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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________ .
Commission File Number 1-38494
aca-20220331_g1.jpg
Arcosa, Inc.
(Exact name of registrant as specified in its charter)
Delaware82-5339416
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
500 N. Akard Street, Suite 400
Dallas,Texas75201
(Address of principal executive offices)(Zip Code)

(972) 942-6500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock ($0.01 par value)ACANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes þ   No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer  Non-accelerated filer
Smaller reporting company  Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No þ
At April 14, 2022, the number of shares of common stock outstanding was 48,321,067.



ARCOSA, INC.
FORM 10-Q
TABLE OF CONTENTS



2

PART I
Item 1. Financial Statements
Arcosa, Inc. and Subsidiaries
Consolidated Statements of Operations
(unaudited)
 Three Months Ended March 31,
 20222021
 (in millions)
Revenues$535.8 $440.4 
Operating costs:
Cost of revenues438.5 361.1 
Selling, general, and administrative expenses62.6 56.4 
501.1 417.5 
Total operating profit34.7 22.9 
Interest expense7.2 2.1 
Other, net (income) expense0.9 0.5 
Income before income taxes26.6 20.3 
Provision for income taxes6.4 4.4 
Net income$20.2 $15.9 
Net income per common share:
Basic$0.42 $0.33 
Diluted$0.41 $0.32 
Weighted average number of shares outstanding:
Basic48.2 48.0 
Diluted48.8 48.8 
Dividends declared per common share$0.05 $0.05 

See accompanying Notes to Consolidated Financial Statements.
3

Arcosa, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(unaudited)
 Three Months Ended March 31,
 20222021
 (in millions)
Net income$20.2 $15.9 
Other comprehensive income (loss):
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 
Currency translation adjustment:
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 
Comprehensive income$22.4 $16.9 

See accompanying Notes to Consolidated Financial Statements.
4

Arcosa, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31,
2022
December 31,
2021
(unaudited)
 (in millions)
ASSETS
Current assets:
Cash and cash equivalents$88.6 $72.9 
Receivables, net of allowance373.7 310.8 
Inventories:
Raw materials and supplies156.9 150.8 
Work in process64.0 53.6 
Finished goods121.9 120.1 
342.8 324.5 
Other36.5 59.7 
Total current assets841.6 767.9 
Property, plant, and equipment, net1,196.4 1,201.9 
Goodwill938.6 934.9 
Intangibles, net215.9 220.3 
Deferred income taxes12.6 13.2 
Other assets51.7 49.9 
$3,256.8 $3,188.1 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$228.7 $184.7 
Accrued liabilities140.4 145.9 
Advance billings20.4 18.6 
Current portion of long-term debt14.2 14.8 
Total current liabilities403.7 364.0 
Debt666.4 664.7 
Deferred income taxes137.5 134.0 
Other liabilities71.6 72.1 
1,279.2 1,234.8 
Stockholders’ equity:
Common stock – 200.0 shares authorized
0.5 0.5 
Capital in excess of par value1,697.1 1,692.6 
Retained earnings297.3 279.5 
Accumulated other comprehensive loss(17.1)(19.3)
Treasury stock (0.2) 
1,977.6 1,953.3 
$3,256.8 $3,188.1 
See accompanying Notes to Consolidated Financial Statements.
5

Arcosa, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
 Three Months Ended
March 31,
 20222021
 (in millions)
Operating activities:
Net income$20.2 $15.9 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization37.8 31.4 
Stock-based compensation expense4.4 4.7 
Provision for deferred income taxes5.1 1.3 
Gains on disposition of property and other assets(1.2)(5.9)
(Increase) decrease in other assets(1.2)1.5 
Increase (decrease) in other liabilities(3.0)(4.0)
Other0.5 2.2 
Changes in current assets and liabilities:
(Increase) decrease in receivables(69.3)(31.9)
(Increase) decrease in inventories(18.2)(14.7)
(Increase) decrease in other current assets2.7 (5.4)
Increase (decrease) in accounts payable44.0 31.6 
Increase (decrease) in advance billings1.8 (16.1)
Increase (decrease) in accrued liabilities0.9 (10.2)
Net cash provided by operating activities24.5 0.4 
Investing activities:
Proceeds from disposition of property and other assets20.6 9.5 
Capital expenditures(25.9)(19.9)
Net cash required by investing activities(5.3)(10.4)
Financing activities:
Payments to retire debt(1.0)(1.4)
Dividends paid to common stockholders(2.4)(2.4)
Purchase of shares to satisfy employee tax on vested stock(0.1)(0.1)
Net cash required by financing activities(3.5)(3.9)
Net increase (decrease) in cash and cash equivalents15.7 (13.9)
Cash and cash equivalents at beginning of period72.9 95.8 
Cash and cash equivalents at end of period$88.6 $81.9 

See accompanying Notes to Consolidated Financial Statements.
6

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
Shares
$0.01 Par Value
SharesAmount
(in millions, except par value)
Balances at December 31, 202048.2 $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, 202148.2 $0.5 $1,699.4 $233.2 $(21.1) $(0.7)$1,911.3 
Balances at December 31, 202148.3 $0.5 $1,692.6 $279.5 $(19.3) $ $1,953.3 
Net income— — — 20.2 — — — 20.2 
Other comprehensive income— — — — 2.2 — — 2.2 
Cash dividends on common stock— — — (2.4)— — — (2.4)
Restricted shares, net — 4.5 — —  (0.2)4.3 
Balances at March 31, 202248.3 $0.5 $1,697.1 $297.3 $(17.1) $(0.2)$1,977.6 

See accompanying Notes to Consolidated Financial Statements.
7

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 may not be indicative of Arcosa's expected business, financial condition, and results of operations for the year ending December 31, 2022.
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.
Stockholders' Equity
In December 2020, the Company’s Board of Directors (the “Board”) authorized a new $50 million share repurchase program effective January 1, 2021 through December 31, 2022 to replace a program of the same amount that expired on December 31, 2020. For the three months ended March 31, 2022, the Company repurchased no shares. As of March 31, 2022, the Company had a remaining authorization of $40.6 million under the program.
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, certain utility structure, and certain storage tank product lines 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 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, we had a contract asset of $62.9 million related to these contracts, compared to $54.2 million at December 31, 2021, 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.
8

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 and the percentage of the outstanding performance obligations as of March 31, 2022 expected to be delivered during the remainder of 2022:
Unsatisfied performance obligations at March 31, 2022
Total
Amount
Percent expected to be delivered in 2022
 (in millions)
Engineered Structures:
Utility, wind, and related structures$421.0 88 %
Storage tanks$20.9 100 %
Transportation Products:
Inland barges$150.6 72 %
Substantially all unsatisfied performance obligations beyond 2022 are expected to be delivered during 2023.
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. The Company has no continuing involvement or recourse related to these receivables once they are sold, and the impact of these transactions in the Company's Consolidated Statements of Operations for the three months ended March 31, 2022 was not significant. The carrying values of cash, receivables, and accounts payable are considered to be representative of their respective fair values.
9

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, the Company adopted Accounting Standards Updated No. 2019-12, “Simplifying the Accounting for Income Taxes”, (“ASU 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions to the general principles for income taxes. The adoption of the 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
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. 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, 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.

Note 2. Acquisitions and Divestitures
There was no acquisition activity during the three months ended March 31, 2022.
2021 Acquisitions
In August 2021, we completed the stock acquisition of Southwest Rock Products, LLC and affiliated entities (collectively “Southwest Rock”), a natural aggregates company serving the greater Phoenix metropolitan area, which is included in our Construction Products segment, for a total purchase price of $149.7 million. The acquisition was funded with cash on hand, $100.0 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. 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. The preliminary valuation resulted in the recognition of, among others, $63.3 million of goodwill, $51.0 million of mineral reserves, and $28.0 million of property, plant, and equipment 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.
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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 that 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 receivable18.8 
Inventories20.9 
Property, plant, and equipment68.4 
Mineral reserves198.8 
Goodwill87.2 
Customer relationships7.2 
Other assets10.4 
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.
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, 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.
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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
 Level 1Level 2Level 3Total
(in millions)
Liabilities:
Interest rate hedge(1)
$ $1.2 $ $1.2 
Contingent consideration(2)
  6.4 6.4 
Total liabilities$ $1.2 $6.4 $7.6 
 Fair Value Measurement as of December 31, 2021
 Level 1Level 2Level 3Total
(in millions)
Liabilities:
Interest rate hedge(1)
$ $3.9 $ $3.9 
Contingent consideration(2)
  6.7 6.7 
Total liabilities$ $3.9 $6.7 $10.6 

(1) Included in other liabilities 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 three 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 storage and distribution tanks.
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.
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The financial information for these segments is shown in the tables below. We operate principally in North America.
 Three Months Ended March 31,
RevenuesOperating Profit (Loss)
 2022202120222021
 (in millions)
Aggregates and specialty materials$187.9 $135.3 
Construction site support23.6 17.9 
Construction Products211.5 153.2 $16.7 $15.8 
Utility, wind, and related structures190.6 164.0 
Storage tanks59.9 43.0 
Engineered Structures250.5 207.0 28.3 17.5 
Inland barges47.0 57.9 
Steel components26.8 22.3 
Transportation Products73.8 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 and December 31, 2021.
March 31,
2022
December 31,
2021
 (in millions)
Land$139.5 $137.3 
Mineral reserves505.4 507.3 
Buildings and improvements305.3 301.0 
Machinery and other990.5 973.9 
Construction in progress49.5 45.4 
1,990.2 1,964.9 
Less accumulated depreciation and depletion(793.8)(763.0)
$1,196.4 $1,201.9 

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Note 6. Goodwill and Other Intangible Assets
Goodwill
Goodwill by segment is as follows:
March 31,
2022
December 31,
2021
 (in millions)
Construction Products$464.0 $460.3 
Engineered Structures437.6 437.6 
Transportation Products37.0 37.0 
$938.6 $934.9 

The increase in Construction Products goodwill during the three months ended March 31, 2022 is primarily due to measurement period adjustments from the acquisitions of StonePoint and Southwest Rock. See Note 2 Acquisitions and Divestitures.
Intangible Assets
Intangibles, net consisted of the following:
March 31,
2022
December 31,
2021
(in millions)
Intangibles with indefinite lives - Trademarks$34.1 $34.1 
Intangibles with definite lives:
Customer relationships135.5135.4
Permits87.587.5
Other3.93.9
226.9226.8
Less accumulated amortization(45.1)(40.6)
181.8186.2
Intangible assets, net$215.9 $220.3 

Note 7. Debt
The following table summarizes the components of debt as of March 31, 2022 and December 31, 2021:
March 31,
2022
December 31,
2021
 (in millions)
Revolving credit facility$125.0 $125.0 
Term loan144.4 144.4 
Senior notes400.0 400.0 
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 

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, the term loan had a remaining balance of $144.4 million.
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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, we had $125.0 million of outstanding loans borrowed under the revolving credit facility, and there were approximately $28.5 million of letters of credit issued, leaving $346.5 million available. Of the outstanding letters of credit as of March 31, 2022, $27.9 million are expected to expire in 2022, with the remainder in 2023. 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% as of March 31, 2022. The commitment fee rate ranges from 0.20% to 0.35% and was set at 0.30% at March 31, 2022. 
The Company's revolving credit and term loan facilities require the maintenance of certain ratios related to leverage and interest coverage. As of March 31, 2022, 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, the Company had $1.2 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. 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 was $380.4 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 $6.6 million of debt issuance costs.
The remaining principal payments under existing debt agreements as of March 31, 2022 are as follows:
20222023202420252026Thereafter
 (in millions)
Revolving credit facility$ $ $ $125.0 $ $ 
Term loan7.5 8.5 8.4 120.0   
Senior notes     400.0 

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Interest rate hedges
In December 2018, the Company entered into an interest rate swap instrument, effective as of January 2, 2019 and expiring in 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, the Company has recorded a liability of $1.2 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 consisted of the following:
Operating LeasesFinance Leases
(in millions)
2022 (remaining)$5.9 $6.1 
20234.6 4.7 
20244.0 4.6 
20253.3 2.8 
20262.2  
Thereafter8.4  
Total undiscounted future minimum lease obligations28.4 18.2 
Less imputed interest(4.3)(1.0)
Present value of net minimum lease obligations$24.1 $17.2 
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The following table summarizes our operating and finance leases and their classification within the Consolidated Balance Sheet.
March 31,
2022
December 31,
2021
(in millions)
Assets
Operating - Other assets
$21.2 $20.9 
Finance - Property, plant, and equipment, net
17.5 16.9 
Total lease assets38.7 37.8 
Liabilities
Current
Operating - Accrued liabilities
4.9 4.8 
Finance - Current portion of long-term debt
6.7 6.3 
Non-current
Operating - Other liabilities
19.2 19.1 
Finance - Debt
10.5 10.0 
Total lease liabilities$41.3 $40.2 

Note 9. Other, Net
Other, net (income) expense consists of the following items:
 Three Months Ended
March 31,
 20222021
 (in millions)
Interest income$(0.1)$ 
Foreign currency exchange transactions1.0 0.6 
Other (0.1)
Other, net (income) expense$0.9 $0.5 

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 to 2021 with various significant tax jurisdictions.
Our effective tax rates of 24.1% and 21.7% for the three months ended March 31, 2022 and 2021, respectively, which differed from than the U.S. federal statutory rate of 21.0% due to state income taxes, compensation-related items, and foreign disallowed deductions offset by benefits from statutory depletion deductions.
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, 2022, the Company has deferred $5.4 million in payroll-related taxes in accordance with the provisions of the CARES Act.

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Note 11. Employee Retirement Plans
Total employee retirement plan expense, which includes related administrative expenses, is as follows:
Three Months Ended
March 31,
20222021
(in millions)
Defined contribution plans$3.2 $2.7 
Multiemployer plan0.4 0.4 
$3.6 $3.1 

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 and 2021. Total contributions to the multiemployer plan for 2022 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 and 2021 are as follows:
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 reclassifications0.1 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)
Balances at December 31, 2021$(16.3)$(3.0)$(19.3)
Other comprehensive income (loss), net of tax, before reclassifications0.1 1.6 1.7 
Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, ($0.1), and ($0.1)
 0.5 0.5 
Other comprehensive income (loss)0.1 2.1 2.2 
Balances at March 31, 2022$(16.2)$(0.9)$(17.1)

Note 13. Stock-Based Compensation
Stock-based compensation totaled approximately $4.4 million and $4.7 million for the three months ended March 31, 2022 and 2021, respectively.

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Note 14. Earnings Per Common Share
Basic earnings per common share is computed by dividing net income remaining after allocation to unvested restricted shares, which includes unvested restricted shares of Arcosa stock held by employees of the Former Parent, 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 million and 1.8 million shares for the three months ended March 31, 2022 and 2021, respectively.
The computation of basic and diluted earnings per share follows.
    
 Three Months Ended
March 31, 2022
Three Months Ended
March 31, 2021
 Income
(Loss)
Average
Shares
EPSIncome
(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 – basic20.1 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, the range of reasonably possible losses for such matters, taking into consideration our rights in indemnity and recourse to third parties is $0.3 million to $0.4 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, total accruals of $1.0 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 million as of March 31, 2022, included in our total accruals of $1.0 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.
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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.
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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
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 (“2021 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; the impact of new COVID-19 variants; and the pace of recovery when the COVID-19 pandemic subsides, as well as, the response to a 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 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.
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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 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 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, when seasonal weather conditions have been normal, 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. The outlook for public and private construction activity has improved driven by strong residential demand and increased infrastructure spending. We are focused on managing inflationary pressures related to fuel and labor costs through proactive price increases.
Within our Engineered Structures segment, our backlog as of March 31, 2022 provides a healthy level of production visibility for 2022. Our customers remain committed to taking delivery of these orders. In utility structures, order and inquiry activity continues to be strong, as customers remain focused on grid hardening and reliability initiatives. The demand outlook for traffic and telecom structures also remains positive. In the third quarter 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") support and high steel prices are negatively impacting near-term expectations. In the fourth quarter of 2021, we idled our Clinton, Illinois wind tower facility in anticipation of lower volumes in 2022. Order and inquiry activity in the storage tank business is very strong, after taking a pause initially at the onset of COVID-19 as certain customers deferred new tank installations.
Within our Transportation Products segment, our backlog for inland barges as of March 31, 2022 of $150.6 million provides a base level of production visibility into 2023. 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 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 underlying fundamentals for a dry barge replacement cycle remain in place as the fleet continues to age, new builds have not kept pace with scrapping, and utilization rates are high. 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 our backlog into 2023 as we remain flexible for an anticipated market recovery. Demand for steel components, which was softening pre-COVID-