IRVINE, Calif. - Shimmick Corporation (NASDAQ: SHIM), a prominent water infrastructure company, has secured a subcontract worth $27,583,595 for electrical installations at the Sunol Valley Water Treatment Plant Ozonation project. The prime contract, with a total value of $234,782,000, was awarded by the San Francisco Public Utilities Commission (SFPUC) to J.F. Shea Construction, Inc. on May 14, 2024.
The project is situated in Sunol, Alameda County, and focuses on improving the taste and odor of raw water supplied to the Sunol Valley Water Treatment Plant. The initiative includes the construction of a new ozone treatment facility, featuring an Ozone Generator Building, an Ozone Contact Basin, and various support systems.
Shimmick's role in the project encompasses the installation of high-voltage power systems, as well as instrumentation and controls for the ozonation facility. Steve Richards, the CEO of Shimmick, expressed the company's enthusiasm for participating in this vital infrastructure project, which is expected to enhance water quality for millions in the Bay Area.
Richards highlighted Shimmick's proficiency in complex water treatment projects and its ability to execute specialized electrical work utilizing its in-house expertise.
The implementation of the ozonation system is anticipated to offer additional primary disinfection, bolster treatment reliability, and provide an extra safeguard against potential emerging contaminants. This development represents a substantial commitment to advancing water quality in the San Francisco Bay Area.
Shimmick has established itself as a key player in the water infrastructure sector, with a portfolio that includes projects like the world's largest wastewater recycling and purification system in California and the renowned Hoover Dam.
The company prides itself on its seasoned professionals, many of whom have over two decades of industry experience, and its comprehensive approach to customer service, encompassing project delivery and long-term maintenance.
This news is based on a press release statement issued by Shimmick Corporation.
In other recent news, Shimmick Corporation has been the focus of several developments. The company's shareholders recently approved board nominees and the ratification of Deloitte & Touche LLP as the company's independent auditor.
All six director nominees were elected, with Mitchell B. Goldsteen receiving the highest number of votes, underlining shareholder confidence in the company's governance.
However, the company's first-quarter results have led to a downgrade from Buy to Hold by a Craig-Hallum analyst. The company's slower start in new projects and increased legal fees have led to cautious optimism for a potential increase in activity during the second half of the year. To address balance sheet concerns, Shimmick is expecting to complete $40 million in non-core asset sales during the second quarter.
Roth/MKM also adjusted its outlook on Shimmick, lowering the price target from $9.00 to $3.50 while maintaining a Neutral rating. The firm noted ongoing issues with legacy projects inherited from AECOM, prompting a more cautious stance until clearer signs of improved execution and cost management are seen.
Lastly, the company disclosed a default on its credit agreement, which has led to ongoing discussions with the lender to negotiate a waiver or amendment. The default gives the lender the right to demand immediate repayment of the approximately $32 million owed by Shimmick Corporation. The company is actively seeking alternative financing options to maintain its operations. These are all recent developments that investors should take note of.
InvestingPro Insights
As Shimmick Corporation (NASDAQ: SHIM) secures a significant subcontract and continues to assert its presence in the water infrastructure industry, it's important to consider the company's financial health and market performance. The recent subcontract is a positive development; however, a look at the real-time data from InvestingPro reveals a more nuanced picture.
Shimmick's market capitalization stands at a modest $61.74 million, indicating the company's relatively small size in the financial markets. Despite recent achievements, the company's price-to-earnings (P/E) ratio is negative at -1.83, reflecting investor concerns about its profitability in the near term. Additionally, the company's revenue has decreased by 13.61% over the last twelve months as of Q1 2024, suggesting challenges in maintaining growth.
InvestingPro Tips highlight several critical points for potential investors to consider. Analysts have revised their earnings expectations downwards for the upcoming period, and they anticipate a decline in sales for the current year. Moreover, Shimmick's stock has experienced high volatility, and it is currently trading at a low revenue valuation multiple. These factors may influence investment decisions for those closely monitoring Shimmick's financial trajectory.
For investors seeking a more comprehensive analysis, there are additional tips available on InvestingPro, which can be accessed for Shimmick Corporation at https://www.investing.com/pro/SHIM. By using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking further insights that may inform investment strategies.
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