Arcosa Lifts Profit as Utility Structures Offset Rainfall Drag
Adjusted EBITDA margin widened 60 basis points to 22.1% in the second quarter.
Arcosa Inc. (ACA), an infrastructure-products maker, posted higher second-quarter profit as utility-structures growth offset weather-weakened aggregates demand.
The quarter marked a sharp sequential improvement even as year-over-year revenue growth remained modest. Continuing-operations revenue increased 15% from the first quarter, adjusted EBITDA climbed 42%, and margin expanded 410 basis points.
Revenue from continuing operations rose 2% from a year earlier to $658.7 million, and adjusted EBITDA increased 5% to $145.9 million. Adjusted diluted earnings rose 5% to $1.13 a share, while GAAP diluted earnings were unchanged at $1.03 a share.
Construction Products revenue edged up 1% to $357.0 million, though segment margin narrowed 20 basis points to 28.1%. Heavy rainfall in Texas contributed to a 2% decline in freight-adjusted aggregates volumes, reversing the first quarter's 4% growth, while lower unit costs helped aggregates cash gross margin expand to 48.1%.
Engineered Structures provided the stronger growth. Revenue increased 3% to $301.7 million, adjusted EBITDA rose 13%, and margin expanded 180 basis points to 20.4%, driven by utility structures. Utility-and-related-structures revenue grew 12% to $230.6 million, while planned lower volumes pushed wind-tower revenue down 19%.
Utility-and-related-structures backlog reached a record $648.1 million, up 49% from year-end, as wind-tower backlog declined to $537.4 million. The shift reinforced the growing weight of utility demand within Engineered Structures.
Cash generation weakened as working-capital use increased and capital spending rose. Operating cash flow from continuing operations swung to a $24.7 million outflow from a $38.0 million inflow a year earlier, and free cash flow fell to negative $51.0 million as capital expenditures increased to $58.8 million.
Arcosa no longer provides quarterly guidance and skipped its customary earnings call because of its pending acquisition by CRH for $150 a share, reversing its first-quarter practice of raising the full-year outlook. The company also completed its $450 million barge-business sale, used $83.0 million of the proceeds to reduce debt, and added two Construction Products acquisitions, leaving the record utility backlog as its clearest disclosed demand signal ahead.