Southland Holdings, Inc. (NYSE American: SLND and SLNDW)
(“Southland”), a leading provider of specialized infrastructure
construction services, today announced financial results for the
quarter and year ended December 31, 2022.
- Gross profit margin of 12% for the year ended December 31,
2022, compared to 9% for the year ended December 31, 2021.
- Operating income increased 48% to $82.7 million for the year
ended December 31, 2022, compared to $56.1 million for the year
ended December 31, 2021.
- Operating income margin of 7% for the year ended December 31,
2022, compared to 4% for the year ended December 31, 2021.
- Net income increased 56% to $60.5 million for the year ended
December 31, 2022, compared to $38.7 million for the year ended
December 31, 2021.
- EBITDA increased 23% to $128.2 million for the year ended
December 31, 2022, compared to $104.3 million for the year ended
December 31, 2021.
- Backlog increased 34% to a record $2.97 billion as of December
31, 2022, compared to $2.22 billion as of December 31, 2021.
- Record new awards of $1.9 billion in 2022, an increase of
approximately 220% compared to the prior year.
- Record new awards of $874 million in the fourth quarter of
2022.
“2022 was a great year for Southland. The efforts put forth by
the men and women that make up our team led to Southland setting
numerous company records. We achieved record new project awards,
backlog, gross profit, operating income, and EBITDA in the year.
Beyond the numbers, we had numerous operational successes
delivering clean water solutions, completing flood and waterway
control structures, constructing bridges that connect communities
and facilitate commerce, and partnering with our customers to
address vital infrastructure needs. I look forward to what the
future holds for us,” said Southland Chief Executive Officer, Frank
Renda.
2022 Fourth Quarter & Full Year
Results
Condensed Consolidated
Statements of Operations
Three Months Ended
(Amounts in thousands)
December 31, 2022
December 31, 2021
Revenue
$
294,804
$
363,626
Cost of construction
258,948
324,048
Gross profit
35,856
39,578
Selling, general, and administrative
expenses
14,836
16,115
Operating income
21,020
23,463
Gain on investments, net
(3
)
(146
)
Other income, net
(1,268
)
(1,210
)
Interest expense
2,574
1,934
Earnings before income taxes
19,717
22,885
Income tax expense (benefit)
(455
)
8,730
Net income
20,172
14,155
Net income (loss) attributable to
noncontrolling interests
634
(679
)
Net income attributable to Southland
Holdings
$
19,538
$
14,834
Revenue for the three months ended December 31, 2022 was $294.8
million, a decrease of $68.8 million, or 23%, compared to the three
months ended December 31, 2021.
Gross profit for the three months ended December 31, 2022 was
$35.9 million, a decrease of $3.7 million, or 10%, compared to the
three months ended December 31, 2021. Our gross profit margin
increased from 11% to 12% for the three months ended December 31,
2022 compared to the three months ended December 31, 2021.
Selling, general, and administrative expense for the three
months ended December 31, 2022 were $14.8 million, a decrease of
$1.3 million, or 8.6%, compared to the three months ended December
31, 2021.
Condensed Consolidated
Statements of Operations
Year Ended
(Amounts in thousands)
December 31, 2022
December 31, 2021
Revenue
$
1,161,431
$
1,279,186
Cost of construction
1,020,497
1,164,998
Gross profit
140,934
114,188
Selling, general, and administrative
expenses
58,231
58,136
Operating income
82,703
56,052
(Gain) loss on investments, net
76
(898
)
Other income, net
(2,204
)
(2,780
)
Interest expense
8,891
7,255
Earnings before income taxes
75,940
52,475
Income tax expense
13,290
10,945
Net income
62,650
41,530
Net income attributable to noncontrolling
interests
2,108
2,810
Net income attributable to Southland
Holdings
$
60,542
$
38,720
Revenue for the year ended December 31, 2022 was $1,161.4
million, a decrease of $117.8 million, or 9.2%, compared to the
year ended December 31, 2021.
Gross profit for the year ended December 31, 2022 was $140.9
million, an increase of $26.7 million, or 23.4%, compared to the
year ended December 31, 2021. Our gross profit margin increased
from 9% to 12% for the year ended December 31, 2022 compared to
year ended December 31, 2021.
Selling, general, and administrative expense for the year ended
December 31, 2022 were $58.2 million, an increase of $0.1 million,
or 0.1%, compared to the year ended December 31, 2021. Selling,
general, and administrative expense as a percent of revenue were 5%
for the year ended December 31, 2022 compared to 4.5% for the year
ended December 31, 2021. For the year ended December 31, 2022 we
incurred approximately $2.2 million of costs related to Southland
becoming a public company.
Segment Revenue
Three Months Ended
(Amounts in thousands)
December 31, 2022
December 31, 2021
% of Total
% of Total
Segment
Revenue
Revenue
Revenue
Revenue
Civil
$
84,021
28.5
%
$
98,347
27.0
%
Transportation
210,783
71.5
%
265,279
73.0
%
Total revenue
$
294,804
100.0
%
$
363,626
100.0
%
Year Ended
(Amounts in thousands)
December 31, 2022
December 31, 2021
% of Total
% of Total
Segment
Revenue
Revenue
Revenue
Revenue
Civil
$
305,324
26.3
%
$
391,629
30.6
%
Transportation
856,107
73.7
%
887,557
69.4
%
Total revenue
$
1,161,431
100.0
%
$
1,279,186
100.0
%
Segment Gross Profit
Three Months Ended
(Amounts in thousands)
December 31, 2022
December 31, 2021
% of Segment
% of Segment
Segment
Gross Profit
Revenue
Gross Profit
Revenue
Civil
$
17,149
20.4
%
$
(1,800
)
(1.8
)%
Transportation
18,707
8.9
%
41,378
15.6
%
Gross profit
$
35,856
12.2
%
$
39,578
10.9
%
Year Ended
(Amounts in thousands)
December 31, 2022
December 31, 2021
% of Segment
% of Segment
Segment
Gross Profit
Revenue
Gross Profit
Revenue
Civil
$
45,464
14.9
%
$
40,913
10.4
%
Transportation
95,470
11.2
%
73,275
8.3
%
Gross profit
$
140,934
12.1
%
$
114,188
8.9
%
EBITDA Reconciliation
Three Months Ended
Year Ended
(Amounts in thousands)
December 31, 2022
December 31, 2021
December 31, 2022
December 31, 2021
Net income
$
19,538
$
14,834
$
60,542
$
38,720
Depreciation and amortization
10,534
12,217
45,697
47,468
Income tax expense (benefit)
(455
)
8,730
13,290
10,945
Interest expense
2,574
1,934
8,891
7,255
Interest income
(143
)
17
(172
)
(47
)
EBITDA
$
32,048
$
37,732
$
128,248
$
104,341
Backlog
(Amounts in thousands)
Backlog
Balance December 31, 2021
$
2,218,573
New contracts, change orders, and
adjustments
1,892,946
Gross backlog
4,111,519
Less: contract revenue recognized in
2022
(1,137,634
)
Balance December 31, 2022
$
2,973,885
Condensed Consolidated Balance
Sheets
As of
(Amounts in thousands)
December 31, 2022
December 31, 2021
Cash and cash equivalents
$
57,915
$
63,342
Restricted cash
14,076
47,900
Accounts receivable, net
135,678
126,702
Retainage receivables
122,682
110,971
Contract assets
512,906
374,624
Other current assets
24,047
22,977
Total current assets
867,304
746,516
Property and equipment, net
114,084
156,031
Right-of-use assets
16,893
15,816
Investments - unconsolidated entities
113,724
103,610
Investments - limited liability
companies
2,590
1,926
Investments - private equity
3,261
3,925
Goodwill
1,528
1,528
Intangible assets, net
2,218
3,215
Other noncurrent assets
3,703
3,186
Total noncurrent assets
258,001
289,237
Total assets
1,125,305
1,035,753
Accounts payable
$
126,385
$
146,455
Retainage payable
33,677
32,706
Accrued liabilities
121,584
115,057
Current portion of long-term debt
46,322
41,333
Short-term lease liabilities
16,572
20,048
Contract liabilities
131,557
111,286
Total current liabilities
476,097
466,885
Long-term debt
227,278
195,597
Long-term lease liabilities
10,032
13,496
Deferred tax liabilities
3,392
5,962
Other noncurrent liabilities
48,622
51,462
Total long-term liabilities
289,324
266,517
Total liabilities
765,421
733,402
Noncontrolling Interest
10,446
11,057
Members’ capital
327,614
267,831
Preferred stock
24,400
24,400
Accumulated other comprehensive income
(2,576
)
(937
)
Total equity
359,884
302,351
Total liabilities and equity
$
1,125,305
$
1,035,753
Condensed Consolidated
Statement of Cash Flows
Year Ended
(Amounts in thousands)
December 31, 2022
December 31, 2021
Cash flows from operating
activities:
Net income
$
62,650
$
41,530
Adjustments to reconcile net income to net
cash used in operating activities
Depreciation and amortization
45,697
47,468
Deferred taxes
(2,103
)
(271
)
Gain on sale of assets
(3,377
)
(5,168
)
Foreign currency remeasurement loss
(gain)
548
136
(Earnings) from equity method
investments
(9,299
)
(7,239
)
TZC Investment present value accretion
(2,355
)
(2,265
)
Gain on trading securities, net
(260
)
(1,145
)
(Increase) decrease in accounts
receivable
(18,432
)
(7,412
)
Increase in contract assets
(138,677
)
(2,116
)
Increase in prepaid expenses and other
current assets
(1,293
)
(765
)
(Increase) decrease in ROU assets
(1,315
)
5,990
(Decrease) increase in accounts payable
and accrued expenses
(13,546
)
26,480
Increase (decrease) in contract
liabilities
20,049
(188,654
)
Increase (decrease) in operating lease
liabilities
1,264
(5,974
)
Other
(5,753
)
8,832
Net cash used in operating activities
(66,202
)
(90,573
)
Cash flows from investing
activities:
Purchase of fixed assets
(4,765
)
(18,797
)
Proceeds from sale of fixed assets
10,064
11,251
Loss on investment in limited liability
company
336
248
Purchase of trading securities
—
(391
)
Proceeds from the sale of trading
securities
927
175
Purchase of interest of other
investments
—
(150
)
Capital contribution to investees
(1,000
)
(835
)
Net cash provided by (used in) investing
activities
5,562
(8,499
)
Cash flows from financing
activities:
Borrowings on line of credit
75,000
67,000
Payments on line of credit
—
(82,000
)
Borrowings on notes payable
281
206,172
Payments on notes payable
(42,934
)
(153,587
)
Payments of deferred financing costs
—
(260
)
Advances to related parties
(1,603
)
(1,571
)
Payments from related parties
5
1,260
Payments on finance lease
(8,157
)
(4,716
)
Capital contributions from noncontrolling
members
—
926
Distributions
(2,457
)
(2,620
)
Net cash provided by financing
activities
20,135
30,604
Effect of exchange rate on cash
1,254
(686
)
Net decrease in cash and cash equivalents
and restricted cash
(39,251
)
(69,154
)
Beginning of period
111,242
180,396
End of period
$
71,991
$
111,242
Supplemental cash flow
information
Cash paid for income taxes
$
10,392
$
14,093
Cash paid for interest
$
9,044
$
7,519
Non-cash investing and financing
activities:
Lease assets obtained in exchange for new
leases
$
19,558
$
16,051
Assets obtained in exchange for notes
payable
$
4,091
$
—
Conference Call
Southland will host a conference call at 10:00 a.m. Eastern Time
on Thursday, March 23, 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,
transportation and facilities, marine, steel structures, water and
wastewater treatment, and water pipeline end markets. Southland is
headquartered in Grapevine, Texas.
For more information, please visit Southland’s website at
www.southlandholdings.com.
Non-GAAP Financial Measures
This press release includes certain unaudited financial measures
not presented in accordance with generally accepted accounting
principles (“GAAP”), including but not limited to earnings before
interest, taxes, depreciation, and amortization (“EBITDA”),
backlog, 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.
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/20230322005751/en/
Southland Contacts: Cody Gallarda EVP, Chief Financial
Officer cgallarda@southlandholdings.com
Alex Murray Corporate Development & Investor Relations
amurray@southlandholdings.com
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