Form 8-K - Current report

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): November 12, 2024

 

 

SOUTHLAND HOLDINGS, INC.

(Exact Name of Registrant as Specified in Charter)

 

Delaware		001-41090		87-1783910
(State or Other Jurisdiction		(Commission		(IRS Employer
of Incorporation)		File Number)		Identification No.)

 

1100 Kubota Drive

Grapevine, TX 76051

(Address of Principal Executive Offices) (Zip Code)

 

[phone]

(Registrant’s Telephone Number, Including Area Code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))

 

Securities registered pursuant to section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.0001 per share		SLND		NYSE American LLC
Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share		SLND WS		NYSE American LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

 

Item 2.02 Results of Operations and Financial Condition. 

 

On November 12, 2024, Southland Holdings, Inc., a Delaware corporation (the “Company”), issued a press release announcing financial results for the quarter ended September 30, 2024. Additional information is included in the Company’s press release. A copy of the Company’s press release is attached hereto as Exhibit 99.1. The foregoing description of the press release is qualified in its entirety by reference to the attached exhibit.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits:

 

Exhibit		Description
99.1		Press Release dated November 12, 2024.
104		Cover Page Interactive Data File (embedded within Inline XBRL document)

 

1

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: November 12, 2024	SOUTHLAND HOLDINGS, INC.
	By:	/s/ Frank S. Renda
		Name:	Frank S. Renda
		Title:	President and Chief Executive Officer

 

2

 

Exhibit 99.1

 

Southland Announces Third Quarter 2024 Results

 

GRAPEVINE, Texas, November 12, 2024 – 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.

 

2

 

 

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				Gross				% of Segment
Segment		Gross Loss				Revenue				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				Gross				% of Segment
Segment		Gross Profit				Revenue				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	)

 

3

 

 

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.

 

4

 

 

Condensed Consolidated Balance Sheets (unaudited)

 

		As of
(Amounts in thousands, except share and per share data)		September 30, 2024				December 31, 2023
ASSETS
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

 

5

 

 

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

 

6

 

 

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.

 

Southland Contacts:

 

Cody Gallarda

EVP, Chief Financial Officer

[e-mail]

 

Alex Murray

Corporate Development & Investor Relations

[e-mail]

 

7

Cover	Nov. 12, 2024
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 12, 2024
Entity File Number	001-41090
Entity Registrant Name	SOUTHLAND HOLDINGS, INC.
Entity Central Index Key	0001883814
Entity Tax Identification Number	87-1783910
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	1100 Kubota Drive
Entity Address, City or Town	Grapevine
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	76051
City Area Code	(817)
Local Phone Number	293-4263
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false
Common stock, par value $0.0001 per share
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	SLND
Security Exchange Name	NYSEAMER
Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share
Title of 12(b) Security	Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share
Trading Symbol	SLND WS
Security Exchange Name	NYSEAMER

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