Arcosa (NYSE:ACA) Q3 2025 Earnings Call October 31, 2025 08:30 AM ET Speaker7Good morning, ladies and gentlemen, and welcome to the Arcosa Third Quarter 2025 Earnings Conference Call. My name is Bo, and I will be your conference call coordinator today. As a reminder, today's call is being recorded. Now, I would like to turn the call over to your host, Ms. Erin Drabek, Vice President of Investor Relations for Arcosa. Please go ahead, Ms. Drabek.Speaker3Good morning, and thank you for joining Arcosa's Third Q ...

Group 1 - The company plans to invest up to RMB 500 million to expand its overseas transshipment business through Hainan Jushen Information Technology Co., Ltd [2] - Recently, the company increased the registered capital of Hainan Jushen by RMB 50 million, completing the business registration change [2] - The total amount of capital increase in Hainan Jushen over the past twelve months has reached 10% of the company's latest audited net assets [2] Group 2 - The investment is aimed at supporting the subsidiary's transshipment projects and will not adversely affect the company's future financial status or operational results [3] - The company has received approval for the deregistration of its wholly-owned subsidiary, Guangzhou Jushen Logistics Co., Ltd, which will not significantly impact the overall business development or profitability [6]

Financial Data and Key Metrics Changes - The company reported a consolidated adjusted EBITDA growth of 26%, outpacing a 12% revenue growth in the first quarter of 2025, with a margin expansion of 190 basis points [7][10] - The net debt to adjusted EBITDA ratio was maintained at 2.9 times, with expectations to reduce leverage to a target of 2 to 2.5 times over the next twelve months [9][19] Business Line Data and Key Metrics Changes - In the Construction Products segment, revenues increased by 5%, driven by the contribution from the Stabola acquisition, while organic revenues declined by 6% due to lower freight revenues and divestitures [13][14] - The Engineered Structures segment saw a 23% increase in revenues, largely due to higher wind tower volumes and the inorganic impact from the Amaron acquisition [17] - The Transportation Products segment experienced a 6% increase in revenues, with adjusted segment EBITDA increasing by 13% [18] Market Data and Key Metrics Changes - The aggregates business represented 69% of construction materials revenues, with average organic pricing up 7% year-over-year and total pricing up 10% due to the Stabola acquisition [12][14] - The company expects to benefit from continued investment in U.S. infrastructure and a new era of growth in the U.S. power market [10][24] Company Strategy and Development Direction - The company is focused on executing its strategic vision, with a strong emphasis on organic investments and the integration of recent acquisitions [6][11] - The outlook for 2025 remains positive, with anticipated revenue of $2.9 billion, representing a 17% increase, and adjusted EBITDA of $570 million, reflecting a 30% increase [22][24] - The company is committed to maintaining operational excellence and managing costs effectively in a fluid macroeconomic environment [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the evolving macroeconomic and policy environments, citing strong demand in most end markets and solid visibility from backlogs [10][11] - The company anticipates a strong second half of 2025, particularly in the construction products segment, driven by the Stabola acquisition and high single-digit organic growth [24][26] Other Important Information - The company reaffirmed its capital expenditure guidance of $145 to $165 million for the full year, with a focus on maintenance CapEx in 2025 [21] - Free cash flow for the quarter was negative $30 million, but management expects improvement in the second half of the year [21] Q&A Session Summary Question: Can you elaborate on the wind tower contribution to sales and profit dollars in the quarter? - Management highlighted strong volume growth in utility structures and noted that the wind tower facilities are performing well, contributing positively to margins [38][40] Question: What are the expectations for the construction products business moving forward? - Management indicated that there are no surprises in the Stabola operations and expressed optimism about demand and orders for the upcoming months [66][70] Question: How are you thinking about pricing versus volume declines in the aggregates business? - The company is focusing on margin rather than volume, with local decision-making to balance cost absorption and pricing strategies [92][93] Question: What is the outlook for the housing market and its impact on the business? - Management expects stabilization and a potential recovery in the housing market in the second half of the year, although it remains cautious about the overall housing demand [106][108]