Arcosa Q1 Earnings Call Highlights

Key Points

• Arcosa reported a strong start to 2026 with 10% Adjusted EBITDA growth from continuing operations, 100 bps margin expansion, and raised full-year guidance to a $565 million midpoint (≈11% YoY); the company closed a $450 million barge divestiture to simplify the portfolio and expects pro forma net debt/EBITDA of ~1.9x with about $1.1 billion of liquidity.
• Engineered Structures delivered record performance—segment margin reached 21.1% (up 300 bps) driven by mid‑teen growth in utility structures and a record $558 million utility backlog (up 28%), while wind towers are in transition with a $600 million backlog and staged recognition into 2026–27.
• In Construction Products, aggregates and trench shoring were bright spots—freight‑adjusted aggregates revenue rose ~6% and trench shoring revenue/adjusted EBITDA grew ~26% on record orders—though asphalt volumes faced seasonal weakness; Arcosa also completed a $60 million natural aggregates acquisition in Florida.

Arcosa NYSE: ACA reported what executives described as a strong start to 2026, highlighted by double-digit Adjusted EBITDA growth from continuing operations, margin expansion, and an increase to full-year guidance. Management also emphasized the company’s portfolio simplification following the completion of its barge divestiture and outlined ongoing investments and acquisitions aimed at strengthening its remaining construction and engineered structures businesses.

First-quarter performance and portfolio changes

President and CEO Antonio Carrillo said the company “kicked off the year with strong results,” delivering “Adjusted EBITDA growth of 10% from continuing operations,” with margin expanding by 100 basis points. Carrillo said the quarter was driven by “robust double-digit top-line growth and strong margin uplift in Utility Structures,” while Construction Products delivered “solid results” despite seasonality and winter weather impacts.

A major development during the period was the completion of Arcosa’s barge divestiture. Carrillo noted that on April 1 the company closed the “$450 million barge divestiture,” calling it “a pivotal step in simplifying our portfolio.” With the sale completed, Arcosa now operates with two segments: Construction Products and Engineered Structures. Carrillo said the company intends to use net proceeds from the barge sale “to reinvest in our growth platforms and manage our debt.”

Arcosa also added to its aggregates platform during the quarter. Carrillo said the company completed a “$60 million acquisition of a natural aggregates operation located in Florida,” which he described as having “accretive margins.”

Construction Products: weather impacts, aggregates strength, and trench shoring growth

Chief Financial Officer Gail Peck said her comments focused on continuing operations and that the barge business results were included in discontinued operations. In Construction Products, Peck said first-quarter results were “largely in line with our expectations,” despite “a slow start to the quarter due to severe winter weather across our footprint in January.” Segment revenues rose 5%, while adjusted segment EBITDA “decreased slightly,” as gains in Aggregates and Trench Shoring were offset by seasonality in Asphalt and lower cost absorption in Specialty Materials.

Within aggregates, Peck said freight-adjusted revenues increased about 6%, driven by 2% pricing growth and 4% volume. Adjusted cash gross profit margin rose 220 basis points, and adjusted cash gross profit per ton increased 7%. She said performance was led by Texas, where favorable weather later in the quarter “more than offset” harsh conditions in the East region.

In specialty materials and asphalt, Peck said revenues fell 4% “primarily due to lower asphalt volumes,” though specialty materials revenues increased slightly due to higher lightweight aggregates volumes. She said costs rose year-over-year due to planned maintenance downtime at a lightweight plant and a larger seasonal impact from asphalt, resulting in lower adjusted EBITDA for the quarter. Peck said the company expects “earnings growth and margin improvement for both product lines for the remainder of the year.”

Trench shoring remained a standout. Peck said the business posted another “strong quarter of growth,” with both revenues and adjusted EBITDA up about 26%, supported by record order levels and “very positive” customer sentiment.

Engineered Structures: record margins, utility backlog growth, and wind tower transition

In Engineered Structures, Peck said segment revenues increased 4%, led by “mid-teen growth” in utility and related structures that more than offset lower wind tower revenues, which were expected. Utility structures revenue grew “north of 15%,” supported by volume and pricing, and drove a 21% increase in adjusted segment EBITDA. Segment margin reached a record 21.1%, up 300 basis points year-over-year.

Peck attributed the margin expansion to strong execution and capacity actions, noting the team “successfully executed strategic capacity expansion projects to drive volume and accelerate the delivery of more favorable product mix.” The company ended the quarter with record utility and related structures backlog of $558 million, up 28% from the start of the year. Peck said order activity included “a couple of orders for long-term projects that extend into 2028,” and added that customer reservations—tracked separately from backlog—were also robust.

For wind towers, Peck said Arcosa received $43 million of orders during the quarter for delivery in 2026 and 2027 and ended the quarter with backlog of $600 million. She said the company expects to recognize 36% of that wind tower backlog in 2026 and 59% in 2027.

During the Q&A, Carrillo described Engineered Structures as a “K-shape segment,” with Utility Structures rising significantly while wind declines in a transition year. Peck said Arcosa raised its margin expectations for the segment versus February and expects an annual margin “in the 20% range” to be sustainable for the year, though she noted startup costs tied to the Clinton ramp-up and the galvanizing facility would likely peak in the second quarter before easing in the back half.

Cash flow, leverage, and updated guidance

Peck said Arcosa generated $58 million of operating cash flow from continuing operations in the first quarter, compared to a $21 million use of cash in the prior-year period. The improvement was driven by higher earnings and a $53 million reduction in working capital usage. Capital expenditures for continuing operations were $44 million, up from $33 million a year earlier, reflecting “increased investment in our core growth platforms.” Free cash flow from continuing operations was $21 million, compared to negative $49 million in the prior-year period.

Additional first-quarter cash activity included the $60 million aggregates acquisition and $18 million of share repurchases “to offset dilution,” Peck said.

On leverage, Carrillo said that at quarter-end, pro forma for the barge divestiture, net debt to adjusted EBITDA decreased to 1.9x, “slightly below our target range.” Peck added that pro forma for the April 1 closing, net debt to adjusted EBITDA was 1.9x versus 2.3x at quarter end, reflecting an estimated $370 million of after-tax net proceeds. She said $83 million was used in April to prepay a portion of the term loan. Pro forma liquidity was estimated at $1.1 billion, including full availability under a $700 million revolver.

Arcosa updated several guidance items following the divestiture, Peck said:

• Full-year capex is now expected to be $215 million to $240 million, a slight reduction from the prior range.
• Full-year effective tax rate is expected to be 16% to 18%, down 1.5 points due to a lower expected state tax rate for continuing operations. Peck noted the first-quarter tax rate of 5.3% benefited from one-time discrete items.
• Corporate cost impact to adjusted EBITDA is expected to be about $60 million at the midpoint, “roughly flat with 2025” as the company offsets barge stranded costs.

For the full year, Carrillo said guidance now reflects continuing operations only. At the midpoint, Arcosa expects adjusted EBITDA of $565 million, up $22.5 million from its prior guidance range, representing 11% year-over-year growth. Carrillo also guided to revenue of $2.5 billion to $2.65 billion, up 6% year-over-year, and said the company expects margin to expand to a record 21.3%.

In Construction Products, Carrillo said Arcosa anticipates another record year for revenues and adjusted segment EBITDA, with low single-digit aggregates volume growth and mid-single-digit pricing improvement consistent with February guidance. He said the company is using fuel surcharges and loading fees in aggregates to combat higher diesel costs, and that asphalt pricing is indexed to liquid AC. Carrillo said demand support continues from infrastructure and heavy non-residential activity, while residential remains pressured by affordability; he said the company expects flat to slightly down residential aggregates volume in 2026 and sees recovery pushing out to 2027.

In Engineered Structures, Carrillo pointed to “power market tailwinds,” citing expanding data centers and rising electricity consumption that are driving multi-year utility investment. He said Arcosa is “successfully addressing” newly implemented steel tariffs affecting structures made in Mexico, noting the company has “contractual protection in place to effectively pass through the impact.” Carrillo said Arcosa is ahead of schedule converting an idle Illinois wind tower plant into a utility pole plant, expecting production of large utility poles by the end of the second quarter, and said a new galvanizing facility in Mexico completed its first “tape” in April and should be commercially operational in the second quarter.

On costs, Carrillo said Arcosa uses “between 10-11 million gallons of diesel” and has been implementing fuel surcharges and loading fees. Peck said diesel prices are up about $1.50 per gallon in Arcosa’s footprint; if sustained and “unabated,” she estimated a 4% to 5% headwind to cash unit profitability in 2026, but said the company has taken steps to mitigate the impact.

About Arcosa NYSE: ACA

Arcosa, Inc NYSE: ACA is a Dallas‐based industrial company that was formed through the spin‐off of Trinity Industries' construction products business in 2018. Since its inception, Arcosa has focused on the manufacture and sale of critical infrastructure components, serving a diverse set of end markets including transportation, construction and energy.

The company's Construction Products segment produces a broad range of highway safety products, such as guardrail systems, sign supports and crash cushions, as well as aggregates and ready‐mix concrete.

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