Southland Holdings, Inc. (AMEX:SLND) Q4 2024 Earnings Call Transcript

Southland Holdings, Inc. (AMEX:SLND) Q4 2024 Earnings Call Transcript March 5, 2025

Rea: Good morning. My name is Rea, and I will be your conference operator today. At this time, I would like to welcome everyone to the Southland Holdings, Inc. fourth quarter and full year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star then the number two.

Alex Murray: Good morning, everyone. And welcome to the Southland Holdings, Inc. fourth quarter and full year 2024 conference call. This is Alex Murray, Director of Corporate Development and Investor Relations. Joining me today are Frank Renda, President and Chief Executive Officer, and Cody Gallarda, Executive Vice President and Chief Financial Officer. Before we begin, I’d like to remind everyone that this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts and no assurances of future performance.

Forward-looking statements are uncertain and outside of Southland Holdings, Inc.’s control. Southland’s actual results and financial condition may differ materially from those projected in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements and we do not undertake any duty to update these statements. For a discussion of some of the risks that could affect results, please see the risk factor section of our Form 10-K for the year ended December 31, 2024, which was filed with the SEC last night. We also refer to non-GAAP financial measures, and you will find reconciliations of these non-GAAP financial measures in the press release relating to this conference call, which can be found on the investor relations page of our website.

With that, I will now turn the call over to Frank Renda.

Frank Renda: Thank you, Alex. Good morning, and thank you for joining Southland Holdings, Inc.’s fourth quarter and full year 2024 conference call. As we reflect on the year, I’d like to highlight and commend how our team has continued to push forward despite challenges, delivering key projects, maintaining operational excellence, and reinforcing our commitment to safety and community impact. We have successfully delivered several high-profile projects during the year. We completed the SR 80 bridge in Palm Beach, Florida, also known as the Mar-a-Lago bridge. We also recently opened the East Haddam Bridge in Connecticut, improving connectivity and regional access. We completed a cruise destination project for a private entertainment client in the Caribbean, which demonstrates our ability to deliver complex infrastructure that enhances local economies.

Q&A Session

In our water resources group, we continue to expand our reach with the completion of the San Juan Lateral project for the Bureau of Reclamation, providing essential water infrastructure to support communities in the region. We also completed the Romeo Arm Slip Line project in Detroit, Michigan. Beyond our technical expertise, our strong safety culture makes these successes possible. I’m pleased to report that multiple projects, including Cielo 26 and Mill Creek Drainage Relief Tunnel, have each surpassed one million safe work hours without a loss, a testament to the dedication of our teams and our unwavering commitment to safety as the foundation of everything we do. Additionally, this year marked the fiftieth anniversary of two of our divisions, a milestone that not only honors our rich history but also the strong foundation we have established over many decades, which sets us up well to succeed for years to come.

While this has been a demanding period, our team’s resilience and ability to execute at a high level have positioned us for future success. I want to thank our employees and stakeholders for their commitment and continued support. With that, let’s turn to the quarter’s results. Fourth quarter revenue was $267 million with a gross profit of $8 million. Excluding unfavorable adjustments from the M&P business and certain legacy projects, our gross profit in the quarter was $35 million. The unfavorable adjustments negatively impacted our results by $27 million. The unfavorable adjustments were driven by dispute resolutions and increased completion costs on certain legacy projects. At the end of the quarter, we had approximately $163 million of remaining M&P backlog and approximately $83 million of non-M&P legacy backlog.

We are encouraged by the continued strong performance of our new core projects, which delivered double-digit margins in the quarter. We ended the quarter with $2.57 billion of backlog. I’d also like to note that we currently have approximately $750 million of pending alternative delivery contracts not included in backlog, for which preconstruction phases are already underway. Notable alternative delivery projects include the earthquake-ready Burnside Bridge in Portland, Oregon, and phase two of the North End treatment plant in Winnipeg. We are currently working on phase one of this project. Our new core work makes up approximately $2.3 billion of backlog. We have several new core projects that we expect to ramp up this year and create a more significant impact on results.

This includes the $600 million Shands Bridge in Florida, the $410 million Robert F. Kennedy Bridge rehab in New York, and the $243 million US 19 project in Florida, which we are in the early stages of their project life cycles. We also have several quicker burn water resource projects with strong margins that we expect to have a meaningful impact on 2025 results. We booked approximately $105 million in new awards during the quarter. This included a $60 million wastewater treatment plant in the southwest, several water resource emergency projects, and a broadband project for a private client. We continue to see a large pipeline of opportunities, particularly from our longstanding federal, state, and local clients. The ongoing capital infusion from the Infrastructure Investment and Jobs Act, combined with historically strong state and local infrastructure programs, provides a favorable tailwind for our business in the years ahead.

Texas and Florida remain at the forefront of state-driven infrastructure investment, with record-setting funding levels aimed at addressing critical transportation, water, and resilience needs. Given the sustained economic growth and population expansion in these areas, we anticipate continued prioritization of large-scale infrastructure projects. With our established presence and deep expertise in these key markets, we are well-positioned to capitalize on these opportunities. In recent years, the timing of new project awards has been somewhat uneven, with a tendency to ramp up in the back half of the year. We anticipate a similar pattern this year as project timelines and funding cycles influence the flow of opportunities. The demand in our core markets remains robust, driven by ongoing infrastructure needs and strong public and private sector investments.

Given this favorable environment, we remain disciplined in our approach, prioritizing projects that align with our strategic goals, operational strength, and margin expectations. Our extensive pipeline of opportunities positions us well to secure a healthy share of projects while maintaining a selective quality-over-quantity approach to bidding. As we move forward, we are confident in our ability to capitalize on the right opportunities and drive long-term success. Upcoming opportunities in our civil segment include the $7 billion Iona Island wastewater treatment plant program in Vancouver and the $2 billion Northern Colorado Water Glade Reservoir Program in Fort Collins. We’re also tracking the $600 million Jordan Lake water supply program in North Carolina and additional phases of the Winnipeg North End treatment plant in Canada.

In our transportation segment, we also expect to bid on the Verrazzano-Narrows Bridge rehab in New York and the Washington Bridge in Providence, Rhode Island. During the fourth quarter, we also successfully executed another strategic initiative to bolster our balance sheet. We converted $20 million of certain promissory notes due to myself and the two other founders of Southland Holdings, Inc., Tim Nguyen and Lee Renda, to common stock. We feel strongly about the long-term potential of Southland Holdings, Inc. This transaction reinforces our confidence in the business while improving the balance sheet. In closing, our strong new core backlog pipeline and the continued strong execution on new core projects give us confidence in our long-term trajectory.

We are focused on delivering operational excellence, maintaining a disciplined approach to project selection, and driving sustainable profitability over the long term. As we move into 2025, our strategic priorities remain clear: executing our core projects with precision, winding down legacy work, and strengthening our position in our core markets. With a talented and dedicated team and a favorable industry environment, we are well-equipped to deliver long-term value to our stakeholders. With that, I will now turn the call over to Cody Gallarda for a financial update.

Cody Gallarda: Thanks, Frank, and good morning, everyone. I will discuss an overview of our financial performance for the fourth quarter and full year ending 2024. You can find additional details and information in the financial statements, footnotes, and management’s discussion and analysis, which were filed with the Securities and Exchange Commission on Form 10-K last night. With respect to the fourth quarter, revenue was $267 million, down $49 million from the fourth quarter of 2023. Gross profit for the fourth quarter was $8 million, down from $21 million for the fourth quarter of 2023. Gross profit margin in the fourth quarter of 2024 was 3% compared to 6.7% in the fourth quarter of 2023. Selling, general, and administrative expenses for the fourth quarter were $16 million, a decrease of $4.2 million compared to the fourth quarter of 2023.

This reduction was primarily driven by reduced compensation expense. Interest expense for the fourth quarter was $9.6 million, an increase of $3.9 million compared to the fourth quarter of 2023. The increase was attributable to higher debt balances and elevated borrowing costs. As previously discussed, we expect interest expense to remain in the $9.5 million per quarter range going forward. Income tax benefit was $14 million for the quarter compared to an income tax expense of $2.9 million in the same period last year. This was primarily driven by changes in our effective tax rate, the recognition of certain deferred tax liabilities, and the cumulative catch-up impacts of adjustments to forecasted versus actual results. More information regarding the changes in our effective tax rate, valuation allowance adjustments, deferred tax liabilities, and the impact of prior tax election changes can be found in our Form 10-K filing.

We reported a net loss of $4 million or negative $0.09 per share in the fourth quarter compared to a net loss of $6 million or negative $0.12 per share in the fourth quarter of 2023. In the fourth quarter, we produced EBITDA or earnings before interest, taxes, depreciation, and amortization of negative $3 million compared to EBITDA of $9 million for the fourth quarter of 2023. Now to touch on segment performance for the fourth quarter. Our Civil segment had revenues of $104 million, a decrease of $4 million from the fourth quarter of 2023. Our Civil segment’s gross profit was $8 million, a decrease from $25 million from the fourth quarter of 2023. As a percentage of revenue for the quarter, our Civil segment had a gross profit margin of 8% compared to 23% in the fourth quarter of 2023.

For the quarter, our Transportation segment had revenues of $163 million, a decrease from $208 million from the fourth quarter of 2023. Our Transportation segment’s gross loss was $0.4 million, an improvement from a gross loss of $3 million in the fourth quarter of 2023. As a percentage of revenue for the quarter, our Transportation segment had a gross profit margin of negative 0.2%, compared to negative 1.6% for the fourth quarter of 2023. Within the Transportation segment, the M&P business line contributed $36 million to revenue and approximately negative $8 million to gross profit in the fourth quarter. Our core operating results in this segment, which excludes M&P, would have been $127 million of revenue and $8 million of gross profit for a gross profit margin of approximately 6%.

Consolidated core results in the quarter, which excludes M&P, would have been $231 million of revenue and approximately $15 million of gross profit for an approximate gross profit margin percentage of 6.5%. Now to touch on results for the full year ended December 31, 2024. Our full-year revenue was $980 million, down from the full year 2023. Gross profit for the full year ended December 31, 2024, was negative $63 million, a decrease from positive $36 million from the full year 2023. Our gross loss margin was negative 6.4% in 2024 compared to a positive 3.1% in 2023. SG&A expenses for the year ended December 31, 2024, were $63 million, a decrease of $4 million compared to the prior year. The decrease was primarily driven by a decrease in compensation-related expenses.

SG&A expenses as a percentage of revenue were 6.5% for the year ending December 31, 2024, compared to 5.8% for the full year 2023. Interest expense for the year ended December 31, 2024, was $30 million, an increase of $10 million compared to 2023. The difference was attributable to increased borrowing costs and higher debt balances. We reported an income tax benefit for the year of $47 million on a pretax loss, which represents an effective tax rate of 31%. This compares to a tax benefit of $9 million on a pretax loss of $27 million, also for an effective tax rate of 31% in 2023. As discussed on prior calls, our 2023 tax position was impacted by numerous revocations of subchapter S election, which were no longer available to us. More information around the revocation of the S election, valuation allowance changes, GILTI inclusions, and more can be found in our recently filed Form 10-K.

On a go-forward basis, we expect the tax rate to be in the 20% to 24% range, depending on certain tax credits, nondeductible items, and certain state, local, and international taxes. We reported a GAAP net loss of $105 million or negative $2.19 per share in the year compared to a net loss of $19 million or negative $0.41 per share last year. For the year ended December 31, 2024, we reported an adjusted net loss of $105 million or negative $2.19 per share. This compares to an adjusted net loss of $39 million or negative $0.82 per share in 2023 after backing out other income from changes in the fair value of an earn-out liability for 2023, offset by transaction-related expenses. Now to touch on our segment performance for the full year ended 2024.

For the full year ending December 31, 2024, our Civil segment had revenues of $323 million, a decrease of $14 million from full year 2023. Our Civil segment gross profit for the year was $17 million, a decrease from $52 million from full year 2023. As a percentage of revenue for the full year ended 2024, our Civil segment had a gross profit margin of 5.2% compared to 15.3% for 2023. For the full year ending December 31, 2024, our Transportation segment had revenues of $657 million, a decrease of approximately $166 million from full year 2023. Our Transportation segment gross loss for the year was $80 million compared to a gross loss of $16 million from full year 2023. As a percentage of revenue for the full year ended 2024, our Transportation segment had a gross profit margin of negative 12% compared to negative 1.9% in 2023.

Within the Transportation segment, the M&P business line contributed $101 million to revenue and negative $83 million to gross profit in 2024. Our core operating results in this segment, which excludes M&P, were $556 million of revenue and $3 million of gross profit. Consolidated core results in the year excluding M&P, would have been $879 million of revenue and $20 million of gross profit. As of December 31, 2024, M&P backlog makes up approximately $163 million, and non-M&P legacy work makes up approximately $83 million of backlog. Said differently, our legacy and M&P backlog makes up less than 10% of our total backlog. And we are optimistic about the results expected to be produced from $2.3 billion of new core backlog. Turning to the balance sheet, as of December 31, 2024, we finished the year with net debt of $213 million inclusive of cash and restricted cash of $88 million.

We ended 2024 with just under $2.6 billion in backlog, and we expect to burn approximately 39% of this backlog in 2025. Thank you for your time and interest in Southland Holdings, Inc. I’ll now pass the call back to the operator for your questions.

Rea: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you’re using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Adam Thalhimer from Thompson Davis. Please go ahead.

Adam Thalhimer: Morning, guys.

Cody Gallarda: Good morning, Adam.

Frank Renda: Morning, Adam.

Adam Thalhimer: Hey, Cody. I just wanted to follow up on or start where you left off, which is the 39% of the backlog burns in 2025. Curious how you see the book and burn work trending this year.

Cody Gallarda: Yeah. So I’ll start and then let Frank lead into where he sees the bidding activity going. You know, obviously, we had a lower than one book-to-burn ratio in Q4, but are excited about the $100 million that we did pick up. We do expect to see that back-weighted cadence that we’ve seen in prior years and are looking forward to announcing some impressive wins in 2025.

Frank Renda: Yeah, Adam, and I guess, you know, this is a place to kind of address the, you know, maybe why not more awards as we see the market, you know, is really healthy. And we don’t see the demand slowing anytime soon. We’ve been winding down a business unit that was over 30% of our backlog, and our focus was on completing, you know, this transition and returning to higher profitability. We’re adding work in a disciplined manner, ensuring that we have the right resources for the projects and prioritizing high-quality backlog in our core markets, where we have historically performed very well. Demand is really good, and we expect this trend to continue. We’re confident in winning our fair share of new projects, and we remain committed to protecting margins rather than pursuing growth at any cost.

The timing of these new awards, you know, could be a little bit uneven. We expect new awards to really pick up in the back half of the year. We also have approximately $750 million in pending alternative delivery contracts, and, you know, we’re confident that these will convert into construction awards.

Adam Thalhimer: Got it. And then just thinking about how the street and myself are gonna model EBITDA this year. As we sit here in March, I mean, is the expectation for the full year that we’ll have positive EBITDA? And maybe you can comment on how you see the quarterly cadence shaking out.

Cody Gallarda: Yeah. So I’ll echo some of what we mentioned on our last call, Adam, is, you know, we expect to return to positive EBITDA numbers by the end of this year, whether that means Q1 looks positive, Q2 looks positive, either leading to your question. There are some unknowns around the cadence of that. But with the decreasing legacy and M&P backlog, which is down to less than 10%, what we picked up in new work and potential and expected new awards going into the end of the year, we are looking forward to a much stronger finish to 2025.

Adam Thalhimer: Great. And then just lastly for me, the process of bringing down contract assets, does that really ramp up as 2025 progresses?

Cody Gallarda: So there’s a couple of different ways to look at that question, Adam. I want to address it from both the contract asset side in the context of the net contract position side, which takes out contract liabilities. When you look at where contract assets have been over the last couple of years, we’ve had meaningful decreases with collections, you know, as well as some of the unfortunate profit fades that we’ve had. But I really want to highlight the significant growth that we’ve seen in contract liabilities, which offsets that net balance sheet position. So looking at it from a net perspective, you know, we’re slightly over $200 million of net contract position at year-end. So I bring that up to say, to make two points.

The first being, you know, everything that Frank has commented and we’ve shared and been talking about publicly on new work having positive upfront cash flows is being realized. But then also to directly answer your question, there can be an increase in contract assets as we pursue closing out some of these troubled jobs where there are claim pursuits. So I want to be transparent on both sides of that equation.

Frank Renda: Yeah. And I think on the claims, Adam, you know, most of these claims were on jobs that happened in 2017, 2018, and 2019. And so, you know, we’re at the table with a lot of those claims, and you know, we continue to work through and make small progress on settling the legacy claims. Not a no major updates, I guess, on larger claims to report this quarter. But we do expect a significant amount of cash flow from these claims in the coming quarters. And that should take that number down when that happens.

Adam Thalhimer: Great. Thanks, guys. Good luck in Q1.

Frank Renda: Thanks, Adam.

Cody Gallarda: Thanks, Adam.

Rea: Thank you. Your next question comes from Julio Romero from Sidoti & Company. Please go ahead.

Julio Romero: Thanks. Hey. Good morning, Frank, Cody, Alex. Or maybe to start, hey. Good morning. On the civil segment, solid performance there and a nice sequential rebound from the third quarter. Maybe just talk about the drivers of the gross profit there? And I guess you did realize fewer issues on non-M&P legacy work in the fourth quarter compared to the third quarter.

Frank Renda: Yeah. I guess, first on the civil margin, you know, really excited about the civil work. We picked up some great civil projects over the last couple of quarters, and unfortunately, we had an unfavorable ruling on a dispute on a legacy civil project that significantly impacted results this quarter. But the core work continues to produce strong double-digit margins. We also continue to pick up smaller quick-burning civil projects that are producing strong margins and just feel really good about where we’re at in the civil sector. On the legacy updates, you know, our non-M&P legacy backlog has been reduced to around $80 million, and a significant portion of the challenges we faced in this portfolio during 2024 stems from a bridge project in the Midwest.

We recently achieved a major milestone by opening this new bridge. There’s some demolition work that remains, but reaching this milestone is a significant step forward for us and it meaningfully reduces the risk of further project fade on this project.

Julio Romero: Got it. That’s helpful. And then you know, that non-M&P legacy number went down by $22 million compared to last quarter. Is that due to the unfavorable ruling on the dispute you just mentioned, or is that due to the bridge project in the Midwest? Just trying to think about that number there.

Cody Gallarda: Are you speaking specifically to the civil segment, Julio?

Julio Romero: I’m just speaking no. I should speak about non-M&P legacy. Probably more broadly.

Cody Gallarda: No. It’s legacy. Okay. Thank you. Sorry. We were down from yeah. So it’s I think we were $105 million last quarter for that number. So for progressing work. And as time moves on, that number is gonna continue to dwindle from a backlog perspective. And then if I understood maybe a nuance of the other part of your question, there’s some additional detail into the profit activity in the MD&A that we saw last night.

Julio Romero: Got it. I’m just trying to get a sense for is $22 million a quarter should we be through this non-M&P legacy by the end of 2025? Or does it go up longer than that?

Frank Renda: So we do expect to complete the majority of the non-legacy M&P work by the end of 2025. There is one project that can tail into 2026. That we’re working to accelerate, but no additional commentary beyond that at this time.

Julio Romero: Okay. Gotcha. And then I guess, you know, how should we be expecting cash flow to trend in 2025?

Cody Gallarda: Yeah. So we certainly do expect to produce strong cash flow from operations in 2025 as you’ve seen. That turnover time happening, there’s definitely going to be seasonality that you see with cash flow more weighted towards the back half of the year. Think of the meaningful driver behind that is going to be new core project contribution that continues to contribute at very healthy margins. But can be swayed by dispute resolutions on some of our legacy projects. But all of that being said, we expect to generate strong cash flow from operations this year.

Julio Romero: Got it. Variable. I’ll pass it on. Thank you.

Rea: Thank you. As a reminder, if you wish to ask a question, please press star one. Your next question comes from Christian Schwab from Craig-Hallum Capital Group. Please go ahead.

Christian Schwab: Great. Thanks for taking my question. So I guess I need to ask, you know, with the kind of fast pace of change that’s going on in our government today, and people being told they can’t get money or may not get federal funding money, are you guys seeing any anxiety about some of these projects that you’re excited about that maybe those funds will not be able to be allocated to them?

Frank Renda: Hey. Good morning, Christian. Great question. You know? Listen to, you know, kind of listen to the administration speech last night and heard some really positive things in there and some things that got you thinking, but the good thing about the kind of work that we do is it benefits a lot of communities on both sides of the aisle and we all know how critical this work is for our country. You know, we put it off for a long time and talked about cutting down on some of the red tape to get these projects off the ground. If they’re able to come through with that, it’ll be beneficial to our business. And we’re in the middle innings of IIJA spending and we expect that to be a tailwind for our business for many years to come.

And even at the state level, Texas and Florida just continue to have historic levels of spending. Overall, we just feel really good about the pipeline and opportunities out there. And expect to win our fair share of them. You know, the other things that, you know, we heard last night were manufacturing and bringing some of that back and, you know, maybe some tax cuts on that end. But one thing that we do, Christian, that a lot of groups don’t do is, you know, we manufacture our own TBMs. We manufacture our own steel support, you know, some gates, false work, and if there were to be, you know, some cutbacks and tariffs, I think that’s an avenue that we have a real advantage on as well. So we feel optimistic about the future.

Christian Schwab: Fantastic. Well, other question. Thanks, guys.

Frank Renda: Thanks, Chris. Appreciate it.

Rea: Thank you. Your next question comes from Brent Thielman from Davidson. Please go ahead.

Brent Thielman: Hey, guys. Yeah. I guess the question just in terms of the direct or indirect impact of tariffs, overall disruption to the supply chain. I mean, it was trying to see steel prices move a lot higher. It could be some upward pressure around other costs for things that you guys use in your day-to-day projects. Maybe you can just talk about your positioning on contracts in light of that. You know, is there risk? Are you protected? That’d be helpful there.

Frank Renda: Yeah. Thanks. Good morning, you know, on tariffs. The good thing about a majority of our projects is we’re required to procure made-in-America materials already. So we’re already purchasing products in the US. And we really have minimal cross-border exposure. We try to lock in our material pricing, large purchase orders at the beginning of projects, but you know, we’re monitoring the new developments here and taking it into consideration on new bids. Overall, we do not expect this to have a material impact on the business. You know, of course, on some materials and parts for equipment, you know, we’ve got a little bit of exposure out there, but again, don’t expect it to have a material impact on the business at this point.

Brent Thielman: Okay. Maybe just from a seasonal perspective. Certainly heard some things from other companies in a bit of a rough start to the year. I don’t know if you guys could comment on that. You know? Know there’s been some weather down in Texas and among other places. Know, is it more unusual than you’ve seen in prior years or we need to consider there?

Frank Renda: Yeah. A couple of things, you know. Obviously, we had a couple of storms kind of come through. You know, we’ve had some unusual weather patterns, I guess, that have affected us a little bit. But, you know, as far as seasonality, you know, we expect an uptick in new work starts and really getting into some of the larger projects, you know, that I kind of touched on in the remarks, like the Shands Bridge, and the Kennedy Bridge there in New York to really start producing some material results later on in the year. And I would say, good morning, Brent. I would say that what we can continue to and expect to continue to be impacted by weather in various geographies in which we work. But I think if you look at the dispersion of projects that we have currently active, we don’t expect all areas of the country, North America that we work in, to be hit at the same time.

So, you know, hopefully, there’s minimal disruption across the industry for us and for all of our competitors with respect to weather. But to the extent, you know, there likely will be, you know, we believe we’ll certainly have continuing operations in other areas that are unaffected.

Brent Thielman: Brett, about the last thing that I expected going into this year was eleven inches of snow on the ground in Beaumont, Texas, and Lake Charles, Louisiana. It was quite a scene on our two projects out there.

Brent Thielman: Sure. This is fun for the kids. Appreciate it, guys. Thank you.

Frank Renda: Hey. Thanks, Greg.

Rea: Thank you. There are no further questions at this time. I will now hand the call over to Frank Renda. Please continue.

Frank Renda: Hey. Thanks, everyone, for joining today, and thanks for your interest in Southland Holdings, Inc. Look forward to talking again next quarter. Have a great day.

Rea: Thank you. Ladies and gentlemen, today’s conference call has concluded. Thank you for your participation. You may now disconnect.