Construction products business guides Arcosa in third-quarter 2020

Total revenues increased by 10 percent in the third quarter at Arcosa, with revenues in the company’s construction products business jumping 27 percent.

Construction products revenues increased to $146.9 million in the third quarter despite adverse weather in Houston and on the Gulf Coast that impacted Cherry Companies and other natural aggregate locations, the company says.

Arcosa acquired Cherry and its 12 Houston locations late last year.

“Our third-quarter results demonstrate the overall resilience of our portfolio and our continued progress in repositioning the company around core infrastructure products,” says Antonio Carrillo, president and CEO of Arcosa. “Our year-over-year revenue and adjusted EBITDA (earnings before interest, tax, depreciation and amortization) growth are significant achievements given COVID-related economic uncertainty and an unusual number of major weather events in Houston and on the Gulf Coast.”

According to Arcosa, its natural aggregate business experienced strong volumes in Texas due to healthy residential and highway demand, as well as newly acquired locations. Arcosa experienced continued weakness in plants serving oil and gas markets, though.

Additionally, revenues were lower in Arcosa’s specialty materials businesses primarily due to reduced volumes in its lightweight aggregate business attributed to continued COVID-related construction delays.

“Our construction products group reported growth across all key metrics, driven by continued strong performance by Cherry and our aggregates business, and our barge business benefitted from significant operating efficiencies that led to impressive margins,” Carrillo says. “Order and inquiry activity was mostly positive during the third quarter, with the exception of liquid barges. We received $154 million of wind tower orders and experienced strong demand across utility, traffic and telecom structures, and construction activity remained robust in most of our key markets.”

Arcosa is encouraged by significantly improved fundamentals in the dry barge market, driven by increased grain movements and higher freight rates.

“On the other hand, the liquid barge market remains weak as refined products, petrochemicals and crude oil movements have not yet recovered from the pandemic,” Carrillo says. “We are strategically extending our backlog to stay flexible and allow time for a recovery, while also investing in innovation to drive additional traffic on the inland river system.”