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Southland Announces Fourth Quarter and Full Year 2022 Results

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.

Contacts

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