Arcosa (ACA) Sidoti September Small-Cap Virtual Conference summary

Business overview and strategy

• Operates three segments: construction products, engineered structures, and transportation, with a primary focus on U.S. infrastructure markets.

• Construction products, especially aggregates, are the main growth focus, with significant capital allocated over the past six years.

• Engineered structures include wind towers and utility structures, both benefiting from long-term electrification and infrastructure trends.

• Transportation segment centers on barge manufacturing, with positive demand trends expected.

• Ongoing portfolio simplification through divestitures and reinvestment in core segments.

Major acquisitions and portfolio changes

• Acquired Stavola, an aggregates and asphalt business in New Jersey, for $1.2 billion, marking the largest deal in company history.

• Divested a rail components business to help fund the Stavola acquisition and further simplify the portfolio.

• Post-acquisition, aggregates and related products will account for about 65% of EBITDA.

• Acquisition brings higher EBITDA margins and aligns the business more closely with industry leaders.

Margin, cyclicality, and regional expansion

• Stavola’s 35% EBITDA margin is accretive, and overall margins are expected to align with top industry peers.

• Construction segment aims to grow gross profit per ton annually through volume and pricing increases.

• Shift toward less cyclical businesses reduces earnings volatility and supports higher valuation multiples.

• Northeast expansion introduces some seasonality but offers stable, high-margin growth opportunities.

• New Jersey mines and asphalt plants have long reserve lives and are in early ramp-up phases.