Financial Data and Key Metrics Changes - Fourth quarter revenue was $267 million, down $49 million from Q4 2023, with a gross profit of $8 million, down from $21 million in the same period last year [27][30] - Full-year revenue for 2024 was $980 million, a decrease from 2023, with a gross profit of negative $63 million compared to positive $36 million in 2023 [33][39] - The company reported a net loss of $4 million or negative $0.09 per share in Q4 2024, compared to a net loss of $6 million or negative $0.12 per share in Q4 2023 [30] Business Line Data and Key Metrics Changes - The Civil segment had revenues of $104 million in Q4 2024, a decrease of $4 million from Q4 2023, with a gross profit of $8 million, down from $25 million [31] - The Transportation segment reported revenues of $163 million in Q4 2024, down from $208 million in Q4 2023, with a gross loss of $0.4 million, an improvement from a gross loss of $3 million in the previous year [31] - For the full year, the Civil segment had revenues of $323 million, down $14 million from 2023, while the Transportation segment had revenues of $657 million, a decrease of approximately $166 million [38][39] Market Data and Key Metrics Changes - The company ended Q4 2024 with a backlog of approximately $2.57 billion, with $750 million in pending alternative delivery contracts not included in backlog [15][41] - The ongoing capital infusion from the Infrastructure Investment and Jobs Act is expected to provide a favorable tailwind for the business, particularly in Texas and Florida, which are leading in infrastructure investment [19][20] Company Strategy and Development Direction - The company aims to execute core projects with precision, wind down legacy work, and strengthen its position in core markets [25][24] - The focus is on maintaining a disciplined approach to project selection and driving sustainable profitability over the long term [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to capitalize on opportunities and drive long-term success, with expectations for positive EBITDA by the end of 2025 [54][55] - The demand in core markets remains robust, driven by ongoing infrastructure needs and strong public and private sector investments [21][19] Other Important Information - The company converted $20 million of certain promissory notes to common stock, reinforcing confidence in the business and improving the balance sheet [23] - The company expects to burn approximately 39% of its backlog in 2025 [41] Q&A Session Summary Question: How does the company see the book and burn work trending in 2025? - Management noted a lower than one book-to-burn ratio in Q4 but is excited about the $100 million in new awards and expects a back-weighted cadence for new awards in 2025 [48][50] Question: Will the company have positive EBITDA in 2025? - Management expects to return to positive EBITDA numbers by the end of 2025, with a stronger finish anticipated [54][55] Question: What is the expectation for cash flow in 2025? - Management expects strong cash flow from operations in 2025, with seasonality weighted towards the back half of the year [78] Question: Are there concerns about federal funding for projects? - Management remains optimistic about the pipeline and opportunities, expecting to win a fair share of projects despite potential funding concerns [84][86] Question: How is the company positioned regarding tariffs and supply chain disruptions? - The company primarily procures made-in-America materials, minimizing exposure to tariffs, and does not expect material impacts from supply chain disruptions [91][92]

Financial Performance - For the year ended December 31, 2024, the company reported revenue of $980.2 million, a decrease of $180.2 million, or 15.5%, compared to $1,160.4 million in 2023[208]. - The cost of construction for 2024 was $1,043.2 million, a decrease of $81.4 million, or 7.2%, from $1,124.6 million in 2023[209]. - The gross loss for 2024 was $63.0 million, an increase of $98.9 million, or 276.0%, compared to a gross profit of $35.8 million in 2023[210]. - Selling, general, and administrative expenses for 2024 were $63.3 million, a decrease of $3.9 million, or 5.8%, from $67.2 million in 2023[211]. - Other income, net for 2024 was $3.6 million, a decrease of $19.9 million, or 84.6%, compared to $23.6 million in 2023[212]. - Interest expense for 2024 was $29.5 million, an increase of $10.0 million, or 51.6%, from $19.5 million in 2023[213]. - The income tax benefit for 2024 was $46.9 million, with an effective tax rate of 30.8%, compared to $8.5 million and an effective rate of 31.3% in 2023[214][215]. - Revenue from the Civil segment for 2024 was $323.3 million, a decrease of $14.2 million, or 4.2%, compared to $337.5 million in 2023[219]. - Revenue from the Transportation segment for 2024 was $656.9 million, a decrease of $166.0 million, or 20.2%, compared to $822.9 million in 2023[221]. Contractual and Operational Insights - Southland's contract backlog as of December 31, 2023, is $2,834,966,000, down from $2,973,885,000 at the end of 2022[43]. - New contracts and adjustments in 2023 amounted to $1,011,797,000, while contract revenue recognized in 2023 was $1,150,716,000[43]. - Fixed price contracts are expected to continue representing a majority of Southland's total backlog[42]. - The company is actively evaluating acquisitions to leverage resources and expertise in the Transportation and Civil segments[32]. - The company’s backlog is subject to unexpected adjustments and cancellations, which could adversely affect projected revenue[79]. - A substantial portion of revenue is derived from project-based work awarded through competitive bidding, making revenue unpredictable due to potential delays, cancellations, or scope changes[85]. Workforce and Labor Issues - As of December 31, 2024, the company had approximately 2,100 employees, with about 500 salaried and 1,600 hourly workers[62]. - Approximately 14% of the workforce, or about 300 employees, were represented by a union as of December 31, 2024[63]. - Labor costs continue to rise due to inflation and shortages of qualified workers, making hiring and retention a priority[47]. - Labor shortages and increased labor costs may impair the company's ability to maintain productivity and profitability, affecting growth strategies[102]. Market and Economic Conditions - The company is vulnerable to the cyclical nature of the markets it serves, with demand for services dependent on construction project approvals, which may be adversely affected by economic conditions[86]. - Economic downturns can lead to reduced demand for services, as customers may delay or cancel capital expenditures, impacting the company's revenue and profitability[87]. - Supply chain disruptions have led to increased prices for materials and labor, impacting project costs and scheduling[45]. - Supply chain disruptions may negatively affect the company's ability to complete projects, as sourcing materials from suppliers can be impacted by various factors[98]. - Weather conditions can significantly impact revenue and profitability, causing project delays and additional costs[100]. - Climate change-related events pose long-term risks to the company's operations and financial condition, potentially leading to increased project costs or cancellations[101]. Compliance and Regulatory Risks - The company is subject to various procurement regulations and laws, including the Davis-Bacon Act and the Walsh-Healy Act, which could impose additional costs and risks[59][81]. - The company is exposed to risks related to government contracts, including potential suspension or debarment due to statutory violations[81]. - Changes in laws or regulations could adversely affect business operations and result in fines or loss of contracts[113]. - Violations of anti-bribery laws could lead to severe penalties and damage the company's reputation, impacting business operations[115]. - Extensive laws and regulations govern workplace safety, and non-compliance could result in significant liabilities and adversely affect financial conditions[107]. Strategic Focus and Business Model - The company emphasizes a culture of diversity and inclusion, ensuring equal access to opportunities regardless of various protected classes[61][64]. - The company has built a competitive compensation and benefits package, including a 401(k) match plan and flexible work schedules[67][68]. - The company targets a mix of large-scale and small-scale projects to mitigate risks associated with specific customers or projects[32]. - The company’s business model emphasizes self-performance, allowing better cost management and minimizing reliance on third-party providers[32]. Financial Strategy and Market Position - The company does not intend to pay dividends for the foreseeable future, relying on stock appreciation for returns[76]. - The company is classified as an "emerging growth company" and is only required to provide two years of audited financial statements, which may affect the attractiveness of its Common Stock to investors[142]. - The company will remain an emerging growth company until it exceeds total annual gross revenue of $1.235 billion or meets other specified criteria[143]. - The trading price of the company's securities may be volatile due to various factors, including market conditions and operational performance[151]. - The company may issue additional equity securities in the future, which could dilute earnings per share and stockholders' percentage ownership[168]. Risk Management and Cybersecurity - The company employs risk management strategies based on NIST regulation standards and conducts regular vulnerability audits to manage cybersecurity risks[170]. - The company maintains cybersecurity risk insurance and conducts threat scenario exercises to enhance its cybersecurity posture[173].

Financial Performance - Revenue for Q4 2024 was $267.3 million, a decrease of $48.9 million, or 15.5%, compared to Q4 2023 revenue of $316.2 million[9] - Gross profit for Q4 2024 was $7.7 million, down from $21.1 million in Q4 2023, resulting in a gross margin decrease from 6.7% to 2.9%[10] - Net loss attributable to stockholders for Q4 2024 was $4.2 million, or $(0.09) per share, compared to a net loss of $5.6 million, or $(0.12) per share in Q4 2023[5] - Full year 2024 revenue was $980.2 million, a decrease of $180.2 million, or 15.5%, from $1.2 billion in 2023[14] - Full year 2024 gross loss was $63.0 million, compared to a gross profit of $35.8 million in 2023, with gross margin decreasing from 3.1% to (6.4)%[15] - Net loss attributable to stockholders for the full year 2024 was $105.4 million, or $(2.19) per share, compared to a net loss of $19.3 million, or $(0.41) per share in 2023[5] - Adjusted EBITDA for Q4 2024 was $(2.7) million, compared to $9.1 million in Q4 2023[20] - Adjusted net loss attributable to common stockholders for Q4 2024 was $4,155,000, compared to $5,563,000 in Q4 2023, showing a 25.2% improvement[22] - The net loss for the year ended December 31, 2024, was $105,528,000, compared to $18,715,000 in 2023, indicating a significant increase in losses[29] Backlog and Business Segments - The backlog as of December 31, 2024, was $2.57 billion, down from $2.83 billion at the end of 2023[21] - The Materials & Paving business contributed $35.6 million to revenue in Q4 2024 and $100.6 million for the full year 2024[14] Expenses and Liabilities - Selling, general, and administrative expenses for Q4 2024 were $15.7 million, a decrease of $4.2 million, or 21.2%, compared to Q4 2023[11] - Total liabilities rose from $940,504,000 in 2023 to $1,028,240,000 in 2024, an increase of 9.3%[26] Assets and Cash Flow - Total current assets decreased from $942,536,000 in 2023 to $881,652,000 in 2024, a decline of 6.5%[26] - Cash and cash equivalents increased from $49,176,000 in 2023 to $72,185,000 in 2024, representing a growth of 46.8%[26] - Net cash provided by operating activities for 2024 was $1,927,000, a recovery from a cash outflow of $10,264,000 in 2023[29] - The company reported a cash inflow of $18,781,000 from financing activities in 2024, compared to an outflow of $2,590,000 in 2023[29] Stockholders' Equity and Shares - Total stockholders' equity decreased from $260,564,000 in 2023 to $175,409,000 in 2024, a decline of 32.7%[26] - The diluted loss per share attributable to common stock for the year ended December 31, 2024, was $2.19, compared to $0.41 for the year ended December 31, 2023[22] - The weighted average shares outstanding for diluted earnings per share increased from 47,088,813 in 2023 to 48,073,973 in 2024[22] Tax and Interest Payments - Cash paid for income taxes was $1.561 billion, compared to $7.587 billion in the previous period[30] - Cash paid for interest was $28.047 million, an increase from $18.277 million[30] Lease and Note Payable Transactions - Assets obtained in exchange for new leases totaled $18.718 million, up from $13.875 million[30] - Assets obtained in exchange for notes payable amounted to $27.365 million, compared to $10.884 million previously[30] - Related party payable exchanged for notes payable was $3.797 million, with no previous amount reported[30] - Conversion of promissory notes payable to equity was $20,000, with no previous amount reported[30] - The issuance of post-merger earnouts shares was $35 million[30] - Dividend financed with notes payable was $50 million, with no previous amount reported[30] Company Overview - Southland is a leading provider of specialized infrastructure construction services, with a history dating back to 1900[33] - The company serves various end markets including bridges, tunneling, and water treatment[33]

Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $173 million, down from $312 million in the same period in 2023, primarily due to legacy headwinds and impacts from hurricanes [26][28] - Gross loss for the quarter was $51 million, compared to a gross profit of $30 million in Q3 2023, resulting in a gross profit margin of negative 30% [28][31] - Net loss reported was $55 million or negative $1.14 per share, compared to net income of $4 million or $0.08 per share in the same period last year [31] - EBITDA for the quarter was negative $59 million, compared to positive $22 million in Q3 2023 [31] Business Line Data and Key Metrics Changes - Civil segment revenues were $56 million, a decrease of $35 million from the same period in 2023, with a gross loss of $18 million [32] - Transportation segment revenues were $117 million, down $104 million from the same period in 2023, with a gross loss of $33 million [33][34] - Unfavorable charges of $27 million from legacy civil projects and $44 million from materials and paving and legacy projects significantly impacted both segments [32][34] Market Data and Key Metrics Changes - The company ended the quarter with a total backlog of $2.74 billion, essentially flat from the previous quarter and up from $2.54 billion at the end of Q3 2023 [15] - Approximately $180 million of remaining M&P backlog and $105 million of non-M&P legacy backlog are expected to be substantially complete by the end of 2025 [10][12] Company Strategy and Development Direction - The company is focusing on securing smaller dollar, shorter duration projects that yield quick cash flow, targeting projects in the $30 million to $150 million range [17][66] - The strategic plan includes a shift away from the M&P business to focus on core markets, with a backlog of $2.5 billion in new core projects [12][66] - The company is experiencing sustained demand across core markets, with infrastructure construction services demand outpacing the supply of qualified contractors [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong performance of new core projects, which are expected to return the company to profitability in 2025 [12][22] - The company anticipates significant cash inflows from the resolution of disputes and change orders related to legacy projects, contributing to future cash generation [35][41] - Management acknowledged the challenges faced in Q3 but emphasized the robust pipeline of opportunities and the expectation of a recovery in Q4 and into 2025 [54][60] Other Important Information - The company closed a $160 million senior secured term loan facility, extending debt maturities to 2028 and strengthening the balance sheet [14][35] - The company achieved several operational milestones, including significant safety achievements on projects [23] Q&A Session Summary Question: What is the time frame for the $105 million of non-M&P legacy backlog to burn off? - Management expects it to be substantially complete by the end of 2025, with one project extending into 2026 [37] Question: What was the revenue impact from the non-cash unfavorable adjustments in the quarter? - Approximately $71 million was a decrease in recognized revenue due to cumulative catch-up impacts of percentage completion accounting [38] Question: How does the company plan to allocate resources between smaller quick-turn projects and larger projects? - Management aims for a balance, maximizing resources to ensure the highest returns possible [39][40] Question: What is the expected timing of additional claims settlements? - Significant cash flows are expected from settlements as owners are running out of abilities to delay payments [41] Question: Can you provide history on the non-M&P legacy business? - The majority of the work performed well, but legacy projects overshadowed results due to cumulative catch-up effects [44] Question: What is the capacity to add more business given the current backlog? - The company is extremely selective, focusing on projects that maximize returns, with a strong cash position to support this [46][48] Question: How should backlog conversion be expected in Q4? - A recovery in volume is anticipated in Q4, with expectations of a sequential recovery in top line numbers [60][61] Question: How should the cadence of the $180 million M&P revenue be modeled? - A straight line model is not recommended; there will be variability in project completions [62] Question: What risk mitigation processes are being implemented for shorter duration projects? - The company has overhauled its procurement process to cover risk points effectively [68][69]

Financial Performance - Revenue for the three months ended September 30, 2024, was $173,320, a decrease of 44.6% compared to $312,472 for the same period in 2023[11] - Gross loss for the three months ended September 30, 2024, was $(51,105), compared to a gross profit of $29,529 for the same period in 2023[11] - Operating loss for the three months ended September 30, 2024, was $(68,597), compared to an operating income of $14,282 for the same period in 2023[11] - Net loss attributable to Southland Stockholders for the three months ended September 30, 2024, was $(54,727), compared to a net income of $3,800 for the same period in 2023[11] - Comprehensive loss attributable to Southland Stockholders for the three months ended September 30, 2024, was $(54,581), compared to a comprehensive income of $2,173 for the same period in 2023[13] - The company reported a net loss of $(58,129) for the three months ended September 30, 2024, compared to a net income of $4,791 for the same period in 2023[12] - For the nine months ended September 30, 2024, the net loss was $102,959,000 compared to a net loss of $11,376,000 for the same period in 2023[20] - 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 same period in 2023[155] - Gross loss for the nine months ended September 30, 2024, was $70.7 million, an increase of $85.4 million, or 581.7%, compared to the same period in 2023[157] - The basic and diluted net loss per share for the three months ended September 30, 2024, was $(1.14), compared to $0.08 for the same period in 2023[129] Cash Flow and Liquidity - Cash flows from operating activities provided $12,242,000 in the nine months ended September 30, 2024, a significant improvement from cash used of $36,588,000 in the prior year[20] - The company’s cash and cash equivalents at the end of the period totaled $106,748,000, an increase from $46,752,000 at the end of September 30, 2023[20] - Cash provided by financing activities was $28,437,000 for the nine months ended September 30, 2024, compared to $11,730,000 in the same period of 2023[20] - The company had a net change in cash, cash equivalents, and restricted cash of $42.9 million for the nine months ended September 30, 2024, compared to a decrease of $25.2 million in the same period of 2023[193] - The company expects to maintain liquidity of at least $20.0 million at all times as per the Credit Agreement[204] Debt and Interest - Total equity as of September 30, 2024, was $158,034, a decrease from $260,564 as of December 31, 2023[15] - Interest expense for the three months ended September 30, 2024, was $(7,520), compared to $(6,231) for the same period in 2023[11] - Interest expense for the nine months ended September 30, 2024, was $19.9 million, an increase of $6.1 million, or 44.3%, compared to the same period in 2023[161] - As of September 30, 2024, total long-term debt was $275.2 million, an increase from $251.9 million as of December 31, 2023[75] - The weighted average interest rate on total debt outstanding increased to 9.22% as of September 30, 2024, from 6.12% as of December 31, 2023[75] - The company entered into a $160.0 million term loan facility on September 30, 2024, which replaced the previous revolving credit facility[77] Operational Changes and Strategy - The company decided to discontinue certain types of projects in its Materials & Paving business line to focus on more profitable areas[24] - The merger with Legato Merger Corp. II was completed on February 14, 2023, with Southland LLC surviving as a wholly owned subsidiary[26] - The company continues to identify new opportunities for growth in both the Civil and Transportation segments, with a positive outlook for future infrastructure projects[136] Segment Performance - The Civil segment generated revenue of $55.8 million, accounting for 32.2% of total revenue, while the Transportation segment contributed $117.5 million, representing 67.8%[73] - Revenue for the Civil segment for the three months ended September 30, 2024, was $55.8 million, a decrease of $34.9 million, or 38.4%, compared to the same period in 2023[164] - Revenue for the Transportation segment for the three months ended September 30, 2024, was $117.5 million, a decrease of $104.3 million, or 47.0%, compared to the same period in 2023[168] Assets and Liabilities - As of September 30, 2024, the company had $20.2 million in accrued loss provisions, up from $17.3 million as of December 31, 2023[64] - As of September 30, 2024, contract assets totaled $456.2 million, down from $554.2 million as of December 31, 2023, representing a decrease of 17.7%[109] - The net contract position as of September 30, 2024, was $212.7 million, down from $360.9 million as of December 31, 2023, indicating a reduction of 41.0%[111] - The company recorded claims assets of $253.0 million as of September 30, 2024, compared to $306.4 million as of December 31, 2023, a decrease of 17.5%[113] Future Outlook - The company plans to adopt ASU 2023-05 in the first quarter of 2025, which is expected to have no material impact on consolidated financial statements[43] - The company anticipates that future operating results and available cash will be adequate to meet liquidity needs for at least the next twelve months[190]

Financial Performance - Revenue for the quarter ended September 30, 2024, was $173.3 million, a decrease of $139.2 million, or 44.5%, compared to the same quarter in 2023[5] - Gross loss for the quarter ended September 30, 2024, was $51.1 million, compared to a gross profit of $29.5 million for the same quarter in 2023, resulting in a gross margin decrease from 9.5% to (29.5)%[6] - Net loss attributable to stockholders for the quarter ended September 30, 2024, was $54.7 million, or $(1.14) per share, compared to a net income of $3.8 million, or $0.08 per share for the same quarter in 2023[2] - EBITDA for the quarter ended September 30, 2024, was $(58.7) million, compared to $22.3 million for the same quarter in 2023[3] - For the nine months ended September 30, 2024, revenue was $712.9 million, a decrease of $131.3 million, or 15.6%, compared to the same period in 2023[8] - Gross loss for the nine months ended September 30, 2024, was $70.7 million, compared to a gross profit of $14.7 million for the same period in 2023, with a gross margin decrease from 1.7% to (9.9)%[9] - The company reported a net loss of $102,959,000 for the nine months ended September 30, 2024, compared to a net loss of $11,376,000 for the same period in 2023[20] - Adjusted net loss attributable to common stockholders was $54,727,000 for the three months ended September 30, 2024, compared to an adjusted net income of $3,800,000 for the same period in 2023[17] Assets and Liabilities - Total assets decreased to $1,186,794,000 as of September 30, 2024, from $1,201,068,000 as of December 31, 2023[19] - Cash and cash equivalents increased to $91,378,000 as of September 30, 2024, from $49,176,000 as of December 31, 2023[19] - Total liabilities increased to $430,564,000 as of September 30, 2024, compared to $356,537,000 as of December 31, 2023[19] - The company reported a total stockholders' equity of $149,064,000 as of September 30, 2024, down from $249,622,000 as of December 31, 2023[19] - The company had borrowings on notes payable of $167,784,000 for the nine months ended September 30, 2024, compared to $115,355,000 for the same period in 2023[20] Cash Flow and Expenses - Cash flows from operating activities showed a net cash used of $36,588,000 for the nine months ended September 30, 2024[20] - Selling, general, and administrative expenses for the quarter ended September 30, 2024, were $17.5 million, an increase of $2.2 million, or 14.7%, compared to the same quarter in 2023[7] - Southland's cash paid for interest increased to $18,886 from $12,704, representing a 48.5% increase year-over-year[21] Business Segments and Operations - Backlog as of September 30, 2024, was $2.74 billion, an increase from $2.54 billion as of September 30, 2023[3] - The Transportation segment accounted for 67.8% of total revenue in the quarter ended September 30, 2024, down from 71.0% in the same quarter of 2023[11] - Materials & Paving business contributed $17.5 million to revenue in the quarter ended September 30, 2024[5] Other Financial Metrics - Lease assets obtained in exchange for new leases rose to $9,881 from $8,529, a growth of 15.8%[21] - Assets obtained in exchange for notes payable surged to $23,286 from $8,626, marking an increase of 169.8%[21] - Related party payable exchanged for notes payable amounted to $3,797, with no previous year comparison available[21] - The issuance of post-merger earnout shares was recorded at $0, compared to $35,000 in the previous year[21] - Dividend financed with notes payable was $0, down from $50,000 in the prior year[21] Company Overview - Southland is a leading provider of specialized infrastructure construction services, with a history dating back to 1900[23] - The company serves various end markets including bridges, tunneling, and water treatment[23] - Southland's financial measures include non-GAAP metrics such as Adjusted EBITDA, which provide insights into financial trends[25] - Forward-looking statements indicate that actual results may differ materially from projections due to inherent uncertainties[27]

Financial Data and Key Metrics - Revenue for Q2 2024 was $252 million, down from $257 million in Q2 2023 [4] - Gross loss for Q2 2024 was $40 million, compared to $34 million in Q2 2023 [4] - Operating cash flow was strong at $27 million in Q2 2024 [4] - Net loss for Q2 2024 was $46 million, or $0.96 per share, compared to a net loss of $13 million, or $0.27 per share, in Q2 2023 [16] - Adjusted EBITDA for Q2 2024 was negative $49.9 million, compared to negative $42.2 million in Q2 2023 [17] Business Line Performance - Civil segment revenue increased to $79 million in Q2 2024, up from $65 million in Q2 2023, with gross profit margin improving to 12% from 9% [18] - Transportation segment revenue decreased to $172 million in Q2 2024, down from $191 million in Q2 2023, with gross profit margin worsening to negative 29% from negative 21% [18] - Materials & Paving segment contributed $9 million in revenue but had a gross loss of $47 million due to unfavorable adjustments from dispute settlements [19] Market and Backlog Data - Backlog at the end of Q2 2024 was $2.74 billion, up from $2.64 billion in Q1 2024 [8] - New awards in Q2 2024 totaled $375 million, including the $202 million Bull Run Filtration Facility and $150 million in water resource projects [8] - The company was selected for phase 2 of the North End Treatment Plant in Winnipeg, with an expected construction contract value of $220 million [9] Strategic Direction and Industry Competition - The company is focusing on resolving legacy disputes to strengthen the balance sheet and generate cash [5][6] - Alternative delivery contracts, such as progressive design builds, are becoming more prevalent, and the company is well-positioned to capitalize on these opportunities due to its technical expertise and competitive advantage [10][11] - The EPA's updated Clean Water Infrastructure Needs survey estimates $630 billion will be needed over the next 20 years to address water quality objectives, presenting significant opportunities for the company [11][12] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the core business and the ability to capitalize on opportunities from the IIJA (Infrastructure Investment and Jobs Act) [13][14] - The company expects to generate significant cash from resolving legacy disputes and strong performance in core business projects in the coming quarters [6][14] Other Important Information - The company closed a $42.5 million real estate transaction in July 2024, resulting in $16 million of debt reduction and $25 million in cash for general corporate purposes [7] - A debt refinancing transaction is expected to be finalized before Q3 2024 results are announced, which will refinance approximately $110 million of existing debt [21] Q&A Session Summary Question: When will the Civil segment backlog start flowing into revenue? - Revenue from the Civil segment is expected to increase in Q3 and Q4 2024, with backlog up 38% year-over-year [23][24] Question: How will the remaining Materials & Paving backlog be recognized? - The remaining $200 million in Materials & Paving backlog will be heavily weighted towards Q3 and Q4 2024, with some projects trailing into 2025 [25] Question: What is the potential for more dispute settlements in the coming quarters? - The company expects to generate significant cash from ongoing dispute settlements, with approximately half of the CIE balance related to substantially completed projects [27] Question: How many projects are involved in the disputed contracts? - The company has a handful of claims related to its legacy portfolio, with the CityLYNX project being one of the larger claims [29][30] Question: What is the outlook for organic growth excluding legacy disputes? - The company expects strong organic growth driven by the IIJA and healthy market conditions, with the Civil segment backlog up 38% [33][34] Question: What are the chances of contract disputes being settled in 2025 instead of 2024? - Most claims are from projects bid in 2018 and 2019, and the company is working to resolve them as quickly as possible [37] Question: Why was the revenue from Materials & Paving only $9 million in Q2 2024? - The settlement resulted in a derecognition of revenue from prior periods, but operational progress remains on track for substantial completion by mid-2025 [38] Question: How will the $110 million refinancing affect GAAP interest expense? - The refinancing is expected to support working capital better, but details will be provided once the transaction is finalized [40] Question: Did weather impact Q2 or early Q3 performance? - Higher-than-normal rain events impacted some work, but no significant weather-related issues were noted for July [41] Question: What is the pro forma balance sheet position after recent transactions? - The real estate transaction and dispute settlements have strengthened the balance sheet, with $25 million in net proceeds and $16 million in debt reduction [43] Question: What are the remaining risks in executing the Materials & Paving backlog? - Risks include change orders, weather, and inflation, but the company expects to collect on recorded claims and sees potential cash upside [45][47]

Financial Performance - Revenue for the three months ended June 30, 2024, was $251,512,000, a decrease of 2% from $256,927,000 for the same period in 2023[11] - Gross loss for the three months ended June 30, 2024, was $(40,022,000), compared to $(33,794,000) for the same period in 2023, indicating a deterioration in gross margin[11] - Operating loss for the three months ended June 30, 2024, was $(55,702,000), an increase from $(50,242,000) in the prior year[11] - Net loss attributable to Southland Stockholders for the three months ended June 30, 2024, was $(46,077,000), compared to $(12,826,000) for the same period in 2023[11] - Net loss per share attributable to common stockholders for the three months ended June 30, 2024, was $(0.96), compared to $(0.27) in the same period of 2023[11] - Comprehensive loss attributable to Southland Stockholders for the three months ended June 30, 2024, was $(46,667,000), compared to $(11,678,000) for the same period in 2023[12] - The company reported a net loss before income taxes of $(61,316,000) for the three months ended June 30, 2024, compared to $(30,490,000) for the same period in 2023[11] - The net loss for the six months ended June 30, 2024, was $44,830,000, compared to a net loss of $16,167,000 for the same period in 2023[17] - Revenue for the six months ended June 30, 2024, was $539.6 million, an increase of $7.9 million, or 1.5%, compared to $531.8 million for the same period in 2023[122] - Gross loss for the six months ended June 30, 2024, was $19.6 million, an increase of $4.8 million, or 32.0%, compared to a gross loss of $14.9 million for the same period in 2023[124] Cash Flow and Liquidity - Cash flows from operating activities provided $17,534,000 in the first half of 2024, a significant improvement from a cash outflow of $10,636,000 in the first half of 2023[17] - Cash and cash equivalents at the end of the period increased to $69,169,000 from $54,108,000 year-over-year[17] - The total cash, cash equivalents, and restricted cash at the end of the period was $69,169,000, up from $63,820,000 at the beginning of the period[28] - Net cash provided by operating activities was $17.5 million during the six months ended June 30, 2024, compared to a net cash used of $10.6 million in the same period in 2023[159] - Net cash used in financing activities was $15.1 million for the six months ended June 30, 2024, compared to $9.7 million for the same period in 2023[162] Debt and Financing - Total long-term debt as of June 30, 2024, was $173,239 thousand, an increase from $251,906 thousand as of December 31, 2023[58] - The weighted average interest rate on total debt increased to 7.01% as of June 30, 2024, from 6.12% as of December 31, 2023[58] - The company amended its revolving credit facility to extend maturity to April 15, 2025, with a current drawn amount of $90,000 thousand[60] - The company projects compliance with all applicable debt covenants through the maturity of the revolving credit facility[59] - Total long-term debt as of June 30, 2024, was $307.8 million, with $134.5 million due within the next twelve months[163] - The revolving credit facility limit was amended to $95.0 million in May 2024, with $90.0 million drawn as of June 30, 2024[164] Segment Performance - Civil segment revenue increased to $79,368 thousand (31.6% of total revenue) in Q2 2024, compared to $65,567 thousand (25.5%) in Q2 2023[56] - Transportation segment revenue decreased to $172,144 thousand (68.4% of total revenue) in Q2 2024, down from $191,360 thousand (74.5%) in Q2 2023[56] - Revenue for the Civil segment for the three months ended June 30, 2024, was $79.4 million, an increase of $13.8 million, or 21.0%, compared to $65.6 million for the same period in 2023[130] - Revenue for the Transportation segment for the three months ended June 30, 2024, was $172.1 million, a decrease of $19.2 million, or 10.0%, compared to $191.4 million for the same period in 2023[135] Operational Adjustments - The company discontinued certain projects in its Materials & Paving business line to focus on more profitable areas, although this did not qualify for Discontinued Operations treatment[21] - The company reported a gain on the sale of assets amounting to $2,855,000 in the first half of 2024, compared to a gain of $85,000 in the same period of 2023[17] - The company entered into a real estate purchase agreement to sell three properties for a total of $42.5 million, with proceeds allocated for general corporate purposes and debt reduction[97][98] Accounting and Regulatory Changes - The company plans to adopt ASU 2023-05 regarding joint venture formations in the first quarter of 2025, expecting no material impact on consolidated financial statements[33] - The Company is evaluating the impact of ASU 2023-07 and ASU 2023-09 on its consolidated financial statements, with ASU 2023-07 effective for annual periods beginning after January 1, 2024[35][36] - The Company has not elected to early adopt ASU 2023-09, which establishes new income tax disclosure requirements effective for annual periods beginning after December 15, 2024[36] - The Company’s significant accounting policies remained unchanged for the three and six months ended June 30, 2024[37] Backlog and Future Expectations - As of June 30, 2024, Southland had $2.7 billion of Remaining Unsatisfied Performance Obligations (RUPO), expecting to recognize approximately 39% as revenue in the next twelve months[81] - Backlog as of June 30, 2024, was $2,743.7 million, down from $2,834.9 million at the end of 2023[151] - The company anticipates further spending on infrastructure projects due to economic stimulus initiatives, including the Infrastructure Investment and Jobs Act[106]

Financial Performance - Revenue for Q2 2024 was $251.5 million, a decrease of $5.4 million, or 2.1%, compared to Q2 2023 revenue of $256.9 million[1][6] - Gross loss for Q2 2024 was $40.0 million, an increase of $6.2 million, or 18.4%, compared to a gross loss of $33.8 million in Q2 2023[1][6] - Net loss attributable to stockholders for Q2 2024 was $46.1 million, or $(0.96) per share, compared to a net loss of $12.8 million, or $(0.27) per share in Q2 2023[1][2] - Adjusted EBITDA for Q2 2024 was $(49.9) million, compared to $(42.2) million in Q2 2023[2] - Net loss attributable to Southland Stockholders for the three months ended June 30, 2024, was $(46,077) thousand, compared to $(12,826) thousand for the same period in 2023, representing a significant increase in losses[14] - Adjusted EBITDA for the six months ended June 30, 2024, was $(38,973) thousand, compared to $(29,424) thousand for the same period in 2023, indicating a worsening operational performance[14] - Net loss for the six months ended June 30, 2024, was $44,830,000, compared to a net loss of $16,167,000 for the same period in 2023[1] Operational Efficiency - Positive cash flow from operations for Q2 2024 was $27.4 million, reflecting improved operational efficiency[2][4] - Cash provided by operating activities was $17,534,000, a significant improvement from cash used in operating activities of $(10,636,000) in the prior year[1] Backlog and Awards - New awards totaled $374.8 million in Q2 2024, contributing to a backlog of $2.74 billion, up from $2.64 billion as of March 31, 2024[2] - The balance of backlog as of June 30, 2024, was $2,743,749 thousand, down from $2,834,966 thousand at the end of 2023, suggesting a decrease in future revenue visibility[15] - The company recognized contract revenue of $(566,872) thousand in 2024, which reduced the backlog balance[15] Assets and Liabilities - Total assets as of June 30, 2024, increased to $1,263,407 thousand from $1,201,068 thousand as of December 31, 2023, reflecting growth in the company's asset base[17] - Current liabilities rose to $770,242 thousand as of June 30, 2024, compared to $583,967 thousand at the end of 2023, indicating increased short-term financial obligations[17] - Total liabilities increased to $1,047,857 thousand as of June 30, 2024, from $940,504 thousand at the end of 2023, indicating a rise in the company's debt levels[17] Cash and Liquidity - Cash and cash equivalents increased to $52,352 thousand as of June 30, 2024, from $49,176 thousand at the end of 2023, indicating improved liquidity[17] - Total cash and cash equivalents at the end of the period increased to $69,169,000 from $54,108,000 year-over-year[1] - Cash paid for income taxes was $203,000, down from $2,903,000 in the previous year[1] - Cash paid for interest increased to $11,970,000 from $7,541,000 year-over-year[1] - Net cash provided by investing activities was $2,982,000, compared to $2,240,000 in the same period last year[1] - Borrowings on notes payable increased significantly to $24,678,000 from $248,000 in the previous year[1] Segment Performance - The Civil segment generated $79.4 million in revenue for Q2 2024, representing 31.6% of total revenue, while the Transportation segment accounted for $172.1 million, or 68.4%[11] - The Materials & Paving business negatively impacted gross loss by $46.8 million in Q2 2024[6][8] Future Outlook - The company expects to collect approximately $58 million from settled contract disputes in Q3 2024, which will enhance liquidity[3][4] - The company plans to host a conference call on August 13, 2024, to discuss financial results and future outlook[22] Company Overview - Southland is a leading provider of specialized infrastructure construction services, with a focus on various sectors including transportation and water treatment[23]

Financial Data and Key Metrics Changes - Revenue for Q1 2024 was $288 million, an increase of 5% from the same quarter last year [7][22] - Gross profit was $20 million, up from $19 million in the prior year, with a gross profit margin of 7.1%, slightly up from 6.9% [7][22] - EBITDA for the quarter was $11 million, compared to $9 million for the same period in 2023 [19] - The company reported a net loss of $400,000 or negative $0.01 per share, an improvement from a net loss of $5 million or negative $0.11 per share in the same period last year [23] Business Line Data and Key Metrics Changes - Civil segment revenue was $84 million, an increase of $11 million from the same period in 2023, with a gross profit of $18 million and a gross profit margin of 21%, up from 12% [24] - Transportation segment revenue was $204 million, an increase of $2 million from the same period in 2023, but gross profit decreased to $3 million from $10 million, resulting in a gross profit margin of 1%, down from 5% [24][25] - The materials and paving business line contributed $38 million to revenue but had a negative gross profit of $10 million due to severe weather and increased project costs [25] Market Data and Key Metrics Changes - The company ended the quarter with a backlog of $2.64 billion, having booked approximately $100 million in new awards during the quarter [11] - Demand from public agencies and private clients remains strong, with expectations for continued proposal submissions for various projects [12][15] Company Strategy and Development Direction - The company aims to capitalize on opportunities in the U.S. and core end markets, with a focus on civil projects and infrastructure improvements [13][16] - There is a strategic emphasis on selecting high-margin projects and managing the backlog effectively, particularly as legacy projects are completed [44][49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong demand in end markets and the potential for new awards as the year progresses [16][44] - The company expects to see a sequential increase in backlog due to strong new awards and is focused on maintaining healthy margins [49] Other Important Information - The company has a net debt of $255 million, with plans to pay down approximately $46 million of debt in the next 12 months [26] - The company is evaluating options to simplify its debt structure and extend maturities [26] Q&A Session Summary Question: Continued M&P losses and potential offsets - Management indicated that new jobs starting should help offset losses, with a focus on completing legacy work by mid-2025 [29][30] Question: Outlook for Civil segment margins - Management is optimistic about maintaining healthy margins in the Civil segment due to strong project execution and new awards [33] Question: End market mix within Civil - The Civil segment is seeing diverse opportunities across water, wastewater, and emergency projects, contributing to strong execution [37] Question: Impact of legacy projects on gross margins - Management expects a decline in legacy backlog impact on gross margins as new work contributes positively [46] Question: Cash flow expectations - Positive cash flows are anticipated in the latter half of the year, consistent with historical trends [48]