Southland (SLND) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q1 2024 was $288 million, an increase of 5$20 million, up from $19 million in the prior year, with a gross profit margin of 7.1$11 million, compared to $9 million for the same period in 2023 [19] - The company reported a net loss of$400,000 or negative $0.01 per share, an improvement from a net loss of$5 million or negative $0.11 per share in the same period last year [23] Business Line Data and Key Metrics Changes - Civil segment revenue was$84 million, an increase of $11 million from the same period in 2023, with a gross profit of$18 million and a gross profit margin of 21%, up from 12% [24] - Transportation segment revenue was $204 million, an increase of$2 million from the same period in 2023, but gross profit decreased to $3 million from$10 million, resulting in a gross profit margin of 1%, down from 5% [24][25] - The materials and paving business line contributed $38 million to revenue but had a negative gross profit of$10 million due to severe weather and increased project costs [25] Market Data and Key Metrics Changes - The company ended the quarter with a backlog of $2.64 billion, having booked approximately$100 million in new awards during the quarter [11] - Demand from public agencies and private clients remains strong, with expectations for continued proposal submissions for various projects [12][15] Company Strategy and Development Direction - The company aims to capitalize on opportunities in the U.S. and core end markets, with a focus on civil projects and infrastructure improvements [13][16] - There is a strategic emphasis on selecting high-margin projects and managing the backlog effectively, particularly as legacy projects are completed [44][49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong demand in end markets and the potential for new awards as the year progresses [16][44] - The company expects to see a sequential increase in backlog due to strong new awards and is focused on maintaining healthy margins [49] Other Important Information - The company has a net debt of $255 million, with plans to pay down approximately$46 million of debt in the next 12 months [26] - The company is evaluating options to simplify its debt structure and extend maturities [26] Q&A Session Summary Question: Continued M&P losses and potential offsets - Management indicated that new jobs starting should help offset losses, with a focus on completing legacy work by mid-2025 [29][30] Question: Outlook for Civil segment margins - Management is optimistic about maintaining healthy margins in the Civil segment due to strong project execution and new awards [33] Question: End market mix within Civil - The Civil segment is seeing diverse opportunities across water, wastewater, and emergency projects, contributing to strong execution [37] Question: Impact of legacy projects on gross margins - Management expects a decline in legacy backlog impact on gross margins as new work contributes positively [46] Question: Cash flow expectations - Positive cash flows are anticipated in the latter half of the year, consistent with historical trends [48]