Can you elaborate on the robust customer reservations for utility structures not included in backlog, and do current capacity investments go beyond the Illinois and Tulsa conversions?

Customer reservations normally grow in parallel with backlog and are typically about the same size, indicating strong demand. The main projects are the two plant conversions and the galvanizing facility. Beyond these, there are many smaller projects focused on maximizing margin profile and increasing throughput in a tight market. “Normally, the reservation piece is about the same size as our backlog. This time is probably a little smaller because we have some additional orders that were outside of our normal contracts. But they normally grow in parallel, both the backlog and the reservations.”

What is the energy exposure across the Construction Products business, how is it being navigated, and what are the timing impacts on margin? Are there other inflationary inputs being monitored?

Arcosa uses 10-11 million gallons of diesel in Construction Products, primarily in aggregates. Diesel prices are up ~$1.50/gallon, potentially creating a 4-5% headwind to cash unit profitability if unabated. However, the company actively implements fuel surcharges and loading fees to mitigate this. Engineered Structures has negligible diesel exposure, with natural gas being the main input, which has not had a significant impact. “But we're seeing diesel prices up about $1.50 a gallon in our footprint. So if these prices remained at this elevated level, we'd estimate about a 4% to 5% headwind to cash unit profitability for 2026, and that's unabated.”

How long do you expect the current level of utility power demand to last, and what gives you confidence in raising guidance early in the year?

The demand for utility structures has a very long tail, with market studies and customer forecasts suggesting sustained demand for many years, supercharged by AI and data center growth. Guidance was raised due to strong performance and existing backlog that supports the updated outlook, providing high confidence. “And we have -- our forecast to suggest that this has a very long tail of sustained demand for many years to come. So we're -- I think we're in a really strong position.”

ACA

Arcosa (ACA) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Materials· May 1, 2026

Source: earnings call transcript

Executive summary

Arcosa Q1 FY26 — Strong Start, Raised Guidance, and Strategic Transformation

Arcosa delivered a strong first quarter, marked by significant progress in its strategic transformation with the completion of the barge divestiture. The company raised its full-year guidance, driven by robust performance in Utility Structures and solid execution across its continuing operations. This positions Arcosa to capitalize on multi-year infrastructure and power market tailwinds, supported by disciplined capital deployment and ongoing capacity expansions.

Highlights

Adjusted EBITDA from continuing operations grew 10% YoY.
Segment margin expanded by 100 basis points.
Utility Structures achieved a record segment margin of 21.1%, up 300 bps YoY.
Pro forma net debt to adjusted EBITDA decreased to 1.9x, below target range.
Full-year 2026 Adjusted EBITDA guidance raised to $565 million, representing 11% YoY growth.

Concerns

Geopolitical volatility and rising oil prices create new uncertainty, though not yet impacting demand.
Residential volume recovery is pushed out to 2027, with flat to slightly down volumes anticipated for 2026.
New 10% steel tariffs on utility structures from Mexico, effective April 6, are being mitigated by contractual protection.
Start-up costs for the Clinton plant conversion and Mexico galvanizing facility are expected to peak in Q2.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Adjusted EBITDA (continuing operations)	$565M high materiality	FY26	High
Full-year 2026 Revenue (continuing operations)	$2.65B high materiality	FY26	High
Full-year 2026 Margin (continuing operations)	21.3% medium materiality	FY26	High
Construction Products Adjusted EBITDA Growth	mid-single-digit medium materiality	FY26	Medium
Aggregates Volume Growth	low single-digit low materiality	FY26	Medium
Aggregates Pricing Improvement	mid-single-digit low materiality	FY26	Medium
Full-year 2026 CapEx (continuing operations)	$215M-$240M medium materiality	FY26	High
Full-year 2026 Effective Tax Rate (continuing operations)	16%-18% low materiality	FY26	High
Full-year 2026 Corporate Cost Impact to Adjusted EBITDA	approximately $60M low materiality	FY26	High
Engineered Structures Adjusted EBITDA Growth	approximately 10% medium materiality	FY26	High
Engineered Structures Annual Margin	20% range medium materiality	FY26	High
Wind Tower Volume Recovery	back to 2025 levels low materiality	FY27	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Construction Products Finished largely in line with expectations, overcoming a slow start due to severe winter weather. Aggregates performance was led by the Texas region. Specialty Materials and Asphalt saw higher costs due to planned maintenance and seasonal impact. Trench Shoring continued strong growth. Aggregates freight-adjusted revenues: +6%Aggregates pricing growth: +2%Aggregates volume growth: +4%Aggregates adjusted cash gross profit margin: +220 bpsAggregates adjusted cash gross profit per ton: +7%Specialty Materials and Asphalt revenues: -4%Specialty Materials revenues: slightly increasedTrench Shoring revenues: +26%Trench Shoring adjusted EBITDA: +26%	5% increase	+5%	—	slightly decreased adjusted segment EBITDA
Engineered Structures Segment revenues increased due to mid-teens growth in utility and related structures, compensating for lower wind tower revenues. Strong utility structures performance drove significant margin expansion to a record 21.1%. Utility and related structures revenues: north of 15% increaseAdjusted segment EBITDA: +21%Segment margin increase: +300 bps YoY	4% increase	+4%	—	21.1% adjusted segment margin

ACA operating KPIs by quarter

ACA operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Change vs prior quarter
Backlog Utility and Related Structures	$435M We ended the year with backlog for utility and related structures of $435 million, up 5% from the start of the year, providing solid visibility for 2026. Source: earnings call transcript	$558M We ended the quarter with record backlog for utility and related structures of $558 million, up 28% from the start of the year. Source: earnings call transcript	+28.3%
Orders Wind Towers	$190M For wind towers, we received orders of $190 million during the quarter, primarily for 2027 delivery. Source: earnings call transcript	$43M For wind towers, we received orders of $43 million during the quarter for delivery in 2026 and 2027. Source: earnings call transcript	-77.4%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Utility and related structures backlog $558M Q1 FY26 end

up 28% from start of year

Order activity continued to be strong and included orders for long-term projects extending into 2028. Customer reservations are also robust.

Wind towers orders $43M Q1 FY26

For delivery in 2026 and 2027.

Wind towers backlog $600M Q1 FY26 end

36% expected to be recognized in 2026, 59% in 2027.

Deals & partnerships

Undisclosed Sale of barge business $450M

Completed the divestiture of the barge business, simplifying the portfolio to focus on Construction Products and Engineered Structures.

Undisclosed Acquisition of natural aggregates operation $60M

Completed a bolt-on acquisition of a natural aggregates operation located in Florida in March.

Capital programs

Barge Divestiture completed $450M

Benefit:Portfolio simplification, net proceeds of $370M for reinvestment and debt management

Pivotal step in simplifying portfolio, focusing on two core segments.

Illinois Wind Tower Plant Conversion underway

Benefit:Produce large utility poles

Ahead of schedule with critical equipment installed, converting idle wind tower plant to utility pole plant.

Mexico Galvanizing Facility underway

Benefit:Expected cost savings to offset start-up costs

Completed its first dip in April, expected to be commercially operational in Q2.

Oklahoma Wind Tower Facility Transition planning continues

Benefit:Produce utility poles

Planning continues for the transition of a second wind tower facility to produce utility poles.

Risks & headwinds

Geopolitical volatility and rising oil prices Q1 FY26 and ongoing

Oil prices have risen sharply

Mitigation:Not yet translated into weaker demand in construction footprint; actively implementing fuel surcharges and loading fees.

Residential volume recovery pushed to 2027 FY26

Flat to slightly down residential volume in aggregates this year

Mitigation:Servicing attractive markets, expecting benefit when housing market recovers.

Steel tariffs on utility structures Ongoing from Q2 FY26

New 10% steel tariff on the full value of Danish products, effective April 6

Mitigation:Contractual protection in place to effectively pass through the impact; optimistic for USMCA joint review later this year to create certainty.

Start-up costs for new facilities Q2 FY26

Start-up costs for Clinton plant and galvanizing facility will hit their peak level in Q2

Mitigation:Expected cost savings from the galvanizing facility will help offset start-up costs in Illinois.

What to watch in Q2 FY26

Illinois Utility Pole Plant Production

end of Q2

Current Critical equipment installed

Target Producing large utility poles

Why it matters

This plant conversion increases capacity for high-demand utility structures, crucial for meeting market needs and supporting segment growth.

We're ahead of schedule with the conversion of Illinois wind tower plant, which have been idle for several years to a utility pulp plant. With critical equipment being installed and commercial success filling our backlog, we now expect to produce large utility poles from this facility by the end of the second quarter.

Find out whether ACA delivers this. Inve re-checks your case every morning.

Q&A highlights

What's driving the record segment margins in Engineered Structures, particularly in Utility Structures, and how sustainable is this performance for the rest of 2026?

The record margins are primarily driven by Utility Structures due to increased volumes, optimized capacity, and strong commercial execution. While there will be some start-up costs for new facilities peaking in Q2, the company has raised its margin expectations, anticipating an annual segment margin in the 20% range to be sustainable for the year.

“So a long-winded way of saying our margin expectation for this segment has increased and we would see an annual margin in the 20% range sustainable for the year.”

asked by Julio Romero · answered by Gail Peck

2 min read 6 chapters

Detailed narrative

Strategic Transformation and Portfolio Simplification

Arcosa completed the $450 million barge divestiture on April 1, a pivotal step in simplifying its portfolio. The company is now fully focused on two segments: Construction Products and Engineered Structures, both aligned with U.S. infrastructure investment and power market tailwinds. Net proceeds from the sale will be used for growth reinvestment and debt management, with pro forma net debt to adjusted EBITDA at 1.9x.

Strong Q1 Performance and Raised Outlook

The company delivered strong Q1 results with adjusted EBITDA growth of 10% from continuing operations, driven by robust double-digit top-line growth and 100 basis points of margin expansion. Utility Structures exceeded expectations, achieving record margin performance. As a result, Arcosa raised its full-year 2026 guidance for continuing operations, anticipating $565 million in adjusted EBITDA, an 11% increase year-over-year.

Utility Structures Momentum and Capacity Expansion

The Utility Structures business saw revenue accelerate north of 15%, supported by volume and pricing, leading to a 21% increase in adjusted segment EBITDA and a record 21.1% segment margin. Demand is fueled by data center expansion and rising electricity consumption.

Arcosa is advancing high-return investments, including converting an idle Illinois wind tower plant to a utility pole plant by Q2 and making its new Mexico galvanizing facility commercially operational in Q2.

Construction Products Performance and Market Dynamics

Construction Products delivered solid results, overcoming a slow start due to winter weather. Aggregates saw 6% freight-adjusted revenue growth (2% pricing, 4% volume), with strong performance in Texas. The segment benefits from infrastructure and heavy nonresidential demand, particularly data centers and LNG opportunities.

However, residential volume recovery is pushed to 2027, with flat to slightly down volumes expected this year due to affordability challenges and weakened consumer confidence.

Capital Allocation and M&A Pipeline

Arcosa maintains a healthy balance sheet, with significant flexibility and capacity for growth. The company completed a $60 million natural aggregates acquisition in Florida in March and has an active pipeline of additional bolt-on opportunities in natural and recycled aggregates.

Capital deployment priorities include these acquisitions and organic growth projects, particularly in Utility Structures, while also managing debt, with an $83 million term loan prepayment made in April.

Wind Tower Transition and Future Optionality

The wind tower business is in a transition year, with volumes expected to be lower in 2026. However, orders of $43 million were received for 2026 and 2027 delivery, and a volume recovery to 2025 levels is planned for 2027 based on existing backlog.

The conversion of two wind tower plants to utility pole production provides strong returns on capital invested in the wind business and offers optionality for further utility pole capacity expansion if demand continues to strengthen.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.