Arcosa, Inc.

Good morning, ladies and gentlemen, and welcome to the ARCOSA, Inc. Fourth Quarter and Full Year 2018 Earnings Conference Call. My name is Bree, and I'll 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, Gail Peck, SVP, Finance and Treasurer for ARCOSA. Ms. Peck, you may begin.

Good morning, everyone. Thank you for joining our Fourth Quarter and Full Year 2018 Earnings Call. With me today are Antonio Carrillo, President and CEO, and Scott Beasley, CFO. A question and answer session will follow their prepared remarks. A copy of yesterday's press release and the slide presentation for this morning's call are posted at our website, www.arcosa.com. You can access the presentation by going to the Events tab under the Investors section of the website. A replay of today's call will be available for the next two weeks. Instructions for accessing the replay number are included in the press release. A replay of the webcast will be available for one year on our website. Today's comments and presentation slides contain financial measures that have not been prepared in accordance with generally accepted accounting principles. Reconciliations of non-GAAP financial measures to the closest GAAP measure are included in the appendix of the slide presentation. Let me also remind you that today's conference call contains 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, including its Form 10-K, that is expected to be filed later today, for more information on these risks and uncertainties. I would now like to turn the call over to Antonio.

Thank you, Gail. Good morning, everyone, and thank you for joining us to review our fourth quarter results and the outlook for 2019. I will begin my comments with slide number four. The fourth quarter was an exciting and productive time for us. Arcosa became an independent public company on November 1st. On December 5th, we closed a sizable acquisition that scales our construction products group. We also divested two small business units in which we did not believe we could be competitive. And our fourth quarter financials reflected year-over-year improvement across key metrics. Additionally, as we look ahead, we're seeing positive trends in several of our businesses that support our confidence in ARCOSA's growth prospects. ARCOSA entered the public market's position for growth. We have a very strong balance sheet providing the resources to fund future expansion. We have a hand-picked management team that has a history of working well together and that is focused and incentivized. And we are operating with a lean corporate structure that gives us the flexibility to capitalize on growth opportunities. Thanks to those attributes, we have been able to hit the ground running, executing on several of our strategic priorities, which are shown on slide number five. First, we moved forward on the goal of growing construction products with the December acquisition of Oklahoma-based ACG Materials. This is a company that we know well, and the transaction has been strategically important in several ways. It adds significant scale to both the specialty materials and the aggregate businesses, transforming each of them into competitive growth platforms. It gives us further end market and geographic diversification. It brings technical expertise in specialty materials applications that we can leverage in other parts of our business. And it has an active pipeline of bolt-on acquisition opportunities that we are currently exploring. On slide number six, we included the information that we provided at the time of the ACG acquisition. It is important to emphasize the geographic and end-market diversity that ACG brings to our customers. As we spend more time with the ACG management team, it is very clear that their specialty material expertise creates products with high barriers to entry, as well as long-term relationship with customers. It is also exciting to see the entrepreneurial spirit that the ACG team brings to the table. The integration is going very well, and I'm convinced that ACG will be a great addition to our culture. Going back to the first stage priorities on slide number seven, In the energy equipment segment, we have taken actions that are expected to improve margins, applying lean manufacturing processes to our utility structure business and restructuring our Mexican operations. While a few months do not make a trend, I am encouraged, as we start 2019, by the early signs of progress we are seeing. The new management team in the transmission business has taken positive actions. Mexico is in the middle of a nice turnaround, and our storage tank business is building momentum. This progress is taking place thanks to the enhanced focus on the energy equipment business as part of ARCOSA, a renewed management team, and a culture of performance and accountability we're building, and that is reflected in our compensation structure. I look forward to sharing with you the details on our progress. In the transportation segment, we continue to capitalize on the ongoing market recovery in the barge business and increase demand for railcar components. In the fourth quarter, we announced the reopening of our barge facility in Madison Bay, Louisiana. This plant is on track to deliver its first barge in the middle of this year, and we are encouraged by the level of quoting activity that's underway. At the same time, in our rail components business, we're seeing early signs of success in expanding our customer base. We're starting to win trial orders for some of our components from customers that would not have bought from us if we were still part of Trinity. Lastly, as a new company, we have the ability to create a new corporate culture. Over the last several months, we have significantly flattened the organization. managing with a small corporate office that enables fast decision-making and leads to a very agile organization that can react quickly to changing market dynamics. We are pleased with the progress that we have made over the past several months on each of our Stage 1 priorities, while at the same time producing fourth quarter results that reflect positive momentum heading into 2019. Our performance in the fourth quarter demonstrated the benefits of serving multiple infrastructure markets as contributions from the transportation and energy segments more than offset the impact of challenging weather conditions on the construction product segment. Moving into the outlook for 2019, which is found on slide number eight. This will be ARCOSA's first full year of operations. And the midpoint of our consolidated EBITDA guidance range for 2019 represents 18% growth compared to 2018. Keep in mind, this is after absorbing additional costs tied to public company expenses and lower pricing on some rail component supply agreements. We expect 2019 growth to be driven by all three our cost of business segments. In construction, market conditions heading into 2019 look favorable, with expanded state and local government budgets for infrastructure spending and strength in the private sector as well. We believe our construction products business is well-positioned in high-growth areas. As we have discussed in the past, we are facing additional competition in some of our core natural aggregates regions, which is normal, and we expect to continue to have strong margins which are more in line with our industry peers. At the same time, we will have the full-year benefit of the ACG acquisition and, as I mentioned earlier, ACG brought with it an attractive pipeline of potential bolt-on acquisitions. We would be very disappointed if we did not complete at least one by the end of this year. We believe that our COSA has a competitive advantage in making accretive acquisitions in this space, as we can target smaller candidates and can offer them a level of independence and support that is not efficient for the very large industry players. In the energy equipment market, conditions are more mixed, but look promising overall for 2019. In wind towers, our backlog is solid, giving us good visibility for the next couple of years. We were pleased to receive an order for $38 million in the fourth quarter for delivery in 2019. But as we approach the end of the phase-out of the production tax credit, there is uncertainty in the market. The trends towards clean energy continue to be strong, and wind is now a competitive energy source on its own merit. So the fundamentals for the industry are strong in the long term. But the industry will have to learn how to operate within a different market environment. In the utility structure business, quotation activity is steady, reflecting solid demand for steel posts and lattice towers. Here, though, our focus is on margin expansion through manufacturing and operating efficiencies. As I mentioned earlier, we're seeing some early signs of success in this business. This gives us confidence that we are on the right track. And the storage tank business backlogs are up, driven by strong demand from residential, commercial, and agricultural customers, and an early but significant pickup in our Mexican operations. There is no question that fuel shortages in Mexico require additional storage and transport capacity, and we believe our COSA is well positioned to take advantage of this new source of demand. Now to transportation, where market recovery signs in our barge business continue to materialize, underpinning our confidence in this segment's expected 2019 EBITDA growth. Our customers, the barge operators, have seen higher spot rates as demand builds. And at the end of the fourth quarter, we had a book-to-bill ratio of 1.4, the fourth consecutive quarter above 1.0. As the largest barge manufacturer in the country, we are preparing to be in the right position to capitalize on a cyclical turnaround in this market. Additionally, our rail components business is benefiting from the current high backlog levels for the North American rail cars and the fact that, as an independent company, we are in a position to significantly expand our customer base. In summary, we are very enthusiastic about the positive trends in our businesses and confident in the ability of our operating groups to execute on growth and margin expansion opportunities in their sectors. I will now turn over the call to Scott Beasley, our CFO, for a financial review. Scott?