Fourth Quarter and Full Year 2019 Earnings February 27, 2020
How to Find Us NYSE TICKER OUR WEBSITE ACA www.arcosa.com INVESTOR CONTACT HEADQUARTERS InvestorResources@arcosa.com Arcosa, Inc. 500 North Akard Street, Suite 400 Dallas, Tx 75201 / 2 Moving Infrastructure Forward
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, intentions or strategies fo r the future. Arcosa uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “o utl ook,” “strategy,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this presentation, 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 mate rially from historical experience or our present expectations, including but not limited to assumptions, risks and uncertainties regarding achievement of the expecte d benefits of Arcosa’s spin -off from Trinity Industries, Inc. (“Trinity”); tax treatment of the spin -off; failure to successfully integrate Cherry Industries, Inc. ( “Cherry”), 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; ability to improve 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 "Risk Factors" and the "Forward-Looking Statements" section of "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Arcosa's Form 10-K for the year-ended December 31, 2019 which is to be filed on or about February 27, 2020, and as may be revised and updated by Arcosa's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Non-GAAP Financial Measures This presentation contains financial measures that have not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Reconciliations of non-GAAP financial measures to the closest GAAP measure are provided in the Appendix. Presentation of Financials The spin- off of the Company by Trinity was completed on November 1, 2018. The Company’s financial statements for periods prior to November 1, 2018 were presented on a “carve - out” basis. The carve -out financials of the Company are not necessarily representative of the amounts that would have been reflected in the financial statements had the Company been an independent company during the applicable periods. / 3 Moving Infrastructure Forward
Agenda Strategic Highlights Segment Commentary and Outlook Long-term Vision and Capital Allocation / 4 Moving Infrastructure Forward
Agenda Strategic Highlights Segment Commentary and Outlook Long-term Vision and Capital Allocation / 5 Moving Infrastructure Forward
Strategic Highlights 2020 projected to Deployed more Completed our Solid financial $273M of Free 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, new ‘cash Adjusted across most of strategic with plans to culture’ begins EBITDA up our markets. growth since publish our first EBITDA guidance the time of spin, Sustainability 29%, driven by to show of $275-$300M, up with ACG Report for full organic growth, progress 19% at midpoint Materials and year 2020 acquisitions, Cherry and operating Industries improvements acquisitions See Adjusted EBITDA and Free Cash Flow reconciliations in Appendix . / 6 Moving Infrastructure Forward
2019 Financial Results Full Year Adjusted EBITDA increased 29%, driven by organic growth, acquisitions, and operating improvements 4th Quarter ($M’s) Full Year ($M’s) Revenues Net Income Adjusted EBITDA Revenues Net Income Adjusted EBITDA +17% +19% Adjusted Reported Adjusted Reported +19% +29% 27.7 53.1 446.9 +29% 1,736.9 114.8 240.7 45.4 374.4 1,460.4 +7% 21.1 89.1 186.5 113.3 19.8 75.7 Q4-18 Q4-19 Q4-18 Q4-19 Q4-18 Q4-19 FY-18 FY-19 FY-18 FY-19 FY-18 FY-19 Margin 12.1% 11.9% Margin 12.8% 13.9% There were no adjustments made to 4Q19 reported Net Income. See Adjusted Net Income and Adjusted EBITDA reconciliations in Appendix . / 7 Moving Infrastructure Forward
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 ▪ Softness in new railcar market ▪ Continued strength in Construction Products, led by healthy ▪ Oil and gas markets, served by our aggregate plants infrastructure spending in our key markets ▪ Lower wind tower margins ▪ Strategic expansion of Cherry’s natural and recycled aggregates platform ▪ Dry barge recovery, coupled with steady liquid barge demand ▪ Robust utility structures demand, driven by grid hardening and reliability initiatives ▪ Steady demand for storage tanks in U.S. and Mexico +17% to midpoint Revenues +19% to midpoint Adjusted EBITDA $M’s $M’s 1,950 – 2,100 275 – 300 1,737 241 1,460 187 2018 2019 2020 Guidance 2018 2019 2020 Guidance See Adjusted EBITDA reconciliation in Appendix. / 8 Moving Infrastructure Forward
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 Provides levers for additional Offers compelling competitive attractive Houston market, a key value creation advantages gap in our current Texas network • Largest recycled aggregates producer Platform to replicate Cherry’s natural in the U.S. with experienced and recycled aggregates in new management team geographies • Extensive network of strategically Opportunity to leverage legacy natural located facilities and reserve positions Aggregate mines aggregates expertise in Cherry’s Specialty locations Cherry locations • market Long-term customer and supplier relationships Houston-area Cherry Stable platform expected to produce • locations Access to critical raw material, both Montgomery Washington high returns on capital through a cycle Liberty internally and externally sourced Austin Waller Harris Cherry HQ Chambers • Technical expertise in concrete Recycling Facility Fort Bend Galveston Accelerates Arcosa’s overall portfolio recycling and repurposing Stabilized Facility shift into higher valued Construction Brazoria Recycling + Stabilized Facility Products / 9 Moving Infrastructure Forward
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 Energy Management Product Use and Quality Employee Health and Safety Diversity Air Quality Talent Management GHG Emissions Water and Wastewater Management Community Relations Land Management Governance and Business Ethics Our Materiality Assessment was based primarily on SASB standards, with additional input from stakeholders and other sustainability standards / 10 Moving Infrastructure Forward
Agenda Strategic Highlights Segment Commentary and Outlook Long-term Vision and Capital Allocation / 11 Moving Infrastructure Forward
Segment Results: Construction Products Full Year EBITDA growth of 26%, although lower margins, primarily from ACG acquisition 4th Quarter ($M’s) Full Year ($M’s) Adjusted Segment Revenues Revenues Adjusted Segment EBITDA EBITDA +56% +44% +50% +26% 102.2 439.7 17.9 92.1 16.0 75.0 73.1 12.4 292.3 65.6 74.4 14.3 86.2 364.7 51.3 217.9 Q4-18 Q4-19 Q4-18 Q4-19 FY18 FY19 FY18 FY19 20.9% 18.9% Margin 17.5% 25.0% Margin Aggregates & Specialty Materials Construction Site Support See Adjusted Segment EBITDA reconciliation in Appendix . / 12 Moving Infrastructure Forward
Segment Results: Energy Equipment Full Year EBITDA growth of 58% through organic growth and significant margin improvements 4th Quarter ($M’s) Full Year ($M’s) Revenues Adjusted Segment Revenues Adjusted Segment EBITDA EBITDA +3% +19% +7% +58% 213.0 27.6 836.6 128.6 207.0 780.1 23.2 211.2 57.0 51.6 197.2 81.5 625.4 155.4 156.0 582.9 Q4-18 Q4-19 Q4-18 Q4-19 FY18 FY19 FY18 FY19 13.0% Margin 10.4% 15.4% Margin 11.2% Wind Towers & Utility Structures Storage Tanks & Other See Adjusted Segment EBITDA reconciliation in Appendix . / 13 Moving Infrastructure Forward
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