SLND Southland Holdings Inc

 

 

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 13, 2023

 

 

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)

 

(817) 293-4263

(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 13, 2023, Southland Holdings, Inc., a Delaware corporation (the “Company”), issued a press release announcing financial results for the quarter ended September 30, 2023. 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 13, 2023.
104		Cover Page Interactive Data File (embedded within Inline XBRL document)

 

 

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 13, 2023	SOUTHLAND HOLDINGS, INC.
	By:	/s/ Frank S. Renda
		Name:	Frank S. Renda
		Title:	President and Chief Executive Officer

 

 

Exhibit 99.1

 

Southland Announces Third Quarter 2023 Results

 

GRAPEVINE, Texas, November 13, 2023 (Business Newswire) -- Southland Holdings, Inc. (NYSE American: SLND and SLND WS) (“Southland”), a leading provider of specialized infrastructure construction services, today announced financial results for quarter ended September 30, 2023.

 

●

Revenue of $312 million for the quarter ended September 30, 2023, down 6.8% from $335 million for the quarter ended September 30, 2022.

 

●

Gross profit of $30 million for the quarter ended September 30, 2023, compared to $62 million for the quarter ended September 30, 2022.

 

●

Net income attributable to stockholders of $4 million, or $0.08 per diluted share for the quarter ended September 30, 2023, compared to a net income attributable to stockholders of $35 million for the quarter ended September 30, 2022.

 

●

EBITDA of $22 million for the quarter ended September 30, 2023, compared to $60 million for the quarter ended September 30, 2022.

 

●

Backlog of $2.54 billion, up 7% compared to $2.37 billion as of September 30, 2022.

 

Southland’s President and Chief Executive Officer, Frank Renda, said, “This quarter’s results demonstrate positive contribution from recently awarded work in both our Civil and Transportation segments. While consolidated revenues declined this quarter compared to the same period last year, our core business delivered strong margins, offset by certain legacy projects as we work through completing lower margin backlog from prior years. We continue to see elevated bidding opportunities which we expect to carry into 2024 as funds from the Infrastructure Investment and Jobs Act (IIJA) are allocated towards critical infrastructure projects across the country.”

 

2023 Third Quarter Results

 

Condensed Consolidated Statements of Operations (unaudited)

 

		Three Months Ended
(Amounts in thousands)		September 30, 2023				September 30, 2022
Revenue		$	312,472			$	335,125
Cost of construction			282,943				272,715
Gross profit			29,529				62,410
Selling, general, and administrative expenses			15,247				15,606
Operating income			14,282				46,804
Loss on investments, net			(21	)			(100	)
Other income, net			2,151				2,292
Interest expense			(6,231	)			(2,285	)
Income before income taxes			10,181				46,711
Income tax expense			5,390				10,588
Net income			4,791				36,123
Net income attributable to noncontrolling interests			991				924
Net income attributable to Southland Stockholders		$	3,800			$	35,199
Net income per share attributable to common stockholders
Basic(1)		$	0.08
Diluted(1)		$	0.08
Weighted average shares outstanding
Basic(1)			47,856,114
Diluted(1)			47,872,042

 

(1)

The structure of Southland’s historical common equity structure was in the form of membership percentages and no shares were issued. As such, reporting periods prior to the three months ended March 31, 2023 will not present share or per share data.

 

 

Revenue for the three months ended September 30, 2023, was $312.5 million, a decrease of $22.7 million, or 6.8%, compared to the three months ended September 30, 2022.

 

Gross profit for the three months ended September 30, 2023, was $29.5 million, a decrease of $32.9 million, or 52.7%, compared to gross profit of $62.4 million for the three months ended September 30, 2022. Our gross profit margin decreased from 18.6% to 9.5% for the three months ended September 30, 2023 compared to the three months ended September 30, 2022.

 

Selling, general, and administrative costs for the three months ended September 30, 2023 were $15.2 million, a decrease of $0.4 million, or 2.3%, compared to the three months ended September 30, 2022. Selling, general, and administrative costs as a percent of revenue were 4.9% for the three months ended September 30, 2023 compared to 4.7% for the three months ended September 30, 2022.

 

Condensed Consolidated Statements of Operations (unaudited)

 

		Nine Months Ended
(Amounts in thousands)		September 30, 2023				September 30, 2022
Revenue		$	844,228			$	866,627
Cost of construction			829,550				761,549
Gross profit			14,678				105,078
Selling, general, and administrative expenses			47,266				43,395
Operating income (loss)			(32,588	)			61,683
Loss on investments, net			(3	)			(79	)
Other income, net			23,559				936
Interest expense			(13,790	)			(6,317	)
Income (loss) before income taxes			(22,822	)			56,223
Income tax expense (benefit)			(11,446	)			13,745
Net income (loss)			(11,376	)			42,478
Net income attributable to noncontrolling interests			2,314				1,474
Net income (loss) attributable to Southland Stockholders		$	(13,690	)		$	41,004
Net loss per share attributable to common stockholders
Basic(1)		$	(0.29	)
Diluted(1)		$	(0.29	)
Weighted average shares outstanding
Basic(1)			46,771,938
Diluted(1)			46,771,938

 

(1)

The structure of Southland’s historical common equity structure was in the form of membership percentages and no shares were issued. As such, reporting periods prior to the three months ended March 31, 2023 will not present share or per share data. 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, 2023, because the inclusion of potential shares of common stock would have been anti-dilutive for the period presented.

 

Revenue for the nine months ended September 30, 2023 was $844.2 million, a decrease of $22.4 million, or 2.6%, compared to the nine months ended September 30, 2022.

 

Gross profit for the nine months ended September 30, 2022, was $14.7 million, a decrease of $90.4 million, or 86.0%, compared to gross profit of $105.1 million for the nine months ended September 30, 2022. Our gross profit margin decreased from 12.1% to 1.7% for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.

 

Selling, general, and administrative costs for the nine months ended September 30, 2023 were $47.3 million, an increase of $3.9 million, or 8.9%, compared to the nine months ended September 30, 2022. Selling, general, and administrative costs as a percent of revenue were 5.6% for the nine months ended September 30, 2023 compared to 5.0% for the nine months ended September 30, 2022.

 

 

Segment Revenue

 

		Three Months Ended
(Amounts in thousands)		September 30, 2023								September 30, 2022
						% of Total								% of Total
Segment		Revenue				Revenue				Revenue				Revenue
Civil		$	90,708				29.0	%		$	71,409				21.3	%
Transportation			221,764				71.0	%			263,716				78.7	%
Total revenue		$	312,472				100.0	%		$	335,125				100.0	%

 

		Nine Months Ended
(Amounts in thousands)		September 30, 2023								September 30, 2022
						% of Total								% of Total
Segment		Revenue				Revenue				Revenue				Revenue
Civil		$	229,264				27.2	%		$	221,303				25.5	%
Transportation			614,964				72.8	%			645,324				74.5	%
Total revenue		$	844,228				100.0	%		$	866,627				100.0	%

 

Segment Gross Profit

 

		Three Months Ended
(Amounts in thousands)		September 30, 2023								September 30, 2022
						% of Segment								% of Segment
Segment		Gross Profit				Revenue				Gross Profit				Revenue
Civil		$	12,465				13.7	%		$	8,926				12.5	%
Transportation			17,064				7.7	%			53,484				20.3	%
Gross profit		$	29,529				9.5	%		$	62,410				18.6	%

 

		Nine Months Ended
(Amounts in thousands)		September 30, 2023								September 30, 2022
						% of Segment								% of Segment
Segment		Gross Profit				Revenue				Gross Profit				Revenue
Civil		$	27,137				11.8	%		$	28,315				12.8	%
Transportation			(12,459	)			(2.0	)%			76,763				11.9	%
Gross profit		$	14,678				1.7	%		$	105,078				12.1	%

 

Adjusted EBITDA Reconciliation

 

		Three Months Ended								Nine Months Ended
(Amounts in thousands)		September 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
Net income (loss) attributable to Southland Stockholders		$	3,800			$	35,199			$	(13,690	)		$	41,004
Depreciation and amortization			7,968				11,523				24,704				35,163
Income taxes expense (benefit)			5,390				10,588				(11,446	)			13,745
Interest expense			6,231				2,285				13,790				6,317
Interest income			(1,060	)			(18	)			(1,358	)			(29	)
EBITDA			22,329				59,577				12,000				96,200
Transaction related costs			-				-				1,594				-
Contingent earnout consideration non-cash expense reversal			-				-				(20,689	)			-
Adjusted EBITDA		$	22,329			$	59,577			$	(7,095	)		$	96,200

 

 

Backlog

 

(Amounts in thousands)		Backlog
Balance December 31, 2022		$	2,973,886
New contracts, change orders, and adjustments			412,756
Gross backlog			3,386,642
Less: contract revenue recognized in 2023			(845,323	)
Balance September 30, 2023		$	2,541,319

 

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, 2023				September 30, 2022				September 30, 2023				September 30, 2022
Reconciliation of adjusted net income (loss) attributable to common stock:
Net income (loss) attributable to common stock (GAAP as reported)		$	3,800			$	35,199			$	(13,690	)		$	41,004
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		$	3,800			$	35,199			$	(33,096	)		$	41,004
Weighted average shares outstanding for diluted and adjusted diluted earnings per share(2)			47,872,042								46,771,938
Diluted earnings (loss) per share attributable to common stock(2)		$	0.08							$	(0.29	)
Adjusted diluted earnings (loss) per share attributable to common stock(2)		$	0.08							$	(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)

The structure of Southland’s historical common equity structure was in the form of membership percentages and no shares were issued. As such, reporting periods prior to the three months ended March 31, 2023 will not present share or per share data. 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, 2023, because the inclusion of potential shares of common stock would have been anti-dilutive for the period presented

 

 

Condensed Consolidated Balance Sheets (unaudited)

 

		As of
(Amounts in thousands, except share and per share data)		September 30, 2023				December 31, 2022
ASSETS
Current assets
Cash and cash equivalents		$	32,211			$	57,915
Restricted cash			14,541				14,076
Accounts receivable, net			198,967				135,678
Retainage receivables			125,196				122,682
Contract assets			515,361				512,906
Other current assets			22,635				24,047
Total current assets			908,911				867,304
Property and equipment, net			100,558				114,084
Right-of-use assets			12,858				16,893
Investments - unconsolidated entities			123,666				113,724
Investments - limited liability companies			2,590				2,590
Investments - private equity			3,219				3,261
Deferred tax asset			21,631				-
Goodwill			1,528				1,528
Intangible assets, net			1,822				2,218
Other noncurrent assets			3,171				3,703
Total noncurrent assets			271,043				258,001
Total assets		$	1,179,954			$	1,125,305
LIABILITIES AND EQUITY
Current liabilities
Accounts payable		$	137,347			$	126,385
Retainage payable			39,059				33,677
Accrued liabilities			125,236				121,584
Current portion of long-term debt			47,825				46,322
Short-term lease liabilities			13,922				16,572
Contract liabilities			184,627				131,557
Total current liabilities			548,016				476,097
Long-term debt			261,236				227,278
Long-term lease liabilities			5,314				10,032
Deferred tax liabilities			2,876				3,392
Other noncurrent liabilities			96,343				48,622
Total long-term liabilities			365,769				289,324
Total liabilities			913,785				765,421
Commitment and contingencies (Note 7)
Stockholders’ equity
Preferred stock, $0.0001 par value, authorized 50,000,000 shares, none issued and outstanding in 2023			-				-
Preferred stock, $1.00 par value, 24,400,000 shares issued and outstanding in 2022			-				24,400
Common stock, $0.0001 par value, authorized 500,000,000 shares, 47,856,114 and none issued and outstanding in 2023 and 2022, respectively			8				-
Additional paid-in-capital			269,920				-
Accumulated deficit			(13,690	)			-
Accumulated other comprehensive loss			(2,551	)			(2,576	)
Members’ capital			-				327,614
Total stockholders’ equity			253,687				349,438
Noncontrolling interest			12,482				10,446
Total equity			266,169				359,884
Total liabilities and equity		$	1,179,954			$	1,125,305

 

 

Condensed Consolidated Statement of Cash Flows (unaudited)

 

		Nine Months Ended
(Amounts in thousands)		September 30, 2023				September 30, 2022
Cash flows from operating activities:
Net income (loss)		$	(11,376	)		$	42,478
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation and amortization			24,704				35,163
Deferred taxes			(22,148	)			(440	)
Change in fair value of earnout liability			(20,689	)			-
Share based compensation			484				-
Gain on sale of assets			(118	)			(1,343	)
Foreign currency remeasurement (gain) loss			(37	)			746
Earnings from equity method investments			(5,102	)			(7,346	)
TZC investment present value accretion			(1,828	)			(1,758	)
Loss (gain) on trading securities, net			3				(257	)
Changes in assets and liabilities:
Accounts receivable			(69,471	)			(24,167	)
Contract assets			(4,376	)			(72,703	)
Prepaid expenses and other current assets			1,564				(1,001	)
ROU assets			4,034				930
Accounts payable and accrued expenses			20,584				(6,997	)
Contract liabilities			53,048				(29,591	)
Operating lease liabilities			(3,991	)			(1,206	)
Other			(1,873	)			(3,444	)
Net cash used in operating activities			(36,588	)			(70,936	)
Cash flows from investing activities:
Purchase of fixed assets			(7,475	)			(4,384	)
Proceeds from sale of fixed assets			7,461				3,897
Loss on investment in limited liability company			-				336
Proceeds from the sale of trading securities			47				840
Capital contribution to unconsolidated investments			(540	)			(1,000	)
Net cash used in investing activities			(507	)			(311	)
Cash flows from financing activities:
Borrowings on line of credit			3,000				55,000
Payments on line of credit			(8,000	)			-
Borrowings on notes payable			115,355				115
Payments on notes payable			(111,908	)			(31,161	)
Payments of deferred financing costs			(578	)			-
Advances from related parties			425				-
Payments to related parties			(4	)			(405	)
Payments on finance lease			(3,538	)			(6,298	)
Distributions			(110	)			(1,556	)
Proceeds from merger of Legato II and Southland Holdings, LLC			17,088				-
Net cash provided by financing activities			11,730				15,695
Effect of exchange rate on cash			126				1,834
Net decrease in cash and cash equivalents and restricted cash			(25,239	)			(53,718	)
Beginning of period			71,991				111,242
End of period		$	46,752			$	57,524
Supplemental cash flow information
Cash paid for income taxes		$	3,033			$	6,153
Cash paid for interest		$	12,704			$	6,464
Non-cash investing and financing activities:
Lease assets obtained in exchange for new leases		$	8,529			$	12,537
Assets obtained in exchange for notes payable		$	8,626			$	3,397
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, November 14, 2023. 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.

 

 

Southland Contacts:

 

Cody Gallarda

EVP, Chief Financial Officer

cgallarda@southlandholdings.com

 

Alex Murray

Corporate Development & Investor Relations

amurray@southlandholdings.com

 

v3.23.3

Cover	Nov. 13, 2023
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 13, 2023
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

---