- All 3 Business Segments Contribute to Significant
Year-over-Year Revenue and Adjusted EBITDA Growth
- A Combination of Organic Growth, the ACG Materials Acquisition,
and Operating Margin Improvements Drives Results Higher
- Full Year 2019 Revenue and Adjusted EBITDA Guidance Raised to
$1.75 Billion to $1.8 Billion and $230 Million to $240 Million,
Respectively
- Two Complementary Acquisitions During the Quarter Will Expand
Product Offerings and Reduce Cyclicality
Arcosa, Inc. (NYSE: ACA) (“Arcosa” or the “Company”), a provider
of infrastructure-related products and solutions, today announced
results for the second quarter ended June 30, 2019.
Second Quarter Highlights
- Revenues increased 23% to $434.1 million
- Net income increased 41% to $31.8 million
- Adjusted EBITDA increased 38% to $64.2 million
- Diluted EPS increased 41% to $0.65
“This was another quarter of solid growth for Arcosa as we
executed on our strategic plan,” commented Antonio Carrillo,
President and Chief Executive Officer. “All three segments
contributed to revenue and Adjusted EBITDA growth in the second
quarter. We achieved higher-than-expected margins in our Energy
Equipment segment, the ramp-up in our barge business continues on
track, and our Construction Products markets remain healthy despite
challenging weather conditions.
“Consistent with our disciplined growth strategy, we completed
two small bolt-on acquisitions in the second quarter, one in
aggregates and one in marine components. Both transactions broaden
our product lines and should reduce our overall cyclicality.
“Based on the strength of our year-to-date results and our
favorable outlook for the second half of this year, we are raising
our 2019 guidance. We now expect 2019 Adjusted EBITDA to range from
$230 million to $240 million, representing a 26% year-over-year
increase at the mid-point of the range,” Mr. Carrillo
concluded.
Segment Results - Construction Products
- Revenues increased 38% to $115.6 million in the second quarter,
benefitting from the December 2018 acquisition of ACG
Materials.
- Second quarter Adjusted Segment EBITDA increased $3.8 million
to $26.5 million, representing a 22.9% margin compared to a 27.1%
margin a year ago.
- The year-over-year margin decrease primarily resulted from
weather-driven volume declines in our operations in Texas,
Oklahoma, and California, as well as the addition of ACG Materials,
which has lower margins than the legacy businesses.
Segment Results - Energy Equipment
- Second quarter revenues were up 15% year-over-year to $204.3
million.
- Adjusted Segment EBITDA increased 107% to $32.3 million,
representing a 15.8% margin compared to a 8.7% margin a year
ago.
- The Company's continuous improvement programs gained momentum
and helped achieve better-than-expected volumes and operating
efficiencies in the wind towers, utility structures, and storage
tank businesses.
- Segment backlog for utility structures and wind towers was
$517.6 million at the end of the second quarter, compared to $633.1
million at the end of 2018. Bidding activity continues to be strong
for utility structures due to increased spending on grid hardening
and reliability initiatives.
- The wind towers business received orders of $36 million in the
second quarter, including orders for a new customer, for delivery
in 2019 and 2020, with pricing reflective of a market transitioning
from production tax credit incentives. In the second half of the
year, overall wind towers margins are expected to be lower than the
first half due to lower pricing in our backlog and inefficiencies
associated with building new tower types.
Segment Results - Transportation Products
- Second quarter revenues increased 26% to $115.3 million.
- Adjusted Segment EBITDA increased 4% to $16.7 million,
representing a margin of 14.5% compared to a 17.5% margin a year
ago.
- Margin performance was largely consistent with the Company's
expectations, due to factors previously discussed, including lower
pricing on a long-term components sales agreement, $1.3 million of
start-up expenses from the re-opening of the Louisiana barge
facility, and the delivery of barges that were priced in a weaker
demand environment in 2018.
- The barge business booked orders for $32 million in the quarter
with improved pricing levels and added to the $203 million of
orders received in the first quarter. Additionally, the level of
order inquiries received to date in the third quarter has been
strong. Barge backlog increased to $349.7 million at the end of
June, compared to $230.5 million at the end of 2018. Approximately
54% of the backlog is expected to be delivered in 2019, with the
balance in 2020.
Capital Allocation and Liquidity
- The Company completed two bolt-on acquisitions in the second
quarter for cash consideration of approximately $23 million. Both
transactions broaden the Company's product lines and should reduce
overall cyclicality.
- For the second quarter, capital expenditures were $21 million,
and the Company continues to expect capital expenditures of between
$70 million and $80 million for 2019.
- In May 2019, the Company declared a quarterly dividend of $0.05
per share that was paid in July 2019.
- The Company did not repurchase any shares under its current
share repurchase authorization during the quarter. Approximately
$39 million remains available under the $50 million authorization
approved in December 2018.
- At the end of the second quarter, cash and cash equivalents
totaled $83.3 million. Combined with unused capacity under its
credit facility, the Company had $337.1 million of liquidity at
June 30, 2019.
2019 Guidance
The Company also announced that it has raised its 2019 full year
adjusted EBITDA guidance to a range of $230 million to $240 million
from its prior guidance range of $215 million to $225 million. The
Company increased its full year 2019 revenue guidance to a range of
$1.75 billion to $1.80 billion from its prior guidance range of
$1.70 billion to $1.80 billion.
Non-GAAP Financial Information
This earnings release contains financial measures that have not
been prepared in accordance with U.S. generally accepted accounting
principles ("GAAP"). Reconciliations of non-GAAP financial measures
to the closest GAAP measure are included in the accompanying tables
to this earnings release.
Presentation of Financials
The spin-off of the Company by Trinity Industries, Inc. (“Former
Parent”; NYSE:TRN) was completed on November 1, 2018. The Company’s
financial statements for periods prior to November 1, 2018 were
prepared on a “carve-out” basis. The carve-out financials of the
Company are not necessarily representative of the amounts that
would have been reflected in the financial statements had the
Company been an independent company during the applicable
periods.
Conference Call Information
A conference call is scheduled for 8:30 a.m. Eastern time on
August 2, 2019 to discuss 2019 second quarter results. To listen to
the conference call webcast, please visit the Investor Relations
section of Arcosa’s website at http://ir.arcosa.com/Events. A slide
presentation for this conference call will be posted on the
Company’s website in advance of the call at
http://ir.arcosa.com/Events. The audio conference call number is
866-342-8591 for domestic callers and 203-518-9713 for
international callers. The conference ID is ARCOSA. An audio
playback will be available through 11:59 p.m. Eastern time on
August 16, 2019, by dialing 800-723-0389 for domestic callers and
402-220-2647 for international callers. A replay of the webcast
will be available for one year on Arcosa’s website at
http://ir.arcosa.com/Events.
About Arcosa
Arcosa, Inc. (NYSE:ACA), headquartered in Dallas, Texas, is a
provider of infrastructure-related products and solutions with
leading positions in construction, energy, and transportation
markets. Arcosa reports its financial results in three principal
business segments: the Construction Products Group, the Energy
Equipment Group, and the Transportation Products Group. For more
information, visit www.arcosa.com.
Some statements in this release, which are not historical facts,
are “forward-looking statements” as defined by the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include statements about Arcosa’s estimates,
expectations, beliefs, intentions or strategies for the future.
Arcosa uses the words “anticipates,” “assumes,” “believes,”
“estimates,” “expects,” “intends,” “forecasts,” “may,” “will,”
“should,” “guidance,” “outlook,” “vision,” and similar expressions
to identify these forward-looking statements. Forward-looking
statements speak only as of the date of this release, and Arcosa
expressly disclaims any obligation or undertaking to disseminate
any updates or revisions to any forward-looking statement contained
herein, except as required by federal securities laws.
Forward-looking statements are based on management’s current views
and assumptions and involve risks and uncertainties that could
cause actual results to differ materially from historical
experience or our present expectations, including but not limited
to assumptions, risks and uncertainties regarding achievement of
the expected benefits of Arcosa’s separation from Trinity
Industries, Inc.; tax treatment of the separation; failure to
successfully integrate the ACG Materials acquisition, or failure to
achieve the expected benefits of the acquisition; market conditions
and customer demand for Arcosa’s business products and services;
the cyclical nature of, and seasonal or weather impact on, the
industries in which Arcosa competes; competition and other
competitive factors; governmental and regulatory factors; changing
technologies; availability of growth opportunities; market
recovery; improving margins; and Arcosa’s ability to execute its
long-term strategy, and such forward-looking statements are not
guarantees of future performance. For further discussion of such
risks and uncertainties, see "Risk Factors" and the
"Forward-Looking Statements" section of "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in
Arcosa's Form 10-K for the year-ended December 31, 2018, as may be
revised and updated by Arcosa's Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K.
Arcosa, Inc.
Condensed Consolidated and Combined
Statements of Operations
(in millions, except per share
amounts)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Revenues
$
434.1
$
353.0
$
845.0
$
707.4
Operating costs:
Cost of revenues
345.7
283.0
678.5
568.6
Selling, engineering, and administrative
expenses
46.1
39.4
86.9
77.0
391.8
322.4
765.4
645.6
Operating profit
42.3
30.6
79.6
61.8
Interest expense
1.6
—
3.5
—
Other, net (income) expense
(0.1
)
1.2
(0.3
)
2.2
1.5
1.2
3.2
2.2
Income before income taxes
40.8
29.4
76.4
59.6
Provision (benefit) for income taxes
9.0
6.8
16.9
14.8
Net income
$
31.8
$
22.6
$
59.5
$
44.8
Net income per common share:
Basic
$
0.66
$
0.46
$
1.23
$
0.92
Diluted
$
0.65
$
0.46
$
1.21
$
0.92
Weighted average number of shares
outstanding(1):
Basic
47.8
48.8
47.9
48.8
Diluted
48.3
48.8
48.4
48.8
(1) For periods prior to the separation
the denominator for basic and diluted net income per common share
was calculated using the 48.8 million shares of common stock
outstanding immediately following the separation.
Arcosa, Inc.
Condensed Segment Data
(in millions)
(unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
Revenues:
2019
2018
2019
2018
Construction aggregates
$
93.2
$
61.1
$
181.6
$
113.7
Other
22.4
22.8
40.0
40.4
Construction Products Group
115.6
83.9
221.6
154.1
Wind towers and utility structures
151.0
133.0
309.6
280.5
Other
53.3
45.4
103.8
94.2
Energy Equipment Group
204.3
178.4
413.4
374.7
Inland barges
66.1
42.9
115.5
73.7
Steel components
49.2
48.6
97.3
107.1
Transportation Products Group
115.3
91.5
212.8
180.8
Segment Totals before Eliminations
435.2
353.8
847.8
709.6
Eliminations
(1.1
)
(0.8
)
(2.8
)
(2.2
)
Consolidated and Combined Total
$
434.1
$
353.0
$
845.0
$
707.4
Three Months Ended June
30,
Six Months Ended June
30,
Operating profit (loss):
2019
2018
2019
2018
Construction Products Group
$
17.5
$
17.6
$
28.8
$
30.0
Energy Equipment Group
25.0
8.2
53.2
25.7
Transportation Products Group
12.6
12.7
20.9
21.7
Segment Totals before Corporate
Expenses
55.1
38.5
102.9
77.4
Corporate
(12.8
)
(7.9
)
(23.3
)
(15.6
)
Consolidated and Combined Total
$
42.3
$
30.6
$
79.6
$
61.8
Backlog:
June 30, 2019
June 30, 2018
Energy Equipment Group:
Wind towers and utility structures
$
517.6
$
780.1
Other
$
45.3
$
53.2
Transportation Products Group:
Inland barges
$
349.7
$
198.4
Arcosa, Inc.
Condensed Consolidated Balance
Sheets
(in millions)
(unaudited)
June 30, 2019
December 31, 2018
Current assets:
Cash and cash equivalents
$
83.3
$
99.4
Receivables, net of allowance
228.7
291.4
Inventories
291.0
252.5
Other
19.9
24.1
Total current assets
622.9
667.4
Property, plant, and equipment, net
814.3
803.0
Goodwill
631.4
615.2
Deferred income taxes
7.6
6.9
Other assets
95.7
79.7
$
2,171.9
$
2,172.2
Current liabilities:
Accounts payable
$
73.0
$
86.2
Accrued liabilities
129.0
121.5
Current portion of long-term debt
1.1
1.8
Total current liabilities
203.1
209.5
Debt
106.7
183.7
Deferred income taxes
69.4
58.3
Other liabilities
58.4
36.2
437.6
487.7
Stockholders' equity:
Common stock
0.5
0.5
Capital in excess of par value
1,679.8
1,685.7
Retained earnings
74.0
19.5
Accumulated other comprehensive loss
(20.0
)
(17.7
)
Treasury stock
—
(3.5
)
1,734.3
1,684.5
$
2,171.9
$
2,172.2
Arcosa, Inc.
Condensed Consolidated and Combined
Cash Flow Statements
(in millions)
(unaudited)
Six Months Ended June
30,
2019
2018
Operating activities:
Net income
$
59.5
$
44.8
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion, and
amortization
41.5
32.9
Provision for deferred income taxes
9.3
4.7
Changes in current assets and
liabilities
26.0
16.7
Other
4.9
6.2
Net cash provided by operating
activities
141.2
105.3
Investing activities:
Proceeds from dispositions of property and
other assets
2.2
1.1
Capital expenditures
(38.9
)
(20.4
)
Acquisitions, net of cash acquired
(22.8
)
(25.0
)
Net cash required by investing
activities
(59.5
)
(44.3
)
Financing activities:
Payments to retire debt
(80.7
)
(0.1
)
Shares repurchased
(8.0
)
—
Dividends paid to common stockholders
(5.0
)
—
Purchase of shares to satisfy employee tax
on vested stock
(4.1
)
—
Net transfers to Former Parent and
affiliates
—
(54.0
)
Other
—
(3.1
)
Net cash required by financing
activities
(97.8
)
(57.2
)
Net increase (decrease) in cash and cash
equivalents
(16.1
)
3.8
Cash and cash equivalents at beginning of
period
99.4
6.8
Cash and cash equivalents at end of
period
$
83.3
$
10.6
Arcosa, Inc. Reconciliation of Consolidated and Combined
Adjusted EBITDA ($ in millions) (unaudited)
GAAP does not define “Earnings Before Interest, Taxes,
Depreciation, Depletion and Amortization” (“EBITDA”) and it should
not be considered as an alternative to earnings measures defined by
GAAP, including net income. We use this metric to assess the
operating performance of our consolidated business, as a metric for
incentive-based compensation, and as a basis for strategic planning
and forecasting as we believe that it closely correlates to
long-term shareholder value, and we believe this metric also
assists investors in comparing a company's performance on a
consistent basis without regard to depreciation, depletion, and
amortization, which can vary significantly depending on many
factors. We adjust consolidated EBITDA for certain non-routine
items (“Adjusted EBITDA”) to provide a more consistent comparison
of earnings performance from period to period, which we also
believe assists investors in comparing a company's performance on a
consistent basis. “Adjusted EBITDA Margin” is defined as Adjusted
EBITDA divided by Revenues.
Three Months Ended June
30,
Six Months Ended June
30,
Full Year 2019
Guidance
2019
2018
2019
2018
Low
High
Revenues
$
434.1
$
353.0
$
845.0
$
707.4
$
1,750.0
$
1,800.0
Net income
31.8
22.6
59.5
44.8
100.0
111.0
Add:
Interest expense, net
1.2
—
2.8
—
5.0
5.0
Provision (benefit) for income taxes
9.0
6.8
16.9
14.8
31.0
35.0
Depreciation, depletion, and amortization
expense
21.7
15.8
41.5
32.9
92.0
87.0
EBITDA
63.7
45.2
120.7
92.5
228.0
238.0
Add:
Impact of the fair value mark up of
acquired inventory
0.2
—
1.6
—
2.0
2.0
Other, net (income) expense(1)
0.3
1.2
0.4
2.2
—
—
Adjusted EBITDA
$
64.2
$
46.4
$
122.7
$
94.7
$
230.0
$
240.0
Adjusted EBITDA Margin
14.8
%
13.1
%
14.5
%
13.4
%
13.1
%
13.3
%
(1) Included in Other net expense was the
impact of foreign currency exchange transactions of $0.5 million
and $1.2 million for the three months ended June 30 2019 and 2018
respectively and $1.0 million and $2.2 million for the six months
ended June 30 2019 and 2018 respectively.
Arcosa, Inc. Reconciliation of Adjusted Segment EBITDA ($
in millions) (unaudited)
“Segment EBITDA” is defined as segment operating profit plus
depreciation, depletion, and amortization. GAAP does not define
Segment EBITDA and it should not be considered as an alternative to
earnings measures defined by GAAP, including segment operating
profit. We use this metric to assess the operating performance of
our businesses, as a metric for incentive-based compensation, and
as a basis for strategic planning and forecasting as we believe
that it closely correlates to long-term shareholder value, and we
believe this metric also assists investors in comparing a company's
performance on a consistent basis without regard to depreciation,
depletion, and amortization, which can vary significantly depending
on many factors. We adjust Segment EBITDA for certain non-routine
items (“Adjusted Segment EBITDA”) to provide a more consistent
comparison of earnings performance from period to period, which we
also believe assists investors in comparing a company's performance
on a consistent basis. "Adjusted Segment EBITDA Margin" is defined
as Adjusted Segment EBITDA divided by Revenues.
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
Construction Products
Revenues
$
115.6
$
83.9
$
221.6
$
154.1
Operating Profit
17.5
17.6
28.8
30.0
Add: Depreciation, depletion, and
amortization expense
9.0
5.1
17.8
10.2
Segment EBITDA
26.5
22.7
46.6
40.2
Add: Impact of the fair value mark up of
acquired inventory
—
—
1.4
—
Adjusted Segment EBITDA
$
26.5
$
22.7
$
48.0
$
40.2
Adjusted Segment EBITDA Margin
22.9
%
27.1
%
21.7
%
26.1
%
Energy Equipment
Revenues
$
204.3
$
178.4
$
413.4
$
374.7
Operating Profit
25.0
8.2
53.2
25.7
Add: Depreciation and amortization
expense
7.3
7.4
14.3
15.2
Adjusted Segment EBITDA
$
32.3
$
15.6
$
67.5
$
40.9
Adjusted Segment EBITDA Margin
15.8
%
8.7
%
16.3
%
10.9
%
Transportation Products
Revenues
$
115.3
$
91.5
$
212.8
$
180.8
Operating Profit
12.6
12.7
20.9
21.7
Add: Depreciation and amortization
expense
3.9
3.3
7.7
7.5
Segment EBITDA
16.5
16.0
28.6
29.2
Add: Impact of the fair value mark up of
acquired inventory
0.2
—
0.2
—
Adjusted Segment EBITDA
$
16.7
$
16.0
$
28.8
$
29.2
Adjusted Segment EBITDA Margin
14.5
%
17.5
%
13.5
%
16.2
%
Operating Profit (loss) - Corporate
$
(12.8
)
$
(7.9
)
$
(23.3
)
$
(15.6
)
Add: Corporate depreciation expense
1.5
—
1.7
—
Adjusted EBITDA
$
64.2
$
46.4
$
122.7
$
94.7
Arcosa, Inc. Reconciliation of Adjusted Net Income and
Adjusted Diluted EPS (unaudited)
GAAP does not define “Adjusted Net Income” and it should not be
considered as an alternative to earnings measures defined by GAAP,
including net income. We use this metric to assess the operating
performance of our consolidated business. We adjust net income for
certain non-routine items to provide investors with what we believe
is a more consistent comparison of earnings performance from period
to period.
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
(in millions)
Net Income
$
31.8
$
22.6
$
59.5
$
44.8
Impact of the fair value mark up of
acquired inventory
0.2
—
1.6
—
Tax impact
—
—
(0.4
)
—
Adjusted Net Income
$
32.0
$
22.6
$
60.7
$
44.8
GAAP does not define “Adjusted Diluted EPS” and it should not be
considered as an alternative to earnings measures defined by GAAP,
including diluted EPS. We use this metric to assess the operating
performance of our consolidated business. We adjust diluted EPS for
certain non-routine items to provide investors with what we believe
is a more consistent comparison of earnings performance from period
to period.
Three Months Ended June
30,
Six Months Ended June
30,
2019
2018
2019
2018
(in dollars per share)
Diluted EPS
$
0.65
$
0.46
$
1.21
$
0.92
Impact of the fair value mark up of
acquired inventory
—
—
0.02
—
Adjusted Diluted EPS
$
0.65
$
0.46
$
1.23
$
0.92
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190801005879/en/
Scott C. Beasley Chief Financial Officer Gail M. Peck SVP,
Finance & Treasurer T 972.942.6500
InvestorResources@arcosa.com
David Gold ADVISIRY Partners T 212.661.2220
David.Gold@advisiry.com
Arcosa (NYSE:ACA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Arcosa (NYSE:ACA)
Historical Stock Chart
From Apr 2023 to Apr 2024