- Acquisition Adds Specialty Materials
and Aggregates Platforms Serving Attractive Infrastructure
Markets
- Expected to be Slightly Accretive to
Earnings in Year One Following Transaction Completion
- Conference Call Scheduled for 5:30 p.m.
Eastern Time Today to Discuss the Transaction
Arcosa, Inc. (NYSE: ACA) (“Arcosa” or the “Company”), a
manufacturer of infrastructure-related products and services, today
announced that it has reached a definitive agreement with an
affiliate of H.I.G. Capital, LLC to acquire the ACG Materials
business (“ACG”) for approximately $315 million.
ACG is a producer of specialty materials and aggregates with
estimated revenues of approximately $152 million and adjusted
EBITDA of approximately $32 million for the trailing twelve month
period ended August 31, 2018, resulting in a purchase multiple of
approximately 9.8x. Arcosa expects the transaction to be slightly
accretive to earnings in the first year following transaction
completion.
Based in Norman, Oklahoma, ACG mines, mills, processes, and
distributes a broad range of specialty materials and aggregates.
Its primary products are sold to infrastructure and building
products markets, as well as to the agriculture, food, and
pharmaceutical industries. ACG adds 24 active mines and 5
production facilities to Arcosa’s 18 active aggregates and
specialty materials locations, and is expected to expand the
current annualized revenues of Arcosa’s Construction Products
segment by roughly 50%, to approximately $450 million. ACG’s
operating facilities are located in Texas, Florida, Oklahoma,
Kansas, Missouri, Washington, Nevada, and British Columbia.
Commenting on the transaction, Antonio Carrillo, Arcosa’s
President and CEO, noted, “The acquisition of ACG demonstrates
early execution on key elements of our strategic growth plan: to
expand our Construction Products business and to grow in attractive
markets.
“ACG is a strategically important acquisition, adding
significant scale to the Construction Products segment, extending
our specialty product portfolio and geographic reach, and expanding
our end markets. Additionally, ACG’s experienced leadership team
brings a track record of operating excellence and growth. We look
forward to leveraging their expertise as we continue to expand our
Construction Products segment through organic growth initiatives
and acquisitions.”
Paul Harrington, President of ACG, added, “Arcosa provides an
excellent platform for us to continue growing through organic
investments and bolt-on acquisitions. Our management team is very
enthusiastic about this combination, and we look forward to working
with our counterparts in Arcosa’s Construction Products segment to
drive profitable growth.”
The Company expects to fund the approximate $315 million
purchase price with a combination of cash on-hand and advances
under its $400 million five year, credit facility. The transaction,
which has been approved by the Company’s Board of Directors, is
subject to customary closing conditions and regulatory provisions
under the Hart-Scott-Rodino Act.
The transaction is expected to close in the fourth quarter of
2018 or first quarter of 2019. After closing and additional clarity
on purchase price accounting, the Company expects to revisit its
revenue and EBITDA guidance for fiscal year 2019.
Conference Call Information
A conference call is scheduled for 5:30 p.m. Eastern
time today to discuss the acquisition and the Company’s
earnings results for the third quarter ended September 30, 2018. A
slide presentation for this conference call will be posted on the
Company’s website
at http://ir.arcosa.com/Events approximately 15 minutes
before the start of the call. The conference call number
is 866-831-8711 for domestic callers
and 203-518-9865 for international callers. The
conference ID is ARCOSA. An audio playback will be available
through 11:59 p.m. Eastern time on November 28,
2018, by dialing 800-839-9719 for domestic callers
and 402-220-6091 for international callers. A live audio
webcast of the conference call with a slide presentation will be
available to the public and a replay will be available after the
call by visiting Arcosa’s website
at http://ir.arcosa.com/Events.
About Arcosa
Arcosa, Inc., headquartered in Dallas, Texas, is a
manufacturer of infrastructure-related products and services 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,” 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 spin-off from Trinity; tax
treatment of the spin-off; inability to consummate the ACG
Materials acquisition within the expected time periods or at all,
failure to successfully integrate ACG Materials, 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 “Information Statement Summary”, “Risk
Factors” and “Forward-Looking Statements” in the information
statement filed as an exhibit to Arcosa’s Registration Statement on
Form 10, as amended.
Reconciliation of Adjusted EBITDA for ACG(in
millions)(unaudited)
“Adjusted EBITDA” is defined as ACG’s net income plus interest
expense, income taxes, depreciation and amortization, and other
one-time or non-recurring expenses, including management fees, debt
refinancing fees, and non-recurring professional fees. Adjusted
EBITDA is not a calculation based on generally accepted accounting
principles. The amounts included in the Adjusted EBITDA
calculation, however, are derived from amounts included in the
historical statements of operations data. In addition, Adjusted
EBITDA should not be considered as an alternative to net income or
operating income as an indicator of ACG’s operating performance, or
as an alternative to operating cash flows as a measure of
liquidity. We believe Adjusted EBITDA assists investors in
comparing a company’s performance on a consistent basis without
regard to depreciation and amortization and other expenses, which
can vary significantly depending upon many factors.
Adjusted EBITDA (For the Trailing Twelve Months Ended
August 31, 2018) Net income $ (1.8 ) Add: Interest expense
16.6 Provision for income taxes (3.9 ) Depreciation and
amortization expense 15.4 Other adjustments 5.7
Adjusted EBITDA 32.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181114005886/en/
Scott C. BeasleyChief Financial OfficerGail M. PeckSVP, Finance
& TreasurerT 972.942.6500InvestorResources@arcosa.com
David GoldADVISIRY PartnersT
212.661.2220David.Gold@advisiry.com
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