Southland Holdings (SLND) risk factors, FY2024 10-K

Risks Relating to Southland’s Business and Industry

1. 01We may lose business to competitors through competitive bidding processes
2. 02Our Backlog is subject to unexpected adjustments and cancellations
3. 03The loss of one or more customers could have an adverse effect on us
4. 04We are subject to risks related to government contracts and related procurement regulations
5. 05The timing of new contract starts, including delays, cancellations and scope alternations, may result in unpredictable fluctuations in our business
6. 06We are vulnerable to the cyclical nature of the markets we serve
7. 07Demand for our services may increase or decrease during economic recessions or volatile economic cycles, and a reduction in demand in end markets may adversely affect our business
8. 08Adverse credit and financial market conditions could impair our, our customers’ and our partners’ borrowing capacity, which could negatively affect us
9. 09The nature of our contracts subjects us to risks associated with delays and cost overruns, which may not be recoverable and may result in reduced profits or losses that could have a material impact on us
10. 10If we are unable to accurately estimate contract risks, revenue or costs, economic factors such as inflation, the timing of new awards or the pace of project execution, we may incur a loss or achieve lower than anticipated profit
11. 11We may incur higher costs to lease, acquire and maintain equipment necessary for our operations
12. 12We use certain commodity products that are subject to significant price fluctuations
13. 13Supply chain interruptions, including availability of materials, products or equipment, may have a negative impact on our ability to complete projects
14. 14Some of our contracts have penalties for late completion
15. 15Weather can significantly affect our revenue and profitability
16. 16Climate change and related environmental issues could have a material adverse impact on us
17. 17If we are unable to attract and retain qualified managers and skilled employees, our operating costs may increase
18. 18We depend on key personnel and we may not be able to operate and grow our business effectively if we lose the services of any of our key persons or are unable to attract qualified and skilled personnel in the future
19. 19Our employees work on projects that are inherently dangerous and in locations where there are high security risks, and a failure to maintain a safe work site could result in significant losses
20. 20We may incur liabilities or suffer negative financial or reputational impacts relating to health and safety matters
21. 21We are dependent upon suppliers and subcontractors to complete many of our contracts
22. 22Our participation in joint ventures exposes us to liability and/or harm to our reputation for failures by our partners
23. 23Employee, agent or partner misconduct or our overall failure to comply with laws or regulations could impair our ability to compete for contracts
24. 24Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations
25. 25We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws
26. 26During the ordinary course of our business, we may become subject to material lawsuits or indemnity claims
27. 27Systems and information technology interruption and breaches in data security and/or privacy could adversely impact our ability to operate and negatively impact our results of operations
28. 28Our inability to recover on contract modifications against project owners or subcontractors for payment or performance could negatively affect our business
29. 29Our failure to adequately recover on affirmative claims brought by us against project owners or other project participants for additional contract costs could have a negative impact on our liquidity and future operations
30. 30We may experience delays and defaults in customer payments, and we may pay our suppliers and subcontractors before receiving payment from our customers for the related services, which could result in a material adverse effect on our business
31. 31The COVID-19 pandemic has adversely impacted, and could continue to adversely impact, our business, financial condition and results of operations
32. 32In connection with acquisitions or divestitures, we may become subject to liabilities
33. 33If we fail to integrate acquisitions successfully, we may experience operational challenges and risks, which may have an adverse effect on our business
34. 34Our financial results are based upon estimates and assumptions that may differ from actual results
35. 35Our reported results of operations could be adversely affected as a result of impairments of goodwill, other identifiable intangible assets or investments
36. 36Our accounting for revenue recognized over time could result in a reduction or elimination of previously reported revenue and profit
37. 37Our indebtedness could lead to adverse consequences or adversely affect our financial position and prevent us from fulfilling our obligations under such indebtedness, and any refinancing of this debt could be at significantly higher interest rates
38. 38Our bonding requirements may limit our ability to incur indebtedness, which could limit our ability to refinance our existing credit facilities or to execute our business plan
39. 39We may be unable to win new contracts if we cannot provide customers with letters of credit or performance or other bonds
40. 40It can be difficult and expensive to obtain the insurance we need for our business operations
41. 41We have international operations that are subject to foreign economic and political uncertainties and risks. Unexpected and adverse changes in the foreign countries in which we operate could result in project disruptions, increased cost and potential losses
42. 42Foreign currency risks could have an adverse impact on revenue, earnings and/or Backlog
43. 43We could be adversely impacted if we fail to comply with domestic and international import and export laws
44. 44Compliance with and changes in tax laws could adversely affect our performance
45. 45Bank failures or intervention by banking regulators may have an adverse impact on our business
46. 46Delaware law and our charter documents may impede or discourage a takeover or change in control

Risks Relating to Our Securities

1. 47We are an “emerging growth company” and it cannot be ascertained whether the reduced disclosure requirements applicable to emerging growth companies will make our Common Stock less attractive to investors
2. 48An established market for our securities may not be sustained
3. 49NYSE may delist Southland’s securities from trading on its exchange, which could limit investors’ ability to make transactions in its securities and subject Southland to additional trading restrictions
4. 50The price of our securities may change significantly, and you could lose all or part of your investment as a result
5. 51These broad market and industry fluctuations may adversely affect the market price of our securities, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our securities is low
6. 52Future sales, or the perception of future sales, by the Company or our stockholders in the public market could cause the market price of our securities to decline
7. 53If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, the price and trading volume of our securities could decline
8. 54Our actual operating and financial results in any given period may differ from guidance we provide to the public, including our most recent public guidance
9. 55We do not intend to pay dividends for the foreseeable future. As a result, you will be relying solely on the appreciation in value of our securities to achieve a return on your investment
10. 56We are a “controlled company” that could take advantage of exemptions to certain corporate governance requirements under NYSE rules in the future
11. 57The Warrants may never be in the money, and may expire worthless
12. 58An investor will only be able to exercise a Warrant if the issuance of shares of Common Stock upon such exercise has been registered or qualified or is deemed exempt under the securities laws of the state of residence of the holder of the Warrants
13. 59We may amend the terms of the Warrants in a manner that may be adverse to holders with the approval by the holders of at least a majority of the then outstanding Warrants
14. 60We may redeem unexpired Warrants prior to their exercise at a time that is disadvantageous to the holders, thereby making the Warrants worthless
15. 61Our management’s ability to require holders of our Warrants to exercise such Warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash
16. 62We may issue additional equity securities and any such issuance may dilute earnings per share and stockholders’ percentage ownership