– Fourth Quarter Adjusted EBITDA Growth of 38%, Normalized for
Storage Tanks Divestiture, with All Three Segments Contributing to
the Increase
– 220 Basis Points of Fourth Quarter Adjusted EBITDA Margin
Expansion
– Full Year Free Cash Flow of $94 Million, Up 37%
Arcosa, Inc. (NYSE: ACA) (“Arcosa,” the “Company,” “We,” or
“Our”), a provider of infrastructure-related products and
solutions, today announced results for the fourth quarter and full
year ended December 31, 2023.
On October 3, 2022, the Company completed the divestiture of its
storage tanks business. Financial results for the storage tanks
business were historically included in the Engineered Structures
segment as part of continuing operations until the date of sale.
The table below includes additional financial information to
facilitate the comparison to prior year's results.
Fourth Quarter Highlights
Three Months Ended December
31,
2023
2022
% Change
($ in millions, except per
share amounts)
Revenues
$
582.2
$
500.3
16
%
Revenues, excluding impact from divested
business(1)
$
582.2
$
499.0
17
%
Net income
$
27.1
$
154.6
N.M.
Adjusted Net Income(2)
$
33.2
$
11.4
191
%
Diluted EPS
$
0.56
$
3.18
N.M.
Adjusted Diluted EPS(2)
$
0.68
$
0.24
183
%
Adjusted EBITDA(2)
$
84.3
$
61.7
37
%
Adjusted EBITDA Margin(2)
14.5
%
12.3
%
220 bps
Adjusted EBITDA, excluding impact from
divested business(1)(2)
$
84.3
$
61.3
38
%
Adjusted EBITDA Margin, excluding impact
from divested business(1)(2)
14.5
%
12.3
%
220 bps
Net cash provided by operating
activities
$
62.2
$
(8.3
)
N.M.
Free Cash Flow(2)
$
10.0
$
(59.7
)
N.M.
Full Year Highlights
Year Ended December
31,
2023
2022
% Change
($ in millions, except per
share amounts)
Revenues
$
2,307.9
$
2,242.8
3
%
Revenues, excluding impact from divested
business(1)
$
2,307.9
$
2,053.9
12
%
Net income
$
159.2
$
245.8
N.M.
Adjusted Net Income(2)
$
158.1
$
106.8
48
%
Diluted EPS
$
3.26
$
5.05
N.M.
Adjusted Diluted EPS(2)
$
3.23
$
2.19
47
%
Adjusted EBITDA(2)
$
367.6
$
325.1
13
%
Adjusted EBITDA Margin(2)
15.9
%
14.5
%
140 bps
Adjusted EBITDA, excluding impact from
divested business(1)(2)
$
367.6
$
278.2
32
%
Adjusted EBITDA Margin, excluding impact
from divested business(1)(2)
15.9
%
13.5
%
240 bps
Net cash provided by operating
activities
$
261.0
$
174.3
50
%
Free Cash Flow(2)
$
94.1
$
68.5
37
%
N.M. - not meaningful for the period
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.
“2023 was a significant year for growth across our businesses as
revenues and Adjusted EBITDA increased double-digits, normalizing
for the storage tanks divestiture,” said Antonio Carrillo,
President and Chief Executive Officer. “We generated $94 million of
free cash flow even as we invested significantly to advance several
key organic growth initiatives. Our results speak to the effective
execution of our strategy and the talent and dedication of our
outstanding team.
“Construction Products increased revenues by 8% in 2023, with
Adjusted Segment EBITDA advancing 23%. Key growth drivers included
infrastructure and heavy manufacturing projects, as well as
improved second-half fundamentals in single-family residential
within our footprint. Through our disciplined commercial strategy,
we achieved strong unit profitability gains in natural and recycled
aggregates on roughly flat full-year volumes amid continued cost
pressures. Our specialty materials business ended the year on a
positive note with higher Adjusted EBITDA and margin in the fourth
quarter, positioning this business for expected growth in 2024.
Overall segment margin expanded 70 basis points year-over-year,
excluding the impact of the $22 million land sale completed in the
first quarter.
“Within Engineered Structures, Adjusted Segment EBITDA increased
13% in 2023, normalizing for the sale of the storage tanks
business. Our wind towers business performed better than expected
generating a modest level of profitability on what was initially
expected to be a breakeven year, in addition to recognizing the net
tax credits associated with the Inflation Reduction Act. While
market demand remains strong for utility structures, full year
Adjusted EBITDA and margin declined driven by customer mix
headwinds, a strengthening peso, and unplanned equipment
maintenance. Sequentially, margin for utility structures increased
in the fourth quarter, and we continue to focus on improving
profitability in 2024.
“Full year Adjusted Segment EBITDA in Transportation Products
more than doubled and margin expanded 570 basis points highlighting
the operating leverage inherent in these businesses on higher
volumes. During the fourth quarter, we received orders for both
hopper barges and tank barges representing a book-to-bill of 1.2,
substantially filling our planned capacity for 2024. Order
inquiries remain healthy, and we are focused on extending our
backlog into 2025.
“Disciplined capital allocation was a priority in 2023 as we
invested significantly in organic growth projects, including the
expansion of our plaster plant in specialty materials, construction
of a greenfield concrete pole plant in utility structures, and
significant progress on our new wind tower facility in New Mexico,
which is scheduled to begin production in mid-2024. Complementing
our organic investment, we also deployed approximately $120
million, executing six bolt-on acquisitions in Construction
Products at a blended average multiple of 8 times, including the
purchase of a hard rock quarry in south Florida for $65 million in
December.”
Carrillo concluded, “We ended 2023 in a strong financial
position, with Net Debt to Adjusted EBITDA of 1.3x and available
liquidity of more than $500 million. Our balance sheet flexibility
supports the pursuit of strategic investments that strengthen our
capabilities and supplement our long-term growth.”
2024 Outlook and Guidance
Arcosa announced the following total Company guidance for full
year 2024:
- Consolidated revenues of $2.46 billion to $2.72 billion,
compared to $2.31 billion in 2023.
- Consolidated Adjusted EBITDA of $380 million to $420 million,
compared to $367.6 million in 2023, including $22 million from a
land sale gain in the first quarter of 2023.
Commenting on the outlook, Carrillo noted, “Arcosa is poised for
another strong year in 2024, reflecting multi-year tailwinds from
infrastructure spending across our diversified portfolio of
businesses. With a healthy commercial environment, we remain
focused on driving strong operational execution and increasing our
profitability.
“Over the past few years, we have significantly enhanced our
resiliency while reducing the cyclicality and complexity of our
business. As we enter 2024, we remain committed to building on this
progress by continuing to advance our strategic objectives and
investing to further position our portfolio for sustainable
long-term growth.”
Fourth Quarter 2023 Results and Commentary
Construction Products
- Revenues increased 7% to $238.3 million driven by higher
pricing across our aggregates and specialty materials businesses.
Volumes for natural aggregates increased slightly while recycled
aggregate and specialty materials volumes were down compared to the
prior year period. Our trench shoring business benefited from both
organic volume growth and acquisition-related contribution.
- Adjusted Segment EBITDA increased 7% to $53.0 million,
reflecting strong pricing gains and operational improvements in our
specialty materials business.
- Adjusted Segment EBITDA Margin declined slightly to 22.2%
compared to 22.4% in the prior year period. Freight-Adjusted
Segment EBITDA Margin was 25.3% compared to 25.9% in the prior year
period.
- The margin decline for the quarter was driven by a decrease in
the gain on sales of depleted land. Excluding the impact of land
sales, Freight-Adjusted Segment EBITDA Margin increased 90 basis
points year-over-year.
Engineered Structures
- Prior year fourth quarter results included revenues and
Adjusted EBITDA of $1.3 million and $0.4 million, respectively, for
the storage tanks business which was sold on October 3, 2022.
- Revenues for utility, wind, and related structures increased
15.5% primarily due to higher volumes in our utility structures
business. Revenues from our wind towers business were roughly
flat.
- Excluding the impact of the storage tanks business, Adjusted
Segment EBITDA increased 89% to $32.3 million, and margin increased
530 basis points to 13.7%.
- Adjusted Segment EBITDA increased primarily due to the
recognition of $10.6 million in net benefit from Advanced
Manufacturing Production (“AMP”) tax credits in our wind towers
business and higher volumes in our utility structures
business.
- For the full year, the net benefit from AMP tax credits was
$25.3 million, exceeding our guidance range of $17 to $22 million,
as we recognized additional tax credits for towers started in 2022
but delivered in 2023 based on additional guidance issued by the
Internal Revenue Service in December 2023.
- 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 fourth quarter, the combined backlog for
utility, wind, and related structures was $1,367.5 million compared
to $671.3 million at the end of the fourth quarter of 2022. We
expect to deliver approximately 43% of our current backlog in
2024.
Transportation Products
- Revenues were $108.0 million, up 49% primarily due to an 89%
increase in barge revenues driven by higher volumes and
pricing.
- Adjusted Segment EBITDA increased $5.6 million, or 67%, to
$13.9 million, representing a 12.9% margin compared to 11.4% in the
prior period. The increase was driven by higher volumes in both
businesses and enhanced operating leverage.
- During the quarter, we received orders for both hopper and tank
barges totaling approximately $86 million, representing a
book-to-bill of 1.2.
- Barge backlog at the end of the quarter was $253.7 million, up
13% year-over-year. We expect to deliver all 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 increased to
$16.2 million in the fourth quarter compared to $15.0 million in
the prior year primarily due to higher compensation-related
costs.
- Acquisition and divestiture-related costs were $0.8 million in
the fourth quarter compared to $5.4 million in the prior year.
- The effective tax rate for the fourth quarter was 25.8%
compared to 22.7% in the prior year. The increase in the tax rate
was primarily due to a return-to-provision true-up of our tax
liability related to the sale of the storage tanks business.
Cash Flow and Liquidity
- Operating cash flow was $62.2 million during the fourth
quarter, an increase of $70.5 million year-over-year.
- Working capital resulted in a $28.0 million use of cash for the
quarter compared to the prior year's $31.1 million use of cash. The
increase in working capital was largely due to higher volumes and
AMP tax credits.
- Capital expenditures in the fourth quarter were $58.7 million,
up $6.6 million from the prior year, as we completed construction
of our concrete utility pole facility in Florida and made progress
on other organic projects underway in Construction Products and
Engineered Structures.
- Free Cash Flow for the quarter was $10.0 million, up from
$(59.7) million in the prior year.
- We invested $102.1 million in three bolt-on acquisitions during
the quarter in Construction Products.
- During the quarter, we repurchased shares totaling $13.8
million, leaving $36.2 million remaining under our share repurchase
authorization.
- We ended the quarter with total liquidity of $522.8 million,
including $104.8 million of cash and cash equivalents, and Net Debt
to Adjusted EBITDA was 1.3X 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
February 23, 2024 to discuss fourth quarter and full year 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 75986. An audio playback will be available through 11:59 p.m.
Eastern Time on March 8, 2024, by dialing 800-839-8798 for domestic
callers and 402-220-6078 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 pandemics on Arcosa’s business; 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; the delivery or satisfaction of any backlog or firm
orders; 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 to be filed on or around
February 23, 2024 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
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Revenues
$
582.2
$
500.3
$
2,307.9
$
2,242.8
Operating costs:
Cost of revenues
475.2
420.3
1,864.1
1,831.7
Selling, general, and administrative
expenses
66.6
66.1
261.1
262.8
Gain on disposition of property, plant,
equipment, and other assets
(2.4
)
(5.2
)
(28.2
)
(11.7
)
Gain on sale of storage tanks business
—
(189.0
)
(6.4
)
(189.0
)
539.4
292.2
2,090.6
1,893.8
Operating profit
42.8
208.1
217.3
349.0
Interest expense
7.2
7.5
28.1
31.0
Other, net (income) expense
(0.9
)
0.7
(6.7
)
1.8
6.3
8.2
21.4
32.8
Income before income taxes
36.5
199.9
195.9
316.2
Provision for income taxes
9.4
45.3
36.7
70.4
Net income
$
27.1
$
154.6
$
159.2
$
245.8
Net income per common share:
Basic
$
0.56
$
3.20
$
3.27
$
5.08
Diluted
$
0.56
$
3.18
$
3.26
$
5.05
Weighted average number of shares
outstanding:
Basic
48.6
48.2
48.5
48.2
Diluted
48.7
48.4
48.7
48.5
Arcosa, Inc.
Condensed Segment Data
(in millions)
(unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
Revenues:
2023
2022
2023
2022
Aggregates and specialty materials
$
214.0
$
200.5
$
879.9
$
821.4
Construction site support
24.3
21.4
121.4
102.1
Construction Products
238.3
221.9
1,001.3
923.5
Utility, wind, and related structures
236.3
204.6
873.5
813.1
Storage tanks(1)
—
1.3
—
188.9
Engineered Structures
236.3
205.9
873.5
1,002.0
Inland barges
72.3
38.2
280.2
189.9
Steel components
35.7
34.3
153.3
127.4
Transportation Products
108.0
72.5
433.5
317.3
Segment Totals before Eliminations
582.6
500.3
2,308.3
2,242.8
Eliminations
(0.4
)
—
(0.4
)
—
Consolidated Total
$
582.2
$
500.3
$
2,307.9
$
2,242.8
Three Months Ended
December 31,
Year Ended
December 31,
Operating profit (loss):
2023
2022
2023
2022
Construction Products
$
24.4
$
24.1
$
138.6
$
96.5
Engineered Structures(1)
25.4
200.1
95.7
307.0
Transportation Products
10.0
4.3
45.8
11.5
Segment Total
59.8
228.5
280.1
415.0
Corporate
(17.0
)
(20.4
)
(62.8
)
(66.0
)
Consolidated Total
$
42.8
$
208.1
$
217.3
$
349.0
Backlog:
December 31, 2023
December 31, 2022
Engineered Structures:
Utility, wind, and related structures
$
1,367.5
$
671.3
Transportation Products:
Inland barges
$
253.7
$
225.1
(1) On October 3, 2022, the Company sold
the storage tanks business. We have recognized a total pre-tax 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 months and year ended December 31,
2022.
Arcosa, Inc.
Condensed Consolidated Balance
Sheets
(in millions)
(unaudited)
December 31, 2023
December 31, 2022
Current assets:
Cash and cash equivalents
$
104.8
$
160.4
Receivables, net of allowance
357.1
334.2
Inventories
401.8
315.8
Other
48.3
46.4
Total current assets
912.0
856.8
Property, plant, and equipment, net
1,336.3
1,199.6
Goodwill
990.7
958.5
Intangibles, net
270.7
256.1
Deferred income taxes
6.8
9.6
Other assets
61.4
60.0
$
3,577.9
$
3,340.6
Current liabilities:
Accounts payable
$
272.5
$
190.7
Accrued liabilities
117.4
121.8
Advance billings
34.5
40.5
Current portion of long-term debt
6.8
14.7
Total current liabilities
431.2
367.7
Debt
561.9
535.9
Deferred income taxes
179.6
175.6
Other liabilities
73.2
77.0
1,245.9
1,156.2
Stockholders' equity:
Common stock
0.5
0.5
Capital in excess of par value
1,682.8
1,684.1
Retained earnings
664.9
515.5
Accumulated other comprehensive loss
(16.2
)
(15.7
)
2,332.0
2,184.4
$
3,577.9
$
3,340.6
Arcosa, Inc.
Consolidated Statements of Cash
Flows
(in millions)
(unaudited)
Year Ended
December 31,
2023
2022
Operating activities:
Net income
$
159.2
$
245.8
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion, and
amortization
159.5
154.1
Stock-based compensation expense
23.9
19.1
Provision for deferred income taxes
31.8
44.8
Gain on disposition of property, plant,
equipment, and other assets
(28.2
)
(11.7
)
Gain on sale of storage tanks business
(6.4
)
(189.0
)
(Increase) decrease in other assets
(6.4
)
(3.8
)
Increase (decrease) in other
liabilities
(7.1
)
(16.0
)
Other
6.5
(3.7
)
Changes in current assets and
liabilities:
(Increase) decrease in receivables
(47.8
)
(65.9
)
(Increase) decrease in inventories
(83.5
)
(26.7
)
(Increase) decrease in other current
assets
(1.8
)
(8.5
)
Increase (decrease) in accounts
payable
77.2
27.0
Increase (decrease) in advance
billings
(1.4
)
21.9
Increase (decrease) in accrued
liabilities
(14.5
)
(13.1
)
Net cash provided by operating
activities
261.0
174.3
Investing activities:
Proceeds from disposition of property,
plant, equipment, and other assets
36.6
32.2
Proceeds from sale of businesses
2.0
271.6
Capital expenditures
(203.5
)
(138.0
)
Acquisitions, net of cash acquired
(120.9
)
(75.1
)
Net cash provided (required) by investing
activities
(285.8
)
90.7
Financing activities:
Payments to retire debt
(143.8
)
(220.2
)
Proceeds from issuance of debt
160.0
80.0
Shares repurchased
(13.8
)
(15.0
)
Dividends paid to common stockholders
(9.8
)
(9.8
)
Purchase of shares to satisfy employee tax
on vested stock
(11.4
)
(12.5
)
Holdback payment from acquisition
(10.0
)
—
Debt issuance costs
(2.0
)
—
Net cash required by financing
activities
(30.8
)
(177.5
)
Net increase (decrease) in cash and cash
equivalents
(55.6
)
87.5
Cash and cash equivalents at beginning of
period
160.4
72.9
Cash and cash equivalents at end of
period
$
104.8
$
160.4
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
December 31,
Year Ended
December 31,
2023
2022
2023
2022
(in millions)
Net Income
$
27.1
$
154.6
$
159.2
$
245.8
Gain on sale of storage tanks business,
net of tax
5.5
(147.3
)
1.0
(147.3
)
Impact of acquisition and
divestiture-related expenses, net of tax(1)
0.6
4.1
1.7
8.3
Benefit from reduction in holdback
obligation, net of tax
—
—
(3.8
)
—
Adjusted Net Income
$
33.2
$
11.4
$
158.1
$
106.8
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
December 31,
Year Ended
December 31,
2023
2022
2023
2022
(in dollars per share)
Diluted EPS
$
0.56
$
3.18
$
3.26
$
5.05
Gain on sale of storage tanks business
0.11
(3.03
)
0.02
(3.03
)
Impact of acquisition and
divestiture-related expenses(1)
0.01
0.09
0.03
0.17
Benefit from reduction in holdback
obligation
—
—
(0.08
)
—
Adjusted Diluted EPS
$
0.68
$
0.24
$
3.23
$
2.19
(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
December 31,
Year Ended
December 31,
Full Year
2024 Guidance
2023
2022
2023
2022
Low
High
Revenues
$
582.2
$
500.3
$
2,307.9
$
2,242.8
$
2,460.0
$
2,720.0
Net income
27.1
154.6
159.2
245.8
144.8
170.2
Add:
Interest expense, net
6.8
6.5
23.4
29.9
28.0
30.0
Provision for income taxes
9.4
45.3
36.7
70.4
29.7
37.3
Depreciation, depletion, and amortization
expense(1)
40.7
37.2
159.5
154.1
177.5
182.5
EBITDA
84.0
243.6
378.8
500.2
380.0
420.0
Add (less):
Gain on sale of storage tanks business
—
(189.0
)
(6.4
)
(189.0
)
—
—
Impact of acquisition and
divestiture-related expenses(2)
0.8
5.4
2.2
11.0
—
—
Benefit from reduction in holdback
obligation
—
—
(5.0
)
—
—
—
Other, net (income) expense
(0.5
)
1.7
(2.0
)
2.9
—
—
Adjusted EBITDA(3)
$
84.3
$
61.7
$
367.6
$
325.1
$
380.0
$
420.0
Adjusted EBITDA Margin
14.5
%
12.3
%
15.9
%
14.5
%
15.4
%
15.4
%
(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 EBITDA,
included above, for the three months and year ended December 31,
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
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Construction Products
Revenues
$
238.3
$
221.9
$
1,001.3
$
923.5
Operating Profit
24.4
24.1
138.6
96.5
Add: Depreciation, depletion, and
amortization expense(1)
28.6
25.5
111.7
102.7
Segment EBITDA
53.0
49.6
250.3
199.2
Less: Benefit from reduction in holdback
obligation
—
—
(5.0
)
—
Adjusted Segment EBITDA
$
53.0
$
49.6
$
245.3
$
199.2
Adjusted Segment EBITDA Margin
22.2
%
22.4
%
24.5
%
21.6
%
Engineered Structures
Revenues
$
236.3
$
205.9
$
873.5
$
1,002.0
Operating Profit
25.4
200.1
95.7
307.0
Add: Depreciation and amortization
expense(1)
6.9
6.4
26.6
30.5
Segment EBITDA
32.3
206.5
122.3
337.5
Add: Impact of acquisition and
divestiture-related expenses(2)
—
—
—
0.6
Less: Gain on sale of storage tanks
business
—
(189.0
)
(6.4
)
(189.0
)
Adjusted Segment EBITDA(3)
$
32.3
$
17.5
$
115.9
$
149.1
Adjusted Segment EBITDA Margin
13.7
%
8.5
%
13.3
%
14.9
%
Transportation Products
Revenues
$
108.0
$
72.5
$
433.5
$
317.3
Operating Profit
10.0
4.3
45.8
11.5
Add: Depreciation and amortization
expense
3.9
4.0
16.0
15.8
Segment EBITDA
13.9
8.3
61.8
27.3
Adjusted Segment EBITDA
$
13.9
$
8.3
$
61.8
$
27.3
Adjusted Segment EBITDA Margin
12.9
%
11.4
%
14.3
%
8.6
%
Operating Loss - Corporate
$
(17.0
)
$
(20.4
)
$
(62.8
)
$
(66.0
)
Add: Impact of acquisition and
divestiture-related expenses - Corporate(2)
0.8
5.4
2.2
10.4
Add: Corporate depreciation expense
1.3
1.3
5.2
5.1
Adjusted EBITDA
$
84.3
$
61.7
$
367.6
$
325.1
(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 Segment
EBITDA, included above, for the three months and year ended
December 31, 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
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Construction Products
Revenues
$
238.3
$
221.9
$
1,001.3
$
923.5
Less: Freight revenues
28.5
30.4
116.1
122.1
Freight-Adjusted Revenues
$
209.8
$
191.5
885.2
801.4
Adjusted Segment EBITDA(1)
$
53.0
$
49.6
$
245.3
$
199.2
Adjusted Segment EBITDA Margin(1)
22.2
%
22.4
%
24.5
%
21.6
%
Freight-Adjusted Segment EBITDA Margin
25.3
%
25.9
%
27.7
%
24.9
%
(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
December 31,
Year Ended
December 31,
2023
2022
2023
2022
Cash Provided by Operating Activities
$
62.2
$
(8.3
)
$
261.0
$
174.3
Capital expenditures
(58.7
)
(52.1
)
(203.5
)
(138.0
)
Proceeds from disposition of property,
plant, equipment, and other assets
6.5
0.7
36.6
32.2
Free Cash Flow
$
10.0
$
(59.7
)
$
94.1
$
68.5
Net income
$
27.1
$
154.6
$
159.2
$
245.8
Free Cash Flow Conversion
37
%
(39
)%
59
%
28
%
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.
December 31, 2023
Total debt excluding debt issuance
costs
$
573.1
Cash and cash equivalents
104.8
Net Debt
$
468.3
Adjusted EBITDA (trailing twelve
months)
$
367.6
Net Debt to Adjusted EBITDA
1.3
Arcosa, Inc.
Reconciliation of Historical Adjusted
EBITDA for the Storage Tanks Business
(in millions)
(unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2022
2022
Storage tanks business:
Operating Profit
$
189.3
$
230.1
Add: Depreciation and amortization
expense
0.1
5.2
Storage tanks EBITDA
189.4
235.3
Add: Impact of acquisition and
divestiture-related expenses
—
0.6
Less: Gain on sale of storage tanks
business
(189.0
)
(189.0
)
Storage tanks Adjusted EBITDA
$
0.4
$
46.9
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240222467917/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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