Southland Holdings, Inc.

Previous wording

Our Civil segment primarily operates throughout North America and specializes in services that include the design and construction of water pipeline, pump stations, lift stations, water and wastewater treatment plants, concrete and structural steel, outfall, and tunneling.

Current wording

We segregate our business into two reportable segments: Transportation and Civil. Our Civil segment primarily operates throughout North America and specializes in services that include the design and construction of water pipeline, pump stations, lift stations, water and wastewater treatment plants, concrete and structural steel, outfall, and tunneling.

Previous wording

In April 2025, the U.S. government announced a variety of tariff actions in response to which many countries have announced retaliatory trade actions, including tariffs on U.S. exports. The tariffs and retaliatory trade actions have increased the cost of importing certain construction materials into the U.S. and have caused disruption and uncertainty to both international trade, supply chains and financial markets. It is unclear to what extent, when and for how long announced trade actions will be in place. To date, these trade actions have had no meaningful impact on the results of our operations or the projects currently underway as the construction materials and equipment used for our current projects have generally been sourced and/or secured upon project inception. However, we are evaluating the potential impacts of these proposed tariffs, including potential impacts to our customers, as well as our ability to mitigate their related impacts. In addition, economic experts and policy makers have expressed concerns that increased tariffs and retaliatory trade actions could increase inflation or the risk of a recession, which could also affect our customers’ use of capital and demand for our services.

Current wording

During the first half of 2025, the U.S. government announced a variety of tariff actions in response to which many countries have announced retaliatory trade actions, including tariffs on U.S. exports. The tariffs and retaliatory trade actions have increased the cost of importing certain construction materials into the U.S. and have caused disruption and uncertainty to both international trade, supply chains and financial markets. It is unclear to what extent, when and for how long announced trade actions will be in place. To date, these trade actions have had no meaningful impact on the results of our operations or the projects currently underway as the construction materials and equipment used for our current projects have generally been sourced and/or secured upon project inception. However, we are evaluating the potential impacts of these proposed tariffs, including potential impacts to our customers, as well as our ability to mitigate their related impacts. In addition, economic experts and policy makers have expressed concerns that increased tariffs and retaliatory trade actions could increase inflation or the risk of a recession, which could also affect our customers’ use of capital and demand for our services.

Previous wording

Our business may also be affected by overall economic market conditions, including but not limited to declines in spending by project owners, delays in new projects, by changes in client schedules, or for other reasons.

Current wording

Our business may also be affected by overall economic market conditions, including but not limited to declines in spending by project owners, delays in new projects, changes in client schedules, or for other reasons.

Previous wording

For the three months ended March 31, 2025, M&P contributed $18.1 million to revenue and $9.1 million in gross loss. There is additional information on the M&P gross loss in the Transportation portion of the Segment Results section of this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. This compares to $38.6 million to revenue and $10.4 million to gross loss for the three months ended March 31, 2024. As of March 31, 2025, approximately 5.6% of Southland’s backlog was in M&P, and Southland estimates this work to be substantially completed in the next nine months.

Current wording

For the three months ended June 30, 2025, M&P contributed $21.7 million to revenue and $3.8 million in gross loss. There is additional information on the M&P gross loss in the Transportation portion of the Segment Results section of this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. This compares to $8.9 million to revenue and $46.8 million to gross loss for the three months ended June 30, 2024. For the six months ended June 30, 2025, M&P contributed $39.8 million to revenue and $12.9 million in gross loss. This compares to $47.5 million to revenue and $57.1 million to gross loss for the six months ended June 30, 2024. As of June 30, 2025, approximately 4.3% of Southland’s backlog was in M&P and Southland estimates most of this work to be substantially completed in the next six months, with three projects extending into 2026.

Previous wording

Revenue for the three months ended March 31, 2025, was $239.5 million, a decrease of $48.6 million, or 16.9%, compared to the three months ended March 31, 2024. The decrease was attributable to a $67.2 million decrease in revenue in our Transportation segment primarily due to projects approaching completion and impacts related to exiting the M&P business line, offset by a $18.6 million increase in revenue in our Civil segment primarily due to new projects substantially started after March 31, 2024.

Current wording

Revenue for the three months ended June 30, 2025, was $215.4 million, a decrease of $36.1 million, or 14.4%, compared to the three months ended June 30, 2024. The decrease was attributable to a $38.3 million decrease in revenue in our Transportation segment primarily due to projects approaching completion, offset by a $2.2 million increase in revenue in our Civil segment primarily due to new projects substantially started after June 30, 2024.

Previous wording

Cost of construction for the three months ended March 31, 2025, was $218.0 million, a decrease of $49.7 million, or 18.6%, compared to the three months ended March 31, 2024. The decrease was attributable to a $63.5 million decrease in our Transportation segment primarily due to projects approaching completion and impacts related to exiting the M&P business line, offset by a $13.8 million increase in our Civil segment primarily due to new projects substantially started after March 31, 2024.

Current wording

Cost of construction for the three months ended June 30, 2025, was $202.0 million, a decrease of $89.5 million, or 30.7%, compared to the three months ended June 30, 2024. The decrease was attributable to a $86.2 million decrease in our Transportation segment primarily due to projects approaching completion and impacts related to exiting the M&P business line, offset by a $3.3 million increase in our Civil segment primarily due to new projects substantially started after June 30, 2024.

Previous wording

Selling, general, and administrative expenses for the three months ended March 31, 2025, were $16.5 million, an increase of $2.1 million, or 14.4%, compared to the three months ended March 31, 2024. The increase was primarily due to a $1.7 million increase in incentive compensation expense and a $0.5 million increase in real estate tax expense, compared to the same period in 2024.

Current wording

Selling, general, and administrative expenses for the three months ended June 30, 2025, were $13.6 million, a decrease of $2.1 million, or 13.4%, compared to the three months ended June 30, 2024. The decrease was primarily due to a $2.2 million decrease in preconstruction expenses, compared to the same period in 2024.

Previous wording

Interest expense for the three months ended March 31, 2025, was $8.9 million, an increase of $3.2 million, or 56.9%, compared to the three months ended March 31, 2024. The increase was primarily driven by a $1.0 million increase in interest expense related to the real estate transaction described in Note 2 of the unaudited condensed consolidated financial statements and $2.2 million due to the increase of interest rates on external borrowings compared to the same period in 2024.

Current wording

Interest expense for the three months ended June 30, 2025, was $10.0 million, an increase of $3.3 million, or 48.6%, compared to the three months ended June 30, 2024. The increase was primarily driven by a $1.0 million increase in interest expense related to the real estate transaction described in Note 2 of the unaudited condensed consolidated financial statements, $1.4 million due to the increase of interest rates on external borrowings and $0.9 million due to an increase in amortization of deferred financing costs, compared to the same period in 2024.

Previous wording

Income tax benefit for the three months ended March 31, 2025, was $0.3 million, or an effective rate of 10.1%. The primary differences between the federal statutory tax rate of 21% and the effective rate were state income taxes, the recording of valuation allowances against certain subsidiaries’ separate company deferred tax assets, federal tax credits, and the income earned in foreign jurisdictions with different tax rates than the domestic rate; however, this foreign income is included within U.S. taxable income through Section 951A Global Intangible Low-Taxed Income (“GILTI”).

Current wording

Income tax benefit for the three months ended June 30, 2025, was $0.1 million, or an effective rate of 0.6%. The primary differences between the federal statutory tax rate of 21% and the effective rate were state income taxes, the recording of valuation allowances against certain subsidiaries’ separate company deferred tax assets, federal tax credits, the income earned in foreign jurisdictions with different tax rates than the domestic rate; however, that foreign income is included within U.S. taxable income through Section 951A Global Intangible Low-Taxed Income (“GILTI”) when the foreign rate is less than 90% of the domestic rate, and the impact of worldwide forecast on the interim calculations under ASC 740.

Previous wording

Income tax expense for the three months ended March 31, 2024, was $0.3 million, or an effective rate of 36.9%. The primary differences between the federal statutory tax rate of 21% and the effective rate were state income taxes, federal tax credits, and the income earned in foreign jurisdictions with different tax rates than the domestic rate; however, this foreign income is included within U.S. taxable income through GILTI, and finally the impact of worldwide forecast on the interim calculation under ASC 740.

Current wording

Income tax benefit for the three months ended June 30, 2024, was $16.0 million, or an effective rate of 26.0%. The primary differences between the federal statutory tax rate of 21% and the effective rate were state income taxes, the recording of a valuation allowance against certain subsidiaries’ deferred tax assets, federal tax credits, the income earned in foreign jurisdictions with a zero tax rate; however, that foreign income is included within U.S. taxable income through GILTI, and the impact of worldwide forecast on the interim calculations under ASC 740.

Previous wording

Revenue for the three months ended March 31, 2025, was $102.9 million, an increase of $18.6 million, or 22.1%, compared to the three months ended March 31, 2024. The increase was primarily attributable to increased revenues of $9.2 million from a water pipeline project in the Southwest, $6.1 million from a water facility project in the Pacific Northwest, $5.8 million from a water treatment plant project in the Southwest and $5.5 million from a wastewater treatment plant project in the Southwest. All of these projects started after March 31, 2024. These increases were offset by decreased revenue of $7.5 million from another water pipeline project in the Southwest due to the project approaching completion in the three months ended March 31, 2025 versus the same period in 2024.

Current wording

Revenue for the three months ended June 30, 2025, was $81.5 million, an increase of $2.2 million, or 2.7%, compared to the three months ended June 30, 2024. The increase was primarily attributable to increased revenues of $13.4 million from a water pipeline project in the Southwest, $4.9 million from a tunnel and water pipeline project in the Southwest and $4.5 million from a water facility project in the Pacific Northwest, all of which increased due to the projects being substantially started after June 30, 2024. These increases were offset by decreased revenues of $12.8 million from a wastewater treatment plant project in the Southeast due to certain unfavorable adjustments and $7.3 million from a water project in the West that is approaching completion.

Previous wording

Gross profit for the three months ended March 31, 2025, was $22.6 million, or 22.0% of segment revenue, compared to gross profit of $17.9 million, or 21.2%, of segment revenue, for the three months ended March 31, 2024. The primary drivers to the increase in gross profit of $4.8 million for the three months ended March 31, 2025 versus the same period in 2024 were new higher margin projects substantially started after March 31, 2024, which led to increased profit contributions, including $1.8 million from a water pipeline project in Southwest, $1.5 million from water treatment plant in the Southwest and $1.4 million from a water facility project in the Pacific Northwest.

Current wording

Revenue for the six months ended June 30, 2025, was $184.4 million, an increase of $20.8 million, or 12.7%, compared to the six months ended June 30, 2024. The increase was primarily attributable to increased revenues of $22.6 million from a water pipeline project in the Southwest and $10.6 million from a water facility project in the Pacific Northwest, both of which increased due to the projects being substantially started after June 30, 2024. These increases were offset by decreased revenue of $13.5 million from a water pipeline project in the Southwest that is approaching completion.

Previous wording

Revenue for the three months ended March 31, 2025, was $136.6 million, a decrease of $67.3 million, or 33.0%, compared to the three months ended March 31, 2024. The decrease was primarily attributable to decreased revenues of $58.6 million from a project in the Bahamas due to the project approaching completion, $21.0 million from takeover work related to the American Bridge acquisition due to the project approaching completion and $20.5 million from the M&P line.

Current wording

Revenue for the six months ended June 30, 2025, was $270.4 million, a decrease of $105.5 million, or 28.1%, compared to the six months ended June 30, 2024. This was primarily attributable to decreased revenues of $92.4 million from a project in the Bahamas and $36.9 from takeover work related to the American Bridge acquisition, due to the projects approaching completion. These decreases were offset by increased revenue of $21.5 million from another project in the Bahamas due to the project substantially started after June 30, 2024.

Previous wording

In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operational performance. We use the following non-GAAP measures to evaluate our ongoing operations and for internal planning, forecasting and compensation purposes. We believe that the non-GAAP financial information may be helpful in assessing our operating performance and facilitates an alternative comparison between fiscal periods. The non-GAAP financial measures are not, and should not be viewed as, a substitute for GAAP reporting measures.

Current wording

In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operational performance. We use the following non-GAAP measures to evaluate our ongoing operations and for internal planning, forecasting and compensation purposes. We believe that the non-GAAP financial information may be

Previous wording

Non-GAAP financial measures should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP financial measures on a supplemental basis. The reconciliation of net loss to non-GAAP financial measures below

Current wording

Non-GAAP financial measures should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP financial measures on a supplemental basis. The reconciliation of net loss to non-GAAP financial measures below should be reviewed, and no single financial measure should be relied upon to evaluate our business. Below is a reconciliation of net loss to these non-GAAP financial measures.

Previous wording

We will receive the proceeds from the exercise of Warrants for cash. We believe the likelihood that Warrant holders will exercise their Warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our common stock. On May 2, 2025, the closing price of our common stock was $3.23 per share. To the extent the market price of our common stock remains below the exercise price of $11.50 per share, we believe that Warrant holders will be unlikely to exercise their Warrants for cash, resulting in little or no cash proceeds to us for any such exercise. To the extent we receive any cash proceeds, we expect to use such proceeds for general corporate and working capital purposes, which would increase our liquidity. However, we do not expect to rely materially on the cash exercise of Warrants to fund our operations.

Current wording

We will receive the proceeds from the exercise of Warrants for cash. We believe the likelihood that Warrant holders will exercise their Warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our common stock. On August 1, 2025, the closing price of our common stock was $3.90 per share. To the extent the market price of our common stock remains below the exercise price of $11.50 per share, we believe that Warrant holders will be unlikely to exercise their Warrants for cash, resulting in little or no cash proceeds to us for any such exercise. To the extent we receive any cash proceeds, we expect to use such proceeds for general corporate and working capital purposes, which would increase our liquidity. However, we do not expect to rely materially on the cash exercise of Warrants to fund our operations.

Previous wording

The following table sets forth summary change in cash, cash equivalent and restricted cash for the three months ended March 31, 2025 and 2024:

Current wording

The following table sets forth summary change in cash, cash equivalent and restricted cash for the six months ended June 30, 2025 and 2024:

Previous wording

Net cash provided by operating activities was $6.4 million during the three months ended March 31, 2025. During the three months ended March 31, 2025, the primary drivers in cash provided by operating activities were an increase of $10.4 million in accounts payable and accrued liabilities, a decrease of $8.6 million in accounts receivable, and an increase of $6.9 million in contract liabilities, offset by an increase of $10.7 million in contract assets and an increase of $7.5 million in other current assets. Net cash used in operating activities was $9.9 million during the three months ended March 31, 2024. During the three months ended March 31, 2024, the primary drivers in cash used in operating activities were increases of $32.1 million in accounts receivable and $16.2 million in contract assets, offset by an increase in accounts payable of $40.0 million.

Current wording

Net cash provided by operating activities was $1.0 million during the six months ended June 30, 2025. During the six months ended June 30, 2025, the primary drivers in cash provided by operating activities were a decrease of $19.5 million in accounts receivable, $12.8 million in depreciation and amortization of deferred financing costs and an increase of $12.3 million in accounts payable and accrued liabilities, offset by an increase of $16.9 million in contract assets, $12.7 million in net loss, an increase of $10.4 million in other current assets and a decrease of $4.7 million in operating lease liabilities. Net cash provided by operating activities was $17.5 million during the six months ended June 30, 2024. During the six months ended June 30, 2024, the primary drivers in cash provided by operating activities were an increase of $77.2 million in accounts payable and accrued liabilities, an increase of $31.9 million in contract liabilities, a decrease of $27.4 million in contract assets and $11.1 million in depreciation and amortization, offset by an increase of $64.7 million in accounts receivables, $44.8 million in net loss, $15.9 million in deferred taxes and $3.2 million in earnings from equity method investments.

Previous wording

Net cash provided by investing activities was $1.1 million during the three months ended March 31, 2025. During the three months ended March 31, 2025, the primary drivers in cash provided by investing activities were $2.9 million in proceeds from sale of property and equipment offset by $1.8 million in purchases of property and equipment. Net cash used in investing activities was $0.4 million during the three months ended March 31, 2024. During the three months ended March 31, 2024, the primary drivers in cash used in investing activities were an increase of $3.1 million in purchase of property and equipment, offset by $2.7 million in proceeds from sale of property and equipment.

Current wording

Net cash provided by investing activities was $0.8 million during the six months ended June 30, 2025. During the six months ended June 30, 2025, the primary drivers in cash provided by investing activities were $3.4 million in proceeds from sale of property and equipment, offset by $2.9 million in purchases of property and equipment. Net cash provided by investing activities was $3.0 million during the six months ended June 30, 2024. During the six months ended June 30, 2024, the primary drivers in cash provided by investing activities were proceeds from sale of property and equipment of $3.2 million and distributions from investees of $4.2 million, offset by purchases of property and equipment of $4.2 million.

Previous wording

Net cash used in financing activities was $14.0 million for the three months ended March 31, 2025. During the three months ended March 31, 2025, the primary drivers in cash used in financing activities were $13.6 million in payments on notes payable and $0.3 million in payments of finance lease and financing obligations. Net cash used in financing activities was $6.9 million for the three months ended March 31, 2024. During the three months ended March 31, 2024, the primary drivers in cash provided by financing activities were $10.7 million in payments on notes payable and $1.4 million in payments on finance lease and financing obligations, offset by $5.0 million in borrowings on the Revolving Credit Facility.

Current wording

Net cash used in financing activities was $26.1 million for the six months ended June 30, 2025. During the six months ended June 30, 2025, the primary drivers in cash used in financing activities were $25.2 million in payments on notes payable and $0.5 million in payments of finance lease and financing obligations. Net cash used in financing activities was $15.1 million for the six months ended June 30, 2024. During the six months ended June 30, 2024, the primary drivers in cash used in financing activities were $36.9 million of payments on notes payable and $2.7 million of payments on finance leases, offset by $24.7 million of borrowings on notes payable.

Previous wording

As of March 31, 2025, we had total debt of $288.1 million, of which $46.8 million is due within the next twelve months.

Current wording

As of June 30, 2025, we had total debt of $278.6 million, of which $48.9 million is due within the next twelve months.

Previous wording

Subsequent to the year ended December 31, 2024, the Company and Administrative Agent entered into a first amendment to the Credit Facility that removed an Administrative Agent-requested borrowing base reserve amount in exchange for certain additional reporting obligations and a personal guarantee from Frank Renda, the Company’s President and Chief Executive Officer, on any draws made on the Delayed Draw. As such, the Company has access to the Delayed Draw facility as supported by the borrowing base calculation.

Current wording

Subsequent to the year ended December 31, 2024, the Company and Administrative Agent entered into a first amendment to the Credit Facility that removed an Administrative Agent-requested borrowing base reserve amount in exchange for certain additional reporting obligations and a personal guarantee from Frank Renda, the Company’s President and Chief Executive Officer, on any draws made on the Delayed Draw. As such, the Company has access to the Delayed Draw facility as supported by the borrowing base calculation and as of June 30, 2025, $17.3 million was available.

Previous wording

As of March 31, 2025, the Company was in compliance with all applicable financial covenants under the Credit Agreement.

Current wording

As of June 30, 2025, the Company was in compliance with all applicable covenants under the Credit Agreement.

Previous wording

On August 9, 2024, a principal payment of $2.5 million was made and the Revolving Credit Facility limit was reduced to $84.5 million. An additional payment of $10.0 million was made on September 15, 2024, which further reduced the Revolving Credit Facility limit to $74.5 million. The Company used a portion of the Term Loan proceeds to pay in full outstanding amounts under the Revolving Credit Facility. Concurrently with the Company’s entry into the Credit Agreement, the Company terminated the Revolving Credit Facility.

Current wording

In July 2024, the Company made a $3.0 million payment on the Revolving Credit Facility, in connection with the real estate transaction described in Note 2 of the unaudited condensed consolidated financial statements. On August 9, 2024, a principal payment of $2.5 million was made and the Revolving Credit Facility limit was reduced to $84.5 million. An additional payment of $10.0 million was made on September 15, 2024, which further reduced the Revolving Credit Facility limit to $74.5 million. The Company used a portion of the Term Loan proceeds to pay in full outstanding amounts under the Revolving Credit