– Adjusted EBITDA Growth of 24%, Net of Divestiture, Led by
Construction and Transportation Products
– Operating Leverage and Unit Profitability Gains Drove Margin
Expansion of 170 Basis Points
– Completed Three Construction Products Acquisitions for $41
million at Attractive Valuations
Arcosa, Inc. (NYSE: ACA) (“Arcosa,” the “Company,” “We,” or
“Our”), a provider of infrastructure-related products and
solutions, today announced results for the third quarter ended
September 30, 2023.
On October 3, 2022, the Company completed the divestiture of its
storage tanks business. Financial results for the storage tanks
business were historically included in the Engineered Structures
segment as part of continuing operations until the date of sale.
The table below includes additional financial information to
facilitate the comparison to prior year's results.
Third Quarter Highlights
Three Months Ended September
30,
2023
2022
% Change
($ in millions, except per
share amounts)
Revenues
$
591.7
$
603.9
(2
)%
Revenues, excluding impact from divested
business(1)
$
591.7
$
538.1
10
%
Net income
$
35.5
$
32.0
11
%
Adjusted Net Income(2)
$
35.9
$
33.7
7
%
Diluted EPS
$
0.72
$
0.66
9
%
Adjusted Diluted EPS(2)
$
0.73
$
0.70
4
%
Adjusted EBITDA(2)
$
89.4
$
90.8
(2
)%
Adjusted EBITDA Margin(2)
15.1
%
15.0
%
10 bps
Adjusted EBITDA, excluding impact from
divested business(1)(2)
$
89.4
$
72.1
24
%
Adjusted EBITDA Margin, excluding impact
from divested business(1)(2)
15.1
%
13.4
%
170 bps
Net cash provided by operating
activities
$
43.9
$
71.4
(39
)%
Free Cash Flow(2)
$
1.7
$
40.7
(96
)%
bps - basis points
(1) Excludes the impact of the storage
tanks business in the prior period.
(2) Non-GAAP financial measure. See
reconciliation tables included in this release.
“Arcosa delivered double-digit revenue and Adjusted EBITDA
growth in the third quarter, normalizing for the sale of the
storage tanks business,” said Antonio Carrillo, President and Chief
Executive Officer. "Strong results in Construction and
Transportation Products more than compensated for a decline in
Engineered Structures, underscoring the resiliency of our
diversified portfolio.
“In Construction Products, pricing remained strong across our
portfolio. Natural aggregates benefited from a recovery in overall
volumes, particularly in our Texas and Gulf Coast regions. In
specialty materials, margins increased significantly from the
second quarter, reflecting solid execution on our operational
improvement plan. We also advanced our strategic objectives,
investing $41 million to complete three bolt-on acquisitions in
September and October. While relatively small in size, these
acquisitions expand our footprint within both existing and new
geographies at attractive valuations.
“Within Engineered Structures, our wind towers business
performed well despite a relatively low level of production volume.
We continued to take steps to prepare our footprint for an
anticipated multi-year up-cycle, and our backlog provides
visibility for improved performance in 2024. During the quarter, we
were pleased to receive a small qualification order from a new
customer for delivery next year.”
Carrillo continued, “Our utility structures business
underperformed relative to our expectations in the third quarter.
Key factors affecting performance included product mix headwinds,
partially attributable to some higher margin projects delaying to
2024, and operating challenges, including equipment downtime.
Year-over-year results were also impacted by a stronger peso. We
are addressing these challenges and anticipate improved performance
going forward.
“Adjusted Segment EBITDA in Transportation Products reached a
three-year high with margin nearly tripling year-over-year. This
performance highlights the enhanced operating leverage inherent in
these businesses as production volumes increase. Inland river water
levels reached historic lows during the quarter impacting customer
sentiment, which is reflected in our book-to-bill ratio of 0.3.
Despite relatively low order activity in the third quarter, our
backlog is up 87% year-over-year and extends into the second half
of 2024 with improved pricing.”
Carrillo concluded, “Our balance sheet and liquidity position
remain strong, providing ample flexibility for strategic capital
allocation. We are making solid progress on our organic growth
initiatives within Construction Products and Engineered Structures
and look forward to the related contribution in 2024 and
beyond.”
2023 Outlook and Guidance
The Company maintains its full year 2023 guidance:
- Consolidated revenue of $2.25 billion to $2.30 billion.
- Consolidated Adjusted EBITDA of $355 million to $370
million.
Commenting on the outlook, Carrillo concluded, “We are pleased
with our strong year-to-date results and remain confident in our
2023 outlook. As we look ahead to next year, Arcosa is
well-positioned for continued growth. Backlogs in our cyclical
businesses provide visibility for stronger performance, and the
fundamentals in our growth businesses are favorable. We remain
focused on building long-term shareholder value through the
consistent execution of our strategy.”
Third Quarter 2023 Results and Commentary
Construction Products
- Revenues increased 7% to $262.1 million driven by higher
pricing across our aggregates and specialty materials businesses
and volume growth in our natural aggregates business. Our trench
shoring business benefited from both organic volume growth and
acquisition-related contribution.
- Adjusted Segment EBITDA increased 9% to $58.7 million,
reflecting strong pricing gains and reduced inflationary cost
pressures.
- Adjusted Segment EBITDA Margin expanded to 22.4% compared to
22.1% in the prior year period. Freight-Adjusted Segment EBITDA
Margin of 25.3% was flat with the prior year period.
- Margin in our specialty materials business increased
sequentially reflecting progress on plans to address labor and
maintenance challenges, but declined year-over-year.
Engineered Structures
- Comparability of segment results was impacted by the
divestiture of our storage tanks business completed on October 3,
2022. Prior year third quarter results included revenues and
Adjusted EBITDA for the storage tanks business of $65.8 million and
$18.7 million, respectively.
- Revenues for utility, wind, and related structures increased
due to higher volumes in our utility structures business, partially
offset by lower pricing due to product mix and reduced volumes in
our wind tower business.
- Excluding the impact of the storage tanks business, Adjusted
Segment EBITDA decreased 6% to $25.4 million, and margins declined
140 basis points to 11.4%.
- Adjusted Segment EBITDA declined primarily due to lower margins
in our utility structures business, partially offset by the
recognition of $5.6 million in net benefit from Advanced
Manufacturing Production (“AMP”) tax credits in our wind towers
business.
- The margin decline in utility structures was the result of
product mix headwinds, operating challenges, and negative foreign
currency impacts.
- Order activity for utility and related structures was healthy,
with orders received keeping pace with shipments. Conversations
with our customers for additional wind tower orders continue.
During the quarter, we received a qualification order from a new
customer for two wind towers.
- At the end of the third quarter, the combined backlog for
utility, wind, and related structures was $1,450.8 million compared
to $370.4 million at the end of the third quarter of 2022.
Transportation Products
- Revenues were $107.1 million, up 30%. Barge revenues increased
32% and steel components revenues increased 25%, both driven by
higher volumes and pricing.
- Adjusted Segment EBITDA increased $13.3 million, or 271%, to
$18.2 million, representing a 17.0% margin compared to 5.9% in the
prior period. The increase was driven by enhanced operating
leverage on higher volumes and improved pricing.
- During the quarter, we received orders of approximately $21
million in our barge business, representing a book-to-bill of 0.3.
These orders extend our backlog into the second half of 2024.
- Barge backlog at the end of the quarter was $240.4 million
compared to $128.9 million at the end of the third quarter of 2022.
We expect to deliver approximately 26% of our current backlog in
the fourth quarter of 2023 and the remainder in 2024.
Corporate and Other Financial Notes
- Excluding acquisition and divestiture-related costs, which have
been excluded from Adjusted EBITDA, corporate expenses decreased to
$14.2 million in the third quarter compared to $15.1 million in the
prior year primarily driven by lower insurance-related costs.
- Acquisition and divestiture-related costs were $0.5 million in
the third quarter compared to $1.6 million in the prior year.
- The effective tax rate for the third quarter was 17.4% compared
to 21.2% in the prior year. The decrease in the tax rate was
primarily due to AMP tax credits for our wind tower business, which
are excluded from taxable income, and lower foreign taxes.
Cash Flow and Liquidity
- Operating cash flow was $43.9 million during the third quarter,
a decrease of $27.5 million year-over-year primarily due to an
increase in working capital requirements.
- Working capital resulted in a $29.4 million use of cash for the
quarter compared to the prior year's $3.8 million use of cash. The
increase in working capital was largely due to higher volumes and
the timing of collection of our receivables.
- Capital expenditures in the third quarter were $47.9 million,
up $14.9 million from the prior year, as progress continued on
organic projects underway in Construction Products and Engineered
Structures.
- Free Cash Flow for the quarter was $1.7 million, down from
$40.7 million in the prior year.
- We ended the quarter with total liquidity of $633.3 million,
including $155.3 million of cash and cash equivalents, and Net Debt
to Adjusted EBITDA was 1.0X for the trailing twelve months.
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
November 2, 2023 to discuss third quarter 2023 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 52019. An audio playback will be
available through 11:59 p.m. Eastern Time on November 16, 2023, by
dialing 888-225-1656 for domestic callers and 402-220-4975 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,” 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 impact of the COVID-19 pandemic, or other similar outbreaks, on
Arcosa’s business; assumptions, risks and uncertainties regarding
achievement of the expected benefits of Arcosa’s spin-off from
Trinity Industries, Inc.; tax treatment of the spin-off; failure to
successfully integrate acquisitions 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; 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, 2022 and as may be revised and
updated by Arcosa's Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K.
Arcosa, Inc.
Condensed Consolidated Statements of
Operations
(in millions, except per share
amounts)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenues
$
591.7
$
603.9
$
1,725.7
$
1,742.5
Operating costs:
Cost of revenues
484.6
488.8
1,388.9
1,411.4
Selling, general, and administrative
expenses
61.3
67.8
194.5
196.7
Gain on disposition of property, plant,
equipment, and other assets
(2.6
)
(1.7
)
(25.8
)
(6.5
)
Gain on sale of storage tanks business
—
—
(6.4
)
—
543.3
554.9
1,551.2
1,601.6
Operating profit
48.4
49.0
174.5
140.9
Interest expense
6.7
8.6
20.9
23.5
Other, net (income) expense
(1.3
)
(0.2
)
(5.8
)
1.1
5.4
8.4
15.1
24.6
Income before income taxes
43.0
40.6
159.4
116.3
Provision for income taxes
7.5
8.6
27.3
25.1
Net income
$
35.5
$
32.0
$
132.1
$
91.2
Net income per common share:
Basic
$
0.73
$
0.66
$
2.71
$
1.88
Diluted
$
0.72
$
0.66
$
2.70
$
1.87
Weighted average number of shares
outstanding:
Basic
48.7
48.3
48.5
48.2
Diluted
48.8
48.5
48.7
48.5
Arcosa, Inc.
Condensed Segment Data
(in millions)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Revenues:
2023
2022
2023
2022
Aggregates and specialty materials
$
227.8
$
216.8
$
665.9
$
620.9
Construction site support
34.3
27.4
97.1
80.7
Construction Products
262.1
244.2
763.0
701.6
Utility, wind, and related structures
222.5
211.2
637.2
608.5
Storage tanks(1)
—
65.8
—
187.6
Engineered Structures
222.5
277.0
637.2
796.1
Inland barges
67.3
50.9
207.9
151.7
Steel components
39.8
31.8
117.6
93.1
Transportation Products
107.1
82.7
325.5
244.8
Consolidated Total
$
591.7
$
603.9
$
1,725.7
$
1,742.5
Three Months Ended
September 30,
Nine Months Ended
September 30,
Operating profit (loss):
2023
2022
2023
2022
Construction Products
$
30.3
$
27.6
$
114.2
$
72.4
Engineered Structures(1)
18.7
37.1
70.3
106.9
Transportation Products
14.1
1.0
35.8
7.2
Segment Total
63.1
65.7
220.3
186.5
Corporate
(14.7
)
(16.7
)
(45.8
)
(45.6
)
Consolidated Total
$
48.4
$
49.0
$
174.5
$
140.9
Backlog:
September 30,
2023
September 30,
2022
Engineered Structures:
Utility, wind, and related structures
$
1,450.8
$
370.4
Transportation Products:
Inland barges
$
240.4
$
128.9
(1) On October 3, 2022, the Company sold
the storage tanks business. We have recognized a total gain on the
sale of $195.4 million, of which, $189.0 million was recognized in
the fourth quarter of 2022 and $6.4 million was recognized in the
first quarter of 2023. See Reconciliation of Historical Adjusted
EBITDA for the Storage Tanks Business table for the contribution of
the storage tanks business to operating profit, included above, for
the three and nine months ended September 30, 2022.
Arcosa, Inc.
Condensed Consolidated Balance
Sheets
(in millions)
(unaudited)
September 30, 2023
December 31, 2022
Current assets:
Cash and cash equivalents
$
155.3
$
160.4
Receivables, net of allowance
389.6
334.2
Inventories
361.2
315.8
Other
45.4
46.4
Total current assets
951.5
856.8
Property, plant, and equipment, net
1,254.6
1,199.6
Goodwill
966.6
958.5
Intangibles, net
247.0
256.1
Deferred income taxes
9.8
9.6
Other assets
60.1
60.0
$
3,489.6
$
3,340.6
Current liabilities:
Accounts payable
$
244.8
$
190.7
Accrued liabilities
121.7
121.8
Advance billings
31.8
40.5
Current portion of long-term debt
6.8
14.7
Total current liabilities
405.1
367.7
Debt
503.4
535.9
Deferred income taxes
193.3
175.6
Other liabilities
72.5
77.0
1,174.3
1,156.2
Stockholders' equity:
Common stock
0.5
0.5
Capital in excess of par value
1,691.5
1,684.1
Retained earnings
640.3
515.5
Accumulated other comprehensive loss
(16.8
)
(15.7
)
Treasury stock
(0.2
)
—
2,315.3
2,184.4
$
3,489.6
$
3,340.6
Arcosa, Inc.
Consolidated Statements of Cash
Flows
(in millions)
(unaudited)
Nine Months Ended
September 30,
2023
2022
Operating activities:
Net income
$
132.1
$
91.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion, and
amortization
118.8
116.9
Stock-based compensation expense
18.3
15.5
Provision for deferred income taxes
14.0
19.7
Gains on disposition of property, plant,
equipment, and other assets
(25.8
)
(6.5
)
Gain on sale of storage tanks business
(6.4
)
—
(Increase) decrease in other assets
(3.5
)
2.3
Increase (decrease) in other
liabilities
(6.2
)
(18.7
)
Other
1.3
(3.6
)
Changes in current assets and
liabilities:
(Increase) decrease in receivables
(34.6
)
(52.0
)
(Increase) decrease in inventories
(40.4
)
(39.1
)
(Increase) decrease in other current
assets
1.0
(3.0
)
Increase (decrease) in accounts
payable
49.5
57.9
Increase (decrease) in advance
billings
(4.1
)
(2.6
)
Increase (decrease) in accrued
liabilities
(15.2
)
4.6
Net cash provided by operating
activities
198.8
182.6
Investing activities:
Proceeds from disposition of property,
plant, equipment, and other assets
30.1
31.5
Proceeds from sale of storage tanks
business
2.0
—
Capital expenditures
(144.8
)
(85.9
)
Acquisitions, net of cash acquired
(18.8
)
(75.1
)
Net cash required by investing
activities
(131.5
)
(129.5
)
Financing activities:
Payments to retire debt
(142.0
)
(59.8
)
Proceeds from issuance of debt
100.0
80.0
Shares repurchased
—
(15.0
)
Dividends paid to common stockholders
(7.3
)
(7.4
)
Purchase of shares to satisfy employee tax
on vested stock
(11.1
)
(9.8
)
Holdback payment from acquisition
(10.0
)
—
Debt issuance costs
(2.0
)
—
Net cash required by financing
activities
(72.4
)
(12.0
)
Net increase (decrease) in cash and cash
equivalents
(5.1
)
41.1
Cash and cash equivalents at beginning of
period
160.4
72.9
Cash and cash equivalents at end of
period
$
155.3
$
114.0
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,
2023
2022
2023
2022
(in millions)
Net Income
$
35.5
$
32.0
$
132.1
$
91.2
Gain on sale of storage tanks business,
net of tax
—
—
(4.5
)
—
Impact of acquisition and
divestiture-related expenses, net of tax(1)
0.4
1.7
1.1
4.3
Benefit from reduction in holdback
obligation, net of tax
—
—
(3.8
)
—
Adjusted Net Income
$
35.9
$
33.7
$
124.9
$
95.5
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,
2023
2022
2023
2022
(in dollars per share)
Diluted EPS
$
0.72
$
0.66
$
2.70
$
1.87
Gain on sale of storage tanks business
—
—
(0.09
)
—
Impact of acquisition and
divestiture-related expenses(1)
0.01
0.04
0.02
0.09
Benefit from reduction in holdback
obligation
—
—
(0.08
)
—
Adjusted Diluted EPS
$
0.73
$
0.70
$
2.55
$
1.96
(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.
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
2023 Guidance
2023
2022
2023
2022
Low
High
Revenues
$
591.7
$
603.9
$
1,725.7
$
1,742.5
$
2,250.0
$
2,300.0
Net income
35.5
32.0
132.1
91.2
154.8
160.0
Add:
Interest expense, net
5.0
8.6
16.6
23.4
23.0
24.0
Provision for income taxes
7.5
8.6
27.3
25.1
31.7
37.5
Depreciation, depletion, and amortization
expense(1)
40.5
39.6
118.8
116.9
157.0
160.0
EBITDA
88.5
88.8
294.8
256.6
366.5
381.5
Add (less):
Gain on sale of storage tanks business
—
—
(6.4
)
—
(6.4
)
(6.4
)
Impact of acquisition and
divestiture-related expenses(2)
0.5
2.2
1.4
5.6
1.4
1.4
Benefit from reduction in holdback
obligation
—
—
(5.0
)
—
(5.0
)
(5.0
)
Other, net (income) expense
0.4
(0.2
)
(1.5
)
1.2
(1.5
)
(1.5
)
Adjusted EBITDA(3)
$
89.4
$
90.8
$
283.3
$
263.4
$
355.0
$
370.0
Adjusted EBITDA Margin
15.1
%
15.0
%
16.4
%
15.1
%
15.8
%
16.1
%
(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) See Reconciliation of Historical
Adjusted EBITDA for the Storage Tanks Business table for the
contribution of the storage tanks business to Adjusted EBITDA,
included above, for the three and nine months ended September 30,
2022.
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,
2023
2022
2023
2022
Construction Products
Revenues
$
262.1
$
244.2
$
763.0
$
701.6
Operating Profit
30.3
27.6
114.2
72.4
Add: Depreciation, depletion, and
amortization expense(1)
28.4
26.3
83.1
77.2
Segment EBITDA
58.7
53.9
197.3
149.6
Less: Benefit from reduction in holdback
obligation
—
—
(5.0
)
—
Adjusted Segment EBITDA
$
58.7
$
53.9
$
192.3
$
149.6
Adjusted Segment EBITDA Margin
22.4
%
22.1
%
25.2
%
21.3
%
Engineered Structures
Revenues
$
222.5
$
277.0
$
637.2
$
796.1
Operating Profit
18.7
37.1
70.3
106.9
Add: Depreciation and amortization
expense(1)
6.7
8.1
19.7
24.1
Segment EBITDA
25.4
45.2
90.0
131.0
Add: Impact of acquisition and
divestiture-related expenses(2)
—
0.6
—
0.6
Less: Gain on sale of storage tanks
business
—
—
(6.4
)
—
Adjusted Segment EBITDA(3)
$
25.4
$
45.8
$
83.6
$
131.6
Adjusted Segment EBITDA Margin
11.4
%
16.5
%
13.1
%
16.5
%
Transportation Products
Revenues
$
107.1
$
82.7
$
325.5
$
244.8
Operating Profit
14.1
1.0
35.8
7.2
Add: Depreciation and amortization
expense
4.1
3.9
12.1
11.8
Segment EBITDA
18.2
4.9
47.9
19.0
Adjusted Segment EBITDA
$
18.2
$
4.9
$
47.9
$
19.0
Adjusted Segment EBITDA Margin
17.0
%
5.9
%
14.7
%
7.8
%
Operating Loss - Corporate
$
(14.7
)
$
(16.7
)
$
(45.8
)
$
(45.6
)
Add: Impact of acquisition and
divestiture-related expenses - Corporate(2)
0.5
1.6
1.4
5.0
Add: Corporate depreciation expense
1.3
1.3
3.9
3.8
Adjusted EBITDA
$
89.4
$
90.8
$
283.3
$
263.4
(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) See Reconciliation of Historical
Adjusted EBITDA for the Storage Tanks Business table for the
contribution of the storage tanks business to Adjusted Segment
EBITDA, included above, for the three and nine months ended
September 30, 2022.
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,
2023
2022
2023
2022
Construction Products
Revenues
$
262.1
$
244.2
$
763.0
$
701.6
Less: Freight revenues
30.4
31.2
87.6
91.7
Freight-Adjusted Revenues
$
231.7
$
213.0
675.4
609.9
Adjusted Segment EBITDA(1)
$
58.7
$
53.9
$
192.3
$
149.6
Adjusted Segment EBITDA Margin(1)
22.4
%
22.1
%
25.2
%
21.3
%
Freight-Adjusted Segment EBITDA Margin
25.3
%
25.3
%
28.5
%
24.5
%
(1) 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,
2023
2022
2023
2022
Cash Provided by Operating Activities
$
43.9
$
71.4
$
198.8
$
182.6
Capital expenditures
(47.9
)
(33.0
)
(144.8
)
(85.9
)
Proceeds from disposition of property,
plant, equipment, and other assets
5.7
2.3
30.1
31.5
Free Cash Flow
$
1.7
$
40.7
$
84.1
$
128.2
Net income
$
35.5
$
32.0
$
132.1
$
91.2
Free Cash Flow Conversion
5
%
127
%
64
%
141
%
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,
2023
Total debt excluding debt issuance
costs
$
514.8
Cash and cash equivalents
155.3
Net Debt
$
359.5
Adjusted EBITDA (trailing twelve
months)
$
345.0
Net Debt to Adjusted EBITDA
1.0
Arcosa, Inc.
Reconciliation of Historical Adjusted
EBITDA for the Storage Tanks Business
(in millions)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2022
Storage tanks business:
Operating Profit
$
16.6
$
40.8
Add: Depreciation and amortization
expense
1.5
5.1
Storage tanks EBITDA
18.1
45.9
Add: Impact of acquisition and divestiture-related expenses
0.6
0.6
Storage tanks Adjusted EBITDA
$
18.7
$
46.5
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101471581/en/
INVESTOR CONTACTS Gail M. Peck Chief Financial Officer
Erin Drabek Director 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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