Southland Holdings, Inc. (SLND)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue was $215.4M, down 14.4% YoY; gross margin improved to 6.2% from (15.9)% YoY; net loss was $10.3M or $(0.19) per share; EBITDA was $4.2M .
• Segment mix: Civil delivered 37.9% of revenue with 17.9% gross margin; Transportation delivered 62.1% of revenue with gross margin improving to (0.9)% from (28.6)% YoY .
• Backlog ended the quarter at $2.32B, supported by ongoing IIJA demand; management emphasized disciplined bidding and margin sustainability as key priorities and catalysts .
• SG&A declined 13.4% YoY to $13.6M; management reiterated interest expense at ~$9.5M per quarter and effective tax rate of 20%–24% as ongoing model inputs .
• Street consensus via S&P Global for Q2 2025 was unavailable; refrain from beat/miss calls based on non-S&P sources (third-party sites indicated an EPS beat and revenue miss, but we anchor to S&P) .

What Went Well and What Went Wrong

What Went Well

• Sustained margin improvement: “We continue to be encouraged by the sustained margin improvement in our core business resulting from our disciplined approach to bidding and operations.” — Frank Renda, CEO .
• Civil strength: Civil segment gross margin rose to 17.9% in Q2 (from 11.5% YoY), with gross profit of $14.6M on $81.5M revenue .
• Cost discipline: SG&A declined 13.4% YoY to $13.6M, reflecting tighter overhead control .

What Went Wrong

• Top-line pressure: Revenue fell 14.4% YoY to $215.4M, with Transportation revenue down to $133.9M; materials & paving contributed $21.7M revenue but weighed on profitability .
• Transportation margin still negative: Transportation gross margin improved but remained at (0.9)%, versus (28.6)% YoY; segment loss of $1.2M in Q2 .
• Materials & Paving drag: M&P business negatively impacted Q2 gross profit by $3.8M, consistent with management’s strategy to wind down remaining legacy exposure through 2025 .

Financial Results

Consolidated Results vs Prior Quarters

Notes: EBITDA is a non-GAAP measure; see reconciliations in the respective filings .

Segment Mix and Margins

KPIs

Actual vs Consensus (S&P Global)

S&P Global consensus coverage for SLND Q2 2025 was unavailable at time of analysis.

Guidance Changes

Management did not issue formal numerical guidance ranges for revenue, margins, OpEx, OI&E, or tax rate beyond the parameters above .

Earnings Call Themes & Trends

Management Commentary

• “We continue to be encouraged by the sustained margin improvement in our core business resulting from our disciplined approach to bidding and operations.” — Frank Renda, President & CEO .
• Civil margin ambition: “Without the impacts from legacy write-downs, this business can consistently deliver mid-teen results.” — Frank Renda (Q1 call) .
• Interest and tax modeling inputs: “We anticipate interest expense to average approximately $9.5M per quarter going forward… we expect our effective tax rate to be in the 20% to 24% range.” — Keith Bassano, CFO (Q1 call) .
• Transportation pipeline/ramp: “We should start to see a couple of our large transportation projects start to really kick off… $600M Shands Bridge and the $400M RK bridge.” — Frank Renda (Q1 call) .
• Macro resilience: Minimal tariff exposure due to domestic procurement practices; strong IIJA/state spending tailwinds (Q4/Q1 calls) .

Q&A Highlights

• Civil margins and sustainability: Management reiterated mid-teens Civil margin potential as the “normal” profile absent legacy impacts .
• M&P wind-down and impact: CFO detailed Q1 non-cash closeout charge and the path to substantial completion by YE2025; residual risk acknowledged .
• Transportation growth cadence: Expect ramp from Shands and RFK projects to backfill revenue/margin as M&P exits .
• Claims/cash flow timing: Management expects meaningful operating cash flow in back half of 2025, though dispute settlement timing remains uncertain .
• Liquidity and modeling inputs: Ample liquidity to pursue opportunities; reiterated ~$9.5M quarterly interest expense and 20%–24% tax rate .

Estimates Context

• S&P Global consensus for Q2 2025 EPS and revenue was unavailable at the time of analysis; therefore, we do not assert beats/misses versus S&P. Third-party sites indicated EPS of $(0.19) “beat by $0.08” and revenue “miss by ~$30M”, but we do not anchor to non-S&P sources for investment decisions .

Key Takeaways for Investors

• Margin recovery is the core story: Civil margins are consistently double-digit, underpinning the consolidated pivot to profitability as legacy/M&P exits; watch Civil mix and project execution .
• Transportation inflection approaching: Ramp of Shands and RFK should gradually lift Transportation margins; track award-to-start conversion and margin trajectory .
• Backlog remains robust amid selective bidding: $2.32B backlog with disciplined pursuit suggests margin-first strategy; cadence of awards remains back-half weighted historically .
• Interest expense and tax rate are material headwinds/tailwinds: Model ~$9.5M quarterly interest expense and 20%–24% ETR; these parameters drive EPS sensitivity .
• Cash flow skew to H2: Operating cash flow expected to be back-half weighted; claims settlements could be catalysts but carry timing uncertainty .
• Legacy/M&P wind-down nearing finish line: Substantial completion targeted by YE2025; each quarter should reduce drag risk and improve consolidated margins .
• Macro tailwinds intact: IIJA/state programs continue to support demand; tariff exposure minimal due to domestic procurement practices .

Sources: Q2 2025 8-K and Exhibit 99.1 press release ; Q1 2025 8-K and call transcript ; Q4 2024 8-K and call transcript ; External transcript page and summaries for Q2 call details where company documents were not available in-catalog .