SLND Southland Holdings Inc

Southland Holdings, Inc. (NYSE American: SLND and SLND WS) (“Southland”), a leading provider of specialized infrastructure construction services, today announced financial results for the quarter ended September 30, 2024.

• Revenue of $173.3 for the quarter ended September 30, 2024, compared to $312.5 million for the quarter ended September 30, 2023.
• Gross loss of $51.1 million for the quarter ended September 30, 2024, compared to $29.5 million in gross profit for the quarter ended September 30, 2023.
• Net loss attributable to stockholders of $54.7 million, or $(1.14) per share for the quarter ended September 30, 2024, compared to a net income attributable to stockholders of $3.8 million, or $0.08 per share for the quarter ended September 30, 2023.
• EBITDA of $(58.7) million for the quarter ended September 30, 2024, compared to $22.3 million for the quarter ended September 30, 2023. (1)
• Backlog of $2.74 billion, compared to $2.54 billion as of September 30, 2023.(1)

(1)

 

Please refer to “Non-GAAP Measures” and reconciliations for our non-GAAP financial measures, including, “EBITDA” and “Backlog”

Southland’s President & Chief Executive Officer, Frank Renda, said, “While this quarter was disappointing due to legacy project impacts, I remain very confident in Southland's long-term outlook. We finished the quarter with the highest quarter end cash balance we have had since becoming a public company and backlog of $2.7 billion. This positions us to capitalize on a promising pipeline of opportunities as demand for our services continues to be robust.”

2024 Third Quarter Results

Condensed Consolidated Statements of Operations (unaudited)

 

 

 

 

 

 

 

Three Months Ended

(Amounts in thousands)

September 30, 2024

 

September 30, 2023

Revenue

$

173,320

 

$

312,472

Cost of construction

 

224,425

 

 

282,943

Gross profit (loss)

 

(51,105)

 

 

29,529

Selling, general, and administrative expenses

 

17,492

 

 

15,247

Operating income (loss)

 

(68,597)

 

 

14,282

Gain (loss) on investments, net

 

5

 

 

(21)

Other income, net

 

841

 

 

2,151

Interest expense

 

(7,520)

 

 

(6,231)

Earnings (losses) before income taxes

 

(75,271)

 

 

10,181

Income tax expense (benefit)

 

(17,142)

 

 

5,390

Net income (loss)

 

(58,129)

 

 

4,791

Net income (loss) attributable to noncontrolling interests

 

(3,402)

 

 

991

Net income (loss) attributable to Southland Stockholders

$

(54,727)

 

$

3,800

 

 

 

 

 

 

Net income (loss) per share attributable to common stockholders

 

 

 

 

 

Basic (1)

$

(1.14)

 

$

0.08

Diluted (1)

$

(1.14)

 

$

0.08

Weighted average shares outstanding

 

 

 

 

 

Basic (1)

 

48,105,512

 

 

47,856,114

Diluted (1)

 

48,105,512

 

 

47,872,042

_____________________________

(1)

 

Basic net income (loss) per share is the same as diluted net loss per share attributable to common stockholders for the three months ended September 30, 2024, because the inclusion of potential shares of common stock would have been anti-dilutive.

Revenue for the three months ended September 30, 2024, was $173.3 million, a decrease of $139.2 million, or 44.5%, compared to the three months ended September 30, 2023. Materials & Paving business contributed $17.5 million to revenue in the three months ended September 30, 2024.

Gross loss for the three months ended September 30, 2024, was $51.1 million, compared to gross profit of $29.5 million for the three months ended September 30, 2023. Gross margin decreased from 9.5% to (29.5)% for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. Materials & Paving business negatively impacted gross loss by $18.3 million in the three months ended September 30, 2024.

Selling, general, and administrative costs for the three months ended September 30, 2024, were $17.5 million, an increase of $2.2 million, or 14.7%, compared to the three months ended September 30, 2023. Selling, general, and administrative costs as a percent of revenue were 10.1% for the three months ended September 30, 2024, compared to 4.9% for the three months ended September 30, 2023.

Condensed Consolidated Statements of Operations (unaudited)

 

 

 

 

 

 

 

Nine Months Ended

(Amounts in thousands)

September 30, 2024

 

September 30, 2023

Revenue

$

712,929

 

$

844,228

Cost of construction

 

783,635

 

 

829,550

Gross profit (loss)

 

(70,706)

 

 

14,678

Selling, general, and administrative expenses

 

47,566

 

 

47,266

Operating loss

 

(118,272)

 

 

(32,588)

Loss on investments, net

 

(18)

 

 

(3)

Other income, net

 

2,430

 

 

23,559

Interest expense

 

(19,895)

 

 

(13,790)

Losses before income taxes

 

(135,755)

 

 

(22,822)

Income tax benefit

 

(32,796)

 

 

(11,446)

Net loss

 

(102,959)

 

 

(11,376)

Net income (loss) attributable to noncontrolling interests

 

(1,749)

 

 

2,314

Net loss attributable to Southland Stockholders

$

(101,210)

 

$

(13,690)

 

 

 

 

 

 

Net loss per share attributable to common stockholders

 

 

 

 

 

Basic (1)

$

(2.11)

 

 

(0.29)

Diluted (1)

$

(2.11)

 

 

(0.29)

Weighted average shares outstanding

 

 

 

 

 

Basic (1)

 

48,020,822

 

 

46,771,938

Diluted (1)

 

48,020,822

 

 

46,771,938

______________________________

(1)

 

Basic net loss per share is the same as diluted net loss per share attributable to common stockholders for the nine months ended September 30, 2024, and September 30, 2023, because the inclusion of potential shares of common stock would have been anti-dilutive for the periods presented.

Revenue for the nine months ended September 30, 2024, was $712.9 million, a decrease of $131.3 million, or 15.6%, compared to the nine months ended September 30, 2023. Materials & Paving business contributed $65.0 million to revenue in the nine months ended September 30, 2024.

Gross loss for the nine months ended September 30, 2024, was $70.7 million, compared to gross profit of $14.7 million for the nine months ended September 30, 2023. Gross margin decreased from 1.7% to (9.9)% for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. Materials & Paving business negatively impacted gross loss by $75.4 million in the nine months ended September 30, 2024.

Selling, general, and administrative costs for the nine months ended September 30, 2024, were $47.6 million, an increase of $0.3 million, or 0.6%, compared to the nine months ended September 30, 2023. Selling, general, and administrative costs as a percent of revenue were 6.7% for the nine months ended September 30, 2024, compared to 5.6% for the nine months ended September 30, 2023.

Segment Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended  

(Amounts in thousands)

 

September 30, 2024

 

September 30, 2023

 

 

 

 

    

% of Total

 

 

 

 

% of Total

Segment

 

Revenue

 

Revenue

 

Revenue

    

Revenue

Civil

 

$

55,849

 

32.2%

 

$

90,708

 

29.0%

Transportation

 

 

117,471

 

67.8%

 

 

221,764

 

71.0%

Total revenue

 

$

173,320

 

100.0%

 

$

312,472

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended  

(Amounts in thousands)

 

September 30, 2024

 

September 30, 2023

 

 

 

 

    

% of Total

 

 

 

    

% of Total

Segment

 

Revenue

 

Revenue

 

Revenue

 

Revenue

Civil

 

$

219,490

 

30.8%

 

$

229,264

 

27.2%

Transportation

 

 

493,439

 

69.2%

 

 

614,964

 

72.8%

Total revenue

 

$

712,929

 

100.0%

 

$

844,228

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

Segment Gross Profit (Loss)

 

 

Three Months Ended

(Amounts in thousands)

 

September 30, 2024

 

September 30, 2023

 

 

 

    

% of Segment    

 

 

    

% of Segment

Segment

 

Gross Loss

 

Revenue 

 

Gross Profit

 

Revenue

Civil

 

$

(18,336)

 

(32.8)%

 

$

12,465

 

13.7%

Transportation

 

 

(32,769)

 

(27.9)%

 

 

17,064

 

7.7%

Gross profit (loss)

 

$

(51,105)

 

(29.5)%

 

$

29,529

 

9.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

(Amounts in thousands)

 

September 30, 2024

 

September 30, 2023

 

 

 

    

% of Segment

 

 

 

    

% of Segment

Segment

 

Gross Profit

 

Revenue

 

Gross Profit

 

Revenue

Civil

 

$

8,694

 

4.0%

 

$

27,137

 

11.8%

Transportation

 

 

(79,400)

 

(16.1)%

 

 

(12,459)

 

(2.0)%

Gross profit (loss)

 

$

(70,706)

 

(9.9)%

 

$

14,678

 

1.7%

Adjusted EBITDA Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

(Amounts in thousands)

 

September 30, 2024

 

September 30, 2023

 

September 30, 2024

 

September 30, 2023

Net income (loss) attributable to Southland Stockholders

 

$

(54,727)

 

$

3,800

 

$

(101,210)

 

$

(13,690)

Depreciation and amortization

 

 

5,776

 

 

7,968

 

 

16,925

 

 

24,704

Income tax expense (benefit)

 

 

(17,142)

 

 

5,390

 

 

(32,796)

 

 

(11,446)

Interest expense

 

 

7,520

 

 

6,231

 

 

19,895

 

 

13,790

Interest income

 

 

(167)

 

 

(1,060)

 

 

(527)

 

 

(1,358)

EBITDA

 

 

(58,740)

 

 

22,329

 

 

(97,713)

 

 

12,000

Transaction related costs

 

 

—

 

 

—

 

 

—

 

 

1,594

Contingent earnout consideration non-cash expense reversal

 

 

—

 

 

—

 

 

—

 

 

(20,689)

Adjusted EBITDA

$

(58,740)

 

$

22,329

$

(97,713)

 

$

(7,095)

Backlog

 

 

 

(Amounts in thousands)

 

Balance December 31, 2023

$

2,834,966

New contracts, change orders, and adjustments

 

615,151

Less: contract revenue recognized in 2024

 

(712,928)

Balance September 30, 2024

$

2,737,189

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share Attributable to Common Stock Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

(Amounts in thousands except shares and per share data)

 

September 30, 2024

 

September 30, 2023

 

September 30, 2024

 

September 30, 2023

Reconciliation of adjusted net loss attributable to common stock:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common stock (GAAP as reported)

 

$

(54,727)

 

$

3,800

 

$

(101,210)

 

$

(13,690)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Transaction related costs

 

 

—

 

 

—

 

 

—

 

 

1,594

Contingent earnout consideration non-cash expense

 

 

—

 

 

—

 

 

—

 

 

(20,689)

Income tax impact of adjustments (1)

 

 

—

 

 

—

 

 

—

 

 

(311)

Adjusted net income (loss) attributable to common stockholders

 

$

(54,727)

 

$

3,800

 

$

(101,210)

 

$

(33,096)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding for diluted and adjusted diluted earnings per share (2)

 

 

48,105,512

 

 

47,872,042

 

 

48,020,822

 

 

46,771,938

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income (loss) per share attributable to common stock (2)

 

$

(1.14)

 

$

0.08

 

$

(2.11)

 

$

(0.29)

Adjusted diluted income (loss) per share attributable to common stock (2)

 

$

(1.14)

 

$

0.08

 

$

(2.11)

 

$

(0.71)

____________________________

(1)

 

The income tax impact of adjustments that are subject to tax is determined using the incremental statutory tax rates of the jurisdictions to which each adjustment relates for the respective periods.

(2)

 

Basic net income (loss) per share is the same as diluted net income (loss) per share attributable to common stockholders for the three and nine months ended September 30, 2024, and the nine months ended September 30, 2023, because the inclusion of potential shares of common stock would have been anti-dilutive for the periods presented.

Condensed Consolidated Balance Sheets (unaudited)

 

 

 

 

 

 

 

(Amounts in thousands, except share and per share data)

 

As of

ASSETS

 

September 30, 2024

 

December 31, 2023

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

91,378

 

$

49,176

Restricted cash

 

 

15,370

 

 

14,644

Accounts receivable, net

 

 

193,124

 

 

194,869

Retainage receivables

 

 

108,651

 

 

109,562

Contract assets

 

 

456,176

 

 

554,202

Other current assets

 

 

19,223

 

 

20,083

Total current assets

 

 

883,922

 

 

942,536

 

 

 

 

 

 

 

Property and equipment, net

 

 

114,034

 

 

102,150

Right-of-use assets

 

 

13,584

 

 

12,492

Investments - unconsolidated entities

 

 

125,588

 

 

121,648

Investments - limited liability companies

 

 

2,590

 

 

2,590

Investments - private equity

 

 

3,095

 

 

3,235

Deferred tax asset

 

 

39,334

 

 

11,496

Goodwill

 

 

1,528

 

 

1,528

Intangible assets, net

 

 

1,418

 

 

1,682

Other noncurrent assets

 

 

1,701

 

 

1,711

Total noncurrent assets

 

 

302,872

 

 

258,532

Total assets

 

$

1,186,794

 

$

1,201,068

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

164,897

 

$

162,464

Retainage payable

 

 

35,954

 

 

40,950

Accrued liabilities

 

 

101,939

 

 

124,667

Current portion of long-term debt

 

 

43,072

 

 

48,454

Short-term lease liabilities

 

 

8,829

 

 

14,081

Contract liabilities

 

 

243,505

 

 

193,351

Total current liabilities

 

 

598,196

 

 

583,967

 

 

 

 

 

 

 

Long-term debt

 

 

275,237

 

 

251,906

Long-term lease liabilities

 

 

6,085

 

 

5,246

Deferred tax liabilities

 

 

1,952

 

 

2,548

Long-term accrued liabilities

 

 

58,075

 

 

49,109

Financing obligations, net

 

 

41,464

 

 

—

Other noncurrent liabilities

 

 

47,751

 

 

47,728

Total long-term liabilities

 

 

430,564

 

 

356,537

Total liabilities

 

 

1,028,760

 

 

940,504

 

 

 

 

 

 

 

Commitment and contingencies (Note 7)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Preferred stock, $0.0001 par value, authorized 50,000,000 shares, none issued and outstanding as of September 30, 2024 and December 31, 2023

 

 

—

 

 

—

Common stock, $0.0001 par value, authorized 500,000,000 shares, 48,105,512 and 47,891,984 issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

 

 

5

 

 

5

Additional paid-in-capital

 

 

271,798

 

 

270,330

Accumulated deficit

 

 

(120,463)

 

 

(19,253)

Accumulated other comprehensive loss

 

 

(2,276)

 

 

(1,460)

Total stockholders' equity

 

 

149,064

 

 

249,622

Noncontrolling interest

 

 

8,970

 

 

10,942

Total equity

 

 

158,034

 

 

260,564

Total liabilities and equity

 

$

1,186,794

 

$

1,201,068

Condensed Consolidated Statement of Cash Flows (unaudited)

 

 

 

 

 

 

 

 

 

Nine Months Ended

(Amounts in thousands)

 

September 30, 2024

 

September 30, 2023

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(102,959)

 

$

(11,376)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

Depreciation and amortization

 

 

16,925

 

 

24,704

Loss on extinguishment of debt

 

 

246

 

 

—

Deferred taxes

 

 

(28,379)

 

 

(22,148)

Change in fair value of earnout liability

 

 

—

 

 

(20,689)

Share based compensation

 

 

1,674

 

 

484

Gain on sale of assets

 

 

(3,279)

 

 

(118)

Foreign currency remeasurement gain

 

 

(53)

 

 

(37)

Loss (earnings) from equity method investments

 

 

2,453

 

 

(5,102)

TZC investment present value accretion

 

 

(3,367)

 

 

(1,828)

Loss on trading securities, net

 

 

18

 

 

3

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

2,196

 

 

(69,471)

Contract assets

 

 

97,801

 

 

(4,376)

Other current assets

 

 

859

 

 

1,564

Right-of-use assets

 

 

(1,096)

 

 

4,034

Accounts payable and accrued liabilities

 

 

(22,659)

 

 

20,584

Contract liabilities

 

 

50,115

 

 

53,048

Operating lease liabilities

 

 

1,227

 

 

(3,991)

Other

 

 

520

 

 

(1,873)

Net cash provided by (used in) operating activities

 

 

12,242

 

 

(36,588)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(6,210)

 

 

(7,475)

Proceeds from sale of property and equipment

 

 

4,453

 

 

7,461

Contributions to other investments

 

 

(59)

 

 

—

Distributions from other investments

 

 

181

 

 

47

Distributions from investees

 

 

4,183

 

 

—

Capital contribution to unconsolidated investments

 

 

(250)

 

 

(540)

Net cash provided by (used in) investing activities

 

 

2,298

 

 

(507)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings on revolving credit facility

 

 

5,000

 

 

3,000

Payments on revolving credit facility

 

 

(95,000)

 

 

(8,000)

Borrowings on notes payable

 

 

167,784

 

 

115,355

Payments on notes payable

 

 

(80,613)

 

 

(111,908)

Proceeds from financing obligations

 

 

42,500

 

 

—

Payments of deferred financing costs

 

 

(5,468)

 

 

(578)

Pre-payment premium

 

 

(246)

 

 

—

Advances from related parties

 

 

—

 

 

425

Payments to related parties

 

 

—

 

 

(4)

Payments on finance lease and financing obligations

 

 

(5,314)

 

 

(3,538)

Distribution to members

 

 

—

 

 

(110)

Payment of taxes related to net share settlement of RSUs

 

 

(206)

 

 

—

Proceeds from merger of Legato II and Southland Holdings, LLC

 

 

—

 

 

17,088

Net cash provided by financing activities

 

 

28,437

 

 

11,730

 

 

 

 

 

 

 

Effect of exchange rate on cash

 

 

(49)

 

 

126

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents and restricted cash

 

 

42,928

 

 

(25,239)

Beginning of period

 

 

63,820

 

 

71,991

End of period

 

$

106,748

 

$

46,752

 

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

 

Cash paid for income taxes

 

$

1,079

 

$

3,033

Cash paid for interest

 

$

18,886

 

$

12,704

Non-cash investing and financing activities:

 

 

 

 

 

 

Lease assets obtained in exchange for new leases

 

$

9,881

 

$

8,529

Assets obtained in exchange for notes payable

 

$

23,286

 

$

8,626

Related party payable exchanged for note payable

 

$

3,797

 

$

—

Issuance of post-merger earn out shares

 

$

—

 

$

35,000

Dividend financed with notes payable

 

$

—

 

$

50,000

Conference Call

Southland will host a conference call at 10:00 a.m. Eastern Time on Wednesday, November 13, 2024. The call may be accessed here, or at southlandholdings.com. Following the conference call, a replay will be available on Southland’s website.

About Southland

Southland is a leading provider of specialized infrastructure construction services. With roots dating back to 1900, Southland and its subsidiaries form one of the largest infrastructure construction companies in North America, with experience throughout the world. The company serves the bridges, tunnelling, communications, transportation and facilities, marine, steel structures, water and wastewater treatment, and water pipeline end markets. Southland is headquartered in Grapevine, Texas.

For more information, please visit Southland’s website at southlandholdings.com.

Non-GAAP Financial Measures

This press release includes certain unaudited financial measures not presented in accordance with generally accepted accounting principles (“GAAP”), including but not limited to earnings before interest, taxes, depreciation, and amortization (“EBITDA”), adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”), backlog, adjusted net income (loss), adjusted net income (loss) per share and certain ratios and other metrics derived therefrom. Note that other companies may calculate these non-GAAP financial measures differently, and therefore such financial measures may not be directly comparable to similarly titled measures of other companies. Further, these non-GAAP financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing financial results. Therefore, these measures should not be considered in isolation or as an alternative to net income, cash flows from operations or other measures of profitability, liquidity or performance under GAAP. Southland believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Southland’s financial condition and results of operations. Southland also believes that these non-GAAP financial measures provide an additional tool for investors to use in evaluating ongoing operating results and trends. These non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which items of expense and income are excluded or included in determining these non-GAAP financial measures.

Please see the accompanying tables for reconciliations of the following non-GAAP financial measures for Southland’s current and historical results: adjusted net income (loss) per share attributable to common stock (a non-GAAP financial measure) to net income (loss) per share attributable to common stock; and adjusted net income (loss) attributable to common stock, and Adjusted EBITDA (non-GAAP financial measures) to net income (loss) attributable to common stock.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on Southland’s current beliefs, expectations and assumptions regarding the future of Southland’s business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of Southland’s control. Southland’s actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements.

Any forward-looking statement made by Southland in this press release is based only on information currently available to Southland and speaks only as of the date on which it is made. Southland undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

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Southland Contacts:

Cody Gallarda EVP, Chief Financial Officer cgallarda@southlandholdings.com

Alex Murray Corporate Development & Investor Relations amurray@southlandholdings.com