EX-99.1 2 southlandhold_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

Southland Announces Fourth Quarter and Full Year 2022 Results

 

GRAPEVINE, Texas, March 22, 2023 (Business Newswire) -- 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.

 

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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%

 

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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 

 

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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 

 

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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   $— 

 

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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.

 

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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.

  

Southland Contacts:

Cody Gallarda

EVP, Chief Financial Officer

cgallarda@southlandholdings.com

 

Alex Murray

Corporate Development & Investor Relations

amurray@southlandholdings.com

 

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