- Robust Third Quarter Earnings Growth and Margin Expansion Led
by Construction Products and Engineered Structures
- Strong Operating Cash Flow of $135 Million Driven by Increased
Earnings and Improved Working Capital Management
- October 1 Closing of $1.2 Billion Stavola Acquisition and Third
Quarter Completion of Steel Components Divestiture Enhance
Portfolio Transformation
- Raised Full Year 2024 Adjusted EBITDA Guidance Reflecting
Strategic Actions
Arcosa, Inc. (NYSE: ACA) (“Arcosa,” the “Company,” “We,” or
“Our”), a provider of infrastructure-related products and
solutions, today announced results for the third quarter ended
September 30, 2024.
Third Quarter 2024 Highlights
Three Months Ended September
30,
2024
2023
% Change
($ in millions, except per
share amounts)
Revenues
$
640.4
$
591.7
8
%
Revenues, excluding the impact of divested
business(1)
$
626.8
$
551.9
14
%
Net income
$
16.6
$
35.5
(53
)%
Adjusted Net Income(2)
$
44.6
$
35.9
24
%
Diluted EPS
$
0.34
$
0.72
(53
)%
Adjusted Diluted EPS(2)
$
0.91
$
0.73
25
%
Adjusted EBITDA(2)
$
114.0
$
89.4
28
%
Adjusted EBITDA Margin(2)
17.8
%
15.1
%
270
bps
Adjusted EBITDA, excluding impact from
divested business(1)(2)
$
115.3
$
83.1
39
%
Adjusted EBITDA Margin, excluding impact
from divested business(1)(2)
18.4
%
15.1
%
330
bps
Net cash provided by operating
activities
$
135.0
$
43.9
208
%
Free Cash Flow(2)
$
107.2
$
1.7
6206
%
bps - basis points
(1) Excludes the impact of the divested
steel components business for both periods presented.
(2) Non-GAAP financial measure. See
reconciliation tables included in this release.
Antonio Carrillo, President and Chief Executive Officer, noted,
“We continue to successfully execute on our portfolio optimization
strategy and are strengthening the foundation of our business by
reducing the complexity and cyclicality while improving our margin
profile. During the third quarter, we completed the divestiture of
our steel components business and on October 1st we closed on the
$1.2 billion acquisition of the aggregates-led construction
materials business of Stavola, our largest transaction to date.
“Our progress is reflected in our third quarter financial
results with 39% Adjusted EBITDA growth outpacing revenue growth
resulting in 330 basis points of margin expansion, normalizing for
the divestiture of steel components, with strong organic and
inorganic growth in both Construction Products and Engineered
Structures.
“Order levels during the quarter remained healthy for our
utility structures business while conversations with our customers
for additional wind tower orders are focused on delivery in 2026
and beyond. For barge, we received orders for both tank and hopper
barges representing a book-to-bill of 0.9 and providing increased
production visibility for 2025.
“Severe weather has been a recurring event, with two hurricanes
in the quarter and a third in early October, impacting areas where
we have operations. We are thankful our people are safe and our
plants were not significantly impacted, although we did experience
some production interruptions as a result.”
Carrillo continued, “We generated $107 million of free cash flow
in the third quarter, benefiting from strong working capital
management and a reduction in capital expenditures. Our pro forma
Net Debt to Adjusted EBITDA of 3.4x was improved compared to the
3.7x we projected at the time of the Stavola acquisition
announcement. We remain confident in our goal to return to our
target leverage ratio of 2.0x - 2.5x within 18 months. Overall, we
are pleased with how our business is performing and the underlying
trends remain positive. We are well-positioned to build further on
the success that we have achieved.”
2024 Outlook and Guidance
The Company made the following adjustments to its full year 2024
guidance to reflect the strategic portfolio actions:
- Adjusted its consolidated revenues range to $2.56 billion to
$2.63 billion, compared to the prior guidance range of $2.60
billion to $2.72 billion.
- Increased its consolidated Adjusted EBITDA range to $435
million to $450 million, compared to the prior guidance range of
$420 million to $440 million.
Commenting on the outlook, Carrillo noted, “Adjusting for the
steel components divestiture, our third quarter results tracked
well to our expectations, delivering in-line Adjusted EBITDA and
outperforming on margin. Our outlook for the remainder of the year
remains very positive. We are pleased to increase our Adjusted
EBITDA guidance to reflect the strategic actions we have taken to
optimize our portfolio, specifically, the acquisition of Stavola
completed at the beginning of October, with some offset from the
divestiture of steel components in August.”
Third Quarter 2024 Results and Commentary
Construction Products
- Revenues increased 1% to $265.9 million primarily due to recent
acquisitions. Organic revenues in our aggregates and specialty
materials businesses were down slightly as lower volumes, a
decrease in freight revenue, and a reduction in revenue from
recently divested operations were partially offset by higher
pricing. Revenues for our trench shoring business decreased 6%
primarily due to lower steel prices and reduced volumes.
- Adjusted Segment EBITDA increased 21% to $71.0 million
primarily due to the accretive impact of recent acquisitions,
increased unit profitability in our legacy aggregates business and
operating improvements in our specialty materials and shoring
businesses.
- Adjusted Segment EBITDA Margin increased 430 basis points to
26.7% from 22.4% in the prior year period and Freight-Adjusted
Segment EBITDA Margin was 29.2% compared to 25.4% in the prior year
period.
Engineered Structures
- Revenues for utility, wind, and related structures increased
26% to $279.4 million primarily due to higher volumes in our wind
towers business and the contribution from the Ameron Pole Products
("Ameron") business that was acquired in April 2024. Revenues for
utility structures increased slightly as higher volumes and
improved product mix were mostly offset by lower steel prices.
- Adjusted Segment EBITDA increased 74% to $44.3 million, and
margin expanded 450 basis points to 15.9%, resulting from higher
wind tower volumes, the accretive impact of the acquired Ameron
business, and operating improvements in our utility structures
business.
- Order activity for utility and related structures remains
healthy and conversations with our customers for additional wind
tower orders continue.
- At the end of the third quarter, the combined backlog for
utility, wind, and related structures was $1,264.6 million compared
to $1,450.8 million at the end of the third quarter of 2023. We
expect to deliver approximately 20% of our current backlog in
2024.
Transportation Products
- Results for the segment were impacted by the divestiture of the
steel components business. Third quarter revenues and Adjusted
EBITDA for the steel components business were $13.6 million and
$(1.3) million, respectively, compared to $39.8 million and $6.3
million, respectively, in the prior year period.
- In addition, the Company recognized a pretax loss on the sale
of $23.0 million ($17.7 million after tax), which has been excluded
from Adjusted Segment EBITDA.
- Revenues for our barge business increased 21% primarily due to
higher tank barge deliveries.
- Excluding the impact of the divested steel components business
from both periods, Adjusted Segment EBITDA increased 8%, to $12.9
million, driven by higher tank barge deliveries.
- Adjusted Segment EBITDA Margin was 15.8% compared to 17.7% in
the prior period, excluding the steel components business. The
decrease was largely due to planned operating inefficiencies
resulting from the changeover from hopper to tank barge production
in one of our facilities.
- During the quarter, we received barge orders totaling
approximately $75 million for both tank and hopper barges
representing a book-to-bill of 0.9.
- Backlog for inland barges at the end of the quarter was $244.7
million compared to $240.4 at the end of the third quarter of 2023.
We expect to deliver approximately 32% of our current backlog in
2024.
Corporate and Other Financial Notes
- Excluding acquisition and divestiture-related costs, which have
been excluded from Adjusted EBITDA, corporate expenses decreased to
$13.4 million in the third quarter from $14.2 million in the prior
year.
- Acquisition and divestiture-related costs were $11.6 million in
the third quarter compared to $0.5 million in the prior year.
- The effective tax rate in the second quarter was 13.1% compared
to 17.4% in the prior year. The decrease in the tax rate was
primarily due to increased Advanced Manufacturing Production tax
credits and foreign currency impacts.
Cash Flow and Liquidity
- Operating cash flow was $135.0 million during the third
quarter, an increase of $91.1 million compared to the prior year
driven by a reduction in working capital.
- Working capital was a $50.0 million net source of cash for the
quarter compared to the prior year's $29.4 million net use of cash.
The increase in cash provided by working capital was driven by a
decrease in receivables and an increase in accrued
liabilities.
- Capital expenditures in the third quarter were $34.4 million,
compared to $47.9 million in the prior year, as we near completion
on organic projects underway in Construction Products and
Engineered Structures.
- Free Cash Flow for the quarter was $107.2 million, up
significantly from $1.7 million in the prior year.
- During the quarter, we invested $34.7 million, net of cash
acquired, for the acquisition of a Phoenix, Arizona based natural
aggregates business.
- The Company received net cash proceeds of $53.1 million from
the divestiture of the steel components business, which was used to
fund repayments on the Company's revolving credit facility totaling
$60 million during the quarter.
- On August 26, 2024, we issued $600.0 million of 6.875%
unsecured senior notes, temporarily increasing cash, net of
issuance costs, for the quarter, to partially fund the $1.2 billion
acquisition of Stavola. The balance of the purchase price was
funded with a $700.0 million variable-rate senior secured Term Loan
B Facility that closed concurrently with the acquisition on October
1, 2024.
- We ended the quarter with total liquidity of $516.1 million,
including $156.8 million of cash and cash equivalents, excluding
the net proceeds from the senior note issuance.
- Net Debt to Adjusted EBITDA was 1.2x for the trailing twelve
months. Pro forma Net Debt to Adjusted EBITDA for the acquisition
of Stavola is 3.4x.
Non-GAAP Financial Information
This earnings release contains financial measures that have not
been prepared in accordance with U.S. generally accepted accounting
principles (“GAAP”). Reconciliations of non-GAAP financial measures
to the closest GAAP measure are included in the accompanying tables
to this earnings release.
Conference Call Information
A conference call is scheduled for 8:30 a.m. Eastern Time on
October 31, 2024 to discuss third quarter 2024 results. To listen
to the conference call webcast, please visit the Investor Relations
section of Arcosa’s website at https://ir.arcosa.com. A slide
presentation for this conference call will be posted on the
Company’s website in advance of the call at https://ir.arcosa.com.
The audio conference call number is 800-343-1703 for domestic
callers and 785-424-1116 for international callers. The conference
ID is ARCOSA and the passcode is 15081. An audio playback will be
available through 11:59 p.m. Eastern Time on November 14, 2024, by
dialing 800-934-4577 for domestic callers and 402-220-1177 for
international callers. A replay of the webcast will be available
for one year on Arcosa’s website at
https://ir.arcosa.com/news-events/events-presentations.
About Arcosa
Arcosa, Inc. (NYSE:ACA), headquartered in Dallas, Texas, is a
provider of infrastructure-related products and solutions with
leading positions in construction, engineered structures, and
transportation markets. Arcosa reports its financial results in
three principal business segments: Construction Products,
Engineered Structures, and Transportation Products. For more
information, visit www.arcosa.com.
Some statements in this release, which are not historical facts,
are “forward-looking statements” as defined by the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include statements about Arcosa’s estimates,
expectations, beliefs, intentions or strategies for the future.
Arcosa uses the words “anticipates,” “assumes,” “believes,”
“estimates,” “expects,” “intends,” “forecasts,” “may,” “will,”
“should,” “guidance,” “outlook,” “strategy,” “plans,” “goal,” and
similar expressions to identify these forward-looking statements.
Forward-looking statements speak only as of the date of this
release, and Arcosa expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein, except as required by
federal securities laws. Forward-looking statements are based on
management’s current views and assumptions and involve risks and
uncertainties that could cause actual results to differ materially
from historical experience or our present expectations, including
but not limited to assumptions, risks and uncertainties regarding
the failure to successfully complete or integrate acquisitions,
including Ameron and Stavola, or divest any business, or failure to
achieve the expected benefits of acquisitions or divestitures;
market conditions and customer demand for Arcosa’s business
products and services; the cyclical nature of, and seasonal or
weather impact on, the industries in which Arcosa competes;
competition and other competitive factors; governmental and
regulatory factors; changing technologies; availability of growth
opportunities; market recovery; ability to improve margins; the
impact of inflation and costs of materials; assumptions regarding
achievements of the expected benefits from the Inflation Reduction
Act; the delivery or satisfaction of any backlog or firm orders;
the impact of pandemics on Arcosa’s business; and Arcosa’s ability
to execute its long-term strategy, and such forward-looking
statements are not guarantees of future performance. For further
discussion of such risks and uncertainties, see “Risk Factors” and
the “Forward-Looking Statements” section of “Management's
Discussion and Analysis of Financial Condition and Results of
Operations” in Arcosa's Form 10-K for the year ended December 31,
2023 and as may be revised and updated by Arcosa's Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K.
TABLES TO FOLLOW
Arcosa, Inc.
Condensed Consolidated
Statements of Operations
(in millions, except per share
amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Revenues
$
640.4
$
591.7
$
1,903.7
$
1,725.7
Operating costs:
Cost of revenues
503.7
484.6
1,517.4
1,388.9
Selling, general, and administrative
expenses
82.4
61.3
231.0
194.5
Gain on disposition of property, plant,
equipment, and other assets
(2.5
)
(2.6
)
(8.4
)
(25.8
)
(Gain) loss on sale of businesses
23.0
—
3.5
(6.4
)
Impairment charge
—
—
5.8
—
606.6
543.3
1,749.3
1,551.2
Operating profit
33.8
48.4
154.4
174.5
Interest expense
15.8
6.7
35.5
20.9
Other, net (income) expense
(1.1
)
(1.3
)
(0.7
)
(5.8
)
14.7
5.4
34.8
15.1
Income before income taxes
19.1
43.0
119.6
159.4
Provision for income taxes
2.5
7.5
18.2
27.3
Net income
$
16.6
$
35.5
$
101.4
$
132.1
Net income per common share:
Basic
$
0.34
$
0.73
$
2.08
$
2.71
Diluted
$
0.34
$
0.72
$
2.07
$
2.70
Weighted average number of shares
outstanding:
Basic
48.7
48.7
48.6
48.5
Diluted
48.8
48.8
48.7
48.7
Arcosa, Inc.
Condensed Segment Data
(in millions)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Revenues:
2024
2023
2024
2023
Aggregates and specialty materials
$
233.6
$
227.8
$
690.8
$
665.9
Construction site support
32.3
34.3
102.4
97.1
Construction Products
265.9
262.1
793.2
763.0
Utility, wind, and related structures
279.4
222.5
785.8
637.2
Engineered Structures
279.4
222.5
785.8
637.2
Inland barges
81.5
67.3
236.9
207.9
Steel components(1)
13.6
39.8
87.8
117.6
Transportation Products
95.1
107.1
324.7
325.5
Consolidated Total
$
640.4
$
591.7
$
1,903.7
$
1,725.7
Three Months Ended
September 30,
Nine Months Ended
September 30,
Operating profit (loss):
2024
2023
2024
2023
Construction Products
$
40.4
$
30.3
$
108.6
$
114.2
Engineered Structures
32.6
18.7
94.0
70.3
Transportation Products(1)
(14.2
)
14.1
13.0
35.8
Segment Total
58.8
63.1
215.6
220.3
Corporate
(25.0
)
(14.7
)
(61.2
)
(45.8
)
Consolidated Total
$
33.8
$
48.4
$
154.4
$
174.5
Backlog:
September 30, 2024
September 30, 2023
Engineered Structures:
Utility, wind, and related structures
$
1,264.6
$
1,450.8
Transportation Products:
Inland barges
$
244.7
$
240.4
(1) On August 16, 2024, the Company
completed the divestiture of the steel components business. During
the three and nine months ended September 30, 2024, the Company
recognized a loss on the sale of $23.0 million, which is included
in operating profit.
Arcosa, Inc.
Condensed Consolidated Balance
Sheets
(in millions)
(unaudited)
September 30, 2024
December 31, 2023
Current assets:
Cash and cash equivalents
$
756.8
$
104.8
Receivables, net of allowance
396.4
357.1
Inventories
360.4
401.8
Other
46.1
48.3
Total current assets
1,559.7
912.0
Property, plant, and equipment, net
1,381.5
1,336.3
Goodwill
1,009.3
990.7
Intangibles, net
306.3
270.7
Deferred income taxes
6.8
6.8
Other assets
93.3
61.4
$
4,356.9
$
3,577.9
Current liabilities:
Accounts payable
$
242.9
$
272.5
Accrued liabilities
156.0
117.4
Advance billings
29.3
34.5
Current portion of long-term debt
4.1
6.8
Total current liabilities
432.3
431.2
Debt
1,232.8
561.9
Deferred income taxes
198.4
179.6
Other liabilities
59.3
73.2
1,922.8
1,245.9
Stockholders' equity:
Common stock
0.5
0.5
Capital in excess of par value
1,692.1
1,682.8
Retained earnings
759.0
664.9
Accumulated other comprehensive loss
(16.7
)
(16.2
)
Treasury stock
(0.8
)
—
2,434.1
2,332.0
$
4,356.9
$
3,577.9
Arcosa, Inc.
Consolidated Statements of Cash
Flows
(in millions)
(unaudited)
Nine Months Ended
September 30,
2024
2023
Operating activities:
Net income
$
101.4
$
132.1
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion, and
amortization
134.6
118.8
Impairment charge
5.8
—
Stock-based compensation expense
19.0
18.3
Provision for deferred income taxes
14.7
14.0
Gain on disposition of property, plant,
equipment, and other assets
(8.4
)
(25.8
)
(Gain) loss on sale of businesses
3.5
(6.4
)
(Increase) decrease in other assets
(1.9
)
(3.5
)
Increase (decrease) in other
liabilities
(16.4
)
(6.2
)
Other
(3.8
)
1.3
Changes in current assets and
liabilities:
(Increase) decrease in receivables
(45.5
)
(34.6
)
(Increase) decrease in inventories
33.1
(40.4
)
(Increase) decrease in other current
assets
3.7
1.0
Increase (decrease) in accounts
payable
(24.8
)
49.5
Increase (decrease) in advance
billings
(4.1
)
(4.1
)
Increase (decrease) in accrued
liabilities
42.9
(15.2
)
Net cash provided by operating
activities
253.8
198.8
Investing activities:
Proceeds from disposition of property,
plant, equipment, and other assets
14.0
30.1
Proceeds from sale of businesses
86.4
2.0
Capital expenditures
(136.4
)
(144.8
)
Acquisitions, net of cash acquired
(214.6
)
(18.8
)
Net cash required by investing
activities
(250.6
)
(131.5
)
Financing activities:
Payments to retire debt
(260.2
)
(142.0
)
Proceeds from issuance of debt
935.0
100.0
Dividends paid to common stockholders
(7.3
)
(7.3
)
Purchase of shares to satisfy employee tax
on vested stock
(10.5
)
(11.1
)
Holdback payment from acquisition
—
(10.0
)
Debt issuance costs
(8.2
)
(2.0
)
Net cash provided (required) by financing
activities
648.8
(72.4
)
Net increase (decrease) in cash and cash
equivalents
652.0
(5.1
)
Cash and cash equivalents at beginning of
period
104.8
160.4
Cash and cash equivalents at end of
period
$
756.8
$
155.3
Arcosa, Inc.
Reconciliation of Adjusted Net Income
and Adjusted Diluted EPS
(unaudited)
GAAP does not define “Adjusted Net Income”
and it should not be considered as an alternative to earnings
measures defined by GAAP, including net income. We use this metric
to assess the operating performance of our consolidated business.
We adjust net income for certain items that are not reflective of
the normal operations of our business to provide investors with
what we believe is a more consistent comparison of earnings
performance from period to period.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
(in millions)
Net Income
$
16.6
$
35.5
$
101.4
$
132.1
(Gain) loss on sale of businesses, net of
tax
17.7
—
2.7
(4.5
)
Impact of acquisition and
divestiture-related expenses, net of tax(1)
10.3
0.4
16.7
1.1
Benefit from reduction in holdback
obligation, net of tax
—
—
—
(3.8
)
Impairment charge, net of tax
—
—
4.5
—
Adjusted Net Income
$
44.6
$
35.9
$
125.3
$
124.9
GAAP does not define “Adjusted Diluted
EPS” and it should not be considered as an alternative to earnings
measures defined by GAAP, including diluted EPS. We use this metric
to assess the operating performance of our consolidated business.
We adjust diluted EPS for certain items that are not reflective of
the normal operations of our business to provide investors with
what we believe is a more consistent comparison of earnings
performance from period to period.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
(in dollars per share)
Diluted EPS
$
0.34
$
0.72
$
2.07
$
2.70
(Gain) loss on sale of businesses
0.36
—
0.05
(0.09
)
Impact of acquisition and
divestiture-related expenses(1)
0.21
0.01
0.34
0.02
Benefit from reduction in holdback
obligation
—
—
—
(0.08
)
Impairment charge
—
—
0.09
—
Adjusted Diluted EPS
$
0.91
$
0.73
$
2.55
$
2.55
(1) Expenses associated with acquisitions
and divestitures, including the cost impact of the fair value
markup of acquired inventory, advisory and professional fees,
integration, separation, and other transaction costs. For the three
and nine months ended September 30, 2024, includes legal fees
accrued in interest expense in connection with the committed senior
secured 364-day bridge loan facility that was available to fund the
Stavola acquisition in the event permanent financing was not
obtained prior to closing.
Arcosa, Inc.
Reconciliation of Adjusted
EBITDA
($ in millions)
(unaudited)
“EBITDA” is defined as net income plus
interest, taxes, depreciation, depletion, and amortization.
“Adjusted EBITDA” is defined as EBITDA adjusted for certain items
that are not reflective of the normal earnings of our business.
GAAP does not define EBITDA or Adjusted EBITDA and they should not
be considered as alternatives to earnings measures defined by GAAP,
including net income. We use Adjusted EBITDA to assess the
operating performance of our consolidated business, as a metric for
incentive-based compensation, as a measure within our lending
arrangements, and as a basis for strategic planning and forecasting
as we believe that it closely correlates to long-term shareholder
value. As a widely used metric by analysts, investors, and
competitors in our industry, we believe Adjusted EBITDA also
assists investors in comparing a company's performance on a
consistent basis without regard to depreciation, depletion,
amortization, and other items which can vary significantly
depending on many factors. “Adjusted EBITDA Margin” is defined as
Adjusted EBITDA divided by Revenues.
Three Months Ended
September 30,
Nine Months Ended
September 30,
Full Year
2024 Guidance(3)
2024
2023
2024
2023
Low
High
Revenues
$
640.4
$
591.7
$
1,903.7
$
1,725.7
$
2,560.0
$
2,630.0
Net income
16.6
35.5
101.4
132.1
119.4
123.8
Add:
Interest expense, net
12.0
5.0
29.3
16.6
62.0
64.0
Provision for income taxes
2.5
7.5
18.2
27.3
22.8
25.4
Depreciation, depletion, and amortization
expense(1)
45.2
40.5
134.6
118.8
181.0
185.0
EBITDA
76.3
88.5
283.5
294.8
385.2
398.2
Add (less):
(Gain) loss on sale of businesses
23.0
—
3.5
(6.4
)
3.5
3.5
Impact of acquisition and
divestiture-related expenses(2)
12.0
0.5
20.4
1.4
35.0
37.0
Benefit from reduction in holdback
obligation
—
—
—
(5.0
)
—
—
Impairment charge
—
—
5.8
—
5.8
5.8
Other, net (income) expense
2.7
0.4
5.5
(1.5
)
5.5
5.5
Adjusted EBITDA
$
114.0
$
89.4
$
318.7
$
283.3
$
435.0
$
450.0
Adjusted EBITDA Margin
17.8
%
15.1
%
16.7
%
16.4
%
17.0
%
17.1
%
(1) Includes the impact of the fair value
markup of acquired long-lived assets, subject to final purchase
price adjustments.
(2) Expenses associated with acquisitions
and divestitures, including the cost impact of the fair value
markup of acquired inventory, advisory and professional fees,
integration, separation, and other transaction costs.
(3) Full year 2024 guidance does not
include the fair value markup of inventory or long-lived assets
associated with purchase price allocation for the Stavola
acquisition that closed on October 1, 2024.
Arcosa, Inc.
Reconciliation of Adjusted Segment
EBITDA
($ in millions)
(unaudited)
“Segment EBITDA” is defined as segment
operating profit plus depreciation, depletion, and amortization.
“Adjusted Segment EBITDA” is defined as Segment EBITDA adjusted for
certain items that are not reflective of the normal earnings of our
business. GAAP does not define Segment EBITDA or Adjusted Segment
EBITDA and they should not be considered as alternatives to
earnings measures defined by GAAP, including segment operating
profit. We use Adjusted Segment EBITDA to assess the operating
performance of our businesses, as a metric for incentive-based
compensation, and as a basis for strategic planning and forecasting
as we believe that it closely correlates to long-term shareholder
value. As a widely used metric by analysts, investors, and
competitors in our industry we believe Adjusted Segment EBITDA also
assists investors in comparing a company's performance on a
consistent basis without regard to depreciation, depletion,
amortization, and other items, which can vary significantly
depending on many factors. “Adjusted Segment EBITDA Margin” is
defined as Adjusted Segment EBITDA divided by Revenues.
Three Months Ended
September 30,
Nine Months Ended
September 30,
Twelve Months Ended September
30,
2024
2023
2024
2023
2024
Construction Products
Revenues
$
265.9
$
262.1
$
793.2
$
763.0
$
1,031.5
Operating Profit
40.4
30.3
108.6
114.2
133.0
Add: Depreciation, depletion, and
amortization expense(1)
30.2
28.4
89.7
83.1
118.3
Segment EBITDA
70.6
58.7
198.3
197.3
251.3
Less: Gain on sale of businesses
—
—
(5.0
)
—
(5.0
)
Add: Impact of acquisition and
divestiture-related expenses(2)
0.4
—
1.7
—
1.7
Less: Benefit from reduction in holdback
obligation
—
—
—
(5.0
)
—
Add: Impairment charge
—
—
5.8
—
5.8
Adjusted Segment EBITDA
$
71.0
$
58.7
$
200.8
$
192.3
$
253.8
Adjusted Segment EBITDA Margin
26.7
%
22.4
%
25.3
%
25.2
%
24.6
%
Engineered Structures
Revenues
$
279.4
$
222.5
$
785.8
$
637.2
$
1,022.1
Operating Profit
32.6
18.7
94.0
70.3
119.4
Add: Depreciation and amortization
expense(1)
11.7
6.7
32.1
19.7
39.0
Segment EBITDA
44.3
25.4
126.1
90.0
158.4
Add: Impact of acquisition and
divestiture-related expenses(2)
—
—
1.6
—
1.6
Less: Gain on sale of businesses
—
—
(14.5
)
(6.4
)
(14.5
)
Adjusted Segment EBITDA
$
44.3
$
25.4
$
113.2
$
83.6
$
145.5
Adjusted Segment EBITDA Margin
15.9
%
11.4
%
14.4
%
13.1
%
14.2
%
Transportation Products
Revenues
$
95.1
$
107.1
$
324.7
$
325.5
$
432.7
Operating Profit
(14.2
)
14.1
13.0
35.8
23.0
Add: Depreciation and amortization
expense
2.8
4.1
10.9
12.1
14.8
Segment EBITDA
(11.4
)
18.2
23.9
47.9
37.8
Add: Loss on sale of businesses
23.0
—
23.0
—
23.0
Adjusted Segment EBITDA
$
11.6
$
18.2
$
46.9
$
47.9
$
60.8
Adjusted Segment EBITDA Margin
12.2
%
17.0
%
14.4
%
14.7
%
14.1
%
Operating Loss - Corporate
$
(25.0
)
$
(14.7
)
$
(61.2
)
$
(45.8
)
$
(78.2
)
Add: Impact of acquisition and
divestiture-related expenses - Corporate(2)
11.6
0.5
17.1
1.4
17.9
Add: Corporate depreciation expense
0.5
1.3
1.9
3.9
3.2
Adjusted EBITDA
$
114.0
$
89.4
$
318.7
$
283.3
$
403.0
(1) Includes the impact of the fair value
markup of acquired long-lived assets, subject to final purchase
price adjustments.
(2) Expenses associated with acquisitions
and divestitures, including the cost impact of the fair value
markup of acquired inventory, advisory and professional fees,
integration, separation, and other transaction costs.
Arcosa, Inc.
Reconciliation of Freight-Adjusted
Revenues for Construction Products
($ in millions)
(unaudited)
“Freight-Adjusted Revenues” for
Construction Products is defined as segment revenues less freight
and delivery, which are pass-through activities. GAAP does not
define Freight-Adjusted Revenues and they should not be considered
as alternatives to earnings measures defined by GAAP, including
revenues. We use Freight-Adjusted Revenues in the review of our
operating results. We also believe that this presentation is
consistent with our competitors. As a widely used metric by
analysts and investors, this metric assists in comparing a
company's performance on a consistent basis. “Freight-Adjusted
Segment Margin” is defined as Freight-Adjusted Revenues divided by
Adjusted Segment EBITDA.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Construction Products
Revenues
$
265.9
$
262.1
$
793.2
$
763.0
Less: Freight revenues(1)
22.7
31.2
73.7
90.2
Freight-Adjusted Revenues
$
243.2
$
230.9
$
719.5
$
672.8
Adjusted Segment EBITDA(2)
$
71.0
$
58.7
$
200.8
$
192.3
Adjusted Segment EBITDA Margin(2)
26.7
%
22.4
%
25.3
%
25.2
%
Freight-Adjusted Segment EBITDA Margin
29.2
%
25.4
%
27.9
%
28.6
%
(1) The freight revenue amount shown for
the three and nine months ended September 30, 2023 has been updated
from the prior year disclosure due to a reclass between freight
revenue and product revenue.
(2) See Reconciliation of Adjusted Segment
EBITDA table.
Arcosa, Inc.
Reconciliation of Free Cash Flow and
Net Debt to Adjusted EBITDA
($ in millions)
(unaudited)
GAAP does not define “Free Cash Flow” and
it should not be considered as an alternative to cash flow measures
defined by GAAP, including cash flow from operating activities. We
define Free Cash Flow as cash provided by operating activities less
capital expenditures net of the proceeds from the disposition of
property, plant, equipment, and other assets. The Company also uses
“Free Cash Flow Conversion”, which we define as Free Cash Flow
divided by net income. We use these metrics to assess the liquidity
of our consolidated business. We present these metrics for the
convenience of investors who use such metrics in their analysis and
for shareholders who need to understand the metrics we use to
assess performance and monitor our cash and liquidity
positions.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Cash Provided by Operating Activities
$
135.0
$
43.9
$
253.8
$
198.8
Capital expenditures
(34.4
)
(47.9
)
(136.4
)
(144.8
)
Proceeds from disposition of property,
plant, equipment, and other assets
6.6
5.7
14.0
30.1
Free Cash Flow
$
107.2
$
1.7
$
131.4
$
84.1
Net income
$
16.6
$
35.5
$
101.4
$
132.1
Free Cash Flow Conversion
646
%
5
%
130
%
64
%
GAAP does not define “Net Debt” and it
should not be considered as an alternative to cash flow or
liquidity measures defined by GAAP. The Company uses Net Debt,
which it defines as total debt minus cash and cash equivalents to
determine the extent to which the Company’s outstanding debt
obligations would be satisfied by its cash and cash equivalents on
hand. The Company also uses “Net Debt to Adjusted EBITDA”, which it
defines as Net Debt divided by Adjusted EBITDA for the trailing
twelve months as a metric of its current leverage position. We
present this metric for the convenience of investors who use such
metrics in their analysis and for shareholders who need to
understand the metrics we use to assess performance and monitor our
cash and liquidity positions.
September 30, 2024
October 1 Stavola
Adjustments(2)
September 30, 2024 Pro
Forma
Total debt excluding debt issuance
costs
$
1,248.7
$
600.0
$
1,848.7
Cash and cash equivalents
756.8
(627.7
)
129.1
Net Debt
$
491.9
$
1,227.7
$
1,719.6
Adjusted EBITDA (trailing twelve
months)(1)
$
399.6
$
100.5
$
500.1
Net Debt to Adjusted EBITDA
1.2
3.4
(1) Adjusted EBITDA includes an upward pro
forma adjustment for Ameron, acquired on April 9, 2024, of $9.9
million, which reflects an amount equal to 50% of Ameron’s
historical Adjusted EBITDA for the twelve months ended December 31,
2023 of $19.8 million, as previously disclosed, to approximate the
six-month pro forma impact on our Adjusted EBITDA as if the
acquisition had occurred on September 30, 2023. Also included is a
$13.3 million downward pro forma adjustment to exclude Adjusted
EBITDA from the steel components business during the period, which
was divested on August 16, 2024.
(2) The $1.2 billion purchase price for
the acquisition of Stavola, completed on October 1, 2024, was
funded with a combination of a $600 million issuance of fixed-rate
senior notes which closed in August 2024 and a $700 million
issuance of a variable-rate senior secured Term Loan B Facility
which closed on October 1, 2024, of which $100 million was used to
pay down the Company's revolving credit facility. Adjusted EBITDA
for Stavola reflects Stavola's historical Adjusted EBITDA for the
twelve months ended June 30, 2024, as previously disclosed.
Arcosa, Inc.
Reconciliation of Adjusted EBITDA for
Steel Components Business
(in millions)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Twelve Months Ended September
30,
2024
2023
2024
2023
2024
Steel Components Business:
Operating Profit
$
(25.4
)
$
3.9
$
(20.9
)
$
8.1
$
(18.0
)
Add: Depreciation and amortization
expense
1.1
2.4
5.9
7.3
8.3
Steel Components EBITDA
(24.3
)
6.3
(15.0
)
15.4
(9.7
)
Add: Loss on sale of business
23.0
—
23.0
—
23.0
Steel Components Adjusted
EBITDA
$
(1.3
)
$
6.3
$
8.0
$
15.4
$
13.3
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030900631/en/
INVESTOR CONTACTS Erin Drabek VP of Investor Relations T
972.942.6500 InvestorResources@arcosa.com
David Gold ADVISIRY Partners T 212.661.2220
David.Gold@advisiry.com
MEDIA CONTACT Media@arcosa.com
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