Southland Holdings, Inc. · AMEX:SLND
Southland — Legato Merger Corp. II — SPAC Merger (September 2022)
46 slides from Southland's SPAC merger presentation, Sep 19, 2022
Slide 1: Southland Holdings Investor Presentation
SOUTHLAND HOLDINGS INVESTOR PRESENTATION SEPTEMBER 19, 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 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: At a Glance
$2B BACKLOG ⁓ 2,700 EMPLOYEES ENR (1) RANKED #19 DOMESTIC HEAVY CONTRACTORS ENR RANKED #69 TOP 400 CONTRACTORS ENR RANKED #70 CONTRACTORS BY NEW CONTRACTS AT A GLANCE 8 BUILDING GREAT THINGS (1) Engineering News - Record Headquarters Equipment Facility Regional Offices/Operations/Administration Albu
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: Civil project segment
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 one of the largest hard rock tunnel bo
Slide 11: Transportation project segment
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 CAPABILITIES 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: 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
Slide 16: Diverse customer base
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 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 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
FINANCIAL PERFORMANCE 19 BUILDING GREAT THINGS 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 2022 and 2023 amounts were projections given to SPAC manag
Slide 20: Financial Performance: 2016-2021 CAGR
FINANCIAL PERFORMANCE 20 BUILDING GREAT THINGS $46 $104 2016A 2021A 18% CAGR $467 $1,279 2016A 2021A 22% CAGR Note: The 2016 amounts on this page were not audited in accordance with PCAOB standards. The 2021 annual financial statements we re audited in accordance with PCAOB standards. The company de
Slide 21: Backlog
BACKLOG 21 BUILDING GREAT THINGS Backlog ($ millions) 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 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2013A 2014A 2015A 2016A 2017A 2018A 2019A
Slide 22: Backlog as of 6/30/2022
BACKLOG 22 BUILDING GREAT THINGS Backlog as of 6/30/2022 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 6/30/2022. Pending backlog additions after 6/30/2022 are not in
Slide 23: Annual Income Statements
ANNUAL INCOME STATEMENTS 23 BUILDING GREAT THINGS Income Statements Note: The 2019 - 2021 annual financial statements were audited in accordance with PCAOB standards.
Slide 24: Segments
SEGMENTS 24 BUILDING GREAT THINGS 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.
Slide 25: YoY Income Statements
YOY INCOME STATEMENTS 25 BUILDING GREAT THINGS Income Statements Gross Profit Margin of 8% in first six months vs. 7.5% 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 defin
Slide 26: Income Statements by segment
INCOME STATEMENTS 26 BUILDING GREAT THINGS Revenue Gross Profit 45.4% 54.6% 1H22 Gross Profit Civil Transportation 28.2% 71.8% 1H22 Revenue Civil Transportation Note: The quarterly financial statements were not audited in accordance with PCAOB, but have been reviewed by the company’s e xte rnal audi
Slide 27: Historical Balance Sheet Metrics
$44 $150 $237 $197 $280 $336 Pro Forma Net Debt (1) Working Capital HISTORICAL BALANCE SHEETS METRICS 27 BUILDING GREAT THINGS Weighted average interest rate on pro forma debt as of 12/31/20, 12/31/21, and 6/30/2022 was 3.20%, 2.96%, and 3.03% respectively. Note: 2019 - 2021 annual financial stateme
Slide 28: Financial Performance
FINANCIAL PERFORMANCE 28 BUILDING GREAT THINGS Financial Performance 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. 2022 and 2023 amounts were projections given to SPAC management.
Slide 29: Large JV Partners
LARGE JV PARTNERS 29 BUILDING GREAT THINGS (1) ASC 810 - 10 - 45 - 14 Southland partners with some of the largest, well - respected names in the E&C industry. Southland accounts for large JV projects under partial consolidation guidance. ( 1 ) • Revenue, costs, and profit are recognized in the incom
Slide 30: Transaction Summary
TRANSACTION SUMMARY
Slide 31: Transaction Summary
TRANSACTION SUMMARY 31 BUILDING GREAT THINGS 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 includi
Slide 32: 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 33: Valuation: 2022 EV / EBITDA
Source: Company filings, S&P Capital IQ. Note: Market data as of September 16, 2022. Estimates based on consensus estimates. Ref er to page 43 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 34: Executive Summary
EXECUTIVE SUMMARY
Slide 35: Summary
SUMMARY 35 BUILDING GREAT THINGS 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
Slide 36: Appendix
Appendix
Slide 37: Annual Income Statements
ANNUAL INCOME STATEMENTS 37 BUILDING GREAT THINGS Income Statements Note: The 2019 - 2021 annual financial statements were audited in accordance with PCAOB standards.
Slide 38: Annual Balance Sheets
ANNUAL BALANCE SHEETS 38 BUILDING GREAT THINGS Balance Sheets Note: The 2020 - 2021 annual financial statements were audited in accordance with PCAOB standards.
Slide 39: Annual Statement of Cash Flows
ANNUAL STATEMENT OF CASH FLOWS 39 BUILDING GREAT THINGS Statement of Cash Flows Note: The 2019 - 2021 annual financial statements were audited in accordance with PCAOB standards.
Slide 40: YoY Income Statements
YOY INCOME STATEMENTS 40 BUILDING GREAT THINGS Income Statements Note: The quarterly financial statements were not audited in accordance with PCAOB, but have been reviewed by the company’s e xte rnal auditor.
Slide 41: Balance Sheet
BALANCE SHEET 41 BUILDING GREAT THINGS Balance Sheet Note: The quarterly financial statements were not audited in accordance with PCAOB, but have been reviewed by the company’s e xte rnal auditor.
Slide 42: YoY Statement of Cash Flows
YOY STATEMENT OF CASHFLOWS 42 BUILDING GREAT THINGS Statement of Cash Flows Note: The quarterly financial statements are not audited in accordance with PCAOB, but have been reviewed by the company’s ex ter nal auditor.
Slide 43: 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 44: Contingent consideration aligns incentives with public shareholders
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 45: Valuation: 2023 EV / EBITDA
Source: Company filings, S&P Capital IQ. Note: Market data as of September 16, 2022. Estimates based on consensus estimates. Ref er to page 43 for additional details on transaction structure. (1) Assumes $165 million of EBITDA or above while TEV includes 6.9mm “Base” (2022 and 2023) and 3.4mm “Bonus
Slide 46: Zukin Reasonable Basis Review
ZUKIN REASONABLE BASIS REVIEW 46 BUILDING GREAT THINGS Zukin Certification Services LLC (“Zukin”) performed a Reasonable Basis Review (RBR Ρ ) of southland’s projections and their underlying assumptions and concluded: T he assumptions used, taken as a whole, provide reasonable support for the projec
Legato Merger Corp. II — SPAC Merger (September 2022) on 6ix