Southland Holdings, Inc. ((SLND)) has held its Q4 earnings call. Read on for the main highlights of the call.
Southland Holdings, Inc. recently held its earnings call, revealing a mixed sentiment among its stakeholders. The company celebrated significant achievements in project completions and safety milestones, alongside a robust pipeline of future projects. However, these positive notes were tempered by declines in revenue and profitability, increased interest expenses, and ongoing challenges with legacy projects. While strategic financial moves and a strong backlog suggest potential for future improvement, the current financial performance remains a concern.
Successful Completion of High-Profile Projects
Southland Holdings showcased its capability to deliver complex infrastructure projects by completing several significant undertakings, including the SR 80 bridge in Florida, East Haddam Bridge in Connecticut, and a cruise destination project in the Caribbean. These achievements underscore the company’s expertise in managing and executing large-scale infrastructure projects.
Safety Milestone Achievements
The company has demonstrated a strong safety culture, with projects like Cielo 26 and Mill Creek Drainage Relief Tunnel surpassing one million safe work hours without a loss. This achievement highlights Southland Holdings’ commitment to maintaining high safety standards across its operations.
Strong New Core Backlog
Ending the quarter with a $2.57 billion backlog, Southland Holdings has secured a strong pipeline for future growth. New core projects make up $2.3 billion of this backlog, indicating a promising outlook for the company’s future endeavors.
Strategic Financial Initiative
In a move to strengthen its financial standing, Southland Holdings’ founders converted $20 million in promissory notes to common stock. This strategic initiative not only improves the balance sheet but also reinforces confidence in the company’s business prospects.
Strong Pipeline of Upcoming Opportunities
The company is tracking several large-scale projects, including the $7 billion Iona Island wastewater treatment plant and the $2 billion Northern Colorado Water Glade Reservoir Program. These projects represent significant opportunities for growth and expansion in the coming years.
Decline in Fourth Quarter Revenue and Profit
Southland Holdings reported a decline in fourth-quarter revenue, which stood at $267 million, a decrease of $49 million from the same period in 2023. Gross profit also fell to $8 million from $21 million in the prior year, reflecting the financial challenges the company faces.
Negative Full-Year Financial Results
The company experienced a full-year net loss of $105 million, or negative $2.19 per share, compared to a net loss of $19 million, or negative $0.41 per share in 2023. This significant increase in losses highlights the financial difficulties Southland Holdings is currently navigating.
Increased Interest Expenses
Interest expenses for the fourth quarter rose by $3.9 million to $9.6 million compared to the previous year. This increase is attributed to higher debt balances and borrowing costs, further impacting the company’s financial performance.
Legacy Project Challenges and Dispute Resolutions
Unfavorable adjustments related to legacy projects negatively impacted results by $27 million. These adjustments were driven by dispute resolutions and increased completion costs, posing ongoing challenges for Southland Holdings.
Forward-Looking Guidance
Despite the current challenges, Southland Holdings provided an optimistic outlook for the future. The company maintains a backlog of $2.57 billion and expects to achieve positive EBITDA by the end of 2025. With a focus on new core projects delivering double-digit margins and a favorable industry environment, particularly in Texas and Florida, Southland Holdings anticipates capitalizing on a robust pipeline of opportunities. The company plans to burn approximately 39% of its backlog in 2025, aiming for strong cash flow from operations supported by the completion of legacy projects and new core work.
In conclusion, Southland Holdings, Inc.’s earnings call presented a mixed picture. While the company celebrated significant achievements in project completion and safety, financial challenges remain a concern. With strategic initiatives and a strong backlog, the company is poised for future growth, but it must navigate its current financial hurdles carefully.