0001104659-26-035302
SEC filingSouthland Holdings, Inc. reported a challenging fiscal year 2025 with significant financial losses. Revenue was $772.2 million, but the company incurred a gross loss of $155.3 million due to construction costs of $927.4 million, resulting in a negative gross margin. Operating loss was $216.9 million, and net loss attributable to stockholders was $306.5 million. Despite the net loss, operating cash flow was positive at $16.6 million, primarily driven by a $116.8 million decrease in contract assets and a $89.1 million increase in other noncurrent liabilities. The company faced liquidity challenges in Q4 2025 related to an adverse court ruling on the WSCC Project, but subsequent transactions with sureties in March 2026 improved its liquidity profile. Total assets were $989.3 million against total liabilities of $1.12 billion, resulting in a total equity deficit of $132.5 million. Contract backlog decreased to $2.03 billion at year-end from $2.57 billion the prior year.
Southland Holdings, Inc. experienced a difficult fiscal year 2025 with substantial losses across all profitability metrics. The company generated $772.2 million in revenue but recorded a gross loss of $155.3 million, representing a negative gross margin of 20.1%. This resulted from construction costs of $927.4 million exceeding revenue. Operating loss was $216.9 million after $61.6 million in SG&A expenses. Net loss attributable to stockholders was $306.5 million, or $6.00 per basic and diluted share. Despite the significant net loss, the company generated positive operating cash flow of $16.6 million, compared to $1.9 million in the prior year. The primary drivers were a $116.8 million decrease in contract assets, a $89.1 million increase in other noncurrent liabilities, and $57.3 million in deferred taxes, partially offset by the $308.4 million net loss.
The company's revenue of $772.2 million represents work completed during the fiscal year. The document indicates Southland operates in two reportable segments: Civil and Transportation. The Civil segment specializes in water pipeline, pump stations, water and wastewater treatment plants, concrete and structural steel, outfall, and tunneling. The Transportation segment focuses on bridges, roadways, marine, dredging, ship terminals and piers, and specialty structures and facilities. However, specific revenue figures for each segment are not provided in the available data. The company's contract backlog decreased from $2.57 billion at December 31, 2024 to $2.03 billion at December 31, 2025, representing a reduction of $541.8 million after recognizing $772.2 million in revenue and adding $230.3 million in new contracts and adjustments.
Profitability metrics were severely negative in fiscal year 2025. The gross margin was -20.1%, indicating construction costs significantly exceeded revenue. Operating margin was -28.1% after accounting for $61.6 million in selling, general, and administrative expenses. The company reported other income of $1.7 million and interest expense of $37.0 million, resulting in a loss before income taxes of $251.9 million. Income tax expense was $56.5 million, leading to a net loss of $308.4 million. The document mentions that the construction industry has faced material impacts to profitability due to increased costs, including labor, materials, equipment, and fuel. The company attempts to recover anticipated cost increases through price escalation provisions and fixed-price bids from subcontractors.
Operating cash flow was positive at $16.6 million, driven primarily by working capital changes including decreases in contract assets ($116.8 million) and accounts receivable ($23.1 million), and increases in other noncurrent liabilities ($89.1 million) and accounts payable/accrued liabilities ($23.6 million). Investing activities provided $3.4 million in cash, while financing activities used $40.2 million primarily for debt repayments. The balance sheet shows total assets of $989.3 million, including $734.0 million in current assets (notably $366.6 million in contract assets and $167.8 million in accounts receivable) and $255.3 million in noncurrent assets. Total liabilities were $1.12 billion, resulting in a total equity deficit of $132.5 million. Current liabilities were $655.0 million, including $252.5 million in contract liabilities and $224.9 million in accounts payable. Long-term debt was $204.0 million with an additional $53.7 million current portion.
The company experienced liquidity challenges in Q4 2025 primarily due to an adverse court ruling related to the WSCC Project, which limited recovery of expected claims. This impacted financial covenants and reduced availability under the credit agreement. Subsequent to December 31, 2025, certain sureties assumed lender positions under the Credit Agreement, waived all potential defaults and covenant violations, and waived principal and interest payments until maturity, expected to save approximately $30.2 million over the next twelve months. The sureties also advanced $102.1 million subsequent to year-end under existing General Indemnity Agreements. Management believes the company has sufficient liquidity to meet obligations for at least the next twelve months based on current cash position, expected operating cash flows, existing backlog, and recent actions. The company continues to focus on selective bidding, maintaining bonding capacity, and growth through controlled expansion.