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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241112061906/en/
Southland Contacts:
Cody Gallarda EVP, Chief Financial Officer
cgallarda@southlandholdings.com
Alex Murray Corporate Development & Investor Relations
amurray@southlandholdings.com
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