Arcosa, Inc. · NYSE:ACA
Arcosa — Q4 2020 Earnings Presentation
28 slides from Arcosa's earnings presentation, Feb 25, 2021
Slide 1: Fourth Quarter and Full Year 2020 Earnings Conference Call
Fourth Quarter and Full Year 2020 Earnings Conference Call February 25, 2021
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 2020 Highlights ▪ Achieved 11% Revenue growth and 18% Adjusted EBITDA growth as our portfolio of infrastructure-related businesses showed resilience during the COVID crisis ▪ Generated $178M of Free Cash Flow, marking the second year in a row of free cash flow conversi
Slide 5: Arcosa's Value Proposition
Arcosa’s Value Proposition Leading Experienced Low leverage Disciplined capital Track record of businesses management and ample allocation process executing on serving critical team with history liquidity to to grow in strategic priorities infrastructure of managing navigate cycles attractive market
Slide 6: Update on COVID-19
1 Update on COVID-19 6 / Moving Infrastructure Forward
Slide 7: COVID-19 Update
COVID-19 Update We prioritize the health and safety of our people The health and safety of our employees, communities, and other stakeholders is our highest priority. We have put safeguard measures in place at our plants and office locations to meet or exceed the standards set forth by CDC guideline
Slide 8: Q4 and Full Year 2020 Results
2 Q4 and Full Year 2020 Results 8 / Moving Infrastructure Forward
Slide 9: Q4-2020 Financial Results
Q4-2020 Financial Results Revenue grew 3% and Adjusted EBITDA grew 6% with an increased percentage from Construction Products Revenues Net Income Adjusted Adjusted EBITDA ($M) ($M) ($M) +3% +6% 446.9 458.9 Decline in Adjusted Net Income primarily due to higher depreciation and 56.4 amortization from
Slide 10: Full Year 2020 Financial Results
Full Year 2020 Financial Results 2020 was another year of revenue growth and margin improvement, as our portfolio of infrastructure-related businesses showed resilience during the COVID crisis Revenues Net Income Adjusted Adjusted EBITDA ($M) ($M) ($M) +11% +18% 1,935.6 283.7 1,736.9 +4% 240.7 1,460
Slide 11: Segment Results: Construction Products
Segment Results: Construction Products Adjusted Segment EBITDA grew 73% in Q4 and 50% for the full year, driven by the Cherry acquisition and improved performance in the legacy aggregates business Aggregates & Specialty Materials Construction Site Support Q4 2020 Full Year 2020 Revenues Adjusted Seg
Slide 12: Segment Results: Engineered Structures
Segment Results: Engineered Structures Adjusted Segment EBITDA was lower in Q4, primarily from lower wind tower production; Full Year Revenue and EBITDA were in line with expectations as demand across the segment remained resilient Utility, Wind, and Related Structures Storage Tanks Q4 2020 Full Yea
Slide 13: Segment Results: Transportation Products
Segment Results: Transportation Products Adjusted Segment EBITDA was lower in Q4 as we strategically extended our backlog, but Full Year EBITDA was up 22%, driven by Barge growth Barge Steel Components Q4 2020 Full Year 2020 Revenues Adjusted Segment EBITDA Revenues Adjusted Segment EBITDA ($M) ($M)
Slide 14: Balance Sheet Highlights
Balance Sheet Highlights We generated $178 million of Free Cash Flow during the year; net debt/EBITDA of ~0.5X creates capacity for further disciplined growth Net Debt / Adjusted EBITDA Free Cash Flow Ratio at end of quarter $M’s Long term target of 2-2.5x 273 178 0.5 0.4 0.5 0.1 0.2 74 -0.1 -0.1 -0
Slide 15: Additional Q4 and Full Year 2020 Financial Information
Additional Q4 and Full Year 2020 Financial Information Commentary Corporate ▪ Q4-2020 expenses were consistent with our normal run-rate of ~$13-14M per quarter, after costs adding back $1.6M of acquisition-related expenses Tax Rate / ▪ Full year tax rate was 23%, roughly flat with 2019's rate Other
Slide 16: 2021 Outlook
3 2021 Outlook 16 / Moving Infrastructure Forward
Slide 17: Strategic Positioning since 2018
Strategic Positioning since 2018 Our portfolio is significantly more stable than when we became an independent company in 2018, led by the growth of Construction Products Construction Products made up 42% of our EBITDA in …led by the growth of aggregates and specialty 2020, significantly higher than
Slide 18: 2021 Outlook
2021 Outlook Our guidance is lower than our 2020 performance primarily because of a COVID-led downturn in Barge, but we are optimistic on the health of our Construction Products and Engineered Structures markets Positives moving into 2021 Challenges moving into 2021 ▪ Resilient public and private co
Slide 19: Long-Term Fundamentals are Strong
Long-Term Fundamentals are Strong Our businesses are well aligned with long-term trends around growth and replacement of aging North American infrastructure Construction Products (42%) Engineered Structures (35%) Transportation Products (23%) ▪ Infrastructure: Favorable nationwide trends in ▪ Transm
Slide 20: 2020 ESG in Review
2020 ESG in Review We have integrated Environmental, Social, and Governance (ESG) responsibility into our daily practices and long-term strategy ▪ Finalized materiality assessment to align with stakeholder needs ▪ Named full-time Director of ESG ▪ Published key policy statements (July 2020) and a 20
Slide 21: 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 22: Appendix
Appendix
Slide 23: Additional Financial Guidance for 2021
Additional Financial Guidance for 2021 Commentary ▪ ~$13-14M per quarter, excluding potential one-time items related to acquisitions and integration Corporate costs ▪ We expect a full year 2021 tax rate of ~23-25% Tax Rate ▪ $100-110M in 2021 (~$80M of maintenance capex + ~$20-$30M of growth project
Slide 24: Non-GAAP Measures
Non-GAAP Measures Refer to slides that follow for accompanying reconciliations “EBITDA” is defined as net income plus interest, taxes, depreciation, depletion, and amortization. We adjust EBITDA for certain items that are not reflective of the normal earnings of our business (“Adjusted EBITDA”). GAA
Slide 25: Reconciliation of Adjusted EBITDA and Adjusted Net Income
Reconciliation of Adjusted EBITDA and Adjusted Net Income ($’s in millions) (unaudited) Three Months Ended Full Year 2021 Year Ended December 31, December 31, Guidance 2020 2019 2020 2019 2018 Low High Net income $ 10.5 $ 21.1 $ 106.6 $ 113.3 $ 75.7 $ 88.0 $ 103.0 Add: Interest expense, net 2.2 1.3
Slide 26: Reconciliation of Adjusted Segment EBITDA
Reconciliation of Adjusted Segment EBITDA ($’s in millions) Three Months Ended (unaudited) Year Ended December 31, December 31, 2020 2019 2020 2019 2018 Construction Products Operating Profit $ 12.8 $ 7.4 $ 74.7 $ 52.7 $ 50.4 Add: Depreciation, depletion, and amortization expense 17.2 10.5 60.1 38.0
Slide 27: 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 Year Ended December 31, December 31, 2020 2019 2020 2019 2018 Cash Provided by Operating Activities $ 33.2 $ 139.8 $ 259.9 $ 358.8 $ 118.5 Capital Expenditures (25.2) (24.4) (82.1) (85.4
Slide 28: 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 - Depreciation, depletion, and amortization expense 2.8 Pro-Forma adjustments, prima