Arcosa, Inc. · NYSE:ACA
Arcosa — Q1 2020 Earnings Presentation
29 slides from Arcosa's earnings presentation, Apr 29, 2020
Slide 1: First Quarter 2020 Earnings and Business Update
First Quarter 2020 Earnings and Business Update April 29, 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 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 o
Slide 4: Key messages from today's call
Key messages from today’s call ▪ Our highest priority is the health and safety of our employees and communities; protocols are in place at plants and offices that meet or exceed Centers for Disease Control (CDC) standards and other guidelines ▪ Our businesses support critical infrastructure sectors,
Slide 5: Agenda
Agenda Update on COVID-19 Q1 2020 Results Liquidity, Balance Sheet, and Capital Allocation Update Market Outlook Long term Vision 5 / Moving Infrastructure Forward
Slide 6: Agenda
Agenda Update on COVID-19 Q1 2020 Results Liquidity, Balance Sheet, and Capital Allocation Update Market Outlook Long term Vision 6 / Moving Infrastructure Forward
Slide 7: Our Priorities during COVID-19 Crisis
Our Priorities during COVID-19 Crisis Protect the Health and Safety of Support Critical Infrastructure Maintain Financial Flexibility to our Employees and Communities Sectors Return to Growth ▪ The health and safety of employees and other ▪ Our businesses support critical infrastructure ▪ Cash of $2
Slide 8: Agenda
Agenda Update on COVID-19 Q1 2020 Results Liquidity, Balance Sheet, and Capital Allocation Update Market Outlook Long term Vision 8 / Moving Infrastructure Forward
Slide 9: Q1 2020 Financial Results
Q1 2020 Financial Results Adjusted EBITDA increased 29%, driven by organic growth, acquisitions, and operating improvements Revenues ($M) Net Income ($M) Adjusted EBITDA ($M) +19% +29% 488.2 75.6 410.9 +14% 58.5 31.6 27.7 Q1-19 Q1-20 Q1-19 Q1-20 Q1-19 Q1-20 Margin 14.2% 15.5% See Adjusted EBITDA rec
Slide 10: Segment Results: Construction Products
Segment Results: Construction Products Adjusted EBITDA growth of 49%, from strong legacy operations and Cherry acquisition Revenues ($M’s) Adjusted Segment EBITDA ($M’s) Aggregates and Specialty Materials Construction Site Support +49% +41% 32.1 149.4 17.3 106.0 21.5 17.6 132.1 88.4 Q1-19 Q1-20 Q1-1
Slide 11: Segment Results: Energy Equipment
Segment Results: Energy Equipment Revenue growth of 7%, with roughly flat margins excluding 2019’s bad debt expense recovery Revenues ($M’s) Adjusted Segment EBITDA ($M’s) Wind Towers and Utility Structures Storage Tanks and Other +7% -5% 35.2 223.2 33.6 209.1 46.8 50.5 158.6 176.4 Q1 2019 included
Slide 12: Segment Results: Transportation Products
Segment Results: Transportation Products Adjusted EBITDA growth of 55%, as barge business continued to ramp up to meet higher levels of demand Revenues ($M’s) Adjusted Segment EBITDA ($M’s) Barges Rail Components +55% +20% 18.7 117.0 97.5 28.0 12.1 48.1 89.0 49.4 Q1-19 Q1-20 Q1-19 Q1-20 Margin 12.4%
Slide 13: Agenda
Agenda Update on COVID-19 Q1 2020 Results Liquidity, Balance Sheet, and Capital Allocation Update Market Outlook Long term Vision 13 / Moving Infrastructure Forward
Slide 14: Free Cash Flow and Liquidity
Free Cash Flow and Liquidity Strong free cash flow over the last year contributed to Q1’s $201M of cash and an additional $274M of committed revolver capacity Free Cash Flow Available Liquidity at end of Q1 ($M’s) Free Cash Flow Operating Cash Flow Less CapEx, $M’s 475 115 107 ▪ We borrowed an addit
Slide 15: Balance Sheet Highlights
Balance Sheet Highlights Significant balance sheet capacity will enable us to pursue disciplined growth, when appropriate ~0.5x Net Debt / Adjusted EBITDA at the end of the …with minimal debt maturities until 2025 quarter, well below our long term target… Net Debt / Adjusted EBITDA Debt Maturity Sch
Slide 16: Capital Allocation Approach for 2020
Capital Allocation Approach for 2020 We have taken a number of actions to conserve cash in order to manage through different economic conditions Strategic Growth through Return of capital Organic investments Acquisitions to shareholders ▪ Delayed non-essential CapEx; a limited ▪ In addition to Cherr
Slide 17: Agenda
Agenda Update on COVID-19 Q1 2020 Results Liquidity, Balance Sheet, and Capital Allocation Update Market Outlook Long term Vision 17 / Moving Infrastructure Forward
Slide 18: Construction Products Outlook
Construction Products Outlook Construction demand was solid in Q1; balance of year will depend on duration and depth of COVID-19 slowdown 2019 Impact of economic Revenue Primary Market Drivers slowdown on 2020 outlook ▪ $545M (pro- ▪ Natural and recycled aggregates: Public Significant Moderate Minim
Slide 19: Energy Equipment Outlook
Energy Equipment Outlook Energy equipment backlog provides solid visibility for 2020 2019 Backlog as Primary Market Impact of economic Revenue of 03/31/20 Drivers slowdown on 2020 outlook ▪ $625M ▪ $476M ▪ Utility structures: Grid hardening Significant Moderate Minimal and reliability initiatives; W
Slide 20: Transportation Products Outlook
Transportation Products Outlook Barge backlog extends through end of 2020; railcar-related demand has fallen significantly as industry orders have declined 2019 Backlog as of Primary Market Impact of economic Revenue 03/31/20 Drivers slowdown on 2020 outlook Significant Moderate Minimal ▪ $294M ▪ $3
Slide 21: Key assumptions in 2020 Outlook
Key assumptions in 2020 Outlook Our view of 2020 is based on a number of assumptions that could change as the COVID-19 pandemic evolves Key Assumptions ▪ Plants continue to operate under the Department of Homeland Security ‘Essential Government / Regulatory Infrastructure’ designation ▪ States and l
Slide 22: Agenda
Agenda Update on COVID-19 Q1 2020 Results Liquidity, Balance Sheet, and Capital Allocation Update Market Outlook Long term Vision 22 / Moving Infrastructure Forward
Slide 23: ESG Update
ESG Update Our Materiality Assessment identified 11 significant topics across our businesses; we plan to publish our initial Sustainability Report for full year 2020 Our Our People & Our Environment Products Communities Employee Health and Safety Energy Management Product Use and Quality Diversity A
Slide 24: Long-Term Vision for Arcosa
Long-Term Vision for Arcosa Our long-term vision remains intact; we plan to emerge from this crisis with even stronger growth and ESG initiatives Integrate Environmental, Social, Improve and Governance Reduce long-term returns initiatives (ESG) into our the complexity and on invested capital long-te
Slide 25: Appendix
Appendix
Slide 26: Reconciliation of Consolidated and Combined Adjusted EBITDA and Adjusted Net Income
Reconciliation of Consolidated and Combined Adjusted EBITDA and Adjusted Net Income ($’s in millions) (unaudited) Three Months Ended March 31, GAAP does not define “Earnings Before Interest, Taxes, Depreciation, 2020 2019 Depletion and Amortization” (“EBITDA”) and it should not be considered Revenue
Slide 27: Reconciliation of Adjusted Segment EBITDA
Reconciliation of Adjusted Segment EBITDA ($’s in millions) Three Months Ended (unaudited) March 31, 2020 2019 “Segment EBITDA” is defined as segment operating profit plus Construction Products depreciation, depletion, and amortization. GAAP does not define Revenues $ 149.4 $ 106.0 Segment EBITDA an
Slide 28: 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 29: Reconciliation of Net Debt to Adjusted EBITDA
Reconciliation of Net Debt to Adjusted EBITDA (unaudited) GAAP does not define “Net Debt” and it should not be considered as an alternative to cash flow or liquidity measures defined by GAAP. The Company uses Net Debt, which it defines as total debt minus cash and cash equivalents to determine the e