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 strategy is to simplify the portfolio and reinvest in core growth areas.

Recent 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, transforming the business mix.

• Margins are expected to align with leading industry peers, with a focus on maintaining and growing profitability.

• Bolt-on acquisitions remain a key strategy, especially in the Northeast, leveraging Stavola as a platform.

Market dynamics, margins, and cyclicality

• Aggregates business benefits from strong local market dynamics and high EBITDA margins (~35%).

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

• Shifted business mix to less cyclical segments, reducing exposure to highly cyclical markets.

• Northeast expansion introduces some seasonality, but overall cyclicality is mitigated by pricing power.

• New Jersey mines and asphalt plants offer significant growth potential, with opportunities to expand recycled aggregates and stabilized sand offerings.