Arcosa Inc

Previous wording

•Within our Engineered Structures segment, our backlog as of June 30, 2024 provides good production visibility for the remainder of 2024. Our customers remain committed to taking delivery of these orders. In utility structures, order and inquiry activity continues to be healthy, as customers remain focused on grid hardening and reliability initiatives. The passage of the Inflation Reduction Act ("IRA") on August 16, 2022, which included a long-term extension of the Production Tax Credit (“PTC”) for new wind farm projects and introduced new Advanced Manufacturing Production (“AMP”) tax credits for companies that domestically manufacture and sell clean energy equipment in the U.S., is a significant catalyst for our wind towers business. As demonstrated by more than $1.1 billion of new orders for delivery through 2028, which we have received since the passage of the IRA, our wind towers business is at the beginning stages of a market recovery. A large portion of these orders will support wind energy expansion projects in the Southwest. As a result, we have opened a new plant in New Mexico and have started delivering towers from this facility late in the second quarter of 2024.

Current wording

•Within our Engineered Structures segment, our backlog as of September 30, 2024 provides good production visibility for the remainder of 2024 and into 2025. Our customers remain committed to taking delivery of these orders. In utility structures, order and inquiry activity continues to be healthy, as customers remain focused on grid hardening and reliability initiatives. The passage of the Inflation Reduction Act ("IRA") on August 16, 2022, which included a long-term extension of the Production Tax Credit for new wind farm projects and introduced new Advanced Manufacturing Production (“AMP”) tax credits for companies that domestically manufacture and sell clean energy equipment in the U.S., is a significant catalyst for our wind towers business. As demonstrated by more than $1.1 billion of new orders for delivery through 2028, which we have received since the passage of the IRA, our wind towers business is at the beginning stages of a market recovery. A large portion of these orders will support wind energy expansion projects in the Southwest. As a result, we have opened a new plant in New Mexico and started delivering towers from this facility late in the second quarter of 2024.

Previous wording

•Within our Transportation Products segment, our backlog for inland barges as of June 30, 2024 was $251.5 million and extends into 2025. Our customers remain committed to taking delivery of these orders. Our barge business is recovering from cyclical lows resulting from the onset of the COVID-19 pandemic when order levels fell sharply and have remained low due to persistently high steel prices. Over this time, customer inquiries have remained healthy, initially for dry barges and more recently for tank barges. The fleet continues to age as new builds have not kept pace with scrapping, and utilization rates are high. We have been successful in filling orders when we can strategically source steel. During the second quarter, we received orders of $33 million primarily for tank barges. Demand for steel components has stabilized as the near-term outlook for the new railcar market indicates replacement-level demand.

Current wording

•Within our Transportation Products segment, our backlog for inland barges as of September 30, 2024 was $244.7 million and extends into 2025. Our customers remain committed to taking delivery of these orders. Our barge business is recovering from cyclical lows resulting from the onset of the COVID-19 pandemic when order levels fell sharply due to high steel prices throughout 2022 and 2023. Over this time, customer inquiries have remained healthy, initially for dry barges and more recently for tank barges. The fleet continues to age as new builds have not kept pace with scrapping, and utilization rates are high. We have been successful in filling orders when we can strategically source steel. During the third quarter, we received orders of $75 million for tank and hopper barges.

Previous wording

In August 2024, the Company entered into an agreement to acquire the construction materials business of Stavola Holding Corporation and its affiliated entities ("Stavola") for $1.2 billion in cash. Stavola, which will be reported within the Construction Products segment, serves the New York-New Jersey market through its network of five natural aggregates quarries, twelve asphalt plants, and three recycled aggregates sites. The Company has obtained $1.2 billion of committed secured bridge loan financing, as well as a backstop to its existing $600 million revolving credit facility. Prior to the transaction close, the Company anticipates accessing the long-term debt capital markets for permanent financing with a mix of secured and unsecured debt. The transaction is expected to close in the fourth quarter.

Current wording

In October 2024, the Company completed the acquisition of the construction materials business of Stavola Holding Corporation and its affiliated entities ("Stavola") for $1.2 billion in cash. Stavola, which will be reported within the Construction Products segment, serves the New York-New Jersey MSA through its network of five hard rock natural aggregates quarries, twelve asphalt plants, and three recycled aggregates sites. The purchase price was funded with a $700.0 million secured term loan facility (the “Term Loan”) that matures in October 2031 and $600.0 million of 6.875% senior notes (the "2024 Notes") that matures in August 2032.

Previous wording

•Revenues for the three and six months ended June 30, 2024 increased by 13.7% and 11.4% to $664.7 million and $1,263.3 million, respectively, from the same periods in 2023, due to higher revenues in all three segments.

Current wording

•Revenues for the three and nine months ended September 30, 2024 increased by 8.2% and 10.3% to $640.4 million and $1,903.7 million, respectively, from the same periods in 2023, due to higher revenues in our Engineered Structures and Construction Products segments, partially offset by lower revenues in Transportation Products due to the divestiture of our steel components business.

Previous wording

•Operating profit for the three months ended June 30, 2024 increased by $16.2 million to $67.2 million driven by growth in all three segments. Excluding the $21.8 million gain on the sale of depleted land in the prior period, operating profit for the six months ended June 30, 2024 increased by $16.3 million to $120.6 million with all three segments contributing to the growth.

Current wording

•Operating profit for the three months ended September 30, 2024 decreased by $14.6 million to $33.8 million primarily due to the $23.0 million loss on the sale of the steel components business. Excluding the loss, operating profit increased $8.4 million. For the nine months ended September 30, 2024, excluding the $21.8 million gain on the sale of depleted land in the prior period, operating profit increased by $1.7 million to $154.4 million.

Previous wording

•Selling, general, and administrative expenses increased by 12.4% and 11.6% for the three and six months ended June 30, 2024, respectively, compared to the same periods in the prior year, driven by increased costs from recently acquired businesses and higher acquisition and divestiture-related expenses. As a percentage of revenues, selling, general, and administrative expenses were 12.0% and 11.8% for the three and six months ended June 30, 2024, respectively, compared to 12.1% and 11.7% for the same periods in 2023, respectively.

Current wording

•Selling, general, and administrative expenses increased by 34.4% and 18.8% for the three and nine months ended September 30, 2024, respectively, compared to the same periods in the prior year, driven by increased costs from recently acquired businesses and higher acquisition and divestiture-related expenses. As a percentage of revenues, selling, general, and administrative expenses were 12.9% and 12.1% for the three and nine months ended September 30, 2024, respectively, compared to 10.4% and 11.3% for the same periods in 2023, respectively.

Previous wording

•The effective tax rate for the three and six months ended June 30, 2024 was 14.3% and 15.6%, respectively, compared to 12.0% and 17.0%, respectively, for the same periods in 2023. See Note 10 Income Taxes to the Consolidated Financial Statements.

Current wording

•The effective tax rate for the three and nine months ended September 30, 2024 was 13.1% and 15.2%, respectively, compared to 17.4% and 17.1%, respectively, for the same periods in 2023. See Note 10 Income Taxes to the Consolidated Financial Statements.

Previous wording

•Net income for the three and six months ended June 30, 2024 was $45.6 million and $84.8 million, respectively, compared to $40.9 million and $96.6 million, respectively, for the same periods in 2023.

Current wording

•Net income for the three and nine months ended September 30, 2024 was $16.6 million and $101.4 million, respectively, compared to $35.5 million and $132.1 million, respectively, for the same periods in 2023.

Previous wording

Approximately 37% of the unsatisfied performance obligations for utility, wind, and related structures in our Engineered Structures segment are expected to be delivered during 2024, approximately 32% are expected to be delivered during 2025 and the remainder are expected to be delivered through 2028. Approximately 69% of the unsatisfied performance obligations for inland barges in our Transportation Products segment are expected to be delivered during 2024, and the remainder are expected to be delivered during 2025.

Current wording

Approximately 20% of the unsatisfied performance obligations for utility, wind, and related structures in our Engineered Structures segment are expected to be delivered during 2024, approximately 47% are expected to be delivered during 2025 and the remainder are expected to be delivered through 2028. Approximately 32% of the unsatisfied performance obligations for inland barges in our Transportation Products segment are expected to be delivered during 2024, and the remainder are expected to be delivered during 2025.

Previous wording

•Revenues from Engineered Structures increased primarily due to higher volumes in our utility structures and wind towers businesses and the contribution from the acquired Ameron business.

Current wording

•Revenues from Engineered Structures increased primarily due to higher volumes in our utility structures and wind towers businesses and the contribution from the recently acquired Ameron business.

Previous wording

•Operating costs increased by 11.9% and 13.4% during the three and six months ended June 30, 2024, respectively.

Current wording

•Operating costs increased by 11.7% and 12.8% during the three and nine months ended September 30, 2024, respectively.

Previous wording

•Operating costs for Construction Products increased primarily due to increased costs from the recently acquired businesses.

Current wording

•Operating costs for Construction Products decreased for the three months ended September 30, 2024 driven by lower organic volumes and operating improvements in our specialty materials and trench shoring businesses. Operating costs for the nine months ended September 30, 2024 increased primarily due to increased costs from the recently acquired businesses and a $21.8 million gain on the sale of depleted land that was netted against operating costs in the prior period.

Previous wording

•Operating costs for Transportation Products were roughly flat primarily due to higher volumes in inland barge.

Current wording

•Operating costs for Transportation Products increased for the three and nine months ended September 30, 2024 primarily due to higher volumes in inland barge and a $23.0 million loss recognized on the sale of the steel components business, partially offset by lower steel components volumes.

Previous wording

•Selling, general, and administrative expenses increased by 12.4% and 11.6% for the three and six months ended June 30, 2024, compared to the same periods in the prior year, driven by increased costs from recently acquired businesses and higher acquisition and divestiture-related expenses. As a percentage of revenues, selling, general, and administrative expenses were 12.0% and 11.8% for the three and six months ended June 30, 2024, respectively, compared to 12.1% and 11.7% for the same periods in 2023, respectively.

Current wording

•Selling, general, and administrative expenses increased by 34.4% and 18.8% for the three and nine months ended September 30, 2024, compared to the same periods in the prior year, driven by increased costs from recently acquired businesses and higher acquisition and divestiture-related expenses. As a percentage of revenues, selling, general, and administrative expenses were 12.9% and 12.1% for the three and nine months ended September 30, 2024, respectively, compared to 10.4% and 11.3% for the same periods in 2023, respectively.

Previous wording

•Operating profit in Construction Products increased primarily due to the accretive impact of recent acquisitions and operating improvements in our specialty materials business. For the six months ended June 30, 2024, operating profit increased 9.8% excluding the prior year land sale gain.

Current wording

•Operating profit in Construction Products increased for the three months ended September 30, 2024 primarily due to the accretive impact of recent acquisitions and higher pricing and operating improvements in our legacy operations. For the nine months ended September 30, 2024, operating profit increased 17.5% excluding the $21.8 million land sale gain in the prior year.

Previous wording

•Operating profit in Engineered Structures increased for the three and six months ended June 30, 2024 due to additional gains on sale of the storage tanks business, higher utility structure and wind tower volumes, and the impact of the acquired Ameron business.

Current wording

•Operating profit in Engineered Structures increased for the three and nine months ended September 30, 2024 due to higher wind towers volumes, operating improvements in our utility structures business and the accretive impact of the acquired Ameron business.

Previous wording

The provision for income taxes results in effective tax rates that differ from the statutory rates. The Company's effective tax rate for the three and six months ended June 30, 2024 was 14.3% and 15.6%, respectively, compared to 12.0% and 17.0%, respectively, for the same periods in 2023. The change in the tax rate for the three and six months ended June 30, 2024 is primarily due to AMP tax credits, differences in the tax effects of foreign currency translations, compensation-related items, state income taxes and statutory depletion deductions.

Current wording

The provision for income taxes results in effective tax rates that differ from the statutory rates. The Company's effective tax rate for the three and nine months ended September 30, 2024 was 13.1% and 15.2%, respectively, compared to 17.4% and 17.1%, respectively, for the same periods in 2023. The change in the tax rate for the three and nine months ended September 30, 2024 is primarily due to AMP tax credits, differences in the tax effects of foreign currency translations, compensation-related items, state income taxes and statutory depletion deductions.

Previous wording

•Revenues increased 4.3% primarily due to recent acquisitions. Organic revenues in our aggregates and specialty materials businesses were roughly flat as higher pricing was mostly offset by lower volumes primarily due to elevated rainfall during the period, a decrease in freight revenue, and a reduction in revenue from recently divested operations. Revenues in our trench shoring business increased 7.7% primarily due to higher volumes.

Current wording

•Revenues increased 1.4% 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 was partially offset by higher pricing. Revenues in our trench shoring business decreased 5.8% primarily due to reduced steel prices and lower volumes.

Previous wording

•Cost of revenues increased 3.4% primarily due to increased costs from the recently acquired businesses, including higher depreciation, depletion, and amortization expense and the cost impact of the fair market value write-up of acquired inventory and a $5.0 million benefit recognized in the prior period related to the reduction in a holdback obligation owed on a previous acquisition. The increase was partially offset by lower organic volumes in our aggregates and specialty materials businesses and operating improvements in our specialty materials and trench shoring businesses. As a percentage of revenues, cost of revenues decreased to 75.4% in the current period, compared to 76.1% in the prior period.

Current wording

•Cost of revenues decreased 4.4% primarily due to lower organic volumes in our aggregates and specialty materials businesses and operating improvements in our specialty materials and trench shoring businesses. The decrease was partially offset by increased costs from recently acquired businesses, including higher depreciation, depletion, and amortization expense. As a percentage of revenues, cost of revenues decreased to 75.2% in the current period, compared to 79.8% in the prior period.

Previous wording

•Selling, general, and administrative expenses decreased 1.4% due to lower costs in our aggregates and trench shoring businesses. Selling, general, and administrative expenses as a percentage of revenues was 10.5% in the current period, compared to 11.1% in the prior period.

Current wording

•Selling, general, and administrative expenses increased 11.1% due to additional costs from recently acquired businesses and higher compensation-related costs. Selling, general, and administrative expenses as a percentage of revenues was 10.5% in the current period, compared to 9.6% in the prior period.

Previous wording

•Operating profit increased 14.5% primarily due to the accretive impact of recent acquisitions and operating improvements in our specialty materials business and trench shoring businesses, partially offset by the benefit from the holdback payment in the prior period.

Current wording

•Operating profit increased 33.3% due to the accretive impact of recent acquisitions, recent divestiture of underperforming operations, increased unit profitability in our aggregates business, and operating improvements in our specialty materials business and trench shoring businesses.

Previous wording

•Depreciation, depletion, and amortization expense increased 5.8% primarily due to the fair market value write-up of long-lived assets from recent acquisitions and organic growth investments.

Current wording

•Depreciation, depletion, and amortization expense increased 6.3% primarily due to the fair market value write-up of long-lived assets from recent acquisitions and organic growth investments.

Previous wording

•Revenues increased 5.3% primarily due to recent acquisitions. Organic revenue in our aggregates and specialty materials businesses were up slightly as higher pricing more than offset the lower volumes driven by abnormally wet weather, a decrease in freight revenue, and a reduction in revenue from recently divested operations. Revenues from our trench shoring business increased 11.6% driven by revenues from higher organic volumes and the acquisition completed in the first quarter of 2023.

Current wording

•Revenues increased 4.0% 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 was partially offset by higher pricing. Revenues from our trench shoring business increased 5.5% driven by revenues from higher organic volumes and the acquisition completed in the first quarter of 2023.

Previous wording

•Cost of revenues increased 5.8% primarily due to increased costs from the recently acquired businesses, including higher depreciation, depletion, and amortization expense and $1.3 million for the cost impact of the fair market value write-up of acquired inventory and a $5.0 million benefit recognized in the prior period related to the reduction in a holdback obligation owed on a previous acquisition. These costs were partially offset by lower organic volumes in our aggregates and specialty materials businesses and operating improvements in our specialty materials business. As a percentage of revenues, cost of revenues was 77.1% in the current period, compared to 76.7% in the prior period.

Current wording

•Cost of revenues increased 2.2% primarily due to increased costs from the recently acquired businesses, including higher depreciation, depletion, and amortization expense and $1.7 million for the cost impact of the fair market value write-up of acquired inventory and a $5.0 million benefit recognized in the prior period related to the reduction in a holdback obligation owed on a previous acquisition. These costs were partially offset by lower organic volumes in our aggregates and specialty materials businesses and operating improvements in our specialty materials business. As a percentage of revenues, cost of revenues was 76.5% in the current period, compared to 77.8% in the prior period.

Previous wording

•During the current period, the segment recognized a $5.0 million gain on the sale of an under-performing single-location asphalt and paving operation and an impairment charge of $5.8 million related to the closure of its aggregates operations in west Texas for a net reduction in operating profit of $0.8 million.

Current wording

•During the period, the Construction Products segment recognized a $5.0 million gain on the sale of an under-performing single-location asphalt and paving operation and an impairment charge of $5.8 million related to the closure of its aggregates operations in west Texas, for a net reduction in operating profit of $0.8 million.

Previous wording

•Operating profit decreased 18.7% primarily due to a $21.8 million gain on the sale of depleted land in the prior period. Excluding the gain, operating profit increased 9.8% driven by the accretive impact of recent acquisitions and operating improvements in our specialty materials business.

Current wording

•Operating profit decreased 4.9% primarily due to a $21.8 million gain on the sale of depleted land in the prior period. Excluding the gain, operating profit increased 17.5% driven by the accretive impact of recent acquisitions, recent divestiture of underperforming operations, increased unit profitability in our aggregates business, and operating improvements in our specialty materials business and trench shoring businesses.

Previous wording

•Cost of revenues increased 33.0% primarily due to increased costs from the acquired Ameron business, including higher depreciation and amortization expense and $1.6 million for the cost impact of the fair market value write-up of acquired inventory. Costs of revenues also increased due to higher utility structures and wind towers volumes and additional expenses incurred related to the startup of two new facilities: a concrete utility structures plant and a wind tower plant. These costs were partially offset by higher AMP tax credits.

Current wording

•Cost of revenues increased 18.3% primarily due to increased costs from the acquired Ameron business and higher wind towers volumes. Costs of revenues also increased due to additional expenses incurred related to the startup of two new facilities: a concrete utility structures plant and a wind tower plant.

Previous wording

•Selling, general, and administrative expenses increased 40.0% primarily due to additional costs from the acquired Ameron business and higher compensation-related costs in utility structures.

Current wording

•Selling, general, and administrative expenses increased 54.5% primarily due to additional costs from the acquired Ameron business and higher compensation-related costs in utility structures.

Previous wording

•Revenues increased 22.1% primarily due to higher volumes in our utility structures and wind towers businesses and the contribution from the acquired Ameron business, partially offset by lower utility structures pricing due to product mix.

Current wording

•Revenues increased 23.3% primarily due to higher volumes in our utility structures and wind towers businesses and the contribution from the acquired Ameron business, partially offset by lower utility structures pricing due to product mix.

Previous wording

•Cost of revenues increased 24.1% primarily due to increased costs from the acquired Ameron business, including higher depreciation and amortization expense and $1.6 million for the cost impact of the fair market value write-up of acquired inventory. Costs of revenues also increased due to higher utility structures and wind towers volumes and additional expenses incurred related to the startup of two new facilities: a concrete utility structures plant and a wind tower plant, which was partially offset by higher AMP tax credits.

Current wording

•Cost of revenues increased 22.0% primarily due to increased costs from the acquired Ameron business, including higher depreciation and amortization expense and $1.6 million for the cost impact of the fair market value write-up of acquired inventory. Costs of revenues also increased due to higher utility structures and wind towers volumes and additional expenses incurred related to the startup of two new facilities: a concrete utility structures plant and a wind tower plant.

Previous wording

•Selling, general, and administrative expenses increased 29.0% primarily due to additional cost from the acquired Ameron business and higher compensation-related costs in utility structures.

Current wording

•Selling, general, and administrative expenses increased 37.2% primarily due to additional cost from the acquired Ameron business and higher compensation-related costs in utility structures.

Previous wording

•Operating profit increased 19.0% primarily due to the gain recognized during the period, higher utility structures and wind towers volumes, and the impact of the acquired Ameron business, partially offset by lower margins in our utility structures business and driven by product mix.

Current wording

•Operating profit increased 33.7% primarily due to the gain recognized during the period, higher utility structures and wind towers volumes, and the impact of the acquired Ameron business, partially offset by lower margins in our utility structures business driven by product mix.

Previous wording

As of June 30, 2024, the backlog for utility, wind, and related structures was $1,338.7 million, compared to $1,367.5 million and $1,507.4 million as of December 31, 2023 and June 30, 2023, respectively. Approximately 37% of these unsatisfied performance obligations are expected to be delivered during 2024, approximately 32% during 2025, and the remainder are expected to be delivered through 2028.

Current wording

As of September 30, 2024, the backlog for utility, wind, and related structures was $1,264.6 million, compared to $1,367.5 million and $1,450.8 million as of December 31, 2023 and September 30, 2023, respectively. Approximately 20% of these unsatisfied performance obligations are expected to be delivered during 2024, approximately 47% during 2025, and the remainder are expected to be delivered through 2028.

Previous wording

As of June 30, 2024, the backlog for inland barges was $251.5 million, compared to $253.7 million and $287.1 million as of December 31, 2023 and June 30, 2023, respectively. Approximately 69% of unsatisfied performance obligations for inland barges are expected to be delivered during 2024, and the remainder are expected to be delivered in 2025.

Current wording

As of September 30, 2024, the backlog for inland barges was $244.7 million, compared to $253.7 million and $240.4 million as of December 31, 2023 and September 30, 2023, respectively. Approximately 32% of unsatisfied performance obligations for inland barges are expected to be delivered during 2024, and the remainder are expected to be delivered in 2025.

Previous wording

•Corporate overhead costs increased 19.2% primarily due to higher acquisition and divestiture-related expenses of $3.9 million, compared to $0.3 million for the same period in 2023.

Current wording

•Corporate overhead costs increased 70.1% primarily due to higher acquisition and divestiture-related expenses of $11.6 million, compared to $0.5 million for the same period in 2023.

Previous wording

•Corporate overhead costs increased 16.4% primarily due to higher acquisition and divestiture-related expenses of $5.5 million, compared to $0.9 million for the same period in 2023.

Current wording

•Corporate overhead costs increased 33.6% primarily due to higher acquisition and divestiture-related expenses of $17.1 million, compared to $1.4 million for the same period in 2023.

Previous wording

The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our cash flows from operating, investing, and financing activities for the nine months ended September 30, 2024 and 2023:

Previous wording

Operating Activities. Net cash provided by operating activities for the six months ended June 30, 2024 was $118.8 million, compared to $154.9 million for the six months ended June 30, 2023.

Current wording

Operating Activities. Net cash provided by operating activities for the nine months ended September 30, 2024 was $253.8 million, compared to $198.8 million for the nine months ended September 30, 2023.

Previous wording

•The changes in current assets and liabilities resulted in a net use of cash of $44.7 million for the six months ended June 30, 2024, compared to a net use of cash of $14.4 million for the six months ended June 30, 2023. The current year activity was primarily driven by increased receivables, partially offset by decreased inventories.

Current wording

•The changes in current assets and liabilities resulted in a net source of cash of $5.3 million for the nine months ended September 30, 2024, compared to a net use of cash of $43.8 million for the nine months ended September 30, 2023. The current year activity was primarily driven by a net increase in liabilities and decreased inventories, partially offset by increased receivables.

Previous wording

Investing Activities. Net cash required by investing activities for the six months ended June 30, 2024 was $241.2 million, compared to $86.1 million for the six months ended June 30, 2023.

Current wording

Investing Activities. Net cash required by investing activities for the nine months ended September 30, 2024 was $250.6 million, compared to $131.5 million for the nine months ended September 30, 2023.