Shimmick Corporation reported significant financial challenges in its latest 10-Q filing for the quarter ending September 27, 2024. The company experienced a notable decline in revenue, with total revenue for the three months amounting to $166.0 million, down 5% from $175.4 million in the same period last year. For the nine months, revenue decreased by approximately 24.1%, from $494.7 million to $376.7 million. This decline was attributed to lower activity on existing projects and the winding down of jobs, despite some offset from new contracts.

The gross margin also suffered, showing a decrease from $17.0 million in Q3 2023 to $12.2 million in Q3 2024, and a significant drop from a positive $22.8 million to a negative $34.8 million for the nine-month period. The company reported a loss from operations of $78.6 million for the nine months, compared to a profit of $16.3 million in the previous year.

Net losses were substantial, with a net loss of $1.6 million for the three months ended September 27, 2024, compared to a net income of $34.8 million in the prior year. For the nine-month period, the net loss reached $86.3 million, a stark contrast to the $15.2 million profit reported in the same period of 2023. The losses were primarily driven by increased operating expenses, which rose to $63.6 million for the nine months, up from $47.8 million in the previous year.

Strategically, Shimmick completed a sale-leaseback of its equipment yard in Tracy, California, generating $20.5 million, which was used to repay borrowings under its revolving credit facility. Additionally, the company recorded a one-time charge of $16 million related to enhancements to its enterprise resource planning (ERP) system.

The company’s total assets decreased to $346.7 million from $426.7 million at the end of 2023, while total current liabilities increased to $278.2 million. Stockholders' equity plummeted to $973,000 from $70.5 million, reflecting the ongoing financial strain.

Shimmick's project backlog stood at $834 million as of September 27, 2024, with over half related to water projects, indicating a focus on critical infrastructure. The company continues to navigate a challenging market environment, characterized by strong competition and pricing pressures, while also addressing internal control weaknesses identified in its financial reporting processes.