Good morning, ladies and gentlemen, and welcome to the Arcosa Third Quarter 2025 Earnings Conference Call. My name is Boe, and I will be your conference call coordinator today. As a reminder, today's call is being recorded. Now I would like to turn the call over to your host, Ms. Erin Drabek, Vice President of Investor Relations for Arcosa. Please go ahead, Ms. Drabek.

Good morning, and thank you for joining Arcosa's Third Quarter 2025 Earnings Call. With me today are Antonio Carrillo, President and CEO; and Gail Peck, CFO. A question-and-answer session will follow their prepared remarks. A copy of the press release issued yesterday and the slide presentation for this morning's call are posted on our Investor Relations website, ir.arcosa.com. A replay of today's call will be available for the next 2 weeks. Instructions for accessing the replay number are included in the press release. A replay of the webcast will be available for 1 year on our website under the News and Events tab. Today's comments and presentation slides contain financial measures that have not been prepared in accordance with GAAP. Reconciliations of non-GAAP measures to the closest GAAP measure are included in the appendix of the slide presentation. In addition, today's conference call includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company's SEC filings for more information on these risks and uncertainties, including the press release we filed yesterday and our Form 10-Q expected to be filed later today. I would now like to turn the call over to Antonio.

Thank you, Erin. Good morning, everyone, and thank you for joining us today for a discussion of our third quarter results and the outlook for the rest of the year. Let me start with a few key takeaways on Slide 4. Q3 was a record quarter for Arcosa. We delivered double-digit revenue and adjusted EBITDA growth with all 3 segments contributing to our strong results. Revenue increased 27% and adjusted EBITDA grew 51%, both excluding the impact of the divested steel components business. Likewise, our record adjusted EBITDA margin of 21.8% was a 340 basis points improvement over the same period last year. We believe our third quarter performance is a testament to the strength of the portfolio optimization strategy we have undertaken over the past few years, highlighted by the accretive contribution of the $1.2 billion Stavola acquisition, which we closed a year ago. The strength of our business model is underscored by the free cash flow generation and debt reduction we delivered during the third quarter. The team did a great job with particular focus on disciplined cash management. As a result, we ended the quarter with a leverage ratio of 2.4 times, putting us 2 quarters ahead of our stated plan to return to our 2 to 2.5 times leverage target within 18 months of the Stavola acquisition. We are extremely proud of this progress. Now that we are back within our target range, we will continue to take a balanced approach on capital allocation, investing in the business to drive growth while maintaining a healthy balance sheet. Moving next to an update on our business units. Within Construction Products, third quarter adjusted segment EBITDA was a record $150 million and margin expanded 300 basis points. Stavola led our significant third quarter growth and was highly accretive to segment margin. The acquisition performed well in this first year, delivering $105 million in adjusted EBITDA, a 35.2% margin for the 12 months ending in September 30. Overall, we saw higher average selling prices and higher volume in the aggregates business, leading to double-digit unit profitability gains. Engineered Structures continues to deliver strong organic performance, benefiting from increased demand in our utility structures business and higher volumes in our wind tower business. In the third quarter, we increased adjusted EBITDA by 29%, expanding margins by 240 basis points. Significant tailwinds in the U.S. power market remain robust, and our backlog in utility and related structures is at record levels. Additionally, we received new wind tower orders, improving our near-term production visibility while we wait for an anticipated uplift in demand in 2027 and beyond. The barge business executed well, generating double-digit revenue and adjusted EBITDA growth with margin increasing 190 basis points. Our barge backlog is up 16% year-to-date, and we have production visibility for both hopper and tank barges extending well into the second half of 2026. Our outlook for the remainder of the year remains very positive. Overall, demand trends are favorable, and we believe our U.S.-focused operations are well aligned with long-term infrastructure and secular power market drivers. We have increased the midpoint of our 2025 adjusted EBITDA guidance range and anticipated 32% year-over-year growth, reflecting strong accretion from Stavola as well as double-digit organic expansion. To wrap up, the third quarter performance reflects steady progress in executing our strategic priorities. And with a stronger balance sheet, we're once again in a position to look at potential M&A opportunities as well as organic investments as we seek to further enhance long-term shareholder value. I will now turn over the call to Gail to discuss our third quarter results in more detail. Gail?

Thank you, Antonio. Good morning, everyone. I'll start with the Construction Products segment on Slide 10. Third quarter revenues increased 46% and adjusted segment EBITDA increased 62%, which reflects record quarterly performance for the segment. Margin expanded by 300 basis points to 29.7%. The growth was led by the accretive contribution from Stavola, which has now completed a full year with Arcosa. For our aggregates business, freight-adjusted revenues increased 28% and adjusted cash gross profit increased 38% during the quarter, expanding margin by 330 basis points. Total volumes increased 18%, largely due to the addition of Stavola. We were pleased to see organic volume growth for the first time in several quarters as weather was generally favorable throughout the quarter. Monthly volume was relatively stable throughout the quarter, indicating steady market demand. On a unit basis, freight-adjusted average sales price per ton increased 9% and adjusted cash gross profit per ton increased 17%. Organically, aggregates pricing was up mid-single digits. However, unit profitability declined compared to last year. The decrease was primarily due to production downtime at a few natural aggregates locations negatively impacting cost absorption during the quarter. The root causes largely related to unplanned equipment repairs that have been addressed, positioning us for improved performance in the fourth quarter. Normalizing for the unabsorbed costs, organic adjusted EBITDA for aggregates would have been up mid-single digits for the quarter. Turning to specialty materials and asphalt. Revenues more than doubled, primarily reflecting Stavola's asphalt business, which performed well during the quarter. In specialty materials, revenues increased high single digits as strong growth in lightweight aggregates was partially offset by a slight revenue decline in specialty plaster, which was comping against a strong volume quarter in the prior year period. Adjusted EBITDA and margin expanded year-over-year, both in total and on an organic basis. Finally, revenues and adjusted EBITDA increased in our trench shoring business, while margin declined slightly due to mix. Moving to Engineered Structures on Slide 11. In the third quarter, segment revenues increased 11%, with the contribution split between utility and related structures and wind towers. Within utility and related structures, which represented 69% of segment revenues, third quarter revenues increased 8% due to double-digit volume growth and mid-single-digit pricing expansion in utility structures, partially offset by lower steel price pass-through. Within wind towers, revenues increased 20% due to higher volumes from our New Mexico plant, which was ramping up production in the third quarter of last year. Adjusted segment EBITDA increased 29% and margin expanded 240 basis points to 18.3%. The earnings growth and margin expansion were primarily driven by higher revenues and operating improvements in our utility structures business. We ended the quarter with a record backlog for utility and related structures of $462 million, up 11% year-to-date as we continue to see strong order activity. Our production visibility for this business is supported by our reported backlog as well as customer reservations for future capacity. For wind towers, we received orders of $57 million during the quarter, which improves our production visibility in 2026. We ended the quarter with backlog of $526 million, which also reflects the revaluation impact of adjusting backlog into 2026 from 2028. Turning to Transportation Products on Slide 12. Inland barge revenues were up 22% and adjusted segment EBITDA increased 36%, excluding the divested steel components business from the prior year period. The growth was driven by higher tank barge volumes, while hopper barge volumes were roughly flat. Margin for the business improved by 190 basis points, primarily driven by improved mix and operating leverage in our tank barge operations. During the third quarter, barge orders totaled $148 million for both hopper and tank barges, reflecting a book-to-bill of 1.5. Our barge backlog at the end of the quarter totaled $326 million, an increase of 16% year-to-date, and our current production visibility extends well into the second half of 2026. I'll now provide some comments on our cash flow performance and leverage position on Slide 13. Third quarter operating cash flow was $161 million, an increase of 19% year-over-year and up more than 150% sequentially as we planned for higher cash flow in the back half of the year. Working capital was a $23 million source of cash in the quarter, even as revenues increased 25%. Capital expenditures for the third quarter were $40 million, bringing year-to-date capital expenditures to $101 million, down $35 million year-over-year. For the full year, we continue to expect capital expenditures of $145 million to $155 million, which implies a slightly higher rate in the fourth quarter as we are investing in our plant conversion and placing deposits for long lead-time equipment items within utility structures. Free cash flow for the quarter was $134 million, an increase of 25% year-over-year. We allocated $100 million to reduce the outstanding balance on the Stavola acquisition term loan, which is prepayable with no penalty. As Antonio mentioned, we are pleased to achieve our stated leverage goal at an accelerated pace. We ended the quarter at 2.4 times net debt to adjusted EBITDA. And looking ahead, we expect to remain within our target range. Our liquidity remains strong at $920 million, including full availability under our $700 million revolver, and we have no material near-term debt maturities. I will now turn the call over to Antonio for an update on our outlook.

Thank you, Gail. I will now turn to Slide 15 to review our guidance. As evidenced by our third quarter and year-to-date results, the strategy we have executed for the last 7 years of allocating capital to our growth businesses, improving our cyclical businesses and simplifying the portfolio has created a resilient platform with significant long-term growth potential. Our portfolio is now strategically aligned around businesses with durable demand fundamentals and compelling end market positions. Our key growth businesses continue to demonstrate strong performance, while our cyclical businesses benefit from solid backlog visibility and a strong foundation for continued growth. Given our year-to-date performance and confidence in our outlook for the rest of the year, we have adjusted our full year 2025 guidance ranges, tightening forecasted revenues to a range of $2.86 billion to $2.91 billion and adjusted EBITDA to a range of $575 million to $585 million. At the increased midpoint, this implies 32% adjusted EBITDA growth in 2025, normalizing for the divestiture of the steel components business. Turning to Slide 16 for a discussion on our outlook for the business segments. Beginning with Construction Products, we're optimistic about the future, supported by attractive long-term demand fundamentals. Stavola continues to perform in line with expectations and the seasonally stronger second and third quarters demonstrated its premium financial attributes. Infrastructure demand drivers underpin the stability of Stavola's results, and we remain confident in the pipeline of work for both aggregates and asphalt in the New York, New Jersey market, now our second largest market. In Texas, our largest aggregates market, public infrastructure demand remains fundamentally healthy. While highway lettings are trending off peak levels, the outlook for state spending growth over the next several years is very positive and remains at historically elevated levels. More broadly, we believe infrastructure is on solid footing, and we expect it to be a catalyst for 2026 volumes. In our shoring business, which serves early phase public and private infrastructure works, third quarter order activity was above last year's level and our customers remain confident. On the private side, we're encouraged by the secular nonresidential trends, including U.S. energy infrastructure build-out, onshoring activities and the data center investments. Additionally, warehouse activity continues to positively inflect. Our construction materials platform is well located in favorable geographies with attractive population dynamics and long-term growth drivers that will benefit from a recovery in single-family housing. At the start of the year, we were hopeful to see an uptick in residential volumes in the back half of the year, but this has not materialized. With the recent Fed action and the potential for additional rate cuts, we now see a prospect of a single-family housing recovery in 2026. For full year 2025, we remain on track for high single-digit pricing growth in aggregates. Turning to volumes. Year-to-date volumes were up 7%, benefiting from Stavola and offsetting mid-single-digit organic volume decline. Looking at the full year, we now expect high single-digit volume growth, a slight step down from our prior guidance. On the third quarter, we were encouraged by the reversal in declining organic volume trends and ended the quarter with strong volume growth in September. We expect modest fourth quarter volume growth, assuming normal weather and no adverse impacts from the government shutdown. Moving next to Engineered Structures. I'll begin with a few comments on the U.S. power industry, which is the driver of our utility structures and wind tower businesses. The expansion of data centers and the rise in electricity consumption across the U.S. are driving significant and sustained increases in power demand. Meeting this growing need will require leveraging all available sources of power generation and significant investments in the transmission and distribution infrastructure. As I've said before, this is an exciting time to be serving the U.S. power industry, and we believe our Engineered Structures platform is strategically positioned to benefit in this new era of power growth. Turning first to wind towers. Wind energy is now cost competitive with other major power sources, even in the absence of tax credits and can play a critical role in meeting future energy needs quickly and efficiently. We have received orders from 2 customers totaling approximately $117 million, of which $60 million were received after the quarter end. At the same time, we shifted a portion of our 2028 backlog into 2026. This improves our production visibility, as we now have backlogs for all 3 facilities for '26 and '27. We're still early and continue to work with our customers on additional orders. What is important is that we have good visibility across our platform, and we have time to continue to work with our customers on production schedules that allow them to prepare for growth in 2027 and beyond. Moving to utility structures. We continue to see accelerating demand underscored by our record backlog as utility customers continue to increase their investments in transmission and distribution infrastructure. During the third quarter, we made good progress in the conversion of our wind tower facility in Illinois to produce large utility poles. Production in this facility is scheduled to begin in the second half of 2026. We expect our new galvanizing facility in Mexico to complete its first dip in the first quarter of 2026, which will improve our cost structure and enhance margin. We remain confident in the durability of demand supported by long-term power trends, increased utility CapEx and the strategic network of alliance customers. As the utility market grows, the flexible and strategically located network of facilities within our Engineered Structures platform provides us with the ability to adapt and increase capacity without significant capital investments. Turning to Transportation. The aging U.S. barge fleet creates a favorable replacement cycle, which is expected to extend over the next several years. Strong order activity in the third quarter has significantly improved our production visibility for 2026, extending beyond the typical outlook we have at this point of the year. This improved line of sight for both hopper and tank barges reinforces our confidence in sustained demand through the cycle. In closing, as we enter the fourth quarter and turn our attention to fiscal year '26, we remain confident in the strength and future potential of our core markets. With an optimized portfolio and favorable macro dynamics, we have positioned Arcosa for sustained long-term growth and value creation while focusing on operational excellence and disciplined capital allocation. We are now ready to take your questions.

We'll go first this morning to Trey Grooms of Stephens.

Congrats on the great quarter. I guess, first off, you gave us some pretty good color, but I didn't know if maybe you could dive in a little bit more around the puts and takes around the full year revenue and EBITDA guidance adjustments or kind of just tightening those ranges a bit. Any more color you could give us on those puts and takes, please?

Sure. Trey, this is Gail. I'll take that. As you saw in our release and in our comments this morning, we made some adjustments to the full year guide with just 1 quarter left. It reflects the strong year-to-date performance that we've had through the first 9 months, and we expect a good quarter in Q4. So we tightened the revenue guidance just a little bit. I think that reflects a very small slight step down. That would be coming from construction as volumes on the organic side for the year have not been as strong as we would have thought at the start of the year. All that being said, slight adjustment to revenue, we're looking at strong double-digit revenue growth year-over-year. On the EBITDA side, we did raise the midpoint about $10 million. We now see $580 million of EBITDA for the year. As Antonio said, that's 32% growth year-over-year. As we think about the fourth quarter, this will be our first quarter with 100% organic as Stavola has anniversaried in the third quarter. And we're seeing strong double-digit growth in the fourth quarter. It is a seasonal quarter for Construction. So you do see Q4 step down. We do have Stavola in the New York, New Jersey MSA, which is very weather-dependent in the fourth quarter. So you see some seasonality, a normal step down in Q4. And we're really excited to close the year strong. We have excellent production visibility with our backlog on the manufacturing side. You do have 2 holidays in the fourth quarter, and sometimes that has an impact. But we're really excited to end the year strong, pleased to raise the midpoint of our guidance and conclude a very strong record year for Arcosa.

That's super helpful. Just kind of following up on that. On the Construction business, you mentioned some inefficiencies with some of your legacy aggregates businesses with some production downtime at a few locations. Is that going to continue into the fourth quarter? Is that playing a role at all? Or is that largely behind you?

Trey, it's Antonio. I believe that issue is mostly in the past. As we expand our number of facilities, while we've seen significant growth, we aren't yet at the scale of some of our larger competitors. Thus, having one or two facilities with issues can still introduce some volatility for us. That's what you've observed. However, I believe we've mostly moved past that, and each day we aim to improve as a company, striving to get better every day.

If I could switch just to Engineered Structures, just real quick. The margins there, very impressive margin improvement. You mentioned pricing and some operating improvements in utility. So if you could maybe talk about some of those drivers and how you're thinking about the margin outlook and kind of sustainability of those margins as we look forward.

I'll take that, Trey. Looking at the third quarter and this year, both the wind tower business and utility structures are performing exceptionally well. In wind, we started the year by ramping up the Belen facility in New Mexico last year. Compared to last year, we had excess costs, but overall, the team has done a fantastic job increasing our facilities. We excel at building wind towers when we have a steady production cycle, which we currently have. This is why we're optimistic about the visibility from the new orders for 2026 and 2027, giving us great insights into our future. Demand for utility structures remains strong as we increase our capacity. As Gail mentioned, our volume has seen double-digit growth, and we have maintained this for the last seven years. It's a great period for us as we enhance our capacity, and we've become adept at it. Our plants are operating well. Naturally, with a larger business, some areas perform better than others, and there are still aspects we need to improve. We're not finished yet. However, I'm very excited about our progress. The team is doing an excellent job. Gail also noted that we've placed orders for additional equipment as we need to keep expanding our capacity. Moving forward, as we begin hiring at the Illinois facility, we'll start its ramp-up. This is part of the growing pains, but we're thrilled with where we stand.

And I might add, Trey, on to that, just coming back to the start of your question. And when you really look at the year-over-year growth, as Antonio said, wind was ramping, we finished that ramp earlier in the year. So the year-over-year growth is really coming from the strength in utility and related structures. So very pleased to see that. At nearly 70% of segment revenue, that's an important driver of our performance.

We go next now to Julio Romero at Sidoti & Company.

I wanted to start on Construction Products. Antonio, you mentioned for full year '25, you remain on track for high single-digit pricing growth in aggregates. Can you just talk about the pricing outlook within aggregates as we head into '26? And I'm not asking for guidance, but just kind of high-level thoughts there.

Sure. This business operates on a very local level, with each location having unique dynamics. Overall, we are optimistic about the demand, particularly on the infrastructure side. We've noted consistent volumes during the quarter, which is a positive indicator, and recovery in volume growth is crucial for pricing. We have successfully increased prices over several quarters despite a decline in volume. Now that we are seeing volume recovery, we believe we can continue passing through pricing to our customers. We are located in favorable geographies, which also contributes positively. If we see some recovery in housing towards late '26, that will enhance our position further. We feel positive about our pricing strategy and the volume trends observed in the third quarter. Our business stands in a strong position, and it is important to note that Stavola has significantly altered our business dynamics.

I might add, just, Julio, as you think about the cadence of pricing, we have full year pricing guide of high single digit for Arcosa in 2025. That's total pricing. We did indicate that organic pricing was up mid-single digits in the quarter. Stavola does anniversary. So the fourth quarter will be all organic. So we do expect a slight step-down to that year-over-year rate in the Q4 with somewhere near more of that organic rate that we achieved in Q3. So as we look to 2026, as Antonio said, we still see pricing trending on the high side of historical averages.

Okay. Very helpful there. And congratulations on reaching your target leverage 2 quarters ahead of schedule. You weren't kidding when you said you'd have cash flow accelerate in the second half here. Can you just talk about capital allocation going forward? How are you thinking about perhaps more debt reduction versus further growth initiatives?

Sure. So first of all, I think what you said is exactly how we thought about it. When we went through Stavola, it was a large acquisition for us, but we had really good visibility on our cyclical businesses backlog and on the growth businesses performance. And that's what gave us the confidence to go for a larger acquisition. And that's why when we talk about our backlogs, the visibility is so important. On capital allocation, we mentioned we want to keep our balance sheet. We want to continue to improve. Even though we are within our range, I personally would like to be lower in that range to have more flexibility as we move forward. So my goal would be to try to get lower in the range of 2 to 2.5 times leverage. On the other hand, we've been working for the last several months on filling our pipeline of bolt-on acquisitions, and we have opportunities out there, and these things happen sometimes when you want them, sometimes when they just happen. So we now have the flexibility of taking advantage of those opportunities and continue to focus on bolt-on acquisitions, which have been very, very accretive to Arcosa numbers. So I want to continue doing that, both on the aggregates and the recycled aggregates. On the organic growth side, we have opportunities. We're investing in the facility in Illinois to convert it from wind to transmission. I mentioned we are finally finishing out our galvanizing facility in Mexico. And we have opportunities based on depending on the strength of the transmission tower business. We always have opportunities to continue to invest. We are ordering additional equipment to continue to grow the business as we see demand strength accelerating. So I think you will see a combination of both organic and inorganic capital allocation in terms of M&A and organic growth going forward and hopefully continue to reduce our debt to the lower end of our range.

We'll go next now to Ian Zaffino of Oppenheimer.

Congrats on all the wind tower orders. I guess I just wanted to ask also, what is the outlook, I guess, for incremental orders there? And what was the decision to accelerate the backlog? Walk me through kind of those dynamics. Was this all on because of you're trying to figure out your production schedules? Was this driven by the customers' decision? Maybe just some color around there as well.

Thank you, Ian. Let me provide a broad overview. As I mentioned earlier, the wind industry is currently competitive with other energy sources, but it has relied on tax credits for quite some time. It appears that after 2027, the industry will transition to a market-driven model, which is a positive development since we are now competitive. However, we have two years to navigate this transition. This year, we have seen various policy changes that have introduced uncertainty. To bridge these two years, we believe the pace will pick up as we approach the end of 2027. Historically, developers and the industry tend to ramp up efforts to maximize tax credits before they expire. We need to address our backlog to capture as much as we can for our customers who require these towers. The year 2028 is shaping up to be a different landscape, and I am optimistic about it because the demand for power in the U.S. is rising, prices are increasing, and the industry remains competitive. Currently, we have a backlog, and we are working with our customers to fulfill part of that while also securing new orders. We are not fully booked for 2026 and 2027, and we are actively engaging with customers to accommodate additional orders and understand their needs during this period of ongoing tax incentives. I am hopeful we will receive more orders, but it is still early as we are at the end of October and beginning of November, providing us with time for this to unfold over the coming months.

Okay. As a follow-up, your two non-growth segments are performing well, and you've shown great patience while waiting for them to ramp up and reach mid-cycle or above. Congratulations on the excellent work you've done. Considering their current status and your intention to shift more towards growth, are there any plans on the horizon regarding capital allocation to pursue growth businesses more aggressively and move away from those non-growth segments that are currently doing well?

That's a good question, and it's one we frequently discuss. I want to highlight that Stavola has significantly changed the dynamics of Arcosa. We now operate a business that is much larger than it was a year ago, which has positioned us better to continue evolving our portfolio. We need to determine the right timing for simplifying the company. One important milestone we achieved this quarter was reaching our leverage ratio. Those cyclical businesses generate substantial cash, which was essential for us to reduce debt after acquiring Stavola. Now that we are progressing and lowering our leverage ratio to our target, we should be well-positioned to further simplify the company. However, these processes take time, and there's never a perfect moment to initiate them. We will need to keep evaluating our options.

We go next now to Jean Veliz of D.A. Davidson.

I want to start with the wind business. Are you anticipating additional wind orders beyond what you've discussed here today? And do you need to see additional orders for us to assume a sort of stable contribution from wind in 2026?

So, as I mentioned before, we're still early. We're working with our customers and I hope we can secure additional orders. I'm optimistic about what I see for 2026 and 2027. We now have good visibility for our three facilities, as I mentioned earlier. We have time, and while we don't provide guidance at this time of year, we're positive about our relationships with our customers. We'll have more information in the coming weeks and months.

Yes. And I guess I would just add as it relates to '26 and your question. We feel very, very comfortable where we are at this point of the year, and we have good coverage of our '25 revenue run rate. We're not there at 100% yet, but we have very good coverage at this point of the year.

Got it. And moving on to Engineered Structures. Can you provide an update on timing of capacity investments you're making in Engineered Structures? And when do you expect that to begin to ramp up and contribute to growth?

I mentioned that during the second half of the year, we'll start increasing production, which we hope to complete by the end of the year. I believe it will begin to make a positive contribution probably in 2027.

And are you guys filling that capacity?

Yes. Yes, we're working with our customers to fill it up. And the reason we're expanding is because we have the demand from our customers. We're really seeing accelerating demand in utility structures, and that's why we're doing this expansion and why we're evaluating additional expansion based on conversations with our customers.

And we'll go next now to Garik Shmois of Loop Capital.

Just to start, a couple of questions on barge. Just given the improvement in orders...

Garik, I'm sorry to interrupt you. We're having a hard time hearing you.

Sorry, is this better?

Yes. Please go ahead.

Okay. Sorry about that. So a couple of questions on barge to start. Just given the improvement in orders, are you seeing an inflection in hopper orders as well as tank? I'm wondering what you're hearing from your customers just regarding the ramp in the replacement cycle being sustainable moving forward? And if you can speak maybe to the type of margins you're seeing on the new orders coming into backlog.

Yes, certainly. The key takeaway is that both tank and hopper barges need to be replaced. Looking at the replacement cycle, I believe we are entering a prolonged phase over the next few years. I can’t say whether it begins today, tomorrow, or in a week, but we believe our capacity will be essential to meet this replacement demand. Consequently, we are pricing our barges accordingly and not undervaluing our capacity. If we aimed to fill our plants by offering lower prices to all our customers, we could do that immediately for the next several years, but we're opting not to. We are pricing our barges based on their true value and ensuring good profit margins. I have strong confidence in the barge business being on solid ground for the coming years. We have received orders for both hopper and tank barges. While I won't say that there is a queue for hundreds of barges, the demand is robust. We have good visibility in our backlog, which is quite unusual for this time of year, especially for 2026, as we’ve said we are already deep into the second half of next year.

Okay. That's helpful. I wanted to ask on aggregates and organic volumes. I think you mentioned that you're starting to see modest growth here in the fourth quarter. Wondering if you can unpack where that is. Is that certain regions are starting to perform better? Or is it more of a function of end markets improving? I'd be thinking more nonresidential and infrastructure. But just any help on where you're seeing some of the inflections on organic aggregates demand?

Yes, I can share that. In Texas over the past year, given the slowdown in the residential market, we've shifted our focus towards more infrastructure business, which takes time as we transition from a residential focus, particularly in Texas and the West. Infrastructure demand remains strong, and we're experiencing good volume growth in that area. As for residential, we anticipated an increase in the second half of the year but did not see that materialize. Therefore, we're continuing to emphasize our infrastructure efforts. We're enthusiastic about opportunities in reshoring, power infrastructure, and data centers, where we're seeing positive volume. Although the Gulf market remains relatively weak, we foresee significant potential for 2026 with LNG and other delayed projects. As we head into 2026 and realign more toward infrastructure, we expect to establish a stronger and more consistent position. We're optimistic about the nonresidential side and hope to see a rebound in the residential market sometime in 2026. Overall, the outlook is very positive, particularly for Stavola, which is increasingly focused on infrastructure. Provided there are no adverse effects from federal funding, we should be in a strong position.

Thank you. And ladies and gentlemen, that will conclude our question-and-answer session for this morning. So that will bring us to the conclusion of today's Arcosa Third Quarter 2025 Earnings Conference Call. Again, we'd like to thank you all so much for joining us this morning and wish you all a great day. Goodbye.