Arcosa(ACA) - 2025 Q2 - Quarterly Results

Q2 2025 Financial Highlights Arcosa achieved record Q2 2025 performance with significant revenue and Adjusted EBITDA growth, driven by strategic acquisitions Q2 2025 Key Financial Metrics | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues (millions) | $736.9 | $664.7 | 11% | | Revenues (ex-divestiture, millions) | $736.9 | $626.6 | 18% | | Net Income (millions) | $59.7 | $45.6 | 31% | | Adjusted Net Income (millions) | $62.2 | $44.7 | 39% | | Diluted EPS | $1.22 | $0.93 | 31% | | Adjusted Diluted EPS | $1.27 | $0.91 | 40% | | Adjusted EBITDA (millions) | $154.2 | $112.7 | 37% | | Adjusted EBITDA Margin | 20.9% | 17.0% | +390 bps | | Net cash from operating activities (millions) | $61.2 | $38.3 | 60% | | Free Cash Flow (millions) | $39.2 | $(6.1) | N.M. | - The company achieved record performance, highlighted by an 18% revenue growth and a 42% Adjusted EBITDA expansion when excluding the impact of a divested business[4] - Adjusted EBITDA Margin reached a record 20.9%, an increase of 360 basis points year-over-year (excluding divestiture impact)[4] - Key growth businesses performed well, with a 15% increase in Aggregates cash unit profitability and a record backlog in Utility Structures[4] Management Commentary and Outlook Management highlights the positive impact of the Stavola acquisition and strong segment performance, leading to tightened full-year guidance CEO Commentary The CEO attributes record results to the Stavola acquisition, strong Engineered Structures, and healthy barge orders, while prioritizing deleveraging - The Stavola acquisition increased Arcosa's consolidated revenues by 14% and consolidated Adjusted EBITDA margin by 250 basis points in the quarter[6] - Engineered Structures delivered strong results with record top-line and margin, supported by a record backlog in the utility structures business due to U.S. grid load growth[7] - The barge business is performing as expected with a healthy order book, solidifying 2025 production plans and extending backlog into 2026[8] - The company is prioritizing deleveraging and is on track to reach its target Net Debt to Adjusted EBITDA range of 2.0-2.5 times within the next three quarters[8] 2025 Full-Year Guidance Arcosa tightened its full-year 2025 guidance for consolidated revenue and Adjusted EBITDA, reflecting increased confidence in its outlook Full Year 2025 Guidance Update | Metric | New Guidance Range | Previous Guidance Range | | :--- | :--- | :--- | | Consolidated Revenues (billions) | $2.85 - $2.95 | $2.8 - $3.0 | | Consolidated Adjusted EBITDA (millions) | $555 - $585 | $545 - $595 | - The guidance includes the direct impact of tariffs, which are expected to be immaterial[10] Segment Performance Review Segment performance review highlights strong growth in Construction Products and Engineered Structures, alongside improved barge business visibility Construction Products The segment reported record revenue and Adjusted Segment EBITDA, driven by the Stavola acquisition, despite a slight organic revenue decline Construction Products Q2 2025 Performance | Metric | Q2 2025 | % Change YoY | | :--- | :--- | :--- | | Revenues (millions) | $354.5 | 28% | | Adjusted Segment EBITDA (millions) | $100.4 | 44% | | Adjusted Segment EBITDA Margin | 28.3% | +310 bps | - The Stavola acquisition, completed in October 2024, contributed $90.3 million to revenues and $35.2 million to Adjusted Segment EBITDA during the quarter[15] - Aggregates Adjusted Cash Gross Profit per Ton grew by 15%, driven by a 6% increase in total volumes and an 8% increase in Freight-Adjusted Average Sales Price[15] Engineered Structures This segment achieved significant revenue and Adjusted Segment EBITDA growth, reaching a record margin, fueled by higher volumes and efficiencies Engineered Structures Q2 2025 Performance | Metric | Q2 2025 | % Change YoY | | :--- | :--- | :--- | | Revenues (millions) | $293.0 | 7% | | Adjusted Segment EBITDA (millions) | $54.8 | 31% | | Adjusted Segment EBITDA Margin | 18.7% | +350 bps | - The backlog for utility and related structures reached a record $450.0 million, up 9% from the start of the year, driven by strong demand for grid hardening and reliability[15] - The wind towers backlog was $598.6 million at quarter-end, with increased order inquiry activity following recent legislative developments[15] Transportation Products Excluding divested steel components, the barge business saw an 18% revenue increase and 10% Adjusted Segment EBITDA growth, with improved backlog visibility - Excluding the divested steel components business, barge business revenues increased 18% and Adjusted Segment EBITDA increased 10% to $13.5 million[19] - The barge backlog at quarter-end was $277.0 million, with an additional $122 million in orders received after the quarter, extending hopper barge backlog into 2026[19] Cash Flow and Liquidity The company generated strong operating and free cash flow, improving Net Debt to Adjusted EBITDA and maintaining robust liquidity Q2 2025 Cash Flow & Liquidity | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating Cash Flow (millions) | $61.2 | $38.3 | | Capital Expenditures (millions) | $27.8 | $47.6 | | Free Cash Flow (millions) | $39.2 | $(6.1) | - Net Debt to Adjusted EBITDA for the trailing twelve months was 2.8x, a slight improvement from 2.9x at the end of Q1 2025[19] - Total liquidity at quarter-end was $889.7 million, comprising $189.7 million in cash and full availability of a $700 million revolving credit facility[19] Financial Statements and Non-GAAP Reconciliations This section presents detailed financial statements and reconciliations for non-GAAP measures, offering a comprehensive view of the company's financial position Condensed Consolidated Statements of Operations For Q2 2025, Arcosa reported increased revenues of $736.9 million, with gross profit growing to $166.1 million and net income rising 31% to $59.7 million Q2 2025 Statement of Operations (in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenues | $736.9 | $664.7 | | Gross profit | $166.1 | $138.0 | | Operating profit | $94.8 | $67.2 | | Net income | $59.7 | $45.6 | Condensed Segment Data This section details revenues and operating profit by segment, highlighting Construction Products as the largest contributor and a record $450.0 million utility structures backlog Revenues by Segment - Q2 2025 (in millions) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Construction Products | $354.5 | $276.1 | | Engineered Structures | $293.0 | $274.8 | | Transportation Products | $89.4 | $113.8 | | Consolidated Total | $736.9 | $664.7 | Backlog as of June 30, 2025 (in millions) | Segment | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Utility and related structures | $450.0 | $414.0 | | Wind towers | $598.6 | $776.8 | | Inland barges | $277.0 | $280.1 | Condensed Consolidated Balance Sheets As of June 30, 2025, Arcosa's balance sheet shows total assets of $5.01 billion, total debt of $1.68 billion, and stockholders' equity of $2.51 billion Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $1,116.7 | $954.0 | | Total assets | $5,011.6 | $4,915.5 | | Total current liabilities | $527.5 | $516.0 | | Total debt | $1,683.5 | $1,688.9 | | Total stockholders' equity | $2,508.3 | $2,428.2 | Consolidated Statements of Cash Flows For the first six months of 2025, net cash from operating activities was $60.5 million, a decrease due to working capital changes, while investing activities required less cash Six Months Ended June 30 Cash Flow (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $60.5 | $118.8 | | Net cash required by investing activities | $(33.4) | $(241.2) | | Net cash (required) provided by financing activities | $(24.7) | $121.3 | | Net increase (decrease) in cash | $2.4 | $(1.1) | Non-GAAP Reconciliations This section provides detailed reconciliations for various non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, and Free Cash Flow Reconciliation of Net Income to Adjusted EBITDA - Q2 (in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | $59.7 | $45.6 | | Interest expense, net | $27.2 | $10.7 | | Provision for income taxes | $10.1 | $7.6 | | Depreciation, depletion, and amortization | $56.1 | $46.6 | | EBITDA | $153.1 | $110.5 | | Adjustments | $1.1 | $2.2 | | Adjusted EBITDA | $154.2 | $112.7 | Reconciliation of Free Cash Flow - Q2 (in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Cash provided by operating activities | $61.2 | $38.3 | | Capital expenditures | $(27.8) | $(47.6) | | Proceeds from disposition of property, etc. | $5.8 | $3.2 | | Free Cash Flow | $39.2 | $(6.1) |