Arcosa, Inc. (ACA)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 delivered strong top-line and profitability: revenue $666.2M (+14% y/y), Adjusted EBITDA $128.3M (+52% y/y) with 480 bps margin expansion to 19.3%, while GAAP EPS was a loss of $(0.16) on higher DD&A from acquisitions and a higher tax rate; Adjusted EPS was $0.46 .
• 2025 guidance implies another step-up: revenue $2.8–$3.0B and Adjusted EBITDA $545–$595M (midpoint ≈ +30% y/y) with DD&A of $230–$235M, tax rate 19–20%, CapEx $145–$165M, and corporate expense ≈$60M; management expects significant margin expansion and continued deleveraging (Net Debt/Adj. EBITDA 2.9x exiting 2024) .
• Construction Products benefited from the Stavola acquisition (Q4 revenue +31% to $311.9M; segment Adj. EBITDA +52% to $80.8M; margin +370 bps to 25.9%); Engineered Structures grew on wind tower volumes/Ameron; Barge EBITDA more than doubled ex-divested steel components with a 1.4x book-to-bill .
• Cash generation accelerated: Q4 operating cash flow $248.2M and free cash flow $199.2M, enabling full revolver repayment and improved net leverage to 2.9x; total liquidity $886.6M at year-end .
• Catalysts for shares: 2025 guidance implying double-digit organic growth layered on full-year Stavola contribution, visible wind/barge backlogs, and a focused deleveraging path; offsets include weather seasonality in Q1 from Northeast exposure and steel/tariff policy uncertainty .

What Went Well and What Went Wrong

What Went Well

• Construction Products performance and portfolio mix shift: Stavola added $78.2M revenue and $27.1M Adj. EBITDA in Q4; segment margin expanded to 25.9% with freight-adjusted margin at 28.3% .
• Engineered Structures margin expansion backed by wind tower ramp and Ameron: Q4 revenue +11% to $261.5M; Adj. Segment EBITDA +41% to $45.7M; margin +380 bps to 17.5%; backlog $1.19B with ~64% expected to deliver in 2025 .
• Free cash flow and deleveraging: Q4 operating cash flow $248.2M; FCF $199.2M; revolver fully repaid; Net Debt/Adj. EBITDA 2.9x vs. 3.4x in Q3, positioning for further deleveraging in 2025 .

What Went Wrong

• GAAP EPS loss of $(0.16) on higher DD&A from fair value step-ups (primarily Stavola) and a higher-than-expected effective tax rate; combined impact reduced Adjusted EPS by $0.40 in Q4 .
• Organic aggregates volumes were soft amid weather and portfolio pruning; Construction Products organic revenue down 4% (freight pass-through and divestitures), and planned downtime at a lightweight aggregates facility weighed on specialty materials .
• Estimates context: S&P Global consensus data could not be retrieved at this time; beat/miss vs. Street not determinable in this report window (consensus unavailable via S&P Global).

Financial Results

Consolidated trend (oldest → newest)

Notes: Q4 revenue +14% y/y; Adj. EBITDA +52% y/y; Adj. EBITDA margin +480 bps y/y .

Q4 2024 Actual vs Estimates (S&P Global)

• Consensus (S&P Global) unavailable at time of query; beat/miss not assessed. We attempted to fetch S&P Global estimates but could not retrieve due to access limits; therefore, we do not present consensus comparisons in this report.

Segment performance (Q4 2023 vs Q4 2024)

Drivers: Stavola contributed $78.2M revenue and $27.1M Adj. EBITDA in Q4 within Construction Products; higher wind tower volumes and Ameron boosted Engineered Structures; barge deliveries and efficiencies lifted Transportation Products; prior-year steel components divestiture affects y/y comparability .

KPIs and balance sheet

Guidance Changes

Reference point: At Q3, FY 2024 guidance was revenue $2.56–$2.63B; Adj. EBITDA $435–$450M (raised then) .

Earnings Call Themes & Trends

Management Commentary

• “2024 was a transformative year… acquisition of aggregates-led Stavola... entry into the nation's largest MSA… and Ameron… We also divested certain non-core assets… Our actions combined to deliver record full year revenues, Adjusted EBITDA, and margin in 2024.” .
• “At the mid-point of our 2025 full year guidance range, we anticipate a 30% increase in Adjusted EBITDA and another year of significant margin expansion… roughly 40% of our growth in 2025 to stem from a double-digit organic increase.” .
• “Stavola performed well during our first quarter of ownership… We finished the year strong with fourth quarter free cash flow of nearly $200 million… resulting in net leverage of 2.9x.” .
• “Depreciation, depletion and amortization expense increased approximately 50% y/y… For full year 2025, we expect DD&A of $230–$235 million… effective tax rate of 19% to 20%… corporate expenses ≈$60 million.” .
• “We believe the company is well prepared against the current trade and tariff uncertainties… guidance does not incorporate any impact from potential regulatory changes.” .

Q&A Highlights

• Steel pricing impact and pass-through: Revenue shortfall vs guidance largely from Engineered Structures due to steel price declines; transmission pricing mostly pass-through with some lag; margins can benefit when steel prices fall .
• Stavola seasonality: Expect ~200 bps margin headwind in Q1 at Construction Products as Stavola is roughly breakeven in Q1; recycled aggregate facilities have similar seasonality .
• CapEx step-down and organic project contributions: 2025 CapEx $145–$165M focused on maintenance; concrete pole plant (FL) and NM wind tower ramp accretive to segment EBITDA/margins; recycled aggregates and specialty materials expansions performing well .
• Aggregates volumes/pricing outlook: Organic volumes flattish to slightly up in 2025; mid-single-digit price increases; Q4 and early Q1 saw heavier rainfall/cold weather .
• Barge demand and capacity: Customers (esp. tank barges) ordering ahead on capacity/steel price risk; tank barge delivery slots into 2026 at current production rates .

Estimates Context

• S&P Global (Capital IQ) consensus estimates were unavailable at time of retrieval due to access limitations; as such, we do not present Q4 2024 beat/miss vs. Street or FY 2025 consensus comparisons in this report. We default to company-reported actuals and guidance (Consensus unavailable via S&P Global).

Key Takeaways for Investors

• Mix shift continues to drive structural margin gains: Adj. EBITDA margin reached 19.3% in Q4, aided by Stavola and Ameron, with 2025 guidance implying further expansion .
• 2025 setup is strong: Guidance implies ~30% Adj. EBITDA growth at midpoint with ~40% organic contribution and nine months of incremental Stavola, underpinned by healthy utility structures, wind tower backlog, and barge visibility .
• Deleveraging is a near-term capital priority: Q4 FCF of $199M enabled revolver paydown; Net Debt/Adj. EBITDA at 2.9x supports a path back to 2.0–2.5x in ~18 months post-Stavola .
• Near-term watch items: Q1 seasonal/mix headwinds in Construction (Stavola) and potential steel/tariff policy changes; management expects normalized 19–20% tax rate and elevated DD&A from acquisition step-ups .
• Pricing power intact amid weather variability: Aggregates pricing remains strong (mid-single-digit 2025 pricing expected), though volumes can be weather-affected; expect more 2H weighting .
• Barge cycle strengthening: 1.4x book-to-bill in Q4; tank barge slots extend into 2026, supporting back-half 2025 growth as mix normalizes .
• Shareholder returns maintained: $0.05 quarterly dividend and a renewed $50M repurchase authorization through 2026 provide optionality alongside deleveraging .

Appendix: Q4 2024 Detailed Disclosures (select)

• Consolidated income statement, segment revenue/operating profit tables, backlog, balance sheet, and cash flow reconciliations are provided in the company’s Q4 2024 8-K press release and exhibit .
• Non-GAAP reconciliations for Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, and segment EBITDA are included in the Q4 materials .
• Prior quarter (Q3 and Q2 2024) results, guidance updates, and non-GAAP reconciliations included in the Q3 and Q2 press releases .