Southland Holdings (SLND) risk factors, FY2025 10-K

Risks Relating to Southland’s Business and Industry

1. 01We may lose business to competitors through competitive bidding processes31% rewritten
2. 02Our Backlog is subject to unexpected adjustments and cancellations
3. 03The loss of one or more customers could have an adverse effect on us42% rewritten
4. 04We are subject to risks related to government contracts and related procurement regulations
5. 05The timing of new contract delays, cancellations and termination of existing contracts may result in unpredictable fluctuations in our business47% rewritten
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 and tariffs, 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 fluctuations39% rewritten
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 us20% rewritten
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 operations26% rewritten
28. 28Our inability to recover on contract modifications against project owners or subcontractors for payment or performance could negatively affect our financial condition, results of operations and cash flows
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 are involved in various lawsuits which, if determined unfavorable to us, could adversely affect our financial results and/or cash flows, harm our reputation and/or preclude us from bidding on future projects. We also may invest significant working capital on projects while legal proceedings are being settledNew
31. 31We 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 business20% rewritten
32. 32Public health crises, such as the COVID-19 pandemic, have adversely impacted, and could in the future adversely impact, our business, financial condition and results of operationsNew
33. 33In connection with acquisitions or divestitures, we may become subject to liabilities
34. 34If we fail to integrate acquisitions successfully, we may experience operational challenges and risks, which may have an adverse effect on our business
35. 35Our financial results are based upon estimates and assumptions that may differ from actual results
36. 36Our reported results of operations could be adversely affected as a result of impairments of goodwill, other identifiable intangible assets or investments
37. 37Our accounting for revenue recognized over time could result in a reduction or elimination of previously reported revenue and profit
38. 38Our 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
39. 39Our 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
40. 40We may be unable to win new contracts if we cannot provide customers with letters of credit or performance or other bonds
41. 41It can be difficult and expensive to obtain the insurance we need for our business operations
42. 42We 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 losses20% rewritten
43. 43Foreign currency risks could have an adverse impact on revenue, earnings and/or Backlog
44. 44We could be adversely impacted if we fail to comply with domestic and international import and export laws
45. 45Compliance with and changes in tax laws could adversely affect our performance
46. 46Bank failures or intervention by banking regulators may have an adverse impact on our business
47. 47Delaware law and our charter documents may impede or discourage a takeover or change in control

Risks Relating to Our Securities

1. 48We 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. 49An established market for our securities may not be sustained
3. 50NYSE American 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. 51The price of our securities may change significantly, and you could lose all or part of your investment as a result
5. 52These 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. 53Future 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. 54If 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. 55Our 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. 56We 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. 57We are a “controlled company” that could take advantage of exemptions to certain corporate governance requirements under NYSE American rules in the future22% rewritten
11. 58The Warrants may never be in the money, and may expire worthless
12. 59An 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. 60We 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. 61We may redeem unexpired Warrants prior to their exercise at a time that is disadvantageous to the holders, thereby making the Warrants worthless
15. 62Our 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. 63We may issue additional equity securities and any such issuance may dilute earnings per share and stockholders’ percentage ownership