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01/10 16:57
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents mixed results: improved gross profit margins and a strong backlog, but significant net losses and increased interest expenses. The Q&A session highlights optimism in the Civil segment and potential cash flow from claims, but uncertainty remains with the Materials & Paving segment and transportation revenue. The lack of clear guidance on margin profiles and revenue contraction adds to the uncertainty. With no market cap data, a neutral impact (-2% to 2%) is predicted, balancing positive project developments against financial challenges.
Revenue $239 million, down $49 million from the same period in 2024.
Gross Profit $21.5 million, an increase of $1.1 million from the same period in 2024.
Gross Profit Margin 9%, an increase from 7.1% in the prior year.
Selling, General and Administrative Costs $16.5 million, an increase of $2.1 million compared to the same period in 2024 due to additional compensation and tax expenses.
Interest Expense $8.9 million, up $3.2 million from the prior year, primarily driven by higher borrowing costs and additional interest from a real estate transaction.
Income Tax Benefit $300,000 compared to income tax expense of $300,000 in the same period last year.
Net Loss $4.5 million or a loss of $0.08 per share, compared to a net loss of $400,000 or a loss of $0.01 per share in the same period last year.
EBITDA $10.1 million compared to EBITDA of $10.9 million for the same period in 2024.
Civil Segment Revenue $103 million compared to revenue of $84 million in the same period in 2024.
Civil Segment Gross Profit $23 million, an increase of $5 million from the same period in the prior year.
Civil Segment Gross Profit Margin 22% compared to 21% in the same period in 2024.
Transportation Segment Revenue $137 million, a decrease of $67 million from the same period in 2024.
Transportation Segment Gross Loss $1 million, a decrease from a gross profit of $3 million in the same period in the prior year.
Transportation Segment Gross Profit Margin Negative 1% compared to a positive 1% for the same period in 2024.
Materials & Paving Revenue $18 million with a negative gross profit of $9 million, impacted by a noncash charge of $3.5 million and increased project costs.
Core Operating Results (excluding Materials & Paving) Revenue $119 million with a gross profit of $8 million for a gross profit margin of 7%.
Consolidated Core Results (excluding Materials & Paving) Revenue $221 million with a gross profit of $31 million for a gross profit margin of 14%.
Backlog Approximately $2.5 billion, with expectations to burn approximately 40% over the next 12 months.
New Awards: During the quarter, we added approximately $137 million in new awards, led by 2 water resource projects totaling $97 million, bringing our total backlog to approximately $2.5 billion.
Upcoming Opportunities: Upcoming opportunities in our Civil segment include a $450 million Black Creek Tunnel in Toronto, packages from the $600 million Jordan Lake Water Supply program, and packages from the $2 billion Northern Colorado Water Glades Reservoir program.
Client Mix: Our historical client mix consists of approximately 80% government agencies and 20% private clients, providing flexibility to adjust in response to market demand.
Gross Profit Margin: Consolidated gross profit margin was 9%, an increase from 7% in the prior year period, driven by strong performance in the Civil segment with a gross profit margin of 22%.
Backlog: We finished the quarter with approximately $2.5 billion of backlog, of which we expect to burn approximately 40% over the next 12 months.
Leadership Changes: Keith Bassano appointed as CFO and Don Graul as Chief Strategy Officer to strengthen leadership and position for long-term performance.
Market Positioning: Despite adverse weather and economic uncertainties, Southland remains well-positioned with strong risk management practices and a robust pipeline of critical infrastructure opportunities.
Economic Factors: Potential impact of recent tariff actions and federal spending cuts. While current tariffs are not expected to materially affect the business, there is a risk of increased input costs over time.
Supply Chain Challenges: Minimal direct exposure to cross-border material procurement, but tariffs could increase input costs.
Regulatory Issues: No expected material impact from government spending cuts on demand for projects, as the company primarily works with government agencies.
Competitive Pressures: Strong demand for infrastructure projects, but the company remains selective in its bidding strategy to maintain margins.
Financial Risks: Increased interest expense due to higher borrowing costs and additional expenses related to a real estate transaction.
Project Performance: Negative gross profit margin in the Transportation segment, primarily due to increased project costs and a noncash charge related to a paving project.
Leadership Additions: Appointment of Keith Bassano as CFO and Don Graul as Chief Strategy Officer to strengthen leadership and performance.
Milestone Celebration: American Bridge Company celebrated its 125th anniversary, highlighting its legacy in infrastructure.
New Awards: Added approximately $137 million in new awards during the quarter, increasing total backlog to approximately $2.5 billion.
Pipeline Opportunities: Upcoming projects include a $450 million Black Creek Tunnel and various water supply programs totaling over $2 billion.
Risk Management: Strong risk management practices in place to mitigate potential cost escalations from tariffs.
Revenue Expectations: Revenue for Q1 2025 was $239 million, with expectations to burn approximately 40% of the backlog over the next 12 months.
Gross Profit Margin: Consolidated gross profit margin improved to 9%, with expectations for continued strong margins from new core projects.
Interest Expense: Anticipated interest expense to average approximately $9.5 million per quarter going forward.
Effective Tax Rate: Expected effective tax rate to be in the 20% to 24% range.
Future Performance: Confidence in delivering value for clients and stakeholders due to strong demand and a robust pipeline.
Share Repurchase Program: None
The earnings call presents a mixed picture. While there are positive developments such as strong civil segment performance, backlog growth, and opportunities from Texas's Proposition 4, financials are concerning with net losses and negative EBITDA. The Q&A highlights potential growth in data centers and tunnel projects but reveals uncertainties in cash flow and legacy claims. Despite some optimism, the lack of clear guidance and unresolved issues tempers the overall sentiment, leading to a neutral outlook for the stock price in the near term.
The earnings call highlights strong financial improvements, including reduced net loss and positive EBITDA. The Civil segment shows strong margins, and the company has a robust backlog and pipeline, suggesting future growth. Management's optimism about margin improvements and cash flow in the coming quarters is positive. However, the decrease in Transportation revenue and lack of specific guidance on weather impacts and legacy claims resolution are minor concerns. Overall, the sentiment is positive, with expectations of continued growth and improved financial performance.
The earnings call summary presents mixed results: improved gross profit margins and a strong backlog, but significant net losses and increased interest expenses. The Q&A session highlights optimism in the Civil segment and potential cash flow from claims, but uncertainty remains with the Materials & Paving segment and transportation revenue. The lack of clear guidance on margin profiles and revenue contraction adds to the uncertainty. With no market cap data, a neutral impact (-2% to 2%) is predicted, balancing positive project developments against financial challenges.
The earnings call presents a mixed outlook. Positive elements include revenue and margin growth, alongside successful project completions. However, the lack of specific guidance, potential regulatory and operational risks, and absence of a share buyback program dampen enthusiasm. Q&A insights reveal management's cautious optimism but also highlight uncertainties, particularly in achieving positive EBITDA and cash flow timing. Given these factors, a neutral sentiment is warranted, as the positives and negatives appear balanced, with no strong catalyst for significant stock price movement.
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