LEGATO(LGTO) - 2023 Q3 - Quarterly Report

Financial Performance - Total revenue for Q3 2023 was $312,472,000, a decrease of 6.9$335,125,000 in Q3 2022[16] - Gross profit for Q3 2023 was $29,529,000, down from$62,410,000 in Q3 2022, representing a decline of 52.7%[16] - Net income for Q3 2023 was $4,791,000, a significant decrease from$36,123,000 in Q3 2022, reflecting a decline of 86.7%[16] - Operating income for Q3 2023 was $14,282,000, down from$46,804,000 in Q3 2022, a decrease of 69.5%[16] - Comprehensive income attributable to Southland stockholders for Q3 2023 was $2,173,000, compared to$38,939,000 in Q3 2022, a decrease of 94.4%[18] - For the nine months ended September 30, 2023, Southland Holdings reported a net loss of $11,376,000 compared to a net income of$42,478,000 for the same period in 2022[25] - Net income attributable to Southland Stockholders for the three months ended September 30, 2023, was $3.8 million, while for the nine months ended, it was a net loss of$13.7 million[103] - Gross profit for the nine months ended September 30, 2023, was $14.7 million, a decrease of$90.4 million, or 86.0%, compared to the same period in 2022[141] Assets and Liabilities - Total assets increased to $1,179,954,000 as of September 30, 2023, compared to$1,125,305,000 as of December 31, 2022, marking a growth of 4.8%[15] - Total liabilities rose to $913,785,000 as of September 30, 2023, up from$765,421,000 at the end of 2022, an increase of 19.4%[15] - The company’s total stockholders' equity decreased to $266,169,000 as of September 30, 2023, from$359,884,000 at the end of 2022, a decline of 26.0%[15] - The company reported a total debt of $309.6 million as of September 30, 2023, an increase from$273.8 million as of December 31, 2022[74] - As of September 30, 2023, long-term debt was $309.1 million, with$47.8 million due within the next twelve months[176] Cash Flow and Financing - Cash and cash equivalents decreased to $32,211,000 as of September 30, 2023, down from$57,915,000 at the end of 2022, a decline of 44.3%[15] - Cash flows used in operating activities for the nine months ended September 30, 2023, were $36,588,000, an improvement from$70,936,000 in the same period of 2022[25] - The company reported a net cash provided by financing activities of $11,730,000 for the nine months ended September 30, 2023, down from$15,695,000 in the same period of 2022[25] - Cash paid for interest increased to $12,704,000 in the nine months ended September 30, 2023, compared to$6,464,000 in the prior year[25] - The company has $90 million drawn on its revolving credit facility, with$10 million available as of September 30, 2023[76] - In July 2023, the company refinanced approximately $76.4 million of existing secured notes, resulting in a new equipment note of$113.5 million at a fixed rate of 7.25%[77] Revenue Segmentation - Civil segment revenue for Q3 2023 was $90.7 million, a 27$71.4 million in Q3 2022, while Transportation segment revenue was $221.8 million, a decrease of 16$263.7 million in Q3 2022[72] - Revenue for the nine months ended September 30, 2023, was $844.2 million, down 2.6$866.6 million for the same period in 2022[72] - Gross profit for the Civil segment in Q3 2023 was $12.5 million, representing 13.7$8.9 million (12.5%) in Q3 2022; Transportation segment gross profit was $17.1 million (7.7$53.5 million (20.3%) in Q3 2022[73] - Transportation segment revenue for the nine months ended September 30, 2023, was $615.0 million, a decrease of$30.4 million, or 4.7%, compared to the same period in 2022[159] Backlog and Contracts - Backlog as of September 30, 2023, is $2,541,319, down from$2,973,886 on December 31, 2022, reflecting a decrease of approximately 14.6%[183] - New contracts, change orders, and adjustments added $412,756 to the backlog during the period[183] - Remaining Unsatisfied Performance Obligations (RUPO) as of September 30, 2023, indicate that approximately 42$184.6 million as of September 30, 2023, compared to $131.6 million as of December 31, 2022[97] Corporate Actions and Governance - Southland Holdings merged with Legato Merger Corp. II on February 14, 2023, resulting in a reverse recapitalization[31] - The company filed a merger agreement with Southland Holdings, LLC on May 25, 2022[211] - The company has amended its bylaws and certificate of incorporation as of February 14, 2023[211] - The company has certifications from its Principal Executive Officer and Principal Financial Officer in compliance with the Sarbanes-Oxley Act[211] - Management evaluated the effectiveness of disclosure controls and procedures, determining they were effective as of the end of the reporting period[189] Market and Stock Performance - The closing price of common stock on November 9, 2023, was$5.65, significantly lower than the initial public offering price of $10.00 per unit[201] - 91.7$11.50, and if the market price remains below this, holders are unlikely to exercise them for cash[202]