Slide 1: Third Quarter 2022 Earnings Conference Call
Third Quarter 2022 Earnings Conference Call MOVING INFRASTRUCTURE FORWARD | November 3, 2022
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 Arcosa, Inc. INVESTOR CONTACT 500 North Akard Street, Suite 400 InvestorResources@arcosa.com Dallas, TX 75201 3 I MOVING INFRASTRUCTURE FORWARD I 2022
Slide 4: Third Quarter 2022 Highlights
THIRD QUARTER 2022 HIGHLIGHTS • Double-digit Adjusted EBITDA growth led by Engineered Structures • Consolidated year-over-year Adjusted EBITDA margin expansion despite inflationary cost pressures • Completed the divestiture of our storage tanks business in October 2022, an important milestone that r
Slide 5: Arcosa's Value Proposition
ARCOSA’S VALUE PROPOSITION LEADING EXPERIENCED HEALTHY BALANCE DISCIPLINED CAPITAL TRACK RECORD businesses serving management team sheet and ample allocation process to of executing on critical with history of liquidity to navigate grow in attractive strategic priorities as infrastructure managing t
Slide 6: Strategic Update
01 STRATEGIC UPDATE
Slide 7: Arcosa's Long-Term Vision
ARCOSA’S LONG-TERM VISION Grow in attractive markets Reduce the complexity and Improve long-term Integrate Environmental, where we can achieve cyclicality of the overall returns on invested capital Social, and Governance sustainable competitive business initiatives (ESG) into our long- advantages te
Slide 8: Strategic Transformation
STRATEGIC TRANSFORMATION Today Arcosa is a less cyclical and more resilient company, and the recent sale of our storage tanks business enhances our capacity to further expand in our focused growth areas Construction Products has Increased to Actionable Strategic Progress to Position Portfolio for Mo
Slide 9: Divestiture of Storage Tanks Business on October 3, 2022
DIVESTITURE OF STORAGE TANKS BUSINESS ON OCTOBER 3, 2022 Excellent example of improving a business and preparing it for monetization when market conditions are supportive, enabling us to realize significant value through a competitive sale process TRANSACTION OVERVIEW STRATEGIC RATIONALE • In Octobe
Slide 10: Q3 2022 Results
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Slide 11: Q3 2022 Consolidated Results
Q3 2022 CONSOLIDATED RESULTS Double-digit increase in Adjusted EBITDA and expanded margins despite inflationary cost pressures Revenues ($M) Net Income ($M) Adjusted EBITDA ($M) +8% +21% +11% 603.9 33.7 90.8 559.1 1.7 82.0 27.8 4.1 32.0 23.7 Q3-21 Q3-22 Q3-21 Q3-22 Q3-21 Q3-22 Adjusted Margin 14.7%
Slide 12: Segment Results: Construction Products
SEGMENT RESULTS: CONSTRUCTION PRODUCTS Adjusted Segment EBITDA was roughly flat as strong pricing momentum was offset by inflationary cost pressures Revenues ($M) Adjusted Segment EBITDA ($M) +7% -1% 244.2 54.6 53.9 227.4 27.4 25.1 202.3 216.8 Q3-21 Q3-22 Q3-21 Q3-22 Aggregates & Specialty Materials
Slide 13: Segment Results: Engineered Structures
SEGMENT RESULTS: ENGINEERED STRUCTURES Led by utility structures and storage tanks, healthy market demand and strategic pricing measures resulted in 42% increase in Adjusted Segment EBITDA and significant margin expansion Revenues ($M) Adjusted Segment EBITDA ($M) +11% +42% 277.0 45.8 250.1 65.8 60.
Slide 14: Segment Results: Transportation Products
SEGMENT RESULTS: TRANSPORTATION PRODUCTS Anticipated decline in Adjusted EBITDA as the modest recovery in steel components was offset by continued weakness in barge Revenues ($M) Adjusted Segment EBITDA ($M) +1% -20% 81.6 82.7 6.1 23.2 4.9 31.8 58.4 50.9 Q3-21 Q3-22 Q3-21 Q3-22 Barges Steel Componen
Slide 15: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS Track record of deleveraging post acquisitions and increased balance sheet flexibility post storage tanks divestiture Net Debt / Adjusted EBITDA (ratio at end of period) Liquidity ($M) 693 Long term target of 2.0 - 2.5x 2.1 2.0 1.9 1.8 • In October 2022, paid 221 Spun $155M
Slide 16: Updated 2022 Outlook
03 UPDATED 2022 OUTLOOK
Slide 17: Outlook for 2022
OUTLOOK FOR 2022 Strong outlook for growth businesses, offsetting cyclical challenges from wind towers and barge Expect ~23% Increase in Adjusted EBITDA from …Based on Attractive Fundamentals Driving Organic Expansion Growth Businesses in 2022… and Full Year Contributions from Acquisitions Adjusted
Slide 18: Cyclical Businesses
CYCLICAL BUSINESSES In 2022, our cyclical businesses are expected to be at ~25% of their combined 2018 Adjusted EBITDA levels, but long-term fundamentals remain supportive Outlook for Dry Barge Replacement Cycle Remains Intact New builds for N.A. Railcar Market Forecasted to Increase in 2023 Fleet a
Slide 19: Updated 2022 Outlook
UPDATED 2022 OUTLOOK Updated our Adjusted EBITDA guidance range to reflect the divestiture of the storage tanks business on October 3, 2022 Adjusted EBITDA ($M) +15% 325 - 345 320 - 330 • Expect full year 2022 Adjusted EBITDA growth 284 283 of 15% at the mid-point 241 • Updated range to remove stora
Slide 20: ESG Accomplishments
ESG ACCOMPLISHMENTS We continue to take actions to integrate ESG in our long-term strategy and culture Highlights from Our 2021 Sustainability Report • 60% reduction in our TRIR1 since 2019 SAFETY • ARC 100 driving positive and engaged culture of safety at all levels of the organization • Expanded c
Slide 21: Appendix
APPENDIX
Slide 22: Additional Financial Guidance for 2022
ADDITIONAL FINANCIAL GUIDANCE FOR 2022 COMMENTARY • We expect full year 2022 revenues of between $2.20 and $2.25 billion compared to previous guidance range of $2.2 REVENUE to $2.3 billion CORPORATE • ~$14-15M in the fourth quarter, excluding one-time items related to acquisition and divestiture-rel
Slide 23: Non-GAAP Measures
NON-GAAP MEASURES Refer to slides that follow for accompanying reconciliations “EBITDA” is defined as net income plus interest, taxes, depreciation, depletion, and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for certain items that are not reflective of the normal earnings of our bu
Slide 24: Reconciliation of Adjusted EBITDA and Adjusted Net Income
Reconciliation of Adjusted EBITDA and Adjusted Net Income ($’s in millions) (unaudited) Three Months Ended Nine Months Ended Full Year September 30, September 30, 2022 Guidance(1) 2022 2021 2022 2021 Low High Net income $ 32.0 $ 23.7 $ 91.2 $ 60.4 $ 239.5 $ 252.3 Add: Interest expense, net 8.6 7.3 2
Slide 25: Reconciliation of Adjusted Segment EBITDA
Reconciliation of Adjusted Segment EBITDA ($’s in millions) (unaudited) Three Months Ended Nine Months Ended Year Ended Twelve Months Ended September 30, September 30, December 31, September 30, 2022 2021 2022 2021 2021 2020 2019 2018 2022 Construction Products Operating Profit $ 27.6 $ 26.8 $ 72.4
Slide 26: 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 Pro Forma Pro Forma September 30, December 31, December 31, December 31, December 31, March 31, September 30, September 30, 2018(1) 2018 2019 2020(1) 2021(1) 2022(1) June 30, 2022(1) 2022(2) 2022(3)
Slide 27: Reconciliation of Adjusted EBITDA for Cyclical and Growth Businesses
Reconciliation of Adjusted EBITDA for Cyclical and Growth Businesses (in millions) (unaudited) Year Ended Full Year 2022 Guidance(1) December 31, 2018 2019 2020 2021 Low High Consolidated Adjusted EBITDA(2) $ 186.5 $ 240.7 $ 283.7 $ 283.3 $ 320.0 $ 330.0 Add: Corporate Adjusted EBITDA(2) 32.0 43.7 4
Slide 28: Reconciliation of Adjusted EBITDA for Storage Tanks Businesses
Reconciliation of Adjusted EBITDA for Storage Tanks Businesses (in millions) (unaudited) Average for Nine Months Year Ended Years Ended Year Ended Ended December 31, December 31, December 31, September 30, 2018 2019-2021 2021 2022 Storage tanks business: Operating Profit $ (9.5) $ 21.9 $ 36.8 $ 40.8