(Mark One) | |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Caption | Page |
• | growing in attractive markets where we can achieve sustainable competitive advantages; |
• | reducing the complexity and cyclicality of the overall business; |
• | improving long-term returns on invested capital; and |
• | integrating Environmental, Social, and Governance initiatives (ESG) into our long-term strategy. |
Construction Products | Energy Equipment | Transportation Products | ||||
Primary products | • Natural aggregates• Lightweight aggregates• Specialty milled or processed materials• Trench shields and shoring products | • Wind towers• Utility structures• Storage and distribution tanks | • Inland barges• Fiberglass barge covers, winches, and other components• Axles and couplers for railcars and locomotives | |||
Primary markets served | • Residential, commercial, and industrial construction• Road and bridge construction• Agriculture• Specialty building products• Underground construction | • Wind power generation• Electricity transmission and distribution• Gas and liquids storage and transportation for residential, commercial, agriculture, and industrial markets | • Transportation products serving numerous markets, including:• Agriculture/food products• Refined products• Chemicals• Upstream oil• Railcar manufacturers and maintenance operations |
December 31, 2019 | December 31, 2018 | |||||||
(in millions) | ||||||||
Energy Equipment Group: | ||||||||
Wind towers and utility structures | $ | 596.8 | $ | 633.1 | ||||
Other | $ | 36.2 | $ | 55.1 | ||||
Transportation Products Group: | ||||||||
Inland barges | $ | 346.9 | $ | 230.5 |
Business Group | December 31, 2019 | |
Construction Products Group | 1,185 | |
Energy Equipment Group | 3,450 | |
Transportation Products Group | 1,540 | |
Corporate | 100 | |
6,275 |
Name | Age | Office | Officer Since | |||
Antonio Carrillo* | 53 | President and Chief Executive Officer | 2018 | |||
Scott C. Beasley* | 39 | Chief Financial Officer | 2018 | |||
Reid S. Essl* | 38 | President, Construction Products | 2018 | |||
Kerry S. Cole* | 51 | President, Energy Equipment | 2018 | |||
Jesse E. Collins, Jr.* | 53 | President, Transportation Products | 2018 | |||
Bryan P. Stevenson* | 46 | Chief Legal Officer | 2018 | |||
Mary E. Henderson* | 61 | Chief Accounting Officer | 2018 | |||
Gail M. Peck | 52 | Senior Vice President, Finance and Treasurer | 2018 |
• | allow Arcosa to more effectively pursue its own distinct operating priorities and strategies, enable Arcosa's management to pursue its own separate opportunities for long-term growth and profitability and to recruit, retain, and motivate employees pursuant to compensation policies which are appropriate for Arcosa's lines of business; |
• | permit Arcosa to concentrate its financial resources solely on its own operations, providing greater flexibility to invest capital in its business in a time and manner appropriate for its distinct strategy and business needs; and |
• | enable investors to evaluate the merits, performance, and future prospects of Arcosa's businesses and to invest in Arcosa separately based on these distinct characteristics. |
• | Arcosa will need to make investments to replicate or outsource certain systems, infrastructure, and functional expertise after its Separation from Trinity. These initiatives to develop Arcosa’s independent ability to operate without access to Trinity’s existing operational and administrative infrastructure will be costly to implement. Arcosa may not be able to operate its business efficiently or at comparable costs, and its profitability may decline; and |
• | Prior to the Separation, Arcosa relied upon Trinity for working capital requirements and other cash requirements, including in connection with Arcosa’s previous acquisitions. Subsequent to the Separation, Trinity no longer provides Arcosa with funds to finance Arcosa’s working capital or other cash requirements. Arcosa’s access to and cost of debt financing may be different from the historical access to and cost of debt financing under Trinity. Differences in access to and cost of debt financing may result in differences in the interest rate charged to Arcosa on financings, as well as the amounts of indebtedness, types of financing structures, and debt markets that may be available to Arcosa, which could have an adverse effect on Arcosa’s business, financial condition, results of operations, and cash flows. |
• | entering into any transaction resulting in the acquisition of 40 percent or more of its stock or substantially all of its assets, whether by merger or otherwise; |
• | merging, consolidating, or liquidating; |
• | issuing equity securities beyond certain thresholds; |
• | repurchasing its capital stock unless certain conditions are met; and |
• | ceasing to actively conduct its business. |
• | Arcosa’s quarterly or annual earnings, or those of other companies in its industry; |
• | actual or anticipated fluctuations in Arcosa’s operating results; |
• | changes in earnings estimates by securities analysts or Arcosa’s ability to meet those estimates; |
• | Arcosa’s ability to meet its forward looking guidance; |
• | the operating and stock price performance of other comparable companies; |
• | overall market fluctuations and domestic and worldwide economic conditions; and |
• | other factors described in these “Risk Factors” and elsewhere in this Annual Report on Form 10-K. |
• | rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; |
• | the right of Arcosa’s Board of Directors to issue preferred stock without stockholder approval; |
• | the ability of Arcosa’s directors, and not stockholders, to fill vacancies (including those resulting from an enlargement of the Board of Directors) on Arcosa’s Board of Directors; |
• | the initial division of Arcosa’s Board of Directors into three classes of directors, with each class serving a staggered term; and |
• | a provision that directors serving on a classified board may be removed by stockholders only for cause. |
Approximate Square Feet(1) | Approximate Square Feet Located In(1) | |||||||||||||
Owned | Leased | US | Mexico | Canada | ||||||||||
Construction Products Group | 580,100 | 119,500 | 648,500 | — | 51,100 | |||||||||
Energy Equipment Group | 2,270,000 | 472,800 | 1,710,300 | 1,032,500 | — | |||||||||
Transportation Products Group | 1,761,400 | 116,300 | 1,877,700 | — | — | |||||||||
Corporate | — | 24,600 | 24,600 | — | — | |||||||||
4,611,500 | 733,200 | 4,261,100 | 1,032,500 | 51,100 |
Number of Facilities | Estimated Proven and Probable Reserves (1) (thousand tons) | Percentage of Reserves | 2019 Production (thousand tons) | ||||||
Owned | Leased | ||||||||
Natural aggregates | 23 | 323,900 | 57% | 43% | 9,800 | ||||
Specialty materials | 14 | 608,800 | 67% | 33% | 6,300 | ||||
Total | 37 | 932,700 | 63% | 37% | 16,100 |
Production Capacity Utilized(1) | ||
Construction Products Group(2) | 70 | % |
Energy Equipment Group | 75 | % |
Transportation Products Group(3) | 55 | % |
11/1/2018 | 12/31/2018 | 12/31/2019 | |||||||||
Arcosa, Inc. | $ | 100 | $ | 101 | $ | 163 | |||||
S&P Small Cap 600 Index | $ | 100 | $ | 88 | $ | 107 | |||||
S&P Small Cap 600 Construction & Engineering Industry Index | $ | 100 | $ | 87 | $ | 115 |
Period | Number of Shares Purchased (1) | Average Price Paid per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2) | ||||||||||
October 1, 2019 through October 31, 2019 | 2,159 | $ | 34.34 | — | $ | 36,025,126 | ||||||||
November 1, 2019 through November 30, 2019 | 158 | $ | 38.55 | — | $ | 36,025,126 | ||||||||
December 1, 2019 through December 31, 2019 | 2,841 | $ | 45.07 | — | $ | 36,025,126 | ||||||||
Total | 5,158 | $ | 40.38 | — | $ | 36,025,126 |
(1) | These columns include the following transactions during the three months ended December 31, 2019: (i) the surrender to the Company of 5,158 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 0 shares of common stock on the open market as part of the stock repurchase program. |
(2) | In December 2018, the Company’s Board of Directors authorized a $50 million share repurchase program that expires December 31, 2020. |
Year Ended December 31, | |||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||||||
(in millions, except per share data) | |||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||
Revenues | $ | 1,736.9 | $ | 1,460.4 | $ | 1,462.4 | $ | 1,704.0 | $ | 2,140.4 | |||||||||
Income before income taxes | 146.8 | 95.0 | 130.1 | 197.2 | 219.2 | ||||||||||||||
Provision for income taxes | 33.5 | 19.3 | 40.4 | 74.2 | 84.2 | ||||||||||||||
Net income | $ | 113.3 | $ | 75.7 | $ | 89.7 | $ | 123.0 | $ | 135.0 | |||||||||
Net income per common share: | |||||||||||||||||||
Basic | $ | 2.34 | $ | 1.55 | $ | 1.84 | $ | 2.52 | $ | 2.77 | |||||||||
Diluted | $ | 2.32 | $ | 1.54 | $ | 1.84 | $ | 2.52 | $ | 2.77 | |||||||||
Weighted average number of shares outstanding(1): | |||||||||||||||||||
Basic | 47.9 | 48.8 | 48.8 | 48.8 | 48.8 | ||||||||||||||
Diluted | 48.4 | 48.9 | 48.8 | 48.8 | 48.8 | ||||||||||||||
Dividends declared per common share | $ | 0.20 | $ | 0.05 | $ | — | $ | — | $ | — | |||||||||
Balance Sheet Data: | |||||||||||||||||||
Total assets | $ | 2,302.5 | $ | 2,172.2 | $ | 1,602.5 | $ | 1,526.3 | $ | 1,603.7 | |||||||||
Debt | $ | 107.3 | $ | 185.5 | $ | 0.5 | $ | — | $ | 0.5 |
• | Revenues for the year ended December 31, 2019 grew 18.9% to $1.7 billion compared to the year ended December 31, 2018 primarily due to the impact of the ACG acquisition in our Construction Products Group, higher unit volumes and prices in our Energy Equipment Group, and higher tank barge volumes in our Transportation Products Group. |
• | Operating profit for year ended December 31, 2019 totaled $152.9 million, representing an increase of 61.1% compared to the year ended December 31, 2018 primarily driven by increased revenues in all segments, operating improvements in our Energy Equipment Group, and certain other charges recognized in the prior period including an impairment charge of $23.2 million related to divested businesses. |
• | Selling, general, and administrative expenses increased by 16.6% for the year ended December 31, 2019, when compared to the prior year largely due to additional costs from the acquired ACG business, incremental standalone costs related to the replacement of services and fees previously provided or incurred by Trinity, as well as other standalone public company costs. |
• | The effective tax rate for the year ended December 31, 2019 was 22.8% compared to 20.3% for the year ended December 31, 2018. See Note 10, “Income Taxes” to the Consolidated and Combined Financial Statements. |
• | Net income for the year ended December 31, 2019 was $113.3 million compared with $75.7 million for the year ended December 31, 2018. |
December 31, 2019 | December 31, 2018 | ||||||
(in millions) | |||||||
Energy Equipment Group: | |||||||
Wind towers and utility structures | $ | 596.8 | $ | 633.1 | |||
Other | $ | 36.2 | $ | 55.1 | |||
Transportation Products Group: | |||||||
Inland barges | $ | 346.9 | $ | 230.5 |
Year Ended December 31, | Percent Change | ||||||||||||||||
2019 | 2018 | 2017 | 2019 versus 2018 | 2018 versus 2017 | |||||||||||||
($ in millions) | |||||||||||||||||
Construction Products Group | $ | 439.7 | $ | 292.3 | $ | 258.9 | 50.4 | % | 12.9 | % | |||||||
Energy Equipment Group | 836.6 | 780.1 | 844.1 | 7.2 | (7.6 | ) | |||||||||||
Transportation Products Group | 465.7 | 391.4 | 363.3 | 19.0 | 7.7 | ||||||||||||
Segment Totals before Eliminations | 1,742.0 | 1,463.8 | 1,466.3 | 19.0 | (0.2 | ) | |||||||||||
Eliminations | (5.1 | ) | (3.4 | ) | (3.9 | ) | 50.0 | (12.8 | ) | ||||||||
Consolidated and Combined Total | $ | 1,736.9 | $ | 1,460.4 | $ | 1,462.4 | 18.9 | (0.1 | )% |
• | Revenues grew by 18.9% with all segments contributing to the increase. |
• | Revenues from our Construction Products Group increased primarily due to the impact of the ACG acquisition. |
• | In our Energy Equipment Group, revenues increased primarily driven by higher volumes in wind towers and higher pricing levels in utility structures. |
• | Revenues from our Transportation Products Group increased primarily due to higher tank barge volumes partially offset by lower contractual pricing and decreased volumes in steel components. |
• | Revenues were essentially flat in 2018 as lower volumes in our Energy Equipment Group were largely offset by increased volumes in both the Construction Products and Transportation Products Groups. |
• | Revenues from our Construction Products Group increased primarily due to the impact of acquisitions completed in 2018 and 2017 in both our construction aggregates and other product lines. |
• | In our Energy Equipment Group, revenues decreased primarily due to a planned reduction of volumes in our wind towers product line partially offset by an increase in revenues from our other product lines. |
• | Revenues from our Transportation Products Group increased primarily due to increased volumes in both our inland barge and steel components product lines. |
Year Ended December 31, | Percent Change | ||||||||||||||||
2019 | 2018 | 2017 | 2019 versus 2018 | 2018 versus 2017 | |||||||||||||
(in millions) | |||||||||||||||||
Construction Products Group | $ | 387.0 | $ | 241.9 | $ | 205.2 | 60.0 | % | 17.9 | % | |||||||
Energy Equipment Group | 735.9 | 751.5 | 765.7 | (2.1 | ) | (1.9 | ) | ||||||||||
Transportation Products Group | 418.9 | 343.0 | 324.3 | 22.1 | 5.8 | ||||||||||||
All Other | — | 0.1 | 0.1 | ||||||||||||||
Segment Totals before Eliminations and Corporate Expenses | 1,541.8 | 1,336.5 | 1,295.3 | 15.4 | 3.2 | ||||||||||||
Corporate | 47.3 | 32.1 | 39.3 | 47.4 | (18.3 | ) | |||||||||||
Eliminations | (5.1 | ) | (3.1 | ) | (3.9 | ) | 64.5 | (20.5 | ) | ||||||||
Consolidated and Combined Total | $ | 1,584.0 | $ | 1,365.5 | $ | 1,330.7 | 16.0 | 2.6 |
• | Operating costs increased 16.0%. |
• | The increase in our Construction Products Group was primarily due to the acquired ACG business as well as increased volumes in our legacy businesses. |
• | Operating costs for the Energy Equipment Group decreased primarily due to an impairment charge and the elimination of operating losses from divested businesses in 2018, partially offset by higher volumes in 2019. |
• | Operating costs for the Transportation Products Group increased due to higher tank barge volumes and start-up costs incurred related to the re-opening of a previously idled barge facility, partially offset by lower steel component volumes. |
• | Total selling, general, and administrative expenses increased 16.6% largely due to additional costs from the acquired ACG business, incremental standalone costs related to the replacement of services and fees previously provided or incurred by Trinity, and other standalone public company costs. As a percentage of revenue, selling, general, and administrative expenses for the year ended December 31, 2019 was 10.3% compared to 10.5% for the year ended December 31, 2018. |
• | Operating costs increased 2.6%. |
• | The increase in operating costs in our Construction Products Group was primarily due to the impact of businesses acquired in 2018 and 2017 in both our construction aggregates and other product lines. |
• | Operating costs for the Energy Equipment Group were lower primarily due to a planned reduction in volumes in our wind tower product line, partially offset by an impairment charge of $23.2 million recorded in 2018 on businesses that were subsequently divested. |
• | Operating costs for the Transportation Products Group were higher due to increased volumes in our inland barge and steel components product lines. |
• | Total selling, general, and administrative expenses decreased 5.6%, primarily due to lower compensation-related expenses. |
Year Ended December 31, | Percent Change | ||||||||||||||||
2019 | 2018 | 2017 | 2019 versus 2018 | 2018 versus 2017 | |||||||||||||
(in millions) | |||||||||||||||||
Construction Products Group | $ | 52.7 | $ | 50.4 | $ | 53.7 | 4.6 | % | (6.1 | )% | |||||||
Energy Equipment Group | 100.7 | 28.6 | 78.4 | 252.1 | (63.5 | ) | |||||||||||
Transportation Products Group | 46.8 | 48.4 | 39.0 | (3.3 | ) | 24.1 | |||||||||||
All Other | — | (0.1 | ) | (0.1 | ) | ||||||||||||
Segment Totals before Eliminations and Corporate Expenses | 200.2 | 127.3 | 171.0 | 57.3 | (25.6 | ) | |||||||||||
Corporate | (47.3 | ) | (32.1 | ) | (39.3 | ) | 47.4 | (18.3 | ) | ||||||||
Eliminations | — | (0.3 | ) | — | |||||||||||||
Consolidated and Combined Total | $ | 152.9 | $ | 94.9 | $ | 131.7 | 61.1 | (27.9 | ) |
• | Operating profit increased 61.1%. |
• | Operating profit in the Construction Products Group increased 4.6% primarily due to higher volumes from the acquired ACG business. |
• | Operating profit in our Energy Equipment Group increased significantly due to higher unit volumes in wind towers and higher pricing levels in utility structures as well as the elimination of operating losses from, and the incurrence of an impairment charge related to, businesses divested in 2018. |
• | Operating profit in our Transportation Products Group decreased 3.3% primarily due to reduced volumes and lower contractual pricing for steel components as well as start-up costs incurred toward the re-opening of a previously idled barge facility, partially offset by higher tank barge volumes. |
• | Our operating profit decreased 27.9%. |
• | Operating profit in the Construction Products Group decreased primarily due to lower volumes in our legacy construction aggregates businesses and increased costs related to the fair value markup of acquired inventory. |
• | Operating profit in our Energy Equipment Group decreased as a result of a planned reduction in volumes in our wind towers product line and the impact of a $23.2 million impairment charge on businesses that were subsequently divested. |
• | Operating profit in our Transportation Products Group increased due to increased volumes in our inland barge and steel components product lines. |
Year Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Interest income | $ | (1.4 | ) | $ | (0.4 | ) | $ | (0.1 | ) | ||
Foreign currency exchange transactions | 1.5 | (0.2 | ) | 2.2 | |||||||
Other | (0.8 | ) | (0.4 | ) | (0.5 | ) | |||||
Other, net (income) expense | $ | (0.7 | ) | $ | (1.0 | ) | $ | 1.6 |
Year Ended December 31, | Percent Change | ||||||||||||||||
2019 | 2018 | 2017 | 2019 versus 2018 | 2018 versus 2017 | |||||||||||||
($ in millions) | |||||||||||||||||
Revenues: | |||||||||||||||||
Construction aggregates | $ | 364.7 | $ | 217.9 | $ | 204.9 | 67.4 | % | 6.3 | % | |||||||
Other | 75.0 | 74.4 | 54.0 | 0.8 | 37.8 | ||||||||||||
Total revenues | 439.7 | 292.3 | 258.9 | 50.4 | 12.9 | ||||||||||||
Operating costs: | |||||||||||||||||
Cost of revenues | 342.2 | 212.6 | 178.6 | 61.0 | 19.0 | ||||||||||||
Selling, general, and administrative expenses | 44.8 | 29.3 | 26.6 | 52.9 | 10.2 | ||||||||||||
Operating profit | $ | 52.7 | $ | 50.4 | $ | 53.7 | 4.6 | (6.1 | ) | ||||||||
Operating profit margin | 12.0 | % | 17.2 | % | 20.7 | % | |||||||||||
Depreciation, depletion, and amortization | $ | 38.0 | $ | 21.9 | $ | 18.4 | 73.5 | 19.0 |
• | Revenues increased 50.4%, driven by the acquisition of ACG, which increased revenues by approximately 50%. In our legacy construction aggregates businesses, increased volumes were substantially offset by lower average selling prices, largely in our natural aggregates business in the Dallas-Fort Worth, Texas market area. |
• | Cost of revenues increased 61.0%, primarily due to the acquired ACG business as well as increased volumes in our legacy construction aggregates businesses. |
• | Selling, general, and administrative expenses increased 52.9% primarily due to additional costs from the acquired ACG business. |
• | Operating profit increased primarily due to the acquired ACG business. Operating margin decreased reflecting the change in product mix as a result of the addition of the ACG business, which has lower margins than the legacy businesses, as well as lower average selling prices in the legacy natural aggregates business. |
• | Depreciation, depletion, and amortization expense increased primarily due to the acquired ACG business. |
• | Revenues and cost of revenues increased 12.9% and 19.0%, respectively, primarily due to revenues attributable to acquisitions completed in 2017 in both the lightweight aggregates and the trench shoring businesses and the December 2018 acquisition of ACG. |
• | Selling, general, and administrative expenses increased 10.2% primarily due to the acquired businesses. |
• | Operating profit and margin decreased primarily due to lower volumes in our legacy construction aggregates businesses and increased costs related to the fair value markup of acquired inventory. |
Year Ended December 31, | Percent Change | ||||||||||||||||
2019 | 2018 | 2017 | 2019 versus 2018 | 2018 versus 2017 | |||||||||||||
($ in millions) | |||||||||||||||||
Revenues: | |||||||||||||||||
Wind towers and utility structures | $ | 625.4 | $ | 582.9 | $ | 652.1 | 7.3 | % | (10.6 | )% | |||||||
Other | 211.2 | 197.2 | 192.0 | 7.1 | 2.7 | ||||||||||||
Total revenues | 836.6 | 780.1 | 844.1 | 7.2 | (7.6 | ) | |||||||||||
Operating costs: | |||||||||||||||||
Cost of revenues | 670.6 | 658.3 | 691.7 | 1.9 | (4.8 | ) | |||||||||||
Selling, general, and administrative expenses | 65.3 | 70.0 | 74.0 | (6.7 | ) | (5.4 | ) | ||||||||||
Impairment charge | — | 23.2 | — | ||||||||||||||
Operating profit | $ | 100.7 | $ | 28.6 | $ | 78.4 | 252.1 | (63.5 | ) | ||||||||
Operating profit margin | 12.0 | % | 3.7 | % | 9.3 | % | |||||||||||
Depreciation and amortization | $ | 27.9 | $ | 29.7 | $ | 30.2 | (6.1 | ) | (1.7 | ) |
• | Revenues increased 7.2%, driven primarily by higher unit volumes in wind towers and higher pricing levels in utility structures. Revenues from other product lines, which include results primarily from our storage and distribution tanks, also increased due to higher volumes and pricing levels, partially offset by the elimination of revenues from businesses divested in 2018. |
• | Cost of revenues increased 1.9%, due primarily to higher overall volumes. The increase was partially offset by the elimination of costs from divested businesses, as well as a $6.1 million finished goods inventory write-off recognized in 2018 related to an order for a single customer in our utility structures business. |
• | Selling, general, and administrative expenses decreased 6.7% primarily due to the elimination of costs from divested businesses and a $2.9 million recovery of bad debt related to a single customer in our utility structures business. |
• | Revenues decreased 7.6% primarily due to a planned reduction of volumes in our wind towers product line, partially offset by an increase in revenues from other product lines as a result of higher volumes in our storage tanks business. |
• | Cost of revenues decreased 4.8% due to lower volumes in our wind tower product line, partially offset by a $6.1 million finished goods inventory write-off related to an order for a single customer in our utility structures business. |
• | Decreases in revenues and cost of revenues were also partially offset by the required adoption of ASU 2014-09, which impacts the timing of revenue recognition in our wind towers and certain utility structures product lines. See Note 1 of the Notes to Consolidated and Combined Financial Statements for further discussion of the impact of this required change in accounting policy. |
• | Selling, general, and administrative expenses decreased 5.4% primarily due to bad debt expense related to a single customer recognized in 2017. |
• | Operating profit in 2018 was also negatively impacted by a $23.2 million impairment charge on businesses that were subsequently divested. |
Year Ended December 31, | Percent Change | ||||||||||||||||
2019 | 2018 | 2017 | 2019 versus 2018 | 2018 versus 2017 | |||||||||||||
($ in millions) | |||||||||||||||||
Revenues: | |||||||||||||||||
Inland barges | $ | 293.9 | $ | 170.2 | $ | 157.9 | 72.7 | % | 7.8 | % | |||||||
Steel components | 171.8 | 221.2 | 205.4 | (22.3 | ) | 7.7 | |||||||||||
Total revenues | 465.7 | 391.4 | 363.3 | 19.0 | 7.7 | ||||||||||||
Operating costs: | |||||||||||||||||
Cost of revenues | 396.8 | 320.5 | 301.2 | 23.8 | 6.4 | ||||||||||||
Selling, general, and administrative expenses | 22.1 | 22.5 | 23.1 | (1.8 | ) | (2.6 | ) | ||||||||||
Operating profit | $ | 46.8 | $ | 48.4 | $ | 39.0 | (3.3 | ) | 24.1 | ||||||||
Operating profit margin | 10.0 | % | 12.4 | % | 10.7 | % | |||||||||||
Depreciation and amortization | $ | 16.3 | $ | 15.5 | $ | 17.1 | 5.2 | (9.4 | ) |
• | Revenues increased 19.0%, primarily driven by higher tank barge volumes but partially offset by lower contractual pricing and decreased volumes in steel components. Railcar component demand has declined as the North American industry outlook for new railcar builds has softened. The Company expects the decline to continue into 2020 unless the industry backlog for new railcars recovers. |
• | Cost of revenues increased 23.8%, driven by higher tank barge volumes, partially offset by lower steel component volumes. Cost of revenues also increased $2.6 million due to start-up costs related to the re-opening of a previously idled barge manufacturing facility, which began delivering barges in the third quarter of 2019. |
• | Selling, general, and administrative expenses were substantially unchanged. |
• | Revenues and cost of revenues increased 7.7% and 6.4%, respectively, primarily from higher volumes in both the inland barge and steel components product lines. |
• | Selling, general, and administrative expenses decreased 2.6%. |
Year Ended December 31, | Percent Change | ||||||||||||||||
2019 | 2018 | 2017 | 2019 versus 2018 | 2018 versus 2017 | |||||||||||||
($ in millions) | |||||||||||||||||
Corporate overhead costs | $ | 47.3 | $ | 32.1 | $ | 39.3 | 47.4 | % | (18.3 | )% |
Year Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Total cash provided by (required by): | |||||||||||
Operating activities | $ | 358.8 | $ | 118.5 | $ | 162.0 | |||||
Investing activities | (109.4 | ) | (364.5 | ) | (126.4 | ) | |||||
Financing activities | (108.4 | ) | 338.6 | (42.8 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | $ | 141.0 | $ | 92.6 | $ | (7.2 | ) |
• | The increase in cash flow provided by operating activities was primarily driven by increased earnings for the year ended December 31, 2019 and changes in current assets and liabilities. |
• | The changes in current assets and liabilities resulted in a net source of cash of $132.6 million for the year ended December 31, 2019 compared to a net use of cash of $80.8 million for the year ended December 31, 2018. The increase was primarily driven by a reduction in receivables and increase in advance billings for our Energy Equipment and Transportation Products Groups. |
• | Capital expenditures for the year ended December 31, 2019 were $85.4 million compared to $44.8 million for the year ended December 31, 2018. |
• | Proceeds from the sale of property, plant, and equipment and other assets totaled $8.9 million for the year ended December 31, 2019 compared to $10.2 million for the year ended December 31, 2018. |
• | Cash paid for acquisitions, net of cash acquired, was $32.9 million for the year ended December 31, 2019 compared to $333.2 million for the year ended December 31, 2018. |
• | During the year ended December 31, 2019, the Company had repayments of advances under the Company's revolving credit facility of $80 million. During the year ended December 31, 2018, the Company had borrowings under the revolving credit facility of $180 million. |
• | Dividends paid during the year ended December 31, 2019 were $9.9 million. |
• | The Company paid $11.0 million during the year ended December 31, 2019 to repurchase common stock under the current share repurchase program compared to $3.0 million repurchased during the year ended December 31, 2018. |
• | The decrease in cash flow provided by operating activities was primarily driven by lower operating profit. |
• | The changes in current assets and liabilities resulted in a net use of cash of $80.8 million for the year ended December 31, 2018 compared to a net use of cash of $0.5 million for the year ended December 31, 2017. The change was primarily driven by the increase in receivables. While most of this increase relates to the timing of payments from trade receivables, approximately 10% of the increase is due to the recognition of receivables from the Former Parent which had previously been deemed settled in the period incurred in the historical combined financial statements. |
• | Capital expenditures for the year ended December 31, 2018 were $44.8 million compared to $82.4 million for the year ended December 31, 2017. |
• | Proceeds from the sale of property, plant, and equipment and other assets totaled $10.2 million for the year ended December 31, 2018 compared to $3.5 million for the year ended December 31, 2017. |
• | Cash paid for acquisitions, net of cash acquired, was $333.2 million for the year ended December 31, 2018 compared to $47.5 million during for the year ended December 31, 2017. There was $3.3 million of divestiture activity for the year ended December 31, 2018. There was no divestiture activity for the year ended December 31, 2017. |
• | During the year ended December 31, 2018, we borrowed $180.0 million and retired $0.3 million in debt. During the year ended December 31, 2017, we retired $0.1 million in debt as scheduled. |
• | We received a capital contribution of $200.0 million from Trinity during the year ended December 31, 2018. |
• | Net transfers to Trinity totaled $34.5 million for the year ended December 31, 2018 compared with $43.0 million for the year ended December 31, 2017. |
Payments Due by Period | ||||||||||||||||||||
Contractual Obligations and Commercial Commitments | Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | |||||||||||||||
(in millions) | ||||||||||||||||||||
Debt | $ | 100.0 | $ | — | $ | — | $ | 100.0 | $ | — | ||||||||||
Operating leases | 22.7 | 6.4 | 6.6 | 3.7 | 6.0 | |||||||||||||||
Obligations for purchase of goods and services | 168.9 | 138.8 | 25.0 | 5.1 | — | |||||||||||||||
Total | $ | 291.6 | $ | 145.2 | $ | 31.6 | $ | 108.8 | $ | 6.0 |
• | 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, including the Cherry acquisition; |
• | 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; |
• | 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; |
• | if the Company does not realize some or all of the benefits expected to result from the Separation, or if such benefits are delayed; |
• | the Company's ongoing businesses may be adversely affected and subject to certain risks and consequences as a result of the Separation; |
• | if the distribution of shares of Arcosa resulting from the Separation, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, the Company's stockholders at the time of the distribution and the Company could be subject to significant tax liability; and |
• | if the Separation does not comply with state and federal fraudulent conveyance laws and legal dividend requirements. |
Page | |
Description of the Matter | At December 31, 2019, the Company’s goodwill was $621.9 million and represented 27% of total assets. As discussed in Note 1 of the financial statements, goodwill is required to be tested for impairment annually, or on an interim basis whenever events or circumstances change, indicating that the carrying amount of the goodwill might be impaired. Auditing management’s annual goodwill impairment test is complex due to the significant measurement uncertainty in determining the fair value of each reporting unit. In particular, the fair value estimates are sensitive to significant assumptions such as weighted average cost of capital, revenue growth rates, and projected operating margins, which are affected by expected future market or economic conditions. Our risk assessment for goodwill impairment considers the amount by which the estimated fair value of a reporting unit exceeds the carrying value of its net assets since the level of precision required for estimated fair value increases as the difference between the estimated fair value and the carrying value narrows. |
How We Addressed the Matter in Our Audit | We tested controls over the Company’s goodwill impairment process for estimating the fair value of the Company’s reporting units. For example, we tested controls over management’s review of the valuation model and of the significant assumptions used to develop the prospective financial information, including management’s controls to validate that the data used in the valuation was complete and accurate. To test the fair value of the Company’s reporting units, our audit procedures included: (i) assessing the appropriateness of the methodology utilized by management to estimate fair value; (ii) assessing the significant assumptions used by management by comparing them to current industry and economic trends, considering changes in the Company’s business model, customer base or product mix and other relevant factors; (iii) performing sensitivity analyses of the significant assumptions; and (iv) reviewing the reconciliation of the fair value of the reporting units to the market capitalization of the Company and assessing the resulting control premium. In addition, we involved valuation specialists to assist us in evaluating the components and assumptions that are most significant to the fair value estimate. |
/s/ ERNST & YOUNG LLP |
Year Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions, except per share amounts) | |||||||||||
Revenues | $ | $ | $ | ||||||||
Operating costs: | |||||||||||
Cost of revenues | |||||||||||
Selling, general, and administrative expenses | |||||||||||
Impairment charge | |||||||||||
Total operating profit | |||||||||||
Interest expense | |||||||||||
Other, net (income) expense | ( | ) | ( | ) | |||||||
( | ) | ||||||||||
Income before income taxes | |||||||||||
Provision (benefit) for income taxes: | |||||||||||
Current | ( | ) | |||||||||
Deferred | |||||||||||
Net income | $ | $ | $ | ||||||||
Net income per common share: | |||||||||||
Basic | $ | $ | $ | ||||||||
Diluted | $ | $ | $ | ||||||||
Weighted average number of shares outstanding(1): | |||||||||||
Basic | |||||||||||
Diluted | |||||||||||
Dividends declared per common share | $ | $ | $ |
Year Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Net income | $ | $ | $ | ||||||||
Other comprehensive income (loss): | |||||||||||
Derivative financial instruments: | |||||||||||
Unrealized losses arising during the period, net of tax expense (benefit) of ($0.7), ($0.3), and $0.0 | ( | ) | ( | ) | |||||||
Reclassification adjustments for losses included in net income, net of tax expense (benefit) of ($0.1), $0.0, and $0.0 | |||||||||||
Currency translation adjustment: | |||||||||||
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.0, ($0.3), and $0.0 | ( | ) | |||||||||
Reclassification adjustments for losses included in net income, net of tax expense (benefit) of $0.0, $0.0, and $0.0 | |||||||||||
( | ) | ( | ) | ||||||||
Comprehensive income | $ | $ | $ |
December 31, 2019 | December 31, 2018 | |||||||
(in millions, except per share amounts) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Receivables, net of allowance for doubtful accounts of $2.3 and $8.7 | ||||||||
Inventories: | ||||||||
Raw materials and supplies | ||||||||
Work in process | ||||||||
Finished goods | ||||||||
Other | ||||||||
Total current assets | ||||||||
Property, plant, and equipment, net | ||||||||
Goodwill | ||||||||
Deferred income taxes | ||||||||
Other assets | ||||||||
$ | $ | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | $ | ||||||
Accrued liabilities | ||||||||
Advance billings | ||||||||
Current portion of long-term debt | ||||||||
Total current liabilities | ||||||||
Debt | ||||||||
Deferred income taxes | ||||||||
Other liabilities | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $0.01 par value – 200.0 shares authorized at December 31, 2019; 200.0 at December 31, 2018; 48.3 shares issued and outstanding at December 31, 2019; 48.8 at December 31, 2018 | ||||||||
Capital in excess of par value | ||||||||
Retained earnings | ||||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
Treasury stock – 0.0 shares at December 31, 2019; 0.1 at December 31, 2018 | ( | ) | ||||||
$ | $ |
Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions) | ||||||||||||
Operating activities: | ||||||||||||
Net income | $ | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation, depletion, and amortization | ||||||||||||
Impairment charge | ||||||||||||
Stock-based compensation expense | ||||||||||||
Provision for deferred income taxes | ||||||||||||
Gains on disposition of property and other assets | ( | ) | ( | ) | ( | ) | ||||||
(Increase) decrease in other assets | ( | ) | ( | ) | ||||||||
Increase (decrease) in other liabilities | ( | ) | ( | ) | ||||||||
Other | ( | ) | ( | ) | ||||||||
Changes in current assets and liabilities: | ||||||||||||
(Increase) decrease in receivables | ( | ) | ( | ) | ||||||||
(Increase) decrease in inventories | ( | ) | ( | ) | ||||||||
(Increase) decrease in other current assets | ( | ) | ( | ) | ( | ) | ||||||
Increase (decrease) in accounts payable | ||||||||||||
Increase (decrease) in advance billings | ( | ) | ||||||||||
Increase (decrease) in accrued liabilities | ||||||||||||
Net cash provided by operating activities | ||||||||||||
Investing activities: | ||||||||||||
Proceeds from disposition of property and other assets | ||||||||||||
Capital expenditures | ( | ) | ( | ) | ( | ) | ||||||
Acquisitions, net of cash acquired | ( | ) | ( | ) | ( | ) | ||||||
Proceeds from divestitures | ||||||||||||
Net cash required by investing activities | ( | ) | ( | ) | ( | ) | ||||||
Financing activities: | ||||||||||||
Payments to retire debt | ( | ) | ( | ) | ( | ) | ||||||
Proceeds from issuance of debt | ||||||||||||
Shares repurchased | ( | ) | ( | ) | ||||||||
Dividends paid to common shareholders | ( | ) | ||||||||||
Purchase of shares to satisfy employee tax on vested stock | ( | ) | ( | ) | ||||||||
Capital contribution from Former Parent | ||||||||||||
Net transfers to Former Parent and affiliates | ( | ) | ( | ) | ||||||||
Other | ( | ) | ( | ) | ( | ) | ||||||
Net cash provided by (required by) financing activities | ( | ) | ( | ) | ||||||||
Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||||||
Cash and cash equivalents at beginning of period | ||||||||||||
Cash and cash equivalents at end of period | $ | $ | $ |
Common Stock | Treasury Stock | |||||||||||||||||||||||||||||||||
Former Parent's Net Investment | Shares | $0.01 Par Value | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Shares | Amount | Total Stockholders’ Equity | ||||||||||||||||||||||||||
(in millions, except par value) | ||||||||||||||||||||||||||||||||||
Balances at December 31, 2016 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||
Net transfers from Former Parent and affiliates | ( | ) | — | — | — | — | — | — | — | ( | ) | |||||||||||||||||||||||
Restricted shares, net | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Balances at December 31, 2017 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||
Cumulative effect of adopting new accounting standards | ( | ) | — | — | — | — | — | — | — | ( | ) | |||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Capital contribution from Former Parent | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Net transfers from Former Parent and affiliates | ( | ) | — | — | — | — | — | — | — | ( | ) | |||||||||||||||||||||||
Distribution by Former Parent | ( | ) | — | — | — | — | — | |||||||||||||||||||||||||||
Cash dividends on common stock | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||
Restricted shares, net | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||
Shares repurchased | — | — | — | — | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Balances at December 31, 2018 | $ | $ | $ | $ | $ | ( | ) | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||
Net income | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||||||
Cash dividends on common stock | — | — | — | — | ( | ) | — | — | — | ( | ) | |||||||||||||||||||||||
Restricted shares, net | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
Shares repurchased | — | — | — | — | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
Retirement of treasury stock | — | ( | ) | — | ( | ) | — | — | — | |||||||||||||||||||||||||
Other | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Balances at December 31, 2019 | $ | $ | $ | $ | $ | ( | ) | $ | $ |
Unsatisfied performance obligations at | ||||||
December 31, 2019 | ||||||
Total Amount | Percent expected to be delivered in 2020 | |||||
(in millions) | ||||||
Energy Equipment Group: | ||||||
Wind towers and utility structures | $ | % | ||||
Other | $ | % | ||||
Transportation Products Group: | ||||||
Inland barges | $ | % |
Year Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Acquisitions: | |||||||||||
Purchase price | $ | $ | $ | ||||||||
Net cash paid | $ | $ | $ | ||||||||
Goodwill recorded | $ | $ | $ |
Accounts receivable | $ | ||
Inventories | |||
Property, plant, and equipment | |||
Mineral reserves | |||
Goodwill | |||
Other assets | |||
Accounts payable | ( | ) | |
Accrued and other liabilities | ( | ) | |
Capital lease obligations | ( | ) | |
Deferred income taxes | ( | ) | |
Total net assets acquired | $ |
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||||
(in millions) | |||||||
Revenues | $ | $ | |||||
Income before income taxes | $ | $ |
Fair Value Measurement as of December 31, 2019 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | $ | $ | $ | |||||||||||
Total assets | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Interest rate hedge(1) | $ | $ | $ | $ | |||||||||||
Contingent consideration(2) | |||||||||||||||
Total liabilities | $ | $ | $ | $ | |||||||||||
Fair Value Measurement as of December 31, 2018 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
(in millions) | |||||||||||||||
Assets: | |||||||||||||||
Cash equivalents | $ | $ | $ | $ | |||||||||||
Total assets | $ | $ | $ | $ | |||||||||||
Liabilities: | |||||||||||||||
Interest rate hedge(1) | $ | $ | $ | $ | |||||||||||
Total liabilities | $ | $ | $ | $ |
Revenues | Operating Profit (Loss) | Assets | Depreciation, Depletion, & Amortization | Capital Expenditures | |||||||||||||||
Construction aggregates | $ | ||||||||||||||||||
Other | |||||||||||||||||||
Construction Products Group | $ | $ | $ | $ | |||||||||||||||
Wind towers and utility structures | |||||||||||||||||||
Other | |||||||||||||||||||
Energy Equipment Group | |||||||||||||||||||
Inland barges | |||||||||||||||||||
Steel components | |||||||||||||||||||
Transportation Products Group | |||||||||||||||||||
Segment Totals before Eliminations and Corporate | |||||||||||||||||||
Corporate | ( | ) | |||||||||||||||||
Eliminations | ( | ) | |||||||||||||||||
Consolidated Total | $ | $ | $ | $ | $ |
Revenues | Operating Profit (Loss) | Assets | Depreciation, Depletion, & Amortization | Capital Expenditures | |||||||||||||||
Construction aggregates | $ | ||||||||||||||||||
Other | |||||||||||||||||||
Construction Products Group | $ | $ | $ | $ | |||||||||||||||
Wind towers and utility structures | |||||||||||||||||||
Other | |||||||||||||||||||
Energy Equipment Group | |||||||||||||||||||
Inland barges | |||||||||||||||||||
Steel components | |||||||||||||||||||
Transportation Products Group | |||||||||||||||||||
All Other | ( | ) | |||||||||||||||||
Segment Totals before Eliminations and Corporate | |||||||||||||||||||
Corporate | ( | ) | |||||||||||||||||
Eliminations | ( | ) | ( | ) | |||||||||||||||
Consolidated and Combined Total | $ | $ | $ | $ | $ |
Revenues | Operating Profit (Loss) | Assets | Depreciation, Depletion, & Amortization | Capital Expenditures | |||||||||||||||
Construction aggregates | $ | ||||||||||||||||||
Other | |||||||||||||||||||
Construction Products Group | $ | $ | $ | $ | |||||||||||||||
Wind towers and utility structures | |||||||||||||||||||
Other | |||||||||||||||||||
Energy Equipment Group | |||||||||||||||||||
Inland barges | |||||||||||||||||||
Steel components | |||||||||||||||||||
Transportation Products Group | |||||||||||||||||||
All Other | ( | ) | |||||||||||||||||
Segment Totals before Eliminations and Corporate | |||||||||||||||||||
Corporate | ( | ) | |||||||||||||||||
Eliminations | ( | ) | |||||||||||||||||
Combined Total | $ | $ | $ | $ | $ |
Year Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Mexico: | |||||||||||
Revenues: | |||||||||||
External | $ | $ | $ | ||||||||
Intercompany | |||||||||||
$ | $ | $ | |||||||||
Operating profit | $ | $ | ( | ) | $ |
Total Assets | Long-Lived Assets | ||||||||||||||
December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in millions) | |||||||||||||||
Mexico | $ | $ | $ | $ |
December 31, 2019 | December 31, 2018 | ||||||
(in millions) | |||||||
Land(1) | $ | $ | |||||
Buildings and improvements | |||||||
Machinery and other | |||||||
Construction in progress | |||||||
Less accumulated depreciation and depletion | ( | ) | ( | ) | |||
$ | $ |
December 31, 2019 | December 31, 2018 | ||||||
(in millions) | |||||||
Construction Products Group | $ | $ | |||||
Energy Equipment Group | |||||||
Transportation Products Group | |||||||
$ | $ |
December 31, 2019 | December 31, 2018 | ||||||
(in millions) | |||||||
Revolving credit facility | $ | $ | |||||
Finance leases | |||||||
Total debt | $ | $ |
2020 | 2021 | 2022 | 2023 | 2024 | Thereafter | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Revolving credit facility | $ | $ | $ | $ | $ | $ |
December 31, 2019 | |||
(in millions) | |||
Maturity of Lease Liabilities | |||
2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total undiscounted operating lease payments | |||
Less imputed interest | ( | ) | |
Present value of operating lease liabilities | $ | ||
Balance Sheet Classification | |||
Other assets | $ | ||
Accrued liabilities | $ | ||
Other liabilities | |||
Total operating lease liabilities | $ | ||
Other Information | |||
Weighted average remaining lease term | |||
Weighted average discount rate | % |
December 31, 2018 | |||
(in millions) | |||
Future Minimum Rent Expense | |||
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total undiscounted operating lease payments | $ |
Year Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Interest income | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Foreign currency exchange transactions | ( | ) | |||||||||
Other | ( | ) | ( | ) | ( | ) | |||||
Other, net (income) expense | $ | ( | ) | $ | ( | ) | $ |
Year Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Current: | |||||||||||
Federal | $ | $ | ( | ) | $ | ||||||
State | |||||||||||
Foreign | |||||||||||
Total current | ( | ) | |||||||||
Deferred: | |||||||||||
Federal: | |||||||||||
Effect of Tax Cuts and Jobs Act | ( | ) | ( | ) | |||||||
Other | |||||||||||
State | ( | ) | |||||||||
Foreign | ( | ) | ( | ) | ( | ) | |||||
Total deferred | |||||||||||
Provision | $ | $ | $ |
Year Ended December 31, | ||||||||
2019 | 2018 | 2017 | ||||||
Statutory rate | % | % | % | |||||
State taxes | ||||||||
Domestic production activities deduction | ( | ) | ||||||
Changes in valuation allowances and reserves | ( | ) | ( | ) | ||||
Changes in tax reserves | ( | ) | ( | ) | ||||
Effect of Tax Cuts and Jobs Act | ( | ) | ( | ) | ||||
Prior year true-ups | ( | ) | ( | ) | ( | ) | ||
Foreign adjustments | ||||||||
Other, net | ( | ) | ( | ) | ||||
Effective rate | % | % | % |
December 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Deferred tax liabilities: | |||||||
Depreciation, depletion, and amortization | $ | $ | |||||
Total deferred tax liabilities | |||||||
Deferred tax assets: | |||||||
Workers compensation, pensions, and other benefits | |||||||
Warranties and reserves | |||||||
Tax loss carryforwards and credits | |||||||
Inventory | |||||||
Accrued liabilities and other | ( | ) | |||||
Total deferred tax assets | |||||||
Net deferred tax assets (liabilities) before valuation allowances | ( | ) | ( | ) | |||
Valuation allowances | |||||||
Adjusted net deferred tax assets (liabilities) | $ | ( | ) | $ | ( | ) |
December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Beginning balance | $ | $ | $ | ||||||||
Additions for tax positions related to the current year | |||||||||||
Additions for tax positions of prior years | |||||||||||
Reductions for tax positions of prior years | |||||||||||
Settlements | ( | ) | |||||||||
Expiration of statute of limitations | ( | ) | ( | ) | ( | ) | |||||
Ending balance | $ | $ | $ |
Year Ended December 31, | |||||||||||
2019 | 2018 | 2017 | |||||||||
(in millions) | |||||||||||
Defined contribution plans | $ | $ | $ | ||||||||
Multiemployer plan | |||||||||||
$ | $ | $ |
PPA Zone Status | Contributions for Year Ended December 31, | |||||||||||||||||||||||
Pension Fund | Employer Identification Number | 2019 | 2018 | Rehabilitation plan status | 2019 | 2018 | 2017 | Surcharge imposed | Expiration date of collective bargaining agreement | |||||||||||||||
(in millions) | ||||||||||||||||||||||||
Boilermaker-Blacksmith National Pension Trust | 48-6168020 | $ | $ | $ |
Currency translation adjustments | Unrealized loss on derivative financial instruments | Accumulated Other Comprehensive Loss | |||||||||
(in millions) | |||||||||||
Balances at December 31, 2016 | $ | ( | ) | $ | $ | ( | ) | ||||
Other comprehensive loss, net of tax, before reclassifications | ( | ) | ( | ) | |||||||
Other comprehensive loss | ( | ) | ( | ) | |||||||
Balances at December 31, 2017 | ( | ) | ( | ) | |||||||
Other comprehensive loss, net of tax, before reclassifications | ( | ) | ( | ) | |||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax benefit of $0.0, $0.0, and $0.0 | |||||||||||
Other comprehensive income (loss) | ( | ) | |||||||||
Balances at December 31, 2018 | ( | ) | ( | ) | ( | ) | |||||
Other comprehensive income (loss), net of tax, before reclassifications | ( | ) | ( | ) | |||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax benefit of $0.0, $0.1, and $0.1 | |||||||||||
Other comprehensive income (loss) | ( | ) | ( | ) | |||||||
Balances at December 31, 2019 | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Trinity Equity Awards Held by Arcosa Employees | Arcosa Equity Awards Held by Arcosa Employees | Weighted Average Grant-Date Fair Value per Award | |||||||
Equity awards outstanding at December 31, 2018 | $ | ||||||||
Granted | |||||||||
Vested | ( | ) | ( | ) | |||||
Forfeited | ( | ) | ( | ) | |||||
Equity awards outstanding at December 31, 2019 | $ |
Year Ended December 31, 2019 | ||||||||||
(in millions, except per share amounts) | ||||||||||
Income (Loss) | Average Shares | EPS | ||||||||
Net income | $ | |||||||||
Unvested restricted share participation | ( | ) | ||||||||
Net income per common share – basic | $ | |||||||||
Effect of dilutive securities: | ||||||||||
Nonparticipating unvested restricted shares | ||||||||||
Net income per common share – diluted | $ | $ |
Year Ended December 31, 2018 | ||||||||||
(in millions, except per share amounts) | ||||||||||
Income (Loss) | Average Shares | EPS | ||||||||
Net income | $ | |||||||||
Unvested restricted share participation | ( | ) | ||||||||
Net income per common share – basic | $ | |||||||||
Effect of dilutive securities: | ||||||||||
Nonparticipating unvested restricted shares | ||||||||||
Net income per common share – diluted | $ | $ |
Year Ended December 31, 2017 | ||||||||||
(in millions, except per share amounts) | ||||||||||
Income (Loss) | Average Shares | EPS | ||||||||
Net income | $ | |||||||||
Unvested restricted share participation | ||||||||||
Net income per common share – basic | $ | |||||||||
Effect of dilutive securities: | ||||||||||
Nonparticipating unvested restricted shares | ||||||||||
Net income per common share – diluted | $ | $ |
Three Months Ended | |||||||||||||||
March 31, 2019 | June 30, 2019 | September 30, 2019 | December 31, 2019 | ||||||||||||
(in millions except per share data) | |||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Operating costs: | |||||||||||||||
Cost of revenues | |||||||||||||||
Selling, general, and administrative expenses | |||||||||||||||
Operating profit | |||||||||||||||
Income before income taxes | |||||||||||||||
Provision for income taxes | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Net income per common share: | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ |
Three Months Ended | |||||||||||||||
March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | ||||||||||||
(in millions except per share data) | |||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||
Operating costs: | |||||||||||||||
Cost of revenues | |||||||||||||||
Selling, general, and administrative expenses | |||||||||||||||
Impairment charge | |||||||||||||||
Operating profit | |||||||||||||||
Income before income taxes | |||||||||||||||
Provision for income taxes | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Net income per common share(1): | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ |
/s/ ERNST & YOUNG LLP |
Equity Compensation Plan Information | ||||||||||
(a) | (b) | (c) | ||||||||
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | ||||||||
Plan Category: | ||||||||||
Equity compensation plans approved by security holders: | ||||||||||
Restricted stock units and performance units | 1,227,857 | (1) | $ | — | 2,397,471 | (2) | ||||
Equity compensation plans not approved by security holders | — | — | ||||||||
Total | 1,227,857 | 2,397,471 |
(1) | Represents shares underlying awards that have been granted under the 2018 Stock Option and Incentive Plan (the "Incentive Plan") (including Arcosa equity awards issued in respect of outstanding Trinity equity awards in connection with the Separation). Amounts are comprised of (a) 944,260 shares of common stock issuable upon the vesting and conversion of restricted stock units and (b) 283,597 shares of common stock issuable upon the vesting and conversion of performance units, assuming payout at target performance. The restricted stock units and performance units do not have an exercise price. The performance units are granted to employees based upon a target level; however, depending upon the achievement of certain specified goals during the performance period, performance units may be issued at an amount between 0% and 200% of the target level. |
(2) | For purposes of calculating the number of shares remaining available for issuance under the Incentive Plan, this calculation reserves for issuance the potential maximum payout (200% of target) of the outstanding performance units. Upon certification of actual performance, reserved shares that are not issued will again be available for issuance under the Incentive Plan. |
NO. | DESCRIPTION |
2.1 | |
2.2 | |
2.3 | |
3.1 | |
3.2 | |
4.1 | |
10.1 | |
10.2 | |
10.3 | |
10.4 | |
*10.5 | |
*10.6 | |
*10.7 | |
*10.8 | |
*10.9 | |
*10.10 | |
*10.11 |
*10.12 | |
*10.13 | |
*10.14 | |
*10.15 | |
*10.16 | |
*10.17 | |
*10.18 | |
*10.19 | |
*10.20 | |
*10.21 | |
*10.22 | |
*10.23 | |
*10.24 | |
*10.25 | |
10.26 | |
21 | |
23 | |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
95 | |
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) |
ARCOSA, INC. | By | /s/ Scott C. Beasley |
Registrant | ||
Scott C. Beasley | ||
Chief Financial Officer | ||
February 27, 2020 |
Signature | Title | Date | ||
/s/ Antonio Carrillo | President and Chief Executive Officer and Director | February 27, 2020 | ||
Antonio Carrillo | (Principal Executive Officer) | |||
/s/ Scott C. Beasley | Chief Financial Officer | February 27, 2020 | ||
Scott C. Beasley | (Principal Financial Officer) | |||
/s/ Mary E. Henderson | Chief Accounting Officer | February 27, 2020 | ||
Mary E. Henderson | (Principal Accounting Officer) | |||
/s/ Rhys J. Best | Non-Executive Chairman | February 27, 2020 | ||
Rhys J. Best | ||||
/s/ Joseph Alvarado | Director | February 27, 2020 | ||
Joseph Alvarado | ||||
/s/ David W. Biegler | Director | February 27, 2020 | ||
David W. Biegler | ||||
/s/ Jeffrey A. Craig | Director | February 27, 2020 | ||
Jeffrey A. Craig | ||||
/s/ Ronald J. Gafford | Director | February 27, 2020 | ||
Ronald J. Gafford | ||||
/s/ John W. Lindsay | Director | February 27, 2020 | ||
John W. Lindsay | ||||
/s/ Douglas L. Rock | Director | February 27, 2020 | ||
Douglas L. Rock | ||||
/s/ Melanie Trent | Director | February 27, 2020 | ||
Melanie Trent |
ARTICLE I CERTAIN DEFINITIONS | 1 | ||
1.1 Definitions | 1 | ||
1.2 Additional Definitions | 11 | ||
1.3 Other Definitional Provisions | 12 | ||
ARTICLE II PURCHASE AND SALE OF THE SECURITIES | 13 | ||
2.1 Basic Transaction | 13 | ||
2.2 Closing Transactions | 13 | ||
2.3 Closing Cash Proceeds Adjustment; Inventory Count | 15 | ||
2.4 Withholding Rights | 18 | ||
ARTICLE III CONDITIONS TO CLOSING | 19 | ||
3.1 Conditions to the Obligations of the Buyer, the Sellers and the Companies | 19 | ||
3.2 Conditions to the Obligations of the Buyer | 19 | ||
3.3 Conditions to the Obligations of the Sellers and the Companies | 20 | ||
3.4 Frustration of Conditions | 20 | ||
ARTICLE IV COVENANTS OF THE PARTIES | 20 | ||
4.1 Reasonable Best Efforts | 21 | ||
4.2 Maintenance of Business | 22 | ||
4.3 Operation of Business | 22 | ||
4.4 Access | 24 | ||
4.5 Title Policy | 25 | ||
4.6 Intercompany Arrangements | 25 | ||
4.7 Exclusivity | 26 | ||
4.8 R&W Insurance Policy | 27 | ||
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SELLERS | 27 | ||
5.1 Capacity, Organization and Power | 27 | ||
5.2 Title to Securities | 28 | ||
5.3 Authority; Noncontravention | 28 | ||
5.4 Governmental Authorities and Consents | 28 | ||
5.5 Litigation | 28 | ||
5.6 Brokerage | 29 | ||
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE COMPANIES | 29 | ||
6.1 Capacity, Organization and Corporate Power | 29 | ||
6.2 Securities and Related Matters | 29 | ||
6.3 Authorization; Noncontravention | 29 |
6.4 Subsidiaries | 30 | ||
6.5 Financial Statements; No Undisclosed Liabilities | 31 | ||
6.6 Absence of Certain Developments | 32 | ||
6.7 Contracts and Commitments | 32 | ||
6.8 Intellectual Property Rights | 34 | ||
6.9 Litigation | 36 | ||
6.1 Compliance with Laws | 37 | ||
6.11 Permits | 37 | ||
6.12 Environmental Matters | 37 | ||
6.13 Employees | 39 | ||
6.14 Employee Benefit Plans | 40 | ||
6.15 Insurance | 43 | ||
6.16 Tax Matters | 43 | ||
6.17 Brokerage | 45 | ||
6.18 Affiliated Transactions | 45 | ||
6.19 Properties | 45 | ||
6.2 Customers and Suppliers | 47 | ||
6.21 Accounts Receivable; Accounts Payable | 48 | ||
6.22 Affiliate Transactions | 48 | ||
6.23 Inventory | 48 | ||
6.24 Bank Accounts | 49 | ||
6.25 Product Liability | 49 | ||
6.26 Trade Controls; Absence of Corrupt Practices | 50 | ||
6.27 NO OTHER REPRESENTATIONS AND WARRANTIES | 51 | ||
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE BUYER | 51 | ||
7.1 Organization and Power | 51 | ||
7.2 Authorization and Enforceability | 51 | ||
7.3 No Violation | 52 | ||
7.4 Governmental Authorities and Consents | 52 | ||
7.5 Litigation | 52 | ||
7.6 Brokerage | 52 | ||
7.7 Independent Investigation | 52 | ||
7.8 Financial Capability | 53 | ||
7.9 Solvency | 53 | ||
7.1 Purchase for Investment | 53 | ||
ARTICLE VIII TERMINATION | 54 | ||
8.1 Termination | 54 | ||
8.2 Effect of Termination | 54 | ||
ARTICLE IX ADDITIONAL AGREEMENT AND COVENANTS | 55 | ||
9.1 Acknowledgement by the Buyer | 55 |
9.2 Further Assurances | 56 | ||
9.3 Employees and Employee Benefits | 57 | ||
9.4 Director and Officer Liability and Indemnification | 59 | ||
9.5 Certain Access Provisions | 60 | ||
9.6 Notification | 61 | ||
9.7 Certain Consents | 61 | ||
9.8 Tax Matters | 61 | ||
9.9 Non-Compete; Non-Solicit | 66 | ||
9.1 Buyer Right of First Refusal | 67 | ||
ARTICLE X CERTAIN POST-CLOSING MATTERS | 68 | ||
10.1 Survival of Representations, Warranties and Covenants | 68 | ||
10.2 Certain Waivers | 68 | ||
ARTICLE XI MISCELLANEOUS | 68 | ||
11.1 Press Releases and Communications | 68 | ||
11.2 Expenses | 69 | ||
11.3 Amendment and Waiver | 69 | ||
11.4 Notices | 69 | ||
11.5 Successors and Assigns | 70 | ||
11.6 Non-Recourse | 71 | ||
11.7 Severability | 71 | ||
11.8 Construction | 71 | ||
11.9 No Third-Party Beneficiaries | 72 | ||
11.1 Complete Agreement | 72 | ||
11.11 Electronic Delivery; Counterparts | 72 | ||
11.12 Governing Law; WAIVER OF JURY TRIAL | 73 | ||
11.13 Specific Performance | 73 | ||
11.14 Prevailing Party | 74 | ||
11.15 Acknowledgement | 74 | ||
11.16 No Right of Set-Off | 74 | ||
11.17 Relationship of the Parties | 75 | ||
11.18 Sellers’ Representative | 75 | ||
11.19 Buyer Guarantor | 76 |
Term | Section |
Accounting Methods | 2.3(d) |
Agreement | Preamble |
Allocation Schedule | 9.8(c) |
Buyer | Preamble |
Buyer Guarantor | Preamble |
Closing | 2.2(a) |
Closing Balance Sheet | 2.3(c) |
Closing Statement | 2.3(c) |
Company or Companies | Preamble |
Company Environmental Permit | 6.12(a) |
Company Intellectual Property | 6.8(a) |
Company Permit | 6.11(a) |
Company Personal Property | 6.19(a) |
Competing Business | 9.9(a) |
D&O Tail Policy | 9.4(b) |
Disclosure Schedules | Article V |
Electronic Delivery | 11.11 |
End Date | 8.1(d) |
ERISA | 1.1 |
Estimated Closing Cash Proceeds | 2.3(a) |
Imputed Underpayment | 9.8(k) |
Independent Accounting Firm | 2.3(f) |
Inventory Amount | 2.3(b) |
IRS | 1.1 |
IT Systems | 6.8(j) |
Latest Balance Sheets | 6.5(a)(iv) |
Law Firm | 11.15 |
Lease | 6.19(b) |
Leased Real Property | 6.19(b) |
Majority Holders | 11.18(c) |
Marks | 1.1 |
Material Contract | 6.7(a) |
Multiemployer Plan | 6.14(e) |
Multiple Employer Plan | 6.14(e) |
Objection Notice | 2.3(f) |
Option Agreements | 6.19(d) |
Owned Real Property | 6.19(c) |
Party or Parties | Preamble |
Payoff Indebtedness | 2.2(b)(iii) |
Term | Section |
Property Offer | 9.10(b) |
Purchase Price Shortfall | 2.3(i)(ii) |
Representative Losses | 11.18(d) |
Restricted Person Lists | 6.26 |
Retained Employee | 9.3(a) |
R&W Insurance Policy | 4.8 |
Securities | Recitals |
Securities Act | 7.10 |
Seller | Preamble |
Seller Group | 11.15 |
Seller Person | 4.6(a) |
Seller Released Matters | 4.6(b) |
Seller Releasing Party | 4.6(b) |
Sellers’ Representative | Preamble |
Subject Property | 9.10(a) |
Tax Allocation Purchase Price Tax Proceeding | 9.8(c) 9.8(j) |
Trade Secrets | 1.1 |
Waiver Exceptions | 10.2 |
WARN Act | 4.3(m) |
Warranty | 6.25(b) |
By: | /s/ Reid S. Essl |
By: | /s/ Reid S. Essl |
By: | /s/ Leonard L. Cherry |
By: | /s/ Leonard L. Cherry |
By: | /s/ Leonard L. Cherry |
By: | /s/ Leonard L. Cherry |
Dated: December 12, 2019 | /s/ Regina Sue Cherry Name: Regina Sue Cherry |
• | Section 203 of the DGCL, an anti-takeover statute prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the time the person became an interested stockholder, unless the business combination or the acquisition of shares that resulted in a stockholder becoming an interested stockholder is approved in a prescribed manner (generally, a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status did own) 15 percent or more of a corporation’s voting stock); |
• | a classified board with three approximately equal classes of directors until the 2022 annual meeting of shareholders, at which time each director will stand for election annually; |
• | no removal of directors without cause while the Board of Directors is classified; |
• | amendment of the bylaws by the Board of Directors or by the affirmative vote of holders of at least a majority of the outstanding capital stock entitled to vote thereon; |
• | the number of directors on the Board of Directors may not be less than five nor more than eleven, with the exact number of directors to be fixed exclusively by the Board of Directors and any vacancies created in the Board of Directors resulting from any increase in the authorized number of directors will be filled by a majority of the Board of Directors then in office; |
• | stockholders may not call special stockholder meetings and only the Board of Directors, the Chairperson of the Board of Directors or the President may call special meetings of Arcosa stockholders; |
• | action must take place at the annual or a special meeting of Arcosa stockholders and stockholders have no right to act by written consent; |
• | advance notice procedures with respect to stockholder proposals and nomination of candidates for election as directors (other than nominations made by or at the direction of the Board of Directors); |
• | ability to issue additional shares of common stock or preferred stock without stockholder approval, subject to applicable rules of the NYSE, or a comparable public market, and Delaware law, for a variety of corporate purposes; and |
• | no cumulative voting. |
(dd) | MATCHING EMPLOYER CONTRIBUTION: Any amount credited by an Employer for a Plan Year ending prior to January 1, 2020 to a Participant pursuant to Section 4.01(b) hereof. |
(pp) | TRUST (or TRUST FUND): The fund known as the ARCOSA, INC. DEFERRED COMPENSATION PLAN TRUST, maintained in accordance with the terms of the trust agreement, as from time to time amended, which constitutes part of this Plan. |
(b) | Matching Employer Contributions. No Matching Employer Contributions shall be made pursuant to this Plan for any Plan Year beginning on or after January 1, 2020. For Plan Years ending prior to January 1, 2020, each Employer may credit a Matching Employer Contribution amount in the form of cash to each of its Employees for whom an amount was credited pursuant to paragraph (a) of this Section 4.01; |
Year of Service | Applicable Percentage |
Less than 1 | 0% |
1 but less than 2 | 25% |
2 but less than 3 | 30% |
3 but less than 4 | 35% |
4 but less than 5 | 40% |
5 or more | 50% |
6. | By adding the following sentence to the end of subsection (c) in Section 4.01: |
Arcosa, Inc. Active Subsidiaries as of February 27, 2020 | ||
Name of Subsidiary | Jurisdiction of Incorporation | |
4601 Holmes Road Corporation | Texas | |
Administradora Especializada, S. de R.L. de C.V. | Mexico | |
Arcosa ACG, Inc. | Delaware | |
Arcosa Aggregates, Inc. | Delaware | |
Arcosa Canada Distribution, Inc. | Alberta | |
Arcosa Canada ULC | Alberta | |
Arcosa Marine Components, LLC | Delaware | |
Arcosa Cryogenics, LLC | Delaware | |
Arcosa EPI, LLC | Delaware | |
Arcosa Industries de México, S. de R.L. de C.V. | Mexico | |
Arcosa International Holdings AG | Switzerland | |
Arcosa LWB, LLC | Delaware | |
Arcosa LW BR, LLC | Delaware | |
Arcosa LWFP, LLC | Delaware | |
Arcosa LW HPB, LLC | Delaware | |
Arcosa LW KY, LLC | Delaware | |
Arcosa LW, LLC | Delaware | |
Arcosa LWS, LLC | Delaware | |
Arcosa Marine Components, LLC | Delaware | |
Arcosa Marine Leasing, Inc. | Delaware | |
Arcosa Marine Products, Inc. | Delaware | |
Arcosa Materials, Inc. | Delaware | |
Arcosa Mining and Construction Equipment, Inc. | Delaware | |
Arcosa MS2, LLC | Delaware | |
Arcosa Shoring Products, Inc. | Delaware | |
Arcosa Tank, LLC | Delaware | |
Arcosa Traffic and Lighting Structures, LLC | Delaware | |
Arcosa Wind Towers, Inc. | Delaware | |
Art Wilson Co. | Nevada | |
Asistencia Profesional Corporativa, S. de R.L. de C.V. | Mexico | |
CEMC Services, LLC | Delaware | |
Cherry Administration Services, Inc. | Texas | |
Cherry Companies Management, Inc. | Texas | |
Cherry Concrete Removal, Ltd. | Texas | |
Cherry Crawford Holdings, Ltd. | Texas | |
Cherry Crushed Concrete, Inc. | Texas | |
Cherry Demolition, Inc. | Texas | |
Cherry Industries, Inc. | Texas | |
Cherry Land Holdings, L.L.C. | Texas | |
Cherry Moving Company, Inc. | Texas | |
Cherry Recycling, Inc. | Texas | |
Diamond Gypsum, LLC | Delaware | |
The Gravel Company, LLC | Texas | |
Harrison Gypsum Holdings, LLC | Delaware | |
Harrison Gypsum, LLC | Oklahoma | |
HG Eagle, LLC | Delaware | |
Imperial Limestone Company Limited | British Columbia | |
Inland Marine Equipment LLC | Delaware | |
Jack Acquisitions, Inc. | Delaware | |
J.A. Jack & Sons, Inc. | Washington | |
McConway & Torley, LLC | Delaware | |
Meyer Utility Structures, LLC | Delaware |
Arcosa, Inc. Active Subsidiaries as of February 27, 2020 | ||
Name of Subsidiary | Jurisdiction of Incorporation | |
North Florida Rock, LLC | Delaware | |
OFE, S. de R.L. de C.V. | Mexico | |
POB Exploration, LLC | Delaware | |
Selinsky Road Holdings, Ltd. | Texas | |
Servicios Corporativos Tatsa, S. de R.L. de C.V. | Mexico | |
Standard Forged Products, LLC | Delaware | |
Washita Valley Logistics, LLC | Oklahoma | |
Western Oklahoma Development Group, LLC | Oklahoma | |
Western States Gypsum | Nevada |
/s/ ERNST & YOUNG LLP |
1. | I have reviewed this Annual Report on Form 10-K of Arcosa, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1. | I have reviewed this Annual Report on Form 10-K of Arcosa, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company, as of, and for, the periods presented in the Report. |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company, as of, and for, the periods presented in the Report. |
Mine or Operating Name/MSHA Identification Number | Section 104 S&S Citations (#) | Section 104(b) Orders (#) | Section 104(d) Citations and Orders (#) | Section 110(b)(2) Violations (#) | Section 107(a) Orders (#) | Total Dollar Value of MSHA Assessments Proposed ($) | Total Number of Mining Related Fatalities (#) | Received Notice of Pattern of Violation Under Section 104(e) (yes/no) | Received Notice of Potential to Have Pattern under Section 104(e) (yes/no) | Legal Actions Pending as of Last Day of Period (#) | Legal Actions Initiated During Period (#) | Legal Actions Resolved During Period (#) | |||||||||||||||||||||||||||||||||||
Asa (4104399) | — | — | — | — | — | $ | 363 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Belton (4101043) | — | — | — | — | — | $ | 121 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Cottonwood (4104553) | — | — | — | — | — | $ | 605 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Curry (4105307) | 1 | — | — | — | — | $ | 977 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Kopperl (4104450) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Malloy Bridge (4102946) | — | — | — | — | — | $ | 484 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Paradise (4103253) | 1 | — | — | — | — | $ | 627 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Anacoco (1600543) | — | — | — | — | — | $ | 605 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Indian Village (1600348) | — | — | — | — | — | $ | 363 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Rye (4102547) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Pearl River (1601334) | — | — | — | — | — | $ | 242 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Eaves Loop (1601589) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Moody (4105204) | — | — | — | — | — | $ | 363 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Materials Bouse Junction (3401828) | — | — | — | — | — | $ | 626 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Materials Diamond (3401660) | 1 | — | — | — | — | $ | 121 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Materials Diamond North (3401977) | — | — | — | — | — | $ | 242 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Materials Shamrock (4104758) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Adams Claim (2600668) | 7 | — | — | — | — | $ | 8,333 | 2 | — | No | No | — | — | — | |||||||||||||||||||||||||||||||||
Harrison Gypsum #2 (3401364) | — | — | — | — | — | $ | 121 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Harrison Gypsum #5 (3401964) | 2 | — | — | — | — | $ | 745 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Ludwig (2602775) | — | — | — | — | — | $ | 363 | — | No | No | — | — | — |
1 | Significant and Substantial (S&S) citations are reported on this form. Non-S&S citations are not reported on this form but any assessments resulting from non-S&S citations are reported. | |
2 | Proposed penalty amounts are pending regarding S&S citation(s) issued during the reporting period. |
Mine or Operating Name/MSHA Identification Number | Section 104 S&S Citations (#) | Section 104(b) Orders (#) | Section 104(d) Citations and Orders (#) | Section 110(b)(2) Violations (#) | Section 107(a) Orders (#) | Total Dollar Value of MSHA Assessments Proposed ($) | Total Number of Mining Related Fatalities (#) | Received Notice of Pattern of Violation Under Section 104(e) (yes/no) | Received Notice of Potential to Have Pattern under Section 104(e) (yes/no) | Legal Actions Pending as of Last Day of Period (#) | Legal Actions Initiated During Period (#) | Legal Actions Resolved During Period (#) | |||||||||||||||||||||||||||||||||||
ACG Ainsworth (4105117) | 2 | — | — | — | — | $ | 961 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Garrett (4105169) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Bruni Pit (4105454) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Mentone Pit (4105458) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Deiringer (4104878) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Ft Stockton (4104943) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Materials Ark City (1401743) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Materials Newkirk (3401781) | 2 | — | — | — | — | $ | 598 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Materials Orla LLC (4104958) | — | — | — | — | — | $ | 363 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Midkiff (4104913) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
ACG Stanton (4105067) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Dilley Pit (4104879) | — | — | — | — | — | $ | 121 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
J A Jack & Sons (4503239) | 3 | — | — | — | — | $ | 1,051 | 3 | — | No | No | — | — | — | |||||||||||||||||||||||||||||||||
KRMI Quarry (4503363) | — | — | — | — | — | $ | 605 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Marianna Quarry (0801267) | — | — | — | — | — | $ | 242 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Wills Point (4104113) | — | — | — | — | — | $ | — | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Wills Point Lester (4104071) | — | — | — | — | — | $ | 121 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Boulder (0504415) | 3 | — | — | — | — | $ | 3,720 | 4 | — | No | No | — | — | — | |||||||||||||||||||||||||||||||||
Brooklyn (1200254) | 2 | — | — | — | — | $ | 1,406 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Brooks (1500187) | — | — | — | — | — | $ | 121 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Erwinville (1600033) | 2 | — | — | — | — | $ | 5,620 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Frazier Park (0400555) | — | — | — | — | — | $ | 132 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Livingston (0100034) | — | — | — | — | — | $ | 242 | — | No | No | — | — | — | ||||||||||||||||||||||||||||||||||
Streetman (4101628) | — | — | — | — | — | $ | 363 | — | No | No | — | — | — |
3 | Proposed penalty amounts are pending regarding S&S and non-S&S citation(s) issued during the reporting period. | |
4 | Proposed penalty amounts are pending regarding non-S&S citation(s) issued during the reporting period. |
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Stock-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restricted stock activity | The activity for equity awards held by Arcosa employees for the year ended December 31, 2019 was as follows:
|
Consolidated and Combined Balance Sheets (Parenthetical) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Receivables, allowance for doubtful accounts | $ 2.3 | $ 8.7 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 48,300,000 | 48,800,000 |
Common stock, shares outstanding | 48,300,000 | 48,800,000 |
Treasury stock, shares | 0 | 100,000 |
Summary of Significant Accounting Policies - Stockholder's Equity (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Nov. 01, 2018 |
|
Accounting Policies [Abstract] | |||
Authorized amount from Board of Directors for share repurchase | $ 50,000,000 | ||
Number of shares repurchased | 361,442 | ||
Cost of shares repurchased | $ 11,000,000.0 | $ 3,000,000.0 | |
Remaining authorized repurchase amount | $ 36,000,000.0 | ||
Common stock, shares authorized | 200,000,000 | 200,000,000 | 200,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Consolidated and Combined Statements of Operations - USD ($) shares in Millions, $ in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|||
Income Statement [Abstract] | |||||
Revenues | $ 1,736.9 | $ 1,460.4 | $ 1,462.4 | ||
Operating costs: | |||||
Cost of revenues | 1,404.5 | 1,188.4 | 1,167.7 | ||
Selling, general, and administrative expenses | 179.5 | 153.9 | 163.0 | ||
Impairment charge | 0.0 | 23.2 | 0.0 | ||
Total operating costs | 1,584.0 | 1,365.5 | 1,330.7 | ||
Total operating profit | 152.9 | 94.9 | 131.7 | ||
Interest expense | 6.8 | 0.9 | 0.0 | ||
Other, net (income) expense | (0.7) | (1.0) | 1.6 | ||
Total other (income) expense | 6.1 | (0.1) | 1.6 | ||
Income before income taxes | 146.8 | 95.0 | 130.1 | ||
Provision (benefit) for income taxes: | |||||
Current | 16.2 | (3.1) | 30.1 | ||
Deferred | 17.3 | 22.4 | 10.3 | ||
Total provision for income taxes | 33.5 | 19.3 | 40.4 | ||
Net income | $ 113.3 | $ 75.7 | $ 89.7 | ||
Net income per common share: | |||||
Basic (in dollars per share) | $ 2.34 | $ 1.55 | $ 1.84 | ||
Diluted (in dollars per share) | $ 2.32 | $ 1.54 | $ 1.84 | ||
Weighted average number of shares outstanding(1): | |||||
Basic (in shares) | [1] | 47.9 | 48.8 | 48.8 | |
Diluted (in shares) | [1] | 48.4 | 48.9 | 48.8 | |
Dividends declared per common share (in dollars per share) | $ 0.20 | $ 0.05 | $ 0 | ||
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Summary of Significant Accounting Policies - Property, Plant, and Equipment (Details) |
12 Months Ended |
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Dec. 31, 2019 | |
Buildings and improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Buildings and improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 30 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 11 years |
Machinery and other | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 2 years |
Machinery and other | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Technology equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 2 years |
Technology equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Leases Operating leases (Details) $ in Millions |
Dec. 31, 2019
USD ($)
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Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2020 | $ 6.4 |
2021 | 4.0 |
2022 | 2.6 |
2023 | 2.0 |
2024 | 1.7 |
Thereafter | 6.0 |
Total undiscounted operating lease payments | 22.7 |
Less imputed interest | 3.7 |
Present value of operating lease liabilities | $ 19.0 |
Weighted average remaining lease term | 5 years 9 months 18 days |
Weighted average discount rate | 4.80% |
Other assets | |
Right of use asset | $ 15.6 |
Accrued liabilities | |
Operating lease, current liability | 5.5 |
Other liabilities | |
Operating Lease, noncurrent liability | $ 13.5 |
Goodwill - Goodwill (Details) - USD ($) $ in Millions |
12 Months Ended | |
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Dec. 31, 2019 |
Dec. 31, 2018 |
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Goodwill [Line Items] | ||
Goodwill | $ 621.9 | $ 615.2 |
Goodwill impairment charges | 0.0 | 0.0 |
Construction Products Group | ||
Goodwill [Line Items] | ||
Goodwill | 166.2 | 171.7 |
Energy Equipment Group | ||
Goodwill [Line Items] | ||
Goodwill | 416.9 | 416.9 |
Transportation Products Group | ||
Goodwill [Line Items] | ||
Goodwill | $ 38.8 | $ 26.6 |
Acquisitions and Divestitures (Tables) |
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Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition and divestiture activity | The Company's acquisition and divestiture activities are summarized below:
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ACG Materials | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Final purchase price allocation | The following table represents our final purchase price allocation (in millions):
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Pro-forma consolidated and combined operating results | The following table represents the unaudited pro-forma consolidated operating results of the Company as if the ACG acquisition had been completed on January 1, 2017. The unaudited pro-forma information makes certain adjustments to depreciation, depletion, and amortization expense to reflect the fair value recognized in the purchase price allocation, as well as to align ACG's capital structure and debt financing with that of the Company at the acquisition date. As a measure of unaudited pro-forma earnings, we have presented income before income taxes because our effective tax rates for 2018 and 2017 were impacted by one-time effects of the Act that would be impracticable to calculate for ACG. The unaudited pro-forma information should not be considered indicative of the results that would have occurred if the acquisition had been completed on January 1, 2017, nor is such unaudited pro-forma information necessarily indicative of future results.
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Commitments and Contingencies |
12 Months Ended |
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Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and 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 December 31, 2019, the range of reasonably possible losses for such matters, taking into consideration our rights in indemnity and recourse to third parties, is $1.1 million to $4.6 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 December 31, 2019, total accruals of $3.6 million, including environmental matters described below, 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 $1.4 million as of December 31, 2019, included in our total accruals of $3.6 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 (the “APA”) 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 currently pending 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 Company and Meyer have filed a motion to dismiss T&B’s claims, and an Answer and Counterclaims against T&B. We intend to vigorously defend ourselves in this matter. Based on the facts and circumstances currently known to the Company, (i) we cannot determine that a loss is probable at this time, and therefore no accrual has been included in the accompanying consolidated financial statements; and (ii) a possible loss is not reasonably estimable. 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 involving 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. Other commitments Non-cancelable purchase obligations amounted to $168.9 million as of December 31, 2019, of which $110.1 million is for the purchase of raw materials and components, primarily by the Energy Equipment and Transportation Products Groups.
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Employee Retirement Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Retirement Plans | Employee Retirement Plans The Company sponsors defined benefit plans and defined contribution profit sharing plans that provide retirement income and death benefits for eligible employees and retirees of the Company. For periods prior to the Separation, the participation of employees of the Company in defined benefit plans sponsored by Trinity is reflected in the combined financial statements as though the Company participated in a multiemployer plan with Trinity. The assets and liabilities of the defined benefit plans were retained by Trinity. Prior to the Separation, the expenses of these benefit plans were allocated to Arcosa based on a review of personnel and personnel costs by business unit and funded through intercompany transactions with Trinity. A proportionate share of the cost is reflected in the combined financial statements. In connection with the Separation, certain defined contribution profit sharing plans were separated into standalone plans for Arcosa and Trinity. Total employee retirement plan expense, which includes related administrative expenses, is as follows:
Defined Contribution Plans Established under Internal Revenue Code Section 401(k), the Arcosa, Inc. Profit Sharing Plan ("401(k) Plan") is a defined contribution plan available to all eligible employees. Participants in the 401(k) Plan are eligible to receive future retirement benefits through a company-funded annual retirement contribution and company match, both of which are discretionary, requiring board approval, and are made annually, in the year following service, with the investment of the funds directed by the participants. The Company also sponsors a fully‑funded, non-qualified deferred compensation plan. The invested assets and related liabilities of these participants were approximately $3.9 million and $2.8 million at December 31, 2019 and 2018, respectively, which are included in “Other assets” and “Other liabilities” on the Consolidated Balance Sheets. There were no distributions from the Company’s non-qualified deferred compensation plan to participants for the years ended December 31, 2019 and 2018. Multiemployer Plan The Company contributes to a multiemployer defined benefit pension 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 risks of participating in a multiemployer plan are different from a single-employer plan in the following aspects: •Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers. •If a participating employer stops contributing to a multiemployer plan, the unfunded obligations of the plan may be borne by the remaining participating employers. •If the Company chooses to stop participating in the multiemployer plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. Our participation in the multiemployer plan for the year ended December 31, 2019 is outlined in the table below. The Pension Protection Act ("PPA") zone status at December 31, 2019 and 2018 is as of the plan years beginning January 1, 2019 and 2018, respectively, and is obtained from the multiemployer plan's regulatory filings available in the public domain and certified by the plan's actuary. Among other factors, plans in the yellow zone are less than 80% funded while plans in the red zone are less than 65% funded. Federal law requires that plans classified in the yellow or red zones adopt a funding improvement plan or a rehabilitation plan in order to improve the financial health of the plan. The Company's contributions to the multiemployer plan were less than 5% of total contributions to the plan. The last column in the table lists the expiration date of the collective bargaining agreement to which the plan is subject.
Employer contributions to the multiemployer plan for the year ending December 31, 2020 are expected to be $1.8 million. ACG Pension Plan In connection with the acquisition of ACG in December 2018, the Company assumed the assets and liabilities related to a defined benefit pension plan. As of December 31, 2019, the plan assets totaled $3.2 million and the projected benefit obligation totaled $3.1 million, for a net over funded status of $0.1 million, which is included in other assets on the Consolidated Balance Sheet. The net pension expense for the year ended December 31, 2019 was not significant. Employer contributions for the ACG pension plan for the year ending December 31, 2020 are not expected to be significant.
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt The following table summarizes the components of debt as of December 31, 2019 and December 31, 2018:
On November 1, 2018, the Company entered into a $400.0 million unsecured revolving credit facility that matures in November 2023. The interest rates under the facility 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 1.25% as of December 31, 2019. The commitment fee rate ranges from 0.20% to 0.35% and was set at 0.20% at December 31, 2019. As of December 31, 2019, we had $100.0 million of outstanding loans borrowed under the facility and there were approximately $42.5 million in letters of credit issued, leaving $257.5 million available for borrowing. All of the outstanding letters of credit as of December 31, 2019 are expected to expire in 2020. The majority of our letters of credit obligations support the Company’s various insurance programs and warranty claims and generally renew by their terms each year. The Company's revolving credit facility requires the maintenance of certain ratios related to leverage and interest coverage. As of December 31, 2019, we were in compliance with all such financial covenants. Borrowings under the credit facility are guaranteed by certain wholly-owned subsidiaries of the Company. The carrying value of borrowings under our revolving credit facility approximates fair value because the interest rate adjusts to the market interest rate (Level 3 input). See Note 3 Fair Value Accounting. As of December 31, 2019, the Company had $1.2 million of unamortized debt issuance cost related to the revolving credit facility, which is included in other assets on the Consolidated Balance Sheet. The remaining principal payments under existing debt agreements as of December 31, 2019 are as follows:
On January 2, 2020, the Company entered into an Amended and Restated Credit Agreement to increase the revolving credit facility from $400.0 million 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 mechanism for determining and the applicable ranges for the interest rate margin and commitment fee rate are unchanged. The interest rate on the revolving credit facility was initially set at one-month LIBOR plus 1.50% and the interest rate on the term loan facility was initially set at three-month LIBOR plus 1.50%. The commitment fee rate on both facilities was initially set at set at 0.25%. The entire term loan was advanced on January 2, 2020 in connection with the closing of the acquisition of Cherry. See Note 2 Acquisitions and Divestitures. 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 revolving credit facility. The instrument carried an initial notional amount of $100 million, thereby hedging the first $100 million of borrowings under the credit facility. The instrument effectively fixes the LIBOR component of the credit facility borrowings at a monthly rate of 2.71%. As of December 31, 2019, the Company has recorded a liability of $4.3 million for the fair value of the instrument, all of which is recorded in accumulated other comprehensive loss. See Note 3 Fair Value Accounting.
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Fair Value Accounting |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Accounting | Fair Value Accounting Assets and liabilities measured at fair value on a recurring basis are summarized below:
(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.
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Fair Value Accounting (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and liabilities measured at fair value on recurring basis | Assets and liabilities measured at fair value on a recurring basis are summarized below:
(2) Current portion included in accrued liabilities and non-current portion included in other liabilities on the Consolidated Balance Sheets. |
Debt (Tables) |
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Components of debt | The following table summarizes the components of debt as of December 31, 2019 and December 31, 2018:
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Remaining principal payments under existing debt agreements | The remaining principal payments under existing debt agreements as of December 31, 2019 are as follows:
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Employee Retirement Plans (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total employee retirement plan expense | Total employee retirement plan expense, which includes related administrative expenses, is as follows:
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Details of multiemployer plan | Our participation in the multiemployer plan for the year ended December 31, 2019 is outlined in the table below. The Pension Protection Act ("PPA") zone status at December 31, 2019 and 2018 is as of the plan years beginning January 1, 2019 and 2018, respectively, and is obtained from the multiemployer plan's regulatory filings available in the public domain and certified by the plan's actuary. Among other factors, plans in the yellow zone are less than 80% funded while plans in the red zone are less than 65% funded. Federal law requires that plans classified in the yellow or red zones adopt a funding improvement plan or a rehabilitation plan in order to improve the financial health of the plan. The Company's contributions to the multiemployer plan were less than 5% of total contributions to the plan. The last column in the table lists the expiration date of the collective bargaining agreement to which the plan is subject.
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Segment Information - Revenues, operating profit, total assets, and long-lived assets for Mexico operations (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
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Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | $ 446.9 | $ 445.0 | $ 434.1 | $ 410.9 | $ 374.4 | $ 378.6 | $ 353.0 | $ 354.4 | $ 1,736.9 | $ 1,460.4 | $ 1,462.4 |
Operating profit | 30.5 | $ 42.8 | $ 42.3 | $ 37.3 | 26.7 | $ 6.4 | $ 30.6 | $ 31.2 | 152.9 | 94.9 | 131.7 |
Total Assets | 2,302.5 | 2,172.2 | 2,302.5 | 2,172.2 | 1,602.5 | ||||||
Mexico: | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 198.1 | 190.5 | 180.8 | ||||||||
Operating profit | 4.8 | (11.0) | 1.4 | ||||||||
Total Assets | 202.2 | 203.8 | 202.2 | 203.8 | |||||||
Long-Lived Assets | $ 85.5 | $ 85.8 | 85.5 | 85.8 | |||||||
Mexico: | External | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | 110.1 | 108.2 | 118.2 | ||||||||
Mexico: | Intercompany | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Revenues | $ 88.0 | $ 82.3 | $ 62.6 |
Acquisitions and Divestitures - ACG unaudited pro-forma information (Details) - ACG Materials - USD ($) $ in Millions |
12 Months Ended | |
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Dec. 31, 2018 |
Dec. 31, 2017 |
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Business Acquisition [Line Items] | ||
Revenues | $ 1,604.1 | $ 1,594.4 |
Income before income taxes | $ 97.6 | $ 133.6 |
Summary of Significant Accounting Policies - Warranties (Details) - USD ($) $ in Millions |
12 Months Ended | |
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Dec. 31, 2019 |
Dec. 31, 2018 |
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Product Warranty Liability [Line Items] | ||
Warranty accrual | $ 2.6 | $ 2.9 |
Minimum | ||
Product Warranty Liability [Line Items] | ||
Product warranty period against materials and manufacturing defects | 1 year | |
Maximum | ||
Product Warranty Liability [Line Items] | ||
Product warranty period against materials and manufacturing defects | 5 years |
Income Taxes - Reconciliation between the statutory U.S. Federal income tax rate and the Company's effective income tax rate (Details) |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Income Tax Disclosure [Abstract] | |||
Statutory rate | 21.00% | 21.00% | 35.00% |
State taxes | 3.10% | 3.10% | 2.50% |
Domestic production activities deduction | 0.00% | 0.00% | (2.10%) |
Changes in valuation allowances and reserves | (1.30%) | (1.20%) | 1.30% |
Changes in tax reserves | (0.30%) | (1.40%) | 0.80% |
Effect of Tax Cuts and Jobs Act | 0.00% | (1.60%) | (5.00%) |
Prior year true ups | (0.50%) | (0.40%) | (2.20%) |
Foreign adjustments | 0.60% | 2.40% | 1.80% |
Other, net | 0.20% | (1.60%) | (1.00%) |
Effective rate | 22.80% | 20.30% | 31.10% |
Selected Quarterly Financial Data (Unaudited) - Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions |
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Dec. 31, 2019 |
Sep. 30, 2019 |
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Mar. 31, 2018 |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||
Revenues | $ 446.9 | $ 445.0 | $ 434.1 | $ 410.9 | $ 374.4 | $ 378.6 | $ 353.0 | $ 354.4 | $ 1,736.9 | $ 1,460.4 | $ 1,462.4 | ||||||||
Operating costs: | |||||||||||||||||||
Cost of revenues | 369.3 | 356.7 | 345.7 | 332.8 | 310.9 | 308.9 | 283.0 | 285.6 | 1,404.5 | 1,188.4 | 1,167.7 | ||||||||
Selling, general, and administrative expenses | 47.1 | 45.5 | 46.1 | 40.8 | 36.8 | 40.1 | 39.4 | 37.6 | 179.5 | 153.9 | 163.0 | ||||||||
Impairment charge | 0.0 | 23.2 | 0.0 | 0.0 | 0.0 | 23.2 | 0.0 | ||||||||||||
Operating profit | 30.5 | 42.8 | 42.3 | 37.3 | 26.7 | 6.4 | 30.6 | 31.2 | 152.9 | 94.9 | 131.7 | ||||||||
Income before income taxes | 28.5 | 41.9 | 40.8 | 35.6 | 28.8 | 6.6 | 29.4 | 30.2 | 146.8 | 95.0 | 130.1 | ||||||||
Provision (benefit) for income taxes | 7.4 | 9.2 | 9.0 | 7.9 | 1.1 | 3.4 | 6.8 | 8.0 | 33.5 | 19.3 | 40.4 | ||||||||
Net income | $ 21.1 | $ 32.7 | $ 31.8 | $ 27.7 | $ 27.7 | $ 3.2 | $ 22.6 | $ 22.2 | $ 113.3 | $ 75.7 | $ 89.7 | ||||||||
Net income per common share: | |||||||||||||||||||
Basic (in dollars per share) | $ 0.44 | $ 0.68 | [1] | $ 0.66 | [1] | $ 0.57 | [1] | $ 0.56 | $ 0.07 | [1] | $ 0.46 | [1] | $ 0.45 | [1] | $ 2.34 | $ 1.55 | $ 1.84 | ||
Diluted (in dollars per share) | $ 0.43 | $ 0.67 | [1] | $ 0.65 | [1] | $ 0.56 | [1] | $ 0.56 | $ 0.07 | [1] | $ 0.46 | [1] | $ 0.45 | [1] | $ 2.32 | $ 1.54 | $ 1.84 | ||
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Employee Retirement Plans - Total employee retirement plan expense (Details) - USD ($) $ in Millions |
12 Months Ended | ||
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Dec. 31, 2019 |
Dec. 31, 2018 |
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Retirement Benefits [Abstract] | |||
Defined contribution plans | $ 8.5 | $ 8.3 | $ 6.9 |
Multiemployer plan | 1.8 | 2.1 | 2.1 |
Total retirement plan expense | $ 10.3 | $ 10.4 | $ 9.0 |
Goodwill |
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Goodwill | Goodwill Goodwill by segment is as follows:
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Acquisitions and Divestitures |
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Acquisitions and Divestitures | Acquisitions and Divestitures The Company's acquisition and divestiture activities are summarized below:
Acquisitions - ACG Materials On December 5, 2018, we completed the stock acquisition of ACG Materials (“ACG”), a producer of specialty materials and aggregates which is included in our Construction Products Group. The purchase price of $309.1 million was funded with a combination of cash on-hand and a $180.0 million borrowing under the Company's credit facility. Acquisition-related transaction costs incurred after the Separation were insignificant. Costs incurred by the Former Parent prior to the Separation were included in the allocation of corporate costs in accordance with the methodology described in Note 1. The acquisition was recorded as a business combination with valuations of the acquired assets and liabilities 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 or liabilities. The following table represents our final purchase price allocation (in millions):
The goodwill acquired, none of which is tax deductible, primarily relates to ACG's geographic footprint, market position, and existing workforce. Revenues included in the Consolidated Statement of Operations from the date of the acquisition were approximately $11.7 million during the year ended December 31, 2018, whereas operating profit during the same period was insignificant. The following table represents the unaudited pro-forma consolidated operating results of the Company as if the ACG acquisition had been completed on January 1, 2017. The unaudited pro-forma information makes certain adjustments to depreciation, depletion, and amortization expense to reflect the fair value recognized in the purchase price allocation, as well as to align ACG's capital structure and debt financing with that of the Company at the acquisition date. As a measure of unaudited pro-forma earnings, we have presented income before income taxes because our effective tax rates for 2018 and 2017 were impacted by one-time effects of the Act that would be impracticable to calculate for ACG. The unaudited pro-forma information should not be considered indicative of the results that would have occurred if the acquisition had been completed on January 1, 2017, nor is such unaudited pro-forma information necessarily indicative of future results.
Acquisitions - Other In June 2019, we completed acquisitions of certain assets and liabilities of an inland barge components business within our Transportation Products Group and the acquisition of certain assets and liabilities of a construction aggregates business in our Construction Products Group. In August 2019, we completed the acquisitions of certain assets and liabilities of two construction aggregates businesses in our Construction Products Group. The total purchase price for the four businesses acquired in 2019 was $39.2 million, a portion of which includes estimated payments to the seller of a construction aggregates business over the next 10 years. The acquisitions have been recorded as business combinations based on preliminary valuations of the assets acquired and liabilities assumed at their acquisition date fair value using level three inputs. The valuation resulted in the recognition of $12.2 million of goodwill in our Transportation Products Group and $0.4 million in our Construction Products Group. Such assets and liabilities were not significant in relation to assets and liabilities at the consolidated and segment level. In March 2018, we completed the acquisition of certain assets of an inland barge business with a purchase price and net cash paid of $25.0 million. The acquisition was recorded as a business combination based on valuations of the acquired assets and liabilities at their acquisition date fair value using level three inputs. The valuation resulted in the recognition of $9.5 million of goodwill in our Transportation Products Group. Such assets and liabilities were not significant in relation to assets and liabilities at the consolidated and combined or segment level. In May 2017, we completed the acquisition of the assets of a lightweight aggregates business paid for with cash of $6.2 million. In October 2017, we completed the acquisition of the assets of a lightweight aggregates business paid for with shares of Trinity stock valued at $14.7 million. In July 2017, we completed the acquisition of the assets of a trench shoring products business for $42.1 million. All three acquisitions were in our Construction Products Group. These acquisitions were recorded as business combinations based on valuations of the acquired assets and liabilities at their acquisition date fair value using level three inputs. Such assets and liabilities were not significant in relation to assets and liabilities at the consolidated or segment level. Acquisitions - Cherry On January 6, 2020, we completed the stock acquisition of Cherry Industries, Inc. and affiliated entities (“Cherry”), a leading producer of natural and recycled aggregates in the Houston, Texas market which will be included in our Construction Products Group. The purchase price of approximately $298.0 million was funded with a combination of cash on-hand and advances under a new $150.0 million five-year term loan. See Note 7 Debt for additional information on our credit facility. Transaction costs incurred during the year ended December 31, 2019 related to the Cherry acquisition were not significant. The acquisition will be recorded as a business combination. We expect to complete our purchase price allocation as soon as reasonably possible not to exceed one year from the acquisition date. Due to the timing of the acquisition, additional quantitative disclosures are, at this time, impracticable. Divestitures During the fourth quarter of 2018, the Company completed the divestiture of certain businesses whose revenues were included in the Other component of the Energy Equipment Group. The net proceeds from these divestitures were not significant. Prior to the sales, the Company recognized a pre-tax impairment charge of $23.2 million on these businesses. We have concluded that the divestiture of these businesses did not represent a strategic shift that would result in a material effect on our operations and financial results; therefore, these disposals have not been reflected in discontinued operations in our Consolidated and Combined Financial Statements. There was no divestiture activity during the years ended December 31, 2019 and December 31, 2017.
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Accumulated Other Comprehensive Loss (Tables) |
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Changes in accumulated other comprehensive loss | Changes in accumulated other comprehensive loss for the twelve months ended December 31, 2019, December 31, 2018, and December 31, 2017 are as follows:
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial information for segments |
Year Ended December 31, 2018
Year Ended December 31, 2017
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Revenues, operating profit, total assets, and long-lived assets for Mexico operations | Revenues and operating profit for our Mexico operations for the years ended December 31, 2019, 2018, and 2017 are presented below. Our Canadian operations were not significant in relation to the consolidated financial statements.
Total assets and long-lived assets for our Mexico operations as of December 31, 2019 and 2018 are presented below:
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating leases | The following table presents information about the amount, timing, and uncertainty of cash flows arising from the Company's operating leases as of December 31, 2019.
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Prior period adoption of ASU 2016-02 | Disclosures related to periods prior to adoption of ASU 2016-02
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Acquisitions and Divestitures - ACG preliminary purchase price allocation (Details) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Business Acquisition [Line Items] | ||
Goodwill | $ 621.9 | $ 615.2 |
Construction Products Group | ||
Business Acquisition [Line Items] | ||
Goodwill | 166.2 | $ 171.7 |
Construction Products Group | ACG Materials | ||
Business Acquisition [Line Items] | ||
Accounts receivable | 23.8 | |
Inventories | 12.5 | |
Property, plant, and equipment | 77.8 | |
Mineral reserves | 137.3 | |
Goodwill | 105.5 | |
Other assets | 6.3 | |
Accounts payable | (10.2) | |
Accrued and other liabilities | (14.5) | |
Capital lease obligations | (8.3) | |
Deferred income taxes | (21.1) | |
Total net assets acquired | $ 309.1 |
Summary of Significant Accounting Policies - Goodwill and Intangible Assets (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Finite-Lived Intangible Assets [Line Items] | |||
Goodwill impairment charges | $ 0.0 | $ 0.0 | |
Net book value of intangible assets | 51.7 | 55.2 | |
Indefinite-lived intangible assets (excluding goodwill) | 34.1 | 34.1 | |
Intangible assets, gross | 44.6 | 44.6 | |
Amortization expense from intangible assets | $ 3.4 | $ 4.7 | $ 5.0 |
Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets with defined useful lives, amortization period | 1 year | ||
Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets with defined useful lives, amortization period | 12 years |
Income Taxes - Components of deferred tax liabilities and assets (Details) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Deferred tax liabilities: | ||
Depreciation, depletion, and amortization | $ 109.1 | $ 103.2 |
Total deferred tax liabilities | 109.1 | 103.2 |
Deferred tax assets: | ||
Workers compensation, pensions, and other benefits | 21.6 | 16.2 |
Warranties and reserves | 1.7 | 2.2 |
Tax loss carryforwards and credits | 14.8 | 31.0 |
Inventory | 22.7 | 10.8 |
Accrued liabilities and other | 1.0 | (2.7) |
Total deferred tax assets | 61.8 | 57.5 |
Net deferred tax assets (liabilities) before valuation allowances | (47.3) | (45.7) |
Valuation allowances | 4.8 | 5.7 |
Adjusted net deferred tax assets (liabilities) | $ 52.1 | $ 51.4 |
Earnings Per Common Share - Computation of basic and diluted earnings per share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2019 |
Sep. 30, 2019 |
Jun. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|||||||||
Earnings Per Share Reconciliation [Abstract] | |||||||||||||||||||
Net income | $ 21.1 | $ 32.7 | $ 31.8 | $ 27.7 | $ 27.7 | $ 3.2 | $ 22.6 | $ 22.2 | $ 113.3 | $ 75.7 | $ 89.7 | ||||||||
Unvested restricted share participation | (1.1) | (0.2) | 0.0 | ||||||||||||||||
Net income per common share – basic | $ 112.2 | $ 75.5 | $ 89.7 | ||||||||||||||||
Net income - basic (shares) | [1] | 47.9 | 48.8 | 48.8 | |||||||||||||||
Net income - basic (EPS) | $ 0.44 | $ 0.68 | [1] | $ 0.66 | [1] | $ 0.57 | [1] | $ 0.56 | $ 0.07 | [1] | $ 0.46 | [1] | $ 0.45 | [1] | $ 2.34 | $ 1.55 | $ 1.84 | ||
Effect of dilutive securities: | |||||||||||||||||||
Nonparticipating unvested restricted shares | $ 0.0 | $ 0.0 | $ 0.0 | ||||||||||||||||
Nonparticipating unvested restricted shares (shares) | 0.5 | 0.1 | 0.0 | ||||||||||||||||
Net income per common share – diluted | $ 112.2 | $ 75.5 | $ 89.7 | ||||||||||||||||
Net income - diluted (shares) | [1] | 48.4 | 48.9 | 48.8 | |||||||||||||||
Net income - diluted (EPS) | $ 0.43 | $ 0.67 | [1] | $ 0.65 | [1] | $ 0.56 | [1] | $ 0.56 | $ 0.07 | [1] | $ 0.46 | [1] | $ 0.45 | [1] | $ 2.32 | $ 1.54 | $ 1.84 | ||
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Employee Retirement Plans - Details of the multiemployer plan (Details) - Boilermaker-Blacksmith National Pension Trust - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Multiemployer Plans [Line Items] | |||
PPA Zone Status | Red | Yellow | |
Financial improvement plan status | Implemented | ||
Multiemployer plan contributions | $ 1.8 | $ 2.1 | $ 1.9 |
Surcharge imposed | Yes | ||
Expiration date of collective bargaining agreement | Jun. 30, 2022 |
Summary of Significant Accounting Policies - Long-lived Assets (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2017 |
Dec. 31, 2018 |
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Accounting Policies [Abstract] | |||
Indefinite-lived intangible assets (excluding goodwill) | $ 34,100,000 | $ 34,100,000 | |
Impairment of long-lived assets held-for-use | $ 0 | $ 0 |
Earnings Per Common Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of basic and diluted earnings per share | The computation of basic and diluted earnings per share follows.
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Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Accounting Policies [Abstract] | ||
Contract with customer | $ 50.8 | $ 44.0 |
Consolidated and Combined Statements of Comprehensive Income - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Statement of Comprehensive Income [Abstract] | |||
Net income | $ 113.3 | $ 75.7 | $ 89.7 |
Derivative financial instruments: | |||
Unrealized losses arising during the period, net of tax expense (benefit) of ($0.7), ($0.3), and $0.0 | (2.8) | (0.9) | 0.0 |
Reclassification adjustments for losses included in net income, net of tax expense (benefit) of ($0.1), $0.0, and $0.0 | 0.3 | 0.0 | 0.0 |
Currency translation adjustment: | |||
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.0, ($0.3), and $0.0 | 0.5 | 0.0 | (1.4) |
Reclassification adjustments for losses included in net income, net of tax expense (benefit) of $0.0, $0.0, and $0.0 | 0.0 | 3.0 | 0.0 |
Total other comprehensive income (loss) | (2.0) | 2.1 | (1.4) |
Comprehensive income | $ 111.3 | $ 77.8 | $ 88.3 |
Property, Plant, and Equipment - Narrative (Details) - USD ($) $ in Millions |
Dec. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, net | $ 816.2 | $ 803.0 |
Manufacturing Facility, Nonoperating | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, net | $ 47.4 |
Earnings Per Common Share |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | 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. For periods prior to the Separation, the denominator for basic and diluted net income per share was calculated using the 48.8 million shares of common stock outstanding immediately following the Separation. Total weighted average restricted shares were 1.6 million shares, 0.3 million shares, and 0.0 million shares, for the years ended December 31, 2019, 2018, and 2017, respectively. There were no weighted average restricted shares prior to the Separation. The computation of basic and diluted earnings per share follows.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The components of the provision for income taxes are as follows:
The provision for income taxes results in effective tax rates that differ from the statutory rates. The following is a reconciliation between the statutory U.S. federal income tax rate and the Company’s effective income tax rate on income before income taxes:
The Tax Cuts and Jobs Act ("the Act") was enacted on December 22, 2017. The Act reduced the U.S. federal corporate income tax rate from 35% to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign-sourced earnings. For the year ended December 31, 2017, we recognized a provisional benefit of $6.2 million, primarily related to the impact of the Act on our deferred taxes. During the year ended December 31, 2018, we finalized the accounting for the enactment of the Act and recorded an additional $1.5 million benefit, primarily as a result of the true-up of our deferred taxes. There was no additional impact to the year-ended December 31, 2019. Income (loss) before income taxes for the December 31, 2019, 2018, and 2017 was $143.6 million, $106.6 million, and $139.9 million, respectively, for U.S. operations, and $3.2 million, $(11.6) million, and $(9.8) million, respectively, for foreign operations, principally Mexico and Canada. The Company provides deferred income taxes on the unrepatriated earnings of its foreign operations where it results in a deferred tax liability. 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. The components of deferred tax liabilities and assets are as follows:
At December 31, 2019, the Company had $22.0 million of federal consolidated net operating loss carryforwards, primarily from businesses acquired, and $0.6 million of tax-effected state loss carryforwards remaining. In addition, the Company had $36.9 million of foreign net operating loss carryforwards that will begin to expire in the year 2022. We have established a valuation allowance for state and foreign tax operating losses and credits that we have estimated may not be realizable. Income tax has not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested outside the United States. This amount becomes taxable upon a repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary. The amount of such temporary differences totaled approximately $79.4 million as of December 31, 2019. Determination of the amount of any unrecognized deferred income tax liability on this temporary difference is not practicable because of the complexities of the hypothetical calculation. Taxing authority examinations We have multiple federal tax return filings that are subject to examination by the Internal Revenue Service. We filed the initial Arcosa, Inc. federal return for 2018 and it will remain open for three years. The 2015-2018 tax years are open for the ACG federal returns. We have various subsidiaries that file separate state tax returns and are subject to examination by taxing authorities at different times. The entities are generally open for their 2015 tax years and forward. We have various subsidiaries in Mexico that file separate tax returns and are subject to examination by taxing authorities at different times. The entities are generally open for their 2014 tax years and forward. Unrecognized tax benefits The change in unrecognized tax benefits for the years ended December 31, 2019, 2018, and 2017 was as follows:
The additions for tax positions of prior years of $0.1 million and $0.2 million for the years ended December 31, 2018 and 2017, respectively, are due to foreign tax positions. Settlements for the year ended December 31, 2017 were due to the resolution of our 2006-2009 tax years. Expiration of statutes of limitations during the years ended December 31, 2019 and 2017 relate to foreign tax returns. Expiration of statutes of limitations during the year ended December 31, 2018 relate to state and foreign tax returns. The total amount of unrecognized tax benefits including interest and penalties at December 31, 2018 and 2017, that would affect the Company’s effective tax rate if recognized was $0.5 million and $1.9 million, respectively. The total amount of tax benefit including interest and penalties recognized in 2019 due to lapses in statutes of limitations was $0.5 million. Arcosa accounts for interest expense and penalties related to income tax issues as income tax expense. Accordingly, interest expense and penalties associated with an uncertain tax position are included in the income tax provision. The total amount of accrued interest and penalties as of December 31, 2019, 2018, and 2017 was $0.0 million, $0.0 million, and $0.9 million, respectively. Income tax expense for the years ended December 31, 2019, 2018, and 2017 included decreases of $0.0 million, $0.9 million, and $1.5 million, respectively, with regard to interest expense and penalties related to uncertain tax positions.
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Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unsatisfied Performance Obligations | 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 December 31, 2019 and the percentage of the outstanding performance obligations as of December 31, 2019 expected to be delivered during 2020:
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