Toggle SGML Header (+)


Section 1: 8-K (8-K)


UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):
November 14, 2018


Arcosa, Inc.



(Exact name of registrant as specified in its charter)

Delaware
 
1-38494
 
82-5339416
(State or other jurisdiction of incorporation
 
(Commission File No.)
 
(I.R.S. Employer Identification No.)
         

2525 N. Stemmons Freeway, Dallas, Texas
 
75207-2401
(Address of principal executive offices)
 
(Zip Code)

Registrant's telephone number, including area code:
972-942-6500

Not Applicable
Former name or former address, if changed since last report



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  



Item 2.02
Results of Operations and Financial Condition.

On November 14, 2018, Arcosa, Inc. (the "Company") issued an earnings release announcing its financial results for the three and nine months ended September 30, 2018.  A copy of the earnings release is attached hereto as Exhibit 99.1 and is incorporated into this Item 2.02 by reference.

On November 14, 2018, the Company issued a press release announcing entry into a definitive agreement to acquire the ACG Materials business (the “Acquisition”). A copy of this press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

Also on November 14, 2018, the Company disseminated an investor presentation which is intended to be a supplement to the press release announcing the proposed Acquisition. A copy of the investor presentation is furnished as Exhibit 99.3 to this Current Report on Form 8-K.

Item 7.01
Regulation FD Disclosure.

The information in Item 2.02 of this Current Report on Form 8-K is incorporated by reference into this Item 7.01.

The information in Items 2.02 and 7.01, including Exhibits 99.1, 99.2 and 99.3, is being furnished and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01
Financial Statements and Exhibits.

(d)
Exhibits

Exhibit No.
Description
Earnings Release, dated November 14, 2018
Press Release, dated November 14, 2018
Investor Presentation, November 2018


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
Arcosa, Inc.
     
November 14, 2018
By:
/s/ Bryan P. Stevenson
   
Name: Bryan P. Stevenson
   
Title: Chief Legal Officer



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)


Exhibit 99.1



News Release

FOR IMMEDIATE RELEASE

Arcosa, Inc. Announces Third Quarter 2018 Results


Construction Products and Transportation Products Post Higher Revenues and Operating Profit


Announces plans to re-open idled barge facility

DALLAS, Texas - ARCOSA, Inc. - November 14, 2018:
Arcosa, Inc. (NYSE: ACA) (“Arcosa” or the “Company”), a manufacturer of infrastructure-related products and services, today announced earnings results for the third quarter ended September 30, 2018.

Third Quarter Highlights


Revenues of $378.6 million were up 3.5% year-on-year, led by Construction Products and Transportation Products

Net income was $3.2 million, inclusive of a previously-announced $23.2 million pre-tax impairment charge in the Energy Equipment Group, compared with $20.6 million in 2017

EBITDA was $46.6 million, compared to $50.5 million in 2017

Construction Products and Transportation Products posted higher revenues and operating profit

Within Transportation Products, results for the inland barge business continued to reflect early signs of an industry recovery, receiving $61.3 million of orders and posting a book-to-bill ratio of 1.24 during the quarter

Year-to-date operating cash flow was $118.5 million

CEO Comments

Arcosa President and CEO, Antonio Carrillo, commented, “Third quarter results were in line with our expectations and support the growth strategy we have put in place across our three business segments. Both Construction Products and Transportation Products posted higher revenues and operating profit in the third quarter.

“In Construction Products, growth in our lightweight aggregates and trench shoring businesses more than offset the impact of challenging weather conditions on our aggregates business in Texas.

“In Transportation Products, higher inland barge revenues, increased backlog, and strong order and quoting activity are signs of an early recovery underway in the barge market and support our recent decision to re-open one of our two idled facilities.

972.942.6500
arcosa.com


“Energy Equipment results were substantially reduced by a one-time impairment charge resulting from our decision, announced in early October, to divest several sub-scale businesses. These businesses have now been divested, and while the cash proceeds from the transactions were immaterial, the divestitures will eliminate ongoing operating losses. Additionally, the segment’s results were affected by planned lower volumes in our wind towers product line as part of a long term supply agreement, as well as a $6.1 million inventory reserve related to a canceled project for a single customer in our utility structures business. During the quarter, our utility structures business recovered from production inefficiencies related to an order for a new product type that hampered our throughput in the second quarter and early part of the third quarter.

“Moving forward, the new structure of Energy Equipment will enhance our focus on the higher potential platform businesses in the segment: utility structures, wind towers, storage tanks, and we are rolling out plans to replicate the continuous improvements programs of the wind towers business across our utility structures and storage tank product lines.

“We remain focused on our stage one priorities: growing our Construction Products businesses, improving margins in our Energy Equipment segment, and expanding our Transportation Products businesses as our key markets recover.”

Mr. Carrillo concluded, “In that context, we are pleased to have reached a definitive agreement with an affiliate of H.I.G. Capital, LLC to acquire the ACG Materials business for approximately $315 million, which we announced today in a separate release. ACG Materials is a producer of specialty materials and aggregates in the United States and Canada and is expected to be a strong strategic addition to Arcosa’s Construction Products segment.”

Additional notes on Financial Results


The Company reported a higher effective tax rate of 51.5% during the third quarter compared to 39.1% last year, primarily due to the non-deductibility of a portion of the impairment charge in the Energy Equipment segment


Throughout the three and nine months ended September 30, 2018, Arcosa operated as part of Trinity Industries, Inc. (NYSE: TRN) (“Trinity”). Consequently, Trinity's net investment in Arcosa's operations (Parent Equity) is shown in lieu of stockholders' equity, as there were no reported Arcosa shares outstanding as of September 30, 2018


On November 1, 2018, Arcosa’s tax-free separation from Trinity was successfully completed and “regular way” trading in the Company’s shares began on the New York Stock Exchange under the ticker symbol “ACA”.  At November 1, 2018, the Company reported approximately 48.8 million shares outstanding


In connection with the separation, on October 31, 2018, Trinity contributed $200 million cash to Arcosa.  In addition, the Company has announced that it has executed a $400 million unsecured, five-year credit facility

972.942.6500
2
arcosa.com

Conference Call Information

A conference call is scheduled for 5:30 p.m. Eastern time today to discuss the acquisition and the Company’s earnings results for the third quarter ended September 30, 2018.  A slide presentation for this conference call will be posted on the Company’s website at http://ir.arcosa.com/Events approximately 15 minutes before the start of the call.  The conference call number is 866-831-8711 for domestic callers and 203-518-9865 for international callers.  The conference ID is ARCOSA.  An audio playback will be available through 11:59 p.m. Eastern time on November 28, 2018, by dialing 800-839-9719 for domestic callers and 402-220-6091 for international callers.  A live audio webcast of the conference call with a slide presentation will be available to the public and a replay will be available after the call by visiting Arcosa’s website at http://ir.arcosa.com/Events.

About Arcosa

Arcosa, Inc., headquartered in Dallas, Texas, is a manufacturer of infrastructure-related products and services with leading positions in construction, energy, and transportation markets.  Arcosa reports its financial results in three principal business segments: the Construction Products Group, the Energy Equipment Group, and the Transportation Products Group. For more information, visit www.arcosa.com.

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 or strategies for the future. Arcosa uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “outlook,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this release, and Arcosa expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, except as required by federal securities laws. Forward-looking statements are based on management’s current views and assumptions and involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations, including but not limited to assumptions, risks and uncertainties regarding achievement of the expected benefits of Arcosa’s spin-off from Trinity; tax treatment of the spin-off; inability to consummate the ACG Materials acquisition within the expected time periods or at all, failure to successfully integrate ACG Materials, or failure to achieve the expected benefits of the acquisition; market conditions and customer demand for Arcosa’s business products and services; the cyclical nature of, and seasonal or weather impact on, the industries in which Arcosa competes; competition and other competitive factors; governmental and regulatory factors; changing technologies; availability of growth opportunities; market recovery; improving margins; and Arcosa’s ability to execute its long-term strategy, and such forward-looking statements are not guarantees of future performance. For further discussion of such risks and uncertainties, see “Information Statement Summary”, “Risk Factors” and “Forward-Looking Statements” in the information statement filed as an exhibit to Arcosa’s Registration Statement on Form 10, as amended.
972.942.6500
3
arcosa.com


CONTACTS

 
Scott C. Beasley
 
Gail M. Peck
 
David Gold
 
Chief Financial Officer
 
SVP, Finance & Treasurer
 
ADVISIRY Partners
           
 
T 972.942.6500
     
T 212.661.2220
 
InvestorResources@arcosa.com
David.Gold@advisiry.com
       

TABLES TO FOLLOW

972.942.6500
4
arcosa.com

Arcosa, Inc.
Combined Statements of Comprehensive Income
(in millions)
(unaudited)

   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2018
   
2017
   
2018
   
2017
 
Revenues
 
$
378.6
   
$
365.9
   
$
1,086.0
   
$
1,114.9
 
Operating costs:
                               
Cost of revenues
   
308.9
     
290.4
     
877.5
     
885.7
 
Selling, engineering, and administrative expenses
   
40.1
     
41.9
     
117.1
     
120.6
 
Impairment charge
   
23.2
     
     
23.2
     
 
     
372.2
     
332.3
     
1,017.8
     
1,006.3
 
Operating profit
   
6.4
     
33.6
     
68.2
     
108.6
 
                                 
Other, net (income) expense
   
(0.2
)
   
(0.2
)
   
2.0
     
 
Income before income taxes
   
6.6
     
33.8
     
66.2
     
108.6
 
                                 
Provision for income taxes
   
3.4
     
13.2
     
18.2
     
42.5
 
                                 
Net income
   
3.2
     
20.6
     
48.0
     
66.1
 
Other comprehensive income (loss)
   
(0.1
)
   
(0.8
)
   
0.4
     
(1.4
)
Comprehensive income
 
$
3.1
   
$
19.8
   
$
48.4
   
$
64.7
 

Our effective tax rate reflects the Company's estimate for its state income tax expense, excess tax benefits or deficiencies related to equity compensation, and the impact of nondeductible impairment charges. A portion of the $23.2 million pre-tax impairment charge recorded in the three and nine months ended September 30, 2018 was attributable to certain of our foreign operations for which taxes are not provided. This impairment charge increased the losses in those jurisdictions with no corresponding tax benefit.

The Tax Cuts and Jobs Act (the "Act"), enacted in December 2017, reduced the U.S. federal corporate income tax rate from 35.0% to 21.0%. In December 2017, we recorded a tax benefit after the initial assessment of the tax effects of the Act, and we will continue refining this amount throughout 2018, which could potentially affect the measurement of our deferred tax balance or give rise to new deferred tax amounts in a final adjustment in the fourth quarter of 2018. The impact of the Act may differ from our estimate due to changes in the regulations, rulings, guidance, and interpretations issued by the IRS and the FASB as well as interpretations and assumptions made by the Company.

972.942.6500
5
arcosa.com

Arcosa, Inc.
Condensed Segment Data
(in millions)
(unaudited)

   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
Revenues:
 
2018
   
2017
   
2018
   
2017
 
Construction Products Group
 
$
72.6
   
$
69.4
   
$
226.7
   
$
194.8
 
Energy Equipment Group
   
198.4
     
217.3
     
573.1
     
651.3
 
Transportation Products Group
   
108.5
     
80.5
     
289.3
     
272.1
 
All Other
   
     
     
     
 
Segment Totals before Eliminations
   
379.5
     
367.2
     
1,089.1
     
1,118.2
 
Eliminations
   
(0.9
)
   
(1.3
)
   
(3.1
)
   
(3.3
)
Combined Total
 
$
378.6
   
$
365.9
   
$
1,086.0
   
$
1,114.9
 

   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
Operating profit (loss):
 
2018
   
2017
   
2018
   
2017
 
Construction Products Group
 
$
15.3
   
$
13.6
   
$
45.3
   
$
42.5
 
Energy Equipment Group
   
(13.2
)
   
20.8
     
12.5
     
63.2
 
Transportation Products Group
   
13.5
     
9.8
     
35.2
     
30.9
 
All Other
   
(0.1
)
   
     
(0.1
)
   
 
Segment Totals before Eliminations and Corporate Expenses
   
15.5
     
44.2
     
92.9
     
136.6
 
Corporate
   
(9.1
)
   
(10.6
)
   
(24.7
)
   
(28.0
)
Eliminations
   
     
     
     
 
Combined Total
 
$
6.4
   
$
33.6
   
$
68.2
   
$
108.6
 

Backlog:
 
September 30,
2018
   
September 30,
2017
 
Wind towers and utility structures
 
$
700.3
   
$
972.0
 
Inland barges
 
$
210.4
   
$
126.0
 

972.942.6500
6
arcosa.com

Arcosa, Inc.
Condensed Combined Balance Sheets
(in millions)
(unaudited)

   
September 30,
2018
   
December 31,
2017
 
Current assets:
           
Cash and cash equivalents
 
$
10.4
   
$
6.8
 
Receivables, net of allowance
   
174.7
     
165.3
 
Inventories
   
234.7
     
246.8
 
Other
   
30.0
     
9.9
 
Total current assets
   
449.8
     
428.8
 
                 
Property, plant, and equipment, net
   
570.5
     
583.1
 
Goodwill
   
504.0
     
494.3
 
Deferred income taxes
   
8.8
     
8.8
 
Other assets
   
76.9
     
87.5
 
   
$
1,610.0
   
$
1,602.5
 
Current liabilities:
               
Accounts payable
 
$
60.9
   
$
56.0
 
Accrued liabilities
   
109.1
     
118.0
 
Current portion of long-term debt
   
0.1
     
0.1
 
Total current liabilities
   
170.1
     
174.1
 
                 
Debt
   
0.3
     
0.4
 
Deferred income taxes
   
16.8
     
11.0
 
Other liabilities
   
19.7
     
9.1
 
     
206.9
     
194.6
 
                 
Parent equity:
               
Net parent investment
   
1,422.5
     
1,427.7
 
Accumulated other comprehensive loss
   
(19.4
)
   
(19.8
)
     
1,403.1
     
1,407.9
 
   
$
1,610.0
   
$
1,602.5
 

972.942.6500
7
arcosa.com

Arcosa, Inc.
Condensed Combined Cash Flow Statements
(in millions)
(unaudited)

   
Nine Months Ended
September 30,
 
   
2018
   
2017
 
Operating activities:
           
Net income
 
$
48.0
   
$
66.1
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
   
49.7
     
48.2
 
Impairment charge
   
23.2
     
 
Provision (benefit) for deferred income taxes
   
7.1
     
12.4
 
Changes in current assets and liabilities
   
(29.2
)
   
12.0
 
Other
   
19.7
     
(4.4
)
Net cash provided by operating activities
   
118.5
     
134.3
 
Investing activities:
               
Proceeds from dispositions of property and other assets
   
2.6
     
2.1
 
Capital expenditures
   
(33.0
)
   
(45.9
)
Acquisitions, net of cash acquired
   
(25.0
)
   
(47.5
)
Net cash required by investing activities
   
(55.4
)
   
(91.3
)
Financing activities:
               
Payments to retire debt
   
(0.1
)
   
(0.1
)
Proceeds from issuance of debt
   
     
0.6
 
Net transfers from/(to) parent and affiliates
   
(56.3
)
   
(47.3
)
Holdback payment from acquisition
   
(3.1
)
   
 
Net cash required by financing activities
   
(59.5
)
   
(46.8
)
Net increase (decrease) in cash and cash equivalents
   
3.6
     
(3.8
)
Cash and cash equivalents at beginning of period
   
6.8
     
14.0
 
Cash and cash equivalents at end of period
 
$
10.4
   
$
10.2
 

972.942.6500
8
arcosa.com

Arcosa, Inc.
Reconciliation of EBITDA
(in millions)
(unaudited)

“EBITDA” is defined as net income plus interest expense, income taxes, and depreciation and amortization, including non-cash impairment charges.  "EBITDA Margin" is defined as Adjusted EBITDA divided by Revenue. EBITDA is not a calculation based on generally accepted accounting principles. The amounts included in the EBITDA calculation are, however, derived from amounts included in the historical statements of operations data. In addition, EBITDA should not be considered as an alternative to net income or operating income as an indicator of our operating performance, or as an alternative to operating cash flows as a measure of liquidity. We believe EBITDA assists investors in comparing a company’s performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors.

   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2018
   
2017
   
2018
   
2017
 
Revenues
 
$
378.6
   
$
365.9
   
$
1,086.0
   
$
1,114.9
 
                                 
Net income
   
3.2
     
20.6
     
48.0
     
66.1
 
Add:
                               
Interest expense
   
     
     
     
 
Provision for income taxes
   
3.4
     
13.2
     
18.2
     
42.5
 
Depreciation and amortization expense
   
16.8
     
16.7
     
49.7
     
48.2
 
Impairment charge
   
23.2
     
     
23.2
     
 
EBITDA
 
$
46.6
   
$
50.5
   
$
139.1
   
$
156.8
 
EBITDA Margin
   
12.3
%
   
13.8
%
   
12.8
%
   
14.1
%

972.942.6500
9
arcosa.com

Arcosa, Inc.
Reconciliation of Adjusted EBITDA by Segment
(in millions)
(unaudited)

“Adjusted EBITDA” is defined as segment operating profit plus depreciation and amortization including non-cash impairment charges. "Adjusted EBITDA Margin" is defined as Adjusted EBITDA divided by Revenue. Since income taxes and interest expense are not allocated to the segment level, they are not added back in the calculation of Adjusted EBITDA. For a reconciliation of EBITDA to net income, see the accompanying EBITDA reconciliation. Adjusted EBITDA is not a calculation based on generally accepted accounting principles. The amounts included in the Adjusted EBITDA calculation are, however, derived from amounts included in the historical statements of operations data. In addition, Adjusted EBITDA should not be considered as an alternative to net income or operating income as an indicator of our operating performance, or as an alternative to operating cash flows as a measure of liquidity. We believe Adjusted EBITDA assists investors in comparing a company’s performance on a consistent basis without regard to depreciation and amortization, which can vary significantly depending upon many factors.

   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2018
   
2017
   
2018
   
2017
 
Construction Products Segment
                       
Revenues
 
$
72.6
   
$
69.4
   
$
226.7
   
$
194.8
 
                                 
Operating Profit
   
15.3
     
13.6
     
45.3
     
42.5
 
Add: Depreciation and amortization expense
   
5.2
     
4.7
     
15.4
     
13.3
 
Adjusted EBITDA
 
$
20.5
   
$
18.3
   
$
60.7
   
$
55.8
 
Adjusted EBITDA Margin
   
28.2
%
   
26.4
%
   
26.8
%
   
28.6
%
                                 
Energy Equipment Segment
                               
Revenues
 
$
198.4
   
$
217.3
   
$
573.1
   
$
651.3
 
                                 
Operating Profit
   
(13.2
)
   
20.8
     
12.5
     
63.2
 
Add: Depreciation and amortization expense
   
7.4
     
7.5
     
22.6
     
22.7
 
Add: Impairment charge
   
23.2
     
     
23.2
     
 
Adjusted EBITDA
 
$
17.4
   
$
28.3
   
$
58.3
   
$
85.9
 
Adjusted EBITDA Margin
   
8.8
%
   
13.0
%
   
10.2
%
   
13.2
%
                                 
Transportation Products Segment
                               
Revenues
 
$
108.5
   
$
80.5
   
$
289.3
   
$
272.1
 
                                 
Operating Profit
   
13.5
     
9.8
     
35.2
     
30.9
 
Add: Depreciation and amortization expense
   
4.2
     
4.5
     
11.7
     
12.2
 
Adjusted EBITDA
 
$
17.7
   
$
14.3
   
$
46.9
   
$
43.1
 
Adjusted EBITDA Margin
   
16.3
%
   
17.8
%
   
16.2
%
   
15.8
%
                                 
Operating Profit - All Other
 
$
(0.1
)
 
$
   
$
(0.1
)
 
$
 
Operating Profit - Corporate
   
(9.1
)
   
(10.6
)
   
(24.7
)
   
(28.0
)
Other, net expense
   
(0.2
)
   
(0.2
)
   
2.0
     
 
Add: Interest expense
   
     
     
     
 
EBITDA
 
$
46.6
   
$
50.5
   
$
139.1
   
$
156.8
 


972.942.6500
10
arcosa.com

(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)


Exhibit 99.2

News Release

FOR IMMEDIATE RELEASE

Arcosa, Inc. Announces Definitive Agreement to Acquire ACG Materials


Acquisition Adds Specialty Materials and Aggregates Platforms Serving Attractive Infrastructure Markets

Expected to be Slightly Accretive to Earnings in Year One Following Transaction Completion

Conference Call Scheduled for 5:30 p.m. Eastern Time Today to Discuss the Transaction

DALLAS, Texas - ARCOSA, Inc. - November 14, 2018:

Arcosa, Inc. (NYSE: ACA) (“Arcosa” or the “Company”), a manufacturer of infrastructure-related products and services, today announced that it has reached a definitive agreement with an affiliate of H.I.G. Capital, LLC to acquire the ACG Materials business (“ACG”) for approximately $315 million.

ACG is a producer of specialty materials and aggregates with estimated revenues of approximately $152 million and adjusted EBITDA of approximately $32 million for the trailing twelve month period ended August 31, 2018, resulting in a purchase multiple of approximately 9.8x. Arcosa expects the transaction to be slightly accretive to earnings in the first year following transaction completion.

Based in Norman, Oklahoma, ACG mines, mills, processes, and distributes a broad range of specialty materials and aggregates. Its primary products are sold to infrastructure and building products markets, as well as to the agriculture, food, and pharmaceutical industries. ACG adds 24 active mines and 5 production facilities to Arcosa’s 18 active aggregates and specialty materials locations, and is expected to expand the current annualized revenues of Arcosa’s Construction Products segment by roughly 50%, to approximately $450 million. ACG’s operating facilities are located in Texas, Florida, Oklahoma, Kansas, Missouri, Washington, Nevada, and British Columbia.

Commenting on the transaction, Antonio Carrillo, Arcosa’s President and CEO, noted, “The acquisition of ACG demonstrates early execution on key elements of our strategic growth plan: to expand our Construction Products business and to grow in attractive markets.

972.942.6500
arcosa.com


“ACG is a strategically important acquisition, adding significant scale to the Construction Products segment, extending our specialty product portfolio and geographic reach, and expanding our end markets. Additionally, ACG’s experienced leadership team brings a track record of operating excellence and growth. We look forward to leveraging their expertise as we continue to expand our Construction Products segment through organic growth initiatives and acquisitions.”

Paul Harrington, President of ACG added, “Arcosa provides an excellent platform for us to continue growing through organic investments and bolt-on acquisitions. Our management team is very enthusiastic about this combination, and we look forward to working with our counterparts in Arcosa’s Construction Products segment to drive profitable growth.”

The Company expects to fund the approximate $315 million purchase price with a combination of cash on-hand and advances under its $400 million five year, credit facility. The transaction, which has been approved by the Company’s Board of Directors, is subject to customary closing conditions and regulatory provisions under the Hart-Scott-Rodino Act.

The transaction is expected to close in the fourth quarter of 2018 or first quarter of 2019.  After closing and additional clarity on purchase price accounting, the Company expects to revisit its revenue and EBITDA guidance for fiscal year 2019.

Conference Call Information
A conference call is scheduled for 5:30 p.m. Eastern time today to discuss the acquisition and the Company’s earnings results for the third quarter ended September 30, 2018.  A slide presentation for this conference call will be posted on the Company’s website at http://ir.arcosa.com/Events approximately 15 minutes before the start of the call.  The conference call number is 866-831-8711 for domestic callers and 203-518-9865 for international callers.  The conference ID is ARCOSA.  An audio playback will be available through 11:59 p.m. Eastern time on November 28, 2018, by dialing 800-839-9719 for domestic callers and 402-220-6091 for international callers.  A live audio webcast of the conference call with a slide presentation will be available to the public and a replay will be available after the call by visiting Arcosa’s website at http://ir.arcosa.com/Events.

972.942.6500
2
arcosa.com


About Arcosa

Arcosa, Inc., headquartered in Dallas, Texas, is a manufacturer of infrastructure-related products and services with leading positions in construction, energy, and transportation markets.  Arcosa reports its financial results in three principal business segments: the Construction Products Group, the Energy Equipment Group, and the Transportation Products Group. For more information, visit www.arcosa.com.

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 or strategies for the future. Arcosa uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “outlook,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this release, and Arcosa expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, except as required by federal securities laws. Forward-looking statements are based on management’s current views and assumptions and involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations, including but not limited to assumptions, risks and uncertainties regarding achievement of the expected benefits of Arcosa’s spin-off from Trinity; tax treatment of the spin-off; inability to consummate the ACG Materials acquisition within the expected time periods or at all, failure to successfully integrate ACG Materials, or failure to achieve the expected benefits of the acquisition; market conditions and customer demand for Arcosa’s business products and services; the cyclical nature of, and seasonal or weather impact on, the industries in which Arcosa competes; competition and other competitive factors; governmental and regulatory factors; changing technologies; availability of growth opportunities; market recovery; improving margins; and Arcosa’s ability to execute its long-term strategy, and such forward-looking statements are not guarantees of future performance. For further discussion of such risks and uncertainties, see “Information Statement Summary”, “Risk Factors” and “Forward-Looking Statements” in the information statement filed as an exhibit to Arcosa’s Registration Statement on Form 10, as amended.

CONTACTS

 
Scott C. Beasley
 
Gail M. Peck
 
David Gold
 
Chief Financial Officer
 
SVP, Finance & Treasurer
 
ADVISIRY Partners
           
 
T 972.942.6500
     
T 212.661.2220
 
InvestorResources@arcosa.com
   

David.Gold@advisiry.com

TABLES TO FOLLOW

972.942.6500
3
arcosa.com

Reconciliation of Adjusted EBITDA for ACG
(in millions)
(unaudited)

“Adjusted EBITDA” is defined as ACG’s net income plus interest expense, income taxes, depreciation and amortization, and other one-time or non-recurring expenses, including management fees, debt refinancing fees, and non-recurring professional fees. Adjusted EBITDA is not a calculation based on generally accepted accounting principles. The amounts included in the Adjusted EBITDA calculation, however, are derived from amounts included in the historical statements of operations data. In addition, Adjusted EBITDA should not be considered as an alternative to net income or operating income as an indicator of ACG’s operating performance, or as an alternative to operating cash flows as a measure of liquidity. We believe Adjusted EBITDA assists investors in comparing a company’s performance on a consistent basis without regard to depreciation and amortization and other expenses, which can vary significantly depending upon many factors.

Adjusted EBITDA  (For the Trailing Twelve Months Ended August 31, 2018)
     
       
Net income
 
$
(1.8
)
Add:
       
Interest expense
   
16.6
 
Provision for income taxes
   
(3.9
)
Depreciation and amortization expense
   
15.4
 
Other adjustments
   
5.7
 
Adjusted EBITDA
   
32.0
 


972.942.6500
4
arcosa.com

(Back To Top)

Section 4: EX-99.3 (EXHIBIT 99.3)


Exhibit 99.3

   Overview of ACG Materials Acquisition  November 2018 
 

   Forward-Looking Statements  Moving Infrastructure Forward — ACG Materials Acquisition, November 2018  2  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, intentions or strategies for the future. Arcosa uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “outlook,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this release, and Arcosa expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, except as required by federal securities laws. Forward-looking statements are based on management’s current views and assumptions and involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations, including but not limited to assumptions, risks and uncertainties regarding achievement of the expected benefits of Arcosa’s spin-off from Trinity; tax treatment of the spin-off; inability to consummate the ACG Materials acquisition within the expected time periods or at all, failure to successfully integrate ACG Materials, or failure to achieve the expected benefits of the acquisition; market conditions and customer demand for Arcosa’s business products and services; the cyclical nature of, and seasonal or weather impact on, the industries in which Arcosa competes; competition and other competitive factors; governmental and regulatory factors; changing technologies; availability of growth opportunities; market recovery; improving margins; and Arcosa’s ability to execute its long-term strategy, and such forward-looking statements are not guarantees of future performance. For further discussion of such risks and uncertainties, see “Information Statement Summary”, “Risk Factors” and “Forward-Looking Statements” in the information statement filed as an exhibit to Arcosa’s Registration Statement on Form 10, as amended. 
 

   How to Find Us  Moving Infrastructure Forward — ACG Materials Acquisition, November 2018  3  Investor ContactInvestorResources@arcosa.com  NYSE tickerACA  Our websitewww.arcosa.com  HeadquartersArcosa, Inc.500 North Akard StreetDallas, TX 75201 
 

   ACG Materials highlights  Moving Infrastructure Forward — ACG Materials Acquisition, November 2018  4  Multi-State Platform  $152M LTM Revenue1  $32M LTM Adjusted EBITDA1  24Active Mines  5Production Facilities  Diverse End Markets  Adds complementary, scaled specialty materials and aggregates platforms  Diversifies customer base across attractive end markets  Accelerates growth into specialty materials and aggregates   Strengthens pipeline of acquisitions and organic growth opportunities   Adds expertise in developing specialty materials applications  Brings top tier management team to Arcosa                                                                                                                                                                  Aggregate mines  Corporate HQ      Production facilities    1 Estimated LTM for 12 months ended 08/31/2018. See Adjusted EBITDA reconciliation in Appendix 
 

   The acquisition is aligned with Arcosa’s long term vision and Stage 1 Priorities  Moving Infrastructure Forward — ACG Materials Acquisition, November 2018  5  Improve long term returns on invested capital  Grow in attractive markets where we can achieve sustainable competitive advantages  Reduce the complexity and cyclicality of the overall business    Operate a flat and responsive corporate structure  Expand Transport-ation Products organically as barge and rail markets recover  Improve Energy Equipment’s operational performance while pursuing disciplined growth  Grow Construction Products organically and through acquisitions        Stage 1 Priorities  Long Term Vision 
 

   ACG Materials is a strategic acquisition for Arcosa’s Construction Products Group  Moving Infrastructure Forward — ACG Materials Acquisition, November 2018  6              Aggregates  Specialty Materials  Construction Site Support 
 

   Adds complementary, scaled aggregates and specialty materials businesses to Arcosa’s current platforms  Moving Infrastructure Forward — ACG Materials Acquisition, November 2018  7    Operations  Products  Geographic Footprint    18 active Construction Materials locations 11 aggregate mines7 lightweight locations  Aggregates (sand, gravel, and limestone base)Lightweight aggregates       29 active locations24 aggregate mines5 production facilites  Mined and crushed rock (aggregates, cement / retarder rock, fines)Specialty milled (building products, fertilizers)Specialty processed (plasters, agricultural prills, food/pharma)                                                                                                      Aggregate mines                Lightweight locations                                                                                                                                                                                                Aggregate mines    Production facilities   
 

 Diversifies customer base across attractive end markets and accelerates growth in specialty materials  Moving Infrastructure Forward — ACG Materials Acquisition, November 2018  8    Mined and Crushed Rock  Specialty Milled  Specialty Processed  Products        Applications  Road constructionWell padsAccess roadsCement / retarder rockFertilizer, soil conditioner  Bathtubs, caulk, paint, joint compoundsRoofing tilesGlass packagingAnimal feed additiveFertilizer, soil conditionerPlastics and coatings  Flooring, ceramicsGolf turf, fertilizerMicronutrientsBaking, brewing  End Markets  EnergyInfrastructureBuilding productsAgriculture  Building productsAgriculture  Building productsAgricultureFood and pharmaceutical  Aggregate Rock  Retarder Rock  Fines  Filler  Coarse  Food Grade  Plasters  Prills  Source: Company provided information; Management estimates. 
 

   Brings top tier management team and strengthens pipeline of organic projects and bolt-on acquisition opportunities  Moving Infrastructure Forward — ACG Materials Acquisition, November 2018  9      Top tier management team  Pipeline of organic projects and bolt-on acquisition opportunities  Strong leadership team with deep industry experience in infrastructure and building productsTrack record of operating excellence and growthExpertise in developing specialty materials applications in attractive markets  ACG team has completed 9 bolt-on acquisitions since 2013, within aggregates and specialty materialsCurrent pipeline of opportunities to grow organically and through additional bolt-on acquisitions 
 

 Transaction and Financing Summary  Moving Infrastructure Forward — ACG Materials Acquisition, November 2018  10  Financing  Purchase price of approximately $315 millionArcosa expects to fund the transaction with a combination of cash on-hand and advances under our $400 million five year, credit facility  Expected Close  Q4 2018 – Q1 2019Subject to customary closing conditions and regulatory provisions under the Hart-Scott-Rodino Act  Accretion  Expected to be accretive to earnings in year one following transaction completion Arcosa expects to revisit its revenue and EBITDA guidance for fiscal year 2019, following the closing and additional clarity on purchase price accounting 
 

 Investment Highlights  Moving Infrastructure Forward — ACG Materials Acquisition, November 2018  11  Adds complementary, scaled aggregates and specialty materials platforms  Diversifies customer base across attractive end markets  Accelerates growth into specialty materials and aggregates  Brings top tier management team to Arcosa  Strengthens pipeline of acquisitions and organic growth opportunities   Adds expertise in developing specialty materials applications 
 

 Appendix 
 

   Adjusted EBITDA reconciliation (unaudited)  Moving Infrastructure Forward — ACG Materials Presentation, November 2018  13  $ Millions (For the Trailing Twelve Months Ended August 31, 2018)         Net income  (1.8)  Add:      Interest expense  16.6    Provision/(benefit) for income taxes  (3.9)   Depreciation & amortization expense  15.4   Other adjustments  5.7       Adjusted EBITDA  32.0  “Adjusted EBITDA” is defined as ACG’s net income plus interest expense, income taxes, depreciation and amortization, and other one-time or non-recurring expenses, including management fees, debt refinancing fees, and non-recurring professional fees. Adjusted EBITDA is not a calculation based on generally accepted accounting principles. The amounts included in the Adjusted EBITDA calculation, however, are derived from amounts included in the historical statements of operations data. In addition, Adjusted EBITDA should not be considered as an alternative to net income or operating income as an indicator of ACG’s operating performance, or as an alternative to operating cash flows as a measure of liquidity. We believe Adjusted EBITDA assists investors in comparing a company’s performance on a consistent basis without regard to depreciation and amortization and other expenses, which can vary significantly depending upon many factors.  
 


(Back To Top)