UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q



(Mark One)
þ☑			QUARTERLY REPORT PURSUANT TO SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, ~~2019~~

2020


		OR
		OR
¨☐	TRANSITION REPORT PURSUANT TOSECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________ .

Commission File Number 1-38494

Arcosa, Inc.

(Exact name of registrant as specified in its charter)

Delaware

82-5339416

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

500 N. Akard Street, Suite 400 ~~Dallas, Texas~~

Dallas,

Texas

75201

(Address of principal executive offices)

(Zip Code)

(972) 942-6500

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($0.01 par value)	ACA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to besubmitted pursuant to Rule 405 of Regulation S-T(§ 232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit suchfiles). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See thedefinitions of “large accelerated filer,” “accelerated filer,” “smaller reportingcompany,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ þ Accelerated filer ¨Non-accelerated filer þ¨

Smaller reporting company ¨ ☐Emerging growth company¨☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shellcompany (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No þ

At July 15, ~~2019~~2020 the number of shares of common stock outstanding was ~~48,386,813.~~48,339,918.

ARCOSA, INC.

FORM 10-Q

TABLE OF CONTENTS

Table of Contents

PART I

Item 1. Financial Statements

Arcosa, Inc. and Subsidiaries

Consolidated ~~and Combined~~ Statements of Operations

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
	(in millions)
Revenues	$	498.5	$	434.1	$	986.7	$	845.0
Operating costs:
Cost of revenues	396.8		345.7		788.1		678.5
Selling, general, and administrative expenses	53.9		46.1		105.7		86.9

	450.7		391.8		893.8		765.4
Total operating profit	47.8		42.3		92.9		79.6

Interest expense	2.8		1.6		6.1		3.5
Other, net (income) expense	(0.1)		(0.1)		(0.3)		(0.3)
Income before income taxes	45.1		40.8		87.1		76.4

Provision for income taxes	11.8		9.0		22.2		16.9





Net income	$	33.3	$	31.8	$	64.9	$	59.5

Net income per common share:
Basic	$	0.69	$	0.66	$	1.34	$	1.23
Diluted	$	0.68	$	0.65	$	1.33	$	1.21
Weighted average number of shares outstanding:
Basic	47.9		47.8		47.9		47.9
Diluted	48.4		48.3		48.4		48.4
Dividends declared per common share	$	0.05	$	0.05	$	0.10	$	0.10

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
(in millions)
Revenues $ 434.1
$ 353.0
$ 845.0
$ 707.4
Operating costs:
Cost of revenues 345.7
283.0
678.5
568.6
Selling, engineering, and administrative expenses 46.1
39.4
86.9
77.0
391.8
322.4
765.4
645.6
Total operating profit 42.3
30.6
79.6
61.8

Interest expense 1.6
—
3.5
—
Other, net (income) expense (0.1 ) 1.2
(0.3 ) 2.2
Income before income taxes 40.8
29.4
76.4
59.6

Provision for income taxes 9.0
6.8
16.9
14.8

Net income $ 31.8
$ 22.6
$ 59.5
$ 44.8

Net income attributable to Arcosa, Inc. per common share:
Basic $ 0.66
$ 0.46
$ 1.23
$ 0.92
Diluted $ 0.65
$ 0.46
$ 1.21
$ 0.92
Weighted average number of shares outstanding⁽¹⁾:

Basic 47.8
48.8
47.9
48.8
Diluted 48.3
48.8
48.4
48.8
Dividends declared per common share $ 0.05
$ —
$ 0.10
$ —

⁽¹⁾ For periods prior to the Separation, the denominator for basic and diluted net income per common share was calculated using the 48.8 million shares of common stock outstanding immediately following the Separation.

See accompanying ~~notes~~Notes to ~~consolidated and combined financial statements.~~Consolidated Financial Statements.

Table of Contents

Arcosa, Inc. and Subsidiaries

Consolidated ~~and Combined~~ Statements of Comprehensive Income

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
	(in millions)
Net income	$	33.3	$	31.8	$	64.9	$	59.5
Other comprehensive income (loss):
Derivative financial instruments:
Unrealized losses arising during the period, net of tax expense (benefit) of ($0.2), ($0.5), ($1.1), and ($0.7)	(0.5)		(1.8)		(3.9)		(2.8)
Reclassification adjustments for losses included in net income, net of tax expense (benefit) of ($0.1), $0.0, ($0.2),and $0.0	0.4		—		0.6		0.1
Currency translation adjustment:
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.0, $0.2, ($0.2), and $0.0	0.4		0.1		(0.7)		0.4

	0.3		(1.7)		(4.0)		(2.3)
Comprehensive income	$	33.6	$	30.1	$	60.9	$	57.2

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
(in millions)
Net income $ 31.8
$ 22.6
$ 59.5
$ 44.8
Other comprehensive income (loss):
Derivative financial instruments:
Unrealized losses arising during the period, net of tax expense (benefit) of ($0.5), $0.0, ($0.7), and $0.0 (1.8 ) —
(2.8 ) —
Reclassification adjustments for losses included in net income, net of tax expense (benefit) of $0.0, $0.0, $0.0,and $0.0 —
—
0.1
—
Currency translation adjustment:
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.2, $0.0, $0.0, and $0.0 0.1
0.2
0.4
0.5
(1.7 ) 0.2
(2.3 ) 0.5
Comprehensive income $ 30.1
$ 22.8
$ 57.2
$ 45.3

See accompanying ~~notes~~Notes to ~~consolidated and combined financial statements.~~Consolidated Financial Statements.

Table of Contents

Arcosa, Inc. and Subsidiaries

Consolidated Balance Sheets


	June 30, 2020		December 31, 2019
	(unaudited)
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	148.4	$	240.4

Receivables, net of allowance	217.7		200.0

Inventories:
Raw materials and supplies	152.5		134.8
Work in process	42.6		41.7
Finished goods	118.9		106.8
	314.0		283.3
Other	25.8		33.5
Total current assets	705.9		757.2


Property, plant, and equipment, net	892.7		816.2
Goodwill	758.0		621.9
Intangibles, net	146.0		51.7
Deferred income taxes	15.4		14.3
Other assets	42.2		41.2
	$	2,560.2	$	2,302.5
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	108.3	$	90.0
Accrued liabilities	118.7		119.4
Advance billings	54.4		70.9
Current portion of long-term debt	4.5		3.7
Total current liabilities	285.9		284.0

Debt	252.1		103.6
Deferred income taxes	99.9		66.4
Other liabilities	73.2		58.1
	711.1		512.1


Stockholders’ equity:

Common stock – 200.0 shares authorized	0.5		0.5
Capital in excess of par value	1,689.4		1,686.7
Retained earnings	182.9		122.9
Accumulated other comprehensive loss	(23.7)		(19.7)
Treasury stock	—		—
	1,849.1		1,790.4
	$	2,560.2	$	2,302.5

June 30,
2019 December 31,
2018
(unaudited)
(in millions)
ASSETS
Current assets:
Cash and cash equivalents $ 83.3
$ 99.4
Receivables, net of allowance 228.7
291.4
Inventories:
Raw materials and supplies 145.6
128.4
Work in process 45.7
33.3
Finished goods 99.7
90.8
291.0
252.5
Other 19.9
24.1
Total current assets 622.9
667.4

Property, plant, and equipment, net 814.3
803.0
Goodwill 631.4
615.2
Deferred income taxes 7.6
6.9
Other assets 95.7
79.7
$ 2,171.9
$ 2,172.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 73.0
$ 86.2
Accrued liabilities 129.0
121.5
Current portion of long-term debt 1.1
1.8
Total current liabilities 203.1
209.5

Debt 106.7
183.7
Deferred income taxes 69.4
58.3
Other liabilities 58.4
36.2
437.6
487.7
Stockholders’ equity:
Common stock – 200.0 shares authorized 0.5
0.5
Capital in excess of par value 1,679.8
1,685.7
Retained earnings 74.0
19.5
Accumulated other comprehensive loss (20.0 ) (17.7 )
Treasury stock —
(3.5 )
1,734.3
1,684.5
$ 2,171.9
$ 2,172.2

See accompanying ~~notes~~Notes to ~~consolidated and combined financial statements.~~Consolidated Financial Statements.

Table of Contents

Arcosa, Inc. and Subsidiaries

Consolidated ~~and Combined~~ Statements of Cash Flows

(unaudited)


	Six Months Ended June 30,							Six Months Ended June 30,
	2019			2018				2020		2019
	(in millions)							(in millions)
Operating activities:							Operating activities:
Net income	$	59.5		$	44.8		Net income	$	64.9	$	59.5
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion, and amortization	41.5			32.9			Depreciation, depletion, and amortization	54.7		41.5

Stock-based compensation expense	7.1			4.8			Stock-based compensation expense	8.8		7.1

Provision for deferred income taxes	9.3			4.7			Provision for deferred income taxes	2.4		9.3
Gains on dispositions of property and other assets	(1.9		)	(0.4		)
Gains on disposition of property and other assets							Gains on disposition of property and other assets	(1.8)		(1.9)

(Increase) decrease in other assets	0.2			2.0			(Increase) decrease in other assets	(2.1)		0.2
Increase (decrease) in other liabilities	2.3			(0.2		)	Increase (decrease) in other liabilities	(1.8)		2.3
Other	(2.8		)	—			Other	2.1		(2.8)
Changes in current assets and liabilities:							Changes in current assets and liabilities:
(Increase) decrease in receivables	65.3			20.8			(Increase) decrease in receivables	12.3		65.3
(Increase) decrease in inventories	(32.2		)	(14.0		)	(Increase) decrease in inventories	(14.7)		(32.2)
(Increase) decrease in other current assets	4.3			—			(Increase) decrease in other current assets	11.8		4.3
Increase (decrease) in accounts payable	(13.5		)	15.5			Increase (decrease) in accounts payable	9.1		(13.5)
Increase (decrease) in advance billings							Increase (decrease) in advance billings	(26.9)		0.9
Increase (decrease) in accrued liabilities	2.1			(5.6		)	Increase (decrease) in accrued liabilities	1.5		1.2

Net cash provided by operating activities	141.2			105.3			Net cash provided by operating activities	120.3		141.2

Investing activities:							Investing activities:
Proceeds from dispositions of property and other assets	2.2			1.1

Proceeds from disposition of property and other assets							Proceeds from disposition of property and other assets	7.0		2.2
Capital expenditures	(38.9		)	(20.4		)	Capital expenditures	(43.6)		(38.9)
Acquisitions, net of cash acquired	(22.8		)	(25.0		)	Acquisitions, net of cash acquired	(313.9)		(22.8)

Net cash required by investing activities	(59.5		)	(44.3		)	Net cash required by investing activities	(350.5)		(59.5)

Financing activities:							Financing activities:

Payments to retire debt	(80.7		)	(0.1		)	Payments to retire debt	(100.7)		(80.7)
Proceeds from issuance of debt							Proceeds from issuance of debt	250.3		—
Shares repurchased	(8.0		)	—			Shares repurchased	(2.0)		(8.0)
Dividends paid to common shareholders	(5.0		)	—			Dividends paid to common shareholders	(4.9)		(5.0)
Purchase of shares to satisfy employee tax on vested stock	(4.1		)	—			Purchase of shares to satisfy employee tax on vested stock	(3.3)		(4.1)
Net transfers from/(to) Former Parent and affiliates	—			(54.0		)
Holdback payment from acquisition	—			(3.1		)
Net cash required by financing activities	(97.8		)	(57.2		)

Other							Other	(1.2)		—

Net cash provided by (required by) financing activities							Net cash provided by (required by) financing activities	138.2		(97.8)
Net increase (decrease) in cash and cash equivalents	(16.1		)	3.8			Net increase (decrease) in cash and cash equivalents	(92.0)		(16.1)
Cash and cash equivalents at beginning of period	99.4			6.8			Cash and cash equivalents at beginning of period	240.4		99.4
Cash and cash equivalents at end of period	$	83.3		$	10.6		Cash and cash equivalents at end of period	$	148.4	$	83.3

See accompanying ~~notes~~Notes to ~~consolidated and combined financial statements.~~Consolidated Financial Statements.

Table of Contents

Arcosa, Inc. and Subsidiaries

Consolidated ~~and Combined~~ Statements of Stockholders' Equity

(unaudited)


		Common Stock					Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss	Treasury Stock						Total Stockholders’ Equity
		Shares	$0.01 Par Value											Shares			Amount
	(in millions, except par value)
Balances at March 31, 2019		48.8	$	0.5	$	1,690.2	$	44.7	$	(18.3)	(0.4)	$	(11.9)		$	1,705.2
Net income		—	—		—		31.8		—		—	—			31.8
Other comprehensive loss		—	—		—		—		(1.7)		—	—			(1.7)
Cash dividends on common stock		—	—		—		(2.5)		—		—	—			(2.5)
Restricted shares, net		0.2	—		4.2		—		—		(0.2)	(4.5)			(0.3)

Retirement of treasury stock		(0.6)	—		(16.4)		—		—		0.6	16.4			—
Other		—	—		1.8		—		—		—	—			1.8
Balances at June 30, 2019		48.4	$	0.5	$	1,679.8	$	74.0	$	(20.0)	—	$	—		$	1,734.3


Balances at March 31, 2020		48.3	$	0.5	$	1,690.5	$	152.0	$	(24.0)	(0.1)	$	(3.0)		$	1,816.0
Net income		—	—		—		33.3		—		—	—			33.3
Other comprehensive income		—	—		—		—		0.3		—	—			0.3
Cash dividends on common stock		—	—		—		(2.4)		—		—	—			(2.4)
Restricted shares, net		0.2	—		5.8		—		—		(0.1)	(4.0)			1.8

Retirement of treasury stock		(0.2)	—		(7.0)		—		—		0.2	7.0			—
Other		—	—		0.1		—		—		—	—			0.1
Balances at June 30, 2020		48.3	$	0.5	$	1,689.4	$	182.9	$	(23.7)	—	$	—		$	1,849.1


Balances at December 31, 2018		48.8	$	0.5	$	1,685.7	$	19.5	$	(17.7)	(0.1)	$	(3.5)		$	1,684.5
Net income		—	—		—		59.5		—		—	—			59.5
Other comprehensive loss		—	—		—		—		(2.3)		—	—			(2.3)
Cash dividends on common stock		—	—		—		(5.0)		—		—	—			(5.0)
Restricted shares, net		0.2	—		7.8		—		—		(0.2)	(4.9)			2.9
Shares repurchased		—	—		—		—		—		(0.3)	(8.0)			(8.0)
Retirement of treasury stock		(0.6)	—		(16.4)		—		—		0.6	16.4			—
Other		—	—		2.7		—		—		—	—			2.7
Balances at June 30, 2019		48.4	$	0.5	$	1,679.8	$	74.0	$	(20.0)	—	$	—		$	1,734.3


Balances at December 31, 2019		48.3	$	0.5	$	1,686.7	$	122.9	$	(19.7)	—	$	—		$	1,790.4
Net income		—	—		—		64.9		—		—	—			64.9
Other comprehensive loss		—	—		—		—		(4.0)		—	—			(4.0)
Cash dividends on common stock		—	—		—		(4.9)		—		—	—			(4.9)
Restricted shares, net		0.2	—		10.5		—		—		(0.1)	(5.0)			5.5
Shares repurchased		—	—		—		—		—		(0.1)	(2.0)			(2.0)
Retirement of treasury stock		(0.2)	—		(7.0)		—		—		0.2	7.0			—
Other		—	—		(0.8)		—		—		—	—			(0.8)
Balances at June 30, 2020		48.3	$	0.5	$	1,689.4	$	182.9	$	(23.7)	—	$	—		$	1,849.1

Former Parent's Net Investment Common
Stock Capital in
Excess of
Par Value Retained
Earnings Accumulated
Other
Comprehensive
Loss Treasury
Stock Total
Stockholders’
Equity
Shares $0.01 Par Value Shares Amount
(in millions, except par value)
Balances at March 31, 2018 $ 1,391.9
—
$ —
$ —
$ —
$ (19.5 ) —
$ —
$ 1,372.4
Net income 22.6
—
—
—
—
—
—
—
22.6
Other comprehensive income —
—
—
—
—
0.2
—
—
0.2
Net transfers from parent and affiliates (2.9 ) —
—
—
—
—
—
—
(2.9 )
Restricted shares, net 2.6
—
—
—
—
—
—
—
2.6
Balances at June 30, 2018 $ 1,414.2
—
$ —
$ —
$ —
$ (19.3 ) —
$ —
$ 1,394.9

Balances at March 31, 2019 $ —
48.8
$ 0.5
$ 1,690.2
$ 44.7
$ (18.3 ) (0.4 ) $ (11.9 ) $ 1,705.2
Net income —
—
—
—
31.8
—
—
—
31.8
Other comprehensive loss —
—
—
—
—
(1.7 ) —
—
(1.7 )
Cash dividends on common stock —
—
—
—
(2.5 ) —
—
—
(2.5 )
Restricted shares, net —
0.2
—
4.2
—
—
(0.2 ) (4.5 ) (0.3 )
Shares repurchased —
—
—
—
—
—
—
—
—
Retirement of treasury stock —
(0.6 ) —
(16.4 ) —
—
0.6
16.4
—
Other —
—
—
1.8
—
—
—
—
1.8
Balances at June 30, 2019 $ —
48.4
$ 0.5
$ 1,679.8
$ 74.0
$ (20.0 ) —
$ —
$ 1,734.3

Balances at December 31, 2017 $ 1,427.7
—
$ —
$ —
$ —
$ (19.8 ) —
$ —
$ 1,407.9
Cumulative effect of adopting new accounting standards (see Note 1) (4.0 ) —
—
—
—
—
—
—
(4.0 )
Net income 44.8
—
—
—
—
—
—
—
44.8
Other comprehensive income —
—
—
—
—
0.5
—
—
0.5
Net transfers from parent and affiliates (59.1 ) —
—
—
—
—
—
—
(59.1 )
Restricted shares, net 4.8
—
—
—
—
—
—
—
4.8
Balances at June 30, 2018 $ 1,414.2
—
$ —
$ —
$ —
$ (19.3 ) —
$ —
$ 1,394.9

Balances at December 31, 2018 $ —
48.8
$ 0.5
$ 1,685.7
$ 19.5
$ (17.7 ) (0.1 ) $ (3.5 ) $ 1,684.5
Net income —
—
—
—
59.5
—
—
—
59.5
Other comprehensive loss —
—
—
—
—
(2.3 ) —
—
(2.3 )
Cash dividends on common stock —
—
—
—
(5.0 ) —
—
—
(5.0 )
Restricted shares, net —
0.2
—
7.8
—
—
(0.2 ) (4.9 ) 2.9
Shares repurchased —
—
—
—
—
—
(0.3 ) (8.0 ) (8.0 )
Retirement of treasury stock —
(0.6 ) —
(16.4 ) —
—
0.6
16.4
—
Other —
—
—
2.7
—
—
—
—
2.7
Balances at June 30, 2019 $ —
48.4
$ 0.5
$ 1,679.8
$ 74.0
$ (20.0 ) —
$ —
$ 1,734.3

See accompanying ~~notes~~Notes to ~~consolidated and combined financial statements.~~Consolidated Financial Statements.

Table of Contents

Arcosa, Inc. and Subsidiaries

Notes to Consolidated ~~and Combined~~ Financial Statements

~~(Unaudited)~~(unaudited)

Note 1. Overview and Summary of Significant Accounting Policies

Basis of Presentation

~~On November 1, 2018,~~ Arcosa, Inc. and its consolidated subsidiaries (“Arcosa,” the “Company,” “we,” or “our”) ~~became an independent publicly-traded company as~~, headquartered in Dallas, Texas, is a ~~result~~provider of infrastructure-related products and solutions with leading brands serving construction, energy, and transportation markets in North America. Arcosa is a Delaware corporation and was incorporated in 2018 in connection with the ~~distribution by~~separation of Arcosa from Trinity Industries, Inc. (“Trinity” or “Former Parent”) ~~of 100% of~~on November 1, 2018 as an independent, publicly-traded company, listed on the ~~outstanding shares of Arcosa, Inc. to Trinity’s stockholders~~New York Stock Exchange (the “Separation”). Trinity stockholders received one share of Arcosa, Inc. common stock for every three shares of Trinity common stock held as of 5:00 p.m. local New York City time on October 17, 2018, the record date for the distribution. The transaction was structured to be tax-free to both Trinity and Arcosa stockholders for U.S. federal income tax purposes.

The accompanying Consolidated ~~and Combined~~ Financial Statements ~~present our historical financial position, results of operations, comprehensive income/loss,~~are unaudited and cash flows in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The combined financial statements for periods prior to the Separation were derived from Trinity’s consolidated financial statements and accounting records and prepared in accordance with GAAP for the preparation of carved-out combined financial statements. Through the date of the Separation, all revenues and costs as well as assets and liabilities directly associated with Arcosa have been ~~included in~~prepared from the ~~combined financial statements. Prior to the Separation, the combined financial statements also included allocations~~books and records of ~~certain selling, engineering, and administrative expenses provided by Trinity to~~ Arcosa, and allocations of related assets, liabilities, and the Former Parent’s net investment, as applicable. The allocations were determined on a reasonable basis; however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had the Company been an entity that operated independently of Trinity during the applicable periods.

~~Following the Separation, the consolidated financial statements include the accounts of the Company~~Inc. and its ~~subsidiaries and no longer include any allocations from Trinity.~~

consolidated subsidiaries. All normal and recurring adjustments necessary for a fair presentation of the financial position of the Company and the results of operations, comprehensive income/loss, and cash flows have been made in conformity with ~~GAAP.~~accounting principles generally accepted in the U.S. (“GAAP”). All significant intercompany accounts and transactions have been eliminated. Because of seasonal and other factors, including the unknown potential duration, spread, severity, and impact of the COVID-19 pandemic, Arcosa's business, financial condition, and results of operations for the three and six months ended June 30, ~~2019~~2020 may not be indicative of Arcosa's expected business, financial condition, and results of operations for the year ending December 31, ~~2019.~~ 2020.

These interim financial statements and notes are condensed as permitted by the instructions to Form 10-Q and should be read in conjunction with the audited consolidated and combined financial statements of the Company included in its Annual Report on Form 10-K for the year ended December 31, ~~2018.~~

~~Relationship with Former Parent and Related Entities~~

Prior to the Separation, Arcosa was managed and operated in the normal course of business with other business units of Trinity. The accompanying combined financial results for periods prior to the Separation include sales and purchase transactions with Trinity and its subsidiaries in addition to certain shared costs which have been allocated to Arcosa and reflected as expenses in the Combined Statements of Operations. Transactions and allocations between Trinity and Arcosa are reflected in the Combined Statements of Cash Flows as a financing activity in Net transfers from/(to) Former Parent and affiliates. All transactions and allocations between Trinity and Arcosa prior to the Separation have been deemed paid between the parties, in cash, in the period in which the transaction or allocation was recorded in the Combined Financial Statements. Disbursements and cash receipts were made through centralized accounts payable and cash collection systems, respectively, which were operated by Trinity. As cash was disbursed and received by Trinity, it was accounted for by Arcosa through the Former Parent's net investment account. Allocations of current income taxes receivable or payable prior to the Separation were deemed to have been remitted to Arcosa or Trinity, respectively, in cash, in the period to which the receivable or payable applies.

~~Corporate Costs/Allocations~~

Prior to the Separation, the combined financial results include an allocation of costs related to certain corporate functions incurred by Trinity for services that were provided to or on behalf of Arcosa. Corporate costs have been allocated to Arcosa using methods management believes are consistent and reasonable. Such cost allocations to Arcosa consisted of (1) shared service charges and (2) corporate overhead costs. Shared service charges consisted of monthly charges to each Trinity business unit for certain corporate functions such as information technology, human resources, and legal based on usage rates and activity units. Corporate overhead costs consisted of costs not previously allocated to Trinity's business units and were allocated to Arcosa based on an analysis of each cost function and the relative benefits received by Arcosa for the period. Corporate overhead costs allocated to Arcosa prior to the Separation totaled $7.9 million and $15.6 million for the three and six months ended June 30, 2018. Corporate overhead costs are included in selling, engineering, and administrative expenses in the accompanying Consolidated and Combined Statements of Operations. Also see Note 4 Segment Information.

The Combined Financial Statements of Arcosa for the three and six months ended ended June 30, 2018 may not include all of the actual expenses that would have been incurred had we operated as a standalone company during the periods presented and may not reflect our combined results of operations, financial position, and cash flows had we operated as a standalone company during the periods presented. Actual costs that would have been incurred if we had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. We also may incur additional costs associated with being a standalone, independent, publicly-traded company that were not included in the expense allocations and, therefore, would result in additional costs that are not reflected in our historical results of operations, financial position, and cash flows.

~~Other Transactions with Trinity Businesses~~

For the three and six months ended June 30, 2018, the Company had sales to Trinity businesses of $32.6 million and $76.1 million, respectively, and purchases from Trinity businesses of $12.0 million and $24.8 million, respectively. Subsequent to the Separation, Trinity is no longer considered a related entity.2019.

Stockholders' Equity

In December 2018, the Company’s Board of Directors (the “Board”) authorized a $50 million share repurchase program effective December 5, 2018 through December 31, 2020. The Company did not repurchase any shares during the three months ended June 30, ~~2019. The Company repurchased 269,574 shares at a cost of $8.0 million during~~2020. For the six months ended June 30, ~~2019, leaving~~2020, the Company repurchased 56,836 shares at a cost of $2.0 million. As of June 30, 2020, the Company had a remaining authorization of ~~$39.0 million.~~$34.0 million under the program.

Revenue Recognition

Revenue is measured based on the allocation of the transaction price in a contract to satisfied performance obligations. The transaction price does not include any amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. The following is a description of principal activities from which the Company generates its revenue, separated by reportable segments. Payments for our products and services are generally due within normal commercial terms. For a further discussion regarding the Company’s reportable segments, see Note 4 Segment Information.

Construction Products Group

The Construction Products Group recognizes substantially all revenue when the customer has accepted the product and legal title of the product has passed to the customer.

Energy Equipment Group

Within the Energy Equipment Group, revenue is recognized for our wind tower, certain utility structure, and certain storage tank product lines over time as the products are manufactured using an input approach based on the costs incurred relative to the total estimated costs of production. We recognize revenue over time for these products as they are highly customized to the needs of an individual customer resulting in no alternative use to the Company if not purchased by the customer after the contract is executed, and we have the right to bill the customer for our work performed to date plus at least a reasonable profit margin for work performed. As of June 30, ~~2019,~~2020, we had a contract asset of ~~$54.3~~$23.9 million related to these contracts, compared to ~~$44.0~~$50.8 million at December 31, ~~2018,~~2019, which is included in receivables, net of allowance, onwithin the Consolidated Balance ~~Sheet.~~Sheets. For all other products, revenue is recognized when the customer has accepted the product and legal title of the product has passed to the customer.

Transportation Products Group

The Transportation Products Group recognizes revenue when the customer has accepted the product and legal title of the product has passed to the customer.

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Unsatisfied Performance Obligations

The following table includes estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied or partially satisfied as of June 30, ~~2019~~2020 and the percentage of the outstanding performance obligations as of June 30, ~~2019~~2020 expected to be delivered during the remainder of ~~2019:~~2020:


	Unsatisfied performance obligations at June 30, 2019					Unsatisfied performance obligations at June 30, 2020
	Total Amount		Percent expected to be delivered in 2019			Total Amount		Percent expected to be delivered in 2020
	(in millions)					(in millions)
Energy Equipment Group:					Energy Equipment Group:
Wind towers and utility structures	$	517.6	52	%	Wind towers and utility structures	$	352.2	74	%
Other	$	45.3	80	%	Other	$	15.5	100	%

Transportation Products Group:					Transportation Products Group:
Inland barges	$	349.7	54	%	Inland barges	$	258.7	73	%

~~All~~Substantially all unsatisfied performance obligations beyond ~~2019~~2020 are expected to be delivered during ~~2020.~~2021.

Income Taxes

The liability method is used to account for income taxes. Deferred income taxes represent the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances reduce deferred tax assets to an amount that will more likely than not be realized.

The Company regularly evaluates the likelihood of realization of tax benefits derived from positions it has taken in various federal and state filings after consideration of all relevant facts, circumstances, and available information. For those tax positions that are deemed more likely than not to be sustained, the Company recognizes the benefit it believes is cumulatively greater than 50% likely to be realized. To the extent the Company were to prevail in matters for which accruals have been established or be required to pay amounts in excess of recorded reserves, the effective tax rate in a given financial statement period could be materially impacted.

Prior to the Separation, the Company’s operating results were included in the Former Parent’s various consolidated U.S. federal and state income tax returns, as well as non-U.S. tax filings. In the Company’s Combined Financial Statements for the periods prior to the Separation, income tax expense and deferred tax balances have been recorded as if the Company filed tax returns on a standalone basis separate from the Former Parent. The separate return method applies the accounting guidance for income taxes to the standalone financial statements as if the Company was a separate taxpayer and a standalone enterprise for the periods presented.

Financial Instruments

The Company considers all highly liquid debt instruments to be cash and cash equivalents if purchased with a maturity of three months or less. Financial instruments that potentially subject the Company to a concentration of credit risk are primarily cash investments and receivables. The Company ~~currently~~ places its cash investments ~~primarily~~ in bank deposits and highly-rated money market funds, and its investment policy limits the amount of credit exposure to any one commercial issuer. We seek to limit concentrations of credit risk with respect to receivables with control procedures that monitor the credit worthiness of customers, together with the large number of customers in the Company's customer base and their dispersion across different industries and geographic areas. As receivables are generally unsecured, the Company maintains an allowance for doubtful accounts based upon the expected ~~collectibility of all receivables.~~credit losses. Receivable balances determined to be uncollectible are charged against the allowance. To accelerate the conversion to cash, the Company may sell a portion of its trade receivables to a third party. The Company has no continuing involvement or recourse related to these receivables once they are sold, and the impact of these transactions ~~recognized~~ in the Company's Consolidated Statements of Operations for the three and six months ended June 30, ~~2019~~2020 was not significant. The carrying values of cash, receivables, and accounts payable are considered to be representative of their respective fair values.

Derivative Instruments

The Company may, from time to time, use derivative instruments to mitigate the impact of changes in interest rates, commodity prices, or changes in foreign currency exchange rates. For derivative instruments designated as hedges, the Company formally documents the relationship between the derivative instrument and the hedged item, as well as the risk management objective and strategy for the use of the derivative instrument. This documentation includes linking the derivative to specific assets or liabilities on the balance sheet, commitments, or forecasted transactions. At the time a derivative instrument is entered into, and at least quarterly thereafter, the Company assesses whether the derivative instrument is effective in offsetting the changes in fair value or cash flows of the hedged item. Any change in the fair value of the hedged instrument is recorded in accumulated other comprehensive loss (“AOCL”) as a separate component of stockholders' equity and reclassified into earnings in the period during which the hedged transaction affects earnings. The Company monitors its derivative positions and the credit ratings of its counterparties and does not anticipate losses due to counterparties' non-performance.

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Recent Accounting Pronouncements

Recently adopted accounting pronouncements

Effective as of January 1, 2018, the Company adopted Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”) which provides common revenue recognition guidance for GAAP. Under ASU 2014-09, an entity recognizes revenue when it transfers promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. It also requires additional detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

The Company applied ASU 2014-09 to all contracts that were not complete as of January 1, 2018 using the modified retrospective method of adoption, resulting in a reduction to Net Parent Investment of $4.0 million, net of tax, as of January 1, 2018 related to the cumulative effect of applying this standard.

The primary impact of adopting the standard is a change in the timing of revenue recognition for our wind towers and certain utility structures product lines within our Energy Equipment Group. Previously, the Company recognized revenue when the product was delivered. Under ASU 2014-09, revenue is recognized over time as the products are manufactured. Revenue recognition policies in our other business segments remain substantially unchanged.

Effective as of January 1, 2019, the Company adopted Accounting Standards Update No. 2016-02, “Leases”, (“ASU 2016-02”) which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The Company elected to use the optional transition method that allows the Company to apply the provisions of the standard at the effective date without adjusting the comparative prior periods. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard which allowed us to carry forward the historical lease classification. The cumulative effect of adopting the standard on the opening balance of retained earnings was not significant.

The primary impact of adopting the standard was the recognition of a right-of-use asset and corresponding lease liability for our operating leases included in other assets and other liabilities, respectively, on the Consolidated Balance Sheet. See Note 8 Leases for further discussion.

The Company has implemented processes and a lease accounting system to ensure adequate internal controls were in place to assess our contracts and enable proper accounting and reporting of financial information upon adoption.

~~Recently issued accounting pronouncements not yet~~Effective as of January 1, 2020, the Company adopted

~~In June 2016, the Financial Accounting Standards Board issued~~ Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses”, (“ASU 2016-13”), which amends the existing accounting guidance for recognizing credit losses on financial assets and certain other instruments not measured at fair value through net income, including financial assets measured at amortized cost, such as trade receivables and contract assets. ASU 2016-13 replaces the existing incurred loss impairment model with an expected credit loss model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of the asset. The ~~new~~adoption of this guidance ~~is expected~~did not have a material effect on the Company’s Consolidated Financial Statements.

Recently issued accounting pronouncements not adopted as of June 30, 2020

In December 2019, the FASB issued Accounting Standards Updated No. 2019-12, “Simplifying the Accounting for Income Taxes”, (“ASU 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions to ~~result in earlier recognition of credit losses.~~the general principles for income taxes. ASU ~~2016-13~~2019-12 will become effective for public companies during interim and annual reporting periods beginning after December 15, ~~2019,~~2020, with early adoption permitted. We are currently ~~assessing~~evaluating the ~~effects~~impact of ~~the new standard, including its impact~~adoption on our ~~Consolidated Financial Statements.~~consolidated financial statements.

Reclassifications

Certain prior year balances have been reclassified in the Consolidated ~~and Combined~~ Financial Statements to conform towith the ~~2019~~2020 presentation.

Note 2. Acquisitions and Divestitures

2020 Acquisitions

On January 6, 2020, we completed the stock acquisition of Cherry Industries, Inc. and affiliated entities (“Cherry”), a leading producer of natural and recycled aggregates in the Houston, Texas market which is included in our Construction Products Group. The purchase price of $296.8 million was funded with a combination of cash on-hand, advances under a new $150.0 million five-year term loan, and future payments to the seller for a net cash paid of $284.1 million during the six months ended June 30, 2020. See Note 7 Debt for additional information on our credit facility. Non-recurring transaction and integration costs incurred related to the Cherry acquisition were approximately $0.7 million and $1.6 million during the three and six months ended June 30, 2020, respectively, and approximately $0.5 million during the year ended December 31, 2019. The acquisition was recorded as a business combination based on preliminary valuations of the assets acquired and liabilities assumed at their acquisition date fair value using level three inputs, defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. 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 to the purchase price allocation, particularly with respect to our preliminary estimates of mineral reserves, intangibles, and deferred income taxes. The following table represents our preliminary purchase price allocation as of June 30, 2020:

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	June 30, 2020
	(in millions)
Accounts receivable	$	30.8
Inventories	11.8
Property, plant, and equipment	62.1
Mineral reserves	21.2
Goodwill	125.6
Customer relationships	60.2
Permits	24.9
Other assets	4.2
Accounts payable	(7.5)
Accrued liabilities	(5.4)
Deferred taxes	(29.3)
Other liabilities	(1.8)
Total net assets acquired	$	296.8

The goodwill acquired, none of which is tax deductible, primarily relates to Cherry's market position and existing workforce. The customer relationship intangibles and permits were assigned weighted average useful lives of 14.9 years and 19.8 years, respectively. Revenues and operating profit included in the Consolidated Statement of Operations from the date of the acquisition were approximately $44.9 million and $8.1 million, respectively, during the three months ended June 30, 2020 and approximately $88.7 million and $13.8 million, respectively, during the six months ended June 30, 2020.

The following table represents the unaudited pro-forma consolidated operating results of the Company as if the Cherry acquisition had been completed on January 1, 2019. The unaudited pro-forma information makes certain adjustments to depreciation, depletion, and amortization expense to reflect the fair value recognized in the purchase price allocation, removes one-time transaction related costs, and aligns the Company's debt financing with that as of the acquisition date. 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, 2019, nor is such unaudited pro-forma information necessarily indicative of future results.


	Six Months Ended June 30, 2020		Year Ended December 31, 2019
	(in millions)
Revenues	$	986.7	$	1,916.9
Income before income taxes	$	90.6	$	163.8

In March 2020, we completed the acquisition of certain assets and liabilities of a traffic structures business in our Energy Equipment Group for a total purchase price of $25.5 million. The acquisition was recorded as a business combination based on preliminary valuations of the assets acquired and liabilities assumed at their acquisition date fair value using level three inputs. The valuation resulted in the recognition of $10.1 million of goodwill in our Energy Equipment Group. Such assets and liabilities were not significant in relation to assets and liabilities at the consolidated or segment level.

In June 2020, we completed the acquisition of certain assets and liabilities of a concrete poles business in our Energy Equipment Group. The purchase price of the acquisition was not significant.

In July 2020, we completed the acquisition of certain assets and liabilities of a telecommunication structures business in our Energy Equipment Group for a total purchase price of $27.7 million. The acquisition will be recorded as a business combination.

2019 Acquisitions

In June 2019, we completed the acquisition of certain assets and liabilities of an inland barge components business within our Transportation Products Group. We also completed the acquisition of certain assets and liabilities of a construction aggregates business in our Construction Products Group. The total purchase price for the businesses acquired was ~~$29.8~~$27.6 million, a portion of which includes estimated royalties to be paid to the seller of the construction aggregates business over the next 10 years. The acquisitions were recorded as business combinations ~~based on preliminary valuations of~~with the assets acquired and liabilities assumed recorded at their acquisition date fair value using level three ~~inputs, defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets.~~inputs. The valuation resulted in the recognition of ~~$12.1~~$10.4 million of goodwill in our Transportation Products Group and no$1.6 million of goodwill in our Construction Products Group. Such assets and liabilities were not significant in relation to assets and liabilities at the consolidated or segment level.

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In ~~March 2018,~~August 2019, we completed ~~the acquisition~~acquisitions of certain assets and liabilities of ~~an inland barge business with~~two construction aggregates businesses in our Construction Products Group for a total purchase price ~~and net cash paid~~ of ~~$25.0~~$9.4 million. The ~~acquisition was~~acquisitions were recorded as a business ~~combination~~combinations based on preliminary valuations of the assets acquired ~~assets~~and liabilities assumed at their acquisition date fair value using level three ~~inputs, defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets.~~inputs. The valuation resulted in the recognition of ~~$9.5~~$1.1 million of goodwill in our ~~Transportation~~Construction Products Group. Such assets and liabilities were not significant in relation to assets and liabilities at the ~~combined~~consolidated or segment level.

With regard to the acquisition of ACG Materials (“ACG”) in December 2018, the purchase price allocation continues to be preliminary as of June 30, 2019. 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 to the purchase price allocation, particularly with respect to our preliminary estimates of depletable land and deferred income taxes. The following table represents our preliminary purchase price allocation as of June 30, 2019:

June 30, 2019
(in millions)
Accounts receivable $ 23.7
Inventories 12.5
Property, plant, and equipment 83.4
Depletable land 137.1
Goodwill 115.5
Other assets 5.5
Accounts payable (10.2 )
Accrued and other liabilities (14.3 )
Finance lease liability (8.3 )
Deferred income taxes (35.8 )
Total net assets acquired $ 309.1

Divestitures

There was no0 divestiture activity for the three and six months ended June 30, ~~2019~~2020 and ~~2018.~~2019.

Note 3. Fair Value Accounting

Assets and liabilities measured at fair value on a recurring basis are summarized below:


	Fair Value Measurement as of June 30, 2019									Fair Value Measurement as of June 30, 2020
	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
	(in millions)									(in millions)
Assets:									Assets:
Cash equivalents	$	50.0	$	—	$	—	$	50.0	Cash equivalents	$	87.1	$	—	$	—	$	87.1

Total assets	$	50.0	$	—	$	—	$	50.0	Total assets	$	87.1	$	—	$	—	$	87.1

Liabilities:									Liabilities:
Interest rate hedge⁽¹⁾	$	—	$	4.6	$	—	$	4.6	Interest rate hedge⁽¹⁾	$	—	$	8.6	$	—	$	8.6
Contingent consideration⁽²⁾	$	—	$	—	$	5.2	$	5.2	Contingent consideration⁽²⁾	—		—		4.2		4.2
Total liabilities	$	—	$	4.6	$	5.2	$	9.8	Total liabilities	$	—	$	8.6	$	4.2	$	12.8

	Fair Value Measurement as of December 31, 2018									Fair Value Measurement as of December 31, 2019
	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
	(in millions)									(in millions)
Assets:									Assets:
Cash equivalents	$	30.0	$	—	$	—	$	30.0	Cash equivalents	$	155.3	$	—	$	—	$	155.3

Total assets	$	30.0	$	—	$	—	$	30.0	Total assets	$	155.3	$	—	$	—	$	155.3

Liabilities:									Liabilities:
Interest rate hedge⁽¹⁾	$	—	$	1.2	$	—	$	1.2	Interest rate hedge⁽¹⁾	$	—	$	4.3	$	—	$	4.3
Contingent consideration⁽²⁾									Contingent consideration⁽²⁾	—		—		6.4		6.4
Total liabilities	$	—	$	1.2	$	—	$	1.2	Total liabilities	$	—	$	4.3	$	6.4	$	10.7

⁽¹⁾Included in other liabilities on the Consolidated Balance Sheets.

⁽²⁾Current portion included in accrued liabilities and non-current portion included in other liabilities on the Consolidated Balance Sheets.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date. An entity is required to establish a fair value hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair values are listed below:

Level 1 – This level is defined as quoted prices in active markets for identical assets or liabilities. The Company’s cash equivalents are instruments of the U.S. Treasury or highly-rated money market mutual funds.

Level 2 – This level is defined as observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Interest rate hedges are valued at exit prices obtained from each counterparty. See Note 7 Debt.

Level 3 – This level is defined as unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Contingent consideration relates to estimated future payments owed to the sellers of businesses previously acquired. We estimate the fair value of the contingent consideration using a discounted cash flow model. The fair value is sensitive to changes in the forecast of sales and changes in discount rates and is reassessed quarterly based on assumptions used in our latest projections.

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Note 4. Segment Information

The Company reports operating results in ~~three~~3 principal business segments:

Construction Products. The Construction Products segment produces and sells construction aggregates ~~including natural aggregates and specialty materials~~ and manufactures and sells ~~construction site support equipment including~~ trench shields and shoring products and services for infrastructure-related projects.

Energy Equipment. The Energy Equipment segment manufactures and sells products for energy-related businesses, including structural wind towers, steel utility structures for electricity transmission and distribution, traffic structures, telecommunication structures, and storage and distribution tanks.

Transportation Products. The Transportation Products segment manufactures and sells products for the inland waterway and rail transportation industries including barges, ~~and~~ barge-related products, axles, and ~~steel components for railcars and other transportation and industrial equipment.~~couplers.

The financial information for these segments is shown in the tables below. We operate principally in North America.


	Three Months Ended June 30,
	Revenues						Operating Profit (Loss)
	2020		2019		2020		2019
	(in millions)
Construction aggregates	$	132.1	$	93.2
Other	16.1		22.4
Construction Products Group	148.2		115.6		$	24.3	$	17.5

Wind towers and utility structures	176.9		151.0
Other	45.9		53.3
Energy Equipment Group	222.8		204.3		20.9		25.0

Inland barges	107.0		66.1
Steel components	21.2		49.2
Transportation Products Group	128.2		115.3		15.9		12.6



Segment Totals before Eliminations and Corporate	499.2		435.2		61.1		55.1
Corporate	—		—		(13.3)		(12.8)
Eliminations	(0.7)		(1.1)		—		—
Consolidated Total	$	498.5	$	434.1	$	47.8	$	42.3

	Six Months Ended June 30,
	Revenues						Operating Profit (Loss)
	2020		2019		2020		2019
	(in millions)
Construction aggregates	$	264.2	$	181.6
Other	33.4		40.0
Construction Products Group	297.6		221.6		$	41.1	$	28.8

Wind towers and utility structures	353.3		309.6
Other	92.7		103.8
Energy Equipment Group	446.0		413.4		45.8		53.2

Inland barges	196.0		115.5
Steel components	49.2		97.3
Transportation Products Group	245.2		212.8		30.2		20.9



Segment Totals before Eliminations and Corporate	988.8		847.8		117.1		102.9
Corporate	—		—		(24.2)		(23.3)
Eliminations	(2.1)		(2.8)		—		—
Consolidated Total	$	986.7	$	845.0	$	92.9	$	79.6

Three Months Ended June 30,
Revenues Operating Profit (Loss)
2019 2018 2019 2018
(in millions)
Construction aggregates $ 93.2
$ 61.1

Other 22.4
22.8

Construction Products Group 115.6
83.9
$ 17.5
$ 17.6

Wind towers and utility structures 151.0
133.0

Other 53.3
45.4

Energy Equipment Group 204.3
178.4
25.0
8.2

Inland barges 66.1
42.9

Steel components 49.2
48.6

Transportation Products Group 115.3
91.5
12.6
12.7

Segment Totals before Eliminations and Corporate 435.2
353.8
55.1
38.5
Corporate —
—
(12.8 ) (7.9 )
Eliminations (1.1 ) (0.8 ) —
—
Consolidated and Combined Total $ 434.1
$ 353.0
$ 42.3
$ 30.6

Six Months Ended June 30,
Revenues Operating Profit (Loss)
2019 2018 2019 2018
(in millions)
Construction aggregates $ 181.6
$ 113.7

Other 40.0
40.4

Construction Products Group 221.6
154.1
$ 28.8
$ 30.0

Wind towers and utility structures 309.6
280.5

Other 103.8
94.2

Energy Equipment Group 413.4
374.7
53.2
25.7

Inland barges 115.5
73.7

Steel components 97.3
107.1

Transportation Products Group 212.8
180.8
20.9
21.7

Segment Totals before Eliminations and Corporate 847.8
709.6
102.9
77.4
Corporate —
—
(23.3 ) (15.6 )
Eliminations (2.8 ) (2.2 ) —
—
Consolidated and Combined Total $ 845.0
$ 707.4
$ 79.6
$ 61.8

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Note 5. Property, Plant, and Equipment

The following table summarizes the components of property, plant, and equipment as of June 30, ~~2019~~2020 and December 31, ~~2018.~~

2019.


	June 30, 2019			December 31, 2018				June 30, 2020		December 31, 2019
	(in millions)							(in millions)
Land⁽¹⁾	$	332.5		$	316.5		Land⁽¹⁾	$	369.4	$	331.4
Buildings and improvements	273.6			267.5			Buildings and improvements	299.0		280.5
Machinery and other	736.4			715.9			Machinery and other	822.7		755.7
Construction in progress	34.7			28.8			Construction in progress	35.9		38.6
	1,377.2			1,328.7				1,527.0		1,406.2
Less accumulated depreciation and depletion	(562.9		)	(525.7		)	Less accumulated depreciation and depletion	(634.3)		(590.0)
	$	814.3		$	803.0			$	892.7	$	816.2

⁽¹⁾ Includes depletable land of ~~$209.3~~$231.7 million as of June 30, ~~2019~~2020 and ~~$201.9~~$211.0 million as of December 31, ~~2018.~~2019.

Note 6. Goodwill

Goodwill by segment is as follows:


						June 30, 2020		December 31, 2019
	June 30, 2019		December 31, 2018
	(in millions)					(in millions)
Construction Products Group	$	175.8	$	171.7	Construction Products Group	$	293.9	$	166.2
Energy Equipment Group	416.9		416.9		Energy Equipment Group	427.1		416.9
Transportation Products Group	38.7		26.6		Transportation Products Group	37.0		38.8
	$	631.4	$	615.2		$	758.0	$	621.9

The increase in the Construction Products Group goodwill during the six months ended June 30, ~~2019~~2020 is primarily due to the acquisition of Cherry. The increase in the Energy Equipment Group goodwill during the six months ended June 30, 2020 is due to recently completed acquisitions. The decrease in Transportation Products Group is due to a refinement of the purchase price allocation ~~for ACG. The increase in the Transportation Products Group goodwill during the six months ended June 30, 2019 is due to an~~of a recent acquisition. See Note 2 Acquisitions and Divestitures.

Note 7. Debt

The following table summarizes the components of debt as of June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:


	June 30, 2020		December 31, 2019
	(in millions)
Revolving credit facility	$	100.0	$	100.0
Term loan	150.0		—
Finance leases	6.9		7.3
	256.9		107.3
Less: unamortized debt issuance costs	(0.3)		—
Total debt	$	256.6	$	107.3

June 30, 2019 December 31,
2018
(in millions)
Revolving credit facility $ 100.0
$ 180.0
Finance leases 7.8
5.5
Total debt $ 107.8
$ 185.5

On November 1, 2018, the Company entered into a $400.0 million unsecured revolving credit facility that ~~matures~~was scheduled to mature in November 2023. On January 2, 2020, the Company entered into an Amended and Restated Credit Agreement to increase the revolving credit facility to $500.0 million and added a term loan facility of $150.0 million, in each case with a maturity date of January 2, 2025.

The interest rates under the revolving credit facility and term loan are variable based on LIBOR or an alternate base rate plus a margin. A commitment fee accrues on the average daily unused portion of the revolving facility. The margin ~~that is~~for borrowing and commitment fee rate are determined based on Arcosa’s leverage as measured by a consolidated total indebtedness to consolidated EBITDA ~~ratio, which is currently~~ratio. The margin for borrowing ranges from 1.25% to 2.00% and was set at LIBOR plus ~~1.25%. A~~1.50% as of June 30, 2020. The commitment fee ~~accrues on~~rate ranges from 0.20% to 0.35% and was set at 0.25% as of June 30, 2020.

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In March 2020, as a precautionary measure, the ~~average daily unused portion of the~~Company borrowed $100.0 million under its revolving credit facility atto increase our cash position and preserve financial flexibility considering the ~~current rate of 0.20%~~uncertainty resulting from the COVID-19 pandemic. The Company subsequently repaid the $100.0 million during the three months ended June 30, 2020.

As of June 30, ~~2019,~~2020, we had $100.0 million of outstanding loans borrowed under the facility, and ~~$46.2~~there were approximately $26.0 million of letters of credit issued, ~~under the facility,~~ leaving ~~$253.8~~$374.0 million available. Of the outstanding letters of credit as of June 30, ~~2019, $29.1~~2020, $25.4 million are expected to expire in ~~2019,~~2020, with the remainder in ~~2020.~~2021. The majority of our ~~letter~~letters of credit obligations support the Company’s various insurance programs and warranty claims and generally renew by their terms each year.

The entire term loan was advanced on January 2, 2020 in connection with the closing of the acquisition of Cherry. See Note 2 Acquisitions and Divestitures.

The Company's revolving credit ~~facility requires~~and term loan facilities require the maintenance of certain ratios related to leverage and interest coverage. As of June 30, ~~2019,~~2020, we were in compliance with all such financial covenants. Borrowings under the credit ~~facility~~agreement are guaranteed by certain wholly-owned subsidiaries of the Company.

The carrying value of borrowings under our revolving credit ~~facility approximates~~and term loan facilities approximate fair value because the interest rate adjusts to the market interest rate (Level 3 input). See Note 3 Fair Value Accounting.

As of June 30, ~~2019,~~2020, the Company had ~~$1.3~~$1.9 million of unamortized debt issuance costs related to the revolving credit facility, which are included in other assets on the Consolidated Balance Sheet.

The remaining principal payments under ~~our revolving credit facility~~existing debt agreements as of June 30, ~~2019~~2020 are as follows:

2019 2020 2021 2022 2023 Thereafter
(in millions)
Revolving credit facility $ —
$ —
$ —
$ —
$ 100.0
$ —


	2020		2021		2022		2023		2024		Thereafter
	(in millions)
Revolving credit facility	$	—	$	—	$	—	$	—	$	—	$	100.0
Term loan	0.9		4.7		7.5		8.5		8.4		120.0

Interest rate hedges

In December 2018, the Company entered into an interest rate swap instrument, effective as of January 2, 2019 and expiring in 2023, to reduce the effect of changes in the variable interest rates associated with borrowings under the revolving credit facility. The instrument carried an initial notional amount of ~~$100.0~~$100 million, thereby hedging the first ~~$100.0~~$100 million of borrowings under the credit facility. The instrument effectively fixes the LIBOR component of the credit facility borrowings at a monthly rate of 2.71%. As of June 30, ~~2019,~~2020, the Company has recorded a liability of ~~$4.6~~$8.6 million for the fair value of the instrument, all of which is recorded in accumulated other comprehensive loss. See Note 3 Fair Value Accounting.

Note 8. Leases

We have various leases primarily for office space and certain equipment. At inception, we determine if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. For leases that contain options to purchase, terminate, or extend, such options are included in the lease term when it is reasonably certain that the option will be exercised. Some of ~~the Company's~~our lease arrangements contain lease components and non-lease components which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at commencement date in determining the present value of lease payments.

Operating Leases

The following table presents information about the ~~amount, timing, and uncertainty of cash flows arising from the~~ Company's operating leases as of June 30, ~~2019.~~2020.


	June 30, 2020
	(in millions)
Maturity of Lease Liabilities
2020 (remaining)	$	3.1
2021	4.2
2022	2.8
2023	2.1
2024	1.8
Thereafter	7.3
Total undiscounted operating lease payments	21.3
Less imputed interest	(3.3)
Present value of operating lease liabilities	$	18.0

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June 30, 2019
(in millions)
Maturity of Lease Liabilities
2019 (remaining) $ 3.7
2020 6.1
2021 3.8
2022 2.4
2023 1.9
Thereafter 7.6
Total undiscounted operating lease payments 25.5
Less imputed interest (3.7 )
Present value of operating lease liabilities $ 21.8

Balance Sheet Classification
Other assets $ 18.4

Accrued liabilities $ 6.1
Other liabilities 15.7
Total operating lease liabilities $ 21.8

Other Information
Weighted average remaining lease term 5.8 years
Weighted average discount rate 4.8 %

Operating lease costs were $2.0 million and $4.0 million during the three and six months ended June 30, 2019, respectively. Costs related to variable lease rates or leases with terms less than twelve months were not significant.


Balance Sheet Classification	June 30, 2020		December 31, 2019
	(in millions)
Other assets	$	14.5	$	15.6

Accrued liabilities	$	4.7	$	5.5
Other liabilities	13.3		13.5
Total operating lease liabilities	$	18.0	$	19.0

Cash paid for amounts included in the measurement of operating lease liabilities was $1.8 million and $3.8 million during the three and six months ended June 30, 2019, respectively, and is included in operating cash flows. The additional right-of-use assets recognized as non-cash asset additions that resulted from new operating lease liabilities during the three and six months ended June 30, 2019 were not significant.

Finance Leases

Finance leases are included in property, plant, and equipment, net and debt on the consolidated balance sheets. The associated amortization expense and interest expense are included in depreciation and interest expense, respectively, on the consolidated income statements. These leases are not material to the consolidated financial statements as of June 30, ~~2019.~~2020.

Note 9. Other, Net

Other, net (income) expense consists of the following items:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
	(in millions)
Interest income	$	(0.1)	$	(0.4)	$	(0.3)	$	(0.7)
Foreign currency exchange transactions	0.2		0.5		0.2		1.0
Other	(0.2)		(0.2)		(0.2)		(0.6)
Other, net (income) expense	$	(0.1)	$	(0.1)	$	(0.3)	$	(0.3)

Three Months Ended
June 30, Six Months Ended
June 30,
2019 2018 2019 2018
(in millions)
Interest income $ (0.4 ) $ —
$ (0.7 ) $ —
Foreign currency exchange transactions 0.5
1.2
1.0
2.2
Other (0.2 ) —
(0.6 ) —
Other, net (income) expense $ (0.1 ) $ 1.2
$ (0.3 ) $ 2.2

Note 10. Income Taxes

For interim income tax reporting, we estimate our annual effective tax rate and apply it to our year to date ordinary income (loss). Tax jurisdictions with a projected or year to date loss for which a tax benefit cannot be realized are excluded. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur. We have open tax years from ~~2013~~2014 to ~~2018~~2019 with various significant tax jurisdictions.

For the three and six months ended June 30, 2020, the effective tax rate of 26.2% and 25.5%, respectively, was higher than the U.S. federal statutory rate of 21.0% due primarily to state taxes, tax effects of foreign currency translation, and nondeductible compensation expenses in the U.S. and Mexico. For the three and six months ended June 30, 2019, the effective tax rate of 22.1% and 22.1%, respectively, was higher than the U.S. federal statutory tax rate of 21.0% due primarily to state taxes partially offset by foreign tax benefits and excess tax benefits related to equity compensation. ~~For~~

In response to the ~~three and six months ended June 30, 2018, the effective tax rate of 23.1% and 24.8%, respectively, was higher than~~COVID-19 pandemic, on March 27, 2020 the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which includes certain tax relief and benefits that may impact the Company. In light of the recent nature of these developments, the Company is currently evaluating the impact of the various provisions of the CARES Act on its income tax provision. Approximately $15 million of federal ~~statutory~~and state income tax ~~rate~~payments were deferred from the first half of ~~21.0% due primarily to~~the year into July 2020, following passage of the CARES Act and similar state ~~taxes and foreign taxes partially offset by excess tax benefits related to equity compensation.~~provisions.

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Note 11. Employee Retirement Plans

Total employee retirement plan expense, which includes related administrative expenses, was $2.6 million and $5.3 million for the three and six months ended June 30, 2019, respectively. Total employee retirement plan expense was $2.6 million and $5.1 million for the three and six months ended June 30, 2018, respectively. Prior to the Separation, these costs were funded through intercompany transactions with Trinity.is as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
	(in millions)
Defined contribution plans	$	2.7	$	2.2	$	5.3	$	4.4
Multiemployer plan	0.5		0.4		0.9		0.9
	$	3.2	$	2.6	$	6.2	$	5.3

The Company ~~participates in~~contributes to a multiemployer defined benefit plan under the terms of a collective-bargaining agreement that covers certain union-represented ~~employees.~~employees at one of the facilities of Meyer Utility Structures, LLC, a subsidiary of Arcosa. The Company contributed $0.4 million and $0.8 million to the multiemployer plan for the three and six months ended June 30, 2020, respectively. The Company contributed $0.4 million and $0.9 million to the multiemployer plan for the three and six months ended June 30, 2019, respectively. ~~The Company contributed $0.5 million and $1.1 million to the multiemployer plan for the three and six months ended June 30, 2018, respectively.~~ Total contributions to the multiemployer plan for ~~2019~~2020 are expected to be approximately ~~$1.9~~$1.7 million.

In connection with the acquisition of ACG Materials in December 2018, the Company assumed the assets and liabilities related to a defined benefit pension plan. Employer contributions under this plan for ~~2019~~2020 are not expected to be significant.

Note 12. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss for the six months ended June 30, ~~2019~~2020 and ~~2018~~2019 are as follows:


	Currency translation adjustments		Unrealized loss on derivative financial instruments		Accumulated Other Comprehensive Loss
	(in millions)
Balances at December 31, 2018	$	(16.8)	$	(0.9)	$	(17.7)
Other comprehensive income (loss), net of tax, before reclassifications	0.4		(2.8)		(2.4)
Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, $0.0, and $0.0	—		0.1		0.1
Other comprehensive income (loss)	0.4		(2.7)		(2.3)
Balances at June 30, 2019	$	(16.4)	$	(3.6)	$	(20.0)

Balances at December 31, 2019	$	(16.3)	$	(3.4)	$	(19.7)
Other comprehensive income (loss), net of tax, before reclassifications	(0.7)		(3.9)		(4.6)
Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, ($0.2) and ($0.2)	—		0.6		0.6
Other comprehensive income (loss)	(0.7)		(3.3)		(4.0)
Balances at June 30, 2020	$	(17.0)	$	(6.7)	$	(23.7)

Currency
translation
adjustments

Unrealized
loss on
derivative
financial
instruments
Accumulated
Other
Comprehensive
Loss
(in millions)
Balances at December 31, 2017 $ (19.8 ) $ —
$ (19.8 )
Other comprehensive income (loss), net of tax, before reclassifications 0.5
—
0.5
Amounts reclassified from accumulated other comprehensive loss, net of tax benefit of $0.0, $0.0, and $0.0 —
—
—
Other comprehensive income (loss) 0.5
—
0.5
Balances at June 30, 2018 $ (19.3 ) $ —
$ (19.3 )

Balances at December 31, 2018 $ (16.8 ) $ (0.9 ) $ (17.7 )
Other comprehensive income (loss), net of tax, before reclassifications 0.4
(2.8 ) (2.4 )
Amounts reclassified from accumulated other comprehensive loss, net of tax benefit of $0.0, $0.0 and $0.0 —
0.1
0.1
Other comprehensive income (loss) 0.4
(2.7 ) (2.3 )
Balances at June 30, 2019 $ (16.4 ) $ (3.6 ) $ (20.0 )

Note 13. Stock-Based Compensation

Stock-based compensation totaled approximately $5.1 million and $8.8 million for the three and six months ended June 30, 2020, respectively. Stock-based compensation totaled approximately $3.7 million and $7.1 million for the three and six months ended June 30, 2019, respectively. ~~Stock-based compensation totaled approximately $2.6 million and $4.8 million for the three and six months ended June 30, 2018, respectively.~~

~~For periods prior to the Separation, Arcosa's Combined Financial Statements reflect compensation expense for stock-based plans associated with the portion~~

Table of ~~the Former Parent's equity incentive plans in which Arcosa employees participated.~~Contents

Note 14. Earnings Per Common Share

Basic earnings per common share is computed by dividing net income remaining after allocation to unvested restricted shares, which includes unvested restricted shares of Arcosa stock held by employees of the Former Parent, by the weighted average number of basic common shares outstanding for the period. Except when the effect would be antidilutive, the calculation of diluted earnings per common share includes the weighted average net impact of nonparticipating unvested restricted shares. ~~For periods prior to the Separation, the denominator for basic and diluted net income per share was calculated using the 48.8~~Total weighted average restricted shares were 1.6 million shares ~~of common stock outstanding immediately following~~for the ~~Separation.~~three and six months ended June 30, 2020, respectively. Total weighted average restricted shares were 1.7 million shares for the three and six months ended June 30, 2019, respectively. ~~There were no weighted average restricted shares prior to the Separation.~~

The computation of basic and diluted earnings per share follows.


	Three Months Ended June 30, 2020								Three Months Ended June 30, 2019
	Income (Loss)		Average Shares	EPS		Income (Loss)		Average Shares	EPS
	(in millions, except per share amounts)
Net income	$	33.3				$	31.8
Unvested restricted share participation	(0.3)					(0.3)
Net income per common share – basic	33.0		47.9	$	0.69	31.5		47.8	$	0.66
Effect of dilutive securities:
Nonparticipating unvested restricted shares	—		0.5			—		0.5
Net income per common share – diluted	$	33.0	48.4	$	0.68	$	31.5	48.3	$	0.65

	Six Months Ended June 30, 2020								Six Months Ended June 30, 2019
	Income (Loss)		Average Shares	EPS		Income (Loss)		Average Shares	EPS
	(in millions, except per share amounts)
Net income	$	64.9				$	59.5
Unvested restricted share participation	(0.5)					(0.7)
Net income per common share – basic	64.4		47.9	$	1.34	58.8		47.9	$	1.23
Effect of dilutive securities:
Nonparticipating unvested restricted shares	—		0.5			—		0.5
Net income per common share – diluted	$	64.4	48.4	$	1.33	$	58.8	48.4	$	1.21

Three Months Ended
June 30, 2019 Three Months Ended
June 30, 2018
Income
(Loss) Average
Shares EPS Income
(Loss) Average
Shares EPS
(in millions, except per share amounts)
Net income $ 31.8
$ 22.6

Unvested restricted share participation (0.3 ) —

Net income – basic 31.5
47.8
$ 0.66
22.6
48.8
$ 0.46
Effect of dilutive securities:
Nonparticipating unvested restricted shares —
0.5
—
—

Net income – diluted $ 31.5
48.3
$ 0.65
$ 22.6
48.8
$ 0.46

Six Months Ended
June 30, 2019 Six Months Ended
June 30, 2018
Income
(Loss) Average
Shares EPS Income
(Loss) Average
Shares EPS
(in millions, except per share amounts)
Net income $ 59.5
$ 44.8

Unvested restricted share participation (0.7 ) —

Net income – basic 58.8
47.9
$ 1.23
44.8
48.8
$ 0.92
Effect of dilutive securities:
Nonparticipating unvested restricted shares —
0.5
—
—

Net income – diluted $ 58.8
48.4
$ 1.21
$ 44.8
48.8
$ 0.92

Note 15. Contingencies

The Company is involved in claims and lawsuits incidental to our business arising from various matters including commercial disputes, alleged product defect and/or warranty claims, intellectual property matters, personal injury claims, environmental issues, employment and/or workplace-related matters, and various governmental regulations. ~~The Company evaluates its exposure to such claims and suits periodically and establishes accruals for these contingencies when a range of loss can be reasonably estimated. The~~At June 30, 2020, the range of reasonably possible losses for such matters, taking into consideration our rights in indemnity and recourse to third parties is ~~$1.2~~$0.8 million to ~~$10.8~~$1.6 million.

The Company evaluates its exposure to such claims and suits periodically and establishes accruals for these contingencies when probable losses can be reasonably estimated. At June 30, ~~2019,~~2020, total accruals of ~~$4.8~~$2.5 million, including environmental matters described below, are included in accrued liabilities in the accompanying Consolidated Balance Sheet. The Company believes any additional liability from such claims and suits would not be material to its financial position or results of operations.

Arcosa is subject to remedial orders and federal, state, local, and foreign laws and regulations relating to the environment. The Company has reserved ~~$1.0~~$1.3 million as of June 30, ~~2019,~~2020, included in our total accruals of ~~$4.8~~$2.5 million discussed above, to cover our probable and estimable liabilities with respect to the investigations, assessments, and remedial responses to such matters, taking into account currently available information and our contractual rights to indemnification and recourse to third parties. ~~However, estimates~~

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On July 22, 2019, the Company was served with a breach of contract lawsuit filed by Thomas & Betts Corporation (“T&B”) against the Company and its wholly-owned subsidiary, Trinity Meyer Utility Structures, LLC, now known as Meyer Utility Structures, LLC (“Meyer”), in the Supreme Court of the State of New York, New York County. T&B’s claims relate to responsibility for alleged product warranty claims pursuant to the terms of the Asset Purchase Agreement, dated June 24, 2014, entered into by and between T&B and Meyer with respect to Meyer’s purchase of certain assets of T&B’s utility structure business. The Company and Meyer subsequently removed the litigation to federal court. The case is currently pending under Case No. 1:19-cv-07829-PAE; Thomas & Betts Corporation, now known as, ABB Installation Products, Inc., Plaintiff, v. Trinity Meyer Utility Structures, LLC, formerly known as McKinley 2014 Acquisition, LLC, and Arcosa, Inc., Defendants; In the United States District Court for the Southern District of New York. The Company and Meyer have filed a motion to dismiss T&B’s claims, and an Answer and Counterclaims against T&B. We intend to vigorously defend ourselves in this matter. Based on the facts and circumstances currently known to the Company, (i) we cannot determine that a loss is probable at this time, and therefore no accrual has been included in the accompanying consolidated financial statements; and (ii) a possible loss is not reasonably estimable.

Estimates of liability arising from future proceedings, assessments, or remediation are inherently imprecise. Accordingly, there can be no assurance that we will not become involved in future litigation or other proceedings involving the environment or, if we are found to be responsible or liable in any such litigation or proceeding, that such costs would not be material to the Company.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide ~~management's~~a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A is presented in the following sections:

•~~Separation from Trinity~~Company Overview

•~~Basis~~Potential Impact of ~~Historical Presentation~~COVID-19 On Our Business

•Executive ~~Summary~~Overview

•Results of Operations

•Liquidity and Capital Resources

•Recent Accounting Pronouncements

•Forward-Looking Statements

Our MD&A should be read in conjunction with the Consolidated ~~and Combined~~ Financial Statements of Arcosa, Inc. and subsidiaries (“Arcosa,” “Company,” “we,” and “our”) and related Notes in Part I, Item 1 of this Quarterly Report on Form 10-Q and the Consolidated and Combined Financial Statements and related Notes in Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 (“~~2018~~2019 Annual Report on Form 10-K”).

~~Separation from Trinity~~

Company Overview

Arcosa, headquartered in Dallas, Texas, is a provider of infrastructure-related products and solutions with leading brands serving construction, energy, and transportation markets in North America. Arcosa is a Delaware corporation and was incorporated in 2018 in connection with the separation of Arcosa from Trinity Industries, Inc. (“Trinity” or “Former Parent”) on November 1, 2018 as an independent, publicly-traded company, listed on the New York Stock Exchange (the “Separation”). At

Potential Impact of COVID-19 On Our Business

Our highest priority is the ~~time~~health and safety of ~~the Separation, Arcosa consisted of certain of Trinity’s former construction products, energy equipment,~~our employees and ~~transportation products businesses. The Separation was effectuated through a pro rata dividend distribution on November 1, 2018 of all of the then-outstanding shares of common stock of Arcosa~~communities. Our businesses support critical infrastructure sectors, pursuant to the ~~holders~~Department of ~~common stock of Trinity as of October 17, 2018,~~Homeland Security’s Cybersecurity and Infrastructure Security Agency standards.Our plants have continued to operate throughout the ~~record date for the distribution. Trinity stockholders received one share of Arcosa common stock for every three shares of Trinity common stock held~~COVID-19 crisis. However, as of the ~~record date.~~date of this filing, uncertainty exists concerning the potential magnitude of the impact and duration of the COVID-19 pandemic. The ~~transaction was structured~~following possible events related to the COVID-19 pandemic may potentially adversely impact our business, financial condition, or results of operations: customer demand for our products and services may decrease; reductions in our customers' capex spending; our supply chain may have disruption preventing us from obtaining the necessary materials and equipment to manufacture our products and provide services; our employees’ ability to continue to work may be ~~tax-free~~impacted because of COVID-19 related illness or local, state, or federal orders requiring them to ~~both Trinity~~stay at home; the effect of governmental regulations imposed in response to the COVID-19 pandemic may result in shutdowns of our operations; limitations on the ability of our customers to conduct their business and ~~Arcosa stockholders~~purchase our products and services; disruptions to our customers’ supply chains or purchasing patterns; and limitations on the ability of our customers to pay us on a timely basis.

We believe that, based on the various standards published to date, our employees are part of the Essential Critical Infrastructure Workforce, and the work they perform is critical, essential, and life-sustaining. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders.

In addition to the extensive health and safety protocols already in place across our plants, we estimate that we incurred $1.5-2.0 million of incremental costs related to COVID-19 during the six months ended June 30, 2020 for ~~U.S. federal income tax purposes.~~

~~Basis~~personal protective equipment, health screenings, deep cleaning services, and facilities re-configurations. We do not anticipate that the enhanced health and safety protocols will have a material impact on the productivity of ~~Historical Presentation~~our plants.

The ~~accompanying Consolidated and Combined Financial Statements present our historical financial position, results~~preparation of ~~operations, comprehensive income/loss, and cash flows in accordance with accounting principles generally accepted in~~ the ~~U.S. (“GAAP”). The combined financial statements for periods prior to the Separation were derived from Trinity’s~~Company's consolidated financial statements requires management to make estimates and ~~accounting records~~assumptions that affect the reported amounts of assets and ~~prepared in accordance with GAAP for the preparation~~liabilities and disclosure of ~~carved-out combined financial statements. Through~~contingent assets and liabilities at the date of the ~~Separation, all revenues and costs~~financial statements as well as the reported amounts of revenues and expenses during the reporting period. At this time, we have not observed any material impairments of our assets or a significant change in the fair value of assets due to the COVID-19 pandemic. However, due to the factors discussed above, we are unable to determine or predict the overall impact the COVID-19 pandemic will have on our business, results of operations, liquidity or capital resources.

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Market Outlook

•Within our Construction Products Group, we experienced better than anticipated construction demand in the second quarter following the outbreak of the COVID-19 pandemic as construction activity in Texas remained resilient and ~~liabilities directly~~other states reopened for business.However, we did experience a softening of demand for our shoring products that continued throughout the second quarter.The outlook for public and private construction demand remains uncertain as the path to sustained economic recovery is unclear, and the associated impacts on states’ fiscal health and budgetary constraints, unemployment, and consumer confidence are difficult to measure.

•Within our Energy Equipment Group, our backlog as of June 30, 2020 provides strong production visibility for 2020 and our customers remain committed to taking delivery of these orders. In utility structures, order and inquiry activity continues to be robust, as customers remain focused on grid hardening and reliability initiatives. We continue to work with ~~Arcosa~~wind tower customers on new orders, and the one-year extension of the Production Tax Credit ("PTC") enacted in May 2020 provides our customers an additional year to complete qualifying renewable energy projects that must otherwise have been ~~included~~placed in service in 2020 or 2021. Order and inquiry activity in the ~~combined financial statements. Prior~~storage tank business has slowed since the beginning of the COVID-19 crisis, as certain customers have begun to defer new tank installations.

•Within our Transportation Products Group, our backlog for inland barges as of June 30, 2020 provides strong production visibility for 2020 and our customers remain committed to taking delivery of these orders. As anticipated, barge order and inquiry levels during the ~~Separation,~~second quarter were below the ~~combined financial statements also included allocations of certain selling, engineering,~~last several quarters, as barge utilization declined from the COVID-19 related economic slowdown.The underlying fundamentals for a dry barge replacement cycle remains in place, and ~~administrative expenses provided by Trinity to Arcosa~~we experienced an increase in order inquiry activity in July 2020 but at levels below pre-pandemic. Lower demand for refined products including gasoline and ~~allocations of related assets, liabilities,~~jet fuel, low oil prices, and the ~~Former Parent’s net investment, as applicable. The allocations were determined on a reasonable basis; however,~~uncertain macro-environment have negatively impacted order inquiries for liquid barges. We will continue to evaluate our footprint and capacity to improve our flexibility and allow time for the ~~amounts are not necessarily representative~~fundamentals of the ~~amounts that would have been reflected~~barge business to overcome short-term, COVID-related weakness in the ~~financial statements had the Company been an entity that operated independently of Trinity during the applicable periods. Related party allocations prior to the Separation, including the method~~market. Demand for such allocation, are described further in Note 1, “Overview and Summary of Significant Accounting Policies” to the Consolidated and Combined Financial Statements. Following the Separation, the consolidated financial statements include the accounts of Arcosa and those of our wholly-owned subsidiaries and no longer include any allocations from Trinity.

~~Trinity~~steel components continues to ~~provide some general and administrative functions on a transitional basis~~decline as the outlook for ~~a fee following~~ the ~~Separation.~~North American rail transportation market, which was softening pre-COVID-19, remains uncertain.

Executive ~~Summary~~ Overview

Financial Operations and ~~Operational~~ Highlights

~~The Company's revenues~~•Revenues for the three and six months ended June 30, ~~2019~~2020 increased ~~23.0%~~14.8% and ~~19.5%~~16.8% to ~~$434.1~~$498.5 million and ~~$845.0~~$986.7 million, respectively, compared to the same periods in ~~2018.~~ 2019, primarily due to the impact of the Cherry acquisition in our Construction Products Group, higher hopper and tank barge deliveries in our Transportation Products Group, and higher unit volumes in our Energy Equipment Group.

•Operating profit for the three and six months ended June 30, ~~2019~~2020 totaled ~~$42.3~~$47.8 million and ~~$79.6~~$92.9 million, respectively, representing an increase of ~~38.2%~~$5.5 million and ~~28.8%,~~$13.3 million, respectively, from the same periods in ~~2018. Revenues~~2019, primarily driven by the impact of the Cherry acquisition in our Construction Products Group ~~increased for the three~~ and six months ended June 30, 2019 compared to the same periods last year primarily due to increased volumes from the December 2018 acquisition of ACG Materials (“ACG”), partially offset by weather-driven volume declineshigher hopper and tank barge deliveries in our legacy businesses. Operating profit for the group decreased primarily due to the decrease in revenues in the legacy businesses. The Energy Equipment Group recorded higher revenues and operating profit for the three and six months ended June 30, 2019 primarily due to higher unit volume in its wind towers and higher pricing levels in its utility structures business partially offset by the loss of revenues from businesses divested in 2018. Revenues from the Transportation Products Group increased for the three and six months ended June 30, 2019 when compared to the same periods last year primarily resulting from higher barge deliveries. Operating profit for the group decreased slightly during the same periods partially due to start-up costs incurred related to the re-opening of a previously idled barge facility.Group.

•Selling, ~~engineering,~~general, and administrative expenses increased by ~~17.0%~~16.9% and ~~12.9%~~21.6%, respectively, for the three and six months ended June 30, ~~2019~~2020 when compared to the prior year periods largely due to additional costs from the acquired ~~ACG~~Cherry business.

~~The Company's effective tax rate~~ As a percentage of revenue, selling, general, and administrative expenses increased slightly to 10.8% and 10.7% for ~~each of~~ the three and six months ended June 30, ~~2019 was 22.1%,~~2020, respectively, compared to ~~23.1%~~10.6% and ~~24.8%~~10.3%, respectively, for the same periods in ~~2018.~~ 2019.

•The ~~decrease~~effective tax rate for the three and six months ended June 30, 2020 was 26.2% and 25.5%, respectively, compared to 22.1% and 22.1% for the same periods in 2019. The increase in the tax rate for the three and six months ended June 30, ~~2019~~2020 is primarily due to increased state taxes, tax effects of foreign ~~tax benefits as well as increased valuation allowances~~currency translation, and nondeductible compensation expenses in the ~~prior periods that are not included~~U.S. and Mexico in the current ~~periods.~~period. See Note 10 ~~“Income Taxes”~~Income Taxes of the Consolidated ~~and Combined~~ Financial Statements.

•Net income for the three and six months ended June 30, ~~2019~~2020 was $33.3 million and $64.9 million, respectively, compared to $31.8 million and $59.5 ~~million, respectively, compared with $22.6 million and $44.8~~ million, respectively, for the same periods in ~~2018.~~2019.

Our Energy Equipment and Transportation Products Groups operate in cyclical industries. Additionally, results in our Construction Products Group are affected by weather and seasonal fluctuations with the second and third quarters historically being the quarters with the highest revenues.

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Unsatisfied Performance Obligations (Backlog)

As of June 30, ~~2019~~2020 and ~~2018~~2019 our unsatisfied performance obligations, or backlog, were as follows:


	June 30, 2019		June 30, 2018			June 30, 2020		June 30, 2019
	(in millions)					(in millions)
Energy Equipment Group:					Energy Equipment Group:
Wind towers and utility structures	$	517.6	$	780.1	Wind towers and utility structures	$	352.2	$	517.6
Other	45.3		53.2		Other	15.5		45.3

Transportation Products Group:					Transportation Products Group:
Inland barges	$	349.7	$	198.4	Inland barges	$	258.7	$	349.7

Approximately ~~52%~~74% of unsatisfied performance obligations for our wind towers and utility structures in our Energy Equipment Group are expected to be delivered during ~~the year ending December 31, 2019,~~2020, with substantially all of the remainder expected to be delivered ~~in 2020. Approximately 80%~~during 2021. All of the unsatisfied performance obligations for our other business lines in our Energy Equipment Group are expected to be delivered during ~~the year ending December 31, 2019, with the remainder expected to be delivered in~~ 2020. Approximately ~~54%~~73% of unsatisfied performance obligations for inland barges in our Transportation Products Group are expected to be delivered during ~~the year ending December 31, 2019~~2020, with the remainder expected to be delivered in ~~2020.~~2021.

Results of Operations

Overall Summary

Revenues


	Three Months Ended June 30,											Six Months Ended June 30,
	2020		2019		Percent Change		2020		2019			Percent Change
	(in millions)										(in millions)
Construction Products Group	$	148.2	$	115.6	28.2	%	$	297.6	$	221.6			34.3	%
Energy Equipment Group	222.8		204.3		9.1		446.0		413.4			7.9
Transportation Products Group	128.2		115.3		11.2		245.2		212.8			15.2

Segment Totals before Eliminations	499.2		435.2		14.7		988.8		847.8			16.6
Eliminations	(0.7)		(1.1)				(2.1)		(2.8)
Consolidated Total	$	498.5	$	434.1	14.8		$	986.7	$	845.0		16.8

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 Percent Change 2019 2018 Percent Change
(in millions) (in millions)
Construction Products Group $ 115.6
$ 83.9
37.8 % $ 221.6
$ 154.1
43.8 %
Energy Equipment Group 204.3
178.4
14.5
413.4
374.7
10.3
Transportation Products Group 115.3
91.5
26.0
212.8
180.8
17.7
Segment Totals before Eliminations and Corporate Expenses 435.2
353.8
23.0
847.8
709.6
19.5
Eliminations (1.1 ) (0.8 )
(2.8 ) (2.2 )
Consolidated and Combined Total $ 434.1
$ 353.0
23.0
$ 845.0
$ 707.4
19.5
2020 versus 2019

~~Our revenues~~•Revenues for the three and six months ended June 30, ~~2019~~2020 increased by ~~23.0%~~14.8% and ~~19.5%~~16.8%, respectively, from the prior year periods with all segments contributing to the increase.

•Revenues from our Construction Products Group increased primarily due to the impact of the ~~ACG acquisition~~Cherry acquisition.

•Revenues from our Energy Equipment Group increased primarily due to higher volumes in ~~our Construction Products Group, higher barge deliveries in~~utility structures.

•Revenues from our Transportation Products Group increased primarily due to higher hopper and ~~higher unit volumes~~tank barge deliveries partially offset by decreased deliveries and ~~prices in our Energy Equipment Group.~~lower contractual pricing for steel components.

Operating Costs


	Three Months Ended June 30,											Six Months Ended June 30,
	2020		2019		Percent Change		2020		2019			Percent Change
	(in millions)										(in millions)
Construction Products Group	$	123.9	$	98.1	26.3	%	$	256.5	$	192.8			33.0	%
Energy Equipment Group	201.9		179.3		12.6		400.2		360.2			11.1
Transportation Products Group	112.3		102.7		9.3		215.0		191.9			12.0

Segment Totals before Eliminations and Corporate Expenses	438.1		380.1		15.3		871.7		744.9			17.0
Corporate	13.3		12.8		3.9		24.2		23.3			3.9
Eliminations	(0.7)		(1.1)				(2.1)		(2.8)
Consolidated Total	$	450.7	$	391.8	15.0		$	893.8	$	765.4		16.8

Table of Contents

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 Percent Change 2019 2018 Percent Change
(in millions) (in millions)
Construction Products Group $ 98.1
$ 66.3
48.0 % $ 192.8
$ 124.1
55.4 %
Energy Equipment Group 179.3
170.2
5.3
360.2
349.0
3.2
Transportation Products Group 102.7
78.8
30.3
191.9
159.1
20.6
Segment Totals before Eliminations and Corporate Expenses 380.1
315.3
20.6
744.9
632.2
17.8
Corporate 12.8
7.9
62.0
23.3
15.6
49.4
Eliminations (1.1 ) (0.8 ) 37.5
(2.8 ) (2.2 ) 27.3
Consolidated and Combined Total $ 391.8
$ 322.4
21.5
$ 765.4
$ 645.6
18.6
2020 versus 2019

•Operating costs for the three and six months ended June 30, ~~2019~~2020 increased by ~~21.5%~~15.0% and ~~18.6%~~16.8%, ~~respectively, over the same periods in 2018. The increases in~~respectively.

•Cost of revenues for our Construction Products Group ~~were~~increased primarily due to higher volumes from the acquired ~~ACG~~Cherry business. ~~Operating costs~~

•Cost of revenues for the Energy Equipment Group ~~were~~increased primarily due to higher volumes in wind towers and utility structures.

•Cost of revenues for the Transportation Products Group increased primarily due to higher hopper and tank barge deliveries partially offset by decreased volumes in steel components.

•Selling, general, and administrative expenses, including Corporate expenses, increased by 16.9% and 21.6% for the three and six months ended June 30, ~~2019 compared to the same periods of 2018,~~2020, respectively, largely due to ~~higher unit volumes. Operating~~additional costs from the acquired Cherry business. Also, for the ~~Transportation Products Group~~six months ended June 30, 2020, selling, general, and administrative expenses increased due to a $2.9 million recovery of bad debt recorded in the prior year related to a single customer in our utility structures business. As a percentage of revenue, selling, general, and administrative expenses were ~~higher~~10.8% and 10.7% for the three and six months ended June 30, ~~2019 due~~2020, respectively, compared to ~~higher barge deliveries~~10.6% and ~~start-up costs incurred related to~~10.3% for the ~~re-opening of a previously idled barge facility.~~same periods in 2019.

~~Selling, engineering, and administrative expenses, including Corporate expenses, increased by 17.0% and 12.9%~~Operating Profit (Loss)


	Three Months Ended June 30,											Six Months Ended June 30,
	2020		2019		Percent Change		2020		2019			Percent Change
	(in millions)										(in millions)
Construction Products Group	$	24.3	$	17.5	38.9	%	$	41.1	$	28.8			42.7	%
Energy Equipment Group	20.9		25.0		(16.4)		45.8		53.2			(13.9)
Transportation Products Group	15.9		12.6		26.2		30.2		20.9			44.5

Segment Totals before Corporate Expenses	61.1		55.1		10.9		117.1		102.9			13.8
Corporate	(13.3)		(12.8)		3.9		(24.2)		(23.3)			3.9

Consolidated Total	$	47.8	$	42.3	13.0		$	92.9	$	79.6		16.7

2020 versus 2019

•Operating profit for the three and six months ended June 30, 2019, respectively, largely due to additional costs from the acquired ACG business. As a percentage of revenue, selling, engineering, and administrative expenses were 10.6% and 10.3% for the three and six months ended June 30, 2019, respectively, as compared to 11.2% and 10.9% for the same periods in 2018.

~~Operating Profit (Loss)~~

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 Percent Change 2019 2018 Percent Change
(in millions) (in millions)
Construction Products Group $ 17.5
$ 17.6
(0.6 )% $ 28.8
$ 30.0
(4.0 )%
Energy Equipment Group 25.0
8.2
204.9
53.2
25.7
107.0
Transportation Products Group 12.6
12.7
(0.8 ) 20.9
21.7
(3.7 )
Segment Totals before Corporate Expenses 55.1
38.5
43.1
102.9
77.4
32.9
Corporate (12.8 ) (7.9 ) 62.0
(23.3 ) (15.6 ) 49.4
Consolidated and Combined Total $ 42.3
$ 30.6
38.2
$ 79.6
$ 61.8
28.8

~~Operating profit for the three months ended June 30, 2019~~2020 increased by ~~38.2% when compared to the same period in 2018.~~ 13.0% and 16.7%, respectively.

•Operating profit in ~~the~~our Construction Products Group ~~was flat for the three months ended June 30, 2019 when compared~~increased primarily due to the ~~prior year period due to higher volumes from~~impact of the acquired ~~ACG business, partially offset by the decrease in revenues in the legacy businesses due to weather-driven volume declines.~~ Cherry business.

•Operating profit in our Energy Equipment Group ~~increased for the three months ended June 30, 2019 compared to the prior year period~~decreased primarily due to ~~higher unit volume and~~decreased pricing in our wind towers ~~and~~product line. For the six months ended June 30, 2020, operating profit also decreased due to a $2.9 million recovery of bad debt recorded in the prior year related to a single customer in our utility structures ~~business and the elimination of operating losses from businesses divested in 2018.~~ business.

•Operating profit in our Transportation Products Group ~~was flat for the three months ended June 30, 2019 compared to the prior year period~~increased primarily due to higher hopper and tank barge deliveries, partially offset by decreased deliveries and lower contractual pricing for steel ~~components and start-up costs incurred toward the re-opening of a previously idled barge facility.~~components.

Operating profit for the six months ended June 30, 2019 increased by 28.8% when compared to the same period in 2018. Operating profit in the Construction Products Group decreased for the six months ended June 30, 2019 when compared to the prior year period primarily due to the decrease in revenues in the legacy businesses as a result of lower volumes and pricing. Operating profit in our Energy Equipment Group increased for the six months ended June 30, 2019 compared to the prior year period primarily due to higher unit volume and pricing in our wind towers and utility structures business, the elimination of operating losses from businesses divested in 2018, and a recovery of bad debt from a single customer. Operating profit in our Transportation Products Group decreased slightly for the six months ended June 30, 2019 compared to the prior year period primarily due to lower steel component deliveries and start-up costs incurred toward the re-opening of a previously idled barge facility, largely offset by higher barge deliveries.

For a further discussion of revenues, costs, and the operating results of individual segments, see Segment Discussion below.

Other Income and Expense

Other, net (income) expense consists of the following items:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
	(in millions)
Interest income	$	(0.1)	$	(0.4)	$	(0.3)	$	(0.7)
Foreign currency exchange transactions	0.2		0.5		0.2		1.0
Other	(0.2)		(0.2)		(0.2)		(0.6)
Other, net (income) expense	$	(0.1)	$	(0.1)	$	(0.3)	$	(0.3)

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Income Taxes

The provision for income taxes results in effective tax rates that differ from the statutory rates. The Company's effective tax rate for the three and six months ended June 30, ~~2019~~2020 was ~~22.1%~~26.2% and ~~22.1%~~25.5%, respectively, compared to ~~23.1% and 24.8%~~22.1% for the same periods in ~~2018.~~2019. The increase in the tax rate for the three and six months ended June 30, 2020 is primarily due to increased state taxes, tax effects of foreign currency translation, and nondeductible compensation expenses in the U.S. and Mexico.

Our effective tax rate reflects the Company's estimate for its state income tax expense, excess tax benefits related to equity compensation, and the impact of foreign tax benefits. See Note 10 ~~"Income Taxes"~~ of the Notes to Consolidated ~~and Combined~~ Financial Statements for a further discussion of income taxes.

In response to the COVID-19 pandemic, on March 27, 2020 the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which includes certain tax relief and benefits that may impact the Company. In light of the recent nature of these developments, the Company is currently evaluating the impact of the various provisions of the CARES Act on its income tax provision. Approximately $15 million of federal and state income tax payments were deferred from the first half of the year into July 2020, following passage of the CARES Act and similar state provisions.

Segment Discussion

Construction Products Group


	Three Months Ended June 30,														Six Months Ended June 30,
	2020			2019			Percent		2020			2019			Percent
	($ in millions)								Change			($ in millions)					Change
Revenues:
Construction aggregates	$	132.1		$	93.2		41.7	%	$	264.2		$	181.6		45.5	%
Other	16.1			22.4			(28.1)		33.4			40.0			(16.5)
Total revenues	148.2			115.6			28.2		297.6			221.6			34.3

Operating costs:
Cost of revenues	107.1			86.7			23.5		222.1			169.0			31.4
Selling, general, and administrative expenses	16.8			11.4			47.4		34.4			23.8			44.5
Operating profit	$	24.3		$	17.5		38.9		$	41.1		$	28.8		42.7
Operating profit margin	16.4		%	15.1		%			13.8		%	13.0		%

Depreciation, depletion, and amortization⁽¹⁾	$	13.9		$	9.0		54.4		$	27.7		$	17.8		55.6

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 Percent 2019 2018 Percent
($ in millions) Change ($ in millions) Change
Revenues:
Construction aggregates $ 93.2
$ 61.1
52.5 % $ 181.6
$ 113.7
59.7 %
Other 22.4
22.8
(1.8 ) 40.0
40.4
(1.0 )
Total revenues 115.6
83.9
37.8
221.6
154.1
43.8

Operating costs:
Cost of revenues 86.7
59.2
46.5
169.0
110.0
53.6
Selling, engineering, and administrative costs 11.4
7.1
60.6
23.8
14.1
68.8
Operating profit $ 17.5
$ 17.6
(0.6 ) $ 28.8
$ 30.0
(4.0 )
Operating profit margin 15.1 % 21.0 % 13.0 % 19.5 %

Depreciation, depletion, and amortization⁽¹⁾
$ 9.0
$ 5.1
76.5
$ 17.8
$ 10.2
74.5

⁽¹⁾Depreciation, depletion, and amortization are components of operating profit.

Three Months Ended June 30, 2020 versus Three Months Ended June 30, 2019

•Revenues increased by 28.2% primarily driven by the acquisition of Cherry, which increased segment revenues by approximately 40%. The increase was partially offset by a decrease of 28.1% in revenues in our trench shoring business as a result of lower volumes as customers reduced capital expenditures during the COVID-19 crisis. In our legacy construction aggregates businesses, natural aggregates revenues were higher due to a robust increase in volume, partially offset by weakness in our plants serving oil and ~~cost~~gas markets.Our specialty materials businesses reported lower revenues primarily due to reduced volumes in our lightweight aggregates business attributed to COVID-19 related construction delays.

•Cost of revenues increased by ~~37.8% and 46.5%, respectively, for~~23.5% due to higher volumes from the ~~three months ended June 30, 2019, when compared to the same period in 2018. The acquisition~~acquired Cherry business. As a percent of ~~ACG resulted in an increase of approximately 45% in~~ revenues, ~~for the three months ended June 30, 2019 compared to the same period in 2018, partially offset by weather-driven volume declines in our legacy businesses. The increase in~~ cost of revenues ~~during the three months ended June 30, 2019~~decreased to 72.3% compared to ~~the same period~~75.0% in the prior ~~year was~~period due to operating efficiencies, lower fuel costs, and reduced maintenance expenses in the legacy businesses.

•Selling, general, and administrative costs increased as a percentage of revenues due to additional costs from the acquired Cherry business. Selling, general, and administrative costs in the legacy businesses were lower than the previous period.

•Operating profit increased by 38.9%, outpacing the increase in revenues.

•Depreciation, depletion, and amortization expense increased primarily due to the acquired Cherry business.

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Six Months Ended June 30, 2020 versus Six Months Ended June 30, 2019

•Revenues increased 34.3% primarily driven by the acquisition of Cherry, which increased segment revenues by approximately 40%. The increase was partially offset by a decrease of 16.5% in revenues in our trench shoring business as a result of lower volumes as customers reduced capital expenditures during the ~~ACG acquisition.~~ COVID-19 crisis. In our legacy construction aggregates businesses, reduced volumes in plants serving oil and gas markets were partially offset by increased natural aggregates volumes serving other markets.

•Cost of revenues increased 31.4% primarily due to higher volumes from the acquired Cherry business. As a percent of revenues, cost of revenues decreased to 74.6% compared to 76.3% in the prior period due to operating efficiencies, lower fuel costs, and reduced maintenance expenses in the legacy businesses.

•Selling, ~~engineering,~~general, and administrative costs increased by ~~60.6% for the three months ended June 30, 2019, compared to the same period in 2018,~~44.5% primarily due to additional costs from the acquired ~~ACG~~Cherry business.

Revenues and cost of revenues increased by 43.8% and 53.6%, respectively, for the six months ended June 30, 2019, when compared to the same period in 2018. The acquisition of ACG resulted in an increase of approximately 50% in revenues for the six months ended June 30, 2019 compared to the same period in 2018, partially offset by weather-driven volume declines in our legacy businesses. The increase in cost of revenues during the six months ended June 30, 2019 compared to the same period in the prior year was primarily driven by the increased revenues as a result of the ACG acquisition. Selling, ~~engineering,~~general, and administrative costs in the legacy businesses were lower than the previous period.

•Operating profit increased by ~~68.8% for~~42.7%, outpacing the ~~six months ended June 30, 2019, compared to the same period~~increase in ~~2018,~~revenues.

•Depreciation, depletion, and amortization expense increased primarily due to ~~additional costs from~~ the acquired ~~ACG~~Cherry business.

Energy Equipment Group


	Three Months Ended June 30,														Six Months Ended June 30,
	2020			2019			Percent		2020			2019			Percent
	($ in millions)								Change			($ in millions)					Change
Revenues:
Wind towers and utility structures	$	176.9		$	151.0		17.2	%	$	353.3		$	309.6		14.1	%
Other	45.9			53.3			(13.9)		92.7			103.8			(10.7)
Total revenues	222.8			204.3			9.1		446.0			413.4			7.9

Operating costs:
Cost of revenues	183.7			163.0			12.7		364.7			331.6			10.0
Selling, general, and administrative expenses	18.2			16.3			11.7		35.5			28.6			24.1

Operating profit	$	20.9		$	25.0		(16.4)		$	45.8		$	53.2		(13.9)
Operating profit margin	9.4		%	12.2		%			10.3		%	12.9		%

Depreciation and amortization⁽¹⁾	$	8.1		$	7.3		11.0		$	15.5		$	14.3		8.4

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 Percent 2019 2018 Percent
($ in millions) Change ($ in millions) Change
Revenues:
Wind towers and utility structures $ 151.0
$ 133.0
13.5 % $ 309.6
$ 280.5
10.4 %
Other 53.3
45.4
17.4
103.8
94.2
10.2
Total revenues 204.3
178.4
14.5
413.4
374.7
10.3

Operating costs:
Cost of revenues 163.0
151.5
7.6
331.6
313.0
5.9
Selling, engineering, and administrative costs 16.3
18.7
(12.8 ) 28.6
36.0
(20.6 )
Operating profit $ 25.0
$ 8.2
204.9
$ 53.2
$ 25.7
107.0
Operating profit margin 12.2 % 4.6 % 12.9 % 6.9 %

Depreciation and amortization⁽¹⁾
$ 7.3
$ 7.4
(1.4 ) $ 14.3
$ 15.2
(5.9 )

⁽¹⁾Depreciation and amortization are components of operating profit.

Three Months Ended June 30, 2020 versus Three Months Ended June 30, 2019

•Revenues increased by ~~14.5% for the three months ended June 30, 2019 when compared to the same period~~9.1% driven by primarily by higher volumes in ~~2018. Revenues~~utility structures and sales from our acquired traffic structures business. This was partially offset by lower steel prices in utility structures and lower volumes and pricing in our other product line.

•Cost of revenues increased by 12.7% driven by higher overall volumes in wind towers and utility structures partially offset by lower volumes in other product ~~lines~~lines.

•Selling, general, and administrative costs increased by ~~13.5%,~~11.7% primarily due to additional costs from acquired businesses in March and June 2020.

•Operating profit decreased by 16.4% primarily due to decreased pricing in our wind tower business.

Six Months Ended June 30, 2020 versus Six Months Ended June 30, 2019

•Revenues increased by 7.9% driven ~~primarily~~ by a higher ~~unit volume~~volumes in wind towers and ~~higher pricing levels in~~ utility ~~structures. Revenues from other product lines increased by 17.4% as higher storage tank pricing levels were~~structures, partially offset by ~~the reduction~~lower steel prices in ~~revenues from businesses divested~~utility structures and lower pricing in ~~2018.~~ wind towers and other product lines.

•Cost of revenues increased by ~~7.6% for the three months ended June 30, 2019 compared to 2018,~~10.0% driven ~~primarily~~ by higher overall volumes ~~offset partially by the reduction~~ in ~~costs from businesses divested in 2018.~~

~~Revenues increased by 10.3% for the six months ended June 30, 2019 when compared to the same period in 2018. Revenues from our~~ wind towers and utility structures product lines increased by 10.4%, driven primarily by a higher unit volume in wind towers and higher pricing levels in utility structures. Revenues from other product lines increased by 10.2% as higher storage tank pricing levels were partially offset by ~~the reduction~~lower volumes in revenues from businesses divested in 2018. Cost of revenues increased by 5.9% for the six months ended June 30, 2019 compared to 2018, driven primarily by higher overall volumes offset partially by the reduction in costs from businesses divested in 2018.other product lines.

•Selling, ~~engineering,~~general, and administrative costs ~~decreased~~increased by ~~12.8% and 20.6% for the three and six months ended June 30, 2019, respectively, compared to the same periods in 2018,~~24.1% primarily ~~due to the reduction of costs from businesses divested in 2018. For the six months ended June 30, 2019, selling, engineering, and administrative costs also decreased~~ due to a $2.9 million recovery of bad debt recorded in the prior year related to a single customer in our utility structures ~~business.~~business and additional costs from acquired businesses.

~~The~~•Operating profit decreased by 13.9% primarily due to decreased pricing in our wind towers business and the recovery of bad debt recorded in the prior year.

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Unsatisfied Performance Obligations (Backlog)

As of June 30, 2020, the backlog for wind towers and utility structures was $352.2 million compared to $517.6 million ~~and $780.1 million at~~as of June 30, ~~2019 and 2018, respectively.~~2019. Approximately ~~52%~~74% of unsatisfied performance obligations for wind towers and utility structures are expected to be delivered during the year ending December 31, ~~2019~~2020 with substantially all of the remainder expected to be delivered ~~in 2020.~~during 2021. Future wind tower orders are subject to uncertainty ~~following~~as PTC eligibility for new wind farm projects is scheduled to expire at the ~~phase-out~~end of 2020 and the level of credit phases out after 2024. In May 2020, to alleviate potential supply chain disruptions associated with COVID-19, the Internal Revenue Service approved a one-year extension of the ~~Production Tax Credit.~~PTC to complete qualifying renewable energy projects that must otherwise have been placed in service in 2020 or 2021. Pricing of orders and individual order quantities ~~during the three months ended June 30, 2019 are reflective of~~reflect a market transitioning from ~~production tax credit~~PTC incentives. As of June 30, ~~2019,~~2020, the backlog for our other business lines in our Energy Equipment Group was ~~$45.3~~$15.5 million, of which ~~80%~~100% is expected to be delivered during the year ending December 31, ~~2019, with the remainder to be delivered during~~ 2020.

Transportation Products Group


	Three Months Ended June 30,														Six Months Ended June 30,
	2020			2019			Percent		2020			2019			Percent
	($ in millions)								Change			($ in millions)					Change
Revenues:
Inland barges	$	107.0		$	66.1		61.9	%	$	196.0		$	115.5		69.7	%
Steel components	21.2			49.2			(56.9)		49.2			97.3			(49.4)
Total revenues	128.2			115.3			11.2		245.2			212.8			15.2

Operating costs:
Cost of revenues	106.7			97.0			10.0		203.4			180.7			12.6
Selling, general, and administrative expenses	5.6			5.7			(1.8)		11.6			11.2			3.6

Operating profit	$	15.9		$	12.6		26.2		$	30.2		$	20.9		44.5
Operating profit margin	12.4		%	10.9		%			12.3		%	9.8		%

Depreciation and amortization ⁽¹⁾	$	4.7		$	3.9		20.5		$	9.1		$	7.7		18.2

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 Percent 2019 2018 Percent
($ in millions) Change ($ in millions) Change
Revenues:
Inland barges $ 66.1
$ 42.9
54.1 % $ 115.5
$ 73.7
56.7 %
Steel components 49.2
48.6
1.2
97.3
107.1
(9.2 )
Total revenues 115.3
91.5
26.0
212.8
180.8
17.7

Operating costs:
Cost of revenues 97.0
73.1
32.7
180.7
147.8
22.3
Selling, engineering, and administrative costs 5.7
5.7
—
11.2
11.3
(0.9 )
Operating profit $ 12.6
$ 12.7
(0.8 ) $ 20.9
$ 21.7
(3.7 )
Operating profit margin 10.9 % 13.9 % 9.8 % 12.0 %

Depreciation and amortization ⁽¹⁾
$ 3.9
$ 3.3
18.2
$ 7.7
$ 7.5
2.7

⁽¹⁾Depreciation and amortization are components of operating profit.

Three Months Ended June 30, 2020 versus Three Months Ended June 30, 2019

•Revenues increased by 11.2% primarily from higher hopper and ~~cost~~tank barge deliveries, partially offset by decreased deliveries and lower contractual pricing for steel components.

•Cost of revenues increased ~~for the three months ended June 30, 2019~~10.0% driven by ~~26.0%~~higher hopper and ~~32.7%, respectively, compared to the same period in 2018 primarily from higher~~tank barge ~~deliveries. Revenues for steel components was roughly flat due to higher deliveries, which was mostly~~volumes, partially offset by lower ~~contractual pricing.~~steel component volumes. Cost of revenues ~~also increased~~decreased by $1.3 million ~~for the three months ended June 30, 2019~~ due to start-up costs incurred ~~towards~~in 2019 toward the re-opening of a previously idled barge manufacturing ~~facility, which began delivering barges in July~~plant. As a percent of ~~2019.~~

~~Revenues and~~revenues, cost of revenues decreased to 83.2% compared to 84.1% in the prior year period primarily due to improved operating efficiencies in our barge business.

•Selling, general, and administrative costs decreased slightly.

•Operating profit increased ~~for~~by 26.2%, outpacing the ~~six months ended~~increase in revenues.

Six Months Ended June 30, 2020 versus Six Months Ended June 30, 2019

•Revenues increased by ~~17.7% and 22.3%, respectively, compared to the same period in 2018~~15.2% primarily from higher hopper and tank barge deliveries, partially offset by decreased deliveries and lower contractual pricing for steel components.

•Cost of revenues increased 12.6% driven by higher hopper and tank barge volumes, partially offset by lower steel component ~~deliveries.~~volumes. Cost of revenues ~~also increased~~decreased by $3.1 million ~~for the six months ended June 30, 2019~~ due to start-up costs incurred ~~towards~~in 2019 toward the re-opening of a previously idled barge manufacturing ~~facility.~~plant. As a percent of revenues, cost of revenues decreased to 83.0% compared to 84.9% in the prior year period primarily due to improved operating efficiencies in our barge business.

•Selling, ~~engineering,~~general, and administrative costs ~~were substantially unchanged for~~increased slightly.

•Operating profit increased by 44.5%, outpacing the ~~three and six months ended June 30, 2019 compared to the same periods~~increase in ~~2018.~~revenues.

Unsatisfied Performance Obligations (Backlog)

As of June 30, ~~2019,~~2020, the backlog for the Transportation Products Group was ~~$349.7~~$258.7 million compared to ~~$198.4~~$349.7 million as of June 30, ~~2018.~~2019. Approximately ~~54%~~73% of unsatisfied performance obligations for inland barges are expected to be delivered during the year ending December 31, ~~2019~~2020 with the remainder expected to be delivered in ~~2020.~~2021.

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Corporate


	Three Months Ended June 30,										Six Months Ended June 30,
	2020		2019		Percent		2020		2019		Percent
	(in millions)						Change		(in millions)				Change
Corporate overhead costs	$	13.3	$	12.8	3.9	%	$	24.2	$	23.3	3.9	%

Three Months Ended June 30, Six Months Ended June 30,
2019 2018 Percent 2019 2018 Percent
(in millions) Change (in millions) Change
Corporate overhead costs $ 12.8
$ 7.9
62.0 % $ 23.3
$ 15.6
49.4 %

~~For periods prior to the Separation, corporate~~2020 versus 2019

•Corporate overhead costs ~~consisted of costs not previously allocated to Trinity's business units and have been allocated to Arcosa based on an analysis of each cost function and the relative benefits received by Arcosa~~increased 3.9% for each of the periods using methods management believes are consistent and reasonable. See Note 1, “Overview and Summary of Significant Accounting Policies” of the Notes to the Consolidated and Combined Financial Statements for further information.

~~For~~both the three and six months ended June 30, ~~2019, the increase in~~2020 primarily related to higher acquisition-related transaction and integration costs of $0.7 million and $1.6 million, respectively. Excluding these costs, corporate overhead costs ~~compared to 2018 was primarily due to incremental standalone costs related to~~were lower than the ~~replacement of services and fees previously provided or incurred by Trinity as well as other standalone public company costs.~~ comparative periods.

•We estimate full-year corporate costs will be ~~approximately $50.0~~between $45 million and $50 million in fiscal year ~~2019.~~2020.

Liquidity and Capital Resources

Arcosa’s primary liquidity ~~requirements are primarily to fund~~requirement consists of funding our business operations, including capital expenditures, working capital investment, and disciplined acquisitions. Our primary sources of liquidity ~~are~~include cash ~~flows~~flow from operations, our existing cash balance, ~~and, as necessary, borrowings~~availability under the revolving credit facility, and, as necessary, the issuance of additional long-term debt or equity. To the extent we ~~generate discretionary cash flow,~~have available liquidity, we may also consider ~~using this additional cash flow to undertake~~undertaking new capital investment projects, ~~execute~~executing additional strategic acquisitions, ~~return~~returning capital to stockholders, or ~~for~~funding other general corporate purposes.

Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, ~~2019~~2020 and ~~2018:~~2019:


	Six Months Ended June 30,
	2020		2019
	(in millions)
Total cash provided by (required by):
Operating activities	$	120.3	$	141.2
Investing activities	(350.5)		(59.5)
Financing activities	138.2		(97.8)
Net increase (decrease) in cash and cash equivalents	$	(92.0)	$	(16.1)

Six Months Ended
June 30,
2019 2018
(in millions)
Total cash provided by (required by):
Operating activities $ 141.2
$ 105.3
Investing activities (59.5 ) (44.3 )
Financing activities (97.8 ) (57.2 )
Net (decrease) increase in cash and cash equivalents $ (16.1 ) $ 3.8

Operating Activities. Net cash provided by operating activities for the six months ended June 30, ~~2019~~2020 was ~~$141.2~~$120.3 million compared to ~~$105.3~~$141.2 million for the six months ended June 30, ~~2018.~~2019.

~~Receivables at~~•The decrease in net cash provided by operating activities was primarily driven by changes in current assets and liabilities.

•The changes in current assets and liabilities resulted in a net use of cash of $6.9 million for the six months ended June 30, ~~2019 decreased~~2020 compared to a net source of cash of $26.0 million for the six months ended June 30, 2019. This decrease was primarily driven by ~~$65.3 million or 22.4% since December 31, 2018 primarily due to lower trade~~a significant reduction in receivables infor our Energy Equipment ~~and Transportation Products Groups. Raw materials inventory at June 30, 2019 increased by $17.2 million or 13.4% since December 31, 2018. Work~~Group in process inventory increased by $12.4 million or 37.2% and finished goods inventory increased by $8.9 million or 9.8% since December 31, 2018 primarily in our Transportation Products Group. Accounts payable decreased by $13.5 million, while accrued liabilities increased by $2.1 million from December 31, 2018. We continually review reserves related to collectibilitythe prior year as well as a decrease in advanced billings in the ~~adequacy of lower of cost or net realizable value with regard to accounts receivable and inventory.~~current year.

Investing Activities. Net cash required by investing activities for the six months ended June 30, ~~2019~~2020 was ~~$59.5~~$350.5 million compared to ~~$44.3~~$59.5 million for the six months ended June 30, ~~2018.~~ 2019.

•Capital expenditures for the six months ended June 30, ~~2019~~2020 were ~~$38.9~~$43.6 million compared to ~~$20.4~~$38.9 million for the same period last year. Full-year capital expenditures are expected to range between ~~$70~~$75 million and ~~$80~~$85 million in ~~2019.~~2020. We expect maintenance capital expenditures ~~to be in the range~~ of ~~$60 million to~~approximately $65 million and ~~the~~ capital expenditures related to additional growth to be in the range of $10 million and ~~$15~~$20 million in ~~2019.~~ 2020.

•Proceeds from the sale of property, plant, and equipment and other assets totaled ~~$2.2~~$7.0 million for the six months ended June 30, ~~2019,~~2020, compared to ~~$1.1~~$2.2 million for the same period in ~~2018.~~ 2019.

•Cash paid for acquisitions, net of cash acquired, was ~~$22.8~~$313.9 million for the six months ended June 30, ~~2019~~2020 compared to ~~$25.0~~$22.8 million for the same period in ~~2018.~~2019. There was no divestiture activity for the six months ended June 30, ~~2019~~2020 and ~~2018.~~2019.

Financing Activities. Net cash ~~required~~provided by financing activities during the six months ended June 30, ~~2019~~2020 was ~~$97.8~~$138.2 million compared to ~~$57.2~~net cash required by financing activities of $97.8 million for the same period in ~~2018.~~ 2019.

•Current year to date activity was primarily related to proceeds from the ~~$80.0~~issuance of the $150 million ~~repayments of advances~~term loan, as the $100.0 million precautionary advance under the Company's revolving credit facility ~~while prior~~was borrowed and repaid during the

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period. Prior year to date activity was primarily related to ~~net transfers to Former Parent totaling $54.0 million.~~repayments of advances of $80 million under the revolving credit facility.

Other Investing and Financing Activities

Revolving Credit Facility

On ~~November 1, 2018,~~January 2, 2020, the Company entered into ~~a $400.0 million unsecured~~an Amended and Restated Credit Agreement to increase the revolving credit facility ~~that matures~~to $500.0 million and added a term loan facility of $150.0 million, in ~~November 2023.~~ each case with a maturity date of January 2, 2025.

In March 2020, as a precautionary measure, the ~~average daily unused portion of the~~Company borrowed $100.0 million under its revolving ~~facility at the current rate of 0.20%. Borrowings under the~~ credit facility ~~are guaranteed by certain wholly-owned subsidiaries of~~to increase our cash position and preserve financial flexibility considering the ~~Company.~~

uncertainty resulting from the COVID-19 pandemic. The Company subsequently repaid the $100.0 million during the three months ended June 30, 2020. As of June 30, ~~2019,~~2020, we had $100.0 million of outstanding loans borrowed and ~~$46.2~~$26.0 million of letters of credit issued under the facility, leaving ~~$253.8~~$374.0 million available.

The entire term loan was advanced on January 2, 2020 in connection with the closing of the acquisition of Cherry.

The Company's revolving credit ~~facility requires~~and term loan facilities require the maintenance of certain ratios related to leverage and interest coverage. As of June 30, ~~2019,~~2020, we were in compliance with all such financial covenants. Borrowings under the credit agreement are guaranteed by certain wholly-owned subsidiaries of the Company.

We believe, based on our current business plans, that our existing cash, available liquidity, and cash flow from operations will be sufficient to fund necessary capital expenditures and operating cash requirements for the foreseeable future. The Company further believes that its financial resources will allow it to manage the anticipated impact of COVID-19 on the Company's business operations for the foreseeable future. The macroeconomic uncertainties posed by COVID-19 are evolving rapidly. Consequently, the Company will continue to evaluate its financial position in light of future developments, particularly those relating to COVID-19.

Dividends and Repurchase Program

In May ~~2019,~~2020, the Company declared a quarterly cash dividend of $0.05 per share to be paid inon July ~~2019.~~31, 2020.

In December 2018, the Company’s Board of Directors authorized a $50 million share repurchase program effective December 5, 2018 through December 31, 2020. Under the program, the Company repurchased ~~269,574~~56,836 shares at a cost of ~~$8.0~~$2.0 million during the six months ended June 30, ~~2019, leaving~~2020. As of June 30, 2020, the Company had a remaining authorization of ~~$39.0 million.~~$34.0 million under the program. See Note 1 ~~“Overview and Summary~~ of ~~Significant Accounting Policies”~~the Notes to the Consolidated ~~and Combined~~ Financial Statements.

Derivative Instruments

In December 2018, the Company entered into an interest rate swap instrument, effective as of January 2, 2019 and expiring in 2023, to reduce the effect of changes in the variable interest rates associated with borrowings under the revolving credit facility. The instrument carried an initial notional amount of $100.0 million, thereby hedging the first $100.0 million of borrowings under the credit facility. The instrument effectively fixes the LIBOR component of the credit facility borrowings at a monthly rate of 2.71%. As of June 30, ~~2019,~~2020, the Company has recorded a liability of ~~$4.6~~$8.6 million for the fair value of the instrument, all of which is recorded in accumulated other comprehensive loss. See Note 3 ~~“Fair Value Accounting”~~ and Note 7 ~~“Debt”~~of the Notes to the Consolidated ~~and Combined~~ Financial Statements.

Off-Balance Sheet Arrangements

As of June 30, ~~2019,~~2020, we had letters of credit issued under our revolving credit facility in an aggregate principal amount of ~~$46.2~~$26.0 million. Of the outstanding letters of credit as of June 30, ~~2019, $29.1~~2020, $25.4 million are expected to expire in ~~2019,~~2020, with the remainder in ~~2020.~~2021. The majority of our letters of credit obligations support the Company’s various insurance programs and warranty claims and generally renew by their terms each year. See Note 7 ~~“Debt”~~of the Notes to the Consolidated ~~and Combined~~ Financial Statements.

Recent Accounting Pronouncements

See Note 1 ~~“Overview and Summary of Significant Accounting Policies”~~ of the Notes to the Consolidated ~~and Combined~~ Financial Statements for information about recent accounting pronouncements.

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Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements contained herein that are not historical facts are forward-looking ~~statements.~~statements and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performances, estimates, projections, goals, and forecasts. ~~The~~Arcosa uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” ~~“should”~~“should,” and similar expressions ~~generally~~to identify these forward-looking statements. ~~Forward-looking statements involve risks and uncertainties that~~Potential factors, which could cause our actual results of operations to differ materially from those in the forward-looking statements ~~including,~~include, among others:

•the impact of the COVID-19 pandemic on our sales, operations, supply chain, employees, and financial condition;

•market conditions and customer demand for ~~Arcosa's~~our business products and services;

•the cyclical nature of the industries in which ~~Arcosa competes;~~we compete;

•variations in weather in areas where ~~Arcosa~~our construction products are sold, used, or installed;

•naturally-occurring events and other events and disasters causing disruption to our manufacturing, product deliveries, and production capacity, thereby giving rise to an increase in expenses, loss of revenue, and property losses;

•competition and other competitive factors;

•our ability to identify, consummate, or integrate acquisitions of new businesses or products, including the Cherry acquisition;

•the timing of introduction of new products;

•the timing and delivery of customer orders or a breach of customer contracts;

•the credit worthiness of customers and their access to capital;

•product price changes;

•changes in mix of products sold;

•the costs incurred to align manufacturing capacity with demand and the extent of its utilization;

•the operating leverage and efficiencies that can be achieved by ~~Arcosa's~~our manufacturing businesses;

•availability and costs of steel, component parts, supplies, and other raw materials;

~~competition and other competitive factors;~~

•changing technologies;

•surcharges and other fees added to fixed pricing agreements for steel, component parts, supplies and other raw materials;

•interest rates and capital costs;

•counter-party risks for financial instruments;

•long-term funding of our operations;

•taxes;

•the stability of the governments and political and business conditions in certain foreign countries, particularly Mexico;

•changes in import and export quotas and regulations;

•business conditions in emerging economies;

•costs and results of litigation;

•changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies;

•legal, regulatory, and environmental issues, including compliance of ~~Arcosa's~~our products with mandated specifications, standards, or testing criteria and obligations to remove and replace ~~Arcosa's~~our products following installation or to recall our products and install different products manufactured by ~~Arcosa~~us or our competitors;

•actions by the executive and legislative branches of the U.S. government relative to federal government budgeting, taxation policies, government expenditures, U.S. borrowing/debt ceiling limits, and trade policies, including tariffs, and border closures;

~~the use of social or digital media to disseminate false, misleading and/or unreliable or inaccurate information;~~

•the inability to sufficiently protect our intellectual property rights;

•if ~~Arcosa~~the Company does not realize some or all of the benefits expected to result from the ~~spin-off,~~Separation, or if such benefits are delayed;

~~Arcosa's~~•the Company's ongoing businesses may be adversely affected and subject to certain risks and consequences as a result of the ~~spin-off transaction;~~Separation;

•if the distribution of shares of Arcosa resulting from the Separation, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, the Company's stockholders at the time of the distribution and the Company could be subject to significant tax liability; and

•if the ~~spin-off transaction~~Separation does not comply with state and federal fraudulent conveyance laws and legal dividend requirements.

Any forward-looking statement speaks only as of the date on which such statement is made. ~~We undertake~~Arcosa undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is ~~made, except as required by applicable federal securities laws. Factors~~made. For a discussion of risks and uncertainties that could cause actual results ~~or events~~ to differ ~~materially~~ from those ~~anticipated include~~contained in the ~~matters described under the section entitled~~forward-looking statements, see Item 1A, “Risk Factors” in our ~~2018~~2019 Annual Report on Form ~~10-K.~~10-K and this Quarterly Report on Form 10-Q.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

There has been no material change in our market risks since December 31, ~~2018~~2019 as set forth in our ~~2018~~2019 Annual Report on Form 10-K. See Note 9 ~~“Other, Net”~~ of the Notes to Consolidated ~~and Combined~~ Financial Statements for the impact of foreign exchange rate fluctuations for the three and six months ended June 30, ~~2019.~~2020.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that it is able to collect and record the information it is required to disclose in the reports it files with the Securities and Exchange Commission (“SEC”), and to process, summarize, and disclose this information within the time periods specified in the rules of the SEC. The Company’s Chief Executive and Chief Financial Officers are responsible for establishing and maintaining these procedures and, as required by the rules of the SEC, evaluating their effectiveness. Based on their evaluation of the Company’s disclosure controls and procedures that took place as of the end of the period covered by this report, the Chief Executive and Chief Financial Officers believe that these procedures are effective to 1) ensure that the Company is able to collect, process, and disclose the information it is required to disclose in the reports it files with the SEC within the required time periods and 2) accumulate and communicate this information to the Company’s management, including its Chief Executive and Chief Financial Officers, to allow timely decisions regarding this disclosure.

Changes in Internal Control over Financial Reporting

During the period covered by this report, there have been no changes in the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

As permitted by the SEC Staff interpretive guidance for recently acquired businesses, management's assessment and conclusion on the effectiveness of the Company's disclosure controls and procedures as of June 30, ~~2019~~2020 excludes an assessment of the internal control over financial reporting of the ~~ACG~~Cherry business acquired in ~~December 2018.~~January 2020. The ~~ACG~~Cherry business represents approximately ~~18%~~14% of consolidated total assets and approximately 9% of consolidated revenues as of and for the six months ended June 30, ~~2019.~~2020.

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PART II

Item 1.Legal Proceedings

~~None.~~On July 22, 2019, the Company was served with a breach of contract lawsuit filed by Thomas & Betts Corporation (“T&B”) against the Company and its wholly-owned subsidiary, Trinity Meyer Utility Structures, LLC, now known as Meyer Utility Structures, LLC (“Meyer”), in the Supreme Court of the State of New York, New York County. T&B’s claims relate to responsibility for alleged product warranty claims pursuant to the terms of the Asset Purchase Agreement, dated June 24, 2014, entered into by and between T&B and Meyer with respect to Meyer’s purchase of certain assets of T&B’s utility structure business. The Company and Meyer subsequently removed the litigation to federal court. The case is currently pending under Case No. 1:19-cv-07829-PAE; Thomas & Betts Corporation, now known as, ABB Installation Products, Inc., Plaintiff, v. Trinity Meyer Utility Structures, LLC, formerly known as McKinley 2014 Acquisition, LLC, and Arcosa, Inc., Defendants; In the United States District Court for the Southern District of New York. The Company and Meyer have filed a motion to dismiss T&B’s claims, and an Answer and Counterclaims against T&B. We intend to vigorously defend ourselves in this matter.

Item 1A.Risk Factors

There have been no material changes in the Company's risk factors from those set forth in our ~~2018~~2019 Annual Report on Form ~~10-K.~~10-K, except as follows:

Arcosa’s business, financial condition and results of operations may be adversely affected by the recent global COVID-19 outbreak and other similar outbreaks.

Arcosa’s business, financial condition and results of operations may be adversely affected if a pandemic or outbreak of an infectious disease occurs. For example, the current outbreak of COVID-19 has disrupted global trade, commerce, financial and credit markets, and daily life throughout the world.Our highest priority is the health and safety of our employees, and our facilities follow the highest standards to safeguard our employees' health and safety. The United States Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency currently identifies our employees as an Essential Critical Infrastructure Workforce. We have similar designations from the state governments where our manufacturing facilities are located. This essential critical classification currently allows Arcosa’s physical operations to continue. We continue to monitor our operations and the impact of government orders and recommendations. Arcosa maintains facilities throughout the United States, most of which have been or are currently subject to stay-at-home, shelter-in-place, or other restrictive orders under state and local ordinances, with some employees having to work remotely if possible. While some of our employees can work remotely, most of Arcosa’s manufacturing operations requires our employees to physically work in our manufacturing facilities. If federal, state, or local authorities determine that Arcosa’s operations are non-essential or non-critical, or if one or more of Arcosa’s facilities become subject to governmental ordered closure, voluntary temporary closure, or closure from a COVID-19 outbreak within the facility, the business, financial condition, and results of operations for the affected segment or for Arcosa as a whole could be materially affected.

In addition, certain of Arcosa’s workers and operations are located in areas where travel and curfew restrictions have been imposed, such as Mexico. Disruptions to Arcosa’s cross-border business transactions and activities caused by COVID-19 could materially affect Arcosa’s business and results of operations.

The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business, and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity, including the length of any related recession, and actions taken in response; the effect on our customers and customer demand for our products and services; our ability to sell and provide our products and services, including as a result of travel restrictions and people working from home; if members of our management and other key personnel in critical functions across Arcosa are unable to perform their duties or have limited availability; the ability of our customers to pay for our products and services; any disruption in our supply chain; the ability to procure the required personal protectiveequipment for our employees; our ability to continue operations in compliance with COVID-19 related regulations; and any closures of our and our customers’ facilities; cybersecurity and IT infrastructure risks from the increase in our employees' remote working; the impact of the COVID-19 pandemic on the health and safety of our employees; the impact of the COVID-19 pandemic on the demand for commodities, including oil, served by our products and services; and the pace of recovery when the COVID-19 pandemic subsides, as well as, the response to a potential reoccurrence. In addition, the negative impact on the economy could cause customers to postpone projects, cancel or delay orders, or file bankruptcy. Any of these events could cause or contribute to the risks and uncertainties enumerated in our Annual Report on Form 10-K and could materially adversely affect our business, financial condition, results of operations and/or stock price.

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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

This table provides information with respect to purchases by the Company of shares of its common stock during the quarter ended June 30, ~~2019:~~2020:


Period	Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share ⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs⁽²⁾
April 1, 2020 through April 30, 2020	43	$	37.70	—	$	34,030,774
May 1, 2020 through May 31, 2020	102,563	$	32.31	—	$	34,030,774
June 1, 2020 through June 30, 2020	212	$	37.76	—	$	34,030,774
Total	102,818	$	32.32	—	$	34,030,774

Period
Number of Shares Purchased ⁽¹⁾

Average Price Paid per Share ⁽¹⁾

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾

Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs⁽²⁾
April 1, 2019 through April 30, 2019 151
$ 30.72
—
$ 39,023,255
May 1, 2019 through May 31, 2019 106,086
$ 36.16
—
$ 39,023,255
June 1, 2019 through June 30, 2019 270
$ 36.09
—
$ 39,023,255
Total 106,507
$ 36.15
—
$ 39,023,255


⁽¹⁾	These columns include the surrender to the Company of 106,507 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock and restricted stock units issued to employees.


⁽²⁾	~~In December 2018, the Company’s Board of Directors authorized a new $50.0 million share repurchase program that expires December 31, 2020.~~

⁽¹⁾These columns include the surrender to the Company of 102,818 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees.

⁽²⁾In December 2018, the Company’s Board of Directors authorized a $50 million share repurchase program that expires December 31, 2020.

Item 3.Defaults Upon Senior Securities

Not applicable.

Item 4.Mine Safety Disclosures

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-Q.

Item 5.Other Information

None.

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Item 6. Exhibits



NO.		DESCRIPTION
3.1		Restated Certificate of Incorporation of Arcosa, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-8 filed on October 31, 2018, File No. 333-228098).
3.2		Amended and Restated Bylaws of Arcosa, Inc. (incorporated by reference to Exhibit 3.2 to the ~~Company’s Registration Statement on Form S-8 filed on October 31, 2018, File No. 333-228098).~~
~~10.1~~	~~Form of Restricted Stock Unit Agreement for grants commencing 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Current~~Company's Quarterly Report on Form ~~8-K filed on May 7, 2019,~~10-Q, for the quarter-ended March 31, 2020, File No. ~~333-228098)~~001-38494).
~~10.2~~10.1.1		~~Form~~Supplement to Subsidiary Guaranty date d as of ~~Non-Employee Director Restricted Stock Unit Agreement for grants commencing 2019 (incorporated~~May 27, 2020 by ~~reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 7, 2019, File No. 333-228098)~~Arcosa Cherry, LLC (filed herewith).
~~10.3~~10.1.2		~~Form~~Supplement to Subsidiary Guaranty dated as of ~~Performance-Based Restricted Stock Unit Grant Agreement for grants commencing 2019 (incorporated~~May 27, 2020 by ~~reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on May 7, 2019, File No. 333-228098)~~Cherry Industries, Inc. (filed herewith).
~~10.4~~10.1.3		~~Amendment Number One~~Supplement to ~~the Arcosa,~~Subsidiary Guaranty dated as of May 27, 2020 by Ch erry Crushed Con c rete, Inc. ~~2018 Stock Option and Incentive Plan~~ (filed herewith).
31.1		Rule 13a-15(e) and 15d-15(e) Certification of the Chief Executive Officer (filed herewith).
31.2		Rule 13a-15(e) and 15d-15(e) Certification of the Chief Financial Officer (filed herewith).
32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
95		Mine Safety Disclosure Exhibit (filed herewith).
101.INS		Inline XBRL Instance Document (filed electronically herewith).
101.SCH		Inline XBRL Taxonomy Extension Schema Document (filed electronically herewith).
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed electronically herewith).
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document (filed electronically herewith).
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed electronically herewith).
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document (filed electronically herewith).
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



ARCOSA, INC.	By	/s/ Scott C. Beasley
Registrant
		Scott C. Beasley
		Chief Financial Officer
		~~August 2, 2019~~July 31, 2020


Caption			Page

~~Caption~~			~~Page~~

PART I FINANCIAL INFORMATION
Item 1. Financial Statements			3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			2930
Item 4. Controls and Procedures			2931

PART II OTHER INFORMATION
Item 1. Legal Proceedings			3032
Item 1A. Risk Factors			3032
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3033
Item 3. Defaults Upon Senior Securities			3033
Item 4. Mine Safety Disclosures			3033
Item 5. Other Information			3033
Item 6. Exhibits			3134

SIGNATURES			3235



	Former Parent's Net Investment			Common Stock				Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock					Total Stockholders’ Equity
	Former Parent's Net Investment			Shares		$0.01 Par Value		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Shares		Amount			Total Stockholders’ Equity
	(in millions, except par value)
Balances at March 31, 2018	$	1,391.9		—		$	—	$	—		$	—		$	(19.5	)	—		$	—		$	1,372.4
Net income	22.6			—		—		—			—			—			—		—			22.6
Other comprehensive income	—			—		—		—			—			0.2			—		—			0.2
Net transfers from parent and affiliates	(2.9		)	—		—		—			—			—			—		—			(2.9		)
Restricted shares, net	2.6			—		—		—			—			—			—		—			2.6
Balances at June 30, 2018	$	1,414.2		—		$	—	$	—		$	—		$	(19.3	)	—		$	—		$	1,394.9

Balances at March 31, 2019	$	—		48.8		$	0.5	$	1,690.2		$	44.7		$	(18.3	)	(0.4	)	$	(11.9	)	$	1,705.2
Net income	—			—		—		—			31.8			—			—		—			31.8
Other comprehensive loss	—			—		—		—			—			(1.7		)	—		—			(1.7		)
Cash dividends on common stock	—			—		—		—			(2.5		)	—			—		—			(2.5		)
Restricted shares, net	—			0.2		—		4.2			—			—			(0.2	)	(4.5		)	(0.3		)
Shares repurchased	—			—		—		—			—			—			—		—			—
Retirement of treasury stock	—			(0.6	)	—		(16.4		)	—			—			0.6		16.4			—
Other	—			—		—		1.8			—			—			—		—			1.8
Balances at June 30, 2019	$	—		48.4		$	0.5	$	1,679.8		$	74.0		$	(20.0	)	—		$	—		$	1,734.3

Balances at December 31, 2017	$	1,427.7		—		$	—	$	—		$	—		$	(19.8	)	—		$	—		$	1,407.9
Cumulative effect of adopting new accounting standards (see Note 1)	(4.0		)	—		—		—			—			—			—		—			(4.0		)
Net income	44.8			—		—		—			—			—			—		—			44.8
Other comprehensive income	—			—		—		—			—			0.5			—		—			0.5
Net transfers from parent and affiliates	(59.1		)	—		—		—			—			—			—		—			(59.1		)
Restricted shares, net	4.8			—		—		—			—			—			—		—			4.8
Balances at June 30, 2018	$	1,414.2		—		$	—	$	—		$	—		$	(19.3	)	—		$	—		$	1,394.9

Balances at December 31, 2018	$	—		48.8		$	0.5	$	1,685.7		$	19.5		$	(17.7	)	(0.1	)	$	(3.5	)	$	1,684.5
Net income	—			—		—		—			59.5			—			—		—			59.5
Other comprehensive loss	—			—		—		—			—			(2.3		)	—		—			(2.3		)
Cash dividends on common stock	—			—		—		—			(5.0		)	—			—		—			(5.0		)
Restricted shares, net	—			0.2		—		7.8			—			—			(0.2	)	(4.9		)	2.9
Shares repurchased	—			—		—		—			—			—			(0.3	)	(8.0		)	(8.0		)
Retirement of treasury stock	—			(0.6	)	—		(16.4		)	—			—			0.6		16.4			—
Other	—			—		—		2.7			—			—			—		—			2.7
Balances at June 30, 2019	$	—		48.4		$	0.5	$	1,679.8		$	74.0		$	(20.0	)	—		$	—		$	1,734.3



	June 30, 2019
	(in millions)
Accounts receivable	$	23.7
Inventories	12.5
Property, plant, and equipment	83.4
Depletable land	137.1
Goodwill	115.5
Other assets	5.5
Accounts payable	(10.2		)
Accrued and other liabilities	(14.3		)
Finance lease liability	(8.3		)
Deferred income taxes	(35.8		)
Total net assets acquired	$	309.1



	Three Months Ended June 30, 2019						Three Months Ended June 30, 2018
	Income (Loss)			Average Shares	EPS		Income (Loss)		Average Shares	EPS
	(in millions, except per share amounts)
Net income	$	31.8					$	22.6
Unvested restricted share participation	(0.3		)				—
Net income – basic	31.5			47.8	$	0.66	22.6		48.8	$	0.46
Effect of dilutive securities:
Nonparticipating unvested restricted shares	—			0.5			—		—
Net income – diluted	$	31.5		48.3	$	0.65	$	22.6	48.8	$	0.46

	Six Months Ended June 30, 2019						Six Months Ended June 30, 2018
	Income (Loss)			Average Shares	EPS		Income (Loss)		Average Shares	EPS
	(in millions, except per share amounts)
Net income	$	59.5					$	44.8
Unvested restricted share participation	(0.7		)				—
Net income – basic	58.8			47.9	$	1.23	44.8		48.8	$	0.92
Effect of dilutive securities:
Nonparticipating unvested restricted shares	—			0.5			—		—
Net income – diluted	$	58.8		48.4	$	1.21	$	44.8	48.8	$	0.92