Arcosa, Inc. (ACA)·Q3 2025 Earnings Summary

Executive Summary

• Record quarter: revenue $0.80B (+25% YoY) and Adjusted EBITDA $174.2M (+53% YoY), with margin expanding 400 bps to 21.8% . CEO highlighted “success of our portfolio transformation,” with Stavola accretive and leverage ahead of plan .
• Beat vs S&P Global consensus: revenue $797.8M vs $782.8M; Adjusted EPS $1.56 vs $1.35; both above expectations; notable strength in Construction Products and Engineered Structures (values from S&P Global; see Estimates Context) .*
• Guidance: FY25 revenue range tightened to $2.86–$2.91B (from $2.85–$2.95B), and Adjusted EBITDA raised to $575–$585M (from $555–$585M), effectively lifting the midpoint by $10M .
• Balance sheet: Net Debt/Adj. EBITDA improved to 2.4x (from 2.8x in Q2), aided by $134M FCF and $100M term loan repayment; total liquidity $920M .
• Catalysts: record utility structures backlog, new wind tower orders improving 2026–27 visibility, and barge backlog up 16% YTD; mix/price discipline supports margins across segments .

What Went Well and What Went Wrong

• What Went Well

  • Broad-based strength: all segments contributed; Adjusted EBITDA +53% and margin +400 bps to 21.8% . CEO: “record results led by 27% revenue growth… roughly 50% Adjusted EBITDA improvement” .
  • Construction Products: Stavola added $102.6M revenue and $44.5M Adj. Segment EBITDA; aggregates volumes +18%, ASP +9%, unit profitability/ton +17% .
  • Engineered Structures: revenue +11%, Adj. Segment EBITDA +29%, margin +240 bps to 18.3%; record utility structures backlog $461.5M; additional wind tower orders ~$117M including $60M post quarter-end .

• What Went Wrong

  • Legacy aggregates downtime: operating inefficiencies at a few locations reduced cost absorption; organic Adjusted EBITDA roughly flat despite pricing gains .
  • Higher interest burden: interest expense rose to $27.1M (+$11.3M YoY) due to debt from Stavola acquisition .
  • Wind towers backlog down vs year-end: backlog $526.3M at 9/30/25 (vs $776.8M at 12/31/24), though Q4 orders (~$60M) improved visibility .

Financial Results

• Estimates vs Actuals (S&P Global; values marked with asterisk from S&P Global)
  • Revenue: $782.8M consensus vs $797.8M actual — Beat .*
  • Primary/Adjusted EPS: $1.35 consensus vs $1.56 actual — Beat .*
  • Values retrieved from S&P Global.

Non-GAAP notes: Adjusted metrics exclude acquisition/divestiture items, impairments, and gains/losses on asset/business sales; see company reconciliations for details .

Guidance Changes

Management reiterated strong end-market demand drivers (U.S. infrastructure, grid investment) underpinning the outlook .

Earnings Call Themes & Trends

Management Commentary

• Strategic message: “Our third quarter performance underscores the success of our portfolio transformation… record results led by 27% revenue growth… roughly 50% Adjusted EBITDA improvement…” .
• Power market: “Expansion of data centers and the rise in electricity consumption… driving significant and sustained increase in power demand… our engineered structures platform is strategically positioned” .
• Capital allocation: “Now that we are back within our target range, we will continue to take a balanced approach… investing in our businesses… and bolt-on acquisitions” .
• Construction: “Stavola led our significant… growth and was highly accretive… aggregates volumes increased 18% and pricing increased 9%” .
• Barge: “We are pricing our barges… we’re not giving our capacity away… see solid demand and visibility deep into 2026” .

Q&A Highlights

• Guidance puts/takes: Revenue range tightened due to slight construction volume shortfall; EBITDA midpoint raised ~$10M; Q4 seasonality and holidays noted; Stavola anniversaries in Q4 .
• Aggregates downtime: Issues “largely behind us”; organic volume trends improved exiting Q3 .
• Engineered Structures margins: Sustained by pricing, operating improvements, and utility volume growth; wind facility ramp benefits .
• Wind orders/backlog shift: Orders added and 2028 volumes moved into 2026 to bridge incentive period; management expects additional orders over coming months .
• Barge cycle: Multi-year replacement cycle; emphasizing pricing discipline; orders across hopper and tank .
• Capital allocation: Aim to move leverage toward lower end of 2.0–2.5x while pursuing bolt-ons and organic projects (IL transmission conversion; MX galvanizing) .

Estimates Context

• Q3 2025 S&P Global consensus vs actual:
  • Revenue: $782.8M consensus vs $797.8M actual — Beat .*
  • Primary/Adjusted EPS: $1.35 consensus vs $1.56 actual — Beat .*
• Implications: Street likely lifts FY25 EBITDA and segment margin assumptions given stronger Construction Products throughput (despite legacy downtime) and sustained Engineered Structures margins. Values retrieved from S&P Global.

Key Takeaways for Investors

• Mix and pricing power driving operating leverage: Adjusted EBITDA margins expanded to 21.8% with Construction Products freight-adjusted margins at 32.7% .
• Aggregates momentum re-accelerating: volumes +18%, ASP +9% and unit profitability/ton +17%; operational downtime addressed heading into Q4 .
• Power exposure is a structural tailwind: record utility backlog and incremental wind orders enhance 2026–27 visibility; incremental capacity actions should support margins .
• Barge upcycle intact with pricing discipline: backlog +16% YTD and visibility well into H2’26; supports multi-year cash generation .
• Deleveraging creates optionality: Net Debt/Adj. EBITDA down to 2.4x and $920M liquidity supports bolt-ons and organic investments while maintaining flexibility .
• Guidance quality improving: FY25 EBITDA midpoint raised; revenue range tightened; CapEx plan $145–$155M to support growth projects .
• Near-term trading lens: Positive estimate revisions and visibility should be supportive; watch Q4 construction seasonality and execution on aggregates cost absorption as the primary swing factors .

Footnote: *Values retrieved from S&P Global.