Arcosa’s Earnings Call Highlights Record Growth and Strategic Success

Arcosa ((ACA)) has held its Q2 earnings call. Read on for the main highlights of the call.

Arcosa’s recent earnings call painted a picture of robust growth and strategic success, marked by record financial metrics and effective acquisition integration. Despite facing some challenges, such as weather-related impacts and uncertainties in wind tower orders, the company’s overall sentiment was positive, emphasizing its strong positioning in key sectors like construction and utility structures.

Record Quarter for Arcosa

Arcosa reported a record-breaking quarter with revenues soaring by 18% and an all-time high adjusted EBITDA margin of 20.9%, marking a 360 basis point increase. The company’s adjusted EBITDA grew by an impressive 42% year-over-year, excluding the divested steel components business, highlighting its operational efficiency and strategic focus.

Stavola Acquisition Success

The acquisition of Stavola in October 2024 proved to be a significant growth driver for Arcosa, contributing to a 14% increase in consolidated revenues and expanding the adjusted EBITDA margin by 250 basis points. This successful integration underscores Arcosa’s strategic acumen in enhancing its market position.

Strong Growth in Construction Products

The Construction Products segment experienced remarkable growth, with revenues increasing by 28% and adjusted segment EBITDA rising by 44%, largely driven by the Stavola acquisition. The segment’s margin expanded by 310 basis points to 28.3%, reflecting strong market demand and operational excellence.

Engineered Structures Performance

Arcosa’s Engineered Structures segment reported a 7% increase in revenue and a 31% rise in adjusted segment EBITDA, with margins expanding by 350 basis points to a record 18.7%. The segment ended the quarter with a record backlog for Utility and Related Structures of $450 million, up 9% from the start of the year, indicating sustained demand.

Increased Aggregates Pricing

The aggregates business benefited from an 8% increase in freight-adjusted average sales price per ton, resulting in a 15% increase in adjusted cash gross profit per ton. This pricing strength demonstrates Arcosa’s ability to capitalize on market conditions to enhance profitability.

Weather-Related Challenges

Arcosa’s organic legacy Construction Products business faced challenges due to above-average rainfall, which impacted volumes and cost absorption. Despite these hurdles, the company remains optimistic about overcoming these temporary setbacks.

Wind Towers Order Uncertainty

While there was an increase in inquiries for wind towers, Arcosa faced some uncertainty in securing new orders, with the backlog down 23% from the start of the year. This highlights a potential area of concern that the company will need to address moving forward.

Trench Shoring Business Decline

The trench shoring business experienced a decline in revenues due to lower volumes and a reduction in steel prices, resulting in unchanged margins. This segment’s performance reflects broader market challenges that Arcosa is navigating.

Positive Forward Momentum

Arcosa’s forward-looking guidance for 2025 is optimistic, with anticipated revenues of $2.9 billion, up 17% year-over-year, and adjusted EBITDA of $570 million, up 30%. This guidance reflects Arcosa’s sustained growth potential and strategic positioning in the market.

In summary, Arcosa’s earnings call highlighted a period of strong performance and strategic growth, driven by successful acquisitions and robust market positioning. Despite facing some challenges, the company’s outlook remains positive, with a focus on leveraging its strengths in key sectors to drive future growth.