Gail Peck
Thank you, Antonio, and good morning, everyone. I'll begin with construction products on slide 11. Fourth-quarter segment revenues increased 31%, while adjusted segment EBITDA grew 52%, resulting in 370 basis points of margin expansion. The segment performance was largely attributable to the accretive impacts of Stavola, which contributed 25% of segment revenues, 34% of adjusted segment EBITDA, and 290 basis points of segment margin expansion in the quarter.
The integration of Stavola is progressing well, and fourth-quarter financial results were in line with our overall expectations.
On an organic basis, segment revenues declined 4%, primarily due to lower freight revenue, which is a pass through and the divestiture of underperforming operations earlier in the year. This decrease was partially offset by strong pricing gains across our aggregate and specialty materials businesses. Although adjusted segment EBITDA on an organic basis declined roughly 3%, organic margin improved 20 basis points year over year.
Turning to our aggregate business, which includes both natural and recycled aggregates, average organic pricing was up low double digits from the prior year. Total fourth-quarter volume was up mid-single digits due to the contribution of Stavola, while organic volume decreased due to our focused strategy on pricing, a higher number of heavy rainfall days, and the closure of our West Texas aggregates operations earlier in the year.
Strong organic pricing, lower fuel costs, and actions to optimize operations resulted in mid-teen organic unit profitability gains and drove 50 basis points of segment margin expansion during the quarter. For the full year, pricing grew approximately 10% and volumes decreased roughly 8% on an organic basis. Total volume, inclusive of acquisitions, was about flat for the year with pricing growth similar to the organic showing.
Within specialty materials, revenues were roughly flat as strong pricing gains were mostly offset by lower freight revenue. Adjusted EBITDA for the business declined compared to the prior-year quarter, primarily due to planned downtime at one of our lightweight aggregates facilities for a required equipment upgrade. This work has been completed and operations returned to normal in January.
Finally, revenues and adjusted EBITDA for our trench shoring business were roughly flat, and adjusted EBITDA margin for the business was slightly diluted to this segment, primarily due to product mix in the quarter.
Moving to engineered structures on slide 12, revenues for our utility, wind, and related structures businesses increased 11%, largely due to higher wind tower volumes and the inorganic impact from Ameron, which was acquired last April. Revenues in our utility structures business declined in the quarter due to reduced steel prices which impacted average selling prices and lower volumes.
Adjusted segment EBITDA increased 41% and margins expanded 380 basis points. The segment growth was predominantly organic, resulting from the ramp in our new wind tower facility in New Mexico, which was accretive to the segment in the quarter, and favorable product mix and operating improvements in our utility structures business. This growth was enhanced by the positive contribution from Ameron. We ended the year with combined backlog for utility wind and related structures of $1.2 billion and expect to deliver 64% during 2025.
Turning to transportation products on slide 13, revenues were up 28% and adjusted segment EBITDA doubled, excluding steel components from the prior-year period. Higher tank barge volumes and improved plant efficiencies resulted in almost 700 basis points of margin improvement year by year for the barge business. We received barge orders of $128 million during the quarter, representing a book to bill of 1.4. We ended the year with a backlog of $280 million, up 10% year to year.
I'll now provide some comments on our strong cash flow and improved balance sheet position as shown on slide 15. During the quarter we generated $248 million of operating cash flow, up from $62 million in last year's fourth quarter. The increase was largely driven by a $180 million reduction in working capital due to lower receivables and increased advanced billings primarily for our wind tower and barge businesses.
During the quarter, we sold $45 million of 2024 A&P wind tower tax credits, which contributed to the decrease in receivables. The credits were sold at a small discount, resulting in a $3 million reduction to fourth quarter adjusted EBITDA.
CapEx for the fourth quarter was $53 million, down $6 million from the prior period. This translated to $199 million of free cash flow for the quarter, which we used to fully repay our revolver. For the full year, free cash flow was $330 million, up from $94 million last year.
We are pleased to end the year with net debt to adjusted EBITDA 2.9 times, down from 3.4 times at the start of the quarter. We are being disciplined with respect to capital deployment, prioritizing debt reduction in the near term. For full year 2025, we expect CapEx of between $145 million to $165 million, down from $190 million in 2024 as we predominantly invest for maintenance needs across our portfolio and finish growth projects in flight. We anticipate additional deleveraging during the second half of the year.
I'll wrap up with a few final comments for modeling purposes. It is important to highlight that Stavola, whose operations are located in the Northeast, brings more seasonality to our portfolio. Stavola is roughly a break-even business in the first quarter and seasonally strongest in the second and third quarters. While Stavola is accretive to construction products segment for the full year, we expect their operations to dilute adjusted segment EBITDA margin by approximately 200 basis points in the first quarter.
In the fourth quarter of 2024, depreciation, depletion, and amortization expense increased approximately 50% year over year, primarily due to recent acquisition activity, including the required fair value markup for long-lived assets. For full year 2025, we expect depreciation, depletion, and amortization expense to range from $230 million to $235 million.
For 2025, we expect a more normalized effective tax rate of 19% to 20%. And last, we see corporate expenses of approximately $60 million, up about 3.5% year over year.
I will now turn the call back over to Antonio for more discussion on our 2025 outlook.
Antonio Carrillo
Thank you, Gail. The actions we took in 2024 position as well as we entered 2025. Arcosa is a company focused on growing in the US market, which is supported by attractive long-term infrastructure led investment. Of the over 140 locations Arcosa operates, only one mine is in Canada and two manufacturing plants are in Mexico. Everything else is in the US.
Almost every steel product we make, even in Mexico, is made with US melted and rolled steel. So we believe the company is well prepared against the current trade and tariff uncertainties. However, there are many unknowns surrounding the trade policies that are being discussed and the risk of potential retaliatory impacts, including by Mexico. So we will be watching developments closely and making the adjustments needed as the details come out.
We're also optimistic about the potential impact of reduced regulation could have in many of our markets. Like with trade, it's too early to estimate any future benefit, but if in many of our markets, heavy regulatory burdens are bottlenecks for infrastructure growth. The 2025 guidance that I'll review in a moment does not incorporate any impacts from potential regulatory changes, either positive or negative.
Turning to our outlook on slide 17, we expect growth to come from four different sources in 2025. First, our growth businesses, construction materials, and utility and related structures enter the year with solid underlying demand fundamentals. Second, the backlogs in our cyclical businesses barge and wind towers support solid growth for 2025. Third, several organic projects we finished in '24 should contribute positively to our results in 2025. And finally, the important acquisitions we did last year should bring solid growth for the company this year.
For 2025, we anticipate revenues to be in the range of $2.8 billion to $3 billion and adjusted EBITDA to be in the range of $545 million to $595 million, which implies 30% growth at the midpoint. Our guidance incorporates double-digit organic and inorganic growth with a slightly higher weight to inorganic as we benefit from nine additional months of Stavola in 2025.
Please turn to slide 18 for a discussion on our business output by segment. In construction products, our outlook is positive. We expect increased spending on infrastructure, AI, data centers, as well as a continuation of heavy manufacturing investment in selected markets. Additionally, we're optimistic about regarding a possible recovery in the single-family housing sector later in the year.
Our commercial strategy is a balance between growing volume and pricing initiatives. For 2025, we anticipate strong double-digit increasing volumes in our aggregates business benefiting from Stavola. With respect to aggregates pricing, we expect mid-single-digit price increases in 2025. As we start the year, we're very well set up given last year's pricing actions, and we expect additional pricing opportunities during 2025.
For the full year, we expect significant adjusted EBITDA growth in the construction segments being from Stavola and high-single-digit organic growth. Margin expansion will be led by the accretive impact of Stavola as well as solid organic contribution from higher unit profitability.
Cold and wet weather has impacted operations in January and February, not unusual in our seasonally lowest quarter, but creating a slow start to the year. As a result, year-over-year growth for the segment is more weighted toward the second and third quarters.
Moving to engineered structures, grid-hardening initiatives, increased electrification, data center growth, and connecting renewable energy to the grid continue to drive healthy demand. Road infrastructure spending continues to support our traffic structures business, and a return to more normalized carrier spending should positively impact our telecom business.
With a more favorable customer mix in the backlog and the accretive impact of Ameron, we expect double-digit adjusted EBITDA growth and solid margin expansion for utility structures and related businesses.
For wind towers, our backlog supports another year of significant growth driven by the production ramp-up in the new Mexico facility. Our guidance assumes we sell 2025 A&P tax credits at a small discount, which is slightly diluted to the segment margin, but will accelerate our leveraging. We continue to discussions with our customers about additional orders for wind towers in 2026 and beyond.
We remain confident that further investment in wind energy is needed to meet the low growth demand in the US. As we have discussed in the past, this is not a business that receives orders every quarter. Our customers have historically placed large multi-year, multi-planned orders with us when they have good visibility on projects.
Therefore, we expect that as the year goes by and the regulatory environment impacting the wind industry becomes more clear, we will be able to have constructive conversations with our customers. What's important to remember is that the current backlog provides good visibility for 2025, so we have time for the regulatory environment to settle down.
Last in transportation products, the inland river barge fleet has experienced underinvestment over the past several years. As a result, the fleet is aging, creating pent-up replacement needs. Our current backlog of $280 million at the end of the year has us well positioned for 2025. On hopper barges, we have backlogs through the third quarter. On tank barges, we're sold out for 2025 and with some additional orders booked since the end of the quarter.
At the current production rate, our delivery time for a new tank barge order goes deep into 2026. It is important to mention that customer inquiries continue to be strong, especially for tank barges. With steel tariffs as a possibility on the horizon, the message we're giving our customers is that steel prices will probably go up, so continuing to wait to replace an aging fleet will get more expensive over time.
For our barge business, we expect that adjusted EBITDA growth will be more back half weighted as we go through some product mix headwinds in the first part of the year.
In closing, even though there is some short-term regulatory uncertainty, we believe Arcosa is well positioned for continued growth, and I'm excited about what we're seeing for 2025 and beyond. I want to thank all our employees and tell them how proud I am of what they accomplished in 2024.
We're now ready to answer your questions.
Operator
(Operator Instructions) Ian Zaffino, Oppenheimer.
Ian Zaffino
All right, great. Thank you very much and thanks for all the colors. Appreciate that. Question on steel components, how much did the decline in steel prices impact revenues? And then maybe help us understand the volume decline, what drove that? Thanks.
Gail Peck
Good morning, Ian, this is Gail, and I'm assuming you're referring to the steel-related impacts on our engineered structures segment as it relates to revenue. Sure, I would say, yes we did, for the full year and really that came in the fourth quarter, we did miss our revenue guidance. We're about $25 million below the midpoint, and I would attribute that mostly to the engineered structures, and I would attribute that mostly to steel.
We did see a little bit of revenue missing construction maybe to the tune of $5 million or so as volumes were impacted by a little bit by weather. But predominantly, the revenue miss was on the steel price side. I would say, not quite a 10% decline year over year for transmission revenues, but I would certainly say high-single-digit impact for steel prices, and we had a little bit of slowness around the border at year end, no surprise there. That impacted revenue, but I would attribute it to the to the steel price.
Antonio Carrillo
And yeah, I'll just give a little more color. The structures we build, they ranged from very small distribution pole to very, very large transmission towers. And when you measure volume, it's hard to compare a small tower to a big tower. So sometimes you will see this volatility in volumes as the production makes the changes and there's also not only the size but the complexity of each one. So it's normal to have some volatility on the volume side.
Ian Zaffino
Okay, and just to be clear, that decline in steel prices is pretty much 100% pass through, so there's really no profit impact. And just add another question, I'm just on general and steel, are you seeing any type of like pre-buy activity, maybe concerned that steel prices might go up and then maybe they could lock in now or build something now at a lower steel price? Thanks.
Antonio Carrillo
I'll give you -- yes, so depending on the business, we have two types of businesses on steel. One, where we have a full pass through with some delayed, so the transmission industry is one of them where we have pricing agreements and if the price remains in a relatively, let's say close band, there's no adjustment, but once the price moves you pass it through down or up. So what you saw when price goes down you will see our margin increase because it's basically a pass through and that's what you saw in the fourth quarter.
There's other businesses like barge and wind where we have specific pricing agreements with the steel mills for specific products and then there's no volatility on steel prices. That's both barge and wind work like that. On the pre-buy, we have seen additional, let's say, demand specifically for barges.
I mentioned in my comments that we sold some additional barges, tank barges, and now our delivery time is deep into 2026. And that comes from some people saying, well, they still might go up, let me take my orders right now. But it's not something that we expect to continue because it's not easy to get fixed prices right now with all the expectations are still going up.
Ian Zaffino
Okay, thank you very much for the color.
Operator
Trey Grooms, Stephens.
Ethan Roberts
Hey, good morning, everyone. This is Ethan on for Trey. Thanks for taking the question. I just wanted to elaborate quickly on the wind outlook. What are you hearing from customers? Curious on how the current administration has impacted customer sentiment. And we know previously you've pointed to 2026 as being the year where wind kind of really picks up. I'm just curious if that's still the case.
Antonio Carrillo
What we're hearing from customers is that the demand for renewables specifically for wind is still there. I would say that the sentiment continues to be very optimistic. And the reason behind it is the low growth in the US, the demand for energy in the US is growing, and the debate can be whether data centers will contribute 2% or 10% in 5 years or in 10 years. That's a little irrelevant. What's important is any growth will significantly increase the need for power.
And if you order a gas turbine right now, you're in 2030 receiving it, if you're not in the queue already. So the need for wind is there. I think we just need some additional clarity. And if you think about what's happening, if you look at the total wind installations in 2025, 2026, I think what we are seeing from customers is that they expect a relatively flat year in 206.
And what we've mentioned is, no, when the growth comes, we should receive orders for additional growth in probably -- we expected it initially at the end of this year. Let's see where the regulatory environment ends, but I think we have the backlog to support our production this year. We have backlog in another facility that supports it for several years. So I think we're in a good shape to wait and see where the regulatory environment ends up. What's important is the demand is there for wind and we have the backlog to stay focused this year and generate strong growth.
Ethan Roberts
Okay, awesome, yeah, that's really encouraging. And then secondly, just switching gears to construction products, just curious on your outlook. You gave some good end market commentary and the mid-single digits on pricing was really helpful. Just curious on how you're thinking about unit profitability in 2025 and how that might compare to 2024?
And similarly within the guidance you mentioned, a certain portion being tied of the implied EBITDA increase within the 2025 guidance, a certain portion of that to be tied to organic growth. So just wondering which segments you're thinking about that that might be most heavily concentrated towards? Thanks.
Gail Peck
Good morning. This is Gail. I'll take that. Yeah, as we as we think about '25, and we said in our comments, overall, we're looking at 30% EBITDA growth at the midpoint, outpacing the teens revenue growth, so strong margin growth expected for 2025 in total. And we did say that that growth was split. 40% organic and 60% inorganic, and that inorganic piece is primarily Stavola.
We do benefit from another quarter of Ameron that we didn't have last year, but that's primarily Stavola. And so to your question on the 40% organic side, we see about 15% of that growth coming from the construction product segment. So as Antonio said in his script about high-single-digit organic growth for the construction segment, we said mid-single digit on price, so we're expecting to price ahead of inflation and so we expect unit profitability gains on an organic basis within construction products.
The other big slice of that organic growth is going to be coming from the engineered structure segment. I'd say about 20% of the overall growth is coming from engineered structure. Again, I think we gave some pretty good commentary in the script. We expect double-digit adjusted EBITDA growth in utility structures and significant growth within wind tower, when you heard Antonio just saying based on the strong visibility that we have in that business for 2025.
And then that the last piece of the organic growth will come from the barge business. That's our remaining business within the transportation product segment, and that's about 5% of the overall growth for the company.
Ethan Roberts
Got it. That's super helpful. Thank you so much for the color. I'll pass it on.
Operator
Garik Shmois, Loop Capital Markets.
Garik Shmois
Oh, hi, thank you. Just wanted to follow up on construction products. I was hoping you could provide some more color on what you're expecting for volumes recognizing. You're coming off of a softer year in '24, you've had some weather delays both in the fourth quarter and in the start of this year. Just wondering how you're thinking, more on an organic basis, how you expect construction products and specifically aggregates demand to progress this year?
Gail Peck
Yeah, I'll take that. Good morning, Garik. As we said in in the script, we see a strong double-digit growth on a total basis for volumes within construction. I'd say from an organic basis, not too dissimilar from some of our larger peers, kind of flattish to maybe slightly up on an organic basis from a volume perspective in 2025.
And as it relates to the quarter, for the fourth quarter where we exited the year, we did have some heavy rainfall days. I wouldn't say the weather was a complete deterrent for the quarter by any means, but we did have some -- in the Dallas area along the coast in the Tennessee area. We had some heavy rainfall days, not only the number of days, but the quantity of rain we had. So that did impact volumes in the fourth quarter. So on an organic basis, we did see volumes exiting the year down on a year-over-year basis.
Maybe just to add one more point that shouldn't be lost because I know you've listened to a lot of materials calls by now. January and February were a little weak from just purely cold and wet weather, so we're it's not unusual in the first quarter, but a little bit of a slower start with some of the weather here in January and February. But that's baked in the flattish to slightly up organic volume outlook for the year.
Garik Shmois
Yeah, and that message has certainly been conveyed by others. I wanted to follow up just on CapEx. It looks like it's taking a step down this year. Just wanted to confirm that to $145 million or $165 million. And then also, I think in the prepared marks you talked about some projects that you wrapped up in '24, you expect them to contribute in '25.
Just wondering if you could go into a little bit more detail around those projects and the level of earnings contribution or accretion you expect this year from the capital projects that were completed last year?
Antonio Carrillo
I'll take that. So starting with the CapEx, yes, we're stepping down as we mentioned since we bought Stavola, we're focusing on delevering. So what we're cutting is not maintenance CapEx, it's the growth CapEx. We do have some growth CapEx, but it's really to finish projects that we have on the way and a few small things.
And when we bought Stavola, we said we felt very good about increasing our leverage at that time because we were finishing all these organic projects that were going to help us in 2026. And in my remarks, I mentioned we expect growth from four different areas. We expect growth from our growth businesses, engineering structures, and construction growth from our cyclical businesses because of the backlog, wind and barge.
We expected growth from these organic projects that we built last few years, and they should start contributing. And finally, the acquisitions. On the organic projects, I also mentioned in my prepared remarks, the concrete pulp factory will be built in Florida. And that has margins similar to the rest of the portfolio, so the margin, probably will be relatively flat to the business, but it will be increasing the EBITDA for the segment.
The wind power plant that's ramping up, as mentioned by Gail in her remarks, it's being accretive to the segment. So as we ramp up the plant in New Mexico, that should help us increase the margin in engineering structures. We mentioned a few other small projects. We ramped up a small plant in aggregate that has similar margins than the rest of the business. And a few small -- the plaster plant that was going to be now fully operational is doing very well in Oklahoma.
The margins on that one is a little lower than the segment margin, but it's very accretive to specialty materials. And finally, the small recycled aggregate plants that we started last year are also accretive to margins. So I think it's a good mix of a lot of projects that we invested over the last couple of years, and now it's time to prove that they were good and start getting the returns while we delever.
Garik Shmois
Sounds good. I appreciate all the color. Nice quarter and best of luck.
Antonio Carrillo
Thank you.
Operator
Julio Romero, Sidoti & Company.
Justin Mechetti
Good morning. This is Justin on for Julio. Thank you for taking questions. So on Stavola, you mentioned the seasonality impact on Stavola performance expected. So I guess, do you expect the organic recycled aggregate facilities to help offset the seasonality and how might these facilities contribute to overall performance in the first half of 2025?
Antonio Carrillo
Well, the recycling facilities we have, if the recycling facilities are in the northeast, they will have similar seasonality as natural aggregates. What happens is that the weather really shut down construction and that's where the seasonality comes from. So no, I don't expect our recycled facilities to offset Stavola. They would have similar seasonality in the region.
Gail Peck
And maybe just to add on to that, we did say in the prepared marks that we do expect a 200 basis points headwind from Stavola in the first quarter as they are essentially a breakeven operation contributing some revenue but a breakeven operation in the first quarter.
Justin Mechetti
Great, thanks for the color there. And then on guidance, we saw the updated depreciation, depletion, and amortization expense guide of $230 million to $235 million. It's meaningfully higher than our expectations. So how much of this increase is directly attributable to Stavola and how should we consider this as the normal run rate when modeling for 2026 and beyond?
Gail Peck
Yeah, that's a good question. That's why we wanted to be very clear on our expectations because there is a change there, and I would attribute that really predominantly to the step-up related to Stavola, and you saw that in the fourth quarter as well of 2024 with a 50% increase in that expense line item, and that really is the write up in the fixed assets. Most notably their reserves, and that is what drives our depletion expense. So I would consider that a fairly normalized run rate on a go-forward basis.
Justin Mechetti
Great, thank you. That's all for me.
Operator
[John Belize], D.A. Davidson.
Unidentified Participant
All right, thank you so much for the time. Regarding barge, could you talk about what kind of feedback you're receiving from customers when you let them know about the possibility of steel prices and therefore the barge prices to go up?
Antonio Carrillo
Very different circumstances in tank and in hopper barges. Let me start with hopper. I think hopper is more sensitive to price and I think people are still thinking that prices are coming down, so they're a little more, let's say, concerned about steel price increases. On the tank barge side, when you look at the customer mix, two things: on the tank barge, there's a lot more regulation involved on their certification by coast coastguard, et cetera.
So they have less flexibility on how much they can let the barges age and the quality of the barges and the state of the barge that they are operating, so they have less options. Of course, there's always a concern about steel prices, but I think a lot of customers what they're watching now, especially on the tank barge side, when you look at the amount of barges that need to be replaced over the next five years, both hoppers and tank. And you look at the production capacity that the industry players, the barge manufacturers have right now.
If they don't start ordering a lot of barges right now, it's going to be a problem getting the capacity up. And when I talk to customers, I sense concern about whether there's going to be capacity to supply all these barges that need to be replaced. So I think that's what you're seeing in our barge backlog that some people are trying to anticipate that. I think the hopper people have not taken that step, but at some point when you look at the amount of barges that need to be replaced, there's a limit to how much you can wait.
So as I mentioned in my remarks, waiting to see if steel prices come down, especially with the tariff threat right now. It's not a very wise option, but of course I don't buy barges.
Unidentified Participant
Thank you. And pivoting to the construction products, could you provide a little more color for the sort of growth you see in specialty materials relative to your natural and recycled aggregate operations?
Antonio Carrillo
Yeah, so specialty materials, I would say that the demand is a little more weighted towards infrastructure. On the lightweight aggregates, it's a lot more infrastructure driven than our natural aggregates. We have a higher mix of infrastructure projects.
On the specialty material side, I mentioned we started that we finished our plaster plant, which is mainly geared toward a multi-family housing and it's doing very well. The plant is basically at full capacity, running very well with very good margins, and meeting the expectations we had when we invested the money to expand it.
So overall, we expect the solid growth in our specialty materials coming from that expansion and the other products they have. And specialty materials, I think, as I said, it's more focused on infrastructure, so we're very bullish on infrastructure spending in the US so we should do very well.
Unidentified Participant
All right, and if I could squeeze one more. Within the engineering structures, and I apologize if you already went over this, but can you talk about why utility and related structure volumes were lower in the fourth quarter?
Antonio Carrillo
Yeah, I mentioned a couple of things, and Gail mentioned from the sale side on the revenue side was mostly steel. There were some issues at the end of the year in the border which slowed our production a little bit.
But I also mentioned that the production mix, the product mix that we go through, we make very small poles and very large poles, very simple and very complex. And it's not abnormal to see volatility in the volume because of the size and the complexity of the polls. So there was nothing special that happened. It's just I think it's normal volatility based on product mix.
Unidentified Participant
Thank you so much for your time.
Operator
Thank you. We have no further questions in the queue. I'll turn the program back over to Erin Drabek for closing remarks.
Erin Drabek
Thank you for joining Arcosa this morning for our fourth quarter and full year update, and we look forward to providing you another update in our first-quarter call. Thank you.
Operator
Thank you. This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful day.
