Q4 2023 Arcosa Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Arcosa fourth quarter and full year 2023 earnings conference call. My name is Todd, and I will be your conference coordinator today.

Good morning, ladies and gentlemen, and welcome to the Arcos <unk> fourth quarter and full year 2023 earnings conference call.

Todd: My name is Todd and I will be your conference coordinator today.

Operator: As a reminder, today's call is being recorded. Now, I would like to turn the call over to your host, Aaron Drabak, Director of Investor Relations for Arcosa. Ms. Drabak, you may begin.

Todd: As a reminder, today's call is being recorded.

Todd: Now I would like to turn the call over to your host Erin Dray back director of Investor Relations for Arcos <unk>. Mr. <unk> you may begin.

Aaron Drabak: Good morning, everyone, and thank you for joining Arcosa's fourth quarter and full year 2023 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 yesterday's press release and the slide presentation for this morning's call is 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.

Erin Dray: Good morning, everyone and thank you for joining Arco's fourth quarter and full year 2023 earnings call with me today are Antonio Carrillo, President and CEO and Gail Peck CFO.

Erin Dray: A question and answer session will follow their prepared remark.

Speaker Change: A copy of yesterday's press release and the slide presentation for this morning's call are posted on our Investor Relations website, IR Dot arcos the dotcom.

Speaker Change: A replay of today's call will be available for the next two week <unk>.

Speaker Change: Traction for accessing the replay number are included in the press release.

Aaron Drabak: A replay of the webcast will be available for one year on our website under the news and events tab. Financial measures in today's comments and presentation slides 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 contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Board-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-K, expected to be filed later today. I would now like to turn the call over to Antonio.

Speaker Change: A replay of the webcast will be available for one year on our website under the news and events tab.

Speaker Change: Today's comments and presentation slides contain financial measures that have not been prepared in accordance with GAAP.

Speaker Change: Reconciliations of non-GAAP financial measures to the closest GAAP measure are included in the appendix of the slide presentation.

Speaker Change: In addition, today's conference call contains forward looking statements as defined by the private Securities Litigation Reform Act of 1995 Board looking statements are subject to risks and uncertainties that could cause actual results to differ materially from such forward looking statements.

Speaker Change: Please refer to the company's SEC filings for more information on these risks and uncertainties, including in our press release, we filed yesterday and our Form 10-K expected to be filed later today.

Speaker Change: I would now like to turn the call over to Antonio.

Antonio Carrillo: Thank you, Erin. Good morning, and thank you for joining us to discuss our fourth quarter and full year 2023 results and the outlook for 2024. I will start with a few key messages. 2023 represented another solid year of operational and financial performance for Arcosa. Our success reflects the effective execution of our strategy and the talent and dedication of our outstanding team. Normalizing for the sale of the storage tank business, Arcosa generated double-digit growth in revenue and adjusted the bid path for 2023, outpacing the guidance we set at the beginning of the year. Additionally, we drove a solid improvement in adjusted EBITDA margin, reflecting a favorable pricing environment, increased operational leverage in our transportation products business, and the benefit of the wind tower tax credit. Finally, we reported a 50% increase in full-year operating cash flow that helped fund key growth initiatives.

Antonio Carrillo: Thank you Erin.

Antonio Carrillo: Good morning, and thank you for joining us to discuss our fourth quarter and full year 2023 results and the <unk>.

Antonio Carrillo: Outlook for 2024.

Antonio Carrillo: I will start with a few key messages 2023 represented another solid year with great operational and financial performance for our culture.

Antonio Carrillo: Our success reflects the effective execution of our strategy and the talent and dedication of our outstanding team.

Antonio Carrillo: Normalizing for the sale of storage the storage tank business are of course, they generated double digit growth in revenue and adjusted EBITDA for 2023, Oh basing the guidance, we set at the beginning of the year.

Antonio Carrillo: Additionally, we drove solid improvement in adjusted EBITDA margin, reflecting a favorable pricing environment increased operational leverage in our transportation products business and the benefit of winter our tax rates.

Antonio Carrillo: Finally, we reported a 50% increase in full year operating cash flow that helps fund key growth initiatives.

Antonio Carrillo: Strategically, we continue to advance our objectives and position our portfolio for sustainable long-term growth. Following the divestiture of the storage tank business in the fourth quarter of 2022, we redeployed a portion of the sale proceeds to strengthen our construction product segment. Over the past year, we closed six bolt-on acquisitions, expanding our geographic presence in key natural and recycled aggregates markets, including Florida, and enhancing our capabilities in trench shoring. Consistent with our disciplined approach to capital allocation, these strategic acquisitions were completed at an attractive valuation.

Antonio Carrillo: Strategically we continue to advance our objectives and position our portfolio for sustainable long term growth.

Following the divestiture of the storage the storage tank business in the fourth quarter of 2022, we redeployed a portion of the sale proceeds to strengthening our construction products segment.

Antonio Carrillo: Over the past year, we closed six bolt on acquisitions, expanding our geographic presence in key natural and recycled aggregates markets, including Florida, and enhancing our capabilities in grain short.

Antonio Carrillo: Consistent with our disciplined approach to capital allocation. These strategic acquisitions were completed.

Antonio Carrillo: Evaluations.

Antonio Carrillo: We also progressed on several important organic initiatives, which included the expansion of our specialty plaster capacity, completion of our new concrete bowl facility in Florida, as well as the build-out of our wind tower facility in New Mexico, which we expect will deliver its first tower mid-year. Looking broadly at our 2023 performance, our growth businesses benefited from healthy market fundamentals, proactive pricing actions, and reduced inflationary pressures as the year progressed. Our cyclical businesses perform well, led by our transportation products business, where adjusted EBITDA more than doubled.

Antonio Carrillo: We also progressed on several important organic initiatives, which included the expansion of our specialty plastic capacity completion of our new concrete Bowl facility in Florida as well as the build out of our wind tower facility in New Mexico, which we expect will deliver its first our midyear.

Antonio Carrillo: Looking broadly at 'twenty or 'twenty to 'twenty three performance, our gross businesses benefited from healthy market fundamentals proactive pricing actions and reduced inflationary pressures as the year progressed.

Antonio Carrillo: Our cyclical businesses performed well led by our transportation products business, where adjusted EBITDA more than doubled.

Antonio Carrillo: Operationally, our wind tower business outperformed our expectations in 2023 and achieved EBITDA profitability for the year, exclusive of tax credits, reflecting our focus on optimizing our production and managing costs as we prepare for an anticipated multi-year upside. Turning to our fourth quarter results on slide 11, consolidated adjusted VTAC grew 38% on revenue, growth of 17%. Similar to our full year results, growth was driven by increases across all three segments. The fourth quarter adjusted the margin slightly, gained 220 basis points year over year, benefiting from higher barge and rail component production, increased volume in utility structures, and a favorable impact from the wind tax credit.

Antonio Carrillo: Operationally, our wind tower business outperformed our expectations in 2023 and achieved profitability for the year exclusive of back spreads, reflecting our focus on optimizing our production and managing costs as we prepare for an anticipated multiyear upcycle.

Antonio Carrillo: Turning to our fourth quarter results on slide 11, consolidated adjusted EBITDA grew 38% on revenue growth of 17%.

Antonio Carrillo: Similar to our full year results rose was driven by increased across all three segments.

Antonio Carrillo: Fourth quarter, adjusted EBITDA margin gained 220 basis points year over year benefiting from higher barge and rail component production increased volume in utility structures and a favorable impact from wind tax credit. We ended the year with a strong balance sheet and ample liquidity, providing the flexibility to invest in growth initiatives, while returning cash to shareholders.

Antonio Carrillo: We ended the year with a strong balance sheet and ample liquidity, providing the flexibility to invest in growth initiatives while returning cash to shareholders. I will now turn the call over to Gail to discuss our segment performance, and then I will return to update you on our 2024 outlook.

Antonio Carrillo: I will now turn it over to the call to Gail to discuss our segment performance and then I will return to update you on our 'twenty 'twenty four outlook Gail.

Gail Peck: Thank you, Antonio. I'll begin on slide 12 to discuss fourth quarter segment results. In construction products, revenues increased 7% primarily due to higher pricing across our aggregate and specialty materials businesses and both organic and acquisition-related volume growth in our shoring business. On a freight-adjusted basis, segment revenues increased 10% year-over-year.

Gail Peck: Thank you Antonio I'll begin on slide 12 to discuss fourth quarter segment results.

Gail Peck: In construction products revenues increased 7%, primarily due to higher pricing across our aggregates and specialty materials businesses.

Gail Peck: Organic and acquisition related volume growth and our shoring business.

Gail Peck: On a freight adjusted basis segment revenues increased 10% year over year.

Gail Peck: Adjusted segment EBITDA increased 7%, reflecting strong pricing gains, as well as operational improvements in our specialty materials business. Excluding land sales from both quarters, adjusted segment EBITDA increased 14% year-over-year, and freight-adjusted segment EBITDA margin improved 90 basis points, driven by unit profitability gains and reduced inflationary pressure. Turning to natural aggregates, average organic pricing was up low double digits year over year on a freight-adjusted basis, with pricing gains across our footprint.

Gail Peck: Adjusted segment, EBITDA increased 7%, reflecting strong pricing gains as well as operational improvements in our specialty materials business.

Gail Peck: Excluding land sales from both quarters adjusted segment EBITDA increased 14% year over year and freight adjusted segment EBITDA margin improved 90 basis points, driven by unit profitability gains and reduced inflationary pressures.

Gail Peck: Turning to natural aggregates average organic pricing was up low double digits year over year on a freight adjusted basis with pricing gains across our footprint.

Gail Peck: Pricing strength was notable in the quarter, especially when compared to the strong pricing growth achieved in last year's fourth quarter. Volumes increased in low single digits, led by our Texas region, which benefited from favorable weather compared to last year, an uptick in residential activity, and the contribution of the new greenfield location in Central Texas. For the full year, organic pricing grew in the mid-teens, positioning us well for continued pricing momentum in 2024. Full year natural aggregate volumes were roughly flat with the prior year as the volume increase in the back half of the year offset a first half decline.

<unk> strength was notable in the quarter, especially when compared to strong pricing growth achieved in last year's fourth quarter volumes increased low single digits led by our Texas region, which benefited from favorable weather compared to last year, an uptick in residential activity and the contribution of the new Greenfield location in Central Texas.

Gail Peck: For the full year organic pricing grew in the mid teens positioning us well for continued pricing momentum in 2024.

Gail Peck: Full year natural aggregates volumes were roughly flat with the prior year as volume as the volume increase in the back half of the year offset first half declines.

Gail Peck: In recycled aggregates, we achieved broad-based pricing strength that more than offset a roughly 20% volume decline, resulting in strong product unit profitability gains and margin expansion. Earlier in the quarter, we entered the Central Florida recycling market with a small acquisition, and the integration is progressing smoothly. Within specialty materials, we continued to see healthy demand, particularly for our plaster and lightweight product lines, which had solid pricing gains during the quarter. Adjusted EBITDA margin improved year over year, positively impacting the segment margin by roughly 35 basis points, as we continue to focus on operational improvement and increased throughput in our plaster facility. Finally, our trench shoring business reported a 14% increase in revenues on higher organic volumes, as well as a contribution from the Houston acquisition completed in the first quarter.

Gail Peck: And recycled aggregates, we achieved broad based pricing strength that more than offset a roughly 20% volume decline, resulting in strong product unit profitability gains and margin expansion.

Gail Peck: Earlier in the quarter, we entered the central Florida recycling market with a small acquisition and the integration is progressing smoothly.

Within specialty materials, we continue to see healthy demand, particularly for our cluster and lightweight product lines, which had solid pricing gains during the quarter.

Gail Peck: Adjusted EBITDA margin improved year over year positively impacting the segment margin by roughly 35 basis points as we continue to focus on operational improvements and increased throughput in our cluster facility.

Gail Peck: Finally, our trench shoring business reported a 14% increase in revenues on higher organic volumes as well as contribution from the Houston acquisition completed in the first quarter margin expanded nicely in order levels remained healthy.

Gail Peck: Margin expanded nicely, and order levels remained healthy. Moving to Engineered Structures, on slide 13, revenues for our utility, wind, and related structures businesses increased 15 percent, largely due to higher volumes in utility structures. Adjusted segment EBITDA for these businesses increased 89% and margin, Expanded 530 base. During the quarter, we recognized $10.6 million in AMP tax credits, resulting in full-year net tax credits of $25 million, exceeding the high end of our expectations by about $3 million due to additional guidance issued by the IRS in December. This guidance allowed the recognition of tax credits for towers started in 2022 and delivered in 2026.

Gail Peck: Moving to engineered structures on slide 13 revenues for our utility wind and related structures businesses increased 15% largely due to higher volumes in utility structures.

Gail Peck: Adjusted segment EBITDA for these businesses increased 89% and margin.

Gail Peck: Expanded 530 basis points.

Gail Peck: During the quarter, we recognized $10 6 million in A&P tax credits, resulting in full year net tax credits of $25 million exceeding the high end of our expectations by about $3 million due to additional guidance issued by the IRS in December.

Gail Peck: This guidance allowed the recognition of tax credits for towers started in 2022 and delivered in 2023.

Gail Peck: Fourth quarter margin for our utility structures business improved both year over year and sequentially from the third quarter. However, we expect customer mix to remain a headwind in the first half of 2024. But we remain focused on continuing to enhance margins in this business. We ended the year with combined backlog for utility, wind, and related structures of $1.4 billion, more than double our backlog at the end of 2022. Turning to transportation products on slide 14, revenues were up 49%, and volumes and pricing increased across the segment, led by our barge business. Adjusted segment EBITDA increased 67%, resulting in a margin expansion of 150 basis points, despite some additional costs incurred by the barge business early in the quarter to address low river water levels.

Gail Peck: Fourth quarter margin for our utility structures business improved both year over year and sequentially from the third quarter, we expect customer mix to remain a headwind in the first half of 2024, but we remain focused on continuing to enhance margins in this business.

Gail Peck: We ended the year with combined backlog for utility wind and related structures of $1 4 billion.

Gail Peck: More than double our backlog at the end of 2022.

Gail Peck: Turning to transportation products on slide 14 revenues were up 49% and volumes and pricing increased across the segment led by our barge business.

Gail Peck: Adjusted segment, EBITDA increased 67%, resulting in margin expansion of 150 basis points. Despite some additional costs incurred by the barge business early in the quarter to address low river water water levels.

Gail Peck: We received barge orders of $86 million during the quarter, all for 24 delivery, which substantially fills our planned production capacity for the year. We ended the year with a barge backlog of $254 million, up 13% year-over-year. I'll conclude on slide 16 with some comments on our cash flow and balance sheet position. During the quarter, we generated $10 million of free cash flow, up from a deficit of $60 million in last year's fourth quarter, driven by a combination of stronger net earnings and lower working capital requirements, adjusted for the buildup of the wind tower tax credit. For the full year, free cash flow increased 37% to $94 million.

Gail Peck: We received barge orders of $86 million during the quarter, all for 24 delivery, which substantially sells our planned production capacity for the year. We ended the year with barge backlog of $254 million up 13% year over year.

Gail Peck: I'll conclude on slide 16, with some comments on our cash flow and balance sheet position.

Gail Peck: During the quarter, we generated $10 million of free cash flow up from a deficit of $60 million in last year's fourth quarter, driven by a combination of stronger net earnings and lower working capital requirements adjusted for the buildup of the wind tower tax credit.

Gail Peck: For the full year free cash flow increased 37% to $94 million.

Gail Peck: Capital expenditures in 2023 were $204 million, in line with the midpoint of our annual guidance. During the year, we invested significantly to complete several key organic growth initiatives across engineered structures and construction products. Additionally, we have made substantial progress on the wind tower facility in New Mexico since announcing the project at the end of the first quarter. We expect to deploy approximately $15 million of additional capital expenditures in the first half of the year to complete the project.

Gail Peck: Capital expenditures in 2023 or $204 million in line with the midpoint of our annual guidance.

Gail Peck: During the year, we invested significantly to complete several key organic growth initiatives across engineered structures and construction products. Additionally, we have made substantial progress on the wind tower facility in new Mexico since announcing the project at the end of the first quarter, we expect to deploy approximately $15 million of additional capex.

Gail Peck: In the first half of the year to complete the project.

Gail Peck: In late the third quarter, we also began the buildout of a new galvanizing line in one of our utility structures facilities in Mexico to optimize our costs. We anticipate it will be operational by the end of the year. For modeling purposes, we see full-year 2024 CapEx of $175 to $190 million. This range includes growth CapEx of $55 to $60 million that is expected to be more first-half weighted based on the timing of projects. We forecast depreciation, depletion, and amortization expense to be in the range of approximately $178 to $183 million, up $21 million year-over-year at the midpoint of the range, reflecting the full year impact of large organic projects completed in 2023 and additional investment in 2024. We anticipate a full year 2024 effective tax rate of 17 to 18%, taking into consideration the expected impact from AMP tax credits in our wind towers.

Gail Peck: In late third quarter. We also commenced the build out of a new galvanizing line in one of our utility structures facilities in Mexico to optimize our costs, we anticipate it will be operational by the end of the year.

Gail Peck: For modeling purposes, we see full year 2020 for Capex of $175 million to $190 million. This range includes growth capex of $55 million to $60 million that is expected to be more first half weighted based on the timing of projects we forecast.

Gail Peck: Asian depletion and amortization expense to be in the range of approximately $178 million to $183 million up $21 million year over year at the midpoint of the range.

<unk> the full year impact of large organic projects completed in 2023 and additional investment in 2024.

Gail Peck: We anticipate a full year of 2024 effective tax rate of 17% to 18% taking into consideration the expected impact from A&P tax credits in our wind towers business.

Gail Peck: Wrapping up, we ended the year with net debt to adjusted EBITDA of 1.3 times, up from one times at the end of the third quarter as we borrowed an additional $60 million under our revolving credit facility in December to help fund the Florida Hard Rock Acquisition in Natural Aggregate. We ended 2024 with a strong balance sheet, with available liquidity of $523 million, and no material near-term debt. I will now turn the call back over to Antonio for more discussion on our 2024 outlook. Thank you, Gail. Turning to slide 18.

Gail Peck: Wrapping up we ended the year with net debt to adjusted EBITDA of one three times up from one times at the end of the third quarter as we borrowed an additional $60 million under our revolving credit facility in December to help fund the Florida hard rock acquisition and natural aggregates. We ended 2024 with a strong balance.

Gail Peck: She's with available liquidity of $523 million and no material near term debt maturities I will now turn the call back over to Antonio for more discussion on our 2024 outlook. Thank.

Antonio Carrillo: Thank you Gale turning to slide 18.

Antonio Carrillo: Looking ahead to 2024 are of course is well positioned for continued growth.

Antonio Carrillo: Looking ahead to 2024, Arcosa is well positioned for continued growth. The infrastructure-led demand environment across our portfolio remains favorable, and we expect continued expansion in our growth businesses, complemented by improving production volumes in our cyclical businesses. From a CAPEX perspective,

Antonio Carrillo: The infrastructure led demand environment across our portfolio remains favorable and we expect continued expansion in our growth businesses complemented by improving production volumes in our cyclical businesses.

Antonio Carrillo: From a capex perspective perspective.

Antonio Carrillo: We expect another year of significant investment that scaled measure in addition to our wood window plant in new Mexico, and the new Galvanizing line and utility structures, we expect to continue to pursue financially accretive acquisitions that strengthen our capabilities and increase our margins.

Antonio Carrillo: We expect another year of significant investment; as Gail mentioned, in addition to our wind power plant in New Mexico and the new galvanizing lining in utility structures, we expect to continue to pursue financially accretive acquisitions that strengthen our capabilities and increase our margins. In summary, we forecast 2024 revenue at the midpoint of our guidance to be $2.59 billion, up 12% compared to 2023. Our 2024 adjusted EBITDA forecast, at the midpoint of our guidance, is $400 million, up 16% year-over-year, excluding the $22 million land sale gain recognized in the first quarter of 2023. The midpoint of our Adjusted EBITDA guidance implies an Adjusted EBITDA margin of 15.4%, up approximately 40 basis points compared to 2023 as we further optimize our profitability.

In summary, we forecast 2020 for revenue at the midpoint of our guidance to be $2 59 billion up 12% compared to 2023.

Antonio Carrillo: Our 2024, our adjusted EBITDA forecast at the midpoint of our guidance is $400 million up 16% year over year, excluding the 22 million land sale gain recognized in the first quarter of 2023.

Antonio Carrillo: The midpoint of our adjusted EBITDA guidance implies an adjusted EBITDA margin of 15, 4% up approximately 40 basis points compared to 2023 as we further optimize our profitability.

Antonio Carrillo: Turning to slide 19 to review our outlook for our growth businesses.

Antonio Carrillo: We anticipate a solid year for our construction broach.

Antonio Carrillo: On the on the demand front, we expect positive contributions from highway and infrastructure project activity as well as growth in heavy industrial construction and multifamily multifamily residential in certain markets as I noted last quarter. The single family residential construction market appears to have stabilized, but it is not your peer when housing starts will read.

Antonio Carrillo: Turn to slide 19 to review our outlook for our rural businesses. We anticipate a solid year for our construction products. On the demand front, we expect positive contributions from highway and infrastructure project activity, as well as growth in heavy industrial construction and multifamily residential construction in certain markets. As I noted last quarter, the single-family residential construction market appears to have stabilized, but it's not yet clear when housing starts will return to consistent growth. Across our construction materials business, we expect overall organic growth to be roughly flat versus the prior year. Additionally, inclement weather in January is expected to weigh on first quarter results.

Antonio Carrillo: Turning to consistent growth.

Antonio Carrillo: Across our construction materials business, we expect overall organic growth to be roughly flat versus prior year.

Antonio Carrillo: Importantly, inclement weather in January is expected to weigh on first quarter results.

We expect our 2023 acquisitions should contribute positively with them are accretive.

Antonio Carrillo: Accretive overall margin.

Antonio Carrillo: Pricing remains attractive and we continue to be focused on driving unit profitability and margin improvement through 2024.

Antonio Carrillo: Utility and related structures are poised for a stronger year in 2020 for recovering from operational and performance challenges in the second half of 2023.

Antonio Carrillo: Market conditions remain supportive with continued volume growth overall, our utility customers forward looking capex programs are at higher spending levels with a focus on electric grid hardening initiatives and the ongoing transition to alternative energy sources.

Antonio Carrillo: We expect our 2023 acquisitions should contribute positively with an accretive overall margin. Pricing remains attractive, and we continue to be focused on driving unit profitability and margin improvement through 2024. Utility and related structures are poised for a stronger year in 2024, recovering from operational and performance challenges in the second half of 2023. Market conditions remain supportive for continued volume growth. Overall, our utility customers' forward-looking CAPEX programs are at higher spending levels, with a focus on electric grid hardening initiatives and the ongoing transition to alternative energy sources.

Antonio Carrillo: Meanwhile, our traffic business should benefit from continued federal infrastructure spending, particularly within our faster growing southeast market.

Antonio Carrillo: Due to the expected to expected customer umbrella mixing structures backlog, we anticipate stronger EBITDA in the second half of 2024 relative to the first half.

We were pleased with the sequential margin improvement in the fourth quarter and are committed to building on that progress through 2024.

Antonio Carrillo: Turning to slide 20.

Antonio Carrillo: 2023 was a transition year for our wind towers business in which we built backlog in preparation for a multiyear up cycle.

Antonio Carrillo: Our current backlog of approximately 1 billion provides solid production visibility into 2028.

Antonio Carrillo: While we did not book any additional orders during the fourth quarter consumer interest in onshore wind projects remains high and as projects move further along the planning stage inquiries schrute converted to additional backlog.

Antonio Carrillo: Meanwhile, our traffic business should benefit from continued federal infrastructure spending, particularly within our faster-growing Southeast market. Due to the expected to expected customer and product mix in our utility structure backlog, we anticipate stronger EBITDA in the second half of 2024 relative to the first half. We were pleased with the sequential margin improvement in the fourth quarter and are committed to building on that progress through 2024. Turning to slide 20.

Antonio Carrillo: Meanwhile, we remain focused on the startup of the new Mexico facility to support the expected production ramp up in 2024 and beyond.

Antonio Carrillo: As our winter production volume scales, we plan to continue to invest in strengthening our capabilities enhance and enhance our manufacturing flexibility.

Antonio Carrillo: Turning to slide 21.

Antonio Carrillo: Our barge business generated significantly stronger results in 2023 as volume and pricing improved from the 2022 cyclical lows.

Antonio Carrillo: We remain well positioned to further for further expansion in 2024 as the market continues to recover we expect to be selective with their orders prioritizing those that enhance our profitability and generate incremental operating leverage as volume scales.

Antonio Carrillo: Although steel prices remain elevated costumers.

Funded favorably when we are successful with strategic sourcing evidenced by a one two times book to Bill in the fourth quarter.

Antonio Carrillo: 2023 was a transition year for Wind Towers, in which we built backlog in preparation for a multi-year upcycle. Our current backlog of approximately $1 billion provides solid production visibility into 2028. While we did not book any additional orders during the fourth quarter, consumer interest in onshore wind projects remains high.

Antonio Carrillo: Additionally, our ability to substitute lower priced cold rolled coil for plate still in the manufacturing process provides manufacturing flexibility.

Strengthening customer demand for barges is evident not only in the fourth quarter revenue, which nearly doubled from the prior year, but also in our backlog, which grew 13% year over year in the fourth quarter. We're also encouraged by new liquid barge orders in the fourth quarter, a trend that may point to broadening market demand as we enter 2024.

Antonio Carrillo: And as projects move further along the planning stage, inquiries should convert them into additional backlog. Meanwhile, we remain focused on the startup of the New Mexico facility to support the expected production ramp-up in 2024 and beyond. As our wind tower production volume scales, we plan to continue to invest to strengthen our capabilities and enhance our manufacturing flexibility. Turning to slide 21, our large business generated significantly stronger results in 2023 as volume and pricing improved from the 2022 cyclical lows. We remain well positioned for further expansion in 2024 as the market continues to recover. We expect to be selective with our orders, prioritizing those that enhance our profitability and generate incremental operating leverage as volume increases. Although steel prices remain elevated, customers have responded favorably when we are successful with strategic sourcing, as evidenced by our 1.2 times book to build in the fourth quarter. Additionally, our ability to substitute lower-priced hot-rolled coil for plate steel in the manufacturing process provides manufacturing flexibility.

Antonio Carrillo: As a result, we have substantially filled our production capacity for 'twenty 'twenty four and we're focused on extending our backlog into 2025 overall, we expect another strong year for our barge business in 2024 with higher production volume and further improvement in profitability.

Antonio Carrillo: In our steel components business the outlook remains positive as market demand is expected to be stable in <unk>.

Antonio Carrillo: We anticipate a more balanced competitive environment for freight railcar couple of probes. Following the favorable outcome of the trade cases against China, and Mexico, which has positive implications for both the new railcar and maintenance market.

With North American railcar deliveries forecast to remain at stable replacement levels, we anticipate our steel components business will generate further gains in profitability on moderate revenue growth.

Antonio Carrillo: In closing our coastal delivered strong financial performance in 2023, and we enter 2024 with positive momentum across our businesses. We remain focused on operational execution portfolio optimization and capital allocation, both organically and through acquisitions to our growth businesses.

Antonio Carrillo: We expect healthy market fundamentals to continue to drive solid results in our growth businesses, while our cyclical businesses are poised to benefit from increased production.

Antonio Carrillo: And greater operating leverage we will continue to advance our strategic objectives, while investing to capture future growth opportunities across our portfolio.

Antonio Carrillo: Strengthening customer demand for barges is evident not only in the fourth quarter revenue, which nearly doubled from the prior year, but also in our backlog, which grew 13% year over year in the fourth quarter. We're also encouraged by new liquid barge orders in the fourth quarter, a trend that may point to broadening market demand as we enter 2024. As a result, we have substantially filled our production capacity for 2024, and we're focused on extending our backlog into 2025. Overall, we expect another strong year for our barge business in 2024, with higher production volumes and further improvement in profitability. In our Steel Components business, the outlook remains positive as market demand is expected to be stable. In addition, we anticipate a more balanced competitive environment for our freight railcar coupler products following the favorable outcome of the trade cases against China and Mexico, which has positive implications for both the new railcar and maintenance market. With North American railcar deliveries forecast to remain at stable replacement levels, we anticipate our steel components business will generate further gains in profitability on moderate revenue growth. In closing, Arcosa delivered strong financial performance in 2023, and we entered 2024 with positive momentum.

Speaker Change: Operator, and I would like to open the call for questions.

Speaker Change: Floor is now open for your questions.

I have a question at this time, please press star one on your telephone keypad.

Speaker Change: They remove yourself at anytime by pressing star to once.

Speaker Change: Once again to ask a question. Please press star one at this time.

Speaker Change: Our first question comes from Trey Grooms with Stephens. Please go ahead.

Trey Grooms: Hey, good morning, Antonio and Gale congrats on a strong finish to the year.

Trey Grooms: Thank you Scott.

Trey Grooms: You guys.

Continue to execute well on.

Trey Grooms: Nice progress on filling out the construction products assets through acquisitions and <unk>.

Trey Grooms: Tony I know there is a strategic focus to continue to simplify.

Trey Grooms: The overall asset portfolio and simplify the story and you guys have made large strides there clearly selling the storage tank business as part of that as well, but can you can you update us on kind of where you are in that thought.

Trey Grooms: Your thoughts are on that process.

Given where we are.

The more cyclical businesses starting to kind of.

Trey Grooms: Start to improve there and just update on those thoughts please.

Trey Grooms: Sure.

Speaker Change: And let me.

Speaker Change: Give you the big picture I think Youre, absolutely right. The way you described it.

Speaker Change: We have and we want to continue to allocate capital into our growth business. As you know with the final rules businesses of the construction segment and the engineered structures, we see very good opportunities to continue to redeploy capital.

Operator: Across our businesses, we remain focused on operational execution, portfolio optimization, and capital allocation, both organically and through acquisitions for our growth businesses. We expect healthy market fundamentals to continue to drive solid results in our growth businesses, while our cyclical businesses are poised to benefit from increased production and greater operating leverage. We will continue to advance our strategic objectives while investing to capture future growth opportunities across our portfolio. Operator, and I would like to open the call to questions. We are now open to your questions. If you have a question at this time, please press star 1 on your telephone keypad. You may remove yourself at any time by pressing star 2.

Speaker Change: We're building a nice pipeline strengthening our M&A.

Speaker Change: Small group that we have internally so we want to continue to expand our capabilities to redeploy capital that's when the redeployment.

Speaker Change: On the simplification it continues to be a priority for us.

Speaker Change: As I've said before M&A has a life of its own it happens when it needs to happen and.

Speaker Change: When the businesses are ready when the market is in the right time so.

Speaker Change: What I can tell you is we will continue to pursue that simplification and we will continue to pursue the reallocation of capital both in construction and engineered structures. So it's top of mind for us and for our board and for everyone in the company.

Trey Grooms: Once again, to ask a question, please press star 1 at this time. Our first question comes from Trey Grooms with the Stevens. Please go ahead.

Speaker Change: Alright, and Tony Thanks for the update there.

Speaker Change: Also maybe switching gears.

Antonio Carrillo: Hey, good morning, Antonio and Gail. Congratulations on a strong finish to the year. Thank you, Trey. You got it.

Speaker Change: Just a little bit.

Speaker Change: There was.

If you could maybe just touch on the demand trends that youre seeing across you mentioned.

Trey Grooms: You guys, you know, continue to execute well on, and are making nice progress on filling out the construction products assets through acquisitions. Tony, I know, you know, there is a strategic focus to continue to simplify the overall asset portfolio and simplify the story, and you guys have made large strides there. Clearly, you know, selling the storage tank business is part of that as well. But can you update us on kind of where you are in that thought, or where your thoughts are on that process, and you know, given where we are with the more cyclical businesses starting to kind of start to improve there, and just an update on those thoughts, please? Sure, Trey, and let me give you the big picture.

Speaker Change: Residential maybe starting to see some improvement there, but if you could also maybe touch on the parts of your business, particularly in construction.

Speaker Change: That kind of touch the non res and infrastructure could you kind of talk about what youre seeing in the demand trends in those end markets as well as we look into 'twenty four.

Speaker Change: Sure as I mentioned on the residential side.

Speaker Change: We've seen a stabilization of the of the demand.

As Gale mentioned our volumes in the second half of the year were better than the first half last year or so so I think we've seen kind of a bottom.

Antonio Carrillo: I think you're absolutely right in the way you described it. We want to continue to allocate capital to our growth businesses. As you know, we define our growth businesses as a construction segment and engineering structures. We see very good opportunities to continue to redeploy capital.

Speaker Change: And at the same time.

Speaker Change: At the same time.

Speaker Change: We see very good progress, having very very strong demand from the infrastructure side. We also see a very nice.

Speaker Change: And we expect more on the heavy industrial side, there is a significant trend.

Antonio Carrillo: We're building a nice pipeline, strengthening our M&A small group that we have internally. So we want to continue to expand our capabilities to redeploy capital. That's on the redeployment.

Speaker Change: I think across the country on the industrialization of the coal country not only.

Speaker Change: Heavy industrial but also when you see the AI evolution happening theres going to be a lot of infrastructure that needs to be developed there theres a lot of on the energy side power plants, and all sorts of energy related to infrastructure. So I am very optimistic on the industrial side on the and that's that.

Antonio Carrillo: On simplification, it continues to be a priority for us. As I've said before, M&A has a life of its own. It happens when it needs to happen, when the business is ready, when the market is at the right time. So what I can tell you is we will continue to pursue that simplification, and we will continue to pursue the reallocation of capital, both in construction and engineering. So it's top of mind for us and for our board and for everyone in the company. All right, Antonio, thanks for the update.

Speaker Change: Part of the equation and then multifamily is a regional thing in some places we're seeing better trends than in others. So it's a it's a little more spotty, but the good news is since we spun we've grown our footprint. So now we have a lot more exposure than just takes us so of course that creates some variability but at the same time.

Trey Grooms: Also, maybe switching gears just a little bit, you know, there was, if you could maybe just touch on the demand trends that you're seeing across, you mentioned residential, maybe starting to see some improvement there, but if you could also maybe touch on the parts of your business, particularly in construction, that kind of touch on the non-residential and infrastructure. Could you kind of talk about what you're seeing in the demand trends and those in the markets as we look into 24? Sure.

Speaker Change: I think with the acquisitions, we've done we're getting into markets that are very very attractive.

Speaker Change: Perfect.

As an example, we just finished.

Speaker Change: Florida, we closely in December the acquisition of the hard rock if you remember in the third quarter, we announced the recycled aggregates in Florida.

Speaker Change: What that proves that our method of going in setting our foods, so more than opportune start coming to us and we want to continue to build around the footprint.

Antonio Carrillo: As I mentioned on the residential side, you know, we've seen a stabilization of demand. As Gail mentioned, our volumes in the second half of the year were better than the first half last year. So I think we've seen kind of a bottom.

Got it perfect. Thank you for taking my questions and good luck for the rest of the year.

Speaker Change: Thank you Terry.

Speaker Change: Thank you. Our next question comes from Julio Romero with Sidoti and company. Please go ahead.

Speaker Change: Hi, Good morning, Antonio and Gail This is Alex on for Julio.

Antonio Carrillo: And at the same time, we see very good progress and very strong demand from the infrastructure side. We also see very nice progress, and we expect more on the heavy industrial side. There's a significant trend, I think, across the country for the industrialization of the whole country, not only heavy industrial, but also when you see the AI revolution happening, there's going to be a lot of infrastructure that needs to be developed there. There's a lot on the energy side, power plants, and all sorts of energy-related infrastructure. So I am very optimistic on the industrial side of that part of the equation. And then multifamily is a regional thing.

Alex: Good morning, good morning.

Alex: My first question is on.

Alex: You know the guidance and seasonality.

Alex: Speak to what's expected from guidance from a segment perspective in terms of seasonality.

Alex: Curious you know which of the business units are expected to follow the traditional seasonal kids.

Alex: Pardon me versus a more sequential ramp as we progress through the year.

Alex: Good morning, Alex This is Gil I'll take that that's a good that's a good question and as we've said in our comments as we look to 2024, we see the EBITDA more second half weighted and there is a few things that are driving that as your questioning on seasonality that's certainly one of them.

Antonio Carrillo: In some places, we're seeing better trends than in others, so it's a little more spotty. But the good news is, since we started, we've grown our footprint. So now we have a lot more exposure than just in Texas. So, of course, that creates some variability. But at the same time, I think with the acquisitions we've made, we're getting into markets that are very, very attractive. Florida is an example.

Alex: Q1 is normally our most.

Alex: Most seasonally slow quarter for construction.

Alex: We did have we commented in.

Alex: The scripts that we did face some tough weather in January so we will have that will fight that headwind in Q1, along with the normal.

Alex: Whether it's seasonality that was in construction for sure given the outdoor nature of the business, but we felt that weather impact pretty broadly across our portfolio.

Antonio Carrillo: Just to finish my comment, Florida, we closed it in December with the acquisition of the hard rock. If you remember, in the third quarter, we announced recycled aggregates in Florida also. So, what that proves is that our method of going and setting a foot somewhere, then opportunities start coming to us, and we want to continue to build around that footprint.

Alex: With freezing temperatures and rain, where we had some downtime in our and actually in our manufacturing facilities, but you know what we'll we'll we'll push through that but so you have the typical seasonality with Q1.

Trey Grooms: Perfect. Thank you for taking my questions and good luck for the rest of the year. Thank you, Trey.

Alex: I think we've.

Alex: We've been pretty.

Alex: Transparent with the large land sale that we had in Q1 last year, so that won't repeat in Q1, and we've given our guidance in.

Operator: Thank you. Our next question comes from Julio Romero with Sidoti and Company. Please go ahead. Hi, good morning Antonio and Gail. This is Alex on behalf of Julio.

Alex: Impacts excluding the landfill.

Alex: So kind of apart from those typical things as I think about the businesses utility structures is another one where we mentioned the second half stronger than the first half.

Alex: Good morning, Alex. This is Gayle. My first question is on guidance and seasonality. Can you speak to what's expected from guidance from a segment perspective in terms of seasonality? Curious, you know, which of the business units are expected to follow a traditional seasonal cadence versus a more sequential ramp as they progress through the year.

Alex: Maybe I would even go so so broad as to say the engineered segment is going to be more weighted towards the second half and there's a few things driving that first is the fact as we look at our customer mix and utility structures.

Alex: And how about the project timing and the cadence of that we see a better mix in the second half than the first half.

Gail Peck: I'll take that. That's a good question. As we've said in our comments, as we look to 2024, we see EBITDA being more second half weighted, and there are a few things that are driving that, as you're questioning on seasonality, that's certainly one of them. Q1 is normally our most seasonalally slow quarter for construction. We did have, we commented in the scripts that we did face some tough weather in January, so we will have that headwind in Q1 along with the normal weather seasonality. That was in construction for sure, given the outdoor nature of the business, but we felt that weather impact pretty broadly across our portfolio, with freezing temperatures and rain where we had some downtime in our manufacturing facilities, but we'll push through that, so you have the typical seasonality with Q1.

Alex: Very strong demand drivers robust outlook for that business, but that's the way it plays out based on the backlog visibility we have today when you think about it.

Alex:

Alex: The other impacts to second half for the segment I would call out the startup of our new facilities both the.

Alex: Well in new Mexico wind tower facilities that will be a drag on first half EBITDA contributing in the second half. So that's gonna be impactful to the cadence as well as the new concrete pole.

Facility within utility structures, we finished that in virtually in December of last year. So we will see positive contributions from that.

Alex: Accretive to the overall segment than in.

Alex: In the fourth quarter, but theres going to be a crime.

Alex: Associated with the ramp up of that as well.

Alex:

Alex: I think the only other.

Alex: The only other place, maybe where you might see a slight second half.

Gail Peck: I think we've been pretty transparent with the large land sale that we had in Q1 last year, so that won't repeat in Q1, and we've given our guidance impacts excluding the land sale. So, kind of apart from those typical things, as I think about the businesses, utility structures are another one where we mentioned the second half would be stronger than the first half. Maybe I would even go so broad as to say the engineered segment is going to be more weighted towards the second half. And there are a few things driving that, the fact that as we look at our customer mix in utility structures and how the project timing and the cadence of that, we see a better mix in the second half than in the first half.

Step up to first half would be in barge as we continue to ramp the business and I think those are the general view of the world as we see it here in February for 2024.

Let me just complement something that I think Gail mentioned, it but I'll I went too.

Alex: If you think of our goals through 2024.

Alex: As I mentioned, we closed 2023 strong we entered into 'twenty to 'twenty four.

Alex: We're ramping up concrete bold plans, where we're ramping up.

Alex: We already have a lot of employees in Berlin, Theyre, starting to calculate rollerblade, well plate, but we are building a tremendous amount of.

Alex: Cost in the plant as we go through the first half of the year until they start producing and once they start producing efficiencies very slow climbing. So you have the.

Gail Peck: Still very strong demand drivers, and a robust outlook for that business, but that's the way it plays out based on the backlog visibility we have today. When you think about the other impacts to the second half for this segment, I would call out the start-up of our new facilities, both the Berlin, New Mexico wind tower facility that will be a drag on first half EBITDA contributing in the second half, so that's going to be impactful to the cadence, as well as the new concrete pole facility within utility structures. We finished that virtually in December of last year, so we will see positive contributions from that, accretive to the overall segment in the fourth quarter, but there's going to be a climb associated with a ramp-up of that as well. I think the only other, um...

Alex: The new concrete ball plant you have the billing plans you have ramp up in both of the barge plant you will have a ramp up in another winter plant.

Alex: So of course is building up capacity as we go through the year and carrying all of those costs.

Alex: Patients, who at least as we build up and as we exit 2024, we should have a very strong manufacturing capacity and ready for the for the for the up cycle that we expect.

Speaker Change: Thank you very much John Antonio Great contacts and one follow up and final question from me on the engineered structures segment.

Gail Peck: The only other place maybe where you might see a slight second half step up to first half would be in Barge as we continue to ramp up the business, but I think that is the general view of the world as we see it here in February for 2024. Let me just complement something that I think Gail mentioned, but I want to ask you to think of Arcosa through 2024. As I mentioned, we close 2023 strong. We enter into 2024. We're ramping up the concrete pole plant. We already have a lot of employees in Belen. They're starting to cut plate, roll plate, weld plate, but we are building a tremendous amount of cost in the plant as we go through the first half of the year until they start producing. And once they start producing, efficiency is very slow to climb. So you have the new concrete pole plant. You have the Belen plant.

Speaker Change: It's about.

Speaker Change: The customer hesitation or general sentiment.

Speaker Change: Around final guidelines on the 10% domestic content bonus.

Speaker Change: I'm curious just how you expect the orders and overall demand to trend.

Speaker Change: After that guidance is finalized.

Speaker Change: We really don't expect a lot of.

Speaker Change: I've not heard of any pushback from customers at the moment so.

Speaker Change: We haven't we don't expect any any impact to our poor guidance or bore backlogs with this new guidance. So we're not concerned about it.

Speaker Change: Yeah, and I guess I wanted to just add Alex as it relates to the the irate most of the virtually all of the impacts related to wind have really played out the way we anticipated.

Speaker Change: Sure.

Speaker Change: Pleased with with the way things have have rolled out on that side.

Antonio Carrillo: You have ramp-ups in both of the barge plants. You also have a ramp-up in another wind tower plant. So Arcosa is building up capacity as we go through the year and carrying all those costs and inefficiencies, let's say, as we build up and as we exit 2024, we should have a very strong manufacturing capacity and be ready for the up cycle that we expect. Thank you very much, Gail and Antonio. Great context,

Speaker Change: If you remember most of our most of our manufacturing with exception of two plants in the U S. So we are very focused on U S manufacturing and that's been our focus.

Speaker Change: I appreciate that thank you very much and Thats all for me.

Speaker Change: Okay.

Speaker Change: Once again, if you would like to ask a question. Please press star one at this time.

Speaker Change: Our next question comes from John Ramirez with D. A Davidson. Please go ahead.

John Ramirez: Hi, good morning.

Alex: And one follow-up and final question from me on the engineered structure segment. Curious about customer hesitation or general sentiment around the final guidelines on the 10% domestic content bonus. Curious just how you expect orders and overall demand to trend after that guidance is finalized. We really don't expect a lot of it; we have not heard any pushback from our customers at the moment. We don't expect any impact on our guidance or on our backlogs with this new guidance, so we're not concerned about it.

John Ramirez: Just lifting.

John Ramirez: Listen at the legal challenges to the songs you project.

John Ramirez: What's the feedback from that customer regarding plans and proposed delivery schedules going forward.

John Ramirez: Look.

John Ramirez: We haven't heard anything so where we don't we haven't heard of any any feedback from the customer or from anything else. So we keep we keep going.

John Ramirez: Okay.

John Ramirez: And just piggybacking off.

John Ramirez: The previous question.

John Ramirez: So any additional.

John Ramirez: Additional inputs from Treasury.

Antonio Carrillo: Yeah, and I guess I would just add, Alex, as it relates to the IRA, most of the, virtually all the impacts related to wind have really played out the way we anticipated. So we're pleased with the way things have rolled out on that side. Yeah, and if you remember, most of our manufacturing, with the exception of two plants, is in the U.S. We are very focused on U.S. manufacturing, and that's been our focus. I appreciate that. Thank you very much, and that's all from me. If you would like to ask a question, please press star 1 at this time. Our next question comes from John Ramirez with D.A. Davidson. Please go ahead. Hi, good morning.

John Ramirez: No change in expectations around.

John Ramirez: The.

John Ramirez: Kratz from the towers.

So theres.

John Ramirez: Looking at your guidance for 2024.

John Ramirez: So there's no you're not expecting any changes into your guidance for how you're utilizing your tax.

Speaker Change: Got it.

Kratz: I'll take that Alex so how we recognize an account for our tax credit.

Speaker Change: Similar to 2023, and we are rolling those in as a reduction of cost of sales. So no no change in regard to that.

Alex: And generally as you think about the tax credit we really.

John Ramirez: Looking at the legal challenges to the Sunship project, what's the feedback from that customer regarding plans and proposed delivery schedules going forward? How does that look? We haven't heard anything, so we haven't heard any feedback from the customer or from anything else, so we keep going. Okay, thank you. And just piggybacking off the previous question, so any additional inputs from Treasury that, you know, changing the expectations around the Kretz for the towers, um, so there's, Looking at your guidance for 2024, so there's no, you're not expecting any changes to your guidance for how you're utilizing your tax credits then? I'll take that, Alex.

Speaker Change: Manage the business Holistically for.

Speaker Change: Total total total EBITDA in total profitability.

Speaker Change: But you know as as we ramp in wind tower, and we expect revenues to grow in wind tower, we would expect the tax credit.

Speaker Change: To grow along with that.

Speaker Change: Probably yes, there are things as I've talked about before that impact the size of the credits certainly that the wattage of the turbine is at a three section a four section tower, but those things aside I think generally we can expect to see the tax credit.

Speaker Change: Grow in line with revenue growth all else being equal so not that impactful to overall margin because it's going to grow in line with revenue, but certainly it's.

Gail Peck: So how we recognize and account for our tax credits is very similar to 2023. We are rolling those in as a reduction in the cost of sales. So no, no, and no change in regard to that. You know, and generally, as you think about the tax credit, we really manage the business holistically for, you know, total EBITDA and total profitability. But, you know, as we ramp up the wind tower, and we expect revenues to grow in the wind tower, we would expect the tax credit to grow along with that. You know, probably, there are things, as I've talked about before, that impact the size of the credit, certainly the wattage of the turbine, whether it is a three-section or four-section tower, but those things aside, I think, generally, we can expect to see the tax credit grow in line with revenue growth, all else being equal.

Speaker Change: It's going to add to our EBITDA growth in 2024.

Speaker Change: Perfect. Thank you and just one more for me.

Speaker Change:

You talked about price momentum.

Speaker Change: Going into 2024 for aggregates.

Speaker Change: Are you guys, considering any mid year price increases.

Speaker Change: Normally we do a price increase in the middle of the year. So yes, we expect to continue to raise prices wherever we can.

Speaker Change: And I would just say Alex at this juncture given it's so early in the year, we don't we don't roll those into our guidance.

Speaker Change: But but certainly.

Speaker Change: Very price disciplined approach.

Speaker Change: Yeah.

Speaker Change: Perfect. Thank you I'll jump back in.

Speaker Change: Thank you. Our next question comes from Garik <unk> with loop capital markets. Please go ahead.

Garik: Oh, hi, thank so congrats on the quarter I was hoping first you could if you could go over the variance within your revenue guidance what would have to happen.

Gail Peck: So not that impactful to overall margin because it's going to grow in line with revenue but certainly is going to add to our EBITDA growth in 2024. Perfect. Thank you. And just one more for me.

Garik: See the low end and the high end of the 6% to 18% range that you've offered.

Garik: Yeah.

Speaker Change: I'll take that Garik.

John Ramirez: You talked about price momentum going into 2024 for aggregates. Are you guys considering any mid-year price increases? Normally, we do a price increase in the middle of the year, so yes, we expect to continue to raise prices wherever we can. And I would just say, Alex, at this juncture, given it's so early in the year, we don't roll those into our guidance, but we certainly take a very price-disciplined approach. Thank you. I'll jump back in.

Speaker Change: See if I can pull some of it apart for you there's a lot of a lot of moving parts as you know.

Speaker Change: I think.

Speaker Change: You know as we think about our cyclical businesses and maybe I'll start there.

Speaker Change: We've got good backlog visibility. So when you think about our barge business we have 250.

Speaker Change: $55 million of backlog at the end of 2023, we said that is all for 2020 for delivery.

Speaker Change: We've substantially filled our production plans and where we're taking order inquiries for 2025.

Garrick Schmoyce: Thank you. Our next question comes from Garrick Schmoyce with Loop Capital Markets. Please go ahead.

Speaker Change: So you look at the ramp you look at where we finished 2023, we have our marine components revenue. In addition to our backlog so you could be approaching.

Garrick Schmoyce: Oh, hi, thanks. Congratulations on the quarter. I was hoping, first, if you could go over the variance within your revenue guidance, what would have to happen to reach the low end and the high end of the 6 to 18% range that you. I'll take that, Garrick. And see if I can pull some of it apart for you.

Close to 20% revenue growth in the barge business with a backlog that is solidified we feel pretty comfortable about that.

Speaker Change: Likewise in wind we have good visibility for 2024.

Gail Peck: There's a lot of moving parts, as you know. I think, as we think about our cyclical businesses, and maybe I'll start there. We've got good backlog visibility. So when you think about our barge business, we have 255 million dollars of backlog at the end of 2023.

Speaker Change: So I don't I don't see any risk to the wind backlog, there's potentially upside if we take additional orders.

Speaker Change: I think the focus for US really is on orders for 25 and beyond I'll, Let Antonio comment there you know when I wrap up but you know not.

Speaker Change: Not a lot of risk associated with them.

Antonio Carrillo: The downside on barger wind and potentially some upside, but I'd say somewhat limited on 24 with more growth in 'twenty five for those businesses.

Gail Peck: We said that was all for 2024 delivery. We've substantially filled our production plans, and we're taking order inquiries for 2025. So, you know, when you look at the ramp, when you look at where we finish in 2023, we have our marine components revenue in addition to our backlog, so you could be approaching, you know, close to 20% revenue growth in the barge business. And with a backlog that is solidified, we feel pretty comfortable about that. You know, likewise, in wind, we have good visibility for 2024.

Antonio Carrillo: Utility same thing we have that we have a good backlog we have a shadow backlog that we don't include them in reportable backlog.

Antonio Carrillo: You know high single digit revenue growth in utility structures is is feels comfortable.

Antonio Carrillo: And then on construction.

Antonio Carrillo: We feel very confident in the outlook the demand outlook as Antonio said, a rough start with weather.

Antonio Carrillo: We're used to that we've got some inorganic.

Gail Peck: So I don't I don't see any risk to the wind backlog; there's potentially upside if we take additional orders. I think the focus for us really is on orders for 25 and beyond. I'll let Antonio comment there, you know, when I wrap up, but, you know, not a lot of risk associated with the downside on barger wind in, potentially some upside, but I'd say somewhat limited on 24 with more growth in 25 for those businesses. Utility, same thing, we have a good backlog, we have a shadow backlog that we don't include in the reportable backlog, and high single-digit revenue growth in And then on construction. You know, we feel very confident in the outlook, the demand outlook, as Antonio said, you know, a rough start with weather. We're used to that.

Antonio Carrillo: Gannett contributions that we will see in 2024, I think the way maybe to think about top line and construction is is as we had.

Antonio Carrillo: Close to <unk>.

Antonio Carrillo: 7% topline revenue growth last year.

Antonio Carrillo: Maybe.

Antonio Carrillo: The 100 basis points or so of that was inorganic and we could expect maybe a slightly larger inorganic piece and in in 2024 to get you in that that high single digit area of revenue growth for construction next year.

Antonio Carrillo:

That is what the one business, where we don't have a backlog, but we feel pretty confident in the in the demand drivers that that we see in the in the tailwind from the infrastructure rolling in more and more strongly in 2024.

Speaker Change: Only thing I would add to gale's comment is the other thing that you know.

We know how to do it we do it.

Speaker Change: Constantly ramping up facilities, it's always a risk there's always things that can happen and we need to hire a lot of people and we need to train people and we need to produce.

Gail Peck: We've got some inorganic contributions that we will see in 2024. I think the way maybe to think about top line and construction is that we had, you know, close to, 7% top line revenue growth last year, maybe 100 basis points or so of that was inorganic, and we could expect maybe a slightly larger inorganic piece in 2024 to get you in that high single-digit area of revenue growth for construction next year. That is the one business where we don't have a backlog, but we feel pretty confident in the demand drivers that we see in the tailwinds from the infrastructure rolling in more strongly in 2024. The only thing I would add to Gail's comment is the other thing that, you know, we can do it.

Speaker Change: And it's always a risk it's going to be a heavy lift for the year, but the good news I think is the demand side the demand side is there.

Speaker Change: And it's all up to us to perform well for the year.

Speaker Change: Because we have everything to be successful with them.

Speaker Change: That's great color I appreciate that.

Speaker Change: I just wanted to follow up on the inorganic growth opportunities I think just to be clear first off.

Speaker Change: The stronger inorganic growth in construction products.

Speaker Change: That assumes the acquisitions.

Gail Peck: We do need to do it. Constantly ramping up facilities is always a risk, there's always things that can happen, and we need to hire a lot of people, and we need to train people, and we need to produce products, and it's always a risk, it's going to be a heavy lift for the year, but the good news is, I mean, the demand side is there, and it's all up to us to perform well for the year because That's a great color.

Speaker Change: Both the fourth quarter and the recently announced one.

Speaker Change: I guess that was in the fourth quarter, as well and South Florida.

Speaker Change: I just wanted to confirm that and it doesn't include any new acquisitions and then just as a.

Speaker Change: A follow up to that just how are you thinking about acquisitions more broadly within construction products, maybe talk about bolt ons as opposed to new platforms are you in the markets that you wanted to be in now or are there other regions that you want to expand it and then just maybe speak to how that looks in 2024.

Garrick Schmoyce: I appreciate that. I just want to follow up on the inorganic growth opportunities. I think just to be clear, first off, the stronger inorganic growth in construction products assumes the acquisitions in both the fourth quarter and the recently announced one, I guess that was in the fourth quarter as well, in South Florida. So I just want to confirm that, and it doesn't include any new acquisitions, as a follow-up to that. Just how are you thinking about acquisitions more broadly within construction products? You know, maybe talk about bolt-ons as opposed to new platforms.

Speaker Change: But you are correct the guidance on the first slide does not include any new acquisitions.

Speaker Change: Last year, we had very little inorganic.

Speaker Change: EBITDA coming from from previous acquisition. So so this year, we expect a little more because we made them.

Speaker Change: At the end of the year and this acquisition you know it takes time to integrate them. There are some integration costs and things. So normally it takes a little time for them to start being accretive, but we do expect them to be.

Garrick Schmoyce: Are you in the markets that you want to be in now? Or are there other regions that you want to expand into? And, you know, just maybe, you can speak to how that looks in 2020. The guidance on the first slide does not include any new acquisitions.

Speaker Change: Accretive to our margins in 2024.

Speaker Change: In all the future acquisitions I would say.

Antonio Carrillo: Last year, we had very little inorganic EBITDA coming from previous acquisitions, so this year, we expect a little more because we made them at the end of the year. And these acquisitions, you know; it takes time to integrate them. There are some integration costs and things. So normally, it takes a little time for them to start being accretive, but we do expect them to be accretive to our margins in 2024 on future acquisitions. I would say, I've said it before, but it's, you know, do we like bigger ones? Of course, we like bigger ones.

Speaker Change: I've said it before but it's it's you know.

Speaker Change: Do we like bigger ones of course, we like bigger once they're not available.

Most of the time, when we see something bigger will be interested in that as.

Speaker Change: As you've seen some of the multiples that are being paid for the larger ones.

Speaker Change: One of the things, we believe we'd be leaving buying in a disciplined capital allocation and we're buying vis a vis acquisitions. The multiples that we believe are good and generate value for our investors.

Speaker Change: So we'll continue to look for acquisitions on the bulk of those are the larger also if we can find them at reasonable prices.

Speaker Change: And we are still looking for additional platforms in other regions. We still have several regions. We're interested in where we do not have a presence.

Antonio Carrillo: They're not available, and most of the time, when we see something bigger, we'll be interested in them, as you've seen some of the multiples that are being paid for the larger ones. You know, one of the things we believe in is we believe in buying in a disciplined capital allocation, and we're buying these acquisitions at multiples that we believe are good and generate value for our investors. So, we'll continue to look for acquisitions on the Bolton side and larger ones also if we can find them at reasonable prices. And we are still looking for additional platforms in other regions. We still have several regions we're interested in where we do not have a presence, and so today we have a lot more opportunities to redeploy capital than we had five years ago when we were only in Texas.

Speaker Change: But today we have.

Speaker Change: A lot more opportunity to redeploy capital then we have five years ago would we were only in Texas today, we can redeploy it in California, and Arizona, and Texas, and Florida, along the Gulf Coast in Tennessee. So we are building a nice platform that we can.

Speaker Change: <unk> and we need to get good at buying these smaller opportunities are reasonable prices. We also see opportunities to redeploy capital in the engineered structures, there's gaps in our in.

In our boat portfolio that we need to feel we can do it organically or inorganically and were working both sides of the equation. So so I think youll see us continue to be active in the M&A market.

Antonio Carrillo: Today, we can redeploy them in California, in Arizona, in Texas, in Florida, along the Gulf Coast, in Tennessee. So we are building a nice platform that we can expand, and we need to get good at buying these small opportunities at reasonable prices. We also see opportunities to redeploy capital in engineering structures. There are gaps in our product portfolio that we need to fill. We can do it organically or inorganically, and we're working on both sides of the equation.

Speaker Change: Sounds good thanks for that and best of luck.

Speaker Change: Yeah.

Speaker Change: Thank you we have no further questions at this time this will conclude the arcos <unk> fourth quarter and full year 2023 earnings conference call. We thank you for your participation.

Speaker Change: You may disconnect at any time.

Speaker Change: Okay.

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Antonio Carrillo: So I think you'll see us continue to be active in the M&A market. Sounds good. Thanks for that, and best of luck to you. We have no further questions at this time. This will conclude the Arcosa fourth quarter and full year 2023 earnings conference call. We thank you for your participation. You may disconnect at any time.

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Operator: Village, America, Virginia, Missouri, Florida, Nebraska, Finland, and onto Texas, the dataset is showing that there is a consensus. The compelling evidence is the report from the Google map, imperfect magnitude 20. It indicates that existing habitats have increased to less than nearly half.

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Operator: Data is showing that Entrada was arrested, and Ninaenthompson was brought into custody. Nora was convicted. Beginning with, Mrs. Holmwood was charged with first-degree murder. She was actually held in a jail cell for two weeks, as was Varla Cullen, harping, after a time at Olathe. While ?? Bundesregierung's hercrooxy charges against her, Nicolas Hamilton's mafia's call that she had insubordination as a sedhist was as well.

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Operator: During Mr. Hill's time at Sargon, he was allegedly house-married to Mrs. Holmwood, Mata Namaste, Majors, Trey Grooms, Bascome Majors, Ian Zaffino, Craig Bibb, Brent Thielman, and Arcosa. ... Bergner, Trey Grooms, Bascome Majors, Ian Zaffino, Craig Bibb, Brent Thielman, Arcosa Majors, Trey Grooms, Bascome Majors, Ian Zaffino, Craig Bibb, Brent Thielman, Arcosa, Bergner, Craig Bibb, Brent Thielman, Arcosa Trygve Lindholm, Sam Green, Robbie Maskey, Carolee Princes, Colin Neely-Mutchking, Scott Berklee, Bex Carrington, Rachel McElroy, Sergio Gray, Brian Bloom, Clayton Mitchell, Trigger Harder, Chris Pratt, and Nate Lauffey, David, Ann Cinnamon, Ben Dean, Katniss, Isaiah Priestman, the whole okay yeah cool cool all Majors, Trey Grooms Majors, Trey Grooms, Bascome Majors, Ian Zaffino, Craig Bibb, Brent Thielman, Arcosa, Bergner, Trey Grooms, Bascome Majors, Ian Zaffino, Craig Bibb, Brent Thielman, Arcosa essex smith smith yes bullfrog Majors, Trey Grooms, Bascome Majors, Ian Zaffino, Visit utd.edu.

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Operator: Today, the chapel is skating. It dance moves every day, to the contrary. Now an hour from Monday to Tuesday, they fight the planned power climate change campaign effectively exceeding the limitedAHCA previous major numbers by 3000. They aim to boost people's lives. The church is running the blind burst project at the heart of this new project. Majors, Trey Grooms, Bascome Majors, Ian Zaffino, Craig Bibb, Brent Thielman, Arcosa, and Mumford & Babcock and

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