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Shimmick Corp

Shimmick CorpSHIM決算レポート

Nasdaq · 産業 · 建築工事以外の重型建設請負業者

Shimmick Corp is a U.S.-based heavy civil construction firm specializing in building and upgrading critical public infrastructure, including water facilities, transportation systems, dams, and environmental remediation projects. It primarily serves federal, state, and local government clients across North America, delivering complex large-scale construction solutions for public sector segments.

What changed in Shimmick Corp's 10-K — 2023 vs 2024

Top changes in Shimmick Corp's 2024 10-K

331 paragraphs added · 360 removed · 211 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

45 edited+36 added−88 removed20 unchanged
Climate change may result in, among other things, changes in rainfall patterns, storm patterns and intensity and temperature levels. Our results of operations are significantly influenced by weather and major changes in historical weather patterns could significantly impact our future results of operations.
Climate change may result in, among other things, changes in rainfall patterns, storm patterns and intensity and temperature levels. Our results are significantly influenced by weather and major changes in historical weather patterns could significantly impact our future results of operations.
For example, if climate change results in significantly more adverse weather conditions in a given period, we could experience reduced productivity and increases in certain other costs, which could negatively results of operations. Available Information Our corporate website address is http://www.shimmick.com.
For example, if climate change results in significantly more adverse weather conditions in a given period, we could experience reduced productivity and increases in certain other costs, which could negatively impact our results of operations. Available Information Our corporate website address is http://www.shimmick.com.
We also encourage our employees to continue to develop in their careers, including by obtaining advanced degrees or professional certifications. We compensate our employees according to our fair remuneration policies and believe in paying for performance. Accordingly, some employees may receive a portion of their compensation in the form of equity.
We also encourage our employees to continue to develop in their careers by obtaining advanced degrees or professional certifications. We compensate our employees according to our fair remuneration policies and believe in paying for performance. Accordingly, some employees may receive a portion of their compensation in the form of equity.
We also promote continuous dialogue between managers and employees in addition to these formal touchpoints. We provide attractive benefits that promote the health of our employees and their families and design compelling job opportunities, aligned with our mission, in an energizing work environment.
We also promote continuous dialogue between managers and employees in addition to these formal touchpoints. • Benefits . We provide attractive benefits that promote the health and welfare of our employees and their families and design compelling job opportunities, aligned with our mission, in an energizing work environment.
In addition, most of our construction contracts are entered into with public authorities, and these contracts frequently impose additional requirements, including requirements regarding labor relations and subcontracting with designated classes of disadvantaged businesses. We continually monitor our compliance with these laws, regulations and other requirements.
In addition, most of our construction contracts are entered into with public authorities, and these contracts 8 frequently impose additional requirements, including requirements regarding labor relations and subcontracting with designated classes of disadvantaged businesses. We continually monitor our compliance with these laws, regulations and other requirements.
We also use our website as a means of disclosing additional information, including for complying with our disclosure obligations under the SEC’s Regulation FD (Fair Disclosure). The SEC maintains an internet site, www.sec.gov, containing reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC. 14
We also use our website as a means of disclosing additional information, including for complying with our disclosure obligations under the SEC’s Regulation FD (Fair Disclosure). The SEC maintains an internet site, www.sec.gov, containing reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC. 10
Typically, a 8 bidder for a contract must post a bid bond for 5% to 10% of the amount bid, and on winning the bid, must post a performance and payment bond for 100% of the contract amount.
Typically, a bidder for a contract must post a bid bond for 5% to 10% of the amount bid, and on winning the bid, must post a performance and payment bond for 100% of the contract amount.
We also make available on our website the Shimmick 13 Code of Business Conduct and Ethics, our corporate governance guidelines, and the charters for the Compensation and Human Capital, Audit, and Nominating and Corporate Governance Committees of the board of directors.
We also make available on our website the Shimmick Code of Business Conduct and Ethics, our corporate governance guidelines, and the charters for the Compensation and Human Capital, Audit, Nominating and Corporate Governance and Special Committees of the board of directors.
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.
Joint Ventures We participate in various construction joint ventures in order to share expertise, risk and resources for certain projects. Generally, each construction joint venture is formed to accomplish a specific project and is jointly controlled by the joint venture partners.
Our track record of successful project execution and our balance sheet position, provide us with adequate bidding and bonding capacity, which allows us to bid a large number of projects simultaneously. Historically and primarily, Liberty Mutual Group and Berkshire Hathaway have provided us with surety bonding.
Our track record of successful project execution and our balance sheet position should provide us with adequate bidding and bonding capacity, which we believe would allow us to bid a number of projects simultaneously. Historically and primarily, Liberty Mutual Group and most recently Berkshire Hathaway have provided us with surety bonding.
In general, we have maintained compliance with the regulations by replacing our existing equipment as it reaches the end of its useful life with new equipment that meets or exceeds the requirements of the CARB regulations. Accordingly, we have not incurred material incremental expenses to comply with the regulations.
In general, we have maintained compliance with the regulations by replacing our existing equipment as it reaches the end of its useful life with new equipment that meets or exceeds the requirements of the CARB regulations.
Our project foremen and superintendents conduct weekly on-site safety meetings, and our full-time safety inspectors make random site safety inspections and perform assessments and training if infractions are discovered. In addition, our superintendents and project managers are required to complete an OSHA-approved safety course.
Our project foremen and superintendents conduct weekly on-site safety meetings, and our safety inspectors make site safety inspections and perform assessments and training if infractions are discovered. In addition, our superintendents and project managers are required to complete an OSHA-approved safety course. Our incident rate is below industry average.
We typically pass the cost of disposal through to our customers under such agreement. Certain environmental laws impose substantial penalties for non-compliance and others, such as CERCLA, and comparable state laws, impose strict, retroactive, joint and several liability upon persons that contributed to the release of a hazardous substance into the environment.
Certain environmental laws impose substantial penalties for non-compliance and others, such as CERCLA, and comparable state laws, impose strict, retroactive, joint and several liability upon persons that contributed to the release of a hazardous substance into the environment.
We begin meetings with safety messages and conduct extensive training programs, which have allowed us to maintain a high safety level at our worksites. All new employees undergo an initial safety orientation, and for certain types of projects, we conduct specific hazard training programs.
We begin meetings with safety messages and conduct training programs, which have contributed to safety performance at our worksites. All new employees undergo an initial safety orientation, and for certain types of projects, we conduct specific hazard training programs.
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.
We select our joint venture partners based on a number of factors including their construction and financial capabilities, expertise in the type of work to be performed and past working relationships.
Our projects and solutions aim to ensure access to clean and safe drinking water, protect public health, and reduce waterborne diseases. Our work contributes to protecting the environment by removing pollutants and contaminants from wastewater before it is released back into ecosystems.
Our projects aim to ensure access to clean and safe drinking water, protect public health and reduce waterborne diseases and contribute to protecting the environment by removing pollutants and contaminants from wastewater before it is released back into ecosystems. • Water Resources . We construct, rehabilitate and upgrade dams, reservoirs, and water conveyance and storage systems.
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.
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 selectively focus on the following types of infrastructure projects: • Water Treatment: We expand, rehabilitate, upgrade, build and rebuild water and wastewater treatment infrastructure, including desalination plants. We implement complex cleantech treatment technologies including ozonation, biological activated carbon, membrane filtration, reverse osmosis, chemical treatment, and oxidation. We also conduct facility commissioning.
We expand, rehabilitate, upgrade, build and rebuild water and wastewater treatment infrastructure including desalination plants. We implement treatment technologies including ozonation, biological activated carbon, membrane filtration, reverse osmosis, chemical treatment, and oxidation.
In addition, we maintain general liability, workers’ compensation and excess liability insurance, all in amounts consistent with our risk of loss and industry practice. As a normal part of the construction business, we generally are required to provide various types of surety and payment bonds that provide an additional measure of security for our performance on public contracts.
As a normal part of the construction business, we generally are required to provide various types of surety and payment bonds that provide an additional measure of security for our performance on public contracts.
Moreover, it is possible that additional solid wastes will in the future be designated as “hazardous wastes.” Hazardous solid wastes are subject to more rigorous and costly disposal requirements than are non-hazardous solid wastes. Generally, under the applicable project agreement, the customer, as the generator of the waste, is at risk for its proper disposal.
From time to time, the EPA considers the adoption of stricter disposal standards for non-hazardous solid wastes. Moreover, it is possible that additional solid wastes will in the future be designated as “hazardous wastes.” Hazardous solid wastes are subject to more rigorous and costly disposal requirements than are non-hazardous solid wastes.
Select projects of ours enable reliable water supply, generate hydroelectric power, and control flooding, ensuring water availability and energy security. Our work contributes to protecting communities from flood damage to safeguard lives, property, and infrastructure. • Other Critical Infrastructure: We build, retrofit, expand, rehabilitate, operate, and maintain our nation’s critical infrastructure, including mass transit, bridges, and military infrastructure.
This includes flood control systems, pump stations, and coastal protection infrastructure. Select projects of ours enable reliable water supply, generate hydroelectric power, and control flooding, ensuring water availability and energy security. Our work contributes to protecting communities from flood damage to safeguard lives, property and infrastructure.
We work on projects that we believe are vital for economic growth, social connectivity, and accessibility. We believe our projects enable smooth and efficient movement of people and goods, foster trade, address environmental sustainability, and improve quality of life for individuals and communities.
We believe our projects enable smooth and efficient movement of people and goods, foster trade, address environmental sustainability and improve quality of life for individuals and communities. Within critical infrastructure, we are focused primarily on the following types of projects: 3 • Climate Resilience .
All employees are responsible for maintaining a respectful workplace free of unlawful discrimination, harassment, and retaliation. We do not tolerate discrimination, and any employee who witnesses or observes discrimination or harassment is encouraged to report it. We maintain an ethics hotline that employees can use to report incidents confidentially and without fear of retaliation.
We are committed to an inclusive and equitable workplace, with a culture where employees are treated with respect. All our employees are responsible for maintaining a respectful workplace free of unlawful discrimination, harassment, and retaliation. We maintain an ethics hotline that employees can use to report incidents confidentially and without fear of retaliation. • Business Partners .
Our chief executive officer periodically leads employee meetings intended to reinforce the importance of our core values and regularly meets with small groups of employees to receive their feedback on our business. Our employees are responsible for upholding our mission, values, strategy and talent leadership expectations.
We believe our success is dependent on employee understanding of and investment in their role in that value creation. Our chief executive officer periodically leads employee meetings 7 intended to reinforce the importance of our core values and regularly meets with small groups of employees to receive their feedback on our business.
The capacity of the surety market is subject to market-based fluctuations driven primarily by the level of surety industry losses and the degree of surety market consolidation. Some of our competitors may be limited in the projects they can bid because of bidding and bonding capacity constraints.
The capacity of the surety market is subject to market-based fluctuations driven primarily by the level of surety industry losses and the degree of surety market consolidation.
Critical infrastructure ensures the efficient movement of goods and people, supports economic growth, and enhances connectivity between regions. Major economic drivers for these projects include increasing international trade, urbanization, and population growth. As governments and private entities continue to invest in upgrading and expanding infrastructure to meet these demands, opportunities for innovative solutions and technologies are expected to flourish.
Critical infrastructure ensures the efficient movement of goods and people, supports economic growth, and enhances connectivity between regions. Major economic drivers for critical infrastructure projects include increasing international trade, urbanization, need for modernization and population growth.
Our Growth Strategy Following the AECOM Sale Transactions, 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 beginning to see the benefits of that transition.
In 2024, more than half of our revenue was generated in California, the largest construction market in the United States. Business and Growth Strategy Following the AECOM Sale 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.
Solid wastes, which may include hazardous solid wastes, are subject to the requirements of the federal Solid Waste Disposal Act, the federal Resource Conservation and Recovery Act (the “RCRA”), and comparable state statutes. From time to time, the EPA considers the adoption of stricter disposal standards for non-hazardous solid wastes.
Although we do not generate large amounts of solid wastes, we occasionally dispose of solid wastes on behalf of customers. Solid wastes, which may include hazardous solid wastes, are subject to the requirements of the federal Solid Waste Disposal Act, the federal Resource Conservation and Recovery Act (the “RCRA”), and comparable state statutes.
In connection with certain acquisitions, we could assume, or be required to provide indemnification against, environmental liabilities that could expose us to material losses. Furthermore, the existence of contamination at properties we own, lease or operate could result in increased operational costs or restrictions on our ability to use those properties as intended.
Furthermore, the existence of contamination at properties we own, lease or operate could result in increased operational costs or restrictions on our ability to use those properties as intended. 9 In certain instances, citizen groups also have the ability to bring legal proceedings against us if we are not in compliance with environmental laws, or to challenge our ability to receive environmental permits that we need to operate.
Projects that were secured prior to the AECOM Sale Transactions, including large scale projects with higher risk and lower margins, are being worked off and replaced with smaller to mid-sized projects with less risk and higher margins.
Projects that were secured prior the AECOM Sale Transaction, including large scale projects with higher risk and lower margins, are continuing to be worked off and replaced with smaller to mid-sized projects with less risk and higher margins. 4 In fiscal year 2024, we focused on simplifying our business with an emphasis on liquidity, capital efficiency and effective execution of our projects.
Social Our focus on corporate responsibility is not limited to sustainability. We also prioritize social responsibility across our operations and deploy operational best practices across all of our projects. These best practices, tools, and techniques have been developed for key areas of Shimmick’s operations. One of these key areas is Safety, Health, and Environmental (“SH&E”).
Our Safety, Health, and Environmental (“SH&E”) program includes specific guidelines to protect people and the environment and minimize impacts of construction activities. Social Our focus on corporate responsibility is not limited to sustainability. We also prioritize social responsibility across our operations and deploy operational best practices across all of our projects. • Safety . Safety is a core Shimmick value.
It is important to us that our employees are engaged in our mission to drive our business forward, to recruit from their networks, and to envision a long tenure with us. We provide information to employees no less than quarterly on our core values, strategic plan and financial results.
It is critical to us that our employees are engaged in our mission to drive our business forward, to recruit from their networks, and to envision a long tenure with us. We evaluate our employee engagement via formal surveys or similar tools on a periodic basis.
Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental claim is made against us. Moreover, public interest in the protection of the environment has increased dramatically in recent years.
In addition, claims for damages to persons or property, including natural resources, may result from the impacts of our operations. Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental claim is made against us.
Thanks to these efforts, our incident rate is trending well below industry average and represents our continuing effort to improve our culture of safety. For instance, according to the Bureau of Labor Statistics, the average rate of recordable incidents for the construction industry in 2022, the most recent data published, was 2.4 per 100 employees.
For instance, according to the Bureau of Labor Statistics, the average rate of recordable incidents for the construction industry in 2023, the most recent data published, was 2.3 per 100 employees. Our average rate of recordable incidents for calendar year 2024 was 1.06 per 100 employees. • Harassment-Free Work Environment.
The trend of more expansive and stringent environmental legislation and regulations applied to the construction industry could continue, resulting in increased costs of doing business and consequently affecting profitability. We have incurred, and may in the future incur, significant capital and operating expenditures to comply with such laws and regulations.
We have incurred, and may in the future incur, significant capital and operating expenditures to comply with such existing laws and regulations.
We provide multiple learning solutions which cover a wide range of areas such as diversity and inclusion training, leadership skills, safety training, financial knowledge, technology training and presentation skills.
We run periodic education series which includes internal and external speakers presenting topics of interest that are relevant to our employees. We provide multiple learning solutions which cover a wide range of areas including leadership skills, safety training, financial knowledge, technology training and presentation skills. • Performance Reviews .
Human Capital Management Shimmick is focused on hiring and retaining highly talented employees with diverse backgrounds and empowering them to both grow their careers and create value for our stockholders. Our success is dependent on employee understanding of and investment in their role in that value creation.
Our board of directors comprises directors who provide strategic guidance and oversight and our executive management team is responsible for implementing our governance principles. Human Capital Management We are focused on hiring and retaining highly talented employees and empowering them to both grow their careers and create value for our stockholders.
Despite a healthcare environment that is facing rising costs, we continue to pay the majority of the cost of our employees’ healthcare insurance. We take a values-driven, broad view of diversity and inclusion.
We provide a volunteer time off program that provides eight hours of paid time off to volunteer. Despite rising costs, we continue to pay the majority of the cost of our employees’ healthcare insurance.
Based on the feedback received from employees, we have developed multiple strategic initiatives focused on culture, specifically on promoting a positive employee experience, as well as focusing on career development and engagement to attract and retain the best talent in the industry. 10 We adhere to a blended learning approach with the understanding that our people learn from experiences (on the job and in life), from other people (mentors or supportive managers), and by participating in formal learning and training programs.
Based on the feedback received from employees, we have developed multiple strategic initiatives focused on culture, specifically on promoting a positive employee experience, as well as focusing on career development. • Development . Learning is highly individualized and needs to be offered in a way that is most conducive to a specific learner’s needs and learning objectives.
Based on these and other factors, we believe that demand for construction and ongoing maintenance of water and other critical infrastructure projects will continue to increase. Water Treatment In the United States, the delivery of drinking water, wastewater treatment, and stormwater services rely on a comprehensive network of treatment plants, pumps, pipes, storage facilities, and other essential components.
As governments and private entities continue to invest in upgrading and expanding infrastructure to meet these demands, opportunities for innovative solutions and technologies are expected to flourish. Based on these and other factors, we believe that demand for construction and ongoing maintenance of water and other critical infrastructure projects will continue to increase.
Our Industry 6 Several long-term trends, including the impact of climate change, the deterioration of aging infrastructure, and coastal population growth, have resulted in a renewed focus on infrastructure development and funding in the United States.
Our Industry and Addressable Markets Our core markets continue to benefit from long-term trends, including the impact of climate change and the deterioration of aging infrastructure.
Our water infrastructure solutions incorporate advanced systems for treating and repurposing wastewater, reducing strain on freshwater resources and alleviating the burden on local ecosystems. By maximizing water efficiency, these projects contribute to conserving water resources for future generations. We also deliver projects that protect vulnerable regions from flooding.
Sustainability and Corporate Responsibility Environmental Our work contributes to addressing the nation’s need for reliable and resilient infrastructure, particularly in water end-markets. Our water infrastructure projects incorporate systems for treating and repurposing wastewater, which can help reduce strain on freshwater resources. We also construct projects that are designed to protect regions from flooding.
According to Engineering News Record , in 2023, Shimmick was nationally ranked as a top ten builder of water supply (#6), dams and reservoirs (#7), and water treatment and desalination plants (#7). Shimmick is led by industry veterans, many with over 20 years of experience, and works closely with its customers to deliver complete solutions, including long-term operations and maintenance.
According to Engineering News Record, in 2024, we are nationally ranked as a Top 400 contractor and top ten builder of water supply (#8), dams and reservoirs (#6), and water treatment and desalination plants (#7). Our business includes construction operations from Morrison Knudsen and Washington Group International, which were consolidated in 2017 by AECOM.
We build state-of-the-art flood control systems to mitigate the impact of natural disasters and sea-level rise to communities. Our goal is to deliver solutions to meet our customers’ needs for resilient infrastructure. Additionally, our work along the nation’s inland waterways enables the efficient and emissions-reducing transportation of goods, supporting commerce, and connecting regions for economic growth and trade.
We build flood control systems to mitigate the impact of sea-level rise and flooding events on communities. Additionally, our work along the nation's inland waterways supports efficient transportation of goods. Our projects are often constructed in environmentally sensitive areas and urban locations where minimizing negative impacts of construction on the community is a priority.
Item 1. Business 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.
We integrate technical excellence with collaborative project delivery methods to provide innovative, technology-driven infrastructure solutions that seek to accelerate economic growth and empower communities nationwide. We and our legacy companies have a long history of successfully completing complex water and other critical infrastructure projects, ranging from advanced wastewater recycling and purification system to dams, locks and transit systems.
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Additionally, water treatment infrastructure supports sustainable water management, which conserves this precious resource for future generations. • Water Resources: We build, expand, and improve water storage and conveyance, including dams, levees, flood control systems, pump stations, and coastal protection. We also upgrade and expand locks and dams along our nation’s waterways to enable continued emission-reduced movement of goods.
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Item 1. Business Overview Shimmick delivers turnkey solutions that are designed to strengthen the water market, as well as other critical infrastructure markets, including energy, climate resiliency and sustainable transportation. With a history and experience that spans over a century, Shimmick, headquartered in California, unites deep engineering heritage with entrepreneurial spirit to tackle today’s most complex infrastructure challenges.
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As of December 29, 2023, we had a backlog of projects of approximately $1.1 billion, with over half of that amount comprised of water projects. We believe we have the ability to self-perform many of these projects, differentiating us from many of our competitors.
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In 2021, we were sold by AECOM and became an independent company under new private ownership (the “AECOM Sale Transaction”). In November 2023, we completed our initial public offering (the “IPO”) and currently our common stock is listed for trading on the Nasdaq Capital Market under the symbol “SHIM”.
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Self-performance enables us to better control the critical aspects of our projects, reducing the risk of cost and schedule overruns. 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.
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Projects and Backlog As of January 3, 2025, we had a backlog of projects of approximately $822 million, mostly located in California, with ongoing projects in six other states (NJ, TN, TX, WY, ID, WA).
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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 ("AECOM Sale Transactions").
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We self-perform many of these projects, which we believe allows us to better control critical aspects of construction, reduce cost and schedule risks, and deliver greater value to clients. We selectively focus on the following types of infrastructure projects: Water Treatment and Resources • Water and Wastewater Treatment .
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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.
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Other Critical Infrastructure We build, retrofit, expand, rehabilitate, operate and maintain our nation’s critical infrastructure, including mass transit, bridges and military infrastructure. We work on projects that we believe are vital for economic growth, social connectivity, and accessibility.
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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. 3 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”).
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We build and upgrade levees, flood walls, pump stations, drainage systems, and strengthen existing infrastructure both in preparation to withstand severe weather events and in response to such events to facilitate recovery. • Transportation and Mobility .
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The net proceeds to the Company from the IPO were approximately $23 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.
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We construct mass transit systems (light passenger rail and bus rapid transit), autonomous transportation solutions (personal rapid transit, autonomous fixed guideway people movers, and implement intelligent transportation technologies. • Energy Transition . We modify facilities to accommodate electric vehicle fleets for transit agencies and municipalities, implement renewable energy components in our projects, and support data center construction.
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Our Customers Our project revenue and contracts come primarily from public sector customers such as federal, state, and local governments, including water districts, sanitation districts, irrigation districts, and flood control districts. Government funding provides financial stability and reliability, as public projects are funded by entities with the authority to collect taxes and allocate funds.
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These trends have led to a renewed focus in recent years on infrastructure development and funding in the United States, including in our primary markets: water infrastructure, climate resilience projects, transportation systems and energy transition facilities.
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Diverse funding sources — grants, appropriations, loans, state and local taxes, and user fees — reduce dependence on a single source and enhance overall market stability. Throughout our history, we have maintained and cultivated a strong presence in California. In 2023, more than half of our revenue was generated in California, the largest construction market in the United States.
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According to independent industry research, these sectors are projected to grow at rates of 4% to 11% annually through 2028, outpacing the overall non-residential construction industry average of 3.3%. Based on our geographic focus and core capabilities, we estimate our addressable market to be approximately $106 billion of the $1.1 trillion in non-residential construction projected for 2025.
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The amount of construction put in place for water infrastructure in California was almost $5 billion in 2023, according to Standard & Poor's. Our revenue from water projects in California was less than 10% of the total California water market, indicating ample opportunity for us to grow our market share in California, where we believe we possess significant competitive advantages.
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Our Customers Our customers are predominantly in the public sector and include a broad base of federal agencies (military and civilian), municipal water and wastewater districts, irrigation districts, flood control districts, local and regional transit authorities, and statewide, county and city public works departments.
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For example, we have detailed knowledge of the California market and have developed long-standing relationships with significant customers, including public agencies across the state.
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We also perform work for private clients such as developers, utilities and owners of industrial, commercial and residential sites. We serve as both prime contractors and subcontractors on projects, with approximately 93% of our current backlog representing prime contracts. Throughout our history, we have maintained and cultivated a strong presence in California.
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In addition to long-standing relationships with our customers, our decades of industry experience have supplied us with deep knowledge of the local workforce, subcontractors, and suppliers throughout the state, which we believe provides us with a distinct pricing advantage and enables us to better manage risk.
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To that end, we executed several notable transactions: • Settlements of two major claims at the Chickamauga Lock and Golden Gate Bridge projects totaling over $130 million in cash received during fiscal year 2024. • Divestiture of our foundation drilling assets and sale-leaseback of our equipment yard which provided liquidity of $17.5 million and $17 million, respectively. • Decreased backlog originating from projects secured prior to the AECOM Sale Transaction which are in loss positions. • Reached an agreement with AECOM to resolve a previous lawsuit relating to the purchase and sale agreement for the divestiture of Shimmick from AECOM in exchange for shares of our common stock.
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We also have a long history of delivering solutions for the federal government, primarily building locks, dams, levees, and flood protection along the nation’s inland waterways and coasts. This work supports efficient transportation, which helps boost trade, reduce congestion on roads, and enhance our nation’s economy.
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These strategic transactions and agreements provided us with additional liquidity and allow us to further focus our efforts on growing our core business. On November 12, 2024, Shimmick announced that it appointed Ural Yal as its new CEO and member of the Board of Directors effective December 2, 2024 and succeeded Steven Richards upon his retirement. We believe Mr.
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Our commitment to a renewed strategic focus on water infrastructure is demonstrated by the fact that we have repeatedly been ranked in the top ten for dams and reservoirs, water supply, and water treatment and desalination by Engineering News Record . Shimmick was again ranked in the top ten in these same sectors in 2023.
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Yal brings deep expertise in both the California market and national infrastructure construction along with a proven track record of operational growth to lead the Company in capitalizing on market opportunities through operational excellence, safety and client satisfaction.
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Our growth strategies are as follows: Organically Grow Core Water and Critical Infrastructure Business. We seek to further expand our market share in water and other critical infrastructure to meet the nation’s needs for clean water, economic development, disaster mitigation, trade, and resilience.
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With these developments, we believe we are well positioned to execute our business and growth strategy, which is focused on organically growing core water and critical infrastructure business while enhancing profitability. We may also seek to expand service offerings for water and critical infrastructure through strategic acquisitions.
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We anticipate a prolonged and growing demand for the markets we currently serve, due to, among other things, growing coastal populations, climate change, drought and severe weather events, and increased activity along the inland waterways, where, according to the most recent ASCE Report Card for Inland Waterways nearly 830 million tons of the nation’s goods are transported every year.
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Sustainable, Profitable Backlog We intend to grow our business through leveraging our proven strengths while managing and lowering risk across our portfolio. • Selective Bidding.
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Accordingly, we aim to increase the share of water projects as a percentage of our overall backlog.
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We analyze each opportunity and determine: (1) size, location and duration of the project, (2) our available resources and ability to execute the work safely and profitably to our client's satisfaction, (3) our ability to win the project in that specific competitive environment, and (4) project risks associated with the contract and the project delivery model (e.g., fixed price, negotiated, cost-plus, unit price lump sum, etc.).
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We plan to continue focusing on building infrastructure that meets our customer’s needs — like water reuse, recycling, and conservation — and capitalize on significant opportunities within our core market of California. 4 In the third quarter of 2023, Shimmick closed the sale of its Operations and Management Division.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

101 edited+22 added−33 removed270 unchanged
The terms of our existing debt agreements (including our Revolving Credit Facility) contain, and any debt agreements governing our future indebtedness may contain, a number of restrictive covenants and other provisions that impose significant operating and financial restrictions on us, including restrictions on our ability, and the ability of our subsidiaries, to take actions that may be in our best interests, including, among others, disposing of assets, entering into change of control transactions, mergers or acquisitions, incurring additional indebtedness, granting liens on our assets, declaring and paying dividends, and agreeing to do any of the foregoing.
The terms of our existing debt agreements (including our Revolving Credit Facility and our Credit Agreement) contain, and any debt agreements governing our future indebtedness may contain, a number of restrictive covenants and other provisions that impose significant operating and financial restrictions on us, including restrictions on our ability, and the ability of our subsidiaries, to take actions that may be in our best interests, including, among others, disposing of assets, entering into change of control transactions, mergers or acquisitions, incurring additional indebtedness, granting liens on our assets, declaring and paying dividends, and agreeing to do any of the foregoing.
However, if certain events occur prior to December 29, 2028, including if we become a “large accelerated filer,” as defined 41 under the Exchange Act, our annual gross revenue exceeds $1.235 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company.
However, if certain events occur prior to December 29, 2028, including if we become a “large accelerated filer,” as defined under the Exchange Act, our annual gross revenue exceeds $1.235 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company.
Our amended and restated certificate of incorporation further will provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the federal securities laws of the United States, including any claims under the Securities Act and the Exchange Act.
Our amended and restated certificate of incorporation further will provide that, unless we consent 35 in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the federal securities laws of the United States, including any claims under the Securities Act and the Exchange Act.
In addition to the increased cost we have incurred, and expect to continue to incur as an independent company following our separation from AECOM in January 2021, as a public company whose shares are listed on Nasdaq, we will incur additional accounting, legal and other expenses that we did not incur as a private company, including costs associated with our public company reporting requirements under the Exchange Act.
In addition to the increased cost we have incurred, and continue to incur as an independent company following our separation from AECOM in January 2021, as a public company whose shares are listed on Nasdaq, we have incurred, and will continue to incur, additional accounting, legal and other expenses that we did not incur as a private company, including costs associated with our public company reporting requirements under the Exchange Act.
In addition, the timing of the revenue, earnings and cash flows from our contracts can be delayed by a number of factors, including adverse weather conditions, such as prolonged or intense periods of rain, snow, storms or flooding, delays in receiving material and equipment from suppliers and services from subcontractors, labor shortages and changes in the scope of work to be performed.
In addition, the timing of the revenue, earnings and cash flows from our contracts can be delayed by a number of factors, including adverse weather conditions, such as prolonged or intense periods of rain, snow, wildfires, storms or flooding, delays in receiving material and equipment from suppliers and services from subcontractors, labor shortages and changes in the scope of work to be performed.
Alternatively, we may issue a significant number of shares as consideration for an acquisition, which would have a dilutive effect on our existing stockholders. 29 Amounts included in our backlog may not result in actual revenue or translate into profits. Our backlog is subject to cancellation and unexpected adjustments and therefore is an uncertain indicator of future results of operations.
Alternatively, we may issue a significant number of shares as consideration for an acquisition, which would have a dilutive effect on our existing stockholders. Amounts included in our backlog may not result in actual revenue or translate into profits. Our backlog is subject to cancellation and unexpected adjustments and therefore is an uncertain indicator of future results of operations.
If we are unable to provide competitive compensation packages, high-quality training programs and attractive work environments or to establish and maintain successful partnerships, our ability to profitably execute our work could be adversely impacted. We rely heavily on immigrant labor. We have taken steps that we believe are sufficient and appropriate to ensure compliance with immigration laws.
If we are unable to provide competitive 15 compensation packages, high-quality training programs and attractive work environments or to establish and maintain successful partnerships, our ability to profitably execute our work could be adversely impacted. We rely heavily on immigrant labor. We have taken steps that we believe are sufficient and appropriate to ensure compliance with immigration laws.
If we are not able to react quickly to force majeure events, our operations may be affected significantly, which would have a negative impact on our business, financial condition, results of operations and cash flows. We may choose, or be required, to pay our subcontractors even if our customers do not pay, or delay paying us for the related services.
If we are not able to react quickly to force majeure events, our operations may be affected significantly, which would have a negative impact on our business, financial condition, results of operations and cash flows. 18 We may choose, or be required, to pay our subcontractors even if our customers do not pay, or delay paying us for the related services.
For so long as we continue to qualify as an emerging 40 growth company or smaller reporting company, we will not be required to comply with Section 404(b) of the Sarbanes-Oxley Act, which requires an independent registered public accounting firm to attest to and report on management’s assessment of its internal control over financial reporting.
For so long as we continue to qualify as an emerging growth company or smaller reporting company, we will not be required to comply with Section 404(b) of the Sarbanes-Oxley Act, which requires an independent registered public accounting firm to attest to and report on management’s assessment of its internal control over financial reporting.
Although we believe that we may benefit from initiatives seeking to address the effects of climate change, and we seek to mitigate our business risks associated with climate change by establishing robust environmental programs and partnering with organizations who are also focused on mitigating their own climate related risks, we recognize 36 that there are inherent climate related risks wherever business is conducted.
Although we believe that we may benefit from initiatives seeking to address the effects of climate change, and we seek to mitigate our business risks associated with climate change by establishing robust environmental programs and partnering with organizations who are also focused on mitigating their own climate related risks, we recognize that there are inherent climate related risks wherever business is conducted.
However, we cannot provide assurance that we have identified, or will identify in the future, all illegal immigrants who work for us. Our failure to identify illegal immigrants who work for us may 19 result in fines or other penalties being imposed upon us, which could have a material adverse effect on our operations, results of operations and financial condition.
However, we cannot provide assurance that we have identified, or will identify in the future, all illegal immigrants who work for us. Our failure to identify illegal immigrants who work for us may result in fines or other penalties being imposed upon us, which could have a material adverse effect on our operations, results of operations and financial condition.
Lengthy periods of wet or cold winter weather could interrupt construction, and this could lead to under-utilization of crews and equipment, resulting in less efficient rates of overhead recovery. Extreme heat could prevent us from performing certain types of operations. Changes in weather conditions could cause delays and otherwise significantly affect our project costs.
Lengthy periods of wet or cold winter weather could interrupt construction, and this could lead to under-utilization of crews and equipment, resulting in less efficient rates of overhead recovery. Extreme heat and/or wildfires could prevent us from performing certain types of operations. Changes in weather conditions could cause delays and otherwise significantly affect our project costs.
Although we believe we have the experience and processes to enable us to formulate appropriate assumptions and produce reasonably dependable estimates, these assumptions and estimates are subject to the risks inherent in estimates, including unanticipated delays or technical complications. Variances in actual results from related estimates on a large project, or on several smaller projects, could be material.
Although we believe we have the experience and processes to enable us to formulate appropriate assumptions and produce reasonably dependable estimates, these assumptions and estimates are subject to the risks inherent in estimates, including unanticipated delays or technical 25 complications. Variances in actual results from related estimates on a large project, or on several smaller projects, could be material.
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.
Our ability to obtain surety bonds primarily depends upon our 19 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.
In addition, litigation and other proceedings may take up management's time and attention and take away from the time they are able to devote to other matters. Although climate change and increasing regulations often drive demand for water infrastructure, climate change, and related legislative and regulatory responses to climate change, may have a long-term impact on our business.
In addition, litigation and other proceedings may take up management's time and attention and take away from the time they are able to devote to other matters. Although climate change and increasing regulations often drive demand for infrastructure, climate change, and related legislative and regulatory responses to climate change, may have a long-term impact on our business.
Consequently, this could have a material adverse effect on our business, financial condition and results of operations. Increasing focus by stakeholders on policies and practices related to corporate responsibility could result in additional costs and could adversely impact our reputation, investor perception, employee retention and willingness of third parties to do business with us.
Consequently, this could have a material adverse effect on our business, financial condition and results of operations. Focus by stakeholders on policies and practices related to corporate responsibility could result in additional costs and could adversely impact our reputation, investor perception, employee retention and willingness of third parties to do business with us.
In addition, uncertain or adverse economic conditions that create volatility in the credit and equity markets 17 may reduce the availability of debt or equity financing for our customers, causing them to reduce capital spending. This has resulted, and in the future could result, in cancellations of projects or deferral of projects to a later date.
In addition, uncertain or adverse economic conditions that create volatility in the credit and equity markets may reduce the availability of debt or equity financing for our customers, causing them to reduce capital spending. This has resulted, and in the future could result, in cancellations of projects or deferral of projects to a later date.
A cancellation of an unfinished contract or our debarment from the bidding process could cause our equipment and work crews to be idled for a significant 24 period of time until other comparable work becomes available, which could have a material adverse effect on our business and results of operations.
A cancellation of an unfinished contract or our debarment from the bidding process could cause our equipment and work crews to be idled for a significant period of time until other comparable work becomes available, which could have a material adverse effect on our business and results of operations.
Our inability to 28 obtain adequate insurance coverage could subject us to increased out-of-pocket expenses in the event of a claim and could have an adverse impact on our ability to procure new work, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Our inability to obtain adequate insurance coverage could subject us to increased out-of-pocket expenses in the event of a claim and could have an adverse impact on our ability to procure new work, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Physical risks related to climate change, such as changing sea levels, temperature fluctuations, severe storms, and energy and technological disruptions, could cause delays and increases in project costs, resulting in variability in our revenue and profitability, as well as potentially adverse impacts to our results of operations and financial condition.
Physical risks related to climate change, such as changing sea levels, temperature fluctuations, severe storms, and energy and technological disruptions, could cause delays and increases in project costs, resulting in variability in our 32 revenue and profitability, as well as potentially adverse impacts to our results of operations and financial condition.
If we fail to comply or meet the evolving legal and regulatory requirements or expectations of our various stakeholders, we may be subject to enforcement actions, required to pay fines, and/or investors may sell their share, all of which could have short- and long-term impacts on our business and operations.
If we fail to comply or meet the legal and regulatory requirements or expectations of our various stakeholders, we may be subject to enforcement actions, required to pay fines, and/or investors may sell their share, all of which could have short- and long-term impacts on our business and operations.
At times of low unemployment rates in the areas we serve, it can be difficult for us to find qualified and affordable personnel. We may be unable to hire and retain a sufficiently skilled labor force necessary to support our operating 20 requirements and growth strategy.
At times of low unemployment rates in the areas we serve, it can be difficult for us to find qualified and affordable personnel. We may be unable to hire and retain a sufficiently skilled labor force necessary to support our operating requirements and growth strategy.
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies.
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay 37 the adoption of these accounting standards until they would otherwise apply to private companies.
Construction and maintenance sites, plants and quarries are potentially dangerous workplaces subject to the usual hazards associated with providing construction and related services, and our employees and others are often put in close proximity with mechanized equipment, moving vehicles, chemical and manufacturing processes and highly regulated materials.
Construction and maintenance sites, plants and quarries are potentially dangerous workplaces subject to the usual hazards associated with providing construction and related services, and our employees and others are often put in 17 close proximity with mechanized equipment, moving vehicles, chemical and manufacturing processes and highly regulated materials.
Similarly, our backlog frequently reflects multiple contracts for certain customers, therefore, one customer may comprise a significant percentage of backlog at a certain point in time. The loss of business from any one of such customers could have a material adverse effect on our business or results of 27 operations.
Similarly, our backlog frequently reflects multiple contracts for certain customers, therefore, one customer may comprise a significant percentage of backlog at a certain point in time. The loss of business from any one of such customers could have a material adverse effect on our business or results of operations.
Under Section 203, a corporation may not, in general, engage in a business combination with any 39 holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other exceptions, our board of directors has approved the transaction.
Under Section 203, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other exceptions, our board of directors has approved the transaction.
Timing of the award and performance of new contracts could have an adverse effect on our results of operations and cash flows. 26 Historically, a substantial portion of our revenue and earnings is generated from large-scale project awards. The timing of project awards is unpredictable and outside of our control.
Timing of the award and performance of new contracts could have an adverse effect on our results of operations and cash flows. Historically, a substantial portion of our revenue and earnings is generated from large-scale project awards. The timing of project awards is unpredictable and outside of our control.
Additionally, our ability to perform our work during such an event may be dependent on the governmental or societal responses to these circumstances in the markets in which we operate. We experienced many of these risks in connection with the COVID-19 pandemic.
Additionally, our ability to perform our work during such an event may be dependent on the 28 governmental or societal responses to these circumstances in the markets in which we operate. We experienced many of these risks in connection with the COVID-19 pandemic.
We have incurred, and will continue to incur, capital and operating expenditures and other costs in the 35 ordinary course of business in complying with OSHA and other state and local laws and regulations, and could incur penalties and fines in the future, including, in extreme cases, criminal sanctions.
We have incurred, and will continue to incur, capital and operating expenditures and other costs in the ordinary course of business in complying with OSHA and other state and local laws and regulations, and could incur penalties and fines in the future, including, in extreme cases, criminal sanctions.
Moreover, public interest in the protection of the environment has increased dramatically in recent years. The trend of more expansive and stringent environmental legislation and regulations applied to our industry could continue, resulting in increased costs of doing business and, consequently, affecting profitability.
Moreover, public interest in the protection of the environment has increased dramatically in recent years. The trend of more expansive and 30 stringent environmental legislation and regulations applied to our industry could continue, resulting in increased costs of doing business and, consequently, affecting profitability.
Our status as a “controlled company” could cause our common stock to be less attractive to certain investors or otherwise reduce the trading price of our common stock. We do not anticipate paying any cash dividends in the foreseeable future.
Our status as a “controlled company” could cause our common stock to be less attractive to certain investors or otherwise reduce the trading price of our common stock. 34 We do not anticipate paying any cash dividends in the foreseeable future.
As a result, our failure to maintain adequate safety standards could result in reduced 21 profitability or the loss of projects or customers and could have a material adverse impact on our business, financial condition, results of operations, and cash flows.
As a result, our failure to maintain adequate safety standards could result in reduced profitability or the loss of projects or customers and could have a material adverse impact on our business, financial condition, results of operations, and cash flows.
Although the water infrastructure market is relatively less susceptible to fluctuations in the market, economic downturns or reductions in government funding of infrastructure projects could reduce our revenue and profits and have a material adverse effect on our results of operations.
Although the infrastructure market is relatively less susceptible to fluctuations in the market, economic downturns or reductions in government funding of infrastructure projects could reduce our revenue and profits and have a material adverse effect on our results of operations.
Furthermore, if global economic, political or other market conditions adversely affect the financial institutions that provide credit to us, it is possible that our ability to draw upon our existing debt and credit facility may be impacted.
Furthermore, 26 if global economic, political or other market conditions adversely affect the financial institutions that provide credit to us, it is possible that our ability to draw upon our existing debt and credit facility may be impacted.
The need for working capital for our business varies due to fluctuations in the following amounts, among other factors: 31 • receivables; • contract retentions; • contract assets; • contract liabilities; • the size and status of contract mobilization payments and progress billings; and • the amounts owed to suppliers and subcontractors.
The need for working capital for our business varies due to fluctuations in the following amounts, among other factors: • receivables; • contract retentions; • contract assets; • contract liabilities; • the size and status of contract mobilization payments and progress billings; and • the amounts owed to suppliers and subcontractors.
Our customers may be adversely affected by market conditions and economic downturns, which could impair their ability to pay for our services. Economic downturns could reduce capital expenditures in the industries we serve, which could result in decreased demand for our services.
Our customers may be adversely affected by market conditions and economic downturns, which could impair their ability to pay for our services. 13 Economic downturns could reduce capital expenditures in the industries we serve, which could result in decreased demand for our services.
If we are unable to obtain aggregates to support our business, then our financial condition, results of operations and cash flows may be adversely affected. Unavailability of insurance coverage could have a negative effect on our operations and results.
If we are unable 23 to obtain aggregates to support our business, then our financial condition, results of operations and cash flows may be adversely affected. Unavailability of insurance coverage could have a negative effect on our operations and results.
We may be required to make significant future contributions to multiemployer pension plans in which we participate. 30 We participate in various multiemployer pension plans in the United States under union agreements that generally provide defined benefits to employees covered by collective bargaining agreements.
We may be required to make significant future contributions to multiemployer pension plans in which we participate. We participate in various multiemployer pension plans in the United States under union agreements that generally provide defined benefits to employees covered by collective bargaining agreements.
Our business is seasonal and is affected by adverse weather conditions and the spending patterns of our customers, exposing us to variable quarterly results. Some of our customers reduce their expenditures and work order requests towards the end of the fiscal year.
Cybersecurity." Our business is seasonal and is affected by adverse weather conditions and the spending patterns of our customers, exposing us to variable quarterly results. Some of our customers reduce their expenditures and work order requests towards the end of the fiscal year.
Any termination of a joint venture could cause us to reduce our backlog and could materially and adversely affect our business, results of operations and financial condition. Our dependence on a limited number of customers could adversely affect our business and results of operations.
Any termination of a joint venture could cause us to reduce our backlog and could materially and adversely affect our business, results of operations and financial condition. 22 Our dependence on a limited number of customers could adversely affect our business and results of operations.
As a result, we cannot assure you that we will be able to successfully operate as a public company, execute our business strategies as a public company, or comply with regulatory requirements applicable to public companies. 42
As a result, we cannot assure you that we will be able to successfully operate as a public company, execute our business strategies as a public company, or comply with regulatory requirements applicable to public companies.
These risks are discussed more fully below and include, but are not limited to, risks related to: Risks Related to Our Projects • the nature of our contracts, particularly those that are fixed-price, subjects us to risks associated with cost overruns, continuing operating cost inflation and potential claims for liquidated damages, • design-build contracts subject us to the risk of design errors and omissions, • we could incur material costs and losses as a result of claims that our materials do not meet regulatory requirements or contractual specifications, • force majeure events, such as natural disasters, epidemics, pandemics and terrorists’ actions, could negatively impact our business, which may affect our financial condition, results of operations or cash flows, • our subcontractors may fail to satisfy their obligations to us or other parties, or we may be unable to maintain these relationships, either of which may have a material adverse effect on our business, financial condition, results of operations, profitability, cash flows and growth prospects, Risks Related to Our Business and Industry • an inability to obtain bonding could limit the aggregate dollar amount of contracts that we are able to pursue, • although the water infrastructure market is relatively less susceptible to fluctuations in the market, economic downturns or reductions in government funding of infrastructure projects could reduce our revenue and profits and have a material adverse effect on our results of operations, • our limited operating history as an independent company following our separation from AECOM, • disputes with our prior owner, AECOM, and requirements to make future payments to AECOM, • violations or alleged violations of government regulations, requirements and statutes, including the False Claims Act, relating to our government contracts could have a material adverse effect on our business, • our dependence on a limited number of customers could adversely affect our business and results of operations, • our dependence on subcontractors and suppliers of materials could increase our costs and impact our ability to complete contracts on a timely basis or at all, which would adversely affect our profits and cash flows, • acquisition activity presents certain risks to our business, operations and financial condition, and we may not realize the financial and strategic goals contemplated at the time of a transaction, • amounts included in our backlog may not result in actual revenue or translate into profits, as our backlog is subject to cancellation and unexpected adjustments, • our use of the input method of revenue recognition based on costs incurred relative to total expected costs could result in a reduction or reversal of previously recorded revenue and profits, • pandemics and public health emergencies could materially disrupt our business and negatively impact our results of operations, cash flows and financial condition, 15 • both we and our customers use certain commodity products that are subject to significant price fluctuations, and these fluctuations may have a material adverse effect on both our and our customers’ financial condition, results of operations and cash flows, as well as our customers’ investment decisions, Risks Related to Legal and Governmental Regulation • our failure to comply with the regulations of Occupational Safety and Health Administration (“OSHA”) and state and local agencies that oversee transportation and safety compliance could adversely affect our business, financial condition, results of operations, profitability, cash flows and growth prospects, • a change in tax laws or regulations of any federal or state jurisdiction in which we operate could increase our tax burden and otherwise adversely affect our business, financial condition, results of operations, and cash flows, General Risk Factors • a failure to fully or promptly recover customer claims could have a material adverse impact on our liquidity and financial results, • although climate change and increasing regulations often drive demand for water infrastructure, climate change, and related legislative and regulatory responses to climate change, may have a long- term impact on our business, • deterioration of the United States economy could have a material adverse effect on our business, financial condition and results of operations, and Risks Related to the Securities Markets and Ownership of Our Common Stock • because we are a “controlled company” under the listing standards of Nasdaq and the rules of the SEC, our stockholders do not have certain corporate governance protections that are available to stockholders of companies that are not controlled companies, • we do not anticipate paying any cash dividends in the foreseeable future, so if our share price does not appreciate, our investors may not experience gains and could potentially lose on their investment in our shares • provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management, • our amended and restated charter documents provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us, • our disclosure controls and procedures may not prevent or detect all errors or acts of fraud, and • we are an emerging growth company and a smaller reporting company, and because we take advantage of specified reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies, our financial statements may not be comparable to companies that comply with public company effective dates, which may make our common stock less attractive to investors.
These risks are discussed more fully below and include, but are not limited to, risks related to: Risks Related to Our Projects • the nature of our contracts, particularly those that are fixed-price, subjects us to risks associated with cost overruns, continuing operating cost inflation and potential claims for liquidated damages, • design-build contracts subject us to the risk of design errors and omissions, • we could incur material costs and losses as a result of claims that our materials do not meet regulatory requirements or contractual specifications, • force majeure events, such as natural disasters, epidemics, pandemics and terrorists’ actions, could negatively impact our business, which may affect our financial condition, results of operations or cash flows, • our subcontractors may fail to satisfy their obligations to us or other parties, or we may be unable to maintain these relationships, either of which may have a material adverse effect on our business, financial condition, results of operations, profitability, cash flows and growth prospects, Risks Related to Our Business and Industry • an inability to obtain bonding could limit the aggregate dollar amount of contracts that we are able to pursue, • although the infrastructure market is relatively less susceptible to fluctuations in the market, economic downturns or reductions in government funding of infrastructure projects could reduce our revenue and profits and have a material adverse effect on our results of operations, • our limited operating history as an independent company following our separation from AECOM, • requirements to make future payments to AECOM, • violations or alleged violations of government regulations, requirements and statutes, including the False Claims Act, relating to our government contracts could have a material adverse effect on our business, • our dependence on a limited number of customers could adversely affect our business and results of operations, • our dependence on subcontractors and suppliers of materials could increase our costs and impact our ability to complete contracts on a timely basis or at all, which would adversely affect our profits and cash flows, • acquisition activity presents certain risks to our business, operations and financial condition, and we may not realize the financial and strategic goals contemplated at the time of a transaction, • amounts included in our backlog may not result in actual revenue or translate into profits, as our backlog is subject to cancellation and unexpected adjustments, • our use of the input method of revenue recognition based on costs incurred relative to total expected costs could result in a reduction or reversal of previously recorded revenue and profits, • pandemics and public health emergencies could materially disrupt our business and negatively impact our results of operations, cash flows and financial condition, 11 • both we and our customers use certain commodity products that are subject to significant price fluctuations, and these fluctuations may have a material adverse effect on both our and our customers’ financial condition, results of operations and cash flows, as well as our customers’ investment decisions, Risks Related to Legal and Governmental Regulation • our financial results could be impacted by uncertainty in U.S. trade policy, including uncertainty surrounding changes in tariffs, trade agreements or other trade restrictions imposed by the U.S. or other governments, • our failure to comply with the regulations of the Occupational Safety and Health Administration (“OSHA”) and state and local agencies that oversee transportation and safety compliance could adversely affect our business, financial condition, results of operations, profitability, cash flows and growth prospects, • a change in tax laws or regulations of any federal or state jurisdiction in which we operate could increase our tax burden and otherwise adversely affect our business, financial condition, results of operations, and cash flows, General Risk Factors • a failure to fully or promptly recover customer claims could have a material adverse impact on our liquidity and financial results, • although climate change and increasing regulations often drive demand for water infrastructure, climate change, and related legislative and regulatory responses to climate change, may have a long- term impact on our business, • deterioration of the United States economy could have a material adverse effect on our business, financial condition and results of operations, and Risks Related to the Securities Markets and Ownership of Our Common Stock • because we are a “controlled company” under the listing standards of Nasdaq and the rules of the SEC, our stockholders do not have certain corporate governance protections that are available to stockholders of companies that are not controlled companies, • we do not anticipate paying any cash dividends in the foreseeable future, so if our share price does not appreciate, our investors may not experience gains and could potentially lose on their investment in our shares • provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management, • our amended and restated charter documents provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us, • our disclosure controls and procedures may not prevent or detect all errors or acts of fraud, and • we are an emerging growth company and a smaller reporting company, and because we take advantage of specified reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies, our financial statements may not be comparable to companies that comply with public company effective dates, which may make our common stock less attractive to investors.
In recent years, there has been increasing focus from stakeholders, including government agencies, investors, consumers and employees, on our policies and practices related to corporate responsibility, including environment, climate, diversity and inclusion, human rights and governance transparency.
In recent years, there has been focus from stakeholders, including government agencies, investors, consumers and employees, on our policies and practices related to corporate responsibility, including environment, climate, inclusion, human rights and governance transparency.
If our policies and practices do not meet regulatory requirements or stakeholders’ evolving expectations for responsible corporate citizenship in areas including environmental stewardship, employee health and safety practices, director and employee diversity, human capital management and corporate governance, our reputation and employee retention may be negatively impacted, and customers and suppliers may be unwilling to do business with us.
If our policies and practices do not meet regulatory requirements or stakeholders’ expectations for responsible corporate citizenship in areas including environmental stewardship, employee health and safety practices, human capital management and corporate governance, our reputation and employee retention may be negatively impacted, and customers and suppliers may be unwilling to do business with us.
As our prior owner, AECOM is the credit support provider for the surety bonds in place for all our Legacy Projects, which consist of the bonded projects that were ongoing as of the closing of the AECOM Sale Transactions.
As our prior owner, AECOM is the credit support provider for the surety bonds in place for all our Legacy Projects, which consist of the bonded projects that were ongoing as of the closing of the AECOM Sale Transaction.
The costs incurred and gross margin realized on our contracts can vary, sometimes substantially, from our original projections due to a variety of factors, including, but not limited to: • on site conditions that differ from those assumed in the original bid or contract, • failure to include required materials or work in a bid, or the failure to estimate properly the quantities or costs needed to complete a lump sum contract, • contract or project modifications creating unanticipated costs not covered by change orders, • failure by our suppliers, subcontractors, designers, engineers, joint venture partners, or customers to perform their obligations, • delays in quickly identifying and taking measures to address issues which arise during contract execution, • changes in availability, proximity and costs of materials, including steel, concrete, aggregates and other construction materials, as well as fuel and lubricants for our equipment, • claims or demands from third parties for alleged damages arising from the design, construction or use and operation of a project of which our work is part, • difficulties in obtaining required governmental permits or approvals, • availability and skill level of workers in the geographic location of a project, • citations issued by any governmental authority, including OSHA, • unexpected labor conditions or work stoppages, • changes in applicable laws and regulations, • delays caused by weather conditions, • fraud, theft or other improper activities by our suppliers, subcontractors, designers, engineers, joint venture partners or customers or our own personnel, and • mechanical problems with our machinery or equipment.
The costs incurred and gross margin realized on our contracts can vary, sometimes substantially, from our original projections due to a variety of factors, including, but not limited to: • on site conditions that differ from those assumed in the original bid or contract, • failure to include required materials or work in a bid, or the failure to estimate properly the quantities or costs needed to complete a lump sum contract, • contract or project modifications creating unanticipated costs not covered by change orders, • failure by our suppliers, subcontractors, designers, engineers, joint venture partners, or customers to perform their obligations, • delays in quickly identifying and taking measures to address issues which arise during contract execution, • changes in availability, proximity and costs of materials, including steel, concrete, aggregates and other construction materials, as well as fuel and lubricants for our equipment, • claims or demands from third parties for alleged damages arising from the design, construction or use and operation of a project of which our work is part, • difficulties in obtaining required governmental permits or approvals, • availability and skill level of workers in the geographic location of a project, • citations issued by any governmental authority, including OSHA, • unexpected labor conditions or work stoppages, • changes in applicable laws and regulations, including those that may occur in connection with the new presidential administration as a result of the 2024 U.S. elections, • delays caused by weather conditions, • fraud, theft or other improper activities by our suppliers, subcontractors, designers, engineers, joint venture partners or customers or our own personnel, and • mechanical problems with our machinery or equipment.
Risks Related to the Securities Markets and Ownership of Our Common Stock Our controlling stockholder is able to exert substantial influence. Our controlling stockholder beneficially owns over 80% of our outstanding shares of common stock.
Risks Related to the Securities Markets and Ownership of Our Common Stock Our controlling stockholder is able to exert substantial influence. Our controlling stockholder beneficially owns over 60% of our outstanding shares of common stock.
In the course of preparing the financial statements that are included in this Annual Report on Form 10-K, our management has determined that as of December 29, 2023, we have material weaknesses in our internal control over financial reporting, which relate to the design and operation of internal control over financial reporting, lack of formal and effective controls over certain financial statement account balances, and lack of effective controls over the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) principles including control environment, risk assessment, control activities, information and communications and monitoring.
In the course of preparing the financial statements that are included in this Annual Report on Form 10-K, our management has determined that as of January 3, 2025, we have material weaknesses in our internal control over financial reporting, which relate to the design and operation of internal control over financial reporting, lack of formal and effective controls over certain financial statement account balances, and lack of effective controls over the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) principles including control environment, risk assessment, control activities, information and communications and monitoring.
We depend on subcontractors to perform work on some of our projects. There is a risk that we may have disputes with subcontractors arising from, among other things, the quality and timeliness of the work they perform, customer concerns about our subcontractors, or our failure to extend existing work orders or issue new work orders under a subcontracting arrangement.
There is a risk that we may have disputes with subcontractors arising from, among other things, the quality and timeliness of the work they perform, customer concerns about our subcontractors, or our failure to extend existing work orders or issue new work orders under a subcontracting arrangement.
Any assessment of the potential impact of future corporate responsibility-related regulations or industry standards is uncertain given the wide scope of potential regulatory change where we operate. Further, there is an increasing number of state-level anti-ESG initiatives in the United States that may conflict with other regulatory requirements 37 or various stakeholders’ expectations.
Any assessment of the potential impact of future corporate responsibility-related regulations or industry standards is uncertain given the wide scope of potential regulatory change where we operate. Further, there are a number of state-level anti-ESG initiatives in the United States that may conflict with other regulatory requirements or various stakeholders’ expectations.
Deterioration in general economic activity and infrastructure spending or Congress deficit reduction measures could have a material adverse effect on our business, financial condition, results of operations and cash flows. We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.
Deterioration in general economic activity and infrastructure spending or Congress deficit reduction measures could have a material adverse effect on our business, financial condition, results of operations and cash flows. 33 We have incurred, and will continue to incur, increased costs as a result of operating as a public company, and our management has been required, and will continue to be required, to devote substantial time to compliance initiatives.
As of December 29, 2023 and December 30, 2022, we recorded no liability for underfunding of multiemployer pension plans in which we participate, as no events triggering our obligation to make contributions for such underfunding were deemed probable to occur.
As of January 3, 2025 and December 29, 2023, we recorded no liability for underfunding of multiemployer pension plans in which we participate, as no events triggering our obligation to make contributions for such underfunding were deemed probable to occur.
Furthermore, compliance with these rules will require a substantial investment of management's time, and this investment may result in a diversion of management's time and attention from revenue-generating activities.
Furthermore, compliance with these rules has required, and will continue to require, a substantial investment of management's time, and this investment may result in a diversion of management's time and attention from revenue-generating activities.
Additionally, in many countries and jurisdictions, including the United States, governmental bodies are enacting new or additional legislation and regulations to reduce or mitigate the potential impacts of climate change.
Additionally, governmental bodies in the United States are enacting new or additional legislation and regulations to reduce or mitigate the potential impacts of climate change.
We also anticipate that we will incur costs associated with corporate governance requirements, including requirements under Section 404 and other provisions of the Sarbanes-Oxley Act, as well as rules implemented by the SEC, the listing requirements of Nasdaq and other applicable securities rules and regulations.
We also have incurred, and will continue to incur, costs associated with corporate governance requirements, including requirements under Section 404 and other provisions of the Sarbanes-Oxley Act, as well as rules implemented by the SEC, the listing requirements of Nasdaq and other applicable securities rules and regulations.
Risks Related to Legal and Governmental Regulation Environmental laws and regulations and any changes to, or liabilities arising under, such laws and regulations could have a material adverse effect on our financial condition, results of operations and liquidity.
Environmental laws and regulations and any changes to, or liabilities arising under, such laws and regulations could have a material adverse effect on our financial condition, results of operations and liquidity.
If a failure of our safeguarding measures were to occur, or if software or third-party vendors that support our information technology environment are compromised, it could have a negative impact to our business and result in business interruptions, remediation costs and/or legal claims, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If a failure of our safeguarding measures were to occur, or if software or third-party vendors that support our information technology environment are compromised, it could have a negative impact to our business and result in business interruptions, remediation costs and/or legal claims, which could have a material adverse effect on our business, financial condition, results of operations and cash flows and which may not be fully insured by our cyber risk insurance policy.
To comply with this statute, we are required to document and test our internal control procedures, and our management is required to assess and report on the effectiveness of our internal control over financial reporting.
To comply with this statute, we are required to document and test our internal control procedures and to disclose significant changes made in our internal controls and procedures and our management is required to assess and report on the effectiveness of our internal control over financial reporting.
Our contracts often require us to perform extra or change order work as directed by the customer even if the customer has not agreed in advance on the scope or price of the extra work to be performed.
These situations may occur due to changes in the initial project scope. Our contracts often require us to perform extra or change order work as directed by the customer even if the customer has not agreed in advance on the scope or price of the extra work to be performed.
In order to remediate these material weaknesses, we have hired and continue to seek out additional accounting and finance staff members with public company reporting experience, to augment our current staff and to improve the effectiveness of our closing and financial reporting processes. We have designed and implemented new entity level controls, information system general controls and financial reporting controls.
In order to remediate these material weaknesses, we have hired and continue to seek out additional accounting and finance staff members with public company reporting experience, to augment our current staff and to improve the 36 effectiveness of our closing and financial reporting processes.
Similarly, due to our geographic concentration in California, a natural disaster or major event that disrupts these markets or the related workforce could have an immediate and material adverse impact on our operations and profitability. We work in a highly competitive marketplace.
Similarly, due to our geographic concentration in California, a natural disaster or major event that disrupts these markets or the related workforce, such as the wildfires that affected Los Angeles and other surrounding areas in early 2025, could have an immediate and material adverse impact on our operations and profitability. We work in a highly competitive marketplace.
Our controlling stockholder controls a majority of the voting power of our outstanding common stock. As a result, although we do not rely on the “controlled company” exemption, we are a “controlled company” under the listing standards of Nasdaq and SEC rules, and we qualify for exemptions from certain corporate governance requirements.
As a result, although we do not rely on the “controlled company” exemption, we are a “controlled company” under the listing standards of Nasdaq and SEC rules, and we qualify for exemptions from certain corporate governance requirements.
Substantially all of the contracts in our backlog may be canceled or modified at the election of the customer. As of December 29, 2023, our backlog was approximately $1.1 billion. Most of our contracts are cancelable on short or no advance notice.
Substantially all of the contracts in our backlog may be canceled or modified at the election of the customer. As of January 3, 2025, our backlog was approximately $822 million. Most of our contracts are cancelable on short or no advance notice.
Potential payments to the Seller Entities set forth in the Purchase Agreement include potential payments for retained claim reimbursements from Legacy Projects, the payment of a portion of actual income tax benefits realized (i.e., in cash or through an actual reduction in liability for tax) as a result of AECOM's election under Treasury Regulations Section 1.1502-36(d)(6) and a one-time additional cash payment if either of the Earnout Thresholds are achieved.
Potential payments to the Seller Entities set forth in the Purchase Agreement include the payment of a portion of actual income tax benefits realized (i.e., in cash or through an actual reduction in liability for tax) as a result of AECOM's election under Treasury Regulations Section 1.1502-36(d)(6).
Risks Related to Our Projects 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.
Risks Related to Our Projects 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. 12 The majority of our revenue and backlog is derived from fixed unit price contracts and lump sum contracts.
Compliance with these rules and regulations will increase our legal and financial compliance costs, introduce new costs, such as investor relations, stock exchange listing fees, stockholder reporting and directors and officers liability insurance, and will make some activities more time-consuming and costly.
Compliance with these rules and regulations has increased our legal and financial compliance costs, has introduced new costs, such as investor relations, stock exchange listing fees, stockholder reporting and directors’ and officers’ liability insurance, and has made some activities more time-consuming and costly.
We continue to assess the impact of various U.S. federal, state and international legislative proposals that could result in a material increase to our U.S. federal, state and/or international taxes. We cannot predict whether any specific legislation will be enacted or the terms of any such legislation.
We continue to assess the impact of various U.S. federal, state and international legislative proposals that could result in a material increase to our U.S. federal, state and/or international taxes.
General Risk Factors From time to time, we are involved in litigation proceedings, potential liability claims and contract disputes which may reduce our profits. We may be subject to a variety of legal proceedings, liability claims or contract disputes. We engage in engineering and construction activities where design, construction or systems failures can result in substantial injury or damage.
We may be subject to a variety of legal proceedings, liability claims or contract disputes. We engage in engineering and construction activities where design, construction or systems failures can result in substantial injury or damage.
In addition, inflationary factors, such as increases in the labor costs, material costs, and overhead costs, may also adversely affect our financial condition and results of operations. Inflation in the United States has reached multi-decade highs and remained elevated over the past few years.
In addition, inflationary factors, such as increases in the labor costs, material costs, and overhead costs, may also adversely affect our financial condition and results of operations. Although inflation in the United States has moderated slightly recently, it has remained elevated over the past few years and we cannot predict any future inflation trends.
All of the foregoing risks may be magnified as the cost, size or complexity of an acquisition or acquired company increases, or where the acquired company's market or business are materially different from ours, or where more than one integration is occurring simultaneously or within a concentrated period of time.
All of the foregoing risks may be magnified as the cost, size or complexity of an acquisition or acquired company increases, or where the acquired company's market or business are materially different from ours, or where more than one integration is occurring simultaneously or within a concentrated period of time. 24 In addition, in the future we may require significant financing to complete an acquisition or investment, whether through bank loans, raising of debt or otherwise.
If we are not able to obtain such necessary financing, it could have an impact on our ability to consummate a substantial acquisition or investment and execute our growth strategy.
We cannot assure you that such financing options will be available to us on reasonable terms, or at all. If we are not able to obtain such necessary financing, it could have an impact on our ability to consummate a substantial acquisition or investment and execute our growth strategy.
Because we emit greenhouse gases through the combustion of fossil fuels as part of our operations, any such laws and regulations applicable to jurisdictions in which we operate could require us to incur costs to reduce greenhouse gas emissions associated with our operations. 34 We have in the past been, and may in the future be, required to remediate contaminated properties currently or formerly owned or operated by us or third-party facilities that receive waste generated by our operations, regardless of whether such contamination resulted from our own actions or those of others and whether such actions complied with applicable laws at the time they were taken.
We have in the past been, and may in the future be, required to remediate contaminated properties currently or formerly owned or operated by us or third-party facilities that receive waste generated by our operations, regardless of whether such contamination resulted from our own actions or those of others and whether such actions complied with applicable laws at the time they were taken.
These fluctuations may have a material adverse effect on both our and our customers' financial condition, results of operations and cash flows. Fluctuations in commodity prices may also affect our customers' investment decisions and therefore subject us to risks of cancellation, delays in existing work, or changes in the timing and funding of new awards.
Fluctuations in commodity prices may also affect our customers' investment decisions and therefore subject us to risks of cancellation, delays in existing work, or changes in the timing and funding of new awards.
However, if such proposals were to be enacted, or if modifications were to be made to certain existing regulations, the consequences could have a material adverse impact on us, including increasing our tax burden, increasing our cost of tax compliance or otherwise adversely affecting our business, financial condition, results of operations and cash flows.
However, if such proposals were to be enacted, or if modifications were to be made to certain existing regulations, the consequences could have a material adverse impact on us, including increasing our tax burden, increasing our cost of tax compliance or otherwise adversely affecting our business, financial condition, results of operations and cash flows. 31 General Risk Factors From time to time, we are involved in litigation proceedings, potential liability claims and contract disputes which may reduce our profits.
Since the techniques used to obtain unauthorized access or to sabotage systems change frequently and are often not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventive measures. 32 Our business also requires us to share confidential information with suppliers and other third parties.
We may also miscalculate the level of investment necessary to protect our systems adequately. Since the techniques used to obtain unauthorized access or to sabotage systems change frequently and are often not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventive measures.
In the event AECOM were to experience financial distress and/or the bonding companies otherwise determined that the creditworthiness of AECOM was not sufficient, the underlying sureties could require that we provide additional credit support in the form of guarantees, letters of credit, collateral, or otherwise which could materially and adversely impact our business.
In the event AECOM were to experience financial distress and/or the bonding companies otherwise determined that the creditworthiness of AECOM was not sufficient, the underlying sureties could require that we provide additional credit support in the form of guarantees, letters of credit, collateral, or otherwise which could materially and adversely impact our business. 21 Similarly, if the applicable agreements relating to any of the Legacy Projects require that the amount of the bond with respect to such project be increased, we will need to request that AECOM provide such an increase.
No claims have been asserted against SCC or us at this time and we intend to fully cooperate with the DOJ in its investigation. 18 The CID seeks information relating to our corporate structure, our relationship with the prime contractor, ATS, and the identity of employees or contractors of SCC and its affiliates involved in the project, among other things.
The CID seeks information relating to our corporate structure, our relationship with the prime contractor, ATS, and the identity of employees or contractors of SCC and its affiliates involved in the project, among other things.
We could experience a material decrease in profitability and liquidity if we choose, or are required, to pay our subcontractors for work performed for customers that fail to pay, or delay paying us, for the related work. 22 Our subcontractors may fail to satisfy their obligations to us or other parties, or we may be unable to maintain these relationships, either of which may have a material adverse effect on our business, financial condition, results of operations, profitability, cash flows and growth prospects.
Our subcontractors may fail to satisfy their obligations to us or other parties, or we may be unable to maintain these relationships, either of which may have a material adverse effect on our business, financial condition, results of operations, profitability, cash flows and growth prospects. We depend on subcontractors to perform work on some of our projects.
Pursuant to the Purchase Agreement entered into in connection with the AECOM Sale Transactions, we are required to make payments to the Seller Entities under certain circumstances.
We may be required to make additional payments to our prior owner, AECOM, which could adversely impact our business. Pursuant to the Purchase Agreement entered into in connection with the AECOM Sale Transaction, we are required to make payments to the Seller Entities under certain circumstances.
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. These situations may occur due to changes in the initial project scope.
In certain circumstances, such as those that arose in connection with our Golden Gate Bridge Project, 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.

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Item 2. Properties

Properties — owned and leased real estate

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Item 2. Prope rties. We complete the scope work on our projects from multiple locations throughout the country. We lease administrative offices in Irvine, California, Denver, Colorado, Suisun, California, and in other locations throughout the United States.
Item 2. Prope rties. We complete the scope work on our projects from multiple locations throughout the country. We lease administrative offices in Irvine, California, Denver, Colorado, Suisun, California, Boise, Idaho and in other locations throughout the United States.
Suisun, CA – Office Leased 10,221 sq. ft. Tracy, CA – Equipment Facility Owned 10,000 sq. ft., 43 acres
Suisun, CA – Office Leased 10,221 sq. ft. Boise, ID – Office Leased 1,704 sq. ft. Tracy, CA – Equipment Facility Leased 10,000 sq. ft., 43 acres
Our equipment maintenance and repair facility is located in Tracy, California, and we also use the site to store our inventory of construction materials. Below are our primary regional office and equipment facility locations.
We also lease an equipment maintenance and repair facility located in Tracy, California, which we use to store our inventory of construction materials as well as to maintain and repair our equipment. Below are our primary regional office and equipment facility locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. Leg al Proceedings. For a discussion of our legal proceedings, see Note 12 - Commitments and Contingencies of the notes to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K. Item 4. Mi ne Safety Disclosures. Not applicable 44 PA RT II
Item 3. Leg al Proceedings. For a discussion of our legal proceedings, see Note 12 - Commitments and Contingencies of the notes to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K. Item 4. Mi ne Safety Disclosures. Not applicable 40 PA RT II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Item 5. Market for R egistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock, par value $0.01 per share, trades on the NASDAQ Global Select Market under the trading symbol "SHIM". Holders Substantially all of our stockholders maintain their shares in "street name" accounts and are not individually stockholders of record.
Item 5. Market for R egistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock, par value $0.01 per share, trades on the Nasdaq Capital Market under the trading symbol "SHIM". Holders Substantially all of our stockholders maintain their shares in "street name" accounts and are not individually stockholders of record.
According to the records of our transfer agent, there were five stockholders of record as of March 25, 2024. Dividends We do not intend to declare or pay dividends on our common stock in the near-term.
According to the records of our transfer agent, there were eight stockholders of record as of March 19, 2025. Dividends We do not intend to declare or pay dividends on our common stock in the near-term.
Removed
Stock Performance Graph Not applicable as we are a “smaller reporting company,” as defined in the Exchange Act. Use of Proceeds On November 16, 2023, we completed our IPO, in which we issued and sold 3,575,000 shares of our common stock at an initial public offering price of $7.00 per share.
Added
Stock Performance Graph Not applicable as we are a “smaller reporting company,” as defined in the Exchange Act. Unregistered Sales of Equity Securities Except as previously disclosed in Current Reports on Form 8-K, no unregistered sales of the Company’s equity securities were made during the fiscal year ended January 3, 2025. Issuer Repurchase of Equity Securities None.
Removed
We raised net proceeds of approximately $19 million, after deducting the underwriting discount of $2 million and offering expenses of $4 million. All shares sold in our IPO were registered pursuant to a registration statement on Form S-1 (File No. 333-274870) (as amended, the “Registration Statement”), declared effective by the SEC on November 13, 2023.
Removed
Roth Capital Partners, LLC acted as representative of the underwriters for the offering. The offering terminated after the sale of all securities registered pursuant to the Registration Statement.
Removed
No payments for such expenses were made directly or indirectly to (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities, or (iii) any of our affiliates.
Removed
As contemplated in the Registration Statement, we used the net proceeds of the offering, together with cash on hand, to repay all outstanding borrowing under our Revolving Credit Facility. There was no material change in the use of the net proceeds from our IPO from the expected use of proceeds described in the Registration Statement.
Removed
Issuer Repurchase of Equity Securities None. Item 6. [Res erved] 45

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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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.
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.
Additional cash requirements resulting from our growth include the costs of additional personnel, enhancing our information systems and, in the future, our integration of any acquisitions and our compliance with laws and rules applicable to being a public company.
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.
Financing Activities For the fiscal year ended December 29, 2023, net cash provided by financing activities was $48 million, which primarily consisted of net proceeds from the Revolving Credit Facility borrowings of $30 million and IPO proceeds of $25 million, partially offset by payments of IPO costs of $6 million.
For the fiscal year ended December 29, 2023, net cash provided by financing activities was $48 million, which primarily consisted of net proceeds from the Revolving Credit Facility borrowings of $30 million and IPO proceeds of $25 million, partially offset by payments of IPO costs of $6 million.
We have included Adjusted net income in this Annual Report on Form 10-K 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.
We have included Adjusted net (loss) income in this Annual Report on Form 10-K 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.
Shared Tax Benefits Pursuant to the internal reorganization of its business in early 2020, AECOM agreed to make an election under Treasury Regulations Section 1.1502-36(d)(6) that could result in certain tax benefits to us (in the form of cash or a reduction in liability for taxes).
Pursuant to the internal reorganization of its business in early 2020, AECOM agreed to make an election under Treasury Regulations Section 1.1502-36(d)(6) that could result in certain tax benefits to us (in the form of cash or a reduction in liability for taxes).
Other Items We have agreed to indemnify the Seller Entities for any costs or expenses incurred under any outstanding letters of credit, surety bonds, guarantees, advance payment guarantees and other contractual obligations arising from or relating to the assets purchased or the liabilities assumed under the Purchase Agreement, including bonds relating to the Legacy Projects.
We have agreed to indemnify the Seller Entities for any costs or expenses incurred under any outstanding letters of credit, surety bonds, guarantees, advance payment guarantees and other contractual obligations arising from or relating to the assets purchased or the liabilities assumed under the Purchase Agreement, including bonds relating to the Legacy Projects.
In particular, we believe that the exclusion of the income and expenses eliminated in calculating Adjusted net income can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted net income provides useful information to investors and others in understanding and evaluating our results of operations.
In particular, we believe that the exclusion of the income and expenses eliminated in calculating Adjusted net (loss) income can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted net (loss) income provides useful information to investors and others in understanding and evaluating our results of operations.
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 consolidated financial statements, we provide investors with certain non-GAAP financial measures, including Adjusted net income and Adjusted EBITDA.
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 consolidated financial statements, we provide investors with certain non-GAAP financial measures, including Adjusted net (loss) income and Adjusted EBITDA.
Our use of Adjusted net income 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.
Our use of Adjusted net (loss) income as an analytical tool has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP.
Some of these limitations are: • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized might have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements, • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs, • Adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation, • Adjusted EBITDA does not reflect interest or tax payments that would reduce the cash available to us, and • other companies, including companies in our industry, might calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as comparative measures. 53 Because of these and other limitations, you should consider Adjusted EBITDA alongside Net (loss) income attributable to Shimmick Corporation, which is the most directly comparable GAAP measure.
Some of these limitations are: • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized might have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements, • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs, • Adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation, • Adjusted EBITDA does not reflect interest or tax payments that would reduce the cash available to us, and • other companies, including companies in our industry, might calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as comparative measures. 51 Because of these and other limitations, you should consider Adjusted EBITDA alongside Net loss attributable to Shimmick Corporation, which is the most directly comparable GAAP measure.
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. 60 Item 7A.
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. 59 Item 7A.
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.
Many of our contracts are 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.
Revenue Recognition and Estimated Costs to Complete Projects The Company recognizes revenue from signed contracts with customers, change orders (approved and unapproved) and claims on those contracts that we conclude to be enforceable under the terms of the signed contracts. Many of 58 the Company’s contracts have one clearly identifiable performance obligation.
Revenue Recognition and Estimated Costs to Complete Projects The Company recognizes revenue from signed contracts with customers, change orders (approved and unapproved) and claims on those contracts that we conclude to be enforceable under the terms of the signed contracts. Many of 57 the Company’s contracts have one clearly identifiable performance obligation.
If we are unable to recoup these costs, it could have a significant impact on our business. How We Assess Performance of Our Business 49 Revenue We currently derive our revenue predominantly by providing infrastructure, operations and management services around the United States.
If we are unable to recoup these costs, it could have a significant impact on our business. How We Assess Performance of Our Business 46 Revenue We currently derive our revenue predominantly by providing infrastructure, operations and management services around the United States.
Our History and the AECOM Sale Transactions Overview 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.
Our History, the AECOM Sale Transaction and 2024 Financing Transactions Overview 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.
Some of these limitations are: • Adjusted net income does not reflect changes in, or cash requirements for, our working capital needs, • Adjusted net income does not reflect the potentially dilutive impact of stock-based compensation, and 52 • other companies, including companies in our industry, might calculate Adjusted net income or similarly titled measures differently, which reduces their usefulness as comparative measures.
Some of these limitations are: 50 • Adjusted net (loss) income does not reflect changes in, or cash requirements for, our working capital needs, • Adjusted net (loss) income does not reflect the potentially dilutive impact of stock-based compensation, and • other companies, including companies in our industry, might calculate Adjusted net (loss) income or similarly titled measures differently, which reduces their usefulness as comparative measures.
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. 47 Seasonality.
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. 44 Seasonality.
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 48 surety bonds, past performance on similar projects and price, which we believe creates a barrier to entry.
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” or collaborative contract proposal, where contracts are awarded based on a combination of technical qualifications, proposed project team, 45 schedule, the ability to obtain surety bonds, past performance on similar projects and price, which we believe creates a barrier to entry.
Because of these and other limitations, you should consider Adjusted net income alongside Net (loss) income attributable to Shimmick Corporation, which is the most directly comparable GAAP measure. See reconciliation below.
Because of these and other limitations, you should consider Adjusted net (loss) income alongside Net loss attributable to Shimmick Corporation, which is the most directly comparable GAAP measure.
Emerging Growth Company and Smaller Reporting Company 59 We are an “emerging growth company,” as defined in the JOBS Act.
Emerging Growth Company and Smaller Reporting Company 58 We are an “emerging growth company,” as defined in the JOBS Act.
Further, the Seller Entities have provided a conditional guaranty required by any surety bonds and/or a bonding program relating to certain guaranteed obligations and payment obligations with respect to the certain other assets related to our business and our subsidiaries to the extent owned by Seller Entities or their affiliates.
Further, the Seller Entities have provided a conditional guaranty required by any surety bonds and/or a bonding program relating to certain guaranteed obligations and payment obligations with respect to the certain other assets related to our business and our subsidiaries to the extent owned by Seller Entities or their affiliates. 2024 Financing Transactions • Credit Agreement .
We are obligated to share with AECOM actual tax benefits realized (i.e., in cash or through an actual reduction in liability for tax).
We are obligated to share with AECOM actual tax benefits realized (i.e., in cash or through an actual reduction in liability for tax). 43 • Other Items .
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 jobs. Revenue recognized on these Legacy Loss Projects was $99 million and $123 million for the fiscal years ended December 29, 2023 and December 30, 2022, respectively.
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 $68 million and $99 million for the fiscal years ended January 3, 2025 and December 29, 2023, respectively.
Changes in Contract Capital—The change in operating assets and liabilities varies due to fluctuations and timing in operating activities and Contract Capital.
Operating assets and liabilities — The change in operating assets and liabilities varies due to fluctuations and timing in operating activities and operating assets and liabilities.
Total debt outstanding is presented on the consolidated balance sheets as follows: (In thousands) December 29, 2023 December 30, 2022 Revolving Credit Facility $ 29,914 $ — Total debt 29,914 — Unamortized debt issuance costs (287 ) — Long-term debt, net $ 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.
Total debt outstanding is presented on the consolidated balance sheets as follows: (In thousands) January 3, 2025 December 29, 2023 Credit Agreement $ 11,503 $ — Revolving Credit Facility — 29,914 Unamortized debt issuance costs (2,025 ) (287 ) Long-term debt, net $ 9,478 $ 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.
In January 2021, we were sold by AECOM and began operating as an independent company under new private ownership ("AECOM Sale Transactions") under a December 2020 Purchase Agreement with SCC Group, a special purpose entity formed for the purpose of entering into and consummating the sale transactions including acquiring 100% of the stock of the Company and certain other assets related to our business and our subsidiaries to the extent owned by Seller Entities or their affiliates. 46 On November 19, 2021, SCC Group was merged with SCCI National Holdings, Inc., with SCCI National Holdings, Inc. becoming the surviving entity.
In January 2021, we were sold by AECOM and began operating as an independent company under new private ownership ("AECOM Sale Transaction") under a December 2020 Purchase Agreement with SCC Group, a special purpose entity formed for the purpose of entering into and consummating the sale transaction including acquiring 100% of the stock of the Company and certain other assets related to our business and our subsidiaries to the extent owned by Seller Entities or their affiliates.
Investing Activities For the fiscal year ended December 29, 2023, net cash provided by investing activities was $22 million, which primarily consisted of cash proceeds from the sale of non-core business contracts of $30 million, proceeds from sale of assets of $6 million ($4 million due to sale of an office building), and return of investment in unconsolidated joint ventures of $16 million, partially offset by unconsolidated joint venture equity contributions of $23 million and purchases of property, plant and equipment of $7 million. 56 For the fiscal year ended December 30, 2022, net cash provided by investing activities was $4 million, which primarily consisted of a net working capital settlement in association with the AECOM Sale Transactions of $32 million and proceeds from sale of assets of $2 million, partially offset by unconsolidated joint venture equity contributions of $20 million, and purchases of property, plant and equipment of $10 million.
For the fiscal year ended December 29, 2023, net cash provided by investing activities was $22 million, which primarily consisted of cash proceeds from the sale of non-core business contracts of $30 million, proceeds from sale of assets of $6 million ($4 million due to sale of an office building), and return of investment in unconsolidated joint 55 ventures of $16 million, partially offset by unconsolidated joint venture equity contributions of $23 million and purchases of property, plant and equipment of $7 million.
Substantially all of the contracts in our backlog may be canceled or modified at the election of the customer. As of December 29, 2023, we had a backlog of projects of approximately $1.1 billion, with over half of that amount comprised of water projects.
Substantially all of the contracts in our backlog may be canceled or modified at the election of the customer. As of January 3, 2025, we had a backlog of projects of approximately $822 million, with over half of that amount comprised of water projects.
Cash flows used in operating activities were driven by reduced net income, adjusted for various non-cash items and changes in accounts receivable, due from unconsolidated joint ventures, contract assets, accounts payable, contract liabilities and accrued expenses balances (collectively, “Contract Capital”), as discussed below, accrued salaries and wages and other assets and liabilities.
Cash flows used in operating activities were driven by a net loss, adjusted for various non-cash items and changes in accounts receivable, contract assets, contract liabilities, accounts payable and accrued expenses balances, accrued salaries and wages and other assets and liabilities as discussed below.
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.
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.
Self-performance also enables us to better control the critical aspects of our projects, reducing the risk of cost and schedule overruns. 57 The following table presents the Company's percentage of backlog by customer type, contract type and backlog recognized: As of (In millions) December 29, 2023 Backlog by customer type: State and local agencies 74 % Federal agencies 14 % Private owners 12 % Total backlog 100 % As of (In millions) December 29, 2023 Backlog by contract type: Fixed-price 86 % Cost reimbursable 14 % Total backlog 100 % As of (In millions) December 29, 2023 Estimated backlog recognized: 0 to 24 months 80 % 25 to 36 months 9 % Beyond 36 months 11 % Total backlog 100 % Off-Balance Sheet Arrangements In our joint ventures, the liability of each partner is usually joint and several.
Self-performance also enables us to better control the critical aspects of our projects, reducing the risk of cost and schedule overruns. 56 The following tables present the Company's percentage of backlog by customer type, contract type and backlog recognized: As of January 3, 2025 Backlog by customer type: State and local agencies 71 % Federal agencies 13 % Private owners 16 % Total backlog 100 % As of January 3, 2025 Backlog by contract type: Fixed-price 85 % Cost reimbursable 15 % Total backlog 100 % As of January 3, 2025 Estimated backlog recognized: 0 to 24 months 84 % 25 to 36 months 7 % 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.
The Revolving Credit Facility was subsequently amended on June 30, 2023 and September 22, 2023. As amended, the Revolving Credit Facility provides for a total commitment of $35 million and bears interest at an annual rate of adjusted term SOFR, subject to a 1.0% floor, plus 4.50%.
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%.
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.
The Company’s operating assets and liabilities 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.
Adjusted EBITDA Adjusted EBITDA represents our net (loss) income attributable to Shimmick Corporation before interest expense, income tax expense and depreciation and amortization, adjusted to eliminate changes in fair value of contingent consideration, transaction-related costs, stock-based compensation, and legal fees and other costs for a Legacy Loss Project.
Adjusted EBITDA Adjusted EBITDA represents our net loss attributable to Shimmick Corporation before interest expense, income tax benefit 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 transaction-related costs and changes in fair value of contingent consideration remaining after the impact of transactions with our prior owner.
The negative gross margin is primarily the result of a subset of these projects (“Legacy Loss Projects”) that have experienced significant cost overruns due to the COVID pandemic, design issues and other factors. On this subset, we have recognized the estimated costs to complete and the loss expected from these projects.
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.
Contractual Obligations Contractual obligations of the Company consisted of liabilities associated with remaining lease payments through the fiscal years ending through December 31, 2028 of approximately $10 million, $8 million, $4 million, $2 million and $2 million, respectively, and approximately $1 million in the aggregate thereafter based on balances outstanding as of December 29, 2023.
Contractual Obligations Contractual obligations of the Company consisted of liabilities associated with remaining lease payments through the fiscal years ending December 28, 2029 of approximately $7 million, $5 million, $4 million, $4 million and $3 million, respectively, and approximately $3 million in the aggregate thereafter based on balances outstanding as of January 3, 2025.
Our future success will be highly dependent on our ability to access outside sources of capital. 54 As is customary in our business, we are required to provide surety bonds to secure our performance under our contracts.
However, we regularly monitor other 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.
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.
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.
Adjusted net income Adjusted net income represents Net (loss) income attributable to Shimmick Corporation adjusted to eliminate changes in fair value of contingent consideration, transaction-related costs, stock-based compensation, and legal fees and other costs for a Legacy Loss Project.
Adjusted net (loss) income Adjusted net (loss) income represents Net 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 our prior owner.
The impact on cash flows from operations in the fiscal years ended December 29, 2023 and December 30, 2022 from Legacy Loss Projects was cash used of approximately $65 million and $96 million, respectively.
The impact on net cash flows from operations in the fiscal years ended January 3, 2025 and December 29, 2023 from Legacy Loss Projects was cash proceeds of approximately $42 million in part due to settlements on claims during the year and cash used of $65 million, respectively.
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 will generally be selling, general and administrative expenses.
We incur significant expenses on an ongoing basis as a public company 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.
All funds provided by Berkshire under the Project Financing Agreement as well as all accrued interest are due and payable in full on March 28, 2028. 55 Cash Flows Analysis The following table sets forth our cash flows for the periods indicated: Fiscal Year Ended December 29, December 30, (In thousands) 2023 2022 Net cash used in operating activities $ (88,100 ) $ (3,084 ) Net cash provided by investing activities 22,050 4,197 Net cash provided by (used in) financing activities 47,875 (931 ) Net (decrease) increase in cash, cash equivalents and restricted cash (18,175 ) 182 Cash, cash equivalents and restricted cash, beginning of period 82,085 81,903 Cash, cash equivalents and restricted cash, end of period $ 63,910 $ 82,085 Operating Activities During the fiscal year ended December 29, 2023, net cash used in operating activities was $88 million, compared to net cash used in operating activities of $3 million for the fiscal year ended December 30, 2022.
Cash Flows Analysis The following table sets forth our cash flows for the periods indicated: 54 Fiscal Year Ended January 3, December 29, (In thousands) 2025 2023 Net cash used in operating activities $ (21,259 ) $ (88,100 ) Net cash provided by investing activities 15,041 22,050 Net cash (used in) provided by financing activities (21,897 ) 47,875 Net decrease in cash, cash equivalents and restricted cash (28,115 ) (18,175 ) Cash, cash equivalents and restricted cash, beginning of period 63,910 82,085 Cash, cash equivalents and restricted cash, end of period $ 35,795 $ 63,910 Operating Activities During the fiscal year ended January 3, 2025, net cash used in operating activities was $21 million, compared to net cash used in operating activities of $88 million for the fiscal year ended December 29, 2023.
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.
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.
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.
We integrate technical excellence with collaborative project delivery methods to provide innovative, technology-driven infrastructure solutions that accelerate economic growth and empower communities 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.
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.
Unrestricted cash and cash equivalents at January 3, 2025 totaled $34 million and availability under the Revolving Credit Facility and Credit Agreement totaled $15 million and $51 million, respectively, resulting in total liquidity of $100 million. 52 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.
The changes in the components of Contract Capital during the fiscal years ended December 29, 2023 and December 30, 2022 were as follows: Fiscal Year Ended December 29, December 30, (In thousands) 2023 2022 Accounts receivable, net $ 2,251 $ 41,574 Due from unconsolidated joint ventures 313 7,079 Contract assets (9,334 ) (46,736 ) Accounts payable 13,747 10,436 Contract liabilities (47,940 ) (94,165 ) Accrued expenses (26,861 ) 31,471 Changes in Contract Capital, net $ (67,824 ) $ (50,341 ) During the fiscal year ended December 29, 2023, the decrease in Contract Capital was $68 million, which was primarily driven by decreases in contract liabilities and accrued expenses.
The changes in the components of operating assets and liabilities during the fiscal years ended January 3, 2025 and December 29, 2023 were as follows: Fiscal Year Ended January 3, December 29, (In thousands) 2025 2023 Accounts receivable, net $ 11,190 $ 2,251 Due from unconsolidated joint ventures - 313 Contract assets 104,139 (9,334 ) Accounts payable (35,114 ) 13,747 Contract liabilities (13,260 ) (47,940 ) Accrued expenses 9,940 (26,861 ) Accrued salaries, wages and benefits 2,039 (8,975 ) Other assets and liabilities 4,310 (645 ) Changes in operating assets and liabilities, net $ 83,244 $ (77,444 ) During the fiscal year ended January 3, 2025, the increase in operating assets and liabilities was $83 million, which was primarily driven by decreases in contract assets and increases in contract liabilities and accrued expenses.
For additional information regarding AECOM, see “ Risk Factors — Risks Related to Our Business and Industry — We are involved in ongoing disputes with our prior owner, AECOM, which could adversely impact our business ,” “ — We may be required to make additional payments to AECOM pursuant to contractual arrangements” and “— If AECOM defaults on its contractual obligations under agreements in which we are a beneficiary, our business could be materially and adversely impacted. ” 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.
For additional information regarding AECOM, see “ Risk Factors — Risks Related to Our Business and Industry — We may be required to make additional payments to AECOM pursuant to contractual arrangements” and “— If AECOM defaults on its contractual obligations under agreements in which we are a beneficiary, our business could be materially and adversely impacted. ” Ural Yal Appointed CEO of Shimmick On November 12, 2024, Shimmick announced that it appointed Ural Yal as its new CEO and member of the Board of Directors effective December 2, 2024 and succeeded Steven Richards upon his retirement.
We have also implemented the 2023 Omnibus Incentive Plan to align our equity compensation program with public company plans and practices, which we expect will increase 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.
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.
Income tax expense No taxable income was recognized for the fiscal year ended December 29, 2023, thus no income tax expense was recorded. For the fiscal year ended December 30, 2022, there was approximately $1 million of tax expense after accounting for the utilization of NOL carryforwards.
Income tax benefit Income tax benefit of $1 million was recognized for the fiscal year ended January 3, 2025, primarily as the result of a decrease in other taxes payable. No taxable income was recognized for the fiscal year ended December 29, 2023, thus no income tax expense or benefit was recorded.
Gross margin recognized on these Legacy Loss Projects was ($14) million and ($23) million for the fiscal years ended December 29, 2023 and December 30, 2022, respectively. Selling, general and administrative expenses Selling, general and administrative expenses increased by $1 million, or 2%, primarily resulting from higher legal, professional services and other costs.
Gross margin recognized on these Legacy Loss Projects was $(45) million and $(14) million for the fiscal years ended January 3, 2025 and December 29, 2023, respectively.
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 expect to incur additional costs associated with being a public company.
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.
Liquidity and Capital Resources Capital Requirements and Sources of Liquidity During the fiscal year ended December 29, 2023, our capital expenditures were approximately $7 million compared to $10 million for the fiscal year ended December 30, 2022. Historically, we have had significant cash requirements in order to organically expand our business to undertake new projects.
(4) Consists of transaction-related costs and changes in fair value of contingent consideration remaining after the impact of transactions with our prior owner. Liquidity and Capital Resources Capital Requirements and Sources of Liquidity During the fiscal year ended January 3, 2025, our capital expenditures were approximately $10 million compared to $7 million for the fiscal year ended December 29, 2023.
See reconciliation below: Fiscal Year Ended December 29, December 30, (In thousands) 2023 2022 Net (loss) income attributable to Shimmick Corporation $ (2,546 ) $ 3,760 Changes in fair value of contingent consideration (174 ) 9,462 Transaction-related costs 2,595 3,104 Stock-based compensation 2,062 2,295 Legal fees and other costs for a Legacy Loss Project (1) 8,740 10,904 Adjusted net income $ 10,677 $ 29,525 Fiscal Year Ended December 29, December 30, (In thousands) 2023 2022 Net (loss) income attributable to Shimmick Corporation $ (2,546 ) $ 3,760 Depreciation and amortization 17,121 15,979 Interest expense 2,284 226 Income tax expense — 1,274 Changes in fair value of contingent consideration (174 ) 9,462 Transaction-related costs 2,595 3,104 Stock-based compensation 2,062 2,295 Legal fees and other costs for a Legacy Loss Project (1) 8,740 10,904 Adjusted EBITDA $ 30,082 $ 47,004 (1) Consists of legal fees and other costs incurred in connection with claims relating to a Legacy Loss Project.
See reconciliations below: Fiscal Year Ended January 3, December 29, (In thousands) 2025 2023 Net loss attributable to Shimmick Corporation $ (124,748 ) $ (2,546 ) Transformation costs (1) 7,067 — Stock-based compensation 6,130 2,062 ERP pre-implementation asset impairment and associated costs (2) 15,708 — Legal fees and other costs for Legacy Projects (3) 14,030 8,740 Other (4) 828 2,421 Adjusted net (loss) income $ (80,985 ) $ 10,677 Fiscal Year Ended January 3, December 29, (In thousands) 2025 2023 Net loss attributable to Shimmick Corporation $ (124,748 ) $ (2,546 ) Interest expense 5,426 2,284 Income tax benefit (963 ) — Depreciation and amortization 15,132 17,121 Transformation costs (1) 7,067 — Stock-based compensation 6,130 2,062 ERP pre-implementation asset impairment and associated costs (2) 15,708 — Legal fees and other costs for Legacy Projects (3) 14,030 8,740 Other (4) 828 2,421 Adjusted EBITDA $ (61,390 ) $ 30,082 (1) Consists of transformation-related costs we have incurred including advisory costs in connection with settling outstanding claims in connection with exiting certain Legacy Projects as part of the Company’s growth strategy to address and capitalize on the nation’s growing need for water and other critical infrastructure.
Equity in Earnings of Unconsolidated Joint Ventures Equity in earnings of unconsolidated joint ventures includes our return on investment in unconsolidated joint ventures.
Equity in (Loss) Earnings of Unconsolidated Joint Ventures Equity in (loss) earnings of unconsolidated joint ventures includes our return on investment in unconsolidated joint ventures. Net Loss Net loss represents earnings after consideration of all operating expenses and other income and expenses to measure loss to allocate resources and assess financial performance.
Results of Operations The following table sets forth selected financial data for the fiscal year ended December 29, 2023 compared to the fiscal year ended December 30, 2022: Fiscal Year Ended % of Revenue December 29, December 30, $ % December 29, December 30, (In thousands, except percentage data) 2023 2022 Change Change 2023 2022 Revenue $ 632,806 $ 664,158 $ (31,352 ) (5 )% 100 % 100 % Cost of revenue 610,434 640,643 (30,209 ) (5 ) 96 96 Gross margin 22,372 23,515 (1,143 ) (5 ) 4 4 Selling, general and administrative expenses 61,507 60,442 1,065 2 10 9 Amortization of intangibles 2,618 2,632 (14 ) (1 ) 0 0 Total operating expenses 64,125 63,074 1,051 2 10 9 Equity in earnings of unconsolidated joint ventures 10,354 52,471 (42,117 ) (80 ) 2 8 Gain on sale of assets 31,834 — 31,834 100 5 — Income from operations 435 12,912 (12,477 ) (97 ) 0 2 Other expense, net 2,721 8,731 (6,010 ) (69 ) 0 1 Net (loss) income before income tax (2,286 ) 4,181 (6,467 ) (155 ) (0 ) 1 Income tax expense — 1,274 (1,274 ) — — — Net (loss) income $ (2,286 ) $ 2,907 $ (5,193 ) (179 )% 0 % 0 % 50 Revenue and gross margin The following table sets forth selected revenue and gross margin data for the fiscal year ended December 29, 2023 compared to the fiscal year ended December 30, 2022: (In thousands, except percentage data) Shimmick Projects Legacy Projects Consolidated Total Fiscal Year 2023 Revenue $ 434,297 $ 198,509 $ 632,806 Gross margin 29,023 (6,651 ) 22,372 Gross margin (%) 7 % (3 )% 4 % Fiscal Year 2022 Revenue $ 350,667 $ 313,491 $ 664,158 Gross margin 24,284 (769 ) 23,515 Gross margin (%) 7 % 0 % 4 % Variances Fiscal Year 2023 to Fiscal Year 2022 Increase (Decrease) Revenue $ 83,630 $ (114,982 ) $ (31,352 ) Revenue (%) 24 % (37 )% (5 )% Gross margin 4,739 (5,882 ) (1,143 ) Shimmick Projects Projects started after the AECOM Sale Transactions ("Shimmick Projects") have focused on water infrastructure and other critical infrastructure.
Results of Operations The following table sets forth selected financial data for the fiscal year ended January 3, 2025 compared to the fiscal year ended December 29, 2023: Fiscal Year Ended % of Revenue (In thousands, except percentage data) January 3, 2025 December 29, 2023 $ Change % Change January 3, 2025 December 29, 2023 Revenue $ 480,236 $ 632,806 $ (152,570 ) (24 )% 100 % 100 % Cost of revenue 535,885 610,434 (74,549 ) (12 ) 112 96 Gross margin (55,649 ) 22,372 (78,021 ) (349 ) (12 ) 4 Selling, general and administrative expenses 63,966 64,125 (159 ) (0 ) 13 10 ERP pre-implementation asset impairment and associated costs 15,708 — 15,708 NM 3 — Total operating expenses 79,674 64,125 15,549 24 16 10 Equity in (loss) earnings of unconsolidated joint ventures (4,728 ) 10,354 (15,082 ) (146 ) (1 ) 2 Gain on sale of assets 20,725 31,834 (11,109 ) (35 ) 4 5 (Loss) income from operations (119,326 ) 435 (119,761 ) (27,531 ) (25 ) 1 Interest expense 5,426 2,284 3,142 138 1 — Other expense, net 959 437 522 119 — — Net loss before income tax (125,711 ) (2,286 ) (123,425 ) 5,399 (26 ) 1 Income tax benefit 963 — 963 NM — — Net loss $ (124,748 ) $ (2,286 ) $ (122,462 ) 5,357 % (26 )% 1 % 47 Revenue and gross margin The following table sets forth disaggregated data on revenues and gross margin for the fiscal year ended January 3, 2025 compared to the fiscal year ended December 29, 2023: Fiscal Year Ended (In thousands, except percentage data) January 3, 2025 December 29, 2023 $ Change % Change Shimmick Projects Revenue $ 355,683 $ 386,491 $ (30,808 ) (8 )% Gross Margin $ 12,094 $ 38,063 $ (25,969 ) (68 )% Gross Margin (%) 3 % 10 % Legacy Projects Revenue $ 93,226 $ 198,509 $ (105,283 ) (53 )% Gross Margin $ (49,321 ) $ (6,651 ) $ (42,670 ) 642 % Gross Margin (%) (53 )% (3 )% Foundations Projects Revenue $ 31,327 $ 47,806 $ (16,479 ) (34 )% Gross Margin $ (18,422 ) $ (9,040 ) $ (9,382 ) 104 % Gross Margin (%) (59 )% (19 )% Consolidated Total Revenue $ 480,236 $ 632,806 $ (152,570 ) (24 )% Gross Margin $ (55,649 ) $ 22,372 $ (78,021 ) (349 )% Gross Margin (%) (12 )% 4 % Shimmick Projects Projects started after the AECOM Sale Transaction ("Shimmick Projects") have focused on water infrastructure and other critical infrastructure.
According to Engineering News Record, in 2023, Shimmick was nationally ranked as a top ten builder of water supply (#6), dams and reservoirs (#7), and water treatment and desalination plants (#7). Shimmick is led by industry veterans, many with over 20 years of experience, and works closely with its customers to deliver complete solutions, including long-term operations and maintenance.
According to Engineering News Record, in 2024, we are nationally ranked as a top ten builder of water supply (#8), dams and reservoirs (#6), and water treatment and desalination plants (#7). Our business includes construction operations from Morrison Knudsen and Washington Group International which were consolidated in 2017 by AECOM.
Net (loss) income Net (loss) income decreased by $5 million to a net loss of $2 million for the fiscal year ended December 29, 2023, due to a decrease in income from operations primarily due to a decrease in equity in earnings of unconsolidated joint ventures partially offset by gain on sale of assets as well as a decrease in other expense, net.
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 fiscal year ended December 29, 2023, partially offset by the $17 million gain recognized on the transaction for the sale-leaseback of our equipment yard in Tracy, California and $2 49 million gain recognized on the sale of the assets of our non-core Foundations Projects during the f iscal year ended January 3, 2025 .
Legacy Projects revenue decreased $115 million and gross margin was negative $7 million, a decrease of $6 million as compared to fiscal year ended December 30, 2022, primarily as a result of projects winding down and an unfavorable settlement on a Legacy Project.
Gross margin was $(49) million for the fiscal year ended January 3, 2025 as compared to $(7) million for the fiscal year ended December 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 48 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.
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 Agreement matures on March 27, 2028 and requires the Company to maintain a leverage ratio that does not exceed 1.75 to 1.0.
Further, the ACF Credit Agreement is subject to an annual unused line fee of 0.50%. The ACF Credit Agreement includes certain financial operating covenants, including a minimum liquidity requirement of $5 million. The ACF Credit Agreement matures on the earlier of March 12, 2028 or 90 days prior to the maturity date of the Credit Agreement.
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We selectively focus on infrastructure projects relating to water treatment, water resources and other critical infrastructure. As of December 29, 2023, we had a backlog of projects of approximately $1.1 billion, with over half of that amount comprised of water projects. We believe we have the ability to self-perform many of these projects, differentiating us from many of our competitors.
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Overview Shimmick is an industry leader in delivering turnkey infrastructure solutions that strengthen critical markets across water, energy, climate resiliency, and sustainable transportation. With a track record that spans over a century, Shimmick, headquartered in California, unites deep engineering heritage with entrepreneurial spirit to tackle today's most complex infrastructure challenges.
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Self-performance enables us to better control the critical aspects of our projects, reducing the risk of cost and schedule overruns. 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”).
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In 2021, we were sold by AECOM and became an independent company under new private ownership ("AECOM Sale Transaction"). In November 2023, we completed our initial public offering (the “IPO”) and currently our stock is listed for trading on the Nasdaq Capital Market under the symbol "SHIM".
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The net proceeds to the Company from the IPO were approximately $23 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.
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We selectively focus on the following types of infrastructure projects: Water Treatment and Resources • Water and Wastewater Treatment . We expand, rehabilitate, upgrade, build and rebuild water and wastewater treatment infrastructure including desalination plants. We implement treatment technologies including ozonation, biological activated carbon, membrane filtration, reverse osmosis, chemical treatment, and oxidation.
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In the intervening period between January 2, 2021 and November 19, 2021, SCC Group’s assets and liabilities consisted of its investment in SCCI National Holdings, Inc., as well as rights to receive any net working capital settlement and any obligation to pay contingent consideration related to its January 2, 2021 acquisition of SCCI National Holdings, Inc.
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Our projects aim to ensure access to clean and safe drinking water, protect public health and reduce waterborne diseases and contribute to protecting the environment by removing pollutants and contaminants from wastewater before it is released back into ecosystems. • Water Resources . We construct, rehabilitate and upgrade dams, reservoirs, and water conveyance and storage systems.
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Retained Claim Reimbursements The Purchase Agreement provides that the Seller Entities will retain the right to participate in a portion of the net proceeds of any cash, cash equivalents or other assets received or recovered from any claims relating to certain specified Legacy Projects that were ongoing at the time of closing.
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This includes flood control systems, pump stations, and coastal protection infrastructure. Select projects of ours enable reliable water supply, generate hydroelectric power, and 42 control flooding, ensuring water availability and energy security. Our work contributes to protecting communities from flood damage to safeguard lives, property and infrastructure.
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AECOM is entitled to a percentage of proceeds we may receive, subject to a specified cap for each such Legacy Project.
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Other Critical Infrastructure We build, retrofit, expand, rehabilitate, operate and maintain our nation’s critical infrastructure, including mass transit, bridges and military infrastructure. We work on projects that we believe are vital for economic growth, social connectivity, and accessibility.
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Earn Out Considerations As additional consideration, the Seller Entities were entitled to receive a one-time additional cash payment based on the performance of the business for the 36-month period beginning October 3, 2020 and ending September 29, 2023 based on specified aggregate Adjusted EBITDA (as defined in the Purchase Agreement) thresholds set forth in the Purchase Agreement.
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We believe our projects enable smooth and efficient movement of people and goods, foster trade, address environmental sustainability and improve quality of life for individuals and communities. Within critical infrastructure, we are focused primarily on the following types of projects: • Climate Resilience .
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No earnout was achieved based on the Company's calculation of Adjusted EBITDA (as defined in the Purchase Agreement) of the business to date and no corresponding additional cash payment has been made, or is expected to be made, to Seller Entities.
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We build and upgrade levees, flood walls, pump stations, drainage systems, and strengthen existing infrastructure both in preparation to withstand severe weather events and in response to such events to facilitate recovery. • Transportation and Mobility .
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Because we now exist as a public company, we will incur significant expenses on an ongoing basis that we did not incur as a private company.
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We construct mass transit systems (light passenger rail and bus rapid transit), autonomous transportation solutions (personal rapid transit, autonomous fixed guideway people movers, and implement intelligent transportation technologies. • Energy Transition . We modify facilities to accommodate electric vehicle fleets for transit agencies and municipalities, implement renewable energy components in our projects, and support data center construction.
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As a result of management's shift in job bidding strategy toward higher margin, lower risk jobs, total revenue recognized on these Shimmick Projects increased by $84 million to $434 million for the fiscal year ended December 29, 2023 as compared to $351 million for the fiscal year ended December 30, 2022 and gross margin increased $5 million, or 20%.
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As of January 3, 2025, we had a backlog of projects of approximately $822 million, mostly located in California, with ongoing projects in six other states. We self-perform many of these projects, which we believe allows us to better control critical aspects of construction, reduce cost and schedule risks, and deliver greater value to clients.
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Legacy Projects As part of the AECOM Sale Transactions, we assumed the Legacy Projects and backlog that were started under AECOM.

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