Shimmick Corp (SHIM): A Turnaround Story in Infrastructure’s Golden Age

Amid a volatile macroeconomic backdrop, Shimmick Corp (SHIM) has quietly positioned itself at the intersection of two unstoppable trends: the global push for climate-resilient infrastructure and the sector’s consolidation-driven efficiency gains. While its stock price has been battered by legacy project losses, a deep dive into its operational metrics reveals a company undergoing a textbook turnaround. For investors willing to look past near-term noise, SHIM offers a compelling “buy” opportunity to capitalize on a $740 million backlog of high-margin projects and a margin recovery that’s just hitting its stride.

From Losses to Liftoff: The Gross Margin Turnaround

The most striking turnaround metric is SHIM’s gross margin, which improved from a -13% drag in Q1 2024 to a +4% contribution in Q1 2025—a $21 million swing. This isn’t luck. It’s the result of ruthless cost discipline and a strategic pivot toward high-margin water infrastructure and climate resilience projects.

The California Palisades fire cleanup project alone contributed $3 million to Q1 margins, while new water projects added another $3 million. Crucially, losses on Legacy Projects (inherited from AECOM) narrowed by $14 million year-over-year, as the company winds down costly projects and renegotiates contracts.

This margin trajectory is no flash in the pan. Management’s “transformation plan”—which slashed SG&A expenses by 11% in Q1 2025—has freed up capital to focus on profitable work. With 2025 guidance calling for 9-12% gross margins on Shimmick Projects (vs. 4% in Q1), the runway for improvement is clear.

$740M Backlog: The Engine of Future Growth

SHIM’s $740 million backlog (as of April 2025) is the crown jewel of this turnaround story. A staggering 87% of this backlog is tied to Shimmick Projects—work in water, energy transition, and sustainable transportation that aligns with Biden’s $1.2 trillion infrastructure plan and global climate spending. These are sectors where price competition is minimal, and margins are protected by long-term contracts and government priorities.

Even as Legacy Projects wind down, the backlog’s quality is unmatched. Bidding opportunities for 2025 alone total $2 billion, with wins likely skewed toward Shimmick’s sweet spot: fixed-price contracts for critical infrastructure like the Murray Street Bridge and North Hollywood Bus Rapid Transit.

The skeptics argue that SHIM’s $10 million Q1 net loss disqualifies it as an investment. But this misses the bigger picture: 80% of the loss stems from Legacy Projects, which are being systematically retired. By 2026, these projects will contribute just $50-60 million in revenue—a fraction of the $2 billion backlog pipeline.

A Contrarian Opportunity as Institutions Exit

SHIM’s shares have been under pressure from institutional sell-offs and insider sales, creating a buying opportunity. While large funds have reduced exposure—likely due to short-term losses—the stock now trades at 3.5x projected 2025 EBITDA (vs. peers at 8-10x). This discount ignores the fact that 60% of 2025 revenue growth is already locked into backlog.

Insider sales, meanwhile, are less ominous than they appear. CEO Ural Yal and CFO Devin Nordhagen have maintained significant stakes, while the 144 filings reflect standard liquidity needs—not a lack of confidence.

Risks vs. Rewards: The Calculus for 2025

The risks are clear:
- Near-term losses: The net loss could widen in Q2 as Legacy Projects’ final costs crystallize.
- Tariffs and supply chains: Geopolitical risks (e.g., Red Sea conflicts) could delay projects.

But the rewards are asymmetric:
- Margin leverage: Every dollar of Shimmick Projects’ 10-15% revenue growth in 2025 will drop to the bottom line at a 9-12% margin, driving a $15-25 million EBITDA turnaround.
- Debt flexibility: With $71 million in cash and a new $15 million credit facility, liquidity is secure.

Why Buy Now?

SHIM is a play on the infrastructure boom—a theme that’s only gaining momentum. With a backlog-to-revenue ratio of 4:1 (vs. industry averages of 2:1), the company is primed to deliver exponential growth as projects convert into revenue. The stock’s current valuation reflects legacy pain, not its future as a high-margin infrastructure specialist.

The catalysts are clear:
- 2025 execution: Deliver on 10-15% Shimmick Project growth and 9-12% margins.
- Debt renegotiation: Resolve the $32 million credit facility issue (already in talks).

For investors with a 12-18 month horizon, SHIM offers a risk/reward ratio unmatched in the sector. The margin turnaround is real, the backlog is bulletproof, and the sell-off has priced in worst-case scenarios. This is a once-in-a-cycle opportunity to buy a turnaround story with infrastructure’s tailwind at its back.

Rating: Buy
Target Price: $8.50 (based on 10x 2025E EBITDA of $25M)

This analysis is based on SEC filings, earnings releases, and management commentary as of May 13, 2025.