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 March 31, 2023.
- Revenue increased to $275 million, up 6% from $258 million for the quarter ended March 31, 2022.
- Gross profit margin of 6.9%, compared to 1.9% for the quarter ended March 31, 2022.
- Operating income increased to $3.4 million, compared to an operating loss of $9.4 million for the quarter ended March 31, 2022.
- Net loss of $4.7 million, compared to a net loss of $13.6 million for the quarter ended March 31, 2022.
- Adjusted net loss of $1.5 million, or $(0.03) per share, compared to an adjusted net loss of $13.6 million for the quarter ended March 31, 2022.(1)
- Adjusted EBITDA increased to $12.7 million, compared to $1.4 million for the quarter ended March 31, 2022. (1)
- Backlog of $2.9 billion, up 43% compared to $2.0 billion as of March 31, 2022.
- New awards of $170 million, compared to $41 million for the quarter ended March 31, 2022.
| (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, “Our first quarter results for 2023 reflect a good start to the year, with revenue increasing by 6% and margins expanding from 1.9% to 6.9% from the prior year. We continue to see elevated demand for our services with limited competition as opportunities with funding from the Infrastructure Investment and Jobs Act accelerate."
2023 First Quarter Results
Condensed Consolidated Statements of Operations (unaudited) |
|||||||||
|
|
Three Months Ended |
|
||||||
(Amounts in thousands except shares and per share data) |
|
March 31, 2023 |
|
March 31, 2022 |
|
||||
Revenue |
|
$ |
274,829 |
|
|
$ |
258,486 |
|
|
Cost of construction |
|
|
255,886 |
|
|
|
253,555 |
|
|
Gross profit |
|
|
18,943 |
|
|
|
4,931 |
|
|
Selling, general, and administrative expenses |
|
|
15,571 |
|
|
|
14,299 |
|
|
Operating income (loss) |
|
|
3,372 |
|
|
|
(9,368 |
) |
|
(Loss) gain on investments, net |
|
|
(32 |
) |
|
|
280 |
|
|
Other expense, net |
|
|
(2,599 |
) |
|
|
(576 |
) |
|
Interest expense |
|
|
(3,254 |
) |
|
|
(1,967 |
) |
|
Loss before income taxes |
|
|
(2,513 |
) |
|
|
(11,631 |
) |
|
Income tax expense |
|
|
1,753 |
|
|
|
1,342 |
|
|
Net loss |
|
|
(4,266 |
) |
|
|
(12,973 |
) |
|
Net income attributable to noncontrolling interests |
|
|
398 |
|
|
|
628 |
|
|
Net loss attributable to Southland Holdings Stockholders |
|
$ |
(4,664 |
) |
|
$ |
(13,601 |
) |
|
|
|
|
|
|
|
|
|
||
Net loss per share attributable to common stockholders |
|
|
|
|
|
|
|
||
Basic (1) |
|
$ |
(0.11 |
) |
|
|
|
|
|
Diluted (1) |
|
$ |
(0.11 |
) |
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
||
Basic (1) |
|
|
44,407,831 |
|
|
|
|
|
|
Diluted (1) |
|
|
44,407,831 |
|
|
|
|
|
|
| (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 three months ended 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, 2023, was $274.8 million, an increase of $16.3 million, or 6%, compared to the three months ended March 31, 2022.
Gross profit for the three months ended March 31, 2023, was $18.9 million, an increase of $14.0 million, or 284%, compared to the three months ended March 31, 2022. Our gross profit margin increased from 1.9% to 6.9% for the three months ended March 31, 2023.
Selling, general, and administrative costs for the three months ended March 31, 2023, were $15.6 million, an increase of $1.3 million, or 9%, compared to the three months ended March 31, 2022. The increase was driven by $1.0 million of expenses related to becoming a public company.
Segment Revenue
|
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|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||||||
(Amounts in thousands) |
|
March 31, 2023 |
|
March 31, 2022 |
|
||||||
|
|
|
|
% of Total |
|
|
|
% of Total |
|
||
Segment |
|
Revenue |
|
Revenue |
|
Revenue |
|
Revenue |
|
||
Civil |
|
$ |
72,989 |
|
26.6 |
% |
$ |
75,043 |
|
29.0 |
% |
Transportation |
|
|
201,840 |
|
73.4 |
% |
|
183,443 |
|
71.0 |
% |
Total revenue |
|
$ |
274,829 |
|
100.0 |
% |
$ |
258,486 |
|
100.0 |
% |
Segment Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Three Months Ended |
|
||||||||||
(Amounts in thousands) |
|
March 31, 2023 |
|
March 31, 2022 |
|
||||||||
|
|
|
|
|
% of Segment |
|
|
|
|
% of Segment |
|
||
Segment |
|
Gross Profit |
|
Revenue |
|
Gross Profit |
|
Revenue |
|
||||
Civil |
|
$ |
8,766 |
|
12.0 |
% |
$ |
6,967 |
|
|
9.3 |
|
% |
Transportation |
|
|
10,177 |
|
5.0 |
% |
|
(2,036 |
) |
|
(1.1 |
) |
% |
Gross profit |
|
$ |
18,943 |
|
6.9 |
% |
$ |
4,931 |
|
|
1.9 |
|
% |
Condensed Consolidated Balance Sheets (unaudited) |
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|
|
|
|
|
|
|
||
|
|
As of |
||||||
(Amounts in thousands) |
|
March 31, 2023 |
|
December 31, 2022 |
||||
Cash and cash equivalents |
|
$ |
28,930 |
|
|
$ |
57,915 |
|
Restricted cash |
|
|
14,621 |
|
|
|
14,076 |
|
Accounts receivable, net |
|
|
178,723 |
|
|
|
135,678 |
|
Retainage receivables |
|
|
126,092 |
|
|
|
122,682 |
|
Contract assets |
|
|
543,147 |
|
|
|
512,906 |
|
Other current assets |
|
|
24,083 |
|
|
|
24,047 |
|
Total current assets |
|
|
915,596 |
|
|
|
867,304 |
|
|
|
|
|
|
|
|
||
Property and equipment, net |
|
|
108,857 |
|
|
|
114,084 |
|
Right-of-use assets |
|
|
18,657 |
|
|
|
16,893 |
|
Investments - unconsolidated entities |
|
|
116,920 |
|
|
|
113,724 |
|
Investments - limited liability companies |
|
|
2,590 |
|
|
|
2,590 |
|
Investments - private equity |
|
|
3,319 |
|
|
|
3,261 |
|
Goodwill |
|
|
1,528 |
|
|
|
1,528 |
|
Intangible assets, net |
|
|
2,057 |
|
|
|
2,218 |
|
Other noncurrent assets |
|
|
3,391 |
|
|
|
3,703 |
|
Total noncurrent assets |
|
|
257,319 |
|
|
|
258,001 |
|
Total assets |
|
|
1,172,915 |
|
|
|
1,125,305 |
|
|
|
|
|
|
|
|
||
Accounts payable |
|
$ |
166,203 |
|
|
$ |
126,385 |
|
Retainage payable |
|
|
34,828 |
|
|
|
33,677 |
|
Accrued liabilities |
|
|
114,184 |
|
|
|
121,584 |
|
Current portion of long-term debt |
|
|
52,718 |
|
|
|
46,322 |
|
Short-term lease liabilities |
|
|
16,678 |
|
|
|
16,572 |
|
Contract liabilities |
|
|
138,800 |
|
|
|
131,557 |
|
Total current liabilities |
|
|
523,411 |
|
|
|
476,097 |
|
|
|
|
|
|
|
|
||
Long-term debt |
|
|
242,669 |
|
|
|
227,278 |
|
Long-term lease liabilities |
|
|
10,556 |
|
|
|
10,032 |
|
Deferred tax liabilities |
|
|
2,878 |
|
|
|
3,392 |
|
Other noncurrent liabilities |
|
|
119,981 |
|
|
|
48,622 |
|
Total long-term liabilities |
|
|
376,084 |
|
|
|
289,324 |
|
Total liabilities |
|
|
899,495 |
|
|
|
765,421 |
|
|
|
|
|
|
|
|
||
Noncontrolling interest |
|
|
10,712 |
|
|
|
10,446 |
|
Members’ capital |
|
|
— |
|
|
|
327,614 |
|
Preferred stock |
|
|
— |
|
|
|
24,400 |
|
Common stock |
|
|
8 |
|
|
|
— |
|
APIC |
|
|
269,436 |
|
|
|
— |
|
Accumulated deficit |
|
|
(4,664 |
) |
|
|
— |
|
Accumulated other comprehensive income |
|
|
(2,072 |
) |
|
|
(2,576 |
) |
Total equity |
|
|
273,420 |
|
|
|
359,884 |
|
Total liabilities and equity |
|
$ |
1,172,915 |
|
|
$ |
1,125,305 |
|
Condensed Consolidated Statement of Cash Flows (unaudited) |
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|
|
|
||||||
|
|
Year Ended |
||||||
(Amounts in thousands) |
|
March 31, 2023 |
|
March 31, 2022 |
||||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
(4,266 |
) |
|
$ |
(12,973 |
) |
Adjustments to reconcile net income to net cash used in operating activities |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
8,560 |
|
|
|
11,667 |
|
Deferred taxes |
|
|
(514 |
) |
|
|
63 |
|
Change in fair value of earnout liability |
|
|
2,936 |
|
|
|
— |
|
Gain on sale of assets |
|
|
(967 |
) |
|
|
(251 |
) |
Foreign currency remeasurement gain |
|
|
(5 |
) |
|
|
(156 |
) |
Earnings from equity method investments |
|
|
(3,242 |
) |
|
|
(765 |
) |
TZC Investment present value accretion |
|
|
(603 |
) |
|
|
(580 |
) |
Loss (gain) on trading securities, net |
|
|
32 |
|
|
|
(280 |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
(49,278 |
) |
|
|
(19,363 |
) |
Contract assets |
|
|
(30,306 |
) |
|
|
(3,029 |
) |
Prepaid expenses and other current assets |
|
|
119 |
|
|
|
2,602 |
|
ROU assets |
|
|
(1,764 |
) |
|
|
(2,371 |
) |
Accounts payable and accrued expenses |
|
|
33,705 |
|
|
|
786 |
|
Contract liabilities |
|
|
7,241 |
|
|
|
(12,247 |
) |
Operating lease liabilities |
|
|
1,820 |
|
|
|
2,347 |
|
Other |
|
|
1,753 |
|
|
|
(3,137 |
) |
Net cash used in operating activities |
|
|
(34,779 |
) |
|
|
(37,687 |
) |
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchase of fixed assets |
|
|
(1,166 |
) |
|
|
(714 |
) |
Proceeds from sale of fixed assets |
|
|
1,295 |
|
|
|
521 |
|
Purchase of trading securities |
|
|
(81 |
) |
|
|
— |
|
Proceeds from the sale of trading securities |
|
|
— |
|
|
|
357 |
|
Capital contribution to investees |
|
|
— |
|
|
|
(1,000 |
) |
Net cash provided by (used in) investing activities |
|
|
48 |
|
|
|
(836 |
) |
|
|
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
|
||
Borrowings on line of credit |
|
|
3,000 |
|
|
|
30,000 |
|
Borrowings on notes payable |
|
|
181 |
|
|
|
115 |
|
Payments on notes payable |
|
|
(12,382 |
) |
|
|
(10,367 |
) |
Advances from related parties |
|
|
(493 |
) |
|
|
(247 |
) |
Payments to related parties |
|
|
6 |
|
|
|
1,252 |
|
Payments on finance lease |
|
|
(1,189 |
) |
|
|
(2,088 |
) |
Distributions |
|
|
(110 |
) |
|
|
(1,542 |
) |
Proceeds from merger of Legato II and Southland Holdings, LLC |
|
|
17,088 |
|
|
|
— |
|
Net cash provided by financing activities |
|
|
6,101 |
|
|
|
17,123 |
|
|
|
|
|
|
|
|
||
Effect of exchange rate on cash |
|
|
190 |
|
|
|
(401 |
) |
|
|
|
|
|
|
|
||
Net decrease in cash and cash equivalents and restricted cash |
|
|
(28,440 |
) |
|
|
(21,801 |
) |
Beginning of period |
|
|
71,991 |
|
|
|
111,242 |
|
End of period |
|
$ |
43,551 |
|
|
$ |
89,441 |
|
|
|
|
|
|
|
|
||
Supplemental cash flow information |
|
|
|
|
|
|
||
Cash paid for income taxes |
|
$ |
87 |
|
|
$ |
421 |
|
Cash paid for interest |
|
$ |
3,230 |
|
|
$ |
5,415 |
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
||
Lease assets obtained in exchange for new leases |
|
$ |
6,416 |
|
|
$ |
6,894 |
|
Assets obtained in exchange for notes payable |
|
$ |
2,299 |
|
|
$ |
— |
|
Issuance of post-merger earn out shares |
|
|
35,000 |
|
|
|
— |
|
Dividend financed with notes payable |
|
$ |
50,000 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
||
Adjusted Net Loss and Adjusted Net Loss Per Share Attributable to Common Stock Reconciliation |
||||||||
Three Months Ended |
||||||||
(Amounts in thousands except shares and per share data) |
March 31, 2023 |
|
March 31, 2022 |
|||||
Reconciliation of adjusted net loss attributable to common stock: |
|
|||||||
Net loss attributable to common stock (GAAP as reported) |
|
$ |
(4,664 |
) |
|
$ |
(13,601 |
) |
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 |
$ |
(1,467 |
) |
$ |
(13,601 |
) |
||
|
|
|
|
|
|
|
||
Weighted average shares outstanding (2) |
||||||||
Basic and diluted (2) |
|
|
44,407,831 |
|
|
|
|
|
Net loss per share attributable to common stockholders (2) |
|
$ |
(0.11 |
) |
|
|
|
|
Adjusted net loss per share attributable to common stockholders (2) |
$ |
(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) 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 three months ended March 31, 2023, because the inclusion of potential shares of common stock would have been anti-dilutive for the period presented |
||||||||
Adjusted EBITDA Reconciliation |
|||||||||
|
|
|
|
|
|
|
|
||
|
|
Three Months Ended |
|
||||||
(Amounts in thousands) |
|
March 31, 2023 |
|
March 31, 2022 |
|
||||
Net loss |
|
$ |
(4,664 |
) |
|
$ |
(13,601 |
) |
|
Depreciation and amortization |
|
|
8,560 |
|
|
|
11,667 |
|
|
Income taxes |
|
|
1,753 |
|
|
|
1,342 |
|
|
Interest expense |
|
|
3,254 |
|
|
|
1,967 |
|
|
Interest income |
|
|
(137 |
) |
|
|
(11 |
) |
|
Transaction related costs |
|
|
1,035 |
|
|
|
- |
|
|
Contingent earnout consideration non-cash expense |
|
|
2,936 |
|
|
|
- |
|
|
Adjusted EBITDA |
|
$ |
12,737 |
|
|
$ |
1,364 |
|
|
Backlog |
||||
|
|
|
|
|
(Amounts in thousands) |
|
Backlog |
||
Balance December 31, 2022 |
|
$ |
2,973,886 |
|
New contracts, change orders, and adjustments |
|
|
170,070 |
|
Gross backlog |
|
|
3,143,956 |
|
Less: contract revenue recognized in 2023 |
|
|
(282,122 |
) |
Balance March 31, 2023 |
|
$ |
2,861,834 |
|
Conference Call
Southland will host a conference call at 10:00 a.m. Eastern Time on Tuesday, May 16, 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, tunneling, 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 adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”), backlog, adjusted net loss, adjusted net 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 loss per share attributable to common stock (a non-GAAP financial measure) to net loss per share attributable to common stock; and adjusted net loss attributable to common stock, and Adjusted EBITDA (non-GAAP financial measures) to net 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/20230515005825/en/
Contacts
Cody Gallarda
EVP, Chief Financial Officer
cgallarda@southlandholdings.com
Alex Murray
Corporate Development & Investor Relations
amurray@southlandholdings.com
