Arcosa plans senior notes offering for acquisition

DALLAS - Infrastructure products provider Arcosa , Inc. (NYSE: NYSE:ACA) has announced its intention to issue $600 million in senior notes due in 2032. The private offering is contingent on market conditions and other factors. The proceeds are earmarked to partially fund the company's $1.2 billion acquisition of the construction materials business from Stavola Holding Corporation.

The senior notes will be unsecured obligations of Arcosa, backed initially by guarantees from its domestic subsidiaries that are guarantors under its senior credit facility. The offering targets qualified institutional buyers and certain non-U.S. persons in accordance with U.S. securities laws.

If the acquisition does not close by the date specified in the indenture, a special mandatory redemption of the notes will be triggered. The notes, as well as the related guarantees, will not be registered under the Securities Act of 1933 and cannot be offered or sold in the U.S. without registration or an exemption.

Arcosa plans to use any remaining funds from the offering to repay amounts outstanding under its revolving credit facility. The offering will only be made through a private offering memorandum.

Based in Dallas, Texas, Arcosa operates in the construction, engineered structures, and transportation markets, reporting financial results across three principal business segments.

This announcement is based on a press release statement and does not serve as a solicitation of an offer to buy the notes or any other securities. Arcosa has cautioned that some statements in the release are forward-looking and subject to risks and uncertainties that could cause actual results to differ materially from expectations.

Arcosa Inc. reported strong financial outcomes for the second quarter of 2024, with record quarterly revenues and adjusted EBITDA. The company's strategic moves, including the acquisition of Stavola for $1.2 billion and the divestiture of its steel components business to Stellex Capital Management, are expected to strengthen its market position and optimize its portfolio for future growth.

Arcosa's quarterly revenues climbed by 14%, and adjusted EBITDA saw a 31% increase.

Stellex Capital Management has entered into a definitive agreement to acquire McConway & Torley and Standard Forged Products from Arcosa. The transaction, expected to be finalized in the third quarter, is anticipated to enhance the growth of the acquired companies, exploring both organic and acquisitive strategies.

These recent developments underline Arcosa's strategic focus on deleveraging, organic growth, and efficiency improvements.

InvestingPro Insights

As Arcosa, Inc. (NYSE: ACA) prepares for its significant acquisition with a strategic issuance of senior notes, the company's financial health and market performance become focal points for investors. According to recent data from InvestingPro, Arcosa boasts a market capitalization of $3.97 billion, reflecting its substantial presence in the infrastructure sector. The company's P/E ratio stands at 26.86, suggesting that investors are willing to pay a higher price for its earnings compared to some industry peers.

InvestingPro Tips highlight that Arcosa operates with a moderate level of debt, which is a reassuring signal for investors concerned about the company's ability to manage its financial obligations, especially in light of the new debt from the senior notes offering. Furthermore, the company's liquid assets exceed its short-term obligations, indicating a strong liquidity position that can support its near-term financial needs, including the completion of the Stavola Holding Corporation acquisition.

Revenue growth also remains a strong suit for Arcosa, with an 8.89% increase in revenue over the last twelve months as of Q2 2024. This growth trajectory is further supported by a gross profit margin of 19.03%, showcasing the company's ability to maintain profitability amidst its expansion efforts. As investors consider the potential impact of the acquisition on Arcosa's financial position, these metrics offer a glimpse into the company's robust financial foundation and its potential for continued growth.

For those interested in a deeper analysis, InvestingPro provides additional InvestingPro Tips for Arcosa, offering valuable insights that could influence investment decisions. Discover more expert tips by visiting https://www.investing.com/pro/ACA.

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