IPO of the Week: Arcosa

Josef Schuster
Dr. Josef Schuster is the founder of Chicago-based IPOX Schuster LLC and chief architect of the IPOX® Indexes. The IPOX methodology is implemented in an IPO and spin-off strategy at Catalyst Funds. Before founding IPOX, Dr. Schuster pursued his academic work on European IPOs in the Financial Markets Group (FMG) at the London School of Economics (LSE), where he completed his MSc and PhD and conceived the idea to start IPOX. He regularly appears in the media as an expert in global New Listings and respective investment products.

Company Description

Arcosa, Inc is a Dallas, Texas-based growth-oriented manufacturer of infrastructure related products and services in construction, energy, and transportation markets. The company was prior the infrastructure-related business of Trinity Industries, a long-time diversified industrial veteran company since 1933. Arcosa was founded followed by the December 2017 separation plan of Trinity Industries.

Business Model

Arcosa generates revenues from three business groups including: a) Construction Products Group through the sales of construction aggregates and construction site support equipment; b) Energy Equipment Group through manufacturing structural wind towers, utility steel structures and storage and distribution tanks; c) Transportation Products Group mainly through the manufacture and sales of inland barges, fiberglass barge covers and steel components for railcars and other transportation equipment.

Spin-Off History

On 11/1/2018, Arcosa began trading on NYSE followed by the spin-off from Trinity Industries (NYSE: TRN). Trinity stockholders received one share of Arcosa common stock for every three shares of Trinity common stock held as of the record date. Arcosa was included in the IPOX® 100 U.S. Portfolio on 03/15/2019 and currently weighs approximately 0.12%.

Historical Performance

Growth Outlook

Industry Comparison

Company

Stock

Symbol

IPO/Spin-off

Date

Initial
Return

Offer to Date

2019

YTD

Beta to S&P

EPS

2018

Revenue

(in millions)

2018 Net Income

(in millions)

Dividend/share

Arcosa

ACA US

Spin-off completed on 11/1/2018

25.3%

1.11

$1.54

1,460.4

75.70

0.05

Construction Product Segment

Martin Marietta

MLM US

Martin Marietta went public in 1994

50.5%

0.79

$7.43

4,244.27

470.00

1.84

Energy Equipment Segment

Broadwind Energy

BWEN US

Broadwind listed on NASDAQ in 2009

42.3%

1.30

-$1.56

125.38

-24.15

n.a.

Transportation Equipment Segment

 

Compete with inland barges manufacturers and railcars steel components manufacturers.