ROC
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
每个类别的标题 |
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交易 符号: |
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在其上注册的交易所的名称 |
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请在以下复选框中打勾，指示注册人：(1)在前12个月(或注册人被要求提交这些报告的更短期间内)已经提交了1934年证券交易法第13或15(d)条规定需要提交的所有报告；以及(2)在过去的90天内一直受到了此类文件提交要求的限制。
请在以下复选框中打勾，指示注册人是否已经电子提交了根据Regulation S-T规则405条(本章节的§232.405条)需要提交的所有互动数据文件在过去的12个月内(或注册人被要求提交这些文件的更短期间内)。
勾选以下选框，指示申报人是大型加速评估提交人、加速评估提交人、非加速评估提交人、小型报告公司或新兴成长型公司。关于“大型加速评估提交人”、“加速评估提交人”、“小型报告公司”和“新兴成长型公司”的定义，请参见《交易所法规》第12亿.2条。
大型加速报告人 |
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加速文件提交人 |
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较小的报告公司 |
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新兴成长公司 |
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如果是新兴成长型企业，请勾选复选标记，表明注册者已选择不使用延长过渡期来符合根据证券交易法第13(a)条规定提供的任何新财务会计准则。
请勾选“是”，如果报告人是外壳公司（定义见证券交易法规则12b-2）。是 ☐ 没有
截至2024年11月7日，注册人员
前瞻性声明
我们在本季度10-Q表格（“10-Q表格”）中做出前瞻性声明，涉及到1933年证券法修正案第27A节（“证券法”）和1934年证券交易法修正案第21E节（“交易所法案”）的含义，并受到风险和不确定性的影响。对于这些声明，我们声称受到该等节所含前瞻性声明的安全港保护。这些前瞻性声明包括关于我们业务、财务状况、流动性、运营结果、计划和目标可能或假定的未来结果的信息。当我们使用“相信”、“期待”、“预计”、“估计”、“计划”、“继续”、“打算”、“项目”、“将”、“应该”、“可能”或类似表达时，我们意图确定前瞻性声明。但是，缺乏这些词语或类似表达并不意味着一项声明不是前瞻性。所有涉及我们预期或期望将来发生的营运绩效、事件或发展的声明都是前瞻性声明。
前瞻性陈述受到重大风险和不确定性的影响。投资者被提醒不要过度依赖这些陈述。实际上，结果可能与前瞻性陈述中所列的内容有实质性的差异。因此，任何此类陈述都必须根据我们2023财年截至2023年12月29日的10-K表格年报中标题为“前瞻性陈述”和“风险因素”部分中包含的重要因素进行全面的限定，并且有可能不时在我们未来的SEC报告中描述的其他假设和因素（除了特定提到的与此类前瞻性陈述相关的假设和其他因素）对于我们的运营和财务结果可能产生重大影响，并可能导致我们的实际结果与我们在本10-Q表格、演示文稿、我们的网站、回答问题或以其他方式所作的前瞻性陈述中包含或暗示的内容产生实质性的差异。我们认为这些因素包括但不限于以下内容：
2
任何前瞻性声明仅于其作出之日起生效，我们无需对前瞻性声明进行更新，以反映在作出前瞻性声明之日后发生的事件或情况，包括但不限于意外事件，除非法律要求。 新因素不时出现，管理层无法预测所有这些因素，也无法评估每个因素对业务的影响，或任何因素，或多种因素可能导致实际结果与任何前瞻性声明中包含或暗示的结果实质上不同的程度。
3
目录
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页面 |
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第I部分 |
5 |
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项目1。 |
5 |
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6 |
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7 |
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8 |
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9 |
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项目2。 |
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项目3。 |
37 |
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项目4。 |
37 |
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第二部分 |
38 |
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项目1。 |
38 |
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项目1A。 |
38 |
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项目2。 |
38 |
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项目3。 |
38 |
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项目4。 |
38 |
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项目5。 |
38 |
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项目6。 |
39 |
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4
第一部分国际泳联社交信息
项目 1。财务报表。财务报表
Shimmick 公司
缩减式综合账户汇编负债表
（单位：千美元，以股份数据为单位）
(未经审计)
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9月27日, |
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12月29日 |
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2024 |
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2023 |
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资产 |
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流动资产 |
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现金及现金等价物 |
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$ |
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受限现金 |
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应收账款，净额 |
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合同资产，流动 |
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预付款项及其他流动资产 |
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总流动资产 |
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物业、厂房和设备，净值 |
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无形资产-净额 |
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合同资产，非流动的 |
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租赁使用权资产 |
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对非合并合营企业的投资 |
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递延税款资产 |
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其他资产 |
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资产总计 |
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$ |
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$ |
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负债和股东权益 |
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流动负债 |
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应付账款 |
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$ |
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$ |
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合同负债，流动 |
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应计的工资、工资和福利 |
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应计费用 |
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其他流动负债 |
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流动负债合计 |
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长期负债净额 |
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非流动租赁负债 |
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合同负债，长期 |
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附带条件 |
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递延所得税负债 |
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其他负债 |
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负债合计 |
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股东权益 |
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普通股，每股面值为 $0.0001； |
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股本溢价 |
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保留盈亏（赤字） |
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非控制性权益 |
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股东权益合计 |
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负债合计及股东权益总计 |
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$ |
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$ |
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请参见附带的简明合并财务报表附注。
5
Shimmick 公司
综合汇编陈述运营报表
(以千为单位，除每股数据外)
(未经审计)
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截至三个月 |
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截至九个月 |
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9月27日, |
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九月二十九日， |
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9月27日, |
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九月二十九日， |
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2024 |
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2023 |
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2024 |
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2023 |
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收入 |
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$ |
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$ |
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营收成本 |
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毛利率 |
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销售、一般和管理费用 |
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ERP实施前资产减值及相关成本 |
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总营业费用 |
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对未合并合资企业的收益（亏损）权益 |
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资产出售收益 |
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营业收入（亏损） |
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利息支出 |
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其他费用，净额 |
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所得税前的净（亏损）收入 |
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所得税费用 |
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净利润（亏损） |
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归属于非控股股权的净利润 |
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归属于Shimmick Corporation的净（亏损）收入 |
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$ |
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$ |
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$ |
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$ |
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每股普通股归属于Shimmick Corporation的净（亏损）收入 |
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基本 |
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$ |
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$ |
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$ |
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$ |
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摊薄 |
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$ |
( |
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$ |
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$ |
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$ |
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请参见附带的简明合并财务报表附注。
6
Shimmick 公司
压缩合并财务报表股东权益的构成
（单位：千美元，以股份数据为单位）
(未经审计)
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普通股 |
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额外的 |
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保留（赤字） |
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股东权益 |
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总计 |
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股份 |
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金额 |
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资本 |
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收益 |
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利益 |
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股权 |
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2024年6月28日余额 |
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$ |
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$ |
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$ |
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$ |
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$ |
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净亏损 |
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- |
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普通股发行 |
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基于股票的补偿 |
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- |
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来自非控股权益的贡献 |
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- |
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截至2024年9月27日的余额 |
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$ |
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$ |
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$ |
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$ |
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$ |
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普通股 |
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额外的 |
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留存（赤字） |
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股东权益 |
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总计 |
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股份 |
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金额 |
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资本 |
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收益 |
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利益 |
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股权 |
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截至2023年6月30日的余额 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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净利润 |
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— |
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行使股票期权 |
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基于股票的补偿 |
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— |
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截至2013年9月29日的余额 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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普通股 |
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额外的 |
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保留（赤字） |
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股东权益 |
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总计 |
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股份 |
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金额 |
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资本 |
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收益 |
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利益 |
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股权 |
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截至2023年12月29日的余额 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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净亏损 |
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— |
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( |
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普通股发行 |
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基于股票的补偿 |
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— |
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来自非控股权益的贡献 |
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— |
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分配给非控股股权的股东 |
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— |
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( |
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截至2024年9月27日的余额 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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普通股 |
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额外的 |
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保留（赤字） |
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股东权益 |
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总计 |
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股份 |
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金额 |
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资本 |
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收益 |
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利益 |
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股权 |
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截至2022年12月30日的余额 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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净利润 |
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— |
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行使股票期权 |
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基于股票的补偿 |
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— |
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来自非控股权益的贡献 |
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— |
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分配给非控股股权的股东 |
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— |
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( |
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( |
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截至2013年9月29日的余额 |
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$ |
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$ |
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$ |
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|
$ |
( |
) |
|
$ |
|
|||||
请参见附带的简明合并财务报表附注。
7
Shimmick 公司
综合汇编陈述现金流量表
(以千为单位)
(未经审计)
|
|
截至九个月 |
|
|||||
|
|
9月27日, |
|
|
九月二十九日， |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
经营活动现金流 |
|
|
|
|
|
|
||
净（亏损）收益 |
|
$ |
( |
) |
|
$ |
|
|
调整以将净（亏损）收益调节为经营活动中使用的现金净额： |
|
|
|
|
|
|
||
基于股票的补偿 |
|
|
|
|
|
|
||
折旧和摊销 |
|
|
|
|
|
|
||
未合并联营企业的投资收益（损失） |
|
|
|
|
|
( |
) |
|
未合并联营企业的投资回报率 |
|
|
|
|
|
|
||
ERP预实施资产减值 |
|
|
|
|
|
|
||
资产出售收益 |
|
|
( |
) |
|
|
( |
) |
其他 |
|
|
|
|
|
|
||
运营资产和负债的变化： |
|
|
|
|
|
|
||
应收账款，净额 |
|
|
|
|
|
( |
) |
|
合同资产 |
|
|
( |
) |
|
|
( |
) |
应付账款 |
|
|
( |
) |
|
|
|
|
合同责任 |
|
|
( |
) |
|
|
( |
) |
应计的工资、工资和福利 |
|
|
|
|
|
( |
) |
|
应计费用 |
|
|
|
|
|
( |
) |
|
其他资产和负债 |
|
|
|
|
|
( |
) |
|
用于经营活动的净现金 |
|
|
( |
) |
|
|
( |
) |
投资活动产生的现金流量 |
|
|
|
|
|
|
||
购买固定资产 |
|
|
( |
) |
|
|
( |
) |
资产出售收益 |
|
|
|
|
|
|
||
非合并的合资创业公司股权投资 |
|
|
( |
) |
|
|
( |
) |
对非合并的合资创业公司的投资回报 |
|
|
|
|
|
|
||
投资活动提供的净现金流量 |
|
|
|
|
|
|
||
筹资活动现金流量 |
|
|
|
|
|
|
||
信贷设施的净借款 |
|
|
|
|
|
|
||
循环信贷设施的净（偿还）借款 |
|
|
( |
) |
|
|
|
|
其他，净数 |
|
|
( |
) |
|
|
( |
) |
融资活动提供的净现金 |
|
|
|
|
|
|
||
现金、现金等价物和受限制现金净减少额 |
|
|
( |
) |
|
|
( |
) |
期初现金、现金等价物及受限制的现金 |
|
|
|
|
|
|
||
现金、现金等价物和限制性现金，期末余额 |
|
$ |
|
|
$ |
|
||
现金、现金等价物和受限现金的调节 |
|
|
|
|
|
|
||
资产负债表摘要 |
|
|
|
|
|
|
||
现金及现金等价物 |
|
$ |
|
|
$ |
|
||
受限现金 |
|
|
|
|
|
|
||
现金、现金等价物和受限制的现金总额 |
|
$ |
|
|
$ |
|
||
请参见附带的简明合并财务报表附注。
8
Shimmick 公司
简明合并基本报表的附注简明合并基本报表
(未经审计)
注释1. 业务和组织
Shimmick公司（"Shimmick", "公司"）成立于1990年，位于加利福尼亚，作为区域型基础设施施工承包商在加利福尼亚运营近30年。2017年，AECOm收购了Shimmick，并将其与现有的施工服务整合，包括来自Morrison Knudsen、Washington Group International及其他公司的前期施工业务。2021年1月，我们完成了AECOm销售交易，并开始作为一家在新私人所有权下独立运营的公司（"AECOm销售交易"）。
随附的简明合并基本报表包括Shimmick公司及其子公司的账户（“Shimmick”、“我们”、“我们的”、“我们”、“其”或“公司”），除非另有说明。2023年9月12日，公司将名称从SCCI National Holdings, Inc.更改为Shimmick Corporation。
注2. 报告基础和重要会计政策摘要
呈现基础
附表简明综合财务报表已按照美国通用会计原则（“GAAP”）和证券交易委员会的规则和法规准备。所提供的信息反映了所有调整，包括一切正常和反复发生的调整，据管理层认为这些调整是为了公正地展示所述中期期间的经营成果、现金流量和财务状况而必要的。由于公司的经营结果中不包含任何被分类为综合收益的项目，因此未提供综合收益表。所有子公司账户和交易已被消除。根据规则和法规，通常包含在根据GAAP编制的财务报表中的某些信息和附注披露已被压缩或省略，尽管管理层认为这些披露足以防止所呈现的信息产生误导。附表简明综合中期财务报表尚未经审计，应与我们截至2023年12月29日的年度报告中的审计的综合财务报表和附注一起阅读（“10-K表”）。由于公司部分业务具有季节性特点，截至2024年9月27日的三个月和九个月的经营成果不能完全反映全年的经营成果。
报告中的变更
部分之前期平衡在简明综合资产负债表、损益表和现金流量表以及相应附注中已经被合并、重新分类或舍入以符合当前期展示。这些更改对之前报告的净（损失）收入、现金流量、资产和负债或权益没有影响。
重要会计政策摘要
我们的重大会计政策在我们的10-k表格的第2节“报告基础和重大会计政策摘要”中有更详细的描述。
使用估计
根据通用会计准则，我们编制的简明综合财务报表需要管理层做出影响简明综合财务报表和附注中包括的报告金额的估计和假设。实际结果可能会与这些估计不同。
最近发布的会计声明
未列在下文的会计公告已经过评估并确定不适用或预计对简明综合财务报表影响不大。
9
在2023年11月，FASB发布了ASU 2023-07，以增强报告业务部门的重要费用和细分盈利类别及金额的披露。该修订在2024年12月15日后开始的财政年度的中期有效，允许提前采用。公司目前正在评估修订的条款及其对未来合并基本报表的影响。
在2023年12月，FASB发布了ASU 2023-09，以改善信息披露和展示要求，通过要求一致的类别和更大的信息细分，提升所得税披露的透明度，涵盖税率调节和按辖区划分的已支付所得税。该修订在2024年12月15日后开始的财政年度的中期有效，允许提前采用。公司目前正在评估修订的条款及其对未来合并基本报表的影响。
注意3. 营业收入、应收账款和合同资产及负债
该 下表展示了公司按合同类型展开的营业收入：
|
|
截至三个月 |
|
|
截至九个月 |
|
||||||||||
|
|
9月27日, |
|
|
九月二十九日， |
|
|
9月27日, |
|
|
九月二十九日， |
|
||||
(以千为单位) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
固定价格 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
成本可报销的 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
设备和劳务收入 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
总营业收入 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
AECOm售卖交易之后启动的项目（“Shimmick项目”）专注于水利设施和其他重要设施。专注于基础钻探的项目被称为“基础项目”。在AECOm售卖交易完成之前启动的项目被称为“传统项目”。
以下表格显示了公司按Shimmick项目、基础项目和传统项目分类的营业收入：
|
|
截至三个月 |
|
|
截至九个月 |
|
||||||||||
|
|
9月27日, |
|
|
九月二十九日， |
|
|
9月27日, |
|
|
九月二十九日， |
|
||||
(以千为单位) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Shimmick 项目 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
基础项目 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
传统项目(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
总营业收入 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(1)
2023年9月30日
截至2024年4月30日和2024年1月31日，公司的现金及现金等价物合计为$百万。
10
合同余额
以下表格提供了有关合同资产（也称为未完成合同上的成本和预计收入超过开票金额以及应收尾款）和合同负债（也称为未完成合同上的开票金额超过成本和预计收入及前瞻性损失准备金）的信息，其中包括依赖未来活动的资产和负债:
|
|
9月27日, |
|
|
12月29日 |
|
|
|
|
|||
|
|
2024 |
|
|
2023 |
|
|
变化 |
|
|||
(以千为单位) |
|
|
|
|
|
|
|
|
|
|||
合同资产，流动和非流动: |
|
|
|
|
|
|
|
|
|
|||
未完成合同上的成本和预计收入超过开票金额 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
应收尾款 |
|
|
|
|
|
|
|
|
|
|||
总合同资产 |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
合同负债，流动和非流动部分： |
|
|
|
|
|
|
|
|
|
|||
未完成合同的计费超过成本和预计收益 |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
预期亏损准备金 |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
总合同负债 |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
净额 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
公司与客户的合同条款包括账单和付款的时间，通常不同于营业收入确认的时间。因此，公司在精简合并资产负债表中持有合同资产和负债。这些合同资产和负债是根据合同逐个计算的，并且在每个期间结束时以净额报告，并被分类为流动或非流动。公司执行工作的许多合同也包含应保留款项条款。保留款指的是客户暂时留存的我们账单的部分，待项目圆满完成后支付。除非进行预留，公司假定客户根据此类条款保留的所有金额是完全可收回的。这些资产和负债在精简合并资产负债表中报告为“合同资产，流动”，“合同资产，非流动”，“合同负债，流动”和“合同负债，非流动”。在未完成合同中的已计费的成本和预计收益超过计费的部分包括超额确认的营业收入。 未完成合同中已计费的金额超过成本和预计收益的部分包括超额计费的营业收入。公司确认的营业收入 员工福利计划
公司收入确认的时间可能与其收取现金的权利不一致。这些权利通常取决于预付账款条款、基于工作某些阶段完成或服务执行时的里程碑账单。
|
|
9月27日, |
|
|
12月29日 |
|
||
|
|
2024 |
|
|
2023 |
|
||
(以千为单位) |
|
|
|
|
|
|
||
应收账款总额，毛额 |
|
$ |
|
|
$ |
|
||
信贷损失准备 |
|
|
( |
) |
|
|
( |
) |
应收账款，净额 |
|
$ |
|
|
$ |
|
||
截至2024年9月27日和2023年12月29日，几乎所有的合同资产预计会在公司估计的营业周期内收回，除了与某些合同相关的尾款和索赔。公司的营业周期可能超过一年。
公司正在就未经批准的变更订单和索赔与客户进行谈判或等待批准。公司正在根据完成与变更订单相关的工作，包括待定变更订单定价或与范围发生重大变化导致工作遭受重大延迟和额外成本的索赔，行使其合同权利以收回从客户那里产生的额外成本。如果双方无法达成相互接受的解决方案，公司可能采取法律行动。
11
有关重要客户的信息
重要客户占应收账款的百分比，净额 |
|
|
|
截至 2024 年 9 月 27 日 |
|
|
|
客户一 |
|
|
|
客户二 |
|
|
|
|
|
|
|
截至 2023 年 12 月 29 日 |
|
|
|
客户一 |
|
|
|
客户二 |
|
|
重要客户占收入的百分比 |
|
|
|
截至2024年9月27日的三个月 |
|
|
|
客户一 |
|
|
|
客户二 |
|
|
|
客户三 |
|
|
|
客户四 |
|
|
|
|
|
|
|
截至2023年9月29日的三个月 |
|
|
|
客户一 |
|
|
|
客户二 |
|
|
|
客户三 |
|
|
重要客户占收入的百分比 |
|
|
|
截至2024年9月27日的九个月 |
|
|
|
客户一 |
|
|
|
客户二 |
|
|
|
客户三 |
|
|
|
|
|
|
|
截至2023年9月29日的九个月 |
|
|
|
客户一 |
|
|
|
客户二 |
|
|
|
客户三 |
|
|
估计数的修订
合同估计值的变化导致毛利率净增长美元
12
第4节。合资企业和可变利益实体
下列是合并合资企业的财务信息摘要：
|
|
9月27日, |
|
|
12月29日 |
|
||
|
|
2024 |
|
|
2023 |
|
||
(以千为单位) |
|
|
|
|
|
|
||
流动资产 |
|
$ |
|
|
$ |
|
||
非流动资产 |
|
|
|
|
|
|
||
总资产 |
|
|
|
|
|
|
||
流动负债 |
|
|
|
|
|
|
||
非流动负债 |
|
|
|
|
|
|
||
总负债 |
|
$ |
|
|
$ |
|
||
|
|
截至三个月 |
|
|
截至九个月 |
|
||||||||||
|
|
9月27日, |
|
|
九月二十九日， |
|
|
9月27日, |
|
|
九月二十九日， |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
(以千为单位) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
收入 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
公司的合并创业公司资产仅限于特定合资企业使用，不可用于公司的一般业务。
非合并的创业公司的财务基本报表摘要信息，来源于他们的财务报表， 具体如下：
|
|
9月27日, |
|
|
12月29日 |
|
||
|
|
2024 |
|
|
2023 |
|
||
(以千为单位) |
|
|
|
|
|
|
||
流动资产 |
|
$ |
|
|
$ |
|
||
非流动资产 |
|
|
|
|
|
|
||
总资产 |
|
|
|
|
|
|
||
流动负债 |
|
|
|
|
|
|
||
总负债 |
|
$ |
|
|
$ |
|
||
|
|
截至三个月 |
|
|
截至九个月 |
|
||||||||||
|
|
9月27日, |
|
|
九月二十九日， |
|
|
9月27日, |
|
|
九月二十九日， |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
(以千为单位) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
收入 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
营收成本 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
毛利率 |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
净利润（亏损） |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
公司分别在2024年9月27日和2023年9月29日 ended 方三个月和九个月的合营企业中确认了权益盈余(损失) $ million。
合同约定的支持内容在基本报表中 第11条 - 承诺和事项 中讨论。
13
关联方交易
我们经常向公司的创业公司提供施工管理和其他分包服务，营业收入包括与这些服务相关的金额，这部分金额在我们的持股比例内被消除。
|
|
截至三个月 |
|
|
截至九个月 |
|
||||||||||
|
|
9月27日, |
|
|
九月二十九日， |
|
|
9月27日, |
|
|
九月二十九日， |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
(以千为单位) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
收入 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
截至2024年9月27日和2023年12月29日，与对未合并合资企业提供的服务相关的金额已包含在简明合并资产负债表中。 如下：
|
|
9月27日, |
|
|
12月29日 |
|
||
|
|
2024 |
|
|
2023 |
|
||
(以千为单位) |
|
|
|
|
|
|
||
应收账款，净额 |
|
$ |
|
|
$ |
|
||
备注5. 物业、厂房和设备及无形资产
以下表格总结了截至2024年9月27日和2023年12月29日的物业、厂房和设备的元件，以及截至2024年9月27日和2023年9月29日的三个月和九个月的折旧费用。
|
|
9月27日, |
|
|
12月29日 |
|
||
(以千为单位) |
|
2024 |
|
|
2023 |
|
||
建筑物、土地和租赁改进 |
|
$ |
|
|
$ |
|
||
机械、设备和车辆 |
|
|
|
|
|
|
||
办公设备、软件和在建工程 |
|
|
|
|
|
|
||
物业、厂房和设备总额 |
|
|
|
|
|
|
||
累计折旧 |
|
|
( |
) |
|
|
( |
) |
物业、厂房和设备，净值 |
|
$ |
|
|
$ |
|
||
|
|
截至三个月 |
|
|
截至九个月 |
|
||||||||||
|
|
9月27日, |
|
|
九月二十九日， |
|
|
9月27日, |
|
|
九月二十九日， |
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
(以千为单位) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
折旧费用 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
折旧在营业收入以及销售、一般和管理费用中登记，并采用直线法计算，按资产的预计使用年限，或在租赁改进和资本化租赁的情况下，按租约剩余期限或其预计使用年限中较短者计算。
截至2024年9月27日的三个月中，Shimmick完成了公司位于加利福尼亚州特雷西的设备场地的售后回租。该协议完成了设备场地以$
在截至2024年9月27日的三个月期间，Shimmick做出了增强公司现有企业资源计划（ERP）系统的战略决定，而不是实施一个新平台，因之前资本化的预实施成本和剩余的合同义务为$
14
2024. 资产注销在ERP实施前的资产减值及相关费用中记录于简明合并经营报表中。
以下表格展示了公司的有限使用寿命无形资产，包括每个主要无形资产类别及总的加权平均使用寿命：
|
|
2024年9月27日 |
|||||||||||||||
(以千为单位) |
|
剩余加权平均使用年限（单位：年） |
|
|
无形资产，毛额 |
|
|
累计摊销 |
|
|
无形资产净值 |
|
|
||||
商标 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|||
客户合同 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|||
总计 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
2023年12月29日 |
|
|||||||||||||
(以千为单位) |
|
加权平均剩余使用寿命（以年计） |
|
|
无形资产，毛额 |
|
|
累计摊销 |
|
|
无形资产净值 |
|
||||
商标 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
客户合同 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
总计 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
公司的预计剩余摊销总额如下：
|
|
摊销 |
|
|
(以千为单位) |
|
费用 |
|
|
2024 |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
总计 |
|
$ |
|
|
注释6. 债务
总债务余额在压缩合并资产负债表中列示如下:
(以千为单位) |
|
2024年9月27日 |
|
|
2023年12月29日 |
|
||
信贷设施 |
|
$ |
|
|
$ |
|
||
循环授信设施 |
|
|
|
|
|
|
||
尚未摊销的债务发行费用 |
|
|
( |
) |
|
|
( |
) |
长期债务，净额 |
|
$ |
|
|
$ |
|
||
循环授信设施
在2023年3月27日，我们与MidCap Financial Services, LLC签订了循环信贷协议，该协议最初提供的总承诺金额为$
15
截至2024年9月27日的三个月内，我们偿还了$
信贷设施
在2024年5月20日，公司作为担保方，其全资子公司作为借款方（“借款方”）、Alter Domus (US) LLC作为代理人，以及AECOM和伯克希尔哈撒韦专业保险公司（“BHSI”）作为贷方，签订了一项循环信贷额度协议（“信贷协议”），该协议于2024年9月25日进行了修改，其中包括允许公司同时修订循环信贷额度。根据修订后的信贷协议，贷款容量最高可达$
信贷协议到期日为
借款人在信贷协议下的义务由公司担保，并通过对公司和借款人几乎所有资产的担保进行担保。
信贷协议包含这类交易的常规肯定性和否定性契约，包括限制担保权、资产出售和投资的契约，每种情况均遵循协商的例外和限制。此外，信贷协议还包含自2025年第四季度结束后的季度审查开始的最大杠杆比率契约。信贷协议还包含这种类型交易的常规陈述和保证以及违约条款。公司至2024年9月27日并不知晓任何不遵守财务契约的情况。截至2024年9月27日，信贷额度下未偿还金额为$
注7.所得税
我们通过将我们估计的年度实际税率应用于我们截至年初的税前收入，并在发生时期内进行离散税收项目的调整，来计算年初至今的所得税费用。
第二季度和2024年上半年的有效税率分别为
截至2024年9月27日的九个月，由于今年的亏损产生的递延税费用完全被估值准备所抵销，导致零税费支出。
截至2023年9月29日的九个月，由于亏损产生的递延税费用完全被估值准备所抵销，导致零税费支出。
公司一般预计
递延所得税资产和负债
我们确认未来税务后果产生的递延税资产和负债，这是由于根据美国通用会计准则资产和负债的账面价值与其各自的税基之间存在差异，以及净经营亏损结转和税收积分结转。我们评估我们的递延税资产的回收能力，权衡所有正面和负面证据，如果我们判断部分或全部递延税资产不太可能会实现，我们需要建立或维持针对这些资产的减值备抵。
16
As of each reporting date, we consider new evidence, both positive and negative, that could impact our view with regard to the future realization of deferred tax assets. We will maintain our positions with regard to future realization of deferred tax assets, including those with respect to which we continue maintaining valuation allowances, until there is sufficient new evidence to support a change in expectations. Such a change in expectations could arise due to many factors, including those impacting our forecasts of future earnings, as well as changes in the tax laws under which we operate and tax planning. It is not reasonably possible to forecast any such changes at the present time, but it is possible that, should they arise, our view of their effect on the future realization of deferred tax assets may impact materially our condensed consolidated financial statements.
After weighing all the evidence, giving more weight to the evidence that was objectively verifiable, a valuation allowance of $
注释 8.基于股票的薪酬
2021年4月12日，公司董事会批准了公司的2021年股票计划（“2021年股票计划”）。2021年股票计划储备金
2023年11月13日，公司董事会批准了Shimmick Corporation 2023年股权激励计划（“2023年综合激励计划”）。
与股票补助金相关的总薪酬支出为美元
在截至2024年9月27日的九个月中，股票期权活动 如下所示：
|
|
股票期权 |
|
|||||||||||||
|
|
股票数量 |
|
|
加权平均每股行使价 |
|
|
加权平均授予日期公允价值 |
|
|
剩余合同期限的加权平均年数 |
|
||||
截至 2023 年 12 月 29 日的未缴款项 |
|
|
|
|
$ |
|
|
$ |
|
|
|
|
||||
已行使 |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
已没收且已过期 |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
截至 2024 年 9 月 27 日的未缴款项 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
自 2024 年 9 月 27 日起可行使 |
|
|
|
|
$ |
|
|
$ |
|
|
|
|
||||
下表汇总了截至2024年9月27日的九个月中未归属的Shimmick限制性股票单位的活动：
17
|
|
限制性股票单位 |
|
|||||
|
|
股份数量 |
|
|
加权平均授予日公正价值 |
|
||
截至2023年12月29日仍未归属 |
|
|
|
|
$ |
|
||
已授予 |
|
|
|
|
|
|
||
已没收 |
|
|
( |
) |
|
|
|
|
截至2024年9月27日为止的未偿还期权 |
|
|
|
|
|
|
||
截至2024年9月27日已归属 |
|
|
|
|
|
|
||
截至2024年9月27日未归属 |
|
|
|
|
$ |
|
||
注9.每股收益
基本每股收益（“EPS”）是基于期间内的加权平均在外流通股数计算的。摊薄后每股收益包括员工和董事期权及限制性股票单位的摊薄效应。当行权价低于期间内股票的平均市场价时，期权被视为摊薄；当行权价超过期间内普通股的平均市场价时，期权被视为抗摊薄。 所有板块
基本和摊薄EPS的计算如下：
|
|
截至三个月 |
|
|
截至九个月 |
|
||||||||||
(以千为单位，除每股数据外) |
|
2024年9月27日 |
|
|
2023年9月29日 |
|
|
2024年9月27日 |
|
|
2023年9月29日 |
|
||||
分子： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
归属于Shimmick Corporation的净（亏损）收入 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
基本和摊薄后每股收益的分子 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
分母： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
基本每股收益的分母 - 加权平均分享 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
摊薄效应: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
员工股票期权 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
限制性股票单位 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
每股普通股摊薄净收益分母-调整后加权平均数 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
摊薄后每股收益的分母 - 调整后的加权平均分享和假定转换 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
基本每股收益 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
稀释每股收益 |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
注释10.租约
在简明合并利润表中记录的租赁费用包括如下内容：
|
|
截至三个月 |
|
|
截至九个月 |
|
||||||||||
(以千为单位) |
|
2024年9月27日 |
|
|
2023年9月29日 |
|
|
2024年9月27日 |
|
|
2023年9月29日 |
|
||||
经营租赁成本 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
营收成本 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
销售、一般和管理费用 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
融资租赁成本（所有板块的营业收入成本）： |
|
|
|
|
|
|
|
|
|
|
|
|
||||
摊销租赁权资产 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
租赁负债利息 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
短期租赁成本 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
总租金成本 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
18
Additional condensed consolidated balance sheets information related to leases is as follows:
|
|
|
|
September 27, |
|
|
December 29, |
|
||
(In thousands) |
|
Balance Sheet Classification |
|
2024 |
|
|
2023 |
|
||
Assets: |
|
|
|
|
|
|
|
|
||
Operating lease assets |
|
|
$ |
|
|
$ |
|
|||
Finance lease assets |
|
|
|
|
|
|
|
|||
Total lease assets |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Liabilities: |
|
|
|
|
|
|
|
|
||
Current: |
|
|
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
$ |
|
|
$ |
|
|||
Finance lease liabilities |
|
|
|
|
|
|
|
|||
Total current lease liabilities |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
Non-current: |
|
|
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
$ |
|
|
$ |
|
|||
Finance lease liabilities |
|
|
|
|
|
|
|
|||
Total non-current lease liabilities |
|
|
|
$ |
|
|
$ |
|
||
Weighted average remaining lease term information related to leases is as follows:
|
|
September 27, |
|
December 29, |
|
|
2024 |
|
2023 |
Weighted average remaining lease term (in years): |
|
|
|
|
Operating leases |
|
|
||
Finance leases |
|
|
||
Weighted average discount rate: |
|
|
|
|
Operating leases |
|
|
||
Finance leases |
|
|
Supplemental cash flow information related to leases is as follows:
|
|
Nine Months Ended |
|
|||||
|
|
September 27, |
|
|
September 29, |
|
||
(In thousands) |
|
2024 |
|
|
2023 |
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
||
Financing cash flows from finance leases |
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange for new operating leases |
|
$ |
|
|
$ |
|
||
Total remaining lease payments under both the Company’s operating and finance leases are as follows:
|
|
Operating |
|
|
Financing |
|
||
(In thousands) |
|
Leases |
|
|
Leases |
|
||
Year |
|
|
|
|
|
|
||
2024 |
|
$ |
|
|
$ |
|
||
2025 |
|
|
|
|
|
|
||
2026 |
|
|
|
|
|
|
||
2027 |
|
|
|
|
|
|
||
2028 |
|
|
|
|
|
|
||
Thereafter |
|
|
|
|
|
|
||
Total lease payments |
|
|
|
|
|
|
||
Amounts representing interest |
|
|
( |
) |
|
|
( |
) |
Total lease liabilities |
|
$ |
|
|
$ |
|
||
19
Note 11. Commitments and Contingencies
In the Company’s joint venture arrangements, the liability of each partner is usually joint and several. This means as each joint venture partner may become liable for the entire risk of performance guarantees provided by each partner to the customer. Typically, each joint venture partner indemnifies the other partners for any liabilities incurred in excess of the liabilities the other party is obligated to bear under the respective joint venture agreement. In addition, the Company may be required to guarantee performance directly to the customer. The Company is unable to estimate the maximum potential amount of future payments that the Company could be required to make under outstanding performance guarantees related to joint venture projects due to a number of factors, including but not limited to, the nature and extent of any contractual defaults by the other joint venture partners, resource availability, potential performance delays caused by the defaults, the location of the projects, and the terms of the related contracts.
In the ordinary course of business, the Company is subject to other claims, lawsuits, investigations and disputes arising out of the conduct of its business, including matters relating to commercial transactions, government contracts, and employment matters. The Company recognizes a liability for contingencies that are probable of occurrence and reasonably estimable. To date, no such matters are material to the condensed consolidated statements of operations.
In certain contracts, there are provisions that require the Company to pay liquidated damages if the Company is responsible for the failure to meet specified contractual milestone dates and the applicable customer asserts a conforming claim under these provisions. These contracts define the conditions under which customers may make claims against the Company for liquidated damages. Based upon the evaluation of performance and other commercial and legal analysis, management has recognized relevant probable liquidated damages as of September 27, 2024 and December 29, 2023, and believes that the ultimate resolution of such matters will not materially affect the Company's condensed consolidated financial position, results of operations, or cash flows.
The Company has recorded contingent consideration as of September 27, 2024 and December 29, 2023 at its estimated fair value. The Company is unable to reasonably determine an estimated range of amounts of the payments that could be made due to the uncertainty of future events.
Guarantees
The Company obtains bonding on construction contracts through third-party bonding companies. As is customary in the construction industry, the Company indemnifies the third-party bonding companies for any losses incurred by it in connection with bonds that are issued. The Company has granted the third-party bonding companies a security interest in accounts receivable, contract assets and contract rights for that obligation.
The Company typically indemnifies contract owners for claims arising during the construction process and carries insurance coverage for such claims.
Letters of Credit
In the ordinary course of business and under certain contracts, the Company is required to post standby letters of credit for its insurance carriers. The Company did not have any letters of credit outstanding as of September 27, 2024 or December 29, 2023.
Note 12. Subsequent Events
Legacy Project Settlement
On October 31, 2024, the Company entered into a settlement agreement in its Golden Gate Bridge Project (the “GGB Project”). Under the terms of the settlement and through its consolidated joint venture with Danny’s Construction Co. LLC, Shimmick/Danny’s Joint Venture (“SDJV”), SDJV will receive total settlement proceeds of $
The settlement amount and reduction of outstanding scope of work are recorded in Contract assets, current and Contract liabilities, current within the condensed consolidated balance sheets.
As a result of the GGB Project settlement and after accounting for subcontractor, legal and other costs as well as previously recorded revenue, the Company recognized an increase in gross margin of $
20
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist in understanding and assessing the trends and significant changes in our results of operations and financial condition. Historical results may not be indicative of future performance. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and all other non-historical statements in this discussion are forward looking statements and are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward looking statements as a result of various factors, including those discussed below and elsewhere in the Form 10-K, particularly in “Risk Factors” or in other sections of this Form 10-Q, as well as the “Risk Factors” section in the Form 10-K and those described from time to time in our future reports with the SEC. This discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Form 10-Q.
In this discussion, we use certain non-GAAP financial measures. Explanation of these non-GAAP financial measures and reconciliation to the most directly comparable GAAP financial measures are included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations. Investors should not consider non-GAAP financial measures in isolation or as substitutes for financial information presented in compliance with GAAP.
Overview
We are a leading provider of water and other critical infrastructure solutions nationwide. We have a long history of successfully completing 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 2024, Shimmick was nationally ranked as a top ten builder of water supply (#8), dams and reservoirs (#6), 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.
We selectively focus on the following types of infrastructure projects:
As of September 27, 2024, we had a backlog of projects of $834 million, with over half of that amount comprised of water projects. We believe we have the ability to self-perform many of these projects, enabling us to compete for complex projects and differentiating us from many of our competitors. Self-performance also enables us to better control the critical aspects of our projects, reducing the risk of cost and schedule overruns.
Recent Developments
Legacy Project Settlement
On October 31, 2024, the Company entered into a settlement agreement in its Golden Gate Bridge Project (the “GGB Project”). Under the terms of the settlement and through its consolidated joint venture with Danny’s Construction Co. LLC, Shimmick/Danny’s Joint
21
Venture (“SDJV”), SDJV will receive total settlement proceeds of $97 million, a contract change order for reduced scope of work of $6 million and a contract change order for extension of project completion and costs incurred on the GGB Project. The GGB Project owner is required to pay SDJV $25 million within 14 business days of the executed agreement and the remaining $72 million cash payment to SDJV on or before December 17, 2024. After paying subcontractor pass-through claims, Shimmick plans to use the remaining proceeds for ongoing operations, including completion of the GGB Project.
The settlement amount and reduction of outstanding scope of work are recorded in Contract assets, current and Contract liabilities, current within the condensed consolidated balance sheets.
As a result of the GGB Project settlement and after accounting for subcontractor, legal and other costs as well as previously recorded revenue, the Company recognized an increase in gross margin of $11 million on the project during the three months ended September 27, 2024 within the condensed consolidated statements of operations.
Additionally, on August 23, 2024, the Company received $33 million in cash as a result of the previously announced settlement of a claim with the United States Army Corps of Engineers for which the revenue and cost of revenue impact was recorded within the condensed consolidated statements of operations for the six months ended June 28, 2024.
Sale-Leaseback Agreement
During the three months ended September 27, 2024, Shimmick completed the sale-leaseback of the Company's equipment yard in Tracy, California. The agreement consummated the sale of the equipment yard for $20.5 million and allows us to continue using the property pursuant to a separately executed seven-year lease. The Company received net proceeds of $17 million, after adjustments for prepaid rent through February 2026 and related closing costs, which were used to repay borrowings under the Revolving Credit Facility. As a result of the sale, the Company recorded a gain of $17 million in Gain on sale of assets within the condensed consolidated statements of operations.
ERP Pre-implementation Asset Impairment and Associated Costs
During the three months ended September 27, 2024, Shimmick made the strategic decision to enhance the Company’s current enterprise resource planning (ERP) system rather than implementing a new platform which, due to prior capitalized pre-implementation costs and remaining contractual obligations of $5 million included in accrued expenses in the accompanying condensed consolidated balance sheets, resulted in a one-time charge of $16 million recorded in the three months ended September 27, 2024. The write-off is recorded in ERP pre-implementation asset impairment and associated costs within the condensed consolidated statements of operations.
Our History and Initial Public Offering
Shimmick was founded in 1990 in California and operated as a regional infrastructure construction contractor throughout California for nearly 30 years. In 2017, AECOM acquired Shimmick and consolidated it with its existing construction services, which included former construction operations from Morrison Knudsen, Washington Group International, and others.
In January 2021, we were sold by AECOM and began operating as an independent company under new private ownership. After the transaction, we began a transformation to shift our strategy to meet the nation’s growing need for water and other critical infrastructure and grow our business. We are also focusing more on smaller complex projects that we can largely self perform and which we believe will have lower risk and higher margin.
On November 16, 2023, the Company completed its initial public offering of 3,575,000 shares of common stock at a price to the public of $7.00 per share (the “IPO”). The net proceeds to the Company from the IPO were approximately $19 million, after deducting underwriting discounts and commissions and before estimated offering expenses payable by the Company. The Company’s common stock began trading on the NASDAQ Global Market on November 14, 2023.
Key Factors Affecting Our Performance and Results of Operations
We expect that our results of operations will be affected by a number of factors which have discussed below.
Weather, natural disasters and emergencies. The results of our business in a given period can be impacted by adverse weather conditions, severe weather events, natural disasters or other emergencies, which include, among other things, heavy or prolonged snowfall or rainfall, hurricanes, tropical storms, tornadoes, floods, blizzards, extreme temperatures, wildfires, post-wildfire floods and debris flows, pandemics and earthquakes. These conditions and events can negatively impact our financial results due to, among other things, the termination, deferral or delay of projects, reduced productivity and exposure to significant liabilities.
22
Seasonality. Typically, our revenue is lowest in the first quarter of the year because cold, snowy or wet conditions can create challenging working environments that are more costly for our customers or cause delays on projects. Second quarter revenue is typically higher than those in the first quarter, as some projects begin, but continued cold and wet weather can often impact productivity. Third quarter revenue is typically the highest of the year, as a greater number of projects are underway and operating conditions, including weather, are normally more accommodating. Project geographic location will also dictate how seasonality affects productivity and timing. Also, the holiday season and inclement weather can sometimes cause delays during the fourth quarter, reducing revenue and increasing costs.
Our Ability to Fulfill Backlog Orders. Our backlog consists of the estimated amount of services to be completed from future work on uncompleted contracts or work that has been awarded with contracts still being negotiated. It also includes revenue from change orders and renewal options. Most of our contracts are cancelable on short or no advance notice. Reductions in backlog due to cancellation by a customer, or for other reasons, could significantly reduce the revenue that we actually receive from contracts in backlog. In the event of a project cancellation, we may be reimbursed for certain costs, but we typically have no contractual right to the total revenues reflected in our backlog. Backlog amounts are determined based on target price estimates that incorporate historical trends, anticipated seasonal impacts, experience from similar projects and from communications with our customers. These estimates may prove inaccurate, which could cause estimated revenue to be realized in periods later than originally expected, or not at all. As a result, our backlog as of any particular date is an uncertain indicator of future revenue and earnings. In addition, contracts included in our backlog may not be profitable. If our backlog fails to materialize, our business, financial condition, results of operations and cash flows could be materially and adversely affected.
Our Ability to Obtain New Projects. We selectively bid on projects that we believe offer an opportunity to meet our profitability objectives or that offer the opportunity to enter promising new markets. The potential customers conduct rigorous competitive processes for awarding many contracts. We will potentially face strong competition and pricing pressures for any additional contract awards from other government agencies, and we may be required to qualify or continue to qualify under various multiple award task order contract criteria.
Our Ability to Successfully Expand our Footprint. We review our bidding opportunities to attempt to minimize concentration of work with any one customer, in any one industry, or in tight labor markets. We believe that by carefully positioning ourselves in markets that have meaningful barriers to entry, like those with highly technical or specialized scopes of work, we can continue to be competitive. For example, we target projects with significant, highly-technical work that we can self-perform. We believe this provides us with a distinct pricing advantage, as well as better risk management. In addition, as a result of federal and state-level infrastructure initiatives, we believe that funding for technical construction projects may exceed capacity, enabling us to opportunistically target smaller specialized projects with less risk at higher margins. We may be limited in our ability to expand our footprint by barriers to entry to new markets, competition, and availability of capital and skilled labor.
We primarily compete for new contracts independently, seeking to win and complete new projects directly for our customers. Our customers primarily award contracts using one of two methods: the traditional public “competitive bid” method, in which price is the major determining factor, or through a “best value” proposal, where contracts are awarded based on a combination of technical qualifications, proposed project team, schedule, the ability to obtain surety bonds, past performance on similar projects and price, which we believe creates a barrier to entry. Contracts are principally awarded on a fixed-price basis, and we earn and recognize revenue using an input measure of total costs incurred divided by total costs expected to be incurred.
Our Ability to Obtain Approval of Change Orders and Successfully Pursue Claims. We are subject to variation in scope and cost of projects from our original projections. In certain circumstances, we seek to collect or assert claims against customers, engineers, consultants, subcontractors or others involved in a project for additional costs exceeding the contract price or for amounts not included in the original contract price. Our experience has often been that public customers have been willing to negotiate equitable adjustments in the contract compensation or completion time provisions if unexpected circumstances arise. However, this process may result in disputes over whether the work performed is beyond the scope of the work included in the original project plans and specifications or, if the customer agrees that the work performed qualifies as extra work, the price that the customer is willing to pay for the extra work. Public customers may seek to impose contractual risk-shifting provisions more aggressively or there could be statutory and other legal prohibitions that prevent or limit contract changes or equitable adjustments.
Our Ability to Control Project Costs. Our costs primarily consist of payroll, equipment, materials, and other project related expenses. With a consistent focus on profitability by our management team, we leverage information technology and utilize financial systems to improve project execution and control costs. However, if we are unable to accurately estimate the overall risks, requirements or costs when we bid on or negotiate a contract that is ultimately awarded to us, we may achieve a lower than anticipated profit or incur a loss on the contract. Also, our labor and training expenses may increase as a result of a shortage in the supply of skilled personnel. We may
23
not be able to pass these expenses on to our customers, which could adversely affect our profitability. To the extent that we are unable to buy construction equipment necessary for our needs, either due to a lack of available funding or equipment shortages in the marketplace, we may be forced to rent equipment on a short-term basis, which could increase the costs of performing our contracts. If we are unable to continue to maintain the equipment in our fleet, we may be forced to obtain third-party repair services, which could increase our costs. In addition, the market value of our equipment may unexpectedly decline at a faster rate than anticipated.
In addition, as is customary in the construction business, we are required to provide surety bonds to our customers to secure our performance under construction contracts. Our ability to obtain surety bonds primarily depends upon our capitalization, working capital, past performance, management expertise and reputation, as well as certain external factors, including the overall capacity of the surety market. Surety companies consider such factors in relationship to the amount of our backlog and their underwriting standards, which may change from time to time. Events that adversely affect the insurance and bonding markets generally may result in bonding becoming more difficult to obtain in the future, or being available only at a significantly greater cost. If are unable to obtain adequate bonding or if the cost of bonding materially increased, it would limit the amount that we can bid on new contracts, limit the competitiveness of our bids, and could have a material adverse effect on our future revenue and business prospects.
Our Ability to Control Selling General and Administrative Costs. Because we now exist as a public company, we incur significant expenses on an ongoing basis that we did not incur as a private company. Those costs include additional director and officer liability insurance expenses, stock exchange listing expenses, as well as third-party and internal resources related to accounting, auditing, Sarbanes-Oxley Act compliance, legal and investor and public relations expenses. These costs are generally selling, general and administrative expenses. We have also implemented the 2023 Omnibus Incentive Plan to align our equity compensation program with public company plans and practices, which increases our stock-based compensation expense.
Joint Ventures. We participate in various construction joint ventures in order to share expertise, risk and resources for certain highly complex, large, and/or unique projects. Generally, each construction joint venture is formed to accomplish a specific project and is jointly controlled by the joint venture partners. We select our joint venture partners based on our analysis of their construction and financial capabilities, expertise in the type of work to be performed and past working relationships, among other criteria. The joint venture agreements typically provide that our interests in any profits and assets, and our respective share in any losses and liabilities, that may result from the performance of the contract are limited to our stated percentage interest in the project. Under each joint venture agreement, one partner is designated as the sponsor. The sponsoring partner typically provides administrative, accounting and much of the project management support for the project and generally receives a fee from the joint venture for these services. We have been designated as the sponsoring partner in some venture projects and are a non-sponsoring partner in others. We incur transaction and integration costs prior to fully realizing the benefits of acquisition synergies. Joint ventures often require significant investments before they begin operations and we incur many of these costs prior to realizing any gain on the investment in the joint venture. If we are unable to recoup these costs, it could have a significant impact on our business.
How We Assess Performance of Our Business
Revenue
We currently derive our revenue predominantly by providing infrastructure, operations and management services around the United States. We generally recognize revenue over-time as performance obligations are satisfied and control over promised goods or services are transferred to our customers.
Gross Margin
Gross margin represents revenue less contract costs. Contract costs consist of all direct and indirect costs on contracts, including raw materials, labor, equipment costs, and subcontractor costs. 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 in the current period in the cost of revenue.
Selling, General, and Administrative Expenses
Selling, general and administrative expenses consist primarily of salaries and personnel costs for our administrative, finance and accounting, legal, information systems, human resources and certain managerial employees. Additional expenses include audit, consulting and professional fees, travel, insurance, office space rental costs, property taxes and other corporate and overhead expenses.
Equity in Earnings (Loss) of Unconsolidated Joint Ventures
Equity in earnings (loss) of unconsolidated joint ventures includes our return on investment in unconsolidated joint ventures.
Results of Operations
24
Three Months Ended September 27, 2024 compared to the Three Months Ended September 29, 2023
The following table sets forth selected financial data for the three months ended September 27, 2024 compared to the three months ended September 29, 2023:
|
Three Months Ended |
|
|
|
|
|
% of Revenue |
|
|||||||||||||||
|
September 27, |
|
|
September 29, |
|
|
|
|
|
% Change |
|
|
September 27, |
|
|
September 29, |
|
||||||
(In thousands, except percentage data) |
2024 |
|
|
2023 |
|
|
$ Change |
|
|
|
|
|
2024 |
|
|
2023 |
|
||||||
Revenue |
$ |
166,035 |
|
|
$ |
175,448 |
|
|
$ |
(9,413 |
) |
|
|
(5 |
)% |
|
|
100 |
% |
|
|
100 |
% |
Cost of revenue |
|
153,846 |
|
|
|
158,436 |
|
|
|
(4,590 |
) |
|
|
(3 |
) |
|
|
93 |
|
|
|
90 |
|
Gross margin |
|
12,189 |
|
|
|
17,012 |
|
|
|
(4,823 |
) |
|
|
(28 |
) |
|
|
7 |
|
|
|
10 |
|
Selling, general and administrative expenses |
|
12,985 |
|
|
|
14,022 |
|
|
|
(1,037 |
) |
|
|
(7 |
) |
|
|
8 |
|
|
|
8 |
|
ERP pre-implementation asset impairment and associated costs |
|
15,708 |
|
|
|
- |
|
|
|
15,708 |
|
|
NM |
|
|
|
9 |
|
|
|
- |
|
|
Total operating expenses |
|
28,693 |
|
|
|
14,022 |
|
|
|
14,671 |
|
|
|
105 |
|
|
|
17 |
|
|
|
8 |
|
Equity in earnings of unconsolidated joint ventures |
|
812 |
|
|
|
2,577 |
|
|
|
(1,765 |
) |
|
|
(68 |
) |
|
|
- |
|
|
|
1 |
|
Gain on sale of assets |
|
16,896 |
|
|
|
30,069 |
|
|
|
(13,173 |
) |
|
|
(44 |
) |
|
|
10 |
|
|
|
17 |
|
Income from operations |
|
1,204 |
|
|
|
35,636 |
|
|
|
(34,432 |
) |
|
|
(97 |
) |
|
|
- |
|
|
|
20 |
|
Interest expense |
|
1,977 |
|
|
|
412 |
|
|
|
1,565 |
|
|
|
380 |
|
|
|
1 |
|
|
|
- |
|
Other expense, net |
|
791 |
|
|
|
393 |
|
|
|
398 |
|
|
|
101 |
|
|
|
- |
|
|
|
- |
|
Net (loss) income before income tax |
|
(1,564 |
) |
|
|
34,831 |
|
|
|
(36,395 |
) |
|
|
(104 |
) |
|
|
(1 |
) |
|
|
20 |
|
Income tax expense |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
- |
|
|
Net (loss) income |
$ |
(1,564 |
) |
|
$ |
34,831 |
|
|
$ |
(36,395 |
) |
|
|
(104 |
)% |
|
|
(1 |
)% |
|
|
20 |
% |
Revenue and gross margin
The following table sets forth selected revenue and gross margin data for the three months ended September 27, 2024 compared to the three months ended September 29, 2023:
|
Three Months Ended |
|
|
|
|
|
|
|
|
|||||||
(In thousands, except percentage data) |
September 27, 2024 |
|
|
September 29, 2023 |
|
|
$ Change |
|
|
% Change |
|
|
||||
Shimmick Projects |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
$ |
101,475 |
|
|
$ |
109,884 |
|
|
$ |
(8,409 |
) |
|
|
(8 |
)% |
|
Gross Margin |
$ |
6,181 |
|
|
$ |
15,060 |
|
|
$ |
(8,879 |
) |
|
|
(59 |
)% |
|
Gross Margin (%) |
|
6 |
% |
|
|
14 |
% |
|
|
|
|
|
|
|
||
Foundations Projects |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
$ |
10,837 |
|
|
$ |
11,523 |
|
|
$ |
(686 |
) |
|
|
(6 |
)% |
|
Gross Margin |
$ |
(1,904 |
) |
|
$ |
(1,432 |
) |
|
$ |
(472 |
) |
|
|
33 |
% |
|
Gross Margin (%) |
|
(18 |
)% |
|
|
(12 |
)% |
|
|
|
|
|
|
|
||
Legacy Projects |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
$ |
53,723 |
|
|
$ |
54,041 |
|
|
$ |
(318 |
) |
|
|
(1 |
)% |
|
Gross Margin |
$ |
7,912 |
|
|
$ |
3,384 |
|
|
$ |
4,528 |
|
|
|
134 |
% |
|
Gross Margin (%) |
|
15 |
% |
|
|
6 |
% |
|
|
|
|
|
|
|
||
Consolidated Total |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
$ |
166,035 |
|
|
$ |
175,448 |
|
|
$ |
(9,413 |
) |
|
|
(5 |
)% |
|
Gross Margin |
$ |
12,189 |
|
|
$ |
17,012 |
|
|
$ |
(4,823 |
) |
|
|
(28 |
)% |
|
Gross Margin (%) |
|
7 |
% |
|
|
10 |
% |
|
|
|
|
|
|
|
||
25
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 $101 million and $110 million for the three months ended September 27, 2024 and September 29, 2023, respectively. The $9 million decrease in revenue was primarily the result of a $28 million decrease from lower activity on existing jobs and jobs winding down partially offset by $19 million of revenue from a new water infrastructure job.
Gross margin recognized on Shimmick Projects was $6 million and $15 million for the three months ended September 27, 2024 and September 29, 2023, respectively. The decline in the gross margin was primarily the result of a $12 million decrease in gross margin on existing jobs that are winding down and completing partially offset by a $3 million increase in margin from a new water infrastructure job.
Foundations Projects
The Company entered into an agreement to sell the assets of our non-core Foundations Projects in the second quarter of 2024 and will be winding down any remaining work during the remainder of the 2024 fiscal year. As a result, revenue from Foundations Projects will decline during the remainder of the 2024 fiscal year. Revenue recognized on Foundations Projects was $11 million and $12 million for the three months ended September 27, 2024 and September 29, 2023, respectively. The decline in revenue was the result of timing of jobs winding down.
Gross margin recognized on Foundations Projects was $(2) million and $(1) million for the three months ended September 27, 2024 and September 29, 2023, respectively. The decline in gross margin was the result of cost overruns and 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 flat at $54 million for each of the three months ended September 27, 2024 and September 29, 2023. As a result of the GGB Project settlement and after accounting for previously recorded revenue, we made an adjustment to revenue of $31 million to reflect the settlement amount (which is included in the $54 million of revenue for the three months ended September 27, 2024), which offset continued impacts of Legacy Projects winding down. See Recent Developments for additional details.
Gross margin was $8 million and $3 million for the three months ended September 27, 2024 and September 29, 2023, respectively. The increase in gross margin was primarily as a result of the GGB Project settlement which was partially offset by continued impacts of Legacy Projects winding down, as well as additional legal fees to pursue contract modifications and recoveries and additional cost overruns on other Legacy Loss Projects (as defined below).
A subset of Legacy Projects ("Legacy Loss Projects") have experienced significant cost overruns due to the COVID pandemic, design issues, legal costs 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 $49 million and $27 million for the three months ended September 27, 2024 and September 29, 2023, respectively. The increase was primarily as a result of the GGB Project settlement discussed above, partially offset by continued impacts of other Legacy Loss Projects winding down. Gross margin recognized on these Legacy Loss Projects was $10 million and $(1) million for the three months ended September 27, 2024 and September 29, 2023, respectively, the increase of which is primarily as a result of the GGB Project settlement.
Selling, general and administrative expenses
Selling, general and administrative expenses remained approximately flat period over period.
Equity in earnings of unconsolidated joint ventures
Equity in earnings of unconsolidated joint ventures was $1 million, compared to earnings of $3 million in the prior year period. The decrease was primarily driven by increased costs due to schedule extensions experienced during the nine months ended September 27, 2024.
Gain on sale of assets
26
Gain on sale of assets decreased by $13 million primarily due to the gain recognized on the sale of non-core business contracts for $30 million during the three months ended September 29, 2023 that did not reoccur during the nine months ended September 27, 2024, partially offset by the $17 million gain recognized on the transaction for the sale-leaseback of our equipment yard in Tracy, California during the three months ended September 27, 2024.
ERP pre-implementation asset impairment and associated costs
ERP pre-implementation asset impairment and associated costs increased by $16 million due to the strategic decision to enhance the Company’s current ERP system rather than implementing a new platform which, due to prior capitalized costs and remaining contractual obligations, resulted in a one-time charge of $16 million recorded in the three months ended September 27, 2024.
Interest expense
Interest expense increased by $2 million primarily due to interest charges on the Credit Facility which was not entered into until May 20, 2024.
Other expense, net
Other expense, net remained approximately flat period over period.
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 September 29, 2023.
Net (loss) income
Net (loss) income decreased by $36 million to a net loss of $2 million for the three months ended September 27, 2024, primarily due to an increase in ERP pre-implementation asset impairment and associated costs of $16 million, a decrease in gain on the sale of assets of $13 million, decrease in gross margin of $5 million, increase of interest expense of $2 million and decrease in equity in earnings of unconsolidated joint ventures of $2 million all as described above.
Nine Months Ended September 27, 2024 compared to the Nine Months Ended September 29, 2023
The following table sets forth selected financial data for the nine months ended September 27, 2024 compared to the nine months ended September 29, 2023:
|
Nine Months Ended |
|
|
|
|
|
% of Revenue |
|
|||||||||||||||
|
September 27, |
|
|
September 29, |
|
|
|
|
|
% Change |
|
|
September 27, |
|
|
September 29, |
|
||||||
(In thousands, except percentage data) |
2024 |
|
|
2023 |
|
|
$ Change |
|
|
|
|
|
2024 |
|
|
2023 |
|
||||||
Revenue |
$ |
376,684 |
|
|
$ |
494,744 |
|
|
$ |
(118,060 |
) |
|
|
(24 |
)% |
|
|
100 |
% |
|
|
100 |
% |
Cost of revenue |
|
411,485 |
|
|
|
471,967 |
|
|
|
(60,482 |
) |
|
|
(13 |
) |
|
|
109 |
|
|
|
95 |
|
Gross margin |
|
(34,801 |
) |
|
|
22,777 |
|
|
|
(57,578 |
) |
|
|
(253 |
) |
|
|
(9 |
) |
|
|
5 |
|
Selling, general and administrative expenses |
|
47,878 |
|
|
|
47,841 |
|
|
|
37 |
|
|
|
- |
|
|
|
13 |
|
|
|
10 |
|
ERP pre-implementation asset impairment and associated costs |
|
15,708 |
|
|
|
- |
|
|
|
15,708 |
|
|
NM |
|
|
|
4 |
|
|
|
- |
|
|
Total operating expenses |
|
63,586 |
|
|
|
47,841 |
|
|
|
15,745 |
|
|
|
33 |
|
|
|
17 |
|
|
|
10 |
|
Equity in (loss) earnings of unconsolidated joint ventures |
|
(779 |
) |
|
|
9,570 |
|
|
|
(10,349 |
) |
|
|
(108 |
) |
|
|
- |
|
|
|
2 |
|
Gain on sale of assets |
|
20,585 |
|
|
|
31,749 |
|
|
|
(11,164 |
) |
|
|
(35 |
) |
|
|
5 |
|
|
|
6 |
|
(Loss) income from operations |
|
(78,581 |
) |
|
|
16,255 |
|
|
|
(94,836 |
) |
|
|
(583 |
) |
|
|
(21 |
) |
|
|
3 |
|
Interest expense |
|
4,370 |
|
|
|
1,020 |
|
|
|
3,350 |
|
|
|
328 |
|
|
|
1 |
|
|
|
- |
|
Other expense, net |
|
3,335 |
|
|
|
48 |
|
|
|
3,287 |
|
|
|
6,848 |
|
|
|
1 |
|
|
|
- |
|
Net (loss) income before income tax |
|
(86,286 |
) |
|
|
15,187 |
|
|
|
(101,473 |
) |
|
|
(668 |
) |
|
|
(23 |
) |
|
|
3 |
|
Income tax expense |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
- |
|
|
Net (loss) income |
$ |
(86,286 |
) |
|
$ |
15,187 |
|
|
$ |
(101,473 |
) |
|
|
(668 |
)% |
|
|
(23 |
)% |
|
|
3 |
% |
27
Revenue and gross margin
The following table sets forth selected revenue and gross margin data for the nine months ended September 27, 2024 compared to the nine months ended September 29, 2023:
|
Nine Months Ended |
|
|
|
|
|
|
|
|
|||||||
(In thousands, except percentage data) |
September 27, 2024 |
|
|
September 29, 2023 |
|
|
$ Change |
|
|
% Change |
|
|
||||
Shimmick Projects |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
$ |
275,457 |
|
|
$ |
301,475 |
|
|
$ |
(26,018 |
) |
|
|
(9 |
)% |
|
Gross Margin |
$ |
10,316 |
|
|
$ |
28,626 |
|
|
$ |
(18,310 |
) |
|
|
(64 |
)% |
|
Gross Margin (%) |
|
4 |
% |
|
|
9 |
% |
|
|
|
|
|
|
|
||
Foundations Projects |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
$ |
25,931 |
|
|
$ |
40,615 |
|
|
$ |
(14,684 |
) |
|
|
(36 |
)% |
|
Gross Margin |
$ |
(8,212 |
) |
|
$ |
(7,041 |
) |
|
$ |
(1,171 |
) |
|
|
17 |
% |
|
Gross Margin (%) |
|
(32 |
)% |
|
|
(17 |
)% |
|
|
|
|
|
|
|
||
Legacy Projects |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
$ |
75,296 |
|
|
$ |
152,654 |
|
|
$ |
(77,358 |
) |
|
|
(51 |
)% |
|
Gross Margin |
$ |
(36,905 |
) |
|
$ |
1,192 |
|
|
$ |
(38,097 |
) |
|
|
(3196 |
)% |
|
Gross Margin (%) |
|
(49 |
)% |
|
|
1 |
% |
|
|
|
|
|
|
|
||
Consolidated Total |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue |
$ |
376,684 |
|
|
$ |
494,744 |
|
|
$ |
(118,060 |
) |
|
|
(24 |
)% |
|
Gross Margin |
$ |
(34,801 |
) |
|
$ |
22,777 |
|
|
$ |
(57,578 |
) |
|
|
(253 |
)% |
|
Gross Margin (%) |
|
(9 |
)% |
|
|
5 |
% |
|
|
|
|
|
|
|
||
Shimmick Projects
Shimmick Projects have focused on water infrastructure and other critical infrastructure. Revenue recognized on Shimmick Projects was $275 million and $301 million for the nine months ended September 27, 2024 and September 29, 2023, respectively. The $26 million decrease in revenue was primarily the result of a $63 million decrease from lower activity on existing jobs and jobs winding down partially offset by $37 million of revenue from a new water infrastructure job and ramp up of a transportation project.
Gross margin recognized on Shimmick Projects was $10 million and $29 million for the nine months ended September 27, 2024 and September 29, 2023, respectively. The decline in the gross margin was primarily the result of a $23 million decrease driven by increased cost, schedule extensions and a decrease on existing jobs that are winding down, partially offset by $6 million of gross margin from a new water infrastructure job.
Foundations Projects
The Company entered into an agreement to sell the assets of our non-core Foundations Projects in the second quarter of 2024 and will be winding down any remaining work during the remainder of the 2024 fiscal year. As a result, revenue will decline during the remainder of the 2024 fiscal year. Revenue recognized on Foundations Projects was $26 million and $41 million for the nine months ended September 27, 2024 and September 29, 2023, respectively. The $15 million decline in revenue was the result of timing of multiple jobs winding down.
Gross margin recognized on Foundations Projects was $(8) million and $(7) million for the nine months ended September 27, 2024 and September 29, 2023, respectively. The decline in gross margin was the result of cost overruns and 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 $75 million, a decline of $77 million as the Company works to complete these projects. The decline in revenue was primarily driven by continued impacts of Legacy Projects winding down during fiscal 2024, the sale of non-core business contracts in the third quarter of 2023 as well as a non-cash adjustment to revenue on a Legacy Loss Project settlement recognized during the second quarter of 2024, partially offset by the GGB Project settlement. See Recent Developments for additional details associated with the GGB Project settlement.
28
Gross margin was $(37) million, a decrease of $38 million as compared to the nine months ended September 29, 2023, primarily as a result of the Legacy Loss Project settlement during the second quarter of 2024, projects winding down and additional cost overruns on Legacy Loss Projects that have experienced additional increases in the cost to complete as well as additional legal fees to pursue contract modifications and recoveries, partially offset by the GGB Project settlement.
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 $57 million and $80 million for the nine months ended September 27, 2024 and September 29, 2023, respectively. Gross margin recognized on these Legacy Loss Projects was $(34) million and $(3) million for the nine months ended September 27, 2024 and September 29, 2023, respectively. The decrease in gross margin was primarily the result of the Legacy Loss Project settlement during the second quarter of 2024, additional increases in the cost to complete as well as additional legal fees to pursue contract modifications and recoveries, partially offset by the GGB Project settlement.
Selling, general and administrative expenses
Selling, general and administrative expenses remained approximately flat period over period.
Equity in (loss) earnings of unconsolidated joint ventures
Equity in (loss) earnings of unconsolidated joint ventures was a loss of $1 million, compared to earnings of $10 million in the prior year period, primarily due a favorable subcontractor settlement during the nine months ended September 29, 2023 that did not reoccur during the nine months ended September 27, 2024 and increased costs due to schedule extensions.
Gain on sale of assets
Gain on sale of assets decreased by $11 million primarily due to the gain recognized on the sale of non-core business contracts for $30 million during the three months ended September 29, 2023 that did not reoccur during the nine months ended September 27, 2024, partially offset by the $17 million gain recognized on the transaction for the sale-leaseback of our equipment yard in Tracy, California and $2 million gain recognized on the sale of the assets of our non-core Foundations Projects during the nine months ended September 27, 2024.
ERP pre-implementation asset impairment and associated costs
ERP pre-implementation asset impairment and associated costs increased by $16 million due to the strategic decision to enhance the Company’s current ERP system rather than implementing a new platform which, due to prior capitalized costs and remaining contractual obligations, resulted in a one-time charge of $16 million recorded in the nine months ended September 27, 2024.
Interest expense
Interest expense increased by $3 million primarily due to interest charges on the Credit Facility which was entered into on May 20, 2024 as well as interest charges on the Revolving Credit Facility which was not entered into until March 27, 2023.
Other expense, net
Other expense, net increased by $3 million for the nine months ended September 27, 2024 primarily due to a $1 million loss recognized on the settlement of certain claims with AECOM as well as expenses recognized associated with the change in fair value of contingent consideration and other costs incurred during the nine months ended September 27, 2024.
Income tax expense
29
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 nine months ended September 29, 2023.
Net loss
Net loss increased by $101 million to a net loss of $86 million for the nine months ended September 27, 2024, primarily due to decreases in gross margin of $58 million, an increase in ERP pre-implementation asset impairment and associated costs of $16 million, decrease of gain on the sale of assets of $11 million, increase in equity in loss of unconsolidated joint ventures of $10 million, increase in other expense, net of $3 million as well as an increase in interest expense of $3 million all as described above.
Non-GAAP Financial Measures
We report our financial results in accordance with GAAP. However, management believes that certain non-GAAP financial measures provide investors with additional useful information in evaluating our performance. Therefore, to supplement our condensed consolidated financial statements, we provide investors with certain non-GAAP financial measures, including Adjusted net income (loss) and Adjusted EBITDA.
Adjusted Net Income (Loss)
Adjusted net income (loss) represents Net income (loss) attributable to Shimmick Corporation adjusted to eliminate stock-based compensation, ERP pre-implementation asset impairment and associated costs, legal fees and other costs for Legacy Projects and transaction-related costs and changes in fair value of contingent consideration remaining after the impact of transactions with AECOM. We have also made an adjustment for transformation costs we have incurred including advisory costs as we settle outstanding claims, exit the Legacy Projects and transform the Company into a water-focused business.
We have included Adjusted net income (loss) in this Form 10-Q 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 income (loss) can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted net income (loss) provides useful information to investors and others in understanding and evaluating our results of operations.
Our use of Adjusted net income (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:
Because of these and other limitations, you should consider Adjusted net income (loss) alongside Net income (loss) attributable to Shimmick Corporation, which is the most directly comparable GAAP measure.
Adjusted EBITDA
Adjusted EBITDA represents our Net income (loss) attributable to Shimmick Corporation before interest expense, income tax expense and depreciation and amortization, adjusted to eliminate stock-based compensation, ERP pre-implementation asset impairment and associated costs, legal fees and other costs for Legacy Projects and other costs. We have also made an adjustment for transformation costs we have incurred including advisory costs as we settle outstanding claims, exit the Legacy Projects and transform the Company into a water-focused business.
We have included Adjusted EBITDA in this Form 10-Q 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.
30
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:
Because of these and other limitations, you should consider Adjusted EBITDA alongside Net income (loss) attributable to Shimmick Corporation, which is the most directly comparable GAAP measure.
See reconciliations below:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
September 27, |
|
|
September 29, |
|
||||
(In thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net (loss) income attributable to Shimmick Corporation |
|
$ |
(1,564 |
) |
|
$ |
34,567 |
|
|
$ |
(86,286 |
) |
|
$ |
14,930 |
|
Transformation costs (1) |
|
|
1,924 |
|
|
|
- |
|
|
|
4,532 |
|
|
|
- |
|
Stock-based compensation |
|
|
1,337 |
|
|
|
496 |
|
|
|
3,304 |
|
|
|
1,547 |
|
ERP pre-implementation asset impairment and associated costs(2) |
|
|
15,708 |
|
|
|
- |
|
|
|
15,708 |
|
|
|
- |
|
Legal fees and other costs for Legacy Projects (3) |
|
|
6,436 |
|
|
|
1,708 |
|
|
|
11,796 |
|
|
|
6,346 |
|
Other (4) |
|
|
414 |
|
|
|
(109 |
) |
|
|
860 |
|
|
|
1,808 |
|
Adjusted net income (loss) |
|
$ |
24,255 |
|
|
$ |
36,662 |
|
|
$ |
(50,086 |
) |
|
$ |
24,631 |
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 27, |
|
|
September 29, |
|
|
September 27, |
|
|
September 29, |
|
||||
(In thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net (loss) income attributable to Shimmick Corporation |
|
$ |
(1,564 |
) |
|
$ |
34,567 |
|
|
$ |
(86,286 |
) |
|
$ |
14,930 |
|
Depreciation and amortization |
|
|
3,447 |
|
|
|
4,637 |
|
|
|
11,646 |
|
|
|
13,186 |
|
Interest expense |
|
|
1,977 |
|
|
|
413 |
|
|
|
4,370 |
|
|
|
1,020 |
|
Income tax expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Transformation costs (1) |
|
|
1,924 |
|
|
|
- |
|
|
|
4,532 |
|
|
|
- |
|
Stock-based compensation |
|
|
1,337 |
|
|
|
496 |
|
|
|
3,304 |
|
|
|
1,547 |
|
ERP pre-implementation asset impairment and associated costs(2) |
|
|
15,708 |
|
|
|
- |
|
|
|
15,708 |
|
|
|
- |
|
Legal fees and other costs for Legacy Projects (3) |
|
|
6,436 |
|
|
|
1,708 |
|
|
|
11,796 |
|
|
|
6,346 |
|
Other (4) |
|
|
414 |
|
|
|
(109 |
) |
|
|
860 |
|
|
|
1,808 |
|
Adjusted EBITDA |
|
$ |
29,679 |
|
|
$ |
41,712 |
|
|
$ |
(34,070 |
) |
|
$ |
38,837 |
|
(1) Consists of transformation-related costs we have incurred including advisory costs as we settle outstanding claims, exit the Legacy Projects and transform the Company into a water-focused business.
(2) Reflects a strategic decision to enhance the Company’s current ERP system rather than implementing a new platform which, due to prior capitalized costs and remaining contractual obligations, resulted in a one-time charge of $16 million in the third quarter of fiscal 2024.
(3) Consists of legal fees and other costs incurred in connection with claims relating to Legacy Projects.
(4) Consists of transaction-related costs and changes in fair value of contingent consideration remaining after the impact of transactions with AECOM.
31
Liquidity and Capital Resources
Capital Requirements and Sources of Liquidity
During the nine months ended September 27, 2024 our capital expenditures were approximately $10 million compared to $6 million for the nine months ended September 29, 2023. Historically, we have had significant cash requirements in order to organically expand our business to undertake new projects. Our cash requirements include costs related to increased expenditures for equipment, facilities and information systems, purchase of materials and production of materials and cash to fund our organic expansion into new markets, including through joint ventures. Our working capital needs are driven by the seasonality and growth of our business, with our cash requirements greater in periods of growth. Additional cash requirements resulting from our growth include the costs of additional personnel, enhancing our information systems, our compliance with laws and rules applicable to being a public company and, in the future, our integration of any acquisitions. Unrestricted cash and cash equivalents at September 27, 2024 totaled $26 million and availability under the Revolving Credit Facility and Credit Facility totaled $15 million and $18 million, respectively, resulting in total liquidity of $59 million. In addition, we expect to receive approximately $97 million in the 2024 fiscal year as a result of the settlement of the claim on the GGB Project as discussed in Recent Developments.
We have historically relied upon cash available through operating activities, in addition to credit facilities and existing cash balances, to finance our working capital requirements and to support our growth. On November 16, 2023, we completed our IPO pursuant to which we issued and sold an aggregate of 3,575,000 shares of common stock at a price to the public of $7.00 per share. We received aggregate net proceeds of approximately $19 million after deducting underwriting discounts and commissions of $2 million and other offering expenses of $4 million. We will continue to monitor the capital markets and may continue raising additional capital through the issuance of our common shares, authorized preferred shares or other securities.
We regularly monitor potential capital sources, including equity and debt financing, in an effort to meet our planned expenditures and liquidity requirements. Our future success will be highly dependent on our ability to access outside sources of capital.
As is customary in our business, we are required to provide surety bonds to secure our performance under our contracts. Our ability to obtain surety bonds primarily depends upon our capitalization, working capital, past performance, management expertise and reputation and certain external factors, including the overall capacity of the surety market. Surety companies consider such factors in relationship to the amount of our backlog and their underwriting standards, which may change from time to time. We have pledged proceeds and other rights under our contracts to our bond surety company. Events that affect the insurance and bonding markets may result in bonding becoming more difficult to obtain in the future, or being available only at a significantly greater cost.
We believe that our operating, investing and financing cash flows are sufficient to fund our operations for at least the next twelve months. However, future cash flows are subject to a number of variables, and significant additional expenditures will be required to conduct our operations. Furthermore, as a result of the completion of our IPO on November 16, 2023, we have incurred and expect to continue to incur additional costs associated with being a public company. There can be no assurance that operations and other capital resources will provide cash in sufficient amounts to maintain planned or future levels of expenditures. In the event we make one or more acquisitions and the amount of capital required is greater than the amount we have available for acquisitions at that time, we could be required to reduce the expected level of expenditures and/or seek additional capital. If we seek additional capital, we may do so through joint ventures, asset sales and sale-leaseback transactions, offerings of debt or equity securities or other means. We cannot guarantee that this additional capital will be available on acceptable terms or at all. If we are unable to obtain the funds we need, we may not be able to complete acquisitions that may be favorable to us or finance the expenditures necessary to conduct our operations.
Total debt outstanding is presented on the condensed consolidated balance sheets as follows:
(In thousands) |
|
September 27, 2024 |
|
|
December 29, 2023 |
|
||
Credit Facility |
|
$ |
42,000 |
|
|
$ |
- |
|
Revolving Credit Facility |
|
|
- |
|
|
|
29,914 |
|
Unamortized debt issuance costs |
|
|
(2,097 |
) |
|
|
(287 |
) |
Long term debt, net |
|
$ |
39,903 |
|
|
$ |
29,627 |
|
Revolving Credit Facility
On March 27, 2023, we entered into the Revolving Credit Facility with MidCap Financial Services, LLC, which originally provided a total commitment of $30 million. The Revolving Credit Facility has been subsequently amended, most recently on September 25, 2024. As amended, the Revolving Credit Facility provides for a total commitment of $15 million and bears interest at an annual rate of adjusted term SOFR, subject to a 1.0% floor, plus 5.50%. Further, the Revolving Credit Facility is subject to an annual collateral management fee of 0.50% and an annual unused line fee of 0.50%. The Revolving Credit Facility includes certain financial operating
32
covenants, including a minimum liquidity requirement of $7.5 million. The Revolving Credit Facility matures on December 31, 2024. The Company is not aware of any instances of noncompliance with the key financial covenants as of September 27, 2024.
In the three months ended September 27, 2024, we repaid $15 million of the amount outstanding under the Revolving Credit Facility. As of September 27, 2024, no borrowings were outstanding under the Revolving Credit Facility. As of December 29, 2023, $30 million was outstanding under the Revolving Credit Facility, respectively.
Credit Facility
On May 20, 2024, the Company, as guarantor, and its wholly-owned subsidiaries as borrowers (“Borrowers”), Alter Domus (US) LLC, as agent, and AECOM and Berkshire Hathaway Specialty Insurance Company (“BHSI”) as lenders, entered into a revolving credit facility (the “Credit Agreement”). The Credit Agreement was subsequently amended on September 25, 2024 to among other things, permit the Company’s concurrent amendment to the Revolving Credit Facility. As amended, the Credit Agreement provides borrowing capacity up to $60 million. The obligations under the Credit Agreement bear interest at a per annum rate equal to one month Term SOFR (as defined in the Credit Agreement), subject to a 1.00% floor, plus 3.50%. Interest on any outstanding amounts drawn under the Credit Agreement will be payable, in kind or in cash at the election of the Company, on the last day of each month and upon prepayment.
The Credit Agreement matures on May 20, 2029 (the “Maturity Date”), and the Borrowers may borrow, repay and reborrow amounts under the Credit Agreement until the Maturity Date.
Obligations of the Borrowers under the Credit Agreement are guaranteed by the Company and secured by a lien on substantially all assets of the Company and the Borrowers.
The Credit Agreement contains customary affirmative and negative covenants for a transaction of this type, including covenants that limit liens, asset sales and investments, in each case subject to negotiated exceptions and baskets. In addition, the Credit Agreement contains a maximum leverage ratio covenant as tested quarterly commencing with the close of the fourth quarter of 2025. The Credit Agreement also contains representations and warranties and event of default provisions customary for a transaction of this type. The Company is not aware of any instances of noncompliance with financial covenants as of September 27, 2024. As of September 27, 2024, $42 million was outstanding under the Credit Facility.
The transactions with AECOM also included a mutual release and settlement of certain claims with AECOM and a corresponding agreement to issue 7,745,000 shares of our common shares to AECOM. 5,144,622 of the common shares were issued on May 20, 2024 and issuance of the remaining 2,600,378 shares was completed following shareholder approval on June 26, 2024. Of the total common shares issued, 1,036,949 were held in escrow which resulted in an AECOM voting interest of 19.9% as of September 27, 2024. The Company recognized a loss of $1 million in Other expense, net within the condensed consolidated statements of operations as a result of the share issuance which represented the excess of the $13 million fair market value of the common shares at the time of issuance over the $12 million carrying value of the contingent consideration liabilities settled with AECOM.
Cash Flows Analysis
The following table sets forth our cash flows for the periods indicated:
|
|
Nine Months Ended |
|
|||||
|
|
September 27, |
|
|
September 29, |
|
||
(In thousands) |
|
2024 |
|
|
2023 |
|
||
Net cash used in operating activities |
|
$ |
(66,183 |
) |
|
$ |
(64,776 |
) |
Net cash provided by investing activities |
|
|
18,389 |
|
|
|
13,153 |
|
Net cash provided by financing activities |
|
|
10,457 |
|
|
|
32,694 |
|
Net decrease in cash, cash equivalents and restricted cash |
|
|
(37,337 |
) |
|
|
(18,929 |
) |
Cash, cash equivalents and restricted cash, beginning of period |
|
|
63,910 |
|
|
|
82,085 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
26,573 |
|
|
$ |
63,156 |
|
Operating Activities
During the nine months ended September 27, 2024, net cash used in operating activities was $66 million, compared to net cash used in operating activities of $65 million for the nine months ended September 29, 2023. Cash flows used in operating activities were driven by increased net loss, adjusted for various non-cash items and changes in accounts receivable, contract assets, accounts payable, contract liabilities and accrued expenses balances (collectively, “Contract Capital”), as discussed below.
33
Changes in Contract Capital—The change in operating assets and liabilities varies due to fluctuations and timing in operating activities and Contract Capital. The changes in the components of Contract Capital during the nine months ended September 27, 2024 and September 29, 2023 were as follows:
|
|
Nine Months Ended |
|
|||||
|
|
September 27, |
|
|
September 29, |
|
||
(In thousands) |
|
2024 |
|
|
2023 |
|
||
Accounts receivable, net |
|
$ |
663 |
|
|
$ |
(12,012 |
) |
Due from unconsolidated joint ventures |
|
|
- |
|
|
|
313 |
|
Contract assets |
|
|
(2,418 |
) |
|
|
(10,134 |
) |
Accounts payable |
|
|
(12,149 |
) |
|
|
24,221 |
|
Contract liabilities |
|
|
(18,157 |
) |
|
|
(41,797 |
) |
Accrued expenses |
|
|
34,165 |
|
|
|
(22,042 |
) |
Changes in Contract Capital, net |
|
$ |
2,104 |
|
|
$ |
(61,451 |
) |
During the nine months ended September 27, 2024, the increase in contract capital was $2 million, which was primarily due to decreases in accounts payable and contract liabilities, partially offset by increases in accrued expenses. The Company’s Contract Capital fluctuations are impacted by the mix of projects in backlog, seasonality, the timing of new awards and related payments for work performed and the contract billings to the customer as projects are completed. Contract Capital is also impacted at period-end by the timing of accounts receivable collections and accounts payable payments for projects.
Investing Activities
For the nine months ended September 27, 2024, net cash provided by investing activities was $18 million, which was primarily driven by proceeds from the sale of assets of $32 million, partially offset by purchases of property, plant and equipment of $10 million and contributions to unconsolidated joint ventures of $3 million.
For the nine months ended September 29, 2023, net cash provided by investing activities was $13 million, which primarily consisted of cash proceeds from the sale of non-core business contracts of $30 million, proceeds from sale of property, plant and equipment of $5 million ($4 million due to sale of an office building), and return of investment in unconsolidated joint ventures of $4 million, partially offset by unconsolidated joint venture equity contributions of $20 million and purchases of property, plant and equipment of $6 million.
Financing Activities
For the nine months ended September 27, 2024, net cash provided by financing activities was $10 million, which primarily consisted of net borrowings from credit facilities of $12 million, partially offset by $2 million of debt issuance costs incurred for the Credit Facility agreement and associated amendment entered into during the second and third quarters of 2024.
For the nine months ended September 29, 2023, net cash provided by financing activities was $33 million, which primarily consisted of net proceeds from the Revolving Credit Facility borrowings of $34 million.
Letters of Credit
We obtain standby letters of credit required by our insurance carriers. The Company did not have any letters of credit outstanding as of September 27, 2024 or December 29, 2023.
Contractual Obligations
Contractual obligations of the Company consisted of liabilities associated with remaining lease payments for the three months ending January 3, 2025 through the fiscal years ending through December 29, 2028 of approximately $2 million, $7 million, $5 million, $4 million, $4 million, respectively, and approximately $6 million in the aggregate thereafter based on balances outstanding as of September 27, 2024.
Backlog
Our backlog consists of the remaining unearned revenue on awarded contracts, including our pro-rata share of work to be performed by unconsolidated joint ventures, less the joint venture partners’ pro-rata share of work to be performed by consolidated joint ventures. We include in backlog estimates of the amount of consideration to be received, including bonuses, awards, incentive fees, fixed-price awards, claims, unpriced change orders, penalties, minimum customer commitments on cost plus arrangements, liquidated damages
34
and certain time and material arrangements in which the estimated value is firm or can be estimated with a reasonable amount of certainty in both timing and amounts. As construction on our contracts progresses, we increase or decrease backlog to take account of changes in estimated quantities under fixed-price contracts, as well as to reflect changed conditions, change orders and other variations from initially anticipated contract revenue and costs, including completion penalties and bonuses. Substantially all of the contracts in our backlog may be canceled or modified at the election of the customer.
As of September 27, 2024, we had a backlog of projects of $834 million with over half of that amount comprised of water projects. We believe we have the ability to self-perform many of these projects, enabling us to compete for complex projects and differentiating us from many of our competitors. Self-performance also enables us to better control the critical aspects of our projects, reducing the risk of cost and schedule overruns.
The following tables present the Company's percentage of backlog by customer type, contract type and backlog recognized:
|
|
As of |
|
|
|
|
September 27, 2024 |
|
|
Backlog by customer type: |
|
|
|
|
State and local agencies |
|
|
70 |
% |
Federal agencies |
|
|
13 |
% |
Private owners |
|
|
17 |
% |
Total backlog |
|
|
100 |
% |
|
|
As of |
|
|
|
|
September 27, 2024 |
|
|
Backlog by contract type: |
|
|
|
|
Fixed-price |
|
|
85 |
% |
Cost reimbursable |
|
|
15 |
% |
Total backlog |
|
|
100 |
% |
|
|
As of |
|
|
|
|
September 27, 2024 |
|
|
Estimated backlog recognized: |
|
|
|
|
0 to 24 months |
|
|
81 |
% |
25 to 36 months |
|
|
10 |
% |
Beyond 36 months |
|
|
9 |
% |
Total backlog |
|
|
100 |
% |
Off-Balance Sheet Arrangements
In our joint ventures, the liability of each partner is usually joint and several. This means that each joint venture partner may become liable for the entire risk of performance guarantees provided by each partner to the customer. Typically each joint venture partner indemnifies the other partners for any liabilities incurred in excess of the liabilities the other party is obligated to bear under the respective joint venture agreement. We are unable to estimate the maximum potential amount of future payments that we could be required to make under outstanding performance guarantees related to joint venture projects due to a number of factors, including but not limited to, the nature and extent of any contractual defaults by our joint venture partners, resource availability, potential performance delays caused by the defaults, the location of the projects, and the terms of the related contracts.
Critical Accounting Estimates
The discussion of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates and assumptions on an ongoing basis. The results of our analysis form the basis for making assumptions about the carrying values of assets
35
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences may be material to our condensed consolidated financial statements.
Our critical accounting estimates are described in more detail in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Form 10-K. There have been no other significant changes in our critical accounting estimates from those reported in our Form 10-K and we believe that the related judgments and assessments have been consistently applied and produce financial information that fairly depicts the financial condition, results of operations, and cash flows for all periods presented.
Emerging Growth Company and Smaller Reporting Company
We are an “emerging growth company,” as defined in the JOBS Act. For so long as we are an emerging growth company, we will, among other things:
In addition, Section 107 of the JOBS Act provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. This permits an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
We will continue to qualify as an emerging growth company until the earliest of:
We are also a smaller reporting company as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter.
36
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable as we are a “smaller reporting company,” as defined in the Exchange Act.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Management, under the supervision and with the participation of the Chief Executive Officer and Interim Chief Financial Officer, has conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). In conducting our evaluation, management used the updated framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control–Integrated Framework (2013). Disclosure controls and procedures are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Based on that evaluation, our Chief Executive Officer and Interim Chief Financial Officer concluded that as of September 27, 2024, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below. We have in place and are executing a remediation plan to address the material weaknesses described below.
As discussed in Item 9A of our Form 10-K, we identified material weaknesses in our internal control over financial reporting, which relate to the design and operation of internal control over financial reporting, including the lack of formal and effective controls over certain financial statement account balances, and lack of effective controls over the COSO principles including control environment, risk assessment, control activities, information and communications and monitoring as of December 29, 2023 and December 30, 2022.
Management performed additional analyses and other procedures to ensure that our condensed consolidated financial statements were prepared in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP"). Accordingly, management believes that the condensed consolidated financial statements included in this Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows as of and for the periods presented in this Form 10-Q, in accordance with U.S. GAAP.
Management’s Plan to Remediate the Identified Material Weaknesses
We believe our current staff, which has changed over the last twenty-four months, possess the appropriate skillsets and public company reporting experience to prepare and report on complete and accurate financial statements. We have designed and implemented new entity level controls, information system general controls and financial reporting and business process controls over estimate at completion (revenue), payroll, treasury, property, plant and equipment and leases.
We continue to evaluate the controls that we have implemented and conduct such testing that is necessary to conclude on the operating effectiveness of the controls. Additional remediation may be necessary as we continue to monitor and evaluate the effectiveness of controls implemented to date.
Changes in Internal Control over Financial Reporting
With the exception of the implementation and enhancement of controls in connection with our remediation activities described above, there were no changes to our internal control over financial reporting during the quarter ended September 27, 2024 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.
37
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The information required with respect to this Part II, Item 1 can be found under Item 1., Financial Statements, Note 11 - Commitments and Contingencies, to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.
Item 1A. Risk Factors
There have been no material changes to the risk factors disclosed in the Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
None
Item 5. Other Information
During the fiscal quarter ended September 27, 2024, none of our directors or executive officers
|
|
|
|
|
|
Plan Arrangement |
|
|
|
|
|
|||
Name and Title |
|
Action |
|
Date |
|
Rule 10b5-1(c) |
|
Non-Rule 10b5-1 |
|
|
Maximum Number of Securities to be Sold(2) |
|
Plan Expiration Date |
|
|
|
|
X |
|
|
- |
|
|
|
|||||
(1) Mr. Goldsteen entered into his Rule 10b5-1 trading arrangement, dated August 20, 2024, through GOHO LLC, an entity which he controls.
(2) The maximum amount shares of common stock to be sold in any three-month period is
38
Item 6. Exhibits
Exhibit Number |
|
Description |
10.1 |
|
|
10.2 |
|
|
31.1* |
|
|
31.2* |
|
|
32.1# |
|
|
32.2# |
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
# Furnished herewith
39
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
Shimmick Corporation |
|
|
|
|
|
Date: November 12, 2024 |
|
By: |
/s/ Amanda Mobley |
|
|
|
Amanda Mobley |
|
|
|
Interim Chief Financial Officer |
|
|
|
|
|
|
|
|
40