Southland Holdings, Inc. · AMEX:SLND
Southland — Legato Merger Corp. II — SPAC Merger (December 2022)
43 slides from Southland's SPAC merger presentation, Dec 6, 2022
Slide 1: Southland Holdings Investor Presentation
SOUTHLAND HOLDINGS Investor Presentation December 6, 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: Important Disclosures: Non-GAAP Financial Measures
IMPORTANT DISCLOSURES 3 BUILDING GREAT THINGS BUILDING GREAT THINGS 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,
Slide 4: Important Disclosures: Forward-Looking Statements
IMPORTANT DISCLOSURES 4 BUILDING GREAT THINGS BUILDING GREAT THINGS 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 Lit
Slide 5: Speakers
LEGATO II Gregory Monahan Chief Executive Officer LEGATO II Brian Pratt Chairman 5 BUILDING GREAT THINGS SOUTHLAND Frank Renda Chief Executive Officer SOUTHLAND Cody Gallarda Chief Financial Officer Speakers
Slide 6: About Southland
About Southland
Slide 7: Southland Holdings company overview
With roots dating back to 1900, Southland Holdings and its subsidiaries form one of the largest infrastructure construction companies in North America , with experience throughout the world. We have built transportation infrastructure that connects our nation, constructed water pipelines and built t
Slide 8: Locations, backlog, employees and ENR rankings
8 BUILDING GREAT THINGS (1) Engineering News - Record Headquarters Equipment Facility Albuquerque, NM Gilboa, NY Fort Lee, NJ Pittsburgh, PA Little Rock, AR Vancouver, BC Seattle, WA Concord, CA Orange County, CA Grapevine, TX Fort Worth, TX El Paso, TX Houston, TX Beaumont, TX Winnipeg, MB Toronto,
Slide 9: Executive Team
9 BUILDING GREAT THINGS Frank Renda President & Chief Executive Officer Cody Gallarda EVP & Chief Financial Officer Tim Winn EVP & Chief Operating Officer Rudy Renda EVP & Chief Operating Officer, Strategy & Special Projects Frank Renda is responsible for identifying and establishing all necessary i
Slide 10: Civil Segment
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 constructing one of the largest hard rock tunnel
Slide 11: Transportation Segment
Transportation Segment 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, U
Slide 12: Competitive Advantages
12 STRONG BALANCE SHEET & BONDING CAPACITY SELF PERFORMING & TECHNICAL EXPERTS WIDE BREADTH OF CAPABILITIES GEOGRAPHY SIGNIFICANTLY OWNED EQUIPMENT FLEET BUILDING GREAT THINGS Competitive Advantages
Slide 13: Equipment Overview
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
15 Source: Infrastructure Report Card provided by American Society of Civil Engineers (1) Assumes go - no - go rate of 50% (2) Assumes 13.7% bid - to - win ratio which is Southland Holdings’ average for past 3 years (2019 - 2021) Between now and 2039, the ASCE report estimates that nearly $13 trilli
Slide 16: Looking ahead
16 BUILDING GREAT THINGS LARGEST AMOUNT OF NEW WORK OPPORTUNITY WE’VE SEEN IN RECENT HISTORY FEWER BIDDERS ON NEW WORK VS PRIOR YEARS FEWER BIDDERS LENDS TO INCREASED BID MARGINS SIGNIFICANT INCREASE IN PROJECTED FUTURE INFRASTRUCTURE SPEND Looking ahead NEW PROJECTS ACROSS ALL END MARKETS AND GEOGR
Slide 17: Client Mix
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 Department of Transportation Arkansas Department of
Slide 18: Company Timeline
1929 1974 2014 2012 2013 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 Acquired MOLE
Slide 19: Financial Performance
19 Note: The 2019 - 2021 annual financial statements were audited in accordance with PCAOB standards. Information on this page prior to 201 9 was not audited in accordance with PCAOB standards. The company is not setting a precedent for future guidance. The company defines EBITDA as earnings before
Slide 20: 2016-2021 CAGR: Revenue and EBITDA
20 $46 $104 2016A 2021A 18% CAGR $467 $1,279 2016A 2021A 22% CAGR Note: The 2016 amounts on this page were not audited in accordance with PCAOB standards. The 2021 annual financial statements we re audited in accordance with PCAOB standards. The company defines EBITDA as earnings before interest exp
Slide 21: Backlog
21 Note: Information on this page prior to 2019 is not audited in accordance with PCAOB standards. $558 $1,089 $836 $1,175 $1,844 $1,876 $2,284 $2,897 $2,219 $2,370 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2013 2014 2015 2016 2017 2018 2019 2020 2021 9/30/2022 BUILDING GREAT THINGS Backlog
Slide 22: Backlog & New Awards
22 Note: Backlog consists of amounts from contracts that are fully executed. Pending backlog additions includes projects the com pan y was awarded or was apparent low bidder on after 9/30/2022. Pending backlog additions after 9/30/2022 are not included in 9/30/2022 backlog. The company is not settin
Slide 23: Segments
23 42% 58% Gross Profit 3 Year Average Civil Transportation 35% 65% Revenue 3 Year Average Civil Transportation Revenue Gross Profit Note: The 2019 - 2021 annual financial statements were audited in accordance with PCAOB standards. BUILDING GREAT THINGS Segments
Slide 24: YOY Income Statements
24 Gross Profit Margin of 12% in first nine months vs. 8% same period in 2021 Note: The quarterly financial statements are not audited in accordance with PCAOB, but have been reviewed by the company’s ex ter nal auditor. The company defines EBITDA as earnings before interest expense, interest expens
Slide 25: Historical Balance Sheet Metrics
$44 $150 $231 $197 $280 $359 Pro Forma Net Debt (1) Working Capital 25 Weighted average interest rate on pro forma debt as of 12/31/20, 12/31/21, and 9/30/2022 was 3.20%, 2.96%, and 3.72% respectively. Note: 2019 - 2021 annual financial statements were audited in accordance with PCAOB standards. The
Slide 26: Transaction Summary
Transaction Summary
Slide 27: Transaction Summary
27 Overview of Southland Overview of Legato II Motivations for the Transaction Transaction Board of Directors Summary Southland Holdings, LLC (“Southland”) is a leading provider of specialized infrastructure construction services across North America including bridges, tunneling, transportation and
Slide 28: Motivations for the Transaction
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: 2022E Valuation
Source: Company filings, S&P Capital IQ. Note: Market data as of December 2, 2022. Estimates based on consensus estimates. Re fer to page 33 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”
Slide 30: Executive Summary
Executive Summary
Slide 31: Summary
31 CLOSE ALIGNMENT OF MANAGEMENT AND SHAREHOLDER INTERESTS FINANCIAL PERFORMANCE SOLID BACKLOG ATTRACTIVE VALUATION COMPARED TO PEERS STRONG BALANCE SHEET INDUSTRY KNOWLEDGE AND EXPERIENCE / COMPETITIVE ADVANTAGE GROWING ROBUST MARKETS BUILDING GREAT THINGS Summary
Slide 32: Appendix
Appendix
Slide 33: Estimated 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 34: Contingent Consideration
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 35: 2023E Valuation
5.0x 5.4x 14.2x 13.1x 11.0x 8.4x 7.9x 8.1x 5.3x 6.6x 6.2x 4.2x 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 December 2, 2022. Estimates based on consensus estimates. Re fer to page 33 for addit
Slide 36: Annual Income Statements
36 Note: The 2019 - 2021 annual financial statements were audited in accordance with PCAOB standards. BUILDING GREAT THINGS Annual Income Statements
Slide 37: Annual Balance Sheets
37 Note: The 2020 - 2021 annual financial statements were audited in accordance with PCAOB standards. BUILDING GREAT THINGS Annual Balance Sheets
Slide 38: Annual Statement of Cash Flows
38 BUILDING GREAT THINGS Note: The 2019 - 2021 annual financial statements were audited in accordance with PCAOB standards. Annual Statement of Cash Flows
Slide 39: YOY Income Statements
39 Note: The quarterly financial statements were not audited in accordance with PCAOB, but have been reviewed by the company’s e xte rnal auditor. BUILDING GREAT THINGS YOY Income Statements
Slide 40: Segments
40 Revenue Gross Profit Note: The quarterly financial statements were not audited in accordance with PCAOB, but have been reviewed by the company’s e xte rnal auditor. 25.5% 74.5% First Nine Month Revenue Civil Transportation 26.9% 73.1% First Nine Month Gross Profit Civil Transportation BUILDING GR
Slide 41: Balance Sheet
41 Note: The quarterly financial statements were not audited in accordance with PCAOB, but have been reviewed by the company’s e xte rnal auditor. BUILDING GREAT THINGS Balance Sheet
Slide 42: YOY Statement of Cash Flows
42 Note: The quarterly financial statements are not audited in accordance with PCAOB, but have been reviewed by the company’s ex ter nal auditor. BUILDING GREAT THINGS YOY Statement of Cash Flows
Slide 43: Financial Performance
43 Note: The company defines EBITDA as earnings before interest expense, interest expense, income taxes, depreciation, and amort iza tion and it is a non - GAAP measure. The company is not setting a precedent for future guidance. The 2019 - 2021 annual financial statements were audited in accordance