Shimmick's Mission-Critical Pivot: Backlog Tops $1.2B and Margins Head Higher

Q2 2026: gross margin doubles, backlog hits a 2-year high, and a new dedicated mission-critical unit points the E&C builder toward data centers and electrification.

SHIM · Earnings Call · 2026-08-10

A Pivotal Quarter

In Q2 2026, Shimmick delivered a clear inflection point. Revenue came in at $107M, gross margin expanded to 12% (up from 6% a year earlier), and adjusted EBITDA turned positive at $4M. The headline, though, is the order book: “We added $138 million in new work booked in the second quarter, which brings our total backlog to $991 million, its highest level in 2 years.” — Ural Yal, Chief Executive Officer (CEO) · 2026-08-10 Combined with $221M in awards pending fully executed contracts, the backlog now exceeds $1.2B — and, more tellingly, the company has converted less than 10% of that into revenue yet. CEO Ural Yal noted “activity levels continue to improve and several projects that had longer ramp-up timelines are now beginning to move forward” — Ural Yal, Chief Executive Officer (CEO) · 2026-08-10.

The Mission-Critical Pivot

The driver is strategic: Shimmick is deliberately exiting low-margin legacy and noncore work while building a dedicated unit for mission-critical infrastructure. “We have established a dedicated mission-critical business unit focused on pursuing and executing these opportunities, allowing us to better serve customers and capitalize on the growing demand we're seeing.” — Ural Yal, Chief Executive Officer (CEO) · 2026-08-10 That means data centers, advanced manufacturing, defense and electrification — and crucially, its electric arm, Axia Electric, is winning a growing share of the work. As Ural put it,

I would say the mission-critical work we're winning is probably about 80% on the electrical side. So it's heavy on the electrical side, which is great for the electrical business we've launched, and those are higher margin, strong jobs, and we're pretty excited about them.
Ural Yal, Chief Executive Officer (CEO) · 2026-08-10

The West Virginia data center build is now moving into preconstruction, and Texas is becoming a hotbed of opportunities — both for water and data center work. This pivot has been brewing for a while. On the prior call, the CEO had flagged “lot of these data centers are really shifting towards Texas, which is where we're growing as well. So that has brought in a lot more opportunity.” — Ural Yal, CEO · 2026-05-14 Now the strategy is becoming tangible in the backlog.

The Backlog Runway

The quality of the backlog is improving as fast as its size. “We have only converted less than 10% of the backlog booked over the past 12 months into revenue to date, providing meaningful visibility and supporting our expectations for continued revenue growth in the upcoming quarters.” — Ural Yal, Chief Executive Officer (CEO) · 2026-08-10 CFO Todd Yoder reinforced the margin story: “Noncore backlog now less than 3% of our total backlog... What this means is we'll continue to see favorable mix impact on our total gross margin moving forward.” — Todd Yoder, Chief Financial Officer (CFO) · 2026-08-10 Management expects gross margins to climb from the current 12% toward the 15–20% range on mission-critical work, and they plan to keep G&A roughly flat as revenue scales. The gross margin trajectory confirms this: from a low of -13% in Q1 2024 to 12.4% in the most recent quarter — a remarkable improvement that tracks the exit from old contracts. Against the broader wave of data center demand (a recurring theme across global earnings), Shimmick is carving out a specialized niche in electrical and water systems for these facilities — an angle most E&C peers don't have. The company also continues to win across advanced manufacturing and electrification, diversifying beyond its traditional water base.

Risks That Remain

It's not all smooth concrete. Revenue is still down year-over-year ($107M vs $128M) because new work is ramping slower than expected, and the stock sits roughly 44% below its 2024 high despite the positive news. Liquidity is tight — $33M at quarter-end, with $17M of cash. The company's 2026 guidance implies a very strong H2: revenue of $525–575M (about +12% at midpoint) and adjusted EBITDA of $15–30M. If the backlog burns as forecast, the math works; if project starts slip again (as one large award did from February to July), free-cash-flow pressure could persist. Still, the direction is unmistakable. With mission-critical business unit now formalized and a pipeline consistently booking $500M–$1B in bids per month, Shimmick is no longer just a turnaround story — it is positioning itself as a growth name at the intersection of water, power, and the digital-economy buildout.