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Item 7.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

•Contractual Obligations and Commercial Commitments

•Critical Accounting Policies and Estimates

•Recent Accounting Pronouncements

•Forward-Looking Statements

Our MD&A should be read in conjunction with our Consolidated Financial Statements and related Notes in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K.

Company Overview

Arcosa, Inc. and its consolidated subsidiaries, (“Arcosa,” “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.

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 response to any potential reoccurrence.

We strive to continuously improve our procedures, processes, and management systems regarding employee health and safety, and 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 do not anticipate that any enhanced health and safety protocols will have a material impact on the productivity of our plants.

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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 healthy demand and increased infrastructure spending. However, following the recent sharp rise in interest rates and the market expectation for additional tightening, the outlook for single-family residential housing has weakened. We are focused on managing inflationary pressures related to diesel, cement, and process fuels through proactive price increases and are monitoring potential impacts on overall demand as leading economic indicators indicate an increased probability of an economic slowdown in 2023.

•Within our Engineered Structures segment, our backlog as of December 31, 2022 provides good production visibility for 2023. Our customers remain committed to taking delivery of these orders. In utility structures, order and inquiry activity continues to be healthy, as customers remain focused on grid hardening and reliability initiatives. The demand outlook for traffic and telecom structures also remains positive. Wind tower order quantities in 2022 were impacted by high steel prices and uncertainty related to the renewal of the Production Tax Credit (“PTC”), that expired at the end of 2021. As a result, in the fourth quarter of 2021, we idled our Clinton, Illinois wind tower facility in anticipation of lower volumes. The passage of the Inflation Reduction Act ("IRA") on August 16, 2022, which included a long-term extension of the PTC for new wind farm projects and introduced a new advanced manufacturing tax credit for companies that domestically manufacture and sell clean energy equipment in the U.S., is a significant catalyst for our wind towers business. However, the lapse in the PTC and the associated impact on our customers and the wind industry supply chain, has created a near-term lull in projects. As a result, we anticipate 2023 will be a transition year as new wind projects ramp up and expect a strong multi-year rebound in volumes beginning in 2024. In the fourth quarter of 2022, we received wind tower orders of $371 million which extends our backlog to 2025 and fills a base level of production capacity for the next three years.

•Within our Transportation Products segment, our backlog for inland barges as of December 31, 2022 is $225.1 million, which fills a significant portion of our planned production capacity for 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 reduced 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. While high steel prices continued to negatively impact order levels in 2022, the underlying fundamentals for a dry barge replacement cycle remain in place. The fleet continues to age, new builds have not kept pace with scrapping, and utilization rates are high. As a result, order inquiries have been increasing, and we received orders of $134 million in the fourth quarter of 2022, primarily for hopper barges for 2023 delivery. Demand for steel components, which was softening pre-COVID-19 due to a weakening North American rail transportation market, is increasing relative to 2020 and 2021 cyclical lows as the near-term outlook for the new railcar market indicates a stable level of replacement demand.

Executive Overview

Financial Operations and Highlights

•Revenues for the year ended December 31, 2022 increased 10.1% to $2.2 billion compared to the year ended December 31, 2021 with all three segments contributing to the increase.

•Operating profit for the year ended December 31, 2022 of $349.0 million increased $241.7 million compared to the year ended December 31, 2021, of which $189.0 million related to the gain on the sale of the storage tanks business completed in the fourth quarter. The additional $52.7 million increase was driven by increased pricing and volumes in Construction Products, higher margins on increased pricing in Engineered Structures, and higher overall volumes and increased efficiencies in Transportation Products.

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•As a percentage of revenue, selling, general, and administrative expenses was 11.7% for the year ended December 31, 2022, compared to 12.6% in the prior year. Selling, general, and administrative expenses increased by 2.7% for the year ended December 31, 2022, when compared to the prior year largely due to increased compensation costs.

•The effective tax rate for the year ended December 31, 2022 was 22.3% compared to 16.7% for the year ended December 31, 2021. See Note 10, “Income Taxes” to the Consolidated Financial Statements.

•Net income for the year ended December 31, 2022 was $245.8 million compared with $69.6 million for the year ended December 31, 2021.

Unsatisfied Performance Obligations (Backlog)

As of December 31, 2022 and 2021 our backlog of firm orders was as follows:

(in millions)

Engineered Structures:

Utility, wind, and related structures $ 671.3 $ 437.5

Storage tanks(1) $ — $ 22.0

Transportation Products:

(1) On October 3, 2022, the Company completed the sale of its storage tanks business and its related backlog.

Approximately 57% of the unsatisfied performance obligations for our utility, wind, and related structures in our Engineered Structures segment are expected to be delivered during the year ending 2023, 24% expected to be delivered during the year ending 2024, with the remainder expected to be delivered during the year ending 2025. All of the unsatisfied performance obligations for inland barges in our Transportation Products segment are expected to be delivered during the year ending 2023.

Results of Operations

The following discussion of Arcosa’s results of operations should be read in connection with “Forward-Looking Statements” and Item 1A, “Risk Factors”. These items provide additional relevant information regarding the business of Arcosa, its strategy and various industry conditions which have a direct and significant impact on Arcosa’s results of operations, as well as the risks associated with Arcosa’s business.

Overall Summary

Revenues

Year Ended December 31, Percent Change

($ in millions)

Eliminations — (0.1) (2.2)

2022 versus 2021

•Revenues increased by 10.1%.

•Revenues from our Construction Products segment increased primarily due to increased pricing across our product lines in our aggregate and specialty materials businesses and higher volumes from recently acquired businesses.

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•In our Engineered Structures segment, revenues increased primarily due to increased pricing in all product lines.

•Revenues from our Transportation Products segment increased primarily due to higher deliveries in steel components, partially offset by lower tank barge deliveries.

2021 versus 2020

•Revenues increased by 5.2%.

•Revenues from our Construction Products segment increased primarily due to higher natural and recycled aggregates volumes from acquired businesses as well as in our legacy natural aggregates business.

•In our Engineered Structures segment, revenues increased primarily due to increased pricing in all product lines driven by higher steel prices and higher volumes in utility structures and U.S. storage tanks.

•Revenues from our Transportation Products segment decreased primarily due to lower volumes in our inland barge business.

Operating Costs

Operating costs are comprised of cost of revenues; selling, general, and administrative expenses; impairment charges; and gains or losses on property disposals.

Year Ended December 31, Percent Change

(in millions)

Eliminations — (0.1) (2.2)

2022 versus 2021

•Operating costs decreased 1.8%. Excluding the $189.0 million gain on the sale of our storage tanks business within the Engineered Structures segment, operating costs increased 8.0%

•Cost of revenues for Construction Products increased primarily due to inflationary-related cost increases, including diesel, cement, and process fuels and higher volumes from recently acquired businesses.

•Excluding the gain from the sale of the storage tanks business, operating costs for Engineered Structures increased primarily due to higher steel raw material prices.

•Cost of revenues for Transportation Products increased primarily due to increased steel component volumes and higher steel raw material costs in inland barges.

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

•As a percentage of revenue, selling, general, and administrative expenses for the year ended December 31, 2022 was 11.7% compared to 12.6% for the year ended December 31, 2021.

2021 versus 2020

•Operating costs increased 8.1%.

•Cost of revenues for Construction Products increased primarily due to higher volumes from acquired businesses, including the cost impact of the fair market value write-up of acquired inventory and additional depreciation, depletion, and amortization expense.

•Cost of revenues for Engineered Structures increased primarily due to higher volumes in our utility structures business, as well as higher steel raw material prices.

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•Cost of revenues for Transportation Products decreased primarily due to lower volumes in our inland barge business.

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

•As a percentage of revenue, selling, general, and administrative expenses for the year ended December 31, 2021 was 12.6% compared to 11.5% for the year ended December 31, 2020. The increase is largely due to additional costs from acquired businesses in Construction Products and higher corporate costs due to a legal settlement in the fourth quarter and higher acquisition-related transaction and integration costs.

Operating Profit (Loss)

Year Ended December 31, Percent Change

(in millions)

2022 versus 2021

•Operating profit increased 225.3%, a large portion of which related to the $189.0 million gain on sale of our storage tanks business within the Engineered Structures segment. Excluding the gain, operating profit increased $52.7 million, or 49.1%.

•Operating profit in Construction Products increased primarily due to increased pricing and volumes from recently acquired businesses, partially offset by inflationary-related cost increases, including diesel, cement, and process fuels.

•Operating profit in Engineered Structures increased by 34.1%, excluding the gain on the sale of the storage tanks business, primarily due to higher revenues and improved margins in our utility structures and storage tanks businesses as well as improved pricing across all product lines.

•Operating profit in Transportation Products increased primarily due to higher volumes and improved margins in our steel components business.

2021 versus 2020

•Our operating profit decreased 29.3%.

•Operating profit in the Construction Products segment increased primarily due to increased volumes from recently acquired business and in our legacy businesses.

•Operating profit in our Engineered Structures segment increased primarily due to higher volumes in our utility structures business and improved margins in our storage tanks business, partially offset by lower wind tower volumes.

•Operating profit in our Transportation Products segment decreased primarily due to lower barge volumes and the associated decline in operational efficiencies from reduced capacity utilization.

For a further discussion of revenues, costs, and the operating results of individual segments, see Segment Discussion below.

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Other Income and Expense

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

Year Ended December 31,

(in millions)

Interest income $ (1.1) $ — $ (0.4)

Foreign currency exchange transactions 3.3 0.6 3.6

Other, net (income) expense $ 1.8 $ 0.3 $ 3.0

•Other, net expense due to foreign currency exchange transactions increased by $2.7 million in 2022 primarily driven by increased volatility in the U.S. dollar to Mexican peso exchange rate as well as foreign currency impacts on the sale of the storage tanks business in Mexico.

Income Taxes

The income tax provision for the years ended December 31, 2022, 2021, and 2020 was $70.4 million, $14.0 million, and $31.6 million, respectively. The effective tax rate for the years ended December 31, 2022, 2021, and 2020 was 22.3%, 16.7%, and 22.9%, respectively. The effective tax rates differ from the federal tax rate of 21.0% due to the impact of state income taxes, excess tax benefits related to equity compensation, and the impact of foreign tax benefits. The increase in our effective tax rate for the year ended December 31, 2022 was largely due to true-ups of apportionment rates impacting prior year state current and deferred taxes. For a reconciliation of the federal tax rate to our effective tax rate, see Note 10 of the Notes to Consolidated Financial Statements.

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 impacted the Company. Approximately $15 million of federal and state income tax payments deferred during the first half of 2020 were paid during the third quarter of 2020. Approximately $5.4 million and $4.3 million of payroll-related taxes were paid during 2022 and 2021, respectively. As of December 31, 2022, the Company has repaid all payroll-related taxes deferred in accordance with the provisions of the CARES Act.

See Note 10 of the Notes to Consolidated Financial Statements for a further discussion of income taxes.

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Segment Discussion

Construction Products

Year Ended December 31, Percent Change

($ in millions)

Revenues:

Operating costs:

Impairment charge — — 0.8

2022 versus 2021

•Revenues increased 15.9% partially due to recent acquisitions, which on a combined basis accounted for approximately half of the increase in segment revenues. The additional increase in revenues was driven by strong pricing gains across our product lines in our aggregates and specialty materials businesses, partially offset by overall lower volumes from legacy operations. Revenues from our trench shoring business increased 19.8% driven by higher volumes and increased pricing.

•Cost of revenues increased 16.5%, partially due to higher volumes as well as additional depreciation, depletion, and amortization expense from recently acquired businesses. Cost of revenues also increased due to higher inflationary-related costs, including diesel, cement, and process fuels, across our businesses. As a percent of revenues, cost of revenues increased slightly.

•Selling, general, and administrative expenses increased 11.7% driven by additional costs from recently acquired businesses. As a percentage of revenues, selling, general, and administrative costs declined to 10.9% compared to 11.3% in the previous year.

•Operating profit increased by 16.0%, in line with revenue.

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

2021 versus 2020

•Revenues increased 34.2%, primarily due to StonePoint and other recent acquisitions, which on a combined basis increased segment revenues by approximately 25%. The additional increase in revenues was driven by strong demand for construction aggregates despite numerous weather-related challenges in the first half of the year, partially offset by reduced shipments to oil and gas markets. Revenues from our trench shoring business increased 32.7%, above pre-pandemic levels, due to higher steel prices and improved demand conditions as COVID-related construction delays improved.

•Cost of revenues increased 38.7% due to higher volumes from the acquired businesses and strong demand in our legacy businesses. Cost of revenues also increased due to a $4.7 million increase in the amortization of the fair value mark up of acquired inventory as well as higher depreciation, depletion, and amortization expense from acquired businesses. As a percent of revenues, cost of revenues in our legacy businesses, excluding depreciation, depletion, and amortization, were mostly in line with the prior year despite higher fuel prices and other inflationary-related increases.

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•Selling, general, and administrative expenses increased 31.4% due to additional costs from acquired businesses. As a percentage of revenues, selling, general, and administrative costs in the legacy businesses declined as legacy costs were substantially unchanged from the previous year.

•Operating profit increased 11.4% driven by increased volumes in the second half of the year which offset the impact of Winter Storm Uri in the first quarter, and excessive rainfall in the second quarter. Excluding the impact of the fair value mark up of acquired inventory and the impairment charge recognized in the prior year, operating profit increased approximately 15%.

•Depreciation, depletion, and amortization expense increased primarily due to StonePoint and other recently acquired businesses along with the associated fair value mark up of acquired long-lived assets.

Engineered Structures

Year Ended December 31, Percent Change

($ in millions)

Revenues:

Operating costs:

Selling, general, and administrative expenses 73.6 74.0 74.4 (0.5) (0.5)

Gain on sale of storage tanks business (189.0) — —

Impairment charge — 2.9 1.3

2022 versus 2021

•Revenues increased 7.3% driven by increased pricing across all product lines partially offset by lower overall volumes and the sale of the storage tanks business which was completed on October 3, 2022.

•Cost of revenues increased 5.4% primarily driven by higher steel raw material prices partially offset by lower overall volumes and the elimination of costs for storage tanks in the fourth quarter following the sale.

•Selling, general, and administrative expenses were substantially unchanged as increased costs in utility structures were offset by the elimination of costs from storage tanks in the fourth quarter following the sale.

•Operating profit increased significantly driven by the $189.0 million gain recognized on sale of our storage tanks business during the fourth quarter. Excluding the gain, operating profit increased $30.0 million or 34.1% primarily due to higher revenues and improved margins in our utility structures and storage tanks businesses as well as improved pricing across all product lines. The increase was partially offset by a $7.7 million increase to operating profit in 2021 related to the resolution of a customer dispute.

2021 versus 2020

•Revenues increased 6.4% due to increased pricing across all product lines, higher volumes in utility structures, and the full year impact of the acquired traffic and telecom structures businesses. Revenue increases were partially offset by lower wind tower volumes. Revenues also increased by $7.7 million due to a non-recurring item in our wind towers business related to the resolution of a customer dispute from 2019.

•Cost of revenues increased 6.6% driven by higher steel raw material prices and increased volumes in our utility structures business, partially offset by lower wind tower volumes. Cost of revenues were reduced by a gain of $3.9 million recognized on the sale of a non-operating facility in the first quarter.

•Selling, general, and administrative expenses were substantially unchanged.

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•Operating profit increased by 9.7% primarily due to increased volumes in our utility structures business and improved margins in our storage tanks and utility structures businesses, a one-time resolution of a customer dispute, and the gain on the sale of a non-operating facility. This increase was partially offset by lower wind tower volumes and Winter Storm Uri that impacted production in our Texas and Oklahoma plants for approximately one week in the first quarter.

Unsatisfied Performance Obligations (Backlog)

As of December 31, 2022, the backlog for utility, wind, and related structures was $671.3 million compared to $437.5 million as of December 31, 2021. Approximately 57% of the unsatisfied performance obligations for our utility, wind, and related structures are expected to be delivered during the year ending December 31, 2023, 24% expected to be delivered during the year ending 2024, with the remainder expected to be delivered during the year ending 2025.

Transportation Products

Year Ended December 31, Percent Change

($ in millions)

Revenues:

Operating costs:

Selling, general, and administrative expenses 22.8 21.8 22.6 4.6 (3.5)

Impairment charge — — 5.0

2022 versus 2021

•Revenues increased 3.8% led by a 41.7% increase in steel components revenues due to increased deliveries resulting from improving demand conditions in the North American railcar market. The segment increase was partially offset by a 12.0% decrease in revenues from inland barges, reflecting continued weak demand conditions resulting from historically high steel prices.

•Cost of revenues increased by 2.0% driven by higher steel component volumes, partially offset by lower tank barge volumes.

•Selling, general, and administrative expenses increased 4.6% due to higher overall volumes and increased legal expenses.

•Operating profit increased by 79.7% due to higher overall volumes and improved margins in our steel components business.

2021 versus 2020

•Revenues decreased 34.5%. Revenues from inland barges decreased 43.0% due to lower tank and hopper barge deliveries as demand conditions weakened from the COVID-19 pandemic and increased steel prices. Steel component revenues increased slightly due to higher deliveries as market fundamentals in the North American railcar market began to improve from cyclical trough levels reached in 2020.

•Cost of revenues decreased 27.8% driven by lower barge volumes.

•Selling, general, and administrative expenses decreased due to lower compensation costs.

•Operating profit decreased by 88.3% due to lower barge volumes and the associated decline in operational efficiencies from reduced capacity utilization.

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Unsatisfied Performance Obligations (Backlog)

As of December 31, 2022, the backlog for inland barges was $225.1 million compared to $92.7 million as of December 31, 2021. All of the backlog for inland barges is expected to be delivered during the year ending December 31, 2023.

Corporate

Year Ended December 31, Percent Change

($ in millions)

2022 versus 2021

•Corporate overhead costs decreased 6.1% primarily due to a $1.1 million reduction in acquisition and divestiture-related expenses as well as by $8.7 million for a legal settlement recognized in the prior year. This decrease was partially offset by higher compensation-related expenses in the current year.

2021 versus 2020

•Corporate overhead costs increased 21.8% primarily due to an additional $6.9 million of acquisition-related transaction and integration costs as well as a legal settlement of $8.7 million incurred during the fourth quarter of 2021 related to a previously disclosed matter regarding events that pre-dated the Company's spin-off.

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 each of the last three years:

Year Ended December 31,

(in millions)

Total cash provided by (required by):

Net increase (decrease) in cash and cash equivalents $ 87.5 $ (22.9) $ (144.6)

2022 versus 2021

Operating Activities. Net cash provided by operating activities for the year ended December 31, 2022 was $174.3 million compared to $166.5 million for the year ended December 31, 2021.

•The changes in current assets and liabilities resulted in a net use of cash of $65.3 million for the year ended December 31, 2022 compared to a net use of cash of $50.3 million for the year ended December 31, 2021. The current year activity was primarily driven by increased receivables and inventories due to increased volumes and higher steel prices.

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Investing Activities. Net cash provided by investing activities for the year ended December 31, 2022 was $90.7 million compared to net cash required by investing activities of $570.3 million for the year ended December 31, 2021.

•Capital expenditures for the year ended December 31, 2022 increased to $138.0 million compared to $85.1 million for the year ended December 31, 2021 driven by investment in various growth projects in our Construction Products and Engineered Structures segments.

•Proceeds of $271.6 million were received during the year ended December 31, 2022 from the sale of the storage tanks business compared to $18.2 million for the year ended December 31, 2021 from the divestiture of an asphalt operation acquired as part of the StonePoint acquisition.

•Proceeds from the sale of property, plant, and equipment and other assets totaled $32.2 million for the year ended December 31, 2022 compared to $20.0 million for the year ended December 31, 2021.

•Cash paid for acquisitions, net of cash acquired, was $75.1 million for the year ended December 31, 2022 compared to $523.4 million for the year ended December 31, 2021.

Financing Activities. Net cash required by financing activities for the year ended December 31, 2022 was $177.5 million compared to $380.9 million of net cash provided by financing activities for the same period in 2021.

•During the year ended December 31, 2022, the Company received net proceeds from borrowings under its revolving credit facility of $30 million which was used to partially finance the acquisition of RAMCO. Subsequently, the Company used $155.0 million of cash proceeds from the sale of the storage tanks business in the fourth quarter to repay all amounts borrowed under its revolving credit facility. During the year ended December 31, 2021, the Company received proceeds from the issuance of the $400 million senior notes to finance the acquisition of StonePoint. The Company also received proceeds of $100 million from borrowings under the revolving credit facility, of which $75 million were repaid during the year.

•Dividends paid during the year ended December 31, 2022 were $9.8 million.

•The Company paid $15.0 million during the year ended December 31, 2022 to repurchase common stock under the share repurchase program in effect at the time compared to $9.4 million paid during the year ended December 31, 2021.

2021 versus 2020

Operating Activities. Net cash provided by operating activities for the year ended December 31, 2021 was $166.5 million compared to $259.9 million for the year ended December 31, 2020.

•The changes in current assets and liabilities resulted in a net use of cash of $50.3 million for the year ended December 31, 2021 compared to a net source of cash of $3.8 million for the year ended December 31, 2020. The decrease was primarily driven by increased receivables and inventories due to increased volumes and higher steel prices.

Investing Activities. Net cash required by investing activities for the year ended December 31, 2021 was $570.3 million compared to $528.2 million for the year ended December 31, 2020.

•Capital expenditures for the year ended December 31, 2021 were $85.1 million compared to $82.1 million for the year ended December 31, 2020.

•Proceeds from the sale of property, plant, and equipment and other assets totaled $20.0 million for the year ended December 31, 2021 compared to $9.6 million for the year ended December 31, 2020.

•Cash paid for acquisitions, net of cash acquired, was $523.4 million for the year ended December 31, 2021 compared to $455.7 million during for the year ended December 31, 2020.

Financing Activities. Net cash provided by financing activities during the year ended December 31, 2021 was $380.9 million compared to $123.7 million of net cash provided by financing activities for the same period in 2020.

•During the year ended December 31, 2021, the Company received proceeds from the issuance of the $400 million senior notes. The Company also received proceeds of $100 million from borrowings under our revolving credit facility, of which $75 million were repaid during the year. During the year ended December 31, 2020, the Company received proceeds from the issuance of the $150 million term loan to partially fund the acquisition of Cherry and, as a precautionary measure at the onset of the pandemic, borrowings under the Company's revolving credit facility of $100 million which were later repaid during the year.

•Dividends paid during the year ended December 31, 2021 were $9.8 million.

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•The Company paid $9.4 million during the year ended December 31, 2021 to repurchase common stock under the share repurchase program in effect at the time compared to $8.0 million paid during the year ended December 31, 2020.

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 million and added a term loan facility of $150 million, in each case with a maturity date of January 2, 2025. The entire term loan was advanced on January 2, 2020 in connection with the closing of the acquisition of Cherry. As of December 31, 2022, the term loan had a remaining balance of $136.8 million.

As of December 31, 2022, we had no outstanding loans borrowed under the revolving credit facility, and there were approximately $25.3 million of letters of credit issued, leaving $474.7 million available. During 2022, the Company borrowed a net $30 million, which was used to partially finance the acquisition of RAMCO. In the fourth quarter, the Company used $155.0 million of the cash proceeds from the sale of the storage tanks business to repay all outstanding loans borrowed under its revolving credit facility. See Note 2 Acquisitions and Divestitures for additional information. Of the outstanding letters of credit as of December 31, 2022, $24.7 million are expected to expire in 2023, with the remainder in 2024. The majority of our letter 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 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 December 31, 2022. The commitment fee rate ranges from 0.20% to 0.35% and was set at 0.30% at December 31, 2022.

The Company's revolving credit and term loan facilities require the maintenance of certain ratios related to leverage and interest coverage. As of December 31, 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, 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 $400.0 million in 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 in April and October of each year. 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.

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.

Repurchase Program

In December 2022, the Company’s Board of Directors (the “Board”) authorized a new $50 million share repurchase program effective January 1, 2023 through December 31, 2024 to replace a program of the same amount that expired on December 31, 2022. Under the previous program, the Company repurchased 298,629 shares at a cost of $15.0 million during the year ended December 31, 2022. During the year ended December 31, 2021, the Company repurchased 170,168 shares at a cost of $9.4 million. See Note 1 of the Notes to Consolidated Financial Statements.

Derivative Instruments

In December 2018, the Company entered into an interest rate swap instrument, effective as of January 2, 2019 and expiring in October 2023, to reduce the effect of changes in the variable interest rates associated 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 the borrowings at a monthly rate of 2.71%. As of December 31, 2022, the Company has recorded an asset of $1.8 million for the fair value of the instrument, all of which is recorded in accumulated other comprehensive loss. See Note 3 and Note 7 of the Notes to Consolidated Financial Statements.

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Stock-Based Compensation

We have a stock-based compensation plan for our directors, officers, and employees. See Note 13 of the Notes to Consolidated Financial Statements.

Employee Retirement Plans

In 2022, we sponsored an employee savings plan under the 401(k) plan that covered substantially all employees and included a company matching contribution with the investment of the funds directed by the participants. The Company also contributed to a multiemployer defined benefit pension plan under the terms of a collective-bargaining agreement that covered certain union-represented employees at one of our facilities. See Note 11 of the Notes to Consolidated Financial Statements.

Contractual Obligations and Commercial Commitments

As of December 31, 2022, we had the following contractual obligations and commercial commitments:

(in millions)

Obligations for purchase of goods and services 181.8 177.1 4.7

See Note 15 of the Notes to Consolidated Financial Statements.

Critical Accounting Policies and Estimates

MD&A discusses our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

On an on-going basis, management evaluates its estimates and judgments based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our accounting policies are more fully described in Note 1 of the Notes to Consolidated Financial Statements. We believe the following critical accounting policies include our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements.

Business Combinations and Allocation of Purchase Price

We account for business combinations under the acquisition method of accounting. As of the date that control in the entity is obtained, the purchase price of the transaction is allocated to the identifiable assets acquired and liabilities assumed based on their estimated fair values. The purchase price is determined based on the fair value of consideration transferred to and liabilities assumed from the seller as of the date of acquisition. Goodwill is recorded for the excess of the purchase price over the net fair value of the identifiable assets acquired and liabilities assumed. The determination of the acquisition date fair value of the assets acquired and liabilities assumed requires management's judgment and involves the use of significant estimates and assumptions, especially with respect to future expected cash flows, useful lives, and discount rates.

We commonly use an excess earnings method to value acquired mineral reserves and separately identifiable intangible assets, which may include, but are not limited to, customer relationships, permits, and backlog. Significant assumptions used in the valuation of these types of assets may include projected revenues, production costs, capital requirements, customer attrition rates, and discount rates. Changes in the assumptions used could have a significant impact on the estimated acquisition date fair value of the related asset and any future depreciation, depletion, or amortization expense.

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The estimated remaining useful lives of acquired tangible and definite-lived intangible assets are based on the length of time that the assets are expected to provide value to the Company and have a significant impact on current and future period earnings.

Management's estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and, as a result, actual results may differ from estimates. We may adjust the amounts recognized in an acquisition during a measurement period after the acquisition date. Any such adjustments are the result of subsequently obtaining additional information that existed at the acquisition date regarding the assets acquired or the liabilities assumed. Measurement period adjustments are generally recorded as increases or decreases to goodwill, if any, recognized in the transaction. The cumulative impact of measurement period adjustments on depreciation, amortization, and other income statement items are recognized in the period the adjustment is determined.

Acquisition costs are expensed as incurred and are included in selling, general, and administrative expenses in the accompanying Consolidated Statements of Operations. We include results of operations from acquired businesses in our Consolidated Financial Statements from the effective date of the acquisition.

Long-lived Assets

As of December 31, 2022, net property, plant, and equipment and net intangible assets represent 36% and 8% of the Company's total assets, respectively. The methods for recognition of depreciation, depletion, and amortization are based on estimates regarding the expected future economic benefit to the Company and any potential impairment to the value of such assets could be significant. As such, the accounting treatment for these long-lived assets is a critical accounting policy.

Property, plant, and equipment are stated at cost and depreciated or depleted over their estimated useful lives, primarily using the straight-line method. Depletion of mineral reserves is calculated based on estimated proven and probable reserves using the units-of-production method on a quarry-by-quarry basis. Intangible assets, primarily consisting of customer relationships and permits, are recorded at fair value on the date of acquisition and amortized over their estimated useful lives using the straight-line method. See Note 1 of the Notes to Consolidated Financial Statements for additional information regarding the ranges of estimated useful lives by category of property, plant, and equipment and intangible assets.

We periodically evaluate the carrying value of long-lived assets to be held and used for potential impairment whenever facts and circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. The carrying value of long-lived assets to be held and used is considered impaired when the carrying value is not recoverable through undiscounted future cash flows and the fair value of the asset or asset group is less than their carrying value. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risks involved or market quotes as available. Significant estimates and judgments that most significantly impact the impairment analysis may include projected revenues, operating profit, and the remaining useful life over which the asset or asset group is expected to generate cash flows.

Impairment losses on long-lived assets held for sale are determined in a similar manner, except that estimated fair values are reduced by the estimated cost to dispose of the assets.

The Company had no impairment charges during the year ended December 31, 2022. Impairment charges of $2.9 million were recognized during the year ended December 31, 2021 related to assets that were classified as held for sale during the year. Impairment charges of $7.1 million were recognized during the year ended December 31, 2020 related to assets that were disposed of during the year.

Goodwill

Goodwill is required to be tested for impairment annually or on an interim basis whenever events or circumstances change indicating that the carrying amount of the goodwill might be impaired. The quantitative goodwill impairment test is assessed at the “reporting unit” level by comparing the reporting unit's estimated fair value with the carrying amount of its net assets. If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized. The goodwill impairment is measured as the excess of the reporting unit's carrying value over its fair value, not to exceed the amount of goodwill allocated to the reporting unit. The estimates and judgments that most significantly affect the fair value calculations are assumptions, consisting of level three inputs, related to revenue and operating profit growth, discount rates, and exit multiples.

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As of December 31, 2022, goodwill totaled $958.5 million. Based on the Company's annual goodwill impairment test, performed at the reporting unit level as of December 31, 2022, the Company concluded that no impairment charges were determined to be necessary and that none of the reporting units evaluated were at risk of failing the goodwill impairment test. A reporting unit is considered to be at risk if its estimated fair value does not exceed the carrying value of its net assets by 10% or more. See Note 1 and Note 6 of the Notes to Consolidated Financial Statements.

We believe that the assumptions used in our impairment analysis are reasonable; however, given the uncertainties of the economy and its potential impact on our businesses, there can be no assurance that our estimates and assumptions regarding the fair value of our reporting units will prove to be accurate predictions of the future. Additionally, variations in any of these assumptions may result in different calculations in fair value that could result in an impairment charge.

A 100 basis point increase in the discount rate or reduction in the terminal growth rate would not have resulted in an impairment of goodwill for any of our reporting units as of December 31, 2022.

Contingencies and Litigation

The Company is involved in claims and lawsuits and environmental matters incidental to our business. We evaluate our exposure to such claims and suits periodically and establish accruals for these contingencies when probable losses can be reasonably estimated. The range of reasonably possible losses for such matters, taking into consideration our rights in indemnity and recourse to third parties was $0.3 million to $1.9 million as of December 31, 2022 and $9.1 million to $9.5 million as of December 31, 2021.

Based on information currently available with respect to such claims and lawsuits, including information on claims and lawsuits as to which the Company is aware but for which the Company has not been served with legal process, it is management’s opinion that the ultimate outcome of all such claims and litigation, including settlements, in the aggregate will not have a material adverse effect on the Company’s financial condition for purposes of financial reporting. However, resolution of certain claims or lawsuits by settlement or otherwise, could impact the operating results of the reporting period in which such resolution occurs. For additional information, see Note 15 of the Notes to Consolidated Financial Statements.

Income Taxes

The liability method is used to account for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and other tax attributes using currently enacted tax rates. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the provision for income taxes in the period that includes the enactment date. Management is required to estimate the timing of the recognition of deferred tax assets and liabilities, make assumptions about the future deductibility of deferred tax assets, and assess deferred tax liabilities based on enacted law and tax rates for the appropriate tax jurisdictions to determine the amount of such deferred tax assets and liabilities. Changes in the calculated deferred tax assets and liabilities may occur in certain circumstances including statutory income tax rate changes, statutory tax law changes, or changes in the structure or tax status of the Company. The Company assesses whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, both positive and negative, using a more likely than not standard. This assessment considers, among other matters, the nature, frequency, and severity of recent losses; a forecast of future profitability; the duration of statutory carryback and carryforward periods; the Company’s experience with tax attributes expiring unused; and tax planning alternatives.

As of December 31, 2022, our adjusted net deferred tax liability was $166.0 million. At December 31, 2022, the Company had $60.3 million federal consolidated net operating loss carryforwards, primarily from businesses acquired, and $6.6 million of tax-effected state loss carryforwards remaining. In addition, the Company had $9.1 million of foreign net operating loss carryforwards that will begin to expire in the year 2023. We have established a valuation allowance for state and foreign tax operating losses and credits that we have estimated may not be realizable.

For additional information, see Note 10 of the Notes to Consolidated Financial Statements.

Recent Accounting Pronouncements

See Note 1 of the Notes to Consolidated Financial Statements for information about recent accounting pronouncements.

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Forward-Looking Statements

This annual report on Form 10-K (or statements otherwise made by the Company or on the Company’s behalf from time to time in other reports, filings with the Securities and Exchange Commission (“SEC”), news releases, conferences, internet postings or otherwise) 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,” “plans,” 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 products are manufactured, 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 and related public disclosures are not favorably received by stockholders;

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•if the Former Parent fails to perform under various transaction agreements that were executed as part of the Separation;

•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 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” included elsewhere herein.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Our earnings could be affected by changes in interest rates due to the impact those changes have on our variable rate revolving credit and term loan facility. As of December 31, 2022, we had no outstanding loans borrowed under the revolving credit facility and the term loan had a remaining balance of $136.8 million. If interest rates average one percentage point more in fiscal year 2023 than they did during 2022, our interest expense would increase by $0.4 million, after considering the effects of interest rate hedges. In comparison, at December 31, 2021, we estimated that an average increase of one percentage point would increase interest expense by $1.7 million.

As of December 31, 2022, we had $400.0 million outstanding on our 4.375% senior notes (the "Notes") due 2029. The Notes have a 4.375% fixed annual interest rate and, therefore, our economic interest rate exposure is fixed. However, the values of the Notes are exposed to interest rate risk. We estimate that a one percentage point increase in market interest rates would decrease the fair value of the Notes by approximately $17.9 million. We carry the Notes at face value less unamortized discount on our Consolidated Balance Sheet and present the fair value for disclosure purposes only.

In addition, we are subject to market risk related to our net investments in our foreign subsidiaries. The net investment in foreign subsidiaries as of December 31, 2022 was $109.6 million. The impact of such market risk exposures as a result of foreign exchange rate fluctuations has not been significant to Arcosa. See Note 9 of the Consolidated Financial Statements.

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Item 8.Financial Statements and Supplementary Data.

Arcosa, Inc.

Index to Financial Statements

Page

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 54

Consolidated Balance Sheets as of December 31, 2022 and 2021 58

Notes to Consolidated Financial Statements 61

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Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Arcosa, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Arcosa, Inc. and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 24, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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Valuation of Goodwill

/s/ ERNST & YOUNG LLP

We have served as the Company's auditor since 2015.

Dallas, Texas

February 24, 2023

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Arcosa, Inc. and Subsidiaries

Consolidated Statements of Operations

Year Ended December 31,

(in millions, except per share amounts)

Operating costs:

Selling, general, and administrative expenses 262.8 256.0 223.1

Gain on sale of storage tanks business (189.0) — —

Impairment charge — 2.9 7.1

Other, net (income) expense 1.8 0.3 3.0

Provision for income taxes:

Net income per common share:

Weighted average number of shares outstanding:

Dividends declared per common share $ 0.20 $ 0.20 $ 0.20

See accompanying Notes to Consolidated Financial Statements.

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Arcosa, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

Year Ended December 31,

(in millions)

Other comprehensive income (loss):

Derivative financial instruments:

Currency translation adjustment:

See accompanying Notes to Consolidated Financial Statements.

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Arcosa, Inc. and Subsidiaries

Consolidated Balance Sheets

(in millions, except per share amounts)

ASSETS

Current assets:

Cash and cash equivalents $ 160.4 $ 72.9

Receivables, net of allowance for doubtful accounts of $5.5 and $4.2 334.2 310.8

Inventories:

Property, plant, and equipment, net 1,199.6 1,201.9

Deferred income taxes 9.6 13.2

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt 14.7 14.8

Stockholders’ equity:

Accumulated other comprehensive loss (15.7) (19.3)

See accompanying Notes to Consolidated Financial Statements.

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Arcosa, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

Year Ended December 31,

(in millions)

Operating activities:

Impairment charge — 2.9 7.1

Stock-based compensation expense 19.1 18.0 20.0

Provision for deferred income taxes 44.8 11.9 9.6

Gains on disposition of property and other assets (11.7) (10.3) (6.4)

Gain on sale of storage tanks business (189.0) — —

(Increase) decrease in other assets (3.8) 5.2 (7.6)

Increase (decrease) in other liabilities (16.0) (22.6) 11.5

Changes in current assets and liabilities:

(Increase) decrease in receivables (65.9) (25.9) (13.5)

(Increase) decrease in inventories (26.7) (24.6) 32.6

(Increase) decrease in other current assets (8.5) (13.3) 1.9

Increase (decrease) in accounts payable 27.0 34.7 43.5

Increase (decrease) in advance billings 21.9 (26.1) (31.6)

Increase (decrease) in accrued liabilities (13.1) 4.9 (29.1)

Investing activities:

Proceeds from disposition of property and other assets 32.2 20.0 9.6

Acquisitions, net of cash acquired (75.1) (523.4) (455.7)

Proceeds from sale of businesses 271.6 18.2 —

Net cash provided (required) by investing activities 90.7 (570.3) (528.2)

Financing activities:

Shares repurchased (15.0) (9.4) (8.0)

Dividends paid to common shareholders (9.8) (9.8) (9.8)

Purchase of shares to satisfy employee tax on vested stock (12.5) (10.1) (3.8)

Debt issuance costs — (6.6) —

Other — — (1.2)

Net cash (required) provided by financing activities (177.5) 380.9 123.7

Net increase (decrease) in cash and cash equivalents 87.5 (22.9) (144.6)

Cash and cash equivalents at beginning of period 72.9 95.8 240.4

Cash and cash equivalents at end of period $ 160.4 $ 72.9 $ 95.8

Income tax payments for the years ended 2022, 2021, and 2020 were $21.9 million, $2.9 million, and $36.9 million, respectively.

See accompanying Notes to Consolidated Financial Statements.

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Arcosa, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity

CommonStock TreasuryStock

(in millions, except par value)

Other comprehensive loss — — — — (2.4) — — (2.4)

Cash dividends on common stock — — — (9.8) — — — (9.8)

Shares repurchased — — — — — (0.2) (8.0) (8.0)

Retirement of treasury stock (0.4) — (15.1) — — 0.4 15.1 —

Other — — (0.8) — — — — (0.8)

Net income — — — 69.6 — — — 69.6

Other comprehensive income — — — — 2.8 — — 2.8

Cash dividends on common stock — — — (9.8) — — — (9.8)

Shares repurchased — — — — — (0.2) (9.4) (9.4)

Retirement of treasury stock (0.4) — (22.3) — — 0.4 22.3 —

Other comprehensive income — — — — 3.6 — — 3.6

Cash dividends on common stock — — — (9.8) — — — (9.8)

Shares repurchased — — — — — (0.3) (15.0) (15.0)

Retirement of treasury stock (0.6) — (28.6) — — 0.6 28.6 —

See accompanying Notes to Consolidated Financial Statements.

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Arcosa, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

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 present our historical financial position, results of operations, comprehensive income/loss, and cash flows in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All significant intercompany accounts and transactions have been eliminated.

Stockholders' Equity

In December 2022, the Company’s Board of Directors (the “Board”) authorized a new $50 million share repurchase program effective January 1, 2023 through December 31, 2024 to replace a program of the same amount that expired on December 31, 2022. Under the previous program, the Company repurchased 298,629 shares at a cost of $15.0 million during the year ended December 31, 2022. During the year ended December 31, 2021, the Company repurchased 170,168 shares at a cost of $9.4 million.

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 tanks 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 December 31, 2022 and 2021, we had a contract asset of $77.5 million and $54.2 million, respectively, which is included in receivables, net of allowance, within the Consolidated Balance Sheets. The increase in the contract asset during 2022 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.

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.

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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 December 31, 2022 and the percentage of the outstanding performance obligations as of December 31, 2022 expected to be delivered during 2023:

Unsatisfied performance obligations at

TotalAmount Percent expected to be delivered in 2023

(in millions)

Engineered Structures:

Utility, wind, and related structures $ 671.3 57 %

Storage tanks $ —

Transportation Products:

Approximately 24% of the unsatisfied performance obligations for our utility, wind, and related structures in our Engineered Structures segment are expected to be delivered during the year ending 2024, with the remainder expected to be delivered during the year ending 2025. On October 3, 2022, the Company completed the sale of its storage tanks business and its related backlog. Note 2 Acquisitions and Divestitures.

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 third parties. The Company has no recourse to these receivables once they are sold but may have continuing involvement related to servicing and collection activities. The impact of these transactions in the Company's Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020 was not significant. The carrying values of cash, receivables, and accounts payable are considered to be representative of their respective fair values.

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost is determined principally on the first in first out method. The value of inventory is adjusted for damaged, obsolete, excess, or slow-moving inventory. Work in process and finished goods include material, labor, and overhead.

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Property, Plant, and Equipment

Property, plant, and equipment are stated at cost and depreciated or depleted over their estimated useful lives, primarily using the straight-line method. The estimated useful lives are: buildings and improvements - 5 to 30 years; leasehold improvements - the lesser of the term of the lease or 11 years; and machinery and equipment - 3 to 15 years. Depletion of mineral reserves is calculated based on estimated proven and probable reserves using the units-of-production method on a quarry-by-quarry basis. The costs of ordinary maintenance and repair are charged to operating costs as incurred.

Goodwill and Intangible Assets

Goodwill is required to be tested for impairment annually, or on an interim basis when events or changes in circumstances indicate the carrying amount may not be recoverable. The quantitative goodwill impairment test is assessed at the “reporting unit” level by comparing the reporting unit's estimated fair value with the carrying amount of its net assets. If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized. The goodwill impairment is measured as the excess of the reporting unit's carrying value over its fair value, not to exceed the amount of goodwill allocated to the reporting unit. The estimates and judgments that most significantly affect the fair value calculations are assumptions, consisting of level three inputs, related to revenue and operating profit growth, discount rates, and exit multiples. As of December 31, 2022 and 2021, the Company's annual impairment test of goodwill was completed at the reporting unit level and no impairment charges were determined to be necessary.

Intangible assets are recorded at fair value, using level three inputs, on the date of acquisition and evaluated to determine their estimated useful life. These assets primarily consist of customer relationships and permits and are amortized using the straight-line method. The estimated useful lives for definite-lived intangible assets are: customer relationships - 2 to 22 years; permits - 10 to 29 years; and other - 5 to 10 years.

Indefinite-lived intangible assets primarily relate to an acquired trademark. These assets are not amortized but are evaluated for impairment annually, or on an interim basis when events or changes in circumstances indicate the carrying amount may not be recoverable. The impairment test compares the fair value of each asset to its carrying value using a relief from royalty method. As of December 31, 2022 and 2021, the Company's annual impairment test was completed and no impairment charges were determined to be necessary.

Long-lived Assets

The Company evaluates the carrying value of long-lived assets to be held and used, including property, plant, and equipment and definite-lived intangibles, for potential impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. The carrying value of long-lived assets to be held and used is considered impaired only when the carrying value is not recoverable through undiscounted future cash flows and the fair value of the assets is less than their carrying value. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risks involved or market quotes as available. Impairment losses on long-lived assets held for sale are determined in a similar manner, except that fair values are reduced by the estimated cost to dispose of the assets.

The Company had no impairment charges during the year ended December 31, 2022. Impairment charges of $2.9 million were recognized during the year ended December 31, 2021 related to assets that were classified as held for sale during the year. Impairment charges of $7.1 million were recognized during the year ended December 31, 2020 related to assets that were disposed of during the year.

Workers’ Compensation

The Company is effectively self-insured for workers’ compensation claims. A third-party administrator is used to process claims. We accrue our workers' compensation liability based upon independent actuarial studies. As of December 31, 2022 and 2021, the Company's accrual for worker's compensation costs was $28.2 million and $28.9 million, respectively, which is included in accrued liabilities and other long-term liabilities within the Consolidated Balance Sheets.

Warranties

The Company provides various express, limited product warranties that generally range from 1 to 5 years depending on the product. The warranty costs are estimated using a two-step approach. First, an engineering estimate is made for the cost of all claims that have been asserted by customers. Second, based on historical, accepted claims experience, a cost is accrued for all products still within a warranty period for which no claims have been filed. The Company provides for the estimated cost of product warranties at the time revenue is recognized related to products covered by warranties and assesses the adequacy of the resulting reserves on a quarterly basis.

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As of December 31, 2022 and 2021, the Company's accrual for warranty costs was $1.5 million and $6.3 million, respectively, which is included in accrued liabilities within the Consolidated Balance Sheets.

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.

Foreign Currency Translation

Certain operations outside the U.S. prepare financial statements in currencies other than the U.S. dollar. The income statement amounts are translated at average exchange rates for the year, while the assets and liabilities are translated at year-end exchange rates. Translation adjustments are accumulated as a separate component of stockholders' equity and other comprehensive income. The functional currency of our Mexico operations is considered to be the U.S. dollar. The functional currency of our Canadian operations is considered to be the Canadian dollar.

Other Comprehensive Income (Loss)

Other comprehensive income (loss) consists of foreign currency translation adjustments and the effective unrealized gains and losses on the Company's derivative financial instruments, the sum of which, along with net income, constitutes comprehensive net income (loss). See Note 12 Accumulated Other Comprehensive Loss. All components are shown net of tax.

Recent Accounting Pronouncements

Recently adopted accounting pronouncements

Effective as of January 1, 2020, the Company adopted Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses”, (“ASU 2016-13”), which amends the existing accounting guidance for recognizing credit losses on financial assets and certain other instruments not measured at fair value through net income, including financial assets measured at amortized cost, such as trade receivables and contract assets. ASU 2016-13 replaces the existing incurred loss impairment model with an expected credit loss model that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of the asset. The adoption of this guidance did not have a material effect on the Company’s Consolidated Financial Statements.

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 December 31, 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, 2024 as amended by ASU 2022-06. 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.

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Management's Estimates

The preparation of financial statements in conformity with GAAP 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. Actual results could differ from those estimates.

Note 2. Acquisitions and Divestitures

The Company's acquisition activities are summarized below:

Year Ended December 31,

(in millions)

Acquisitions:

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 $75.6 million. The acquisition was funded with $80.0 million of 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, $54.2 million of permits with an initial weighted average useful life of 20 years, $6.4 million of property, plant, and equipment, and $11.6 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 date. Adjustments to the preliminary purchase price allocation could be material, particularly with respect to our preliminary estimates of intangible assets and property, plant, and equipment.

2021 Acquisitions

Southwest Rock Products, LLC

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 valuation of the assets acquired and liabilities assumed at their acquisition date fair value using Level 3 inputs. The final valuation resulted in the recognition of, among others, $70.7 million of goodwill, $43.7 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.

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StonePoint Ultimate Holding, LLC

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 3 inputs. The following table represents our final purchase price allocation as ofDecember 31, 2022:

(in millions)

Accounts receivable 18.3

Inventories 20.9

Property, plant, and equipment 68.4

Mineral reserves 198.8

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 from the date of the acquisition were approximately $123.7 million and $(0.1) million during the year ended December 31, 2021, respectively.

The following table represents the unaudited pro-forma consolidated operating results of the Company as if the StonePoint acquisition had been completed on January 1, 2020. The unaudited pro-forma information makes certain adjustments to depreciation, depletion, and amortization expense to reflect the fair value recognized in the purchase price allocation, removes one-time transaction-related costs, and aligns the Company's debt financing with that as of the acquisition date. The unaudited pro-forma information should not be considered indicative of the results that would have occurred if the acquisition had been completed on January 1, 2020, nor is such unaudited pro-forma information necessarily indicative of future results.

(in millions)

Income before income taxes $ 92.1 $ 138.9

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.

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2020 Acquisitions

Cherry Industries, Inc.

On January 6, 2020, we completed the stock acquisition of Cherry Industries, Inc. and affiliated entities (“Cherry”), a leading producer of natural and recycled aggregates in the Houston, Texas market which is included in our Construction Products segment. The purchase price of $296.8 million was funded with a combination of cash on-hand, advances under a new $150.0 million five-year term loan, and future payments to the seller for a net cash paid of $284.1 million during the year ended December 31, 2020. See Note 7 Debt for additional information on our credit facility. The acquisition was recorded as a business combination with valuations of the assets acquired and liabilities at their acquisition date fair value using level three inputs. The following table represents our final purchase price allocation:

(in millions)

Accounts receivable $ 30.5

Inventories 11.8

Property, plant, and equipment 58.8

Mineral reserves 17.2

Customer relationships 62.1

Other assets 4.3

Accounts payable (7.5)

Accrued liabilities (4.9)

Deferred income taxes (32.7)

Other liabilities (1.5)

Total net assets acquired $ 296.8

The goodwill acquired, none of which is tax deductible, primarily relates to Cherry's market position and existing workforce. The customer relationship intangibles and permits were assigned weighted average useful lives of 14.9 years and 19.8 years, respectively. Revenues and operating profit included in the Consolidated Statement of Operations from the date of the acquisition were approximately $173.2 million and $25.2 million, respectively, during the year ended December 31, 2020.

The following table represents the unaudited pro-forma consolidated operating results of the Company as if the Cherry acquisition had been completed on January 1, 2019. The unaudited pro-forma information makes certain adjustments to depreciation, depletion, and amortization expense to reflect the fair value recognized in the purchase price allocation, removes one-time transaction-related costs, and aligns the Company's debt financing with that as of the acquisition date. The unaudited pro-forma information should not be considered indicative of the results that would have occurred if the acquisition had been completed on January 1, 2019, nor is such unaudited pro-forma information necessarily indicative of future results.

(in millions)

Income before income taxes $ 144.5 $ 163.8

Other Acquisitions - 2020

In March 2020, we completed the acquisition of certain assets and liabilities of a traffic structures business in our Engineered Structures segment for a total purchase price of $25.5 million. The acquisition was recorded as a business combination based on a valuation of the assets acquired and liabilities assumed at their acquisition date fair value using level three inputs. The valuation resulted in the recognition of $10.0 million of goodwill in our Engineered Structures segment. Such assets and liabilities were not significant in relation to assets and liabilities at the consolidated or segment level.

In June 2020, we completed the acquisition of certain assets and liabilities of a concrete poles business in our Engineered Structures segment. The purchase price of the acquisition was not significant.

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In July 2020, we completed the acquisition of certain assets and liabilities of a telecommunication structures business in our Engineered Structures segment for a total purchase price of $27.8 million. The acquisition was recorded as a business combination based on a valuation of the assets acquired and liabilities assumed at their acquisition date fair value using level three inputs. The valuation resulted in the recognition of $8.5 million of goodwill in our Engineered Structures segment. Such assets and liabilities were not significant in relation to assets and liabilities at the consolidated or segment level.

In August 2020, we completed the acquisition of certain assets and liabilities of a natural aggregates business in our Construction Products segment for a total purchase price of $25.8 million. The acquisition was recorded as a business combination based on a valuation of the assets acquired and liabilities assumed at their acquisition date fair value using level three inputs. The valuation resulted in the recognition of $8.7 million of goodwill in our Construction Products segment. Such assets and liabilities were not significant in relation to assets and liabilities at the consolidated or segment level.

In October 2020, we completed the stock acquisition of Strata Materials, LLC (“Strata”), a leading provider of natural and recycled aggregates in the Dallas-Fort Worth, Texas area, which is included in our Construction Products segment for a total purchase price of $87.0 million. The acquisition was recorded as a business combination based on a valuation of the assets acquired and liabilities assumed at their acquisition date fair value using level three inputs. The valuation resulted in the recognition of $51.6 million of permits with an initial weighted average useful life of 22.8 years and $3.8 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.

In October 2020, we also completed the acquisition of certain assets and liabilities of a traffic structures business in our Engineered Structures segment. The purchase price of the acquisition was not significant.

Divestitures

On October 3, 2022, the Company completed the sale of its storage tanks business for $275 million. Net cash proceeds received at closing were approximately $271.6 million, after transaction closing costs. The sale resulted in a pre-tax gain of $189.0 million which is presented within operating income in the Consolidated Statement of Operations. The storage tanks business, historically reported within the Engineered Structures segment, manufactured 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. Revenues and operating profit of the storage tanks business were $187.3 million and $40.7 million, respectively, for the year ended December 31, 2022, $217.0 million and $36.6 million, respectively, for the year ended December 31, 2021, and $177.0 million and $18.3 million, respectively, for the year ended December 31, 2020. As the sale of the storage tanks business is not considered a strategic shift that will have a major effect on the Company's operations or financial results, it is not reported as a discontinued operation. In October 2022, the Company used $155.0 million of the cash proceeds from the sale to repay the outstanding loans borrowed under its revolving credit facility. See Note 7 Debt for additional information.

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.

There were no businesses divested of during the year ended December 31, 2020.

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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 December 31, 2022

Level 1 Level 2 Level 3 Total