UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


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

FOR THE QUARTERLY PERIOD ENDED ~~MARCH 31,~~JUNE 30, 2022


			OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 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	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 required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ☐

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

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

Large accelerated filer þ Accelerated filer ☐ Non-accelerated filer ☐

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 shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

At ~~April 14,~~July 15, 2022, the number of shares of common stock outstanding was ~~48,321,067.~~48,357,261.

ARCOSA, INC.

FORM 10-Q

TABLE OF CONTENTS

Table of Contents

PART I

Item 1. Financial Statements

Arcosa, Inc. and Subsidiaries

Consolidated Statements of Operations

(unaudited)


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021

			(in millions)						(in millions)
Revenues	Revenues		$	535.8		$	440.4	Revenues	$	602.8	$	515.1	$	1,138.6	$	955.5
Operating costs:	Operating costs:							Operating costs:
Cost of revenues	Cost of revenues		438.5			361.1		Cost of revenues	479.3		417.4		917.8		778.5
Selling, general, and administrative expenses	Selling, general, and administrative expenses		62.6			56.4		Selling, general, and administrative expenses	66.3		66.4		128.9		122.8

			501.1			417.5			545.6		483.8		1,046.7		901.3
Total operating profit	Total operating profit		34.7			22.9		Total operating profit	57.2		31.3		91.9		54.2

Interest expense	Interest expense		7.2			2.1		Interest expense	7.7		6.6		14.9		8.7
Other, net (income) expense	Other, net (income) expense		0.9			0.5		Other, net (income) expense	0.4		(0.3)		1.3		0.2
Income before income taxes	Income before income taxes		26.6			20.3		Income before income taxes	49.1		25.0		75.7		45.3

Provision for income taxes	Provision for income taxes		6.4			4.4		Provision for income taxes	10.1		4.2		16.5		8.6

Net income	Net income		$	20.2		$	15.9	Net income	$	39.0	$	20.8	$	59.2	$	36.7

Net income per common share:	Net income per common share:							Net income per common share:
Basic	Basic		$	0.42		$	0.33	Basic	$	0.80	$	0.43	$	1.22	$	0.76
Diluted	Diluted		$	0.41		$	0.32	Diluted	$	0.79	$	0.43	$	1.21	$	0.75
Weighted average number of shares outstanding:	Weighted average number of shares outstanding:							Weighted average number of shares outstanding:
Basic	Basic		48.2			48.0		Basic	48.3		48.1		48.2		48.0
Diluted	Diluted		48.8			48.8		Diluted	48.6		48.6		48.6		48.5
Dividends declared per common share	Dividends declared per common share		$	0.05		$	0.05	Dividends declared per common share	$	0.05	$	0.05	$	0.10	$	0.10

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

Arcosa, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(unaudited)


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021

			(in millions)						(in millions)
Net income	Net income		$	20.2		$	15.9	Net income	$	39.0	$	20.8	$	59.2	$	36.7
Other comprehensive income (loss):	Other comprehensive income (loss):							Other comprehensive income (loss):
Derivative financial instruments:	Derivative financial instruments:							Derivative financial instruments:
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.4 and $0.2			1.6			0.5
Reclassification adjustments for losses included in net income, net of tax expense (benefit) of ($0.1) and ($0.1)			0.5			0.4
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.2, $0.0, $0.6 and $0.2								Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.2, $0.0, $0.6 and $0.2	0.7		0.3		2.3		0.8
Reclassification adjustments for losses included in net income, net of tax expense (benefit) of ($0.1), ($0.1), ($0.2) and ($0.2)								Reclassification adjustments for losses included in net income, net of tax expense (benefit) of ($0.1), ($0.1), ($0.2) and ($0.2)	0.3		0.3		0.8		0.7
Currency translation adjustment:	Currency translation adjustment:							Currency translation adjustment:
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.0 and $0.0			0.1			0.1
Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.0, $0.1, $0.0 and $0.1								Unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0.0, $0.1, $0.0 and $0.1	(0.2)		0.2		(0.1)		0.3

			2.2			1.0			0.8		0.8		3.0		1.8
Comprehensive income	Comprehensive income		$	22.4		$	16.9	Comprehensive income	$	39.8	$	21.6	$	62.2	$	38.5

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

Arcosa, Inc. and Subsidiaries

Consolidated Balance Sheets


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021
		(unaudited)					(unaudited)
		(in millions)					(in millions)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	88.6	$	72.9	Cash and cash equivalents	$	77.0	$	72.9

Receivables, net of allowance	Receivables, net of allowance	373.7		310.8		Receivables, net of allowance	350.1		310.8

Inventories:	Inventories:					Inventories:
Raw materials and supplies	Raw materials and supplies	156.9		150.8		Raw materials and supplies	135.7		150.8
Work in process	Work in process	64.0		53.6		Work in process	53.0		53.6
Finished goods	Finished goods	121.9		120.1		Finished goods	107.2		120.1
		342.8		324.5			295.9		324.5
Assets held for sale						Assets held for sale	116.9		20.4
Other	Other	36.5		59.7		Other	31.4		39.3
Total current assets	Total current assets	841.6		767.9		Total current assets	871.3		767.9

Property, plant, and equipment, net	Property, plant, and equipment, net	1,196.4		1,201.9		Property, plant, and equipment, net	1,178.3		1,201.9
Goodwill	Goodwill	938.6		934.9		Goodwill	950.9		934.9
Intangibles, net	Intangibles, net	215.9		220.3		Intangibles, net	266.8		220.3
Deferred income taxes	Deferred income taxes	12.6		13.2		Deferred income taxes	11.6		13.2
Other assets	Other assets	51.7		49.9		Other assets	58.4		49.9
		$	3,256.8	$	3,188.1		$	3,337.3	$	3,188.1
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	228.7	$	184.7	Accounts payable	$	220.2	$	184.7
Accrued liabilities	Accrued liabilities	140.4		145.9		Accrued liabilities	123.9		145.9
Advance billings	Advance billings	20.4		18.6		Advance billings	14.0		18.6

Liabilities held for sale						Liabilities held for sale	44.7		—
Current portion of long-term debt	Current portion of long-term debt	14.2		14.8		Current portion of long-term debt	13.6		14.8
Total current liabilities	Total current liabilities	403.7		364.0		Total current liabilities	416.4		364.0

Debt	Debt	666.4		664.7		Debt	699.4		664.7
Deferred income taxes	Deferred income taxes	137.5		134.0		Deferred income taxes	148.2		134.0
Other liabilities	Other liabilities	71.6		72.1		Other liabilities	77.3		72.1
		1,279.2		1,234.8			1,341.3		1,234.8

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:

Common stock – 200.0 shares authorized	Common stock – 200.0 shares authorized	0.5		0.5		Common stock – 200.0 shares authorized	0.5		0.5
Capital in excess of par value	Capital in excess of par value	1,697.1		1,692.6		Capital in excess of par value	1,703.1		1,692.6
Retained earnings	Retained earnings	297.3		279.5		Retained earnings	333.7		279.5
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(17.1)		(19.3)		Accumulated other comprehensive loss	(16.3)		(19.3)
Treasury stock	Treasury stock	(0.2)		—		Treasury stock	(25.0)		—
		1,977.6		1,953.3			1,996.0		1,953.3
		$	3,256.8	$	3,188.1		$	3,337.3	$	3,188.1

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

Arcosa, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)


		Three Months Ended March 31,					Six Months Ended June 30,
		2022		2021			2022		2021

		(in millions)					(in millions)
Operating activities:	Operating activities:					Operating activities:
Net income	Net income	$	20.2	$	15.9	Net income	$	59.2	$	36.7
Adjustments to reconcile net income to net cash provided by operating activities:	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	Depreciation, depletion, and amortization	37.8		31.4		Depreciation, depletion, and amortization	77.3		68.0

Stock-based compensation expense	Stock-based compensation expense	4.4		4.7		Stock-based compensation expense	10.1		8.8

Provision for deferred income taxes	Provision for deferred income taxes	5.1		1.3		Provision for deferred income taxes	12.3		6.1
Gains on disposition of property and other assets	Gains on disposition of property and other assets	(1.2)		(5.9)		Gains on disposition of property and other assets	(4.8)		(5.3)

(Increase) decrease in other assets	(Increase) decrease in other assets	(1.2)		1.5		(Increase) decrease in other assets	2.9		2.8
Increase (decrease) in other liabilities	Increase (decrease) in other liabilities	(3.0)		(4.0)		Increase (decrease) in other liabilities	(16.4)		(12.1)
Other	Other	0.5		2.2		Other	1.0		(1.6)
Changes in current assets and liabilities:	Changes in current assets and liabilities:					Changes in current assets and liabilities:
(Increase) decrease in receivables	(Increase) decrease in receivables	(69.3)		(31.9)		(Increase) decrease in receivables	(75.0)		(29.4)
(Increase) decrease in inventories	(Increase) decrease in inventories	(18.2)		(14.7)		(Increase) decrease in inventories	(17.4)		(38.7)
(Increase) decrease in other current assets	(Increase) decrease in other current assets	2.7		(5.4)		(Increase) decrease in other current assets	7.6		(4.1)
Increase (decrease) in accounts payable	Increase (decrease) in accounts payable	44.0		31.6		Increase (decrease) in accounts payable	55.3		49.8
Increase (decrease) in advance billings	Increase (decrease) in advance billings	1.8		(16.1)		Increase (decrease) in advance billings	(4.6)		(23.1)
Increase (decrease) in accrued liabilities	Increase (decrease) in accrued liabilities	0.9		(10.2)		Increase (decrease) in accrued liabilities	3.7		(6.8)

Net cash provided by operating activities	Net cash provided by operating activities	24.5		0.4		Net cash provided by operating activities	111.2		51.1

Investing activities:	Investing activities:					Investing activities:

Proceeds from disposition of property and other assets	Proceeds from disposition of property and other assets	20.6		9.5		Proceeds from disposition of property and other assets	29.2		11.1
Capital expenditures	Capital expenditures	(25.9)		(19.9)		Capital expenditures	(52.9)		(41.5)

Acquisitions, net of cash acquired						Acquisitions, net of cash acquired	(75.0)		(388.7)

Net cash required by investing activities	Net cash required by investing activities	(5.3)		(10.4)		Net cash required by investing activities	(98.7)		(419.1)

Financing activities:	Financing activities:					Financing activities:

Payments to retire debt	Payments to retire debt	(1.0)		(1.4)		Payments to retire debt	(56.3)		(1.9)

Proceeds from issuance of debt						Proceeds from issuance of debt	80.0		400.0
Shares repurchased						Shares repurchased	(15.0)		(4.4)
Dividends paid to common stockholders	Dividends paid to common stockholders	(2.4)		(2.4)		Dividends paid to common stockholders	(5.0)		(4.9)
Purchase of shares to satisfy employee tax on vested stock	Purchase of shares to satisfy employee tax on vested stock	(0.1)		(0.1)		Purchase of shares to satisfy employee tax on vested stock	(9.7)		(9.7)

Debt issuance costs						Debt issuance costs	—		(6.6)

Net cash required by financing activities	Net cash required by financing activities	(3.5)		(3.9)		Net cash required by financing activities	(6.0)		372.5
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	15.7		(13.9)		Net increase (decrease) in cash and cash equivalents	6.5		4.5
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	72.9		95.8		Cash and cash equivalents at beginning of period	72.9		95.8
Cash and cash equivalents at end of period		$	88.6	$	81.9
Cash and cash equivalents at end of period(1)						Cash and cash equivalents at end of period(1)	$	79.4	$	100.3

(1) Ending cash as of June 30, 2022 includes $2.4 million of cash presented within assets held for sale on the consolidated balance sheet.

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

Arcosa, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

(unaudited)


			Common Stock				Capital in Excess of Par Value				Retained Earnings				Accumulated Other Comprehensive Loss				Treasury Stock				Total Stockholders’ Equity							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		Total Stockholders’ Equity				Shares			$0.01 Par Value			Capital in Excess of Par Value		Retained Earnings	Accumulated Other Comprehensive Loss							Amount				Total Stockholders’ Equity
		(in millions, except par value)																											(in millions, except par value)
Balances at March 31, 2021																									Balances at March 31, 2021					48.2						$	0.5		$	1,699.4			$	233.2			$	(21.1)			—			$	(0.7)			$	1,911.3
Net income																									Net income					—		—			—			20.8				—				—				—			20.8
Other comprehensive income																									Other comprehensive income					—		—			—			—				0.8			—				—			0.8
Cash dividends on common stock																									Cash dividends on common stock					—		—			—			(2.5)				—			—				—			(2.5)
Restricted shares, net																									Restricted shares, net					0.4		—			4.1			—				—			(0.1)				(9.6)			(5.5)
Shares repurchased																									Shares repurchased					—		—			—			—				—			(0.1)				(4.4)			(4.4)
Retirement of treasury stock																									Retirement of treasury stock					(0.2)		—			(14.7)			—				—			0.2				14.7			—

Balances at June 30, 2021																									Balances at June 30, 2021					48.4		$	0.5		$	1,688.8		$	251.5			$	(20.3)		—				$	—		$	1,920.5

Balances at March 31, 2022																									Balances at March 31, 2022					48.3		$	0.5		$	1,697.1		$	297.3			$	(17.1)		—				$	(0.2)		$	1,977.6
Net income																									Net income					—		—			—			39.0				—			—				—			39.0
Other comprehensive income																									Other comprehensive income					—		—			—			—				0.8			—				—			0.8
Cash dividends on common stock																									Cash dividends on common stock					—		—			—			(2.6)				—			—				—			(2.6)
Restricted shares, net																									Restricted shares, net					0.6		—			6.0			—				—			(0.2)				(9.8)			(3.8)
Shares repurchased																									Shares repurchased					—		—			—			—				—			(0.3)				(15.0)			(15.0)
Retirement of treasury stock																									Retirement of treasury stock					—		—			—			—				—			—				—			—

Balances at June 30, 2022																									Balances at June 30, 2022					48.9		$	0.5		$	1,703.1		$	333.7			$	(16.3)		(0.5)				$	(25.0)		$	1,996.0

Balances at December 31, 2020	Balances at December 31, 2020		48.2		$	0.5			$	1,694.1			$	219.7			$	(22.1)		—			$	—		$	1,892.2	Balances at December 31, 2020				48.2			$	0.5		$	1,694.1			$	219.7		$	(22.1)			—			$	—			$	1,892.2
Net income	Net income		—		—		—				15.9				—				—		—		15.9		Net income					—		—			—			36.7				—			—				—			36.7
Other comprehensive income	Other comprehensive income		—		—		—				—				1.0				—		—		1.0		Other comprehensive income					—		—			—			—				1.8			—				—			1.8
Cash dividends on common stock	Cash dividends on common stock		—		—		—				(2.4)				—				—		—		(2.4)		Cash dividends on common stock					—		—			—			(4.9)				—			—				—			(4.9)
Restricted shares, net	Restricted shares, net		—		—		5.3				—				—				—		(0.7)		4.6		Restricted shares, net					0.4		—			9.4			—				—			(0.1)				(10.3)			(0.9)
Shares repurchased																									Shares repurchased					—		—			—			—				—			(0.1)				(4.4)			(4.4)
Retirement of treasury stock																									Retirement of treasury stock					(0.2)		—			(14.7)			—				—			0.2				14.7			—

Balances at March 31, 2021			48.2		$	0.5	$	1,699.4			$	233.2			$	(21.1)			—		$	(0.7)	$	1,911.3
Balances at June 30, 2021																									Balances at June 30, 2021					48.4		$	0.5		$	1,688.8		$	251.5			$	(20.3)		—				$	—		$	1,920.5

Balances at December 31, 2021	Balances at December 31, 2021		48.3		$	0.5	$	1,692.6			$	279.5			$	(19.3)			—		$	—	$	1,953.3	Balances at December 31, 2021					48.3		$	0.5		$	1,692.6		$	279.5			$	(19.3)		—				$	—		$	1,953.3
Net income	Net income		—		—		—				20.2				—				—		—		20.2		Net income					—		—			—			59.2				—			—				—			59.2
Other comprehensive income	Other comprehensive income		—		—		—				—				2.2				—		—		2.2		Other comprehensive income					—		—			—			—				3.0			—				—			3.0
Cash dividends on common stock	Cash dividends on common stock		—		—		—				(2.4)				—				—		—		(2.4)		Cash dividends on common stock					—		—			—			(5.0)				—			—				—			(5.0)
Restricted shares, net	Restricted shares, net		—		—		4.5				—				—				—		(0.2)		4.3		Restricted shares, net					0.6		—			10.5			—				—			(0.2)				(10.0)			0.5
Shares repurchased																									Shares repurchased					—		—			—			—				—			(0.3)				(15.0)			(15.0)
Retirement of treasury stock																									Retirement of treasury stock					—		—			—			—				—			—				—			—

Balances at March 31, 2022			48.3		$	0.5	$	1,697.1			$	297.3			$	(17.1)			—		$	(0.2)	$	1,977.6
Balances at June 30, 2022																									Balances at June 30, 2022					48.9		$	0.5		$	1,703.1		$	333.7			$	(16.3)		(0.5)				$	(25.0)		$	1,996.0

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

Arcosa, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(unaudited)

Note 1. Overview and Summary of Significant Accounting Policies

Basis of Presentation

Arcosa, Inc. and its consolidated subsidiaries (“Arcosa,” the “Company,” “we,” or “our”), headquartered in Dallas, Texas, is a provider of infrastructure-related products and solutions with leading brands serving construction, engineered structures, and transportation markets in North America. Arcosa is a Delaware corporation and was incorporated in 2018 in connection with the separation (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 accompanying Consolidated Financial Statements are unaudited and have been prepared from the books and records of Arcosa, Inc. and its 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 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 ~~March 31,~~June 30, 2022 may not be indicative of Arcosa's expected business, financial condition, and results of operations for the year ending ~~December��~~December 31, 2022.

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, 2021.

Stockholders' Equity

In December 2020, the Company’s Board of Directors (the “Board”) authorized a new $50 million share repurchase program effective January 1, 2021 through December 31, 2022 to replace a program of the same amount that expired on December 31, 2020. For the three and six months ended ~~March 31,~~June 30, 2022, the Company repurchased ~~0 shares.~~298,629 shares at a cost of $15.0 million. As of ~~March 31,~~June 30, 2022, the Company had a remaining authorization of ~~$40.6~~$25.7 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

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

Engineered Structures

Within the Engineered Structures segment, 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 ~~March 31,~~June 30, 2022, we had a contract asset of ~~$62.9~~$62.1 million related to these contracts, compared to $54.2 million at December 31, 2021, which is included in receivables, net of allowance, within the Consolidated Balance Sheets. The increase in the contract asset is due to timing of deliveries. 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.

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Transportation Products

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

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 ~~March 31,~~June 30, 2022 and the percentage of the outstanding performance obligations as of ~~March 31,~~June 30, 2022 expected to be delivered during the remainder of 2022:


		Unsatisfied performance obligations at March 31, 2022					Unsatisfied performance obligations at June 30, 2022
		Total Amount		Percent expected to be delivered in 2022			Total Amount		Percent expected to be delivered in 2022
		(in millions)					(in millions)
Engineered Structures:	Engineered Structures:					Engineered Structures:
Utility, wind, and related structures	Utility, wind, and related structures	$	421.0	88	%	Utility, wind, and related structures	$	410.1	83	%
Storage tanks	Storage tanks	$	20.9	100	%	Storage tanks	$	20.2	100	%

Transportation Products:	Transportation Products:					Transportation Products:
Inland barges	Inland barges	$	150.6	72	%	Inland barges	$	131.8	50	%

Substantially all unsatisfied performance obligations beyond 2022 are expected to be delivered during 2023.

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.

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 places its cash investments 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 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 in the Company's Consolidated Statements of Operations for the three and six months ended ~~March 31,~~June 30, 2022 was not significant. The carrying values of cash, receivables, and accounts payable are considered to be representative of their respective fair values.

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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.

Recent Accounting Pronouncements

Recently ~~adopted accounting pronouncements~~

Effective as of January 1, 2021, the Company adopted 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 the general principles for income taxes. The adoption of the guidance did not have a material effect on the Company's Consolidated Financial Statements.

~~Recently~~ issued accounting pronouncements not adopted as of ~~March 31,~~June 30, 2022

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2020-04, “Reference Rate Reform”, (“ASU 2020-04”), which provides optional guidance for contract modifications, hedging accounting, and other transactions associated with the transition from reference rates that are expected to be discontinued. ASU 2020-04 is effective for all entities upon issuance through December 31, 2022. We continue to evaluate the impact of adoption, but do not expect the guidance to have a material impact on our Consolidated Financial Statements.

In October 2021, the FASB issued Accounting Standards Update No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, (“ASU 2021-08”), which requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. ASU 2021-08 will become effective for public companies during interim and annual reporting periods beginning after December 15, 2022, with early adoption permitted. We do not expect this standard to have a material impact on our Consolidated Financial Statements.

Reclassifications

Certain prior year balances have been reclassified in the Consolidated Financial Statements to conform with the 2022 presentation.

Note 2. Acquisitions and Divestitures

~~There~~2022 Acquisitions

In May 2022, we completed the stock acquisition of Recycled Aggregate Materials Company, Inc. ("RAMCO"), a leading producer of recycled aggregates in the Los Angeles metropolitan area, which is included in our Construction Products segment, for a total purchase price of $75.4 million. The acquisition was funded with additional borrowings under our revolving credit facility. The acquisition was recorded as a business combination based on a preliminary valuation of the assets acquired and liabilities assumed at their acquisition date fair value using unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities ("Level 3" inputs). The preliminary valuation resulted in the recognition of, among others, $54.0 million of permits with an initial weighted average useful life of 20 years, $6.5 million of property, plant, and equipment, and $11.3 million of goodwill in our Construction Products segment. The remaining assets and liabilities were not significant in relation to assets and liabilities at the consolidated or segment level. We expect to complete our purchase price allocation as soon as reasonably possible, not to exceed one year from the acquisition ~~activity during~~date. Adjustments to the ~~three months ended March 31, 2022.~~preliminary purchase price allocation could be material, particularly with respect to our preliminary estimates of intangible assets and property, plant, and equipment.

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2021 Acquisitions

In August 2021, we completed the stock acquisition of Southwest Rock Products, LLC and affiliated entities (collectively “Southwest Rock”), a natural aggregates company serving the greater Phoenix metropolitan area, which is included in our Construction Products segment, for a total purchase price of $149.7 million. The acquisition was funded with cash on hand, $100.0 million of borrowings under our revolving credit facility, and a $15.0 million holdback payable to the seller upon the extension of a certain mineral reserve lease. The acquisition was recorded as a business combination based on a preliminary valuation 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 and liabilities.~~Level 3 inputs. The preliminary valuation resulted in the recognition of, among others, ~~$63.3~~$63.4 million of goodwill, $51.0 million of mineral reserves, and $28.0 million of property, plant, and equipment in our Construction Products segment. The remaining assets and liabilities were not significant in relation to assets and liabilities at the consolidated or segment level. We expect to complete our purchase price allocation as soon as reasonably possible, not to exceed one year from the acquisition date. Adjustments to the preliminary purchase price allocation could be material, particularly with respect to our preliminary estimates of mineral reserves and property, plant, and equipment.

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On April 9, 2021, we completed the stock acquisition of StonePoint Ultimate Holding, LLC and affiliated entities (collectively “StonePoint”), a top 25 U.S. construction aggregates company, which is included in our Construction Products segment. The purchase price of $372.8 million was funded with proceeds from a private offering of $400.0 million of 4.375% senior unsecured notes that closed on April 6, 2021. See Note 7 Debt for additional information. The acquisition was recorded as a business combination with valuations of the assets acquired and liabilities assumed at their acquisition date fair value using ~~level three~~Level 3 inputs. The following table represents our final purchase price allocation as of ~~March 31,~~June 30, 2022:


	(in millions)
Cash	$	1.0
Accounts receivable	~~18.8~~18.3
Inventories	20.9
Property, plant, and equipment	68.4
Mineral reserves	198.8
Goodwill	~~87.2~~87.7
Customer relationships	7.2
Other assets	10.4
Accounts payable	(7.4)
Accrued liabilities	(10.0)
Deferred income taxes	(9.2)
Other liabilities	(13.3)
Total net assets acquired	$	372.8

The goodwill acquired, none of which is tax-deductible, primarily relates to StonePoint's market position and existing workforce. The customer relationships intangible asset was assigned a useful life of 10 years. Revenues and operating profit (loss) included in the Consolidated Statement of Operations were approximately $31.8 million and $(2.4) million during the three months ended March 31, 2022, respectively.

In April 2021, we also completed the acquisition of certain assets and liabilities of a Dallas-Fort Worth, Texas based recycled aggregates business in our Construction Products segment. The purchase price of the acquisition was not significant.

Divestitures

There ~~was~~were no ~~divestiture activity for~~divestitures closed during the three and six months ended ~~March 31,~~June 30, 2022 and 2021.

In November 2021, we completed the divestiture of certain assets and liabilities of an asphalt operation previously acquired as part of the StonePoint acquisition with a selling price of approximately $19.0 million. The income statement impact of the disposal was not significant as the assets were recorded at fair value as of their acquisition date in April 2021.

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On April 25, 2022, the Company entered into an agreement to sell its storage tanks business for $275 million in cash. The storage tanks business, reported within the Engineered Structures segment, is a leading manufacturer of steel pressure tanks for the storage and transportation of propane, ammonia, and other gases serving the residential, commercial, energy, and agricultural markets with operations in the U.S. and Mexico. The transaction is expected to close in the second half of 2022, subject to regulatory approvals in the U.S. and Mexico and other customary closing conditions. As of June 30, 2022, the Company reclassified $116.9 million of assets and $44.7 million of liabilities as held for sale within its consolidated balance sheet, including $37.0 million of receivables, $47.1 million of inventories, $29.2 million of property, plant, and equipment, net, $20.9 million of accounts payable, and $23.7 million of accrued liabilities. Operating profit for the storage tanks business was $13.9 million and $24.2 million for the three and six months ended June 30, 2022, respectively, and $10.8 million and $18.1 million for the three and six months ended June 30, 2021, respectively. The Company will continue to refine its estimate of assets and liabilities held for sale as additional information becomes available up until the time of closing.

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Note 3. Fair Value Accounting

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


		Fair Value Measurement as of March 31, 2022									Fair Value Measurement as of June 30, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total

		(in millions)									(in millions)
Assets:										Assets:

Interest rate hedge(1)										Interest rate hedge(1)	$	—	$	0.3	$	—	$	0.3
Total assets										Total assets	$	—	$	0.3	$	—	$	0.3

Liabilities:	Liabilities:									Liabilities:
Interest rate hedge(1)		$	—	$	1.2	$	—	$	1.2
Contingent consideration(2)		—		—		6.4		6.4

Contingent consideration(3)										Contingent consideration(3)	$	—	$	—	$	4.9	$	4.9
Total liabilities	Total liabilities	$	—	$	1.2	$	6.4	$	7.6	Total liabilities	$	—	$	—	$	4.9	$	4.9

		Fair Value Measurement as of December 31, 2021									Fair Value Measurement as of December 31, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total

		(in millions)									(in millions)

Liabilities:	Liabilities:									Liabilities:
Interest rate hedge(1)		$	—	$	3.9	$	—	$	3.9
Contingent consideration(2)		—		—		6.7		6.7
Interest rate hedge(2)										Interest rate hedge(2)	$	—	$	3.9	$	—	$	3.9
Contingent consideration(3)										Contingent consideration(3)	—		—		6.7		6.7
Total liabilities	Total liabilities	$	—	$	3.9	$	6.7	$	10.6	Total liabilities	$	—	$	3.9	$	6.7	$	10.6

(1)Included in other non-current assets on the Consolidated Balance Sheets.

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

~~(2)~~(3) 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.

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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.

Note 4. Segment Information

The Company reports operating results in 3 principal business segments:

Construction Products. The Construction Products segment primarily produces and sells natural and recycled aggregates, specialty materials, and construction site support equipment, including trench shields and shoring products.

Engineered Structures. The Engineered Structures segment primarily manufactures and sells steel structures for infrastructure businesses, including utility structures for electricity transmission and distribution, structural wind towers, traffic structures, and telecommunication structures. These products share similar manufacturing competencies and steel sourcing requirements and can be manufactured across our North American footprint. The segment also manufactures storage and distribution ~~tanks.~~tanks as well as concrete utility structures.

Transportation Products. The Transportation Products segment primarily manufactures and sells inland barges, fiberglass barge covers, winches, marine hardware, and steel components for railcars and other transportation and industrial equipment.

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

Three Months Ended March 31,
Revenues Operating Profit (Loss)
2022 2021 2022 2021
(in millions)
Aggregates and specialty materials $ 187.9 $ 135.3
Construction site support 23.6 17.9
Construction Products 211.5 153.2 $ 16.7 $ 15.8
Utility, wind, and related structures 190.6 164.0
Storage tanks 59.9 43.0
Engineered Structures 250.5 207.0 28.3 17.5
Inland barges 47.0 57.9
Steel components 26.8 22.3
Transportation Products 73.8 80.2 2.7 4.1
Segment Totals before Eliminations and Corporate 535.8 440.4 47.7 37.4
Corporate — — (13.0) (14.5)
Eliminations — — — —
Consolidated Total $ 535.8 $ 440.4 $ 34.7 $ 22.9

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	Three Months Ended June 30,
	Revenues				Operating Profit (Loss)
	2022		2021		2022		2021

	(in millions)
Aggregates and specialty materials	$	216.2	$	181.5
Construction site support	29.7		23.0
Construction Products	245.9		204.5		$	28.1	$	17.9

Utility, wind, and related structures	206.7		191.6
Storage tanks	61.9		50.9
Engineered Structures	268.6		242.5		41.5		29.1

Inland barges	53.8		49.0
Steel components	34.5		19.2
Transportation Products	88.3		68.2		3.5		1.3



Segment Totals before Eliminations and Corporate	602.8		515.2		73.1		48.3
Corporate	—		—		(15.9)		(17.0)
Eliminations	—		(0.1)		—		—
Consolidated Total	$	602.8	$	515.1	$	57.2	$	31.3

	Six Months Ended June 30,
	Revenues				Operating Profit (Loss)
	2022		2021		2022		2021

	(in millions)
Aggregates and specialty materials	$	404.1	$	316.8
Construction site support	53.3		40.9
Construction Products	457.4		357.7		$	44.8	$	33.7

Utility, wind, and related structures	397.3		355.6
Storage tanks	121.8		93.9
Engineered Structures	519.1		449.5		69.8		46.6

Inland barges	100.8		106.9
Steel components	61.3		41.5
Transportation Products	162.1		148.4		6.2		5.4



Segment Totals before Eliminations and Corporate	1,138.6		955.6		120.8		85.7
Corporate	—		—		(28.9)		(31.5)
Eliminations	—		(0.1)		—		—
Consolidated Total	$	1,138.6	$	955.5	$	91.9	$	54.2

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Note 5. Property, Plant, and Equipment

The following table summarizes the components of property, plant, and equipment as of ~~March 31,~~June 30, 2022 and December 31, 2021.


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021

		(in millions)					(in millions)
Land	Land	$	139.5	$	137.3	Land	$	140.3	$	137.3
Mineral reserves	Mineral reserves	505.4		507.3		Mineral reserves	507.6		507.3
Buildings and improvements	Buildings and improvements	305.3		301.0		Buildings and improvements	293.6		301.0
Machinery and other	Machinery and other	990.5		973.9		Machinery and other	929.7		973.9
Construction in progress	Construction in progress	49.5		45.4		Construction in progress	65.4		45.4
		1,990.2		1,964.9			1,936.6		1,964.9
Less accumulated depreciation and depletion	Less accumulated depreciation and depletion	(793.8)		(763.0)		Less accumulated depreciation and depletion	(758.3)		(763.0)
		$	1,196.4	$	1,201.9		$	1,178.3	$	1,201.9

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Note 6. Goodwill and Other Intangible Assets

Goodwill

Goodwill by segment is as follows:


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021

		(in millions)					(in millions)
Construction Products	Construction Products	$	464.0	$	460.3	Construction Products	$	476.3	$	460.3
Engineered Structures	Engineered Structures	437.6		437.6		Engineered Structures	437.6		437.6
Transportation Products	Transportation Products	37.0		37.0		Transportation Products	37.0		37.0
		$	938.6	$	934.9		$	950.9	$	934.9

The increase in Construction Products goodwill during the ~~three~~six months ended ~~March 31,~~June 30, 2022 is primarily due to ~~measurement period adjustments from~~ the ~~acquisitions~~acquisition of ~~StonePoint and Southwest Rock.~~RAMCO. See Note 2 Acquisitions and Divestitures.

Intangible Assets

Intangibles, net consisted of the following:


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021

		(in millions)					(in millions)
Intangibles with indefinite lives - Trademarks	Intangibles with indefinite lives - Trademarks	$	34.1	$	34.1	Intangibles with indefinite lives - Trademarks	$	34.1	$	34.1

Intangibles with definite lives:	Intangibles with definite lives:					Intangibles with definite lives:
Customer relationships	Customer relationships	135.5		135.4		Customer relationships	137.1		135.4
Permits	Permits	87.5		87.5		Permits	141.5		87.5
Other	Other	3.9		3.9		Other	3.9		3.9
		226.9		226.8			282.5		226.8
Less accumulated amortization	Less accumulated amortization	(45.1)		(40.6)		Less accumulated amortization	(49.8)		(40.6)
		181.8		186.2			232.7		186.2
Intangible assets, net	Intangible assets, net	$	215.9	$	220.3	Intangible assets, net	$	266.8	$	220.3

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Note 7. Debt

The following table summarizes the components of debt as of ~~March 31,~~June 30, 2022 and December 31, 2021:


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021

		(in millions)					(in millions)
Revolving credit facility	Revolving credit facility	$	125.0	$	125.0	Revolving credit facility	$	155.0	$	125.0
Term loan	Term loan	144.4		144.4		Term loan	142.5		144.4
Senior notes	Senior notes	400.0		400.0		Senior notes	400.0		400.0
Finance leases (see Note 8 Leases)	Finance leases (see Note 8 Leases)	17.2		16.3		Finance leases (see Note 8 Leases)	21.3		16.3
		686.6		685.7			718.8		685.7
Less: unamortized debt issuance costs	Less: unamortized debt issuance costs	(6.0)		(6.2)		Less: unamortized debt issuance costs	(5.8)		(6.2)
Total debt	Total debt	$	680.6	$	679.5	Total debt	$	713.0	$	679.5

Revolving Credit Facility and Term Loan

On November 1, 2018, the Company entered into a $400.0 million unsecured revolving credit facility that 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 add a term loan facility of $150.0 million, in each case with a maturity date of January 2, 2025. The entire term loan was advanced on January 2, 2020. As of ~~March 31,~~June 30, 2022, the term loan had a remaining balance of ~~$144.4~~$142.5 million.

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OnIn August 4, 2021, we borrowed an additional $100.0 million under our revolving credit facility to fund, in part, the acquisition of Southwest Rock. In May 2022, we borrowed an additional $80.0 million to fund the acquisition of RAMCO. We also repaid $50.0 million during the three months ended June 30, 2022. As of ~~March 31,~~June 30, 2022, we had ~~$125.0~~$155.0 million of outstanding loans borrowed under the revolving credit facility, and there were approximately $28.5 million of letters of credit issued, leaving ~~$346.5~~$316.5 million available. Of the outstanding letters of credit as of ~~March 31,~~June 30, 2022, ~~$27.9~~$24.6 million are expected to expire in 2022, with the remainder in 2023. The majority of our letters of credit obligations support the Company’s various insurance programs and generally renew by their terms each year.

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 for borrowing and commitment fee rate are determined based on the Company’s leverage as measured by a consolidated total indebtedness to consolidated EBITDA ratio. The margin for borrowing ranges from 1.25% to 2.00% and was set at LIBOR plus 1.75% as of ~~March 31,~~June 30, 2022. The commitment fee rate ranges from 0.20% to 0.35% and was set at 0.30% at ~~March 31,~~June 30, 2022.

The Company's revolving credit and term loan facilities require the maintenance of certain ratios related to leverage and interest coverage. As of ~~March 31,~~June 30, 2022, we were in compliance with all such financial covenants. Borrowings under the credit agreement are guaranteed by certain wholly-owned subsidiaries of the Company.

In order to increase liquidity in anticipation of the acquisition of StonePoint, the Company entered into an unsecured 364-Day Credit Agreement on March 26, 2021 providing for a revolving line of credit of $150.0 million, with an outside maturity date of March 25, 2022. Pricing, covenants, and guarantees were substantially similar to the Company’s existing revolving credit and term loan facilities. Per the terms of the facility, it terminated on April 6, 2021 upon the closing of the Company’s private offering of $400.0 million in senior notes.

The carrying value of borrowings under our revolving credit 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 ~~March 31,~~June 30, 2022, the Company had $1.2 million of unamortized debt issuance costs related to the revolving credit facility, which are included in other assets on the Consolidated Balance Sheet.

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Senior Notes

On April 6, 2021, the Company issued $400.0 million aggregate principal amount of 4.375% senior notes (the “Notes”) that mature in April 2029. Interest on the Notes is payable semiannually. The Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by each of the Company’s domestic subsidiaries that is a guarantor under our revolving credit and term loan facilities. The terms of the indenture governing the Notes, among other things, limit the ability of the Company and each of its subsidiaries to create liens on assets, enter into sale and leaseback transactions, and consolidate, merge or transfer all or substantially all of its assets and the assets of its subsidiaries. The terms of the indenture also limit the ability of the Company’s non-guarantor subsidiaries to incur certain types of debt.

At any time prior to April 15, 2024, the Company may redeem all or a portion of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus an applicable make-whole premium and accrued and unpaid interest to the redemption date. On and after April 15, 2024, the Company may redeem all or a portion of the Notes at redemption prices set forth in the indenture, plus accrued and unpaid interest to the redemption date. If a Change of Control Triggering Event (as defined in the indenture) occurs, the Company must offer to repurchase the Notes at a price equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest to the date of repurchase.

The estimated fair value of the Notes as of ~~March 31,~~June 30, 2022 was ~~$380.4~~$339.5 million based on a quoted market price in a market with little activity (Level 2 input).

In connection with the issuance of the Notes, the Company paid $6.6 million of debt issuance costs.

The remaining principal payments under existing debt agreements as of ~~March 31,~~June 30, 2022 are as follows:


		2022		2023		2024		2025		2026		Thereafter			2022		2023		2024		2025		2026		Thereafter

		(in millions)													(in millions)
Revolving credit facility	Revolving credit facility	$	—	$	—	$	—	$	125.0	$	—	$	—	Revolving credit facility	$	—	$	—	$	—	$	155.0	$	—	$	—
Term loan	Term loan	7.5		8.5		8.4		120.0		—		—		Term loan	5.6		8.4		8.4		120.0		—		—
Senior notes	Senior notes	—		—		—		—		—		400.0		Senior notes	—		—		—		—		—		400.0

~~Table of Contents~~

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 Amended and Restated Credit Agreement. The instrument carried an initial notional amount of $100 million, thereby hedging the first $100 million of borrowings. The instrument effectively fixes the LIBOR component of borrowings at a monthly rate of 2.71%. As of ~~March 31,~~June 30, 2022, the Company has recorded ~~a liability~~an asset of ~~$1.2~~$0.3 million for the fair value of the instrument, all of which is recorded in accumulated other comprehensive ~~loss.~~income. 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 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.

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Future minimum lease payments for operating and finance lease obligations as of ~~March 31,~~June 30, 2022 consisted of the following:

Operating Leases Finance Leases
(in millions)
2022 (remaining) $ 5.9 $ 6.1
2023 4.6 4.7
2024 4.0 4.6
2025 3.3 2.8
2026 2.2 —
Thereafter 8.4 —
Total undiscounted future minimum lease obligations 28.4 18.2
Less imputed interest (4.3) (1.0)
Present value of net minimum lease obligations $ 24.1 $ 17.2

~~Table of Contents~~


	Operating Leases		Finance Leases
	(in millions)
2022 (remaining)	$	4.0	$	3.4
2023	7.0		6.6
2024	6.1		6.6
2025	5.4		4.8
2026	4.2		1.1
Thereafter	9.3		0.3
Total undiscounted future minimum lease obligations	36.0		22.8
Less imputed interest	(2.9)		(1.5)
Present value of net minimum lease obligations	$	33.1	$	21.3

The following table summarizes our operating and finance leases and their classification within the Consolidated Balance Sheet.


		March 31, 2022		December 31, 2021			June 30, 2022		December 31, 2021

		(in millions)					(in millions)
Assets	Assets					Assets
Operating - Other assets	Operating - Other assets	$	21.2	$	20.9	Operating - Other assets	$	30.3	$	20.9
Finance - Property, plant, and equipment, net	Finance - Property, plant, and equipment, net	17.5		16.9		Finance - Property, plant, and equipment, net	24.0		16.9
Total lease assets	Total lease assets	38.7		37.8		Total lease assets	54.3		37.8

Liabilities	Liabilities					Liabilities
Current	Current					Current
Operating - Accrued liabilities	Operating - Accrued liabilities	4.9		4.8		Operating - Accrued liabilities	6.6		4.8
Finance - Current portion of long-term debt	Finance - Current portion of long-term debt	6.7		6.3		Finance - Current portion of long-term debt	6.0		6.3
Non-current	Non-current					Non-current
Operating - Other liabilities	Operating - Other liabilities	19.2		19.1		Operating - Other liabilities	26.5		19.1
Finance - Debt	Finance - Debt	10.5		10.0		Finance - Debt	15.3		10.0
Total lease liabilities	Total lease liabilities	$	41.3	$	40.2	Total lease liabilities	$	54.4	$	40.2

Note 9. Other, Net

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


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021

			(in millions)						(in millions)
Interest income	Interest income		$	(0.1)		$	—	Interest income	$	—	$	(0.1)	$	(0.1)	$	(0.1)
Foreign currency exchange transactions	Foreign currency exchange transactions		1.0			0.6		Foreign currency exchange transactions	0.5		(0.1)		1.5		0.5
Other	Other		—			(0.1)		Other	(0.1)		(0.1)		(0.1)		(0.2)
Other, net (income) expense	Other, net (income) expense		$	0.9		$	0.5	Other, net (income) expense	$	0.4	$	(0.3)	$	1.3	$	0.2

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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 2014 to 2021 with various significant tax jurisdictions.

Our effective tax rates of ~~24.1%~~20.6% and ~~21.7%~~21.8% for the three and six months ended ~~March 31,~~June 30, 2022, ~~and 2021,~~ respectively, which differed from ~~than~~ the U.S. federal statutory rate of 21.0% due to state income taxes, compensation-related items, and foreign disallowed deductions, offset by benefits from statutory depletion deductions. For the three and six months ended June 30, 2021, the effective tax rates of 16.8% and 19.0%, respectively, were lower than the U.S. federal statutory rate of 21.0% due to decreased state income taxes, statutory depletion deductions, and compensation-related items, partially offset by disallowed expenses connected to acquisitions, and foreign nondeductible expenses.

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. As of ~~March 31,~~June 30, 2022, the Company has deferred $5.4 million in payroll-related taxes in accordance with the provisions of the CARES Act.

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Note 11. Employee Retirement Plans

Total employee retirement plan expense, which includes related administrative expenses, is as follows:


		Three Months Ended March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
			(in millions)						(in millions)
Defined contribution plans	Defined contribution plans		$	3.2		$	2.7	Defined contribution plans	$	3.6	$	2.6	$	6.8	$	5.3
Multiemployer plan	Multiemployer plan		0.4			0.4		Multiemployer plan	0.4		0.6		0.8		1.0
			$	3.6		$	3.1		$	4.0	$	3.2	$	7.6	$	6.3

The Company contributes to a multiemployer defined benefit plan under the terms of a collective-bargaining agreement that covers certain union-represented employees at one of the facilities of Meyer Utility Structures, 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 ~~March 31,~~June 30, 2022, respectively. The Company contributed $0.5 million and ~~2021.~~$0.9 million to the multiemployer plan for the three and six months ended June 30, 2021, respectively. Total contributions to the multiemployer plan for 2022 are expected to be approximately ~~$1.5~~$1.6 million.

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Note 12. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 are as follows:


		Currency translation adjustments		Unrealized loss on derivative financial instruments		Accumulated other comprehensive loss			Currency translation adjustments		Unrealized loss on derivative financial instruments		Accumulated other comprehensive loss

		(in millions)							(in millions)
Balances at December 31, 2020	Balances at December 31, 2020	$	(16.6)	$	(5.5)	$	(22.1)	Balances at December 31, 2020	$	(16.6)	$	(5.5)	$	(22.1)
Other comprehensive income (loss), net of tax, before reclassifications	Other comprehensive income (loss), net of tax, before reclassifications	0.1		0.5		0.6		Other comprehensive income (loss), net of tax, before reclassifications	0.3		0.8		1.1
Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, ($0.1), and ($0.1)		—		0.4		0.4
Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, ($0.2), and ($0.2)								Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, ($0.2), and ($0.2)	—		0.7		0.7
Other comprehensive income (loss)	Other comprehensive income (loss)	0.1		0.9		1.0		Other comprehensive income (loss)	0.3		1.5		1.8
Balances at March 31, 2021		$	(16.5)	$	(4.6)	$	(21.1)
Balances at June 30, 2021								Balances at June 30, 2021	$	(16.3)	$	(4.0)	$	(20.3)

Balances at December 31, 2021	Balances at December 31, 2021	$	(16.3)	$	(3.0)	$	(19.3)	Balances at December 31, 2021	$	(16.3)	$	(3.0)	$	(19.3)
Other comprehensive income (loss), net of tax, before reclassifications	Other comprehensive income (loss), net of tax, before reclassifications	0.1		1.6		1.7		Other comprehensive income (loss), net of tax, before reclassifications	(0.1)		2.3		2.2
Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, ($0.1), and ($0.1)		—		0.5		0.5
Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, ($0.2), and ($0.2)								Amounts reclassified from accumulated other comprehensive loss, net of tax expense (benefit) of $0.0, ($0.2), and ($0.2)	—		0.8		0.8
Other comprehensive income (loss)	Other comprehensive income (loss)	0.1		2.1		2.2		Other comprehensive income (loss)	(0.1)		3.1		3.0
Balances at March 31, 2022		$	(16.2)	$	(0.9)	$	(17.1)
Balances at June 30, 2022								Balances at June 30, 2022	$	(16.4)	$	0.1	$	(16.3)

Note 13. Stock-Based Compensation

Stock-based compensation totaled approximately ~~$4.4~~$5.7 million and ~~$4.7~~$10.1 million for the three and six months ended ~~March 31,~~June 30, 2022, respectively. Stock-based compensation totaled approximately $4.1 million and $8.8 million for the three and six months ended June 30, 2021, respectively.

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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. Total weighted average restricted shares were ~~1.6~~1.5 million and ~~1.8~~1.6 million shares for the three and six months ended ~~March 31,~~June 30, 2022, respectively. Total weighted average restricted shares were 1.8 million and 1.9 million three and six months ended June 30, 2021, respectively.

The computation of basic and diluted earnings per share follows.


		Three Months Ended March 31, 2022					Three Months Ended March 31, 2021						Three Months Ended June 30, 2022					Three Months Ended June 30, 2021
		Income (Loss)		Average Shares	EPS		Income (Loss)		Average Shares	EPS			Income (Loss)		Average Shares	EPS		Income (Loss)		Average Shares	EPS

		(in millions, except per share amounts)											(in millions, except per share amounts)
Net income	Net income	$	20.2				$	15.9				Net income	$	39.0				$	20.8
Unvested restricted share participation	Unvested restricted share participation	(0.1)					(0.1)					Unvested restricted share participation	(0.4)					(0.1)
Net income per common share – basic	Net income per common share – basic	20.1		48.2	$	0.42	15.8		48.0	$	0.33	Net income per common share – basic	38.6		48.3	$	0.80	20.7		48.1	$	0.43
Effect of dilutive securities:	Effect of dilutive securities:											Effect of dilutive securities:
Nonparticipating unvested restricted shares	Nonparticipating unvested restricted shares	—		0.6			—		0.8			Nonparticipating unvested restricted shares	—		0.3			—		0.5
Net income per common share – diluted	Net income per common share – diluted	$	20.1	48.8	$	0.41	$	15.8	48.8	$	0.32	Net income per common share – diluted	$	38.6	48.6	$	0.79	$	20.7	48.6	$	0.43

													Six Months Ended June 30, 2022					Six Months Ended June 30, 2021
													Income (Loss)		Average Shares	EPS		Income (Loss)		Average Shares	EPS

													(in millions, except per share amounts)
Net income												Net income	$	59.2				$	36.7
Unvested restricted share participation												Unvested restricted share participation	(0.6)					(0.2)
Net income per common share – basic												Net income per common share – basic	58.6		48.2	$	1.22	36.5		48.0	$	0.76
Effect of dilutive securities:												Effect of dilutive securities:
Nonparticipating unvested restricted shares												Nonparticipating unvested restricted shares	—		0.4			—		0.5
Net income per common share – diluted												Net income per common share – diluted	$	58.6	48.6	$	1.21	$	36.5	48.5	$	0.75

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. At ~~March 31,~~June 30, 2022, the range of reasonably possible losses for such matters, taking into consideration our rights in indemnity and recourse to third parties is $0.3 million to $0.4 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 ~~March 31,~~June 30, 2022, total accruals of ~~$1.0~~$0.9 million 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 ~~$0.9~~$0.8 million as of ~~March 31,~~June 30, 2022, included in our total accruals of ~~$1.0~~$0.9 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.

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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 filed 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 “Trial Court”). The Company and Meyer have filed a motion to dismiss T&B’s claims, and an Answer and Counterclaims against T&B. On July 30, 2020, the Court granted the Company's and Meyer's motion and dismissed T&B's claims. In its ruling, the Court likewise dismissed Meyer's counterclaims. On August 28, 2020, T&B filed its Notice of Appeal to the United States Court of Appeals for the Second Circuit (the “Appellate Court”). On November 9, 2020, T&B filed its Appellant’s Brief with the Appellate Court. The Company and Meyer filed its Appellees’ Brief on February 8, 2021. T&B filed its Reply Brief on April 9, 2021. On August 26, 2021, oral argument was held, and, on September 22, 2021, the Appellate Court issued a Summary Order reversing the dismissal and remanding the case to the Trial Court for further proceedings. On February 13, 2022, the parties reached an agreement to settle all claims in this case without admission of liability or fault. On February 18, 2022 the parties filed a stipulation of dismissal of each party's respective claims. On February 22, 2022, the Trial Court issued its Order on Joint Stipulation of Dismissal which fully and finally resolved the litigation.

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, including those related to 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 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:

•Company Overview

•Potential Impact of COVID-19 on our Business

•Executive 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 Financial Statements of Arcosa, Inc. and its consolidated subsidiaries (“Arcosa,” “Company,” “we,” or “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, 2021 (“2021 Annual Report on Form 10-K”).

Company Overview

Arcosa, headquartered in Dallas, Texas, is a provider of infrastructure-related products and solutions with leading brands serving construction, engineered structures, and transportation markets in North America. Arcosa is a Delaware corporation and was incorporated in 2018 in connection with the separation (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.

Potential Impact of COVID-19 on our Business

Our highest priority is the health and safety of our employees and communities. We are committed to safety across our operations. Our businesses support critical infrastructure sectors and our plants have continued to operate throughout the COVID-19 pandemic. If one or more of Arcosa’s facilities become subject to governmental ordered closure, voluntary temporary closure, closure from a COVID-19 outbreak within the facility, or other COVID-19 related reason, the business, liquidity and financial condition, and results of operations for Arcosa could be adversely affected.

The COVID-19 pandemic has disrupted global trade, commerce, financial and credit markets, and daily life throughout the world. The extent to which the COVID-19 pandemic impacts our business, liquidity and financial condition, and results of operations 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 taken in response to the pandemic; the impact of the pandemic on economic activity, 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; if key personnel are unable to perform their duties or have limited availability; the number of employees who contract or are directly exposed to COVID-19 and their availability to work in our plants and facilities; the ability to retain employees; the ability of our customers to pay for our products and services; any disruption in our supply chain; the ability to procure personal protective equipment; the availability of COVID-19 testing supplies; our ability to continue operations in compliance with COVID-19 related regulations; any closures of our and our customers’ facilities; increased cybersecurity and IT infrastructure risks; the impact on the health and safety of our employees; the impact on the demand for commodities served by our products and services; the impact of new COVID-19 variants; and the pace of recovery when the COVID-19 pandemic subsides, as well as, the response to a potential reoccurrence.

We strive to continuously improve our procedures, processes, and management systems regarding employee health and safety. The continuance of the COVID-19 pandemic has highlighted the critical importance of focusing on the health and wellness of our employees. We have followed the federal, state, and local guidelines governing our facilities and shared best practices across the organization, with the goal of protecting our employees and communities. We continue to monitor and implement guidelines and best practices for COVID-19 mitigation procedures.

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In addition to the extensive health and safety protocols already in place across our plants, we estimate that we are incurring less than $500 thousand per quarter of incremental costs related to COVID-19. We do not anticipate that the enhanced health and safety protocols will have a material impact on the productivity of our plants.

The preparation of the Company's Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the 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.

Market Outlook

•Within our Construction Products segment, our natural and recycled aggregates businesses have remained resilient, particularly in Texas, when seasonal weather conditions have been normal, and where states have reopened for business. We did experience a softening of demand for our specialty materials and shoring products businesses beginning in 2020 following the COVID-19 outbreak, but have largely recovered to pre-pandemic demand levels in 2022. The outlook for public and private construction activity has improved driven by ~~strong~~healthy residential demand and increased infrastructure spending. We are focused on managing inflationary pressures related to fuel and labor costs through proactive price ~~increases.~~increases and are monitoring potential future changes in demand following recent interest rate increases and the market expectation for additional tightening.

•Within our Engineered Structures segment, our backlog as of ~~March 31,~~June 30, 2022 provides a healthy level of production visibility for 2022. Our customers remain committed to taking delivery of these orders. In utility structures, order and inquiry activity continues to be strong, as customers remain focused on grid hardening and reliability initiatives. The demand outlook for traffic and telecom structures also remains positive. ~~In the third quarter of 2021, we received wind tower orders of $174 million providing a base level of production visibility for 2022.~~ Long-term expectations for the wind industry are favorable; however, uncertainty pertaining to the level of Production Tax Credit ("PTC") support and high steel prices are negatively impacting near-term ~~expectations. In~~expectations and order quantities. As a result, in the fourth quarter of 2021, we idled our Clinton, Illinois wind tower facility in anticipation of lower volumes in 2022. ~~Order and inquiry activity in the storage tank business is very strong, after~~After taking a pause initially at the onset of COVID-19, ~~as certain customers deferred new~~demand conditions in the storage tank ~~installations.~~business remain above pre-COVID levels primarily driven by increased residential housing activity and deurbanization trends.

•Within our Transportation Products segment, our backlog for inland barges as of ~~March 31,~~June 30, 2022 of ~~$150.6~~$131.8 million provides a base level of production visibility into 2023. Our customers remain committed to taking delivery of these orders. Barge order levels fell sharply at the onset of the pandemic and ensuing high steel prices further negatively impacted demand throughout 2021. To align with lower expected production levels in 2022, we have reduced our capacity in our two active barge operating plants and completed the idling of our Madisonville, Louisiana facility in the fourth quarter of 2021 to further reduce our cost structure. ~~The~~While order levels have remained low in 2022, the underlying fundamentals for a dry barge replacement cycle remain in place as the fleet continues to age, new builds have not kept pace with scrapping, and utilization rates are high. ~~In the first quarter of 2022, we received orders of approximately $105 million, primarily for hopper barges. These orders fill our planned production capacity for 2022 and extend our~~Our barge backlog extends into 2023 ~~as we~~allowing us to remain flexible for an anticipated market recovery. Demand for steel components, which was softening pre-COVID-19 due to a weakening North American rail transportation market, is increasing as the outlook for the new railcar market has improved due to increased railcar loadings, improved utilization, and replacement needs.

Executive Overview

Recent Developments

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Financial Operations and Highlights

•Revenues for the three and six months ended ~~March 31,~~June 30, 2022 increased by ~~21.7%~~17.0% and 19.2% to ~~$535.8~~$602.8 million ~~as increased~~and $1,138.6 million, respectively, driven by higher revenues in ~~Construction Product and Engineered Structures were partially offset by decreased volumes in Transportation Products.~~all segments.

~~Table of Contents~~

•Operating profit for the three and six months ended ~~March 31,~~June 30, 2022 totaled ~~$34.7~~$57.2 million and $91.9 million, respectively, representing an increase of ~~$11.8~~$25.9 million and $37.7 million, respectively, from the same ~~period~~periods in 2021. For the ~~quarter,~~three and six month periods, increased operating profit was driven by higher ~~operating profit~~margins on increased pricing in Engineered Structures, combined with higher volumes in Construction Products and ~~Engineered Structures was partially offset by lower operating profit in~~our steel components business within Transportation Products.

•Selling, general, and administrative expenses increased by 11.0% for the three months ended March 31, 2022 when compared to the prior year period largely due to increased costs from recently acquired businesses. As a percentage of revenue, selling, general, and administrative expenses decreased to ~~11.7%~~11.0% and 11.3% for the three and six months ended June 30, 2022, compared to 12.9% for the same periods in 2021. Selling, general, and administrative expenses were largely unchanged for the three months ended ~~March 31,~~June 30, 2022 compared to ~~12.8% for~~ the same period in ~~2021.~~the prior year and increased 5.0% for the six months ended June 30, 2022 when compared to the prior year, largely due to increased costs from recently acquired businesses.

•The effective tax rate for the three and six months ended ~~March 31,~~June 30, 2022 was ~~24.1%~~20.6% and 21.8%, respectively, compared to ~~21.7%~~16.8% and 19.0%, respectively, for the same ~~period~~periods in 2021. The increase in the tax rate for the three and six months ended June 30, 2022 is primarily due to ~~increased state taxes, foreign adjustments, and disallowed compensation~~lower deductions on compensation-related items in the current ~~period.~~periods and a one-time benefit from state tax law changes in the prior periods. See Note 10 Income Taxes of the Consolidated Financial Statements.

•Net income for the three and six months ended ~~March 31,~~June 30, 2022 was ~~$20.2~~$39.0 million and $59.2 million, respectively, compared to ~~$15.9~~$20.8 million and $36.7 million, respectively, for the same ~~period~~periods in 2021.

Our Engineered Structures and Transportation Products segments operate in cyclical industries. Additionally, results in our Construction Products segment are affected by weather and seasonal fluctuations with the second and third quarters historically being the quarters with the highest revenues.

Unsatisfied Performance Obligations (Backlog)

As of ~~March 31,~~June 30, 2022, December 31, 2021, and ~~March 31,~~June 30, 2021, our unsatisfied performance obligations, or backlog, were as follows:


		March 31, 2022		December 31, 2021		March 31, 2021			June 30, 2022		December 31, 2021		June 30, 2021

		(in millions)							(in millions)
Engineered Structures:	Engineered Structures:							Engineered Structures:
Utility, wind, and related structures	Utility, wind, and related structures	$	421.0	$	437.5	$	379.5	Utility, wind, and related structures	$	410.1	$	437.5	$	348.5
Storage tanks	Storage tanks	20.9		22.0		30.7		Storage tanks	20.2		22.0		30.3

Transportation Products:	Transportation Products:							Transportation Products:
Inland barges	Inland barges	$	150.6	$	92.7	$	133.2	Inland barges	$	131.8	$	92.7	$	139.4

Approximately ~~88%~~83% of the unsatisfied performance obligations for our utility, wind, and related structures in our Engineered Structures segment are expected to be delivered during 2022, with substantially all of the remainder expected to be delivered during 2023. All of the unsatisfied performance obligations for our storage tanks business in our Engineered Structures segment are expected to be delivered during 2022. Approximately ~~72%~~50% of unsatisfied performance obligations for inland barges in our Transportation Products segment are expected to be delivered during 2022, with the remainder expected to be delivered during 2023.

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Results of Operations

Overall Summary

Revenues


		Three Months Ended March 31,					Three Months Ended June 30,													Six Months Ended June 30,
				2022				2021			Percent Change				2022					2021			Percent Change			2022					2021			Percent Change
			(in millions)			Percent Change				(in millions)						Percent Change					(in millions)					Percent Change
Construction Products	Construction Products			$	211.5			$	153.2			38.1		%	Construction Products			$	245.9		$	204.5		20.2	%				$	457.4	$	357.7		27.9		%
Engineered Structures	Engineered Structures			250.5				207.0			21.0		Engineered Structures		268.6					242.5				10.8			519.1					449.5			15.5
Transportation Products	Transportation Products			73.8				80.2			(8.0)		Transportation Products		88.3					68.2			29.5				162.1					148.4			9.2

Segment Totals before Eliminations	Segment Totals before Eliminations			535.8				440.4			21.7		Segment Totals before Eliminations		602.8					515.2			17.0			1,138.6					955.6			19.2
Eliminations	Eliminations			—				—					Eliminations		—					(0.1)						—					(0.1)
Consolidated Total	Consolidated Total			$	535.8			$	440.4		21.7		Consolidated Total		$		602.8				$	515.1		17.0			$	1,138.6				$	955.5		19.2

~~Three Months Ended March 31,~~ 2022 versus ~~Three Months Ended March 31,~~ 2021

•Revenues increased by ~~21.7%.~~17.0% and 19.2% during the three and six months ended June 30, 2022, respectively.

•Revenues from Construction Products increased primarily due to higher volumes from acquired businesses as well as increased pricing and strong demand in our legacy businesses.

•Revenues from Engineered Structures increased primarily due to increased pricing in all product lines driven by higher steel prices.

•Revenues from Transportation Products ~~decreased~~increased primarily due to ~~lower volumes in inland barge, partially offset by higher volumes~~increased deliveries in steel components.

Operating Costs


		Three Months Ended March 31,					Three Months Ended June 30,												Six Months Ended June 30,
				2022				2021				Percent Change			2022				2021				Percent Change			2022					2021				Percent Change
											Percent Change											Percent Change												Percent Change
			(in millions)			Percent Change				(in millions)						Percent Change				(in millions)						Percent Change
Construction Products	Construction Products			$	194.8			$	137.4			41.8	%	Construction Products	$			217.8	$	186.6			16.7		%				$	412.6	$	324.0			27.3		%
Engineered Structures	Engineered Structures			222.2				189.5					17.3		Engineered Structures			227.1		213.4					6.4				449.3		402.9				11.5
Transportation Products	Transportation Products			71.1				76.1				(6.6)		Transportation Products	84.8				66.9				26.8					155.9					143.0				9.0

Segment Totals before Eliminations and Corporate Expenses	Segment Totals before Eliminations and Corporate Expenses			488.1				403.0				21.1		Segment Totals before Eliminations and Corporate Expenses	529.7				466.9				13.5			1,017.8					869.9				17.0
Corporate	Corporate			13.0				14.5				(10.3)		Corporate	15.9				17.0				(6.5)			28.9					31.5				(8.3)
Eliminations	Eliminations			—				—						Eliminations	—				(0.1)							—					(0.1)
Consolidated Total	Consolidated Total			$	501.1			$	417.5			20.0		Consolidated Total	$		545.6			$	483.8			12.8			$	1,046.7				$	901.3			16.1

Depreciation, depletion, and amortization(1)	Depreciation, depletion, and amortization(1)			$	37.8			$	31.4			20.4		Depreciation, depletion, and amortization(1)	$	39.5			$	36.6			7.9			$	77.3				$	68.0			13.7

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

~~Three Months Ended March 31,~~ 2022 versus ~~Three Months Ended March 31,~~ 2021

•Operating costs increased by ~~20.0%.~~12.8% and 16.1% during the three and six months ended June 30, 2022.

•Cost of revenues for Construction Products increased primarily due to higher volumes, ~~from acquired businesses, including the impact of additional depreciation, depletion,~~higher fuel prices, and ~~amortization expense.~~other inflationary-related increases.

•Cost of revenues for Engineered Structures increased primarily due to higher steel prices.

•Cost of revenues for Transportation Products ~~decreased~~increased primarily due to ~~lower barge volumes, partially offset by~~ higher steel component ~~volumes.~~volumes and higher steel costs in inland barges.

•Depreciation, depletion, and amortization increased primarily due to recent acquisitions, including the fair value mark up of long-lived assets.

•~~Selling, general, and administrative expenses, including Corporate expenses, increased 11.0% largely due to increased costs from recently acquired businesses.~~ As a percentage of revenues, selling, general, and administrative expenses decreased to ~~11.7%~~11.0% and 11.3% for the three and six months ended June 30, 2022, compared to 12.9% for the same periods in 2021. Selling, general, and administrative expenses were largely unchanged for the three months ended ~~March 31,~~June 30, 2022 compared to ~~12.8% for~~ the same period in ~~2021.~~the prior year and increased 5.0% for the six months ended June 30, 2022 when compared to the prior year, largely due to increased costs from recently acquired businesses.

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Operating Profit (Loss)


		Three Months Ended March 31,					Three Months Ended June 30,													Six Months Ended June 30,
				2022				2021			Percent Change				2022					2021			Percent Change			2022					2021			Percent Change
			(in millions)			Percent Change				(in millions)						Percent Change					(in millions)					Percent Change
Construction Products	Construction Products			$	16.7			$	15.8			5.7		%	Construction Products			$	28.1		$	17.9		57.0	%				$	44.8	$	33.7		32.9		%
Engineered Structures	Engineered Structures			28.3				17.5			61.7		Engineered Structures		41.5					29.1				42.6			69.8					46.6			49.8
Transportation Products	Transportation Products			2.7				4.1			(34.1)		Transportation Products		3.5					1.3			169.2				6.2					5.4			14.8

Segment Totals before Corporate Expenses	Segment Totals before Corporate Expenses			47.7				37.4			27.5		Segment Totals before Corporate Expenses		73.1					48.3			51.3			120.8					85.7			41.0
Corporate	Corporate			(13.0)				(14.5)			(10.3)		Corporate		(15.9)					(17.0)			(6.5)			(28.9)					(31.5)			(8.3)

Consolidated Total	Consolidated Total			$	34.7			$	22.9		51.5		Consolidated Total		$		57.2				$	31.3		82.7			$	91.9				$	54.2		69.6

~~Three Months Ended March 31,~~ 2022 versus ~~Three Months Ended March 31,~~ 2021

•Operating profit increased by ~~51.5%.~~82.7% and 69.6% during the three and six months ended June 30, 2022.

•Operating profit in Construction Products increased primarily due to higher ~~revenues, partially offset by higher depreciation, depletion, and amortization expense.~~volumes.

•Operating profit in Engineered Structures increased primarily due to higher revenues and improved margins in our utility and related structures ~~business.~~businesses.

•Operating profit in Transportation Products ~~decreased~~increased primarily due to ~~overall lower volumes.~~higher volumes in steel components.

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 March 31,			Three Months Ended June 30,						Six Months Ended June 30,
			2022			2021			2022		2021		2022		2021
			(in millions)						(in millions)
Interest income	Interest income		$	(0.1)		$	—	Interest income	$	—	$	(0.1)	$	(0.1)	$	(0.1)
Foreign currency exchange transactions	Foreign currency exchange transactions		1.0			0.6		Foreign currency exchange transactions	0.5		(0.1)		1.5		0.5
Other	Other		—			(0.1)		Other	(0.1)		(0.1)		(0.1)		(0.2)
Other, net (income) expense	Other, net (income) expense		$	0.9		$	0.5	Other, net (income) expense	$	0.4	$	(0.3)	$	1.3	$	0.2

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 ~~March 31,~~June 30, 2022 was ~~24.1%~~20.6% and 21.8%, respectively, compared to ~~21.7%~~16.8% and 19.0% for the same ~~period~~periods in 2021. The increase in the tax ~~rate~~rates is primarily due to increased foreign adjustments and disallowed compensation deductions in addition to a one-time benefit from state tax law changes in the prior ~~period.~~periods.

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 of the Notes to Consolidated Financial Statements for further discussion of income taxes.

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Segment Discussion

Construction Products


		Three Months Ended March 31,				Three Months Ended June 30,									Six Months Ended June 30,
				2022			2021			Percent			2022		2021		Percent		2022		2021		Percent
			($ in millions)				Change		($ in millions)						Change		($ in millions)				Change
Revenues:	Revenues:											Revenues:
Aggregates and specialty materials	Aggregates and specialty materials			$	187.9		$	135.3		38.9	%	Aggregates and specialty materials	$	216.2	$	181.5	19.1	%	$	404.1	$	316.8	27.6	%
Construction site support	Construction site support			23.6			17.9			31.8		Construction site support	29.7		23.0		29.1		53.3		40.9		30.3
Total revenues	Total revenues			211.5			153.2			38.1		Total revenues	245.9		204.5		20.2		457.4		357.7		27.9

Operating costs:	Operating costs:											Operating costs:
Cost of revenues	Cost of revenues			168.8			118.9			42.0		Cost of revenues	192.6		162.7		18.4		361.4		281.6		28.3
Selling, general, and administrative expenses	Selling, general, and administrative expenses			26.0			18.5			40.5		Selling, general, and administrative expenses	25.2		23.9		5.4		51.2		42.4		20.8
Operating profit	Operating profit			$	16.7		$	15.8		5.7		Operating profit	$	28.1	$	17.9	57.0		$	44.8	$	33.7	32.9

Depreciation, depletion, and amortization(1)	Depreciation, depletion, and amortization(1)			$	24.6		$	17.1		43.9		Depreciation, depletion, and amortization(1)	$	26.3	$	22.5	16.9		$	50.9	$	39.6	28.5

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

Three Months Ended ~~March 31,~~June 30, 2022 versus Three Months Ended ~~March 31,~~June 30, 2021

•Revenues increased ~~38.1%~~20.2% primarily driven by strong pricing and volume gains in both natural and recycled aggregates. Recent acquisitions, net of divestitures, resulted in an increase in revenues over prior year of approximately 5%. Revenues from our trench shoring business increased 29.1% from stronger pricing gains.

•Cost of revenues increased 18.4% due to higher volumes, higher fuel prices, and other inflationary-related increases. As a percent of revenues, cost of revenues decreased slightly primarily due to the amortization of the fair value mark up of inventory in the previous year.

•Selling, general, and administrative costs increased 5.4% primarily due to additional costs from acquired businesses. Selling, general, and administrative costs were lower than the previous period as a percentage of revenues.

•Operating profit increased 57.0% driven by increased volumes, and the reduction in amortization of the fair value mark up of inventory in the previous year.

•Depreciation, depletion, and amortization expense increased primarily due to recent acquisitions, including the impact of the fair value mark up of long-lived assets.

Six Months Ended June 30, 2022 versus Six Months Ended June 30, 2021

•Revenues increased 27.9% primarily driven by recent acquisitions, which on a combined basis increased segment revenues by approximately ~~30%~~15%. The additional increase in revenues was driven by ~~higher~~strong pricing and ~~volumes~~volume gains in ~~our~~both natural and recycled ~~aggregates and specialty materials businesses as well as increased volumes and higher steel prices in our construction site support business.~~

•Revenues in our legacy natural aggregates business increased slightly compared to the prior year period as strong pricing gains and volume increases were partially offset by anticipated volume declines in Central Texas.aggregates.

•Cost of revenues increased ~~42.0%~~28.3% due to higher volumes from recently acquired businesses and strong demand in our legacy businesses. Cost of revenues also increased due to higher depreciation, depletion, and amortization expense from acquired ~~businesses. As a percent of revenues, cost of revenues in our legacy~~ businesses, ~~decreased slightly despite~~ higher fuel prices and other inflationary-related increases.

•Selling, general, and administrative costs increased ~~40.5%~~20.8% primarily due to additional costs from acquired businesses. Selling, general, and administrative costs ~~in the legacy businesses~~ were slightly lower than the previous period as a ~~percent~~percentage of revenues.

•Operating profit increased ~~5.7%~~32.9% due to higher revenues and pricing, partially offset by higher depreciation, depletion, and amortization expense.

•Depreciation, depletion, and amortization expense increased primarily due to recently acquired businesses, including the impact of the fair value mark up of long-lived assets.

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Engineered Structures


		Three Months Ended March 31,				Three Months Ended June 30,									Six Months Ended June 30,
				2022			2021			Percent			2022		2021		Percent		2022		2021		Percent

			($ in millions)				Change		($ in millions)						Change		($ in millions)				Change
Revenues:	Revenues:											Revenues:
Utility, wind, and related structures	Utility, wind, and related structures			$	190.6		$	164.0		16.2	%	Utility, wind, and related structures	$	206.7	$	191.6	7.9	%	$	397.3	$	355.6	11.7	%
Storage tanks	Storage tanks			59.9			43.0			39.3		Storage tanks	61.9		50.9		21.6		121.8		93.9		29.7
Total revenues	Total revenues			250.5			207.0			21.0		Total revenues	268.6		242.5		10.8		519.1		449.5		15.5

Operating costs:	Operating costs:											Operating costs:
Cost of revenues	Cost of revenues			204.1			171.1			19.3		Cost of revenues	207.6		193.4		7.3		411.7		364.5		12.9
Selling, general, and administrative expenses	Selling, general, and administrative expenses			18.1			18.4			(1.6)		Selling, general, and administrative expenses	19.5		20.0		(2.5)		37.6		38.4		(2.1)

Operating profit	Operating profit			$	28.3		$	17.5		61.7		Operating profit	$	41.5	$	29.1	42.6		$	69.8	$	46.6	49.8

Depreciation and amortization(1)	Depreciation and amortization(1)			$	8.0		$	8.4		(4.8)		Depreciation and amortization(1)	$	8.0	$	8.4	(4.8)		$	16.0	$	16.8	(4.8)

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

Three Months Ended ~~March 31,~~June 30, 2022 versus Three Months Ended ~~March 31,~~June 30, 2021

•Revenues increased ~~21.0%~~10.8% due to increased pricing across all product lines, primarily driven by higher steel prices slightly offset by reduced volumes. Revenues in 2021 were positively impacted by a $7.7 million one-time resolution of a customer dispute in our wind towers business.

•Cost of revenues increased 7.3% driven by higher steel prices, partially offset by lower volumes and a gain of $1.6 million recognized on the sale of a traffic structures facility as we consolidated manufacturing within a region.

•Selling, general, and administrative costs down slightly and decreased as a percentage of revenues to 7.3% compared to 8.2% in the prior period.

•Operating profit increased 42.6% primarily due to higher revenues and improved margins in our utility and related structures businesses, as well as a recognition of a gain on the facility sale. The increase in operating profit was partially offset by the one-time resolution of a wind tower customer dispute in 2021.

Six Months Ended June 30, 2022 versus Six Months Ended June 30, 2021

•Revenues increased 15.5% primarily due to increased pricing across all product lines, partially offset by lower ~~wind tower~~ volumes.

•Cost of revenues increased ~~19.3%~~12.9% primarily driven by higher steel input prices, partially offset by lower ~~wind tower~~ volumes. Cost of revenues were also ~~increased due to~~impacted by a gain of $3.9 million recognized in the first quarter of 2021, partially offset by the $1.6 million gain recognized in the second quarter of 2022 both on the ~~sale~~dispositions of ~~a non-operating facility in the prior period.~~manufacturing facilities not required to support operations.

•Selling, general, and administrative costs were ~~substantially unchanged~~down slightly and decreased as a percentage of revenues to 7.2% compared to ~~8.9%~~8.5% in the prior period.

•Operating profit increased ~~61.7%~~49.8% primarily due to higher revenues and improved margins in our utility structures ~~businesses~~business and improved pricing across all product lines. This increase was partially offset by a one-time customer resolution recognized in ~~our storage tanks business.~~2021.

Unsatisfied Performance Obligations (Backlog)

As of ~~March 31,~~June 30, 2022, the backlog for utility, wind, and related structures was ~~$421.0~~$410.1 million, compared to $437.5 million and ~~$379.5~~$348.5 million as of December 31, 2021 and ~~March 31,~~June 30, 2021, respectively. Approximately ~~88%~~83% of these unsatisfied performance obligations are expected to be delivered during the year ending December 31, 2022 with substantially all of the remainder expected to be delivered in 2023. Future wind tower orders are subject to uncertainty as PTC eligibility for new wind farm projects is currently in a phase-out period that extends until 2025, and there is currently no PTC in place for new wind farm projects commencing in 2022 or beyond. Pricing of orders and individual order quantities reflect a market transitioning from PTC incentives. As of ~~March 31,~~June 30, 2022, the backlog for our storage tank business was ~~$20.9~~$20.2 million, all of which is expected to be delivered during the year ending December 31, 2022.

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Transportation Products


		Three Months Ended March 31,				Three Months Ended June 30,									Six Months Ended June 30,
				2022			2021			Percent			2022		2021		Percent		2022		2021		Percent
			($ in millions)				Change		($ in millions)						Change		($ in millions)				Change
Revenues:	Revenues:											Revenues:
Inland barges	Inland barges			$	47.0		$	57.9		(18.8)	%	Inland barges	$	53.8	$	49.0	9.8	%	$	100.8	$	106.9	(5.7)	%
Steel components	Steel components			26.8			22.3			20.2		Steel components	34.5		19.2		79.7		61.3		41.5		47.7
Total revenues	Total revenues			73.8			80.2			(8.0)		Total revenues	88.3		68.2		29.5		162.1		148.4		9.2

Operating costs:	Operating costs:											Operating costs:
Cost of revenues	Cost of revenues			65.6			71.1			(7.7)		Cost of revenues	79.1		61.4		28.8		144.7		132.5		9.2
Selling, general, and administrative expenses	Selling, general, and administrative expenses			5.5			5.0			10.0		Selling, general, and administrative expenses	5.7		5.5		3.6		11.2		10.5		6.7

Operating profit	Operating profit			$	2.7		$	4.1		(34.1)		Operating profit	$	3.5	$	1.3	169.2		$	6.2	$	5.4	14.8

Depreciation and amortization (1)	Depreciation and amortization (1)			$	3.9		$	4.6		(15.2)		Depreciation and amortization (1)	$	4.0	$	4.5	(11.1)		$	7.9	$	9.1	(13.2)

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

Three Months Ended ~~March 31,~~June 30, 2022 versus Three Months Ended ~~March 31,~~June 30, 2021

•Revenues increased 29.5% primarily due to a 79.7% increase in steel component revenues on higher deliveries as the North American railcar market shows signs of a modest recovery. Revenues from inland barges increased 9.8% from higher hopper barge pricing due to higher steel costs.

•Cost of revenues increased 28.8% driven by higher steel component volumes and higher hopper barge steel costs.

•Selling, general, and administrative costs were relatively unchanged and decreased ~~8.0%~~as a percentage of revenues to 6.5% compared to 8.1% in the prior period due to overall higher volumes and pricing.

•Operating profit increased by 169.2% due to higher steel component volumes.

Six Months Ended June 30, 2022 versus Six Months Ended June 30, 2021

•Revenues increased 9.2%. Reflecting weakened demand conditions from both the COVID-19 pandemic and increased steel prices, revenues from inland barges decreased ~~18.8%~~5.7% driven by lower tank barge deliveries, partially offset by a slight increase in hopper barge ~~deliveries.~~pricing. Steel component revenues increased ~~20.2%~~47.7% due to increased deliveries resulting from improving demand conditions in the North American railcar market.

•Cost of revenues ~~decreased 7.7%~~increased 9.2% driven by higher steel component volumes, partially offset by lower tank barge ~~volumes, partially offset by higher steel component~~ volumes.

•Selling, general, and administrative costs ~~increased~~were up slightly but decreased as a percentage of ~~revenue~~revenues to ~~7.5%~~6.9% compared to ~~6.2%~~7.1% in the prior period ~~on lower~~due to overall higher volumes.

•Operating profit ~~decreased 34.1%~~increased 14.8% due to ~~overall~~higher steel component volumes, partially offset by lower tank barge volumes.

Unsatisfied Performance Obligations (Backlog)

As of ~~March 31,~~June 30, 2022, the backlog for inland barges was ~~$150.6~~$131.8 million, compared to $92.7 million and ~~$133.2~~$139.4 million as of December 31, 2021 and ~~March 31,~~June 30, 2021, respectively. Approximately ~~72%~~50% of unsatisfied performance obligations for inland barges are expected to be delivered during the year ending December 31, 2022 with the remainder expected to be delivered in 2023.

Table of Contents

Corporate
Three Months Ended March 31,
2022 2021 Percent
(in millions) Change
Corporate overhead costs $ 13.0 $ 14.5 (10.3) %


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Percent		2022		2021		Percent
	(in millions)				Change		(in millions)				Change
Corporate overhead costs	$	15.9	$	17.0	(6.5)	%	$	28.9	$	31.5	(8.3)	%

~~Three Months Ended March 31,~~

2022 versus ~~Three Months Ended March 31,~~ 2021

•Corporate overhead costs decreased ~~10.3%~~6.5% for the three months ended ~~March 31,~~June 30, 2022 primarily due to lower acquisition and divestiture-related expenses of ~~$0.9~~$2.5 million for the three months ended June 30, 2022, compared to $5.8 million for the same period in 2021.

•Corporate overhead costs decreased 8.3% for the six months ended June 30, 2022 primarily due to lower acquisition and divestiture-related expenses of $3.4 million in current period, compared to ~~$1.7~~$7.5 million for the same period in 2021.

•We estimate ~~full-year~~ corporate costs of approximately ~~$13-14~~$14 to $15 million per quarter for the remainder of 2022, excluding non-recurring acquisition and divestiture-related expenses. We estimate full-year acquisition and divestiture-related expenses of approximately ~~$7.5-8.5~~$10.5 to $11.5 million.

~~Table of Contents~~

Liquidity and Capital Resources

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

Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021:


		Three Months Ended March 31,					Six Months Ended June 30,
		2022		2021			2022		2021

		(in millions)					(in millions)
Total cash provided by (required by):	Total cash provided by (required by):					Total cash provided by (required by):
Operating activities	Operating activities	$	24.5	$	0.4	Operating activities	$	111.2	$	51.1
Investing activities	Investing activities	(5.3)		(10.4)		Investing activities	(98.7)		(419.1)
Financing activities	Financing activities	(3.5)		(3.9)		Financing activities	(6.0)		372.5
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	$	15.7	$	(13.9)	Net increase (decrease) in cash and cash equivalents	$	6.5	$	4.5

Operating Activities. Net cash provided by operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was ~~$24.5~~$111.2 million compared to ~~$0.4~~$51.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021.

•The changes in current assets and liabilities resulted in a net use of cash of ~~$38.1~~$30.4 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022 compared to a net use of cash of ~~$46.7~~$52.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021. The current year activity was primarily driven by increased receivables and inventories due to increased volumes and higher steel prices, partially offset by increases in accounts payable.

Investing Activities. Net cash required by investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was ~~$5.3~~$98.7 million compared to ~~$10.4~~$419.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021.

•Capital expenditures for the ~~three~~six months ended ~~March 31,~~June 30, 2022 were ~~$25.9~~$52.9 million compared to ~~$19.9~~$41.5 million for the same period last year. Full-year capital expenditures are expected to be approximately $120 to $140 million in 2022. We expect maintenance capital expenditures of ~~approximately~~$70 to $90 million and capital expenditures related to additional growth to be ~~$30 to~~approximately $50 million in 2022.

•Proceeds from the sale of property, plant, and equipment and other assets totaled ~~$20.6~~$29.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2022, compared to ~~$9.5~~$11.1 million for the same period in 2021.

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•Cash paid for acquisitions, net of cash acquired, was $75.0 million for the six months ended June 30, 2022 compared to $388.7 million for the same period in 2021. There was no ~~acquisition or~~ divestiture activity for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021.

Financing Activities. Net cash required by financing activities during the ~~three~~six months ended ~~March 31,~~June 30, 2022 was ~~$3.5~~$6.0 million compared to net cash ~~required~~provided by financing activities of ~~$3.9~~$372.5 million for the same period in 2021.

•Current year activity primarily related to borrowings and repayments under the revolving credit facility as well as $15.0 million of share repurchases under the current repurchase authorization. Prior year to date activity primarily related to the net proceeds from the issuance of the $400 million Senior Notes.

Other Investing and Financing Activities

Revolving Credit Facility and Senior Notes

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 entire term loan was advanced on January 2, 2020. As of ~~March 31,~~June 30, 2022, the term loan had a remaining balance of ~~$144.4~~$142.5 million.

As of ~~March 31,~~June 30, 2022, we had ~~$125.0~~$155.0 million of outstanding loans borrowed under the revolving credit facility and there were approximately $28.5 million of letters of credit issued, leaving ~~$346.5~~$316.5 million available for borrowing.

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 for borrowing and commitment fee rate are determined based on Arcosa’s leverage as measured by a consolidated total indebtedness to consolidated EBITDA ratio. The margin for borrowing ranges from 1.25% to 2.00% and was set at LIBOR plus 1.75% as of ~~March 31,~~June 30, 2022. The commitment fee rate ranges from 0.20% to 0.35% and was set at 0.30% as of ~~March 31,~~June 30, 2022.

~~Table of Contents~~

In order to increase liquidity in anticipation of the acquisition of StonePoint the Company entered into an unsecured 364-Day Credit Agreement on March 26, 2021 providing for a revolving line of credit of $150.0 million, with an outside maturity date of March 25, 2022, with pricing, covenants, and guarantees substantially similar to the Company’s existing revolving credit and term loan facilities. Per the terms of the facility, it terminated on April 6, 2021 upon the closing of the Company’s private offering of $400 million in senior notes.

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. Consequently, the Company will continue to evaluate its financial position in light of future developments, particularly those relating to COVID-19, including its variants.

Dividends and Repurchase Program

In ~~March~~May 2022, the Company declared a quarterly cash dividend of $0.05 per share that was paid on ~~April~~July 29, 2022.

In December 2020, the Company’s Board of Directors authorized a new $50 million share repurchase program effective January 1, 2021 through December 31, 2022 to replace a program of the same amount that expired on December 31, 2020. Under the program, the Company repurchased no298,629 shares during the ~~three~~six months ended ~~March 31,~~June 30, 2022. As of ~~March 31,~~June 30, 2022, the Company had a remaining authorization of ~~$40.6~~$25.7 million under the program. See Note 1 of the Notes to the Consolidated Financial Statements.

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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 Amended and Restated Credit Agreement. The instrument carried an initial notional amount of $100.0 million, thereby hedging the first $100.0 million of borrowings. The instrument effectively fixes the LIBOR component of the borrowings at a monthly rate of 2.71%. As of ~~March 31,~~June 30, 2022, the Company has recorded ~~a liability~~an asset of ~~$1.2~~$0.3 million for the fair value of the instrument, all of which is recorded in accumulated other comprehensive ~~loss.~~income. See Note 3 and Note 7 of the Notes to the Consolidated Financial Statements.

Recent Accounting Pronouncements

See Note 1 of the Notes to the Consolidated 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 and involve risks and uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives, future financial performances, estimates, projections, goals, and forecasts. Arcosa uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” and similar expressions to identify these forward-looking statements. Potential factors, which could cause our actual results of operations to differ materially from those in the forward-looking statements 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 our business products and services;

•the cyclical nature of the industries in which we compete;

•variations in weather in areas where 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, or divest any business;

•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 our manufacturing businesses;

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

•changing technologies;

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

•increased costs due to increased inflation;

•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 our products with mandated specifications, standards, or testing criteria and obligations to remove and replace our products following installation or to recall our products and install different products manufactured by 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 inability to sufficiently protect our intellectual property rights;

•our ability to mitigate against cybersecurity incidents, including ransomware, malware, phishing emails, and other electronic security threats;

•the improper use of social and other digital media to disseminate false, misleading, and/or unreliable or inaccurate information about the Company or demonstrate actions that negatively reflect on the Company;

•if the Company's ESG efforts are not favorably received by stockholders;

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

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•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 Separation does not comply with state fraudulent conveyance laws and legal dividend requirements.

Any forward-looking statement speaks only as of the date on which such statement is made. Arcosa undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. For a discussion of risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see Item 1A, “Risk Factors” in our 2021 Annual Report on Form 10-K and future Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There has been no material change in our market risks since December 31, 2021 as set forth in our 2021 Annual Report on Form 10-K. See Note 9 of the Notes to Consolidated Financial Statements for the impact of foreign exchange rate fluctuations for the three and six months ended ~~March 31,~~June 30, 2022.

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, 2022 excludes an assessment of the internal control over financial reporting of the RAMCO business acquired in May 2022. RAMCO represents approximately 3% of consolidated total assets and less than 1% of consolidated revenues as of and for the six months ended June 30, 2022.

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PART II

Item 1. Legal Proceedings

See Note 15 of the Consolidated Financial Statements regarding legal proceedings.

Item 1A. Risk Factors

There have been no material changes in the Company's risk factors from those set forth in our 2021 Annual Report on Form 10-K.

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 ~~March 31,~~June 30, 2022:

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)
January 1, 2022 through January 31, 2022 611 $ 52.58 — $ 40,625,892
February 1, 2022 through February 28, 2022 355 $ 44.17 — $ 40,625,892
March 1, 2022 through March 31, 2022 992 $ 57.41 — $ 40,625,892
Total 1,958 $ 53.50 — $ 40,625,892


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, 2022 through April 30, 2022	711	$	56.81	—	$	40,625,892
May 1, 2022 through May 31, 2022	373,922	$	52.15	191,683	$	30,634,738
June 1, 2022 through June 30, 2022	107,539	$	46.59	106,946	$	25,656,442
Total	482,172	$	50.91	298,629	$	25,656,442

(1) These columns include the following transactions during the three months ended ~~March 31,~~June 30, 2022: (i) the surrender to the Company of ~~1,958~~183,543 shares of common stock to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees and (ii) the purchase of no298,629 shares of common stock on the open market as part of the stock repurchase program.

(2) In December 2020, the Company’s Board of Directors authorized a new $50 million share repurchase program effective January 1, 2021 through December 31, 2022 to replace a program of the same amount that expired on 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 Quarterly Report on Form 10-Q, for the quarter-ended March 31, 2020, File No. 001-38494).


~~10.1~~4.1						Second Supplemental Indenture dated as of May 17, 2022 among the Guaranteeing Subsidiaries named therein, Arcosa, Inc. and Computershare Trust Company N.A. (filed herewith).
10.1.1						Supplement to Subsidiary Guaranty dated as of April 8, 2022 ~~Change in Control Severance Plan,~~by Arcosa Aggregates Texas, LLC (filed herewith).
10.1.2						Supplement to Subsidiary Guaranty dated ~~March 3,~~as of April 26, 2022 by Arcosa Aggregates Holdings, LLC (filed herewith).
10.2						Amendment Number Two to the Amended and Restated Credit Agreement dated as of June 29, 2022 by and among Arcosa, Inc., as borrower, the lenders thereto, JPMorgan Chase Bank, National Association, as administrative agent (filed herewith).
10.3						Equity Purchase Agreement by and between Arcosa, Inc. and Triarc Tanks Bidco, LLC, dated April 25, 2022 (filed herewith).
10.4						Amendment No. 1 to Equity Purchase Agreement by and between Arcosa, Inc. and Triarc Tanks Bidco, LLC, dated May 13, 2022 (filed herewith).
10.5						Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.1 to the ~~Company's~~Company’s Current Report on Form 8-K filed ~~March 7,~~on May 5, 2022, File No. 001-38494).
10.6						Form of Performance-Based Restricted Stock Unit Grant Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 5, 2022, File No. 001-38494).
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).

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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.~~Arcosa, Inc.
	(Registrant)

August 4, 2022	ByBy:	/s/ Gail M. Peck
~~Registrant~~
		Gail M. Peck
		Chief Financial Officer
		~~April 29, 2022~~

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Caption			Page

PART I
Item 1. Financial Statements			3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2123
Item 3. Quantitative and Qualitative Disclosures a bout Market Risk			3235
Item 4. Controls and Procedures			3235

PART II
Item 1. Legal Proceedings			3336
Item 1A. Risk Factors			3336
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3336
Item 3. Defaults Upon Senior Securities			3336
Item 4. Mine Safety Disclosures			3336
Item 5. Other Information			3336
Item 6. Exhibits			3437

SIGNATURES			3538