Arcosa, Inc.

Good morning, ladies and gentlemen, and welcome to the ARCOSA Inc. Second Quarter 2020 Earnings Conference Call. My name is Ashley, 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, Gail Peck, Senior Vice President, Finance and Treasurer for ARCOSA. Ms. Peck, you may begin.

Good morning, everyone. Thank you for joining our second quarter 2020 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 investor relations website, www.ir.arcosa.com. 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 under the News and Events tab. 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 for more information on these risks and uncertainties, including our Form 10-K, the earnings press release we filed yesterday, and our Form 10-Q for the second quarter, expected to be filed later today. I would now like to turn the call over to Antonio.

Thank you, Gail. Good morning and thank you for joining today's call to discuss our COSA second quarter results and our future outlook. Second quarter results demonstrated the resilience of our COSA in the face of very challenging business conditions. We have remained fully operational during the pandemic as an essential business whose products and services help keep critical infrastructure working. Turning to slide four, Here are the key messages we would like to cover on today's call. During the pandemic, we continue to prioritize the health and well-being of our employees and the communities where we operate. I want to recognize all of our employees for their incredible commitment and dedication during these difficult times. I'm extremely proud of Arcosa for continuing to support our customers and communities. This was an exceptional quarter for Arcosa across all metrics, including revenue, net income, and adjusted EBITDA. Each of our business segments posted revenue growth, but our construction business outperformed our expectations, showing organic growth and the benefit of the cherry acquisition that closed earlier this year. Our shift to more stable and diversified end markets over the last 18 months has been an important factor in enabling this growth. Another major focus area has been our cash culture. In the second quarter, we generated $56 million of free cash flow versus a use of $5 million a year ago. Our free cash flow was nearly twice our net income, an impressive result as we are successfully reducing the working capital requirements of our business and focusing on margin expansion. During the quarter, we used cash flow to pay down debt, and at the end of June, we had a relatively modest net debt of $108 million, or less than half our trailing 12 months EBITDA. We have kept our leverage low while investing $314 million on acquisitions in the first half of the year, the bulk of which was cherished. As we move forward, our goal is to continue to utilize our balance sheet strength and allocate our strong cash flow generation on projects that allow us to grow in attractive markets, reduce our cyclicality, and improve our return invested capital. We'll spend more time later in the call discussing the demand environment across our businesses, as well as our progress in continuing to execute on our long-term vision. Please turn to slide seven. I want to spend a few minutes discussing how we have shifted to operate in the current COVID environment. Given the essential nature of our business, we have worked hard to keep our plants operating to support our customers' needs at this difficult time. At the same time, we have also prioritized the safety of our team. We have implemented protocols consistent with CDC guidelines at our plants and offices. While many of our offices have shifted to work from home, that option is not possible for our plants. There we have implemented a number of important measures you can see on this slide. While our employees are our top priority, our communities are important too. Many of them are suffering. We have taken a number of steps to support the communities around our plants and offices, and we have donated personal protective equipment to small businesses. Turning to slide nine, let's look at our consolidated results for the second quarter. Our businesses performed extremely well during delivering record results. Revenue grew 15% year-over-year, with growth in all three segments. Adjusted EBITDA grew about 50% faster than revenue, evidencing operating leverage and margin expansion coming from initiatives we have put in place. Our construction product segment was the largest driver of revenue and EBITDA growth. The Cherry acquisition we closed in January is performing ahead of plan. On balance, we were very pleased with how the second quarter progressed. Scott will take you through the business lines and our financial metrics, and then I will give you additional color on our short- and long-term view of our market. Scott?