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    ACA
    Earnings call· Dec 2025(Q4 FY25)

    Arcosa Q4 FY25 earnings call ACA

    Feb 27, 2026 Source

    Executive summary

    Arcosa Q4 FY25 — Record Performance and Strategic Divestiture

    Arcosa concluded Q4 and FY25 with record financial performance, driven by strong execution in Construction Materials and Engineered Structures. The company announced the strategic divestiture of its barge business for $450 million, a move designed to streamline its portfolio and intensify focus on infrastructure and power market tailwinds. This transformation positions Arcosa for sustained growth in its core segments, despite near-term headwinds in wind towers and residential construction.

    Highlights

    5

    • Achieved record full-year revenues of $2.9 billion, up 12% year-over-year.

    • Delivered record full-year adjusted EBITDA of $583 million, a 30% increase year-over-year.

    • Expanded full-year adjusted EBITDA margin to a record 20.2%, up 280 basis points.

    • Announced the sale of the barge business for $450 million in cash, reducing complexity and cyclicality.

    • Reduced net debt to adjusted EBITDA to 2.3x by year-end, ahead of schedule.

    Concerns

    3

    • Wind tower revenues are anticipated to decrease by approximately 25% in 2026 due to policy uncertainty.

    • Q1 FY26 Construction Products segment EBITDA contribution is expected to drop slightly from the prior year due to adverse weather in the Northeast.

    • Residential volumes remained challenged, particularly in the Phoenix and Florida markets, with an outlook for flat residential volume in aggregates.

    Guidance & targets

    20
    CategoryTargetConfidence
    Full-year Revenue (excluding barge)
    $2.95 billion to $3.1 billion
    high materiality
    High
    Full-year Adjusted EBITDA (excluding barge)
    $590 million to $640 million
    high materiality
    High
    Full-year Barge Revenue
    $410 million to $430 million
    medium materiality
    High
    Full-year Barge Adjusted EBITDA
    $70 million to $75 million
    medium materiality
    High
    Full-year Capital Expenditures
    $220 million to $250 million
    medium materiality
    High
    Growth Capital Expenditures
    $70 million to $80 million
    medium materiality
    High
    Maintenance Capital Expenditures
    $150 million to $170 million
    medium materiality
    High
    Full-year Depreciation, Depletion and Amortization
    $230 million to $240 million
    low materiality
    High
    Full-year Net Interest Expense
    $88 million to $90 million
    low materiality
    High
    Full-year Effective Tax Rate
    17.5% to 19.5%
    low materiality
    High
    Construction Products Adjusted EBITDA Growth
    mid- to high single-digit
    medium materiality
    High
    Aggregates Volume Growth
    low single-digit
    medium materiality
    High
    Aggregates Pricing Improvement
    mid-single-digit
    medium materiality
    High
    Aggregates Unit Profitability
    solid gains
    medium materiality
    High
    Wind Tower Revenue Decrease
    roughly 25%
    high materiality
    High
    Wind Tower Growth
    return to growth
    medium materiality
    Medium
    Utility Structures Adjusted EBITDA Growth
    strong double-digit
    high materiality
    High
    Utility Structures Margins
    higher
    medium materiality
    High
    Illinois Wind Tower Plant Conversion Operational Date
    second half of 2026
    medium materiality
    High
    Tulsa Facility Transition Impact
    2028 and beyond
    medium materiality
    High

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Construction Products
    Segment performance was all organic as Stavola reached its one-year anniversary. Freight-adjusted revenues increased 4%, and adjusted segment EBITDA grew 3%.
    Revenue excluding freight: +4% YoYAdjusted segment EBITDA margin: +140 bps YoY (reported)Freight-adjusted adjusted segment EBITDA margin: roughly flat YoY
    		—-2%—3% adjusted segment EBITDA growth
    Construction Products - Aggregates
    Q4 freight-adjusted revenues increased due to pricing and volume. Full year volumes benefited from Stavola and H2 organic improvement. Performance was partially offset by lower unit profitability in the Gulf and West regions.
    Pricing growth: 5%Volume improvement: 2%Adjusted cash gross profit per ton: +3%Full year volumes: +6% (inorganic + organic H2)Full year freight-adjusted sales price: +8%Full year adjusted cash gross profit per ton: +10%
    		—8% freight-adjusted revenue growth—6% adjusted cash gross profit growth
    Construction Products - Specialty Materials and Asphalt
    Revenue decrease primarily due to lower freight revenue for asphalt. Strong profitability gains in lightweight aggregates were offset by volume-related decline in specialty plaster. Asphalt saw modest unit profitability gains.
    Revenue excluding freight: roughly flatAdjusted EBITDA and margin: declined slightly
    		-5%———
    Construction Products - Trench Shoring
    Experienced strong margin expansion driven by higher volumes and improved operating leverage, with record backlog.
    Margin expansion: strong
    		—double-digit increase—double-digit increase in adjusted EBITDA
    Engineered Structures
    Growth led by utility and related structures, with strong revenue growth and operating efficiencies. Achieved sequential margin improvement in each quarter of 2025.
    Adjusted segment EBITDA margin: 18.5% (+100 bps YoY)
    		—15%—22% adjusted segment EBITDA growth
    Engineered Structures - Utility and Related Structures
    Executed well throughout the year, resulting in sequential margin improvement. Backlog remained at or near record highs.
    Volumes: double digitsPricing: high single digitsSteel pass-through: roughly flat YoY
    		—20%——
    Engineered Structures - Wind Towers
    Focused on rightsizing the business for lower production levels in 2026, resulting in a slight decline in margin.
    Margin: slight decline YoY
    		—3%—roughly flat adjusted EBITDA
    Transportation Products
    Growth primarily due to higher tank barge volumes and a more favorable mix, building on prior year improvements. This segment will be eliminated from reporting in Q1 2026.
    Margin expansion: 90 bps
    		—19%—24% adjusted segment EBITDA growth

    Operational metrics

    13
    Full-year Revenues
    $2.9 billionup 12%
    FY25

    Record revenues for the full year.

    Full-year Adjusted EBITDA
    $583 millionup 30%
    FY25

    Record adjusted EBITDA for the full year.

    Full-year Adjusted EBITDA Margin
    20.2%up 280 basis points
    FY25

    Record adjusted EBITDA margin for the full year.

    Safety Incident Rate
    lowest annual
    FY25

    Achieved the lowest annual safety incident rate in Arcosa's history.

    Aggregates Cash Unit Profitability
    10%
    FY25

    Growth in cash unit profitability, led by strong pricing gains and the accretive impact of Stavola.

    Net Working Capital Days
    improved sequentially
    each quarter in 2025

    Improved sequentially each quarter in 2025, excluding advanced billings, due to focus on cash management.

    Term Loan Debt Repaid
    $164 million
    FY25

    Repaid during the year, prepayable at no cost.

    Net Debt to Adjusted EBITDA
    2.3xdown from 2.9x
    end of FY25

    Comfortably within target leverage range, achieved two quarters ahead of schedule.

    Liquidity
    $915 million
    end of FY25

    Strong liquidity with no near-term debt maturities.

    Net Interest Expense
    $102 million
    FY25

    Net interest expense for the prior year.

    Construction Products Q1 EBITDA contribution to FY
    drop slightlyfrom 16% of FY EBITDA (last year)
    Q1 FY26

    Expected due to cold temperatures and significant snowfall in the Northeast impacting Stavola operations.

    Engineered Structures Segment Margin
    flat
    FY26

    A path to flat margins for the segment looks achievable, despite margin impact from wind tower step-down, due to strong utility structures performance.

    EBITDA Quality
    betterthan 2025
    2026 and beyond

    Due to changing tax credit EBITDA for utility structures EBITDA as utility structures grows.

    Industry KPIs

    4
    MetricValueDetails
    Total backlog$435 million (Utility Structures); $628 million (Wind Towers)USD
    End market pipeline—
    Acquisition contributionStavola acquisition
    Same store organic revenue growth8%%

    Orderbook & backlog

    5
    Utility and Related Structures Backlog$435 millionend of FY25

    up 5% from start of year

    Provides solid visibility for 2026; customer reservations remain strong.

    Wind Tower Orders$190 millionQ4 FY25

    Primarily for 2027 delivery.

    Wind Tower Backlog$628 millionend of FY25

    42% expected to be recognized in 2026, 53% in 2027.

    Wind Tower Backlog for 2026$260 millionDecember 31

    Indicates a decrease of roughly 25% in anticipated wind tower revenues for 2026.

    Wind Tower Backlog for 2027$330 millionDecember 31

    Supports expected return to growth in 2027.

    Deals & partnerships

    1
    Wynnchurch CapitalSale of Arcosa's barge business$450 million in cash

    The sale is subject to regulatory approval and other customary closing conditions. Management believes it is the right time to transition the business given its strong backlog and market fundamentals.

    Capital programs

    3
    Illinois Wind Tower Plant Conversionunderway
    Period spend: included in $70M-$80M growth CapEx

    Benefit: produce large utility poles (seventh steel utility pole plant)

    Making solid progress on converting the idled wind tower facility. Benefits from the new Mexico galvanizing facility are expected to generally offset start-up costs in 2026. Facility already has orders and customers assigned.

    Mexico Galvanizing Facilitynearing completion

    Benefit: improve cost structure

    The new galvanizing facility will complete its first dip this quarter. Expected savings will help offset start-up costs of the Illinois plant conversion for this year.

    Tulsa Facility Transitionpreparing for transition

    Benefit: increase utility structures capacity; reduce wind tower capacity to 2 facilities

    Preparing for a transition of the Tulsa, Oklahoma facility from wind towers to utility structures. The facility has wind tower backlog through 2027 and can run both product lines in parallel. The ramp-up will be smoother than Illinois due to existing workforce.

    Risks & headwinds

    3
    Policy uncertainty impacting wind tower volumes2026

    Anticipated decrease of roughly 25% in wind tower revenues for 2026.

    Mitigation: Rightsizing the wind tower business to two facilities and transitioning capacity to the higher-multiple, higher-margin utility structures business.

    Northeast weather impact on Q1 Construction Products performanceQ1 FY26

    Q1 EBITDA contribution for the Construction Products segment expected to drop slightly from 16% of total FY EBITDA (last year).

    Mitigation: Not explicitly stated, but acknowledged as a seasonal impact, particularly for Stavola operations.

    Residential market challengesOngoing

    Outlook incorporates flat residential volume in aggregates; residential volumes remained weak overall, notably in Phoenix and Florida markets.

    Mitigation: Optimistic about future benefits when the housing market recovers, given attractive state for residential development, and positive activity in Texas (Houston market).

    What to watch in Q1 FY26

    5

    Barge Divestiture Status

    Q2 FY26
    CurrentDefinitive agreement signed, pending regulatory approval
    TargetClosed

    Why it matters

    This is a significant strategic milestone that reduces complexity and cyclicality, and frees up capital for growth initiatives.

    We expect the sale to close in the second quarter of 2026, subject to regulatory approval and other customary closing conditions.

    Q&A highlights

    8

    How will the proceeds from the barge sale be redeployed, specifically regarding M&A in terms of areas, geographies, and current market multiples?

    Management plans short-term debt reduction post-close, then focuses on an active M&A pipeline, primarily bolt-on acquisitions within current and new MSAs. They emphasize a disciplined approach to capital allocation, avoiding excessively high multiples, and also highlight significant organic CapEx for plant conversions and reserves.

    “I think there might be some debt reduction in the short term. And then after that, we have a very active pipeline of opportunities in our -- for M&A. Right now, we're looking at mostly within our current footprint, but we do have some opportunities that take us some new MSAs that we are not present.”

    asked by Ian Zaffino · answered by Antonio Carrillo

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Transformation and Barge Divestiture

    Arcosa achieved a significant strategic milestone with the announced sale of its barge business for $450 million in cash to Wynnchurch Capital. This divestiture, expected to close in Q2 2026, is a key step in reducing portfolio complexity and cyclicality, enhancing the company's overall margin profile, and improving long-term resiliency. Upon completion, Arcosa will be fully focused on its Construction Materials and Engineered Structures segments, which are aligned with long-term infrastructure and power market tailwinds in the U.S.

    02

    Construction Products Performance and 2026 Outlook

    The Construction Products segment delivered strong results in 2025, with aggregates achieving 10% growth in cash unit profitability, driven by strong pricing and the accretive impact of Stavola. For 2026, the company anticipates mid- to high single-digit adjusted EBITDA growth, with low single-digit volume growth and mid-single-digit pricing improvement in aggregates. This outlook is supported by robust infrastructure demand, which accounts for approximately 45% of segment revenues, and continued IIJA funding, despite some Q1 seasonality impacts from weather in the Northeast.

    03

    Engineered Structures: Utility-Driven Growth

    Engineered Structures is strategically positioned to benefit from increasing U.S. power demand, driven by data center expansion and grid modernization. Utility and related structures maintained record backlog levels throughout 2025, with Q4 seeing 20% revenue growth, double-digit volume increases, and high single-digit pricing. The segment expects strong double-digit adjusted EBITDA growth and higher margins in 2026, with utility structures compensating for a short-term step-down in wind tower volumes.

    04

    Wind Tower Business Rightsizing and Capacity Transition

    While wind tower revenues are projected to decrease by approximately 25% in 2026 due to policy uncertainty, Arcosa expects a return to growth in 2027, supported by a $330 million backlog for that year. To adapt to market dynamics and capitalize on utility demand, Arcosa is converting its idled Illinois wind tower facility to produce large utility poles, expected to be operational in H2 2026. A similar transition is planned for the Tulsa facility post-2027, leveraging flexible manufacturing to reallocate resources to higher-margin utility structures.

    05

    Disciplined Capital Allocation and Balance Sheet Strength

    Arcosa ended 2025 with a strong balance sheet, reducing its net debt to adjusted EBITDA to 2.3x, ahead of its target. The company plans to use proceeds from the barge sale for short-term debt reduction, followed by investments in organic growth CapEx, including plant conversions and additional reserves, and bolt-on M&A opportunities in aggregates. Arcosa emphasizes a disciplined approach to capital allocation, focusing on high-value opportunities within its current and new MSAs.

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