Arcosa (ACA) Announces Agreement to Acquire StonePoint Materials

Arcosa, Inc. (NYSE: ACA) (“Arcosa” or the “Company”), a provider of infrastructure-related products and solutions, today announced that it has reached a definitive agreement to acquire StonePoint Ultimate Holding, LLC and affiliated entities (“StonePoint”) from an affiliate of Sun Capital Partners, Inc. for $375 million in cash.

StonePoint is one of the 25 largest aggregates companies in the United States, with approximately 9 million tons of annual production across 20 locations, and more than 40 years of reserve life. StonePoint operates in three regions: Gulf Coast (Texas, Louisiana, Mississippi), Tennessee/Kentucky, and Pennsylvania/West Virginia. Approximately 80% of StonePoint’s EBITDA is generated from aggregates, while the remaining 20% is earned from asphalt and other services. The acquisition is expected to be accretive to Arcosa’s earnings and margins in 2021.

Financial Overview

StonePoint is projected to generate revenues of $117 million and Adjusted EBITDA of $28 million for the twelve months ending March 31, 2021, a period that has been impacted by COVID-related construction delays in several key markets.

StonePoint is expected to earn at least $30 million of Adjusted EBITDA in 2021 and return to 2019’s pre-pandemic level of $33 million by 2022, through operating synergies and construction market recovery in several of its geographies.

Additionally, Arcosa expects a net present value of approximately $15 million of tax benefits from the transaction, which the Company expects to realize over the next 4-5 years.

Commenting on the transaction, Antonio Carrillo, Arcosa’s President and Chief Executive Officer, noted, “StonePoint represents an outstanding strategic fit for Arcosa. The transaction aligns with Arcosa’s strategy to expand our Aggregates business in our current footprint and to enter new, attractive geographies. StonePoint has an experienced operating team, an attractive pipeline of organic growth projects and bolt-on acquisitions, and a footprint in fast-growing markets. We look forward to welcoming the StonePoint team to the Arcosa family and building on our combined strengths.”

StonePoint CEO Colin Oerton commented, “Arcosa will be an excellent long-term owner of the StonePoint platform and will be able to further accelerate the growth of the business. We have built an exceptional business and team under Sun Capital and want to thank all of our employees and partners for their work in building a leading US aggregates company.”

Timing and Financing

The transaction has been approved by the Company’s Board of Directors and has already received regulatory approval under the Hart-Scott-Rodino Act. The transaction is subject to customary closing conditions and is expected to close in April 2021.

Arcosa expects to fund the acquisition with a combination of cash on-hand and borrowings available under its $500 million revolving credit facility, with an expectation to refinance the borrowings with long-term debt.

Evercore served as financial advisor to Arcosa, while Weil, Gotshal, & Manges served as its legal advisor. Sun Capital was advised by Kirkland & Ellis.

Non-GAAP Financial Information

This release contains financial measures that have not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Reconciliations of non-GAAP financial measures to the closest GAAP measure are included in the accompanying table to this release.

Conference Call Information

A conference call is scheduled for 5:00 p.m. Eastern Time today to discuss the transaction. To listen to the conference call webcast, please visit the Investor Relations section of Arcosa’s website at https://ir.arcosa.com. A slide presentation for this conference call will be posted on the Company’s website in advance of the call at https://ir.arcosa.com. The audio conference call number is 866-831-8616 for domestic callers and 203-518-9873 for international callers. The conference ID is ARCOSA and the passcode is 272672. An audio playback will be available through 11:59 p.m. Eastern Time on April 5, 2021, by dialing 800-839-5634 for domestic callers and 402-220-2560 for international callers. A replay of the webcast will be available for one year on Arcosa’s website at https://ir.arcosa.com/news-events/events-presentations.

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