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 |
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|
||||||||
|
|
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.
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Contacts
Southland Contacts:
Cody Gallarda
EVP, Chief Financial Officer
cgallarda@southlandholdings.com
Alex Murray
Corporate Development & Investor Relations
amurray@southlandholdings.com
