Southland (SLND) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $173.3 million, down 44.5% year-over-year, with a net loss of $54.7 million, driven by legacy project charges and non-recurring settlements.

• Gross loss was $51.1 million, with a gross margin of (29.5)%, compared to gross profit of $29.5 million and margin of 9.5% in Q3 2023.

• Backlog reached $2.74 billion at quarter-end, the highest in company history, providing strong visibility into 2025.

• Strategic initiatives included a $42.5 million real estate transaction and a $160 million term loan facility, improving liquidity and extending debt maturity to 2028.

• Management expects to return to profitability in 2025 as legacy projects wind down and new core projects ramp up.

Financial highlights

• Q3 2024 revenue was $173.3 million, down from $312 million year-over-year, mainly due to legacy headwinds, hurricane impacts, and project timing.

• Net loss attributable to stockholders was $54.7 million, or $-1.14 per share, compared to net income of $3.8 million or $0.08 per share in Q3 2023.

• EBITDA was $(58.7) million, down from $22.3 million in the prior year.

• SG&A costs rose to $17.5 million, and interest expense increased to $7.5 million.

• Cash and cash equivalents at September 30, 2024, were $91.4 million, with total debt of $318.3 million.

Outlook and guidance

• Backlog at September 30, 2024, was $2.74 billion, with 39% expected to be recognized as revenue in the next 12 months.

• Remaining legacy backlog expected to be substantially complete by end of 2025, with minimal impact beyond.

• Management anticipates sequential revenue recovery in Q4 and a return to profitability in 2025.

• Expects significant cash inflows from claim settlements in 2025.

• Effective tax rate projected at 20%-24% going forward.