CRH Public Limited Company 2026 Q3 Earnings Call

Jim Mintern here, CEO of CRH, and you are all very welcome to our Q3 2026 results presentation and conference call. Joining me on the call is Aylwyn Bryan, our CFO, Randy Lake, our COO, and Danilo Juvane, our Head of Investor Relations. Before we get started, I will hand over to Danilo for some opening brief remarks.

Thanks, Jim, and hello, everyone. I would 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 slide 2 and to our filings with the SEC, including our annual report on Form 10-K and our quarterly reports on Form 10-Q, which are available on our website. We will also refer to certain non-GAAP financial measures. Definitions and reconciliations are included in the appendix to the presentation and in our earnings release. I will now hand it back to Jim.

Over the next 20 minutes or so, we will take you through a brief presentation of our results for the third 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 as a whole. We will also spend some time discussing the continued execution of our strategy and Velocity, a recently launched transformation initiative that will help us build a better CRH and deliver further value creation for our shareholders. Based on the visibility that we have at this moment in time, we will also share our thoughts on some of the trends we are seeing across our markets as we look ahead to 2027. First, on slide 4, let me take you through some key messages from our results.

Overall, we delivered a resilient third quarter performance despite contending with a challenging cost environment and subdued residential activity across many of our markets. Looking ahead to the remainder of the year and based on the current momentum that we see across our business, we are updating our financial guidance and now expect full-year Adjusted EBITDA to be between $7.8 billion and $8.0 billion, representing another year of growth and value creation for CRH. The strength of our balance sheet and cash generation capability enables us to invest for future growth while also delivering significant returns to shareholders. Today, we announced a new $6 billion share buyback program to run to the end of 2030, demonstrating our continued focus on disciplined and efficient capital allocation. Our ability to deploy capital in high-growth markets, integrate at scale, and deliver unique synergies through our connected portfolio is a key differentiator for our business.

We recently announced the completion of our $8.5 billion acquisition of Arcosa, a significant investment which will reinforce CRH as the leading aggregates and critical infrastructure player in North America. We have also invested a further $1.9 billion in 27 value-accretive acquisitions in the year to date. We have an attractive pipeline of further growth opportunities in front of us, supported by our unmatched scale, connected portfolio, and proven growth capabilities. During the quarter, we launched Velocity, a focused initiative to deliver an enhanced scalable operating model for CRH. Velocity will underpin our growth objectives and enhance operational efficiency, thereby delivering a structurally higher-margin business. We expect Velocity to generate $400 million of annual Adjusted EBITDA run rate benefits by the end of 2028, and I will take you through that in more detail later in the presentation.

Looking ahead to 2027 and based on the visibility we have across our key markets, the outlook for our business is positive, supported by our strategic alignment to growing infrastructure megatrends. Turning to slide 5 and our financial highlights for the third quarter. Overall, we delivered a resilient performance despite subdued residential activity and a challenging cost environment. Total revenues of $11.4 billion were 3% ahead of the prior year, reflecting good underlying demand across our key markets, positive pricing momentum, and contributions from acquisitions. We experienced significant cost inflation during the quarter as sustained increases in oil prices flowed through to key inputs, particularly energy, raw materials, and haulage. In response, we implemented further commercial and operational actions to mitigate the impact. This enabled us to deliver Adjusted EBITDA of $2.7 billion, in line with the prior year, representing a margin of approximately 24%.

Our third quarter margin was 80 basis points behind the prior year. Our in line, excluding the impact of some one-off gains in the prior year, which demonstrates the resiliency of our connected portfolio in an inflationary environment. All of this translated into diluted earnings per share pre-impairment of $2.09, which includes the impact of transformation-related costs associated with Velocity. At this point, I will ask Randy to take you through the performance of each of our businesses.

Thanks, Jim, and hello, everyone. Turning to Slide 7, and starting with Americas Materials Solutions, which delivered a resilient performance despite subdued residential activity and input cost pressures. Total revenues and Adjusted EBITDA were 6% and 1% ahead of the prior year, reflecting positive pricing momentum, contributions from acquisitions, and the benefits of our connected portfolio. In Essential Materials, third quarter revenue were 19% ahead of the prior year. Our aggregates volumes increased by 2%, while pricing was 5% ahead or +6% on a mix-adjusted basis. Cement volumes were in line with the prior year, while the pricing declined by an average of 2%. Our performance also reflects contributions from acquisitions, particularly Eco Material, which I'm pleased to report continues to perform well with volumes and pricing both up mid-single digits compared to the prior year period.

In Road Solutions, Q3 revenues were 2% ahead of the prior year, supported by growth in asphalt and ready-mix concrete pricing. As Jim mentioned, we experienced some significant input cost inflation during the quarter, which impacted our margin performance, and we focused on cost recovery through further commercial actions and operational measures. While housing activity remains muted, overall underlying demand remains supported by our exposure to growing infrastructure megatrends. Transportation continues to be underpinned by federal and state funding, while reindustrialization activity is being fueled by large-scale manufacturing and data center investments. Overall, a solid performance for our Americas Materials Solutions business. Looking ahead, I'm encouraged by our backlogs, which are in line with the prior year.

Next to Americas Building Solutions on Slide 8, where our third quarter performance reflects the impact of divestitures, subdued residential activity, as well as the non-recurrence of a prior year gain on the sale of certain land assets. We also experienced an inflationary cost backdrop, particularly in relation to elevated haulage rates, and have now implemented ongoing operational and commercial initiatives to mitigate those costs. In our Building and Infrastructure Solutions business, we continue to experience strong growth in data center, water, and energy infrastructure markets. For Americas Building Solutions overall, total revenues and Adjusted EBITDA were 3% and 18% behind the prior year period. Excluding the impact of land sales, third quarter Adjusted EBITDA and margin were ahead of the prior year.

Moving to International Solutions on Slide 9, where our business delivered further growth and margin expansion, supported by increased activity levels in certain markets, positive pricing momentum, and disciplined cost control. Total revenue growth of 1% translated into a 6% increase in Adjusted EBITDA and a further 110 basis points of margin expansion. In Europe, demand remains underpinned by good infrastructure and reindustrialization activity. While in Australia, our business continues to benefit from positive underlying demand, operational efficiencies, and contributions from acquisitions.

Thanks, Randy. Turning to Slide 10, reflecting our third quarter performance and expectations for the fourth quarter, we are updating our financial guidance for 2026 to reflect a softer residential market, inflationary cost backdrop, as well as a partial year contribution from the Arcosa acquisition. Assuming normal 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 $7.8 billion and $8.0 billion. Net income between $3.1 billion and $3.3 billion and adjusted diluted earnings per share between $5.37 and $5.59, representing another year of growth and value creation for CRH. At this point, I would like to discuss the continued execution of our strategy.

Since setting out our strategic roadmap and ambitious 2030 growth targets at our Investor Day last year, we have continued to strengthen our portfolio and increase our exposure to attractive markets aligned with growing infrastructure megatrends: transportation, water, and reindustrialization. We have been proactively shaping our portfolio to capture secular growth, recycling capital into higher value strategic opportunities through acquisitions such as Arcosa, Eco Material, and Axius Water, as well as completing over 60 value-accretive bolt-on acquisitions and $2.1 billion of divestitures. Alongside portfolio strengthening, we are now evolving our operating model through Velocity, a focused transformation initiative that will underpin our growth objectives and enhance operational efficiency, thereby delivering a structurally higher margin business, all powered by our winning way. Together, these actions will build a better CRH and support the next era of growth and long-term value creation for our shareholders.