CORRECTING and REPLACING Southland Announces First Quarter 2024 Results

Fourth Bullet, second paragraph of the release should read: "Adjusted Net Loss attributable to stockholders of $0.4 million, or $(0.01) per share for the quarter ended March 31, 2024, compared to an Adjusted Net Loss attributable to stockholders of $1.5 million, or $(0.03) per share for the quarter ended March 31, 2023" (instead of "Adjusted Net Loss attributable to stockholders of $0.4 million, or $(0.01) per share for the year ended March 31, 2024, compared to an Adjusted Net Loss attributable to stockholders of $1.5 million, or $(0.03) per share for the year ended March 31, 2023.")

The updated release reads:

SOUTHLAND ANNOUNCES FIRST QUARTER 2024 RESULTS

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 March 31, 2024.

• Revenue of $288.1 million for the quarter ended March 31, 2024, up 5% from $274.8 million for the quarter ended March 31, 2023.
• Gross profit of $20.4 million for the quarter ended March 31, 2024, compared to $18.9 million for the quarter ended March 31, 2023.
• Net loss attributable to stockholders of $0.4 million, or $(0.01) per share for the quarter ended March 31, 2024, compared to a net loss attributable to stockholders of $4.7 million, or $(0.11) per share for the quarter ended March 31, 2023.
• Adjusted Net Loss attributable to stockholders of $0.4 million, or $(0.01) per share for the quarter ended March 31, 2024, compared to an Adjusted Net Loss attributable to stockholders of $1.5 million, or $(0.03) per share for the quarter ended March 31, 2023.
• Adjusted EBITDA of $10.9 million for the quarter ended March 31, 2024, compared to $12.7 million for the quarter ended March 31, 2023. (1)
• Backlog of $2.64 billion, compared to $2.83 billion as of December 31, 2023.

(1)

Please refer to “Non-GAAP Measures” and reconciliations for our non-GAAP financial measures, including, “Adjusted Net Loss,” “Adjusted Net Loss Per Share,” and “Adjusted EBITDA”

Southland’s President and Chief Executive Officer, Frank Renda, said, “We had a good start to the year in our seasonally slowest quarter, with revenue increasing by 5% and gross margins improving slightly from the prior year. Demand in our core markets for infrastructure construction services remains extremely healthy driven by significant federal spending and robust state and local programs.”

2024 First Quarter Results

Condensed Consolidated Statements of Operations (unaudited)

 

 

 

 

 

 

 

Three Months Ended

(Amounts in thousands)

March 31, 2024

 

March 31, 2023

Revenue

$

288,097

 

$

274,829

Cost of construction

 

267,676

 

 

255,886

Gross profit

 

20,421

 

 

18,943

Selling, general, and administrative expenses

 

14,394

 

 

15,571

Operating income

 

6,027

 

 

3,372

Loss on investments, net

 

(76)

 

 

(32)

Other income (loss), net

 

536

 

 

(2,599)

Interest expense

 

(5,655)

 

 

(3,254)

Earnings (losses) before income taxes

 

832

 

 

(2,513)

Income tax expense

 

307

 

 

1,753

Net income (loss)

 

525

 

 

(4,266)

Net income attributable to noncontrolling interests

 

931

 

 

398

Net loss attributable to Southland Stockholders

$

(406)

 

$

(4,664)

 

 

 

 

 

 

Net loss per share attributable to common stockholders

 

 

 

 

 

Basic (1)

$

(0.01)

 

 

(0.11)

Diluted (1)

$

(0.01)

 

 

(0.11)

Weighted average shares outstanding

 

 

 

 

 

Basic (1)

 

47,925,072

 

 

44,407,831

Diluted (1)

 

47,925,072

 

 

44,407,831

(1)

Basic net loss per share is the same as diluted net loss per share attributable to common stockholders for the three months ended March 31, 2024, and March 31 2023, because the inclusion of potential shares of common stock would have been anti-dilutive for the period presented.

Revenue for the three months ended March 31, 2024, was $288.1 million, an increase of $13.3 million, or 4.8%, compared to the three months ended March 31, 2023. Materials & Paving business contributed $38.6 million to revenue in the three months ended March 31, 2024.

Gross profit for the three months ended March 31, 2024, was $20.4 million, an increase of $1.5 million, or 7.8%, compared to gross profit of $18.9 million for the three months ended March 31, 2023. Gross profit margin increased from 6.9% to 7.1% for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Materials & Paving business negatively impacted gross profit by $10.4 million in the three months ended March 31, 2024.

Selling, general, and administrative costs for the three months ended March 31, 2024, were $14.4 million, a decrease of $1.2 million, or 7.6%, compared to the three months ended March 31, 2023. Selling, general, and administrative costs as a percent of revenue were 5.0% for the three months ended March 31, 2024, compared to 5.7% for the three months ended March 31, 2023.

Segment Revenue

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(Amounts in thousands)

March 31, 2024

 

March 31, 2023

 

 

 

 

% of Total

 

 

 

 

% of Total

Segment

Revenue

 

Revenue

 

Revenue

 

Revenue

Civil

$

84,273

 

29.3%

$

72,989

 

26.6%

Transportation

 

203,824

 

70.7%

 

201,840

 

73.4%

Total revenue

$

288,097

 

100.0%

$

274,829

 

100.0%

Segment Gross Profit

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

(Amounts in thousands)

March 31, 2024

 

March 31, 2023

 

 

 

% of Segment

 

 

 

 

% of Segment

Segment

Gross Profit

 

Revenue

 

Gross Profit

 

Revenue

Civil

$

17,870

 

21.2%

$

8,766

 

12.0%

Transportation

 

2,551

 

1.3%

 

10,177

 

5.0%

Gross profit

$

20,421

 

7.1%

$

18,943

 

6.9%

Adjusted EBITDA Reconciliation

 

 

 

 

 

 

 

Three Months Ended

(Amounts in thousands)

March 31, 2024

 

March 31, 2023

Net loss attributable to Southland Stockholders

$

(406)

 

$

(4,664)

Depreciation and amortization

 

5,577

 

 

8,560

Income tax expense

 

307

 

 

1,753

Interest expense

 

5,655

 

 

3,254

Interest income

 

(184)

 

 

(137)

EBITDA

 

10,949

 

 

8,766

Transaction related costs

 

—

 

 

1,035

Contingent earnout consideration non-cash expense reversal

 

—

 

 

2,936

Adjusted EBITDA

$

10,949

 

$

12,737

Backlog

 

 

 

(Amounts in thousands)

 

Balance December 31, 2023

$

2,834,966

New contracts, change orders, and adjustments

 

100,893

Less: contract revenue recognized in 2024

 

(296,947)

Balance March 31, 2024

$

2,638,912

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

 

 

 

 

 

 

 

Three Months Ended

(Amounts in thousands except shares and per share data)

March 31, 2024

 

March 31, 2023

Reconciliation of adjusted net income (loss) attributable to common stock:

 

 

 

 

 

Net loss attributable to common stock (GAAP as reported)

$

(406)

 

$

(4,664)

Adjustments:

 

 

 

 

 

Transaction related costs

 

—

 

 

1,035

Contingent earnout consideration non-cash expense

 

—

 

 

2,936

Income tax impact of adjustments (1)

 

—

 

 

(774)

Adjusted net loss attributable to common stockholders

$

(406)

 

$

(1,467)

 

 

 

 

 

 

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

 

47,925,072

 

 

44,407,831

 

 

 

 

 

 

Diluted loss per share attributable to common stock (2)

$

(0.01)

 

 

(0.11)

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

$

(0.01)

 

 

(0.03)

(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 loss per share is the same as diluted net loss per share attributable to common stockholders for three months ended March 31, 2024, and March 31, 2023, because the inclusion of potential shares of common stock would have been anti-dilutive for the period presented

.

Condensed Consolidated Balance Sheets (unaudited)

 

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

As of

ASSETS

March 31, 2024

 

December 31, 2023

Current assets

 

 

 

 

 

Cash and cash equivalents

$

31,239

 

$

49,176

Restricted cash

 

15,278

 

 

14,644

Accounts receivable, net

 

217,233

 

 

194,869

Retainage receivables

 

118,558

 

 

109,562

Contract assets

 

570,120

 

 

554,202

Other current assets

 

14,632

 

 

20,083

Total current assets

 

967,060

 

 

942,536

 

 

 

 

 

 

Property and equipment, net

 

102,773

 

 

102,150

Right-of-use assets

 

10,494

 

 

12,492

Investments - unconsolidated entities

 

124,628

 

 

121,648

Investments - limited liability companies

 

2,590

 

 

2,590

Investments - private equity

 

3,120

 

 

3,235

Deferred tax asset

 

11,896

 

 

11,496

Goodwill

 

1,528

 

 

1,528

Intangible assets, net

 

1,616

 

 

1,682

Other noncurrent assets

 

1,711

 

 

1,711

Total noncurrent assets

 

260,356

 

 

258,532

Total assets

$

1,227,416

 

$

1,201,068

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

$

202,441

 

$

162,464

Retainage payable

 

43,422

 

 

40,950

Accrued liabilities

 

117,714

 

 

124,667

Current portion of long-term debt

 

46,425

 

 

48,454

Short-term lease liabilities

 

11,096

 

 

14,081

Contract liabilities

 

185,183

 

 

193,351

Total current liabilities

 

606,281

 

 

583,967

 

 

 

 

 

 

Long-term debt

 

255,590

 

 

251,906

Long-term lease liabilities

 

4,985

 

 

5,246

Deferred tax liabilities

 

2,250

 

 

2,548

Long-term accrued liabilities

 

49,593

 

 

49,109

Other noncurrent liabilities

 

47,738

 

 

47,728

Total long-term liabilities

 

360,156

 

 

356,537

Total liabilities

 

966,437

 

 

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 March 31, 2024 and December 31, 2023

 

—

 

 

—

Common stock, $0.0001 par value, authorized 500,000,000 shares, 48,025,688 and 47,891,984 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

 

5

 

 

5

Additional paid-in-capital

 

270,801

 

 

270,330

Accumulated deficit

 

(19,659)

 

 

(19,253)

Accumulated other comprehensive loss

 

(1,832)

 

 

(1,460)

Total stockholders' equity

 

249,315

 

 

249,622

Noncontrolling interest

 

11,664

 

 

10,942

Total equity

 

260,979

 

 

260,564

Total liabilities and equity

$

1,227,416

 

$

1,201,068

Condensed Consolidated Statement of Cash Flows (unaudited)

 

 

 

 

 

 

 

Three Months Ended

(Amounts in thousands)

March 31, 2024

 

March 31, 2023

Cash flows from operating activities:

 

 

 

 

 

Net income (loss)

$

525

 

$

(4,266)

Adjustments to reconcile net income (loss) to net cash used in operating activities

 

 

 

 

 

Depreciation and amortization

 

5,577

 

 

8,560

Deferred taxes

 

(642)

 

 

(514)

Change in fair value of earnout liability

 

—

 

 

2,936

Share based compensation

 

677

 

 

—

Gain on sale of assets

 

(2,385)

 

 

(967)

Foreign currency remeasurement (gain) loss

 

64

 

 

(5)

Earnings from equity method investments

 

(1,907)

 

 

(3,242)

TZC investment present value accretion

 

(627)

 

 

(603)

Loss on trading securities, net

 

76

 

 

32

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(32,071)

 

 

(49,278)

Contract assets

 

(16,175)

 

 

(30,306)

Prepaid expenses and other current assets

 

5,450

 

 

119

Right-of-use assets

 

1,994

 

 

(1,764)

Accounts payable and accrued expenses

 

40,059

 

 

33,705

Contract liabilities

 

(8,162)

 

 

7,241

Operating lease liabilities

 

(1,883)

 

 

1,820

Other

 

(467)

 

 

1,753

Net cash used in operating activities

 

(9,897)

 

 

(34,779)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchase of property and equipment

 

(3,128)

 

 

(1,166)

Proceeds from sale of property and equipment

 

2,657

 

 

1,295

Contributions to other investments

 

(13)

 

 

(81)

Distributions from other investments

 

52

 

 

—

Net cash (used in) provided by investing activities

 

(432)

 

 

48

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Borrowings on revolving credit facility

 

5,000

 

 

3,000

Borrowings on notes payable

 

222

 

 

181

Payments on notes payable

 

(10,650)

 

 

(12,382)

Payments of deferred financing costs

 

(75)

 

 

—

Advances from related parties

 

—

 

 

(493)

Payments from related parties

 

125

 

 

6

Payments on finance lease

 

(1,359)

 

 

(1,189)

Distribution to members

 

—

 

 

(110)

Payment of taxes related to net share settlement of RSUs

 

(206)

 

 

—

Other

 

—

 

 

17,088

Net cash (used in) provided by financing activities

 

(6,943)

 

 

6,101

 

 

 

 

 

 

Effect of exchange rate on cash

 

(31)

 

 

190

 

 

 

 

 

 

Net decrease in cash and cash equivalents and restricted cash

 

(17,303)

 

 

(28,440)

Beginning of period

 

63,820

 

 

71,991

End of period

$

46,517

 

$

43,551

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

Cash refunds from income taxes

$

454

 

$

87

Cash paid for interest

$

5,527

 

$

3,230

Non-cash investing and financing activities:

 

 

 

 

 

Lease assets obtained in exchange for new leases

$

1,252

 

$

6,416

Assets obtained in exchange for notes payable

$

3,341

 

$

2,299

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 Tuesday, May 14, 2024. The call may be accessed here, or at www.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 www.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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240513759275/en/

Cody Gallarda EVP, Chief Financial Officer [e-mail]

Alex Murray Corporate Development & Investor Relations [e-mail]