LEGATO(LGTO) - 2024 Q3 - Quarterly Report

Financial Performance - Revenue for Q3 2024 was $173.32 million, a decrease of 44.6$312.47 million in Q3 2023[19] - Gross loss for Q3 2024 was $51.11 million, compared to a gross profit of$29.53 million in Q3 2023[19] - Net loss attributable to Southland stockholders for Q3 2024 was $54.73 million, compared to a net income of$3.80 million in Q3 2023[19] - Operating loss for Q3 2024 was $68.60 million, compared to an operating income of$14.28 million in Q3 2023[19] - Comprehensive loss for Q3 2024 was $57.89 million, compared to a comprehensive income of$2.82 million in Q3 2023[20] - Basic net loss per share for Q3 2024 was $(1.14), compared to a basic net income per share of$0.08 in Q3 2023[19] - For the nine months ended September 30, 2023, Southland Holdings reported a net loss of $11,376,000, compared to a net loss of$102,959,000 for the same period in 2024, indicating a significant increase in losses year-over-year[28] - Revenue for the nine months ended September 30, 2024, was $712.9 million, a decrease of$131.3 million, or 15.6%, compared to the same period in 2023[163] - Gross loss for the nine months ended September 30, 2024, was $70.7 million, an increase of$85.4 million, or 581.7%, compared to the same period in 2023[165] - The net loss attributable to common stockholders for the three months ended September 30, 2024, was $54.727 million, compared to a net income of$3.800 million for the same period in 2023, reflecting a significant decline[134] - For the nine months ended September 30, 2024, the net loss attributable to common stockholders was $101.210 million, compared to a loss of$13.690 million for the same period in 2023, indicating a substantial increase in losses[134] Assets and Liabilities - Total current assets decreased to $883.92 million as of September 30, 2024, from$942.54 million as of December 31, 2023[17] - Total liabilities increased to $1.03 billion as of September 30, 2024, compared to$940.50 million as of December 31, 2023[17] - Total stockholders' equity decreased to $149.06 million as of September 30, 2024, from$249.62 million as of December 31, 2023[17] - Cash and cash equivalents increased to $91.38 million as of September 30, 2024, from$49.18 million as of December 31, 2023[17] - The total cash and cash equivalents at the end of the period increased to $106,748,000 as of September 30, 2024, up from$46,752,000 in 2023, demonstrating improved liquidity[28] - The company reported a loss on extinguishment of debt of $28,379,000 in 2024, while there was no such loss reported in 2023, indicating increased financial restructuring efforts[28] - The company entered into a$160.0 million term loan facility on September 30, 2024, to replace the previous revolving credit facility[86] - Total debt as of September 30, 2024, was $318.3 million, with$43.1 million due within the next twelve months[200] Cash Flow and Financing Activities - Cash flows from operating activities showed a net cash used of $36,588,000 for the nine months ended September 30, 2023, while in 2024, the company generated$12,242,000 in cash from operating activities, indicating a turnaround in cash flow management[28] - Net cash provided by operating activities was $12.2 million for the nine months ended September 30, 2024, compared to a net cash used of$36.6 million for the same period in 2023[196][197] - Net cash provided by investing activities was $2.3 million for the nine months ended September 30, 2024, driven by$4.5 million in proceeds from the sale of property and equipment[198] - Net cash provided by financing activities was $28.4 million for the nine months ended September 30, 2024, primarily from$167.8 million in borrowings on notes payable[199] Segment Performance - Civil segment revenue was $55.85 million (32.2$90.71 million (29.0% of total) in 2023[82] - Transportation segment revenue was $117.47 million (67.8$221.76 million (71.0% of total) in 2023[82] - Revenue from the Transportation segment for the three months ended September 30, 2024, was $117.5 million, a decrease of$104.3 million, or 47.0%, compared to the same period in 2023[175] - Civil segment backlog increased to $990.7 million, while Transportation segment backlog decreased to$1.7 billion as of September 30, 2024[191] Operational Changes and Strategic Initiatives - The company has decided to discontinue certain types of projects in its Materials & Paving business line, focusing resources on more profitable lines of business, which is expected to enhance overall profitability[34] - Southland Holdings completed a merger with Legato II, which was accounted for as a reverse recapitalization, allowing the company to expand its operational capabilities and market presence[36] - The company anticipates further spending on infrastructure projects due to economic stimulus initiatives, including the Infrastructure Investment and Jobs Act passed in 2021[145] - The company has seen an increase in demand for specialty construction projects at federal, state, and local levels, positioning itself favorably for future growth[145] Compliance and Regulatory Matters - The company plans to adopt ASU 2023-05 in the first quarter of 2025, which is expected to have no material impact on consolidated financial statements[53] - The SEC's new climate-related disclosure rules will apply to the company's financial statements beginning with the fiscal year ending December 31, 2025[58] - The company is in compliance with all financial covenants under the Credit Agreement as of September 30, 2024[208] Miscellaneous - The company issued 33,793,111 shares of common stock to former members of Southland, resulting in net proceeds of $17.1 million, with transaction costs of$9.9 million included in additional paid-in capital[61] - The company has not identified any triggering events for impairment assessments of long-lived assets during the three and nine months ended September 30, 2024[48] - A valuation allowance of $2.6 million was recorded against net deferred tax assets due to financial losses in Canadian operations during the three months ended September 30, 2024[114] - The company maintained a Liquidity of at least$20.0 million at all times, with a requirement to comply with TTM EBITDA Covenants when Liquidity falls below $30.0 million[91]