Southland (SLND) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $251.5 million, down 2.1% year-over-year, with a net loss of $46.1 million, or $(0.96) per share, compared to a net loss of $12.8 million, or $(0.27) per share, in Q2 2023.

• Gross loss increased to $40 million, primarily due to non-recurring settlements in the Materials & Paving (M&P) business, which reduced gross profit by $39.7 million.

• Positive cash flow from operations was $27.4 million in Q2 2024.

• Backlog increased to $2.74 billion as of June 30, 2024, with 39% expected to be recognized as revenue in the next 12 months.

• The quarter was impacted by $40 million in unfavorable adjustments from settling legacy project disputes.

Financial highlights

• Q2 2024 revenue decreased by $5.4 million year-over-year; gross margin was -15.9% versus -13.2% last year.

• Adjusted net loss for Q2 2024 was $46.1 million ($(0.96) per share), compared to $35.4 million ($(0.76) per share) in Q2 2023.

• Adjusted EBITDA for Q2 2024 was $(49.9) million, compared to $(42.2) million in Q2 2023.

• Cash and cash equivalents at quarter-end were $52.4 million, with total liquidity (including restricted cash) at $69.2 million.

• Interest expense increased to $6.7 million, up $2.4 million year-over-year, due to higher debt balances.

Outlook and guidance

• Expect to collect $58 million from dispute settlements in Q3, strengthening the balance sheet.

• Anticipate substantial completion of M&P projects by mid-2025, with remaining backlog under $200 million.

• Civil segment backlog up 38% from year-end, with revenue and margin growth expected to flow into future quarters.

• Management remains confident in the core business and long-term outlook despite legacy project headwinds.

• A new long-term debt facility is expected to close before a required $10 million principal reduction in September 2024.