SLND - Earnings call transcript Q3 2024 | Southland Holdings, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Southland Holdings, Inc.

Third Quarter 2024 Conference Call. [Operator Instructions] This call is being recorded on Wednesday, November 13, 2024. I would now like to turn the conference over to Alex Murray. Please go ahead.

Alex Murray

Good morning, everyone, and welcome to the Southland Third Quarter 2024 Conference Call. Director Development Murray, Investor Alex is of and Corporate Relations. This

Officer. President today Vice Executive Financial are me and President Frank Chief Executive Joining Gallarda, Renda, Chief Cody Officer; and and

everyone Private Before Securities of that forward-looking we of Exchange within of Act Act the meaning Securities XXXX Act XXA the like XXXX. XXE of begin, to XXXX, statements this call Section Litigation may I'd Reform conference contain of Securities the Section and remind of the

facts historical neither are assurances of statements Forward-looking performance. nor future

Forward-looking uncertain outside Southland's of statements and are control.

in differ not Southland's do forward-looking actual condition not these financial you results of rely statements. we and undertake Therefore, and any materially forward-looking may from on statements, any duty those projected to statements. should these the update

of please Form discussion the affect the filed SEC of the September XX, some could SEC ended XXXX, the section Factors was March of see and the last Risk Form XX, X, that results, was on XX-K with our for filed with XX-Q that night. ended on December for year risks discussion quarter a that the XXXX, For XXXX,

this Relations We call, found that, financial refer to to you can turn to and find which I in page the Investor of also now the our release on will relating measures, the reconciliations be press over Frank. will will non-GAAP conference website. With call

Frankie S. Renda

thank joining third Southland's and for quarter call. you Good morning, conference Thank you, Alex. XXXX

business. projects the loss our a certain $XX core third business, important with Third It was income bifurcate gross of quarter M&P million quarter and between $XXX revenue legacy new our to million. statement is

M&P were $XX largely The in certain the of results legacy expected negatively non-cash had the on resolutions, of $XXX legacy dispute non-M&P impacted $XX million quarter, unfavorable unfavorable that projects million $XXX business adjustments, projects. At adjustments unfavorable we the quarter our delays projects, and and certain adjustments approximately recoveries approximately were The Excluding gross million. the the backlog legacy in recent of by and on remaining our driven quarter, which completion M&P profit million. backlog. was scheduled increased costs reduced end by from

new substantially charges are remaining also We strong strategy very XXXX. initiatives us non-cash strength our gives in approximately work, of strategic quarter's backlog expect by solid results, on of Despite result positioning core to projects, the by makes of but our This this significant up the our with these the confidence the complete backlog. the performance new of strong our our impact $X.X billion margins underscores for aligns now, as which sustained us we direction. the which double-digit end core encouraged delivering new delivered of initiatives core only not long-term well and about The performance success. I'm margins. of projects M&P are be excited

is best our great off. heading had. work core core XXXX as and ever projects into burn provides up the projects backlog we've visibility new to new ramp This work continue to Our us continue legacy with our

return to Given and core in expect internal will profitability to I backlog strength improvements the processes, new we XXXX. our strategic in

in We third also position cash balance quarter to ever several executed the We transaction since During sheet. we've estate initiatives upon had the July. strongest end with quarter, million successfully going strategic we the the quarter bolster closed public. $XX.X real our closed

in and on of of us The enabling strengthened This flat new balance facility term sheet and profitability last also and backlog, plant capitalize the portion Callodine and confidently of facility balance opportunities, the maturity a swiftly ended the quarter. up extended at quarter million positioned a better attractive changes. last million year. $XXX loan. water loan enhanced position, to opportunities with us term are the With We Finance from term gives approximately included initial new flexibility, during draw We our $X.XX markets. We senior our awards additional booked consisted execute quarter our pursue on end debt and new strengthened sheet. from XXXX. The of to of real draw drive large the $X.XX of we higher Bureau of essentially This $XXX transaction million loan estate This significantly committed billion $XXX to backlog third to our initial billion delayed million refinance respond the for $XXX quarter. market Commercial the cash treatment the closed quarter in loan Reclamation. $XX with million secured term

also we backlog into apparent negotiations. on and are several expect We the projects, after finalizing contract convert bidder low have which to

the are capitalize on this thrilled significant truly but pipeline We is positioned promising we most we robust ever momentum believe well backlog, seen. exceptional, core our are we We to tracking of the have new are with and the opportunity.

continues We sustained supply to outpace competition. to a has are the infrastructure opportunity services limited across imbalance as This contractors. of on core unique for experiencing us for demand qualified bid construction created with demand our projects markets

on well to duration in will the strategic next expect We're $XX X component Moving with is quick cash that the pursuing $XXX focus to dollar, plan over selective, strengths million shorter projects to and align our remain focusing range projects numerous of securing on months. duration million forward, yield flow. that that key our bid projects shorter we smaller objectives. A

state Worth Toronto, One Civil the $XXX utility some segment, the and for F, $XXX to projects. replacement Hydro attractive Austin, can package million million market tunnel Our the Island up York for drainage rebuilding New Civil Bridge the upcoming with and Hudson continues Washington River Gateway and the $XXX Transportation I-XX CapEx Garden actively Airport's and civil million Tunnel following duration in Rhode segment, $XXX We're relief infrastructure Terminal pick key opportunities in segment including billion between natural engaging Dallas-Fort region's also disasters. shorter to Parkway and include local projects in the us in tracking City tunnel and explore area $XXX focus $X in we to Sky also Jersey. In Southeast to Bridge million is officials Canada, the Texas, contribute I-XXX in million in our our support very and New recent the We're Ontario, larger of a be ways Canada.

to Additionally, to the have large Valley Supply North smaller $X coming we bid in quarters. the billion includes program on tracking expect the Dakota. opportunity are Water over packages we Red River from This programs

billion resources business the to and losses robust we this fully on which potential. To are Colorado. Northeast. the come. over projects of are Water Texas key M&P that the dollars projects approximately growth $XX of and pipeline District City visibility clear gives Northern years. Secure we We also for the in years also We're our legacy program tracking phase this transportation of drive various are capitalize With Colorado tracking Thornton, due planning of certain recap, unprecedented will transportation opportunities this This $X $XXX faced million unmatched billion the billions a to quarter, us water Water the and into our packages spend program in an the projects. coming GBRA for on $X billion to impacts We're working program. We're from of and currently positioned initial following a including some of to markets, Florida, uniquely in program, tens expertise, largely several of non-cash long-term for business

We is provides and new XXXX. head core visibility are us about we core excited performing work as new the into our our how backlog

positions since seen. have to We end had well capitalize backlog also us improve ever and cash have sheet in significant we on sheet quarter and strides the highest we the perform best balance company. pipeline opportunities balance improvement public our on ended becoming the made our The quarter of balance to with our have great a

opening recent lanes Midwest. several the to the [ ] a hard bridge final some placement closing, teams. a and project highlight achievements like in concrete the recently work the and of to milestones, have our our East operational and Westbound on Arkansas paving completing I'd achieved deck people, in challenging by of project Before dedication we Thanks including

million Additionally, strong us single a your and hours XXXX that, over achieved Creek of and now I'll to call quality, Cody surpassing the our lost tunnel turn for team you safety incident. a commitment without time sets X.X to work for each members team beyond. With our safety to an Thank for financial impressive up unwavering project which update. Mill milestone, a

Cody Gallarda

I morning, Frank, provide overview our performance everyone. financial and during the will good you, an XXXX. Thank of quarter of third

details XX-Q last impacts in find quarter. You filed discussion the the in additional impacted headwinds quarter for and from million, and Legacy XXXX. was night. Revenue can the same million down and Form footnotes from production $XXX period financial negatively that statements, in and analysis management's hurricanes $XXX on during information were the

was resulted in for a million margin $XX contributed to decrease $X.X million the period quarter expense quarter period contributed increase to and compared period the projects. of the legacy was loss quarter projects was $XX in of were the new anticipated on XXXX. the to third million Additionally, XX% substantially The projects gross of $XX.X Gross same prior XX% $X.X second the reduced had to project certain compared starts XXXX. marine of schedule third $XX to revenue in increase negative a We delayed the borrowing that recoveries dispute third replacing quarter. Gross in year of expected of increased during results. year also $XX to year. quarter. Selling, of in the costs $X.X in difference the of the Interest administrative XXXX. not closeouts in million large the and the much delays and same the as result quarter profit completed the costs attributable non-cash project an in year. this These general to was million year-over-year. million, starts in this quarter This period same last and charges increased compared project revenue Bahamas quarter costs debt project more in balances. timing the million, significant revenue impacted in This impacts us from higher to compared and charges in as resolutions, an for from was the on compared certain completion Unfavorable profit same legacy million the

$XX we million interest certain basis, in expense be effective compared quarter last expect to was expect state negative million year. XX% reported [ on of In year. depending per share go-forward net in same nondeductible income per taxes. We quarter million in expense compared positive $X.XX $X a produced $XX we negative the or of of We period tax items interest, or million of ] tax and earnings million period go-forward of $X benefit quarter, On $XX the range, amortization $X.X tax to share the credits, before same the basis. Income quarter $XX last for third on for million a XXXX. to net to rate be to and tax per the $X.XX certain for million our or EBITDA to same compared approximately in XX% loss the local period depreciation taxes, and a the EBITDA

to quarter. Now segment for touch the on performance

million of $XX XXXX. Our period of million, Civil from decrease segment revenues the same $XX had a in

Our Civil to gross of segment in million same the profit year. in period a compared $XX was gross the million prior loss $XX

segment quarter, Unfavorable civil As $XX to gross from period the Civil in a our results projects XXXX. same XX% quarter. charges percentage in compared negative margin in legacy of profit XX% of revenue impacted for the the of million had

Transportation the from revenues had decrease our million of of $XXX the XXXX. $XXX For million, a period same quarter, in segment

during marine large year. contributed the the a Transportation compared to This completed this project more in in year substantially last we second to the Bahamas revenue quarter million year. the project third of in segment discussed, quarter $XX previously this As

a segment in $XX million gross was gross prior in Transportation compares period profit loss the the million. to year. $XX Our This same of

a in Transportation was period for the a $XX the compared impacted of Materials in a for in noncash charges materials results. dispute XXXX. As largely segment charge to XX% a $XX Paving percentage profit quarter. positive and projects gross due of of Unfavorable legacy quarter, this had significantly which million negative business charges from the This These on $XX in by segment margin X% our significantly revenue paving a and same and were million impacted project to million the & of bridge charges was resolution. the segment's Midwest,

balance the to Turning sheet.

cash net of XX, $XXX we XXXX, cash of September of of restricted $XXX million. inclusive As had million, and debt

to extended of XXXX. announced, facility and Commercial term we initial in loan a The significantly a loan maturities Finance committed the consisted million term loan. term additional secured $XXX draw senior This initial and previously million debt As with loan quarter. million a liquidity Callodine closed our delayed $XX provided facility with term us draw $XXX

move your and forward, Southland. our encouraged core the strong the in back orders for related inflows now we the with disputes legacy projects, for we're you interest performance As seeing and from operator we're resolution change time by questions. future substantial along to call cash the new pass potential for the projects. Thank I'll our to in your of

Operator

question your first Adam Thalhimer with Instructions] And from comes line [Operator the Thompson Davis. of

Adam Thalhimer

$XXX million backlog, frame non-M&P on the of what's that The legacy off? burning time

Cody Gallarda

to substantially we of will point. tail be at XXXX expect with will project believe it that a one by immaterial end but So the have into that complete XXXX, we be that

Adam Thalhimer

unfavorable Okay. unfavorable What adjustments quarter? from -- was non-cash the in the revenue impact the from the

Cody Gallarda

work remaining to decrease were time The lower there, $XX with to the the about. the away. Bahamas So line there's based but the opening contribution was cumulative contribution in to projects to in pushed still decrease But forgive disclosed, out led you look in contribution addition dip to backward right a completion $X.X impacts that that on volume the the in percentage contributed included the the QX when the had on specified line. -- in the million gone catch-up and being approximately hasn't We of line The our of top remarks. in project that to that we're backlog we top decrease revenue was at do the excited new volume. have core recognized what that -- that great the we've billion accounting speak

Adam Thalhimer

about think you're projects focusing also allocate Okay. you going going. do mega buckets? you And list million, quick smaller gave about talked you how then -- going of do how work, you're between to you $XXX on turn Frank, those -- million $XX to but what a resources think X forward How about that

Frankie S. Renda

Yes.

maximize the Adam, areas balance, million resources have some we by make a staple our and and that to to project $XXX then of want those projects. in we it's can So million taking sure also $XX

it's talk I the to balance best really in the reason want now of to to coming of And is from sure all to maximize get key that's it's cash so kind whether you can return hot, hit on in, when because transportation, pipeline disappointing And why it. possible. we're The a we I the out projects wastewater, every projects returns tough quarter, now get maximizing but the And your ourselves and to at the right is talk highest whether about about you kind looking balance, program incredible maximizing water, is mix that the resources. resources of is position there you now. put what right make right

Adam Thalhimer

Last of be? What me. claims will think for the timing do one you settlements it. Got additional guys

Cody Gallarda

We've the of completed them. So balance table assets half number we're past got we've on disclosed at that in fully in here of on contract our claims are the a projects.

we're and settlements significant as out from cash we owing expect story those a money off delay believe that us will be XXXX our coming flows large and owners of to and abilities due generation. part of running We cash are think

Operator

comes question from Thielman with of Davidson. next the your Brent And line D.A.

Brent Thielman

a non-M&P helpful. legacy piece through when question history a talk had the up those be is picked to projects this portfolio you Maybe just the business, you new on were more that I would around something business. the came across? little of Just or could

Frankie S. Renda

effect, segment. negative. think I period couple you're that referring charges well on. the non-M&P drove that work remain touching Civil. had the We overshadowed catch-up current that legacy you Kind majority really in really those of projects touched which the those cumulative this Yes. profit performed was margin by The of projects quarter It We confident in on Civil of to. had

to is up be those backlog expect expected few down to XXXX-XXXX far were and substantially we And and over as legacy impacts, $XXX up, they those were XXXX. quarters. Absent to complete picked the million in picked when legacy next margins. frame, mid-teen is our the wrapping produced Our projects Brent, that time as up in be Civil

Brent Thielman

guess, bidding then the I climate very And look, is Okay. healthy.

available and I look that Frank, changes around But you made bonding project you there. capacity to at some what other do at today, did capacity are you've mean, capital the the With your out to as this I able to pursuits what the structure, guess your trying threshold stage I go you to backlog I'm right to now? can guess, to understand already relative to more what's business you're have. talk add

Frankie S. Renda

Yes.

the history. So company's we're sitting backlog best a billion near in with core backlog. our That's new $X.X our of in

-- can personnel, look part We opportunities the are integral partners long-term our and few talk regularly going resources. billion than jobs next them to greater success a all what be we best total about backlog. The the are we surety have to that we return have as having $X.X locations, backlog, $X.XXX see billion have the be of to over $X.X backlog, our absolutely at tracking. an we're in that regards billion even our that as targeting right different at on in $X.X total years. And We can pipeline billion the Our we add, maximize core the meet now. market, perfect equipment, the to our in to visibility exactly in with gives but far opportunity we're as kind we we're think to selective. into get just resources we where do what extremely going Brent, we core That to that we're us in

our quickly we what completely return market quarter, we laser-focused profitability tough to and exactly we have to but reset. XXXX. core So on in expect and extremely We're do

Cody Gallarda

Yes.

optimal, since strongest the of [ as this going. we in be cash kind before, turnaround a of Brent, are side, just public, where color Not position sitting the the little that ] from add we're very to think, a is quarter, echo part maybe had mentioned can't optimistic Southland. we've which with we're going Frank we I where but big I section disappointed in about sheet more balance for

Brent Thielman

I that work in of setting Maybe right had some can you an maybe some projects the ramp we Yes. of this a to up how it the a these about recently, activity some anything a follow-up mean, But and to collections the backlog or sounds the of expect that. that else up to here little Obviously, influence. I on ramping of timing flow a cash on with with think sort like in legacy get to Southeast just mean, acceleration pushed there's lot flow in maybe bit. should now. I'm of aside sense you cash just the efforts, see [indiscernible] trying of Cody? business right ex as

Cody Gallarda

question. look the particularly of decreases well high in in work indicators at you and on we've leading some complete that, think and increase we've some settlements We the Great had Yes. probability legacy there's the as flow a CIEs for with cash had VIE the opportunity with as that of as kind portfolio.

help that cash and you when we it's that in on also XX-month work as to really time payments, to hoped projects, of mentioned, us the VIE position. impact. say, to meaningful some which over these than think at of gap last, larger projects I'd smaller announcements and provide side that to announced on and Frank the in significant period, cash quicker getting, turn earlier the we've off had on making generation larger did I horizon seen for. look why off bridge you've health initially focus more a the kicking we slower projects recent some mode But great focused our the had cadence what increase So are contributed that of They on starting that

Operator

line of And comes Schwab Christian question your with Craig-Hallum. next the from

Unknown Analyst

you other few what behalf A start was first, the questions the on could Tyler times? here. from project is of and the Christian. impact revenue to push on due quarter This quantify Maybe hurricanes

Frankie S. Renda

Yes.

of contributed I that, makes and going and it, we on time rest joining. overall of the good that overall about shift decrease earlier Thanks at kind line to we're the work in just time talked at mark, the of goods, $XX of that projects which up million think, of of Tyler, revenue. the call it where the for right moved is in to look representative mentioned shortfall, that's from hear volume the still you cost half you. decrease that about to some we to The spectrum. being coming be the When

coming. So it's still

expect good us as extend for dip we is anomaly quarter and what QX, large more recovery a and forward will backlog that an a think and of great our we'll third that contribution. from The XXXX perspective going makes volume-wise have in into on

Unknown Analyst

and several what work. kind resolutions? or a those like then $XXX of look the million work in I M&P All it of about on way Is gross quarters think profit to left was really business great. legacy then is of $XXX think year? it million projects right. And other next there impacts of just to the That's that the kind tell of hard bucketed rest Or based of and individual through might over next the

Frankie S. Renda

that. work margin giving a that in quarter. appreciate overshadow number I you larger bit Yes. X every million. little left as margin very book what's We lower about the and of enough out the and try good a We $XXX to continuing dwindle. work beyond contribution That to do I'll making feel the me new we of easy there. projects go

see to see that hope the in the speak forward business and moving that make and an So long really to health less mid of term. we impact

Unknown Analyst

of both then similar last quarter. percentages And one and I think. here, in Okay. kind down The segments sequentially Transport, the Civil

You opportunities on guys the side. you some excited sound Civil about have

to Any see we X X recover? comparatively? next on to year, about comparatively? way those segments year, to you these bracket view levels Civil from expect we Would next grow as Just think growth faster how in those transport a any recovery

Frankie S. Renda

about markets. quicker burn are excited We're Civil typically projects. both Yes.

expect pick little to we jobs, So bit up civil if X those quicker. a we would X burn or

billion quarter But little But transportation, many of out there. we so as bit far think really couple I those the we'll next be As start a that off longer and opportunities to year those next there's in first $X.X Civil, the to might the just backlog show and specifically next burn. of of year, themselves Transportation see running years. in in have already

profitability both about return and expect excited XXXX. So in to to

Operator

your comes Julio line from & Sidoti Company. And next question with the Romero of

Julio Romero

Could in quarter? start we conversion how backlog there. Maybe thinking the be should we to about fourth --

Cody Gallarda

Yes.

to So some time -- still we to uncertainties shift expect the earlier that starts we've conversion we around of think the line I fruition see backlog in discussed. project There that fourth are QX. quarter, referred as coming always in

So but and we do remarks to recovery dip is see had that getting expect both QX, really where then we we the that profitability from in see opening a into volume-wise echo to that Frank's fight segments. through to return of we XXXX our for

Julio Romero

sequentially you. fourth way rebound just think of quarter? asking you third do another is relative to volume the Got I quarter guess in

Cody Gallarda

Yes, also given of derecognition their being do that level revenue and see non-cash from charges prior on volume periods the we kind we rebounding of impact discussed. of just element

So recovery yes, a numbers. we in top do line sequential expect

Julio Romero

or of how about the next kind Any quarters? line think there? kind of like cadence And in time revenue model very help line Cody. that's do just of so we should $XX some lumpiness No, M&P, you straight or in on a or $XXX Should it. off the M&P million later? million of helpful, we this Got burn X earlier that expect to

Cody Gallarda

that a next appropriate. There like, be being what it XXXX. the we decent chunk down line. M&P that won't off on there not remaining finishes then we'll recommend of expect kind point we're have information Julio. that and work going then immaterial Yes. quarters fully hopefully work negotiating finishing be I owner a the to out There backlog tapers to of we would question, to No, is still discussing more with But earlier that few over when down. straight substantially on great an is complete where after plan be on looks and and

Julio Romero

That's helpful. Okay.

quarter, expected I gave about think us the for cash inflow was number when spoke settlements, dispute third quarter. guys a that last you you

the if us the settlements flow Just wondering dispute quarter. fourth could expectation for of you same give from cash kind

Cody Gallarda

events to happened specific which the that was Arkansas that we No, on the had Yes. job, paving announced.

or announcements claims cash or XXXX, the conversion though, significant no it as depending from expectations and in out. we're those expect earlier, inflows finish otherwise mentioned throughout claim So on segment several QX claims from on cash Suffice how beyond. in near line the say, large to we negotiations settlements finalize as M&P

Julio Romero

you're processes might selective the duration just maybe risk I with and Got helpful some would of Maybe some shorter stem the a last to to projects. one some taking issues about bit there. of it. shift the Can extremely on these you you be be speak work? talking little some more Very for that the mitigation of think, on being mentioned duration front seen Frank, help you've longer different projects. me

help what other losses. could detail you that differently risk in of provide the terms any Just of of doing kind kind can minimize you're of

Frankie S. Renda

Yes.

talked and to that of we off. quick lot of on the projects these projects to looking are So started the a at areas. that, projects our staple we're I some we more need kind years think the while a markets. paying $X.X $X.X are market. projects short-term core start And because billion have in shift about, Of of in started that billion a couple the of But targeting we get more back. in It we core takes just and hitting of

that bolt-ons higher main So the made. M&P you're we of And the looking for would with was I shift out getting guess decision business margins. was say I the that

to from And naturally the going million projects, million choose to segment. there's $XX hitting that range we right have are so and up quick But to projects. in you're Civil hundreds the focused picking on $XXX in civil more

So excited market. that really about

Cody Gallarda

Yes.

team, changes our make Chaffin Dorma I made ] years entire our we're starting we want we rest also the ago. overhauling think a to might emphasis Ken our I that [ qualitative sure really staff just on several procurement add that focusing covering and and risk Frank's assessment on on quantitative details some behind points of I process best to process commend and their to with all and procurement just Jon really the entire of on can.

risk up set So mitigation. for we're long-term that

flow through to that mentioned, upcoming our and discuss financial it able but for results, calls. we're as that So takes that in be we'll to demonstrate Frank itself in a confident while

Operator

I'm at would Renda back And no I questions closing to turn Frank like remarks. for further showing to this time. it

Frankie S. Renda

all in interest Southland for forward next you Thank your to and look quarter. speaking

Operator

you presenters. call. for you, ladies and this today's gentlemen, Thank conference participating. And Thank all concludes

now may disconnect. You

Southland (SLND) 13 Nov 242024 Q3 Earnings call transcript