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Acquisitions and Divestitures | 12 Months Ended
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Dec. 31, 2024
Business Combinations [Abstract] |
Acquisitions and Divestitures | The Company's acquisition activities are summarized below:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in millions)
Acquisitions: |  |  |  |  |
Purchase price | $ | 1,424.2 |  |  | $ | 119.4 |  |  | $ | 75.6 |
Net cash paid | $ | 1,424.1 |  |  | $ | 120.9 |  |  | $ | 75.1 |
Goodwill recorded | $ | 397.1 |  |  | $ | 40.4 |  |  | $ | 11.6 |
2024 Acquisitions On October 1, 2024, we acquired substantially all of the construction materials business of Stavola Holding Corporation and its affiliated entities ("Stavola") for $1.2 billion in cash, subject to certain customary purchase price adjustments. The purchase price was funded with a combination of proceeds from a private offering of $600.0 million of 6.875% senior unsecured notes that closed on August 26, 2024 and $700.0 million in borrowings under a variable-rate secured term loan entered into on October 1, 2024. See Note 7 Debt for additional information. Stavola, which is included in our Construction Products segment, is an aggregates-led and vertically integrated construction materials company primarily serving the New York-New Jersey Metropolitan Statistical Area ("MSA") through its network of five hard rock natural aggregates quarries, twelve asphalt plants, and three recycled aggregates sites. The acquisition expanded our platform into the nation’s largest MSA with industry-leading financial attributes. The Stavola acquisition was recorded as a business combination based on a preliminary valuation of assets acquired and liabilities assumed at their acquisition date fair values using unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities ("Level 3" inputs). We expect to complete our purchase price allocation as soon as reasonably possible, not to exceed one year from the acquisition date. Adjustments to the preliminary purchase price allocation could be material, particularly with respect to our preliminary estimates of property, plant, and equipment, including mineral reserves. The following table details the preliminary purchase price allocation as of the acquisition date:
| (in millions)
Cash | $ | 0.7 |
Receivables, net of allowance | 69.1 |
Inventories | 23.2 |
Other | 2.6 |
Property, plant, and equipment, including mineral reserves | 743.0 |
Goodwill | 351.5 |
Intangibles | 41.0 |
Other assets | 24.9 |
Accounts payable | (17.9) |
Accrued liabilities | (2.4) |
Advance billings | (0.8) |
Other liabilities | (25.3) |
Total net assets acquired | $ | 1,209.6 |
Goodwill represents the excess of the purchase consideration over the preliminary valuation of the net assets acquired. The goodwill acquired, which has been assigned to the Construction Products segment, is tax-deductible and primarily attributable to Stavola's market position and existing workforce. The acquired intangibles include beneficial use rights, recycling permits, and the Stavola trade name, which have a useful life of 34 years, 20 years, and 5 years, respectively. Non-recurring transaction costs incurred related to the Stavola acquisition were approximately $25.5 million during the year ended December 31, 2024. These costs are included in selling, general, and administrative expenses in the Consolidated Statement of Operations. Additionally, the Company incurred $6.2 million of debt issuance costs for commitments on a bridge loan facility that was not drawn upon and terminated upon placement of the long term financing to fund Stavola. See Note 7 Debt for additional information. These non-recurring costs are included in interest expense on the Consolidated Statement of Operations. On October 1, 2024, the Company also entered into three separate lease agreements for properties owned by the sellers. These lease agreements were accounted for separately from the Stavola acquisition and the corresponding right of use assets and lease liabilities of $12.6 million are reflected in the Consolidated Balance Sheet as of December 31, 2024. Revenues and operating profit included in the Consolidated Statement of Operations from the date of the Stavola acquisition were approximately $78.2 million and $4.5 million during the year ended December 31, 2024, respectively. The following table represents the unaudited pro-forma consolidated operating results of the Company as if the Stavola acquisition had been completed on January 1, 2023 and includes adjustments to: •Include additional depreciation, depletion, and amortization expense related to the fair value of acquired property, plant, and equipment, mineral reserves, and intangible assets. •Include the impact to cost of sales from the sell-through of inventory that was stepped up in value. •Exclude transaction costs of $25.5 million from the year ended December 31, 2024 and reflect such expenses in the year ended December 31, 2023. •Include additional interest expense related to debt financing transactions. 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, 2023, nor is such unaudited pro-forma information necessarily indicative of future results.
|  |  | Year Ended December 31, 2024 |  | Year Ended December 31, 2023
|  |  | (in millions)
Revenues |  |  | $ | 2,769.8 |  |  | $ | 2,563.3 |
Income before income taxes |  |  | $ | 113.3 |  |  | $ | 93.5 |
In July 2024, we completed the acquisition of a Phoenix, Arizona based natural aggregates business in our Construction Products segment, for a total purchase price of $35.0 million. In April 2024, we completed the acquisition of Ameron Pole Products LLC ("Ameron"), a leading manufacturer of highly engineered, premium concrete and steel poles for a broad range of infrastructure applications, including lighting, traffic, electric distribution, and small-cell telecom, for a total purchase price of $180.0 million. With operations in Alabama, California, and Oklahoma, Ameron is included in our Engineered Structures segment. The acquisition was funded with $160.0 million of borrowings under our revolving credit facility and cash on hand. The acquisition was recorded as a business combination based on a valuation of the assets acquired and liabilities assumed at their acquisition date fair value using Level 3 inputs. The final valuation resulted in the recognition of, among others, $60.8 million of property, plant, and equipment, $25.6 million of customer relationships, $18.1 million of inventory, $12.8 million of developed technology, $12.0 million of accounts receivable, $8.9 million of trademarks and $42.3 million of goodwill in our Engineered Structures segment. The goodwill acquired, which is tax-deductible, primarily relates to Ameron's market position and existing workforce. 2023 Acquisitions On December 20, 2023, we completed the acquisition of certain assets and liabilities of Lake Point Holdings, LLC and Lake Point Restoration LLC, (collectively "Lake Point") a Florida based natural aggregates business in our Construction Products segment, for a total purchase price of $65.1 million. The acquisition was funded with $60.0 million of borrowings under our revolving credit facility and cash on hand. The acquisition was recorded as a business combination based on a valuation of the assets acquired and liabilities assumed at their acquisition date fair value using Level 3 inputs. The final valuation resulted in the recognition of, among others, $13.3 million of property, plant, and equipment, $19.1 million of mineral reserves, $11.5 million of permits, and $15.6 million of goodwill in our Construction Products segment. In October 2023, we completed the acquisition of certain assets and liabilities of a Florida based recycled aggregates business and a Phoenix, Arizona based recycled aggregates business, both of which are included in our Construction Products segment. The purchase prices of these acquisitions were not significant. In September 2023, we completed the acquisition of certain assets and liabilities of a Houston, Texas based stabilized sand producer in our Construction Products segment. The purchase price of the acquisition was not significant. In March 2023, we completed the stock acquisition of a Houston, Texas based shoring, trench, and excavation products business in our Construction Products segment. In February 2023, we completed the acquisition of certain assets and liabilities of a Phoenix, Arizona based recycled aggregates business in our Construction Products segment. The purchase prices of these acquisitions were not significant. 2022 Acquisitions In May 2022, we completed the stock acquisition of Recycled Aggregate Materials Company, Inc. ("RAMCO"), a leading producer of recycled aggregates in the Los Angeles metropolitan area, which is included in our Construction Products segment, for a total purchase price of $77.4 million. The acquisition was funded with $80.0 million of borrowings under our revolving credit facility. The acquisition was recorded as a business combination based on a valuation of the assets acquired and liabilities assumed at their acquisition date fair value using Level 3 inputs. The final valuation resulted in the recognition of, among others, $54.2 million of permits with an initial weighted average useful life of 20 years, $6.4 million of property, plant, and equipment, and $13.4 million of goodwill in our Construction Products segment. The remaining assets and liabilities were not significant in relation to assets and liabilities at the consolidated or segment level. Divestitures On August 16, 2024, the Company completed the divestiture of its steel components business. The steel components business, previously reported in the Transportation Products segment, was a leading supplier of railcar coupling devices, railcar axles, and circular forgings. The total consideration for the divestiture was $110.0 million consisting of $55.0 million in cash, a $25.0 million seller's note and a $30.0 million earnout of which the estimated fair value as of December 31, 2024 was $15.4 million. See Note 3 Fair Value Accounting. During the year ended December 31, 2024, the Company recognized a loss of $21.6 million on the sale of the business, which is reflected in (gain) loss on sale of businesses on the Consolidated Statement of Operations. Revenues and operating profit (loss) of the steel components business were $87.8 million and $(19.5) million, respectively, for the year ended December 31, 2024, $153.3 million and $11.0 million, respectively, for the year ended December 31, 2023, and $127.4 million and $0.9 million, respectively, for the year end December 31, 2022. As the steel components business was not core to Arcosa's long-term strategy, its divestiture was not considered a strategic shift that would have a major effect on the Company's operations or financial results either from a quantitative or qualitative perspective. As such, it is not reported as a discontinued operation. During the three months ended June 30, 2024, we completed the divestiture of certain assets and liabilities of a single-location asphalt and paving operation in our Construction Products segment and the sale of a non-operating facility in our Engineered Structures segment. The total consideration for these divestitures was $27.3 million. The Company recognized a net pre-tax gain of $12.5 million which is reflected in (gain) loss on sale of businesses on the Consolidated Statement of Operations. There were no divestitures completed during the year ended December 31, 2023. In October 2022, the Company completed the sale of its storage tanks business for $275.0 million. Net cash proceeds received at closing were approximately $271.6 million, after transaction closing costs. The sale resulted in a pre-tax gain of $189.0 million recognized during the year ended December 31, 2022. An additional gain of $6.9 million and $6.4 million was recognized during the years ended December 31, 2024 and 2023, respectively, primarily due to the resolution of certain contingencies from the sale. The storage tanks business, historically reported within the Engineered Structures segment as continuing operations until the date of sale, was a leading manufacturer of steel pressure tanks for the storage and transportation of propane, ammonia, and other gases serving the residential, commercial, energy, and agricultural markets with operations in the U.S. and Mexico. Revenues and operating profit of the storage tanks business prior to the sale were $188.9 million and $41.1 million, respectively, for the year ended December 31, 2022. As the sale of the storage tanks business was not considered a strategic shift that would have had a major effect on the Company's operations or financial results, it is not reported as a discontinued operation. In October 2022, the Company used $155.0 million of the cash proceeds from the sale to repay the outstanding loans borrowed under its revolving credit facility. See Note 7 Debt for additional information. Other In June 2023, the Company settled a $15.0 million holdback obligation from the 2021 acquisition of Southwest Rock upon the extension of a certain mineral reserve lease. Based on final negotiations with the seller, the holdback obligation was settled for $10.0 million and paid in June 2023. The $5.0 million difference between the settlement amount and the amount accrued at the time of acquisition was recorded as a reduction in cost of revenues in the Consolidated Statement of Operations.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
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