Slide 1: Arcosa to Acquire Stavola
ARCOSA TO ACQUIRE STAVOLA STRATEGIC UPDATE AND SECOND QUARTER 2024 EARNINGS CALL MOVING INFRASTRUCTURE FORWARD | AUGUST 2, 2024
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS 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
Slide 3: How to Find Us
HOW TO FIND US OUR WEBSITE NYSE TICKER www.arcosa.com ACA HEADQUARTERS Arcosa, Inc. INVESTOR CONTACT 500 North Akard Street, Suite 400 InvestorResources@arcosa.com Dallas, TX 75201 3 I MOVING INFRASTRUCTURE FORWARD I 2024
Slide 4: Today's Key Announcements
TODAY’S KEY ANNOUNCEMENTS STRONG QUARTERLY TRANSFORMATIONAL ONGOING PORTFOLIO PERFORMANCE ACQUISITION OF STAVOLA OPTIMIZATION • Strong Q2 2024 performance • $1.2B acquisition of a leading • Entered definitive agreement aggregates-led provider of to divest Steel Components • All three segments contri
Slide 5: Q2 2024 Results
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Slide 6: Q2 2024 Consolidated Results
Q2 2024 CONSOLIDATED RESULTS Double-digit Adjusted EBITDA growth outpaces revenues with all three segments contributing REVENUES ($M) NET INCOME ($M) ADJUSTED EBITDA ($M) +14% +31% 664.7 112.7 +20% 584.8 44.7 37.3 85.8 45.6 40.9 (3.6) (0.9) Q2-23 Q2-24 Q2-23 Q2-24 Q2-23 Q2-24 Margin 14.7% 17.0% Adju
Slide 7: Second Quarter 2024 Business Segment Highlights
SECOND QUARTER 2024 BUSINESS SEGMENT HIGHLIGHTS CONSTRUCTION PRODUCTS • Accretive impact of recent acquisitions and operating improvements in specialty materials and trench shoring resulted in 360 basis points of margin expansion • Strong aggregates pricing momentum offset volume headwinds from elev
Slide 8: Strong Q2 2024 Segment Results
STRONG Q2 2024 SEGMENT RESULTS CONSTRUCTION PRODUCTS ENGINEERED STRUCTURES TRANSPORTATION PRODUCTS REVENUES ($M) REVENUES ($M) REVENUES ($M) +4% +33% +1% 264.8 276.1 274.8 113.0 113.8 37.7 40.6 207.0 40.5 38.1 227.1 235.5 72.5 75.7 Q2-23 Q2-24 Q2-23 Q2-24 Q2-23 Q2-24 Aggregates & Specialty Materials
Slide 9: 2024 Guidance Increased
2024 GUIDANCE INCREASED Tightened revenue guidance and raised low end of Adjusted EBITDA guidance to reflect strong second quarter results Revenues ($M) Adjusted EBITDA ($M) 2,575 – 2,775 2,600 – 2,720 410 - 440 420 - 440 +15% 368 +24% 2,308 22 346 FY-23 Previous 2024 Updated 2024 FY-23 Previous 202
Slide 10: Strategic Update
02 STRATEGIC UPDATE
Slide 11: Arcosa to Acquire Stavola to Advance Portfolio Transformation - Transaction Overview
ARCOSA TO ACQUIRE STAVOLA TO ADVANCE PORTFOLIO TRANSFORMATION - TRANSACTION OVERVIEW • Arcosa to acquire Stavola for $1.2 billion in cash • Expect to recognize ~$125 million of estimated net tax benefits generated from transaction on a present value PURCHASE PRICE basis • Acquisition multiple of 12.
Slide 12: Stavola Is a Leading Provider of Construction Materials in the Northeast
STAVOLA IS A LEADING PROVIDER OF CONSTRUCTION MATERIALS OPERATING IN THE NORTHEAST BY THE NUMBERS COMPANY HIGHLIGHTS ~5.7M ~2.6M Founded in 1948 with over 75 years of industry experience Tons of Annual Tons of Annual Aggregates Sales Asphalt Sales Strong positions in its core NJ – NY area market, th
Slide 13: Stavola Increases Arcosa's Exposure to Higher Value Construction Products
STAVOLA ACQUISITION INCREASES ARCOSA’S EXPOSURE TO HIGHER VALUE CONSTRUCTION PRODUCTS % Overall Adjusted EBITDA1 56% 44% AGGREGATES ASPHALT • 5 hard rock quarries • Network of 12 asphalt plants • ~4.7M annual tons of natural aggregates • Brand new state-of-the-art asphalt plant sitting • ~350M tons
Slide 14: Arcosa to Divest Steel Components and Other Non-Core Assets
ARCOSA TO DIVEST STEEL COMPONENTS AND OTHER NON-CORE ASSETS Portfolio Updates Announced the sale of our Steel Components business to Stellex Capital Management Steel Components had LTM 6/30/2024 revenues of $150 million and operates under the brands McConway & Torley, Standard Forged Products, a
Slide 15: Compelling Strategic and Financial Rationale
COMPELLING STRATEGIC AND FINANCIAL RATIONALE 1 Extends footprint into the nation’s largest MSA with a scaled and vertically integrated aggregates and FOB asphalt operation 2 Represents attractive valuation for a scaled aggregates-led business with premium financial attributes 3 Increases Arcosa’s ex
Slide 16: Stavola Expands and Diversifies Geographic Footprint
STAVOLA EXPANDS AND DIVERSIFIES CONSTRUCTION PRODUCTS’ GEOGRAPHIC FOOTPRINT Pro Forma for Stavola Acquisition our Aggregates Business Serves 13 of the 50 Largest MSAs Stavola Locations * * Natural Aggregates * * Asphalt Construction Products Segment Recycled Aggregates Incremental Presence from Stav
Slide 17: Stavola Extends Footprint into the Nation's Largest MSA
STAVOLA EXTENDS ARCOSA’S FOOTPRINT INTO THE NATION’S LARGEST MSA Stavola’s Core Markets Are Over-Indexed to Infrastructure Demand Aggregates Demand Asphalt Demand Non-residential Non-residential 5–15% Infrastructure 5–10% Infrastructure 75–85% 80–90% Residential Residential 5–10% 10–20% 29M Tons 9M
Slide 18: Expands Construction Products with High Value-Added Aggregates and Asphalt
EXPANDS CONSTRUCTION PRODUCTS WITH HIGH VALUE-ADDED AGGREGATES AND A VERTICALLY INTEGRATED AND COMPLEMENTARY ASPHALT OPERATION Acquisition of Stavola enhances scale and margin profile of our Construction Products portfolio Pro Forma1 Portfolio Mix % Revenue 100% Construction Construction Products Ot
Slide 19: Acquisition and Divestiture Advance Portfolio Transformation
ACQUISITION OF STAVOLA AND SALE OF STEEL COMPONENTS ARE SIGNIFICANT STEPS TO ADVANCE PORTFOLIO TRANSFORMATION Aligns with our strategy to reduce the complexity and cyclicality of the portfolio % Adjusted EBITDA, excluding corporate costs 2018 Acquisitions LTM PF1 Construction Products Transportation
Slide 20: Arcosa's Long-Term Vision
ARCOSA’S LONG-TERM VISION Integrate Grow in attractive Environmental, Social, Maintain a healthy Reduce the complexity Improve long-term markets where we can and Governance (ESG) balance sheet through and cyclicality of the returns on invested achieve sustainable initiatives into our prudent delever
Slide 21: Ongoing Investment in Our Construction Products Platform
ONGOING INVESTMENT IN OUR CONSTRUCTION PRODUCTS PLATFORM OVER TIME ~$2.7 billion of investment in Construction Products acquisitions as we seek to expand our growth platforms KEY ACQUISITIONS ANNOUNCED Q4 2018 Q1 2020 Q3 2020 Q2 2021 Q3 2021 Q2 2022 TODAY Natural Aggregates PRODUCT Specialty Materia
Slide 22: Disciplined Cash Culture and Track Record of Deleveraging
DISCIPLINED ‘CASH CULTURE’ AND TRACK RECORD OF DELEVERAGING FOLLOWING PAST ACQUISITIONS $M’s Free Cash Flow Net Capital Expenditure $282 Operating Cash Flow $187 $94 $36 $260 $101 $69 $84 $359 $261 $225 Avg. FCF $119 $166 $174 $122M ($77) ($73) ($65) ($106) ($35) ($167) ($189) 2018 2019 2020 2021 20
Slide 23: Strong Pro Forma Cash Flow Supports Accelerated Deleveraging
STRONG PRO FORMA CASH FLOW GENERATION SUPPORTS ACCELERATED DELEVERAGING Committed to maintaining a healthy balance sheet through prudent deleveraging NET DEBT TO ADJUSTED EBITDA OVERVIEW OF FINANCING PLAN 3.7 • Committed $1.2 billion secured bridge financing in place • Permanent financing expected t
Slide 24: Appendix
APPENDIX
Slide 25: Guidance Summary for 2024
GUIDANCE SUMMARY FOR 2024 Guidance will be updated for the acquisition of Stavola and sale of steel components after the transactions close COMMENTARY • $2.60B to $2.72B range for full year 2024 REVENUE • 2023 full year revenue was $2.31B ADJUSTED • $420M to $440M range for full year 2024 EBITDA • 2
Slide 26: Non-GAAP Measures
NON-GAAP MEASURES Refer to slides that follow for accompanying reconciliations “EBITDA” is defined as net income plus interest, taxes, depreciation, depletion, and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for certain items that are not reflective of the normal earnings of our bu
Slide 27: Reconciliation of Adjusted EBITDA and Adjusted Net Income
Reconciliation of Adjusted EBITDA and Adjusted Net Income ($’s in millions) (unaudited) Three Months Ended Full Year June 30, 2024 Guidance(3) 2024 2023 Low High Net income $ 45.6 $ 40.9 $ 172.6 $ 180.7 Add: Interest expense, net 10.7 5.7 34.0 36.0 Provision for income taxes 7.6 5.6 35.3 39.7 Deprec
Slide 28: Reconciliation of Adjusted Segment EBITDA
Reconciliation of Adjusted Segment EBITDA ($’s in millions) (unaudited) Three Months Ended Year Ended Twelve Months Ended June 30, December 31, June 30, 2024 2023 2018 2023 2024 Construction Products Operating Profit $ 39.4 $ 34.4 $ 50.4 $ 138.6 $ 122.9 Add: Depreciation, depletion, and amortization
Slide 29: Reconciliation of Freight-Adjusted Revenues for Construction Products
Reconciliation of Freight-Adjusted Revenues for Construction Products ($’s in millions) (unaudited) Three Months Ended June 30, 2024 2023 Construction Products Revenues $ 276.1 $ 264.8 Less: Freight revenues 27.1 30.5 Freight-Adjusted Revenues $ 249.0 $ 234.3 Adjusted Segment EBITDA(1) $ 69.7 $ 57.2
Slide 30: Reconciliation of Net Debt to Adjusted EBITDA and Free Cash Flow
Reconciliation of Net Debt to Adjusted EBITDA and Free Cash Flow ($’s in millions) (unaudited) As of December 31, December 31, December 31, December 31, December 31, December 31, June 30, Pro Forma June 30, 2024 2018 2019 2020(1) 2021(1) 2022(1) 2023 2024(2) Stavola Pro Forma Total debt excluding de
Slide 31: Reconciliation of Stavola and Steel Components Adjusted EBITDA
Reconciliation of Stavola and Steel Components Adjusted EBITDA (in millions) (unaudited) Twelve Months Ended June 30, 2024 Net Income $ 71.8 Add: Interest expense, net 0.8 Provision for income taxes(1) — Depreciation, depletion, and amortization expense 18.9 EBITDA 91.5 Non-recurring adjustments 9.0
Slide 32: Arcosa Contact Details
500 N. Akard Street, Suite 400 Dallas, Texas 75201 (972) 942-6500 ir.arcosa.com