Transportation, Construction Lift Arcosa To Solid Second Quarter

Solid gains in its transportation and construction businesses powered Arcosa Inc. to a winning second quarter, as it completed its divestiture of its storage tanks business.

“I am pleased with Arcosa’s second quarter performance, with adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] surpassing last year’s record results, normalizing for the divestiture of our storage tanks business,” said Antonio Carrillo, president and CEO.

“Adjusted segment EBITDA in transportation products more than doubled, and margins expanded 530 basis points year-over-year, underscoring the operating leverage inherent in these businesses as volumes improve,” Carillo said. “We were pleased to obtain sufficient second quarter orders to maintain our barge backlog and extend our production visibility further into 2024 with improved pricing.”

“However, overall adjusted segment EBITDA margins were impacted by operating inefficiencies in our specialty materials business that we are addressing,” he added. “Within engineered structures, our wind towers business performed well on a low level of volume, benefiting in part from the recognition of tax credits associated with the Inflation Reduction Act.

Anticipated product mix headwinds in our utility structures business resulted in lower overall segment profitability in-line with our expectation. We expect a stronger second half and remain optimistic about our future growth potential. The demand environment across the segment continues to be very robust, and we are in the early stages of a multi-year expansion in the wind industry.”

Revenues in Arcosa’s Transportation Products segment were $113 million, up 28 percent. Barge revenues increased 35 percent, and steel components revenues increased 17 percent, both driven by higher volumes and pricing, the company said.

During the second quarter, the company received orders of approximately $81 million in its barge business, primarily for hopper barges for delivery in 2024.

The barge backlog at the end of the quarter was $267.1 million, compared to $131.8 million at the end of the the 2022 second quarter.

“We expect to deliver approximately 45 percent of our current backlog in 2023,” the company said.

The company made the following adjustments to its full year 2023 guidance:

• Increased the low end of its revenue guidance range to $2.25 billion from $2.20 billion, resulting in a full year range of $2.25 billion to $2.30 billion.
• Increased the low end of its adjusted EBITDA guidance range to $355 million from $345 million, resulting in a full year range of $355 million to $370 million.

Commenting on the outlook, Carrillo said, “In light of Arcosa’s solid financial performance through the first half of the year and improved visibility in our cyclical businesses, we have increased confidence in our full-year outlook. As a result, we are raising the low end of our 2023 revenue and adjusted EBITDA guidance range. As we look ahead, Arcosa is well-positioned for growth, given our broad exposure to infrastructure markets that we believe will benefit from multi-year tailwinds. We remain committed to expanding margin, generating strong cash flow and allocating capital to build long-term shareholder value.”