IRVINE - Shimmick Corporation (NASDAQ: SHIM), a prominent water infrastructure firm, announced the appointment of Ural Yal as the new CEO and member of its Board of Directors, effective December 2, 2024. Yal will take over from Steve Richards, who is retiring after a notable 43-year career.
Yal, 47, brings over two decades of experience in the sector, having held various senior positions at Flatiron Construction since 2017. His tenure at Flatiron included overseeing growth into new markets and expansion into collaborative project delivery methods. His career began in engineering and progressed through leadership roles, culminating in his latest position as Executive Vice President.
Shimmick's Executive Chairman, Mitch Goldsteen, highlighted Yal's deep expertise in both the California market and national infrastructure construction as key factors in his selection as the ideal leader for Shimmick's next phase. Goldsteen expressed confidence in the company's position to capitalize on market opportunities under Yal's leadership.
Yal, a licensed civil engineer in California, holds an undergraduate degree in Civil Engineering from Istanbul Technical University and an MBA from California State University, Dominguez Hills. He has been recognized for his client-focused approach and successful financial outcomes in the industry.
Steve Richards, who has led Shimmick since 2021, will transition to a strategic advisor role to support the leadership change and remain on the Board of Directors until the 2025 annual meeting. Richards played a pivotal role in Shimmick's transition to a standalone public company and its establishment of a strong market position.
In his remarks, Yal expressed honor in joining Shimmick and its professionals, acknowledging the company's reputation for undertaking and delivering challenging projects. He emphasized the focus on growth through operational excellence, safety leadership, and client satisfaction.
Shimmick has a history of working on complex projects, such as California's largest wastewater recycling and purification system and the iconic Hoover Dam. The company has been nationally ranked in 2024 by Engineering News Record in several categories, including top ten builders of water supply, dams, reservoirs, and water treatment and desalination plants.
The information in this article is based on a press release statement from Shimmick Corporation.
In other recent news, Shimmick Corporation has settled its Golden Gate Bridge litigation for a substantial $97 million. This agreement, part of the company's broader transformation plan, resolves the last major legal claim tied to Shimmick’s legacy projects. The settlement also includes a $6.0 million reduction in the project's scope and an extension for project completion, with substantial completion anticipated by the third quarter of 2025.
Shimmick Corporation has also made significant strides in enhancing its financial flexibility. The company has amended its credit agreements with MidCap Financial Services, LLC, AECOM, and Berkshire Hathaway (NYSE:BRKa) Specialty Insurance Company, increasing its borrowing capacity and extending the maturity date. These amendments are expected to provide Shimmick with increased operational headroom and liquidity for its ongoing and future projects.
In terms of analyst notes, Craig-Hallum has reduced Shimmick Corporation's price target to $3 due to project delays and increasing costs. Despite these challenges, Shimmick has made strategic financial moves, including a one-time charge of $30 million to settle a disputed legacy loss contract and a sale-leaseback transaction for an equipment facility in California.
The company's recent Q2 results were disappointing, with an adjusted loss of $1.60 per share and revenue reported at $91 million, both significantly missing analyst projections. However, Shimmick Corporation projects a generally flat year-over-year revenue for Shimmick Projects in fiscal 2024, with a gross margin between 4-9%. These recent developments provide crucial insights for investors into the company's performance and future expectations.
InvestingPro Insights
As Shimmick Corporation (NASDAQ: SHIM) prepares for a leadership transition, investors should be aware of some critical financial metrics and insights provided by InvestingPro. The company's current financial position presents a complex picture that may impact its future under new CEO Ural Yal.
According to InvestingPro data, Shimmick's market capitalization stands at $72.55 million, reflecting its position in the water infrastructure sector. However, the company faces significant challenges, as evidenced by its revenue of $524.16 million for the last twelve months as of Q2 2024, representing a substantial decline of 24.02% compared to the previous period.
InvestingPro Tips highlight that Shimmick "operates with a significant debt burden" and "may have trouble making interest payments on debt." These factors could potentially constrain Yal's ability to implement growth strategies or invest in new projects without addressing the company's financial structure.
The company's profitability is also a concern, with InvestingPro data showing a negative gross profit margin of -5.8% for the last twelve months as of Q2 2024. This aligns with an InvestingPro Tip indicating that Shimmick "suffers from weak gross profit margins." The incoming CEO will need to focus on improving operational efficiency and cost management to reverse this trend.
Despite these challenges, it's worth noting that Shimmick is "trading at a low revenue valuation multiple," according to another InvestingPro Tip. This could present an opportunity for value investors if Yal can successfully turn the company's performance around.
For readers interested in a more comprehensive analysis, InvestingPro offers 16 additional tips for Shimmick Corporation, providing a deeper understanding of the company's financial health and market position as it enters this new leadership era.
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