Arcosa, Inc. (ACA) | The Buildout — AI Infrastructure
The Verdict
Arcosa makes the physical pieces of the electric grid and the ground beneath construction sites. Its utility structures business builds steel and concrete poles and transmission structures that carry electricity, and its aggregates business supplies stone, sand, and asphalt for heavy construction. In the AI buildout, Arcosa is a picks-and-shovels supplier: it sells no chips or servers, but its utility poles and towers are part of the grid that delivers power to data centers and the broader economy.
| Market Cap | — |
| Revenue (TTM) | $2.7B |
| Revenue Growth | +2.6% |
| EBITDA Margin (TTM) | 22.0% |
| Net Debt | $1.0B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Utility and related structures revenue grew 15.1% in Q1 FY2026, to $225.4M from $195.8M, on both volume and pricing.
- Utility and related structures backlog ended Q1 FY2026 at a record $557.6M, up 28% from the start of the year, with orders extending into 2028.
- Engineered Structures posted a record 21.1% adjusted segment EBITDA margin in Q1 FY2026, up 300 basis points year over year.
- Continuing-operations adjusted EBITDA rose 10% in Q1 FY2026, double the revenue growth, with margin up 100 basis points.
- Free cash flow from continuing operations swung to $21M in Q1 FY2026 from negative $49M a year earlier, helped by a $53M reduction in working-capital cash use.
What We’re Watching
- Wind towers are roughly 10% of total revenue and fell 21.3% in Q1 FY2026; the guided 2027 recovery to 2025 levels rests on a $600M backlog with 3 customers.
- Diesel is up about $1.50 per gallon in the footprint; management estimates a 4%–5% headwind to 2026 cash unit profitability if prices stay elevated.
- A 10% Section 232 steel tariff on Mexico-made utility structures took effect April 6, with contractual pass-through claimed; the USMCA joint review later in 2026 is the swing factor.
- Q2 FY2026 continuing-operations revenue growth slowed to about 2% from 4% in Q1; full Q2 detail is not in the source material.
On the operating evidence, the thesis strengthened into the deal: utility structures accelerated, backlog hit a record, segment margin set a high, and management raised full-year adjusted EBITDA guidance. But the horizon is no longer Arcosa's to manage — a CRH merger, agreed at an $8.5 billion enterprise value and approved by stockholders on 2026-09-04, has no disclosed closing date — and the freshest datapoint, Q2 revenue growth of about 2%, was slower than Q1. The open question is whether the utility-structures demand behind the records is durable enough to carry the business through the transition.
Earnings Beat
Arcosa's latest reported quarter, Q2 FY2026, had continuing-operations revenue of $658.7M and a gross margin of 23.6%. That was up from Q1 FY2026 revenue of $571.7M, and continuing-ops revenue rose about 2% year over year. Full Q2 detail and a Q2 earnings call are not in the source material.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $659M | $572M | $737M | −10.6% |
| Gross margin | 23.6% | 21.1% | 22.5% | +110bps |
| EBITDA | $196M | $99M | $149M | +31.2% |
| EPS | $6.68 | $0.77 | $1.22 | +448.0% |
AI came and that simply, let's say, supercharged the demand for transmission towers and the investment companies have to do to support growth in power demand.— Antonio Carrillo, CEO, 2026-05-01
Management tone: On the Q1 FY2026 call (2026-05-01), management's tone was upbeat, and its framing shifted toward utility structures as the growth engine, portfolio simplification as complete, and a new cost overlay from diesel and tariffs. They were direct in Q&A, quantified the diesel downside, and acknowledged the one area with no track record — 765 kV lattice towers, which they said had never been sold. The guidance raise was framed as backed by backlog already in place. The prior call transcript was not in the source material, so the shift is read only from management's references to February guidance.
Management Guidance
For FY2026 on a continuing-operations basis, management guides revenue of $2.6B–$2.7B ($2.65B midpoint, +6% year over year) and adjusted EBITDA of $545M–$585M ($565M midpoint, +11%), a record 21.3% margin at the midpoint. Capital expenditures were lowered to $215M–$240M and the effective tax rate to 16%–18%. Construction Products adjusted segment EBITDA growth was lowered to mid-single-digit, while Engineered Structures was guided to about 10% growth, with utility structures more than offsetting the wind transition. Management notes the comparison is not like-for-like because the barge reclassification moved the company to a continuing-operations basis.
Trajectory
Reported revenue has stepped down as the barge business moved to discontinued operations — $798M in Q3 FY2025, $717M in Q4 FY2025, $572M in Q1 FY2026, then $659M in Q2 FY2026. The composite has also changed shape: utility and related structures revenue grew 15.1% in Q1 FY2026 while wind towers fell 21.3%, and Construction Products grew revenue 5.1% but saw adjusted segment EBITDA fall slightly. Management guides FY2026 to a record 21.3% adjusted EBITDA margin, and the computed signals show EBITDA margin expanding even as revenue growth decelerates.
The Model
The model projects FY+1 revenue of $2,562.5M with EBITDA of $546M (21.3% margin), and FY+2 revenue of $2,834.5M with EBITDA of $615M (21.7% margin). The near term rests on utility structures — a record $557.6M backlog with 73% recognized in 2026 — and on the capacity conversions at Illinois and Mexico; FY+2 depends on further utility-structures growth, the staged Oklahoma conversion, and a wind recovery management guides to 2027.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $2.9B | $2.6B | $2.8B |
| YoY Growth | — | −11.1% | +10.6% |
| EBITDA | $563M | $546M | $615M |
| EBITDA Margin | 19.5% | 21.3% | 21.7% |
Projections are the median of 4 independent model runs. The model’s revenue sits 0.6% below analyst consensus.
For FY2026 on a continuing-operations basis, management guides revenue of $2.6B–$2.7B ($2.65B midpoint, +6% year over year) and adjusted EBITDA of $545M–$585M ($565M midpoint, +11%), a record 21.3% margin at the midpoint. Capital expenditures were lowered to $215M–$240M and the effective tax rate to 16%–18%. Construction Products adjusted segment EBITDA growth was lowered to mid-single-digit, while Engineered Structures was guided to about 10% growth, with utility structures more than offsetting the wind transition. Management notes the comparison is not like-for-like because the barge reclassification moved the company to a continuing-operations basis.
What Could Go Right — and Wrong
- Utility structures backlog keeps compounding past the record $557.6M, making 2027 revenue more visible.
- The converted Illinois plant ships large utility poles on schedule and the Mexico galvanizer reaches commercial operation.
- Arcosa lands a first order for 765 kV lattice towers, a product it has not sold before.
- The USMCA review removes the tariff overhang on Mexico-made utility structures.
- Diesel prices normalize, easing management's self-estimated 4%–5% headwind to 2026 cash-unit profitability.
- Wind's guided recovery to 2025 levels in 2027 does not materialize; it rests on a $600M backlog with just 3 customers.
- The Q2 FY2026 revenue growth of about 2% becomes a trend, putting the FY2026 revenue midpoint under pressure.
- Tariff pass-through proves incomplete, adding cost to the utility-structures line that drives the margin story.
- Start-up costs at Illinois and the Mexico galvanizer run past Q2 instead of peaking there, delaying the margin abatement management dated to the second half.
- Residential construction stays weak; management already pushed its recovery to 2027 and cut Construction Products EBITDA growth guidance to mid-single-digit.
Looking Ahead
Over the next year the dated items are a wind-tower ramp in the second half of 2026 aimed at a 2027 recovery to 2025 levels and a USMCA joint review later in 2026 that could settle tariff treatment for Mexico-made utility structures. The longer-dated items — the staged Oklahoma conversion gated by wind backlog through 2027, utility orders extending into 2028, and two wind tower plants remaining by 2028 — sit alongside the CRH acquisition, which has no disclosed closing date.
- 2H 2026Wind tower ramp — Step-up toward a 2027 recovery to 2025 levels.
- Later 2026USMCA joint review — Could settle tariff treatment for Mexico-made structures.
- 2027Wind recovery target — Return to 2025 wind volumes on backlog already in place.
- 2027Oklahoma conversion — Shift capacity to utility poles as wind backlog clears.
- No date givenCRH merger close — Arcosa would become a wholly owned CRH Americas subsidiary.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $2.6B | $2.9B | $2.7B | +12.2% |
| Gross Margin | 20.0% | 22.3% | 23.0% | +232bps |
| EBITDA | $373M | $563M | $603M | +51.0% |
| EBITDA Margin | 14.5% | 19.5% | 22.0% | +501bps |
| Net Income | $94M | $208M | $491M | +122.4% |
| Free Cash Flow | $312M | $176M | $135M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)23.0%
- EBITDA Margin (TTM)22.0%
- Net Margin (TTM)17.9%
- ROIC6.4%
- FCF Conversion22.4%
- SBC / Revenue0.9%
The Company
Arcosa is a Dallas-headquartered maker of infrastructure products serving construction, engineered structures, and transportation markets in North America. After the $450 million barge divestiture closed on April 1, 2026, it runs as a two-segment company. Construction Products produces and sells natural and recycled aggregates, specialty materials, asphalt mix, and construction site support equipment such as trench shields and shoring. Engineered Structures makes steel and concrete structures: utility structures, wind towers, traffic and lighting structures, and telecommunication towers.
The company is built around regional materials and fabricated structures. Its aggregates operations are concentrated in Texas and New Jersey — "our largest geographic exposure" — plus eight other states. For utility structures, Engineered Structures operates six manufacturing plants in the U.S. and Mexico dedicated to steel structures and two in the U.S. dedicated to concrete structures, alongside wind-tower, traffic-and-lighting, and telecom plants. It is adding vertical integration: a new galvanizing facility in Mexico, an upstream step for utility structures, completed its first dip in April and is expected to be commercially operational in Q2 2026.
Business Segments
Competitive Landscape
Arcosa competes in two very different markets. In aggregates, competitor filings place it among the ten-largest U.S. producers, alongside Martin Marietta and Vulcan Materials. In wind towers, Broadwind's own filing names Arcosa "the largest North American based competitor" in that product line. In utility structures, the source names Valmont as an inferred peer, and management says most lattice towers are imported today — a segment where Arcosa is not yet a supplier. Management describes utility-structure demand as strong enough that its capacity expansions are backed by customer forecasts rather than blind additions.
- Broadwind (BWEN)Documented: names Arcosa "the largest North American based competitor" in the wind tower product line of its Heavy Fabrications segment.
- Martin Marietta (MLM)Documented: lists Arcosa among the ten-largest U.S. aggregates producers in 2025.
- Vulcan Materials (VMC)Documented: carries similar ten-largest U.S. aggregates producers list language naming Arcosa.
- Valmont (VMI)Named in the supply-chain dataset as a peer in steel utility transmission structures; not discussed.
- Nucor (NUE)Flagged as a competitive watch item through its Towers and Structures group, targeting $150M of EBITDA; also named as a steel supplier.
Supply Chain
Arcosa sits in the middle of the infrastructure supply chain: it buys steel plate, aggregates inputs, and process materials, and sells finished utility structures, wind towers, and construction materials to utilities, wind developers, and contractors. No neighbor transcript in the source material names Arcosa directly.
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