Southland Holdings, Inc. · AMEX:SLND
Southland — SPAC Merger (June 2022)
34 slides from Southland's SPAC merger presentation, Jun 1, 2022
Slide 1: Southland Holdings Investor Presentation
SOUTHLAND HOLDINGS INVESTOR PRESENTATION JUNE 1, 2022
Slide 2: Important Disclosures
IMPORTANT DISCLOSURES This Presentation (together with oral statements made in connection herewith, the "Presentation") is for informational purpos es only to assist prospective investors in making their own evaluation with respect to the proposed business combination (the "Proposed Transaction ") b
Slide 3: Non-GAAP Financial Measures
Non - GAAP Financial Measures This Presentation includes certain unaudited financial measures not presented in accordance with generally accepted accountin g p rinciples, including but not limited to earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and certain ratios and ot
Slide 4: Forward-Looking Statements
Forward - Looking Statements This Presentation includes certain statements that are not historical facts but are forward - looking statements for purposes of t he safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward - looking statements generally a
Slide 5: Speakers
SOUTHLAND Frank Renda Chief Executive Officer SOUTHLAND Cody Gallarda Chief Financial Officer LEGATO II Gregory Monahan Chief Executive Officer LEGATO II Brian Pratt Chairman SPEAKERS 5 BUILDING GREAT THINGS
Slide 6: About Southland
ABOUT SOUTHLAND
Slide 7: Southland Holdings overview
With roots dating back to 1900, Southland Holdings and its subsidiaries form one of the largest construction companies in North America , with experience throughout the world. We have built transportation infrastructure that connects our nation, constructed water pipelines and built treatment facili
Slide 8: At a Glance
$2B+ BACKLOG ⁓ 2,500 EMPLOYEES ENR (1 ) RANKED #16 DOMESTIC HEAVY CONTRACTORS ENR RANKED #89 TOP 400 CONTRACTORS ENR RANKED ENR RANKED #58 CONTRACTORS BY NEW CONTRACTS AT A GLANCE 8 BUILDING GREAT THINGS (1) Engineering News - Record
Slide 9: Executive management team
Southland Holdings’ executive management team leverages decades of experience to build a premier operation that is poised for significant future growth. As President and Chief Executive Officer of Southland Holdings, Frank Renda is responsible for identifying and establishing all necessary initiativ
Slide 10: Project Segments: Civil
Civil WATER PIPELINE PUMP STATIONS LIFT STATIONS WATER & WASTEWATER TREATMENT PLANTS CONCRETE & STRUCTURAL STEEL OUTFALL TUNNELING Constructed over 12 million linear feet of large diameter water pipeline Bored over 1 million linear feet of tunnel Currently own and operate the largest hard rock tunn
Slide 11: Project Segments: Transportation
Transportation BRIDGES ROADWAYS MARINE DREDGING SHIP TERMINALS / PIERS SPECIALITY STRUCTURES & FACILITIES Iconic bridges and structures all around the world Over 20,000+ bridges and structures worldwide Diverse experience and capabilities in Suspension, Cable - Stayed, Precast, Moveable, Utility a
Slide 12: Competitive Advantages
COMPETITIVE ADVANTAGES 12 BUILDING GREAT THINGS STRONG BALANCE SHEET & BONDING CAPACITY SELF PERFORMING & TECHNICAL EXPERTS WIDE BREADTH OF CAPABILTIES GEOGRAPHY SIGNIFICANTLY OWNED EQUIPMENT FLEET
Slide 13: Owned equipment fleet
Southland primarily purchases equipment, which enables the Company to expand margins by having equipment available when needed and lowers the overall cost of equipment vs. renting. Southland’s competitors, on the other hand, primarily rent equipment, losing out on the potential margin expansion Sout
Slide 14: America's Infrastructure
America’s Infrastructure Water Pipeline Every two minutes, there is a water main break, and an estimated 6 billion gallons of treated water lost each day in the U.S. Nationwide, the drinking water and wastewater pipes in the ground are on avg 45 years old. Roadways Growing wear and tear on our natio
Slide 15: Targeted Opportunities
TARGETED OPPORTUNITIES 15 BUILDING GREAT THINGS Source: 2021 Infrastructure Report Card provided by American Society of Civil Engineers (1) Assumes 13.7% bid - to - win ratio which is average for past 3 years (2019 - 2021) (2) Assumes go - no - go rate of 50% Between now and 2039, the ASCE report es
Slide 16: Client Mix
LOCAL COUNTY AND CITY STATE FEDERAL PRIVATE Southland Holdings has a diverse customer base with a significant amount of work coming from recurring customers. US Bureau of Reclamation US Army Corps of Engineers Louisiana Department of Transportation Texas Department of Transportation Florida Departme
Slide 17: Peer Group
Southland Holdings is a significant competitor in a field of larger construction companies due to the company’s range of services and ability to execute on complex projects. This gives Southland an advantage of pursuing projects with a limited list of potential bidders. PEER GROUP 17 BUILDING GREAT
Slide 18: Company Timeline
1929 1974 2014 2005 2010 2011 2012 2016 2020 AMERICAN BRIDGE Established JOHNSON BROS. Established MOLE CONSTRUCTORS Established OSCAR RENDA CONTRACTING Established SOUTHLAND CONTRACTING Established OSCAR RENDA CONTRACTING Acquired SOUTHLAND HOLDINGS Formed RENDA PACIFIC Established KW PIPELINE Acqu
Slide 19: Historical Financial Performance
HISTORICAL 19 $349 $506 $563 $467 $623 $849 $1,048 $1,058 $1,279 $52 $76 $73 $46 $55 $104 $76 $86 $99 $- $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 2013A 2014A 2015A 2016A 2017A 2018A 2019A 2020A 2021A Historical Financial Perfor
Slide 20: Segment Size
SEGMENT SIZE – 3 YEAR AVERAGE 20 BUILDING GREAT THINGS 36% 64% Revenue Civil Transportation 42% 58% Gross Profit Civil Transportation Note: The information on this page is not audited in accordance with PCAOB standards and is subject to adjustment pending fin ali zation when included in Legato’s sub
Slide 21: Backlog
BACKLOG 21 BUILDING GREAT THINGS Note: The information on this page is not audited in accordance with PCAOB standards and is subject to adjustment pending fin ali zation when included in Legato’s subsequent SEC filings.
Slide 22: Historical Income Statements
HISTORICAL INCOME STATEMENTS 22 BUILDING GREAT THINGS Note: The information on this page is not audited in accordance with PCAOB standards and is subject to adjustment pending fin ali zation when included in Legato’s subsequent SEC filings. (1) Company not fully taxed as a C - Corp
Slide 23: Historical Balance Sheets
HISTORICAL BALANCE SHEETS 23 BUILDING GREAT THINGS Note: The information on this page is not audited in accordance with PCAOB standards and is subject to adjustment pending fin ali zation when included in Legato’s subsequent SEC filings.
Slide 24: Historical Statement of Cash Flows
HISTORICAL STATEMENT OF CASH FLOWS 24 BUILDING GREAT THINGS Note: The information on this page is not audited in accordance with PCAOB standards and is subject to adjustment pending fin ali zation when included in Legato’s subsequent SEC filings.
Slide 25: Large JV Partners
LARGE JV PARTNERS 25 BUILDING GREAT THINGS (1) ASC 810 - 10 - 45 - 14 Southland partners with some of the largest, well - respected names in the E&C industry. • Aecon • Fluor • Granite • Traylor Bros. • Hochtief • Dragados • Morrison Construction Southland accounts for large JV projects under partia
Slide 26: Transaction Summary
TRANSACTION SUMMARY
Slide 27: Transaction overview
Southland Holdings, LLC (“Southland”) is a leading provider of specialized infrastructure construction services across North America including bridges, tunneling, transportation and facilities, marine, steel structures, water and sewer treatment, and water pipelines Legato Merger Corp II (Nasdaq: LG
Slide 28: Key investment highlights
Leading provider of specialized infrastructure construction services across North America including bridges, tunneling, transportation and facilities, marine, steel structures, water and sewer treatment, and water pipelines Customers include federal, state, local and private organizations. A signifi
Slide 29: Sources & Uses and Pro Forma Ownership
( 1) Cash in Trust and Pro Forma Ownership reflects 27.6m Public Shares issued during Legato II’s IPO. Assumes no redemptions. (2) Transaction structure inclusive of full earn - out consideration based on the 202 2 Bonus Adjusted EBITDA target of $ 145 mm & 2023 Bonus Adjusted EBITDA target of 165mm
Slide 30: Earn-out structure
Size (Shares) Structure Rationale 2022 Earnings Based Incentive 3.45 mm Receive if 202 2 Adjusted EBITDA is $ 125 million or above (2022 “Base” Earnout) ▪ Compensates Southland shareholders for delivering upon stated earnings targets in 202 2 & 2023 ▪ “Bonus” Earnouts provide Southland shareholders
Slide 31: 2022E Valuation
Source: Company filings, S&P Capital IQ. Note: Market data as of May 23, 2022. Estimates based on consensus estimates. Refer to page 29 for additional details on transaction structure. (1) Assumes $145 million of EBITDA or above while TEV includes 6.9mm “Base” (2022 and 2023) and 3.4mm “Bonus” (2022
Slide 32: 2023E Valuation
4.9x 5.3x 11.5x 12.1x 10.2x 7.1x 7.3x 5.7x 4.8x 6.1x 5.2x 3.9x Southland (1) Southland (2) PWR ACM ROAD DY MTZ FLR GVA PRIM STRL TPC 2023 EV / EBITDA Source: Company filings, S&P Capital IQ. Note: Market data as of May 23, 2022. Estimates based on consensus estimates. Refer to page 29 for additional
Slide 33: Executive Summary
EXECUTIVE SUMMARY
Slide 34: Summary
SUMMARY 34 BUILDING GREAT THINGS CLOSE ALIGNMENT OF MANAGEMENT AND SHAREHOLDER INTERESTS STRONG BALANCE SHEET FINANCIAL PERFORMANCE SOLID BACKLOG GROWING ROBUST MARKETS INDUSTRY KNOWLEDGE AND EXPERIENCE / COMPETITIVE ADVANTAGE ATTRACTIVE VALUATION COMPARED TO PEERS