PART I

Item 1. Financial Statements

Arcosa, Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited)


		Three Months Ended March 31,			Three Months Ended March 31,
			2022			2021			2023		2022

			(in millions)						(in millions)
Revenues	Revenues		$	535.8		$	440.4	Revenues	$	549.2	$	535.8
Operating costs:	Operating costs:							Operating costs:
Cost of revenues	Cost of revenues		438.5			361.1		Cost of revenues	440.6		439.7
Selling, general, and administrative expenses	Selling, general, and administrative expenses		62.6			56.4		Selling, general, and administrative expenses	62.5		62.6
Gain on disposition of property, plant, equipment, and other assets								Gain on disposition of property, plant, equipment, and other assets	(22.6)		(1.2)
Gain on sale of storage tanks business								Gain on sale of storage tanks business	(6.4)		—

			501.1			417.5			474.1		501.1
Total operating profit	Total operating profit		34.7			22.9		Total operating profit	75.1		34.7

Interest expense	Interest expense		7.2			2.1		Interest expense	7.1		7.2
Other, net (income) expense	Other, net (income) expense		0.9			0.5		Other, net (income) expense	(1.9)		0.9
Income before income taxes	Income before income taxes		26.6			20.3		Income before income taxes	69.9		26.6

Provision for income taxes	Provision for income taxes		6.4			4.4		Provision for income taxes	14.2		6.4

Net income	Net income		$	20.2		$	15.9	Net income	$	55.7	$	20.2

Net income per common share:	Net income per common share:							Net income per common share:
Basic	Basic		$	0.42		$	0.33	Basic	$	1.15	$	0.42
Diluted	Diluted		$	0.41		$	0.32	Diluted	$	1.14	$	0.41
Weighted average number of shares outstanding:	Weighted average number of shares outstanding:							Weighted average number of shares outstanding:
Basic	Basic		48.2			48.0		Basic	48.3		48.2
Diluted	Diluted		48.8			48.8		Diluted	48.8		48.8
Dividends declared per common share	Dividends declared per common share		$	0.05		$	0.05	Dividends declared per common share	$	0.05	$	0.05

See accompanying Notes to Consolidated Financial Statements.

Arcosa, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(unaudited)


		Three Months Ended March 31,			Three Months Ended March 31,
			2022			2021			2023		2022

			(in millions)						(in millions)
Net income	Net income		$	20.2		$	15.9	Net income	$	55.7	$	20.2
Other comprehensive income (loss):	Other comprehensive income (loss):							Other comprehensive income (loss):
Derivative financial instruments:	Derivative financial instruments:							Derivative financial instruments:
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.4 and $0.2			1.6			0.5
Reclassification adjustments for losses included in net income, net of tax expense (benefit) of ($0.1) and ($0.1)			0.5			0.4
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.0 and $0.4								Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.0 and $0.4	0.1		1.6
Reclassification adjustments for (gains) losses included in net income, net of tax expense (benefit) of $0.1 and ($0.1)								Reclassification adjustments for (gains) losses included in net income, net of tax expense (benefit) of $0.1 and ($0.1)	(0.4)		0.5
Currency translation adjustment:	Currency translation adjustment:							Currency translation adjustment:
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.0 and $0.0	Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.0 and $0.0		0.1			0.1		Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.0 and $0.0	0.1		0.1

			2.2			1.0			(0.2)		2.2
Comprehensive income	Comprehensive income		$	22.4		$	16.9	Comprehensive income	$	55.5	$	22.4

See accompanying Notes to Consolidated Financial Statements.

Arcosa, Inc. and Subsidiaries

Consolidated Balance Sheets


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(unaudited)					(unaudited)
		(in millions)					(in millions)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	88.6	$	72.9	Cash and cash equivalents	$	149.2	$	160.4

Receivables, net of allowance	Receivables, net of allowance	373.7		310.8		Receivables, net of allowance	393.6		334.2

Inventories:	Inventories:					Inventories:
Raw materials and supplies	Raw materials and supplies	156.9		150.8		Raw materials and supplies	125.2		126.3
Work in process	Work in process	64.0		53.6		Work in process	70.8		59.2
Finished goods	Finished goods	121.9		120.1		Finished goods	132.3		130.3
							328.3		315.8
		342.8		324.5
Other	Other	36.5		59.7		Other	41.8		46.4
Total current assets	Total current assets	841.6		767.9		Total current assets	912.9		856.8

Property, plant, and equipment, net	Property, plant, and equipment, net	1,196.4		1,201.9		Property, plant, and equipment, net	1,209.7		1,199.6
Goodwill	Goodwill	938.6		934.9		Goodwill	976.5		958.5
Intangibles, net	Intangibles, net	215.9		220.3		Intangibles, net	250.9		256.1
Deferred income taxes	Deferred income taxes	12.6		13.2		Deferred income taxes	9.6		9.6
Other assets	Other assets	51.7		49.9		Other assets	57.5		60.0
		$	3,256.8	$	3,188.1		$	3,417.1	$	3,340.6
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	228.7	$	184.7	Accounts payable	$	205.8	$	190.7
Accrued liabilities	Accrued liabilities	140.4		145.9		Accrued liabilities	115.7		121.8
Advance billings	Advance billings	20.4		18.6		Advance billings	44.0		40.5

Current portion of long-term debt	Current portion of long-term debt	14.2		14.8		Current portion of long-term debt	14.9		14.7
Total current liabilities	Total current liabilities	403.7		364.0		Total current liabilities	380.4		367.7

Debt	Debt	666.4		664.7		Debt	535.0		535.9
Deferred income taxes	Deferred income taxes	137.5		134.0		Deferred income taxes	183.0		175.6
Other liabilities	Other liabilities	71.6		72.1		Other liabilities	75.5		77.0
		1,279.2		1,234.8			1,173.9		1,156.2

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:

Common stock – 200.0 shares authorized	Common stock – 200.0 shares authorized	0.5		0.5		Common stock – 200.0 shares authorized	0.5		0.5
Capital in excess of par value	Capital in excess of par value	1,697.1		1,692.6		Capital in excess of par value	1,690.3		1,684.1
Retained earnings	Retained earnings	297.3		279.5		Retained earnings	568.8		515.5
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(17.1)		(19.3)		Accumulated other comprehensive loss	(15.9)		(15.7)
Treasury stock	Treasury stock	(0.2)		—		Treasury stock	(0.5)		—
		1,977.6		1,953.3			2,243.2		2,184.4
		$	3,256.8	$	3,188.1		$	3,417.1	$	3,340.6

See accompanying Notes to Consolidated Financial Statements.

Arcosa, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022

		(in millions)					(in millions)
Operating activities:	Operating activities:					Operating activities:
Net income	Net income	$	20.2	$	15.9	Net income	$	55.7	$	20.2
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	37.8		31.4		Depreciation, depletion, and amortization	38.8		37.8

Stock-based compensation expense	Stock-based compensation expense	4.4		4.7		Stock-based compensation expense	5.5		4.4

Provision for deferred income taxes	Provision for deferred income taxes	5.1		1.3		Provision for deferred income taxes	7.4		5.1
Gains on disposition of property and other assets		(1.2)		(5.9)
Gains on disposition of property, plant, equipment, and other assets						Gains on disposition of property, plant, equipment, and other assets	(22.6)		(1.2)
Gain on sale of storage tanks business						Gain on sale of storage tanks business	(6.4)		—

(Increase) decrease in other assets	(Increase) decrease in other assets	(1.2)		1.5		(Increase) decrease in other assets	3.4		(1.2)
Increase (decrease) in other liabilities	Increase (decrease) in other liabilities	(3.0)		(4.0)		Increase (decrease) in other liabilities	(2.6)		(3.0)
Other	Other	0.5		2.2		Other	3.5		0.5
Changes in current assets and liabilities:	Changes in current assets and liabilities:					Changes in current assets and liabilities:
(Increase) decrease in receivables	(Increase) decrease in receivables	(69.3)		(31.9)		(Increase) decrease in receivables	(66.4)		(69.3)
(Increase) decrease in inventories	(Increase) decrease in inventories	(18.2)		(14.7)		(Increase) decrease in inventories	(10.9)		(18.2)
(Increase) decrease in other current assets	(Increase) decrease in other current assets	2.7		(5.4)		(Increase) decrease in other current assets	4.6		2.7
Increase (decrease) in accounts payable	Increase (decrease) in accounts payable	44.0		31.6		Increase (decrease) in accounts payable	10.5		44.0
Increase (decrease) in advance billings	Increase (decrease) in advance billings	1.8		(16.1)		Increase (decrease) in advance billings	8.0		1.8
Increase (decrease) in accrued liabilities	Increase (decrease) in accrued liabilities	0.9		(10.2)		Increase (decrease) in accrued liabilities	(1.2)		0.9

Net cash provided by operating activities	Net cash provided by operating activities	24.5		0.4		Net cash provided by operating activities	27.3		24.5

Investing activities:	Investing activities:					Investing activities:

Proceeds from disposition of property and other assets		20.6		9.5
Proceeds from disposition of property, plant, equipment, and other assets						Proceeds from disposition of property, plant, equipment, and other assets	23.9		20.6
Proceeds from sale of storage tanks business						Proceeds from sale of storage tanks business	2.0		—
Capital expenditures	Capital expenditures	(25.9)		(19.9)		Capital expenditures	(44.4)		(25.9)

Acquisitions, net of cash acquired						Acquisitions, net of cash acquired	(15.6)		—

Net cash required by investing activities	Net cash required by investing activities	(5.3)		(10.4)		Net cash required by investing activities	(34.1)		(5.3)

Financing activities:	Financing activities:					Financing activities:

Payments to retire debt	Payments to retire debt	(1.0)		(1.4)		Payments to retire debt	(1.9)		(1.0)

Dividends paid to common stockholders	Dividends paid to common stockholders	(2.4)		(2.4)		Dividends paid to common stockholders	(2.4)		(2.4)
Purchase of shares to satisfy employee tax on vested stock	Purchase of shares to satisfy employee tax on vested stock	(0.1)		(0.1)		Purchase of shares to satisfy employee tax on vested stock	(0.1)		(0.1)

Net cash required by financing activities	Net cash required by financing activities	(3.5)		(3.9)		Net cash required by financing activities	(4.4)		(3.5)
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	15.7		(13.9)		Net increase (decrease) in cash and cash equivalents	(11.2)		15.7
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	72.9		95.8		Cash and cash equivalents at beginning of period	160.4		72.9
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	88.6	$	81.9	Cash and cash equivalents at end of period	$	149.2	$	88.6

See accompanying Notes to Consolidated Financial Statements.

Arcosa, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

(unaudited)


			Common Stock				Capital in Excess of Par Value				Retained Earnings				Accumulated Other Comprehensive Loss				Treasury Stock				Total Stockholders’ Equity							Common Stock					Capital in Excess of Par Value		Retained Earnings			Accumulated Other Comprehensive Loss		Treasury Stock			Total Stockholders’ Equity
		Shares		$0.01 Par Value									Shares						Amount		Total Stockholders’ Equity				Shares			$0.01 Par Value			Capital in Excess of Par Value		Retained Earnings	Accumulated Other Comprehensive Loss					Amount			Total Stockholders’ Equity
		(in millions, except par value)																											(in millions, except par value)

Balances at December 31, 2020			48.2		$	0.5			$	1,694.1			$	219.7			$	(22.1)		—			$	—		$	1,892.2
Net income			—		—		—				15.9				—				—		—		15.9
Other comprehensive income			—		—		—				—				1.0				—		—		1.0
Cash dividends on common stock			—		—		—				(2.4)				—				—		—		(2.4)
Restricted shares, net			—		—		5.3				—				—				—		(0.7)		4.6

Balances at March 31, 2021			48.2		$	0.5	$	1,699.4			$	233.2			$	(21.1)			—		$	(0.7)	$	1,911.3

Balances at December 31, 2021	Balances at December 31, 2021		48.3		$	0.5	$	1,692.6			$	279.5			$	(19.3)			—		$	—	$	1,953.3	Balances at December 31, 2021					48.3		$	0.5		$	1,692.6	$	279.5		$	(19.3)	—	$	—	$	1,953.3
Net income	Net income		—		—		—				20.2				—				—		—		20.2		Net income					—		—			—		20.2			—		—	—		20.2
Other comprehensive income	Other comprehensive income		—		—		—				—				2.2				—		—		2.2		Other comprehensive income					—		—			—		—			2.2		—	—		2.2
Cash dividends on common stock	Cash dividends on common stock		—		—		—				(2.4)				—				—		—		(2.4)		Cash dividends on common stock					—		—			—		(2.4)			—		—	—		(2.4)
Restricted shares, net	Restricted shares, net		—		—		4.5				—				—				—		(0.2)		4.3		Restricted shares, net					—		—			4.5		—			—		—	(0.2)		4.3

Balances at March 31, 2022	Balances at March 31, 2022		48.3		$	0.5	$	1,697.1			$	297.3			$	(17.1)			—		$	(0.2)	$	1,977.6	Balances at March 31, 2022					48.3		$	0.5		$	1,697.1	$	297.3		$	(17.1)	—	$	(0.2)	$	1,977.6

Balances at December 31, 2022																									Balances at December 31, 2022					48.4		$	0.5		$	1,684.1	$	515.5		$	(15.7)	—	$	—	$	2,184.4
Net income																									Net income					—		—			—		55.7			—		—	—		55.7
Other comprehensive income																									Other comprehensive income					—		—			—		—			(0.2)		—	—		(0.2)
Cash dividends on common stock																									Cash dividends on common stock					—		—			—		(2.4)			—		—	—		(2.4)
Restricted shares, net																									Restricted shares, net					—		—			6.2		—			—		—	(0.5)		5.7

Balances at March 31, 2023																									Balances at March 31, 2023					48.4		$	0.5		$	1,690.3	$	568.8		$	(15.9)	—	$	(0.5)	$	2,243.2

See accompanying Notes to Consolidated Financial Statements.

Arcosa, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

Note 1. Overview and Summary of Significant Accounting Policies

Basis of Presentation

Arcosa, Inc. and its consolidated subsidiaries (“Arcosa,” the “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 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.

The accompanying Consolidated Financial Statements are unaudited and have been prepared from the books and records of Arcosa, Inc. and its consolidated subsidiaries. All normal and recurring adjustments necessary for a fair presentation of the financial position of the Company and the results of operations, comprehensive income/loss, and cash flows have been made in conformity with accounting principles generally accepted in the U.S. (“GAAP”). All significant intercompany accounts and transactions have been eliminated. Because of seasonal and other factors, ~~including~~ the ~~unknown potential duration, spread, severity, and impact of the COVID-19 pandemic, Arcosa's business,~~ financial condition and results of operations for the three months ended March 31, ~~2022~~2023 may not be indicative of Arcosa's expected business, financial condition, and results of operations for the year ending ~~December��~~December 31, ~~2022.~~2023.

These interim financial statements and notes are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with the audited Consolidated ~~and Combined~~ Financial Statements of the Company included in its Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Stockholders' Equity

In December ~~2020,~~2022, the Company’s Board of Directors (the “Board”) authorized a new $50 million share repurchase program effective January 1, ~~2021~~2023 through December 31, ~~2022~~2024 to replace a program of the same amount that expired on December 31, ~~2020.~~2022. For the three months ended March 31, ~~2022,~~2023, the Company ~~repurchased 0 shares. As~~did not repurchase any shares, leaving the full amount of the $50.0 million authorization available as of March 31, ~~2022, the Company had a remaining authorization of $40.6 million under the program.~~2023.

Revenue Recognition

Revenue is measured based on the allocation of the transaction price in a contract to satisfied performance obligations. The transaction price does not include any amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. The following is a description of principal activities from which the Company generates its revenue, separated by reportable segments. Payments for our products and services are generally due within normal commercial terms. For a further discussion regarding the Company’s reportable segments, see Note 4 Segment Information.

Construction Products

The Construction Products segment recognizes substantially all revenue when the customer has accepted the product and legal title of the product has passed to the customer.

Engineered Structures

Within the Engineered Structures segment, revenue is recognized for our wind tower and certain utility structure ~~and certain storage tank product lines~~businesses over time as the products are manufactured using an input approach based on the costs incurred relative to the total estimated costs of production. We recognize revenue over time for these products as they are highly customized to the needs of an individual customer resulting in no alternative use to the Company if not purchased by the customer after the contract is ~~executed, and~~executed. In addition, we have the right to bill the customer for our work performed to date plus at least a reasonable profit margin for work performed. As of March 31, ~~2022,~~2023, we had a contract asset of ~~$62.9~~$78.0 million related to these contracts, compared to ~~$54.2~~$77.5 million atas of December 31, ~~2021,~~2022, which is included in receivables, net of allowance, within the Consolidated Balance Sheets. The increase in the contract asset is due to timing of deliveries. For all other products, revenue is recognized when the customer has accepted the product and legal title of the product has passed to the customer.

Transportation Products

The Transportation Products segment recognizes revenue when the customer has accepted the product and legal title of the product has passed to the customer.

Unsatisfied Performance Obligations

The following table includes estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially satisfied as of March 31, ~~2022~~2023 and the percentage of the outstanding performance obligations as of March 31, ~~2022~~2023 expected to be delivered during the remainder of ~~2022:~~2023:


		Unsatisfied performance obligations at March 31, 2022					Unsatisfied performance obligations as of March 31, 2023
		Total Amount		Percent expected to be delivered in 2022			Total Amount		Percent expected to be delivered in 2023
		(in millions)					(in millions)
Engineered Structures:	Engineered Structures:					Engineered Structures:
Utility, wind, and related structures	Utility, wind, and related structures	$	421.0	88	%	Utility, wind, and related structures	$	1,531.4	29	%
Storage tanks		$	20.9	100	%

Transportation Products:	Transportation Products:					Transportation Products:
Inland barges	Inland barges	$	150.6	72	%	Inland barges	$	279.0	68	%

~~Substantially all~~Of the remaining unsatisfied performance obligations ~~beyond 2022~~for utility, wind, and related structures, 22% are expected to be delivered during ~~2023.~~2024 with the remainder expected to be delivered through 2028. Substantially all of the remaining unsatisfied performance obligations for inland barges are expected to be delivered during 2024.

Income Taxes

The liability method is used to account for income taxes. Deferred income taxes represent the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized.

The Company regularly evaluates the likelihood of realization of tax benefits derived from positions it has taken in various federal and state filings after consideration of all relevant facts, circumstances, and available information. For those tax positions that are deemed more likely than not to be sustained, the Company recognizes the benefit it believes is cumulatively greater than 50% likely to be realized. To the extent the Company were to prevail in matters for which accruals have been established or be required to pay amounts in excess of recorded reserves, the effective tax rate in a given financial statement period could be materially impacted.

Financial Instruments

The Company considers all highly liquid debt instruments to be cash and cash equivalents if purchased with a maturity of three months or less. Financial instruments that potentially subject the Company to a concentration of credit risk are primarily cash investments and receivables. The Company places its cash investments in bank deposits and highly-rated money market funds, and its investment policy limits the amount of credit exposure to any one commercial issuer. We seek to limit concentrations of credit risk with respect to receivables with control procedures that monitor the credit worthiness of customers, together with the large number of customers in the Company's customer base and their dispersion across different industries and geographic areas. As receivables are generally unsecured, the Company maintains an allowance for doubtful accounts based upon the expected credit losses. Receivable balances determined to be uncollectible are charged against the allowance. To accelerate the conversion to cash, the Company may sell a portion of its trade receivables to a third ~~party.~~parties. The Company has no ~~continuing involvement or~~ recourse ~~related~~ to these receivables once they are sold but may have continuing involvement related to servicing and ~~the~~collection activities. The impact of these transactions in the Company's Consolidated Statements of Operations for the three months ended March 31, ~~2022~~2023 was not significant. The carrying values of cash, receivables, and accounts payable are considered to be representative of their respective fair values.

Derivative Instruments

The Company may, from time to time, use derivative instruments to mitigate the impact of changes in interest rates, commodity prices, or changes in foreign currency exchange rates. For derivative instruments designated as hedges, the Company formally documents the relationship between the derivative instrument and the hedged item, as well as the risk management objective and strategy for the use of the derivative instrument. This documentation includes linking the derivative to specific assets or liabilities on the balance sheet, commitments, or forecasted transactions. At the time a derivative instrument is entered into, and at least quarterly thereafter, the Company assesses whether the derivative instrument is effective in offsetting the changes in fair value or cash flows of the hedged item. Any change in the fair value of the hedged instrument is recorded in accumulated other comprehensive loss (“AOCL”) as a separate component of stockholders' equity and reclassified into earnings in the period during which the hedged transaction affects earnings. The Company monitors its derivative positions and the credit ratings of its counterparties and does not anticipate losses due to counterparties' non-performance.

Recent Accounting Pronouncements

Recently adopted accounting pronouncements

Effective as of January 1, ~~2021,~~2023, the Company adopted Accounting Standards ~~Updated~~Update No. ~~2019-12, “Simplifying the~~2021-08, “Business Combinations (Topic 805): Accounting for ~~Income Taxes”~~Contract Assets and Contract Liabilities from Contracts with Customers”, (“ASU ~~2019-12”~~2021-08”), which ~~simplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes.~~requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The adoption of ~~the~~this guidance did not have a material effect on the Company's Consolidated Financial Statements.

Recently issued accounting pronouncements not adopted as of March 31, ~~2022~~2023

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2020-04, “Reference Rate Reform”, (“ASU 2020-04”), which provides optional guidance for contract modifications, hedging accounting, and other transactions associated with the transition from reference rates that are expected to be discontinued. ASU 2020-04 is effective for all entities upon issuance through December 31, ~~2022.~~2024 as amended by ASU 2022-06. We continue to evaluate the impact of adoption, but do not expect the guidance to have a material impact on our Consolidated Financial Statements.

~~In October 2021,~~

Reclassifications

Certain prior year balances have been reclassified in the FASB issued Accounting Standards Update No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, (“ASU 2021-08”), which requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. ASU 2021-08 will become effective for public companies during interim and annual reporting periods beginning after December 15, 2022, with early adoption permitted. We do not expect this standard to have a material impact on our Consolidated Financial ~~Statements.~~Statements to conform with the 2023 presentation.

Note 2. Acquisitions and Divestitures

~~There was no acquisition activity during the three months ended March 31, 2022.~~

~~2021~~2023 Acquisitions

In ~~August 2021,~~February 2023, we completed the acquisition of certain assets and liabilities of a Phoenix, Arizona based recycled aggregates business in our Construction Products segment. The purchase price of the acquisition was not significant.

In March 2023, we completed the stock acquisition of ~~Southwest Rock~~a Houston, Texas based shoring, trench, and excavation products business in our Construction Products ~~LLC and affiliated entities (collectively “Southwest Rock”~~segment. The purchase price of the acquisition was not significant.

2022 Acquisitions

In May 2022, we completed the stock acquisition of Recycled Aggregate Materials Company, Inc. ("RAMCO"), a ~~natural~~leading producer of recycled aggregates ~~company serving~~in the ~~greater Phoenix~~Los Angeles metropolitan area, which is included in our Construction Products segment, for a total purchase price of ~~$149.7~~$77.4 million. The acquisition was funded with ~~cash on hand, $100.0~~$80.0 million of borrowings under our revolving credit ~~facility, and a $15.0 million holdback payable to the seller upon the extension of a certain mineral reserve lease.~~facility. The acquisition was recorded as a business combination based on a preliminary valuation of the assets acquired and liabilities assumed at their acquisition date fair value using ~~level three inputs, defined as~~ unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and ~~liabilities.~~liabilities ("Level 3" inputs). The ~~preliminary~~final valuation resulted in the recognition of, among others, ~~$63.3~~$54.2 million of ~~goodwill, $51.0 million~~permits with an initial weighted average useful life of ~~mineral reserves, and $28.0~~20 years, $6.4 million of property, plant, and equipment, and $13.4 million of goodwill in our Construction Products segment. The remaining assets and liabilities were not significant in relation to assets and liabilities at the consolidated or segment level. We expect to complete our purchase price allocation as soon as reasonably possible, not to exceed one year from the acquisition date. Adjustments to the preliminary purchase price allocation could be material, particularly with respect to our preliminary estimates of mineral reserves and property, plant, and equipment.

On April 9, 2021, we completed the stock acquisition of StonePoint Ultimate Holding, LLC and affiliated entities (collectively “StonePoint”), a top 25 U.S. construction aggregates company, which is included in our Construction Products segment. The purchase price of $372.8 million was funded with proceeds from a private offering of $400.0 million of 4.375% senior unsecured notes thatDivestitures

There were no divestitures closed on April 6, 2021. See Note 7 Debt for additional information. The acquisition was recorded as a business combination with valuations of the assets acquired and liabilities assumed at their acquisition date fair value using level three inputs. The following table represents our final purchase price allocation as of March 31, 2022:


	~~(in millions)~~
~~Cash~~	$	~~1.0~~
~~Accounts receivable~~	~~18.8~~
~~Inventories~~	~~20.9~~
~~Property, plant, and equipment~~	~~68.4~~
~~Mineral reserves~~	~~198.8~~
~~Goodwill~~	~~87.2~~
~~Customer relationships~~	~~7.2~~
~~Other assets~~	~~10.4~~
~~Accounts payable~~	~~(7.4)~~
~~Accrued liabilities~~	~~(10.0)~~
~~Deferred income taxes~~	~~(9.2)~~
~~Other liabilities~~	~~(13.3)~~
~~Total net assets acquired~~	$	~~372.8~~

The goodwill acquired, none of which is tax-deductible, primarily relates to StonePoint's market position and existing workforce. The customer relationships intangible asset was assigned a useful life of 10 years. Revenues and operating profit (loss) included in the Consolidated Statement of Operations were approximately $31.8 million and $(2.4) million during the three months ended March 31, ~~2022, respectively.~~2023 and 2022.

In April 2021, we also completed the acquisition of certain assets and liabilities of a Dallas-Fort Worth, Texas based recycled aggregates business in our Construction Products segment. The purchase price of the acquisition was not significant.

~~Divestitures~~

~~There was no divestiture activity for the three months ended March 31, 2022 and 2021.~~

~~On April 25,~~October 2022, the Company ~~entered into an agreement to sell~~completed the sale of its storage tank business for $275 million. Net cash proceeds received at closing were approximately $271.6 million, after transaction closing costs. The storage tanks business, ~~for $275 million in cash. The storage tanks business,~~historically reported within the Engineered Structures segment, is a leading manufacturer of steel pressure tanks for the storage and transportation of propane, ammonia, and other gases serving the residential, commercial, energy, and agricultural markets with operations in the U.S. and Mexico. ~~The transaction is expected~~Revenues and operating profit for the storage tanks business were $59.9 million and $10.3 million, respectively, for the three months ended March 31, 2022. An additional gain of $6.4 million was recognized during the three months ended March 31, 2023, primarily due to ~~close in~~ the ~~second half~~resolution of ~~2022, subject to regulatory approvals in~~certain contingencies from the ~~U.S. and Mexico and other customary closing conditions.~~sale.

Note 3. Fair Value Accounting

Assets and liabilities measured at fair value on a recurring basis are summarized below:


		Fair Value Measurement as of March 31, 2022									Fair Value Measurement as of March 31, 2023
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total

		(in millions)									(in millions)
Assets:										Assets:

Interest rate hedge(1)										Interest rate hedge(1)	$	—	$	1.5	$	—	$	1.5
Total assets										Total assets	$	—	$	1.5	$	—	$	1.5

Liabilities:	Liabilities:									Liabilities:
Interest rate hedge(1)		$	—	$	1.2	$	—	$	1.2

Contingent consideration(2)	Contingent consideration(2)	—		—		6.4		6.4		Contingent consideration(2)	$	—	$	—	$	2.0	$	2.0
Total liabilities	Total liabilities	$	—	$	1.2	$	6.4	$	7.6	Total liabilities	$	—	$	—	$	2.0	$	2.0

		Fair Value Measurement as of December 31, 2021									Fair Value Measurement as of December 31, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total

		(in millions)									(in millions)
Assets:										Assets:

Interest rate hedge(1)										Interest rate hedge(1)	—		1.8		—		1.8
Total assets										Total assets	$	—	$	1.8	$	—	$	1.8

Liabilities:	Liabilities:									Liabilities:
Interest rate hedge(1)		$	—	$	3.9	$	—	$	3.9

Contingent consideration(2)	Contingent consideration(2)	—		—		6.7		6.7		Contingent consideration(2)	—		—		2.4		2.4
Total liabilities	Total liabilities	$	—	$	3.9	$	6.7	$	10.6	Total liabilities	$	—	$	—	$	2.4	$	2.4

(1) Included in other ~~liabilities~~assets on the Consolidated Balance Sheets.

(2) Current portion included in accrued liabilities and non-current portion included in other liabilities on the Consolidated Balance Sheets.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to establish a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair values are listed below:

Level 1 – This level is defined as quoted prices in active markets for identical assets or liabilities. The Company’s cash equivalents are instruments of the U.S. Treasury or highly-rated money market mutual funds.

Level 2 – This level is defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Interest rate hedges are valued at exit prices obtained from each counterparty. See Note 7 Debt.

Level 3 – This level is defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Contingent consideration relates to estimated future payments owed to the sellers of businesses previously acquired. We estimate the fair value of the contingent consideration using a discounted cash flow model. The fair value is sensitive to changes in the forecast of sales and changes in discount rates and is reassessed quarterly based on assumptions used in our latest projections.

Note 4. Segment Information

The Company reports operating results in 3three principal business segments:

Construction Products. The Construction Products segment primarily produces and sells natural and recycled aggregates, specialty materials, and construction site support equipment, including trench shields and shoring products.

Engineered Structures. The Engineered Structures segment primarily manufactures and sells steel structures for infrastructure businesses, including utility structures for electricity transmission and distribution, structural wind towers, traffic structures, and telecommunication structures. These products share similar manufacturing competencies and steel sourcing requirements and can be manufactured across our North American footprint. The segment also manufactures concrete utility structures. Historically, the segment also manufactured storage and distribution tanks. In October 2022, the Company completed the divestiture of its storage tanks business. See Note 2 Acquisitions and Divestitures.

Transportation Products. The Transportation Products segment primarily manufactures and sells inland barges, fiberglass barge covers, winches, marine hardware, and steel components for railcars and other transportation and industrial equipment.

The financial information for these segments is shown in the tables below. We operate principally in North America.


										Three Months Ended March 31,
										Revenues				Operating Profit (Loss)
										2023		2022		2023		2022

										(in millions)
Aggregates and specialty materials									Aggregates and specialty materials	$	211.0	$	187.9
Construction site support									Construction site support	25.1		23.6
Construction Products									Construction Products	236.1		211.5		$	49.5	$	16.7

Utility, wind, and related structures									Utility, wind, and related structures	207.7		190.6
Storage tanks									Storage tanks	—		59.9
Engineered Structures									Engineered Structures	207.7		250.5		29.9		28.3

Inland barges									Inland barges	68.1		47.0
Steel components									Steel components	37.3		26.8
Transportation Products									Transportation Products	105.4		73.8		10.1		2.7

Segment Totals before Eliminations and Corporate									Segment Totals before Eliminations and Corporate	549.2		535.8		89.5		47.7
Corporate									Corporate	—		—		(14.4)		(13.0)

Consolidated Total									Consolidated Total	$	549.2	$	535.8	$	75.1	$	34.7

	Three Months Ended March 31,
	Revenues				Operating Profit (Loss)
	2022		2021		2022		2021

	(in millions)
Aggregates and specialty materials	$	187.9	$	135.3
Construction site support	23.6		17.9
Construction Products	211.5		153.2		$	16.7	$	15.8

Utility, wind, and related structures	190.6		164.0
Storage tanks	59.9		43.0
Engineered Structures	250.5		207.0		28.3		17.5

Inland barges	47.0		57.9
Steel components	26.8		22.3
Transportation Products	73.8		80.2		2.7		4.1

Segment Totals before Eliminations and Corporate	535.8		440.4		47.7		37.4
Corporate	—		—		(13.0)		(14.5)
Eliminations	—		—		—		—
Consolidated Total	$	535.8	$	440.4	$	34.7	$	22.9

Note 5. Property, Plant, and Equipment

The following table summarizes the components of property, plant, and equipment as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022.


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022

		(in millions)					(in millions)
Land	Land	$	139.5	$	137.3	Land	$	139.1	$	138.7
Mineral reserves	Mineral reserves	505.4		507.3		Mineral reserves	507.0		506.3
Buildings and improvements	Buildings and improvements	305.3		301.0		Buildings and improvements	310.6		308.3
Machinery and other	Machinery and other	990.5		973.9		Machinery and other	996.3		973.9
Construction in progress	Construction in progress	49.5		45.4		Construction in progress	98.1		83.7
		1,990.2		1,964.9			2,051.1		2,010.9
Less accumulated depreciation and depletion	Less accumulated depreciation and depletion	(793.8)		(763.0)		Less accumulated depreciation and depletion	(841.4)		(811.3)
		$	1,196.4	$	1,201.9		$	1,209.7	$	1,199.6

Note 6. Goodwill and Other Intangible Assets

Goodwill

Goodwill by segment is as follows:


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022

		(in millions)					(in millions)
Construction Products	Construction Products	$	464.0	$	460.3	Construction Products	$	501.9	$	483.9
Engineered Structures	Engineered Structures	437.6		437.6		Engineered Structures	437.6		437.6
Transportation Products	Transportation Products	37.0		37.0		Transportation Products	37.0		37.0
		$	938.6	$	934.9		$	976.5	$	958.5

The increase in Construction Products goodwill during the three months ended March 31, ~~2022 is primarily~~2023 was due to acquisitions completed during the quarter and measurement period adjustments from the ~~acquisitions~~acquisition of ~~StonePoint and Southwest Rock.~~RAMCO. See Note 2 Acquisitions and Divestitures.

Intangible Assets

Intangibles, net consisted of the following:


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022

		(in millions)					(in millions)
Intangibles with indefinite lives - Trademarks	Intangibles with indefinite lives - Trademarks	$	34.1	$	34.1	Intangibles with indefinite lives - Trademarks	$	34.1	$	34.1

Intangibles with definite lives:	Intangibles with definite lives:					Intangibles with definite lives:
Customer relationships	Customer relationships	135.5		135.4		Customer relationships	136.9		136.9
Permits	Permits	87.5		87.5		Permits	141.7		141.7
Other	Other	3.9		3.9		Other	2.7		2.7
		226.9		226.8			281.3		281.3
Less accumulated amortization	Less accumulated amortization	(45.1)		(40.6)		Less accumulated amortization	(64.5)		(59.3)
		181.8		186.2			216.8		222.0
Intangible assets, net	Intangible assets, net	$	215.9	$	220.3	Intangible assets, net	$	250.9	$	256.1

Note 7. Debt

The following table summarizes the components of debt as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:

March 31,
2022 December 31,
2021
(in millions)
Revolving credit facility $ 125.0 $ 125.0
Term loan 144.4 144.4
Senior notes 400.0 400.0
Finance leases (see Note 8 Leases) 17.2 16.3
686.6 685.7
Less: unamortized debt issuance costs (6.0) (6.2)
Total debt $ 680.6 $ 679.5


	March 31, 2023		December 31, 2022

	(in millions)

Term loan	$	136.8	$	136.8
Senior notes	400.0		400.0
Finance leases (see Note 8 Leases)	18.1		19.1
	554.9		555.9
Less: unamortized debt issuance costs	(5.0)		(5.3)
Total debt	$	549.9	$	550.6

Revolving Credit Facility and Term Loan

On November 1, 2018, the Company entered into a $400.0 million unsecured revolving credit facility that was scheduled to mature in November 2023. On January 2, 2020, the Company entered into an Amended and Restated Credit Agreement to increase the revolving credit facility to $500.0 million and add a term loan facility of $150.0 million, in each case with a maturity date of January 2, 2025. The entire term loan was advanced on January 2, 2020. As of March 31, ~~2022,~~2023, the term loan had a remaining balance of ~~$144.4~~$136.8 million.

~~On August 4, 2021, we borrowed an additional $100.0 million under our revolving credit facility to fund, in part, the acquisition of Southwest Rock.~~ As of March 31, ~~2022,~~2023, we had ~~$125.0 million of~~no outstanding loans borrowed under the revolving credit facility, and there were approximately ~~$28.5~~$25.3 million of letters of credit issued, leaving ~~$346.5~~$474.7 million available. Of the outstanding letters of credit as of March 31, ~~2022, $27.9~~2023, $24.5 million are expected to expire in ~~2022,~~2023, with the remainder in ~~2023.~~2024. The majority of our letters of credit obligations support the Company’s various insurance programs and generally renew by their terms each year.

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 margin for borrowing and commitment fee rate are determined based on the Company’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%~~1.50% as of March 31, ~~2022.~~2023. The commitment fee rate ranges from 0.20% to 0.35% and was set at ~~0.30%~~0.25% at March 31, ~~2022.~~2023.

The Company's revolving credit and term loan facilities require the maintenance of certain ratios related to leverage and interest coverage. As of March 31, ~~2022,~~2023, we were in compliance with all such financial covenants. Borrowings under the credit agreement are guaranteed by certain wholly-owned subsidiaries of the Company.

In order to increase liquidity in anticipation of the acquisition of StonePoint, the Company entered into an unsecured 364-Day Credit Agreement on March 26, 2021 providing for a revolving line of credit of $150.0 million, with an outside maturity date of March 25, 2022. Pricing, covenants, and guarantees were substantially similar to the Company’s existing revolving credit and term loan facilities. 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.

The carrying value of borrowings under our revolving credit and term loan facilities approximate fair value because the interest rate adjusts to the market interest rate (Level 3 input). See Note 3 Fair Value Accounting.

As of March 31, ~~2022,~~2023, the Company had ~~$1.2~~$0.8 million of unamortized debt issuance costs related to the revolving credit facility, which are included in other assets on the Consolidated Balance Sheet.

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. Interest on the Notes is payable ~~semiannually.~~semiannually in April and October. 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 terms of the indenture governing the Notes, among other things, limit the ability of the Company and each of its subsidiaries to create liens on assets, enter into sale and leaseback transactions, and consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries. The terms of the indenture also limit the ability of the Company’s non-guarantor subsidiaries to incur certain types of debt.

At any time prior to April 15, 2024, the Company may redeem all or a portion of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus an applicable make-whole premium and accrued and unpaid interest to the redemption date. On and after April 15, 2024, the Company may redeem all or a portion of the Notes at redemption prices set forth in the indenture, plus accrued and unpaid interest to the redemption date. If a Change of Control Triggering Event (as defined in the indenture) occurs, the Company must offer to repurchase the Notes at a price equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest to the date of repurchase.

The estimated fair value of the Notes as of March 31, ~~2022~~2023 was ~~$380.4~~$362.3 million based on a quoted market price in a market with little activity (Level 2 input).

In connection with the issuance of the Notes, the Company paid $6.6 million of debt issuance costs.

The remaining principal payments under existing debt agreements as of March 31, ~~2022~~2023 are as follows:

2022 2023 2024 2025 2026 Thereafter
(in millions)
Revolving credit facility $ — $ — $ — $ 125.0 $ — $ —
Term loan 7.5 8.5 8.4 120.0 — —
Senior notes — — — — — 400.0


	2023	2024	2025	2026	2027	Thereafter

	(in millions)

Term loan	8.4	8.4	120.0	—	—	—
Senior notes	—	—	—	—	—	400.0

Interest rate hedges

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 with borrowings under the Amended and Restated Credit Agreement. The instrument carried an initial notional amount of $100 million, thereby hedging the first $100 million of borrowings. The instrument effectively fixes the LIBOR component of borrowings at a monthly rate of 2.71%. As of March 31, ~~2022,~~2023, the Company has recorded ~~a liability~~an asset of ~~$1.2~~$1.5 million for the fair value of the instrument, all of which is recorded in accumulated other comprehensive loss. See Note 3 Fair Value Accounting.

Note 8. Leases

We have various leases primarily for office space and certain equipment. At inception, we determine if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. For leases that contain options to purchase, terminate, or extend, such options are included in the lease term when it is reasonably certain that the option will be exercised. Some of our lease arrangements contain lease components and non-lease components which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at commencement date in determining the present value of lease payments.

Future minimum lease payments for operating and finance lease obligations as of March 31, ~~2022~~2023 consisted of the following:


		Operating Leases		Finance Leases				Operating Leases		Finance Leases
		(in millions)				(in millions)
2022 (remaining)		$	5.9	$	6.1
2023		4.6		4.7
2023 (remaining)							2023 (remaining)	$	6.0	$	5.4
2024	2024	4.0		4.6			2024	7.5		7.1
2025	2025	3.3		2.8			2025	6.8		5.1
2026	2026	2.2		—			2026	5.4		1.3
2027							2027	3.3		0.2
Thereafter	Thereafter	8.4		—			Thereafter	10.8		—
Total undiscounted future minimum lease obligations	Total undiscounted future minimum lease obligations	28.4		18.2			Total undiscounted future minimum lease obligations	39.8		19.1
Less imputed interest	Less imputed interest	(4.3)		(1.0)			Less imputed interest	(3.2)		(1.0)
Present value of net minimum lease obligations	Present value of net minimum lease obligations	$	24.1	$	17.2		Present value of net minimum lease obligations	$	36.6	$	18.1

1615

The following table summarizes our operating and finance leases and their classification within the Consolidated Balance Sheet.


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022

		(in millions)					(in millions)
Assets	Assets					Assets
Operating - Other assets	Operating - Other assets	$	21.2	$	20.9	Operating - Other assets	$	34.1	$	33.9
Finance - Property, plant, and equipment, net	Finance - Property, plant, and equipment, net	17.5		16.9		Finance - Property, plant, and equipment, net	20.3		22.4
Total lease assets	Total lease assets	38.7		37.8		Total lease assets	54.4		56.3

Liabilities	Liabilities					Liabilities
Current	Current					Current
Operating - Accrued liabilities	Operating - Accrued liabilities	4.9		4.8		Operating - Accrued liabilities	7.0		6.7
Finance - Current portion of long-term debt	Finance - Current portion of long-term debt	6.7		6.3		Finance - Current portion of long-term debt	6.4		6.3
Non-current	Non-current					Non-current
Operating - Other liabilities	Operating - Other liabilities	19.2		19.1		Operating - Other liabilities	29.6		29.9
Finance - Debt	Finance - Debt	10.5		10.0		Finance - Debt	11.7		12.8
Total lease liabilities	Total lease liabilities	$	41.3	$	40.2	Total lease liabilities	$	54.7	$	55.7

Note 9. Other, Net

Other, net (income) expense consists of the following items:


		Three Months Ended March 31,			Three Months Ended March 31,
			2022			2021			2023		2022

			(in millions)						(in millions)
Interest income	Interest income		$	(0.1)		$	—	Interest income	$	(1.2)	$	(0.1)
Foreign currency exchange transactions	Foreign currency exchange transactions		1.0			0.6		Foreign currency exchange transactions	(0.5)		1.0
Other	Other		—			(0.1)		Other	(0.2)		—
Other, net (income) expense	Other, net (income) expense		$	0.9		$	0.5	Other, net (income) expense	$	(1.9)	$	0.9

Note 10. Income Taxes

For interim income tax reporting, we estimate our annual effective tax rate and apply it to our year to date ordinary income (loss). Tax jurisdictions with a projected or year to date loss for which a tax benefit cannot be realized are excluded. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur. We have open tax years from ~~2014~~2015 to ~~2021~~2022 with various significant tax jurisdictions.

~~Our effective~~On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was enacted to reduce inflation and promote clean energy in the United States. Among other things, the IRA introduces a 15% alternative minimum tax ~~rates~~for corporations with a three-year taxable year average annual adjusted financial statement income in excess of ~~24.1%~~$1 billion and ~~21.7%~~imposes a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022. The Company has evaluated these new provisions and has concluded there is no impact for the three months ended March 31, 2023.

The IRA also provides for certain manufacturing, production, and investment tax credit incentives, including new Advanced Manufacturing Production ("AMP") tax credits for companies that domestically manufacture and sell clean energy equipment, including wind towers. For the three months ended March 31, 2023, the Company has recognized $4.3 million in AMP tax credits for wind towers produced and sold in 2023 which are included as a reduction to cost of sales on the Consolidated Statement of Operations due to the refundable nature of the credits. The credits are included in Receivables, net of allowance, on the Consolidated Balance Sheet.

Certain provisions of the IRA, including the AMP tax credits for wind towers, remain subject to the issuance of additional guidance and clarification. We have considered the applicable current laws and regulations in our tax provision for the three months ended March 31, 2023, and continue to evaluate the impact of these tax law changes on future periods.

Our effective tax rates of 20.3% and 24.1% for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively, ~~which~~ differed from ~~than~~ the U.S. federal statutory rate of 21.0% due to AMP tax credits, state income taxes, statutory depletion deductions, compensation-related items, and foreign ~~disallowed deductions offset by benefits from statutory depletion deductions.~~

Note 11. Employee Retirement Plans

Total employee retirement plan expense, which includes related administrative expenses, is as follows:

Three Months Ended
March 31,
2022 2021
(in millions)
Defined contribution plans $ 3.2 $ 2.7
Multiemployer plan 0.4 0.4
$ 3.6 $ 3.1


	Three Months Ended March 31,
	2023		2022
	(in millions)
Defined contribution plans	$	3.6	$	3.2
Multiemployer plan	0.4		0.4
	$	4.0	$	3.6

The Company contributes to a multiemployer defined benefit plan under the terms of a collective-bargaining agreement that covers certain union-represented employees at one of the facilities of Meyer Utility Structures, a subsidiary of Arcosa. The Company contributed $0.4 million to the multiemployer plan for the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022. Total contributions to the multiemployer plan for ~~2022~~2023 are expected to be approximately $1.5 million.

Note 12. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 are as follows:


		Currency translation adjustments		Unrealized loss on derivative financial instruments		Accumulated other comprehensive loss			Currency translation adjustments		Unrealized loss on derivative financial instruments		Accumulated other comprehensive loss

		(in millions)
Balances at December 31, 2020		$	(16.6)	$	(5.5)	$	(22.1)
Other comprehensive income (loss), net of tax, before reclassifications		0.1		0.5		0.6
Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, ($0.1), and ($0.1)		—		0.4		0.4
Other comprehensive income (loss)		0.1		0.9		1.0
Balances at March 31, 2021		$	(16.5)	$	(4.6)	$	(21.1)
									(in millions)
Balances at December 31, 2021	Balances at December 31, 2021	$	(16.3)	$	(3.0)	$	(19.3)	Balances at December 31, 2021	$	(16.3)	$	(3.0)	$	(19.3)
Other comprehensive income (loss), net of tax, before reclassifications	Other comprehensive income (loss), net of tax, before reclassifications	0.1		1.6		1.7		Other comprehensive income (loss), net of tax, before reclassifications	0.1		1.6		1.7
Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, ($0.1), and ($0.1)	Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, ($0.1), and ($0.1)	—		0.5		0.5		Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, ($0.1), and ($0.1)	—		0.5		0.5
Other comprehensive income (loss)	Other comprehensive income (loss)	0.1		2.1		2.2		Other comprehensive income (loss)	0.1		2.1		2.2
Balances at March 31, 2022	Balances at March 31, 2022	$	(16.2)	$	(0.9)	$	(17.1)	Balances at March 31, 2022	$	(16.2)	$	(0.9)	$	(17.1)

Balances at December 31, 2022								Balances at December 31, 2022	$	(17.0)	$	1.3	$	(15.7)
Other comprehensive income (loss), net of tax, before reclassifications								Other comprehensive income (loss), net of tax, before reclassifications	0.1		0.1		0.2
Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, $0.1, and $0.1								Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, $0.1, and $0.1	—		(0.4)		(0.4)
Other comprehensive income (loss)								Other comprehensive income (loss)	0.1		(0.3)		(0.2)
Balances at March 31, 2023								Balances at March 31, 2023	$	(16.9)	$	1.0	$	(15.9)

Note 13. Stock-Based Compensation

Stock-based compensation totaled approximately ~~$4.4~~$5.5 million and ~~$4.7~~$4.4 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

Note 14. Earnings Per Common Share

Basic earnings per common share is computed by dividing net income remaining after allocation to participating unvested restricted shares, which includes unvested restricted shares of Arcosa stock held by employees of ~~the Former Parent,~~our former parent, Trinity Industries, Inc., by the weighted average number of basic common shares outstanding for the period. Except when the effect would be antidilutive, the calculation of diluted earnings per common share includes the weighted average net impact of nonparticipating unvested restricted shares. Total weighted average restricted shares were ~~1.6~~1.3 million and ~~1.8~~1.6 million shares for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively.

The computation of basic and diluted earnings per share follows.


												Three Months Ended March 31, 2023					Three Months Ended March 31, 2022
												Income (Loss)		Average Shares	EPS		Income (Loss)		Average Shares	EPS

												(in millions, except per share amounts)
Net income											Net income	$	55.7				$	20.2
Unvested restricted share participation											Unvested restricted share participation	(0.2)					(0.1)
Net income per common share – basic											Net income per common share – basic	55.5		48.3	$	1.15	20.1		48.2	$	0.42
Effect of dilutive securities:											Effect of dilutive securities:
Nonparticipating unvested restricted shares											Nonparticipating unvested restricted shares	—		0.5			—		0.6
Net income per common share – diluted											Net income per common share – diluted	$	55.5	48.8	$	1.14	$	20.1	48.8	$	0.41

	Three Months Ended March 31, 2022					Three Months Ended March 31, 2021
	Income (Loss)		Average Shares	EPS		Income (Loss)		Average Shares	EPS

	(in millions, except per share amounts)
Net income	$	20.2				$	15.9
Unvested restricted share participation	(0.1)					(0.1)
Net income per common share – basic	20.1		48.2	$	0.42	15.8		48.0	$	0.33
Effect of dilutive securities:
Nonparticipating unvested restricted shares	—		0.6			—		0.8
Net income per common share – diluted	$	20.1	48.8	$	0.41	$	15.8	48.8	$	0.32

Note 15. Contingencies

The Company is involved in claims and lawsuits incidental to our business arising from various matters including commercial disputes, alleged product defect and/or warranty claims, intellectual property matters, personal injury claims, environmental issues, employment and/or workplace-related matters, and various governmental regulations. At March 31, ~~2022,~~2023, the range of reasonably possible losses for such matters, taking into consideration our rights in indemnity and recourse to third parties is ~~$0.3~~$1.0 million to ~~$0.4~~$2.4 million.

The Company evaluates its exposure to such claims and suits periodically and establishes accruals for these contingencies when probable losses can be reasonably estimated. At March 31, ~~2022,~~2023, total accruals of ~~$1.0~~$3.3 million are included in accrued liabilities in the accompanying Consolidated Balance Sheet. The Company believes any additional liability from such claims and suits would not be material to its financial position or results of operations.

Arcosa is subject to remedial orders and federal, state, local, and foreign laws and regulations relating to the environment. The Company has reserved ~~$0.9~~$0.7 million as of March 31, ~~2022,~~2023, included in our total accruals of ~~$1.0~~$3.3 million discussed above, to cover our probable and estimable liabilities with respect to the investigations, assessments, and remedial responses to such matters, taking into account currently available information and our contractual rights to indemnification and recourse to third parties.

On July 22, 2019, the Company was served with a breach of contract lawsuit filed by Thomas & Betts Corporation (“T&B”) against the Company and its wholly-owned subsidiary, Trinity Meyer Utility Structures, LLC, now known as Meyer Utility Structures, LLC (“Meyer”), in the Supreme Court of the State of New York, New York County. T&B’s claims relate to responsibility for alleged product warranty claims pursuant to the terms of the Asset Purchase Agreement, dated June 24, 2014, entered into by and between T&B and Meyer with respect to Meyer’s purchase of certain assets of T&B’s utility structure business. The Company and Meyer subsequently removed the litigation to federal court. The case is filed under Case No. 1:19-cv-07829-PAE; Thomas & Betts Corporation, now known as, ABB Installation Products, Inc., Plaintiff, v. Trinity Meyer Utility Structures, LLC, formerly known as McKinley 2014 Acquisition, LLC, and Arcosa, Inc., Defendants; In the United States District Court for the Southern District of New York (the “Trial Court”). The Company and Meyer have filed a motion to dismiss T&B’s claims, and an Answer and Counterclaims against T&B. On July 30, 2020, the Court granted the Company's and Meyer's motion and dismissed T&B's claims. In its ruling, the Court likewise dismissed Meyer's counterclaims. On August 28, 2020, T&B filed its Notice of Appeal to the United States Court of Appeals for the Second Circuit (the “Appellate Court”). On November 9, 2020, T&B filed its Appellant’s Brief with the Appellate Court. The Company and Meyer filed its Appellees’ Brief on February 8, 2021. T&B filed its Reply Brief on April 9, 2021. On August 26, 2021, oral argument was held, and, on September 22, 2021, the Appellate Court issued a Summary Order reversing the dismissal and remanding the case to the Trial Court for further proceedings. On February 13, 2022, the parties reached an agreement to settle all claims in this case without admission of liability or fault. On February 18, 2022 the parties filed a stipulation of dismissal of each party's respective claims. On February 22, 2022, the Trial Court issued its Order on Joint Stipulation of Dismissal which fully and finally resolved the litigation.

Estimates of liability arising from future proceedings, assessments, or remediation are inherently imprecise. Accordingly, there can be no assurance that we will not become involved in future litigation or other proceedings, including those related to the environment or, if we are found to be responsible or liable in any such litigation or proceeding, that such costs would not be material to the Company.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A is presented in the following sections:

•Company Overview

•Potential Impact of COVID-19 on our Business

•Market Outlook

•Executive Overview

•Results of Operations

•Liquidity and Capital Resources

•Recent Accounting Pronouncements

•Forward-Looking Statements

Our MD&A should be read in conjunction with the Consolidated Financial Statements of Arcosa, Inc. and its consolidated subsidiaries (“Arcosa,” “Company,” “we,” or “our”) and related Notes in Part I, Item 1 of this Quarterly Report on Form 10-Q and the Consolidated and Combined Financial Statements and related Notes in Item 8, “Financial Statements and Supplementary Data”, of our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (“~~2021~~2022 Annual Report on Form 10-K”).

Company Overview

Arcosa, 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 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.

Potential Impact of COVID-19 on our Business

Our highest priority is the health and safety of our employees and communities. We are committed to safety across our operations. Our businesses support critical infrastructure sectors and our plants have continued to operate throughout the COVID-19 pandemic. If one or more of Arcosa’s facilities become subject to governmental ordered closure, voluntary temporary closure, closure from a COVID-19 outbreak within the facility, or other COVID-19 related reason the business, liquidity and financial condition, and results of operations for Arcosa could be adversely affected.

~~The COVID-19 pandemic has disrupted global trade, commerce, financial and credit markets, and daily life throughout the world.~~ The extent to which the COVID-19 pandemic impacts our business, liquidity and financial condition, and results of operations will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business, and individuals’ actions taken in response to the pandemic; the impact of the pandemic on economic activity, and actions taken in response; the effect on our customers and customer demand for our products and services; our ability to sell and provide our products and services; if key personnel are unable to perform their duties or have limited availability; the number of employees who contract or are directly exposed to COVID-19 and their availability to work in our plants and facilities; the ability to retain employees; the ability of our customers to pay for our products and services; any disruption in our supply chain; the ability to procure personal protective equipment; the availability of COVID-19 testing supplies; our ability to continue operations in compliance with COVID-19 related regulations; any closures of our and our customers’ facilities; increased cybersecurity and IT infrastructure risks; the impact on the health and safety of our employees; the impact on the demand for commodities served by our products and services;including the impact of new COVID-19 ~~variants;~~variants and ~~the pace of recovery when the COVID-19 pandemic subsides, as well as,~~ the response to aany potential reoccurrence.

We strive to continuously improve our procedures, processes, and management systems regarding employee health and ~~safety. The continuance of the COVID-19 pandemic has highlighted the critical importance of focusing on the health~~safety, and wellness of our employees. We have followed the federal, state, and local guidelines governing our facilities and shared best practices across the organization, with the goal of protecting our employees and communities. We continue to monitor and implement guidelines and best practices for COVID-19 mitigation procedures.

~~In addition to the extensive health and safety protocols already in place across our plants,~~ we ~~estimate that we are incurring less than $500 thousand per quarter of incremental costs related to COVID-19. We~~ do not anticipate that ~~the~~any enhanced health and safety protocols will have a material impact on the productivity of our plants.

The preparation of the Company's Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. At this time, we have not observed any material impairments of our assets or a significant change in the fair value of assets due to the COVID-19 pandemic. However, due to the factors discussed above, we are unable to determine or predict the overall impact the COVID-19 pandemic ~~will~~may have on our business, results of operations, liquidity, or capital resources.

Market Outlook

•Within our Construction Products segment, ~~our natural and recycled aggregates businesses have remained resilient, particularly in Texas,~~the demand environment remains healthy overall when seasonal weather conditions have been normal, supported by increased infrastructure spending and where states have reopened for business. We did experience a softening of demand for our specialty materials and shoring products businesses beginning in 2020 following the COVID-19 outbreak, but have largely recovered to pre-pandemic demand levels in 2022.private non-residential activity. The outlook for ~~public~~single-family residential housing continues to be impacted by higher interest rates and ~~private construction activity~~home affordability, which has ~~improved driven by strong residential demand and increased infrastructure spending.~~negatively impacted volumes. We ~~are focused on~~have been successful in managing inflationary cost pressures ~~related to fuel and labor costs~~ through proactive price ~~increases.~~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 March 31, ~~2022~~2023 provides ~~a healthy level of~~good production visibility for ~~2022.~~the remainder of 2023. Our customers remain committed to taking delivery of these orders. In utility structures, order and inquiry activity continues to be ~~strong,~~healthy, as customers remain focused on grid hardening and reliability initiatives. The ~~demand outlook for traffic and telecom structures also remains positive. In~~passage of the ~~third quarter~~Inflation Reduction Act ("IRA") on August 16, 2022, which included a long-term extension of ~~2021, we received wind tower orders of $174 million providing a base level of production visibility for 2022. Long-term expectations for~~ the ~~wind industry are favorable; however, uncertainty pertaining to the level of~~ Production Tax Credit ~~("PTC"~~(“PTC”) ~~support~~for new wind farm projects and ~~high steel prices are negatively impacting near-term expectations. In~~introduced new Advanced Manufacturing Production ("AMP") tax credits for companies that domestically manufacture and sell clean energy equipment in the ~~fourth quarter~~U.S., is a significant catalyst for our wind towers business. As demonstrated by more than $1.1 billion of ~~2021,~~new orders we ~~idled~~have received since the passage of the IRA for delivery through 2028, our ~~Clinton, Illinois~~ wind tower ~~facility in anticipation~~business is at the beginning stages of ~~lower volumes in 2022. Order and inquiry activity~~a market recovery. A large portion of these orders will support wind energy expansion projects in the ~~storage tank business is very~~Southwest. As a result, we plan to open a new plant in New Mexico, with production at this facility expected to begin in mid-2024. We anticipate 2023 will be a transition year as new wind projects ramp up and expect a strong ~~after taking a pause initially at the onset of COVID-19 as certain customers deferred new tank installations.~~multi-year rebound in volumes beginning in 2024.

•Within our Transportation Products segment, our backlog for inland barges as of March 31, ~~2022~~2023 of ~~$150.6~~$279 million ~~provides a base~~is at its highest level since the first quarter of ~~production visibility into 2023.~~2020. 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. To align with lower expected production levels in~~demand. In 2022, we ~~have~~ reduced ~~our~~ 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. ~~The~~While high steel prices have impacted order levels, the underlying fundamentals for a dry barge replacement cycle remain in ~~place as the~~place. The fleet continues to age, new builds have not kept pace with scrapping, and utilization rates are high. InAs a result, order inquiries have been strong and we received orders of $122 million in the first quarter of ~~2022, we received orders of approximately $105 million, primarily for hopper barges. These orders fill our planned production capacity for 2022 and extend~~2023, which extends our backlog into ~~2023 as we remain flexible for an anticipated market recovery.~~ 2024.Demand for steel components, which was softening pre-COVID-19 due to a weakening North American rail transportation market, is increasing relative to 2020 and 2021 cyclical lows as the near-term outlook for the new railcar market ~~has improved due to increased railcar loadings, improved utilization, and~~indicates a stable level of replacement ~~needs.~~demand.

Executive Overview

~~Recent Developments~~

On April 25, 2022, the Company entered into an agreement to sell its storage tanks business for $275 million in cash. The storage tanks business, reported within the Engineered Structures segment, is a leading manufacturer of steel pressure tanks for the storage and transportation of propane, ammonia, and other gases serving the residential, commercial, energy, and agricultural markets with operations in the U.S. and Mexico. The transaction is expected to close in the second half of 2022, subject to regulatory approvals in the U.S. and Mexico and other customary closing conditions.

Financial Operations and Highlights

•Revenues for the three months ended March 31, ~~2022~~2023 increased by ~~21.7%~~2.5% to ~~$535.8~~$549.2 million ~~as increased~~due to higher revenues in Construction ~~Product~~Products and ~~Engineered Structures were~~Transportation Products partially offset by ~~decreased volumes~~lower revenues in ~~Transportation Products.~~

~~Table~~Engineered Structures due to the sale of ~~Contents~~our storage tanks business on October 3, 2022.

•Operating profit for the three months ended March 31, ~~2022~~2023 totaled ~~$34.7~~$75.1 million, ~~representing~~ an increase of ~~$11.8~~$40.4 million ~~from~~year-over-year. Excluding $29.0 million of asset sale gains recognized in the ~~same period in 2021. For the~~current quarter, operating profit increased 32.9% due to higher operating profit in Construction Products and ~~Engineered Structures was~~Transportation Products, partially offset by lower operating profit in ~~Transportation Products.~~Engineered Structures due to the sale of our storage tanks business.

•Selling, general, and administrative expenses ~~increased by 11.0%~~were flat for the three months ended March 31, ~~2022 when~~2023 compared to the same period in the prior year, ~~period largely due to~~as increased compensation costs were offset by the elimination of costs from ~~recently acquired businesses.~~our storage tanks business. As a percentage of ~~revenue,~~revenues, selling, general, and administrative expenses ~~decreased to 11.7%~~was 11.4% for the three months ended March 31, ~~2022,~~2023 compared to ~~12.8%~~11.7% for the same period in ~~2021.~~2022.

•The effective tax rate for the three months ended March 31, ~~2022~~2023 was ~~24.1%,~~20.3% compared to ~~21.7%~~24.1% for the same period in ~~2021. The increase in the tax rate is primarily due to increased state taxes, foreign adjustments, and disallowed compensation deductions in the current period.~~2022. See Note 10 Income Taxes of the Consolidated Financial Statements.

•Net income for the three months ended March 31, ~~2022~~2023 was ~~$20.2~~$55.7 million compared to ~~$15.9~~$20.2 million for the same period in ~~2021.~~2022.

Our Engineered Structures and Transportation Products segments operate in cyclical industries. Additionally, results in our Construction Products segment are affected by weather and seasonal fluctuations with the second and third quarters historically being the quarters with the highest revenues.

Unsatisfied Performance Obligations (Backlog)

As of March 31, ~~2022,~~2023, December 31, ~~2021,~~2022, and March 31, ~~2021,~~2022, our unsatisfied performance obligations, or backlog, were as follows:


		March 31, 2022		December 31, 2021		March 31, 2021			March 31, 2023		December 31, 2022		March 31, 2022

		(in millions)							(in millions)
Engineered Structures:	Engineered Structures:							Engineered Structures:
Utility, wind, and related structures	Utility, wind, and related structures	$	421.0	$	437.5	$	379.5	Utility, wind, and related structures	$	1,531.4	$	671.3	$	421.0
Storage tanks		20.9		22.0		30.7

Transportation Products:	Transportation Products:							Transportation Products:
Inland barges	Inland barges	$	150.6	$	92.7	$	133.2	Inland barges	$	279.0	$	225.1	$	150.6

Approximately ~~88%~~29% of the unsatisfied performance obligations for ~~our~~ utility, wind, and related structures in our Engineered Structures segment are expected to be delivered during ~~2022,~~2023, 22% are expected to be delivered during 2024 with ~~substantially all of~~ the remainder expected to be delivered ~~during 2023. All~~through 2028. Approximately 68% of the ~~unsatisfied performance obligations for our storage tanks business in our Engineered Structures segment are expected to be delivered during 2022. Approximately 72% of~~ unsatisfied performance obligations for inland barges in our Transportation Products segment are expected to be delivered during ~~2022,~~2023 with the remainder expected to be delivered during ~~2023.~~2024.

Results of Operations

Overall Summary

Revenues


		Three Months Ended March 31,					Three Months Ended March 31,
				2022				2021			Percent Change				2023					2022			Percent Change
			(in millions)			Percent Change				(in millions)						Percent Change
Construction Products	Construction Products			$	211.5			$	153.2			38.1		%	Construction Products			$	236.1		$	211.5		11.6	%
Engineered Structures	Engineered Structures			250.5				207.0			21.0		Engineered Structures		207.7					250.5			(17.1)
Transportation Products	Transportation Products			73.8				80.2			(8.0)		Transportation Products		105.4					73.8			42.8

Segment Totals before Eliminations				535.8				440.4			21.7
Eliminations				—				—

Consolidated Total	Consolidated Total			$	535.8			$	440.4		21.7		Consolidated Total		$		549.2				$	535.8		2.5

Three Months Ended March 31, ~~2022~~2023 versus Three Months Ended March 31, ~~2021~~2022

•Revenues increased by ~~21.7%~~2.5%.

•Revenues from Construction Products increased primarily due to higher ~~volumes from acquired businesses as well as increased~~ pricing across our aggregates and ~~strong demand in our legacy~~specialty material businesses.

•Revenues from Engineered Structures decreased due to the sale of our storage tanks business. Revenues from utility, wind, and related structures increased primarily due to increased ~~pricing~~volumes in ~~all product lines driven by higher steel prices.~~our utility structures business.

•Revenues from Transportation Products ~~decreased~~increased primarily due to ~~lower volumes~~higher deliveries in both inland barge ~~partially offset by higher volumes in~~and steel components.

Operating Costs


		Three Months Ended March 31,					Three Months Ended March 31,
				2022				2021				Percent Change			2023				2022				Percent Change
											Percent Change											Percent Change
			(in millions)			Percent Change				(in millions)						Percent Change
Construction Products	Construction Products			$	194.8			$	137.4			41.8	%	Construction Products	$			186.6	$	194.8			(4.2)		%
Engineered Structures	Engineered Structures			222.2				189.5					17.3		Engineered Structures			177.8		222.2				(20.0)
Transportation Products	Transportation Products			71.1				76.1				(6.6)		Transportation Products	95.3				71.1				34.0

Segment Totals before Eliminations and Corporate Expenses				488.1				403.0				21.1
Segment Totals before Corporate Expenses														Segment Totals before Corporate Expenses	459.7				488.1				(5.8)
Corporate	Corporate			13.0				14.5				(10.3)		Corporate	14.4				13.0				10.8
Eliminations				—				—

Consolidated Total	Consolidated Total			$	501.1			$	417.5			20.0		Consolidated Total	$		474.1			$	501.1			(5.4)

Depreciation, depletion, and amortization(1)	Depreciation, depletion, and amortization(1)			$	37.8			$	31.4			20.4		Depreciation, depletion, and amortization(1)	$	38.8			$	37.8			2.6

(1) Depreciation, depletion, and amortization are components of operating costs.

Three Months Ended March 31, ~~2022~~2023 versus Three Months Ended March 31, ~~2021~~2022

•Operating costs ~~increased~~decreased by ~~20.0%~~5.4%. Netted against operating costs in the current quarter included $29.0 million of asset sale gains, primarily consisting of $21.8 million from the sale of depleted land in Construction Products and $6.4 million of additional gain recognized on the sale of the storage tanks divestiture. Excluding these gains, operating costs were about flat.

•Cost of revenues for Construction Products increased primarily due to ~~higher volumes from acquired businesses,~~inflationary-related cost increases, including ~~the impact of additional depreciation, depletion,~~diesel, cement, and ~~amortization expense.~~process fuels.

•Cost of revenues for Engineered Structures ~~increased primarily~~decreased largely due to ~~higher steel prices.~~the elimination of costs from our storage tanks business.

•Cost of revenues for Transportation Products ~~decreased~~increased primarily due to ~~lower~~higher volumes in inland barge ~~volumes, partially offset by higher~~and steel ~~component volumes.~~components.

•Depreciation, depletion, and amortization increased ~~primarily due to~~as a result of recent acquisitions ~~including the fair value mark up of long-lived assets.~~and organic growth investments.

•Selling, general, and administrative expenses ~~including Corporate expenses,~~were essentially flat, as increased ~~11.0% largely due to increased~~compensation costs were offset by the elimination of costs from ~~recently acquired businesses.~~our storage tanks business. As a percentage of revenues, selling, general, and administrative expenses decreased to ~~11.7%~~11.4% for the three months ended March 31, ~~2022,~~2023, compared to ~~12.8%~~11.7% for the same period in ~~2021.~~2022.

Operating Profit (Loss)


		Three Months Ended March 31,					Three Months Ended March 31,
				2022				2021			Percent Change				2023					2022			Percent Change
			(in millions)			Percent Change				(in millions)						Percent Change
Construction Products	Construction Products			$	16.7			$	15.8			5.7		%	Construction Products			$	49.5		$	16.7		196.4	%
Engineered Structures	Engineered Structures			28.3				17.5			61.7		Engineered Structures		29.9					28.3			5.7
Transportation Products	Transportation Products			2.7				4.1			(34.1)		Transportation Products		10.1					2.7			274.1

Segment Totals before Corporate Expenses	Segment Totals before Corporate Expenses			47.7				37.4			27.5		Segment Totals before Corporate Expenses		89.5					47.7			87.6
Corporate	Corporate			(13.0)				(14.5)			(10.3)		Corporate		(14.4)					(13.0)			10.8

Consolidated Total	Consolidated Total			$	34.7			$	22.9		51.5		Consolidated Total		$		75.1				$	34.7		116.4

Three Months Ended March 31, ~~2022~~2023 versus Three Months Ended March 31, ~~2021~~2022

•Operating profit increased by ~~51.5%~~116.4%.

•Operating profit in Construction Products increased ~~primarily~~ due to the land sale gain as well as higher ~~revenues, partially offset by higher depreciation, depletion, and amortization expense.~~pricing.

•~~Operating~~Excluding the impact of the storage tanks business in both periods, operating profit in Engineered Structures increased ~~primarily~~ due to higher ~~revenues and improved margins~~volumes in ~~our~~ utility structures ~~business.~~and recognition of the AMP tax credits in wind towers.

•Operating profit in Transportation Products ~~decreased primarily due to overall lower volumes.~~increased driven by higher volumes and improved margins in both inland barge and steel components.

For a further discussion of revenues, costs, and the operating results of individual segments, see Segment Discussion below.

Other Income and Expense

Other, net (income) expense consists of the following items:


		Three Months Ended March 31,			Three Months Ended March 31,
			2022			2021			2023		2022
			(in millions)						(in millions)
Interest income	Interest income		$	(0.1)		$	—	Interest income	$	(1.2)	$	(0.1)
Foreign currency exchange transactions	Foreign currency exchange transactions		1.0			0.6		Foreign currency exchange transactions	(0.5)		1.0
Other	Other		—			(0.1)		Other	(0.2)		—
Other, net (income) expense	Other, net (income) expense		$	0.9		$	0.5	Other, net (income) expense	$	(1.9)	$	0.9

Income Taxes

The provision for income taxes results in effective tax rates that differ from the statutory rates. The Company's effective tax rate for the three months ended March 31, ~~2022~~2023 was ~~24.1%~~20.3% compared to ~~21.7%~~24.1% for the same period in ~~2021.~~2022. The ~~increase~~decrease in the tax rate for the three months ended March 31, 2023 is primarily due to AMP tax credits and reduced foreign taxes, partially offset by increased ~~foreign adjustments and disallowed compensation deductions in addition to a one-time benefit from~~ state ~~tax law changes in prior period.~~income taxes.

Our effective tax rate reflects the Company's estimate for its state income tax expense, excess tax benefits related to equity compensation, and the impact of foreign tax benefits. See Note 10 of the Notes to Consolidated Financial Statements for further discussion of income taxes.

In response to the COVID-19 pandemic, on March 27, 2020 the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which includes certain tax relief and benefits that may impact the Company. As of March 31,On August 16, 2022, the ~~Company has deferred $5.4 million~~IRA was enacted to reduce inflation and promote clean energy in ~~payroll-related taxes~~the United States. Among other things, the IRA introduces a 15% alternative minimum tax for corporations with a three-year taxable year average annual adjusted financial statement income in ~~accordance with~~excess of $1 billion and imposes a 1% excise tax on the fair market value of stock repurchases made by covered corporations after December 31, 2022. The IRA also provides for certain manufacturing, production, and investment tax credit incentives, including new AMP tax credits for companies that domestically manufacture and sell clean energy equipment, including wind towers. Certain provisions of the ~~CARES Act that we expect~~IRA, including the AMP tax credits for wind towers, remain subject to ~~pay during~~ the ~~year~~issuance of additional guidance and clarification. We have considered the applicable current IRA tax law changes in our tax provision for the three months ended ~~December~~March 31, ~~2022.~~2023, and continue to evaluate the impact of these tax law changes on future periods.

Segment Discussion

Construction Products


		Three Months Ended March 31,				Three Months Ended March 31,
				2022			2021			Percent			2023		2022		Percent
			($ in millions)				Change		($ in millions)						Change
Revenues:	Revenues:											Revenues:
Aggregates and specialty materials	Aggregates and specialty materials			$	187.9		$	135.3		38.9	%	Aggregates and specialty materials	$	211.0	$	187.9	12.3	%
Construction site support	Construction site support			23.6			17.9			31.8		Construction site support	25.1		23.6		6.4
Total revenues	Total revenues			211.5			153.2			38.1		Total revenues	236.1		211.5		11.6

Operating costs:	Operating costs:											Operating costs:
Cost of revenues	Cost of revenues			168.8			118.9			42.0		Cost of revenues	182.9		169.9		7.7
Selling, general, and administrative expenses	Selling, general, and administrative expenses			26.0			18.5			40.5		Selling, general, and administrative expenses	26.3		26.0		1.2
Gain on disposition of property, plant, equipment, and other assets												Gain on disposition of property, plant, equipment, and other assets	(22.6)		(1.1)
Operating profit	Operating profit			$	16.7		$	15.8		5.7		Operating profit	$	49.5	$	16.7	196.4

Depreciation, depletion, and amortization(1)	Depreciation, depletion, and amortization(1)			$	24.6		$	17.1		43.9		Depreciation, depletion, and amortization(1)	$	26.9	$	24.6	9.3

(1) Depreciation, depletion, and amortization are components of operating profit.

Three Months Ended March 31, ~~2022~~2023 versus Three Months Ended March 31, ~~2021~~2022

•Revenues increased ~~38.1%~~11.6% primarily driven by ~~recent acquisitions, which on a combined basis increased segment revenues by approximately 30%. The additional increase~~strong pricing gains across our product lines in ~~revenues was driven by higher pricing and volumes in~~ our ~~recycled~~ aggregates and specialty materials businesses, ~~as well as increased volumes and higher steel prices in our construction site support business.~~

•~~Revenues in our legacy natural aggregates business increased slightly compared to the prior year period as strong pricing gains and volume increases were~~ partially offset by ~~anticipated volume declines~~overall lower volumes. Revenues from our trench shoring business increased 6.4% driven by higher volumes and the acquisition of a small, Houston-based shoring, trench, and excavation products business in ~~Central Texas.~~the quarter.

•Cost of revenues increased ~~42.0%~~7.7% primarily due to ~~higher volumes from recently acquired businesses~~inflationary-related cost increases, including diesel, cement, and ~~strong demand in our legacy businesses. Cost of revenues also increased due to higher depreciation, depletion, and amortization expense from acquired businesses.~~process fuels. As a percent of revenues, cost of revenues decreased to 77.5% in ~~our legacy businesses decreased slightly despite higher fuel prices and other inflationary-related increases.~~the current period compared to 80.3% in the prior period.

•Selling, general, and administrative costs ~~increased 40.5% primarily due to additional costs from acquired businesses.~~were substantially unchanged. Selling, general, and administrative costs decreased as a percentage of revenues to 11.1% compared to 12.3% in the ~~legacy businesses were slightly lower than the previous period as a percent of revenues.~~prior period.

•Operating profit increased ~~5.7%~~significantly, partially due to ~~higher revenues, partially offset~~the gain recognized on the disposition of depleted land. Excluding this gain, operating profit increased 72.4% driven by ~~higher depreciation, depletion, and amortization expense.~~increased pricing, despite lower volumes.

•Depreciation, depletion, and amortization expense increased primarily due to ~~recently acquired businesses, including the impact of the fair value mark up of long-lived assets.~~recent acquisitions and organic growth investments.

Engineered Structures


		Three Months Ended March 31,
				2022		2021			Percent			Three Months Ended March 31,
												2023		2022		Percent
			($ in millions)			Change		($ in millions)						Change
Revenues:	Revenues:										Revenues:
Utility, wind, and related structures	Utility, wind, and related structures			$	190.6	$	164.0		16.2	%	Utility, wind, and related structures	$	207.7	$	190.6	9.0	%
Storage tanks	Storage tanks			59.9		43.0			39.3		Storage tanks	—		59.9		(100.0)
Total revenues	Total revenues			250.5		207.0			21.0		Total revenues	207.7		250.5		(17.1)

Operating costs:	Operating costs:										Operating costs:
Cost of revenues	Cost of revenues			204.1		171.1			19.3		Cost of revenues	168.4		204.2		(17.5)
Selling, general, and administrative expenses	Selling, general, and administrative expenses			18.1		18.4			(1.6)		Selling, general, and administrative expenses	15.8		18.1		(12.7)
Gain on sale of storage tank business											Gain on sale of storage tank business	(6.4)		—
Gain on disposition of property, plant, equipment, and other assets											Gain on disposition of property, plant, equipment, and other assets	—		(0.1)

Operating profit	Operating profit			$	28.3	$	17.5		61.7		Operating profit	$	29.9	$	28.3	5.7

Depreciation and amortization(1)	Depreciation and amortization(1)			$	8.0	$	8.4		(4.8)		Depreciation and amortization(1)	$	6.6	$	8.0	(17.5)

(1) Depreciation and amortization are components of operating profit.

Three Months Ended March 31, ~~2022~~2023 versus Three Months Ended March 31, ~~2021~~2022

•Revenues decreased 17.1% due to the decline in revenue from our storage tanks business, which was sold in October 2022. Revenue from utility, wind, and related structures increased ~~21.0%~~9.0% primarily due to increased ~~pricing across all product lines, partially offset by lower wind tower volumes.~~volumes in our utility structures business.

•Cost of revenues decreased 17.5% due to the elimination of costs from our storage tanks business. Cost of revenues from utility, wind, and related structures increased ~~19.3% primarily driven by higher steel input prices,~~in line with the increase in revenue, partially offset by ~~lower~~AMP tax credits recognized in our wind ~~tower volumes. Cost of revenues also increased due to a gain of $3.9 million recognized on the sale of a non-operating facility in the prior period.~~towers business.

•Selling, general, and administrative costs ~~were substantially unchanged~~decreased due to the elimination of costs from our storage tanks business. Selling, general, and ~~decreased as a percentage of revenues~~administrative costs from utility, wind, and related structures increased primarily due to ~~7.2%~~increased compensation costs.

•The storage tanks business contributed $6.4 million in operating profit related to the additional gain on sale recorded in the first quarter compared to ~~8.9%~~$10.3 million of operating profit in the prior ~~period.~~year, resulting in a $3.9 million decrease year-over-year related to the divestiture. Excluding the impact from the divestiture in both periods, operating profit increased primarily due to higher volumes in our utility structures business and $3.2 million of net benefit recognized from AMP tax credits in our wind towers business.

•Operating profit increased ~~61.7% primarily~~due to the gain recognized on the sale of our storage tanks business. Excluding this gain, operating profit decreased due to the elimination of our storage tanks business, which contributed $10.3 million to operating profit in the prior year. Operating profit from utility, wind, and related structures increased due to higher revenues ~~and improved margins~~ in our utility structures ~~businesses~~business and ~~improved pricing~~$3.2 million of net benefit recognized from AMP tax credits in our ~~storage tanks~~wind towers business.

Unsatisfied Performance Obligations (Backlog)

As of March 31, ~~2022,~~2023, the backlog for utility, wind, and related structures was ~~$421.0~~$1,531.4 million, compared to ~~$437.5~~$671.3 million and ~~$379.5~~$421.0 million as of December 31, ~~2021~~2022 and March 31, ~~2021,~~2022, respectively. Approximately ~~88%~~29% of these unsatisfied performance obligations are expected to be delivered during the year ending December 31, ~~2022~~2023, approximately 22% during the year ended December 31, 2024, with ~~substantially all of~~ the remainder expected to be delivered in 2023. Future wind tower orders are subject to uncertainty as PTC eligibility for new wind farm projects is currently in a phase-out period that extends until 2025, and there is currently no PTC in place for new wind farm projects commencing in 2022 or beyond. Pricing of orders and individual order quantities reflect a market transitioning from PTC incentives. As of March 31, 2022, the backlog for our storage tank business was $20.9 million, all of which is expected to be delivered during the year ending December 31, 2022.through 2028.

Transportation Products


		Three Months Ended March 31,				Three Months Ended March 31,
				2022			2021			Percent			2023		2022		Percent
			($ in millions)				Change		($ in millions)						Change
Revenues:	Revenues:											Revenues:
Inland barges	Inland barges			$	47.0		$	57.9		(18.8)	%	Inland barges	$	68.1	$	47.0	44.9	%
Steel components	Steel components			26.8			22.3			20.2		Steel components	37.3		26.8		39.2
Total revenues	Total revenues			73.8			80.2			(8.0)		Total revenues	105.4		73.8		42.8

Operating costs:	Operating costs:											Operating costs:
Cost of revenues	Cost of revenues			65.6			71.1			(7.7)		Cost of revenues	89.3		65.6		36.1
Selling, general, and administrative expenses	Selling, general, and administrative expenses			5.5			5.0			10.0		Selling, general, and administrative expenses	6.0		5.5		9.1

Operating profit	Operating profit			$	2.7		$	4.1		(34.1)		Operating profit	$	10.1	$	2.7	274.1

Depreciation and amortization (1)	Depreciation and amortization (1)			$	3.9		$	4.6		(15.2)		Depreciation and amortization (1)	$	4.0	$	3.9	2.6

(1) Depreciation and amortization are components of operating profit.

Three Months Ended March 31, ~~2022~~2023 versus Three Months Ended March 31, ~~2021~~2022

•Revenues ~~decreased 8.0%. Reflecting weakened demand conditions from the COVID-19 pandemic and~~ increased ~~steel prices, revenues from~~42.8% driven by an increase in deliveries of inland barges decreased 18.8% driven by lower tank barge deliveries, partially offset by a slight increase in hopper barge deliveries. Steel component revenues increased 20.2% due to increased deliveries resulting from improving demand conditions in the North American railcar market.and steel components.

•Cost of revenues ~~decreased 7.7% driven by lower tank barge~~increased 36.1% due to higher volumes ~~partially offset by higher~~of inland barges and steel ~~component volumes.~~components.

•Selling, general, and administrative costs increased 9.1% but decreased as a percentage of ~~revenue~~revenues to ~~7.5%~~5.7% compared to ~~6.2%~~7.5% in the prior ~~period on lower volumes.~~period.

•Operating profit ~~decreased 34.1% due to overall lower volumes.~~increased significantly, outpacing the increase in revenues, driven by improved operating leverage associated with the increased volumes and improved margins across both businesses.

Unsatisfied Performance Obligations (Backlog)

As of March 31, ~~2022,~~2023, the backlog for inland barges was ~~$150.6~~$279.0 million, compared to ~~$92.7~~$225.1 million and ~~$133.2~~$150.6 million as of December 31, ~~2021~~2022 and March 31, ~~2021,~~2022, respectively. Approximately ~~72%~~68% of unsatisfied performance obligations for inland barges are expected to be delivered during the year ending December 31, ~~2022~~2023 with the remainder expected to be delivered in ~~2023.~~2024.

Corporate
Three Months Ended March 31,
2022 2021 Percent
(in millions) Change
Corporate overhead costs $ 13.0 $ 14.5 (10.3) %


	Three Months Ended March 31,
	2023		2022		Percent
	(in millions)				Change
Corporate overhead costs	$	14.4	$	13.0	10.8	%

Three Months Ended March 31, ~~2022~~2023 versus Three Months Ended March 31, ~~2021~~2022

•Corporate overhead costs ~~decreased 10.3% for the three months ended March 31, 2022~~increased 10.8% primarily due to increased compensation-related expenses. The increase was partially offset by lower acquisition and divestiture-related expenses of ~~$0.9~~$0.6 million, ~~in current period,~~ compared to ~~$1.7~~$0.9 million for the same period in ~~2021.~~

•We estimate full-year corporate costs of approximately $13-14 million per quarter for the remainder of 2022, excluding non-recurring acquisition and divestiture-related expenses. We estimate full-year acquisition and divestiture-related expenses of approximately $7.5-8.5 million.2022.

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. To the extent we have available liquidity, we may also consider undertaking new capital investment projects, executing additional strategic acquisitions, returning capital to stockholders, or funding other general corporate purposes.

Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022

		(in millions)					(in millions)
Total cash provided by (required by):	Total cash provided by (required by):					Total cash provided by (required by):
Operating activities	Operating activities	$	24.5	$	0.4	Operating activities	$	27.3	$	24.5
Investing activities	Investing activities	(5.3)		(10.4)		Investing activities	(34.1)		(5.3)
Financing activities	Financing activities	(3.5)		(3.9)		Financing activities	(4.4)		(3.5)
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	$	15.7	$	(13.9)	Net increase (decrease) in cash and cash equivalents	$	(11.2)	$	15.7

Operating Activities. Net cash provided by operating activities for the three months ended March 31, ~~2022~~2023 was ~~$24.5~~$27.3 million compared to ~~$0.4~~$24.5 million for the three months ended March 31, ~~2021.~~2022.

•The changes in current assets and liabilities resulted in a net use of cash of $55.4 million for the three months ended March 31, 2023 compared to a net use of cash of $38.1 million for the three months ended March 31, ~~2022 compared to a net use of cash of $46.7 million for the three months ended March 31, 2021.~~2022. The current year activity was primarily driven by increased receivables and inventories due to increased volumes and higher steel prices, partially offset by increases in accounts ~~payable.~~payable and advanced billings.

Investing Activities. Net cash required by investing activities for the three months ended March 31, ~~2022~~2023 was ~~$5.3~~$34.1 million compared to ~~$10.4~~$5.3 million for the three months ended March 31, ~~2021.~~2022.

•Capital expenditures for the three months ended March 31, ~~2022~~2023 were ~~$25.9~~$44.4 million compared to ~~$19.9~~$25.9 million for the same period last year. Full-year capital expenditures are expected to be approximately ~~$120~~$185 to ~~$140~~$210 million in ~~2022. We expect maintenance capital expenditures of approximately $90 million and capital expenditures related to additional growth to be $30 to $50 million in 2022.~~2023.

•Proceeds from the sale of property, plant, and equipment and other assets totaled ~~$20.6~~$23.9 million for the three months ended March 31, ~~2022,~~2023, compared to ~~$9.5~~$20.6 million for the same period in ~~2021.~~2022.

•Cash paid for acquisitions, net of cash acquired, was $15.6 million for the three months ended March 31, 2023 compared to no activity for the same period in 2022. Proceeds from the sale of the storage tanks business were $2.0 million during the three months ended March 31, 2023 and related to the resolution of certain contingencies from the sale that closed in October 2022. There was no ~~acquisition or~~ divestiture activity for the three months ended March 31, ~~2022 and 2021.~~2022.

Financing Activities. Net cash required by financing activities during the three months ended March 31, ~~2022~~2023 was ~~$3.5~~$4.4 million compared to net cash required by financing activities of ~~$3.9~~$3.5 million for the same period in ~~2021.~~2022.

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 $500.0 million and added a term loan facility of $150.0 million, in each case with a maturity date of January 2, 2025. The entire term loan was advanced on January 2, 2020. As of March 31, ~~2022,~~2023, the term loan had a remaining balance of ~~$144.4~~$136.8 million.

As of March 31, ~~2022,~~2023, we had ~~$125.0 million of~~no outstanding loans borrowed under the revolving credit facility and there were approximately ~~$28.5~~$25.3 million of letters of credit issued, leaving ~~$346.5~~$474.7 million available for borrowing. Of the outstanding letters of credit as of March 31, 2023, $24.5 million are expected to expire in 2023, with the remainder in 2024. The majority of our letters of credit obligations support the Company’s various insurance programs and generally renew by their terms each year.

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 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%~~1.50% as of March 31, ~~2022.~~2023. The commitment fee rate ranges from 0.20% to 0.35% and was set at ~~0.30%~~0.25% as of March 31, ~~2022.~~

2023.

In order to increase liquidity in anticipation of the acquisition of StonePoint the Company entered into an unsecured 364-Day Credit Agreement on March 26, 2021 providing for a revolving line of credit of $150.0 million, with an outside maturity date of March 25, 2022, with pricing, covenants, and guarantees substantially similar to the Company’s existing revolving credit and term loan facilities. Per the terms of the facility, it terminated on April 6, 2021 upon the closing of the Company’s private offering of $400 million in senior notes.

We believe, based on our current business plans, that our existing cash, available liquidity, and cash flow from operations will be sufficient to fund necessary capital expenditures and operating cash requirements for the foreseeable future. The Company further believes that its financial resources will allow it to manage the anticipated impact of COVID-19 on the Company's business operations for the foreseeable future. The macroeconomic uncertainties posed by COVID-19 are evolving. Consequently, the Company will continue to evaluate its financial position in light of future developments, particularly those relating to COVID-19, including its variants.

Dividends and Repurchase Program

In March ~~2022,~~2023, the Company declared a quarterly cash dividend of $0.05 per share that was paid on April ~~29, 2022.~~28, 2023.

In December ~~2020,~~2022, the Company’s Board of Directors authorized a new $50 million share repurchase program effective January 1, ~~2021~~2023 through December 31, ~~2022~~2024 to replace a program of the same amount that expired on December 31, ~~2020. Under the program, the Company repurchased no shares during~~2022. For the three months ended March 31, ~~2022. As~~2023, the Company did not repurchase any shares, leaving the full amount of the $50.0 million authorization available as of March 31, ~~2022, the Company had a remaining authorization of $40.6 million under the program.~~2023. See Note 1 of the Notes to the Consolidated Financial Statements.

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 with borrowings under the Amended and Restated Credit Agreement. The instrument carried an initial notional amount of $100.0 million, thereby hedging the first $100.0 million of borrowings. The instrument effectively fixes the LIBOR component of the borrowings at a monthly rate of 2.71%. As of March 31, ~~2022,~~2023, the Company has recorded ~~a liability~~an asset of ~~$1.2~~$1.5 million for the fair value of the instrument, all of which is recorded in accumulated other comprehensive ~~loss.~~income. See Note 3 and Note 7 of the Notes to the Consolidated Financial Statements.

Recent Accounting Pronouncements

See Note 1 of the Notes to the Consolidated Financial Statements for information about recent accounting pronouncements.

3027

Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not historical facts are forward-looking statements and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performances, estimates, projections, goals, and forecasts. Arcosa uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “plans,” and similar expressions to identify these forward-looking statements. 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 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;

•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 are not favorably received by stockholders;

•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 ~~result from~~ the ~~Separation, or if such benefits are delayed;~~issuance of additional guidance and clarification;

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•if the distribution of shares of Arcosa resulting from the ~~Separation,~~separation of Arcosa from Trinity Industries, Inc. in November 2018 (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 state fraudulent conveyance laws and legal dividend requirements.

Any forward-looking statement speaks only as of the date on which such statement is made. Arcosa undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. 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” in our ~~2021~~2022 Annual Report on Form 10-K and future Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There has been no material change in our market risks since December 31, ~~2021~~2022 as set forth in our ~~2021~~2022 Annual Report on Form 10-K. See Note 9 of the Notes to Consolidated Financial Statements for the impact of foreign exchange rate fluctuations for the three months ended March 31, ~~2022.~~2023.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that it is able to collect and record the information it is required to disclose in the reports it files with the Securities and Exchange Commission (“SEC”), and to process, summarize, and disclose this information within the time periods specified in the rules of the SEC. The Company’s Chief Executive and Chief Financial Officers are responsible for establishing and maintaining these procedures and, as required by the rules of the SEC, evaluating their effectiveness. Based on their evaluation of the Company’s disclosure controls and procedures that took place as of the end of the period covered by this report, the Chief Executive and Chief Financial Officers believe that these procedures are effective to 1) ensure that the Company is able to collect, process, and disclose the information it is required to disclose in the reports it files with the SEC within the required time periods and 2) accumulate and communicate this information to the Company’s management, including its Chief Executive and Chief Financial Officers, to allow timely decisions regarding this disclosure.

Changes in Internal Control over Financial Reporting

During the period covered by this report, there have been no changes in the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

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PART II

Item 1. Legal Proceedings

See Note 15 of the Consolidated Financial Statements regarding legal proceedings.

Item 1A. Risk Factors

There have been no material changes in the Company's risk factors from those set forth in our ~~2021~~2022 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

This table provides information with respect to purchases by the Company of shares of its common stock during the quarter ended March 31, ~~2022:~~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)
January 1, 2022 through January 31, 2022 611 $ 52.58 — $ 40,625,892
February 1, 2022 through February 28, 2022 355 $ 44.17 — $ 40,625,892
March 1, 2022 through March 31, 2022 992 $ 57.41 — $ 40,625,892
Total 1,958 $ 53.50 — $ 40,625,892


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)
January 1, 2023 through January 31, 2023	750	$	57.55	—	$	50,000,000
February 1, 2023 through February 28, 2023	613	$	58.11	—	$	50,000,000
March 1, 2023 through March 31, 2023	—	$	—	—	$	50,000,000
Total	1,363	$	57.80	—	$	50,000,000

(1) These columns include the following transactions during the three months ended March 31, ~~2022:~~2023: (i) the surrender to the Company of ~~1,958~~1,363 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 no shares of common stock on the open market as part of the stock repurchase program.

(2) In December ~~2020,~~2022, the Company’s Board of Directors authorized a new $50 million share repurchase program effective January 1, ~~2021~~2023 through December 31, ~~2022~~2024 to replace a program of the same amount that expired on December 31, ~~2020.~~2022.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 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-Q.

Item 5. Other Information

None.

Item 6. Exhibits


NO.						DESCRIPTION
3.1						Restated Certificate of Incorporation of Arcosa, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-8 filed on October 31, 2018, File No. 333-228098).
3.2						Amended and Restated Bylaws of Arcosa, Inc. (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q, for the quarter-ended March 31, 2020, File No. 001-38494).
4.1						Third Supplemental Indenture dated as of October 3, 2022 among Arcosa, Inc. and Computershare Trust Company N.A. (filed herewith).
4.2						Fourth Supplemental Indenture dated as of January 4, 2023 among the Guaranteeing Subsidiary named therein, Arcosa, Inc., and Computershare Trust Company N.A. (filed herewith).
10.1						~~Arcosa, Inc. 2022 Change in Control Severance Plan, dated March 3, 2022 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on~~ Form ~~8-K, filed March 7, 2022, File No. 001-38494).~~of Perform ance-Based Restricted Stock Unit Grant Agreement (filed herewith)
31.1						Rule 13a-15(e) and 15d-15(e) Certification of the Chief Executive Officer (filed herewith).
31.2						Rule 13a-15(e) and 15d-15(e) Certification of the Chief Financial Officer (filed herewith).
32.1						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
95						Mine Safety Disclosure Exhibit (filed herewith).
101.INS						Inline XBRL Instance Document (filed electronically herewith).
101.SCH						Inline XBRL Taxonomy Extension Schema Document (filed electronically herewith).
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed electronically herewith).
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document (filed electronically herewith).
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed electronically herewith).
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document (filed electronically herewith).
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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