Arcosa, Inc. · NYSE:ACA
Arcosa — Q2 2020 Earnings Presentation
31 slides from Arcosa's earnings presentation, Jul 31, 2020
Slide 1: Second Quarter 2020 Earnings Update
Second Quarter 2020 Earnings Update July 31, 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; we have continued to enhance the protocols at our plants and offices to meet or exceed CDC standards and other guidelines, while operating as essential businesses that support critic
Slide 5: Today’s Discussion
Today’s Discussion 1 2 3 4 Update on Q2-2020 Free Cash Managing COVID-19 Results Flow, Liquidity, for the Long and Capital Term Allocation Highlights 5 / Moving Infrastructure Forward
Slide 6: Update on COVID-19
1 Update on COVID-19 6 / Moving Infrastructure Forward
Slide 7: 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 8: Q2-2020 Results
2 Q2-2020 Results 8 / Moving Infrastructure Forward
Slide 9: Q2-2020 Financial Results
Q2-2020 Financial Results Revenues grew 15% while strong operating performance increased Adjusted EBITDA margins Revenues Net Income Adjusted EBITDA ($M) ($M) ($M) +15% 498.5 +23% 78.7 434.1 +5% 64.2 33.3 31.8 Q2-19 Q2-20 Q2-19 Q2-20 Q2-19 Q2-20 Margin 14.8% 15.8% See Adjusted EBITDA reconciliations
Slide 10: Segment Results: Construction Products
Segment Results: Construction Products Adjusted Segment EBITDA growth of 46%, driven by Cherry acquisition and strong natural aggregates performance Revenues Aggregates & Specialty Materials Adjusted Segment EBITDA Construction Site Support ($M) ($M) +46% +28% 38.6 148.2 16.1 115.6 26.5 22.4 132.1 9
Slide 11: Segment Results: Energy Equipment
Segment Results: Energy Equipment Revenue growth of 9%, driven by transmission structures plus addition of new traffic structures product line Revenues Adjusted Segment EBITDA Wind Towers and Utility Structures ($M) ($M) Storage Tanks and Other -6% +9% 32.3 222.8 30.4 204.3 45.9 53.3 176.9 151.0 Q2-
Slide 12: Segment Results: Transportation Products
Segment Results: Transportation Products Adjusted Segment EBITDA growth of 26% from significant barge revenue and margin improvements Revenues Adjusted Segment EBITDA ($M) Barges ($M) Rail Components +26% +11% 21.1 128.2 115.3 21.2 16.7 49.2 107.0 66.1 Q2-19 Q2-20 Q2-19 Q2-20 Margin 14.5% 16.5% See
Slide 13: Free Cash Flow, Liquidity, and Capital Allocation Highlights
3 Free Cash Flow, Liquidity, and Capital Allocation Highlights 13 / Moving Infrastructure Forward
Slide 14: Free Cash Flow and Liquidity
Free Cash Flow and Liquidity We generated $56 million of Free Cash Flow, repaid the precautionary $100 million borrowing on our credit facility, and ended the quarter with $148 million of cash Free Cash Flow Available Liquidity, End of Q2 $M’s $M’s 522 115 107 Cash 148 56 56 6 Qtr Avg $58 During Q2,
Slide 15: Balance Sheet Highlights
Balance Sheet Highlights Our strong free cash flow generation reduced our net debt / Adjusted EBITDA to ~0.4x ~0.4x Net Debt / Adjusted EBITDA at the end Q2-20, well below …with minimal debt maturities until 2025 our long term target… Net Debt / Adjusted EBITDA Debt Maturity Schedule Ratio since spi
Slide 16: Capital Allocation Approach for 2020
Capital Allocation Approach for 2020 We are managing cash tightly in the face of macroeconomic uncertainty, but we are still pursuing selective investments to execute on our long-term growth strategies Strategic growth through Return of capital Organic investments acquisitions to shareholders ▪ Dela
Slide 17: Capital Allocation to Grow in Adjacent Infrastructure Products
Capital Allocation to Grow in Adjacent Infrastructure Products In 2020, we have invested in 3 acquisitions plus organic growth to build on our strong position in transmission and distribution structures CAPITAL DEPLOYED DESCRIPTION IN 2020 ▪ March 2020 acquisition of HSI, a leading traffic $26M Traf
Slide 18: Managing for the Long Term
4 Managing for the Long Term 18 / Moving Infrastructure Forward
Slide 19: Arcosa’s Long-Term Vision
Arcosa’s Long-Term Vision Grow in attractive markets Reduce the complexity Improve long-term Integrate Environmental, where we can achieve and cyclicality of the returns on invested Social, and Governance sustainable competitive overall business capital initiatives (ESG) into our advantages long-ter
Slide 20: Near-Term Outlook
Near-Term Outlook Construction Products and Energy Equipment end markets have remained healthy, while Transportation Products has seen a significant decline in new order activity from the COVID-related slowdown Near-Term Outlook by Segment Energy Equipment ▪ Positive Outlook % of Q2 Adjusted EBITDA
Slide 21: Positive Long-Term Fundamentals
Positive Long-Term Fundamentals We remain confident in the long-term fundamentals of our key markets Long-Term Outlook ▪ Long-term fundamentals remain strong in our key Texas and Gulf Coast geographies, driven by Construction projected population growth, fiscal health, and major infrastructure proje
Slide 22: Repositioning Arcosa
Repositioning Arcosa Our second quarter performance highlights our progress since 2018 in creating a more stable base of revenue and profit, anchored around core infrastructure products Adjusted Segment Adjusted Segment Q2-2018 EBITDA Q2-2020 EBITDA ($M’s) ($M’s) ▪ Natural aggregates operations, ▪ N
Slide 23: Expansion into Adjacent Infrastructure-Related Product Lines
Expansion into Adjacent Infrastructure-Related Product Lines With our acquisitions, we have expanded our product offering in the $3B transmission and distribution markets, as well as entered new large markets tied to infrastructure growth END MARKETS AND PRODUCT LINES RENEWABLE ELECTRICITY POWER TRA
Slide 24: Long-term Vision: ESG Update
Long-term Vision: ESG Update As we integrate ESG initiatives into our long-term strategy, our operations teams have taken an active role in pursuing initiatives that promote environmental responsibility Arcosa’s Meyer Utility Structures’ Arcosa Marine is sponsoring a Arcosa’s Construction Products g
Slide 25: Long-term Vision: ESG Update
Long-term Vision: ESG Update We are committed to developing reportable metrics and establishing meaningful goals in areas important to our stakeholders. Our People Our Environment Employee Health & Safety Energy Management Diversity Air Quality Talent Management GHG Emissions Community Relations Wat
Slide 26: Arcosa’s Value Proposition
Arcosa’s Value Proposition Leading Experienced Low leverage Disciplined capital Track record of businesses management and ample allocation process executing on Stage serving critical team with history liquidity to to grow in 1 priorities in first infrastructure of managing navigate cycles attractive
Slide 27: Appendix
Appendix
Slide 28: Non-GAAP Measures
Non-GAAP Measures Refer to slides that follow for accompanying reconciliations “EBITDA” is defined as net income plus interest, taxes, depreciation, depletion, and amortization. We adjust EBITDA for certain items that are not reflective of the normal earnings of our business (“Adjusted EBITDA”). GAA
Slide 29: Reconciliation of Adjusted EBITDA and Adjusted Net Income
Reconciliation of Adjusted EBITDA and Adjusted Net Income ($’s in millions) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Net income $ 33.3 $ 31.8 $ 64.9 $ 59.5 Add: Interest expense, net 2.7 1.2 5.8 2.8 Provision for income taxes 11.8 9.0 22.2 16.9 (1) Deprec
Slide 30: Reconciliation of Adjusted Segment EBITDA
Reconciliation of Adjusted Segment EBITDA ($’s in millions) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Construction Products Operating Profit $ 24.3 $ 17.5 $ 41.1 $ 28.8 Add: Depreciation, depletion, and amortization expense 13.9 9.0 27.7 17.8 Segment EBITD
Slide 31: 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, 2019 2019 2019 2019 2020 2020 Cash Provided by Operating Activities $ 125.0 $ 16.2 $ 77.8 $ 139.8 $ 41.5 $ 78.8 Capital E