Arcosa Sees Solid Growth, Barge Rebuilding Cycle Ahead
Antonio Carrillo, president and chief executive officer of Arcosa, believes that the “aging and under-invested” inland barge sector is poised for a major barge-building cycle.
“We expect a multi-year building cycle given the age of the inland barge fleet,” Carillo told investors during Arcosa’s third-quarter earnings call on October 31.
Arcosa is a leading barge-builder in its transportation products unit. Its two other segments are construction products and engineered structures. Arcosa employs 6,075 people and reports overall revenues of $2.3 billion.
Results for the barge segment were affected by the divestiture of its steel components business, Carillo said. Third-quarter revenues and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the steel components business were $13.6 million and $1.3 million, respectively, compared to $39.8 million and $6.3 million, respectively, in the prior year. In addition, the company recognized a pretax loss on the sale of $23 million ($17.7 million after tax), which was excluded from adjusted segment EBITDA.
However, revenues for Arcosa’s barge business increased 21 percent, primarily due to higher tank barge deliveries. Carillo said the company is fully booked for tank barge orders through all of 2025 and is booked for hopper barges through July. Adjusted barge segment EBITDA increased 8 percent, to $12.9 million, driven by higher tank barge deliveries.
Adjusted segment EBITDA margin was 15.8 percent compared to 17.7 percent in the prior period, excluding the steel components business. The decrease was largely due to planned operating inefficiencies resulting from the changeover from hopper to tank barge production in one of Arcosa’s facilities.
During the quarter, Arcosa received barge orders totaling approximately $75 million for both tank and hopper barges representing a book-to-bill of 0.9. Backlog for inland barges at the end of the quarter was $244.7 million compared to $240.4 at the end of the third quarter of 2023.
“We expect to deliver approximately 32 percent of our current backlog in 2024,” the company said in an accompanying press release.
“Adjusting for the steel components divestiture, our third-quarter results tracked well to our expectations, delivering in-line adjusted EBITDA and outperforming on margin,” the company said. “Our outlook for the remainder of the year remains very positive. We are pleased to increase our adjusted EBITDA guidance to reflect the strategic actions we have taken to optimize our portfolio, specifically, the acquisition of Stavola, completed at the beginning of October, with some offset from the divestiture of steel components in August.”
The company increased its consolidated adjusted EBITDA range to between $435 million and $450 million, compared to the prior guidance range of $420 million to $440 million.
Arcosa concluded its biggest-ever purchase of aggregate and construction firm Stavola on October 1. After years of acquisitions, the focus for the future, Carrillo said, will be on improving margins and pruning unproductive assets, while pursuing attractive business growth opportunities in wind towers and utility structures that serve what he said is a robust and growing demand for electrical grid expansions, powered by both natural growth and stepped-up demand for AI services, which place high demands on the grid.
“Our progress is reflected in our third quarter financial results with 39 percent adjusted EBITDA growth outpacing revenue growth resulting in 330 basis points of margin expansion, normalizing for the divestiture of steel components, with strong organic and inorganic growth in both construction products and engineered structures,” Carrillo said. “Order levels during the quarter remained healthy for our utility structures business while conversations with our customers for additional wind tower orders are focused on delivery in 2026.”
Carillo told investors that, while interest rates are not quite where the company would like them and election uncertainty has affected some markets, he was “very excited about 2025” and that he sees “a lot of tailwinds” for all lines of Arcosa’s businesses. He also sees strong demand for aggregates and construction materials based on ongoing investments from infrastructure bills.
The full report, and a recording of the third-quarter earnings webinar, is available at www.arcosa.com.
