Arcosa, Inc. · NYSE:ACA
Arcosa — Q3 2020 Earnings Presentation
26 slides from Arcosa's earnings presentation, Oct 29, 2020
Slide 1: Third Quarter 2020 Earnings Update
Third Quarter 2020 Earnings Update October 29, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements Some statements in this presentation, 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, intenti
Slide 3: How to Find Us
How to Find Us OUR WEBSITE NYSE TICKER www.arcosa.com ACA HEADQUARTERS INVESTOR CONTACT Arcosa, Inc. InvestorResources@arcosa.com 500 North Akard Street, Suite 400 Dallas, Tx 75201 3 / Moving Infrastructure Forward
Slide 4: Key messages from today's call
Key messages from today’s call ▪ Our highest priority remains the health and safety of our employees and communities as we face the COVID-19 pandemic. We have continually enhanced our protocols while operating as essential businesses that support critical infrastructure sectors ▪ Our Q3-2020 results
Slide 5: Update on COVID-19
1 Update on COVID-19 5 / Moving Infrastructure Forward
Slide 6: COVID-19 Update
COVID-19 Update We prioritize the health and safety of our people The health and safety of our employees, communities, and other stakeholders is our highest priority. We have put safeguard measures in place at our plants and office locations to meet or exceed the standards set forth by CDC guideline
Slide 7: Q3-2020 Results
2 Q3-2020 Results 7 / Moving Infrastructure Forward
Slide 8: Q3-2020 Financial Results
Q3-2020 Financial Results Revenues grew 10% while strong operating performance and the Cherry acquisition increased Adjusted EBITDA margins Revenues Net Income Adjusted Adjusted EBITDA ($M) ($M) ($M) +10% 490.0 +12% 445.0 73.0 +1% 64.9 33.0 33.3 0.3 2.1 32.7 31.2 Q3-19 Q3-20 Q3-19 Q3-20 Q3-19 Q3-20
Slide 9: Segment Results: Construction Products
Segment Results: Construction Products Adjusted Segment EBITDA grew 40%, driven by Cherry acquisition and improved operating performance in our legacy businesses Revenues Aggregates & Specialty Materials Adjusted Segment EBITDA ($M) Construction Site Support ($M) +40% +27% 36.8 146.9 18.1 115.9 26.2
Slide 10: Segment Results: Energy Equipment
Segment Results: Energy Equipment Revenues grew 6% from a combination of organic growth and our newly acquired traffic and telecom structures, but margins declined due to COVID-related challenges Revenues Adjusted Segment EBITDA Wind Towers and Utility Structures ($M) ($M) Storage Tanks and Other -1
Slide 11: Segment Results: Transportation Products
Segment Results: Transportation Products Adjusted Segment EBITDA increased 38% from barge revenue growth and margin improvements; rail components was down year-over-year but roughly flat sequentially Revenues Adjusted Segment EBITDA ($M) Barges ($M) Rail Components +38% 0% 22.0 120.6 120.7 21.3 43.1
Slide 12: Additional Financial Information
Additional Financial Information Commentary Corporate ▪ Q3-2020 expenses of $17.0M included $2.5M of non-recurring legal expenses, plus $1.4M of acquisition-related expenses costs ▪ We expect corporate expenses to return to the normal run-rate of ~$13M per quarter ▪ We expect a full year tax rate of
Slide 13: Free Cash Flow and Balance Sheet Highlights
Free Cash Flow and Balance Sheet Highlights We generated $93 million of Free Cash Flow in the quarter; net debt/EBITDA of ~0.5X after the Strata acquisition, creates capacity for further disciplined growth Free Cash Flow Net Debt / Adjusted EBITDA $M’s Ratio at end of quarter 115 107 Long term targe
Slide 14: Market Outlook and Long-Term Vision
3 Market Outlook and Long-Term Vision 14 / Moving Infrastructure Forward
Slide 15: Near-Term Outlook
Near-Term Outlook Construction Products and Energy Equipment end markets have remained healthy throughout the pandemic; the liquid barge market has been the most impacted by the COVID-related downturn Near-Term Outlook by Segment Energy Equipment ▪ Positive Outlook % of YTD Adjusted EBITDA (excludin
Slide 16: Strata Materials Highlights
Strata Materials Highlights We acquired Strata Materials for $87M in October 2020 Recycled Aggregates Natural Aggregates • ~80% of Revenue • ~20% of Revenue 6 • 5 locations across DFW • 1 location serving Southeast DFW DFW Locations 2M+ Tons Produced Annually ▪ Strata provides a variety of material
Slide 17: Strata Materials Investment Highlights
Strata Materials Investment Highlights Expands ability to serve DFW customers with a Leverages Cherry’s Gains access to permitted complementary product operating and commercial locations in key growth offering that includes both expertise to drive areas of DFW market natural and recycled incremental
Slide 18: Strategic Repositioning through Disciplined Capital Allocation
Strategic Repositioning through Disciplined Capital Allocation In the 2 years since our spinoff, we have repositioned our portfolio around 3 key platforms, and we will continue to seek attractive organic and acquisition growth in these businesses Aggregates (Natural and Recycled) Specialty Materials
Slide 19: Arcosa's Long-Term Vision
Arcosa’s Long-Term Vision Grow in attractive markets Reduce the complexity Improve long-term Integrate Environmental, where we can achieve and cyclicality of the returns on invested Social, and Governance sustainable competitive overall business capital initiatives (ESG) into our advantages long-ter
Slide 20: Arcosa's Value Proposition
Arcosa’s Value Proposition Leading Experienced Low leverage Disciplined capital Track record of businesses management and ample allocation process executing on Stage serving critical team with history liquidity to to grow in 1 priorities in first 2 infrastructure of managing navigate cycles attracti
Slide 21: Appendix
Appendix
Slide 22: Non-GAAP Measures
Non-GAAP Measures Refer to slides that follow for accompanying reconciliations “EBITDA” is defined as net income plus interest, taxes, depreciation, depletion, and amortization. We adjust EBITDA for certain items that are not reflective of the normal earnings of our business (“Adjusted EBITDA”). GAA
Slide 23: Reconciliation of Adjusted EBITDA and Adjusted Net Income
Reconciliation of Adjusted EBITDA and Adjusted Net Income ($’s in millions) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net income $ 31.2 $ 32.7 $ 96.1 $ 92.2 Add: Interest expense, net 2.2 1.3 8.0 4.1 Provision for income taxes 9.1 9.2 31.3 26.1
Slide 24: Reconciliation of Adjusted Segment EBITDA
Reconciliation of Adjusted Segment EBITDA ($’s in millions) Three Months Ended Nine Months Ended (unaudited) September 30, September 30, 2020 2019 2020 2019 Construction Products Operating Profit $ 20.8 $ 16.5 $ 61.9 $ 45.3 Add: Depreciation, depletion, and amortization expense 15.2 9.7 42.9 27.5 Se
Slide 25: Reconciliation of Free Cash Flow and Net Debt to Adjusted EBITDA
Reconciliation of Free Cash Flow and Net Debt to Adjusted EBITDA ($’s in millions) (unaudited) Three Months Ended March 31, June 30, September 30, December 31, March 31, June 30, September 30, 2019 2019 2019 2019 2020 2020 2020 Cash Provided by Operating Activities $ 125.0 $ 16.2 $ 77.8 $ 139.8 $ 41
Slide 26: Reconciliation of Strata Materials EBITDA
Reconciliation of Strata Materials EBITDA Strata Materials Adjusted EBITDA ($’s in millions) (unaudited) Twelve Months Ended August 31, 2020 Net income $ 5.9 Add: Interest expense, net 0.4 Provision for income taxes 0.0 Depreciation, depletion, and amortization expense 2.8 Pro-Forma adjustments, pri