Arcosa, Inc. (ACA) FY 2024 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A is presented in the following sections:

•Company Overview

•Market Outlook

•Executive Overview

•Results of Operations

•Liquidity and Capital Resources

•Contractual Obligations and Commercial Commitments

•Critical Accounting Policies and Estimates

•Recent Accounting Pronouncements

•Forward-Looking Statements

Our MD&A should be read in conjunction with our Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K.

Company Overview

Arcosa, Inc. and its consolidated subsidiaries (“Arcosa,” “Company,” “we,” or “our”), headquartered in Dallas, Texas, is a provider of infrastructure-related products and solutions with leading brands serving construction, engineered structures, and transportation markets in North America. Arcosa is a Delaware corporation and was incorporated in 2018 as an independent, publicly-traded company, listed on the New York Stock Exchange.

Market Outlook

•Within our Construction Products segment, market demand remains healthy overall when seasonal weather conditions have been normal, supported by increased infrastructure spending and private non-residential activity. The outlook for single-family residential housing continues to be impacted by higher interest rates and home affordability, which has negatively impacted volumes. We have been successful in managing inflationary cost pressures through proactive price increases.

•Within our Engineered Structures segment, our backlog as of December 31, 2024 provides good production visibility for 2025. Our customers remain committed to taking delivery of these orders. In utility structures, order and inquiry activity continues to be healthy, as customers remain focused on grid hardening and reliability initiatives. The passage of the IRA in August 2022, which included a long-term extension of the PTC for new wind farm projects and introduced new AMP tax credits for companies that domestically manufacture and sell clean energy equipment in the U.S., is a significant catalyst for our wind towers business. Since the passage of the IRA we have received new orders of $1.1 billion for delivery through 2028, a large portion of which will support wind energy expansion projects in the Southwest. As a result, we have opened a new plant in New Mexico and started delivering towers from this facility late in the second quarter of 2024. The timing of new orders may be unpredictable, particularly as the market adjusts to a new administration. However, we remain confident that further investment in wind energy is needed to meet the load growth demands in the U.S., and we continue to have discussions with our customers about additional orders for 2026 and beyond.

•Within our Transportation Products segment, our backlog for inland barges as of December 31, 2024 was $280.1 million, up 10.4% compared to December 31, 2023, and fills a significant portion of our planned production capacity for 2025. Our customers remain committed to taking delivery of these orders. Our barge business is recovering from cyclical lows resulting from the onset of the COVID-19 pandemic when order levels fell sharply due to high steel prices throughout 2022 and 2023. Over this time, customer inquiries have improved, initially for dry barges and more recently for tank barges. Both fleets continue to age as new builds have not kept pace with scrapping, and utilization rates are high, which are indicators of future replacement demand. During the fourth quarter we received orders of $128 million for both hopper and tank barges.

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Executive Overview

Recent Developments

In October 2024, the Company completed the acquisition of the construction materials business of Stavola Holding Corporation and its affiliated entities (“Stavola”) for $1.2 billion in cash. Stavola, which is reported within the Construction Products segment, serves the New York-New Jersey MSA through its network of five hard rock natural aggregates quarries, twelve asphalt plants, and three recycled aggregates sites. The purchase price was funded with a $700.0 million secured term loan facility (the “Term Loan”) that matures in October 2031 and $600.0 million of 6.875% senior notes (the “2024 Notes”) that mature in August 2032.

In August 2024, the Company completed the sale of its steel components business. Previously reported in the Transportation Products segment, the steel components business was a leading supplier of railcar coupling devices, railcar axles, and circular forgings. The total consideration for the divestiture was $110.0 million consisting of $55.0 million in cash, a $25.0 million seller's note and a $30.0 million earnout out of which the estimated fair value as of December 31, 2024 was $15.4 million. During the year ended December 31, 2024, the Company recognized a pre-tax loss of $21.6 million on the sale of the business which is reflected in (gain) loss on sale of businesses on the Consolidated Statement of Operations. As the steel components business was not core to Arcosa's long-term strategy, its divestiture was not considered a strategic shift that would have a major effect on the Company's operations or financial results either from a quantitative or qualitative perspective. As such, it is not reported as a discontinued operation.

In April 2024, the Company completed the acquisition of Ameron Pole Products, LLC ("Ameron"), a leading manufacturer of highly engineered, premium concrete, and steel poles for a broad range of infrastructure applications, including lighting, traffic, electric distribution, and small-cell telecom, for a total purchase price of $180.0 million. With operations in Alabama, California, and Oklahoma, Ameron is included in our Engineered Structures segment. The acquisition was funded with $160.0 million of borrowings under our revolving credit facility and cash on hand.

Financial Operations and Highlights

•Revenues for the year ended December 31, 2024 increased 11.4% to $2.6 billion compared to the year ended December 31, 2023, driven by higher revenues in Engineered Structures and Construction Products, partially offset by lower revenues in Transportation Products resulting from the divestiture of the steel components business.

•Operating profit for the year ended December 31, 2024 of $197.6 million decreased $19.7 million primarily due to increased acquisition and divestiture-related transaction expenses recognized in Corporate costs, the impact of the fair value markup of acquired inventory and long-lived assets, and a $21.8 million gain recognized on the sale of depleted land in the prior year.

•As a percentage of revenues, selling, general, and administrative expenses was 12.5% for the year ended December 31, 2024, compared to 11.3% in the prior year, driven by increased costs from recently acquired businesses and higher acquisition and divestiture-related transaction expenses.

•The effective tax rate for the year ended December 31, 2024 was 27.9% compared to 18.7% for the year ended December 31, 2023. See Note 10, “Income Taxes” to the Consolidated Financial Statements.

•Net income for the year ended December 31, 2024 was $93.7 million compared with $159.2 million for the year ended December 31, 2023.

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Unsatisfied Performance Obligations (Backlog)

As of December 31, 2024 and 2023 our backlog of firm orders was as follows:

Approximately 64% of the unsatisfied performance obligations for our utility, wind, and related structures in our Engineered Structures segment are expected to be delivered during 2025, approximately 13% are expected to be delivered during 2026, and the remainder are expected to be delivered through 2028. Approximately 92% of the unsatisfied performance obligations for inland barges in our Transportation Products segment are expected to be delivered during 2025, and the remainder are expected to be delivered during 2026.

Results of Operations

The following discussion of Arcosa’s results of operations should be read in connection with “Forward-Looking Statements” and Item 1A, “Risk Factors.” These items provide additional relevant information regarding the business of Arcosa, its strategy and various industry conditions which have a direct and significant impact on Arcosa’s results of operations, as well as the risks associated with Arcosa’s business.

Overall Summary

Revenues

2024 versus 2023

•Revenues increased by 11.4%.

•Revenues from Construction Products increased primarily due to the contribution from recent acquisitions.

•Revenues from Engineered Structures increased primarily due to higher volumes in our wind towers and utility structures businesses and the contribution from the acquired Ameron business.

•Revenues from Transportation Products decreased due to the sale of the steel components business, which was completed in August 2024, partially offset by higher volumes in our barge business.

2023 versus 2022

•Revenues increased by 2.9%. Excluding the impact of the storage tanks divestiture, which was completed in October 2022, revenues increased 12.4%.

•Revenues from Construction Products increased primarily due to higher pricing across our aggregates and specialty materials businesses and additional revenues from the acquisition of a trench shoring business completed in the first quarter of 2023.

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•Excluding the impact of the storage tanks divestiture, revenues from Engineered Structures increased 7.4% primarily due to increased volumes in our utility structures business, partially offset by lower pricing due to product mix, and lower volumes in our wind towers business.

•Revenues from Transportation Products increased due to higher volumes in both our barge and steel components businesses.

Operating Costs

Operating costs are comprised of cost of revenues; selling, general, and administrative expenses; impairment charges; and gains or losses on property disposals.

2024 versus 2023

•Operating costs increased 13.5%.

•Operating costs for Construction Products increased primarily due to additional costs from recently acquired businesses, including the fair value markup of acquired inventory and long-lived assets, and a $21.8 million gain recognized on the sale of depleted land that was netted against operating costs in the prior period.

•Operating costs for Engineered Structures increased primarily due to higher volumes in our wind towers and utility structures businesses and increased costs from the acquired Ameron business.

•Operating costs for Transportation Products were substantially unchanged as higher barge volumes and the $21.6 million loss recognized on the sale of steel components were mostly offset by lower steel components volumes.

•Depreciation, depletion, and amortization increased due to recent acquisitions and organic growth investments.

•As a percentage of revenues, selling, general, and administrative expenses for the year ended December 31, 2024 was 12.5% compared to 11.3% for the year ended December 31, 2023, driven by increased costs from recently acquired businesses and higher acquisition and divestiture-related transaction expenses.

2023 versus 2022

•Operating costs increased 10.4%. Excluding the impact of the storage tanks divestiture on both periods, operating costs increased 8.4%.

•Operating costs for Construction Products increased primarily due to additional costs from recently acquired businesses and operating inefficiencies in our specialty materials business, partially offset by an increase in gains recognized on the sale of depleted land.

•Operating costs for utility, wind, and related structures within Engineered Structures increased primarily due to higher volumes in our utility structures business, partially offset by lower volumes and AMP tax credits in our wind towers business.

•Operating costs for Transportation Products increased primarily due to higher volumes in barge and steel components.

•Depreciation, depletion, and amortization increased due to recent acquisitions and organic growth investments, partially offset by the impact of the storage tanks divestiture.

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•As a percentage of revenues, selling, general, and administrative expenses for the year ended December 31, 2023 was 11.3% compared to 11.7% for the year ended December 31, 2022. When compared to the prior year, selling, general, and administrative expenses were relatively unchanged for the year ended December 31, 2023, as the elimination of costs from the storage tanks business were largely offset by increased compensation-related costs.

Operating Profit (Loss)

2024 versus 2023

•Operating profit decreased 9.1%.

•Excluding the $21.8 million gain recognized on the sale of depleted land in the prior period, operating profit in Construction Products increased 14.6% primarily due to the accretive impact of recently acquired businesses and operating improvements in our specialty materials and trench shoring businesses.

•Operating profit in Engineered Structures increased by 32.1% primarily due to higher wind towers and utility structures volumes and the accretive impact of the acquired Ameron business.

•Excluding the $21.6 million loss on the sale of the steel components business, operating profit in Transportation Products increased 13% primarily due to higher volumes and improved margins in barge, partially offset by lower steel components volumes.

2023 versus 2022

•Operating profit decreased 37.7%, driven by the divestiture of the storage tanks business. Excluding the impact of the storage tanks divestiture on both periods, operating profit increased $92.0 million, or 77.4%.

•Operating profit in Construction Products increased primarily due to higher asset sale gains, increased pricing across the segment and the benefit recognized on a holdback obligation, partially offset by operating inefficiencies in our specialty materials business.

•Excluding the impact of the storage tanks divestiture, operating profit in Engineered Structures increased by 16.1% primarily due to the recognition of the AMP tax credits, partially offset by a decline in volumes in our wind towers business and lower margins in our utility structure business.

•Operating profit in Transportation Products increased primarily due to higher volumes and improved margins in both barge and steel components.

For a further discussion of revenues, costs, and the operating results of individual segments, see Segment Discussion below.

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Other Income and Expense

Other, net (income) expense consists of the following items:

•Other, net expense due to foreign currency exchange transactions increased by $6.0 million in 2024, primarily driven by increased volatility in the U.S. dollar to Mexican peso exchange rate.

Income Taxes

The income tax provision for the years ended December 31, 2024, 2023, and 2022 was $36.3 million, $36.7 million, and $70.4 million, respectively. The effective tax rate for the years ended December 31, 2024, 2023, and 2022 was 27.9%, 18.7%, and 22.3%, respectively. The effective tax rates differ from the federal tax rate of 21.0% due to AMP tax credits, state income taxes, tax effects of foreign currency translations, prior year true-ups, tax effects of the disposal of nondeductible goodwill, and statutory depletion deductions. The increase in our effective tax rate for the year ended December 31, 2024 was largely due to state income taxes and the tax effects of foreign currency translations. For a reconciliation of the federal tax rate to our effective tax rate, see Note 10 to the Consolidated Financial Statements.

See Note 10 to the Consolidated Financial Statements for a further discussion of income taxes.

Segment Discussion

Construction Products

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2024 versus 2023

•Revenues increased 10.4% primarily due to recent acquisitions. Revenue from Stavola since it was acquired on October 1, 2024 was $78.2 million, representing approximately 75% of the increase. Organic revenues in our aggregates and specialty materials businesses were down slightly as higher pricing was offset by lower volumes, a decrease in freight revenues, and a reduction in revenues from recently divested operations. Revenues from our trench shoring business increased due to higher organic volumes and the acquisition completed in the first quarter of 2023.

•Cost of revenues increased 10.2%, primarily due to increased costs from recently acquired businesses, including higher depreciation, depletion, and amortization expense and $12.2 million for the cost impact of the fair value markup of acquired inventory. Cost of revenues also increased $5.0 million due to a benefit recognized in the prior period related to the reduction in a holdback obligation owed on a previous acquisition. These costs were partially offset by lower costs from recently divested operations. As a percent of revenues, cost of revenues decreased to 78.2% in the current period, compared to 78.3% in the prior period.

•Selling, general, and administrative expenses increased 8.6%, due to additional costs from recently acquired businesses and higher compensation-related costs. As a percentage of revenues, selling, general, and administrative costs decreased to 10.5% compared to 10.7% in the previous year.

•During the current period, the Construction Products segment recognized a $5.0 million gain on the sale of an under-performing single-location asphalt and paving operation and an impairment charge of $5.8 million related to the closure of our aggregates operations in west Texas, for a net reduction in operating profit of $0.8 million.

•Operating profit decreased 3.4%. Excluding the $21.8 million gain recognized on the sale of depleted land in the prior period, operating profit increased 14.6%, driven by the accretive impact of recent acquisitions, the recent divestiture of underperforming operations, increased unit profitability in our aggregates business, and operating improvements in our specialty materials and trench shoring businesses. Operating profit for Stavola since it was acquired on October 1, 2024 was $4.5 million, representing approximately 26% of the increase, excluding the gain recognized on the sale of depleted land.

•Depreciation, depletion, and amortization expense increased primarily due to recent acquisitions, including the fair value markup of long-lived assets, and organic growth investments.

2023 versus 2022

•Revenues increased 8.4% primarily due to increased pricing across our product lines in our aggregates and specialty materials businesses. Higher volumes in recycled aggregates were largely offset by lower volumes in natural aggregates and specialty materials. Revenues from our trench shoring business increased 18.9%, driven by the acquisition completed in the first quarter of 2023 and higher organic volumes.

•Cost of revenues increased 6.5%, due to increased costs from the acquired shoring business, higher recycled aggregates volumes, and operating inefficiencies in our specialty materials business. These costs were partially offset by a $5 million reduction in a holdback obligation owed on a previous acquisition. As a percent of revenues, cost of revenues decreased to 78.3% in the current period, compared to 79.7% in the prior period.

•Selling, general, and administrative expenses increased 6.6%, driven by additional costs from recently acquired businesses. As a percent of revenues, selling, general, and administrative costs decreased to 10.7% compared to 10.9% in the previous year.

•Operating profit increased by 43.6%, partially due to a gain recognized on the sale of depleted land. Excluding the gain, operating profit increased 27.2%, driven by increased pricing across the segment and the benefit recognized on a holdback obligation, partially offset by operating inefficiencies in our specialty materials business.

•Depreciation, depletion, and amortization expense increased primarily due to recent acquisitions and organic growth investments.

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Engineered Structures

2024 versus 2023

•Revenues increased 19.9% primarily due to higher volumes in our wind towers and utility structures businesses and the contribution from the acquired Ameron business, partially offset by lower utility structures pricing due to product mix.

•Cost of revenues increased 18.0% primarily due to higher wind tower and utility structures volumes and additional expenses incurred related to the startup of two new facilities during the year, including a concrete utility structures plant and a wind tower plant. Cost of revenues also increased due to higher costs from the acquired Ameron business, including higher depreciation and amortization expense and $1.6 million for the cost impact of the fair value markup of acquired inventory.

•Selling, general, and administrative expenses increased 34.1% primarily due to additional costs from the acquired Ameron business and higher compensation-related expenses in our utility structure and wind tower businesses.

•For the years ended December 31, 2024 and 2023, the Company recognized additional gains on the sale of the storage tanks business related to the settlement of certain contingencies and a gain on the sale of a non-operating facility that previously supported the divested business.

•Operating profit increased 32.1%, primarily due to the gain recognized during the current period, higher utility structures and wind tower volumes, and the impact of the acquired Ameron business, partially offset by lower margins in our utility structures business driven by product mix.

•Depreciation and amortization expense increased primarily due to the acquired Ameron business and organic growth investments.

2023 versus 2022

•Revenues decreased 12.8% resulting from the sale of the storage tanks business, which was completed in October 2022. Revenue from utility, wind, and related structures increased 7.4% primarily due to increased volumes in our utility structures business, partially offset by lower pricing due to product mix, and lower volumes in our wind towers business.

•Cost of revenues decreased 11.6% largely due to the elimination of costs from our storage tanks business. Cost of revenues for utility, wind, and related structures increased due to higher volumes in our utility structures business, partially offset by lower volumes and AMP tax credits recognized in our wind towers business.

•Selling, general, and administrative expenses decreased 10.5% primarily due to the elimination of costs from our storage tanks business. Selling, general, and administrative expenses for utility, wind, and related structures increased largely due to higher compensation-related costs.

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•The divestiture of the storage tanks business resulted in a net decrease in operating profit of $223.7 million due to an additional gain on sale of $6.4 million recorded in the first quarter of 2023 compared to $230.1 million of operating profit for the storage tanks business in the prior year. Excluding the impact of the divestiture in both periods, operating profit increased $12.4 million or 16.1% primarily due to $25.3 million of net benefit recognized from AMP tax credits in our wind towers business, partially offset by lower margins in our utility structures business, driven by product mix, and decreased wind tower volumes.

Unsatisfied Performance Obligations (Backlog)

As of December 31, 2024, the backlog for utility, wind, and related structures was $1,190.8 million compared to $1,367.5 million as of December 31, 2023. Approximately 64% of these unsatisfied performance obligations are expected to be delivered during 2025, approximately 13% are expected to be delivered during 2026, and the remainder are expected to be delivered through 2028.

Transportation Products

2024 versus 2023

•Revenues decreased 3.7% resulting from the sale of the steel components business which was completed in August 2024. Barge revenue increased 17.7%, driven by higher deliveries.

•Cost of revenues decreased by 5.2%, driven by lower steel components volumes due to the divestiture, partially offset by higher cost of revenues for the barge business due to higher volumes. As a percent of revenues, cost of revenues decreased to 82.2% in the current year, compared to 83.6% in the prior year.

•Selling, general, and administrative expenses decreased 11.4%, primarily due to the divestiture of the steel components business, partially offset by higher compensation-related expenses for the barge business.

•Operating profit decreased 34.1%, driven by the $21.6 million loss recognized on the sale of the steel components business during the current period. Excluding the loss, operating profit increased $6.0 million, or 13.1%, driven by increased volume and improved margin in our barge business.

•Depreciation and amortization decreased primarily due to the divestiture of the steel components business.

2023 versus 2022

•Revenues increased 36.6% due to higher volumes and improved pricing across the barge and steel components businesses.

•Cost of revenues increased by 28.0% reflecting higher volumes during the current year. As a percent of revenues, cost of revenues decreased to 83.6% in the current year, compared to 89.2% in the prior year.

•Selling, general, and administrative expenses increased 11.4%, primarily due to increased expenses from participation in trade remedy proceedings involving certain imports of freight rail couplers from China and Mexico, as well as higher compensation-related expenses, but decreased as a percent of revenues to 5.9% in the current year, compared to 7.2% in the prior year.

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•Operating profit increased significantly, outpacing the percentage increase to revenues, driven by enhanced operating leverage associated with higher volumes and improved margins across the barge and steel components businesses.

Unsatisfied Performance Obligations (Backlog)

As of December 31, 2024, the backlog for inland barges was $280.1 million compared to $253.7 million as of December 31, 2023. Approximately 92% of these unsatisfied performance obligations are expected to be delivered during 2025 and the remainder are expected to be delivered in 2026.

Corporate

2024 versus 2023

•Corporate overhead costs increased 47.9% primarily due to a $30.5 million increase in acquisition and divestiture-related transaction expenses. Excluding these expenses, corporate overhead costs were roughly flat.

2023 versus 2022

•Corporate overhead costs decreased 4.8% primarily due to a $8.2 million reduction in acquisition and divestiture-related transaction expenses, partially offset by higher compensation-related expenses.

Liquidity and Capital Resources

Arcosa’s primary liquidity requirement consists of funding our business operations, including capital expenditures, working capital investment, and disciplined acquisitions. Our primary sources of liquidity include cash flow from operations, our existing cash balance, availability under the revolving credit facility, and, as necessary, the issuance of additional long-term debt or equity. To the extent we have available liquidity, we may also consider undertaking new capital investment projects, executing additional strategic acquisitions, returning capital to stockholders, or funding other general corporate purposes.

Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities for each of the last three years:

2024 versus 2023

Operating Activities. Net cash provided by operating activities for the year ended December 31, 2024 was $502.0 million compared to $261.0 million for the year ended December 31, 2023.

•The changes in current assets and liabilities resulted in a net source of cash of $185.0 million for the year ended December 31, 2024 compared to a net use of cash of $71.8 million for the year ended December 31, 2023. The current year activity was primarily driven by an increase in advance billings and decreases in receivables and inventories.

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Investing Activities. Net cash required by investing activities for the year ended December 31, 2024 was $1,508.9 million compared to $285.8 million for the year ended December 31, 2023.

•Capital expenditures for the year ended December 31, 2024 decreased to $189.7 million compared to $203.5 million for the year ended December 31, 2023.

•Proceeds from the sale of property, plant, and equipment and other assets totaled $18.3 million for the year ended December 31, 2024 compared to $36.6 million for the year ended December 31, 2023.

•Cash paid for acquisitions, net of cash acquired, was $1,424.1 million for the year ended December 31, 2024 compared to $120.9 million for the year ended December 31, 2023.

•Proceeds from the sale of businesses was $86.6 million during the year ended December 31, 2024, primarily driven by the sale of the steel components business, compared to $2.0 million during the year ended December 31, 2023.

Financing Activities. Net cash provided by financing activities for the year ended December 31, 2024 was $1,089.4 million compared to $30.8 million of net cash required by financing activities for the year ended December 31, 2023.

•During the year ended December 31, 2024, the Company received proceeds of $600.0 million from the issuance of the 2024 Notes and $700.0 million from the Term Loan, which were primarily used to fund the Stavola acquisition. Net repayments from borrowings under the revolving credit facility for the year ended December 31, 2024 totaled $160.0 million. The Company borrowed $335.0 million under the revolving credit facility during the year, including $160.0 million in April 2024 to partially fund the Ameron acquisition. These borrowings were paid in full during 2024, resulting in no outstanding loans borrowed under the revolving credit facility as of December 31, 2024.

•Dividends paid during the year ended December 31, 2024 were $9.7 million, unchanged from the prior year.

•During the year ended December 31, 2024, the Company did not repurchase any common stock under its share repurchase program compared to $13.8 million paid during the year ended December 31, 2023.

2023 versus 2022

Operating Activities. Net cash provided by operating activities for the year ended December 31, 2023 was $261.0 million compared to $174.3 million for the year ended December 31, 2022.

•The changes in current assets and liabilities resulted in a net use of cash of $71.8 million for the year ended December 31, 2023 compared to a net use of cash of $65.3 million for the year ended December 31, 2022. The current year activity was primarily driven by increased inventories due to higher volumes and increased receivables due to the recognition of AMP tax credits, partially offset by increased accounts payable.

Investing Activities. Net cash required by investing activities for the year ended December 31, 2023 was $285.8 million compared to net cash provided of $90.7 million for the year ended December 31, 2022.

•Capital expenditures for the year ended December 31, 2023 increased to $203.5 million compared to $138.0 million for the year ended December 31, 2022 with the increase primarily driven by investments in two new facilities supporting expansion in our wind tower and utility structures businesses as well as various growth projects in the Construction Products segment.

•Proceeds from the sale of property, plant, and equipment and other assets totaled $36.6 million for the year ended December 31, 2023 compared to $32.2 million for the year ended December 31, 2022.

•Cash paid for acquisitions, net of cash acquired, was $120.9 million for the year ended December 31, 2023 compared to $75.1 million during for the year ended December 31, 2022.

•Proceeds from the sale of the storage tanks business was $2.0 million during the year ended December 31, 2023, which was related to the resolution of certain contingencies from the sale, compared to $271.6 million during the year ended December 31, 2022.

Financing Activities. Net cash required by financing activities during the year ended December 31, 2023 was $30.8 million compared to $177.5 million for the year ended December 31, 2022.

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•During the year ended December 31, 2023, the Company received net proceeds from borrowings under its revolving credit facility and term loan of $23.2 million, which was used to partially finance the Lake Point acquisition in the fourth quarter of 2023. During the year ended December 31, 2022, the Company received net proceeds from borrowings under its revolving credit facility of $30.0 million, which was used to partially finance the RAMCO acquisition in the second quarter of 2022. The Company used $155.0 million of cash proceeds from the sale of the storage tanks business in the fourth quarter of 2022 to repay all amounts then borrowed under its revolving credit facility.

•Dividends paid during the year ended December 31, 2023 were $9.8 million, unchanged from the prior year.

•The Company paid $13.8 million during the year ended December 31, 2023 to repurchase common stock under its share repurchase program compared to $15.0 million paid during the year ended December 31, 2022.

Other Investing and Financing Activities

Revolving Credit Facility, Term Loan, and Senior Notes

In August 2023, we entered into the Credit Agreement to increase our revolving credit facility from $500.0 million to $600.0 million, extend the maturity date of our revolving credit facility from January 2, 2025 to August 23, 2028, and refinance and repay in full the remaining balance of the term loan then outstanding under our prior credit facility.

On August 15, 2024, we entered into an amendment to the Credit Agreement to, among other things, (i) increase our revolving credit facility from $600.0 million to $700.0 million, (ii) collateralize the amended revolving credit facility with substantially all of our and our subsidiary guarantors' personal property (with certain exceptions), (iii) make the applicable margin for revolving borrowings, letters of credit and the commitment fee rate be based on our consolidated net leverage ratio (permitting up to $150.0 million of unrestricted cash to be netted from the calculation thereof), (iv) modify the margin for SOFR-based revolving borrowings and letters of credit to range from 1.25% to 2.50% per annum, (v) modify the margin for base rate revolving borrowings to range from 0.25% to 1.50%, (vi) modify the commitment fee that accrues on the unused portion of the revolving credit facility to range from 0.20% to 0.45%, and (vii) modify the maximum permitted leverage ratio to include a net debt concept (permitting up to $150.0 million of unrestricted cash to be netted from the calculation thereof), and to provide that such ratio shall be no greater than 5.00 to 1.00 during the fourth quarter of 2024 and the next two fiscal quarters, 4.50 to 1.00 for the next following two fiscal quarters, and 4.00 to 1.00 for each fiscal quarter thereafter (however, this maximum permitted leverage ratio may be increased to 4.50 to 1.00 for up to four fiscal quarters if a material acquisition is entered into). These amendments did not become effective until the closing of the Stavola acquisition on October 1, 2024. The amended revolving credit facility's maturity date of August 23, 2028 remains unchanged.

As of December 31, 2024, we had no outstanding loans borrowed and approximately $0.7 million of letters of credit outstanding under our revolving credit facility, which left $699.3 million available for borrowing. The Company borrowed $335.0 million under the revolving credit facility during the year ended December 31, 2024, including $160.0 million in April 2024 to partially fund the Ameron acquisition. These borrowings were paid in full during 2024. Our letters of credit expire in 2025, and the majority of our letter of credit obligations support the Company’s various insurance programs and generally renew by their terms each year.

The interest rates for revolving loans under the Credit Agreement are variable based on the daily simple or term SOFR, plus a 10-basis point credit spread adjustment, or an alternate base rate, in each case plus a margin for borrowing. A commitment fee accrues on the average daily unused portion of the revolving credit facility. The margin for revolving borrowings and commitment fee rate are determined based on the Company's Consolidated Total Net Leverage Ratio (as measured by a consolidated funded indebtedness, less the aggregate amount of unrestricted cash up to a maximum amount not to exceed $150.0 million, to consolidated EBITDA ratio). As of December 31, 2024, the margin for borrowing based on SOFR was set at 2.50% and the commitment fee rate was set at 0.45%.

The revolving credit facility portion of the Credit Agreement requires the maintenance of certain ratios related to leverage and interest coverage. As of December 31, 2024, we were in compliance with all such financial covenants. Borrowings under the Credit Agreement are guaranteed by certain domestic subsidiaries of the Company. On October 1, 2024, we collateralized our obligations under the Credit Agreement with substantially all of our and our subsidiary guarantors' personal property (with certain exceptions).

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The Credit Agreement provides for a Term Loan in an aggregate principal amount of $700.0 million. The Term Loan was funded on October 1, 2024 simultaneously with the closing of the Stavola acquisition, of which $100.0 million was used to pay down the Company's revolving credit facility. The Term Loan requires, among other things (i) mandatory prepayments from excess cash flow on an annual basis, commencing with the fiscal year ending December 31, 2025, (ii) mandatory prepayments with proceeds of certain asset sales and debt issuances, and (iii) quarterly principal amortization payments in an amount equal to 0.25% of the initial Term Loan. The Term Loan has a maturity date of October 1, 2031. The interest rate for the Term Loan is based on SOFR plus 2.25% per year. The Term Loan is prepayable at any time without penalty, except in the event of a voluntary repricing in the first six months after closing, in which case a premium in the amount of 1.0% of the initial Term Loan is payable. The Term Loan is guaranteed by the same subsidiaries of the Company that guarantee our revolving credit facility, and the Term Loan is secured on a pari passu basis with our revolving credit facility.

On August 26, 2024, the Company issued $600.0 million aggregate principal amount of 6.875% 2024 Notes that mature in August 2032. Interest on the 2024 Notes is payable semiannually in February and August. In April 2021, the Company issued $400.0 million aggregate principal amount of 4.375% senior unsecured notes (the "2021 Notes", and together with the 2024 Notes, the "Senior Notes") that mature in April 2029. Interest on the 2021 Notes is payable semiannually in April and October. The Senior Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by each of the Company’s domestic subsidiaries that is a guarantor under our Credit Agreement. The terms of each indenture governing the Senior Notes, among other things, limit the ability of the Company and each of its subsidiaries to create liens on assets, enter into sale and leaseback transactions, and consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries. The terms of each indenture also limit the ability of the Company’s non-guarantor subsidiaries to incur certain types of debt.

We believe, based on our current business plans, that our existing cash, available liquidity, and cash flow from operations will be sufficient to fund necessary capital expenditures and operating cash requirements for the foreseeable future.

Repurchase Program

In December 2024, the Board authorized a new $50.0 million share repurchase program effective January 1, 2025 through December 31, 2026 to replace a program of the same amount that expired on December 31, 2024. Under the previous program, the Company did not repurchase any shares during the year ended December 2024, and repurchased 200,000 shares at a cost of $13.8 million during the year ended December 31, 2023.

Derivative Instruments

In December 2018, the Company entered into a $100.0 million interest rate swap instrument, effective as of January 2, 2019, to reduce the effect of changes in the variable interest rates associated with the first $100.0 million of borrowings under the Company's committed credit facility. In conjunction with the replacement of LIBOR with SOFR as a benchmark for borrowings under our credit facility, on July 1, 2023 the swap instrument transitioned from LIBOR to SOFR. The instrument effectively fixed the SOFR component of borrowings under our credit facility at a monthly rate of 2.71% until such instrument's termination. The interest rate swap instrument expired in October 2023 and no new interest rate swap instrument has been entered into in connection with the Term Loan. See Note 3 and Note 7 to the Consolidated Financial Statements.

Stock-Based Compensation

We have a stock-based compensation plan for our directors, officers, and employees. See Note 13 to the Consolidated Financial Statements.

Employee Retirement Plans

In 2024, we sponsored an employee savings plan under the 401(k) plan that covered substantially all employees and included a company matching contribution with the investment of the funds directed by the participants. The Company also contributed to various multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that covered certain union-represented employees at five of our facilities. See Note 11 to the Consolidated Financial Statements.

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Contractual Obligations and Commercial Commitments

As of December 31, 2024, we had the following contractual obligations and commercial commitments:

In the normal course of business, at December 31, 2024, the Company was contingently liable for $141.5 million in surety bonds, which guarantee its own performance and are required by certain states and municipalities and their related agencies. The Company has indemnified the underwriting insurance companies against any exposure under the surety bonds. The Company is not aware of any circumstances that would result in material claims against these bonds. See Note 15, "Commitments and Contingencies" to the Consolidated Financial Statements.

Critical Accounting Policies and Estimates

MD&A discusses our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

On an on-going basis, management evaluates its estimates and judgments based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our accounting policies are more fully described in Note 1 to the Consolidated Financial Statements. We believe the following critical accounting policies include our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements.

Business Combinations

We account for business combinations under the acquisition method of accounting. As of the date that control in the entity is obtained, the purchase price of the transaction is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values. The purchase price is determined based on the fair value of consideration transferred to and liabilities assumed from the seller as of the date of acquisition. Goodwill is recorded for the excess of the purchase price over the net fair value of the identifiable assets acquired and liabilities assumed. The determination of the acquisition date fair value of the assets acquired and liabilities assumed requires management's judgment and involves the use of significant estimates and assumptions, especially with respect to future expected cash flows and discount rates.

We commonly use an excess earnings method to value acquired mineral reserves and separately identifiable intangible assets, which may include, but are not limited to, customer relationships, permits, and backlog. Significant assumptions used in the valuation of these types of assets may include projected revenues, production costs, capital requirements, customer attrition rates, and discount rates. Changes in the assumptions used could have a significant impact on the estimated acquisition date fair value of the related asset and any future depreciation, depletion, or amortization expense.

The estimated remaining useful lives of acquired tangible and definite-lived intangible assets are based on the length of time that the assets are expected to provide value to the Company and have a significant impact on current and future period earnings.

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Management's estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and, as a result, actual results may differ from estimates. We may adjust the amounts recognized in an acquisition during a measurement period after the acquisition date. Any such adjustments are the result of subsequently obtaining additional information that existed at the acquisition date regarding the assets acquired or the liabilities assumed. Measurement period adjustments are generally recorded as increases or decreases to goodwill, if any, recognized in the transaction. The cumulative impact of measurement period adjustments on depreciation, amortization, and other income statement items are recognized in the period the adjustment is determined.

Acquisition costs are expensed as incurred and are included in selling, general, and administrative expenses in the accompanying Consolidated Statements of Operations. We include results of operations from acquired businesses in our Consolidated Financial Statements from the effective date of the acquisition.

Long-lived Assets

As of December 31, 2024, property, plant, and equipment, net and intangible assets, net represent 43% and 7% of the Company's total assets, respectively. The methods for recognition of depreciation, depletion, and amortization are based on estimates regarding the expected future economic benefit to the Company and any potential impairment to the value of such assets could be significant.

Property, plant, and equipment are stated at cost and depreciated or depleted over their estimated useful lives, primarily using the straight-line method. Depletion of mineral reserves is calculated based on estimated reserves using the units-of-production method on a quarry-by-quarry basis. Intangible assets, primarily consisting of customer relationships and permits, are recorded at fair value on the date of acquisition and amortized over their estimated useful lives using the straight-line method. See Note 1 to the Consolidated Financial Statements for additional information regarding the ranges of estimated useful lives by category of property, plant, and equipment and intangible assets.

We periodically evaluate the carrying value of long-lived assets for potential impairment whenever facts and circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. The carrying value of long-lived assets is considered impaired when the carrying value is not recoverable through undiscounted future cash flows and the fair value of the asset or asset group is less than their carrying value. Fair value is determined primarily using the estimated future cash flows discounted at a rate commensurate with the risks involved or market quotes as available. Significant estimates and judgments that most significantly impact the impairment analysis may include projected revenues, operating profit, and the remaining useful life over which the asset or asset group is expected to generate cash flows.

Impairment losses on long-lived assets held for sale are determined in a similar manner, except that estimated fair values are reduced by the estimated cost to dispose of the assets.

The Company recorded an impairment of $5.8 million during the year ended December 31, 2024 related to the closure of the Company's aggregates operations in west Texas in our Construction Products segment. The Company had no impairment charges during the years ended December 31, 2023 or 2022.

Goodwill

Goodwill is required to be tested for impairment annually or on an interim basis whenever events or circumstances change indicating that the carrying amount of the goodwill might be impaired. The quantitative goodwill impairment test is assessed at the “reporting unit” level by comparing the reporting unit's estimated fair value with the carrying amount of its net assets. If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized. The goodwill impairment is measured as the excess of the reporting unit's carrying value over its fair value, not to exceed the amount of goodwill allocated to the reporting unit. The estimates and judgments that most significantly affect the fair value calculations consist of level three inputs related to revenue and operating profit growth and discount rates. The Company performs its annual goodwill impairment analysis as of October 1 of each year.

As of December 31, 2024, goodwill totaled $1,361.2 million. Based on the Company's annual goodwill impairment test, performed at the reporting unit level as of October 1, 2024, the Company concluded that no impairment charges were determined to be necessary and that none of the reporting units evaluated were at risk of failing the goodwill impairment test. A reporting unit is considered to be at risk if its estimated fair value does not exceed the carrying value of its net assets by 10% or more. See Note 1 and Note 6 to the Consolidated Financial Statements.

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We believe that the assumptions used in our impairment analysis are reasonable; however, given the uncertainties of the economy and its potential impact on our businesses, there can be no assurance that our estimates and assumptions regarding the fair value of our reporting units will prove to be accurate predictions of the future. Additionally, variations in any of these assumptions may result in different calculations in fair value that could result in an impairment charge.

A 100 basis point increase in the discount rate or reduction in the terminal growth rate would not have resulted in an impairment of goodwill for any of our reporting units as of October 1, 2024.

Income Taxes

The liability method is used to account for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and other tax attributes using currently enacted tax rates. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the provision for income taxes in the period that includes the enactment date. Management is required to estimate the timing of the recognition of deferred tax assets and liabilities, make assumptions about the future deductibility of deferred tax assets, and assess deferred tax liabilities based on enacted law and tax rates for the appropriate tax jurisdictions to determine the amount of such deferred tax assets and liabilities. Changes in the calculated deferred tax assets and liabilities may occur in certain circumstances including statutory income tax rate changes, statutory tax law changes, or changes in the structure or tax status of the Company. The Company assesses whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, both positive and negative, using a more likely than not standard. This assessment considers, among other matters, the nature, frequency, and severity of recent losses; a forecast of future profitability; the duration of statutory carryback and carryforward periods; the Company’s experience with tax attributes expiring unused; and tax planning alternatives.

As of December 31, 2024, the Company's adjusted net deferred tax liability was $197.8 million. At December 31, 2024, the Company had $3.2 million federal consolidated net operating loss carryforwards, primarily from businesses acquired, and $4.5 million of tax-effected state loss carryforwards remaining. In addition, the Company had $7.7 million of foreign net operating loss carryforwards that will begin to expire in the year 2025. We have established a valuation allowance for state and foreign tax operating losses and credits that we have estimated may not be realizable.

For additional information, see Note 10 to the Notes to Consolidated Financial Statements.

Recent Accounting Pronouncements

See Note 1 to the Consolidated Financial Statements for information about recent accounting pronouncements.

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Forward-Looking Statements

This annual report on Form 10-K (or statements otherwise made by the Company or on the Company’s behalf from time to time in other reports, filings with the SEC, news releases, conferences, internet postings, or otherwise) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not historical facts are forward-looking statements and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performances, estimates, projections, goals, and forecasts. Arcosa uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “plans,” and similar expressions to identify these forward-looking statements. Potential factors, which could cause our actual results of operations to differ materially from those in the forward-looking statements include, among others:

•the impact of pandemics, epidemics, or other public health emergencies on our sales, operations, supply chain, employees, and financial condition;

•market conditions and customer demand for our business products and services;

•the cyclical and seasonal nature of the industries in which we compete;

•variations in weather in areas where our construction products are sold, used, or installed;

•naturally occurring events and other events and disasters causing disruption to our manufacturing, product deliveries, and production capacity, thereby giving rise to an increase in expenses, loss of revenue, and property losses;

•competition and other competitive factors;

•our ability to identify, consummate, or integrate acquisitions of new businesses or products, or divest any business;

•the timing of introduction of new products;

•the timing and delivery of customer orders or a breach of customer contracts;

•the credit worthiness of customers and their access to capital;

•product price changes;

•changes in mix of products sold;

•the costs incurred to align manufacturing capacity with demand and the extent of its utilization;

•the operating leverage and efficiencies that can be achieved by our manufacturing businesses;

•availability and costs of steel, component parts, supplies, and other raw materials;

•changing technologies;

•surcharges and other fees added to fixed pricing agreements for steel, component parts, supplies and other raw materials;

•increased costs due to inflation or tariffs;

•interest rates and capital costs;

•counter-party risks for financial instruments;

•our indebtedness or leverage levels;

•long-term funding of our operations;

•taxes;

•costs and availability of sufficient insurance coverage;

•material nonpayment or nonperformance by any of our key customers;

•the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico;

•public infrastructure expenditures;

•changes in import and export quotas and regulations;

•business conditions in emerging economies;

•costs and results of litigation;

•changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies;

•legal, regulatory, and environmental issues, including compliance of our products with mandated specifications, standards, or testing criteria and obligations to remove and replace our products following installation or to recall our products and install different products manufactured by us or our competitors;

•actions by the executive and legislative branches of the U.S. government relative to federal government budgeting, taxation policies, government expenditures, U.S. borrowing/debt ceiling limits, and trade policies, including tariffs, and border closures;

•our ability to sufficiently protect our intellectual property rights;

•our ability to mitigate against cybersecurity incidents, including ransomware, malware, phishing emails, and other electronic security threats;

•if the Company's sustainability efforts are not favorably received by stockholders;

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•if the Company does not realize some or all of the benefits expected from certain provisions of the IRA, including the AMP tax credits for wind towers; and

•the delivery or satisfaction of any backlog or firm orders.

Any forward-looking statement speaks only as of the date on which such statement is made. Arcosa undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. For a discussion of risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see Item 1A, “Risk Factors” included elsewhere herein.

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