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Item 1. Business

2025-03-20 compared with 2024-03-28 · 141 added, 246 removed, 79 unchanged (83% of the section changed)

We are a leading provider of water and other critical infrastructure solutions nationwide.

We have a long history of successfully completing complex water projects, ranging from the world’s largest wastewater recycling and purification system in California to the iconic Hoover Dam.

According to Engineering News Record , in 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.

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.

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.

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.

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”.

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).

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:

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 complex cleantech treatment technologies including ozonation, biological activated carbon, membrane filtration, reverse osmosis, chemical treatment, and oxidation.

We also conduct facility commissioning.

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.

Additionally, water treatment infrastructure supports sustainable water management, which conserves this precious resource for future generations.

We implement treatment technologies including ozonation, biological activated carbon, membrane filtration, reverse osmosis, chemical treatment, and oxidation.

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 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.

We construct, rehabilitate and upgrade dams, reservoirs, and water conveyance and storage systems.

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.

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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.

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.

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.

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").

After the transaction, we began a transformation to shift our strategy to meet the nation’s growing need for water and other critical infrastructure and grow our business.

We are also focusing more on smaller complex projects that we can largely self-perform and which we believe will have lower risk and higher margin.

On November 16, 2023, the Company completed its initial public offering of 3,575,000 shares of common stock at a price to the public of $7.00 per share (the “IPO”).

The net proceeds to the Company from the IPO were approximately $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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Accordingly, we aim to increase the share of water projects as a percentage of our overall backlog.

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.

In the third quarter of 2023, Shimmick closed the sale of its Operations and Management Division.

This strategic transaction allows Shimmick to further focus its efforts on growing its core water infrastructure business.

The sale was an important step in our long-term strategy to focus our resources on core areas of our business in the water infrastructure market where we see the most potential for growth and innovation.

We believe that by carefully positioning ourselves in markets that have meaningful barriers to entry, as discussed below, we can realize meaningful advantages.

We target projects requiring highly technical or specialized scopes of work or in our core market of California, where we can leverage our deep knowledge of and relationships with customers, workforces, subcontractors, and suppliers.

We believe this provides us with a distinct pricing advantage, as well as better risk management.

Enhance Profitability.

With a consistent focus on profitability by our management team and growing demand for critical infrastructure, we believe we can further enhance margins through disciplined project selection and bidding.

We believe that the need and funding for projects may exceed the industry’s capacity, enabling us to opportunistically target smaller specialized projects with less risk at higher margins.

We maintain a disciplined project evaluation process during which we look at a wide range of factors when determining which projects to bid.

Certain criteria are considered at each stage of the pursuit process, which may include project size, location, customer, scope of work, availability of resources, anticipated competition, and project duration, among others.

We selectively bid on projects that we believe offer an opportunity to meet our profitability objectives or that offer the opportunity to strategically grow our market share.

In addition, we review our bidding opportunities to attempt to minimize concentration of work with any one customer or in tight labor markets.

We also believe that complex projects require companies like ours to have specific technical experience, the ability to obtain surety bonds, a trained workforce, geographic presence in key markets, and specialty equipment.

These requirements, among others, present certain barriers to entry, which limits competition and enables us to maintain selectivity and a desired level of profitability.

Additionally, we believe the demand for services like ours is outpacing the industry’s ability to supply those services.

As illustrated by several of the bids we won in 2023, we were one of just three bidders on the Folsom Dam for USACE, one of two bidders for Control Upgrades at Plant No.

2 for the Orange County Sanitation District, and the sole bidder on the Regional Water Reclamation Facility for the Elsinore Valley Municipal Water District.

Expand Service Offerings for Water and Critical Infrastructure Through Strategic Acquisitions .

We intend to complement our organic growth through strategic acquisitions.

We will opportunistically evaluate strategic acquisitions that would enable us to pursue complementary markets or enter new geographies where we do not have an existing footprint.

Specifically, we plan to target companies that expand our existing solutions to provide additional capabilities along the water value chain, such as solutions for influent and effluent water conveyance, physical, chemical and/or biological water treatment, water testing, commissioning and operations and maintenance or other services which provide additional recurring revenue opportunities.

Our industry includes a number of companies whose growth potential we believe has plateaued absent additional capital infusion or that otherwise may be seeking a liquidity event, which we believe presents opportunities for us to further our growth through strategic acquisitions.

We believe with existing cash on hand, publicly traded stock and access to capital markets, will enable us to leverage our established platform and the acquisition experience of our management team positions us well to capitalize on future acquisition opportunities and accelerate our growth.

We have historically pursued publicly funded water and other critical infrastructure projects.

These projects include water and wastewater treatment, water conveyance (pipes, pump stations, irrigation and drainage channels), water storage (dams, reservoirs, weirs), flood protection (levees, flood walls), and environmental projects (species protection, fish ladders, hatcheries), as well as other critical infrastructure.

These projects enhance connectivity, trade and economic growth.

As noted above, we have the ability to self-perform virtually all aspects of the critical infrastructure projects we build.

However, at times, we may enter into joint venture arrangements on certain projects where it is necessary or desirable to share expertise, risk and resources.

The services we self-perform versus those we rely upon subcontractors and joint venture partners to perform vary from project to project.

Our decision regarding whether to self-perform work required depends on multiple factors, including location, availability of subcontractors, availability of craft, size of project, risk management objectives, scope and cost of self-performing versus subcontracting.

The work performed through joint venture arrangements is done on an integrated basis, meaning we and our joint venture partners operate as an integrated company with shared cost and risk.

As of December 29, 2023, we had a backlog of projects of approximately $1.1 billion, approximately 10% of which are through our joint venture arrangements.

Water Treatment

Our experience in the water treatment space includes a wide range of treatment technologies.

For example, for Orange County’s Groundwater Replenishment System Expansion, we delivered a three-step advanced process consisting of microfiltration, reverse osmosis and ultraviolet light with hydrogen peroxide to produce water that meets and exceeds state and federal drinking water standards.

The new 30 million gallons daily expansion, completed in 2023, created an additional 31,000 acre-feet per year of new water supply and expanded the facility’s capacity to provide water for one million people.

Water Resources

According to Engineering News Record , we were the nation’s sixth largest builder of dams and reservoirs and seventh largest builder of water supply systems in 2023.

These critical infrastructure projects control flooding, store and supply water, and improve water quality to meet public demands.

We also improve locks along the nation’s inland waterways, enabling the efficient and emissions-reducing transportation of goods, supporting commerce, and connecting regions for economic growth and trade.

At the LaGrange Lock and Dam in Illinois, USACE chose us to perform a major rehabilitation of the more than 80-year-old dam along one of the main inland waterways.

According to the most recent ASCE Report Card for inland waterways, barges transport nearly 830 million tons of the nation’s goods every year along these navigable rivers, canals, and channels.

Additionally, we recently completed the Rapid Disaster Infrastructure program, building more than five miles of levees in Missouri to protect the area from flooding.

A Shimmick-led joint venture also replaced an aging lock and dam and constructed the new Olmsted Dam on the Ohio River.

With the Olmsted lock and dam replacement, economic net benefits to the nation are estimated to be more than $640 million annually, according to the same ASCE Report Card.

In California, as part of a joint venture, we recently secured a project for USACE to raise the main dam in Folsom.

The project, set for completion in 2027, will enhance flood control by increasing temporary storage capacity of the reservoir by 43,000 acre-feet, reducing flood risk in the greater Sacramento area.

Other Critical Infrastructure

Critical infrastructure refers to the systems, assets, and facilities that are essential for the functioning and well-being of our nation.

They are vital for maintaining national security, public health and safety, and economic stability.

Disruptions or failures in critical infrastructure can have significant consequences and impact the functioning of society.

Our most recent example of critical infrastructure delivered for the military was the Point Loma Navy Fuel Pier Replacement.

This project was necessary to ensure the safe and efficient refueling of naval ships and to meet current operational and safety standards.

We demolished and removed the existing pier, installed a new fueling pier, and performed other security improvements to enhance the Navy’s ability to maintain its fleet of surface ships, submarines, and other vessels.

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.

Droughts and flooding in the west, along with extreme weather along coastal states, have demonstrated the need for expanded water and storm water infrastructure, flooding mitigation and disaster recovery efforts.

In addition, our nation’s infrastructure, much of it built more than 50 years ago, has deteriorated over the last several decades.

Within critical infrastructure, we are focused primarily on the following types of projects:

• Climate Resilience .

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 .

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.

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.

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.

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.

The demand for water infrastructure stems from multiple factors driving the need for reliable water management systems.

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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.

Major economic drivers for critical infrastructure projects include increasing international trade, urbanization, need for modernization 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.

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.

According to an ASCE Report, more than 50,000 drinking water systems distribute 39 billion gallons of drinking water to U.S.

homes, industries, and other businesses.

These systems are regulated by the EPA and state agencies under the Safe Drinking Water Act.

The drinking water systems in the United States have been assessed as poor/at-risk, with a grade of C- by the ASCE.

With over 16,000 publicly owned wastewater treatment systems, centralized plants are expected to handle a larger share of wastewater treatment due to urban growth.

These systems are currently operating at an average of 81% of their design capacity, with 15% exceeding capacity.

Many systems built in the 1970s under the Clean Water Act are reaching the end of their expected 40- to 50-year lifespan.

Nationwide, water pipes average 45 years old, and some components are over a century old, despite an expected lifespan of 50 to 100 years.

Water Resources

According to the America’s ASCE Infrastructure Report Card, there are over 91,000 dams with an average age of 57 years across the U.S.

Approximately 15,600 dams in the United States are classified as high-hazard structures, with an estimated rehabilitation cost for non-federal dams of nearly $20 billion.

The inland waterway network in the United States is comprised of approximately 12,000 miles of inland navigation channels as well as an additional 11,000 miles of intracoastal waterways owned and operated by the USACE.

Most of the locks and dams are well past their 50-year design life.

According to the ASCE’s 2021 America’s Infrastructure Report Card, the USACE backlog of authorized projects that are waiting for appropriations funding, which includes the nation’s inland waterway locks and dams, is $6.8 billion.

The ASCE reports a navigation backlog of $2.7 billion annually in unmet maintenance work activities.

Estimates show the need to rehabilitate federal dams is approximately $27.6 billion.

Industry Drivers and Trends

We believe our core markets of water and other critical infrastructure are in the midst of a prolonged expansion, driven by several macro-economic and geopolitical trends, including the following:

Climate change and extreme weather events.

Intergovernmental Panel on Climate Change 2023 report highlighted that climate change has affected water security due to warming, changing precipitation patterns, and greater frequency and intensity of climatic extremes.

Sea-level rise, droughts and flooding continue to affect highly populated areas, including coastal populations.

As of October 2023, the U.S.

National Oceanic and Atmospheric Administration (“NOAA”) indicated that more than 90 million people are currently being affected by droughts and 40 states are experiencing moderate droughts or worse.

At the same time, other parts of the country are seeing extreme flooding.

According to NOAA, there were 40 tropical cyclone and flooding events in the United States from 2013 to 2023, with an aggregate cost of approximately $730.0 billion.

In coastal regions, rising sea levels and storm surges pose risks to low-lying areas.

For example, California has a coastal population of more than 25 million people according to the Office of Coastal Management’s 2023 estimate, which is anticipated to be significantly affected by climate change.

Aging infrastructure.

Our nation’s infrastructure — much of it built more than 50 years ago — has deteriorated over the last several decades and is in need of major upgrades and expansions.

In its 2021 America’s Infrastructure Report Card, the ASCE graded America’s overall infrastructure as a C- with many of our target markets graded in the Ds.

The report estimated that the cumulative needed investment in infrastructure in the United States for the 10 years from 2020 to 2029 was in excess of $2.6 trillion.

The ASCE report estimated that by 2039, failure to improve our infrastructure could cost over $10.0 trillion in lost U.S.

Additionally, the replacement of old, lead pipes is required to protect public health.

The EPA estimates that 9 million lead pipes currently deliver drinking water to homes and businesses across the U.S., putting millions at risk for neurological damage and coronary heart disease.

Recognized as a serious public health risk, the IIJA includes $15 billion to replace lead pipes across the United States.

Increasing regulations to safeguard public health and address contaminants.

Given the widespread exposure to perfluoroalkyl and polyfluoroalkyl substances ("PFAS") — harmful, long-lasting chemicals that have been found in our nation’s water supply — state legislatures and the federal government are acting to mitigate the public health impacts and environmental degradation that these chemicals have caused, according to the National Conference for State Legislatures.

The IIJA dedicates $10 billion in funding for communities impacted by emerging contaminants in water, including PFAS.

In 2021, the EPA released a PFAS roadmap to prevent unsafe new PFAS chemicals from entering the market and protect public health.

As part of this roadmap, in 2023 the EPA took steps to designate PFAS chemicals as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”).

CERCLA establishes liability for owners, operators, generators and others, potentially making entities that handle designated PFAS liable for recovery and remediation costs related to PFAS.

In December 2023, the EPA released its second annual progress report which highlights the agency’s enhanced use of regulations to improve data on how PFAS are released and used .

Water conservation and efficiency.

According to a 2021 Nasdaq report, contracts for water reuse have surpassed those for desalination.

Water recycling offers cost savings, lower energy requirements, and enhanced environmental benefits.

In addition to being more economical than desalination, it minimizes the necessity for expanding production capacity and transforms wastewater treatment plants from cost centers into profit centers.

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.

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.

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.

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.

In fiscal year 2024, we focused on simplifying our business with an emphasis on liquidity, capital efficiency and effective execution of our projects.

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.

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.

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.

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.

Sustainable, Profitable Backlog

We intend to grow our business through leveraging our proven strengths while managing and lowering risk across our portfolio.

• Selective Bidding.

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.).

We believe this process allows us to make an informed judgment on whether to pursue the project and ensure we maintain a risk-balanced portfolio.

• Collaborative Contracting.

The heavy civil construction industry has seen an increase in utilization of collaborative contracting models rather than fixed-price contracts in complex infrastructure projects.

Collaborative models allow the client to select a contractor largely based on qualifications.

The parties then spend a number of months developing the project together under a consultancy contract (the “preconstruction services phase”) at the completion of which a construction contract is negotiated based on an open-book pricing structure.

This partnership-based approach allows the parties to mitigate and manage project risk more effectively, ultimately leading to enhanced budget and schedule outcomes.

Currently our portfolio includes a small but growing number of these projects, and our goal is to increase the representation of collaborative contracts in our backlog.

To achieve this, we are investing in our bidding, sales and marketing efforts.

• Expansion in Electrical Work .

We have self-performed electrical work on our projects for over 15 years and have gained significant experience and expertise in this field.

With recent developments and increased investments in energy transition and technology-driven infrastructure (both of which include major electrical scopes in each project), we see an opportunity to leverage our strengths in electrical construction and grow this side of our business, along with providing turn-key solutions through our civil capabilities.

• Operational Improvements and SG&A Optimization .

We plan to continue refining and improving our operations while maintaining a strong focus on developing our people and a strong company culture.

In addition, while many of the major initiatives for right-sizing our SG&A structure were completed in 2024, we are continuing to take action towards making our business more effective, through improvements in other areas of our business including IT, finance, insurance, organizational structure and benefits.

• Project Controls Improvements .

We are making new investments in digitization of our cost, schedule and progress tracking systems through the use of digital labor and equipment tracking systems, PowerBI-based reporting structures, accounting system improvements and additional training to our project staff.

This process helps us better manage project costs and schedules, improving profitability and visibility.

• Health, Safety and Environment .

Safety and well-being of our employees, clients and the communities are our utmost focus.

We have a safety track record that is significantly better than industry averages and improving, with strong metrics such as a 34% reduction in our recordable incident rate in 2024 as compared to 2023.

We are committed to fostering an environment where safety is embraced by everyone involved with a true commitment to an injury-free workplace.

We also are committed to being good stewards of the environment on all of our projects, ensuring we understand and comply with applicable regulations.

Insurance and Bonding

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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.

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.

Our ability to obtain surety bonds depends upon our capitalization, working capital, aggregate contract size, past performance, management expertise and external factors, including the capacity of the overall surety market.

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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.

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.

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.

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.

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.

The joint venture agreements typically provide that our interests in any profits and assets, and our respective share in any losses and liabilities, that may result from the performance of the contract are limited to our stated percentage interest in the project.

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We have been designated as the sponsoring partner in some venture projects and are a non-sponsoring partner in others.

As we target growth in our revenues and backlog, as well as increased engagement with collaborative contracting, we expect to increase our joint venture activity to allocate resources and reduce our risk exposure while pooling capabilities and experience with other companies to deliver enhanced value to our clients.

Sustainability and Corporate Responsibility

Environmental

Our work directly addresses the nation’s need for reliable and resilient infrastructure, particularly in water end-markets.

Our projects contribute to protecting water sources and enhancing water supply reliability to meet the growing demand for safe and clean water.

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.

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.

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.

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.

Our Safety, Health, and Environmental (“SH&E”) program includes specific guidelines to protect people and the environment and minimize impacts of construction activities.

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”).

As our #1 core value, Safety is our foremost concern, and we maintain stringent safety standards to protect our employees and the communities we serve.

We seek to achieve SH&E success through a comprehensive, internal program that incorporates SH&E standards and innovative techniques, with the ultimate goal of achieving zero work-related injuries or illnesses and preventing

damage to property and the environment.

Shimmick’s SH&E program includes specific guidelines to protect people and the environment and includes environmental compliance maps, environmental impact assessments, environmental management plans, environmental compliance checklists, and workflows outlining how to manage environmental compliance.

We aim to create an inclusive and equitable workplace to harness the power of different perspectives and drive innovation.

For example, in 2021, Shimmick established a mission to empower and support women by providing professional and personal development opportunities.

We founded Women at Shimmick, an employee resource group charged with improving the experiences of women at Shimmick, providing programs, events, activities, and other opportunities for professional and personal development for women.

The group aims to build awareness of women’s experience among the general employee population, recruit and retain more high performing women, and increase the number of women in leadership positions.

In the group’s first year, survey results indicated improvement in key areas including welcoming, leadership and development opportunities, building awareness, and recognition.

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.

Safety is a core Shimmick value.

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.

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.

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.

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.

This helps promote a culture of integrity and increase trust in leadership.

Additionally, we have a proven track record of partnering with small and diverse business partners to provide maximum practicable subcontracting opportunities for them.

We have a dedicated team of small business and supplier diversity program managers and exceptional year-over-year subcontracting performance.

We provide a robust outreach program that includes an evolving Mentor-Protégé Program.

We are committed to achieving subcontract objectives that are realistic, challenging, and attainable.

Our commitment to small and diverse business participation is demonstrated by the awards and recognition received throughout our history.

Finally, our governance framework is intended to maintain a close alignment of our interests with those of our stakeholders and to ensure transparency, ethical conduct, and accountability.

Our board of directors comprises experienced professionals who provide strategic guidance and oversight.

• Business Partners .

We regularly partner with disadvantaged business enterprises to provide subcontracting opportunities.

We have a team of small business and diversity program managers.

We provide an outreach program that includes a mentor-protégé program.

Our governance framework is designed to promote transparency, ethical conduct, and accountability.

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

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 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.

We are focused on hiring and retaining highly talented employees and empowering them to both grow their careers and create value for our stockholders.

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

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.

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.

In addition to soliciting feedback through employee surveys, we continuously evaluate our employees’ level of engagement by visiting projects and asking open- ended questions.

We also evaluate our employees’ engagement via formal surveys or similar tools on a periodic basis.

We care about our employees’ experience and care about them as individuals who are motivated in different ways.

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.

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.

We acknowledge that 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.

We run a 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 such as diversity and inclusion training, leadership skills, safety training, financial knowledge, technology training and presentation skills.

As of January 3, 2025, we had 1,200 employees, with 399 staff and 801 craft workers.

We are party to collective bargaining agreements covering most of our craft workforce.

In areas where we utilize union labor force, we have strong relationships with the various trade unions, which allows us to attract top talent to construct our projects.

• Retention .

Our business is dependent upon a readily available supply of management, supervisory and field personnel.

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.

• 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.

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 .

Managers hold performance conversations with their employees on a periodic basis to ensure they receive the performance feedback they deserve, to allow managers to obtain insight into how to support the development of their teams, and to ensure that performance expectations are clear and aligned with the Company’s strategic objectives.

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 encourage our employees to continue to develop in their careers, including by obtaining advanced degrees or professional certifications.

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.

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 encourage our employees to contribute their time to support various community and charitable activities and sponsor several local community organizations.

Recently, Shimmick launched a volunteer time off program that provides eight hours of paid time off to volunteer.

In addition to competitive base salaries, cash bonuses, and stock options for the majority of management, we are committed to continuously evaluating and ensuring the competitiveness of our benefits offerings so that we meet the various needs of our employees and their families.

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 believe that fostering an internal climate that is supportive and allows people of all backgrounds to flourish lends itself to the highest levels of company performance and facilitates the attraction and retention of best-in-class talent.

We also believe it is inherently the right way to conduct business.

We support an innovative, creative culture where people can bring their best and most authentic selves to work.

Employees who hold divergent opinions are encouraged to voice their views.

We track and report internally on key talent metrics including workforce demographics, critical role pipeline data, diversity data and engagement and inclusion indices.

Decisions regarding staffing, selection, and promotions are made on the basis of individual qualifications related to the requirements of the position.

We are committed to identifying and developing the talents of our next generation of leaders.

We endeavor to select qualified individuals from a diverse pool of candidates derived from broad outreach efforts when we are recruiting.

We are committed to the sourcing and/or promotion of highly- qualified women, people of color and other under-represented groups for management and board positions.

We are also challenging ourselves to better support our female and underrepresented employees in their onboarding, training, development and progression within the Company.

As of December 29, 2023, we had more than 1,300 employees.

We are party to collective bargaining agreements covering a majority of our craft workforce.

See “ Risk Factors – Risks Related to Our Business and Industry – Strikes or work stoppages could have a negative impact on our operations and results.

Our business is dependent upon a readily available supply of management, supervisory and field personnel.

In the past, we have been able to attract sufficient numbers of personnel to support the growth of our operations.

Training and Safety

We place the highest emphasis on the safety of the public, our customers and our employees.

Safety is the #1 Shimmick core value.

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.

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.

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.

Shimmick’s most recent average rate of recordable incidents for the most recently completed fiscal year 2023 is notably lower, at 1.5 per 100 employees.

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.

The water and critical infrastructure markets in which we operate are competitive and include larger national firms such as Barnard Construction Company, Inc., Ames Construction Inc., Flatiron Construction Corp., Fluor Corporation, Granite Construction Incorporated, Kiewit Corporation, Skanska USA Inc., Traylor Bros., Inc., and Walsh Construction Group, LLC, as well as smaller regional contractors, particularly in California.

Project awards in our industry are typically based on multiple criteria, including price, technical approach, past performance, quality plans, equipment resources, financial strength, bonding capacity, and relevant project experience.

We focus on projects where our self-perform capabilities, technical expertise, and local market knowledge provide competitive advantages.

Government and Environmental Regulations and Climate Change Matters

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We also are subject to compliance with numerous other laws and regulations of federal, state and local agencies and authorities, including those relating to workplace safety, wage and hour and other labor issues (including the requirements of the OSHA and comparable state laws), immigration controls, vehicle and equipment operations and other aspects of our business.

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.

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.

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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.

As is the case with other companies in our industry, some of our aggregate materials products contain varying amounts of crystalline silica, a common mineral.

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We also communicate, through safety information sheets and other means, what we believe to be appropriate warnings and cautions to employees and customers about the risks associated with excessive, prolonged inhalation of mineral dust in general and crystalline silica in particular.

We have not incurred material expenses in connection with these compliance activities.

Although we do not generate large amounts of solid wastes, we occasionally dispose of solid wastes on behalf of customers.

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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.

In addition, claims for damages to persons or property, including natural resources, may result from the SH&E impacts of our operations.

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.

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 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.

To the extent that laws are enacted or other governmental action is taken that restricts our operations or imposes more stringent and costly operating, waste handling, disposal and cleanup requirements, our business, financial condition or results of operations could be materially adversely affected.

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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.

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.

Our results are significantly influenced by weather and major changes in historical weather patterns could significantly impact our future results of operations.

Available Information

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On our investor relations webpage (https://investors.shimmick.com), we make available, free of charge, our SEC reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, director and officer reports on Forms 3, 4, and 5, and any amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

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, 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.

The information contained on our website is not included as part of, or incorporated by reference into, this Annual Report on Form 10-K or any other reports we file with or furnish to the SEC.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business