aca-202103220001739445false00017394452021-03-222021-03-22
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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| Date of Report (Date of Earliest Event Reported): | | March 22, 2021 |
Arcosa, Inc.
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(Exact name of registrant as specified in its charter)
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| Delaware | | 001-38494 | | 82-5339416 |
| (State or other jurisdiction of incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
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| 500 N. Akard Street, Suite 400 | | | | |
| Dallas, | Texas | | | | 75201 |
| (Address of principal executive offices) | | | | (Zip Code) |
Registrant's telephone number, including area code: (972) 942-6500
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| Not Applicable |
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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| 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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 1.01 Entry into a Material Definitive Agreement
On March 22, 2021, Arcosa Materials, Inc. (“Purchaser”), a Delaware corporation and wholly-owned subsidiary of Arcosa, Inc. (“Arcosa”), entered into a Unit Purchase Agreement (the “Purchase Agreement”) with StonePoint Ultimate Holding, LLC, a Delaware limited liability company (the “Company”), the sellers set forth in the Purchase Agreement (each a “Seller” and, collectively, the “Sellers”), and Sun StonePoint Aggregator, LP, a Delaware limited partnership, as representative for the Sellers. The Company is in the construction aggregates business and provides crushed stone, sand, gravel, and asphalt to commercial and residential markets in ten (10) states.
At the closing of the Transaction (as defined below), Purchaser would acquire from the Sellers all of the issued and outstanding common units of the Company (the “Transaction”), for a cash purchase price of approximately $375 million, upon the terms and subject to the conditions set forth in the Purchase Agreement.
The Purchase Agreement includes customary representations, warranties and covenants. The closing of the Transaction is subject to customary closing conditions, including, among others, (i) the absence of legal restraints preventing the consummation of the acquisition, (ii) the accuracy of the representations and warranties contained in the Purchase Agreement (subject to certain qualifications) and (iii) the performance by the parties of their respective obligations under the Purchase Agreement in all material respects. The Purchase Agreement contains certain standard termination rights for Purchaser and the Sellers.
The foregoing description of the Purchase Agreement and the transactions contemplated thereby is qualified in its entirety by the full text of the Purchase Agreement, which will be filed as an exhibit to Arcosa’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.
The Purchase Agreement will be included to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about Arcosa, Purchaser or any of their respective businesses, subsidiaries or affiliates. The representations, warranties and covenants contained in the Purchase Agreement (a) were made by the parties thereto only for purposes of that agreement and as of specific dates; (b) were made solely for the benefit of the parties to the Purchase Agreement; (c) may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Purchase Agreement (such disclosures include information that has been included in public disclosures, as well as additional non-public information); (d) may have been made for the purposes of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts; and (e) may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Arcosa, Purchaser or any of their respective businesses, subsidiaries or affiliates. Additionally, the representations, warranties, covenants, conditions and other terms of the Purchase Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in Arcosa’s public disclosures. The Purchase Agreement should not be read alone, but should instead be read in conjunction with the other information regarding the Company and Arcosa that is or will be contained in, or incorporated by reference into, the Forms 10-K, Forms 10-Q and other documents that are filed with the Securities and Exchange Commission.
Item 2.02 Results of Operation and Financial Condition.
On March 22, 2021, Arcosa issued a press release announcing that Purchaser had entered into the Purchase Agreement to acquire the Company. A copy of this press release is furnished as Exhibit 99.1 to this report on Form 8-K.
Also on March 22, 2021, Arcosa disseminated an investor presentation which is intended to be a supplement to the press release announcing the proposed Transaction. A copy of the investor presentation is furnished as Exhibit 99.2 to this report on Form 8-K.
The information in Item 2.02 of this report (including Exhibit 99.1 and 99.2) is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise be subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as otherwise expressly stated in such filing. Additionally, the submission of this Item 2.02 is not an admission of the materiality of any information in this Item 2.02.
Item 7.01 Regulation FD Disclosure.
See “Item 2.02 – Results of Operation and Financial Condition” which is incorporated herein by reference.
The information in Item 7.01 of this report (including Exhibit 99.1 and 99.2) is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Exchange Act, or otherwise be subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as otherwise expressly stated in such filing. Additionally, the submission of this Item 7.01 is not an admission of the materiality of any information in this Item 7.01 that is required to be disclosed solely by Regulation FD.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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| Exhibit No. | Description |
| Arcosa, Inc. Press Release dated March 22, 2021 |
| Arcosa, Inc. Investor Presentation dated March 22, 2021 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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 hereunto duly authorized.
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| Arcosa, Inc. |
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| March 22, 2021 | By: | /s/ Scott C. Beasley |
| | Name: Scott C. Beasley |
| | Title: Chief Financial Officer |
News Release
FOR IMMEDIATE RELEASE
Arcosa, Inc. Announces Agreement to Acquire StonePoint Materials
–$375 Million Acquisition of Top 25 Aggregates Company in the US
–Expands Footprint in Texas and Louisiana and Provides Entry into New Markets in Tennessee, Kentucky, Pennsylvania, and West Virginia
–Adds Pipeline of Organic Growth Opportunities and Bolt-on Acquisitions
–Transaction to be Funded with Cash and Available Revolver Capacity
–Conference Call Scheduled for 5 p.m. Eastern Time Today
DALLAS, Texas - ARCOSA, Inc. - March 22, 2021:
Arcosa, Inc. (NYSE: ACA) (“Arcosa” or the “Company”), a provider of infrastructure-related products and solutions, today announced that it has reached a definitive agreement to acquire StonePoint Ultimate Holding, LLC and affiliated entities (“StonePoint”) from an affiliate of Sun Capital Partners, Inc. for $375 million in cash.
StonePoint is one of the 25 largest aggregates companies in the United States, with approximately 9 million tons of annual production across 20 locations, and more than 40 years of reserve life. StonePoint operates in three regions: Gulf Coast (Texas, Louisiana, Mississippi), Tennessee/Kentucky, and Pennsylvania/West Virginia. Approximately 80% of StonePoint’s EBITDA is generated from aggregates, while the remaining 20% is earned from asphalt and other services. The acquisition is expected to be accretive to Arcosa’s earnings and margins in 2021.
Financial Overview
StonePoint is projected to generate revenues of $117 million and Adjusted EBITDA of $28 million for the twelve months ending March 31, 2021, a period that has been impacted by COVID-related construction delays in several key markets.
StonePoint is expected to earn at least $30 million of Adjusted EBITDA in 2021, and return to 2019’s pre-pandemic level of $33 million by 2022, through operating synergies and construction market recovery in several of its geographies.
Additionally, Arcosa expects a net present value of approximately $15 million of tax benefits from the transaction, which the Company expects to realize over the next 4-5 years.
Commenting on the transaction, Antonio Carrillo, Arcosa’s President and Chief Executive Officer, noted, “StonePoint represents an outstanding strategic fit for Arcosa. The transaction aligns with Arcosa’s strategy to expand our Aggregates business in our current footprint and to enter new, attractive geographies. StonePoint has an experienced operating team, an attractive pipeline of organic growth projects and bolt-on acquisitions, and a footprint in fast-growing markets. We look forward to welcoming the StonePoint team to the Arcosa family and building on our combined strengths.”
StonePoint CEO Colin Oerton commented, “Arcosa will be an excellent long-term owner of the StonePoint platform and will be able to further accelerate the growth of the business. We have built an exceptional business and team under Sun Capital and want to thank all of our employees and partners for their work in building a leading US aggregates company.”
Timing and Financing
The transaction has been approved by the Company’s Board of Directors and has already received regulatory approval under the Hart-Scott-Rodino Act. The transaction is subject to customary closing conditions and is expected to close in April 2021.
Arcosa expects to fund the acquisition with a combination of cash on-hand and borrowings available under its $500 million revolving credit facility, with an expectation to refinance the borrowings with long-term debt.
Evercore served as financial advisor to Arcosa, while Weil, Gotshal, & Manges served as its legal advisor. Sun Capital was advised by Kirkland & Ellis.
Non-GAAP Financial Information
This release contains financial measures that have not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Reconciliations of non-GAAP financial measures to the closest GAAP measure are included in the accompanying tables to this release.
Conference Call Information
A conference call is scheduled for 5:00 p.m. Eastern Time today to discuss the transaction. To listen to the conference call webcast, please visit the Investor Relations section of Arcosa’s website at https://ir.arcosa.com. A slide presentation for this conference call will be posted on the Company’s website in advance of the call at https://ir.arcosa.com. The audio conference call number is 866-831-8616 for domestic callers and 203-518-9873 for international callers. The conference ID is ARCOSA and the passcode is 272672. An audio playback will be available through 11:59 p.m. Eastern Time on April 5, 2021, by dialing 800-839-5634 for domestic callers and 402-220-2560 for international callers. A replay of the webcast will be available for one year on Arcosa’s website at https://ir.arcosa.com/news-events/events-presentations.
About Arcosa
Arcosa, Inc. (NYSE:ACA), headquartered in Dallas, Texas, is a provider of infrastructure-related products and solutions with leading positions in construction, engineered structures, and transportation markets. Arcosa reports its financial results in three principal business segments: Construction Products, Engineered Structures, and Transportation Products. For more information, visit www.arcosa.com.
Some statements in this release, which are not historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about Arcosa’s estimates, expectations, beliefs, intentions or strategies for the future. Arcosa uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “outlook,” “strategy,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this release, and Arcosa expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, except as required by federal securities laws. Forward-looking statements are based on management’s current views and assumptions and involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations, including but not limited to assumptions, risks and uncertainties regarding the impact of the COVID-19 pandemic on Arcosa’s customer demand for Arcosa’s products and services, Arcosa’s supply chain, Arcosa’s employees ability to work because of COVID-19 related illness, the health and safety of our employees, the effect of governmental regulations imposed in response to the COVID-19 pandemic; assumptions, risks and uncertainties regarding achievement of the expected benefits of Arcosa’s spin-off from Trinity; tax treatment of the spin-off; failure to successfully integrate acquisitions, or failure to achieve the expected benefits of acquisitions; market conditions and customer demand for Arcosa’s business products and services; the cyclical nature of, and seasonal or weather impact on, the industries in which Arcosa competes; competition and other competitive factors; governmental and regulatory factors; changing technologies; availability of growth opportunities; market recovery; ability to improve margins; and Arcosa’s ability to execute its long-term strategy, and such forward-looking statements are not guarantees of future performance. For further discussion of such risks and uncertainties, see "Risk Factors" and the "Forward-Looking Statements" section of "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Arcosa's Form 10-K for the year-ended December 31, 2020, and as may be revised and updated by Arcosa's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
INVESTOR CONTACTS
MEDIA CONTACT
TABLE TO FOLLOW
Reconciliation of StonePoint Pro-Forma Adjusted EBITDA
($ in millions)
(unaudited)
“Pro-Forma Adjusted EBITDA” is defined as StonePoint's net income plus interest expense, income taxes, depreciation, depletion, and amortization, pro-forma adjustments for acquisitions made during the period, acquisition-related and sponsor fees, plus additional adjustments to account for non-recurring items. GAAP does not define Pro-Forma Adjusted EBITDA and it should not be considered as an alternative to earnings measures defined by GAAP, including net income. We use Adjusted EBITDA to assess the operating performance of our businesses, as a metric for incentive-based compensation, as a measure within our lending arrangements, and as a basis for strategic planning and forecasting as we believe that it closely correlates to long-term shareholder value. As a widely used metric by analysts, investors, and competitors in our industry, we believe Pro-Forma Adjusted EBITDA also assists investors in comparing a company's performance on a consistent basis without regard to depreciation, depletion, amortization, and other items which can vary significantly depending on many factors. “Pro-Forma Adjusted EBITDA Margin” is defined as Pro-Forma Adjusted EBITDA divided by Revenues.
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| Trailing Twelve Months Ended |
| December 31, 2019 | | March 31, 2021 (Forecasted) |
| Net Revenue, Pro-Forma for Acquisitions | $ | 147.6 | | | $ | 116.6 | |
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| Net income | (7.3) | | | (7.0) | |
| Add: | | | |
| Interest expense, net | 6.0 | | | 8.9 | |
| Provision for income taxes | — | | | — | |
| Depreciation, depletion, and amortization expense | 16.7 | | | 22.3 | |
| Full year pro-forma for 2019 and 2020 acquisitions | 8.4 | | | 1.6 | |
| Acquisition-related and sponsor fees | 7.7 | | | 5.5 | |
| Other non-recurring | 1.5 | | | (3.7) | |
| Pro-Forma Adjusted EBITDA | $ | 33.0 | | | $ | 27.6 | |
| Pro-Forma Adjusted EBITDA Margin | 22 | % | | 24 | % |
