CRH PUBLIC LTD CO(CRH)Q2 2026 法說會逐字稿

Good day, and welcome to the CRH Second Quarter 2026 Results Presentation. My name is Krista, and I will be your conference operator today. At this time, I'd like to turn the conference over to Jim Mintern, CRH Chief Executive Officer, to begin the conference. Please go ahead, sir.

Hello, everyone. Jim Mintern here, CEO of CRH, and you're all very welcome to our Q2 2026 results presentation and conference call. Joining me on the call is Aylwyn Bryan, our CFO; Randy Lake, our COO; and Danilo Juvane, Head of Investor Relations. Before we get started, I'll hand over to Danilo for some brief opening remarks.

Thanks, Jim, and hello, everyone. I'd like to draw your attention to Slide 2 shown here on the screen. During our presentation, we will be making some forward-looking statements relating to our future plans and expectations. These are subject to certain risks and uncertainties, and actual results and outcomes could differ materially due to factors outlined on this slide. For more details, please refer to our annual report and other SEC filings, which are available on our website. I'll now hand it back to you, Jim.

Over the next 20 minutes or so, we will take you through a brief presentation of our results for the second quarter of the year, highlighting the key components of our operating performance, our recent capital allocation activities as well as providing you with an update on our expectations for the year. We will also outline how we are strategically positioning our business to deliver further growth and value creation for our shareholders. First, on Slide 4, let me take you through some key messages from our results. We are pleased to report a record second quarter with further growth in revenues, adjusted EBITDA and margin compared to the prior year period, reflecting favorable underlying demand, disciplined commercial execution and contributions from acquisitions. All of this is underpinned by the benefits of our superior strategy and the continued execution of our winning way. We remain focused on active portfolio management and the disciplined allocation of capital as we continue to build a higher growth connected portfolio to maximize shareholder value. In the year-to-date, we completed 3 strategic divestitures of noncore businesses for a total consideration of $1.9 billion and invested $1.4 billion in 17 value-accretive acquisitions across our 4 strategic growth platforms of aggregates, cementitious, roads and water. We also recently announced an agreement to acquire Arcosa, a leading provider of building materials and critical infrastructure products in the United States. This is a significant investment, which will reinforce CRH as the leading aggregates and critical infrastructure player in North America, and I will take you through that in further detail later in the presentation. Turning to outlook. We are encouraged by the underlying demand environment across our key markets. Notwithstanding the current geopolitical and macroeconomic uncertainties, we are pleased to reaffirm our adjusted EBITDA guidance range for 2026, representing another strong year of growth and value creation for CRH. Turning now to Slide 5 and our financial highlights for the second quarter. Overall, a robust performance with revenues, adjusted EBITDA, margin and diluted EPS all ahead of the prior year period. Total revenues of $10.8 billion were 6% ahead. This translated into adjusted EBITDA of over $2.6 billion in the quarter, a 7% increase over the prior year. Despite contending with an inflationary cost environment, I am pleased to report a further 30 basis points of margin expansion, demonstrating our relentless focus on commercial excellence and strong cost discipline across our business. All of this translated into further growth in our diluted earnings per share, a 14% increase, reflecting a strong operating performance and including a $0.16 net gain on divestitures in the period. Now at this point, I will ask Randy to take you through the performance of each of our businesses.

Thanks, Jim. Hello, everyone. Turning to Slide 7 and starting with Americas Materials Solutions, which delivered a strong performance in the quarter, supported by good underlying demand, positive pricing and contributions from acquisitions. Total revenues and adjusted EBITDA were 10% and 12% ahead of the prior year, benefiting from our national scale and connected portfolio of businesses. In Essential Materials, second quarter revenues were 20% ahead of the prior year. Our aggregates volume increased by 2%, while pricing was 5% ahead. Cement volumes were 2% behind the prior year, reflecting some adverse weather conditions, which impacted activity levels in certain markets. Cement pricing declined by 1%, reflecting regional variances across our operating footprint. Our performance also reflects contributions from acquisitions, particularly Eco Material, which I'm pleased to report is performing well. In Road Solutions, Q2 revenues were 6% ahead of the prior year, supported by growth in asphalt volumes and pricing as well as increased paving activity, reflecting strong project execution and backlog conversion. From a demand standpoint, the underlying backdrop remains positive, supported by our strategic alignment to growing infrastructure megatrends. Transportation and water infrastructure continues to be supported by strong state and federal funding, while reindustrialization activity remains underpinned by large-scale manufacturing and data center projects. Despite an inflationary cost environment, I'm pleased with how our teams demonstrated strong cost and commercial discipline across our business, delivering a further 40 basis point of margin expansion compared to the prior year. So overall, robust delivery from our Americas Materials Solutions business. And looking ahead for the remainder of the year, I'm encouraged by the positive momentum we're seeing in our bidding activity and our backlogs. Next to Americas Building Solutions on Slide 8, where our second quarter performance reflects the impact of recently completed divestitures and a subdued new build residential market. We also experienced an inflationary cost backdrop, particularly in relation to elevated haulage rates in the quarter, and we've implemented operational and commercial initiatives to mitigate these costs. In our Outdoor Living business, demand for residential repair and remodel continues to be resilient. In our Building and Infrastructure Solutions business, we're seeing good growth in data center, water and energy markets. For Americas Building Solutions overall, total revenues and adjusted EBITDA were 2% and 8% behind prior year. Moving to International Solutions on Slide 9, where our business delivered further growth and margin expansion supported by higher activity levels in certain markets, positive pricing momentum and strict cost control in an inflationary environment. Total revenue growth of 5% translated into an 8% increase in adjusted EBITDA and a further 70 basis points of margin expansion, reflecting ongoing performance optimization initiatives as well as contributions from acquisitions. In Europe, our businesses continue to benefit from favorable infrastructure and reindustrialization activity, while in Australia, our business also continues to perform well, benefiting from positive underlying demand, operational improvements and synergy delivery from recent acquisitions.

Thanks, Randy. Overall, a strong second quarter performance from our business. Now at this point, I would like to discuss the continued execution of our strategy and how that leaves us well positioned for continued growth and value creation. We continue to focus on increasing our exposure to three large and growing infrastructure megatrends, which we believe will support significant long-term growth and value creation for our business. Through disciplined capital allocation, we are strengthening our leading market positions in attractive markets to fully capitalize on these compelling growth opportunities. We are continuing to advance our aggregates-led connected portfolio strategy as demonstrated by our recent agreement to acquire Arcosa. We produce over 380 million tonnes of aggregates on an annual basis. And by leveraging the benefits of our connected portfolio across our cementitious, roads and water platforms, we are able to maximize our profits, cash and returns. With over 1,200 acquisitions completed throughout our history, we have a proven ability to acquire and integrate businesses at scale. And our financial strength and cash generation capabilities provides us with strong optionality for further capital deployment. Turning to Slide 12. Through the continued execution of our strategy, we are increasing our exposure to growing infrastructure megatrends, transportation, water and reindustrialization and strengthening our leadership positions across our four connected growth platforms of aggregates, cementitious, roads and water. All of this reinforces our position as the #1 infrastructure player in North America and our ability to deliver further growth and value creation for our shareholders. I will now ask Aylwyn to take you through our recent capital allocation activities.

Thanks, Jim. Hello, everybody. Turning to Slide 13 and first to M&A, where year-to-date, we've invested $1.4 billion on 17 value-accretive acquisitions across our connected growth platforms. The largest acquisition was Axius Water for approximately $700 million, further strengthening our position as a leading U.S. water infrastructure player. As Jim mentioned earlier, in June, we also reached an agreement to acquire Arcosa for a cash consideration of $150 per share, reflecting a total enterprise value of approximately $8.5 billion. The transaction is subject to Arcosa stockholder approval, regulatory approvals and customary closing conditions, and we expect to close during the first quarter of 2027. Looking ahead and notwithstanding what has been an active year so far, we have a strong pipeline of further M&A opportunities in front of us, supported by our unmatched scale, connected portfolio and fragmented nature of our industry. We also completed 3 strategic divestitures of noncore businesses for a total consideration of $1.9 billion, demonstrating our commitment to active portfolio management and the reallocation of capital into higher growth connected businesses. Through the second quarter, we've invested approximately $800 million in growth CapEx leveraging our size and scale to fully capitalize on high-returning, low-risk investment opportunities to expand capacity in high-growth markets, improve operational efficiency, increase automation and optimize our energy usage, all of which will drive long-term shareholder value. We have also returned $1.2 billion to shareholders through dividends and share buybacks year-to-date. And in line with our strong financial position and policy of consistent long-term dividend growth, the Board has declared a quarterly dividend of $0.39 per share, representing an increase of 5% on the prior year. Since the inception of our buyback program in 2018, we've returned approximately $10 billion to shareholders through the repurchase of 24% of our shares. As previously announced in June, in connection with our agreement to acquire Arcosa, we have taken the decision to pause our share buyback program following the completion of the latest tranche and we'll reevaluate the program at a later date. So overall, an active year so far, demonstrating our focus on efficient allocation of capital to maximize value for our shareholders.

Thanks, Aylwyn. A good summary there of our recent capital allocation activities. Turning now to Slide 14 and our agreement to acquire Arcosa, which is fully aligned with our strategy. Arcosa is a leading provider of building materials and critical infrastructure products in the United States. Under our ownership, it will enhance our connected customer offering and with 35 million tonnes of annual high-quality aggregates, it will reinforce our position as the leader in U.S. aggregates with over 265 million tonnes of combined annualized production. Overall, the acquisition represents a compelling growth and value creation opportunity for CRH. And I will ask Randy to provide a brief overview of the strong synergy opportunities we have identified so far.

With this acquisition, we're uniquely positioned to deliver significant value creation for our shareholders, leveraging our unmatched scale, connected portfolio and leading performance capabilities. And as you can see on Slide 15, we currently expect approximately $175 million of run-rate cost synergies to be achieved by year 3 with $60 million anticipated in the first year of ownership. We've identified significant opportunities across operational improvements, materials, self-supply, global procurement benefits as well as optimizing our administrative and support functions. So overall, the transaction represents strong synergy and value creation potential, and we look forward to updating you further post completion. Turning to Slide 16 and just to take a step back for a moment to highlight our strong track record of synergy delivery from acquisitions. Our ability to identify, acquire and integrate businesses at scale is a well-developed muscle in CRH. Origination starts at the local level. Local teams with strong community ties and long-term relationships, sourcing strategic growth opportunities across thousands of locations. These empowered local teams leverage the benefits of our global scale and leading performance capabilities, be it through best practice programs, global procurement benefits or operational and commercial excellence initiatives. We have a disciplined and value-focused approach, applying a rigorous appraisal process as well as strict strategic and financial performance criteria to every investment we make. Since 2018, we've delivered on average approximately 600 basis points of margin improvement within the first 3 years post acquisition. A more recent example of this is Eco Material, the leading supplier of SCMs, which we acquired last year. The integration is progressing well, and I'm pleased to report that synergy delivery is ahead of our original expectations. All of this reflects a deeply embedded culture of performance and a relentless focus on continuous business improvement, which really strikes at the core of our winning way.

Thanks, Randy. Turning to Slide 17. And as we previously communicated, over the next five years, we expect to have at our disposal financial capacity of approximately $40 billion, reflecting our strong growth profile, the level of cash we are generating and the strength of our balance sheet. We expect to allocate approximately 70% of this to growth investments with the remaining 30% returned to shareholders through dividends and share buybacks. The proposed acquisition of Arcosa accelerates our progress in this regard by also being fully aligned with the delivery of our 2030 financial targets, annual revenue growth of between 7% and 9% and adjusted EBITDA margin of 22% to 24% by 2030 and an average adjusted free cash flow conversion of over 100%. On Slide 18, you can really get a sense of the size and scale of our business with the adjusted EBITDA of CRH together with Arcosa on a forecast 2026 basis being larger than the next 4 U.S. peers combined. Scale matters in our industry. It creates significant commercial, operational and strategic benefits that set us apart and enable us to deliver leading performance year after year. Our unrivaled cash generation capabilities, combined with our uniquely connected portfolio provides us with superior optionality to invest for further growth and value creation, all supported by our strong balance sheet and investment-grade credit rating. All of this together demonstrates why CRH is the leading compounder of capital in our industry. Finally, now turning to outlook on Slide 20. And we are pleased to reaffirm our adjusted EBITDA, net income and diluted earnings per share guidance for 2026. Assuming normal seasonal weather patterns for the remainder of the year and no further major dislocations in the geopolitical or macroeconomic environment, we expect full year adjusted EBITDA to be between $8.1 billion and $8.5 billion, net income between $3.9 billion and $4.1 billion and diluted earnings per share between $5.60 and $6.05, representing another strong year of growth and value creation for CRH. So that concludes our presentation for today. I will now hand you back to the moderator to coordinate the Q&A session of our call.

Jim, Aylwyn, congrats on the strong quarter here. You kept your outlook unchanged despite a volatile and uncertain macro backdrop. I was hoping you could give us a little more color on your 2026 guidance and the underlying assumptions.

Yes. I'll give a bit of background first, and then I might ask Randy to jump in on the building blocks, the volumes and prices underpinning that reaffirmation of the guidance and then Aylwyn on the financial puts and takes at the end. This morning, very pleased to be announcing a really strong Q2 and a strong H1 despite a challenging macro environment. We had a weather-interrupted May and June in some of our Southern and Southeastern parts of the U.S. business. In that context, I'm very pleased to be reaffirming the adjusted EBITDA guidance for the year. What gives us confidence is the positive demand across the business. Infrastructure is strong across both the U.S. and internationally. We're forecasting that this year we'll still have 40% of the IIJA unspent. So we had good momentum coming into 2026. That's continued and we're seeing good momentum exiting into 2027 too. One thing we noted in the first half of 2026 is a notable pickup in reindustrialization, especially data centers, advanced manufacturing facilities, semiconductor facilities and LNG plants. These are large multiyear construction projects, typically 2 to 3 years. Residential is subdued, particularly new build in the U.S., but repair and remodel remains resilient. Internationally, we see similar trends: strong infrastructure underpinning and a pickup in reindustrialization, particularly in Central and Eastern Europe. In parts of Western Europe and into the Nordics we are seeing pockets of residential recovery. So a good underlying backdrop across the business. We've had a good start to the year in terms of pricing, with good early-season pricing followed by midyear pricing and very good commercial execution. Looking forward in that guidance to another year of margin expansion. Randy, do you want to get into specifics of volumes and prices?

Yes. When you look at our business, and specifically Americas Materials, the backlog gives us that 6- to 9-month view of underlying activity, and that remains positive. The quantum we're bidding and what we've secured in terms of volumes are both up year-over-year. Infrastructure and private reindustrialization are playing a significant role. These are multiyear projects and they play to the strength of the connected portfolio: aggregates, underground water and energy components, cementitious products, ready-mix and asphalt. That connected portfolio has been a strength and adds to the volume backdrop. Good to see aggregate movement in Q2: volumes up 2%, pricing up 5%, which aligns with our full-year expectations. In Q1 we had a mixed adjusted pricing of 5%, so it's great to see that coming through in demand. Cement volumes had some weather impact in Q2, but for the first half, volumes are up 3%. That gives us confidence for low single-digit volume improvement and broadly flat pricing for cement. On cementitious, Eco Material is performing well with volume and pricing up mid-single digits; on a mix-adjusted basis, cementitious pricing is ahead. Internationally, good volume growth, with expectations for the year being low single-digit volume and mid-single-digit pricing, marking the ninth year of positive pricing in that business. The combination of good backlog and commercial execution gives us a lot of confidence for the year.

From a scope perspective, you'll have seen it's been an active year from a portfolio perspective. So $1.4 billion on 17 value-accretive acquisitions and $1.9 billion of divestments. There are lots of puts and takes that feed into guidance, but the net incremental EBITDA contribution to be expected is in the region of $200 million for the year. Finally, on FX, based on current FX rates, the FX impact is expected to be negligible.

Super helpful. That was a lot of great detail. Maybe one quick follow-up: you touched on prices and improvements in certain pockets. As we go into the second half and into the exit rate into 2027, what's your view on the market's ability to absorb potentially higher prices across your Americas Materials products, particularly Essentials, given continued cost inflation?

We've had a good start to pricing with strong early-season pricing across the business. We called out a mix-adjusted 5% in Q1, and it's encouraging to see that come through in Q2. Midyear pricing is in place and that supports our expectation of mid-single-digit pricing for the full year, which should give good momentum into 2027. We are entering the core of the construction season now. We're happy with where pricing is and expect another year of margin expansion for the full year.

Jim, could you talk about the drivers of margin weakness at Americas Building Solutions and the timing and levers for recovery there?

Anthony, it's a mixed quarter for Americas Building Solutions. We saw good growth across data centers and reindustrialization that supported water and energy infrastructure. But performance was impacted by divestitures in the first half and subdued new-build residential demand. Repair and remodel has remained resilient. In the quarter we were impacted by cost inflation, particularly haulage rates on certain delivered products. We've implemented mitigations including price surcharges and cost reductions, but there can be a lag to recover. We expect the impact of this cost inflation to moderate heading into Q3 and further into Q4.

I want to ask about BUILD America 250. I'd love your updated thoughts on how it stacks up to IIJA, the puts and takes there. It looks like we may be heading for a continuing resolution. How do you think that plays out and what could it mean for your business and the public demand outlook? If there were a funding gap, how would you navigate that?

Thanks, Trey. I'll ask Randy to come in on specifics from a DC perspective. Overall, we exited last year with good momentum and have seen that continue with strong federal and state funding this year, which we see in bidding activity and backlogs. We expect to have 40% of the IIJA yet to be deployed at year end, which is not unusual for a multiyear funding program. Randy, could you give an update of what you understand about BUILD America 250?

If you take a step back, infrastructure spend has been bipartisan and conversations have been constructive in both the House and the Senate. The BUILD America Act as written authorizes $580 billion for highway, transit and safety programs. It's early days in the Senate and they'll prepare their own version, but the environment is generally supportive. Three points stand out in the Act's language: increased funding for core infrastructure such as bridges and highways, attention to permitting reform to accelerate project delivery, and discussion of new revenue streams to address the Highway Trust Fund shortfall. Even if we end up on a continuing resolution, our starting point is coming off record funding levels, combined with the remaining IIJA funds, which is a significant level of investment still to come. We don't see pullback or hesitation at the state level on maintenance or new build. In times of continuing resolution, states often reallocate money into repair and maintenance, which benefits us. Fundamentally, we don't see any disruptions or expect any disruptions for the balance of the year or looking into 2027.

I wanted a balanced update on the M&A pipeline and the Arcosa transaction approval. You've been good about divesting assets; where are you with that journey? Could you give more color on the types of assets you would focus on divesting?

In terms of acquisitions and our pipeline, it's been a very strong first half: $1.4 billion on 17 acquisitions across our connected growth platforms and aligned with infrastructure megatrends. The largest was Axius Water at $700 million, which closed before the end of the quarter and is integrating well. We announced an agreement to acquire Arcosa for an $8.5 billion enterprise value. Arcosa is primarily aggregates and also plays in engineered structures, particularly energy transmission. It adds about 35 million tonnes to our North American production and brings us into two new high-growth markets, Dallas and Phoenix, where we had geographic white spaces. It also strengthens our engineered structures position, a fast-growing part of U.S. construction. The deal is subject to Arcosa shareholder and regulatory approvals and we expect completion in early 2027. We have a strong and active pipeline of opportunities in attractive high-growth markets; the balance sheet remains robust. At Investor Day we outlined $40 billion of financial capacity, and that optionality allows disciplined allocation of capital across aggregates, cementitious, roads and water. On divestments, we've completed $1.9 billion across three divestments year-to-date. This is an ongoing process of recycling capital into faster-growing, more connected parts of the portfolio. Expect us to continue that activity as we pursue higher growth geographies and segments.

A couple from me. First, on the asphalt business in North America: pricing went from flat to plus 6% in Q2, and we can all see what's happened with bitumen. Could you indicate where spot prices might be year-on-year over the key Q3 season and how your costs are shaping up? Any general remark about absorption into the paving business would be great. Second, could you give a quick tour of important observations by country in your international business around volume or price?

Morning, Will. I'll ask Randy to address asphalt pricing and the outlook for the full year. On international: Central and Eastern Europe had a challenging Q1 due to weather but recovered, driven by infrastructure and reindustrialization. We're seeing activity in defense-related infrastructure projects there. Western Europe showed strong performance in parts; Ireland, Spain and the Nordics are performing well, and we're seeing early recovery in France, particularly permits in residential. The U.K. has had a solid year; more than half of our Tarmac business in the U.K. is infrastructure, and projects are supporting that business. We're looking forward to another year of growth in profits and margins in the U.K. Randy, on asphalt?

I'll break this into demand and cost/pricing. Demand: we see good improvement in bidding activity and secured work, so volumes are ahead heading into the second half. From a cost standpoint, liquid asphalt is a competitive advantage for us. We can store roughly half of our yearly consumption, which ensures supply during peak paving season and gives technical capability to design mixes specific to projects. We manage that business on a margin basis. Considering the demand environment, cost profile and our liquid asphalt position, we expect another year of margin progression for the balance of the year.

On ready-mix in Americas, volumes were flat and pricing up slightly. What's going on in that business and what's the outlook for H2?

A solid year-to-date performance in ready-mix. It's one of the areas most directly impacted by subdued new-build residential in the U.S., which is a large user of ready-mix. We don't expect a recovery in new-build residential during 2026; any recovery is likely to be in late 2027 at best. When that returns, it will be meaningful for both volume and pricing in ready-mix. This is consistent across our U.S. footprint.

One other question on cement: you had good volumes in H1 and look set for decent volumes in H2, but pricing seems stagnant. What would it take to move cement pricing stronger than today's levels across the industry?

I'm pleased with cement volume performance—up 3% year-to-date in a market that's more flat—driven by internalizing volumes from recent acquisitions and synergy execution. We stepped off two strong years of pricing: up 8% in 2024, positive in 2025, and slightly down in 2026 H1, but overall good price progression over the two-year period. Despite the slight pricing headwind in H1, we delivered margin expansion in the cement business. A recovery in residential and concrete demand would certainly help cement pricing. Also, our cementitious mix, including Eco Material, shows positive mix-adjusted pricing; overall, a strong performance across U.S. cementitious for H1 and Q2.

Well done again on a strong second quarter. My question is on the data center theme. Jim, you've given stats before on CRH proximity to data centers under construction. Could we get an update on that and exposure to that segment? Broadly, with hyperscalers positive on CapEx, how do we think about CRH plugging into that for future growth?

We've seen a notable step-up in activity in 2026 versus 2025 in data centers and broader reindustrialization—advanced manufacturing and microchip plants. We're in an early phase of a generation of capital investment across the U.S. We're active on about 200 data centers across the U.S.; these are typically 2- to 3-year projects. With roughly 2,000 locations across the U.S., 85% of announced data centers are within 25 miles of one of our facilities. We put dedicated sales teams in place to work early with hyperscalers and site users, helping specify materials. For example, a recent East Texas data center project alone required about 3 million tonnes of aggregates for stabilizing an 85-acre footprint. We often are first on site for subterranean energy and water infrastructure using cementitious products, then aggregates, concrete, and finally asphalt and paving. These are huge, multiyear projects where our connected portfolio—delivering full product suites—gives us a significant advantage and meaningful long-term growth opportunity.

Congrats on the results. My question concerns margins, especially in Americas Materials Solutions. There was very good expansion. I wanted to understand the reasons for that and the confidence you have in sustaining those margins in the current environment.

Adrian, the Americas Materials business was a standout in Q2 and H1, delivering another quarter of margin expansion despite weather disruptions and inflationary headwinds. This reflects our connected portfolio and scale: 2,000 locations, leading regional brands and relentless focus on operational, commercial and procurement excellence. That's the CRH winning way we discussed at Investor Day. Since 2018, we've delivered consistent margin improvement post-acquisition; we expect 2026 to be our 13th consecutive year of margin expansion. That consistency is driven by our go-to-market capability and local teams executing with global scale.

Two elements in particular: first, we aim to be best-in-class in each operating business while engaging customers in a targeted way. Over the last several years we've built market teams in 30-plus critical MSAs—Salt Lake City, Dallas, Tampa, Austin and others—bringing the full capabilities of CRH to customers with national or regional presence. Second, we've developed vertical teams aligned with megatrends—data centers, airports, nuclear and the energy transition—so we can get in early, work on design and specification and bring CRH's full capabilities from design through execution. This go-to-market approach is making a meaningful difference in performance and outlook.

Thanks, everyone. That's all we have time for today, and thank you for your attention. As always, if you have any follow-up questions, please feel free to contact our Investor Relations team. We look forward to updating you again in October when we will report our results for the third quarter of 2026. Thank you. Have a good day, and stay safe.

Thank you. Your conference call has now ended, and you may now disconnect.