An early-November spinoff of assets outside core Rail and Railcar Leasing and Management Services businesses under Dallas-based Trinity Industries Inc. spawned Arcosa Inc., a New York Stock Exchange-traded company reporting 2017 sales of $1.5 billion across three groups: Construction Products, with 11 sand & gravel (Texas, Louisiana) and eight expanded shale and clay (Alabama, Arkansas, California, Colorado, Indiana, Kentucky, Louisiana, Texas) plants, plus Energy Equipment and Transportation.
Arcosa entered the public markets as “a strong, independent company with established businesses,” said CEO Antonio Carrillo on the first day of operating as a separate business from Trinity Industries. “A healthy, nearly-debt free balance sheet and strong operating cash flow provide us with significant resources to grow both organically and through disciplined acquisitions. Our stage one priorities are to grow our construction products businesses, improve margins in our energy equipment segment, and expand our transportation products businesses as our key markets recover.”
“Our name symbolizes the ‘arc’ of progress for our business and ongoing commitment to meeting critical infrastructure needs through innovation, entrepreneurship, and flexibility,” added Carrillo, a 16-year Trinity veteran. “We are committed to establishing credibility with our many stakeholders, including the investment community, customers and suppliers, team members throughout the organization, and the communities in which we operate.”
Leading the Arcosa Construction Products Group is Reid Essl, who transitioned from chief financial officer over the Trinity Construction, Energy and Marine businesses. Of 2017 Arcosa financials, Construction Products accounted for $259 million, or 18 percent of sales, and $54 million, or 41 percent of $132 million in operating profit. The sand & gravel and lightweight aggregate production portfolio includes legacy Trinity Industries plants, along with sites previously under Oldcastle Architectural/Big River and Texas Industries.
OUT OF GATE BOLT-ON
Two weeks after the spinoff, Arcosa entered a definitive agreement with an H.I.G. Capital LLC affiliate to acquire ACG Materials, Norman, Okla. The company mines and processes materials for the construction, agriculture, food and pharmaceutical industries, and has among its brands AccuCrete, a cementitious floor underlayment sold as a packaged dry mix. It brings 24 active aggregate sites and five production facilities to Arcosa Construction Products, and will boost segment revenues upward of 50 percent, to approximately $450 million. ACG operates in Florida, Texas, Oklahoma, Kansas, Missouri, Washington, Nevada and British Columbia.
“The acquisition demonstrates early execution on key elements of our strategic growth plan: To expand our Construction Products business and grow in attractive markets,” noted Carrillo. “ACG is a strategically important acquisition, adding significant scale to the Construction Products segment, extending our specialty product portfolio and geographic reach, and expanding our end markets.”