Arcosa, Inc. Announces First Quarter 2019 Results

• Strong Year-over-Year Growth Across Key Metrics
• Results Benefited from Broad Infrastructure End Market Exposure and
  Recent ACG Materials Acquisition
• Barge Backlog Increased 67% Year-to-Date
• Full Year 2019 Revenue and Adjusted EBITDA Guidance Ranges Reaffirmed

DALLAS–(BUSINESS WIRE)–Arcosa, Inc. (NYSE: ACA) (“Arcosa” or the “Company”), a provider of
infrastructure-related products and solutions, today announced results
for the first quarter ended March 31, 2019.

First Quarter Highlights

• Revenues increased 16% to $410.9 million
• Net income increased 25% to $27.7 million; adjusted net income
  increased 30% to $28.8 million, excluding non-routine items related to
  the ACG Materials acquisition
• Diluted EPS increased 24% to $0.56; adjusted diluted EPS increased 29%
  to $0.58
• Adjusted EBITDA increased 21% to $58.5 million
• Operating cash flow of $125.0 million in the quarter

“Arcosa’s first quarter results were better than our expectations,” said
Antonio Carrillo, President and Chief Executive Officer. “This strong
start to 2019 supports our confidence in our full year guidance.

“We achieved year-over-year revenue growth in each of our business
segments, benefitting from organic initiatives and the addition of ACG
Materials, which we acquired in December 2018.

“First quarter adjusted EBITDA growth outpaced revenue gains, despite
start-up expenses of $1.8 million related to the re-opening of our
Madisonville, Louisiana barge facility, lost production at our
Caruthersville, Missouri barge facility due to flooding, and
inefficiencies at all of our barge plants as we ramped up production.
Adjusted EBITDA margin expansion was driven by strong margin
improvements in Energy Equipment from increased throughput, improved
operating efficiencies, and the fourth quarter 2018 divestitures of
several businesses. Additionally, Energy Equipment margins benefitted
from the partial recovery of a previously recorded bad debt expense.

“The integration of the ACG Materials acquisition into our Construction
Products Group is also proceeding well. ACG’s first quarter results were
in line with our expectations, and we continue to consider bolt-on
acquisitions in the aggregates and specialty materials markets.

“First quarter order activity remained strong. Our barge business
continued to build backlog, primarily for liquid tank barges, which has
firmed up our production schedule for 2019 and has given us considerable
early backlog for 2020. This was an exceptionally high quarter of orders
with a book to bill of 4.1 that reflected solid demand and the
finalization of several large orders that had been in the pipeline for
months. We remain encouraged by inquiry levels in both the dry and
liquid markets.

“In the Energy Equipment segment, bidding activity remains strong in our
utility structures business with first quarter order levels increasing
sequentially. However, we expect lower second quarter performance driven
by a less favorable product mix from several customer projects that were
delayed beyond the quarter,” noted Mr. Carrillo.

“We continued to execute effectively on our stage one priorities:
growing Construction Products, improving margins in Energy Equipment,
expanding our Transportation Products business as markets continue to
recover, and operating a lean corporate structure.

“Our strong start to the year and confidence in current business trends
support our expectations for substantial growth in 2019. We reaffirm our
full year revenue and adjusted EBITDA guidance ranges of $1.70 billion
to $1.80 billion and $215 million to $225 million, respectively. The
mid-point represents 18% year-over-year adjusted EBITDA growth in 2019,
after absorbing additional standalone company costs and initial pricing
on a long-term components contract,” Mr. Carrillo noted.

Segment Results – Construction Products

• Revenues increased 51% to $106.0 million in the first quarter,
  benefitting from a full quarter of operating results from the December
  2018 acquisition of ACG Materials.
• Operating profit for the first quarter was $11.3 million compared to
  $12.4 million in the same period in 2018.
• Adjusting for the write-up of acquired ACG Materials inventory, first
  quarter Adjusted Segment EBITDA was $21.5 million, $4.0 million higher
  than a year ago. The increase was driven by the ACG acquisition.

Segment Results – Energy Equipment

• First quarter revenues were up 7% year-over-year to $209.1 million.
• Operating profit for the first quarter was $28.2 million compared to
  $17.5 million in the same period in 2018.
• Adjusted Segment EBITDA increased 39% to $35.2 million as a result of
  higher revenues for wind towers and utility structures, improved
  throughput and operating efficiencies, and the fourth quarter 2018
  divestitures of several businesses.
• In addition, the segment collected a $2.9 million bad debt recovery
  against a previously disclosed write-down related to a single customer
  in the utility structures business.
• Segment backlog for utility structures and wind towers was $549.2
  million, down from $633.1 million at the end of 2018. Bidding activity
  continues to be strong for utility structures. No new wind tower
  orders were booked during the quarter.

Segment Results – Transportation Products

• First quarter revenues increased 9% to $97.5 million.
• Operating profit for the first quarter was $8.3 million compared to
  $9.0 million in the same period in 2018.
• Adjusted Segment EBITDA decreased 8% to $12.1 million from $13.2
  million in the same period in 2018, resulting from approximately $1.8
  million of start-up expenses associated with the re-opening of the
  Louisiana barge facility as well as a flood at our Caruthersville,
  Missouri facility.
• The barge business booked orders for $203 million in the quarter,
  bringing backlog to $383.9 million at the end of March, up from $230.5
  million at the end of 2018. Approximately 67% of the backlog is
  expected to be delivered in 2019, with the balance in 2020.

Additional Notes on Financial Results

• Corporate costs were $10.5 million during the first quarter compared
  to $7.7 million in the first quarter last year, reflecting increased
  independent public company costs. Consistent with our previously
  announced expectation of corporate costs of approximately $50 million
  in 2019, corporate costs are anticipated to increase throughout the
  remainder of 2019.
• The Company reported a lower effective tax rate of 22.2% during the
  quarter compared to 26.5% for the same period in 2018 due to increased
  valuation allowances in the prior period. The Company expects a
  normalized annual tax rate of 25.0% in 2019.
• The non-routine items excluded from Adjusted Net Income, Adjusted
  Diluted EPS, and Adjusted EBITDA for the three months ended March 31,
  2019 and 2018 are outlined in the accompanying tables and relate to
  the fair value mark-up of acquired ACG Materials inventory.

Liquidity and Capital Allocation

• The Company ended the quarter with $118.0 million of cash and cash
  equivalents compared to $99.4 million at year end 2018.
• During the quarter, debt declined from $185.5 million to $105.1
  million, as the Company repaid $80.0 million of advances under its
  $400 million revolving credit facility. Combined with unused capacity
  under its credit facility, the Company had $370.5 million of liquidity
  at March 31, 2019.
• Operating cash flow was $125.0 million in the quarter, driven by an
  $85.2 million reduction in accounts receivable.
• During the first quarter, capital expenditures were $18.0 million, and
  the Company continues to expect capital expenditures of between $70
  million and $80 million for 2019.
• Approximately $8.0 million, or 269,574 shares at an average price of
  $29.60, was repurchased during the quarter, leaving $39 million
  available under the $50 million authorization approved in December
  2018.
• Also, in March 2019, the Company declared a quarterly dividend of
  $0.05 per share that was paid in April 2019.

Non-GAAP Financial Information

This earnings release contains financial measures that have not been
prepared in accordance with generally accepted accounting principles
(GAAP). Reconciliations of non-GAAP financial measures to the closest
GAAP measure are included in the accompanying tables to this earnings
release.

Presentation of Financials

The spin-off of the Company by Trinity Industries, Inc. (“Former
Parent”; NYSE:TRN) was completed on November 1, 2018. The Company’s
financial statements for periods prior to November 1, 2018 were prepared
on a “carve-out” basis. The carve-out financials of the Company are not
necessarily representative of the amounts that would have been reflected
in the financial statements had the Company been an independent company
during the applicable periods.

Conference Call Information

A conference call is scheduled for 8:30 a.m. Eastern time on May 3, 2019
to discuss 2019 first quarter results. To listen to the conference call
webcast, please visit the Investor Relations section of Arcosa’s website
at http://ir.arcosa.com/Events.
A slide presentation for this conference call will be posted on the
Company’s website in advance of the call at http://ir.arcosa.com/Events.
The audio conference call number is 877-876-9173 for domestic callers
and 785-424-1667 for international callers. The conference ID is ARCOSA.
An audio playback will be available through 11:59 p.m. Eastern time on
May 17, 2019, by dialing 800-839-3613 for domestic callers and
402-220-2973 for international callers. A replay of the webcast will be
available for one year on Arcosa’s website at http://ir.arcosa.com/Events.

About Arcosa

Arcosa, Inc. (NYSE:ACA), headquartered in Dallas, Texas, is a provider
of infrastructure-related products and solutions with leading positions
in construction, energy, and transportation markets. Arcosa reports its
financial results in three principal business segments: the Construction
Products Group, the Energy Equipment Group, and the Transportation
Products Group. For more information, visit www.arcosa.com.

Some statements in this release, which are not historical facts, are
“forward-looking statements” as defined by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include
statements about Arcosa’s estimates, expectations, beliefs, intentions
or strategies for the future. Arcosa uses the words “anticipates,”
“assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,”
“may,” “will,” “should,” “guidance,” “outlook,” and similar expressions
to identify these forward-looking statements. Forward-looking statements
speak only as of the date of this release, and Arcosa expressly
disclaims any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statement contained herein, except as
required by federal securities laws. Forward-looking statements are
based on management’s current views and assumptions and involve risks
and uncertainties that could cause actual results to differ materially
from historical experience or our present expectations, including but
not limited to assumptions, risks and uncertainties regarding
achievement of the expected benefits of Arcosa’s separation from Trinity
Industries, Inc.; tax treatment of the separation; failure to
successfully integrate the ACG Materials acquisition, or failure to
achieve the expected benefits of the acquisition; market conditions and
customer demand for Arcosa’s business products and services; the
cyclical nature of, and seasonal or weather impact on, the industries in
which Arcosa competes; competition and other competitive factors;
governmental and regulatory factors; changing technologies; availability
of growth opportunities; market recovery; improving margins; and
Arcosa’s ability to execute its long-term strategy, and such
forward-looking statements are not guarantees of future performance. For
further discussion of such risks and uncertainties, see “Risk Factors”
and the “Forward-Looking Statements” section of “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in
Arcosa’s Form 10-K for the year-ended December 31, 2018, as may be
revised and updated by Arcosa’s Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K.

GAAP does not define “Earnings Before Interest, Taxes, Depreciation,
Depletion and Amortization” (“EBITDA”) and it should not be considered
as an alternative to earnings measures defined by GAAP, including net
income. We use this metric to assess the operating performance of our
consolidated business, as a metric for incentive-based compensation, and
as a basis for strategic planning and forecasting as we believe that it
closely correlates to long-term shareholder value, and we believe this
metric also assists investors in comparing a company’s performance on a
consistent basis without regard to depreciation, depletion, and
amortization, which can vary significantly depending on many factors. We
adjust consolidated EBITDA for certain non-routine items (“Adjusted
EBITDA”) to provide a more consistent comparison of earnings performance
from period to period, which we also believe assists investors in
comparing a company’s performance on a consistent basis. “Adjusted
EBITDA Margin” is defined as Adjusted EBITDA divided by Revenues.

“Segment EBITDA” is defined as segment operating profit plus
depreciation, depletion, and amortization. GAAP does not define Segment
EBITDA and it should not be considered as an alternative to earnings
measures defined by GAAP, including segment operating profit. We use
this metric to assess the operating performance of our businesses, as a
metric for incentive-based compensation, and as a basis for strategic
planning and forecasting as we believe that it closely correlates to
long-term shareholder value, and we believe this metric also assists
investors in comparing a company’s performance on a consistent basis
without regard to depreciation, depletion, and amortization, which can
vary significantly depending on many factors. We adjust Segment EBITDA
for certain non-routine items (“Adjusted Segment EBITDA”) to provide a
more consistent comparison of earnings performance from period to
period, which we also believe assists investors in comparing a company’s
performance on a consistent basis. “Adjusted Segment EBITDA Margin” is
defined as Adjusted Segment EBITDA divided by Revenues.

GAAP does not define “Adjusted Net Income” and it should not be
considered as an alternative to earnings measures defined by GAAP,
including net income. We use this metric to assess the operating
performance of our consolidated business. We adjust net income for
certain non-routine items to provide investors with what we believe is a
more consistent comparison of earnings performance from period to period.

GAAP does not define “Adjusted Diluted EPS” and it should not be
considered as an alternative to earnings measures defined by GAAP,
including diluted EPS. We use this metric to assess the operating
performance of our consolidated business. We adjust diluted EPS for
certain non-routine items to provide investors with what we believe is a
more consistent comparison of earnings performance from period to period.

Contacts

Scott C. Beasley
Chief Financial Officer

Gail M. Peck
SVP, Finance & Treasurer

T 972.942.6500
[email protected]

David Gold
ADVISIRY Partners

T 212.661.2220
[email protected]