Arcosa, Inc. · NYSE:ACA
Arcosa — Q4 2019 Earnings Presentation
26 slides from Arcosa's earnings presentation, Feb 27, 2020
Slide 1: Fourth Quarter and Full Year 2019 Earnings
Fourth Quarter and Full Year 2019 Earnings February 27, 2020
Slide 2: 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 2 / Moving Infrastructure Forward
Slide 3: 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 4: Agenda
Agenda Strategic Highlights Segment Commentary and Outlook Long-term Vision and Capital Allocation 4 / Moving Infrastructure Forward
Slide 5: Agenda
Agenda Strategic Highlights Segment Commentary and Outlook Long-term Vision and Capital Allocation 5 / Moving Infrastructure Forward
Slide 6: Strategic Highlights
Strategic Highlights Solid financial $273M of Free 2020 projected to Deployed more Completed our be another year of than $600M into initial ESG performance in Cash Flow in growth, with solid Construction Materiality first year. 2019 2019, as our fundamentals Products Assessment, Adjusted new ‘cash a
Slide 7: 2019 Financial Results
2019 Financial Results Full Year Adjusted EBITDA increased 29%, driven by organic growth, acquisitions, and operating improvements 4th Quarter ($M’s) Full Year ($M’s) Revenues Net Income Adjusted EBITDA Revenues Net Income Adjusted EBITDA +19% Adjusted Reported +17% Adjusted Reported +19% 27.7 53.1
Slide 8: 2020 Outlook
2020 Outlook We are expecting another year of revenue and EBITDA growth, with solid fundamentals across most of our markets and backlogs providing good production visibility Positives moving into 2020 Challenges moving into 2020 ▪ Continued strength in Construction Products, led by healthy ▪ Softnes
Slide 9: Cherry Acquisition Update
Cherry Acquisition Update Acquisition closed in January and integration is underway; Cherry will be a platform for additional value creation in Construction Products Expands aggregates business into Offers compelling competitive Provides levers for additional attractive Houston market, a key advanta
Slide 10: ESG Update
ESG Update Our Materiality Assessment identified 11 significant topics across our businesses; we plan to publish our initial Sustainability Report for full year 2020 Our Our People & Our Environment Products Communities Employee Health and Safety Energy Management Product Use and Quality Diversity A
Slide 11: Agenda
Agenda Strategic Highlights Segment Commentary and Outlook Long-term Vision and Capital Allocation 11 / Moving Infrastructure Forward
Slide 12: Segment Results: Construction Products
Segment Results: Construction Products Full Year EBITDA growth of 26%, although lower margins, primarily from ACG acquisition 4th Quarter ($M’s) Full Year ($M’s) Revenues Adjusted Segment Revenues Adjusted Segment EBITDA EBITDA +56% +44% +50% +26% 102.2 17.9 439.7 92.1 16.0 75.0 73.1 12.4 292.3 65.6
Slide 13: Segment Results: Energy Equipment
Segment Results: Energy Equipment Full Year EBITDA growth of 58% through organic growth and significant margin improvements 4th Quarter ($M’s) Full Year ($M’s) Revenues Adjusted Segment Revenues Adjusted Segment EBITDA EBITDA +3% +19% +7% +58% 207.0 213.0 27.6 836.6 128.6 780.1 57.0 23.2 211.2 51.6
Slide 14: Segment Results: Transportation Products
Segment Results: Transportation Products Full Year EBITDA was roughly flat, as rail component weakness offset solid barge recovery 4th Quarter ($M’s) Full Year ($M’s) Revenues Adjusted Segment Revenues Adjusted Segment EBITDA EBITDA +30% +12% +19% 0% 132.3 19.0 465.7 63.9 63.7 17.0 31.4 391.4 102.1
Slide 15: Free Cash Flow Generation
Free Cash Flow Generation $273 Million of Free Cash Flow in 2019, as our ‘cash culture’ begins to show progress …leaving us with ~0.5x Net Debt / Adjusted EBITDA after the We generated $273M of Free Cash Flow in 2019... Cherry acquisition Free Cash Flow Net Debt / Adjusted EBITDA Operating Cash Flow
Slide 16: Additional 2020 financial information
Additional 2020 financial information FY 2020 Guidance ▪ $95-$105M, higher than 2019’s $85M due to Cherry acquisition and organic growth Capital Expenditures projects to expand product lines and capacity ▪ We expect working capital to be roughly flat for the year, excluding any impact from Working a
Slide 17: Agenda
Agenda Strategic Highlights Segment Commentary and Outlook Long-term Vision and Capital Allocation 17 / Moving Infrastructure Forward
Slide 18: Long-Term Vision for Arcosa
Long-Term Vision for Arcosa Integrate Environmental, Social, Improve and Governance Reduce long-term returns initiatives (ESG) into our the complexity and on invested capital long-term strategy Grow cyclicality of the overall in attractive markets business where we can achieve sustainable competitiv
Slide 19: Capital Allocation Since Spin-Off
Capital Allocation Since Spin-Off Disciplined capital allocation is a key component of advancing our long-term vision Organic Strategic Growth through Return of capital investments Acquisitions to shareholders ▪ $85M of Capital ▪ $640M of acquisitions since spin ▪ $25M returned to Expenditures in sh
Slide 20: Strategic Growth through Acquisitions
Strategic Growth through Acquisitions We have deployed more than $600M on Construction Products acquisitions since the time of the spin, due to favorable long-term fundamentals and acquisition opportunities Attractive fundamentals of Aggregates Growth of Construction Products segment and Specialty M
Slide 21: Organic investments
Organic investments We are allocating capex to grow in attractive markets where we can build sustainable competitive advantages Aggregates and Specialty Materials investments Utility Structures organic investments Reserve acquisitions to expand in current geographies Adjacent product lines Greenfiel
Slide 22: Appendix
Appendix
Slide 23: Reconciliation of Consolidated and Combined Adjusted EBITDA and Adjusted Net Income
Reconciliation of Consolidated and Combined Adjusted EBITDA and Adjusted Net Income ($’s in millions) (unaudited) Three Months Ended Year Ended Full Year December 31, December 31, 2020 Guidance GAAP does not define “Earnings Before Interest, Taxes, Depreciation, 2019 2018 2019 2018 Low High Depletio
Slide 24: Reconciliation of Adjusted Segment EBITDA
Reconciliation of Adjusted Segment EBITDA ($’s in millions) Three Months Ended Year Ended December 31, December 31, (unaudited) 2019 2018 2019 2018 Construction Products “Segment EBITDA” is defined as segment operating profit plus Revenues $ 102.2 $ 65.6 $ 439.7 $ 292.3 depreciation, depletion, and
Slide 25: Reconciliation of Free Cash Flow
Reconciliation of Free Cash Flow (unaudited) GAAP does not define “Free Cash Flow” and it should not be considered as an alternative to cash flow measures defined by GAAP, including cash flow from operating activities. We use this metric to assess the liquidity of our consolidated business. We prese
Slide 26: Reconciliation of Net Debt to Adjusted EBITDA
Reconciliation of Net Debt to Adjusted EBITDA (unaudited) The Company uses the term “Net Debt” to determine the extent to which the Company’s outstanding debt obligations would be satisfied by its cash and cash equivalents on hand. Management believes this metric is useful to investors in determinin