Southland (SLND) - 2025 Q2 - Quarterly Results

Executive Summary & Business Outlook Southland Holdings, Inc. is a leading North American infrastructure construction firm, with its CEO noting margin improvements and anticipating future growth from government initiatives Company Overview Southland Holdings, Inc. is a leading provider of specialized infrastructure construction services in North America, with a history dating back to 1900 - Southland Holdings, Inc. is a leading provider of specialized infrastructure construction services[2][25] - The company and its subsidiaries form one of the largest infrastructure construction companies in North America, with experience globally, serving markets such as bridges, tunneling, transportation, and water treatment[25] CEO Commentary Frank Renda, Southland's President & CEO, expressed encouragement regarding sustained margin improvement in the core business due to disciplined bidding and operations - CEO Frank Renda is encouraged by sustained margin improvement in the core business, attributed to disciplined bidding and operations[3] - The company maintains a positive outlook for the second half of the year, expecting to capitalize on opportunities from the IIJA and other government spending initiatives[3] Second Quarter 2025 Financial Results Southland reported a decrease in revenue but significant improvements in gross profit and a reduction in net loss for Q2 2025 compared to Q2 2024, alongside a positive EBITDA and a substantial backlog Key Financial Highlights Southland reported a decrease in revenue but significant improvements in gross profit and a reduction in net loss for Q2 2025 compared to Q2 2024, alongside a positive EBITDA and a substantial backlog Q2 2025 Key Financial Highlights (YoY) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change | Chunk Num | | :-------------------------------- | :----------------- | :----------------- | :----- | :-------- | | Revenue | $215.4 | $251.5 | -14.4% | 5 | | Gross Profit (Loss) | $13.4 | $(40.0) | Improved | 5 | | Gross Profit Margin | 6.2% | (15.9)% | +22.1 pp | 5 | | Net Loss Attributable to Stockholders | $(10.3) | $(46.1) | Reduced | 5 | | Net Loss Per Share | $(0.19) | $(0.96) | Reduced | 5 | | EBITDA | $4.2 | $(49.9) | Improved | 5 | | Backlog (as of June 30, 2025) | $2,320.0 | N/A | N/A | 5 | Condensed Consolidated Statements of Operations The condensed consolidated statements of operations for the three months ended June 30, 2025, show a net loss of $9.89 million, a significant improvement from a $45.36 million net loss in the prior year period, driven by a shift from gross loss to gross profit Condensed Consolidated Statements of Operations (Three Months Ended June 30) | (Amounts in thousands) | June 30, 2025 | June 30, 2024 | | :--------------------------------- | :------------ | :------------ | | Revenue | $215,382 | $251,512 | | Cost of construction | 202,019 | 291,534 | | Gross profit (loss) | 13,363 | (40,022) | | Selling, general, and administrative expenses | 13,572 | 15,680 | | Operating loss | (209) | (55,702) | | Gain on investments, net | 59 | 53 | | Other income, net | 182 | 1,053 | | Interest expense | (9,983) | (6,720) | | Losses before income taxes | (9,951) | (61,316) | | Income tax benefit | (61) | (15,961) | | Net loss | (9,890) | (45,355) | | Net income attributable to noncontrolling interests | 416 | 722 | | Net loss attributable to Southland Stockholders | $(10,306) | $(46,077) | | Net loss per share attributable to common stockholders (Basic & Diluted) | $(0.19) | $(0.96) | | Weighted average shares outstanding (Basic & Diluted) | 54,008,088 | 48,030,951 | Detailed Q2 Income Statement Analysis For Q2 2025, revenue decreased by 14.4% year-over-year, while gross profit significantly improved from a loss to a profit, with gross margin increasing by 22.1 percentage points - Revenue for Q2 2025 was $215.4 million, a decrease of $36.1 million (14.4%) compared to Q2 2024, with the Materials & Paving business contributing $21.7 million[7] - Gross profit for Q2 2025 was $13.4 million, a substantial improvement from a gross loss of $40.0 million in Q2 2024, with gross margin increasing from (15.9)% to 6.2%[8] - Selling, general, and administrative costs decreased by $2.1 million (13.4%) to $13.6 million in Q2 2025, though as a percentage of revenue, SG&A costs slightly increased from 6.2% to 6.3%[9] Six Months Ended June 30, 2025 Financial Results For the six months ended June 30, 2025, Southland reported a net loss of $12.68 million, a significant reduction from $44.83 million in the prior year, primarily due to a turnaround from gross loss to gross profit and improved operating income Condensed Consolidated Statements of Operations For the six months ended June 30, 2025, Southland reported a net loss of $12.68 million, a significant reduction from $44.83 million in the prior year, primarily due to a turnaround from gross loss to gross profit and improved operating income Condensed Consolidated Statements of Operations (Six Months Ended June 30) | (Amounts in thousands) | June 30, 2025 | June 30, 2024 | | :--------------------------------- | :------------ | :------------ | | Revenue | $454,868 | $539,609 | | Cost of construction | 420,025 | 559,210 | | Gross profit (loss) | 34,843 | (19,601) | | Selling, general, and administrative expenses | 30,037 | 30,074 | | Operating income (loss) | 4,806 | (49,675) | | Gain (loss) on investments, net | 76 | (23) | | Other income, net | 925 | 1,589 | | Interest expense | (18,857) | (12,375) | | Losses before income taxes | (13,050) | (60,484) | | Income tax benefit | (374) | (15,654) | | Net loss | (12,676) | (44,830) | | Net income attributable to noncontrolling interests | 2,182 | 1,653 | | Net loss attributable to Southland Stockholders | $(14,858) | $(46,483) | | Net loss per share attributable to common stockholders (Basic & Diluted) | $(0.28) | $(0.97) | | Weighted average shares outstanding (Basic & Diluted) | 53,985,325 | 47,978,012 | Detailed YTD Income Statement Analysis Year-to-date revenue for 2025 decreased by 15.7% compared to 2024, but gross profit significantly improved from a loss to a profit, with gross margin increasing by 11.3 percentage points - Revenue for the six months ended June 30, 2025, was $454.9 million, a decrease of $84.7 million (15.7%) compared to the same period in 2024, with the Materials & Paving business contributing $39.8 million[12] - Gross profit for the six months ended June 30, 2025, was $34.8 million, a significant improvement from a gross loss of $19.6 million in the prior year, with gross margin increasing from (3.6)% to 7.7%[13] - Selling, general, and administrative costs for the six months ended June 30, 2025, were $30.0 million, a slight decrease of $0.1 million (0.1%), while as a percentage of revenue,