SLND - Earnings call transcript Q4 2023 (2024)

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Good morning. My name is Joanna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Southland Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions]

Thank you. your begin may you conference. Alex,

and and Good Quarter Murray, the Development Fourth to Full morning, Director Year Corporate Alex everyone, and is XXXX Southland This welcome Conference Relations. Investor of Call.

Cody are Frank and and Officer; Vice Joining me Gallarda, Officer. Renda, Executive today the Financial Chief President Executive and Chief President

Section like Securities the everyone statements begin, that Act meaning the Before Securities within and Securities call of Section conference the the I'd Litigation of of we of XXE this of XXXX to Reform remind XXA Exchange XXXX. Act XXXX, forward-looking of may Private contain Act

Forward-looking statements performance. facts certainties of are future neither historical nor

statements Forward-looking and control. Southland's of are uncertain outside

any results forward-looking statements, and of those Southland's financial any differ may we projected do and not statements. materially to should in you statements. undertake update these from on these actual Therefore, duty forward-looking condition rely not

risks December some see year Form discussion ended of the For last the that night. Factors SEC of XX-K section Risk please a could our XX, filed was of the affect with results, the XXXX for that

website. Investor refer page will can and reconciliations find be will call, release financial on this the non-GAAP press found the We you in related our which measures, of to to also conference Relations

With that, Frank. turn over call to I'll now the

you, Full Southland's and Year Thank Alex. thank and morning, joining Fourth XXXX Quarter Good you for Conference Call.

North a quarterly Before throughout I'd extend to moment take gratitude annual my discussing our to and teams America. our like to exceptional results,

and subcontractors clients significant in employees, Our achieved past milestones the have year.

Facility Merit Year multiple to including and Orlando. the our the rail in highlight Lateral of of much of bridges Supply in Juan We Test rail SunTrax the construction Project. XXXX. We a Brightline anticipated Awards XX moment successes the services Project for Water Connected/Automated project work, to of awards part Vehicle our from completed San Let's of some marking start Miami received operational our take Florida, as outstanding the for E&R, expansive

secured the Year AWWA proficiency in repair Michigan, showcasing Creek our emergency Rehabilitation Tunnel also and award, the Project Bear Our project of work.

excellence T-Mobile These accomplishments by underscore Our the the corporate also unwavering our equipment employee demonstrating team our during teams enablement quality America, of highest honored to delivering for work. and dedication in the capability commitment across North our was year.

fourth quarter, million in and segment, $XX revenue charges was strong and year driven mixed and to operations full year business. posted our cash $XX quarter. impacts of Materials reported and by the billion of $XX flow results. for Turning & fourth segment gross offset in million profit We by profit from quarter the Transportation gross We million. our of results Civil Paving our was in the from our $XXX unfavorable a in million Revenue positive $X.X performance fourth from

backlog a X.X% with a amount our We in have completed brought M&P the and to to million substantial be backlog approximately $XXX the down smaller of work of XXXX. expect remaining of to portion complete or remaining in XXXX work

completing projects We acknowledge work. legacy our from persist this continue the we to headwinds face and challenges

considerable a completing progress the in settle a on cash We claims focus these continue generating to projects expect opportunity of number make have on and to legacy to with XXXX.

confidence to We forward. We performance. to anticipate our strong this continue are which moving also demonstrating bolstering continue momentum projects core with new business, gain our trend sustained in in success

million Florida, County Dallas, Complex Water the in project Pond in and Gates the contribute West Filter $XX $XX XX are million $XXX Jacksonville, in $XXX the The million XXXX. This up, XXXX expect Florida, a results we Airport amount Elm project to ramping and Pipeline Water million International XXXX $XXX Expansion million US project, Atoka in Treatment or Shands compared in late overall we projects to the the to Texas. Clearwater, won Fork Denver Bridge larger Oklahoma, that SRXX Plant them in Pinellas includes

continue to very work a win limited also bidding environment with We favorable competition. in

backlog. bids project those great last billion billion converting of We with have in opportunities proposals awards quarter ended We XXXX. had did of and $X.X on alone. over $XXX billion and the year fourth job We $X awards pending. million call, of of in we a our On the $X new mentioned we booked new

increased $X.XX XX% Our backlog of billion sequentially at quarter. end the third from the

of suspender discussed last in Rehab Bay constructed and In the Kennedy our This Project booked City, Bridge, $XXX XXXX. We known formerly the also bridge, San new in rehab included main was original we We approximately the segment, in New Bridge Oakland Robert Bridge as on project Transportation during our quarter. F. million California. Triborough York call. the awards the Francisco ropes cable were awarded that

this built that the and of at projects Eastern span years XXX bridge structures original span also the X XXXX ago. originally nearly the completed need XXXX. were Western this These upgrade in we these bridge and demonstrate in have built to We

infrastructure the across We like aging opportunities from country. are seeing this

new Dakota. the segment, of Civil during is program. an included Red a billion our of over project million supply awards $X water phase This This in million approximately $XXX project quarter. initial booked North we Valley $XX In the phase the River of

were project a the tunnel resource awarded during in also quarter. Dallas water We several and projects

on of spending markets. agencies country. the We state our infrastructure to see healthy are across environment continue Local a end bidding critical projects all in and

in the passed in We spending. bipartisan have innings trillion of impact from the an this but bidding the early opportunities Congress $X.X in also by still months few are the that past uptick from bill IIJA seen was

been to less lakes investment largest include allocations support allocated. for Amtrak's The of in and $XX.X the the support replace funding a Northeast and and Biden rail of announced has allocation of repair bridge the The to infrastructure. American $X.X than also announced water water Corridor. in the to IIJA infrastructure. for half recently administration tunnel history this upgrades $XX Recently to and XX from billion from This billion Northeast infrastructure projects the clean provides nation's water in clean water is billion bill the funding funding IIJA

allocations certain bid recent to these on We as from expect out come the they to in years. coming bid packages

Florida. We and South, infrastructure the infrastructure including growth components population strong some response geographical in Texas their years. markets are federal from tracking in resource to of several in utilizing in are transportation substantial budget are large The to These surpluses water critical and of recent expanding also states and key grants for states programs our expand funding communities.

we bid Juan March. In coming to bid San we the to clinic, expect includes in expect months, the of work. water dollars several This on which lateral treatment billion

bid DuPoint also green Mattox packages Galveston and pass Texas from in Florida. expect We Bridge SRXX to the the on in

successes of has for accomplished. challenging In our team a summary, I'm was XXXX operational year proud Southland, but the

local primarily in & Materials down. which on legacy business, the down solely are great our what in excited in about continue coming coming opportunities spending on weighed and markets focusing were our and issues opportunities to the by behind will business. us the about we years. We We've results forward core our and in over issues quarters the these our have Our robust federal look putting a Paving maintained positive state wind to outlook business

will I to turn that, for financial a update. Cody With over call now the

and performance overview I will ended good during Frank, year fourth of financial our an full everyone. morning, and the XXXX. quarter discuss Thanks,

information discussion filed that in and night. and find XX-K last financial Form were and on the analysis can additional You statements, details footnotes, management's

costs business. million, Gross $XX the Paving for in expenses, was million With the from for to the and driven in $XX by up the million from profit the public to XXXX. margin was our the respect expenses, the was million, fourth in non-cash general Materials quarter quarter, was primarily were XXXX. quarter the mainly profit additional compared $XX X.X% quarter same same fourth in was company in $XX of Gross in period an & period million fourth in increase administrative charges down expense. same to debt to revenue $XXX the quarter $XX and XXXX. million in XX.X% due This stock period million, bad $X.X unfavorable compensation compensation-related including prior year.Selling, This compared of

Interest higher the The Income in debt was in of $X.X to period to tax for an same million benefit a last expense balances. attributable to increased compared year. the was of $X same tax borrowing quarter million, million increase quarter expense compared for and costs the period the XXXX. difference $X was $XXX,XXX

While forecasted we on primarily used a quarter to in results of tax during income was pretax year-end due the this true-up the loss, expense recognized in XXXX. an interim periods

and XXXX More calls, in more status of GILTI allowance numerous found valuation S-Elections, Form S-Elections, were our which prior changes, no around information longer tax inclusion XXXX. earnings XX-K. be discussed recently in filed can included revocation in As subchapter to us the the our available

or earnings to loss in year. amortization period fourth the negative $XX million reported interest, $X the income of depreciation same the XXXX. taxes, We of in of of for million compared last net compared net produced quarter share quarter, EBITDA we same EBITDA, per the $X.XX million $X In a $XX in million to period and before or

on Now segment for quarter. to touch the performance

segment million, XXXX. Civil of from had period of Our $XX revenues in million increase same an the $XXX

same Our $X prior Civil year. an in was the gross segment period million, from profit increase million the $XX of

our segment had gross As a XXXX. the percentage Civil compared margin XX% of for in revenue for to of the period quarter, same profit XX%

our a in period Transportation segment quarter, $X XXXX. decrease million revenues of million, $XXX had same from For the the of

prior million, segment $X in Transportation year. million from $XX the the a a same in was of Our profit gross decrease gross loss period

X.X% segment compared had quarter, a As positive X.X% to same a in for percentage negative gross of profit period the XXXX. revenue of Transportation the margin for our

primarily $XX order the additional Texas segments M&P The gross were contributed a profit Materials future work. line revenue a and to on rejected past, of driven million paving and current to change & The fourth negative project impacted charges by in Paving $XX million that in quarter. business in

revenue excluding operating would $XXX and results & $XXX million X.X%. for been for of profit revenue of results core a have profit million of XX.X%. gross core profit margin gross of Materials Materials Paving, excluding million margin and would in been the Paving, $XX quarter, of in gross have $XX segment, million this results Consolidated profit & a gross of Our

results. on touch Now to XXXX year full

December $X.X XXXX. $XX million from decrease from year million, the full Our $XXX full profit a revenue XXXX year billion, the was flat Gross the prior in for year was year. ended XX,

Our margin million to the in was Materials compared Paving to during XX% of the unfavorable $XX was driver from charges The X% XXXX XXXX. profit attributable gross in business year. & main

$X million increase prior XXXX. $X were of in including year the and XXXX primarily costs full costs year increase $X X% stock to million as were the expenses, a for the percentage to year compared for ended million revenue public X.X% The XX, in million, expense. XXXX an the compensation in expense, December bad SG&A for increase year. $X a XX, non-cash driven debt company compensation-related million by December costs of was SG&A $XX compared increase ended

of a $XX increase borrowing effective an the of for XXXX. of tax higher effective million for pretax the $XX income on was attributable loss $XX million rate December expense tax Interest year rate million, $XX debt to XX, of an ended $X of income expense costs was XX%. tax to reported in We an represents which year increased tax an difference compared XXXX This and of to $XX benefit The million, pretax on compares million or million of XXXX. XX% balances.

included certain revocation XXXX Form subchapter As go-forward and information on of be be available tax in local international which we items were range and us filed the More more taxes. expect recently position our XX% the tax state, around GILTI to discussed XX% in valuation in rate can the to inclusion certain On S-Elections, non-deductible prior to no allowance longer credits, calls, changes, a in our the tax depending XXXX. basis, S-Elections, and found XX-K. numerous

the value changes an compares in million net by XXXX, backing of or a compared the of for million to $XX to liability last fair transaction-related or negative income income million after from net earnout of out $X.XX year. share reported of income expenses. year. GAAP an This year negative share We $X.XX the adjusted We net year loss we the per reported offset other $XX $XX per in million net in adjusted of last $XX loss

full the ended Now to XXXX. for year on our touch segment performance

ended million, increase $XX an XX, revenues Civil the from $XXX million December had XXXX. of For XXXX, year full segment our full of year

million segment from Civil $X profit XXXX. of the year year gross for was million, Our $XX full a decrease

XX.X%, gross As of prior our for period. improvement the had year XXXX, the an margin full segment revenue XX.X% a from of ended for Civil profit percentage

of approximately full the XXXX, million, of from our full XX, ended Transportation For had $XXX revenues decrease million segment XXXX. year a December $XX year

and Our loss gross to full gross Transportation $XX profit year million the for segment $XX of year XXXX. million a was from compared

margin profit ended year had a full the XX.X% our gross As of Transportation year. segment negative X.X% for last of percentage to XXXX, revenue compared

and profit $XXX Paving revenue $XX & the Materials contributed to The business million to year. in gross negative line million

of Materials been would $XXX this for have which Materials XX.X%. profit of quarter a and operating Consolidated and of have excluding profit results million of a revenue gross $XXX the profit been year & excludes in in $XXX margin of Our margin million results segment, core profit & revenue would of gross gross million million for $XX XX.X%. Paving Paving gross

balance Turning to sheet. the

secured we $XXX December million, net year As $X restricted $XX XX, We of of quarter this finished of the cash cash net borrowings. notes million XXXX, inclusive with of paid of debt on our and million. new down

debt conversion, This stock net had $XXX converted end the forma part XXXX. closing Thus, million using of of with we As of at debt of and XX, preferred we million figures stock XXXX, as pro net previous December compares XXXX. in million XXXX of preferred $XXX $XX.X debt. early the of to our end transaction the of

with ended billion $X.XX XXXX We backlog. in

this to expect XX% approximately in burn We of XXXX. backlog

in As encouraged remain Frank prepared new and remarks, highlighted with his bidding we award potential. our outlook

you to operator the your for and Southland. your in your Thank interest I'll now call time the pass back questions. for

M&P on wanted the start jobs. I to

jobs to the should stopped as losses that, at positives because question follow-up do slow? lot XXXX in the like analysts, bake some in least on were there in my or is, a to you start year? do losses but jobs, further M&P Sorry of we then And think this those quarter,

Yes. Thanks, Adam.

of the and contingency margins M&P for known bulk for the middle and estimated the reduced of to We've year. items. our completed be maintained all loss the date recorded we completion work XXXX, we've the expect of So this

these last we'll of been aware, As can these completed. to jobs get do everything challenging handful and has we're completing to projects all we continue

positively We headwinds recorded or Any margin known. the will time finish still, be when have may Adam, impact additional this issues that is some to negatively work.

get in Texas. quarter change And in reflect plan owner. to feel we a We claims it going done. the due challenge from we're the was have The took in denied specific the that to the But change denied to was project that order. a solid primarily like the we're for fourth charge order we due pursue to money a now

and -- Going forward, to and expect expect our will be known less going we we of to the plan, it continue backlog we -- execute forward. less our

follow-up about backlog in might questions, have in $XXX this million be and Adam, Yes. left one of M&P. your we

we're To than on total So quarters to to those be in the X best taking. done X.X% initial charges down guys transparent should about have what to our the you recorded to X%, that. defer less subsequent charges you it. our of QX backlog. reason your question and and for all We've I'll X of and model

our change or complete are and from of on entirely site. of claims that CIE we've substantially half Approximately complete the orders demobilized balance legacy projects that comprised is

that being projects, be off-site and a jobs in owners so finished. had bit are these And We're the we've and so. should COVID, to getting so Adam. talked about a closer, as did little obviously, office weren't the fund the previously, during we lot And of just the said, claim

complete. they're Now

with them are claims these and table get finished. owners. as every owners, the set to getting half settlements get to with to And are starting are far closer. in getting trying up. mediations We're closer we're get touch attacking Now And as hopefully, day

a on margins. the Just follow-up gross

portion vast As we when to that the we it, billion to through and have the under? that billion of strong on of $XXX we we year that bidding project XXXX, decent the 'XX? business, call this on aggressive? should a you're Or work legacy be the forward going could too is throughout get the projects talked assumption the about calendar majority into that double-digit gross right work, on you Is go $X.X going margins

remarks. won touched to up up backlog Christian, XXXX in show continue XXXX about excited that really we've to show prepared and The are to should we projects in picked on up in The we going XXXX really in we ramp late projects the start to We're more. the that mid-'XX, start picked that ramp in 'XX. as start and to

operate continue markets. in and We show to our Civil and segment strong strongly results core

about 'XX we And extremely and into optimistic going so backlog 'XX. that the have we're

to just On we Christian, in what basis, that low an some shared maybe in reiterate opening M&P double-digit margin we the range. remarks. ex were of

So to work the to we've backlog those to in as burn. of past. obviously forward been through results able the getting types we back legacy that produce Look

than starts longer potential side. are, transportation of particularly nature, for by some their the quicker projects and Those shorter projects. see Civil some definitely lead burn on We usually that, our

inside 'XX. up early we potential believe for new of may we that here awards some there's in that and particularly So do pick

We're pick near about $X healthy now. there billion and of record pending that Christian. expect million see numerous talked in remember And sitting share opportunities that in a able good up pursuing the we opportunities into to new We're and We worth to work be We call, Yes. and right out environment last of $X And pipeline out an we you backlog in. to extremely $XXX sitting segments the of incredible if contract wins. beyond. bids. there, XXXX we operate continuing the billion all see convert were on

optimistic profitability we're remain work, to So going very and focus be sustainably. is good about our first winning then to and disciplined growing and focus on

Yes.

there's our come $XX headway up seen million into in through We the the draw the cash selecting And look have made been starts for we've there the is, we will of improve. curves have ops. When at cash So work Frank XXXX. on our effect on of from and year-over-year has flow fruition we that that focused year. to potential to net going to some mentioned, that out from one favorable projects ramp as QX, move significant cadence-wise, and expect that as through with yes, respect continued And to trend QX. itself naturally course reverse the flow working to it's flow always the we capital, operations, positive seasonality, as over you cash to think

January, wet we a here had up but coming pretty we the to expect months. in Yes, pick

drag. little it of So a be bit a could

for last one me. And

what about your embedded sorry balance? within talked the little some And if cash can but mind see color are do potentially claims, items the a we when and providing ticket missed on big resolutions? You you it, claims more

Yes.

determining been With we've claims historically question. to that the respect built the to We opportunity years what seeing deserve of to drivers be great lot to in over but willing So we're information expect of we and time significant compensated are completed up very going several a disclosed some progress larger We we do that in of that that. 'XX, settle to some out that, projects have do difficult in for great are these a those. and settle the of be on. responsible price there have

to to expectations in but or color additional potential get it individual resolution some of table no as do go, 'XX. So as on far the settlements we expect

pick impressive We up had in an book-to-bill QX.

close to the I going that basis, to a X.X. But profitability these in eyes wide we're all think, respect we're flow. year-over-year look When backlog, ample record opportunity with open return and of you near best be pipeline, cash maintaining opportunities on into would

are add about doing to to that, anything potential you'd responsible backlog with Frank, be going the we very to do so. see increase So for but that?

Hantman This for on Julio. is Alex

just clarification. is question quick First a

the on actual more job? risk? side, function M&P of of would you the loss procurement execution was the the it a say So was Or

change I in say QX, between a I specific that those execution it you the bulk that charge options, -- drove Yes. could was There would order risk. were if choosing QX. guess, of you was

as we order change the event to was negotiation. specific were a that means But to charges through contractually continue work QX recovery -- will project. other We this pursue complete available to

a out bit. moving just And it. Got

is help the Transportation a you get Transportation sense performing better could how Midwest core ex bridge? M&P, bridge, on us for So segment, American

year margins. over was ex a of little just breakout Transportation. QX M&P Transportation the X% share ex M&P Full can XX%. I under M&P from Yes. was In

lot for the see in we that that reflects business, margin of in we that performance do potential a where certainly segment. work not but have good the So

one for me. last And Great.

guys? expense, interest XXXX assuming on for you Just what for should be we

think, when see We Hopefully, at look expense under just a we're that time. you hit base I the somewhat will rates decrease million quarter fourth $X mark. in it stabilizing. interest quarter over

QX debt think probably our were a structure out current in modeling we is good where place So with starting for I XXXX.