Tariff Turmoil and Legacy Project Tensions: Contradictions from the Latest Earnings Call

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Revenue and Gross Margin Improvement:
- Shimmick reported revenue of $122 million for Q1 2025, with a gross margin of $5 million and an adjusted EBITDA of negative $3 million.
- The improvement was driven by operational enhancements on Shimmick projects and reduced losses on legacy projects.

Backlog and Bid Activity:
- Shimmick's backlog ended the first quarter at approximately $740 million, with 90% of it being Shimmick projects.
- The company almost tripled its bid activity since the last quarter, with a robust proposal pipeline of roughly $2 billion.
- This increase in bid activity was due to a slowdown in bidding for larger public projects and clients waiting for funding certainty.

Tariff and Market Uncertainty:
- Shimmick's existing projects are minimally impacted by tariffs as materials are under fixed-price contracts.
- The company is monitoring tariffs and market uncertainties, with a focus on winning the right way and maintaining financial discipline.
- Uncertainty around funding streams and tariffs has temporarily paused bidding activity for larger public projects.

Electrical and Technology Infrastructure Expansion:
- Shimmick's backlog is expected to grow as the company targets an increase in electrical work to 30% by 2027.
- The expansion is driven by technological improvements and growing needs in water, transit, data centers, and other segments.
- Recent wins in the electrical and technology-driven infrastructure market have contributed to this growth.

Financial Guidance and Liquidity:
- Shimmick's liquidity remains strong, ending the first quarter with $71 million in total liquidity.
- The company is reaffirming its full-year guidance, expecting Shimmick projects revenue to increase 10% to 15% with overall gross margin between 9% and 12%.
- The strong liquidity position supports strategic and operational plans, including expanding into electrical and technology infrastructure markets.