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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2025

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-41090

Southland Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware		87-1783910
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1100 Kubota Dr.

Grapevine, TX 76051

(Address of principal executive offices) (Zip Code)

(817) 293-4263

(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per share	SLND	NYSE American LLC
Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share	SLND WS	NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of November 3, 2025, there were 54,113,036 shares of common stock, par value $0.0001 per share, issued and outstanding.

Table of Contents

SOUTHLAND HOLDINGS, INC.

TABLE OF CONTENTS



	Page
PART I – Financial Information
ITEM 1. Financial Statements	1
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	33
ITEM 4. Controls and Procedures	34

PART II – Other Information	35
ITEM 1. Legal Proceedings	35
ITEM 1A. Risk Factors	35
ITEM 5. Other Information	35
ITEM 6. Exhibits	36
Signatures	37

Table of Contents

Unless otherwise stated in this Quarterly Report on Form 10-Q (this “Quarterly Report”), references to the “Company,” “our,” “us,” “we,” or “Southland” refer to Southland Holdings, Inc. and its subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”), as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are based on the reasonable beliefs and assumptions of our management. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates,” “intends” or similar expressions. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about our ability to:

●

Access, collect and use personal data about consumers;

●

Execute our business strategy, including monetization of services provided and expansions in and into existing and new lines of business;

●

Anticipate the uncertainties inherent in the development of new business lines and business strategies;

●

Retain and hire necessary employees;

●

Increase brand awareness;

●

Attract, train and retain effective officers, key employees or directors;

●

Upgrade and maintain information technology systems;

●

Potential disruptions, failures or security breaches of the information technology systems on which we rely to conduct our business;

●

Acquire, develop and protect intellectual property;

●

Meet future liquidity requirements, maintain adequate working capital, and comply with restrictive covenants related to long-term indebtedness;

●

Effectively respond to general economic, socioeconomic and other business conditions;

●

Maintain the listing of our securities on the NYSE American LLC or another national securities exchange;

●

Obtain additional capital, including use of debt and capital markets;

●

Achieve or enhance future operating and financial results;

●

Anticipate rapid technological changes;

●

Comply with laws and regulations applicable to its business, including but not limited to laws and regulations related to data privacy and insurance operations;

●

Stay abreast of modified or new laws and regulations applying to our business;

●

Anticipate the impact of, and respond to, new accounting standards;

●

Anticipate any change in interest rates which would change our cost of capital;

●

Anticipate the significance and timing of contractual obligations;

●

Maintain key strategic relationships with customers, partners and distributors;

●

Respond to uncertainties associated with product and service development and market acceptance;

●

Anticipate the ability of the renewable sector or any other current or potential sectors to develop to the size or at the rate it expects;

●

Anticipate the impact of various federal, state, and local government funding initiatives;

●

Manage to finance operations on an economically viable basis;

●

Anticipate the impact of new U.S. federal income tax law, including the impact on deferred tax assets;

●

Successfully defend, pursue or collect claims and litigation; and

●

Anticipate and respond to changes in the domestic or international trade laws, including tariffs.

Forward-looking statements are not guarantees of performance and speak only as of the date hereof. While we believe that these forward-looking statements are reasonable, there can be no assurance that we will achieve or realize these plans, intentions, or expectations. You should understand that the following important factors, in addition to those discussed under the heading “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “Annual Report”), “Item 1A. Risk Factors” to Part II in this Quarterly Report and other reports or documents we file with the

Table of Contents

Securities and Exchange Commission (“SEC”), could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements in this Quarterly Report:

●

Litigation, complaints, product liability claims and/or adverse publicity;

●

The impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability;

●

Increases and decreases in utility and other energy costs, increased costs related to utility or governmental requirements; and

●

Privacy and data protection laws, privacy or data breaches or the loss of data.

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Quarterly Report are more fully described under the heading “Item 1A. Risk Factors” in the Annual Report and elsewhere in this Quarterly Report. The risks described under the heading “Item 1A. Risk Factors” in the Annual Report are not exhaustive. Other sections of this Quarterly Report may describe additional factors that could adversely affect our business, financial condition or results of operations. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on the business, nor the extent to which any factor or combination of facts may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

In addition, statements of belief and similar statements reflect our reasonable beliefs and opinions on the relevant subject. These statements are based upon information available to us, as applicable, as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and such statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, involve risks and are subject to change based on various factors, including those discussed under the headings “Item 1A. Risk Factors” and “Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

SOUTHLAND HOLDINGS, INC.

Condensed Consolidated Balance Sheets (unaudited)


(Amounts in thousands, except share and per share data)	As of
ASSETS	September 30, 2025		December 31, 2024
Current assets
Cash and cash equivalents	$	40,482	$	72,185
Restricted cash		16,862		15,376
Accounts receivable, net		195,072		179,320
Retainage receivables		120,535		112,264
Contract assets		468,551		483,181
Other current assets		28,177		19,326
Total current assets		869,679		881,652

Property and equipment, net		112,188		116,328
Right-of-use assets		9,900		14,897
Investments - unconsolidated entities		134,608		126,705
Investments - limited liability companies		2,590		2,590
Investments - private equity		2,554		2,699
Deferred tax asset		143		54,531
Goodwill		1,528		1,528
Intangible assets, net		1,180		1,180
Other noncurrent assets		1,698		1,539
Total noncurrent assets		266,389		321,997
Total assets	$	1,136,068	$	1,203,649

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	233,895	$	191,670
Retainage payable		35,413		33,622
Accrued liabilities		76,812		91,515
Current portion of long-term debt		51,356		44,525
Short-term operating lease liabilities		6,272		10,104
Contract liabilities		268,210		249,706
Total current liabilities		671,958		621,142

Long-term debt		216,443		255,625
Long-term operating lease liabilities		16,838		10,791
Deferred tax liabilities		3,071		292
Financing obligations, net		41,462		41,468
Long-term accrued liabilities		58,075		58,075
Other noncurrent liabilities		40,781		40,847
Total long-term liabilities		376,670		407,098
Total liabilities		1,048,628		1,028,240

Commitment and contingencies (Note 6)

Stockholders' equity
Preferred stock, $0.0001 par value, authorized 50,000,000 shares, none issued and outstanding as of September 30, 2025 and December 31, 2024		—		—
Common stock, $0.0001 par value, authorized 500,000,000 shares, 54,113,036 and 53,936,411 issued and outstanding as of September 30, 2025 and December 31, 2024, respectively		5		5
Additional paid-in-capital		292,872		292,173
Accumulated deficit		(214,745)		(124,618)
Accumulated other comprehensive loss		(3,155)		(3,902)
Total stockholders' equity		74,977		163,658
Noncontrolling interest		12,463		11,751
Total equity		87,440		175,409
Total liabilities and equity	$	1,136,068	$	1,203,649

See notes to unaudited condensed consolidated financial statements

Table of Contents

SOUTHLAND HOLDINGS, INC.

Condensed Consolidated Statements of Operations (unaudited)


	Three Months Ended				Nine Months Ended
(Amounts in thousands except shares and per share data)	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Revenue	$	213,343	$	173,320	$	668,211	$	712,929
Cost of construction		210,068		224,425		630,093		783,635
Gross profit (loss)		3,275		(51,105)		38,118		(70,706)
Selling, general, and administrative expenses		14,587		17,492		44,624		47,566
Operating loss		(11,312)		(68,597)		(6,506)		(118,272)
Gain (loss) on investments, net		50		5		126		(18)
Other income, net		639		841		1,564		2,430
Interest expense		(9,166)		(7,520)		(28,023)		(19,895)
Losses before income taxes		(19,789)		(75,271)		(32,839)		(135,755)
Income tax expense (benefit)		57,194		(17,142)		56,820		(32,796)
Net loss		(76,983)		(58,129)		(89,659)		(102,959)
Net income (loss) attributable to noncontrolling interests		(1,714)		(3,402)		468		(1,749)
Net loss attributable to Southland Stockholders	$	(75,269)	$	(54,727)	$	(90,127)	$	(101,210)

Net loss per share attributable to common stockholders
Basic	$	(1.39)	$	(1.14)	$	(1.67)	$	(2.11)
Diluted	$	(1.39)	$	(1.14)	$	(1.67)	$	(2.11)
Weighted average shares outstanding
Basic		54,113,036		48,105,512		54,028,363		48,020,822
Diluted		54,113,036		48,105,512		54,028,363		48,020,822

See notes to unaudited condensed consolidated financial statements

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SOUTHLAND HOLDINGS, INC.

Condensed Consolidated Statements of Comprehensive Loss (unaudited)


	Three Months Ended				Nine Months Ended
(Amounts in thousands)	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Net loss	$	(76,983)	$	(58,129)	$	(89,659)	$	(102,959)
Foreign currency translation adjustment, net of tax		(1,173)		238		991		(1,039)
Comprehensive loss, net of tax		(78,156)		(57,891)		(88,668)		(103,998)
Comprehensive (income) loss attributable to noncontrolling interest		(1,888)		(3,310)		712		(1,972)
Comprehensive loss attributable to Southland Stockholders	$	(76,268)	$	(54,581)	$	(89,380)	$	(102,026)

See notes to unaudited condensed consolidated financial statements

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SOUTHLAND HOLDINGS, INC.

Condensed Consolidated Statements of Equity (unaudited)


	Nine Months Ended September 30, 2025
	Shares
	Preferred	Common	Preferred		Common				Additional		Accumulated		Noncontrolling		Total
(Amounts in thousands)	stock	stock	Stock		Stock		AOCI		Paid-In Capital		Deficit		Interest		Equity
Balance as of December 31, 2024	—	53,936,411	$	—	$	5	$	(3,902)	$	292,173	$	(124,618)	$	11,751	$	175,409
Issuance of shares - RSUs, net of tax	—	50,658		—		—		—		(111)		—		—		(111)
Issuance of common stock	—	100		—		—		—		—		—		—		—
Share based compensation	—	—		—		—		—		464		—		—		464
Net income (loss)	—	—		—		—		—		—		(4,552)		1,766		(2,786)
Other comprehensive income (loss)	—	—		—		—		(329)		—		—		11		(318)
Balance as of March 31, 2025	—	53,987,169	$	—	$	5	$	(4,231)	$	292,526	$	(129,170)	$	13,528	$	172,658
Issuance of shares - RSUs, net of tax	—	125,867		—		—		—		(10)		—		—		(10)
Share based compensation	—	—		—		—		—		228		—		—		228
Net income (loss)	—	—		—		—		—		—		(10,306)		416		(9,890)
Other comprehensive income	—	—		—		—		2,075		—		—		407		2,482
Balance as of June 30, 2025	—	54,113,036	$	—	$	5	$	(2,156)	$	292,744	$	(139,476)	$	14,351	$	165,468
Share based compensation	—	—		—		—		—		128		—		—		128
Net loss	—	—		—		—		—		—		(75,269)		(1,714)		(76,983)
Other comprehensive loss	—	—		—		—		(999)		—		—		(174)		(1,173)
Balance as of September 30, 2025	—	54,113,036	$	—	$	5	$	(3,155)	$	292,872	$	(214,745)	$	12,463	$	87,440

See notes to unaudited condensed consolidated financial statements

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SOUTHLAND HOLDINGS, INC.

Condensed Consolidated Statements of Equity (unaudited)


	Nine Months Ended September 30, 2024
	Shares
	Preferred	Common	Preferred		Common				Additional		Accumulated		Noncontrolling		Total
(Amounts in thousands)	stock	stock	Stock		Stock		AOCI		Paid-In Capital		Deficit		Interest		Equity
Balance as of December 31, 2023	—	47,891,984		—		5		(1,460)		270,330		(19,253)		10,942		260,564
Issuance of shares - RSUs, net of tax	—	133,704		—		—		—		(206)		—		—		(206)
Share based compensation	—	—		—		—		—		677		—		—		677
Net income (loss)	—	—		—		—		—		—		(406)		931		525
Other comprehensive loss	—	—		—		—		(372)		—		—		(209)		(581)
Balance as of March 31, 2024	—	48,025,688	$	—	$	5	$	(1,832)	$	270,801	$	(19,659)	$	11,664	$	260,979
Issuance of shares - RSUs, net of tax	—	79,824		—		—		—		—		—		—		—
Share based compensation	—	—		—		—		—		622		—		—		622
Net income (loss)	—	—		—		—		—		—		(46,077)		722		(45,355)
Other comprehensive loss	—	—		—		—		(590)		—		—		(106)		(696)
Balance as of June 30, 2024	—	48,105,512	$	—	$	5	$	(2,422)	$	271,423	$	(65,736)	$	12,280	$	215,550
Share based compensation	—	—		—		—		—		375		—		—		375
Net loss	—	—		—		—		—		—		(54,727)		(3,402)		(58,129)
Other comprehensive income	—	—		—		—		146		—		—		92		238
Balance as of September 30, 2024	—	48,105,512	$	—	$	5	$	(2,276)	$	271,798	$	(120,463)	$	8,970	$	158,034

See notes to unaudited condensed consolidated financial statements

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SOUTHLAND HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows (unaudited)


	Nine Months Ended
(Amounts in thousands)	September 30, 2025		September 30, 2024
Cash flows from operating activities:
Net loss	$	(89,659)	$	(102,959)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		17,530		16,925
Amortization of deferred financing costs		1,387		—
Loss on extinguishment of debt		—		246
Deferred taxes		57,218		(28,379)
Share based compensation		820		1,674
Gain on sale of assets		(2,743)		(3,279)
Foreign currency remeasurement gain		(53)		(53)
Loss (earnings) from equity method investments		(8,131)		2,453
TZC investment present value accretion		—		(3,367)
Loss (gain) on trading securities, net		(126)		18
Changes in assets and liabilities:
Accounts and retainage receivables		(23,055)		2,196
Contract assets		14,861		97,801
Other current assets		(8,851)		859
Right-of-use assets		4,997		(1,096)
Accounts payable, retainage payable and accrued liabilities		28,174		(22,659)
Contract liabilities		18,498		50,115
Operating lease liabilities		(4,976)		1,227
Other		1,002		520
Net cash provided by operating activities		6,893		12,242

Cash flows from investing activities:
Purchase of property and equipment		(3,446)		(6,210)
Proceeds from sale of property and equipment		6,264		4,453
Contributions to other investments		—		(59)
Distributions from other investments		271		181
Distributions from investees		184		4,183
Capital contribution to unconsolidated investments		(184)		(250)
Net cash provided by investing activities		3,089		2,298

Cash flows from financing activities:
Borrowings on revolving credit facility		—		5,000
Payments on revolving credit facility		—		(95,000)
Borrowings on notes payable		—		167,784
Payments on notes payable		(39,010)		(80,613)
Proceeds from financing obligations		—		42,500
Payments of deferred financing costs		(297)		(5,468)
Pre-payment premium		—		(246)
Payments to related parties		(3)		—
Payments on finance lease and financing obligations		(832)		(5,314)
Payment of taxes related to net share settlement of RSUs		(121)		(206)
Net cash provided by (used in) financing activities		(40,263)		28,437

Effect of exchange rate on cash		64		(49)

Net increase (decrease) in cash and cash equivalents and restricted cash		(30,217)		42,928
Beginning of period		87,561		63,820
End of period	$	57,344	$	106,748

Supplemental cash flow information
Cash paid for income taxes	$	734	$	1,079
Cash paid for interest	$	26,781	$	18,886
Non-cash investing and financing activities:
Lease assets obtained in exchange for new leases	$	9,311	$	9,881
Assets obtained in exchange for notes payable	$	5,585	$	23,286
Related party payable exchanged for note payable	$	—	$	3,797

See notes to unaudited condensed consolidated financial statements

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SOUTHLAND HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Description of Business

Southland Holdings, Inc. and its consolidated subsidiaries (“Southland”, the “Company”, “we”, “us”, or “our”) is a diverse leader in specialty infrastructure construction with roots dating back to 1900. We design and construct projects in the bridges, tunnels, transportation and facilities, marine, steel structures, water and wastewater treatment, and water pipelines end markets.

Southland is based in Grapevine, Texas. It is the parent company of Johnson Bros. Corporation, American Bridge Holding Company (“American Bridge”), Oscar Renda Contracting, Southland Contracting, Mole Constructors, Heritage Materials and other affiliates. With the combined capabilities of these six primary subsidiaries and their affiliates, Southland has become a diversified industry leader with both public and private customers. The majority of our customers are located in the United States.

As previously announced, on May 25, 2022, Legato Merger Corp. II, a Delaware corporation (“Legato II”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Legato Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Legato II (“Merger Sub”), and Southland Holdings LLC, a Texas limited liability company (“Southland LLC”).

On February 14, 2023 (the “Closing Date”), as contemplated by the Merger Agreement, Merger Sub merged with and into Southland LLC, with Southland LLC surviving the merger as a wholly owned subsidiary of Legato II (the “Merger”). The transactions contemplated by the Merger Agreement are referred to herein collectively as the “Business Combination.” In connection with the Business Combination, Legato II changed its name to “Southland Holdings, Inc.” The Merger was accounted for as a reverse recapitalization with Southland LLC as the accounting acquirer and Legato II as the acquired company for accounting purposes.

On the Closing Date, the Company issued 33,793,111 shares of common stock to the former members of Southland (“Southland Members”) in exchange for their membership interests in Southland (“Southland Membership Interests”). Southland received net proceeds of $17.1 million. Transaction costs of $9.9 million directly related to the Merger, are included in additional paid-in capital in the unaudited condensed consolidated balance sheet as of September 30, 2025 and December 31, 2024.

Prior to the Merger, Southland LLC declared a $50.0 million dividend to be payable to Southland Members, which is recorded in other noncurrent liabilities on the unaudited condensed consolidated balance sheets. Southland Members, in lieu of cash payment, agreed to receive a promissory note for payment in the future. The notes have a four-year term and accrue interest at 7.0%. In December 2024, the Company exchanged the remaining outstanding balance of these promissory notes and accrued interest thereupon due in exchange for shares of common stock.

Immediately after giving effect to the Business Combination, there were 44,407,831 shares of common stock and 14,385,500 warrants, each exercisable for a share of common stock at an exercise price of $11.50 per share (including public and private placement warrants) (each a “Warrant” and together, collectively, the “Warrants”), outstanding.

Note 2. Basis of Presentation

Consolidated U.S. GAAP Presentation

These interim unaudited condensed consolidated financial statements have been prepared in conformity with United States Generally Accepted Accounting Principles (“GAAP”). The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) contains guidance that form GAAP. New guidance is released via Accounting Standards Update (“ASU”).

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The unaudited condensed consolidated financial statements have been prepared by us pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. These unaudited condensed consolidated financial statements should be read in conjunction with our Annual Report which was filed on Form 10-K on March 4, 2025.

The accompanying consolidated balance sheet and related disclosures as of December 31, 2024, have been derived from the Form 10-K filed on March 4, 2025. The Company’s financial condition as of September 30, 2025, and operating results for the three and nine months ended September 30, 2025, are not necessarily indicative of the financial conditions and results of operations that may be expected for any future interim period or for the year ending December 31, 2025.

The unaudited condensed consolidated financial statements include the accounts of Southland Holdings, Inc., and our majority-owned and controlled subsidiaries and affiliates, as detailed below. All significant intercompany transactions are eliminated within the consolidations process. Investments in non-construction related partnerships and less-than-majority owned subsidiaries that we do not control, but where we have significant influence, are accounted for under the equity method. Certain construction related joint ventures and partnerships that we do not control, nor do we have significant influence, are accounted for under the equity method for the balance sheet and under the proportionate consolidation method for the statement of operations.

Reclassifications

Certain reclassifications have been made to the Company’s prior period consolidated financial information to conform to the current year presentation. These presentation changes did not impact the Company’s consolidated net income, consolidated cash flows, total assets, total liabilities or total equity.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management periodically evaluates estimates used in the preparation of the unaudited condensed consolidated financial statements for continued reasonableness. It is reasonably possible that changes may occur in the near term that would affect our estimates with respect to revenue recognition, the allowance for credit losses, recoverability of unapproved contract modifications, deferred tax assets, and other accounts for which estimates are required.

Cash, Cash Equivalents, and Restricted Cash

We consider all highly liquid instruments purchased with a maturity of three months or less as cash equivalents. We maintain our cash in accounts at certain financial institutions. The majority of our balances exceed federally insured limits.

We have not experienced any losses in these accounts, and we do not believe they are exposed to any significant credit risk.

Restricted cash and cash equivalents consist of amounts held in accounts in our name at certain financial institutions. These accounts are subject to certain control provisions in favor of various surety and insurance companies for purposes of compliance and security perfections.

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(Amounts in thousands)	September 30, 2025		December 31, 2024
Cash and cash equivalents at beginning of period	$	72,185	$	49,176
Restricted cash at beginning of period		15,376		14,644
Total cash, cash equivalents, and restricted cash at beginning of period	$	87,561	$	63,820

Cash and cash equivalents at end of period	$	40,482	$	72,185
Restricted cash at end of period		16,862		15,376
Total cash, cash equivalents, and restricted cash at end of period	$	57,344	$	87,561

Goodwill and Indefinite-Lived Intangibles

Goodwill and indefinite-lived intangibles are tested for impairment annually in the fourth quarter, or more frequently if events or circumstances indicate that goodwill or indefinite-lived intangibles may be impaired. We evaluate goodwill at the reporting unit level (operating segment or one level below an operating segment). We identify our reporting unit and determine the carrying value of the reporting unit by assigning the assets and liabilities, including the existing goodwill and indefinite-lived intangibles, to the reporting unit. Our reporting units are based on our organizational and reporting structure. We currently identify three reporting units. We begin with a qualitative assessment using inputs based on our business, our industry, and overall macroeconomic factors. If our qualitative assessment deems that the fair value of a reporting unit is more likely than not less than its carrying amount, we then complete a quantitative assessment to determine the fair value of the reporting unit and compare it to the carrying amount of the reporting unit. During the three and nine months ended September 30, 2025 and 2024, based on the results of our qualitative assessments which determined that it was more likely than not that the fair value of the reporting units exceeded the carrying amounts and that the fair value of the indefinite-lived intangible assets exceeded the carrying amounts, we did not complete quantitative assessments, and we did not record any impairment of goodwill or indefinite-lived intangible assets.

Valuation of Long-Lived Assets

We review long-lived assets, including finite-lived intangible assets subject to amortization, for impairment upon the occurrence of events or changes in circumstances that would indicate that the carrying value of the asset or group of assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or group of assets to the future net cash flows expected to be generated by the asset or group of assets. If such assets are not considered to be fully recoverable, any impairment to be recognized is measured by the amount by which the carrying amount of the asset or group of assets exceeds its respective fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the three and nine months ended September 30, 2025 and 2024, we did not identify any triggering events that would require a quantitative assessment.

Accounts Receivable, Net

We provide an allowance for credit losses, which is based upon a review of outstanding receivables, historical collection information, existing economic conditions, and future expectations. Normal contract receivables are typically due 30 days after the issuance of the invoice. Retainages are due 30 days after completion of the project and acceptance by the contract owner. Warranty retainage receivables, where applicable, are typically due two years after completion of the project and acceptance by the contract owner. Receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based on individual credit evaluations and specific circumstances of the customer.

As of September 30, 2025, and December 31, 2024, we had an allowance for credit losses of $1.5 million and $2.0 million, respectively.

Real Estate Transaction

In July 2024, the Company closed a real estate purchase agreement to sell and leaseback three properties for $42.5 million (see Note 11). The transaction was accounted for as a failed sale-leaseback in accordance with ASC 842. As a result, the assets remain on the consolidated balance sheets at their historical net book values. A financing obligation liability was recognized in the amount of $42.5 million with an interest rate of 8.90%. The financing obligation has a maturity date of July 2044. The Company will not recognize rent expenses related to the leased assets. Instead, monthly rent payments under the lease

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agreement will be recorded as interest expense and a reduction of the outstanding liability.

As of September 30, 2025, relating to the transaction noted above, the current outstanding liability is included in accrued liabilities and the long-term outstanding liability presented as financing obligations, net on the unaudited condensed consolidated balance sheets.

Recently Adopted Accounting Pronouncements

In August 2023, the FASB issued ASU 2023-05, “Business Combinations-Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement” (“ASU 2023-05”), which requires that a joint venture apply a new basis of accounting upon formation. As a result, a newly formed joint venture, upon formation, would initially measure its assets and liabilities at fair value. ASU 2023-05 is effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. ASU 2023-05 was adopted in the first quarter of 2025. Our adoption of ASU 2023-05 did not have a material impact on our consolidated financial statements.

In November 2023, FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which requires expanded disclosure of significant segment expenses and other segment items on an annual and interim basis. ASU 2023-07 will be applied retrospectively and is first effective for our annual reporting for 2024 and for quarterly reporting beginning in 2025. The adoption of ASU 2023-07 did not have a material impact on our consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

In October 2023, the FASB issued ASU 2023-06 “Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” which amends GAAP to include 14 disclosure requirements that are currently required under SEC Regulation S-X or Regulation S-K. Each amendment will be effective on the date on which the SEC removes the related disclosure requirement from SEC Regulation S-X or Registration S-K. The Company has evaluated the new standard and determined that it will have no material impact on its consolidated financial statements or disclosures since the Company is already subject to the relevant SEC disclosure requirements.

On December 14, 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which established new income tax disclosure requirements. Public business entities must apply the guidance to annual periods beginning after December 15, 2024. We have not elected to early adopt this standard. We are currently evaluating the impact ASU 2023-09 will have on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public entities to disclose, in the notes to financial statements, certain costs and expenses, such as purchases of inventory, employee compensation, and costs related to depreciation and amortization. ASU 2024-03 is effective for our Annual Report on Form 10-K for the fiscal year ended December 31, 2027, and subsequent interim periods, with early adoption permitted. We do not expect ASU 2024-03 to have an impact on our financial position, results of operations and cash flows; however, we are currently evaluating the impact on our consolidated financial statement disclosures.

Significant Accounting Policies

The significant accounting policies followed by the Company are set forth in Note 2 to the 10-K filed on March 4, 2025, and contained elsewhere herein, other than the policy for warrants, which is included below. For the three and nine months ended September 30, 2025, there were no significant changes in our use of estimates or significant accounting policies.

Warrants

Immediately after giving effect to the Business Combination, there were 14,385,500 Warrants issued and outstanding. Each Warrant is exercisable for a share of common stock at an exercise price of $11.50 per share. The Company accounts for the Warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in FASB ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the instruments are freestanding financial

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instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own common shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, was conducted at the time of Warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding. The Company has concluded that the public Warrants and private Warrants issued pursuant to the Warrant agreement qualify for equity accounting treatment.

Note 3. Fair Value of Investments

Fair value of investments measured on a recurring basis as of September 30, 2025, and December 31, 2024, were as follows:


	As of
	September 30, 2025
(Amounts in thousands)	Fair Value		Level 1		Level 2		Level 3
Investments Noncurrent
Private equity	$	2,554	$	—	$	—	$	2,554
Total noncurrent		2,554		—		—		2,554
Overall Total	$	2,554	$	—	$	—	$	2,554


	As of
	December 31, 2024
(Amounts in thousands)	Fair Value		Level 1		Level 2		Level 3
Investments Noncurrent
Private equity	$	2,699	$	—	$	—	$	2,699
Total noncurrent		2,699		—		—		2,699
Overall Total	$	2,699	$	—	$	—	$	2,699

Note 4. Revenue

Revenue is recognized over time using the input method in accordance with ASC 606, measured by the percentage of cost incurred to date to the estimated total cost for each contract. This method is used because we believe expended cost to be the best available measure of progress on contracts.

Our contracts are primarily in the form of firm fixed-price and fixed-price per unit. A large portion of our contracts have scope defined adequately, which allows us to estimate total contract value upon the signing of a new contract. Upon signing a new contract, we allocate the total consideration across various contractual promises to transfer a distinct good or service to a customer. These are grouped into specific performance obligations. This process requires significant management judgement. Most of our contracts have a single performance obligation. For contracts with multiple performance obligations, we allocate the total transaction price based on the estimated standalone selling price, which is the total project costs plus a budgeted margin percentage, for each of the performance obligations.

Revenue is recognized when, or as, the performance obligations are satisfied. Our contracts do not include a significant financing component. Costs to obtain contracts are generally not significant and are expensed in the period incurred.

Estimating cost to complete of long-term contracts involves a significant amount of estimation and judgement. For long-term contracts, we use the calculated transaction price, estimated cost to complete the project, and the total costs incurred on the project to date to calculate the percentage of the project that is complete. The estimated costs to complete the project and the estimated transaction price can change due to unforeseen events that can either increase or decrease the margin on a particular project.

Our contract structures typically allow for variable consideration. A significant portion of this variable consideration comes in the form of change order requests and claims. Other variable consideration can include volume discounts, performance bonuses, incentives, liquidated damages, and other terms that can either raise or lower the total transaction price. We estimate variable consideration based on the probability of being entitled to collection of specific amounts. We include amounts that we believe we have an enforceable right to collect, based on our expected probability of success with specific claims or contractual

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rights. Our estimates of total variable consideration rely on all available information about our customer including historical, current, and forecasted information.

Many of our contracts require contract modifications resulting from a change in contract scope or requirements. Change orders are issued to document changes to the original contract. We can have approved and unapproved change orders. Unapproved change orders are contract modifications for which we or our customers have not agreed to terms, scope and price. Contract modifications are necessary for many reasons, including but not limited to, changes to the contract specifications or design from the customer, modification to the original scope, changes to engineering drawings, or other required deviation from the original construction plan. Contract modifications may also be necessary for reasons including, but not limited to, other changes to the contract which may be out of our control, such as rain or other weather delays, incomplete, insufficient, inaccurate engineering drawings, different site conditions from information made available during the estimating process, or other reasons. An unapproved change order may turn into a formal claim if we cannot come to an agreement with the owner but are contractually entitled to recovery of costs and profits for work performed. Costs incurred related to contract modifications are included in the estimated costs to complete and are treated as project costs when incurred. Unless the contract modification is distinct from the other goods and services included within the project, the contract modification is accounted for as part of the existing contract. The effect of any modifications on the transaction price, and our measure of the percentage-of-completion on specific performance obligations for which the contract modification relates, is recognized as a cumulative catch-up adjustment to revenue recognized. In some cases, contract modifications may not be fully settled until after the completion of work as specified in the original contract.

We review and update our contract estimates regularly on every construction project. Any adjustments in estimated profit, via changes in estimated revenues and estimated costs, on contracts is recognized under the cumulative catch-up method. Under this method, the cumulative impact of a revenue, cost, or profit adjustment is recognized in the period the updated estimates are identified, which may include a reversal of amounts recognized in prior periods. The input of actual costs is used in the percentage-of-completion formula that takes into account current changes in estimates that are treated on a prospective basis. Adjustments in contract estimates resulted in a decrease in gross profit of $33.6 million and $58.8 million for three and nine months ended September 30, 2025, respectively. Adjustments in contract estimates resulted in a decrease in gross profit of $83.1 million and $191.7 million for the three and nine months ended September 30, 2024, respectively.

If a contract is deemed to be in a loss position, the projected loss is recognized in full, including reversal of any previously recognized margin, in the period in which the change in estimate is made. Losses are recognized as an accrued loss provision on the consolidated balance sheets in the accrued liabilities caption. For contract revenue after the date that the loss is accrued, the accrued loss provision is adjusted so that the gross profit for the contract remains zero in future periods, subject to future adjustments to the overall expected profit or loss as determined at such time. As of September 30, 2025 and December 31, 2024, we had $8.7 million and $15.7 million, respectively, in accrued loss provisions.

We estimate the likelihood of collection during the bidding process for new contracts. Customers with a history of late or non-payment are typically avoided in the bidding process. We consider the necessity for write-down of receivable balances in conjunction with GAAP when evaluating our estimates of transaction price and estimated costs to complete our projects.

We bill our customers in conjunction with our contract terms. Our contracts have three main categories, (i) contracts that are billed based on a specific timeline, (ii) contracts that are billed upon the completion of certain phases of work, or milestones, and (iii) contracts that are billed as services are provided. Some of our contracts are billed following the recognition of certain revenue. This creates an asset on our consolidated balance sheets captioned “contract assets.” Other contracts’ schedules allow us to bill customers prior to recognizing revenue. These contracts create a liability on our consolidated balance sheets captioned “contract liabilities.”

We segregate our business into two reportable segments: Transportation and Civil. Our Chief Operating Decision Maker (“CODM”), the Chief Executive Officer, uses these segments in order to operate the business. Our segments offer different specialty infrastructure services. Our CODM regularly reviews our operating and financial performance based on these segments. Each of our reportable segments is composed of similar business units that specialize in specialty infrastructure projects that are unique.

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Our business is managed using revenue and gross profit primarily. Our CODM regularly uses this information to review operating results, plan future bids, allocate resources, target customers, and plan future growth and capital allocations. To determine reportable segment gross profit, certain allocations, including allocations of shared and indirect costs, such as facility costs, equipment costs, and indirect operating expenses, were made.

Our Civil segment is comprised of Oscar Renda Contracting, Inc., Mole Constructors, Inc., Southland Contracting, Inc., Southland Holdings, LLC, Renda Pacific, LLC, Southland Renda JV, Southland RE Properties, Oscar Renda Contracting Canada, Southland Mole of Canada, Southland Technicore Mole joint venture, and Southland Mole of Canada/Astaldi Canada Design & Construction JV (“Southland Astaldi”). In November 2024, the Company dissolved the Southland Technicore Mole joint venture. This segment focuses on projects throughout North America that include the design and construction of water pipeline, pump stations, lift stations, water and wastewater treatment plants, concrete and structural steel, outfall, and tunneling.

Our Transportation segment is comprised of American Bridge, Heritage Materials, LLC, and Johnson Bros. Corporation. This segment operates throughout North America and specializes in services that include the design and construction of bridges, roadways, marine, dredging, ship terminals, and piers, and specialty structures and facilities.

Total assets by segment are not presented as our CODM, as defined by ASC 280, does not review or allocate resources based on segment assets. We do not have material intersegment revenue or gross profit. Joint ventures are classified into the segment with which the projects align.

Segment Revenue

Revenue by segment for the three and nine months ended September 30, 2025 and 2024, was as follows:


	Three Months Ended								Nine Months Ended
(Amounts in thousands)	September 30, 2025				September 30, 2024				September 30, 2025				September 30, 2024
			% of Total				% of Total				% of Total				% of Total
Segment	Revenue		Revenue		Revenue		Revenue		Revenue		Revenue		Revenue		Revenue
Civil	$	99,481	46.6	%	$	55,849	32.2	%	$	283,927	42.5	%	$	219,490	30.8	%
Transportation		113,862	53.4	%		117,471	67.8	%		384,284	57.5	%		493,439	69.2	%
Total revenue	$	213,343	100.0	%	$	173,320	100.0	%	$	668,211	100.0	%	$	712,929	100.0	%

Segment Cost of Construction

Cost of construction by segment three and nine months ended September 30, 2025 and 2024, was as follows:


	Three Months Ended								Nine Months Ended
(Amounts in thousands)	September 30, 2025				September 30, 2024				September 30, 2025				September 30, 2024
			% of Total				% of Total				% of Total				% of Total
	Cost of		Cost of		Cost of		Cost of		Cost of		Cost of		Cost of		Cost of
Segment	Construction		Construction		Construction		Construction		Construction		Construction		Construction		Construction
Civil	$	89,054	42.4	%	$	74,185	33.1	%	$	236,264	37.5	%	$	210,796	26.9	%
Transportation		121,014	57.6	%		150,240	66.9	%		393,829	62.5	%		572,839	73.1	%
Total cost of construction	$	210,068	100.0	%	$	224,425	100.0	%	$	630,093	100.0	%	$	783,635	100.0	%

Segment Gross Profit (Loss)

Gross profit (loss) by segment for the three and nine months ended September 30, 2025 and 2024, was as follows:


	Three Months Ended								Nine Months Ended
(Amounts in thousands)	September 30, 2025				September 30, 2024				September 30, 2025				September 30, 2024
			% of Segment				% of Segment				% of Segment				% of Segment
Segment	Gross Profit		Revenue		Gross Loss		Revenue		Gross Profit		Revenue		Gross Profit		Revenue
Civil	$	10,427	10.5	%	$	(18,336)	(32.8)	%	$	47,663	16.8	%	$	8,694	4.0	%
Transportation		(7,152)	(6.3)	%		(32,769)	(27.9)	%		(9,545)	(2.5)	%		(79,400)	(16.1)	%
Gross profit (loss)	$	3,275	1.5	%	$	(51,105)	(29.5)	%	$	38,118	5.7	%	$	(70,706)	(9.9)	%

Revenue earned outside of the United States was 14% and 11% for the three months ended September 30, 2025 and 2024, respectively. Revenue earned outside of the United States was 15% and 20% the nine months ended September 30, 2025 and 2024, respectively.

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Note 5. Debt

Long-term debt and credit facilities consisted of the following as of September 30, 2025, and December 31, 2024:


	As of
(Amounts in thousands)	September 30, 2025		December 31, 2024
Secured notes	$	272,894	$	306,219
Mortgage notes		329		393
Total debt		273,223		306,612
Unamortized deferred financing costs		(5,424)		(6,462)
Total debt, net		267,799		300,150
Less: Current portion		(51,356)		(44,525)
Total long-term debt	$	216,443	$	255,625

The weighted average interest rate on total debt outstanding as of September 30, 2025 and December 31, 2024, was 9.33% and 9.43%, respectively.

Secured Notes

We enter into secured notes in order to finance growth within our business. As of September 30, 2025, we had outstanding secured notes expiring between December 2025 and March 2033. Interest rates on the secured notes range between 0.00% and 12.90%. The secured notes are collateralized by certain assets of Southland’s fleet of equipment.

On September 30, 2024, the Company entered into a term loan and security agreement (the “Credit Agreement”) with Callodine Commercial Finance, LLC as administrative agent (“Administrative Agent”) and lender. The Credit Agreement provides for a four-year secured $160.0 million term loan facility (the “Credit Facility”), consisting of a $140.0 million initial draw term loan (the “Term Loan”) and a $20.0 million committed delayed draw term loan (the “Delayed Draw”). The Delayed Draw is a committed facility in which the Company may request all or a portion of the Delayed Draw to be available to the Company, subject to specified advance rates against eligible collateral and other criteria of the Credit Facility. The Delayed Draw can be drawn no more than once per quarter in minimum increments of $2.5 million, and once drawn, any repaid amounts of the Delayed Draw cannot be re-borrowed. Any undrawn portion of the Delayed Draw commitment will terminate on September 30, 2027, the third anniversary of the closing date. The Credit Facility has a maturity date of September 30, 2028.

The Credit Facility replaced the revolving credit facility with Frost Bank that was originally entered into in July 2021 (as subsequently amended, the “Revolving Credit Facility”). A portion of the proceeds from the Term Loan was used to pay in full all outstanding amounts under the Revolving Credit Facility, and the Revolving Credit Facility was terminated.

On March 3, 2025, the Company and Administrative Agent entered into a first amendment to the Credit Facility that removed an Administrative Agent-requested borrowing base reserve amount in exchange for certain additional reporting obligations and a personal guarantee from Frank Renda, the Company’s President and Chief Executive Officer, on any draws made on the Delayed Draw. As such, the Company has access to the Delayed Draw facility as supported by the borrowing base calculation and as of September 30, 2025, $18.7 million was available.

The Credit Agreement requires quarterly principal payments on the Term Loan, which commenced on December 31, 2024. The required principal amortization is as follows: (i) 5.0% in the first year (1.25% per quarter), (ii) 10.0% in the second year (2.50% per quarter), (iii) 15.0% in the third and fourth years (3.75% per quarter), and (iv) the remaining balance at maturity. The amortization for the Delayed Draw will also be paid quarterly and apply to each individual draw at the same prevailing quarterly rate that is in effect for the Term Loan and will commence with the first full quarter after the draw date of any Delayed Draw.

The interest on amounts drawn under the Credit Facility is payable monthly at a rate of 7.25% per annum plus the higher of (i) 90-day Secured Overnight Financing Rate (“SOFR”) with a credit adjustment spread of 0.15% or (ii) 3%. The undrawn portion of the Delayed Draw is subject to a 3.75% commitment fee, payable monthly.

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Any principal prepayments in the first three years, other than mandatory prepayments pursuant to the Credit Agreement, will be subject to additional fees. In the first year, any prepayments will incur fees of 3% or the make-whole premium, whichever is higher. The make-whole premium is the interest and fees that would have been earned for the full year less interest and fees paid to date during the year. In the second and third years, any prepayments will incur fees of 2% and 1%, respectively. There are no fees for prepayments made in the fourth year.

The Credit Agreement contains customary restrictive covenants and events of default, including financial covenants based on the Company’s Liquidity, as defined in the Credit Agreement, and trailing twelve-month earnings before interest expense, income taxes, depreciation and amortization (the “TTM EBITDA Covenants”). The TTM EBITDA Covenants will be tested and the Company must comply with the TTM EBITDA Covenants during any period where the Company’s Liquidity falls below $30.0 million until the Company’s Liquidity exceeds $30.0 million for a period of at least 30 days. The Credit Agreement requires the Company to maintain Liquidity of at least $20.0 million at all times. The Credit Agreement also stipulates that the outstanding principal cannot be greater than the specified advance rates against eligible collateral.

The obligations under the Credit Facility are unconditionally guaranteed by the Company and its subsidiaries. The obligations under the Credit Facility are secured by a first lien on all assets of the Company, subject to permitted liens and interests of other parties as described in the Credit Agreement.

As of September 30, 2025, the Company was in compliance with all applicable covenants under the Credit Agreement.

Mortgage Notes

We enter into mortgage notes in order to finance growth within our business. As of September 30, 2025, we had a mortgage note expiring in February 2029. The interest rate on the mortgage note was 5.99%. The mortgage note is collateralized by certain real estate owned by Southland.

Revolving Credit Facility

In July 2024, the Company made a $3.0 million payment on the Revolving Credit Facility, in connection with the real estate transaction (see Note 2). On August 9, 2024, a principal payment of $2.5 million was made and the Revolving Credit Facility limit was reduced to $84.5 million. An additional payment of $10.0 million was made on September 15, 2024, which further reduced the Revolving Credit Facility limit to $74.5 million. The Company used a portion of the Term Loan proceeds to pay in full all outstanding amounts under the Revolving Credit Facility. Concurrently with the Company’s entry into the Credit Agreement, the Company terminated the Revolving Credit Facility.

Note 6. Commitments and Contingencies

Litigation

In the ordinary course of business, we and our affiliates are involved in various legal proceedings alleging, among other things, liability issues or breach of contract or tortious conduct in connection with the performance of services and/or materials provided, the outcomes of which cannot be predicted with certainty. We and our affiliates are also subject to government inquiries in the ordinary course of business seeking information concerning our compliance with government construction contracting requirements and various laws and regulations, the outcomes of which cannot be predicted with certainty.

Some of the matters in which we or our joint ventures and affiliates are involved may involve compensatory, punitive, or other claims or sanctions that, if granted, could require us to pay damages or make other expenditures in amounts that are not currently probable to be incurred or cannot currently be reasonably estimated. In addition, in some circumstances, our government contracts could be terminated, we could be suspended or incur other administrative penalties or sanctions, or payment of our costs could be disallowed. While any of our pending legal proceedings may be subject to early resolution as a result of our ongoing efforts to resolve the proceeding, whether or when any legal proceeding will be resolved is neither predictable nor guaranteed.

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Accordingly, it is possible that future developments in such proceedings and inquiries could require us to (i) adjust existing accruals, or (ii) record new accruals that we did not originally believe to be probable or that could not be reasonably estimated. Such changes could be material to our financial condition, results of operations, and/or cash flows in any particular reporting period. In addition to matters that are considered probable for which the loss can be reasonably estimated, disclosure is also provided when it is reasonably possible and estimable that a loss will be incurred, when it is reasonably possible that the amount of a loss will exceed the amount recorded, or a loss is probable but the loss cannot be estimated.

Liabilities relating to legal proceedings and government inquiries, to the extent that we have concluded such liabilities are probable and the amounts of such liabilities are reasonably estimable, are recorded on the consolidated balance sheets. A certain number of the claims are insured but subject to varying deductibles, and a certain number of the claims are uninsured. The aggregate range of possible loss related to (i) matters considered reasonably possible, and (ii) reasonably possible amounts in excess of accrued losses recorded for probable loss contingencies was immaterial, as of September 30, 2025, and December 31, 2024. Our estimates of such matters could change in future periods.

CityLYNX Project

On November 28, 2016, the City of Charlotte (“City”) awarded Contract Number 2017000790 to Johnson Bros. Corporation, a Southland subsidiary (“JBC”) for the project known as CityLYNX Gold Line Phase 2 – Streetcar Project which extended the previously constructed 1.5-mile streetcar system by 2.5 miles to the east and west and included construction through numerous segments in the heart of downtown Charlotte, North Carolina, as well as the reconstruction of the Hawthorne Lane Bridge (the “Project”).

During the course of the Project, JBC alleges numerous and continuous changes and interferences by the City and the City’s representatives which the City has refused to recognize as a contractual change.

After multiple failed attempts at negotiated settlement, JBC timely filed its original complaint in the General Court of Justice, Superior Court Division in Mecklenburg County, State of North Carolina (the “Court”) on February 20, 2023. JBC filed its First Amended Complaint on April 12, 2023. In the First Amended Complaint, JBC asserted ten claims against the City, including claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and subcontractor pass-through claims (the “Contract Claims”).

On June 1, 2023, the City filed its Motions to Dismiss, Answer to First Amended Verified Complaint and Counterclaim, seeking, in part, the dismissal of all of JBC’s claims (the “Motion to Dismiss”). The Court issued its Order and Opinion on the Motion to Dismiss on February 27, 2024. Among its rulings in the Order, the Court concluded that JBC’s Contract Claims were time-barred in part and dismissed those claims with prejudice “to the extent those claims [arose] from conduct occurring before 31 January 2021.”

JBC then filed Motions on April 17, 2024, seeking reconsideration of the Court’s partial dismissal of the Contract Claims with prejudice and, alternatively, leave to file a second amended complaint (the “Motion for Reconsideration”). After full briefing, the Court convened a hearing on the Motion for Reconsideration on May 30, 2024.

On June 7, 2024, the Court granted JBC’s Motion for Reconsideration in part by amending its previous Order and converting the dismissal to a “without prejudice” dismissal and granting JBC’s motion to file its proposed Second Amended Complaint.

On June 11, 2024, JBC filed its Second Amended Complaint which reiterates the Contract Claims resulting in damages “in an amount in excess of $115,000,000, plus pre-judgement and post-judgement interest.”

The parties continue to participate in mediation and continue to exchange information and engage in meetings as part of that process.

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Surety Bonds

We, as a condition for entering into a substantial portion of our construction contracts, had outstanding surety bonds as of September 30, 2025, and December 31, 2024. We have agreed to indemnify the surety if the surety experiences a loss on the bonds of any of our affiliates.

Self-Insurance

We are self-insured up to certain limits with respect to workers’ compensation, general liability and auto liability matters, and health insurance. We maintain accruals for self-insurance retentions based upon third-party data and claims history.

Note 7. Income Taxes

Effective January 1, 2024, Southland Holdings, LLC and subsidiary filing group elected to join the Southland Holdings, Inc. and Subsidiaries filing group to have all domestic corporate entities included within one consolidated federal income tax return starting with the 2024 calendar year.

The federal statutory tax rate is 21%. Southland’s effective tax rate was (289.0%) and 22.9% for the three months ended September 30, 2025 and 2024, respectively. The primary differences between the statutory rate and the effective rate for the three months ended September 30, 2025 and 2024 were due to state income taxes, federal tax credits, valuation allowances recorded against domestic subsidiaries’ net deferred tax assets, and income earned in a foreign jurisdiction with different income tax rates from the domestic rate; however, that foreign income is included within U.S. taxable income through Section 951A Global Intangible Low-Taxed Income (“GILTI”). The effective tax rate was (173.0%) and 24.2% for the nine months ended September 30, 2025 and 2024, respectively. The primary differences between the statutory rate and the effective rate for the nine months ended September 30, 2025 and 2024 were due to state income taxes, federal tax credits, valuation allowances recorded against domestic subsidiaries’ net deferred tax assets, and income earned in a foreign jurisdiction with different income tax rates from the domestic rate; however, that foreign income is included within U.S. taxable income through GILTI.

The Company is in a net deferred tax asset position for both U.S. federal and state income tax as of September 30, 2025. The Company assesses available positive and negative evidence to estimate whether sufficient taxable income will be generated to permit use of existing deferred income tax assets. The Company has incurred three years of cumulative losses in various jurisdictions including the U.S. Such objective evidence and recent changes in forecasts resulted in the Company establishing a valuation allowance against the net deferred tax assets related to U.S. federal and state income tax as of September 30, 2025, with the exception of the net deferred tax assets related to separate state filings for certain subsidiaries. As of September 30, 2025, the Company has recorded a valuation allowance of approximately $62.5 million related to its US federal and state net deferred tax assets, inclusive of current year activity, as they are determined to be more-likely-than-not to not be utilized.

As a result of financial losses incurred within the Canadian operations at certain subsidiaries, the Company maintains a valuation allowance against the net deferred tax assets as they are determined to not be more-likely-than-not to be utilized. As of September 30, 2025, the Company has a valuation allowance in the amount of $8.3 million related to the net deferred tax assets on certain Canadian subsidiaries.

The Company maintains a valuation allowance related to the net deferred tax assets recorded from United Kingdom operations from historic losses incurred that are determined to not be more-likely-than-not to be utilized. As of September 30, 2025, the valuation allowance related to United Kingdom operations is $16.6 million.

On July 4, 2025, the President signed into law the One Big Beautiful Bill Act (the “Tax Act”). The Tax Act introduces multiple tax laws and other legislative changes, including modifications to income tax provisions such as domestic research and development expenses, capital expenditures, adjustments to business interest expense limitation calculation, and U.S. taxation of international earnings. These provisions do not have any current impact on our consolidated financial statements. However, we expect the Tax Act to allow the Company to accelerate previously capitalized R&D expenditures as well as provide favorable changes to the business interest expense limitation calculation and removal of the requirement to capitalize R&D expenditures in current year and going forward.

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Note 8. Remaining Unsatisfied Performance Obligations

Remaining Unsatisfied Performance Obligations (“RUPO”) consists of two components: (1) unearned revenue and (2) contracts that are awarded but not started. Unearned revenue includes the revenue we expect to record in the future on in-progress contracts, including 100% of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts. Contracts that are awarded, but not yet started, are included in RUPO once a contract has been fully executed and/or we have received a formal “Notice to Proceed” from the project owner.

Although RUPO reflects business that we consider to be firm, deferrals, cancellations and/or scope adjustments may occur. RUPO is adjusted to reflect any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals, as appropriate.

Fixed price contracts, particularly with federal, state and local government customers, are expected to continue to represent a majority of our total RUPO.

As of September 30, 2025, Southland had $2.3 billion of RUPO. The Company expects to recognize approximately 39% of its RUPO as revenue during the next twelve months, and the balance thereafter.

Note 9. Cost and Estimated Earnings on Uncompleted Contracts

Contract assets as of September 30, 2025, and December 31, 2024, consisted of the following:


	As of
(Amounts in thousands)	September 30, 2025		December 31, 2024
Costs in excess of billings	$	440,697	$	452,010
Costs to fulfill contracts, net		27,854		31,171
Contract assets	$	468,551	$	483,181

Costs and estimated earnings on uncompleted contracts were as follows as of September 30, 2025, and December 31, 2024:


	As of
(Amounts in thousands)	September 30, 2025		December 31, 2024
Costs incurred on uncompleted contracts	$	7,974,812	$	7,664,737
Estimated earnings		236,106		343,869
Costs incurred and estimated earnings		8,210,918		8,008,606
Less: billings to date		(8,038,431)		(7,806,302)
Costs to fulfill contracts, net		27,854		31,171
Net contract position	$	200,341	$	233,475

Our net contract position is included on the unaudited condensed consolidated balance sheets under the following captions:


	As of
(Amounts in thousands)	September 30, 2025		December 31, 2024
Contract assets	$	468,551	$	483,181
Contract liabilities		(268,210)		(249,706)
Net contract position	$	200,341	$	233,475

We periodically evaluate our project forecasts and the amounts recognized with respect to our claims and unapproved change orders, and other potential modifications under review (referred to collectively as “Unresolved Contract Modifications”). On certain projects we have assessed Unresolved Contract Modifications to recover additional costs and profits which we believe we are entitled under the terms of our contracts. This includes Unresolved Contract Modifications on completed projects and projects that are not yet complete. Until an Unresolved Contract Modification is finalized it is likely that additional costs will be incurred in future periods. Our customers, or other third parties, may disagree with some or all of our assessed Unresolved Contract Modifications. As of September 30, 2025 and December 31, 2024, we have recorded $493.1 million and $469.8 million, respectively, related to Unresolved Contract Modifications.

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On January 1, 2025, we had contract liabilities of $249.7 million, of which $24.1 million and $199.1 million were recognized as revenue during the three and nine months ended September 30, 2025, respectively.

On January 1, 2024, we had contract liabilities of $193.4 million, of which $9.4 million and $132.6 million were recognized as revenue during the three and nine months ended September 30, 2024, respectively.

Note 10. Noncontrolling Interests Holders

Southland has several controlling interests including both joint ventures and partnerships. We have controlling interests and allocate earnings and losses in those entities to the noncontrolling interest holders based on our ownership percentages.

We own an 84.7% interest in Oscar Renda Contracting, Inc. (“Oscar Renda”), as of September 30, 2025, and September 30, 2024.

We own a 70.0% interest in the Southland Astaldi joint venture as of September 30, 2025, and September 30, 2024.

In November 2024, the Company dissolved the Southland Technicore Mole joint venture. Our interest in the Southland Technicore Mole joint venture was 0% as of September 30, 2025, and 65% as of September 30, 2024.

American Bridge entered into a joint venture with Commodore Maintenance Corporation, forming American Bridge/Commodore Joint Venture. According to the joint venture agreement, each of the parties is paid in accordance with its respective work performed and has no responsibility for losses incurred by the other party in performance of its work. At September 30, 2025, American Bridge was responsible for approximately 82% of the total contracted work.

We consolidated each of Oscar Renda Contracting of Canada, Southland Technicore Mole joint venture, Southland Astaldi joint venture, and American Bridge/Commodore joint venture as a result of our control over the joint venture operations. We have fully consolidated revenue, cost of construction, and other costs on our unaudited condensed consolidated statements of operations and balances on the unaudited condensed consolidated balance sheets.

Note 11. Related Party Transactions

Southland occasionally enters into subcontracts with a subcontractor in which certain employees hold a minority ownership. Cost of construction related to this subcontractor was $0.6 million and $0.3 million for the three months ended September 30, 2025 and 2024, respectively, and $2.2 million and $1.8 million for the nine months ended September 30, 2025 and 2024, respectively. Accounts payable balance due to this subcontractor was $3.3 million and $0.4 million as of September 30, 2025 and December 31, 2024, respectively. The terms on which Southland enters into agreements with this related party are substantially the same as terms the Company would enter into with a similar, unrelated party.

In the second quarter of 2024 the Company exchanged $13.1 million of amounts due to certain Southland Members for $13.1 million in promissory notes with a three-year term bearing an interest rate of 7.0%. These promissory notes pay interest monthly and are included in long-term debt. These amounts are related to balances due to the Chief Executive Officer Frank Renda and Co-Chief Operating Officers Tim Winn and Rudy Renda prior to the Merger. In December 2024, the Company exchanged $6.8 million of these promissory notes and accrued interest thereupon due in exchange for shares of common stock.

In July 2024, the Company closed a real estate purchase agreement to sell and leaseback three properties for $42.5 million. The Company’s Chief Executive Officer, Frank Renda, and co-Chief Operating Officer, Rudy Renda, hold a combined 25% indirect minority interest in the entity that purchased the real estate. During the year ended December 31, 2024, the Company paid $2.0 million to this related party in accordance with the real estate purchase agreement.

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Note 12. Share Based Compensation

On May 24, 2022, the Board of Directors of Legato Merger Corp. II, a Delaware corporation, adopted the Southland Holdings, Inc. 2022 Equity Incentive Plan (“2022 Plan”). On June 25, 2024, the Company’s Board of Directors adopted a new compensation structure for the Company’s Named Executive Officers. Details of this new compensation structure were filed on Form 8-K with the Securities and Exchange Commission on July 1, 2024. A total of 2,220,392 shares of our common stock were reserved for issuance under the 2022 Plan of which 925,579 remained available as of September 30, 2025.

Restricted Stock Units (“RSUs”): RSUs are issued for compensatory purposes. RSU stock compensation cost is measured at our common stock’s fair value based on the market price at the date of grant. We recognize stock compensation cost only for RSUs that we estimate will ultimately vest. We estimate the number of shares that will ultimately vest at each grant date based on our historical experience and adjust stock compensation cost based on changes in those estimates over time.

A summary of the changes in our RSUs during the nine months ended September 30, 2025 and 2024 is as follows:


		September 30, 2025				September 30, 2024
	RSUs		Weighted-Average Grant-Date Fair Value per RSU		RSUs		Weighted-Average Grant-Date Fair Value per RSU
Outstanding, beginning balance		599,547	$	5.31		173,333	$	8.94
Granted		623,931		3.60		681,310		4.83
Vested		(176,525)		3.55		(133,704)		9.35
Forfeited		(219,988)		4.83		—		—
Canceled		(38,814)		3.12		(41,568)		8.32
Outstanding, ending balance		788,151	$	3.93		679,371	$	5.31

Performance Stock Units (“PSUs”): PSUs provide for the issuance of shares upon vesting, which occurs following the end of the performance period based on achievement of certain metrics as established by the Board of Directors. The Company recognizes expense for PSUs based on the forecasted achievement of Company performance metrics, multiplied by the fair value of the total number of shares of common stock that the Company anticipates will be issued based on such achievement.

A summary of the changes in our PSUs during the nine months ended September 30, 2025 and 2024 is as follows:


		September 30, 2025				September 30, 2024
	PSUs		Weighted-Average Grant-Date Fair Value per PSU		PSUs		Weighted-Average Grant-Date Fair Value per PSU
Outstanding, beginning balance		304,880	$	4.58		—	$	—
Granted		—		—		304,880		4.58
Forfeited		(131,190)		4.58		—		—
Outstanding, ending balance		173,690	$	4.58		304,880	$	—

Compensation cost was $0.1 million and $0.8 million for the three and nine months ended September 30, 2025, respectively, which is included in selling, general and administrative expenses on the unaudited condensed consolidated statements of operations. Compensation cost was $0.4 million and $1.7 million for the three and nine months ended September 30, 2024, respectively.

As of September 30, 2025, there was a total of $3.5 million in unrecognized compensation cost which will be recognized over a remaining weighted-average period of 1.3 years.

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Note 13. Loss per Share

Basic and diluted net loss per share for the three and nine months ended September 30, 2025 and 2024 consisted of the following (in thousands, except shares and per share amounts):


	Three Months Ended				Nine Months Ended
	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Numerator:
Net loss	$	(76,983)	$	(58,129)	$	(89,659)	$	(102,959)
Less net income (loss) attributable to noncontrolling interests		(1,714)		(3,402)		468		(1,749)
Net loss attributable to common stockholders, basic and diluted		(75,269)		(54,727)		(90,127)		(101,210)

Denominator:
Weighted average common shares outstanding — basic		54,113,036		48,105,512		54,028,363		48,020,822
Weighted average common shares outstanding — diluted		54,113,036		48,105,512		54,028,363		48,020,822

Net loss per share — basic	$	(1.39)	$	(1.14)	$	(1.67)	$	(2.11)
Net loss per share — diluted	$	(1.39)	$	(1.14)	$	(1.67)	$	(2.11)

As the average market price of common stock for the three and nine months ended September 30, 2025 did not exceed the exercise price of the Warrants, the potential dilution from the Warrants converting into 14,385,500 shares of common stock for both periods have been excluded from the number of shares used in calculating diluted net loss per share as their inclusion would have been antidilutive. For the three and nine months ended September 30, 2025, the potential dilution from unvested RSUs converting into 768,066 shares and 550,640 shares of common stock, respectively, has been excluded from the number of shares used in calculating diluted net loss per share as their inclusion would have been antidilutive. For three and nine months ended September 30, 2024, the potential dilution from unvested RSUs converting into 599,547 shares and 398,998 shares of common stock, respectively, has been excluded from the number of shares used in calculating diluted net loss per share as their inclusion would have been antidilutive.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis contains forward-looking statements relating to future events or our future financial performance, which involve risk and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. Please see the discussion regarding forward-looking statements included under the “Cautionary Note Regarding Forward-Looking Statements” section for a discussion of some of the uncertainties, risks, and assumptions associated with these statements.

The following discussion and analysis present information that we believe is relevant to an assessment and understanding of our unaudited condensed consolidated balance sheets, statements of cash flows, and results of operations. This information should be read in conjunction with the unaudited condensed consolidated financial statements and the notes related thereto.

Overview

Southland Holdings, Inc. (“Southland”) is a diverse leader in specialty infrastructure construction with roots dating back to 1900. The end markets for which we provide services cover a broad spectrum of specialty services within infrastructure construction. We design and construct projects in the bridges, tunnels, communications, transportation and facilities, marine, steel structures, water and wastewater treatment, and water pipelines end markets.

Southland is based in Grapevine, Texas. It is the parent company of Johnson Bros. Corporation, American Bridge Company, Oscar Renda Contracting, Southland Contracting, Mole Constructors, and Heritage Materials. With the combined capabilities of these six primary subsidiaries, Southland has become a diversified industry leader with projects spanning North America in various end markets.

Key Factors Affecting Results of Operations

Business Environment

We segregate our business into two reportable segments: Transportation and Civil. Our Civil segment primarily operates throughout North America and specializes in services that include the design and construction of water pipeline, pump stations, lift stations, water and wastewater treatment plants, concrete and structural steel, outfall, and tunneling.

Our Transportation segment primarily operates throughout North America and specializes in services that include the design and construction of bridges, roadways, marine, dredging, ship terminals and piers, and specialty structures and facilities. Our Transportation segment is responsible for the construction of bridges and structures including many of the most recognizable bridges, convention centers, sports stadiums, marine facilities, and Ferris wheels in the world.

Both our Civil and Transportation segments continue to identify new opportunities, and the future outlook of the end markets we serve remains positive. Although risk and uncertainty exist, including, but not limited to, the items addressed within our forward-looking statements and risk factors, we believe that we are well positioned to compete on new infrastructure projects in both the public and private sectors.

Market Trends and Uncertainties

In both our Transportation and Civil segments, we have competitors within the individual markets and geographic areas in which we operate, ranging from small, local companies to larger regional, national, and international companies. Although the construction business is highly competitive, there are few, if any, companies which compete in all of our market areas, both geographically and from an end market perspective. The degree and type of competition is influenced by the type and scope of construction projects within individual markets. Equipment ownership and ability to self-perform across numerous disciplines are two of our significant competitive advantages. We believe that the primary factors influencing competition in our industry are price, reputation for quality, safety, schedule certainty, relevant experience, availability of field supervision and skilled labor, machinery and equipment, financial strength, as well as knowledge of local markets and conditions.

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Many of our competitors have the ability to perform work in either the private or public sectors. When opportunities for work in one sector are reduced, competitors tend to look for opportunities in the other sector. This migration has the potential to reduce revenue growth and/or increase pressure on gross profit margins.

We have seen an increase in demand for specialty construction projects in recent years at the federal, state, and local level. We anticipate further spending on infrastructure related to economic stimulus spending including the Infrastructure Investment and Jobs Act that was passed in 2021, and other federal, state, or local initiatives.

We believe that the combination of our experience, reputation, and technical expertise are unmatched among companies of our size. This combination of skills has allowed us to pursue complex projects with fewer competitors.

During the first half of 2025, the U.S. government announced a variety of tariff actions in response to which many countries have announced retaliatory trade actions, including tariffs on U.S. exports. The tariffs and retaliatory trade actions have increased the cost of importing certain construction materials into the U.S. and have caused disruption and uncertainty to both international trade, supply chains and financial markets. It is unclear to what extent, when and for how long announced trade actions will be in place. To date, these trade actions have had no meaningful impact on the results of our operations or the projects currently underway as the construction materials and equipment used for our current projects have generally been sourced and/or secured upon project inception. However, we are evaluating the potential impacts of these proposed tariffs, including potential impacts to our customers, as well as our ability to mitigate their related impacts. In addition, economic experts and policy makers have expressed concerns that increased tariffs and retaliatory trade actions could increase inflation or the risk of a recession, which could also affect our customers’ use of capital and demand for our services.

Seasonality, Cyclicality, and Variability

The results of our operations are subject to quarterly variations. Much of the variation is the result of weather, particularly rain, ice, snow, heat, wind, and named storms, which can impact our ability to perform construction activities. These weather impacts can affect revenue and profitability in either of our business segments. Any quarter can be affected either negatively or positively by atypical weather patterns in any part of North America, or other areas in which we operate. Traditionally, our first quarter is the most weather-affected; however, this may or may not necessarily be true in future periods.

Our business may also be affected by overall economic market conditions, including but not limited to declines in spending by project owners, delays in new projects, changes in client schedules, or for other reasons.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with the United States Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenues and expenses earned and incurred, respectively, during the reporting period. Critical accounting estimates are fundamental to the portrayal of both our financial condition and results of operations and often require difficult, subjective, and complex estimates and judgments by management. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which we believe to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the financial statements in future periods. The following discussion addresses the items we have identified as our critical accounting estimates. There have been no material developments or changes from the policies and estimates discussed in our annual disclosures.

Valuation Allowances for Deferred Tax Assets

We record income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. We assess the likelihood that our deferred tax

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assets will be recoverable based on expected future taxable income. To the extent that we determine it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized, we establish a valuation allowance.

To the extent valuation allowances are established or increased in a period, we include an expense within the tax provision in our condensed consolidated statements of operations. During the third quarter of 2025, we recognized a valuation allowance of $62.5 million related to the Company’s net operating loss carryforward and other net deferred tax assets, which led to a $57.3 million non-cash expense, which is presented in the income tax expense (benefit) row in the condensed consolidated statement of operations, relating to the deferred tax asset valuation allowance. These valuation allowances may be released in future years when it is more likely than not that some portion or all of the deferred tax assets will be realized. In making such a determination, we will periodically evaluate whether or not all available evidence, such as future income and reversal of temporary differences, tax planning actions, and recent results of operations, provides sufficient positive evidence to offset any other negative evidence that may exist at such time. In the event the deferred tax valuation allowance is released, we would record an income tax benefit for a portion or all of the deferred tax valuation allowance released.

More information about our accounting policies can be found in Note 2 of our audited consolidated financial statements, and Management’s Discussion and Analysis, for the year ended December 31, 2024 on our Annual Report on Form 10-K, as filed with the SEC on March 4, 2025.

Materials and Paving

In the second quarter of 2023, Southland decided to discontinue certain types of projects in its Materials & Paving business line (“M&P”) and sold assets related to producing large scale concrete and asphalt. M&P is reported in the Transportation segment. In an effort to wind down this component of its Transportation segment and reallocate resources towards core operations, the Company sold various materials production assets. The Company has concluded this action with M&P does not qualify for Discontinued Operations treatment and presentation under ASC 205-20 as it does not represent a strategic shift in the Company’s business.

For the three months ended September 30, 2025, M&P contributed $22.9 million to revenue and $3.0 million to gross loss. There is additional information on the M&P gross loss in the Transportation portion of the Segment Results section of this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. This compares to $17.5 million to revenue and $18.3 million to gross loss for the three months ended September 30, 2024. For the nine months ended September 30, 2025, M&P contributed $62.7 million to revenue and $15.9 million in gross loss. This compares to $65.0 million to revenue and $75.4 million to gross loss for the nine months ended September 30, 2024. As of September 30, 2025, approximately 3.9% of Southland’s backlog was in M&P and Southland estimates most of this work to be substantially completed in the next three months, with three projects extending into 2026.

Results of Operations

Comparisons of the Three Months Ended September 30, 2025 to the Three Months Ended September 30, 2024

The following table sets forth summary financial information for the three months ended September 30, 2025 and 2024:


	Three Months Ended
(Amounts in thousands)	September 30, 2025		September 30, 2024
Revenue	$	213,343	$	173,320
Cost of construction		210,068		224,425
Gross profit (loss)		3,275		(51,105)
Selling, general, and administrative expenses		14,587		17,492
Operating loss		(11,312)		(68,597)
Gain on investments, net		50		5
Other income, net		639		841
Interest expense		(9,166)		(7,520)
Losses before income taxes		(19,789)		(75,271)
Income tax expense (benefit)		57,194		(17,142)
Net loss		(76,983)		(58,129)
Net loss attributable to noncontrolling interests		(1,714)		(3,402)
Net loss attributable to Southland Stockholders	$	(75,269)	$	(54,727)

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Revenue

Revenue for the three months ended September 30, 2025, was $213.3 million, an increase of $40.0 million, or 23.1%, compared to the three months ended September 30, 2024. The increase was attributable to a $43.6 million increase in revenue in our Civil segment, offset by a $3.6 million decrease in revenue in our Transportation segment, both primarily due to projects approaching completion and the absence of certain prior year net unfavorable adjustments.

Cost of construction

Cost of construction for the three months ended September 30, 2025, was $210.1 million, a decrease of $14.4 million, or 6.4%, compared to the three months ended September 30, 2024. The decrease was attributable to a $29.2 million decrease in our Transportation segment primarily due to projects approaching completion and impacts related to exiting the M&P business line, offset by a $14.8 million increase in our Civil segment primarily due to new projects substantially started after September 30, 2024.

Gross profit (loss)

Gross profit for the three months ended September 30, 2025, was $3.3 million, an increase of $54.4 million, or 106.4%, compared to the three months ended September 30, 2024. The increase was attributable to a $28.8 million increase in gross profit in our Civil segment and a $25.6 million improvement in gross loss in our Transportation segment, both primarily due to the absence of certain prior year net unfavorable adjustments.

Selling, general, and administrative expenses

Selling, general, and administrative expenses for the three months ended September 30, 2025, were $14.6 million, a decrease of $2.9 million, or 16.6%, compared to the three months ended September 30, 2024. The decrease was primarily due to a $2.2 million decrease in compensation expense and a $0.7 million decrease in insurance expense, compared to the same period in 2024.

Interest expense

Interest expense for the three months ended September 30, 2025, was $9.2 million, an increase of $1.6 million, or 21.9%, compared to the three months ended September 30, 2024. The increase was primarily driven by a $0.5 million increase in amortization of deferred financing costs and $1.1 million due to the increase of interest rates on external borrowings, compared to the same period in 2024.

Income tax expense (benefit)

Income tax expense for the three months ended September 30, 2025, was $57.2 million, or an effective rate of (289.0%). The primary differences between the federal statutory tax rate of 21% and the effective rate were state income taxes, the recording of valuation allowances against domestic subsidiaries’ net deferred tax assets, the income earned in foreign jurisdictions with different tax rates than the domestic rate; however, that foreign income is included within U.S. taxable income through Section 951A Global Intangible Low-Taxed Income (“GILTI”) when the foreign rate is less than 90% of the domestic rate, and the impact of worldwide forecast on the interim calculations under ASC 740.

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Income tax benefit for the three months ended September 30, 2024, was $17.1 million, or an effective rate of 22.9%. The primary differences between the federal statutory tax rate of 21% and the effective rate were state income taxes, the recording of a valuation allowance against certain subsidiaries’ net deferred tax assets, federal tax credits, the income earned in foreign jurisdictions with a zero tax rate; however, that foreign income is included within U.S. taxable income through GILTI, and the impact of worldwide forecast on the interim calculations under ASC 740.

Comparisons of the Nine Months Ended September 30, 2025 to the Nine Months Ended September 30, 2024

The following table sets forth summary financial information for the nine months ended September 30, 2025 and 2024:


	Nine Months Ended
(Amounts in thousands)	September 30, 2025		September 30, 2024
Revenue	$	668,211	$	712,929
Cost of construction		630,093		783,635
Gross profit (loss)		38,118		(70,706)
Selling, general, and administrative expenses		44,624		47,566
Operating loss		(6,506)		(118,272)
Gain (loss) on investments, net		126		(18)
Other income, net		1,564		2,430
Interest expense		(28,023)		(19,895)
Losses before income taxes		(32,839)		(135,755)
Income tax expense (benefit)		56,820		(32,796)
Net loss		(89,659)		(102,959)
Net income (loss) attributable to noncontrolling interests		468		(1,749)
Net loss attributable to Southland Stockholders	$	(90,127)	$	(101,210)

Revenue

Revenue for the nine months ended September 30, 2025, was $668.2 million, a decrease of $44.7 million, or 6.3%, compared to the nine months ended September 30, 2024. The decrease was attributable to a $109.1 million decrease in revenue in our Transportation segment primarily due to projects approaching completion, offset by a $64.4 million increase in revenue in our Civil segment primarily due to new projects substantially started after September 30, 2024.

Cost of construction

Cost of construction for the nine months ended September 30, 2025, was $630.1 million, a decrease of $153.5 million, or 19.6%, compared to the nine months ended September 30, 2024. The decrease was attributable to a $179.0 million decrease in our Transportation segment primarily due to projects approaching completion and impacts related to exiting the M&P business line, offset by a $25.5 million increase in our Civil segment primarily due to new projects substantially started after September 30, 2024.

Gross profit (loss)

Gross profit for the nine months ended September 30, 2025, was $38.1 million, an increase of $108.8 million, or 153.9%, compared to the nine months ended September 30, 2024. The increase was attributable to a $69.8 million improvement in gross profit in our Transportation segment and a $39.0 million increase in gross profit in our Civil segment, both primarily due to the absence of certain prior year net unfavorable adjustments.

Selling, general, and administrative expenses

Selling, general, and administrative expenses for the nine months ended September 30, 2025, were $44.6 million, a decrease of $2.9 million, or 6.2%, compared to the nine months ended September 30, 2024. The decrease was primarily due to a $0.9 million decrease in stock compensation, a $0.7 million decrease in legal expense, a $0.6 million decrease in incentive compensation expense and a $0.6 million decrease in professional fees, compared to the same period in 2024.

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Interest expense

Interest expense for the nine months ended September 30, 2025, was $28.0 million, an increase of $8.1 million, or 40.9%, compared to the nine months ended September 30, 2024. The increase was primarily driven by a $1.9 million increase in interest expense related to the real estate transaction described in Note 2 of the unaudited condensed consolidated financial statements, $4.8 million due to the increase of interest rates on external borrowings and $1.4 million due to an increase in amortization of deferred financing costs, compared to the same period in 2024.

Income tax expense (benefit)

Income tax expense for the nine months ended September 30, 2025, was $56.8 million, or an effective rate of (173.0%). The primary differences between the federal statutory tax rate of 21% and the effective rate were state income taxes, federal tax credits, valuation allowances recorded against domestic subsidiaries’ net deferred tax assets, and income earned in a foreign jurisdiction with different income tax rates from the domestic rate; however, that foreign income is included within U.S. taxable income through GILTI.

Income tax benefit for the nine months ended September 30, 2024, was $32.8 million, or an effective rate of 24.2%. The primary differences between the federal statutory tax rate of 21% and the effective rate were state income taxes, federal tax credits, the income earned in foreign jurisdictions with a zero tax rate; however, that foreign income is included within U.S. taxable income through GILTI, and the recording of a valuation allowance against certain subsidiaries’ net deferred tax assets.

Segment Results

Comparisons of the Three Months Ended September 30, 2025 to the Three Months Ended September 30, 2024

The following table sets forth segment information for the three months ended September 30, 2025 and 2024:


	Three Months Ended
(Amounts in thousands)	September 30, 2025				September 30, 2024
			% of Total				% of Total
Segment	Revenue		Revenue		Revenue		Revenue
Civil	$	99,481	46.6	%	$	55,849	32.2	%
Transportation		113,862	53.4	%		117,471	67.8	%
Total revenue	$	213,343	100.0	%	$	173,320	100.0	%


	Three Months Ended
(Amounts in thousands)	September 30, 2025				September 30, 2024
			% of Segment				% of Segment
Segment	Gross Profit		Revenue		Gross Loss		Revenue
Civil	$	10,427	10.5	%	$	(18,336)	(32.8)	%
Transportation		(7,152)	(6.3)	%		(32,769)	(27.9)	%
Gross profit (loss)	$	3,275	1.5	%	$	(51,105)	(29.5)	%

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Civil

Revenue for the three months ended September 30, 2025, was $99.5 million, an increase of $43.6 million, or 78.1%, compared to the three months ended September 30, 2024. The increase was primarily attributable to increased revenues of $12.5 million from a water pipeline project in the Southwest and $9.0 million from a water facility project in the Pacific Northwest, both of which increased due to the projects being substantially started after September 30, 2024. The increase was also primarily attributable to increased revenues of $11.7 million from a tunnel project in Canada and $7.6 million from a tunnel project in the Southwest, both of which increased due to the absence of certain prior year net unfavorable adjustments as compared to the same period in 2024.

Gross profit for the three months ended September 30, 2025, was $10.4 million, or 10.5% of segment revenue, compared to gross loss of $18.3 million, or (32.8)%, of segment revenue, for the three months ended September 30, 2024. The primary driver to the increase in gross profit of $28.8 million for the three months ended September 30, 2025 versus the same period in 2024 was primarily due to the absence of certain prior year net unfavorable adjustments, which led to a $25.1 million total increase in gross margin contribution from those related projects. The increase was also attributable to increased gross margin contributions of $2.4 million from a water pipeline project in the Southwest, $2.1 from a wastewater treatment plant project in Canada, $2.0 million from a water facility project in the Pacific Northwest, $1.8 million from a tunnel project in the Southwest and $1.2 million from a wastewater treatment plant project in the Southwest, all of which increased due to the projects being substantially started after September 30, 2024. These increases were offset by decreased gross margin contributions of $4.0 million from a water pipeline project in the Midwest and $3.5 million from a water project in the East, both due to unfavorable adjustments related to claims.

Transportation

Revenue for the three months ended September 30, 2025, was $113.9 million, a decrease of $3.6 million, or 3.1%, compared to the three months ended September 30, 2024. The decrease was primarily attributable to decreased revenues of $16.8 million from an elevated roadway and bridge project in the Southeast due to the project approaching completion and $14.8 million from a bridge project in the Southeast due to certain net unfavorable adjustments related to project delays. The decreases were offset by increased revenues of $8.4 million from another bridge project in the Southeast, $6.0 million from a bridge project in the Northeast and $5.1 million from a bridge project in the Northwest, due to the projects being substantially started after September 30, 2024. The decreases were also offset by increased revenue of $8.0 million from a bridge project in the Midwest due to the absence of certain prior year net unfavorable adjustments.

Gross loss for the three months ended September 30, 2025, was $7.2 million, or (6.3)% of segment revenue, compared to gross loss of $32.8 million, or (27.9)% of segment revenue, for the three months ended September 30, 2024. The primary driver to the decrease in gross loss of $25.6 million was due to an absence of certain prior year net unfavorable adjustments, which led to increases in gross margin contributions of $9.2 million from a M&P project in the South, $3.6 million from a bridge project in the Southeast and $3.5 million from takeover work related to the American Bridge acquisition. Another driver to the decrease in gross loss was the increase in profit contribution of $10.1 million from a bridge project in the Midwest due to prior year net unfavorable adjustments of $17.0 million, compared to current year net unfavorable adjustments of $6.9 million driven by higher-than-expected project costs.

Comparisons of the Nine Months Ended September 30, 2025 to the Nine Months Ended September 30, 2024

The following table sets forth segment information for the nine months ended September 30, 2025 and 2024:


	Nine Months Ended
(Amounts in thousands)	September 30, 2025				September 30, 2024
			% of Total				% of Total
Segment	Revenue		Revenue		Revenue		Revenue
Civil	$	283,927	42.5	%	$	219,490	30.8	%
Transportation		384,284	57.5	%		493,439	69.2	%
Total revenue	$	668,211	100.0	%	$	712,929	100.0	%

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	Nine Months Ended
(Amounts in thousands)	September 30, 2025				September 30, 2024
			% of Segment				% of Segment
Segment	Gross Profit		Revenue		Gross Profit		Revenue
Civil	$	47,663	16.8	%	$	8,694	4.0	%
Transportation		(9,545)	(2.5)	%		(79,400)	(16.1)	%
Gross profit (loss)	$	38,118	5.7	%	$	(70,706)	(9.9)	%

Civil

Revenue for the nine months ended September 30, 2025, was $283.9 million, an increase of $64.4 million, or 29.4%, compared to the nine months ended September 30, 2024. The increase was primarily attributable to increased revenues of $35.1 million from a water pipeline project in the Southwest, $19.6 million from a water facility project in the Pacific Northwest and $13.4 million from a wastewater treatment plant project in the Southwest, all of which increased due to the projects being substantially started after September 30, 2024.

Gross profit for the nine months ended September 30, 2025, was $47.7 million, or 16.8% of segment revenue, compared to $8.7 million, or 4.0% of segment revenue, for the nine months ended September 30, 2024. The primary driver to the increase of $39.0 million for the three months ended September 30, 2025 versus the same period in 2024 was primarily due to the absence of certain prior year net unfavorable adjustments, which led to a $28.6 million total increase in gross margin contribution from those related projects. The increase was also attributable to increased gross margin contributions of $6.9 million from a water pipeline project in the Southwest, $6.1 from a tunnel and water pipeline project in the Southwest and $4.3 million from a water facility project in the Pacific Northwest, all of which increased due to the projects being substantially started after September 30, 2024. These increases were offset by decreased gross margin contributions of $3.6 million from a water pipeline project in the Midwest and $3.4 million from a water project in the East, both due to unfavorable adjustments related to claims.

Transportation

Revenue for the nine months ended September 30, 2025, was $384.3 million, a decrease of $109.2 million, or 22.1%, compared to the nine months ended September 30, 2024. The decrease was primarily attributable to decreased revenues of $97.9 million from a project in the Bahamas and $36.4 million from takeover work related to the American Bridge acquisition, due to the projects approaching completion. These decreases were offset by increased revenue of $25.8 million from a bridge project in the Northeast due to the project being substantially started after September 30, 2024.

Gross loss for the nine months ended September 30, 2025, was $9.5 million, or (2.5)% of segment revenue, compared to gross loss of $79.4 million, or (16.1)% of segment revenue, for the nine months ended September 30, 2024. The primary driver to the decrease in gross loss of $69.9 million was the increase in profit contribution of $35.9 million from an M&P project in the South due to prior year net unfavorable adjustments of $40.2 million, compared to current year net unfavorable adjustments of $4.4 million due to project delays. Another driver to the decrease in gross loss was the increase in profit contribution of $28.2 million from a bridge project in the Midwest due to prior year net unfavorable adjustments of $42.3 million, compared to current year net unfavorable adjustments of $14.0 million driven by higher-than-expected project costs.

Key Business Metrics

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measures are useful in evaluating our operational performance. We use the following non-GAAP measures to evaluate our ongoing operations and for internal planning, forecasting and compensation purposes. We believe that the non-GAAP financial information may be helpful in assessing our operating performance and facilitates an alternative comparison between fiscal periods. The non-GAAP financial measures are not, and should not be viewed as, a substitute for GAAP reporting measures.

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EBITDA

In our industry, it is customary to manage our business using earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”). EBITDA assists management and the Board of Directors and may be useful to investors in comparing our operating performance consistently over time as it removes the impact of our capital structure and expenses that do not relate to our core operations.

Non-GAAP financial measures should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP financial measures on a supplemental basis. The reconciliation of net loss to non-GAAP financial measures below should be reviewed, and no single financial measure should be relied upon to evaluate our business. Below is a reconciliation of net loss to these non-GAAP financial measures.


	Three Months Ended				Nine Months Ended
(Amounts in thousands)	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Net loss attributable to Southland Stockholders	$	(75,269)	$	(54,727)	$	(90,127)	$	(101,210)
Depreciation and amortization		5,629		5,776		17,530		16,925
Income tax expense (benefit)		57,194		(17,142)		56,820		(32,796)
Interest expense		9,166		7,520		28,023		19,895
Interest income		(221)		(167)		(1,473)		(527)
EBITDA		(3,501)		(58,740)		10,773		(97,713)

Backlog

We define contract backlog (“Backlog”) as a measure of the total amount of revenue remaining to be earned on projects that have been awarded. Backlog consists of two components: (1) unearned revenue and (2) contracts awarded but not started. Unearned revenue includes the revenue we expect to record in the future on in-progress contracts, including 100% of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts. Contracts that are awarded, but not yet started, are included in Backlog once a contract has been fully executed and/or we have received a formal “Notice to Proceed” from the project owner.


(Amounts in thousands)
Balance December 31, 2024	$	2,572,912
New contracts, change orders, and adjustments		354,351
Less: contract revenue recognized in 2025		(668,211)
Balance September 30, 2025	$	2,259,052

Backlog should not be considered a comprehensive indicator of future revenue as many of our contracts can be terminated by our customers on relatively short notice, and Backlog does not include future work for which we may be awarded or new awards for which we are awaiting an executed contract or an authorized “Notice to Proceed.” In the event of a termination, we are typically reimbursed for all of our costs through a specific contractual date, our costs to demobilize from the project site, and in certain cases overhead costs and profit associated with the contract through the termination date. Costs may include preconstruction and engineering services as well as that of our subcontractors. Our contracts do not typically grant us rights to revenue reflected in Backlog. Projects may remain in the Backlog for extended periods of time as a result of schedule delays, regulatory requirements, project specific issues, or other reasons. Contract amounts from contracts where a transaction price cannot be reasonably estimated are not included within our Backlog amount.

The following tables set forth our Backlog by segment:

Civil


(Amounts in thousands)
Balance December 31, 2024	$	961,207
New contracts, change orders, and adjustments		236,271
Less: contract revenue recognized in 2025		(281,746)
Balance September 30, 2025	$	915,732

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Transportation


(Amounts in thousands)
Balance December 31, 2024	$	1,611,705
New contracts, change orders, and adjustments		118,079
Less: contract revenue recognized in 2025		(386,464)
Balance September 30, 2025	$	1,343,320

Liquidity, Capital Commitments and Resources

Our principal sources of liquidity are cash generated from operations, funds from borrowings, and existing cash on hand. Our principal uses of cash typically include the funding of working capital obligations, debt service, and investment in machinery and equipment for our projects.

We will receive the proceeds from the exercise of Warrants for cash. We believe the likelihood that Warrant holders will exercise their Warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the trading price of our common stock. On November 3, 2025, the closing price of our common stock was $4.52 per share. To the extent the market price of our common stock remains below the exercise price of $11.50 per share, we believe that Warrant holders will be unlikely to exercise their Warrants for cash, resulting in little or no cash proceeds to us for any such exercise. To the extent we receive any cash proceeds, we expect to use such proceeds for general corporate and working capital purposes, which would increase our liquidity. However, we do not expect to rely materially on the cash exercise of Warrants to fund our operations.

Based on historical and anticipated future operating results, we believe cash flow from operations, available cash, and other financing sources will be adequate to meet our liquidity needs for at least the next twelve months, including any anticipated requirements for working capital, capital expenditures, and scheduled debt service.

Our current and future liquidity is greatly dependent upon our operating results, which are largely determined by overall economic conditions, our current contracts and Backlog. Our liquidity could be adversely affected by a disruption in the availability of credit. If such an event were to occur, we may be unable to borrow under our Credit Facility (as defined below) or may be required to seek additional financing. In addition, we may be required to seek additional financing to refinance all or a significant portion of our existing debt on or prior to maturity. We may also seek to access the public or private equity markets to support our liquidity whenever required or conditions are favorable to us. We have filed a shelf registration statement on Form S-3 with the SEC that was declared effective by the SEC on April 8, 2024 (File No. 333-278008), which allows us to offer and sell up to an aggregate amount of $150.0 million of any combination of common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock or debt securities, or units of these securities from time to time subject to Instruction I.B.6 to Form S-3 which limits the aggregate market value of securities we may sell during any 12 consecutive months to one-third of our public float for so long as our public float is less than $75.0 million. There can be no assurance that we will be able to raise additional capital or obtain additional financing when needed or on terms that are favorable to us.

We are exposed to market risks relating to fluctuations in interest rates and currency exchange risks. Significant changes in market conditions could cause interest rates to increase and have a material impact on the financing needed to operate our business.

The following table sets forth summary change in cash, cash equivalent and restricted cash for the nine months ended September 30, 2025 and 2024:


	Nine Months Ended
(Amounts in thousands)	September 30, 2025		September 30, 2024
Net cash provided by operating activities	$	6,893	$	12,242
Net cash provided by investing activities		3,089		2,298
Net cash provided by (used in) financing activities		(40,263)		28,437
Effect of exchange rate changes		64		(49)
Net change in cash, cash equivalents, and restricted cash	$	(30,217)	$	42,928

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Net cash provided by operating activities was $6.9 million during the nine months ended September 30, 2025. During the nine months ended September 30, 2025, the primary drivers in cash provided by operating activities were $57.2 million in deferred taxes, an increase of $28.2 million in accounts payable and accrued liabilities, an increase of $18.5 in contract liabilities and $17.5 million in depreciation and amortization, offset by $89.7 million in net loss and an increase of $23.1 million accounts receivable. Net cash provided by operating activities was $12.2 million during the nine months ended September 30, 2024. During the nine months ended September 30, 2024, the primary drivers in cash provided by operating activities were a decrease of $97.8 million in contract assets, an increase of $50.1 million in contract liabilities, $16.9 million in depreciation and amortization and $1.2 million increase in operating lease liabilities, offset by $105.1 million in net loss, $26.7 million in deferred taxes, and a decrease of $22.1 million in accounts payable and accrued liabilities.

Net cash provided by investing activities was $3.1 million during the nine months ended September 30, 2025. During the nine months ended September 30, 2025, the primary drivers in cash provided by investing activities were $6.3 million in proceeds from sale of property and equipment, offset by $3.4 million in purchases of property and equipment. Net cash provided by investing activities was $2.3 million during the nine months ended September 30, 2024. During the nine months ended September 30, 2024, the primary drivers in cash provided by investing activities were $4.5 million in proceeds from sale of property and equipment and $4.2 million in distributions from investees, offset by $6.2 million in purchases of property and equipment.

Net cash used in financing activities was $40.3 million for the nine months ended September 30, 2025. During the nine months ended September 30, 2025, the primary drivers in cash used in financing activities were $39.0 million in payments on notes payable and $0.8 million in payments of finance lease and financing obligations. Net cash provided by financing activities was $28.4 million for the nine months ended September 30, 2024. During the nine months ended September 30, 2024, the primary drivers in cash provided by financing activities were $167.8 million in borrowings on notes payable and $42.5 million in proceeds from financing obligations, offset by $95.0 million of payments on the Revolving Credit Facility (as defined below), $80.6 million in payments on notes payable and $5.5 million in payments of deferred financing costs.

As of September 30, 2025, we had total debt of $267.8 million, of which $51.4 million is due within the next twelve months.

Secured Notes

On September 30, 2024, the Company entered into a term loan and security agreement (the “Credit Agreement”) with Callodine Commercial Finance, LLC as administrative agent and lender. The Credit Agreement provides for a four-year secured $160.0 million term loan facility (the “Credit Facility”), consisting of a $140.0 million initial draw term loan (the “Term Loan”) and a $20.0 million committed delayed draw term loan (the “Delayed Draw”). The Delayed Draw is a committed facility in which the Company may request all or a portion of the Delayed Draw to be available to the Company, subject to specified advance rates against eligible collateral and other criteria of the Credit Facility. The Delayed Draw can be drawn no more than once per quarter in minimum increments of $2.5 million, and once drawn, any repaid amounts of the Delayed Draw cannot be re-borrowed. Any undrawn portion of the Delayed Draw commitment will terminate on September 30, 2027, the third anniversary of the closing date. The Credit Facility has a maturity date of September 30, 2028.

Subsequent to the year ended December 31, 2024, the Company and Administrative Agent entered into a first amendment to the Credit Facility that removed an Administrative Agent-requested borrowing base reserve amount in exchange for certain additional reporting obligations and a personal guarantee from Frank Renda, the Company’s President and Chief Executive Officer, on any draws made on the Delayed Draw. As such, the Company has access to the Delayed Draw facility as supported by the borrowing base calculation and as of September 30, 2025, $18.7 million was available.

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As of September 30, 2025, the Company was in compliance with all applicable covenants under the Credit Agreement.

Mortgage Notes

Revolving Credit Facility

In July 2024, the Company made a $3.0 million payment on the Revolving Credit Facility, in connection with the real estate transaction described in Note 2 of the unaudited condensed consolidated financial statements. On August 9, 2024, a principal payment of $2.5 million was made and the Revolving Credit Facility limit was reduced to $84.5 million. An additional payment of $10.0 million was made on September 15, 2024, which further reduced the Revolving Credit Facility limit to $74.5 million. The Company used a portion of the Term Loan proceeds to pay in full outstanding amounts under the Revolving Credit Facility. Concurrently with the Company’s entry into the Credit Agreement, the Company terminated the Revolving Credit Facility.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

It is management’s responsibility to establish and maintain adequate disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including the company’s principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and our Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report. Following this review and evaluation, our management determined that as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2025 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

See Note 6 – “Commitments and Contingencies”, included in the notes to our unaudited condensed consolidated financial statements included under Part I of this Quarterly Report.

Item 1A. Risk Factors

There have been no additional risk factors identified and no material changes with regard to the risk factors previously disclosed under “Item 1A. Risk Factors” to Part I of our Annual Report on Form 10-K as of the fiscal year ended December 31, 2024.

Item 5. Other Information

During the last fiscal quarter, none of our directors or officers adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

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Item 6. Exhibits



Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated as of May 25, 2022, by and among the Company, Legato Merger Sub, Inc. and Southland Holdings, LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 25, 2022).
3.1	Second Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2023).
3.2	Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2023).
3.3	Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 12, 2025).
3.4	Amendment No. 1 to Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.4 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 12, 2025).
4.1	Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1 (File No. 333-260816) filed with the SEC on November 5, 2021).
4.2	Warrant Agreement between American Stock Transfer & Trust Company and the Company (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 23, 2021).
4.3	Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 (File No. 333-260816) filed with the SEC on November 5, 2021).
31.1*	Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 Sarbanes Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 Sarbanes Oxley Act of 2002.
32.1**	Certification of Principal Executive Officer pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
32.2**	Certification of Principal Financial Officer pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
101*	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets (Unaudited); (ii) Condensed Consolidated Statements of Operations (unaudited); (iii) Condensed Consolidated Statements of Comprehensive Income (unaudited); (iv) Condensed Consolidated Statements of Equity (unaudited); (v) Condensed Consolidated Statements of Cash Flows (unaudited); and (vi) Notes to Condensed Consolidated Financial Statements (unaudited), tagged as blocks of text and including detailed tags.
104*	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

*Filed herewith.

**Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, duly authorized.

Date: November 12, 2025


	SOUTHLAND HOLDINGS, INC.

	By:	/s/ Frank Renda
	Name:	Frank Renda
	Title:	President, Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Keith Bassano
	Name:	Keith Bassano
	Title:	Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

Southland Holdings, Inc. 10-Q