Arcosa(ACA) - 2024 Q1 - Quarterly Report

PART I - Financial Information Financial Statements Arcosa reported Q1 2024 revenues of $598.6 million (up 9.0%), net income of $39.2 million (down from $55.7 million due to a prior-year gain), and improved operating cash flow to $80.5 million Consolidated Statements of Operations (Q1 2024 vs Q1 2023) | Financial Metric | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | | :--- | :--- | :--- | | Revenues | $598.6 | $549.2 | | Operating Profit | $53.4 | $75.1 | | Net Income | $39.2 | $55.7 | | Diluted EPS | $0.80 | $1.14 | | Dividends per Share | $0.05 | $0.05 | Consolidated Balance Sheet Highlights | Balance Sheet Item | March 31, 2024 (Millions USD) | December 31, 2023 (Millions USD) | | :--- | :--- | :--- | | Total Current Assets | $993.7 | $912.0 | | Total Assets | $3,668.1 | $3,577.9 | | Total Current Liabilities | $434.9 | $431.2 | | Total Debt | $600.6 | $561.9 | | Total Stockholders' Equity | $2,373.8 | $2,332.0 | Consolidated Statements of Cash Flows (Q1 2024 vs Q1 2023) | Cash Flow Activity | Three Months Ended March 31, 2024 (Millions USD) | Three Months Ended March 31, 2023 (Millions USD) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $80.5 | $27.3 | | Net Cash required by Investing Activities | ($43.5) | ($34.1) | | Net Cash provided (required) by Financing Activities | $34.7 | ($4.4) | | Net Increase (Decrease) in Cash | $71.7 | ($11.2) | - In April 2024, the company acquired Ameron Pole Products LLC for $180.0 million, funded by borrowings and cash, integrating it into the Engineered Structures segment[28] - The effective tax rate for Q1 2024 was 17.1%, a decrease from 20.3% in Q1 2023, primarily due to AMP tax credits and lower state income taxes[55] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Q1 2024 revenues grew 9.0% to $598.6 million, but operating profit decreased to $53.4 million due to a prior-year land sale gain, with a positive market outlook and strategic acquisition Market Outlook The company maintains a positive market outlook across segments, driven by infrastructure spending and the Inflation Reduction Act - The market outlook is positive, with healthy Construction Products demand, Engineered Structures benefiting from the IRA with over $1.1 billion in new wind tower orders, and a strong Transportation Products backlog extending into 2025[68] Results of Operations Consolidated revenues rose 9.0% to $598.6 million, with all segments growing, while operating profit decreased 28.9% to $53.4 million, primarily due to a prior-year land sale gain Revenues by Segment (Q1 2024 vs Q1 2023) | Segment | Q1 2024 Revenues (Millions USD) | Q1 2023 Revenues (Millions USD) | % Change | | :--- | :--- | :--- | :--- | | Construction Products | $251.2 | $236.1 | 6.4% | | Engineered Structures | $231.6 | $207.7 | 11.5% | | Transportation Products | $115.8 | $105.4 | 9.9% | | Consolidated Total | $598.6 | $549.2 | 9.0% | Operating Profit by Segment (Q1 2024 vs Q1 2023) | Segment | Q1 2024 Operating Profit (Millions USD) | Q1 2023 Operating Profit (Millions USD) | % Change | | :--- | :--- | :--- | :--- | | Construction Products | $28.8 | $49.5 | (41.8)% | | Engineered Structures | $26.3 | $29.9 | (12.0)% | | Transportation Products | $14.6 | $10.1 | 44.6% | | Segment Totals | $69.7 | $89.5 | (22.1)% | | Corporate | ($16.3) | ($14.4) | 13.2% | | Consolidated Total | $53.4 | $75.1 | (28.9)% | - The decrease in Construction Products' operating profit was primarily due to a $21.8 million gain on land sale in the prior-year period; excluding this, profit increased 4.0%[83] - Engineered Structures' operating profit declined due to lower utility structures margins from project mix and new facility startup costs[86] Unsatisfied Performance Obligations (Backlog) The company's backlog for inland barges increased sequentially, with deliveries extending into 2025, while Engineered Structures backlog remained substantial Backlog by Segment | Segment & Product Line | March 31, 2024 (Millions USD) | December 31, 2023 (Millions USD) | March 31, 2023 (Millions USD) | | :--- | :--- | :--- | :--- | | Engineered Structures: | | | | | Utility, wind, and related structures | $1,366.7 | $1,367.5 | $1,531.4 | | Transportation Products: | | | | | Inland barges | $294.4 | $253.7 | $279.0 | - The inland barges backlog increased 16% sequentially from December 31, 2023, with deliveries extending into 2025[68] Liquidity and Capital Resources Strong liquidity is maintained with Q1 2024 operating cash flow at $80.5 million and $378.0 million available under the revolving credit facility, sufficient for future operations and capital expenditures - Full-year 2024 capital expenditures are projected to be between $190 million and $205 million, driven by growth projects in Construction Products and Engineered Structures[96] - As of March 31, 2024, the company had $200.0 million outstanding on its revolving credit facility and $400.0 million in senior notes due 2029[98] - A quarterly cash dividend of $0.05 per share was declared, with no share repurchases during the quarter and $36.2 million remaining authorized under the program[99] Quantitative and Qualitative Disclosures about Market Risk No material changes in market risks have occurred since the disclosures in the 2023 Annual Report on Form 10-K - No material change in the company's market risks has occurred since December 31, 2023[105] Controls and Procedures The CEO and CFO confirmed effective disclosure controls and procedures, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2024[107] - No material changes to internal control over financial reporting occurred during Q1 2024[108] PART II - Other Information Legal Proceedings The company has accrued $1.5 million for legal contingencies, with an estimated additional possible loss of $1.2 million, deemed immaterial to its financial position - Details on legal proceedings are provided in Note 15 of the Consolidated Financial Statements[110] - As of March 31, 2024, $1.5 million has been accrued for legal contingencies, with an estimated additional possible loss of approximately $1.2 million[64] Risk Factors No material changes to the company's risk factors were reported compared to the 2023 Annual Report on Form 10-K - No material changes in risk factors were reported compared to the 2023 Annual Report on Form 10-K[111] Unregistered Sales of Equity Securities and Use of Proceeds No open market share repurchases occurred in Q1 2024, with $36.2 million remaining authorized under the program, though shares were acquired for tax withholding - No open market share repurchases occurred during Q1 2024, with $36.2 million remaining authorized under the repurchase program[113] Exhibits This section details exhibits filed with the Form 10-Q, including the Ameron acquisition agreement and CEO/CFO certifications - Key exhibits include the Membership Interest Purchase Agreement for the Ameron acquisition and CEO/CFO certifications[116]