Q2 2024 Arcosa Inc Earnings Call

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Brittany: Good morning, ladies and gentlemen, and welcome to the Arcosa, Inc. second quarter 2024 earnings conference call. My name is Brittany, and I will be your conference call coordinator today. As a reminder, today's call is being recorded. I would now like to turn the call over to your host, Erin Drabek, Director of Investor Relations for Arcosa. Ms. Drabek, you may begin.

Speaker Change: Good morning, ladies and gentlemen, and welcome to the Arcos that Inc. Second quarter 2024 earnings Conference call.

Aaron Rubik: My name is Britney and I'll be your conference call coordinator today as a reminder, today's call is being recorded I would now like to turn the call over to your host Aaron's Rubik director of Investor Relations for Arkansas, Mr. It back you may begin.

Erin Drabek: Good morning, everyone, and thank you for joining us. Today we will discuss Arcosa's second quarter 2024 earnings results, as well as provide a strategic update. With me today are Antonio Carrillo, President and CEO, Gail Peck, CFO, and Reid Essel, Group President for Construction Materials. Antonio will begin with some brief comments on our second quarter results and strategic updates. Gail will provide additional details on our financial results and guidance, and then Antonio will discuss the Stavola acquisition and other portfolio enhancing actions we announced yesterday before we open the call for questions.

Good morning, everyone and thank you for joining us.

Today, we will discuss our Christmas second quarter 'twenty 'twenty four earnings result, as well as to provide a strategic update with me today are Antonio Carrillo, President and CEO, Gail Peck, CFO and read ethanol group President for construction material.

Speaker Change: Antonio will begin with some brief comments on our second quarter results and strategic update.

Speaker Change: Gail will provide additional details on our financial results and guidance, then Antonio will discuss festival that acquisition and other portfolio enhancing actions, we announced yesterday before we open the call for questions.

Erin Drabek: A copy of the press release issued yesterday and the slide presentation for this morning's call are 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. A replay of the webcast will be available for one year on our website under the news and events tab.

A copy of the press release issued yesterday and the slide presentation for this morning's call are posted on our Investor Relations website, IR Dot arcos to dot com a replay of today's call will be available for shoot for the next two weeks.

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

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

Erin Drabek: Today's comment and presentation slides contain financial measures that have not been prepared in accordance with GAAP. Reconciliations of non-GAAP 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. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in 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-Q, expected to be filed later today. I would now like to turn the call over to Antonio.

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

Speaker Change: Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from such forward looking statements.

Speaker Change: These 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-Q expected to be filed later today.

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

Antonio Carrillo: Thank you, Erin, and good morning everyone. It's an exciting time for Arcosa. Our second quarter was highlighted by several events that, on a combined basis, demonstrate the steady advancement of our long-term strategic vision to grow in attractive markets and to reduce the complexity and cyclicality of our business. Let's start with slide four.

Antonio Thank: Thank you Erin and good morning, everyone.

An exciting time for our culture, our second quarter was highlighted by several several events, which on a combined basis demonstrate the steady advancement of our long term strategic vision to grow in attractive markets and to reduce the complexity and cyclicality of our business, let's start on slide four.

Antonio Carrillo: Yesterday, we announced strong financial results, posting record quarterly revenues and adjusted EBITDA while expanding adjusted EBITDA margins. We also raised the low end of our 2024 full-year adjusted EBITDA range. Importantly, we ended the quarter with a healthy balance. We also announced value-enhancing portfolio actions to accelerate our long-term strategy. We have entered into an agreement to acquire Stavola for 1.2 billion dollars, the largest acquisition in Arcosa

Antonio Thank: Yesterday, we announced strong financial results posting record quarterly revenues and adjusted it would be tough.

Antonio Thank: While expanding adjusted EBITDA margins. We also raised the low end of our 2020 for full year adjusted EBITDA range.

Antonio Thank: Importantly, we ended the quarter with a healthy balance sheet, we also announced value enhancing portfolio actions to accelerate our long term strategy.

Antonio Thank: We have entered into an agreement to acquire Stavola for $1 $2 billion, the largest acquisition in our coastal history as.

Antonio Carrillo: As a leading aggregate-centric and vertically-integrated construction materials company, Savola expands our geographic footprint into the nation's largest MSA, with increased exposure to lower-volatility, infrastructure-led end markets. We also executed a definitive agreement to divest our steel components business and completed the sale of other non-core assets for a total consideration of $137 million. Reformatting for the transaction as of June 30, construction products would represent 65% of Arcosa's adjusted EBITDA on an LTM or last 12-month basis.

As a leading aggregates centric vertically integrated construction materials company symbolics expand sort of a geographic footprint into the nation's largest MSA with increased exposure to lower volatility infrastructure led and markets.

Antonio Thank: We also executed a definitive agreement to divest our steel components business and completed the sale of other noncore assets for a total consideration of $137 million.

Antonio Thank: Pro forma for the transaction as of June 30, construction products would represent represents 65% of our calls us adjusted they beat that on an LTM last 12 month basis.

Antonio Thank: And consolidated pro forma LTM adjusted EBITDA margin would expand approximately 220 basis points as.

Antonio Carrillo: And consolidated performer LTM adjusted EBITDA margin would expand approximately 220 basis points. As we discuss these important announcements, you will hear three major themes today that align with our strategic vision. First, our businesses have strong momentum. Second, with the divestitures we announced, we are taking decisive actions to optimize our portfolio and enhance the quality of our earnings. And third, with a great team, strong market fundamentals, good cash flow visibility, and a solid track record, the time is right, and Arcosa is ready to take on a transformational acquisition and temporarily increase our leverage. I will discuss the acquisitions and divestitures in more detail later, but let me give you some additional color on how our businesses are performing. Turning to slide six.

Speaker Change: As we discussed it's important announcements you will hear three major themes today that are aligned with our strategic vision.

First our businesses have strong momentum second with the divestitures, we announced we are taking decisive actions to optimize our portfolio and enhance the quality of our earnings and third with a great team strong market fundamentals, good cash flow visibility and a solid track record the time is right.

Speaker Change: And of course is ready to take on a transformational acquisition and temporarily increased our leverage.

Speaker Change: I will discuss the acquisition and divestitures in more detail later, but let me give you some additional color on how our businesses are performing.

Speaker Change: Turning to slide six second quarter consolidated revenues increased 14% and adjusted EBITDA grew 31%, reflecting 230 basis points of margin expansion on an organic basis, we generated strong double digit adjusted EBITDA growth led by the market recovery underway in our cyclical businesses.

Antonio Carrillo: Second quarter consolidated revenues increased 14% and adjusted EBITDA grew 31%, reflecting 230 basis points of margin expansion. On an organic basis, we generated strong double-digit adjusted EBITDA growth led by the market recoveries underway in our cyclical businesses and operating improvements in our specialty materials and utility structures businesses. This was augmented by the accretive contribution from recent acquisitions, including Amaron Paul products, which we acquired in April, and several aggregate ball tons, which we completed in Florida, Texas, and Arizona last year.

Speaker Change: And operating improvements in our specialty materials and utility structures business.

Speaker Change: These wassa augmented by the accretive contribution from recent acquisitions, including I'm wrong bulk products, which we acquired in April and several I'd really get the bolt ons, which we completed in Florida that makes us in Arizona last year.

Antonio Carrillo: The integration of Amron is progressing well, and we are pleased with the complementary fit within our existing footprint. Also of note, we delivered the first wind towers from our new plant in Belen, New Mexico, which is performing in line with expectations and should become less diluted to margin as deliveries ramp up. Our aggregates business continued to benefit from strong pricing momentum during the quarter, which, together with disciplined cost control, compensated for volume headwinds due to elevated rainfall, particularly in Texas.

Speaker Change: The integration of Ameren is progressing well and we're pleased with the complementary fit within our existing footprint.

Speaker Change: Also note we delivered the first wind towers from our new plant in Berlin, New Mexico, which is performing in line with expectations and should become less dilutive to margin as deliveries ramp up.

Speaker Change: Our aggregates business continues to benefit from strong pricing momentum during the quarter, which together with disciplined cost control compensated for volume headwinds due to elevated rainfall, particularly in Texas.

Antonio Carrillo: Our strong performance in the second quarter demonstrates the strength of our infrastructure-led company, which has benefited from increased scale and more resilient platforms. We're very pleased with our year-to-date results, and the underlying trends in our businesses remain very positive. As you can see, we had an extremely productive second quarter. I would like to recognize all our employees for delivering a fantastic quarter while at the same time executing on the transformative transaction.

Speaker Change: Our strong performance in the second quarter demonstrates the strength of our infrastructure infrastructure led company.

Speaker Change: Which has benefited from increased scale and more resilient platforms. We're very pleased with our year to date results and the underlying trends in our businesses remained very positive.

Speaker Change: As you can see we have an extremely productive second quarter I would like to recognize all our employees for delivering a fantastic quarter, while at the same time executing on the transformative transactions I feel the work that he's behind these accomplishments and want to thank everyone for their incredible commitment to this great company I would like to turn over the call to.

Antonio Carrillo: I see all the work that is behind these accomplishments and want to thank everyone for their incredible commitment to this great company. I would like to turn the call over to Gail to discuss our second quarter results in more detail.

Speaker Change: To discuss our second quarter results in more detail.

Gail Peck: Thank you, Antonio. Good morning, everyone. I'll begin on slide 8.

Speaker Change: Thank you Antonio good morning, everyone.

Speaker Change: Hi.

Gail Peck: Starting with construction products, second quarter revenues increased 4% year-over-year. On a freight-adjusted basis, revenues increased 6%, with growth split evenly between organic and acquisition contributions. Second quarter adjusted segment EBITDA increased 22% primarily due to the accretive impact of recent acquisitions and the operating improvements in our specialty materials and trench shoring businesses. Rate-adjusted segment EBITDA margin expanded to 28%, up 360 basis points year-over-year and 160 basis points sequentially from the first quarter.

Starting with construction products second quarter revenues increased 4% year over year on a freight adjusted basis revenues increased 6% with growth.

Speaker Change: The split evenly between organic and acquisition contribution.

Speaker Change: Second quarter adjusted segment EBITDA increased 22%, primarily due to the accretive impact of recent acquisitions and the operating improvements in our specialty material into ensuring businesses.

Speaker Change: Great adjusted segment EBITDA margin expanded to 28%.

Speaker Change: <unk> hundred 60 basis points year over year, and 160 basis points sequentially from the first quarter.

Gail Peck: Turning to our aggregates business, which includes both natural and recycled aggregates, pricing momentum remained strong, with average organic pricing up low double digits in the second quarter. The contribution from acquisitions was accretive to overall average selling price. However, total volumes were down low single digits, and organic volumes were down mid-single digits.

Speaker Change: Turning to our aggregates business, which includes both natural and recycled aggregates.

Momentum remains strong with average organic pricing up low double digits in the second quarter. The contribution from acquisitions was accretive to overall average selling prices.

Speaker Change: Total volumes were down low single digits.

Speaker Change: Volumes were down mid single digits.

Gail Peck: Elevated rainfall constrained volume in the quarter, but demand has been favorable when weather conditions are normal. The accretive impact of recent acquisitions and modest organic growth resulted in low double-digit adjusted EBITDA growth accompanied by higher margin year-over-year. Within specialty materials, freight-adjusted revenues increased by low-double digits driven by strong pricing gains in lightweight aggregates and higher volume in pricing in plus. Operational improvements in this business resulted in higher adjusted EBITDA and contributed approximately half of the year-over-year margin improvement for this segment. Revenues in our Trent Shoring business increased on higher volumes.

Speaker Change: Elevated rainfall constrained volume in the quarter. However, demand has been favorable winter weather conditions are normal.

Speaker Change: The accretive impact of recent acquisitions and modest organic growth resulted in low double digit adjusted EBITDA growth accompanied by higher margin year over year.

Speaker Change: In specialty materials freight adjusted revenues increased low double digits, driven by strong pricing gains and lightweight aggregate and higher volume and pricing and faster operational improvements in this business resulted in higher adjusted EBITDA and contributed approximately.

Speaker Change: The year over year margin improvement for the segment.

Speaker Change: Revenues in our trench shoring business increased on higher volume operating improvements resulted in higher adjusted EBITDA and margin expansion.

Gail Peck: Operating improvements resulted in higher adjusted EBITDA and margin expansion. Moving to engineered structures, revenues increased 33% due to higher utility structure and wind tower volumes and the contribution from the recently acquired Amarom business, which drove about one-third of the increase. Adjusted segment EBITDA grew 48%, outpacing the increase in revenues, and the margin expanded 160 basis points. Strong organic growth in both wind towers and utility structures was supplemented by the accretive impact of Amaranth during the period.

Speaker Change: Moving to engineered structures revenues increased 33% due to higher utility structure in wind tower volume and the contribution from the recently acquired Ameron business, which drove about one third of the increase.

Speaker Change: Adjusted segment EBITDA grew 48%.

Speaker Change: Increase in revenue and margin expanded 160 basis points.

Speaker Change: Organic growth in both wind towers and utility structures was supplemented by the accretive impact of Ameren.

Gail Peck: Organic margin was up approximately 110 basis points year-over-year and roughly 300 basis points sequentially due to improved margin within utility and related structures and less dilutive impact from the ramp-up at our two new facilities in New Mexico and Florida. Order activity in utility structures remains healthy, with attractive margins. In wind towers, we did not book any new orders during the quarter, but we continue to have active discussions with our customers about future needs.

Speaker Change: Yes.

Speaker Change: Organic margin was up approximately 110 basis points year over year, and roughly 300 basis points sequentially due to improved margin within utility and related structures and less dilutive impact from the ramp up at our.

Speaker Change: In new Mexico, and Florida.

Speaker Change: Order activity and utility structures remains healthy with attractive margin in wind towers, we did not book any new orders during the quarter, but we continue to have active discussions with our customers on future needs.

Gail Peck: We ended the quarter with a backlog for utility, wind, and related structures of $1.3 billion and expect to deliver 37% during the remainder of this year. Finally, we recognize a gain of $7.5 million from the sale of a non-operating facility that supported a previously divested business. This gain has been excluded from adjusted segment evictions.

Speaker Change: Ended the quarter with a backlog for utility wind and related structures of one 3 billion.

Speaker Change: And expect to deliver 37% during the remainder of this year.

Speaker Change: Finally, we recognized a gain of $7 $5 million from the sale of the nonoperating facility. That's supported a previously divested business. This gain has been excluded from adjusted segment EBITDA.

Gail Peck: According to Transportation Products, segment revenues were roughly flat, and higher barge revenues were mostly offset by lower steel components revenues. Barge revenues increased 4%, driven by higher hopper barge volumes. Adjusted segment EBITDA increased 7%, and margin expanded by 90 basis points. As expected, margin declines sequentially from the first quarter as one of our barge facilities prepares to change over to tank barge production. During the quarter, we received barge orders totaling approximately $33 million, primarily for tank barges, representing a book-to-bill of $0.4. Orders for liquid barges continued to demonstrate momentum for a third consecutive quarter, and inquiry activity remained solid.

Speaker Change: Turning to transportation product segment revenues were roughly flat as higher barge revenue was mostly offset by lower steel components.

Speaker Change: <unk> revenues increased 4% driven by higher Hopper barge volumes adjusted segment, EBITDA increased 7% and margin expanded by 90 basis.

Speaker Change: As expected margin declined sequentially from the first quarter is one of our barge facilities prepares to change over to tank barge production.

Speaker Change: During the quarter, we received orders totaling approximately $33 million primarily for tank barges representing.

Speaker Change: Our book to Bill Jones with four orders for liquid barges continues to demonstrate momentum.

Speaker Change: Good quarter and inquiry activity remains solid.

Gail Peck: Our total barge backlog at the end of the quarter was $252 million, roughly flat with the start of the year, and we expect to deliver approximately 70% during the remainder of 2022. I'll take a moment to briefly address our cash flow and balance sheet position. Year-to-date, we have generated $119 million of operating cash flow, which is down $36 million year-over-year due to increased working capital requirements, primarily related to higher receivables as our cyclical businesses ramp up.

Speaker Change: Total backlog at the end of the quarter with $252 million roughly flat with the start of the year and we expect to deliver approximately 70% during the remainder of 2024.

Speaker Change: I'll take a moment to briefly address our cash flow and balance sheet position year to date, we have generated $119 million of operating cash flow, which is down $36 million year over year due to increased working capital requirements, primarily related to higher receivables as a cyclical businesses ramp up.

Gail Peck: Year-to-date capital expenditures were $102 million, up slightly from the prior year. This translated into a year-to-date pre-cash flow of $24 million, down $58 million from the prior period. We are maintaining our full-year CapEx guidance of $190 to $205 million. We ended the quarter with a healthy balance sheet to support the acquisition of Stavola, with net debt to adjusted EBITDA 1.5 times and available liquidity of $393 million. I'll conclude on slide nine with some comments on our increased 2024 guide.

Speaker Change: Year to date capital expenditures were $102 million up slightly from the prior year. This translated into year to date free cash flow of $24 million.

Speaker Change: $58 million from the prior period.

Speaker Change: We are maintaining our full year capex guidance of $190 million to $205 million. We ended the quarter with a healthy balance sheet to support the acquisition of civil up with net debt to adjusted EBITDA, One five times.

Speaker Change: 330 $393 million.

Speaker Change: I'll conclude on slide nine with some comments on our increased 2012.

Gail Peck: We are very pleased with our year-to-date results. Our businesses are healthy and performing well. Accordingly, we tightened our full year 2024 revenue guidance range and raised the low end of our adjusted EBITDA guidance. The new adjusted EBITDA midpoint of $430 million represents 24% growth year-over-year, adjusting for the gain on Lancel, with 120 basis points of anticipated margin expansion. And this revised guidance is before any adjustment for the newly announced Strategic Act. I'll now turn it back to Antonio for further discussions on yesterday's announcement.

Speaker Change: We are very pleased with our year to date results, our businesses are healthy and performing well.

Speaker Change: Accordingly, we tightened our full year 2020 for revenue guidance range and raised the low end of our adjusted EBITDA guidance range. The new adjusted EBITDA midpoint of $430 million represents 24% growth year over year adjusting for the gain on land sale was 120 basis points of anticipated margin expansion.

Speaker Change: And this revised guidance is before any adjustment for the newly announced strategic action.

Speaker Change: Now I'll turn it back to Antonio for further discussion on yesterday's now.

Antonio Carrillo: Thank you, Gail. Let's now move to yesterday's strategic announcements, which optimize our portfolio and enhance the quality of our earnings. First, on slide 11, we are excited to announce the $1.2 billion acquisition of Stavola, a leading provider of construction materials with a strong position in its core New York-New Jersey markets, the nation's largest MSM. The acquisition enhances our construction products platform with high-margin, vertically integrated aggregates and asphalt operations. With LPM adjusted at a beta of $100 million, the purchase price represents 12 times the gross multiple and 10.7 times the net multiple, including the expected net tax benefit.

Antonio Thank: Thank you Gail.

Antonio Thank: Uh huh.

Antonio Thank: Let's now move to yesterday strategic announcements, which optimize our portfolio and enhance the quality of our earnings first on slide 11, we are excited to announce the $1 2 billion acquisition of Stavola, a leading provider of construction materials with a strong position in its core New York, New Jersey markets the nations largest MSA.

Antonio Carrillo: Based on Stavola's financial attributes, we expect the acquisition to be immediately accretive to free cash flow per share, neutral to cash EPS in 2025, and accretive to cash EPS in 2021. HSR and regulatory approvals have been obtained, and we anticipate the transaction will close in the fourth quarter.

The acquisition enhances our construction products platform with high margin vertically integrated aggregates and asphalt operations.

Antonio Thank: With LTM adjusted the beat that was 100 million the purchase price represents 12 times Rosemont people and 10 seven times net multiple including expected net tax benefits.

Antonio Thank: Based on stabilized financial attributes, we expect the acquisition to be immediately accretive to free cash flow per share neutral to cash EPS in 2025 and accretive to cash EPS in 2026 eight.

Antonio Thank: HSR regulatory approvals have been obtained and we anticipate the transaction will close in the fourth quarter.

Antonio Thank: Turning to slide 12.

Antonio Carrillo: Stavola is aggregate-led, which is an attribute that we prioritize in an acquisition screening. Aggregates provide 56% of adjusted EBITDA, and the FOB asphalt operations are highly integrated with its hard rock quarries. Stavola's industry-leading adjusted margin of roughly 35%, on an LTM basis, is highly accretive to the construction product segment and to Arcosa overall, demonstrating a strong competitive advantage. The company has been in business for close to 80 years and has built a strategic network of five hardwood quarries and three recycled aggregate facilities that produce approximately 5.7 million tons annually.

Stavola: Stavola, it's aggregates led which you said an attribute that we prioritizing them acquisition screening.

Speaker Change: Aggregates provide 56% if I just didn't beat that and the F. O B asphalt operations are highly integrated with its hard rough worries.

Speaker Change: Diebold is elite industry, leading adjusted EBITDA margin of roughly 35%.

Speaker Change: On an LTM basis is highly accretive to the construction bulk segment until oracles overall, demonstrating a strong competitive advantage there.

Speaker Change: The company has been in business for close to 80 years and has been the strategic network of five hardwood Boris and three recycled aggregates facilities that produce approximately $5 7 million tons annually.

Antonio Carrillo: They also have 12 strategically located asphalt plants which, for the most part, deliver their products FOB the plant. The company has approximately 350 million tons of estimated hard rock reserves. Tavola brings a talented and experienced management team who will continue to run the company, and we look forward to welcoming them to the Arcosa family.

Speaker Change: They also have 12 strategically located asphalt plants, which for the most part deliver that approach F O b the plants.

Speaker Change: The company has approximately 350 million tons of waste he made it hard rock reserves.

Diebold: Diebold brings a talented and experienced management team, who will continue to run the company and we look forward to welcoming them.

Speaker Change: To the Arco's family.

Speaker Change: Turning to slide 14.

Antonio Carrillo: We're also optimizing our portfolio in other ways. Reducing the complexity and cyclicality of our portfolio has been a pillar of our long-term strategy since inception. Yesterday, we announced the sale of our steel components business, one of our silica businesses that primarily serves the North American railcar industry, to Stellex Capital Management. With LTM 2024 revenues of about $150 million, our steel components business was small and not core to our costs. Following the COVID downturn, the business ran roughly at break-even EBITDA levels in 2021 and returned to profitability as market conditions improved, with LTM 2024 adjusted EBITDA margins being diluted to both transportation product segments and to our costs overall.

Speaker Change: We're also optimizing our portfolio in other ways, reducing the complexity and cyclicality of our portfolio has been a pillar of our long term strategy since inception.

Yesterday, we announced the sale of our steel components one of our cyclical businesses. That's primarily serves the north American railcar industry to Sterling capital management with the M. P M.

Speaker Change: For revenues of about 150 million are still components business was small and not core to our culture.

Speaker Change: Following the call with that I'll turn the business kind of the business run roughly a breakeven to beat that levels in 2021 and return to profitability as market conditions improve with L. P. M 2024, adjusted EBITDA margin diluted the both transportation problems segment outdoor it goes overall.

Speaker Change: The transaction is expected to close in the third quarter.

Antonio Carrillo: The transaction is expected to close in the third quarter. I want to personally thank all the employees of our Steel Components business for the incredible work they have done over many years. I have had the privilege of getting to know many of our employees in Pennsylvania, and they will be missed by the Arcosa team. However, at the same time, we found a new owner with a focus on the rail market who will be able to support the goals of this business. I look forward to seeing all the great things you will achieve in the future.

Speaker Change: I want to personally thank all the employees of our steel components business for the incredible work. They have done over many years I have had the privilege to get to know many of our employees in Pennsylvania, and they will be missed by the airports have been at the same time, we found a new owner with a focus on the rail market, we'll be able to support the goals of this busy.

Speaker Change: I look forward to seeing all of the great things you will achieve in the future.

Antonio Carrillo: In addition to selling the steel components business, we continued pruning our portfolio in the second quarter. First, we sold a non-operating facility in Engineers Rock. We also sold a subscale asphalt business which was operating at a loss. Total consideration for the three diversity troops was $137 million and will be used to reduce debt.

Speaker Change: In addition to selling the steel components business, we continued pruning our portfolio in the second quarter.

First we sold non operating facility in engineered structures.

Speaker Change: We also sold a subscale asphalt business, which was operating at a loss.

Total consideration for the three divestitures was $137 million and will be used to reduce debt.

Antonio Carrillo: As we continue focusing on our margin, during the quarter, we also closed a small underperforming aggregate operation in West Texas and redeployed the equipment to other locations. Turning to slide 15, let me add some additional color on the strategic rationale for the transaction. Stavola is an excellent fit for us and the key to our overall strategy of growing in an attractive market. It's a transformative acquisition, not only in terms of scale but also in terms of a geographic footprint, which, upon closing, will include a sizable presence in the largest MSA in the country.

Speaker Change: As we continue focusing on our margin during the quarter. We also closed a small underperforming aggregate operations in west, Texas and redeploy the equipment to other locations.

Speaker Change: Turning to slide 15, let me add some additional color on the strategic rationale for the transaction stuff.

Speaker Change: <unk> always had an excellent fit for us and keep to our overall strategy of growing and attractive markets et.

Speaker Change: Is that a transformative acquisition not only in terms of scale, but also in terms of our geographic footprint, which upon closing will include a sizable presence in the largest MSA in the country.

Antonio Carrillo: The company is well positioned in this stable infrastructure-led market, with its facilities ideally located to service approximately 85% of New Jersey's population. Additionally, we believe this acquisition will provide a platform for future growth opportunities and represent an attractive valuation for a scaled, aggregates-led business with premium financial attributes. These transactions demonstrate our commitment to increasing our exposure to higher-value ad construction products while simplifying and optimizing the portfolio to reduce higher earnings to produce higher earnings and profitability. Slide 16 shows Arcosa's expanded geographic footprint, including Estabola. We will now operate in 13 of the top 50 MSAs, up from only 5 in 2018. Moving to slide 17.

Speaker Change: The company is well positioned in these stable infrastructure led market. We facilitate facility is ideally located to service approximately 85% of new Jersey's population.

Additionally, we believe this acquisition will provide a platform for future growth opportunities represent an attractive valuation for a scaled aggregates led business with premium financial attributes.

Speaker Change: These transactions demonstrate our commitment to increasing our exposure to higher higher value at construction problems, while simplifying and optimizing the portfolio to reduce higher everything.

To produce higher revenue and profitability.

Speaker Change: Slide 16 shows our calls us expanded geographic footprint, including Stavola.

Speaker Change: We will now operating in 13 of the top 50, Msas up from only five and 2018.

Speaker Change: Moving to slide 17.

Antonio Carrillo: You can see the breakdown of Stavola Demand Drivers. The company is over-indexed to infrastructure demand, both in aggregates and asphalt, providing stable demand. Slide 18 shows how the acquisition enhances our construction products portfolio. The Proforma portfolio mix has aggregates and aggregate-based products accounting for 76% of the segment's LTM revenue.

Speaker Change: You can see the breakdown will step all of the main drivers the company, it's over indexing or the infrastructure demand both in aggregates and asphalt providing stable demand.

Speaker Change: Slide 18 shows how the acquisition enhances our construction products portfolio.

Speaker Change: Pro forma portfolio mix has aggregates and aggregates based brothers accounting for 76% of the segment's LTM revenues on a pro forma basis, our construction products adjusted EBITDA adjusted segment. They beat that margin expanded by nearly 260 basis points to 26, 1%.

Antonio Carrillo: On a pro forma basis, our construction products adjusted segment EBITDA margin expands by nearly 260 basis points to 26.1%. We're taking strategic actions that are expected to drive strong, sustainable growth. This acquisition and the divestiture of steel components underscore this, as shown on slide 19. At the time of our separation in 2018, construction products accounted for about one-third of total Arcosa EBITDA.

Speaker Change: We're taking strategic actions that are expected to drive strong sustainable growth This acquisition and the divestiture of steel components underscores. This is shown on slide 19.

Speaker Change: The time of our separation in 2018 construction products accounted for about one third of total like bar close I beat that pro.

Antonio Carrillo: Proforma for the SABOL acquisition and the sale of steel components, construction products will account for roughly two-thirds of our total adjusted EBIT. This marks an important inflection point in our business as these strategic actions accelerate the execution of our long-term vision shown on slide 20. Today we have added a fifth pillar to our strategy, our commitment to a healthy balance sheet through prudent delivery. This will be our priority in the near term.

Speaker Change: Pro forma for the small acquisition and the sale of steel components construction products will account for roughly two thirds of our total adjusted they beat that.

Speaker Change: This marks an important inflection point in our business as these strategic.

Speaker Change: Actually let's accelerate the execution of our long term vision shown on slide 22. They we have added a fifth pillar to our strategy our commitment to a healthy balance sheet through prudent deleveraging.

These will be our priority in the near term.

Antonio Carrillo: As shown on slide 21, over the past six years, we have strategically invested to expand our construction products business, both in terms of product lines and geographic regions, because we are attracted to the long-term market fundamentals, sustainable competitive advantages, and the fragmented industry structure. To date, we have invested approximately $1.5 billion focused on aggregate-led opportunities. We have a purchase price of $1.2 billion. Stavola nearly doubles that investment in construction products.

Speaker Change: As shown on slide 21 over the past six years, we have strategically invested to expand our construction products business. Both in terms of product lines and geographic regions. Because we were attracted to the long term market fundamentals sustainable competitive advantages and the fragmented industry structure debate, we have invested approximately $1 5 billion.

Speaker Change: Focused on aggregates led opportunities we have purchase price of $1 2 billion stable stable at nearly doubled study investment in construction products.

Antonio Carrillo: This transformational acquisition will increase our leverage beyond our targeted range in the near term, so I would like to take a few minutes to discuss why this is the right time for Arcosa to take on this acquisition and temporarily increase our leverage. First, as our recent results demonstrate, each one of our businesses is performing well. The outlook for our growth businesses is bright, with healthy market fundamentals and increased infrastructure spending. Furthermore, our cyclical businesses are seeing positive market indicators, and we anticipate a multi-year upcycle for both wind towers and barges, supported by our current backlog visibility.

Speaker Change: This transformational acquisition will increase our leverage beyond our targeted range in the near term.

Speaker Change: I'd like to take a few minutes to discuss why do you see the right time for a closer to take on these acquisition and temporarily increased our leverage.

Speaker Change: First our recent results demonstrate each one of our businesses are performing well the outlook for our growth businesses is bright with healthy market fundamentals and increased infrastructure spending.

Speaker Change: Are there more are cyclical businesses are seeing positive market indicators, and we anticipate a multiyear up cycle for both wind towers and barghest supported by our current backlog visibility.

Antonio Carrillo: Taken together, we have a good line of sight to increase cash flow generation, which gives us confidence to take on additional financing. Second, for the past two years, we have made sizable investments in growth capital expenditures. Most of these projects are on track to be completed by the end of the year. As these plants ramp up, they will start contributing to organic growth and provide incremental cash flow.

Speaker Change: Taken together, we have good line of sight to increase cash flow generation, which gives us confidence to take on additional financing.

Speaker Change: Thank him for the past two years, we have made sizable investments in growth capital expenditures. Most of these projects are complete or on track to be completed by the end of the year.

Speaker Change: As these plants ramp up that they will start contributing to organic growth and provide the incremental cash flow at the same time, we plan to reduce growth capex in the near term to focus on reducing debt. We also have opportunities to generate cash by focusing on working capital reductions.

Antonio Carrillo: At the same time, we plan to reduce growth capex in the near term and focus on reducing debt. We also have opportunities to generate cash by focusing on working capital reduction. Third, we have successfully completed many acquisitions over the past six years. We have an experienced team and improved systems that allow for effective integration. An opportunity of this size does not come around often, and Arcosa is in a healthy financial position to take advantage and grow our plant. The purchase price for Stavola will be paid in cash, and we have committed financing in place.

Speaker Change: Third we have successfully completed many acquisitions over the past six years, we have an experienced team and improved systems that allow for effective integration.

Speaker Change: And the opportunity of this size does not come around often on our cost base and a healthy financial position to take advantage and grow our platform.

Speaker Change: The purchase price for Stavola will be paid in cash and we have committed financing in place.

Antonio Carrillo: For Permanent Financing, we plan to tap the long-term straight-debt market. On a performance basis, our leverage ratio is 3.7 times, and we are focused on delivering the balance. We have a proven track record of paying down debt quickly following the execution of requisitions, as you can see on slide 22, with debt reduction as a near-term capital allocation priority. Our goal is to return to our targeted ratio of 2 to 2.5 times net leverage within 18 months of the acquisition closing date.

Speaker Change: For permanent financing, we plan to tap the long term straight debt market on a pro forma basis, our leverage ratio was three seven times and we are focused on delevering. The balance sheet. We have a proven track record of paying down debt quickly following execution of acquisitions as you can see on slide 22.

Speaker Change: Debt reduction is our near term capital allocation priority.

Speaker Change: Our goal is to return to our targeted ratio of two to two and a half.

Speaker Change: Times net leverage within 18 months of the acquisition closing date, we're financially disciplined I'm firmly committed to maintaining a healthy balance sheet.

Antonio Carrillo: We're financially disciplined and firmly committed to maintaining a healthy balance. Before opening the call for Q&A, let me return to my primary message, which is that our strategy is working, and we continue to focus on profitable and sustainable growth. In almost six years, Arcosa has made significant progress. We are pleased with our results for the first half of 2024, and we are well-positioned to create additional long-term value for all our stakeholders.

Speaker Change: Before opening the call for Q&A, Let me return to my primary message, which is that our strategy is working and we continue to focus on profitable and sustainable growth.

Speaker Change: Six years of course has made significant progress we are pleased with our results for the first half of 'twenty one.

Speaker Change: <unk> four and we are well positioned to create additional long term value for all our stakeholders.

Antonio Carrillo: As I reflect on how far we've come and the initiatives we have underway for 2024 and beyond, I am the most excited I have ever been about the future potential of Arcosa. We're now ready to take your questions. Operator?

Speaker Change: If I reflect on how far we've come and the initiatives we have underway for 'twenty 'twenty four and beyond I am the most excited I have ever been about the future potential of our puzzle. We're now ready to take your questions operator.

Operator: Thank you. At this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star and 1 if you would like to ask a question. We will take our first question from Ian Zaffino on behalf of Oppenheimer. Your line is now open.

Speaker Change: Thank you at this time, if you would like to ask a question. Please press the star and one on your telephone keypad you may remove yourself from the queue at any time by pressing star to once again that is star one if he would like to ask a question. We will take our first question from Ian Zaffino with Oppenheimer. Your line is now okay.

Ian Zaffino: All right, great. Thank you very much. Congratulations on everything, kind of all around.

Ian Zaffino: Alright, great. Thank you very much adulation.

Speaker Change: Everything kind of all around here.

Antonio Carrillo: Thank you, Ian.

Ian Zaffino: Thank you Ian.

Antonio Carrillo: I wanted to ask you, on the acquisition, as far as the market location is concerned, I know it's getting into a little more markets, but is there a further opportunity to maybe consolidate around that market? Is this going to be a platform to do so? I know you have some deleveraging to do on the media front, but how do we think about this longer term and how it fits into the portfolio?

Ian Zaffino: I wanted to ask you on the acquisition.

Speaker Change: As far as the market location.

And I was getting into all of our markets, but is there a further opportunity to maybe consolidate around that market. As this can be a platform to do so I know you had some deleveraging to doing that.

Speaker Change: But how do we think about this longer term and how it fits into the portfolio.

Antonio Carrillo: I'll give you some color, Ian. It's a very, very, very stable market when you look at the financials over a long period of time. It's very stable with high margins. You know, a very good market. This company has done a great job expanding over the last several years, and there are opportunities to consolidate not only in the main market of the New York and New Jersey area, but they also have other quarries around it.

Speaker Change: Thanks.

Speaker Change: Yeah, I'll give you some color again, it's a it's a very very very stable market. When you look at the financials over a long period of time, it's a very stable with high margins.

Speaker Change: You know a very good market. This company has done a great job expanding over the last several years.

Speaker Change: And if.

Speaker Change: There are opportunities to consolidate not only in the main market of the of the New York, New Jersey area, but they also have other corridors around it. So there are opportunities one thing that's very interesting when you look at the competitors in the region you have many of the big guys surround it's which is something we like we like we like to compete against us.

Antonio Carrillo: So there are opportunities. One thing that's very interesting, when you look at the competitors in the region, you have many of the big guys around it, which is something we like. We like to compete against some of the larger peers, but there are also some smaller bolt-on opportunities for the future. As I said before, our priority right now is leveraging, and that's going to be our focus. And there are opportunities to grow organically and implement some other actions to improve efficiency, et cetera, but also to learn from this company. This company has done a fantastic job, and there are things we can bring to them, but there are also things we can learn from them. I'm so very excited about it.

Speaker Change: The larger larger peers.

Speaker Change: But there are also some smaller bolt on opportunities for the future as I said before our priority right now is delivering deleveraging and that's going to be our focus and there are opportunities to grow.

Speaker Change: Organically on the implement some some other actions to improve efficiency et cetera, but also to learn from this company. This company has done a fantastic job of them. There are things, we can bring to them, but there are also things we can learn from them. So very excited about it.

Antonio Carrillo: Okay, thank you. And then, you know, just as far as order inquiries and the backlog and the order book, you know, on both sides of it, on the supply side, are we still expecting a pretty large order to be coming your way? And if so, you know, how do we get there? Or how do you guys get there to seal that deal? And then on the BART side, in discussions with customers, how are they now talking about seal prices?

Speaker Change: Okay. Thank you and then.

Speaker Change: Just as far as order inquiries in the backlog and the order book.

Speaker Change:

Speaker Change: On both sides of it on the wind side.

Speaker Change: Are we still expecting a pretty large water to.

Speaker Change: To be coming your way.

Speaker Change: And if so how do we get there or how do you guys get there.

Speaker Change: That deal and then on the barge side in discussions with customers. How are they now talking about steel prices are we at a level now where we can maybe reach mid cycle EBITDA in that business and I think before you thrown out something north of 50 million as far as Oh.

Antonio Carrillo: Are we at a level now where we could maybe reach mid-cycle EBITDA in that BART business? And I think before you've thrown out something, you know, north of 50 million as far as a mid-cycle EBITDA number for that business, because maybe 60 or 70, maybe help us understand where we are in that process.

Speaker Change: Mid cycle EBITDA number for that business.

Speaker Change: Because maybe 60 or 70.

Maybe help us understand where are we on that process as well. Thanks.

Antonio Carrillo: Sure, let me start with wind. You know, I've said it a few times, but wind is a business that we don't expect to get, you know, $10 million here and $10 million there. It's a very consolidated market. There are really two big players in the U.S. and some smaller players in terms of cost. And I think if you think about the Inflation Reduction Act that was passed just a couple of years ago.

Speaker Change: Sure, let me start with wind.

Speaker Change: I've said it a few times, but when they say business that we we don't expect to get you know 10 million here in 10 million. There there is a very consolidated market. So.

Speaker Change: There's really two big players in the U S. In some smaller players in terms of customers.

Speaker Change: And I think if you if you think about the inflation reduction act that was passed just a couple of years ago.

Antonio Carrillo: The time to develop projects, and we're spending time with developers and other people talking, it takes time for these projects to get developed. Normally, when we get orders, large orders for towers, it's not for... New Mexico is specific because we have a specific order for a specific project, but in general, we get a blank order for a region, for a certain part of the country.

Speaker Change: You know the time to develop projects and we're spending time with developers and other people talking but it takes time for these projects to get developed.

Speaker Change: And.

Speaker Change: I normally when we get all of the large order for $4 is not for.

Speaker Change: The new Mexico specific because we have a specific order for a specific project, but in general we get a blank, Florida for that region for a certain part of the country.

Antonio Carrillo: And there are many wind farms being built there. So I think as our customers build their book and they get more clarity on the number of projects and the size of projects, et cetera, we're in discussions with them, as Gail said in her script. And it might not be this quarter or next quarter, but our plan is to continue ramping up our production. As I've said before, we operate a relatively low capacity steel mill.

Speaker Change: And Theres, many wind farms being built there so I think as our customers build their book tenders, they get more clarity on the amount of projects and the size of projects et cetera, and we're in discussions with them as Gail said in her script.

Speaker Change: And.

It does not.

Speaker Change: Not be this quarter or next quarter, but it's going to we expect our plan is to continue ramping up our production as I've said before we operate at relatively low capacity steel.

Antonio Carrillo: So I think over the next year or so, you should see us get additional backlog. And that's our expectation, to get additional backlog over the next year. Right now, we have very good visibility into 2025.

Speaker Change: So I think over the next year or so you should see us get additional backlog.

Speaker Change: And that's our expectation to get additional backlog over the next year right. Now we have very good visibility into 2025. So we are really really good spot to be able to we don't want to give away. The capacity. We I think we have a.

Antonio Carrillo: So we are in a really good spot to be able to, we don't want to give away the capacity. I think we have a very nice position to negotiate good agreements with our customers over the next year. On barges, Gail mentioned specifically liquid barges, we continue to see very robust demand. When you look at the latest report, the fleet for liquid barges is about the same age as dry cargo. And normally, liquid barge customers are a lot more demanding about the quality and how to keep up their barges.

Speaker Change: Very nice position to negotiate agreements with our customers over the next year.

Speaker Change: On barges.

Speaker Change: Gail mentioned, specifically on liquid barges, we continue to see very very robust demand. When you look at the latest report liquid barge a fleet for liquid barges to about the same age as they are the dry dry cargo.

Speaker Change: And.

Speaker Change: Normally liquid barge customers are a lot more demanding on the quality on the on how to keep up their barghest. So we're seeing really good things we launched in the last couple of weeks. Our first 30 K in our in our planting echelon C. D that as Gail mentioned, we have transition from bright carnival to liquid cargo. So both of our plants are in.

Antonio Carrillo: So we're seeing really good things. We launched in the last couple of weeks our first 30K in our plant in Ashland City, and as Gail mentioned, we have transitioned from dry cargo to liquid cargo. So both of our plants are in their sweet spot of the products they need to be making.

Gail: Their sweet spot of the products they need to be making.

Antonio Carrillo: I think that the mid-cycle, the previous high bar for the business, was about $120 million in terms of EBITDA. So mid-cycle, we did something around $60 million or so. And right now, what we're focused on again, seeing the demand that's going to come because of the age of the fleet and the replacement that's needed, and when you see the utilization of the fleet is very high.

Speaker Change: I think the mid cycle that the previous set a high bar for the business about $120 million in terms of a beat that's what mid cycle with some something around 60 million or so.

Speaker Change: I right now what we're focused on again.

Speaker Change: Seeing the demand that's going to come because of the of the age of the fleet and the replacement that's needed and when you'll see the utilization of the fleet is very high.

Antonio Carrillo: What we want to conserve is our capacity and be able to focus on margins and sell it in a nice place. Steel prices are helping. Steel prices have come down a lot. So we are, I think those things are converging for us to continue to focus on gaining market share, gaining pricing, and margin on the backlog. So I'm not worried that we had a low book to build this quarter. I think we're in a good spot. I think we have really good visibility into 2025, and what we're focused on is making sure that when we get orders, we get the right margin.

Speaker Change: What we want to conserve as a capacity and be able to focus on margins and sell it at a nice place steel prices are healthy steel prices have come down a lot. So we are I think those things are converging for us to continue to focus on gaining market getting that pricing in the mall.

Speaker Change: On the backlog so I'm not worried that we had a low book to Bill This quarter I think we're in a good spot I think we have greatly good visibility to 'twenty to 'twenty five and what we're focusing on making sure that when we get all of them as we get the right margin for them.

Ian Zaffino: Okay, great. Thank you very much.

Speaker Change: Okay, great. Thank you very much.

Operator: Thank you. We'll take our next question from Julio Romero with Dodi and Company. Your line is now open.

Speaker Change: Thank you we'll take our next question is from Julio Romero with Sidoti <unk> Company. Your line is now open.

Alex Hantman: Yes, hello. This is Alex on behalf of Julio. Congratulations on the quarter and thanks for taking questions. Thank you, Alex. Absolutely. On the acquisition, how would you have us think about further portfolio simplification?

Speaker Change: Yes, Hello. This is Alex on for Julio Congrats on the quarter and thanks for taking questions.

Speaker Change: Thank you Alex.

Alex: Absolutely on the acquisition and how would you have us think about further portfolio simplification.

Antonio Carrillo: Well, you know, Alex, I think it's, you know, part of our strategy, as I mentioned, is always to simplify and reduce the cyclicality of the company. I think there's always opportunities for simplification. As I've mentioned before, you know, M&A, both on the buying and the selling side, sometimes it takes on a life of its own. I've said it several times.

Speaker Change: Well you know.

Alex: Alex I think.

Alex: It's.

Speaker Change: You know part of our strategy as I mentioned, and it's always to simplify and reduce the cyclicality of the company.

Yeah, I think there's there's always opportunities for simplification and as I've mentioned before you know M&A is both on the buying and the selling side, sometimes it's it's it takes a life of its own and I said it several times. Sometimes you you you buy things that you want to appear out of nowhere or some.

Antonio Carrillo: Sometimes you buy things that you want to appear out of nowhere, or sometimes when you want something, it's not available. Same thing when you want to sell. We need to, you know, every business we've sold, the conditions have to be right, the buyers have to be in the right place. So I think, you know, we will continue to simplify the company, but it's going to take some time. And, you know, as part of, as a show, to show you that we are committed.

Speaker Change: Times when you want something that does he is not available same thing when you want to sell we need to you know every business we've sold.

Speaker Change: The conditions have to be right the buyers have to get in the right place. So.

Speaker Change: I think you know we will continue to simplify the company.

Speaker Change: But the but the but.

Speaker Change: But it's going to take some time and you know as part of a cycle that's a show.

Speaker Change: To show you that we are committed to we just sold steel components two years ago, we sold to our tank business.

Antonio Carrillo: We just sold steel components. Two years ago, we sold our tank business. So we'll continue to move that way. And also, it also depends on capital allocation. If we simplify the company, we have to have, as we did this quarter when we sold the business, but at the same time, we have places to put it and continue to move our portfolio in the right direction. So it's fine-tuning, I would say, but I think this strategy is working. I think we have a clear path that we'll continue to move in that way, but it's going to take some time.

Speaker Change: Jim.

Speaker Change: We will continue to move that way and also it also depends on the capital allocation. If we simplify the company we have to have as we did this quarter when we sold the business, but at the same time, we have places to put it and continue to move our portfolio in the right direction. So it's a fine fine tuning I would say, but it's.

Speaker Change: It's it's I think the strategy is working I think we have some some some some are clear pasta will continue to move that way, but it's going to take some time.

Antonio Carrillo: Okay, thanks. So I guess to summarize, you know, post-closing capital allocation, you're not ruling out further simplification or M&A, but you are going to be focused on deleveraging.

Speaker Change: Okay. Thanks, So I guess to summarize hone.

Closing capital allocation.

Speaker Change: You are not ruling out further simplification or M&A, but you are going to be focus on the deleveraging.

Antonio Carrillo: Yes, I think you should see us focus on leveraging; we're reducing our CAPEX, growth CAPEX, as I mentioned. We're finishing all these plans that we've been building.

Yes.

Speaker Change: You should see us focus on deleveraging, we are reducing our capex growth Capex as I mentioned, we're finishing all of these plans that we've been building went to reduce our fees were not going to reduce maintenance capex.

Antonio Carrillo: We're going to reduce our PEEJ, but we're not going to reduce maintenance CAPEX. And the goal will be to reduce our leverage. And once we do that, we'll be able to continue with our M&A strategy.

Speaker Change: And and the goal the goal will be to reduce our leverage and once we do that we'll be able to continue with our M&A strategy no.

Antonio Carrillo: Great, yeah. Thank you for the context. And just switching gears a little bit, could you give us an update on IIJA and, you know, any impact, or whether you're starting to feel that at this point?

Speaker Change: Great. Yes, thank you for the context, and just switching gears a little bit.

Speaker Change: Could you give us an update on <unk> and any impact or whether you are starting to feel that at this point.

Antonio Carrillo: Well, it's anecdotally, as I've said, we don't get specific projects that we know exactly where the money is coming from. But anecdotally, we're seeing more and more bidding and contracting in many of our states. So I would say it's been slower than expected, but I think, little by little, we see more and more larger projects being awarded. So I think we're seeing parts of it. I cannot tell you exactly how much of it is coming, but what I can tell you is that when you look at the volume reduction this quarter, a lot had to do with weather.

Speaker Change: Well, it's a it's anecdotally as I have said to you. We don't that we don't get specific projects that we know exactly where the money is coming from but anecdotally, we're seeing more and more a beating and letting in many of our states. So I would say, it's been slower than than they expected but I.

Speaker Change: Think little by little we see more and more larger projects being.

Speaker Change: <unk> being awarded so I think we're seeing portions of it that I cannot tell you exactly how much of it is is it's it's coming but what I can tell you is when you look at the volume reduction this quarter a lot had to do with weather.

Antonio Carrillo: As Gail mentioned in her script, when the weather is good, demand is strong, and we continue to see strong demand across the board in our business, and pricing momentum continues to be good. So overall, I'm happy with what we're seeing.

Scaled: When scaled mentioned in her script when weather is good the demand is strong and we continue to see strong demand across the board in our in our business and pricing momentum continues to be good. So overall happy with what we're seeing.

Alex Hantman: I appreciate the context. Thank you very much.

Speaker Change: I appreciate the context, thank you very much.

Operator: Thank you. We'll take our next question from Ray Grooms with Stevens Inc. Your line is now open.

Speaker Change: Thank you we'll take our next question from Ray Grooms with Stephens, Inc. Your line is now open.

Trey Grooms: Hey, good morning everyone. It's Trey Grooms.

Hey, good morning, everyone as Trey grooms.

Ray Grooms: First off congrats on the <unk> acquisitions, it looks like a great fit for you guys.

Ray Grooms: Yeah.

Speaker Change: And as we kind of look.

Sure so as we.

Speaker Change: As we look at.

Speaker Change: Kind of layering in the bowl.

Speaker Change: I'm guessing that could change the seasonality of your business is somewhat any color you could give us there as we kind of think about our models.

Gail Peck: Good morning, Trey. I'll take that. It's Gail. Yeah, so, you know.

Speaker Change: Good morning, Trey I'll take that at scale, yeah, So operating in the northeast.

Speaker Change: <unk> brings a little bit more seasonality to our construction business.

Speaker Change: We're accustomed to seasonality as it is today without.

Speaker Change: One being.

Speaker Change:

Speaker Change: Seasonal low point, but you know as we think about the impact and we've looked over the last few years looked at maybe the relative impact on our segment I'd say, it's probably in Q1 about 175 basis points on average maybe dilutive to our Q1 segment margin, but as you see the full year margin of 35.

Speaker Change: It is it is absolutely accretive accretive on a full year basis, but you will see that seasonal step down a little bit more pronounced maybe not as pronounced as some of our larger peers that have.

Speaker Change: Exposure to colder weather, but it will have an impact.

Gail Peck: Yep. Okay, thanks, Gail. That's super helpful.

Speaker Change: Yep, Okay. Thanks, Thats Super helpful.

Gail Peck: Also, I guess maybe another one for Gail on the updated guidance. You know, any color you could give us on the cadence for the back half, you know, for the legacy business. Clearly, you guys have a lot going on with the portfolio, but outside of the portfolio announcements last night, anything we should be aware of there as we think about kind of the back half and the cadence as it relates to the updated guidance? Yeah, I think so.

Speaker Change: I guess, maybe another one for Gail on the updated guidance.

Speaker Change: Any any color you could give us on the on the cadence for the back half.

Speaker Change: For the for the legacy business clearly you guys have a lot going on with with the portfolio, but outside of the.

Speaker Change: Portfolio announcements last night any anything we should be aware of there as we think about kind of the back half and the cadence as it relates to the updated guidance.

Gail Peck: Yeah, I think, as we've always said at the start of the year, our second half is going to be stronger than our first half. We are very pleased with our first half results, but if you look at the implied, you see a slight tick up at the midpoint in EBITDA for the back half. I would say from a cadence perspective, what may be a little bit more visible than the run rate during the year is, just as we've said, we've been ramping within the engineered structures.

Speaker Change: Yeah, I think as we've always said at the start of the year, our second half was going to be stronger than our first half.

Speaker Change: We are very pleased with our first half results, but if you look at the implied you see a slight tick tick tick up at the midpoint and indeed the conference back half.

Speaker Change: I would say from a cadence perspective, what may be a little bit more.

Speaker Change: Visible than the run rate during the year as just as we've said, we we've been ramping and within engineered structures. So you're seeing the ramp up in new Mexico, and you're seeing the ramp up in our Florida concrete pole plant. So I would see more of the.

Gail Peck: So you're seeing the ramp up in our Berlin, New Mexico, and you're seeing the ramp up in our Florida Concrete Pole Plant. So I would see more of the second half improvement relative to engineered structures. Otherwise, I think it's fairly consistent patterns in our quarterly cadence.

Speaker Change: More of the second half improvement relative to engineered structures, otherwise I think it's it's it's fairly consistent.

Speaker Change: Consistent patterns in our in our quarterly cadence.

Speaker Change: Okay.

Trey Grooms: Okay, perfect. And last one for me, kind of circling back to Stavola, just kind of looking at the New York and New Jersey markets that they operate in. You know, what does the pricing dynamics of that market look like historically? We've heard over the last few years that pricing has really improved, well, maybe over the last several years with some of these assets kind of changing hands in that market, but, you know, anything to add there, maybe how pricing in these markets might compare to the legacy business or any color. Thank you.

Speaker Change: Perfect and last one for me.

Speaker Change: Kind of circling back to stable.

Speaker Change: Just kind of looking at the New York, and New Jersey markets that they operate in.

Speaker Change: What is the pricing dynamics of that market looked like historically, we've heard over the last few years that that pricing has really improved well maybe over the last several years with some of these assets kind of changing hands in that market, but anything to add there maybe how pricing in these markets might compare to the.

Speaker Change: Legacy business or any color. Thank you.

Reid Essel: Yeah, Trey, I'll take that one. This is Reed. Good morning.

Speaker Change: Yeah, Terry I'll take that one this is really good morning.

Speaker Change: Youre right pricing has improved over over the last couple of years in that market. As a reminder, the majority of these volumes are hard rock volumes up in that market. So we would see elevated pricing in line with what would be expected from hard rock as opposed to some attributes or locations in our legacy.

Trey Grooms: You're right. Pricing has improved over the last couple years in that market. As a reminder, the majority of these volumes are hard rock volumes up in that market, so we would see elevated pricing in line with what would be expected from hard rock as opposed to some attributes or locations in our legacy portfolio. But I'd say, overall, the market has performed well and in line with our other markets have, experiencing a couple price increases a year.

Speaker Change: Portfolio, but I'd say overall, the market has performed well and in line as our other markets have experiencing a couple of price increases a year.

Trey Grooms: We expect that and we'll continue to support that going forward as well. So definitely, over the last couple years, we have seen those pricing increases and with the mix, adding these hard rock locations to our portfolio, we would expect that going forward. Discipline competition is up there as well. We like the competitive landscape. Antonio mentioned it in some of his remarks with some of our larger peers in that market. Not only this acquisition, but you've seen some other consolidation in that market recently as well, which we think will bode well for that market going forward.

Speaker Change: We expect that and we will continue to.

Speaker Change: Support that going forward as well so.

Speaker Change: Definitely over the last couple of years have seen those pricing increases.

Speaker Change: And.

Speaker Change: With the mix, adding these hard rock locations to our portfolio.

Speaker Change: We would we would expect that going forward disciplined competition up there as well we like the competitive landscape Antonio mentioned in some of his remarks with some of our larger peers.

Speaker Change: In that market.

Speaker Change: Not only this acquisition, but you've seen some other consolidation in that market recently, as well, which we think will bode well for that market going forward.

Reid Essel: Got it. All right. Thanks, everyone. Thanks, Reed. Good luck.

Speaker Change: Got it alright, thanks, everyone. Thanks Reed.

Speaker Change: Good luck.

Craig: Thanks, Craig Thank you.

Operator: Thank you. We'll take our next question from Garik Shmois with Loop Capital. Your line is open.

Speaker Change: Thank you we'll take our next question from Garik <unk> with loop capital. Your line is open.

Garik Shmois: Well, hi, thanks. Congratulations on everything. This is unstable. I'm wondering if there are any synergies we should anticipate either on the cost side or on the commercial side.

Garik <unk>: Oh, hi, thanks.

Speaker Change: Relations on everything.

Speaker Change: Paul I'm wondering if there are any synergies we should anticipate either on the cost side or on the commercial side.

Reid Essel: Yeah, Garik Reed again. Good morning. So, again, as we've all been saying, really excited about this acquisition. It really is an extension of our current footprint, geography-wise, obviously, into the largest MSA. We're excited about adding the management team and the plant locations. We do expect some operational efficiencies to come from these businesses, but there is currently no overlap with our current portfolio up there. So, really, incremental volume and incremental benefit to our business.

Gary: Yeah, Gary Accrete again, good morning so.

Speaker Change: Again, as we've all been saying really excited about this acquisition. It really is truly an extension of our current footprint.

Gary Accrete: Geography wise, obviously into the largest MSA and we're excited about adding the management team the plant locations, we do expect some operational efficiencies.

Speaker Change: To come from these businesses, but there is currently no overlap with our current portfolio up there so really incremental volume and.

Reid Essel: There are some growth opportunities, again, as we touched on earlier in the call, that we expect to experience and are looking forward to. The recycling business is a business that, you know, we've been very active in over the last five to six years since becoming Arcosa, and there are some additional expansion opportunities in that space. Some of the aggregate facilities, as well; there are five aggregate locations in the market. I'd say we're in the early stages of their ramp-up and newer facilities, so looking forward to future growth in those areas and then Greenfield locations, you know, potentially in the future, and then some potential consolidation opportunities, again, as Antonio hit on. So, overall, we do expect some benefits, operational efficiencies, and some potential, you know, I'd say overall synergies as we bring the businesses together, but really leveraging this extension to our footprint up in the Northeast.

Speaker Change: An incremental benefit to our business there are some growth opportunities again as we touched on earlier in the call that we expect to experience and are looking forward to the recycling business is a business that you know we've been very active in over the last five to six years since becoming a coaster.

Speaker Change: And there are some additional expansion opportunities up there in that space.

Antonio Thank: Some of the aggregate facilities as well, there's five aggregate locations in the market I would say are in the early stages of their ramp up and newer facilities. So looking forward to the future growth in those areas and then greenfield locations potentially in the future and then some potential consolidation opportunities again as Antonio hit on so.

Antonio Thank: Overall, we do expect some benefit operational efficiencies and some potential I'd say overall.

Antonio Thank: Overall synergies as we bring the businesses together, but really leveraging this extension to our footprint up in the northeast market.

Garik Shmois: Okay, no, that's helpful. Just one more follow-up on Stavola. As far as the end markets, that business service, is it any different than the legacy operations? You know, is it a little bit more infrastructure focused, or, you know, is it fairly comparable to legacy Arcosa?

Speaker Change: Okay. No that's helpful to form a follow up on unstable.

Speaker Change: As far as the end markets.

Speaker Change: That business services is it any different than the legacy operations.

Speaker Change: It's a little bit more infrastructure focused or.

Speaker Change: Is it fairly comparable to two legacy airplanes.

Reid Essel: Same end markets, but more heavy emphasis on infrastructure, as noted in the slide deck, 80%, 85%. When you look at the aggregates and asphalt markets, there's additional replacement demand as well on the asphalt side of the business. So again, similar but different with more infrastructure-led projects in that market.

Speaker Change: The same end markets, but more.

Speaker Change: Heavy emphasis on infrastructure as noted in the slide deck 80, 85% when you look at the aggregates and asphalt markets, there's additional replacement demand as well.

Speaker Change: The asphalt side of the business, so again, similar but different with with more infrastructure led projects up in that market.

Antonio Carrillo: One thing, Antonio, one thing that's interesting about the market, you know, it's when you look at all the analysis we did and we hired consultants to go review the market. The roads are not in great shape in many of the places, so a lot of it has to do with maintenance, which is something that attracted us. There are also very large infrastructure projects that are happening in the region, and that is also very attractive.

Speaker Change: One thing that isn't though the one thing that's interesting about the market you know, it's when you look at.

Speaker Change: All the analyses with Eaton, we hired consultants to go review that the the market.

Speaker Change: It's the the roads are in not a great shape in many of the places where a lot of it has to do with maintenance, which something that attracted us.

Speaker Change: There are social in the region very large infrastructure projects that are happening.

Speaker Change: That is also very attractive and then as Rick mentioned the recycling piece.

Antonio Carrillo: And then, as Rick mentioned, the recycling piece, you know, recycling, the raw material for recycling is demolition and replacement. So as that region requires a lot of replacement, we believe there's a good opportunity for us to grow in the recycling piece also. So I think overall it fits very, very well.

Rick: Recycling the raw material for recycling, you said demolition and replacement so.

Rick: That region requires a lot of replacement we believe there's a good opportunity for us to grow in the recycling piece also so I think overall it fits very very well.

Garik Shmois: Okay, no, thanks. I can certainly attest to the maintenance needs in the region. And then just last question, just on construction products, you know, very strong margin expansion in the quarter. Just wondering if you can speak to the sustainability and maybe some of the drivers that benefited 2Q and how to think about that in the back half.

Speaker Change: Okay no. Thanks, I can throw you attached to that.

Speaker Change: The maintenance needs.

Speaker Change: In the region.

Speaker Change: And then just last question just on construction products.

Speaker Change: Very strong margin expansion.

Speaker Change: In the quarter.

Speaker Change: Wondering if you can speak to the sustainability and maybe some of the drivers of that benefited Q2, and how to think about that in the back half of the year.

Gail Peck: Sure, I'll take that, Garik. Good morning. I'm really very, very pleased with the margin performance in the segment, both on a year-over-year and sequential basis. As I said in my comments, about half of the year-over-year improvement came from really the good work we've been doing in specialty materials and turning that business around from some operating challenges that we experienced last year. It's never been about the demand aspect.

Speaker Change: Sure I'll take that good morning.

Speaker Change: And it really very very pleased with with the margin performance in this segment, both on a year over year and sequential basis.

Speaker Change: Yeah as I said in my comments.

Speaker Change: About half of the year over year improvement came from really the good work, we've been doing in specialty materials and turning that.

Speaker Change: Around from some operating challenges that we experienced last year. It's it's it's never been a demand.

Speaker Change: [noise] aspect, we had some labor challenges in some production inefficiencies, we're very pleased with the strides that we have within our specialty materials business.

Gail Peck: We had some labor challenges and some production inefficiencies. However, we're very pleased with the stride that we have within our specialty materials business. Likely some additional opportunity there as these improvements fully take hold. We also saw, you know, a similar vein. We saw good improvement in our shoring products business as well. If you recall, we acquired a Houston manufacturer a little over a year ago, so not inorganic at this point, but really the integration between the operations and the efficiencies we're seeing there.

Speaker Change: Likely some some additional opportunity there.

Speaker Change: We.

Speaker Change: Improvements fully take hold.

Speaker Change: We also saw similar vein, we saw good improvement in our showroom products.

Speaker Change: Well, if you recall, we acquired a Houston manufacturer a little over a year ago. So so not not inorganic at this point, but really the integration between the operations and the efficiencies we're seeing there and then.

Gail Peck: And then, you know, The aggregates business, obviously the biggest piece of that segment, performed very well. I think the opportunity there would be having consistently dry weather, so we're very optimistic and very pleased with what was a very strong quarter.

Speaker Change: The aggregates business, obviously, the biggest piece of that segment performed very well.

Speaker Change: The opportunity there would be having it it would be consistently dry weather. So so we're very optimistic and very pleased with what was a very strong quarter.

Garik Shmois: Okay, y'all, thanks for all that. I appreciate it, and best of luck.

Speaker Change: Okay. Thanks for all that I appreciate it and best of luck.

Operator: Thank you. We'll take our next question from Jean Ramirez with DA Davidson. Your line is open.

Speaker Change: Thank you we'll take our next question from Gene Ramirez with D. A Davidson your line is open.

Speaker Change: Okay.

Jean Ramirez: Hello everyone, congrats on the quarter and reacquisition. Thank you. Really, or anyone, um, regardless to BOLA.

Gene Ramirez: Hello, everyone, congrats on the quarter and the acquisition.

Speaker Change: Thank you.

Speaker Change:

Speaker Change: Reading or anyone regarding to stop all up.

Reid Essel: Could you provide some color around the sustainability of the 35% EBITDA margin versus the last couple of years? And also, could you just give some color on what you expect going forward?

Speaker Change: Could you provide some color around the sustainability of that 35% EBITDA margin versus the last couple of years.

Speaker Change: And also could you just give us some color on what you expect going forward.

Reid Essel: Sure, I'll take that. You know, 35. You know, when you look back over the last couple years, that margin has been in the low to mid-30s for the business as a whole. And so, you know, looking forward, not only to what we're seeing in that market today and the LTM performance, but also, you know, going forward with what's expected for the balance of this year and into the future, we would expect those margins to remain, you know, relatively consistent.

Speaker Change: Sure I'll take that.

Speaker Change: <unk> 35, you know when you look back over the last couple of years.

Speaker Change: That margin has been in the low to mid thirties for the business as a whole and so looking forward not only what we're seeing in that market today and the LTM performance, but also go forward with watts.

Speaker Change: Expected for the balance of this year and into the future. We would expect those margins to remain relatively consistent.

Reid Essel: So yes, it's been a business that has, you know, experienced lower volatility in the past. And again, that's what drives us and what attracts us to that market, as well as the replacement and repair side of it. We have a little bit of additional visibility because of that, and then we would expect those fundamentals to continue. I'll give you all.

Speaker Change: So yes, it's been a it's been a business that has.

Speaker Change: Experienced lower volatility in the past and again, that's what drives us and what attracts us to that market.

Speaker Change: As well as the replacement and repair side of it we have a little bit additional visibility because of that.

Speaker Change: And then we'd expect those fundamentals to continue.

Antonio Carrillo: I'll also give you a little more color, we saw some, when you see the financials of the company in 2023. The year was a little slower than they expected, and we've been in talks with this company for a while. So we hired consultants to make sure that we understood the reason why 2023 was a little slower than normal. And it had to do with COVID; the DOT, the local DOT, was very slow in issuing the lettings and the projects for the region.

Speaker Change: I'll give you also a little more color. We you know we saw some when you when you see the financials of the company in 2023.

Speaker Change: The year was a little slower than they expected and we've been in talks with this company for a while.

Speaker Change: So we hired a consultant to make sure that we understood. The recent 420 23 was a little slower than normal.

Speaker Change: And they had to do with Covid aim the DLT the local D O D.

Speaker Change: What's very slow in issuing the lettings for on the project for the region.

Antonio Carrillo: So they had a huge backlog of things that were held up, and that held the demand down a little bit. So the margins stayed okay, but the volumes came down quite a bit because of that. So we proved that with a consultant and checked on all those things. It turned out that they have been telling us exactly what's happening. And as soon as that bottleneck in DOT cleared, I think the volumes came back up.

Speaker Change: So they had a huge backlog of things that were held up.

Speaker Change: And that's as you fill the demand down a little bit. So the margin stayed okay, but the volumes came down quite a bit because of that so we prove that with our consultant and checked on all of those things you can pull it out but they they have been telling us exactly what was happening.

Speaker Change: And as soon as that the bottlenecking Vod cleared I think Dave the volumes came back up on when you see the last 12 months of this of the the $100 million of the day. They they produce until June you can see the business came back very strongly towards 2022 levels. So I think when you see the business.

Antonio Carrillo: And when you see the last 12 months of the $100 million that they produced until June, you can see the business came back very strongly towards 2022. So I think when you see the business over a long period of time, it's very.

Speaker Change: Over the long period of time, it's very consistent.

Jean Ramirez: Thank you so much for that. And staying within construction products, what are your expectations for the second half? It seems like there should be some significant pent-up demand in Texas given the adverse weather we had through the first half. And then just to follow up to that, how are you seeing volumes materially? And how does that impact, you know, any potential price increases? through the second half of 2024.

Speaker Change: Thank you so much for that and staying within construction products.

Speaker Change: What are your expectations for the second it seems like there should be some significant pent up demand in Texas given the.

Speaker Change: Adverse weather, we had through the first half.

Speaker Change: And then just a follow up to that.

Speaker Change: What are you are you seeing volumes materially.

Speaker Change: How does that impact no any potential price increases.

Speaker Change: The second half of 2024.

Antonio Carrillo: Well, what we've said in the past, you know, many times, projects, it's not like they can build the road faster. So sometimes you see some additional demand that gets held up by weather in the first half, especially here in Dallas. It was very, very wet.

Speaker Change: Well, what we said in the past as you know many times projects, it's not like they can build the road faster. So sometimes you see some additional demand.

Speaker Change: That is get held up by weather in the first half, especially especially here in Dallas.

Speaker Change: Was very very wet so aim.

Antonio Carrillo: So, you know, we're seeing very good volumes as we move along the year. I'm not sure how much is pent-up demand versus normal demand, but it's, you know, projects are needed, and the demand is there, and the projects are underway. It's hard to tell you how much really is pent-up demand versus just normal demand. It's not easy to ramp up a project and do it faster just because we were held up with rain.

Speaker Change: We're seeing very good volumes as we move along the year I'm not sure how much is pent up demand versus normal demand, but it's you know projects are needed and the demand is there and the projects are underway. So.

Speaker Change: It's hard to tell you how much release pent up demand versus just normal demand I E.

Speaker Change: And you.

Speaker Change: It's not easy to ramp up a break them do it faster just because we were held up with brain. So.

Antonio Carrillo: And I would say, and remember, the rain has two impacts. One is on the projects, of course, but also when you shut down plants, you have increased costs. You have to carry the cost of the plant while you have it shut down because of rain. So I think the combination of both things should help. I guess I'd say, as a

Speaker Change: I would say and remember the rain has two impacts one is on the projects of course, but also when you shut down plants. You have increased costs you have to carry the cost of the plant. While you have it shut it down because of rain. So I think the combination of both things are or should help us.

Gail Peck: I guess I'd say as we think about our full-year volume outlook, you know, we said at the start of the year we saw kind of flat volumes and, you know, as we had volumes down organically low single in the first quarter and mid-single in the second quarter, and I'd say both those quarters we had some weather. So I think on balance, for us, what that would likely mean is we see probably the full year down low single digits now as compared to flat where we really started the year.

Speaker Change: I guess I'd say as we think about our full year volume outlook.

Speaker Change: At the start of the year.

Speaker Change: Yeah.

Speaker Change: As we had volumes down organically low single in the first quarter and mid single in the second quarter.

Speaker Change: Those quarters, we had some weather so I think on balance with for us what that would likely mean as we see probably the full year down low single digits now as compared to flat.

Gail Peck: And, you know, to echo Antonio's comments and really kind of put that volume constraining weather related. You know, of course, on a total volume basis with the contributions from the acquisitions we did in the back half of the year and now Stobola here for one quarter, we see total volumes up.

Speaker Change: It really started the year end.

Speaker Change: Boeing Antonio's comments, and really kind of put that volume constraining weather related.

Speaker Change: Yeah of course on a total volume basis with the contributions from the acquisitions, we did in the back half of the year announced a bullet here for one quarter, we see total volumes up for the year.

Jean Ramirez: And just to add a little more context, how does that impact your pricing? Are you having any conversations with clients regarding that for the second half?

Speaker Change: Thank you and then just to add.

Speaker Change: And a little more context.

Speaker Change: Does that impact.

Speaker Change: Your pricing.

Speaker Change: You.

Speaker Change: Having any conversations with clients that regarding that for the second half.

Reid Essel: We're definitely still having having conversations with customers on pricing. We've had, you know, many of your price increases that have gone out and are still, you know, receiving feedback on those to understand the stickiness of them, like everybody is, you know, as of July 1st. But pricing conversations are always ongoing, and we'll look to continue those into the expected, you know, January 1st increases of next year. Yeah. And as I said, in my

Speaker Change: Yeah.

Speaker Change: We're definitely still having having conversations with customers on pricing. We've had many of your price increases that have gone out and are still.

Speaker Change: Receiving feedback on those to understand the stickiness of them like everybody is as of July 1st but.

Speaker Change: Pricing conversations are always ongoing and we'll look to continue those into the expected January 1st increases next year.

Gail Peck: Yeah, and as I said in my comments, just to echo Reid's remarks, on a year-over-year basis, organically, we saw low double-digit price increases, Q1 was strong, so that will translate into very healthy pricing gains for 24, and momentum as we set ourselves up for 2025.

Speaker Change: As I said in my in my comments.

Speaker Change: On a year over year basis organically, we saw low double digit price increases.

Speaker Change: Q1 was strong so that will translate into very healthy pricing gains for 'twenty, four and momentum as we as we set ourselves up for 2025.

Jean Ramirez: Perfect. And if I could just move one more into barges, barge orders. It would seem that, with steel prices down, that should motivate some activity for customers. Yeah, how are you thinking about the outlook for barges going forward given that environment? I think you have to...

Speaker Change: Perfect and then if I could just one more into barges.

Speaker Change: <unk> orders.

Speaker Change:

Speaker Change: And we've seen this with steel prices are down.

Speaker Change: Motivated some activity for our customers.

Speaker Change: Yeah, Hi, how are you thinking about the outlook.

Speaker Change: I'll look for barges going forward given that environment.

Antonio Carrillo: I think you have two things that are, you know, converging, as I mentioned before. I think one is the age of the fleet and the really low replacement that has happened over the last several years. And also, that's complemented by a high level of BARD.

Speaker Change: Well I think you have two things that are converging as I mentioned before I think one is the age of the fleet and the.

Speaker Change: The really low replacement that have happened over the last several years.

Speaker Change: And also that's complemented by high level of barge.

Antonio Carrillo: There are some barges that are being refurbished. But overall, I think the environment is very positive for the barge business. It's lumpy, the backlog is going to be lumpy. We're not going to be getting booked to bills of one or two every quarter.

Speaker Change: As a scrapping.

Speaker Change: There is some barge barges that are being refurbished but overall I think the environment is very positive for the barge business.

Speaker Change: It's lumpy, but the backlog is going to be lumpy, we're not going to be getting book to bills of one or two every quarter.

Antonio Carrillo: But, you know, I think when you think about capacity and the market. When the market is low, our market share goes down because there are other smaller players that are getting orders, and everyone gets a piece of the pie. As the market becomes a little more robust, the company that has the most capacity will win. So I believe as the market is getting more, let's say, the conditions are good for a good replacement market.

Speaker Change: You know I think when you when you think about the capacity when you think about the market when the market is low our market share goes down because.

Speaker Change: There's others more players that are getting or is there something that everyone gets a piece of the pie as the market becomes a little more robust.

Speaker Change: We are the company that has the most capacity so.

Speaker Change: I believe as the market is getting more let's say.

Speaker Change: Yeah.

Speaker Change: The conditions are good for good replacement market.

Antonio Carrillo: Our biggest goal is to maintain our capacity and be able to sell it at a really good margin and be disciplined around our order taking. So, with steel prices coming down and good demand drivers, I think if we are patient, we're going to get really good orders, but we have to be patient, and we have good visibility. We're not in a hurry. We have really good visibility.

Speaker Change: Our biggest goal is to maintain our capacity and be able to sell it at a really good margins and be disciplined around our order, taking so with steel prices coming down and a good demand drivers I think where we're if we're patient we're going to we're going to get really good orders, but we have to be patient and we have good visibility we're not going.

Speaker Change: Hurry.

Speaker Change: We have really good visibility. So we're in a really good position for 'twenty to 'twenty five to be able to continue to grow the business.

Jean Ramirez: Antonio, team, thank you so much for the commentary and for your help back in the queue.

Tony's team: Tony's team. Thank you so much for the commentary I'll hop back in the queue.

Erin Drabek: Thank you. Thank you. And we have no further questions in the queue at this time. I'll turn the program back over to Erin Drabek for any additional or closing remarks.

Speaker Change: Thank you. Thank you and we have no further questions in the queue. At this time I will turn the program back over to Aaron <unk> for any additional or closing remarks.

Erin Drabek: Thank you for your time and attention today. It is an exciting time for Arcosa, and we have a lot of work ahead of us. We thank you for your continued support and look forward to our next update.

Aaron Rubik: Thank you for your time and attention today. It is an exciting time for our cause that and we have a lot of work ahead of US. We thank you for your continued support and look forward to our next update.

Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful day.

Speaker Change: This does conclude today's program. Thank you for your participation you may disconnect at any time and have a wonderful day.

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