Earnings call transcript: Arcosa Q2 2025 beats EPS forecast, stock surges

Arcosa Inc., with a market capitalization of $4.6 billion, reported its second-quarter earnings for 2025, surpassing analysts’ expectations for earnings per share (EPS) but falling short on revenue forecasts. The company posted an EPS of $1.27, significantly above the anticipated $1.08, marking a surprise of 17.59%. Revenue came in at $736.9 million, below the forecasted $760.12 million, resulting in a negative surprise of 3.05%. Following the earnings announcement, Arcosa’s stock price jumped by 10.78% to $85.10, reflecting investor optimism. According to InvestingPro analysis, the company maintains strong liquidity with current assets exceeding short-term obligations.

Key Takeaways

• Arcosa’s EPS exceeded forecasts by 17.59%, despite revenue falling short.
• The stock price surged 10.78% post-earnings announcement.
• Adjusted EBITDA grew 42% year-over-year, with a record margin of 20.9%.
• Strong performance in utility structures and wind towers.
• Full-year revenue guidance set at $2.9 billion, indicating 17% growth.

Company Performance

Arcosa demonstrated robust performance in the second quarter of 2025, with a notable 18% year-over-year increase in revenue. The company’s adjusted EBITDA surged by 42% to $439.9 million, achieving a record margin of 20.9%. This performance was driven by strong results in its aggregates, utility structures, and barge businesses. The company’s overall financial health score is rated as FAIR by InvestingPro, with particularly strong scores in cash flow management. Discover comprehensive analysis and more insights with InvestingPro’s detailed research report, available for over 1,400 US stocks. The successful integration of the Stavola acquisition and strategic focus on deleveraging the balance sheet have positioned Arcosa favorably within the industry.

Financial Highlights

• Revenue: $736.9 million, up 18% year-over-year
• Earnings per share: $1.27, up significantly from forecasts
• Adjusted EBITDA: 42% growth year-over-year
• Operating cash flow: $61 million
• Net debt to adjusted EBITDA ratio: 2.8x

Earnings vs. Forecast

Arcosa’s EPS of $1.27 exceeded the forecasted $1.08 by 17.59%, showcasing the company’s strong operational performance. However, revenue fell short of expectations, coming in at $736.9 million compared to the anticipated $760.12 million, resulting in a negative surprise of 3.05%.

Market Reaction

Following the earnings report, Arcosa’s stock experienced a significant increase, rising by 10.78% to $85.10. This surge reflects investor confidence in the company’s ability to deliver strong earnings despite the revenue miss. The stock’s movement places it between its 52-week high of $113.43 and low of $68.11, indicating positive market sentiment. InvestingPro analysis suggests the stock is currently trading above its Fair Value, with analyst price targets ranging from $100 to $125. InvestingPro subscribers have access to detailed valuation metrics and 6 additional exclusive ProTips for Arcosa.

Outlook & Guidance

Arcosa has set its full-year revenue guidance at $2.9 billion, representing a 17% growth. The company anticipates high single-digit pricing and double-digit volume growth in its aggregates segment. Additionally, Arcosa expects solid demand in utility structures and wind towers, supported by a strong backlog of $450 million in utility structures and nearly $600 million in wind towers.

Executive Commentary

Antonio Carrillo, CEO of Arcosa, expressed satisfaction with the company’s performance, stating, "We are pleased with our solid first half performance and the momentum we have as we move into the second half of the year." He emphasized the company’s strategic positioning in the power infrastructure market, remarking, "It’s a great time to be serving the power industry."

Risks and Challenges

• Potential supply chain disruptions could impact production schedules.
• Market saturation in certain sectors may limit growth opportunities.
• Macroeconomic pressures, such as inflation, could affect input costs.
• Policy changes related to wind energy tax credits could influence future projects.

Q&A

During the earnings call, analysts inquired about the clarity of wind energy tax credits and the potential impact on future projects. Arcosa confirmed there were no significant project delays and highlighted strong multifamily demand in Texas and New Jersey. The company also discussed its capacity and order visibility across various business segments, reinforcing its optimistic outlook.

Full transcript - Arcosa Inc (ACA) Q2 2025:

Leo, Conference Call Coordinator: Good morning, ladies and gentlemen, and welcome to the Arcosa Incorporated Second Quarter twenty twenty five Earnings Conference Call. My name is Leo, and I will be your conference call coordinator today. As a reminder, today’s call is being recorded. Now, I would like to turn the call over to your host, Erin Draybeck, Vice President of Investor Relations for Arcosa. Ms.

Draybeck, you may begin.

Erin Draybeck, Vice President of Investor Relations, Arcosa: Good morning, everyone, and thank you joining our COSA second quarter twenty twenty five earnings call. With me today are Antonio Carrillo, President and CEO and Gail Peck, CFO. A question and answer session will follow their prepared remarks. A copy of the press release issued yesterday and the slide presentation for this morning’s call are posted on our Investor Relations website, ir.arcosa.com. A replay of today’s call will be available for the next two weeks.

Instructions for accessing the replay number are included in the press release. A replay of the webcast will be available for one year on our website under the News and Events tab. Today’s comments and presentation slides contain financial measures that have not been prepared in accordance with GAAP. Reconciliations of non GAAP financial measures to the closest GAAP measure are included in the appendix of the slide presentation. In addition, today’s conference call includes forward looking statements as defined by the Private Securities Litigation Reform Act of 1995.

Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from such forward looking statements. Please refer to the company’s SEC filings for more information on these risks and uncertainties, including the press release we filed yesterday and our Form 10 Q expected to be filed later today. I would now like to turn the call over to Antonio.

Antonio Carrillo, President and CEO, Arcosa: Thank you, Erin. Good morning, everyone, and thank you for joining us today for a discussion of our second quarter results and the outlook for 2025. Let me start with a few key takeaways on Slide four. We are pleased to report a record quarter that reflects the positive momentum for our strategic initiatives. Over the past year, we have taken deliberate actions to strengthen our growth businesses, streamline the portfolio, reduce the cyclicality and expand margins.

And the impact is clear in this quarter’s results. It also bodes well for our future performance. As Arcosa continues to transform, we have expanded our disclosures around our key growth businesses, Construction Materials and utility related structures to help investors track our progress. Gail will provide more details in her remarks. Arcosa’s revenue increased 18% and adjusted EBITDA grew 42% year over year, excluding the divested Steel Components business.

We report a record adjusted EBITDA margin of 20.9%, up three sixty basis points. The successful integration of Stavola, which we acquired in October 2024 has proven to be a significant driver of our growth, increasing consolidated revenues by 14 and expanding adjusted EBITDA margin by two fifty basis points. Contribution from Stavola more than compensated for weather related challenges in our organic legacy Construction Products business, which experienced above average rainfall throughout the quarter. In the aggregates business, we continue to realize strong pricing gain, which drove 15 increase in adjusted cash gross profit per ton. Additionally, our growth was augmented by a record quarter for engineered structures, fueled by strong execution in our utility and related structures business and raising demand tied to long term grid expansion trends.

Our fully ramped wind tower facility in Belen, New Mexico is performing well and is margin accretive. Our barge business performed in line with expectation and order activity is positive with orders received in the third quarter. Our hopper barge backlog now extends into the 2026. Tank barge backlog extends into the fourth quarter of next year. We also delivered strong cash generation during the quarter as we continue to prioritize deleveraging following the Stabol acquisition.

We remain on track to reach our target leverage range of two to 2.5 times within the next three quarters. Given healthy overall demand in our growth businesses along with solid backlog visibility in our cyclical businesses, we’re tightening our guidance range for full year 2025 revenues and adjusted EBITDA while maintaining the midpoint. As a reminder, the midpoint of our guidance implies a 30% growth in EBITDA for 2025 excluding the divested Rail Components business. To wrap up, we are pleased with our solid first half performance and the momentum we have as we move into the second half of the year. I will now turn the call over to Gail to discuss our second quarter segment results in more detail.

Gail Peck, CFO, Arcosa: Thank you, Antonio. Good morning, everyone. I’ll start with Construction Products segment on Slide 10, which reported record revenues and segment adjusted EBITDA. Second quarter revenues increased 28% and adjusted segment EBITDA increased 44% driven by the accretive contribution from Stivola. Margin expanded three ten basis points to 28.3%.

The acquisition integration is progressing very well and Stivola’s second quarter performance demonstrates its premium financial attributes delivering a 39% adjusted EBITDA margin for the quarter despite a significant increase in rainfall days in the New York, New Jersey MSA during the quarter compared to the prior year. On an organic basis, higher overall pricing was offset by reduced volumes and cost absorption as wet weather impacted many of our key markets. While weather has been a headwind in the first six months of the year, we are pleased to see year to date organic adjusted EBITDA margin for this segment up slightly year over year. As Antonio mentioned, we are expanding our disclosures for our aggregates business to better align with our construction materials peers. An additional table has been added to the earnings release that provides volume, average selling price and unit profitability metrics for our largest Construction Materials business.

As a reminder, last quarter we began breaking out revenue for aggregates and we are pleased to increase transparency to highlight the quality of our platform. For our aggregates business, freight adjusted revenues increased 15% and adjusted cash gross profit increased 21% during the quarter, expanding margin by two fifty basis points. Total volumes increased 6% as the addition of Stivola more than offset lower organic volumes. On a unit basis, freight adjusted average sales price per ton increased 8% to 17.83 and adjusted cash gross profit per ton increased 15% to $8.24 Organically, was up mid single digits in line with expectations. Above average rainfall was a factor throughout the quarter in most of our markets, reducing the number of available workdays.

With lower production volumes, our teams focused on maintenance and repair activities during the quarter, which reduced cost absorption, but should improve margin in the second half of the year. With more normalized weather patterns in July, we experienced strong double digit volume growth in our aggregates business supported by Stabola and solid organic growth, which underpins our confidence in the second half of the year. Turning to Specialty Materials and Asphalt. Revenues effectively doubled, primarily reflecting the Stivola acquisition. Stivola’s asphalt business performed well during the quarter with margins slightly ahead of expectation.

In Specialty Materials, higher pricing was offset by lower volumes resulting in flat adjusted EBITDA year over year. Finally, revenues for our trench shoring business were down due to lower volumes and a reduction in steel prices, which decreased average selling prices. Adjusted EBITDA declined in line with revenue and margin was unchanged. Customer sentiment for our Shoring business remains positive. Moving to Engineered Structures on Slide 11.

As previously mentioned, we have now broken out revenues into two line items, utility and related structures and wind towers. We provide backlog information on a standalone basis as well. In the second quarter, segment revenue increased seven percent due to higher wind tower volumes from our New Mexico plant, which began delivering towers in the second quarter of last year and is now fully ramped to its planned production. Revenues from Utility and Related Structures decreased 2%, in line with expectations. Significant double digit volume growth in our steel utility poles and improved product mix were offset by lower steel prices, which reduced average pricing.

Adjusted segment EBITDA increased 31% and margin expanded three fifty basis points to a record 18.7%. The earnings growth was about evenly split between utility and related structures and wind towers. We ended the quarter with a record backlog for utility and related structures of $450,000,000 up 9% from the start of the year as we continue to see strong order activity. Our production visibility for this business is supported by our reported backlog as well as customer reservations for future capacity. For wind towers, we ended the quarter with backlog of almost $600,000,000 down 23% from the start of the year as we continue to deliver on our existing orders.

As a reminder, our backlog extends into 2028 at our New Mexico facility. Turning to Transportation Products on Slide 12. Revenues were up 18% and adjusted segment EBITDA increased 10% excluding steel components from the prior year period. The growth was driven by higher tank barge volumes, partially offset by lower hopper barge deliveries. Margin for the business declined 110 basis points in line with expectations based on product mix.

We expect to see sequential margin improvement in the second half. During the second quarter, barge orders totaled $33,000,000 primarily for hopper barges for 2025 delivery. We ended the quarter with backlog of $277,000,000 in line with the start of the year. Order activity increased subsequent to quarter end and we have solidified our production plans for 2025. I’ll now provide some comments on our cash flow performance and leverage position on Slide 13.

Second quarter operating cash flow was $61,000,000 a sequential improvement from the first quarter’s breakeven cash flow. Working capital was a $76,000,000 use of cash, primarily driven by higher receivables due to the seasonal ramp in construction and increased inventories supporting our utility structures business. Looking at working capital days, we are pleased with the significant reduction from the second quarter last year. CapEx for the second quarter was $28,000,000 down $20,000,000 from the prior period as we are primarily investing in maintenance CapEx this year. For the full year, we now see CapEx of $145,000,000 to $155,000,000 which lowers the top end by $10,000,000 reflecting the expected timing of investment.

Free cash flow for the quarter was 39,000,000 We expect free cash flow to improve as we move into the second half of the year. We continue to make progress deleveraging the balance sheet following the Stabola acquisition. Second quarter’s 2.8 times net debt to adjusted EBITDA is down over a half turn from when we closed the transaction last October due to strong earnings growth. With higher anticipated cash flow, we expect to begin reducing debt during the second half of the year. Our liquidity remains strong at $890,000,000 including full availability under our $700,000,000 revolver, and we have no material near term debt maturities.

I will now turn the call over to Antonio for an update on our 2025 outlook.

Antonio Carrillo, President and CEO, Arcosa: Thank you, Gail. I will now turn to Slide 15 to review our guidance. Looking ahead, our process growth businesses are firmly positioned in attractive end markets with solid demand fundamentals. Additionally, our cyclical businesses have strong backlog visibility. The steps we have taken to strategically transform our portfolio have created a more focused and resilient platform, which is positioned for consistent long term growth.

At the midpoint of our range, we anticipate revenues of €2,900,000,000 up 17% year to year and adjusted EBITDA of $570,000,000 up 30% excluding steel components from 2024 results. We expect the full year impact of acquisitions in 2025 to be supplemented by double digit adjusted EBITDA growth from our legacy operations. In terms of tariffs, we have navigated this period of uncertainty very well. And with the current available information, we do not see any future material impacts. Please turn to Slide 16 for a discussion of our business outlook by segment.

We expect Construction Products to perform well driven by accretive contributions from Stabola. In our aggregates business, we are increasing our full year pricing outlook to high single digit appreciation and we expect double digit volume growth. With volumes up 2% for the first half of the year, we anticipate solid volume growth in the second half coming from both Stabola and organic volume improvements. When we look at the end market demand, infrastructure investment continues to serve as a growth catalyst. Public sector projects are progressing while private markets show resilience in select industrial segments such as AI, data centers and warehouses.

In contrast, single family residential remains pressured, while demand for multifamily is improving. On balance, we are confident in the strong long term prospects for our construction business despite recent weather related softness. As Gail mentioned, when weather is dry, volumes appear to be solid, which we saw in the June as well as in the month of July. This supports the outlook for high single digit organic growth in the second half of the year for the Construction Products segment. Moving to Engineered Structures, we’re benefiting from continued investment in the nation’s aging infrastructure and the new era of growth for The U.

S. Power market due to increased electrification, data center growth and connecting renewable energy to the grid. Given strong momentum and a pickup in demand for transmission structures, we have begun converting our Island, Illinois facility from wind towers to utility structures. We expect to be operational in the 2026. Our record backlog, long term power trends, increased utility CapEx and strategic network of Alliance customers gives us confidence in the durability of demand.

Ameren is also experiencing steady demand for lighting poles and traffic signals as road infrastructure spending continues to support our traffic structures business. On the telecom side, we are seeing modest pickup in spending by carriers, which is giving us giving that part of the business a lift. Turning to wind, the recent passage of the one big beautiful bill adds clarity and urgency to the near term orders. Order inquiries with our wind turbine customers have increased and we anticipate a period of solid demand as developers expedite activity to ensure they capture tax credits before they expire. Long term, U.

Power demand is expected to accelerate and all sources of power generation will be required to fulfill demand. Even without tax rate support, wind has become cost competitive with other sources of generation and should play an important role in meeting load growth demand. This is an exciting time to be serving The U. S. Power industry and we believe our engineered structures platform is well positioned in this new environment of power growth.

With relatively small capital investment, most of our plants are capable of producing large utility structures, providing us optionality if demand for transmission poles continues to accelerate. Last for our discussion on transportation, the barge fleet continues to age and this means replacement demand over the next five to ten years will likely outpace what the industry can build. The introduction of permanent bonus depreciation should be helpful for our barge customers. While we only received $33,000,000 in orders in the second quarter, we booked $122,000,000 of additional orders since quarter end, filling our 2025 production plans for copper barges and providing solid backlog visibility for both hopper and tank barges well into 2026. Inquiries for tank barges are into 2027, but we are ready to increase production if demand continues to accelerate.

We will continue to be disciplined and strategic with our deployment of capital as we prioritize deleveraging, while also investing in the business to drive long term growth both organically and via potential M and A transactions. Summing up, we’re optimistic about 2025 and beyond. We have an incredible team who’s executing well and our results reflect that. Our growth businesses are operating in attractive markets with solid demand fundamentals and we have a very strong market position. Our cyclical businesses have solid backlogs, their products are needed and with recent policy clarity, demand is picking up.

Our cost is more resilient than ever before and our goal is to continue to take steps to optimize our portfolio to reduce complexity while enhancing long term shareholder value. With that, we’re ready to take your questions.

Leo, Conference Call Coordinator: Thank you. We’ll take our first question from Grooms of Stephens. Your line is open.

Ethan, Analyst, Stephens: Good morning, everyone. This is Ethan on for Trey. Thanks for taking my question. I wanted to talk first about the moving pieces of the updated guide range and looking ahead to the second half. You’ve called out the organic versus inorganic contribution for the year, but how should we think about the moving pieces of the guide on a on a segment basis, versus the assumptions you had baked in at the beginning of the year?

Gail Peck, CFO, Arcosa: Good morning. This is Gail. I’ll take that. You know, maybe just a few comments high level on the outlook. You know, as Antonio says in his script, you know, we remain on track for strong growth in 2025, and the guidance really reflects our increased confidence in the outlook.

We’ve maintained the midpoint as you know and tightened the range. And, you know, as I think about the organic versus inorganic split, we’re looking at 30% EBITDA growth for the year. Still expecting 12% of that or 12% year over year growth on an organic basis. That’s really not changed from where we were at the start of the year. So strong 12% organic growth.

I’d say what has changed is now that we’ve finished the first six months of the year and we know that our construction business was challenged by weather, that had some impacts on construction for the first half of the year. We have had outperformance by utility structures and a little bit by barge to help compensate for that. So that really leaves the full year guide intact. What we did say in our comments is we expect the second half of construction to be high single digit organic growth. That is where we started the year.

It was just interrupted by the weather we had in the first half. As we mentioned in July, we were pleased with the strong double digit volume growth and solid organic growth in the month of July. So what we’re seeing when the weather is drier, volumes are good. So that’s underpinning our confidence in the back half construction outlook. So I I I think really it’s just a little bit of movement between outperformance in engineered structures and the softened first half to construction really due to weather.

Ethan, Analyst, Stephens: Right. Right. And that’s encouraging to hear about the pickup in activity. And quickly on the drivers of the raised aggregates ASP guidance, where is the outperformance there coming from relative to what you had expected at the beginning of the year?

Gail Peck, CFO, Arcosa: So on an ASP front, as you can see, we had 8% growth in the quarter, total ASP growth. That brings year to date growth to about a 10% increase year over year. So strong pricing in the first half of the year, which was above our expectations. So, you know, our our raise from the mid single digit to the high single digit really reflects the start of the year where we had select mid years that we were targeting, we were able to achieve. So that improved.

As you remember, our initial guide didn’t have any mid years. We did have some select mid years. Pricing gains were really broad based in the quarter. Stivola continues to be accretive to ASP, and pricing trends in the New York, New Jersey MSA are favorable. So, you know, high confidence on the performance in the first half.

And then when you think about the back half, we’ll continue to have, you know, very strong pricing momentum. I I I will point out first half did benefit from the strong low double digit volume excuse me, price increases we had in the back half of last year. So we had some carryover impacts in the first first half, but we’re very positive about the pricing environment.

Ethan, Analyst, Stephens: Great. Thanks for taking the question and I’ll pass it on. Thank you.

Leo, Conference Call Coordinator: Thank you. Our next question is from Ian Zaffino of Oppenheimer. Please go ahead.

Isaac Salzon, Analyst, Oppenheimer: Hey, good morning. This is Isaac Salzon on for Ian. Thanks very much for taking the questions. I just had one on the wind tower business. You noted wind towers, obviously, inquiries seem to pick up a bit as there’s a bit more uncertainty on the policy side and some urgency as, I guess, tax credit stays out.

I guess the question is maybe could you remind us on the capacity available across the wind tower business to receive new orders And how you think about potentially adding orders and utilizing that capacity? Thanks.

Antonio Carrillo, President and CEO, Arcosa: Sure. Absolutely. This is Antonio. So we have four plants that could produce wind towers. One of them we announced that we are transitioning to a transmission tower since we’re seeing tremendous demand there and the backlogs are extending and delivery times are extending.

So I think that’s a really positive move for our utility structures business, which is really, really doing very well. Our wind tower business also performing very well in terms of operation and running. The three plants that are left for wind are operating, I would say, about 60% capacity, probably in New Mexico a little higher. So we do have capacity to increase production in the short term if our customers require it. And as you mentioned, I think the biggest news in this quarter versus last quarter now with policy clarity is that our our customers are are very excited about the next few years for wind.

And and so we are we are excited to to support the industry over the next few years. And hopefully, over the next several quarters, we have some good news about additional orders and clarity for whole industry.

Isaac Salzon, Analyst, Oppenheimer: Okay. Thank you. Congrats on a strong quarter.

Garik Shmois, Analyst, Loop Capital: Thank you.

Leo, Conference Call Coordinator: Thank you. Our next question is from Garik Shmois of Loop Capital. Your line is open.

Garik Shmois, Analyst, Loop Capital: Hi. Thanks. And appreciate the increased aggregates disclosures. I just want to ask on the aggregates gross profit per ton growth. And it’s pretty impressive, but how should we think about that level of growth in the second half of the year?

And then maybe just kind of big picture on gross profit per ton now that we’re seeing it a little bit more clearly. Is there a long term target for that metric that you think the business can get to over time?

Gail Peck, CFO, Arcosa: Good morning, Gerrick. Thanks for the questions. Yeah. We’re very pleased to enhance our disclosures within construction materials, you know, having done over 20 acquisitions since our start. It’s taken us a little bit of time, but we’re really pleased to have the enhanced disclosures.

We think it helps investors a lot to really understand what we think is a high quality platform. To your question about back half trends, we’ll continue to see good gross profit per ton growth in the back half. We will benefit from another quarter that would be Q3 of inorganic contribution from Stivola, and that has been nicely accretive to our performance overall this quarter. I think it really shines. Q1 was their seasonal low, we’re really seeing the impact that the acquisition has and really validates our decision to move forward acquiring the business.

As we think about, you know, on a go forward basis, we haven’t set an absolute target. What’s important to us is really maintaining that growth in GP per ton. And, you know, that’s really going to be a combination of our continued focus on pricing discipline and cost discipline. And we’re seeing, you know, signs certainly it bumps around as a lot of things do these days, but we’re seeing reduction in inflationary pressures certainly on some of the inputs, which is helpful. But it’s growing that gross profit per ton that we’re very focused on.

Garik Shmois, Analyst, Loop Capital: Okay. That makes sense. I wanted to ask just on the balance sheet with the leverage expected to get back down to the two to two and a half times range within the next two to three quarters. I’m wondering if you could talk about the acquisition pipeline in particular, what you’re seeing and what some of the opportunities could be as you work the leverage down post Ebola.

Antonio Carrillo, President and CEO, Arcosa: Sure. This is Antonio. And I think that’s where we have continued to focus on having a full pipeline. So we we never took the the gap the the foot of the pedal. And we’ve this as you as we’ve said before here, you know, M and A has its own timing and sometimes things come with that we don’t expect.

And sometimes when we want things, there’s nothing available. So that’s why we’ve kept an open mind and and we feel we have a very solid pipeline of bolt on acquisitions and we continue to work on them. So as we get closer to our leverage ratio, I think we would feel more comfortable in deploying capital both organically and inorganically. We as I said before, we announced the transition of one of our wind tower facilities to transmission structures. That’s going to be about 20,000,000 to $25,000,000 in capital.

Most of it will be spent next year, but we are feeling more comfortable now that our balance sheet is closer to our target. And on M and A, as we get if we find something that really fits and we really like, we’ll think about it as we get closer.

Garik Shmois, Analyst, Loop Capital: Okay. Thanks for that. I’ll pass it on.

Leo, Conference Call Coordinator: Thank you. Our next question is from Julio Romero of Sidoti and Company. Please go ahead.

Julio Romero, Analyst, Sidoti and Company: Great. Hey, good morning, Antonio and Miguel. You spoke about policy uncertainty fading in the wind tower business post the tax reform bill and demand picking up as a result. Can you maybe speak to how the final provisions of the bill compared to what you expected? Any details that surprised you?

And then secondly, can you talk about the margin implications of final provisions to your wind tower business relative to expectations?

Antonio Carrillo, President and CEO, Arcosa: Yes. So the policy thing was a kind of a roller coaster through the quarter because things different versions came out. I I think, you know, things things could always be better and things could always be worse. I I I think, what’s important here, Julio, is the clarity. I think the industry what what would the industry needs is clarity.

And I mentioned in my remarks, wind is a competitive source of energy. So so just having clarity allows the industry to to to move. And that’s what we’re seeing right now on the the the, let’s say, the sentiment we’re getting from our customers. Okay. We’ll move.

There is an important step that’s happening in the next few weeks, which is clarity on what a start of construction means for these wind projects. That’s going to be an important part in the next couple of weeks. Again, I think what we need is clarity. If you look at the pipeline of projects that are out there, I think we have a solid couple of years coming. We just need a little more clarity around what that means.

But to be honest, it was a relief to at least see what we’re dealing with. And the industry is not going anywhere. I think the industry is going here to stay and it’s going to have a solid near term future. I would tell you there’s also clarity in other areas. Mentioned the bonus depreciation for barges.

And that’s if you saw, we only sold $33,000,000 in the second quarter. We sold we’ve already sold 122,000,000 in the third quarter. Some of it has to do with tax that has tax benefits for our customers behind it. So I think the clarity I think there’s still things to come that we are still analyzing from the big beautiful bill. So overall, clarity is important.

Julio Romero, Analyst, Sidoti and Company: And I’m Very helpful there. Go ahead.

Gail Peck, CFO, Arcosa: I was just I was just gonna add good morning good morning, Julio. Was just gonna add on to Antonio’s clarity, comment, and that really comes to the increased confidence comment that we had. And that’s really what this is executed really well in the second quarter, but we have a higher level of confidence relative to where we were at the start of the year. You know, most notably in our in our cyclical businesses as we filled production slots that we needed to fill in the fourth quarter. And so, you know, when we come back to guidance and looking at the EBITDA midpoint range seems very achievable.

And, you know, we’d like to think that there is potential upside if weather cooperates, which our construction folks would surely appreciate and we get additional tailwinds from incremental operating leverage within our manufacturing businesses. So the clarity is important and it’s important as we think about the balance of the year.

Julio Romero, Analyst, Sidoti and Company: Great. Thanks so much. And then are you guys seeing any customer driven delays as a result of federal, state or DOT funding across the portfolio? And is there any way to parse that out from the weather delays you called out that affected you guys and everybody else in the quarter?

Antonio Carrillo, President and CEO, Arcosa: Yes. I’ll take that. We are not I don’t think we any of the of our weakness in organic have to do with delays in project. It was really weather. It was really bad weather quarter in several of our regions.

But when you sit down with our teams and and you dig really dig into asking questions, well, tell me about what you see in the market, what are what’s happening with projects. I think the the biggest the biggest word I hear is all these projects are real. So there are a lot of projects that are waiting in the pipeline to get started. And when you talk to our teams across the board in the construction, but also in utility and also in in wind and and in barge. The word that we hear is all these projects that we’re seeing are real.

So I’m very excited about maybe they’re taking a little longer to start or something, but I really perceive a very positive environment around projects large projects that are coming to fruition soon.

Julio Romero, Analyst, Sidoti and Company: Great. One more if I could. Just on the aggregates business, you mentioned multifamily demand is improving. Can you maybe talk about which geographies are showing that multifamily improvement?

Antonio Carrillo, President and CEO, Arcosa: Yes. There are several regions where we’re seeing that. I would say probably the weakest we’re seeing is in the Gulf Coast. But here in Texas, we’re seeing some improvements. And in New Jersey, things have gone very, very well.

I think New Jersey is probably the highlight for us across the board in the Stabola platform. So and then I I would say Texas and New Jersey were the highlights for the for the quarter in that in that sense.

Gail Peck, CFO, Arcosa: I I I’d add on to that, Julio. We’ve seen, you know, third party research on on multifamily. The National Association of Home Builders sees mid single digit growth for multifamily in 2026. So back half seems to be improving from a multifamily front and, our specialty materials customer sentiment seems to align with that.

Julio Romero, Analyst, Sidoti and Company: Great. Thanks so much.

Leo, Conference Call Coordinator: Thank you. Our next question is from Brent Thielman of D. A. Davidson. Please go ahead.

Brent Thielman, Analyst, D.A. Davidson: Hi, Thanks. We appreciate the added disclosures here as well. I guess, Antonio, I kind of look across all the different businesses you have, and it seems like you’re carrying a lot of momentum here, you know, potentially into 2026 with sort of when one of the variables still trying to figure out here. And, yeah, I was just doing kind of the math on the backlog conversion there. You’re running about 90,000,000 a quarter in revenue, just based upon that.

My I guess my first part of the question is how much of that can carry over into 2026? And, you know, the the I wanted to sort of delineate, increase in inquiries versus when orders could ultimately come in. Any greater sense of when that could occur just to sort of shore up next year’s visibility there?

Antonio Carrillo, President and CEO, Arcosa: Sure. Let me start. As you know, construction has less visibility because for the most part, we don’t have a huge backlog. Are a on the aggregate side, we do have projects, especially, I would say, and contracts in the West where we have on premise people located that are taking aggregates. But for the most part, we don’t have a lot of long term contracts.

That said, we are seeing, especially here in Texas, the Gulf Coast and New Jersey, larger projects that we’re bidding. And we have in New Jersey very strong backlog, for example, for infrastructure projects. So overall construction, is less tied to large projects, we are seeing strong demand for large projects, which is it’s a good thing. And as you said, we I think we have good momentum there. Talking about the other businesses, starting I will say the one that I’m the most excited about is the utility and related structures.

As you as I mentioned in my remarks, I think it’s a great time to be serving the power industry. When you look at every trend there and and the the customer sentiment is really, really positive. And and that’s why we took the chance to change the facility from wind to utility because we see not only us, but our competitors extending delivery times. And that’s why we want to open the facility to be able to serve the industry and allow ourselves tie to this incredible trend that we’re seeing and be able to grow faster once we open the facility in the second quarter next year. It’s going to take a ramp up, but it’s a and I also mentioned we have additional capacity if we need more.

On the so that’s on the backlog. But we are very optimistic. Gail mentioned we have record backlog in Utility, but we also have customer reservations that are very strong. And that means they have not been converted from, let’s say, a conceptual order to specific designs. And as that process continues, we expect our backlog to continue to perform well.

On the wind tower side, it’s just timing. I think once our customers are needing the wind towers, we just have to these negotiations and contracts take time. So we’re working on that. I will tell you, I’m very optimistic of where we’re seeing the backlog where we expect the backlog to look like several months from now. So positive on that.

And finally, barge, I think you saw the orders in the third quarter already. Our barge line now is filled up until April. The tank line is filled up until the fourth quarter of next year. We’re quoting tank barges into 2027. And as I mentioned in my remarks, I think it might take a little longer.

I don’t know when it’s going to pick, but the pent up demand for barge is incredible. And at some point, we’re going to have to increase capacity to be able to supply it. So as you said, I think across the board, very positive momentum in the company, great visibility for the second quarter for the second half. It’s all about execution and focusing on building the backlog so that 2026 continues to be continue the growth of Arcosa.

Garik Shmois, Analyst, Loop Capital: Okay. All right.

Brent Thielman, Analyst, D.A. Davidson: I appreciate all that. I think, Antonio, what I was trying to get to just on the wind side is that, I know you have some carryover backlog into subsequent years, and you have pretty good visibility here into the second half of the year for that business from a volume perspective. What I’m trying to figure out is, yeah, how much of this sort of run rate of revenue and wind through the second half of the year carries into 2026 before you need to get some more orders to sort of continue that through the year, if that makes sense.

Antonio Carrillo, President and CEO, Arcosa: Yes. So we have three plants operating. One is, as Gail mentioned in her remarks, has orders until 2028. The other two plants, we have orders until the 2025 and we have we’re right now, we’re working with our customers to fill up that capacity for 2026. As I mentioned, we’re confident we’re going to get there.

I’m not worried about it. I think the clarity was important and the timing was very important. If you had asked me a few months ago before this, there was a lot more worry. But what I will tell you one important piece. Just like wind towers is very important for us, it’s a good business for us, we’re a very important supplier for our customers.

So it’s a we have a strategic relationship with our customers that we both need each other for for to be able to supply this industry, and and I I think we’ll get we’ll get there in the near future.

Brent Thielman, Analyst, D.A. Davidson: Okay. One more if I could just on utility structures. Obviously, there’s been a push around some of your competitors in the industry to add capacity as well. And I just wanted to get a sense, especially with this latest announcement of the conversion of the wind plant to transmission. What what is it that maybe has changed for you to make that decision in the market?

What are you hearing from your customers that’s just incrementally different,

Antonio Carrillo, President and CEO, Arcosa: whether it’s the

Brent Thielman, Analyst, D.A. Davidson: last six months, last twelve months, specifically in the utility structures, transmission structures arena to decide to make that added push to add capacity there?

Antonio Carrillo, President and CEO, Arcosa: Yes. So it’s a really good question. I think we were we’ve always been very bullish on this. When you look at forecast and utility CapEx forecast for they’ve been just increasing and increasing. And the let’s say, the trend continues not only to be very positive, but every day it’s more positive.

We’re also seeing faster response time from our customers in terms of they’re getting permits to be able to build the lines. And I will tell you, the other thing that’s changing that’s very interesting is the poles are getting bigger. And as you get into bigger poles, that’s our sweet spot. That’s where our cost really, really shines. And that’s where the flexibility we have in our manufacturing really is unique because wind towers are enormous and they’re very well set up for building utility poles, large utility poles.

So as utilities move towards larger when you look announcements, it’s mainly very large phone lines. And that’s where we what we really like to to build, and our plans are really well set up for that. So so I I think the trends are in our favor.

Gail Peck, CFO, Arcosa: Yeah. And I think, Brent

Isaac Salzon, Analyst, Oppenheimer: I appreciate it.

Gail Peck, CFO, Arcosa: Just to add on as it relates to the the conversion we’re doing. I mean, we’re converting an idle plant that has a little bit of a drag on our p and l because it’s idled. We’re converting that into utility structures, which are seeing strong growth at a relatively small dollar ticket of of 20 to 25,000,000 as Antonio said. You compare that to the nice returns we’re getting on the New Mexico wind tower facility, that was a $55,000,000 investment. So we’re able to, deploy some capital and have that operational by the ’26 and fully ramped sometime not too far down the future.

So that I think that puts us in a very unique position.

Brent Thielman, Analyst, D.A. Davidson: Understood. Thanks for taking the questions.

Leo, Conference Call Coordinator: And there are no further questions at this time. I’d be happy to return the conference to Erin Drebeck for closing comments.

Erin Draybeck, Vice President of Investor Relations, Arcosa: Thank you again for joining us today. We appreciate your questions and your interest in Arcosa. Please reach out if you have any follow-up questions.

Leo, Conference Call Coordinator: Thank you. This does conclude today’s conference. You may now disconnect your lines and everyone have a great day.

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