into active construction. The reduction of noncore backlog to less than 3% of the total backlog is expected to have a favorable mix impact on total gross margins moving forward on a year-over-year basis, contributing to improved absorption of overhead.

Geographic and Overhead Management

Shimmick remains focused on core markets in California, Texas, and Washington, with Texas offering significant opportunities in water and data centers. The company is also following key customers to adjacent regions through its new mission-critical business unit. Management is committed to optimizing SG&A costs, aiming to keep them at current levels while investing in the business, leveraging existing overhead structure to support higher revenue volumes.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.