Arcosa Acquires Southwest Rock Products

Arcosa has acquired Arizona-based Southwest Rock Products LLC and affiliated entities for $150 million. Southwest Rock is a pure-play natural aggregates company serving the greater Phoenix metropolitan area with five active sand and gravel locations and one hard rock quarry producing approximately five million annual tons of construction aggregates.

“I am excited to announce the acquisition of Southwest Rock, which is an excellent strategic fit for Arcosa,” said Antonio Carrillo, president and chief executive officer. “The business is aligned with our strategy to reduce our cyclicality and enter new and attractive geographies. Southwest Rock has an experienced operating team, a strong footprint in the high growth Phoenix market area, and a pipeline of actionable bolt-on opportunities.

“We have made considerable progress advancing our portfolio shift into higher margin and more stable Construction Products,” Carollio noted. “Since our spin-off, we have invested approximately $1.3 billion in construction materials acquisitions, which has expanded our Construction Products businesses to now represent more than 50% of our Adjusted EBITDA.”

The company bundled the announcement in with its second-quarter report, in which it achieved revenues of $515.1 million, up 3%; net income of $20.8 million and adjusted net income of $29.1 million.

“Our second quarter results reflect the resilience of our portfolio of infrastructure businesses as we executed successfully and kept pace with last year’s record results despite some headwinds,” Carillo said. “Construction activity was strong overall, with some offset from abnormally wet weather during the quarter, especially in our largest markets within Texas and along the Gulf Coast. The integration of StonePoint is progressing smoothly and performance is tracking well against our expectations, adjusting for the wet weather.

“Order activity for our utility and traffic structures businesses was very healthy during the quarter as growth drivers remain intact. We are also encouraged by improving fundamentals in the North American railcar market, with orders in our steel components business outpacing shipments during the quarter.

“We continue to confront high steel prices. On a positive note, we have been able to proactively raise prices across most of our steel manufacturing businesses to help mitigate the impact on margins. While long-term fundamentals remain strong for our barge business, high steel prices continued to depress order activity. As planned, we will idle our Louisiana plant in the third quarter, and we have taken additional steps to strategically extend our backlog into 2022 to allow time for a market recovery,” Carillo concluded.

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