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    ACA
    Earnings call· Mar 2026(Q1 FY26)

    Arcosa Q1 FY26 earnings call ACA

    May 1, 2026 Source

    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

    5

    • 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

    4

    • 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

    12
    CategoryTargetConfidence
    Full-year 2026 Adjusted EBITDA (continuing operations)
    $565M
    high materiality
    High
    Full-year 2026 Revenue (continuing operations)
    $2.65B
    high materiality
    High
    Full-year 2026 Margin (continuing operations)
    21.3%
    medium materiality
    High
    Construction Products Adjusted EBITDA Growth
    mid-single-digit
    medium materiality
    Medium
    Aggregates Volume Growth
    low single-digit
    low materiality
    Medium
    Aggregates Pricing Improvement
    mid-single-digit
    low materiality
    Medium
    Full-year 2026 CapEx (continuing operations)
    $215M-$240M
    medium materiality
    High
    Full-year 2026 Effective Tax Rate (continuing operations)
    16%-18%
    low materiality
    High
    Full-year 2026 Corporate Cost Impact to Adjusted EBITDA
    approximately $60M
    low materiality
    High
    Engineered Structures Adjusted EBITDA Growth
    approximately 10%
    medium materiality
    High
    Engineered Structures Annual Margin
    20% range
    medium materiality
    High
    Wind Tower Volume Recovery
    back to 2025 levels
    low materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    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

    Operational metrics

    15
    Adjusted EBITDA Growth (continuing operations)
    10%YoY
    Q1 FY26

    Growth from continuing operations.

    Segment Margin Expansion
    100
    Q1 FY26

    Overall margin expansion.

    Net Debt to Adjusted EBITDA (pro forma)
    1.9xvs 2.3x at quarter end
    Q1 FY26

    Pro forma for barge divestiture, decreased to below target range.

    Working Capital Reduction
    $53M
    Q1 FY26

    Reduction in the use of cash for working capital.

    Capital Expenditure (continuing operations)
    $44Mvs $33M prior year
    Q1 FY26

    Reflects increased investment in core growth platforms.

    Natural Aggregates Acquisition
    $60M
    Q1 FY26

    Investment for a bolt-on natural aggregates operation in Florida.

    Share Repurchase
    $18M
    Q1 FY26

    Used to offset dilution.

    Estimated After-Tax Net Proceeds from Barge Sale
    $370M
    Q1 FY26

    Used for reinvestment and debt management.

    Term Loan Prepayment
    $83M
    April 2026

    Used to prepay a portion of outstanding term loan balance.

    Pro Forma Liquidity
    $1.1B
    Q1 FY26

    Estimated pro forma for the barge divestiture closing.

    Effective Tax Rate
    5.3%
    Q1 FY26

    Favorably impacted by one-time discrete items.

    Diesel Consumption
    10M-11M
    Annual

    Annual diesel consumption in the Construction Products footprint.

    Diesel Price Increase
    $1.50
    Q1 FY26

    Observed increase in diesel prices in the company's footprint.

    Diesel Price Impact (unabated)
    4%-5%headwind
    FY26

    Estimated impact if diesel prices remain elevated and mitigation actions are not effective.

    Steel Tariff Impact
    10%
    Effective April 6

    New tariff on utility structures manufactured in Mexico using U.S. steel, mitigated by contractual protection.

    Industry KPIs

    5
    MetricValueDetails
    Total backlog$558M (Utility and related structures); $600M (Wind towers)USD
    12 month backlog$216MUSD
    End market pipelineData center development, reshoring activities, new power generation, LNG opportunities
    Acquisition contribution$60MUSD
    Same store organic revenue growth+6%%

    Orderbook & backlog

    3
    Utility and related structures backlog$558MQ1 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$43MQ1 FY26

    For delivery in 2026 and 2027.

    Wind towers backlog$600MQ1 FY26 end

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

    Deals & partnerships

    2
    UndisclosedSale of barge business$450M

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

    UndisclosedAcquisition of natural aggregates operation$60M

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

    Capital programs

    4
    Barge Divestiturecompleted$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 Conversionunderway

    Benefit: Produce large utility poles

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

    Mexico Galvanizing Facilityunderway

    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 Transitionplanning continues

    Benefit: Produce utility poles

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

    Risks & headwinds

    4
    Geopolitical volatility and rising oil pricesQ1 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 2027FY26

    Flat to slightly down residential volume in aggregates this year

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

    Steel tariffs on utility structuresOngoing 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 facilitiesQ2 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

    5

    Illinois Utility Pole Plant Production

    end of Q2
    CurrentCritical equipment installed
    TargetProducing 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.

    Q&A highlights

    7

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.