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Acquisitions and Divestitures | 3 Months Ended
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Mar. 31, 2025
Business Combination [Abstract] |
Acquisitions and Divestitures | 2025 Acquisitions There were no acquisitions completed during the three months ended March 31, 2025. 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 Stavola acquisition expanded our platform into the nation's largest MSA with industry-leading financial attributes. During the three months ended March 31, 2025, the Company received $17.6 million from escrow related to purchase price adjustments in accordance with the terms of the purchase agreement for the Stavola acquisition, which reduced the total purchase price consideration. 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 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 | 69.2 |
Inventories | 23.5 |
Other current assets | 2.6 |
Property, plant, and equipment, including mineral reserves | 743.0 |
Goodwill | 333.6 |
Intangibles | 41.0 |
Other assets | 24.9 |
Accounts payable | (17.9) |
Accrued liabilities | (2.5) |
Advance billings | (0.8) |
Other liabilities | (25.3) |
Total net assets acquired | $ | 1,192.0 |
Goodwill represents the excess of the purchase consideration over the preliminary valuation of the net assets acquired. The acquired goodwill, 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. 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 $12.5 million and $12.6 million, respectively, are reflected in the Consolidated Balance Sheet as of March 31, 2025. Revenues and operating profit (loss) included in the Consolidated Statement of Operations were approximately $26.4 million and $(11.0) million during the three months ended March 31, 2025, respectively. Non-recurring transaction costs incurred during the three months ended March 31, 2025 were approximately $0.7 million. In July 2024, we completed the acquisition of a Phoenix, Arizona based natural aggregates business in our Con struction 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 acquired goodwill, which is tax-deductible, primarily relates to Ameron's market position and existing workforce. Divestitures There were no divestitures completed during the three months ended March 31, 2025. 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 March 31, 2025 was $15.6 million. See Note 3 Fair Value Accounting. During the three months ended March 31, 2025, the Company recognized a gain of $0.3 million, primarily due to the change in the estimated fair value of the earnout. Revenues and operating profit (loss) of the steel components business were $36.1 million and $2.5 million, respectively, for the three months ended March 31, 2024. 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 from either a quantitative or qualitative perspective. Accordingly, 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.

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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 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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