Good morning, everyone, and welcome to the Southland Second Quarter 2026 Conference Call. This is Alex Murray, Vice President of Corporate Development and Investor Relations. Joining me today are Frank Randa, President and Chief Executive Officer, and Keith Bassano, 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 neither historical facts nor assurances of future performance. Forward-looking statements are uncertain and outside of Southland's control. Southland's actual results and financial condition may differ materially from those projected in 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, 2025 that was filed with the SEC on March 26, 2026, and the discussion in our Form 10-Q for the quarter-ended June 30, 2026 that was filed with the SEC last night. We will also refer to non-GAAP financial measures, and you will find reconciliations in the press release related 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.

Thank you, Alex. Good morning, and thank you for joining Southland's second quarter 2026 conference call. I will provide an overview of the series of agreements we entered into with our sureties. I will then review our quarterly results, including the legacy dispute adjustments recorded during the quarter, progress on the wind down of legacy projects, and the strength of our current pipeline of opportunities. Turning to our strategic plan and capital structure, as you know, our sureties have been providing support both through direct funding and by acquiring our term loan facility. We formalize that ongoing commitment into a financial assistance agreement and a second amendment to our term loan facility. Together, these agreements give us the runway we need to complete our bonded work while putting the company in a much more sustainable capital structure. The financial assistance agreement governs the term on which our sureties have provided and will continue to provide financing with respect to our bonded construction projects. As part of this agreement, the terms depend on whether certain sureties are providing go-forward bonding or not. Any surety that is party to the financial assistance agreement that has provided bonds to us after the retroactive effective date and is expected to continue to issue bonds to us is considered a bonding surety. Financing provided by those sureties is referred to as bonding surety financing. Bonding surety financing bears interest at 4% per annum with accrued interest capitalized and added to principal each year. As of June 30, 2026, total bonding surety financing was approximately $59 million. dollars sureties providing financing that are not providing go forward bonding are considered non-bonding sureties and their funding is referred to as non-bonding financing as of june 30th 2026 total non-bonding financing was approximately 151 million dollars the agreement documents the terms of our non-bonding financing arrangements with our non-bonding sureties, including the future conversion of certain non-bonding financing into senior non-voting preferred shares in accordance with a preferred share term sheet attached to the agreement. Under the agreement, each applicable surety panel has determined the expected loss for the non-bonding financing expected to fund MATPANEL's outstanding bonded projects through completion. The Preferred Shares Term Sheet contemplates that the amount initially converted into preferred shares equals the lesser of the non-bonding financing provided as of June 30, 2026, or 50% of that panel's expected loss. Based on non-bonding financing, as of June 30th, we expect to convert an issue of approximately $151 million of preferred shares allocated among the sureties based on their respective participation on the applicable panel. These preferred shares carry a stated value of $1,000 per share with a liquidation preference equal to that stated value. They rank senior to any other class or series of our equity, have a perpetual maturity, and are not convertible into any other securities of the company. We're required to issue them no later than September 30th of this year, and they can't be primed by any other equity without the applicable surety panel's consent. The preferred shares will be adjusted upward or downward based on actual loss once the applicable sureties projects are completed, with the final preferred share amount limited to 50% of that actual loss. And to the extent the amount initially issued exceeds 50% of the actual loss, that excess converts back to unsecured indebtedness. So the aggregate preferred shares outstanding equals 50% of actual loss at completion. The remaining portion of the non-bonding financing for which preferred shares are not issued will constitute unsecured indebtedness, will bear no interest and will not be subject to mandatory amortization payments other than certain net cash flows from claims and 5% of annual operating cash flow. At time of substantial completion of sureties bonded projects, provided that we are not in default at the applicable time, each surety will forgive the portion of its non-bonding financing that is unsecured indebtedness if its bonded projects achieve substantial completion or all project dispositions with respect to such projects are consummated within 20 percent of the applicable expected loss amount. As part of the agreement, we also reach terms on an amendment to our senior credit facility. So long as we remain in compliance with the facility, the amendment sets the interest rate at a fixed 4%, with accrued interest capitalized and added to principal, and suspends both the scheduled principal payments and the early termination premium. If that relief were to end early, the original interest rate would apply retroactively. Together, this represents approximately $27 million of cash debt service relief over the next 12 months. During the second quarter, our surety partners advanced approximately $71 million to support active, bonded projects, bringing total surety advances to $210 million, exclusive of the Washington State Convention Center. Their continued support reflects confidence in both our plan and execution strategy. Turning to this quarter's results, second quarter revenue was $113 million, inclusive of a revenue reversal of approximately $102 million from non-cash adjustments related to legacy dispute negotiations and resolutions. Gross loss for the quarter was $71 million, primarily driven by the unfavorable adjustment from legacy disputes, which impacted gross loss by approximately $94 million. We continue to actively pursue all avenues to collect the amounts owed to us and expect to make progress throughout the remainder of 2026 in resolving these matters and converting them into cash. Our legacy portfolio also continues to shrink. We are down to $46 million of material and paving backlog and $35 million of non-M&P legacy backlog remaining. The market backdrop across our core end markets also remains strong. Federal, state, and local infrastructure funding continues to translate into active procurement for water, bridge, marine, and tunnel work. Moving along the backlog, we finished the quarter with $1.68 billion of backlog, down from $2.03 billion at year end. With the financing agreement now in place, we expect bonding support and bidding activity to continue increasing. We expect a combination of improving financial flexibility, a shrinking legacy portfolio, and strong market demand positions us well to convert upcoming opportunities into awards over the coming months. This is evident in the recently announced Phase 3 Winnipeg North End Sewage Treatment Plant Award, which we secured alongside our partners ACON and NWH, representing approximately $190 million in contract value for Southland. Active pursuits in our pipeline include additional packages at the Winnipeg North End Sewage treatment plant, the Claiborne Pelt Bridge Rehabilitation in Rhode Island, the I-10 Calcasieu Approach Bridges in Louisiana, the MoDOT Liberty Bend Bridge Design Build in Missouri, the Bermuda Swing Bridge Replacement, the MTA Bronx Whitestone Bridge Rehabilitation in New York, the Outer Bridge Crossing Repairs for the Port Authority, and multiple tunnel marine and bridge opportunities across our core markets. In summary, we have reached final agreement on a central element of the strategic plan we outlined in March. Our surety partners have provided capital to support execution. Our senior credit facility has been restructured to provide meaningful cash debt service relief, and the broader financing agreement is now in place.

With that, I'll now turn the call over to keith for financial updates thank you frank and good morning everyone i will discuss an overview of our financial performance during the second quarter of 2026. you can find additional details and information in the financial statements footnotes and management's discussion and analysis that were filed on form 10q last night revenue in the second quarter was 113.3 million compared to 215.4 million in the same period in 2025. Gross loss in the quarter was 71.2 million compared to gross profit of 13 million in the second quarter of 2025. This was driven by unfavorable adjustments related to claims across several legacy projects. During the three months ended June 30, 2026, we performed a comprehensive reassessment of expected recoverability of claims on several projects including substantially completed projects in light of recent developments and updated information available regarding the timing and the amount of potential recoveries as a result of this reassessment we reduced the estimated value of certain claims and recorded a cumulative catch-up adjustment that negatively impact revenue and gross profit for the quarter of $102.3 million and $93.6 million, respectively. While the company continues to pursue recovery of amounts it believes are contractually due, the timing and the ultimate resolution of these matters remains uncertain. These adjustments reflect the de-recognition of claim positions on work that is already constructed. Our contract assets balance declined to $272.3 million at the quarter end from $389.4 million at year end. The vast majority of that balance relates to legacy projects where construction activities are already completed. Selling general and administrative expenses in the second quarter were $16.7 million, an increase of $3.1 million, or 23.1%, compared to the same period in 2025. The increase was primarily driven by a $3.2 million increase in bad debt expense associated with legacy adjustments, partially offset by lower compensation expense. Selling general and administrative expense in the second quarter included $1.2 million of business transformation expense. Interest expense for the quarter totaled $7.3 million, a decrease of $2.7 million or 26.5% compared to the same period in 2025, primarily due to lower total debt outstanding. Cash interest in the quarter was $4 million compared to $8.5 million in the first quarter, the difference primarily attributable to the suspended interest service on our senior term loan. Other income was $6.4 million compared to $0.6 million in the prior year period, primarily driven by gains on asset sales. These gains are the result of progress made toward an initiative under our strategic plan to monetize non-core assets and reduce our debt. We recorded an income tax benefit of approximately $1.6 million for the quarter compared to a $61,000 benefit in the same period last year. Our effective tax rate for the quarter was approximately 2%. As we discussed on our last call, we recorded a valuation allowance against our domestic deferred tax assets in the third quarter of 2025, which now stands at approximately $147 million as of the second quarter of 2026. As a reminder, that valuation allowance does not limit our ability to use those deferred tax assets in the future. Net loss attributable to Southland stockholders in the second quarter was $84.3 million, or a loss of $1.55 per diluted share, compared to a net loss of $10.3 million, or a loss of $0.19 per diluted share in the second quarter of 2025. EBITDA in the second quarter was negative $73.4 million, compared to a positive $4.2 million in the second quarter of 2025. As I mentioned earlier, this quarter's EBITDA was largely impacted by non-cash unfavorable adjustments of $93.6 million related to our comprehensive reassessment recoverability of Now to touch on segment performance for the quarter. Our civil segment had revenue of $41 million compared to $81.5 million in the same period in 2025. Civil had a gross loss of $27.1 million compared to a gross profit of $14.3 million. in the prior year period. Our transportation segment had revenue of 72.3 million compared to 133.9 million in the same period in 2025. Transportation had a gross loss of 44.2 million compared to a gross loss of 1.3 million in the same period in the prior year. The materials and paving business line contributed 11.7 million in the revenue and a gross loss of $16.3 million in the second quarter, compared to a revenue of $21.7 million and a gross loss of $3.8 million in the same period of 2025. M&P now represents approximately 3% of total backlog. We finished the quarter with approximately $1.68 billion of backlog, of which we expect to recognize approximately 38% as revenue over the next 12 months. During the quarter, our surety partners advanced approximately $70.6 million under our general indemnity agreements to support ongoing project performance, bringing total advances under those agreements to $209.8 million, excluding the Washington State Convention Center. Including amounts funded in connection with the Washington State Convention Center judgment, total surety payables were $298.9 million at quarter end. Repayment of these amounts is not required prior to at least August 13, 2027. Repayment terms regarding the Washington State Convention Center are still being negotiated. As Frank noted, we also reached terms on a second amendment to our senior credit facility. The amendment sets the interest rate at a fixed 4% and defers payment of that interest so it is capitalized as payment-in-kind interest and added to principal rather than paid in cash. The credit amendment suspends the scheduled quarterly amortization payments and the early termination premium, and it eliminates certain early maturity triggers tied to our other indebtedness. The facility continues to mature in September of 2028. The amendment also removes our financial covenants on a going-forward basis. Our facility previously required us maintain liquidity of at least $20 million at all times and tested a minimum EBITDA covenant in defined circumstances. As amended, those requirements apply only to periods prior to March of this year. While we are encouraged to finalize these agreements, our focus remains on closing out our legacy work, improving the balance sheet through asset monetization and the surety partnership and executing on our core business. I'll now return the call back to the operator for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you'd like to ask a question, please raise your hand by pressing star one. Your first question comes from Julio Romero with Sudati and Company, LLC. your line is open. Please go ahead.

Great. Thanks. Hey, good morning, Frank, Keith, and Alex. Thanks so much for taking the questions.

Morning, Julio. Morning.

Hi. So, you know, congratulations on completing the financial assistance agreement and the second amendment. Now that those are executed, could you maybe help investors understand kind of what changes for Southland from here from a go-forward liquidity basis, whether you anticipate needing additional surety funding beyond what's being provided, and what this all means for bonding capacity on new work going forward.

Yeah, this is Keith here. Let me start off with liquidity. So what this agreement does for the company is provides the liquidity that that we need to execute on our bonded work. The shorties have been extremely supportive and you saw that even further this quarter with an additional 70 million of bonding support or rather than shorty payable support to help support the bonded work. We have seen consistent support from the shorties and this agreement formalizes that support.

On the bonding front, Julio, we spent the first half of the year bidding with constrained bonding support as we worked through the deal. Now that the deal is finalized, we expect a comprehensive bonding program that supports the long-term plan. The Winnipeg North End Award we announced in July is approximately $190 million in contract value that's going to be included in Q3 awards. And we expect bidding to pick up now that the deal is finalized. Excellent.

Thanks for the color there. And then for my follow-up here, it's just on the preferred shares you expect to issue, $151 million. How should common shareholders kind of think about that? Is that going to be permanent in the capital structure? Is that a temporary kind of stabilization tool that you expect to redeem? Just help frame that for the common shareholder, if you could.

Yeah, so these are perpetual shares. We will negotiate optional redemption terms. However, that's under negotiation at this time. And these are non-convertible. Okay, great.

Excellent. Thanks for taking the questions, and I'll turn it over.

Your next question comes from Christian Schwab with Craig Harlem Capital Group. Your line is open.

Please go ahead. hey guys it's it's been tax all on for christian schwab here um i just said i just had one question on the uh legacy dispute adjustments and specifically on a go forward basis um do you guys you know internally have like an idea of when you know the the adjustments will be over and and kind of business will get get back to you know normal business i guess simply Yeah.

So, during the quarter, again, these were the result of a comprehensive reassessment of expected recoverability on our claims in the portfolio of projects. Entering into these agreements was critical for the company and critical for the business. We now have additional stakeholders in the claim recoveries as a result. We performed this reassessment and we'll continue to evaluate claims on a quarterly basis, but we view this as a one-time adjustment in the quarter.

All right, guys. That was a moment question. Thank you. Thank you.

There are no further questions at this time. We'll take another question from Julio Romero. Your line is open. Please go ahead.

Hi, guys. Thanks for taking the follow-up question here. The award on the joint venture that you received last month that entered your that enters your civil backlog here in the third quarter um what is what is your portion of the project when is that expected to convert to revenue um what's the expected duration of that project and then um any other projects that are similar to winnipeg in terms of engagements in prior years that might convert to construction awards um or future phases of awards in the future yeah so so the winnipeg project you know we we're working on phase one this is phase two of the project and there's there's multiple phases you know that we hope to uh tender on uh in the coming you know months and months and years but

our portion, you know, is $190 million of construction contract, $190 million contract that will conclude in 2030.

Okay. Thanks very much. Julio, could you repeat that second portion of the question?

Yeah. Hey, can you hear me? Yes. Okay. Yep. Just, you know, when, uh if there's just like if there's other projects that are similar to winnipeg in the sense that you know you kind of uh engaged or bidded on them with a with a joint venture you know in the 23 24 time frame that um you know you're not actively bidding on you know projects of that size now or i would think you you weren't um uh in the earlier part of this year but you know any other projects that are similar to that in the sense that they might actually you know progress towards uh uh an award um here in the coming you know back half of the year or 27. yeah there there's quite a few projects you know that we we have um that are similar uh we've got we've got a couple of couple of projects that we expect to turn into potential construction contracts in the in the back half of the year early next year okay okay great and then i guess Since I'm on anyway, I guess if you have a couple of other projects, I guess that would be interpreted as a positive statement about the continued support you're getting from the surety partners that you have and your bonding capacity.

Yes, we expect bidding to ramp up in the last half of the year. And going forward, there's a lot of demand in our industry, water, wastewater, bridges, marine, all sectors that we're going to strategically target. We're going to continue to hit those short-duration projects, and there's multiple to choose from, and surety support going forward is going to be really helpful.

Great. And then geographically, where are you seeing private sector demand for those services?

There's a lot of work and there's really a lot of work all over the country right now. You know, you hear the data centers really kicking off all over. But as far as infrastructure projects, you know, Texas, Florida, the Northeast, all of our core markets have a lot of work to choose from.

Excellent. Well, thanks for taking the follow up questions. I appreciate it.

Thanks, Julio.

There are no further questions at this time. I'll now turn the call back to Frank for closing remarks.

Before we wrap up today, I'd like to thank our employees for their continued commitment and dedication to building some of the most challenging infrastructure projects across North America, especially as we worked through this transition. I'd also like to thank our Surety Partners for their continued support and partnership as we work together to put Southland on a stronger path forward. Thank you all for joining today, and I look forward to updating you on our next call. Thanks, everyone.

This concludes today's call. Thank you for attending. You may now disconnect.