Arcosa Construction Products Division Performs Well

Arcosa Inc. announced results for the first quarter ended March 31. The company is reporting:

  • Revenues of $535.8 million, up 22%.
  • Net income of $20.2 million and Adjusted Net Income of $20.9 million.
  • Diluted EPS of $0.41, up 28%, and Adjusted Diluted EPS of $0.42, up 20%.
  • Adjusted EBITDA of $73.4 million, up 30%.
  • Operating cash flow of $24.5 million and Free Cash Flow of $(1.4) million.

On April 26, the company announced it entered into a definitive agreement to sell its storage tanks business to Black Diamond Capital Management LLC for $275 million in cash. The transaction is expected to close in the second half of 2022 and is subject to customary closing conditions, including regulatory approvals in the United States and Mexico.

“Arcosa’s first quarter results exceeded our expectations, with Adjusted EBITDA growth of 30% outpacing revenue growth,” said Antonio Carrillo, president and chief executive officer. “I am very pleased with our strong start to the year, as our portfolio of businesses generated solid performance in a challenging environment.

“In addition, we significantly advanced our long-term vision to reduce the complexity of Arcosa’s overall portfolio with the agreement to sell our storage tanks business. We intend to invest the proceeds into our key growth businesses. The divestiture aligns with our focused strategy to shift our business mix towards less cyclical, higher-margin growth opportunities that leverage our core strengths and drive long-term shareholder value creation.”

Carrillo continued, “Led by contributions from recent acquisitions and supported by organic growth, Construction Products performed well during the quarter, delivering a 26% increase in Adjusted Segment EBITDA. Construction activity remained healthy, and we experienced another quarter of broad pricing gains across our portfolio. Favorable market conditions and improved efficiencies in our utility structures business, coupled with solid execution in our cyclical businesses, elevated our first quarter performance.

“We are focused on closely managing inflationary pressures, proactively raising prices and carefully monitoring raw material costs. Global steel prices remain elevated, recouping declines observed earlier in the first quarter ahead of the escalating conflict in Ukraine. As a result, the market expectation is for steel prices to remain high through at least the remainder of 2022.

“Benefiting from our ability to secure competitive steel pricing, we received $105 million of orders in our barge business during the first quarter, representing the highest quarterly level of orders in two years. The profitability of these orders remains low, but they reflect the significant pent-up replacement demand for hopper barges and fill our planned capacity for 2022, while helping to leverage our fixed costs. In addition, the new orders provide critical production continuity into 2023, positioning us to remain flexible and participate in the anticipated recovery.”

Carrillo concluded, “We ended the quarter with ample liquidity and improved our Free Cash Flow compared to last year.”

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