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What changed in Arcosa, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Arcosa, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+407 added−425 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in Arcosa, Inc.'s 2023 10-K

407 paragraphs added · 425 removed · 323 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

73 edited+7 added−12 removed46 unchanged
Biggest changeAs of December 31, 2022 and 2021, our backlog of firm orders was as follows: December 31, 2022 December 31, 2021 (in millions) Engineered Structures: Utility, wind, and related structures $ 671.3 $ 437.5 Storage tanks (1) $ — $ 22.0 Transportation Products: Inland barges $ 225.1 $ 92.7 (1) On October 3, 2022, the Company completed the sale of its storage tanks business and its related backlog.
Biggest changeAs of December 31, 2023 and 2022, our backlog of firm orders was as follows: December 31, 2023 December 31, 2022 (in millions) Engineered Structures: Utility, wind, and related structures $ 1,367.5 $ 671.3 Transportation Products: Inland barges $ 253.7 $ 225.1 Approximately 43% of the unsatisfied performance obligations for our utility, wind, and related structures in our Engineered Structures segment is expected to be delivered during 2024, approximately 27% is expected to be delivered during 2025, and the remainder is expected to be delivered through 2028.
We control a portion of our raw material needs through demolition services that we provide and source the remainder in competitive markets from third parties. Due to increasing landfill scarcity the acceptance of demolished concrete may be restricted, increasing the availability of raw product at our crushing locations.
We control a portion of our raw material needs through demolition services that we provide, and we source the remainder in competitive markets from third parties. Due to increasing landfill scarcity, the acceptance of demolished concrete may be restricted, increasing the availability of raw product at our crushing locations.
Pepper Snapple Group, Inc. from 2015 to 2018. Mr. Carrillo currently serves as a director of NRG Energy, Inc. where he was appointed in 2019. Gail M. Peck was appointed as Arcosa’s Chief Financial Officer in May 2021. Previously, she served as the Senior Vice President, Finance and Treasurer at Arcosa. From 2010 until the Separation, Ms.
Pepper Snapple Group, Inc. from 2015 to 2018. Mr. Carrillo currently serves as a director of NRG Energy, Inc. where he was appointed in 2019. Gail M. Peck was appointed as Arcosa’s Chief Financial Officer in May 2021. Previously, she served as the Senior Vice President, Finance and Treasurer at Arcosa. From 2010 until 2018, Ms.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and Note 15 of the Notes to Consolidated Financial Statements for further information regarding reserves for environmental matters. See Item 1A for further discussion of risk factors with regard to environmental, governmental, and other matters. 12 Table of Contents Information About Our Executive Officers.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and Note 15 of the Consolidated Financial Statements for further information regarding reserves for environmental matters. See Item 1A for further discussion of risk factors with regard to environmental, governmental, and other matters. 12 Table of Contents Information About Our Executive Officers.
Lightweight aggregates are select shales or clays that are expanded and hardened by high temperatures in a rotary kiln and possess a bulk density that can be less than half that of natural aggregates. Product applications include structural lightweight concrete, lightweight masonry block, and road surface treatments.
Lightweight aggregates are select shales or clays that are expanded and hardened by high temperatures in a rotary kiln and possess a bulk density that can be less than half the density of natural aggregates. Product applications include structural lightweight concrete, lightweight masonry block, and road surface treatments.
Demand for non-residential construction is driven primarily by population and economic growth, in addition to segment-specific factors such as the growth of e-commerce, changes in retail patterns, changes in office occupancy trends, and numerous other factors. • Specialty/Other: Our products are used in various other end markets including energy-related activities such as drilling pads, roads and major downstream projects, agriculture/horticulture, and industrial uses.
Demand for non-residential construction is driven primarily by population and economic growth, in addition to segment-specific factors such as the growth of e-commerce, changes in retail patterns, changes in office occupancy trends, financing costs and numerous other factors. • Specialty/Other: Our products are used in various other end markets including energy-related activities, such as drilling pads, roads and major downstream projects, agriculture/horticulture, and industrial uses.
All of the unsatisfied performance obligations for inland barges in our Transportation Products segment are expected to be delivered during the year ending 2023. Marketing. We sell substantially all of our products and services through our own sales personnel operating from offices in multiple locations in the U.S. and Mexico. We also use independent sales representatives and distributors. Human Capital.
All of the unsatisfied performance obligations for inland barges in our Transportation Products segment are expected to be delivered during the year ending 2024. Marketing. We sell substantially all of our products and services through our own sales personnel operating from offices in multiple locations in the U.S. and Mexico. We also use independent sales representatives and distributors. Human Capital.
The following table sets forth the names and ages of all our executive officers, their positions and offices presently held by them, and the year each person first became an officer. Name Age Office Officer Since Antonio Carrillo 56 President and Chief Executive Officer 2018 Gail M. Peck 55 Chief Financial Officer 2018 Reid S.
The following table sets forth the names and ages of all our executive officers, their positions and offices presently held by them, and the year each person first became an officer. Name Age Office Officer Since Antonio Carrillo 57 President and Chief Executive Officer 2018 Gail M. Peck 56 Chief Financial Officer 2018 Reid S.
In August 2022, the Inflation Reduction Act (“IRA”) passed, providing a long-term extension of the PTC for new wind farm projects and introduced a new advanced manufacturing tax credit for companies that domestically manufacture and sell clean energy equipment in the U.S. from 2023 to 2032.
In August 2022, the Inflation Reduction Act (“IRA”) passed, providing a long-term extension of the PTC for new wind farm projects and introduced a new Advanced Manufacturing Production (“AMP”) tax credit for companies that domestically manufacture and sell clean energy equipment in the U.S. from 2023 to 2032.
Essl served as the Group Chief Financial Officer of the Construction, Energy, Marine, and Components businesses of Trinity. In his 14 years at Trinity, Mr. Essl held a variety of operational, financial, strategic planning, and business development positions. Kerry S. Cole serves as a Group President at Arcosa. From 2016 until the Separation, Mr.
Essl served as the Group Chief Financial Officer of the Construction, Energy, Marine, and Components businesses of Trinity. In his 14 years at Trinity, Mr. Essl held a variety of operational, financial, strategic planning, and business development positions. Kerry S. Cole serves as a Group President at Arcosa. From 2016 until 2018, Mr.
Collins served as Executive Vice President and Chief Operating Officer at Broadwind Energy serving wind energy, transportation, and infrastructure markets, prior to which he held various management and executive positions at Trinity from 1993 to 2007. Bryan P. Stevenson serves as the Chief Legal Officer at Arcosa. From 2015 until the Separation, Mr.
Collins served as Executive Vice President and Chief Operating Officer at Broadwind Energy serving wind energy, transportation, and infrastructure markets, prior to which he held various management and executive positions at Trinity from 1993 to 2007. Bryan P. Stevenson serves as the Chief Legal Officer at Arcosa. From 2015 until 2018, Mr.
Product applications include plasters, prills, agricultural supplements and fertilizers, paints, flooring, glass, ingredients for food and feed, cement, energy infrastructure, and other products. • Construction Site Support: We hold a strong market position in the manufacture of trench shields and shoring products for the U.S. construction industry.
Product applications include plasters, prills, agricultural supplements and fertilizers, paints, flooring, glass, ingredients for food and feed, cement, energy infrastructure, and other products. • Construction Site Support: We hold a strong market position in the manufacturing of trench shields and shoring products for the U.S. construction industry.
In the dry barge industry, scrapping has exceeded new builds every year since 2016 suggesting a strong deferred replacement cycle that we expect will be supported by a recovery in agriculture once plate steel prices normalize after increasing sharply over the last two years.
In the dry barge industry, scrapping has exceeded new builds since 2016 suggesting a strong deferred replacement cycle that we expect will be supported by a recovery in agriculture once plate steel prices normalize after increasing sharply over the last two years.
We manufacture a variety of hopper barges, tank barges, deck barges, and fiberglass covers, and provide a full line of deck hardware to the marine industry, including hatches, castings, and winches for barges, towboats, and dock facilities. Dry cargo barges transport various commodities, such as grain, coal, and aggregates.
We manufacture a variety of hopper barges, tank barges, deck barges, other specialized barges, and fiberglass covers, and provide a full line of deck hardware to the marine industry, including hatches, castings, and winches for barges, towboats, and dock facilities. Dry cargo barges transport various commodities, such as grain, coal, and aggregates.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” for revenues attributable to our Engineered Structures products. • Utility Structures: We are a well-established manufacturer in the U.S. and Mexico of engineered steel utility structures, including tapered steel and lattice structures, for electricity transmission and distribution.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” for revenues attributable to our Engineered Structures products. • Utility Structures: We are a well-established manufacturer in the U.S. and Mexico of engineered steel utility structures, including tapered steel, lattice, and sub-station structures, for electricity transmission and distribution.
Environmental, Health, and Safety. We are subject to federal, state, and international environmental, health, and safety laws and regulations in the U.S., Mexico, and each country in which we operate, including the U.S. Environmental Protection Agency (“USEPA”). These include laws regulating air emissions, water discharge, hazardous materials, and waste management.
Environmental, Health, and Safety. We are subject to federal, state, and international environmental, health, and safety laws and regulations in the U.S., Mexico, and each country in which we operate, including regulations promulgated by the U.S. Environmental Protection Agency (“USEPA”). These include laws regulating air emissions, water discharge, hazardous materials, and waste management.
However, claims that may be asserted against Arcosa for work-related illnesses or injury and the further adoption of occupational and mine safety and health regulations in the U.S. or in foreign jurisdictions in which we operate could increase our operating costs.
However, claims that may be asserted against Arcosa for work-related illnesses or injuries and the further adoption of occupational and mine safety and health regulations in the U.S. or in foreign jurisdictions in which we operate could increase our operating costs.
Peck served as Vice President, Finance and Treasurer of Trinity. From 2004 to 2009, she served as Vice President and Treasurer for Centex Corporation, a diversified building company. Reid S. Essl serves as a Group President at Arcosa. From 2016 until the Separation, Mr. Essl served as the President of Trinity Construction Materials and from 2013 to 2016, Mr.
Peck served as Vice President, Finance and Treasurer of Trinity. From 2004 to 2009, she served as Vice President and Treasurer for Centex Corporation, a diversified building company. Reid S. Essl serves as a Group President at Arcosa. From 2016 until 2018, Mr. Essl served as the President of Trinity Construction Materials and from 2013 to 2016, Mr.
In addition, in certain markets, we are paid a fee to accept raw product. Our operating permits which allow recycling activities and the strategic location of our stationary crushing sites are competitive advantages. Engineered Structures.
In certain markets, we are paid a fee to accept raw product. Our competitive advantages include our operating permits, which allow recycling activities, and the strategic location of our stationary crushing sites. Engineered Structures.
Approximately 35% of the hopper fleet and 25% of the tank fleet are more than 20 years old. The replacement of these fleets is expected to drive healthy demand based on an assumed 25 to 30-year useful life.
Approximately 40% of the hopper fleet and 25% of the tank fleet are more than 20 years old. The replacement of these fleets is expected to drive healthy demand based on an assumed 25 to 30-year useful life.
From 2000 to 2007, he served in a variety of operations and manufacturing leadership positions at Trinity spanning Mining and Construction Equipment, Heads, and Structural Bridge business units. Jesse E. Collins, Jr. serves as a Group President at Arcosa. From 2016 until the Separation, Mr.
From 2000 to 2007, he served in a variety of operations and manufacturing leadership positions at Trinity spanning Mining and Construction Equipment, Heads, and Structural Bridge business units. Jesse E. Collins, Jr. serves as a Group President at Arcosa. From 2016 until 2018, Mr.
Prior to joining Orbia, Mr. Carrillo spent 16 years at Trinity where he served as Senior Vice President and Group President of Trinity’s Energy Equipment Group and was responsible for Trinity’s Mexico operations. Mr. Carrillo previously served as a director of Trinity from 2014 until the Separation in 2018 and served as a director of Dr.
Prior to joining Orbia, Mr. Carrillo spent 16 years at Trinity where he served as Senior Vice President and Group President of Trinity’s Energy Equipment Group and was responsible for Trinity’s Mexico operations. Mr. Carrillo previously served as a director of Trinity from 2014 until 2018 and served as a director of Dr.
From April 2018 until the Separation, Mr. Carrillo served as the Senior Vice President and Group President of Construction, Energy, Marine and Components of Trinity. From 2012 to February 2018, Mr. Carrillo served as the Chief Executive Officer of Orbia Advance Corporation (formerly known as Mexichem S.A.B. de C.V.), a publicly traded global specialty chemical company.
From April 2018 until November 2018, Mr. Carrillo served as the Senior Vice President and Group President of Construction, Energy, Marine and Components of Trinity Industries, Inc. ("Trinity"). From 2012 to February 2018, Mr. Carrillo served as the Chief Executive Officer of Orbia Advance Corporation (formerly known as Mexichem S.A.B. de C.V.), a publicly traded global specialty chemical company.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” for revenues attributable to aggregates and specialty materials. • Natural Aggregates: We are an established producer and distributor of natural aggregates serving both public infrastructure and private construction markets and operate in Texas, our largest geographic exposure, and 8 other states.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” for revenues attributable to aggregates and specialty materials, and construction site support. • Natural Aggregates: We are an established producer and distributor of natural aggregates serving both public infrastructure and private construction markets and operate in Texas, our largest geographic exposure, and eight other states.
Population and household formation growth have contributed to a strong residential housing market in recent years, however the recent rise in interest rates has caused a near term slow down, with housing permits, an indication of future construction activity, down approximately 1% in Texas in 2022 compared to the previous year.
Population and household formation growth have contributed to a strong residential housing market in recent years, however, the recent rise in interest rates has caused a near term slow down, with housing permits, an indication of future construction activity, down approximately 13% in Texas in 2023 compared to the previous year.
Revenues from GE Renewable Energy (“GE”) included in our Engineered Structures segment constituted 9.3%, 9.5%, and 15.3% of consolidated revenues for the years ended December 31, 2022, 2021, and 2020, respectively. Our traffic structures business primarily sells to individual state Departments of Transportation and highway contractors typically in a competitive-bid market.
Revenues from GE Renewable Energy (“GE”) included in our Engineered Structures segment constituted 8.1%, 9.3%, and 9.5% of consolidated revenues for the years ended December 31, 2023, 2022, and 2021, respectively. Our traffic structures business primarily sells to individual state Departments of Transportation and highway contractors typically in a competitive-bid market.
In general, we believe there is enough capacity in the supply industries to meet current production levels without any material impacts. We anticipate our existing contracts and other relationships with multiple suppliers will meet our current production forecasts. Transportation Products.
In general, we believe there is enough capacity in the supply industries to meet current production levels without any material impacts. We anticipate our existing contracts and other relationships with multiple suppliers will meet our current production forecasts. 8 Table of Contents Transportation Products.
We manage the business from the four regions of Texas (including Arkansas and Oklahoma), the Ohio River Valley, the Gulf Coast, and the West. We operate primarily from open pit quarries and have one underground mine.
We manage the business from the four regions of Texas, the Ohio River Valley, the Gulf Coast, and the West. We operate primarily from open pit quarries and have one underground mine.
“ Risk Factors - Risks Related to our Business and Operations.” Governmental Regulation. Construction Products. Arcosa’s Construction Products segment is subject to regulation by the U.S. Mine Safety and Health Administration (“MSHA”), the Health-Safety and Reclamation Code of Ministry of Mines for British Columbia, and various state agencies, and certain specialty materials are regulated by the U.S.
“ Risk Factors - Risks Related to Technology and Cybersecurity.” Governmental Regulation. Construction Products. Arcosa’s Construction Products segment is subject to regulation by the U.S. Mine Safety and Health Administration (“MSHA”), the Health-Safety and Reclamation Code of Ministry of Mines for British Columbia, and various state agencies, and certain specialty materials are regulated by the U.S.
Upgrades to utility structures are needed to support larger equipment that is required to withstand growing load demand and to allow for connectivity of the grid to renewable energy sources. The IIJA, enacted in November 2021, provides $73 billion in additional federal funding to support the investment needed in the U.S. power grid.
Upgrades to utility structures are needed to support larger equipment that is required to withstand growing load demand and to allow for connectivity of the grid to renewable energy sources. The IIJA authorized $73 billion in additional federal funding to support the investment needed in the U.S. power grid.
We anticipate that the IIJA will be supportive for these businesses as well due to the increased level of highway spending and the provision for $65 billion in additional federal funding for broadband infrastructure.
We anticipate that the IIJA will continue to be beneficial for these businesses as well due to the increased level of highway spending and the provision for $65 billion in federal funding for broadband infrastructure.
In 2022, we had shipments of approximately 37 million tons of aggregates and specialty materials, including approximately 4 million tons of recycled aggregates. Texas is our largest geographic market, representing approximately 45% of the segment's revenues in 2022. All other states each are less than 10% of segment revenues.
In 2023, we had shipments of approximately 38 million tons of aggregates and specialty materials, including approximately 5 million tons of recycled aggregates. Texas is our largest geographic market, representing approximately 45% of the segment's revenues in 2023. All other states each are less than 10% of segment revenues.
At this time, we are involved in various stages of investigation and cleanup related to environmental remediation matters at certain of our facilities. In addition, there may be soil or groundwater contamination at several of our properties resulting from historical, ongoing, or nearby activities.
At this time, we are involved in various stages of investigation and cleanup related to environmental remediation matters at certain of our facilities. In addition, soil or groundwater contamination may be present at several of our properties as a result of historical, ongoing, or nearby activities.
We believe we are well-positioned to benefit from significant upgrades in the electrical grid to support enhanced reliability, policy changes encouraging more generation from renewable energy sources, the expansion of new transmission, distribution, and telecommunication infrastructure, and the replacement and growth of the U.S. highway and road system.
We believe we are well-positioned to benefit from significant upgrades in the electrical grid to support enhanced reliability, policy changes encouraging more generation from renewable energy sources, the expansion of new transmission, distribution, and telecommunication infrastructure, and the replacement and growth of the U.S. highway and road system. 7 Table of Contents Our utility structures business is well-positioned to benefit from significant investment in utility infrastructure.
We have a proven and successful record of securing long-term reserve positions for both current and future mine locations through our employment of exploration teams and the use of professional third parties. Our reserves are critical to our raw material supply and long-term success.
Natural aggregates and specialty materials can be found throughout the U.S. We have a proven and successful record of securing long-term reserve positions for both current and future mine locations through our employment of exploration teams and the use of professional third parties. Our reserves are critical to our raw material supply and long-term success.
We believe we are well-positioned to benefit from healthy public infrastructure spending in Florida and adjacent states and have opportunities to grow organically into new geographies as well. Additionally, we expect to benefit from continued spending on the buildout of 5G and other wireless networks in North America.
We believe our traffic structures business is well-positioned to benefit from public infrastructure spending in Florida and adjacent states, and has opportunities to grow organically into new geographies as well. Additionally, we expect to benefit from continued spending on the buildout of 5G and other wireless networks in North America within our telecommunication structures business.
Stevenson was the Vice President, Associate General Counsel and Corporate Secretary for Trinity. Prior to joining Trinity, Mr. Stevenson was Vice President, General Counsel and Secretary for CarParts, Inc. (formerly known as U.S. Auto Parts Network, Inc.), an online provider of automotive parts, from 2011 to 2015. Mary E. Henderson serves as the Chief Accounting Officer at Arcosa.
Stevenson was the Vice President, Associate General Counsel and Corporate Secretary for Trinity. Prior to joining Trinity, Mr. Stevenson was Vice President, General Counsel and Secretary for CarParts, Inc. (formerly known as U.S. Auto Parts Network, Inc.), an online provider of automotive parts, from 2011 to 2015. Eric D.
Our utility structures business is well-positioned to benefit from significant investment in utility infrastructure. There is strong demand for transmission and distribution structures across the U.S. as much of the utility infrastructure has aged and needs replacement. Global concerns regarding emissions have increased consumer demand for electricity.
There is strong demand for transmission and distribution structures across the U.S. as much of the utility infrastructure has aged and needs replacement. Global concerns regarding emissions have increased consumer demand for electricity.
Our natural aggregates products include sand, gravel, limestone, stabilized material, and various other products used in the production of ready mixed concrete, cement, and other precast concrete products, roads, municipal and private water, sewer and drainage projects, oil and gas well pads, wind farms, as well as various other building products.
Our natural aggregates products include sand, gravel, limestone, stabilized material, and various other products used in the production of ready mixed concrete, cement, and other precast concrete products, roads, municipal and private water, sewer and drainage projects, oil and gas well pads, wind farms, as well as various other building products. • Recycled Aggregates: We are the largest producer of recycled aggregates in the U.S. with operations in Texas, California, Florida, and Arizona.
In October 2022, we completed the sale of our storage tanks business. 7 Table of Contents Markets Our Engineered Structures segment serves a broad spectrum of infrastructure markets, including electricity transmission and distribution, wind power generation, highway road construction, and wireless communication.
We have one manufacturing plant in Oklahoma and have the capability to manufacture telecom structures in our other Engineered Structures plants. In October 2022, we completed the sale of our storage tanks business. Markets Our Engineered Structures segment serves a broad spectrum of infrastructure markets, including electricity transmission and distribution, wind power generation, highway road construction, and wireless communication.
Coast Guard, the U.S. National Transportation Safety Board, the U.S. Customs Service, the Maritime Administration of the USDOT, and private industry organizations such as the American Bureau of Shipping. These organizations establish safety criteria, investigate vessel accidents, and recommend improved safety standards.
Coast Guard, the U.S. National Transportation Safety Board, the U.S. Customs Service, the Maritime Administration of the U.S. Department of Transportation ("USDOT"), and private industry organizations such as the American Bureau of Shipping.
Trench shields and shoring products are used for water and sewer construction, utility installations, manhole work, oil and gas pipeline construction, and other underground applications.
Trench shields and shoring products are used for water and sewer construction, utility installations, manhole work, oil and gas pipeline construction, and other underground applications. Additionally, we participate in certain regional rental markets for trench shoring equipment.
Our inland barge customers are primarily commercial marine transportation companies, lessors, and industrial shippers. While we compete with several other manufacturers in the U.S., we hold a majority share of the inland barge manufacturing market.
Our inland barge customers are primarily commercial marine transportation companies, lessors, and industrial shippers. While we compete with several other manufacturers in the U.S., we hold a majority share of the inland barge manufacturing market. We believe we are well-positioned to benefit from the expected fleet replacement cycle in both dry and liquid barges.
We believe that we employ appropriate precautions to protect our employees and others from workplace injuries and harmful exposure to materials handled and managed at our facilities.
Occupational Safety and Health Administration (“OSHA”) and, within our Construction Products segment, MSHA. We believe that we employ appropriate precautions to protect our employees and others from workplace injuries and harmful exposure to materials handled and managed at our facilities.
Our telecom structures business sells to wireless communication carriers and third-party tower lessors and developers. 8 Table of Contents Raw Materials and Suppliers The principal material used in our Engineered Structures segment is steel. During 2022, the supply of steel was sufficient to support our manufacturing requirements.
Our telecom structures business sells to wireless communication carriers and third-party tower lessors and developers. Raw Materials and Suppliers The principal material used in our Engineered Structures segment is steel. During 2023, the supply of steel was sufficient to support our manufacturing requirements. Overall steel prices began to rise sharply in late 2020, reaching record levels in 2021.
The outlook for construction spending in Texas is favorable with 2023 fiscal year planned Texas Department of Transportation (“TxDOT”) lettings of approximately $8.8 billion. In 2022, TxDOT released its 10-year Unified Transportation Program identifying a record $85 billion of infrastructure projects, an increase of $10 billion from the prior year.
The outlook for construction spending in Texas is favorable with 2024 fiscal year planned Texas Department of Transportation (“TxDOT”) lettings of approximately $13 billion. The TxDOT annual update to its 10-year Unified Transportation Program ("UTP") approved in 2023 identified a record $100 billion of infrastructure projects, an increase of $15 billion from the prior year's UTP update.
While hot rolled coil prices normalized to more historic levels during 2022, plate steel prices reached new highs before moderating somewhat but remain elevated. Steel prices may be volatile in the future in part as a result of market conditions.
While hot rolled coil prices normalized to more historic levels during 2022, plate steel prices reached new highs. In 2023, pricing for hot rolled coil was volatile while plate steel prices remained elevated, with a slight decline throughout the year. Steel prices may be volatile in the future in part as a result of market conditions.
Arcosa's three segments are made up of leading businesses that serve critical infrastructure markets: (1) On October 3, 2022, the Company completed the sale of its storage tanks business. 4 Table of Contents Our Segments. The Company reports operating results in three principal business segments.
Arcosa's three segments are made up of leading businesses that serve critical infrastructure markets: (1) Revenues for the year ended December 31, 2022 include $188.9 million from the storage tanks business that was sold on October 3, 2022. 4 Table of Contents Our Segments. The Company reports operating results in three principal business segments.
We believe the supply of recycled aggregates will continue to grow in use due to resource scarcity and associated ESG benefits, reduced disposal and acceptance of concrete in landfills, and energy savings from less processing and transportation costs. Recycled aggregates are a substitute to natural aggregates, primarily for hard rock uses.
Recycled aggregates currently supply a small percentage of total aggregates supplied nationwide. We believe the use of recycled aggregates will continue to grow due to resource scarcity and associated sustainability benefits, reduced disposal and acceptance of concrete in landfills, and energy savings from less processing and transportation costs.
The other half of our construction materials demand is split across residential, non-residential, and specialty/other end markets. • Infrastructure Construction: Infrastructure construction includes construction spending by federal, state, and local governments for roads, highways, bridges, airports, and other public infrastructure, as well as private spending on road and utility construction.
Markets Over a multi-year period, we believe that approximately half of our current portfolio of construction materials are used in infrastructure projects and the other half is split across residential, non-residential, and specialty/other end markets. 5 Table of Contents • Infrastructure Construction: Infrastructure construction includes construction spending by federal, state, and local governments for roads, highways, bridges, airports, and other public infrastructure, as well as private spending on road and utility construction.
In 2022, Arcosa launched LEAD: Leadership Exploration and Development. This formal employee development program was created to help identify internal talent, provide skill and competency growth opportunities, and build a deep bench of emerging leaders at the Company.
Over the course of the program, more than half of the participants received promotions into plant leadership roles. This formal employee development program was created to help identify internal talent, provide skill and competency growth opportunities, and build a deep bench of emerging leaders at the Company.
The Company employed approximately 5,230 employees as of December 31, 2022. The following table presents the approximate headcount breakdown of employees by segment: December 31, 2022 Construction Products 1,860 Engineered Structures 2,365 Transportation Products 900 Corporate 105 5,230 As of December 31, 2022, approximately 4,125 employees were employed in the U.S., 1,090 employees in Mexico, and 15 employees in Canada.
The Company employed approximately 6,075 employees as of December 31, 2023. The following table presents the approximate headcount breakdown of employees by segment: December 31, 2023 Construction Products 2,040 Engineered Structures 2,775 Transportation Products 1,150 Corporate 110 6,075 As of December 31, 2023, approximately 4,795 employees were employed in the U.S., 1,260 employees in Mexico, and 20 employees in Canada.
Essl 41 Group President 2018 Kerry S. Cole 54 Group President 2018 Jesse E. Collins, Jr. 56 Group President 2018 Bryan P. Stevenson 49 Chief Legal Officer 2018 Mary E. Henderson 64 Chief Accounting Officer 2018 Antonio Carrillo serves as Arcosa’s President and Chief Executive Officer, as well as a member of its Board of Directors.
Essl 42 Group President 2018 Kerry S. Cole 55 Group President 2018 Jesse E. Collins, Jr. 57 Group President 2018 Bryan P. Stevenson 50 Chief Legal Officer 2018 Eric D. Hurst 40 Vice President, Controller 2023 Antonio Carrillo serves as Arcosa’s President and Chief Executive Officer, as well as a member of Arcosa's Board of Directors.
Our principal executive offices are located at 500 N. Akard Street, Suite 400, Dallas, Texas 75201. Our telephone number is 972-942-6500, and our Internet website address is www.arcosa.com .
Arcosa is a Delaware corporation and was incorporated in 2018 as an independent, publicly-traded company listed on the New York Stock Exchange. Our principal executive offices are located at 500 N. Akard Street, Suite 400, Dallas, Texas 75201. Our telephone number is 972-942-6500, and our Internet website address is www.arcosa.com .
We believe we are well-positioned to benefit from the expected fleet replacement cycle in both dry and liquid barges. 9 Table of Contents Our customers for our steel components businesses are primarily freight and passenger railcar manufacturers, rail maintenance and repair facilities, railroads, steel mills, and mining equipment manufacturers. We compete with both domestic and foreign manufacturers.
Our customers for our steel components businesses are primarily freight and passenger railcar manufacturers, rail maintenance and repair facilities, railroads, steel mills, and mining equipment manufacturers. We compete with both domestic and foreign manufacturers. 9 Table of Contents Raw Materials and Suppliers The principal material used in our Transportation Products segment is steel.
The wind industry is currently awaiting finalization of the IRA's tax credit rules from the Internal Revenue Service (“IRS”). Subject to further clarification from the IRS, we believe these tax incentives provide a significant multi-year catalyst for our wind towers business.
The wind industry is currently awaiting finalization of the IRA's tax credit rules from the Internal Revenue Service (“IRS”). We believe these tax incentives provide a significant multi-year catalyst for our wind towers business, as demonstrated by more than $1.1 billion of new orders for delivery through 2028 we have received since the passage of the IRA.
Our steel components businesses that serve the railcar industry are regulated by governmental agencies such as the USDOT and the administrative agencies it oversees, including the Federal Railroad Administration, and industry authorities such as the Association of American Railroads. All such agencies and authorities promulgate rules, regulations, specifications, and operating standards affecting rail-related safety standards for railroad equipment.
These organizations establish safety criteria, investigate vessel accidents, and recommend improved safety standards. 11 Table of Contents Our steel components businesses that serve the railcar industry are regulated by governmental agencies such as the USDOT and the administrative agencies it oversees, including the Federal Railroad Administration, and industry authorities such as the Association of American Railroads.
Arcosa believes that its future success is highly dependent upon the Company’s continued ability to attract, retain, and motivate qualified employees. As part of the Company’s effort to attract and motivate employees, Arcosa offers competitive compensation and benefits, including healthcare and retirement benefits, parental and family leave, and holiday and paid time off.
As part of the Company’s effort to attract and motivate employees, Arcosa offers competitive compensation and benefits, including healthcare and retirement benefits, parental and family leave, and holiday and paid time off. Launched in September 2022, Arcosa's LEAD: Leadership Exploration and Development cohort continued its development track in 2023.
Overall steel prices began to rise sharply in late 2020, reaching record levels in 2021. While hot rolled coil prices normalized to more historic levels during 2022, plate steel prices reached new highs before moderating somewhat but remain elevated. Steel prices may be volatile in the future in part as a result of market conditions.
During 2023, the supply of steel was sufficient to support our manufacturing requirements. Overall steel prices began to rise sharply in late 2020, reaching record levels in 2021. While hot rolled coil prices normalized to more historic levels during 2022, plate steel prices reached new highs.
The raw product material is processed to remove steel, rebar, shingles, and other debris, and screened to appropriate sizes for use as a road base, erosion control, for building foundations, and as a backfill for utility trenches. Recycled aggregates currently supply a small percentage of total aggregates supplied nationwide.
Recycled aggregates are a complement to our natural aggregates platform and are produced by crushing concrete reclaimed from demolished highways, buildings, and other structures. The raw product material is processed to remove debris, primarily rebar, and screened to appropriate sizes for use as a road base, erosion control, building foundations, and as a backfill for utility trenches.
Occupational Safety and Health Administration and Similar Regulations. In addition to the regulations described above, our operations are subject to regulation of health and safety matters by the U.S. Occupational Safety and Health Administration (“OSHA”) and, within our Construction Products segment, MSHA.
All such agencies and authorities promulgate rules, regulations, specifications, and operating standards affecting rail-related safety standards for railroad equipment. Occupational Safety and Health Administration and Similar Regulations. In addition to the regulations described above, our operations are subject to regulation of health and safety matters by the U.S.
Non-residential construction activity, while currently negatively impacted by supply chain delays incited by the COVID-19 pandemic, generally follows a strong residential construction cycle on a lagged basis. Customers and Competitors For natural and recycled aggregates and specialty materials, our customers include concrete producers; commercial, residential, highway, and general contractors; manufacturers of masonry and building products; and state and local governments.
Customers and Competitors For natural and recycled aggregates and specialty materials, our customers include concrete producers; commercial, residential, highway, and general contractors; manufacturers of masonry and building products; and state and local governments.
We also manufacture pre-stressed concrete poles for utility, lighting, transportation, and telecommunications markets.
We also manufacture pre-stressed concrete poles for utility, lighting, transportation, and telecommunications markets. We have six manufacturing plants in the U.S. and Mexico dedicated to steel structures.
We compete, in most cases, with natural and recycled aggregates producers in the regions where we operate. Many opportunities for consolidation exist.
We compete, in most cases, with natural and recycled aggregates producers in the regions where we operate. Many opportunities for consolidation exist. Therefore, companies in the industry tend to grow by acquiring existing facilities to extend their current market positions or enter new markets.
Due to the added value in processing, specialty materials have a much wider, multi-state distribution area due to their higher value relative to their distribution costs as compared to natural and recycled aggregates. We compete with specialty materials producers nationwide. For trench shields and shoring products, our customers are equipment rental dealers and commercial, residential, and industrial contractors.
Our specialty materials products enjoy higher barriers to entry than our natural and recycled aggregates due to specific mineral properties, specialized manufacturing, or additional processing. Due to the added value in processing, specialty materials have a much wider, multi-state distribution area due to their higher value relative to their distribution costs as compared to natural and recycled aggregates.
We compete with shoring products manufacturers nationwide. Raw Material and Suppliers The primary raw material for our natural aggregates and specialty materials comes from quarries. Natural aggregates and specialty materials can be found throughout the U.S.
We compete with specialty materials producers nationwide. For trench shields and shoring products, our customers are equipment rental dealers and commercial, residential, and industrial contractors. We compete with shoring products manufacturers nationwide. 6 Table of Contents Raw Material and Suppliers The primary raw material for our natural aggregates and specialty materials comes from quarries.
In 2022, we began construction of a new concrete pole plant in Florida to serve increased grid hardening and renewable energy investment. • Wind Towers: We are one of the leading manufacturers of structural wind towers in the U.S. and Mexico with plants strategically located in wind-rich regions of North America. • Traffic Structures: We manufacture steel traffic structures for use on the U.S. highway and road system primarily serving Florida and adjacent states.
In March 2023, we began construction of a new wind tower plant in New Mexico to support the growing wind investment in the Southwest. • Traffic Structures: We manufacture steel traffic structures for use in the U.S. highway and road system primarily serving Florida and adjacent states.
These agencies promulgate and enforce rules and regulations pertaining, in part, to the manufacture of tanks that are used in the storage, transportation and transport arrangement, and distribution of regulated and non-regulated substances. 11 Table of Contents Transportation Products. The primary regulatory and industry authorities involved in the regulation of the inland barge industry are the U.S.
Food and Drug Administration (“FDA”). Engineered Structures. Arcosa’s Engineered Structures segment is subject to the regulations of various state departments of transportation. These agencies promulgate and enforce rules and regulations pertaining, in part, to the manufacture of traffic structures. Transportation Products. The primary regulatory and industry authorities involved in the regulation of the inland barge industry are the U.S.
In 2019, we launched a reenergized safety initiative, ARC 100, to build a positive and proactively engaged culture of safety excellence. ARC 100 is inspired by the voices of frontline employees, driven by cross-functional teams, and actively supported by visible commitment from senior leaders.
ARC 100 is inspired by the voices of frontline employees, driven by cross-functional teams, and actively supported by visible commitment from senior leaders. Since its implementation, Arcosa has experienced progress in reducing the severity and frequency of safety incidents as a result of a continued focus on building a strong safety culture through its ARC 100 safety initiative.
Arcosa values diversity and inclusion within its workforce and is committed to a work environment which promotes professionalism and inclusiveness. One of Arcosa’s core values is “We Win Together”. This belief drives our commitment to a workplace free from discrimination where collaboration, dedication, and unity align to drive favorable results for all stakeholders. Talent Attraction and Management.
This belief drives our commitment to a workplace free from discrimination where collaboration, dedication, and unity align to drive favorable results for all stakeholders. Talent Attraction and Management. Arcosa believes that its future success is highly dependent upon the Company’s continued ability to attract, retain, and motivate qualified employees.
During 2022, we expanded our recycled aggregates platform, which is largely Texas based, through the acquisition of Recycled Aggregate Materials Company, Inc. (“RAMCO”) with operations in the Los Angeles metropolitan area. • Specialty Materials: Our specialty materials, including lightweight aggregates, select natural aggregates, and milled or processed specialty building products and agricultural products, are produced and distributed nationwide.
Recycled aggregates are a substitute to natural aggregates, primarily for hard rock uses. • Specialty Materials: Our specialty materials, including lightweight aggregates, select natural aggregates, and milled or processed specialty building products and agricultural products, are produced and distributed nationwide.
We strive to continuously improve our procedures, processes, and management systems with regard to employee health and safety. These efforts are achieved by promoting safe work practices among employees and contractors and maintaining property and equipment in safe operating conditions. In furtherance of Arcosa’s commitment to improving our safety performance, the Company achieved improvements in certain safety metrics during 2022.
These efforts are achieved by promoting safe work practices among employees and contractors and maintaining property and equipment in safe operating conditions. 10 Table of Contents In 2019, we launched a reenergized safety initiative, ARC 100, to build a positive and proactively engaged culture of safety excellence.
The decrease in employee headcount from December 31, 2021 to December 31, 2022 was largely due to the sale of the storage tanks business. 10 Table of Contents Employee Health and Safety. Arcosa is committed to safety across our operations. Our highest priority is the health and safety of our employees.
Employee Health and Safety. Arcosa is committed to safety across our operations. Our highest priority is the health and safety of our employees. We strive to continuously improve our procedures, processes, and management systems with regard to employee health and safety.
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Our businesses support critical infrastructure sectors and our plants have continued to operate throughout the COVID-19 pandemic. Arcosa is a Delaware corporation and was incorporated in 2018 in connection with the separation (the “Separation”) of Arcosa from Trinity Industries, Inc. (“Trinity” or “Former Parent”) on November 1, 2018 as an independent, publicly-traded company, listed on the New York Stock Exchange.
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Non-residential construction activity, while showing signs of recent slowing in the U.S., has remained healthy in our markets supported by heavy industrial activity and the lagged effect of a strong residential construction cycle.
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During 2021, we expanded our natural aggregates platform through two large acquisitions. In April 2021, we completed the acquisition of StonePoint Ultimate Holding, LLC and affiliated entities (collectively “StonePoint”), a top 25 U.S. construction aggregates company, which expanded our footprint in Texas and the Gulf Coast and provided entry into new geographic markets in Tennessee and the Ohio River Valley.
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We have two manufacturing plants in the U.S. dedicated to concrete structures, including a new plant in Florida that was completed in December 2023. • Wind Towers: We are one of the leading manufacturers of structural wind towers in the U.S. and Mexico with three manufacturing plants strategically located in wind-rich regions of North America.
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In August 2021, we completed the acquisition of Southwest Rock Products, LLC and affiliated entities (collectively “Southwest Rock”), a leading Arizona pure-play aggregates producer, which provided scaled entry into the Phoenix metropolitan area. • Recycled Aggregates: Recycled aggregates are a complement to our natural aggregates platform and are produced by crushing concrete reclaimed from demolished highways, buildings, and other structures.
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In 2023, pricing for hot rolled coil was volatile, while plate steel prices remained elevated, with a slight decline throughout the year. Steel prices may be volatile in the future in part as a result of market conditions.
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Additionally, we participate in certain regional rental markets for trench shoring equipment. 5 Table of Contents Markets Over a multi-year horizon, we believe that approximately half of our current portfolio of construction materials are used in infrastructure projects.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeArcosa believes these provisions will protect its stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with Arcosa’s Board of Directors and by providing Arcosa’s Board of Directors with more time to assess any acquisition proposal. These provisions are not intended to make Arcosa immune from takeovers.
Biggest changeIn addition, Arcosa is subject to Section 203 of the Delaware General Corporation Law which makes it more difficult for a person who acquires, 15% or more of Arcosa's outstanding voting stock to effect various business combinations with us for a three-year period following the time such stockholder became a 15% stockholder. 27 Table of Contents Arcosa believes these provisions will protect its stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with Arcosa’s Board of Directors and by providing Arcosa’s Board of Directors with more time to assess any acquisition proposal.
The timing, declaration, amount, and payment of future dividends to Arcosa’s stockholders falls within the discretion of Arcosa’s Board of Directors.
The timing, declaration, amount, and payment of future dividends to Arcosa’s stockholders falls within the discretion of Arcosa’s Board of Directors (the "Board").
In addition, Arcosa's success in recovering natural aggregates and specialty materials depends on the ability to secure new reserve locations and permits to mine such reserves in areas that make distribution of materials economically viable. Community engagement and maintaining good relations within the communities that we operate is important to retaining and securing permits.
In addition, Arcosa's success in recovering natural aggregates and specialty materials depends on the ability to secure new reserve locations and permits to mine such reserves in areas that make distribution of materials economically viable. Community engagement and maintaining good relations within the communities where we operate is important to retaining and securing permits.
Arcosa’s business benefits from free trade agreements such as the United States-Mexico-Canada Agreement (“USMCA”). Potential developments, including failure to enforce the USMCA, potential changes or amendments to the agreement, governmental policies, and laws and regulations could adversely affect Arcosa’s existing production operations in Mexico and have a material adverse effect on Arcosa’s business.
Arcosa's business benefits from free trade agreements, such as the United States-Mexico-Canada Agreement ("USMCA"). Potential developments, including failure to enforce the USMCA, potential changes or amendments to the agreement, governmental policies, and laws and regulations could adversely affect Arcosa's existing production operations in Mexico and have a material adverse effect on Arcosa's business.
Additionally, the seasonal nature of Arcosa’s business has led to variation in Arcosa’s quarterly results in the past and is expected to continue to do so in the future. This general seasonality of Arcosa’s business and any severe or prolonged adverse weather conditions or other similar events could have a material adverse effect.
Additionally, the seasonal nature of Arcosa's business has led to variation in Arcosa's quarterly results in the past and is expected to continue to do so in the future. This general seasonality of Arcosa's business and any severe or prolonged adverse weather conditions or other similar events could have a material adverse effect on Arcosa's business.
If the SEC’s proposed climate disclosure requirements are adopted on substantially similar terms as proposed, we will be required to incur significant time and money to comply with the disclosure requirements and may be required to modify certain of our operations. These compliance costs could adversely impact our future business.
Furthermore, if the SEC's proposed climate disclosure requirements are adopted on substantially similar terms as proposed, we will be required to incur significant time and money to comply with the disclosure requirements and may be required to modify certain of our operations. These compliance costs could adversely impact our future business.
Business, regulatory, and legal developments regarding climate change, and physical impacts from climate change, could have an adverse effect on our business. Legislation and new rules to regulate emission of greenhouse gases (“GHGs”) has been introduced in numerous state legislatures, the U.S. Congress, and by the USEPA.
Business, regulatory, and legal developments regarding climate change, and physical impacts from climate change, could have an adverse effect on our business. Legislation and new rules to regulate emission of greenhouse gases (“GHGs”) have been introduced in numerous state legislatures, the U.S. Congress, and by the USEPA.
Arcosa is subject to potential liability for third-party claims alleging property damage and personal and bodily injury or death arising from the use of or exposure to Arcosa’s products, especially in connection with products Arcosa manufactures that Arcosa’s customers use to transport hazardous, flammable, toxic, or explosive materials.
Arcosa is subject to potential liability for third-party claims alleging property damage and personal and bodily injury or death arising from the use of or exposure to Arcosa’s products, especially in connection with products Arcosa manufactures that its customers use to transport hazardous, flammable, toxic, or explosive materials.
Our manufacturing plants or other facilities may have unknown environmental conditions that could be expensive and time-consuming to correct. There can be no assurance that we will not encounter hazardous environmental conditions at any of our manufacturing plants or other facilities that may require us to incur significant clean-up or correction costs.
Our manufacturing plants or other facilities may have unknown environmental conditions that could be expensive and time-consuming to correct. There can be no assurance that we will not encounter environmental conditions at any of our manufacturing plants or other facilities that may require us to incur significant clean-up or correction costs.
If Arcosa is not able to successfully integrate its transactions to any material degree, such failure of a successful integration could result in unexpected claims or otherwise have a material adverse effect on Arcosa’s business.
In addition, if Arcosa is not able to successfully integrate its transactions to any material degree, such failure of a successful integration could result in unexpected claims or otherwise have a material adverse effect on Arcosa’s business.
The risk of accidental contamination or injury from these materials cannot be completely eliminated. If an accident with these substances occurs, we could be held liable for any damages that result, as well as incurring clean-up costs and liabilities, which can be substantial. Additionally, an accident could damage our facilities, resulting in delays and increased costs.
The risk of accidental contamination or injury from these materials cannot be completely eliminated. If an accident involving these substances occurs, we could be held liable for any damages that result, as well as incurring clean-up costs and liabilities, which can be substantial. Additionally, an accident could damage our facilities, resulting in delays and increased costs.
Arcosa is a party to the Amended and Restated Credit Agreement (the “Credit Agreement”), by and among Arcosa, as borrower, and the lenders party thereto and the Indenture by and among Arcosa, certain of its subsidiaries which are guarantors and the trustee (the "Indenture") pursuant to which $400 million of 4.375% senior notes due 2029 (the "Senior Notes") (the Credit Agreement, Indenture, and Senior Notes, collectively, the “Financing Documents”) were issued.
Arcosa is a party to the Second Amended and Restated Credit Agreement (the “Credit Agreement”), by and among Arcosa, as borrower, and the lenders party thereto and the Indenture by and among Arcosa, certain of its subsidiaries which are guarantors and the trustee (the "Indenture"), pursuant to which $400 million of 4.375% senior notes due 2029 (the "Senior Notes" and, collectively, with the Credit Agreement and the Indenture, the “Financing Documents”) were issued.
We are also subject to potential liability for claims alleging property damage and personal and bodily injury or death arising from the use of or exposure to our 21 Table of Contents products, especially in connection with products we manufacture that our customers use to transport or store hazardous, flammable, toxic, or explosive materials.
We are also subject to potential liability for claims alleging property damage and personal and bodily injury or death arising from the use of or exposure to our 24 Table of Contents products, especially in connection with products we manufacture that our customers use to transport or store hazardous, flammable, toxic, or explosive materials.
Some of these proposals would require industries to meet new standards that may require substantial reductions in carbon emissions. There is also a potential for climate change legislation and regulation that could adversely impact the cost of certain manufacturing inputs, including the increased cost of energy and electricity.
Some of these proposals would require industries to meet new standards that may require substantial reductions in carbon emissions. There is also a potential for climate change legislation and regulation that could adversely impact the cost of certain manufacturing inputs, including the increasing cost of energy and electricity.
Under varying circumstances, Arcosa may seek to minimize these risks using hedges and similar financial instruments and other activities, although these measures, if and when implemented, may not be effective. Any material and untimely changes in interest rates or exchange rates could adversely impact our business.
Under varying circumstances, Arcosa may seek to minimize these risks using hedges and similar financial instruments and other activities, although these measures, if and when implemented, may not be effective. Any material and untimely changes in exchange rates could adversely impact our business.
If the IRS, SAT, or other taxing jurisdictions successfully contests a tax position that Arcosa takes, Arcosa may be required to pay additional taxes or fines which may not have been previously accrued that may adversely affect its results of operations and financial position.
If the IRS, SAT, or other taxing jurisdictions successfully contests a tax position that Arcosa takes, Arcosa may be required to pay additional taxes or penalties which may not have been previously accrued that may adversely affect its results of operations and financial position.
These delays may create unplanned downtime, increasing costs and inefficiencies in Arcosa’s operations, and increased levels of obsolete inventory. Additionally, Arcosa maintains an inventory of certain products that meet standard specifications and are ultimately purchased by a variety of end users.
These delays may create unplanned downtime, increasing costs and inefficiencies in Arcosa’s operations, and increased levels of excess inventory. Additionally, Arcosa maintains an inventory of certain products that meet standard specifications and are ultimately purchased by a variety of end users.
Any material failure, interruption of service, compromised data security, or cybersecurity threat could adversely affect Arcosa’s relations with suppliers, customers, and regulators and place Arcosa in violation of confidentiality and data protection laws, rules, and regulations, and result in negative impacts to Arcosa’s market share, operations, and profitability.
Any material failure, interruption of service, compromise of data security, or cybersecurity threat could adversely affect Arcosa’s relations with suppliers, customers, and regulators and place Arcosa in violation of data protection laws, rules, and regulations, and result in negative impacts to Arcosa’s market share, operations, and profitability.
Arcosa’s trademarks, service marks, copyrights, patents, and trade secrets may be exposed to market confusion, commercial 24 Table of Contents abuse, infringement, or misappropriation and possibly challenged, invalidated, circumvented, narrowed, or declared unenforceable by countries where Arcosa’s products and services are made available, including countries where the laws may not protect Arcosa’s intellectual property rights as fully as in the U.S.
Arcosa’s trademarks, service marks, copyrights, patents, and trade secrets may be exposed to market confusion, commercial abuse, infringement, or misappropriation and possibly challenged, invalidated, circumvented, narrowed, or declared unenforceable by countries where Arcosa’s products and services are made available, including countries where the laws may not protect Arcosa’s intellectual property rights as fully as in the U.S.
An outbreak or escalation of hostilities between the U.S. and any foreign power or between other foreign powers, such as the war in Ukraine, could result in a real or perceived shortage of petroleum and/or natural gas, which could result in an increase in the cost of natural gas or energy in general.
An outbreak or escalation of hostilities between the U.S. and any foreign power or between other foreign powers, such as the war in Ukraine or the Israeli-Hamas conflict, could result in a real or perceived shortage of petroleum and/or natural gas, which could result in an increase in the cost of natural gas or energy in general.
Additionally, the inflationary pressures on principal raw material prices, like steel, may result in a delay in orders from Arcosa's customers, including but not limited to, a customer's decision to place or delay orders for new barges due to fluctuations in the price of steel.
The inflationary pressures on principal raw material prices, like steel, may result in increased costs or a delay in orders from Arcosa's customers, including but not limited to a customer's decision to place or delay orders for new barges due to fluctuations in the price of steel.
While Arcosa maintains emergency response and business recovery plans that are intended to allow Arcosa to recover from natural disasters that could disrupt Arcosa’s business, Arcosa cannot provide assurances that its plans would fully protect Arcosa from the effects of all such disasters.
While Arcosa maintains emergency response and business recovery plans that are intended to allow Arcosa to recover from natural disasters, Arcosa cannot provide assurances that its plans would fully protect Arcosa from the effects of all such disasters.
Some of Arcosa’s customers place orders for Arcosa’s products (i) in reliance on their ability to utilize tax benefits or tax credits such as accelerated depreciation or the production tax credit for renewable energy or (ii) to utilize federal-aid programs that allow for purchase price reimbursement or other government funding or subsidies, any of which benefits, credits, or programs could be or are being delayed, discontinued or allowed to expire without extension thereby reducing demand for certain of Arcosa’s products and reducing certain tax credits for which Arcosa may be eligible.
Some of Arcosa’s customers place orders for Arcosa’s products (i) in reliance on their ability to obtain and utilize tax benefits or tax credits such as accelerated depreciation or the production tax credit or investment tax credit for renewable energy or (ii) to utilize federal-aid programs that allow for purchase price reimbursement or other government funding or subsidies, any of which benefits, credits, or programs could be modified, discontinued or allowed to expire without extension thereby reducing demand for certain of Arcosa’s products and reducing certain tax credits for which Arcosa may be eligible.
Arcosa’s inability to produce and disseminate relevant and/or reliable data and information pertaining to Arcosa’s business in an efficient, cost-effective, secure, and well-controlled fashion may have significant negative impacts on confidentiality requirements and obligations and trade secret or other proprietary needs and expectations and, therefore, Arcosa’s future operations, profitability, and competitive position.
Risks Related to Technology and Cybersecurity The inability to produce and disseminate relevant and/or reliable data and information pertaining to Arcosa’s business in an efficient, cost-effective, secure, and well-controlled fashion may have significant negative impacts on confidentiality requirements and obligations and trade secret or other proprietary needs and expectations and, therefore, Arcosa’s future operations, profitability, and competitive position.
Although Arcosa maintains reserves 27 Table of Contents for its probable and reasonably estimable liability, Arcosa’s reserves may be inadequate to cover its portion of claims or final judgments after taking into consideration rights in indemnity and recourse under insurance policies or to third parties as a result of which there could be a material adverse effect on Arcosa’s business.
Although Arcosa maintains reserves for its probable and reasonably estimable liability, Arcosa’s reserves may be inadequate to cover its portion of claims or final judgments after taking into consideration rights in indemnity and recourse under insurance policies or to third parties as a result of which there could be a material adverse effect on Arcosa’s business. See Note 15.
If Arcosa fails to comply with the applicable regulations related to the foreign countries where Arcosa operates, Arcosa may be unable to market and sell its products in those countries or could be subject to administrative fines or penalties.
If Arcosa fails to comply with the applicable regulations related to the foreign countries where Arcosa operates, 20 Table of Contents Arcosa may be unable to market and sell its products in those countries or could be subject to administrative fines or penalties.
The subjective nature and wide variety of frameworks and methods used by our stockholders and others to assess Arcosa’s ESG strategy and progress; diversity, equity, and inclusion ("DEI") initiatives; and heightened governance standards could result in a negative perception by our stockholders or misrepresentation of Arcosa’s ESG goals and progress.
The subjective nature and wide variety of frameworks and methods used by our stockholders and others to assess Arcosa’s sustainability strategy and progress; diversity, equity, and inclusion ("DEI") initiatives; and heightened governance standards could result in a negative perception by our stockholders or misrepresentation of Arcosa’s sustainability 25 Table of Contents goals and progress.
However, Arcosa’s forecasts are not always accurate and unexpected changes in demand for these products, whether because of a change in preferences or otherwise, can lead to increased levels of obsolete inventory. Any delays in construction projects and Arcosa’s customers’ orders or any inability to manage Arcosa’s inventory could have a material adverse effect.
However, Arcosa’s forecasts are not always accurate and unexpected changes in demand for these products, whether because of an unexpected delay, a change in preferences or otherwise, can lead to increased levels of excess inventory. Any delays in construction projects and Arcosa’s customers’ orders or any inability to manage Arcosa’s inventory could have a material adverse effect on Arcosa's business.
Arcosa has been proactive in integrating its ESG initiatives into its long-term strategy.
Arcosa has been proactive in integrating its sustainability initiatives into its long-term strategy.
Arcosa may use contract-specific purchasing practices, supplier commitments, contractual price escalation provisions, and other arrangements with Arcosa’s customers to mitigate the effect of this volatility on Arcosa’s operating profits for the year. To the extent that Arcosa does not have such arrangements in place, a change in steel prices could materially lower Arcosa’s profitability.
Arcosa may use contract-specific purchasing practices, supplier commitments, contractual price escalation provisions, flexing between steel type, and other arrangements with Arcosa’s customers to mitigate the effect of this volatility on Arcosa’s operating profits. To the 16 Table of Contents extent that Arcosa does not have such arrangements in place, a change in steel prices could materially lower Arcosa’s profitability.
For example, Arcosa’s competitors may import competing products that are subsidized by foreign governments and sold in the U.S. at less than fair value. The results of trade negotiations, trade agreements, and tariffs could also negatively affect Arcosa’s supplies, cost of goods sold, and customers.
For example, Arcosa’s competitors may import competing products that are subsidized by foreign governments and sold in the U.S. at less than fair value. The results of trade negotiations, trade agreements, and tariffs could also negatively affect Arcosa’s supplies, cost of goods sold, and customers. For example, Arcosa produces certain products at its manufacturing facilities in Mexico.
Construction activity and Arcosa's ability to deliver products on time or at all to its customers can also be affected in any period by public holidays, vacation periods, and adverse weather conditions such as extreme temperature, hurricanes, severe storms, torrential rains and floods, low river levels, natural disasters such as fires and earthquakes, a pandemic related shutdown or work stoppage, and similar events, any of which could reduce demand for Arcosa’s products, push back existing orders to later dates or lead to cancellations.
Construction activity and Arcosa's ability to deliver products on time or at all to its customers can also be affected in any period by public holidays, vacation periods, and adverse seasonal weather conditions such as extreme temperature, hurricanes, severe storms, torrential rains and floods, low river levels, and similar events, any of which could reduce demand for Arcosa's products, push back existing orders to later dates or lead to cancellations.
Any impairment of the value of goodwill or other intangible assets recorded in connection with previous acquisitions would result in a non-cash charge against earnings, which could have a material adverse effect on our financial condition and results of operations.
Any impairment of the value of goodwill or other intangible assets recorded in connection with previous acquisitions would result in a non-cash charge against earnings, which could have a material adverse effect on our financial condition and results of operations. Risks Related to Economic, Geopolitical and Legal Factors.
Arcosa’s ability to consummate any acquisitions on terms that are favorable to Arcosa may be limited by a number of factors, such as competition for attractive targets and, to the extent necessary, Arcosa’s ability to obtain financing on satisfactory terms, if at all.
However, Arcosa may not be able to identify and secure suitable opportunities. Arcosa’s ability to consummate any acquisitions on terms that are favorable to Arcosa may be limited by a number of factors, such as competition for attractive targets and, to the extent necessary, Arcosa’s ability to obtain financing on satisfactory terms, if at all.
Arcosa will have to continually upgrade its infrastructure and applications, to reduce these risks. Security breaches in Arcosa’s information technology could result in theft, destruction, loss, misappropriation, or release of confidential data, trade secrets, or other proprietary or intellectual property that could adversely impact Arcosa’s future results.
Arcosa will have to continually upgrade its infrastructure and applications to reduce or mitigate these risks. Security breaches in Arcosa’s information technology systems could result in theft, destruction, loss, misappropriation, or release of protected, confidential or other sensitive data including personal information of our employees, trade secrets, or other proprietary intellectual property that could adversely impact Arcosa’s future results.
The following list of material risk factors is not all-inclusive or necessarily in order of importance. Additional risks and uncertainties not presently known to Arcosa or that it currently deems immaterial also may materially adversely affect it in future periods. Risks Related to our Business and Operations. The global COVID-19 pandemic and other similar outbreaks may adversely affect Arcosa’s business.
The following list of material risk factors is not all-inclusive or necessarily in order of importance. Additional risks and uncertainties not presently known to Arcosa or that it currently deems immaterial also may materially adversely affect it in future periods. Risks Related to our Business and Operations.
Generally, liability under existing laws for an accident depends upon causation analysis and the acts, errors, or omissions, if any, of a party involved in the transportation activity, including, but not limited to, the shipper, the buyer, and the seller of the substances being transported, or the manufacturer of the barge, container, or its components.
Generally, liability under existing laws for an accident depends upon causation analysis and the acts, errors, or omissions, if any, of a party involved in the transportation activity, including, but not limited to, the shipper, the buyer, and the seller of the substances being transported, or the manufacturer of products or their components used to transport such substances.
Fluctuations in the price and supply of raw materials and parts and components used in the production of Arcosa’s products and the availability of natural aggregates, recycled aggregates, and specialty materials reserves could have a material adverse effect on its ability to cost-effectively manufacture and sell its products.
Fluctuations in the price and supply of raw materials and parts and components used in the production of Arcosa’s products could have a material adverse effect on its ability to cost-effectively manufacture and sell its products.
Furthermore, any shortages in trucking, rail, barge, or container shipping capacity, any increase in the cost thereof, or any other disruption to those transportation systems, including due to a pandemic related shutdown or work stoppage, could limit Arcosa’s ability to deliver its products in a timely manner or at all.
Furthermore, any shortages in trucking, rail, barge, or container shipping capacity, any increase in the cost thereof, or any other disruption to those transportation systems could limit Arcosa’s ability to deliver its products in a timely manner or at all.
Equipment failures or extensive damage to Arcosa’s facilities, including as might occur as a result of natural disasters, could lead to production, delivery or service curtailments or shutdowns, loss of revenue or higher expenses.
Extensive damage to Arcosa’s facilities, including as a result of natural disasters or similar incidents, could lead to production, delivery or service curtailments or shutdowns, loss of revenue or higher expenses.
We are subject to various governmental regulations in the U.S., Mexico, and other countries where we do business related to occupational safety and health, labor, and business practices.
Arcosa’s operations are also subject to various governmental regulations in the U.S., Mexico, and other countries where we do business related to occupational safety and health, labor, and business practices, including OSHA and MSHA.
If Arcosa is unable to purchase a sufficient quantity of raw materials, parts, and components on a timely basis, Arcosa could face disruptions in its production and incur delays while Arcosa attempts to engage alternative suppliers.
If Arcosa is unable to purchase a sufficient quantity of raw materials, parts, and components on a timely basis, Arcosa could face disruptions in its production and incur delays while it attempts to engage alternative suppliers. Fewer suppliers could require Arcosa to source unproven and distant supply alternatives.
Upon encountering a hazardous environmental condition or receiving a notice of a hazardous environmental condition, we may be required to correct the condition. The presence of a hazardous environmental condition relating to any of our manufacturing plants or other facilities may require significant expenditures to correct the environmental condition.
Upon encountering an environmental condition or receiving a notice of an environmental condition, we may be required to correct the condition. The presence of an environmental condition requiring corrective action or remediation relating to any of our manufacturing plants or other facilities may require significant expenditures to address.
Future limitations on the availability (including limitations imposed by increased regulation or restrictions on rail, road, and pipeline transportation of energy supplies as well as other potential supply chain limitations) or consumption of petroleum products and/or an increase in energy costs, particularly natural gas for plant operations and diesel fuel for vehicles and plant equipment, could have an adverse effect upon our ability to conduct Arcosa’s business cost effectively.
Future limitations on the availability (including limitations imposed by increased regulation or restrictions on rail, road, and pipeline transportation of energy supplies) or consumption of electricity, petroleum products or natural gas and/or an increase in energy costs, particularly natural gas and diesel fuel, could have an adverse effect upon our ability to conduct Arcosa’s business cost effectively.
Political, legal, trade, economic change or instability, criminal activities, or social unrest could limit or curtail Arcosa’s respective foreign business activities and operations, including the ability to hire and retain employees. Violence in Mexico associated with drug trafficking is continuing.
Arcosa’s operations outside of the U.S. are subject to risks associated with cross-border business transactions and activities. Political, legal, trade, or economic change or instability, criminal activities, or social unrest could limit or curtail Arcosa’s respective foreign business activities and operations, including the ability to hire and retain employees. Violence in Mexico associated with drug trafficking is continuing.
Our business is at risk from and may be impacted by information security incidents, including attempts to gain unauthorized access to our confidential data, ransomware, malware, phishing emails, and other electronic security events as well as unauthorized access to the confidential data, ransomware, malware, phishing emails, and other electronic security events involving third parties with which we do business.
Our business is at risk from and may be impacted by information security incidents, including attempts to gain unauthorized access to our systems or data, ransomware, malware, phishing scams, and other physical and electronic security events as well as from similar events impacting third parties with which we do business.
Although Arcosa regularly monitors and reviews its operations, procedures, and policies for compliance with Arcosa’s operating permits and related laws and regulations, the risk of environmental liability is inherent in the operation of Arcosa’s businesses.
These environmental permits are subject to modification, renewal, and/or revocation. Although Arcosa regularly monitors and reviews its operations, procedures, and policies for compliance with Arcosa’s environmental permits and related laws and regulations, the risk of environmental liability is inherent in the operation of Arcosa’s businesses.
In addition, Arcosa could face higher labor costs in the future as a result of severance or other charges associated with lay-offs, shutdowns, or reductions in the size and scope of its operations or difficulties of restarting Arcosa’s operations that have been temporarily shuttered.
In addition, Arcosa could face higher labor costs in the future as a result of severance or other charges associated with lay-offs, shutdowns, reductions in the size and scope of its operations or difficulties of restarting Arcosa’s operations that have been temporarily shuttered. Negative publicity, work stoppages, or strikes by unions could have a material adverse effect on Arcosa's business.
Such incidents can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security threats. They can also result from internal compromises, such as human error, or malicious acts.
Such incidents can range from individual attempts to gain unauthorized access to our information technology systems to more sophisticated security attacks and events. They can also result from internal compromises, such as human error, or malicious acts or misconduct by employees or third-party vendors.
The limited number of customers for certain of Arcosa’s products, the variable purchase patterns of Arcosa’s customers in all of its segments, the impact of inflation on principal raw material prices, including steel prices with respect to the order of new barges, and the timing of completion, delivery, and customer acceptance of orders may cause Arcosa’s revenues and income from operations to vary substantially each quarter, potentially resulting in significant fluctuations in its quarterly results.
The limited number of customers for certain of Arcosa’s products, the variable purchase patterns of Arcosa’s customers in all of its segments, and the timing of completion, delivery, and customer acceptance of orders may cause Arcosa’s revenues and income from operations to vary substantially each quarter, potentially resulting in significant fluctuations in its quarterly results.
Arcosa is a party to collective bargaining agreements with various labor unions at some of Arcosa’s operations in the U.S. and Canada and all of Arcosa’s operations in Mexico.
Some of Arcosa’s employees belong to labor unions and strikes or work stoppages could adversely affect Arcosa’s operations. Arcosa is a party to collective bargaining agreements with various labor unions at some of Arcosa’s operations in the U.S. and Canada and all of Arcosa’s operations in Mexico.
Manufacturing and construction sites are inherently dangerous workplaces. Arcosa’s manufacturing sites often put Arcosa’s employees and others in close proximity with large pieces of mechanized equipment, moving vehicles, chemical and manufacturing processes, heavy products and other items, and highly regulated materials.
Manufacturing and construction sites are inherently dangerous workplaces. Arcosa’s manufacturing sites often put Arcosa’s employees and others in close proximity with large pieces of mechanized equipment, moving vehicles, chemical and manufacturing processes, heavy products and other items, and highly regulated materials. Unsafe work sites have the potential to increase employee turnover and raise Arcosa’s operating costs.
An interruption in operations at Arcosa’s facilities, as a result of equipment or technology failure or acts of nature, including non-navigation orders, could reduce or prevent Arcosa’s production, delivery, service, or repair of Arcosa’s products and increase Arcosa’s costs and expenses. A halt of production at any of Arcosa’s manufacturing facilities could severely affect delivery times to Arcosa’s customers.
An interruption in operations at Arcosa’s facilities could reduce or prevent Arcosa’s production, delivery, service, or repair of Arcosa’s products and increase Arcosa’s costs and expenses. A halt of production at any of Arcosa’s manufacturing facilities could severely affect delivery times to Arcosa’s customers.
Arcosa relies on information technology infrastructure and architecture, including hardware, network including the cloud, software, people, and processes to provide useful and confidential information to conduct Arcosa’s business in the ordinary course.
Arcosa relies on information technology infrastructure and architecture, including hardware, cloud computing networks, software, people, and processes to manage protected, confidential, and other sensitive information to conduct Arcosa’s business in the ordinary course.
Arcosa’s inability to achieve satisfactory progress on its ESG initiatives, like climate change related initiatives, reduced emissions, DEI efforts, and improved safety, on a timely basis, or at all, or to meet the ESG criteria of our stockholders and others could adversely affect Arcosa’s business. Risks Related to Arcosa Common Stock. Investors may have difficulty valuing Arcosa's stock.
Arcosa’s inability to achieve satisfactory progress on its sustainability initiatives, like climate change related initiatives, reduced air emissions, water and waste management, DEI efforts, and improved safety, on a timely basis, or at all, or to meet the sustainability criteria of our stockholders and others could adversely affect Arcosa’s business.
However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that Arcosa’s Board of Directors determines is not in the best interests of Arcosa and its stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors. Risks Related to the Separation.
These provisions are not intended to make Arcosa immune from takeovers. However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that Arcosa’s Board of Directors determines is not in the best interests of Arcosa and its stockholders.
Additionally, such events could result in Arcosa’s customers’ attempts to unilaterally cancel or terminate firm contracts or orders in whole or in part resulting in contract or purchase order breaches which could result in increased commercial litigation costs.
In addition, such events could result in Arcosa’s customers’ attempts to unilaterally cancel or terminate firm contracts or orders in whole or in part, resulting in contract or purchase order breaches which could result in increased commercial litigation costs. Arcosa and its customers participate in cyclical industries, which are subject to downturns.
The inability to hire and retain skilled or professional labor could adversely impact Arcosa’s operations. Arcosa depends on professional labor across its businesses and skilled labor in the manufacture, maintenance, and repair of Arcosa’s products. Some of Arcosa’s facilities are located in areas where demand for skilled laborers may exceed supply.
The inability to hire and retain skilled or professional labor could adversely impact Arcosa’s operations. Arcosa depends on professional labor across its businesses and skilled labor in the manufacture, maintenance, and repair of Arcosa’s products.
Some of the markets Arcosa serves have a limited number of customers. The volumes purchased by customers in each of Arcosa’s business segments vary from year to year, and not all customers make purchases every year.
Some of the markets Arcosa serves have a limited number of customers. For example, Arcosa's wind tower customer base is highly concentrated due to a limited number of companies constructing wind towers. The volumes purchased by customers in each of Arcosa’s business segments vary from year to year, and not all customers make purchases every year.
While we employ several measures to prevent, detect, and mitigate these threats, there is no guarantee such efforts will be successful in preventing a cyber event or that any third parties with which we do business will be successful in preventing a cyber event.
There are additional risks related to the use of remote networking services and technologies that enable remote work. 26 Table of Contents While we employ several measures to prevent, detect, and mitigate these threats, there is no guarantee such efforts will be successful in preventing a cyber event or that any third parties with which we do business will be successful in preventing a cyber event.
If Arcosa is unable to secure financing on acceptable terms, Arcosa’s other sources of funds, including available cash, its committed bank facility, and cash flow from operations may not be adequate to fund its operations and contractual commitments and refinance existing debt.
If Arcosa is unable to secure financing on acceptable terms, Arcosa's other sources of funds, including available cash, its revolving credit facility, and cash flow from operations may not be adequate to fund its operations and contractual commitments and refinance existing debt. We are also exposed to risks associated with the creditworthiness of our customers and suppliers.
However, third parties could also seek to hold Arcosa responsible for these liabilities that Arcosa’s counterparties agreed to provide indemnification for, and there can be no assurance that the indemnity from these counterparties or any insurance will be sufficient to protect Arcosa against the full amount of such potential liabilities, or that the counterparties will be able to fully satisfy their indemnification obligations.
Third parties could also seek to hold Arcosa responsible for these liabilities, and there can be no assurance that any indemnity from our counterparties or any insurance we obtain in connection with the transaction will be sufficient to protect Arcosa against the full amount of such potential liabilities.
Arcosa faces intense competition in all geographic markets and each industry sector in which it operates. In addition to price, Arcosa faces competition in respect to product performance and technological innovation, substitution, quality, reliability of delivery, customer service, and other factors.
In addition to price, Arcosa faces competition with respect to product performance and technological innovation, substitution, quality, reliability of delivery, customer service, and other factors.
Arcosa may not be able to successfully identify, consummate or integrate acquisitions, and acquisitions may bring additional known and unknown risks to Arcosa’s business. Arcosa expects to routinely engage in the search for growth opportunities, including assessment of merger and acquisition prospects in new markets and/or products. However, Arcosa may not be able to identify and secure suitable opportunities.
"Commitments and Contingencies” for additional information on the Company’s current litigation. Risks Related to Growth Strategy. Arcosa may not be able to successfully identify, consummate or integrate acquisitions. Arcosa expects to routinely engage in the search for growth opportunities, including assessment of merger and acquisition prospects in new markets and/or products.
Repercussions from terrorist activities or armed conflict could harm Arcosa’s business. Terrorist activities, anti-terrorist efforts, and other armed conflict involving the U.S. or its interests abroad or other foreign actors may adversely affect the U.S. and global economies, potentially preventing Arcosa from meeting its financial and other obligations by negatively affecting the industries in which Arcosa operates.
Terrorist activities, anti-terrorist efforts, and other armed conflict involving the U.S. or its interests abroad or other foreign actors, including the war in Ukraine and the Israeli-Hamas conflict, may adversely affect the U.S. and global economies, potentially negatively affecting the industries in which Arcosa operates.
Arcosa periodically evaluates for potential impairment the carrying values of Arcosa’s long-lived assets, including intangible assets, to be held and used.
Arcosa may be required to reduce the value of Arcosa’s long-lived assets, including intangible assets and/or goodwill, which would weaken Arcosa’s financial results. Arcosa periodically evaluates for potential impairment the carrying values of Arcosa’s long-lived assets, including intangible assets, to be held and used.
These types of warranty claims could result in significant costs associated with product recalls or product shipping, repair, or replacement, and damage to Arcosa’s reputation. Defects in materials and workmanship could harm our reputation, expose us to product warranty or product liability claims, decrease demand for products, or materially harm existing or prospective customer relationships.
Defects in materials and workmanship could harm our reputation, expose us to product warranty or product liability claims, decrease demand for products, or materially harm existing or prospective customer relationships.
Arcosa’s business may be adversely affected if a pandemic or outbreak of an infectious disease occurs. For example, the outbreak of COVID-19, including its variants, has disrupted global trade, commerce, financial and credit markets, and daily life throughout the world.
Pandemics, epidemics, or other public health emergencies, as well as the governmental reaction thereto, may adversely affect Arcosa’s business. Arcosa’s business may be adversely affected if a pandemic, epidemic, or other public health emergency occurs. For example, the outbreak of COVID-19, including its variants, disrupted global trade, commerce, financial and credit markets, and daily life throughout the world.
There can be no assurances that governments will sustain or increase current infrastructure spending and tax incentive and other subsidy levels, and any reductions thereto or delays therein could affect Arcosa’s business. Arcosa’s manufacturer’s warranties expose Arcosa to product replacement and repair claims.
There can be no assurances that governments will sustain or increase current infrastructure spending and tax incentive and other subsidy levels, and any reductions thereto or delays therein could affect Arcosa’s business. Repercussions from terrorist activities or armed conflict could harm Arcosa’s business.
Extreme weather conditions and natural occurrences such 17 Table of Contents as extreme temperatures, hurricanes, tornadoes, and floods could result in varying states of disaster and a real or perceived shortage of petroleum and/or natural gas, including rationing thereof, potentially resulting in unavailability or an increase in natural gas prices, electricity prices, or other general energy costs.
Additionally, extreme weather conditions such as extreme temperatures, hurricanes, tornadoes, or floods could result in varying states of disaster and lead to disruptions to the delivery and supply of petroleum and/or natural gas, including rationing thereof, or an increase in natural gas prices, electricity prices, or other general energy costs.
The impacts of climate change and related regulations on our operations and the Company overall are highly uncertain and difficult to estimate, but such effects could be materially adverse to our business.
The impacts of climate change and related regulations on our operations and the Company overall are highly uncertain and difficult to estimate, but such effects could be materially adverse to our business. Arcosa’s sustainability efforts may be costly or may not meet the public sentiments of our stockholders and others with respect to our sustainability practices and related public disclosures.
Such laws and regulations expose Arcosa to liability for its own acts and in certain instances potentially expose Arcosa to liability for the acts of others. These laws and regulations also may impose liability on Arcosa currently under circumstances where at the time of the action taken, Arcosa’s acts or those of others complied with then applicable laws and regulations.
These laws and regulations also may impose liability on Arcosa currently under circumstances where at the time of the action taken, Arcosa’s acts or those of others complied with then applicable laws and regulations. In addition, such laws may require significant expenditures to achieve compliance, and are frequently modified or revised to impose new obligations.
As a result of our policy to comply with the FCPA and similar anti-bribery laws, we may be at a competitive disadvantage to competitors that are not subject to, or do not comply with, such laws. 16 Table of Contents Arcosa's margins may be affected as a result of inflation.
As a result of our policy to comply with the FCPA and similar anti-bribery laws, we may be at a competitive disadvantage to competitors that are not subject to, or do not comply with, such laws. Arcosa may incur increased costs due to fluctuations in foreign currency exchange rates.
Arcosa relies on patent, copyright, and trademark law, and trade secret protection and confidentiality and/or license agreements with others to protect Arcosa’s intellectual property rights.
Arcosa’s inability to sufficiently protect Arcosa’s intellectual property rights could adversely affect Arcosa’s business. Arcosa’s patents, copyrights, trademarks, trade secrets, and other intellectual property rights are important to Arcosa’s success. Arcosa relies on patent, copyright, and trademark law, and trade secret protection and confidentiality and/or license agreements with others to protect Arcosa’s intellectual property rights.
Although we believe that we are in material compliance with all applicable regulations and operating permits material to our business operations, amendments to existing statutes and regulations, adoption of new statutes and regulations, modification of existing operating permits, or entering into new lines of business could require us to continually alter our methods of operation and/or discontinue the sale of certain of our products resulting in costs to us that could be substantial.
In addition, amendments to existing statutes and regulations, adoption of new statutes and regulations, modification of existing operating permits, or entering into new lines of business which are covered by regulatory agencies that Arcosa has not previously been subject to could require us to alter our methods of operation and/or discontinue the sale of certain of our products, resulting in costs to us that could be substantial.
The Financing Documents contain a number of covenants potentially restricting the operations and financial condition of Arcosa and certain of its subsidiaries. These covenants could have an adverse effect on Arcosa's business by limiting its ability to take advantage of financing, merger and acquisition, or other opportunities.
These covenants and change of control provisions could have an adverse effect on Arcosa's business by limiting its ability to take advantage of financing, merger and acquisition, or other opportunities.
Such periods could negatively impact U.S. domestic and global financial markets, thereby reducing customer demand for Arcosa’s products and services and potentially result in reductions in Arcosa’s revenues, increased price competition, or increased operating costs, any of which could adversely affect Arcosa’s business. 22 Table of Contents For example, Arcosa produces many of its products at its manufacturing facilities in Mexico.
Such periods could negatively impact U.S. domestic and global financial markets, thereby reducing customer demand for Arcosa’s products and services and potentially result in reductions in Arcosa’s revenues, increased price competition, or increased operating costs, any of which could adversely affect Arcosa’s business. Furthermore, certain of Arcosa’s businesses depend on government spending for infrastructure and other similar building activities.
In instances where any benefits, credits, subsidies, or programs are allowed to expire or are otherwise delayed, modified or discontinued, the demand for Arcosa’s products could decrease and reduce the amount of AMP tax credits for which Arcosa may be eligible, thereby creating the potential for a material adverse effect on Arcosa’s business and could result in non-cash impairments on long-lived assets, including intangible assets, and/or goodwill.
If forthcoming guidance interprets the AMP in a restrictive manner or if any benefits, credits, subsidies, or programs under the IRA are allowed to expire or are otherwise modified or discontinued, the demand for Arcosa’s products could decrease and/or the amount of AMP tax credits for which Arcosa may be eligible may be reduced, thereby creating the potential for a material adverse effect on Arcosa’s business and future financial results.
Future regulatory changes, new lines of business which are covered by regulatory agencies that Arcosa has not previously been subject to, or the determination that Arcosa’s current or future products or processes are not in compliance with applicable requirements, rules, regulations, specifications, standards or product testing criteria might result in additional operating expenses, administrative fines or penalties, product recalls, reputational harm, or loss of business that could have a material adverse effect on Arcosa’s business.
Although we believe that we are in material compliance with all applicable regulations and operating permits material to our business operations, if we determine that our current or future products or processes are not in compliance with applicable requirements, rules, regulations, specifications, standards or product testing criteria, it might result in additional operating expenses, administrative fines or penalties, criminal sanctions, product recalls, reputational harm, or loss of business that could have a material adverse effect on Arcosa’s business.
Arcosa has not, to date, been materially affected by any of these risks, but Arcosa cannot predict the likelihood of future effects from such risks or any resulting adverse impact on Arcosa’s business.
Arcosa has not, to date, been materially affected by any of these risks, but Arcosa cannot predict the likelihood of future effects from such risks or any resulting adverse impact on Arcosa’s business. Arcosa ships raw materials to Mexico and manufactures products in Mexico that are sold in the U.S. or elsewhere, which are subject to customs and other regulations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2022, the Company’s estimated proven and probable mineral reserves by major commodity group and geographic region are as follows: Estimated Mineral Reserves (million tons) Proven Probable Total Owned Leased Natural aggregates: Texas 185.8 18.9 204.7 67% 33% All other 274.1 295.0 569.1 19% 81% 459.9 313.9 773.8 32% 68% Specialty materials 337.4 85.5 422.9 72% 28% 797.3 399.4 1,196.7 46% 54% Quantities of mineral reserves were estimated from geologic analysis of exploration results and the application of economic and mining parameters appropriate to the individual deposits.
Biggest changeAs of December 31, 2023, the Company’s estimated proven and probable mineral reserves by major commodity group and geographic region are as follows: Estimated Mineral Reserves (million tons) Proven Probable Total Owned Leased Natural aggregates: Texas 181.4 18.9 200.3 70 % 30 % All other 303.0 280.0 583.0 24 % 76 % 484.4 298.9 783.3 36 % 64 % Specialty materials 334.2 84.9 419.1 72 % 28 % 818.6 383.8 1,202.4 48 % 52 % Quantities of mineral reserves were estimated from geologic analysis of exploration results and the application of economic and mining parameters appropriate to the individual deposits.
Rights to mine the properties is controlled through our ownership in fee and/or long-term lease agreements with third parties. Our mining operations are subject to a wide range of laws, ordinances, and regulations and require various governmental approvals and permits.
Rights to mine the properties are controlled through our ownership in fee and/or long-term lease agreements with third parties. Our mining operations are subject to a wide range of laws, ordinances, and regulations and require various governmental approvals and permits.
Item 2. Properties. Arcosa’s corporate headquarters is located in Dallas, Texas. We principally operate in various locations throughout the U.S. and in Mexico. Our facilities are considered to be in good condition, well maintained, and adequate for our purposes.
Item 2. Properties. Arcosa’s corporate headquarters are located in Dallas, Texas. We principally operate in various locations throughout the U.S. and in Mexico. Our facilities are considered to be in good condition, well maintained, and adequate for our purposes.
As of December 31, 2022, the Company did not have any individually material mining properties. The terms “mineral resource,” “measured mineral resource,” “indicated mineral resource,” “inferred mineral resource,” “mineral reserve,” “proven mineral reserve,” and “probable mineral reserve,” whether singular or plural, are defined and used in accordance with S-K 1300.
As of December 31, 2023, the Company did not have any individually material mining properties. The terms “mineral resource,” “measured mineral resource,” “indicated mineral resource,” “inferred mineral resource,” “mineral reserve,” “proven mineral reserve,” and “probable mineral reserve,” whether singular or plural, are defined and used in accordance with S-K 1300.
In addition to our active operations, we control interests in 22 inactive and greenfield (undeveloped) mining properties. We also own and operate recycled aggregates (i.e., recycled concrete products) facilities which are not dependent on mineral reserves.
In addition to our active operations, we control interests in 20 inactive and greenfield (undeveloped) mining properties. We also own and operate recycled aggregates (i.e., recycled concrete products) facilities which are not dependent on mineral reserves.
The operations extract materials from surficial or near-surface alluvial and bedrock deposits. Mining methods utilized at our surface operations include conventional truck/shovel excavation and dredge mining. Our single underground mine in Pennsylvania utilizes mechanized room-and-pillar mining methods. Processing operations to produce sand and gravel and crushed stone consist of mechanized crushing, washing, and sizing.
The operations extract materials from surficial or near-surface alluvial and bedrock deposits. Mining methods utilized at our surface operations include conventional truck/shovel excavation and dredge mining. Our single underground mine in Pennsylvania utilizes mechanized room-and-pillar mining methods. 32 Table of Contents Processing operations to produce sand and gravel and crushed stone consist of mechanized crushing, washing, and sizing.
We have obtained all material permits currently required to conduct our present mining operations. Mineral Reserves We controlled an estimated 1.2 billion tons of mineral reserves as of December 31, 2022.
We have obtained all material permits currently required to conduct our present mining operations. Mineral Reserves We controlled an estimated 1.2 billion tons of mineral reserves as of December 31, 2023.
However, certain operations may have more limited reserves and may not be able to expand. Approximately 966 million tons or 81% of the reported mineral reserves are attributable to active mining operations.
However, certain operations may have more limited reserves and may not be able to expand. Approximately 969 million tons or 81% of the reported mineral reserves are attributable to active mining operations.
Our aggregates operations are grouped into the “Texas” (including Arkansas and Oklahoma) and “All Other” geographic regions and shipments from an individual quarry or stationary crushing location are generally limited in geographic scope because the cost of transportation to customers is high relative to the value of the product itself.
Our aggregates operations are grouped into the “Texas” and “All Other” geographic regions and shipments from an individual quarry or stationary crushing location are generally limited in geographic scope because the cost of transportation to customers is high relative to the value of the product itself.
Information about the total square footage of our facilities as of December 31, 2022 is as follows: Approximate Square Feet (1) Approximate Square Feet Located In (1) Owned Leased U.S. Non-U.S.
Information about the total square footage of our facilities as of December 31, 2023 is as follows: Approximate Square Feet (1) Approximate Square Feet Located In (1) Owned Leased U.S. Non-U.S.
Since specialty materials have a much wider, multi-state distribution area due to their higher value relative to their distribution costs as compared to natural aggregates, we do not group our specialty materials operations by geographic region. 29 Table of Contents Our active operations as of December 31, 2022 included 44 that produce and distribute natural aggregates and 13 that produce, process, and distribute specialty materials.
Since specialty materials have a much wider, multi-state distribution area due to their higher value relative to their distribution costs as compared to natural aggregates, we do not group our specialty materials operations by geographic region. 31 Table of Contents Our active operations as of December 31, 2023 included 49 that produce and distribute natural aggregates and 13 that produce, process, and distribute specialty materials.
Mineral resources, that are not mineral reserves, do not have a demonstrated economic viability at this time; however, of the 79.5 million tons of inferred mineral resources, 29.3 million tons or 37% are attributable to 9 active mining operations. Item 3. Legal Proceedings. See Note 15 of the Consolidated Financial Statements regarding legal proceedings.
Mineral resources, that are not mineral reserves, do not have a demonstrated economic viability at this time; however, of the 77.9 million tons of inferred mineral resources, 29.4 million tons or 38% are attributable to 10 active mining operations. Item 3. Legal Proceedings. See Note 15 of the Consolidated Financial Statements regarding legal proceedings.
The following table summarizes, by major commodity group, the annual production history over the preceding three years for our mining properties: 30 Table of Contents Annual Production (million tons) 2022 2021 2020 Natural aggregates 26.8 24.4 14.5 Specialty materials 4.6 5.3 5.3 31.4 29.7 19.8 Our ownership or leasehold interest in our mining properties – both active and undeveloped – is 100%.
The following table summarizes, by major commodity group, the annual production history over the preceding three years for our mining properties: Annual Production (million tons) 2023 2022 2021 Natural aggregates 27.5 26.8 24.4 Specialty materials 4.0 4.6 5.3 31.5 31.4 29.7 Our ownership or leasehold interest in our mining properties – both active and undeveloped – is 100%.
Economic viability of the reported mineral reserves has been demonstrated using three-year trailing average product prices on a per-property basis. 31 Table of Contents Mineral Resources We controlled an estimated 118.8 million tons of mineral resources as of December 31, 2022, exclusive of our reported mineral reserves.
Economic viability of the reported mineral reserves has been demonstrated using three-year trailing average product prices on a per-property basis. 33 Table of Contents Mineral Resources We controlled an estimated 117.3 million tons of mineral resources as of December 31, 2023, exclusive of our reported mineral reserves.
The economic viability of our reserves were determined using average selling prices ranging from $2.68 to $64.47 per ton, depending on the location and market. Our mineral reserves, on average, represent approximately 30 years at current production levels within the natural aggregates business and approximately 90 years at current production levels within the specialty materials business.
The economic viability of our reserves was determined using average selling prices ranging from $3.00 to $104.14 per ton, depending on the location and market. Our mineral reserves, on average, represent approximately 30 years at current production levels within the natural aggregates business and approximately 105 years at current production levels within the specialty materials business.
The following table summarizes our mineral resources by major commodity group and geographic region as of December 31, 2022: Estimated Mineral Resources (million tons) Measured Indicated Inferred Total Natural aggregates: Texas — 1.6 19.7 21.3 All other 6.5 7.7 10.3 24.5 6.5 9.3 30.0 45.8 Specialty materials 23.5 — 49.5 73.0 30.0 9.3 79.5 118.8 Our inferred mineral resources have been estimated on the basis of limited geologic evidence.
The following table summarizes our mineral resources by major commodity group and geographic region as of December 31, 2023: Estimated Mineral Resources (million tons) Measured Indicated Inferred Total Natural aggregates: Texas 1.1 1.1 18.8 21.0 All other 6.5 7.2 9.8 23.5 7.6 8.3 28.6 44.5 Specialty materials 23.5 — 49.3 72.8 31.1 8.3 77.9 117.3 Our inferred mineral resources have been estimated on the basis of limited geologic evidence.
The following map illustrates the locations of our active mining operations as of December 31, 2022, excluding stand-alone processing facilities: The following table summarizes, by major commodity group and geographic region, the status for our mining properties as of December 31, 2022: Number of Properties Producing Inactive Total Natural aggregates: Texas 22 9 31 All other 22 9 31 44 18 62 Specialty materials 13 4 17 57 22 79 Our active mining operations include 56 surface mines and one underground mine.
The following map illustrates the locations of our active mining operations as of December 31, 2023, excluding stand-alone processing facilities: The following table summarizes, by major commodity group and geographic region, the status for our mining properties as of December 31, 2023: Number of Properties Producing Inactive Total Natural aggregates: Texas 27 8 35 All other 22 8 30 49 16 65 Specialty materials 13 4 17 62 20 82 Our active mining operations include 61 surface mines and one underground mine.
Reported mineral reserves include only quantities that are owned in fee or under lease – approximately 550 million tons or 46% are located on owned land and 647 million tons or 54% are located on leased land.
Reported mineral reserves include only quantities that are owned in fee or under lease – approximately 581 million tons or 48% are located on owned land and 621 million tons or 52% are located on leased land.
Our mineral resource estimates are based on an initial assessment using average selling price assumptions ranging from $6.43 to $88.33, depending on the location and market.
Our mineral resource estimates are based on an initial assessment using average selling price assumptions ranging from $7.02 to $119.57 per ton, depending on the location and market.
Mining Properties During the year ended December 31, 2022, we produced 31.4 million tons of natural aggregates and specialty materials from our mining and processing operations located in the United States and Canada, all of which, we believe, have adequate road and/or railroad access.
For more information related to the risks associated with the estimates of mineral reserves and mineral resources, see Item 1A “ Risk Factor - Risks Related to our Business and Operations.” Mining Properties During the year ended December 31, 2023, we produced 31.5 million tons of natural aggregates and specialty materials from our mining and processing operations located in the United States and Canada, all of which, we believe, have adequate road and/or railroad access.
Construction Products 767,200 182,500 938,100 11,600 Engineered Structures 1,993,100 317,000 1,657,500 652,600 Transportation Products 1,802,500 81,100 1,883,600 — Corporate — 24,600 24,600 — 4,562,800 605,200 4,503,800 664,200 (1) Excludes non-operating facilities. 28 Table of Contents Our estimated weighted average production capacity utilization for the twelve-month period ended December 31, 2022 is reflected by the following percentages: Production Capacity Utilized (1) Construction Products (2) 75 % Engineered Structures 65 % Transportation Products 35 % (1) Excludes non-operating facilities.
Construction Products 772,900 382,300 1,143,600 11,600 Engineered Structures 1,860,400 301,800 1,501,600 660,600 Transportation Products 1,802,500 81,100 1,883,600 — Corporate — 39,800 39,800 — 4,435,800 805,000 4,568,600 672,200 (1) Excludes non-operating facilities. 30 Table of Contents Our estimated weighted average production capacity utilization for the twelve-month period ended December 31, 2023 is reflected by the following percentages: Production Capacity Utilized (1) Construction Products (2) 70 % Engineered Structures 70 % Transportation Products 45 % (1) Excludes non-operating facilities.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures. The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-K. 32 Table of Contents PART II
Biggest changeItem 4. Mine Safety Disclosures. The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-K. 34 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAll rights reserved. 11/1/2018 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Arcosa, Inc. $ 100 $ 101 $ 163 $ 202 $ 194 $ 201 S&P Small Cap 600 Index $ 100 $ 88 $ 107 $ 120 $ 152 $ 127 S&P Small Cap 600 Construction & Engineering Industry Index $ 100 $ 87 $ 115 $ 132 $ 190 $ 194 33 Table of Contents Issuer Purchases of Equity Securities This table provides information with respect to purchases by the Company of shares of its common stock during the quarter ended December 31, 2022: Period Number of Shares Purchased (1) Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 1, 2022 through October 31, 2022 232 $ 64.58 — $ 25,656,442 November 1, 2022 through November 30, 2022 46,148 $ 58.85 — $ 25,656,442 December 1, 2022 through December 31, 2022 188 $ 57.17 — $ 25,656,442 Total 46,568 $ 58.87 — $ 25,656,442 (1) These columns include the surrender to the Company of 46,568 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees.
Biggest changeAll rights reserved. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Arcosa, Inc. $ 100 $ 162 $ 201 $ 193 $ 200 $ 305 S&P Small Cap 600 Index $ 100 $ 123 $ 137 $ 173 $ 145 $ 169 S&P Small Cap 600 Construction & Engineering Industry Index $ 100 $ 132 $ 151 $ 218 $ 221 $ 353 36 Table of Contents Issuer Purchases of Equity Securities This table provides information with respect to purchases by the Company of shares of its common stock during the quarter ended December 31, 2023: Period Number of Shares Purchased (1) Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 1, 2023 through October 31, 2023 184 $ 67.08 — $ 50,000,000 November 1, 2023 through November 30, 2023 201,322 $ 68.76 200,000 $ 36,247,953 December 1, 2023 through December 31, 2023 1,935 $ 83.39 — $ 36,247,953 Total 203,441 $ 68.90 200,000 $ 36,247,953 (1) These columns include the following transactions during the three months ended December 31, 2023: (i) the surrender to the Company of 3,441 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees and (ii) the purchase of 200,000 shares of common stock on the open market as part of the stock repurchase program.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Shares of our common stock are listed on the New York Stock Exchange under the ticker symbol “ACA,” which began “regular-way” trading on November 1, 2018 immediately following the Separation. Our transfer agent and registrar is American Stock Transfer & Trust Company.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Shares of our common stock are listed on the New York Stock Exchange under the ticker symbol “ACA,” which began “regular-way” trading on November 1, 2018. Our transfer agent and registrar is American Stock Transfer & Trust Company.
The data in the graph assumes $100 was invested in each index at the closing price on November 1, 2018 and assumes the reinvestment of dividends. Copyright Standard and Poor’s, Inc. Used with permission.
The data in the graph assumes $100 was invested in each index at the closing price on December 31, 2018 and assumes the reinvestment of dividends. Copyright Standard and Poor’s, Inc. Used with permission.
Holders At December 31, 2022, we had 1,057 record holders of common stock. Because many of our shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Holders At December 31, 2023, we had 996 record holders of common stock. Because many of our shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Performance Graph The following Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filing.
Arcosa cannot guarantee that it will continue to pay any dividend in the future. 35 Table of Contents Performance Graph The following Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filing.
(2) In December 2022, the Company’s Board of Directors authorized a new $50 million share repurchase program effective January 1, 2023 through December 31, 2024 to replace a program of the same amount that expired on December 31, 2022.
(2) In December 2022, the Company’s Board of Directors authorized a new $50.0 million share repurchase program effective January 1, 2023 through December 31, 2024 to replace a program of the same amount that expired on December 31, 2022. During the year ended December 31, 2023, the Company repurchased 200,000 shares at a cost of $13.8 million.
Under the previous program, the Company repurchased 298,629 shares at a cost of $15.0 million during the year ended December 31, 2022. During the year ended December 31, 2021, the Company repurchased 170,168 shares at a cost of $9.4 million. As of December 31, 2022, the Company has approximately $25.7 million available dollars for share repurchases under the current program.
Under the previous program, the Company repurchased 298,629 shares at a cost of $15.0 million during the year ended December 31, 2022. As of December 31, 2023, the Company has approximately $36.2 million available for share repurchases under the current program. Item 6 . Reserved. 37 Table of Contents
The following graph compares the Company's cumulative total stockholder return from November 1, 2018 (beginning of “regular-way” trading) through December 31, 2022 with the S&P Small Cap 600 Index and the S&P Small Cap 600 Construction & Engineering Industry Index.
The following graph compares the Company's cumulative total stockholder return during the five-year period ended December 31, 2023 with the S&P Small Cap 600 Index and the S&P Small Cap 600 Construction & Engineering Industry Index.
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Item 6 . Reserved. 34 Table of Contents
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Dividends The timing, declaration, amount, and payment of future dividends to Arcosa's stockholders falls within the discretion of the Board of Directors.
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The Board of Directors' decisions regarding the payment of future dividends will depend on many factors, such as Arcosa's financial condition, earnings, capital requirements, debt service obligations, covenants related to our debt service obligations, industry practice, legal requirements, regulatory constraints, access to the capital markets, and other factors that the Board of Directors deems relevant.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOverall Summary Revenues Year Ended December 31, Percent Change 2022 2021 2020 2022 versus 2021 2021 versus 2020 ($ in millions) Construction Products $ 923.5 $ 796.8 $ 593.6 15.9 % 34.2 % Engineered Structures 1,002.0 934.1 877.7 7.3 6.4 Transportation Products 317.3 305.6 466.5 3.8 (34.5) Segment Totals before Eliminations 2,242.8 2,036.5 1,937.8 10.1 5.1 Eliminations — (0.1) (2.2) Consolidated Total $ 2,242.8 $ 2,036.4 $ 1,935.6 10.1 5.2 2022 versus 2021 • Revenues increased by 10.1%. • Revenues from our Construction Products segment increased primarily due to increased pricing across our product lines in our aggregate and specialty materials businesses and higher volumes from recently acquired businesses. 37 Table of Contents • In our Engineered Structures segment, revenues increased primarily due to increased pricing in all product lines. • Revenues from our Transportation Products segment increased primarily due to higher deliveries in steel components, partially offset by lower tank barge deliveries. 2021 versus 2020 • Revenues increased by 5.2%. • Revenues from our Construction Products segment increased primarily due to higher natural and recycled aggregates volumes from acquired businesses as well as in our legacy natural aggregates business. • In our Engineered Structures segment, revenues increased primarily due to increased pricing in all product lines driven by higher steel prices and higher volumes in utility structures and U.S. storage tanks. • Revenues from our Transportation Products segment decreased primarily due to lower volumes in our inland barge business.
Biggest changeExcluding the impact of the storage tanks divestiture, revenues increased 12.4%. • Revenues from Construction Products increased primarily due to higher pricing across our aggregate and specialty materials businesses and additional revenues from our recent trench shoring acquisition. • Excluding the impact of the storage tanks divestiture, revenues from Engineered Structures increased 7.4% primarily due to increased volumes in our utility structures business, partially offset by lower pricing due to product mix, and lower volumes in our wind towers business. • Revenues from Transportation Products increased due to higher volumes in both inland barge and steel components. 2022 versus 2021 • Revenues increased by 10.1%. • Revenues from Construction Products increased primarily due to increased pricing across our aggregate and specialty materials businesses and higher volumes from recently acquired businesses. • Revenues from Engineered Structures increased primarily due to increased pricing in all product lines. • Revenues from Transportation Products increased primarily due to higher deliveries in steel components, partially offset by lower tank barge deliveries.
Net cash provided by investing activities for the year ended December 31, 2022 was $90.7 million compared to net cash required by investing activities of $570.3 million for the year ended December 31, 2021. • Capital expenditures for the year ended December 31, 2022 increased to $138.0 million compared to $85.1 million for the year ended December 31, 2021 driven by investment in various growth projects in our Construction Products and Engineered Structures segments. • Proceeds of $271.6 million were received during the year ended December 31, 2022 from the sale of the storage tanks business compared to $18.2 million for the year ended December 31, 2021 from the divestiture of an asphalt operation acquired as part of the StonePoint acquisition. • Proceeds from the sale of property, plant, and equipment and other assets totaled $32.2 million for the year ended December 31, 2022 compared to $20.0 million for the year ended December 31, 2021. • Cash paid for acquisitions, net of cash acquired, was $75.1 million for the year ended December 31, 2022 compared to $523.4 million for the year ended December 31, 2021.
Net cash provided by investing activities for the year ended December 31, 2022 was $90.7 million compared to net cash required of $570.3 million for the year ended December 31, 2021. • Capital expenditures for the year ended December 31, 2022 increased to $138.0 million compared to $85.1 million for the year ended December 31, 2021, driven by investment in various growth projects in our Construction Products and Engineered Structures segments. • Proceeds of $271.6 million were received during the year ended December 31, 2022 from the sale of the storage tanks business compared to $18.2 million for the year ended December 31, 2021 from the divestiture of an asphalt operation acquired as part of the StonePoint acquisition. • Proceeds from the sale of property, plant, and equipment and other assets totaled $32.2 million for the year ended December 31, 2022 compared to $20.0 million for the year ended December 31, 2021. • Cash paid for acquisitions, net of cash acquired, was $75.1 million for the year ended December 31, 2022 compared to $523.4 million during for the year ended December 31, 2021.
Intangible assets, primarily consisting of customer relationships and permits, are recorded at fair value on the date of acquisition and amortized over their estimated useful lives using the straight-line method. See Note 1 of the Notes to Consolidated Financial Statements for additional information regarding the ranges of estimated useful lives by category of property, plant, and equipment and intangible assets.
Intangible assets, primarily consisting of customer relationships and permits, are recorded at fair value on the date of acquisition and amortized over their estimated useful lives using the straight-line method. See Note 1 to the Consolidated Financial Statements for additional information regarding the ranges of estimated useful lives by category of property, plant, and equipment and intangible assets.
Actual results may differ from these estimates under different assumptions or conditions. Our accounting policies are more fully described in Note 1 of the Notes to Consolidated Financial Statements. We believe the following critical accounting policies include our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements.
Actual results may differ from these estimates under different assumptions or conditions. Our accounting policies are more fully described in Note 1 to the Consolidated Financial Statements. We believe the following critical accounting policies include our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements.
However, resolution of certain claims or lawsuits by settlement or otherwise, could impact the operating results of the reporting period in which such resolution occurs. For additional information, see Note 15 of the Notes to Consolidated Financial Statements. Income Taxes The liability method is used to account for income taxes.
However, resolution of certain claims or lawsuits by settlement or otherwise, could impact the operating results of the reporting period in which such resolution occurs. For additional information, see Note 15 to the Consolidated Financial Statements. Income Taxes The liability method is used to account for income taxes.
A reporting unit is considered to be at risk if its estimated fair value does not exceed the carrying value of its net assets by 10% or more. See Note 1 and Note 6 of the Notes to Consolidated Financial Statements.
A reporting unit is considered to be at risk if its estimated fair value does not exceed the carrying value of its net assets by 10% or more. See Note 1 and Note 6 to the Consolidated Financial Statements.
The Company also contributed to a multiemployer defined benefit pension plan under the terms of a collective-bargaining agreement that covered certain union-represented employees at one of our facilities. See Note 11 of the Notes to Consolidated Financial Statements.
The Company also contributed to a multiemployer defined benefit pension plan under the terms of a collective-bargaining agreement that covered certain union-represented employees at one of our facilities. See Note 11 to the Consolidated Financial Statements.
Changes in the assumptions used could have a significant impact on the estimated acquisition date fair value of the related asset and any future depreciation, depletion, or amortization expense. 47 Table of Contents The estimated remaining useful lives of acquired tangible and definite-lived intangible assets are based on the length of time that the assets are expected to provide value to the Company and have a significant impact on current and future period earnings.
Changes in the assumptions used could have a significant impact on the estimated acquisition date fair value of the related asset and any future depreciation, depletion, or amortization expense. 49 Table of Contents The estimated remaining useful lives of acquired tangible and definite-lived intangible assets are based on the length of time that the assets are expected to provide value to the Company and have a significant impact on current and future period earnings.
Subsequently, the Company used $155.0 million of cash proceeds from the sale of the storage tanks business in the fourth quarter to repay all amounts borrowed under its revolving credit facility. During the year ended December 31, 2021, the Company received proceeds from the issuance of the $400 million senior notes to finance the acquisition of StonePoint.
Subsequently, the Company used $155.0 million of cash proceeds from the sale of the storage tanks business in the fourth quarter of 2022 to repay all amounts then borrowed under its revolving credit facility. During the year ended December 31, 2021, the Company received proceeds from the issuance of the $400 million senior notes to finance the acquisition of StonePoint.
Revenues from our trench shoring business increased 19.8% driven by higher volumes and increased pricing. • Cost of revenues increased 16.5%, partially due to higher volumes as well as additional depreciation, depletion, and amortization expense from recently acquired businesses. Cost of revenues also increased due to higher inflationary-related costs, including diesel, cement, and process fuels, across our businesses.
Revenues from our trench shoring business increased 19.8%, driven by higher volumes and increased pricing. • Cost of revenues increased 16.9%, partially due to higher volumes as well as additional depreciation, depletion, and amortization expense from recently acquired businesses. Cost of revenues also increased due to higher inflationary-related costs, including diesel, cement, and process fuels, across our businesses.
For a discussion of risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see Item 1A, “ Risk Factors ” included elsewhere herein. 51 Table of Contents
For a discussion of risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see Item 1A, “ Risk Factors ” included elsewhere herein. 54 Table of Contents
Employee Retirement Plans In 2022, we sponsored an employee savings plan under the 401(k) plan that covered substantially all employees and included a company matching contribution with the investment of the funds directed by the participants.
Employee Retirement Plans In 2023, we sponsored an employee savings plan under the 401(k) plan that covered substantially all employees and included a company matching contribution with the investment of the funds directed by the participants.
All of the unsatisfied performance obligations for inland barges in our Transportation Products segment are expected to be delivered during the year ending 2023. Results of Operations The following discussion of Arcosa’s results of operations should be read in connection with “Forward-Looking Statements” and Item 1A, “ Risk Factors ”.
All of the unsatisfied performance obligations for inland barges in our Transportation Products segment are expected to be delivered during 2024. Results of Operations The following discussion of Arcosa’s results of operations should be read in connection with “Forward-Looking Statements” and Item 1A, “ Risk Factors ”.
Impairment losses on long-lived assets held for sale are determined in a similar manner, except that estimated fair values are reduced by the estimated cost to dispose of the assets. The Company had no impairment charges during the year ended December 31, 2022.
Impairment losses on long-lived assets held for sale are determined in a similar manner, except that estimated fair values are reduced by the estimated cost to dispose of the assets. The Company had no impairment charges during the years ended December 31, 2023 or 2022.
We include results of operations from acquired businesses in our Consolidated Financial Statements from the effective date of the acquisition. Long-lived Assets As of December 31, 2022, net property, plant, and equipment and net intangible assets represent 36% and 8% of the Company's total assets, respectively.
We include results of operations from acquired businesses in our Consolidated Financial Statements from the effective date of the acquisition. Long-lived Assets As of December 31, 2023, net property, plant, and equipment and net intangible assets represent 37% and 8% of the Company's total assets, respectively.
Net cash required by financing activities for the year ended December 31, 2022 was $177.5 million compared to $380.9 million of net cash provided by financing activities for the same period in 2021. • During the year ended December 31, 2022, the Company received net proceeds from borrowings under its revolving credit facility of $30 million which was used to partially finance the acquisition of RAMCO.
Net cash required by financing activities during the year ended December 31, 2022 was $177.5 million compared to $380.9 million of net cash provided by financing activities for the same period in 2021. 47 Table of Contents • During the year ended December 31, 2022, the Company received net proceeds from borrowings under its revolving credit facility of $30.0 million, which was used to partially finance the RAMCO acquisition in the second quarter of 2022.
The Company also received proceeds of $100 million from borrowings under the revolving credit facility, of which $75 million were repaid during the year. • Dividends paid during the year ended December 31, 2022 were $9.8 million. • The Company paid $15.0 million during the year ended December 31, 2022 to repurchase common stock under the share repurchase program in effect at the time compared to $9.4 million paid during the year ended December 31, 2021. 2021 versus 2020 Operating Activities.
The Company also received proceeds of $100 million from borrowings under the revolving credit facility, of which $75 million were repaid during the year. • Dividends paid during the year ended December 31, 2022 were $9.8 million, unchanged from the prior year. • The Company paid $15.0 million during the year ended December 31, 2022 to repurchase common stock under the share repurchase program in effect at the time compared to $9.4 million paid during the year ended December 31, 2021.
Our customers remain committed to taking delivery of these orders. Barge order levels fell sharply at the onset of the pandemic and ensuing high steel prices further negatively impacted demand throughout 2021.
Our customers remain committed to taking delivery of these orders. Barge order levels fell sharply at the onset of the COVID-19 pandemic and ensuing high steel prices further negatively impacted demand.
Additionally, variations in any of these assumptions may result in different calculations in fair value that could result in an impairment charge. A 100 basis point increase in the discount rate or reduction in the terminal growth rate would not have resulted in an impairment of goodwill for any of our reporting units as of December 31, 2022.
Additionally, variations in any of these assumptions may result in different calculations in fair value that could result in an impairment charge. A 100 basis point increase in the discount rate or reduction in the terminal growth rate would not have resulted in an impairment of goodwill for any of our reporting units as of October 1, 2023.
The segment increase was partially offset by a 12.0% decrease in revenues from inland barges, reflecting continued weak demand conditions resulting from historically high steel prices. • Cost of revenues increased by 2.0% driven by higher steel component volumes, partially offset by lower tank barge volumes. • Selling, general, and administrative expenses increased 4.6% due to higher overall volumes and increased legal expenses. • Operating profit increased by 79.7% due to higher overall volumes and improved margins in our steel components business. 2021 versus 2020 • Revenues decreased 34.5%.
The segment increase was partially offset by a 12.0% decrease in revenues from inland barges, reflecting continued weak demand conditions resulting from historically high steel prices. • Cost of revenues increased by 2.0%, driven by higher steel component volumes, partially offset by lower tank barge volumes. • Selling, general, and administrative expenses increased 4.6% due to higher overall volumes and increased legal expenses. 45 Table of Contents • Operating profit increased by 79.7% due to higher overall volumes and improved margins in our steel components business.
Recent Accounting Pronouncements See Note 1 of the Notes to Consolidated Financial Statements for information about recent accounting pronouncements. 49 Table of Contents Forward-Looking Statements This annual report on Form 10-K (or statements otherwise made by the Company or on the Company’s behalf from time to time in other reports, filings with the Securities and Exchange Commission (“SEC”), news releases, conferences, internet postings or otherwise) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
For additional information, see Note 10 to the Notes to Consolidated Financial Statements. 51 Table of Contents Recent Accounting Pronouncements See Note 1 to the Consolidated Financial Statements for information about recent accounting pronouncements. 52 Table of Contents Forward-Looking Statements This annual report on Form 10-K (or statements otherwise made by the Company or on the Company’s behalf from time to time in other reports, filings with the SEC, news releases, conferences, internet postings or otherwise) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
This assessment considers, among other matters, the nature, frequency, and severity of recent losses; a forecast of future profitability; the duration of statutory carryback and carryforward periods; the Company’s experience with tax attributes expiring unused; and tax planning alternatives. As of December 31, 2022, our adjusted net deferred tax liability was $166.0 million.
This assessment considers, among other matters, the nature, frequency, and severity of recent losses; a forecast of future profitability; the duration of statutory carryback and carryforward periods; the Company’s experience with tax attributes expiring unused; and tax planning alternatives. As of December 31, 2023, the Company's adjusted net deferred tax liability was $172.8 million.
Our MD&A is presented in the following sections: • Company Overview • Potential Impact of COVID-19 on our Business • Executive Overview • Results of Operations • Liquidity and Capital Resources • Contractual Obligations and Commercial Commitments • Critical Accounting Policies and Estimates • Recent Accounting Pronouncements • Forward-Looking Statements Our MD&A should be read in conjunction with our Consolidated Financial Statements and related Notes in Item 8, “ Financial Statements and Supplementary Data ,” of this Annual Report on Form 10-K.
Our MD&A is presented in the following sections: • Company Overview • Market Outlook • Executive Overview • Results of Operations • Liquidity and Capital Resources • Contractual Obligations and Commercial Commitments • Critical Accounting Policies and Estimates • Recent Accounting Pronouncements • Forward-Looking Statements Our MD&A should be read in conjunction with our Consolidated Financial Statements in Item 8, “ Financial Statements and Supplementary Data ,” of this Annual Report on Form 10-K.
Based on the Company's annual goodwill impairment test, performed at the reporting unit level as of December 31, 2022, the Company concluded that no impairment charges were determined to be necessary and that none of the reporting units evaluated were at risk of failing the goodwill impairment test.
Based on the Company's annual goodwill impairment test, performed at the reporting unit level as of October 1, 2023, the Company concluded that no impairment charges were determined to be necessary and that none of the reporting units evaluated were at risk of failing the goodwill impairment test.
The margin for borrowing and commitment fee rate are determined based on Arcosa’s leverage as measured by a consolidated total indebtedness to consolidated EBITDA ratio. The margin for borrowing ranges from 1.25% to 2.00% and was set at LIBOR plus 1.75% as of December 31, 2022.
The margin for borrowing and commitment fee rate are determined based on Arcosa’s leverage as measured by a consolidated total indebtedness to consolidated EBITDA ratio. The margin for borrowing based on SOFR ranges from 1.25% to 2.00% and was set at 1.50% as of December 31, 2023.
The passage of the Inflation Reduction Act ("IRA") on August 16, 2022, which included a long-term extension of the PTC for new wind farm projects and introduced a new advanced manufacturing tax credit for companies that domestically manufacture and sell clean energy equipment in the U.S., is a significant catalyst for our wind towers business.
The passage of the IRA on August 16, 2022, which included a long-term extension of the PTC for new wind farm projects and introduced new AMP tax credits for companies that domestically manufacture and sell clean energy equipment in the U.S., is a significant catalyst for our wind towers business.
Income Taxes The income tax provision for the years ended December 31, 2022, 2021, and 2020 was $70.4 million, $14.0 million, and $31.6 million, respectively. The effective tax rate for the years ended December 31, 2022, 2021, and 2020 was 22.3%, 16.7%, and 22.9%, respectively.
Income Taxes The income tax provision for the years ended December 31, 2023, 2022, and 2021 was $36.7 million, $70.4 million, and $14.0 million, respectively. The effective tax rate for the years ended December 31, 2023, 2022, and 2021 was 18.7%, 22.3%, and 16.7%, respectively.
If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized. The goodwill impairment is measured as the excess of the reporting unit's carrying value over its fair value, not to exceed the amount of goodwill allocated to the reporting unit.
The goodwill impairment is measured as the excess of the reporting unit's carrying value over its fair value, not to exceed the amount of goodwill allocated to the reporting unit.
See Note 10, “Income Taxes” to the Consolidated Financial Statements. • Net income for the year ended December 31, 2022 was $245.8 million compared with $69.6 million for the year ended December 31, 2021.
See Note 10, “Income Taxes” to the Consolidated Financial Statements. • Net income for the year ended December 31, 2023 was $159.2 million compared with $245.8 million for the year ended December 31, 2022.
Interest on the Notes is payable semiannually in April and October of each year. The Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by each of the Company’s domestic subsidiaries that is a guarantor under our revolving credit and term loan facilities.
The Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by each of the Company’s domestic subsidiaries that is a guarantor under our revolving credit and term loan facilities.
At December 31, 2022, the Company had $60.3 million federal consolidated net operating loss carryforwards, primarily from businesses acquired, and $6.6 million of tax-effected state loss carryforwards remaining. In addition, the Company had $9.1 million of foreign net operating loss carryforwards that will begin to expire in the year 2023.
At December 31, 2023, the Company had $33.7 million federal consolidated net operating loss carryforwards, primarily from businesses acquired, and $6.1 million of tax-effected state loss carryforwards remaining. In addition, the Company had $13.8 million of foreign net operating loss carryforwards that will begin to expire in the year 2024.
Excluding the $189.0 million gain on the sale of our storage tanks business within the Engineered Structures segment, operating costs increased 8.0% • Cost of revenues for Construction Products increased primarily due to inflationary-related cost increases, including diesel, cement, and process fuels and higher volumes from recently acquired businesses. • Excluding the gain from the sale of the storage tanks business, operating costs for Engineered Structures increased primarily due to higher steel raw material prices. • Cost of revenues for Transportation Products increased primarily due to increased steel component volumes and higher steel raw material costs in inland barges. • Depreciation, depletion, and amortization increased primarily due to recent acquisitions, including the fair value mark up of long-lived assets. • As a percentage of revenue, selling, general, and administrative expenses for the year ended December 31, 2022 was 11.7% compared to 12.6% for the year ended December 31, 2021. 2021 versus 2020 • Operating costs increased 8.1%. • Cost of revenues for Construction Products increased primarily due to higher volumes from acquired businesses, including the cost impact of the fair market value write-up of acquired inventory and additional depreciation, depletion, and amortization expense. • Cost of revenues for Engineered Structures increased primarily due to higher volumes in our utility structures business, as well as higher steel raw material prices. 38 Table of Contents • Cost of revenues for Transportation Products decreased primarily due to lower volumes in our inland barge business. • Depreciation, depletion, and amortization increased primarily due to the acquisition of StonePoint and other recent acquisitions, including the fair value mark up of long-lived assets. • As a percentage of revenue, selling, general, and administrative expenses for the year ended December 31, 2021 was 12.6% compared to 11.5% for the year ended December 31, 2020.
Excluding the $189.0 million gain on the sale of our storage tanks business within Engineered Structures, operating costs increased 8.0%. • Cost of revenues for Construction Products increased primarily due to inflationary-related cost increases, including diesel, cement, and process fuels and higher volumes from recently acquired businesses. • Excluding the gain from the sale of the storage tanks business, operating costs for Engineered Structures increased primarily due to higher steel raw material prices. • Cost of revenues for Transportation Products increased primarily due to increased steel component volumes and higher steel raw material costs in inland barges. • Depreciation, depletion, and amortization increased primarily due to recent acquisitions, including the fair value mark up of long-lived assets. • As a percentage of revenue, selling, general, and administrative expenses for the year ended December 31, 2022 was 11.7% compared to 12.6% for the year ended December 31, 2021.
Cash Flows The following table summarizes our cash flows from operating, investing, and financing activities for each of the last three years: Year Ended December 31, 2022 2021 2020 (in millions) Total cash provided by (required by): Operating activities $ 174.3 $ 166.5 $ 259.9 Investing activities 90.7 (570.3) (528.2) Financing activities (177.5) 380.9 123.7 Net increase (decrease) in cash and cash equivalents $ 87.5 $ (22.9) $ (144.6) 2022 versus 2021 Operating Activities.
Cash Flows The following table summarizes our cash flows from operating, investing, and financing activities for each of the last three years: Year Ended December 31, 2023 2022 2021 (in millions) Total cash provided by (required by): Operating activities $ 261.0 $ 174.3 $ 166.5 Investing activities (285.8) 90.7 (570.3) Financing activities (30.8) (177.5) 380.9 Net increase (decrease) in cash and cash equivalents $ (55.6) $ 87.5 $ (22.9) 2023 versus 2022 Operating Activities.
The commitment fee rate ranges from 0.20% to 0.35% and was set at 0.30% at December 31, 2022. The Company's revolving credit and term loan facilities require the maintenance of certain ratios related to leverage and interest coverage. As of December 31, 2022, we were in compliance with all such financial covenants.
The commitment fee rate ranges from 0.20% to 0.35% and was set at 0.25% at December 31, 2023. The Company's revolving credit facility requires the maintenance of certain ratios related to leverage and interest coverage. As of December 31, 2023, we were in compliance with all such financial covenants.
The range of reasonably possible losses for such matters, taking into consideration our rights in indemnity and recourse to third parties was $0.3 million to $1.9 million as of December 31, 2022 and $9.1 million to $9.5 million as of December 31, 2021.
The reasonably possible loss for such matters, taking into consideration our rights in indemnity and recourse to third parties was $1.1 million as of December 31, 2023 and ranged from $0.3 million to $1.9 million as of December 31, 2022.
Excluding the gain, operating profit increased $52.7 million, or 49.1%. • Operating profit in Construction Products increased primarily due to increased pricing and volumes from recently acquired businesses, partially offset by inflationary-related cost increases, including diesel, cement, and process fuels. • Operating profit in Engineered Structures increased by 34.1%, excluding the gain on the sale of the storage tanks business, primarily due to higher revenues and improved margins in our utility structures and storage tanks businesses as well as improved pricing across all product lines. • Operating profit in Transportation Products increased primarily due to higher volumes and improved margins in our steel components business. 2021 versus 2020 • Our operating profit decreased 29.3%. • Operating profit in the Construction Products segment increased primarily due to increased volumes from recently acquired business and in our legacy businesses. • Operating profit in our Engineered Structures segment increased primarily due to higher volumes in our utility structures business and improved margins in our storage tanks business, partially offset by lower wind tower volumes. • Operating profit in our Transportation Products segment decreased primarily due to lower barge volumes and the associated decline in operational efficiencies from reduced capacity utilization.
Excluding the gain, operating profit increased $52.7 million, or 49.1%. • Operating profit in Construction Products increased primarily due to increased pricing and volumes from recently acquired businesses, partially offset by inflationary-related cost increases, including diesel, cement, and process fuels. • Operating profit in Engineered Structures increased by 34.1%, excluding the gain on the sale of the storage tanks business, primarily due to higher revenues and improved margins in our utility structures and storage tanks businesses as well as improved pricing across all product lines. • Operating profit in Transportation Products increased primarily due to higher volumes and improved margins in our steel components business.
Corporate Year Ended December 31, Percent Change 2022 2021 2020 2022 versus 2021 2021 versus 2020 ($ in millions) Corporate overhead costs $ 66.0 $ 70.3 $ 57.7 (6.1) % 21.8 % 2022 versus 2021 • Corporate overhead costs decreased 6.1% primarily due to a $1.1 million reduction in acquisition and divestiture-related expenses as well as by $8.7 million for a legal settlement recognized in the prior year.
Corporate Year Ended December 31, Percent Change 2023 2022 2021 2023 versus 2022 2022 versus 2021 ($ in millions) Corporate overhead costs $ 62.8 $ 66.0 $ 70.3 (4.8) % (6.1) % 2023 versus 2022 • Corporate overhead costs decreased 4.8% primarily due to a $8.2 million reduction in acquisition and divestiture-related expenses, partially offset by higher compensation-related expenses. 2022 versus 2021 • Corporate overhead costs decreased 6.1% primarily due to a $1.1 million reduction in acquisition and divestiture-related expenses as well as by $8.7 million for a legal settlement recognized in 2021.
Potential factors, which could cause our actual results of operations to differ materially from those in the forward-looking statements include, among others: • the impact of the COVID-19 pandemic on our sales, operations, supply chain, employees, and financial condition; • market conditions and customer demand for our business products and services; • the cyclical nature of the industries in which we compete; • variations in weather in areas where our products are manufactured, sold, used, or installed; • naturally occurring events and other events and disasters causing disruption to our manufacturing, product deliveries, and production capacity, thereby giving rise to an increase in expenses, loss of revenue, and property losses; • competition and other competitive factors; • our ability to identify, consummate, or integrate acquisitions of new businesses or products, or divest any business; • the timing of introduction of new products; • the timing and delivery of customer orders or a breach of customer contracts; • the credit worthiness of customers and their access to capital; • product price changes; • changes in mix of products sold; • the costs incurred to align manufacturing capacity with demand and the extent of its utilization; • the operating leverage and efficiencies that can be achieved by our manufacturing businesses; • availability and costs of steel, component parts, supplies, and other raw materials; • changing technologies; • surcharges and other fees added to fixed pricing agreements for steel, component parts, supplies and other raw materials; • increased costs due to increased inflation; • interest rates and capital costs; • counter-party risks for financial instruments; • long-term funding of our operations; • taxes; • the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico; • changes in import and export quotas and regulations; • business conditions in emerging economies; • costs and results of litigation; • changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies; • legal, regulatory, and environmental issues, including compliance of our products with mandated specifications, standards, or testing criteria and obligations to remove and replace our products following installation or to recall our products and install different products manufactured by us or our competitors; • actions by the executive and legislative branches of the U.S. government relative to federal government budgeting, taxation policies, government expenditures, U.S. borrowing/debt ceiling limits, and trade policies, including tariffs, and border closures; • the inability to sufficiently protect our intellectual property rights; • our ability to mitigate against cybersecurity incidents, including ransomware, malware, phishing emails, and other electronic security threats; • the improper use of social and other digital media to disseminate false, misleading, and/or unreliable or inaccurate information about the Company or demonstrate actions that negatively reflect on the Company; • if the Company's ESG efforts and related public disclosures are not favorably received by stockholders; 50 Table of Contents • if the Former Parent fails to perform under various transaction agreements that were executed as part of the Separation; • if the distribution of shares of Arcosa resulting from the Separation, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, the Company's stockholders at the time of the distribution and the Company could be subject to significant tax liability; and • if the Separation does not comply with legal dividend requirements.
Potential factors, which could cause our actual results of operations to differ materially from those in the forward-looking statements include, among others: • the impact of pandemics, epidemics, or other public health emergencies on our sales, operations, supply chain, employees, and financial condition; • market conditions and customer demand for our business products and services; • the cyclical and seasonal nature of the industries in which we compete; • variations in weather in areas where our construction products are sold, used, or installed; • naturally occurring events and other events and disasters causing disruption to our manufacturing, product deliveries, and production capacity, thereby giving rise to an increase in expenses, loss of revenue, and property losses; • competition and other competitive factors; • our ability to identify, consummate, or integrate acquisitions of new businesses or products, or divest any business; • the timing of introduction of new products; • the timing and delivery of customer orders or a breach of customer contracts; • the credit worthiness of customers and their access to capital; • product price changes; • changes in mix of products sold; • the costs incurred to align manufacturing capacity with demand and the extent of its utilization; • the operating leverage and efficiencies that can be achieved by our manufacturing businesses; • availability and costs of steel, component parts, supplies, and other raw materials; • changing technologies; • surcharges and other fees added to fixed pricing agreements for steel, component parts, supplies and other raw materials; • increased costs due to increased inflation; • interest rates and capital costs; • counter-party risks for financial instruments; • long-term funding of our operations; • taxes; • material nonpayment or nonperformance by any of our key customers; • the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico; • public infrastructure expenditures; • changes in import and export quotas and regulations; • business conditions in emerging economies; • costs and results of litigation; • changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies; • legal, regulatory, and environmental issues, including compliance of our products with mandated specifications, standards, or testing criteria and obligations to remove and replace our products following installation or to recall our products and install different products manufactured by us or our competitors; • actions by the executive and legislative branches of the U.S. government relative to federal government budgeting, taxation policies, government expenditures, U.S. borrowing/debt ceiling limits, and trade policies, including tariffs, and border closures; • the inability to sufficiently protect our intellectual property rights; • our ability to mitigate against cybersecurity incidents, including ransomware, malware, phishing emails, and other electronic security threats; • if the Company's sustainability efforts are not favorably received by stockholders; 53 Table of Contents • if the Company does not realize some or all of the benefits expected from certain provisions of the IRA, including the AMP tax credits for wind towers, which remain subject to the issuance of additional guidance and clarification; and • the delivery or satisfaction of any backlog or firm orders.
Excluding the gain, operating profit increased $30.0 million or 34.1% primarily due to higher revenues and improved margins in our utility structures and storage tanks businesses as well as improved pricing across all product lines.
Excluding the gain, operating profit increased $30.0 million or 34.1% primarily due to higher revenues and improved margins in our utility structures and storage tanks businesses as well as improved pricing across all product lines. The increase was partially offset by a $7.7 million increase to operating profit in 2021 related to the resolution of a customer dispute.
For a further discussion of revenues, costs, and the operating results of individual segments, see Segment Discussion below. 39 Table of Contents Other Income and Expense Other, net (income) expense consists of the following items: Year Ended December 31, 2022 2021 2020 (in millions) Interest income $ (1.1) $ — $ (0.4) Foreign currency exchange transactions 3.3 0.6 3.6 Other (0.4) (0.3) (0.2) Other, net (income) expense $ 1.8 $ 0.3 $ 3.0 • Other, net expense due to foreign currency exchange transactions increased by $2.7 million in 2022 primarily driven by increased volatility in the U.S. dollar to Mexican peso exchange rate as well as foreign currency impacts on the sale of the storage tanks business in Mexico.
Other Income and Expense Other, net (income) expense consists of the following items: Year Ended December 31, 2023 2022 2021 (in millions) Interest income $ (4.7) $ (1.1) $ — Foreign currency exchange transactions (1.7) 3.3 0.6 Other (0.3) (0.4) (0.3) Other, net (income) expense $ (6.7) $ 1.8 $ 0.3 • Other, net expense due to foreign currency exchange transactions decreased by $5.0 million in 2023, primarily driven by increased volatility in the U.S. dollar to Mexican peso exchange rate as well as foreign currency impacts on the sale of the storage tanks business in Mexico.
As a percentage of revenues, selling, general, and administrative costs declined to 10.9% compared to 11.3% in the previous year. • Operating profit increased by 16.0%, in line with revenue. • Depreciation, depletion, and amortization expense increased primarily due to recent acquisitions, including the impact of the fair value mark up of long-lived assets. 2021 versus 2020 • Revenues increased 34.2%, primarily due to StonePoint and other recent acquisitions, which on a combined basis increased segment revenues by approximately 25%.
As a percentage of revenues, selling, general, and administrative costs in the legacy businesses declined to 10.9% compared to 11.3% in the previous year. • Operating profit increased by 16.0%, in line with revenue. 43 Table of Contents • Depreciation, depletion, and amortization expense increased primarily due to recent acquisitions, including the impact of the fair value mark up of long-lived assets.
Repurchase Program In December 2022, the Company’s Board of Directors (the “Board”) authorized a new $50 million share repurchase program effective January 1, 2023 through December 31, 2024 to replace a program of the same amount that expired on December 31, 2022.
Repurchase Program In December 2022, the Company’s Board of Directors (the “Board”) authorized a new $50.0 million share repurchase program effective January 1, 2023 through December 31, 2024 to replace a program of the same amount that expired on December 31, 2022. During the year ended December 31, 2023, the Company repurchased 200,000 shares at a cost of $13.8 million.
See Note 3 and Note 7 of the Notes to Consolidated Financial Statements. 46 Table of Contents Stock-Based Compensation We have a stock-based compensation plan for our directors, officers, and employees. See Note 13 of the Notes to Consolidated Financial Statements.
The interest rate swap instrument expired in October 2023. See Note 3 and Note 7 to the Consolidated Financial Statements. 48 Table of Contents Stock-Based Compensation We have a stock-based compensation plan for our directors, officers, and employees. See Note 13 to the Consolidated Financial Statements.
Under the previous program, the Company repurchased 298,629 shares at a cost of $15.0 million during the year ended December 31, 2022. During the year ended December 31, 2021, the Company repurchased 170,168 shares at a cost of $9.4 million. See Note 1 of the Notes to Consolidated Financial Statements.
As of December 31, 2023, the Company had a remaining authorization of $36.2 million under the program. Under the previous program, the Company repurchased 298,629 shares at a cost of $15.0 million during the year ended December 31, 2022. See Note 1 to the Consolidated Financial Statements.
Company Overview Arcosa, Inc. and its consolidated subsidiaries, (“Arcosa,” “Company,” “we,” or “our”) headquartered in Dallas, Texas, is a provider of infrastructure-related products and solutions with leading brands serving construction, engineered structures, and transportation markets in North America.
Company Overview Arcosa, Inc. and its consolidated subsidiaries (“Arcosa,” “Company,” “we,” or “our”), headquartered in Dallas, Texas, is a provider of infrastructure-related products and solutions with leading brands serving construction, engineered structures, and transportation markets in North America. Arcosa is a Delaware corporation and was incorporated in 2018 as an independent, publicly-traded company, listed on the New York Stock Exchange.
Liquidity and Capital Resources Arcosa’s primary liquidity requirement consists of funding our business operations, including capital expenditures, working capital investment, and disciplined acquisitions. Our primary sources of liquidity include cash flow from operations, our existing cash balance, availability under the revolving credit facility, and, as necessary, the issuance of additional long-term debt or equity.
Our primary sources of liquidity include cash flow from operations, our existing cash balance, availability under the revolving credit facility, and, as necessary, the issuance of additional long-term debt or equity.
Year Ended December 31, Percent Change 2022 2021 2020 2022 versus 2021 2021 versus 2020 (in millions) Construction Products $ 827.0 $ 713.6 $ 518.9 15.9 % 37.5 % Engineered Structures 695.0 846.1 797.5 (17.9) 6.1 Transportation Products 305.8 299.2 411.9 2.2 (27.4) Segment Totals before Eliminations and Corporate Expenses 1,827.8 1,858.9 1,728.3 (1.7) 7.6 Corporate 66.0 70.3 57.7 (6.1) 21.8 Eliminations — (0.1) (2.2) Consolidated Total $ 1,893.8 $ 1,929.1 $ 1,783.8 (1.8) 8.1 Depreciation, depletion, and amortization $ 154.1 $ 144.3 $ 114.5 6.8 26.0 2022 versus 2021 • Operating costs decreased 1.8%.
Year Ended December 31, Percent Change 2023 2022 2021 2023 versus 2022 2022 versus 2021 (in millions) Construction Products $ 862.7 $ 827.0 $ 713.6 4.3 % 15.9 % Engineered Structures 777.8 695.0 846.1 11.9 (17.9) Transportation Products 387.7 305.8 299.2 26.8 2.2 Segment Totals before Eliminations and Corporate Expenses 2,028.2 1,827.8 1,858.9 11.0 (1.7) Corporate 62.8 66.0 70.3 (4.8) (6.1) Eliminations (0.4) — (0.1) Consolidated Total $ 2,090.6 $ 1,893.8 $ 1,929.1 10.4 (1.8) Depreciation, depletion, and amortization $ 159.5 $ 154.1 $ 144.3 3.5 6.8 40 Table of Contents 2023 versus 2022 • Operating costs increased 10.4%.
Approximately 57% of the unsatisfied performance obligations for our utility, wind, and related structures in our Engineered Structures segment are expected to be delivered during the year ending 2023, 24% expected to be delivered during the year ending 2024, with the remainder expected to be delivered during the year ending 2025.
Approximately 43% of the unsatisfied performance obligations for our utility, wind, and related structures in our Engineered Structures segment is expected to be delivered during 2024, approximately 27% is expected to be delivered during 2025, and the remainder is expected to be delivered through 2028.
Contractual Obligations and Commercial Commitments As of December 31, 2022, we had the following contractual obligations and commercial commitments: Contractual Obligations and Commercial Commitments Total Next 12 Months Beyond 12 Months (in millions) Debt $ 536.8 $ 8.4 $ 528.4 Operating leases 40.3 7.8 32.5 Finance leases 20.3 6.9 13.4 Obligations for purchase of goods and services 181.8 177.1 4.7 Total $ 779.2 $ 200.2 $ 579.0 See Note 15 of the Notes to Consolidated Financial Statements.
Contractual Obligations and Commercial Commitments As of December 31, 2023, we had the following contractual obligations and commercial commitments: Contractual Obligations and Commercial Commitments Total Next 12 Months Beyond 12 Months (in millions) Debt $ 560.0 $ — $ 560.0 Operating leases 41.3 9.4 31.9 Finance leases 13.8 7.2 6.6 Obligations for purchase of goods and services 198.9 153.2 45.7 Total $ 814.0 $ 169.8 $ 644.2 See Note 15 to the Consolidated Financial Statements.
Net cash provided by operating activities for the year ended December 31, 2021 was $166.5 million compared to $259.9 million for the year ended December 31, 2020. • The changes in current assets and liabilities resulted in a net use of cash of $50.3 million for the year ended December 31, 2021 compared to a net source of cash of $3.8 million for the year ended December 31, 2020.
Net cash provided by operating activities for the year ended December 31, 2023 was $261.0 million compared to $174.3 million for the year ended December 31, 2022. • The changes in current assets and liabilities resulted in a net use of cash of $71.8 million for the year ended December 31, 2023 compared to a net use of cash of $65.3 million for the year ended December 31, 2022.
The current year activity was primarily driven by increased receivables and inventories due to increased volumes and higher steel prices. 44 Table of Contents Investing Activities.
The current year activity was primarily driven by increased inventories due to higher volumes and increased receivables due to the recognition of AMP tax credits, partially offset by increased accounts payable. 46 Table of Contents Investing Activities.
Derivative Instruments In December 2018, the Company entered into an interest rate swap instrument, effective as of January 2, 2019 and expiring in October 2023, to reduce the effect of changes in the variable interest rates associated borrowings under the Amended and Restated Credit Agreement.
Derivative Instruments In December 2018, the Company entered into a $100.0 million interest rate swap instrument, effective as of January 2, 2019, to reduce the effect of changes in the variable interest rates associated with the first $100.0 million of borrowings under the Company's committed credit facility.
We have established a valuation allowance for state and foreign tax operating losses and credits that we have estimated may not be realizable. For additional information, see Note 10 of the Notes to Consolidated Financial Statements.
We have established a valuation allowance for state and foreign tax operating losses and credits that we have estimated may not be realizable.
Selling, general, and administrative expenses increased by 2.7% for the year ended December 31, 2022, when compared to the prior year largely due to increased compensation costs. • The effective tax rate for the year ended December 31, 2022 was 22.3% compared to 16.7% for the year ended December 31, 2021.
Selling, general, and administrative expenses were relatively unchanged for the year ended December 31, 2023, when compared to the prior year, as the elimination of costs from the storage tanks business were largely offset by increased compensation-related costs. • The effective tax rate for the year ended December 31, 2023 was 18.7% compared to 22.3% for the year ended December 31, 2022.
The interest rates under the revolving credit facility and term loan are variable based on LIBOR or an alternate base rate plus a margin. A commitment fee accrues on the average daily unused portion of the revolving facility.
The interest rates under the revolving credit facility are variable based on the daily simple or term Secured Overnight Financing Rate ("SOFR"), plus a 10-basis point credit spread adjustment, or an alternate base rate, in each case plus a margin for borrowing. A commitment fee accrues on the average daily unused portion of the revolving facility.
Operating Profit (Loss) Year Ended December 31, Percent Change 2022 2021 2020 2022 versus 2021 2021 versus 2020 (in millions) Construction Products $ 96.5 $ 83.2 $ 74.7 16.0 % 11.4 % Engineered Structures 307.0 88.0 80.2 248.9 9.7 Transportation Products 11.5 6.4 54.6 79.7 (88.3) Segment Totals before Eliminations and Corporate Expenses 415.0 177.6 209.5 133.7 (15.2) Corporate (66.0) (70.3) (57.7) (6.1) 21.8 Consolidated Total $ 349.0 $ 107.3 $ 151.8 225.3 (29.3) 2022 versus 2021 • Operating profit increased 225.3%, a large portion of which related to the $189.0 million gain on sale of our storage tanks business within the Engineered Structures segment.
Operating Profit (Loss) Year Ended December 31, Percent Change 2023 2022 2021 2023 versus 2022 2022 versus 2021 (in millions) Construction Products $ 138.6 $ 96.5 $ 83.2 43.6 % 16.0 % Engineered Structures 95.7 307.0 88.0 (68.8) 248.9 Transportation Products 45.8 11.5 6.4 298.3 79.7 Segment Totals before Eliminations and Corporate Expenses 280.1 415.0 177.6 (32.5) 133.7 Corporate (62.8) (66.0) (70.3) (4.8) (6.1) Consolidated Total $ 217.3 $ 349.0 $ 107.3 (37.7) 225.3 2023 versus 2022 • Operating profit decreased 37.7%, driven by the divestiture of the storage tanks business.
The estimates and judgments that most significantly affect the fair value calculations are assumptions, consisting of level three inputs, related to revenue and operating profit growth, discount rates, and exit multiples. 48 Table of Contents As of December 31, 2022, goodwill totaled $958.5 million.
The estimates and judgments that most significantly affect the fair value calculations are assumptions, consisting of level three inputs, related to revenue and operating profit growth, discount rates, and exit multiples. 50 Table of Contents During the year ended December 31, 2023, the Company voluntarily changed its annual goodwill impairment assessment date from December 31st to October 1st.
See Note 10 of the Notes to Consolidated Financial Statements for a further discussion of income taxes. 40 Table of Contents Segment Discussion Construction Products Year Ended December 31, Percent Change 2022 2021 2020 2022 versus 2021 2021 versus 2020 ($ in millions) Revenues: Aggregates and specialty materials $ 821.4 $ 711.6 $ 529.4 15.4 % 34.4 % Construction site support 102.1 85.2 64.2 19.8 32.7 Total revenues 923.5 796.8 593.6 15.9 34.2 Operating costs: Cost of revenues 726.6 623.7 449.7 16.5 38.7 Selling, general, and administrative expenses 100.4 89.9 68.4 11.7 31.4 Impairment charge — — 0.8 Operating profit $ 96.5 $ 83.2 $ 74.7 16.0 11.4 Depreciation, depletion, and amortization $ 102.7 $ 88.7 $ 60.1 15.8 47.6 2022 versus 2021 • Revenues increased 15.9% partially due to recent acquisitions, which on a combined basis accounted for approximately half of the increase in segment revenues.
See Note 10 to the Consolidated Financial Statements for a further discussion of income taxes. 42 Table of Contents Segment Discussion Construction Products Year Ended December 31, Percent Change 2023 2022 2021 2023 versus 2022 2022 versus 2021 ($ in millions) Revenues: Aggregates and specialty materials $ 879.9 $ 821.4 $ 711.6 7.1 % 15.4 % Construction site support 121.4 102.1 85.2 18.9 19.8 Total revenues 1,001.3 923.5 796.8 8.4 15.9 Operating costs: Cost of revenues 783.9 736.3 630.1 6.5 16.9 Selling, general, and administrative expenses 107.0 100.4 89.9 6.6 11.7 Gain on disposition of property, plant, equipment, and other assets (28.2) (9.7) (6.4) Operating profit $ 138.6 $ 96.5 $ 83.2 43.6 16.0 Depreciation, depletion, and amortization $ 111.7 $ 102.7 $ 88.7 8.8 15.8 2023 versus 2022 • Revenues increased 8.4% primarily due to increased pricing across our product lines in our aggregates and specialty materials businesses.
Other Investing and Financing Activities Revolving Credit Facility and Senior Notes On January 2, 2020, the Company entered into an Amended and Restated Credit Agreement to increase the revolving credit facility to $500 million and added a term loan facility of $150 million, in each case with a maturity date of January 2, 2025.
Other Investing and Financing Activities Revolving Credit Facility and Senior Notes On August 23, 2023, the Company entered into a Second Amended and Restated Credit Agreement to increase the revolving credit facility from $500.0 million to $600.0 million, extend the maturity date from January 2, 2025 to August 23, 2028, and refinance and repay in full the remaining balance of the term loan then outstanding under the Amended and Restated Credit Agreement .
Our customers remain committed to taking delivery of these orders. In utility structures, order and inquiry activity continues to be healthy, as customers remain focused on grid hardening and reliability initiatives. The demand outlook for traffic and telecom structures also remains positive.
In utility structures, order and inquiry activity continues to be healthy, as customers remain focused on grid hardening and reliability initiatives.
The increase in our effective tax rate for the year ended December 31, 2022 was largely due to true-ups of apportionment rates impacting prior year state current and deferred taxes. For a reconciliation of the federal tax rate to our effective tax rate, see Note 10 of the Notes to Consolidated Financial Statements.
The decrease in our effective tax rate for the year ended December 31, 2023 was largely due to AMP tax credits and the tax effects of foreign currency translations. For a reconciliation of the federal tax rate to our effective tax rate, see Note 10 to the Consolidated Financial Statements.
To align with lower expected production levels in 2022, we reduced capacity in our two active barge operating plants and completed the idling of our Madisonville, Louisiana facility in the fourth quarter of 2021 to further reduce our cost structure.
In 2022, we reduced capacity in our two active barge operating plants and completed the idling of our Louisiana facility in the fourth quarter of 2021 to further reduce our cost structure. While high steel prices have impacted order levels, the underlying fundamentals for a dry barge replacement cycle remain in place.
Transportation Products Year Ended December 31, Percent Change 2022 2021 2020 2022 versus 2021 2021 versus 2020 ($ in millions) Revenues: Inland barges $ 189.9 $ 215.7 $ 378.3 (12.0) % (43.0) % Steel components 127.4 89.9 88.2 41.7 1.9 Total revenues 317.3 305.6 466.5 3.8 (34.5) Operating costs: Cost of revenues 283.0 277.4 384.3 2.0 (27.8) Selling, general, and administrative expenses 22.8 21.8 22.6 4.6 (3.5) Impairment charge — — 5.0 Operating profit $ 11.5 $ 6.4 $ 54.6 79.7 (88.3) Depreciation and amortization $ 15.8 $ 17.8 $ 18.0 (11.2) (1.1) 2022 versus 2021 • Revenues increased 3.8% led by a 41.7% increase in steel components revenues due to increased deliveries resulting from improving demand conditions in the North American railcar market.
Transportation Products Year Ended December 31, Percent Change 2023 2022 2021 2023 versus 2022 2022 versus 2021 ($ in millions) Revenues: Inland barges $ 280.2 $ 189.9 $ 215.7 47.6 % (12.0) % Steel components 153.3 127.4 89.9 20.3 41.7 Total revenues 433.5 317.3 305.6 36.6 3.8 Operating costs: Cost of revenues 362.3 283.0 277.9 28.0 1.8 Selling, general, and administrative expenses 25.4 22.8 21.8 11.4 4.6 Gain on disposition of property, plant, equipment, and other assets — — (0.5) Operating profit $ 45.8 $ 11.5 $ 6.4 298.3 79.7 Depreciation and amortization $ 16.0 $ 15.8 $ 17.8 1.3 (11.2) 2023 versus 2022 • Revenues increased 36.6% due to higher volumes and improved pricing of inland barges and steel components. • Cost of revenues increased by 28.0% reflecting higher volumes during the current year.
Engineered Structures Year Ended December 31, Percent Change 2022 2021 2020 2022 versus 2021 2021 versus 2020 ($ in millions) Revenues: Utility, wind, and related structures $ 813.1 $ 717.9 $ 695.2 13.3 % 3.3 % Storage tanks 188.9 216.2 182.5 (12.6) 18.5 Total revenues 1,002.0 934.1 877.7 7.3 6.4 Operating costs: Cost of revenues 810.4 769.2 721.8 5.4 6.6 Selling, general, and administrative expenses 73.6 74.0 74.4 (0.5) (0.5) Gain on sale of storage tanks business (189.0) — — Impairment charge — 2.9 1.3 Operating profit $ 307.0 $ 88.0 $ 80.2 248.9 9.7 Depreciation and amortization $ 30.5 $ 33.1 $ 31.5 (7.9) 5.1 2022 versus 2021 • Revenues increased 7.3% driven by increased pricing across all product lines partially offset by lower overall volumes and the sale of the storage tanks business which was completed on October 3, 2022. • Cost of revenues increased 5.4% primarily driven by higher steel raw material prices partially offset by lower overall volumes and the elimination of costs for storage tanks in the fourth quarter following the sale. • Selling, general, and administrative expenses were substantially unchanged as increased costs in utility structures were offset by the elimination of costs from storage tanks in the fourth quarter following the sale. • Operating profit increased significantly driven by the $189.0 million gain recognized on sale of our storage tanks business during the fourth quarter.
Excluding the impact of the divestiture in both periods, operating profit increased $12.4 million or 16.1% primarily due to $25.3 million of net benefit recognized from AMP tax credits in our wind towers business, partially offset by lower margins in our utility structures business, driven by product mix, and decreased wind tower volumes. 2022 versus 2021 • Revenues increased 7.3%, driven by increased pricing across all product lines, partially offset by lower overall volumes and the sale of the storage tanks business, which was completed on October 3, 2022. • Cost of revenues increased 5.2%, primarily driven by higher steel raw material prices, partially offset by lower overall volumes and the elimination of costs for storage tanks in the fourth quarter following the sale. • Selling, general, and administrative expenses were substantially unchanged as increased costs in utility structures were offset by the elimination of costs from storage tanks in the fourth quarter following the sale. 44 Table of Contents • Operating profit increased significantly, driven by the $189.0 million gain recognized on sale of our storage tanks business during the fourth quarter.
Goodwill Goodwill is required to be tested for impairment annually or on an interim basis whenever events or circumstances change indicating that the carrying amount of the goodwill might be impaired. The quantitative goodwill impairment test is assessed at the “reporting unit” level by comparing the reporting unit's estimated fair value with the carrying amount of its net assets.
The quantitative goodwill impairment test is assessed at the “reporting unit” level by comparing the reporting unit's estimated fair value with the carrying amount of its net assets. If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized.
The additional $52.7 million increase was driven by increased pricing and volumes in Construction Products, higher margins on increased pricing in Engineered Structures, and higher overall volumes and increased efficiencies in Transportation Products. 36 Table of Contents • As a percentage of revenue, selling, general, and administrative expenses was 11.7% for the year ended December 31, 2022, compared to 12.6% in the prior year.
Excluding the impact of the divested business in both years, operating profit increased $92.0 million, driven by higher pricing and asset sale gains in Construction Products, increased volumes in Transportation Products, and AMP tax credits in Engineered Structures. • As a percentage of revenue, selling, general, and administrative expenses was 11.3% for the year ended December 31, 2023, compared to 11.7% in the prior year.
All of the backlog for inland barges is expected to be delivered during the year ending December 31, 2023.
Unsatisfied Performance Obligations (Backlog) As of December 31, 2023, the backlog for inland barges was $253.7 million compared to $225.1 million as of December 31, 2022. All of the backlog for inland barges is expected to be delivered during 2024.
Unsatisfied Performance Obligations (Backlog) As of December 31, 2022 and 2021 our backlog of firm orders was as follows: December 31, 2022 December 31, 2021 (in millions) Engineered Structures: Utility, wind, and related structures $ 671.3 $ 437.5 Storage tanks (1) $ — $ 22.0 Transportation Products: Inland barges $ 225.1 $ 92.7 (1) On October 3, 2022, the Company completed the sale of its storage tanks business and its related backlog.
Unsatisfied Performance Obligations (Backlog) As of December 31, 2023 and 2022 our backlog of firm orders was as follows: December 31, 2023 December 31, 2022 (in millions) Engineered Structures: Utility, wind, and related structures $ 1,367.5 $ 671.3 Transportation Products: Inland barges $ 253.7 $ 225.1 Approximately 43% of the unsatisfied performance obligations for our utility, wind, and related structures in our Engineered Structures segment is expected to be delivered during 2024, approximately 27% is expected to be delivered during 2025, and the remainder is expected to be delivered through 2028.
The effective tax rates differ from the federal tax rate of 21.0% due to the impact of state income taxes, excess tax benefits related to equity compensation, and the impact of foreign tax benefits.
The effective tax rates differ from the federal tax rate of 21.0% due to AMP tax credits, tax effects of foreign currency translations, state income taxes, prior year true-ups, and statutory depletion deductions.
Impairment charges of $2.9 million were recognized during the year ended December 31, 2021 related to assets that were classified as held for sale during the year. Impairment charges of $7.1 million were recognized during the year ended December 31, 2020 related to assets that were disposed of during the year.
Impairment charges of $2.9 million were recognized during the year ended December 31, 2021 related to assets that were classified as held for sale during the year. Goodwill Goodwill is required to be tested for impairment annually or on an interim basis whenever events or circumstances change indicating that the carrying amount of the goodwill might be impaired.
As a result, order inquiries have been increasing, and we received orders of $134 million in the fourth quarter of 2022, primarily for hopper barges for 2023 delivery.
The fleet continues to age, new builds have not kept pace with scrapping, and utilization rates are high. As a result, order inquiries have been strong, and we received orders of $86.0 million in the fourth quarter of 2023 for both hopper and tank barges for 2024 delivery.
Revenues also increased by $7.7 million due to a non-recurring item in our wind towers business related to the resolution of a customer dispute from 2019. • Cost of revenues increased 6.6% driven by higher steel raw material prices and increased volumes in our utility structures business, partially offset by lower wind tower volumes.
Revenue from utility, wind, and related structures increased 7.4% primarily due to increased volumes in our utility structures business, partially offset by lower pricing due to product mix, and lower volumes in our wind towers business. • Cost of revenues decreased 11.6% largely due to the elimination of costs from our storage tanks business.
This increase was partially offset by lower wind tower volumes and Winter Storm Uri that impacted production in our Texas and Oklahoma plants for approximately one week in the first quarter. Unsatisfied Performance Obligations (Backlog) As of December 31, 2022, the backlog for utility, wind, and related structures was $671.3 million compared to $437.5 million as of December 31, 2021.
Unsatisfied Performance Obligations (Backlog) As of December 31, 2023, the backlog for utility, wind, and related structures was $1,367.5 million compared to $671.3 million as of December 31, 2022.
Per the terms of the facility, it terminated on April 6, 2021 upon the closing of the Company’s private offering of $400.0 million in senior notes. On April 6, 2021, the Company issued $400.0 million aggregate principal amount of 4.375% senior notes (the “Notes”) that mature in April 2029.
Borrowings under the credit agreement are guaranteed by certain wholly owned subsidiaries of the Company. On April 6, 2021, the Company issued $400.0 million aggregate principal amount of 4.375% senior notes (the “Notes”) that mature in April 2029. Interest on the Notes is payable semiannually in April and October of each year.
We are focused on managing inflationary pressures related to diesel, cement, and process fuels through proactive price increases and are monitoring potential impacts on overall demand as leading economic indicators indicate an increased probability of an economic slowdown in 2023. • Within our Engineered Structures segment, our backlog as of December 31, 2022 provides good production visibility for 2023.
We have been successful in managing inflationary cost pressures through proactive price increases. • Within our Engineered Structures segment, our backlog as of December 31, 2023 provides good production visibility for 2024. Our customers remain committed to taking delivery of these orders.
As of December 31, 2022, we had no outstanding loans borrowed under the revolving credit facility, and there were approximately $25.3 million of letters of credit issued, leaving $474.7 million available. During 2022, the Company borrowed a net $30 million, which was used to partially finance the acquisition of RAMCO.
During the year ended December 31, 2022, the Company received net proceeds from borrowings under its revolving credit facility of $30.0 million which was used to partially finance the RAMCO acquisition in the second quarter of 2022.
In the fourth quarter of 2022, we received wind tower orders of $371 million which extends our backlog to 2025 and fills a base level of production capacity for the next three years. • Within our Transportation Products segment, our backlog for inland barges as of December 31, 2022 is $225.1 million, which fills a significant portion of our planned production capacity for 2023.
As a result, we are opening a new plant in New Mexico, with production at this facility expected to begin in mid-2024. • Within our Transportation Products segment, our backlog for inland barges as of December 31, 2023 was $253.7 million, up 12.7% compared to December 31, 2022, and fills a significant portion of our planned production capacity for 2024.
Net cash required by investing activities for the year ended December 31, 2021 was $570.3 million compared to $528.2 million for the year ended December 31, 2020. • Capital expenditures for the year ended December 31, 2021 were $85.1 million compared to $82.1 million for the year ended December 31, 2020. • Proceeds from the sale of property, plant, and equipment and other assets totaled $20.0 million for the year ended December 31, 2021 compared to $9.6 million for the year ended December 31, 2020. • Cash paid for acquisitions, net of cash acquired, was $523.4 million for the year ended December 31, 2021 compared to $455.7 million during for the year ended December 31, 2020.
Net cash required by investing activities for the year ended December 31, 2023 was $285.8 million compared to net cash provided by investing activities of $90.7 million for the year ended December 31, 2022. • Capital expenditures for the year ended December 31, 2023 increased to $203.5 million compared to $138.0 million for the year ended December 31, 2022 with the increase primarily driven by investments in two new facilities supporting expansion in our wind tower and utility structures businesses as well as various growth projects in the Construction Products segment. • Proceeds from the sale of property, plant, and equipment and other assets totaled $36.6 million for the year ended December 31, 2023 compared to $32.2 million for the year ended December 31, 2022. • Cash paid for acquisitions, net of cash acquired, was $120.9 million for the year ended December 31, 2023 compared to $75.1 million for the year ended December 31, 2022. • Proceeds from the sale of the storage tanks business was $2.0 million during the year ended December 31, 2023, which was related to the resolution of certain contingencies from the sale, compared to $271.6 million during the year ended December 31, 2022.
During the year ended December 31, 2020, the Company received proceeds from the issuance of the $150 million term loan to partially fund the acquisition of Cherry and, as a precautionary measure at the onset of the pandemic, borrowings under the Company's revolving credit facility of $100 million which were later repaid during the year. • Dividends paid during the year ended December 31, 2021 were $9.8 million. 45 Table of Contents • The Company paid $9.4 million during the year ended December 31, 2021 to repurchase common stock under the share repurchase program in effect at the time compared to $8.0 million paid during the year ended December 31, 2020.
The Company used $155.0 million of cash proceeds from the sale of the storage tanks business in the fourth quarter of 2022 to repay all amounts then borrowed under its revolving credit facility. • Dividends paid during the year ended December 31, 2023 were $9.8 million, unchanged from the prior year. • The Company paid $13.8 million during the year ended December 31, 2023 to repurchase common stock under the share repurchase program in effect at the time compared to $15.0 million paid during the year ended December 31, 2022. 2022 versus 2021 Operating Activities.
These items provide additional relevant information regarding the business of Arcosa, its strategy and various industry conditions which have a direct and significant impact on Arcosa’s results of operations, as well as the risks associated with Arcosa’s business.
These items provide additional relevant information regarding the business of Arcosa, its strategy and various industry conditions which have a direct and significant impact on Arcosa’s results of operations, as well as the risks associated with Arcosa’s business. 39 Table of Contents Overall Summary Revenues Year Ended December 31, Percent Change 2023 2022 2021 2023 versus 2022 2022 versus 2021 ($ in millions) Construction Products $ 1,001.3 $ 923.5 $ 796.8 8.4 % 15.9 % Engineered Structures 873.5 1,002.0 934.1 (12.8) 7.3 Transportation Products 433.5 317.3 305.6 36.6 3.8 Segment Totals before Eliminations 2,308.3 2,242.8 2,036.5 2.9 10.1 Eliminations (0.4) — (0.1) Consolidated Total $ 2,307.9 $ 2,242.8 $ 2,036.4 2.9 10.1 2023 versus 2022 • Revenues increased by 2.9%.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−1 removed0 unchanged
Biggest changeIf interest rates average one percentage point more in fiscal year 2023 than they did during 2022, our interest expense would increase by $0.4 million, after considering the effects of interest rate hedges. In comparison, at December 31, 2021, we estimated that an average increase of one percentage point would increase interest expense by $1.7 million.
Biggest changeIf interest rates average one percentage point more in fiscal year 2024 than they did during 2023, our interest expense would increase by $1.6 million. In comparison, at December 31, 2022, we estimated that an average increase of one percentage point would increase interest expense by $0.4 million, after considering the effects of interest rate hedges.
As of December 31, 2022, we had $400.0 million outstanding on our 4.375% senior notes (the "Notes") due 2029. The Notes have a 4.375% fixed annual interest rate and, therefore, our economic interest rate exposure is fixed. However, the values of the Notes are exposed to interest rate risk.
As of December 31, 2023, we had $400.0 million outstanding on our 4.375% senior notes (the "Notes") due 2029. The Notes have a 4.375% fixed annual interest rate and, therefore, our economic interest rate exposure is fixed. However, the values of the Notes are exposed to interest rate risk.
We estimate that a one percentage point increase in market interest rates would decrease the fair value of the Notes by approximately $17.9 million. We carry the Notes at face value less unamortized discount on our Consolidated Balance Sheet and present the fair value for disclosure purposes only.
We estimate that a one percentage point increase in market interest rates would decrease the fair value of the Notes by approximately $16.7 million. We carry the Notes at face value less unamortized discount on our Consolidated Balance Sheet and present the fair value for disclosure purposes only.
In addition, we are subject to market risk related to our net investments in our foreign subsidiaries. The net investment in foreign subsidiaries as of December 31, 2022 was $109.6 million. The impact of such market risk exposures as a result of foreign exchange rate fluctuations has not been significant to Arcosa.
In addition, we are subject to market risk related to our net investments in our foreign subsidiaries. The net investment in foreign subsidiaries as of December 31, 2023 was $125.8 million. The impact of such market risk exposures as a result of foreign exchange rate fluctuations has not been significant to Arcosa.
See Note 9 of the Consolidated Financial Statements. 52 Table of Contents
See Note 9 to the Consolidated Financial Statements. 55 Table of Contents
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Our earnings could be affected by changes in interest rates due to the impact those changes have on our variable rate revolving credit and term loan facility.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Our earnings could be affected by changes in interest rates due to the impact those changes have on our variable rate revolving credit facility. As of December 31, 2023, we had $160.0 million of outstanding loans borrowed under the revolving credit facility.
Removed
As of December 31, 2022, we had no outstanding loans borrowed under the revolving credit facility and the term loan had a remaining balance of $136.8 million .

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