Arcosa(ACA) - 2025 Q2 - Quarterly Report

PART I Item 1. Financial Statements This section presents Arcosa, Inc.'s unaudited consolidated financial statements, including statements of operations, comprehensive income, balance sheets, cash flows, and stockholders' equity, along with detailed notes explaining significant accounting policies, acquisitions, divestitures, debt, leases, and other financial disclosures for the periods ended June 30, 2025 and 2024 Consolidated Statements of Operations The Consolidated Statements of Operations show a significant increase in revenues and operating profit for both the three and six months ended June 30, 2025, compared to the same periods in 2024, primarily driven by acquisitions. Net income also increased for the three-month period but slightly decreased for the six-month period | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenues | $736.9 | $664.7 | $1,368.9 | $1,263.3 | | Gross profit | $166.1 | $138.0 | $291.5 | $249.6 | | Operating profit | $94.8 | $67.2 | $150.6 | $120.6 | | Net income | $59.7 | $45.6 | $83.3 | $84.8 | | Basic EPS | $1.22 | $0.93 | $1.70 | $1.74 | | Diluted EPS | $1.22 | $0.93 | $1.70 | $1.74 | | Dividends declared per common share | $0.05 | $0.05 | $0.10 | $0.10 | Consolidated Statements of Comprehensive Income The Consolidated Statements of Comprehensive Income show an increase in comprehensive income for both the three and six months ended June 30, 2025, primarily due to higher net income and positive currency translation adjustments | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income | $59.7 | $45.6 | $83.3 | $84.8 | | Currency translation adjustment | $0.9 | $(0.2) | $0.9 | $(0.6) | | Comprehensive income | $60.6 | $45.4 | $84.2 | $84.2 | Consolidated Balance Sheets The Consolidated Balance Sheets indicate an increase in total assets and stockholders' equity as of June 30, 2025, compared to December 31, 2024, primarily driven by increases in receivables and inventories, while total liabilities also saw a slight increase | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :-------------------------- | :------------------------------ | | Total current assets | $1,116.7 | $954.0 | | Property, plant, and equipment, net | $2,100.9 | $2,129.4 | | Goodwill | $1,343.4 | $1,361.2 | | Total assets | $5,011.6 | $4,915.5 | | Total current liabilities | $527.5 | $516.0 | | Debt | $1,673.3 | $1,676.8 | | Total liabilities | $2,503.3 | $2,487.3 | | Total stockholders' equity | $2,508.3 | $2,428.2 | Consolidated Statements of Cash Flows Net cash provided by operating activities decreased significantly for the six months ended June 30, 2025, compared to the same period in 2024, mainly due to increased working capital needs. Investing activities required less cash, while financing activities shifted from providing cash to requiring cash | Cash Flow Activity | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--------------------------------------- | :------------------------------------------- | :------------------------------------------- | | 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 and cash equivalents | $2.4 | $(1.1) | | Cash and cash equivalents at end of period | $189.7 | $103.7 | Consolidated Statements of Stockholders' Equity Stockholders' equity increased from December 31, 2024, to June 30, 2025, primarily due to net income and other comprehensive income, partially offset by cash dividends and share purchases to satisfy employee taxes | Metric | Balances at December 31, 2024 (in millions) | Balances at June 30, 2025 (in millions) | | :--------------------------------- | :---------------------------------------- | :-------------------------------------- | | Total Stockholders' Equity | $2,428.2 | $2,508.3 | | Net income (6 months ended June 30, 2025) | N/A | $83.3 | | Other comprehensive income (6 months ended June 30, 2025) | N/A | $0.9 | | Cash dividends on common stock (6 months ended June 30, 2025) | N/A | $(5.0) | Note 1. Overview and Summary of Significant Accounting Policies Arcosa, Inc. is a Dallas-based provider of infrastructure-related products and solutions. The note outlines the basis of presentation for the unaudited interim financial statements, details the $50.0 million share repurchase program authorized in December 2024, and describes revenue recognition policies for its Construction Products, Engineered Structures, and Transportation Products segments. It also covers income tax accounting, financial instruments, and the adoption of recent accounting pronouncements (ASU 2023-09 and ASU 2023-07) with no material impact on financial statements, while ASU 2024-03 is being evaluated - Arcosa, Inc. is a provider of infrastructure-related products and solutions serving construction, engineered structures, and transportation markets in North America[16] - A $50.0 million share repurchase program was authorized effective January 1, 2025, through December 31, 2026. No shares were repurchased during the three and six months ended June 30, 2025, leaving the full amount available[19] - Revenue recognition varies by segment: Construction Products and Transportation Products recognize revenue when the customer accepts the product and legal title passes. Engineered Structures recognizes revenue over time for customized wind towers and certain utility structures, and at a point in time for other products[21][22][23] - The Company adopted ASU 2023-09 (Income Tax Disclosures) and ASU 2023-07 (Segment Reporting Disclosures) effective January 1, 2025, and January 1, 2024, respectively, with no material impact on the Consolidated Financial Statements. ASU 2024-03 (Expense Disaggregation Disclosures) is being evaluated for future impact[30][31][32] Note 2. Acquisitions and Divestitures Arcosa completed significant acquisitions in 2024, including Stavola Holding Corporation's construction materials business for $1.2 billion and Ameron Pole Products LLC for $180.0 million, expanding its Construction Products and Engineered Structures segments, respectively. The company also divested its steel components business in August 2024 for $110.0 million, recognizing a loss in 2025 due to changes in earnout fair value - On October 1, 2024, Arcosa acquired Stavola Holding Corporation's construction materials business for $1.2 billion in cash, expanding its Construction Products segment into the New York-New Jersey MSA[35] - On April 1, 2024, Arcosa acquired Ameron Pole Products LLC for $180.0 million, adding highly engineered concrete and steel poles to its Engineered Structures segment[40] - In August 2024, the Company divested its steel components business for $110.0 million, recognizing a loss of $2.8 million and $2.5 million for the three and six months ended June 30, 2025, respectively, primarily due to a change in the estimated fair value of the earnout[42] Note 3. Fair Value Accounting The Company measures certain assets and liabilities at fair value on a recurring basis, categorizing them into a three-level hierarchy. As of June 30, 2025, cash equivalents were primarily Level 1, while contingent consideration (both assets and liabilities) was classified as Level 3, reflecting the use of unobservable inputs in their valuation | Asset/Liability | Fair Value as of June 30, 2025 (in millions) | Fair Value as of December 31, 2024 (in millions) | | :------------------------ | :------------------------------------------- | :--------------------------------------------- | | Cash equivalents (Level 1) | $81.0 | $133.0 | | Contingent consideration (asset, Level 3) | $12.8 | $15.4 | | Contingent consideration (liability, Level 3) | $1.4 | $1.4 | - Level 3 inputs are unobservable and significant to the fair value of assets or liabilities, such as contingent consideration, which is estimated using models like discounted cash flow or Monte Carlo simulations[47] Note 4. Segment Information Arcosa operates in three principal business segments: Construction Products, Engineered Structures, and Transportation Products. The Construction Products segment saw significant revenue and operating profit growth due to acquisitions. Engineered Structures also experienced growth, driven by wind tower volumes. Transportation Products revenues and operating profit decreased due to the divestiture of the steel components business, despite higher inland barge performance - Arcosa's three principal business segments are Construction Products, Engineered Structures, and Transportation Products, operating primarily in North America[48][49][50] | Segment | Revenues (3 Months Ended June 30, 2025) | Operating Profit (3 Months Ended June 30, 2025) | Revenues (6 Months Ended June 30, 2025) | Operating Profit (6 Months Ended June 30, 2025) | | :---------------------- | :-------------------------------------- | :-------------------------------------------- | :-------------------------------------- | :-------------------------------------------- | | Construction Products | $354.5 million | $58.6 million | $617.3 million | $76.9 million | | Engineered Structures | $293.0 million | $42.8 million | $577.8 million | $81.8 million | | Transportation Products | $89.4 million | $8.8 million | $173.8 million | $22.7 million | | Consolidated Total | $736.9 million | $94.8 million | $1,368.9 million | $150.6 million | | Segment | Revenues (3 Months Ended June 30, 2024) | Operating Profit (3 Months Ended June 30, 2024) | Revenues (6 Months Ended June 30, 2024) | Operating Profit (6 Months Ended June 30, 2024) | | :---------------------- | :-------------------------------------- | :-------------------------------------------- | :-------------------------------------- | :-------------------------------------------- | | Construction Products | $276.1 million | $39.4 million | $527.3 million | $68.2 million | | Engineered Structures | $274.8 million | $35.1 million | $506.4 million | $61.4 million | | Transportation Products | $113.8 million | $12.6 million | $229.6 million | $27.2 million | | Consolidated Total | $664.7 million | $67.2 million | $1,263.3 million | $120.6 million | Note 5. Property, Plant, and Equipment Property, plant, and equipment, net, slightly decreased to $2,100.9 million as of June 30, 2025, from $2,129.4 million at December 31, 2024. No impairment charges were recognized in the current period, contrasting with a $5.8 million charge in the prior year related to Construction Products | Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :---------------------------------- | :-------------------------- | :------------------------------ | | Land | $170.0 | $158.3 | | Mineral reserves | $1,117.4 | $1,111.7 | | Buildings and improvements | $391.4 | $366.4 | | Machinery and other | $1,308.2 | $1,292.8 | | Construction in progress | $129.2 | $129.7 | | Less accumulated depreciation and depletion | $(1,015.3) | $(929.5) | | Property, plant, and equipment, net | $2,100.9 | $2,129.4 | - No impairment charges were recognized during the three and six months ended June 30, 2025, compared to a $5.8 million impairment charge in the prior year related to the closure of aggregates operations in west Texas[56] Note 6. Goodwill and Other Intangible Assets Goodwill decreased slightly to $1,343.4 million as of June 30, 2025, primarily due to purchase price adjustments from the Stavola acquisition in the Construction Products segment. Intangible assets, net, also decreased to $324.2 million, with definite-lived intangibles including customer relationships, permits, and other assets | Segment | Goodwill as of June 30, 2025 (in millions) | Goodwill as of December 31, 2024 (in millions) | | :---------------------- | :--------------------------------------- | :--------------------------------------------- | | Construction Products | $843.4 | $861.2 | | Engineered Structures | $480.1 | $480.1 | | Transportation Products | $19.9 | $19.9 | | Total Goodwill | $1,343.4 | $1,361.2 | | Intangible Asset Type | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------------- | :-------------------------- | :------------------------------ | | Intangibles with indefinite lives - Trademarks | $43.8 | $43.8 | | Intangibles with definite lives, net | $280.4 | $294.5 | | Total Intangible assets, net | $324.2 | $338.3 | - The decrease in Construction Products goodwill is attributed to purchase price adjustments from the Stavola acquisition[57] Note 7. Debt Arcosa's total debt remained stable at $1,683.5 million as of June 30, 2025. The company refinanced its term loan in June 2025, establishing a new $698.3 million 2025 Refinancing Term Loan with a lower interest rate (SOFR plus 2.00%). The revolving credit facility was increased to $700.0 million in August 2024, with no outstanding borrowings as of June 30, 2025. The company also has $1.0 billion in senior unsecured notes (2021 and 2024 Notes) | Debt Component | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :--------------------------------- | :-------------------------- | :------------------------------ | | Revolving credit facility | $0.0 | $0.0 | | Term Loan | $696.5 | $700.0 | | 2021 Senior Notes - 4.375% due April 2029 | $400.0 | $400.0 | | 2024 Senior Notes - 6.875% due August 2032 | $600.0 | $600.0 | | Finance leases | $4.0 | $7.1 | | Total debt | $1,683.5 | $1,688.9 | - On June 17, 2025, Arcosa entered into Amendment No. 2 to the Credit Agreement, establishing a new $698.3 million 2025 Refinancing Term Loan with an interest rate of SOFR plus 2.00% per year, a 0.25% reduction from the previous 2024 Term Loan[69] - The revolving credit facility was increased from $600.0 million to $700.0 million in August 2024, with no outstanding loans as of June 30, 2025, leaving $700.0 million available for borrowing[61][62] Note 8. Leases Arcosa has various operating and finance leases for office space, land, buildings, and equipment. As of June 30, 2025, the present value of net minimum operating lease obligations was $60.1 million, and finance lease obligations were $4.0 million. Total lease assets were $69.3 million, and total lease liabilities were $64.1 million | Lease Type | Present Value of Net Minimum Lease Obligations (June 30, 2025, in millions) | | :-------------------------------- | :---------------------------------------------------------- | | Operating Leases | $60.1 | | Finance Leases | $4.0 | | Lease Classification | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :--------------------------------- | :-------------------------- | :------------------------------ | | Total lease assets | $69.3 | $75.4 | | Total lease liabilities | $64.1 | $70.4 | Note 9. Other (income) expense Other (income) expense primarily consists of foreign currency exchange transactions, which resulted in an income of $2.2 million for the three months ended June 30, 2025, and $2.1 million for the six months ended June 30, 2025, a positive change compared to expenses in the prior year | Item | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Foreign currency exchange transactions | $(2.2) | $3.3 | $(2.1) | $2.8 | Note 10. Income Taxes Arcosa's effective tax rates for the three and six months ended June 30, 2025, were 14.5% and 15.9%, respectively, differing from the U.S. federal statutory rate of 21.0% due to AMP tax credits, state income taxes, statutory depletion deductions, and other adjustments. The recently enacted One Big Beautiful Bill Act (OBBBA) is being assessed for its potential impact on future financial statements, particularly regarding renewable-energy tax incentives | Period | Effective Tax Rate (2025) | Effective Tax Rate (2024) | | :-------------------------- | :------------------------ | :------------------------ | | Three Months Ended June 30 | 14.5% | 14.3% | | Six Months Ended June 30 | 15.9% | 15.6% | - The effective tax rates differ from the U.S. federal statutory rate of 21.0% due to Advanced Manufacturing Production (AMP) tax credits, state income taxes, statutory depletion deductions, compensation-related items, and other foreign adjustments[80] - The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, includes provisions that scale back or add stricter eligibility requirements for renewable-energy tax incentives, and its impact on consolidated financial statements is currently being assessed[81] Note 11. Employee Retirement Plans Total employee retirement plan expense increased to $5.6 million for the three months and $10.5 million for the six months ended June 30, 2025, compared to the prior year. This includes contributions to defined contribution plans and multiemployer defined benefit pension plans, with expected total contributions to multiemployer plans for 2025 at approximately $2.8 million | Plan Type | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :---------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Defined contribution plans | $4.8 | $4.6 | $9.2 | $8.6 | | Multiemployer plans | $0.8 | $0.4 | $1.3 | $0.8 | | Total expense | $5.6 | $5.0 | $10.5 | $9.4 | - Total contributions to multiemployer plans for 2025 are expected to be approximately $2.8 million[82] Note 12. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss improved from $(17.7) million at December 31, 2024, to $(16.8) million at June 30, 2025, primarily due to positive currency translation adjustments of $0.9 million during the six-month period | Metric | Balances at December 31, 2024 (in millions) | Other Comprehensive Income (Loss) (6 months ended June 30, 2025) | Balances at June 30, 2025 (in millions) | | :-------------------------------- | :---------------------------------------- | :--------------------------------------------------------------- | :-------------------------------------- | | Accumulated other comprehensive loss | $(17.7) | $0.9 | $(16.8) | Note 13. Stock-Based Compensation Stock-based compensation expense decreased slightly to $6.7 million for the three months and $13.4 million for the six months ended June 30, 2025, compared to the same periods in the prior year | Period | Stock-Based Compensation (2025, in millions) | Stock-Based Compensation (2024, in millions) | | :-------------------------- | :------------------------------------------- | :------------------------------------------- | | Three Months Ended June 30 | $6.7 | $7.4 | | Six Months Ended June 30 | $13.4 | $14.1 | Note 14. Earnings Per Common Share Basic and diluted earnings per common share increased for the three months ended June 30, 2025, to $1.22, but slightly decreased for the six months ended June 30, 2025, to $1.70, compared to the prior year. Weighted average shares outstanding remained relatively stable | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $1.22 | $0.93 | $1.70 | $1.74 | | Diluted EPS | $1.22 | $0.93 | $1.70 | $1.74 | | Weighted average shares outstanding (Basic, in millions) | 48.9 | 48.6 | 48.8 | 48.5 | | Weighted average shares outstanding (Diluted, in millions) | 49.0 | 48.7 | 48.9 | 48.7 | Note 15. Commitments and Contingencies Arcosa is involved in various claims and lawsuits incidental to its business, but as of June 30, 2025, reasonably possible losses and related accruals for such matters were not significant. The Company was also contingently liable for $201.7 million in surety bonds - As of June 30, 2025, reasonably possible losses and related accruals for legal claims and lawsuits were not significant[89] - The Company was contingently liable for $201.7 million in surety bonds as of June 30, 2025, guaranteeing its performance[91] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Arcosa's financial condition, results of operations, liquidity, and capital resources. It highlights increased revenues and operating profit driven by acquisitions, discusses market outlooks for each segment, and details cash flow activities, debt management, and the share repurchase program Company Overview Arcosa, Inc. is a Dallas, Texas-based company providing infrastructure-related products and solutions to construction, engineered structures, and transportation markets across North America - Arcosa is a provider of infrastructure-related products and solutions with leading brands serving construction, engineered structures, and transportation markets in North America[94] Market Outlook Market demand for Construction Products remains healthy, supported by infrastructure spending, though residential housing is impacted by interest rates. Engineered Structures has good production visibility with strong backlog, driven by grid hardening and wind energy demand, despite policy uncertainties from the OBBBA. Transportation Products' inland barge business is recovering, with backlog extending into 2026, indicating future replacement demand - Construction Products segment sees healthy market demand from infrastructure spending and private non-residential activity, but single-family residential housing is negatively impacted by higher interest rates[97] - Engineered Structures has a strong backlog ($598.6 million for wind towers as of June 30, 2025) and healthy order activity for utility structures due to grid hardening and electricity demand. The Inflation Reduction Act (IRA) was a catalyst for wind tower orders, but the One Big Beautiful Bill Act (OBBBA) terminates AMP tax credits for wind towers after 2027 and modifies PTC eligibility for wind farm projects[97] - Transportation Products' inland barge backlog was $277.0 million as of June 30, 2025, up 10% from June 30, 2024, with tank barge backlog extending deep into 2026, indicating recovery and future replacement demand[98] Executive Overview Arcosa completed the acquisition of Stavola's construction materials business in October 2024 and divested its steel components business in August 2024. Revenues increased by 10.9% and 8.4% for the three and six months ended June 30, 2025, respectively, driven by Construction Products and Engineered Structures. Operating profit also increased significantly, while interest expense rose due to acquisition-related debt - Arcosa acquired Stavola's construction materials business in October 2024 and divested its steel components business in August 2024[99][100] | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenues | $736.9 (10.9% increase) | $664.7 | $1,368.9 (8.4% increase) | $1,263.3 | | Operating profit | $94.8 ($27.6 million increase) | $67.2 | $150.6 ($30.0 million increase) | $120.6 | | SG&A expenses | $73.0 (8.2% decrease) | $79.5 | $146.7 (1.3% decrease) | $148.6 | | Interest expense | $28.5 ($17.1 million increase) | $11.4 | $56.8 ($37.1 million increase) | $19.7 | | Effective tax rate | 14.5% | 14.3% | 15.9% | 15.6% | | Net income | $59.7 | $45.6 | $83.3 | $84.8 | Unsatisfied Performance Obligations (Backlog) Arcosa's backlog for Engineered Structures (utility and related structures, wind towers) and Transportation Products (inland barges) provides significant revenue visibility. Utility structures backlog increased to $450.0 million, while wind towers backlog decreased to $598.6 million. Inland barges backlog remained strong at $277.0 million | Segment/Product | June 30, 2025 (in millions) | December 31, 2024 (in millions) | June 30, 2024 (in millions) | | :------------------------------ | :-------------------------- | :------------------------------ | :-------------------------- | | Utility and related structures | $450.0 | $414.0 | $424.6 | | Wind towers | $598.6 | $776.8 | $914.1 | | Inland barges | $277.0 | $280.1 | $251.5 | - 84% of utility and related structures backlog is expected to be delivered in 2025, with the remainder in 2026. For wind towers, 30% is expected in 2025, 24% in 2026, and the rest through 2028. For inland barges, 57% is expected in 2025, and the remainder in 2026[104][105] Results of Operations Consolidated revenues increased by 10.9% and 8.4% for the three and six months ended June 30, 2025, respectively, driven by Construction Products and Engineered Structures, partially offset by Transportation Products. Operating profit saw substantial increases of 41.1% and 24.9% for the respective periods. Selling, general, and administrative expenses decreased both in absolute terms and as a percentage of revenues, while interest expense significantly increased due to acquisition-related debt | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | % Change | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | % Change | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------- | :-------------------------------------------- | :-------------------------------------------- | :------- | | Revenues | $736.9 | $664.7 | 10.9% | $1,368.9 | $1,263.3 | 8.4% | | Operating Costs | $642.1 | $597.5 | 7.5% | $1,218.3 | $1,142.7 | 6.6% | | Operating Profit | $94.8 | $67.2 | 41.1% | $150.6 | $120.6 | 24.9% | | SG&A Expenses | $73.0 | $79.5 | (8.2%) | $146.7 | $148.6 | (1.3%) | | SG&A as % of Revenues | 9.9% | 12.0% | | 10.7% | 11.8% | | | Depreciation, depletion, and amortization | $56.1 | $46.6 | 20.4% | $109.7 | $89.4 | 22.7% | | Interest expense | $28.5 | $11.4 | 149.1% | $56.8 | $19.7 | 188.3% | | Effective tax rate | 14.5% | 14.3% | | 15.9% | 15.6% | | - Revenues increased due to the Stavola acquisition and higher wind tower volumes, partially offset by the steel components divestiture[107] - Operating profit increased primarily due to the impact of the Stavola acquisition and higher wind tower volumes, along with improved product mix and operating improvements in utility structures[114] Segment Discussion This section provides a detailed breakdown of financial performance by Arcosa's three operating segments: Construction Products, Engineered Structures, and Transportation Products, along with Corporate overhead Construction Products Construction Products revenues increased significantly by 28.4% and 17.1% for the three and six months ended June 30, 2025, respectively, primarily due to the Stavola acquisition. Operating profit also saw substantial growth, driven by the acquisition's impact, despite a decline in organic revenues and lower cost absorption in legacy businesses | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | % Change | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | % Change | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------- | :-------------------------------------------- | :-------------------------------------------- | :------- | | Total revenues | $354.5 | $276.1 | 28.4% | $617.3 | $527.3 | 17.1% | | Operating profit | $58.6 | $39.4 | 48.7% | $76.9 | $68.2 | 12.8% | | Operating profit margin | 16.5% | 14.3% | | 12.5% | 12.9% | | | Depreciation, depletion, and amortization | $41.8 | $29.4 | 42.2% | $80.4 | $59.5 | 35.1% | - The Stavola acquisition contributed $90.3 million to revenues for the three months and $116.7 million for the six months ended June 30, 2025, and $22.9 million and $11.9 million to operating profit for the respective periods[120][125] - Organic revenues in construction materials declined due to lower volumes and freight revenue, and revenues in trench shoring decreased due to lower volumes and reduced steel prices[120][125] Engineered Structures Engineered Structures revenues increased by 6.6% and 14.1% for the three and six months ended June 30, 2025, respectively, driven by higher wind tower volumes and the Ameron acquisition. Operating profit significantly increased by 21.9% and 33.2% for the respective periods, benefiting from higher wind tower volumes, improved product mix, and operating improvements in utility structures. Backlog for utility structures increased, while wind towers backlog decreased | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | % Change | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | % Change | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------- | :-------------------------------------------- | :-------------------------------------------- | :------- | | Total revenues | $293.0 | $274.8 | 6.6% | $577.8 | $506.4 | 14.1% | | Operating profit | $42.8 | $35.1 | 21.9% | $81.8 | $61.4 | 33.2% | | Depreciation and amortization | $12.0 | $12.5 | (4.0%) | $24.7 | $20.4 | 21.1% | - Revenues increased due to higher volumes from the new wind tower facility in New Mexico and the contribution from the Ameron acquisition (for the six-month period)[126][132] - Operating profit increased due to higher wind tower volumes, improved product mix, and operating improvements in utility structures[114][132] | Backlog (in millions) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :-------------------- | :------------ | :---------------- | :------------ | | Utility structures | $450.0 | $414.0 | $424.6 | | Wind towers | $598.6 | $776.8 | $914.1 | Transportation Products Transportation Products revenues decreased by 21.4% and 24.3% for the three and six months ended June 30, 2025, respectively, primarily due to the divestiture of the steel components business. However, inland barge revenues increased, driven by higher tank barge deliveries. Operating profit decreased overall but increased when excluding the impact of the divested steel components business, driven by higher barge volumes. The backlog for inland barges was $277.0 million | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | % Change | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | % Change | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------- | :-------------------------------------------- | :-------------------------------------------- | :------- | | Total revenues | $89.4 | $113.8 | (21.4%) | $173.8 | $229.6 | (24.3%) | | Inland barges revenues | $89.4 | $75.7 | 18.1% | $173.8 | $155.4 | 11.8% | | Steel components revenues | $0.0 | $38.1 | (100.0%) | $0.0 | $74.2 | (100.0%) | | Operating profit | $8.8 | $12.6 | (30.2%) | $22.7 | $27.2 | (16.5%) | | Depreciation and amortization | $1.9 | $4.1 | (53.7%) | $3.8 | $8.1 | (53.1%) | - Excluding the impact of the divested steel components business, operating profit in Transportation Products increased due to higher barge volumes, particularly tank barges[115][139] - The backlog for inland barges was $277.0 million as of June 30, 2025, with 57% expected to be delivered in 2025 and the remainder in 2026[135] Corporate Corporate overhead costs decreased by 22.6% for the three months and 14.9% for the six months ended June 30, 2025, primarily due to lower acquisition and divestiture-related expenses | Metric | Three Months Ended June 30, 2025 (in millions) | Three Months Ended June 30, 2024 (in millions) | % Change | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | % Change | | :----------------------- | :--------------------------------------------- | :--------------------------------------------- | :------- | :-------------------------------------------- | :-------------------------------------------- | :------- | | Corporate overhead costs | $15.4 | $19.9 | (22.6%) | $30.8 | $36.2 | (14.9%) | - The decrease in corporate overhead costs was primarily due to lower acquisition and divestiture-related expenses[137][138] Liquidity and Capital Resources Arcosa's liquidity is supported by cash flow from operations, existing cash, and its revolving credit facility. Net cash provided by operating activities decreased significantly, while investing activities required less cash due to lower capital expenditures and cash received from acquisition adjustments. Financing activities shifted to a net use of cash due to debt payments and dividends. The company refinanced its term loan and maintains a $700.0 million revolving credit facility with no outstanding borrowings | Cash Flow Activity | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Operating activities | $60.5 | $118.8 | | Investing activities | $(33.4) | $(241.2) | | Financing activities | $(24.7) | $121.3 | | Net increase (decrease) in cash and cash equivalents | $2.4 | $(1.1) | - Capital expenditures for the six months ended June 30, 2025, were $61.8 million, down from $102.0 million in the prior year. Full-year capital expenditures are expected to be approximately $145 million to $155 million in 2025[144] - Arcosa refinanced its term loan with a new $698.3 million 2025 Refinancing Term Loan at a lower interest rate (SOFR plus 2.00%). The revolving credit facility was increased to $700.0 million, with no outstanding borrowings as of June 30, 2025[145][146][149] - The Board authorized a $50.0 million share repurchase program effective January 1, 2025, through December 31, 2026. No shares were repurchased under this program during the three and six months ended June 30, 2025[153] Recent Accounting Pronouncements This section refers to Note 1 for information on recently adopted and issued accounting pronouncements Forward-Looking Statements This section contains a cautionary statement regarding forward-looking statements, highlighting various risks and uncertainties that could cause actual results to differ materially from projections. Key risk factors include market conditions, cyclicality, weather, competition, acquisitions/divestitures, raw material costs, interest rates, taxes, and regulatory changes, including the impact of the OBBBA on wind energy tax incentives - Forward-looking statements involve risks and uncertainties, including market conditions, customer demand, cyclical and seasonal nature of industries, weather, competition, ability to integrate acquisitions or divest businesses, raw material costs, interest rates, taxes, and legal/regulatory issues[155] - Specific risks include the impact of the OBBBA on the modification or termination of AMP tax credits for wind towers and changes in demand for wind towers resulting from modifications in tax incentives[160] Item 3. Quantitative and Qualitative Disclosures about Market Risk There have been no material changes in Arcosa's market risks since December 31, 2024, as detailed in its 2024 Annual Report on Form 10-K. The impact of foreign exchange rate fluctuations is referenced in Note 9 - No material change in market risks since December 31, 2024[157] - The impact of foreign exchange rate fluctuations is discussed in Note 9[157] Item 4. Controls and Procedures Arcosa's Chief Executive and Chief Financial Officers concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025. There have been no material changes in the Company's internal control over financial reporting during the period - The Company's disclosure controls and procedures were effective as of June 30, 2025[158] - No material changes in the Company's internal control over financial reporting occurred during the period covered by the report[159] PART II Item 1. Legal Proceedings This section refers to Note 15 of the Consolidated Financial Statements for information regarding legal proceedings, indicating that reasonably possible losses and related accruals were not significant as of June 30, 2025 - Information on legal proceedings is provided in Note 15, where reasonably possible losses and related accruals were not significant as of June 30, 2025[161] Item 1A. Risk Factors There have been no material changes in the Company's risk factors from those disclosed in its 2024 Annual Report on Form 10-K - No material changes in the Company's risk factors from those set forth in the 2024 Annual Report on Form 10-K[162] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the quarter ended June 30, 2025, Arcosa purchased 123,324 shares of common stock at an average price of $88.26 per share, primarily to satisfy tax withholding obligations on vested restricted stock. No shares were purchased under the $50.0 million share repurchase program, which remains fully available | Period | Number of Shares Purchased | Average Price Paid per Share | | :--------------------------------- | :------------------------- | :--------------------------- | | April 1, 2025 through April 30, 2025 | 30 | $78.98 | | May 1, 2025 through May 31, 2025 | 122,157 | $88.28 | | June 1, 2025 through June 30, 2025 | 1,137 | $86.06 | | Total | 123,324 | $88.26 | - The shares purchased were primarily to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees[167] - No shares were purchased on the open market as part of the $50.0 million share repurchase program, which remains fully available as of June 30, 2025[167] Item 3. Defaults Upon Senior Securities This item is not applicable to the Company for the reporting period Item 4. Mine Safety Disclosures Information concerning mine safety violations and other regulatory matters is included in Exhibit 95 to this Form 10-Q - Mine safety disclosures are provided in Exhibit 95 to this Form 10-Q[165] Item 5. Other Information During the three months ended June 30, 2025, no director or officer of the Company adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement - No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[166] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including organizational documents, credit agreements, certifications, mine safety disclosures, and XBRL interactive data files - Exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, Amendment No. 2 to Second Amended and Restated Credit Agreement, CEO and CFO certifications, Mine Safety Disclosure Exhibit, and Inline XBRL documents[168] SIGNATURES The report is duly signed on behalf of Arcosa, Inc. by Gail M. Peck, Chief Financial Officer, on August 8, 2025 - The report was signed by Gail M. Peck, Chief Financial Officer, on August 8, 2025[171]