Southland Holdings, Inc. (ASE:SLND) Q2 2023 Earnings Call Transcript

Frank Renda : Now, for some of these projects, the chip manufacturers, they continue to move forward. And Christian, we’re not going to do anything that’s not in — exactly in our core competencies right now. So the portions of these plants that we’re looking at are the pipelines, the excavations, water, wastewater treatment plants, and that’s exactly what we do. These jobs are moving forward. As far as the middle mile, we’re really excited about that market. It’s another piece of our underground. And we’ve done quite a few of these projects in the past. They were just with a large water pipeline or something of that nature. But with the amount of money that is going to be spent in these areas, we’re geared up for it. We’re ready to go.

We haven’t picked up a lot of these projects as of yet, but it helps us when our competition, when these projects move forward, it helps us in these areas where our competition gets tied up. We all have a certain amount of resources. So, it’s benefiting us in indirect ways as well right now.

Cody Gallarda : Yes. And Christian, it’s Cody. I’d also add, the skill set crossover between the underground work, Frank mentioned in the middle mile stuff is fairly — is much more homogenous than being in large-scale paving work. There’s also a risk mitigation component on the contract deliveries — on the project delivery side of these contracts where they’re geared to CMGC awards. So we’re not locked into completing the scope of work beyond the design phase. It’s likely, and we will certainly take a hard look at pursuing it, but we’re not locked into a several hundred million dollar contract in these middle mile awards under a CMGC model.

Operator: Your next question comes from Brent Thielman from D.A. Davidson.

Brent Thielman : Great. Frank or Cody, on that zero margin backlog going forward, can you give us any sense for the average size of those jobs you’re still working to complete? I’m just trying to understand if you have some relatively larger projects embedded in that or series of smaller projects just as we think about kind of the future potential cost risk as you continue to work through these?

Cody Gallarda : Yes. Brent, great question. Let me ask a clarifier. Are you talking about initial contract size or remaining backlog on each individual project?

Brent Thielman : I guess I’d say remaining, Cody?

Cody Gallarda : Yes, there — it’s a fairly even distribution. There isn’t any one that has a larger number of backlog to complete materially different than the others.

Brent Thielman : Okay. And then, Cody, I heard you say it’d be tough to grow revenue for the full year compared to last year at this stage. I mean, it looks like based on what you’ve got in the Q, you’re going to burn call it, $1.2 billion in revenue over the next 4 quarters. So should we still think that’s, I guess, of that $1.2 billion, is that still going to be heavier weighted to the back half of this year or to the front half of next year? Just trying to get a sense around that.